SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
January 21, 1999
Date of Report (Date of earliest event reported)
Crompton & Knowles Corporation
(Exact name of registrant as specified in its charter)
Massachusetts
(State or other jurisdiction of incorporation or organization)
No. 1-4663
(Commission File Number)
04-1218720
(I.R.S. Employer Identification No.)
One Station Place, Metro Center
Stamford, Connecticut
(address of principal executive offices)
06902
(Zip Code)
(203) 353-5400
(Registrant's telephone number, including area code)
Item 2. Acquisition or disposition of assets.
On November 20, 1998, the Registrant and Bayer AG, Germany,
represented by its United States subsidiary, Bayer Corporation
("Bayer") concluded agreements to form joint ventures to serve
the agricultural seed treatment markets in Canada, Mexico and the
United States. The business previously operated by Gustafson
Inc. ("Gustafson"), a unit of Uniroyal Chemical Company, Inc.
("Uniroyal Chemical"), a wholly owned subsidiary of the
Registrant, forms the basis of the 50/50 joint ventures. Bayer
acquired its 50 percent interest in the seed treatment joint
ventures for $180 million. The U.S. joint venture will be
headquartered in Plano, Texas under the former Gustafson
management.
The transaction resulted in a pre-tax gain to the Registrant of
approximately $150 million after giving effect to net assets
transferred of approximately $25 million and certain closing
costs. The impact on annual sales of the Registrant will be a
reduction of approximately $100 million.
The crop protection businesses of Uniroyal Chemical and Bayer
will continue to operate independently, except for these seed
treatment joint ventures.
Item 7. Financial Statements and Exhibits.
(c) Exhibits. The exhibit number set forth below corresponds to
the number assigned to such exhibit in the Exhibit Table to
Regulation S-K of the Securities Exchange Act of 1934.
Exhibit Number Description
2.1 Limited Liability Company Agreement by and
between Gustafson, Inc. and Trace Chemicals,
Inc., effective as of September 23, 1998.
2.2 First Amendment to Limited Liability Company
Agreement by and among GT Seed Treatment Inc.
(f/k/a Gustafson, Inc.), Ecart Inc. (f/k/a
Trace Chemicals, Inc.) and Bayer Corporation,
dated as of November 20, 1998.
2.3 Purchase Agreement by and among the Registrant,
Uniroyal Chemical Company, Inc., Trace
Chemicals, Inc. and Gustafson, Inc., as
Sellers, and Bayer Corporation, as Purchaser,
and Gustafson LLC, as the Company, dated as of
November 20, 1998.
2.4 Purchase Agreement by and between Uniroyal
Chemical Co./Cie and Bayer Inc., effective as
of November 20, 1998.
2.5 Partnership Agreement of Gustafson Partnership
by and between Uniroyal Chemical Co./Cie and
Bayer Inc., effective as of November 20, 1998.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrants have duly caused this report to be signed
on their behalf by the undersigned hereunto duly authorized.
Crompton & Knowles Corporation
Dated: January 21, 1999 By:/s/ John T. Ferguson II
John T. Ferguson II
Vice President,General Counsel
and Secretary
EXHIBIT 2.1
EXECUTION COPY
LIMITED LIABILITY COMPANY AGREEMENT
OF GUSTAFSON LLC
By and Between Gustafson, Inc. and Trace Chemicals, Inc.
Effective as of September 23, 1998
TABLE OF CONTENTS
Page
Article I DEFINITIONS 1
Article II ORGANIZATION AND PURPOSE 11
2.1 Organization. 11
2.2 Name of the Company. 11
2.3 Purpose. 11
2.4 Term. 11
2.5 Principal Office. 11
2.6 Registered Agent. 11
2.7 Members. 12
2.8 Management by Board. 12
2.9 Certificate of Membership Interest. 12
Article III CAPITAL 12
3.1 Initial Capital Contributions. 12
3.2 No Additional Capital Contributions Required. 12
3.3 No Interest on Capital Contributions; Deficit Account. 12
3.4 Return of Capital Contributions. 12
3.5 Form of Return of Capital. 12
3.6 Capital Accounts. 13
3.7 Allocations. 14
3.8 Income Tax Allocations. 15
3.9 Currency. 15
3.10 Distributions. 16
Article IV MANAGEMENT 16
4.1 Board. 16
4.2 Managers; Appointment. 20
4.3 Power to Bind Company. 21
4.4 Vacancies. 21
4.5 Quorum. 22
4.6 Meetings. 22
4.7 Action Without a Meeting. 22
4.8 Proxy. 22
4.9 Meeting by Telephone or Video Conference. 23
4.10 Resignations and Removal. 23
4.11 Compensation and Expenses. 23
4.12 Board Chairman. 23
4.13 Deadlock. 23
Article V MEETINGS OF MEMBERS 27
5.1 Meetings of and Voting by Members. 27
5.2 Services; Intercompany Dealings. 27
5.3 Duty of Members. 27
5.4 Resignation or Withdrawal. 28
Article VI OFFICERS 28
6.1 Officers. 28
6.2 Election and Term of Office. 28
6.3 Removal. 28
6.4 Vacancies. 28
6.5 President. 28
6.6 Vice Presidents. 29
6.7 Secretary. 29
6.8 Chief Financial Officer. 29
6.9 Remuneration. 29
Article VII INDEMNIFICATION; LIMITATION OF LIABILITY; OTHER
ACTIVITIES; 29
CONFIDENTIALITY 30
7.1 Indemnification by the Company. 30
7.2 Notice to Company. 30
7.3 Contest by Company. 30
7.4 Advances of Expenses by Company. 30
7.5 Indemnification by a Member. 31
7.6 Notice to Member. 31
7.7 Contest by Member. 31
7.8 Advances of Expenses by Member. 31
7.9 Other. 32
7.10 Effect of Interest in Transaction. 32
7.11 No Third Party Rights. 32
7.12 Insurance. 32
7.13 Limitation of Liability. 33
7.14 Other Activities. 33
7.15 Confidential Information. 34
Article VIII TRANSFERS AND ADMISSION OF NEW MEMBERS 36
8.1 Preemption Rights; Right of First Offer; Rights of First
Refusal. 36
8.2 Involuntary Transfers. 40
8.3 Change of Control 41
8.4 Admission of Transferee. 42
8.5 Rights of Unadmitted Transferees. 43
8.6 No Right to Payment on Disassociation. 43
8.7 Preemptive Rights. 43
8.8 Waiver. 43
Article IX DISSOLUTION AND LIQUIDATION 44
9.1 Events of Dissolution. 44
9.2 Not Dissolution. 44
9.3 Procedure for Winding Up and Dissolution. 44
9.4 Termination. 44
Article X BOOKS, RECORDS, AND ACCOUNTING 44
10.1 Bank Accounts. 44
10.2 Books and Records. 45
10.3 Annual Accounting Period. 45
10.4 Reports. 46
10.5 Tax Matters Member. 47
10.6 Tax Elections. 47
10.7 Title to Company Property. 47
Article XI AMENDMENTS; GENERAL PROVISIONS 48
11.1 Assurances. 48
11.2 Complete Agreement. 48
11.3 Applicable Law. 48
11.4 Section Titles. 48
11.5 Binding Provisions. 48
11.6 Notice. 49
11.7 Terms. 49
11.8 Severability of Provisions. 50
11.9 Alternative Dispute Resolution. 50
11.10 Counterparts. 51
11.11 Estoppel Certificate. 51
11.12 Amendment 51
11.13 Consents. 51
11.14 Legends. 52
11.15 Parties in Interest. 52
11.16 Counting of Time. 52
11.17 English Language. 52
11.18 Exhibits. 52
LIMITED LIABILITY COMPANY AGREEMENT
THIS LIMITED LIABILITY COMPANY AGREEMENT (this "Agreement")
is effective as of September 23, 1998 (the "Effective Date"), by
and between GUSTAFSON, INC., a corporation organized under the
laws of the State of Minnesota, United States and TRACE
CHEMICALS, INC., a corporation organized under the laws of the
State of Nevada, United States and those parties listed on
Exhibit A as the same may be amended from time to time.
NOW, THEREFORE, for good and valuable consideration, the
sufficiency and receipt of which is hereby acknowledged, the
parties, intending legally to be bound, agree as follows:
Article I
DEFINITIONS
The following capitalized terms shall have the meaning
specified in this Article I. Other terms are defined in the text
of this Agreement, and, throughout this Agreement, those terms
shall have the meanings respectively ascribed to them:
"Act" means the Delaware Limited Liability Company Act, as the
same may be amended from time to time.
"Active Ingredient" or "Active Ingredients" means any and all
naturally occurring or synthetically produced substances,
compounds, mixtures, or Biologicals, whether now existing or
hereafter developed, which prevent, destroy, repel or mitigate
any Pest, or accelerate or retard the rate of growth, germination
or maturation, or otherwise protect, or alter the behavior of,
seeds, stored grains, or plants or the products thereof, whether
now existing or hereafter developed.
"Affiliate" or "Affiliates" means, with respect to any Person,
any other Person directly or indirectly, through one or more
intermediaries, controlling, controlled by, or under common
control with, such first mentioned Person. As used in this
definition of Affiliate, the term "control" (including
"controlled by" or "under common control with") means the
possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a Person,
whether through ownership of voting securities, as trustee, by
contract, or otherwise.
"Agency" or "Agencies" means individually and collectively, (i)
the United States Environmental Protection Agency, and any other
federal, state, local, provincial or other governmental or
regulatory agency in the Territory which now regulates, or may in
the future regulate, the use, development, registration or sale
of Active Ingredients or Formulations; and (ii) the United States
Patent and Trademark Office, the United States Copyright Office,
and any other federal, state, local, provincial or other
governmental or regulatory agency in the world which now
regulates, or may in the future regulate, the protection, use, or
registration of Technology.
"Agreement" shall have the meaning given to such term in the
Preamble.
"Beneficial Owner" (including with correlative meanings, the term
"Beneficially Owned") means with respect to any Capital Stock,
any Person, who would be deemed a Beneficial Owner under Rule
13d-3 (or any successor rule of similar import) under the
Exchange Act.
"Biological" or "Biologicals" means any and all naturally
occurring or synthetically produced biological organisms which
prevent, destroy, repel or mitigate any Pest, or accelerate or
retard the rate of growth, germination or maturation, or
otherwise protect, or alter the behavior of, seeds, stored
grains, or plants or the products thereof.
"Board" means the individuals appointed by the Members to serve
as Managers pursuant to the provisions of Article IV.
"Bona Fide Offer" means a written offer to purchase all of a
Selling Member's Membership Interest made by a Person who is not
an Affiliate of the Selling Member, containing at least the
following terms of purchase: the offered price, payment terms,
closing date and any significant closing conditions.
"Calculated Purchase Price" means, as to any party's Membership
Interest, an amount equal to the Calculated Purchase Price of the
Company multiplied by the percentage ownership interest in the
Company represented by such Membership Interest. Calculated
Purchase Price, as to the Company, shall mean an amount
denominated in United States Dollars, equal to the product of (a)
the total EBIT of the Company for the twenty-four (24) month
period preceding the date of the revised Soliciting Offer divided
by two (2) and (b) 13.7.
"Capital Account" shall have the meaning given to such term in
Section 3.6.
"Capital Contribution" means the total amount of cash and the
fair market value of any other assets contributed (or deemed
contributed under Regulation Section 1.704-1(b)(2)(iv)(d)) to the
Company by a Member, net of liabilities assumed by the Company or
to which the assets are subject.
"Capital Stock" means any and all (i) shares, interest, units,
participations or other equity equivalents of or equity interests
(however designated) in capital stock of any Person including
shares of preferred or preference stock, (ii) partnership
interest (whether general or limited) in any Person which is a
partnership, (iii) membership interests or limited liability
company interests in any limited liability company, and (iv)
other equity or ownership interests in any Person.
"Capital Transaction" means any transaction not in the ordinary
course of business that results in the Company's receipt of cash
or other consideration other than Capital Contributions,
including, without limitation, proceeds of sales or exchanges or
other dispositions of property not in the ordinary course of
business, financings, refinancings, condemnations, recoveries of
damage awards, and insurance proceeds.
"C&K" means Crompton & Knowles Corporation, a corporation
organized under the laws of the Commonwealth of Massachusetts,
United States.
"Certificate of Formation" means the certificate of formation
signed by an authorized Person, pursuant to which the Company was
formed, as originally filed with the Secretary of State, as the
same may be amended from time to time in writing signed by an
authorized Person.
"Change of Control" shall mean, with respect to any Member:
(i) any event upon which any Person, other than an
Affiliate of such Member, becomes the Beneficial Owner of Capital
Stock representing: (a) greater than fifty percent (50%) of the
Voting Power of such Member or its Parent; or (b) greater than
thirty percent (30%) of the Voting Power of such Member or its
Parent if any Capital Stock in such Member or its Parent is
Publicly Traded and if no other Person, immediately after the
occurrence of such event, is the Beneficial Owner of more than
thirty percent (30%) of the Voting Power of such Member or its
Parent; in either of (a) or (b), if and only if such Person
and/or any of its Affiliates is engaged in a Crop Protection
Business or is under an obligation to acquire a Crop Protection
Business from other than a Member or its Affiliates; and/or
(ii) any event upon which any Person(s), other than an
Affiliate of such Member, becomes the Beneficial Owner of Capital
Stock representing: (a) greater than fifty percent (50%) of the
Voting Power of such Member or its Parent; or (b) greater than
thirty percent (30%) of the Voting Power of any such Member or
its Parent if any Capital Stock in such Member or its Parent is
Publicly Traded and if no other Person, immediately after the
occurrence of such event, is the Beneficial Owner of more than
thirty percent (30%) of such Voting Power; in either of (a) or
(b), if and only if the direct or indirect ownership of the
Membership Interest of such Member constitutes all or
substantially all of the assets of such Member or its Parent
whose Capital Stock is the subject of this provision; and/or
(iii) the sale, transfer or other disposition (in one
transaction or a series of transactions), to any Person(s), other
than an Affiliate of such Member, of all or a material part of
the assets of the Crop Protection Business of such Member and its
Affiliates, taken as a whole as of the Effective Date of this
Agreement, used in the development and manufacture of Active
Ingredients and Formulations with applications to Seed Treatment;
and/or
(iv) any event upon which any Person(s), other than an
Affiliate of such Member, becomes the Beneficial Owner (in one
transaction or a series of transactions) of Capital Stock
representing: (a) greater than fifty percent (50%) of the Voting
Power of any Affiliate(s) of such Member, other than a Parent,
(an "Indirect Affiliate"); or (b) greater than thirty percent
(30%) of the Voting Power of any such Indirect Affiliate if any
Capital Stock of such Indirect Affiliate or Parent is Publicly
Traded and if no other Person, immediately after the occurrence
of such event, is the Beneficial Owner of more than thirty
percent (30%) of such Voting Power; in either of (a) or (b), if
and only if such Indirect Affiliate(s) owns all or a material
part of the assets of the Crop Protection Business of such Member
and its Affiliates, taken as a whole as of the Effective Date of
this Agreement, used in the development and manufacture of Active
Ingredients and Formulations with applications to Seed Treatment;
and provided, however, the provisions of items (ii), (iii) and
(iv) above notwithstanding, that the sale, transfer, or other
disposition directly or indirectly, by way of Beneficial
Ownership or otherwise to a Person (in one transaction or a
series of related transactions) of ownership or control of both
(1) all or substantially all of the assets of the Crop Protection
Business of such Member and its Affiliates taken as a whole as of
the Effective Date of this Agreement and (2) the Membership
Interest of such Member, shall not constitute a Change of Control
for purposes of this Agreement if such Person and/or any of its
Affiliates is not engaged in the Crop Protection Business; and
further provided, however, the provisions of items (i) through
(iv) and the first proviso above notwithstanding, that any spin-
off, restructuring or other transaction in which all or
substantially all of the Crop Protection Business of such Member
and its Affiliates taken as a whole as of the Effective Date of
this Agreement becomes owned (x) by an independent company or (y)
by a joint venture company whether operated as a corporation,
limited liability company, partnership, limited partnership or
other form of entity, in which independent company or joint
venture such Member or Affiliate thereof owns fifty percent (50%)
or more of the Capital Stock or Voting Power therein, shall not
in any such case constitute a Change of Control if such
independent company or joint venture company undertakes in
writing, in a form and substance reasonably satisfactory to the
other Member, to perform the obligations of an Affiliate pursuant
to the Marketing Agreement and the Post-Exercise Agreement.
"Code" means the Internal Revenue Code of 1986, as may be amended
from time to time, or any corresponding provision of any
succeeding law.
"Company" means the limited liability company formed in
accordance with this Agreement.
"Compete" or "Competes" means to materially compete in all or a
portion of the Seed Treatment business, or to take substantial
steps to materially compete in all or a portion of the Seed
Treatment business.
"Competitor" means a Person that Competes in the Territory,
either directly or indirectly.
"Confidential Information" means all confidential and/or
proprietary information of a Person (the "Owning Person"),
whether arising under statute, common law or otherwise, whether
belonging wholly or in part to the Owning Person, and whether
subject to license or other grant of rights by or to the Owning
Person as licensor or as licensee; but specifically excluding
information that is generally known to those skilled in a
chemical or life sciences field, including without limitation,
the agrochemical field, and information as to a Person (a
"Receiving Person"), and only as to such Receiving Person, that
(1) is lawfully known to such Receiving Person prior to the
disclosure by the Owning Person to such Receiving Person; (2) is
lawfully acquired by such Receiving Person, rightfully furnished
to such Receiving Person, or Publicly Available to such Receiving
Person; (3) is information which such Receiving Person can
document is independently developed by such Receiving Person; (4)
is lawfully reverse engineered by such Receiving Person; or (5)
is required to be disclosed by such Receiving Person pursuant to
law, provided such Receiving Person uses reasonable efforts to
give the Owning Person reasonably detailed prior notice of such
required disclosure and an opportunity to oppose such disclosure.
"Covered Company Person" shall have the meaning given to such
term in Section 7.1.
"Covered Member Person" shall have the meaning given to such term
in Section 7.5
"Crop Protection Business" means the manufacture, sale or
distribution of Active Ingredients, Formulations, Equipment or
Other Products and/or Services.
"Deadlock" means, a situation where there is more than one (1)
Member, and a matter presented to the Board at a meeting or by a
proposed written consent has been considered and voted on by the
Board, and thirty (30) days after the date of the first vote on
the matter, there continues to be a failure of the Board to reach
a decision with respect to such matter, because the voting
Managers are divided, with three (3) voting Managers voting in
favor of the matter or abstaining from voting, and three (3)
voting Managers voting against such matter or abstaining from
voting.
"Dispute" means any dispute, controversy or claim arising out of
or relating to this Agreement, including without limitation, an
alleged failure of a Member to perform any of its obligations
under this Agreement, or any claim which relates to the
Confidential Information of any Member; but, specifically
excluding therefrom, a Deadlock. For purposes of this Agreement,
any disagreement as to whether any dispute, controversy or claim
is a "Dispute", to be resolved pursuant to Section 11.9 hereof
or a "Deadlock" to be resolved pursuant to Section 4.13 hereof,
shall be deemed to be a "Dispute."
"Distribution" or "Distributions" means any cash paid to a Member
by the Company from the operations or capital of the Company,
other than for the payment for goods, equipment or services.
"EBIT" means for any period, net income or loss, plus, to the
extent deducted in computing net income, interest payments and
income taxes paid and/or accrued during such period.
"Effective Date" shall have the meaning given to such term in the
Preamble.
"Equipment" means any and all equipment (i) of a Member or its
Affiliates, that is specifically designed for or directly
applicable to Seed Treatment uses or applications, and (ii) that
the Company or its Affiliates has the right to manufacture,
develop, market or sell whether for Seed Treatment uses and
applications or for other than Seed Treatment uses or
applications, including without limitation, seed treaters, size
rights, screens, cylinders, and samplers.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
in effect on the date in question, unless otherwise specifically
provided.
"Fair Market Value" means, as to any Member's Membership
Interest, an amount equal to the Fair Market Value of the Company
multiplied by the percentage ownership interest in the Company
represented by such Membership Interest. Fair Market Value, as
to the Company, shall mean the cash fair market value that an
unrelated person would pay for one hundred percent (100%)
ownership interest in the Company, in light of all relevant
factors, in an arm's length transaction in which neither party is
compelled to buy or sell, and without any discount or premium
representing control of the enterprise. The Fair Market Value of
the Company shall be determined using a valuation methodology
that values the Company as a going concern and does not take into
account any diminution in value caused by the withdrawal of
either party from the Company or the dissolution of the Company
in accordance with Article IX. The parties shall cooperate with
all reasonable requests from the Neutral Investment Bank for
information necessary for the making of any such determination.
"Fiscal Year" means the fiscal year of the Company, which shall
be the year ending the Saturday closest to the last day of
December.
"Formulation" or "Formulations" means a substance or compound, or
mixture of substances or compounds, which include one or more
Active Ingredients, whether now existing or hereafter developed.
"Governing Body" shall have the meaning given to such term in
Section 7.14.4.
"HSR Act" means the Hart Scott Rodino Antitrust Improvements Act
of 1976, as amended.
"Initial Capital Contribution" shall have the meaning given to
such term in Section 3.1.
"Initial Member" or "Initial Members" means Gustafson, Inc. and
Trace Chemicals, Inc.
"Interest" or "Interests" means an Interest Holder's share of the
profits and losses of the Company, and right to receive
Distributions from the Company; but, specifically excluding any
Membership Rights.
"Interest Holder" means any Person who holds an Interest, whether
as a Member or an unadmitted assignee of a Member.
"Invest or Participate" means: (a) to acquire as a principal,
partner, shareholder, member, Beneficial Owner or in any similar
capacity, Capital Stock in a Person in excess of five percent
(5%) of the total Capital Stock of such Person; or (b) by
contract or otherwise, to manage, operate or finance a Person, or
to participate in the management, operation or financing of a
Person, or to act as agent, representative, consultant or in any
similar capacity for a Person, or to permit a Person to use the
name of a Member or its Affiliate.
"Involuntary Transfer" means each of the following: (i) the
appointment by a court of competent jurisdiction of a receiver,
liquidator, assignee, custodian, trustee, sequestrator or other
similar agent for a Member or for any substantial part of a
Member's assets or property; (ii) the ordering by a court of
competent jurisdiction of the winding up or liquidation of a
Member's affairs; (iii) the filing with respect to a Member of a
petition in any such involuntary case, involving a Member or its
parent under any bankruptcy, insolvency or other similar law now
or hereafter in effect, which petition remains undismissed for a
period of ninety (90) days or which is dismissed or suspended
pursuant to Section 305 of the Federal Bankruptcy Code (or any
corresponding provision of any future United States bankruptcy
law); (iv) the commencement by a Member of a voluntary case under
any bankruptcy, insolvency or other similar law now or hereafter
in effect; (v) the consent by a Member to the entry of an order
for relief in an involuntary case under any such law, or the
written consent of a Member to the appointment of or taking
possession by a receiver, liquidator, assignee, trustee,
custodian, sequestrator or other similar agent for a Member or
for any substantial part of a Member's assets or property; (vi)
the making by a Member of any general assignment for the benefit
of creditors; (vii) the failure by a Member generally to pay its
debts as such debts become due; (viii) the carrying out by a
court of competent jurisdiction or an authorized Person of a
foreclosure, execution sale or similar realization proceedings by
any Person (a) who or that has a pledge of or has been granted a
lien, security interest or other encumbrance, or (b) who or that
has an order of attachment, garnishment or a charging or similar
order, in or against any of the Interests; or (ix) any other
divestiture of a Member by court order, self-help or other
private action.
"Majority Vote" means, (i) in the case of a reconstituted board
pursuant to Section 4.13.3, the affirmative vote of at least
three (3) of the five (5) Managers on the Board (excluding the
President); (ii) in the case of there being only one Member, the
affirmative vote of at least two (2) of the three (3) voting
Managers on the Board (excluding the President); and (iii) in all
other cases, the vote of at least four (4) of the six (6)
Managers on the Board (excluding the President), in all cases at
a meeting of which a quorum of Managers is participating in
person, by conference telephone, video or similar communications
equipment, or by proxy.
"Manager" or "Managers" means the individuals from time to time
designated pursuant to Article IV of this Agreement as managers
of the Company.
"Marketing Agreement" means that certain Marketing Rights and
Margin Agreement by and among C&K, the Company, Partnership,
Bayer Corporation and Bayer Inc. to be dated as of November ,
1998.
"Member" or "Members" means the Initial Members signing this
Agreement and any Person who subsequently is admitted as a member
of the Company.
"Membership Interest" means a Member's entire interest in the
Company, including without limitation, a Member's Interest and a
Member's Membership Rights.
"Membership Rights" means the right to: (i) inspect the
Company's books and records; (ii) appoint Managers and to
participate in the business, affairs and management of the
Company; and (iii) vote on, consent to or otherwise participate
in any decision or action of the Members pursuant to this
Agreement or the Act; provided, however, that Membership Rights
does not include any right to disclosure of the existence of any
arrangements or agreements, or any terms thereof, that are
protected by confidentiality, secrecy or similar agreements with
third parties, or any other arrangements or agreements that, if
disclosed, would result in the Company being in breach of such
arrangements or agreements.
"Member Vote" means, in the case of two Members, the affirmative
vote of both Members, and in the case of one Member, the
affirmative vote of that one Member.
"Neutral Investment Bank" means an investment banking firm of
international reputation which has not been engaged by a Member
or its Affiliates (a) at any time regarding matters related to
the Company; and (b) in the last two (2) years for any other
matter, and which the Member and its Affiliates agree not to
engage in the subsequent two (2) years.
"Operative Agreements" means the Marketing Agreement, the Pre-
Exercise Agreement, the Post-Exercise Agreement and the Cross
License Agreements, the forms of each of which are attached
hereto as Exhibit D, and incorporated herein by reference.
"Other Products and/or Services" means (i) any products for Seed
Treatment uses or applications, other than Active Ingredients,
Formulations and Equipment including, without limitation,
colorants, dyes, pigments and coatings; and (ii) any activities
of the Company, other than those activities set forth in Sections
4.2 and 4.3 of the Pre-Exercise Agreement and the Post-Exercise
Agreement, specifically designed for or directly applicable to
Seed Treatment uses or applications.
"Parent" means, as to a Member, any Person which is the direct or
indirect Beneficial Owner of fifty percent (50%) or more of the
Capital Stock, having Voting Power, of such Member.
"Partners" means the partners of the Partnership.
"Partnership" means Gustafson Partnership, a general partnership
organized under the laws of the Province of Ontario, Canada.
"Percentage" means, as to a Member, the percentage represented by
the relationship of such Member's Units to the total number of
Units outstanding and, as to an Interest Holder who is not a
Member, the percentage of the Member whose Interest has been
acquired by such Interest Holder, to the extent the Interest
Holder has succeeded to that Member's Interest.
"Person" means any individual, corporation, governmental
authority, limited liability company, partnership, trust, estate,
unincorporated association or other entity.
"Pest" means any plant, animal or other organism, when and if
determined by an Agency to be deleterious to man or the
environment.
"Post-Exercise Agreement" means the Post-Exercise Distribution
and Technology License Agreement to be dated as of November ,
1998, by and among GT Seed Treatment Inc., Bayer Corporation and
the Company.
"Pre-Exercise Agreement" means the Pre-Exercise Distribution and
Technology License Agreement to be dated as of November , 1998,
by and among GT Seed Treatment Inc., and the Company.
"Profit" and "Loss" means, for each taxable year of the Company
(or other period for which Profit or Loss must be computed), the
Company's taxable income or loss determined in accordance with
Section 703(a) of the Code, with the following adjustments:
(i) all items of income, gain, loss, deduction, or
credit required to be stated separately pursuant to Section
703(a)(1) of the Code shall be included; and
(ii) any tax-exempt income of the Company, not otherwise
taken into account in computing Profit or Loss, shall be
included; and
(iii) any expenditures of the Company described in Section
705(a)(2)(B) of the Code (or treated as such pursuant to
Regulation Section 1.704-1(b)(2)(iv)(i)) and not otherwise taken
into account in computing Profit or Loss shall be subtracted; and
(iv) gain or loss resulting from any taxable disposition of
Company property shall be computed by reference to the adjusted
book value of the property disposed of, notwithstanding the fact
that the adjusted book value differs from the adjusted basis of
the property for federal income tax purposes; and
(v) in lieu of the depreciation, amortization, or cost
recovery deductions allowable in computing taxable income or
loss, there shall be taken into account the depreciation or
amortization computed for book purposes.
Profit or Loss shall not include any profits made or losses
incurred by any Interest Holder in supply of goods or services to
or from the Company.
"Publicly Available" means that the information in question is
available from a public source; provided, however, information
shall not be deemed to be Publicly Available to a Person unless
the Person contending the information is Publicly Available (i)
has lawfully acquired such information through experimentation,
research or other appropriate method of acquisition, and (ii) if
the form in which the information is held by the Person on a
particular date has commercial value, has acquired such
information in the same form in which it is held by the Person on
such date.
"Publicly Traded" when used in reference to any Capital Stock at
any given date, means Capital Stock which is listed or authorized
for quotation on the New York Stock Exchange, the American Stock
Exchange or on the National Market System of the Nasdaq Stock
Market (or any successor to such entities) or listed on or
included into the free market of any of the Stuttgart, Munich,
Frankfurt, Dusseldorf, Hamburg or Berlin stock exchange.
"Regulation" or "Regulations" means the income tax regulations as
amended, including any temporary regulations, or any successor
income tax regulation or regulations from time to time
promulgated under the Code.
"Secretary of State" means the Secretary of the State of
Delaware.
"Seed Treatment" means any and all uses or applications of Active
Ingredients, Formulations, Equipment, and Other Products and/or
Services, in connection with seeds or stored grains for
agricultural purposes, whether now existing or hereinafter
developed.
"Subsidiary" means individually and collectively, Agro ST Inc., a
corporation organized under the laws of the State of Delaware,
United States of America, Industrias Gustafson S.A. DE C.V. , a
corporation organized under the laws of Mexico, and Trace
Chemicals LLC, a Delaware Limited Company, each a wholly owned
subsidiary of the Company.
"Tax Matters Member" shall have the meaning given to such term in
Section 10.5.
"Technology" means all forms of intellectual property, including
without limitation, copyrights, copyright applications, patents,
patent applications, inventions, processes, production methods,
proprietary information, know-how, trade secrets, information,
trademarks, trademark applications, service marks, trade names,
logos and slogans, identification lists, product and technical
labels, data, including registration data and Agency data, plans,
blueprints, specifications, designs, manufacturing information,
formulation recipes and techniques, seed safety information, seed
testing techniques, efficacy data, environmental, residue,
toxicology and product chemistry information, discoveries,
drawings, recorded knowledge, techniques, ideas, concepts,
surveys, engineering reports, test reports and procedures,
manuals, materials standards, process standards, performance
standards, catalogs, flow charts, formulation or technical
registrations, work techniques, computer and automatic machinery
software and programs, related object and source code and the
like whether or not protected by or protectable by patent,
copyright, trademark, trade secret or other proprietary rights or
by any Agency; but specifically excluding Technology that is
generally known to those skilled in a chemical or life sciences
field, including without limitation, the agrochemical field.
"Territory" means collectively, the United States, Canada, and
the United Mexican States.
"Third Party" or "Third Parties" means any and all Persons other
than the Company, the Partnership, a Member, a Partner or any of
their respective Affiliates.
"Transfer" means, when used as a noun, any voluntary sale,
hypothecation, pledge, assignment or other transfer by a Member,
and, when used as a verb, means for a Member to voluntarily sell,
hypothecate, pledge, assign, or otherwise transfer.
"Transferee" means a Person who is the assignee, purchaser or
transferee of an Interest.
"Units" means the number of units of income, gain, loss and
deduction of a Member or Interest Holder, as the case may be.
"United States" means collectively, the fifty (50) states of the
United States of America, the District of Columbia, and the
Commonwealth of Puerto Rico; but, specifically excluding any
territories and possessions of the United States of America.
"Voting Power" (which term includes the power to vote or to
direct the voting of) when used in reference to any Capital Stock
shall mean the power of the holders of such Capital Stock
generally to vote, with respect to any Person which is a
corporation, for the election of members of the board of
directors and, with respect to any other Person that is not a
corporation, for the Members of the Governing Body of such other
Person.
"U.S. GAAP" means United States generally accepted accounting
principles, consistently applied.
Article II
ORGANIZATION AND PURPOSE
2.1 Organization.
The Company was organized as a limited liability company
pursuant to the Act when the original executed Certificate of
Formation was filed pursuant to the Act. The parties intend that
the Company be operated pursuant to the Act and the provisions of
this Agreement.
2.2 Name of the Company.
The name of the Company shall be "Gustafson LLC". The
Company may do business under that name and under any other name
or names that the Board selects. If the Company does business
under a name other than that set forth in its Certificate of
Formation, then the Company shall file an assumed business name
as required by law. The Board may change the name of the Company
by amendment to the Certificate of Formation pursuant to the Act.
2.3 Purpose.
The Company is organized solely for the purposes of: (i)
developing, formulating, manufacturing, registering, marketing
and selling Active Ingredients, Formulations, Equipment, and
Other Products and/or Services for Seed Treatment uses and
applications in the Territory, and to do any and all things
necessary, convenient or incidental thereto. Unless both Members
consent, or unless specifically permitted by the Operative
Agreements, the Company shall have no authority to carry on any
other lawful business for which a limited liability company may
be organized under the Act.
2.4 Term.
The term of the Company shall begin upon the acceptance of
the Certificate of Formation by the Secretary of State and shall
be perpetual, unless its existence is sooner terminated pursuant
to the mandatory provisions of the Act.
2.5 Principal Office.
The principal office of the Company shall be located at 1400
Preston Road, Suite 400, Plano, TX 75093, or at any other place
within the State of Texas or elsewhere that the Board selects.
2.6 Registered Agent.
The name and address of the Company's current registered
agent in the State of Delaware is The Corporation Trust Company,
1209 Orange Street, City of Wilmington, New Castle County,
Delaware 19801.
2.7 Members.
The name and Percentage of each Member is set forth on
Exhibit A.
2.8 Management by Board.
The Company shall be managed by a Board as provided in
Article IV hereof.
2.9 Certificate of Membership Interest.
A Member's Membership Interest shall be evidenced by a
certificate, the form of which is attached hereto as Exhibit B,
and incorporated herein by reference.
Article III
CAPITAL
3.1 Initial Capital Contributions.
Each Member shall contribute as the Capital Contribution to
be made by it the cash, obligations, other property or services
set forth in the column headed "Initial Capital Contribution" on
Exhibit A to this Agreement. The amount of the initial
contribution of each Member shall be recorded by the Board as a
contribution to the capital of the Company.
3.2 No Additional Capital Contributions Required.
No Member shall be obligated, nor shall any Member have a
right, to contribute any additional capital to the Company,
except with the prior consent of both Members.
3.3 No Interest on Capital Contributions; Deficit Account.
Interest Holders shall not be paid interest on their Capital
Contributions. Except as otherwise required in the Act or this
Agreement, no Interest Holder shall have any liability to restore
all or any portion of a deficit balance in a Capital Account.
3.4 Return of Capital Contributions.
Except as otherwise provided in this Agreement, no Interest
Holder shall have the right to receive any return of any Capital
Contribution.
3.5 Form of Return of Capital.
If a Member is entitled to receive a return of a Capital
Contribution, the Interest Holder shall not have the right to
receive anything but cash in return of the Interest Holder's
Capital Contribution.
3.6 Capital Accounts.
An account ("Capital Account") shall be maintained by the
Company for each Interest Holder in accordance with the following
provisions:
3.6.1. An Interest Holder's Capital Account shall be credited
with the Interest Holder's Capital Contributions, the amount of
any Company liabilities assumed by the Interest Holder (other
than liabilities secured by Company property distributed to the
Interest Holder), and the Interest Holder's allocable share, as
determined by the Company, of profit and any income or gain
specially allocated by the Company to the Interest Holder.
3.6.2. An Interest Holder's Capital Account shall be debited
with the amount of money and the fair market value of any Company
property distributed by the Company to the Interest Holder (net
of liabilities secured by such distributed property that such
Interest Holder is considered to assume or take subject to
Section 752 of the Code), the amount of the Interest Holder's
individual liabilities that are assumed by the Company (other
than liabilities that reduce the amount of any Capital
Contribution made by such Interest Holder), the Interest Holder's
allocable share, as determined by the Company, of loss, and any
item in the nature of expenses or losses specially allocated, as
determined by the Company, to the Interest Holder.
3.6.3. If any Interest is transferred pursuant to the terms
of this Agreement, the Transferee shall succeed to the Capital
Account of the transferor to the extent the Capital Account is
attributable to the transferred Interest. On any such transfer,
and upon the occurrence of any event specified in Regulation
Section 1.704-1(b)(2)(iv)(f), the book value of Company property
(whether tangible or intangible) shall be adjusted to equal
market value, and the Capital Account of each Interest Holder
shall be adjusted to reflect the aggregate adjustment in the same
manner as if the Company had recognized gain or loss equal to the
amount of such aggregate adjustment. It is intended that the
Capital Accounts of all Interest Holders shall be maintained in
compliance with the provisions of Regulation Section 1.704-1(b),
and all provisions of this Agreement relating to the maintenance
of Capital Accounts shall be interpreted and applied in a manner
consistent with that Regulation.
3.6.4. The Company shall: (i) make any adjustments that are
necessary or appropriate to maintain equality between the Capital
Accounts of the Interest Holders and the amount of capital
reflected on the Company's balance sheet, as computed for book
purposes in accordance with Regulations Section 1.704 -
1(b)(2)(iv)(q); and (ii) make any appropriate modifications in
the event unanticipated events might otherwise cause this
Agreement not to comply with Regulation Section 1.704-1(b).
3.7 Allocations.
3.7.1. General Rule for Allocations.
Except as otherwise provided in this Article III, the Profits and
Losses of the Company shall be allocated among the Interest
Holders according to their Percentage Interest. If any Interest
in the Company is transferred during a fiscal year, then items of
Profit and Loss shall each be allocated on the basis of a closing
of the Company's books on the date of such transfer.
3.7.2. Qualified Income Offset.
No Interest Holder shall be allocated Losses or deductions to the
extent that the allocation would cause the Interest Holder to
have an Adjusted Capital Account Deficit. If an Interest Holder
unexpectedly receives any adjustment, allocation, or Distribution
described in Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5) or
(6) that results in or increases an Adjusted Capital Account
Deficit at the end of any taxable year, then all items of income
and gain of the Company for that taxable year shall be allocated
to that Interest Holder, before any other allocation pursuant to
this Article III (other than those pursuant to Sections 3.7.3.1
and 3.7.3.2), in an amount and manner sufficient to eliminate
such Adjusted Capital Account Deficit as quickly as possible.
This Section 3.7.2 is intended to comply with, and shall be
interpreted consistently with, the "qualified income offset"
provisions of the Regulation Section 1.704-1(b)(2)(ii)(d) and all
other Regulation Sections relating thereto.
3.7.3. Minimum Gain.
3.7.3.1. Except as set forth in Regulation Section 1.704-
2(f), if, during any taxable year, there is a net decrease in
minimum gain, each Interest Holder, prior to any other allocation
pursuant to this Article III, shall be specially allocated items
of gross income and gain for such taxable year (and, if
necessary, subsequent taxable years) in an amount equal to that
Interest Holder's share of the net decrease of minimum gain,
computed in accordance with Regulation Section 1.704-2(g).
Allocations of items of gross income and gain pursuant to this
Section 3.7.3.1 shall be made as described in Regulation Sections
1.704-2(f) and (j). This Section 3.7.3.1 is intended to comply
with, and shall be interpreted consistently with, the "minimum
gain chargeback" provisions of Regulation Section 1.704-2(f) and
all other Regulation Sections relating thereto.
3.7.3.2. Except as set forth in Regulation Section 1.704-
2(i)(4), if, during any taxable year, there is a net decrease in
Member minimum gain, each Interest Holder with a share of that
Member minimum gain as of the beginning of such year, prior to
any other allocation pursuant to this Article III, shall be
specially allocated items of gross income and gain for such
taxable year (and, if necessary, subsequent taxable years) in an
amount equal to that Interest Holder's share of the net decrease
of Member minimum gain, computed in accordance with Regulation
Section 1.704-2(i)(4). Allocations of items of gross income and
gain pursuant to this Section 3.7.3.2 shall be made as described
in Regulation Sections 1.704-2(i)(4) and (j). This Section
3.7.3.2 is intended to comply with, and shall be interpreted
consistently with, the "partner nonrecourse debt minimum gain
chargeback" provisions of Regulation Section 1.704-2(i)(4) and
all other Regulation Sections relating thereto.
3.7.4. Regulatory Allocations.
The allocations set forth in Sections 3.7.2 and 3.7.3 are
included to comply with the requirements of the Regulations. If
allocations under such provisions are different from the
allocations that otherwise would be made under this Article III,
then the Board shall make appropriate allocations, consistent
with the Regulations, so that the net allocations are as much as
possible consistent with the allocations under Section 3.7.1.
3.8 Income Tax Allocations.
3.8.1. Except as otherwise provided in this section,
items of income, gain, deduction and loss shall be determined and
allocated for federal income tax purposes in the same manner as
in Section 3.7.
3.8.2. In accordance with Code Section 704(c) and the
Regulations thereunder, income, gain, loss and deduction with
respect to any property contributed to the capital of the Company
shall, solely for tax purposes, be allocated among the Interest
Holders so as to take account of any variation between adjusted
basis of such property to the Company for federal income tax
purposes and its initial fair market value upon contribution to
the Company.
3.8.3. In the event the Capital Accounts of the Interest
Holders are adjusted pursuant to Section 3.6.2, subsequent
allocation of income, gain, loss and deduction with respect to
property to which the adjustment relates shall, solely for tax
purposes, take into account of any variation between the adjusted
basis of such property to the Company for federal income tax
purposes and its adjusted fair market value.
3.8.4. Unless otherwise agreed to unanimously by the Members,
the Company shall allocate the items in Subsection 3.8.2 and
3.8.3 using the traditional method with curative allocations as
described in Regulation Section 1.704-3(c).
3.9 Currency.
All Capital Contributions to be made to, and Dividends to be
paid by, the Company pursuant to this Agreement shall be made in
the currency of the United States. All other payments to be made
or calculated pursuant to this Agreement shall be made and
calculated in the currency of the United States.
3.10 Distributions.
Distributions other than upon liquidation shall be made to
the Members in proportion to their Percentage Interest and may be
made in cash or in kind. Distributions upon liquidation shall be
made to the Members as provided in Section 9.3.
Article IV
MANAGEMENT
4.1 Board.
Upon the formation of the Company, the Initial Members have
determined to conduct the business and affairs of the Company
through a Board of Managers, who shall act together as a group.
The Managers shall have such rights, duties and powers as are
specified in this Agreement.
4.1.1. The Managers, acting as a Board, have the sole, full
and complete authority, power and discretion to manage and
control the business, affairs and properties of the Company, to
make all decisions regarding those matters and to perform any and
all other acts or activities necessary or appropriate to the
management of the Company's business.
4.1.2. The Board shall have the power to delegate
responsibilities and authority to subcommittees of the Board, or
to such officers as may be appointed by the Board pursuant to
Article VI from time to time, with such general or specific
authority to make any contracts, enter into any transaction, and
make and obtain any commitments on behalf of the Company and to
otherwise conduct or further the Company's business.
4.1.3. Without limiting the generality of Sections 4.1.1 or
4.1.2, the taking of any of the following actions by the Company
shall require the approval of a Majority Vote of the Board:
4.1.3.1. Review and approval of the budget for the Company
for each financial year, and the annual business and midterm
strategic plan for the Company and any subsidiaries thereof.
4.1.3.2. Creation or dissolution of any subsidiaries of the
Company.
4.1.3.3. Establishment or modification of the Company's
capital expenditures budget.
4.1.3.4. Appointment, removal and compensation of the
Company's President and other officers.
4.1.3.5. Establishment, modification or termination of the
Company's compensation and benefit programs for all employees.
4.1.3.6. Establishment or modification of the Company's
dividend and Distribution policies.
4.1.3.7. Incurrence of or payment by the Company of any
expenses for any capital project that exceeds or is estimated to
exceed US$200,000.
4.1.3.8. Creation, amendment, termination or modification of
any arrangement, agreement or contract between the Company or a
Subsidiary and (i) any Member, the Partnership, a Subsidiary, any
Partner, (ii) an Affiliate of a Member, the Partnership, a
Subsidiary or a Partner; or (iii) an employee, executive officer
or director or other board member or representative of a Member,
the Partnership, a Partner or a Subsidiary; provided however,
that any sublicense under the Cross License Agreement between the
Company and its subsidiary Agro ST Inc. must be approved by the
unanimous consent of the Board; any changes in Prices made
pursuant to Article 7 of the Pre-Exercise Agreement shall not
require the Board's approval to be effective; and any changes to
the Prices (as defined in the Marketing Agreement) agreed to by
the Company or a Subsidiary and (i) any Member, the Partnership,
a Subsidiary, any Partner or (ii) an Affiliate of a Member, the
Partnership, a Subsidiary or a Partner pursuant to Section 4 of
the Marketing Agreement shall not require the approval of the
Board to be effective.
4.1.3.9. Acquisitions or disposition of any business of the
Company, and approval of any financing associated with such
acquisition or disposition.
4.1.3.10. Entrance into, or any modification of, any material
research or development contract or obligation by the Company
that would result in the Company exceeding the approved research
or development budget by more than US$200,000.
4.1.3.11. Making of any loan or advance or giving any credit
by the Company in excess of US$100,000, excluding trade credit,
or any modification of the terms thereof.
4.1.3.12. Borrowing of money for and on behalf of the
Company or any subsidiary, which borrowing may in the aggregate
exceed US$100,000, or any modification of the terms thereof,
excluding trade credit.
4.1.3.13. Grant of any mortgages, deeds of trust, security
interests or other liens, or executing and delivering any
instruments to encumber any assets of the Company or its
subsidiaries, to secure repayment of amounts that in the
aggregate exceed US$100,000, or permitting any liens to exist
against assets of the Company or in amounts that in the aggregate
exceed US$100,000.
4.1.3.14. Appointment of outside legal counsel or independent
auditors.
4.1.3.15. Change of the accounting principles used by the
Company.
4.1.3.16. Change of the Company's business philosophy.
4.1.3.17. Purchases by the Company in excess of US$2,000,000
per order.
<PAGE>
4.1.3.18. Modification of this Agreement, the
Certification of Formation of the Company, or any subsidiary
thereof, or the certificate of incorporation, bylaws or any other
organizational documents of any subsidiary of the Company.
4.1.3.19. Registration, marketing and development:
(i) any one product or registration, if the cost of such
registering, marketing and developing is expected to exceed
US$400,000 in any one year; and
(ii) products and registrations, if the Company has
materially exceeded or will materially exceed the previously
approved budgets for registering, marketing and developing
products; or if registering, marketing and developing costs will,
in the aggregate, exceed US$1 million for the current fiscal
year.
4.1.3.20. Acquisition by purchase, lease, or otherwise of
any real property.
4.1.3.21. Entrance into any Capital Transaction;
4.1.3.22. Engagement in business in any jurisdiction that
does not provide for the registration of limited liability
companies;
4.1.3.23. Discontinuance of the Company's business;
4.1.3.24. Authorization of any merger, reorganization or
recapitalization of the Company and the material terms and
provisions thereof;
4.1.3.25. Settlement or confession of judgment in any legal
matter exceeding US$250,000.
4.1.3.26. Except as expressly provided in Article IX of this
Agreement, termination, dissolution, liquidation or winding-up of
the Company.
4.1.3.27. Authorization to make all Company elections
permitted under the Code, including, without limitation,
elections of methods of depreciation.
4.1.3.28 The issuance of additional Interests, Membership
Interests, or debt securities in the Company.
4.1.4. Notwithstanding anything to the contrary in this
Agreement or the Operative Agreements, no Member may use its
position as a Member, on the Board or its appointed Managers on
the Board to require that the Company do any act that would
require, or condition any contract, agreement or arrangement with
the other Member or the other Member's Affiliates on, disclosure
of the Confidential Information or Technology of one Member or
its Affiliates to the other Member, or the use of the
Confidential Information or Technology of one Member or its
Affiliates by the other Member.
4.2 Managers; Appointment.
4.2.1. Board Members. Except as provided in Section
4.13 of this Agreement, the Board shall consist of seven (7)
individuals: (i) six (6) Managers, with each Manager entitled to
one vote, and (ii) the President of the Company, who shall be a
non-voting Manager.
4.2.1.1. Initial Appointment. Five (5) of the six (6)
initial voting Managers of the Board shall be appointed by
Gustafson, Inc. and the sixth initial voting Manager shall be
appointed by Trace Chemicals, Inc., and shall serve without
additional compensation or benefits from the Company.
4.2.1.2. Sale of Fifty Percent of Membership Interest. Upon
the sale by Gustafson, Inc. of a forty-nine percent (49%)
Membership Interest (reducing its 99% Membership Interest to a
50% Membership Interest) and the sale by Trace Chemicals, Inc. of
all of its one percent (1%) Membership Interest to a Person
admitted as a Member, the Board shall be reconstituted, as
follows: (i) Gustafson, Inc. shall designate three (3) of the
initial voting Managers to remain on the Board, and shall cause
the other three (3) initial voting Managers to resign, such
resignations to be effective upon the sale of fifty percent (50%)
of the Membership Interest. Upon the receipt by Gustafson, Inc.
of such resignations, and upon consummation of the sale, the
newly admitted Member shall be entitled to appoint three (3)
Managers to the Board. As a result of its purchase of fifty
percent (50%) of the Membership Interest, the newly admitted
Member purchasing the fifty percent (50%) of the Membership
Interest shall be entitled to appoint three (3) voting Managers.
Each year at the annual meeting of the Members, Gustafson, Inc.
shall be entitled to appoint three (3) voting Managers and the
Member purchasing the fifty percent (50%) of the Membership
Interest shall be entitled to appoint three (3) voting Managers.
Each voting Manager shall hold office for one (1) year terms, or
until his earlier resignation or removal in accordance with this
Agreement and the Act. A voting Manager may be reappointed for
an unlimited number of terms.
4.2.1.3. Subsequent Transfers. Upon the Transfer by a Member
of all of its Membership Interest to a Person who is admitted as
a Member, and other than a Transfer contemplated under Section
4.2.1.2, the transferring Member shall cause the three (3) voting
Managers appointed by such Member to resign, effective upon the
sale. Upon the resignation of the three (3) such voting
Managers, and consummation of the sale, the newly admitted Member
will be entitled to appoint three (3) Managers to the Board.
Thereafter, the newly admitted Member shall be entitled to
appoint three (3) voting Managers and the non-transferring Member
shall be entitled to appoint three (3) voting Managers. Each
voting Manager shall hold office for one (1) year terms, or until
his earlier resignation or removal in accordance with this
Agreement and the Act. A voting Manager may be reappointed for
an unlimited number of terms.
4.2.1.4. Appointment of President as Non-Voting Manager. The
Board of Managers shall appoint the President as a non-voting
Manager.
4.2.2. Duty of Managers. No Manager appointed pursuant to
Section 4.2 or serving as the non-voting Manager shall be liable
to the Company, the other Managers or the Members for monetary
damages for breach of fiduciary duty as a Manager, or otherwise
liable, responsible or accountable to the Company, the other
Managers or the Members for monetary damages or otherwise for any
acts performed, or for any failure to act; provided, however,
that this provision shall not eliminate or limit the liability of
a Manager (i) for any breach of the Manager's duty of loyalty to
the Member appointing such Manager, (ii) for acts or omissions
which involve intentional misconduct or a knowing violation of
law, (iii) for any transaction from which the Manager received
any improper personal benefit; or (iv) for disclosing
Confidential Information in violation of the provisions of this
Agreement.
4.2.3. Duty of Seventh Voting Manager. No Manager appointed
pursuant to Section 4.13.3.2 shall be liable to the Company, the
other Managers or the Members for monetary damages for breach of
fiduciary duty as a Manager or otherwise liable, responsible or
accountable to the Company, the other Managers or the Members for
monetary damages or otherwise for any acts performed, or for any
failure to act; provided, however, that this provision shall not
eliminate or limit the liability of such Manager (i) for any
breach of such Manager's duty of loyalty to the Company, (ii) for
acts or omissions which involve intentional misconduct or a
knowing violation of law, or (iii) for any transaction from which
the Manager received any improper personal benefit; or (iv) for
disclosing Confidential Information in violation of the
provisions of this Agreement.
4.3 Power to Bind Company.
Unless specifically authorized to do so by this Agreement or
by the Majority Vote of the Board, no attorney-in-fact, Manager,
officer, employee or other agent of the Company shall have any
power or authority to bind the Company in any way, to pledge its
credit or to render it liable for any purpose. No Member shall
have any power or authority to bind the Company unless the Member
has been specifically authorized by a Majority Vote of the Board
to act as an agent of the Company for that specific purpose.
4.4 Vacancies.
Any vacancy occurring in the voting Managers of the Board,
whether caused by death, resignation, removal or otherwise, may
be filled only by the Member who originally appointed the
vacating voting Manager. A voting Manager appointed to fill a
vacancy shall be appointed for the unexpired term of his
predecessor in office.
4.5 Quorum.
The presence, in person, by conference telephone, video or
similar communications equipment, or by proxy of four (4) voting
Managers, including no less than two (2) voting Managers from
each Member, and in the case of one (1) Member, the presence, in
person, by conference telephone, video or similar communications
equipment, or by proxy of two (2) voting Managers appointed by
such Member, shall constitute a quorum for the transaction of
business at a Board meeting. A Majority Vote of the Board
participating in a duly constituted meeting where there is a
quorum shall be the act of the Board, except as may be otherwise
specifically provided by the Act or this Agreement. In the
absence of a quorum, a majority of Managers present may adjourn
the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present. At
a reconvening of such adjourned meeting at which a quorum shall
be present, any business may be transacted that might have been
transacted at the meeting as originally noticed.
4.6 Meetings.
4.6.1. Regular Meetings. Regular meetings of the Board
shall be held at such times and places as the Board shall
designate; provided, however, that for two (2) years from the
date of admission of a Member pursuant to Section 4.2.1.2,
unless the Board by Majority Vote agrees otherwise, the Board
shall meet at least four (4) times a year. Thereafter, the Board
shall meet at least annually.
4.6.3. Special Meetings. Special meetings of the Board may be
called (i) by the President, (ii) by a Member, or (ii) at the
request of three voting Managers. Written or oral notice of
special meetings shall be given to all Managers at least fourteen
(14) days before the dates of such meetings. No notice need be
given to any Manager who attends in person or to any Manager who,
in a writing executed and filed with the records of the meeting
either before or after the meeting, waives such notice. Such
notice or waiver of notice need not state the purpose or purposes
of such meeting.
4.7 Action Without a Meeting.
Any action that may be taken at a meeting of the Board may
be taken without a meeting if a consent in writing, setting forth
the action so taken or to be taken, shall be signed by all of the
voting Managers. Such consent shall be filed with the minutes of
the Board's meetings.
4.8 Proxy.
A Manager may grant a proxy entitling any other Manager
appointed by the same Member to exercise his voting rights. Such
proxy shall be in writing and shall specify a termination date.
The Managers appointed by the other Member shall be entitled to
inspect the proxy on demand. Any proxy shall be filed with the
minutes of the meeting.
4.9 Meeting by Telephone or Video Conference.
A Manager may participate in a meeting of the Board by means
of conference telephone, video or similar communications
equipment enabling all Managers participating in the meeting to
hear one another, and participation in a meeting shall constitute
presence in person at such meeting.
4.10 Resignations and Removal.
Each Manager shall hold office at the pleasure of the Member
appointing such Manager. The resignation of any Manager shall be
in writing and shall be effective immediately upon acknowledgment
of receipt by a Member. Any Manager may be removed, with or
without cause, as follows (i) at any time, by the Member that
appointed such Manager; (ii) in the case of the President, by a
Majority Vote of the Board; or (iii) by the request of the Member
that appointed such Manager, if such request is made, in
preparation of the admission of a newly admitted Member, and the
appointment of Managers by such newly admitted Member as set
forth in Section 4.2.1.
4.11 Compensation and Expenses.
Managers appointed pursuant to Section 4.2 shall serve
without additional compensation or benefits from the Company.
Each Member is responsible for all expenses incurred by the
voting Managers appointed by that Member in connection with such
Managers' activities as a Manager. The Members shall share
equally the reasonable compensation for and expenses of the
seventh voting Manager appointed pursuant to Section 4.13.3.1.
4.12 Board Chairman.
The initial voting Managers may elect from any of the
initial voting Managers a Chairman of the Board. Upon the sale
of fifty percent (50%) of the Membership Interest as contemplated
in Section 4.2.1.2, the reconstituted Board may elect a Chairman
of the Board from any of the voting Managers. Thereafter, the
Chairman of the Board shall be a voting Manager appointed by the
Members as follows: each year at the annual meeting of Members,
the Chairman shall be appointed by a Member, alternating yearly
between Gustafson, Inc. and the Member purchasing the fifty
percent (50%) in Membership Interest. Except as provided in
Section 4.13.3.3, the Chairman shall have no additional vote
other than his vote as a Manager. The Chairman of the Board
shall preside at all meetings of the Board and shall perform such
other duties as may be prescribed from time to time by the Board
and by this Agreement.
4.13 Deadlock.
4.13.1. Memorandum. If Deadlock occurs, a Member may
circulate a memorandum to the other Member and to the parent
company of the other Member by registered mail, return receipt
requested to the address for such other Member and such parent of
such other Member provided in Section 11.6 hereof, stating a
summary of the issue, its proposed resolution of the issue, and
the considerations in support of such proposed resolution. Such
memorandum shall be considered by the president, a member of
board of management or other senior executive (hereinafter
"senior executive") of the parent of the Member. Within twenty
(20) days of receipt of such a memorandum by the parent of the
Member, the senior executives of the parent of each Member shall
meet to negotiate in good faith a mutually satisfactory
resolution of the Deadlock.
4.13.2. Mediation. If such senior executives are not able to
reach a mutually satisfactory resolution of the Deadlock within
thirty (30) days after the date of the first such meeting, then
the Members shall attempt in good faith to mediate a resolution
to the Deadlock in accordance with the procedures set forth in
this Section 4.13 and Exhibit C, parts A and B with a mediator
that is mutually acceptable to both Members. If the Members
cannot agree on such a mediator within such thirty (30) days,
then either or both Members may request, by notice to the other
Member, that a mediator be appointed by the American Arbitration
Association ("AAA") to mediate the resolution of the Deadlock.
4.13.3. Initial Period. For an initial period of five (5)
years after the date of the admission of a Member to the Company
pursuant to Section 4.2.1.2 ("Initial Period"), the following
shall apply:
4.13.3.1. Reconstitution. If a Deadlock has occurred, and
there is no resolution by Members within ninety (90) days after
the date that the mediator is agreed to, or if no agreement is
reached as to a mediator, then within ninety (90) days after the
date the mediator is appointed by AAA, either or both Members may
elect by giving written notice to the other Member that the Board
shall be reconstituted within sixty (60) days thereafter as a
eight (8) person board. The reconstitution means that the six
(6) voting Managers shall be removed by the Members appointing
such Managers, and the following appointments made: (i) each
Member shall appoint three (3) persons not previously Managers of
the Company as voting Managers; (ii) a seventh Manager,
independent of both Members, shall be appointed by mutual
agreement of the Members as a seventh voting Manager; and (iii)
the President shall continue as a non-voting Manager.
4.13.3.2. Seventh Voting Manager. If the Members cannot
mutually agree upon a seventh Manager within thirty (30) days
after the date of such reconstitution as provided in Section
4.13.3.1, then each Member shall select an independent person and
the two persons so chosen shall select the seventh, independent
voting Manager. The seventh Manager shall receive reasonable
compensation to serve on the Board, to be paid as provided in
Section 4.11.
4.13.3.3. No Abstention. Following reconstitution of the
Board as provided in Sections 4.13.3.1 and 4.13.3.2, the Board
shall vote on the issue which is the subject of the Deadlock,
within a reasonable period of time following the reconstitution
of the Board, but in no event later than three (3) months and no
voting Manager (including the Chairman, if any) shall abstain
from voting on the issue which is the subject of the Deadlock.
4.13.3.4. Removal after Vote. After the vote on the issue
which is the subject of the Deadlock, the seventh and independent
Manager may be removed by a vote for such removal by any three
(3) other voting Managers.
4.13.4. Post-Initial Period. If a Deadlock occurs after the
expiration of the Initial Period, and such senior executives are
not able to reach a mutually satisfactory resolution of the issue
which is the subject of the Deadlock within thirty (30) days of
the first meeting of such senior executives, then the Members
shall attempt in good faith to mediate a resolution to the
Deadlock in accordance with this Section 4.13 and Exhibit C,
parts A and B, with a mediator that is mutually acceptable to
both Members. If the Members cannot agree on such a mediator
within such thirty (30) days after such first meeting, one or
both Members may request, by notice to the other Member, that a
mediator be appointed by the AAA to mediate the resolution of the
Deadlock.
4.13.4.1. Sale. In the event that a Deadlock continues for
more than six (6) months after the commencement of mediation in
accordance with Section 4.13.4, then the following shall apply:
4.13.4.1.1 A Member, by notice to the other Member, may
require the Board to solicit proposals from internationally
recognized investment banking firms to provide the services
outlined in Section 4.13.4.1. The Board shall select an
internationally recognized investment banking firm reasonably
acceptable to both Members. If the Members cannot mutually agree
upon such firm within thirty (30) days after the date the
proposals are due to the Board, then each Member shall select a
Neutral Investment Bank, and the two firms so chosen shall select
a third internationally recognized investment banking firm to
provide the services outlined in Section 4.13.4.1. The
internationally recognized investment banking firm selected
pursuant to this Section is hereinafter referred to as the
"Firm."
4.13.4.1.2 The Firm shall promptly solicit bids from
responsible prospective buyers to purchase (i) all, but not less
than all, of the assets of the Company; and/or (ii) all, but not
less than all, of the Membership Interest in the Company.
4.13.4.1.3. Each Member may submit a bid to the Firm to
purchase either the other Member's Membership Interest or all of
the assets of the Company, but no Member may bid, or enter into
an agreement with respect to such bid, with a Person that is not
an Affiliate of such Member.
4.13.4.1.4. If the Members cannot mutually agree on the
selection of a bid within thirty (30) days of the bid submission
date, the Firm shall promptly determine the highest responsible
bid, and notify the Members of its determination.
4.13.4.1.5. Upon the selection of a bid in accordance with
Section 4.13.4.1.4, each Member and the Company shall comply with
the bid. If the bid is to purchase the assets of the Company,
each Member shall cause the Company to sell all of its assets to
the selected bidder. If the bid is to purchase all the
Membership Interest in the Company, or in the case of Section
4.13.4.1.3, the other Member's Membership Interest in the
Company, each Member obligated to sell, shall sell its Membership
Interest to the selected bidder.
4.13.4.1.6. The net proceeds of any sale, occurring pursuant
to this Section 4.13 shall be distributed to: (i) each Member
selling its Membership Interest, or (ii) both Members, if the
assets of the Company are sold, all in accordance with the terms
of this Agreement. The Company shall be responsible for all fees
and costs incurred pursuant to this Section 4.13.
4.13.5. The right of first offer and right of first
refusal in Section 8.1 shall not be applicable in the event that
Deadlock has occurred.
4.13.6. If a sale pursuant to Section 4.13.4.1.5 occurs, then
the following shall apply:
4.13.6.1. In the case of a sale of all the Membership
Interest of both Members, or a sale of the Company's assets to a
Person or Persons not previously a Member and not currently an
Affiliate of a Member, the Members and the parents of both
Members shall be deemed to have "Divested" and to be "Divested
Sponsors" as those terms are defined in the Marketing Agreement.
For purposes of the Marketing Agreement, the date of such sale
shall be the "Divestment Date."
4.13.6.2. In the case of a sale of one Member's Membership
Interest to the other Member or to an Affiliate of the other
Member, or the sale of the Company's assets to one Member or to
an Affiliate of one Member, the Member and parent of the Member
who sells its Membership Interest or causes the Company to sell
the assets to the other Member or its Affiliate, shall be deemed
to have "Divested" and to be a "Divested Sponsor" as those terms
are defined in the Marketing Agreement. For purposes of the
Marketing Agreement, the date of such sale shall be the
"Divestment Date."
4.13.6.3 In the case of a sale of a Member's Membership Interest
to the other Member, to an Affiliate of the other Member, or to
Persons not currently a Member, the selling Member shall have the
obligation to assign the Post-Exercise Agreement to the
purchaser, and Gustafson, Inc. shall have the right, but not the
obligation, to assign the Pre-Exercise Agreement to the
purchaser.
Article V
MEETINGS OF MEMBERS
5.1 Meetings of and Voting by Members.
5.1.1. Meetings of the Members shall be held at least
annually in the month of March or such other time as designated
by the Board. A meeting of the Members may be called at any time
by four (4) voting Managers or by a Member Vote. Meetings of
Members shall be held at the Company's principal place of
business or at any other place designated by the Board. Not less
than fourteen (14) days, nor more than ninety (90) days, before
each meeting, the Person calling the meeting shall give written
notice of the meeting to each Member entitled to vote at the
meeting. The notice shall state the time, place, and purpose of
the meeting. Notwithstanding the foregoing provisions, each
Member who is entitled to notice waives notice if before or after
the meeting the Member signs a waiver of the notice that is filed
with the records of Members' meetings or is present at the
meeting in person or by proxy. Unless this Agreement provides
otherwise, at a meeting of the Members, the presence in person or
by proxy of all Members constitutes a quorum. A Member may vote
either in person or by written proxy signed by a duly authorized
officer of the Member.
5.1.2. Except as otherwise provided in this Agreement, the
affirmative vote of all Members shall be required to approve any
matter coming before the Members.
5.1.3. In lieu of holding a meeting, the Members may vote or
otherwise take action by a written instrument indicating the
consent of all Members.
5.1.4. A Member may grant a proxy entitling any other Person
appointed by the same Member to exercise his voting rights. Such
proxy shall be in writing and shall specify a termination date.
The other Member shall be entitled to inspect the proxy on
demand. Any proxy shall be filed with the minutes of the
meeting.
5.2 Services; Intercompany Dealings.
5.2.1. No Member shall be required to perform services
for the Company solely by virtue of being a Member. Unless
approved by Majority Vote of the Board, no Member shall perform
services for the Company or be entitled to compensation for
services performed for the Company.
5.2.2. Notwithstanding the foregoing, the Company is
authorized to enter into the Operative Agreements.
5.3 Duty of Members.
No Member or any of its Affiliates, nor any officer,
director, employee or former employee of any Member or its
Affiliates shall have any obligation, or be liable, to the
Company, or to any Person, including any other Member, or an
Affiliate of a Member, for: (i) exercising any of the rights of
such Member or such Affiliate under this Agreement or any of the
Operative Agreements to which such Member or its Affiliate is or
will be a party; (ii) exercising or failing to exercise its
rights as a Member of the Company; or (iii) breach of any
fiduciary or other similar duty to the Company, or any Person,
including any other Member or an Affiliate of a Member by reason
of such conduct, other than a breach of any Operative Agreement.
5.4 Resignation or Withdrawal.
No Member shall have the right to resign or withdraw from
the Company except upon termination of the Company as provided in
Section 9.4, or upon the transfer of such Member's Membership
Interest in accordance with Section 4.13 or Article VII.
Article VI
OFFICERS
6.1 Officers.
The Board shall have the power and authority to appoint a
president, secretary, chief financial officer, and such other
officers of the Company as the business of the Company may
require, each of whom shall hold office for such period, have
such authority and perform such duties as are provided in this
Agreement or as the Board determines. Any two or more offices
may be filled by the same person, except the offices of president
and chief financial officer.
6.2 Election and Term of Office.
The officers of the Company shall be elected by the Board at
any regular or special meeting of the Board. Each officer shall
hold office until his successor shall have been duly elected and
qualified or until his death, resignation or removal. Election
or appointment of an officer shall not of itself create contract
rights. The Board may authorize the Company to enter into an
employment contract with any officer in accordance with state
law, but no such contract shall impair the right of the Board to
remove any officer at any time in accordance with Section 6.3
hereof.
6.3 Removal.
Any officer may be removed by the Board, whenever in its
judgment the best interests of the Company will be served
thereby, but such removal, other than for cause, shall be without
prejudice to the contract rights, if any, of the person so
removed. The removal of the President shall include the removal
of such individual as a non-voting Manager.
6.4 Vacancies.
A vacancy in any office because of death, resignation,
removal, disqualification or otherwise, may be filled by the
Board for the unexpired portion of the term.
6.5 President.
Except as otherwise provided in this Agreement and
specifically by Section 4.1.2 hereof, the President of the
Company shall act as the chief executive officer and in general
supervise and control the day-to-day business and affairs of the
Company. The President shall see that all orders and resolutions
of the Board are carried into effect. He may sign, with the
Secretary of the Company or any other officer of the Company duly
authorized by the Board, deeds, mortgages, bonds, contracts, or
other instruments that the Board has authorized to be executed,
except in cases where the signing and execution thereof shall be
expressly delegated by the Board or by this Agreement to some
other officer or agent of the Company or shall be required by law
to be otherwise signed or executed. The President shall perform
such other duties as may be prescribed by the Board from time to
time.
