FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities and Exchange Act of 1934
Date of Report (Date of earliest event reported): February 26, 1999
THE VALSPAR CORPORATION
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Delaware 1-3011 36-2443580
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(State or other Jurisdiction (Commission File (IRS Employer
of Incorporation) Number) Identification No.)
1101 Third Street South, Minneapolis, Minnesota 55415
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (612)332-7371
Not Applicable
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(former name or former address, if changed, since last report)
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Item 2. Acquisition or Disposition of Assets
On February 26, 1999, The Valspar Corporation (the "Company") completed
the acquisition of certain operations of Dexter Corporation's Packaging Coatings
business and Dexter Corporation's French industrial coatings subsidiary, Dexter
S.A.S., pursuant to a Dexter Coatings Business Purchase and Sale Agreement
between Dexter Corporation ("Dexter") and the Company dated August 21, 1998 (the
"Purchase Agreement"). Dexter Corporation's Packaging Coatings business is the
worldwide packaging coatings business of the U.S.-based Dexter Corporation and
certain of its affiliates worldwide. Dexter S.A.S. supplies a variety of
industrial coatings to the European market. Combined 1998 sales for the
Packaging Coatings business and Dexter S.A.S. were $212 million.
The Packaging Coatings business acquired has operations in the United
States, Mexico, Brazil, the United Kingdom, Austria, Switzerland, France, Spain,
Japan, Thailand, Singapore and South Africa and supplies beverage can coatings,
food can coatings and specialty coatings. In the United States, the United
Kingdom and Singapore, the Company acquired certain assets and assumed certain
liabilities of the acquired operations. In Mexico, Brazil, Austria, Switzerland,
France, Spain and Thailand, the Company acquired the outstanding share capital
of the Dexter subsidiaries. In Japan and South Africa, the Company acquired
Dexter's majority interests in joint venture affiliates. The Packaging Coatings
business will be combined with the Company's existing worldwide packaging
coatings business.
The industrial coatings business of Dexter S.A.S. is located in
Tournus, France and supplies wood, coil, flexible packaging and general
industrial coatings primarily to the European market.
The total consideration for this transaction was approximately $224.5
million in cash; including approximately $214.5 million for assets and share
capital of Dexter Corporation and certain of its subsidiaries and affiliates,
and $10 million for a non-competition covenant from Dexter Corporation and its
subsidiaries and affiliates. The total consideration paid for this transaction
is subject to adjustment as provided in the Purchase Agreement and was
negotiated after weighing various factors, including earnings, book values,
trends and other customary valuation methods.
The consideration for the acquisition was financed with borrowings from
the Company's recently amended primary credit facility with a consortium of 19
banks led by Wachovia and co-managed by Chase Manhattan.
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Item 7. Financial Statements and Exhibits
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
It is currently impracticable to provide the required financial
statements of the acquired business. Pursuant to paragraph (a)(4) of
Item 7 of Form 8-K, such financial information will be filed by
amendment not later than 60 days after the due date of this report on
Form 8-K.
(b) PRO FORMA FINANCIAL INFORMATION.
It is currently impracticable to provide the required pro forma
financial information. Pursuant to paragraph (b)(2) of Item 7 of Form
8-K, such financial information will be filed by amendment not later
than 60 days after the due date of this report on Form 8-K.
(c) EXHIBITS.
2.1 Dexter Coatings Business Purchase and Sale Agreement between
Dexter Corporation and the registrant made and entered into as
of August 21, 1998, as amended by the First Amendment to
Dexter Coatings Business Purchase and Sale Agreement dated
February 26, 1999 (pursuant to Rule 24b-2, certain information
has been deleted and filed separately with the Commission).
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
THE VALSPAR CORPORATION
By /s/ Rolf Engh
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Name: Rolf Engh
Title: Secretary
Date: March 15, 1999
Certain information in this exhibit has been deleted and filed separately
pursuant to Rule 24b-2.
EXHIBIT 2.1
DEXTER COATINGS BUSINESS
PURCHASE AND SALE AGREEMENT
Agreement dated August 21, 1998, by and between Dexter Corporation, a
Connecticut corporation ("Dexter") and The Valspar Corporation, a Delaware
corporation ("Buyer").
WITNESSETH:
WHEREAS, Dexter and certain of its subsidiaries are engaged in the
Coatings Business (as hereinafter defined), which business is conducted in more
than 13 countries, including Austria, Brazil, France, Japan, Mexico, Singapore,
Spain, South Africa, Switzerland, Thailand, Venezuela, the United Kingdom and
the United States;
WHEREAS, Dexter desires to sell the Coatings Business to Buyer, and
Buyer desires to purchase the Coatings Business from Dexter, by means of the
transfer from Dexter and its subsidiaries to Buyer and its subsidiaries of
certain stock of the Dexter Coatings Companies (as hereinafter defined) and
certain of the assets and liabilities of the Coatings Business;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter contained, Dexter and Buyer, on the basis of, and in
reliance upon, the representations, warranties, covenants, obligations and
agreements set forth in this Agreement, and upon the terms and subject to the
conditions contained herein, hereby agree as follows:
ARTICLE 1
DEFINITIONS
For purposes of this Agreement, including the Schedules and Exhibits
hereto, the defined terms set forth in this Article and in Exhibit A shall have
the meanings set forth in this Article or in such Exhibit. All Article and
Section numbers, and Schedule and Exhibit references, used in this Agreement
refer to Articles and Sections of this Agreement, and Schedules and Exhibits
attached hereto or delivered simultaneously herewith, unless otherwise
specifically described.
"Acquired Assets" means all assets, properties and rights of the
Selling Companies that are used primarily in the Coatings Business, other than
the Excluded Assets. The Acquired Assets include, but are not limited to, all
right,
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title and interest of the Selling Companies (other than with respect to Excluded
Assets) in the following:
(i) the Properties;
(ii) the production facilities, buildings and improvements,
machinery, equipment, furniture, fixtures, office equipment, spare
parts and supplies, and other tangible personal property located on the
Properties or used primarily in the Coatings Business;
(iii) inventories of raw materials, intermediates and
work-in-process used in the manufacture of the products of the Coatings
Business as well as finished products of the Coatings Business,
wherever located;
(iv) all Intellectual Property that is Primary Intellectual
Property, including without limitation that Intellectual Property owned
by the Selling Companies and identified in the Schedule to Section
5.13;
(v) amounts receivable from Persons that are not members of
the Dexter Group with respect to the sale of products or services of
the Coatings Business;
(vi) rights under Contracts (including but not limited to
leases of real property and unfilled customer orders) whether relating
to periods before or after the Closing Date that relate primarily to
the operation of the Coatings Business;
(vii) all of the shares in the capital or shares of the
capital stock, as the case may be, of each of the Dexter Coatings Stock
Companies (other than Dexter SAS);
(viii) those shares in the capital or shares of the capital
stock, as the case may be, of the Dexter Coatings Joint Venture
Companies and Dexter SAS that are owned by Dexter or another Selling
Company; and
(ix) files, customer lists, accounting records, personnel
records, marketing materials and general intangibles that relate
primarily to the Coatings Business.
"Acquired Companies" means the Dexter Coatings Stock Companies and the
Dexter Coatings Joint Venture Companies (other than Midland - Dexter de
Venezuela S.A.
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"Acquired Companies Intellectual Property" means Intellectual Property
owned or controlled by the Acquired Companies and by Midland - Dexter de
Venezuela S.A. that is used in the Coatings Business.
"Acquired Companies' Intercompany Payables" has the meaning given such
term in Section 3.06.
"Acquired Companies' Intercompany Receivables" has the meaning given
such term in Section 3.06.
"Acquired Liabilities" means all of the following liabilities and
obligations incurred by the Selling Companies primarily in connection with the
Coatings Business:
(i) all liabilities to Persons other than Dexter and other
members of the Dexter Group that relate to the operation of the
Coatings Business and are properly reflected in the Closing Balance
Sheet;
(ii) all obligations of the Selling Companies arising under
Contracts relating primarily to the Coatings Business, but only to the
extent that those obligations relate to the period after the Closing
Date;
(iii) the severance obligations set forth in Section12.02; and
(iv) all liabilities and obligations of the Selling Companies
described in Schedule 5.12 to this Agreement.
"Allocation" and "Specific Allocation" have the respective meanings
given such terms in Section 2.03.
"Ancillary Agreements" means the agreements described in Section 3.04.
"Ancillary Agreement" means one of the Ancillary Agreements.
"Annual Financial Statements" has the meaning given such term in
Section 5.03(a).
"Base Amount" has the meaning given such term in Section 2.02.
"Business Day" means a day that is not a Saturday or Sunday, nor a day
on which banks are generally closed in New York City.
"Buyer" means The Valspar Corporation, a Delaware corporation.
"Buyers' Claim" has the meaning given such term in Section 14.04(a).
"Buyer Group" means, collectively, Buyer and its Subsidiaries.
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"Buying Companies" means collectively, Buyer and each of the
Subsidiaries of Buyer to which Buyer transfers the right to purchase any portion
of the Acquired Assets pursuant to Section 19.05. "Buying Company" means any one
of the Buying Companies.
"Claimant" has the meaning given such term in Section 14.05(a).
"Closing" means the actions to be taken by the Buying Companies and the
Selling Companies and their affiliates described in Sections 3.03 through 3.07.
"Closing Assumption Agreements" means the assumption agreements to be
executed and delivered by the Buying Companies at the Closing as provided for in
Section 3.03(d).
"Closing Balance Sheet" has the meaning given such term in Section
4.04.
"Closing Conveyance Documents" means the deeds, bills of sale, stock
certificates, assignments, and other instruments of conveyance to be executed
and delivered by the Selling Companies at the Closing as provided for in Section
3.03(a).
"Closing Net Asset Value," "Closing Net Worth Value" and "Closing
Amount" have the respective meanings given such terms in Section 4.02.
"Closing Date" means the date on which the Closing occurs.
"Closing Statement" has the meaning given such terms in Section 4.04.
"Coatings Assets" means the Acquired Assets and the assets of the
Dexter Coatings Stock Companies and the Dexter Joint Venture Companies.
"Coatings Business" means (i) the business conducted by the Dexter
Coatings Companies of developing, manufacturing, marketing and selling coatings
and related materials for beer and beverage cans, food cans, closures, tubes,
aerosol cans and other packaging applications, and (ii) the business conducted
by Dexter SAS, a Subsidiary of Dexter, of developing, manufacturing, marketing
and selling wood coatings, graphic arts coatings, coil coatings and general
industrial coatings. The Coatings Business specifically excludes, without
limitation, (A) the business conducted by the Coating Systems business of Dexter
of developing, marketing and selling aerospace coatings, automotive coatings and
specialty coatings and (B) the business conducted by the Electronic Materials
business of Dexter of developing, marketing and selling coatings for electronic
packaging applications.
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"Coatings Business Executives" means the persons listed as such in
Exhibit B.
"Coatings Field" means the field of developing, manufacturing,
marketing and selling coatings and related materials for beer and beverage cans,
food cans, closures, tubes, aerosol cans and other related packaging
applications.
"Code" means the Internal Revenue Code of 1986, as amended.
"Competitive Business" has the meaning given such term in Section
16.05.
"Confidentiality Agreement" means that certain confidentiality
agreement dated July 10, 1998 between Dexter and Buyer.
"Continued Employees" has the meaning given such term in Section 12.01.
"Continued Employee" means one of the Continued Employees.
"Contract" has the meaning given such term in Section 5.10.
"Damages" has the meaning given such term in Section 14.01(a).
"Deferred Closing" has the meaning given such term in Section 16.01(a).
"Dexter" means Dexter Corporation, a Connecticut corporation.
"Dexter Coatings Companies" means, collectively, all of the Selling
Companies, the Dexter Coatings Stock Companies and the Dexter Coatings Joint
Venture Companies. "Dexter Coatings Company" means one of the Dexter Coatings
Companies.
"Dexter Coatings Joint Venture Companies" means each of the
corporations identified as such on Exhibit A. "Dexter Coatings Joint Venture
Company" means any one of the Dexter Coatings Joint Venture Companies.
"Dexter Coatings Stock Companies" means each of the Subsidiaries of
Dexter identified as such on Exhibit A. "Dexter Coatings Stock Company" means
any one of the Dexter Coatings Stock Companies.
"Dexter Executives" means the persons listed as such in Exhibit B.
"Dexter Group" means, collectively, Dexter and Dexter's Subsidiaries.
"Direct Claims" has the meaning given such term in Section 14.01(b).
"DOJ" means the United States Department of Justice.
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"Environmental Law" means (a) any law, regulation, rule, ordinance,
bylaw, decree or order of any Governmental Authority, which relates to or
otherwise imposes liability, obligations, or standards with respect to
pollution, contamination or protection of human health, safety or the
environment and (b) any permits, licenses and judgments issued or promulgated
under any such law, regulation, rule, ordinance, bylaw, decree or order.
"ERISA" has the meaning given such term in Section 12.04(a).
"Excluded Assets" means all of the following of the Selling Companies:
(i) cash, cash items, interests in bank accounts and other
deposits with third parties, other than petty cash;
(ii) claims for refunds of taxes and governmental charges of
whatever nature;
(iii) amounts receivable from Dexter or any other member of
the Dexter Group;
(iv) claims with respect to insurance coverage obtained from,
or in conjunction with, Dexter or any other member of the Dexter Group,
and prepayments and refunds of amounts previously paid on account of
such insurance, except as expressly provided in Section 16.06;
(v) employee benefit plans and funds maintained by, or in
conjunction with, Dexter or any other member of the Dexter Group, and
prepayments and refunds of amounts previously paid on account of such
employee benefit plans and funds (other than as provided in Section
12.04);
(vi) any contract or agreement as to which consent to
assignment is required but has not been obtained;
(vii) corporate books and records, including minute books, tax
returns and tax supporting information;
(viii) records relating to any of the Excluded Liabilities;
(ix) all Intellectual Property that is Secondary Intellectual
Property;
(x) those assets maintained at Dexter's facility in Waukegan,
Illinois and identified on Exhibit C;
(xi) the claim against Zeon Chemicals, Inc. identified on
Schedule to Section 5.07 to this Agreement;
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(xii) any accounts receivable owing by Nacanco Services
(Europe) Limited to one of the Coatings Companies to the extent that
any such accounts receivable have not been paid due to the product
liability claims described on the Schedule to Section 5.07 to this
Agreement; and
(xiii) the claim against Stucor identified on Schedule to
Section 5.07 to this Agreement, the rights to which will be assigned by
Vernicolor AG to Dexter prior to the Closing.
"Excluded Liabilities" means all liabilities and obligations of the
Selling Companies, whether accrued or unaccrued, absolute or contingent, known
or unknown, which are not expressly included in the definition of Acquired
Liabilities.
"Exhibits" means the exhibits to this Agreement.
"Financial Exchange Rate" has the meaning specified in Section 2.04.
"Financial Statements" has the meaning specified in Section 5.03(a).
"FTC" means the United States Federal Trade Commission.
"GAAP" has the meaning specified in Section 5.03(a).
"Governmental Authorities" means all entities exercising executive,
legislative, judicial, regulatory or administrative functions of government,
whether the scope of such functions are transnational, national, or limited to
certain states, provinces, municipalities or other political subdivisions,
including but not limited to agencies, departments, boards, commissions or other
instrumentalities of any country or any political subdivisions thereof in which
the Coatings Business is being conducted by the Dexter Coatings Companies.
"Governmental Authority" means one of the Governmental Authorities.
"Hazardous Materials" means any dangerous, toxic or hazardous
pollutant, contaminant, chemical, waste, material or substance as defined in or
governed by any applicable law, statute, code, ordinance, regulation, rule or
other requirement relating to the environment or human health or safety,
including without limitation any waste, material, substance, pollutant,
petroleum or petroleum product, or contaminant that subjects any of the Dexter
Coatings Companies or their successors to any imposition of costs or liabilities
under any Environmental Law.
"HSR Act" means the U.S. Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended, and the rules and regulations thereunder.
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"Insurance" has the meaning given such term in Section 16.06.
"Intellectual Property" means rights in the following: patents, patent
applications and invention disclosures; trademarks and service marks, whether
registered, the subject of any pending registration or existing under common
law; copyrightable subject matter; registered design and similar design
protection; trade secrets (including ideas, research and development, know-how,
formulas, laboratory notebooks, data, designs, drawings, specifications); mask
works; software; and similar intangible property rights in any jurisdiction
where the Coatings Business is conducted.
"Intercompany Accounts" means all amounts, regardless of their nature,
that are (a) owed by any of the Acquired Companies to any other member of the
Dexter Group, other than another of the Acquired Companies, or (b) owed by any
member of the Dexter Group, other than one of the Acquired Companies, to any of
the Acquired Companies.
"Japanese JV Shares," "Japanese JV Partner" and "Japanese ROFO" have
the respective meanings given such terms in Section 9.03(a).
"Knowledge of Dexter" means the actual knowledge of the Dexter
Executives or the Coatings Business Executives on the date of this Agreement or
on the date of the Closing, as applicable, after reasonable inquiry.
