SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 6, 1995
M.A. HANNA COMPANY
(Exact name of registrant as specified in its charter)
Delaware 1-5222 34-0232435
(State of Incorporation) (Commission (IRS Employer Identification Number)
File Number)
Suite 36-5000, 200 Public Square, Cleveland, Ohio 44114-2304
(Address of principal executive office)
(216) 589-4000
(Telephone Number)
Item 2. Acquisition or Disposition of Assets
On June 6, 1995, M.A. Hanna Company (the "Company")
completed the previously announced disposition of its
printing and textile businesses to Day International Group,
Inc., a company newly organized by American Industrial
Partners ("AIP"), for $199.5 million in cash, subject to
certain adjustments. The amount of the consideration was the
result of arms-length negotiations. The Company issued a
news release on April 12, 1995 announcing its agreement with
AIP regarding the disposition and issued a news release on
June 6, 1995 announcing the consummation of the disposition.
Item 7. Financial Statements and Exhibits
(b) Pro Forma Financial Information
The following pro forma income statement information
gives effect to the disposition of the Company's printing and
textile businesses to Day International Group, Inc. assuming
the sale had been consummated as of January 1, 1994. For the
year ended December 31, 1994, interest expense would have
decreased from $28.5 million to $24.3 million reflecting the
repayment of debt that could have been retired.
Income from continuing operations would have increased
from $37.0 million or $1.18 per share fully diluted to $39.5
million or $1.26 per share fully diluted. For the three months
ended March 31, 1995, interest expense would have decreased
from $6.9 million to $5.5 million and income from continuing
operations would have increased from $12.0 million or $.38 per
share fully diluted to $12.9 million or $.41 per share fully
diluted.
The following pro forma balance sheet information
assumes the sale had been consummated as of March 31, 1995.
Cash and cash equivalents at March 31, 1995 would have
increased from $27.8 million to $114.0 million reflecting sales
proceeds of $199.5 million received at closing less the payment
of expenses associated with the sale of $8.0 million and the
retirement of debt of $105.3 million. Net assets of discontinued
operations would have decreased from $104.5 million to zero. Notes
payable to bank and other long-term debt would have decreased from
$2.1 million and $108.5 million, respectively, to zero and $5.3
million, respectively. Trade payables and accrued expenses
would have increased from $344.7 million to $385.3 million to
recognize the estimated accrued taxes on the gain from the sale
and retained earnings would have increased from $307.4 million
to $353.8 million, reflecting the estimated net gain from the
disposition.
(c) Exhibits
1. Stock Purchase Agreement, dated April 11,
1995, as amended, by and among Day
International Group, Inc. (formerly known as
Day International Holdings Inc.), Cadillac
Plastic Group, Inc. and M.A. Hanna Company.
2. News Release dated April 12, 1995.
3. News Release dated June 6, 1995.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
M.A. HANNA COMPANY
Date: June 21, 1995 By:/s/ Thomas E. Lindsey
Thomas E. Lindsey, Controller
EXHIBIT INDEX
Exhibit Description of Exhibits
2 Stock Purchase Agreement, dated April 11, 1995, as
amended, by and among Day International Group, Inc.
(formerly known as Day International Holdings, Inc.),
Cadillac Plastic Group, Inc. and M.A. Hanna Company.
99.1 Press Release dated April 12, 1995.
99.2 Press Release dated June 6, 1995.
EXHIBIT 2
STOCK PURCHASE AGREEMENT
among
DAY INTERNATIONAL HOLDINGS, INC.,
M.A. HANNA COMPANY
and
CADILLAC PLASTIC GROUP, INC.
Dated April 11, 1995
TABLE OF CONTENTS
Page
1. Definitions. . . . . . . . . . . . . . . . . . . . . . . . 2
2. Sale and Purchase of Shares. . . . . . . . . . . . . . . . 16
2.1 Sale of Shares. . . . . . . . . . . . . . . . . . . 16
2.2 Closing Payment . . . . . . . . . . . . . . . . . . 16
2.3 Purchase Price Adjustment . . . . . . . . . . . . . 17
2.4 Intercompany Accounts . . . . . . . . . . . . . . . 22
3. Closing and Closing Date . . . . . . . . . . . . . . . . . 23
4. Representations and Warranties of Seller and M.A Hanna . . 24
4.1 Organization, Power and Authority . . . . . . . . . 24
4.2 Charter Documents and Corporate Records . . . . . . 25
4.3 The Shares. . . . . . . . . . . . . . . . . . . . . 26
4.4 Authorization and Effect of Agreement . . . . . . . 26
4.5 Subsidiaries and Investments. . . . . . . . . . . . 27
4.6 No Breach . . . . . . . . . . . . . . . . . . . . . 27
4.7 Financial Statements. . . . . . . . . . . . . . . . 28
4.8 Conduct of Business . . . . . . . . . . . . . . . . 30
4.9 Approval of Transactions. . . . . . . . . . . . . . 30
4.10 Orders and Actions. . . . . . . . . . . . . . . . . 30
4.11 Compliance with Laws. . . . . . . . . . . . . . . . 31
4.12 Employee Benefit Plans. . . . . . . . . . . . . . . 32
4.13 Tax Matters . . . . . . . . . . . . . . . . . . . . 34
4.14 Title to Assets; Sufficiency of Assets. . . . . . . 36
4.15 Intellectual Property . . . . . . . . . . . . . . . 38
4.16 Labor Relations . . . . . . . . . . . . . . . . . . 39
4.17 Contract Rights . . . . . . . . . . . . . . . . . . 40
4.18 Environmental Matters . . . . . . . . . . . . . . . 43
4.19 Insurance . . . . . . . . . . . . . . . . . . . . . 45
4.20 Absence of Undisclosed Liabilities. . . . . . . . . 45
4.21 Affiliated Transactions . . . . . . . . . . . . . . 46
4.22 Disclaimer. . . . . . . . . . . . . . . . . . . . . 47
4.23 Brokerage . . . . . . . . . . . . . . . . . . . . . 47
5. Representations and Warranties of Buyer. . . . . . . . . . 47
5.1 Organization, Power and Authority . . . . . . . . . 47
5.2 Legal and Authorized Transactions . . . . . . . . . 48
5.3 No Breach . . . . . . . . . . . . . . . . . . . . . 48
5.4 Consents and Approvals. . . . . . . . . . . . . . . 49
5.5 No Distribution . . . . . . . . . . . . . . . . . . 49
5.6 Buyer's Financing . . . . . . . . . . . . . . . . . 50
5.7 Orders and Actions. . . . . . . . . . . . . . . . . 50
5.8 No Reliance . . . . . . . . . . . . . . . . . . . . 50
5.9 Bridge Commitment . . . . . . . . . . . . . . . . . 51
5.10 Brokerage . . . . . . . . . . . . . . . . . . . . . 51
6. Conditions to the Obligations of Seller. . . . . . . . . . 52
6.1 Representations and Warranties True and Correct . . 52
6.2 Covenants and Agreements Performed. . . . . . . . . 52
6.3 No Actions. . . . . . . . . . . . . . . . . . . . . 52
6.4 Consents. . . . . . . . . . . . . . . . . . . . . . 53
6.5 HSR Act . . . . . . . . . . . . . . . . . . . . . . 53
6.6 Officer's Certificate . . . . . . . . . . . . . . . 53
6.7 Payment of Consideration. . . . . . . . . . . . . . 53
6.8 Closing of the Day Canada and Day U.K.
Transactions. . . . . . . . . . . . . . . . . . 54
6.9 Employment Agreements . . . . . . . . . . . . . . . 54
7. Conditions to the Obligations of Buyer . . . . . . . . . . 54
7.1 Representations and Warranties True and Correct . . 54
7.2 Covenants and Agreements Performed. . . . . . . . . 55
7.3 No Actions. . . . . . . . . . . . . . . . . . . . . 55
7.4 Consents. . . . . . . . . . . . . . . . . . . . . . 55
7.5 HSR Act . . . . . . . . . . . . . . . . . . . . . . 55
7.6 Adverse Change. . . . . . . . . . . . . . . . . . . 56
7.7 Resignations. . . . . . . . . . . . . . . . . . . . 56
7.8 Delivery of the Shares. . . . . . . . . . . . . . . 56
7.9 Officer's Certificate . . . . . . . . . . . . . . . 56
7.10 Closing of the Day Canada and Day U.K.
Transactions. . . . . . . . . . . . . . . . . . 56
7.11 Financing . . . . . . . . . . . . . . . . . . . . . 56
7.12 Title Insurance and Survey. . . . . . . . . . . . . 57
7.13 Audit of Company Financial Statements . . . . . . . 57
7.14 Indebtedness; Encumbrances. . . . . . . . . . . . . 58
7.15 Loss. . . . . . . . . . . . . . . . . . . . . . . . 58
8. Covenants and Agreements of the Parties. . . . . . . . . . 58
8.1 Closing Conditions. . . . . . . . . . . . . . . . . 58
8.2 Reasonable Access; Confidentiality. . . . . . . . . 59
8.3 Conduct of Business . . . . . . . . . . . . . . . . 60
8.4 Litigation. . . . . . . . . . . . . . . . . . . . . 63
8.5 Publicity . . . . . . . . . . . . . . . . . . . . . 63
8.6 Regulatory Filings. . . . . . . . . . . . . . . . . 64
8.7 Post-Closing Access; Closing Books. . . . . . . . . 65
8.8 Expenses of Sale. . . . . . . . . . . . . . . . . . 67
8.9 Tax Matters . . . . . . . . . . . . . . . . . . . . 67
8.10 Tax Elections . . . . . . . . . . . . . . . . . . . 75
8.11 Tax Allocation. . . . . . . . . . . . . . . . . . . 76
8.12 Employee Benefits . . . . . . . . . . . . . . . . . 77
8.13 WARN Act. . . . . . . . . . . . . . . . . . . . . . 80
8.14 Environmental Matters . . . . . . . . . . . . . . . 80
8.15 Covenant Not to Compete . . . . . . . . . . . . . . 82
8.16 Notice of Developments. . . . . . . . . . . . . . . 85
8.17 Exclusivity . . . . . . . . . . . . . . . . . . . . 85
8.18 Audit . . . . . . . . . . . . . . . . . . . . . . . 86
8.19 Obtaining of Financing. . . . . . . . . . . . . . . 86
8.20 Insurance . . . . . . . . . . . . . . . . . . . . . 89
9. Indemnification and Survival . . . . . . . . . . . . . . . 89
9.1 Indemnification by Seller, M.A. Hanna, Day U.K. and
Day Canada . . . . . . . . . . . . . . . . . . . . . 89
9.2 Indemnification by Buyer . . . . . . . . . . . . . . 91
9.3 Notice and Opportunity to Defend . . . . . . . . . . 92
9.4 Limitations. . . . . . . . . . . . . . . . . . . . . 94
9.5 Survival of Representations and Warranties and
Covenants . . . . . . . . . . . . . . . . . . . 98
9.6 Indemnification Procedures for Environmental
Matters . . . . . . . . . . . . . . . . . . . . 100
9.7 Exclusive Remedy . . . . . . . . . . . . . . . . . . 106
10. Termination . . . . . . . . . . . . . . . . . . . . . . . 107
10.1 Termination. . . . . . . . . . . . . . . . . . . . 107
10.2 Effects of Termination . . . . . . . . . . . . . . 109
11. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . 109
11.1 Assignment; Successors and Assigns . . . . . . . . 109
11.2 Notices. . . . . . . . . . . . . . . . . . . . . . 110
11.3 Waiver; Remedies . . . . . . . . . . . . . . . . . 112
11.4 No Recourse Against Others . . . . . . . . . . . . 112
11.5 Entire Agreement . . . . . . . . . . . . . . . . . 112
11.6 Amendment. . . . . . . . . . . . . . . . . . . . . 112
11.7 Further Assurances . . . . . . . . . . . . . . . . 112
11.8 Counterparts . . . . . . . . . . . . . . . . . . . 113
11.9 Governing Law; Language. . . . . . . . . . . . . . 113
11.10 Schedules. . . . . . . . . . . . . . . . . . . . . 113
11.11 Captions . . . . . . . . . . . . . . . . . . . . . 114
11.12 Rights of Third Parties. . . . . . . . . . . . . . 114
11.13 Severability . . . . . . . . . . . . . . . . . . . 114
11.14 Equitable Relief . . . . . . . . . . . . . . . . . 114
11.15 Integration. . . . . . . . . . . . . . . . . . . . 115
Schedules
Schedule 4.1 Corporate Authorizations
Schedule 4.2 Charter Documents
Schedule 4.5 Subsidiaries; Investments
Schedule 4.6 Consents
Schedule 4.7 Financial Statements
Schedule 4.8 Conduct of Business
Schedule 4.9 Approvals
Schedule 4.10 Orders and Actions
Schedule 4.12 Employee Benefit Plans
Schedule 4.13 Tax Matters
Schedule 4.14 Title to Assets
Schedule 4.15 Intellectual Property
Schedule 4.16 Labor Relations
Schedule 4.17 Contracts
Schedule 4.18 Environmental Matters
Schedule 4.19 Insurance
Schedule 4.20 Undisclosed Liabilities
Schedule 4.21 Affiliated Transactions
Schedule 6.9 Employment Agreements
Schedule 7.13 Accounting Adjustments
Schedule 8.3 Conduct of Business
Schedule 8.12 IRS Form 5500s
Schedule 8.19(e) Summary of Terms - Senior
Subordinated Notes
Annexes
A-1 Accounting Practices
and Procedures
A-2 Accounting Adjustments
B Day Canada Asset Purchase
Agreement
C Day U.K. Stock Purchase
Agreement
D Commitment Letters
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated April 11, 1995, among
DAY INTERNATIONAL HOLDINGS, INC., a Delaware corporation
("Seller"), and M.A. HANNA COMPANY, a Delaware corporation ("M.A.
