SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K/A
(Amendment No.1 to Current Report)
Current Report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 11, 1996
BETZ LABORATORIES, INC.
(Exact name of registrant as specified in charter)
Pennsylvania 0-2085 23-1503731
(State or other jurisdiction (Commission (IRS employer
of incorporation) File Number) identification no.)
4636 Somerton Road, Trevose, PA 19053
(Address of principal executive offices) (Zip Code)
(215) 355-3300
(Registrant's telephone number, including area code)
N/A
(Former Name or Former Address, if Changed Since Last Report)
ITEM 5. OTHER EVENTS.
On March 11, 1996, Betz Laboratories, Inc., a
Pennsylvania corporation (the "Company"), entered into a
Worldwide Purchase and Sale Agreement (the "Purchase
Agreement") with W.R. Grace & Co.-Conn., a Connecticut
corporation ("Grace") and wholly owned subsidiary of W.R.
Grace & Co., a New York corporation, pursuant to which,
subject to the satisfaction of certain conditions,
including the receipt of customary regulatory approval,
the Company will purchase and Grace will sell the
Dearborn Business by means of the transfer from Grace and
its subsidiaries to the Company and its subsidiaries of
certain assets and liabilities of the Dearborn Business.
A copy of the Purchase Agreement is attached as Exhibit
2.1 hereof, and is incorporated herein by reference in
its entirety.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
2.1 Worldwide Purchase and Sale Agreement, dated as
of March 11, 1996, by and between Grace and the
Company.
SIGNATURE
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.
Date: March 29, 1996
BETZ LABORATORIES, INC.
By:/s/ William R.Cook
Name: William R. Cook
Title: President and
Chief Executive Officer
EXHIBIT INDEX
Exhibits
2.1 Worldwide Purchase and Sale Agreement, dated as
of March 11, 1996, by and between Grace and the
Company.
Conformed Copy
GRACE DEARBORN
WORLDWIDE PURCHASE AND SALE AGREEMENT
AGREEMENT dated as of March 11, 1996 by and between
W. R. GRACE & CO.-CONN. ("Grace") and BETZ LABORATORIES,
INC. ("Buyer").
W I T N E S S E T H :
WHEREAS, the Dearborn Business (as hereinafter
defined) is conducted by Grace and certain of its
subsidiaries and affiliates (as identified on Exhibit A-1
hereto) in more than fifty countries including Argentina,
Australia, Bahrain, Belgium, Bolivia, Brazil, Canada,
Chile, Colombia, the Czech Republic, Denmark, the Dominican
Republic, Ecuador, El Salvador, Finland, France, Germany,
Greece, Guatemala, Hong Kong, Hungary, India, Indonesia,
Ireland, Italy, Japan, Kuwait, Malaysia, Mexico, the
Netherlands, New Zealand, Norway, Panama, Paraguay, Peru,
the Philippines, Poland, Portugal, Russia, Saudi Arabia,
Singapore, South Africa, Spain, Sweden, Switzerland,
Taiwan, Thailand, Trinidad, Turkey, the United Arab
Emirates, the United Kingdom, the United States, Uruguay
and Venezuela;
WHEREAS, Grace desires to sell the Dearborn Business
to Buyer and Buyer desires to purchase the Dearborn
Business from Grace by means of the transfer from Grace and
its subsidiaries to Buyer and its subsidiaries of certain
assets and liabilities of the Dearborn Business including,
but not limited to, the partnership interests of the
limited partnership conducting the Dearborn Business in the
United States, the capital stock of the Grace subsidiaries
conducting the Dearborn Business in Belgium, Canada,
France, the Netherlands and Sweden, and the capital stock
owned by Grace in a joint venture company in India; and
WHEREAS, in certain countries, the Dearborn Business
is operated and managed by Grace and its subsidiaries in
combination with other Grace businesses using shared
facilities and the services of shared employees, and in
some cases such facilities and employees will be retained
by Grace and its subsidiaries and services made available
to Buyer and its subsidiaries for a transitional period,
while in other cases such facilities and employees will be
transferred to Buyer and its subsidiaries and services made
available to Grace and its subsidiaries for a transitional
period;
NOW, THEREFORE, in consideration of the mutual
covenants herein contained, the parties 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 Exhibits A-1, A-2 and B shall have
the meanings set forth in this Article or in such Exhibits.
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.
"Ancillary Agreements" means the agreements described
in Section 3.4. "Ancillary Agreement" means one of the
Ancillary Agreements.
"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 nor, with respect to the determination of the
LIBOR Rate, a day on which banks are generally closed in
London, England.
"Buyer" means Betz Laboratories, Inc., a Pennsylvania
corporation.
"Buyer Group" means, collectively, Buyer and its
Subsidiaries and, at any time after the Closing, the
Transferred Companies and Transferred Joint Ventures.
"Buyer Indemnified Group" has the meaning given such
term in Section 14.2.
"Buyer Plans" means the employee benefit plans or
arrangements maintained by the Buyer Group. "Buyer Plan"
means one of the Buyer Plans.
"Buying Companies" means, collectively, Buyer and each
of the Subsidiaries of Buyer listed in Exhibit A-2 and each
of the Subsidiaries of Buyer to which Buyer transfers the
right to purchase any portion of the Total Dearborn Assets,
Transferred Shares, Transferred Interests or Transferred
Investments pursuant to Section 19.5. "Buying Company"
means one of the Buying Companies.
"CERCLA" means the Comprehensive Environmental
Response, Compensation, and Liability Act, 42 U.S.C. SECTION9601
et seq.
"Chromium Claims" means all Cleanup claims, statutory
and common law tort claims, product liability claims, and
Natural Resource Damage Claims relating to chromium
compounds and salts thereof generated, stored, used,
disposed of, treated, handled, shipped or sold by the
Dearborn Business or any predecessor thereof on or before
the Closing Date, including such chromium compounds and
salts thereof that are emitted, released, transported from
or disposed of at or from a Customer Site.
"Claimant" has the meaning given such term in Section
14.5(a).
"Cleanup" means those actions required to: (i) clean
up, remove, treat or remediate Hazardous Substances in the
outdoor environment; (ii) prevent the release of Hazardous
Substances so that they do not migrate, endanger or
threaten to endanger public health or the outdoor
environment; (iii) perform pre-remedial studies and
investigations and post-remedial monitoring and care; or
(iv) respond to any requests by any Governmental Authority
for information or documents in any way related to cleanup,
removal, treatment or remediation of Hazardous Substances
in the outdoor environment.
"Closing" means the actions described in Sections 3.3
through 3.6 to be taken by the Buying Companies and the
Selling Companies and certain of their affiliates.
"Closing Assumption Agreements" means the assumption
agreements to be executed and delivered by the Buying
Companies at the Closing.
"Closing Conveyance Documents" means the deeds, bills
of sale, assignments and other instruments of conveyance to
be executed and delivered by the Selling Companies at the
Closing.
"Closing Date" means the date on which the Closing
occurs.
"Closing Statement" has the meaning given such term in
Section 4.4.
"Closing Working Capital Assets", "Closing Working
Capital Liabilities" and "Closing Net Amount" have the
respective meanings given such terms in Section 4.2.
"Code" means the Internal Revenue Code of 1986, as
amended.
"Confidentiality Agreement" has the meaning given such
term in Section 8.1.
"Continued Dearborn Business Employees" means the
Continued Employees and the employees of the Transferred
Companies and Transferred Joint Ventures. "Continued
Dearborn Business Employee" means one of the Continued
Dearborn Business Employees.
"Continued Employees" has the meaning specified in
Section 12.2(b). "Continued Employee" means one of the
Continued Employees.
"Current Employees" has the meaning specified in
Section 12.2(a). "Current Employee" means one of the
Current Employees.
"Damages" has the meaning given such term in Section
14.1.
"Dearborn Belgium Shares" means all of the shares of
capital stock of the Dearborn Belgium Subsidiaries directly
owned by Grace Belgium.
"Dearborn Belgium Subsidiaries" means: (a) Grace
Dearborn N.V., a Belgian corporation in which Grace Belgium
owns 98.97% of the capital stock and Alexim N.V. owns 1.03%
of the capital stock; (b) Alexim N.V., a Belgian
corporation in which Grace Belgium owns 94.5% of the
capital stock and Grace Dearborn N.V. owns 5.5% of the
capital stock; and (c) Finac N.V., a Belgian corporation in
which Alexim N.V. owns 88% of the capital stock and Grace
Dearborn N.V. owns 12% of the capital stock.
"Dearborn Business" means the business conducted by
the Selling Companies, the Transferred Companies and the
Transferred Joint Ventures of providing (a) water treatment
chemicals, support equipment and consulting services to
prevent corrosion, scale and microbiological growth in
industrial utility waters, heating, cooling and steam
generation applications, and industrial wastewater
applications for clarification, sludge de-watering, odor
control and water recycling; (b) process chemicals, support
equipment and related consulting services to optimize and
protect processing systems for the production of pulp and
paper, refined petroleum products and petrochemicals, sugar
and alcohol; (c) chemicals for the protection and cleaning
of industrial cooking and sterilizing equipment for canned
food; (d) paint detackification products and services to
remove paint sludge from water wash paint spray systems;
(e) chemicals, equipment and consulting services for the
treatment of process waters in the mining and processing of
metal ores; and (f) the provision of polynaphthalene
sulfonate, polyacrylate and polymethacrylate dispersants
and consulting services for use in the petrochemical, oil
recovery, and rubber industries. The term "Dearborn
Business" does not include the business conducted by the
Grace Group of providing products, equipment and consulting
services useful for the bioremediation of contaminated
water, soils or process streams by either the Daramend or
bioreactor technologies, the business conducted by the
Grace Group of providing chemicals and other products and
consulting services useful in servicing and maintaining
vessels used in salt and fresh water, or the business of
providing polynaphthalene sulfonate, polyacrylate and
polymethacrylate superplasticizers for the construction
industry.
"Dearborn Business Employees" means the Current
Employees and employees of the Transferred Companies and
the Transferred Joint Ventures. "Dearborn Business
Employee" means one of the Dearborn Business Employees.
"Dearborn Canada" means Grace Dearborn, Inc., an
Ontario corporation and a wholly owned Subsidiary of
Dearborn International.
"Dearborn Canada Shares" means all of the issued and
outstanding shares of capital stock of Dearborn Canada.
"Dearborn Financial Statements" has the meaning
specified in Section 5.6.
"Dearborn France" means Grace Service Chemicals S.A.,
a French corporation and a wholly owned Subsidiary of Grace
France.
"Dearborn France Shares" means all of the issued and
outstanding shares of capital stock of Dearborn France.
"Dearborn India JV" means Dearborn I.E.I. (India)
Private Ltd., an Indian corporation in which Grace holds a
51% equity interest.
"Dearborn India JV Shares" means the shares of capital
stock of the Dearborn India JV owned by Grace.
"Dearborn Japan JV" means Nippon Dearborn K. K., a
Japanese corporation in which Dearborn Netherlands owns a
50% equity interest.
"Dearborn Japan JV Shares" means the shares of capital
stock of the Dearborn Japan JV owned by Dearborn
Netherlands.
"Dearborn Netherlands" means Grace Dearborn B.V., a
Netherlands corporation in which Grace Netherlands owns a
97.14% equity interest and Dearborn International owns a
2.86% equity interest.
"Dearborn Netherlands Shares" means all of the issued
and outstanding shares of capital stock of Dearborn
Netherlands.
"Dearborn Sweden" means Grace Dearborn AB, a Swedish
corporation and a wholly owned Subsidiary of Grace AB.
"Dearborn Sweden Shares" means all of the issued and
outstanding shares of capital stock of Dearborn Sweden.
"Dearborn U.S." means Dearborn USA, Limited
Partnership, a Delaware limited partnership in which Grace
is the sole general partner and owns a 1% partnership
interest and LB Realty, a wholly owned Subsidiary of Grace,
is the sole limited partner and owns a 99% partnership
interest.
"DOJ" means the United States Department of Justice.
"Employee Benefits Agreement" means the Ancillary
Agreement referred to in Section 3.4(a).
"Environmental Costs" means those costs relating to,
or in connection with, Environmental Law, Cleanup
(including costs paid by Buyer to third parties for such
third party's Cleanup costs), consulting and technical
costs, Damages, restitution, and monitoring costs.
"Environmental Law" means any law, regulation, rule,
ordinance, by-law, or order of any Governmental Authority,
as in effect from time to time, that relates to or
otherwise imposes liability, obligations, or standards with
respect to pollution, the protection of the environment or
the protection of human health, including, without
limitation, any liability, obligations or standards with
respect to the investigation or remediation of releases of
Hazardous Substances into the environment.
"Executives" means the following executives of the
Dearborn Business: Ian Priestnell, President of Grace
Dearborn & General Manager of Water Treatment Services;
Gregory S. McCoy, Vice President and Chief Financial
Officer; John A. Kelly, Vice President, Research &
Development; Jan Chrillesen, Vice President & General
Manager, Paper Industry Services; John A. Stilwell, Vice
President & General Manager, Asia Pacific; Stephen F.
Werbe, Vice President and General Manager - Europe; Donald
J. Crawford, Vice President & General Manager, North
America; Juan Carlos Staibano, Vice President & General
Manager - Latin America; Richard P. Clifford, Director -
Global Manufacturing & Logistics; with respect to
environmental matters set forth in Sections 5.8, 5.14, 5.18
and 14.2A, Mark Stoler, Chief Environmental, Health and
Safety Counsel of WRG; and, with respect to employee
benefit matters set forth in Sections 5.8, 5.12, 5.13, 5.16
and 5.18 and Article 12, Jason G. Albert, Director, Global
Benefits Planning.
"Expatriate Agreements" has the meaning specified in
Section 12.10. "Expatriate Agreement" means one of the
Expatriate Agreements.
"Expatriate Employees" has the meaning specified in
Section 12.10. "Expatriate Employee" means one of the
Expatriate Employees.
"Financial Exchange Rate" has the meaning specified in
Section 2.4(a).
"FTC" means the United States Federal Trade
Commission.
"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 Dearborn Business is
being conducted by the Grace Group. "Governmental
Authority" means one of the Governmental Authorities.
"Grace" means W. R. Grace & Co.-Conn., a Connecticut
corporation and a wholly owned Subsidiary of WRG.
"Grace Brazil" means Grace Brasil S.A., a wholly owned
Subsidiary of Grace.
"Grace Group" means, collectively, WRG, its
Subsidiaries and, at any time prior to the Closing, the
Transferred Companies and Transferred Joint Ventures.
"Grace Indemnified Group" has the meaning given such
term in Section 14.3.
"Grace Severance Arrangement" has the meaning
specified in Section 12.6(a).
"Grace Sweden" means Grace AB, a Swedish corporation
and a wholly owned Subsidiary of Grace.
"Hazardous Substances" means (a) petroleum or
petroleum products; (b) hazardous substances, hazardous
wastes, hazardous materials, radioactive materials,
contaminants, pollutants, or toxic substances as defined
under or regulated by Environmental Law; or (c) any other
chemical, material or substance, the presence or release of
which in or into the environment is regulated by any
Governmental Authority.
"HSR Act" means the U.S. Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and
regulations thereunder.
"Insurance Procedures Agreement" means the Ancillary
Agreement referred to in Section 3.4(c).
"Intellectual Property Licenses" means all licenses of
intellectual property that: (a) are between one or more of
the Selling Companies or the Transferred Companies and any
Person that is not a member of the Grace Group, and (b)
either by their terms are assignable or for which consent
to assignment to a member of the Buyer Group has been
obtained.
"Intellectual Property Rights" means:
(A) all intellectual property which (i) is owned by
the Grace Group; (ii) is used directly and exclusively in
the Dearborn Business or has been developed or is under
development for exclusive use in the Dearborn Business; and
(iii) is included in one of the following categories:
(1) all invention disclosures and Patents
(referred to by Grace's internal reference
number), the Trademarks, the United States
and foreign copyright registrations,
renewals and applications to register
copyrights including, but not limited to,
such previously recited items as are listed
on Schedule 5.15(a) (hereinafter the
"Scheduled Intellectual Property");
(2) all inventions, formulae, processes,
designs, know-how, show-how, manufacturing
know-how, trade secrets, computer software
and technical manuals and documentation
which are not included within subparagraph
(1) above;
(3) all unregistered: trade names, brandnames,
trademarks, service marks, certification
marks, trade dress, designs and logos,
assumed names and other indications of
origin, including, but not limited to, the
DEARBORN name (excluding, however, the use
of the DEARBORN name in combination with the
GRACE name);
(4) all goodwill symbolized by or associated
with any item of subparagraph (3) above; and
(5) all unregistered copyrights; and
(B) license rights to all other intellectual property
which is (i) used in or necessary to the Dearborn Business
or (ii) has been developed or is under development for use
in the Dearborn Business, including, but not limited to,
all Patents, inventions, formulae, processes, designs,
know-how, show-how, manufacturing know-how, trade secrets,
computer software, and technical manuals and documentation,
and all other proprietary information that is shared by the
Dearborn Business and Grace's other businesses, and with
respect to which exclusive rights within the field of the
Dearborn Business have been granted to Dearborn U.S. by the
Dearborn USA, Limited Partnership Intellectual Property
License and Assignment Agreement dated November 30, 1995
between Grace and Dearborn U.S. and the First Amendment
thereto and will be assigned to Buyer by operation of the
Grace Dearborn Intellectual Property License and Assignment
Agreement referred to in Section 3.4(f).
"Knowledge" means the actual knowledge of such
individuals, after due inquiry.
"LIBOR Rate" means the rate per annum in effect on the
Closing Date for one month U.S. dollar deposits in the
London Interbank Market as published in The Wall Street
Journal.
"Liens" means liens, security interests, pledges,
charges, voting trusts or agreements or other encumbrances.
"Litigation Expenses" has the meaning given such term
in Section 14.1(c).
"Local Purchase Prices" has the meaning specified in
Section 2.3. "Local Purchase Price" means one of the Local
Purchase Prices.
"Material Adverse Effect" means a material adverse
effect on the (a) business, assets or liabilities, employee
relationships, supplier relationships, customer
relationships, financial condition or results of operations
of the Dearborn Business, in each case taken as a whole,
(b) the ability of the Selling Companies and the
Transferred Companies to conduct the Dearborn Business in
the manner in which it is currently conducted, or (c) the
ability of the Selling Companies and the Transferred
Companies to consummate the transactions contemplated by
the Transaction Documents without material delay or
impairment.
"Material Contracts" has the meaning given such term
in Section 5.11. "Material Contract" means one of the
Material Contracts.
"Natural Resource Damage Claims" means all actions
arising under Environmental Law relating to natural
resource damage or the restoration of natural resources,
which actions arise from or result from the release,
discharge, disposal, spill, storage or transportation of
Hazardous Substances generated, stored, used, disposed of,
treated, handled, shipped or sold by the Dearborn Business
or any predecessor thereof on or before the Closing Date.
"NPL" has the meaning given such term in Section
5.14(a).
"Patents" means all United States and foreign patents,
patent applications, patent disclosures, including all
reissues, divisions, continuations, continuations-in-part,
substitutions or extensions of any of the foregoing.
"Payment Exchange Rate" has the meaning specified in
Section 2.4(b).
"Person" means any individual, partnership, firm,
trust, association, corporation, joint venture,
unincorporated organization, other business entity or
Governmental Authority.
"Price Waterhouse" means Price Waterhouse LLP.
"Salaried Dearborn Business Employee" has the meaning
given such term in Section 12.6(a).
"Scheduled Closing Date" has the meaning given such
term in Section 3.1.
"Seller Plans" means the employee benefit plans or
arrangements maintained by the Grace Group.
"Selling Companies" means, collectively, Grace and
each of the subsidiaries of Grace listed in Exhibit A-1.
"Selling Company" means one of the Selling Companies.
"Subsidiaries" means entities in which either Grace or
Buyer, respectively, own directly or indirectly 50% or more
of the voting power or other similar interests.
"Subsidiary" means one of the Subsidiaries.
"Surviving Intercompany Accounts" means amounts
payable or receivable as of the Closing that are (a)
included in Total Dearborn Assets, Total Dearborn
Liabilities or the assets or liabilities of one of the
Transferred Companies, and (b) are payable to or receivable
from a unit of the Grace Group whether or not a part of the
Dearborn Business for (i) products and services supplied in
the ordinary course of the Dearborn Business or the
business of such other Grace unit, (ii) reimbursement of
selling expenses relating to the sale of Dearborn Business
products, (iii) reimbursement of personnel costs for
Dearborn Business Employees, (iv) royalties or (v)
reimbursement of Dearborn dedicated research expenses.
Surviving Intercompany Accounts do not include amounts due
to or from any member of the Grace Group (other than a unit
of the Dearborn Business) for management or administrative
services or other internal Grace Group allocations.
"Swedish Holding Company" means Dearborn Holdings AB,
a Swedish corporation and a wholly owned Subsidiary of
Grace.
"Swedish Holding Company Shares" means all of the
issued and outstanding capital stock of the Swedish Holding
Company.
"Tax" or "Taxes" means any United States federal,
state, local or foreign taxes including, but not limited
to, taxes on or measured by income or estimated income,
alternative or add-on minimum tax, gross receipts, sales,
use, ad valorem, franchise, capital stock, transfer, gains,
profit, license, employees' withholding, foreign person
withholding, backup withholding, social security,
occupation, unemployment, disability, excise, severance,
stamp, premium, value added taxes, taxes on services, real
property, personal property, production, inventory and
merchandise, business privilege, or windfall profit tax,
custom, duty or other tax, governmental fee or other like
assessment or charge of any kind whatsoever, together with
any interest, penalty, addition to tax or additional amount
imposed by any Taxing Authority whether or not disputed.
"Tax Procedures Agreement" means the Tax Procedures
Agreement referred to in Section 3.4(b).
"Tax Return" means any return, report or other
information required to be filed with any Taxing Authority
with respect to any Tax, including any declaration of
estimated tax or information return.
"Taxing Authority" means any Governmental Authority
responsible for, and having jurisdiction over, the
assessment, determination, collection or other imposition
of Taxes.
"Total Dearborn Assets" has the meaning given such
term in the Definitions Schedule.
"Total Dearborn Liabilities" has the meaning given
such term in the Definitions Schedule.
"Total Excluded Assets" has the meaning given such
term in the Definitions Schedule.
"Total Excluded Liabilities" has the meaning given
such term in the Definitions Schedule.
"Total Purchase Price" has the meaning specified in
Section 2.2.
"Toxic Tort Claims" means common law or statutory
toxic tort actions relating to loss of life or injury to
persons or property, where such actions arise or result
from the actual or alleged release, discharge, disposal,
spill, storage, transportation, treatment or generation of
Hazardous Substances, including, but not limited to, the
release, discharge, disposal, spill or storage of Hazardous
Substances contained in products supplied to customers of
the Dearborn Business or any predecessor thereof, provided
that such Hazardous Substances were generated, stored,
used, disposed of, treated, released, handled, shipped or
sold by the Dearborn Business or any predecessor thereof on
or before the Closing Date; except that Toxic Tort Claims
do not include Chromium Claims.
"Trademarks" means (i) all applications to register
and registrations of all tradenames, trademarks, service
marks, logos and designs by any Governmental Authority,
including, without limitation, the United States Patent and
Trademark Office; (ii) all renewals of any of the preceding
and (iii) all goodwill symbolized thereby or associated
therewith.
