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Exhibit 10.3
ASSET CONTRIBUTION AGREEMENT -
PVC PARTNERSHIP (GEON)
AMONG
THE GEON COMPANY,
1999 PVC PARTNER INC.
AND
OXY VINYLS, LP
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TABLE OF CONTENTS
Page
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SECTION 1 CONTRIBUTION OF ASSETS; ASSUMPTION OF CERTAIN LIABILITIES............ 1
1.1 Transfer of Assets............................................ 1
1.2 Excluded Assets............................................... 2
1.3 Instruments of Conveyance and Assignment...................... 3
1.4 Further Assurances............................................ 4
1.5 Assumption of Liabilities..................................... 5
1.6 [Intentionally Omitted]....................................... 6
1.7 Employee Matters.............................................. 6
1.8 Joint Contracts............................................... 10
1.9 Retained Business; Support Services.......................... 11
SECTION 2 REPRESENTATIONS AND WARRANTIES OF CONTRIBUTOR........................ 11
2.1 Employee Benefits............................................. 11
2.2 Labor Relations............................................... 14
2.3 Title to Assets; Absence of Liens and Encumbrances; Leases.... 15
2.4 Title Matters; Defects in Improvements........................ 16
2.5 Working Capital............................................... 16
2.6 Government Licenses, Permits and Related Approvals............ 16
2.7 All Necessary Assets.......................................... 16
2.8 Conduct of Business in Compliance with Regulatory and
Contractual Requirements..................................... 17
2.9 Legal Proceedings............................................. 17
2.10 Tax Matters................................................... 17
2.11 HSE Matters................................................... 18
2.12 Contributed Subsidiaries...................................... 19
SECTION 3 REPRESENTATIONS AND WARRANTIES OF THE PARTNERSHIP.................... 19
3.1 Due Organization; Good Standing and Power..................... 19
3.2 Authorization and Validity of Agreement....................... 19
3.3 No Consents Required; No Conflict with Instruments to
which the Partnership is a Party............................. 20
SECTION 4 COVENANTS SUBSEQUENT TO CLOSING DATE................................. 20
4.1 Access to Information......................................... 20
4.2 Mail or Other Communications.................................. 21
4.3 Asset Transfer Effective Time Balance Sheet................... 21
4.4 Insurance Claims.............................................. 21
4.5 Special Covenant.............................................. 21
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SECTION 5 SURVIVAL AND INDEMNIFICATION........................................ 21
5.1 Survival Limitations.......................................... 21
5.2 Indemnification............................................... 22
5.3 Procedures.................................................... 27
5.4 Subrogation................................................... 29
5.5 Claims for HSE Remedial Action................................ 29
5.6 Extent of Indemnification..................................... 32
SECTION 6 MISCELLANEOUS........................................................ 33
6.1 Construction.................................................. 33
6.2 Payment of Certain Expenses and Taxes......................... 33
6.3 Notices....................................................... 34
6.4 Binding Effect; Benefit....................................... 35
6.5 Occasional and Bulk Sales..................................... 35
6.6 Assignability................................................. 36
6.7 Amendment; Waiver............................................. 36
6.8 Dispute Resolution............................................ 36
6.9 Severability.................................................. 36
6.10 Counterparts.................................................. 36
6.11 Conflict with Transfer Documents.............................. 36
6.12 Transfer Documents............................................ 36
SCHEDULES
Schedule A Contributed Business
Schedule B Tier 1 Employees
Schedule C Tier 2 Employees
Schedule 1.1(a) Fee Interests
Schedule 1.1(b) Leases
Schedule 1.1(d) Equipment
Schedule 1.1(g) Certain Contributed Contracts
Schedule 1.2(g) Certain Excluded Assets
Schedule 1.2(j) Excluded Railcars
Schedule 1.5(a)(vi) Assumed Indebtedness
Schedule 1.5(a)(x) Assumed Long-Term Liabilities
Schedule 2 Disclosure Schedule
Schedule 2.1 Employee Benefit Plans
Schedule 2.9 Legal Proceedings
Schedule 2.10 Tax Exempt Indebtedness
APPENDICES
Appendix A Definitions
Appendix B Dispute Resolution Procedures
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EXHIBITS
Exhibit A Form of Deeds
Exhibit B Form of Assignment of Leases
Exhibit C Form of Bill of Sale and Assignment
Exhibit D Form of Trademark Assignment
Exhibit E Form of Patent Assignment
Exhibit F Form of Partnership Assumption Agreement
Exhibit G Form of Site Lease Agreement
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ASSET CONTRIBUTION AGREEMENT-
-----------------------------
PVC PARTNERSHIP (GEON)
----------------------
This ASSET CONTRIBUTION AGREEMENT - PVC PARTNERSHIP (GEON) (this
"Agreement"), dated as of the 30th day of April, 1999, is entered into among The
Geon Company, a Delaware corporation ("Contributor"), 1999 PVC Partner Inc., a
Delaware corporation ("Geon LP"), and Oxy Vinyls, LP, a Delaware limited
partnership (the "Partnership").
WHEREAS, the definitions of capitalized terms used in this Agreement
are set forth in Appendix A hereto; and
WHEREAS, Contributor owns all of the issued and outstanding shares of
capital stock of Geon LP; and
WHEREAS, Contributor wishes to contribute the assets subject to certain
liabilities associated with the businesses described in Schedule A (the
"Contributed Business") to the Partnership, and the Partnership wishes to accept
such assets and assume such liabilities, all upon the terms and conditions
hereinafter set forth; and
WHEREAS, Contributor will become a limited partner in the Partnership
and receive 24 PVC Units and the Specified Amount, if any, from the Partnership;
and
WHEREAS, Contributor will transfer the 24 PVC Units to Geon LP,
whereupon Geon LP will be admitted to the Partnership as a limited partner; and
WHEREAS, the Partnership will consummate certain transactions and enter
into certain agreements as provided for in the Master Transaction Agreement,
dated as of December 22, 1998, between Occidental Chemical Corporation ("OCC")
and Contributor (the "Master Transaction Agreement");
NOW THEREFORE, in consideration of the premises and of the mutual
covenants of the parties hereto, it is hereby agreed as follows:
SECTION I
CONTRIBUTION OF ASSETS; ASSUMPTION OF CERTAIN LIABILITIES
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1.1 TRANSFER OF ASSETS. On the terms and subject to the conditions set
forth in this Agreement, on the date hereof and effective as of the Asset
Transfer Effective Time, Contributor hereby contributes, conveys, assigns,
transfers and delivers to the Partnership, or causes to be contributed,
conveyed, assigned, transferred and delivered to the Partnership, and the
Partnership hereby accepts and acquires, all of the assets, rights, and
properties used or held for use in the operation and conduct or contemplated
operation and conduct of the Contributed Business of every kind, nature,
character and description, tangible and intangible, real, personal or mixed,
whether held by Contributor or an Affiliate thereof, wherever located, other
than the Excluded Assets; and which conveyance, subject to Section 1.2, shall
include the following:
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(a) the Fee Interests;
(b) the Leaseholds;
(c) the Associated Rights, including all contracts, easements,
rights-of-way, permits, licenses and leases and other similar rights for related
equipment, power and communications cables, and other related property and
equipment used principally in the normal operation and conduct of the
Contributed Business;
(d) the Equipment and all warranties and guarantees, if any, express or
implied, existing for the benefit of Contributor or any Affiliate thereof in
connection with the Equipment to the extent assignable;
(e) Subject to the Master Intellectual Property Agreement, the
Unrecorded Assets;
(f) Subject to the Master Intellectual Property Agreement, the
Contributed Intellectual Property;
(g) the Contributed Contracts;
(h) All Government Licenses that are transferable and as to which
Consents to transfer are obtained where required;
(i) Accounts Receivable, Inventory, Stores Inventory, Prepaid Expenses,
and plant petty cash funds, including, by way of illustration only, any amounts
or balances owing to Contributor under any product exchange or similar
agreeement, other than the Specified Working Capital Items;
(j) All of the outstanding capital stock of LaPorte Chemicals Corp.
(the "Contributed Subsidiary");
(k) All claims and rights against third parties (including insurance
carriers, indemnitors, suppliers and service providers) to the extent, but only
to the extent that, they relate to the Assumed Liabilities; PROVIDED, HOWEVER,
that to the extent that any claims or rights of Contributor against any third
parties are not assigned to the Partnership, and the Partnership incurs
Liabilities that would create such claims or rights on behalf of Contributor,
Contributor shall enforce such claims or rights for the benefit (and at the
cost) of the Partnership to the extent it may lawfully do so, except that
Contributor shall not be required to enforce insurance claims against fronting,
captive or retrospectively rated policies which would ultimately result in such
claims being ultimately borne, directly or indirectly, by Contributor; and
(l) Any other asset of Contributor or its Affiliates contributed to the
Partnership pursuant to the terms of this Agreement.
1.2 EXCLUDED ASSETS. It is expressly understood and agreed that the
Assets shall not include the following (the "Excluded Assets"):
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(a) Specified Working Capital Items;
(b) Except as may be agreed pursuant to Section 1.7, any assets of any
qualified or non-qualified pension or welfare plans or other deferred
compensation arrangements maintained by any Contributor or any Affiliate thereof
for employees of such Contributor or any Affiliate thereof prior to the Asset
Transfer Effective Time;
(c) Subject to the Master Intellectual Property Agreement, any and all
of the Intellectual Property of Contributor or any Affiliate thereof to the
extent not primarily used in the normal operation and conduct of, or to the
extent not applicable to, the Contributed Business, and any and all Trademarks
of Contributor or any Affiliate thereof except for the Trademarks assigned or
licensed in the Master Intellectual Property Agreement;
(d) All claims and rights against third parties (including insurance
carriers, indemnitors, suppliers and service providers), to the extent they do
not relate to the Assumed Liabilities;
(e) Claims held by Contributor or any Affiliate thereof for refunds of
Taxes for time periods ending on or before the Asset Transfer Effective Time,
which Taxes remain the liability of Contributor or its Affiliates under this
Agreement;
(f) All items sold in the ordinary course of business prior to the
Asset Transfer Effective Time, none of which individually or in the aggregate
are material to the normal operation and conduct of the Contributed Business;
(g) The tangible assets, intangible assets, real properties, contracts
and rights described on Schedule 1.2(g);
(h) Any of Contributor's or any Affiliates' right, title and interest
in and to any dispersion PVC resin producing plant assets, co-polymer PVC resin
producing plant assets, or specialty homopolymer suspension and blending resins;
(i) Any real property of Contributor or any Affiliate thereof in the
vicinity of but not within the metes and bounds or other descriptions of the Fee
Interests and any related easements or rights-of-way surveyed pursuant to
Section 6.2(d); and
(j) The interest of Contributor and its Affiliates in all railcars
(whether owned or leased) utilized in the operation and conduct of the
Contributed Business and described on Schedule 1.2(j) (the "Excluded Railcars").
1.3 INSTRUMENTS OF CONVEYANCE AND ASSIGNMENT. On the Closing Date:
(a) Contributor shall deliver or cause to be delivered to the
Partnership, (i) properly executed and acknowledged warranty deeds, in
substantially the form attached hereto as Exhibit A (the "Deeds"), for all Fee
Interests being conveyed hereunder, (ii) assignments of lease for the Leases in
substantially the form attached hereto as Exhibit B (the "Assignment of
Leases"), (iii) a bill of sale
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and assignment in substantially the form attached hereto as Exhibit C (the "Bill
of Sale and Assignment") conveying title to the Assets (other than the Fee
Interests and Leaseholds) and assigning the Contributed Contracts, (iv) an
assignment of the trademarks included in the Assets in substantially the form
attached as Exhibit D (the "Trademark Assignment"), (v) an assignment of those
patent rights included in the Assets, as specifically provided in the Master
Intellectual Property Agreement, in substantially the form attached hereto as
Exhibit E (the "Patent Assignment"), and (vi) stock certificates representing
all of the outstanding capital stock of the Contributed Subsidiary, together
with stock powers duly executed in blank;
(b) Contributor and the Partnership shall deliver or cause to be
delivered to each other a Site Lease Agreement with respect to certain
properties in Pedricktown, New Jersey, in substantially the form attached hereto
as Exhibit G (the "Site Lease Agreement"); and
(c) Contributor shall transfer to the Partnership the originals (to the
extent Contributor or any Affiliate thereof possesses an original and retained
no rights thereunder after the Asset Transfer Effective Time) or copies, as
appropriate, of the Contributed Contracts and the originals or copies, as
appropriate, of all current records, files and other data that relate to the
Assets and that are necessary for continuing the normal operation and conduct of
the Contributed Business by the Partnership.
1.4 FURTHER ASSURANCES.
(a) On and from time to time after the Closing Date, Contributor will
execute and deliver, or cause to be executed and delivered, at its sole cost and
expense, such other instruments of conveyance, assignment, transfer and delivery
as the Partnership may reasonably request in order to fulfill and implement the
terms of this Agreement, to vest in the Partnership title to the Assets or to
enable the Partnership to continue the normal operation and conduct of the
Contributed Business and otherwise to realize the benefits intended to be
afforded hereby.
(b) On and from time to time after the Closing Date, the Partnership
will execute and deliver, or cause to be executed and delivered, at its sole
cost and expense, such other instruments of assumption, conveyance, assignment,
transfer, power of attorney or assurance as Contributor may reasonably request
in order to fulfill and implement the terms of this Agreement, to vest in the
Partnership all of the Assumed Liabilities or to enable Contributor to realize
the benefits intended to be afforded hereby.
(c) Notwithstanding any other provision of this Agreement to the
contrary, the Partnership and Contributor acknowledge and agree that any
Government Licenses, Contributed Contracts, warranties or other Assets related
to the Contributed Business and required to be conveyed pursuant to this
Agreement that by their terms require Consent from any other Person shall not be
assigned to the Partnership unless any such Consent has been obtained prior to
the Closing Date.
(d) From and after the Closing Date, Contributor and the Partnership
shall cooperate in good faith and in a commercially reasonable manner with
respect to all matters pertinent to the carrying into effect of this Agreement
and the discharge by each party of its obligations and
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liabilities hereunder and thereunder, and shall furnish to each other such
information, cooperation and assistance as reasonably may be requested in
connection with the foregoing, including any and all financial information
necessary for the Partnership's operation of the Contributed Business or
required for financial reporting or other purposes.
1.5 ASSUMPTION OF LIABILITIES.
(a) On the terms and subject to the conditions, including Sections 1.7
and 5.2, set forth in this Agreement, effective as of the Asset Transfer
Effective Time, the debts, liabilities and obligations of Contributor set forth
in this Section 1.5 shall be assumed by the Partnership in connection with the
transfer of Assets to it, and the Partnership agrees to pay, perform and
discharge all such debts, liabilities and obligations when due:
(i) All obligations arising on or after the Asset Transfer
Effective Time under the Contributed Contracts and Leases that are
assigned to the Partnership hereunder unless and to the extent that
such obligation arises out of a violation of such Contributed Contract
or Lease prior to the Asset Transfer Effective Time;
(ii) All obligations under purchase orders accepted by
Contributor in the ordinary course of business of the Contributed
Business prior to the Asset Transfer Effective Time that are assigned
to the Partnership hereunder and that are not filled as of the Asset
Transfer Effective Time, but only to the extent not filled;
(iii) Trade Accounts Payable;
(iv) All obligations and liabilities, of every kind and
nature, without limitation, arising out of, in connection with or
related to the ownership, operation or use on or after the Asset
Transfer Effective Time of the Assets or the Contributed Business,
except for HSE Claims that are related to Pre-Closing Liabilities and
that arise out of the Partnership's status after the Asset Transfer
Effective Time as an owner or operator of the Assets or the Contributed
Business;
(v) Except for HSE Claims, Exposure Claims and Product
Exposure Claims, any Third Party Claims that are related to Pre-Closing
Liabilities and that are first asserted ten years or more after the
Asset Transfer Effective Time;
(vi) The obligations for Indebtedness described on Schedule
1.5(a)(vi);
(vii) All Liabilities associated with products sold by the
Partnership after the Asset Transfer Effective Time regardless of when
manufactured;
(viii) Any Product Exposure Claims that are first asserted 20
years or more after the Asset Transfer Effective Time;
(ix) Any HSE Claims that are related to Pre-Closing
Liabilities and that are first asserted ten years or more after the
Asset Transfer Effective Time;
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(x) The long-term Liabilities set forth on Schedule 1.5(a)(x);
and
(xi) Any other Liability specifically assumed by the
Partnership pursuant to the terms of this Agreement.
The liabilities and obligations assumed by the Partnership pursuant to this
Section are sometimes hereinafter referred to collectively as the "Assumed
Liabilities."
(b) On the Closing Date, the Partnership shall deliver to Contributor
an instrument of assumption of the Assumed Liabilities substantially in the form
attached hereto as Exhibit F (the "Partnership Assumption Agreement").
1.6 [Intentionally Omitted].
1.7 EMPLOYEE MATTERS.
(a) In accordance with and subject to Section 3.7 of the Master
Transaction Agreement, the Partnership shall offer employment to certain
Salaried Employees and to each Union Employee in accordance with the terms and
conditions negotiated between the Partnership and the Unions. Any Employee that
accepts such offer is hereinafter referred to as a "Partnership Employee."