Hanna").
RECITALS
A. Seller, an indirect wholly owned subsidiary of M.A.
Hanna, is the owner of all of the issued and outstanding capital
stock of Day International, Inc., a Delaware corporation (the
"Company");
B. Seller wishes to sell, and Buyer, an indirect wholly
owned subsidiary of American Industrial Partners Capital Fund II
L.P., a Delaware limited partnership ("AIP II"), wishes to
purchase from Seller, the Shares (as hereinafter defined) upon the
terms and conditions of this Agreement;
C. As a condition thereto and simultaneously therewith,
Buyer shall purchase (i) all of the issued and outstanding capital
stock of Day International (U.K.) Limited, a corporation
registered in Scotland ("Day U.K."), from Cadillac Plastic
Limited, a corporation registered in England ("Cadillac U.K."),
and (ii) substantially all of the assets related to the printing
and textile business of Day International (Canada) Ltd., an
Ontario corporation ("Day Canada"), from Day Canada; and
D. M.A. Hanna wishes to enter into this Agreement for
the purpose of making certain representations and warranties to
Buyer, providing certain indemnification and entering into certain
other obligations in favor of Buyer.
NOW, THEREFORE, in consideration of the foregoing and
the mutual representations, warranties, covenants and undertakings
contained in this Agreement, and subject to and on the terms and
conditions set forth in this Agreement, the parties hereto hereby
agree as follows:
1. Definitions. As used in this Agreement, the
following terms shall have the meanings set forth below, unless
the context otherwise requires:
"Action" means any action, suit, or legal,
administrative or arbitral proceeding or investigation before
or by any Governmental Body.
"Active Subsidiary" means Day International
S.A.R.L., Day International GmbH and Day International de
Mexico S.A. de CV.
"Adjustment Amount" shall have the meaning set
forth in Section 2.3(a) of this Agreement.
"Affiliate", as applied to any Person, means any
other Person directly or indirectly controlling, controlled
by or under common control with that Person.
"AIP" means American Industrial Partners Capital
Fund L.P., a Delaware limited partnership and an Affiliate of
AIP II.
"AIP II" shall have the meaning set forth in the
Recitals of this Agreement.
"Another Transaction" shall have the meaning set
forth in Section 8.17.
"Assets" shall have the meaning set forth in
Section 4.14(b) of this Agreement.
"Audited Company Financial Statements" means the
audited consolidated combined balance sheets of the
Consolidated Entities for the fiscal years ended December 31,
1994 and December 31, 1993 and the consolidated combined
audited statements of income and cash flows of the
Consolidated Entities for the fiscal years ended December 31,
1994, December 31, 1993 and December 31, 1992, each prepared
in accordance with United States GAAP and applying the
accounting principles and procedures set forth on Annex A-1.
"Audited December 31, 1994 Balance Sheet" means the
audited consolidated combined balance sheet of the
Consolidated Entities as of December 31, 1994 prepared in
accordance with United States GAAP, as finally determined in
accordance with the procedures set forth in Section 2.3(b),
applying the accounting principles and procedures set forth
on Annex A-1, and adjusted to reflect the adjustments and
matters described on Annex A-2.
"Audited December 31, 1994 Balance Sheet Objection
Period" shall have the meaning set forth in Section
2.3(b)(ii) of this Agreement.
"Balance Sheet Date" shall have the meaning set
forth in Section 4.8 of this Agreement.
"Beneficiary" means (a) with respect to any claim
for indemnification or Circumstance which could give rise to
a right of indemnification pursuant to Section 9.1, any
member of the Buyer Group and (b) with respect to any claim
for indemnification or Circumstance which could give rise to
a right of indemnification pursuant to Section 9.2, any
member of the Seller Group.
"Bridge Commitment" means that certain Bridge
Commitment Letter, dated April 7, 1995, addressed to AIP on
behalf of Buyer from DLJ in the form attached as Annex D,
pursuant to which DLJ has agreed to purchase up to
$100,000,000 in aggregate principal amount of senior
subordinated notes of the Company.
"Bridge Power" shall have the meaning set forth in
Section 8.19(c) of this Agreement.
"Business" shall have the meaning set forth in
Section 8.15(a) of this Agreement.
"Business Day" means a day of the year on which
banks located in New York, New York are not authorized or
required by Law to be closed.
"Buyer" shall have the meaning set forth in the
Preamble of this Agreement.
"Buyer Group" shall have the meaning set forth in
Section 9.1(a) of this Agreement.
"Buyer 401(k) Plan" shall have the meaning set
forth in Section 8.12(a) of this Agreement.
"Cadillac U.K." shall have the meaning set forth in
the Recitals of this Agreement.
"CERCLA" shall have the meaning set forth in
Section 4.18(b) of this Agreement.
"Charter Documents" means (a) the Certificate or
Articles of Incorporation, as amended to date, or similar
corporate charter or other instrument of organization and (b)
the By-laws, as amended to date, or similar instrument.
"Circumstance" shall have the meaning set forth in
Section 9.3 of this Agreement.
"Closing" shall have the meaning set forth in
Section 3 of this Agreement.
"Closing Date" shall have the meaning set forth in
Section 3 of this Agreement.
"Closing Date Balance Sheet" means the audited
consolidated combined balance sheet of the Consolidated
Entities as of the close of business on the Closing Date
(without giving effect to any of the transactions
contemplated pursuant to this Agreement, the Day Canada
Agreement and the Day U.K. Agreement), as finally determined
in accordance with the procedures set forth in Section
2.3(c), prepared in accordance with United States GAAP,
applying the accounting principles and procedures set forth
on Annex A-1, and adjusted to reflect the adjustments and
matters described on Annex A-2. The parties acknowledge that
the opinion of Buyer's accountants with respect to the
Closing Date Balance Sheet shall not reflect the adjustments
and matters described on Annex A-2.
"Closing Date Balance Sheet Objection Period" shall
have the meaning set forth in Section 2.3(c)(ii) of this
Agreement.
"Closing Net Worth" shall have the meaning set
forth in Section 2.3(a) of this Agreement.
"Code" means the Internal Revenue Code of 1986, as
amended.
"Company" shall have the meaning set forth in the
Recitals of this Agreement.
"Company Financial Statements" shall have the
meaning set forth in Section 4.7(a) of this Agreement.
"Condition of the Company" means the business,
assets, liabilities, results of operations or financial
condition of the Company and its Subsidiaries taken as a
whole.
"Confidentiality Agreement" means the letter
agreement, dated January 24, 1995, between AIP and M.A.
Hanna, setting forth the obligation of Buyer to keep
confidential, among other things, the information provided
pursuant to this Agreement, the Day U.K. Agreement and the
Day Canada Agreement.
"Consolidated Entities" shall mean the Company, the
Subsidiaries, Day U.K. and the Business (as defined in the
Day Canada Agreement).
"Controlled Group" shall have the meaning set forth
in Section 4.12(f) of this Agreement.
"Damages" means any loss, claim, liability, damage,
fine, penalty, amounts paid in settlement, costs (including
costs of investigation or enforcement) or expense (including,
without limitation, reasonable attorneys' fees and
disbursements, witness fees and court costs), but excluding
any costs of internal personnel or other overhead of the
Beneficiary.
"Day Canada" shall have the meaning set forth in
the Recitals of this Agreement.
"Day Canada Agreement" shall have the meaning set
forth in Section 6.8 of this Agreement.
"Day U.K." shall have the meaning set forth in the
Recitals of this Agreement.
"Day U.K. Agreement" shall have the meaning set
forth in Section 6.8 of this Agreement.
"December 31, 1994 Balance Sheet" means the
unaudited consolidated balance sheet of the Consolidated
Entities as of December 31, 1994.
"Denial Notice" shall have the meaning set forth in
Section 9.6(b)(ii)(B)(1) of this Agreement.
"Direct Claim" shall have the meaning provided in
Section 9.6(b)(ii) of this Agreement.
"DLJ" means Donaldson, Lufkin & Jenrette.
"Employees" shall have the meaning set forth in
Section 8.12(a) of this Agreement.
"Employee Plans" shall have the meaning set forth
in Section 4.12(a) of this Agreement.
"Employment Agreements" shall have the meaning set
forth in Section 6.9 of this Agreement.
"Engaging in Competition" shall have the meaning
set forth in Section 8.15(a) of this Agreement.
"Environmental Arbitrator" shall have the meaning
set forth in Section 9.6(b)(ii)(C).
"Environmental Laws" shall have the meaning set
forth in Section 4.18(a) of this Agreement.
"ERISA" means the Employee Retirement Income
Security Act of 1974, as amended.
"Equity Commitment" shall have the meaning set
forth in Section 5.6 of this Agreement.
"Financing Commitments" shall have the meaning set
forth in Section 5.6 of this Agreement.