"Transaction Documents" means this Agreement, the
Ancillary Agreements, the Closing Assumption Agreements,
the Closing Conveyance Documents and all other documents
executed at the Closing. "Transaction Document" means one
of the Transaction Documents.
"Transferred Companies" means the Dearborn Belgium
Subsidiaries, Dearborn Canada, Dearborn France, Dearborn
Netherlands, the Swedish Holding Company, Dearborn Sweden
and Dearborn U.S. "Transferred Company" means one of the
Transferred Companies.
"Transferred Interests" means the 1% partnership
interest in Dearborn U.S. held by Grace and the 99%
partnership interest in Dearborn U.S. held by LB Realty.
"Transferred Investment" means the Dearborn India JV
Shares.
"Transferred Joint Ventures" means Dearborn India JV
and Dearborn Japan JV. "Transferred Joint Venture" means
one of the Transferred Joint Ventures.
"Transferred Shares" means the Dearborn Belgium
Shares, the Dearborn Canada Shares, the Dearborn France
Shares, the Dearborn Netherlands Shares and the Swedish
Holding Company Shares.
"Transitional Services Employees" means the employees
of the Grace Group who are designated at Grace's sole
discretion, after Grace's good faith consultation with
Buyer, as employees available to provide substantial
transitional services to the Dearborn Business on and after
the Closing Date, but who are not Dearborn Business
Employees. "Transitional Services Employee" means one of
the Transitional Services Employees.
"Undisclosed Employee Liabilities" means all
liabilities and obligations to present or former employees
of the Dearborn Business who are not Continued Dearborn
Business Employees or Transitional Services Employees who
become employees of the Buyer Group except for those (i)
disclosed or reflected in the 1995 Dearborn Statement of
Net Assets, (ii) disclosed on any Schedule to Articles 5 or
12 of this Agreement or (iii) disclosed on the Data Room
Schedule.
"Undisclosed Product Liabilities" means all
liabilities and obligations arising from the sale or
distribution of products by the Dearborn Business prior to
the Closing Date except for those (i) disclosed or
reflected in the 1995 Dearborn Statement of Net Assets,
(ii) disclosed on any Schedule to Article 5 of this
Agreement or (iii) disclosed on the Data Room Schedule.
"U.S. GAAP" means United States generally accepted
accounting principles.
"Valuation Date" means the Closing Date.
"WRG" means W. R. Grace & Co., a New York corporation,
the parent company of Grace.
ARTICLE 2
SALE OF DEARBORN BUSINESS, PURCHASE PRICE
2.1 Sale of Business. On the terms and subject to
the conditions of this Agreement, at the Closing, Grace
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 Dearborn Business as
follows: the Selling Companies shall convey the Total
Dearborn Assets owned by the Selling Companies, the
Transferred Shares, the Transferred Interests and the
Transferred Investment to the Buying Companies, and in
exchange therefor, the Buying Companies shall assume the
Total Dearborn Liabilities of the Selling Companies and
shall pay the Local Purchase Prices (which in the aggregate
shall equal the Total Purchase Price).
2.2 Total Purchase Price. "Total Purchase Price"
means US $632 million, plus or minus any adjustments under
Sections 4.3, 4.A, 4.AA, 4.B and 4.C, and subject to
further adjustment as described in Section 2.5. The Total
Purchase Price shall be allocated among the Local Purchase
Prices as provided in Section 2.3.
2.3 Local Purchase Prices. The "Local Purchase
Price" for each country in which a portion of the Dearborn
Business is to be conveyed from one of the Selling
Companies to one of the Buying Companies, whether by the
transfer of assets, the transfer of capital stock or the
transfer of partnership interests, 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 Total Dearborn Assets and the Dearborn Business located
in each country), provided that the aggregate of the Local
Purchase Prices shall equal the Total Purchase Price.
Grace and Buyer have agreed to the Local Purchase Price for
each such country as set forth in Exhibit B (the
"Allocation"). Prior to the Closing Date, Grace and Buyer
shall, in good faith, negotiate a specific 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 Grace 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 Taxing Authority, the party
receiving notice of the dispute shall promptly notify the
other party hereto concerning the resolution of such
dispute. Buyer and Grace 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 Seller each agrees to
provide the other promptly with any other information
required to complete Form 8594. Buyer and Grace 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 Grace shall modify the Allocation and
the Specific Allocation so that the adjustment is allocated
to the country where it relates or as Buyer and Grace
otherwise mutually agree.
2.4 Exchange Rates.
(a) Except as otherwise provided in Section
2.4(b), 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 a rate to be mutually agreed upon
by Grace and Buyer (the "Financial Exchange Rate").
Translation of financial statements will be determined in
accordance with U.S. GAAP. Each Local Purchase Price
described in Exhibit B shall be expressed in U.S. dollars
using the Financial Exchange Rate for the applicable local
currency for the Valuation Date, provided that the
aggregate of all Local Purchase Price shall equal the Total
Purchase Price.
(b) The amounts to be paid in local currency in
Brazil and Colombia and any other countries pursuant to
Sections 3.6 and 4.7 shall be converted from U.S. dollars
into local currency using a rate to be mutually agreed upon
by Grace and Buyer (the "Payment Exchange Rate").
2.5 Special Purchase Price Adjustment. If all of the
conditions to the obligations of the Buying Companies under
this Agreement except for the condition set forth in
Section 10.3(b) have been fulfilled because one or more of
the Buying Companies is unable to complete the purchase of
a portion of the Dearborn Business in one or more countries
because it does not obtain the consent or approval of a
Governmental Authority (including, without limitation, the
expiration of any waiting periods or any consent or
approval contemplated by Section 10.3(b)), Grace shall have
the right to elect to have the Buying Companies and the
Selling Companies proceed with the Closing of the sale of
the Dearborn Business in all other countries by giving
Buyer written notice of such election, in the manner
provided in Section 18.1, at any time prior to termination
of this Agreement pursuant to Section 13.1. If Grace so
elects to proceed with the Closing:
(a) Notwithstanding the provisions of Section
3.1, the Closing shall occur on the date specified by Grace
in such written notice, which date shall be no less than
five Business Days following the date such notice is
delivered to Buyer; provided, however, that such date shall
not be earlier than the Scheduled Closing Date. At the
Closing, the Selling Companies shall complete the
conveyances to the Buying Companies provided for in Section
3.3 except for any conveyance that the parties are unable
to complete as a result of the failure to obtain such
consent or approval (each such conveyance not completed at
the Closing is hereinafter referred to as a "Suspended
Conveyance" and any business that is subject to a Suspended
Conveyance is hereinafter referred to as a "Retained
Business"). The existence of one or more Suspended
Conveyances shall not affect any of the actions of the
parties to be taken at the Closing or their respective
obligations under this Agreement, except as otherwise
specifically provided in this Section.
(b) At the Closing, (i) each of the Buying
Companies shall make the purchase price payments due to the
Selling Companies under Section 3.3 (in the manner provided
in Section 3.6) except for payment due with respect to any
Suspended Conveyance, and (ii) Buyer shall pay to Grace the
full amount of the purchase price due to the Selling
Companies under Section 3.3 for each Suspended Conveyance.
Buyer shall also be responsible for any post-Closing
adjustment payments attributable to such Suspended
Conveyance pursuant to Article 4.
(c) (i) Buyer and Grace will work together to
agree upon the manner in which a Retained Business should
be operated from the Closing Date until it is conveyed
pursuant to paragraphs (d) or (e) hereof (the "Interim
Period"), in compliance with applicable law and in
accordance with the following principles: each Selling
Company that has retained a Retained Business may retain
title to the Retained Business or may transfer the Retained
Business to a newly formed Subsidiary that is wholly owned
directly or indirectly by Grace at Grace's sole cost and
expense. To the maximum extent permissible by applicable
law, Buyer shall operate the business thereof and make
decisions in connection therewith. In all other respects,
Grace shall cause each Selling Company that has a Retained
Business (or each Subsidiary to which such Retained
Business has been transferred) to continue to operate such
Retained Business in the geographic areas in which it was
operated prior to the Closing in the ordinary course of
business, consistent with past practice. Such Selling
Company or Grace Subsidiary, as applicable, shall be deemed
to have been granted licenses by the Buyer Group to use all
Intellectual Property Rights previously used by such
Selling Company in connection with the Retained Business
and shall pay royalties to Buyer (or a designated member of
the Buyer Group) in exchange for such licenses in the
amount, if any, provided for in the agreements between such
Selling Company or Grace Subsidiary, as applicable, and
other members of the Grace Group in effect prior to the
Closing. If such Suspended Conveyance involves the
retention by such Selling Company of the capital stock of a
Transferred Company or Transferred Joint Venture, such
Transferred Company or Transferred Joint Venture shall
continue operating the Retained Business and shall be
granted such licenses and pay such royalties. If no
agreement previously existed between the Selling Company or
Grace Subsidiary and other members of the Grace Group
providing for royalties, the license to continue operating
the Retained Business provided for herein shall be on a
royalty free, paid-up basis.
(ii) If Grace gives Buyer notice of its
election pursuant to this Section 2.5, at the Closing and
at all times thereafter, Buyer shall have the option in its
sole discretion upon three days written notice to Grace of
having the Retained Business conveyed to it without regard
to whether or not the consent or approval of the relevant
Governmental Authority with respect to the Suspended
Conveyance has been obtained. If Buyer decides to exercise
the option pursuant to this subsection (ii) such that the
business otherwise subject to the Suspended Conveyance
shall be conveyed to Buyer at the Closing, then the payment
of the Local Purchase Price relating to such business will
be made as otherwise set forth in this Agreement and not as
contemplated by Section 2.5(b)(ii).
(d) Subject to Section 2.5(e), each Selling
Company or Grace Subsidiary, as applicable, that is
operating a Retained Business shall proceed as
expeditiously as possible and use reasonable efforts to
sell such Retained Business to a purchaser that is not an
affiliate of the Buyer Group or the Grace Group (an
"Independent Purchaser"); the manner of such sale (which
may be by way of "auction" or other competitive bidding
process, negotiated sale or other manner deemed
appropriate) and the terms of any such sale shall be
subject to the approval of Buyer, to the extent permitted
by applicable law, which approval shall not be unreasonably
withheld or delayed. Upon the closing of any such sale,
Grace shall pay to Buyer, as an adjustment of the Total
Purchase Price, the proceeds of such sale, which amount
shall be net of expenses directly related to such sale (but
shall not be reduced by any Taxes incurred in connection
with such sale, but the liability for transfer taxes shall
be allocated in accordance with Section 6(b) of the Tax
Procedures Agreement) which amount shall be adjusted to
reflect Buyer's entitlement (on an economic basis) to the
earnings of the Retained Business during the Interim Period
and Grace's entitlement to reimbursement for the costs
relating to capital expenditures incurred with Buyer's
consent, with interest on such net amount.
(e) At Buyer s request, any Selling Company or
Grace Subsidiary, as applicable, operating a Retained
Business shall delay all efforts to achieve a sale to an
Independent Purchaser for a period ending no later than 15
months after the Closing Date to permit the Buyer Group to
obtain all consents and approvals of Governmental
Authorities required for the purchase by the Buyer Group of
the Retained Business. If the Buyer Group obtains all such
consents and approvals, such Selling Company or Grace
Subsidiary, as applicable, shall convey the Retained
Business to a member of the Buyer Group designated by
Buyer. The purchase price for the assets and business so
conveyed shall be adjusted to reflect Buyer's and Grace's
respective entitlement in accordance with the provisions of
the last sentence of Section 2.5(d).
(f) Buyer agrees to reimburse Grace for
reasonable out-of-pocket expenses related to the sale or
attempted sale of a Retained Business pursuant to Section
2.5(e) (other than Taxes incurred in connection with such
sale, but the liability for transfer taxes shall be
allocated in accordance with Section 6(b) of the Tax
Procedures Agreement) to the extent not deducted from the
proceeds thereof in accordance with the terms of Section
2.5(d). No overhead or administrative cost charged by WRG,
Grace or any member of the Selling Group to a Retained
Business will be reimbursed unless its incurrence was
approved in advance by Buyer.
ARTICLE 3
CLOSING
3.1 Scheduled Closing Date. The "Scheduled Closing
Date" shall be (a) the latest of (i) Friday, June 7, 1996,
(ii) the first Friday that is a Business Day at least five
Business Days following the fulfillment or waiver of the
conditions set forth in Sections 10.3 and 11.3 assuming the
other conditions to Articles 10 and 11 are satisfied at the
Closing and (iii) if the Dearborn Business suffers a
Material Adverse Effect on or after the date hereof which
adversely affects Buyer's ability to obtain financing, the
first Friday after the date Buyer has available the
necessary financing; provided, however, that such date
shall not be later than 30 days after the later to occur of
clauses (i) and (ii) hereof.
3.2 Time and Place of Closing, Simultaneity. The
Closing shall take place on the Scheduled Closing Date at
10:00 a.m. U. S. Eastern Time at the offices of Grace, One
Town Center Road, Boca Raton, Florida, U.S.A., and at such
other time and place as may be applicable under the laws of
any other country or as Grace 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, except as otherwise specifically
provided for herein.
3.3 Conveyances at the Closing; Payments. At the
Closing:
(a) the Selling Companies shall execute,
acknowledge and deliver to the Buying
Companies special warranty deeds, notarial
deeds, bills of sale, 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 Total Dearborn
Assets, the Transferred Shares, the
Transferred Interests and the Transferred
Investment;
(b) the Buying Companies shall pay to the
Selling Companies, on account of the Total
Purchase Price, an aggregate amount equal to
US $632 million, plus or minus the best
joint estimate by Grace and Buyer of the
price adjustment under Section 4.AA, and
plus or minus the price adjustments under
Sections 4.A, 4.B and 4.C, except that (i)
if the parties have not reached agreement
with respect to a price adjustment under
Section 4.A(c), then for the sole purpose of
computing the payment under this Section,
Buyer's position with respect to such
adjustment shall be deemed to be correct and
(ii) if the parties have not reached
agreement with respect to a price adjustment
under Section 4.B or 4.C in circumstances in
which such agreement is necessary, then for
the sole purpose of computing the payment
under this Section, there shall be deemed to
be no adjustment; provided, however, nothing
set forth herein shall limit or otherwise
affect Buyer's right to indemnification
under Section 4.B or 4.C following the
Closing; and
(c) the Buying Companies shall execute,
acknowledge and deliver to the Selling
Companies assumption agreements in order to
effectively assume the Total Dearborn
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 and agreements other than those
specifically contemplated by this Agreement. The Buying
Companies and the Selling Companies shall 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.
3.4 Ancillary Agreements. Each of the following
agreements (the "Ancillary Agreements"), other than the
agreements referred to in subsection (e), shall be executed
and delivered by the parties thereto at the Closing or, if
such agreements are being executed and delivered
simultaneously with this Agreement, such agreements shall
become effective at the Closing:
(Exhibits C and D Intentionally Omitted.)
(a) Employee Benefits Agreement among Grace,
Buyer and certain Subsidiaries of Grace and
Buyer in the form of Exhibit E.
(b) Tax Procedures Agreement between Grace and
Buyer concerning certain Tax matters, in the
form of Exhibit F.
(c) Insurance Procedures Agreement between WRG
and Buyer in the form of Exhibit G.
(d) Toll Manufacturing Agreements between the
Buying Companies and the Selling Companies
for production of Dearborn Business products
following the Closing by the Selling
Companies at the production facilities owned
by the Selling Companies located at Quilmes,
Argentina; Fawkner, Australia; Bogota,
Colombia; Hong Kong; Toluca, Mexico;
Porirua, New Zealand; Canlubang,
Philippines; Singapore; Capetown, South
Africa; Barcelona, Spain; and Samutprakain,
Thailand, the principal terms of which are
set forth on Exhibit H.
(e) Dearborn USA, Limited Partnership
Intellectual Property License and Assignment
Agreement executed on November 30, 1995 by
and between Grace and Dearborn U.S., and the
First Amendment thereto, providing for
royalty-free, exclusive licenses to Dearborn
U.S. within the field of the Dearborn
Business to the DARA-Trademarks, the Grace
Dearborn Trademark, and the Grafted Water
Soluble Intellectual Property Rights as
those terms are defined therein (Exhibit I).
(f) Grace Dearborn Intellectual Property License
and Assignment Agreement between Grace and
Buyer, providing for the assignment to Buyer
of (1) the agreement described in paragraph
(e) above and (2) rights to the DAREX
Trademark, and a royalty-free, exclusive
license to Buyer within the field of the
Dearborn Business to use intellectual
property which is shared by the Dearborn
Business and Grace's other businesses
(Exhibit J).
(g) Transition Administrative Services Agreement
between Grace and Buyer, the principal terms
of which are set forth in Exhibit K.
(h) Swedish Toll Manufacturing Agreement between
Dearborn Sweden and Grace AB, the principal
terms of which are set forth in Exhibit H.
(Exhibit L Intentionally Omitted.)
(i) Lease Agreement for continued production at
Grace Construction Products plant located at
Dearborn s Widnes, England plant, the
principal terms of which are set forth on
Exhibit M.
(j) Site separation agreements for Soracaba,
Brazil and Valencia, Venezuela, the
principal terms of which are set forth on
Exhibit N-1 and N-2.
(k) Leasing arrangements for shared
administrative and sales offices and
warehouses in Atlanta, Georgia, Oslo,
Norway, Helsinki, Finland, Santiago, Chile,
Helsingborg, Sweden and other locations, the
principal terms of which are set forth on
Exhibit O-1 and O-2.
3.5 Intentionally Omitted.
3.6 Method of Closing Payments. All payments at the
Closing by the Buying Companies to the Selling Companies
shall be made by means of a single payment by Buyer, for
itself and as agent for the other Buying Companies, to
Grace, for itself and as agent for the other Selling
Companies, by means of a wire transfer to Grace's account
#016-001257 at Chemical Bank, ABA #021-000-128, except as
follows:
(a) the payment to be made by Buyer Brazil at
the Closing pursuant to Section 3.3 with
respect to the Brazilian Purchase Price
shall be paid to Holdings Brazil at the
offices of Tozzini, Freire, Teixeira e
Silva, Rua Libero Badaro, 293-20 Andar, Sao
Paulo, Brazil, in immediately available
funds in Brazilian Reals;
(b) the payment to be made by Buyer Colombia at
the Closing pursuant to Section 3.3 to Grace
Colombia with respect to the Colombian
Purchase Price-Grace Colombia and to Aquatec
Colombia with respect to the Colombian
Purchase Price-Aquatec Colombia shall be
paid at the offices of Camacho & Co., Calle
72 No. 5-83, 6o. Piso, Bogota, Colombia, in
Colombian Pesos;
(c) one or more payments to be made by Buyer or
a member of the Buyer Group in the event
that Buyer exercises its right to elect to
obtain local financing in a country listed
on the Local Financing Exhibit for the
purchase of equity of a Transferred Company
or assets relating to the Dearborn Business,
provided that Buyer shall indemnify and make
whole the Grace Group for any costs and
expenses incurred as a result of currency
exchange rates and foreign currency
transaction fees directly attributable to
this subsection (c); and
(d) at the option of Grace, by means of an
installment note having the terms set forth
in the Schedule to this Section and having
such other terms as Grace and Buyer shall
mutually agree.
The amount of the payments to be made at the Closing in
Brazil and Colombia and pursuant to Section 3.6(c) shall be
first determined in U.S. dollars and then converted into
local currency using the Payment Exchange Rate on the
Business Day preceding the Closing Date.
3.7 Further Assurances of the Selling Companies. At
any time and from time to time after the Closing, at the
request of Buyer or any of the other Buying Companies, with
the expense thereof borne in accordance with Article 17,
the Selling Companies shall, and shall cause the other
members of the Grace 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 deems necessary or desirable to
put the Buying Companies in actual possession or operating
control of the Total Dearborn Assets and the Transferred
Companies, and of Grace's rights with respect to the
Transferred Investment, or to more fully and effectively
vest in the Buying Companies, or to confirm their title to
and possession of, the Total Dearborn Assets, the
Transferred Shares, the Transferred Interests and the
Transferred Investment, including, without limitation, all
reasonable actions necessary to effectively transfer all of
the Selling Companies' interests in any of such assets as
to which the consent of any third party to the transfer
thereof shall not have been obtained prior to Closing.
3.8 Further Assurances of the Buying Companies. At
any time and from time to time after the Closing, at the
request of Grace or any of the other Selling Companies,
with the expense thereof borne in accordance with Article
17, the Buying Companies 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 Grace
or any of the other Selling Companies reasonably deems
necessary or desirable to more fully and effectively divest
Grace and the other Selling Companies of responsibility for
the Total Dearborn Liabilities and incidents of ownership
of the Total Dearborn Assets, the Transferred Shares, the
Transferred Interests and the Transferred Investment,
including, without limitation, all reasonable actions
necessary to effectively transfer all of the Selling
Companies' obligations with respect to any of such assets
as to which the consent of any third party to the transfer
thereof shall not have been obtained prior to Closing.
3.8A Total Excluded Assets and Total Excluded
Liabilities. On or prior to the Closing Date, Grace shall
(a) cause all rights, properties and other assets of the
Transferred Companies that are Total Excluded Assets to be
sold, assigned or otherwise conveyed by the Transferred
Companies to Grace or Grace's designees (which designees
shall in no event include any of the Transferred
Companies), and Grace or such transferee shall assume all
liabilities (absolute, accrued, contingent or otherwise,
known or unknown) and obligations related to such Total
Excluded Assets, and (b) assume or cause one of its
designees (which designees shall in no event include any of
the Transferred Companies) to assume all liabilities and
obligations of the Transferred Companies that are Total
Excluded Liabilities. The sale, assignment or conveyance
of such Total Excluded Assets and the assumption of such
Total Excluded Liabilities shall not create any liabilities
(absolute, accrued, contingent or otherwise, known or
unknown) or obligations of the Transferred Companies that
shall survive the Closing; provided, however, that to the
extent Grace does not sell, assign, or convey the Total
Excluded Assets pursuant to clause (a) or assume the Total
Excluded Liabilities pursuant to clause (b) prior to the
Closing Date, Grace shall continue to sell, assign, convey
or assume (or cause to be sold, assigned, conveyed or
assumed) the Total Excluded Assets or Total Excluded
Liabilities after the Closing Date and shall remain liable
for such Total Excluded Liabilities. Grace shall be solely
responsible for the costs and expenses associated with the
transfer of such Total Excluded Assets and the assumption
of related liabilities and obligations. The costs and
expenses relating to the assumption of such Total Excluded
Liabilities shall be paid in accordance with Article 17.
ARTICLE 4
PURCHASE PRICES; POST-CLOSING ADJUSTMENTS
4.1 Physical Inventory Count; Closing of Books.
(a) The Selling Companies shall take a physical
count of Dearborn Business inventories of the Transferred
Companies and the Selling Companies at or within two weeks
prior to the Valuation Date. Buyer and its representatives
shall have the opportunity to observe such inventory count.
Such inventory count shall be taken (1) in Brazil, the
United States, Canada, the United Kingdom, Germany, Sweden,
Belgium and the Netherlands, in accordance with the
locations' inventory taking procedures as incorporated in
the Dearborn Business 1995 work papers of Price Waterhouse
(2) for other Dearborn Business locations as requested by
Buyer, in accordance with past practices or (3) as
otherwise agreed to by Grace and Buyer.