Partnership Employees shall be employed effective as of the Asset Transfer
Effective Time. Notwithstanding the foregoing, if as of the Asset Transfer
Effective Time, any Employee is eligible for and receiving short term disability
benefits or sick pay, or is on leave of absence, and the Partnership has offered
such Employee an offer of employment, such Employee shall become employed by the
Partnership (and become a Partnership Employee for purposes of this Section 1.7)
upon eligibility to return to active employment with Contributor under the
applicable conditions of the short term disability benefits or sick pay plan of
Contributor, or upon return from leave of absence. Such Employee's employment by
the Partnership shall not be effective until Contributor verifies that the
Employee has satisfied the conditions (if any) to return to active employment.
Until such time as such Employee becomes a Partnership Employee, Contributor
shall continue to bear all costs and expenses associated with such Employee.
(b) Contributor shall remain solely responsible for (i) any liability
with respect to Tier 1 Employees who do not become Partnership Employees (as
well as any employees of Contributor who do not become Partnership Employees and
who are not Tier 1 Employees, Tier 2 Employees or Plant Employees), including
any liability for severance benefit payments and any costs associated with
violations of any Legal Requirements; (ii) bonus or executive compensation, if
any, to Employees covered by Contributor's bonus or executive compensation
programs; and (iii) any liability related to the termination of any employees of
Contributor or any of its Affiliates at any time prior to the Asset Transfer
Effective Time, including liability for all severance benefit payments to such
employees pursuant to any applicable severance plan and any costs associated
with violations of any Legal Requirements. With respect to Employees who become
Partnership Employees, Contributor shall pay prior to the Asset Transfer
Effective Time bonus or executive compensation earned in 1998. Contributor shall
promptly reimburse the Partnership for a pro rata portion of any bonus or
executive compensation paid by the Partnership that is earned in 1999 by
Partnership
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Employees, based on the months of employment in 1999 with Contributor prior to
the Asset Transfer Effective Time.
(c) The Partnership shall be responsible for any severance costs with
respect to Plant Employees pursuant to the applicable plan or program of the
Partnership, as applicable to such Employee and in effect as of the termination
date of such Employee. Any Partnership Employee whose employment is terminated
by the Partnership within six months after the Asset Transfer Effective Time
shall be entitled to receive a severance benefit from the Partnership not
less than the benefits, if any, provided under the severance plan of
Contributor in effect as of the Asset Transfer Effective Time.
(d) Any employees of Contributor that the Partnership and Contributor
agree are necessary for the orderly transfer of the Contributed Business to the
Partnership but who will not become Partnership Employees ("Transition
Employees") shall be compensated by Contributor on terms and conditions and for
a duration to be agreed upon by the Partnership and Contributor. The Partnership
shall reimburse Contributor for any such agreed upon compensation, including
payroll taxes, travel expenses and other support expenses, benefit costs and
workers compensation premiums and claims, paid by Contributor to or with respect
to any Transition Employee.
(e) With regard to the Contributed Business, the Partnership shall not
at any time prior to 60 days after the Asset Transfer Effective Time, effectuate
a "plant closing" or a "mass layoff," as those terms are defined in the Worker
Adjustment and Retraining Notification Act of 1988 ("WARN"), affecting in whole
or in part, any facility, site of employment or operating unit, or any Employees
without complying fully with the notice and all other applicable requirements of
WARN.
(f) As of the Asset Transfer Effective Time, the Partnership shall
provide each Salaried Employee that is a Partnership Employee with "Partnership
Benefit Plans," which shall mean the benefit plans and programs under (i) Plans
effective immediately prior to the Asset Transfer Effective Time, (ii) the
benefit plans and programs applicable to employees of OCC in similar jobs, or
(iii) a combination of the Plans and OCC's benefit plans and programs, the
determination of which shall be at the sole discretion of the Partnership. From
and after the Asset Transfer Effective Time, each Salaried Employee that is a
Partnership Employee shall be eligible to participate in such Partnership
Benefit Plans in accordance with the terms and conditions thereof. Under such
Partnership Benefit Plans that are Employee Welfare Benefit Plans, Salaried
Employees that are Partnership Employees and their eligible dependents, if
participants in any health, long term disability or life insurance plans, as
applicable, of Contributor immediately prior to the Asset Transfer Effective
Time, (i) shall participate in such Partnership Benefit Plans as of the Asset
Transfer Effective Time, and (ii) shall be deemed to satisfy any pre-existing
condition limitations under group medical, dental, life insurance or disability
plans that shall be provided after the Asset Transfer Effective Time. In
addition, amounts paid by such Salaried Employees that are Partnership Employees
towards deductibles and copayment limitations under the health plans of
Contributor shall be counted toward meeting any similar deductible and copayment
limitations under the health plans that shall be provided under the Partnership
Benefit Plans.
(g) The Partnership shall recognize all service credited for each of
the Salaried Employees that are Partnership Employees on Contributor's records
for purposes of eligibility for
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benefits and vesting under the Partnership Benefit Plans and the level of
benefits under the Partnership Benefit Plans, but no such recognition will be
made for any benefit accrual under any Partnership Benefit Plan that is a
defined benefit pension plan.
(h) Contributor agrees that, for Partnership Employees with an accrued
benefit under any Employee Pension Benefit Plan, Contributor shall, or shall
cause an Affiliate, as appropriate, to amend such Employee Pension Benefit Plans
so that full vesting in such accrued benefits shall occur as of the Asset
Transfer Effective Time.
(i) Contributor and the Partnership shall take all necessary and
reasonable steps to prevent a default of any loans of any Partnership Employee
under the Geon Retirement Savings Plan ("Contributor's 401(k) Plan"), including
taking prompt action to provide for a plan-to-plan asset transfer (as such
transfer is defined in section 414(l) of the Code) of account balances
(including outstanding loans) of those Partnership Employees who so elect to
transfer from Contributor's 401(k) Plan to the appropriate Partnership Benefit
Plan pursuant to section 401(k) of the Code.
(j) From and after the Asset Transfer Effective Time, Salaried
Employees that are Partnership Employees shall be entitled to retain and take
any paid vacation days accrued during the period from January 2, 1999 through
the Asset Transfer Effective Time but not taken under Contributor's vacation
policy, if applicable. On or promptly after the Asset Transfer Effective Time,
Contributor shall pay any Banked Vacation to each Salaried Employee. "Banked
Vacation" shall mean vacation time accrued on Contributor's records as payable
to any Salaried Employee who becomes a Partnership Employee for which vacation
time has not been taken prior to January 2, 1999.
(k) Contributor and the Partnership agree that they will satisfy their
respective obligations, if any, under the National Labor Relations Act regarding
Union Employees. The Partnership will recognize each Union, and each Union
Employee shall participate in such plans and programs as are applicable to the
Union Employees in accordance with the terms and conditions negotiated by the
Partnership.
(l) From and after the Asset Transfer Effective Time, Employees that
are Partnership Employees shall cease to accrue service credit and benefits,
except as expressly provided in this Section 1.7, under any and all welfare
plans of Contributor and its Affiliates, under any and all pension plans of
Contributor and its Affiliates, and under any and all non-ERISA plan or programs
of Contributor and its Affiliates, in which participation had been available to
such Employees prior to the Asset Transfer Effective Time; provided, however,
that Contributor at its sole expense may provide additional benefits to such
Partnership Employees.
(m) Except as otherwise provided in this Section 1.7, Contributor and
the Partnership agree that this Agreement does not contemplate the transfer of
any assets or liabilities from any benefit plan of Contributor to any
Partnership Benefit Plan. The Partnership hereby waives any and all claims that
the Partnership or any of its Affiliates might have to any of the assets of any
plan of Contributor or its Affiliates.
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(n) Except with respect to Assumed Liabilities (other than Assumed
Liabilities described in Section 1.5(a)(v)), Contributor shall retain the sole
responsibility for, and shall continue to pay, all hospital, medical, and health
care continuation coverage benefits as described in section 4980B of the Code,
life insurance, disability, other welfare plan expenses and benefits (including
all benefits under any benefit plan of Contributor), and worker's compensation
for employees of Contributor (including each Employee) and their covered
dependents, including "qualified beneficiaries" within the meaning of section
607(3) of ERISA, with respect to claims incurred prior to the Asset Transfer
Effective Time. In addition, except with respect to Assumed Liabilities (other
than Assumed Liabilities described in Section 1.5(a)(v)), Contributor shall
retain sole responsibility for the payment of any claim for medical benefits,
health care continuation coverage benefits as described in section 4980B of the
Code, life insurance benefits or other welfare benefits by, Exposure Claims by,
or any other item of compensation or benefits payable under any Contributor Plan
to, (i) any employee of Contributor after the Asset Transfer Effective Time, and
(ii) any former employee of Contributor who retired, died, became disabled or
otherwise terminated employment prior to the Asset Transfer Effective Time.
Expenses and benefits relating to such claims incurred by Partnership Employees
and their covered dependents attributable to employment with the Partnership on
or after the Asset Transfer Effective Time shall be the sole responsibility of
the Partnership under the terms of its benefit plans. For the purposes of this
Section 1.7(n), a claim is deemed incurred when the medical or other therapeutic
services giving rise to the claim were performed.
(o) Except as otherwise specified in this Section 1.7 and except with
respect to Exposure Claims, the Partnership hereby agrees to indemnify
Contributor and its Affiliates and to defend and hold Contributor and its
Affiliates harmless from and against any claims, losses, expenses, obligations,
and liabilities (including cost of defense and reasonable attorney's fees)
asserted against and imposed on Contributor and its Affiliates and arising out
of or otherwise in respect of the following:
(i) any failure by the Partnership to comply with its
obligations hereunder or otherwise with respect to any Partnership
Employee;
(ii) any suit or claim of violation brought against
Contributor or its Affiliates under WARN for any actions taken by the
Partnership after the Asset Transfer Effective Time with regard to the
Partnership Employees at any facility, site of employment or operating
unit affected by this Agreement;
(iii) all claims by any Partnership Employee attributable to
employment after the Asset Transfer Effective Time who the Partnership
or its Affiliates actually or constructively terminates or by any
spouse, dependent, estate or other beneficiary of such Employee; or
(iv) any claims or charges by or relating to Employee
concerning wrongful termination, discrimination, harassment, or
violation of (1) the Fair Labor Standards Act, (2) the Labor Management
Relations Act, (3) WARN, (4) the Americans With Disabilities Act, (5)
ERISA, (6) the Consolidated Omnibus Budget Reconciliation Act of 1985,
(7) the National Labor Relations Act, (8) the Family and Medical Leave
Act, (9) the Health Insurance Portability and Accountability Act, (10)
Title VII of the Civil Rights Act of 1964,
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(11) the Age Discrimination in Employment Act, or (12) any and all
applicable state and local laws relating to employees or labor
relations;
all as attributable to the conduct of the Partnership or its Affiliates with
respect to such Employee relating to the period subsequent to the Asset Transfer
Effective Time.
(p) Nothing expressed or implied in this Agreement shall confer upon
any Employee or any other Person other than the parties hereto, or any legal
representative thereof, any rights or remedies, including any right to
employment, whether directly or as a third party beneficiary, or continued
employment for any specified period, of any nature or kind whatsoever.
(q) Except as otherwise specified in this Section 1.7 and except with
respect to Assumed Liabilities (other than the Assumed Liabilities described in
Section 1.5(a)(v)), Contributor agrees to indemnify the Partnership and to
defend and hold the Partnership and its Affiliates harmless from and against
claims, losses, expenses, obligations, and liabilities (including costs of
defense and reasonable attorney's fees) arising out of or otherwise in respect
of the following: (i) any Contributor employee benefit plans, or claims of
employees or former employees of Contributor or of any spouse, dependent,
estate, or other beneficiary of such employees or former employees attributable
to employment with Contributor or any of its Affiliates, including any such
liability or obligation that may arise under Section 1.7(n), and (ii) any claims
or charges relating to wrongful termination, discrimination, harassment, or
violation of (1) the Fair Labor Standards Act, (2) the Labor Management
Relations Act, (3) WARN, (4) the Americans With Disabilities Act, (5) ERISA, (6)
the Consolidated Omnibus Budget Reconciliation Act of 1985, (7) the National
Labor Relations Act, (8) the Family and Medical Leave Act, (9) the Health
Insurance Portability and Accountability Act, (10) Title VII of the Civil Rights
Act of 1964, (11) the Age Discrimination in Employment Act, or (12) any and all
applicable state and local laws relating to employees or labor relations, all as
attributable to the conduct of Contributor or its Affiliates with respect to (I)
any employees or former employees of Contributor who do not become Partnership
Employees relating to the periods both before and after the Asset Transfer
Effective Time, and (II) the Employees, attributable to employment with
Contributor or any of its Affiliates.
(r) Representatives of the Partnership shall be entitled to meet with
the Employees at mutually agreeable times prior to the Asset Transfer Effective
Time to explain and answer questions about the conditions, policies and benefits
of employment by Partnership after the Asset Transfer Effective Time.
Contributor shall cooperate with the Partnership until the Asset Transfer
Effective Time in communicating to such Employees any additional information
concerning employment after the Asset Transfer Effective Time which such
Employees may seek, or which the Partnership may desire to provide, and during
normal business hours shall allow additional meetings by representatives of the
Partnership with such Employees upon the reasonable request of the Partnership.
In addition, Contributor and the Partnership agree to furnish each other with
appropriate records for each of the Employees, subject to customary
confidentiality restrictions, compliance with Legal Requirements and appropriate
employee consents, as may be necessary to assist in proper benefit
administration.
(s) The indemnity provisions of this Section shall be subject to the
requirements of Section 5.3.
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1.8 JOINT CONTRACTS.
(a) Any Contributed Contracts contributed to the Partnership pursuant
to Section 1.1 that relate principally to the Contributed Business but also
relate to the business (other than the Contributed Business) of Contributor or
its Affiliates will be made available to Contributor and its Affiliates by the
Partnership pursuant to arrangements by which Contributor and its Affiliates
will enjoy the benefits of such Contributed Contracts as they relate to their
business (other than the Contributed Business) on the same terms and conditions
as the Partnership.
(b) Any Contracts that relate principally to the business (other than
the Contributed Business) of Contributor or its Affiliates but also relate to
the Contributed Business will be made available to the Partnership by
Contributor or its Affiliates pursuant to arrangements by which the Partnership
will enjoy the benefits of such Contracts as they relate to the Contributed
Business on the same terms and conditions as Contributor or its Affiliates.
1.9 RETAINED BUSINESS; SUPPORT SERVICES. In addition to the
Partnership's rights under the Related Agreements, for two years from the date
hereof, the Partnership shall have the right to purchase services from the
Retained Business at full cost and otherwise on arms'-length terms, in all cases
where it is reasonable under all the circumstances for the Retained Business to
provide such services but in no event in excess of the quantity of, or in kind
other than, such services provided to the Contributed Business prior to the
Asset Transfer Effective Time. In addition, for two years from the date hereof,
the Retained Business shall have the right to purchase services from the
Partnership at full cost and otherwise on arms'-length terms, in all cases where
it is reasonable under all the circumstances for the Partnership to provide such
services. In no event, however, shall this Section 1.9 override the express
terms and conditions of a Related Agreement as to particular services.
SECTION 2
REPRESENTATIONS AND WARRANTIES OF CONTRIBUTOR
---------------------------------------------
Except as set forth on Schedule 2, Contributor and Geon LP jointly and
severally represent and warrant to the Partnership as follows:
2.1 EMPLOYEE BENEFITS.
(a) Schedule 2.1 contains a true and complete list of each bonus,
deferred compensation, incentive compensation, stock purchase, stock option,
employment, consulting, severance or termination pay, hospitalization or other
medical, life or other insurance, supplemental unemployment benefits,
profit-sharing, pension or retirement plan, program, agreement or arrangement,
and each other "employee benefit plan" (within the meaning of section 3(2) of
ERISA), program, agreement or arrangement, whether formal or informal, written
or oral, and whether legally binding or not, sponsored, maintained or
contributed to or required to be contributed to by Contributor or by any trade
or business, whether or not incorporated, that, together with Contributor, would
be deemed a "single employer" within the meaning of section 4001(b)(1) of ERISA,
a "controlled group" within the meaning of section 414(b) of the Code, "trades
or businesses under common control" within the meaning of section 414(c) of the
Code, or an "affiliated service group"
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within the meaning of section 414(m) of the Code (an "ERISA Affiliate") within
the last three years, for the benefit of any employee, former employee,
consultant, officer, or director of Contributor or its Affiliates (collectively,
the "Plans"). Neither Contributor nor any ERISA Affiliate has any plan or
commitment, whether legally binding or not, to create any additional Plan or to
modify or change any existing Plan that would affect any employee or terminated
employee of Contributor or any ERISA Affiliate. There has been no merger,
consolidation, or transfer of assets or liabilities (including any spinoff,
split up or split off) with respect to any of the ERISA Plans.
(b) With respect to each of the Plans, neither Contributor nor any
ERISA Affiliate is obligated to continue with any such Plan beyond the Asset
Transfer Effective Time.
(c) To the extent necessary or appropriate for the proper operation and
administration of each of the Plans, the participant and beneficiary records of
each Plan accurately state the history of each participant and beneficiary in
connection with such Plan and accurately states the benefits earned and owed to
each person under such Plan.
(d) To the Knowledge of Contributor, each of the Plans is, and has
always been, operated in all respects in accordance with all Legal Requirements,
and all persons who participate in the operation of such Plans and all Plan
"fiduciaries" (within the meaning of section 3(2) of ERISA) have always acted in
accordance with the provisions of all Legal Requirements, the Plan documents and
written descriptions of the Plans. Each of the Plans intended to be "qualified"
within the meaning of section 401(a) of the Code is so qualified and has
received a currently applicable favorable determination letter, and nothing has
occurred since the date of such letter that could reasonably be expected to
cause the loss of such qualification.