6.6 Vice Presidents.
In the absence of the President or in the event of his
death, inability or refusal to act, a Vice President designated
by the Board shall perform the duties of the President, and when
so acting, shall have all the powers of and be subject to all the
restrictions upon the President. Any Vice President shall
perform such duties as from time to time may be assigned to him
by the President and by the Board. The Board may, at its
discretion, delegate to the President the authority to appoint
and remove vice presidents.
6.7 Secretary.
The Secretary shall keep the minutes of the meetings of
Members and of the Board in one or more books provided for such
purpose; cause to be given all notices of meetings of Members and
of the Board; be custodian of the corporate records and of the
seal of the Company and see that the seal of the Company is
affixed to all documents the execution of which on behalf of the
Company under its seal is duly authorized; have charge of the
record of Members; and in general perform all duties incident to
the office of secretary and such other duties as from time to
time may be assigned to the Secretary by the President or by the
Board.
6.8 Chief Financial Officer.
The Chief Financial Officer shall supervise the receipt and
custody of the Company's funds; cause to be kept correct and
complete books and records of account, including full and
accurate accounts of receipts and disbursements, in books
belonging to the Company; assume investment management
responsibility for all funds and securities of the Company; cause
to be prepared, distributed and retained all reports and records
required by law regarding the Company's financial status; and
perform such other duties as may be assigned to him, or
specifically required to be performed by him, by the President
and by the Board.
6.9 Remuneration.
The remuneration of officers shall be fixed from time to
time by the Board; provided, however, that the Board may delegate
to the President the authority to fix the salary of all or any
class of officers except the office of President.
Article VII
INDEMNIFICATION; LIMITATION OF LIABILITY; OTHER ACTIVITIES;
CONFIDENTIALITY
7.1 Indemnification by the Company.
The Company, to the fullest extent permitted by applicable
law, shall indemnify, defend and hold harmless any officer,
employee or agent of the Company (each a "Covered Company
Person") from and against any loss, damage, or claim incurred by
such Covered Company Person, including reasonable attorneys'
fees, disbursements and reasonable settlement payments, incurred
in connection with any claim, action, suit or proceeding or
threat thereof, made or instituted in which such Covered Company
Person may be involved or be made a party by reason of such
Covered Company Person's association with the Company, or by
reason of any act or omission performed or omitted by such
Covered Company Person acting in good faith on behalf of the
Company and in a manner reasonably believed to be within the
scope of authority conferred on such Covered Company Person by or
pursuant to this Agreement, except that no Covered Company Person
shall be entitled to be indemnified in respect of any loss,
damage or claim incurred by such Covered Company Person by reason
of gross negligence, bad faith, or willful misconduct with
respect to such act or omissions; provided, however, that any
indemnity under this Section 7.1 shall be provided out of and to
the extent of Company assets only, and no other Covered Company
Person and no Member or Manager shall have any personal liability
on account thereof.
7.2 Notice to Company.
In the event that any claim, demand, action, suit or
proceeding shall be instituted or asserted or any loss, damage or
claim shall arise in respect of which indemnity may be sought
pursuant to Section 7.1, such Covered Company Person shall
promptly notify the Company, in writing. Failure to provide
notice shall not affect the obligations hereunder except to the
extent the Company is actually prejudiced thereby.
7.3 Contest by Company.
The Company shall have the right to participate in and/or
control the defense of any such claim, demand, action, suit or
proceeding and, in connection therewith, to retain counsel
reasonably satisfactory to each Covered Company Person, at the
Company's expense, to represent each Covered Company Person and
any others the Company may designate in such claim, demand,
action, suit or proceeding. The Company shall keep the Covered
Company Person advised of the status of such claim, demand,
action, suit or proceeding and the defense thereof and shall
consider in good faith recommendations made by the Covered
Company Person with respect thereto.
7.4 Advances of Expenses by Company.
Expenses incurred by a Covered Company Person in defending any
claim, demand, action, suit, or proceeding subject to Section 7.1
shall, from time to time, upon request by the Covered Company
Person and approval of the Board, be advanced by the Company
prior to the final disposition of such claim, demand, action,
suit or proceeding upon receipt by the Company of an undertaking
by or on behalf of the Covered Company Person to repay such
amount if it shall be ultimately determined in a judicial
proceeding that such Covered Company Person is not entitled to be
indemnified as authorized in Section 7.1.
7.5 Indemnification by a Member.
Each Member, to the fullest extent permitted by applicable
law, shall indemnify, defend, and hold harmless the Company, each
Manager appointed by such Member, (including those who have been,
but no longer are, such Managers) and each other Member
(including those who have been, but no longer are, Members) (each
a "Covered Member Person") from and against any loss, damage, or
claim incurred by such Covered Member Person, including
reasonable attorneys' fees, disbursements and reasonable
settlement payments, incurred in connection with any claim,
action, suit or proceeding or threat thereof, made or instituted:
(i) in which the Company or the other Member may be involved, or
are brought by the Company or the other Member by reason of a
material breach of such Member's representations or covenants
under this Agreement or otherwise or (ii) in which the Manager
appointed by such Member may be involved or be made a party by
reason of such Manager's association with the Company or by
reason of any act or omission performed or omitted by such
Manager acting in good faith on behalf of the Member or the
Company and in a manner reasonably believed to be within the
scope of authority conferred on such Manager by such Member or
the Company, except that no Manager shall be entitled to be
indemnified in respect of any loss, damage or claim incurred by
such Manager by reason of gross negligence, bad faith, or willful
misconduct with respect to such act or omissions.
7.6 Notice to Member.
In the event that any claim, demand, action, suit or
proceeding shall be instituted or asserted or any loss, damage or
claim shall arise in respect of which indemnity may be sought
pursuant to Section 7.5, such Covered Member Person shall
promptly notify the indemnifying Member, in writing. Failure to
provide notice shall not affect the obligations hereunder except
to the extent the indemnifying Member is actually prejudiced
thereby.
7.7 Contest by Member.
The indemnifying Member shall have the right to participate
in and/or control the defense of any such claim, demand, action,
suit or proceeding and, in connection therewith, to retain
counsel reasonably satisfactory to each Covered Member Person, at
the Member's expense, to represent each Covered Member Person and
any others the Member may designate in such claim, demand,
action, suit or proceeding. The Member shall keep the Covered
Member Person advised of the status of such claim, demand,
action, suit or proceeding and the defense thereof and shall
consider in good faith recommendations made by the Covered Member
Person with respect thereto.
7.8 Advances of Expenses by Member.
Expenses incurred by a Covered Member Person in defending any
claim, demand, action, suit, or proceeding subject to Section 7.5
shall, from time to time, upon request by the Covered Member
Person and approval of the indemnifying Member, be advanced by
such Member prior to the final disposition of such claim, demand,
action, suit or proceeding upon receipt by such Member of an
undertaking by or on behalf of the Covered Member Person to repay
such amount if it shall be ultimately determined in a judicial
proceeding that such Covered Member Person is not entitled to be
indemnified as authorized in Section 7.5.
7.9 Other.
The indemnifications provided by Section 7.1 shall be in addition
to any other rights to which a Covered Company Person may be
entitled under any agreement, vote of the Board, or otherwise as
a matter of law or equity, both as to an action in the
indemnifying party's capacity as Company, and as to an action in
another capacity. The indemnifications provided by Section 7.5
shall be in addition to any other rights to which a Covered
Member Person may be entitled under any agreement, as a matter of
law or equity, or otherwise, both as to an action in the
indemnifying party's capacity as a Member, and as to an action in
another capacity.
7.10 Effect of Interest in Transaction.
No Covered Company Person or Covered Member Person shall be
denied indemnification in whole or in part under this Article VII
or otherwise by reason of the fact that the Covered Company
Person or Covered Member Person had an interest in the
transaction with respect to which the indemnification applies if
the transaction was otherwise permitted or not expressly
prohibited by the terms of this Agreement.
7.11 No Third Party Rights.
The provisions of this Article VII are for the benefit of the
Covered Company Persons and the Covered Member Persons and shall
not be deemed to create any rights for the benefit of any other
Persons.
7.12 Insurance.
7.12.1 The Company shall maintain, at its
expense, an insurance policy or policies with director, officer
or employee coverage of at least FIVE MILLION UNITED STATES
DOLLARS (US$5,000,000), to protect itself and any Covered Company
Person against liability arising out of this Agreement or
otherwise, whether or not the Company would have the power to
indemnify any such person against such liability under the laws
of the State. Each Member shall maintain, at its expense, an
insurance policy or policies to adequately protect itself and any
Manager appointed by such Member against liability arising out of
this Agreement or otherwise, whether or not the Member would have
the power to indemnify any such Manager against such liability
under the laws of the State. Each Member and the Company shall
provide to one another, upon request, evidence of such insurance.
7.12.2 The Company, at its expense, shall
maintain property and casualty and such other insurance, in such
amounts and against such risks, and with such deductibles and
self insured retention limits, as the Board may, by Majority
Vote, determine, provided however, that for the first year after
formation of the Company, the Company shall maintain such other
types and amounts of property and casualty insurance as was
carried and insured against by the Initial Members for their
Business. Upon request, the Company shall deliver to each Member
satisfactory evidence of any such coverage.
7.13 Limitation of Liability.
Neither the Members (nor any of their respective
Affiliates), nor the Managers, nor the Board shall be liable,
responsible or accountable in damages or otherwise to the Company
or the Members for any act or omission by any such Person (which
shall include any applicable entity) performed in good faith
pursuant to the authority granted to such Person by this
Agreement or in accordance with its provisions, and in a manner
reasonably believed by such Person to be within the scope of the
authority granted to such Person and in the best interest of the
Company; provided, however, that such Person shall retain
liability for acts or omissions that involve intentional
misconduct, a knowing violation of the law, a violation of
Section 18-607 of the Act (in the case of Members only) or for any
transaction from which the Person will personally receive a
benefit in money, property, or services to which the Person is
not legally entitled.
7.13.2 Each of the Partners shall at all times duly and punctually pay
and discharge its separate debts, obligations and liabilities of the
Company, whether arising in contract, tort, strict liability or otherwise,
shall be solely the debts, obligations and liabilities of the Company,
and none of the Members or the Managers shall be obligated
personally for any such debt, obligation or liability of the
Company solely by reason of being a Member or a Manager. The
failure of the Company to observe any formalities or requirements
relating to the exercise of its powers or management of its
business or affairs under the Act of this Agreement shall not be
grounds for imposing personal liability on the Members or the
Managers for liabilities of the Company.
7.14 Other Activities.
7.14.1 The Members and the Company each acknowledge that
a fundamental intent of this Agreement and expectation of the
Members and the Company is that, except as expressly provided in
this Agreement or in the Operative Agreements, (i) the Company
shall be the exclusive distribution channel for each Member and
their Affiliates for all Active Ingredients, Formulations,
Equipment and Other Products and/or Services for Seed Treatment
uses and applications in the Territory, and (ii) the Company
shall develop, formulate, manufacture, register, market and sell
Active Ingredients, Formulations, Equipment and Other Products
and/or Services only for Seed Treatment uses and applications
inside the Territory.
7.14.2 The Company and the Members hereto agree to
exercise in good faith all reasonable efforts to satisfy the
intent and expectation set forth in Section 7.14.1. In
furtherance of that intent, and to protect adequately the
Member's Membership Interest in the Company, it is necessary and
essential that the Company and the Members enter into and adhere
to the covenants contained in this Section 7.14.
7.14.3 Except as otherwise provided in the Operative
Agreements, no Member or its Affiliates shall, either directly or
indirectly: (i) Compete with the Company for Seed Treatment uses
and applications in the Territory; (ii) Invest or Participate in
any Person that Competes with the Company for Seed Treatment uses
and applications in the Territory, or market or sell any Post-
Exercise Products to any Person; or (iii) sell, market or
distribute Active Ingredients, Formulations, Equipment and Other
Products and/or Services to any Person that such Member or such
Affiliate knows or has reason to believe intends to market, sell,
distribute, use or apply such Active Ingredients, Formulations,
Equipment or Other Products and/or Services for Seed Treatment
uses or applications inside the Territory.
7.14.4 No employee of the Company, or employee or member
of the board of directors, managing board or similar governing
body ("Governing Body") of a Member or its Affiliates shall
serve as an employee or member of a Governing Body of a
Competitor of the Company.
Except as otherwise provided in the Operative
Agreements, the Company shall not develop, formulate,
manufacture, register, market or sell Active Ingredients,
Formulations, Equipment and Other Products and/or Services for
Seed Treatment uses and applications outside the Territory, or
for other than Seed Treatment, regardless of where the use or
application occurs, or otherwise Compete with either Member in
Seed Treatment uses or applications outside the Territory or in
other than Seed Treatment, regardless of where the use or
application occurs.
Each of the Members and the Company agree that during
the term of this Agreement, and continuing for twelve (12) months
thereafter, it will not, nor will it permit any of its Affiliates
to, solicit for employment or employ any employee employed by the
Company or either Member, other than any employee that has been
terminated by such party prior to such solicitation.
7.15 Confidential Information.
7.15.1 Except as may be specifically authorized in this
Agreement or the Operative Agreements, or as may be permitted by
agreements with Third Parties, or as may be specifically agreed
to by the Members and the Company in a writing signed by all
parties, the Company will hold the Confidential Information of
each Member, the Company and any Third Party in strict confidence
and take all reasonable steps to prevent use by, or disclosure
to, any other Person, which steps will include at least those
taken by the Company to protect its own Confidential Information
of like kind, or use or disclose any such Confidential
Information for any purpose except as provided in this Agreement,
agreements with Third Parties or the Operative Agreements.
7.15.2 Except as may be specifically authorized in this
Agreement or the Operative Agreements, or as may be permitted by
agreements with Third Parties, or as may be specifically agreed
to by the Members and the Company in a writing signed by all
parties, the Members will hold the Confidential Information of
the other Member, the Company and any Third Party in strict
confidence and take all reasonable steps to prevent use by, or
disclosure to, the other Member and any other Third Parties,
which steps will include at least those taken by the Member to
protect its own Confidential Information of like kind, or use or
disclose any such Confidential Information for any purpose except
as provided in this Agreement, agreements with Third Parties or
the Operative Agreements; provided however that a Member may
disclose Confidential Information of the Company and the other
Member to a Third Party in connection with a sale of the
Membership Interest pursuant to Sections 4.13 or Article VIII or
a transfer, by merger, consolidation, sale or otherwise, of the
stock of a Member or its Parent, or of all or substantially all
of the Crop Protection Business of a Member or its direct or
indirect parent; provided that prior to such disclosure, such
Third Party agrees in writing not to disclose such Confidential
Information to any other Third Parties or to otherwise use such
Confidential Information without the prior written permission of
the disclosing Member hereto.
7.15.3
7.15.3.1 Except as specifically authorized in this
Agreement or the Operative Agreements, the Company shall not
disclose any competitively significant Confidential Information
of a Member to any Manager who works in the crop protection or
agrochemical operations group of the other Member.
Except as permitted by agreements with Third
Parties, the Company will not disclose any competitively
significant Confidential Information of a Third Party to any
Member or Manager.
Except as may be specifically authorized in this
Agreement or the Operative Agreements, or as may be permitted by
agreements with a Member or as may be specifically agreed to by a
Member and the Company in writing, the Company will hold the
Confidential Information of each Member and each Member's
Affiliates in strict confidence, and take all reasonable steps to
prevent use by, or disclosure to one Member of Confidential
Information of the other Member, or the other Member's
Affiliates, which steps will include at least those taken by the
Company to protect its own Confidential Information of like kind,
provided however, the Company, subject to Section 7.15.3.1, may
disclose Confidential Information of a Member to the Board to
the extent such disclosure is required to permit the Board to
conduct the business and affairs of the Company pursuant to
Section 4.1. Each Manager shall be required to execute an
undertaking that, in the event the Manager of one Member is given
access to the Confidential Information of the other Member or its
Affiliates as a result of performing his duties on the Board, the
Manager shall hold the Confidential Information of the Member or
its Affiliates in strict confidence, and will not use the
Confidential Information for any purpose other than to perform
his duties on the Board, and will not disclose the Confidential
Information to any Person other than another Manager who is
authorized, pursuant to Section 7.15.3.1, to have access to such
Confidential Information.
Except as required by law and except for Securities and
Exchange Commission filings made by a Member, the Company and the
Members shall not make any announcement, press release or other
public statement relating in any manner to this Agreement, the
terms hereof or the relationship of the Members without first
obtaining the consent of the Members to the disclosure proposed
to be made. The Members hereto shall not unreasonably withhold
their consent to any request made by a party pursuant to this
Section 7.15.4. The Members and the Company shall use their best
efforts to consult and coordinate with each other before making
any announcement, press release or other public statement
required by law to be made.
Agreements with the Company.
Neither Member shall, without the approval of a Majority
Vote of the Board, permit any of its Affiliates to create, amend,
terminate or modify any arrangement, agreement or contract
between the Company and (i) any Member, Gustafson Partnership a
Subsidiary or any Partner, (ii) an Affiliate of a Member,
Gustafson Partnership, a Subsidiary or a Partner, or(iii) an
employee, executive officer or director or other board member or
representative of a Member, Gustafson Partnership, a Partner or a
Subsidiary. Neither Member, shall, without the unanimous consent
of the Board, permit any sublicense under the Cross License
Agreement by it or any of its Affiliates.
Article VIII
TRANSFERS AND ADMISSION OF NEW MEMBERS
8.1 Preemption Rights; Right of First Offer; Rights of First
Refusal.
Except for sales pursuant to Section 4.13, no Member shall
Transfer any or all of its Membership Interest without first
complying with this Section 8.1.
8.1.1. Right of First Offer. If a Member desires to Transfer
its Membership Interest, a Member may so notify the other Member
in the manner provided in Section 8.1.1.1 of its willingness to
Transfer ("Soliciting Offer"). As used in this Section 8.1.1,
the Member desiring to Transfer shall be referred to as the
"Soliciting Member", and the other Member shall be referred to as
the "NonSoliciting Member".
8.1.1.1. The Soliciting Member's Soliciting Offer shall
include: (i) the Percentage of Membership Interest being
proposed for Transfer which shall be that Soliciting Member's
entire Membership Interest; (ii) the date for responding to the
Soliciting Offer, which date shall not be less than thirty (30)
days after the date of the Soliciting Offer; (iii) the date of
closing of the purchase of the Membership Interest, which
purchase date shall not be more than one hundred and eighty (180)
days after the date of the Soliciting Offer; (iv) a proposed
purchase price for the Membership Interest, denominated and
payable in United States Dollars at closing ("Proposed Purchase
Price"); and (v) other basic terms and conditions of the proposed
Transfer.
8.1.1.2. A Soliciting Offer is provisionally accepted by the
NonSoliciting Member if a letter of intent is signed by the
Soliciting Member and the NonSoliciting Member in the manner and
within the time frame required in the Soliciting Offer, subject
to execution of the definitive purchase agreement in accordance
with the provisions of Section 8.1.1.3. The closing of the
transaction contemplated by such Soliciting Offer shall take
place at the office of the Soliciting Member's attorney in the
United States on a date which is the fifth (5) day following the
date that Section 8.1.3 has been satisfied, but in no event later
than one hundred and eighty (180) days after the date of the
Soliciting Offer.
8.1.1.3. If (i) a Soliciting Offer is rejected, or is not
accepted by the NonSoliciting Member as provided in Section
8.1.1.2, or (ii) a definitive purchase agreement is not signed by
both the Soliciting Member and the NonSoliciting Member within
forty-five (45) days of the NonSoliciting Member's acceptance of
such Soliciting Offer, despite the good faith efforts of the
Members to do so, or (iii) the Transfer of the Membership
Interest fails to close in accordance with the terms of the
purchase agreement (including the failure to satisfy Section
8.1.3), then, upon the occurrence of any of (i), (ii) or (iii),
during the period ending sixty (60) months following the date of
this Agreement, the Soliciting Member may provide the
NonSoliciting Member with a revised Soliciting Offer that
replaces the Proposed Purchase Price with the Calculated Purchase
Price and which revises the dates for response and closing to not
less than thirty (30) days from the date of the revised
Soliciting Offer and not more than one hundred and eighty (180)
days from the date of the revised Soliciting Offer, respectively.
8.1.1.4 Upon the occurrence more than sixty (60) months
following the date of this Agreement of any of (i), (ii) or (iii)
as provided in Section 8.1.1.3, if the Soliciting Member so
elects, the Soliciting Member and the NonSoliciting Member shall,
within forty-five (45) days of such occurrence engage a Neutral
Investment Bank to value the Membership Interest of the
Soliciting Member, denominated and payable in United States
Dollars ("IBank Value"). The engagement of the Neutral
Investment Bank shall be on the following terms and conditions:
(x) the banker shall be instructed to determine the Fair Market
Value of the entire Membership Interest of the Soliciting Member,
taking into account the terms and conditions of the Soliciting
Offer, other than price, (y) the instructions provided to the
Neutral Investment Bank are subject to the NonSoliciting Member's
approval, which approval shall not be unreasonably withheld, and
(z) at no time will the Neutral Investment Bank be advised of any
Member's current valuation of the Company and/or its Membership
Interest. Such IBank Value shall be provided within forty-five
(45) days of the engagement of the Neutral Investment Bank.
8.1.1.4.1 The Soliciting Member, after obtaining the
IBank Value as provided in Section 8.1.1.4, may provide the
NonSoliciting Member with a revised Soliciting Offer which
replaces the Proposed Purchase Price with the IBank Value and
which revises the dates for response and for closing to be thirty
(30) days from the date of the revised Soliciting Offer and one
hundred and eighty (180) days from the date of the revised
Soliciting Offer, respectively,
8.1.1.4.2 If within thirty (30) days after obtaining the
IBank Value as provided in Section 8.1.1.4, the Soliciting Member
does not provide the NonSoliciting Member with a revised
Soliciting Offer as provided in Section 8.1.1.4.1, the Soliciting
Member (i) shall pay the fees of the Neutral Investment Bank, and
(ii) may not Transfer its Membership Interest in accordance with
this Section 8.1.1 for a period of eighteen (18) months after the
date of receipt of the IBank Value, after which period the
Soliciting Member may Transfer such interest after again
complying with the provisions of this Section 8.1.1.
8.1.1.5 A revised Soliciting Offer, as provided in Section
8.1.1.3 or Section 8.1.1.4.1 ("Revised Soliciting Offer") is
provisionally accepted by the NonSoliciting Member if a letter of
intent is signed by the Soliciting Member and the NonSoliciting
Member in the manner and within the time frame required in the
Revised Soliciting Offer, subject to execution of the definitive
purchase agreement in accordance with the provisions of Section
8.1.1.6. The closing of the transaction contemplated by such
Revised Soliciting Offer shall take place at the office of the
Soliciting Member's attorney in the United States on a date which
is the fifth day following the date that Section 8.1.3 has been
satisfied, but in no event later than one hundred and eighty
(180) days after the date of the Revised Soliciting Offer, and
the fees of any Neutral Investment Bank engaged as provided in
Section 8.1.1.4 shall be paid one-half by the Soliciting Member
and one-half by the NonSoliciting Member.
8.1.1.6 If (i) a Revised Soliciting Offer is rejected, or is
not accepted by the NonSoliciting Member as provided in Section
8.1.1.5, or (ii) a definitive purchase agreement is not signed by
both the Soliciting Member and the NonSoliciting Member within
forty-five (45) days of the NonSoliciting Member's acceptance of
such Revised Soliciting Offer, despite the good faith efforts of
the Member to do so, or (iii) the Transfer of the Membership
Interest fails to close in accordance with the terms of the
purchase agreement (including the failure to satisfy Section
8.1.3), then, upon the occurrence of any of (i), (ii) or (iii),
the Soliciting Member may, during the eighteen (18) month period
following the occurrence of any of (i), (ii) or (iii),
("Solicitation Period"), Transfer all, but not less than all, of
the Membership Interest to a Third Party, on terms including
purchase price which are reasonably similar to those in the
Revised Soliciting Offer and which are economically equivalent or
greater than those in the Revised Soliciting Offer. Upon the
occurrence of any of (i), (ii) or (iii), the NonSoliciting Member
shall pay the fees of any Neutral Investment Bank, engaged as
provided in Section 8.1.1.4.
8.1.1.7 In the event the Membership Interest is not sold
within the periods provided in Section 8.1.1.5, the Soliciting
Member shall not, after the periods, Transfer such Membership
Interest to any Third Party, without first complying with Section
8.1.2 or, at the Soliciting Member's option, again complying with
this Section 8.1.1.
8.1.2 First Right of Refusal. If a Member at any time
receives a Bona Fide Offer for the purchase of its Membership
Interest, such Member (the "Soliciting Member") may, at its
option, give the other Member (the "NonSoliciting Member")
notice of such Bona Fide Offer (the "Third Party Soliciting Offer
Notice"), provide with the Third Party Soliciting Offer Notice a
copy of the Bona Fide Offer, and offer to Transfer such
Membership Interest to the NonSoliciting Member on the same terms
and conditions, including purchase price, as those contained in
the Bona Fide Offer, except that the closing shall take place at
least ninety (90) days, and no later than one hundred eighty
(180) days after the date of the Third Party Soliciting Offer
Notice.
8.1.2.1 Within thirty (30) days after receipt of the Third
Party Soliciting Offer Notice, the NonSoliciting Member may
elect, by written notice to the Soliciting Member, to purchase
such Membership Interest on the same terms and conditions as
contained in the Bona Fide Offer, as modified by the terms of
Section 8.1.2. Any Transfer shall be subject to the satisfaction
of any necessary approvals as provided in Section 8.1.3.
8.1.2.2 In the event the NonSoliciting Member rejects or
fails to accept such offer within such thirty (30) days as
provided in Section 8.1.2.1, the Soliciting Member shall be free
to Transfer such Membership Interest to such Third Party, on the
terms and conditions set forth in the Bona Fide Offer, subject to
any approvals required pursuant to Section 8.1.3, provided that
such Transfer occurs within two hundred and seventy (270) days
after the rejection or expiration of the period in which the
NonSoliciting Member might have accepted the offer set forth in
the Third Party Soliciting Offer Notice.
8.1.2.3 Any closing shall take place at the office of the
Soliciting Member's attorney in the United States.
8.1.2.4 In the event the Soliciting Member shall not close
the Transfer of such Membership Interest to the Third Party, on
the terms and conditions in the Bona Fide Offer within two
hundred seventy (270) days from the date the NonSoliciting Member
rejects or the expiration of the period in which the
NonSoliciting Member might have accepted the offer set forth in
the Third Party Offer Notice, then, except as may be otherwise
permitted by Section 8.1.1, should such Soliciting Member
thereafter elect to Transfer such Membership Interest to the same
or other Third Party, on the same or other terms and conditions,
the Soliciting Member shall be required to again comply with all
of the terms and provision of Section 8.1.2.
8.1.2.5 No Member may accept any offer from a Third Party for
the purchase of such Member's Membership Interest without such
Member having provided the other Member with a Third Party
Soliciting Offer Notice relative to such offer and having
otherwise complied with this Section 8.1.2.
8.1.3 Approvals. The Transfer of any Membership Interest
pursuant to Section 8.1 shall be subject to the requirements of
the HSR Act and all other applicable federal and state antitrust
statutes and the expiration of any applicable waiting periods in
connection therewith.
8.1.4 Notwithstanding anything to the contrary in Section 8.1, no
Member is obligated to comply with Sections 8.1.1 and 8.1.2 prior
to the Transfer of such Member's Membership Interest to an
Affiliate of such Member, if such Transfer is made with the prior
written consent of the other Member, which consent shall not be
unreasonably withheld, delayed or conditioned.
8.2 Involuntary Transfers.
8.2.1. Upon any Involuntary Transfer of all or any part
of an Interest to anyone other than a Member, the Member
suffering such Involuntary Transfer (the "Suffering Member")
shall immediately give notice of such Involuntary Transfer (the
"Offered Interest Notice") to the Company and the other Member
(the "NonSuffering Member").
8.2.2. If the Interest of a Member suffers an Involuntary
Transfer as described in Section 8.2.1, the NonSuffering Member
shall have the right to make an offer to purchase such Interest
under this Section 8.2.2 upon receipt of the Offered Interest
Notice or upon otherwise learning of the Involuntary Transfer
(the "Offered Interest"). The NonSuffering Member shall have a
period of thirty (30) days after the date of receipt of the
Offered Interest Notice in which to make an written offer (the
"Interest Offer") to purchase the Offered Interest under the
terms and conditions of this Section 8.2. Failure of the
NonSuffering Member to make an Interest Offer with the required
time period shall be deemed a rejection of the Offered Interest.
8.2.3. The purchase price for the Offered Interest shall be
determined in accordance with this Section 8.2.3. The purchase
price to be paid for the Offered Interest shall be equal to the
fair market value of such Offered Interest on the date of the
offer to purchase the Offered Interest (the "Price"). If the
holder of the Offered Interest ("Interest Seller") and the
NonSuffering Member are able to reach agreement as to the Price,
such agreed Price shall govern. If the Interest Seller and the
NonSuffering Member cannot agree on a Price within forty-five
(45) days after the date of the Interest Offer, the Price shall
be determined by a Neutral Investment Bank appointed by the
Interest Seller and the NonSuffering Member within one hundred
and five (105) days after the date of the Interest Offer. If the
Interest Seller and the NonSuffering Member cannot agree on a
Neutral Investment Bank within such period, the Price shall be
determined jointly by a Neutral Investment Bank representing the
Interest Seller and a Neutral Investment Bank representing the
NonSuffering Member (collectively if more than one), each to be
appointed within such sixty (60) day period. If the Neutral
Investment Banks are unable to agree on a Price within thirty
(30) days after the latest date of appointment, they shall within
thirty-five (35) days after such latest date of appointment
select a third Neutral Investment Bank who shall determine within
thirty (30) days after its appointment the Price by arriving at a
valuation either equal to that determined by one of the initial
Neutral Investment Banks or between both initial valuations.
Notwithstanding the foregoing sentence, if the higher of the
values determined by the initial Neutral Investment Banks is not
in excess of 115% of the value determined by the third Neutral
Investment Bank, the Neutral Investment Banks shall be deemed to
have agreed upon a Price equal to the average of the two
determinations. If the two initial Neutral Investment Banks are
unable to agree on a third Neutral Investment Bank, they shall
each appoint an independent Neutral Investment Bank within
thirty-five (35) days after the date that they are unable to
agree on the third Neutral Investment Bank. The two independent
Neutral Investment Banks shall elect within thirty (30) days
after the latest appointment elect a third Neutral Investment
Bank. Each of the Interest Seller and the NonSuffering Member
shall bear the cost and expenses of the Neutral Investment
Bank(s) it or they appoint, and each shall bear one-half of the
cost and expenses of the third Neutral Investment Bank or the
sole Neutral Investment Bank if only one is appointed. The
NonSuffering Member shall have a period of ten (10) days after
the date of agreement as to Price, or after the date of receipt
of the Price calculated by the Neutral Investment Banks in
accordance with this Section 8.2.3 in which to give notice that
it will purchase the Offered Interest at the Price ("Price
Notice"). Failure of the NonSuffering Member to give such notice
within the required time period shall be deemed a rejection of
the Offered Interest.
8.2.4. The Price shall be paid entirely in cash. The closing
of the purchase and sale of the Offered Interest shall occur on
the later of (i) eighty (80) days following the date of the
Interest Offer or (ii) thirty (30) days after the Price Notice.
The Offered Interest shall be transferred free and clear of all
taxes, debts, claims, judgments, liens, encumbrances or other
defects.
8.2.5. Any sale of the Offered Interest shall be subject to
the requirements of the HSR Act and all other applicable federal
and state antitrust statutes and expiration of applicable waiting
periods in connection therewith.
8.2.6. If the Offered Interest is rejected by the
NonSuffering Member as described in Section 8.2.2 or 8.2.3, the
NonSuffering Member will be deemed to have consented to the sale
of the Offered Interest and the Membership Rights associated with
such Offered Interest, and the admission of the purchaser of such
Offered Interest as an admitted Member. If an Involuntary
Transfer is not completed pursuant to Section 8.2, the Interest
Seller shall be deemed to have not received consent from the
NonSuffering Member (unless the NonSuffering Member waives in
writing its right to consent pursuant to Section 8.7) to the sale
of the Membership Interest and admission of the purchaser as a
Member; and accordingly such purchaser shall be a Transferee of
any or part of the Interest of the Interest Seller and shall not
be an admitted Member; and the Interest Seller shall be deemed to
have assigned its Membership Rights, including its right to
appoint Managers, as to such Offered Interest to the NonSuffering
Member. The Offered Interest shall remain subject to this
Section 8.2 with respect to any later Involuntary Transfer.
8.3 Change of Control
Upon the occurrence of a Change of Control with respect to
any Member (the "Notifying Member") the Notifying Member shall
promptly deliver written notice thereof (a "Change of Control
Notice") to the other Member (the "Non-Notifying Member"),
together with reasonable details specifying the applicable
section of this Agreement constituting such Change of Control has
occurred, and such additional information reasonably requested by
the Non-Notifying Member. During the forty-five (45) days
following the date of the Change of Control Notice, the Non-
Notifying Member shall deliver to the Notifying Member a written
response which shall either (i) state that the Non-Notifying
Member will take no action pursuant to this Section regarding
such Change of Control, or (ii) state the Non-Notifying Member's
election to purchase the Notifying Member's Membership Interest
as provided in this Section at the Calculated Purchase Price. The
closing of the resulting transaction will take place within
thirty (30) days after delivery of such response to the Notifying
Member, subject to the requirements of the HSR Act and all other
applicable antitrust statutes and the expiration of applicable
waiting periods in connection therewith. At such closing (x) the
Non-Notifying Member shall deliver to the Notifying Member the
Calculated Purchase Price in U.S. dollars, by wire transfer of
same day funds to the account specified by the Notifying Member
in writing at least two (2) business days prior to such closing
and (y) the Notifying Member shall deliver to the Non-Notifying
Member a written instrument of transfer (in form and substance
reasonably satisfactory to such Non-Notifying Member) duly
authorized, executed and delivered by the Notifying Member,
transferring the Notifying Member's Membership Interest to the
Non-Notifying Member free and clear of all taxes, debts, claims,
judgements, liens, encumbrances or other charges against such
Interest or other defects of title to such Interest. The failure
of any Notifying Member to deliver a Change of Control Notice as
required hereby shall not relieve the Notifying Member of its
obligations hereunder or otherwise affect the rights and
obligations of the parties hereunder. If the Non-Notifying
Member elects to purchase the Notifying Member's Membership
Interest as provided in this Section and if due to the
requirements of applicable antitrust statutes the transaction is
not closed within three hundred sixty (360) days after delivery
to the Notifying Member of the Non-Notifying Member's written
response stating such election, the Notifying Member shall have
no obligation to transfer its Membership Interest to the Non-
Notifying Member pursuant to this Section 8.3.
8.4 Admission of Transferee.
A Transferee will be admitted as a Member only upon the
satisfaction or waiver of conditions set forth in this Section
8.4.
8.4.1. The other Member must consent to the admission of
the Transferee, which consent may be given or denied in the
absolute discretion of the other Member. If a sale is completed
pursuant to Section 4.13, 8.1, 8.2 or 8.3, the Members or Member
shall be deemed to have consented to the Transfer of Membership
Interest and the admission of a Transferee of the Interest as an
admitted Member of the Company. If a Member transfers any or all
of its Membership Interest to an Affiliate of such Member with
the prior written consent of the other Member, the other Member
shall be deemed to have consented to the admission of such
Affiliate as a Member.
8.4.2. The Interest with respect to which the Transferee
is seeking admission as a Member must have been acquired in
accordance with this Agreement.
8.4.3. The Transferee must become a party to this Agreement
as a Member and must execute such documents and instruments as
the other Member may reasonably request (including, without
limitation, amendments to the Agreement or the Certificate of
Formation) to confirm such Transferee as a Member in the Company
and such Transferee's agreement to be bound by the terms and
conditions of this Agreement.
8.4.4. The Transferee must pay or reimburse the Company for
all reasonable legal, filing, and publication costs that the
Company incurs in connection with the admission of the Transferee
as a Member with respect to the Transferred Interests.
8.4.5. The Transferee must provide the Company with an
opinion of counsel satisfactory to counsel for the Company that
the Transfer of the Interest was lawful and in accordance with
the provisions of this Agreement.
8.5 Rights of Unadmitted Transferees.
A Person who becomes a Transferee of Interest but who
is not admitted as a Member pursuant to Section 8.4 shall be
entitled only to allocations and Distributions with respect to
such Interest in accordance with this Agreement. Such Person
shall have no Membership Rights, no right to appoint Managers, no
voting rights, no right to participate in the management of the
business, to see books and records, and shall not have any of the
rights of a Member under the Act or this Agreement.
8.6 No Right to Payment on Disassociation.
In the event of disassociation of a Member (as set forth in
the Act) such dissociated Member or its Transferee shall not be
paid the fair market value of such Member's Interest. The
dissociating Member shall have only the rights specified in this
Agreement.
8.7 Preemptive Rights.
The Members shall have the ability to create and sell any
additional Membership Interest on terms satisfactory to both
Members and to admit the purchaser of such Membership Interest as
a Member pursuant to the terms of this Agreement. Each Member
shall have preemptive rights with respect to any additional
Membership Interest or Interest sold by the Company.
8.8 Waiver.
The right of first offer and/or first refusal contained in
Section 8.1 or the right to purchase the Offered Interest as
provided in Section 8.2 may be waived in a writing signed by a
Member who is entitled to exercise that right with respect to a
particular Transfer or Involuntary Transfer in which event the
Membership Interest may be sold, or a previous Transfer or
Involuntary Transfer may be confirmed to be free and clear of the
provisions of this Section 8. A certificate executed and
acknowledged by the president or other duly authorized officer of
a Member, on behalf of the Member, stating that the provisions of
Sections 8.1 or 8.2 have been met by a Selling Member, Soliciting
Member or Interest Seller, or that the provisions have been duly
waived by the certifying Member, or that the Transfer is exempt
from Sections 8.1 and 8.2 shall be conclusive upon the certifying
Member in favor of all Persons who rely thereon in good faith.
Such certificate shall be furnished to any Member who has in fact
complied with the provisions of Sections 8.1 or 8.2.
Article IX
DISSOLUTION AND LIQUIDATION
9.1 Events of Dissolution.
The Company shall be dissolved upon the happening of any of
the following events:
9.1.1. when terminated pursuant to the terms of Section 2.4;
or
9.1.2. upon the written agreement of all Members.
9.1.3. upon a sale of all or substantially all of the
Company's assets and the receipt of the proceeds therefore.
9.2 Not Dissolution.
The resignation, withdrawal, expulsion, or bankruptcy of a
Member or the occurrence of any other event that otherwise
terminates the continued membership of a Member in the Company
shall not result in the dissolution of the Company, but shall
trigger the provisions set forth in Section 8.2.
9.3 Procedure for Winding Up and Dissolution.
If the Company is dissolved, the Board shall wind up its
affairs. On winding up of the Company, the assets of the Company
shall be distributed, first, to creditors of the Company,
including Members who are creditors, in satisfaction of the
liabilities of the Company, and then, amounts in excess of any
reserves deemed reasonably necessary by the Board to pay all of
the Company's claims and obligations shall be distributed to the
Interest Holders in accordance with their Capital Accounts.
9.4 Termination.
The Board shall comply with any requirements of applicable
law pertaining to the winding up of the affairs of the Company
and the final Distributions of its assets. Upon completion of
the winding up, liquidation and Distributions of the assets, the
Company shall be deemed terminated.
Article X
BOOKS, RECORDS, AND ACCOUNTING
10.1 Bank Accounts.
All funds of the Company shall be deposited in a bank
account or accounts opened in the Company's name. The Board
shall determine the institution or institutions at which the
accounts will be opened and maintained, the types of accounts,
and the Persons who will have authority with respect to the
accounts and the funds therein.
10.2 Books and Records.
10.2.1. The Board shall keep or cause to be kept
separate, complete and accurate books and records of the Company
and supporting documentation of the transactions with respect to
the conduct of the Company's business. Such books and records
shall include, but not be limited to, the following:
(a) a current list of the full name and last known business,
residence and mailing address of each past and present Member and
Manager;
(b) copies of the Company's federal, state and local tax
returns, monthly, quarterly and annual financial statements and
reports described in Section 10.4 of this Agreement for the six
(6) most recent fiscal years;
(c) copies of the Certificate of Formation and prior and
present limited liability company agreements and all amendments
thereto; and
(d) minutes of all meetings of Members and Managers.
10.2.2. Each Member may request and shall promptly receive
copies of and/or may inspect and copy during ordinary business
hours and at the principal place of business of the Company any
and all books and records of the Company, including, but not
limited to, those listed in Section 10.2.1 of this Agreement;
provided, however, that the Company is not obligated to disclose
to any Member any confidentiality, secrecy or similar agreements
with Third Parties, or any agreements that, by doing so, would
result in the Company being in breach of that agreement.
10.2.3. The books and records shall be maintained in
accordance with U.S. GAAP.
10.2.4. Each Member shall reimburse the Company for all costs
and expenses incurred by the Company in connection with the
Member's inspection and copying of the Company's books and
records, but only to the extent such copying requires more than
one (1) person day of the Company's time, otherwise such copying
shall be at the expense of the Company.
10.3 Annual Accounting Period.
The annual accounting period of the Company shall be its
taxable year. The Company's taxable year shall be selected by
the Board, subject to the requirements and limitations of the
Code.
10.4 Reports.
10.4.1. Annual Report. The Company shall file an annual
report as required by the Secretary of State.
10.4.2. Reports to Members. The Managers shall cause to be
prepared and sent to both Members the following, all at the
Company's expense:
(a) on or prior to the last business day of the business
month following the end of each fiscal quarter of a Fiscal Year,
the Company shall cause to be delivered to each Member unaudited
balance sheets of the Company as at the end of such quarter and
the related statements of income and statements of cash flow for
the period from the beginning of such Fiscal Year to the end of
such quarter, and for the period from the beginning of such
quarter to the end of such quarter, in each case prepared in
accordance with U.S. GAAP applied on a basis consistent with the
audited financial statements of the Company, subject to changes
resulting from audit and normal year-end adjustments. The
Company shall also cause to be provided to each Member, together
with such financial statements, such supplemental financial
information of the Company as is necessary to permit the parent
of such Member to prepare consolidated group financial statements
under the accounting standards applicable to the parent of the
Member;
(b) within ninety (90) days after the end of each Fiscal
Year, the Company shall cause to be delivered to each Member
audited balance sheets of the Company as at the end of such
Fiscal Year and the related statements of income and statements
of cash flow of the Company for such Fiscal Year, all in
reasonable detail and accompanied by a report thereon of the
Company's independent auditors as to such financial statements
presenting fairly the financial position of the Company as at the
dates indicated, and the results of their operations, cash flows
and changes in their financial position for the period indicated
in conformity with U.S. GAAP applied on a basis consistent with
prior years (except as noted in the notes thereto), and as to
such audit having been made in accordance with U.S. GAAP. The
Company shall also cause to be provided to each Member, together
with such annual financial statements, a statement of the balance
of such Member's Capital Account. Not more than once per
calendar year in connection with the annual audit, and not more
than once in connection with each other audit conducted at the
unanimous request of the Members, each Member and the principal
independent auditor of the parent of such Member (acting at the
expense of such Member) shall have full access to the audit
workpapers of the Company's auditors prepared in connection with
issuing their audit report on the Company's financial statements
and supporting Company documents (but not to any proprietary data
processes of the Company's auditors), and the right to discuss
such matters with the Company's auditors and management of the
Company;
(c) within fifteen (15) days of the end of each business
month, the Company shall cause to be delivered to each Member
unaudited internal management reports setting forth unaudited
financial statements of the Company, including: balance sheet and
profit and loss statement prepared in accordance with U.S. GAAP;
(d) within five (5) business days following the end of each
business month, the Company shall cause to be delivered to each
Member an unaudited statement of aggregate gross sales and
aggregate net sales for such month;
(e) no later than ninety (90) days before the end of each
Fiscal Year, a proposed budget for the next Fiscal Year.
10.5 Tax Matters Member.
Gustafson, Inc. shall be the Company's tax matters partner
("Tax Matters Member"). The Tax Matters Member shall have all
powers and responsibilities of a "tax matters partner" as defined
in Section 6231 of the Code. The Tax Matters Member shall keep
all Members informed of all notices from government taxing
authorities that may come to the attention of the Tax Matters
Member. The Company shall pay and be responsible for all
reasonable Third-Party costs and expenses incurred by the Tax
Matters Member in performing those duties. A Member shall be
responsible for any costs incurred by the Member with respect to
any tax audit or tax-related administrative or judicial
proceeding against any Member, even though it relates to the
Company. The Tax Matters Member shall obtain the approval of all
Members for the filing of each United States federal income tax
return or amended federal income tax return and shall not agree
to any adjustment proposed by the Internal Revenue Service with
respect to the Company, or any tax item of the Company, that may
have an adverse effect on any Member without the approval of all
Members. The Tax Matters Member shall use its best efforts to
keep all Members informed about material developments in any
Internal Revenue Service audit of the Company.
10.6 Tax Elections.
The Board shall have the authority to make all Company
elections permitted under the Code, including, without
limitation, elections of methods of depreciation. The Company
shall make the election under Section 754 of the Code. The
decision to make or not make any other election shall be at the
Board's sole and absolute discretion.
10.7 Title to Company Property.
10.7.1. Except as provided in Section 10.7.2, all real
and personal property acquired by the Company shall be acquired
and held by the Company in its name.
10.7.2. The Board may direct that legal title to all or any
portion of the Company's property be acquired or held in a name
other than the Company's name. Without limiting the foregoing,
the Board may cause title to be acquired and held in its name or
in the names of trustees, nominees, or straw parties for the
Company. It is expressly understood and agreed that the manner
of holding title to the Company's property (or any part thereof)
is solely for the convenience of the Company and all of that
property shall be treated as Company property.
10.7.3. If a Member or an Affiliate of a Member undertakes
significant work with any auditor engaged by the Company, such
Member shall promptly notify the other Member. The other Member
shall have the right to request that the Company's auditor
resign the engagement with the Company. Any auditor engaged by
the Company shall agree in the engagement letter that if such
auditor determines at any time during the engagement that a
conflict of interest exists between the auditor, and the Company
or a Member, the auditor shall notify the Company and the Members
of the conflict of interest. Upon such notification, the Company
or either Member has the right to request that the Company's
auditor resign the engagement with the Company.
Article XI
AMENDMENTS; GENERAL PROVISIONS
11.1 Assurances.
Each Member shall execute all certificates and other
documents and shall do all such filing, recording, publishing,
and other acts as the Board deems appropriate to comply with the
requirements of law for the formation and operation of the
Company and to comply with any laws, rules, and regulations
relating to the acquisition, operation, or holding of the
property of the Company.
11.2 Complete Agreement.
This Agreement constitutes the complete and exclusive
statement of the agreement among the Members. It supersedes all
prior written and oral statements, including any prior
representation, statement, condition, or warranty.
11.3 Applicable Law.
All questions concerning the construction, validity, and
interpretation of this Agreement and the performance of the
obligations imposed by this Agreement shall be governed by the
internal law, not the law of conflicts, of the State of Delaware.
11.4 Section Titles.
The headings herein are inserted as a matter of convenience
only and do not define, limit, or describe the scope of this
Agreement or the intent of the provisions hereof.
11.5 Binding Provisions.
This Agreement is binding upon, and inures to the benefit
of, the parties hereto and their respective administrators,
personal and legal representatives, successors, and permitted
assigns.
11.6 Notice.
All notices, offers and other communications required or
permitted by this Agreement shall be in writing in the English
language, may be given by a party or its legal counsel, and shall
be deemed to have been duly given or made (i) when personally
delivered (provided written confirmation thereof is also
delivered in person or by express courier), or (ii) upon delivery
by Federal Express Mail or similar nationally recognized express
courier service which provides evidence of delivery, or (iii)
upon delivery of a facsimile transmission, provided a copy
thereof is also delivered in person or by express courier:
Notice to Gustafson, Inc., Trace Chemicals, Inc., and C&K shall
be sufficient if given to:
Crompton & Knowles Corporation
One Station Place-Metro Center
Stamford, CT 06902
Attn.: Charles J. Marsden, Senior Vice President
and Chief Financial Officer
Facsimile Number: (203) 353-5424
Telephone Number: (203) 353-5416
with a copy to:
Crompton & Knowles Corporation
One Station Place-Metro Center
Stamford, CT 06902
Attn.: John T. Ferguson II, Vice President, General Counsel
and Secretary
Facsimile Number: (203) 353-5423
Telephone Number: (203) 353-5405
If to the Company to:
Gustafson LLC
1400 Preston Road, Suite 400
Plano, TX 75093
Attn.: T. Gilliam Austin, President
Facsimile Number: (972) 985-1696
Telephone Number: (972) 985-8877
In the event any Member gives notice to the Company pursuant
to this Agreement, that Member shall also provide a copy of such
notice to the other Member. Each party shall have the right to
designate other or additional addresses or addressees for the
delivery of notices, by giving notice as provided in this Section
11.6.
11.7 Terms.
Common nouns and pronouns shall be deemed to refer to the
masculine, feminine, neuter, singular, and plural, as the
identity of the Person may in the context require.
11.8 Severability of Provisions.
Each provision of this Agreement shall be considered
severable; and if, for any reason, any provision or provisions
herein are determined to be invalid and contrary to any existing
or future law, such invalidity shall not impair the operation of
or affect those portions of this Agreement that are valid.
11.9 Alternative Dispute Resolution.
11.9.1. Subject to Sections 11.9.2 and 11.9.3, if a
Dispute arises under this Agreement that cannot be resolved
informally by the parties in interest (including any Disputes
between any former Member or the successors, trustees, assigns or
administrators of a Member or former Member on the one hand and
the Company on the other hand), a party to the Dispute shall
invoke the procedures set forth in Exhibit C. All Disputes will
be solely and finally settled by this Section 11.9 and such
procedures.
11.9.2. Notwithstanding anything in Section 11.9.1 to the
contrary:
11.9.2.1. Nothing in Section 11.9.1 shall preclude any party
from seeking a preliminary injunction or other provisional
relief, either prior to, during or after the proceeding provided
for in Section 11.9.1, if in its judgment such action is
necessary to avoid irreparable damage or to preserve the status
quo.
11.9.2.2. The parties shall accept as correct, final, binding
and conclusive the determination by the outside accountants then
employed by the Company as to the calculation of any and all
amounts owed by one party to the other hereunder, and such
determination shall not be subject to the provisions of Section
11.9.1. Disputes as to the proper interpretation of the
provisions of this Agreement that describe how those amounts are
to be calculated, however, shall be subject to the provisions of
Section 11.9.1.
11.9.2.3. Any recommendation, approval or determination by
the Members to remove a Person from office that they are
empowered to make, give or withhold, or take under this Agreement
with or without cause when taken in accordance with the terms and
provisions of this Agreement, shall not be subject to the
provisions for dispute resolution in this Section 11.9.
11.9.3. Waiver of Trial By Jury. THE MEMBERS, FOR THEMSELVES
AND FOR THE COMPANY, EACH KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHT EACH MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT, OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN), OR
ACTIONS OF THE OTHER PARTIES IN CONNECTION HEREWITH.
11.9.4. Consent to Jurisdiction. The Members, for themselves
and for the Company, each irrevocably consent that any action or
proceeding against it under, arising out of or in any manner
relating to this Agreement shall be brought in Delaware state or
Federal court. The Members and the Company hereby each expressly
and irrevocably assent and submit to the personal jurisdiction of
any such court in any such action or proceeding. The Members and
the Company each further irrevocably consent to the service of
summons, notice, or other process relating to any such action or
proceeding by delivery thereof by hand or by mail in the manner
provided for in Section 11.6 of this Agreement and consent that
it may be served with any process or paper by registered mail or
by personal service within or without the State of Delaware, in
accordance with applicable law. The Members and the Company each
waive any objection, claim or defense which it may have at any
time to the laying of venue of any such action or proceeding in
any such court; irrevocably waive any claim that any such action
or proceeding brought in any such court has been brought in an
inconvenient forum; and further irrevocably waive the right to
object, with respect to any such action or proceeding brought in
any such court, that such court does not have jurisdiction over
such party.
11.9.5. Notwithstanding anything in Section 11.9 to the
contrary, a Deadlock shall not be considered a Dispute and shall
not be resolved in accordance with Section 11.9 or Exhibit C, but
shall be resolved in accordance with the provisions of Section
4.13.
11.10 Counterparts.
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original and all
of which, when taken together, constitute one and the same
document. The signature of any party to any counterpart shall be
deemed a signature to, and may be appended to, any other
counterpart.
11.11 Estoppel Certificate.
Each Member shall, within ten (10) days after written
request by the Board, deliver to the requesting Person a
certificate stating, to the Member's knowledge, that (a) this
Agreement is in full force and effect; (b) this Agreement has not
been modified except by any instrument or instruments identified
in the certificate; and (c) there is no default hereunder by the
requesting Person, or if there is a default, the nature and
extent thereof.
11.12 Amendment
This Agreement may be amended by an affirmative vote of all
Members; provided, however, that no amendment that materially
reduces the Distributions that may be made to a Member (or
changes the Profit or Loss allocation to an Interest Holder) may
be made without such Member's or such Interest Holder's, as the
case may be, prior consent.
11.13 Consents.
Unless otherwise explicitly provided for herein, any and all
consents, agreements or approvals provided for or permitted by
this Agreement shall be in writing and a signed copy thereof
shall be filed and kept with the books of the Company.
11.14 Legends.
If certificates for any Interest are issued that evidence a
Member's Interest, each such certificate shall bear such legends
as may be required by applicable federal and state laws, or as
may be deemed necessary or appropriate by the Board to reflect
restrictions upon transfer contemplated herein.
11.15 Parties in Interest.
Nothing in this Agreement is intended to confer any rights
or remedies on any Persons other than the Company and the
Members. This Agreement shall not be construed to relieve or
discharge any obligations or liabilities of Third Parties, nor
shall it be construed to give Third Parties any right of
subrogation or action over or against the Members or the Company.
11.16 Counting of Time.
Whenever time is to be counted hereunder, counting will
commence on the day notice is deemed duly given pursuant to
Section 11.6 and continue for consecutive calendar days through
and including the final day of the relevant period provided for
in this Agreement.
11.17 English Language.
This Agreement is made and entered into in the English
language, which language shall be controlling in all respects.
All communications and notices from any party to another shall
likewise be in the English language.
11.18 Exhibits.
The Exhibits to this Agreement are as follows and will be
attached hereto and are incorporated herein by reference.
Exhibit A: Member's Names, Percentage, Capital
Contributions.
Exhibit B: Form Of Certificate for Gustafson LLC.
Exhibit C: Alternative Dispute Resolution Procedures.
Exhibit D: Forms of Operative Agreements.
(the next page is the signature page)
IN WITNESS WHEREOF, the parties hereto have executed this Limited
Liability Company Agreement as of the date and year first above
written.
TRACE CHEMICALS, INC.
By:/s/T. Gilliam Austin
T. Gilliam Austin
President
GUSTAFSON, INC.
By:/s/T. Gilliam Austin
T. Gilliam Austin
President
(Additional Members' Signature Page Attached)
EXHIBIT A
To
Limited Liability Company Agreement
Of Gustafson LLC
[Intentionally Deleted]
EXHIBIT B
To
Limited Liability Company Agreement
Of Gustafson LLC
CERTIFICATE FOR MEMBERSHIP INTEREST IN GUSTAFSON LLC
(FACE OF CERTIFICATE)
THE MEMBERSHIP INTERESTS AND UNITS REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR UNDER THE SECURITIES LAWS OF ANY STATE.
SUCH MEMBERSHIP INTERESTS AND UNITS MAY NOT BE SOLD OR
TRANSFERRED UNLESS SUBSEQUENTLY REGISTERED OR UNLESS AN EXEMPTION
FROM REGISTRATION IS AVAILABLE. THE AGREEMENT (AS DEFINED BELOW)
PROVIDES FOR FURTHER RESTRICTIONS ON TRANSFER OF THE MEMBERSHIP
INTERESTS AND UNITS REPRESENTED HEREBY.
Certificate No. ____
T. Gilliam Austin. as President of GUSTAFSON LLC, a Delaware
limited liability company (the "Company"), hereby certifies that
__________ is the holder of _____ Units of, and a ________
percent (__%) Membership Interest in, GUSTAFSON LLC, as those
terms are defined in the Limited Liability Company Agreement of
GUSTAFSON LLC, effective as of September 23, 1998, as the same
may be amended and restated from time to time (the "Agreement")
(copies of which are on file at the principal office of the
Company).
This Certificate is not negotiable or transferable except by
operation of law, or as otherwise provided in the Agreement, and
any such transfer will be valid only upon delivery of this
Certificate, together with an assignment in a form sufficient to
convey a Membership Interest pursuant to the Agreement and the
Delaware Limited Liability Company Act, as it may be amended and
in effect from time to time, or any successor statute thereto),
duly executed, to the Managers of the Company.
T. Gilliam Austin, President GUSTAFSON LLC
A Delaware Limited Liability Company
Effective as of September 23, 1998
EXHIBIT C
To
Limited Liability Company Agreement
Of Gustafson LLC
ALTERNATIVE DISPUTE RESOLUTION PROCEDURES
A. Method of Invoking ADR Procedures
1. These procedures may be invoked by any party by
giving written notice to the others of the dispute and
designating one or more persons (collectively, the "Designee") to
act on behalf of the disputing party regarding the dispute. The
other parties shall be required to respond to the disputing
party's notice within ten (10) business days by designating in
writing its own Designee. A party may choose to represent
itself, or if it appoints a Designee, its officers may
nonetheless attend such meetings.
2. The parties, each acting through its Designee, shall
meet at a mutually acceptable time and place within ten (10)
business days after the non-disputing party designates its
Designee to the others. At that meeting, the parties shall
attempt in good faith to negotiate a resolution of the dispute,
or failing that, to agree on a method for resolving the claim or
dispute.
3. If, within ten (10) business days after the first
meeting or within such longer period of time as the parties may
mutually agree, the parties have not succeeded in negotiating a
resolution of the claim or dispute or agreeing on a dispute
resolution mechanism, they shall submit the dispute to mediation
in accordance with the procedures set forth herein.
4. The parties will jointly appoint a mutually
acceptable mediator to mediate the dispute. If the parties are
unable to agree on a mutually acceptable mediator within five (5)
business days after the conclusion of the negotiations described
in paragraph 3 above, then the parties shall select a neutral
Third Party from American Arbitration Association ("AAA") in New
York, New York, with the assistance of AAA, unless the parties
agree otherwise in finding a mutually acceptable mediator.
5. Each party to the dispute shall bear an equal share
of the fees and costs of the mediator, and any fees and costs of
AAA.
6. The parties agree to participate in good faith in the
mediation and negotiations related thereto for a period of thirty
(30) days from appointment of a mediator by any of the parties or
the AAA.
7. The parties agree that the mediation period may be
extended for an additional thirty (30) days beyond the initial
thirty (30) day period upon agreement of the parties. Either
party may terminate the mediation at any time after the initial
thirty (30) days or when any agreed upon extension has expired.
B. Mediation Procedures
1. The mediator shall be neutral and impartial.
2. The mediator shall control the procedural aspects of
the mediation. The parties will cooperate fully with the
mediator.
(a) The mediator is free to meet and
communicate separately with each party.
(b) The mediator will decide when to hold
joint meetings with the parties and when to hold separate
meetings. There shall be no stenographic record of any meeting.
Formal rules of evidence will not apply.
3. Each party may be represented by more than one
person, including an attorney.
4. The process will be conducted expeditiously.
5. The mediator will not transmit information received
from any party to another party or any third person unless
authorized to do so by the party transmitting the information.
6. The entire process is confidential. The parties and
the mediator will not disclose information regarding the process,
including settlement terms, to third persons, unless the parties
otherwise agree. The process shall be treated as a compromise
negotiation for purposes of the applicable rules of evidence.
Further, the parties will not disclose the existence of a dispute
or information regarding the mediation to third persons
including, without limitation, the media.
7. The parties will refrain from pursuing administrative
and/or judicial remedies during the mediation process, except as
otherwise expressly provided in the agreement which incorporates
these procedures. The parties agree that any and all statutes of
limitation or periods of time for taking action shall be tolled
during the time period that the parties are engaged in mediation.
8. Unless all parties and the mediator otherwise agree
in writing:
(a) The mediator will be disqualified as a
witness, consultant or expert in any pending or future
investigation, action or proceeding relating to the subject
matter of the mediation (including any investigation, action or
proceeding which involves persons not parties to this mediation);
(b) The mediator, at the conclusion of the
mediation, will immediately either destroy and certify
destruction of, or return to the providing party, any and all
documents and information in the mediator's possession, whether
or not the mediation was successful; and
(c) The mediator will not be subpoenaed in any
such investigation, action or preceding and all parties will
oppose any effort to have the mediator subpoenaed.
9. The mediator, if a lawyer, may freely express views
to the parties on the legal issues of the dispute.
10. The mediator shall not be liable for any act or
omission in connection with the mediation.
11. The mediator may withdraw at any time by written
notice to the parties (i) for overriding personal reasons, (ii)
if the mediator believes that a party is not acting in good
faith, or (iii) if the mediator concludes that further mediation
efforts would not be useful.
C. Litigation
If the parties do not resolve the dispute through mediation
within the period provided in Part A above, the parties may
pursue any and/or all applicable legal and/or equitable remedies
available to them.
EXHIBIT D
To
Limited Liability Company Agreement
Of Gustafson LLC
FORMS OF OPERATIVE AGREEMENTS
1. Marketing Agreement.
2. Pre-Exercise Agreement.
3. Post-Exercise Agreement.
4. Cross License Agreement by and between the Company
and Agro ST Inc.
5. Cross License Agreement by and between the Agro ST
Inc. and the Partnership.
EXHIBIT 2.2
EXECUTION COPY
FIRST AMENDMENT TO
LIMITED LIABILITY COMPANY AGREEMENT
OF GUSTAFSON LLC
FIRST AMENDMENT TO LIMITED LIABILITY COMPANY AGREEMENT
("Amendment") dated as of November 20, 1998 (the "Effective Date") among GT
SEED TREATMENT INC., f/k/a Gustafson, Inc., a corporation organized under the
laws of the State of Minnesota, United States ("GT Seed"), Ecart Inc., f/k/a
Trace Chemicals, Inc., a corporation organized under the laws of the
State of Nevada, United States ("Ecart") and BAYER CORPORATION, a
corporation organized under the laws of the State of Indiana, United States
("Bayer").
WHEREAS, Gustafson LLC, a Delaware limited liability company
(the "Company") was formed on September 23, 1998 pursuant to that
certain Certificate of Formation of Gustafson LLC;
WHEREAS, Gustafson, Inc. and Trace Chemicals, Inc. executed
the Limited Liability Company Agreement effective as of September 23, 1998,
(the "LLC Agreement"); and
WHEREAS, pursuant to that certain Purchase Agreement dated
as of November 20, 1998, by and among Crompton & Knowles Corporation, Uniroyal
Chemical Company, Inc., Gustafson, Inc., Trace Chemicals, Inc., Bayer and
the Company ("Purchase Agreement"), Bayer purchased a forty-nine percent
(49%) Membership Interest in the Company from Gustafson, Inc. and a one percent
(1%) Membership Interest in the Company from Trace Chemicals, Inc.; and
WHEREAS, on the Effective Date, Gustafson, Inc. changed its
name to GT Seed Treatment Inc., and Trace Chemicals, Inc. changed its name
to Ecart Inc.; and
WHEREAS, the parties hereto have agreed to execute and
deliver this Amendment to reflect the transfer and assignments which occurred
pursuant to the Purchase Agreement;
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged and intending to be legally bound,
the parties hereto hereby agree as follows:
1. All capitalized terms used herein and/or in the recitals
hereto and not otherwise defined herein shall have the meanings ascribed to
such terms in the LLC Agreement, as amended hereby.
2. All references in the LLC Agreement to "Gustafson, Inc."
shall now be GT Seed. All references in the LLC Agreement to "Trace
Chemicals, Inc." shall now be Ecart.
3. Bayer hereby agrees to become a Member of the Company as of
the date hereof and agrees to perform and comply with all of the terms,
covenants and conditions of the LLC Agreement, as amended hereby, as a Member
thereof.
4. Ecart hereby withdraws as a Member of the Company and waives
any right to receive any return of capital or other amounts from the Company
in connection with such withdrawal.
5. The LLC Agreement is further amended by deleting Exhibit A in
its entirety and substituting Exhibit A attached to this Amendment therefor.
6. The LLC Agreement, as amended hereby, is in full force and
effect and is hereby ratified and confirmed.
7. The LLC Agreement, as amended hereby, contains the entire
understanding between the parties hereto related to the subject matter thereof
and hereof and supersedes any prior or contemporaneous contracts, agreements,
understandings and/or negotiations, whether oral or written, except for those
agreements, contracts, understandings set forth in the Operative Agreements.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the Effective Date.
ECART INC., GT SEED TREATMENT, INC.,
f/k/a Trace Chemicals, Inc. f/k/a Gustafson, Inc.
By:/s/Charles J. Marsden By:/a/James Conway
Charles J. Marsden James Conway
Vice President and Chief Financial Officer President
BAYER CORPORATION
By:/s/Emil E. Lansu
Name:Emil E. Lansu
Title: Executive Vice President
EXHIBIT A
To
Limited Liability Company Agreement
Of Gustafson LLC
[Intentionally Deleted]
EXHIBIT 2.3
Execution Copy
PURCHASE AGREEMENT
By and Among
Crompton & Knowles Corporation, as C&K,
and
Uniroyal Chemical Company, Inc.,
Trace Chemicals, Inc.
and
Gustafson, Inc.,
as the Sellers,
and
Bayer Corporation, as Purchaser
and
Gustafson LLC, as the Company
Dated as of November 20, 1998
TABLE OF CONTENTS
Page
ARTICLE 1. DEFINITIONS. 1
ARTICLE 2. SALE OF THE OFFERED MEMBERSHIP INTEREST; 11
CONTRIBUTION OF ASSETS. 11
2.1 Sale of the Offered Membership Interest. 11
2.2 Contributed Assets and Assumed Obligations. 12
2.3 Closing Date. 14
ARTICLE 3. PURCHASE PRICE. 14
3.1 Payment. 14
3.2 Post-Closing Adjustment. 14
3.3 Net Equity at the Closing Date. 15
3.4 C&K Agreements. 15
ARTICLE 4. REPRESENTATIONS AND WARRANTIES. 15
4.1 By C&K and the Sellers. 17
(a) Contributed Assets. 17
(b) Organization of the Company and
the Sellers. 17
(c) Authorizations, Consents and Approvals
Needed by the Sellers and the Gustafson
Business Entities. 18
(d) Authorizations, Consents and Approvals
Needed by C&K. 19
(e) Authorizations, Consents and Approvals
Needed by the Company. 19
(f) Absence of Certain Changes. 20
(g) Title to Membership Interest. 20
(h) Title to Real Property. 21
(i) Leases. 22
(j) Contracts and Other Documents. 23
(k) Labor and Employment. 25
(l) ERISA; Employee Benefit Plans. 25
(m) Licenses and Permits. 26
(n) Absence of Undisclosed Liabilities. 27
(o) Compliance With Law. 27
(p) Technology and Registrations. 27
(q) Pending Litigation. 28
(r) Books and Records. 28
(s) Subsidiaries and Other Investments. 28
(t) Inventory. 28
(u) Capital Structure. 29
(v) Financial Statements. 29
(w) Taxes. 29
(x) Accounts Payable and Accounts Receivable. 30
(y) Regulatory Approvals. 30
(z) Insurance. 30
(aa) Contributed Products. 30
4.2 By the Purchaser. 31
(a) Organization and Qualification. 31
(b) Authorization, Consents or Approvals. 31
ARTICLE 5. ENVIRONMENTAL MATTERS. 32
5.1 Environmental. 32
ARTICLE 6. COVENANTS PRIOR TO CLOSING. 34
6.1 Covenants of C&K, the Sellers and the Company. 34
6.2 Cooperation. 35
6.3 No Solicitation. 36
ARTICLE 7. CLOSING. 36
7.1 Conditions to Obligations of Purchaser. 36
7.2 Conditions to Obligations of C&K, the Sellers
and Initial Members. 38
7.3 Additional Conditions to Obligations. 39
7.4 Purchaser's Closing Deliveries. 40
7.5 C&K's, the Sellers' and the Company's Closing
Deliveries. 40
7.6 Employee and Employee Benefit Matters. 42
ARTICLE 8. FURTHER ASSURANCES. 44
8.1 Cooperation 44
8.2 Taxes 44
ARTICLE 9. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION. 45
9.1 Survival. 45
9.2 Indemnification by C&K and the Sellers. 45
9.3 Indemnification by Purchaser. 48
9.4 Procedure for Third Party Claims. 49
9.5 Environmental Indemnification by C&K and the
Sellers. 50
ARTICLE 10. FINDERS AND BROKERS FEES. 53
ARTICLE 11. DEFAULT AND TERMINATION. 53
11.1 Default. 53
11.2 Termination. 53
11.3 Rights on Termination; Waiver. 54
ARTICLE 12. MISCELLANEOUS. 55
12.1 Transaction Costs. 55
12.2 No Third Party Beneficiaries. 55
12.3 Expenses of the Parties. 55
12.4 Amendment and Waiver. 56
12.5 Headings for Convenience. 56
12.6 Counterparts. 56
12.7 Binding Effect. 56
12.8 Publicity. 56
12.9 Complete Agreement. 57
12.10 Notices. 57
12.11 Assignment. 59
12.12 Severability. 59
12.13 Choice of Law; Choice of Forum. 59
12.14 Joint and Several 60
SCHEDULES
Schedule 2.2(a): Contributed Assets and Assumed Obligations - United
States and Mexico
Schedule 4.1(a): Exceptions to Contributed Assets
Schedule 4.1(b): Organization of the Company and the Sellers
Schedule 4.1(c): Authorizations, Consents and Approvals Needed by
the Sellers
Schedule 4.1(d): Authorizations, Consents and Approvals Needed by C&K
Schedule 4.1(e): Authorizations, Consents or Approvals Needed by Company
Schedule 4.1(f): Absence of Certain Changes
Schedule 4.1(g): Title to Membership Interest
Schedule 4.1(h): Title to Real Property
Schedule 4.1(i): Leases
Schedule 4.1(j): Contracts and Other Documents
Schedule 4.1(k): Labor and Employment
Schedule 4.1(l): Employee Benefit Plans
Schedule 4.1(m): Licenses and Permits
Schedule 4.1(n): Absence of Undisclosed Liabilities
Schedule 4.1(o): Compliance with Law
Schedule 4.1(p): Technology and Registrations
Schedule 4.1(q): Pending Litigation
Schedule 4.1(r): Books and Records
Schedule 4.1(s): Subsidiaries and Other Investments
Schedule 4.1(t): Inventory
Schedule 4.1(u): Capital Structure
Schedule 4.1(v): Financial Statements
Schedule 4.1(w): Taxes
Schedule 4.1(x): Accounts Payable and Accounts Receivable.