(b) The Buying Companies and the Selling
Companies or their representatives shall cooperate to close
the books of the Transferred Companies, and, to the extent
necessary for purposes of this Article, to close the
accounting records pertaining to the Dearborn Business of
each of the Selling Companies, as of 11:59 p.m. local time
on the Valuation Date.
4.2 Definitions.
(a) "Closing Working Capital Assets" means the
aggregate amount, as of 11:59 p.m. local time on the
Closing Date, of cash, accounts receivable, inventories and
other current assets that are included in the Total
Dearborn Assets.
(b) "Closing Working Capital Liabilities" means
the aggregate amount, as of 11:59 p.m. local time on the
Closing Date, of accounts payable, income taxes and other
current liabilities that are included in the Total Dearborn
Liabilities. Other current liabilities will include an
accrual for vacation entitlement for 1996 determined on a
pro rata basis for the year.
(c) "Closing Net Amount" means the amount of the
Closing Working Capital Assets less the amount of the
Closing Working Capital Liabilities.
(d) "1995 Dearborn Statement of Net Assets"
means a special purpose combined and consolidated statement
of net assets of the Dearborn Business, other than the
Total Excluded Assets and the Total Excluded Liabilities,
as of the close of business on December 31, 1995, prepared
in conformity with U.S. GAAP, and accompanied by a report
of Price Waterhouse stating whether the 1995 Dearborn
Statement of Net Assets has been prepared, in all material
respects, in accordance with the terms of this Agreement
and with U.S. GAAP.
(e) "1995 Dearborn Statement of Pretax Income"
means a special purpose combined and consolidated statement
of pretax income of the Dearborn Business for the year
ended December 31, 1995 (which includes a line item
Contribution Margin determined on the basis specified in
the Schedule to this Section), prepared on a basis
recognizing that the Dearborn Business is not stand-alone,
which basis of presentation will be described in Note 1
thereto, and in conformity with U.S. GAAP, and accompanied
by a report of Price Waterhouse, which will include a
schedule of audit adjustments, stating whether the 1995
Dearborn Statement of Pretax Income, in all material
respects, presents fairly the pretax results of operations
of the Dearborn Business for 1995 on the basis of
presentation described in Note 1 and in conformity with
U.S. GAAP.
(f) "1995 Working Capital Assets" means the
aggregate amount, as shown on the 1995 Dearborn Statement
of Net Assets, of the cash, accounts receivable,
inventories and other current assets of the Dearborn
Business.
(g) "1995 Working Capital Liabilities" means the
aggregate amount, as shown on the 1995 Dearborn Statement
of Net Assets, of the accounts payable, income taxes and
other current liabilities of the Dearborn Business.
(h) "1995 Net Amount" means the 1995 Working
Capital Assets less the 1995 Working Capital Liabilities.
(i) "Contribution Margin" has the meaning given
such term in the Schedule to this Section.
(j) "1995 Contribution Margin Amount" means the
aggregate amount of the Contribution Margin of the Dearborn
Business for 1995, as shown on the 1995 Dearborn Statement
of Pretax Income.
(k) "Non-Recurring Event" means any event that
would not be reasonably expected to have any significant
effect on the Contribution Margin of the Dearborn Business
for 1996 or subsequent years.
(l) "Earnings Multiple" means 9.
4.3 Computations. The Closing Net Amount shall be
determined in U.S. dollars on a going concern basis, in
accordance with U.S. GAAP applied on a basis consistent
with the accounting principles used in the preparation of
the 1995 Dearborn Statement of Net Assets, and using the
same account classifications, closing procedures and levels
of materiality as those used in the preparation of the 1995
Dearborn Statement of Net Assets. If Buyer is able to
establish that the representation in Section 5.6 with
respect to the 1995 Dearborn Statement of Net Assets was
inaccurate, then both the 1995 Dearborn Statement of Net
Assets and the Closing Net Amount shall be restated using
the corrected accounting principles and levels of
materiality that would cause such representation to be
accurate, and the Total Purchase Price shall be adjusted
accordingly. All amounts deemed paid and discharged
pursuant to Section 16.3 or retained or assumed by any
member of the Grace Group (or for which Grace has agreed to
indemnify the Buyer Group) as of the Closing Date in
accordance with any of the Ancillary Agreements, shall be
excluded from the assets and liabilities to be considered
in the calculation of the Closing Net Amount.
4.4 Closing Statement. As soon as practicable after
the Closing, but in no event later than 120 calendar days
after the Closing, Grace shall deliver to Buyer a statement
setting forth Grace's determination of the Closing Net
Amount (the "Closing Statement"), together with a report of
Price Waterhouse stating whether the Closing Net Amount
shown on the Closing Statement has been determined, in all
material respects, in accordance with the terms of this
Agreement. Upon and after delivery to Buyer of the Closing
Statement, Buyer's independent accountants accompanied by
Buyer shall, upon request, be given access to Price
Waterhouse's working papers to facilitate Buyer's review of
the Closing Statement.
4.A Pre-Closing Financial Statements Price
Adjustments.
(a) 1995 audited statements. As promptly as
practicable after the date of this Agreement, but in no
event later than April 10, 1996, Grace shall deliver to
Buyer the audited 1995 Dearborn Statement of Net Assets and
1995 Dearborn Statement of Pretax Income.
(b) Working capital adjustment. The Total
Purchase Price shall be increased by the amount, if any, by
which the 1995 Net Amount exceeds US $71.9 million or
decreased by the amount, if any, by which the 1995 Net
Amount is less than US $71.9 million.
(c) Contribution Margin adjustment.
(i) Not later than 15 calendar days after
delivery of the 1995 Dearborn Statement of Pretax Income,
Grace shall deliver a statement to Buyer as to the amount,
if any, of the price adjustment under this subsection as
computed by Grace, together with a schedule of all audit
adjustments made in the preparation of the 1995 Dearborn
Statement of Pretax Income, indicating which are due to
Non-Recurring Events. Buyer and Grace agree that the audit
adjustments set forth on such schedule will be the only
items which the parties may dispute in connection with the
calculation of the Contribution Margin adjustment.
(ii) If the 1995 Contribution Margin Amount
exceeds US $70.5 million, there shall be no resulting price
adjustment.
(iii) If the 1995 Contribution Margin Amount
is less than US $70.5 million, the following shall apply:
(A) There shall be no resulting price
adjustment with respect to that portion of the shortfall in
the 1995 Contribution Margin Amount which is attributable
to Non-Recurring Events.
(B) That portion of the shortfall in
the 1995 Contribution Margin Amount which is attributable
to Non-Recurring Events shall be subtracted from the total
shortfall, and US $625,000 shall be deducted from the
resulting amount.
(C) If the amount computed pursuant to
subsection (c)(iii)(B) of this Section is greater than
zero, then such amount as so computed shall be multiplied
by the Earnings Multiple and the Total Purchase Price shall
be decreased by the resulting amount. Such resulting
amount is the "Contribution Margin Adjustment."
4.AA Post-Closing Financial Statement Price
Adjustment. The Total Purchase Price shall be increased by
the amount of any increase, or decreased by the amount of
any decrease, in the amount of the Closing Net Amount from
the 1995 Net Amount.
4.5 Acceptance. If Buyer does not object to the
Closing Net Amount shown on the Closing Statement delivered
by Grace, by written notice of objection delivered to Grace
within 60 calendar days after Buyer's receipt of such
statement, describing in reasonable detail each of its
proposed adjustments to Grace's determination thereof, then
the Closing Net Amount shown on the Closing Statement shall
be final and binding on all parties to this Agreement. If
Buyer does not object to the amount of the Contribution
Margin Adjustment shown on the statement delivered by Grace
under Section 4.A(c)(i), by written notice of objection
delivered to Grace within 60 calendar days after Buyer's
receipt of such statement, describing in reasonable detail
each of Buyer's proposed adjustments to the price reduction
as computed by Grace, then the Contribution Margin
Adjustment as proposed by Grace shall be final and binding
on all parties to this Agreement.
4.6 Non-Acceptance, Resolution of Disputes.
(a) If Buyer objects to the Closing Net Amount
shown on the Closing Statement or the Contribution Margin
Adjustment as shown on Grace's statement under Section
4.A(c)(i) within the time period specified in Section 4.5,
then Buyer and Grace shall promptly endeavor to agree upon
the proper amount of all items in dispute. If a written
agreement resolving any disputed item has not been reached
within 45 calendar days after the date of receipt by Grace
of Buyer's notice of objection to the Closing Net Amount or
the Contribution Margin Adjustment, then either Grace or
Buyer may, by notice to the other refer their differences
to a "Big Six" accounting firm to be agreed upon, other
than Price Waterhouse or Buyer's independent accountants
(the "CPA Firm"). The CPA Firm, acting as experts and not
as arbitrators, shall determine in accordance with the
terms of this Article the differences so submitted,
including the determination of what adjustments, if any,
must be made in one or more of the items reflected in the
Closing Statement delivered by Grace pursuant to Section
4.4 in order for the Closing Net Amount to be determined in
accordance with the provisions of this Agreement or in one
or more components of the Contribution Margin Adjustment as
shown on the statement delivered by Grace under Section
4.A(c)(i) in order for the Contribution Margin Adjustment
to be determined in accordance with the provisions of this
Agreement. In any determination by the CPA Firm of an
adjustment to the Contribution Margin Adjustment, Grace
shall have the burden of proving the extent to which any
shortfall was caused by a Non-Recurring Event. The
determination of the CPA Firm shall be determined in
accordance with the provisions of this Agreement and shall
be final and binding on all parties to this Agreement.
(b) The fees and expenses of the CPA Firm for
any determination under this Article shall be shared as
follows: if the dispute involves the Closing Net Amount,
Grace shall bear a portion of such fees and expenses equal
to the total amount of such fees and expenses multiplied by
a fraction, the numerator of which shall be the difference
between the Closing Net Amount as determined by the CPA
Firm and the Closing Net Amount as finally proposed by
Grace, and the denominator of which shall be the difference
between the Closing Net Amount as finally proposed by Buyer
and the Closing Net Amount as finally proposed by Grace;
or, if the dispute involves the Contribution Margin
Adjustment, Grace shall bear a portion of such fees and
expenses equal to the total amount of such fees and
expenses multiplied by a fraction, the numerator of which
shall be the difference between the Contribution Margin
Adjustment as determined by the CPA Firm and the
Contribution Margin Adjustment as finally proposed by
Grace, and the denominator of which shall be the difference
between the Contribution Margin Adjustment as finally
proposed by Buyer and the Contribution Margin Adjustment as
finally proposed by Grace. Buyer shall bear the remainder
of such fees and expenses.
(c) Nothing herein shall be construed to
authorize or permit the CPA Firm to (i) determine any
question or matter whatsoever under or in connection with
this Agreement or any other Transaction Document except the
determination of what adjustments, if any, must be made in
one or more of the items reflected in the Closing Net
Amount as shown on the Closing Statement delivered by Grace
in order for the Closing Net Amount to be determined in
accordance with the provisions of this Agreement, or in one
or more components of the Contribution Margin Adjustment as
shown on the statement delivered by Grace under Section
4.A(c)(i) in order for the Contribution Margin Amount to be
determined in accordance with the provisions of this
Agreement, (ii) determine a Closing Net Amount that is
outside of the range between the Closing Net Amounts as
finally proposed by Grace and Buyer, respectively, or a
Contribution Margin Adjustment that is outside of the range
between the Contribution Margin Adjustments as finally
proposed by Grace and Buyer, respectively, or (iii) to make
any change to the dollar amounts specified in Section 4.A,
which amounts have been established by agreement of the
parties and may not be changed except in accordance with
Section 19.6. Nothing herein shall be construed to require
the CPA Firm to follow any rules or procedures of any
arbitration association. Grace and Buyer each shall
provide each other and the CPA Firm full access to the
books and records, any other information, including work
papers of its accountants, and to any of its employees to
the extent necessary for any determination under this
Article.
4.B Pre-Closing Adjustment for Certain Additional
Liabilities.
(a) In the event of a Major Undisclosed
Liability, as to which Buyer notifies Grace prior to
Closing, the Total Purchase Price shall be reduced as
provided in this Section.
(b) For purposes of this Section,
(i) An Undisclosed Liability means any
liability, determinable or contingent (other than a current
liability), that was not (1) reflected in the 1995 Dearborn
Statement of Net Assets or (2) disclosed as of the date
hereof on any schedule to Articles 5 or 12 of this
Agreement or the Data Room Schedule as of the date hereof.
Liabilities for pensions in Germany or the Netherlands, or
for employee severance indemnity or premium payments in
Brazil, Colombia, Venezuela, Italy or France, shall not in
any event be Undisclosed Liabilities, whether or not they
are reflected in the 1995 Dearborn Statement of Net Assets
or described in any schedule to this Agreement.
(ii) A Major Undisclosed Liability means an
Undisclosed Liability that either (a) should be reflected,
as of the Closing, on a balance sheet prepared in
accordance with U.S. GAAP, or (b) is such that the
reasonable estimate, as of the Closing, of the actual
amount of loss or payment that will directly result from
the Undisclosed Liability, is US $500,000 or more,
determined separately for each Undisclosed Liability.
(c) Except as provided in subsection (d) of this
Section, the amount of the price reduction for a Major
Undisclosed Liability shall be, (1) if the Major
Undisclosed Liability should be reflected, as of the
Closing, on a balance sheet prepared in accordance with
U.S. GAAP, the amount that should be so reflected, and (2)
in all other cases, an amount equal to the reasonable
estimate, as of the Closing, of the actual amount of loss
or payment that will directly result from the Major
Undisclosed Liability.
(d) This Section shall not entitle the Buying
Companies to any price adjustment with respect to matters
as to which the Buying Companies otherwise are entitled to
be indemnified by the Selling Companies under this
Agreement or any of the Ancillary Agreements.
4.C Adjustment for Certain Conveyancing Problems. In
the event that any asset, property or right transferred or
to be transferred to the Buying Companies under this
Agreement, other than (i) items that would be reflected on
a balance sheet as current assets and (ii) rights under
contracts or arrangements for the sale of Dearborn products
to third parties, requires the consent of a third party for
an effective transfer to the Buying Companies, such consent
is not obtained, and as a direct result thereof, the Buying
Companies are unable to use such asset, property or right
in the Dearborn Business substantially as used by the Grace
Group prior to the Closing, then the Total Purchase Price
shall be decreased by an amount equal to the present value
(using a discount rate of 10%) of the reasonable
incremental cost to the Buying Companies (net of any
reduction in costs, such as rent expense, resulting from
the non-transfer of the asset) of obtaining a substantially
similar replacement. If such cost is to be incurred in a
currency other than U.S. dollars, the amount of the price
reduction shall be computed in U.S. dollars using the
applicable exchange rate, as of the Valuation Date,
referred to in Section 2.4(a). If the asset is the Grace
Group's ownership interest in the Dearborn India JV or the
Dearborn Japan JV, the parties stipulate that the
applicable price adjustments under this Section will be US
$100,000 and US $300,000 respectively.
4.D Termination Option. In the event that, in
Grace's reasonable good faith judgment, the aggregate
effect of the provisions of Sections 4.A(c), 4.B and 4.C
will result in a reduction of the Total Purchase Price of
US $60 million or more, Grace will have the option in its
sole discretion to terminate this Agreement, unless Buyer
shall stipulate that the total of such price reductions
shall in any event be less than US $60 million. If such
option is not exercised, nothing set forth herein shall
limit or otherwise affect the amounts due pursuant to
Sections 4.A(c), 4.B and 4.C whether such adjustments are
paid at Closing or otherwise. Grace's delivery of any
statement indicating the amount of one or more price
reductions, even if in excess of the amount specified in
the prior sentence, shall not be deemed to be a waiver of
Grace's option to terminate this Agreement pursuant to this
Section.
4.7 Payment of Adjustments.
(a) (i) Promptly after the Closing Net Amount
has been finally determined, Grace shall deliver to Buyer a
statement of the Total Purchase Price reflecting the final
Closing Net Amount. After receipt of such statement, the
Allocation and the Specific Allocation shall be amended to
reflect the Total Purchase Price as so adjusted, as Grace
and Buyer shall mutually agree, giving effect to the
country or countries which account for any such adjustment.
(ii) No later than 15 calendar days after
delivery by Grace of the statement of the Total Purchase
Price as adjusted for the final Closing Net Amount, all
resulting Local Purchase Price adjustments shall be settled
simultaneously based on such statement. If any such
resulting Local Purchase Price exceeds the amount
previously paid with respect thereto, the appropriate
Buying Company shall pay the amount due to the appropriate
Selling Company in the manner provided in Section 4.7(c);
if any such resulting Local Purchase Price is less than the
amount previously paid with respect thereto, the
appropriate Selling Company shall refund the amount of the
overpayment to the appropriate Buying Company in the manner
provided in Section 4.7(c). If at the time of settlement
Grace and Buyer have not agreed on the amended Allocation
and Specific Allocation, Grace on behalf of the Selling
Companies shall pay to Buyer on behalf of the Buying
Companies the aggregate amount of any net overpayment, or
Buyer on behalf of the Buying Companies shall pay to Grace
on behalf of the Selling Companies the aggregate amount of
the net payment due.
(b) (i) Promptly after the Contribution Margin
Adjustment has been finally determined, Grace shall deliver
to Buyer a statement of the Total Purchase Price reflecting
the final Contribution Margin Adjustment. After receipt of
such statement, the Allocation and the Specific Allocation
shall be amended to reflect the Total Purchase Price as so
adjusted, as Grace and Buyer shall mutually agree, giving
effect to the country or countries which account for any
such adjustment.
(ii) If Grace delivers the statement of the
Total Purchase Price as adjusted for the final Contribution
Margin Adjustment after the Closing, then not later than 15
calendar days thereafter, all resulting Local Purchase
Price adjustments shall be settled simultaneously based on
such statement. If any such resulting Local Purchase Price
exceeds the amount previously paid with respect thereto,
the appropriate Buying Company shall pay the amount due to
the appropriate Selling Company in the manner provided in
Section 4.7(c); if any such resulting Local Purchase Price
is less than the amount previously paid with respect
thereto, the appropriate Selling Company shall refund the
amount of the overpayment to the appropriate Buying Company
in the manner provided in Section 4.7(c). If at the time
of settlement Grace and Buyer have not agreed on the
amended Allocation and Specific Allocation, Grace on behalf
of the Selling Companies shall pay to Buyer on behalf of
the Buying Companies the aggregate amount of any net
overpayment, or Buyer on behalf of the Buying Companies
shall pay to Grace on behalf of the Selling Companies the
aggregate amount of the net payment due.
(c) All adjusting payments with respect to the
Local Purchase Prices shall be settled by payments in the
United States in U.S. dollars between Grace, as agent for
the Grace Group, and Buyer, as agent for the Buyer Group,
and any amounts due from the Grace Group shall be set off
against any amounts due from the Buyer Group to the extent
practicable. However, any adjustment to a Local Purchase
Price with respect to which payment was made at the Closing
in any currency other than U.S. dollars pursuant to Section
3.6, shall be first determined in U.S. dollars and then
paid in an amount of local currency equal to the dollar
value so determined (based on the Payment Exchange Rate on
the Business Day prior to the date payment is made).
Payment shall be made at the local office of the recipient
within the applicable country or at such other place within
such country as the recipient shall request.
(d) If the net amount of all adjusting payments
under subsection (a), or under subsection (b) if paid after
the Closing, (regardless of where payment is made) is in
excess of US $100,000, Buyer or Grace shall pay interest to
the other on the entire amount of the net adjusting payment
under such subsection owed for the period from the Closing
Date to the date of payment, at the LIBOR Rate plus three
percentage points.
ARTICLE 5
REPRESENTATIONS BY GRACE
Grace represents and warrants to Buyer and the other
Buying Companies as follows:
5.1 Grace Corporate Status and Authority. Grace is a
corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of
organization. Dearborn U.S. is a limited partnership duly
formed, validly existing and in good standing under the
laws of Delaware. Each Selling Company (other than Grace)
is a direct or indirect Subsidiary of Grace. Each member
of the Grace Group that is a party to this Agreement or one
of the other Transaction Documents has all requisite power
and authority to own, lease and operate its properties and
to carry on the Dearborn Business as now being conducted,
except as set forth on the Schedule to this Section or
where the failure to have such power and authority would
not, individually or in the aggregate, have a Material
Adverse Effect. Each member of the Grace Group has full
legal power to execute and deliver each Transaction
Document to which it is or will be a party, and will, prior
to the Closing, have full legal power to perform its
obligations under such Transaction Document and to
consummate the transactions contemplated thereby. The
execution and delivery by each member of the Grace Group of
each Transaction Document to which it is or will be a
party, its performance of its obligations under such
Transaction Document and the consummation of the
transactions contemplated thereby will, prior to the
Closing, have been duly authorized by all required
corporate action of such member, or by partnership action
in the case of Dearborn U.S. Each such member of the Grace
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 constitutes a legal,
valid and binding obligation of such member, enforceable
against such member in accordance with its terms. Each
Transaction Document to be executed by any member of the
Grace Group at the Closing, when executed and delivered,
will be duly and validly executed and delivered by, and
will constitute a legal, valid and binding obligation of
such member and be enforceable against such member in
accordance with its terms. Prior to the Closing, Grace
will have furnished or made available to Buyer complete and
correct copies of the Certificate of Incorporation and By-
Laws (or equivalent organizational documents), as in effect
at the Closing, of each of the Selling Companies.
5.2 Transferred Companies' Organizational Status and
Capitalization.
(a) Each of the Transferred Companies (other
than Dearborn U.S.) is a corporation duly organized,
validly existing and in good standing (or the equivalent
thereof) under the laws of its jurisdiction of organization
set forth in the Schedule to this Section and each of the
Transferred Companies has all requisite power and authority
to own, lease and operate its properties and to carry on
its business as now being conducted, except as set forth on
the Schedule to this Section or where the failure to have
such power and authority would not, individually or in the
aggregate, have a Material Adverse Effect. Each of the
Transferred Companies is duly qualified or licensed to do
business as a foreign corporation and is in good standing
in each jurisdiction in which property is owned or leased
by the Transferred Company or the conduct of the
Transferred Company's business makes such qualification or
license necessary, except as set forth on the Schedule to
this Section or where the failure to be so qualified or
licensed would not have a Material Adverse Effect. Grace
has heretofore furnished or made available to Buyer
complete and correct copies of the Certificate of
Incorporation and By-Laws (or equivalent organizational
documents), as in effect at the Closing, of each of the
Transferred Companies.
(b) The Schedule to this Section also sets forth
a true and complete listing of the authorized, issued and
outstanding capital stock of each Transferred Company
(other than Dearborn U.S.) and the ownership of such
capital stock. Each Selling Company that owns such capital
stock has good and valid title to the capital stock owned
by it, in each case free and clear of all Liens. Except as
set forth on the Schedule to this Section, there are no
outstanding shares of capital stock or other voting
securities of any Transferred Company. There are (i) no
outstanding subscriptions, warrants, options, convertible
securities or other rights to purchase or otherwise acquire
any capital stock of any such Transferred Company, except
repurchase rights of the Grace Group with respect to
capital stock held by certain individuals; (ii) no
securities of any of the Selling Companies or any of their
affiliates (including, without limitation, the Transferred
Companies) convertible into or exchangeable for shares of
capital stock or voting securities of any Transferred
Company; (iii) no obligations of the Selling Companies or
any of their affiliates (including, without limitation, the
Transferred Companies) to issue, deliver or sell any
capital stock, voting securities or securities convertible
into or exchangeable for capital stock or voting securities
of any Transferred Company; and (iv) except as otherwise
indicated on the Schedule to this Section, there are no
equity equivalents, interests in the ownership or earnings
of any Transferred Company or other similar rights, other
than the capital stock of the Transferred Companies. A
member of the Grace Group has the right to repurchase all
the shares of the Transferred Companies not owned by the
Selling Companies. The outstanding capital stock of each
such Transferred Company is duly authorized, validly
issued, fully-paid and non-assessable and free of any
preemptive rights in respect thereto, other than any such
preemptive rights imposed by statutory law.