(e) No liability under Title IV of ERISA has been incurred, directly or
indirectly, by Contributor or any ERISA Affiliate since the effective date of
ERISA that has not been satisfied in full, and no condition exists that presents
a material risk to Contributor or an ERISA Affiliate of incurring liability
under such Title, other than a liability for premiums due the Pension Benefit
Guaranty Corporation ("PBGC"), which payments have been or will be made when
due. To the extent that this representation applies to sections 4064, 4069 or
4204 of Title IV of ERISA, it is made not only with respect to ERISA Plans but
also with respect to any employee benefit plan, program, agreement or
arrangement subject to Title IV of ERISA to which Contributor or an ERISA
Affiliate made, or was required to make, contributions during the three year
period ending on the last day of Contributor's most recent fiscal year.
(f) The PBGC has not instituted any Proceedings to terminate any of the
ERISA Plans, and no condition exists that presents a material risk that any such
Proceedings will be instituted.
(g) No reportable event within the meaning of section 4043 of ERISA, or
prohibited transaction within the meaning of section 406 of ERISA, has occurred
with respect to any Plan.
(h) Neither Contributor, any ERISA Affiliate, any of the ERISA Plans or
any trust created thereunder nor any trustee or administrator thereof has
engaged in any transaction or has taken or failed to take any action in
connection with which Contributor, any ERISA Affiliate, any of the ERISA Plans,
any such trust, any trustee or administrator thereof, or any party dealing with
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the ERISA Plans or any such trust could be subject to any liability, fine,
penalty, tax or related charge under section 409, section 502(c)(i) or (1), or
section 4071 of ERISA or Chapter 43 of the Code, or the imposition of a lien
pursuant to section 401(a)(29) or 412(n) of the Code. Each welfare plan of
Contributor or any ERISA Affiliate that is subject to section 1862(b)(1) of
Social Security Act has been operated in compliance with the secondary payor
requirements of such section.
(i) No assets of any of the Plans are invested, directly or indirectly,
in real or personal property used by Contributor or, with respect to the ERISA
Plans, any ERISA Affiliate. There is sufficient liquidity of assets in each of
the funded Plans to promptly pay for the benefits earned and other liabilities
owed under such Plan. With respect to each of the Plans, no insurance contract,
annuity contract, or other agreement or arrangement with any financial or other
organization would impose any penalty, discount or other reduction on account of
the withdrawal of assets from such organization or the change in the investment
of such assets.
(j) No Plan is a "multiemployer plan" as such term is defined in
section 3(37) of ERISA. No Plan is a plan maintained by more than one employer
(a so-called "multiple employer plan") for purposes of section 413(c) of the
Code.
(k) No amounts payable under the Plans or any other agreement or
arrangement to which Contributor or any ERISA Affiliate is a party will, as a
result of the transactions contemplated by this Agreement, fail to be deductible
for federal income tax purposes by virtue of section 280G of the Code.
(l) No "leased employee," as that term is defined in section 414(n) of
the Code, performs services for Contributor or any ERISA Affiliate.
(m) No Plan provides benefits, including death or medical benefits
(whether or not insured), with respect to current or former employees after
retirement or other termination of service other than (i) coverage mandated by
applicable law, (ii) death benefits or retirement benefits under any "employee
pension plan," as that term is defined in section 3(2) of ERISA, (iii) deferred
compensation benefits accrued as liabilities on the books of Contributor or the
ERISA Affiliates, or (iv) benefits, the full cost of which is borne by the
current or former employee (or his beneficiary).
(n) With respect to each Plan that is funded wholly or partially
through an insurance policy, there will be no liability of Contributor or an
ERISA Affiliate, as of the Closing Date, under any such insurance policy or
ancillary agreement with respect to such insurance policy in the nature of a
retroactive rate adjustment, loss sharing arrangement or other actual contingent
liability arising wholly or partially out of events occurring prior to the
Closing Date.
(o) There is, and has been, no actual, and to the Knowledge of
Contributor, no anticipated, threatened or expected, litigation or arbitration
concerning or involving any of the Plans. No complaints to or by any Authority
have been filed, or, to the knowledge of Contributor, are threatened or
expected, with respect to any of the Plans. No claims have been made, or, to the
Knowledge of Contributor, are expected, with respect to any bond or any
fiduciary or other similar insurance with regard to the actions of any Person in
connection with any of the ERISA Plans or other funded Plans, nor has there
been, nor is there, to the Knowledge of Contributor, expected, any
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notice to any insurer under any such bond or policy with regard to any of such
Plans. No application for any bond or fiduciary liability or similar insurance
policy has been issued subject to any qualification, condition or exclusion.
(p) Except as provided in this Agreement, the consummation of the
transactions contemplated by this Agreement will not (i) entitle any current or
former employee or officer of Contributor or any of its Affiliates to severance
pay, unemployment compensation or any other similar payment, (ii) accelerate the
time of payment or vesting, or increase the amount of, any compensation due to
any such employee or officer, (iii) result in any employment-related expenses or
liabilities, the full cost of which will not be paid by Contributor, or (iv)
result in any prohibited transaction described in section 406 of ERISA or
section 4975 of the Code for which an exemption is not available.
2.2 LABOR RELATIONS.
(a) As related to the Contributed Business, (i) there are no collective
bargaining agreements or other similar agreements, arrangements or undertakings,
written or oral, with employees as a group to or by which Contributor is a party
or is bound, (ii) no employees of Contributor are represented by any labor
organization, collective bargaining representative or group of employees, (iii)
no labor organization, collective bargaining representative or group of
employees claims to represent a majority of the employees of Contributor in an
appropriate unit of Contributor, (iv) Contributor has not been the subject of
any representational campaign or organizing activity by any union or other
organization or group seeking to become the collective bargaining representative
of any of Contributor employees, (v) Contributor has not been subject to, or
threatened with, any strike, labor dispute, slowdown, stoppage, or other
concerted labor activity or dispute during the period of 12 months prior to the
date hereof, (vi) Contributor is not obligated to bargain collectively with
respect to wages, hours and other terms and conditions of employment with any
recognized or certified labor organization, collective bargaining representative
or group of employees, and (vii) to the Knowledge of Contributor,
employer-employee relations of Contributor are generally satisfactory.
(b) As related to the Contributed Business, Contributor is in
compliance in all material respects with all Legal Requirements pertaining to
labor, employment and employment practices and wages, hours, and other terms and
conditions of employment, with respect to Contributor employees, including each
Legal Requirement pertaining to equal opportunity, discrimination, immigration,
promotion or pay of employees, wages, hours of work, family or medical leaves of
absence, plant closings and layoffs, collective bargaining, occupational safety
and health, unemployment, and ERISA. There is no pending, or to the Knowledge of
Contributor, threatened, Proceeding by or before the National Labor Relations
Board, the Equal Employment Opportunity Commission, the Department of Labor or
any other Authority in connection with any current, former or prospective
employee related to the Contributed Business.
(c) As related to the Contributed Business, Contributor (i) has
withheld all amounts required by Legal Requirements or by agreement to be
withheld from the wages, salaries and other payments to Employees, (ii) is not
liable for any arrears of wages, (iii) is not delinquent with respect to any
payment to any trust or other fund or to any Authority with respect to
unemployment
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compensation benefits, workers' compensation, social security, or other benefits
for Employees, and (iv) is not liable for any Taxes, fines, or penalties, or
involved in any pending or, to the Knowledge of Contributor, threatened
Proceeding for the failure (or alleged failure) to comply with any of the
foregoing.
2.3 TITLE TO ASSETS; ABSENCE OF LIENS AND ENCUMBRANCES; LEASES.
(a) Each of Contributor and Contributed Subsidiary has good and
marketable title to all of its Fee Interests, free and clear of all
Encumbrances, except (i) any prior reservations, rights of way, easements and
other matters of record to the extent valid, subsisting and affecting the
Assets, (ii) any prior unrecorded easements set forth in a written instrument or
agreement for which permanent improvements have been constructed in such a
manner as to be apparent to the Partnership from inspection of the Assets to the
extent valid, subsisting and affecting the Assets, (iii) liens for current Taxes
not yet due and payable and mechanics and similar statutory liens arising in the
ordinary course of business, (iv) liens of employees and laborers for current
wages not yet due, (v) building, zoning and health regulations of the
jurisdictions in which the Assets are located, (vi) such imperfections of title
or Encumbrances, if any, as do not in the aggregate materially detract from the
value or materially interfere with the use of the Assets as they are currently
being used or as otherwise would not reasonably be expected to have a Material
Adverse Effect, and (vii) any matters disclosed by surveys obtained in
connection with the transactions contemplated by this Agreement.
(b) Each of Contributor and Contributed Subsidiary is the sole lessee
under its Leases and the sole party entitled to its Leasehold interests in favor
of the lessee thereunder, and the sole owner of the permanent improvements
(other than fixtures) situated on its Leased Premises, free and clear of all
Encumbrances affecting its Leaseholds except (i) any prior reservations,
easements and other matters of record to the extent valid, subsisting and
affecting the Assets, (ii) any prior unrecorded easements set forth in a written
instrument or agreement for which permanent improvements have been constructed
in such a manner as to be apparent to the Partnership from inspection of the
Assets to the extent valid, subsisting and affecting the Assets, (iii) liens for
current Taxes not yet due and payable and mechanics and similar statutory liens
arising in the ordinary course of business, (iv) liens of employees and laborers
for current wages not yet due, (v) building, zoning and health regulations of
the jurisdictions in which the Assets are located, (vi) such imperfections of
title or Encumbrances, if any, as do not in the aggregate materially detract
from the value or materially interfere with the use of the Assets or as
otherwise would not reasonably be expected to have a Material Adverse Effect,
and (vii) any matters disclosed by surveys obtained in connection with the
transactions contemplated by this Agreement. Neither Contributor nor any
Affiliate thereof has received from or delivered to the lessors under such
Leases any written notice of termination or threat of termination of such
respective Leases. True and complete copies of all written lease agreements
(including any written amendments, modifications or assignments thereof)
constituting, or evidencing the terms of, such Leases have been delivered or
made available to the Partnership. No material default or event of default on
the part of a Contributor or any Affiliate thereof under the provisions of any
of such Leases, and no event that with the giving of notice or passage of time
or both would constitute such default or event of default on the part of such
Contributor, has occurred (which default or event of default has not been
cured). Contributor and its Affiliates have not received any written notice from
any lessor under any Lease, that any material
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default or event of default on the part of Contributor or such Affiliate, as
lessee, under the provisions of any Leases, or that any event that with the
giving of notice or passage of time or both would constitute such a default or
an event of default on the part of Contributor or any such Affiliate, as lessee,
has occurred (which default or event of default has not been cured). To
Contributor's Knowledge, no material default or event of default on the part of
the lessor under the provisions of any of such Leases, and no event that with
the giving of notice or passage of time or both would constitute such default or
event of default on the part of any such lessor, has occurred (which default or
event of default has not been cured).
(c) Contributor or its Affiliates have good title to all of the
personal property constituting Assets (other than the Contributed Intellectual
Property) owned or purported to be owned by it, free and clear of all
Encumbrances, except for liens for Taxes not yet due and payable and such
Encumbrances, if any, that do not in the aggregate materially detract from the
value or materially interfere with the use of the Assets (as they are currently
being used) or as otherwise would not reasonably be expected to have a Material
Adverse Effect.
(d) No Asset is burdened by (i) an Encumbrance that secures an
obligation that is of such a nature that, after the consummation of the
transactions contemplated by this Agreement, (A) will be binding upon or
applicable to a Person other than the Partnership or (B) in the event of a
breach of such obligation by a Person other than the Partnership, would cause
such Asset to be foreclosed upon or otherwise taken from the Partnership or (ii)
an Encumbrance that secures Indebtedness.
2.4 TITLE MATTERS; DEFECTS IN IMPROVEMENTS. To Contributor's Knowledge,
there are no trespassers or other adverse parties in possession on or affecting
the Fee Interests, the Leased Premises or the Leaseholds of Contributor or any
of its Affiliates that would reasonably be expected to have a Material Adverse
Effect. Contributor and its Affiliates have not granted and none of the
foregoing is party to any unrecorded options, rights of refusal, sales contracts
or other such contractual rights to acquire such Fee Interests, Leased Premises
or Leaseholds in favor of any third parties relating to its Fee Interests,
Leased Premises or Leaseholds. No written notice has been received by
Contributor or any of its Affiliates (i) from any insurance company or any
Authority with respect to its Fee Interests, Leased Premises or Leaseholds or by
any board of fire underwriters claiming any material defects or deficiencies or
requiring the performance of any repairs, replacement, alteration or other work
relating to the permanent improvements situated thereon (in each case, which
have not been cured) or (ii) from any other Person making an adverse claim
against the Assets.
2.5 WORKING CAPITAL. Including for this purpose the Specified Working
Capital Items, (a) Contributor has operated the Contributed Business in the
ordinary course of business from June 24, 1998 to the Asset Transfer Effective
Time such that its Inventory, Stores Inventory, Prepaid Expenses, Accounts
Receivable and Trade Accounts Payable, as of the Asset Transfer Effective Time,
are at substantially the same level as would have existed for Contributor
without regard to the transactions contemplated by the Master Transaction
Agreement, and (b) the level of Working Capital of Contributor as of the Asset
Transfer Effective Time is reasonably sufficient to operate the Contributed
Business consistent with current and historical practices.
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2.6 GOVERNMENT LICENSES, PERMITS AND RELATED APPROVALS. The Government
Licenses constitute all those necessary for the normal operation and conduct of
the Contributed Business as it is currently operated and conducted, except where
the failure to have such Government Licenses would not reasonably be expected to
have a Material Adverse Effect.
2.7 ALL NECESSARY ASSETS. Including for this purpose the Excluded
Railcars, the Assets together with the rights under this Agreement and the
Related Agreements constitute all property and other rights necessary to enable
the Partnership to operate and conduct the Contributed Business in substantially
the same manner as it is being operated and conducted on the date of this
Agreement, except in all cases where the failure of the Partnership to acquire
such property or other rights by conveyance or license would not in the
aggregate reasonably be expected to have a Material Adverse Effect.
2.8 CONDUCT OF BUSINESS IN COMPLIANCE WITH REGULATORY AND CONTRACTUAL
REQUIREMENTS. Contributor and its Affiliates are operating and conducting the
Assets and the Contributed Business in compliance with all applicable Legal
Requirements, rights of concession, licenses, know-how or other proprietary
rights of others, the failure to comply with which would reasonably be expected
to have a Material Adverse Effect.
2.9 LEGAL PROCEEDINGS. Schedule 2.9 contains a complete and accurate
list of all current Proceedings to which any of Contributor or its Affiliates is
a party and involving the Assets. There is no Proceeding to which Contributor or
its Affiliates is a party (i) that is pending or, to the Knowledge of
Contributor, threatened, (ii) that relates in any way to the Assets, to the
operation or conduct of the Contributed Business, or to the transactions
contemplated by this Agreement, and (iii) that upon resolution adverse to
Contributor or any of its Affiliates, could reasonably be expected to have a
Material Adverse Effect.
2.10 TAX MATTERS.
(a) There are no Encumbrances for Taxes (other than for current Taxes
not yet due and payable) upon the Assets.
(b) Except for the Indebtedness listed on Schedule 2.10, none of the
Assets directly or indirectly secures any Indebtedness the interest on which is
exempt from federal income taxation under the Code.
(c) The interest on the Indebtedness listed on Schedule 2.10 is exempt
from federal income taxation under the Code.
(d) All tax returns of the Contributed Subsidiary, Canco 1 or Canco 2
that are required by any Legal Requirement to be filed with respect to periods
ending on or prior to the Asset Transfer Effective Time have been timely filed,
and all Taxes required to be paid for the periods covered by such tax returns or
related to such tax returns have been timely paid in full by or on behalf of the
Contributed Subsidiary, Canco 1 or Canco 2.
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(e) There are no Proceedings pending against Contributor, Geon LP, the
Contributed Subsidiary, Canco 1 or Canco 2 or any of their respective Affiliates
with respect to any Taxes due from the Contributed Subsidiary, Canco 1 or Canco
2 or for which the Contributed Subsidiary, Canco 1 or Canco 2 may be liable.
(f) None of Contributor, Geon LP, the Contributed Subsidiary, Canco 1
or Canco 2 or any of their respective Affiliates has any outstanding agreement,
waiver or arrangement (i) extending the statute of limitations with respect to
Taxes due from any such party or (ii) agreeing to any extension of time with
respect to any Tax assessment or deficiency for any taxable period for which the
Contributed Subsidiary, Canco 1 or Canco 2 may be liable. There have been no
issues raised in any audit or assessment of Contributor, Geon LP, the
Contributed Subsidiary, Canco 1 or Canco 2 or any of their respective Affiliates
that may result in the Contributed Subsidiary, Canco 1 or Canco 2 being liable
for any Taxes.
(g) There are no overall foreign losses associated with the Contributed
Subsidiary.
2.11 HSE MATTERS. Except as would not be reasonably likely to have a
Material Adverse Effect:
(a) (i) The Fee Interests, the Leased Premises and the operations of
Contributor and its Affiliates in connection with the Assets are in compliance
with all HSE Laws and (ii) to the extent arising out of Contributor's or its
Affiliates' ownership, use or operation of the Assets, there are no Chemical
Substances held, located, released, generated, treated, stored or disposed of
on, under or from such Fee Interests or such Leased Premises or in, on or from
any fixtures or permanent improvements thereon or transported, disposed or
arranged for transport or disposal offsite such Fee Interests or such Leased
Premises in excess or in contravention of any standard prescribed or permitted
by any HSE Laws or that require corrective or other action pursuant to the
provisions of any HSE Laws.