Schedule 4.1(aa): Contributed Products
Schedule 4.2(a): Organization and Qualification
Schedule 4.2(b): Authorization, Consents or Approvals Needed by Purchaser
Schedule 5.1: Environmental Matters
Schedule 6.1(a): Conduct of Business
Schedule 6.1(d): Changes in Business
Schedule 7.1(e): Material Adverse Changes of the Company
Schedule 9.5(a) Marsing Investigation and Remediation Agreement
EXHIBITS
Exhibit A: Knowledge of C&K; Knowledge of the Sellers
Exhibit B: Intentionally Omitted
Exhibit C: Form of LLC Agreement and Certificate of Formation
Exhibit D: Form of LLC Amendment
Exhibit E: Form of LLC Certificate of Membership Interest
Exhibit F: Form of Opinion of Counsel to Purchaser and its Affiliates
Exhibit G: Form of Opinion of Counsel to C&K, the Sellers, the
Company and their Affiliates
Exhibit H: Alternative Dispute Resolution Procedures
Exhibit I: Form of Marketing Rights and Margin Agreement
Exhibit J: Form of Non-Disturbance and Attornment Agreement
Exhibit K: Form of Pre-Exercise Distribution and Technology
License Agreement
Exhibit L: Form of Post-Exercise Distribution and Technology License
Agreement
Exhibit M: Form of Code Section 197(f)(9)(B) Election
Exhibit N: Form of Benefit Services Agreement
Exhibit O: Form of Instrument of Transfer, Assignment and Assumption
Agreement (Contributed Assets and Assumed Obligations)
Exhibit P: Form of Deeds for Each Real Property
Exhibit Q: Form of Lease Estoppel and Consent Certificate
Exhibit R: Form of Consent and Assignment (Contracts)
Exhibit S: Forms of Intellectual Property Assignments
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT is effective as of November 20, 1998 (the
"Effective Date"), by and among Crompton & Knowles Corporation, a corporation
organized under the laws of the Commonwealth of Massachusetts, United States
of America ("C&K"), and Uniroyal Chemical Company, Inc., a corporation
organized under the laws of the State of New Jersey, United States of America
("Uniroyal"), Trace Chemicals, Inc., a corporation organized under the laws of
the State of Nevada, United States of America ("Trace Chemicals"), Gustafson,
Inc., a corporation organized under the laws of the State of Minnesota, United
States of America ("Gustafson, Inc.", and collectively with Uniroyal and Trace
Chemicals, the "Sellers"), and Gustafson LLC, a limited liability company
organized under the laws of the State of Delaware, United States of America
(the "Company"), and Bayer Corporation, a corporation organized under the laws
of the State of Indiana, United States of America ("Purchaser").
W I T N E S S E T H :
WHEREAS, C&K, the parent company of all of the Sellers, has formed a
limited liability company to consolidate the Business of the Gustafson
Business Entities;
WHEREAS, in furtherance of the objective set forth above, C&K and the
Sellers shall cause the transfer of certain assets and obligations of the
Gustafson Business Entities to the Company; and
WHEREAS, C&K and the Sellers desire to sell to Purchaser and Purchaser
desires to purchase, fifty percent (50%) of the Membership Interest in the
Company.
NOW, THEREFORE, for good and valuable consideration, including the
agreements of the parties hereinafter set forth, the parties hereto agree as
follows:
ARTICLE 1. DEFINITIONS.
When used in this Agreement and the above Recitals, the following
capitalized terms shall have the meanings specified in this Article1. Other
terms are defined in the text of this Agreement, and throughout this
Agreement, those terms shall have the meanings respectively ascribed to them:
"Active Ingredient" or "Active Ingredients" means any and all naturally
occurring or synthetically produced substances, compounds, mixtures or
Biologicals, whether now existing or hereafter developed, which prevent,
destroy, repel or mitigate any Pest, or accelerate or retard the rate of
growth, germination or maturation, or otherwise protect, or alter the behavior
of seeds, stored grains, or plants or the products thereof.
"Affiliate" or "Affiliates" means, with respect to any Person, any other
Person, directly or indirectly, through one or more intermediaries,
controlling, controlled by, or under common control with, such first mentioned
Person. As used in this definition of Affiliate, the term "control"
(including "controlled by" or "under common control with") means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through
ownership of voting securities, as trustee, by contract, or otherwise. The
Company shall not be considered an Affiliate of any other Person.
"Agreement" means this agreement together with the exhibits and schedules
attached hereto.
"Agency" or "Agencies" means individually and collectively, (i) the
Environmental Protection Agency, the Environment and Health, and any other
federal, local, provincial or other governmental or regulatory agency in Us
which now regulates, or may in the future regulate, the use, development,
registration or sale of Active Ingredients or Formulations; and (ii) the US
Property Office, and any other federal, local, provincial or other
governmental or regulatory agency in US which now regulates, or may in the
future regulate, the protection, use, or registration of Technology.
"Assignment and Assumption Agreement" means the Instrument of Transfer,
Assignment and Assumption Agreement (Contributed Assets and Assumed
Obligations), the form of attached hereto as Exhibit O and incorporated
herein by reference.
"Assumed Obligations" shall have the meaning given to such term in Section
2.2(a).
"Benefit Services Agreement" means the Benefit Services Agreement by and
between Uniroyal and the Company, the form of which is attached hereto as
Exhibit N and incorporated herein by reference.
"Biological" or "Biologicals" means any and all naturally occurring or
synthetically created biological organisms which prevent, destroy, repel or
mitigate any Pest, or accelerate or retard the rate of growth, germination or
maturation, or otherwise protect, or alter the behavior of, seeds, stored
grains, or plants or the products thereof.
"Board" means the Board of Managers as defined in the LLC Agreement.
"Business" means the business constituting the development, formulation,
manufacture, registration, marketing, and sale of Active Ingredients,
Formulations, Equipment, and Other Products and Services for Seed Treatment
uses or applications in the Territory, and all activities related thereto.
"C&K" shall have the meaning given to such term in the Preamble.
"C&K Agreements" means the agreements listed in Exhibit A to the Marketing
Agreement by and between the Company and C&K or its Affiliates.
"Claim" or "Claims" means any claim, demand, action, cause of action, suit,
enforcement action or proceeding, whether in law or in equity.
"Closing" shall have the meaning given to such term in Section 2.3.
"Closing Agreements" means certificates and agreements (other than the
Operative Agreements and any agreements referenced in any schedule hereto) to
be delivered pursuant to Sections 7.4 and 7.5.
"Closing Date" shall have the meaning given to such term in Section 2.3.
"Closing Date Balance Sheet" shall have the meaning given to such term in
Section 3.3(a).
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" shall have the meaning given to such term in the Preamble.
"Confidential Information" means all confidential and/or proprietary
information of a Person (the "Owning Person"), whether arising under statute,
common law or otherwise, whether belonging wholly or in part to the Owning
Person, and whether subject to license or other grant of rights by or to the
Owning Person as licensor or as licensee; but, specifically excluding,
information that is generally known to those skilled in a chemical or life
sciences field, including without limitation, the agrochemical field, and
information as to a Person (a "Receiving Person"), and only as to such
Receiving Person, that (1) is lawfully known to such Receiving Person prior to
the disclosure by the Owning Person to such Receiving Person; (2) is lawfully
acquired by such Receiving Person, rightfully furnished to such Receiving
Person, or Publicly Available to such Receiving Person; (3) is information
which such Receiving Person can document was independently developed by such
Receiving Person; (4) was lawfully reverse engineered by such Receiving
Person; or (5) is required to be disclosed by such Receiving Person pursuant
to law, provided such Receiving Person uses reasonable efforts to give the
Owning Person reasonably detailed prior notice of such required disclosure and
an opportunity to oppose such disclosure.
"Contamination" means the emission, discharge or release of any Hazardous
Substance to, on, onto or into the environment and the effects of such
emission, discharge or release, including, without limitation, the presence or
existence of any such Hazardous Substance as addressed by a Governmental
Authority pursuant to applicable Environmental Laws.
"Contract Rights" shall have the meaning given to such term in Section 4.1(j).
"Contracts" means contracts, agreements, license agreements, research
agreements, non-disclosure agreements, vendor agreements, distribution,
representative or marketing agreements, purchase orders, commitments, sales
orders and supply agreements, to which the Gustafson Business Entities or the
Company is a party, or by which the Gustafson Business Entities or the Company
is bound as of the Closing Date and which is included as a Contributed Asset.
"Contributed Assets" shall have the meaning given to such term in Section
2.2(a).
"Contributed Products" means the Active Ingredients, Formulations, Equipment
or Other Product and/or Services listed on Schedule 4.1(aa).
"Deeds" means the forms of Deeds for the Real Property attached hereto as
Exhibit P and incorporated herein by reference.
"DeMinimis Amount" means an amount less than or equal to TWENTY-FIVE THOUSAND
UNITED STATES DOLLARS (US$25,000).
"Dispute" means any dispute, controversy or claim arising out of or relating
to this Agreement, including without limitation, an alleged failure of a
Person or its Affiliate to perform any of its obligations under this
Agreement, any alleged default by Purchaser, C&K or the Sellers pursuant to
Section 12.8, or any claim which relates to the Confidential Information of
any Person; but, specifically, excluding, any dispute, controversy or claim
arising out of or relating to the performance under, any Operative Agreements
by any party thereto, on or after the Closing Date. For purposes of this
Agreement and the Operative Agreements, any disagreement between the parties
as to whether any dispute, controversy or claim is a "Dispute", to be resolved
pursuant to Section 12.13 hereof, or a matter to be resolved in accordance
with the provisions of the Operative Agreements shall be deemed to be a
"Dispute".
"Due Inquiry" means an inquiry by each person listed on Exhibit A of each
management and supervisory employee who directly reports to each such listed
person and whose employment responsibilities place them in a position to have
information regarding the representations and warranties set forth in this
Agreement. Such inquiry shall be personally conducted by each individual
listed on Exhibit A as follows:
The individual of whom inquiry is being made shall be
advised of the purpose and context of the inquiry and that truthful responses
are required;
Each individual of whom inquiry is being made will be
provided in writing the particular statements of the Agreement qualified by
Knowledge;
Each individual of whom inquiry is being made will
have an obligation to carefully consider the statement in question, ask
follow-up questions of any person and review any documents that may be of
assistance to them in providing their responses to the inquiry; and
Each individual of whom inquiry is being made and
each of the individuals listed on Exhibit A shall execute certificates
verifying the accuracy of those statements of the Agreement qualified by
Knowledge."Effective Date" shall have the meaning given to such term in the
Preamble. "Employee Benefit Plans" means all of the plans, funds, policies,
programs, arrangements or understandings, sponsored or maintained by the
Company or the Gustafson Business Entities as of the Closing Date, pursuant to
which any employee of the Gustafson Business Entities or the Company as of the
Closing Date (or any dependent or beneficiary of any such employee) might be
or become entitled to (1) retirement or profit-sharing benefits; (2) severance
or separation from service benefits; (3) incentive, performance, or bonus
awards; (4) health care benefits; (5) disability income or wage continuation
benefits; (6) stock option or purchase plan or similar benefits; (7)
supplemental unemployment benefits; (8) life insurance, death or survivor's
benefits; (9) accrued sick pay or vacation pay; (10) any type of benefit
offered under any arrangement subject to characterization as an "employee
welfare benefit plan" within the meaning of Section 3(3) of ERISA; or (11)
benefits of any other type offered through any arrangement that could be
characterized as providing for additional compensation or fringe benefits and
to which the Gustafson Business Entities or the Company is a party or by which
the Gustafson Business Entities or the Company is bound as of the Closing
Date.
"Employee Pension Benefit Plan" means any plan, program or arrangement defined
in Section 3(2) of ERISA.
"Environmental Clean-up" means any and all actions, including those that are
investigative in nature and those involving the study or selection of remedial
alternatives, taken in response to any Contamination, including but not
limited to, analysis, monitoring, investigation, removal, treatment, clean-up,
prevention of migration of or other disposal of or remediation of any
Hazardous Substances required under applicable Environmental Law or required
by Governmental Authorities.
"Environmental Costs" means any and all costs and expenses (including, without
limitation, attorney, consultant and engineer fees and expenses) for an
Environmental Clean-up.
"Environmental Laws" means, collectively, any and all laws, ordinances, rules,
regulations, directives, orders, authorizations, decrees, notices, permits,
binding plans, demand letters or other mandates, proscriptions or
prescriptions of any nature, whether current or future of a Governmental
Authority relating in any way to any Hazardous Substance, Contamination,
protection of the environment, protection of natural resources, or protection
of health and safety, including, without limitation, those relating to
emissions, discharges, releases or threatened emissions, discharges or
releases to, on, onto or into the environment of any Hazardous Substance and
the Federal Insecticide, Fungicide and Rodenticide Act 7 U.S.C.A. 136 et. seq.
"Environmental Liability" shall mean any and all liabilities, Losses, Claims,
penalties, damages, Environmental Costs, expenses, remediation or inspection
costs and any expenses (including, without limitation, attorney, consultant
and engineer fees and expenses) of whatever kind or nature, known or unknown,
contingent or otherwise, arising from or relating to compliance with any
Environmental Law or arising under any theory of law or equity and relating
to, or arising from, Contamination or the use, treatment, storage, disposal,
transport, generation or handling of any Hazardous Substance.
"Environmental Matters" means any matter arising out of or relating to health,
safety, pollution, Contamination, Environmental Laws, compliance with
Environmental Laws or protection of the environment (indoor or outdoor),
including, without limitation, any of the foregoing relating to the presence,
use, production, generation, handling, transport, management, treatment,
storage, disposal, distribution, discharge, release, migration, control or
cleanup of, or exposure to, any Hazardous Substance.
"Environmental Permits" means all governmental permits, licenses,
registrations and authorizations required by Environmental Laws in order to
operate the Business as currently operated by the Gustafson Business Entities.
"Equipment" means any and all equipment that the Gustafson Business Entities
or the Company have the right to manufacture, develop, market or sell whether
for Seed Treatment uses and applications or for other than Seed Treatment uses
or applications, including without limitation, seed treaters, size rights,
screens, cylinders, and samplers.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended.
"ERISA Affiliate" means any entity that is a member of the "controlled group,"
as defined in Section 4001(a)(14) of ERISA, that includes the Company or any
member of the Gustafson Business Entities.
"Excluded Assets" shall have the meaning given to such term in Section 2.2(a).
"Excluded Obligations" shall have the meaning given to such term in Section
2.2(b).
"Financial Books and Records" shall mean all financial records, financial
books and records of account of the Gustafson Business Entities or the
Company, relating to their Business or to the Contributed Assets or the
Assumed Obligations.
"Financial Statements" shall have the meaning given to such term in Section
4.1(v).
"Formation Date" means the date which is the later of the date the Certificate
of Formation for the Company has been filed with and accepted by the Secretary
of the State of Delaware and the date on which the Contributed Assets and
Assumed Liabilities have been assigned and transferred to the Company, as
evidenced by a certificate of C&K and the Sellers dated as of the Closing
Date.
"Formulation" or "Formulations" shall mean a substance or compound, or mixture
of substances or compounds which includes one or more Active Ingredients,
whether now, existing or hereafter developed.
"Governmental Authority" or "Governmental Authorities" means any government,
any governmental entity, department, commission, board, agency or
instrumentality, and any judicial or administrative court, tribunal or
judicial or arbitral body, whether foreign, supra-national, federal, state or
local.
"Gustafson Business Entities" means collectively: (i) Gustafson, Inc. (a/k/a
Gustafson, Incorporated); (ii) Trace Chemicals; and (iii) Industrias
Gustafson.
"Hazardous Substance" shall mean any element, substance, compound or mixture
(including, without limitation, any pollutant, contaminant, chemical,
petroleum product or constituent or industrial, toxic or hazardous substance
or waste and any degradation product thereof) whether solid, liquid or
gaseous, that: (i) is or shall be in the future subject to regulation of any
kind (including, without limitation, regulation by statute, rule, regulation,
directive, ordinance, order, decree, notice, plan or demand letter) by any
Governmental Authority or statutory or regulatory body with regard to
protection of the environment or protection of health and safety; or (ii) the
presence or existence of which shall at any time give rise, under any theory
of law or equity, to any liability, Claim and/or Loss.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended.
"Important Lease Asset" means the Leases for the premises located in Pekin,
Illinois, DeMoines, Iowa, Eden Praire, Minnesota, Marsing, Idaho, and Plano,
Texas, as more particularly identified on Schedule 4.1 (i).
"Indemnitee(s)" shall have the meaning given to such term in Section 9.2.
"Industrias Gustafson" means Industrias Gustafson S.A. DE C.V., a corporation
organized under the laws of Mexico, and a wholly-owned subsidiary of
Gustafson, Inc.
"Initial Member" or "Initial Members" shall have the meaning given to such
term in the LLC Agreement.
"Knowledge" means with respect to the Sellers, the actual knowledge of the
individuals listed on Exhibit A as employees of the Sellers, together with the
knowledge such Persons should have had as a result of Due Inquiry, and with
respect to C&K, the actual knowledge of the individuals listed on Exhibit A as
employees of C&K, together with the knowledge such Persons should have had as
a result of Due Inquiry.
"Laws" means all federal, state, local, foreign or other laws, rules,
regulations, guidelines, orders, injunctions, building and other codes,
ordinances, permits, licenses, authorizations, judgments, decrees of federal,
state, local, foreign or other authorities, and all orders, writs, decrees and
consents of any governmental or political subdivision or agency thereof, or
any court or similar Person established by any such governmental or political
subdivision or agency thereof; but specifically excluding Environmental Laws.
"Lease" or "Leases" means all real and personal property leases, subleases,
concessions, licenses, occupancy agreements, conditional sales agreements or
other title retention agreements to which the Gustafson Business Entities or
the Company is a party, or by which the Company is bound as of the Closing
Date and which is included as a Contributed Asset.
"Lease Estoppel and Consent Certificate" means the substantive equivalent of
the form of certificate attached hereto as Exhibit Q and incorporated herein
by reference.
"Licenses and Permits" means licenses, franchises, registrations, permits,
approvals, certificates, certifications and other authorizations from all
applicable Governmental Authorities which are necessary for the conduct of the
Business of the Gustafson Business Entities or the Company and the conduct,
ownership, use, occupancy and operation of the assets of the Business of the
Company on of the Closing Date; but specifically excluding Environmental
Permits.
"Liens" means liens, encumbrances, Claims, charges, security interests or
rights of first refusal; any limitations on voting rights; or any right of any
Third Party, rights of redemption, equities, and any other restrictions of any
kind or nature whatsoever, including any leases, licenses, escrows, options,
security or other deposits, rights of redemption, chattel mortgages,
conditional sales arrangements or collateral security arrangements; provided
however, giving effect to the agreement of the parties as set forth in Section
8.3 shall not constitute a Lien.
"LLC Agreement" means the Limited Liability Company Agreement of the Company
effective as of September 23, 1998, the form of which is attached hereto as
Exhibit C and incorporated herein by reference.
"LLC Amendment" means the Amendment to the LLC Agreement, the form of which is
attached hereto as Exhibit D and incorporated herein by reference.
"LLC Certificate" means the Certificate evidencing the Offered Membership
Interest, the form of which is attached hereto as Exhibit E and incorporated
herein by reference.
"Losses" means losses (including, without limitation, all special and
consequential damages and all damages for lost profits related to Claims made
by Persons other than Purchaser or its Affiliates), damages, costs, Claims,
expenses, liabilities, Taxes, interest, penalties, suits, judgments, orders,
Liens, obligations and claims of any kind, whether administrative, judicial or
otherwise, including, without limitation, the costs and expenses of
assessments, settlements, investigations and compromises and also including,
without limitation, reasonable attorneys', consultants', accountants' and
expert witness fees and expenses; but specifically excluding all special and
consequential damages, and all damages for lost profits related to Claims for
indemnification made by the Purchaser or its Affiliates.
"Manager" shall have the meaning given to such term in the LLC Agreement.
"Marketing Agreement" means the Marketing Rights and Margin Agreement, dated
as of the Closing Date, by and among the Company, Purchaser, C&K, Gustafson
Partnership and Bayer Inc., a corporation organized under the laws of Canada,
the form of which is attached hereto as Exhibit I and incorporated herein by
reference.
"Marsing Leased Property" means the premises in Marsing, Idaho leased by
Gustafson, Inc. pursuant to a Lease dated December 5, 1985.
"Material Adverse" (including all derivations thereof) means materially
adverse to the operations, affairs, financial condition, assets, properties or
prospects (financial or otherwise) of a Person, or its Business, each taken as
a whole.
"Member" shall have the meaning given to such term in the LLC Agreement.
"Membership Interest" shall have the meaning given to such term in the LLC
Agreement.
"Net Equity of the Company" means the amount equal to the assets of the
Company minus the liabilities of the Company, as adjusted and calculated in
accordance with the procedure established for determining the Closing Date
Balance Sheet in Section 3.3.
"Non-Disturbance and Attornment Agreement" means the substantive equivalent of
the form of Nondisturbance and Attornment Agreement, attached hereto as
Exhibit J and incorporated herein by reference; provided however that other
than with respect to the non-disturbance provisions thereof, the other
substantive provisions may be altered, modified, deleted or amended with the
prior consent of Purchaser, which consent may not be unreasonably withheld,
conditioned or delayed.
"Occurrence" shall have the meaning given to such term in Section 4.1(aa).
"Offered Membership Interest" means fifty percent (50%) of the Membership
Interest.
"Off-Site Liability" means Environmental Liability resulting from the presence
of a Hazardous Substance generated by a Gustafson Business Entity at an Off-
Site Location.
"On-Site Contamination" means Contamination at any location currently owned,
operated or leased by any Gustafson Business Entity and utilized in connection
with the ownership and/or operation of the Business or Contributed Assets,
other than Contamination to the extent caused by action or inaction of the
Company or any Third Parties which action or inaction occurred after the
Closing Date.
"Off-Site Location" means any location now or formerly owned, operated or
leased by any Third Party Manufacturer or other location to which any
Gustafson Business Entity transported Hazardous Substances or arranged for the
transportation of Hazardous Substances, or at which any Hazardous Substances
of any Gustafson Business Entity was deposited or disposed other than Real
Property or real property that is the subject of any Leases.
"Operative Agreements" means collectively, the LLC Agreement, the Certificate
of Formation and the LLC Amendment, the Marketing Agreement, the Pre-Exercise
Distribution and Technology License Agreement, the form of which is attached
hereto as Exhibit K and incorporated herein by reference, and the Post-
Exercise Distribution and Technology License Agreement, the form of which is
attached hereto as Exhibit L, and incorporated herein by reference.
"Other Products and/or Services" means (i) any products for Seed Treatment
uses or applications; other than Active Ingredients, Formulations and
Equipment, including, without limitation, colorants, dyes, pigments and
coatings; and (ii) any activities of the Company or the Gustafson Business
Entities, specifically designed for or directly applicable to Seed Treatment
uses or applications, that the Company or the Gustafson Business Entities has
offered or is offering on the Effective Date.
"Permitted Liens" shall have the meaning given to such term in Section 4.1(h),
in the case of Real Property, or Section 4.1(i) in the case of the Leases.
"Person" means any individual, corporation, Governmental Authority, regulatory
authority, limited liability company, partnership, trust, estate,
unincorporated association or other entity.
"Pest" means any plant, animal or other organism, when and if determined by an
Agency to be deleterious to man or the environment.
"Product" shall mean any Active Ingredient, Formulation, Equipment or Other
Product and/or Service, which any Gustafson Business Entity developed,
formulated, manufactured, registered, marketed or sold prior to the Closing
Date, including without limitation, the Contributed Products.
"Publicly Available" means that the information in question is available from
a public source; provided, however, information shall not be deemed to be
Publicly Available to a Person unless the Person contending the information is
Publicly Available (i) has lawfully acquired such information through
experimentation, research or other appropriate method of acquisition, and (ii)
if the form in which the Technology is held by the Gustafson Business Entities
or the Company on or before the Effective Date has commercial value, has
acquired such information in the same form held by the Company or the
Gustafson Business Entities on or before the Effective Date.
"Purchase Price" shall have the meaning given to such term in Section 3.1.
"Purchase Price Adjustment" means the post-closing adjustment to the Purchase
Price referred to in Section 3.2.
"Purchaser" shall have the meaning given to such term in the Preamble.
"Real Property" means all real property owned by the Gustafson Business
Entities as of the Effective Date and included as a Contributed Asset.
"Recall" means, with respect to any Product, a "recall", "correction" or
"market withdrawal", as those terms are defined by any Governmental Authority.
"Registrations" means the registrations issued by any Governmental Authority.
"Seed Treatment" means any and all uses or applications of Active Ingredients,
Formulations, Equipment or Other Products and/or Services in connection with
seeds or stored grains for agricultural purposes, whether now existing or
hereinafter developed.
"Seller" or "Sellers" shall have the meanings given to such terms in the
Preamble.
"Sellers Indemnitee(s)" shall have the meaning given to such term in Section
9.3.
"Taxes" means all federal, state, local and foreign income, payroll,
employment, unemployment, withholding, excise, sales, personal property, use,
business and occupation, franchise and occupancy, real estate, or other taxes
in connection with the Business (all of the foregoing taxes including interest
and penalties thereon and including estimated taxes).
"Technology" means all forms of intellectual property, including without
limitation, copyrights, copyright applications, patents, patent applications,
trademarks, trademark applications, trade names, service marks, logos,
slogans, inventions, processes, production methods, proprietary information,
know-how, trade secrets, information, identification lists, product and
technical labels, data, including registration data and Governmental Authority
data, plans, blueprints, specifications, designs, manufacturing information,
formulation recipes and techniques, seed safety information, seed testing
techniques, efficacy data, environmental, residue, toxicology and product
chemistry information, discoveries, drawings, recorded knowledge, techniques,
ideas, concepts, surveys, engineering reports, test reports and procedures,
manuals, materials standards, process standards, performance standards,
catalogs, flow charts, formulation or technical registrations, work
techniques, computer and automatic machinery software and programs, related
object and source code and the like whether or not protected by or protectable
by patent, copyright, trademark, trade secret or other proprietary rights or
by Governmental Authority registrations; but specifically excluding Technology
that is generally known to those skilled in a chemical or life sciences field,
including, without limitation, the agrochemical field.
"Territory" means collectively, the United States, and the United Mexican
States.
"Third Party" means any and all persons other than C&K, Sellers, the Company
and the Purchaser and their respective Affiliates.
"Third Party Manufacturer" means any supplier, contract manufacturer, toll
manufacturer, formulator, finisher or other Third Party that now or in the
past provided any Gustafson Business Entity with any service in connection
with any Gustafson Business Entity's operation of the Business or the
Contributed Assets.
"Title Policies" means a standard ALTA owner's policy (without endorsements)
of title insurance with respect to the Real Property located at Frisco, Texas
and a standard ALTA leasehold policy with respect to the lease that affects
the Marsing Leased Property, issued to the Company by Chicago Title Insurance
Company, in each case, (i) in an amount equal to the allocated value of each
such property, as previously agreed to by the parties, and (ii) insuring that
the Company is the owner in fee of the Frisco, Texas property, and holds the
leasehold interest in the Marsing Lease, free and clear of all Liens, except
Permitted Liens.
"Trace Chemicals" shall have the meaning given to such term in the Preamble.
"Uniroyal" shall have the meaning given to such term in the Preamble.
"U.S. GAAP" means generally accepted accounting principles in effect in the
United States as of the date of the subject financial statements or
calculation, as the case may be, consistently applied.
d. ARTICLE 2. SALE OF THE OFFERED MEMBERSHIP INTEREST;
d. CONTRIBUTION OF ASSETS.
2.1 Sale of the Offered Membership Interest.
Subject to the terms and conditions set forth in this Agreement, at the
Closing, Gustafson, Inc. will sell, transfer, assign and deliver to Purchaser
a forty-nine percent (49%) Membership Interest in the Company free and clear
of any Liens, and Trace Chemicals will sell, transfer, assign and deliver to
Purchaser a one percent (1%) Membership Interest in the Company free and clear
of any Liens, and Purchaser will purchase and accept from the Initial Members
the Offered Membership Interest, free and clear of all Liens, and Purchaser
will be admitted as a Member of the Company.
2.2 Contributed Assets and Assumed Obligations.
(a) Prior to the Closing Date, C&K shall cause the Sellers to,
and the Sellers shall, contribute to the Company, by appropriate instruments
of transfer, all the assets of the Gustafson Business Entities including,
without limitation, the assets specifically listed on Schedule 2.2(a) (the
"Contributed Assets"), but specifically excluding the assets listed on
Schedule 4.1(a) ("Excluded Assets"), which Contributed Assets shall be
contributed to the Company free and clear of any and all Liens, other than the
Assumed Obligations. Prior to the Closing Date, C&K shall cause the Sellers
to, and the Sellers shall, assign to the Company, by appropriate instruments
of assignment, those obligations of the Gustafson Business Entities listed on
Schedule 2.2(a) to be transferred by the Sellers to the Company, which
obligations shall be assumed by the Company (the "Assumed Obligations"). The
Contributed Assets and the Assumed Obligations shall be contributed and
transferred and assumed, respectively, strictly in accordance with the
procedures set forth on Schedule 2.2(a). Pursuant to the LLC Agreement,
Gustafson, Inc.'s capital account of the Company will be credited in the
amount of TWO HUNDRED TWELVE MILLION, EIGHT HUNDRED THOUSAND UNITED
STATES DOLLARS (US$212,800,000) for the contributions by Gustafson, Inc. to the
Company in accordance with this Section 2.2(a), and Trace Chemicals' capital
account of the Company will be credited in the amount of SIXTY SEVEN MILLION,
TWO HUNDRED THOUSAND UNITED STATES DOLLARS (US$67,200,000) for the
contributions by Trace Chemicals to the Company in accordance with this
Section 2.2(a).
(b) Notwithstanding any provision in this Agreement to the
contrary, the Company shall assume only the Assumed Obligations and shall not
assume or be obligated to satisfy or perform any other liability, obligation
or commitment of C&K, the Sellers or the Gustafson Business Entities, of
whatever nature. All such other liabilities, obligations and commitments
shall be retained by and remain liabilities, obligations and commitments of
C&K, the Sellers and/or the Gustafson Business Entities (collectively,
"Excluded Obligations"). Without limiting the foregoing sentence, Excluded
Obligations shall include each of the following, except to the extent
specifically included as an Assumed Obligation on Schedule 2.2(a):
(i) Any contingent or unknown Claim against or liability or
obligation of C&K, the Sellers or the Gustafson Business Entities, including
without limitation, any Claim for product liability related to any Product
manufactured or sold on or before the Closing.
(ii) Any liability or obligation of C&K, the Sellers or the
Gustafson Business Entities arising on or before the Closing in favor of any
Person.
(iii) Any present or future liability or obligation of C&K,
the Sellers or the Gustafson Business Entities for Taxes of any kind or nature
whatsoever, whether federal, state or local, including without limitation,
Taxes on capital gains, or the income of C&K, the Sellers or the Gustafson
Business Entities accrued with respect to their Business as conducted by C&K,
the Sellers or the Gustafson Business Entities prior to and on the Closing
Date.
(iv) Any liability or obligation of C&K, the Sellers or the
Gustafson Business Entities in connection with any litigation (whether legal,
administrative or otherwise) or alternative dispute resolution mechanism
pending or threatened against C&K, the Sellers or the Gustafson Business
Entities on or before the Closing or any such litigation or alternative
dispute mechanism which has as a basis any action or inaction occurring on or
before the Closing including (x) any liability, obligation to arbitrate,
claims, grievances or causes of action under any collective bargaining
agreement of C&K, the Sellers or the Gustafson Business Entities and, (y) any
liability (including nonaccrued and contingent liabilities) associated with
occupational exposure to one or more Hazardous Substances to the extent
occurring on or before the Closing Date, and (z) any workers' compensation
claims or liability.
(v) Any obligation of C&K, the Sellers or the Gustafson
Business Entities for any prepayment or make-whole penalty or premium under or
pursuant to any of the contracts or other agreements relating to the
Contributed Assets to the extent that such provision was triggered by any act
of C&K, the Sellers or the Gustafson Business Entities on or before the
Closing Date.
(vi) Any liabilities, obligations or commitments of C&K,
the Sellers or the Gustafson Business Entities under any warranties delivered
by C&K, the Sellers or the Gustafson Business Entities on or prior to the
Closing to the extent arising out of or related to any action or inaction of
C&K, the Sellers or the Gustafson Business Entities on or prior to the Closing
Date.
(vii) Any liabilities, obligations or commitments of C&K,
the Sellers or the Gustafson Business Entities (x) arising under any
contracts, agreements or commitments other than the Contracts or the Leases,
or (y) arising under or related to the Contracts or Leases to the extent
related to or attributable to any failure by C&K, the Sellers or the Gustafson
Business Entities to comply with the terms thereof or to the extent related to
any action or inaction of C&K, the Sellers or the Gustafson Business Entities
on or before the Closing Date.
(viii) Any liability or obligation of C&K, the Sellers or
Gustafson Business Entities arising on or before the Closing Date to its
employees, whose employment is terminated on or before the Closing Date, for
severance or similar pay, whether arising by contract, by any plan or program
or pursuant to any Law.
(ix) Any and all liabilities, damages, losses, costs or
expenses related to any Recall which occurs on or prior to Closing, or which
occurs after the Closing and is related to any Product other than a
Contributed Product.
(x.) Any Off-Site Liability associated with real property that
was formerly owned or was the subject of a former lease and is not the subject
of any Leases.
2.3 Closing Date.
The closing of the transactions contemplated by this Agreement shall
take place at 10:00 a.m. New York City time on November 20, 1998, or at such
other date and time as may be agreed upon by Purchaser, C&K and the Sellers,
subject to the requirements of the HSR Act, if applicable, and all other
applicable antitrust statutes and expiration of applicable waiting periods in
connection therewith (the "Closing" or "Closing Date"). The Closing shall
take place at the offices of Robinson & Cole llp, One Boston Place, Boston
Massachusetts or, at such other place as may be agreed upon by Purchaser, C&K
and the Sellers. Notwithstanding the foregoing, if the Closing has not
occurred on or before December 31, 1998, either C&K and the Sellers or
Purchaser may, provided that such party is not in default hereunder, have the
right to terminate this Agreement by providing the other party with notice, in
accordance with the provisions of Section 12.10 of such party's termination of
this Agreement. Upon such termination, none of the parties to this Agreement
shall have any further obligation to the other parties hereto pursuant to this
Agreement; provided, however, that the obligations set forth in Sections 11.3,
12.8 and 12.13 shall survive any termination of this Agreement in accordance
with this Section 2.3.
d. ARTICLE 3. PURCHASE PRICE.
3.1 Payment.
(a) The Purchase Price shall be ONE HUNDRED AND FORTY MILLION
UNITED STATES DOLLARS (US$140,000,000), subject to adjustment pursuant to
Section 3.2.
(b) On the Closing Date, Purchaser shall cause the Purchase
Price to be delivered to C&K by wire transfer in immediately available funds.
(c) The Purchase Price Adjustment, if any, calculated as
provided in Section 3.2, shall be paid, together with interest on such amount
from the Closing Date until paid at a rate equal to 6% per annum, within ten
(10) days after the final determination of such adjustment is made.
3.2 Post-Closing Adjustment.
(a) The Net Equity of the Company as of the Closing Date shall
be at least TWENTY MILLION, SEVEN HUNDRED AND NINETY-NINE THOUSAND
UNITED STATES DOLLARS (US$20,799,000).
(b) If the Net Equity of the Company at the Closing Date, as
determined in accordance with Section 3.3 hereof, is less than TWENTY MILLION,
SEVEN HUNDRED AND NINETY-NINE THOUSAND UNITED STATES DOLLARS
(US$20,799,000), then the Purchase Price shall be adjusted by reducing the
Purchase Price by one-half of the amount of such deficiency.
(c) If the Net Equity of the Company at the Closing Date, as
determined in accordance with Section 3.3 hereof, is more than TWENTY MILLION,
SEVEN HUNDRED AND NINETY-NINE THOUSAND UNITED STATES DOLLARS (US$20,799,000),
then the Purchase Price shall be adjusted by increasing the Purchase Price by
one-half of the amount of such excess.
3.3 Net Equity at the Closing Date.
(a) As soon as reasonably practicable, but in no event later
than sixty (60) days following the Closing, the Company shall work to produce
an internally prepared balance sheet of the Company as of the Closing Date
(the "Closing Date Balance Sheet"). The Closing Date Balance Sheet shall be
prepared in accordance with U.S. GAAP.
(b) As soon as practicable following the Closing, but in no
event later than one hundred and twenty (120) days after the Closing Date, the
Closing Date Balance Sheet shall be audited by Arthur Andersen llp
("Auditors"). Such audit report shall state (without qualification as to the
scope of audit or other matters) to the Company, C&K and Purchaser, the
Auditors' opinion as to the Net Equity of the Company as of the Closing Date
calculated in accordance with U.S. GAAP. The parties and all their
representatives shall be provided with (i) complete access to all work papers
and other information used by the Auditors, (ii) a draft of such report within
ninety (90) days after the Closing Date, and (iii) a reasonable opportunity to
comment on such draft for twenty-five (25) days after the draft is delivered
by the Auditor, and (iii) the final opinion of the Auditors to the parties
within one-hundred and twenty (120) days of the Closing Date. The audit of
the Closing Date Balance Sheet, when delivered by the Auditors to Purchaser
and C&K, shall be deemed conclusive and binding on the parties hereto and
shall be deemed to be the Closing Date Balance Sheet upon which the Purchase
Price Adjustment will be based. The Company shall pay the cost of the fees
and expenses of the Auditors' audit of the Closing Date Balance Sheet.
3.4 C&K Agreements.
As soon as practical after the Closing, but in no event later than
sixty (60) days following the Closing Date, C&K shall provide to Purchaser
such information ("Information") as is necessary to confirm that the Economic
Provisions (as hereinafter defined) of the C&K Agreements are consistent with
past practice of the Sellers relative to the subject matter thereof and as
reflected on the Financial Statements.
The Information is confidential. C&K agrees to permit, on the
conditions set forth herein, the following persons to have access to the
Information provided by C&K pursuant to this Section 3.4: Mark L. Yogman,
Vice President, Strategic Planning/Organization, Leslie F. Nute, General
Counsel, Frank K. Wenzel, Senior Vice President and Controller, and Deloitte &
Touche, being the public accountants for Purchaser (collectively, the
"Receiving Persons").
Purchaser acknowledges that the Information is being provided
subject to the following conditions:
1. The Information will be used by the Receiving Persons only
for the purpose set forth in this Section 3.4. The Information may be
disclosed to other persons ("Other Bayer Persons") within Purchaser who need
access to the Information in order for Purchaser to complete such
confirmations, provided that such persons are not involved in the crop
protection group of Purchaser or their respective Affiliates and provided
further that such persons do not use the Information for any other purpose or
disclose the Information to any other person.
2. Any copies of the Information and any notes made by the
Receiving Persons and the Other Bayer Persons, together with a list of all
Other Bayer Persons, will only be kept by Purchaser in sealed files.
3. A copy of the Information may also be included in a sealed
file in the legal files in the Pittsburgh legal department of Purchaser and in
the Pittsburgh offices of Jones, Day, Reavis & Pogue, outside counsel to
Purchaser, solely for archiving purposes.
4. Notwithstanding anything in paragraph 1 above, the Receiving
Persons and the Other Bayer Persons (and any successors to their position),
and any outside legal advisors to Purchaser may access and utilize such sealed
or archived files in connection with any dispute brought pursuant to the
Purchase Agreement relating to the Information in such files.
In the event the Purchaser concludes that the Economic Provisions of
the C&K Agreements are not consistent with past practice, the Purchaser shall
notify C&K of the particular C&K agreements and Economic Provisions which are
inconsistent and the basis for their conclusions. In the event that Purchaser
and C&K are unable to informally resolve such Economic Provisions within
thirty (30) days of such notice, the Auditors shall conduct a review of the
Economic Provisions which were the subject of the notice and shall provide a
report reflecting the results of such review. The report of the Auditor shall
be deemed to be conclusive and binding on the parties when delivered to
Purchaser and C&K. In the event that the Auditor's Report concludes that the
provisions reviewed are not consistent with past practices, such provisions
shall be revised (such revision to be effective as of the Closing Date) to
make such provisions consistent with past practice. The Company shall pay the
cost of the fees and expenses of the Auditor's review contemplated hereunder.
For purposes hereof, "Economic Provisions" shall include, but not be limited
to, price, terms of payment including early payment discount, requirements
regarding advance purchase of inventory, advertising allowances and freight
allowances.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES.
4.1 By C&K and the Sellers.
C&K and the Sellers, jointly and severally, represent and warrant the
following to Purchaser (provided that none of the following relate to
Environmental Matters which are addressed exclusively in Section 5.1):
d. (a) Contributed Assets.
(i) Except for the Excluded Assets set forth on Schedule
4.1(a), the Contributed Assets constitute all of the assets used by the
Gustafson Business Entities in the conduct of their Business as presently
conducted. Except for the Excluded Assets forth on Schedule 4.1(a), the
Contributed Assets are the only assets used to produce the revenues set forth
on the Financial Statements.
(ii) Each of the Sellers and the Gustafson Business
Entities have good and marketable title to the portion of Contributed Assets
contributed by it, free and clear of any and all Liens other than as set forth
in this Section 4.1. As of the Closing Date, the Company will have good and
marketable title to the Contributed Assets free and clear of any and all Liens
other than as set forth in this Section 4.1.
(iii) The portion of the Contributed Assets constituting
fixed assets, taken as a whole, are in good working order and repair,
reasonable wear and tear excepted.
(iv) The Products included in the Contributed Assets
constitute all of the Products which the Gustafson Business Entities currently
formulate, currently manufacture, currently have registered, currently market
and/or currently sell.
d. (b) Organization of the Company and the Sellers.
(i) As of the Closing Date, the Company is a limited
liability company duly organized, validly existing under the Laws of the State
of Delaware and is duly qualified to do business in each other jurisdiction
where Gustafson, Inc. was qualified to do business as of the Effective Date.
The copies of the Certificate of Formation of the Company and the LLC
Agreement, which have been delivered to Purchaser and the forms of which are
attached hereto as Exhibit C, are complete and correct and are in full force
and effect and there have been no amendments or modifications thereto either
made and/or approved.
(ii) Each Seller and C&K is a corporation duly incorporated
and validly existing under the Laws of the jurisdiction of its incorporation.
Gustafson, Inc., Industrias Gustafson, and TraceChemicals are duly qualified
to do business in each other material jurisdiction where the property owned,
leased or used by it is located or the conduct of its Business makes such
qualification necessary, except where the failure to do so would not have a
Material Adverse Effect resulting from, related to or arising out of the
imposition of any Taxes other than income or income based Taxes.
d. (c) Authorizations, Consents and Approvals
Needed by the Sellers and the Gustafson Business Entities.
Each Seller has full power and authority to enter into and perform
this Agreement and the Operative Agreements to which it is a party, and has
taken all necessary corporate action to authorize the execution and delivery
of this Agreement and the Operative Agreements to which it is a party and the
performance by it of its obligations hereunder and thereunder. Each of the
Gustafson Business Entities has all necessary corporate power, authority and
capacity to own its property and assets (including the Contributed Assets) and
to carry on its business (including, as applicable, its Business) as presently
conducted. This Agreement and the Operative Agreements to which it is a party
have been duly executed by each Seller and constitute the legal, valid,
binding, and enforceable obligations of such party, enforceable against such
party in accordance with their terms, except to the extent that such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization and similar laws of general application relating to or
affecting creditors' rights generally and general principles of equity,
regardless of whether such enforceability is considered in a proceeding in
equity or at law. The execution and delivery of this Agreement and the
Operative Agreements to which it is a party and the consummation by each
Seller of the transactions contemplated herein or thereby, do not: (i)
conflict with or violate any of the terms of such party's Certificate of
Incorporation or Bylaws; (ii) conflict with, or result in a breach of any of
the terms of, or result in the acceleration of any indebtedness or obligations
or give rise to any right of termination or cancellation under, any agreement,
obligation, or instrument by which C&K is bound or to which any Contributed
Assets are subject, constitute a default (with or without notice or lapse of
time, or both) thereunder; (iii) result in a violation by C&K of any Laws, to
which C&K, a Gustafson Business Entity or any Contributed Assets may be
subject; (iv) result in the creation of any Lien on any of the Contributed
Assets; or (v) conflict with, or result in or constitute a default (with or
without notice or lapse of time, or both) under or breach or violation of or
grounds for termination of, any license, permit or other Governmental
Authority authorization which is part of the Contributed Assets; provided,
however, that the consummation of the transactions contemplated by this
Agreement and the Operative Agreements is subject to the requirements of the
HSR Act, if applicable, and all other applicable antitrust statutes and
expiration of applicable waiting periods in connection therewith. Except as
set forth in Schedule 4.1(c), no authorization, consent, or approval of any
Governmental Authority or any other person is necessary or required in
connection with the execution and delivery by each Seller of this Agreement
and the Operative Agreements to which it is a party or the performance by each
Seller of each Seller's obligations hereunder or thereunder.
(d) Authorizations, Consents and Approvals Needed by C&K.
C&K has full power and authority to enter into and perform this
Agreement and the Operative Agreements, and has taken all necessary corporate
action to authorize the execution and delivery of this Agreement and the
Operative Agreements and the performance by it of its obligations hereunder
and thereunder. C&K has all necessary corporate power, authority and capacity
to own its property and assets and to carry on its business as presently
conducted. This Agreement and the Operative Agreements have been duly
executed by C&K and constitute legal, valid, binding, and enforceable
obligations of C&K, enforceable against C&K in accordance with their terms,
except to the extent that such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization and similar laws of general application
relating to or affecting creditors' rights generally and general principles of
equity, regardless of whether such enforceability is considered in a
proceeding in equity or at law. The execution and delivery of this Agreement
and the Operative Agreements and the consummation by C&K of the transactions
contemplated herein or hereby or therein or thereby, do not: (i) conflict with
or violate any of the terms of C&K's Certificate of Incorporation or Bylaws;
(ii) conflict with, or result in a breach of any of the terms of, or result in
the acceleration of any indebtedness or obligations or give rise to any right
of termination or cancellation under, any agreement, obligation, or instrument
by which C&K is bound or to which any Contributed Assets is subject, or
constitute a default (with or without notice or lapse of time, or both)
thereunder; (iii) result in a violation by C&K of any Laws, to which C&K, a
Gustafson Business Entity or any Contributed Assets may be subject; (iv)
result in creation of any Lien on any of the Contributed Assets; or (v)
conflict with, or result in or constitute a default (with or without notice or
lapse of time, or both) under or breach or violation of or grounds for
termination of, any license, permit or other Governmental Authority
authorization which is part of the Contributed Assets; provided, however, that
the consummation of the transactions contemplated by this Agreement and the
Operative Agreements is subject to the requirements of the HSR Act, if
applicable, and all other applicable antitrust statutes and expiration of
applicable waiting periods in connection therewith. Except as set forth in
Schedule 4.1(d), no authorization, consent, or approval of any Governmental
Authority or any other person is necessary or required in connection with the
execution and delivery by C&K of this Agreement or the Operative Agreements or
the performance by C&K of C&K's obligations hereunder.
d. (e) Authorizations, Consents and Approvals Needed by the
Company.
The Company has full power and authority to enter into and
perform this Agreement and the Operative Agreements and all limited liability
company, Member and Manager action necessary to authorize the execution and
delivery of this Agreement and the Operative Agreements and the performance by
the Company of its obligations hereunder or thereunder has been duly taken.
The Company has all necessary power, authority and capacity to own its
property and assets and to carry on its Business and to carry on its business
(including, as applicable, its Business) as presently conducted. This
Agreement and the Operative Agreements have been duly executed and delivered
by the Company and constitute legal, valid, binding and enforceable
obligations of the Company, enforceable against the Company in accordance with
its terms, except to the extent that such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization and similar laws of general
application relating to or affecting creditors' rights generally and general
principles of equity, regardless of whether such enforceability is considered
in a proceeding in equity or at law. The execution and delivery of this
Agreement and the Operative Agreements and the consummation by the Company of
the transactions contemplated herein or therein, do not: (i) conflict with or
violate any of the terms of the Certificate of Formation or the LLC Agreement;
(ii) conflict with, or result in a breach of any of the terms of, or result in
the acceleration of any indebtedness or obligations or the loss of a material
benefit under, any agreement, obligation or instrument by which the Company is
bound or to which any property of the Company is subject, or constitute a
default (with or without notice or lapse of time, or both) thereunder; (iii)
result in the creation or imposition of any Lien on any of the assets of the
Company; (iv) except as set forth in Schedule 4.1(e), constitute an event
permitting termination of any agreement or instrument to which the Company is
a party or by which any property or asset of the Company is bound or affected,
pursuant to the terms of such agreement or instrument; (v) conflict with, or
result in or constitute a default (with or without notice or lapse of time, or
both) under or breach or violation of or grounds for termination of, any
license, permit or other Governmental Authority authorization to which the
Company is a party or by which the Company may be bound as of the Closing
Date; (vi) result in the violation by the Company of any Laws, to which the
Company or any assets of the Company may be subject; or (vii) result in the
creation of any Lien on any asset of the Company; provided, however, that the
consummation of the transactions contemplated by this Agreement and the
Operative Agreements is subject to the requirements of the HSR Act, if
applicable, and all other applicable antitrust statutes and expiration of
applicable waiting periods in connection therewith. Except as set forth in
Schedule 4.1(e), no authorization, consent or approval of, notice to, or
filing with, any public body or Governmental Authority or any other Person is
necessary in connection with the execution and delivery by the Company of this
Agreement or the Operative Agreements or the performance by the Company of its
obligations hereunder or thereunder.
d. (f) Absence of Certain Changes.
Except to the extent set forth on Schedule 4.1(f), since June
27, 1998, the Gustafson Business Entities have conducted their Business in the
ordinary course, have not taken any action that would have violated Section
6.1 had it been applicable, and there has not been any Material Adverse
changes to their Business or the Company or the Contributed Assets.
d. (g) Title to Membership Interest.
As of the Closing Date, the Initial Members are the owners,
beneficially and of record, of the Membership Interest free and clear of all
Liens other than as set forth on Schedule 4.1(g). As of the Formation Date,
the Initial Members have full power to transfer the Offered Membership
Interest as provided herein to Purchaser without first obtaining the consent
or approval of any other Person. As of the Formation Date, the Initial
Members own good and marketable title to the Offered Membership Interest, free
and clear of any and all Liens and are exclusively entitled to possess and
dispose of the Offered Membership Interest. At the Closing, the Purchaser
will receive from the Initial Members good and marketable title to the
Membership Interest, free and clear of any and all Liens.
d. (h) Title to Real Property.
(i) The Gustafson Business Entities have good and marketable
title to the Real Property, in fee simple absolute and, except as disclosed in
Schedule 4.1(h) ("Permitted Liens"), the Real Property is free and clear of
all Liens. As of the Closing, the Company will have good and marketable title
to the Real Property in fee simple absolute, and except for the Permitted
Liens, the Real Property shall be free and clear of all Liens.
(ii) Schedule 4.1(h) contains a complete and accurate list of
all the Real Property. No other real estate, other than the Real Property,
the Marsing Leased Property, and the other premises leased by the Gustafson
Business Entities pursuant to the Leases, is used by the Gustafson Business
Entities in connection with the Business of the Gustafson Business Entities.
No work has been performed on or materials supplied to the Real Property or
the Marsing Leased Property within any applicable statutory period which has
not been fully paid for, or which could otherwise give rise to any mechanic's
or materialmen's liens. There are no taxes or betterment assessments other
than ordinary real estate taxes assessed but not yet due and payable against
any portion of the Real Property and the Marsing Leased Property. There are
no agreements that would have a material adverse impact on or relate to the
title to, or ownership of, the Real Property. There are no agreements of
record that would have a material adverse impact on or relate to the title to,
or ownership of, the Marsing Leased Property. The Gustafson Business
Entities have all necessary legal rights of entry and exit to and from the
Real Property and the Marsing Leased Property as are reasonably necessary to
carry on their Business upon the Real Property or the Marsing Leased Property,
as applicable, substantially in the manner in which their Business is
currently carried on upon the Real Property and the Marsing Leased Property.
The Sellers have delivered to the Purchaser the most up-to-date surveys and
title policies relating to the Real Property and Marsing Leased Property that
they have in their possession. The Sellers have not made application for a
rezoning of any of the Real Property or the Marsing Leased Property, and
neither the Sellers nor the Company nor the Gustafson Business Entities have
received written notice of a proposed or pending changes to any zoning
affecting the Real Property or the Marsing Leased Property. Neither the
Sellers nor the Company nor the Gustafson Business Entities have received
written notice of any expropriation or condemnation or similar proceeding
pending or threatened against all or any portion of the Real Property or the
Marsing Leased Property. To each of the Sellers' Knowledge, there are no
material defects in the buildings or improvements situated on, or comprising a
part of, the Real Property or the Marsing Leased Property or their mechanical,
sewage, HVAC, electrical or other systems. All accounts owing for work,
labor, materials, services, and equipment in respect of or relating to the
Real Property or the Marsing Leased Property have been fully paid for and no
Person is entitled to claim a Lien other than the Permitted Liens under the
applicable Law. The Sellers have not received any written notice of, and to
C&K's Knowledge or to each of the Sellers' Knowledge, there are no violations
of any Law, ordinance, regulation or recorded restriction (including, without
limitation, those pertaining to zoning, building, fire and health) with
respect to any of the Real Property or the Marsing Leased Property which have
not been corrected, and to each of the Sellers' Knowledge, no authority has
issued or contemplates issuing any notice of violation with respect to the
Real Property or the Marsing Leased Property. C&K, the Sellers and the
Gustafson Business Entities have not granted any right, option or first
refusal to acquire the Real Property or any part thereof or interest therein.
All utilities necessary for the operation of the Real Property or the Marsing
Leased Property and the Gustafson Business Entities' Business, as currently
operated, are available on the Real Property and the Marsing Leased Property.
The Sellers have not received written notice of any actual or threatened
reduction or curtailment of any utility service now supplied to the Real
Property or the Marsing Leased Property. None of the Sellers is a party to
any lawsuit, action, investigation or proceeding with respect to the Real
Property or the Marsing Leased Property and to C&K's Knowledge and each of the
Sellers' Knowledge, no such lawsuit, action, investigation or proceeding is
pending or threatened. No portion of the Real Property, nor the use,
maintenance, or operation thereof is in material violation of any restriction
or other matter of record. The Real Property and the Marsing Leased Property
complies in all material respects with all applicable zoning ordinances.
d. (i) Leases.
(i) As of the Closing, the Company will have good and valid
title to the lessees' interest under the Leases, and except for the Permitted
Liens disclosed on Schedule 4.1(i), the Leases shall be free and clear of all
Liens.
(ii) Schedule 4.1(i) sets forth a complete and accurate listing
or description of all Leases. To C&K's Knowledge and to each of the Sellers'
Knowledge, no event of default under any such Lease by any Gustafson Business
Entity, the Company, or by any other party to any such Lease has occurred and
is continuing which (whether with or without the giving of notice, lapse of
time or both, or the happening of any other event) would constitute a default
under such Lease; each such Lease will, subject to obtaining any consent
listed in Schedule 4.1(e), and having the Assignment and Consent Agreement
executed by all parties thereto, continue to be in full force and effect
against the Company and lessor on the same terms and conditions immediately
after the Closing without the need for any further action on the part of the
Company. With respect to real property Leases, (x) Schedule 4.1(i) lists the
location of the leased premises, the dates of the Leases and any and all
amendments thereto, the annual rental amount and the duration thereof and (y)
except as disclosed on Schedule 4.1(b), there is no mortgage, deed, trust or
other lien of record as of the Closing Date, that is superior to the rights of
tenant under any Lease that is an Important Lease Asset.
(iii) Each Lease constitutes the legal, valid and binding obligation
of each of the parties thereof, except to the extent that such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization and
similar laws of general application relating to or affecting creditors' rights
generally and general principles of equity, regardless of whether such
enforceability is considered in a proceeding in equity or at law. Except as
set forth on Schedule 4.1(i), the Seller, and to C&K's Knowledge or to each of
the Sellers' Knowledge, the other parties to the Leases, have performed all
material obligations required to be performed under the Leases through the
Closing Date and are not (with or without the lapse of time or the giving of
written notice, or both) in breach or default in any respect thereunder. The
Sellers shall have delivered to Purchaser a true, correct and complete copy of
any and all Leases.
d. (j) Contracts and Other Documents.
As of the Closing Date, the Company is not a party to or bound
by any Contract, Lease or similar document other than those Contracts
identified on Schedule 4.1(j), those Leases identified on Schedule 4.1(i), or
those agreements which have been entered into by the Gustafson Business
Entities in the ordinary course of business and consistent with past practices
and do not involve payment or receipt of more than FIFTY THOUSAND UNITED
STATES DOLLARS (US$50,000) (collectively, the "Contract Rights"). As of the
Closing Date, neither the Gustafson Business Entities nor the Company has
received notice of any default, and to C&K's Knowledge or each of the
Sellers' Knowledge as of the Effective Date and as of the Closing Date,
neither the Gustafson Business Entities nor Company is in default, under any
Contract, Lease or other instrument to which the Company or the Gustafson
Business Entities is a party or by which it is bound. As of the Closing,
other than the Contract Rights, the Company will not be, a party to or bound
by any contract relating to its Business, including, without limitation, those
contracts of the type described below:
(i) Any employment or consulting agreement with an employee
or former employee that is not terminable at will by the Company (other than
any agreement for the employment of any such employee or former employee
implied in Law);
(ii) Any collective bargaining agreement with any labor
union;
(iii) Any agreement for capital expenditures or the
acquisition or construction of fixed assets in excess of ONE HUNDRED THOUSAND
UNITED STATES DOLLARS (US$100,000), other than in the ordinary course of
business and consistent with past practices and other than any capital
expenditures to be made at the Pekin, Illinois facility with the mutual
agreement of C&K and Purchaser.
(iv) Any agreement or purchase order in excess of ONE
HUNDRED THOUSAND UNITED STATES DOLLARS (US$100,000) for the purchase,
maintenance or acquisition, or the sale or furnishing, of materials, supplies,
merchandise, equipment or other property or services; other than in the
ordinary course of the Business of the Gustafson Business Entities and
consistent with past practices of the Gustafson Business Entities;
(v) Any agreement granting to any person a first-refusal,
first-offer or similar preferential right to purchase or acquire any
Contributed Asset;
(vi) Any license or royalty agreement other than licenses
or royalty agreements granted or received in the ordinary course of its
Business;
(vii) Any indenture, mortgage, loan or credit agreement
under which Gustafson Business Entities have borrowed any money or issued any
note, bond, indenture or other evidence of indebtedness for money borrowed by
Gustafson Business Entities, or guaranteed indebtedness for money borrowed by
others in connection with their Business;
(viii) Any lease for their Business under which Gustafson
Business Entities are (a) a lessee of, or holds or uses, any machinery,
equipment, vehicle or other tangible personal property owned by a Third Party
or (b) a lessor of, or makes available for use by any Third Party, any
tangible personal property owned by Gustafson Business Entities, as the case
may be, in each case, other than in the ordinary course of its Business;
(ix) Any agreement which would restrict the ability of the
Company from developing or distributing a Product for market and sale anywhere
in the Territory, other than in the ordinary course of its Business; or
(x) Any other agreement which involves payment of more than
FIFTY THOUSAND UNITED STATES DOLLARS (US$50,000) and which is not made in the
ordinary course of the Business of the Gustafson Business Entities and is not
already excluded under the terms of any other provision of this Section
4.1(i).
Except as set forth on Schedule 4.1(j), as of the Effective Date, each
Contract is a valid and binding obligation of a Gustafson Business Entity, and
to C&K's Knowledge or to each of the Sellers' Knowledge, the other parties
thereto, and is in full force and effect, except to the extent that such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization and similar laws of general application relating to or
affecting creditors' rights generally and general principles of equity,
regardless of whether such enforceability is considered in a proceeding in
equity or at law.
Except as set forth on Schedule 4.1(j), the Seller, and to C&K's
Knowledge or to each of the Sellers' Knowledge, the other parties to the
Contracts, have performed all material obligations required to be performed
under the Contracts through the Closing Date and are not (with or without the
lapse of time or the giving of written notice, or both) in breach or default
in any respect thereunder. Except as prohibited by confidentiality or secrecy
provisions in the Contracts, or except as restricted by any objections to
disclosure raised by the other party to the Contracts, the Sellers have
provided Purchaser with a summary of such Contracts containing all the
material terms not prohibited to be disclosed.
(k) Labor and Employment.
Except as set forth in Schedule 4.1(k), as of the Closing Date,
(i) neither the Gustafson Business Entities as to their Business nor the
Company is a party to a union agreement or collective bargaining agreement
with respect to the Business; (ii) there is no labor strike, dispute, formal
grievance, arbitration proceeding, general slowdown or stoppage, or charge of
unfair labor practice involving a Gustafson Business Entity pending before a
court, regulatory body or arbitration tribunal; (iii) Gustafson Business
Entities' Business is being operated in compliance in all material respects
with all Laws relating to employees; (iv) there are no pending complaints nor,
to C&K's Knowledge or to each of the Sellers' Knowledge, are there any
threatened complaints against the Gustafson Business Entities in respect of
their Business before any employment standards tribunal or human rights
tribunal; (v) Gustafson Business Entities are not a party to any written
employment agreement with any employee of their Business or any collective
agreement with any trade union or employee association with respect to their
Business and the Sellers are not aware of any effort to organize any employees
of the Gustafson Business Entities in their Business into any collective
bargaining unit, union or similar arrangement; and (vi) there are no pending
or, to C&K's Knowledge or to each of the Sellers' Knowledge, threatened
workers' compensation, discrimination or other such claims related to the
Gustafson Business Entities or their Business.
d. (l) ERISA; Employee Benefit Plans.
(i) Neither the Company nor any of the Gustafson Business
Entities is a party to or obligated to contribute to any Employee Benefit
Plan, except those set forth in Schedule 4.1(l) attached hereto. Copies of
all of the written plans and agreements described in Schedule 4.1(l) and
written summaries of any oral plans or agreements are or have been made
available to Purchaser.
(ii) With respect to each Employee Benefit Plan: (1)
neither such Employee Benefit Plan nor any plan fiduciary has engaged in a
prohibited transaction as defined in Section 406 of ERISA (for which no
individual or class exemption exists under Section 408 of ERISA) or any
prohibited transaction as defined in Section 4975 of the Code (for which no
individual or class exemption exists under Section 4975 of the Code) involving
such Employee Benefit Plan that resulted in any material liability which has
not been satisfied; (2) all filings and reports as to such Employee Benefit
Plan required to have been made to the Internal Revenue Service ("IRS"), to
the U.S. Department of Labor or, if applicable, to the Pension Benefit
Guaranty Corporation have been made; (3) there is no litigation, disputed
claim (other than routine claims for benefits), governmental proceedings or
investigation commenced or pending or threatened with respect to any such
Employee Benefit Plan or its related trust; (4) such Employee Benefit Plan has
been established, maintained, funded and administrated in all material
respects in accordance with (A) its governing documents and (B) any applicable
provisions of ERISA and the Code; and (5) no such Employee Benefit Plan is,
and neither the Company, nor any of the Gustafson Business Entities has,
during the preceding five (5) year period, contributed to or maintained a
"multiemployer plan" within the meaning of Section 4001(a)(3) of ERISA.
(iii) With respect to any Employee Pension Benefit Plan
that covers employees of the Company or any of the Gustafson Business Entities
and which is intended to be qualified under Section 401(a) of the Code, except
as set forth in Schedule 4.1(l), favorable determination letters as to
qualification of such Employee Pension Benefit Plans under Section 401(a) of
the Code have been issued by the IRS and to C&K's Knowledge or to each of the
Sellers' Knowledge no event has occurred or condition exists that could not be
corrected through one of the compliance programs instituted by the IRS without
incurring substantial costs and penalties.
(iv) There has not been any termination or partial
termination of any Employee Pension Benefit Plan maintained by the Company or
the Gustafson Business Entities that resulted in a material liability to the
Company or the Gustafson Business Entities that has not been satisfied.
(v) With respect to any plan, fund, program or arrangement
maintained or sponsored by the Company for the benefit of employees who
perform services outside the United States (a "Foreign Plan"): (1) there is
no litigation, disputed Claim (other than routine Claims for benefits),
governmental proceeding or investigation threatened, commenced or pending with
respect to such Foreign Plan or its related trust which, if determined
adversely, would have a Material Adverse effect on the financial condition of
the Sellers, taken as a whole; (2) such Foreign Plan has been created and
maintained in accordance with applicable laws and administered in all material
respects in accordance with its governing documents; and (3) such Foreign Plan
may be terminated without having a Material Adverse effect on the financial
condition of the Company.
d. (m) Licenses and Permits.
The Licenses and Permits (other than Environmental Permits which
are the subject of Article 5) are set forth on Schedule 4.1(m). Each of the
Gustafson Business Entities with respect to its Business, and as of the
Closing Date, the Company, have each obtained and fully paid for, and has in
full force and effect all necessary Licenses and Permits, except for those the
lack of which would not Materially Adversely affect its Business. No
proceeding is pending, or, to C&K's Knowledge, or to each of the Sellers'
Knowledge, threatened, to modify, suspend, revoke or otherwise limit any such
Licenses and Permits. To C&K's Knowledge or to each of the Sellers'
Knowledge, no authority intends to cancel, terminate, modify or refuse to
renew any such License or Permit. Except as shown on Schedule 4.1(m), the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby will not result in the revocation,
cancellation, suspension, modification, or limitation of any of the Licenses
and Permits and will not give to any Person any right to revoke, cancel,
suspend, modify, or limit any of the Licenses and Permits.
(n) Absence of Undisclosed Liabilities.
Except as set forth in Schedule 4.1(n), and except with respect
to Environmental Matters (which are the subject of Article 5), to each of the
Sellers' Knowledge or to C&K's Knowledge as of the Closing Date, there is no
material liability connected with the Business of each of the Gustafson
Business Entities that is not fully reflected or disclosed in the Financial
Statements which would be required to be disclosed or reflected in the
Financial Statements in accordance with U.S. GAAP.
d. (o) Compliance With Law.
Except as set forth in Schedule 4.1(o), and except with respect
to Environmental Matters (which are the subject of Article 5), the Gustafson
Business Entities, with respect to their Business and, as of the Closing Date,
the Company is in material compliance in all respects with all applicable
Laws, and C&K, the Sellers and the Company have not received any written
notice of any alleged breach by the Gustafson Business Entities or the Company
of any Laws.
d. (p) Technology and Registrations.
(i) As of the Closing Date, the Company owns or possesses
valid and binding licenses or other rights to use, whether or not registered,
the Technology and Registrations.
(ii) Schedule 4.1(p) sets forth a complete and accurate
list of all registered Technology, applications to register Technology and the
Registrations (identifying those owned and those licensed), including all
United States, state and foreign registrations or applications for
registration thereof and all agreements (including, without limitation,
agreements pursuant to which the Company has granted licenses to third parties
to use any Technology or Registration) relating thereto, as of the Closing
Date. All actions necessary to maintain the registered Technology and the
Registrations have been taken by the Company or by the Gustafson Business
Entities. Except as set forth on Schedule 4.1(p), to C&K's Knowledge or to
each of the Sellers' Knowledge as of the Effective Date and as of the Closing
Date, the use by the Company of any of the Technology or Registrations or the
operation of the Company's Business as conducted as of the Closing does not
violate the proprietary rights of any other Person and no claim has been
asserted by any Person with respect to the use of the Technology or
Registrations by the Company or the operation of the Company's Business as
conducted as of the Closing. To C&K's Knowledge or to each of the Sellers'
Knowledge as of the Effective Date and as of the Closing Date, no Person is
infringing upon the Technology. To C&K's Knowledge or to each of the Sellers'
Knowledge as of the Effective Date, as to the Gustafson Business Entities and
as of the Closing Date as to the Company, no Person, other than the Company,
the Sellers, or the Gustafson Business Entities owns or has any proprietary,
financial or other interests, in any Technology or Registrations, except the
interests of any Person from which the Company, the Sellers or the Gustafson
Business Entities licensed, sublicensed, was assigned or otherwise obtained
rights to the Technology or Registrations. Except as set forth in Schedule
4.1(p), as of the Closing Date, the Company is not a party to any written
confidentiality, secrecy or similar agreements with Third Parties in
connection with the Technology or Registrations.
d. (q) Pending Litigation.