(c) The Schedule to this Section sets forth a
complete list of all jurisdictions for which Dearborn U.S.
is duly qualified or licensed to do business and Dearborn
U.S. is in good standing in each of those jurisdictions.
Grace is the sole general partner in Dearborn U.S. and owns
a 1% partnership interest. LB Realty, a wholly owned
Subsidiary of Grace, is the sole limited partner in
Dearborn U.S. and owns a 99% partnership interest. Grace
and LB Realty each have good and valid title to the
respective partnership interests owned by it. The
ownership of such partnership interests in each case is
free and clear of all Liens. There are (i) no outstanding
subscriptions or other rights to purchase or otherwise
acquire any partnership interest in Dearborn U.S., (ii) no
securities of any of the Selling Companies or any of their
affiliates (including, without limitation, the Transferred
Companies) convertible into or exchangeable for any
partnership interest in Dearborn U.S., (iii) no obligations
of any of the Selling Companies or any of their affiliates
(including, without limitation, the Transferred Companies)
to issue, deliver or sell any partnership interest, voting
securities or securities convertible into or exchangeable
for partnership interests in Dearborn U.S. and (iv) no
partnership interest equivalents, interests in the
partnership of Dearborn U.S. or other similar rights.
Except as set forth in the Schedule to this Section, no
Transferred Company owns or controls, directly or
indirectly, any capital stock, or other securities of, or
has any ownership interest in, any corporation, partnership
or other entity.
(d) The Schedule to this Section sets forth a
true and complete list of all dividends or other
distributions declared or paid by any Transferred Company
since December 31, 1995.
5.3 Transferred Joint Ventures - Corporate Status and
Capitalization. Each Transferred Joint Venture is a
corporation duly organized and validly existing under the
laws of its jurisdiction of organization set forth in the
Schedule to this Section. The Schedule to this Section
also sets forth a true and complete listing of the
authorized, issued and outstanding capital stock of each
Transferred Joint Venture and the ownership of such capital
stock. Except as set forth in the Schedule to this
Section, (a) Grace and Dearborn Netherlands have good and
valid title to the Dearborn India JV Shares and the
Dearborn Japan JV Shares respectively in each case is free
and clear of all Liens, (b) there are no outstanding
subscriptions, warrants or other rights to purchase or
otherwise acquire any capital stock of either Transferred
Joint Venture, (c) there are no securities of the Selling
Companies or any of their affiliates (including, without
limitation, the Transferred Companies) convertible into or
exchangeable for shares of capital stock or voting
securities of any Transferred Joint Venture, and (d) there
are no obligations of the Selling Companies or any of their
affiliates (including, without limitation, the Transferred
Companies) to issue, deliver or sell any capital stock,
voting securities or securities convertible into or
exchangeable for capital stock or voting securities of any
Transferred Joint Venture. The outstanding capital stock
of each Transferred Joint Venture is validly issued, fully-
paid and non-assessable. The Schedule to this Section sets
forth a true and complete list of all dividends declared or
paid by each Transferred Joint Venture since December 31,
1995.
5.4 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 Grace Group that
is or will be a party thereto, and the consummation of the
transactions contemplated by such Transaction Document, do
not and will not (a) contravene or conflict with the
charter documents, by-laws or equivalent organizational
documents of such member, (b) result in the breach or
termination of, or constitute a default under (with or
without the giving of notice or lapse of time or both) any
agreement, contract or license binding upon any such member
of the Grace Group, which breach, termination or default
would have a Material Adverse Effect, or (c) result in
breach of any of the provisions of, or constitute a default
under, any judgment, order, decree, law or regulation, to
which any such member is a party or by which it is bound,
which breach or default would materially adversely affect
the ability of such member to execute and deliver this
Agreement or any other Transaction Document to which it is
or will be a party or to perform its obligations hereunder
or thereunder.
5.5 Absence of Title Claims.
(a) Except with respect to Real Property (as
defined in subsection (b) of this Section) and as specified
in the Schedule to this Section, neither the Total Dearborn
Assets nor the assets of any of the Transferred Companies
are subject to any Lien, covenant, restriction, easement or
other such encumbrance, other than those Liens, covenants,
restrictions, easements, and encumbrances that would not,
individually or in the aggregate, have a Material Adverse
Effect. The material owned tangible assets are in good
condition and, if applicable, in good working order, other
than with respect to such assets as to which the failure to
be in good working order or condition would not have a
Material Adverse Effect. The Selling Companies and their
affiliates have complete and unrestricted power and the
unqualified right to sell, assign and transfer to the
Buying Companies all of the Total Dearborn Assets owned by
them, and upon consummation of the transactions
contemplated by this Agreement, the Buying Companies will
acquire or the Transferred Companies will have good, valid
and marketable title to the Total Dearborn Assets, free and
clear of all Liens, except for Liens which individually or
in the aggregate would not have a Material Adverse Effect.
The bills of sale, deeds, endorsements, assignments and
other instruments to be executed and delivered to Buyer by
the Selling Companies at the Closing will be valid and
binding obligations of the Selling Companies enforceable in
accordance with their terms.
(b) To the Knowledge of the Executives (except
with respect to Real Property) there are no other defects
in any Selling Company's title to any of the Total Dearborn
Assets or in the title of the Transferred Companies to
their respective assets that would, individually or in the
aggregate, have a Material Adverse Effect.
(c) Schedule 5.5(c) sets forth (i) a complete
and correct list of all of the real property owned by Grace
or its affiliates which is included in the Total Dearborn
Assets and all of the real property owned by the
Transferred Companies (the "Owned Real Property") and (ii)
a list of all material real property leased by Grace or its
affiliates which is included in the Total Dearborn Assets
and a list of all material real property leased by the
Transferred Companies (the "Leased Real Property", and
together with the Owned Real Property, the "Real
Property"). Except as specified in the Schedule to this
Section, each Selling Company or Transferred Company, as
the case may be, has good, valid and insurable (to the
extent insurance is available in the jurisdiction) title to
the Owned Real Property, or a valid leasehold interest in
the Leased Real Property, in each case, free of all Liens,
covenants, restrictions, easements or other such
encumbrances which would materially interfere with the
continued use or operation of such Owned Real Property or
Leased Real Property in the manner heretofore used or
operated by the Grace Group in its conduct of the Dearborn
Business.
(d) To the Knowledge of the Executives, neither
the Selling Companies nor the Transferred Companies has
received any written notice or communication from a
Governmental Authority advising it of any (i) general or
special assessment relating to any of the Real Property or
(ii) condemnation or eminent domain proceedings pending or
threatened against any of the Real Property, that would
have a Material Adverse Effect.
5.6 Financial Statements. As of the Closing, the
Schedule to this Section will contain copies of the 1995
Dearborn Statement of Net Assets and the 1995 Dearborn
Statement of Pretax Income, both audited by Price
Waterhouse, and Price Waterhouse's reports thereon. Such
statements are referred to collectively as the "Dearborn
Financial Statements." At the Closing, (i) the 1995
Dearborn Statement of Net Assets will present fairly, in
all material respects, the net assets of the Dearborn
Business, as of December 31, 1995, in accordance with the
terms of this Agreement, as described in Note 1 thereto, in
conformity with U.S. GAAP and the 1995 Dearborn Statement
of Pretax Income (which will include a line item identified
as Contribution Margin determined in accordance with
Dearborn Business practice) will present fairly, in all
material respects, the pretax results of operations of the
Dearborn Business for 1995, on the basis of presentation
described in Note 1 thereto, in conformity with U.S. GAAP;
provided, however, that the Dearborn Financial Statements
will not be a complete presentation of the Dearborn
Business's financial condition and results of operations as
if it were a separate stand-alone operation.
5.7 Intentionally Omitted.
5.8 Litigation.
(a) Except as set forth in the Schedule to this
Section, there are no claims, actions, suits or proceedings
pending or, to the Knowledge of the Executives, threatened,
against any Selling Company or any Transferred Company that
(i) individually or in the aggregate, would reasonably be
expected to have a Material Adverse Effect, (ii) would
reasonably be expected to materially challenge or prevent,
enjoin, alter or delay the transactions contemplated by
this Agreement or the other Transaction Documents, or (iii)
alleges any material criminal action or inaction directly
relating to the Dearborn Business or the Total Dearborn
Assets.
(b) Except as set forth in the Schedule to this
Section, neither the Dearborn Business, the Intellectual
Property Rights, any of the assets included in the Total
Dearborn Assets nor any of the assets of the Transferred
Companies is subject to any order, writ, judgment,
injunction, decree, determination or award that has, or
that would reasonably be expected to have, a Material
Adverse Effect.
(c) Except as set forth in the Schedule to this
Section, there are no pending or, to the Knowledge of the
Executives, threatened governmental investigations of the
Dearborn Business, any of the Total Dearborn Assets or any
of the Transferred Companies, including, but not limited
to, investigations relating to compliance with
Environmental Law, that would reasonably be expected to
have a Material Adverse Effect.
5.9 Asset Disposition or Loss. Except as set forth
in the Schedule to this Section, since December 31, 1995,
no Selling Company or Transferred Company (i) has disposed
of (other than in the ordinary course of business), or
suffered an uninsured casualty loss with respect to, any of
the assets used by such Selling Company or Transferred
Company in connection with the Dearborn Business that had a
book value at the time of such disposition or loss of
greater than US $50,000 or (ii) has entered into any
transaction or conducted its business operations other than
in the ordinary course of business, consistent with past
practices. Since December 31, 1995 to the date hereof, the
Dearborn Business has not suffered a Material Adverse
Effect.
5.10 Insurance.
(a) To the Knowledge of the Executives, the
Schedule to this Section sets forth a complete and correct
summary description of the insurance coverage maintained by
or on behalf of the Dearborn Business in Argentina,
Australia, Belgium, Brazil, Canada, Chile, France, Germany,
the Netherlands, South Africa, Sweden, the United Kingdom
or the United States;
(b) Each such insurance coverage is in full
force and effect; no notice of termination, cancellation or
reservation of rights has been received with respect to any
such insurance coverage other than those as to which,
individually or in the aggregate, any termination,
cancellation or reservation of rights would not reasonably
be expected to have a Material Adverse Effect; and
(c) There is no default with respect to any
provision contained in any such insurance coverage; and
there has not been any failure to give any notice or
present any claim under any such insurance coverage in a
timely fashion or in the manner of detail required by any
such insurance coverage, except for any such failures,
terminations, cancellations, reservations or defaults,
which, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect.
5.11 Contracts.
(a) The Schedule to this Section lists the
following contracts and agreements included in the Total
Dearborn Assets, Total Dearborn Liabilities or the assets
or liabilities of the Transferred Companies (together with
the Leased Real Property, the "Material Contracts"): (i)
each loan, credit agreement, indenture, note, mortgage,
security agreement, loan commitment, evidence of
indebtedness, or other contract under which the Dearborn
Business is a borrower of a material amount of funds,
excluding customary credit terms with suppliers; (ii) each
written agreement under which it is reasonably expected
that the Dearborn Business will make expenditures of more
than US $500,000 per year for the purchase of raw materials
or supplies; or obtain receipts of more than US $500,000
per year for the sale of its products and services; or make
expenditures or obtain receipts of more than US $200,000
per year for any other purpose (in each case excluding
employment agreements, non-blanket purchase orders and
sales orders entered into in the ordinary course of
business consistent with past practices); (iii) any
contract entered into outside of the ordinary course of the
Dearborn Business that involves payment or receipt of more
than US $100,000; (iv) any contract that grants any Person
a right of first refusal or option to purchase or otherwise
acquire any asset of the Dearborn Business having a net
book value of US $100,000 or more; and (v) any strategic
alliance agreement that in the opinion of the Executives is
important for the future prospects of the Dearborn Business
or any material joint venture agreement.
(b) To the Knowledge of the Executives, (i) each
of the Material Contracts is in full force and effect; and
(ii) no Selling Company or Transferred Company has received
any written notice of cancellation or termination of any of
the Material Contracts. Grace has heretofore delivered or
made available to Buyer complete copies of all such
agreements as currently in effect.
(c) To the Knowledge of the Executives, no
Material Contract is the subject of or has been threatened
to be made the subject of, any arbitration, suit, or other
legal proceeding. To the Knowledge of the Executives,
there exists no event of default or occurrence or act on
the part of the Selling Companies or any of their
affiliates or on the part of the other parties to the
Material Contracts which constitutes or would constitute
(with notice or lapse of time or both) a breach or default
under any of the Material Contracts.
(e) None of the Selling Companies or the
Transferred Companies has granted a security interest in
any or all of its rights under any Material Contract or
assigned any or all of its rights under any Material
Contract, including, without limitation, the right to any
payment or proceeds thereunder.
5.12 Labor and Employment. The Schedule to this
Section lists (a) each collective bargaining or other
similar agreement with a labor union or similar
organization that as of the date hereof covers any employee
of Dearborn U.S. and (b) each Dearborn Business Employee
covered by an individual (non-standard) written employment
agreement that will remain in effect after the Closing.
Grace has heretofore delivered or made available to Buyer
complete copies of all such agreements as currently in
effect. Except as set forth in the Schedule to this
Section, (i) there is no strike, slowdown, work stoppage or
lockout relating to labor or employment matters pending or,
to the Knowledge of the Executives, threatened against or
affecting the Dearborn Business, except where such strike,
slowdown, work stoppage or lockout would not reasonably be
expected to have a Material Adverse Effect, (ii) there is
no unfair labor practice, charge or other proceeding
involving the Dearborn Business pending, or, to the
Knowledge of the Executives, threatened before the National
Labor Relations Board and (iii) the Executives do not have
any Knowledge of any current union organizing activities
among employees of Grace or any of its affiliates with
respect to the Dearborn Business. The Transferred
Companies are in compliance with the requirements of the
Worker Adjustment and Retraining Notification Act ("WARN")
and have no liabilities pursuant to WARN.
5.13 Employee Benefit Plans.
(a) The Schedule to this Section lists each
written employee benefit plan that provides retirement,
pension, severance, health care, long-term disability
income or life insurance benefits (other than plans
maintained or required by applicable law or Governmental
Authorities, which are hereinafter sometimes referred to
collectively as "Governmental Plans"), that as of the date
hereof covers any Dearborn Business Employee in Argentina,
Australia, Belgium, Brazil, Canada, Chile, France, Germany,
the Netherlands, South Africa, Sweden, the United Kingdom
or the United States, and each written employee benefit
plan or contract currently maintained by any Transferred
Company that provides such benefit coverages, other than
Governmental Plans. Grace has heretofore delivered or made
available to Buyer true and complete copies of all such
plans that are administered by the Grace Group, and all
such contracts to which any Transferred Company is a party,
as currently in effect.
(b) Except as listed on the Schedule to this
Section, with respect to each Seller Plan from which any
assets are transferred to any Buyer Plan or which is
assumed by the Buyer Group (each such plan, a "Transferred
Plan"): (i) no Transferred Plan is subject to Title IV of
the Employee Retirement Income Security Act of 1974; (ii)
each Transferred Plan (except for a Transferred Plan
described in Section 5.13(b)(iii)) has been operated and
administered in all material respects in accordance with
its terms and applicable law, except to the extent
otherwise disclosed to the Buyer Group by the Grace Group
prior to the date of the transfer of assets from, or the
assumption of, such Transferred Plan; and (iii) with
respect to a Transferred Plan maintained in a jurisdiction
where applicable law requires that the Buyer Group (or a
plan maintained by the Buyer Group) assume any portion of
the assets and/or liabilities of such Transferred Plan,
each such Transferred Plan has been operated and
administered in all material respects in accordance with
its terms and applicable law.
(c) The consummation of the transactions
contemplated by this Agreement will not: (i) entitle any
current or former Dearborn Business employee or officer to
receive from Buyer or any Buyer Plan any severance pay,
unemployment compensation or any other similar payment, as
a result of the terms of any plan or arrangement maintained
by the Grace Group or (ii) accelerate the time of payment
or vesting, or increase the amount, of compensation due any
such employee or officer from the Buyer Group, as a result
of the terms of any plan or arrangement maintained by the
Grace Group; except as set forth by this Agreement and in
the Employee Benefits Agreement.
5.14 Environmental Compliance.
(a) Except as set forth on Schedule 5.14, none
of the real property currently, or to the Knowledge of the
Executives, formerly, owned or operated by the Dearborn
Business is listed on the federal National Priorities List
("NPL") or on lists of properties requiring investigation
or cleanup that have been compiled pursuant to state or
foreign laws that are analogous to CERCLA.
(b) Except as set forth on Schedule 5.14, to the
Knowledge of the Executives:
(i) The Dearborn Business is in compliance
with all applicable Environmental Laws, including having
obtained all material permits, licenses and authorizations
which are required under such laws ("Environmental
Authorizations"), except where the failure to so comply
with such Environmental Laws, individually or in the
aggregate, would not reasonably be expected to have a
Material Adverse Effect. All such Environmental
Authorizations are in effect, no appeal nor any other
action is pending to revoke any such Environmental
Authorization, and the Dearborn Business is in full
compliance with all terms and conditions of such
Environmental Authorizations, except where the failure to
comply with such Environmental Authorizations, or the
existence of any appeal or action to revoke such
Environmental Authorizations, would not reasonably be
expected to have, individually or in the aggregate, a
Material Adverse Effect.
(ii) Neither Grace nor the Dearborn Business
has received written notice from any third party,
including, but not limited to, any Governmental Authority,
alleging a Toxic Tort Claim or Chromium Claim or that the
Dearborn Business or the Total Dearborn Assets are in
violation of any applicable Environmental Law or otherwise
liable under any applicable Environmental Law, which claim,
violation or liability is unresolved. There is no pending
or threatened Toxic Tort Claim or Chromium Claim or claim,
lawsuit, or administrative proceeding under any
Environmental Law against the Dearborn Business or the
Total Dearborn Assets.
(iii) There is no pending or threatened
Toxic Tort Claim or Chromium Claim or claim, lawsuit, or
administrative proceeding under any Environmental Law
against any Person whose liability has been either retained
or assumed contractually by the Dearborn Business.
(iv) There have been no releases, spills, or
discharges of Hazardous Substances on or underneath any of
the real property currently or formerly owned or operated
by the Dearborn Business that would reasonably be expected
to have a Material Adverse Effect.
5.15 Intellectual Property.
(a) Schedule 5.15(a) sets forth a true and
complete list of all Scheduled Intellectual Property that
is directly and exclusively used in the Dearborn Business.
(b) Except as set forth in Schedule 5.15(b), or
to the extent that the inaccuracy of any of the following
would not reasonably be expected to have a Material Adverse
Effect:
(i) the Intellectual Property Rights
assigned or licensed to Buyer include
all intellectual property rights which
(1) are necessary to or are used in the
operation of the Dearborn Business; or
(2) have been developed or are under
development for use in the Dearborn
Business.
(ii) the Selling Companies and the
Transferred Companies, as the case may
be, own or are authorized to use, in
each case, free and clear of all Liens,
all Intellectual Property Rights;
(iii) Grace and its affiliates have good and
unencumbered title to the Scheduled
Intellectual Property and to the
DEARBORN name (as set forth in
subparagraph (3) of Section (A) of the
definition of Intellectual Property
Rights), and to the Knowledge of the
Executives, have good and unencumbered
title to the other Intellectual
Property Rights described in
subparagraphs (2) through (5) of
Section (A) of the definition of
Intellectual Property Rights
(hereinafter "Non-Scheduled
Intellectual Property");
(iv) there is no Lien on the right of the
Selling Companies to transfer to Buyer
any of the Intellectual Property Rights
listed in Section (A) of the definition
of Intellectual Property Rights, or to
grant licenses to the Intellectual
Property Rights described in Section
(B) of such definition, as herein
contemplated, other than any such Liens
that alone or in the aggregate would
not result in a Material Adverse
Effect;
(v) no Intellectual Property Rights have
been authorized to be disclosed to any
Person who is not an affiliate of
Grace, other than in the ordinary
course of business or pursuant to an
obligation of confidentiality binding
upon such Person; and
(vi) to the Knowledge of the Executives and
except in the exercise of reasonable
business judgement in the ordinary
course of business, each copyright
registration, Patent and registered
trademark and application therefor
listed on Schedule 5.15(a) is in proper
form, not disclaimed, and has been duly
maintained, including the submission of
all necessary filings in accordance
with the legal and administrative
requirements of the appropriate
jurisdictions except with respect to
use requirements as to trademarks.
Except as set forth in Schedule 5.15(b), to the
Knowledge of the Executives:
(i) there are no pending oppositions,
cancellations, invalidity proceedings,
interferences or reexamination
proceedings with respect to the
Scheduled Intellectual Property;
(ii) the current operation of the Dearborn
Business does not infringe upon or,
with respect to trade secrets,
otherwise violate any intellectual
property right of any third party;
(iii) no third party unrelated to the Grace
Group is infringing upon or, with
respect to trade secrets, is otherwise
violating any Intellectual Property
Rights;
(iv) none of the Selling Companies or any of
their respective affiliates has
received notice of any claims and there
are no pending claims by any Person
relating to the ownership or use of the
Intellectual Property Rights.
(c) Schedule 5.15(c) sets forth a true and
complete list of all Intellectual Property Licenses.
Except as set forth on Schedule 5.15(c), no Person that is
not a member of the Grace Group has been granted any right
or license to use any Intellectual Property Rights by any
Selling Company or Transferred Company.
(d) Schedule 5.15(d) sets forth a true and
complete list of all agreements between any Selling Company
or Transferred Company, on the one hand, and any Person on
the other, which (i) is not listed on Schedule 5.15(c); and
(ii) conveys rights under Scheduled Intellectual Property
or Non-Scheduled Intellectual Property to any Person that
is not a member of the Grace Group, or grants rights under
any intellectual property owned by any such Person that is
directly and exclusively used in the Dearborn Business.
Grace has heretofore delivered or made available to Buyer
true and complete copies of such agreements as are in
effect.
5.16 Non-Environmental Licenses and Permits.
Except as set forth in the Schedule to this Section,
and specifically excluding all environmental matters:
(a) (i) The Selling Companies and the
Transferred Companies have obtained or have duly applied
for all material permits, licenses or other governmental
authorizations to conduct the Dearborn Business, as it is
currently conducted, and (ii) to the Knowledge of the
Executives, such permits and licenses are valid, subsisting
in full force and effect, and each of the Selling Companies
and the Transferred Companies has fulfilled its obligations
under such permits and licenses, and (iii) no event has
occurred which constitutes or, after notice, or lapse of
time, or both, would constitute a default or violation
under such permits or licenses or would permit revocation
or termination of any such permits or licenses, other than
any such default, violation, revocation, or termination
that individually or in the aggregate would not reasonably
be expected to have a Material Adverse Effect.
