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ASSET PURCHASE AGREEMENT
BETWEEN
DEXTER CORPORATION
AND
AHLSTROM PAPER GROUP OY
Dated as of June 20, 2000
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ARTICLE I
CERTAIN DEFINITIONS
1.1 "affiliate"................................................1
1.2 "APBO".....................................................1
1.3 "Authorizations"...........................................1
1.4 "Bill of Sale".............................................1
1.5 "business day".............................................2
1.6 "Buyer Savings Plan".......................................2
1.7 "Closing"..................................................2
1.8 "Closing Date".............................................2
1.9 "Code".....................................................2
1.10 "Consolidated Income Tax Returns"..........................2
1.11 "Consideration"............................................2
1.12 "Damages"..................................................2
1.13 "Department of Justice"....................................2
1.14 "Dexter Acquisition Proposal"..............................2
1.15 "Dexter Acquisition Transaction"...........................2
1.16 "Draft Allocation".........................................3
1.17 "Effective Time"...........................................3
1.18 "Environmental Claim"......................................3
1.19 "Environmental Law"........................................3
1.20 "Environmental Permits"....................................3
1.21 "ERISA"....................................................3
1.22 "ERISA Affiliate"..........................................3
1.23 "Escrow Amount"............................................3
1.24 "Excluded Assets"..........................................3
1.25 "Excluded Liabilities".....................................3
1.26 "Final Allocation".........................................3
1.27 "Foreign Acquisition Agreement"............................3
1.28 "Foreign Nonwovens Subsidiaries"...........................4
1.29 "FTC"......................................................4
1.30 "GAAP".....................................................4
1.31 "Governmental Entity"......................................4
1.32 "Hazardous Materials"......................................4
1.33 "Indebtedness".............................................4
1.34 "Independent Accountants"..................................4
1.35 "Intercompany Accounts"....................................4
1.36 "Law"......................................................4
1.37 "Lien".....................................................4
1.38 "Material Adverse Effect"..................................4
1.39 "Net Asset Value"..........................................4
1.40 "Nonwovens Acquisition Proposal"...........................4
1.41 "Nonwovens Assets".........................................5
1.42 "Nonwovens Balance Sheet"..................................5
1.43 "Nonwovens Bank Accounts"..................................6
1.44 "Nonwovens Books and Records"..............................6
1.45 "Nonwovens Business".......................................6
1.46 "Nonwovens Contracts"......................................6
1.47 "Nonwovens Employees"......................................6
1.48 "Nonwovens Financial Statements"...........................6
1.49 "Nonwovens Intellectual Property"..........................6
1.50 "Nonwovens Intellectual Property Licenses".................7
1.51 "Nonwovens Inventory"......................................7
1.52 "Nonwovens Leases".........................................7
1.53 "Nonwovens Liabilities"....................................7
1.54 "Nonwovens Real Properties"................................8
1.55 "Nonwovens Subject Subsidiaries"...........................8
1.56 "Nonwovens Subsidiaries"...................................8
1.57 "Permitted Exceptions".....................................8
1.58 "person"...................................................8
1.59 "Plans"....................................................8
1.60 "Preliminary Closing Date Balance Sheet"...................8
1.61 "Potential Grow-In Employees"..............................8
1.62 "Proxy Materials"..........................................8
1.63 "Purchase Price"...........................................9
1.64 "Shareholder Approval".....................................9
1.65 "Specified Dexter Acquisition Proposal"....................9
1.66 "subsidiary"...............................................9
1.67 "Target Net Asset Value"...................................9
1.68 "Tax Indemnified Party"....................................9
1.69 "Tax Indemnifying Party"...................................9
1.70 "Tax Third Party Claim"....................................9
1.71 "Taxes"....................................................9
1.72 "Transferred Employees"....................................9
1.73 "Undertaking and Indemnity Agreement"......................9
1.74 "Vested Eligible Employees"................................9
1.75 "WARN".....................................................9
1.76 "WARN Obligations".........................................9
ARTICLE II
THE CLOSING
2.1 Time and Place of Closing.................................10
2.2 Purchase and Sale of the Nonwovens Assets.................10
2.3 Consideration for the Assets; Nonassignable
Contracts and Leases.. ...10
2.4 Deliveries by the Seller..................................11
2.5 Delivery by the Buyer.....................................12
2.6 Post-Closing Adjustment...................................12
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
3.1 Organization; Qualification...............................14
3.2 Capital Stock.............................................14
3.3 Equity Investments........................................15
3.4 Authority Relative to this Agreement......................15
3.5 No Violation..............................................15
3.6 Financial Statements......................................16
3.7 Absence of Undisclosed Liabilities........................16
3.8 Absence of Certain Changes or Events......................17
3.9 Title and Related Matters.................................17
3.10 Contracts.................................................17
3.11 Leases....................................................18
3.12 Intellectual Property.....................................18
3.13 Legal Proceedings, etc....................................19
3.14 Employee Benefit Plans; ERISA.............................19
3.15 Assets Necessary to Business..............................21
3.16 Governmental Authorizations and Regulations...............21
3.17 Disclosure................................................21
3.18 Accounts Receivable.......................................21
3.19 Taxes.....................................................21
3.20 Insurance.................................................22
3.21 Environmental Matters.....................................22
3.22 Brokers...................................................23
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER
4.1 Organization..............................................23
4.2 Authority Relative to this Agreement......................23
4.3 No Violation..............................................24
4.4 Financing.................................................24
4.5 Brokers...................................................24
ARTICLE V
COVENANTS OF THE PARTIES
5.1 Conduct of Business of the Seller.........................24
5.2 Current Information.......................................26
5.3 Access to Information.....................................26
5.4 Expenses..................................................27
5.5 Reasonable Best Efforts...................................27
5.6 Further Assurances........................................27
5.7 Disclosure Supplements....................................28
5.8 Public Announcements......................................28
5.9 Sales and Transfer Taxes and Fees.........................28
5.10 Noncompetition............................................28
5.11 No Solicitation...........................................29
5.12 Shareholder Approval......................................29
5.13 Proxy Statement...........................................30
ARTICLE VI
SELLER EMPLOYEES
6.1 Employment................................................31
6.2 Assumption of Plans.......................................32
ARTICLE VII
CLOSING CONDITIONS
7.1 Conditions to Each Party's Obligations to Effect
the Transactions Contemplated Hereby......................33
7.2 Conditions to the Obligations of the Seller to
Effect the Transactions Contemplated Hereby...............34
7.3 Conditions to the Obligations of the Buyer to
Effect the Transactions Contemplated Hereby...............34
7.4 Certificates..............................................35
ARTICLE VIII
CERTAIN TAX MATTERS
8.1 Tax Matters...............................................35
8.2 Indemnity for Taxes.......................................37
8.3 Other Tax Matters.........................................39
ARTICLE IX
TERMINATION AND ABANDONMENT
9.1 Termination...............................................39
9.2 Procedure and Effect of Termination.......................40
ARTICLE X
MISCELLANEOUS PROVISIONS
10.1 Delivery of Schedules.....................................41
10.2 Amendment and Modification................................41
10.3 Waiver of Compliance; Consents............................41
10.4 No Third Party Beneficiary Rights.........................41
10.5 Notices...................................................41
10.6 Assignment................................................42
10.7 Designated Subsidiary.....................................43
10.8 Governing Law.............................................43
10.9 Counterparts..............................................43
10.10 Interpretation............................................43
10.11 Entire Agreement..........................................43
10.12 Severability..............................................43
ARTICLE XI
SURVIVAL
11.1 Survival..................................................44
11.2 Indemnification Provisions for the Benefit of the
Buyer.....................................................44
11.3 Indemnification Provisions for the Benefit of
the Seller................................................45
11.4 Matters Involving Third Parties...........................45
11.5 Statements as Representations.............................46
11.6 Limitation on Indemnification.............................46
Exhibit A Form of Undertaking and Indemnity Agreement..............A-1
Exhibit B Form of Company Bill of Sale.............................B-1
Exhibit C Nonwovens Balance Sheet..................................C-1
Exhibit D Escrow Agreement.........................................D-1
Exhibit E FIRPTA Certification.....................................E-1
Exhibit F Opinion of Counsel to Seller.............................F-1
Exhibit G Opinion of Counsel to Buyer..............................G-1
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of June 20, 2000 (the
"Agreement"), between Dexter Corporation, a Connecticut corporation (the
"Seller"), and Ahlstrom Paper Group Oy, a Finland corporation (the
"Buyer").
WHEREAS, the Seller is in the business of manufacturing
and marketing of long-fiber, wet-formed and hydroentangled products,
primarily for use in the food packaging, medical and hygiene markets
through an unincorporated division of Seller and the Nonwovens
Subsidiaries;
WHEREAS, the Buyer wishes to acquire from the Seller
substantially all of the Nonwovens Assets;
WHEREAS, the Seller is willing to transfer the Nonwovens
Assets (other than the Nonwovens Assets owned or held by the Nonwovens
Subject Subsidiaries, the capital stock of which is being transferred
directly or indirectly by the Seller to the Buyer) to the Buyer in exchange
for the assumption by the Buyer of the Nonwovens Liabilities and the
payment to the Seller by the Buyer of the Purchase Price;
WHEREAS, following the execution and delivery of this
Agreement, each of the Foreign Nonwovens Subsidiaries (other than any which
are Nonwovens Subject Subsidiaries) will enter into one or more Foreign
Acquisition Agreements on or prior to the Closing Date with Buyer or one or
more of Buyer's wholly-owned subsidiaries collectively providing for the
purchase or acquisition, directly or indirectly, of all Nonwovens Assets
held by the Foreign Nonwovens Subsidiaries (other than any which are
Nonwovens Subject Subsidiaries) and assumption, directly or indirectly, of
all Nonwovens Liabilities of the Foreign Nonwovens Subsidiaries (other than
any which are Nonwovens Subject Subsidiaries).
NOW, THEREFORE, in consideration of the foregoing
premises and the respective representations, warranties, covenants,
agreements and conditions hereinafter set forth, and intending to be
legally bound hereby, the parties hereto agree as follows:
Article I
CERTAIN DEFINITIONS
As used in this Agreement each of the following terms
shall have the following meaning:
1.1 "affiliate" shall have the meaning ascribed thereto
in Section 10.10.
1.2 "APBO" shall have the meaning ascribed thereto in
Section 6.2(b).
1.3 "Authorizations" shall have the meaning ascribed
thereto in Section 3.16(a).
1.4 "Bill of Sale" shall have the meaning ascribed
thereto in Section 2.4(c).
1.5 "business day" shall have the meaning ascribed
thereto in Section 10.10.
1.6 "Buyer Savings Plan" shall have the meaning ascribed
thereto in Section 6.2(a).
1.7 "Closing" shall mean the consummation of the
transactions contemplated by Article II of this Agreement in accordance
with the terms and upon the conditions set forth in Article II.
1.8 "Closing Date" shall mean the fifth business day
following the later to occur of (i) the expiration or termination of all
waiting periods, including any extensions thereof, if any, which are
applicable to the transactions contemplated by this Agreement pursuant to
Title II of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the rules and regulations thereunder (the "HSR Act") and (ii)
the satisfaction of all of the conditions to each party's obligations
hereunder or the waiver thereof by the party entitled to the benefit
thereof; or such other date as the parties hereto agree upon in writing.
1.9 "Code" shall mean the Internal Revenue Code of 1986,
as amended.
1.10 "Consolidated Income Tax Returns" shall mean (i) a
consolidated United States federal income Tax return within the meaning of
Section 1501 of the Code and the Treasury Regulations under Section 1502 of
the Code and (ii) any other combined, joint, consolidated or unitary income
Tax return, report and form required to be filed with any tax authority,
other than any Tax return, report or form that includes only the Nonwovens
Subject Subsidiaries.
1.11 "Consideration" shall have the meaning ascribed
thereto in Section 2.3(a).
1.12 "Damages" shall mean all losses, amounts paid in
settlement, claims, damages, liabilities, judgments and reasonable
out-of-pocket costs (including costs of investigation or enforcement) and
expenses (including, reasonable attorneys' fees and expenses).
1.13 "Department of Justice" shall have the meaning
ascribed thereto in Section 5.5(a).
1.14 "Dexter Acquisition Proposal" shall mean a written
proposal for the acquisition of Seller as an entirety (whether by way of
merger, consolidation, share exchange, tender offer or otherwise) and shall
include any tender or exchange offer to Seller's shareholders which
proposes to acquire at least a majority of the outstanding shares of the
Seller.
1.15 "Dexter Acquisition Transaction" shall mean any
business combination transaction in which (w) the Seller (or its successor
pursuant to a transaction that does not constitute a Dexter Acquisition
Transaction) is merged with or into another corporation and all of the
outstanding shares of the Seller (or such successor) are purchased or
acquired (unless the shareholders of the Seller receive, with respect to
their shares, shares of the survivor or its ultimate parent corporation
that constitute a majority of the shares thereof then outstanding) or (x)
at least a majority of the outstanding shares of the Seller (or such
successor) are purchased or acquired in a tender offer or exchange offer or
(y) all or substantially all of the assets of Dexter are sold or disposed
of and the outstanding shares of the Seller (or such successor) redeemed or
liquidated or substantially all of the assets are otherwise distributed to
shareholders, or (z) any similar transaction.
1.16 "Draft Allocation" shall have the meaning ascribed
thereto in Section 8.1(e).
1.17 "Effective Time" shall mean 11:59 p.m. New York City
time on the Closing Date at which time the Closing and all transactions
contemplated thereby shall be deemed to have occurred simultaneously;
provided that the Closing has actually occurred.
1.18 "Environmental Claim" shall have the meaning
ascribed thereto in Section 3.21(d).
1.19 "Environmental Law" shall have the meaning ascribed
thereto in Section 3.21(d).
1.20 "Environmental Permits" shall have the meaning
ascribed thereto in Section 3.21(a).
1.21 "ERISA" shall have the meaning ascribed thereto in
Section 3.14(a).
1.22 "ERISA Affiliate" shall have the meaning ascribed
thereto in Section 3.14(a).
1.23 "Escrow Amount" shall have the meaning ascribed
thereto in Section 2.5(a).
1.24 "Excluded Assets" shall mean (i) cash and cash
equivalents (other than cash and cash equivalents of the Nonwovens Subject
Subsidiaries); (ii) all contracts of insurance (except with respect to
insurance proceeds regarding the Nonwovens Assets); (iii) all rights to all
refunds or credits of Taxes levied or imposed upon, or in connection with,
the Nonwovens Assets or the Nonwovens Business with respect to any taxable
period or portion thereof that ends on or before the Effective Time, except
to the extent that any such refunds or credits are taken into account in
preparing the Closing Date Balance Sheet; (iv) those contracts, agreements,
leases and other assets listed in Schedule 1.24(iv); and (v) all property
and assets of the Nonwovens Business that are not used or held for use in
connection with, necessary for, or material to the business and operations
of the Nonwovens Business except as set forth on Schedule 1.24(v).
1.25 "Excluded Liabilities" shall mean all claims,
obligations and liabilities of the Seller and its subsidiaries of any kind,
known or unknown, which are not Nonwovens Liabilities.
1.26 "Final Allocation" shall have the meaning ascribed
thereto in Section 8.1(e).
1.27 "Foreign Acquisition Agreement" shall mean one or
more purchase agreements relating to the transfer of assets by one or more
of the Foreign Nonwovens Subsidiaries in form and substance reasonably
satisfactory to Buyer and Seller intended to reflect the economic terms
hereof and the allocation between the parties of rights, duties and
obligations as provided herein including with respect to employee benefits
and pension matters.
1.28 "Foreign Nonwovens Subsidiaries" shall mean the
Nonwovens Subsidiaries listed on Schedule 1.28.
1.29 "FTC" shall have the meaning ascribed thereto in
Section 5.5(a).
1.30 "GAAP" shall mean United States generally accepted
accounting principles.
1.31 "Governmental Entity" shall have the meaning
ascribed thereto in Section 3.5.
1.32 "Hazardous Materials" shall have the meaning
ascribed thereto in Section 3.21(d).
1.33 "Indebtedness" as to any person shall mean, without
duplication, (i) all indebtedness (including principal and accrued
interest) of such person for borrowed money or for the deferred purchase
price of property or services (including long-term debt and short-term
debt), (ii) all drafts drawn under letters of credit issued for the account
of such person and (iii) the aggregate amount required to be capitalized
under leases under which such person is the lessee.
1.34 "Independent Accountants" shall have the meaning
ascribed thereto in Section 2.6(a)(iv).
1.35 "Intercompany Accounts" shall have the meaning set
forth in Section 2.6(f).