"Latest Financial Statements" has the meaning given such term in
Section 5.03(a).
"Leased Real Property" means those parcels of leased real property used
in the Coatings Business as identified by location on Schedule 5.06.
"Liens" has the meaning specified in Section 5.04.
"Litigation Expenses" has the meaning specified in Section 14.01(c).
"Local Purchase Prices" means each of the purchase prices described in
Section 2.03.
"Multiemployer Plan" has the meaning given such term in Section
12.04(a).
"Net Worth" means, (i) with respect to each Dexter Coatings Stock
Company, its net worth as of a specified date, and (ii) with respect to each
Dexter Coatings Joint Venture Company, its net worth as of a specified date
times the percentage of its capital stock owned collectively by members of the
Dexter Group as of such date.
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"Neutral Accountant" has the meaning given such term in Section
4.06(b).
"Non-Compete Payment" has the meaning given such term in Section
16.05(c).
"Owned Real Property" means those parcels of owned real property used
in the Coatings Business as identified by legal title holder and location on
Schedule 5.06.
"Permitted Liens" has the meaning specified in Section 5.04.
"Person" means any individual, partnership, firm, trust, association,
corporation, limited liability company, joint venture, unincorporated
organization, other business entity or Governmental Authority.
"PBGC" has the meaning given such term in Section 12.04(c).
"Primary Intellectual Property" means Intellectual Property owned or
controlled by the Selling Companies and primarily used in the Coatings Business.
"Properties" means the Owned Real Property and the Leased Real
Property.
"Protected Period" has the meaning given such term in Section 12.04(b).
"Remedial Activities" means all actions, including, without limitation,
making any capital expenditures, required to: (A) clean up, remove, treat, or in
any way address any Hazardous Materials released prior to the Closing, (B)
prevent the release or threat of release, or minimize the continuing release, of
any Hazardous Materials released prior to the Closing Date, or (C) perform
pre-remedial site investigations or post-remedial monitoring and care of any
Hazardous Materials released prior to the Closing.
"ROFO Rights" means the pre-emptive rights of the joint venture
partners of Dexter described in Sections 9.03(a), (b) and (c) and therein
defined as the "Japanese ROFO," the "South Africa ROFO" and the "Venezuela
ROFO," respectively.
"Scheduled Closing Date" has the meaning given such term in Section
3.01.
"Schedules" means disclosure schedules of Dexter referenced in Article
5 and Article 9.
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"Secondary Intellectual Property" means (i) the cationic ultra-violet
technology jointly developed by the Coatings Business and a separate business
unit of Dexter, which technology is not in commercial production as of the date
of this Agreement; and (ii) the resin technology developed, in whole or in part,
by certain employees of the Coatings Business located in Waukegan, Illinois that
is used for electronics applications.
"Selling Companies" means Dexter and each of the Subsidiaries of Dexter
identified as such on Exhibit A. "Selling Company" means any one of the Selling
Companies.
"Shares" has the meaning given such term in Section 5.05.
"South Africa JV Shares," "South Africa JV Partner," "South Africa JV
Price" and "South Africa ROFO" have the respective meanings given such terms in
Section 9.03(c).
"Subsidiaries" means entities in which either Dexter or Buyer,
respectively, own directly or indirectly 50% or more of the voting power or
other similar interests. "Subsidiary" means one of the Subsidiaries.
"Taxes" means all federal, state, local, foreign and other taxes,
assessments, or governmental charges of any kind whatsoever including, without
limitation, income, franchise, capital stock, excise, property, sales, use,
service, service use, leasing, leasing use, gross receipts, value added, single
business, alternative or add-on minimum, occupation, real and personal property,
windfall profits, environmental, customs, deposits, stamp, workers'
compensation, severance, environmental, transfer, payroll, withholding,
employment, unemployment and social security taxes, or other taxes of the same
or similar nature, together with any interest, penalties or additions thereon
and estimated payments thereof, whether disputed or not.
"Tournus Operations" means the portion of the Coatings Business
conducted in Tournus, France.
"Total Purchase Price" has the meaning given such term in Section 2.02.
"Third Party Claims" has the meaning given such term in Section
14.01(d).
"Transaction Documents" means this Agreement, the Ancillary Agreements,
the Closing Assumption Agreements and the Closing Conveyance Documents.
"Transaction Document" means one of the Transaction Documents.
"Valuation Time" means the close of business on the Closing Date.
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"Venezuela JV Shares," "Venezuela JV Partner" and "Venezuela ROFO" have
the respective meanings given such terms in Section 9.03(b).
"Year 2000 Compliant" has the meaning given such term in Section 5.20.
"Year 2000 Plan" has the meaning given such term in Section 5.20.
"Year 2000 Action Plan" has the meaning given such term in Section
5.20.
ARTICLE 2
SALE OF COATINGS BUSINESS, PRICE
2.01 Sale of Business; Grant of License. On the terms and subject to
the conditions of this Agreement, at the Closing Dexter shall sell, and shall
cause the other Selling Companies to sell, and Buyer shall purchase, and shall
cause the other Buying Companies to purchase, the Coatings Business. The Selling
Companies shall convey the Acquired Assets to the Buying Companies and in
exchange therefor, the Buying Companies shall assume the Acquired Liabilities
and shall pay the Local Purchase Prices (which in the aggregate shall equal the
Total Purchase Price) to the Selling Companies. Dexter hereby grants, and shall
cause the other Selling Companies to grant, to Buyer and the other members of
the Buyer Group an exclusive, worldwide, irrevocable, perpetual, paid-up
license, with a right of sublicense, to use the Secondary Intellectual Property
in the Coatings Field.
2.02 Total Purchase Price. "Total Purchase Price" means:
(a) US $ 212,000,000
plus any increase, or less any decrease, in:
(b) the amount of the Closing Amount from the Base Amount.
The "Base Amount" means $_________. The Total Purchase Price shall be allocated
among the Local Purchase Prices as provided in Section 2.03.
2.03 Local Purchase Prices. The "Local Purchase Price" for each country
in which a portion of the Coatings Business is to be conveyed from one of the
Selling Companies to one of the Buying Companies shall mean the portion of the
Total Purchase Price allocated to the conveyance in such country (which
allocation shall be made in accordance with the agreed upon fair market values
of the portion of the Acquired Assets and the Coatings Business located in each
country), provided that the aggregate of the Local Purchase Prices shall equal
the Total Purchase Price. Dexter and Buyer have agreed to the Local Purchase
Price for each such country as set forth in Exhibit D (the "Allocation"). Prior
to the Closing Date, Dexter and Buyer shall, in good faith, negotiate a specific
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allocation, in accordance with the Allocation, that complies with the
requirements of Section 1060 of the Code and any other applicable provision of
state, local or foreign tax law (the "Specific Allocation"). Each of the Dexter
Group and the Buyer Group shall, except for allocations relating to expenses
incurred in the transactions contemplated herein which are included in the
purchase price for Buyer, be bound by the Allocation and the Specific Allocation
for all tax purposes including the preparation and filing of tax returns. In the
event that the Allocation or the Specific Allocation is disputed by any
Governmental Authority, the party receiving notice of the dispute shall promptly
notify the other party hereto concerning the resolution of such dispute. Buyer
and Dexter each agrees to file Internal Revenue Service Form 8594, and all
federal, state, local and foreign tax returns, using consistent allocations
(except for allocations relating to expenses incurred in the transactions
contemplated herein which are included in the purchase price for Buyer) in
accordance with the Specific Allocation. Buyer and Dexter each agrees to provide
the other promptly with any other information required to complete Form 8594.
Buyer and Dexter may make material modifications to the Allocation and the
Specific Allocation only by mutual consent. If there is an adjustment to the
Total Purchase Price pursuant to this Agreement, Buyer and Dexter shall modify
the Allocation and the Specific Allocation so that the adjustment is allocated
to the Closing Amount in the country where it relates or as Buyer and Dexter
otherwise mutually agree.
2.04 Exchange Rates. Wherever the terms of this Agreement require that,
for purposes of determining the amount of any payment or the value of any asset
or liability, an amount expressed in a currency other than U.S. dollars be
translated as of a specified date into U.S. dollars, or that an amount expressed
in U.S. dollars be translated as of a specified date into the currency of
another country, such amount shall be translated using the daily rate published
by the Federal Reserve Bank of New York at 12:00 noon (the "Financial Exchange
Rate"). Translation of financial statements will be determined in accordance
with U.S. generally accepted accounting principles. Each Local Purchase Price
shall be expressed in U.S. dollars using the Financial Exchange Rate for the
applicable local currency for the Valuation Time, except that Local Purchase
Price for the Acquired Assets, net of Acquired Liabilities, in the U.S. shall be
adjusted as necessary so that the aggregate of all Local Purchase Prices shall
equal the Total Purchase Price.
ARTICLE 3
CLOSING
3.01 Scheduled Closing Date. The "Scheduled Closing Date" shall be the
later to occur of (i) the fifth Business Day after the fulfillment or waiver of
all conditions set forth in Articles 10 and 11 or (ii) such other day as Dexter
and Buyer may agree.
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3.02 Time and Place of Closing, Simultaneity. The Closing shall take
place on the Scheduled Closing Date, subject to the fulfillment or waiver of all
conditions set forth in Articles 10 and 11, at 10:00 a.m. U.S. Eastern Time at
the offices of Dexter, located at One Elm Street, Windsor Locks, Connecticut
06096-2334, U.S.A. and at such other time and place as may be applicable under
the laws of any other country or as Dexter and Buyer mutually agree. All of the
actions to be taken and documents to be executed and delivered at the Closing
shall be deemed to be taken, executed and delivered simultaneously, and no such
action, execution or delivery shall be effective until all actions to be taken
and executions and deliveries to be effected at the Closing are complete.
3.03 Conveyances at the Closing; Payments. Subject to the provisions of
Sections 9.04 and 16.01, at the Closing:
(a) Dexter shall, and shall cause the other
Selling Companies to, execute, acknowledge and
deliver to the Buying Companies special warranty
deeds, notarial deeds, bills of sale, stock
certificates, endorsements, assignments and other
instruments of sale, conveyance, transfer and
assignment in order to effectively transfer to the
Buying Companies all right, title and interest of the
Selling Companies in the Acquired Assets;
(b) Buyer shall, and shall cause the other
Buying Companies to, pay the Selling Companies, on
account of the Total Purchase Price, an aggregate
amount equal to US $212,000,000, plus or minus the
best joint estimate by Dexter and Buyer of the price
adjustment under Section 4.07, except that if the
parties have not reached agreement with respect to
such estimate, then for the sole purpose of computing
the payment under this Section, there shall be deemed
to be no adjustment;
(c) Buyer shall, or shall cause another Buying Company
to, pay to Dexter the Non-Compete Payment.
(d) Buyer shall, and Buyer shall cause the other Buying
Companies to execute, acknowledge and deliver to the
Selling Companies assumption agreements ("Closing
Assumption Agreements") in order to effectively
assume the Acquired Liabilities.
Each document of transfer or assumption referred to in this Article that is not
attached as an Exhibit hereto shall be in customary form for the country to
which it pertains, shall be reasonably satisfactory in form and substance to the
parties thereto, but shall contain no representations, warranties, covenants or
agreements other than those specifically contemplated by this Agreement.
<PAGE>
Buyer shall, and shall cause the other Buying Companies to, and Dexter shall,
and shall cause the other Selling Companies to, also execute and deliver such
other agreements, instruments and documents to effect, confirm or evidence the
transactions contemplated by this Agreement as any other party hereto shall
reasonably request. Buyer may request that, in lieu of instruments of
conveyance, a Selling Company convey specified assets by delivering possession
thereof, where they are then located, to the appropriate Buying Company.
3.04 Ancillary Agreements. At the Closing, each of the following
agreements shall be executed and delivered by the parties thereto or, if
executed and delivered simultaneously with this Agreement, shall become
effective:
(a) a lease agreement between Dexter and Buyer in accordance with
the term sheet attached hereto as Exhibit E pertaining to the
use of office and laboratory space at East Water Street,
Waukegan, Illinois 60085-5652, by the Coatings Business after
the Closing Date;
(b) a manufacturing agreement between Dexter and Buyer in
accordance with the term sheet attached hereto as Exhibit F
pursuant to which Dexter would manufacture certain coatings
products and resins for Buyer at its Waukegan facility; and
(c) leasing arrangements for shared administrative and
sales offices in locations indicated on Exhibit G, the
principal terms of which are also set forth on Exhibit G.
3.05 Method of Closing Payments. All payments at the Closing by the
Buying Companies to the Selling Companies shall be made by means of wire
transfers to such bank accounts as Dexter shall designate in writing prior to
the Closing.
3.06 Payment of Intercompany Accounts. All Intercompany Accounts will
be deemed fully paid and discharged as of the Valuation Time through the
adjustment to the Closing Amount provided for in this Section, which, as between
Dexter and Buyer, shall constitute a final settlement of all such Intercompany
Accounts. Dexter and Buyer shall each be responsible for settling such
Intercompany Accounts with their respective Subsidiaries. For purposes of
determining the Closing Amount as defined in Section 4.02(c), the amount of the
Intercompany Accounts owed to the Acquired Companies immediately prior to the
Valuation Time (the "Acquired Companies' Intercompany Receivables") shall be
offset against the amount of all Intercompany Accounts owed by the Acquired
Companies immediately prior to the Valuation Time (the "Acquired Companies'
Intercompany Payables"), and the difference shall be reflected in the Closing
Amount as follows:
<PAGE>
(a) The Closing Amount shall be reduced by the amount, if any,
by which the Acquired Companies' Intercompany Receivables immediately prior to
the Valuation Time exceeded the Acquired Companies' Intercompany Payables; or
(b) The Closing Amount shall be increased by the amount, if
any, by which the Acquired Companies' Intercompany Payables immediately prior to
the Valuation Time exceeded the Acquired Companies' Intercompany Receivables.
3.07 Certain Prorations. All ad valorem and property taxes, and any
similar assessments based upon or measured by the Selling Companies' ownership
or leasehold interest in the Properties shall be prorated between Dexter and
Buyer as of the Valuation Time based upon such taxes assessed for the tax period
in question or, if there is insufficient information for such tax period, based
upon taxes assessed against the Selling Companies for the immediately preceding
tax period just ended. All such taxes will be prorated on the basis of a 365-day
year. To the extent practicable, all such prorations and payments shall be made
at the Closing, with the balance to be made not later than 45 days after the
delivery of the Closing Statement.
3.08 Further Assurances of Dexter. At any time and from time to time
after the Closing, at the request and expense of Buyer or any of the other
Buying Companies, Dexter shall, and shall cause the other members of the Dexter
Group to, execute and deliver, or cause to be executed and delivered, all such
deeds, assignments, and other documents, and take or cause to be taken all such
other actions, as Buyer or any of the other Buying Companies reasonably deem
necessary or desirable in order to put the Buying Companies in actual possession
or operating control of the Acquired Assets or to more fully and effectively
vest in the Buying Companies, or to confirm their title to and possession of,
the Acquired Assets.
3.09 Further Assurances of Buyer. At any time and from time to time
after the Closing, at the request and expense of Dexter or any of the other
Selling Companies, Buyer shall, and shall cause the other members of the Buyer
Group to, execute and deliver, or cause to be executed and delivered, all such
documents, and take or cause to be taken all such other actions, as Dexter or
any of the other Selling Companies reasonably deem necessary or desirable in
order to more fully and effectively divest Dexter or any of the other Selling
Companies of responsibility for the Acquired Liabilities and incidents of
ownership of the Acquired Assets.
ARTICLE 4
PURCHASE PRICES, POST-CLOSING ADJUSTMENTS
<PAGE>
4.01 Closing of Books. Buyer shall, and shall cause the other Buying
Companies to, and Dexter shall, and shall cause the other Dexter Coatings
Companies to, cooperate to close the accounting records of each of the Dexter
Coatings Companies pertaining to the Coatings Business, as of the Valuation
Time, all on a going concern basis. On, or immediately prior to, the Closing
Date, Dexter shall take (and Buyer and its accountants shall be allowed to
observe) a physical count of the raw materials, work-in process and finished
goods inventories of the Coatings Business at the locations identified on the
Schedule to this Section in order to determine the quantity of such inventories.
Such inventory count shall be taken in accordance with the inventory-taking
practices and procedures used by the Dexter Coatings Companies in their most
recent physical inventory count for the Coatings Business.
4.02 Definitions.
(a) "Closing Net Asset Value" means, with respect to each Selling
Company, the aggregate amount of all (a) trade and other accounts receivable,
net of allowances, (b) inventories, net of reserves, (c) other current and long
term assets, and (d) property and equipment, net of accumulated depreciation,
that are included in the Acquired Assets as of the Valuation Time, less the
aggregate amount of all accounts payable and other current and non-current
liabilities that are included in the Acquired Liabilities as of the Valuation
Time, as computed in accordance with Section 4.03.