(b) Since December 31, 1995, no written warning
notice, notice of violation or probable violation, notice
of revocation, or other written communication from or on
behalf of any Governmental Authority has been received by
any Selling Company or Transferred Company, which violation
has not been corrected or situation otherwise settled,
alleging (i) any violation of any such permit, license or
authorization, or (ii) that any Selling Company or
Transferred Company requires any such license, permit or
authorization for the Dearborn Business not currently held
by them.
(c) No Selling Company or Transferred Company is
in violation of, or has violated, in any such case directly
in connection with the conduct of the Dearborn Business,
any applicable provisions of any laws, rules, statutes,
orders, ordinances or regulations which, individually or in
the aggregate, has resulted or would reasonably be expected
to result in a Material Adverse Effect.
(d) Except as set forth on the Schedule to this
Section, neither the Selling Companies nor any of their
affiliates (including, without limitation, the Transferred
Companies) is in violation of, or has violated, in any such
case in connection with the conduct of the Dearborn
Business, any applicable provisions of any laws, rules,
statutes, orders, ordinances or regulations which,
individually or in the aggregate, has resulted or would
reasonably be expected to result in a Material Adverse
Effect.
5.17 Brokers and Finders. No broker or finder has
acted directly or indirectly for Grace or any of the other
Selling Companies in connection with this Agreement or the
transactions contemplated hereby, except for Merrill Lynch
Pierce Fenner & Smith Incorporated whose fees and expenses
will be paid by Grace.
5.18 No Undisclosed Liabilities. Except as and to the
extent set forth in the 1995 Dearborn Statement of Net
Assets, or the notes thereto, neither the Selling Companies
nor the Transferred Companies had at December 31, 1995 any
liabilities (absolute, accrued, contingent or otherwise,
known or unknown) relating to the Dearborn Business which
are required by the U.S. GAAP to be reflected in a
consolidated balance sheet or set forth in the notes
thereto. Except as and to the extent set forth in Schedule
5.18, since December 31, 1995, neither the Selling
Companies nor the Transferred Companies has incurred any
liabilities (absolute, accrued, contingent or otherwise,
known or unknown) relating to the Dearborn Business and
required by U.S. GAAP to be reflected on a consolidated
balance sheet except for liabilities incurred in the
ordinary course of business since December 31, 1995 which
would not individually or in the aggregate, be reasonably
expected to have a Material Adverse Effect.
5.19 Assets Necessary for Conduct of the Dearborn
Business. The assets to be transferred to the Buying
Companies pursuant to this Agreement or made available to
the Buying Companies pursuant to the Ancillary Agreements
constitute all of the assets necessary to conduct the
production, logistics, marketing, sales and laboratory
(research, applications and customer service) functions of
the Dearborn Business, as currently conducted and are all
of the assets used with respect to such functions in the
Dearborn Business as currently conducted.
5.20 Accounts Receivable. All accounts receivable
included in the Total Dearborn Assets and all accounts
receivable of the Transferred Companies represent unpaid
actual billings for sales made in the ordinary course of
business and represent the legal, valid and binding
obligations of the obligor thereon or adequate reserves
have been established for those accounts receivable which
are not valid and binding or are otherwise uncollectible.
The Dearborn Financial Statements contain adequate and
sufficient reserves for bad debts in respect of accounts
receivable of the Dearborn Business.
5.21 Inventory. All of the inventories included in
the Total Dearborn Assets and all inventories of the
Transferred Companies consist of a quality and quantity
useable and saleable in the ordinary course of business or
adequate reserves for obsolete or below standard quality
materials have been provided therefor. Inventories of the
Dearborn Business are valued in the Dearborn Financial
Statements at the lower of cost or market.
5.22 Disclosure. To the Knowledge of the Executives,
no representation or warranty of any of the Selling
Companies contained in this Agreement, in written
certificates delivered pursuant to this Agreement or in any
of the other Transaction Documents (including in the
Schedules attached hereto or thereto) contains any untrue
statement of material fact or omits to state any material
fact necessary, in order to make the statements made herein
or therein, in light of the circumstances under which they
were made, not misleading.
5.23 Other Matters. The Dearborn Business has no
liability or responsibility with respect to any personal
injury or property damage claims that have been brought
against Grace or any Subsidiary of Grace relating to the
sale of asbestos-containing products.
ARTICLE 6
REPRESENTATIONS OF BUYER
Buyer represents and warrants to Grace and the other
Selling Companies as follows:
6.1 Buying Companies' Corporate Status. Buyer is a
corporation duly organized, validly existing and in good
standing 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 that is a party to this Agreement or one of the
other Transaction Documents has full legal power to execute
and deliver each Transaction Document to which it is or
will be a party, and will, prior to the Closing, have full
legal power to perform its obligations under such
Transaction Document and to consummate the transactions
contemplated thereby. The execution and delivery by each
member of the Buyer Group of each Transaction Document to
which it is or will be a party, its performance of its
obligations under such Transaction Document and the
consummation of the transactions contemplated thereby, will
prior to the Closing 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 Agreement, and each such Transaction Document
constitutes a legal, valid and binding obligation of such
member, enforceable against such member in accordance with
its terms. 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 constitute a legal, valid and binding
obligation of such member and be enforceable against such
member in accordance with its terms.
6.2 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 Buyer Group that
is or will be a party thereto, and the consummation of the
transactions contemplated by such Transaction Document, do
not and will not (a) contravene or conflict with the
charter documents, by-laws or equivalent organizational
documents of such member, (b) result in the breach or
termination of, or constitute a default under (with or
without the giving of notice or lapse of time or both) any
agreement, contract or license binding upon any such member
of the Buyer Group which breach, termination or default
would have a Material Adverse Effect, or (c) result in
breach of any of the provisions of, or constitute a default
under, any judgment, order, decree, to which it is a party
or by which it is bound, which breach or default would
materially adversely affect the ability of such member to
execute and deliver this Agreement or any other Transaction
Document to which it is or will be a party or to perform
its obligations hereunder or thereunder.
6.3 Sufficient Funds. On the Closing Date, the
Buying Companies will have sufficient funds to consummate
the transactions contemplated by this Agreement.
6.4 Brokers and Finders. No broker or finder has
acted directly or indirectly for Buyer or any of its
affiliates in connection with this Agreement or the
transactions contemplated hereby, except for J.P. Morgan &
Co., whose fees and expenses will be paid by Buyer.
ARTICLE 7
INVESTIGATION BY THE BUYING COMPANIES
Buyer acknowledges the following:
7.1 Investigation. The Buying Companies have
conducted their own investigation and made their own
evaluation of the Dearborn Business, the Transferred
Companies, the Transferred Joint Ventures, the Total
Dearborn Assets and the Total Dearborn Liabilities.
7.2 Financial Information. As part of their
investigation, the Buying Companies have been given
financial statements, forecasts, projections, opinions and
other oral or written information and materials with
respect to the Dearborn Business (the "Additional Financial
Information") by Grace, other members of the Grace Group or
their respective representatives. There are uncertainties
inherent in attempting to make projections and forecasts,
and the Buying Companies are familiar with such
uncertainties. The Buying Companies have made their own
evaluation of the Additional Financial Information.
Neither Grace nor any other member of the Grace Group is
making any representations or warranties with respect to
the Additional Financial Information or the Dearborn
Financial Statements except for the specific
representations and warranties set forth in Article 5.
7.3 No Additional Representations. Except for the
specific representations and warranties set forth in this
Agreement, including the Schedules hereto, the Ancillary
Agreements or any certificate contemplated hereby and
delivered to Buyer in connection herewith, none of the
Selling Companies (nor any other member or affiliate of the
Grace Group ) is making any representation or warranty,
express or implied, of any nature whatsoever.
ARTICLE 8
COVENANTS OF THE SELLING COMPANIES
AND THE BUYING COMPANIES
8.1 Access and Inquiry. Between the date of this
Agreement and the Closing, the Selling Companies shall
provide, and shall cause the Transferred Companies (and, to
the extent Grace has the right to do so, the Transferred
Joint Ventures) to provide, to the Buying Companies and
their counsel, financial advisors, auditors and other
representatives, reasonable access to the properties and
facilities of the Dearborn Business (including reasonable
access to enable Buyer to conduct Phase I environmental
investigations, but not Phase II environmental
investigations or other testing that may include invasive
procedures such as soil core borings or testing of
environmental media), and will, upon written request,
permit the Buying Companies and their counsel, financial
advisors, auditors and other representatives to contact and
make reasonable inquiry of employees of the Selling
Companies and the Transferred Companies (and, to the extent
Grace is able to arrange for such access and inquiry, to
the facilities and employees of the Transferred Joint
Ventures) regarding the Dearborn Business. Except for the
details of any trade secrets and other sensitive
intellectual property, the Selling Companies shall, and
shall cause the Transferred Companies (and, to the extent
Grace has the right to do so, the Transferred Joint
Ventures) to, make available to the Buying Companies all
books, records, and other financial data and files, where
located, of the Selling Companies, the Transferred
Companies and the Transferred Joint Ventures relating
primarily to the Dearborn Business, to the extent
reasonably requested by any Buying Company. The Buying
Companies acknowledge that the terms of the confidentiality
agreement dated November 15, 1995 between Grace and Buyer
(the "Confidentiality Agreement") shall apply to
information obtained by any Buying Company pursuant to the
foregoing.
8.2 Hart-Scott and Other Filings. As promptly as
practicable after the date hereof, Grace and Buyer shall
file or cause to be filed with respect to this Agreement
and the transactions contemplated hereby appropriate
Notification and Report Forms under the HSR Act and filings
with Governmental Authorities in other jurisdictions under
similar statutes or foreign investment statutes. Grace and
Buyer shall cooperate to coordinate such filings, and to
make reasonable efforts to promptly respond to any request
or inquiry by a Governmental Authority with respect
thereto. Each party will furnish to the other party such
information and reasonable assistance as such other party
may reasonably request in connection with the foregoing.
8.3 Intentionally Omitted.
8.4 Notices to Third Parties.
(a) The Buying Companies and the Selling
Companies shall use their reasonable best efforts to take
or cause to be taken all action, to do or cause to be done,
and to assist and cooperate with the other parties hereto
in doing all things necessary, proper or advisable to
consummate and make effective, in the most expeditious
manner practicable, the transactions contemplated by this
Agreement. Without limiting the generality of the
foregoing, the parties hereto shall cooperate with one
another: (i) in determining whether action by or in
respect of, or filing with, any Governmental Authority
(either domestic or foreign) is required, proper or
advisable or any actions, consents, waivers or approvals
are required to be obtained from parties to any contracts,
in connection with the transactions contemplated by this
Agreement; (ii) in seeking to obtain any such actions,
consents and waivers and to make any such filings; and
(iii) in negotiating alternative arrangements in the event
a governmental or third party (including, without
limitation, a labor union or works council) consent,
permit, authorization or registration required pursuant to
the transactions contemplated hereby is not obtained on a
timely basis or in the event Buyer is unable to make
necessary arrangements to establish a buying entity in a
certain jurisdiction, with the understanding that such
arrangements will be designed so as to put the parties in a
position as close as practicable to that which they would
have been in had such consent, permit, authorization,
registration or action been obtained including, without
limitation, providing to such party the benefits and
liabilities associated with the ownership and operation of
any assets subject to such consent, permit, authorization,
registration or action. Notwithstanding the foregoing, the
provisions of this Section shall not apply to any matters
covered by the provisions of Section 2.5 hereof, which
matters shall continue to be covered by Section 2.5. In
case at any time after the Closing any further action is
necessary or desirable to carry out the purposes of this
Agreement, the proper officers and directors of each party
hereto shall promptly take all such necessary action.
(b) To the extent any party shall reasonably
request, the parties shall prepare and execute, with the
assistance and advice of local counsel, additional
agreements reflecting the fundamental terms of this
Agreement to the extent required by local laws in order to
effectuate the transactions contemplated by this Agreement.
Notwithstanding the foregoing, the parties agree that this
Agreement sets forth the complete agreement and
understanding of the parties with respect to the matters
set forth herein and, to the fullest extent permitted by
law, shall be controlling in the event of any conflict or
inconsistency between the provisions hereof and the
provisions of any of such local agreements.
8.5 Reorganization of Dearborn Business in Brazil and
Sweden. Prior to the Closing, (a) Grace shall cause Grace
Brazil to transfer to Holdings Brazil the assets and
liabilities of the Dearborn Business described in Part I of
the Schedule to this Section in exchange for shares of the
capital stock of Grace Brazil owned by Holdings Brazil, and
(b) Grace shall cause Grace Sweden to transfer to Dearborn
Sweden as a capital contribution the assets and liabilities
described in Part II of the Schedule to this Section and
thereafter, Grace shall cause the Swedish Holding Company
to purchase the Dearborn Sweden Shares from Grace Sweden.
All costs and expenses incurred by Grace or its affiliates
in connection with the reorganization referred to above
shall be the obligation of Grace and shall not be paid by
Buyer or its affiliates.
8.6 Reasonable Best Efforts. In making its
reasonable best efforts under Sections 8.2 and 8.4, except
as may be contemplated by Section 2.5, no member of the
Grace Group or the Buyer Group shall be required to make
any payment (other than for reasonable legal fees and
routine filing fees) that it is not presently contractually
required to make, divest any assets (including, but not
limited to, assets of the Dearborn Business), make any
change in the conduct of its business or that of the
Dearborn Business, accept any limitation on the future
conduct of its business or that of the Dearborn 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 of any
existing agreement or arrangement, or agree to any of the
foregoing.
8.7 Intentionally Omitted.
8.8 Covenant Not to Compete; No Solicitation.
(a) For a period of five years after the Closing
Date, the Selling Companies shall not, and shall cause
their affiliates not to, directly or indirectly: (i)
engage in the Dearborn Business in those countries where
the Dearborn Business currently operates, or in the
development, registration, formulation, sale or
distribution of any products primarily directed to a market
that competes with the Dearborn Business as currently
conducted including, without limitation, products that are
the result of discoveries or development by the Grace Group
after the Closing Date or (ii) invest in, manage, operate,
join or control as a partner, stockholder, consultant or
otherwise, any Person that competes with the Dearborn
Business in any jurisdiction where the Dearborn Business is
currently conducted (a "Buyer Competitive Business");
provided, however, that nothing in this Section 8.8 shall
prohibit the Selling Companies, or their affiliates, from
owning up to 5% of the outstanding voting securities of any
publicly traded entity; provided, further, that nothing in
this Section 8.8 shall prohibit the Selling Companies, or
their affiliates, from acquiring a Buyer Competitive
Business as an incidental part of an acquisition (by joint
venture, merger or other) of the assets of, or the majority
of voting interests in, another Person (a "Target
Business") if the worldwide sales of the Target Business
from the Buyer Competitive Business are not in excess of
30% of the worldwide sales of the Target Business in the
fiscal year of the Target Business, for reporting purposes,
preceding such acquisition. In the event the Selling
Companies, or their affiliates, acquire a Buyer Competitive
Business pursuant to the second proviso in the preceding
sentence and the worldwide sales of the Buyer Competitive
Business are either in excess of 10% of the worldwide sales
of the Target Business or in excess of US $50 million in
such fiscal year, the Selling Companies shall thereafter
divest such Buyer Competitive Business within a reasonable
period of time by way of auction or other competitive
bidding process, negotiation, sale or such other manner or
divestiture as the Selling Companies shall deem
appropriate.
(b) For a period of two years after the Closing
Date, the Selling Companies shall not, and shall cause
their affiliates not to, solicit to employ any of the
employees of the Dearborn Business so long as they are
employed by the Dearborn Business.
(c) If any provisions contained in this Section
shall for any reason be held invalid, illegal or
unenforceable in any respect, such invalidity, illegality
or unenforceability shall not affect any other provisions
of this Section, but this Section shall be construed as if
such invalid, illegal or unenforceable provisions had never
been contained herein. It is the intention of the parties
that if any of the restrictions or covenants contained
herein is held to cover a geographic area or to be for a
length of time which is not permitted by applicable law, or
in any way construed to be too broad or to any extent
invalid, such provision shall not be construed to be null,
void and of no effect, but to the extent such provision
would be valid or enforceable under applicable law, a court
of competent jurisdiction shall construe and interpret or
reform this Section to provide for a covenant having the
maximum enforceable geographic area, time period and other
provisions (not greater than those contained herein) as
shall be valid and enforceable under such applicable law.
The Selling Companies agree that the Buying Companies shall
be entitled, upon a proper showing, to injunctive relief
requiring specific performance of this Section by the
Selling Companies.
8.9 Notification of Certain Matters. Grace shall use
reasonable efforts to give prompt notice to Buyer, and
Buyer shall use reasonable efforts to give prompt notice to
Grace of any of the following events that occur between the
date of this Agreement and the Closing as to which they
obtain actual knowledge: (a) the occurrence or non-
occurrence of any event, the occurrence or non-occurrence
of which would be reasonably likely to cause (i) any
representation or warranty contained in this Agreement to
be untrue or inaccurate in any material respect or (ii) any
covenant, condition or agreement contained in this
Agreement not to be complied with or satisfied in any
material respect, and (b) any failure of the Selling
Companies or the Buying Companies, as the case may be, to
comply with or satisfy any covenant, condition or agreement
to be complied with or satisfied by it hereunder in any
material respect; provided, however, that the delivery of
any notice pursuant to this Section 8.9 shall not limit or
otherwise affect the remedies available hereunder to the
party receiving such notice. In addition, the Selling
Companies will use reasonable efforts to promptly
supplement or amend the Schedules with respect to any
matter that they obtain actual knowledge of, hereafter
arising which, if existing or occurring at the date of this
Agreement, would have been required to be set forth or
described in the attached Schedules. No supplement or
amendment of the attached Schedules made pursuant to this
Section 8.9 shall be deemed to cure any breach of any
representation or warranty made in this Agreement or limit
in any way the purchase price adjustment set forth in
Section 4.B.
8.10 Resignations. At the Closing, Grace will deliver
to Buyer, the resignations (effective on or prior to the
Closing Date) of all directors of the Transferred Companies
whose resignations Buyer has requested, provided that Buyer
has given Grace adequate time prior to the Closing Date to
obtain the same.
8.11 Confidentiality Agreements. Grace hereby
represents and warrants that it has entered into
confidentiality agreements with certain third parties that
expressed an interest in acquiring the Dearborn Business
and that were subsequently permitted access to confidential
information of the Dearborn Business and that each such
agreement is now and will remain in full force and effect
as of the date hereof and as of the Closing Date. At the
Closing, Grace shall assign such confidentiality agreements
to Buyer.
8.12 Work's Council. Prior to the Closing, Grace
shall provide to Buyer a schedule setting forth all
jurisdictions in which the Dearborn Business is conducted
in which a work's council is present.
ARTICLE 9
CONDUCT OF BUSINESS PRIOR TO THE CLOSING
Except as otherwise consented to in writing by Buyer
which consent shall not be unreasonably withheld or delayed
or as otherwise specifically provided in this Agreement,
from the date of this Agreement until the Closing:
9.1 Operation in Ordinary Course. The Selling
Companies shall, and shall cause the Transferred Companies
(and, to the extent the Selling Companies have the right to
do so, the Transferred Joint Ventures) to, conduct the
Dearborn Business only in the ordinary course of business,
consistent with past practice and shall use their
respective reasonable efforts to preserve intact the
business organization of the Dearborn Business and keep
available the services of the officers and employees of the
Dearborn Business.
9.2 Disposition of Assets. The Selling Companies
shall not, and shall not permit the Transferred Companies
(and, to the extent the Selling Companies have the right to
do so, the Transferred Joint Ventures) to (a) permit or
allow any of the assets (other than any of the Total
Excluded Assets) of the Dearborn Business to be subjected
to any Liens that shall survive the Closing and that would
reasonably be expected to have a Material Adverse Effect or
(b) sell, lease (as lessor), transfer, license (as
licensor), or otherwise dispose of, any capital asset of
the Dearborn Business with a book value of US $50,000 or
more (other than any of the Total Excluded Assets), unless
such disposition is reflected in the 1996 budget for the
Dearborn Business.
9.3 Material Agreements. The Selling Companies shall
not, and shall not permit the Transferred Companies (and,
to the extent the Selling Companies have the right to do
so, the Transferred Joint Ventures) to, in connection with
the Dearborn Business, (a) borrow any money or enter into
any loan or credit agreement under which borrowings would
be included in the Total Dearborn Liabilities or in the
liabilities of the Transferred Companies or the Transferred
Joint Ventures in the amount of US $50,000 or more, other
than any agreement or arrangement maintained by or in
conjunction with other members of the Grace Group or
arrangements with suppliers for customary credit terms made
in the ordinary course of business consistent with past
practice, (b) amend or terminate any Material Contract
other than in the ordinary course of business consistent
with past practice, (c) dispose of, waive or permit to
lapse any claims and rights under Material Contracts with
an aggregate value in excess of US $100,000 other than in
the ordinary course of business consistent with past
practice, (d) make any announcement or proposal concerning,
or grant any general increase in salary that would affect
the Executives other than in the ordinary course of
business (unless such announcement, proposal or grant had
been approved by Grace management prior to the date of this
Agreement), (e) pay, discharge or satisfy any claims,
liabilities or obligations (absolute, accrued, contingent
or otherwise) relating to the Dearborn Business other than
the payment, discharge or satisfaction in the ordinary
course of business and consistent with past practice of
liabilities and obligations reflected or reserved against
in the Dearborn Financial Statements or incurred in the
ordinary course of business and consistent with past
practice since December 31, 1995, (f) (Intentionally
Omitted), (g) to the extent the same would have a Material
Adverse Effect, dispose of or permit to lapse any rights to
the use of any Intellectual Property, or disclose to any
Person (other than representatives of Buyer) any trade
secret, formula, process or know-how not theretofore a
matter of public knowledge, other than in the ordinary
course of business, (h) make any general change in the
credit or warranty terms extended to new or existing
customers other than in the ordinary course of business,
(i) enter into any lease of real or personal property
(whether as lessor or lessee) involving annual rental
payments in excess of US $100,000, (j) enter into any
contract for the purchase or sale, or the exchange or
storage, of inventory or supplies or for lease of any
storage facilities owned by or under lease to the Dearborn
Business, as the case may be, involving annual payments in
excess of US $100,000, other than in the ordinary course of
business, (k) enter into any contract or agreement under
which it is reasonably expected that the Dearborn Business
will (i) make expenditures of more than US $500,000 per
year for the purchase of raw materials or supplies, or (ii)
obtain receipts of more than US $500,000 per year for the
sale of its products and services, or (iii) make
expenditures or obtain receipts of more than US $200,000
per year for any purpose other than the purchase of raw
materials or supplies or the sale of its products and
services, (l) authorize any new capital expenditures other
than those contemplated by the accumulated monthly 1996
budget for the Dearborn Business, which individually is in
excess of US $100,000 or, in the aggregate, are in excess
of US $250,000, (m) split, combine or reclassify any shares
of capital stock or partnership interests of the
Transferred Companies (except for Dearborn Sweden),
declare, set aside or pay any dividend or make any other
distribution whether in cash, stock, or property or any
combination thereof in respect of such capital stock or
partnership interests, or (n) agree, whether in writing or
otherwise, to take any action prohibited by this Section
9.3.
9.4 Relations with Customers and Suppliers. The
Selling Companies shall, and shall cause the Transferred
Companies (and, to the extent the Selling Companies have
the right to do so, the Transferred Joint Ventures) to, use
reasonable efforts to preserve the Dearborn Business's
relations with customers and suppliers, licensors,
licensees, contractors, distributors and others having
business relations with the Dearborn Business.