"First Trigger Date" means such date on or after
June 15, 1995 that is the later of (i) 45 calendar days after
the delivery to Buyer of the Audited Company Financial
Statements or (ii) 48 calendar days after the delivery of a
first draft of the management's discussion and analysis
relating to the Audited Company Financial Statements;
provided, however, that if the First Trigger Date falls on a
date other than a Business Day, the First Trigger Date shall
mean the next succeeding Business Day.
"Former Employees" shall have the meaning set forth
in Section 8.12(c) of this Agreement.
"GAAP" means generally accepted accounting
principles.
"Governmental Body" means any government or
political subdivision thereof, whether federal, state, local
or foreign, or any agency or instrumentality of any such
government or political subdivision thereof, or any federal,
state or foreign court or arbitrator.
"HSR Act" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and
regulations promulgated thereunder.
"Indebtedness" means any indebtedness for borrowed
money of the Company or any of the Subsidiaries reflected in
any promissory note, indenture, bond, mortgage, credit
agreement or other similar instrument, including any and all
interest expenses accrued and unpaid thereon and any
prepayment penalties payable with respect thereto.
"Indemnitor" means (a) with respect to any claim
for indemnification or Circumstance which could give rise to
a right of indemnification pursuant to Section 9.1, Seller,
M.A. Hanna, Cadillac U.K. or Day Canada, as the case may be,
and (b) with respect to any claim for indemnification or
Circumstance which could give rise to a right of
indemnification pursuant to Section 9.2, Buyer.
"Independent Accountants" shall have the meaning
set forth in Section 2.3(c)(iii) of this Agreement.
"Initial Net Worth" shall have the meaning set
forth in Section 2.3(a) of this Agreement.
"Intellectual Property Rights" shall have the
meaning set forth in Section 4.15 of this Agreement.
"Investments" means any equity interest, directly
or indirectly, in any other Person in excess of 5% of the
total equity ownership of such Person.
"Known" or "Knowledge". The phrases "known",
"knows" or "knowledge" or similar terms when used with
reference to an individual or a party to this Agreement shall
refer to the actual knowledge of such individual or of the
executive officers of such party, without independent
investigation or attribution of knowledge from any other
person.
"Known Environmental Matters" shall have the
meaning set forth in Section 8.14(a) of this Agreement.
"Law" means any law, statute, code, ordinance,
rule, regulation or other requirement of any Governmental
Body.
"Leased Real Property" shall have the meaning set
forth in Section 4.14(b) of this Agreement.
"Leases" shall have the meaning set forth in
Section 4.14(a) of this Agreement.
"Lien" means any lien, pledge, mortgage, security
interest, charge, option, adverse claim, right, restriction
on transfer or other similar encumbrance.
"Loss" shall have the meaning set forth in Section
7.15 of this Agreement.
"M.A. Hanna" shall have the meaning set forth in
the Preamble of this Agreement.
"Materiality Condition" shall have the meaning set
forth in Section 9.4.4 of this Agreement.
"NationsBank" means NationsBank, N.A. (Carolinas).
"Nationsbank Commitment" means that certain
commitment to provide senior credit facilities of up to
$85,000,000 issued to Buyer by NationsBank and NationsBank
Capital Markets, Inc. in the form attached as Annex D.
"Net Insurance Recovery" means any insurance
proceeds recovered in respect of Damages less 200% of the
annual premium paid (taking into account only premiums paid
after the Closing) by the Beneficiary or any Affiliate of the
Beneficiary in the most current fiscal year in respect of
such insurance (provided the Beneficiary provides proper
documentation to the Indemnitor evidencing the payment of
such premiums) but shall not include any proceeds under any
insurance policy pursuant to which premiums are normally
adjusted to reimburse the insurer for any material part of
proceeds paid out in previous years.
"Non-competition Area" shall have the meaning set
forth in Section 8.15(a) of this Agreement.
"Non-competition Term" shall have the meaning set
forth in Section 8.15(d) of this Agreement.
"Notice of Objection" shall have the meaning set
forth in Section 2.3(b)(ii) of this Agreement.
"Onsite Remedial Action" means any investigatory,
remedial, cleanup, corrective or compliance action undertaken
pursuant to Environmental Laws after the Closing Date at, on,
or with respect to conditions emanating or migrating from,
the Company's facilities, for which indemnification is
provided under this Agreement.
"Option" means any option, warrant, call,
convertible or exchangeable security, subscription,
preemptive right, other agreement or right of similar nature.
"Order" means any order, judgment, injunction,
award, decree or writ of any Governmental Body.
"Owned Property" shall have the meaning set forth
in Section 4.14(a) of this Agreement.
"Payment Date" shall have the meaning set forth in
Section 2.3(e) of this Agreement.
"PBGC" shall have the meaning set forth in Section
4.12(f) of this Agreement.
"Permitted Liens" shall have the meaning set forth
in Section 4.14(b) of this Agreement.
"Person" or "Persons" means any individual,
corporation, partnership, firm, joint venture, association,
limited liability company, joint-stock company, trust,
unincorporated organization, governmental or regulatory body
or other legal entity.
"Policies" shall have the meaning set forth in
Section 4.19 of this Agreement.
"Post-Closing Offsite Matters" shall have the
meaning set forth in Section 8.14(a) of this Agreement.
"Principal Management" means the authority to
direct the handling of the subject matter of a Direct Claim,
or an Onsite Remedial Action associated with a Third Party
Claim, including, without limitation, (a) selection of
consultants, contractors, experts or advisors, (b)
evaluation, selection and implementation of remedial
measures, and (c) negotiations with or challenges to any
Governmental Body and third parties, to the extent done in
good faith and in compliance with Law.
"Purchase Price" means $184,500,000 if the Closing
occurs on or prior to the First Trigger Date and $185,000,000
if the Closing occurs after the First Trigger Date; provided,
however, that the Purchase Price shall be $181,500,000 in the
event that M.A. Hanna effects the Bridge Power or the Buyer
effects a Qualified Bridge Drawdown.
"Qualified Bridge Drawdown" means a borrowing by
Buyer of funds under the Bridge Commitment (or any comparable
financing utilized by Buyer in accordance with Section
8.19(b)) at any time after the expiration of ten days
following the Second Trigger Date or a borrowing of funds in
accordance with Section 8.19(e).
"Real Property" shall have the meaning set forth in
Section 4.14(b) of this Agreement.
"Salomon" shall have the meaning set forth in
Section 4.23 of this Agreement.
"Sampling Prudent for Good Environmental
Management" means sampling taken in response to material
facts indicating that, based on all relevant circumstances,
conditions on the Owned Property could reasonably be expected
to present a significant risk to human health or the
environment; this term does not mean sampling performed
simply to obtain data in a situation in which no material
facts indicate that, based on all relevant circumstances,
conditions on the Owned Property could reasonably be expected
to present a significant risk to human health or the
environment.
"Second Trigger Date" means the date that is 31
days after the date that is the First Trigger Date; provided,
however, that if the Second Trigger Date falls on a date
other than a Business Day, the Second Trigger Date shall mean
the next succeeding Business Day.
"Seller" shall have the meaning set forth in the
Preamble of this Agreement.
"Seller Group" shall have the meaning set forth in
Section 9.2 of this Agreement.
"Seller's Tax Group" means Seller and its
Affiliates.
"Seller 401(k) Plan" shall have the meaning set
forth in Section 8.12(a) of this Agreement.
"Shares" shall have the meaning set forth in
Section 2.1 of this Agreement.
"Subordinated Debt Financing" shall have the
meaning set forth in Section 8.19(a) of this Agreement.
"Subsidiaries" means any Person of which at least a
majority of the outstanding shares or other equity interests
having ordinary voting power for the election of directors or
comparable managers of such Person are owned, directly or
indirectly, by the Company, by one or more Subsidiaries of
the Company, or by the Company and one or more Subsidiaries
of the Company.
"Subsidiary Shares" shall have the meaning set
forth in Section 4.5(b) of this Agreement.
"Taxes" shall have the meaning set forth in Section
4.13(a) of this Agreement.
"Tax Returns" shall have the meaning set forth in
Section 4.13(a) of this Agreement.
"Third Party Claim" means any demand that has been
made on or communicated to Buyer, Seller, M.A. Hanna, or the
Company or any of its Subsidiaries, by any Person other than
Buyer, Seller, M.A. Hanna, or the Company or any of its
Subsidiaries which, if maintained or enforced, might result
in a claim for indemnification under this Agreement with
respect to the matters described in Section 9.6(a).
"Transfer Taxes" shall have the meaning set forth
in Section 8.9(f) of this Agreement.
"WARN Act" shall have the meaning set forth in
Section 8.13 of this Agreement.
"338(g) Election" shall have the meaning set forth
in Section 8.10(b) of this Agreement.
"338(h)(10) Election" shall have the meaning set
forth in Section 8.10(a) of this Agreement.
2. Sale and Purchase of Shares.
2.1 Sale of Shares. Subject to the terms and
conditions of this Agreement, at the Closing, Seller shall sell
and deliver to Buyer, and Buyer shall purchase and accept from
Seller, all of the outstanding shares of capital stock of the
Company (the "Shares"), free and clear of any Liens.
2.2 Closing Payment. In full payment for the sale
of the Shares to Buyer, at the Closing, Buyer shall pay to Seller
the Purchase Price, which amount shall be subject to adjustment
after the Closing Date as provided in Section 2.3. Buyer shall
pay the Purchase Price in cash by bank wire transfer of
immediately available funds to Seller's account or accounts at a
bank or banks specified by Seller in writing prior to the Closing.
2.3 Purchase Price Adjustment.
(a) The Purchase Price shall be adjusted by an
amount (the "Adjustment Amount") equal to the absolute value of
the difference (if any) between (i) the Initial Net Worth and
(ii) the Closing Net Worth. "Initial Net Worth" shall mean the
difference between (A) the total combined consolidated assets of
the Consolidated Entities as of the close of business on December
31, 1994 reduced by (B) the total combined consolidated
liabilities of the Consolidated Entities as of the close of
business on December 31, 1994, in each case as reflected on the
Audited December 31, 1994 Balance Sheet. "Closing Net Worth"
shall mean the difference between (A) the total combined
consolidated assets of the Consolidated Entities as of the Closing
Date reduced by (B) the total combined consolidated liabilities of
the Consolidated Entities as of the Closing Date, in each case as
reflected on the Closing Date Balance Sheet.
(b)(i) Within three Business Days after Seller's
receipt of the Audited December 31, 1994 Balance Sheet, Seller
shall deliver such balance sheet to Buyer for review. In
connection with Buyer's review of the Audited December 31, 1994
Balance Sheet, Seller shall, promptly upon request, provide to
Buyer and its agents access to the work papers of Seller's
accountants (both internal and external) relating to the Audited
December 31, 1994 Balance Sheet and any and all documentation
related thereto.
(ii) Unless Buyer gives Seller written notice of its
objection to the Audited December 31, 1994 Balance Sheet, which
notice shall include the basis of Buyer's objection in reasonable
detail ("Notice of Objection"), within 30 calendar days after
receiving the Audited December 31, 1994 Balance Sheet (the
"Audited December 31, 1994 Balance Sheet Objection Period"), such
balance sheet shall be final, conclusive and binding on the
parties to this Agreement.