(b) "Closing Net Worth" means the Net Worth of each of
the Dexter Coatings Stock Companies and each of the Dexter Coatings Joint
Venture Companies as of the Valuation Time, as computed in accordance with
Section 4.03.
(c) "Closing Amount" means the sum of (i) the Closing Net Asset Value
of each of the Selling Companies, plus (ii) the Closing Net Worth of each of the
Dexter Coatings Stock Companies and each of the Dexter Joint Venture Companies.
4.03 Computations. The Closing Amount shall be determined in U.S.
dollars on a going concern basis, in accordance with U.S. generally accepted
accounting principles applied on a consistent basis with those used in the
determination of the Base Amount, except as otherwise specified in the Schedule
to this Section. In addition, the Closing Amount shall be determined using the
same account classifications, closing procedures and levels of materiality as
those used in the preparation of the Financial Statements, including, without
limitation, those policies as to inventory valuation specified in the Schedule
to this Section.
4.04 Closing Statement. Within 90 calendar days after the Closing,
Dexter shall deliver to Buyer a statement (the "Closing Statement") setting
forth
<PAGE>
Dexter's determination of the Closing Amount, together with a report of
PricewaterhouseCoopers LLP stating whether or not the Closing Amount shown on
the Closing Statement has been determined in accordance with the terms of this
Agreement. The Closing Statement shall contain an unaudited consolidated balance
sheet of the Coatings Business as of the Closing Date (the "Closing Balance
Sheet"). Upon and after delivery to Buyer of the Closing Statement, Buyer's
independent accountants shall, upon request, be given access to of
PricewaterhouseCoopers LLP's working papers to facilitate Buyer's review of the
Closing Statement.
4.05 Acceptance. If Buyer does not object to the Closing Amount shown
on the Closing Statement delivered by Dexter, by written notice of objection
delivered to Dexter within 60 calendar days after Buyer's receipt of such
statement, describing in reasonable detail each of its proposed adjustments to
Dexter's determination thereof, then the Closing Amount shown on the Closing
Statement shall be final and binding on all parties to this Agreement.
4.06 Non-Acceptance, Resolution of Disputes.
(a) If Buyer does object to the Closing Amount shown on the
Closing Statement, then Buyer and Dexter shall promptly endeavor to agree upon
the proper amount of the items in dispute. If a written agreement determining
all disputed items has not been reached within 30 calendar days after the date
of receipt by Dexter from Buyer of Buyer's notice of objection thereto, then
either Dexter or Buyer may, by notice to the other, submit for determination by
arbitration in accordance with this Section the question of what adjustments, if
any, must be made to each unresolved disputed item in order for the Closing
Amount to be determined in accordance with the provisions of this Agreement.
(b) Any such determination by arbitration shall be made by an
accounting firm to be agreed upon, other than PricewaterhouseCoopers LLP or
Ernst & Young LLP (the "Neutral Accountant") and shall be final and binding on
Buyer and Dexter.
(c) The fees and expenses of the Neutral Accountant for any
determination under this Article shall be shared equally by Dexter and Buyer.
(d) Nothing herein shall be construed to authorize or permit
the Neutral Accountant to (i) determine any question or matter whatever under or
in connection with this Agreement or any Transaction Document except the
determination of what adjustments, if any, must be made to one or more of the
disputed items reflected in the Closing Amount as shown on the Closing Statement
delivered by Dexter in order for the Closing Amount to be determined in
accordance with the provisions of this Agreement, or (ii) determine a Closing
Amount that is outside of the range defined by the Closing Amount as finally
proposed by Dexter and Buyer, respectively. Nothing herein shall be construed
<PAGE>
to require the Neutral Accountant to follow any rules or procedures of any
arbitration association.
4.07 Payment of Adjustments. Promptly after the Closing Amount has been
finally determined, Dexter shall deliver to Buyer a statement of the Total
Purchase Price and of the Local Purchase Prices (the aggregate of which shall
equal the Total Purchase Price) determined using the final Closing Amount and in
conformity with the terms of this Agreement. All adjustments to the Local
Purchase Prices shall be settled simultaneously based on such statement not
later than 15 calendar days after delivery thereof. The adjustments to the Local
Purchase Price in respect of each Acquired Company shall include that portion of
the adjustment provided for in Section 3.06 in compensation for the global
settlement of the Intercompany Accounts that shall be attributable to that
Acquired Company. If any Local Purchase Price exceeds the amount paid at the
Closing with respect thereto, then the appropriate Buying Company shall pay, or
shall cause Buyer to pay as its agent, the amount of the excess to the
appropriate Selling Company or to Dexter as its agent; if any Local Purchase
Price is less than the amount paid at the Closing with respect thereof, then the
appropriate Selling Company shall, or shall cause Dexter as its agent to, refund
the amount of the overpayment to the appropriate Buying Company or to Buyer as
its agent. To the extent practicable, any amounts due from the Dexter Group
shall be set off against any amount due from the Buyer Group. If the net amount
of the adjusting payment or payments exceeds $100,000, interest shall be paid at
this time on the entire amount of the net adjusting payment or payments, from
the Closing Date to the date of payment, at the "prime rate" as in effect on the
Closing Date as quoted by J.P. Morgan & Company Incorporated.
ARTICLE 5
DEXTER'S REPRESENTATIONS
Dexter represents and warrants to Buyer and the other Buying Companies
as follows:
5.01 Dexter Group Corporate Status and Authority.
(a) Each member of the Dexter Group that is a party to the
Transaction Documents is a corporation duly organized and validly
existing under the laws of its jurisdiction of organization as set
forth in Exhibit A. Each such member of the Dexter Group has full legal
power to enter into each Transaction Document to which it is or will be
a party, and to perform its obligations under such Transaction
Document, including, without limitation, the corporate power and
authority to sell, transfer and convey the shares and other Acquired
Assets and to execute, deliver and perform the Ancillary Agreements as
provided in this Agreement.
<PAGE>
(b) The execution and delivery by each member of the Dexter
Group of each Transaction Document to which it is or will be a party,
and its performance of its obligations under such Transaction Document,
have been duly authorized by all required corporate action of such
member. Each such member of the Dexter Group has duly and validly
executed and delivered each Transaction Document to which it is a party
that is being executed and delivered simultaneously with this
Agreement, and each such Transaction Document is legally binding on
such member and enforceable against such member in accordance with its
terms, except as may be limited by bankruptcy, insolvency or other laws
affecting the enforcement of creditors' rights generally or by general
principles of equity (regardless of whether considered in a proceeding
in equity or one at law). Each Transaction Document to be executed by
any member of the Dexter Group at the Closing, when executed and
delivered, will be duly and validly executed and delivered by, and will
be legally binding on, such member and enforceable against such member
in accordance with its terms, except as may be limited by bankruptcy,
insolvency or other laws affecting the enforcement of creditors' rights
generally or by general principles of equity (regardless of whether
considered in a proceeding in equity or one at law).
(c) Except as set forth on the Schedule to this Section, each
of the Dexter Coatings Companies, where applicable, in good standing
under the laws of its jurisdiction of its organization and has the
corporate power and authority and all authorizations, licenses, permits
and certifications necessary to own and operate its properties used in
the Coatings Business and to carry on the Coatings Business as
heretofore conducted. The copies of the charter and bylaws of each of
the Dexter Coatings Stock Companies and the Dexter Coatings Joint
Venture Companies which have been delivered or made available by Dexter
to Buyer prior to the date hereof reflect all material amendments made
thereto and are materially correct and complete as of the date hereof.
Each Dexter Coatings Stock Company is a direct or indirect wholly owned
Subsidiary of Dexter, except Dexter SAS. None of the Dexter Coatings
Stock Companies and the Dexter Coatings Joint Venture Companies owns
any shares, partnership interest, joint venture interest or any other
security or ownership interest issued by any other corporation,
organization or entity, except Vernicolor A.G., which owns 35% of the
capital stock of Verniplast A.G., a Swiss company, and 45% of the
capital stock of Vernicolor Thai Ltd., a Thai company.
5.02 No Conflict. Except as set forth on the Schedule to this Section,
the execution and delivery of each Transaction Document by each member of the
Dexter Group that is or will be a party thereto, and the performance by such
member of its obligations under such Transaction Document, do not and will not
(a) conflict with the charter documents, by-laws or similar organizational
<PAGE>
documents of such member, or (b) result in any material breach of any of the
provisions of, constitute a material default under, result in a material
violation of, or result in the creation of a right of termination or
acceleration or of any Lien upon any of the Shares or other Acquired Assets
under any material law, judgment, order, decree, or agreement, to which it or
any other member of the Dexter Group is bound. Except as set forth on the
Schedule to this Section, the execution and delivery of each Transaction
Document by each member of the Dexter Group that is or will be a party thereto,
and the performance by such member of its obligation under such Transaction
Document, do not and will not, require any action by or in respect of, or filing
with, any Governmental Authority.
12.3 Financial Statements.
(a) The Schedule to this Section contains (i) the unaudited
consolidated balance sheet of the Coatings Business as of December 31,
1997 and the unaudited consolidated statement of earnings of the
Coatings Business for the year ended December 31, 1997 (such balance
sheet and statement of earnings being referred to collectively as the
"Annual Financial Statements) and (ii) the unaudited consolidated
balance sheet of the Coatings Business as of June 30, 1998 and the
unaudited consolidated statement of earnings of the Coatings Business
for the six months ended June 30, 1998 (such balance sheet and
statement of earnings being referred to collectively as the "Latest
Financial Statements). The Annual Financial Statements and Latest
Financial Statements are collectively referred to herein as the
"Financial Statements." Except as set forth on the Schedule to this
Section, the Financial Statements are based upon the information
contained in the books and records of Dexter and the other Dexter
Coatings Companies and were prepared in accordance with United States
generally accepted accounting principles, consistently applied
("GAAP"), and fairly present in all material respects the financial
position of the Coatings Business as of such date and the results of
operations of the Coatings Business for the period specified.
(b) Except as set forth on the Schedule to this Section, none of
the Dexter Coatings Companies has any material liability pertaining to
the Coatings Business (whether accrued, absolute, contingent,
unliquidated or otherwise, whether due or to become due, whether known
or unknown), except for (i) liabilities reflected in the Latest
Financial Statements, or (ii) liabilities which have arisen after June
30, 1998 in the ordinary course of business. For purposes hereof, no
uninsured liability for breach of contract, breach of warranty, product
defect, tort, infringement, claim or lawsuit shall be deemed for
purposes hereof to have arisen in the ordinary course of business.
<PAGE>
(c) Since June 30, 1998, there has not been any material
adverse change in the business, financial condition or results of
operation of the Coatings Business taken as a whole.
(d) Except as set forth on the Schedule to this Section, since
June 30, 1998, with respect to the Coatings Business, none of the
Dexter Coatings Companies has: (i) created, incurred, assumed, or
guaranteed more than $100,000 in aggregate indebtedness for borrowed
money (other than indebtedness to another member of the Dexter Group);
(ii) entered into any agreement that creates a mortgage, pledge or Lien
(other than a Permitted Lien) on any of the assets of the Dexter
Coatings Companies, other than in the ordinary course of business (iii)
sold, assigned or transferred (including without limitation transfers
to any employees, affiliates or shareholders) any tangible assets,
except inventories of raw materials or finished goods, other than in
the ordinary course of business; (iv) sold, assigned or transferred
(including, without limitation, transfers to any employees, affiliates
or shareholders) any patents, trademarks, trade names, copyrights,
trade secrets or other material intangible assets; (v) waived any
contractual or other rights of material value; (vi) issued, sold or
transferred any of its shares, securities convertible into or
exchangeable for its shares, warrants, options or other rights to
acquire its shares, or any bonds or debt securities; (vii) made any
single capital expenditure or commitment therefor in excess of $100,000
or the equivalent thereof in other currencies; (viii) suffered any
material damage, destruction or loss of or to any property or
properties owned or used by it, whether or not covered by insurance;
(ix) made or granted any increase in any employee benefit plan or
arrangement, or amended or terminated any existing employee benefit
plan or arrangement, or adopted any new employee benefit plan or
arrangement or made any commitment, other than in the ordinary course
of business and in accordance with past custom and practice; (x) made
any change in accounting principles or employed accounting practices
inconsistent with those previously adhered in the preparation of its
financial statements; (xi) authorized the amendment of or amended its
charter or by-law; (xii) materially amended or modified any material
Contract listed on the Schedule to Section 5.10 other than in the
ordinary course of business; or (xiii) made any loan or advance to any
Person or entity (other than routine travel advances to employees and
routine credit terms to customers).
5.04 Tangible Personal Property. Except as set forth in the Schedule to
this Section, the Coatings Assets include all of the material tangible personal
property (whether owned or leased or otherwise made available to the Coatings
Business by agreement) used in the operation of the Coatings Business as
conducted on the date hereof. The Dexter Coatings Companies have good title, or
a valid leasehold interest in, all of the material tangible personal property
used in the operation of the Coatings Business. Except with respect to the Owned
<PAGE>
Real Property and the Leased Real Property, which are the subject of Section
5.06, the Acquired Assets are not subject to any mortgages, liens, security
interests, claims, pledges, options, charges or other encumbrances ("Liens")
except for (a) Liens that are listed or described on the Schedule to this
Section, (b) mechanics', carriers', workers', warehousemen's, materialmen's,
repairmen's or other Liens arising or incurred in the ordinary course of
business of the Coatings Business, (c) Liens for Taxes, assessments and other
similar governmental charges which are not due and payable or which may
thereafter be paid without penalty or which are reflected in the Closing
Statement, (d) other imperfections of title or encumbrances, if any, which do
not materially affect the marketability of the property subject thereto and do
not materially impair the use of the property subject thereto in the Coatings
Business as presently conducted, and (e) other Liens arising as a matter of Law.
(The Liens referred to in clauses (a) through (e) of the immediately preceding
sentence are hereafter referred to collectively as "Permitted Liens".) Except as
set forth in the Schedule to this Section, all of the material tangible personal
property currently used in the operation of the Coatings Business is in
reasonable condition and repair given its age and service.
5.05 Title to Shares. The Selling Companies have good and valid title
to the number of shares (the "Shares") of the issued and outstanding capital
stock of each of the Dexter Coatings Stock Companies and each of the Dexter
Coatings Joint Venture Companies set forth on the Schedule to this Section. The
Shares represent all of the issued and outstanding capital stock of the Dexter
Coatings Stock Companies and that portion of the issued and outstanding capital
stock of the Dexter Coatings Joint Venture Companies set forth on the Schedule
to this Section. Except as set forth on the Schedule to this Section, (a) the
Shares are duly authorized, validly issued and outstanding, fully paid and
nonassessable and (b) the Shares have not been issued in violation of, and are
not subject to, any preemptive rights or other Liens. Except as set forth in the
Schedule to this Section, there are no outstanding convertible or exchangeable
securities, calls, options or similar agreements relating to the Shares or that
may require any of the Dexter Coatings Stock Companies or any of the Dexter
Coatings Joint Venture Companies to issue to any person or entity any shares of
any of its capital stock. Except as set forth on the Schedule to this Section,
there are no voting trust or other agreements restricting the voting, dividend
rights or disposition of the Shares.
5.06 Properties. The Schedule to this Section sets forth a complete
list of the Owned Real Property and the Leased Real Property and any rights of
third parties to occupy space at these properties. Dexter or another Dexter
Coatings Company has title to the Owned Real Property and title to the leasehold
interests in the Leased Real Property (subject to the terms of the applicable
leases, subleases and related instruments governing the owner's interests
therein, as listed on the Schedule to this Section), free and clear of all Liens
other than (a) Liens listed or described on the Schedule to this Section, (b)
Liens referred to
<PAGE>
in the title policies listed on the Schedule to this Section, (c) other
Permitted Liens, (d) Liens that arise under zoning, land use and other similar
laws, and (e) easements, covenants, rights-of-way and other encumbrances or
restrictions, whether recorded or referred to in an applicable lease or
unrecorded, which do not materially impair the continued use of the property
subject thereto in the Coatings Business as presently conducted. The Owned Real
Property and the Leased Real Property constitute all of the real property owned
or occupied by the Dexter Coatings Companies and used in the operation of the
Coatings Business, other than the real property owned by Dexter in Waukegan,
Illinois. Except as set forth in the Schedule to this Section, the material
buildings, structures, improvements and fixtures currently used in the operation
of the Coatings Business and located on Owned Real Property and the Leased Real
Property are in reasonable condition and repair given their age and service.
5.07 Litigation.
(a) Except as set forth in the Schedule to this Section, (i)
there are no actions, suits or proceedings pending against any Dexter Coatings
Company or the Coatings Business, that would reasonably be expected to have a
material adverse effect upon the business, financial condition or results of
operations of the Coatings Business taken as a whole, and (ii) to the Knowledge
of Dexter, no such actions, suits or proceedings are threatened.
(b) Except as set forth in the Schedule to this Section, to
the Knowledge of Dexter, there are no pending or threatened governmental
investigations of any of the Dexter Coatings Companies pertaining to the
Coatings Business or any of the Acquired Assets, including but not limited to
investigations relating to compliance with Environmental Law.