Except as set forth in Schedule 4.1(q), and except with respect
to Environmental Matters (which are the subject of Article 5), there are no
actions, suits, Claims, enforcement actions, or proceedings pending or, to
C&K's Knowledge or to each of the Sellers' Knowledge, no material Claims
threatened against the Sellers, Gustafson Business Entities or the Company or
their Business or any Person by reason of such Person being an officer or
Manager of the Company, whether at law or in equity or before or by any
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality; nor is there outstanding any writ, order,
decree, or injunction applicable to the Business of the Gustafson Business
Entities or the Company that: (i) calls into question the Company 's
authority or right to enter into this Agreement and consummate the
transactions contemplated hereby; or (ii) would otherwise prevent or delay the
transactions contemplated by this Agreement; or (iii) applies to the conduct
of the Company's Business or the ownership or use of the Contributed Assets.
d. (r) Books and Records.
The books of account, minute books, Membership Interest record
books and other records of the Company are complete and accurate and have been
maintained in accordance with sound business practice. The minute books of
the Company contain accurate and complete records of all meetings held of, and
company action taken by, the Members and the Board, and no meetings of the
Members or the Board has been held for which minutes have not been prepared
and are not contained in such minute books. At the Closing, all such books
and records will be in the possession of the Company. The Financial Books and
Records are complete and correct in all material respects. All of the
Financial Books and Records have been prepared and maintained in all material
respects in accordance with U.S. GAAP (except as otherwise stated therein or
on Schedule 4.1(r)).
d. (s) Subsidiaries and Other Investments.
As of the Closing Date, the Company does not own, directly or
indirectly, any interests or investment (whether equity or debt) in any Person
other than those identified in Schedule 4.1(s).
d. (t) Inventory.
The inventory included in the Contributed Assets and identified
on Schedule 4.1(t) is, and was, acquired and has been maintained in the
ordinary course of business, and is of a good quality, quantity and condition
usable, leasable or saleable in the ordinary course of business, except to the
extent that financial reserves have been recorded against such inventory in
the Financial Statements.
d. (u) Capital Structure.
As of the Closing Date, the Membership Interest shown in
Schedule 4.1(u) constitutes all the issued and outstanding membership
interests of the Company and is owned beneficially and of record by the
Initial Members. The Membership Interest and the Offered Membership Interest
are duly authorized, validly issued, fully paid, and nonassessable and the
Initial Members hold all of the voting rights thereunder. There are no
outstanding subscriptions, options, rights, warrants or other rights,
agreements or commitments obligating the Company to issue, sell or transfer
any of the Membership Interest or any other equity interests in the Company.
d. (v) Financial Statements.
Schedule 4.1(v) sets forth the proforma combined income statement
for the six month period ended June 27, 1998 and the proforma combined balance
sheet of the Company as of June 27, 1998, which proforma income statement and
proforma balance sheet includes all the Contributed Assets and Assumed
Obligations (the "Financial Statements"). The Financial Statements are
prepared in accordance with U.S. GAAP with the proforma adjustments identified
on Schedule 4.1(v). The Financial Statements fairly present the proforma
financial condition of the Company as of the date thereof and the proforma
results of operations of the Company for the period ended on such date,
adjusted as if the Company existed and the Contributed Assets and Assumed
Obligations had been transferred to and assumed by the Company on December 28,
1997.
d. (w) Taxes.
Except as set forth on Schedule 4.1(w), to C&K's Knowledge or to
each of the Sellers' Knowledge as of the Effective Date and as of the Closing
Date, all material returns of Taxes required to be filed by or for the Company
and the Gustafson Business Entities have been timely filed (timely being
understood to include all properly granted extensions) and payment or
provision for the payment of all material Taxes which are shown to have become
due pursuant to such returns has been made and all other Taxes for which each
has received a notice of assessment or demand for payment or have otherwise
been made aware of a deficiency have been paid. All such returns or reports
are complete and accurate in all material respects. The Gustafson Business
Entities or the appropriate affiliates have withheld or collected and paid
over to the appropriate Governmental Authority, or transferred to the Company
all accruals and reserves for such payment of all Taxes required by Law to be
withheld or collected by or with respect to the Gustafson Business Entities.
There are no liens for Taxes upon the assets of the Gustafson Business
Entities, the Company, or the Business other than those which are being
contested in good faith by appropriate proceedings as described in Schedule
4.1(w).
To C&K's Knowledge or to each of the Sellers' Knowledge, no
formal written claim has ever been made by any non-U.S. authority in a
jurisdiction outside the U.S., where no returns are filed with respect to the
Gustafson Business Entities, that their Business' activities might be subject
to taxation by that jurisdiction.
d. (x) Accounts Payable and Accounts Receivable.
Except as set forth on Schedule 4.1(x), on the Closing Date the
Gustafson Business Entities and the Company have no outstanding accounts or
monies due C&K or the Sellers, and C&K or the Sellers have no outstanding
accounts or monies due the Gustafson Business Entities and the Company. Except
as set forth on Schedule 4.1(x), all accounts payable by the Company and
accounts receivable due the Company by C&K, the Sellers or the Gustafson
Business Entities shall be paid prior to Closing by C&K, the Sellers or the
Gustafson Business Entities. The Financial Statements include adequate
reserves for uncollectible accounts receivable of the Company.
d. (y) Regulatory Approvals.
Other than notice to be given (i) pursuant to the HSR Act, if
applicable, and (ii) transfer of Licenses and Permits, no governmental or
regulatory authorization, approval, order, consent, or filing is required,
including, without limitation, any filings which may be required under the
Laws, on the part of C&K, the Gustafson Business Entities and/or the Sellers
in connection with the execution, delivery, and performance of this Agreement
or any agreements and documents to be delivered under this Agreement or the
performance of C&K's and the Sellers' obligations under this Agreement or any
other agreements and documents to be delivered under this Agreement.
(z) Insurance.
The Sellers and the Gustafson Business Entities maintain and at
the Closing, the Company will have such policies of insurance, issued by
responsible insurers, as are appropriate to their Business and the Contributed
Assets, in such amounts and against such risks (including, without limitation,
comprehensive general liability) as are customarily carried and insured
against by C&K. All such policies of insurance are (or will be) in full force
and effect and the Sellers and the Gustafson Business Entities are not, and as
of the Effective Date, the Company will not be in default as to the payment of
premium, the need to give timely notice, or otherwise, under the terms of any
such policies.
(aa) Contributed Products.
(i) The Contributed Products are listed on Schedule
4.1(aa). There has not been any Occurrence (as defined below),
which, individually or in the aggregate, could reasonably be
expected to have a Material Adverse effect; and there has not been any Recall
with respect to any Contributed Products, or, to C&K's Knowledge or to each of
the Sellers' Knowledge , any investigation ongoing or threatened in writing by
any Governmental Authority relating thereto.
(ii) For purposes of this Section 4.1(aa), the term
"Occurrence" shall mean any accident, happening or event which is caused or
allegedly caused by any alleged hazard or alleged defect in manufacture or
formulation, including any alleged failure to warn or any breach of express or
implied warranties or representations with respect to, or any such accident,
happening or event otherwise involving, any of the Contributed Products, which
resulted or is alleged to have resulted in injury or death to any person.
(bb) Due Inquiry.
C&K and each Seller represent and warrant that each of the
individuals listed on Exhibit A has made Due Inquiry.
4.2 By the Purchaser.
Purchaser hereby represents and warrants to C&K and the Sellers as
follows:
(a) Organization and Qualification.
Purchaser is a corporation duly incorporated and validly
existing under the Laws of the jurisdiction of its incorporation. Purchaser
is a wholly owned direct subsidiary of Bayer AG, a corporation organized under
the laws of Germany.
(b) Authorization, Consents or Approvals.
Purchaser has full power and authority to enter into and perform
this Agreement and the Operative Agreements to which it is a party, and has
taken all necessary corporate action to authorize the execution and delivery
of this Agreement and the Operative Agreements to which it is a party and the
performance by Purchaser of its obligations hereunder and thereunder.
Purchaser has all necessary corporate power, authority and capacity to own its
property and assets and to carry on its business as presently conducted. This
Agreement and the Operative Agreements to which it is a party have been duly
executed by Purchaser and constitute legal, valid, binding, and enforceable
obligations of Purchaser, enforceable against Purchaser in accordance with
their terms except to the extent that such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization and similar laws of general
application relating to or affecting creditors' rights generally and general
principles of equity, regardless of whether such enforceability is considered
in a proceeding in equity or at law. The execution and delivery of this
Agreement and the Operative Agreements to which it is a party and the
consummation by Purchaser of the transactions contemplated herein or hereby or
therein or thereby, do not and will not on the Closing Date (i) conflict with
or violate any of the terms of Purchaser's Certificate of Incorporation or
Bylaws, (ii) conflict with, or result in a breach of any of the terms of, or
result in the acceleration of any indebtedness or obligations under, any
agreement, obligation, or instrument by which Purchaser is bound or to which
any property of Purchaser is subject, or constitute a default thereunder or
(iii) result in the violation by Purchaser of any Laws to which Purchaser or
any assets of Purchaser may be subject which would Materially Adversely affect
the transactions contemplated herein; provided, however, that the consummation
of the transactions contemplated by this Agreement is subject to the
requirements of the HSR Act, if applicable, and all other applicable antitrust
statutes and expiration of applicable waiting periods in connection therewith.
Except as set forth in Schedule 4.2(b), no authorization, consent, or approval
of any Governmental Authority or any other person is necessary or required in
connection with the execution and delivery by Purchaser of this Agreement or
the Operative Agreements to which it is a party or the performance by
Purchaser of Purchaser's obligations hereunder or thereunder.
ARTICLE 5. ENVIRONMENTAL MATTERS.
5.1 Environmental.
Notwithstanding anything to the contrary in this Agreement, the
representations and warranties set forth in this Section 5.1 are the exclusive
representations and warranties of C&K and the Sellers concerning any and all
Environmental Matters. C&K and the Sellers, jointly and severally, represent
and warrant to Purchaser that as of the Closing Date:
(a) Schedule 5.1 sets forth a list of all judicial or
administrative proceedings (including, without limitation, arbitrations,
mediations, and correspondence with any Governmental Authority) related to the
ownership and/or operation of the Business or the Contributed Assets in which
C&K, any Seller, or any Gustafson Business Entity is or in the last five (5)
years has been a party before any Governmental Authority relating to
Environmental Matters, the disposition of which may result in: (i)
Environmental Liability against any Gustafson Business Entity, C&K or any
Seller in an amount exceeding the DeMinimis Amount; (ii) interruption of the
Gustafson Business Entities' or the Company's Business for longer than twenty-
four (24) hours; (iii) the making of a capital expenditure in excess of the
DeMinimis Amount; or (iv) the impairment of the utility of, or the diminution
in the value of the Company, the Business or the Contributed Assets, which
impairment or diminution exceeds the DeMinimis Amount.
(b) Except as set forth in Schedule 5.1, each Gustafson Business
Entity is, and to C&K's Knowledge or to each Seller's Knowledge in the past
has been, in substantial compliance with all Environmental Laws applicable to
the operation of the Business and the Contributed Assets.
(c) Except as set forth on Schedule 5.1, in connection with the
ownership and/or operation of the Business and the Contributed Assets each
Gustafson Business Entity currently possesses, currently is in compliance
with, and, to C&K's Knowledge or to each Seller's Knowledge in the past has
substantially complied, in all material respects with the terms of all
Environmental Permits and other approvals necessary to operate the Business.
(d) Except as disclosed on Schedule 5.1 to C&K's Knowledge or to
each of the Sellers' Knowledge, no location currently owned, operated or
leased by any Gustafson Business Entity and utilized in connection with the
ownership and/or operation of the Business of the Gustafson Business Entities
or the Contributed Assets is the subject of any enforcement action or other
investigation by any Governmental Authority or other Third Party that may lead
to Environmental Liability against the Company or any Seller that exceeds the
DeMinimis Amount.
(e) Except as disclosed on Schedule 5.1, to C&K's Knowledge or
any Sellers' Knowledge and without making any external due inquiry or
investigation or conducting any site visits or audits, no Off-Site Location is
the subject of any enforcement action or other investigation by any
Governmental Authority or other Third Party that may lead to Environmental
Liability against the Company or any Seller in an amount that exceeds the
DeMinimis Amount.
(f) Except with respect to Environmental Matters referenced or
identified in Schedule 5.1:
(i) Neither C&K nor any Seller has received any written
request for information, notice, demand letter, administrative inquiry, or
formal notice of claim from a Governmental Authority or Third Party concerning
On-Site Contamination that may lead to Environmental Liability against the
Company or any Seller exceeding the DeMinimis Amount; and
(ii) Neither C&K nor any Seller has received any written
request for information, notice, demand letter, administrative inquiry or
formal notice of claim from a Governmental Authority or other Third-Party
concerning Contamination at an Off-Site Location that may lead to
Environmental Liability against the Company exceeding the DeMinimis Amount.
(g) Except as set forth in Schedule 5.1, to C&K's Knowledge or
to any of the Sellers' Knowledge, there are no underground storage tanks
located on any of the Real Property.
(h) To C&K's Knowledge or to any of the Sellers' Knowledge,
there are no Environmental Permits needed by the Gustafson Business Entities
or the Sellers or that are required by Environmental Laws in order to operate
the Business as currently operated by the Gustafson Business Entities other
than those set forth on Schedule 5.1.
(i) To C&K's Knowledge or to any of the Sellers' Knowledge, the
execution and delivery of this Agreement and the consummation by C&K, each
Seller and the Company of the transactions contemplated herein or hereby will
not result in a violation by any Seller, any Gustafson Business Entity or the
Company of any Environmental Law to which any Seller, any Gustafson Business
Entity, the Company or any Contributed Assets may be subject; provided,
however, that except as set forth in Schedule 5.1, no authorization, consent,
or approval of any Governmental Authority is necessary or required under any
Environmental Law in connection with the execution and delivery by C&K and
each Seller of this Agreement and the performance by C&K and each Seller of
their respective obligations hereunder, or in connection with the Company's
consummation of the transactions contemplated herein or hereby and the
Company's operation of the Business following such consummation.
(j) To C&K's Knowledge or to any of the Sellers' Knowledge,
other than in connection with the transfer of Environmental Permits and
compliance with the terms of any applicable state transfer acts, no
governmental or regulatory authorization, approval, order, consent, or filing
is required under Environmental Laws on the part of C&K, any Seller or any
Gustafson Business Entity in connection with the execution or delivery of this
Agreement or any agreements and documents to be delivered under this Agreement
or the performance of C&K's and each Seller's obligations under this Agreement
or any other agreements and documents to be delivered under this Agreement.
(k) Notwithstanding anything to the contrary in this Section
5.1, C&K, Sellers and/or the Company make no representations or warranties
regarding the Company's compliance with Environmental Laws from and after the
Closing Date.
ARTICLE 6. COVENANTS PRIOR TO CLOSING.
6.1 Covenants of C&K, the Sellers and the Company.
(a) C&K, the Sellers and the Company each hereby covenant that,
except as otherwise previously consented to in writing by Purchaser, from and
after the Effective Date until the Closing or the earlier termination of this
Agreement, each of C&K and the Sellers will cause the Company and the
Gustafson Business Entities to, carry on their respective Businesses in all
material respects in the ordinary course thereof in substantially the same
manner as heretofore conducted and in compliance in all material respects with
all applicable Laws and Environmental Laws and, to the extent consistent
therewith, use all reasonable commercial efforts to preserve intact their
current Business organizations, use all reasonable efforts to keep available
the services of their current officers and other key employees and preserve
their relationships with those Persons having business dealings with them to
the end that their goodwill and ongoing businesses will be materially
unimpaired at the Closing. Without limiting the generality or effect of the
foregoing:
(b) Except with the prior written consent of Purchaser, which
consent will not be unreasonably withheld, conditioned or delayed:
(i) No material contract, lease, license, obligation,
indebtedness, commitment, purchase or sale will be entered into, assumed or
made by the Gustafson Business Entities or the Company, except in the ordinary
course of their Business;
(ii) Neither the Gustafson Business Entities nor the
Company will enter into or assume any mortgage, pledge, conditional sale or
other title retention agreement, or permit any Lien to be placed upon any of
the assets of their Business, whether now owned or hereafter acquired (other
than Liens arising by operation of Law or Environmental Law in the ordinary
course of business); and
(iii) No Lease or material Contract will be terminated or
amended, nor will any consent or approval that is requested from Seller, the
Company or any of the Gustafson Business Entities thereunder be given, except
in the ordinary course of their Business, and except for the possible
termination of the lease of the Eden Prairie, Minnesota facility.
(c) After the Formation Date and until the Closing or
termination of this Agreement, the Company will not amend its Certificate of
Formation or the LLC Agreement or merge or consolidate, or obligate itself to
do so, with or into any other entity.
(d) Except as set forth on Schedule 6.1(d), prior to Closing
each of the Gustafson Business Entities and the Company, with respect to their
Business, shall not: (i) change its accounting methods, principles or
practices; (ii) declare, set aside or pay any dividend or other distribution
(whether in cash, membership interest, property or any combination thereof) in
respect of any stock of itself, or the Membership Interest, or redeem,
repurchase or otherwise acquire any membership interests issued by the
Company; (iii) revalue any of its assets, including, without limitation,
writing down the value of inventory or writing off notes or accounts
receivable, other than in the ordinary course of business; (iv) establish or
increase any bonus, insurance, severance, deferred compensation, pension,
retirement, profit sharing, membership interests option (including, without
limitation, the granting of membership interests awards), employee benefit
plan, or otherwise increase the compensation payable or to become payable to
any officers or key employees of the Gustafson Business Entities or the
Company, except in the ordinary course of business consistent with past
practice or as may be required by Law; (v) enter into any employment or
severance agreement with any of its employees or establish, adopt or enter
into any collective bargaining agreement; or (vi) enter into any contracts
with suppliers and customers other than in the ordinary course of the
Business; or (vii) authorize or commit or agree to take any of the foregoing
actions.
6.2 Cooperation.
Purchaser, C&K and the Sellers agree (a) to cooperate with each
other in determining whether any filings are required to be made or consents
required to be obtained in any jurisdiction in connection with the
consummation of the transactions contemplated hereby and in making or causing
to be made any such filings promptly and in seeking to obtain in a timely
manner any such consents; and (b) to use all reasonable efforts to obtain
promptly the satisfaction of the conditions to the Closing of the transactions
contemplated herein. Purchaser, the Company, C&K and the Sellers shall
furnish to each other and to each other's counsel all such information as may
be reasonably required in order to effectuate the foregoing. C&K, the Sellers
and Purchaser shall cooperate, as may be necessary, with respect to their
respective filings, if any, made pursuant to the HSR Act and all other filings
made under applicable antitrust statutes. Purchaser on the one hand, and C&K
and the Sellers on the other hand shall bear equally all filing fees in
respect of the HSR Act, if applicable, and all other filings under applicable
antitrust statutes and all filing fees required by applicable Environmental
Laws. Until the Closing or early termination of this Agreement, C&K agrees to
cooperate (and will cause its Affiliates to cooperate) with any reasonable
request of Purchaser for access during the Gustafson Business Entities' normal
business hours to the offices, properties, records and personnel of the
Business of the Gustafson Business Entities, provided that Purchaser shall not
unreasonably interfere with such Business' activities and that such access is
subject to all applicable confidentiality obligations of the Company, Sellers
or the Gustafson Business Entities.
6.3 No Solicitation.
Prior to the Closing or earlier termination of this Agreement,
neither C&K nor the Sellers, nor their respective employees, officers, agents
or representatives, shall directly or indirectly (a) solicit, initiate or
encourage any inquiries, proposals or offers from any Person relating to any
acquisition or purchase of all or a material amount of the Contributed Assets
or any ownership interest in the Company and/or the Gustafson Business
Entities, or (b) with respect to any effort or attempt by any other Person to
do or seek any of the foregoing (i) participate in any discussions or
negotiations related to the foregoing, (ii) furnish to any other Person any
Confidential Information with respect to the Contributed Assets or the Company
or the Gustafson Business Entities or their Businesses, or (iii) otherwise
cooperate in any way with, or assist or participate in, or facilitate or
encourage any such effort.
ARTICLE 7. CLOSING.
7.1 Conditions to Obligations of Purchaser.
The obligations of Purchaser under this Agreement, including,
without limitation, the obligation to consummate and effect the purchase of
the Offered Membership Interest, shall be subject to satisfaction of the
following conditions, unless waived by Purchaser:
(a) C&K, the Sellers and the Company shall have performed in all
material respects all agreements, and satisfied in all material respects all
conditions on their part to be performed or satisfied hereunder at or prior to
the Closing Date.
(b) As of the Closing Date, all representations and warranties
of C&K, and the Sellers herein shall have been true and correct when made,
shall have continued to have been true and correct at all times subsequent
thereto, and shall be true and correct on and as of the Closing Date as though
made on, as of and with reference to such date.
(c) All consents, approvals, certificates and authorizations
required to be obtained by C&K, the Sellers and the Company in connection with
the contribution to the Company of the Contributed Assets and the sale of the
Offered Membership Interest, including without limitation, all approvals by
and clearances from all Governmental Authorities, lenders, and other third
parties, shall have been obtained, and C&K shall have made the initial filing
required under the HSR Act, if applicable.
(d) The Company shall have obtained written consents to the
contribution to the Company of the Contributed Assets and the sale of the
Offered Membership Interest for each Lease or Contract listed on Schedule
4.1(n) or Schedule 4.1(i) with respect to which a consent is required in
connection with the consummation of the transactions contemplated by this
Agreement.
(e) Since June 27, 1998, except as set forth in Schedule 7.1(e),
there shall not have occurred any Material Adverse change with respect to the
Gustafson Business Entities, the Company or the Company's or the Gustafson
Business Entities' Business.
(f) The Initial Members and the Company shall have delivered to
Purchaser the written resignations of three Managers of the Company, and shall
cause any other action to be taken with respect to such resignations that
Purchaser may reasonably request.
(g) The Initial Members shall have executed and delivered to
Purchaser the LLC Certificate, the LLC Amendment and all other documents
necessary to transfer good and marketable title to the Offered Membership
Interest to Purchaser free and clear of all Liens as contemplated by this
Agreement.
(h) The Company shall have obtained all material Licenses and
Permits necessary for the operation of its Business after the Closing.
(i) The Closing shall have occurred by the date determined in
accordance with Section 2.3, but in no event later than December 31, 1998.
(j) The Purchaser shall have received all of the deliveries
required pursuant to Section 7.5.
(k) All Operative Agreements shall have been authorized by and
executed and delivered by C&K or its Affiliates, the Sellers and the Company,
as applicable.
(l) Chicago Title Insurance Company shall have issued (or be
irrevocably committed to issue) to the Company the Title Policies.
(m) C&K shall have delivered to Purchaser Incumbency and
Specimen Signature Certificates for each of C&K, each of the Sellers and the
Company.
(n) The parties to the Benefit Services Agreement shall have
executed and delivered such agreement.
(o) The Deeds in the form attached hereto as Exhibit P, the
Assignment, Lease Estoppel and Consent Certificate, in the form attached
hereto as Exhibit Q and the Assignment and Assumption Agreement, in the form
attached hereto as Exhibit O shall have been executed.
(p) Lease Estoppel and Consent Certificates with respect to each
Lease that is an Important Lease Asset shall have been executed by the then
current landlord under each such Lease and delivered to the Company; provided
however, that the C&K and Sellers shall be required to use reasonable
commercial efforts to obtain a Lease Estoppel and Consent Certificate from the
Landlord at the Eden Prairie, Minnesota property, but shall have no obligation
to provide such Lease Estoppel and Consent Certificate at or for the Closing.
(q) If any Lease that is an Important Lease Asset is subordinate
to any mortgage, deed of trust or other lien of record, a Non-Disturbance and
Attornment Agreement with respect to each such Lease shall have been executed
by the then current landlord and the then current holder of record of such
lien and delivered to the Company; provided however, that C&K and Sellers
shall be required to use reasonable commercial efforts to obtain a Non-
Disturbance and Attornment Agreement from the mortgage/ trustee holding the
mortgage/deed of trust on the Eden Prairie, Minnesota property, but shall have
no obligation to provide such NonDisturbance and Attornment Agreement at or
for the Closing.
(r) C&K shall have executed and delivered to Purchaser the
Letter Agreement dated as of the Effective Date, together with all
certificates required therein to be proved (the "C&K Letter Agreement").
7.2 Conditions to Obligations of C&K, the Sellers and Initial
Members.
The obligations of C&K and the Sellers and Initial Members under
this Agreement, including, without limitation, the obligation to contribute
the Contributed Assets and Assumed Obligations to the Company, and to
consummate and effect the sale of the Offered Membership Interest, shall be
subject to satisfaction of each of the following conditions, unless waived by
C&K, the Sellers and the Initial Members:
(a) Purchaser shall have performed in all material respects all
agreements, and satisfied in all material respects all conditions on its part
to be performed or satisfied hereunder at or prior to the Closing Date.
(b) As of the Closing Date, all of the representations and
warranties of Purchaser herein shall have been true and correct when made,
shall have continued to have been true and correct at all times subsequent
thereto, and shall be true and correct on and as of the Closing Date as though
made on, as of, and with reference to such date.
(c) All consents, approvals and authorizations required to be
obtained by C&K and the Sellers, Initial Members and the Company in
connection with the sale of the Offered Membership Interest, including all
approvals by and clearances from all Governmental Authorities, lenders, and
other third parties, shall have been obtained, and the Purchaser shall have
made the initial filing required under the HSR Act, if applicable.
(d) Purchaser shall have delivered the Purchase Price in
accordance with Section 3.1 and the other deliveries required pursuant to
Section 7.4.
(e) All Operative Agreements shall have been authorized by and
executed and delivered by Purchaser, and or Purchaser's Affiliates, as
appropriate.
(f) C&K shall have received all of the deliveries required
pursuant to Section 7.4.
(g) The Closing shall have occurred by the date determined in
accordance with Section 2.3, but in no event later than December 31, 1998.
(h) Bayer AG shall have executed and delivered to C&K the Letter
Agreement dated as of the Effective Date, together with all certificates
required therein to be provided (the "Bayer Letter Agreement").
(i) Purchaser shall have delivered to C&K an Incumbency and
Specimen Signature Certificate for Purchaser and Purchaser's Affiliates.
(j) The parties to the Benefit Services Agreement shall have
executed and delivered such agreement.
(k) The Company shall have obtained all material Licenses and
Permits necessary for the operation of its Business after the Closing.
7.3 Additional Conditions to Obligations.
The obligations of C&K, the Sellers, the Company and Purchaser to
consummate and effect the sale of the Offered Membership Interest pursuant to
this Agreement shall be subject to satisfaction of the following additional
condition, unless waived by C&K, the Sellers and Purchaser: (a) HSR Act and
any applicable waiting periods in connection therewith shall have expired, and
no consent, approval or authorization thereunder shall be subject to any
condition which is unduly burdensome to any of Purchaser, C&K or Sellers; (b)
no second request has been issued by any Governmental Authority; (c) no
injunction or temporary restraining order shall have been granted restraining
or prohibiting the consummation of the transactions contemplated by this
Agreement; and (d) no action, suit or other proceeding instituted by any
Governmental Authority seeking such an injunction or order shall be pending or
threatened.
7.4 Purchaser's Closing Deliveries.
At the Closing, Purchaser will deliver to C&K and the Sellers, in
form and substance reasonably satisfactory to C&K and the Sellers and
consistent with this Agreement:
(a) The Purchase Price as set forth in Section 3.1 hereof, the
executed LLC Amendment, and the appointments of the three Managers designated
by Purchaser.
(b) The Operative Agreements, in the form of Exhibit I, Exhibit
K, and Exhibit L hereto, executed by an authorized officer of Purchaser or
its Affiliate.
(c) Copies of resolutions adopted by the Board of Directors of
Purchaser authorizing the execution and delivery of, and performance of
Purchaser's obligations under, this Agreement, certified by the Secretary or
an Assistant Secretary of Purchaser.
(d) A Certificate of Legal Existence for Purchaser issued by the
Secretary of State of the jurisdiction of its incorporation and dated not more
than ten (10) business days prior to the Closing Date.
(e) A certificate of an authorized officer of Purchaser
certifying and warranting that the representations, warranties and agreements
of Purchaser contained in this Agreement are true and accurate as of the
Closing Date and that Purchaser has satisfied and performed in all material
respects all of its obligations hereunder.
(f) A written opinion of in-house counsel to Purchaser and its
Affiliates, dated as of the Closing Date, in the form of Exhibit F hereto.
(g) Evidence of any authorization, consent, approval or filing
with any public body or Governmental Authority or any other Person necessary
in connection with this Agreement.
(h) Incumbency and Specimen Signature Certificate for the
Purchaser and its Affiliates who are party to the Operative Agreements.
(i) The Bayer Letter Agreement executed by Bayer AG, and the
certificates to be provided as required therein.
(j) The Assignment and Assumption Agreement.
7.5 C&K's, the Sellers' and the Company's Closing Deliveries.
At the Closing, C&K, the Sellers and the Company will deliver to
Purchaser, in form and substance reasonably satisfactory to Purchaser and
consistent with this Agreement:
(a) The LLC Certificate representing the Offered Membership
Interest, duly endorsed for transfer, free and clear of all Liens, the
executed LLC Amendment, and the written resignations of three Managers
designated to resign by the Initial Members.
(b) The Operative Agreements, in the form of Exhibit I, Exhibit
K, and Exhibit L hereto, executed by an authorized officer of C&K, the Sellers
or their Affiliate.
(c) Copies of resolutions adopted by the Company and by the
Board of Directors of C&K, each Seller and Initial Member authorizing the
execution and delivery of, and performance of C&K's, the Company's, the
Sellers' and the Initial Members' obligations under, this Agreement, certified
by the Secretary or an Assistant Secretary of C&K, the Company, the Sellers or
the Initial Members, as the case may be.
(d) A Certificate of Legal Existence for C&K, the Company and
each of the Sellers issued by the Secretary of State of the jurisdiction of
its incorporation and dated not more than ten (10) business days prior to the
Closing Date.
(e) Evidence of qualification of the Company as a foreign
corporation issued by the Secretary of State of any state where Gustafson,
Inc. was qualified to do business as of the Effective Date, all as of a date
not more than ten (10) business days prior to the Closing Date.
(f) A certificate of an authorized officer of C&K, each Seller,
Initial Member and the Company, certifying and warranting that the
representations, warranties and agreements of such party contained in this
Agreement are true and accurate as of the Closing Date and that such party has
satisfied and performed in all material respects all of its respective
obligations hereunder.
(g) A written opinion of in-house counsel to C&K, the Sellers
and their Affiliates, the Initial Members and the Company, dated the Closing
Date substantially in the form of Exhibit G hereto.
(h) Evidence of any authorization, consent, approval or filing
with any public body or Governmental Authority or any other Person necessary
in connection with this Agreement.
(i) Incumbency and Specimen Signature Certificates for C&K, the
Sellers and the Company.
(j) The executed Deeds in the form of Exhibit P, the executed
Assignment and Assumption Agreement in the form of Exhibit O and the executed
Lease Estoppel and Consent Certificate in the form of Exhibit Q, the
Assignment and Assumption Agreement, in the form attached to the Agreement
Exhibit O, together with a copy of the recording memorandum for each Deed.
(k) Lease Estoppel and Consent Certificates for each Lease that
is an Important Lease Asset and Non-Disturbance and Attornment Agreements for
each mortgage, deed of trust or other lien of record to which any Lease that
is an Important Lease Asset is subordinate, provided that C&K and Sellers
shall have no obligation to provide the Lease Estoppel and Consent Certificate
or Non-Disturbance and Attornment Agreement regarding the Eden Praire,
Minnesota property.
(l) The C&K Letter Agreement executed by C&K and the other
certificates to be provided as required therein.
7.6 Employee and Employee Benefit Matters.
(a) All employees of the Gustafson Business Entities, including
employees on leave of absence, vacation, short-term disability, long-term
disability or workers' compensation as of the Closing Date, shall be
transferred to the Company ("Company Employees") on the Closing Date. C&K and
the Sellers agree that any reasonable costs, (including but not limited to the
actual cost of benefits provided) associated with employees on long-term
disability or workers' compensation as of the Closing Date until such
employees cease to be on long-term disability or workers' compensation,
whichever is applicable, shall be reimbursed to the Company by C&K and/or the
Sellers. Any and all liabilities or expenses of the Company relating to
employees of the Gustafson Business Entities who are retired as of the Closing
Date, shall be retained by the Gustafson Business Entities. The Company will
assume the obligations of the Gustafson Business Entities with respect to
accrued but untaken vacation and variable holidays as of the Closing Date, and
such accrued but untaken vacation and variable holidays, together with any and
all liabilities for post-retirement health benefits, have been set forth on
the balance sheet included as part of the Financial Statements and on the
Closing Date Balance Sheet.
(b) Except as otherwise specifically provided in this Agreement,
Purchaser and C&K and the Sellers agree that, as of the Closing Date, the
Company shall continue to provide Employee Benefit Plans comparable in all
material respects to those that the Company or the Gustafson Business Entities
were providing immediately prior to the Closing Date to the Company Employees.
(c) The Company shall adopt and/or maintain welfare benefit
plans (as defined in ERISA Section 3(1)) (the "Welfare Plans") and other
Employee Benefit Plans that, for at least three (3) years after the Closing
Date, provide benefits to Company Employees and to Company Employees who
retire after the Closing Date that are comparable in all material respects to
benefits provided to such persons by the Gustafson Business Entities the day
prior to the Closing Date. The Company, the Sellers and the Purchaser agree
that Company Employees will receive credit for all service credited by the
Sellers or the Gustafson Business Entities under (i) all employee benefit
plans, programs and policies, and fringe benefits of the Company in which they
became participants for purposes of eligibility and vesting and (ii) the
Company's vacation, service award and severance plans for purposes of
calculating the amount of each Company Employee's benefits under such plans.
(d) The Company shall waive any pre-existing condition
limitations for such conditions covered under the Gustafson Business Entities'
medical, health or dental plans and shall honor any deductible and out-of-
pocket expenses incurred by Company Employees and their dependents under the
Gustafson Business Entities' medical, dental or health plans during the
portion of the calendar year preceding the Closing Date. The aggregate amount
paid under the Gustafson Business Entities' medical, health or dental plans to
or for the benefit of Company Employees and their dependents and credited
against any maximum benefit payment limitations contained in such plans will
be credited against any similar maximum benefit payment limitations contained
in the Company's medical, health or dental plans. The Company shall waive any
medical certification under its group term life insurance plan for any Company
Employee up to the amount of coverage such Company Employee had under the
Gustafson Business Entities' life insurance plan (but subject to any limits on
the maximum amount of coverage under the Company's life insurance plan).
(e) The Company agrees to adopt a cafeteria plan qualified under
Code Section 125 as of the Closing Date. The Gustafson Business Entities
agree to transfer any amounts held in spending accounts for the benefit of
Company Employees under the Sellers' plan qualified under Code Section 125 as
soon as practicable after the Closing Date to the Company. The Sellers' plan
shall not pay any claims under the Sellers' plan which were not received by
the Sellers prior to the Closing Date and such claims shall be the sole
responsibility of the Company's Code Section 125 plan.
(f) The Company and the Welfare Plans will be responsible for
administering and paying claims incurred before, on and after the Closing Date
by Company Employees, and their dependents and beneficiaries. The Company and
the Welfare Plans will be responsible for claims incurred by Company Employees
who cease to be employed by the Company after the Closing Date and for claims
incurred by the dependents and beneficiaries of such employees. The Company
shall be responsible for workers' compensation benefits that are payable on or
after the Closing Date, regardless of whether the injury, accident or illness
occurred before the Closing Date and shall pay such benefits or promptly
reimburse the Sellers for any such benefits paid by the Sellers except as
provided in subsection (a) of this Section 7.6. The Company and the Welfare
Plans shall be responsible for any continuation coverage obligations under
COBRA or other applicable law with respect to each employee and each qualified
beneficiary (as defined in Code Section 4980B(q)) who has a qualifying event
(as defined in Code Section 4980B(f)) regardless of whether such qualifying
event occurs or occurred before, on or after the Closing Date.
(g) (i) The Sellers agree to take any and actions necessary
to allow the Company to continue to participate in the Uniroyal Chemical
Company, Inc. Retirement Reserve Fund Plan or any successor thereto ("401(k)
Plan"). With respect to any Company Employee, the 401(k) Plan shall continue
to recognize, for all purposes, service prior to the Closing Date to the same
extent that such service is recognized under the 401(k) Plan as in effect on
the Closing Date. The Sellers and the Company agree to not allow Company
Employees to invest in C&K Common Stock (i) contributions to the 401(k) Plan
attributable to service on and after the Closing Date, or (ii) funds held
under the 401(k) Plan as of the Closing Date and not then invested in C&K
common stock, provided, however, that the Sellers shall not limit the ability
of Company Employees to continue to hold C&K common stock held in their
accounts in the 401(k) Plan as of the Closing Date. The Sellers agree to
provide services with respect to the 401(k) Plan as set forth in the Benefit
Services Agreement.
(ii) At such time as the Company shall cease to be at least
50% owned, directly or indirectly, by the Sellers, the Company shall cease to
be eligible to participate in the 401(k) Plan. At such time the Company shall
take any and all actions necessary to allow a transfer of assets and
liabilities in the 401(k) Plan for participants from the Company to a
qualified plan under Section 401(a) of the Code as soon as practicable after
the Company ceases to be 50% owned by the Sellers. Alternatively, the Company
shall notify the Sellers in writing that no qualified plan maintained by it
will accept a transfer. Thereafter, the Sellers shall treat participants from
the Company as terminated participants subject to such restrictions as are
contained in the Code.
(h) The Sellers agree that all Company Employees shall be fully
vested in any outstanding stock options of the Sellers on or prior to the
Closing Date.
(i) The Sellers shall provide reasonable assistance to the
Company in connection with the transfer of relevant records relating to the
Sellers' welfare plans with respect to Company Employees.
(j) Notwithstanding any provision herein to the contrary, the
Company and its employee benefit plans shall be liable for any and all
liabilities with respect to any claim made by an employee of the Gustafson
Business Entities which relates to or arises out of the period of time on or
prior to the Closing Date except as set forth in Schedule 7.6 hereto.
ARTICLE 8. FURTHER ASSURANCES.
8.1 Cooperation
If Closing occurs hereunder, then from and after the Closing Date,
the parties hereto each covenants that it will cooperate with the other and
execute and deliver to the other parties hereto such other instruments and
documents and take such other actions as may be reasonably requested from time
to time by any other party hereto as necessary to carry out, evidence and
confirm the intended purposes of this Agreement.
8.2 Taxes
C&K agrees to file an election statement in the form of Exhibit M,
with respect to the sale of the Offered Membership Interest described in
Section 2.1 of this Agreement, with its U.S. federal tax return for the tax
year that includes the Closing Date.
8.3 Federal Competition Commission of Mexico.
(a) The parties agree that with respect to the assets that are
found in Mexico it will be necessary to obtain a favorable resolution from the
Federal Competition Commission of Mexico. Therefore, the parties agree that
the present transaction will not produce economic and legal effects in Mexico
in terms of Bayer having any right to influence the voting of shares of the
Mexican subsidiary of the Company or having any influence in the naming or
removal of directors and officers of the Mexico subsidiary of the Company or
in having any influence in any marketing discussions in Mexico until the
resolution of the Mexican Competition Commission has been obtained.
(b) It is further agreed by the parties that the
representations and warranties made in this Agreement are subject to, and
qualified by, the requirement of the Laws of Mexico and obtaining the
resolution of the Mexican Competition Commission.
(c) The parties agree that this Section 8.3 shall
survive the Closing, and the terms hereof shall govern the operation of the
Company until such resolution.
ARTICLE 9. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION.
9.1 Survival.
The representations and warranties of Purchaser, C&K and the Sellers
set forth in this Agreement, the Closing Agreements and the covenants and
obligations of Purchaser, C&K, the Sellers and the Company set forth in this
Agreement or in the Closing Agreements, shall survive the Closing, for the
periods set forth in Sections 9.2 and 9.3 herein.
9.2 Indemnification by C&K and the Sellers.
(a) Subject to and as limited by the provisions of this Section
9.2, C&K and the Sellers jointly and severally agree to defend, indemnify and
hold harmless the Company and Purchaser and their officers, directors, agents
and employees (individually, a "Purchaser Indemnitee" and collectively the
"Purchaser Indemnitees") from and against any and all Losses, suffered by a
Purchaser Indemnitee, as a result of or in connection with:
(i) any breach, misrepresentation, or inaccuracy of any
representation or warranty made by C&K and/or the Sellers in or pursuant to
this Agreement or any Closing Agreements but, excluding any matters under
Section 4.1(h) for which recovery is made from the title company under the
Title Policies;
(ii) any liabilities (other than Assumed Obligations and
Taxes and other than Environmental Liabilities which are dealt with
exclusively in Section 9.5) of C&K and/or the Sellers, the Gustafson Business
Entities, or an Initial Member, including, without limitation, an Excluded
Obligation, which become liabilities of the Company or Purchaser;
(iii) any breach of any covenant, agreement or obligation
made or to be performed by C&K, a Seller, an Initial Member or the Company
under or pursuant to this Agreement or any Closing Agreements;
(iv) any (x) Taxes or (y) any fees, fines or penalties
related to, arising out of or resulting from the failure to qualify to do
business in any jurisdiction or lack of good standing in any jurisdiction, in
either case, assessed against the Company or the Gustafson Business Entities',
Business or the Contributed Assets due in respect of any fiscal period ended
on or before the day immediately prior to the Closing Date, which were not
expressly included as a Assumed Obligation;
(v) any failure of the Sellers to transfer the Contributed
Assets and Assumed Obligations to the Company, or any failure of the Initial
Members to transfer to Purchaser the Offered Membership Interest in each case,
in accordance with this Agreement; and
(vi) any failure by C&K to file with the Internal Revenue
Service the election statement in the form of Exhibit M in accordance with
Section 8.2 of this Agreement.
(b) Notwithstanding Section 9.2(a), C&K and the Sellers shall
not be required to indemnify the Purchaser Indemnitees, under Section 9.2(a),
unless such right to indemnification is asserted by Purchaser or the Company
(whether or not such Losses have actually been incurred) by written notice to
C&K and the Sellers, describing with reasonable specificity the facts giving
rise to the asserted right, within the following time periods:
(i) with respect to any failure of a Seller to cause the
transfer of the Contributed Assets and Assumed Obligations to the Company, or
of an Initial Member to transfer to Purchaser the Offered Membership Interest
in accordance with this Agreement, or with respect to any fraud or intentional
misrepresentation made by the Sellers or by C&K, or with respect to a breach
of the representations and warranties contained in Sections 4.1(a)(ii),
4.1(f), 4.1(g), 4.1(h)(i) or 4.1(i)(i) or with respect to any Excluded
Obligation, there shall be no limitation on the time for making a claim;
(ii) with respect to any (x) Taxes assessed against the
Company's Business or the Contributed Assets due in respect of any fiscal
period ended before the Closing Date which were not expressly included as a
Assumed Obligation, or (y) any Taxes assessed as a result of any failure by
C&K to file with the Internal Revenue Service the election statement in the
form of Exhibit M in accordance with Section 8.2 of this Agreement, within the
applicable statute of limitations for a violation of the underlying Laws which
form the basis of the claim for such Taxes, including all extensions thereof
agreed to with tax authorities; and
(iii) with respect to all other matters covered by Section
9.2(a), on or before the date which is two (2) years after the Closing Date.
(c) Notwithstanding Section 9.2(a) and (b): (i) C&K and the
Sellers shall not be required to indemnify the Purchaser Indemnitees pursuant
to Section 9.2(a) with respect to any individual Losses in the DeMinimis
Amount, as the case may be, or with respect to the first TWO HUNDRED FIFTY
THOUSAND UNITED STATES DOLLARS (US$250,000) of such Losses, calculated on a
cumulative basis and not on a per individual basis and excluding all DeMinimis
Amounts (the "Threshold Amount"); and (ii) C&K and the Sellers shall indemnify
Purchaser and the Company pursuant to Section 9.2(a) for up to the next FIFTY
MILLION UNITED STATES DOLLARS (US$50,000,000) of Losses, to the extent in
excess of the Threshold Amount. Except as provided by Section 9.2(d), C&K's
and the Sellers' aggregate indemnification obligations pursuant to Section
9.2(a) and Section 9.5 shall in no event exceed FIFTY MILLION UNITED STATES
DOLLARS (US$50,000,000) (the "Indemnification Cap").
(d) Notwithstanding Section 9.2(c), the DeMinimis Amount, the
Threshold Amount and the Indemnification Cap shall not apply to Losses with
respect to (i) the failure of a Seller to cause the transfer of the
Contributed Assets and Assumed Obligations to the Company; or (ii) to the
failure of an Initial Member to transfer to Purchaser the Offered Membership
Interest in accordance with this Agreement; (iii) with respect to any
fraudulent or intentional misrepresentation, covenant or agreement made or to
be performed by C&K or by the Sellers; (iv) as to any breach of the covenants
by C&K in Sections 3.1 or 3.2 hereof; or (iv) to any Claims related to
Excluded Obligations.
(e) The amounts for which C&K and the Sellers shall be liable
under this Section 9.2 shall be net of any insurance proceeds actually
received by Purchaser, its Affiliates or the Company in connection with the
amounts or the facts giving rise to the right of indemnification. The amounts
for which C&K and the Sellers shall be liable under Section 9.2 shall also
include reasonable attorneys' fees and all other costs and expenses incurred
by the Company or Purchaser in enforcing its rights to indemnification
hereunder.
(f) Notwithstanding anything in this Article 9 to the contrary,
C&K and the Sellers shall have no obligation to indemnify Purchaser for Losses
suffered by Purchaser solely as a result of Purchaser's ownership of
Membership Interest to the extent the Company has been indemnified hereunder
with respect to the underlying Losses.
(g) As between Purchaser and the Company on the one hand, and
any of C&K and the any Seller on the other hand, the remedies set forth in
this Article 9 shall be the sole and exclusive remedies with respect to this
Agreement and of the transactions provided for herein or contemplated hereby;
provided, however that this Section 9.2(g) shall not restrict the rights of
either party to seek and obtain injunctive relief to specifically enforce the
other party's obligations or to seek and obtain relief for fraud. Without
limiting the generality of the foregoing, Purchaser and Company agree that
after the Closing, the right to indemnification under Section 9.2(a) for
breach of the representations and warranties set forth in Article 5 shall
constitute their sole recourse against C&K and the Sellers with respect to
representations and warranties made regarding Environmental Matters, and that
Purchaser and Company shall have no other right of indemnification or any
other right or remedy against C&K and the Sellers with respect to any
Environmental Matters arising from the Company, this Agreement, the
transactions contemplated thereby, or the Contributed Assets or facilities of
the Gustafson Business Entities or the Company, except as set forth in Section
9.5, and except for the indemnification rights set forth above in this Section
9.2 and in Section 9.5, Purchaser and Company do hereby waive and release C&K
and the Sellers from all Claims, demands, causes of action, liabilities, cost
or expenses with respect to Environmental Matters.
9.3 Indemnification by Purchaser.
(a) Subject to and as limited by the provisions of this Section
9.3, Purchaser shall defend, indemnify and hold harmless C&K's and the
Sellers' and their respective officers, directors, agents and employees
(individually, a "Sellers Indemnitee" and collectively the "Sellers
Indemnitees") from and against any and all Losses, suffered by a the Sellers
Indemnitee, as a result of or in connection with:
(i) any breach, misrepresentation, or inaccuracy of any of
representations or warranty made by Purchaser in or pursuant to this Agreement
or to any Closing Agreements; and
(ii) any breach of any covenant, agreement or obligation
made or to be performed by Purchaser under or pursuant to this Agreement, or
any Closing Agreements.
(b) Notwithstanding Section 9.3(a), Purchaser shall not be
required to indemnify the Sellers Indemnitees under Section 9.3 (a), unless
such right to indemnification is asserted by a Sellers Indemnitee (whether or
not such Losses have actually been incurred) by written notice to Purchaser,
describing with reasonable specificity the facts giving rise to the asserted
right, within the following time periods:
(i) with respect to any fraud or intentional
misrepresentation made by Purchaser, there shall be no time limitation on the
time for making a claim; and
(ii) with respect to all other matters covered by Section
9.3(a), on a date that is two (2) years after the Closing Date.
(c) Notwithstanding Section 9.3(a) and 9.3(b) Purchaser (i)
shall not be required to indemnify the Sellers Indemnitees pursuant to Section
9.3(a) with respect to the DeMinimis Amount or the Threshold Amount, and (ii)
shall indemnify the Sellers Indemnitees pursuant to Section 9.3(a) for the
next FIFTY MILLION UNITED STATES DOLLARS (US$50,000,000) of Losses in excess
of the Threshold Amount. Except as provided by Section 9.3(d), Purchaser's
aggregate indemnification obligation pursuant to Section 9.3(a) shall in no
event exceed the Indemnification Cap.
(d) Notwithstanding Section 9.3(c), the DeMinimus Amount, the
Threshold Amount and the Indemnification Cap shall not apply to Losses with
respect to any fraudulent or intentional misrepresentation, covenant or
agreement made or to be performed by Purchaser, or as to any breach by
Purchaser of the covenants in Sections 3.1 or 3.2 hereof.
(e) The amounts for which Purchaser shall be liable under this
Section 9.3 shall be net of any insurance proceeds actually received by the
Sellers and C&K in connection with the facts giving rise to the right of
indemnification. The amounts for which Purchaser shall be liable under
Section 9.3 shall also include all reasonable attorneys fees and all other
costs and expenses incurred by the Sellers and C&K in enforcing its rights to
indemnification hereunder.
(f) This Section 9.3 shall be the sole and exclusive remedy of
C&K and the Sellers against Purchaser for any claim arising in connection with
this Agreement or the transactions contemplated herein; provided, however that
this Section 9.3(f) shall not restrict the rights of C&K or any Seller to seek
and obtain injunctive relief to specifically enforce Purchaser's obligations
or to seek and obtain relief for fraud.
9.4 Procedure for Third Party Claims.
(a) In the event a claim arises that is covered by the indemnity
provisions of Sections 9.2, 9.3 or 9.5, written notice shall be promptly given
by the party seeking indemnification to the indemnifying party. A delay or
failure by a party seeking indemnification to provide such prompt written
notice to the other party of such claim shall not render the indemnification
provisions invalid against such seeking party, except to the extent that the
other party is prejudiced by such delay or failure in its attempt to mitigate
or resolve such claim.
(b) Provided that the indemnifying party admits in writing to
the party seeking indemnification that such claim is covered by the indemnity
provisions of Sections 9.2, 9.3 or 9.5, the indemnifying party shall have the
right to contest and defend by all appropriate legal proceedings such claim
and to control all settlements (unless the party seeking indemnification
agrees to assume the cost of settlement and to forgo such indemnity) and to
select lead counsel to defend any and all such claims at the sole cost and
expense of the indemnifying party; provided, however, that the indemnifying
party may not effect any settlement that could result in any cost, expense or
liability to the party seeking indemnification or subject the party seeking
indemnification to other than monetary damages unless such party consents in
writing prior to such settlement and the indemnifying party agrees to
indemnify such party therefor. The party seeking indemnification may select
counsel to participate in any defense, in which event counsel for the party
seeking indemnification shall be at the sole cost and expense of such party.
(c) Both the indemnifying party and the indemnified party shall
cooperate fully with one another and shall cause the Company to cooperate in
connection with the defense, compromise, or settlement of any such claim or
action, including, without limitation, by making available to the other all
pertinent information and witnesses within its control.
9.5 Environmental Indemnification by C&K and the Sellers.
(a) On-Site Contamination -- Marsing, Idaho
(i) Schedule 9.5(a) contains the Marsing Investigation and
Remediation Agreement (the "Marsing Agreement") between C&K and Purchaser
concerning the facility located at Simpkins Lane, Marsing, Idaho. C&K and
Purchaser will be bound by the terms of the Marsing Agreement and C&K shall
indemnify and hold harmless Purchaser and the Company for all Environmental
Costs associated with the Marsing Agreement.
(ii) C&K and each Seller shall have no further obligation with
respect to Contamination at the Marsing facility other than to comply fully
with the terms of the Marsing Agreement.
(iii) Subject to the terms and conditions of the Marsing
Agreement, C&K and each Seller shall indemnify and hold harmless the Purchaser
and the Company from and against any and all Environmental Liability resulting
from or arising out of Contamination at the Marsing facility identified in the
Phase II and/or the CRA Reports (as defined in the Marsing Agreement).
(b) On-Site Contamination -- Pekin, Illinois
(i) The groundwater at the Pekin, Illinois facility contains
concentrations of Lindane that may cause Governmental Authorities to direct
C&K, the Gustafson Business Entities, the Company or one or more of the
Sellers to undertake an Environmental Clean-Up.
(ii) C&K and each Seller will indemnify and hold harmless the
Purchaser and the Company from and against any Environmental Liability to the
extent resulting from or arising out of the presence of Lindane in the
groundwater at the Pekin facility as of the date of this Agreement.
(iii) C&K's and each Seller's indemnification obligation
pursuant to Section 9.5(b)(ii) shall terminate and end on the third
anniversary of the Closing Date.
(c) Off-Site Liability
(i) C&K and each Seller shall jointly and severally indemnify
and hold harmless Purchaser and the Company from and against all Off-Site
Liability either discovered by Purchaser or the Company or brought to
Purchaser's or the Company's attention by a Governmental Authority or other
Third Party prior to, on or after the Closing Date for a period of seven (7)
years from the Closing Date. C&K and each Seller shall either pay directly to
the Company or reimburse the Company for any and all Environmental Costs and
Environmental Liability incurred by the Company that are subject to C&K's and
the Sellers' indemnification obligations under this Section 9.5(c).
(ii) Notwithstanding any other provision contained in
this Agreement to the contrary, C&K's and the Sellers' obligation to indemnify
Purchaser and the Company pursuant to this Section 9.5 is subject to the
condition that such right to indemnification be asserted by either the Company
or the Purchaser (whether or not any Loss has been incurred or Claim made) by
written notice to C&K or to any Seller which notice describes with reasonable
specificity the circumstances giving rise to the asserted right. A delay or
failure by a party seeking indemnification to provide such written notice to
the other party of such claim shall not render the indemnification provisions
invalid against such seeking party, except to the extent that the other party
is prejudiced by such delay or failure in its attempt to mitigate or resolve
such asserted right.
(iii) Notwithstanding any other provision contained in this
Agreement to the contrary, C&K's and the Sellers' obligation to indemnify
Purchaser and the Company pursuant to this Section 9.5 is absolute and not
subject to or conditioned on the existence or alleged existence of a breach of
any representation or warranty contained in Article 5.
(iv) The amounts for which C&K and the Sellers shall be
liable under this Section 9.5 shall be net of any insurance proceeds actually
received by Purchaser, its Affiliates or the Company in connection with the
amounts or the facts giving rise to the right of indemnification. The amounts
for which C&K and the Sellers shall be liable under Section 9.5 shall also
include reasonable attorneys' fees and all other costs and expenses incurred
by the Company or Purchaser in enforcing its rights to indemnification after
notice is given pursuant to Section 9.5(c)(ii).
(d) Exclusive Remedy.
Notwithstanding any other provision contained in this Agreement
to the contrary, the indemnifications set forth in Section 9.2 and Section 9.5
are the sole and exclusive remedy (except that Purchaser shall have the right
to seek specific performance of the Marsing Agreement) provided to the Company
and the Purchaser with regard to all Environmental Matters discovered by or
brought to the attention of the Company or Purchaser by a Governmental
Authority or Third Party prior to, on or after the Closing Date, except with
respect to indemnifications provided under Section 9.6, and with respect to
all Losses suffered by any Seller and/or the Purchaser, as a result of or in
connection with any liability (including nonaccrued and contingent
liabilities) associated with occupational exposure to one or more Hazardous
Substances to the extent occurring on or before the Closing Date and with
respect to Section 2.2(b)(x). C&K's and Sellers' obligation to indemnify
Purchaser and the Company pursuant to Section 9.5(a) and (b) shall not be
subject to the Threshold Amount or the DeMinimis Amount, but shall be subject
to the Indemnification Cap. C&K's and Sellers' obligation to indemnify
Purchaser and the Company pursuant to Section 9.5(c) shall not be subject to
the Threshold Amount, the DeMinimis Amount, or the Cap.
9.6 Indemnification by Company.
(a) Subject to and as limited by the provisions of this Section
9.6, the Company agrees to defend, indemnify and hold harmless the Sellers
Indemnitees and the Purchaser Indemnitees from and against any and all Losses
suffered by any Seller and/or the Purchaser, as a result of or in connection
with occupational exposures to one or more Hazardous Substance to the extent
exposure occurs after the Closing Date.
(b) Notwithstanding Section 9.6(a), the Company will not be
required to indemnify the Sellers Indemnitees and/or the Purchaser Indemnitees
under Section 9.6(a), unless such right to indemnification is asserted by the
Sellers and/or the Purchaser (whether or not any Loss has been incurred or
Claims made) by written notice to the Company describing with reasonable
specificity the facts giving rise to the asserted right. A delay or failure
by a party seeking indemnification to provide such written notice to the other
party of such claim shall not render the indemnification provision invalid
against such seeking party, except to the extent that the other party is
prejudiced by such delay or failure in its attempt to mitigate or resolve such
asserted right.
(c) The amounts for which the Company shall be liable under this
Section 9.6 shall be net of any insurance proceeds actually received by
Sellers and/or the Purchaser in connection with the amounts or the facts
giving rise to the right of indemnification. The amounts for which the
Company shall be liable under Section 9.6 also shall include all reasonable
attorneys fees and all other costs and expenses incurred by the Sellers and/or
the Purchaser in enforcing its rights to indemnification hereunder, after
notice is given pursuant to Section 9.6(b).
(d) The indemnification of the Company set forth in this Section
9.6 shall survive the Closing.
ARTICLE 10. FINDERS AND BROKERS FEES.
Each of the parties represents and warrants that it has dealt with
no broker or finder in connection with any of the transactions contemplated by
this Agreement, and, insofar as it knows, no broker or other Person is
entitled to any compensation including, without limitation, a commission or
finder's fee, in connection with any of these transactions. The parties each
agree to indemnify and hold harmless one another against any loss, liability,
damage, cost, claim, or expense incurred by reason of any compensation,
including, without limitation, brokerage, commission, or finder's fee, alleged
to be payable because of any act, omission, or statement of the indemnifying
party.
ARTICLE 11. DEFAULT AND TERMINATION.
11.1 Default.
(a) In the event that all the conditions precedent set forth in
Sections 7.1 and 7.3 have been satisfied by C&K, the Sellers and the Company,
or waived by Purchaser on or prior to the Closing Date, and Purchaser is
ready, willing and able to proceed with the Closing, but the Sellers, C&K and
the Company are unable, unwilling or refuse to consummate the Closing in
accordance with this Agreement, or in the event that C&K, the Sellers or the
Company are otherwise in breach of this Agreement, then Purchaser may proceed
to protect and enforce its rights pursuant to Section 11.3.
(b) In the event that all the conditions precedent set forth in
Sections 7.2 and 7.3 have been satisfied by Purchaser, or waived by C&K and
the Sellers on or prior to the Closing Date, and C&K and the Sellers are
ready, willing and able to proceed with the Closing, but Purchaser is unable,
unwilling or refuses to consummate the Closing in accordance with this
Agreement, or in the event that Purchaser is otherwise in breach of this
Agreement, then C&K, the Sellers and the Company may proceed to protect and
enforce their rights pursuant to Section 11.3.
11.2 Termination.
In addition to the rights of the parties set forth in Section 2.3:
(a) This Agreement may be terminated at any time prior to the
Closing by mutual written consent of C&K, the Sellers, the Company and
Purchaser.
(b) If on the Closing Date, any one or more conditions precedent
to Closing set forth in Sections 7.1 and 7.3 of this Agreement has not been
fulfilled or satisfied by C&K, the Sellers and the Company, or waived by
Purchaser, then Purchaser may, effective upon notice to C&K and the Sellers,
terminate this Agreement.
(c) If on the Closing Date, any one or more conditions precedent
to Closing set forth in Sections 7.2 and 7.3 of this Agreement has not been
fulfilled or satisfied by Purchaser, or waived by C&K and the Sellers, then
C&K and the Sellers may, effective upon notice to Purchaser, terminate this
Agreement.
11.3 Rights on Termination; Waiver.
(a) If this Agreement is terminated pursuant to Section 11.2(a),
all further obligations of the parties under or pursuant to this Agreement
shall terminate without further liability of either party to the other, except
as otherwise provided in this Section 11.3, and except that the obligations
contained in Sections 11.3(e), 12.8 and 12.13 shall survive any such
termination.
(b) In the event this Agreement is terminated by C&K and the
Sellers pursuant to Section 11.2(c), as a result of Purchaser's failure to
satisfy the conditions precedent to Closing set forth in Sections 7.2 and 7.3,
then C&K and the Sellers may pursue any and all legal and or equitable
remedies available to them pursuant to this Agreement as a result of such
breach of this Agreement.
(c) In the event that this Agreement is terminated by Purchaser
as a result of C&K's or the Sellers' failure to satisfy the conditions
precedent to Closing set forth in Sections 7.1 and 7.3, then Purchaser may
pursue any and all legal and/or equitable remedies available to it pursuant to
this Agreement as a result of such breach of this Agreement.
(d) If any of the conditions set forth in Section 7.1 and 7.3
have not been satisfied, Purchaser may nevertheless elect to waive such
conditions and proceed with the consummation of the transactions contemplated
hereby. If any of the conditions set forth in Section 7.2 and 7.3 have not
been satisfied, C&K and the Sellers may nevertheless elect to waive such
conditions and proceed with the consummation of the transactions contemplated
hereby. Any condition set forth in Sections 7.1, 7.2 and 7.3 which has not
been fulfilled, complied with, satisfied or performed at or prior to the
Closing Date shall be conclusively deemed waived if Purchaser, C&K and the
Sellers consummate the Closing despite the lack of fulfillment, compliance
with, satisfaction or performance of such condition, except that any such
consummation of the Closing without the fulfillment, compliance, satisfaction
or performance of any condition set forth in Sections 7.1 or 7.2 shall not
relieve Purchaser, C&K, the Company or the Sellers from their respective
indemnification obligations under Sections 9.2, 9.3, 9.5, and 9.6.
(e) If this Agreement and the transactions provided for herein
shall be terminated or abandoned for any reason whatsoever prior to or at the
Closing, each party shall return to the other parties any and all Confidential
Information furnished to such party in connection herewith and hold in
confidence its knowledge of any and all such Confidential Information and not
use, disclose or publish the same directly or indirectly for any purpose,
including without limitation for the Business (i) without the prior written
consent of such other party or (ii) until the same has been theretofore
publicly disclosed by such other party or otherwise ceased to be secret or
confidential as evidenced by general public knowledge; provided, however, that
each party shall have the right to disclose such information, without consent
to the extent that (iii) such party is required by Law or any Environmental
Law to do so, or (iv) such disclosure is required in connection with
litigation pertinent to such information. The foregoing provisions are
intended to supplement and not supersede any existing confidentiality, secrecy
or similar agreements between the parties and between each party and any Third
Party.
ARTICLE 12. MISCELLANEOUS.
12.1 Transaction Costs.
(a) C&K and the Sellers on the one hand, and Purchaser on the other
hand, shall share equally the cost of any and all state, or local, conveyance,
recording, stamp, transfer and any similar tax, fee or duty ("Transfer Taxes")
required to be paid in respect of the conveyance, assignment, or transfer to
Purchaser of the Offered Membership Interest and the filing and recording
thereof. Except as provided in Section 12.1(b), the Sellers shall be solely
responsible for any Transfer Taxes required to be paid in respect of the
conveyance, assignment, or transfer to the Company of the Contributed Assets
and the Assumed Obligations.
(b) C&K and the Sellers on the one hand and Purchaser on the other
hand, shall share equally all fees, premiums and costs associated with (i) the
issuance of the Title Policies, including Surveys and (ii) all costs
associated with the transfer of all Environmental Permits from the Gustafson
Business Entities to the Company, or if transfer is not permitted, the
issuance of new Environmental Permit to the Company, including the filing fees
and the other costs associated with transferring and/or obtaining the
Environmental Permits, except that Sellers shall be responsible for the costs
associated with Illinois transfer statute, if applicable. Purchaser shall
reimburse Sellers for such shared amounts on the Closing Date.
12.2 No Third Party Beneficiaries.
Nothing in this Agreement is intended, nor shall it be construed, to
confer any rights or benefits upon any Person (including, but not limited to,
any employee or former employee of the Company) other than the parties hereto,
and solely to the extent provided in Sections 9.2 and 9.3. Except as provided
in Sections 9.2 and 9.3, the Sellers Indemnitees, Purchaser Indemnitees, and
other Persons shall have no rights or remedies hereunder. No Third Party is
entitled to rely on any of the representations, warranties and agreements
contained in this Agreement. Purchaser, C&K, the Company and the Sellers
assume no liability to any Third Party because of any reliance on the
representations, warranties and agreements of Purchaser, C&K, the Company and
the Sellers contained in this Agreement.
12.3 Expenses of the Parties.
Subject to Sections 6.2, 9.2, 9.3, 11. 3 and 12.1 hereof, all
expenses involved in the preparation, authorization, and consummation of this
Agreement, incurred up to and including the Closing, including, without
limitation, all fees and expenses of agents, representatives, counsel, and
accountants in connection therewith, shall be borne solely by the party who
shall have incurred the same, and the other parties shall have no liability in
respect thereof; provided, however, that nothing herein shall be construed to
release or impair any claim for damages by any party under Sections 9.2, 9.3
or 11. 3; provided, further, that any and all such expenses of the Company
shall be borne solely by C&K and the Sellers.
12.4 Amendment and Waiver.
No amendment, supplement, or modification of this Agreement shall be
binding unless executed in writing by the parties. Any party's failure to
insist on strict performance of any provision of this Agreement shall not be
deemed a waiver of any other provision of this Agreement, nor shall such
waiver relieve any other party from performing any subsequent obligation
strictly in accordance with the terms of this Agreement. No waiver shall be
effective unless it is in writing and signed by the party against whom
enforcement is sought. The waiver shall be limited to provisions of this
Agreement specifically referred to therein and shall not be deemed a waiver of
any other provision. No waiver shall constitute a continuing waiver unless
the writing states otherwise.
12.5 Headings for Convenience.
The Section headings of this Agreement are included for convenience
only and shall not be deemed to limit or otherwise affect the construction of
any of its provisions.
12.6 Counterparts.
This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
12.7 Binding Effect.
Subject to the provisions of Section 12.11, this Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective administrators, legal representatives, successors and permitted
assigns.
12.8 Publicity.
(a) The parties hereto expect to make a public announcement of
the transactions contemplated herein as soon as practicable after the
execution hereof pursuant to a joint press release in the form previously
agreed upon by Purchaser and C&K. Thereafter and until the Closing, all
general notices, releases, statements and communications to employees,
suppliers, distributors and customers of the Business of the Company and to
the general public and the press relating to the transactions contemplated by
this Agreement shall be made only at such times and in such manner as may be
mutually agreed upon by Purchaser and C&K; provided, however, that (i) each of
C&K or Purchaser shall be entitled to make a public announcement relating to
the proposed transaction if, in the opinion of its legal counsel, such
announcement is required to comply with Law or any Environmental Law or
applicable stock exchange rules and regulations (in which case the disclosing
party shall use its best efforts to provide the other party with as much
advance notice as possible with respect to the reasons for and text of such
announcement and to make such announcement no more extensive than is necessary
to meet the minimum requirement imposed on the party making such
announcement); and (ii) upon the prior consent of Purchaser and C&K, the
Company and its officers may make disclosures of information (other than
Confidential Information ) to customers and suppliers of the Business, but
solely to the extent that such disclosures are necessary to obtain the
consents and approvals required to be obtained by the Sellers or the Company
pursuant to this Agreement, or to the extent that such disclosures are
required to preserve the Business relationships with such Third Parties.
(b) Notwithstanding the foregoing paragraph (a) of this Section
12.8, no party hereto or its representatives will, without the prior written
consent of the other parties, disclose to any other person any Confidential
Information that has been made available in connection with this Agreement
(other than information which has been published or made publicly available
other than by unauthorized disclosure of a party), or disclose any of the
terms, conditions, or other facts with respect to this Agreement, except if,
in the opinion of its legal counsel, such disclosure is required to comply
with Law or Environmental Law or applicable stock exchange rules and
regulations. If circumstances make it impossible to give such prior written
notice, then any disclosure made shall be no more extensive than is necessary
to meet the minimum requirement imposed on the party making such disclosure.
12.9 Complete Agreement.
This Agreement and the documents referred to herein and to be
delivered pursuant hereto constitute the entire agreement between the parties
pertaining to the subject matter hereof, and supersede all prior and
contemporaneous agreements, understandings, negotiations and discussions of
the parties, whether oral or written, including without limitation, the
Agreement dated September 16, 1998 by and among Bayer Corporation, Uniroyal
Chemical Company, Inc., Gustafson, Inc., Trace Chemicals, Inc. and C&K and the
Non-Binding Offer from Bayer AG to C&K dated February 2, 1998, and there are
no warranties, representations or other agreements between the parties in
connection with the subject matter hereof, except as specifically set forth
herein or therein.