(b) Since May 1, 1993, Contributor and its Affiliates have not received
any written notice from any Authority, or any comparable written claim or notice
from any other Person, naming Contributor or its Affiliates as a potentially
responsible party, or otherwise notifying Contributor or any of its Affiliates
of any potential liability under any HSE Law that relates in any way to any
Chemical Substances stored or disposed on or under or generated by or derived or
transported from the operations on the Fee Interests, or the Leased Premises of
Contributor or any of its Affiliates, regardless of whether the events that gave
rise to such claim or notice allegedly occurred before or after May 1, 1993.
(c) Contributor and its Affiliates, as applicable, have been, since May
1, 1993, and are in compliance with all permits, licenses, approvals,
permission, or authorizations necessary for its operations in connection with
the Contributed Business to comply in all respects with then applicable HSE Laws
and all such permits, licenses, approvals, permission, and authorizations have
been issued and are in full force and effect.
(d) (i) Contributor and its Affiliates have not received written notice
of any actual, pending, threatened or potential Proceedings of any kind in
connection with the Contributed
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Business and HSE Laws, Product Exposure Claims or Exposure Claims (including
exposure of any Person or the Environment to any Chemical Substances) ("HSE
Proceedings") and (ii) Contributor and its Affiliates have no Knowledge of any
facts, events or occurrences that are reasonably expected to result in any HSE
Proceedings being brought.
(e) Contributor and its Affiliates are not parties to, or subject to,
the terms of, any consent order, consent judgment, consent decree, court or
administrative order or judgment, agreement, schedule, or decree issued by any
Authority with respect to any HSE Proceedings.
(f) There are no underground storage tanks owned or operated by
Contributor and its Affiliates in, on, or under the Fee Interests or Leased
Premises, and Contributor and its Affiliates have no Knowledge of such tanks
that were previously located thereon that have since been removed or abandoned
in place.
2.12 CONTRIBUTED SUBSIDIARIES. As of the time immediately after the
consummation of the Closing: (i) the Partnership is the record and beneficial
owner of all of the issued and outstanding shares of capital stock of the
Contributed Subsidiary, and the Contributed Subsidiary is the record and
beneficial owner of all of the issued and outstanding shares of capital stock of
Canco 2, in each case free and clear of any Encumbrances or limitations on the
voting or transfer thereof; (ii) there are no subscriptions, options to
purchase, rights of refusal, rights of first offer, conversion or exchange
rights, warrants, preemptive rights or other agreements, claims or commitments
of any kind obligating the Contributed Subsidiary or Canco 2 to issue, transfer,
deliver or sell shares of the capital stock or other securities of, or interests
in, the Contributed Subsidiary or Canco 2 or obligating the Contributed
Subsidiary or Canco 2 to grant, extend or enter into any such agreement or
commitment; (iii) the Contributed Subsidiary has no assets other than all of the
issued and outstanding shares of capital stock of Canco 2, and has no
Liabilities, whether accrued, contingent or otherwise, and whether due or to
become due; and (iv) Canco 2 has no Liabilities, whether accrued, absolute,
contingent or otherwise, and whether due or to become due, other than (a) the
Liabilities assumed by Canco 1 pursuant to the Geon Canada Transfer Agreement
and (b) the Canco Lending Liability, if any.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF THE PARTNERSHIP
-------------------------------------------------
The Partnership represents and warrants to Contributor as follows:
3.1 DUE ORGANIZATION; GOOD STANDING AND POWER. The Partnership is a
limited partnership duly formed and validly existing under the laws of the State
of Delaware. The Partnership has all partnership power and authority to enter
into this Agreement and the other Related Agreements and to perform its
obligations hereunder and thereunder. The Partnership is duly authorized,
qualified or licensed to do business as a foreign partnership, in each of the
jurisdictions in which its right, title or interest in or to any asset, or the
conduct of its business, requires such authorization, qualification or
licensing, except where the failure to so qualify would not have a material
adverse effect on the ability of the Partnership to perform its obligations
hereunder or under the Assignment and Assumption Agreements.
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3.2 AUTHORIZATION AND VALIDITY OF AGREEMENT. The execution, delivery
and performance of this Agreement and the other Related Agreements by the
Partnership and the consummation by the Partnership of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
partnership action on the part of the Partnership. No other partnership action
is necessary for the authorization, execution, delivery and performance by the
Partnership of this Agreement and the Related Agreements and the consummation by
the Partnership of the transactions contemplated hereby or thereby. This
Agreement and the Related Agreements have been duly executed and delivered by
the Partnership and constitute legal, valid and binding obligations of the
Partnership, enforceable in accordance with their terms, except as the same may
be limited by bankruptcy, insolvency, reorganization, moratorium and other laws
relating to or affecting creditors' rights generally and by general equity
principles.
3.3 NO CONSENTS REQUIRED; NO CONFLICT WITH INSTRUMENTS TO WHICH THE
PARTNERSHIP IS A PARTY. The execution, delivery and performance of this
Agreement and the Related Agreements by the Partnership and the consummation by
it of the transactions contemplated hereby and thereby (i) will not require any
Consent except for such Consents the failure of which to be obtained or made,
would not in the aggregate reasonably be expected to have a Material Adverse
Effect on the Partnership's ability to perform its obligations hereunder or
thereunder, and (ii) will not violate (with or without the giving of notice or
the lapse of time or both), conflict with, or result in the breach or
termination of any provision of, or constitute a default under, or result in the
acceleration of the performance of the obligations of the Partnership under, the
Limited Partnership Agreement of the Partnership, or any indenture, mortgage,
deed of trust, lease, licensing agreement, contract, instrument or other
agreement to which the Partnership is a party or by which the Partnership or any
of its assets or properties is bound, except for such violations, conflicts,
breaches, terminations, defaults, accelerations or liens which would not in the
aggregate reasonably be expected to have a material adverse effect on the
Partnership's ability to perform its obligations hereunder or thereunder.
SECTION 4
COVENANTS SUBSEQUENT TO CLOSING DATE
------------------------------------
4.1 ACCESS TO INFORMATION. Following the Closing Date, the Partnership
shall afford, and will cause its Affiliates to afford, to Contributor, its
counsel, accountants and other authorized representatives, during normal
business hours, reasonable access to the books, records and other data of the
Contributed Business with respect to the period prior to the Asset Transfer
Effective Time (and any personnel familiar therewith) to the extent that such
access may be reasonably required by Contributor to facilitate (i) the
preparation by Contributor or its Affiliates of such tax returns as it may be
required to file with respect to the operations of the Assets and the
Contributed Business or in connection with any audit, amended return, claim for
refund or any proceeding with respect thereto, (ii) the investigation,
litigation and final disposition of any claims which may have been or may be
made against Contributor or its Affiliates in connection with the Assets or the
Contributed Business, (iii) the payment of any amount in connection with any
liabilities or obligations which have not been assumed by the Partnership under
this Agreement, (iv) the preparation by Contributor or its Affiliates of
financial statements and reports, and (v) for any other reasonable business
purpose. For a period of ten years after the date of this Agreement, the
Partnership will not dispose of, alter or destroy any such books, records and
other data without giving 90 days' prior notice to
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Contributor to permit it, at its expense, to examine, duplicate or repossess
such records, files, documents and correspondence. Without limiting the
foregoing, Contributor shall cooperate fully in the preparation of the balance
sheets, statements of income and retained earnings and statements of cash flow
of the Contributed Business and shall provide access to financial books and
records and all such information as may be reasonably requested by OCC or any of
its Affiliates, in connection with the satisfaction of disclosure requirements
under the federal securities laws, any Legal Requirement or as may otherwise be
appropriate or necessary.
4.2 MAIL OR OTHER COMMUNICATIONS. Contributor authorizes and empowers
the Partnership on and after the Closing Date to receive and open all mail
received by the Partnership relating to the Contributed Business or the Assets
and to deal with the contents of such communications in any proper manner.
Contributor shall promptly deliver to the Partnership any mail or other
communication received by it on and after the Closing Date pertaining to the
Contributed Business or the Assets and any cash, checks or other instruments of
payment to which the Partnership is entitled. The Partnership shall promptly
deliver to Contributor any mail or other communication received by it after the
Closing Date pertaining to the Excluded Assets or liabilities not assumed by the
Partnership, and any cash, checks or other instruments of payment in respect of
such.
4.3 ASSET TRANSFER EFFECTIVE TIME BALANCE SHEET. Not later than 60 days
after the Closing Date, Contributor shall cause its independent accountants to
prepare and deliver to Contributor and the Partnership a consolidated audited
balance sheet of the Contributed Business and the Transferred Business as of the
Asset Transfer Effective Time (the "Asset Transfer Effective Time Balance
Sheet"). The Asset Transfer Effective Time Balance Sheet shall be prepared in
accordance with GAAP, consistent with past practices. In addition, Contributor
shall prepare and deliver to the Partnership such other financial statements or
information as the Partnership may reasonably request in connection with any
proposed Partnership financing.
4.4 INSURANCE CLAIMS. From and after the Closing Date, Contributor and
the Partnership shall each cooperate in making information available to the
other to assist the other in preparing and filing any insurance claims relating
to occurrences prior to the Asset Transfer Effective Time and pertaining to the
Contributed Business. From and after the Closing Date, Contributor shall not be
required to maintain any policy, binder or contract of insurance that provides
coverage for Contributor, any of its Affiliates or the Assets and covers the
Assets or the Contributed Business. Contributor or its representatives may,
after the Closing Date, cancel any such policy, binder or contract of insurance
that covers the Assets or the Contributed Business by issuing a cancellation
notice with respect to such policies owned by Contributor.
4.5 SPECIAL COVENANT. Contributor agrees to use all reasonable efforts
to obtain as soon as practicable the approval from, or other agreement with, B.
F. Goodrich Company as contemplated by Schedule 4.3(g) to the Master Transaction
Agreement, all at the sole cost and expense of Contributor.
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SECTION 5
SURVIVAL AND INDEMNIFICATION
----------------------------
5.1 SURVIVAL LIMITATIONS. The representations and warranties of the
parties hereto contained in this Agreement or in any certificate or other
writing delivered pursuant hereto or in connection herewith shall survive until
the date that is 24 months after the Asset Transfer Effective Time, except for
the representations and warranties contained in (i) Section 2.10, which shall
survive until the expiration of the applicable statute of limitations, (ii)
Sections 2.3 and 2.4, which shall survive until the date that is ten years after
the Asset Transfer Effective Time and shall not be merged with the Assignment
and Assumption Agreements, and (iii) Section 2.12, which shall survive without
limitation. No action can be brought with respect to any breach of any
representation or warranty (except with respect to Section 2.12) pursuant to
this Agreement unless a written notice that complies with Section 5.3 has been
delivered pursuant to such Section 5.3 prior to the expiration of the survival
period applicable to such representation or warranty; PROVIDED that upon the
giving of such notice, notwithstanding any other provision of this Agreement,
the representation and warranty that is the basis of such action shall continue
only with respect to such action beyond the time at which the representation and
warranty would otherwise terminate, and only until the resolution of such action
pursuant to this Agreement.
5.2 INDEMNIFICATION.
(a) Subject to the other provisions of this Section 5, Contributor
hereby agrees, to the fullest extent permitted by applicable law, to indemnify,
defend and hold harmless the Partnership, its partners, their Affiliates and
their respective officers, directors and employees from, against and in respect
of any losses, claims, damages, fines, penalties, assessments by public
agencies, settlement, cost or expenses (including costs of defense and
attorneys' fees) and other liabilities (any of the foregoing being a
"Liability") incurred or suffered by such indemnitees arising out of, in
connection with or relating to:
(i) Any misrepresentation in or breach of the representations
and warranties of Contributor or any of its Affiliates in this
Agreement, the Assignment and Assumption Agreements, the Master
Intellectual Property Agreement, or the Master Transaction Agreement,
PROVIDED that any Liability arising out of, in connection with or
relating to any breach of the warranties in any Assignment and
Assumption Agreement that is not a breach of the warranties in this
Agreement shall not be indemnified against pursuant to this Section 5;
(ii) Any failure of Contributor or any of its Affiliates to
perform any of its covenants or obligations contained in this
Agreement, the Assignment and Assumption Agreements, the Master
Intellectual Property Agreement, or the Master Transaction Agreement;
(iii) Any obligation or liability relating to the Excluded
Assets;
(iv) Any Exposure Claim;
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(v) Any Product Exposure Claim that is not an Assumed
Liability;
(vi) Any HSE Claim that is related to a Pre-Closing Liability
and that is not an Assumed Liability;
(vii) Any Third Party Claim (other than Exposure Claims,
Product Exposure Claims and HSE Claims) that is related to a
Pre-Closing Liability and that is not an Assumed Liability;
(viii) Any obligation (A) for the payment of severance
benefits to employees of Contributor or any of its Affiliates except as
set forth in Section 1.7, (B) attributable to Contributor's or any of
its Affiliates' employment of any employee, agent or independent
contractor prior to the Asset Transfer Effective Time or (C) assumed by
Contributor and its Affiliates pursuant to Section 1.7;
(ix) Any Taxes of Contributor, Contributed Subsidiary, Canco
1, Canco 2 or Geon LP for any taxable period or portion thereof ending
before the Asset Transfer Effective Time or arising from any of the
transactions contemplated by this Agreement, except to the extent
otherwise provided in Sections 6.2(c) and (d); or
(x) any Proceeding instituted or asserted against the
Partnership by any Person (A) that arises, directly or indirectly, as a
result of the parcels identified as "Assigned Area C" and "Assigned
Area D" on the survey of Contributor's Pedricktown, New Jersey facility
(collectively, the "Parcels") not being owned by Contributor, but
instead being owned by B.F. Goodrich Company or (B) to prevent,
prohibit, or place a material restriction upon the Partnership from
utilizing the Parcels in connection with its operation of the
Contributed Business.
PROVIDED, HOWEVER, that the following provisions shall apply to the
indemnification obligations of Contributor:
(A) Contributor, in the aggregate, shall not have any
indemnification obligation under clause (i) above for any individual
Liability (I) unless the amount of such Liability exceeds $100,000 (the
"Individual Basket") (it being understood that all Liabilities arising
from the same event, condition or set of circumstances shall be
considered as an individual Liability for purposes of such calculation)
and (II) until the total of all Liabilities under said clause (i)
equals an aggregate deductible of $500,000 (the "Deductible") (after
which point, subject to clause (I) above, Contributor will be obligated
to indemnify the Partnership and the other indemnitee against such
further Liabilities); and PROVIDED, FURTHER, that the parties agree
that the amount of Liability for which indemnification may be sought
for breach of any representation or warranty under clause (i) above
shall be calculated taking into account the Individual Basket and
Deductible but without regard to any qualification or exception
regarding materiality or Material Adverse Effect qualification
contained in such representation or warranty (it being understood that
such materiality or Material Adverse Effect qualifications shall apply
for purposes of determining whether there has been such a breach in the
first place, but once it has been established that there is such a
breach, the
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Partnership and the other indemnitee shall be entitled to indemnity
relating back to the first dollar, subject to the Individual Basket and
Deductible); and PROVIDED, FURTHER, that this clause (A) shall not be
applicable to a misrepresentation in or a breach of the representations
and warranties in Section 2.3(d)(ii).
(B) If Contributor is indemnifying against a particular
Liability under two or more of clauses (i) - (x) above, the Partnership
and the other indemnitee shall have the right to select the clause or
clauses under which they seek indemnification; PROVIDED, that the
aggregate indemnification shall in no event exceed the amount of the
particular Liability.
(b) NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, TO THE
FULLEST EXTENT PERMITTED BY LAW, EXCEPT FOR CLAIMS ARISING SOLELY UNDER SECTION
5.2(a)(x), NEITHER CONTRIBUTOR NOR ANY OF ITS AGENTS, EMPLOYEES, REPRESENTATIVES
OR AFFILIATES SHALL BE LIABLE FOR CONSEQUENTIAL, INCIDENTAL, INDIRECT, PUNITIVE,
EXEMPLARY, SPECIAL OR OTHER SIMILAR DAMAGES IN CONNECTION WITH DIRECT CLAIMS BY
AN INDEMNIFIED PARTY (I.E., A CLAIM BY AN INDEMNIFIED PARTY THAT DOES NOT SEEK
REIMBURSEMENT FOR A THIRD PARTY CLAIM PAID OR PAYABLE BY SUCH INDEMNIFIED PARTY)
WITH RESPECT TO THEIR INDEMNIFICATION OBLIGATIONS UNDER THIS AGREEMENT UNLESS
ANY SUCH CLAIM ARISES OUT OF THE FRAUDULENT ACTIONS OF CONTRIBUTOR OR ANY OF ITS
AFFILIATES. IN DETERMINING THE AMOUNT OF ANY LOSS, LIABILITY, OR EXPENSE FOR
WHICH AN INDEMNIFIED PARTY IS ENTITLED TO INDEMNIFICATION UNDER THIS AGREEMENT,
THE GROSS AMOUNT THEREOF WILL BE REDUCED (BUT NOT BELOW ZERO) BY THE NET PRESENT
VALUE OF ANY CORRELATIVE INSURANCE PROCEEDS ACTUALLY REALIZED BY SUCH
INDEMNIFIED PARTY UNDER POLICIES TO THE EXTENT THAT THE FUTURE PREMIUM RATE WILL
NOT BE INCREASED BY CLAIM EXPERIENCE RELATING TO SUCH LOSS, LIABILITY OR
EXPENSE.