5.08 Coatings Assets. The Coatings Assets and the Excluded Assets,
taken together, constitute all of the assets necessary to conduct the Coatings
Business as currently conducted by the Dexter Coatings Companies.
5.09 Insurance. The Schedule to this Section sets forth a list of the
material insurance policies maintained by Dexter or another Dexter Coatings
Company in respect of the Coatings Business. With respect to each such insurance
policy: (a) the policy is legal, valid, binding, enforceable, and in full force
and effect in all material respects; (b) neither any member of the Dexter Group
nor any other party to the policy is in material breach or default (including
with respect to the payment of premiums or the giving of notices), and no event
has occurred which, with notice or the lapse of time, would constitute a
material
<PAGE>
breach or default, or permit termination, modification, or acceleration, under
the policy; and (c) no party to the policy has repudiated any material provision
thereof.
5.10 Contracts. Except as listed or described on the Schedule to this
Section, as of the date hereof, neither Dexter nor any of the other Dexter
Coatings Companies is a party to or bound by any contract, lease, license or
other legally binding commitment ("Contract") relating primarily to or
materially affecting the Coatings Business that is of a type described below:
(a) Any employment, severance or consulting Contract with an
employee or former employee of Dexter or another Dexter Coatings
Company that is not terminable at will (other than any Contract for the
employment of any such employee or former employee implied in law) and
which will require the payment of amounts to such employee after the
date hereof in excess of $75,000 per annum or the equivalent thereof in
other currencies;
(b) Any collective bargaining Contract with any labor union;
(c) Any Contract for capital expenditures or the acquisition
or construction of fixed assets which requires aggregate future
payments in excess of $250,000 or the equivalent thereof in other
currencies;
(d) Any Contract for the sale of a capital asset for a price
in excess of $100,000 or the equivalent thereof in other currencies;
(e) Any Contract requiring aggregate future payments or
expenditures in excess of $100,000 and relating to cleanup, abatement
or other actions in connection with environmental liabilities;
(f) Any Contract, or group of related Contracts with the same
Person, for the purchase of goods or services under which the
undelivered balance of such goods or services is in excess of $250,000
or the equivalent thereof in other currencies;
(g) Any Contract, or group of related Contracts with the same
Person, for the sale of goods or services under which the undelivered
balance of such goods or services has a sales price in excess of
$250,000 or the equivalent thereof in other currencies;
(h) Any Contract providing for the performance by a Dexter
Coatings Company of any development, engineering, design, or
manufacturing services;
<PAGE>
(i) Any Contract between a Dexter Coatings Company and any
other member of the Dexter Group;
(j) Any Contract licensing, authorizing or permitting any
Person to use any of the Intellectual Property of a Dexter Coatings
Company, other than (i) licenses, authorizations or permits to another
Dexter Coatings Company and (ii) licenses, authorizations or permits
for terms of less than one year that were entered into in the ordinary
course of business of the Coatings Business;
(k) Any Contract providing for the payment or receipt of
royalties or other compensation by any of the Dexter Coatings Companies
in connection with the use of any of the Intellectual Property of the
Dexter Coatings Companies;
(l) Any indenture, mortgage, loan or credit Contract relating
to the borrowing of money, or to the issuance of any note, bond,
indenture or other evidence of indebtedness for borrowed money, by any
Dexter Coatings Company, or to the issuance or any letter of credit,
bank guaranty, performance bond or other similar instrument for the
account or benefit of any Dexter Coatings Company, or any agreement
under which a Lien (other than a Permitted Lien) is placed on any of
the assets of any of the Dexter Coatings Companies;
(m) Any Contract containing a guaranty by a Dexter Coatings
Company of the obligations of another Person, whether with respect to
borrowed money, contract performance or otherwise;
(n) Any Contract with any manufacturer's representative, sales
agent or distributor relating to the sale of the products or services
of any of the Dexter Coatings Companies which has a remaining term in
excess of one year and is not terminable without penalty on 90 calendar
days' or less notice;
(o) Any Contract under which Dexter or another Dexter Coatings
Company is (i) a lessee of, or holds or uses, any machinery, equipment,
vehicle or other tangible personal property owned by an unaffiliated
Person or (ii) a lessor of any tangible personal property owned by
Dexter or another Dexter Coatings Company, in any such case which
requires annual payments in excess of $25,000 or the equivalent thereof
in other currencies;
(p) Any Contract establishing a partnership, joint venture or
other similar relationship;
<PAGE>
(q) Any Contract relating to the acquisition or disposition of
any business (whether by merger, sale of stock, sale of assets or
otherwise) that was entered into after January 1, 1991;
(r) Any Contract that substantially limits the freedom of any
of the Dexter Coatings Companies to compete in any line of business
substantially similar to the Coatings Business or any portion thereof
or with any Person or in any area or which would so limit the freedom
of such Dexter Coatings Stock Company or Dexter Joint Venture Coatings
Company after the Closing Date;
(s) Any Contract for the purchase or sale of currencies that
has a term longer than 30 days and is in excess of $250,000 or the
equivalent thereof in other currencies;
(t) Any other Contract which involves aggregate future
payments by or to Dexter or another Dexter Coatings Company in excess
of $250,000.
Except as set forth on the Schedule to this Section, each Contract listed or
described on the Schedule to this Section is a valid and binding obligation of
Dexter or one of the other Dexter Coatings Companies. Except as set forth on the
Schedule to this Section, Dexter or one of the other Dexter Coatings Companies,
as the case may be, has performed in all material respects the obligations
required to be performed by it through the date hereof under each of such
Contracts and neither Dexter nor any of the other Dexter Coatings Companies, as
applicable, is (with or without the lapse of time or the giving of notice, or
both) in breach or default in any respect thereunder, except in any such case
for any breach or default which would not reasonably be expected to have a
material adverse effect upon the business, financial condition or results of
operations of the Coatings Business taken as a whole.
5.11 Employee Benefit Plans.
(a) The Schedule to this Section lists each written employee benefit plan that
provides retirement, pension, health care, long term disability income or life
insurance benefits (other than plans maintained or required by applicable law or
Governmental Authorities). This Schedule also lists each stock, stock option or
bonus plan. Dexter has heretofore delivered or made available to Buyer complete
copies of all such plans that are administered by the Dexter Group as currently
in effect.
(b) Each of the benefit plans Dexter Coatings Companies is in
compliance with applicable ERISA law and the regulations promulgated
thereunder, other than such non-compliance which would not reasonably
be expected to have a material adverse effect upon the business,
<PAGE>
financial condition or results of operations of any of the Coatings
Business taken as a whole.
5.12 Governmental and Environmental compliance. Except as set forth on
the Schedule to this Section or Schedule 5.07:
(a) Each of the Dexter Coatings Companies has all licenses,
permits and certificates from Governmental Authorities that are
material to the Coatings Business taken as a whole and necessary for or
used in the business as currently conducted.
(b) Each of the Dexter Coatings Companies and the Properties
are in substantial compliance with all Environmental Law.
(c) No Hazardous Materials have been generated, treated,
contained, handled, located, used, manufactured, processed, buried,
incinerated, deposited, stored, or released by any of the Dexter
Coatings Companies or by other members of the Dexter Group on, under or
adjacent to any of the Properties, except in substantial compliance
with applicable Environmental Law.
(d) To the Knowledge of Dexter none of the Properties contains
any asbestos which is friable (i.e. in condition such that remedial
action should reasonably be undertaken under any Environmental Law or
to protect human health.)
(e) None of the Dexter Coatings Companies or other members of
the Dexter Group has received any written notice that has not been
settled or otherwise resolved alleging in any manner that any of the
Dexter Coatings Companies is, or might be, responsible for any
spilling, leaking, disposing, discharging, emitting, depositing,
ejecting, leaching, escaping or any other release or threatened
release, however defined, whether intentional or unintentional, of any
Hazardous Material to the environment, except in substantial compliance
with applicable Environmental Law, or for any costs necessary to
protect human health, safety or the environment in connection with such
release, or arising in relation to, or in connection with a violation
of, any applicable Environmental Law.
(f) Except as in substantial compliance with any applicable
Environmental Law, no part of the business of any of the Dexter
Coatings Companies has involved the operation of, and none of the Real
Property has been used as, a landfill, dump or other disposal, storage,
transfer, handling or treatment area for Hazardous Materials, or as a
gasoline service station or a facility for selling, dispensing,
storing, transferring, disposing or handling petroleum and/or petroleum
products.
<PAGE>
(g) To the Knowledge of Dexter there are no material third party or internal
formal environmental compliance reports or site contamination studies with
respect to any of the Dexter Coatings Companies or any of the Properties.
5.13 Intellectual Property.
(a) The Schedule to this Section identifies each patent or registration which
has been issued to any of the Dexter Coatings Companies with respect to any of
its Intellectual Property used in the Coatings Business, identifies each pending
patent application or registration which any of the Dexter Coatings Companies
has made with respect to any of its Intellectual Property used in the Coatings
Business, and identifies each material license, agreement or other permission
which any of the Dexter Coatings Companies has made with respect to any of its
Intellectual Property used in the Coatings Business. The Schedule to this
Section also identifies each material trade name or registered trademark used by
any of the Dexter Coatings Companies in connection with the Coatings Business.
With respect to each item of Intellectual Property required to be identified in
the Schedule to this Section: (i) the Dexter Coatings Companies possess all
right, title and interest in and to the item, free and clear of any Liens; (ii)
the item is not subject to any outstanding injunction, judgment, order, decree
or ruling; and (iii) no suit, action or proceeding is pending or, to the
knowledge of Dexter, threatened which challenges the legality, validity,
enforceability, use, or ownership of the item, other than any such suit, action
or proceeding that individually or in the aggregate would not have a material
adverse effect on the Coatings Business taken as a whole. The Primary
Intellectual Property, the Secondary Intellectual Property and the Acquired
Companies Intellectual Property, taken together, constitute all of the
Intellectual Property necessary to conduct the Coatings Business as currently
conducted by the Dexter Coatings Companies.
(b) None of the Dexter Coatings Companies has interfered with,
infringed upon, misappropriated, or violated any material Intellectual
Property rights of third parties in any material respect in connection
with the operation of the Coatings Business. To the Knowledge of
Dexter, no third party has interfered with, infringed upon,
misappropriated, or violated any material Intellectual Property rights
of any of the Dexter Coatings Companies.
5.14 Taxes. Dexter and the other Dexter Coatings Companies have filed
or caused to be filed with the appropriate Governmental Authorities all tax
returns and reports required to be filed by them with respect to the Coatings
Business on or prior to the Closing Date (taking into account all extensions of
due dates) and Dexter and the other Dexter Coatings Companies have paid or
adequately reserved or provided for all Taxes shown thereon as owing. There are
no tax liens (other than possibly property tax liens) with respect to the
Coatings Business. Except as set forth on the Schedule to this Section, no
<PAGE>
Governmental Authority has proposed in writing any adjustment to any such tax
return or report which adjustment relates to the Coatings Business, unless such
adjustment has been adequately provided for or satisfied. Neither Dexter nor the
other Dexter Coatings Companies has made any election under Section 341(f) of
the Code for any tax year not yet closed for statute of limitations purposes.
Except as otherwise set forth on the Schedule to this Section, no demand or
claim has been made against Dexter or any of the other Dexter Coatings Companies
with respect to any Taxes arising out of membership or participation in any
consolidated, affiliated, combined or unitary group of which Dexter or any other
Dexter Coatings Companies was at any time a member.
5.15 Compliance with Laws. Except as set forth on the Schedule to this
Section or the Schedule to Section 5.12, neither Dexter nor any other Dexter
Coatings Company is in violation of any applicable domestic, foreign or other
statute, law, ordinance, rule, regulation, judgment, order, injunction, decree,
ruling or common law in respect of the conduct of the Coatings Business,
including without limitation measures such as the United States Toxic Substances
Control Act, the Pure Food and Drug Act, the regulations promulgated thereunder,
and other similar measures domestic or foreign, other than such violations which
would not reasonably be expected to have a material adverse effect upon the
business, financial condition or results of operations of any of the Coatings
Business taken as a whole.
5.16 Customers. Except as set forth on the Schedule to this Section, to
the Knowledge of Dexter, none of the customers of any Dexter Coatings Company
which, during the 12-month period ended on June 30, 1998, was among the 10
largest customers of the Coatings Business, measured in terms of the volume of
purchases from the Dexter Coatings Companies taken as a group, has indicated in
writing that it will stop or materially decrease the rate of purchases from the
Dexter Coatings Companies.
5.17 Employees. The Schedule to this Section lists the names of all
employees of each of the Dexter Coatings Companies. Except for the collective
bargaining agreements identified on the Schedule to Section 5.10 of this
Agreement, none of Dexter Coatings Companies is a party to or bound by any
collective bargaining agreement. Except as set forth on the Schedule to this
Section, none of the Dexter Coatings Companies has experienced any strike or
material grievance, claim or other collective bargaining dispute within the past
year. None of the Dexter Coatings Companies has committed any material unfair
labor practice. To the Knowledge of Dexter, no organizational effort is
presently being made or threatened by or on behalf of any labor union with
respect to employees of any of the Dexter Coatings Companies.
5.18 Finders. Except for Merrill Lynch & Co., Inc., no third party
shall be entitled to receive any brokerage commissions, finder's fees, fees for
financial advisory services or similar compensation in connection with the
transactions
<PAGE>
contemplated by this Agreement based on any arrangement or agreement made by or
on behalf of any member of the Dexter Group. The fees of Merrill Lynch & Co.,
Inc. shall be paid by Dexter.
5.19 Inventory. The inventory of the Coatings Business consists of raw
materials and supplies, intermediates, goods in process, and finished goods, all
of which are merchantable and fit for the purpose for which they were procured
or manufactured, and none of which are slow-moving, obsolete, damaged, or
defective, subject only to the reserve for inventory writedown reflected in the
Financial Statements as adjusted for the passage of time through the Closing
Date in accordance with the past custom and practice of the Dexter Coatings
Companies.
5.20 Year 2000 Compliance. All hardware and software, whether embedded
or otherwise, used by the Dexter Coatings Companies in and material to the
Coatings Business as currently conducted ("Material Technology") is either (a)
Year 2000 Compliant or (b) subject of a plan for insuring that the Material
Technology will be Year 2000 Compliant (the "Year 2000 Plan") no later than June
30, 1999, which Year 2000 Plan is described on the Schedule to this Exhibit.
Dexter has also created a ninety day action plan (the "Year 2000 Action Plan"),
which is designed to implement some of the critical elements of the Year 2000
Plan within a ninety-day period. "Year 2000 Compliant" shall mean the ability of
the Material Technology, with respect to the Coatings Business, to provide the
following functions: (a) handle date information involving any and all dates
before, during and/or after January 1, 2000, including accepting input,
providing output, and performing date calculations in whole or in part; (b)
operate in respect of any and all dates before, during and/or after January 1,
2000, without any change in performance; and (c) store and provide output of
date information in ways that are unambiguous as to century.
5.21 Powers of Attorney. Except as set forth on the Schedule to this
Section, there are no outstanding powers of attorney executed on behalf of any
of the Dexter Coatings Companies.
5.22 Product Warranty. Except as set forth in the Schedule to Section
5.07 of this Agreement, substantially all of the products manufactured, sold,
leased, or delivered by the Dexter Coatings Companies in connection with the
Coatings Business have conformed in all material respects with all applicable
contractual commitments and all express and implied warranties, and none of the
members of the Dexter Coatings Companies has, in respect of the Coatings
Business, any material liability for replacement or repair thereof or other
damages in connection therewith, subject only to the reserve for product
warranty claims reflected in the Latest Financial Statements as adjusted for the
passage of time through the Closing Date in accordance with the past custom and
practice of the Dexter Coatings Companies.
<PAGE>
5.23 Product Liability. Except as set forth in the Schedule to Section
5.07 to this Agreement, none of the members of the Dexter Coatings Companies has
any material liability arising out of any injury to individuals or property as a
result of the ownership, possession, or use of any product manufactured, sold,
leased, or delivered by any of the Dexter Coatings Companies in connection with
the Coatings Business.
5.24 Guaranties. Except as identified on the Schedule to Section 5.12
to this Agreement, none of the Dexter Coatings Stock Companies is a guarantor
for any liability or obligation (including indebtedness) of any other Person.
5.25 Certain Business Relationships. Except as set forth in the
Schedule to this Section, none of the directors or officers of the Dexter
Coatings Companies has been involved in any business arrangement or relationship
relating to the Coatings Business that involves a conflict of interest,
including, without limitation, owning any asset, tangible or intangible, which
is used in the Coatings Business.
5.26 Documents. All material documents made available by Dexter to
Buyer that are referred to in any of the foregoing representations and
warranties or in the Schedules to any of them, other than original documents,
are true and correct copies of the original documents as contained in the
business records of the Dexter Group, and all such documents made available to
Buyer, whether originals or copies, are complete in all material respects.