1.36 "Law" shall have the meaning ascribed thereto in
Section 3.5.
1.37 "Lien" shall have the meaning ascribed thereto in
Section 3.3(b).
1.38 "Material Adverse Effect" shall mean any state of
facts, event, change or effect having a material adverse effect on the
condition (financial or otherwise), business, prospects or results of
operations of the Nonwovens Business.
1.39 "Net Asset Value" shall have the meaning ascribed
thereto in Section 2.6(d).
1.40 "Nonwovens Acquisition Proposal" shall mean a
purchase or other acquisition (including by way of merger, consolidation,
stock purchase, asset purchase or share exchange) of a material portion of
the Nonwovens Assets outside the ordinary course of Seller's business, or
any substantially similar transaction, or any inquiry or indication of
interest with respect to any of the foregoing; in each case other than the
transactions contemplated by this Agreement.
1.41 "Nonwovens Assets" shall mean:
(a) all of the property and assets used or held for
use in connection with, necessary for, or material to the business and
operations of the Nonwovens Business, whether or not reflected in the
Nonwovens Balance Sheet, including, without limitation, the Nonwovens Real
Properties, the Nonwovens Intellectual Property, the Nonwovens Inventory,
plants, machinery (a list of any machinery exceeding $250,000 in book value
is set forth on Schedule 1.41(a)), equipment, tools, supplies, spare parts,
furniture, fixtures, computer software and hardware, leasehold
improvements, motor vehicles, accounts and notes receivable (including
intercompany receivables and notes) and prepaid expenses (and including all
items which would be included on the Nonwovens Balance Sheet except for the
fact that such items are fully depreciated or expensed), plus all items of
a nature customarily carried as assets in the accounts of the Nonwovens
Business which have been or will be acquired in the ordinary course of the
Nonwovens Business consistent with past practice between the date of the
Nonwovens Balance Sheet and the Effective Time, less any items which have
been or will be disposed of or consumed in the ordinary course of the
Nonwovens Business consistent with past practice between the date of the
Nonwovens Balance Sheet and the Effective Time;
(b) the Nonwovens Bank Accounts;
(c) the Nonwovens Books and Records (except as
otherwise provided in the Foreign Transfer Agreements to be entered into
with respect to the Foreign Nonwovens Subsidiaries);
(d) the Nonwovens Contracts;
(e) the Nonwovens Leases;
(f) all of the outstanding capital stock of the
Nonwovens Subject Subsidiaries; and
(g) all rights, claims and privileges of the Seller
and its subsidiaries (including rights to recovery under all insurance
policies of the Seller to the extent they relate to the Nonwovens Assets or
the Nonwovens Liabilities which are in effect prior to the Effective Time
and which are not being assigned to the Buyer hereunder) and all rights to
all refunds or credits of Taxes levied or imposed upon, or in connection
with, the Nonwovens Assets or the Nonwovens Business with respect to any
taxable period or portion thereof that ends on or before the Effective
Time, to the extent such refunds or credits are taken into account in
preparing the Closing Date Balance Sheet.
Notwithstanding the foregoing, the Nonwovens Assets shall not mean or
include the Excluded Assets.
1.42 "Nonwovens Balance Sheet" shall have the meaning
ascribed thereto in Section 3.6.
1.43 "Nonwovens Bank Accounts" shall mean all of the bank
accounts of the Seller and its subsidiaries utilized for the Nonwovens
Business which are listed on Schedule 1.43.
1.44 "Nonwovens Books and Records" shall mean all of the
books and records of the Seller and its subsidiaries relating to the
operations of the Nonwovens Business, including, without limitation, all
books and records relating to the employees, the purchase of materials,
supplies and services, financial, accounting, Tax (other than any combined,
joint, consolidated or unitary Tax return information) and operations
matters, product engineering, research and development, manufacture and
sale of products and dealings with customers of the Nonwovens Business. As
used herein, books and records shall include all computerized books and
records and other computerized storage media and the software used in
connection therewith.
1.45 "Nonwovens Business" shall mean the unincorporated
division of the Seller and the Nonwovens Subsidiaries comprising the
nonwovens materials business (including its cogeneration facility) which
focuses on the proprietary formulation, manufacture and marketing of
long-fiber, wet-formed, and hydroentangled products, primarily for use in
the food packaging, medical, and hygiene markets.
1.46 "Nonwovens Contracts" shall mean all right, title
and interest of Seller or any of its affiliates (except for Nonwovens
Subsidiaries other than Nonwovens Subject Subsidiaries) to all contracts,
agreements and commitments of the Seller and its subsidiaries relating to,
necessary for or material to the Nonwovens Business, including, without
limitation, (a) the contracts, agreements and commitments listed in
Schedule 3.10(a) referred to in Section 3.10(a), and (b) all contracts,
agreements and commitments of the Seller relating to, necessary for or
material to the Nonwovens Business which are entered into between the date
of this Agreement and the Effective Time and expressly permitted by this
Agreement, excluding, however, all contracts, agreements and commitments
which (1) expire in accordance with their terms prior to the Effective Time
or are terminated in the ordinary course of the Nonwovens Business or (2)
are listed in Schedule 1.46.
1.47 "Nonwovens Employees" shall have the meaning
ascribed thereto in Section 6.1(a).
1.48 "Nonwovens Financial Statements" shall have the
meaning ascribed thereto in Section 3.6.
1.49 "Nonwovens Intellectual Property" shall mean all (a)
inventions (whether patentable or unpatentable and whether or not reduced
to practice), improvements thereto, and patents, patent applications,
inventor's certificates, and patent disclosures, together with reissuances,
continuations, continuations-in-part, revisions, extensions and
reexaminations thereof; (b) trademarks (including the name "Dexter",
subject to a perpetual royalty-free license for use in the Specialty
Polymers Business and subject to a perpetual, royalty-free non-transferable
license to the Dexter Corporation to use the name in connection with its
affairs outside the Nonwovens Business), service marks, brand names,
certification marks, trade dress, logos, trade names, assumed names,
corporate names and other indications of origin, including, without
limitation, translations, adaptations, derivations, and combinations
thereof; (c) original works of authorship, copyrights and moral rights; (d)
trade secrets and confidential business information (including, without
limitation, ideas, research and development, know-how, formulas,
compositions, manufacturing and production processes and techniques,
technical data, designs, discoveries, drawings, specifications, customer
and supplier lists, pricing and cost information, and business and
marketing plans and proposals); (e) computer software, including, without
limitation, programs, applications, source and object codes, data bases,
data, models, algorithms, tables and documentation related to the
foregoing, (f) rights in confidentiality and licensing agreements with
regard to any of the foregoing; (g) legal claims and defenses related to
any of the foregoing; (h) other similar tangible or intangible intellectual
proprietary or proprietary rights, information and technology and copies
and tangible embodiments thereof (in whatever form or medium); (i) all
applications to register, registrations, and renewals or extensions of the
foregoing; and (j) the goodwill associated with each of the foregoing, that
are used in, relate to, are necessary for or are material to the operation
of the Nonwovens Business including, without limitation, (i) all items
listed in Schedule 3.12(a) referred to in Section 3.12(a) and (ii) all such
items which are acquired or developed for use primarily in the business of
the Nonwovens Business between the date of this Agreement and the Effective
Time, excluding, however, all such items which expire in the ordinary
course of the Nonwovens Business prior to the Effective Time.
1.50 "Nonwovens Intellectual Property Licenses" shall
have the meaning ascribed thereto in Section 3.12(a).
1.51 "Nonwovens Inventory" shall mean all inventories
owned by the Seller or its subsidiaries relating to, necessary for or
material to the Nonwovens Business or the Nonwovens Assets, wherever
located, including all packaging, finished goods, raw materials, supplies,
work in process, spare parts and other miscellaneous items of tangible
property normally considered part of "inventory" under GAAP, consistently
applied.
1.52 "Nonwovens Leases" shall mean (a) all leases of the
Seller and its subsidiaries (as well as the sub-leases listed on Schedule
1.52) relating to, necessary for, or material to the Nonwovens Business
(whether entered into as lessor or lessee) listed in Schedule 3.11 referred
to in Section 3.11, and (b) all leases of the Seller and its subsidiaries
relating to the Nonwovens Business that are entered into between the date
of this Agreement and the Effective Time and expressly permitted by this
Agreement, excluding, however, all leases which will expire in accordance
with their terms prior to the Effective Time.
1.53 "Nonwovens Liabilities" shall mean:
(a) all of the non-interest bearing current
liabilities of the Seller and its subsidiaries (including, to the extent
reflected on the Closing Date Balance Sheet, (i) income Taxes of the
Nonwovens Subject Subsidiaries with respect to any taxable period or
portion thereof that ends on or before the Effective Time and (ii)
non-income Taxes levied or imposed upon, or in connection with, the
Nonwovens Assets or the Nonwovens Business with respect to any taxable
period or portion thereof that ends on or before the Effective Time, but
excluding all other Taxes) which have not been or will not be satisfied or
discharged at or prior to the Effective Time;
(b) all of the obligations and liabilities to
perform under the Nonwovens Leases and the Nonwovens Contracts (except to
the extent such Nonwovens Contracts are not transferred to the Buyer);
(c) all claims and liabilities arising after the
Effective Time out of the Nonwovens Assets; and
(d) the obligations and liabilities being assumed by
the Buyer pursuant to Article VI.
1.54 "Nonwovens Real Properties" shall mean all of the
real properties of the Seller and its subsidiaries relating to, necessary
for or material to the Nonwovens Business which are listed in Schedule 3.9
referred to in Section 3.9.
1.55 "Nonwovens Subject Subsidiaries" shall mean the
subsidiaries listed on Schedule 1.55.
1.56 "Nonwovens Subsidiaries" shall mean the subsidiaries
listed on Schedule 1.56.
1.57 "Permitted Exceptions" shall mean (i) those
exceptions to title to the Nonwovens Assets listed in Schedule 3.9 referred
to in Section 3.9; (ii) Liens that secure debt on the Nonwovens Balance
Sheet or which are otherwise reflected in the Nonwovens Balance Sheet with
respect to which no default exists; (iii) Liens securing all or a portion
of the purchase price of a Nonwovens Asset which arose in connection with
the purchase of such Nonwovens Asset after the date of the Nonwovens
Balance Sheet and which purchase price remains owing; (iv) statutory Liens
for Taxes not yet due or delinquent or the validity of which is being
contested in good faith by appropriate proceedings; (v) carriers',
warehousemen's, mechanics' and materialmen's and other similar Liens
arising in the ordinary course of the Nonwovens Business consistent with
past practice for sums not yet due and payable or delinquent or the
validity of which is being contested in good faith by appropriate
proceedings; (vi) all exceptions, restrictions, easements, rights of way
and encumbrances set forth in the title insurance policies listed in
Schedule 3.20 referred to in Section 3.20; and (vii) other Liens that are
not material in amount or do not materially detract from the value of or
materially impair the use of the property affected by such Lien.
1.58 "person" shall have the meaning ascribed thereto in
Section 10.10.
1.59 "Plans" shall have the meaning ascribed thereto in
Section 3.14(a).
1.60 "Preliminary Closing Date Balance Sheet" shall have
the meaning ascribed thereto in Section 2.6(a)(i).
1.61 "Potential Grow-In Employees" shall have the meaning
ascribed thereto in Section 6.2(b).
1.62 "Proxy Materials" shall have the meaning ascribed
thereto in Section 5.13(a).
1.63 "Purchase Price" shall have the meaning ascribed
thereto in Section 2.3(a)(ii).
1.64 "Shareholder Approval" shall have the meaning
ascribed to it in Section 7.3.
1.65 "Specified Dexter Acquisition Proposal" shall mean
(a) any Dexter Acquisition Proposal which is conditioned on (or has the
price payable depend upon) Seller's shareholders voting against Shareholder
Approval or (b) any other Dexter Acquisition Transaction unless the
proposed acquiror agrees to use its best efforts to cause Seller to comply
with its obligations under this Agreement and to vote all shares of Seller
common stock it acquires and thereby becomes entitled to vote in favor of
Shareholder Approval.
1.66 "subsidiary" shall have the meaning ascribed thereto
in Section 10.10.
1.67 "Target Net Asset Value" shall have the meaning
ascribed thereto in Section 2.6(d).
1.68 "Tax Indemnified Party" shall have the meaning
ascribed thereto in Section 8.2(e).
1.69 "Tax Indemnifying Party" shall have the meaning
ascribed thereto in Section 8.2(e).
1.70 "Tax Third Party Claim" shall have the meaning
ascribed thereto in Section 8.2(e).
1.71 "Taxes" shall mean all taxes, however denominated,
including any interest, penalties or additions to tax that may become
payable in respect thereof, imposed by any government, which taxes shall
include without limitation, all income and withholding taxes, franchise
taxes, payroll and employee withholding taxes, gross receipt taxes,
occupation taxes, real and personal property taxes, ad valorem taxes, stamp
taxes, transfer taxes, workers' compensation taxes and other obligations of
the same or a similar nature; and "Tax" shall mean any one of the
foregoing.
1.72 "Transferred Employees" shall have the meaning
ascribed thereto in Section 6.1(a).
1.73 "Undertaking and Indemnity Agreement" shall have the
meaning ascribed thereto in Section 2.3(a).
1.74 "Vested Eligible Employees" shall have the meaning
ascribed thereto in Section 6.2(b).
1.75 "WARN" shall have the meaning ascribed thereto in
Section 6.2(e).
1.76 "WARN Obligations" shall have the meaning ascribed
thereto in Section 6.2(e).
Article II
THE CLOSING
2.1 Time and Place of Closing. Subject to the terms and
conditions of this Article II, the Closing will take place at the offices
of Skadden, Arps, Slate, Meagher & Flom LLP, Four Times Square, New York,
New York, at 9:30 A.M. (local time) on the Closing Date or at such other
place or time or both as the parties may agree.
2.2 Purchase and Sale of the Nonwovens Assets. Subject to
the terms and conditions of this Agreement (or, with respect to any
condition not satisfied, the waiver thereof by the party for whose benefit
the condition exists), the Seller will sell, convey, assign, transfer and
deliver, or cause to be sold, conveyed, assigned, transferred and
delivered, all of its direct or indirect right, title and interest at the
Effective Time in and to the Nonwovens Assets (other than the Nonwovens
Assets owned or held by the Nonwovens Subject Subsidiaries, the capital
stock of which is being transferred directly or indirectly by the Seller to
the Buyer), and the Buyer will purchase, acquire, accept and pay for, as
hereinafter provided, the Nonwovens Assets (other than the Nonwovens Assets
owned or held by Nonwovens Subject Subsidiaries, the capital stock of which
is being transferred directly or indirectly by the Seller to the Buyer) and
will assume the Nonwovens Liabilities.
2.3 Consideration for the Assets; Nonassignable Contracts
and Leases.
(a) The aggregate consideration (the
"Consideration") for the Nonwovens Assets (including the Nonwovens Assets
owned or held by Nonwovens Subsidiaries) shall consist of (i) the
assumption by the Buyer of the Nonwovens Liabilities and the
indemnification of the Seller by the Buyer with respect to the Nonwovens
Liabilities, in each case pursuant to an Undertaking and Indemnity
Agreement substantially in the form of Exhibit A to this Agreement (the
"Undertaking and Indemnity Agreement"), and (ii) payment or delivery of the
Purchase Price by the Buyer to the Seller. The portion of the Consideration
constituting the purchase price (the "Purchase Price") shall be an amount
in cash equal to $275,000,000. The Purchase Price shall be subject to the
adjustment set forth in Section 2.6.
(b) In the case of any Nonwovens Contracts or
Nonwovens Leases, or any contracts to which a Nonwovens Subject Subsidiary
is a party on the Closing which are not by their terms assignable or which
require the consent of a third party in connection with this transaction,
the Seller agrees to use reasonable efforts to cause such assignment or to
procure such consent. In those cases where consents have not been obtained
to the sale, conveyance, assignment or delivery to the Buyers of any
Nonwovens Contracts or Nonwovens Leases (collectively, "Non-Conveyed
Contracts"), the Seller shall, at the Buyer's request, take all reasonable
steps and actions to provide Buyers with the benefit of such Non-Conveyed
Contracts (including, but not limited to, (i) enforcing, at the request and
expense of the Buyer, any rights of the Seller arising with respect thereto
(including, without limitation, the right to terminate in accordance with
the terms thereof upon the advice of the Buyer) or (ii) permitting the
Buyers to enforce any rights arising with respect thereto) as if such
Non-Conveyed Contracts had been sold, conveyed, assigned and delivered to
the Buyers). The provisions of this Section 2.3(b) shall not affect the
right of the Buyers not to consummate the transactions contemplated by this
Agreement if the conditions to their obligations hereunder contained in
Sections 7.1(d) and 7.3(f) have not otherwise been fulfilled.