(c) Notwithstanding the provisions of this Section 5 to the contrary,
it is expressly agreed that Contributor shall not be required to indemnify the
Partnership and the other indemnitee for any Liability arising out of, in
connection with or related to any HSE Claim to the extent that the action,
condition, event, circumstance or other basis for the HSE Claim was exacerbated
or accelerated by the Partnership. The Partnership shall not be deemed to have
exacerbated an action, condition, event, circumstance or other basis for an HSE
Claim by reason of the continuance thereof after the Asset Transfer Effective
Time (i) under circumstances where the Partnership does not know of its
existence and has not breached any affirmative legal duty to have conducted an
investigation or inquiry that would have uncovered the matter or (ii) under
circumstances where the Partnership does know of its existence but is taking
commercially reasonable actions to cure the matter or to otherwise achieve
compliance in a commercially reasonable and prudent manner. By way of example,
and not by way of limitation, the following actions by the Partnership shall not
be deemed to be exacerbation or acceleration of any HSE Claim or any condition,
event, circumstance or other basis therefor:
(A) any action required to comply with Legal
Requirements or with any Contracts with third parties;
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(B) any action that, in the Partnership's reasonable
judgment, is necessary to be taken in emergencies or in order
to protect human health and safety from any imminent and
substantial endangerment;
(C) any investigation, or any report to any
Authority, directly resulting from repair or maintenance
activities necessary to the continued operation of the Assets
or from the replacement, relocation, demolition, closure or
expansion of buildings, structures, fixtures or other
improvements on or appurtenant to the Fee Interests or the
Leaseholds (where there was no reasonably practicable
alternative, in the reasonable judgment of the Partnership, to
effecting such replacement, relocation, demolition, closure or
expansion in the place and manner in which it was effected),
which investigation or report is required pursuant to HSE
Laws, including waste classification or characterization and
reports of Releases or the presence of Chemical Substances, if
such discovery is made in the ordinary course of such
activities;
(D) periodic compliance or management system audits
conducted in the ordinary course of business, including any
OSHA Star or IS 14000 audits;
(E) responding to an inquiry, inspection, request for
information or other communication from an Authority,
regardless of whether a subpoena or other Legal Requirement
mandates a response;
(F) responding to an inquiry, request for information
or other communication from a third party, regardless of
whether a subpoena or other Legal Requirement mandates a
response, and providing information to a community advisory
panel or the public;
(G) filing or processing applications for issuance,
renewal, modification, amendment or termination of Government
Licenses and providing information to an Authority or other
third party in connection therewith; or
(H) participating in or communicating with a group of
potentially responsible parties involved in a Remedial Action,
regardless of whether a subpoena or other Legal Requirement
mandates such participation or communication, if the
Partnership believes in good faith that such participation or
communication may reduce any Liability associated with such
Remedial Action.
(d) Subject to the other provisions of this Section 5, the Partnership
hereby indemnifies, to the fullest extent permitted by applicable law,
Contributor and its Affiliates, officers, directors and employees against and
agrees to hold each of them harmless from any and all Liability incurred or
suffered by such indemnitee arising out of or relating to:
(i) Any misrepresentation in or breach of the representations
and warranties of the Partnership or the failure of the Partnership to
perform any of its covenants or obligations
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contained in this Agreement, the Assignment and Assumption Agreements,
the Master Intellectual Property Agreement or the Master Transaction
Agreement;
(ii) Assumed Liabilities; or
(iii) Any HSE Claim to the extent arising out of the
Partnership's exacerbation or acceleration of such HSE Claim.
(e) NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, TO THE
FULLEST EXTENT PERMITTED BY LAW, NEITHER THE PARTNERSHIP NOR ANY OF ITS AGENTS,
EMPLOYEES, REPRESENTATIVES OR AFFILIATES SHALL BE LIABLE FOR CONSEQUENTIAL,
INCIDENTAL, INDIRECT, PUNITIVE, EXEMPLARY, SPECIAL OR OTHER SIMILAR DAMAGES IN
CONNECTION WITH DIRECT CLAIMS BY AN INDEMNIFIED PARTY (I.E., A CLAIM BY AN
INDEMNIFIED PARTY THAT DOES NOT SEEK REIMBURSEMENT FOR A THIRD PARTY CLAIM PAID
OR PAYABLE BY SUCH INDEMNIFIED PARTY ) WITH RESPECT TO THEIR INDEMNIFICATION
OBLIGATIONS UNDER THIS AGREEMENT UNLESS ANY SUCH CLAIM ARISES OUT OF THE
FRAUDULENT ACTIONS OF THE PARTNERSHIP. IN DETERMINING THE AMOUNT OF ANY LOSS,
LIABILITY, OR EXPENSE FOR WHICH AN INDEMNIFIED PARTY IS ENTITLED TO
INDEMNIFICATION UNDER THIS AGREEMENT, THE GROSS AMOUNT THEREOF WILL BE REDUCED
(BUT NOT BELOW ZERO) BY THE NET PRESENT VALUE OF ANY CORRELATIVE INSURANCE
PROCEEDS ACTUALLY REALIZED BY SUCH INDEMNIFIED PARTY UNDER POLICIES TO THE
EXTENT THE FUTURE PREMIUM RATE WILL NOT BE INCREASED BY CLAIM EXPERIENCE
RELATING TO SUCH LOSS, LIABILITY OR EXPENSE.
(f) NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, CONTRIBUTOR
AND GEON LP MAKE NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, AND THERE
ARE NO EXPRESS OR IMPLIED CONDITIONS, AS TO THE FOLLOWING MATTERS: THE
MAINTENANCE, REPAIR, DESIGN OR MARKETABILITY OF THE TANGIBLE PERSONAL PROPERTY
AND FIXTURES THAT CONSTITUTE PART OF THE CONTRIBUTED BUSINESS OR ASSETS,
INCLUDING ANY REPRESENTATION OR WARRANTY AS TO MERCHANTABILITY OR FITNESS FOR
ANY PARTICULAR PURPOSE OF SUCH TANGIBLE PERSONAL PROPERTY AND FIXTURES, IT BEING
EXPRESSLY UNDERSTOOD AND AGREED BY THE PARTIES HERETO THAT THE PARTNERSHIP SHALL
BE DEEMED TO BE OBTAINING RIGHTS IN SUCH TANGIBLE PERSONAL PROPERTY AND FIXTURES
IN THE PRESENT STATE OF REPAIR OF SUCH TANGIBLE PERSONAL PROPERTY AND FIXTURES,
"AS IS, WHERE IS, AND WITH ALL FAULTS."
(g) The rights provided to each Indemnified Party pursuant to this
Section 5, as limited by and subject to the provisions of this Section 5, shall
be such Indemnified Party's sole remedy for breach of any representation or
warranty by or covenant or obligation of any Indemnifying Party under this
Agreement, the Assignment and Assumption Agreements, the Master Intellectual
Property Agreement and the Master Transaction Agreement, or arising in
connection with or related in any way to the subject matter of this Agreement or
such agreements. Each Indemnified Party
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hereby waives and relinquishes any other rights, remedies, causes of action or
other claims in respect of any such breach, including equitable and common law
rights and rights created by statute, that such Indemnified Party would
otherwise have for any such breach or with respect to this Agreement or such
agreements or any Liability arising from, in connection with or related to the
subject matter of this Agreement, including any such Liability arising from, in
connection with or related to HSE Laws.
5.3 PROCEDURES.
(a) Any Person seeking indemnification under Section 5.2 (the
"Indemnified Party") agrees to give prompt written notice to the party against
whom indemnity is sought (the "Indemnifying Party") of the assertion of any
claim that does not involve a Third Party Claim, which notice shall describe in
reasonable detail the nature of the claim, an estimate of the amount of damages
attributable to such claim to the extent feasible and the basis of the
Indemnified Party's request for indemnification under this Agreement. If the
Indemnifying Party disputes such claim and such dispute is not resolved by the
parties, such dispute shall be resolved in accordance with Section 6.8.
(b) If an Indemnified Party is notified of a Third Party Claim that may
give rise to a claim for indemnification against any Indemnifying Party under
this Section, then the Indemnified Party shall promptly notify each Indemnifying
Party thereof in writing (including copies of all papers served with respect to
such Third Party Claim), which notice shall describe in reasonable detail the
nature of the Third Party Claim, an estimate of the amount of damages
attributable to the Third Party Claim to the extent feasible and the basis of
the Indemnified Party's request for indemnification under this Agreement;
PROVIDED that any failure to timely give such notice shall not relieve the
Indemnifying Party of any of its obligations under this Section 5 except to the
extent that such failure prejudices or impairs, in any material respect, any of
the rights or obligations of the Indemnifying Party.
(c) Any Indemnifying Party may, and at the request of the Indemnified
Party shall, participate in and control the defense of the Third Party Claim
with counsel of its choice reasonably satisfactory to the Indemnified Party. The
Indemnified Party shall have the right to employ separate counsel in any such
action and to participate in the defense thereof, but the fees and expenses of
such counsel shall be at the expense of the Indemnified Party unless (i) the
employment thereof has been specifically authorized in writing by the
Indemnifying Party, (ii) the Indemnifying Party failed to assume the defense and
employ counsel or failed to diligently prosecute or settle the Third Party Claim
or (iii) there shall exist or develop a conflict that would ethically prohibit
counsel to the Indemnifying Party from representing the Indemnified Party. If
requested by the Indemnifying Party, the Indemnified Party agrees to cooperate
with the Indemnifying Party and its counsel in contesting any Third Party Claim
that the Indemnifying Party elects to contest, including by making any
counterclaim against the Person asserting the Third Party Claim or any
cross-complaint against any Person, in each case only if and to the extent that
any such counterclaim or cross-complaint arises from the same actions or facts
giving rise to the Third Party Claim. The Indemnifying Party shall be the sole
judge of the acceptability of any compromise or settlement of any claim,
litigation or proceeding in respect of which indemnity may be sought hereunder,
PROVIDED that the Indemnifying Party will give the Indemnified Party reasonable
prior written notice of any such
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proposed settlement or compromise and will not consent to the entry of any
judgment or enter into any settlement with respect to any Third Party Claim
without the prior written consent of the Indemnified Party, which shall not be
unreasonably withheld; and PROVIDED FURTHER that the Indemnifying Party will
not, without the written consent of the Indemnified Party, consent to the entry
of any judgment or enter into any settlement that (A) does not provide for the
unconditional written release of, or final resolution of, Liability of the
Indemnified Party with respect to such Third Party Claim, or (B) places any
obligations, other than payment obligations fully indemnified by the
Indemnifying Party under this Agreement, on the Indemnified Party or on or
relating to the Assets. The Indemnifying Party (if the Indemnified Party is
entitled to indemnification hereunder) shall reimburse the Indemnified Party for
its reasonable out of pocket costs incurred with respect to such cooperation.
(d) If the Indemnifying Party fails to assume the defense of a Third
Party Claim within a reasonable period after receipt of written notice pursuant
to the first sentence of Section 5.3(a) or (b), or if the Indemnifying Party
assumes the defense of the Indemnified Party pursuant to Section 5.3(c) but
fails diligently to prosecute or settle the Third Party Claim, then the
Indemnified Party shall have the right to defend, at the sole cost and expense
of the Indemnifying Party, including interest from the date any sum is so
expended by the Indemnified Party at a rate calculated pursuant to Section
13.16(b) of the Limited Partnership Agreement of the Partnership (if the
Indemnified Party is entitled to indemnification hereunder), the Third Party
Claim by all appropriate proceedings, which proceedings shall be promptly and
vigorously prosecuted by the Indemnified Party to a final conclusion or settled.
The Indemnified Party shall have full control of such defense and proceedings;
PROVIDED that the Indemnified Party shall not settle such Third Party Claim
without the written consent of the Indemnifying Party, which consent shall not
be unreasonably withheld; and PROVIDED FURTHER, that the Indemnified Party will
not, without the written consent of the Indemnifying Party, consent to the entry
of any judgment or enter into any settlement that (i) does not provide for the
unconditional written release of, or final resolution of, Liability of the
Indemnifying Party with respect to such Third Party Claim, or (ii) places any
obligations, other than payment obligations fully indemnified by the
Indemnifying Party under this Agreement, on the Indemnifying Party or on or
relating to the Assets. The Indemnifying Party may participate in, but not
control, any defense or settlement controlled by the Indemnified Party pursuant
to this Section, and the Indemnifying Party shall bear its own costs and
expenses with respect to such participation.
(e) Notwithstanding the other provisions of this Section 5.3, if the
Indemnifying Party disputes its potential liability to the Indemnified Party
under this Section 5.3 and if such dispute is resolved in favor of the
Indemnifying Party, the Indemnifying Party shall not be required to bear the
costs and expenses of the Indemnified Party's defense pursuant to this Section
5.3 or of the Indemnifying Party's participation therein at the Indemnified
Party's request, and the Indemnified Party shall reimburse the Indemnifying
Party in full for all costs and expenses of the litigation concerning such
dispute. If a dispute over potential liability is resolved in favor of the
Indemnified Party, the Indemnifying Party shall reimburse the Indemnified Party
in full for all costs of the litigation concerning such dispute, together with
interest as provided in Section 5.3(d).
(f) After it has been determined, by acknowledgment, agreement, or
ruling of court of law, that an Indemnifying Party is liable to the Indemnified
Party under this Section 5, the Indemnifying Party shall pay or cause to be paid
to the Indemnified Party the amount of the Liability
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within ten business days of receipt by the Indemnifying Party of a notice
reasonably itemizing the amount of the Liability but only to the extent actually
paid or suffered by or on behalf of the Indemnified Party.
(g) In the event a Third Party Claim is brought in which both the
Partnership and Contributor are alleged to be liable or the liability as between
the Partnership and Contributor is alleged to be joint, or in which the
entitlement to indemnification under this Section 5 has not been determined, the
Partnership and Contributor shall cooperate in the joint defense of such Third
Party Claim and shall offer to each other such assistance as may reasonably be
requested in order to ensure the proper and adequate defense of any such matter.
Such joint defense shall be under the general management and supervision of the
party that is expected to bear the greater share of the liability, unless
otherwise agreed; PROVIDED, HOWEVER, that neither party shall settle or
compromise any such joint defense matter without the consent of the other, which
consent shall not be unreasonably withheld or delayed. Any uninsured costs of
such joint defense shall be borne as the parties may agree, PROVIDED, HOWEVER,
that in the absence of such agreement, the defense costs shall be borne by the
party incurring such costs; PROVIDED, FURTHER, that, if it is determined that
one party was entitled to indemnification under this Section 5, the other party
shall reimburse the party entitled to indemnification for all of its costs
incurred in connection with such defense.
5.4 SUBROGATION. In the event of any payment by an Indemnifying Party
to an Indemnified Party in connection with any Liability, the Indemnifying Party
shall be subrogated to and shall stand in the place of the Indemnified Party as
to any events or circumstances in respect of which the Indemnified Party may
have any right or claim against any third party relating to such event or
indemnification, but only to the extent of any such payment. The Indemnified
Party shall cooperate with the Indemnifying Party in any reasonable manner in
prosecuting any subrogated claim.
5.5 CLAIMS FOR HSE REMEDIAL ACTION. This Section 5.5 shall govern the
interpretation of the indemnification obligations under Sections 5.2(a)(vi) and
5.2(d)(iii) in respect of any HSE Claim requiring the performance of
investigatory, removal or remedial work, correction of noncompliance or other
corrective action (but not the payment of money other than to third parties
performing such investigatory, removal or remedial work, correction of
noncompliance or other corrective action) by or on behalf of the Partnership or
Contributor ("Remedial Action") for which the Partnership or Contributor,
respectively, may seek indemnification (an "HSE Remedial Action Claim") from the
other, regardless of whether such HSE Claim is an HSE Type A Claim or an HSE
Type B Claim. Notwithstanding the other provisions of this Section 5:
(a) In the case of an HSE Remedial Action Claim, the Partnership shall
have the right to conduct and control such Remedial Action; PROVIDED, that the
Partnership provides Contributor with the opportunity to: (i) review and comment
to the Partnership upon any significant work plans for such Remedial Action
prior to finalization and implementation; (ii) attend meetings with Authorities
concerning such Remedial Action, PROVIDED that the Partnership will control the
negotiations with any Authorities during such meetings; and (iii) have a
representative present during the performance of such Remedial Action.
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(b) Contributor and the Partnership agree that Contributor shall have
no obligation pursuant to Section 5.2(a)(vi) to indemnify against any HSE
Remedial Action Claim unless the Remedial Action for which the Partnership is
seeking indemnification was or will be undertaken as a result of the
Partnership's discovery or receipt of notice of (i) with respect to an HSE Type
B Claim, any noncompliance with HSE Laws, (ii) with respect to an HSE Type A
Claim, the presence, Release or threatened Release of Chemical Substances on or
before the Asset Transfer Effective Time at levels in excess or in contravention
of any applicable level or standard of any HSE Law applicable to such Remedial
Action or any levels set forth in the EPA Region III Risk-Based Concentration
Table (or any replacement or modification thereof) for water, ambient air or
soil (as applicable) as in effect on the date of such Remedial Action
(collectively, the "Threshold Level"), (iii) with respect to an HSE Type A
Claim, any requirement of any HSE Law or any agreement with a third party who
has asserted an HSE Claim, or (iv) any imminent and substantial endangerment to
human health and safety.