ARTICLE 6
BUYER'S REPRESENTATIONS
Buyer represents and warrants to Dexter and the other Selling Companies
as follows:
6.01 Buying Companies' Corporate Status and Authority. Each member of
the Buyer Group that is a party to the Transaction Documents is a corporation
duly organized and validly existing under the laws of its jurisdiction of
organization. Each Buying Company (other than Buyer) is a direct or indirect
Subsidiary of Buyer. Each member of the Buyer Group has full legal power to
enter into each Transaction Document to which it is or will be a party, and to
perform its obligations under such Transaction Document.
The execution and delivery by each member of the Buyer Group of each
Transaction Document to which it is or will be a party, and its performance of
its obligations under such Transaction Document, have been duly authorized by
all required corporate action of such member. Each such member of the Buyer
Group has duly and validly executed and delivered each Transaction Document to
which it is a party that is being executed and delivered simultaneously with
this
<PAGE>
Agreement, and each such Transaction Document is legally binding on such member
and enforceable against such member in accordance with its terms, except as may
be limited by bankruptcy, insolvency or other laws affecting the enforcement of
creditors' rights generally, by general principles of equity (regardless of
whether considered in a proceeding in equity or one at law). Each Transaction
Document to be executed by any member of the Buyer Group at the Closing, when
executed and delivered, will be duly and validly executed and delivered by, and
will be legally binding on, such member and enforceable against such member in
accordance with its terms, except as may be limited by bankruptcy, insolvency or
other laws affecting the enforcement of creditors' rights generally, by general
principles of equity (regardless of whether considered in a proceeding in equity
or one at law).
6.02 No Conflict. The execution and delivery of each Transaction
Document by each member of the Buyer Group that is or will be a party thereto,
and the performance by such member of its obligations under such Transaction
Document, do not and will not (a) conflict with the charter documents, by-laws
or similar organizational documents of such member, or (b) result in any breach
of any of the provisions of, or constitute a default under, any judgment, order,
decree, or agreement to which it is a party or by which it is bound. Except as
set forth on the Schedule to this Section, the execution and delivery of each
Transaction Document by each member of the Buyer Group that is or will be a
party thereto, and the performance by such member of its obligation under such
Transaction Document, do not and will not, require any action by or in respect
of, or filing with, any Governmental Authority.
6.03 Sufficient Funds. The Buying Companies will have on the Scheduled
Closing Date sufficient funds to consummate the transactions contemplated by
this Agreement.
6.04 Finders. No third party shall be entitled to receive any brokerage
commissions, finder's fees, fees for financial advisory services or similar
compensation in connection with the transactions contemplated by this Agreement
based on any arrangement or agreement made by or on behalf of any member of the
Buyer Group.
ARTICLE 7
BUYER'S INVESTIGATION
7.01 Access and Inquiry. Between the date of this Agreement and the
Closing, the Buying Companies shall have reasonable access to the facilities of
the Coatings Business and will, upon request, be permitted to contact and make
reasonable inquiry of employees of the Dexter Coatings Companies regarding the
Coatings Business, Acquired Assets and Acquired Liabilities. Except for the
details of any trade secrets or other sensitive intellectual property, Dexter
shall,
<PAGE>
and shall cause the other Dexter Coatings Companies to, make available to the
Buying Companies all books, records, and other financial data and files of the
Dexter Coatings Companies relating directly to the Coatings Business, Acquired
Assets and Acquired Liabilities, to the extent reasonably requested by any
Buying Company. Buyer, on behalf of itself and the other Buying Companies,
acknowledges that the terms of the Confidentiality Agreement shall apply to
information gained by Buyer or any other Buying Company pursuant to the
foregoing.
7.02 No Additional Representations. Neither Buyer nor any of the other
Buying Companies are relying on the Dexter Coatings Companies (or any other
members of the Dexter Group) with respect to any matter in connection with the
investigation or evaluation of the Coatings Business, Acquired Assets or
Acquired Liabilities by Buyer and the other Buying Companies, except for the
specific representations and warranties in this Agreement, the other Transaction
Documents and the certificates delivered by Dexter to the Buying Companies at
the Closing. None of the Dexter Coatings Companies (nor any other member of the
Dexter Group) is making any representation or warranty, express or implied, of
any nature whatsoever with respect to the Coatings Business, Acquired Assets or
Acquired Liabilities, except for the specific representations and warranties in
this Agreement, the other Transaction Documents and the certificates delivered
by Dexter to the Buying Companies at the Closing.
ARTICLE 8
COVENANTS
8.01 Filings and Authorizations. As promptly as practicable after the
date of this Agreement, Dexter and Buyer shall (a) file or cause to be filed all
notifications and information required to be filed or supplied pursuant to the
HSR Act in connection with the sale of the Coatings Business pursuant to this
Agreement, and (b) if either Dexter or Buyer so determines, shall request early
termination of the waiting period under the HSR Act. Each of Dexter and Buyer,
as promptly as practicable, shall (i) make or cause to be made, all such other
filings and submissions under laws, rules and regulations applicable to it or
members of the Dexter Group or the Buyer Group, as the case may be, as may be
required for them to consummate the sale of the Coatings Business in accordance
with the terms of this Agreement, and (ii) use its reasonable best efforts to
obtain, or cause to be obtained, all authorizations, approvals, consents and
waivers from all Governmental Authorities necessary to be obtained by it in
order for it to so consummate such transfer.
8.02 Licenses and Permits. As soon as practicable after the date
hereof, Buyer shall cause the Buying Companies to prepare and file or cause to
be prepared
and filed with the appropriate Governmental Authorities applications for the
issuance to the Buyer Group of all governmental licenses and permits required
<PAGE>
for the Buyer Group to operate the Coatings Business after the Closing. Buyer
shall, and Buyer shall cause the other Buying Companies to use reasonable
efforts to secure such licenses and permits before the Closing Date. Dexter
shall, and Dexter shall cause the other Dexter Coatings Companies to use
reasonable efforts to assist the Buyer Group in the preparation of such
applications and the securing of such licenses and permits.
8.03 Notices and Consents. Buyer shall, and shall cause the other
Buying Companies to, and Dexter shall and shall cause the other Selling
Companies to, give all notices, and make all filings with, Governmental
Authorities that may reasonably be required to consummate the transactions
contemplated by this Agreement. Dexter will give, and will use reasonable best
efforts to obtain, the consents identified on the Schedule to this Agreement.
Any contract or agreement of the Selling Companies relating primarily to the
Coatings Business as to which appropriate consents to transfer or assignment
have not been obtained as of the Closing Date shall be retained by the Selling
Companies, and the Selling Companies shall use reasonable best efforts to make
the use and benefit of such contract or agreement available to Buyer to the same
extent, as nearly as may be possible, as if such impediment to assignment or
transfer did not exist.
8.04 Reasonable Efforts. In making reasonable efforts under Sections
8.01, 8.02 and 8.03, no member of the Dexter Group or the Buyer Group shall be
required to make any payment (other than statutorily required payments and
reasonable legal fees) that it is not presently contractually required to make,
divest any assets (including but not limited to assets of the Coatings
Business), make any change in the conduct of its business or that of the
Coatings Business, accept any limitation on the future conduct of its business
or that of the Coatings Business, enter into any other agreement or arrangement
with any person that it is not presently contractually required to enter into,
accept any significant modification in any existing agreement or arrangement, or
agree to any of the foregoing.
8.05 Exclusivity. Dexter will not (and Dexter will not cause or permit
any member of Dexter Group to) solicit, initiate, encourage the submission of
any proposal or offer from any person, or participate in any negotiations,
relating to the acquisition of any capital stock or other voting securities of
the Dexter Coatings Stock Companies, or any substantial portion of the Acquired
Assets (including any acquisition structured as a merger, consolidation, or
share exchange).
8.06 Tax Matters.
(a) Dexter has entered into an agreement to acquire the 6,687 shares of
Dexter SAS, a French company, presently owned by SNPE, a copy of which agreement
has been provided to Buyer. In the event that Dexter acquires said
<PAGE>
shares on or before the Closing Date: (i) Dexter shall be entitled to make an
election (and/or to cause Dexter SAS to make an election) to treat Dexter SAS as
a disregarded entity for US Federal (and State and local, if applicable) income
tax purposes, pursuant to US Treasury Regulation Sections 301.7701-1 through -3
(the "Disregarded Entity Election"), with the effective date of such election to
be prior to the Closing Date, and (ii) Buyer shall cooperate fully with Dexter
and shall take all such actions as Dexter may reasonably request in connection
with making the Disregarded Entity Election, including without limitation
causing Dexter SAS and its authorized representatives to execute IRS Forms 8832,
SS-4 and any other forms or documents as Dexter may deem reasonable or necessary
for purposes of effecting the Disregarded Entity Election. If Dexter makes the
Disregarded Entity Election, Buyer shall be entitled thereafter, at its expense,
request permission from the U.S. Internal Revenue Service to reverse the
Disregarded Entity Election. The parties hereto agree that, with respect to the
sale of shares of Dexter SAS, the closing for the sale of such shares may occur,
at Dexter's option, in France.
(b) The Buyer shall not, and shall cause the other members of the Buyer
Group not to: (i) make an election, with the effective date of such election
being on or before the Closing Date, to treat any of the Dexter Coatings Stock
Companies whose shares are being acquired pursuant to this Agreement (or the
documents contemplated hereby), as a disregarded entity (or as a partnership)
for US Federal (and State and local, if applicable) income tax purposes,
pursuant to US Treasury Regulation Section 301.7701 - 1 through -3; or (ii) make
any dividend or other distributions to shareholders from any of the Dexter
Coatings Stock Companies at any time on or after the Closing Date until January
1, 1999 (the "Remainder of the Year"), provided, however, that in the event
Buyer or any of the Dexter Coatings Stock Companies makes a valid election (a
"338 Election") under Section 338 of the US Internal Revenue Code of 1986, as
amended, with respect to any of the Dexter Coatings Stock Companies during the
Remainder of the Year and provides Dexter with notice (a "338 Notice") of such
338 Election, as provided for in US Treasury Regulation Section 1.338-1(g),
promptly thereafter, the Dexter Coatings Stock Company for which such 338
Election has been made may make dividend or other distributions to its
shareholders during the Remainder of the Year but only during the portion
thereof following (A) the making of such 338 Election, and (B) receipt by Dexter
of the 338 Notice with respect to such 338 Election.
(c) The Buyer shall, and shall cause the other members of the Buyer
Group to prepare, within 120 days of the Closing Date, usual and customary
Dexter Coatings Companies' tax return reporting packages with respect to the tax
period beginning January 1, 1998 and ending as of the Closing Date, but only to
the extent that the employees who would have prepared such tax reporting
packages prior to the Closing Date are available to prepare such tax reporting
packages after the Closing Date (i.e. said employees are employed by the Buyer
Group and in the same positions). To the extent that such employees are not
<PAGE>
available to prepare the tax reporting packages after the Closing date, Buyer
shall, and shall cause the other members of the Buyer Group to make available to
Dexter, within 120 days of the Closing Date, the information reasonably
necessary to permit Dexter to prepare usual and customary Dexter Coatings
Companies' tax return reporting packages with respect to the tax period
beginning January 1, 1998 and ending as of the Closing Date.
(d) Dexter and Buyer agree that Buyer has purchased substantially all
the property used in Dexter's Coatings Business in the United States, and in
connection therewith, Buyer shall employ individuals who immediately before the
Closing Date were employed in such trade or business by Dexter. Accordingly,
pursuant to Rev. Proc. 96-60, IRB 1996-53, Buyer shall furnish a Form W-2 to
each employee employed by Buyer who had been employed by Dexter, disclosing all
wages and other compensation paid for such calendar year, and taxes withheld
therefrom, and Dexter shall be relieved of the responsibility to do so.
8.07 Remedial Activities. Buyer shall have the right to perform and
control all aspects of Remedial Activities pertaining to the environmental
liabilities and obligations described in Schedule 5.12 to this Agreement,
subject to the rights of Dexter set forth in this subparagraph Section 8.07.
Buyer shall promptly provide Dexter with copies of all finalized consultants'
reports, laboratory analysis, and correspondence with Governmental Authorities
and third parties relating to Remedial Activities. No less than 30 days prior to
proposing any cleanup standard or plan for Remedial Activities to Governmental
Authorities or initiating any Remedial Activities (other than emergency action
required to address an imminent threat to health, safety or the environment),
Buyer shall notify Dexter in writing of the specific Remedial Activities it
plans to perform and its reasons for doing so. If Dexter has objections to any
clean up standard or plan for Remedial Activities proposed by Buyer, Dexter
shall provide Buyer with specific written comments within 15 business days of
receipt of the notice from Buyer. Buyer and Dexter agree to consult with one
another and to attempt, in good faith, to work out any differences. If Buyer and
Dexter are unable to resolve the matter giving rise to Dexter's objection, then
an independent environmental consultant, mutually selected by the Buyer and
Dexter, shall be engaged to resolve the matter. The decision of such independent
environmental consultant shall be final and binding on the parties hereto, and
Dexter and Buyer shall share equally the fees for such independent attorney or
environmental consultant.
8.08 Year 2000 Compliance. From the date of this Agreement through the
Closing Date, Dexter shall, and shall cause the Dexter Coatings Companies to,
make their best efforts to implement the Year 2000 Plan and the Year 2000 Action
Plan. From the date of this Agreement through the Closing Date, Dexter shall
regularly consult with Buyer regarding such efforts.
<PAGE>
8.09 Off-Site Liabilities. Dexter shall manage and otherwise be
responsible for all penalties, fines, damages, liabilities, losses or costs
(including reasonable attorneys' fees and other costs and expenses incident to
any proceedings, investigations, prosecution or defense) incurred due to
Dexter's failure to comply with any Environmental Law which relates to any
location other than the Properties.
8.10 Sale of Verniplast. Prior to the Closing Date, Vernicolor A.G. may
sell its equity interest in Verniplast A.G. to Plast - Labor A.G. on terms and
conditions which, in the mutual and reasonable judgment of Dexter and Buyer, are
no less favorable to Vernicolor A.G., in terms of product supply, rights in
technology or otherwise, than those of the currently existing agreements between
Vernicolor A.G. and Plast-Labor A. G.
8.11 Cash Payments. Dexter shall use its best efforts to cause the
Dexter Coatings Stock Companies and the Dexter Coatings Joint Venture Companies
to pay cash dividends to their respective shareholders in order to reduce, up to
the amount legally permitted, the cash held by these companies at the Valuation
Time.
8.12 Dexter Mexicana S.A.de C.V. Dexter shall pay all penalties and
fines (and reasonable attorneys' fees and other costs and expenses incident to
any proceedings, investigations, prosecution or defense) relating to or arising
out of Dexter Mexicana S.A. de C.V.'s failure to obtain a construction permit
("Construction Permit") from SEMARNAP (including the failure to obtain operating
permits) in connection with its Leased Property in Mexico referenced in Schedule
5.06 ("Mexican Facility"). In the event that the Closing occurs prior to
February 28, 1999 and a Governmental Authority or the laws and regulations of
Mexico do not permit full operations at the Mexican Facility at the time of the
Closing, Dexter shall timely pay the rent on the Mexican Facility until the
earlier to occur of February 28, 1999 or the date on which full operations of
the Mexican facility are permitted. In the event that a Governmental Authority
or the laws and regulations of Mexico do not permit full operations at the
Mexican Facility as of the later to occur of the Closing Date or February 28,
1999, Dexter shall, at Buyer's option, either timely pay the rent on the Mexican
Facility until full operations are permitted or assume all obligations under the
Mexican Facility lease and pay all reasonable moving expenses relating to the
transport of all Acquired Assets located at the Mexican facility to another
location in Mexico selected by Buyer. Buyer agrees to use its best efforts to
assist Dexter in obtaining the Construction Permit.
ARTICLE 9
CONDUCT OF BUSINESS PRIOR TO THE CLOSING
<PAGE>
Without Buyer's prior written consent, from the date of this Agreement
until the Closing:
9.01 Operation in Ordinary Course. Except as otherwise provided in the
Schedule to this Section, Dexter shall, and shall cause Dexter Coatings
Companies to, conduct the Coatings Business only in the ordinary course of
business and consistent with prior practice. Without limiting the generality of
the foregoing, Dexter shall not, and shall cause the Dexter Coatings Companies
not to engage in any practice, take any action or enter into any transaction of
the kind described in Section 5.03(d).
9.02 Relations with Customers and Suppliers. Dexter shall, and shall
cause the other Dexter Coatings Companies to, use reasonable efforts to preserve
their relations with customers and suppliers of the Coatings Business.