12.10 Notices.
All notices and other communications required or permitted by this
Agreement shall be in writing in the English language, may be given by a party
or its legal counsel, and shall deemed to be duly given (i) when personally
delivered (provided written confirmation thereof is also delivered in person
or by express courier), or (ii) upon delivery by United States Express Mail or
similar nationally recognized express courier service which provides evidence
of delivery, or (iii) upon delivery of a facsimile transmission, provided a
copy thereof is also delivered in person or by express courier.
Notice to Purchaser shall be sufficient if given to:
Bayer Corporation
Agriculture Division
8400 Hawthorne Road
Kansas City, MO 61420
Attn: President, Agricultural Division
Facsimile Number: 816-242-2526
Telephone Number: 816-242-2513
with a copy to:
Bayer Corporation
8400 Hawthorne Road
Kansas City, MO 61420
Attn: Vice President and Assistant General Counsel
Facsimile Number: 816-242-2739
Telephone Number: 816-242-2367
Notice to C&K and the Sellers shall be sufficient if given to:
Crompton & Knowles Corporation, Uniroyal Chemical Company, Inc.,
Trace Chemicals, Inc. and Gustafson, Inc.
c/o Crompton & Knowles Corporation
One Station Place-Metro Center
Stamford, CT 06902
Attn: Charles J. Marsden, Senior Vice President and Chief Financial
Officer
Facsimile Number: (203) 353-5424
Telephone Number: (203) 353-5416
with a copy to:
Crompton & Knowles Corporation
One Station Place-Metro Center
Stamford, CT 06902
Attn: John T. Ferguson II, Vice President, General Counsel and
Secretary
Facsimile Number: (203) 353-5423
Telephone Number: (203) 353-5405
Notice to the Company shall be sufficient if given to:
Gustafson LLC
1400 Preston Road, Suite 400
Plano, TX 75093
Attn: T. Gilliam Austin, President
Facsimile Number: (972) 985-1696
Telephone Number: (972) 985-8877
In the event any party gives notice to the Company pursuant to this
Agreement, that party shall also provide a copy of such notice to all other
parties. Each party shall have the right to designate other or additional
addresses or addressees for the delivery of notices, by giving notice as
provided in this Section 12.10.
12.11 Assignment.
This Agreement and each party's respective rights hereunder, may not
be assigned by any party without the prior written consent of all the other
parties hereto, to be given or withheld in the sole discretion of each party.
Any attempted assignment in violation of this Section 12.11 shall be deemed to
be void.
12.12 Severability.
In the event that any of the provisions of this Agreement shall be
held by a court or other tribunal of competent jurisdiction to be
unenforceable, the provision will be enforced to the maximum extent
permissible and the remaining portions of this Agreement shall remain in full
force and effect.
12.13 Choice of Law; Choice of Forum.
(a) Applicable Law. All questions concerning the construction,
validity, and interpretation of this Agreement and the performance of the
obligations imposed by this Agreement shall be governed by the internal law,
not the law of conflicts, of the State of New York, United States of America.
(b) Dispute Resolution. Any and all disputes arising out of or
related to this Agreement including, without limitation, questions concerning
the construction, enforceability, validity, and interpretation of this
Agreement and the performance of the obligations imposed by this Agreement,
any dispute which relates to the Confidential Information of any party hereto,
will be initially mediated in accordance with the dispute resolution
procedures set forth in this Section 12.13 and Exhibit H. No provision of, or
the exercise of any rights, under this Section 12.13 and Exhibit H shall limit
the right of any party pursue all legal remedies available to them, or obtain
provisional or ancillary remedies such as injunctive relief from a court
having jurisdiction before, during or after the pendency of any alternative
dispute resolution.
(c) Waiver of Trial by Jury. C&K, THE COMPANY, SELLERS AND
PURCHASER EACH KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT EACH
MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON OR
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN), OR ACTIONS
OF THE OTHER PARTIES IN CONNECTION HEREWITH.
(d) Consent to Jurisdiction. C&K, the Sellers, Purchaser and
the Company each irrevocably consent that any action or proceeding against it
under, arising out of or in any manner relating to this Agreement shall be
brought in the United States District Court for the Southern District of New
York; provided, however, that if the action or proceeding cannot be brought in
such District Court or if it is determined by a judge sitting in such District
Court that such court is not the appropriate forum for the action or
proceeding, then the action or proceeding shall be brought in the State of
Delaware Federal or State Court. C&K, the Sellers, Purchaser and the Company
hereby each expressly and irrevocably assent and submit to the personal
jurisdiction of any such court in any such action or proceeding. C&K, the
Sellers, Purchaser and the Company each further irrevocably consent to the
service of summons, notice, or other process relating to any such action or
proceeding by delivery thereof by hand or by mail in the manner provided for
in Section 12.10 of this Agreement and consent that it may be served with any
process or paper by registered mail or by personal service within or without
the States of New York or Delaware, as the case may be, in accordance with
applicable law. C&K, the Sellers, Purchaser and the Company each waive any
objection, claim or defense which it may have at any time to the laying of
venue of any such action or proceeding in any such court; irrevocably waive
any claim that any such action or proceeding brought in any such court has
been brought in an inconvenient forum; and further, irrevocably waive the
right to object, with respect to any such action or proceeding brought in any
such court, that such court does not have jurisdiction over such party.
12.14 Joint and Several
Any and all of the obligations of C&K and the Sellers contained
within this Agreement shall be joint and several.
[the next page is the signature page]
IN WITNESS WHEREOF, each of the parties has caused this Purchase
Agreement to be duly executed as of the date first above written.
UNIROYAL CHEMICAL COMPANY INC.
By:/s/Charles J. Marsden
Charles J. Marsden
Vice President and
Chief Financial Officer
BAYER CORPORATION
By:/s/Emil E. Lansu
Name: Emil E. Lansu
Title: Executive Vice President
GUSTAFSON, LLC
By:/s/T. Gilliam Austin
T. Gilliam Austin
President
GUSTAFSON, INC.
By:/s/T. Gillaim Austin
T. Gilliam Austin
President
TRACE CHEMICALS, INC.
By:/s/T. Gilliam Austin
T. Gilliam Austin
President
CROMPTON & KNOWLES CORPORATION
By:/s/Charles J. Marsden
Charles J. Marsden
Senior Vice President and
Chief Financial Officer
Exhibit A
Knowledge of C&K; Knowledge of the Sellers
Exhibit B
Intentionally Deleted
Exhibit C
Form of LLC Agreement and Certificate of Formation
Exhibit D
Form of LLC Amendment
Exhibit E
Form of LLC Certificate of Membership Interest
Exhibit F
Form of Opinion of Counsel to Purchaser and its Affiliates
Exhibit G
Form of Opinion of Counsel to C&K, the Sellers, the Company and their
Affiliates
Exhibit H
ALTERNATIVE DISPUTE RESOLUTION PROCEDURES
A. Method of Invoking ADR Procedures
1. These procedures may be invoked by any party by giving written
notice to the others of the dispute and designating one or more persons
(collectively, the "Designee") to act on behalf of the disputing party
regarding the dispute. The other parties shall be required to respond to the
disputing party's notice within ten (10) business days by designating in
writing its own Designee. A party may choose to represent itself, or if it
appoints a Designee, its officers may nonetheless attend such meetings.
2. The parties, each acting through its Designee, shall meet at a
mutually acceptable time and place within ten (10) business days after the
non-disputing party designates its Designee to the others. At that meeting,
the parties shall attempt in good faith to negotiate a resolution of the
dispute, or failing that, to agree on a method for resolving the claim or
dispute.
3. If, within ten (10) business days after the first meeting or
within such longer period of time as the parties may mutually agree, the
parties have not succeeded in negotiating a resolution of the claim or dispute
or agreeing on a dispute resolution mechanism, they shall submit the dispute
to mediation in accordance with the procedures set forth herein.
4. The parties will jointly appoint a mutually acceptable mediator to
mediate the dispute. If the parties are unable to agree on a mutually
acceptable mediator within five (5) business days after the conclusion of the
negotiations described in paragraph 3 above, then the parties shall select a
neutral Third Party from American Arbitration Association ("AAA") in New York,
New York, with the assistance of AAA, unless the parties agree otherwise in
finding a mutually acceptable mediator.
5. Each party to the dispute shall bear an equal share of the fees
and costs of the mediator, and any fees and costs of AAA.
6. The parties agree to participate in good faith in the mediation
and negotiations related thereto for a period of thirty (30) days from
appointment of a mediator by any of the parties or the AAA.
7. The parties agree that the mediation period may be extended for an
additional thirty (30) days beyond the initial thirty (30) day period upon
agreement of the parties. Either party may terminate the mediation at any
time after the initial thirty (30) days or when any agreed upon extension has
expired.
B. Mediation Procedures
1. The mediator shall be neutral and impartial.
2. The mediator shall control the procedural aspects of the
mediation. The parties will cooperate fully with the mediator.
(a) The mediator is free to meet and communicate separately with
each party.
(b) The mediator will decide when to hold joint meetings with
the parties and when to hold separate meetings. There shall be no
stenographic record of any meeting. Formal rules of evidence will not apply.
3. Each party may be represented by more than one person, including
an attorney.
4. The process will be conducted expeditiously.
5. The mediator will not transmit information received from any party
to another party or any third person unless authorized to do so by the party
transmitting the information.
6. The entire process is confidential. The parties and the mediator
will not disclose information regarding the process, including settlement
terms, to third persons, unless the parties otherwise agree. The process
shall be treated as a compromise negotiation for purposes of the applicable
rules of evidence. Further, the parties will not disclose the existence of a
dispute or information regarding the mediation to third persons including,
without limitation, the media.
7. The parties will refrain from pursuing administrative and/or
judicial remedies during the mediation process, except as otherwise expressly
provided in the agreement which incorporates these procedures. The parties
agree that any and all statutes of limitation or periods of time for taking
action shall be tolled during the time period that the parties are engaged in
mediation.
8. Unless all parties and the mediator otherwise agree in writing:
(a) The mediator will be disqualified as a witness, consultant
or expert in any pending or future investigation, action or proceeding
relating to the subject matter of the mediation (including any investigation,
action or proceeding which involves persons not parties to this mediation);
(b) The mediator, at the conclusion of the mediation, will
immediately either destroy and certify destruction of, or return to the
providing party, any and all documents and information in the mediator's
possession, whether or not the mediation was successful; and
(c) The mediator will not be subpoenaed in any such
investigation, action or preceding and all parties will oppose any effort to
have the mediator subpoenaed.
9. The mediator, if a lawyer, may freely express views to the parties
on the legal issues of the dispute.
10. The mediator shall not be liable for any act or omission in
connection with the mediation.
11. The mediator may withdraw at any time by written notice to the
parties (i) for overriding personal reasons, (ii) if the mediator believes
that a party is not acting in good faith, or (iii) if the mediator concludes
that further mediation efforts would not be useful.
C. Litigation
If the parties do not resolve the dispute through mediation within the
period provided in Part A above, the parties may pursue any and/or all
applicable legal and/or equitable remedies available to them.
Exhibit I
Form of Marketing Rights and Margin Agreement
Exhibit J
Form of Non-Disturbance and Attornment Agreement<PAGE>
Exhibit K
Form of Pre-Exercise Distribution and Technology License Agreement
Exhibit L
Form of Post-Exercise Distribution and Technology License Agreement
Exhibit M
Form of Code Section 197(f)(9)(B) Election
Exhibit N
Form of Benefit Services Agreement
Exhibit O
Form of Instrument of Transfer, Assignment and Assumption Agreement
(Contributed Assets and Assumed Obligations )
Exhibit P
Form of Deeds for Each Real Property
Exhibit Q
Form of Lease Estoppel and Consent Certificate
Exhibit R
Form of Consent (Contracts)
EXHIBIT S
Form of Intellectual Property Assignments
EXHIBIT 2.4
PURCHASE AND CONTRIBUTION AGREEMENT By and Between Uniroyal Chemical Co./Cie
and Bayer Inc. Dated as of November 20, 1998
TABLE OF CONTENTS
PAGE NO.
ARTICLE 1. DEFINITIONS 1
ARTICLE 2. SALE AND CONTRIBUTION OF ASSETS 12
2.1 Sale of Undivided Interest in Contributed Assets. 12
2.2 Contribution of Uniroyal Assets and Bayer Assets to
Partnership. 12
2.3 Excluded Obligations. 13
2.4 Non-Assignable Rights. 15
2.5 Closing Date 16
ARTICLE 3. PURCHASE PRICE 16
3.1 Payment. 16
3.2 Post-Closing Adjustment. 16
3.3 Net Equity of the Business at the Closing Date. 17
3.4 Allocation of Purchase Price and Bayer Assumed Obligations. 18
ARTICLE 4. REPRESENTATIONS AND WARRANTIES 18
4.1 By Uniroyal-CA. 18
4.2 By Bayer-CA. 27
ARTICLE 5. ENVIRONMENTAL MATTERS 29
5.1 Environmental. 29
ARTICLE 6. COVENANTS PRIOR TO CLOSING 31
6.1 Covenants of Uniroyal-CA. 31
6.2 Cooperation. 32
6.3 No Solicitation. 32
6.4 Pension and Employee Benefit Matters 32
ARTICLE 7. CLOSING 35
7.1 Conditions to Obligations of Bayer-CA. 35
7.2 Conditions to Obligations of Uniroyal-CA. 36
7.3 Additional Conditions to Obligations. 37
7.4 Bayer-CA's Closing Deliveries. 38
7.5 Uniroyal-CA's Closing Deliveries. 39
ARTICLE 8. FURTHER ASSURANCES 40
8.1 Cooperation 40
ARTICLE 9. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION 40
9.1 Survival. 40
9.2 Indemnification by Uniroyal-CA. 40
9.3 Indemnification by Bayer-CA. 43
9.4 Procedure for Third Party Claims. 44
9.5 Bulk Sales Act Indemnity 45
9.6 No Waiver of Rights 46
ARTICLE 10. FINDERS AND BROKERS FEES 46
ARTICLE 11. DEFAULT AND TERMINATION 46
11.1 Default. 46
11.2 Termination. 46
11.3 Rights on Termination; Waiver. 47
ARTICLE 12. MISCELLANEOUS 48
12.1 Sales and Transfer Taxes. 48
12.2 Goods and Services Tax. 48
12.3 No Third Party Beneficiaries. 49
12.4 Expenses of the Parties. 49
12.5 Amendment and Waiver. 49
12.6 Headings for Convenience. 50
12.7 Counterparts. 50
12.8 Binding Effect. 50
12.9 Publicity. 50
12.10 Complete Agreement. 51
12.11 Notices. 51
12.12 Assignment. 52
12.13 Severability. 53
12.14 Choice of Law; Choice of Forum. 53
SCHEDULES
Schedule 2.1 Procedures with Respect to Sale of Bayer Assets to
Bayer-CA
Schedule 2.2(a) Contributed Assets - Canada
Schedule 2.2(b) Procedures with Respect to Contribution of Uniroyal
Assets and Bayer Assets to Partnership
Schedule 2.3 Assumed Obligations
Schedule 3.4 Allocation of Purchase Price and Bayer Assumed
Obligations
Schedule 4.1(a) Excluded Assets
Schedule 4.1(c) Authorizations, Consents and Approvals Needed by
Uniroyal-CA
Schedule 4.1(d) Absence of Certain Changes
Schedule 4.1(e) Leases
Schedule 4.1(f) Contracts and Other Documents
Schedule 4.1(g) Labour and Employment
Schedule 4.1(h) Employee Benefit Plans and Pension Plan
Schedule 4.1(i) Licenses and Permits
Schedule 4.1(j) Absence of Undisclosed Liabilities
Schedule 4.1(k) Compliance with Law
Schedule 4.1(l) Technology and Registrations
Schedule 4.1(m) Pending Litigation
Schedule 4.1(n) Books and Records
Schedule 4.1(o) Inventory
Schedule 4.1(p) Financial Statements
Schedule 4.1(q) Taxes
Schedule 4.1(r) Accounts Payable and Accounts Receivable
Schedule 4.1(u) Contributed Products
Schedule 4.1(v) Previous Tax Elections
Schedule 4.2(b) Authorizations, Consents or Approvals Needed by
Bayer-CA
Schedule 5.1 Environmental Matters
Schedule 6.1(c) Changes in Business
Schedule 7.1(e) Material Adverse Changes with Respect to Business
EXHIBITS
Exhibit A Knowledge of Uniroyal-CA
Exhibit B Form of Partnership Agreement
Exhibit C Forms of Opinion of Counsel to Bayer-CA
Exhibit D Forms of Opinion of Counsel to Uniroyal-CA
Exhibit E Alternative Dispute Resolution Procedures
Exhibit F Form of Marketing Rights and Margin Agreement
Exhibit G Form of Pre-Exercise Distribution and Technology
License Agreement
Exhibit H Form of Post-Exercise Distribution and Technology
License Agreement
Exhibit I Form of Uniroyal-Bayer Transfer, Assignment and
Assumption Agreement
Exhibit J Form of Bayer Transfer, Assignment and Assumption
Agreement
Exhibit K Form of Uniroyal Transfer, Assignment and Assumption
Agreement
Exhibit L Form of Consent Agreement
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT is effective as of the 20th day of November, 1998
(the "Effective Date"), by and between Uniroyal Chemical Co./Cie, an unlimited
liability company organized under the laws of Nova Scotia ("Uniroyal-CA"), and
Bayer Inc., a corporation organized under the laws of Canada ("Bayer-CA").
W I T N E S S E T H :
WHEREAS, Uniroyal-CA and Bayer-CA are desirous of forming the Partnership
(as defined herein) to carry on the Business (as defined herein), which is
currently carried on by Uniroyal-CA;
WHEREAS, in furtherance of the objective set forth above, Uniroyal-CA
desires to sell to Bayer-CA and Bayer-CA desires to purchase a 50% undivided
interest in certain assets and obligations of the Business;
WHEREAS, also in furtherance of the objective set forth above, Uniroyal-
CA and Bayer-CA each desires to contribute to the Partnership its 50%
undivided interest in certain assets and obligations of the Business;
NOW, THEREFORE, for good and valuable consideration, including the
agreements of the parties hereinafter set forth, the parties hereto agree as
follows:
ARTICLE 1. DEFINITIONS
When used in this Agreement and the above Recitals, the following
capitalized terms shall have the meanings specified in this Article 1. Other
terms are defined in the text of this Agreement, and throughout this
Agreement, those terms shall have the meanings respectively ascribed to them:
"Active Ingredient" or "Active Ingredients" means any and all naturally
occurring or synthetically produced substances, compounds, mixtures or
Biologicals, whether now existing or hereafter developed, which prevent,
destroy, repel or mitigate any Pest, or accelerate or retard the rate of
growth, germination or maturation, or otherwise protect, or alter the behavior
of, seeds, stored grains, or plants or the products thereof.
"Affiliate" or "Affiliates" means, with respect to any Person, any other
Person, directly or indirectly, through one or more intermediaries,
controlling, controlled by, or under common control with, such first mentioned
Person. As used in this definition of Affiliate, the term "control"
(including "controlled by", or "under common control with") means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through
ownership of voting securities, as trustee, by contract, or otherwise. The
Partnership shall not be considered an Affiliate of any other Person.
"Agency" or "Agencies" means individually and collectively, (i) the Canadian
Federal Departments of Agriculture and Agri-Food, the Environment and Health,
and any other federal, local, provincial or other governmental or regulatory
agency in Canada which now regulates, or may in the future regulate, the use,
development, registration or sale of Active Ingredients or Formulations; and
(ii) the Canadian Intellectual Property Office, and any other federal, local,
provincial or other governmental or regulatory agency in Canada which now
regulates, or may in the future regulate, the protection, use or registration
of Technology.
"Agreement" means this agreement together with the exhibits and schedules
attached hereto.
"Assigning Party" shall have the meaning given to such term in Section 2.4.
"Assumed Obligations" means those obligations of the Business listed on
Schedule 2.3 to be transferred by Uniroyal-CA and Bayer-CA to the Partnership.
"Auditors" shall have the meaning given to such term in Section 3.3(b).
"Bayer Assets" means an undivided 50% interest in the Contributed Assets
transferred to Bayer-CA pursuant to this Agreement.
"Bayer Assumed Obligations" means an undivided 50% interest in the Assumed
Obligations assumed by Bayer-CA pursuant to this Agreement.
"Bayer-CA" shall have the meaning given to such term in the Preamble.
"Bayer Indemnitee(s)" shall have the meaning given to such term in Section
9.2(a).
"Bayer Letter Agreement" shall have the meaning given to such term in Section
7.2(j).
"Bayer Transfer, Assignment and Assumption Agreement" means the form of
transfer, assignment and assumption agreement attached hereto as Exhibit J and
incorporated herein by reference.
"Biological" or "Biologicals" means any and all naturally occurring or
synthetically created biological organisms which prevent, destroy, repel or
mitigate any Pest, or accelerate or retard the rate of growth, germination or
maturation, or otherwise protect, or alter the behavior of, seeds, stored
grains, or plants or the products thereof.
"Board" means the Partner representative committee as defined in the
Partnership Agreement.
"Business" means the business constituting the marketing and sale of Active
Ingredients, Formulations, Equipment, and Other Products and/or Services for
Seed Treatment uses or applications in Canada.
"C&K" means Crompton and Knowles Corporation, a corporation organized under
the laws of the Commonwealth of Massachusetts, United States of America.
"C&K Letter Agreement" shall have the meaning given to such term in Section
7.1(o).
"Canadian GAAP" means generally accepted accounting principles in effect in
Canada as of the date of the subject financial statements or calculation, as
the case may be, consistently applied.
"Capital Account" shall have the meaning given to such term in the Partnership
Agreement.
"Claim" or "Claims" means any claim, demand, action, cause of action, suit,
enforcement action or proceeding, whether in law or in equity.
"Closing" shall have the meaning given to such term in Section 2.5.
"Closing Agreements" means the certificates and agreements (other than the
Operative Agreements) and any agreements referenced in any schedule hereto) to
be delivered pursuant to Sections 7.4 and 7.5.
"Closing Date" shall have the meaning given to such term in Section 2.5.
"Closing Date Balance Sheet" shall have the meaning given to such term in
Section 3.3(a).
"Competition Act" means the Competition Act (Canada), as amended.
"Competition Act Approval" means (i) the issuance of an advance ruling
certificate pursuant to section 102 of the Competition Act by the Director of
Investigation and Research appointed under the Competition Act to the effect
that he is satisfied that he would not have sufficient grounds upon which to
apply to the Competition Tribunal for an order under section 92 of such Act
with respect to the transactions contemplated by this Agreement; or (ii) that
the waiting period under section 123 of the Competition Act shall have expired
with respect to the transactions contemplated by this Agreement.
"Confidential Information" means all confidential and/or proprietary
information of a Person (the "Owning Person"), whether arising under statute,
common law or otherwise, whether belonging wholly or in part to the Owning
Person, and whether subject to license or other grant of rights by or to the
Owning Person as licensor or as licensee; but, specifically excluding,
information that is generally known to those skilled in a chemical or life
sciences field, including without limitation, the agrochemical field, and
information as to a Person (a "Receiving Person"), and only as to such
Receiving Person, that (1) is lawfully known to such Receiving Person prior to
the disclosure by the Owning Person to such Receiving Person; (2) is lawfully
acquired by such Receiving Person, rightfully furnished to such Receiving
Person, or Publicly Available to such Receiving Person; (3) is information
which such Receiving Person can document was independently developed by such
Receiving Person; (4) was lawfully reverse engineered by such Receiving
Person; or (5) is required to be disclosed by such Receiving Person pursuant
to Law, provided such Receiving Person uses reasonable efforts to give the
Owning Person reasonably detailed prior notice of such required disclosure and
an opportunity to oppose such disclosure.
"Contamination" means the emission, discharge or release of any Hazardous
Substance to, on, onto or into the environment and the effects of such
emission, discharge or release, including without limitation, the presence or
existence of any such Hazardous Substance as addressed by a Governmental
Authority pursuant to applicable Environmental Laws.
"Contract Rights" shall have the meaning given to such term in Section 4.1(f).
"Contracts" means contracts, agreements, license agreements, research
agreements, non-disclosure agreements, vendor agreements, distribution,
representative or marketing agreements, purchase orders, commitments, sales
orders and supply agreements, in each case to the extent relating exclusively
to the Business, to which Uniroyal-CA is a party, or by which Uniroyal-CA is
bound, as of the Closing Date and which is included as a Contributed Asset.
"Contributed Assets" means all the assets of the Business including without
limitation, the assets specifically listed on Schedule 2.2(a), but
specifically excluding the Excluded Assets.
"Contributed Products" means the Active Ingredients, Formulations, Equipment
or Other Products and/or Services listed on Schedule 4.1(u).
"De Minimis Amount" means an amount less than or equal to TWENTY-FIVE THOUSAND
UNITED STATES DOLLARS (US$25,000).
"Dispute" means any dispute, controversy or claim arising out of or relating
to this Agreement, including without limitation, an alleged failure of a
Person or its Affiliate to perform any of its obligations under this
Agreement, any alleged default by Uniroyal-CA or Bayer-CA pursuant to Section
12.9, or any claim which relates to the Confidential Information of any
Person; but, specifically excluding, any dispute, controversy or claim arising
out of or relating to the performance under, any Operative Agreements by any
party thereto, on or after the Closing Date. For purposes of this Agreement
and the Operative Agreements, any disagreement between the parties as to
whether any dispute, controversy or claim is a "Dispute", to be resolved
pursuant to Section 12.14 hereof, or a matter to be resolved in accordance
with the provisions of the Operative Agreements, shall be deemed to be a
"Dispute".
"Distributor Agreement" means the Distributor Agreement to be dated as of the
Closing Date by and between Uniroyal-CA and the Partnership.
"Due Inquiry" means an inquiry by each person listed on Exhibit A of each
management and supervisory employee who directly reports to each such listed
person and whose employment responsibilities place them in a position to have
information regarding the representations and warranties set forth in this
Agreement. Such inquiry shall be personally conducted by each individual
listed on Exhibit A as follows:
(a) The individual of whom inquiry is being made shall be advised of
the purpose and context of the inquiry and that truthful responses are
required;
(b) Each individual of whom inquiry is being made will be provided in
writing the particular statements of the Agreement qualified by Knowledge;
(c) Each individual of whom inquiry is being made will have an
obligation to carefully consider the statement in question, ask follow-up
questions of any person and review any documents that may be of assistance to
them in providing their response to the inquiry; and
(d) Each individual of whom inquiry is being made and each of the
individuals listed on Exhibit A shall execute certificates verifying the
accuracy of those statements of the Agreement qualified by Knowledge.
"Effective Date" shall have the meaning given to such term in the Preamble.
"Elmira Complex" means the manufacturing facility and corporate headquarters
of Uniroyal-CA located at 25 Erb Street, Elmira, Ontario.
"Employee Benefit Plans" means all of the plans, funds, policies, programs,
agreements, policies, arrangements or understandings, written or unwritten,
which are sponsored or maintained by Uniroyal-CA as of the Closing Date on
behalf of the Employees (or any dependents or beneficiaries of any such
Employees) with regard to any (i) supplemental retirement or profit-sharing
benefits; (ii) severance or separation from service benefits; (iii) incentive,
performance, or bonus awards; (iv) dental and health care benefits; (v)
disability income or wage continuation benefits; (vi) supplemental
unemployment benefits; (vii) life insurance, death or survivor's benefits;
(viii) accrued sick pay or vacation pay; (ix) deferred compensation or stock
option benefits; or (x) benefits of any other type offered through any
arrangement that could be characterized as providing for additional
compensation or fringe benefits to the Employees to which Uniroyal-CA is a
party or by which Uniroyal-CA is bound as of the Closing Date, but shall not
include the Pension Plan.
"Employees" means all individuals employed or retained by Uniroyal-CA as
employees in connection with the Business, including those employees of the
Business on long-term disability, short-term disability, vacation or other
leave of absence.
"Environmental Clean-up" means any and all actions, including those that are
investigative in nature and those involving the study or selection of remedial
alternatives, taken in response to any Contamination, including but not
limited to, analysis, monitoring, investigation, removal, treatment, clean-up,
prevention of migration of or other disposal of or remediation of any
Hazardous Substances required under applicable Environmental Law or required
by Governmental Authorities.
"Environmental Costs" means any and all costs and expenses (including without
limitation, legal, consultant and engineer fees and expenses) for an
Environmental Clean-up.
"Environmental Laws" means, collectively, any and all laws, ordinances, rules,
regulations, directives, orders, authorizations, decrees, notices, permits,
binding plans, demand letters or other mandates, proscriptions or
prescriptions of any nature, whether current or future, of a Governmental
Authority relating in any way to any Hazardous Substance, Contamination,
protection of the environment, protection of natural resources, or protection
of health and safety, including, without limitation, those relating to
emissions, discharges, releases or threatened emissions, discharges or
releases to, on, onto or into the environment of any Hazardous Substance and
those relating to the manufacture, registration, analysis, testing, approval,
processing, distribution, use, treatment, storage, disposal, transport or
handling of any Hazardous Substance and any raw materials, intermediates,
finished products, by-products or ingredients containing one or more Hazardous
Substance.
"Environmental Liability" shall mean any and all liabilities, Losses, Claims,
penalties, damages, Environmental Costs, expenses, remediation or inspection
costs and any expenses (including without limitation, legal, consultant and
engineer fees and expenses) of whatever kind or nature, known or unknown,
contingent or otherwise, arising from or relating to compliance with any
Environmental Law or arising under any theory of law or equity and relating
to, or arising from, Contamination or the use, treatment, storage, disposal,
transport, generation or handling of any Hazardous Substance.
"Environmental Matters" means any matter arising out of or relating to health,
safety, pollution, Contamination, Environmental Laws, compliance with
Environmental Laws or protection of the environment (indoor or outdoor),
including without limitation, any of the foregoing relating to the presence,
use, production, generation, handling, transport, management, treatment,
storage, disposal, distribution, discharge, release, migration, control or
cleanup of, or exposure to, any Hazardous Substance.
"Environmental Permits" means all governmental permits, licenses,
registrations and authorizations required by Environmental Laws in order to
operate the Business as currently operated by Uniroyal-CA.
"Equipment" means any and all equipment that the Business has the right to
manufacture, develop, market or sell whether for Seed Treatment uses and
applications or for other than Seed Treatment uses or applications, including
without limitation, seed treaters, size rights, screens, cylinders, and
samplers.
"Excluded Assets" means the assets listed on Schedule 4.1(a).
"Excluded Obligations" shall have the meaning given to such term in Section
2.3.
"Financial Books and Records" shall mean all financial records, financial
books and records of account of Uniroyal-CA, relating exclusively to the
Business or to the Contributed Assets or the Assumed Obligations.
"Financial Statements" shall have the meaning given to such term in Section
4.1(p).
"Formulation" or "Formulations" shall mean a substance or compound, or mixture
of substances or compounds, which includes one or more Active Ingredients,
whether now existing or hereafter developed.
"GST" shall have the meaning given to such term in Section 12.1.
"Governmental Authority" or "Governmental Authorities" means any government,
any governmental entity, department, commission, board, agency or
instrumentality, and any judicial or administrative court, tribunal or
judicial or arbitral body, whether foreign, supra-national, federal,
provincial or local.
"Governmental Authorization" means any authorization, approval, license or
permit, including without limitation any Environmental Permit, issued to
Uniroyal-CA in connection with the Business or the Contributed Assets by any
Governmental Authority.
"Gustafson LLC" means Gustafson LLC, a limited liability company organized
under the laws of the State of Delaware.
"Hazardous Substance" shall mean any element, substance, compound or mixture
(including without limitation, any pollutant, contaminant, chemical, petroleum
product or constituent or industrial, toxic or hazardous substance or waste
and any degradation product thereof) whether solid, liquid or gaseous, that:
(i) is or shall be in the future subject to regulation of any kind (including
without limitation, regulation by statute, rule, regulation, directive,
ordinance, order, decree, notice, plan or demand letter) by any Governmental
Authority or statutory or regulatory body with regard to protection of the
environment or protection of health and safety; or (ii) the presence or
existence of which shall at any time give rise, under any theory of law or
equity, to any liability, Claim and/or Loss.
"Indemnification Cap" shall have the meaning given to such term in Section
9.2(c).
"Interest" shall have the meaning given to such term in the Partnership
Agreement.
"Interim Period" shall have the meaning given to such term in Section 6.4(l).
"Knowledge" means, with respect to Uniroyal-CA, the actual knowledge of the
individuals listed on Exhibit A as employees of Uniroyal-CA, together with the
knowledge such Persons should have had as a result of Due Inquiry.
"LLC Agreement" means that certain Limited Liability Company Agreement of
Gustafson LLC effective as of September 23, 1998, as amended.
"Laws" means all federal, provincial, local, foreign or other laws, rules,
regulations, guidelines, orders, injunctions, building and other codes,
ordinances, permits, licenses, authorizations, judgments, decrees of federal,
provincial, local, foreign or other authorities, and all orders, writs,
decrees and consents of any governmental or political subdivision or agency
thereof, or any court or similar Person established by any such governmental
or political subdivision or agency thereof; but, specifically excluding
Environmental Laws.
"Lease" or "Leases" means all real and personal property leases, subleases,
concessions, licenses, occupancy agreements, conditional sales agreements or
other title retention agreements, in each case to the extent relating
exclusively to the Business, to which Uniroyal-CA is a party, or by which
Uniroyal-CA is bound, as of the Closing Date and which is included as a
Contributed Asset.
"Licenses and Permits" means licenses, franchises, registrations, permits,
approvals, certificates, certifications and other authorizations from all
applicable Governmental Authorities which are necessary for the conduct of the
Business and the conduct, ownership, use, occupancy and operation of the
assets of the Business by the Partnership as of the Closing Date; but
specifically excluding Environmental Permits.
"Liens" means liens, encumbrances, Claims, charges, security interests or
rights of first refusal; any limitations on voting rights; or any right of any
Third Party, rights of redemption, equities, and any other restrictions of any
kind or nature whatsoever, including any leases, licenses, escrows, options,
security or other deposits, rights of redemption, chattel mortgages,
conditional sales arrangements or collateral security arrangements.
"Losses" means losses (including without limitation, all special and
consequential damages and all damages for lost profits related to Claims made
by Persons other than Bayer-CA or its Affiliates), damages, costs, Claims,
expenses, liabilities, Taxes, interest, penalties, suits, judgments, orders,
Liens, obligations and claims of any kind, whether administrative, judicial or
otherwise, including without limitation, the costs and expenses of
assessments, settlements, investigations and compromises and also including
without limitation, reasonable lawyers', consultants', accountants' and
expert witness fees and expenses; but, specifically excluding all special and
consequential damages and all damages for lost profits related to Claims for
indemnification made by Bayer-CA or its Affiliates.
"Marketing Agreement" means the Marketing Rights and Margin Agreement, dated
as of the Closing Date, by and among the Partnership, Bayer Corporation,
Bayer-CA, C&K and Gustafson LLC, the form of which is attached hereto as
Exhibit F and incorporated herein by reference.
"Material Adverse" (including all derivations thereof) means materially
adverse to the operations, affairs, financial condition, assets, properties or
prospects (financial or otherwise) of the Business taken as a whole.
"Net Equity of the Business" means the amount equal to the Contributed Assets
(excluding any amount in respect of goodwill) minus the liabilities of the
Business included in the Assumed Obligations, as adjusted and calculated in
accordance with the procedure established for determining the Closing Date
Balance Sheet in Section 3.3.
"New Pension Plan" means the pension plan for Employees to be established by
the Partnership.
"Non-Assignable Rights" shall have the meaning given to such term in Section
2.4.
"Occurrence" shall have the meaning given to such term in Section 4.1(u).
"Off-Site Liability" means Environmental Liability resulting from the presence
of a Hazardous Substance generated by Uniroyal-CA in respect of the Business
at an Off-Site Location.
"Off-Site Location" means any location now or formerly owned, operated or
leased by any Third Party Manufacturer or other location to which the Business
transported Hazardous Substances or arranged for the transportation of
Hazardous Substances, or at which any Hazardous Substances of Uniroyal-CA was
deposited or disposed other than real property that is the subject of any
Leases.
"On-Site Contamination" means Contamination at any location currently owned,
operated or leased by Uniroyal-CA and utilized in connection with the
ownership and/or operation of the Business or Contributed Assets, other than
Contamination to the extent caused by action or inaction of the Partnership or
any Third Parties, which action or inaction occurred after the Closing Date.
"Operative Agreements" means collectively, the Partnership Agreement, the
Marketing Agreement, the Pre-Exercise Distribution and Technology License
Agreement, the form of which is attached hereto as Exhibit G and incorporated
herein by reference, and the Post-Exercise Distribution and Technology License
Agreement, the form of which is attached hereto as Exhibit H and incorporated
herein by reference.
"Other Products and/or Services" means (i) any products for Seed Treatment
uses or applications; other than Active Ingredients, Formulations and
Equipment, including without limitation, colorants, dyes, pigments and
coatings; and (ii) any activities of the Business specifically designed for or
directly applicable to Seed Treatment uses or applications, that the Business
has offered or is offering on the Effective Date.
"Partner" shall have the meaning given to such term in the Partnership
Agreement.
"Partnership" means a general partnership to be formed under the laws of
Ontario under the name of "Gustafson Partnership" pursuant to Section 2.2.
"Partnership Agreement" means the Partnership Agreement to be entered into
between Uniroyal-CA and Bayer-CA, the form of which is attached hereto as
Exhibit B and incorporated herein by reference.
"Partnership Interest" shall have the meaning given to such term in the
Partnership Agreement.
"Pension Liabilities" shall have the meaning given to such term in Section
6.4(d).
"Pension Plan" means the Uniroyal Chemical Ltd. Salaried Employees Retirement
Plan.
"Person" means any individual, corporation, Governmental Authority, regulatory
authority, limited liability company, unlimited liability company,
partnership, trust, estate, unincorporated association or other entity.
"Pest" means any plant, animal or other organism, when and if determined by an
Agency to be deleterious to man or the environment.
"Product" shall mean any Active Ingredient, Formulation, Equipment or Other
Product and/or Service which Uniroyal-CA developed, formulated, manufactured,
registered, marketed or sold prior to the Closing Date, including without
limitation, the Contributed Products.
"Publicly Available" means that the information in question is available from
a public source; provided, however, information shall not be deemed to be
Publicly Available to a Person unless the Person contending the information is
Publicly Available (i) has lawfully acquired such information through
experimentation, research or other appropriate method of acquisition, and (ii)
if the form in which the Technology is held by the Business on or before the
Effective Date has commercial value, has acquired such information in the same
form held by the Business on or before the Effective Date.
"Purchase Price" shall have the meaning given to such term in Section 3.1.
"Purchase Price Adjustment" means the post-closing adjustment to the Purchase
Price referred to in Section 3.2.
"Recall" means, with respect to any Product, a "recall", "correction" or
"market withdrawal", as those terms are defined by any Governmental Authority.
"Registrations" means the registrations issued by any Governmental Authority
to the extent relating exclusively to the Business.
"Representative" shall have the meaning given to such term in the Partnership
Agreement.
"Seed Treatment" means any and all uses or applications of Active Ingredients,
Formulations, Equipment or Other Products and/or Services in connection with
seeds or stored grains for agricultural purposes, whether now existing or
hereinafter developed.
"Taxes" means all federal, provincial, municipal, local and foreign income,
payroll, employment, employer health, unemployment, withholding, excise,
sales, transfer, goods and services, personal property, use, business and
occupation, franchise and occupancy, real estate, or other taxes or charges in
the nature of tax in connection with the Business and Canada and provincial
pension plan contributions (all of the foregoing including interest and
penalties thereon and including instalments in respect of taxes and estimated
taxes).
"Technology" means all forms of intellectual property used in the Business,
including without limitation, copyrights, copyright applications, patents,
patent applications, trademarks, trademark applications, trade names, service
marks, logos, slogans, inventions, processes, production methods, proprietary
information, know-how, trade secrets, information, identification lists,
product and technical labels, data, including registration data and
Governmental Authority data, plans, blueprints, specifications, designs,
manufacturing information, formulation recipes and techniques, seed safety
information, seed testing techniques, efficacy data, environmental, residue,
toxicology and product chemistry information, discoveries, drawings, recorded
knowledge, techniques, ideas, concepts, surveys, engineering reports, test
reports and procedures, manuals, materials standards, process standards,
performance standards, catalogs, flow charts, formulation or technical
registrations, work techniques, computer and automatic machinery software and
programs, related object and source code and the like whether or not protected
by or protectable by patent, copyright, trademark, trade secret or other
proprietary rights or by Governmental Authority registrations, in each case to
the extent relating exclusively to the Business; but specifically excluding
Technology that is generally known to those skilled in a chemical or life
sciences field, including without limitation, the agrochemical field.
"Third Party" means any and all Persons other than Uniroyal-CA, the
Partnership, Bayer-CA and their respective Affiliates.
"Third Party Manufacturer" means any supplier, contract manufacturer, toll
manufacturer, formulator, finisher or other Third Party that now or in the
past provided the Business with any service in connection with the operation
of the Business or the Contributed Assets.
"Threshold Amount" shall have the meaning given to such term in Section
9.2(c).
"Transfer Date" shall have the meaning given to such term in Section 6.4(d).
"Transferred Assets" shall have the meaning given to such term in Section
6.4(d).
"Uniroyal-CA" shall have the meaning given to such term in the Preamble.
"Uniroyal Assets" means an undivided 50% interest in the Contributed Assets
retained by Uniroyal-CA at the time of the transfer of the Bayer Assets to
Bayer-CA.
"Uniroyal Assumed Obligations" means an undivided 50% interest in the Assumed
Obligations retained by Uniroyal-CA at the time of the assumption of the Bayer
Assumed Obligations by Bayer-CA.
"Uniroyal-Bayer Transfer, Assignment and Assumption Agreement" means the form
of transfer, assignment and assumption agreement attached hereto as Exhibit I
and incorporated herein by reference.
"Uniroyal Indemnitee(s)" shall have the meaning given to such term in Section
9.3.
"Uniroyal Transfer, Assignment and Assumption Agreement" means the form of
transfer, assignment and assumption agreement attached hereto as Exhibit K and
incorporated herein by reference.
"U.S. GAAP" means generally accepted accounting principles in effect in the
United States as of the date of the subject financial statements or
calculation, as the case may be, consistently applied.
ARTICLE 2. SALE AND CONTRIBUTION OF ASSETS
2.1 Sale of Undivided Interest in Contributed Assets.
Subject to the terms and conditions set forth in this Agreement, at
the Closing:
(a) Uniroyal-CA shall sell, transfer, assign and deliver to Bayer-CA, by
appropriate instruments of transfer, the Bayer Assets;
(b) Bayer-CA shall assume and agree to satisfy and discharge, by appropriate
instruments of assumption, the Bayer Assumed Obligations; and
(c) Bayer-CA shall deliver to Uniroyal-CA the Purchase Price as provided in
Section 3.1.
The Bayer Assets shall be transferred to Bayer-CA free and clear of
any Liens, other than the Bayer Assumed Obligations. Uniroyal-CA shall effect
such registrations, recordings and filings with public authorities as may be
required in connection with the transfer of ownership of the Bayer Assets to
Bayer-CA. The Bayer Assets shall be transferred, and the Bayer Assumed
Obligations shall be assumed, strictly in accordance with the procedures set
forth on Schedule 2.1. Upon the sale of the Bayer Assets to, and the
assumption of the Bayer Assumed Obligations by, Bayer-CA, Uniroyal-CA shall
retain the Uniroyal Assets and the Uniroyal Assumed Obligations.
2.2 Contribution of Uniroyal Assets and Bayer Assets to Partnership.
Subject to the terms and conditions set forth in this Agreement, at
the Closing, but subsequent to the transfer of the Bayer Assets to, and the
assumption of the Bayer Assumed Obligations by, Bayer-CA pursuant to Section
2.1:
(a) Uniroyal-CA and Bayer-CA shall form the Partnership by executing and
delivering the Partnership Agreement and by taking the other actions referred
to in this Section 2.2;
(b) Uniroyal-CA and Bayer-CA shall each sell, transfer, assign and deliver to
the Partnership, by appropriate instruments of transfer, all right, title and
interest each holds in, to and under, or in respect of, the Uniroyal Assets
and the Bayer Assets (together representing all of the Contributed Assets),
respectively;
(c) The Partnership shall assume and agree to satisfy and discharge, by
appropriate instruments of assumption, the Bayer Assumed Obligations and the
Uniroyal Assumed Obligations (together representing all of the Assumed
Obligations); and
(d) Each of Uniroyal-CA and Bayer-CA will receive a 50% Interest in the
Partnership, free and clear of any and all Liens, and each of Uniroyal-CA and
Bayer-CA will be admitted as a Partner in the Partnership.
The Contributed Assets shall be transferred to the Partnership free
and clear of any and all Liens other than the Assumed Obligations. Uniroyal-CA
and Bayer-CA shall each effect such registrations, recordings and filings with
public authorities as may be required in connection with the transfer of
ownership of the Uniroyal Assets and the Bayer Assets, respectively, to the
Partnership. In particular, Uniroyal-CA and Bayer-CA shall each take any
action, or cause the Partnership to take any action, as may be necessary to
ensure that the elections contemplated in the Partnership Agreement to be made
under subsection 97(2) of the Income Tax Act (Canada) are made in accordance
with the provisions of the Partnership Agreement. The Uniroyal Assets and
Bayer Assets shall be transferred, and the Uniroyal Assumed Obligations and
Bayer Assumed Obligations shall be assumed, strictly in accordance with the
procedures set forth on Schedule 2.2(b). Pursuant to the Partnership
Agreement, Uniroyal-CA's Capital Account will be credited in the amount of the
Purchase Price for the contributions by Uniroyal-CA to the Partnership in
accordance with this Section 2.2, and Bayer-CA's Capital Account will be
credited in the amount of the Purchase Price for the contributions by Bayer-CA
to the Partnership in accordance with this Section 2.2.
2.3 Excluded Obligations.
Notwithstanding any provision in this Agreement to the contrary, the
Partnership shall assume only the Assumed Obligations and shall not assume or
be obligated to satisfy or perform any other liability, obligation or
commitment of Uniroyal-CA or Bayer-CA, of whatever nature. All such other
liabilities, obligations and commitments shall be retained by and remain
liabilities, obligations and commitments of, Uniroyal-CA or Bayer-CA, as the
case may be (collectively, the "Excluded Obligations"). Without limiting the
foregoing sentence, Excluded Obligations shall include each of the following,
except to the extent specifically included as an Assumed Obligation on
Schedule 2.3:
(a) Any contingent or unknown Claim against or liability or obligation of
Uniroyal-CA or Bayer-CA, including without limitation, with respect to
Uniroyal-CA, any Claim for product liability related to any Product
manufactured or sold on or before the Closing.
(b) Any liability or obligation of Uniroyal-CA or Bayer-CA arising on or
before the Closing in favour of any Person.
(c) Any present or future liability or obligation of Uniroyal-CA or Bayer-CA
for Taxes of any kind or nature whatsoever, whether federal, provincial or
municipal, including without limitation, Taxes on capital gains, or the income
of Uniroyal-CA or Bayer-CA accrued with respect to their businesses as
conducted by Uniroyal-CA or Bayer-CA prior to and on the Closing Date.
(d) Any liability or obligation of Uniroyal-CA or Bayer-CA in connection with
any litigation (whether legal, administrative or otherwise) or alternative
dispute resolution mechanism pending or threatened against Uniroyal-CA or
Bayer-CA on or before the Closing or any such litigation or alternative
dispute mechanism which has as a basis any action or inaction occurring on or
before the Closing including (x) any liability, obligation to arbitrate,
claims, grievances or causes of action under any collective bargaining
agreement of Uniroyal-CA or Bayer-CA, (y) any liability (including non-accrued
and contingent liabilities) associated with occupational exposure to one or
more Hazardous Substances to the extent occurring on or before the Closing
Date and (z) any workers' compensation claims or liability.
(e) Any obligation of Uniroyal-CA or Bayer-CA for any prepayment or make-
whole penalty or premium under or pursuant to any of the contracts or other
agreements relating to the Contributed Assets to the extent that such
provision was triggered by any act of Uniroyal-CA or Bayer-CA on or before the
Closing Date.
(f) Any liabilities, obligations or commitments of Uniroyal-CA or Bayer-CA
under any warranties delivered by Uniroyal-CA or Bayer-CA on or prior to the
Closing to the extent arising out of or related to any action or inaction of
Uniroyal-CA or Bayer-CA on or prior to the Closing Date.
(g) Any liabilities, obligations or commitments of Uniroyal-CA or Bayer-CA
(x) arising under any contracts, agreements or commitments other than the
Contracts or the Leases or (y) arising under or related to the Contracts or
the Leases to the extent related to or attributable to any failure by
Uniroyal-CA or Bayer-CA to comply with the terms thereof or to the extent
related to any action or inaction of Uniroyal-CA or Bayer-CA on or before the
Closing Date.
(h) Any liability or obligation of Uniroyal-CA or Bayer-CA arising on or
before the Closing Date to the employees thereof, whose employment is
terminated on or before the Closing Date, for severance or similar pay,
whether arising by contract, by any plan or program or pursuant to any Law.
(i) Any and all liabilities, damages, losses, costs or expenses related to
any Recall which occurs on or prior to Closing or which occurs after the
Closing and is related to any Product other than a Contributed Product.
(j) Any Environmental Liability resulting from or arising out of any
Environmental Matter that exists on or before the Closing Date or any Claim in
respect of any Environmental Liability which has been made or threatened on or
before the Closing Date.
(k) Any Environmental Liability resulting from, arising out of or related to
the ownership or operation of the Elmira Complex.
2.4 Non-Assignable Rights.
Nothing in this Agreement shall be construed as an assignment of, or
an attempt to assign, any Contract or Governmental Authorization which, as a
matter of law or by its terms, is not assignable or is not assignable without
the approval or consent of the issuer thereof or the other party or parties
thereto, without first obtaining such approval or consent (collectively, "Non-
Assignable Rights"). In connection with each such Non-Assignable Right, the
party which, but for this Section 2.4, would be required by this Agreement to
transfer such Non-Assignable Right (the "Assigning Party") shall:
(a) apply for and use all reasonable efforts to obtain all consents or
approvals contemplated by the Contract or Governmental Authorization, provided
that nothing herein shall require the Assigning Party to make any payment to
any other party to any of the Contracts;
(b) co-operate in any reasonable and lawful arrangements designed to provide
the benefits of such Non-Assignable Right to Bayer-CA or the Partnership, as
the case may be, including without limitation, holding any such Non-Assignable
Right in trust for Bayer-CA or the Partnership, as the case may be, or acting
as agent for Bayer-CA or the Partnership, as the case may be;
(c) enforce any rights of the Assigning Party arising from such Non-
Assignable Right against the issuer thereof or the other party or parties
thereto;
(d) take all such actions and do, or cause to be done, all such things as
shall reasonably be necessary and proper in order that the value of such Non-
Assignable Right shall be preserved and shall enure to the benefit of Bayer-CA
or the Partnership, as the case may be; and
(e) pay over to Bayer-CA or the Partnership, as the case may be, all monies
collected by or paid to Uniroyal-CA in respect of such Non-Assignable Right.
Bayer-CA or the Partnership, as the case may be, shall indemnify and save
the Assigning Party harmless from any Non-Assignable Rights Claims which the
Assigning Party suffers or incurs in connection with or arising as a result of
the application of this Section 2.4 or any action of the Assigning Party taken
pursuant to this Section 2.4, with the exception of any Non-Assignable Rights
Claims arising as a result of the omissions or negligence of the Assigning
Party. For purposes of this Section 2.4, "Non-Assignable Rights Claims" means
any costs, liabilities, expenses, Claims, damages, losses (including without
limitation, Taxes, reasonable professional fees and all costs incurred in
investigating or pursuing any of the foregoing or any proceeding relating to
any of the foregoing), excluding any which are incurred by the Assigning Party
in attempting to assign the Non-Assignable Right or in attempting to obtain
approval or consent to such assignment.
2.5 Closing Date.
The closing of the transactions contemplated by this Agreement shall
take place at 10:00 a.m. Toronto time on November 20, 1998, or at such other
date and time as may be agreed upon by Bayer-CA and Uniroyal-CA, subject to
the requirements of the Competition Act and all other applicable antitrust
statutes and expiration of applicable waiting periods in connection therewith
(the "Closing" or "Closing Date"). The Closing shall take place at the
offices of Osler, Hoskin & Harcourt, 1 First Canadian Place, Toronto, Ontario,
or at such other place as may be agreed upon by Bayer-CA and Uniroyal-CA.
Notwithstanding the foregoing, if the Closing has not occurred on or before
December 31, 1998, either Bayer-CA or Uniroyal-CA may, provided that such
party is not in default hereunder, have the right to terminate this Agreement
by providing the other party with notice, in accordance with the provisions of
Section 12.11 of such party's termination of this Agreement. Upon such
termination, none of the parties to this Agreement shall have any further
obligation to the other parties hereto pursuant to this Agreement; provided,
however, that the obligations set forth in Sections 11.3, 12.9 and 12.14 shall
survive any termination of this Agreement in accordance with this Section 2.5.
ARTICLE 3. PURCHASE PRICE
3.1 Payment.
(a) The Purchase Price shall be FORTY MILLION UNITED STATES DOLLARS
(US$40,000,000), as adjusted pursuant to Section 3.2 (the "Purchase Price").
(b) On the Closing Date, Bayer-CA shall cause the Purchase Price to be
delivered to Uniroyal-CA by wire transfer in immediately available funds.
(c) The Purchase Price Adjustment, if any, calculated as provided in Section
3.2, shall be paid, together with interest on such amount from the Closing
Date until paid at a rate equal to six percent (6%) per annum, within ten (10)
days after the final determination of such adjustment is made.
3.2 Post-Closing Adjustment.
(a) The Net Equity of the Business as of the Closing Date, immediately
following the completion of the transactions contemplated by this Agreement,
shall be at least FOUR MILLION, FIVE HUNDRED AND THIRTY-EIGHT THOUSAND UNITED
STATES DOLLARS (US$4,538,000).
(b) If the Net Equity of the Business at the Closing Date, immediately
following the completion of the transactions contemplated by this Agreement,
as determined in accordance with Section 3.3 hereof, is less than FOUR
MILLION, FIVE HUNDRED AND THIRTY-EIGHT THOUSAND UNITED STATES DOLLARS
(US$4,538,000), the Purchase Price shall be adjusted by reducing the Purchase
Price by one-half of the amount of such deficiency.
(c) If the Net Equity of the Business at the Closing Date, immediately
following the completion of the transactions contemplated by this Agreement,
as determined in accordance with Section 3.3 hereof, is more than FOUR
MILLION, FIVE HUNDRED AND THIRTY-EIGHT THOUSAND UNITED STATES DOLLARS
(US$4,538,000), the Purchase Price shall be adjusted by increasing the
Purchase Price by one-half of the amount of such excess.
3.3 Net Equity of the Business at the Closing Date.
(a) As soon as reasonably practicable, but in no event later than sixty (60)
days following the Closing, Uniroyal-CA and Bayer-CA shall cause the
Partnership to work to produce an internally prepared balance sheet of the
Partnership as of the Closing Date (the "Closing Date Balance Sheet"). The
Closing Date Balance Sheet shall be prepared in accordance with U.S. GAAP and,
except as disclosed on Schedule 6.1(c), on a basis consistent with those
principles used in preparing the pro forma financial statements which show Net
Equity of the Business as US$4,538,000.
(b) As soon as practicable following the Closing, but in no event later than
one- hundred and twenty (120) days after the Closing Date, the Closing Date
Balance Sheet shall be audited by Arthur Andersen ("Auditors"). Such audit
report shall state (without qualification as to the scope of audit or other
matters) to Uniroyal-CA, Bayer-CA and the Partnership, the Auditors' opinion
as to the Net Equity of the Business as of the Closing Date calculated in
accordance with U.S. GAAP. The parties and all their representatives shall be
provided with (i) complete access to all work papers and other information
used by the Auditors, (ii) a draft of such report within ninety (90) days
after the Closing Date, (iii) a reasonable opportunity to comment on such
draft for twenty-five (25) days after the draft is delivered by the Auditor,
and (iv) the final opinion of the Auditors to the parties within one-hundred
and twenty (120) days of the Closing Date. The audit of the Closing Date
Balance Sheet, when delivered by the Auditors to Uniroyal-CA, Bayer-CA and the
Partnership, shall be deemed conclusive and binding on the parties hereto and
shall be deemed to be the Closing Date Balance Sheet upon which the Purchase
Price Adjustment will be based. The Partnership shall pay the cost of the
fees and expenses of the Auditors' audit of the Closing Date Balance Sheet.
3.4 Allocation of Purchase Price and Bayer Assumed Obligations.
The Purchase Price and Bayer Assumed Obligations shall be allocated
in accordance with the provisions of Schedule 3.4, provided that if the
Purchase Price shall be adjusted pursuant to Section 3.2, the amount of the
adjustment required shall, if such amount cannot be reasonably allocated to a
particular asset, be allocated on a pro rata basis among the various
categories of assets listed in Schedule 3.4. Uniroyal-CA and Bayer-CA agree to
report the purchase and sale of the Bayer Assets in any returns required to be
filed under the Income Tax Act (Canada) and other taxation statutes in
accordance with the provisions of Schedule 3.4.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES
4.1 By Uniroyal-CA.
Uniroyal-CA represents and warrants the following to Bayer-CA
(provided that none of the following relate to Environmental Matters which are
addressed exclusively in Section 5.1):
(a) Contributed Assets.
(i) Except for the Excluded Assets set forth on Schedule 4.1(a), the
Contributed Assets constitute all of the assets used by Uniroyal-CA
exclusively in the conduct of the Business as presently conducted. Except for
the Excluded Assets set forth on Schedule 4.1(a), the Contributed Assets are
the only assets used to produce the revenues set forth on the Financial
Statements.
(ii) Uniroyal-CA has good and marketable title to the Contributed Assets free
and clear of any and all Liens other than as set forth on Schedule 4.1(e).
(iii) The portion of the Contributed Assets constituting fixed assets, taken
as a whole, are in good working order and repair, reasonable wear and tear
excepted.
(iv) The Products included in the Contributed Assets constitute all of the
Products which the Business currently markets or sells.
(b) Organization of Uniroyal-CA.
As of the Closing Date, Uniroyal-CA is an unlimited liability
company duly amalgamated and validly existing under the Laws of the Province
of Nova Scotia and is duly qualified to do business in each other jurisdiction
where the property owned, leased or used by it is located or the conduct of
the Business makes such qualification necessary. Uniroyal-CA is not a non-
resident of Canada within the meaning of the Income Tax Act (Canada).
(c) Authorizations, Consents and Approvals Needed by Uniroyal-CA.
Uniroyal-CA has full power and authority to enter into and
perform this Agreement and the Operative Agreements to which it will be a
party and has taken all necessary corporate action to authorize the execution
and delivery of this Agreement and the Operative Agreements to which it will
be a party and the performance by it of its obligations hereunder and
thereunder. Uniroyal-CA has all necessary corporate power, authority and
capacity to own its property and assets (including the Contributed Assets) and
to carry on its Business as presently conducted. This Agreement has been, and
the Operative Agreements to which Uniroyal-CA will be a party will be, duly
executed by Uniroyal-CA and constitute the legal, valid, binding, and
enforceable obligations of Uniroyal-CA, enforceable against it in accordance
with their terms, except to the extent that such enforceability may be limited
by applicable bankruptcy, insolvency, reorganization and similar laws of
general application relating to or affecting creditors' rights generally and
general principles of equity, regardless of whether such enforceability is
considered in a proceeding in equity or at law. The execution and delivery of
this Agreement and the Operative Agreements to which it will be a party and
the consummation by Uniroyal-CA of the transactions contemplated herein or
hereby or therein or thereby, do not: (i) conflict with or violate any of the
terms of Uniroyal-CA's Memorandum or Articles of Association or By-laws; (ii)
conflict with, or result in a breach of any of the terms of, or result in the
acceleration of any indebtedness or obligations or give rise to any right of
termination or cancellation under, any agreement, obligation, or instrument by
which Uniroyal-CA is bound or to which any Contributed Assets are subject, or
constitute a default (with or without notice or lapse of time, or both)
thereunder; (iii) result in a violation by Uniroyal-CA of any Laws to which
Uniroyal-CA or any Contributed Assets may be subject; (iv) result in the
creation of any Lien on any of the Contributed Assets; or (v) conflict with,
or result in or constitute a default (with or without notice or lapse of time,
or both) under or breach or violation of or grounds for termination of, any
license, permit or other Governmental Authorization which is part of the
Contributed Assets; provided, however, that the consummation of the
transactions contemplated by this Agreement and the Operative Agreements to
which it will be a party is subject to the requirements of the Competition
Act, and all other applicable antitrust statutes and expiration of applicable
waiting periods in connection therewith. Except for the Competition Act
Approval and except as set forth in Schedule 4.1(c), no authorization, consent
or approval of any Governmental Authority or any other person is necessary or
required in connection with the execution and delivery by Uniroyal-CA of this
Agreement or the Operative Agreements to which it will be a party or the
performance by Uniroyal-CA of its obligations hereunder or thereunder.
(d) Absence of Certain Changes.
Except to the extent set forth on Schedule 4.1(d), since June
27, 1998, Uniroyal-CA has conducted the Business in the ordinary course, has
not taken any action that would have violated Section 6.1 had it been
applicable, and there has not been any Material Adverse changes to the
Business or the Contributed Assets.
(e) Leases.
(i) Uniroyal-CA has good and valid title to the lessees' interests under the
Leases, and except for the permitted liens disclosed on Schedule 4.1(e), the
Leases shall be free and clear of all Liens.
(ii) Schedule 4.1(e) sets forth a complete and accurate listing or
description of all Leases. To Uniroyal-CA's Knowledge, no event of default
under any such Lease by Uniroyal-CA or by any other party to any such Lease
has occurred and is continuing which (whether with or without the giving of
notice, lapse of time or both, or the happening of any other event) would
constitute a default under such Lease; each such Lease will, subject to
obtaining any consent listed in Schedule 4.1(c), and having the Uniroyal-Bayer
Transfer, Assignment and Assumption Agreement, Bayer Transfer, Assignment and
Assumption Agreement and Uniroyal Transfer, Assignment and Assumption
Agreement executed by all parties thereto, continue to be in full force and
effect against the Partnership and lessor on the same terms and conditions
immediately after the Closing without the need for any further action on the
part of the Partnership. With respect to real property Leases, Schedule
4.1(e) lists the location of the leased premises, the dates of the Leases and
any and all amendments thereto, the annual rental amount and the duration
thereof.
(iii) Each Lease constitutes the legal, valid and binding obligation of each
of the parties thereof, except to the extent that such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization and similar laws
of general application relating to or affecting creditors' rights generally
and general principles of equity, regardless of whether such enforceability is
considered in a proceeding in equity or at law. Except as set forth on
Schedule 4.1(e), Uniroyal-CA, and to Uniroyal-CA's Knowledge, the other
parties to the Leases, have performed all material obligations required to be
performed under the Leases through the Closing Date and are not (with or
without the lapse of time or the giving of written notice, or both) in breach
or default in any respect thereunder. Uniroyal-CA shall have delivered to
Bayer-CA a true, correct and complete copy of any and all Leases.
(iv) The real property exclusively occupied by Uniroyal-CA pursuant to the
real property lease described in item 1(a) on Schedule 4.1(e) has been and
currently is used by Uniroyal-CA as office space and for no other purpose.
The real property exclusively occupied by Uniroyal-CA pursuant to the real
property lease described in item 1(b) on Schedule 4.1(e) has been and
currently is used by Uniroyal-CA as office space and as a research sample
facility and for no other purpose.
(f) Contracts and Other Documents.
As of the Closing Date, Uniroyal-CA is not a party to or bound
by any Contract, Lease or similar document relating exclusively to the
Business other than those Contracts identified on Schedule 4.1(f), those
Leases identified on Schedule 4.1(e), or those agreements which have been
entered into by Uniroyal-CA in the ordinary course of business and consistent
with past practices and do not involve payment or receipt of more than FIFTY
THOUSAND CANADIAN DOLLARS (CDN$50,000) (collectively, the "Contract Rights").
As of the Closing Date, Uniroyal-CA has not received notice of any default,
and to Uniroyal-CA's Knowledge as of the Effective Date and as of the Closing
Date, Uniroyal-CA is not in default under any Contract, Lease or other
instrument to which Uniroyal-CA is a party or by which it is bound relating
exclusively to the Business. Immediately after the Closing, other than the
Contract Rights, the Partnership will not be a party to or bound by any
contract relating exclusively to the Business, including without limitation
those contracts of the type described below:
(i) Any employment or consulting agreement with an employee or former
employee that is not terminable upon reasonable notice to the employee by the
Partnership (other than any agreement for the employment of any such employee
or former employee implied in Law);
(ii) Any collective bargaining agreement with any labour union;
(iii) Any agreement for capital expenditures or the acquisition or
construction of fixed assets in excess of ONE HUNDRED THOUSAND CANADIAN
DOLLARS (CDN$100,000), other than in the ordinary course of business and
consistent with past practices;
(iv) Any agreement or purchase order in excess of ONE HUNDRED THOUSAND
CANADIAN DOLLARS (CDN$100,000) for the purchase, maintenance or acquisition,
or the sale or furnishing, of materials, supplies, merchandise, equipment or
other property or services; other than in the ordinary course of the Business
and consistent with past practices of the Business;
(v) Any agreement granting to any person a first-refusal, first-offer or
similar preferential right to purchase or acquire any Contributed Asset;
(vi) Any license or royalty agreement other than licenses or royalty
agreements granted or received in the ordinary course of the Business;
(vii) Any indenture, mortgage, loan or credit agreement under which Uniroyal-
CA has borrowed any money or issued any note, bond, indenture or other
evidence of indebtedness for money borrowed by Uniroyal-CA, or guaranteed
indebtedness for money borrowed by others in connection with the Business;
(viii) Any lease for the Business under which Uniroyal-CA is (a) a lessee of,
or holds or uses, any machinery, equipment, vehicle or other tangible personal
property owned by a Third Party or (b) a lessor of, or makes available for use
by any Third Party, any tangible personal property owned by Uniroyal-CA, as
the case may be, in each case other than in the ordinary course of the
Business;
(ix) Any agreement which would restrict the ability of the Partnership from
developing or distributing a Product for market and sale anywhere in Canada,
other than in the ordinary course of the Business; or
(x) Any other agreement which involves payment of more than FIFTY THOUSAND
CANADIAN DOLLARS (CDN $50,000) and which is not made in the ordinary course of
the Business and is not already excluded under the terms of any other
provision of this Section 4.1(f).
Except as set forth on Schedule 4.1(f), as of the Effective
Date, each Contract is a valid and binding obligation of Uniroyal-CA, and to
Uniroyal-CA's Knowledge, the other parties thereto, and is in full force and
effect, except to the extent that such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization and similar laws of general
application relating to or affecting creditors' rights generally and general
principles of equity, regardless of whether such enforceability is considered
in a proceeding in equity or at law.
Except as set forth on Schedule 4.1(f), Uniroyal-CA, and to
Uniroyal-CA's Knowledge, the other parties to the Contracts, has or have
performed all material obligations required to be performed under the
Contracts through the Closing Date and are not (with or without the lapse of
time or the giving of written notice, or both) in breach or default in any
respect thereunder. Except as prohibited by confidentiality or secrecy
provisions in the Contracts or except as restricted by any objections to
disclosure raised by the other party to the Contracts, Uniroyal-CA has made
available to Bayer-CA a true, correct and complete copy of any and all
Contracts, and to the extent so prohibitied, Uniroyal-CA has provided Bayer-CA
with a summary of such Contracts containing all the material terms not
prohibited to be disclosed.
(g) Labour and Employment.
Except as set forth in Schedule 4.1(g), as of the Closing Date,
(i) Uniroyal-CA is not a party to a union agreement or collective bargaining
agreement with respect to the Business; (ii) there is no labour strike,
dispute, formal grievance, arbitration proceeding, general slowdown or
stoppage, or charge of unfair labour practice involving the Business pending
before a court, regulatory body or arbitration tribunal; (iii) the Business is
being operated in compliance in all material respects with all Laws relating
to employees; (iv) there are no pending complaints nor, to Uniroyal-CA's
Knowledge, are there any threatened complaints against the Business before any
employment standards tribunal or human rights tribunal; (v) Uniroyal-CA is not
a party to any written employment agreement with any employee of the Business
or any collective agreement with any trade union or employee association with
respect to the Business and is not aware of any effort to organize any
employees of the Business into any collective bargaining unit, union or
similar arrangement; and (vi) there are no pending or, to Uniroyal-CA's
Knowledge, threatened workers' compensation, discrimination or other such
claims related to the Business.
(h) Employee Benefit Plans and Pension Plan.
Schedule 4.1(h) is a complete and accurate list of the Employee
Benefit Plans and the Pension Plan, all of which are in full force and effect
and are duly registered, where required, with the applicable Governmental
Authorities.
(i) Licenses and Permits.