(iii) If Buyer delivers a Notice of Objection within
the Audited December 31, 1994 Balance Sheet Objection Period,
Buyer and Seller shall use all reasonable efforts to resolve all
disputes regarding Buyer's objections set forth in the Notice of
Objection. If Buyer and Seller are not able to resolve all
disputes regarding Buyer's objections set forth in the Notice of
Objection, the remaining disputed items shall be submitted for
final resolution to the Independent Accountants at the time that
disputed items are submitted to the Independent Accountants for
resolution under Section 2.3(c)(iii) or if no items are submitted
for such resolution to the Independent Accountants under Section
2.3(c)(iii) then at the earliest time that such items would be
submitted for such resolution under Section 2.3(c)(iii).
(iv) After offering Seller and Seller's representatives
and Buyer and Buyer's representatives the opportunity to present
their positions as to the disputed items, which opportunity shall
not extend for more than 10 calendar days after the Independent
Accountants have been selected, the Independent Accountants shall
deliver a written report resolving all disputed items and setting
forth the basis for such resolution within 30 calendar days after
Buyer and Seller have presented their positions as to the disputed
items. The resolution of the Independent Accountants shall be
final, conclusive and binding upon the parties to this Agreement
and shall be reflected in any necessary revisions to the Audited
December 31, 1994 Balance Sheet.
(c)(i) Within 60 calendar days of the Closing Date,
Buyer shall deliver to Seller (A) the Closing Date Balance Sheet
and (B) a calculation of the Closing Net Worth based on the
Closing Date Balance Sheet. In connection with Seller's review of
the Closing Date Balance Sheet and Buyer's calculation of the
Closing Net Worth, Buyer shall, promptly upon request, provide to
Seller and its agents access to the work papers of Buyer's
accountants (both internal and external) relating to the Closing
Date Balance Sheet and Buyer's calculation of the Closing Net
Worth and any and all documentation related thereto.
(ii) Unless Seller gives Buyer a Notice of Objection to
Buyer's calculation of the Closing Net Worth, within 30 calendar
days after receiving the Closing Date Balance Sheet and Buyer's
calculation of the Closing Net Worth (the "Closing Date Balance
Sheet Objection Period"), the Closing Date Balance Sheet and
Buyer's calculation of the Closing Net Worth shall be final,
conclusive and binding on the parties to this Agreement.
(iii) If Seller delivers a Notice of Objection within
the Closing Date Balance Sheet Objection Period, Buyer and Seller
shall use reasonable efforts to resolve all disputes regarding
Seller's objections set forth in the Notice of Objection. If
Buyer and Seller are not able to resolve all disputes regarding
Seller's objections set forth in the Notice of Objection within 14
calendar days after Seller's delivery of the Notice of Objection,
the remaining disputed items shall be submitted for final
resolution to a nationally recognized accounting firm selected by
mutual agreement of Buyer and Seller, or if Buyer and Seller are
unable to agree upon such accounting firm within 20 calendar days
after Seller's delivery of a Notice of Objection (whether with
respect to the Audited December 31, 1994 Balance Sheet or the
Closing Date Balance Sheet), Buyer and Seller shall promptly
instruct their respective firms of independent certified public
accountants to select, within five Business Days thereafter, a
third nationally recognized accounting firm (the "Independent
Accountants"). After offering Seller and Seller's representatives
and Buyer and Buyer's representatives the opportunity to present
their positions as to the disputed items, which opportunity shall
not extend for more than 10 calendar days after the Independent
Accountants have been selected, the Independent Accountants shall
deliver a written report resolving all disputed items and setting
forth the basis for such resolution within 30 calendar days after
Seller and Buyer have presented their positions as to the disputed
items. The resolution of the Independent Accountants shall be
final, conclusive and binding upon the parties to this Agreement
and shall be reflected in any necessary revisions to the Closing
Date Balance Sheet and Buyer's calculation of the Closing Net
Worth. Notwithstanding anything in this Agreement to the
contrary, the scope of the Independent Accountants' review of any
dispute between Buyer and Seller regarding the Closing Date
Balance Sheet or the calculation of Closing Date Net Worth
pursuant to this Section 2.3(c) shall be limited solely to the
resolution of Seller's objections set forth in the Notice of
Objection and Buyer shall have no right to change, revise or
otherwise modify the Closing Date Balance Sheet or its calculation
of the Closing Net Worth except as agreed to in writing by Seller
or as required by the Independent Accountants.
(d) One-half of the fees, costs and expenses of the
Independent Accountants for services rendered pursuant to Section
2.3(b) and Section 2.3(c) shall be paid by Seller and one-half of
such fees, costs and expenses shall be paid by Buyer.
(e) If the Closing Net Worth (as finally determined
pursuant to this Section 2.3) is greater than the Initial Net
Worth (as finally determined pursuant to this Section 2.3), Buyer
shall pay the Adjustment Amount (plus interest as determined
pursuant to Section 2.3(f)) to Seller on the Payment Date by wire
transfer of immediately available funds to an account designated
by Seller. Buyer shall on the Payment Date allocate any
Adjustment Amount payable to Seller among Seller, Cadillac U.K.
and Day Canada as Seller may reasonably request. If the Closing
Net Worth (as finally determined pursuant to this Section 2.3) is
less than the Initial Net Worth (as finally determined pursuant to
this Section 2.3), Seller shall pay the Adjustment Amount (plus
interest as determined pursuant to Section 2.3(f)) to Buyer on the
Payment Date, by wire transfer of immediately available funds to
an account designated by Buyer. "Payment Date" shall mean:
(i) if no Notice of Objection is timely delivered by Seller to
Buyer, three Business Days after the earlier of (A) the expiration
of the Closing Date Balance Sheet Objection Period and (B) the
date of delivery by Seller to Buyer of a notice that Buyer's
calculation of the Closing Net Worth and the Initial Net Worth
will be accepted by Seller and M.A. Hanna without objection; or
(ii) if a Notice of Objection with respect to the Audited December
31, 1994 Balance Sheet or the Closing Date Balance Sheet is timely
delivered to Seller or Buyer, as applicable, three Business Days
after the date all disputed items are finally resolved pursuant to
Sections 2.3(b) and 2.3(c).
(f) The Adjustment Amount shall bear interest
compounded monthly from the Closing Date until the date of payment
at the prime rate publicly announced from time to time by
Citibank, N.A.
2.4 Intercompany Accounts. All intercompany
payables due as of the Closing Date (a) from the Company to any of
the Consolidated Entities (other than the Company), (b) from any
of the Consolidated Entities (other than the Company) to the
Company, or (c) from any of the Consolidated Entities (other than
the Company) to any other Consolidated Entity (other than the
Company), shall continue to represent a liability of the
applicable entity or business as of the Closing Date and shall
have no effect on the determination of the Purchase Price. The
corresponding intercompany receivables as of the Closing Date
shall also remain outstanding, and such outstanding receivables
shall similarly have no effect on the determination of the
Purchase Price. All intercompany receivables due as of the
Closing Date (a) to any of the Consolidated Entities from Seller
or any Affiliate of Seller (other than the Consolidated Entities)
or (b) to Seller or any Affiliate of Seller (other than the
Consolidated Entities) from any of the Consolidated Entities,
shall be eliminated as of the Closing Date, and such elimination
shall have no effect on the determination of the Purchase Price.
The corresponding intercompany payables as of the Closing Date
shall also be eliminated, and such elimination shall similarly
have no effect on the determination of the Purchase Price.
3. Closing and Closing Date. The closing of the
purchase and sale of the Shares (the "Closing") shall take place
at the offices of Kirkland & Ellis in New York, New York at 10:00
A.M. Eastern Time on the third Business Day following the
satisfaction or waiver of each of the conditions set forth in
Sections 6 and 7 (other than those conditions that are to be
satisfied at Closing), or at such other place, time or date as
Buyer, Seller and M.A. Hanna may agree to in writing (such time
and date being referred to in this Agreement as the "Closing
Date"). For financial accounting and tax purposes, the Closing
shall be deemed to have been effective as of the close of business
on the Closing Date. All proceedings to be taken and all
documents to be executed and delivered by all parties at the
Closing shall be deemed to have been taken and executed
simultaneously and no proceedings shall be deemed to have been
taken nor documents executed or delivered until all have been
taken, executed and delivered.
4. Representations and Warranties of Seller and M.A
Hanna. Seller and M.A. Hanna jointly and severally represent and
warrant to Buyer as follows on and (unless another time period is
specified therein) as of the date of this Agreement and the
Closing Date:
4.1 Organization, Power and Authority. (a) The
Company and each of the Active Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of
its jurisdiction of incorporation and has the corporate power and
authority to carry on its business as now being conducted, and has
all licenses, permits and authorizations necessary for the conduct
of the business of the Company or such Active Subsidiaries and for
the operation of the facilities on the Real Property as currently
operated, except where the failure to have such licenses, permits,
authorizations, power or authority would not, in the aggregate,
have a material adverse effect on the Condition of the Company and
all such licenses, permits and authorizations are in full force
and effect and have not been violated, except for violations that
are not reasonably likely to have a material adverse effect on the
Condition of the Company. Except as provided in Schedule 4.1, the
Company and each of the Active Subsidiaries is qualified or
otherwise authorized to transact business as a foreign corporation
and is in good standing in each jurisdiction in which the nature
of its business or location of its properties requires such
qualification or authorization, except in such jurisdictions where
the failure to be so qualified or authorized would not, in the
aggregate, have a material adverse effect on the Condition of the
Company.
(b) Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State
of Michigan and has the requisite corporate power and authority to
own the Shares. M.A. Hanna is a corporation duly organized,
validly existing and in good standing under the laws of the State
of Delaware.
4.2 Charter Documents and Corporate Records.
Schedule 4.2 contains copies of the Charter Documents of the
Company and the Subsidiaries that are correct and complete copies
thereof. The minute books of the Company and the Subsidiaries have
been made available to Buyer for its inspection and contain
records of all meetings and consents in lieu of meeting of the
Board of Directors of the Company, the Subsidiaries and the
Company's stockholders since the time of the Company's
organization, and such records are correct and complete in all
material respects. The stock record books of the Company and the
Subsidiaries, which have been made available to Buyer for its
inspection, are correct and complete in all material respects.
4.3 The Shares. (a) The authorized capital stock
of the Company consists of one thousand shares of common stock,
without par value. Seller is the beneficial owner and holder of
record of the Shares. Seller holds the Shares free and clear of
any Liens. The Shares represent the only issued and outstanding
shares of capital stock of the Company.
(b) The Shares are validly issued and outstanding,
fully paid and nonassessable. The Shares have not been issued in
violation of, and are not subject to, and there are no,
outstanding Options relating to the Shares. There are no
authorized or outstanding Options under which the Company may be
obligated to issue or sell any shares of capital stock or any
other securities of the Company.
4.4 Authorization and Effect of Agreement. Each
of Seller and M.A. Hanna has the requisite corporate power and
authority to execute and deliver this Agreement and to perform its
obligations under this Agreement. The execution and delivery by
Seller and M.A. Hanna of this Agreement and the performance by
each of Seller and M.A. Hanna of its obligations under this
Agreement have been duly authorized by all necessary corporate
action on the part of Seller and M.A. Hanna. This Agreement has
been duly executed and delivered by Seller and M.A. Hanna and,
assuming the due execution and delivery of this Agreement by
Buyer, constitutes a valid and binding obligation of Seller and
M.A. Hanna, enforceable against each of Seller and M.A. Hanna in
accordance with its terms, subject with respect to enforceability
to the effect of bankruptcy, fraudulent conveyance, insolvency,
reorganization, moratorium or similar laws now or hereafter in
effect relating to creditors' rights generally and to the
availability of equitable remedies.