9.03 Joint Venture Companies. (a) Buyer acknowledges that Dexter will
offer to sell its Shares in Dexter Midland Company Ltd. (the "Japanese JV
Shares") to Rock Paint Company, Limited (the "Japanese JV Partner") at a price
to be determined in accordance with the pre-emptive right accorded to the
Japanese JV Partner in the Formation Agreement, dated as of July 1, 1973 between
the Japanese JV Partner and Dexter (the "Japanese ROFO"). In the event the
Japanese JV Partner exercises its right to purchase the Japanese JV Shares,
notwithstanding anything to the contrary set forth in this Agreement, Buyer and
Dexter agree that (i) Dexter may sell the Japanese JV Shares to the Japanese JV
Partner and that the Total Purchase Price will be reduced by the amount of the
Local Purchase Price allocated to the Japanese JV Shares as set forth on Exhibit
D, and (ii) the sale of the Japanese JV Shares as set forth in this Section
9.03(a) will not have any effect on Buyer's and the Buyer Group's obligations to
consummate the transactions contemplated by this Agreement.
(b) Buyer acknowledges that Dexter will offer to sell its
interest in Midland-Dexter de Venezuela S.A. (the "Venezuela JV Shares") to
Inversiones Clefimar, C.A. (the "Venezuela JV Partner") at a price to be
determined in accordance with the pre-emptive right accorded to the Venezuelan
JV Partner under the terms of the Articles of Incorporation and By-Laws of
Midland-Dexter de Venezuela S.A. (the "Venezuela ROFO"). In the event the
Venezuela JV Partner exercises its right to purchase the Venezuela JV Shares,
notwithstanding anything to the contrary set forth in this Agreement, Buyer and
Dexter agree that (i) Dexter may sell the Venezuela JV Shares to the Venezuela
JV Partner and that the Total Purchase Price will be reduced by the amount of
the Local Purchase Price allocated to the Venezuela JV Shares as set forth on
Exhibit D, and (ii) the sale of the Venezuela JV Shares as set forth in this
Section 9.03(b) will not have any effect on Buyer's and the Buyer Group's
obligations to consummate the transactions contemplated by this Agreement.
<PAGE>
(c) Buyer acknowledges that Dexter will offer to sell its
interest in Dexter South Africa (Pty) Limited (the "South Africa JV Shares") to
Plascon (Proprietary) Limited (the "South Africa JV Partner") for $_________
(the "South Africa JV Price") in accordance with the terms of the pre-emptive
right accorded to the South Africa JV Partner under the terms of the
Shareholders Agreement, dated September 19, 1997, by and between the South
Africa JV Partner and Dexter (the "South Africa ROFO" and together with the
Japanese ROFO and Venezuela ROFO, each, a "ROFO Right" and, collectively, the
"ROFO Rights"). In the event the South Africa JV Partner exercises its right to
purchase the South Africa JV Shares, notwithstanding anything to the contrary
set forth in this Agreement, Buyer and Dexter agree that (i) Dexter may sell the
South Africa JV Shares to the South Africa JV Partner and that the Total
Purchase Price will be reduced by the South Africa JV Price, and (ii) the sale
of the South Africa JV Shares as set forth in this Section 9.03(c) will not have
any effect on Buyer's and the Buyer Group's obligations to consummate the
transactions contemplated by this Agreement.
(d) In the event that any ROFO Right is exercised and the
Shares of a Dexter Coatings Joint Venture Company are sold pursuant to the
exercise thereof, the Base Amount shall be adjusted accordingly to delete the
Net Worth (as adjusted pursuant to Schedule 4.03) of such Dexter Coatings Joint
Venture Company from the calculation thereof.
9.04 Settlement of Warranty Claims. Dexter shall use best efforts, both
before and, if and as necessary, after the Closing, to settle any material
product warranty claims with respect to the Coatings Business (including but not
limited to the product warranty claims identified in Paragraph 7 Part B of
Schedule 7.05 and any similar claims that shall have arisen out of the same
facts and circumstances) in an expeditious and reasonable manner and on a basis
that is consistent with the approach it has taken in the past 10 years to
resolve product warranty claims with major customers of the Coatings Business
that it sought to retain. From the date of this Agreement, Dexter shall
regularly consult with Buyer regarding such efforts.
ARTICLE 10
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER
All obligations of Buyer under this Agreement are subject, at Buyer's
option, to the fulfillment prior to or at the Closing, of each of the following
conditions:
10.01 Accuracy of Representations and Warranties. Each and every
representation and warranty of Dexter made under this Agreement shall be true
and accurate in all material respects as of the Closing.
<PAGE>
10.02 Performance of Covenants and Agreements. Dexter shall have
performed in all material respects, and shall have caused the other Dexter
Coatings Companies to have performed in all material respects, all of the
covenants and agreements required to be performed by them at or prior to the
Closing pursuant to this Agreement.
10.03 Hart-Scott-Rodino Act. All waiting periods under the HSR Act
applicable to the transactions contemplated by this Agreement shall have
expired, by passage of time or by valid early termination by the FTC or the DOJ;
no representative of either the FTC or the DOJ shall be taking the position that
any of such waiting periods has not commenced to run or has not expired for any
reason; and no representative of either the FTC or the DOJ shall have requested
a delay of the Closing for a period that has not expired, which request has not
been withdrawn.
10.04 Consents. All consents, approvals and authorizations of
Governmental Authorities and third parties under contracts identified on the
Schedule to this Section shall have been obtained.
10.05 No Injunction, etc. No injunction or order of any court or
administrative agency of competent jurisdiction shall be in effect as of the
Closing which restrains or prohibits the purchase and sale of the Acquired
Assets and there shall be no claim, suit, action or other proceeding brought by
a Governmental Authority pending before any court or governmental agency,
seeking to prevent or restrain the transactions contemplated by this Agreement
or seeking material damages in connection therewith.
10.06 Certificate of Dexter. Dexter shall have delivered to Buyer a
certificate of Dexter, dated the date of the Closing, signed by any Vice
President or more senior officer of Dexter certifying that: (a) each and every
representation and warranty of Dexter under this Agreement is true and accurate
in all material respects as of the Closing; and (b) Dexter and the other Dexter
Coatings Companies have performed in all material respects at or prior to the
Closing all of the covenants and agreements required to be performed by them at
or prior to the Closing pursuant to this Agreement.
10.07 Ancillary Agreements. The relevant parties shall have entered
into the Ancillary Agreements.
10.08 Resignations. Buyer shall have received the resignations,
effective as of the Closing, of each director and officer of the Dexter Coatings
Companies other than those whom the Buyer shall have specified in writing at
least five business days prior to the Closing.
10.09 Year 2000 Compliance. (a) Either one of the following conditions
shall have been satisfied: (i) Dexter shall have demonstrated to the reasonable
<PAGE>
satisfaction of Buyer that the MAPICS XA software used in connection with the
Tournus Operations shall be Year 2000 Compliant; or (ii) (A) Buyer shall have
determined, in its reasonable judgment, that the MAPICS XA software used in
connection with the Tournus Operations can be made Year 2000 Compliant prior to
June 30, 1999, in which event it shall propose to Dexter a budget for achieving
that end following Closing; and (B) Dexter shall have agreed to pay all costs
incurred by Buyer in making said MAPICS XA software Year 2000 Compliant; and
(b) Either one of the following conditions shall have been satisfied:
(i) Dexter shall have demonstrated to the reasonable satisfaction of Buyer that
the reactors located at the Birmingham, Singapore, Tournus and Deeside
facilities are Year 2000 Compliant, or (ii) Buyer shall propose to Dexter a
budget (not to exceed $150,000) for achieving that end following Closing, and
Dexter shall have agreed to pay all costs incurred by Buyer to make the reactors
Year 2000 Compliant up to the amount of the budget.
ARTICLE 11
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF DEXTER
All obligations of Dexter under this Agreement are subject, at Dexter's
option, to the fulfillment prior to or at the Closing, of each of the following
conditions:
11.01 Accuracy of Representations and Warranties. Each and every
representation and warranty of Buyer under this Agreement shall be true and
accurate in all material respects as of the Closing.
11.02 Performance of Covenants and Agreements. Buyer shall have caused
the Buying Companies to have performed in all material respects at or prior to
the Closing all of the covenants and agreements required to be performed by them
at or prior to the Closing pursuant to this Agreement.
11.03 Hart-Scott-Rodino Act. All waiting periods under the HSR Act
applicable to the transactions contemplated by this Agreement shall have
expired, by passage of time or by valid early termination by the FTC or the DOJ;
no representative of either the FTC or the DOJ shall be taking the position that
any of such waiting periods has not commenced to run or has not expired for any
reason; and no representative of either the FTC or the DOJ shall have requested
a delay of the Closing for a period which has not expired, which request has not
been withdrawn.
11.04 Consents. All consents, approvals and authorizations of
Governmental Authorities and third parties identified on the Schedule to this
Section shall have been obtained.
<PAGE>
11.05 No Injunction, etc. No injunction or order of any court or
administrative agency of competent jurisdiction shall be in effect as of the
Closing which restrains or prohibits the purchase and sale of the Acquired
Assets and there shall be no claim, suit, action or other proceeding brought by
a Governmental Authority pending before any court or governmental agency,
seeking to prevent or restrain the transactions contemplated by this Agreement
or seeking material damages in connection therewith.
11.06 Certificate of Buyer. Buyer shall have delivered to Dexter a
certificate of Buyer, dated the date of the Closing, signed by a Vice President
or more senior officer of Buyer, certifying that: (a) each and every
representation and warranty of Buyer under this Agreement is true and accurate
in all material respects as of the Closing; and (b) Buyer and the other Buying
Companies have performed in all material respects at or prior to the Closing all
of the covenants and agreements required to be performed by them at or prior to
the Closing pursuant to this Agreement.
11.07 Ancillary Agreements. The relevant parties shall have entered
into the Ancillary Agreements.
ARTICLE 12
EMPLOYEE MATTERS
12.01 Employment. As of the Closing Date, Buyer shall (i) cause the
Dexter Coatings Stock Companies to continue to employ all individuals who are
employees of the Dexter Coatings Stock Companies on the Closing Date and (ii)
make bona fide offers of employment, with comparable base compensation, to all
individuals who are employees of the Selling Companies and who are involved
primarily in the Coatings Business on the Closing Date. All employees of the
Selling Companies who accept such offer of employment and the employees of the
Dexter Coatings Stock Companies are referred to as the "Continued Employees."
For purposes of this Article 12, "Buyer" shall mean Buyer or any member of the
Buyer Group.
12.02 Severance. Subject to the following sentence, Buyer shall pay
severance benefits to any employee who does not accept an offer of employment by
Buyer pursuant to Section 12.01 or who is terminated from employment by Buyer
within 12 months following the Closing Date. Buyer shall not be obligated to pay
severance benefits to any employee who does not accept an offer of employment by
Buyer if said offer is for a comparable position, with comparable compensation
and without any requirement to relocate. The severance benefits payable in
accordance with this Section 12.02 shall not be less than the severance benefits
to which a Continued Employee would have
<PAGE>
been entitled had his or her employment been terminated by Dexter or a Dexter
Coatings Company immediately before the Closing Date.
12.3 Employee Benefits.
(a) For purposes of determining eligibility to participate in
any "employee benefit plan" (as defined in Section3(3) of ERISA) of
Buyer and for vacation, sickness benefits, severance benefits and other
fringe benefits, each of the Continued Employees shall be credited with
the years of service he or she completed while employed by any member
of the "controlled group of corporations" (as such term is defined in
Section 414(b) of the Code) of which Dexter is a member. Such years and
partial years of service shall not, however, be counted or credited for
purposes of benefit accrual under any defined benefit pension plan. The
years and partial years of service to be credited under this paragraph
shall be determined from data furnished by Dexter to Buyer on or before
the Closing Date. Except to the extent reflected on the Closing Balance
Sheet, all claims incurred (but not reported as of the Closing Date) on
or before the Closing Date shall be the obligation of Dexter and shall
not be the obligation of any Buyer plan. Buyer shall have no obligation
to assume sponsorship of, or liability for, any of Dexter's employee
benefit plans, except as provided in Section 12.04.
(b) The Buyer's qualified defined contribution retirement plan
shall accept rollover contributions of distributions from the Dexter
401(k) Plan including with respect to participant loans granted prior
to the Closing Date, if any, loan offset amounts and promissory notes
or other documents evidencing such loans.
12.04 Multiemployer Pension Plan.
(a) With respect to the Bay Area Paint Makers and Employers
Pension Trust (the "Multiemployer Plan"), Buyer, on the one hand, and
Dexter, on the other, intend to satisfy the requirements of Section
4204 of the Employee Retirement Income Security Act of 1974, as amended
("ERISA") to avoid a withdrawal by Dexter as a result of the
transactions contemplated hereby from the Multiemployer Plan in respect
of the Continued Employees covered by the Multiemployer Plan. In this
regard, effective as of the Closing, Buyer shall become a successor
employer contributing to the Multiemployer Plan on behalf of the
Continued Employees participating therein pursuant to the terms of the
applicable collective bargaining agreement and Buyer shall make
contributions after the Closing Date to the Multiemployer Plan for
substantially the same number of contribution base units (as defined in
Section 4001 (a)(11) of ERISA) that Dexter had an obligation to
contribute to the Multiemployer Plan.
<PAGE>
(b) With respect to the Multiemployer Plan, Buyer shall
provide, as soon as practicable after the Closing Date, a bond issued
by a corporate surety company that is an acceptable surety for purposes
of Section 412 of ERISA with a five-year term commencing as of the
first day of the first plan year of the Multiemployer Plan immediately
following the Closing Date (the "Protected Period") or establish an
escrow account or other arrangement with a bank or similar financial
institution, with the same term, satisfactory to the trustees of the
Multiemployer Plan, in an amount equal to the greater of (x) the
average of Dexter's annual contributions to the Multiemployer Plan for
the three plan years preceding the plan year in which the Closing Date
occurs, or (y) Dexter's contributions to the Multiemployer Plan for the
plan year preceding the plan year in which the Closing Date occurs.
(c) If there is a partial or complete withdrawal (as such
terms are defined in Sections 4205(a) and 4203(a) of ERISA,
respectively) from the Multiemployer Plan by Buyer prior to the end of
the Protected Period, Dexter shall, to the extent required by
applicable law, rule or regulation, be secondarily liable for any
withdrawal liability Dexter would have had to the Multiemployer Plan if
Dexter and Buyer had not entered into the agreements contained in this
Section 12.04(f) to the extent the liability of Buyer to the
Multiemployer Plan as a result of either a complete or partial
withdrawal therefrom is not paid by Buyer to the Multiemployer Plan in
respect of such withdrawal. With respect to the Multiemployer Plan, if
either Buyer, on the one hand, or Dexter, on the other, with the
consent of the other party, requests the Pension Benefit Guaranty
Corporation ("PBGC") to grant a variance or exemption from the
requirements of Section 4204(a)(1)(B) or (C) of ERISA and such variance
or exemption is granted or in the event an exemption from such
requirements is available under applicable law, rule or regulation and
the Multiemployer Plan confirms that such exemption is applicable, then
subparagraphs (ii) and (iii), other than this sentence, shall be void
and not enforceable.
(d) Notwithstanding anything to the contrary set forth in
subparagraphs (ii) and (iii) above, Buyer shall indemnify and hold
harmless Dexter and the other members of the Dexter Group for all
losses (including any secondary liability contemplated by subparagraph
(c) above) which are incurred or become payable (A) as a result of the
failure of Buyer to comply with the provisions of this Section 12.04(f)
or (B) as a result of partial or complete withdrawal of Buyer from the
Multiemployer Plan after the Closing Date. Either Buyer, on the one
hand, or Dexter, on the other, shall promptly notify the other party of
any demand for payment of withdrawal liability received by it from the
Multiemployer Plan.
<PAGE>
(e) In the event that Dexter and Buyer determine that the
amount of Dexter's withdrawal liability to the Multiemployer Plan as of
the Closing Date would have been zero, had Dexter withdrawn in a
complete withdrawal from the Plan on the Closing Date, the foregoing
provisions of this Section 12.02(f) shall be deemed to be of no further
force and effect with respect to the Multiemployer Plan, and both
Dexter and Buyer's rights and duties thereunder with respect to the
Multiemployer Plan shall terminate, except that Buyer shall be entitled
to a return of any monies deposited in escrow by it pursuant to the
foregoing. Buyer and Dexter agree that they will make, execute and
deliver to each other and to the Multiemployer Plan and the PBGC,
without payment of any kind whatsoever, all documents and instruments
which are reasonably required to effectuate the terms and conditions of
this Article and to comply with the provisions of Section 4204 of ERISA
and applicable PBGC Regulations thereunder.
12.05 No Third Party Beneficiaries. This Article 12 is an agreement
solely among Buyer and Dexter. Nothing in this Article 12, whether express or
implied, confers upon any employee of Dexter or Buyer or any other person any
rights or remedies, including, but not limited to, (i) any right to employment
or recall, (ii) any right to continued employment for any specified period or
(iii) any right to claim any particular compensation, benefit or aggregation of
benefits of any kind or nature whatsoever.
ARTICLE 13
TERMINATION
13.01 Rights to Terminate.
(a) This Agreement may be terminated at any time prior to the
Closing by written Agreement of Dexter and Buyer.