2.4 Deliveries by the Seller. At the Closing, the Seller
shall deliver or cause to be delivered the following to the Buyer (as well
as any other deliveries required by Foreign Transfer Agreement):
(a) Stock certificates representing all of the
shares of capital stock of each of the Nonwovens Subject Subsidiaries, in
each case accompanied by stock powers duly executed in blank or duly
executed instruments of transfer.
(b) Special warranty deeds, in recordable form, with
respect to the Nonwovens Real Properties owned by the Seller or any of its
subsidiaries (other than the Nonwovens Subject Subsidiaries).
(c) A duly executed bill of sale substantially in
the form of Exhibit B to this Agreement (the "Bill of Sale"), together with
such other appropriate instruments of transfer as the Buyer may reasonably
request, transferring to the Buyer all of the personal and intangible
property owned or held by the Seller as of the Effective Time which is
included in the Nonwovens Assets (other than the Nonwovens Assets owned or
held by Nonwovens Subject Subsidiaries).
(d) Duly executed instruments of assignment
(including any required consents thereto) of the Nonwovens Leases to which
the Seller or any of its subsidiaries (other than the Nonwovens Subject
Subsidiaries) is a party, in recordable form if and to the extent necessary
with respect to those relating to real property or interests therein.
(e) Duly executed instruments of assignment
(including any required consents thereto) of the Nonwovens Contracts to
which the Seller or any of its subsidiaries (other than the Nonwovens
Subject Subsidiaries) is a party.
(f) Duly executed instruments of assignment or
transfer of the Nonwovens Intellectual Property owned or held by the Seller
or any of its subsidiaries (other than the Nonwovens Subject Subsidiaries),
in form suitable for recording in the appropriate office or bureau, and the
original certificates, if available, of such Nonwovens Intellectual
Property together with any powers of attorney necessary to make the
conveyance effective.
(g) Duly executed instruments of assignment of the
Nonwovens Bank Accounts of the Seller or any of its subsidiaries (other
than the Nonwovens Subject Subsidiaries).
(h) Copies of any consents set forth on Schedule
2.4(h) obtained as contemplated by Sections 7.1(d) and 7.3(f).
(i) The Undertaking and Indemnity Agreement duly
executed by the Seller.
(j) The Foreign Acquisition Agreements duly executed
by the relevant Foreign Nonwovens Subsidiaries.
(k) Such other and further instruments of
conveyance, assignment and transfer as the Buyer may reasonably request for
the more effective conveyance and transfer of any of the Nonwovens Assets.
(l) The certificates contemplated by Sections 7.3
and 7.4.
2.5 Delivery by the Buyer. At the Closing, the Buyer
shall deliver the following to the Seller:
(a) The Purchase Price, less $10,000,000 (the
"Escrow Amount"), the net amount of which shall be payable nine months
after the Closing Date (subject to the terms set forth in the form of
escrow agreement attached as Exhibit D hereto) by (i) the wire transfer of
immediately available funds to a bank account designated in writing by the
Seller at least two business days prior to the Closing Date in any bank in
the continental United States or (ii) such means as are otherwise agreed in
writing upon by the Buyer and the Seller.
(b) Copies of any consents obtained as contemplated
by Sections 5.5(a)(i) and 7.1(d).
(c) The Undertaking and Indemnity Agreement duly
executed by the Buyer.
(d) The Foreign Acquisition Agreements duly executed
by the Buyer or one or more of its wholly owned subsidiaries.
(e) The certificates contemplated by Sections 7.2
and 7.4.
2.6 Post-Closing Adjustment.
(a) (i) Within 45 days following the Effective Time,
the Seller shall prepare or cause to be prepared and deliver a balance
sheet of the Nonwovens Business as of the Closing Date (the " Preliminary
Closing Date Balance Sheet") which shall set forth the Net Asset Value of
the Nonwovens Business. The Preliminary Closing Date Balance Sheet will
present fairly and truly the consolidated financial position of the
Nonwovens Business as of the Closing Date and will be in conformity with
GAAP applied on a basis consistent with the Nonwovens Balance Sheet, except
as otherwise specified in Schedule 2.6(a)(i) or in this Section 2.6(a),
including, without limitation, using the same account classifications,
useful lives and depreciation/amortization schedules for
depreciable/amortizable assets, closing procedures and levels of
materiality.
(ii) The Preliminary Closing Date Balance Sheet
shall be accompanied by a report of PricewaterhouseCoopers LLP, independent
public accountants, substantially in the form attached as Schedule
2.6(a)(ii).
(iii) Upon receipt of the Preliminary Closing Date
Balance Sheet, the Buyer and its certified public accountants shall have
the right during the succeeding 15-day period to review, at the Buyer's
expense, the Preliminary Closing Date Balance Sheet and to examine and
review all records and work papers and other supporting documents used to
prepare such Preliminary Closing Date Balance Sheet. The Buyer shall notify
the Seller, in writing (including, but not limited to, by fax or e-mail),
on or before the last day of the 15-day period, of any objections to the
Preliminary Closing Date Balance Sheet, setting forth a reasonably specific
description of the Buyer's objections and the dollar amount of each
objection. If the Buyer does not deliver such notice within such 15-day
period, the Preliminary Closing Date Balance Sheet shall be deemed to have
been accepted by the Buyer.
(iv) If the Buyer objects to the Preliminary Closing
Date Balance Sheet, the Seller and the Buyer shall attempt to resolve any
such objections applying the principles set forth in Section 2.6(a)(i)
within 10 business days of the Seller's receipt of the Buyer's objections.
If the Seller and the Buyer are unable to resolve the matter within such 10
business day period, they shall jointly appoint an impartial
internationally recognized independent certified public accounting firm
(the "Independent Accountants") mutually acceptable to the Buyer and the
Seller (or, if they cannot agree on a mutually acceptable firm, they shall
cause their respective accounting firms to select such firm) within 2 days
of the end of such 10 business day period. The Seller and the Buyer shall
provide to the Independent Accountants full cooperation. The Independent
Accountants shall be instructed to reach their conclusion regarding the
dispute within 10 Business Days. The Preliminary Closing Date Balance Sheet
after the acceptance thereof by the Buyer or the resolution of all disputes
in connection therewith is referred to herein as the "Closing Date Balance
Sheet."
(v) All fees payable to the Independent Accountants
in connection with the resolution of any objections raised to the
Preliminary Closing Date Balance Sheet shall be divided equally between the
Buyer and the Seller.
(b) If the amount of the Net Asset Value as
reflected in the Closing Date Balance Sheet is less than the amount of the
Target Net Asset Value, then the Purchase Price shall be reduced by the
amount of such deficit. Any adjustments in the Purchase Price pursuant to
this Section 2.6(b) shall be paid by the Seller by wire transfer of
immediately available funds to an account designated in writing by the
Buyer. Any payments required pursuant to this Section 2.6(b) shall be made
within 2 business days after the Closing Date Balance Sheet becomes final
and binding on the parties.
(c) If the amount of the Net Asset Value as
reflected in the Closing Date Balance Sheet exceeds the amount of the
Target Net Asset Value, then the Purchase Price shall be increased by the
amount of such excess. Any adjustments in the Purchase Price pursuant to
this Section 2.6(c) shall be paid by the Buyer by wire transfer of
immediately available funds to an account designated in writing by the
Seller. Any payments required pursuant to this Section 2.6(c) shall be made
within 2 business days after the Closing Date Balance Sheet becomes final
and binding on the parties.
(d) For purposes of this Section 2.6, "Net Asset
Value" shall mean the amount set forth for the line item "Net Equity" in
the Closing Date Balance Sheet; and "Target Net Asset Value" shall equal
$199,715,000 as reflected as "Net Equity" on the Nonwoven Balance Sheet.
(e) If the adjustment in the Purchase Price pursuant
to Section 2.6(b) or Section 2.6(c) exceeds $100,000, interest shall be
paid on the amount of the adjustment from the Closing Date to the date of
payment at the rate prescribed by J.P. Morgan & Company Incorporated as its
"prime rate" on the Closing Date.
(f) All Intercompany Accounts will be fully settled
between the Seller and the Buyer within 30 days of the Closing Date. The
Seller and the Buyer shall each be responsible for settling such
Intercompany Accounts with their respective subsidiaries. For purposes of
this Section 2.6, "Intercompany Accounts" shall mean all amounts,
regardless of their nature, that are (a) owed by any of the Nonwovens
Subsidiaries to the Seller or any other subsidiary of the Seller, other
than another of the Nonwovens Subsidiaries, or (b) owed by the Seller or
any subsidiary of the Seller, other than one of the Nonwovens Subsidiaries,
to any of the Nonwovens Subsidiaries.
(g) Unless otherwise required by Law, the parties
shall treat any adjustment made pursuant to Section 2.6(b) or Section
2.6(c) as an adjustment to the Purchase Price for federal, state and local
income Tax purposes.
Article III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller represents and warrants to the Buyer as
follows:
3.1 Organization; Qualification.
(a) Each of the Seller and the Nonwovens
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has
all requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted.
(b) Each of the Seller and the Nonwovens
Subsidiaries is duly qualified or licensed and in good standing to do
business in each jurisdiction in which the property owned, leased or
operated by it or the nature of the business conducted by it makes such
qualification necessary, except in those jurisdictions where the failure to
be so duly qualified or licensed and in good standing would not,
individually or in the aggregate, have a Material Adverse Effect.
(c) The Seller has heretofore made available to the
Buyer complete and correct copies of the Certificate of Incorporation and
By-laws (or other similar charter, by-law or other organizational
documents), as currently in effect, of the Seller and each of the Nonwovens
Subsidiaries.
3.2 Capital Stock. The authorized, issued and outstanding
capital stock of each of the Nonwovens Subject Subsidiaries is set forth in
Schedule 1.55. All the outstanding shares of capital stock of each of the
Nonwovens Subject Subsidiaries are duly authorized, validly issued, fully
paid and non-assessable. Except for the transactions contemplated by this
Agreement, (1) there are no shares of capital stock of any of the Nonwovens
Subject Subsidiaries authorized or as of the date of this Agreement issued
or outstanding, (2) there are no authorized or outstanding options,
warrants, calls, preemptive rights, subscriptions or other rights,
agreements, arrangements or commitments of any character relating to the
issued or unissued capital stock of the Nonwovens Subject Subsidiaries
obligating any Nonwovens Subject Subsidiary to issue, transfer or sell or
cause to be issued, transferred or sold any shares of capital stock or
other equity interest in it or any other Nonwovens Subsidiary or securities
convertible into or exchangeable for such shares or equity interests, or
obligating any Nonwovens Subject Subsidiary to grant, extend or enter into
any such option, warrant, call, subscription or other right, agreement,
arrangement or commitment, and (3) there are no outstanding contractual
obligations of any Nonwovens Subject Subsidiary to repurchase, redeem or
otherwise acquire any capital stock of any of the Nonwovens Subject
Subsidiaries or to provide funds to make any investment (in the form of a
loan, capital contribution or otherwise) in any other entity.
3.3 Equity Investments.
(a) Schedule 3.3(a) sets forth: (i) the name of each
corporation, partnership, joint venture or other entity (other than the
Nonwovens Subject Subsidiaries) in which the Seller has, or pursuant to any
agreement has the right to acquire by any means, directly or indirectly, an
equity interest or investment and which, in each case, is a Nonwovens
Asset; (ii) in the case of each of such person described in the foregoing
clause (i), either (x) a listing of the relevant agreement or agreements
pursuant to which the Seller has acquired such right or such interest or
investment or (y) (A) the jurisdiction of incorporation and (B) the
authorized and outstanding capitalization thereof and the percentage of
each class of voting capital stock owned, directly or indirectly, by the
Seller.
(b) Except as set forth in Schedule 3.3(b), the
Seller's interest in each of the persons listed on Schedule 3.3(a) which
are stated to be owned directly or indirectly by the Seller (except for
directors' qualifying shares, if any, which the Seller will cause to be
transferred at the Effective Time to nominees of the Buyer), will, after
giving effect to the transactions contemplated hereby, be owned by the
Buyer, directly or indirectly, in each case; free and clear of all liens,
pledges, charges, security interests and other encumbrances (each a
"Lien").
3.4 Authority Relative to this Agreement. The Seller has
the corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery
of this Agreement and the consummation of the transactions contemplated
hereby have been duly and validly authorized by the Board of Directors of
the Seller and no other corporate proceedings on the part of the Seller are
necessary to authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by the Seller and constitutes, assuming this Agreement
constitutes a legal, valid, binding and enforceable agreement of the Buyer,
a legal, valid and binding agreement of the Seller, enforceable against it
in accordance with its terms.
3.5 No Violation. Except for the filings, permits,
authorizations, consents and approvals set forth in Schedule 3.5 or as may
be required under the applicable requirements of the HSR Act or the
competition laws or regulations of the European Union or any foreign
supranational authority in any jurisdiction in which the Seller or the
Buyer (directly or through subsidiaries, in each case) has material assets
or conducts material operations, none of the execution, delivery or
performance of this Agreement by the Seller, the consummation by the Seller
of the transactions contemplated hereby or compliance by the Seller with
any of the provisions hereof will (i) conflict with or result in any breach
of any provision of the certificate of incorporation, bylaws or similar
organizational documents of the Seller or any of the Nonwovens
Subsidiaries, (ii) require any filing with, or permit, authorization,
consent or approval of, any federal, regional, state, municipal or local
court, arbitrator, tribunal, administrative agency or commission or other
governmental or other regulatory authority or agency, including federal,
state, local or municipal government or their regulatory authorities and
agencies, whether U.S. or foreign (a " Governmental Entity"), (iii) result
in a violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
amendment, cancellation or acceleration) under, or result in the creation
of a Lien on any Nonwovens Asset pursuant to, any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, lease, license,
contract, agreement or other instrument or obligation to which the Seller
or any of its subsidiaries is a party or by which any of them or any of
their properties or assets may be bound, or (iv) violate any order, writ,
injunction, decree, judgment, permit, license, ordinance, law, statute,
rule or regulation ("Law") applicable to the Seller, any of the Nonwovens
Subsidiaries or any of the Nonwovens Assets, excluding from the foregoing
clauses (ii), (iii) and (iv) such filings, permits, authorizations,
consents, approvals, violations, breaches, defaults or Liens which are not
individually or in the aggregate likely to have a Material Adverse Effect.
3.6 Financial Statements. The Seller has previously
furnished to the Buyer (i) an unaudited consolidated balance sheet and
statement of income of the Nonwovens Business for the fiscal year ended
December 31, 1999, and (ii) an unaudited consolidated balance sheet and
statement of income of the Nonwovens Business as of March 31, 2000, and for
the year to date period then ended. The financial statement referred to in
Section 3.6(i) and Section 3.6(ii) are hereinafter referred to herein as
the "Nonwovens Financial Statements" and the unaudited consolidated balance
sheet of the Nonwovens Business as of March 31, 2000, a copy of which is
attached hereto as Exhibit C, is referred to herein as the "Nonwovens
Balance Sheet." Except as set forth in Schedule 3.6, the Nonwovens
Financial Statements and the Nonwovens Balance Sheet have been prepared in
accordance with GAAP applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto) and each balance
sheet included therein presents fairly and truly the financial position of
the Nonwovens Business as of the date thereof, and each statement of income
included therein presents fairly the results of operations of the Nonwovens
Business for the respective periods therein set forth, except that the
interim financial statements are subject to normal recurring year-end
adjustments and are in a condensed presentation format and do not contain
footnotes.
3.7 Absence of Undisclosed Liabilities. Except as set
forth in Schedule 3.7, the Seller has no liability or obligation (whether
absolute, accrued, contingent or otherwise), that is a Nonwovens Liability,
and no Nonwovens Subsidiary has any liability or obligation (whether
absolute, accrued, contingent or otherwise), in each case of a nature
required by GAAP to be reflected or reserved against in a balance sheet or
disclosed in the notes thereto, except such liabilities, obligations or
contingencies (i) that are adequately accrued or reserved against in the
Nonwovens Balance Sheet or reflected in the notes thereto, (ii) which were
incurred after the date of the Nonwovens Balance Sheet in the ordinary
course of the Nonwovens Business consistent with past practice or (iii)
which individually or in the aggregate do not exceed U.S.$200,000.