The Licenses and Permits (other than Environmental Permits
which are the subject of Article 5) are set forth on Schedule 4.1(i). Except
as set forth on Schedule 4.1(i), Uniroyal-CA has obtained and fully paid for,
and has in full force and effect, all Licenses and Permits necessary for the
Business, except for those the lack of which would not Materially Adversely
affect the Business. No proceeding is pending, or, to Uniroyal-CA's
Knowledge, threatened, to modify, suspend, revoke or otherwise limit any such
Licenses and Permits. To Uniroyal-CA's Knowledge, no authority intends to
cancel, terminate, modify or refuse to renew any such License or Permit.
Except as shown on Schedule 4.1(i), the execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby
will not result in the revocation, cancellation, suspension, modification, or
limitation of any of the Licenses and Permits and will not give to any Person
any right to revoke, cancel, suspend, modify, or limit any of the Licenses and
Permits.
(j) Absence of Undisclosed Liabilities.
Except as set forth in Schedule 4.1(j), and except with respect
to Environmental Matters (which are the subject of Article 5), to Uniroyal-
CA's Knowledge as of the Closing Date, there is no material liability
connected with the Business that is not fully reflected or disclosed in the
Financial Statements which would be required to be disclosed or reflected in
the Financial Statements in accordance with U.S. GAAP.
(k) Compliance With Law.
Except as set forth in Schedule 4.1(k), and except with respect
to Environmental Matters (which are the subject of Article 5), the Business is
in material compliance in all respects with all applicable Laws, and Uniroyal-
CA has not received any written notice of any alleged breach by the Business
of any Laws.
(l) Technology and Registrations.
(i) Uniroyal-CA owns or possesses valid and binding licenses or other rights
to use, whether or not registered, the Technology and Registrations.
(ii) Schedule 4.1(l) sets forth a complete and accurate list of all
registered Technology, applications to register Technology and the
Registrations (identifying those owned and those licensed), including all
Canadian, provincial and foreign registrations or applications for
registration thereof and all agreements (including without limitation,
agreements pursuant to which Uniroyal-CA has granted licenses to third parties
to use any Technology or Registration) relating to the Technology, as of the
Closing Date. All actions necessary to maintain the registered Technology and
the Registrations have been taken by Uniroyal-CA. Except as set forth on
Schedule 4.1(l), to Uniroyal-CA's Knowledge as of the Effective Date and as of
the Closing Date, the use by Uniroyal-CA of any of the Technology or
Registrations or the operation of the Business as conducted as of the Closing
does not violate the proprietary rights of any other Person and no claim has
been asserted by any Person with respect to the use of the Technology or
Registrations by Uniroyal-CA or the operation of the Business as conducted as
of the Closing. To Uniroyal-CA's Knowledge as of the Effective Date and as of
the Closing Date, no Person is infringing upon the Technology. To Uniroyal-
CA's Knowledge as of the Effective Date and as of the Closing Date, no Person,
other than Uniroyal-CA, owns or has any proprietary, financial or other
interests in, any Technology or Registrations, except the interests of any
Person from which Uniroyal-CA licensed, sublicensed, was assigned or otherwise
obtained rights to the Technology or Registrations. Except as set forth in
Schedule 4.1(l), as of the Closing Date, Uniroyal-CA is not a party to any
written confidentiality, secrecy or similar agreements with Third Parties in
connection with the Technology or Registrations.
(m) Pending Litigation.
Except as set forth in Schedule 4.1(m), and except with respect
to Environmental Matters (which are the subject of Article 5), there are no
actions, suits, Claims, enforcement actions, or proceedings pending or, to
Uniroyal-CA's Knowledge, no material Claims threatened against Uniroyal-CA in
respect of the Business, whether at law or in equity or before or by any
federal, provincial, municipal or other governmental department, commission,
board, bureau, agency or instrumentality; nor is there outstanding any writ,
order, decree, or injunction applicable to the Business that: (i) calls into
question Uniroyal-CA's authority or right to enter into this Agreement and
consummate the transactions contemplated hereby; or (ii) would otherwise
prevent or delay the transactions contemplated by this Agreement; or (iii)
applies to the conduct of the Business or the ownership or use of the
Contributed Assets.
(n) Books and Records.
The Financial Books and Records are complete and correct in all
material respects. All of the Financial Books and Records have been prepared
and maintained in all material respects in accordance with Canadian GAAP
(except as otherwise stated therein or on Schedule 4.1(n)).
(o) Inventory.
The inventory included in the Contributed Assets and identified
on Schedule 4.1(o) is, and was, acquired and has been maintained in the
ordinary course of business, and is of a good quality, quantity and condition
usable, leasable or saleable in the ordinary course of business, except to the
extent that financial reserves have been recorded against such inventory in
the Financial Statements. For the purposes of the Financial Statements, all
inventory identified on Schedule 4.1(o) has been valued at the Initial Selling
Price (as defined in the Distributor Agreement) for such inventory.
(p) Financial Statements.
Schedule 4.1(p) sets forth the pro forma combined income
statement for the six month period ended June 27, 1998 and the pro forma
combined balance sheet of the Business as of June 27, 1998, which pro forma
income statement and pro forma balance sheet includes all the Contributed
Assets and Assumed Obligations of the Business (the "Financial Statements").
The Financial Statements are prepared in accordance with U.S. GAAP with the
pro forma adjustments identified on Schedule 4.1(p). The Financial Statements
present fairly the Contributed Assets, excluding goodwill, and the Assumed
Obligations as of the date thereof and the pro forma results of operations of
the Business for the period ended on such date, adjusted as if the Partnership
existed and the Contributed Assets and Assumed Obligations had been
transferred to and assumed by the Partnership on December 28, 1997.
(q) Taxes.
Except as set forth on Schedule 4.1(q), as of the Effective
Date and as of the Closing Date, all material returns of Taxes required to be
filed by or for Uniroyal-CA have been timely filed (timely being understood to
include all properly granted extensions) and payment or provision for the
payment of all material Taxes which are shown to have become due pursuant to
such returns has been made and all other Taxes for which Uniroyal-CA has
received a notice of assessment or demand for payment or have otherwise been
made aware of a deficiency have been paid. All such returns or reports are
complete and accurate in all material respects. Uniroyal-CA will file in a
timely manner (timely being understood to include all properly granted
extensions) all returns required to be filed by it with respect to Taxes for
all periods ending on or before the Closing Date or which include the Closing
Date to the extent such returns are not due on or before the Closing Date, and
will pay all Taxes payable by it for all such periods when such Taxes are due.
Uniroyal-CA has withheld or collected and remitted to the appropriate
Governmental Authority, such remittance of all Taxes required by Law to be
withheld or collected. There are no liens for Taxes upon the Contributed
Assets or upon the Business other than those which are being contested in good
faith by appropriate proceedings as described in Schedule 4.1(q).
To Uniroyal-CA's Knowledge, no formal written claim has ever
been made by any non-Canadian authority in a jurisdiction outside Canada where
Uniroyal-CA does not file returns that it might be subject to taxation on its
Business' activities by that jurisdiction.
(r) Accounts Payable and Accounts Receivable.
Except as set forth on Schedule 4.1(r), the Assumed Obligations
will not include any outstanding accounts or monies due to Uniroyal-CA, and
the Contributed Assets will not include any outstanding accounts or monies due
from Uniroyal-CA. The Financial Statements include adequate reserves for
uncollectible accounts receivable of the Business.
(s) Regulatory Approvals.
Other than (i) the Competition Act Approval, (ii)
authorizations, approvals, consents and filings required in connection with
the pension plan matters referred to in Section 6.4, and (iii) consents with
respect to transfer of Licenses and Permits, no governmental or regulatory
authorization, approval, order, consent, or filing is required, including
without limitation, any filings which may be required under the Laws on the
part of Uniroyal-CA in connection with the execution, delivery, and
performance of this Agreement or any agreements and documents to be delivered
under this Agreement or the performance of Uniroyal-CA's obligations under
this Agreement or any other agreements and documents to be delivered under
this Agreement.
(t) Insurance.
Uniroyal-CA maintains such policies of insurance, issued by
responsible insurers, as are appropriate to the Business and the Contributed
Assets, in such amounts and against such risks (including, without limitation,
comprehensive general liability) as are customarily carried and insured
against by Uniroyal-CA. All such policies of insurance are (or will be) in
full force and effect and are not in default as to the payment of premium, the
need to give timely notice, or otherwise, under the terms of any such
policies.
(u) Contributed Products.
(i) The Contributed Products are listed on Schedule 4.1 (u). There has not
been any Occurrence (as defined below), which, individually or in the
aggregate, could reasonably be expected to have a Material Adverse effect; and
there has not been any Recall with respect to any Contributed Products, or, to
Uniroyal-CA's Knowledge, any investigation ongoing or threatened in writing by
any Governmental Authority relating thereto.
(ii) For purposes of this Section 4.1(u), the term "Occurrence" shall mean
any accident, happening or event which is caused or allegedly caused by any
alleged hazard or alleged defect in manufacture or formulation, including any
alleged failure to warn or any breach of express or implied warranties or
representations with respect to, or any such accident, happening or event
otherwise involving, any of the Contributed Products, which resulted or is
alleged to have resulted in injury or death to any person.
(v) No Previous Tax Elections.
Except as provided in Schedule 4.1(v), Uniroyal-CA has not
prior to the Effective Date made any election or designation for the purposes
of the Income Tax Act (Canada) or any relevant provincial taxation statute
that would affect any of the Bayer Assets.
(w) Due Inquiry.
Uniroyal-CA represents and warrants that each of the
individuals listed on Exhibit A has made Due Inquiry.
(x) Location of Contributed Assets.
Except for office equipment and furniture and certain items of
inventory, none of the Contributed Assets have been or are currently located
at the Elmira Complex.
4.2 By Bayer-CA.
Bayer-CA hereby represents and warrants to Uniroyal-CA as follows:
(a) Organization and Qualification.
Bayer-CA is a corporation duly incorporated and validly
existing under the Laws of the jurisdiction of its incorporation. Bayer-CA is
a wholly owned indirect subsidiary of Bayer AG, a corporation organized under
the laws of Germany. Bayer-CA is not a non-resident of Canada within the
meaning of the Income Tax Act (Canada).
(b) Authorization, Consents or Approvals.
Bayer-CA has full power and authority to enter into and perform
this Agreement and the Operative Agreements to which it will be a party, and
has taken all necessary corporate action to authorize the execution and
delivery of this Agreement and the Operative Agreements to which it will be a
party and the performance by Bayer-CA of its obligations hereunder and
thereunder. Bayer-CA has all necessary corporate power, authority and
capacity to own its property and assets and to carry on its business as
presently conducted. This Agreement has been, and the Operative Agreements to
which Bayer-CA will be a party will be, duly executed by Bayer-CA and
constitute legal, valid, binding, and enforceable obligations of Bayer-CA,
enforceable against Bayer-CA in accordance with their terms, except to the
extent that such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization and similar laws of general application relating to
or affecting creditors' rights generally and general principles of equity,
regardless of whether such enforceability is considered in a proceeding in
equity or at law. The execution and delivery of this Agreement and the
Operative Agreements to which it will be a party and the consummation by
Bayer-CA of the transactions contemplated herein or hereby or therein or
thereby, do not and will not on the Closing Date (i) conflict with or violate
any of the terms of Bayer-CA's Articles of Incorporation or By-laws; (ii)
conflict with, or result in a breach of any of the terms of, or result in the
acceleration of any indebtedness or obligations under, any agreement,
obligation, or instrument by which Bayer-CA is bound or to which any property
of Bayer-CA is subject, or constitute a default thereunder; (iii) result in
the violation by Bayer-CA of any Laws to which Bayer-CA or any assets of
Bayer-CA may be subject which would Materially Adversely affect the
transactions contemplated herein; (iv) result in the creation of any Lien on
any of the Contributed Assets; or (v) conflict with or result in or constitute
a default (with or without notice or lapse of time, or both) under or breach
of violation of or ground for termination of, any license, permit or other
Governmental Authority authorization which is part of the Contributed Assets;
provided, however, that the consummation of the transactions contemplated by
this Agreement and the Operative Agreements is subject to the requirements of
the Competition Act, and all other applicable antitrust statutes and
expiration of applicable waiting periods in connection therewith. Except for
the Competition Act Approval and as set forth in Schedule 4.2(b), no
authorization, consent or approval of any Governmental Authority or any other
person is necessary or required in connection with the execution and delivery
by Bayer-CA of this Agreement or the Operative Agreements to which it will be
a party or the performance by Bayer-CA of Bayer-CA's obligations hereunder or
thereunder.
(c) Bayer Assets
Bayer-CA has not subjected the Bayer Assets to any Liens, and
upon transfer of the Bayer Assets to the Partnership in accordance with
Section 2.2, the Bayer Assets will be free and clear of any and all Liens
other than the Bayer Assumed Obligations and any other Liens which may be
attached to the Bayer Assets at the time the Bayer Assets are received from
Uniroyal-CA pursuant to Section 2.1.
(d) Title to Bayer Assets
Bayer-CA has not sold, transferred, assigned or delivered, or
agreed to sell, transfer, assign or deliver, any of the Bayer Assets except
pursuant to this Agreement. Upon transfer of the Bayer Assets to the
Partnership in accordance with Section 2.2, Bayer-CA will sell, transfer,
assign and deliver to the Partnership all right, title and interest in the
Bayer Assets which it received from Uniroyal-CA pursuant to Section 2.1.
ARTICLE 5. ENVIRONMENTAL MATTERS
5.1 Environmental.
Notwithstanding anything to the contrary in this Agreement, the
representations and warranties set forth in this Section 5.1 are the exclusive
representations and warranties of Uniroyal-CA concerning any and all
Environmental Matters. Uniroyal-CA represents and warrants to Bayer-CA that
as of the Closing Date:
(a) Schedule 5.1 sets forth a list of all judicial or administrative
proceedings (including without limitation, arbitrations, mediations, and
correspondence with any Governmental Authority) related to the ownership
and/or operation of the Business or the Contributed Assets in which Uniroyal-
CA is or in the last five (5) years has been a party before any Governmental
Authority relating to Environmental Matters, the disposition of which may
result in: (i) Environmental Liability against Uniroyal-CA in an amount
exceeding the De Minimis Amount; (ii) interruption of the Business for longer
than twenty-four (24) hours; (iii) the making of a capital expenditure in
excess of the De Minimis Amount; or (iv) the impairment of the utility of, or
the diminution in the value of the Business or the Contributed Assets, which
impairment or diminution exceeds the De Minimis Amount.
(b) Except as set forth in Schedule 5.1, the Business is, and to Uniroyal-
CA's Knowledge, in the past has been, in substantial compliance with all
Environmental Laws applicable to the operation of the Business and the
Contributed Assets.
(c) Except as set forth on Schedule 5.1, in connection with the ownership
and/or operation of the Business and the Contributed Assets, Uniroyal-CA
currently possesses, currently is in compliance with, and to Uniroyal-CA's
Knowledge in the past has substantially complied in all material respects
with, the terms of all Environmental Permits and other approvals necessary to
operate the Business.
(d) Except as disclosed on Schedule 5.1, to Uniroyal-CA's Knowledge, no
location currently owned, operated or leased by Uniroyal-CA and utilized in
connection with the ownership and/or operation of the Business or the
Contributed Assets is the subject of any enforcement action or other
investigation by any Governmental Authority or other Third Party that may lead
to Environmental Liability against the Partnership or Uniroyal-CA that exceeds
the De Minimis Amount.
(e) Except as disclosed on Schedule 5.1, to Uniroyal-CA's Knowledge and
without making any external due inquiry or investigation or conducting any
site visits or audits, no Off-Site Location is the subject of any enforcement
action or other investigation by any Governmental Authority or other Third
Party that may lead to Environmental Liability against the Partnership or
Uniroyal-CA in an amount that exceeds the De Minimis Amount.
(f) Except with respect to Environmental Matters referenced or identified in
Schedule 5.1:
(i) Uniroyal-CA has not received any written request for information, notice,
demand letter, administrative inquiry, or formal notice of claim from a
Governmental Authority or Third Party concerning On-Site Contamination that
may lead to Environmental Liability against the Partnership or Uniroyal-CA in
respect of the Business exceeding the De Minimis Amount; and
(ii) Uniroyal-CA has not received any written request for information,
notice, demand letter, administrative inquiry or formal notice of claim from a
Governmental Authority or other Third-Party concerning Contamination at an
Off-Site Location that may lead to Environmental Liability against the
Partnership in respect of the Business exceeding the De Minimis Amount.
(g) Except as set forth in Schedule 5.1, to Uniroyal-CA's Knowledge there are
no underground storage tanks located on any of the Contributed Assets.
(h) To Uniroyal-CA's Knowledge, there are no Environmental Permits needed by
Uniroyal-CA or that are required by Environmental Laws in order to operate
the Business as currently operated by Uniroyal-CA, other than those set forth
in Schedule 5.1.
(i) To Uniroyal-CA's Knowledge, the execution and delivery of this Agreement
and the consummation by Uniroyal-CA of the transactions contemplated herein or
hereby will not result in a violation by Uniroyal-CA of any Environmental Law
to which the Business or any Contributed Assets may be subject; provided,
however, that except as set forth in Schedule 5.1, no authorization, consent,
or approval of any Governmental Authority is necessary or required under any
Environmental Law in connection with the execution and delivery by Uniroyal-CA
of this Agreement and the performance by Uniroyal-CA of its obligations
hereunder.
(j) To Uniroyal-CA's Knowledge, other than in connection with the transfer of
Environmental Permits and except as set forth in Schedule 5.1, no governmental
or regulatory authorization, approval, order, consent, or filing is required
under Environmental Laws on the part of Uniroyal-CA in connection with the
execution or delivery of this Agreement or any agreements and documents to be
delivered under this Agreement or the performance of Uniroyal-CA's obligations
under this Agreement or any other agreements and documents to be delivered
under this Agreement.
(k) Notwithstanding anything to the contrary in this Section 5.1, Uniroyal-CA
makes no representations or warranties regarding Uniroyal-CA's compliance with
Environmental Laws from and after the Closing Date.
ARTICLE 6. COVENANTS PRIOR TO CLOSING
6.1 Covenants of Uniroyal-CA.
(a) Uniroyal-CA hereby covenants that, except as otherwise previously
consented to in writing by Bayer-CA, from and after the Effective Date until
the Closing or the earlier termination of this Agreement, Uniroyal-CA will
carry on the Business in all material respects in the ordinary course thereof
in substantially the same manner as heretofore conducted and in compliance in
all material respects with all applicable Laws and Environmental Laws and, to
the extent consistent therewith, use all reasonable commercial efforts to
preserve intact the current Business organizations, use all reasonable efforts
to keep available the services of the current officers and other key employees
of the Business and preserve their relationships with those Persons having
business dealings with them to the end that the goodwill and ongoing
businesses of the Business will be materially unimpaired at the Closing.
Without limiting the generality or effect of the foregoing:
(b) Except with the prior written consent of Bayer-CA, which consent will not
be unreasonably withheld, conditioned or delayed:
(i) No material contract, lease, license, obligation, indebtedness,
commitment, purchase or sale will be entered into, assumed or made by
Uniroyal-CA in respect of the Business, except in the ordinary course of the
Business;
(ii) Uniroyal-CA will not enter into or assume any mortgage, pledge,
conditional sale or other title retention agreement in respect of the
Business, or permit any Lien to be placed upon any of the Contributed Assets,
whether now owned or hereafter acquired (other than Liens arising by operation
of Law or Environmental Law in the ordinary course of the Business); and
(iii) No Lease or material Contract will be terminated or amended, nor will
any consent or approval that is requested from Uniroyal-CA thereunder be
given, except in the ordinary course of the Business.
(c) Except as set forth on Schedule 6.1(c), prior to Closing, Uniroyal-CA,
with respect to the Business, shall not: (i) change its accounting methods,
principles or practices; (ii) revalue any of its assets, including, without
limitation, writing down the value of inventory or writing off notes or
accounts receivable, other than in the ordinary course of the Business; (iii)
establish or increase any bonus, insurance, severance, deferred compensation,
pension, retirement, profit sharing, membership interests option (including,
without limitation, the granting of membership interests awards), employee
benefit plan, or otherwise increase the compensation payable or to become
payable to any officers or key employees of the Business, except in the
ordinary course of business consistent with past practice or as may be
required by Law; (iv) enter into any employment or severance agreement with
any of its employees or establish, adopt or enter into any collective
bargaining agreement; (v) enter into any contracts with suppliers and
customers other than in the ordinary course of the Business; or (vi) authorize
or commit or agree to take any of the foregoing actions.
6.2 Cooperation.
Uniroyal-CA and Bayer-CA agree (a) to cooperate with each other in
determining whether any filings are required to be made or consents required
to be obtained in any jurisdiction in connection with the consummation of the
transactions contemplated hereby and in making or causing to be made any such
filings promptly and in seeking to obtain in a timely manner any such
consents; and (b) to use all reasonable efforts to obtain promptly the
satisfaction of the conditions to the Closing of the transactions contemplated
herein. Uniroyal-CA and Bayer-CA shall furnish to each other and to each
other's counsel all such information as may be reasonably required in order to
effectuate the foregoing. Uniroyal-CA and Bayer-CA shall cooperate, as may be
necessary, with respect to their respective filings made pursuant to the
Competition Act and all other filings made under applicable antitrust
statutes. Uniroyal-CA and Bayer-CA shall bear equally all filing fees in
respect of the Competition Act and all other filings under applicable
antitrust statutes and all filing fees required by applicable Environmental
Laws. Until the Closing or early termination of this Agreement, Uniroyal-CA
agrees to cooperate with any reasonable request for access during the
Business' normal business hours to the offices, properties, records and
personnel of the Business, provided that Bayer-CA shall not unreasonably
interfere with such Business' activities and that such access is subject to
all applicable confidentiality obligations of Uniroyal-CA.
6.3 No Solicitation.
Prior to the Closing or earlier termination of this Agreement,
neither Uniroyal-CA nor its employees, officers, agents or representatives,
shall directly or indirectly (a) solicit, initiate or encourage any inquiries,
proposals or offers from any Person relating to any acquisition or purchase of
all or a material amount of the Contributed Assets or any ownership interest
in the Business, or (b) with respect to any effort or attempt by any other
Person to do or seek any of the foregoing (i) participate in any discussions
or negotiations related to the foregoing, (ii) furnish to any other Person any
Confidential Information with respect to the Contributed Assets or the
Business, or (iii) otherwise cooperate in any way with, or assist or
participate in, or facilitate or encourage any such effort.
6.4 Pension and Employee Benefit Matters.
(a) Uniroyal-CA and Bayer-CA shall cause the Partnership to offer employment,
effective from the Closing Date, to all Employees on terms and conditions of
employment, including salary, incentive compensation and benefits, which for
each such Employee are no less favourable than those being received by such
Employee immediately prior to Closing. Uniroyal-CA and Bayer-CA shall cause
the Partnership to recognize the service of the Employees with Uniroyal-CA and
its Affiliates up to the Closing Date for all purposes to the extent that such
service was recognized by Uniroyal-CA and its Affiliates.
(b) Effective as at the Closing, the Employees shall cease to participate in,
and accrue benefits under, the Pension Plan and shall commence participation
in the New Pension Plan as at that date.
(c) As soon as practicable after the Closing, but effective as of the
Closing, Bayer-CA and Uniroyal-CA shall cause the Partnership to establish and
register with the relevant regulatory authorities the New Pension Plan which
shall provide benefits to the Employees on the same terms and conditions as
provided under the defined contribution component of the Pension Plan
immediately prior to the Closing.
(d) The New Pension Plan shall assume, as at the Closing, the liabilities
under the Pension Plan in respect of pension and other benefits which have
accrued on behalf of the Employees under the Pension Plan up to the Closing,
calculated on a basis to be determined by the actuary for the Pension Plan,
all in accordance with applicable Law (the "Pension Liabilities"). Uniroyal-
CA shall make application to the applicable Governmental Authorities for their
approval to transfer assets out of the Pension Plan to the New Pension Plan in
an amount equal to the Pension Liabilities and shall transfer such assets as
may be approved by the applicable Governmental Authorities (the "Transferred
Assets") as soon as reasonably practicable after such approval is obtained
(the "Transfer Date").
(e) Effective as of the Closing, the Employees shall cease to participate
in, and accrue benefits under, the Employee Benefit Plans and shall commence
participation in benefits plans which Bayer-CA and Uniroyal-CA shall cause the
Partnership to establish which shall provide benefits on the same terms and
conditions, or otherwise on a basis which is not less favourable in the
aggregate, as those provided to the Employees under the Employee Benefit Plans
immediately prior to the Closing. Employees who are not participants in the
Employee Benefit Plans as at the Closing shall become participants in the new
benefit plans established by the Partnership in accordance with, and subject
to, the membership eligibility and coverage requirements thereof.
(f) Uniroyal-CA shall retain responsibility under the Employee Benefit Plans
for all amounts payable by reason of or in connection with any and all
reported and unreported claims incurred and filed by the Employees on or prior
to the Closing. Bayer-CA and Uniroyal-CA shall cause the Partnership to
assume responsibility under its benefit plans for any and all claims of the
Employees which relate to claims that are incurred with respect to events
after the Closing.
(g) Bayer-CA and Uniroyal-CA shall cause the Partnership to credit the
Employees with all service accrued while employed by Uniroyal-CA for all
purposes including, without limitation, all pension and employee benefit
purposes.
(h) From the Closing until the Transfer Date, Uniroyal-CA, on behalf of and
at the expense of the Partnership, shall cause the funding agent of the
Pension Plan to accept and record as required, all employer and employee
contributions and disbursements (return of contributions or other periodic or
lump sum benefit payments and pro-rata trustee expenses) relating to the
Employees in respect of and on behalf of the New Pension Plan. The amount of
such credits and disbursements shall be added to or deducted from, as the case
may be, the Transferred Assets.
(i) From the Closing until the Transfer Date, Uniroyal-CA shall ensure that
all funds held by the funding agent of the Pension Plan are invested in
accordance with all applicable laws and pursuant to such investment elections
made by the Employees pursuant to the terms of the Pension Plan, and Uniroyal-
CA will not change the investment of such funds from the manner in which they
are invested as of the Closing without the prior agreement of the Partnership.
(j) Subject to adjustment to comply with any minimum interest rates on
transferred pension assets stipulated by the applicable regulatory
authorities, applicable pension legislation and rules or regulations
thereunder, interest and investment returns shall be credited on that portion
of the Transferred Assets referable to the Employees under the Pension Plan
from the Closing to the Transfer Date and shall be computed based on
individual member accounts in accordance with the terms of the Pension Plan
from the Closing until the end of the last month preceding the Transfer Date.
(k) The Partnership shall not hold Uniroyal-CA responsible or liable for the
actions of Uniroyal-CA in administering the Pension Plan after the Closing and
following the Transfer Date, and neither Uniroyal-CA nor the Pension Plan
shall have any further obligation or liability with respect to the pension
entitlement of the Employees.
(l) Notwithstanding paragraphs (e) and (f), Uniroyal-CA and Bayer-CA agree
that the Employees shall continue participation in the Employee Benefit Plans
until such time as the Partnership establishes its own benefit plans for the
Employees (the "Interim Period"). Uniroyal-CA agrees to take such action and
to make any contributions and to pay any claims on behalf of the Employees as
is necessary to ensure the continued participation of the Employees in the
Employee Benefit Plans during the Interim Period. Bayer-CA and Uniroyal-CA
agree to cause the Partnership to indemnify and to hold harmless Uniroyal-CA
with respect to any and all contributions made by Uniroyal-CA to the Employee
Benefit Plans during the Interim Period, any and all claims paid by Uniroyal-
CA under the Employee Benefit Plans on behalf of the Employees during the
Interim Period, as well as any and all administrative costs to Uniroyal-CA
relating to the continued participation of the Employees in the Employee
Benefit Plans during the Interim Period.
ARTICLE 7. CLOSING
7.1 Conditions to Obligations of Bayer-CA.
The obligations of Bayer-CA under this Agreement, including without
limitation, the obligation to consummate and effect the purchase of the Bayer
Assets, the assumption of the Bayer Assumed Obligations and the formation of
the Partnership, shall be subject to satisfaction of the following conditions,
unless waived by Bayer-CA:
(a) Uniroyal-CA shall have performed in all material respects all agreements,
and satisfied in all material respects all conditions on its part to be
performed or satisfied hereunder at or prior to the Closing Date.
(b) As of the Closing Date, all representations and warranties of Uniroyal-CA
herein shall have been true and correct when made, shall have continued to
have been true and correct at all times subsequent thereto, and shall be true
and correct on and as of the Closing Date as though made on, as of and with
reference to such date.
(c) All consents, approvals, certificates and authorizations required to be
obtained by Uniroyal-CA and Bayer-CA in connection with the sale of the Bayer
Assets to Bayer-CA and the contribution to the Partnership of the Contributed
Assets, including without limitation, all approvals by and clearances from all
Governmental Authorities, lenders, and other third parties, shall have been
obtained, including without limitation Competition Act Approval, but excluding
the registrations, consents, approvals, certificates and authorizations
required in connection with the pension plan matters referred to in Section
6.4.
(d) Uniroyal-CA shall have obtained written consents to the sale of the Bayer
Assets to Bayer-CA and the contribution to the Partnership of the Contributed
Assets for each Lease or Contract listed on Schedule 4.1(e) or Schedule 4.1(f)
with respect to which a consent is required in connection with the
consummation of the transactions contemplated by this Agreement.
(e) Since June 27, 1998, except as set forth in Schedule 7.1(e), there shall
not have occurred any Material Adverse change with respect to the Business.
(f) Uniroyal-CA shall have executed and delivered the Uniroyal-Bayer
Transfer, Assignment and Assumption Agreement in the form attached hereto as
Exhibit I.
(g) The Partnership shall have obtained all material Licenses and Permits
necessary for the operation of the Business after the Closing.
(h) The Closing shall have occurred by the date determined in accordance with
Section 2.5, but in no event later than December 31, 1998.
(i) Bayer-CA shall have received all of the deliveries required pursuant to
Section 7.5.
(j) All Operative Agreements to which Uniroyal-CA is a party shall have been
authorized by and executed and delivered by Uniroyal-CA.
(k) Uniroyal-CA shall have executed and delivered the Partnership Agreement
in the form attached hereto as Exhibit B.
(l) Uniroyal-CA shall have delivered to Bayer-CA an Incumbency and Specimen
Signature Certificate for Uniroyal-CA.
(m) Uniroyal-CA shall have executed and delivered the Uniroyal Transfer,
Assignment and Assumption Agreement in the form attached hereto as Exhibit K.
(n) The Partnership shall have assumed the Assumed Obligations as
contemplated by this Agreement.
(o) C&K shall have executed and delivered to Bayer Corporation the Letter
Agreement dated as of the Effective Date, together with all certificates
required therein to be provided (the "C&K Letter Agreement").
7.2 Conditions to Obligations of Uniroyal-CA.
The obligations of Uniroyal-CA under this Agreement, including
without limitation, the obligation to consummate and effect the sale of the
Bayer Assets and the formation of the Partnership, shall be subject to
satisfaction of each of the following conditions, unless waived by Uniroyal-
CA:
(a) Bayer-CA shall have performed in all material respects all agreements,
and satisfied in all material respects all conditions on its part to be
performed or satisfied hereunder at or prior to the Closing Date.
(b) As of the Closing Date, all of the representations and warranties of
Bayer-CA herein shall have been true and correct when made, shall have
continued to have been true and correct at all times subsequent thereto, and
shall be true and correct on and as of the Closing Date as though made on, as
of, and with reference to such date.
(c) All consents, approvals and authorizations required to be obtained by
Uniroyal-CA and Bayer-CA in connection with the sale of the Bayer Assets to
Bayer-CA and the contribution to the Partnership of the Contributed Assets,
including without limitation all approvals by and clearances from all
Governmental Authorities, lenders, and other third parties, shall have been
obtained, including without limitation Competition Act Approval, but excluding
the registrations, consents, approvals and authorizations required in
connection with the pension plan matters referred to in Section 6.4.
(d) Bayer-CA shall have assumed the Bayer Assumed Obligations and delivered
the Purchase Price in accordance with Sections 2.1 and 3.1 and the other
deliveries required pursuant to Section 7.4.
(e) All Operative Agreements to which Bayer-CA is a party shall have been
authorized by and executed and delivered by Bayer-CA.
(f) Bayer-CA shall have executed and delivered the Partnership Agreement in
the form attached hereto as Exhibit B.
(g) The Partnership shall have obtained all material Licenses and Permits
necessary for the operation of the Business after the Closing.
(h) Uniroyal-CA shall have received all of the deliveries required pursuant
to Section 7.4.
(i) The Closing shall have occurred by the date determined in accordance with
Section 2.5, but in no event later than December 31, 1998.
(j) Bayer AG shall have executed and delivered to C&K the Letter Agreement
dated as of the Effective Date, together with all certificates required
therein to be provided (the "Bayer Letter Agreement").
(k) Bayer-CA shall have delivered to Uniroyal-CA an Incumbency and Specimen
Signature Certificate for Bayer-CA.
(l) Bayer-CA shall have executed and delivered the Bayer Transfer, Assignment
and Assumption Agreement in the form attached hereto as Exhibit J.
(m) The Partnership shall have assumed the Assumed Obligations as
contemplated by this Agreement.
7.3 Additional Conditions to Obligations.
The obligations of Uniroyal-CA and Bayer-CA to consummate and effect
the transactions contemplated by this Agreement shall be subject to
satisfaction of the following additional conditions, unless waived by
Uniroyal-CA and Bayer-CA: (a) Competition Act Approval shall have been
obtained and shall not be subject to any condition which is unduly burdensome
to either Uniroyal-CA or Bayer-CA; (b) no injunction or temporary restraining
order shall have been granted restraining or prohibiting the consummation of
the transactions contemplated by this Agreement; and (c) no action, suit or
other proceeding instituted by any Governmental Authority seeking such an
injunction or order shall be pending or threatened.
7.4 Bayer-CA's Closing Deliveries.
At the Closing, Bayer-CA will deliver to Uniroyal-CA, in form and
substance reasonably satisfactory to Uniroyal-CA and consistent with this
Agreement:
(a) The Purchase Price as set forth in Section 3.1 hereof, the executed
Partnership Agreement in the form of Exhibit B hereto and the appointments of
the three (3) Representatives designated by Bayer-CA.
(b) The Operative Agreements to which Bayer-CA is a party in the form of
Exhibit B and Exhibit H hereto, executed by an authorized officer of Bayer-CA.
(c) Copies of resolutions adopted by the Board of Directors of Bayer-CA
authorizing the execution and delivery of, and performance of Bayer-CA's
obligations under, this Agreement, certified by the Secretary or an Assistant
Secretary of Bayer-CA.
(d) A Certificate of Compliance for Bayer-CA issued by the relevant
Governmental Authority of the jurisdiction of its incorporation and dated not
more than ten (10) business days prior to the Closing Date.
(e) A certificate of an authorized officer of Bayer-CA certifying and
warranting that the representations, warranties and agreements of Bayer-CA
contained in this Agreement are true and accurate as of the Closing Date and
that Bayer-CA has satisfied and performed in all material respects all of its
obligations hereunder.
(f) A certificate of an authorized officer of Bayer-CA certifying and
warranting that Bayer-CA is not a non-resident of Canada within the meaning of
the Income Tax Act (Canada).
(g) Written opinions of counsel to Bayer-CA, dated as of the Closing Date, in
the forms of Exhibit C hereto.
(h) Evidence of any authorization, consent, approval or filing with any
public body or Governmental Authority or any other Person necessary in
connection with this Agreement.
(i) Incumbency and Specimen Signature Certificate for Bayer-CA.
(j) The Bayer Letter Agreement executed by Bayer AG.
(k) The executed Bayer Transfer, Assignment and Assumption Agreement in the
form of Exhibit J hereto.
7.5 Uniroyal-CA's Closing Deliveries.
At the Closing, Uniroyal-CA will deliver to Bayer-CA, in form and
substance reasonably satisfactory to Bayer-CA and consistent with this
Agreement:
(a) The executed Partnership Agreement in the form of Exhibit B hereto.
(b) The Operative Agreements to which Uniroyal-CA is a party in the form of
Exhibit B, Exhibit G, and Exhibit H hereto, executed by an authorized officer
of Uniroyal-CA.
(c) Copies of resolutions adopted by the Board of Directors of Uniroyal-CA
authorizing the execution and delivery of, and performance of Uniroyal-CA's
obligations under, this Agreement, certified by the Secretary or an Assistant
Secretary of Uniroyal-CA.
(d) A Certificate of Status for Uniroyal-CA issued by the relevant
Governmental Authority of the jurisdiction of its incorporation and dated not
more than ten (10) business days prior to the Closing Date.
(e) A certificate of an authorized officer of Uniroyal-CA, certifying and
warranting that the representations, warranties and agreements of Uniroyal-CA
contained in this Agreement are true and accurate as of the Closing Date and
that Uniroyal-CA has satisfied and performed in all material respects all of
its respective obligations hereunder.
(f) A certificate of an authorized officer of Uniroyal-CA certifying and
warranting that Uniroyal-CA is not a non-resident of Canada within the meaning
of the Income Tax Act (Canada).
(g) Written opinions of counsel to Uniroyal-CA, dated the Closing Date
substantially in the forms of Exhibit D hereto.
(h) Evidence of any authorization, consent, approval or filing with any
public body or Governmental Authority or any other Person necessary in
connection with this Agreement.
(i) Incumbency and Specimen Signature Certificate for Uniroyal-CA.
(j) The executed Uniroyal-Bayer Assignment and Assumption Agreement and
Uniroyal Transfer, Assignment and Assumption Agreement, in the form of Exhibit
I and Exhibit K, respectively
(k) The C&K Letter Agreement executed by C&K.
ARTICLE 8. FURTHER ASSURANCES
8.1 Cooperation
If Closing occurs hereunder, then from and after the Closing Date,
the parties hereto each covenants that it will cooperate with the other and
execute and deliver to the other parties hereto such other instruments and
documents and take such other actions as may be reasonably requested from time
to time by any other party hereto as necessary to carry out, evidence and
confirm the intended purposes of this Agreement.
ARTICLE 9. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
9.1 Survival.
The representations and warranties of Uniroyal-CA and Bayer-CA set
forth in this Agreement, the Closing Agreements, and the covenants and
obligations of Uniroyal-CA and Bayer-CA set forth in this Agreement or in the
Closing Agreements, shall survive the Closing, for the periods set forth in
Sections 9.2 and 9.3 herein.
9.2 Indemnification by Uniroyal-CA.
(a) Subject to and as limited by the provisions of this Section 9.2,
Uniroyal-CA agrees to defend, indemnify and hold harmless the Partnership and
Bayer-CA and their respective officers, directors, agents and employees
(individually, a "Bayer Indemnitee" and collectively the "Bayer Indemnitees")
from and against any and all Losses, suffered by a Bayer Indemnitee, as a
result of or in connection with:
(i) any breach, misrepresentation or inaccuracy of any representation or
warranty made by Uniroyal-CA in or pursuant to this Agreement or any Closing
Agreements;
(ii) any liabilities (other than Assumed Obligations and Taxes) of Uniroyal-
CA, including without limitation an Excluded Obligation, which become
liabilities of the Partnership or Bayer-CA;
(iii) any breach of any covenant, agreement or obligation made or to be
performed by Uniroyal-CA under or pursuant to this Agreement or any Closing
Agreements;
(iv) any Taxes, assessed against the Partnership or Uniroyal-CA in respect of
the Business or the Contributed Assets in respect of any taxation year ended
on or before the day immediately prior to the Closing Date, which were not
expressly included as a Assumed Obligation; and
(v) any failure of Uniroyal-CA to transfer the Bayer Assets and Bayer Assumed
Obligations to Bayer-CA, or any failure to transfer the Uniroyal Assets and
the Uniroyal Assumed Obligations to the Partnership, in each case, in
accordance with this Agreement.
(b) Notwithstanding Section 9.2(a), Uniroyal-CA shall not be required to
indemnify the Bayer Indemnitees under Section 9.2(a), unless such right to
indemnification is asserted by a Bayer Indemnitee (whether or not such Losses
have actually been incurred) by written notice to Uniroyal-CA, describing with
reasonable specificity the facts giving rise to the asserted right, within the
following time periods:
(i) with respect to any failure of Uniroyal-CA to cause the transfer of the
Bayer Assets and Bayer Assumed Obligations to Bayer-CA, or to transfer the
Uniroyal Assets and Uniroyal Assumed Obligations to the Partnership, in
accordance with this Agreement, or with respect to any failure of the
Partnership to pay, perform, satisfy and discharge the Bayer Assumed
Obligations, or with respect to any fraud or intentional misrepresentation
made by Uniroyal-CA, or with respect to a breach of the representations and
warranties contained in Sections 4.1(a)(ii), (d) and (e)(i), or with respect
to any Excluded Obligation, there shall be no limitation on the time for
making a claim;
(ii) with respect to any Taxes assessed against the Business or the
Contributed Assets due in respect of any taxation year ended before the
Closing Date which were not expressly included as an Assumed Obligation,
within the period that commences on the date hereof and ends thirty (30) days
following the period within which any relevant taxing authority may assess or
reassess the Partnership, the Business or any relevant Bayer Indemnitee in
connection with such Taxes, including all extensions thereof agreed to with
tax authorities; and
(iii) with respect to all other matters covered by Section 9.2(a), on or
before the date which is two (2) years after the Closing Date.
(c) Notwithstanding Section 9.2(a) and (b) Uniroyal-CA: (i) shall not be
required to indemnify the Bayer Indemnitees pursuant to Section 9.2(a) with
respect to any individual Losses in the De Minimis Amount, or with respect to
the first TWO HUNDRED FIFTY THOUSAND UNITED STATES DOLLARS (US$250,000) of
such Losses, calculated on a cumulative basis and not on a per individual
basis and excluding all De Minimis Amounts (the "Threshold Amount"); and (ii)
shall indemnify Bayer-CA and the Partnership pursuant to Section 9.2(a) for up
to the next FIFTY MILLION UNITED STATES DOLLARS (US$50,000,000) of Losses, to
the extent in excess of the Threshold Amount. Except as provided by Section
9.2(d), Uniroyal-CA's aggregate indemnification obligations pursuant to
Section 9.2(a) shall in no event exceed FIFTY MILLION UNITED STATES DOLLARS
(US$50,000,000) (the "Indemnification Cap").
(d) Notwithstanding Section 9.2(c), the De Minimis Amount, the Threshold
Amount and the Indemnification Cap shall not apply to Losses with respect to
(i) the failure of Uniroyal-CA to transfer the Bayer Assets and Bayer Assumed
Obligations to Bayer-CA or to transfer the Uniroyal Assets and the Uniroyal
Assumed Obligations to the Partnership; (ii) the failure of the Partnership to
pay, perform, satisfy and discharge the Bayer Assumed Obligations; (iii) any
fraudulent or intentional misrepresentation, covenant or agreement made or to
be performed by Uniroyal-CA; (iv) any breach by Uniroyal-CA of the covenants
in Sections 3.1 or 3.2 hereof; or (v) any Claims related to Excluded
Obligations.
(e) The amounts for which Uniroyal-CA shall be liable under this Section 9.2
shall be net of any insurance proceeds actually received by Bayer-CA, its
Affiliates or the Partnership in connection with the amounts or the facts
giving rise to the right of indemnification. The amounts for which Uniroyal-
CA shall be liable under Section 9.2 shall also include reasonable legal fees
and all other costs and expenses incurred by the Partnership or Bayer-CA in
enforcing their rights to indemnification hereunder.
(f) Notwithstanding anything in this Article 9 to the contrary, Uniroyal-CA
shall have no obligation to indemnify Bayer-CA for Losses suffered by Bayer-CA
solely as a result of Bayer-CA's ownership of an Interest or Bayer-CA's status
as a Partner to the extent the Partnership has been indemnified hereunder with
respect to the underlying Losses.
(g) As between Bayer-CA and the Partnership on the one hand, and Uniroyal-CA
on the other hand, the remedies set forth in this Article 9 shall be the sole
and exclusive remedies with respect to this Agreement and the transactions
provided for herein or contemplated hereby; provided, however that this
Section 9.2(g) shall not restrict the rights of either party to seek and
obtain injunctive relief to specifically enforce the other party's obligations
or to seek and obtain relief for fraud. Without limiting the generality of the
foregoing, Bayer-CA agrees that after the Closing, the right to
indemnification under Section 9.2(a) for breach of the representations and
warranties set forth in Article 5 shall constitute its sole recourse against
Uniroyal-CA with respect to representations and warranties made regarding
Environmental Matters, and that Bayer-CA and the Partnership shall have no
other right of indemnification or any other right or remedy against Uniroyal-
CA with respect to any Environmental Matters arising from the Partnership,
this Agreement, the transactions contemplated thereby, or the Contributed
Assets or facilities of the Business or the Partnership except for the
indemnification rights set forth above in this Section 9.2, and Bayer-CA does
hereby waive and release, and agrees with Uniroyal-CA to cause the Partnership
to waive and release, Uniroyal-CA from all Claims, demands, causes of action,
liabilities, costs or expenses with respect to Environmental Matters.
9.3 Indemnification by Bayer-CA.
(a) Subject to and as limited by the provisions of this Section 9.3, Bayer-
CA agrees to defend, indemnify and hold harmless the Partnership and Uniroyal-
CA and their respective officers, directors, agents and employees
(individually, a "Uniroyal Indemnitee" and collectively the "Uniroyal
Indemnitees") from and against any and all Losses, suffered by the Uniroyal
Indemnitee, as a result of or in connection with:
(i) any breach, misrepresentation or inaccuracy of any representation or
warranty made by Bayer-CA in or pursuant to this Agreement or any Closing
Agreements;
(ii) any liabilities (other than Bayer Assumed Obligations) of Bayer-CA which
become liabilities of the Partnership or Uniroyal-CA;
(iii) any breach of any covenant, agreement or obligation made or to be
performed by Bayer-CA under or pursuant to this Agreement or any Closing
Agreements; and
(iv) any failure of Bayer-CA to transfer the Bayer Assets and Bayer Assumed
Obligations to the Partnership in accordance with this Agreement.
(b) Notwithstanding Section 9.3(a), Bayer-CA shall not be required to
indemnify the Uniroyal Indemnitees under Section 9.3 (a), unless such right to
indemnification is asserted by a Uniroyal Indemnitee (whether or not such
Losses have actually been incurred) by written notice to Bayer-CA, describing
with reasonable specificity the facts giving rise to the asserted right,
within the following time periods:
(i) with respect to any failure of Bayer-CA to transfer the Bayer Assets and
Bayer Assumed Obligations to the Partnership in accordance with this
Agreement, or with respect to any failure of Bayer-CA to pay, perform, satisfy
and discharge the Bayer Assumed Obligations, or with respect to any failure of
the Partnership to pay, perform, satisfy and discharge the Assumed
Obligations, or with respect to any fraud or intentional misrepresentation
made by Bayer-CA, or with respect to a breach of the representations and
warranties contained in Sections 4.2(c) or (d), there shall be no time
limitation on the time for making a claim; and
(ii) with respect to all other matters covered by Section 9.3(a), on a date
which is two (2) years after the Closing Date.
(c) Notwithstanding Section 9.3(a) and 9.3(b), Bayer-CA: (i) shall not be
required to indemnify the Uniroyal Indemnitees pursuant to Section 9.3(a) with
respect to the De Minimis Amount or the Threshold Amount; and (ii) shall
indemnify the Uniroyal Indemnitees pursuant to Section 9.3(a) for the next
FIFTY MILLION UNITED STATES DOLLARS (US$50,000,000) of Losses in excess of the
Threshold Amount. Except as provided by Section 9.3(d), Bayer-CA's aggregate
indemnification obligation pursuant to Section 9.3(a) shall in no event exceed
the Indemnification Cap.
(d) Notwithstanding Section 9.3(c), the De Minimis Amount, the Threshold
Amount and the Indemnification Cap shall not apply to Losses with respect to
(i) the failure of Bayer-CA to transfer the Bayer Assets and Bayer Assumed
Obligations to the Partnership; or (ii) the failure of Bayer-CA to pay,
perform, satisfy and discharge the Bayer Assumed Obligations; or (iii) the
failure of the Partnership to pay, perform, satisfy and discharge the Assumed
Obligations; or (iv) any fraudulent or intentional misrepresentation, covenant
or agreement made or to be performed by Bayer-CA; or (v) any breach by Bayer-
CA of the covenants in Section 3.1 or 3.2 hereof.
(e) The amounts for which Bayer-CA shall be liable under this Section 9.3
shall be net of any insurance proceeds actually received by Uniroyal-CA in
connection with the facts giving rise to the right of indemnification. The
amounts for which Bayer-CA shall be liable under Section 9.3 shall also
include all reasonable legal fees and all other costs and expenses incurred by
the Partnership and Uniroyal-CA in enforcing their rights to indemnification
hereunder.
(f) This Section 9.3 shall be the sole and exclusive remedy of Uniroyal-CA
against Bayer-CA for any claim arising in connection with this Agreement or
the transactions contemplated herein; provided, however that this Section
9.3(f) shall not restrict the rights of Uniroyal-CA to seek and obtain
injunctive relief to specifically enforce Bayer-CA's obligations or to seek
and obtain relief from fraud.
9.4 Procedure for Third Party Claims.
(a) In the event a claim arises that is covered by the indemnity provisions
of Sections 9.2, 9.3 or 9.5 written notice shall be promptly given by the
party seeking indemnification to the indemnifying party. A delay or failure
by a party seeking indemnification to provide such prompt written notice to
the other party of such claim shall not render the indemnification provisions
invalid against such seeking party, except to the extent that the other party
is prejudiced by such delay or failure in its attempt to mitigate or resolve
such claim.
(b) Provided that the indemnifying party admits in writing to the party
seeking indemnification that such claim is covered by the indemnity provisions
of Sections 9.2, 9.3 or 9.5 the indemnifying party shall have the right to
contest and defend by all appropriate legal proceedings such claim and to
control all settlements (unless the party seeking indemnification agrees to
assume the cost of settlement and to forgo such indemnity) and to select lead
counsel to defend any and all such claims at the sole cost and expense of the
indemnifying party; provided, however, that the indemnifying party may not
effect any settlement that could result in any cost, expense or liability to
the party seeking indemnification or subject the party seeking indemnification
to other than monetary damages unless such party consents in writing prior to
such settlement and the indemnifying party agrees to indemnify such party
therefor. The party seeking indemnification may select counsel to participate
in any defense, in which event counsel for the party seeking indemnification
shall be at the sole cost and expense of such party.
(c) Both the indemnifying party and the indemnified party shall cooperate
fully with one another and shall cause the Partnership to cooperate in
connection with the defense, compromise, or settlement of any such claim or
action, including without limitation, by making available to the other all
pertinent information and witnesses within its control.
9.5 Bulk Sales Act Indemnity
(a) It is agreed that Bayer-CA shall not require Uniroyal-CA to comply, or to
assist Bayer-CA to comply, with the requirements of the Bulk Sales Act
(Ontario), Section 6 of the Retail Sales Tax Act (Ontario) or such other
comparable legislation in other provinces as may be applicable to the transfer
of the Bayer Assets. Notwithstanding the foregoing, Uniroyal-CA agrees to
indemnify and save harmless Bayer-CA from and against any Claims which may be
made or brought against Bayer-CA or which Bayer-CA may suffer or incur as a
result of, in respect of, or arising out of such non-compliance.
(b) It is agreed that the Partnership shall not require Bayer-CA to comply,
or to assist the Partnership to comply, with the requirements of the Bulk
Sales Act (Ontario), Section 6 of the Retail Sales Tax Act (Ontario) or such
other comparable legislation in other provinces as may be applicable to the
transfer of the Bayer Assets to the Partnership. Notwithstanding the
foregoing, Bayer-CA shall indemnify and save harmless the Partnership from and
against any Claims which may be made or brought against the Partnership or
which the Partnership may suffer or incur as a result of, in respect of, or
arising out of such non-compliance.
(c) It is agreed that the Partnership shall not require Uniroyal-CA to
comply, or to assist the Partnership to comply, with the requirements of the
Bulk Sales Act (Ontario), Section 6 of the Retail Sales Tax Act (Ontario) or
such other comparable legislation in other provinces as may be applicable to
the transfer of the Uniroyal Assets to the Partnership. Notwithstanding the
foregoing, Uniroyal-CA shall indemnify and save harmless the Partnership from
and against any Claims which may be made or brought against the Partnership or
which the Partnership may suffer or incur as a result of, in respect of, or
arising out of such non-compliance.
9.6 No Waiver of Rights.
Nothing in this Agreement shall be deemed to be a waiver of the
responsibility of the Partnership in respect of transferred Employees in the
course of their employment with the Partnership, including in respect of
liabilities relating to those Employees which are incurred or accrued from and
after the Closing Date.
ARTICLE 10. FINDERS AND BROKERS FEES
Each of the parties represents and warrants that it has dealt with
no broker or finder in connection with any of the transactions contemplated by
this Agreement, and, insofar as it knows, no broker or other Person is
entitled to any compensation including without limitation, a commission or
finder's fee, in connection with any of these transactions. The parties each
agree to indemnify and hold harmless one another against any loss, liability,
damage, cost, claim, or expense incurred by reason of any compensation,
including, without limitation, brokerage, commission, or finder's fee, alleged
to be payable because of any act, omission, or statement of the indemnifying
party.
ARTICLE 11. DEFAULT AND TERMINATION
11.1 Default.
(a) In the event that all the conditions precedent set forth in Sections 7.1
and 7.3 have been satisfied by Uniroyal-CA, or waived by Bayer-CA, on or prior
to the Closing Date, and Bayer-CA is ready, willing and able to proceed with
the Closing, but Uniroyal-CA is unable, unwilling or refuses to consummate the
Closing in accordance with this Agreement, or in the event that Uniroyal-CA is
otherwise in breach of this Agreement, then Bayer-CA may proceed to protect
and enforce its rights pursuant to Section 11.3.
(b) In the event that all the conditions precedent set forth in Sections 7.2
and 7.3 have been satisfied by Bayer-CA, or waived by Uniroyal-CA, on or prior
to the Closing Date, and Uniroyal-CA is ready, willing and able to proceed
with the Closing, but Bayer-CA is unable, unwilling or refuses to consummate
the Closing in accordance with this Agreement, or in the event that Bayer-CA
is otherwise in breach of this Agreement, then Uniroyal-CA may proceed to
protect and enforce its rights pursuant to Section 11.3.
Termination.
11.2 Termination.
In addition to the rights of the parties set forth in Section 2.5:
(a) This Agreement may be terminated at any time prior to the Closing by
mutual written consent of Uniroyal-CA and Bayer-CA.
(b) If on the Closing Date, any one or more conditions precedent to Closing
set forth in Sections 7.1 and 7.3 of this Agreement has not been fulfilled or
satisfied by Uniroyal-CA, or waived by Bayer-CA, then Bayer-CA may, effective
upon notice to Uniroyal-CA, terminate this Agreement.
(c) If on the Closing Date, any one or more conditions precedent to Closing
set forth in Sections 7.2 and 7.3 of this Agreement has not been fulfilled or
satisfied by Bayer-CA, or waived by Uniroyal-CA, then Uniroyal-CA may,
effective upon notice to Bayer-CA, terminate this Agreement.
11.3 Rights on Termination; Waiver.
(a) If this Agreement is terminated pursuant to Section 11.2(a), all further
obligations of the parties under or pursuant to this Agreement shall terminate
without further liability of either party to the other, except as otherwise
provided in this Section 11.3, and except that the obligations contained in
Sections 11.3(e), 12.9 and 12.14 shall survive any such termination.
(b) In the event this Agreement is terminated by Uniroyal-CA pursuant to
Section 11.2(c), as a result of Bayer-CA's failure to satisfy the conditions
precedent to Closing set forth in Sections 7.2 and 7.3, then Uniroyal-CA may
pursue any and all legal and equitable remedies available to it pursuant to
this Agreement as a result of such breach of this Agreement.
(c) In the event that this Agreement is terminated by Bayer-CA pursuant to
Section 11.2(b) as a result of Uniroyal-CA's failure to satisfy the conditions
precedent to Closing set forth in Sections 7.1 and 7.3, then Bayer-CA may
pursue any and all legal and equitable remedies available to it pursuant to
this Agreement as a result of such breach of this Agreement.
(d) If any of the conditions set forth in Section 7.1 and 7.3 have not been
satisfied, Bayer-CA may nevertheless elect to waive such conditions and
proceed with the consummation of the transactions contemplated hereby. If any
of the conditions set forth in Section 7.2 and 7.3 have not been satisfied,
Uniroyal-CA may nevertheless elect to waive such conditions and proceed with
the consummation of the transactions contemplated hereby. Any condition set
forth in Sections 7.1, 7.2 and 7.3 which has not been fulfilled, complied
with, satisfied or performed at or prior to the Closing Date shall be
conclusively deemed waived if Uniroyal-CA and Bayer-CA consummate the Closing
despite the lack of fulfillment, compliance with, satisfaction or performance
of such condition, except that any such consummation of the Closing without
the fulfillment, compliance, satisfaction or performance of any condition set
forth in Sections 7.1 or 7.2 shall not relieve Bayer-CA or Uniroyal-CA from
their respective indemnification obligations under Sections 9.2 and 9.3.
(e) If this Agreement and the transactions provided for herein shall be
terminated or abandoned for any reason whatsoever prior to or at the Closing,
each party shall return to the other parties any and all Confidential
Information furnished to such party in connection herewith and hold in
confidence its knowledge of any and all such Confidential Information and not
use, disclose or publish the same directly or indirectly for any purpose,
including without limitation for the Business (i) without the prior written
consent of such other party or (ii) until the same has been theretofore
publicly disclosed by such other party or otherwise ceased to be secret or
confidential as evidenced by general public knowledge; provided, however, that
each party shall have the right to disclose such information, without consent
to the extent that (iii) such party is required by Law or any Environmental
Law to do so, or (iv) such disclosure is required in connection with
litigation pertinent to such information. The foregoing provisions are
intended to supplement and not supersede any existing confidentiality, secrecy
or similar agreements between the parties and between each party and any Third
Party.
ARTICLE 12. MISCELLANEOUS
12.1 Sales and Transfer Taxes.
Uniroyal-CA and Bayer-CA shall each pay, and shall cause the
Partnership to pay, directly to the appropriate taxing authorities, all sales
and transfer taxes, registration charges and transfer fees other than the
goods and services tax ("GST") imposed under Part IX of the Excise Tax Act
(Canada) payable by it, applicable in respect of the purchase and sale of the
Bayer Assets under this Agreement, or by the Partnership, applicable in
respect of the contributions of the Uniroyal Assets and the Bayer Assets to
the Partnership under this Agreement, and shall furnish proof of such payment
upon the reasonable request of any party to this Agreement.
12.2 Goods and Services Tax.
(a) Bayer-CA shall be liable for and shall pay to Uniroyal-CA an amount equal
to any GST payable by Bayer-CA and collectible by Uniroyal-CA under the Excise
Tax Act (Canada) or any provincial legislation imposing a similar value added
or multi-staged tax, in connection with the purchase and sale of the Bayer
Assets.
(b) Uniroyal-CA and Bayer-CA agree that they shall cause the Partnership to
pay to:
(i) Uniroyal-CA, an amount equal to any GST payable by the Partnership and
collectible by Uniroyal-CA under the Excise Tax Act (Canada) or any provincial
legislation imposing a similar value added or multi-staged tax, in connection
with the contribution of the Uniroyal Assets to the Partnership; and
(ii) Bayer-CA, an amount equal to any GST payable by the Partnership and
collectible by Bayer-CA under the Excise Tax Act (Canada) or any provincial
legislation imposing a similar value added or multi-staged tax, in connection
with the contribution of the Bayer Assets to the Partnership.
12.3 No Third Party Beneficiaries.
Nothing in this Agreement is intended, nor shall it be construed, to
confer any rights or benefits upon any Person (including, but not limited to,
any employee or former employee of the Partnership) other than the parties
hereto, and solely to the extent provided in Sections 9.2 and 9.3. Except as
provided in Sections 9.2 and 9.3, the Uniroyal Indemnitees, Bayer Indemnitees,
and other Persons shall have no rights or remedies hereunder. No Third Party
is entitled to rely on any of the representations, warranties and agreements
contained in this Agreement. Uniroyal-CA and Bayer-CA assume no liability to
any Third Party because of any reliance on the representations, warranties and
agreements of Uniroyal-CA and Bayer-CA contained in this Agreement.
12.4 Expenses of the Parties.
Subject to Sections 6.2, 9.2, 9.3, 11.3, 12.1 and 12.2 hereof, all
expenses involved in the preparation, authorization, and consummation of this
Agreement, incurred up to and including the Closing, including without
limitation, all fees and expenses of agents, representatives, counsel, and
accountants in connection therewith, shall be borne solely by the party who
shall have incurred the same, and the other parties shall have no liability in
respect thereof; provided, however, that nothing herein shall be construed to
release or impair any claim for damages by any party under Sections 9.2, 9.3
or 11.3; provided, further, that any and all such expenses of the Partnership
shall be borne solely by Uniroyal-CA.
12.5 Amendment and Waiver.
No amendment, supplement, or modification of this Agreement shall be
binding unless executed in writing by the parties. Any party's failure to
insist on strict performance of any provision of this Agreement shall not be
deemed a waiver of any other provision of this Agreement, nor shall such
waiver relieve any other party from performing any subsequent obligation
strictly in accordance with the terms of this Agreement. No waiver shall be
effective unless it is in writing and signed by the party against whom
enforcement is sought. The waiver shall be limited to provisions of this
Agreement specifically referred to therein and shall not be deemed a waiver of
any other provision. No waiver shall constitute a continuing waiver unless
the writing states otherwise. For greater certainty, the terms and conditions
of any future agreements, including without limitation any contract
manufacturing agreement or tolling arrangement, may override the provisions of
this agreement to the extent those provisions are inconsistent with the terms
and condition of this Agreement; provided that such overriding affect shall
occur only on a prospective basis.
12.6 Headings for Convenience.
The Section headings of this Agreement are included for convenience
only and shall not be deemed to limit or otherwise affect the construction of
any of its provisions.
12.7 Counterparts.
This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
12.8 Binding Effect.
Subject to the provisions of Section 12.12, this Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective administrators, legal representatives, successors and permitted
assigns.
12.9 Publicity.
(a) The parties hereto expect to make a public announcement of the
transactions contemplated herein as soon as practicable after the execution
hereof pursuant to a joint press release in the form previously agreed upon by
Uniroyal-CA and Bayer-CA. Thereafter and until the Closing, all general
notices, releases, statements and communications to employees, suppliers,
distributors and customers of the Business and to the general public and the
press relating to the transactions contemplated by this Agreement shall be
made only at such times and in such manner as may be mutually agreed upon by
Uniroyal-CA and Bayer-CA; provided, however, that each of Uniroyal-CA and
Bayer-CA shall be entitled to make a public announcement relating to the
proposed transaction if, in the opinion of its legal counsel, such
announcement is required to comply with Law or any Environmental Law or
applicable stock exchange rules and regulations (in which case the disclosing
party shall use its best efforts to provide the other party with as much
advance notice as possible with respect to the reasons for and text of such
announcement and to make such announcement no more extensive than is necessary
to meet the minimum requirement imposed on the party making such announcement.
(b) Notwithstanding the foregoing paragraph (a) of this Section 12.9, no
party hereto or its representatives will, without the prior written consent of
the other parties, disclose to any other person any Confidential Information
that has been made available in connection with this Agreement (other than
information which has been published or made publicly available other than by
unauthorized disclosure of a party), or disclose any of the terms, conditions,
or other facts with respect to this Agreement, except if, in the opinion of
its legal counsel, such disclosure is required to comply with Law or any
Environmental Law or applicable stock exchange rules and regulations. If
circumstances make it impossible to give such prior written notice, then any
disclosure made shall be no more extensive than is necessary to meet the
minimum requirement imposed on the party making such disclosure.
12.10 Complete Agreement.
This Agreement and the documents referred to herein and to be
delivered pursuant hereto constitute the entire agreement between the parties
pertaining to the subject matter hereof, and supersede all prior and
contemporaneous agreements, understandings, negotiations and discussions of
the parties, whether oral or written, including without limitation the
agreement dated September 16, 1998 by and among Bayer Corporation, Uniroyal
Chemical Company, Inc., Gustafson, Inc., Trace Chemicals, Inc. and C&K and the
non-binding offer from Bayer AG to C&K dated February 2, 1998, and there are
no warranties, representations or other agreements between the parties in
connection with the subject matter hereof, except as specifically set forth
herein or therein.
12.11 Notices.
All notices and other communications required or permitted by this
Agreement shall be in writing in the English language, may be given by a party
or its legal counsel, and shall deemed to be duly given (i) when personally
delivered (provided written confirmation thereof is also delivered in person
or by express courier), or (ii) upon delivery by a nationally recognized
express courier service which provides evidence of delivery, or (iii) upon
delivery of a facsimile transmission, provided a copy thereof is also
delivered in person or by express courier.
Notice to Bayer-CA shall be sufficient if given to:
Bayer Inc.
77 Belfield Road
Toronto, ON M9W 1G6
Attention.: Thomas Tithecott,
Vice President and General Counsel
Facsimile Number: (416) 240-5426
Telephone Number: (416) 248-3055
with a copy to:
Bayer Corporation
8400 Hawthorne Road
Kansas City, MO 61420
Attention: Vice President and Assistant General
Counsel
Facsimile Number: 816-242-2739
Telephone Number: 816-242-2367
Notice to Uniroyal-CA shall be sufficient if given to:
Uniroyal Chemical Co./Cie
25 Erb Street
Elmira, ON N3B 3A3
Attention: David Ash, General Manager
Facsimile Number: (519) 669-4404
Telephone Number: (519) 669-1671 Ext. 228
with a copy to:
Crompton & Knowles Corporation
One Station Place - Metro Centre
Stamford, CT 06902
Attention: Charles J. Marsden, Senior Vice President
and Chief Financial Officer
Facsimile Number: (203) 353-5424
Telephone Number: (203) 353-5416
with a copy to:
Crompton & Knowles Corporation
One Station Place-Metro Center
Stamford, CT 06902
Attention: John T. Ferguson II, Vice President,
General Counsel and Secretary
Facsimile Number: (203) 353-5423
Telephone Number: (203) 353-5405
Each party shall have the right to designate other or
additional addresses or addressees for the delivery of notices, by giving
notice as provided in this Section 12.11.
12.12 Assignment.
This Agreement and each party's respective rights hereunder, may not
be assigned by any party without the prior written consent of all the other
parties hereto, to be given or withheld in the sole discretion of each party.
Any attempted assignment in violation of this Section 12.12 shall be deemed to
be void.
12.13 Severability.
In the event that any of the provisions of this Agreement shall be
held by a court or other tribunal of competent jurisdiction to be
unenforceable, the provision will be enforced to the maximum extent
permissible and the remaining portions of this Agreement shall remain in full
force and effect.
12.14 Choice of Law; Choice of Forum.
(a) Applicable Law. All questions concerning the construction, validity, and
interpretation of this Agreement and the performance of the obligations
imposed by this Agreement shall be governed by the internal law, not the law
of conflicts, of the Province of Ontario, Canada.
(b) Dispute Resolution. Any and all disputes arising out of or related to
this Agreement including, without limitation, questions concerning the
construction, enforceability, validity, and interpretation of this Agreement
and the performance of the obligations imposed by this Agreement, and any
dispute which relates to the Confidential Information of any party hereto,
will be initially mediated in accordance with the dispute resolution
procedures set forth in this Section 12.14 and Exhibit E. No provision of, or
the exercise of any rights, under this Section 12.14 and Exhibit E shall limit
the right of any party pursue all legal remedies available to them, or obtain
provisional or ancillary remedies such as injunctive relief from a court
having jurisdiction before, during or after the pendency of any alternative
dispute resolution.
(c) Waiver of Trial by Jury. UNIROYAL-CA AND BAYER-CA EACH KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT EACH MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER ORAL OR WRITTEN), OR ACTIONS OF THE OTHER PARTIES IN
CONNECTION HEREWITH.
(d) Consent to Jurisdiction. Uniroyal-CA and Bayer-CA each irrevocably
consent that any action or proceeding against it under, arising out of or in
any manner relating to this Agreement shall be brought in the courts of the
Province of Ontario. Uniroyal-CA and Bayer-CA hereby each expressly and
irrevocably assent and submit to the personal jurisdiction of any such court
in any such action or proceeding. Uniroyal-CA and Bayer-CA each further
irrevocably consent to the service of summons, notice, or other process
relating to any such action or proceeding by delivery thereof by hand or by
mail in the manner provided for in Section 12.11 of this Agreement and consent
that it may be served with any process or paper by registered mail or by
personal service within or without the Province of Ontario in accordance with
applicable law. Uniroyal-CA and Bayer-CA each waive any objection, claim or
defense which it may have at any time to the laying of venue of any such
action or proceeding in any such court; irrevocably waive any claim that any
such action or proceeding brought in any such court has been brought in an
inconvenient forum; and further, irrevocably waive the right to object, with
respect to any such action or proceeding brought in any such court, that such
court does not have jurisdiction over such party.
IN WITNESS WHEREOF, each of the parties has caused this Purchase and
Contribution Agreement to be duly executed as of the date first above written.
UNIROYAL CHEMICAL CO./CIE
By:/s/ David Ash
Name: David Ash
Title: General Manager
Date: November 18, 1998
BAYER INC.