(b) Buyer may terminate this Agreement by giving written
notice to Dexter at any time after June 30, 1999 if the Closing shall
not have occurred on or before June 30, 1999, by reason of the failure
of any condition precedent under Article 10 (unless the failure results
primarily from Buyer itself breaching any representation, warranty or
covenant contained in this Agreement).
(c) Dexter may terminate this Agreement by giving written
notice to Buyer at any time after November 20, 1998 if the Closing
shall not have occurred on or before November 20, 1998, by reason of
the failure of any condition precedent under Article 11 (unless the
failure results primarily from Dexter itself breaching any
representation, warranty or covenant contained in this Agreement).
<PAGE>
13.02 Consequences of Termination. The termination of this Agreement in
accordance with any of the provisions of Section 13.01 shall terminate all
obligations of the parties hereunder (unless such termination results from a
willful breach by a party of any covenant or agreement contained in this
Agreement); provided, however, that the obligations of the parties under
Sections 17.01, 17.02, 19.01, 19.02, 19.03 and 19.04 shall survive termination.
ARTICLE 14
GENERAL INDEMNIFICATION
14.01 Definitions. As used in this Article:
(a) "Damages" means any and all penalties, fines, damages,
liabilities, losses or costs (including reasonable Litigation Expenses but
excluding, in the case of Direct Claims only, consequential damages, punitive
damages or damages for lost profits).
(b) "Direct Claims" means claims other than Third Party
Claims. "Direct Claim" means one of the Direct Claims.
(c) "Litigation Expenses" means reasonable attorneys' fees and
other costs and expenses incident to proceedings or investigations respecting,
or the prosecution or defense of, any Direct Claim or Third Party Claim.
(d) "Third Party Claims" means any and all claims, demands,
suits, actions or proceedings by any person or entity, other than members of the
Buyer Group or the Dexter Group, which could give rise to a right of
indemnification under this Article. "Third Party Claim" means one of the Third
Party Claims.
14.02 Dexter's Indemnification.
(a) Subject to the terms and limitations of this Article 14,
Dexter shall indemnify Buyer, the other Buying Companies and other members of
the Buyer Group against any Damages that are caused by or arise out of (i) the
breach by any Selling Company of any of its covenants or agreements under any of
the Transaction Documents, (ii) any inaccuracy in any representation or breach
of any warranty of Dexter set forth in Article 5, (iii) any of the Excluded
Liabilities, or (iv) any Third Party Claims relating to the conduct of the
Coatings Business prior to the Closing Date (including, without limitation, any
Third Party claims identified on Schedules 5.07 or 5.11 to this Agreement), and
(v) any liability or obligation for the matters identified on Schedule 5.12 or
referred to in Section 8.09.
<PAGE>
(b) The representations and warranties of Dexter set forth in
Article 5 shall survive the Closing, notwithstanding any investigation by Buyer
or the results thereof. Except with respect to claims of which Buyer shall have
notified Dexter in writing prior to the expiration of the relevant time period
as set forth below indicating with reasonable specificity the nature of such
claims, the representations and warranties set forth in Article 5 shall expire
and be of no further force and effect two years after the Closing, provided,
however, that (i) the representations and warranties set forth in Sections 5.11,
5.14 and 5.17 shall survive until six months after the applicable statutes of
limitations (including any extensions thereof) relating to the liabilities
giving rise to such claims have expired; (ii) the representations and warranties
set forth in Sections 5.22 and 5.23 shall survive for three years after the
Closing, (iii) the representations and warranties set forth in Section 5.12
shall survive for 10 years after the Closing, and (iv) the representations and
warranties set forth in Sections 5.01, 5.02 and 5.05 shall survive indefinitely.
(c) Except with respect to claims of which Buyer shall have
notified Dexter in writing prior to the expiration of the relevant time period
as set forth below indicating with reasonable specificity the nature of such
claims, Dexter's obligation to indemnify Buyer, the other Buying Companies and
other members of the Buyer Group for any Excluded Liabilities shall expire and
be of no further force and effect two years after the Closing, provided,
however, that (i) its obligation in respect of any employee, employee benefit
plan or tax matters shall survive until six months after the applicable statutes
of limitations (including any extensions thereof) relating to the liabilities
giving rise to such claims have expired; (ii) its obligation in respect of any
product warranty and product liability claims shall survive for three years
after the Closing, and (iii) its obligation in respect of compliance with
Environmental Laws (subject to Dexter's obligations set forth in Section 8.09)
shall survive for 10 years after the Closing.
14.03 Buyer's Indemnification.
(a) Subject to the terms and limitations of this Article,
Buyer shall indemnify Dexter, the other Selling Companies and the other members
of the Dexter Group against any Damages that are caused by or arise out of (i)
the breach by any Buying Company of any of its covenants or agreements under any
of the Transaction Documents, (ii) any inaccuracy in any representation or
breach of any warranty of Buyer set forth in Article 6, (iii) the failure of any
Buying Company subsequent to the Closing to perform or fulfill its respective
obligations under any contract, agreement or obligation included in the Acquired
Liabilities, for which any member of the Dexter Group is or may be liable, as a
guarantor or otherwise, (iv) any of the Acquired Liabilities and (v) any Third
Party Claims relating to the conduct of the Coatings Business after the Closing
Date.
(b) The representations and warranties of Buyer set forth in
Article 6 shall survive the Closing. Except with respect to claims Dexter has
<PAGE>
previously asserted against Buyer in writing setting forth with reasonable
specificity the nature of such claims, the representations and warranties set
forth in Article 6 shall expire and be of no further force and effect two years
after the Closing.
14.04 Limitations.
(a) Neither Buyer, nor any of the other Buying Companies or
other members of the Buyer Group may assert any claim for indemnification under
this Article (a "Buyers' Claim") with respect to (i) the breach of any
representation or warranty in Article 5 (other than a breach of Section 5.14) or
(ii) any liability or obligation for the matters identified on Schedule 5.12,
unless and until the aggregate amount of all such Buyers' Claims shall exceed US
$1,500,000, and then only with respect to the excess of such aggregate Buyers'
Claims over US $1,500,000. In no event shall the aggregate amount of Dexter's
indemnification with respect to all such Buyers' Claims exceed US $25,000,000;
provided, however, that this limit shall not apply to any claims arising in
connection with the breach of any representation or warranty set forth in
Sections 5.12 or 5.14.
(b) The dollar thresholds set forth in this Section have been
negotiated for the special purpose of the provision to which they relate, and
are not to be taken as evidence of the level of "materiality" for purposes of
any statutory or common law which may be applicable to the transactions
contemplated by this Agreement under which a level of materiality might be an
issue.
14.05 Defense of Third Party Claims.
(a) Buyer shall, and shall cause the other Buying Companies
and the other members of the Buyer Group to, notify Dexter in writing promptly
after learning of any Third Party Claim for which any member of the Buyer Group
intends to seek indemnification from the Dexter Group under this Agreement, or
to have taken into account for purposes of determining whether or not the dollar
thresholds in Section 14.04 have been met. Dexter shall, and shall cause the
other Selling Companies and the other members of the Dexter Group to, notify
Buyer in writing promptly after learning of any Third Party Claim for which any
member of the Dexter Group intends to seek indemnification from the Buyer Group
under this Agreement. It shall be a necessary condition of any claim by any
entity for indemnification under this Agreement with respect to any Third Party
Claim, or for such Third Party Claim to be taken into account for purposes of
determining whether or not the dollar thresholds in Section 14.04 have been met,
that the entity seeking indemnification or to have such claim taken into account
(the "Claimant") notify Dexter on behalf of the Dexter Group, if the Claimant is
a member of the Buyer Group, or Buyer on behalf of the Buyer Group, if the
Claimant is a member of the Dexter Group, prior to the time when
<PAGE>
the notice recipient's ability to contest the Third Party Claim would be
materially impaired by lack of notice. The failure of the Buyer Group to give
such notice of a Third Party Claim shall not relieve the Dexter Group of any
indemnification responsibility under this Article 14, unless such failure
adversely prejudices the ability of the Dexter Group to defend such Third Party
Claim. The failure of the Dexter Group to give such notice of a Third Party
Claim shall not relieve the Buyer Group of any indemnification responsibility
under this Article 14, unless such failure adversely prejudices the ability of
the Buyer Group to defend such Third Party Claim.
(b) Except as otherwise provided in Section 14.05(d), Dexter,
or any other member of the Dexter Group, may undertake the defense of a Third
Party Claim of which the Buyer Group has notified Dexter, by notice to Buyer not
later than 60 calendar days after receipt by Dexter of the Buyer Group's notice
of the claim. Failure on the part of the Dexter Group to so notify Buyer that it
will undertake such defense shall be deemed to be a waiver of the Dexter Group's
right to undertake such defense. If the Dexter Group undertakes the defense of
any Third Party Claim, then it shall control the investigation and defense
thereof, except that the Dexter Group shall not require any member of the Buyer
Group, without Buyer's prior written consent, to take or refrain from taking any
action in connection with such Third Party Claim that Buyer reasonably considers
to be against its interest, nor shall the Dexter Group, without the prior
written consent of Buyer, consent to any settlement that requires any member of
the Buyer Group to make any payment that is not fully indemnified under this
Agreement or taken into account under Section 14.04; and subject to the Dexter
Group's control rights, the Buyer Group may participate in such investigation
and defense, at its own expense. If the Dexter Group does not undertake the
defense of a Third Party Claim, then except as otherwise provided in Section
14.05(d), the Buyer Group shall control such investigation and defense, except
that the Buyer Group shall not require a member of the Dexter Group, without
Dexter's prior written consent, to take or refrain from taking any action in
connection with such Third Party Claim that Dexter reasonably considers to be
against its interest, nor shall the Buyer Group, without the prior written
consent of Dexter, consent to any settlement; and subject to the Buyer Group's
control rights, the Dexter Group may participate in such investigation and
defense, at its own expense.
(c) Except as otherwise provided in Section 14.05(d), Buyer,
or any other member of the Buyer Group, may undertake the defense of a Third
Party Claim that the Dexter Group has notified Buyer of, by notice to Dexter not
later than 60 calendar days after the receipt by Buyer of the Dexter Group's
notice of the claim. Failure on the part of the Buyer Group to so notify Dexter
that it will undertake such defense shall be deemed to be a waiver of the Buyer
Group's right to undertake such defense. If the Buyer Group undertakes the
defense of any Third Party Claim, then it shall control such investigation and
defense, except that the Buyer Group shall not require any member of the Dexter
<PAGE>
Group, without Dexter's prior written consent, to take or refrain from taking
any action in connection with such Third Party Claim that Dexter reasonably
considers to be against its interest, nor shall the Buyer Group, without Buyer's
prior written consent of Dexter, consent to any settlement that requires any
member of the Dexter Group to make any payment that is not fully indemnified
under this Agreement; and subject to the Buyer Group's control rights, the
Dexter Group may participate in such investigation and defense, at its own
expense. If the Buyer Group does not undertake the defense of a tendered Third
Party Claim, then except as otherwise provided in Section 14.05(d), the Dexter
Group shall control such investigation and defense, except that the Dexter Group
shall not require a member of the Buyer Group, without Buyer's prior written
consent, to take or refrain from taking any action in connection with such Third
Party Claim that Buyer reasonably considers to be against its interest, nor
shall the Dexter Group, without the prior written consent of Buyer, consent to
any settlement; and subject to the Dexter Group's control rights, the Buyer
Group may participate in such investigation and defense, at its own expense.
(d) If there is a material conflict of interest between the
Dexter Group and the Buyer Group with respect to a Third Party Claim, then
neither group shall be entitled to assume the defense thereof. In such event the
Buyer Group and the Dexter Group shall each be entitled to conduct its own
investigation and defense, but the parties shall cooperate to conduct such
investigation and defense as efficiently as possible. If a member of the Dexter
Group is required to indemnify the Buyer Group with respect to such Third Party
Claim, then it shall pay the reasonable attorneys' fees and expenses of one
individual or firm representing the Buyer Group with respect thereto. If a
member of the Buyer Group is required to indemnify the Dexter Group with respect
to such Third Party Claim, then it shall pay the reasonable attorneys' fees and
expenses of one individual or firm representing the Dexter Group with respect
thereto.
(e) Buyer shall, and shall cause the other Buying Companies
and the other members of the Buyer Group to, and Dexter shall, and shall cause
the other Selling Companies and the other members of the Dexter Group to, make
available to each other, their counsel and other representatives, all
information and documents reasonably available to them that relate to any Third
Party Claim, and otherwise cooperate, including making relevant personnel
available, as may reasonably be required in connection with the investigation
and defense thereof.
14.06 No Consequential or Lost Profit Damages for Direct Claims. No
party to this Agreement, nor any other member of the Dexter Group or the Buyer
Group, shall seek or be entitled to consequential damages, punitive damages or
damages for lost profits with respect to any Direct Claim.
<PAGE>
ARTICLE 15
COOPERATION IN VARIOUS MATTERS
15.01 Mutual Cooperation. After the Closing, each party to this
Agreement shall, and shall cause its respective Subsidiaries to, cooperate with
each other party and its Subsidiaries as reasonably requested by such other
party in connection with the prosecution or defense of any claims or other
matters relating to the Coatings Business. Such cooperation shall include the
furnishing of testimony and other evidence, permitting access to employees and
providing information regarding the whereabouts of former employees.
15.02 Preservation of Buyer's Files and Records. For a period of 10
years after the Closing, Buyer shall, and shall cause the other Buying Companies
and the other members of the Buyer Group to, preserve all files and records in
their possession relating to the Coatings Business prior to the Closing, allow
the Dexter Group access to such files and records and the right to make copies
and extracts therefrom at any time during normal business hours, and not dispose
of any thereof, except that at any time after the Closing, any member of the
Buyer Group may give Dexter written notice of its intention to dispose of any
records that are more than five years old, specifying the items to be disposed
of in reasonable detail. Any member of the Dexter Group may, within a period of
sixty days after Dexter's receipt of any such notice, notify Buyer of the Dexter
Group's desire to retain one or more of the items to be disposed of. Buyer
shall, upon receipt of such a notice from a member of the Dexter Group, deliver
to such member of the Dexter Group, at the Dexter Group's expense, the items
which the Dexter Group has elected to retain.
15.03 Preservation of Dexter's Files and Records. For a period of 10
years after the Closing, Dexter shall, and shall cause the other Selling
Companies and the other members of the Dexter Group to, preserve all files and
records in their possession relating to the Coatings Business prior to the
Closing, allow the Buyer Group access to such files and records and the right to
make copies and extracts therefrom at any time during normal business hours, and
not dispose of any thereof, except that at any time after the Closing, any
member of the Dexter Group may give Buyer written notice of its intention to
dispose of any records that are more than five years old, specifying the items
to be disposed of in reasonable detail. Any member of the Buyer Group may,
within a period of 60 days after receipt of any such notice, notify Dexter of
the Buyer Group's desire to retain one or more of the items to be disposed of.
Dexter shall, upon receipt of such a notice from a member of the Buyer Group,
deliver to such member of the Buyer Group, at the Buyer Group's expense, the
items which the Buyer Group has elected to retain.
ARTICLE 16
POST-CLOSING MATTERS
<PAGE>
16.01 Post-Closing Transfers. (a) In the event that on the Date, the
ROFO Right with respect to a Dexter Coatings Joint Venture Company is still
unexercised or unconsummated in accordance with its terms, the purchase and sale
of the Shares of such Dexter Coatings Joint Venture Company shall take place on
the date which is three Business Days after such ROFO Right is waived, expired
or otherwise terminated in accordance with its terms or by agreement of the
parties thereto (each, a "Deferred Closing").
(b) At each Deferred Closing, each of Dexter and Buyer will
deliver to the other all such payments, instruments or documents required to be
delivered pursuant to the terms of Article 3 of this Agreement with respect to
the sale of the Shares of such Dexter Coatings Joint Venture Company.
(c) From and after the Closing, each of Dexter and Buyer shall
continue to use their respective reasonable best efforts to consummate the
purchase and sale of the Shares of the Dexter Coatings Joint Venture Companies,
to the extent not consummated at Closing.
(d) Until such time as a Deferred Closing occurs, (i) the
Local Purchase Price of any Dexter Coatings Joint Venture Company the Shares of
which were not transferred to a member of the Buyer Group at Closing shall be
excluded from the amount paid by the Buying Companies to the Selling Companies
for the Coatings Business; and (ii) the Net Worth of any Dexter Coatings Joint
Venture Company the Shares of which were not transferred to a member of the
Buyer Group at Closing shall be excluded from the calculation of the Closing
Amount (and a corresponding adjustment will be made to the Base Amount).
16.02 Renewal of Guaranteed Items. Without the prior written consent of
the Treasurer or any Assistant Treasurer of Dexter, Buyer shall not, and Buyer
shall cause the other members of the Buyer Group not to, renew or extend the
term of, increase its obligations under, or transfer to a third party, any
lease, contract or other obligation for which Dexter or any other member of the
Dexter Group is or may be liable, as guarantor, original tenant, primary
obligor, or otherwise, unless all obligations of the Dexter Group with respect
thereto are thereupon terminated by documentation satisfactory in form and
substance to Dexter.