3.8 Absence of Certain Changes or Events. Except as set
forth in Schedule 3.8 or as otherwise contemplated by this Agreement, since
the date of the Nonwovens Balance Sheet, there has not been: (a) any
Material Adverse Effect; or (b) any state of facts, event, change or
condition which could reasonably be expected to cause a Material Adverse
Effect. For the avoidance of doubt, any state of facts, event, change or
condition which could reasonably be expected to materially impair the value
of (i) any of the manufacturing plants of the Nonwovens Business or (ii)
the cogeneration plant located in Windsor Locks, Connecticut shall
constitute a Material Adverse Effect for purposes of this Section 3.8 as of
any relevant date.
3.9 Title and Related Matters. Except as set forth in
Schedule 3.9 and subject to other Permitted Exceptions: (a) the Seller or a
Nonwovens Subsidiary has, and immediately after the Effective Time, the
Buyer or a Nonwovens Subject Subsidiary will have, good and valid, legal
and beneficial title to, or a valid leasehold or contractual interest in,
free and clear of all Liens, all of the Nonwovens Assets (other than the
Nonwovens Real Properties); and (b) the Seller or a Nonwovens Subject
Subsidiary has, and immediately after the Effective Time, the Buyer or a
Nonwovens Subject Subsidiary will have, good and marketable, legal and
beneficial title (such as any reputable title insurance company licensed to
do business in the jurisdiction in which such Nonwovens Real Property is
located will approve and insure subject only to Permitted Exceptions) to
all of the Nonwovens Real Properties. Schedule 3.9 contains (x) a complete
and correct list of all Nonwovens Real Properties and (y) a complete and
correct list of each title insurance policy insuring title to any of the
Nonwovens Real Properties.
3.10 Contracts.
(a) Schedule 3.10(a) sets forth a complete and
correct list of each Nonwovens Contract which, as of the date hereof, (i)
is a collective bargaining agreement or any agreement that contains any
severance pay liabilities or obligations; (ii) is an employment or
consulting agreement or contract with an employee or individual consultant
or a consulting agreement or contract with a consulting firm or other
organization (other than employment agreements that are created as a matter
of Law); (iii) is an agreement or contract containing any covenant limiting
the freedom of the Seller or any of its subsidiaries to engage in any line
of business or compete with any person; (iv) provides for aggregate future
payments of more than $250,000; (v) provides for aggregate future payments
in excess of $100,000, has a term exceeding one year and which may not be
cancelled upon 90 or fewer days' notice without any liability, penalty or
premium (other than a nominal fee or charge); (vi) is a sales
representative agreement; (vii) is Indebtedness; or (viii) is material to
the business, operations or financial condition of the Nonwovens Business
taken as a whole; provided that Schedule 3.10(a) does not list any
Nonwovens Contract for the purchase or sale of goods or services entered
into in the ordinary course of the Nonwovens Business which may be
cancelled on 90 or fewer days' notice without any liability, penalty or
premium (other than a nominal cancellation fee or charge).
(b) Except as set forth in Schedule 3.10(b), (i)
each Nonwovens Contract is in full force and effect, and (ii) there is not,
with respect to the Nonwovens Contracts, any existing default, or event of
default, or event which with or without due notice or lapse of time or both
would constitute a default or event of default, on the part of the Seller
or any Nonwovens Subsidiary or to the best knowledge of the Seller any
other party thereto, except where the failure to be in full force and
effect or where such default or event of default could not reasonably be
expected to have a Material Adverse Effect.
3.11 Leases. Schedule 3.11 sets forth a complete and
correct list of each Nonwovens Lease which (i) relates to real property;
(ii) provides for aggregate future payments of more than $250,000; (iii)
provides for aggregate future payments in excess of $100,000, has a term
exceeding one year and which may not be cancelled upon 90 or fewer days'
notice without any liability, penalty or premium (other than a nominal
cancellation fee or charge); or (iv) is material to the business,
operations or financial condition of the Nonwovens Business taken as a
whole. Except as set forth in Schedule 3.11, there is not, with respect to
the Nonwovens Leases, any existing default, or event of default, or event
which with or without due notice or lapse of time or both would constitute
a default or an event of default, on the part of the Seller or any
Nonwovens Subsidiary or, to the best knowledge of the Seller, any other
party thereto, except for such defaults or events of default which
individually or in the aggregate could reasonably be expected to have a
Material Adverse Effect. At the Effective Time, the Nonwovens Leases will
be valid, binding and enforceable by the Buyer, one of its subsidiaries
designated pursuant to Section 10.6 as the assignee thereof or a Nonwovens
Subject Subsidiary in accordance with their respective terms, except for
those Nonwovens Leases as to which the failure to be valid, binding and
enforceable could not reasonably be expected to have a Material Adverse
Effect.
3.12 Intellectual Property.
(a) Nonwovens Intellectual Property. Schedule
3.12(a) sets forth a complete and accurate list of all registrations and
applications to register the patents, trademarks, trade names, service
marks, copyrights, copyright registrations, as well as all material,
unregistered trademarks, and any software and applications (other than
shrink-wrapped software) that are included in the Nonwovens Intellectual
Property and a complete and accurate list of all material agreements under
which any such Nonwovens Intellectual Property is licensed to Seller, in
the case of Nonwovens Intellectual Property not owned by Seller, or by
Seller to a third party (collectively, the "Nonwovens Intellectual Property
Licenses"), indicating the parties to such agreement.
(b) Validity of Nonwovens Intellectual Property.
Except as set forth on Schedule 3.12(b), (i) with respect to Nonwovens
Intellectual Property, owned by Seller, Seller has good and valid title
free and clean of all liens and (ii) with respect to all Nonwovens
Intellectual Property held by Seller under license, Seller has the right to
use such Nonwovens Intellectual Property, free from any lien.
(c) Securing and Protection of Nonwovens
Intellectual Property. Except as set forth on Schedule 3.12(c), to the
extent that any material Nonwovens Intellectual Property is required to be
registered with any governmental authority, such Nonwovens Intellectual
Property has been duly registered with, filed in or issued by, as the case
may be, the United States Patent and Trademark Office, United States
Copyright Office or such other filing offices, domestic or foreign. Seller
has taken such actions and, to Seller's knowledge, no other actions will be
required to be taken within the 180-day period commencing at the Closing
Date, to ensure full protection under any applicable laws or regulations,
and such registrations, filings, issuances and other actions remain in full
force and effect, in each case, to the extent related to Nonwovens
Business. Seller has a policy to secure, and, with respect to any material
Nonwovens Intellectual Property, has secured, from all consultants,
contractors and employees who contribute or have contributed to the
creation or the development of Nonwovens Intellectual Property valid
written assignments by such persons to Seller of the rights to such
contribution Seller does not already own by operation of law. Seller has
taken reasonable steps to protect and preserve the confidentiality of all
of its trade secrets. To Seller's knowledge, there are no unauthorized
uses, disclosures or infringements of any part of Nonwovens Intellectual
Property, and all use by or disclosure to any Person of trade secrets that
comprise any part of Nonwovens Intellectual Property has been pursuant to
the terms of a written agreement with such Person, and all use by Seller of
trade secrets owned by another Person has been pursuant to the terms of a
written agreement with such Person or is otherwise lawful.
(d) No Infringement. Except as disclosed in Schedule
3.12(d), to the knowledge of the Seller, (i) the activities, products and
services of Seller in connection with Nonwovens Business, including,
without limitation, Nonwovens Intellectual Property, do not infringe upon
or otherwise violate, the intellectual property of any other Person or
entity; (ii) as of the date hereof, there are no claims or suits pending,
nor has there been notice provided or any claims threatened, alleging that
Seller or any of its activities, products or services in connection with
Nonwovens Business infringe upon or constitute the unauthorized use of any
other Person's or entity's intellectual property, or challenging Seller's
ownership of, right to use, or the validity or enforceability or
effectiveness of any license relating to any Nonwovens Intellectual
Property, (iii) none of Nonwovens Intellectual Property is being infringed
or violated or otherwise used or available for use by any other Person
(except pursuant to Nonwovens Intellectual Property Licenses), and (iv) the
consummation of this Agreement will not result in the loss of any Nonwovens
Intellectual Property and, following the consummation of this Agreement, no
party will have any rights to Nonwovens Intellectual Property except
pursuant to Nonwovens Intellectual Property Licenses.
3.13 Legal Proceedings, etc. Except as set forth in
Schedule 3.13 and except for matters involving only monetary recovery in
which the damages sought to be imposed do not exceed $50,000 individually
or $500,000 in the aggregate, there are no legal, administrative,
arbitration or other proceedings or investigations pending or threatened in
writing against the Nonwovens Business or the Nonwovens Assets nor are
there any governmental legal proceedings pending which challenge the
legality of this Agreement or the transactions contemplated hereby.
3.14 Employee Benefit Plans; ERISA.
(a) Schedule 3.14(a) contains a complete and correct
list of each deferred compensation, incentive compensation or equity
compensation plan; "welfare" plan, fund or program (within the meaning of
section 3(1) of the Employee Retirement Income Security Act of 1974, as
amended (" ERISA")); "pension" plan, fund or program (within the meaning of
section 3(2) of ERISA); each employment, termination or severance agreement
(other than employment agreements that are created as a matter of Law); and
each other material employee benefit plan, fund, program, agreement or
arrangement, in each case, that is sponsored, maintained or contributed to
or required to be contributed to by the Seller or by any trade or business
(other than Plans of the foreign Nonwovens Subsidiaries maintained or
required by applicable Law), whether or not incorporated (an " ERISA
Affiliate"), that together with the Seller would be deemed a " single
employer" within the meaning of section 4001(b) of ERISA, for the benefit
of any employee or former employee employed in the Nonwovens Business (the
"Plans").
(b) No Plan is or has been subject to Title IV or
Section 302 of ERISA or Section 412 of the Code. Neither the Seller nor any
ERISA Affiliate has incurred any unsatisfied liability under Title IV of
ERISA or Section 412 of the Code.
(c) Each Plan has been operated and administered in
accordance with its terms and applicable law in all material respects,
including but not limited to ERISA and the Code, and each Plan intended to
be "qualified" within the meaning of section 401(a) of the Code is so
qualified and the trusts maintained thereunder are exempt from taxation
under section 501(a) of the Code.
(d) Schedule 3.14(d) sets forth each Plan under
which as a result of the consummation of the transactions contemplated by
this Agreement, either alone or in combination with another event, (A) any
current or former employee or officer of the Seller or any ERISA Affiliate
may become entitled to severance pay or any other payment which is a
Nonwovens Liability, except as expressly provided in this Agreement, or (B)
any compensation due any such employee or officer from the Nonwovens
Business may be increased or the time of payment or vesting may become
accelerated.
(e) Except as disclosed in Schedule 3.14(e), there
are no pending, or to the best knowledge of the Seller, threatened claims
by or on behalf of any Plan, by any employee or beneficiary covered under
any such Plan, or otherwise involving any such Plan (other than routine
claims for benefits). With respect to each Plan, all payments due from the
Seller or any of its subsidiaries have been timely made and all amounts
properly accrued to date or as of the Closing Date as liabilities of the
Seller which have not been paid, have been and will be properly recorded on
the Closing Date Balance Sheet.
(f) Except as set forth in Schedule 3.14(f), Seller
has not disseminated in writing or otherwise broadly or generally notified
current or former employees of the Nonwovens Business of any intent or
commitment (whether or not legally binding) to create or implement any
additional plans, funds, programs, agreements or arrangements for the
benefit of any current or former employees of the Nonwovens Business or to
materially amend, modify or terminate any existing Plan.
(g) Except as set forth on Schedule 3.14(g), the
Seller is not party to any collective bargaining agreements. There are no
labor unions or other organizations representing, purporting to represent
or attempting to represent, any employee of the Seller. There is not
pending, or, to the best knowledge of Seller, threatened any labor dispute,
strike, work stoppage or other concerted labor activity against the Seller
involving the employees in the Nonwovens Business. During the three (3)
year period preceding the date hereof, there have been no organizing
activities conducted by any labor organization or work council or the like
with respect to any employee in the Nonwovens Business. Neither the Seller
nor any subsidiary has committed any unfair labor practices or violated in
any material respect any applicable employment laws, regulations,
ordinances, rules, orders or decrees in connection with the operation of
the respective businesses of the Seller and there is not pending or, to the
best knowledge of the Seller, threatened charge, complaint, investigation
or proceeding against the Seller by or before the National Labor Relations
Board, the Department of Labor, the Equal Employment Opportunity
Commission, the Occupational Health and Safety Administration or any
comparable state or municipal agency by or on behalf of any employee or
class of employees or by or before any governmental agency relating to a
purported violation of any applicable employment laws, regulations,
ordinances, rules, orders or decrees.
3.15 Assets Necessary to Business. Except as set forth in
Schedule 3.15 and except for the Excluded Assets, the Nonwovens Assets
constitute all the assets and properties used or held for use in connection
with, necessary for, or material to the business and operations of the
Nonwovens Business as presently conducted.
3.16 Governmental Authorizations and Regulations.
(a) All governmental and other third party permits
(including occupancy permits), licenses, franchises, permits,
registrations, approvals and other authorizations or consents held by the
Seller and its subsidiaries to operate the business of the Nonwovens
Business (herein collectively called "Authorizations") are valid and
sufficient to conduct the Nonwovens Business conducted by them in the
manner presently being conducted, except where the failure to hold such
Authorizations would not, individually or in the aggregate, have a Material
Adverse Effect.
(b) Except as set forth in Schedule 3.16(b), the
Nonwovens Business is being conducted in material compliance with all
applicable Laws of all Governmental Entities relating to the operation,
conduct or ownership of the Nonwovens Business (provided that no
representation or warranty is made in this Section 3.16(b) with respect to
Environmental Laws).
3.17 Disclosure. The representations and warranties by
the Seller in this Agreement and the statements contained in the schedules,
certificates, due diligence materials (including written financial
information) and other writings furnished and to be furnished by or on
behalf of the Seller to the Buyer pursuant to this Agreement, when
considered as a whole and giving effect to any supplements or amendments
thereof prior to the time of signing on the date hereof, do not and will
not contain any untrue statement of a material fact and do not and will not
omit to state any material fact necessary to make the statements herein or
therein not misleading, it being understood that as used in this Section
3.17 "material" means material to the Nonwovens Business.
3.18 Accounts Receivable. Except as provided in a reserve
for doubtful accounts in Nonwovens Financial Statements, the notes and
accounts receivable included in the Nonwovens Assets are genuine and
collectible and represent the legal, valid and binding obligation of the
obligor thereon, enforceable in accordance with their terms, subject to any
applicable bankruptcy, insolvency and similar laws affecting creditors'
rights generally.
3.19 Taxes. Except as and to the extent shown in Schedule
3.19, the Seller has or will have timely filed all returns of income Taxes
and all material returns of other Taxes required to be filed by it with
respect to the Nonwovens Business and the Nonwovens Assets on or prior to
the Effective Time, and has timely and fully paid or provided for all Taxes
shown to be due on such returns, except such as are being contested in good
faith by appropriate proceedings. Except as and to the extent shown in
Schedule 3.19, all deficiencies for Taxes asserted or assessments made as a
result of such examinations have been fully paid, settled or fully
reflected on the books of the Seller. Except as set forth in Schedule 3.19,
neither the United States Internal Revenue Service, nor any other taxing
authority or agency, whether domestic or foreign has asserted in writing
or, to the best knowledge of the Seller, is threatening to assert any
material deficiency or claim for additional Taxes against the Nonwovens
Business or the Nonwovens Assets. Except as set forth in Schedule 3.19, the
Seller has not granted any waiver of any statute of limitations with
respect to, or any extension of a period for the assessment of, any Tax in
respect of the Nonwovens Business.
3.20 Insurance. Schedule 3.20 contains a complete and
correct description of all policies of property, fire and casualty, product
liability, workers' compensation and other forms of insurance owned or held
by the Seller and the Nonwovens Subsidiaries covering the Nonwovens
Business or the Nonwovens Assets. The coverage provided under such policies
of insurance is reasonable in scope and amount in light of the risks
attendant to the business and activities of the Nonwovens Business.
3.21 Environmental Matters.
(a) Each of the Seller and its subsidiaries has
obtained all licenses, permits, authorizations, approvals and consents from
Governmental Entities which are required under any applicable Environmental
Law and necessary for it to carry on the Nonwovens Business as now
conducted ("Environmental Permits"), except for such failures to have
Environmental Permits which, individually or in the aggregate, are not
reasonably likely to have a Material Adverse Effect. Each of such
Environmental Permits is in full force and effect, and each of the Seller
and its subsidiaries is in substantial compliance with the terms and
conditions of all such Environmental Permits and with all applicable
Environmental Laws, except for such failures to be in full force and effect
or to be in compliance which, individually or in the aggregate, are not
reasonably likely to have a Material Adverse Effect.