4.5 Subsidiaries and Investments. (a) Except as
set forth on Schedule 4.5, the Company has no Subsidiaries or
Investments.
(b) Except for shares owned by nominees as
required by applicable Law as set forth in Schedule 4.5, the
Company owns all of the issued and outstanding shares of capital
stock of each of the Subsidiaries (collectively, the "Subsidiary
Shares"), in each case free and clear of all Liens. There are no
authorized or outstanding Options relating to the Subsidiary
Shares or with respect to which any Subsidiary may be obligated to
issue or sell any shares of capital stock or any other security of
such Subsidiary. Schedule 4.5 sets forth the authorized capital
stock of each Subsidiary. Except as set forth on Schedule 4.5,
the Subsidiary Shares are validly issued and outstanding, fully
paid and nonassessable. The Subsidiary Shares have not been
issued in violation of, and are not subject to, and there are no,
outstanding Options relating to the Subsidiary Shares.
4.6 No Breach. Neither the execution and delivery
of this Agreement by Seller or M.A. Hanna, nor the performance of
its obligations under this Agreement, will (a) violate any
provision of the Charter Documents of the Company, any Subsidiary,
Seller or M.A. Hanna, (b) subject to obtaining required
authorizations, approvals, consents or waivers set forth on
Schedule 4.6, conflict with or result in a breach of or the loss
of material benefit under, or otherwise give any other contracting
party the right to terminate, cancel or accelerate, or constitute
(with or without notice or lapse of time) a default under any
contract required to be listed on Schedule 4.14, Schedule 4.15 or
Schedule 4.17, or any other contract that is material to the
Consolidated Entities taken as a whole, to which the Company or
any Subsidiary is a party, (c) result in the creation of any Lien
other than Permitted Liens upon the Assets, (d) violate any Order
against, or binding upon, Seller, M.A. Hanna, the Company or any
Subsidiary or upon the properties or assets of Seller or M.A.
Hanna or the Assets, or (e) constitute a violation by Seller, M.A.
Hanna, the Company or any Subsidiary of any applicable Law;
except, as to clauses (b), (d) and (e), where such violations,
breaches, defaults, terminations, rights of termination or Liens
are not, in the aggregate, reasonably likely to have a material
adverse effect on the Condition of the Company or impair the
ability of Seller or M.A. Hanna to perform its obligations under
this Agreement.
4.7 Financial Statements. (a) Schedule 4.7(a)
contains a true and complete copy of the unaudited consolidated
combined balance sheets of the Consolidated Entities for the
fiscal years ended December 31, 1994 and December 31, 1993 and the
consolidated unaudited statements of income of the Consolidated
Entities for the fiscal year ended December 31, 1994, December 31,
1993 and December 31, 1992 (collectively, the "Company Financial
Statements"). The Company Financial Statements fairly present, in
all material respects, the consolidated combined financial
position and results of operations of the Consolidated Entities at
such dates and for such periods, and have been prepared in
accordance with United States GAAP, consistently applied, and
using such accounting practices and procedures as are set forth on
Annex A-1, subject, in each case, to the adjustments and matters
described on Annex A-2. Notwithstanding anything in this
Agreement to the contrary, the foregoing representations and
warranties shall not survive the Closing and shall have no further
force and effect from and after the Closing, shall be excluded
from those representations and warranties that are the subject of
Section 7.1 of this Agreement, and, in the event that the Closing
shall occur, Seller shall not have any liability for any breach of
such representations and warranties.
(b) The Audited Company Financial Statements will be
attached as Schedule 4.7(b) as soon as the audit described in
Section 8.18 is completed. As of the Closing Date, the Audited
Company Financial Statements will fairly present, in all material
respects, the consolidated financial position and results of
operations of the Consolidated Entities at such dates and for such
periods, and will have been prepared in accordance with United
States GAAP, consistently applied, and using such accounting
practices and procedures as are set forth on Annex A-1.
4.8 Conduct of Business. Except as described on
Schedule 4.8, since December 31, 1994 (the "Balance Sheet Date")
through the date of this Agreement, the Company and the
Subsidiaries have operated their businesses only in the ordinary
course, and there has not been any material adverse change in the
Condition of the Company. Without limiting the foregoing, except
as set forth in Schedule 4.8, since the Balance Sheet Date, none
of the Company and its Subsidiaries has taken any of the actions
prohibited under Section 8.3.
4.9 Approval of Transactions. Except as set forth
on Schedule 4.9 (and in reliance upon the representations of Buyer
set forth in Section 5.5), except for compliance with the HSR Act,
no third party consent or approval, or approval, authorization,
license, permit or other action by, or filing with, any
Governmental Body is required with respect to the actions of
Seller, M.A. Hanna, the Company or any Active Subsidiary in
connection with the execution and delivery of this Agreement by
Seller and M.A. Hanna or in order for Seller or M.A. Hanna to
perform its obligations under this Agreement or to otherwise
consummate the transactions contemplated hereby.
4.10 Orders and Actions. Except as set forth on
Schedule 4.10, there are no (a) outstanding Orders against Seller,
M.A. Hanna, the Company or any Subsidiary, or any of the Assets,
(b) Actions pending or, to the knowledge of Seller and M.A. Hanna,
threatened against Seller, M.A. Hanna, the Company or any
Subsidiary, or any of the Assets, which, if adversely determined,
are reasonably likely to result in liability in excess of
$1,000,000 to the Company or any of the Subsidiaries, to have a
material adverse effect on any Intellectual Property Rights or
otherwise to have a material adverse effect on the Condition of
the Company or to impair the ability of Seller or M.A. Hanna to
perform its obligations under this Agreement or (c) Actions
pending, or to the knowledge of Seller and M.A. Hanna, threatened
against the Seller, M.A. Hanna, the Company or any Subsidiary with
respect to the transactions contemplated hereby. Schedule 4.10
lists all Actions or series of related Actions against the Company
or any Subsidiary or any predecessor (whether arising out of
similar facts or circumstances, a consistent or pervasive course
of conduct or practice or otherwise) which have been settled in
the last five years for amounts in excess of $500,000 (and the
amounts paid in settlement thereof) or settlements which have a
material adverse effect on any Intellectual Property Rights or the
Condition of the Company.
4.11 Compliance with Laws. Each of the Company,
its Subsidiaries and each of the facilities on any of the Real
Property is, and since January 1, 1989 each of the Company, its
Subsidiaries and each of the facilities on any of the Real
Property has been, in compliance with all applicable Orders and
Laws, except for such noncompliance, if any, as would not have a
material adverse effect on the Condition of the Company.
4.12 Employee Benefit Plans.
(a) Schedule 4.12 lists or describes all employee
benefit plans (within the meaning of section 3(3) of ERISA)
sponsored, maintained or contributed to by the Company or any of
the Subsidiaries (collectively, the "Employee Plans") and all
retirement, deferred compensation, bonus, material fringe benefit
plans, programs or arrangements maintained by the Company or any
of the Subsidiaries.
(b) Except as provided on Schedule 4.12, each
Employee Plan listed on Schedule 4.12 has been maintained in all
material respects in accordance with its terms and with applicable
Law, including all applicable reporting and disclosure
requirements.
(c) Each such Employee Plan listed on Schedule
4.12 that is intended to be qualified within the meaning of
Section 401 of the Code has received a determination letter to
that effect from the Internal Revenue Service, and, to the
knowledge of Seller and M.A. Hanna, nothing has occurred since the
date of such letter that cannot be cured within the remedial
amendment period provided by Section 401(b) of the Code which
would prevent any such employee benefit plan from remaining so
qualified.
(d) Neither the Company nor any of its
Subsidiaries has within the last five years contributed to or
maintained any defined benefit plan (as defined in Section 3(35)
of ERlSA) (including any multiemployer pension plan (as defined in
Section 3(37) of ERISA)).
(e) With respect to each Employee Plan, (i) all
contributions which are due (including all employer contributions
and employee salary reduction contributions) have been paid to
such Employee Plan, and (ii) all contributions for prior plan
years which are not yet due, and all contributions with respect to
the current plan year for the period ending on the Closing Date,
have been made or accrued.
(f) The Company has not incurred any liability to
the Pension Benefit Guaranty Corporation ("PBGC"), the Internal
Revenue Service, any multiemployer plan or otherwise with respect
to any employee pension benefit plan currently or previously
maintained by members of the controlled group of companies (as
defined in Section 414 of the Code) that includes the Company (the
"Controlled Group") that has not been satisfied in full, and no
condition exists that presents a material risk to the Company or
any member of the Controlled Group of incurring such a liability,
other than liability for premiums due to the PBGC.
(g) Each of the group benefit programs or other
arrangements that provide health or life insurance benefits to
Former Employees of the Company in excess of such benefits
mandated by law provides that it can be amended in any respect or
terminated unilaterally by the Company. Schedule 4.12 lists the
group benefit programs of the Subsidiaries that provide health or
life insurance benefits to Former Employees in excess of such
benefits mandated by law.
(h) With respect to each of the plans listed on
Schedule 4.12, Seller has furnished to Buyer true and complete
copies of (i) the plan documents and summary plan descriptions,
(ii) the most recent determination letter received from the
Internal Revenue Service, (iii) the last Form 5500 Annual Report
and actuarial report, if any, and (iv) all related trust
agreements, insurance contracts or other funding agreements which
implement such plans.
4.13 Tax Matters.
(a) To the knowledge of Seller and M.A. Hanna, all
material U.S. federal, state, local and foreign tax returns,
declarations of estimated tax and tax reports (including, without
limitation, U.S. consolidated federal income tax returns of the
"affiliated group" (as defined in Section 1504(a) of the Code) of
which M.A. Hanna is the common parent corporation) ("Tax Returns")
required to be filed on or before the date hereof with respect to
the Company, the Subsidiaries or any of their respective income,
properties or operations, have been filed or a filing extension
from the appropriate Governmental Body with respect thereto has
been obtained. All income, gross receipts, property, sales, use,
license, excise, franchise, employment, withholding or similar
taxes, together with any interest, additions, or penalties with
respect thereto and any interest in respect of such additions or
penalties (collectively, "Taxes"), shown to be due on such Tax
Returns or extensions of such Tax Returns or on any written
assessment relating thereto received by Seller, M.A. Hanna, the
Company or any Subsidiary on or before the date of this Agreement
has been paid, or is being contested in good faith by appropriate
proceedings. Except as set forth on Schedule 4.13, all Tax
Returns of the Company and the Subsidiaries relating to taxable
years that remain open for assessment are true and correct in all
material respects. For all Taxes that are being contested as of
the date hereof which relate to the Company's Hong Kong branch or
the Subsidiaries, adequate provision in accordance with United
States or applicable foreign GAAP for the amount of such contested
Taxes has been made on the books and records of the Company (but
only with respect to disputed Taxes relating to the Company's Hong
Kong branch) or such Subsidiary, as the case may be. The Company
and each Subsidiary has established adequate reserves for Taxes
other than income taxes for all periods (or portions thereof)
ending on or prior to the Closing.
(b) Except as provided on Schedule 4.13, as of the
date hereof, (i) there are no material pending or, to the
knowledge of Seller and M.A. Hanna, threatened audits or claims
against the Company or the Subsidiaries relating to any material
liability for Taxes, and (ii) the Company has granted no
extensions of the statutes of limitation for the assessment or
collection of any Taxes which remain in effect.