By:/s/Sommer
Name: Sommer
Title:VP CFO
Date:
By:/s/Thomas G. Tithecott
Name: Thomas G. Tithecott
Title:Secretary
Date: Nov. 20, 1998
Exhibit A
Knowledge of Uniroyal-CA
Exhibit B
Form of Partnership Agreement
Exhibit C
Forms of Opinion of Counsel to Bayer-CA
Exhibit D
Forms of Opinion of Counsel to Uniroyal-CA
Exhibit E
Alternative Dispute Resolution Procedures
A. Method of Invoking ADR Procedures
1. These procedures may be invoked by any party by giving written
notice to the others of the dispute and designating one or more persons
(collectively, the "Designee") to act on behalf of the disputing party
regarding the dispute. The other parties shall be required to respond to the
disputing party's notice within ten (10) business days by designating in
writing its own Designee. A party may choose to represent itself, or if it
appoints a Designee, its officers may nonetheless attend such meetings.
2. The parties, each acting through its Designee, shall meet at a
mutually acceptable time and place within ten (10) business days after the
non-disputing party designates its Designee to the others. At that meeting,
the parties shall attempt in good faith to negotiate a resolution of the
dispute, or failing that, to agree on a method for resolving the claim or
dispute.
3. If, within ten (10) business days after the first meeting or
within such longer period of time as the parties may mutually agree, the
parties have not succeeded in negotiating a resolution of the claim or dispute
or agreeing on a dispute resolution mechanism, they shall submit the dispute
to mediation in accordance with the procedures set forth herein.
4. The parties will jointly appoint a mutually acceptable mediator to
mediate the dispute. If the parties are unable to agree on a mutually
acceptable mediator within five (5) business days after the conclusion of the
negotiations described in paragraph 3 above, then the parties shall select a
neutral Third Party from American Arbitration Association ("AAA") in New York,
New York, with the assistance of AAA, unless the parties agree otherwise in
finding a mutually acceptable mediator.
5. Each party to the dispute shall bear an equal share of the fees
and costs of the mediator, and any fees and costs of AAA.
6. The parties agree to participate in good faith in the mediation
and negotiations related thereto for a period of thirty (30) days from
appointment of a mediator by any of the parties or the AAA.
7. The parties agree that the mediation period may be extended for an
additional thirty (30) days beyond the initial thirty (30) day period upon
agreement of the parties. Either party may terminate the mediation at any
time after the initial thirty (30) days or when any agreed upon extension has
expired.
B. Mediation Procedures
1. The mediator shall be neutral and impartial.
2. The mediator shall control the procedural aspects of the
mediation. The parties will cooperate fully with the mediator.
(a) The mediator is free to meet and communicate separately with
each party.
(b) The mediator will decide when to hold joint meetings with
the parties and when to hold separate meetings. There shall be no
stenographic record of any meeting. Formal rules of evidence will not apply.
3. Each party may be represented by more than one person, including
an attorney.
4. The process will be conducted expeditiously.
5. The mediator will not transmit information received from any party
to another party or any third person unless authorized to do so by the party
transmitting the information.
6. The entire process is confidential. The parties and the mediator
will not disclose information regarding the process, including settlement
terms, to third persons, unless the parties otherwise agree. The process
shall be treated as a compromise negotiation for purposes of the applicable
rules of evidence. Further, the parties will not disclose the existence of a
dispute or information regarding the mediation to third persons including,
without limitation, the media.
7. The parties will refrain from pursuing administrative and/or
judicial remedies during the mediation process, except as otherwise expressly
provided in the agreement which incorporates these procedures. The parties
agree that any and all statutes of limitation or periods of time for taking
action shall be tolled during the time period that the parties are engaged in
mediation.
8. Unless all parties and the mediator otherwise agree in writing:
(a) The mediator will be disqualified as a witness, consultant
or expert in any pending or future investigation, action or proceeding
relating to the subject matter of the mediation (including any investigation,
action or proceeding which involves persons not parties to this mediation);
(b) The mediator, at the conclusion of the mediation, will
immediately either destroy and certify destruction of, or return to the
providing party, any and all documents and information in the mediator's
possession, whether or not the mediation was successful; and
(c) The mediator will not be subpoenaed in any such
investigation, action or preceding and all parties will oppose any effort to
have the mediator subpoenaed.
9. The mediator, if a lawyer, may freely express views to the parties
on the legal issues of the dispute.
10. The mediator shall not be liable for any act or omission in
connection with the mediation.
11. The mediator may withdraw at any time by written notice to the
parties (i) for overriding personal reasons, (ii) if the mediator believes
that a party is not acting in good faith, or (iii) if the mediator concludes
that further mediation efforts would not be useful.
C. Litigation
If the parties do not resolve the dispute through mediation within the
period provided in Part A above, the parties may pursue any and/or all
applicable legal and/or equitable remedies available to them.
Exhibit F
Form of Marketing Rights and Margin Agreement
Exhibit G
Form of Pre-Exercise Distribution and Technology License Agreement
Exhibit H
Form of Post-Exercise Distribution and Technology License Agreement
Exhibit I
Form of Uniroyal-Bayer Transfer, Assignment and Assumption Agreement
Exhibit J
Form of Bayer Transfer, Assignment and Assumption Agreement<PAGE>
Exhibit K
Form of Uniroyal Transfer, Assignment and Assumption Agreement<PAGE>
Exhibit L
Form of Consent Agreement
EXHIBIT 2.5
PARTNERSHIP AGREEMENT OF GUSTAFSON PARTNERSHIP By and Between
Uniroyal Chemical Co./Cie and Bayer Inc.
Effective as of November 20, 1998.
TABLE OF CONTENTS
PAGE NO.
Article I
DEFINITIONS 1
Article II
FORMATION AND PURPOSE 12
2.1 Formation. 12
2.2 Name of the Partnership. 12
2.3 Purpose. 12
2.4 Term. 12
2.5 Principal Office. 12
2.6 Partners. 12
Article III
CAPITAL 13
3.1 Initial Capital Contributions. 13
3.2 No Additional Capital Contributions
Required. 13
3.3 No Interest on Capital Contributions;
Deficit Account. 13
3.4 Return of Capital Contributions. 13
3.5 Form of Return of Capital. 13
3.6 Capital Accounts. 13
3.7 Allocations of income and loss for
income tax purposes. 14
3.8 Currency. 14
3.9 Distributions. 14
Article IV
MANAGEMENT 15
4.1 Board of Representatives. 15
4.2 Representatives; Appointment. 18
4.3 Power to Bind Partnership. 19
4.4 Vacancies. 19
4.5 Quorum. 19
4.6 Meetings. 20
4.7 Action Without a Meeting 20
4.8 Proxy. 20
4.9 Meeting by Telephone or Video Conference. 20
4.10 Resignations and Removal. 20
4.11 Compensation and Expenses. 21
4.12 Board Chairman. 21
4.13 Deadlock. 21
Article V
MEETINGS OF PARTNERS 24
5.1 Meetings of and Voting by Partners. 24
5.2 Services; Intercompany Dealings 25
5.3 Duty of Partners. 25
5.4 Resignation or Withdrawal 26
Article VI
OFFICERS 26
6.1 Officers. 26
6.2 Election and Term of Office. 26
6.3 Removal. 26
6.4 Vacancies. 26
6.5 President. 26
6.6 Vice Presidents. 27
6.7 Secretary. 27
6.8 Chief Financial Officer. 27
6.9 Remuneration. 27
Article VII
INDEMNIFICATION; LIMITATION OF LIABILITY;
OTHER ACTIVITIES; CONFIDENTIALITY 28
7.1 Indemnification by the Partnership. 28
7.2 Notice to Partnership. 28
7.3 Contest by Partnership. 28
7.4 Advances of Expenses by Partnership. 29
7.5 Indemnification by a Partner. 29
7.6 Notice to Partner. 29
7.7 Contest by Partner. 29
7.8 Advances of Expenses by Partner. 30
7.9 Other. 30
7.10 Effect of Interest in Transaction. 30
7.11 No Third Party Rights. 30
7.12 Insurance. 30
7.13 Limitation of Liability 31
7.14 Other Activities. 32
7.15 Confidential Information. 33
7.16 Agreements with the Partnership. 34
Article VIII
TRANSFERS AND ADMISSION OF NEW PARTNERS 35
8.1 Preemption Rights; Right of First Offer;
Rights of First Refusal. 35
8.2 Involuntary Transfers. 39
8.3 Change of Control 40
8.4 Admission of Transferee. 41
8.5 Rights of Unadmitted Transferees. 42
8.6 Preemptive Rights. 42
8.7 Waiver. 42
Article IX
DISSOLUTION AND LIQUIDATION 43
9.1 Events of Dissolution. 43
9.2 Not Dissolution. 43
9.3 Procedure for Winding Up and Dissolution. 43
9.4 Termination. 43
Article X
BOOKS, RECORDS, AND ACCOUNTING 44
10.1 Bank Accounts. 44
10.2 Books and Records. 44
10.3 Annual Accounting Period. 44
10.4 Reports. 45
10.5 Tax Matters Partner. 46
10.6 Tax Elections and Deductions. 46
10.7 Title to Partnership Property. 46
Article XI
AMENDMENTS; GENERAL PROVISIONS 47
11.1 Assurances. 47
11.2 Complete Agreement; Annex and Exhibits. 47
11.3 Applicable Law. 47
11.4 Section Titles. 47
11.5 Binding Provisions. 47
11.6 Notices. 47
11.7 Terms. 49
11.8 Severability of Provisions. 49
11.9 Alternative Dispute Resolution. 49
11.10 Counterparts. 51
11.11 Estoppel Certificate. 51
11.12 Amendment. 51
11.13 Consents. 51
11.14 Legends. 51
11.15 Parties in Interest. 51
11.16 Counting of Time. 52
11.17 English Language. 52
11.18 Exhibits 52
EXHIBITS
Exhibit A Partner's Names, Percentage and Capital
Contributions
Exhibit B Alternative Dispute Resolution Procedures
Exhibit C Forms of Operative Agreements
PARTNERSHIP AGREEMENT
THIS PARTNERSHIP AGREEMENT (this "Agreement") is effective as of November
20, 1998 (the "Effective Date") by and between Uniroyal Chemical Co./Cie
("Uniroyal-CA"), an unlimited liability company organized under the laws of
the Province of Nova Scotia, Canada and Bayer Inc. ("Bayer-CA"), a corporation
organized under the laws of Canada and those parties listed on Exhibit A as
the same may be amended from time to time.
NOW, THEREFORE, for good and valuable consideration, the sufficiency and
receipt of which is hereby acknowledged, the parties, intending legally to be
bound, agree as follows:
Article I
DEFINITIONS
The following capitalized terms shall have the meanings specified in this
Article I. Other terms are defined in the text of this Agreement, and,
throughout this Agreement, those terms shall have the meanings respectively
ascribed to them.
"AAA" shall have the meaning given to such term in Section 4.13.2.
"Act" means the Partnership Act (Ontario), as the same may be amended from
time to time.
"Active Ingredient" or "Active Ingredients" means any and all naturally
occurring or synthetically produced substances, compounds, mixtures, or
Biologicals, whether now existing or hereafter developed, which prevent,
destroy, repel or mitigate any Pest, or accelerate or retard the rate of
growth, germination or maturation, or otherwise protect, or alter the behavior
of, seeds, stored grains, or plants or the products thereof, whether now
existing or hereafter developed.
"Affiliate" or "Affiliates" means, with respect to any Person, any other
Person directly or indirectly, through one or more intermediaries, controlling,
controlled by, or under common control with, such first mentioned Person. As
used in this definition of Affiliate, the term "control" (including "controlled
by", or "under common control with") means the possession, directly or
indirectly, of the power to direct or cause the direction of the management
and policies of a Person, whether through ownership of voting securities, as
trustee, by contract or otherwise.
"Agency" or "Agencies" means individually and collectively, (i) the Canadian
Federal Departments of Agriculture and Agri-Food, the Environment and Health,
and any other federal, local, provincial or other governmental or regulatory
agency in Canada which now regulates, or may in the future regulate, the use,
development, registration or sale of Active Ingredients or Formulations; and
(ii) the Canadian Intellectual Property Office, and any other federal, local,
provincial or other governmental or regulatory agency in Canada which now
regulates, or may in the future regulate, the protection, use or registration of
Technology.
"Agreement" shall have the meaning given to such term in the Preamble.
"Beneficial Owner" (including with correlative meanings, the term
"Beneficially Owned") means with respect to any Capital Stock, any Person who
would be deemed a Beneficial Owner under Rule 13d-3 (or any successor rule of
similar import) under the United States Securities Exchange Act of 1934, as in
effect on the date in question.
"Biological" or "Biologicals" means any and all naturally occurring or
synthetically produced biological organisms which prevent, destroy, repel or
mitigate any Pest, or accelerate or retard the rate of growth, germination or
maturation, or otherwise protect, or alter the behavior of, seeds, stored
grains or plants or the products thereof.
"Board" means the Partner representative committee consisting of individuals
appointed by the Partners to serve as Representatives pursuant to the
provisions of Article IV.
"Bona Fide Offer" means a written offer to purchase all of a Selling Partner's
Partnership Interest made by a Person who is not an Affiliate of the Selling
Partner, containing at least the following terms of purchase: the offered
price, payment terms, closing date and any significant closing conditions.
"Calculated Purchase Price" means, as to any party's Partnership Interest, an
amount equal to the Calculated Purchase Price of the Partnership multiplied by
the percentage ownership interest in the Partnership represented by such
Partnership Interest. Calculated Purchase Price, as to the Partnership, shall
mean an amount denominated in United States dollars, equal to the product of
(a) the total EBIT of the Partnership for the twenty-four (24) month period
preceding the date of the revised Soliciting Offer divided by two (2) and (b)
13.7.
"Canadian GAAP" means Canadian generally accepted accounting principles,
consistently applied.
"Capital Account" shall have the meaning given to such term in Section 3.6.
"Capital Contribution" means the total amount of cash and the fair market
value of any other assets contributed to the Partnership by a Partner, net of
liabilities assumed by the Partnership or to which the assets are subject.
"Capital Stock" means any and all (i) shares, interests, units, participations
or other equity equivalents of or equity interests (however designated) in any
Person including preferred or preference shares, (ii) partnership interests
(whether general or limited) in any Person which is a partnership, (iii)
membership interests or limited liability company interests in any limited
liability company, and (iv) other equity or ownership interests in any Person.
"Capital Transaction" means any transaction not in the ordinary course of
business that results in the Partnership's receipt of cash or other
consideration other than Capital Contributions, including, without limitation,
proceeds of sales or exchanges or other dispositions of property not in the
ordinary course of business, financings, refinancings, condemnations, recoveries
of damage awards, and insurance proceeds.
"C&K" means Crompton & Knowles Corporation, a corporation organized under the
laws of the Commonwealth of Massachusetts, United States.
"Change of Control" shall mean, with respect to any Partner:
(i) any event upon which any Person, other than an Affiliate of such
Partner, becomes the Beneficial Owner of Capital Stock representing: (a)
greater than fifty percent (50%) of the Voting Power of such Partner, or its
Parent; or
(b) greater than thirty percent (30%) of the Voting Power of such Partner or
its Parent if any Capital Stock in such Partner or its Parent is Publicly Traded
and if no other Person, immediately after the occurrence of such event, is the
Beneficial Owner of more than thirty percent (30%) of the Voting Power of such
Partner or its Parent; in either of (a) or (b), if and only if such Person
and/or any of its Affiliates is engaged in a Crop Protection Business or is
under an obligation to acquire a Crop Protection Business from other than a
Partner or its Affiliates; and/or
(ii) any event upon which any Person(s), other than an Affiliate of
such Partner, becomes the Beneficial Owner of Capital Stock representing: (a)
greater than fifty percent (50%) of the Voting Power of such Partner, or its
Parent; or
(b) greater than thirty percent (30%) of the Voting Power of any such Partner
or its Parent if any Capital Stock in such Partner or its Parent is Publicly
Traded and if no other Person, immediately after the occurrence of such event,
is the Beneficial Owner of more than thirty percent (30%) of such Voting Power;
in either of (a) or (b), if and only if the direct or indirect ownership of the
Partnership Interest of such Partner constitutes all or substantially all of
the assets of such Partner, or its Parent whose Capital Stock is the subject of
this provision; and/or
(iii) the sale, transfer or other disposition (in one transaction or
a series of transactions) to any Person(s), other than an Affiliate of such
Partner, of all or a material part of the assets of the Crop Protection
Business of such Partner and its Affiliates, taken as a whole as of the
Effective Date of this Agreement, used in the development and manufacture of
Active Ingredients and Formulations with applications to Seed Treatment; and/or
(iv) any event upon which any Person(s), other than an Affiliate of
such Partner, becomes the Beneficial Owner (in one transaction or a series of
transactions) of Capital Stock representing: (a) greater than fifty percent
(50%) of the Voting Power of any Affiliate(s) of such Partner, other than a
Parent (an "Indirect Affiliate"); or (b) greater than thirty percent (30%) of
the Voting Power of any such Indirect Affiliate if any Capital Stock of such
Indirect Affiliate or Parent is Publicly Traded and if no other Person,
immediately after the occurrence of such event, is the Beneficial Owner of more
than thirty percent (30%) of such Voting Power; in either of (a) or (b) if
and only if such Indirect Affiliate(s) owns all or a material part of the
assets of the Crop Protection Business of such Partner and its Affiliates, taken
as a whole as of the Effective ate of this Agreement, used in the development
and manufacture of Active Ingredients and Formulations with applications to Seed
Treatment; and provided, however, the provisions of items (ii), (iii) and (iv)
above notwithstanding, that the sale, transfer, or other disposition, directly
or indirectly, by way of Beneficial Ownership or otherwise to a Person (in one
transaction or a series of related transactions) of ownership or control of both
(1) all or substantially all of the assets of the Crop Protection Business of
such Partner and its Affiliates taken as a whole as of the Effective Date of
this Agreement and (2) the Partnership Interest of such Partner, shall not
constitute a Change of Control for purposes of this Agreement if such Person and
/or any of its Affiliates is not engaged in the Crop Protection Business; and
further provided, however, the provisions of items (i) through (iv) and the
first proviso above notwithstanding, that any spin-off, restructuring or other
transaction in which all or substantially all of the Crop Protection Business of
such Partner and its Affiliates taken as a whole as of the Effective Date of
this Agreement becomes owned (x) by an independent company or (y) by a joint
venture company whether operated as a corporation, limited liability company,
partnership, limited partnership or other form of entity, in which independent
company or joint venture such Partner or Affiliate thereof owns fifty percent
(50%) or more of the Capital Stock or Voting Power therein, shall not in any
such case constitute a Change of Control, if such independent company or joint
venture company undertakes in writing, in a form and substance reasonably
satisfactory to the other Partner, to perform the obligations of an Affiliate
pursuant to the Marketing Agreement and the Post-Exercise Agreement.
"Change of Control Notice" shall have the meaning given to such term in
Section 8.3.
"Compete" or "Competes" means to materially compete in all or a portion of the
Seed Treatment business, or to take substantial steps to materially compete in
all or a portion of the Seed Treatment business.
"Competitor" means a Person that Competes in Canada, either directly or
indirectly.
"Confidential Information" means all confidential and/or proprietary
information of a Person (the "Owning Person"), whether arising under statute,
common law or otherwise, whether belonging wholly or in part to the Owning
Person, and whether subject to license or other grant of rights by or to the
Owning Person as licensor or as licensee; but specifically excluding information
that is generally known to those skilled in a chemical or life sciences field,
including without limitation, the agrochemical field, and information as to a
Person (a "Receiving Person"), and only as to such Receiving Person, that (1) is
lawfully known to such Receiving Person prior to the disclosure by the Owning
Person to such Receiving Person; (2) is lawfully acquired by such Receiving
Person, rightfully furnished to such Receiving Person, or Publicly Available to
such Receiving Person; (3) is information which such Receiving Person can
document is independently developed by such Receiving Person; (4) is lawfully
reverse engineered by such Receiving Person; or (5) is required to be disclosed
by such Receiving Person pursuant to law, provided such Receiving Person uses
reasonable efforts to give the Owning Person reasonably detailed prior notice of
such required disclosure and an opportunity to oppose such disclosure.
"Covered Partnership Person" shall have the meaning given to such term in
Section 7.1.
"Covered Partner Person" shall have the meaning given to such term in Section
7.5.
"Crop Protection Business" means the manufacture, sale or distribution of
Active Ingredients, Formulations, Equipment or Other Products and/or Services.
"Cross License Agreement" means the Technology Cross License Agreement dated
as of the date of this Agreement by and between Agro ST Inc. and the
Partnership.
"Deadlock" means a situation where there is more than one (1) Partner, and a
matter presented to the Board at a meeting or by a proposed written consent
has been considered and voted on by the Board, and thirty (30) days after the
date of the first vote on the matter, there continues to be a failure of the
Board to reach a decision with respect to such matter, because the voting
Representatives are divided, with three (3) voting Representatives voting in
favor of the matter or abstaining from voting, and three (3) voting
Representatives voting against such matter or abstaining from voting.
"Dispute" means any dispute, controversy or claim arising out of or relating
to this Agreement, including without limitation, an alleged failure of a Partner
to perform any of its obligations under this Agreement, or any claim which
relates to the Confidential Information of any Partner, but, specifically
excludingtherefrom, a Deadlock. For purposes of this Agreement, any
disagreement as to whether any dispute, controversy or claim is a "Dispute" to
be resolved pursuant to Section 11.9 hereof or a "Deadlock" to be resolved
pursuant to Section 4.13 hereof shall be deemed to be a "Dispute".
"Distribution" or "Distributions" means any cash paid to a Partner by the
Partnership from the operations or capital of the Partnership, other than for
the payment for goods, equipment, property or services.
"Distributor Agreement" means the Distributor Agreement to be dated as of the
Closing Date by and between Uniroyal-CA and the Partnership.
"EBIT" means for any period, net income or loss, plus, to the extent deducted
in computing net income, interest payments and income taxes paid and/or accrued
during such period.
"Effective Date" shall have the meaning given to such term in the Preamble.
"Equipment" means any and all equipment (i) of a Partner or its Affiliates
that is specifically designed for or directly applicable to Seed Treatment uses
or applications, and (ii) that the Partnership has the right to manufacture,
develop, market or sell whether for Seed Treatment uses and applications or
for other than Seed Treatment uses or applications, including without limitation
seed treaters, size rights, screens, cylinders and samplers.
"Fair Market Value"means, as to any Partner's Partnership Interest, an amount
equal to the Fair Market Value of the Partnership multiplied by the Percentage
Interest of such Partner. Fair Market Value, as to the Partnership, shall
mean the cash fair market value that an unrelated person would pay for a one
hundred percent (100%) interest in the Partnership, in light of all relevant
factors, in an arm's length transaction in which neither party is compelled to
buy or sell, and without any discount or premium representing control of the
enterprise. The Fair Market Value of the Partnership shall be determined using
a valuation methodology that values the Partnership as a going concern and does
not take into account any diminution in value caused by the withdrawal of either
party from the Partnership or the dissolution of the Partnership in accordance
with Article IX.
The parties shall cooperate with all reasonable requests from the Neutral
Investment Bank for information necessary for the making of any such
determination.
"Firm" shall have the meaning given to such term in Section 4.13.4.1.1.
"Fiscal Period" means the fiscal period (as that term is defined in the ITA)
of the Partnership.
"Fiscal Year" means the fiscal year of the Partnership, which shall be the
year ending the Saturday in December closest to the last day of December.
"Formulation" or "Formulations" means a substance or compound, or mixture of
substances or compounds, which include one or more Active Ingredients, whether
now existing or hereafter developed.
"GAAP Loss" shall have the meaning given to such term in the Annex.
"GAAP Profit" shall have the meaning given to such term in the Annex.
"Governing Body" shall have the meaning given to such term in Section 7.14.4.
"Gustafson LLC" means the limited liability company formed under the laws of
the State of Delaware, United States of America, with such name.
"ITA" means the Income Tax Act (Canada), as the same may be amended from time
to time.
"IBank Value" shall have the meaning given to such term in Section 8.1.1.4.
"Initial Capital Contribution" shall have the meaning given to such term in
Section 3.1.
"Initial Partner" or "Initial Partners" means Uniroyal-CA and Bayer-CA.
"Initial Period" shall have the meaning given to such term in Section 4.13.3.
"Interest" means an Interest Holder's share of the profits and losses of the
Partnership and right to receive Distributions from the Partnership; but,
specifically excluding any Partnership Rights.
"Interest Holder" means any Person who holds an Interest, whether as a Partner
or as an unadmitted assignee of a Partner.
"Interest Offer" shall have the meaning given to such term in Section 8.2.2.
"Interest Seller" shall have the meaning given to such term in Section 8.2.3.
"Invest or Participate" means: (a) to acquire as a principal, partner,
shareholder, member, Beneficial Owner or in any similar capacity, Capital
Stock in a Person in excess of five percent (5%) of the total Capital Stock of
such Person; or (b) by contract or otherwise, to manage, operate or finance a
Person, or to participate in the management, operation or financing of a Person,
or to act as agent, representative, consultant or in any similar capacity for a
Person, or to permit a Person to use the name of a Partner or its Affiliate.
"Involuntary Transfer" means each of the following: (i) the issuance of a
receiving order against the Partner by a court of competent jurisdiction
pursuant to any petition filed against the Partner under the Bankruptcy and
Insolvency Act (Canada) (the "BIA"); (ii) the issuance of an order by a court of
competent jurisdiction on an initial application made with respect to the
Partner pursuant to the Companies' Creditors Arrangement Act (Canada); (iii) the
issuance of a winding-up order by a court of competent jurisdiction with respect
to the Partner pursuant to the Winding-Up and Restructuring Act (Canada); (iv)
the issuance of an order pursuant to the commencement against the Partner of any
proceedings under any bankruptcy, arrangement, reorganization, dissolution,
liquidation, insolvency, winding-up or similar law now or hereafter in effect,
for the relief from or otherwise affecting creditors of the Partner; (v) the
appointment of a receiver, receiver-manager, interim receiver, monitor,
liquidator, assignee, custodian, trustee, sequestrator or other similar agent
for the Partner or for any substantial part of the Partner's assets or property;
(vi) the commencement of a winding-up, liquidation or dissolution of the
Partner's affairs; (vii) the filing with respect to the Partner of a petition in
bankruptcy, which petition is not dismissed or withdrawn within a period of
thirty (30) days from the dateof its filing; (viii) the commencement by the
Partner of any proceedings under any bankruptcy, arrangement, reorganization,
dissolution, liquidation,insolvency, winding-up or similar law now or hereafter
in effect, for the relief from or otherwise affecting creditors of the Partner;
(ix) the consent by the Partner to the issuance of any order referred to in (i),
(ii), (iii) or (iv) herein or to the appointment of or taking possession by a
receiver, receiver- manager, interim receiver, monitor, liquidator, assignee,
custodian, trustee, sequestrator or other similar agent for the Partner or for
any substantial part of the Partner's assets or property; (x) the making by the
Partner of any assignment for the general benefit of creditors, including
without limitation any assignment made pursuant to the BIA; (xi) the failure by
the Partner to meet its liabilities generally as they become due; (xii) the
entry of an order of garnishment, attachment, charging order, execution,
warrant, sequestration, levy, third party demand or similar proceedings by any
Person who or that has a pledge of or has been granted a lien, security
interest, charge or other encumbrance in or against the Interests; or (xiii) any
other divestiture of a Partner by court order, self-help or other private
action.
"LLC Agreement" means that certain Limited Liability Company Agreement of
Gustafson LLC effective as of September 23, 1998, as amended.
"Majority Vote" means (i) in the case of a reconstituted board pursuant to
Section 4.13.3, the affirmative vote of at least three (3) of the five (5)
Representatives on the Board (excluding the President); and (ii) in all other
cases, the vote of at least four (4) of the six (6) Representatives on the
Board (excluding the President), in all cases at a meeting of which a quorum of
Representatives is participating in person, by conference telephone, video or
similar communications equipment or by proxy.
"Marketing Agreement" means that certain Marketing Rights and Margin Agreement
by and among C&K, the Partnership, Gustafson LLC, Bayer Corporation and
Bayer-CA dated as of the date of this Agreement.
"Member" shall have the meaning given to such term in the LLC Agreement.
"Neutral Investment Bank" means an investment banking firm of international
reputation which has not been engaged by a Partner or its Affiliates (a) at
any time regarding matters related to the Partnership; and (b) in the last two
(2) years for any other matter, and which the Partner and its Affiliates agree
not to engage in the subsequent two (2) years.
"Non-Notifying Partner" shall have the meaning given to such term in Section
8.3.
"NonSoliciting Partner" shall have the meanings given to such term in Section
8.1.1 and Section 8.1.2, respectively.
"NonSuffering Partner" shall have the meaning given to such term in Section
8.2.1.
"Notifying Partner" shall have the meaning given to such term in Section 8.3.
"Offered Interest" shall have the meaning given to such term in Section 8.2.2.
"Offered Interest Notice" shall have the meaning given to such term in Section
8.2.1.
"Operative Agreements" means the Marketing Agreement, the Pre-Exercise
Agreement, the Post-Exercise Agreement and the Cross License Agreements, the
forms of each of which are attached hereto as Exhibit C, and incorporated herein
by reference.
"Other Products and/or Services" means (i) any products for Seed Treatment
uses or applications other than Active Ingredients, Formulations and Equipment,
including without colorants, dyes, pigments and coatings; and (ii) any
activities of the Partnership, other than those activities set forth in Sections
4.2 and 4.3 of the Pre-Exercise Agreement and the Post-Exercise Agreement,
specifically designed for or directly applicable to Seed Treatment uses or
applications.
"Parent" means, as to a Partner, any Person which is the direct or indirect
Beneficial Owner of fifty percent (50%) or more of the Capital Stock, having
Voting Power, of such Partner.
"Partner" or "Partners" means the Initial Partners signing this Agreement and
any Person who subsequently is admitted as a partner of the Partnership.
"Partner Vote" means, in the case of two Partners, the unanimous affirmative
vote of both Partners.
"Partnership" means the general partnership formed in accordance with this
Agreement.
"Partnership Interest" means a Partner's entire interest in the Partnership,
including without limitation, a Partner's Interest and a Partner's Partnership
Rights.
"Partnership Rights" means the right to: (i) inspect the Partnership's books
and records; (ii) appoint Representatives and to participate in the business,
affairs and management of the Partnership; and (iii) vote on, consent to or
otherwise participate in any decision or action of the Partners pursuant to this
Agreement or the Act; provided, however, that Partnership Rights does not
include any right to disclosure of the existence of any arrangements or
agreements, or any terms thereof, that are protected by confidentiality, secrecy
or similar agreements with third parties, or any other arrangements or
agreements that, if disclosed, would result in the Partnership being in breach
of such arrangements or agreements.
"Percentage" means, as to a Partner, the percentage represented by the
relationship of such Partner's Units to the total number of Units outstanding
and, as to an Interest Holder who is not a Partner, the percentage of the
Partner whose Interest has been acquired by such Interest Holder, to the extent
the Interest Holder has succeeded to that Partner's Interest.
"Percentage Interest" in the Partnership means, as to a Partner, the Partner's
Interest represented as a percentage that such Partner's Units are to the
total number of Units outstanding and, as to an Interest Holder who is not a
Partner, the percentage interest of the Partner whose Interest has been acquired
by such Interest Holder, to the extent the Interest Holder has succeeded that
Partner's Interest.
"Person" means any individual, corporation, governmental authority, limited
liability company, unlimited liability company, partnership, trust, estate,
unincorporated association or other entity.
"Pest" means any plant, animal or other organism, when and if determined by an
Agency to be deleterious to man or the environment.
"Post-Exercise Agreement" means the Post-Exercise Distribution and Technology
License Agreement dated as of the date of this Agreement by and among
Uniroyal-CA, Bayer-CA and the Partnership.
"Pre-Exercise Agreement" means the Pre-Exercise Distribution and Technology
License Agreement dated as of the date of this Agreement by and between
Uniroyal-CA and the Partnership.
"Price" shall have the meaning given to such term in Section 8.2.3.
"Price Notice" shall have the meaning given to such term in Section 8.2.3.
"Proposed Purchase Price" shall have the meaning given to such term in Section
8.1.1.1.
"Publicly Available" means that the information in question is available from
a public source; provided, however, information shall not be deemed to be
Publicly Available to a Person unless the Person contending the information is
Publicly Available (i) has lawfully acquired such information through
experimentation, research or other appropriate method of acquisition, and (ii)
if the form in which the information is held by the Person on a particular date
has commercial value, has acquired such information in the same form in which it
is held on such date.
"Publicly Traded" when used in reference to any Capital Stock at any given
date, means Capital Stock which is listed or authorized for quotation on the New
York Stock Exchange, the American Stock Exchange, the National Market System of
the Nasdaq Stock Market (or any successor to such entities) or any recognized
Canadian stock exchange or listed on or included into the free market of any
of the Stuttgart, Munich, Frankfurt, Dusseldorf, Hamburg or Berlin stock
exchanges.
"Purchase and Contribution Agreement" means that certain Purchase and
Contribution Agreement by and between Uniroyal-CA and Bayer-CA dated as of
November , 1998.
"Representative" or "Representatives" means the individuals from time to time
designated pursuant to Article IV of this Agreement as members of the Board.
"Revised Soliciting Offer" shall have the meaning given to such term in
Section 8.1.1.5.
"Seed Treatment" means any and all uses or applications of Active Ingredients,
Formulations, Equipment, and Other Products and/or Services, in connection
with stored grains or seeds for agricultural purposes, whether now existing or
hereinafter developed.
"Solicitation Period" shall have the meaning given to such term in Section
8.1.1.6.
"Soliciting Offer" shall have the meaning given to such term in Section 8.1.1.
"Soliciting Partner" shall have the meanings given to such term in Section
8.1.1 and Section 8.1.2, respectively.
"Subsidiary" means individually and collectively, Agro ST Inc., a corporation
organized under the laws of the State of Delaware, United States of America,
and Industrias Gustafson S.A. DE C.V., a corporation organized under the laws of
Mexico, each a wholly owned subsidiary of Gustafson LLC.
"Suffering Partner" shall have the meaning given to such term in Section
8.2.1.
"Tax Matters Partner" shall have the meaning given to such term in Section
10.5.
"Technology" means all forms of intellectual property, including without
limitation, copyrights, copyright applications, patents, patent applications,
inventions, industrial designs, processes, production methods, proprietary
information, know-how, trade secrets, information, trademarks, trademark
applications, trade names, logos and slogans, identification lists, product
and technical labels, data, including registration data and Agency data, plans,
blueprints, specifications, designs, manufacturing information, formulation
recipes and techniques, seed safety information, seed testing techniques,
efficacy data, environmental, residue, toxicology and product chemistry
information, discoveries, drawings, recorded knowledge, techniques, ideas,
concepts, surveys, engineering reports, test reports and procedures, manuals,
materials standards, process standards, performance standards, catalogs, flow
charts, formulation or technical registrations, work techniques, circuit
topographies, computer and automatic machinery software and programs, related
object and source code and the like whether or not protected or protectable by
patent, copyright, trademark, trade secret or other proprietary rights or by
any Agency; but specifically excluding Technology that is generally known to
those skilled in a chemical or life sciences field, including without
limitation, the agrochemical field.
"Third Party" or "Third Parties" means any and all Persons other than the
Partnership, Gustafson LLC, a Partner, a Member (as that term is defined in
the LLC Agreement) or any of their respective Affiliates.
"Third Party Soliciting Offer Notice" shall have the meaning given to such
term in Section 8.1.2.
"Transfer" means, when used as a noun, any voluntary sale, hypothecation,
pledge, assignment, or other transfer by a Partner and, when used as a verb,
means for a Partner to voluntarily sell, hypothecate, pledge, assign, or
otherwise transfer.
"Transferee" means a Person who is the assignee, purchaser or transferee of an
Interest.
"Units" means the number of units of income, gain, loss and deduction of a
Partner or Interest Holder, as the case may be as determined by agreement
between the Partnership and the Partners or Interest Holders from time to time.
The Initial Partners shall be allocated fifty (50) Units each.
"Voting Power" (which term includes the power to vote or to direct the voting
of) when used in reference to any Capital Stock shall mean the power of the
holders of such Capital Stock generally to vote, with respect to any Person
which is a corporation, for the election of members of the board of directors
and, with respect to any other Person that is not a corporation, for the members
of the Governing Body of such other Person.
Article II
FORMATION AND PURPOSE
2.1 Formation.
Uniroyal-CA and Bayer-CA hereby form a partnership under the laws of
Ontario for the purposes set forth in and in accordance with the provisions of
this Agreement.
2.2 Name of the Partnership.
The name of the Partnership shall be "Gustafson Partnership", until
changed by the Board. The Partnership may do business under that name and under
any other name or names that the Board selects. The Partnership shall register
any names under which it does business as required by all applicable laws.
2.3 Purpose.
The Partnership is formed solely for the purposes of developing,
formulating, manufacturing, registering, marketing and selling Active
Ingredients, Formulations, Equipment and Other Products and/or Services for
Seed Treatment uses and applications in Canada, and to do any and all things
necessary, convenient or incidental thereto. Unless both Partners consent, or
unless specifically permitted by the Operative Agreements, the Partnership
shall have no authority to carry on any other business.
2.4 Term.
The term of the Partnership shall begin upon the date of this Agreement
and shall be perpetual, unless its existence is sooner terminated pursuant to
this Agreement.
2.5 Principal Office.
The principal office of the Partnership shall be located at Bay 10, 2712-
37th Avenue N.E., Calgary, Alberta T1Y 5L3 or elsewhere that the Board
selects.
2.6 Partners.
The name, Percentage and Capital Contribution of each Partner is set
forth on Exhibit A.
Article III
CAPITAL
3.1 Initial Capital Contributions.
Each Partner shall contribute as the "Initial Capital Contribution" to be
made by it the cash, obligations, other property or services set forth in the
column headed "Initial Capital Contribution" on Exhibit A to this Agreement.
The fair market value (as determined by the Board) of the Initial Capital
Contribution of each Partner shall be recorded by the Board as a contribution
to the capital of the Partnership.
3.2 No Additional Capital Contributions Required .
No Partner shall be obligated, nor shall any Partner have a right, to
contribute any additional capital to the Partnership, except with the prior
consent of both Partners.
3.3 No Interest on Capital Contributions; Deficit Account.
Interest Holders shall not be paid interest on their Capital
Contributions. Except as otherwise required by this Agreement, no Interest
Holder shall have any liability to restore all or any portion of a deficit
balance in a Capital Account.
3.4 Return of Capital Contributions.
Except as otherwise provided in this Agreement, no Interest Holder shall
have the right to receive any return of any Capital Contribution.
3.5 Form of Return of Capital.
If a Partner is entitled to receive a return of a Capital Contribution,
the Interest Holder shall not have the right to receive anything but cash in
return of the Interest Holder's Capital Contribution.
3.6 Capital Accounts.
An account ("Capital Account") shall be maintained by the Partnership for
each Interest Holder in accordance with the following provisions:
3.6.1 An Interest Holder's Capital Account shall be credited with the fair
market value (as determined by the Board) of the Interest Holder's Capital
Contributions, the amount of any Partnership liabilities assumed by the
Interest Holder (other than liabilities secured by Partnership property
distributed to the Interest Holder), and the Interest Holder's allocable share,
as determined by the Partnership in accordance with this Agreement, of GAAP
Profit.
3.6.2 An Interest Holder's Capital Account shall be debited with the amount
of money and the fair market value (as determined by the Board) of any
Partnership property distributed by the Partnership to the Interest Holder
(net of Partnership liabilities secured by such distributed property that such
Interest Holder assumes or takes subject to), the amount of the Interest
Holder's individual liabilities that are assumed by the Partnership (other than
liabilities that reduce the amount of any Capital Contribution made by such
Interest Holder), the Interest Holder's allocable share, as determined by the
Partnership in accordance with this Agreement, of GAAP Loss.
3.6.3 If any Interest is transferred pursuant to the terms of this Agreement,
the Transferee shall succeed to the Capital Account of the transferor to the
extent the Capital Account is attributable to the transferred Interest.
3.7 Allocations of income and loss for income tax purposes.
The income, gains and losses of the Partnership, as determined for income
tax purposes from time to time, shall be allocated among the Interest Holders
according to their Percentage Interest, subject to the provision of the Annex.
If any Interest in the Partnership is transferred during a Fiscal Period, the
allocations contemplated by this Article 3 and by the Annex shall be made as
between the transferee and the transferor as may be agreed between the
transferee and the transferor or, failing such agreement, all relevant amounts
in respect of that portion of such Fiscal Period up to and including the
effective date of such transfer shall be allocated to the transferor and all
such amounts in respect of that portion of such Fiscal Period from and after the
effective date of such transfer shall be allocated to the transferee.
3.8 Currency.
All Capital Contributions to be made to, and Distributions to be paid by,
the Partnership pursuant to this Agreement shall be made in the currency of
Canada. All other payments to be made or calculated pursuant to this
Agreement shall be made and calculated in the currency referred to in the
relevant provision of this Agreement.
3.9 Distributions.
Distributions other than Distributions upon liquidation shall be made to
the Partners in proportion to their Percentage Interest and may be made in cash
or in kind. Distributions upon liquidation shall be made to the Partners as
provided in Section 9.3.
Article IV
MANAGEMENT
4.1 Board of Representatives.
The Board of Representatives shall manage and control, and supervise the
management of the business and affairs of the Partnership, and shall act
together as a group. The Representatives shall have such rights, duties and
powers as are specified in this Agreement.
4.1.1 The Representatives, acting as a Board, have the sole, full and
complete authority, power and discretion to manage and control the business,
affairs and properties of the Partnership, to make all decisions regarding those
matters and to perform any and all other acts or activities necessary or
appropriate to the management of the Partnership's business.
4.1.2 The Board shall have the power to delegate responsibilities and
authority to subcommittees of the Board or such officers as may be appointed by
the Board pursuant to Article VI from time to time, with such general or
specific authority to make any contracts, enter into any transaction, and make
and obtain any commitments on behalf of the Partnership and to otherwise conduct
or further the Partnership's business.
4.1.3 Without limiting the generality of Sections 4.1.1 or 4.1.2, the taking
of any of the following actions by the Partnership shall require the approval
of a Majority Vote of the Board:
4.1.3.1 Review and approval of the budget for the Partnership for each Fiscal
Year, and the annual business and midterm strategic plan for the Partnership
and any subsidiaries thereof.
4.1.3.2 Creation or dissolution of any subsidiaries of the Partnership.
4.1.3.3 Establishment or modification of the Partnership's capital
expenditures budget.
4.1.3.4 Appointment, removal and compensation of the Partnership's President
and other officers.
4.1.3.5 Establishment, modification or termination of the Partnership's
compensation and benefit programs for all employees.
4.1.3.6 Establishment or modification of the Partnership's Distribution
policies.
4.1.3.7 Incurrence of or payment by the Partnership of any expenses for any
capital project that exceeds or is estimated to exceed CDN$200,000.
4.1.3.8 Creation, amendment, termination or modification of any arrangement,
agreement or contract between the Partnership or a Subsidiary and (i) any
Partner, Gustafson LLC, a Subsidiary or any Member, (ii) an Affiliate of a
Partner, Gustafson LLC, a Subsidiary or a Member, or (iii) an employee,
executive officer or director or other board member or representative of a
Partner,Gustafson LLC, a Member or a Subsidiary; provided however that any
sublicense under the Cross License Agreement must be approved by the unanimous
consent of the Board and provided further that any changes in Prices made
pursuant to Article 7 of the Pre-Exercise Agreement shall not require the
Board's approval to be effective; and provided further that any changes to the
Prices (as defined in the Marketing Agreement) agreed to by the Partnership or
a Subsidiary and (i) any Partner, Gustafson LLC, a Subsidiary or any Member, or
(ii) an Affiliate of a Partner, Gustafson LLC, a Subsidiary or a Member pursuant
to Section 4 of the Marketing Agreement shall not require the Board's approval
to be effective.
4.1.3.9 An acquisition or disposition of any business of the Partnership and
approval of any financing associated with such acquisition or disposition.
4.1.3.10 Entrance into, or any modification of, any material research or
development contract or obligation by the Partnership that would result in the
Partnership exceeding the approved research or development budget by more than
CDN$200,000.
4.1.3.11 Making of any loan or advance or giving any credit by the
Partnership in excess of CDN$100,000, excluding trade credit, or any
modification of the terms thereof.
4.1.3.12 Borrowing of money for and on behalf of the Partnership or any
subsidiary, which borrowing may in the aggregate exceed CDN$100,000, or any
modification of the terms thereof, excluding trade credit.
4.1.3.13 Grant of any mortgages, deeds of trust, security interests or other
liens, or executing and delivering any instruments to encumber any assets of
the Partnership or its subsidiaries, to secure repayment of amounts that in the
aggregate exceed CDN$100,000, or permitting any liens to exist against assets
of the Partnership or in amounts that in the aggregate exceed CDN$100,000.
4.1.3.14 Appointment of outside legal counsel or independent auditors.
4.1.3.15 Change of the accounting principles used by the Partnership.
4.1.3.16 Change of the Partnership's business philosophy.
4.1.3.17 Purchases by the Partnership in excess of CDN$2 million per order.
4.1.3.18 Modification of this Agreement or the certificate of incorporation,
by-laws or any other organizational documents of any subsidiary of the
Partnership.
4.1.3.19 Registration, marketing and development:
(i) any one product or registration, if the cost of
such registering, marketing, and developing is expected to exceed CDN$400,000 in
any one year; and
(ii) products and registrations, if the Partnership
has materially exceeded or will materially exceed the previously approved
budgets for registering, marketing and developing products; or if registering,
marketing and developing costs will, in the aggregate, exceed CDN$1 million for
the current Fiscal Year.
4.1.3.20 Acquisition by purchase, lease, or otherwise of any real property.
4.1.3.21 Entrance into any Capital Transaction.
4.1.3.22 Discontinuance of the Partnership's business.
4.1.3.23 Authorization of any restructuring, reorganization or
recapitalization of the Partnership and the material terms and provisions
thereof.
4.1.3.24 Settlement or confession of judgment in any legal matter exceeding
CDN$250,000.
4.1.3.25 Except as expressly provided in Article IX of this Agreement,
termination, dissolution, liquidation or winding-up of the Partnership.
4.1.3.26 Authorization to make all Partnership elections permitted under the
ITA, including without limitation, elections of methods of depreciation.
4.1.3.27 The issuance of additional Interests or Partnership Interests in the
Partnership or of debt securities of the Partnership.
4.1.4 Notwithstanding anything to the contrary in this Agreement or the
Operative Agreements, no Partner may use its position as a Partner on the
Board or its appointed Representatives on the Board to require that the
Partnership do any act that would require, or condition any contract, agreement
or arrangement with the other Partner or the other Partner's Affiliates on,
disclosure of the Confidential Information or Technology of one Partner or its
Affiliates to the other Partner, or the use of the Confidential Information or
Technology of one Partner or its Affiliates by the other Partner.
4.2 Representatives; Appointment.
4.2.1 Board. Except as provided in Section 4.13 of this Agreement, the Board
shall consist of seven (7) individuals: (i) six (6) Representatives, with each
Representative entitled to one vote, and (ii) the President of the
Partnership, who shall be a non-voting Representative.
4.2.1.1 Initial Appointment. Three (3) of the six (6) initial voting
Representatives of the Board shall be appointed by Uniroyal-CA and the other
three (3) of the initial voting Representatives shall be appointed by
Bayer-CA, and shall serve without additional compensation or benefits from the
Partnership.
4.2.1.2 Subsequent Appointments. Each year at the annual meeting of the
Partners held pursuant to Section 5.1.1, Uniroyal-CA shall be entitled to
appoint three (3) voting Representatives and Bayer-CA shall be entitled to
appoint three (3) voting Representatives. Each voting Representative shall
hold office for a one (1) year term, or until his earlier resignation or
removal in accordance with this Agreement. A voting Representative may be
reappointed for an unlimited number of terms.
4.2.1.3 Subsequent Transfers. Upon the Transfer by a Partner of all of its
Partnership Interest to a Person who is admitted as a Partner, the
transferring Partner shall cause the three (3) voting Representatives appointed
by such Partner to resign, effective upon the sale. Upon the resignation of the
three (3) such voting Representatives, and consummation of the sale, the newly
admitted Partner will be entitled to appoint three (3) Representatives to the
Board. Thereafter, the newly admitted Partner shall be entitled to appoint three
(3) voting Representatives and the non-transferring Partner shall be entitled
to appoint three (3) voting Representatives. Each voting Representative shall
hold office for a one (1) year term, or until his earlier resignation or removal
in accordance with this Agreement. A voting Representative may be reappointed
for an unlimited number of terms.
4.2.1.4 Appointment of President as Non-Voting Representative. The Board
shall appoint the President as a non-voting Representative.
4.2.2 Duty of Representatives. No Representative appointed pursuant to
Section 4.2 or serving as the non-voting Representative shall be liable to the
Partnership, the other Representatives or the Partners for monetary damages
for breach of fiduciary duty as a Representative or otherwise liable,
responsible or accountable to the Partnership, the other Representatives or the
Partners for monetary damages or otherwise for any acts performed, or for any
ailure to act; provided, however, that this provision shall not eliminate or
limit the liability of a Representative (i) for any breach of the
Representative's duty of loyalty to the Partner appointing such Representative,
(ii) for acts or omissions which involve intentional misconduct or a knowing
violation of law, (iii) for any transaction from which the Representative
received any improper personal benefit, or (iv) for disclosing Confidential
Information in violation of the provisions of this Agreement.
4.2.3 Duty of Seventh Voting Representative. No Representative appointed
pursuant to Section 4.13.3.2 shall be liable to the Partnership, the other
Representatives or the Partners for monetary damages for breach of fiduciary
duty as a Representative or otherwise liable, responsible or accountable to the
Partnership, the other Representatives or the Partners for monetary damages or
otherwise for any acts performed, or for any failure to act; provided, however,
that this provision shall not eliminate or limit the liability of such
Representative (i) for any breach of such Representative's duty of loyalty to
the Partnership, (ii) for acts or omissions which involve intentional
misconduct or a knowing violation of law, (iii) for any transaction from
which the Representative received any improper personal benefit, or (iv) for
disclosing Confidential Information in violation of the provisions of this
Agreement.
4.3 Power to Bind Partnership.
Unless specifically authorized to do so by this Agreement or by the
Majority Vote of the Board, no attorney-in-fact, Representative, officer,
employee or other agent of the Partnership shall have any power or authority
to bind the Partnership in any way, to pledge its credit or to render it
liable for any purpose. No Partner shall have any power or authority to
bind the Partnership unless the Partner has been specifically authorized by
a Majority Vote of the Board to act as an agent of the Partnership for that
specific purpose.
4.4 Vacancies.
Any vacancy occurring in the voting Representatives of the Board, whether
caused by death, resignation, removal or otherwise, may be filled only by the
Partner who originally appointed the vacating voting Representative. A voting
Representative appointed to fill a vacancy shall be appointed for the
unexpired term of his predecessor in office.
4.5 Quorum.
The presence, in person, by conference telephone, video or similar
communications equipment, or by proxy of four (4) voting Representatives,
including no less than two (2) voting Representatives from each Partner, shall
constitute a quorum for the transaction of business at a Board meeting. A
Majority Vote of the Board participating in a duly constituted meeting where
there is a quorum shall be the act of the Board, except as may be otherwise
specifically provided by the Act or this Agreement. In the absence of a
quorum, a majority of Representatives present may adjourn the meeting from
time to time, without notice other than announcement at the meeting, until a
quorum shall be present. At a reconvening of such adjourned meeting at which
a quorum shall be present, any business may be transacted that might have
been transacted at the meeting as originally noticed.
4.6 Meetings.
4.6.1 Regular Meetings. Regular meetings of the Board shall be held at such
times and places as the Board shall designate; provided, however, that for two
(2) years from the date of formation of the Partnership, the Board shall meet
at least four (4) times a year. Thereafter, the Board shall meet at least
annually.
4.6.2 Special Meetings. Special meetings of the Board may be called (i) by
the President, (ii) by a Partner, or (ii) at the request of three (3) voting
Representatives. Written or oral notice of special meetings shall be given to
all Representatives at least fourteen (14) days before the dates of such
meetings. No notice need be given to any Representative who attends in person
or to any Representative who, in a writing executed and filed with the records
of the meeting either before or after the meeting, waives such notice. Such
notice or waiver of notice need not state the purpose or purposes of such
meeting.
4.7 Action Without a Meeting.
Any action that may be taken at a meeting of the Board may be taken
without
a meeting if a consent in writing, setting forth the action so taken or to be
taken, shall be signed by all of the voting Representatives. Such consent
shall be filed with the minutes of the Board's meetings.
4.8 Proxy.
A Representative may grant a proxy entitling any other Representative
appointed by the same Partner to exercise his voting rights. Such proxy shall
be in writing and shall specify a termination date. The Representatives
appointed by the other Partner shall be entitled to inspect the proxy on
demand. Any proxy shall be filed with the minutes of the meeting.
4.9 Meeting by Telephone or Video Conference.
A Representative may participate in a meeting of the Board by means of
conference telephone, video or similar communications equipment enabling all
Representatives participating in the meeting to hear one another, and
participation in a meeting shall constitute presence in person at such
meeting.
4.10 Resignations and Removal.
Each Representative shall hold office at the pleasure of the Partner
appointing such Representative. The resignation of any Representative shall
be in writing and shall be effective immediately upon acknowledgment of receipt
by a Partner. Any Representative may be removed, with or without cause, as
follows:
(i) at any time, by the Partner that appointed such Representative; (ii) in
the case of the President, by a Majority Vote of the Board; or (iii) by the
request of the Partner that appointed such Representative, if such request
is made, in preparation of the admission of a newly admitted Partner, and
the appointment of Representatives by such newly admitted Partner as set
forth in Section 4.2.1.
4.11 Compensation and Expenses.
Representatives appointed pursuant to Section 4.2 shall serve without
additional compensation or benefits from the Partnership. Each Partner is
responsible for all expenses incurred by the voting Representatives appointed
by that Partner in connection with such Representatives' activities as a
Representative. The Partners shall share equally the reasonable compensation
for and expenses of the seventh voting Representative appointed pursuant to
Section 4.13.3.1.
4.12 Board Chairman.
The initial voting Representatives may elect from any of the initial
voting Representatives a Chairman of the Board. Thereafter, the Chairman of the
Board shall be a voting Representative appointed by the Partners as follows:
each year at the annual meeting of Partners held pursuant to Section 5.1.1,
the Chairman shall be appointed by a Partner, alternating yearly between
Uniroyal-CA and Bayer-CA. Except as provided in Section 4.13.3.3, the
Chairman shall have no additional vote other than his vote as a
Representative. The Chairman of the Board shall preside at all meetings of
the Board and shall perform such other duties as may be prescribed from time
to time by the Board and by this Agreement.
4.13 Deadlock.
4.13.1 Memorandum. If Deadlock occurs, a Partner may circulate a memorandum
to the other Partner and to the parent company of the other Partner by
registered mail, return receipt requested to the address for such other
Partner and such parent of such other Partner provided in Section 11.6
hereof, stating a summary of the issue, its proposed resolution of the
issue, and the considerations in support of such proposed resolution.
Such memorandum shall be considered by the president, a member of the board
of management or other senior executive (hereinafter "senior executive") of
the parent of the Partner. Within twenty (20) days of receipt of such a
memorandum by the parent of the Partner, the senior executives of the parent
of each Partner shall meet to negotiate in goodfaith a mutually satisfactory
resolution of the Deadlock.
4.13.2 Mediation. If such senior executives are not able to reach a mutually
satisfactory resolution of the Deadlock within thirty (30) days after the date
of the first such meeting, then the Partners shall attempt in good faith to
mediate a resolution to the Deadlock in accordance with the procedures set
forth in this Section 4.13 and Exhibit B, parts A and B, with a mediator that is
mutually acceptable to both Partners. If the Partners cannot agree on such a
mediator within such thirty (30) days, then either or both Partners may
request, by notice to the other Partner, that a mediator be appointed by the
American Arbitration Association ("AAA") to mediate the resolution of the
Deadlock.
4.13.3 Initial Period. For an initial period of five (5) years after the
date of formation of the Partnership ("Initial Period"), the following shall
apply:
4.13.3.1 Reconstitution. If a Deadlock has occurred, and there is no
resolution by Partners within ninety (90) days after the date that the
mediator is agreed to, or if no agreement is reached as to a mediator, then
within ninety (90) days after the date the mediator is appointed by AAA,
either or both Partners may elect by giving written notice to the other
Partner that the Board shall be reconstituted within sixty (60) days
thereafter as an eight (8) person board.
The reconstitution means that the six (6) voting Representatives shall be
removed by the Partners appointing such Representatives, and the following
appointments made: (i) each Partner shall appoint three (3) persons not
previously Representatives of the Partnership as voting Representatives;
(ii) a seventh Representative, independent of both Partners, shall be
appointed by mutual agreement of the Partners as a seventh voting
Representative; and (iii) the resident shall continue as a non-voting
Representative.
4.13.3.2 Seventh Voting Representative. If the Partners cannot mutually
agree
upon a seventh Representative within thirty (30) days after the date of such
reconstitution as provided in Section 4.13.3.1, then each Partner shall select
an independent person and the two (2) persons so chosen shall select the
seventh independent voting Representative. The seventh Representative shall
receive reasonable compensation to serve on the Board, to be paid as provided in
Section 4.11.
4.13.3.3 No Abstention. Following reconstitution of the Board as provided in
Sections 4.13.3.1 and 4.13.3.2, the Board shall vote on the issue which is the
subject of the Deadlock, within a reasonable period of time following the
reconstitution of the Board, but in no event later than three (3) months, and
no voting Representative (including the Chairman, if any) shall abstain from
voting on the issue which is the subject of the Deadlock.
4.13.3.4 Removal after Vote. After the vote on the issue which is the
subject of the Deadlock, the seventh and independent Representative may be
removed by a vote for such removal by any three (3) other voting
Representatives.
4.13.4 Post-Initial Period. If a Deadlock occurs after the expiration of the
Initial Period, and such senior executives are not able to reach a mutually
satisfactory resolution of the issue which is the subject of the Deadlock
within thirty (30) days of the first meeting of such senior executives, then the
Partners shall attempt in good faith to mediate a resolution to the Deadlock
in accordance with this Section 4.13 and Exhibit B, parts A and B, with a
mediator that is mutually acceptable to both Partners. If the Partners
cannot agree on such a mediator within such thirty (30) days after such
first meeting, one or both Partners may request, by notice to the other
Partner, that a mediator be appointed by the AAA to mediate the resolution
of the Deadlock.
4.13.4.1 Sale. In the event that a Deadlock continues for more than six (6)
months after the commencement of mediation in accordance with Section 4.13.4,
then the following shall apply:
4.13.4.1.1 A Partner, by notice to the other Partner, may require the Board
to solicit proposals from internationally recognized investment banking firms to
provide the services outlined in Section 4.13.4.1. The Board shall select an
internationally recognized investment banking firm reasonably acceptable to
both Partners. If the Partners cannot mutually agree upon such firm within
thirty (30) days after the date the proposals are due to the Board, then
each Partner shall select a Neutral Investment Bank, and the two Neutral
Investment Banks so chosen shall select a third internationally recognized
investment banking firm to provide the services outlined in
Section 4.13.4.1. The internationally recognized investment banking
firm selected pursuant to this Section is hereinafter referred to as the "Firm".
4.13.4.1.2 The Firm shall promptly solicit bids from responsible prospective
buyers to purchase (i) all, but not less than all, of the assets of the
Partnership; and/or (ii) all, but not less than all, of the Partnership
Interests in the Partnership.
4.13.4.1.3 Each Partner may submit a bid to the Firm to purchase either the
other Partner's Partnership Interest or all of the assets of the Partnership,
but no Partner may bid, or enter into an agreement with respect to such bid,
with a Person that is not an Affiliate of such Partner.
4.13.4.1.4 If the Partners cannot mutually agree on the selection of a bid
within thirty (30) days of the bid submission date, the Firm shall promptly
determine the highest responsible bid and notify the Partners of its
determination.
4.13.4.1.5 Upon the selection of a bid in accordance with Section 4.13.4.1.4,
each Partner and the Partnership shall comply with the bid. If the bid is to
purchase the assets of the Partnership, each Partner shall cause the
Partnership to sell all of its assets to the selected bidder. If the bid is
to purchase all the Partnership Interests in the Partnership, or in the
case of Section 4.13.4.1.3, the other Partner's Partnership Interest in the
Partnership, each Partner obligated to sell shall sell its Partnership
interest to the selected bidder.
4.13.4.1.6 The net proceeds of any sale occurring pursuant to this Section
4.13 shall be distributed to: (i) each Partner selling its Partnership
Interest, or (ii) both Partners, if the assets of the Partnership are sold,
all in accordance with the terms of this Agreement. The Partnership shall
be responsible for all fees and costs incurred pursuant to this Section 4.13.
4.13.5 The right of first offer and right of first refusal in Section 8.1
shall not be applicable in the event that Deadlock has occurred.
4.13.6 If a sale pursuant to Section 4.13.4.1.5 occurs, then the following
shall apply:
4.13.6.1 In the case of a sale of all the Partnership Interests of both
Partners, or a sale of the Partnership's assets to a Person or Persons not
previously a Partner and not currently an Affiliate of a Partner, the Partners
and the parents of both Partners shall be deemed to have "Divested" and to be
"Divested Sponsors", as those terms are defined in the Marketing Agreement.
For purposes of the Marketing Agreement, the date of such sale shall be the
"Divestment Date."
4.13.6.2 In the case of a sale of one Partner's Partnership Interest to the
other Partner or to an Affiliate of the other Partner, or the sale of the
Partnership's assets to one Partner or to an Affiliate of one Partner, the
Partner and parent of the Partner who sells its Partnership Interest or causes
the Partnership to sell the assets to the other Partner or its Affiliate shall
be deemed to have "Divested" and to be a "Divested Sponsor", as those terms
are defined in the Marketing Agreement. For purposes of the Marketing
Agreement, the date of such sale shall be the "Divestment Date."
4.13.6.3 In the case of a sale of a Partner's Partnership Interest to the
other Partner, to an Affiliate of the other Partner, or to a Person not
currently a Partner, the selling Partner shall have the obligation to
transfer the Post-Exercise Agreement to the purchaser, and Uniroyal-CA shall
have the right, but not the obligation, to transfer the Pre-Exercise
Agreement to the purchaser.
Article V
MEETINGS OF PARTNERS
5.1 Meetings of and Voting by Partners.
5.1.1 Meetings of the Partners shall be held at least annually in the month
of
March or such other time as designated by the Board. A meeting of the
Partners may be called at any time by four (4) voting Representatives or by a
Partner Vote. Meetings of Partners shall be held at the Partnership's
principal place of business or at any other place designated by the Board. Not
less than fourteen (14) days, nor more than ninety (90) days, before each
meeting, the Person calling the meeting shall give written notice of the
meeting to each Partner entitled to vote at the meeting. The notice shall
state the time, place, and purpose of the meeting. Notwithstanding the
foregoing provisions, each Partner who is entitled to notice waives notice if
before or after the meeting the Partner signs a waiver of the notice that is
filed with the records of Partners' meetings or is present at the meeting in
person or by proxy. Unless this Agreement provides otherwise, at a meeting of
the Partners, the presence in person or by proxy of all Partners constitutes a
quorum. A Partner may vote either in person or by written proxy signed by a
duly authorized officer of the Partner.
5.1.2 Except as otherwise provided in this Agreement, the affirmative vote of
all Partners shall be required to approve any matter coming before the
Partners.
5.1.3 In lieu of holding a meeting, the Partners may vote or otherwise take
action by a written instrument indicating the consent of all Partners.
5.1.4 A Partner may grant a proxy entitling any other Person appointed by the
same Partner to exercise its voting rights. Such proxy shall be in writing
and shall specify a termination date. The other Partner shall be entitled to
inspect the proxy on demand. Any proxy shall be filed with the minutes of the
meeting.
5.2 Services; Intercompany Dealings.
5.2.1 No Partner shall be required to perform services for the Partnership
solely by virtue of being a Partner. Unless approved by Majority Vote of the
Board, no Partner shall perform services for the Partnership or be entitled to
compensation for services performed for the Partnership.
5.2.2 Notwithstanding the foregoing, the Partnership is authorized to enter
into the Operative Agreements.
5.3 Duty of Partners.
No Partner or any of its Affiliates, nor any officer, director, employee
or former employee of any Partner or its Affiliates shall have any
obligation, or be liable, to the Partnership, or to any Person, including
any other Partner, or an Affiliate of a Partner, for: (i) exercising any of the
rights of such Partner or such Affiliate under this Agreement or any of the
Operative Agreements to which such Partner or its Affiliate is or will be a
party; (ii) exercising or failing to exercise its rights as a Partner of the
Partnership; or (iii) breach of any fiduciary or other similar duty to the
Partnership, or any Person, including any other Partner or an Affiliate of a
Partner by reason of such conduct, other than a breach of any Operative
Agreement.
5.4 Resignation or Withdrawal
No Partner shall have the right to resign or withdraw from the
Partnership except upon termination of the Partnership as provided in Section
9.4, or upon the transfer of such Partner's Partnership Interest in accordance
with Section 4.13 or Article VIII.
Article VI
OFFICERS
6.1 Officers.
The Board shall have the power and authority to appoint a president,
general manager, secretary, chief financial officer and such other officers
of the Partnership as the business of the Partnership may require, each of whom
shall hold office for such period, have such authority and perform such duties
as are provided in this Agreement or as the Board determines. Any two or more
offices may be filled by the same person, except the offices of president and
chief financial officer.
6.2 Election and Term of Office.
The officers of the Partnership shall be elected by the Board at any
regular or special meeting of the Board. Each officer shall hold office
until his successor shall have been duly elected and qualified or until his
death, resignation or removal. Election or appointment of an officer shall
not of itself create contract rights. The Board may authorize the Partnership
to enter into an employment contract with any officer in accordance with
applicable law, but no such contract shall impair the right of the Board to
remove any officer at any time in accordance with Section 6.3 hereof.
6.3 Removal.
Any officer may be removed by the Board, whenever in its judgment the
best interests of the Partnership will be served thereby, but such removal,
other than for cause, shall be without prejudice to the contract rights, if
any, of the person so removed. The removal of the President shall include
the removal of such individual as a non-voting Representative.
6.4 Vacancies.
A vacancy in any office because of death, resignation, removal,
disqualification or otherwise may be filled by the Board for the unexpired
portion of the term.
6.5 President.
Except as otherwise provided in this Agreement and specifically by
Section 4.1.2 hereof, the President of the Partnership shall act as the chief
executive officer and in general supervise and control the day-to-day
business and affairs of the Partnership. The President shall see that all
orders and resolutions of the Board are carried into effect. He may sign,
with the Secretary of the Partnership or any other officer of the
Partnership duly authorized by the Board, deeds, mortgages, bonds,
Contracts, or other instruments that the Board has authorized to be
executed, except in cases where the signing and execution
thereof shall be expressly delegated by the Board or by this Agreement to some
other officer or agent of the Partnership or shall be required by law to be
otherwise signed or executed. The President shall perform such other duties
as may be prescribed by the Board from time to time. Notwithstanding any
provisions in this Agreement, the powers and duties of the President may be
delegated by the Board to the general manager, if such officer is appointed.
6.6 Vice Presidents.
In the absence of the President or in the event of his death, inability
or refusal to act, a Vice President designated by the Board shall perform the
duties of the President, and when so acting, shall have all the powers of and be
subject to all the restrictions upon the President. Any Vice President
shall perform such duties as from time to time may be assigned to him by the
President and by the Board. The Board may, at its discretion, delegate to
the President the authority to appoint and remove vice presidents.
6.7 Secretary.
The Secretary shall keep the minutes of the meetings of Partners and of
the Board in one or more books provided for such purpose; cause to be given all
notices of meetings of Partners and of the Board; be custodian of the legal
records of the Partnership; have charge of the record of Partners; and in
general perform all duties incident to the office of secretary and such
other duties as from time to time may be assigned to the Secretary by the
President or by the Board.
6.8 Chief Financial Officer.
The Chief Financial Officer shall supervise the receipt and custody of
the Partnership's funds; cause to be kept correct and complete books and records
of account, including full and accurate accounts of receipts and disbursements,
in books belonging to the Partnership; assume investment management
responsibility for all funds and securities of the Partnership; cause to be
prepared, distributed and retained all reports and records required by law
regarding the Partnership's financial status; and perform such other duties
as may be assigned to him, or specifically required to be performed by him,
by the President and by the Board.
6.9 Remuneration.
The remuneration of officers shall be fixed from time to time by the
Board; provided, however, that the Board may delegate to the President the
authority to fix the salary of all or any class of officers except the
office of President.
Article VII
INDEMNIFICATION; LIMITATION OF LIABILITY;
OTHER ACTIVITIES; CONFIDENTIALITY
7.1 Indemnification by the Partnership.
The Partnership, to the fullest extent permitted by applicable law, shall
indemnify, defend and hold harmless any officer, employee or agent of the
Partnership (each a "Covered Partnership Person") from and against any loss,
damage, or claim incurred by such Covered Partnership Person, including
reasonable legal fees, disbursements and reasonable settlement payments,
incurred in connection with any claim, action, suit or proceeding or threat
thereof, made or instituted in which such Covered Partnership Person may be
involved or be made a party by reason of such Covered Partnership Person's
association with the Partnership, or by reason of any act or omission
performed or omitted by such Covered Partnership Person acting in good faith
on behalf of the Partnership and in a manner reasonably believed to be
within the scope of authority conferred on such Covered Partnership Person
by or pursuant to this Agreement, except that no Covered Partnership Person
shall be entitled to be indemnified in respect of any loss, damage or claim
incurred by such Covered Partnership Person by reason of gross negligence,
bad faith, or willful misconduct with respect to such act or
omissions; provided, however, that any indemnity under this Section 7.1 shall
be provided out of and to the extent of Partnership assets only, and no other
Covered Partnership Person and no Partner or Representative shall have any
personal liability on account thereof.