(b) There are no Environmental Claims with respect
to the Nonwovens Business pending, or to the best knowledge of the Seller,
threatened, against the Seller or any of its subsidiaries, or, to the best
knowledge of the Seller, any person whose liability for any such
Environmental Claim the Seller or any of its subsidiaries has or may have
retained or assumed either contractually or by operation of law, except for
Environmental Claims identified on Schedule 3.21(b) or that individually or
in the aggregate, would have a Material Adverse Effect.
(c) There are no past or present actions,
activities, circumstances, conditions, events or incidents, including,
without limitation, the emission, discharge, release or threatened release
of any Hazardous Material, that would form the basis of any Environmental
Claim relating to the Nonwovens Business against the Seller or any of its
subsidiaries, or for which the Seller or any of its subsidiaries is liable
and that is included in the Nonwovens Liabilities except for such
liabilities which, individually or in the aggregate, are not reasonably
likely to have a Material Adverse Effect.
(d) As used in this Agreement:
(1) "Environmental Claim" means any claim,
action, lawsuit or proceeding by any person which seeks to impose liability
(including, without limitation, liability for investigatory costs, cleanup
costs, governmental response costs, natural resources, damages, property
damages, personal injuries or penalties) pursuant to Environmental Law or
which arises arising out of, is based on or results from the presence, or
release or threatened release, of any Hazardous Materials at any location,
whether or not owned or operated by the Seller or any of its subsidiaries.
(2) "Environmental Law" means any law
(including, without limitation, common law, statute, code, order, judgment,
decision, rule, ordinance, regulation, standard or requirement) of any
Governmental Entity, or any binding agreement with any Governmental Entity,
relating to (a) the environment or natural resources, including without
limitation, the pollution, contamination, cleanup, preservation,
protection, or reclamation thereof; (b) workplace health or safety; (c) any
emission, discharge, release or threatened release of Hazardous Materials,
or (d) the health, safety or environmental aspects of the presence,
handling, use, manufacture, distribution, treatment, storage, disposal, or
recycling of or exposure to Hazardous Materials.
(3) "Hazardous Materials" means any pollutant,
chemical, waste, or toxic or hazardous substance, material or agent,
including, without limitation, any petroleum or petroleum products,
pesticides, radioactive materials or asbestos-containing material.
3.22 Brokers. Except for Lehman Brothers Inc., no broker,
finder or investment banker is entitled to any brokerage, finder's or other
fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of the Seller, that
is or will be payable by the Seller. The Seller is solely responsible for
all fees and expenses of Lehman Brothers Inc. payable in connection with
the transactions contemplated by this Agreement.
Article IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Seller as
follows:
4.1 Organization. The Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its
business as now being conducted, except where the failure to be in good
standing or to have such power and authority would not have a Material
Adverse Effect on the ability of the Buyer to consummate the transactions
contemplated by this Agreement.
4.2 Authority Relative to this Agreement. The Buyer has
the corporate power and authority to execute and deliver this Agreement and
the Undertaking and Indemnity Agreement and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this
Agreement and the Undertaking and Indemnity Agreement and the consummation
of the transactions contemplated hereby and thereby have been duly and
validly authorized by the Board of Directors of the Buyer and no other
corporate proceedings on the part of the Buyer are necessary to authorize
this Agreement or to consummate the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by the Buyer and
constitutes a valid and binding agreement of the Buyer, enforceable against
the Buyer in accordance with its terms. The Undertaking and Indemnity
Agreement will be, upon the due and valid execution and delivery thereof, a
valid and binding agreement of the Buyer, enforceable against the Buyer in
accordance with its terms.
4.3 No Violation. Except for the filings, permits,
authorizations, consents and approvals set forth in Schedule 4.3 or as may
be required under the applicable requirements of the HSR Act or the
competition laws or regulations of the European Union or any foreign
supranational authority in any jurisdiction in which the Seller or the
Buyer (directly or through subsidiaries, in each case) has material assets
or conducts material operations and any applicable "bulk sales" laws, none
of the execution, delivery or performance of this Agreement or the
Undertaking and Indemnity Agreement by the Buyer, the consummation by the
Buyer of the transactions contemplated hereby or compliance by the Buyer
with any of the provisions hereof will (i) conflict with or result in any
breach of any provision of the certificate of incorporation, bylaws or
similar organizational documents of the Buyer or any of its subsidiaries,
(ii) require any filing with, or permit, authorization, consent or approval
of, any Governmental Entity, or (iii) violate any order, writ, injunction,
decree, judgment, permit, license, ordinance, law, statute, rule or
regulation applicable to the Buyer, any of its subsidiaries or any of their
properties or assets.
4.4 Financing. At or prior to the Closing Date, the Buyer
will have sufficient cash resources available to pay the Purchase Price.
4.5 Brokers. Except for Donaldson, Lufkin & Jenrette
Securities Corporation, no broker, finder or investment banker is entitled
to any brokerage, finder's or other fee or commission in connection with
the transactions contemplated by this Agreement. The Buyer is solely
responsible for all fees and expenses of Donaldson, Lufkin & Jenrette
Securities Corporation payable in connection with the transactions
contemplated in this Agreement.
Article V
COVENANTS OF THE PARTIES
5.1 Conduct of Business of the Seller. Except as
otherwise contemplated by this Agreement, during the period from the date
of this Agreement to the Effective Time, the Seller will, and will cause
the Nonwovens Subsidiaries to, (1) conduct the Nonwovens Business only in
the ordinary and usual course of business consistent with past practice,
(2) use its reasonable best efforts to preserve intact all rights,
privileges, franchises and other authority adequate for the conduct of the
Nonwovens Business as currently conducted, (3) keep available the services
of the Nonwovens Employees who are directors, managers or vice presidents,
and (4) use its best efforts to maintain satisfactory relationships with
licensors, licensees, suppliers, contractors, distributors, customers and
others having significant business relationships with the Nonwovens
Business. Without limiting the generality of the foregoing and, except as
otherwise expressly provided in this Agreement, prior to the Effective Time
without the prior written consent of the Buyer which will not be
unreasonably withheld or delayed the Seller will not permit either the
Nonwovens Business or any Nonwovens Subsidiary to:
(a) (i) create, incur or assume any long-term debt
(including obligations in respect of capital leases), or, except in the
ordinary course consistent with past practice of the Nonwovens Business
under existing lines of credit, create, incur or assume any short-term debt
if, in either such case, such long-term debt or short-term debt, would
constitute a Nonwovens Liability; (ii) assume, guarantee, endorse or
otherwise become liable or responsible (whether directly, contingently or
otherwise) for the obligations of any other person if such assumption,
guarantee, endorsement or other liability would constitute a Nonwovens
Liability; provided that the Nonwovens Subsidiaries may endorse negotiable
instruments in the ordinary course of the Nonwovens Business consistent
with past practice;
(b) (i) increase in any manner the compensation of
any of the Nonwovens Employees, except such increases as are granted in the
ordinary course of the Nonwovens Business in accordance with its customary
practices (which shall include normal periodic performance reviews and
related compensation and benefit increases but not any general
across-the-board increases); (ii) pay or agree to pay any pension,
retirement allowance or other employee benefit not required by any existing
Plan; or (iii) commit itself to any additional Plans or, except as
otherwise expressly required or permitted by Article VI, to amend or
terminate any of such Plans or any of such agreements in existence on the
date hereof;
(c) permit any of its current insurance (or
reinsurance) policies to be cancelled or terminated or any of the coverage
thereunder to lapse if such policy covers Nonwovens Assets or insures
risks, contingencies or liabilities which could result in a Nonwovens
Liability, unless simultaneously with such termination, cancellation or
lapse, replacement policies providing coverage equal to or greater than the
coverage remaining under those cancelled, terminated or lapsed are in full
force and effect (it being understood that there shall be no obligation to
extend such insurance policies after the Effective Time);
(d) except in the ordinary course of the Nonwovens
Business consistent with past practice, (i) sell, transfer, or otherwise
dispose of or agree to sell, transfer, or otherwise dispose of, any
Nonwovens Assets which have a sales price in excess of $50,000,
individually or in the aggregate, or (ii) mortgage, pledge or otherwise
encumber any Nonwovens Assets except for such mortgages or encumbrances
which constitute Permitted Exceptions;
(e) sell, transfer, license or otherwise dispose of,
or agree to sell, transfer, license or otherwise dispose of any of the
Nonwovens Intellectual Property;
(f) enter into any agreements, commitments or
contracts relating to the Nonwovens Business, except agreements,
commitments or contracts made in the ordinary course of the Nonwovens
Business consistent with past practice;
(g) voluntarily consent to the termination of, or
terminate by its own actions, any Nonwovens Contract or Nonwovens Lease by
any other party thereto, or voluntarily withdraw any application for any
Nonwovens Intellectual Property;
(h) make any capital expenditures of $400,000 or
more other than as contemplated by the Dexter Nonwovens Capital Plan, a
copy of which is attached as Schedule 5.1(h), individually or in the
aggregate, without the prior written consent of the Buyer;
(i) amend its charter documents in a manner that
adversely affects the transactions contemplated hereby;
(j) change the accounting principles used in
connection with the Nonwovens Business unless required by GAAP; and
(k) enter into any agreement, contract, commitment,
understanding undertaking or arrangement to do any of the foregoing.
Notwithstanding the provisions of the Section 5.1,
nothing in this Agreement shall be construed or interpreted to prevent the
Seller or any Nonwovens Subsidiary from (i) paying or making regular or
special dividends or other distributions consisting of cash, marketable
securities or property that is not a Nonwovens Asset or any combination
thereof; (ii) making, accepting or settling intercompany loans or advances
or (iii) engaging in any other transaction incident to the normal cash
management procedures of the Seller and its subsidiaries, including
short-term investments in time-deposits, certificates or deposit and
banker's acceptances made in the ordinary course of the Nonwovens Business.
5.2 Current Information
(a) Between the date of this Agreement and the
Effective Time the Seller will cause one or more of its designated
representatives to consult as requested by the Buyer on a regular basis
with one or more designated representatives of the Buyer and to discuss the
general status of ongoing operations of the Nonwovens Business.
(b) The Seller will promptly notify the Buyer of any
actual or potential Material Adverse Effect or any significant change in
the normal course of business or in the operations of the Nonwovens
Business and of any material complaints, investigations or hearings (or
communications indicating that the same may be contemplated) of any
Governmental Entity, in each case involving the Nonwovens Business, and
will keep the Buyer informed of such events and permit the Buyer's
representatives access to all materials prepared in connection therewith.
5.3 Access to Information.
(a) Between the date of this Agreement and the
Effective Time the Seller will (i) give the Buyer and its authorized
representatives access at reasonable times and upon reasonable notice to
all plants, offices, warehouses and other facilities and properties used in
the Nonwovens Business and to the Nonwovens Books and Records, (ii) permit
the Buyer to make such inspection thereof as the Buyer may reasonably
request, and (iii) cause its officers to furnish the Buyer with such
financial and operating data and other information with respect to the
Nonwovens Business as the Buyer may from time to time reasonably request.
(b) Between the date of this Agreement and the
Effective Time the Buyer will hold and will cause its officers, directors,
employees, representatives, consultants and advisors to hold in strict
confidence in accordance with the terms of the Confidentiality Agreement,
dated March 16, 2000, between the Buyer and the Seller, all documents and
information furnished to the Buyer by or on behalf of the Seller in
connection with the transactions contemplated by this Agreement. If the
transactions contemplated by this Agreement are not consummated, such
confidence shall be maintained in accordance with such Confidentiality
Agreement.
(c) No investigation pursuant to this Section 5.3
shall affect any representations and warranties of the parties herein or
the conditions to the obligations of the parties hereto.
5.4 Expenses. Except as otherwise provided by this
Agreement, whether or not the transactions contemplated hereby are
consummated, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby will be paid by the
party incurring such costs and expenses.
5.5 Reasonable Best Efforts.
(a) Subject to the terms and conditions of this
Agreement and applicable Law, each of the parties shall act in good faith
and use reasonable best efforts to take, or cause to be taken, all actions,
and to do, or cause to be done, all things necessary, proper or advisable
to consummate and make effective the transactions contemplated by this
Agreement as soon as practicable. Without limiting the foregoing, the
parties as to (i) and (ii) below, and Seller as to (iii) shall, and shall
cause their respective subsidiaries, and use reasonable best efforts to
cause their (and their respective subsidiaries') directors, officers,
employees, agents, attorneys, accountants and representatives, to (i)
obtain all consents, approvals, waivers, licenses, permits, authorizations,
registrations, qualifications or other permissions or actions by, and give
all necessary notices to, and make all filings with and applications and
submissions to, any Governmental Entity (including promptly filing with the
United States Federal Trade Commission (the "FTC") and the Antitrust
Division of the United States Department of Justice (the "Department of
Justice") pursuant to the HSR Act all requisite documents and notifications
in connection with the transactions contemplated by this Agreement) or
other person necessary in connection with the consummation of the
transactions contemplated by this Agreement as soon as reasonably
practicable; (ii) provide all such information concerning such party, its
subsidiaries and its officers, directors, employees, partners and
affiliates as may be necessary or reasonably requested in connection with
any of the foregoing including (i) herein; and (iii) avoid the entry of, or
have vacated or terminated, any injunction, decree, order, or judgment that
would restrain, prevent, or delay the consummation of the transactions
contemplated hereby.
(b) The Seller and the Buyer shall keep the other
reasonably apprised of the status of matters relating to the completion of
the transactions contemplated hereby, including promptly furnishing the
other with copies of notices or other communications received by either of
them or by any of their respective subsidiaries, from any third party
and/or any Governmental Entity with respect to the transactions
contemplated by this Agreement.
5.6 Further Assurances. From time to time, without
further consideration, the Seller will, at its own expense, execute and
deliver such documents to the Buyer as the Buyer may reasonably request in
order more effectively to consummate the transactions contemplated hereby
and to vest in the Buyer or a Nonwovens Subsidiary title to the Nonwovens
Assets (including, without limitation, assistance in the reduction to
possession of any thereof). From time to time, without further
consideration, the Buyer will, at its own expense, execute and deliver such
documents as the Seller may reasonably request in order more effectively to
consummate the transactions contemplated hereby and to perfect the
assumption by the Buyer of the Nonwovens Liabilities.
5.7 Disclosure Supplements. From time to time after the
date of this Agreement and prior to the Effective Time, the Seller will
promptly supplement or amend the schedules referred to in Article III with
respect to any matter hereafter arising which, if existing or occurring at
or prior to the date of this Agreement, would have been required to be set
forth or described in a schedule or which is necessary to correct any
information in a schedule or in any representation and warranty of the
Seller that has been rendered inaccurate thereby. From time to time after
the date of this Agreement and prior to the Effective Time, the Buyer will
promptly supplement or amend the schedules referred to in Article IV with
respect to any matter hereafter arising which, if existing or occurring at
or prior to the date of this Agreement, would have been required to be set
forth or described in a schedule or which is necessary to correct any
information so previously disclosed or in any representation and warranty
of the Buyer which has been rendered inaccurate thereby. For purposes of
determining the accuracy of the representations and warranties of the
Seller contained in Article III and the accuracy of the representations and
warranties of the Buyer contained in Article IV in order to determine the
fulfillment of the conditions set forth in Sections 7.3(a) and 7.2(a),
respectively, the schedules delivered by the Seller and the schedules
delivered by the Buyer shall be deemed to include only that information
contained therein on the date of this Agreement and shall be deemed to
exclude any information contained in any subsequent supplement or amendment
thereto.
5.8 Public Announcements. The Buyer and the Seller agree
that neither one of them will issue any press release or otherwise make any
public statement or respond to any press inquiry with respect to this
Agreement or the transactions contemplated hereby without the other party's
prior written consent, except for such press releases or public statements
as may be required by applicable law or the rules of any stock exchange on
which such party's securities are listed, in which case the other party
shall nonetheless be consulted prior to the issuance of any such press
release or public statement.
5.9 Sales and Transfer Taxes and Fees. The parties agree
that all sales and transfer Taxes and related fees (including all real
estate, patent and trademark transfer Taxes and recording fees, if any)
incurred in connection with (i) this Agreement and the transactions
contemplated hereby (other than the sale of any of the Nonwovens Assets by
Dexter Specialty Materials Limited) will be borne one-half by the Seller
and one-half by the Buyer and (ii) the sale of any of the Nonwovens Assets
by Dexter Specialty Materials Limited will be borne solely by the Buyer.