(c)(i) No deficiency or proposed adjustment which
has not been settled or otherwise resolved for (A) any amount of
Tax has been proposed, asserted or assessed by any taxing
authority against the Company or (B) any material amount of Tax
has been proposed, asserted or assessed by any taxing authority
against any affiliated group with respect to a taxable period
during which the Company was a member of such affiliated group;
and
(ii) No claim has ever been made by a taxing
authority in a jurisdiction where the Company does not file Tax
Returns that the Company is or may be subject to Taxes assessed by
such jurisdiction.
4.14 Title to Assets; Sufficiency of Assets.
(a) Schedule 4.14 sets forth a description of each
parcel of real property owned by the Company or any of the
Subsidiaries (the "Owned Property") and a list of all of the
leasehold interests of the Company and the Subsidiaries (the
"Leases"). There are no leases, subleases, licenses, concessions
or other agreements, written or oral, granting to any party or
parties (other than the Company and the Subsidiaries) the right of
use or occupancy of any portion of the Real Property, and there
are no parties (other than the Company and the Subsidiaries) in
possession of any portion of the Real Property.
(b) Except as set forth on Schedule 4.14, (i) each
of the Company and each Subsidiary has good and marketable title
to the Owned Property, valid and enforceable leasehold interests
with respect to the leases of real property that require aggregate
annual payments either by the Company or any Subsidiary, as the
case may be, in excess of $50,000 (the "Leased Real Property," and
together with the Owned Property, the "Real Property") and good
title, valid and enforceable leasehold interests, licenses or
rights to occupy, possess or use all other material assets,
properties and rights which it occupies, possesses, uses or
purports to own, whether or not reflected on the Company Financial
Statements (the Owned Property, the Leased Property and such other
assets, properties and rights that purports to be owned or leased
by the Company and the Subsidiaries are collectively referred to
herein as the "Assets"), free and clear of all Liens, except for
the following ("Permitted Liens"): (A) Liens for Taxes not yet due
and payable or being contested in good faith by appropriate
proceedings; (B) with respect to the Real Property, easements,
covenants, conditions, encroachments and restrictions, including
any zoning or other governmentally established restrictions or
encumbrances which do not materially interfere with the conduct of
the business of the Company and the Subsidiaries or the use or
enjoyment of such Real Property and as to which no material
violation or encroachment exists; (C) workers or unemployment
compensation Liens arising in the ordinary course of business
consistent with past practice; and (D) mechanic's, materialman's,
supplier's, vendor's or similar Liens arising in the ordinary
course of business consistent with past practice securing amounts
which are not delinquent and (ii) to the knowledge of the Seller
and M.A. Hanna, the tangible Assets are, in all material respects,
in good operating condition and repair, normal wear and tear
excepted.
(c) The Assets include all rights, properties and
other assets necessary for the conduct of the business of the
Company and each of the Subsidiaries in all material respects in
the same manner as the business of the Company and each of the
Subsidiaries has been conducted by the Company and each of the
Subsidiaries prior to the date hereof.
(d) As of the Closing, the Company has no
knowledge of any defects in title, liens, encumbrances, adverse
claims or other matters materially affecting the Owned Property
that are not disclosed in the public records or disclosed to the
title company in writing.
4.15 Intellectual Property. Schedule 4.15
contains a complete and accurate list or description of all
(a) trademarks, trade names, service marks and all registrations
and applications therefor, (b) registered copyrights and
applications therefor, (c) patents and patent applications, and
(d) all licenses and other agreements regarding the foregoing, in
each case presently owned or used by the Company or one of its
Subsidiaries in the conduct of the business of the Company and its
Subsidiaries. The foregoing items, along with all other
copyrights, trade dress, logos, inventions, discoveries,
processes, improvements, trade secrets and confidential and
proprietary information held by the Company or any Subsidiary, and
the Company's and any such Subsidiary's rights under any license
or other agreement relating to such intellectual property (whether
as licensee or licensor thereunder), are referred to in this
Agreement collectively as the "Intellectual Property Rights."
Except as indicated on Schedule 4.15, as of the date hereof,
(x) the Company or one of the Subsidiaries owns or has the right
to use pursuant to a valid and enforceable license or other
agreement all Intellectual Property Rights, except where the
failure to own or have such right to use would not, in the
aggregate, have a material adverse effect on the Condition of the
Company, and the Intellectual Property Rights comprise all of the
intellectual property rights necessary for the conduct of the
business of the Company and its Subsidiaries in all material
respects in the same manner as the business of the Company and
each of the Subsidiaries has been conducted prior to the date
hereof, (y) neither the Company nor any Subsidiary has received
any written notice of a claim or demand of any Person relating to,
or any proceedings which are pending or threatened which
challenge, the rights of the Company or any Subsidiary in respect
of the Intellectual Property Rights, and (z) to the knowledge of
Seller and M.A. Hanna, neither the Company nor any Subsidiary has
infringed, misappropriated or otherwise conflicted with any
intellectual property rights of a third party. The Company and
the Subsidiaries have taken all necessary action to maintain and
protect the registered Intellectual Property Rights.
4.16 Labor Relations. Except as set forth on
Schedule 4.16, there is no unfair labor practice complaint or
other proceeding against the Company or any Subsidiary pending
before the National Labor Relations Board or, to the knowledge of
M.A. Hanna and Seller, any comparable foreign Governmental Body
that, if adversely decided, is reasonably likely to have a
material adverse effect on the Condition of the Company. There is
no labor strike, work stoppage or arbitration proceeding pending
or involving or, to the knowledge of Seller and M.A. Hanna,
threatened against the Company or any Subsidiary that is
reasonably likely to have a material adverse effect on the
Condition of the Company. To the knowledge of Seller and M.A.
Hanna, there is no organizational effort presently being made or
threatened by or on behalf of any labor union with respect to any
non-unionized employees of the Company or the Subsidiaries.
4.17 Contract Rights. (a) Schedule 4.17 sets
forth a list, as of the date hereof, of the following contracts to
which the Company or any Subsidiary is a party:
(i) Each employment, consulting or severance
contract or agreement with an employee, former employee, director
or officer that is not terminable at will by the Company or a
Subsidiary (other than any contract or agreement for the
employment of any such employee, former employee, director or
officer implied in Law) and that will require the payment of
amounts by the Company or the Subsidiary after the Closing Date in
excess of $50,000 annually;
(ii) Each collective bargaining agreement with any
labor union;
(iii) Each contract, agreement or commitment for
capital expenditures or for the acquisition or construction of
fixed assets that requires aggregate future payments in excess of
$100,000;
(iv) Except for purchase orders entered into in
the ordinary course of business, each contract or agreement
granting to any Person a first-refusal, first-offer or similar
preferential right to purchase or acquire any right or Asset (or
group of related Assets) used in the operation of the business of
the Company or any Subsidiary having a book value in excess of
$250,000;
(v) Each indenture, mortgage, loan or credit
agreement under which the Company or any Subsidiary has borrowed
any money or issued any note, bond, indenture or other evidence of
Indebtedness (including capital lease obligations) or guaranteed
Indebtedness of others or the obligations or liabilities of any
Person that involves more than $100,000 or is not reflected on the
December 31, 1994 Balance Sheet;
(vi) Each contract or agreement with any
manufacturer's representative, distributor or other sales agent
having a remaining term in excess of one year and that is not
terminable by the Company or a Subsidiary without penalty or
payment of compensation on 90 calendar days or less notice;
(vii) Each contract or agreement under which the
Company or any Subsidiary is (A) a lessee of any real property
owned by a third party, (B) a lessor of any real property owned by
the Company or any Subsidiary, (C) a lessee of any machinery,
equipment, vehicle or other tangible personal property owned by a
third party, or (D) a lessor of any tangible personal property
owned by the Company or any Subsidiary, in any such case which
requires aggregate annual payments either by or to the Company or
a Subsidiary, as the case may be, in excess of $50,000;
(viii) Each agreement for the purchase or sale of
raw materials, commodities, supplies, products, or other personal
property or for the furnishing or receipt of services which either
requires for performance over a period of more than one year or
requires aggregate future payments in excess of $250,000 and is
not cancelable without penalty or payment of compensation;
(ix) Each franchise agreement, partnership or
joint venture agreement;
(x) Each confidentiality agreement that has or
could have a significant impact on the operations of the business
of the Company and its Subsidiaries and each non-competition
agreement (other than those benefitting the Company or a
Subsidiary under which the Company or such Subsidiary has no
current or future obligations);
(xi) Each agreement between the Company or a
Subsidiary and the Seller or M.A. Hanna or any of their Affiliates
(other than agreements between the Company and any Subsidiary or
among one or more Subsidiaries) other than those that are
terminated or otherwise eliminated as of the Closing pursuant to
this Agreement; or
(xii) Each other contract, agreement or commitment
that (A) involves future payments by or to the Company or any
Subsidiary in excess of $250,000, and (B) is not a purchase or
sales order or other contract entered into in the ordinary course
of the business of the Company or any Subsidiary.
(b) Except as set forth on Schedule 4.17, each
contract listed or described thereon or on Schedule 4.14 or
Schedule 4.15 is a valid and binding obligation of the Company or
a Subsidiary and is in full force and effect, and each of the
Company and the Subsidiaries has performed all material
obligations required to be performed by it through the date hereof
under the contracts so listed or described and as of the date
hereof is not (with or without the lapse of time or the giving of
notice, or both) in breach or default in any respect thereunder,
except for such breaches and defaults which, individually or in
the aggregate, would not reasonably be expected to have a material
adverse effect on the Condition of the Company.
4.18 Environmental Matters. Except as set forth
on Schedule 4.18:
(a) The Company possesses, is in compliance in all
material respects with, and has complied in all material respects
with, all material permits, licenses and government authorizations
required for the conduct of its business under local, state,
federal and foreign laws, regulations, Orders, and other
requirements having the force and effect of Law relating to public
or workplace health and safety or pollution and protection of the
environment (including, without limitation, those relating to the
discharge of materials into the environment) ("Environmental
Laws"), and the Company is otherwise in compliance in all material
respects with, and has otherwise complied in all material respects
with, all applicable Environmental Laws.
(b) The Company has not been notified that it is a
party potentially liable or responsible for cleanup or other
response costs or other Damages arising from the release or
disposal of hazardous materials, substances or wastes under the
Comprehensive Environmental Response, Compensation, and Liability
Act of 1980, as amended ("CERCLA"), or any other Environmental
Laws or any common law relating to public or workplace health and
safety or pollution or protection of the environment with respect
to any on-site or off-site location.
(c) Neither the Company nor any predecessor or
Affiliate of the Company has treated, stored, disposed of,
arranged for or permitted the disposal of, transported, handled,
or released any substance, including, without limitation, any
hazardous substance, or owned or operated any facility or
property, so as to give rise to any material liabilities or any
material remedial or corrective obligations of the Company
(including, without limitation, liability for response costs,
natural resource damages, personal injury, property damage or
attorneys fees) pursuant to the CERCLA, any other Environmental
Laws or any common law relating to public or workplace health and
safety or pollution or protection of the environment.
(d) The Company has not entered into or agreed to
any consent decree or order, and it is not subject to any
judgment, decree or judicial order relating to compliance with, or
the cleanup of regulated substances under, any applicable
Environmental Laws or any common law relating to public or
workplace health and safety or pollution or protection of the
environment.