(c) Contributor and the Partnership agree that any Remedial Action to
be undertaken pursuant to this Section 5.5 for which either party may seek
indemnification shall: (i) be the Lowest Cost Response under the circumstances
and based on the assumption that the Fee Interests and the Leaseholds are and
will continue to be used for industrial (as opposed to residential) purposes,
unless (A) any HSE Law applicable to such Remedial Action requires a different
land use assumption (e.g., residential) or (B) the Lowest Cost Response would
result from a different land use assumption; (ii) not, unless required to
achieve the Lowest Cost Response, exceed the least stringent requirements of all
HSE Laws and agreements with third parties who have asserted an HSE Claim; and
(iii) be conducted and completed in compliance in all material respects with all
HSE Laws. To the extent that the Partnership elects to exceed the Lowest Cost
Response in undertaking a Remedial Action that is the subject of an HSE Remedial
Action Claim, Contributor's obligation under Section 5.2(a)(vi) shall be limited
to the Lowest Cost Response, and the Partnership shall be responsible for any
costs associated with exceeding the Lowest Cost Response.
(d) Each of Contributor and the Partnership agrees that it shall not
solicit or importune any Authority to require any Remedial Action for which it
may seek indemnification unless (i) required by any HSE Law or agreement with a
third party who has asserted an HSE Claim, (ii) an HSE Law or Threshold Level
has been contravened or exceeded or (iii) such Remedial Action, in the
Partnership's reasonable judgment, is necessary in order to protect human health
and safety from any imminent and substantial endangerment, PROVIDED, that in the
event a Threshold Level has been contravened or exceeded, the Partnership may
undertake any Remedial Action under any applicable self-directed or voluntary
cleanup program. Nothing in this Section 5 shall prevent Contributor or the
Partnership from reporting any noncompliance or potential noncompliance with any
HSE Law, or any Release, threatened Release or the discovery or presence of any
Chemical Substance to any Authority, or from seeking written approval or
certification from such Authority that Contributor or the Partnership has
completed any Remedial Action regarding an HSE Remedial Action Claim, if, in
each case, Contributor or the Partnership believes in good faith that such
reporting is (A) required by any HSE Law or any agreement with a third party who
has asserted an HSE Claim, (B) necessary to achieve the Lowest Cost Response or
(C) necessary to receive immunity or penalty mitigation under any HSE Law,
including the U.S. Environmental Protection Agency's Incentives for
Self-Policing: Discovery, Disclosure, Correction and Prevention of Violations
dated December 22, 1995, as it may be amended from time to time; PROVIDED, that
Contributor's obligation under
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Section 5.2(a)(vi) or the Partnership's obligation under Section
5.2(d)(iii) in connection with any Remedial Action resulting from any notice
described in clause (C) shall be limited to the Lowest Cost Response.
(e) Contributor and the Partnership shall promptly notify the other
party of any action, condition, event or circumstance that may be subject to
Remedial Action under this Section 5.5 for which either party may seek
indemnification upon receipt of any written document concerning such matter.
Contributor and the Partnership shall promptly notify the other party of any
Release or threatened Release of Chemical Substances or other action, condition,
event or circumstance that such party believes may adversely impact a Remedial
Action after any such matter comes to such party's attention, PROVIDED, that
failure to so notify shall not affect the rights of an Indemnified Party except
to the extent that an Indemnifying Party is actually prejudiced as a result of
such delay. The Partnership shall develop and administer its standards and
practices for determining whether to undertake Remedial Action and, if
undertaken, how to carry out Remedial Action, so that comparable circumstances
or conditions existing at its various properties and facilities are managed in a
comparable way, regardless of whether or not the Partnership acquired such
properties and facilities from Contributor.
(f) Contributor and the Partnership agree to consult with each other in
connection with any Remedial Action subject to indemnification under this
Section 5. If so requested by the other party, Contributor or the Partnership,
as the case may be, shall provide the requesting party with (i) any material
correspondence, reports, technical data or other material written information
generated regarding such Remedial Action, (ii) reasonable access to the
properties and to employees, books and records related to such Remedial Action,
and (iii) the right to take split samples, in each case for the purpose of
verifying the performance of any Remedial Action, the costs for which Remedial
Action Contributor is required to indemnify the Partnership pursuant to this
Section 5. Contributor and the Partnership agree that they shall maintain in
strict confidence, and in accordance with any confidentiality or joint defense
agreements then in effect between the Partnership and Contributor, any of the
foregoing information that is non-public and confidential and any other
confidential information concerning any HSE Remedial Action Claim, subject to
disclosure required by Legal Requirements. If either party is required to
disclose any such non-public, confidential information as a result of any Legal
Requirement, such party will promptly notify the other party and will give such
other party the opportunity to review and comment in advance upon the content
and timing of any such disclosure. The Partnership shall submit any
reimbursement request for indemnification pursuant to this Section 5 to
Contributor and Contributor shall pay the amount requested in such reimbursement
request within 30 days of receipt thereof. If Contributor objects to any portion
of such reimbursement request, it shall notify the Partnership in writing of
such objection with ten days of receipt thereof, and shall pay the undisputed
portion as set forth in the previous sentence. Any dispute regarding any
reimbursement request shall be resolved pursuant to the dispute resolution
procedures set forth in Appendix B.
(g) Upon performance of a Remedial Action subject to indemnification
pursuant to this Section 5.5, the party conducting such Remedial Action (the
Partnership or Contributor, as applicable), shall use commercially reasonable
efforts to obtain written documentation, approval or certification of such
completion. The obligation of Contributor in respect of a particular HSE
Remedial Action Claim shall cease when: (i) with respect to a Remedial Action
involving an HSE
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Type A Claim over which an Authority has not asserted jurisdiction, the Remedial
Action has been completed, and any Chemical Substances for which the Threshold
Level was contravened or exceeded have been satisfactorily investigated, removed
or remediated, in accordance with HSE Laws, and the contractor conducting the
Remedial Action (on behalf of the Partnership or Contributor, as applicable)
provides a written certification reasonably satisfactory to the Partnership
confirming the completion of the Remedial Action in accordance with HSE Laws;
(ii) with respect to a Remedial Action involving an HSE Type A Claim over which
an Authority has asserted jurisdiction, the Remedial Action has been completed
in accordance with HSE Laws to the satisfaction of such Authority, and the
Authority has either (A) issued a written approval or certification of
completion of such Remedial Action that provides that no further action is
required or planned at a future date as of the time of such approval, but which
approval may be qualified or conditioned by the Authority with respect to the
accuracy or completeness of the data or information provided, the discovery of
new information, changes in land use which affect the Remedial Action or other
standard or model reservations of similar type or form in use by the Authority
at the time of such approval (an "Approval"), or (B) failed through inaction to
issue such Approval within one year of the submission of a written request by
the party conducting such Remedial Action for such Approval, without during this
one-year period rejecting approval or requesting further information or further
Remedial Action; (iii) with respect to a Remedial Action involving an HSE Type B
Claim over which an Authority has not asserted jurisdiction, the Remedial Action
has been completed in accordance with HSE Laws and the contractor conducting the
Remedial Action (on behalf of the Partnership or Contributor, as applicable)
provides a written certification reasonably satisfactory to the Partnership
confirming the completion of the Remedial Action in accordance with HSE Laws; or
(iv) with respect to a Remedial Action involving an HSE Type B Claim over which
an Authority has asserted jurisdiction, the Remedial Action has been completed
in accordance with HSE Laws and to the satisfaction of such Authority, and the
Authority has either (A) issued an Approval or (B) failed through inaction to
issue such Approval within one year of the submission of a written request by
the party conducting such Remedial Action for such Approval, without during this
one-year period rejecting approval or requesting further information or further
Remedial Action.
(h) Completion of a Remedial Action shall not preclude Contributor or
the Partnership from asserting a subsequent HSE Remedial Action Claim that
arises from the same condition, event, circumstance or other basis that resulted
in the original Remedial Action (except with respect to the work completed in
such original Remedial Action); PROVIDED, that the Partnership shall be
responsible, pursuant to Section 5.2(d), if and to the extent that it
exacerbates or accelerates such subsequent HSE Remedial Action Claim as set
forth in Section 5.2(c); and PROVIDED, FURTHER, that the Partnership shall be
responsible for maintaining compliance with HSE Laws from and after the date on
which the correction of any noncompliance with HSE Laws is completed consistent
with Section 5.5(g).
(i) Notwithstanding any other provision of this Agreement, Contributor
shall have the right to conduct and control all Remedial Action related to the
authorities and approvals necessary in order to consummate the transactions
contemplated hereby under the New Jersey Environmental Cleanup Responsibility
Act, including the New Jersey Industrial Site Recovery Act, including such
Remedial Action that occurs after the Closing Date. Such Remedial Action
conducted by the Seller shall not be subject to Section 5.5(c).
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5.6 EXTENT OF INDEMNIFICATION. WITHOUT LIMITING OR ENLARGING THE SCOPE
OF THE INDEMNIFICATION, RELEASE AND ASSUMPTION OBLIGATIONS SET FORTH HEREIN, TO
THE FULLEST EXTENT PERMITTED BY LAW, AN INDEMNIFIED PARTY SHALL BE ENTITLED TO
INDEMNIFICATION HEREUNDER IN ACCORDANCE WITH THE TERMS HEREOF, REGARDLESS OF
WHETHER THE INDEMNIFIABLE LOSS GIVING RISE TO ANY SUCH INDEMNIFICATION
OBLIGATION IS THE RESULT OF THE SOLE, GROSS, ACTIVE, PASSIVE, CONCURRENT OR
COMPARATIVE NEGLIGENCE, STRICT LIABILITY OR OTHER FAULT OR VIOLATION OF ANY LAW
OF OR BY ANY SUCH INDEMNIFIED PARTY. THE PARTIES AGREE THAT THIS STATEMENT
CONSTITUTES A CONSPICUOUS LEGEND.
SECTION 6
MISCELLANEOUS
-------------
6.1 CONSTRUCTION. In construing this Agreement, the following
principles shall be followed: (i) no consideration shall be given to the
captions of the articles, sections, subsections or clauses, which are inserted
for convenience in locating the provisions of this Agreement and not as an aid
in construction: (ii) no consideration shall be given to the fact or presumption
that any of the parties had a greater or lesser hand in drafting this Agreement;
(iii) examples shall not be construed to limit, expressly or by implication, the
matter they illustrate; (iv) the word "includes" and its syntactic variants mean
"includes, but is not limited to" and corresponding syntactic variant
expressions; (v) the plural shall be deemed to include the singular, and vice
versa; (vi) each gender shall be deemed to include the other gender; and (vii)
each exhibit, appendix, attachment and schedule to this Agreement is a part of
this Agreement.
6.2 PAYMENT OF CERTAIN EXPENSES AND TAXES.
(a) Subject to the further provisions of this Section 6.2, (i)
Contributor shall be responsible for all Taxes attributable to Contributor's or
its Affiliates' ownership, use or transfer of the Assets or operation of the
Contributed Business prior to the Asset Transfer Effective Time, including all
Taxes, tax returns, and filings (A) of the Contributed Subsidiary, Canco 1 and
Canco 2 attributable to the period before the Asset Transfer Effective Time or
(B) attributable to the transfer and assignment to the Partnership pursuant to
this Agreement, and (ii) the Partnership shall be responsible for all Taxes
attributable to the Partnership's ownership, use or transfer of the Assets or
operation of the Contributed Business after the Asset Transfer Effective Time.
(b) All sales, use, value added, excise, transfer, land transfer or
similar taxes incurred or arising in connection with the transfer of the Assets
to the Partnership shall be borne solely by Contributor.
(c) All real property taxes, personal property taxes, ad valorem taxes
and other similar Taxes (or payments in lieu of such Taxes) assessed on any of
the Contributed Business or the Assets (including Inventory) in the tax period
in which the Asset Transfer Effective Time occurs ("Property Taxes") shall be
prorated between the Partnership and Contributor, as of the Asset Transfer
Effective Time.
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(d) The Partnership shall pay any title or recordation fees in
connection with the transfer of the Assets. The Partnership shall also pay for
any surveys of the Fee Interests and any related easements or rights-of-way that
are requested or ordered by the Partnership.
(e) After the Closing Date, either Contributor or the Partnership
receiving each Property Tax bill or notice applicable to the Contributed
Business or the Assets for the period in which the Asset Transfer Effective Time
occurred shall, if other than the Partnership, promptly notify the Partnership
and shall pay each such tax bill prior to the last day such taxes may be paid
without penalty or interest. If paid by Contributor, the Partnership shall
promptly on receipt of a written request (accompanied by appropriate supporting
documentation) reimburse the paying party with respect to the share of the
Partnership of such amount so paid as provided under this Agreement. If paid by
the Partnership, Contributor shall promptly on receipt of a written request
(accompanied by appropriate supporting documentation) reimburse the Partnership
with respect to the share of Contributor of such amount so paid as provided
under this Agreement. Contributor and the Partnership shall cooperate fully with
each other on and after the Closing Date with respect to any Property Tax
assessment or valuation (or protest in connection therewith) by any Authority
with respect to the tax period in which the Asset Transfer Effective Time
occurs.
(f) If any party receives a refund of any Taxes for which the other is
liable or responsible under this Agreement, the party receiving such refund
shall, within 30 days after the receipt of such refund, remit it to the party
who is liable.
(g) Notwithstanding any other provision of this Agreement, the
obligations of the parties set forth in this Section 6.2 shall be unconditional
and absolute and shall remain in effect until audit, assessment and collection
of any such taxes are barred by the applicable statute of limitations.
6.3 NOTICES. All notices, requests, demands and other communications
that are required or may be given under this Agreement shall, unless otherwise
provided for elsewhere in this Agreement, be in writing and shall be deemed to
have been duly given if and when (i) transmitted by telecopier facsimile during
business hours with proof of confirmation from the transmitting machine, or (ii)
delivered by courier or other hand delivery, as follows:
(a) If to Contributor or Geon LP:
The Geon Company
One Geon Center
Avon Lake, Ohio 44012
Attention: Chief Executive Officer
Telecopy Number: (440) 930-1002
with a copy to:
The Geon Company
One Geon Center
Avon Lake, Ohio 44012
Attention: General Counsel
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Telecopy Number: (440) 930-1002
(b) If to the Partnership:
Oxy Vinyls, LP
5005 LBJ Freeway
Dallas, Texas 75244
Attention: Chief Executive Officer
Telecopy Number: (972) 720-7402
with a copy to:
Oxy Vinyls, LP
5005 LBJ Freeway
Dallas, Texas 75244
Attention: General Counsel
Telecopy Number: (972) 720-7403
and to:
Occidental Petroleum Corporation
10889 Wilshire Boulevard
Los Angeles, California 90024
Attention: General Counsel
Telecopy Number: (310) 443-6333
and to:
The Geon Company
One Geon Center
Avon Lake, Ohio 44012
Attention: Chief Executive Officer
Telecopy Number: (440) 930-1002
and to:
The Geon Company
One Geon Center
Avon Lake, Ohio 44012
Attention: General Counsel
Telecopy Number: (440) 930-1002
or to such other address or telecopy number as either party shall have specified
by notice in writing to the other party. All such notices, requests, demands and
communications shall be deemed to be effective upon receipt.
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6.4 BINDING EFFECT; BENEFIT. Subject to Section 6.6, this Agreement
shall inure to the benefit of and be binding upon the parties hereto and their
respective permitted successors and assigns. Nothing in this Agreement,
expressed or implied, is intended to confer on any Person other than the parties
hereto and their Affiliates or their respective permitted successors and
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Agreement.
6.5 OCCASIONAL AND BULK SALES. To the extent applicable, the
Partnership and Contributor each agree to waive, to the fullest extent permitted
by law, compliance by the other with the provisions of the Bulk Sales Law of any
jurisdiction. Notwithstanding the foregoing, Contributor agrees to indemnify and
save harmless the Partnership from and against any Liability that may be made or
brought against the Partnership or that the Partnership may suffer or incur as a
result of, in respect of, or arising out of such non-compliance.
6.6 ASSIGNABILITY. Neither this Agreement nor any of the rights or
obligations hereunder shall be assignable (by operation of law or otherwise) by
Contributor or Geon LP without the prior written consent of the Partnership or
shall be assignable (by operation of law or otherwise) by the Partnership
(except to a wholly-owned subsidiary thereof) without the prior written consent
of Contributor and Geon LP. Any assignment or purported assignment in violation
of this Section shall be null and void.
6.7 AMENDMENT; WAIVER. This Agreement may be amended, supplemented or
otherwise modified only by a written instrument executed by the parties hereto.
No waiver by any party of any of the provisions hereof shall be effective unless
explicitly set forth in writing and executed by the party so waiving. Subject to
the agreements and obligations of the Partnership hereunder or under applicable
Legal Requirements, no investigations by the Partnership heretofore or hereafter
made shall affect the representations and warranties of Contributor, and, except
as otherwise provided in Section 5.1, such representations and warranties shall
survive any such investigation. The waiver by any party hereto of a breach of
any provision of this Agreement shall not operate or be construed as a waiver of
any subsequent breach.
6.8 DISPUTE RESOLUTION. All disputes under this Agreement shall be
resolved in accordance with the Dispute Resolution Procedures set forth in
Appendix B.
6.9 SEVERABILITY. In the event that any provisions of this Agreement
shall finally be determined to be unlawful, such provision shall, so long as the
severance of such provision does not have a Material Adverse Effect on the
economic and legal substance of the transactions contemplated hereby as to
Contributor or the Partnership, be deemed severed from this Agreement and every
other provision of this Agreement shall remain in full force and effect.