The parties also agree that the Buyer will file all necessary Tax returns
and other documentation with respect to all such sales, transfer and
recording Taxes and fees (including, without limitation, reseller or other
certificates of the Buyer reasonably requested by the Seller), and, if
required by applicable Law, the Seller will join in the execution of any
such Tax returns or other documentation.
5.10 Noncompetition. (a) The Seller agrees that for a
period of five years from the Closing Date, it will not, and will cause its
affiliates not to, directly or indirectly, own, manage, operate, control,
or participate in the ownership, management, operation or control of, or be
connected in any manner with any person that competes with the Nonwovens
Business anywhere in the world.
(b) The Seller agrees, covenants and acknowledges
that from and after the Closing Date, it will not disclose, give, sell, use
or otherwise divulge any confidential information relating to the Nonwovens
Business.
(c) Other than pursuant to a general advertisement
not targeted or directed at employees hired by the Buyer or its affiliates
pursuant to this Agreement, neither Seller nor any of its affiliates shall
for a period of two (2) years from the Closing Date solicit the employment
of, or induce any person to engage in such solicitation, of any employees
hired by the Buyer or its affiliates pursuant to this Agreement.
(d) It is the desire and intent of the parties to
this Agreement that the provisions of this Section 5.10 shall be enforced
to the fullest extent permissible under the laws and public policies
applied in each jurisdiction in which enforcement is sought. If any
particular provisions or portion of this Section 5.10 shall be adjudicated
to be invalid or unenforceable, this Section shall be deemed amended to
delete therefrom such provision or portion adjudicated to be invalid or
unenforceable, such amendment to apply only with respect to the operation
of such Section in the particular jurisdiction in which such adjudication
is made.
(e) The Seller recognizes and acknowledges that the
performance of the obligations under this Section 5.10 are special, unique
and extraordinary in character, and that in the event of a breach by the
Seller or its affiliates or their respective employees, officers, directors
or advisors of the terms and conditions of this Section 5.10, the Buyer
shall be entitled to enforce the specific performance thereof by the Seller
or its affiliates or to enjoin the Seller or its affiliates or their
respective employees, officers, directors or advisors from violating the
provisions of this Section 5.10.
5.11 No Solicitation.
(a) The Seller shall not, and shall cause its
subsidiaries and the officers, directors, agents and advisors of the Seller
and its subsidiaries not to, initiate, solicit or encourage inquiries or
proposals with respect to, or engage in any negotiations concerning, or
provide any confidential information to, or have any discussions with, any
person relating to, any Nonwovens Acquisition Proposal. The Seller shall
notify the Buyer promptly, but in any event within 24 hours, of any such
inquiries, proposals, or offers received by, any such information requested
from, or any such discussions or negotiations sought to be initiated or
continued with, any of its representatives indicating, in connection with
such notice, the name of such Person and the material terms and conditions
of any proposals or offers. The Seller shall immediately cease and cause to
be terminated any activities, discussions or negotiations conducted prior
to the date of this Agreement with any parties other than the Buyer with
respect to any Nonwovens Acquisition Proposal.
(b) Neither the Seller's Board nor any committee
thereof shall (i) approve or recommend, or propose to approve or recommend,
any Nonwovens Acquisition Proposal (other than this Agreement as the same
may be amended from time to time), (ii) cause the Seller or any of its
Subsidiaries to enter into any letter of intent, agreement in principle,
acquisition agreement, merger agreement or other similar agreement with
respect to any Nonwovens Acquisition Proposal (other than this Agreement as
the same may be amended from time to time), or withdraw or modify, in a
manner adverse to the Buyer, or fail to make, the recommendation to
Seller's shareholders that they vote in favor of Shareholder Approval.
5.12 Shareholder Approval. Specifically at the request of
the Buyer and for the avoidance of doubt and uncertainty on the Buyer's
part concerning threatened claims against the Seller and its Board of
Directors arising out of a transaction such as that contemplated by this
Agreement, Seller shall take all action necessary or appropriate to duly
convene a meeting of Seller's shareholders (or to amend the agenda for
Seller's previous noticed Annual Meeting of Shareholders) in order to seek
and to obtain the Shareholder Approval as promptly as practicable. The
Board of Directors shall at all times recommend such approval and shall
take all reasonable action necessary or appropriate to solicit such
approval.
5.13 Proxy Statement.
(a) The Seller shall promptly prepare and file with
the SEC in preliminary form the proxy information and other proxy
solicitation materials of the Seller (the "Proxy Materials") in connection
with the solicitation of proxies necessary to obtain the Shareholder
Approval. The Seller will endeavor to promptly respond to any comments of
the SEC staff and to file, and mail to shareholders, the Proxy Materials as
soon as reasonably practicable after all such comments are resolved. The
Buyer shall cooperate with the Seller in the preparation of the Proxy
Materials. Prior to filing the preliminary Proxy Materials, any response to
the SEC staff comments, the final Proxy Materials, and any amendment or
supplement, the Seller shall give the Buyer reasonable opportunity to
comment on the proposed filing.
(b) The Seller represents, warrants and agrees that
the Proxy Statement, as it may be amended or supplemented, will not, at the
date of mailing to shareholders of the Proxy Statement or any amendment or
supplement, and at the time of the Shareholder Meeting, contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein not
misleading. If, at any time prior to the Shareholder Meeting, the Seller
becomes aware of any information that would cause any of the statements in
the Proxy Statement to be false or misleading with respect to any material
fact, or to omit any material fact necessary to make the statements
contained therein not false and misleading, it shall promptly so inform the
Buyer and take the necessary steps to amend or supplement the Proxy
Statement. Notwithstanding the foregoing, the Seller makes no
representation or warranty with respect to any information supplied by or
on behalf of the Buyer expressly for inclusion in the Proxy Statement. The
Seller represents, warrants and agrees that the Proxy Statement will comply
as to form in all material respects with the Securities Exchange Act of
1934 and the rules and regulations thereunder.
(c) The Buyer represents, warrants and agrees that
none of the information supplied by it or on its behalf expressly for
inclusion in the Proxy Statement will, at the date of mailing of the Proxy
Statement or any amendment or supplement, contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein not misleading. If the Buyer shall become aware, prior
to the Shareholder Meeting, that any information so furnished by it would
cause any of the statements with respect to Buyer in the Proxy Statement to
be false or misleading with respect to any material fact, or to omit to
state any material fact necessary to make such statements not false or
misleading, it will promptly so advise the Seller.
Article VI
SELLER EMPLOYEES
6.1 Employment.
(a) Effective as of the Effective Time, each
employee of the Seller employed in the Nonwovens Business immediately prior
to the Effective Time (the "Nonwovens Employees") shall cease to be an
employee of the Seller and the Buyer shall offer or cause to be offered
employment, on an at-will basis, to all Nonwovens Employees. Effective as
of the Effective Time and until December 31, 2001 and subject to Section
6.2(b), the Buyer shall cause the Nonwovens Employees, as a group, who
accept and commence employment with the Buyer or a subsidiary of the Buyer
as of the Effective Time (the "Transferred Employees") to be provided with
employee benefit arrangements that shall, in the aggregate, be no less
favorable than as provided by the Seller to such Transferred Employees, as
a group, immediately prior to the Effective Time, provided that Buyer shall
in no event be required to continue or offer benefits comparable to
Seller's post-retirement welfare benefits referred to in Section 6.2(b).
(b) The Buyer shall cause the Transferred Employees
to be given full credit for all service with the Seller or any subsidiary
of the Seller prior to the Effective Time for purposes of eligibility and
vesting (but not for purposes of benefit accrual) under any employee
benefit plans or arrangements of the Buyer or any subsidiary of the Buyer
in which such Transferred Employees participate from and after the
Effective Time, to the same extent such service was recognized by the
Seller or any subsidiary of the Seller under a corresponding Plan of Seller
immediately prior to the Effective Time. Neither the Buyer nor any
subsidiary of the Buyer shall require any Transferred Employee to undergo a
physical examination or provide other proof of insurability as a condition
to initial eligibility to participate in the medical and life insurance
plans of Buyer, in connection with the transfer of employment. The Buyer
shall, or shall cause a subsidiary of the Buyer to, (i) waive all
limitations as to preexisting conditions, exclusions and waiting periods
with respect to participation and coverage requirements applicable to
Transferred Employees under the medical and life insurance plans in which
such employees may be eligible to participate after the Effective Time in
connection with the transfer of employment to Buyer, other than limitations
or waiting periods that are already in effect with respect to such
employees and that have not been satisfied as of the Effective Time under
any welfare plan of the Seller or any subsidiary of the Seller in which
Transferred Employees participate immediately prior to the Effective Time,
and (ii) provide each Transferred Employee with credit for any co-payments
and deductibles paid prior to the Effective Time in satisfying any
applicable deductible or out-of-pocket requirements for the year in which
the Effective Time occurs under any welfare plans in which such employees
are eligible to participate after the Effective Time, as if those
deductibles or co-payments had been paid under the welfare plans in which
such employees are eligible to participate after the Effective Time.
(c) Subject to Section 6.2, the Seller shall remain
responsible for, and shall indemnify and hold harmless the Buyer against,
any and all claims, losses, damages, costs and expenses and other
liabilities (other than those constituting Nonwovens Liabilities) relating
to or arising out of any of its employee benefit plans, programs,
agreements or arrangements or obligations thereunder accrued and related to
circumstances existing prior to the Effective Time. Subject to Section 6.2,
Buyer shall be responsible for, and shall indemnify and hold harmless the
Seller against, any and all claims, losses, damages, costs and expenses and
other liabilities relating to or arising out of any of the Buyer's employee
benefit arrangements or obligations thereunder accrued after the Effective
Time.
6.2 Assumption of Plans.
(a) Effective as of the Effective Time, the Buyer
shall establish or designate a defined contribution plan and trust intended
to qualify under Section 401(a) and Section 501(a) of the Code (the "Buyer
Savings Plan"). As soon as practicable following the receipt by Seller of a
favorable determination letter from the Internal Revenue Service (the
"IRS") regarding the qualified status of the Buyer Savings Plan and the
receipt by Buyer of a favorable determination letter from the IRS regarding
the qualified status of the ESPRIT Plan, the Seller shall direct the
trustee of the ESPRIT Plan to transfer, to the trustee of the Buyer Savings
Plan, as of the Effective Time, in a lump sum, the cash value of the
account balances under the ESPRIT Plan in respect of Transferred Employees.
Upon such transfer, the Buyer Savings Plan shall assume liability to pay
benefits in the amounts so transferred, as such amounts may be increased or
decreased thereafter, in accordance with and subject to the provisions of
the Buyer Savings Plan. Prior to the date of the transfer of the cash value
of account balances as contemplated by this Section 6.2(a), the Seller
shall contribute to the trustee of the ESPRIT Plan an amount equal to 10%
of the aggregate Compensation (as defined in the ESPRIT Plan and prorated
for such portion of the ESPRIT Plan year preceding the Effective Time) of
each Transferred Employee who is a participant in the ESPRIT Plan as of
immediately prior to the Effective Time. Pending such transfer, the
Transferred Employees shall have all of the same rights, features and
options with respect to their account balances in the ESPRIT Plan as active
employees under such plan(s) except for the right to additional
contributions. The parties shall cooperate in the filing of the documents
required by the transfer of assets and liabilities described herein.
Notwithstanding anything contained herein to the contrary, no such transfer
shall take place until the 31st day following the filing of all required
Forms 5310-A in connection therewith. Subject to confirmation that this
form is required to be filed.
(b) The Seller shall retain and be responsible for,
and the Seller shall indemnify and hold harmless Buyer against, any and all
claims, losses, damages, costs and expenses with respect to post-retirement
welfare benefits to which any Transferred Employee or any former employee
of the Nonwovens Business is currently entitled or may become entitled
after the Effective Time under the Seller's post-retirement welfare benefit
program. The Buyer shall provide such information as the Seller or its
designee may reasonably request, from time to time, in connection with the
administration of the Seller's post-retirement welfare benefit program.
(c) The Buyer shall assume all liabilities and
obligations of the Seller with respect to the Nonwovens Employees arising
under (i) the Dexter Corporation Special Severance Plan (as such plan has
been modified by employee communications described in Schedule 6.2(c)(i)),
except for the liabilities arising under Sections 2(e) and 2(f) of such
plan, (ii) the pay-to-stay arrangements described in Schedule 6.2(c)(ii)
and (iii) the severance agreements (described in Schedule 6.2(c)(iii)) to
provide continuation of "Employee Benefits" that are welfare benefits as
described in Section 4(a)(ii) of the severance agreements.
(d) The Seller shall be fully responsible for any
benefits in the nature of severance pay due to any Nonwovens Employee who
does not accept an offer of employment described in section 6.1(a) hereof.
The severance benefits provided by the Buyer to any Transferred Employee
whose employment with the Buyer is involuntarily terminated (other than for
cause) by the Buyer or a Buyer subsidiary within twelve months following
the Effective Time shall not be less favorable than the severance benefits
that a Nonwovens Employee would have been entitled to had his or her
employment been terminated by the Seller or a Nonwovens Subsidiary (as the
case may be) immediately prior to the Effective Time. The preceding
sentence shall not apply to any Nonwovens Employee who immediately prior to
the Effective Time, is (i) a party to a severance agreement described in
Section 6.2(c) or (ii) a participant in the Dexter Corporation Special
Severance Plan.
(e) To the extent that any obligations might arise
under the Worker Adjustment Retraining Notification Act ("WARN"), 29 U.S.C.
Section 2101 et seq., or under any similar provision of any federal, state,
regional, foreign, or local law, rule, or regulation (hereinafter referred
to collectively as "WARN Obligations") as a consequence of the transactions
contemplated by this Agreement, the Seller shall be responsible for any
WARN Obligations arising as a result of any employment losses occurring
prior to the Effective Time, and the Buyer shall be responsible for any
WARN Obligations arising as a result of any employment losses occurring
after the Effective Time.
Article VII
CLOSING CONDITIONS
7.1 Conditions to Each Party's Obligations to Effect the
Transactions Contemplated Hereby. The respective obligations of each party
to effect the transactions contemplated hereby shall be subject to the
fulfillment at or prior to the Effective Time of the following conditions:
(a) To the extent required by applicable law, each
of the Seller and the Buyer and any other person (as defined in the HSR
Act) required in connection with the transactions contemplated hereby to
file a Notification and Report Form for Certain Mergers and Acquisitions
with the Department of Justice and the FTC pursuant to the HSR Act shall
have made such filing and all applicable waiting periods with respect to
each such filing (including any extensions thereof) shall have expired or
been terminated.
(b) To the extent required by applicable law, each
of the Seller and the Buyer and any other person required in connection
with the transactions contemplated hereby to file all necessary filings
with any Governmental Entity outside the U.S. and such Governmental
Entities outside the U.S. shall have approved or cleared such filing and
all such approvals or clearances shall have been received.
(c) No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated
or enforced by any Governmental Entity which prohibits the consummation of
the transactions contemplated hereby substantially on the terms
contemplated hereby or has the effect of making the acquisition of the
Nonwovens Business by the Buyer or any of its affiliates illegal.
(d) The Seller and the Buyer, respectively, shall
have timely made all filings and obtained all permits, authorizations,
consents or approvals required in connection with the consummation of the
transactions contemplated by this Agreement, except to the extent that the
failure to obtain any such permits, authorizations, consents or approvals
would not have a Material Adverse Effect.
7.2 Conditions to the Obligations of the Seller to Effect
the Transactions Contemplated Hereby. The obligations of the Seller to
effect the transactions contemplated hereby shall be further subject to the
fulfillment at or prior to the Effective Time of the following conditions,
any one or more of which may be waived by the Seller:
(a) All of the representations or warranties of the
Buyer set forth in the Agreement that are qualified by materiality or
Material Adverse Effect shall be true and correct, and all of the
representations and warranties of the Buyer set forth in the Agreement that
are not so qualified shall be true and correct in all material respects, in
each case, as if such representations or warranties were made on and of the
date hereof and as of the Effective Time (except to the extent such
representations and warranties speak as of a specific date or as of the
date hereof, in which case such representations and warranties shall be so
true and correct or true and correct in all material respects, as the case
may be, as of such specific date or as of the date hereof, respectively).
(b) The Buyer shall have performed and complied in
all material respects with all agreements and obligations required by this
Agreement to be performed and complied with by it on or prior to the
Closing Date.
(c) The Buyer shall have furnished a certificate of
an executive officer of the Buyer to evidence compliance with the
conditions set forth in Sections 7.2(a) and (b) of this Agreement.