4.19 Insurance. Schedule 4.19 sets forth a list
of all insurance policies or similar arrangements currently
maintained by or for the benefit of the Consolidated Entities
(including policies providing property, casualty, liability and
worker's compensation coverage and bond and surety arrangements)
(the "Policies") and a general description of each such policy,
including the name of the insurer, the name of the policyholder,
and the name of each covered insured, the policy number and period
of coverage, the scope of coverage (claims made, occurrence or
otherwise) and the amount of coverage (including limits and
deductibles). All of the Policies are in full force and effect.
Schedule 4.19 also describes any self-insurance or risk retention
arrangements currently in effect for the Consolidated Entities.
4.20 Absence of Undisclosed Liabilities. Except
as set forth on Schedule 4.20, the Consolidated Entities have no
liability or obligation (whether accrued, absolute, or contingent)
except for (a) liabilities and obligations set forth on the
December 31, 1994 Balance Sheet or on the Closing Date Balance
Sheet (as finally determined pursuant to Section 2.3), (b)
liabilities and obligations which were incurred in the ordinary
course of business consistent with past practice (excluding
liabilities or obligations from any breach of product warranty,
tort or violation of Law or arising out of any Action) that either
(i) arose after the Balance Sheet Date or (ii) were in existence
on the Balance Sheet Date but were not required by GAAP to be
disclosed on the December 31, 1994 Balance Sheet, (c) liabilities
and obligations arising under agreements listed on, and other
matters described on, any Schedule to this Agreement, the Day U.K.
Agreement or the Day Canada Agreement (but not for breaches of any
such agreements), and (d) other liabilities or obligations which,
in the aggregate, do not exceed $1,000,000.
4.21 Affiliated Transactions. Except for those
agreements or transactions listed on Schedule 4.21 or contemplated
by this Agreement, the Day U.K. Agreement and the Day Canada
Agreement, fees paid to directors and salaries paid to officers,
or dividends or distributions paid to stockholders, none of the
Consolidated Entities have, within the past three years (a) paid,
loaned or advanced any amount to, (b) sold, transferred or leased
any properties or assets to, or (c) entered into or continued any
agreement, arrangement or understanding (written or otherwise)
with, any of its officers, directors or stockholders or any
"affiliate", or "associate" (as such terms are defined in the
Securities Exchange Act of 1934) of any such Persons (other than
the Consolidated Entities).
4.22 Disclaimer. EXCEPT AS OTHERWISE EXPRESSLY
PROVIDED IN THIS AGREEMENT, SELLER AND M.A. HANNA AND EACH OF THE
CONSOLIDATED ENTITIES DISCLAIM ALL WARRANTIES OF ANY KIND, EXPRESS
OR IMPLIED, INCLUDING, WITHOUT LIMITATION, IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
4.23 Brokerage. Except for the compensation
payable to Salomon Brothers Inc ("Salomon") in connection with the
transactions contemplated by this Agreement, which shall be paid
by Seller or M.A. Hanna, no broker, finder or similar agent has
been employed by or on behalf of Seller, and no Person with which
Seller, M.A. Hanna or the Company has had any dealings or
communications of any kind other than Salomon is entitled to any
brokerage commission, finder's fee or any similar compensation in
connection with this Agreement or the transactions contemplated
hereby.
5. Representations and Warranties of Buyer. Buyer
represents and warrants to Seller and M.A. Hanna as follows on and
(unless another time period is specified therein) as of the date
of this Agreement and the Closing Date:
5.1 Organization, Power and Authority. Buyer is a
corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation and has the
corporate power and authority to carry on its business as now
being conducted. Buyer has the requisite corporate power and
authority to execute and deliver this Agreement and to perform its
obligations under this Agreement.
5.2 Legal and Authorized Transactions. The
execution and delivery by Buyer of this Agreement and the
performance of its obligations under this Agreement have been duly
authorized by all necessary corporate action on the part of Buyer.
This Agreement has been duly executed and delivered by Buyer and,
assuming the due execution and delivery of this Agreement by
Seller and M.A. Hanna, constitutes the valid and binding
obligation of Buyer, enforceable against Buyer in accordance with
its terms, subject with respect to enforceability to the effect of
bankruptcy, fraudulent conveyance, insolvency, reorganization,
moratorium or similar laws now or hereafter in effect relating to
creditors' rights generally and to the availability of equitable
remedies.
5.3 No Breach. Neither the execution and delivery
of this Agreement by Buyer, nor the performance of its obligations
under this Agreement, will (a) violate any provision of the
Charter Documents of Buyer, (b) conflict with or result in a
breach of, or the loss of a material benefit under, or otherwise
give any other contracting party the right to terminate, cancel or
accelerate, or constitute (with or without notice or lapse of
time) a default under any material agreement to which Buyer is a
party or by which Buyer or any of its properties or assets is
bound or subject, (c) violate any Order against, or binding upon,
Buyer or any of the properties or assets of Buyer, or (d)
constitute a violation by Buyer of any applicable Law; except, as
to clauses (b) through (d), where such violations, breaches,
defaults, terminations or rights of termination are not, in the
aggregate, reasonably likely to have a material adverse effect on
the results of operations and financial condition of Buyer or
impair the ability of Buyer to perform its obligations under this
Agreement.
5.4 Consents and Approvals. Except for compliance
with the HSR Act, no third party consent or approval, or approval,
authorization, license, permit or other action by, or filing with,
any Governmental Body, is required with respect to the actions of
Buyer in connection with the execution and delivery of this
Agreement by Buyer or in order for Buyer to perform its obligation
under this Agreement, or to otherwise consummate the transactions
contemplated hereby.
5.5 No Distribution. Buyer is acquiring the
Shares for its own account and not with a view toward, or for sale
in connection with, any distribution or public offering thereof,
and Buyer will not sell or otherwise dispose of the Shares, except
in compliance with the Securities Act of 1933 and the rules and
regulations thereunder. Buyer further acknowledges that it is a
sophisticated investor for purposes of the Securities Act of 1933
and an "accredited investor" for purposes of Rule 501(a) of
Regulation D promulgated thereunder and has such knowledge and
experience in financial and business matters that it is capable of
evaluating the merits and risks of purchasing the Shares. Buyer
has been granted access, as requested, to all of the material
books and records of the Company and the Subsidiaries and to the
executive officers of the Company and the Subsidiaries. Buyer
acknowledges that, in reliance upon the foregoing representation,
the Shares being sold to Buyer hereunder have not been registered
under the Securities Act of 1933 or the blue sky laws of any state
nor will the Shares be sold to Buyer pursuant to an effective
registration statement.
5.6 Buyer's Financing. Buyer has received (a) the
Bridge Commitment, (b) the NationsBank Commitment and (c) a
commitment from AIP II for the investment of $50,000,000 to
purchase equity interests in Buyer in the form attached as Annex D
(the "Equity Commitment," and together with the Bridge Commitment
and the NationsBank Commitment, the "Financing Commitments"),
which financing in the aggregate would be sufficient to enable
Buyer to consummate the transactions contemplated hereby.
5.7 Orders and Actions. There are no
(a) outstanding Orders against Buyer or (b) Actions pending or, to
the knowledge of Buyer, threatened against Buyer, which, if
adversely determined, are reasonably likely to have a material
adverse effect on the results of operations and financial
condition of Buyer or impair the ability of Buyer to perform its
obligations under this Agreement.
5.8 No Reliance. Buyer or its representatives
have inspected and conducted such reasonable review and analysis
(financial and otherwise) of each of the Consolidated Entities as
desired by Buyer, and M.A. Hanna has caused itself, Seller, and
each of the Consolidated Entities to cooperate with Buyer in the
completion of Buyer's due diligence. The purchase of the Shares
by Buyer and the consummation of the transactions contemplated
hereunder and under the Day U.K. Agreement and the Day Canada
Agreement by Buyer and its Affiliates are not done in reliance
upon any warranty or representation by, or information from, M.A.
Hanna, Seller, or the Consolidated Entities of any sort, oral or
written, except the warranties and representations specifically
set forth in this Agreement, the Day U.K. Agreement and the Day
Canada Agreement (including the Schedules hereto and thereto) and
in any certificates required to be delivered to Buyer by Seller
hereunder and to Buyer or its Affiliates thereunder. Such
purchase and consummation are instead done entirely on the basis
of Buyer's own investigation, analysis, judgment and assessment of
the present and potential value and earning power of the
Consolidated Entities as well as those representations and
warranties by Seller, M.A. Hanna and the Consolidated Entities
specifically set forth in this Agreement, the Day U.K. Agreement
and the Day Canada Agreement (including the Schedules hereto and
thereto) and in any certificates required to be delivered to Buyer
by Seller hereunder and to Buyer or its Affiliates thereunder.
5.9 Bridge Commitment. The Bridge Commitment has
been accepted by AIP.
5.10 Brokerage. No broker, finder or similar
agent has been employed by or on behalf of Buyer or any Affiliate
of Buyer, and no Person with which Buyer or any Affiliate of Buyer
has had any dealings or communications of any kind is entitled to
any brokerage commission, finder's fee or any similar compensation
in connection with this Agreement or the transactions contemplated
hereby.
6. Conditions to the Obligations of Seller. The
obligations of Seller to consummate the transactions contemplated
by this Agreement are subject to the fulfillment, on or before the
Closing Date, of the following conditions (any of which may be
waived in whole or in part by Seller in writing):
6.1 Representations and Warranties True and
Correct. All of the representations and warranties of Buyer
contained in this Agreement or in any written certificate
delivered pursuant to this Agreement shall be true and correct in
all material respects on and (except for representations and
warranties that expressly relate to a date earlier than the
Closing Date) as of the Closing Date as if then made.
6.2 Covenants and Agreements Performed. Buyer
shall have performed and complied with in all material respects
all covenants, agreements and conditions required by this
Agreement to be performed or complied with by Buyer prior to or on
the Closing Date.
6.3 No Actions. No Action shall have been
instituted (and be pending) by any Governmental Body seeking to
restrain or prohibit this Agreement or the consummation of the
transactions contemplated hereby (including the transactions
contemplated by the Day Canada Agreement and the Day U.K.
Agreement, respectively). No Order preventing consummation of the
sale of the Shares to Buyer or the consummation of the
transactions contemplated by the Day Canada Agreement and the Day
U.K. Agreement, respectively, shall be in effect.
6.4 Consents. All material consents or approvals
required for the consummation of the transactions contemplated by
this Agreement (including the transactions contemplated by the Day
Canada Agreement and the Day U.K. Agreement, respectively) shall
have been delivered and given.
6.5 HSR Act. Buyer (or its ultimate parent
entity) shall have complied in all material respects with the
requirements of the HSR Act, and the waiting period (including any
extension thereof by reason of a request for additional
information) relating to the notification and report forms under
the HSR Act filed by Buyer (or its ultimate parent entity) and
M.A. Hanna with respect to the transactions contemplated by this
Agreement shall have expired or been terminated.
6.6 Officer's Certificate. Seller shall have been
furnished with a certificate executed on behalf of Buyer by its
President or Chief Financial Officer, dated the Closing Date,
certifying that, to such officer's knowledge, except for those
conditions waived by Seller in writing, the conditions set forth
in this Section 6 have been fulfilled at or prior to the Closing
Date.
6.7 Payment of Consideration. Buyer shall have
delivered to Seller the Purchase Price in accordance with the
terms of this Agreement.