9.5 Satisfaction of Debt. Immediately prior to the
Closing, Grace shall cause the Transferred Companies to
satisfy and discharge all short-term borrowings and long-
term debt, unless otherwise consented to in writing by
Buyer.
ARTICLE 10
CONDITIONS PRECEDENT TO THE OBLIGATIONS
OF THE BUYING COMPANIES
All obligations of the Buying Companies under this
Agreement are subject, at Buyer's option, to the
fulfillment prior to or at the Closing, of each of the
following conditions, unless waived in writing by Buyer:
10.1 Intentionally Omitted.
10.2 Performance of Covenants and Agreements. Grace
and the other Selling Companies shall have in all material
respects performed or complied with all of the covenants
and agreements required to be performed or complied with by
them at or prior to the Closing pursuant to this Agreement.
10.3 Hart-Scott-Rodino Act and Other Governmental
Approvals.
(a) 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.
(b) All consents and approvals of non-U.S.
Governmental Authorities with respect to antitrust,
business combination or foreign investment filings, laws or
regulations shall have been obtained.
10.4 Certificate of Grace.
(a) Grace shall have delivered to Buyer a
certificate of Grace, dated the Closing Date, signed by a
Vice President or more senior officer of Grace certifying
that (except as specifically set forth in such
certificate): (i) each and every representation and
warranty of Grace under this Agreement that is qualified as
to materiality is true and accurate and each of the
representations and warranties of the Selling Companies
under this Agreement that are not so qualified is true and
accurate in all material respects as of the Closing and
(ii) Grace and the other Selling Companies have in all
material respects performed or complied with 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.
(b) If the certificate referred to in Section
10.4(a) sets forth any exceptions to the statement set
forth in clause (ii) of such Section, the condition
precedent to the obligations of the Buying Companies under
Section 10.2 shall not have been fulfilled.
10.5 Litigation. On the Closing Date, there shall not
be in effect or threatened any order, decree or ruling or
other judicial or governmental action restraining,
enjoining or otherwise prohibiting the transactions
contemplated hereby.
ARTICLE 11
CONDITIONS PRECEDENT TO THE OBLIGATIONS
OF THE SELLING COMPANIES
All obligations of the Selling Companies under this
Agreement are subject, at Grace's option, to the
fulfillment prior to or at the Closing, of each of the
following conditions unless either waived in writing by
Seller:
11.1 Intentionally Omitted.
11.2 Performance of Covenants and Agreements. The
Buying Companies shall have in all material respects
performed or complied with all of the covenants and
agreements required to be performed or complied with by
them at or prior to the Closing pursuant to this Agreement.
11.3 Hart-Scott-Rodino Act and Other Governmental
Approvals.
(a) 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.
(b) All consents and approvals of non-U.S.
Governmental Authorities with respect to antitrust,
business combination or foreign investment filings, laws or
regulations shall have been obtained.
11.4 Intentionally Omitted.
11.5 Litigation. On the Closing Date, there shall not
be in effect or threatened any order, decree or ruling or
other judicial or governmental action restraining,
enjoining or otherwise prohibiting the transactions
contemplated hereby.
11.6 Certificate of Buyer.
(a) Buyer shall have delivered to Seller a
certificate of Buyer, dated the Closing Date, signed by a
Vice President or more senior officer of Buyer, certifying
that: (i) each and every representation and warranty of
Buyer under this Agreement that is qualified as to
materiality is true and accurate and each of the
representations and warranties of Buyer under this
Agreement that are not so qualified, is true and accurate
in all material respects, as of the Closing; and (ii) Buyer
and the other Buying Companies have in all material
respects performed or complied with at or prior to the
Closing all of the covenants and agreements required to be
performed or complied with by them at or prior to the
Closing pursuant to this Agreement.
(b) If the certificate referred to in Section
11.6(a) sets forth any exceptions to the statement set
forth in clause (ii) of such Section, the conditions
precedent to the obligations of the Selling Companies under
Section 11.2 shall not have been fulfilled.
ARTICLE 12
EMPLOYEE MATTERS
12.1 Employees of Transferred Companies and
Transferred Joint Ventures. Buyer acknowledges that the
job position and terms and conditions of employment of all
active and inactive employees of the Transferred Companies
and Transferred Joint Ventures shall not be affected by the
occurrence of the Closing, except with respect to employee
benefit plans as otherwise may be provided in the Employee
Benefits Agreement.
12.2 Current, Continued and Transitional Service
Employees.
(a) On the Closing Date, the following
individuals shall cease to be employees of the Grace Group:
(i) each employee of the Grace Group (other than the
Transferred Companies or Transferred Joint Ventures) who is
employed exclusively in the Dearborn Business, (ii) each
employee of the Grace Group (other than the Transferred
Companies or Transferred Joint Ventures) who performs
substantial services for the Dearborn Business and is
designated by Grace as an employee who is to be transferred
with the Dearborn Business, and (iii) each employee who
replaces any employee described in clauses (i) and (ii).
All employees described in clauses (i) and (ii), as of
December 31, 1995, are listed on the Schedule to this
Section. All employees described in clauses (i), (ii) and
(iii) are referred to as "Current Employees".
(b) Each Current Employee (excluding any Current
Employee who is on long-term disability on the Closing
Date) who accepts an offer of employment made by a member
of the Buyer Group in accordance with Section 12.3 shall
become an employee of such member of the Buyer Group
effective on the Closing Date; and all such Current
Employees are referred to as "Continued Employees".
(c) Each Transitional Services Employee shall
cease to be an employee of the Grace Group on a date to be
established by Grace for each Transitional Services
Employee; provided that, with respect to Transitional
Services Employees fully dedicated to performing services
for the Dearborn Business, cessation of each such
employee's employment with the Grace Group shall be by
mutual agreement between Buyer and Grace. Any member of
the Buyer Group may offer employment to any Transitional
Services Employee to commence on or after the date such
employee ceases to be an employee of the Grace Group.
12.3 Positions Offered to Current Employees.
(a) With respect to each Current Employee, the
Buying Companies shall either offer the Current Employee
employment with a member of the Buyer Group to commence on
the Closing Date or the Current Employee shall be eligible
for severance benefits as an employee described in Section
12.6(a)(i).
(b) With respect to each Current Employee who is
offered employment with a member of the Buyer Group in
accordance with Section 12.3(a), either (A) the position
offered by the Buying Companies: (i) shall be for a job
that is equivalent (including with respect to his or her
level of responsibility and authority) to the Current
Employee's job with the Dearborn Business as of the
Closing, (ii) shall be at no reduction in base salary,
wages, or commission or sales incentive award levels
effective as of the Closing, (iii) shall not change the
location of the Current Employee's principal place of work
to one that is an unreasonable commuting distance from his
or her residence, and (iv) shall provide employee benefit
plan coverages in accordance with the provisions of the
Employee Benefits Agreement or (B) the position offered by
the Buying Companies shall be on terms other than those set
forth in (A) above, and, in such case, if the Current
Employee does not accept that offer, he or she shall be
eligible for severance benefits to the same extent as an
employee described in Section 12.6(a)(ii) who voluntarily
terminates employment with the Buyer Group.
(c) The Selling Companies have not made any
representation regarding which, if any, (i) Current
Employees or Transitional Services Employees will accept
offers of employment with the Buyer Group, or (ii)
employees of the Transferred Companies and Transferred
Joint Ventures will continue such employment after the
Closing.
12.4 Employee Benefit Plans. As of the Closing Date,
the Continued Employees and the employees of the
Transferred Companies and the Transferred Joint Ventures
who participated in the employee benefit plans or
arrangements maintained by the Grace Group shall cease to
participate in those plans or arrangements and shall
commence participation in employee benefit plans or
arrangements established or maintained by the Buyer Group,
in accordance with the Employee Benefits Agreement.
Notwithstanding the foregoing, the Grace Group and the
Buyer Group may agree that certain such employees may
continue to participate in employee benefit plans or
arrangements maintained by the Grace Group for a specific
period after the Closing Date.
12.5 Vacation. Effective as of the Closing Date, the
Buyer Group shall assume all liability of the Grace Group
with respect to vacation and leave of absence for each
Continued Dearborn Business Employee. With respect to each
Continued Dearborn Business Employee who is credited with
vacation and/or leave of absence earned on a calendar year
basis, Buyer shall continue to apply the vacation and leave
of absence policy and/or practice (whether or not legally
required) applicable to such Continued Dearborn Business
Employee the day before the Closing Date for at least the
remainder of the calendar year in which the Closing occurs
and the following calendar year; so that each such
Continued Dearborn Business Employee shall be entitled to
use any vacation days or leave of absence time, and/or
receive any pay related thereto, to which he or she would
otherwise be entitled for such calendar years applicable
the day before the Closing Date. With respect to any
Continued Dearborn Business Employee who is credited with
vacation days or leave of absence time (and pay related
thereto) based on the 12-month period commencing on his or
her employment anniversary date (an "Anniversary Vacation
Period"), and not based on a calendar year, Buyer shall
continue to apply the vacation and leave of absence policy
and/or practice (whether or not legally required)
applicable to such Continued Dearborn Business Employee the
day before the Closing for least the Anniversary Vacation
Period during which the Closing occurs and the following
Anniversary Vacation Period; so that each such Continued
Dearborn Business Employee shall be entitled to use any
vacation days or leave of absence time, and/or receive any
pay related thereto, to which he or she would otherwise be
entitled for such Anniversary Vacation Period(s) applicable
the day before the Closing Date.
12.6 Severance Arrangements.
(a) Buyer acknowledges that:
(i) a severance and retention arrangement
has been adopted by the Grace Group (the "Grace Severance
Arrangement"), as described on the Schedule to this Section
that provides severance pay and other benefits to each
Dearborn Business Employee (except for an employee of any
Transferred Joint Venture) who is deemed by Grace to be a
regular salaried employee of the Grace Group (a "Salaried
Dearborn Business Employee") and who Grace determines has
become unemployed as of the Closing Date; or who Grace
determines has been terminated as of an earlier date as a
direct result of the divestment of the Dearborn Business,
but only if consented to by Buyer.
(ii) the severance and other benefits under
the Grace Severance Arrangement shall also apply to each
Salaried Dearborn Business Employee who: (A) becomes an
employee of the Buyer Group but who is subsequently
involuntarily terminated from employment with the Buyer
Group within 6 months after the Closing Date due to plant
consolidation, closing or relocation, or other
circumstances that are not directly related to the
employee's performance, (B) becomes an employee of the
Buyer Group but voluntarily terminates his or her
employment within 6 months after the Closing Date as a
result of an unreasonable change in job duties, a decrease
in compensation or a change in work location that results
in an unreasonable commuting distance from the employee's
existing residence, or (C) on the Closing Date or on any
date subsequent thereto is absent from work due to
disability or leave of absence (whether or not he or she is
receiving workers' compensation payments), and who recovers
from such disability and requests reinstatement to active
employment status within 6 months of the Closing Date, but
is denied reinstatement by any member of the Buyer Group;
(iii) certain Dearborn Business Employees
who are not eligible for severance under the Grace
Severance Arrangement may be entitled to severance benefits
under local law as a result of the transactions
contemplated by this Agreement, even if they commence
employment with the Buyer Group, refuse to accept an offer
of employment with the Buyer Group or resign their
employment with the Grace Group; and
(iv) Transitional Services Employees shall
be eligible for severance under various plans, programs,
policies and practices of the Grace Group upon termination
of employment with the Grace Group (but shall not be
eligible to participate in the Grace Severance
Arrangement).
(b) Buyer shall reimburse Grace (or any other
member of the Grace Group designated by Grace) for the cost
incurred in connection with severance pay and/or other
severance benefits (i) under the Grace Severance
Arrangement with respect to Dearborn Business Employees who
become entitled to severance benefits under circumstances
described in Section 12.3(a) or (b) or Section 12.6(a)(i)
or (ii), and (ii) under any local law that requires
severance to be paid to Dearborn Business Employees as a
result of the transactions contemplated by this Agreement
(as described above in Section 12.6(a)(iii)). Buyer shall
make such reimbursement due pursuant to this Section
12.6(b) within 30 days after receipt of a written demand
from Grace specifying the amount of the costs incurred
during a specific period and appropriate supporting
documentation.
(c) Buyer shall pay Grace (and/or other members
of the Grace Group designated by Grace) a total of US
$10,000,000 in a manner described in the transitional
services agreement(s) that shall be entered into between
the Grace Group and the Buyer Group, which shall be
regarded as compensation for severance benefits that will
be (or may be) provided by the Grace Group under any plan,
program, policy or practice of the Grace Group to
Transitional Services Employees who are terminated by the
Grace Group. With respect to any Transitional Services
Employee who is to be terminated by the Grace Group but who
is transferred to, or hired by, the Buyer Group, then the
Grace Group shall credit to Buyer (or any other member of
the Buyer Group designated by Buyer) an amount equal to the
cost of the severance benefits that would have been
provided to such employee if the employee was terminated by
the Grace Group and not transferred to, or hired by, the
Buyer Group; but only if under applicable law the Grace
Group is not required to provide severance benefits to such
employee.
12.7 Post-Closing Severance Benefits For Salaried
Dearborn Business Employees.
(a) Effective 6 months after the Closing Date,
Buyer shall cause each Salaried Dearborn Business Employee
then employed by the Buyer Group to be covered by a
severance plan or program that shall remain in effect for a
period of not less than 18 months thereafter (the "Buyer's
Severance Arrangement"). The Buyer's Severance Arrangement
shall provide for the following: (i) severance payments
equal to the payments that such employees would have been
entitled to under the terms of the Grace Severance
Arrangement, based upon an aggregation of service with the
Grace Group up to the Closing Date and service with the
Buyer Group on and after the Closing Date, (ii) payments
for unused but accrued vacation as of the date of the
employee's termination, (iii) outplacement services and
(iv) with respect to a Salaried Dearborn Business Employee
who is employed in the United States, continuation of
coverage under the Buyer's Medical Plans (as defined in the
Employee Benefits Agreement) for the shortest of the
following periods: (i) the period ending 4 months after
the employee's last date of employment with the Buyer
Group, (ii) the period that installment severance payments
are made to the employee or (iii) the period that ends on
the date that the employee becomes eligible for coverage
under another group medical plan; such continuation
coverage shall be under the same terms and conditions of
Buyer's Medical Plans applicable to such employee the day
before his or her termination. The costs that such
employee will incur for coverage under the Buyer's Medical
Plans during the period that such employee is entitled to
coverage pursuant to the immediately preceding sentence
shall not exceed the cost of coverage under Buyer's Medical
Plans applicable to active employees who participate
therein. In addition, such period of coverage shall be
considered to be part of the health care continuation
period required to be provided to the employee under the
applicable provisions of the Consolidated Omnibus Budget
Reconciliation Act of 1985. The Buyer's Severance
Arrangement shall permit each eligible former Salaried
Dearborn Business Employee who is employed in the United
States to elect to receive severance payments in a lump sum
or in installment payments in the same manner as provided
by the Grace Severance Arrangement.
(b) The provisions of Section 12.7(a) shall
apply to each Salaried Dearborn Business Employee who is
covered under the Buyer's Severance Arrangement and who:
(i) is subsequently involuntarily terminated from
employment by the Buyer Group during the period that the
Buyer's Severance Arrangement is required to remain in
effect, due to plant consolidation, closing or relocation,
or other circumstances that are not directly related to the
employee's performance; (ii) voluntarily terminates his or
her employment during the period that the Buyer's Severance
Arrangement is required to remain in effect, as a result of
the occurrence, without such employee's consent (which
consent may not be subsequently revoked), of an
unreasonable change in job duties, a change in work
location that results in an unreasonable commuting distance
from such employee's existing residence or a decrease in
such employee's aggregate compensation such that the
employee's resulting aggregate annual compensation will
equal less than 85% of the aggregate compensation received
by such employee for the 12-month period ending on the day
before the Closing Date or (iii) on the Closing Date or on
any date subsequent thereto, is absent from work due to
disability or leave of absence (whether or not he or she is
receiving worker's compensation payments), and who recovers
from such disability (if applicable) and requests
reinstatement to active employment status during the period
that the Buyer's Severance Arrangement is required to
remain in effect, but is denied reinstatement by any member
of the Buyer Group.
(c) Buyer shall cause the plan document and the
summary plan description for the Buyer's Severance
Arrangement to include a provision stating that the Buyer's
Severance Arrangement may not be terminated or amended in a
manner adverse to the covered employees prior to the date
that is 18 months following the Buyer's Severance
Arrangement's effective date. Buyer shall cause the
summary plan description for the Buyer's Severance
Arrangement to be distributed to the Salaried Dearborn
Business Employees within thirty days after the Closing
Date.
(d) After the Buyer's Severance Arrangement has
been in effect for the required 18-month period, Buyer may
terminate or revise the Buyer's Severance Arrangement, to
the extent permitted by applicable law. Salaried Dearborn
Business Employees shall receive credit for prior service
with the Grace Group for the purposes of applying any
revised policy.
12.8 Executive Compensation. As of the Closing Date,
the Continued Dearborn Business Employees who participated
in the Grace Group's executive compensation plans or
arrangements shall commence participation in executive
compensation plans or arrangements maintained by the Buyer
Group, which provide coverage and benefits to such persons
which are, in the aggregate, not less favorable than those
provided to such employees immediately prior to the Closing
Date.
12.9 Inactive Current Employees. This Agreement shall
not obligate the Buyer Group to employ any Dearborn
Business Employee who is classified by the Grace Group as
being on long-term disability leave as of the Closing Date.
Notwithstanding any other provision of this Agreement to
the contrary, those Dearborn Business Employees who have
been classified by the Grace Group as being on layoff,
short-term disability or leave of absence (whether paid or
unpaid or as a result of a workers compensation claim) as
of the Closing shall continue such status with the
appropriate member of the Buyer Group after the Closing
Date.
12.10 Expatriate Employees. The Dearborn Business
Employees listed in the Schedule to this Section are
referred to as the "Expatriate Employees." Each Expatriate
Employee has relocated from the country where he or she was
a citizen or resident, and is a party to one of the
agreements listed in the Schedule to this Section regarding
relocation payments, home leave, repatriation rights and
other matters (the "Expatriate Agreements"). Grace has
delivered or made available to Buyer complete copies of the
written Expatriate Agreements and a written summary of all
other Expatriate Agreements, as currently in effect. At
the Closing Date, the Buyer Group shall assume (i) all
obligations of the Grace Group under the Expatriate
Agreements with respect to each Expatriate Employee who
accepts employment with the Buyer Group, and (ii) all
severance and repatriation obligations of the Grace Group
under the Expatriate Agreements related to the termination
of each Expatriate Employee who does not accept employment
with the Buyer Group.
12.11 Terms of Employment. As to terms and conditions
of employment of the Continued Dearborn Business Employees
not described in this Article, and subject to the Employee
Benefits Agreement, from and after the Closing, the
Continued Dearborn Business Employees: (i) shall be
treated in a manner similar to the other similarly situated
employees of the Buyer Group, (ii) shall be entitled to
participate on the same basis as such other employees in
all job training, career development and educational
programs of the Buyer Group, and (iii) shall be entitled to
fair and equitable consideration together with such other
employees in connection with any management or executive
job opportunities or any other promotional opportunities
with the Buyer Group.
12.12 Recognition of Seniority. The Buyer Group shall
recognize continuous service with the Grace Group
(including predecessor employers to the extent such service
is recognized by the Grace Group) for the purpose of
determining seniority as used for the determination of
service awards, severance benefits, vacations, sick leave
and other terms and conditions of employment related to
seniority.
12.13 Employee Information Sharing. After the Closing
Date, the Buying Companies shall, and shall cause the
Transferred Companies (and, to the extent Buyer has the
right to do so, the Transferred Joint Ventures) to, provide
to the Grace Group, and the Selling Companies shall, and
shall cause the other members of the Grace Group to,
provide to the Buyer Group, on a continuing basis at no
cost to the recipient, such information regarding persons
who were employees of the Dearborn Business under the Grace
Group's ownership, as may be reasonably requested. This
Section shall not compel any person to maintain records
beyond the periods specified in Sections 15.2 and 15.3.
12.14 Transfer of Employees of the Brazilian Business.
Any other provision of this Agreement to the contrary
notwithstanding, at the Closing Date, all Current Employees
who are employed in Brazil shall be transferred by Grace's
Brazilian Subsidiary to Buyer's entity which will carry out
the Dearborn Business in Brazil, by means of a change in
current employment agreements and without termination
thereof.
ARTICLE 13
TERMINATION
13.1 Rights to Terminate.
(a) This Agreement may be terminated at any time
prior to the Closing by written agreement of Grace and
Buyer.
(b) [Intentionally Omitted.]
(c) If the Closing shall not have taken place on
or before December 15, 1996, either Grace or Buyer may
terminate this Agreement at any time thereafter by giving
notice of such termination to the other in the manner
provided in Section 18.1; provided, however, that (i) Grace
may not terminate this Agreement pursuant to this Section
13.1(c) if the Closing could take place in the event Grace
made an election to close pursuant to Section 2.5 hereof
and (ii) in the event of a change of control transaction
affecting a party, such party shall not have the right to
terminate this Agreement pursuant to this Section 13.1(c)
if the failure to consummate the Closing by such date shall
be due to the failure of the party seeking to terminate
this Agreement to have fulfilled any of its obligations
under this Agreement.
13.2 Consequences of Termination.
(a) In the event of a termination of this
Agreement, in accordance with Section 13.1, this Agreement
shall thereafter become void and have no effect; provided,
however, that the termination of this Agreement shall not
affect the rights of any Buying Company or Selling Company
against the other for any breach of this Agreement.
(b) The obligations of the parties under
Sections 17.1 and 17.2 shall survive any termination of
this Agreement.
ARTICLE 14
INDEMNIFICATION
14.1 Definitions. As used in this Article:
(a) "Damages" means any and all assessments,
penalties, fines, damages, judgments, liabilities, losses
or costs (including reasonable Litigation Expenses incident
to Third Party Claims, but excluding Litigation Expenses
incident to Direct Claims).
(b) "Direct Claims" means claims other than
Third Party Claims. "Direct Claim" means one of the Direct
Claims.
(c) "Litigation Expenses" means attorneys' fees
and other costs and expenses incident to proceedings or
investigations with respect to, 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 Grace Group, that could give rise to a right of
indemnification under this Article. "Third Party Claim"
means one of the Third Party Claims.
14.2 Sellers' Indemnification.
(a) Subject to the terms and limitations of this
Article, Grace shall indemnify and hold harmless the Buying
Companies, their Subsidiaries (including, after the
Closing, the Transferred Companies and the Transferred
Joint Ventures), directors, officers and employees (the
"Buyer Indemnified Group"), as the case may be, from and
against all Damages incurred by any member of the Buyer
Indemnified Group arising out of, incurred in connection
with or relating to (i) any breach by or non-performance of
any Selling Company of any of its covenants or agreements
under this Agreement or any of the other Transaction
Documents (other than the Tax Procedures Agreement), (ii)
any breach of or inaccuracy in any representation or
warranty of Grace set forth in Article 5, (iii) any of the
Total Excluded Liabilities, (iv) Undisclosed Employee
Liabilities or (v) Undisclosed Product Liabilities.