(d) The Seller shall have received one or more
opinions, addressed to it and dated the Closing Date, from counsel to the
Buyer, reasonably satisfactory to the Seller, covering the matters set
forth on Exhibit G hereto.
7.3 Conditions to the Obligations of the Buyer to Effect
the Transactions Contemplated Hereby. The obligations of the Buyer to
effect the transactions contemplated hereby shall be further subject to the
fulfillment at or prior to the Effective Time of the following conditions,
any one or more of which may be waived by the Buyer:
(a) All of the representations or warranties of the
Seller set forth in the Agreement that are qualified by materiality or
Material Adverse Effect shall be true and correct in all respects, and all
of the representations and warranties of the Seller set forth in the
Agreement that are not so qualified shall be true and correct in all
material respects, in each case, as if such representations or warranties
were made on and as of the date hereof and as of the Effective Time (except
to the extent such representations and warranties speak as of a specific
date or as of the date hereof, in which case such representations and
warranties shall be so true and correct or true and correct in all material
respects, as the case may be, as of such specific date or as of the date
hereof, respectively).
(b) The Seller shall have performed and complied in
all material respects with all agreements and obligations required by this
Agreement to be performed and complied with by it on or prior to the
Closing Date.
(c) The Seller shall have furnished a certificate of
an executive officer of the Seller to evidence compliance with the
conditions set forth in Sections 7.3(a) and (b) of this Agreement.
(d) The sale of the Nonwovens Assets in accordance
with this Agreement, shall have been approved by at least two-thirds of the
voting power of all outstanding shares of common stock of the Seller
("Shareholder Approval").
(e) The Buyer shall have received one or more
opinions, addressed to it and dated the Closing Date, from counsel to the
Seller, reasonably satisfactory to the Seller, covering the matters set
forth on Exhibit F hereto.
(f) Each of the Nonwovens Contracts and Leases
listed in Schedule 7.3(f) attached hereto or entered into by the Seller or
any Nonwovens Subject Subsidiary after the date of this Agreement shall
have been duly assigned or otherwise transferred to the applicable Buyer as
required hereunder.
(g) The Seller shall have delivered to the Buyer a
FIRPTA Certificate substantially in the form of Exhibit E hereto.
7.4 Certificates. Each of the parties hereto will furnish
to the other party such certificates of such party's officers or others and
such other documents to evidence fulfillment of the conditions set forth in
this Article VII as the other party may reasonably request.
Article VIII
CERTAIN TAX MATTERS
8.1 Tax Matters.
(a) The Buyer shall timely prepare and file (or
cause such preparation and filing) with the appropriate authorities all
income Tax returns, reports and forms (other than any Consolidated Income
Tax Returns) for the Nonwovens Subject Subsidiaries that are required to be
filed after the date of the Effective Time ("Buyer Returns"), and will pay
(or cause to be paid) all income Taxes due with respect to such Buyer
Returns. The Buyer shall make available to the Seller any Buyer Returns and
related workpapers with respect to any taxable period that ends on or
before, or includes, the date of the Effective Time for Seller's review and
comment at least twenty (20) business days prior to the respective due
dates of such Buyer Returns. Such Buyer Returns shall be subject to
Seller's approval, such approval not to be unreasonably withheld, before
the applicable Buyer Return is filed with the appropriate authority. The
Seller shall timely prepare and file (or cause such preparation and filing)
with the appropriate authorities (i) all Consolidated Income Tax Returns of
the Seller and its Affiliates with respect to the Nonwovens Business and
the Nonwovens Assets, and (ii) all other income Tax returns, reports and
forms for the Nonwovens Subsidiaries other than the Nonwovens Subject
Subsidiaries and (iii) all other income Tax returns, reports and forms with
respect to the Nonwovens Business and the Nonwovens Assets that are
required to be filed on or before the date of the Effective Time, and will
pay (or cause to be paid) all income Taxes due with respect to such
returns, reports and forms.
(b) The Buyer shall timely prepare and file (or
cause such preparation and filing) with the appropriate authorities all
non-income Tax returns, reports and forms that are required to be filed
after the date of the Effective Time (subject to any applicable extensions)
with respect to the Nonwovens Business and the Nonwovens Assets when such
returns, reports and forms are due and will pay (or cause to be paid) all
non-income Taxes due with respect to such returns, reports and forms.
(c) The Seller and the Buyer shall reasonably
cooperate in preparing and filing all Tax returns, reports and forms
required to be filed with respect to Taxes levied or imposed upon, or in
connection with, the Nonwovens Business or the Nonwovens Assets, and in
resolving all disputes and audits with respect thereto, including by
maintaining and making available to each other all records (other than the
Nonwovens Books and Records, which shall be governed by Section 8.1(d)
hereof) reasonably necessary in connection therewith. The Buyer shall
prepare (or cause such preparation) within 90 days of the Effective Time,
usual and customary Nonwovens Subject Subsidiaries' consolidated and
controlled foreign corporation Tax return reporting packages with respect
to the taxable period beginning January 1, 2000 and ending as of the
Effective Time.
(d) For a period of six years after the Closing
Date, the Seller and its representatives shall have reasonable access to
the Nonwovens Books and Records transferred to the Buyer hereunder
(including, without limitation, the right to make extracts thereof) to the
extent that the Nonwovens Books and Records relate to Taxes and to the
extent that such access may reasonably be required by the Seller in
connection with matters relating to or affected by the operation of the
Nonwovens Business and the Nonwovens Assets prior to the Closing Date. Such
access shall be afforded by the Buyer upon receipt of reasonable advance
notice and during normal business hours. The Seller shall be solely
responsible for any reasonable out-of-pocket costs or expenses incurred by
it pursuant to this Section 8.1(d). If the Buyer shall desire to dispose of
any of such books and records prior to the expiration of such six-year
period, the Buyer shall, prior to such disposition, give the Seller a
reasonable opportunity, at the Seller's expense, to segregate and remove
such books and records as the Seller may select. In addition to the
foregoing, the parties agree to cooperate with each other with respect to
the defense of any claims or litigation relating to Taxes pertaining to the
Nonwovens Business and the Nonwovens Assets, provided that the party
requesting such cooperation shall reimburse the other party for the other
party's reasonable out-of-pocket costs and expenses of furnishing such
cooperation.
(e) Not later than 15 days prior to the Effective
Time, the Buyer shall prepare (or cause to be prepared) and submit to the
Seller for the Seller's review and approval, which shall not be
unreasonably withheld, a draft allocation of the Purchase Price and the
Nonwovens Liabilities among the Nonwovens Assets, including the capital
stock of the Nonwovens Subsidiaries, to be purchased hereunder, which
allocation shall be reflected in Schedule 8.1(e) (the "Draft Allocation").
The Draft Allocation shall be revised and finalized by the parties in
conjunction with the post-closing adjustment pursuant to Section 2.6 (the
"Final Allocation"). The Draft Allocation and the Final Allocation shall be
made in accordance with Section 1060 of the Code and applicable Treasury
regulations as well as under any analogous provisions of foreign Law. Each
of the Seller and the Buyer shall (i) be bound by the Final Allocation for
purposes of determining any Taxes, (ii) prepare and file, and cause its
affiliates to prepare and file, its Tax returns on a basis consistent with
the Final Allocation and (iii) take no position, and cause its affiliates
to take no position, inconsistent with the Final Allocation on any
applicable Tax return, in any proceeding before any taxing authority or
otherwise. In the event that the Final Allocation is disputed by any taxing
authority, the party receiving notice of the dispute shall promptly notify
the other party hereto concerning resolution of the dispute.
(f) The Buyer shall not (i) make an election to
treat any of the Nonwovens Subject Subsidiaries as a disregarded entity (or
as a partnership) for federal, state or local income Tax purposes for any
period in which the Seller wholly owns, directly or indirectly, the
Nonwovens Subsidiaries, (ii) make any dividend or other distributions to
shareholders from any of the Nonwovens Subsidiaries at any time on or after
the Effective Time until January 1, 2001, or (iii) make an election under
Section 338(g) of the Code and the Treasury regulations promulgated
thereunder with respect to the acquisition of any of the Nonwovens Subject
Subsidiaries without the prior written consent of the Seller.
(g) The Seller and the Buyer agree that the Buyer
has purchased substantially all the property used in the Nonwovens Business
in the United States, and in connection therewith, the Buyer shall employ
individuals who immediately before the Effective Time were employed in such
trade or business by the Seller. Accordingly, pursuant to Rev. Proc. 96-60,
1996-2 C.B. 399, the Buyer shall furnish a United States Internal Revenue
Service Form W-2 to each employee employed by the Buyer who had been
employed by the Seller, disclosing all wages and other compensation paid
for such calendar year, and taxes withheld therefrom, and the Seller shall
be relieved of the responsibility to do so.
8.2 Indemnity for Taxes.
(a) The Seller hereby agrees to indemnify the Buyer
and the Nonwovens Business against and hold them harmless, on an after-Tax
basis, from all liability for (i) income Taxes levied or imposed upon, or
in connection with, the Nonwovens Assets or the Nonwovens Business with
respect to any taxable period or portion thereof ending on or before the
Effective Time, (ii) income Taxes levied or imposed upon, or in connection
with, any business of the Seller other than the Nonwovens Business, and
(iii) income Taxes incurred as a result of any other transaction undertaken
by the Seller, including without limitation the liquidation and dissolution
of the Seller; provided, however, that the Seller shall not indemnify the
Buyer for any such Taxes included in the Nonwovens Liabilities and taken
into account in preparing the Closing Date Balance Sheet.
(b) (i) The Seller agrees to indemnify the Buyer and
the Nonwovens Business against and hold them harmless, on an after-Tax
basis, from all income Taxes, expenses or other losses arising out of the
failure of the Seller to perform any of the agreements it is required to
perform under Section 8.1 and (ii) the Buyer agrees to indemnify the Seller
and hold it harmless, on an after-Tax basis, from all Taxes, expenses or
other losses arising out of the failure by the Buyer to perform any of the
agreements it is required to perform under Section 8.1.
(c) The Buyer and the Seller agree to treat any
payment under this Section 8.2 as an adjustment to the Purchase Price.
(d) The respective indemnification obligations of
the Seller and the Buyer pursuant to this Section 8.2 shall terminate
ninety (90) days following the expiration of the period of limitations
applicable to the related Tax.
(e) A party seeking indemnification provided for
under this Section 8.2 (a "Tax Indemnified Party") in respect of Taxes,
arising out of or involving a claim or demand made by any persons, firm,
governmental authority or corporation against such party (a "Tax Third
Party Claim") must notify the party from whom such indemnification is
sought (the "Tax Indemnifying Party") in writing of the Tax Third Party
Claim as promptly as possible but in no event later than 30 days after
receipt by the Tax Indemnified Party of written notice of the Tax Third
Party Claim; provided, however, that failure to give such notification
shall not affect the indemnification provided hereunder except to the
extent the Tax Indemnifying Party shall have been actually prejudiced as a
result of such failure (except that the Tax Indemnifying Party shall not be
liable for any expenses incurred during the period in which the Tax
Indemnified Party failed to give such notice). Thereafter, the Tax
Indemnified Party shall deliver to the Tax Indemnifying Party, as promptly
as possible but in no event later than 30 days after the Tax Indemnified
Party's receipt thereof, copies of all notices and documents (including
court papers) received by the Tax Indemnified Party, relating to the Tax
Third Party Claim.
If a Tax Third Party Claim is made against the Tax
Indemnified Party, the Tax Indemnifying Party will be entitled to
participate in the defense thereof and to assume the defense thereof with
counsel or other tax advisors selected by the Tax Indemnifying Party and
satisfactory to the Tax Indemnified Party provided, however, that the Tax
Indemnifying Party shall not be entitled to assume the defense of any such
contest unless the Tax Indemnifying Party at its option has either provided
bond or other security for its obligations under this Section 8.2
satisfactory to the Tax Indemnified Party or paid the Tax Third Party
Claim. If the Tax Indemnifying Party assumes such defense, the Tax
Indemnifying Party will not be liable to the Tax Indemnified Party for
legal or other expenses subsequently incurred by the Tax Indemnified Party
in connection with the defense thereof. If the Tax Indemnifying Party
assumes such defense, the Tax Indemnified Party shall have the right to
participate in the defense thereof and to employ counsel or other tax
advisors at its own expense separate from the counsel or other tax advisors
employed by the Tax Indemnifying Party. The Tax Indemnifying Party shall be
liable for all reasonable fees and expenses of counsel or other tax
advisors employed by the Tax Indemnified Party for any period subsequent to
the date the Tax Indemnified Party notifies the Tax Indemnifying Party
pursuant to this Section 8.2(e) and during which the Tax Indemnifying Party
has not assumed the defense thereof. Whether or not the Tax Indemnifying
Party chooses to defend or prosecute any Tax Third Party Claim, all of the
parties hereto shall reasonably cooperate in the defense or prosecution
thereof. Such cooperation shall include the provision to the Tax
Indemnifying Party of records and information which are reasonably relevant
to such Tax Third Party Claim, and making employees available on a mutually
convenient basis to provide additional information and explanation of any
material provided hereunder. Whether or not the Tax Indemnifying Party
shall have assumed the defense of a Tax Third Party Claim, the Tax
Indemnified Party shall not admit any liability with respect to, or settle,
compromise or discharge, such Tax Third Party Claim without the Tax
Indemnifying Party's prior written consent, which consent shall not be
unreasonably withheld.
(f) Without the prior written consent of the Buyer,
which consent shall not be unreasonably withheld, if a Material Adverse
Effect on the liability for Taxes of the Buyer with respect to or arising
from the Nonwovens Business or Nonwovens Assets will result therefrom,
neither the Seller nor any of its affiliates shall make or change any
election, change an accounting period, adopt or change any accounting
method, file any amended Tax return or report, enter into any closing
agreement, settle any Tax claim or assessment relating to the Nonwovens
Business or the Nonwovens Assets, surrender any right to claim a refund of
Taxes or consent to any extension or waiver of the limitations period
applicable to any Tax claim or assessment relating to any of the Nonwovens
Business or the Nonwovens Assets.
(g) If a Tax Indemnified Party receives a refund or
credit with respect to Taxes for which it would have been indemnified under
this Section 8.2, the Tax Indemnified Party shall pay over such refund or
credit to the Tax Indemnifying Party; provided, however, that the amount of
such refund or credit which the Tax Indemnified Party is required to pay
over to the Tax Indemnifying Party shall be computed on an after-Tax basis.
8.3 Other Tax Matters.
(a) The Seller hereby agrees to provide to the Buyer
a certificate that, as of the Closing Date, the Seller is not a foreign
person within the meaning of section 1445 of the Code and the Treasury
regulations thereunder, such certificate to be substantially in the form
attached as Exhibit E hereto. If such certificate or a statement is not
delivered to the Buyer, the Buyer shall be entitled to withhold 10% of the
Purchase Price as required by section 1445 of the Code.
(b) For Tax purposes, the Seller and the Buyer
hereby agree to treat the transactions contemplated by this Agreement as
(i) a sale of the Nonwovens Assets (other than the Nonwovens Assets owned
or held by the Nonwovens Subject Subsidiaries, the capital stock of which
is being transferred directly or indirectly by the Seller to the Buyer) and
(ii) a sale of all of the stock of the Nonwovens Subject Subsidiaries, and
not to take any position for Tax purposes that is inconsistent with such
treatment, unless required by law.
Article IX
TERMINATION AND ABANDONMENT
9.1 Termination. Subject to the parties' obligations as
provided in Section 5.5, this Agreement may be terminated at any time prior
to the Effective Time:
(a) by mutual consent of the Seller and the Buyer;
(b) by the Seller or the Buyer (i) at any time after
October 31, 2000 if the conditions set forth in Article VII shall not have
been satisfied or waived; (ii) a statute, rule, regulation or executive
order shall have been enacted, entered or promulgated prohibiting the
consummation of the transactions contemplated by this Agreement
substantially on the terms contemplated hereby; or (iii) an order, decree,
ruling or injunction shall have been entered permanently restraining,
enjoining or otherwise prohibiting the consummation of the transactions
contemplated by this Agreement substantially on the terms contemplated
hereby and such order, decree, ruling or injunction shall have become final
and non-appealable; provided, that the party seeking to terminate this
Agreement pursuant to this Section 9.1(b)(iii) shall have used its
reasonable efforts to remove such order, decree, ruling or injunction and
shall not be in violation of Section 5.5;
(c) by the Buyer, if there has been a material
violation or breach by the Seller of any agreement, representation or
warranty contained in this Agreement that has rendered the satisfaction of
any condition to the obligations of the Buyer impossible and such violation
or breach has not been waived by the Buyer;
(d) by the Seller, if there has been a material
violation or breach by the Buyer of any agreement, representation or
warranty contained in this Agreement that has rendered the satisfaction of
any condition to the obligations of the Seller impossible and such
violation or breach has not been waived by the Seller; or
(e) by either the Buyer or the Seller if the Seller
has held the meeting of shareholders at which the Shareholder Approval is
requested and the Shareholder Approval shall not have been obtained.