16.03 Payment and Discharge of Certain Intercompany Liabilities. At
Dexter's request at any time and from time to time after the Closing, Buyer
shall promptly reimburse Dexter for any amounts paid directly by Dexter to third
parties after the Closing in discharge of any liabilities that shall have been
taken into account in determining the Closing Amount; provided, however, that
Dexter shall not make any such direct payment without the prior written consent
of
<PAGE>
Buyer and shall provide reasonable documentation to Buyer evidencing the
discharge of such liabilities.
16.04 Use of "Dexter" Name. After the Closing Buyer shall have no right
to use the "Dexter" name except to the extent that such name or any portion
thereof is incorporated in any of the trademarks listed in the Schedule to
Section 5.13. Buyer shall, and shall cause the other Buying Companies and any
other member of the Buyer Group not to, refer (other than in response to
unsolicited inquiries or in announcements of the occurrence of the Closing) to
their respective businesses as formerly being owned by or associated with any
member of the Dexter Group, except that for a period of six months after the
Closing, Buyer and the other Buying Companies shall have the right to (i) use
any catalogues, sales and promotional materials and printed forms that use such
name and are included in the Acquired Assets as of the Closing, or have been
ordered prior to the Closing for use in the Coatings Business, but only to the
extent that it is not practicable to remove or cover up the "Dexter" name, and
(ii) indicate to customers that products offered and sold by Buyer were formerly
sold under the respective product designations employed by Dexter. Buyer shall,
and shall cause the other Buying Companies to use reasonable efforts to minimize
such usage and to discontinue it as soon as practicable after the Closing.
16.05 Dexter's Covenant Not to Compete.
(a) For a period of five years after the Closing Date, no
member of the Dexter Group shall engage, directly or indirectly, in the Coatings
Business in those countries where the Coatings Business currently operates;
except that nothing in this Section shall prohibit the Dexter Group from (a)
continuing to own shares of one or more of the Dexter Coatings Joint Venture
Companies in accordance with the provisions of this Agreement; (b) owning up to
5% of the outstanding voting securities of any publicly traded entity; or (c)
from acquiring any business that manufactures and sell products that compete
with the products manufactured and sold by the Coatings Business (a "Competitive
Business") if, in the year prior to such acquisition, the net sales of such
products by such Competitive Business were less than 10% of the acquired
Competitive Business. The Dexter Group may acquire a Competitive Business that
exceeds the foregoing thresholds; provided, however, that if such an acquisition
of a Competitive Business by the Dexter Group occurs, Buyer shall have the right
(i) at its option to purchase such Competitive Business at a price to be
negotiated which, if the parties are unable to reach agreement within 30 days,
will be established by independent appraisal or (ii) Buyer shall have the right
to require the Dexter Group to divest such Competitive Business within one year
after the date of the Dexter Group's acquisition of the Competitive Business.
(b) For a period of five years commencing on the fifth anniversary of
the Closing Date and ending on the tenth anniversary of the Closing Date, no
member of the Dexter Group shall engage, directly or indirectly, in the Coatings
<PAGE>
Business in those countries where the Coatings Business currently operates;
except that nothing in this Section shall prohibit the Dexter Group from (a)
owning up to 5% of the outstanding voting securities of any publicly traded
entity; or (b) from acquiring any business that manufactures and sell products
that compete with the products manufactured and sold by the Coatings Business (a
"Competitive Business") if, in the year prior to such acquisition, the net sales
of such products by such Competitive Business were less than 50% of the acquired
Competitive Business. The Dexter Group may acquire a Competitive Business that
exceeds the foregoing thresholds; provided, however, that if such an acquisition
of a Competitive Business by the Dexter Group occurs, Buyer shall have the right
(i) at its option to purchase such Competitive Business at a price to be
negotiated which, if the parties are unable to reach agreement within 30 days,
will be established by independent appraisal or (ii) Buyer shall have the right
to require the Dexter Group to divest such Competitive Business within one year
after the date of the Dexter Group's acquisition of the Competitive Business.
(c) In consideration of the Dexter Groups' obligations set forth in
Sections 16.05(a) and 16.05(b), Buyer shall pay to Dexter at the Closing the sum
of $10,000,000 (the "Non-Compete Payment").
16.06 Insurance. With respect to any loss, liability or damage suffered
after the Closing Date relating to, resulting from or arising out of the conduct
of the Coatings Business on or prior to the Closing Date for which Dexter or any
other member of the Dexter Group would be entitled to assert, or cause any other
person or entity to assert, a claim for recovery under any policy of insurance
maintained by or for the benefit of the Dexter Group, in respect of the Coatings
Business ("Insurance"), at the request of Buyer, Dexter will use its reasonable
efforts to assert, or to assist Buyer to assert, one or more claims under such
Insurance covering such loss, liability or damage if Buyer is not itself
entitled to assert such claim, but if Dexter or another member of the Dexter
Group is so entitled, provided that all of Dexter's and the other members of the
Dexter Group's out-of-pocket costs and expenses incurred in connection with the
foregoing, including without limitation any liability, obligation or expense
referred to in the last sentence of this Section 16.06, are, at the option of
the entity incurring such costs and expenses, paid in advance or promptly
reimbursed by Buyer; provided, however, that, effective as of the Closing Date,
Dexter may in its sole discretion terminate or otherwise discontinue any policy
of Insurance. To the extent required under the terms of insurance to give effect
to the foregoing, Dexter will be deemed, solely for the purpose of asserting
claims for Insurance pursuant to the immediately preceding sentence, to have
assumed or retained liability for such loss, liability or damage to the extent
of the policy limits of the applicable policy of Insurance; provided, however,
that (a) Buyer's obligations under Section 14.03 will not be affected by the
provisions of this Section 16.06 and (b) with respect to any claim made by
Dexter under any Insurance pursuant to this Section 16.06, Buyer will indemnify,
defend and hold harmless Dexter and each of its Subsidiaries and their
respective directors, officers, partners, employees, agents and representatives
(including without limitation any
<PAGE>
predecessor or successor of any of the foregoing) from and against any loss,
liability or damage relating to, resulting from or arising out of any
deductible, policy limit, obligation, indemnity, reinsurance due to the
liquidation or insolvency of the reinsurer, self-insurance retention, or
retroactive or retrospective premium resulting from claims made under this
Section 16.06 or other like arrangement by which any such entity, including
without limitation any captive insurance company, retains any liability or
obligation under any such policy of Insurance or otherwise.
16.07 Intercompany Agreements. All contracts, licenses, agreements,
commitments or other arrangements between Dexter (or any other member of the
Dexter Group) and any of the Dexter Coatings Companies, whether written or oral,
and whether express or implied, pursuant to which Dexter (or any other member of
the Dexter Group) provides management, administrative, legal, financial,
accounting, data processing, insurance, technical support, or other services to
the Coatings Business, or the use of any assets of any member of the Dexter
Group, or pursuant to which rights, privileges or benefits are accorded to the
Coatings Business as a unit of the Dexter Group, shall terminate as of the
Closing. After the Closing, none of the Buying Companies shall have any rights
under any similar contract, license, agreement, commitment or arrangement with
Dexter (or any other member of the Dexter Group) except rights under the
Ancillary Agreements.
16.08 Dexter SAS. Dexter has entered into an agreement to acquire 6,687
shares (the "Minority Shares") of Dexter SAS, a French company, presently owned
by SNPE, a copy of which agreement has been provided to Buyer. Dexter shall
retain all liability under said agreement to pay for the shares acquired from
SNPE, and to transfer all right, title and interest in said shares to Buyer as
soon as practicable after it receives them from SNPE, but not prior to the
Closing Date. If Dexter does not acquire the Minority Shares on or before the
Closing Date, the Total Purchase Price shall be reduced by an amount in U. S.
dollars equal to 4,193,000 French Francs. If and when Dexter acquires the
Minority Shares after the Closing Date, the Total Purchase Price shall be
increased by the amount it was decreased on the Closing Date, and Buyer shall
promptly pay to Dexter, via wire transfer, such increased amount.
ARTICLE 17
EXPENSES AND TAXES
17.01 Buyer's Expenses. Subject to the following sentence, Buyer shall
pay and indemnify Dexter and the other Selling Companies against all expenses
incurred by or on behalf of the Buying Companies in connection with the
preparation, authorization, execution and performance of this Agreement and the
transactions contemplated hereby, including, but not limited to, all fees and
expenses of brokers, finders, agents, representatives, counsel and accountants.
<PAGE>
Dexter shall pay the fees of PricewaterhouseCoopers LLP arising in connection
with an audit to be performed by PricewaterhouseCoopers LLP of the Annual
Financial Statements of the Coatings Business, which audit is required in order
for Buyer to prepare and file a report on Form 8-K with the U.S. Securities and
Exchange Commission in connection with the transactions contemplated by this
Agreement; provided, however, that Dexter shall not be required to pay said fees
of PricewaterhouseCoopers LLP unless and until said fees exceed $75,000.
17.02 Dexter's Expenses. Dexter shall pay and indemnify Buyer and the
other Buying Companies against all expenses incurred by or on behalf of the
Selling Companies in connection with the preparation, authorization, execution
and performance of this Agreement and the transactions contemplated hereby,
including, but not limited to, all fees and expenses of brokers, finders,
agents, representatives, counsel and accountants.
17.03 Transfer Taxes. Buyer shall pay and indemnify the Dexter Group
against any sales, value added, transfer, gross receipts, excise, recording,
registration and similar taxes and any filing fees applicable to the transfer to
the Buying Companies of the Acquired Assets pursuant to this Agreement imposed
by the United States, or any state, local or foreign government or subdivision
or agency thereof, whether computed on a unitary, combined or other basis and
all related interest, additions to the tax and penalties thereon.
17.04 VAT. Buyer, Dexter and the Selling Companies agree that the sale
of assets in the United Kingdom constitutes the transfer of a going concern for
the purposes of section 49 VAT Act 1994. The Selling Companies warrant that they
will, from the date of this Agreement until the Closing, continue to use the
assets for the same business as before the date of this Agreement, and that they
have not exercised the election to waive exemption from VAT in relation to the
Property under paragraph 2(I) Schedule 10 VAT Act 1994 and shall not do so
before Closing. Buyer warrants that it intends to and will, after Closing,
continue to use the assets for the same kind of business as did Selling
Companies prior to Closing. The price is exclusive of VAT, if any. Buyer shall
pay the Selling Companies VAT in addition to the price or any part thereof if
Customs & Excise direct that the sale is not a transfer of a going concern.
Unless the Selling Companies have first obtained the consent of Customs & Excise
pursuant to section 49(1)(b) VAT Act 1994, the Selling Companies shall, at
Closing, deliver to the Buyer the records referred to in the said statutory
provision.
ARTICLE 18
NOTICES
18.01 Notices. All notices, requests, demands and other communications
required or permitted to be given under this Agreement shall be deemed to have
been duly given if in writing and delivered personally, by reputable overnight
<PAGE>
courier service, by telephone facsimile transmission (as evidenced by a
confirmed receipt), or by first-class, postage prepaid, registered or certified
mail, addressed as follows:
If to Dexter or any of the other Selling Companies:
Dexter Corporation
One Elm Street
Windsor Locks, CT 06096
Attention: General Counsel
Facsimile: (860) 292-7669
If to Buyer or any of the other Buying Companies:
The Valspar Corporation
1101 South Third Street
Minneapolis, Minnesota 55415
Attention: General Counsel
Facsimile: (612) 375-7313
with a copy to:
Dorsey & Whitney LLP
Pillsbury Center South
220 South Sixth Street
Minneapolis, Minnesota 55402
Attention: Steven C. Nelson
Facsimile: (612) 340-8827
Buyer or any of the other Buying Companies may change the address to which such
communications are to be directed to it by giving written notice to Dexter in
the manner provided above. Dexter or any of the other Selling Companies may
change the address to which such communications are to be directed to it by
giving written notice to Buyer in the manner provided above.
ARTICLE 19
GENERAL
19.01 Entire Agreement. The Transaction Documents, including, but not
limited to this Agreement, including the Exhibits and Schedules hereto, set
forth the entire agreement and understanding of the parties and related persons
with respect to the subject matter hereof and supersede all prior agreements,
arrangements and understandings relating thereto, except for the Confidentiality
Agreement. No representation, promise, inducement or statement of intention
relating to the transactions contemplated by this Agreement has been made by any
party or any related person which is not set forth in this Agreement or the
Transaction Documents.
<PAGE>
19.02 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of New York, without giving effect to any
conflict-of-laws provisions thereof that would otherwise require the application
of the law of any other jurisdiction.
19.03 Submission to Jurisdiction. Buyer shall, and Buyer shall cause
each other Buying Company and Dexter shall, and Dexter shall cause each other
Selling Company to irrevocably submit in any suit, action or proceeding arising
out of or relating to any of the Transaction Documents to which it is or will be
a party, or any of its obligations thereunder, to the jurisdiction of the United
States District Court for the Southern District of New York and the jurisdiction
of any court of the State of New York located in New York County, and waives any
and all objections to such jurisdiction that it may have under the laws of the
State of New York or any other jurisdiction, except to the extent that any
Transaction Document specifically provides that a particular dispute is to be
referred to a court in another jurisdiction or to arbitration.
19.04 Governing Language. This Agreement has been executed and
delivered in a text using the English language, which text, despite any
translation into another language, shall be controlling.
19.05 Successors. This Agreement shall be assignable by Buyer only with
the prior consent of Dexter, and by Dexter only with the prior consent of Buyer.
This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns.
19.06 Amendments and Waivers. This Agreement may be amended, superseded
or canceled, and any of the terms hereof may be waived, only by a written
instrument specifically referring to this Agreement and specifically stating
that it amends, supersedes or cancels this Agreement or waives any of its terms,
executed by all parties, or in the case of a waiver, by the party waiving
compliance. Failure of any party to insist upon strict compliance with any of
the terms of this Agreement in one or more instances shall not be deemed to be a
waiver of its rights to insist upon such compliance in the future, or upon
compliance with other terms hereof.
19.07 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be an original, but all of which shall
constitute but one agreement.
19.08 Captions. The captions used in this Agreement are for convenience
of reference only and shall not be considered in the interpretation of the
provisions thereof.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this instrument on the
date first above written.
DEXTER CORPORATION
By:______________________________
Name:____________________________
Title:____________________________
THE VALSPAR CORPORATION
By:______________________________
Name:____________________________
Title:____________________________
<PAGE>
DEXTER COATINGS BUSINESS PURCHASE
AND SALE AGREEMENT EXHIBIT
EXHIBIT A List of Selling Companies, Dexter Coatings Stock Companies and
Dexter Coatings Joint Venture Companies
<PAGE>
FIRST AMENDMENT TO
DEXTER COATINGS BUSINESS
PURCHASE AND SALE AGREEMENT
This First Amendment dated the 26 day of February, 1999, by and between
Dexter Corporation, a Connecticut corporation ("Dexter") and The Valspar
Corporation, a Delaware corporation ("Buyer")
WITNESSETH:
WHEREAS, Dexter and Buyer are parties to that certain agreement dated
August 21, 1998 and entitled "Dexter Coatings Business Purchase and Sale
Agreement" (the "Purchase Agreement").
WHEREAS, in order to enable the transactions contemplated by the
Purchase Agreement to be consummated on a mutually satisfactory basis, the
parties have agreed to certain additional terms as hereinafter provided.
WHEREAS, all terms used herein in capitalized form which are defined in
the Purchase Agreement shall have the same meanings as in the Purchase
Agreement.
NOW, THEREFORE, in consideration of the premises, the mutual covenants
hereinafter contained and other good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, Dexter and Buyer hereby agree as
follows:
ARTICLE 1
AMENDMENTS TO PURCHASE AGREEMENT
1.01 Reduction of Total Purchase Price. Section 2.02 of the Purchase
Agreement is amended by replacing the figure "US $212,000,000" in subsection (a)
thereof with the figure "US $206,000,000".
1.02 Local Purchase Price Adjustments. Exhibit D of the Purchase
Agreement is amended as follows:
(a) the figure "$_________" opposite Brazil is replaced with the
figure "$_________";
(b) the figure "$_________" opposite "Austria (Canstoll)" is
replaced with the figure "$_________"; and
(c) the figure "$_________" opposite "US (incl. CNC)" is
replaced with the figure "$_________".
<PAGE>
ARTICLE 2
RELATIONSHIP TO PURCHASE AGREEMENT
2.01 Integration. This First Amendment shall constitute an integral
part of the Purchase Agreement.
2.02 General Provisions. The provisions of Article 19 of the Purchase
Agreement will apply to this First Amendment as if restated in their entirety
herein.
IN WITNESS WHEREOF, the parties have executed this instrument on the
date first above written.
DEXTER CORPORATION THE VALSPAR CORPORATION
BY: ____________________________ BY: ____________________________
NAME: __________________________ NAME: __________________________
TITLE: _________________________ TITLE: _________________________