(b) The representations and warranties of Grace
set forth in Article 5 shall survive the Closing. The
representations and warranties set forth in Section 5.5
through the end of Article 5 (except for the representation
and warranty contained in the third sentence of Section
5.5) shall expire and be of no further force and effect 18
months after the Closing Date, except with respect to
claims Buyer has previously asserted against Grace in
writing, setting forth with reasonable specificity the
nature of such claims. Neither the period of survival nor
the liability of Grace with respect to Grace's
representations and warranties shall be reduced by any
investigation made at any time by or on behalf of Buyer.
14.2A Environmental Indemnification.
(a) Notwithstanding any other provisions of this
Agreement, Grace shall indemnify and hold harmless the
Buyer Indemnified Group from and against all Environmental
Costs incurred by any member of the Buyer Indemnified Group
arising out of, incurred in connection with or relating to:
(i) On-Site Matters. (A) To the extent
required by Environmental Law in effect as of the Closing
Date or by a Governmental Authority implementing such law,
Cleanup of Hazardous Substances released into the
environment prior to the Closing Date onto or under any
properties or facilities being transferred to the Buyer
Group pursuant to this Agreement and onto or under adjacent
property to the extent such Hazardous Substances have
migrated to such adjacent property ("On-Site Property");
(B) Toxic Tort Claims, Chromium Claims
and Natural Resource Damage Claims relating to On-Site
Properties, provided that indemnification for Natural
Resource Damage Claims (including such Natural Resource
Damage Claims that relate to chromium compounds and salts
thereof) are limited to claims arising under Environmental
Laws that are in effect as of the Closing Date;
(ii) Formerly-Owned Property Matters.
(A) Cleanup of real property formerly owned by one of the
Selling Companies, Transferred Companies or Transferred
Joint Ventures as part of the Dearborn Business
("Formerly-Owned Property"), except indemnification shall
not be available for Hazardous Substances released or
disposed of at such real property by a member of the Buyer
Group, provided that this exception does not apply to such
release or disposal by the Transferred Companies or
Transferred Joint Ventures prior to the Closing Date;
(B) Toxic Tort Claims, Chromium Claims
and Natural Resource Damage Claims relating to
Formerly-Owned Properties;
(iii) Off-Site Matters. (A) Cleanup of
Hazardous Substances released at any location (other than
locations covered by subsections (a)(i), (ii), and (iv)
herein) ("Off-Site Properties") if such substances were
generated, used, stored, treated, transported, disposed of,
or released by or on behalf of the Dearborn Business or any
predecessor thereto prior to the Closing Date, except that
Grace shall not be obligated to provide indemnification
pursuant to this subsection for the Cleanup of Hazardous
Substances which were disposed of at such locations by any
member of the Buyer Group, provided that this exception
does not apply to such disposal by the Transferred
Companies or Transferred Joint Ventures prior to the
Closing Date;
(B) Toxic Tort Claims, Chromium Claims
and Natural Resource Damage Claims relating to Off-Site
Properties;
(iv) Customer Site Matters. (A) Cleanup of
Hazardous Substances, including Hazardous Substances
contained in products, purchased from or supplied by one of
the Selling Companies, Transferred Companies or Transferred
Joint Ventures of the Dearborn Business (or any predecessor
thereto) prior to the Closing Date, which were released
into the environment onto or under any property owned or
operated by the current or former customers of the Dearborn
Business (including, without limitation, storage tanks
owned or operated by the Dearborn Business or any
predecessor thereto at such locations) or onto or under
adjacent property to the extent such Hazardous Substances
have migrated to such adjacent property ("Customer Sites"),
or which were disposed of or transported from Customer
Sites ("Customer Disposal Sites");
(B) Toxic Tort Claims, Chromium Claims
and Natural Resource Damage Claims relating to Customer
Sites or Customer Disposal Sites; or
(v) Breach of Representations and
Warranties. Breach of or inaccuracy in any of the
representations or warranties stated in Section 5.14.
(b) Indemnification shall be available under
this Section 14.2A only with respect to those claims as to
which Claimant has provided a written notice to Grace
("Environmental Notice") during the periods specified in
this subsection (b). Such Environmental Notice must
include, based on reasonably available information, the
following: (i) location; (ii) types of Hazardous
Substances; (iii) the extent of any contamination, if
known; (iv) the impacted media, if known; and (v) a copy of
any notices filed with or received from any Governmental
Authority or other person, or if no such notice has been
filed or received, the basis upon which Claimant seeks
indemnification. Such Environmental Notice must be
provided prior to the fifth anniversary of the Closing Date
with respect to Cleanup, Toxic Tort Claims and Natural
Resource Damage Claims relating to On-Site Properties,
Customer Sites and Customer Disposal Sites, prior to the
expiration of the 18-month period following the Closing
Date with respect to claims covered by Section 14.2A(a)(v),
or at any time for any other claim covered by this Section
14.2A.
(c) Except as otherwise provided in Section
14.2A(e), the Buyer Indemnified Group shall not be eligible
for indemnification for claims covered by Section
14.2A(a)(i), except for claims for which the Environmental
Costs incurred by Claimant exceeds US $50,000 ("Covered
On-Site Claims"). Grace shall not be obligated to
reimburse the Buyer Indemnified Group unless and until the
aggregate Environmental Costs of such Covered On-Site
Claims exceeds US $6,000,000 (the "Environmental
Deductible"), and then only with respect to the excess of
such aggregate amount. Once the Environmental Deductible
has been exceeded, Grace shall reimburse the Buyer
Indemnified Group for each Covered On-Site Claim, except
for Chromium Claims, in accordance with the following and
based on the year in which the Environmental Notice of such
claim was filed:
(i) Grace shall reimburse 80% of all
Environmental Costs relating to claims made before the
first anniversary of the Closing Date;
(ii) Grace shall reimburse 60% of all
Environmental Costs relating to claims made on or after the
first but before the second anniversary of the Closing
Date;
(iii) Grace shall reimburse 60% of all
Environmental Costs relating to claims made on or after the
second anniversary but before the third anniversary of the
Closing Date;
(iv) Grace shall reimburse 40% of all
Environmental Costs relating to claims made on or after the
third anniversary but before the fourth anniversary of the
Closing Date;
(v) Grace shall reimburse 20% of all
Environmental Costs relating to claims made on or after the
fourth anniversary but before the fifth anniversary of the
Closing Date.
For claims filed before the first anniversary of the
Closing Date, this subsection shall apply to all Covered
On-Site Claims even if it is unclear whether the release
occurred prior to or subsequent to the Closing Date, except
that Buyer shall be solely responsible for releases that
are clearly identified as having occurred subsequent to the
Closing Date.
As to Chromium Claims that are also Covered On-Site
Claims, once the Environmental Deductible has been
exceeded, Grace shall reimburse the Buyer Indemnified Group
for 90% of all Environmental Costs related to such claims,
without respect to when the Environmental Notice for such
claim was submitted.
The Buyer Indemnified Group shall be responsible for
their allocation of Environmental Costs as set forth above
regarding each claim.
(d) (i) Indemnification by Grace for any breach
of Section 5.14 shall be as follows:
(A) any Environmental Costs related to
Cleanup at or related to On-Site Property shall be
allocated in accordance with Section 14.2A(c) above;
(B) limited to fines, penalties, legal
expenses and any other costs of defending any litigation or
administrative proceeding for such breaches related to
noncompliance with Environmental Law, except for matters
otherwise covered by subsection (d)(i)(A) above;
(C) any Environmental Costs related to
Section 14.2A(a)(iv) shall be allocated in accordance with
Section 14.2A(f).
(ii) With regard to subsection (d)(i)(B) and
all other claims related to any other breach of Section
5.14 not referred to in subsection(d)(i)(A) or (C) above,
the Buyer Indemnified Group shall not be eligible for
indemnification with respect to the breach of any
representation of Section 5.14(b)(i), (ii), or (iii) unless
and until the aggregate amount of all such Buyer
Indemnified Group's indemnified costs exceeds US
$1,000,000, and then only with respect to the excess of
such aggregate amount; except that such limits shall not
apply to breaches of environmental representations that
relate to matters covered by Section 14.2A(a)(ii) and
(iii).
(e) Notwithstanding the limitations set forth in
subsection 14.2A(c) above, to the extent that any On-Site
Property becomes listed on the NPL solely as a result of
the release of Hazardous Substances prior to the Closing
Date, Grace shall have responsibility for 100% of all
Environmental Costs related to the Cleanup on that property
commencing on the day the site s nomination to the NPL is
made final by publication in the Federal Register. Until
such time, the allocation set forth in Section 14.2A(c)
above shall be used. Grace, at its option, may assume
control of any project for which it has 100% responsibility
under this subsection.
(f) The Buyer Indemnified Group shall not be
eligible for indemnification under Section 14.2A(a)(iv),
unless and until the aggregate of all Environmental Costs
for which indemnification is sought exceeds US $10,000,000,
and then only with respect to 90% of the excess of such
aggregate.
(g) Grace's aggregate indemnity with respect to
(i) Cleanup, Toxic Tort Claims and Natural Resource Damage
Claims relating to On-Site Properties and Customer Sites;
(ii) Undisclosed Product Liabilities; and (iii) Undisclosed
Employee Liabilities, shall be limited to 10% of the Total
Purchase Price. This limitation does not apply to Chromium
Claims arising at or from any location or any claims
arising under Section 14.2A with respect to Formerly-Owned
Properties or Off-Site Properties.
(h) The dollar thresholds set forth in this
Section 14.2A have been negotiated for the special purpose
of the provisions 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.
14.3 Buyers' Indemnification.
(a) Subject to the terms and limitations of this
Article, the Buying Companies shall, jointly and severally,
indemnify and hold harmless the Selling Companies, their
Subsidiaries, directors, officers and employees (the "Grace
Indemnified Group"), as the case may be, from and against
all Damages incurred by any member of the Grace Indemnified
Group arising out of, incurred in connection with or
relating to (i) the breach by or non-performance of any
Buying Company, or subsequent to the Closing any
Transferred Company or Transferred Joint Venture, of any of
its covenants or agreements under this Agreement or any of
the other Transaction Documents, (ii) any breach of or
inaccuracy in any representation or warranty of Buyer set
forth in Article 6, (iii) the failure of any Transferred
Company or Transferred Joint Venture subsequent to the
Closing to perform or fulfill its obligations under any
contract, agreement or obligation for which any member of
the Grace Group is or may be liable, as a guarantor or
otherwise, (iv) any of the Total Dearborn Liabilities,
including, without limitation, any liability or obligation
relating to the Dearborn Business or the Total Dearborn
Assets based upon or arising under any Environmental Law,
except as may be otherwise provided in this Article 14, (v)
the Buyer Group's hiring practices and decisions with
respect to the Dearborn Business (including, but not
limited to, any claims by any Current Employee alleging he
or she was not hired or was terminated, on or after the
Closing Date in violation of U.S. or non-U.S. non-
discrimination laws), (vi) any claim concerning any aspect
of the employment or termination of employment, at or after
the Closing, of any Continued Dearborn Business Employee,
(vii) (Intentionally Omitted), (viii) any claim made by any
Dearborn Business Employee or any Transitional Services
Employee for any severance pay or other severance benefit,
including, but not limited to, any individual who becomes
entitled to such pay or benefits under the Grace Severance
Arrangement before, on or after the Closing Date and any
individual who under applicable law or otherwise is
entitled to severance upon dismissal by the Selling
Companies after refusing an offer to become an employee of
the Buyer Group, (ix) any change in the collective
organization or joint committees applicable to any
Continued Dearborn Business Employee that occurs at or
after the Closing, or applicable to any Transitional
Services Employee who commences employment with any member
of the Buyer Group that occurs on or after the date that
such employee commences such employment; (x) any claim made
by any Dearborn Business Employee based on any agreement
between the employee and any member of the Grace Group that
was in the ordinary course of business or (xi) any claim
under the U.S. Worker Adjustment and Retraining
Notification Act, 29 U.S.C.SECTIONSECTION 2101 et seq., or any
comparable U.S., state or non-U.S. law arising out of any
actions taken by the Buyer Group at or after the Closing or
as a result of the transactions contemplated by this
Agreement.
(b) The representations and warranties of Buyer
set forth in Article 6 shall survive the Closing.
14.4 Limitations.
(a) The Buying Companies and the other members
of the Buyer Group may not assert any claim for
indemnification under this Article (a "Buyers Claim") with
respect to the breach of or inaccuracy in any
representation or warranty in Section 5.5 through Section
5.13 and Section 5.15 through the end of Article 5 unless
and until the aggregate amount of all such Buyers' Claims
give rise to Damages that exceed US $10,000,000 and then
only with respect to the excess of such aggregate Buyers'
Claims over US $10,000,000; provided, however, that this
Section 14.4 shall not apply to (i) any indemnification by
Grace for any Damages asserted against, imposed upon or
incurred by the breach or inaccuracy in any representations
and warranties contained in Section 5.17 (Brokers).
(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.
(c) Any payment by Buyer (or a Member of the
Buyer Group) or Grace (or a Member of the Grace Group)
under this Article 14 will be treated as an adjustment to
the Total Purchase Price; provided, however, that to the
extent it cannot be so characterized for tax purposes or if
such indemnification occurs after the expiration of the
statute of limitations for the 1996 taxable year, the
recipient of any such payment shall be entitled to an
additional payment to cover Taxes on the payment less any
allowable Tax deductions attributable to payment of the
indemnified claim.
14.5 Defense of Third Party Claims.
(a) The Buying Companies shall, and shall cause
the other members of the Buyer Group to, notify Grace in
writing promptly after a Third Party Claim is asserted
against or sought to be collected from any member of the
Buyer Group for which the Grace Group may be liable under
this Agreement, or which is to be taken into account for
purposes of the dollar thresholds in Sections 14.2A or
14.4. The Selling Companies shall, and shall cause the
other members of the Grace Group to, notify Buyer in
writing promptly after a Third Party Claim is asserted
against or sought to be collected from any member of the
Grace Group for which the Buyer Group may be liable 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 the dollar thresholds under Sections 14.2A or
14.4, that the entity seeking indemnification or to have
such claim taken into account (the "Claimant") notify Grace
on behalf of the Grace 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 Grace Group, prior to
the time when the notice recipient's ability to contest the
Third Party Claim would be materially impaired by lack of
notice. If a Buyer Group Claimant fails to give such
notice of a Third Party Claim and such Claimant's failure
to provide such notice has materially prejudiced the
indemnifying party's ability to defend the Third Party
Claim, then all members of the Buyer Group shall be deemed
to have waived all rights to indemnification with respect
to such Third Party Claim. If a Grace Group Claimant fails
to give such notice of a Third Party Claim and such
Claimant's failure to provide such notice has materially
prejudiced the indemnifying party's ability to defend the
Third Party Claim, then all members of the Grace Group
shall be deemed to have waived all rights to
indemnification with respect to such Third Party Claim.
(b) Except as otherwise provided in Section
14.5(d), Grace, or any other member of the Grace Group, may
undertake the defense of a Third Party Claim that the Buyer
Group has notified Grace of, by notice to Buyer not later
than 60 calendar days after receipt by Grace of the Buyer
Group's notice of the claim. Failure on the part of the
Grace Group to so notify Buyer that it will undertake such
defense shall be deemed to be a waiver of the Grace Group's
right to undertake such defense. If the Grace Group
undertakes the defense of any Third Party Claim, it shall
control the investigation and defense thereof, except that
the Grace Group shall not require any member of the Buyer
Group, without its prior written consent, to take or
refrain from taking any action in connection with such
Third Party Claim, or make any public statement, that it
reasonably considers to be against its interest, nor shall
the Grace Group, without the prior written consent of
Buyer, consent to any settlement that (i) requires any
member of the Buyer Group to make any payment that is not
fully indemnified under this Agreement or taken into
account under Sections 14.2A or 14.4; and (ii) does not
include as an unconditional term thereof the giving by the
claimant or the plaintiff to the relevant member of the
Buyer Indemnified Group against whom such Third Party Claim
is asserted, a release from all liability in respect of
such Third Party Claim or (iii) provides for any
nonmonetary damages which would materially adversely affect
the Dearborn Business; and subject to the Grace Group's
control rights, the Buyer Group may participate in such
investigation and defense, at its own expense, except as
otherwise provided in Section 14.5(d) herein. If the Grace
Group does not undertake the defense of a tendered Third
Party Claim, then except as otherwise provided in Section
14.5(d), the Buyer Group shall control such investigation
and defense, except that the Buyer Group shall not require
a member of the Grace Group, without its prior written
consent, to take or refrain from taking any action in
connection with such Third Party Claim, or make any public
statement, that such entity reasonably considers to be
against its interest, nor shall the Buyer Group, without
the prior written consent of Grace, consent to any
settlement; and subject to the Buyer Group's control
rights, the Grace Group may participate in such
investigation and defense, at its own expense.
(c) Except as otherwise provided in Section
14.5(d), Buyer, or any other member of the Buyer Group, may
undertake the defense of a Third Party Claim that the Grace
Group has notified Buyer of, by notice to Grace not later
than 60 calendar days after receipt by Buyer of the Grace
Group's notice of the claim. Failure on the part of the
Buyer Group to so notify Grace 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, it shall
control such investigation and defense, except that the
Buyer Group shall not require any member of the Grace
Group, without its prior written consent, to take or
refrain from taking any action in connection with such
Third Party Claim, or make any public statement, that it
reasonably considers to be against its interest, nor shall
the Buyer Group, without the prior written consent of
Grace, (i) consent to any settlement that requires any
member of the Grace Group to make any payment that is not
fully indemnified under this Agreement; (ii) does not
include as an unconditional term thereof the giving by the
claimant or the plaintiff to the relevant member of the
Grace Indemnified Group against whom such Third Party Claim
is asserted, a release from all liability in respect of
such Third Party Claim or (iii) provides for any
nonmonetary damages which materially adversely affect the
business conducted by the Grace Group other than the
Dearborn Business and subject to the Buyer Group's control
rights, the Grace Group may participate in such
investigation and defense, at its own expense, except as
otherwise provided in Section 14.5(d). If the Buyer Group
does not undertake the defense of a tendered Third Party
Claim, then except as otherwise provided in Section
14.5(d), the Grace Group shall control such investigation
and defense, except that the Grace Group shall not require
a member of the Buyer Group, without its prior written
consent, to take or refrain from taking any action in
connection with such Third Party Claim, or make any public
statement, that such entity reasonably considers to be
against its interest, nor shall the Grace Group, without
the prior written consent of Buyer, consent to any
settlement; and subject to the Grace Group's control
rights, the Buyer Group may participate in such
investigation and defense, at its own expense.
(d) If a conflict of interest exists or is
reasonably likely to exist between the Grace Group and the
Buyer Group with respect to a Third Party Claim that would
make it inappropriate in the judgment of the Claimant in
its reasonable discretion for the same counsel to represent
both the Claimant and the indemnifying party, then neither
group shall be entitled to assume the defense thereof. In
such event the Buyer Group and the Grace 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 Grace Group is required to indemnify the
Buyer Group with respect to such Third Party Claim, 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 Grace Group with respect to such
Third Party Claim, it shall pay the reasonable attorneys'
fees and expenses of the individual or firm representing
the Grace Group with respect thereto.
(e) The Buying Companies shall, and shall cause
the other members of the Buyer Group to, and the Selling
Companies shall, and shall cause the other members of the
Grace 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 as may reasonably be
required in connection with the investigation and defense
thereof.
14.6 No Consequential or Lost Profit Damages for
Breaches of Representations for Direct Claims. No party to
this Agreement, nor any other member of the Grace Group or
the Buyer Group, shall seek or be entitled to incidental,
indirect or consequential damages or damages for lost
profits in any claim for indemnification in a Direct Claim
based upon a breach of or inaccuracy in the representations
and warranties contained in Article 6 or Article 5,
respectively. Nothing set forth herein will otherwise
limit either party to this Agreement or any other member of
the Grace Group or the Buyer Group from seeking or being
entitled to incidental, indirect or consequential damages
or damages for lost profits (i) in connection with any
other breach of this Agreement or (ii) if such damages are
payable to a third party in connection with a Third Party
Claim.
14.7 No Duplication. In the event that any
circumstance which results in an adjustment to the Total
Purchase Price, or would result in such an adjustment but
for the limitations of Section 4.A (c)(iii)(A) or (B),
would also constitute a breach of any representation or
warranty by Grace under Article 5, the Selling Companies
shall have no obligation to indemnify the Buying Companies
with respect to such breach except pursuant to such
adjustment.
14.8 Vacation Pay. Grace will indemnify Buyer in
accordance with the terms set forth on the Schedule to this
Section 14.8.
ARTICLE 15
COOPERATION IN VARIOUS MATTERS
15.1 Mutual Cooperation. After the Closing, each
party to this Agreement shall, and shall cause its
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 Dearborn Business. Such
cooperation shall include furnishing testimony and other
evidence, permitting access to employees and providing
information regarding the whereabouts of former employees.
The requesting party shall reimburse the other party for
any out-of-pocket expenses incurred by it in connection
with such request and owed to third parties.
15.2 Preservation of Buying Companies' Files and
Records. Except for books and records relating to Taxes
which shall be addressed in the Tax Procedures Agreement,
following the Closing, the Buying Companies shall, and
shall cause the other members of the Buyer Group to,
preserve all files and records in their possession relating
to the Dearborn Business prior to the Closing, allow the
Grace 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 of such files
or records that are less than ten years old, except that at
any time after the third anniversary of the Closing, any
member of the Buyer Group may give Grace written notice of
its intention to dispose of any files or records that are
more than five years old, specifying the items to be
disposed of in reasonable detail. Any member of the Grace
Group may, within a period of sixty days after Grace's
receipt of any such notice, notify Buyer of the Grace
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 Grace Group, deliver to such member of
the Grace Group, at Grace's expense, the items that the
Grace Group has elected to retain.
15.3 Preservation of Selling Companies' Files and
Records. Except for books and records relating to Taxes
which shall be addressed in the Tax Procedures Agreement,
following the Closing, the Selling Companies shall, and
shall cause the other members of the Grace Group to,
preserve all files and records in their possession relating
to the Dearborn 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 of such files
or records that are less than ten years old, except that at
any time after the third anniversary of the Closing, any
member of the Grace Group may give Buyer written notice of
its intention to dispose of any files or 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 sixty days after Buyer's
receipt of any such notice, notify Grace of the Buyer
Group's desire to retain one or more of the items to be
disposed of. Grace shall, upon receipt of such a notice
from a member of the Buyer Group, deliver to such member of
the Buyer Group, at Buyer's expense, the items that the
Buyer Group has elected to retain.
15.4 Publicity. Except as otherwise may be required
by law, neither party shall make an initial public
statement (including, without limitation, any press
release) with respect to this Agreement and the other
Transaction Documents, and the transactions contemplated
hereby and thereby, without the prior written consent of
the other party, which consent shall not be unreasonably
withheld or delayed. After the initial public statement,
either party shall have the right to make public statements
regarding this transaction without the consent of such
other party.
ARTICLE 16
POST-CLOSING MATTERS
16.1 Reports. Other than information relating to
Taxes which shall be addressed in the Tax Procedures
Agreement, the Buying Companies shall, and shall cause the
Transferred Companies (and to the extent the Buying
Companies have the right to do so, the Transferred Joint
Ventures) and their respective employees to, prepare on a
timely basis, in accordance with the instructions of the
Grace Group, such financial and other reports and
statements relating to the Dearborn Business, the
Transferred Companies or the Transferred Joint Ventures for
periods prior to the Closing as may be reasonably requested
by Grace.