6.10 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
6.11 CONFLICT WITH TRANSFER DOCUMENTS. Notwithstanding anything to the
contrary contained in any Transfer Document, no remedy or claim shall be
available to any Person under or by reason of any Transfer Document or any terms
or warranties thereof, except to the extent, if any,
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such remedy or claim arises under this Agreement. In the event of any conflict
between this Agreement and any of the Transfer Documents, this Agreement
shall prevail for all purposes.
6.12 TRANSFER DOCUMENTS. Notwithstanding the form of any Transfer
Document attached to this Agreement as an Exhibit, on the Closing Date, the
parties may, upon mutual agreement, execute and deliver revised forms of such
Transfer Documents or elect to not use any such Transfer Document.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
THE GEON COMPANY
By: /s/ Thomas A. Waltermire
-------------------------------------
Thomas A. Waltermire
President and Chief Operating Officer
1999 PVC PARTNER INC.
By: /s/ Woodrow W. Ban
-------------------------------------
Name: Woodrow W. Ban
-----------------------------------
Title: Assistant Secretary
----------------------------------
OXY VINYLS, LP
By: Occidental PVC, LLC, general partner
By: /s/ John L. Hurst, III
-------------------------------------
John L. Hurst, III
President
43
Appendix A
Definitions
-----------
The terms used in this Agreement have the following definitions or are
defined in the Sections referenced below:
"AAA" is defined in Appendix B.
"Accounts Receivable" means all uncollected accounts receivable that
have been generated by, or are attributable to, Contributor's and its
Affiliates' operation prior to the Asset Transfer Effective Time of the
Contributed Business in the ordinary course and in all respects in a manner
consistent with the provisions of Section 3.3 of the Master Transaction
Agreement.
"Affiliate" means any Person that, directly or indirectly through one
or more intermediaries, controls or is controlled by or is under common control
with the Person specified; PROVIDED, HOWEVER, that for purposes of this
Agreement neither the Partnership nor the Compounding Partnership nor any Person
controlled by either entity shall be considered an Affiliate of Contributor. For
purposes of this definition, the term "control" (including the terms "controlled
by" and "under common control with") means the ownership of more than 50% of the
equity interests, Fully Diluted. With respect to the period from and after the
Asset Transfer Effective Time, the Contributed Subsidiary and Canco shall not be
considered Affiliates of Contributor.
"Agreement" is defined in the first paragraph of this Agreement.
"Approval" is defined in Section 5.5(g).
"Arbitrator" is defined in Appendix B.
"Asset Transfer Effective Time" is defined in the Master Transaction
Agreement.
"Asset Transfer Effective Time Balance Sheet" is defined in Section
4.3.
"Assets" means all of the assets, rights and properties being
contributed, conveyed, assigned, transferred and delivered to the Partnership
pursuant to Section 1.1.
"Assignment and Assumption Agreements" means the Assignment of Leases,
the Deeds, the Bill of Sale and Assignment, the Trademark Assignment, the Patent
Assignment, the Partnership Assumption Agreement and the Site Lease Agreement.
"Assignment of Leases" is defined in Section 1.3(a).
"Associated Rights" means all right, title and interest of Contributor
and any of its Affiliates, if any, in the lands, real property and personal
property of others used principally in the normal operation and conduct of the
Contributed Business.
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44
"Assumed Liabilities" is defined in Section 1.5(a).
"Authority" means any government or governmental or regulatory body
thereof, or political subdivision thereof, whether federal (or any commonwealth,
territory or possession thereof), provincial, state, local or foreign, or any
agency, department or instrumentality thereof, or any court or arbitrator
(public or private).
"Banked Vacation" is defined in Section 1.7(j).
"Canco Lending Liability" means the Liability of Canco 2 that is
created if the alternative is utilized that is described in clause (iii) of the
term "Canco Financing Arrangements," as defined in the Master Transaction
Agreement.
"Canco 1" is defined in the Master Transaction Agreement.
"Canco 2" is defined in the Master Transaction Agreement.
"Capital Spares" means the inventory of spare parts used by Contributor
in the Contributed Business and owned by Contributor as of the Asset Transfer
Effective Time.
"Chemical Substance" means any (i) chemical substance, pollutant,
contaminant, constituent, chemical, mixture, raw material, intermediate or final
product or byproduct the manufacture, generation, formulation, processing,
labeling, use, treatment, handling, storage, disposal, transportation,
arrangement for transportation or disposal, distribution, re-use, recycling or
reclamation of which is regulated (including any requirement for the reporting
of any Release thereof) for the protection of health, safety or the Environment
under any Legal Requirement or defined or listed as an industrial, toxic,
deleterious, harmful, radioactive, infectious, disease-causing or hazardous
substance, material or waste under any Legal Requirement, and (ii) petroleum,
crude oil or any fraction or derivative thereof, (iii) asbestos or
asbestos-containing material or (iv) polychlorinated biphenyls ("PCBs").
"Closing" is defined in the Master Transaction Agreement.
"Closing Date" means the date of this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Compounding Partnership" is defined in the Master Transaction
Agreement.
"Consent" means any consent, waiver, appraisal, authorization,
exception, registration, license or declaration of or by any Person or any
Authority, or any expiration or termination of any applicable waiting period
under any Legal Requirement, required with respect to the Contributed Business
or Contributor or any of its Affiliates in connection with (i) the execution and
delivery of this Agreement or any of the Related Agreements or (ii) the
consummation of the transactions contemplated hereby or thereby.
A-2
45
"Contracts" means contracts, maintenance and service agreements,
purchase commitments for materials and other services, advertising and
promotional agreements, leases, taxation agreements with any Authority, and
other agreements.
"Contributed Business" is defined in the third WHEREAS clause.
"Contributed Contracts" means, other than the Leases and Government
Licenses, all right, title, and interest of Contributor and any Affiliate
thereof in (i) all Contracts to which Contributor or an Affiliate thereof is a
party, whether or not entered into in the ordinary course of business, that
relate principally to the normal operation and conduct of the Contributed
Business, but in the case of any Contracts under which either Contributor or any
Affiliate thereof retains rights with respect to its other businesses, only to
the extent any such Contract relates to the operation of the Contributed
Business, (ii) all agreements and instruments setting forth Contributor's and
any of its Affiliates' rights with respect to rights-of-way, privileges,
riparian and other rights, appurtenances, licenses or franchises and in respect
of intellectual property rights, in each case that constitute Assets described
in clauses (a) through (f) of Section 1.1, and (iii) the Contracts listed on
Schedule 1.1(g).
"Contributed Intellectual Property" means, to the extent such items are
not Excluded Assets, all right, title, and interest of Contributor and any
Affiliate thereof (i) in Intellectual Property primarily used in the Contributed
Business, and a non-exclusive, royalty-free license as set forth in the Master
Intellectual Property Agreement in Intellectual Property used in, but not
primarily used in, the Contributed Business, and (ii) in any Trademarks
specifically assigned or licensed by Contributor in the Master Intellectual
Property Agreement.
"Contributed Subsidiary" is defined in Section 1.1(j).
"Contributor" is defined in the first paragraph of this Agreement.
"Contributor's 401(k) Plan" is defined in Section 1.7(i).
"Deeds" is defined in Section 1.3(a).
"Dispute Notice" is defined in Appendix B.
"Disputing Party" is defined in Appendix B.
"Employee Pension Benefit Plan" has the meaning set forth in section
3(2) of ERISA.
"Employee Welfare Benefit Plan" has the meaning set forth in section
3(1) of ERISA
"Employees" means, collectively, the Salaried Employees and the Union
Employees.
"Encumbrance" means any lien, easement, adverse claim, charge,
encumbrance, security interest, title defect, option, right of first refusal or
any other restriction or third party right.
"Environment" is defined in Section (a) of the definition of "HSE
Laws".
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"Equipment" means all of the right, title and interest of Contributor
and any of its Affiliates in and to the equipment, furniture, furnishings,
fixtures, machinery, Capital Spares, vehicles, tools, computers and other
tangible personal property used principally in the normal operation and conduct
of the Contributed Business, including the items listed on Schedule 1.1(d).
"ERISA" means the Employment Retirement Income Security Act of 1974, as
amended, and the regulations promulgated thereunder.
"Excluded Assets" is defined in Section 1.2.
"Excluded Railcars" is defined in Section 1.2(j).
"Exposure Claim" means any Liability, other than a Product Exposure
Claim, arising out of or relating to exposure of any individual to PVC, VCM or
any other Chemical Substances in connection with the Contributed Business, to
the extent such Liability is attributable to the period prior to the Asset
Transfer Effective Time.
"Fee Interests" means fee title in and to the parcels of land described
as fee property on Schedule 1.1(a), together with all buildings, structures,
fixtures and other permanent improvements situated thereon and all easements,
privileges, rights-of-way, riparian and other water rights, lands underlying any
adjacent streets or roads, appurtenances and licenses to the extent pertaining
to or accruing to the benefit of such land.
"Fully Diluted" means a computation of equity interests on a basis as
if all potentially dilutive securities, including warrants, stock options and
convertible bonds, have been exercised or converted.
"GAAP" means United States generally accepted accounting principles, as
in effect from time to time.
"Geon Canada Transfer Agreement" is defined in the Master Transaction
Agreement.
"Geon LP" is defined in the first paragraph of this Agreement.
"Geon PVC Resin Supply Agreement" means the Geon PVC Resin Supply
Agreement between Contributor and the Partnership executed and delivered
pursuant to the Master Transaction Agreement.
"Government Licenses" means all licenses, permits or franchises issued
by any Authority relating to the operation, development, use, maintenance or
occupancy of the Assets or of the Contributed Business to extent that such
licenses, permits or franchises relate principally to the normal operation and
conduct of the Contributed Business.
"HSE Claim" means (i) any action, condition, event, circumstance or
responsibility (including any compliance action or requirement) that is
necessary to comply with HSE Laws but only to the extent that any of the
foregoing gives rise to out of pocket costs or expenses or results
A-4
47
in a Liability that is required by GAAP to be reflected on the balance sheet of
the applicable party or (ii) any Third Party Claim arising under HSE Laws,
excluding, however, Exposure Claims and Product Exposure Claims.
"HSE Laws" means, (i) with respect to an HSE Type A Claim, Legal
Requirements in effect as of the Asset Transfer Effective Time, together with
all changes from time to time in such Legal Requirements, and (ii) with respect
to an HSE Type B Claim, Legal Requirements in effect as of the Asset Transfer
Effective Time, in each case relating to (a) any ambient air, surface water,
drinking water, groundwater, land surface, subsurface strata, river or marine
sediments, natural resources or real property and the physical buildings,
structures and fixtures thereon, including sewer, septic and waste treatment,
storage or disposal systems (the "Environment"), including pollution,
contamination, cleanup, preservation, protection and reclamation of the
Environment; (b) health or safety, including the exposure of employees and other
Persons to any Chemical Substance; (c) the Release or threatened Release of any
Chemical Substance, noxious noise or odor, including investigation, study,
assessment, testing, monitoring, containment, removal, remediation, response,
cleanup and abatement of such Release or threatened Release; and (d) the
management of any Chemical Substance, including the manufacture, generation,
formulation, processing, labeling, use, treatment, handling, storage, disposal,
transportation, arrangement for transportation or disposal, distribution,
re-use, recycling or reclamation of any Chemical Substance.
"HSE Proceeding" is defined in Section 2.11(d).
"HSE Remedial Action Claim" is defined in Section 5.5.
"HSE Type A Claim" means an HSE Claim, or portion thereof, in which the
sole relief sought is the investigation, removal or remediation of Chemical
Substances present in soil, sediment, surface water or groundwater prior to the
Asset Transfer Effective Time or the restoration of natural resources allegedly
affected thereby.
"HSE Type B Claim" means an HSE Claim other than an HSE Type A Claim.
"Indebtedness" is defined in the Master Transaction Agreement.
"Indemnified Party" is defined in Section 5.3(a).
"Indemnifying Party" is defined in Section 5.3(a).
"Intellectual Property" means research material, technical information,
marketing information, patent rights, patent licenses, pending patent
applications, trade secrets, technical information, know-how, management
information systems, technology, quality control data, specifications, designs,
drawings, software, copyrights, copyright applications or copyright
registrations, sales promotion literature and advertising materials.
"Inventory" means materials used by Contributor in the Contributed
Business and owned by Contributor as of the Asset Transfer Effective Time
including raw materials, feed stocks, supplies, additives, pigments, process
chemicals, packaging materials (to the extent the Partnership's use
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thereof would be consistent with the Master Intellectual Property Agreement),
catalysts, work-in-process and finished goods that relate principally to the
normal operation and conduct of the Contributed Business.
"Knowledge" with respect to Contributor means the actual knowledge of
(i) any current plant manager employed in the Contributed Business and (ii) any
current officer of Contributor having responsibilities with respect to the
Contributed Business or the transactions contemplated in this Agreement.
"Leased Premises" means the premises described in the Leases.
"Leaseholds" means the interest of the tenant under the Leases, for the
use and occupancy of the Leased Premises, together with all buildings,
structures, fixtures and other permanent improvements situated thereon and all
easements, privileges, rights-of-way, riparian and other water rights,
appurtenances and licenses pertaining to the Leases or accruing to the benefit
of the tenant under the Leases.
"Leases" means the leases and subleases, all amendments thereto and all
agreements related thereto described on Schedule 1.1(b).
"Legal Requirement" means any law, common law, statute, rule,
ordinance, consent or other decree, regulation, requirement, standard (including
any clean-up standard), order (including any executive, judicial or
administrative order) or judgment of any Authority, as enacted, established,
published or applied, and any judicial or administrative interpretation thereof,
including (i) the terms of any Government License, (ii) the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, and
(iii) the Resource Conservation and Recovery Act of 1976, as amended.
"Liability" is defined in Section 5.2(a).
"Licensed Technology" means the technology licensed to the Partnership
pursuant to the Master Intellectual Property Agreement.
"Lowest Cost Response" means the response required or allowed under HSE
Laws that corrects the noncompliance with HSE Law, and/or addresses the Chemical
Substances present, as applicable, at the lowest cost (considered as a whole
taking into consideration any negative impact such response may have on the
conduct of the Contributed Business and any potential additional costs or
liabilities that may arise as a result of such response) as compared to any
other response that is consistent with HSE Laws. With respect to an HSE Type A
Claim: (i) taking no action shall constitute the Lowest Cost Response if, after
investigation, taking no action is determined to be consistent with HSE Laws;
and (ii) if taking no action is not consistent with such HSE Laws, the least
costly non-permanent remedy (such as mechanisms to contain or stabilize Chemical
Substances, including caps, dikes, encapsulation, leachate collection systems,
etc.) shall be the Lowest Cost Response, PROVIDED that such non-permanent remedy
is consistent with such HSE Laws and less costly than the least costly permanent
remedy (such as the excavation and removal of soil). With respect to an HSE Type
B Claim: (a) the Lowest Cost Response shall be that required to
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achieve compliance with HSE Laws, recognizing that the amount of penalties
assessed may be determined by HSE Laws as in effect as of the date the HSE Claim
is asserted; (b) the least costly permanent remedy that would minimize the
likelihood of subsequent or repeated HSE Claims related to the same condition,
event, circumstance or other basis for noncompliance consistent with HSE Laws
shall constitute the Lowest Cost Response, provided that Contributor may elect
to pay the penalty, and to mitigate the negative impacts and assume any
additional costs or liabilities associated with a non-permanent remedy to the
reasonable satisfaction of the Partnership, and thereby avoid such a permanent
remedy; and (c) the Partnership may elect to conduct a supplemental
environmental project or perform corrective action that is more costly than a
proposed penalty in lieu of paying some or all of the proposed penalty, and such
project or action shall constitute the Lowest Cost Response if, in the
reasonable judgment of the Partnership, paying penalties would subject the
Partnership to negative impacts on the Contributed Business or potential
additional costs or liabilities sufficient to warrant the additional cost of
such project or action; PROVIDED, that Contributor may elect to pay the penalty,
and to mitigate the negative impacts and assume such additional costs or
liabilities to the reasonable satisfaction of the Partnership, and thereby avoid
such a project or action.
"Master Intellectual Property Agreement" means the Related Agreement
that is attached as Exhibit T to the Master Transaction Agreement.
"Master Transaction Agreement" is defined in the sixth WHEREAS clause.
"Material Adverse Effect" means any adverse circumstance or consequence
that, individually or in the aggregate, has an effect that is material to the
financial condition, results of operations, assets or business of the
Contributed Business or the Assets, taken as a whole. Without limiting the
generality of the foregoing, a "Material Adverse Effect" shall be deemed to have
occurred if the applicable effect, individually or in the aggregate with all
other effects or matters that are qualified by materiality or Material Adverse
Effect, would be reasonably likely to involve liability, loss, or diminution in
value of $5,000,000 or more in the aggregate.
"OCC" is defined in the sixth WHEREAS clause.
"Partnership" is defined in the first paragraph of this Agreement.
"Partnership Assumption Agreement" is defined in Section 1.5(b).
"Partnership Benefit Plans" is defined in Section 1.7(f).
"Partnership Employee" is defined in Section 1.7(a).
"Patent Assignment" is defined in Section 1.3(a).
"PBGC" is defined in Section 2.1(e).
"PCBs" is defined in this Appendix in the definition of "Chemical
Substance".
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"Person" means any natural person, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization, business, Authority or other entity.
"Plans" is defined in Section 2.1(a).