7.2 Notice to Partnership.
In the event that any claim, demand, action, suit or proceeding shall be
instituted or asserted or any loss, damage or claim shall arise in respect of
which indemnity may be sought pursuant to Section 7.1, such Covered
Partnership Person shall promptly notify the Partnership in writing.
Failure to provide notice shall not affect the obligations hereunder except
to the extent the Partnership is actually prejudiced thereby.
7.3 Contest by Partnership.
The Partnership shall have the right to participate in and/or control the
defense of any such claim, demand, action, suit or proceeding and, in
connection therewith, to retain counsel reasonably satisfactory to each Covered
Partnership Person, at the Partnership's expense, to represent each Covered
Partnership Person and any others the Partnership may designate in such
claim, demand, action, suit or proceeding. The Partnership shall keep the
Covered Partnership Person advised of the status of such claim, demand,
action, suit or proceeding and the defense thereof and shall consider in
good faith recommendations made by the Covered Partnership Person with
respect thereto.
7.4 Advances of Expenses by Partnership.
Expenses incurred by a Covered Partnership Person in defending any claim,
demand, action, suit or proceeding subject to Section 7.1 shall, from time to
time, upon request by the Covered Partnership Person and approval of the
Board, be advanced by the Partnership prior to the final disposition of such
claim, demand, action, suit or proceeding upon receipt by the Partnership of an
undertaking by or on behalf of the Covered Partnership Person to repay such
amount if it shall be ultimately determined in a judicial proceeding that such
Covered Partnership Person is not entitled to be indemnified as authorized in
Section 7.1.
7.5 Indemnification by a Partner.
Each Partner, to the fullest extent permitted by applicable law, shall
indemnify, defend and hold harmless the Partnership, each Representative
appointed by such Partner (including those who have been, but no longer are,
such Representatives) and each other Partner (including those who have been,
but no longer are, Partners) (each a "Covered Partner Person") from and
against any loss, damage or claim incurred by such Covered Partner Person,
including reasonable legal fees, disbursements and reasonable settlement
payments incurred in connection with any claim, action, suit or proceeding
or threat thereof, made or instituted (i) in which the Partnership or the
other Partner may be involved, or are brought by the Partnership or the
other Partner by reason of a material breach of such Partner's
representations or covenants under this Agreement or
otherwise or (ii) in which the Representative appointed by such Partner may
be involved or be made a party by reason of such Representative's association
with the Partnership or by reason of any act or omission performed or omitted by
such Representative acting in good faith on behalf of the Partner or the
Partnership and in a manner reasonably believed to be within the scope of
authority conferred on such Representative by such Partner or the
Partnership, except that no Representative shall be entitled to be
indemnified in respect of any loss, damage or claim incurred by such
Representative by reason of gross negligence, bad faith or willful
misconduct with respect to such act or omissions.
7.6 Notice to Partner.
In the event that any claim, demand, action, suit or proceeding shall be
instituted or asserted or any loss, damage or claim shall arise in respect of
which indemnity may be sought pursuant to Section 7.5, such Covered Partner
Person shall promptly notify the indemnifying Partner in writing. Failure to
provide notice shall not affect the obligations hereunder except to the extent
the indemnifying Partner is actually prejudiced thereby.
7.7 Contest by Partner.
The indemnifying Partner shall have the right to participate in and/or
control the defense of any such claim, demand, action, suit or proceeding and,
in connection therewith, to retain counsel reasonably satisfactory to each
Covered Partner Person, at the Partner's expense, to represent each Covered
Partner Person and any others the Partner may designate in such claim, demand,
action, suit or proceeding. The Partner shall keep the Covered Partner Person
advised of the status of such claim, demand, action, suit or proceeding and
the
defense thereof and shall consider in good faith recommendations made by the
Covered Partner Person with respect thereto.
7.8 Advances of Expenses by Partner.
Expenses incurred by a Covered Partner Person in defending any claim,
demand, action, suit, or proceeding subject to Section 7.5 shall, from time to
time, upon request by the Covered Partner Person and approval of the
indemnifying
Partner, be advanced by such Partner prior to the final disposition of such
claim, demand, action, suit or proceeding upon receipt by such Partner of an
undertaking by or on behalf of the Covered Partner Person to repay such amount
if it shall be ultimately determined in a judicial proceeding that such
Covered Partner Person is not entitled to be indemnified as authorized in
Section 7.5.
7.9 Other.
The indemnifications provided by Section 7.1 shall be in addition to any
other rights to which a Covered Partnership Person may be entitled under any
agreement, vote of the Board or otherwise, as a matter of law or equity, both
as to an action in the indemnifying party's capacity as Partnership and as to an
action in another capacity. The indemnifications provided by Section 7.5
shall be in addition to any other rights to which a Covered Partner Person
may be entitled under any agreement, as a matter of law or equity, or
otherwise, both as to an action in the indemnifying party's capacity as a
Partner, and as to an action in another capacity.
7.10 Effect of Interest in Transaction.
No Covered Partnership Person or Covered Partner Person shall be denied
indemnification in whole or in part under this Article VII or otherwise by
reason of the fact that the Covered Partnership Person or Covered Partner
Person had an interest in the transaction with respect to which the
indemnification applies if the transaction was otherwise permitted or not
expressly prohibited by the terms of this Agreement.
7.11 No Third Party Rights.
The provisions of this Article VII are for the benefit of the Covered
Partnership Persons and the Covered Partner Persons and shall not be deemed to
create any rights for the benefit of any other Persons.
7.12 Insurance.
7.12.1 The Partnership shall maintain, at its expense, an insurance policy or
policies with director (which shall include a person such as a
Representative), officer or employee coverage of at least FIVE MILLION
UNITED STATES DOLLARS (US$5,000,000) to protect itself and any Covered
Partnership Person against liability arising out of this Agreement or
otherwise, whether or not the Partnership would have the power to indemnify
any such person against such liability under applicable laws.
Each Partner shall maintain, at its expense, an insurance policy or policies
to adequately protect itself and any Representative appointed by such
Partner against liability arising out of this Agreement or otherwise,
whether or not the Partner would have the power to indemnify any such
Representative against such liability under applicable
laws.
Each Partner and the Partnership shall provide to one another, upon request,
evidence of such insurance.
7.12.2 The Partnership, at its expense, shall maintain property and casualty
and such other insurance, in such amounts and against such risks, and with such
deductibles and self insured retention limits, as the Board may, by Majority
Vote, determine, provided however, that for the first year after formation of
the Partnership, the Partnership shall maintain such other types and amounts of
property and casualty insurance as was carried and insured against by
Uniroyal-CA with respect to the Business (as defined in the Purchase and
Contribution Agreement). Upon request, the Partnership shall deliver to
each Partner satisfactory evidence of any such coverage.
7.13 Limitation of Liability.
7.13.1 Neither the Partners (nor any of their respective Affiliates), nor the
Representatives, nor the Board shall be liable, responsible or accountable in
damages or otherwise to the Partnership or the Partners for any act or
omission by any such Person (which shall include any applicable entity)
performed in good faith pursuant to the authority granted to such Person by
this Agreement or in accordance with its provisions, and in a manner
reasonably believed by such Person to be within the scope of the authority
granted to such Person and in the best interest of the Partnership;
provided, however, that such Person shall retain liability for acts or
omissions that involve intentional misconduct, a knowing violation of the
law or for any transaction from which the Person will personally receive a
benefit in money, property, or services to which the Person is not legally
entitled.
7.13.2 Each of the Partners shall at all times duly and punctually pay and
discharge its separate debts, liabilities, obligations, duties and agreements,
whether present or future, and keep indemnified and save harmless the
Partnership property and the other Partners and their respective estates and
effects from all actions, proceedings, costs, claims and demands of every
nature or kind whatsoever arising out of or in connection with such
Partner's separate debts, liabilities, obligations, duties and agreements.
7.13.3 Except with the prior approval of the Board, the Partnership shall not
enter into any contract or other obligation under which the Partnership incurs
a financial obligation in excess of CDN$100,000 unless there is contained
therein appropriate provisions limiting the claims of all parties to such
contracts and all Persons benefitting under such obligations to the assets
of the Partnership and expressly waiving any rights of such Persons to
proceed against the Partners to satisfy judgment against the Partnership or
any Partner individually.
7.14 Other Activities.
7.14.1 The Partners and the Partnership each acknowledge that a fundamental
intent of this Agreement and expectation of the Partners and the Partnership
is that, except as expressly provided in this Agreement or in the Operative
Agreements, (i) the Partnership shall be the exclusive distribution channel
for each Partner and their Affiliates for all Active Ingredients, Formulations,
Equipment and Other Products and/or Services for Seed Treatment uses and
applications in Canada, and (ii) the Partnership shall develop, formulate,
manufacture, register, market and sell Active Ingredients, Formulations,
Equipment and Other Products and/or Services only for Seed Treatment uses and
applications inside Canada.
7.14.2 The Partnership and the Partners hereto agree to exercise in good
faith all reasonable efforts to satisfy the intent and expectation set forth in
Section 7.14.1. In furtherance of that intent, and to protect adequately the
Partner's Partnership Interest in the Partnership, it is necessary and
essential that the Partnership and the Partners enter into and adhere to the
covenants contained in this Section 7.14.
7.14.3 Except as otherwise provided in the Operative Agreements, no Partner
or its Affiliates shall, either directly or indirectly: (i) Compete with the
Partnership for Seed Treatment uses and applications in Canada; (ii) Invest or
Participate in any Person that Competes with the Partnership for Seed
Treatment uses and applications in Canada or market or sell any
Post-Exercise Products to any Person; or (iii) sell, market or distribute
Active Ingredients, Formulations, Equipment and Other Products and/or
Services to any Person if that such Partner or such Affiliate knows or has
reason to believe such Person intends to market, sell, distribute,
use or apply such Active Ingredients, Formulations,
Equipment or Other Products and/or Services for Seed Treatment uses or
applications inside Canada.
7.14.4 No employee of the Partnership, or employee or member of the board of
directors, managing board or similar governing body ("Governing Body") of a
Partner or its Affiliates shall serve as an employee or member of a Governing
Body of a Competitor of the Partnership.
7.14.5 Except as otherwise provided in the Operative Agreements, the
Partnership
shall not develop, formulate, manufacture, register, market or sell Active
Ingredients, Formulations, Equipment and Other Products and/or Services for
Seed Treatment uses and applications outside Canada, or for other than Seed
Treatment, regardless of where the use or application occurs, or otherwise
Compete with either Partner in Seed Treatment uses or applications outside
Canada or in other than Seed Treatment, regardless of where the use or
application occurs.
7.14.6 Each of the Partners and the Partnership agree that during the term of
this Agreement, and continuing for twelve (12) months thereafter, it will not,
nor will it permit any of its Affiliates to, solicit for employment or employ
any employee employed by the Partnership or either Partner, other than any
employee that has been terminated by such party prior to such solicitation.
7.14.7 Without limiting the generality or effect of any other provisions of
this Agreement, it is the intention of the Parties that the provisions of this
Agreement shall supercede Sections 29 and 30 of the Act.
7.15 Confidential Information.
7.15.1 Except as may be specifically authorized in this Agreement or the
Operative Agreements, or as may be permitted by agreements with Third Parties,
or as may be specifically agreed to by the Partners and the Partnership in a
writing signed by all parties, the Partnership will hold the Confidential
Information of each Partner, the Partnership and any Third Party in strict
confidence and take all reasonable steps to prevent use by, or disclosure to,
any other Person, which steps will include at least those taken by the
Partnership to protect its own Confidential Information of like kind, or use
or disclose any such Confidential Information for any purpose except as
provided in this Agreement, agreements with Third Parties or the Operative
Agreements.
7.15.2 Except as may be specifically authorized in this Agreement or the
Operative Agreements, or as may be permitted by agreements with Third Parties,
or as may be specifically agreed by the Partners and the Partnership in a
writing signed by all parties, the Partners will hold the Confidential
Information of the other Partner, the Partnership and any Third Party in
strict confidence and take all reasonable steps to prevent use by, or
disclosure to, the other Partner and any other Third Parties, which steps
will include at least those taken by the Partner to protect its own
Confidential Information of like kind, or use or disclose any such
Confidential Information for any purpose except as provided
in this Agreement, agreements with Third Parties or the Operative Agreements;
provided, however that a Partner may disclose Confidential Information of the
Partnership and the other Partner to a Third Party in connection with a sale
of the Partnership Interest pursuant to Sections 4.13 or Article VIII or a
transfer, by merger, consolidation, sale or otherwise, of the shares of a
Partner or its Direct or Indirect Parent or of all or substantially all of
the Crop Protection Business of a Partner or its Direct or Indirect Parent;
provided that prior to such disclosure, such Third Party agrees in writing
not to disclose such Confidential Information to any other Third Parties or
to otherwise use such Confidential Information without the prior written
permission of the disclosing Partner hereto.
7.15.3
7.15.3.1 Except as specifically authorized in this Agreement or the Operative
Agreements, the Partnership shall not disclose any competitively significant
Confidential Information of a Partner to any Representative who works in the
crop protection or agrochemical operations group of the other Partner.
7.15.3.2 Except as permitted by agreements with Third Parties, the
Partnership will not disclose any competitively significant Confidential
Information of a Third Party to any Partner or Representative.
7.15.3.3 Except as may be specifically authorized in this Agreement or the
Operative Agreements, or as may be permitted by agreements with a Partner or
as may be specifically agreed to by a Partner and the Partnership in writing,
the Partnership will hold the Confidential Information of each Partner and each
Partner's Affiliates in strict confidence, and take all reasonable steps to
prevent use by, or disclosure to one Partner of Confidential Information of
the other Partner, or the other Partner's Affiliates, which steps will include
at least those taken by the Partnership to protect its own Confidential
Information of like kind; provided however, the Partnership, subject to Section
7.15.3.1, may disclose Confidential Information of a Partner to the Board to the
extent such disclosure is required to permit the Board to conduct the business
and affairs of the Partnership pursuant to Section 4.1. Each Representative
shall be required to execute an undertaking that, in the event the
Representative of one Partner is given access to the Confidential Information of
the other Partner or its Affiliates as a result of performing his duties on the
Board, the Representative shall hold the Confidential Information of the Partner
or its Affiliates in strict confidence, and will not use the Confidential
Information for any purpose other than to perform his duties on the Board, and
will not disclose the Confidential Information to any Person other than another
Representative who is authorized, pursuant to Section 7.15.3.1, to have access
to such Confidential Information.
7.15.4 Except as required by law, including provincial securities
legislation,
and the applicable regulations of stock exchanges, the Partnership and the
Partners shall not make any announcement, press release or other public
statement relating in any manner to this Agreement, the terms hereof or the
relationship of the Partners without first obtaining the consent of the Partners
to the disclosure proposed to be made. The Partners hereto shall not
unreasonably withhold their consent to any request made by a party pursuant to
this Section 7.15.4. The Partners and the Partnership shall use their best
efforts to consult and coordinate with each other before making any
announcement, press release or other public statement required to be made by law
or pursuant to the applicable provisions of Canadian stock exchanges.
7.16 Agreements with the Partnership.
Neither Partner shall, without the approval of a Majority Vote of the
Board, permit any of its Affiliates to create, amend, terminate or modify any
arrangement, agreement or contract between the Partnership and (i) any
Partner, Gustafson LLC, a Subsidiary or any Member, (ii) an Affiliate of a
Partner, Gustafson LLC, a Subsidiary or a Member, or (iii) an employee,
executive officer or director or other board member or representative of a
Partner, Gustafson LLC, a Member or a Subsidiary. Neither Partner shall,
without the unanimous consent of the Board, permit any sublicense under the
Cross License Agreement by it or any of its Affiliates.
Article VIII
TRANSFERS AND ADMISSION OF NEW PARTNERS
8.1 Preemption Rights; Right of First Offer; Rights of First Refusal.
Except for sales pursuant to Section 4.13, no Partner shall Transfer any or
all of its Partnership Interest without first complying with this Section 8.1.
8.1.1 Right of First Offer. If a Partner desires to Transfer its Partnership
Interest, a Partner may so notify the other Partner in the manner provided in
Section 8.1.1.1 of its willingness to Transfer ("Soliciting Offer"). As used in
this Section 8.1.1, the Partner desiring to Transfer shall be referred to as
the "Soliciting Partner", and the other Partner shall be referred to as the
"NonSoliciting Partner".
8.1.1.1 The Soliciting Partner's Soliciting Offer shall include: (i) the
Percentage of Partnership Interest being proposed for Transfer which shall be
that Soliciting Partner's entire Partnership Interest; (ii) the date for
responding to the Soliciting Offer, which date shall not be less than thirty
(30) days after the date of the Soliciting Offer; (iii) the date of closing of
the purchase of the Partnership Interest, which purchase date shall not be more
than one hundred and eighty (180) days after the date of the Soliciting Offer;
(iv) a proposed purchase price for the Partnership Interest, denominated and
payable in United States dollars at closing ("Proposed Purchase Price"); and (v)
other basic terms and conditions of the proposed Transfer.
8.1.1.2 A Soliciting Offer is provisionally accepted by the NonSoliciting
Partner if a letter of intent is signed by the Soliciting Partner and the
NonSoliciting Partner in the manner and within the time frame required in the
Soliciting Offer, subject to the execution of the definitive purchase
agreement in accordance with the provisions of Section 8.1.1.3.
The closing of the transaction contemplated by such Soliciting Offer shall take
place at the office of the Soliciting Partner's solicitors in Canada on a date
which is the fifth (5) day following the date that Section 8.1.3 has been
satisfied, but in no event later than one hundred and eighty (180) days after
the date of the Soliciting Offer.
8.1.13 If (i) a Soliciting Offer is rejected, or is not accepted by the
NonSoliciting Partner as provided in Section 8.1.1.2, or (ii) a definitive
purchase agreement is not signed by both the Soliciting Partner and the
NonSoliciting Partner within forty-five (45) days of the NonSoliciting
Partner's
acceptance of such Soliciting Offer, despite the good faith efforts of the
Partners to do so, or (iii) the Transfer of the Partnership Interest fails to
close in accordance with the terms of the purchase agreement (including the
failure to satisfy Section 8.1.3), then, upon the occurrence of any of (i),
(ii)
or (iii), during the period ending sixty (60) months following the date of
this Agreement, the Soliciting Partner may provide the NonSoliciting Partner
with a revised Soliciting Offer that replaces the Proposed Purchase Price with
the Calculated Purchase Price and which revises the dates for response and
closing to not less than thirty (30) days from the date of the revised
Soliciting Offer and not more than one hundred and eighty (180) days from the
date of the revised Soliciting Offer, respectively.
8.1.1.4 Upon the occurrence more than sixty (60) months following the date of
this Agreement of any of (i), (ii) or (iii) as provided in Section 8.1.1.3, if
the Soliciting Partner so elects, the Soliciting Partner and the NonSoliciting
Partner shall, within forty-five (45) days of such occurrence, engage a
Neutral
Investment Bank to value the Partnership Interest of the Soliciting Partner,
denominated and payable in United States dollars ("IBank Value"). The
engagement of the Neutral Investment Bank shall be on the following terms and
conditions:
(x) the banker shall be instructed to determine the Fair Market Value of the
entire Partnership Interest of the Soliciting Partner, taking into account the
terms and conditions of the Soliciting Offer, other than price, (y) the
instructions provided to the Neutral Investment Bank are subject to the
NonSoliciting Partner's approval, which approval shall not be unreasonably
withheld, and (z) at no time will the Neutral Investment Bank be advised of
any Partner's current valuation of the Partnership and/or its Partnership
Interest.
Such IBank Value shall be provided within forty-five (45) days of the
engagement of the Neutral Investment Bank.
8.1.1.4.1 The Soliciting Partner, after obtaining the IBank Value as provided
in Section 8.1.1.4, may provide the NonSoliciting Partner with a revised
Soliciting Offer which replaces the Proposed Purchase Price with the IBank
Value and which revises the dates for response and for closing to be thirty (30)
days from the date of the revised Soliciting Offer and one hundred and eighty
(180) days from the date of the revised Soliciting Offer, respectively.
8.1.1.4.2 If within thirty (30) days after obtaining the IBank Value as
provided in Section 8.1.1.4, the Soliciting Partner does not provide the
NonSoliciting Partner with a revised Soliciting Offer as provided in Section
8.1.1.4.1, the Soliciting Partner (i) shall pay the fees of the Neutral
Investment Bank, and (ii) may not Transfer its Partnership Interest in
accordance with this Section 8.1.1 for a period of eighteen (18) months after
the date of receipt of the IBank Value, after which period the Soliciting
Partner may Transfer such interest after again complying with the provisions of
this Section 8.1.1.
8.1.1.5 A revised Soliciting Offer, as provided in Section 8.1.1.3 or Section
8.1.1.4.1 ("Revised Soliciting Offer") is provisionally accepted by the
NonSoliciting Partner if a letter of intent is signed by the Soliciting
Partner and the NonSoliciting Partner in the manner and within the time frame
required in the Revised Soliciting Offer, subject to the execution of the
definitive purchase agreement in accordance with the provisions of Section
8.1.1.6. The closing of the transaction contemplated by such Revised Soliciting
Offer shall take place at the office of the Soliciting Partner's solicitors in
Canada on a date which is the fifth (5) day following the date that Section
8.1.3 has been satisfied, but in no event later than one hundred and eighty
(180) days after the date of the Revised Soliciting Offer, and the fees of any
Neutral Investment Bank engaged as provided in Section 8.1.1.4 shall be paid
one-half by the Soliciting Partner and one-half by the NonSoliciting Partner.
8.1.1.6 If (i) a Revised Soliciting Offer is rejected, or is not accepted by
the NonSoliciting Partner as provided in Section 8.1.1.5, or (ii) a definitive
purchase agreement is not signed by both the Soliciting Partner and the
NonSoliciting Partner within forty-five (45) days of the NonSoliciting
Partner's acceptance of such Revised Soliciting Offer, despite the good faith
efforts of the Partner to do so, or (iii) the Transfer of the Partnership
Interest fails to close in accordance with the terms of the purchase agreement
(including the failure to satisfy Section 8.1.3), then, upon the occurrence of
any of (i), (ii) or (iii) the Soliciting Partner may, during the eighteen (18)
month period following the occurrence of any of (i), (ii) or (iii)
("Solicitation Period"), Transfer all, but not less than all, of the Partnership
Interest to a Third Party, on terms including purchase price which are
reasonably similar to those in the Revised Soliciting Offer and which are
economically equivalent or greater
than those in the Revised Soliciting Offer. Upon the occurrence of any of
(i), (ii) or (iii), the NonSoliciting Partner shall pay the fees of any Neutral
Investment Bank engaged as provided in Section 8.1.1.4.
8.1.1.7 In the event the Partnership Interest is not sold within the periods
provided in Section 8.1.1.6, the Soliciting Partner shall not, after the
periods,
Transfer such Partnership Interest to any Third Party without first complying
with Section 8.1.2 or, at the Soliciting Partner's option, again complying
with this Section 8.1.1.
8.1.2 Right of First Refusal If a Partner at any time receives a Bona Fide
Offer for the purchase of its Partnership Interest, such Partner (the
"Soliciting Partner") may, at its option, give the other Partner (the
"NonSoliciting Partner") notice of such Bona Fide Offer (the "Third Party
Soliciting Offer Notice"), provide with the Third Party Soliciting Offer Notice
a copy of the Bona Fide Offer and offer to Transfer such Partnership Interest to
the NonSoliciting Partner on the same terms and conditions, including purchase
price, as those contained in the Bona Fide Offer, except that the closing shall
take place at least ninety (90) days, and no later than one hundred eighty (180)
days after the date of the Third Party Soliciting Offer Notice.
8.1.2.1 Within thirty (30) days after receipt of the Third Party Soliciting
Offer Notice, the NonSoliciting Partner may elect, by written notice to the
Soliciting Partner, to purchase such Partnership Interest on the same terms
and conditions as contained in the Bona Fide Offer, as modified by the terms of
Section 8.1.2. Any Transfer shall be subject to the satisfaction of any
necessary approvals as provided in Section 8.1.3.
8.1.2.2 In the event the NonSoliciting Partner rejects or fails to accept
such offer within such thirty (30) days as provided in Section 8.1.2.1, the
Soliciting Partner shall be free to Transfer such Partnership Interest to such
Third Party, on the terms and conditions set forth in the Bona Fide Offer,
subject to any approvals required pursuant to Section 8.1.3, provided that such
Transfer occurs within two hundred and seventy (270) days after the rejection or
expiration of the period in which the NonSoliciting Partner might have accepted
the offer set forth in the Third Party Soliciting Offer Notice.
8.1.2.3 Any closing shall take place at the office of the Soliciting
Partner's solicitors in Canada.
8.1.2.4 In the event the Soliciting Partner shall not close the Transfer of
such Partnership Interest to the Third Party, on the terms and conditions in the
Bona Fide Offer, within two hundred seventy (270) days from the date the
NonSoliciting Partner rejects or the expiration of the period in which the
NonSoliciting Partner might have accepted the offer set forth in the Third Party
Offer Notice, then, except as may be otherwise permitted by Section 8.1.1,
should such Soliciting Partner thereafter elect to Transfer such Partnership
Interest to the same or other Third Party, on the same or other terms and
conditions, the Soliciting Partner shall be required to again comply with all of
the terms and provisions of Section 8.1.2.
8.1.2.5 No Partner may accept any offer from a Third Party for the purchase of
such Partner's Partnership Interest without such Partner having provided the
other Partner with a Third Party Soliciting Offer Notice relative to such
offer and having otherwise complied with this Section 8.1.2 or without complying
with Section 8.1.1.
8.1.3 Approvals. The Transfer of any Partnership Interest pursuant to Section
8.1 shall be subject to the requirements of the Competition Act (Canada) and all
other applicable federal and provincial laws and the expiration of any
applicable waiting periods and the receipt of necessary approvals in connection
therewith.
8.1.4 Transfer with Consent. Notwithstanding anything to the contrary in
Section 8.1, no Partner is obligated to comply with Sections 8.1.1 and 8.1.2
prior to the Transfer of such Partner's Partnership Interest to an Affiliate
of
such Partner, if such Transfer is made with the consent of the other Partner,
which consent shall not be unreasonably withheld, delayed or conditioned.
8.2 Involuntary Transfers.
8.2.1 Upon any Involuntary Transfer of all or any part of an Interest to
anyone other than a Partner, the Partner suffering such Involuntary Transfer
(the "Suffering Partner") shall immediately give notice of such Involuntary
Transfer
(the "Offered Interest Notice") to the Partnership and the other Partner (the
"NonSuffering Partner").
8.2.2 If the Interest of a Partner suffers an Involuntary Transfer as described
in Section 8.2.1, the NonSuffering Partner shall have the right to make an offer
to purchase such interest under this Section 8.2.2 upon receipt of the Offered
Interest Notice or upon otherwise learning of the Involuntary Transfer (the
"Offered Interest"). The NonSuffering Partner shall have a period of thirty
(30) days after the date of receipt of the Offered Interest Notice in which to
make a written offer (the "Interest Offer") to purchase the Offered Interest
under the terms and conditions of this Section 8.2. Failure of the NonSuffering
Partner to make an Interest Offer within the required time period shall be
deemed a rejection of the Offered Interest.
8.2.3 The purchase price for the Offered Interest shall be determined in
accordance with this Section 8.2.3. The purchase price to be paid for the
Offered Interest shall be equal to the fair market value of such Offered
Interest
on the date of the offer to purchase the Offered Interest (the "Price"). If
the holder of the Offered Interest ("Interest Seller") and the NonSuffering
Partner are able to reach agreement as to the Price, such agreed Price shall
govern. If the Interest Seller and the NonSuffering Partner cannot agree on a
Price within forty-five (45) days after the date of the Interest Offer, the
Price shall be determined by a Neutral Investment Bank appointed by the Interest
Seller and the NonSuffering Partner within one hundred and five (105) days after
the date of the Interest Offer. If the Interest Seller and the NonSuffering
Partner cannot agree on a Neutral Investment Bank within such period, the Price
shall be determined jointly by a Neutral Investment Bank representing the
Interest Seller and a Neutral Investment Bank representing the NonSuffering
Partner (collectively if more than one), each to be appointed within such sixty
(60) day period. If the Neutral Investment Banks are unable to agree on a Price
within thirty (30) days
after the latest date of appointment, they shall within thirty-five (35) days
after such latest date of appointment select a third Neutral Investment Bank
who shall determine within thirty (30) days after its appointment the Price by
arriving at a valuation either equal to that determined by one of the initial
Neutral Investment Banks or between both initial valuations. Notwithstanding
the foregoing sentence, if the higher of the values determined by the initial
Neutral
Investment Banks is not in excess of 115% of the value determined by the other
Neutral Investment Bank, the Neutral Investment Banks shall be deemed to have
agreed upon a Price equal to the average of the two determinations. If the two
initial Neutral Investment Banks are unable to agree on a third Neutral
Investment Bank, they shall each appoint an independent appraiser within
thirty- five (35) days after the date that they are unable to agree on the third
Neutral Investment Bank. The two independent appraisers shall elect within
thirty (30) days after the latest appointment a third appraiser. Each of the
Interest Seller and the NonSuffering Partner shall bear the cost and expenses of
the appraiser(s) it or they appoint, and each shall bear one-half of the cost
and expenses of the third appraiser or the sole appraiser if only one is
appointed. The NonSuffering Partner shall have a period of ten (10) days after
the date of agreement as to
Price, or after the date of receipt of the Price calculated by the appraisers in
accordance with this Section 8.2.3 in which to give notice that it will
purchase
the Offered Interest at the Price ("Price Notice"). Failure of the NonSuffering
Partner to give such notice within the required time period shall be deemed a
rejection of the Offered Interest.
8.2.4 The Price shall be paid entirely in cash. The closing of the purchase
and
sale of the Offered Interest shall occur on the later of (i) eighty (80) days
following the date of the Interest Offer or (ii) thirty (30) days afer the
Price Notice. The Offered Interest shall be transferred free and clear of all
taxes, debts, claims, judgments, liens, encumbrances or other defects.
8.2.5 Any sale of the Offered Interest shall be subject to the requirements of
the Competition Act (Canada) and all other applicable federal and provincial
laws and the expiration of applicable waiting periods and the receipt of
necessary approvals in connection therewith.
8.2.6 If the Offered Interest is rejected by the NonSuffering Partner as
described in Section 8.2.2 or 8.2.3, the NonSuffering Partner will be deemed to
have consented to the sale of the Offered Interest and the Partnership Rights
associated with such Offered Interest, and the admission of the purchaser of
such Offered Interest as an admitted Partner. If an Involuntary Transfer is not
completed pursuant to Section 8.2, the Interest Seller shall be deemed to have
not received consent from the NonSuffering Partner (unless the NonSuffering
Partner waives in writing its right to consent pursuant to Section 8.6) to the
sale of the Partnership Interest and admission of the purchaser as a Partner;
and accordingly such purchaser shall be a Transferee of any or part of the
Interest of the Interest Seller and shall not be an admitted Partner; and the
Interest Seller shall be deemed to have assigned its Partnership Rights,
including its right to appoint Representatives, as to such Offered Interest to
the NonSuffering
Partner. The Offered Interest shall remain subject to this Section 8.2 with
respect to any later Involuntary Transfer.
8.3 Change of Control
Upon the occurrence of a Change of Control with respect to any Partner (the
"Notifying Partner"), the Notifying Partner shall promptly deliver written
notice thereof (a "Change of Control Notice") to the other Partner (the
"Non-Notifying Partner"), together with reasonable details specifying that the
events described in the applicable section of this Agreement constituting such
Change of Control have occurred, and such additional information reasonably
requested by the Non-Notifying Partner. During the forty-five (45) days
following the date of the Change of Control Notice, the Non-Notifying Partner
shall deliver to the Notifying Partner a written response which shall either (i)
state that the Non-
Notifying Partner will take no action pursuant to this Section regarding such
Change of Control, or (ii) state the Non-Notifying Partner's election to
purchase
the Notifying Partner's Partnership Interest as provided in this Section at the
Calculated Purchase Price. The closing of the resulting transaction will take
place within thirty (30) days after delivery of such response to the Notifying
Partner, subject to the requirements of the Competition Act (Canada) and all
other applicable federal and provincial laws and the expiration of applicable
waiting periods and the receipt of necessary approvals in connection
therewith.
At such closing (x) the Non-Notifying Partner shall deliver to the Notifying
Partner the Calculated Purchase Price in United States dollars, by wire transfer
of same day funds to the account specified by the Notifying Partner in writing
at least two (2) business days prior to such closing and (y) the Notifying
Partner shall deliver to the Non-Notifying Partner a written instrument of
transfer (in form and substance reasonably satisfactory to such Non-Notifying
Partner) duly authorized, executed and delivered by the Notifying Partner,
transferring the Notifying Partner's Partnership Interest to the Non-Notifying
Partner free and clear of all taxes, debts, claims, judgments, liens,
encumbrances or other charges against such Interest or other defects in title
to such Interest. The failure of any Notifying Partner to deliver a Change of
Control Notice as required hereby shall not relieve the Notifying Partner of
its obligations hereunder or otherwise affect the rights and obligations of the
parties hereunder. If the Non-Notifying Partner elects to purchase the
Notifying
Partner's Partnership Interest as provided in this Section and if, due to the
requirements of the Competition Act (Canada) and all other applicable federal
and provincial laws, the transaction is not closed within three hundred sixty
(360) days after delivery to the Notifying Partner of the Non-Notifying
Partner's written response stating such election, the Notifying Partner shall
have no obligation to transfer its Partnership Interest to the Non-Notifying
Partner pursuant to this Section 8.3.
8.4 Admission of Transferee.
A Transferee will be admitted as a Partner only upon the satisfaction or
waiver of conditions set forth in this Section 8.4.
8.4.1 The other Partner must consent to the admission of the Transferee,
which consent may be given or denied in the absolute discretion of the other
Partner.
If a sale is completed pursuant to Section 4.13, 8.1, 8.2 or 8.3, the Partners
or Partner shall be deemed to have consented to the Transfer of Partnership
Interest and the admission of a Transferee of the Interest as an admitted
Partner of the Partnership. If a Partner transfers any or all of its
Partnership Interest to an Affiliate of such Partner with the consent of the
other Partner, the other Partner shall be deemed to have consented to the
admission of such Affiliate as a Partner.
8.4.2 The Interest with respect to which the Transferee is seeking admission
as a Partner must have been acquired in accordance with this Agreement.
8.4.3 The Transferee must become a party to this Agreement as a Partner and
must
execute such documents and instruments as the other Partner may reasonably
request (including without limitation, amendments to the Agreement) to confirm
such Transferee as a Partner in the Partnership and such Transferee's
agreement
to be bound by the terms and conditions of this Agreement.
8.4.4 The Transferee must pay or reimburse the Partnership for all reasonable
legal, filing, and publication costs that the Partnership incurs in connection
with the admission of the Transferee as a Partner with respect to the
transferred Interests.
8.4.5 The Transferee must provide the Partnership with an opinion of counsel
satisfactory to counsel for the Partnership that the Transfer of the Interest
was lawful and in accordance with the provisions of this Agreement.
8.4.6 No Person, including a Transferee, that is not a Canadian resident
within the meaning of the ITA shall be admitted as a Partner in the Partnership.
8.4.7 For greater certainty, notwithstanding anything in this Agreement, no
Person that is not a Canadian resident within the meaning of the ITA shall be
entitled to any allocations or Distributions with respect to any Interest.
8.5 Rights of Unadmitted Transferees.
Subject to Section 8.4.7, a Person who becomes a Transferee of Interest
but who
is not admitted as a Partner pursuant to Section 8.3 shall be entitled only to
allocations and Distributions with respect to such Interest in accordance with
this
Agreement. Such Person shall have no Partnership Rights, no right to appoint
Representatives, no voting rights, no right to participate in the management
of the
business or to see books and records and shall not have any of the rights of a
Partner under this Agreement.
8.6 Preemptive Rights.
The Partners shall have the ability to create and sell any additional
Partnership Interest on terms satisfactory to both Partners and to admit the
purchaser of such Partnership Interest as a Partner pursuant to the terms of
this Agreement. Each Partner shall have preemptive rights with respect to any
additional Partnership Interest or Interest sold by the Partnership.
8.7 Waiver.
The right of first offer and/or first refusal contained in Section 8.1 or
the right to purchase the Offered Interest as provided in Section 8.2 may be
waived in a writing signed by a Partner who is entitled to exercise that right
with respect to a particular Transfer or Involuntary Transfer in which event the
Partnership Interest may be sold, or a previous Transfer or Involuntary Transfer
may be confirmed to be free and clear of the provisions of this Section 8. A
certificate
executed and acknowledged by the president or other duly authorized officer of
a Partner, on behalf of the Partner, stating that the provisions of Sections 8.1
or
8.2 have been met by a Selling Partner, Soliciting Partner or Interest Seller,
or that the provisions have been duly waived by the certifying Partner, or that
the Transfer is exempt from Sections 8.1 and 8.2 shall be conclusive upon the
certifying Partner in favor of all Persons who rely thereon in good faith. Such
certificate shall be furnished to any Partner who has in fact complied with the
provisions of Sections 8.1 or 8.2.
Article IX
DISSOLUTION AND LIQUIDATION
9.1 Events of Dissolution.
The Partnership shall continue until dissolved or terminated in
accordance with
the terms of this Agreement. Notwithstanding any provision of the Act to the
contrary, no Partner shall have the right to, and all Partners agree not to,
dissolve, terminate or liquidate or to petition any court for the dissolution,
termination or liquidation of the Partnership except as provided in this
Article IX.
The Partnership shall be dissolved only upon the happening of any of the
following
events:
9.1.1 upon the written agreement of all Partners; or
9.1.2 automatically upon the acquisition by one Partner of all of the
Interests of the other Partners in the Partnership.
9.2 Not Dissolution.
For greater certainty, the resignation, withdrawal, expulsion, or
bankruptcy of a Partner or the occurrence of any other event that results in a
Partner ceasing to be a Partner in the Partnership shall not result in the
dissolution of the Partnership, unless either of Sections 9.1.1 or 9.1.2 is
applicable, but shall trigger the provisions set forth in Section 8.2. The
admission of a new Partner or Partners to the Partnership (whether by way of
transfer to such new Partner or Partners of a Partnership Interest or otherwise)
shall not result in the dissolution
of the Partnership unless either of Sections 9.1.1 or 9.1.2 is applicable.
9.3 Procedure for Winding Up and Dissolution.
If the Partnership is dissolved, the Board shall wind up its affairs. On
winding up of the Partnership, the assets of the Partnership shall be
distributed,
first, to creditors of the Partnership, including Partners who are creditors,in
satisfaction of the liabilities of the Partnership, and then, amounts in
excess of
any reserves deemed reasonably necessary by the Board to pay all of the
Partnership's claims and obligations shall be distributed to the Interest
Holders in accordance with their Capital Accounts.
9.4 Termination.
The Board shall comply with any requirements of applicable law pertaining
to the winding up of the affairs of the Partnership and the final Distributions
of its assets.
Article X
BOOKS, RECORDS, AND ACCOUNTING
10.1 Bank Accounts.
All funds of the Partnership shall be deposited in a bank account or
accounts
opened in the Partnership's name. The Board shall determine the institution or
institutions at which the accounts will be opened and maintained, the types of
accounts and the Persons who will have authority with respect to the accounts
and the funds therein.
10.2 Books and Records.
10.2.1 The Board shall keep or cause to be kept separate, complete and
accurate
books and records of the Partnership and supporting documentation of the
transactions with respect to the conduct of the Partnership's business. Such
books and records shall include, but not be limited to, the following:
(a) a current list of the full name and last known business,
residence and mailing address of each past and present Partner and
Representative;
(b) copies of the Partnership's tax information returns and
monthly, quarterly and annual financial statements and reports described in
Section 10.4 of this Agreement for the six (6) most recent Fiscal Periods; and
(c) minutes of all meetings of Partners and Representatives.
10.2.2 Each Partner may request and shall promptly receive copies of and/or
may
inspect and copy during ordinary business hours and at the principal place of
business of the Partnership any and all books and records of the Partnership,
including but not limited to, those listed in Section 10.2.1 of this
Agreement;
provided, however, that the Partnership is not obligated to disclose to any
Partner any confidentiality, secrecy or similar agreements with Third Parties,
or any agreements that, by doing so, would result in the Partnership being in
breach of that agreement.
10.2.3 The books and records shall be maintained in accordance with Canadian
GAAP.
10.2.4 Each Partner shall reimburse the Partnership for all costs and
expenses incurred by the Partnership in connection with the Partner's inspection
and copying of the Partnership's books and records, but only to the extent such
copying requires more than one (1) person day of the Partnership's time,
otherwise such copying shall be at the expense of the Partnership.
10.3 Annual Accounting Period.
The annual accounting period of the Partnership shall be its Fiscal Year.
10.4 Reports.
10.4.1 Reports to Partners. The Representatives shall cause to be prepared
and sent to both Partners the following, all at the Partnership's expense:
(a) on or prior to the last business day of the business month
following the end of each fiscal quarter of a Fiscal Year, the Partnership
shall cause to be delivered to each Partner unaudited balance sheets of the
Partnership as at the end of such quarter and the related statements of income
and statements of cash flow for the period from the beginning of such Fiscal
Year to the end of such quarter, and for the period from the beginning of such
quarter to the end of
such quarter, in each case prepared in accordance with Canadian GAAP applied
on a
basis consistent with the audited financial statements of the Partnership,
subject to changes resulting from audit and normal year-end adjustments. The
Partnership
shall also cause to be provided to each Partner, together with such financial
statements, such supplemental financial information of the Partnership as is
necessary to permit the parent of such Partner to prepare consolidated group
financial statements under the accounting standards applicable to the parent
of such Partner;
(b) within ninety (90) days after the end of each Fiscal Year,
the
Partnership shall cause to be delivered to each Partner audited balance sheets
of the Partnership as at the end of such Fiscal Year and the related statements
of income and statements of cash flow of the Partnership for such Fiscal Year,
all in reasonable detail and accompanied by a report thereon of the
Partnership's independent auditors as to such financial statements presenting
fairly the financial position of the Partnership as at the dates indicated, and
the results of their
operations, cash flows and changes in their financial position for the period
indicated in conformity with Canadian GAAP applied on a basis consistent with
prior years (except as noted in the notes thereto), and as to such audit having
been made in accordance with Canadian GAAP. The Partnership shall also cause to
be provided to each Partner, together with such annual financial statements, a
statement of the
balance of such Partner's Capital Account. Not more than once per calendar
year in connection with the annual audit, and not more than once in connection
with each other audit conducted at the unanimous request of the Partners, each
Partner and the principal independent auditor of the parent of such Partner
(acting at the expense of such Partner) shall have full access to the audit work
papers of the Partnership's auditors prepared in connection with issuing their
audit report on the Partnership's financial statements and supporting
Partnership documents (but not to any proprietary data processes of the
Partnership's auditors), and the right to
discuss such matters with the Partnership's auditors and management of the
Partnership;
(c) within fifteen (15) days of the end of each business month,
the
Partnership shall cause to be delivered to each Partner unaudited internal
management reports setting forth unaudited financial statements of the
Partnership, including a balance sheet and profit and loss statement prepared in
accordance with Canadian GAAP;
(d) within five (5) business days following the end of each
business month, the Partnership shall cause to be delivered to each Partner an
unaudited statement of aggregate gross sales and aggregate net sales for such
month; and
(e) no later than ninety (90) days before the end of each Fiscal
Year,
a proposed budget for the next Fiscal Year.
10.5 Tax Matters Partner.
Uniroyal-CA shall be designated as the tax matters partner (the "Tax
Matters Partner"). The Tax Matters Partner shall file any elections pursuant to
subsection
96(3) of the ITA on behalf of the Partnership. The Tax Matters Partner shall
comply with all tax reporting and filing obligations of the Partnership,
including as applicable, the filing on behalf of each of the Partners of the
partnership return contemplated by Regulation 229 to the ITA or any similar
provision.
10.6 Tax Elections and Deductions.
(a) The Board shall have the authority to determine at its sole and
absolute discretion all matters relating to taxation of the Partnership. In
particular, it shall have exclusive authority to decide whether and how much
to claim in respect of any deductions in respect of which discretion is afforded
as to the timing, manner or quantum of deductions. Subject to the election
described immediately below, it shall also have absolute discretion as to
whether to make any
or all Partnership elections permitted under the ITA or any other taxing
statute.
(b) Each Initial Partner and the Partnership shall jointly elect
under subsection 97(2) of the ITA, and under any relevant provincial
tax statute, in a timely manner in respect of the initial contributions of
assets by Uniroyal-CA and Bayer-CA, respectively, to the Partnership.
Each Partner shall bear all costs and
expenses incurred in connection with any such election filed in respect of its
respective initial contribution of assets.
10.7 Title to Partnership Property.
10.7.1 Except as provided in Section 10.7.2, all real and personal property
acquired by the Partnership shall be acquired and held by the Partnership in
its name.
10.7.2 The Board may direct that legal title to all or any portion of the
Partnership's property be acquired or held in a name other than the
Partnership's name. Without limiting the foregoing, the Board may cause title
to be acquired and held in its name or in the names of trustees, nominees, or
straw parties for the
Partnership. It is expressly understood and agreed that the manner of holding
title to the Partnership's property (or any part thereof) is solely for the
convenience
of the Partnership and all of that property shall be treated as Partnership
property.
10.7.3 If a Partner or an Affiliate of a Partner undertakes significant work
with
any auditor engaged by the Partnership, such Partner shall promptly notify the
other Partner. The other Partner shall have the right to request that the
Partnership's auditor resign the engagement with the Partnership. Any auditor
engaged by the Partnership shall agree in the engagement letter that if such
auditor determines atany time during the engagement that a conflict of interest
exists between the auditor and the Partnership or a Partner, the auditor shall
notify the Partnership
and the Partners of the conflict of interest. Upon such notification, the
Partnership or either Partner has the right to request that the Partnership's
auditor resign the engagement with the Partnership.
Article XI
AMENDMENTS; GENERAL PROVISIONS
11.1 Assurances.
Each Partner shall execute all certificates and other documents and shall
do all such filing, recording, publishing, and other acts as the Board deems
appropriate to comply with the requirements of law for the formation and
operation of the Partnership and to comply with any laws, rules, and regulations
relating to the acquisition, operation or holding of the property of the
Partnership.
11.2 Complete Agreement; Annex and Exhibits.
This Agreement constitutes the complete and exclusive statement of the
agreement among the Partners. It supersedes all prior written and oral
statements,
including any prior representation, statement, condition, or warranty relating
to the subject matter of this Agreement. The Annex and Exhibits to this
Agreement are hereby made a part of this Agreement as if set forth in full
herein.
11.3 Applicable Law.
All questions concerning the construction, validity, and interpretation
of this
Agreement and the performance of the obligations imposed by this Agreement
shall be governed by the internal law, not the law of conflicts, of the Province
of Ontario and the federal laws of Canada applicable therein.
11.4 Section Titles.
The headings herein are inserted as a matter of convenience only and do
not
define, limit, or describe the scope of this Agreement or the intent of the
provisions hereof.
11.5 Binding Provisions.
This Agreement is binding upon, and inures to the benefit of, the parties
hereto and their respective administrators, personal and legal
representatives, successors and permitted assigns.
11.6 Notices.
All notices, offers and other communications required or permitted by
this Agreement shall be in writing in the English language, may be given by a
party or its legal counsel, and shall be deemed to have been duly given or made
(i) when personally delivered (provided written confirmation thereof is also
delivered in person or by express courier), or (ii) upon delivery by Federal
Express Mail or
similar nationally recognized express courier service which provides evidence
of delivery, or (iii) upon delivery of a facsimile transmission, provided a copy
thereof is also delivered in person or by express courier:
Notice to Uniroyal-CA shall be sufficient if given to:
Uniroyal Chemical Co./Cie
25 Erb Street
Elmira, ON N3B 3A3
Attention: David Ash, General Manager
Facsimile Number: (519) 669-4404
Telephone Number: (519) 669-1671 Ext. 228
with a copy to
Crompton & Knowles Corporation
One Station Place - Metro Centre
Stamford, CT 06902
Attention: Charles J. Marsden, Senior Vice President
and Chief Financial Officer
Facsimile Number: (203) 353-5424
Telephone Number: (203) 353-5416
with a copy to:
Crompton & Knowles Corporation
One Station Place - Metro Centre
Stamford, CT 06902
Attention: John T. Ferguson II, Vice President,
General Counsel and Secretary
Facsimile Number: (203) 353-5423
Telephone Number: (203) 353-5405
Notice to Bayer-CA shall be sufficient if given to:
Bayer Inc.
77 Belfield Road
Toronto, ON M9W 1G6
Attn.: Thomas Tithecott,
Vice President and General Counsel
Facsimile Number: (416) 240-5426
Telephone Number: (416) 248-3055
with a copy to:
Bayer Corporation
8400 Hawthorne Road
Kansas City, MO 61420
Attention: Vice President and Assistant General Counsel
Facsimile Number: 816-242-2739
Telephone Number: 816-242-2367
Notice to the Partnership shall be sufficient if given to:
Gustafson Partnership
Bay 10, 2712-37th Avenue N.E.
Calgary, AB T1Y 5L3
Attn.: General Manager
Facsimile Number: (403) 291-3239
Telephone Number: (403) 250-9481
In the event any Partner gives notice to the Partnership pursuant to this
Agreement, that Partner shall also provide a copy of such notice to the other
Partner. Each party shall have the right to designate other or additional
addresses or addressees for the delivery of notices, by giving notice as
provided in this Section 11.6.
11.7 Terms.
Common nouns and pronouns shall be deemed to refer to the masculine,
feminine, neuter, singular, and plural, as the identity of the Person may in the
context require.
11.8 Severability of Provisions.
Each provision of this Agreement shall be considered severable; and if,
for any reason, any provision or provisions herein are determined to be invalid
and contrary
to any existing or future law, such invalidity shall not impair the operation
of or affect those portions of this Agreement that are valid.
11.9 Alternative Dispute Resolution.
11.9.1 Subject to Sections 11.9.2 and 11.9.3, if a Dispute arises under this
Agreement that cannot be resolved informally by the parties in interest
(including any Disputes between any former Partner or the successors, trustees,
assigns or
administrators of a Partner or former Partner on the one hand and the
Partnership on the other hand), a party to the Dispute shall invoke the
procedures set forth in Exhibit B. All Disputes will be solely and finally
settled by this Section 11.9 and such procedures.
11.9.2 Notwithstanding any thing in Section 11.9.1 to the contrary:
11.9.2.1 Nothing in Section 11.9.1 shall preclude any party from seeking a
preliminary injunction or other provisional relief, either prior to, during or
after
the proceeding provided for in Section 11.9.1, if in its judgment such action is
necessary to avoid irreparable damage or to preserve the status quo.
11.9.2.2 The parties shall accept as correct, final, binding and conclusive
the determination by the outside accountants then employed by the Partnership as
to the calculation of any and all amounts owed by one party to the other
hereunder, and such determination shall not be subject to the provisions of
Section 11.9.1. Disputes as to the proper interpretation of the provisions of
this Agreement that describe how those amounts are to be calculated, however,
shall be subject to the provisions of Section 11.9.1.
11.9.2.3 Any recommendation, approval or determination by the Partners to
remove a Person from office that they are empowered to make, give or withhold,
or take under this Agreement with or without cause when taken in accordance with
the terms and provisions of this Agreement shall not be subject to the
provisions for dispute resolution in this Section 11.9.
11.9.3 Waiver of Trial by Jury. THE PARTNERS, FOR THEMSELVES AND FOR THE
PARTNERSHIP, EACH KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT
EACH MAY
HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON OR ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN), OR ACTIONS OF THE OTHER
PARTIES IN CONNECTION HEREWITH.
11.9.4 Consent to Jurisdiction. The Partners, for themselves and for the
Partnership, each irrevocably consent that any action or proceeding against it
under, arising out of or in any manner relating to this Agreement shall be
brought in the courts of the Province of Ontario. The Partners and the
Partnership hereby each expressly and irrevocably assent and submit to the
personal jurisdiction of any such court in any such action or proceeding.
The Partners and the Partnership each
further irrevocably consent to the service of summons, notice or other process
relating to any such action or proceeding by delivery thereof by hand or by
mail in the manner provided for in Section 11.6 of this Agreement and consent
that it may be served with any process or paper by registered mail or by
personal service within or without the Province of Ontario in accordance with
applicable law. The Partners and the Partnership each waive any objection,
claim or defense which it may have at any time to the laying of venue of any
such action or proceeding in any such court;
irrevocably waive any claim that any such action or proceeding brought in any
such court has been brought in an inconvenient forum; and further irrevocably
waive the right to object, with respect to any such action or proceeding brought
in any such court, that such court does not have jurisdiction over such party.
11.9.5 Notwithstanding anything in Section 11.9 to the contrary, a Deadlock
shall not be considered a Dispute and shall not be resolved in accordance with
Section 11.9 or Exhibit B, but shall be resolved in accordance with the
provisions of Section 4.13.
11.10 Counterparts.
This Agreement may be executed simultaneously in two or more
counterparts, each
of which shall be deemed an original and all of which, when taken together,
constitute one and the same document. The signature of any party to any
counterpart shall be deemed a signature to, and may be appended to, any other
counterpart.
11.11 Estoppel Certificate.
Each Partner shall, within ten (10) days after written request by the
Board, deliver to the requesting Person a certificate stating, to the Partner's
knowledge, that (a) this Agreement is in full force and effect; (b) this
Agreement has not been modified except by any instrument or instruments
identified in the certificate; and
(c) there is no default hereunder by the requesting Person, or if there is a
default, the nature and extent thereof.
11.12 Amendment.
This Agreement may be amended by a unanimous affirmative vote of all
Partners.
11.13 Consents.
Unless otherwise explicitly provided for herein, any and all consents,
agreements or approvals provided for or permitted by this Agreement shall be in
writing and a signed copy thereof shall be filed and kept with the books of the
Partnership.
11.14 Legends.
If certificates for any Interest are issued that evidence a Partner's
Interest,
each such certificate shall bear such legends as may be deemed necessary or
appropriate by the Board to reflect restrictions upon transfer contemplated
herein.
11.15 Parties in Interest.
Nothing in this Agreement is intended to confer any rights or remedies on
any Persons other than the Partnership and the Partners. This Agreement shall
not be construed to relieve or discharge any obligations or liabilities of Third
Parties, nor shall it be construed to give Third Parties any right of
subrogation or action over or against the Partners or the Partnership.
11.16 Counting of Time.
Whenever time is to be counted hereunder, counting will commence on the
day notice is deemed duly given pursuant to Section 11.6 and continue for
consecutive calendar days through and including the final day of the relevant
period provided for in this Agreement.
11.17 English Language.
This Agreement is made and entered into in the English language, which
language shall be controlling in all respects. All communications and notices
from any party to another shall likewise be in the English language.
11.18 Exhibits
The Exhibits to this Agreement are as follows and will be attached hereto
and are incorporated herein by reference.
Exhibit A: Partner's Names, Percentage, Capital Contributions.
Exhibit B: Alternative Dispute Resolution Procedures.
Exhibit C: Forms of Operative Agreements.
(the next page is the signature page)
IN WITNESS WHEREOF, the parties hereto have executed this
Partnership Agreement as of the date and year first above written.
UNIROYAL CHEMICAL CO./CIE
By: /s/David Ash
Name: David Ash
Title: General Manager
BAYER INC.
By: /s/Sommer
Name: Sommer
Title: VP CFO
By: /s/ Thomas G. Tithecott
Name: Thomas G. Tithecott
Title: Secretary
EXHIBIT A
To
Partnership Agreement
of Gustafson Partnership
Name of Partner Percentage Initial Capital Contribution
Units
Uniroyal Chemical Co./Cie 50% Uniroyal Assets*
50
Uniroyal Assumed Obligations*
Bayer Inc. 50% Bayer Assets*
50
Bayer Assumed Obligations*
* As defined in the Purchase and Contribution Agreement
EXHIBIT B
To
Partnership Agreement
of Gustafson Partnership
ALTERNATIVE DISPUTE RESOLUTION PROCEDURES
A. Method of Invoking ADR Procedures
1. These procedures may be invoked by any party by giving written
notice to the others of the dispute and designating one or more persons
(collectively, the "Designee") to act on behalf of the disputing party regarding
the dispute. The other parties shall be required to respond to the disputing
party's notice within ten (10) business days by designating in writing its own
Designee. A party may choose to represent itself, or if it appoints a Designee,
its officers may nonetheless attend such meetings.
2. The parties, each acting through its Designee, shall meet at a
mutually acceptable time and place within ten (10) business days after the
non-disputing party designates its Designee to the others. At that meeting, the
parties shall attempt in good faith to negotiate a resolution of the dispute, or
failing that, to agree on a method for resolving the claim or dispute.
3. If, within ten (10) business days after the first meeting or
within such longer period of time as the parties may mutually agree, the parties
have not succeeded in negotiating a resolution of the claim or dispute or
agreeing on a dispute resolution mechanism, they shall submit the dispute to
mediation in accordance with the procedures set forth herein.
4. The parties will jointly appoint a mutually acceptable mediator to
mediate the dispute. If the parties are unable to agree on a mutually
acceptable mediator within five (5) business days after the conclusion of the
negotiations described in paragraph 3 above, then the parties shall select a
neutral Third Party from American Arbitration Association ("AAA") in New York,
New York, with the assistance of AAA, unless the parties agree otherwise in
finding a mutually acceptable mediator.
5. Each party to the dispute shall bear an equal share of the fees
and costs of the mediator, and any fees and costs of AAA.
6. The parties agree to participate in good faith in the mediation
and negotiations related thereto for a period of thirty (30) days from
appointment of a mediator by any of the parties or the AAA.
7. The parties agree that the mediation period may be extended for an
additional thirty (30) days beyond the initial thirty (30) day period upon
agreement of the parties. Either party may terminate the mediation at any time
after the initial thirty (30) days or when any agreed upon extension has
expired.
B. Mediation Procedures
1. The mediator shall be neutral and impartial.
2. The mediator shall control the procedural aspects of the
mediation. The parties will cooperate fully with the mediator.
(a) The mediator is free to meet and communicate separately with
each party.
(b) The mediator will decide when to hold joint meetings with the
parties and when to hold separate meetings. There shall be no stenographic
record of any meeting. Formal rules of evidence will not apply.
3. Each party may be represented by more than one person, including
an attorney.
4. The process will be conducted expeditiously.
5. The mediator will not transmit information received from any party
to another party or any third person unless authorized to do so by the party
transmitting the information.
6. The entire process is confidential. The parties and the mediator
will not disclose information regarding the process, including settlement terms,
to third persons, unless the parties otherwise agree. The process shall be
treated as a compromise negotiation for purposes of the applicable rules of
evidence. Further, the parties will not disclose the existence of a dispute or
information regarding the mediation to third persons including, without
limitation, the media.
7. The parties will refrain from pursuing administrative and/or
judicial
remedies during the mediation process, except as otherwise expressly provided
in the agreement which incorporates these procedures. The parties agree that
any and all statutes of limitation or periods of time for taking action shall be
tolled during the time period that the parties are engaged in mediation.
8. Unless all parties and the mediator otherwise agree in writing:
(a) The mediator will be disqualified as a witness, consultant or
expert in any pending or future investigation, action or proceeding relating
to the subject matter of the mediation (including any investigation, action or
proceeding which involves persons not parties to this mediation);
(b) The mediator, at the conclusion of the mediation, will
immediately either destroy and certify destruction of, or return to the
providing party, any and all documents and information in the mediator's
possession, whether or not the mediation was successful; and
(c) The mediator will not be subpoenaed in any such
investigation, action or preceding and all parties will oppose any effort to
have the mediator subpoenaed.
9. The mediator, if a lawyer, may freely express views to the parties
on the legal issues of the dispute.
10. The mediator shall not be liable for any act or omission in
connection with the mediation.
11. The mediator may withdraw at any time by written notice to the
parties (i) for overriding personal reasons, (ii) if the mediator believes
that a party is not acting in good faith, or (iii) if the mediator concludes
that further mediation efforts would not be useful.
C. Litigation
If the parties do not resolve the dispute through mediation within the
period provided in Part A above, the parties may pursue any and/or all
applicable legal and/or equitable remedies available to them.
EXHIBIT C
To
Partnership Agreement
of Gustafson Partnership
FORMS OF OPERATIVE AGREEMENTS
1. Marketing Agreement.
2. Pre-Exercise Agreement.
3. Post-Exercise Agreement.
4. Technology Cross-License Agreement by and between Gustafson LLC and
Agro ST Inc.
5. Cross-License Agreement.
ANNEX
ALLOCATION OF PROFIT AND LOSS
WHEREAS it is the intention of the Initial Partners that the income
(including gains) and losses of the Partnership be allocated for general
purposes (including Capital Accounts) according to each Partner's Percentage
Interest in the Partnership but that recognition be made for tax purposes of the
fact that eligible capital property acquired by the Partnership from an Initial
Partner pursuant to the Purchase and Contribution Agreement was the subject of
a subsection 97(2) election under the ITA, the Partnership's income and losses
as determined for income tax purposes will be allocated to the Initial Partners
in accordance with the provisions
of this Annex until the loss of deductions to the Partnership resulting from
such election have been fully reflected as additional income inclusions of the
Initial Partner that benefitted from the non-recognition treatment of such
contribution (or as greater loss allocations to other Partner(s)).
1. Defined Terms.
"Adjustment" for a particular Fiscal Period of the Partnership shall
mean an amount equal to A where
A = [7% x (B - C)] + D;
B = 75% of the amount by which the fair market value of all the eligible
capital property contributed by Uniroyal-CA to the Partnership pursuant to the
Purchase and Contribution Agreement, as determined for Capital Account purposes,
exceeds the aggregate of all elected amounts in respect of such eligible capital
property determined for purposes of the Section 97(2) election referred to in
Section 10.5 of this Agreement;
C = the aggregate amount of Adjustments determined for previous Fiscal
Periods; and
D = where the Partnership disposes of all or part of any eligible capital
property which has been contributed by Uniroyal-CA to the Partnership under the
Purchase and Contribution Agreement (such contributed eligible capital
property or
contributed part of the eligible capital property to be referred to as the
"Contributed Eligible Capital Property"), the lesser of:
(i) 75% of the amount of the proceeds received by the Partnership
upon the disposition of such Contributed Eligible Capital Property;
(ii) 75% the amount of the Purchase Price (as defined in the Purchase
and Contribution Agreement) allocated to such Contributed Eligible Capital
Property pursuant to the Purchase and Contribution Agreement; and
(iii) (B - C) - [7% x (B - C)].
"Business Income" or "Business Loss" for any Fiscal Period means the
income or loss, as the case may be, of the Partnership for such Fiscal Period
from carrying on business for the purposes of the ITA.
"Income Carry-Forward Account" of Uniroyal-CA, shall initially be nil
and shall be adjusted at the end of each Fiscal Period in accordance with
Section 3(d) of this Annex.
"GAAP Profit" and "GAAP Loss" for each Fiscal Period (or other period
for which GAAP Profit or GAAP Loss must be computed) means the net income or
net loss from the operations of the Partnership for the period as determined by
Canadian GAAP.
"Proportionate Share", when used with respect to a Partner, shall be
equal to the Percentage Interest of such Partner in the Partnership.
2. Allocation of Profit or Loss for Capital Account Purposes.
Each Partner's Proportionate Share of GAAP Profit or GAAP Loss,
unaffected by this Annex, for each Fiscal Period shall be credited or charged,
as the case may be, to such Partner's Capital Account, as provided in 3.6.1 and
3.6.2 of the Partnership Agreement.
3. Allocation of Income or Loss for Tax Purposes.
(a) General. For each Fiscal Period, the Partnership shall
compute its income or loss from every source pursuant to the ITA.
(b) Allocation of Business Income. Business Income for each
Fiscal
Period shall be allocated between Uniroyal-CA and Bayer-CA as follows and in
the following order of priority:
(i) To Uniroyal-CA, the aggregate of:
(A) for each Fiscal Period, the lesser of (1) the
Business Income of the Partnership for such Fiscal Period, or (2) an amount
equal to the Adjustment for such Fiscal Period; and
(B) the lesser of (1) the Business Income of the
Partnership for such Fiscal Period, less any Business Income for such Fiscal
Period allocated pursuant to Section 3(b)(i)(A) of this Annex, or (2) an amount
equal to the balance of Uniroyal-CA's Income Carry-Forward Account immediately
after the end of the previous Fiscal Period; and
(ii) To each of Uniroyal-CA and Bayer-CA, an amount equal
to such Partner's Proportionate Share of the excess, if any, of the Business
Income of the
Partnership for such Fiscal Period over the aggregate of the Business Income
for such Fiscal Period allocated pursuant to Section 3(b)(i) of this Annex.
(c) Allocation of Business Loss. Business Loss of each Fiscal
Period shall be allocated between Uniroyal-CA and Bayer-CA as follows and in the
following order of priority:
(i) To Bayer-CA, the aggregate of:
(A) for each Fiscal Period, the lesser of (1) the Business
Loss of the Partnership for such Fiscal Period, or (2) an amount equal to the
Adjustment for such Fiscal Period; and
(B) the lesser of (1) the Business Loss of the
Partnership for such Fiscal Period, less any Business Loss for such Fiscal
Period allocated pursuant to Section 3(c)(i)(A) of this Annex, or (2) an amount
equal to the balance of Uniroyal-CA's Income Carry-Forward Account immediately
after the end of the previous Fiscal Period; and
(ii) To each of Uniroyal-CA and Bayer-CA, an amount equal
to such Partner's Proportionate Share of the excess if any, of the Business Loss
of the Partnership for such Fiscal Period over the aggregate of the Business
Loss for such Fiscal Period allocated pursuant to Section 3 (c) (i) of this
Annex.
(d) Adjustments to Income Carry-Forward Account. The Income
Carry-Forward Account of Uniroyal-CA shall be adjusted at the end of each of
Fiscal Period as follows:
(i) Uniroyal-CA's Income Carry-Forward Account shall be
increased by an amount equal to, with respect to each Fiscal Period, the excess,
if any, of the amount described in Section 3(b)(i)(A)(2) of this Annex over the
amount of Business Income allocated to Uniroyal-CA pursuant to Section
3(b)(i)(A) of this Annex for such Fiscal Period;
(ii) Uniroyal-CA's Income Carry-Forward Account shall be
decreased by an amount of Business Income allocated to Uniroyal-CA pursuant to
Section 3(b)(i)(B) of this Annex for such Fiscal Period; and
(iii) Uniroyal-CA's Income Carry-Forward Account shall be
decreased by an amount equal to the aggregate of:
(A) with respect to each Fiscal Period, the amount of
Business Loss allocated to Bayer-CA pursuant to Section 3(c)(i)(A) of this
Annex for such Fiscal Period; and
(B) the amount of Business Loss allocated to Bayer-CA
pursuant to Section 3(c)(i)(B) of this Annex for such Fiscal Period.
(e) Allocation of Other Income or Loss. For each Fiscal Period,
the Partnership shall compute its income or loss ("Non-Business Income or Loss")
from each source other than Business Income or Business Loss pursuant to the
ITA.
In the event that, following the allocations of Business Income and Business
Loss pursuant to Section 3(b) and (c) of this Annex and the corresponding
adjustments pursuant to Section 3(d) of this Annex for such period, the Income
Carry-Forward Account of Uniroyal-CA is greater than nil, then such Non-Business
Income or Loss shall be
allocated between the Partners in accordance with the principles set forth in
Sections 3(b) and (c) of this Annex and the corresponding adjustments shall be
made in the Income Carry-Forward Account of Uniroyal-CA in accordance with the
principles set forth in Section 3(d) of this Annex. Each Partner's
Proportionate share of anyNon-Business Income or Loss not allocated pursuant to
the preceding sentence shall be allocated to such Partner.
(f) Equitable Adjustment. If (i) a Partner transfers its
Interest in the Partnership and the Partnership is not terminated as a result of
such transfer, or (ii) a Partner's Proportionate Share changes, the provisions
of this Section 3 of this Annex shall be amended in an appropriate manner to
give effect to the admission of such transferee to the Partnership or the change
in such Proportionate Share and to ensure that the purposes of this Section 3
are fulfilled.
4. Tax Assessments.
(a) Consultation. No Partner shall make any agreement on its own
behalf with respect to a proposed or threatened assessment, reassessment, or
other tax matter in respect of the activities of the Partnership without
consulting with the other Partner.
(b) Adjustments. If the allocation of income or loss to a Partner in
accordance with the provisions of this Agreement is determined by:
(i) Revenue Canada or a provincial revenue authority not to be
reasonable having regard to all the circumstances, and the Partner agrees to
report a share of income (or loss) from the Partnership for tax purposes that
is higher than (or lower than) the amount allocated in accordance with this
Agreement; or
(ii) a court having jurisdiction in that matter (after all
appeal rights have been exhausted or all times for appeal have expired without
appeals having been taken) not to be reasonable having regard to all the
circumstances;
the income or loss for tax purposes of the other Partner may be adjusted
to reflect the change to the first Partner's income or loss for tax purposes,
and each Partner shall take all reasonable steps to give effect to the
adjustment, including the filing of amended tax returns.