16.2 Renewal of Guaranteed Items. Without the prior
written consent of the Treasurer or any Assistant Treasurer
of Grace, the Buying Companies shall not, and shall not
permit the Transferred Companies (or, to the extent the
Buying Companies have the right to do so, the Transferred
Joint Ventures) or any other member of the Buyer Group to,
renew or extend the term of, increase its obligations
under, or transfer to a third party, any lease, loan,
contract or other obligation for which Grace or any other
member of the Grace Group is or may be liable, as
guarantor, original tenant, primary obligor, or otherwise,
unless all obligations of the Grace Group with respect
thereto are thereupon terminated by documentation
satisfactory in form and substance to Grace.
16.3 Payment and Discharge of Certain Intercompany
Liabilities.
(a) Surviving Intercompany Accounts that are not
between units of the Dearborn Business shall be paid in
cash, regardless of whether prior to the Closing such items
would have been settled by cash payment or by other means,
at the earlier of (i) 30 calendar days after receipt of an
invoice therefor or (ii) the time payment is made pursuant
to Section 4.7, other than the account receivable from the
Dearborn Japan J.V. by Grace Japan KK which shall remain in
effect pursuant to its terms. Except for Surviving
Intercompany Accounts and as otherwise specifically
provided in the Ancillary Agreements, any amounts owed by
any member of the Grace Group to any Transferred Company or
Transferred Joint Venture, or by any Transferred Company or
Transferred Joint Venture to any other member of the Grace
Group shall be deemed paid and discharged, effective upon
the occurrence of the Closing.
(b) All checks written by Dearborn U.S. in the
ordinary course of business prior to the Closing will be
honored by Grace and all obligations of Dearborn U.S. to
reimburse Grace for such checks shall be deemed paid and
discharged, effective as of the Closing. All funds in the
depository accounts of Dearborn U.S. on the Closing Date
shall be the property of Grace, except for a disbursement
account and an imprest payroll account, each of which shall
have a balance of US $1,000.00 at the Closing and
signatories designated by Buyer U.S.
(c) At Grace s request at any time and from time
to time after the Closing, Buyer shall cause Dearborn U.S.
to promptly reimburse Grace for any amounts paid directly
by the Grace Group after the Closing to third parties on
account of expenses incurred prior to the Closing that
relate directly and exclusively to the Dearborn Business.
16.4 Use of "Grace" Name. Within 90 days after the
Closing, (a) Grace Dearborn, N.V., Dearborn Canada,
Dearborn France, Dearborn Netherlands and Dearborn Sweden
shall each change its corporate name to a name that does
not include the name "Grace" and initiate any necessary
legal filings with the appropriate Governmental Authority
to effectuate a name change and (b) the Transferred
Companies, Transferred Joint Ventures and Buying Companies
shall have no right to use the "Grace" name, except that
for a period ending on the later to occur of (i) six months
after the Closing or (ii) November 30, 1996, the
Transferred Companies, Transferred Joint Ventures and
Buying Companies shall have the right to use any
catalogues, sales and promotional materials and printed
forms that use such name and are included in the Total
Dearborn Assets or the assets of any Transferred Company or
Transferred Joint Venture as of the Closing, or that have
been ordered prior to the Closing for use in the Dearborn
Business, but only to the extent that it is not practicable
to remove or cover up the "Grace" name; provided, however,
Buyer shall move as expeditiously as possible to cancel
registrations with the appropriate Governmental Authorities
to effectuate such name change. The Buying Companies shall
use reasonable efforts to minimize such usage and to
discontinue it as soon as practicable after the Closing.
16.5 Intercompany Agreements. Except for the
Intellectual Property License and Assignment Agreement
between Grace and Dearborn U.S. dated as of November 30,
1995, the agreements between Grace and other members of the
Grace Group that have been assigned to Dearborn U.S.
thereunder, the other agreements entered into between
members of the Grace Group and Dearborn U.S. in connection
with the transfer to Dearborn U.S. of the Dearborn Business
in the United States and the Ancillary Agreements, (a) all
contracts, licenses, agreements, commitments or other
arrangements between Grace or any other member of the Grace
Group and any Transferred Company, Transferred Joint
Venture or the Dearborn Business unit of any Selling
Company, whether written or oral, and whether express or
implied, pursuant to which Grace (or any other member of
the Grace Group) provides management, administrative,
legal, financial, accounting, data processing, insurance,
technical support, or other services to the Dearborn
Business or such Transferred Company or Transferred Joint
Venture, or the use of any assets of any member of the
Grace Group, or pursuant to which rights, privileges or
benefits are accorded to the Dearborn Business or any
Transferred Company or Transferred Joint Venture as a unit
of the Grace Group, shall terminate as of the Closing, and
(b) after the Closing, the Buying Companies, the
Transferred Companies and the Transferred Joint Ventures
shall have no rights under any similar contract, license,
agreement, commitment or arrangement with Grace (or any
other member of the Grace Group).
16.6 Parent Guaranty. As soon as possible after the
NMC Divestment (as defined herein), Grace shall obtain and
deliver a guaranty from WRG-DE (as defined herein) of the
full payment and performance of the obligations of Grace
under this Agreement and the Transaction Documents, which
guaranty shall be in form and substance reasonably
satisfactory to Buyer. Upon receipt of such guaranty, the
guaranty of WRG contained in this Agreement shall be of no
further force and effect. For purposes of this Agreement,
(i) "NMC Divestment" shall mean a transaction of which the
primary purpose is Grace's divestment of its Subsidiary,
National Medical Care, Inc., or to cause Grace and National
Medical Care, Inc. to no longer be under common control;
and (ii) "WRG-DE" shall mean Grace Holdings, Inc., a
Delaware corporation, or any other public company owning
all of the capital stock of Grace following the NMC
Divestment.
ARTICLE 17
EXPENSES
17.1 Buyers' Expenses. Whether or not the
transactions contemplated hereby are consummated, Buyer
shall (i) pay and indemnify the 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, the fees and expenses of J.P. Morgan & Co.
and all fees and expenses of brokers, finders, agents,
representatives, counsel and accountants and (ii) pay one-
half of: all recording and filing fees and other costs and
expenses (other than Taxes which shall be paid in
accordance with procedures set forth in the Tax Procedures
Agreement) incurred in connection with the filing with a
Governmental Authority (either domestic or foreign)
pursuant to Section 8.2 hereof or otherwise, including,
without limitation, notarial filings and similar fees
applicable to the transfer to the Buying Companies of the
Total Dearborn Assets, the Transferred Shares or the
Transferred Interests pursuant to this Agreement.
17.2 Sellers' Expenses. Whether or not the
transactions contemplated hereby are consummated, Grace
shall (i) pay and indemnify the 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, the fees and expenses of Merrill Lynch
Pierce Fenner & Smith Incorporated and all fees and
expenses of brokers, finders, agents, representatives,
counsel and accountants and (iii) pay one-half of: all
recording and filing fees and other costs and expenses
(other than Taxes which shall be paid in accordance with
procedures set forth in the Tax Procedures Agreement)
incurred in connection with the filing with a Governmental
Authority (either domestic or foreign) pursuant to Section
8.2 hereof or otherwise, including, without limitation,
notarial filings and similar fees applicable to the
transfer to the Buying Companies of the Total Dearborn
Assets, the Transferred Shares or the Transferred Interests
pursuant to this Agreement.
ARTICLE 18
NOTICES
18.1 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 courier service or by telephone facsimile
transmission (as evidenced by a confirmed receipt),
addressed as follows:
If to any of the Selling Companies or, prior to the
Closing, any of the Transferred Companies or
Transferred Joint Ventures:
c/o W. R. Grace & Co.-Conn.
One Town Center Road
Boca Raton, Florida 33486-1010
Attention: Larry Ellberger
Fax: (407) 362-2153
with a copy to:
W. R. Grace & Co.-Conn.
One Town Center Road
Boca Raton, Florida 33486-1010
Attention: Secretary
Fax: (407) 362-1635
If to any of the Buying Companies or, after the
Closing, any of the Transferred Companies or
Transferred Joint Ventures:
c/o Betz Laboratories, Inc.
4636 Somerton Road
Trevose, Pennsylvania 19053
Attention: Larry B. Rankin
Fax: (215) 953-2484
with a copy to:
Betz Laboratories, Inc.
4636 Somerton Road
Trevose, Pennsylvania 19053
Attention: General Counsel
Fax: (215) 953-5536
Any Selling Company or, prior to the Closing, any
Transferred Company or Transferred Joint Venture 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. Any Buying Company or, after the Closing,
any Transferred Company or Transferred Joint Venture may
change the address to which such communications are to be
directed to it by giving written notice to Grace in the
manner provided above.
ARTICLE 19
GENERAL
19.1 Entire Agreement. This Agreement, including the
Schedules hereto, and the other Transaction Documents 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.
19.2 Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of New York,
excluding (a) any conflict-of-laws provisions thereof that
would otherwise require the application of the law of any
other jurisdiction, and (b) if applicable, the United
Nations Convention on Contracts for the International Sale
of Goods.
19.3 Submission to Jurisdiction. Each Buying Company
and Selling Company hereby irrevocably submits in any suit,
action or proceeding arising out of or relating to this
Agreement or any of the other Transaction Documents to
which it is or will be a party, or any of its obligations
hereunder or thereunder, to the jurisdiction of the United
States District Court for the Southern District of New York
and the jurisdiction of any court of general jurisdiction
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 this
Agreement or any other Transaction Document specifically
provides that a particular dispute is to be referred to a
court in another jurisdiction or to resolution by
arbitration or experts.
19.4 Governing Language. This Agreement in the
English language shall be the definitive and controlling
text, notwithstanding any translation into another
language.
19.5 Successors; No Third-Party Beneficiaries. This
Agreement shall not be assignable by either party hereto
except with the prior written consent of the other;
provided, however, that the Buying Companies may transfer
or assign, in whole or from time to time in part, to one or
more of their Subsidiaries, the right to purchase all or a
portion of the Total Dearborn Assets, Transferred Shares,
Transferred Interests and the Transferred Investment, but
no such transfer or assignment shall relieve Buyer of its
obligations hereunder. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns. Nothing
in this Agreement, expressed or implied, is intended to
confer upon any Person (including any employee or former
employee) other than the Buying Companies, the Selling
Companies or their successors and permitted assigns, any
rights or remedies under or by reason of this Agreement.
Further, no provision of this Agreement shall create any
such rights in any such Persons in respect to any benefits
that may be provided, directly or indirectly, under any
employee compensation and benefit plans, programs, policies
and arrangements (to include fringe benefits) or any plan
or arrangement which may be established by Buyer or any of
its affiliates.
19.6 Amendments and Waivers. This Agreement may be
amended, superseded or terminated, 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 terminates 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.
19.7 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.
19.8 Captions. The captions used in this Agreement
are for convenience of reference only and shall not be
considered in the interpretation of the provisions hereof.
IN WITNESS WHEREOF, the parties have executed this
instrument on the date first above written.
W. R. GRACE & CO.-CONN. BETZ LABORATORIES, INC.
By: /s/ Larry Ellberger By: /s/ Larry V. Rankin
Name: Larry Ellberger Name: Larry V. Rankin
Title: Senior Vice President Title: Senior Vice President
W. R. Grace & Co., a New York corporation ("WRG"), hereby
unilaterally and unconditionally guarantees the full payment and
performance of all obligations of W. R. Grace & Co.-Conn., a
Connecticut corporation and a wholly owned subsidiary of WRG,
under this Agreement and the Transaction Documents.
W. R. GRACE & CO.
By: /s/ Larry Ellberger
Name: Larry Ellberger
Title: Senior Vice President
LOCAL FINANCING EXHIBIT
COUNTRIES ELIGIBLE FOR LOCAL FINANCING
Australia
Belgium
Brazil
Canada
Columbia
Finland
France
Germany
Italy
Netherlands
Spain
Sweden
United Kingdom
United States
TABLE OF CONTENTS
Section Page
Article 1 Definitions . . . . . . . . . . . . . . . . . . . . 2
Article 2 Sale of Dearborn Business, Purchase Price . . . . . 15
2.1 Sale of Business . . . . . . . . . . . . . . . . . 15
2.2 Total Purchase Price . . . . . . . . . . . . . . . 16
2.3 Local Purchase Prices . . . . . . . . . . . . . . . 16
2.4 Exchange Rates . . . . . . . . . . . . . . . . . . 17
2.5 Special Purchase Price Adjustment . . . . . . . . . 17
Article 3 Closing . . . . . . . . . . . . . . . . . . . . . . 21
3.1 Scheduled Closing Date . . . . . . . . . . . . . . 21
3.2 Time and Place of Closing, Simultaneity . . . . . . 21
3.3 Conveyances at the Closing; Payments . . . . . . . 21
3.4 Ancillary Agreements . . . . . . . . . . . . . . . 23
3.5 Intentionally Omitted . . . . . . . . . . . . . . . 24
3.6 Method of Closing Payments . . . . . . . . . . . . 24
3.7 Further Assurances of the Selling Companies . . . . 26
3.8 Further Assurances of the Buying Companies . . . . 26
3.8A Total Excluded Assets and Total Excluded
Liabilities . . . . . . . . . . . . . . . . . . . 27
Article 4 Purchase Prices; Post-Closing Adjustments . . . . . 27
4.1 Physical Inventory Count; Closing of Books . . . . 27
4.2 Definitions . . . . . . . . . . . . . . . . . . . . 28
4.3 Computations . . . . . . . . . . . . . . . . . . . 29
4.4 Closing Statement . . . . . . . . . . . . . . . . . 30
4.A Pre-Closing Financial Statements Price
Adjustments . . . . . . . . . . . . . . . . . . . 30
4.AA Post-Closing Financial Statement Price Adjustment . 31
4.5 Acceptance . . . . . . . . . . . . . . . . . . . . 32
4.6 Non-Acceptance, Resolution of Disputes . . . . . . 32
4.B Pre-Closing Adjustment for Certain Additional
Liabilities . . . . . . . . . . . . . . . . . . . 34
4.C Adjustment for Certain Conveyancing Problems . . . 35
4.D Termination Option . . . . . . . . . . . . . . . . 35
4.7 Payment of Adjustments . . . . . . . . . . . . . . 36
Article 5 Representations by Grace . . . . . . . . . . . . . 38
5.1 Grace Corporate Status and Authority . . . . . . . 38
5.2 Transferred Companies' Organizational Status and
Capitalization . . . . . . . . . . . . . . . . . . 39
5.3 Transferred Joint Ventures - Corporate Status and
Capitalization . . . . . . . . . . . . . . . . . . 41
5.4 No Conflict . . . . . . . . . . . . . . . . . . . . 42
5.5 Absence of Title Claims . . . . . . . . . . . . . . 42
5.6 Financial Statements . . . . . . . . . . . . . . . 44
5.7 Intentionally Omitted . . . . . . . . . . . . . . . 44
5.8 Litigation . . . . . . . . . . . . . . . . . . . . 44
5.9 Asset Disposition or Loss . . . . . . . . . . . . . 45
5.10 Insurance . . . . . . . . . . . . . . . . . . . . . 45
5.11 Contracts . . . . . . . . . . . . . . . . . . . . . 46
5.12 Labor and Employment . . . . . . . . . . . . . . . 47
5.13 Employee Benefit Plans . . . . . . . . . . . . . . 48
5.14 Environmental Compliance . . . . . . . . . . . . . 49
5.15 Intellectual Property . . . . . . . . . . . . . . . 50
5.16 Non-Environmental Licenses and Permits . . . . . . 53
5.17 Brokers and Finders . . . . . . . . . . . . . . . . 54
5.18 No Undisclosed Liabilities . . . . . . . . . . . . 54
5.19 Assets Necessary for Conduct of the Dearborn
Business . . . . . . . . . . . . . . . . . . . . . 54
5.20 Accounts Receivable . . . . . . . . . . . . . . . . 54
5.21 Inventory . . . . . . . . . . . . . . . . . . . . . 55
5.22 Disclosure . . . . . . . . . . . . . . . . . . . . 55
5.23 Other Matters . . . . . . . . . . . . . . . . . . . 55
Article 6 Representations of Buyer . . . . . . . . . . . . . 55
6.1 Buying Companies' Corporate Status . . . . . . . . 55
6.2 No Conflict . . . . . . . . . . . . . . . . . . . . 56
6.3 Sufficient Funds . . . . . . . . . . . . . . . . . 57
6.4 Brokers and Finders . . . . . . . . . . . . . . . . 57
Article 7 Investigation by the Buying Companies . . . . . . . 57
7.1 Investigation . . . . . . . . . . . . . . . . . . . 57
7.2 Financial Information . . . . . . . . . . . . . . . 57
7.3 No Additional Representations . . . . . . . . . . . 57
Article 8 Covenants of the Selling Companies and the Buying
Companies . . . . . . . . . . . . . . . . . . . . 58
8.1 Access and Inquiry . . . . . . . . . . . . . . . . 58
8.2 Hart-Scott and Other Filings . . . . . . . . . . . 58
8.3 Intentionally Omitted . . . . . . . . . . . . . . . 59
8.4 Notices to Third Parties . . . . . . . . . . . . . 59
8.5 Reorganization of Dearborn Business in Brazil and
Sweden . . . . . . . . . . . . . . . . . . . . . . 60
8.6 Reasonable Best Efforts . . . . . . . . . . . . . . 60
8.7 Intentionally Omitted . . . . . . . . . . . . . . . 61
8.8 Covenant Not to Compete; No Solicitation . . . . . 61
8.9 Notification of Certain Matters . . . . . . . . . . 62
8.10 Resignations . . . . . . . . . . . . . . . . . . . 63
8.11 Confidentiality Agreements . . . . . . . . . . . . 63
8.12 Work's Council . . . . . . . . . . . . . . . . . . 63
Article 9 Conduct of Business Prior to the Closing . . . . . 63
9.1 Operation in Ordinary Course . . . . . . . . . . . 64
9.2 Disposition of Assets . . . . . . . . . . . . . . . 64
9.3 Material Agreements . . . . . . . . . . . . . . . . 64
9.4 Relations with Customers and Suppliers . . . . . . 66
9.5 Satisfaction of Debt . . . . . . . . . . . . . . . 66
Article 10 Conditions Precedent to the Obligations of the
Buying Companies . . . . . . . . . . . . . . . . 66
10.1 Intentionally Omitted . . . . . . . . . . . . . . . 66
10.2 Performance of Covenants and Agreements . . . . . . 66
10.3 Hart-Scott-Rodino Act and Other Governmental
Approvals . . . . . . . . . . . . . . . . . . . . 66
10.4 Certificate of Grace . . . . . . . . . . . . . . . 67
10.5 Litigation . . . . . . . . . . . . . . . . . . . . 67
Article 11 Conditions Precedent to the Obligations
of the Selling Companies . . . . . . . . . . . . 67
11.1 Intentionally Omitted . . . . . . . . . . . . . . . 67
11.2 Performance of Covenants and Agreements . . . . . . 67
11.3 Hart-Scott-Rodino Act and Other Governmental
Approvals . . . . . . . . . . . . . . . . . . . . 68
11.4 Intentionally Omitted . . . . . . . . . . . . . . . 68
11.5 Litigation . . . . . . . . . . . . . . . . . . . . 68
11.6 Certificate of Buyer . . . . . . . . . . . . . . . 68
Article 12 Employee Matters . . . . . . . . . . . . . . . . 69
12.1 Employees of Transferred Companies and Transferred
Joint Ventures . . . . . . . . . . . . . . . . . . 69
12.2 Current, Continued and Transitional Service
Employees . . . . . . . . . . . . . . . . . . . . 69
12.3 Positions Offered to Current Employees . . . . . . 70
12.4 Employee Benefit Plans . . . . . . . . . . . . . . 70
12.5 Vacation . . . . . . . . . . . . . . . . . . . . . 71
12.6 Severance Arrangements . . . . . . . . . . . . . . 72
12.7 Post-Closing Severance Benefits For Salaried
Dearborn Business Employees . . . . . . . . . . . 73
12.8 Executive Compensation . . . . . . . . . . . . . . 75
12.9 Inactive Current Employees . . . . . . . . . . . . 76
12.10 Expatriate Employees . . . . . . . . . . . . . . 76
12.11 Terms of Employment . . . . . . . . . . . . . . . 76
12.12 Recognition of Seniority . . . . . . . . . . . . 77
12.13 Employee Information Sharing . . . . . . . . . . 77
12.14 Transfer of Employees of the Brazilian Business . 77
Article 13 Termination . . . . . . . . . . . . . . . . . . . 77
13.1 Rights to Terminate . . . . . . . . . . . . . . . . 77
13.2 Consequences of Termination . . . . . . . . . . . . 78
Article 14 Indemnification . . . . . . . . . . . . . . . . . 78
14.1 Definitions . . . . . . . . . . . . . . . . . . . . 78
14.2 Sellers' Indemnification . . . . . . . . . . . . . 79
14.2A Environmental Indemnification . . . . . . . . . . 79
14.3 Buyers' Indemnification . . . . . . . . . . . . . . 84
14.4 Limitations . . . . . . . . . . . . . . . . . . . . 86
14.5 Defense of Third Party Claims . . . . . . . . . . . 86
14.6 No Consequential or Lost Profit Damages for
Breaches of Representations for Direct Claims . . 90
14.7 No Duplication . . . . . . . . . . . . . . . . . . 90
14.8 Vacation Pay . . . . . . . . . . . . . . . . . . . 90
Article 15 Cooperation in Various Matters . . . . . . . . . 91
15.1 Mutual Cooperation . . . . . . . . . . . . . . . . 91
15.2 Preservation of Buying Companies' Files and
Records . . . . . . . . . . . . . . . . . . . . . 91
15.3 Preservation of Selling Companies' Files and
Records . . . . . . . . . . . . . . . . . . . . . 91
15.4 Publicity . . . . . . . . . . . . . . . . . . . . . 92
Article 16 Post-Closing Matters . . . . . . . . . . . . . . 92
16.1 Reports . . . . . . . . . . . . . . . . . . . . . . 92
16.2 Renewal of Guaranteed Items . . . . . . . . . . . . 92
16.3 Payment and Discharge of Certain Intercompany
Liabilities . . . . . . . . . . . . . . . . . . . 93
16.4 Use of "Grace" Name . . . . . . . . . . . . . . . . 94
16.5 Intercompany Agreements . . . . . . . . . . . . . . 94
16.6 Parent Guaranty . . . . . . . . . . . . . . . . . . 95
Article 17 Expenses . . . . . . . . . . . . . . . . . . . . 95
17.1 Buyers' Expenses . . . . . . . . . . . . . . . . . 95
17.2 Sellers' Expenses . . . . . . . . . . . . . . . . . 96
Article 18 Notices . . . . . . . . . . . . . . . . . . . . . 96
18.1 Notices. . . . . . . . . . . . . . . . . . . . . . 96
Article 19 General . . . . . . . . . . . . . . . . . . . . . 98
19.1 Entire Agreement . . . . . . . . . . . . . . . . . 98
19.2 Governing Law . . . . . . . . . . . . . . . . . . . 98
19.3 Submission to Jurisdiction . . . . . . . . . . . . 98
19.4 Governing Language . . . . . . . . . . . . . . . . 98
19.5 Successors; No Third-Party Beneficiaries . . . . . 98
19.6 Amendments and Waivers . . . . . . . . . . . . . . 99
19.7 Counterparts . . . . . . . . . . . . . . . . . . . 99
19.8 Captions. . . . . . . . . . . . . . . . . . . . . . 99