"Plant Employees" means the Salaried Employees whose principal place of
employment is at a manufacturing facility and who are not Tier 1 Employees or
Tier 2 Employees.
"Pre-Closing Liabilities" means all Liabilities of every kind and
nature arising out of, in connection with or related to the ownership, operation
or use prior to the Asset Transfer Effective Time of the Assets or the
Contributed Business other than the Liabilities referred to in Sections
1.5(a)(i), (ii), (iii), (vi), (vii), (viii) and (x).
"Prepaid Expenses" means the balances in the prepaid accounts
consistent with GAAP of Contributor or its Affiliates, as of the Asset Transfer
Effective Time, that are associated with the Contributed Business and that will
have value to the Partnership in owning and operating the Contributed Business
after the Asset Transfer Effective Time.
"Proceeding" means any audit, litigation, allegation, claim, grievance,
arbitration, investigation, civil, criminal, quasi-criminal or administrative
action, proceeding, charge, prosecution, suit or other action, in each case
instituted or asserted in writing.
"Product Exposure Claim" means any Liability arising out of or relating
to exposure of any individual to PVC, VCM or any other Chemical Substances from
an alleged defect in a finished product manufactured by a Person other than
Contributor, any Affiliate thereof, the Partnership, any member of the OCC Group
(as defined in the Master Transaction Agreement) or any member of the Geon Group
(as defined in the Master Transaction Agreement) from one or more products of
the Contributed Business sold before the Asset Transfer Effective Time.
"Property Tax" is defined in Section 6.2(c).
"PVC" means polyvinyl chloride.
"PVC Unit" is defined in the Master Transaction Agreement.
"Related Agreements" means the Related Agreements (as such term is
defined in the Master Transaction Agreement), other than this Agreement.
"Release" means any release, spill, emission, leaking, pumping,
injection, deposit, disposal, dumping, discharge, dispersal, leaching, escaping,
emanation or migration of any Chemical Substance in, into or onto the
Environment of any kind whatsoever, including the movement of any Chemical
Substance through or in the Environment, exposure of any type in any workplace,
any release as defined under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, or any other HSE Law and any
noxious noise or odor emission.
"Remedial Action" is defined in Section 5.5.
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"Retained Business" means any business of Contributor or its Affiliates
that is not part of the Contributed Business.
"Salaried Employees" means all employees (either salaried or hourly) of
Contributor whose work relates solely and exclusively to, or substantially in
support of, the Assets, who are not Union Employees, and who are, immediately
prior to the Asset Transfer Effective Time, either (i) in the active employment
of Contributor or (ii) on short-term disability leave, sick leave, or other
temporary leave of absence approved by Contributor.
"Site Lease Agreement" is defined in Section 1.3(b).
"Specified Amount" is defined in the Master Transaction Agreement.
"Specified Working Capital Items" is defined in the Master Transaction
Agreement.
"Stores Inventory" means the inventory of spare parts, excluding
Capital Spares, that are used by a Contributor or any Affiliate thereof in the
Contributed Business and owned by such Contributor or any Affiliate thereof as
of the Asset Transfer Effective Time and that consist of items that generally
can be used for several processes or types of equipment, including such items as
pumps, motors, pipe fittings, electrical wiring, instruments, nuts and bolts,
unfabricated metals, safety items, small hand tools and other miscellaneous
repair parts or supplies. Stores Inventory shall include any reserve for slow
moving or obsolete materials and supplies, and for any inventory volume or price
adjustments.
"Taxes" means all taxes, charges, fees, levies or other assessments
imposed by any Authority, including income, gross receipts, excise, property,
sales, use, transfer, payroll, license, ad valorem, value added, withholding,
social security, national insurance (or other similar contributions or
payments), franchise, severance and stamp taxes (including any interest, fines,
penalties or additions attributable to, or imposed on or with respect to, any
such taxes, charges, fees, levies or other assessments).
"Third Party Claim" means any allegation, claim, demand, civil,
criminal or administrative action, proceeding, charge or prosecution brought by
a Person other than Contributor, any Affiliate thereof, the Partnership, any
member of the OCC Group (as defined in the Master Transaction Agreement) or any
member of the Geon Group (as defined in the Master Transaction Agreement);
PROVIDED, HOWEVER, that, if such allegation, claim, demand, civil, criminal or
administrative action, proceeding, charge or prosecution is brought by
Contributor, any Affiliate thereof, any member of the OCC Group or any member of
the Geon Group, in each case in its capacity as the owner or operator of
property not transferred pursuant to the Asset Contribution and Sale Agreements
(as defined in the Master Transaction Agreement), such allegation, claim,
demand, civil, criminal or administrative action, proceeding, charge or
prosecution shall be a Third Party Claim.
"Threshold Level" is defined in Section 5.5.
"Tier 1 Employees" means the Salaried Employees who are identified on
Schedule B, consisting of (i) certain Salaried Employees who are not Plant
Employees and whose work relates
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indirectly to the support of the Assets and (ii) certain Salaried Employees
whose principal place of business is at a manufacturing facility.
"Tier 2 Employees" means the Salaried Employees who are identified on
Schedule C, consisting of Salaried Employees who are not Plant Employees and
whose work relates directly to the support of the Assets.
"Trade Accounts Payable" means, as of the Asset Transfer Effective
Time, all current trade accounts payable and current accrued expenses, including
salaries and wages due to Partnership Employees, that are generated by and
result from the execution by Contributor and its Affiliates of normal and
customary payment and month-end closing processes prior to the Asset Transfer
Effective Time. Trade Accounts Payable includes unpaid invoices or accruals for
services, materials, supplies, feedstocks and products received in the ordinary
course of business prior to the Asset Transfer Effective Time and which are
attributable to the Contributed Business, including, by way of illustration
only, any amounts or balances owing by Contributor under any product exchange or
similar agreement. Trade Accounts Payable shall not include any payments due to
an Affiliate of Contributor including any payments due for services, rent,
overhead or similar items.
"Trademark Assignment" is defined in Section 1.3(a).
"Trademarks" means trade names, trademarks, trademark registrations or
trademark applications or any derivative thereof or design used in connection
therewith.
"Transfer Documents" means documents transferring, conveying, assigning
or contributing any of the Assets to the Partnership, including the Assignment
and Assumption Agreements.
"Transferred Business" is defined in the Geon Canada Transfer
Agreement.
"Transition Employees" is defined in Section 1.7(d).
"Union Contracts" means any contracts in place between any of the
Unions and Contributor immediately prior to the Asset Transfer Effective Time.
"Union Employees" means all employees who are part of a collective
bargaining unit represented by any Union, and who are, immediately prior to the
Asset Transfer Effective Time, either (i) in the active employment of
Contributor or (ii) on short-term disability leave, sick leave or other
temporary leave of absence approved by Contributor.
"Unions" means (i) the International Brotherhood of Electrical Workers
Local Union Number 369, (ii) the International Association of Machinists and
Aerospace Workers, District Lodge Number 27, (iii) the United Food and
Commercial Workers Union Number 72D (AFL/CIO), and (iv) the United Association
of Journeyman and Apprentices of the Plumbing and Pipe Fitting Industry, Local
Union Number 522.
"Unrecorded Assets" means all right, title and interest of Contributor
and any of its Affiliates in customer lists, customer credit information (to the
extent neither Contributor nor any of its
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Affiliates is bound to any confidentiality obligation with respect thereto),
customer payment histories and credit limits, vendor lists, and catalogs.
"VCM" means vinyl chloride monomer.
"WARN" is defined in Section 1.7(e).
"Working Capital" means working capital, determined in accordance with
GAAP.
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Appendix B
Dispute Resolution Procedures
-----------------------------
(1) BINDING AND EXCLUSIVE MEANS. The dispute resolution provisions set
forth in this Appendix B shall be the binding and exclusive means to resolve all
disputes arising under this Agreement (each a "Dispute").
(2) STANDARDS AND CRITERIA. In resolving any Dispute, the standards and
criteria for resolving such dispute shall, unless Contributor and the
Partnership in their discretion jointly stipulate otherwise, be as set forth in
Appendix 1 to this Appendix B.
(3) ADR AND BINDING ARBITRATION PROCEDURES. If a Dispute arises, the
following procedures shall be implemented:
(a) Any party to this Agreement may at any time invoke the dispute
resolution procedures set forth in this Appendix B as to any Dispute by
providing written notice of such action to the other party or parties to the
Dispute, who within five business days after such notice shall schedule a
meeting to be held in Dallas, Texas between the parties. The meeting shall occur
within 10 business days after notice of the meeting is delivered to the other
party or parties. The meeting shall be attended by representatives of each party
having decision-making authority regarding the Dispute as well as the dispute
resolution process and who shall attempt in a commercially reasonable manner to
negotiate a resolution of the Dispute.
(b) The representatives of the parties shall cooperate in a
commercially reasonable manner and shall explore whether techniques such as
mediation, minitrials, mock trials or other techniques of alternative dispute
resolution might be useful. In the event that a technique of alternative dispute
resolution is so agreed upon, a specific timetable and completion date for its
implementation shall also be agreed upon. The representatives will continue to
meet and discuss settlement until the date (the "Interim Decision Date") that is
the earliest to occur of the following events: (i) an agreement shall be reached
by the parties resolving the Dispute; (ii) one of the parties shall determine
and notify the other party in writing that no agreement resolving the Dispute is
likely to be reached; (iii) if a technique of alternative dispute resolution is
agreed upon, the completion date therefor shall occur without the parties having
resolved the Dispute; or (iv) if another technique of alternative dispute
resolution is not agreed upon, two full meeting days (or such other time period
as may be agreed upon) shall expire without the parties having resolved the
Dispute.
(c) If, as of the Interim Decision Date, the parties have not succeeded
in negotiating a resolution of the dispute pursuant to subsection (b), the
parties shall proceed under subsections (d), (e) and (f).
(d) After satisfying the requirements above, such Dispute shall be
submitted to mandatory and binding arbitration at the election of any party
involved in the Dispute (the "Disputing Party"). The arbitration shall be
subject to the Federal Arbitration Act as supplemented by the conditions set
forth in this Appendix. The arbitration shall be conducted in accordance with
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the Commercial Arbitration Rules of the American Arbitration Association in
effect on the date the notice of arbitration is served, other than as
specifically modified herein. In the absence of an agreement to the contrary,
the arbitration shall be held in Dallas, Texas. The Arbitrator (as defined
below) will allow reasonable discovery in the forms permitted by the Federal
Rules of Civil Procedure, to the extent consistent with the purpose of the
arbitration. During the pendency of the Dispute, each party shall make available
to the Arbitrator and the other parties all books, records and other information
within its control requested by the other parties or the Arbitrator subject to
the confidentiality provisions contained herein, and PROVIDED that no such
access shall waive or preclude any objection to such production based on any
privilege recognized by law. Recognizing the express desire of the parties for
an expeditious means of dispute resolution, the Arbitrator may limit the scope
of discovery between the parties as may be reasonable under the circumstances.
In deciding the substance of the parties' claims, the laws of the State of New
York shall govern the construction, interpretation and effect of this Agreement
(including this Appendix) without giving effect to any conflict of law
principles. The arbitration hearing shall be commenced promptly and conducted
expeditiously, with each party involved in the Dispute being allocated an equal
amount of time for the presentation of its case. Unless otherwise agreed to by
the parties, the arbitration hearing shall be conducted on consecutive days.
Time is of the essence in the arbitration proceeding, and the Arbitrator shall
have the right and authority to issue monetary sanctions against any of the
parties if, upon a showing of good cause, that party is unreasonably delaying
the proceeding. To the fullest extent permitted by law, the arbitration
proceedings and award shall be maintained in confidence by the Arbitrator and
the parties.
(e) The Disputing Party shall notify the American Arbitration
Association ("AAA") and the other parties involved in the Dispute in writing
describing in reasonable detail the nature of the Dispute (the "Dispute
Notice"). The arbitrator (the "Arbitrator") shall be selected within 15 days of
the date of receipt of the Dispute Notice by all of the parties from the members
of a panel of arbitrators of the AAA or, if the AAA fails or refuses to provide
a list of potential arbitrators, of the Center for Public Resources, and shall
be experienced in commercial arbitration. In the event that the parties are
unable to agree on the selection of the Arbitrator, the AAA shall select the
Arbitrator, using the criteria set forth in this Appendix, within 30 days of the
date of the Dispute Notice. In the event that the Arbitrator is unable to serve,
his or her replacement will be selected in the same manner as the Arbitrator to
be replaced. The Arbitrator shall be neutral. The Arbitrator shall have the
authority to assess the costs and expenses of the arbitration proceeding
(including the arbitrators' costs and attorneys' fees and expenses) against any
or all parties.
(f) The Arbitrator shall decide all Disputes and all substantive and
procedural issues related thereto, and shall enforce this Agreement in
accordance with its terms. Without limiting the generality of the previous
sentence, the Arbitrator shall have the authority to issue injunctive relief;
however, the Arbitrator shall not have any power or authority to (i) award
consequential, incidental, indirect, punitive, exemplary, special or other
similar damages or (ii) amend this Agreement. The Arbitrator shall render the
arbitration award, in writing, within 20 days following the completion of the
arbitration hearing, and shall set forth the reasons for the award. In the event
that the Arbitrator awards monetary damages in favor of a party, the Arbitrator
must certify in the award that no indirect, consequential, incidental, punitive,
exemplary, special or other similar damages are included in such award. If the
Arbitrator's decision results in a monetary award, the interest to be granted on
such award, if any, and the rate of such interest shall be determined by the
Arbitrator in
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his or her discretion. The arbitration award shall be final and binding on the
parties, and judgment thereon may be entered in any court of competent
jurisdiction, and may not be appealed except to the extent permitted by the
Federal Arbitration Act.
(g) In the event that a Dispute involving Remedial Action pursuant to
Section 5.5 is submitted to mandatory and binding arbitration, any factual or
technical dispute regarding the presence, Release or threatened Release of
Chemical Substances under Section 5.5(b)(ii) or the Lowest Cost Response under
Section 5.5(c)(i) or (ii) shall be submitted, either by the Arbitrator or by the
parties, to a nationally-recognized environmental consulting firm acceptable to
both parties for binding resolution of such factual or technical dispute, and
the Arbitrator shall be bound to accept and apply the factual or technical
findings of such firm in rendering its decision hereunder.
(h) To assist the Arbitrator or the environmental consulting firm in
resolving Disputes where the Disputing Party alleges, pursuant to Section
5.3(g), and the Arbitrator and/or environmental consulting firm determines, that
both the Partnership and Contributor are liable for a Remedial Action, the
parties authorize the Arbitrator to allocate the Liability, as between
Contributor and the Partnership and for purposes of this Agreement only, based
upon the following rebuttable presumptions:
(i) with respect to an HSE Type A Claim involving a Remedial
Action in, on, under, at, or in the vicinity of the Fee Interests or
the Leaseholds, the Liability should be allocated based upon the
relative years of use or operation by Contributor and the Partnership
of the building, structure, fixture or improvement from which the
Chemical Substance was Released;
(ii) with respect to an HSE Type A Claim involving a Remedial
Action in, on, under, at or in the vicinity of an offsite treatment,
storage or disposal facility, which facility received solid or
hazardous waste or recyclable materials as a public or commercial
enterprise and to which the Contributed Business is alleged to have
sent or transported such materials for treatment, storage, recycling or
disposal both before and after the Asset Transfer Effective Time, the
Liability should be allocated based upon the relative volume of
materials attributed to Contributor and its Affiliates and the
Partnership, PROVIDED that the Chemical Substances attributed to the
parties, and the constituents, toxicity, mobility and concentrations
thereof, are similar in all material respects;
(iii) with respect to an HSE Type B Claim, the Liability to
attain compliance with HSE Laws in effect as of the Asset Transfer
Effective Time should be allocated solely to Contributor, while the
Liability to attain compliance with HSE Laws that become more stringent
after the Asset Transfer Effective Time and to continue to operate in
compliance with then applicable HSE Laws should be allocated to the
Partnership. To the extent penalties for noncompliance with HSE Laws in
effect as of the Asset Transfer Effective Time are assessed for a
period of time before the Asset Transfer Effective Time, before the
Partnership knows of the existence of the noncompliance, or after the
Partnership knows of the existence of such noncompliance but is taking
commercially reasonable actions to cure the matter or to otherwise
achieve compliance in a commercially reasonable and prudent matter,
Liability in each case should be allocated solely to Contributor. To
the extent
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penalties for noncompliance with HSE Laws are assessed for a period of
time after the Partnership knows of the existence of the noncompliance
but has failed to take commercially reasonable actions to cure the
matter or to otherwise achieve compliance in a commercially reasonable
and prudent matter pursuant to Section 5.2(c), Liability should be
allocated solely to the Partnership.
(4) CONTINUATION OF BUSINESS. Notwithstanding the existence of any
Dispute or the pendency of any procedures pursuant to this Appendix B, the
parties agree and undertake that all payments not in dispute shall continue to
be made and all obligations not in dispute shall continue to be performed.
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Appendix 1
----------
(a) First priority shall be given to maximizing the consistency of the
resolution of the Dispute with the satisfaction of all express obligations of
the parties and their Affiliates as set forth in the Agreement.
(b) Second priority shall be given to resolution of the Dispute in a
manner which best achieves the objectives of the business activities and
arrangements under the Agreement and permits the parties to realize the benefits
intended to be afforded thereby.
(c) Third priority shall be given to such other matters, if any, as the
parties or the Arbitrator shall determine to be appropriate under the
circumstances.
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