9.2 Procedure and Effect of Termination. In the event of
termination of this Agreement and abandonment of the transactions
contemplated hereby by either or both of the parties pursuant to Section
9.1, written notice thereof shall forthwith be given to the other party and
this Agreement shall terminate and the transactions contemplated hereby
shall be abandoned, without further action by either of the parties hereto.
If this Agreement is terminated as provided herein:
(a) upon request therefor, each party will redeliver
all documents, work papers and other material of any other party relating
to the transactions contemplated hereby, whether obtained before or after
the execution hereof, to the party furnishing the same;
(b) each party hereto will use its best efforts to
prevent disclosure to third persons of all information received by either
party with respect to the business of the other party or its subsidiaries
(other than information which is a matter of public knowledge or which has
heretofore been or is hereafter published in any publication for public
distribution or filed as public information with any Governmental Entity)
except (i) as may be required by Law; and (ii) as is permitted by this
Agreement;
(c) neither party hereto shall have any liability or
further obligation to the other party to this Agreement pursuant to this
Agreement except as stated in this Section 9.2 and in Sections 5.3(b) and
5.4, provided that nothing herein shall relieve any party from liability
for its willful breach of this Agreement;
(d) upon any termination of this Agreement other
than pursuant to Section 9.1(d) and upon request by the Buyer, the Seller
shall promptly reimburse the Buyer for its out-of-pocket cash expenses
(including, without limitation, fees and expenses of accountants, counsel,
investment bankers and consultants and all travel-related expenses)
incurred in connection with this Agreement and the transactions
contemplated hereby (whether incurred prior to or subsequent to the
execution of this Agreement); provided that the Seller shall in no event be
responsible for more than $2 million in respect of this paragraph (d); and
(e) if after the date hereof and prior to
Shareholder Approval a Specified Dexter Acquisition Proposal is publicly
disclosed (or any previously made Dexter Acquisition Proposal is renewed in
such a manner as to constitute a Specified Dexter Acquisition Proposal) and
this Agreement is subsequently terminated pursuant to Section 9.1(b) or
Section 9.1(e), and if within 12 months following such termination Seller
either enters into a definitive agreement providing for, or consummates, a
Dexter Acquisition Transaction as a result of which shareholders of the
Seller would be entitled to receive (in the case of a definitive
agreement), or receive, aggregate average consideration with a fair market
value per share exceeding $45 (appropriately adjusted for stock splits,
stock dividends, recapitalizations or similar transactions and taking into
account any extraordinary dividends or amounts paid in issuer tender offers
or other extraordinary amounts received with respect to Seller shares after
the date hereof), then within 2 business days following such event the
Seller shall pay the Buyer a fee of $8 million, less any amounts paid or
payable pursuant to paragraph (d) above.
Article X
MISCELLANEOUS PROVISIONS
10.1 Delivery of Schedules. The schedules required to be
delivered pursuant to this Agreement are being delivered simultaneously
with the execution and delivery of this Agreement.
10.2 Amendment and Modification. Subject to applicable
Law, this Agreement may be amended, modified or supplemented only by
written agreement of the Seller and the Buyer at any time prior to the
Effective Time with respect to any of the terms contained herein.
10.3 Waiver of Compliance; Consents. Except as otherwise
provided in this Agreement, any failure of either of the parties to comply
with any obligation, covenant, agreement or condition herein may be waived
by the party entitled to the benefits thereof only by a written instrument
signed by the party granting such waiver, but such waiver or failure to
insist upon strict compliance with such obligation, covenant, agreement or
condition shall not operate as a waiver of, or estoppel with respect to,
any subsequent or other failure. Whenever this Agreement requires or
permits consent by or on behalf of a party, such consent shall be given in
writing in a manner consistent with the requirements for a waiver of
compliance as set forth in this Section 10.3.
10.4 No Third Party Beneficiary Rights. This Agreement is
not intended to and shall not be construed to give any person (other than
the parties to this Agreement) any interest or rights (including, without
limitation, any third party beneficiary rights) with respect to or in
connection with any agreement or provision contained herein or contemplated
hereby.
10.5 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered
personally or mailed by registered or certified mail (return receipt
requested), postage prepaid, telecopied (and which is confirmed) or sent by
reputable courier (providing proof of delivery) to the parties at the
following addresses (or at such other address for a party as shall be
specified by like notice, provided that notices of a change of address
shall be effective only upon receipt thereof):
(a) if to the Seller, to
Dexter Corporation
One Elm Street
Windsor Locks, Connecticut 06096-2334
Attention: General Counsel
Telecopy: (860) 292-7669
with a copy to
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, New York 10036-6522
Telecopy: (212) 735-2000
Attention: J. Michael Schell, Esq.
Margaret L. Wolff, Esq.
(b) if to the Buyer, to
Ahlstrom Paper Group, Oy
P.O. Box 329
Etelaesplanadi 14
FIN - 00101 Helsinki
Finland
Telecopy: 011-358-9-503-9789
Attention: Legal Department -
Gustav Adlercreutz, Esq.
with a copy to
Cleary, Gottlieb, Steen & Hamilton
One Liberty Plaza
New York, New York 10006
Telecopy: (212) 255-3999
Attention: Richard S. Lincer, Esq.
10.6 Assignment. This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns, but neither this
Agreement nor any of the rights, interests or obligations hereunder shall
be assigned by either of the parties hereto without the prior written
consent of the other party, nor is this Agreement intended to confer upon
any other person except the parties hereto any rights or remedies
hereunder; provided, however, that the Buyer may assign its rights to
purchase the Nonwovens Assets to one or more of its wholly owned
subsidiaries, as provided in Section 10.7.
10.7 Designated Subsidiary. Anything in this Agreement to
the contrary notwithstanding, the Seller agrees that the Buyer may cause
one or more of its wholly owned subsidiaries designated by the Buyer to
carry out all or part of the transactions contemplated by this Agreement;
provided, however, that no such designation shall affect or diminish the
liability of the Buyer under this Agreement.
10.8 Governing Law. This Agreement shall be governed by
the laws of the State of New York (regardless of the laws that might
otherwise govern under applicable principles of conflicts of law) as to all
matters, including but not limited to matters of validity, construction,
effect, performance and remedies.
10.9 Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
10.10 Interpretation. The article and section headings
contained in this Agreement are solely for the purpose of reference, are
not part of the agreement of the parties and shall not in any way affect
the meaning or interpretation of this Agreement. As used in this Agreement:
(i) the term "person" shall mean an individual, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization and a
government or any department or agency thereof; (ii) the term "subsidiary"
when used in reference to any person shall mean any other corporation of
which outstanding securities having ordinary voting power to elect a
majority of the Board of Directors of such other corporation are owned
directly or indirectly by such person; (iii) the term "affiliate" shall
mean a person that directly, or indirectly through one or more
intermediaries, controls or is controlled by, or is under common control
with, the person specified; and (iv) the term "business day" means a day on
which banking institutions in New York, New York are authorized or
obligated by law or executive order to close.
10.11 Entire Agreement. This Agreement, including the
exhibits hereto and the documents, schedules, certificates and instruments
referred to herein, and the Confidentiality Agreement, dated March 16, 2000
between the Buyer and the Seller, embodies the entire agreement and
understanding of the parties hereto in respect of the transactions
contemplated by this Agreement. There are no restrictions, promises,
representations, warranties, covenants or undertakings, other than those
expressly set forth or referred to herein or therein. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such transactions.
10.12 Severability. If for any reason any term or
provision of this Agreement is held to be invalid or unenforceable, all
other valid terms and provisions hereof shall remain in full force and
effect, and all of the terms and provisions of this Agreement shall be
deemed to be severable in nature. If for any reason any term or provision
containing a restriction set forth herein is held to cover an area or to be
for a length of time which is unreasonable, or in any other way is
construed to be too broad or to any extent invalid, such term or provision
shall not be determined to be null, void and of no effect, but to the
extent the same is or would be valid or enforceable under applicable law,
any court of competent jurisdiction shall construe and interpret or reform
this Agreement to provide for a restriction having the maximum enforceable
area, time period and other provisions (not greater than those contained
herein) as shall be valid and enforceable under applicable Law.
Article XI
SURVIVAL
11.1 Survival. All of the representations and warranties
contained in this Agreement or in any certificates delivered pursuant to
this Agreement will survive the Closing and continue in full force and
effect until 9 months after the Closing (the "Survival Period"). If any
claim (including any Tax Claim or Environmental Claim) is made in writing
during the Survival Period, the representations and warranties shall
survive thereafter solely for purposes of resolving such claim. The
parties' respective obligations with respect to covenants, Nonwovens
Liabilities and Excluded Liabilities shall not be subject to any Survival
Period.
11.2 Indemnification Provisions for the Benefit of the
Buyer.
(a) In the event of the breach (or in the event a
third party alleges facts that, if true, would mean that there has been a
breach) of any of the representations, warranties or covenants of the
Seller, any of the Nonwovens Subsidiaries or any other subsidiary of the
Seller, contained in this Agreement or in any certificate delivered by the
Seller pursuant to this Agreement and provided that the Buyer makes a
written claim for indemnification pursuant hereto within the applicable
survival period, then the Seller agrees to defend, indemnify and hold
harmless the Buyer from and against all Damages the Buyer suffers resulting
from, arising from, arising out of, relating to, in the nature of or caused
by such event; provided, however, that the Seller shall have no liability
with respect to any Damages pursuant to this Section 11.2(a) unless and
until the aggregate of all claims for Damages hereunder and under Section
11.2(b) exceeds $250,000 and shall thereafter be liable only for the amount
of Damages in excess of $250,000 in the aggregate; provided, further, that
any indemnity with respect to income Taxes (including the survival period
with respect thereto) shall be governed solely by Section 8.2.
(b) The Seller agrees to defend, indemnify, and hold
harmless the Buyer from and against all Damages the Buyer suffers, to the
extent (except as provided in (iv) below) arising from or relating to acts,
omissions, conditions or circumstances occurring or existing prior to or as
of the Closing, and whether or not disclosed in Schedule 3.21(b) or
otherwise, for:
(i) any Environmental Claim with respect to the Nonwovens
Business;
(ii) any notification, investigation, monitoring, or
remediation of, or other response to, any emission, discharge,
release or threatened release, or presence in the environment of
Hazardous Material, whether on-site or off-site, with respect to
the Nonwovens Business, to the extent required pursuant to
Environmental Law in effect as of the Closing but specifically
excluding (y) any such activities required to maintain compliance
with a permit or other Environmental Law with which the Seller was
in compliance prior to and as of the Closing, or (z) any baseline
investigation or similar investigative activity required after the
Closing in connection with application for an IPPC or other permit
in the ordinary course of business;
(iii) any failure of the Seller or its subsidiaries or
the Nonwovens Business to comply, on or prior to the Closing, with
any applicable Environmental Law or Environmental Permit,
including without limitation Damages relating to any fines and
penalties and to any action necessary to enable the Nonwovens
Business to come into compliance based on the nature of the
operations of the Nonwovens Business as of the Closing with
applicable Environmental Laws in effect as of the Closing; and
(iv) non-income Taxes levied or imposed upon, or in
connection with, the Nonwovens Assets or the Nonwovens Business
(including the Nonwovens Subsidiaries) with respect to any taxable
period or portion thereof that ends on or before the Effective
Time, to the extent that such non-income Taxes arise after the
Effective Time or were otherwise not reflected on the Closing Date
Balance Sheet (a "Tax Claim").
The Seller shall have no obligation to defend, indemnify or hold harmless
the Buyer pursuant to this Section 11.2(b) unless and to the extent that
the Buyer makes a written claim for indemnification from the Seller within
9 months from the Closing; provided, however, that the Seller shall have no
liability with respect to any Damages pursuant to this Section 11.2 unless
and until the aggregate of all claims for Damages hereunder and under
Section 11.2(a) exceeds $250,000 and shall thereafter be liable only for
(x) the amount of Damages in excess of $250,000 in the aggregate and (y) in
the case of Damages of the type described in clause (i), (ii) and (iii)
above, 75% of such excess.
(c) The parties shall promptly agree on the amount
of the escrow to be retained for the satisfaction of any claim presented by
Buyer to Seller in accordance with the terms of this indemnity. In the
event the parties cannot agree within 30 days after presentation of a claim
of the type described in clause (i), (ii) or (iii) of Section 11.2(b), the
parties shall mutually appoint a qualified environmental consultant to make
such determination. In the event that the parties cannot agree upon a
consultant, each party shall appoint its own consultant, and those
consultants shall jointly appoint a third consultant, who shall then make
such determination. In the event the appointed consultants shall fail to
agree, the dispute shall be subject to final and binding arbitration in New
York, New York under and in accordance with the rules of Conciliation and
Arbitration of the International Chamber of Commerce's International Court
of Arbitration (the "ICC") then in effect.
11.3 Indemnification Provisions for the Benefit of the
Seller. In the event the Buyer breaches (or in the event any third party
alleges facts that, if true, would mean the Buyer has breached) any of its
representations and warranties contained in this Agreement or in any
certificate delivered by the Buyer pursuant to this Agreement and provided
that the Seller makes a written claim for indemnification against the Buyer
pursuant hereto within the applicable survival period, then Purchaser
agrees to defend, indemnify, and hold harmless the Seller and the Nonwovens
Subsidiaries from and against the entirety of any Damages that the Seller
and the Nonwovens Subsidiaries suffer resulting from, arising out of,
relating to, in the nature of or caused by such event; provided, however,
that the Seller shall have no liability with respect to any Damages
pursuant to this Section 11.3 unless and until the aggregate of all claims
for Damages hereunder exceeds $250,000 and shall thereafter be liable only
for the amount of Damages in excess of $250,000 in the aggregate.
11.4 Matters Involving Third Parties. If any third party
notifies any party hereto (the "Indemnified Party") in writing of the
assertion, or threatened assertion, of any claim with respect to which
indemnification is reasonably likely to be claimed by the Indemnified Party
against any other party hereto (the "Indemnifying Party") under this
Article XI (the "Third Party Claim"), then the Indemnified Party will
notify the Indemnifying Party thereof promptly after receiving such written
notice from the aforesaid third party; provided that no delay on the part
of the Indemnified Party in notifying the Indemnifying Party will relieve
the Indemnifying Party from any obligation hereunder unless, and then
solely to the extent that, the Indemnifying Party is prejudiced thereby.
The Indemnified Party may (through counsel reasonably satisfactory to the
Indemnifying Party) participate at its own expense in (but not control) the
Third Party Claim if it notifies the Indemnifying Party in writing of its
intention so to participate on or before the tenth (10th) day following the
date on which notice of such Third Party Claim was given to the
Indemnifying Party. The Indemnified Party shall cooperate fully in the
defense of the Third Party Claim as and to the extent reasonably requested
by the Indemnifying Party (such cooperation shall include the retention
and, upon the request of the Indemnifying Party, the provision to such
party of records and information which are reasonably relevant to such
claim or demand and making himself or his employees available on a mutually
convenient basis to provide additional information and explanation of any
material provided hereunder.
11.5 Statements as Representations. All statements
contained herein or in any schedule or certificate delivered pursuant to
this Agreement shall be deemed representations and warranties as such term
is used in this Agreement.
11.6 Limitation on Indemnification. Notwithstanding
anything contained in this Agreement or the escrow agreement to be entered
into between the Buyer and the Seller in the form attached as Exhibit D to
the contrary, in no event shall the Seller be required to indemnify any
person pursuant to Section 11.2 or the Escrow Agreement for any Damages
exceeding the Escrow Amount.
IN WITNESS WHEREOF, the Seller and the Buyer have caused
this Agreement to be signed by their respective duly authorized officers as
of the date first above written.
AHLSTROM PAPER GROUP OY
By: /s/ Gustav Adlercreutz
---------------------------------
Name: Gustav Adlercreutz
Title: General Counsel
By: /s/ Jukka Moisio
---------------------------
Name: Jukka Moisio
Title: Chief Financial Officer
DEXTER CORPORATION
By: /s/ K. Grahame Walker
--------------------------------
Name: K. Grahame Walker
Title: Chairman and CEO