6.8 Closing of the Day Canada and Day U.K.
Transactions. The Asset Purchase Agreement between Day Canada and
Buyer, in substantially the form of Annex B (the "Day Canada
Agreement"), and the Share Purchase Agreement between Buyer and
Cadillac U.K., in substantially the form of Annex C (the "Day U.K.
Agreement"), shall have been executed and the Closing (as defined
in each such agreement) shall have occurred.
6.9 Employment Agreements. Buyer shall have
executed and delivered to Seller an agreement pursuant to which
Seller assigns, and Buyer expressly assumes, each of Seller's Tier
I, Tier II and Tier III employment agreements, each of which is
listed on Schedule 6.9 (the "Employment Agreements").
7. Conditions to the Obligations of Buyer. The
obligations of Buyer to consummate the transactions contemplated
by this Agreement are subject to the fulfillment, on or before the
Closing Date, of the following conditions (any of which may be
waived in whole or in part by Buyer in writing):
7.1 Representations and Warranties True and
Correct. All of the representations and warranties of Seller and
M.A. Hanna contained in this Agreement or in any written
certificate delivered pursuant to this Agreement shall be true and
correct in all material respects on and (except for
representations and warranties that expressly relate to a date
earlier than the Closing Date) as of the Closing Date as if then
made.
7.2 Covenants and Agreements Performed. Each of
Seller and M.A. Hanna shall have performed or complied with in all
material respects all covenants, agreements and conditions
required by this Agreement to be performed or complied with by
Seller and M.A. Hanna prior to or on the Closing Date.
7.3 No Actions. No Action shall have been
instituted (and be pending) by any Governmental Body seeking to
restrain or prohibit this Agreement or the consummation of the
transactions contemplated hereby including the transactions
contemplated by the Day Canada Agreement and the Day U.K.
Agreement, respectively. No Order preventing consummation of the
sale of the Shares to Buyer or the consummation of the
transactions contemplated by the Day Canada Agreement and the Day
U.K. Agreement, respectively, shall be in effect.
7.4 Consents. All material consents or approvals
required for the consummation of the transactions contemplated by
this Agreement including the transactions contemplated by the Day
Canada Agreement and the Day U.K. Agreement, respectively shall
have been delivered or given.
7.5 HSR Act. M.A. Hanna shall have complied in
all material respects with the requirements of the HSR Act, and
the waiting period (including any extension thereof by reason of a
request for additional information) relating to the notification
and report forms under the HSR Act filed by Buyer (or its ultimate
parent entity) and M.A. Hanna with respect to the transactions
contemplated by this Agreement shall have expired or been
terminated.
7.6 Adverse Change. Between the Balance Sheet
Date and the Closing Date, there shall have been no material
adverse change in the business, assets, liabilities, results of
operations or financial condition of the Consolidated Entities
taken as a whole.
7.7 Resignations. Each of the members of the
Board of Directors of the Company shall have resigned prior to or
on the Closing Date.
7.8 Delivery of the Shares. Seller shall have
delivered to Buyer a stock certificate representing the Shares,
duly endorsed in blank or with a duly executed stock power
attached.
7.9 Officer's Certificate. Buyer shall have been
furnished with a certificate executed by the President or Chief
Financial Officer of Seller, dated the Closing Date, certifying
that, to such officer's knowledge, except for those conditions
waived by Buyer in writing, the conditions set forth in this
Section 7 have been fulfilled at the Closing Date.
7.10 Closing of the Day Canada and Day U.K.
Transactions. The Day Canada Agreement and the Day U.K. Agreement
shall have been executed and the Closing (as defined in each such
agreement) shall have occurred.
7.11 Financing. Buyer shall have obtained funding
of the financing described in the Financing Commitments (other
than Equity Commitment) or comparable financing as contemplated by
Section 8.19.
7.12 Title Insurance and Survey. The Buyer and
NationsBank (or a substitute lender) as lender shall have obtained
(a) insurance policies from a reputable title insurance company
insuring the title of Buyer to (and the mortgage lien of
NationsBank (or a substitute lender) to) the Owned Property
showing title to be vested in the Company or its applicable
subsidiary, subject only to Permitted Liens and (b) surveys of the
Owned Property sufficient to eliminate the general survey
exceptions to such title insurance and that do not evidence any
Liens, encroachments or other defects or encumbrances, other than
Permitted Liens. The insurance policies from such title insurance
company shall be in such amounts and with such endorsements as
Buyer and/or NationsBank (or a substitute lender) shall reasonably
require to the extent available, including, without limitation,
comprehensive endorsements, zoning endorsements and extended
coverage, but specifically excluding non-imputation endorsements.
Seller agrees to execute such documents (but specifically
excluding any gap indemnities) required to cause such title
insurance company to issue such policies.
7.13 Audit of Company Financial Statements. The
Audited Company Financial Statements, taken as a whole, shall not
be materially and adversely different from the corresponding
Company Financial Statements, taken as a whole, excluding
differences relating to or resulting from the adjustments and
matters described on Schedule 7.13.
7.14 Indebtedness; Encumbrances. As of the
Closing, (a) all outstanding Indebtedness shall be paid in full,
(b) any outstanding letters of credit issued by lenders who hold
Indebtedness shall be terminated, and (c) the Company shall have
obtained the release of all Liens on the capital stock of each of
the Subsidiaries and on all Assets securing such Indebtedness and
shall have cleared all public records of any such Liens. At the
Closing, Seller shall provide or arrange to be provided to Buyer
all releases and other documents in form and substance reasonably
satisfactory to Buyer demonstrating the release (actual and of
record) of such Liens.
7.15 Loss. The Consolidated Entities shall not
have incurred or suffered as to their properties and assets any
physical loss, damage, or destruction (collectively, a "Loss"),
other than as a result of normal wear and tear, in excess of (a)
with respect to Losses which are not covered by insurance,
$5,000,000 in the aggregate or (b) with respect to Losses which
are covered by insurance, $10,000,000 in the aggregate. The
dollar amounts set forth herein shall not, by way of implication,
affect or otherwise limit Buyer's rights under Section 7.6 with
respect to such Loss or otherwise.
8. Covenants and Agreements of the Parties.
8.1 Closing Conditions. Seller shall use all
reasonable efforts to cause the conditions to its and Buyer's
obligation to consummate the transactions contemplated by this
Agreement to be fulfilled and Buyer shall use all reasonable
efforts to cause the conditions to its and Seller's obligation to
consummate the transactions contemplated by this Agreement to be
fulfilled.
8.2 Reasonable Access; Confidentiality.
(a) From the date hereof until the Closing, Seller
shall cause the Company and the Subsidiaries to give Buyer and a
reasonable number of its representatives reasonable access, during
normal business hours and upon reasonable notice to Seller, to the
assets, properties, books, records, agreements, employees and
commitments of the Company and the Subsidiaries and shall cause
the Company and the Subsidiaries to permit Buyer to make such
inspections as it may reasonably require and to furnish Buyer
during such period with all such information relating to the
Company and the Subsidiaries as Buyer may from time to time
reasonably request.
(b) All such information reviewed or obtained by
Buyer and its representatives (and their access thereto) in
connection with this Agreement, the Day U.K. Agreement and the Day
Canada Agreement shall be subject to the terms and conditions of
the Confidentiality Agreement.
(c) After the Closing, Seller and M.A. Hanna will
hold, and will cause their respective Affiliates and their
respective officers, directors, employees, accountants,
representatives, agents, consultants and advisors to hold, in the
same confidence afforded their own information, unless compelled
to disclose by judicial or administrative process or, in the
opinion of their respective counsel, by other requirements of Law,
all documents and information concerning the Company and the
Subsidiaries (except to the extent that such information can be
shown to have been in the public domain through no fault of the
Seller and M.A. Hanna), and will not, without the prior written
consent of the Buyer, release or disclose such information to any
other Person; provided, however, that nothing contained herein
shall limit or restrict the ability of M.A. Hanna and its
Affiliates from using any information relating to the business of
the Company and its Subsidiaries, which is also used in the
business of Seller and its Affiliates (other than the Consolidated
Entities) as currently conducted, in a manner consistent with past
practices.
8.3 Conduct of Business. Between the date hereof
and the Closing Date, M.A. Hanna and Seller shall cause the
Company and the Subsidiaries to conduct their business only in the
ordinary course consistent with past practice, except in
connection with the transactions contemplated hereby. Without
limiting the generality of the foregoing, except as otherwise
expressly permitted by this Agreement or as set forth on Schedule
8.3, between the date hereof and the Closing Date, M.A. Hanna and
Seller shall cause the Company and its Subsidiaries to use
reasonable efforts to preserve its existing business relationships
and affiliations intact and keep available the services of its
present employees and shall not permit the Company or the
Subsidiaries to:
8.3.1 issue, sell, pledge or dispose of, or
agree to issue, sell, pledge or dispose of, any shares of its
capital stock, or grant or issue, or agree to grant or issue,
any Options relating to the issuance thereof;
8.3.2 acquire any shares of its capital stock
or declare any dividends with respect to its shares of
capital stock in securities or other property or make any
other non-cash distribution with respect to its capital
stock;
8.3.3 except in the ordinary course of
business consistent with past practice, sell, pledge, dispose
of or encumber any of the Assets;
8.3.4 except in the ordinary course of
business consistent with past practice, or as necessary or
advisable under applicable Law, make or permit to be made any
material amendment or termination of any contract listed on
Schedule 4.17 or of any Employee Plan;
8.3.5 amend or authorize any amendment of its
Charter Documents;
8.3.6 merge with or into, consolidate with or
acquire all or substantially all of the stock or assets of
any other Person;
8.3.7 enter into any commitment, contract,
lease, sublease, license or sublicense (or series of related
commitments, contracts, leases, subleases, licenses or
sublicenses) either involving more than $500,000 or outside
the ordinary course of business consistent with past
practice;
8.3.8 commit to the acquisition or
construction of any property, plant or equipment in excess of
$200,000 individually or $1,000,000 in the aggregate;
8.3.9 create, incur, assume, or guarantee any
indebtedness (including capital lease obligations) involving
$100,000 individually or $250,000 in the aggregate or outside
the ordinary course of business consistent with past
practice;
8.3.10 discharge or cancel any material claim
or right with respect to any Intellectual Property Rights;
8.3.11 (a) other than pursuant to existing
employment agreements, make or grant any increases in the
compensation or benefits payable or to become payable to (i)
any of its officers or directors or (ii) other employees
whose current salary exceeds $50,000 per year, (b) adopt,
amend, modify, or terminate any Employee Plan or any
retirement, deferred compensation, bonus, insurance, pension
or material fringe benefit plan, program or arrangement (or
make any loan or other credit accommodation) to or for any
officer, employee or director, or (c) other than in the
ordinary course of business consistent with past practices,
make any contribution to any Employee Plan or any retirement,
deferred compensation or bonus program, plan or arrangement
for the benefit of any employee, officer or director; or
8.3.12 make or enter into any agreement or
understanding to do any of the foregoing.
8.4 Litigation. Until the Closing, each of M.A.
Hanna and Seller shall promptly notify Buyer of any Actions that,
to the knowledge of M.A. Hanna and Seller, are commenced, made or
threatened against M.A. Hanna or Seller or the Consolidated
Entities that are reasonably likely to have a material adverse
effect on the business, assets, liabilities, results of operations
or financial condition of the Consolidated Entities taken as a
whole or impair the ability of Seller or M.A. Hanna to perform its
obligations under this Agreement and Buyer shall promptly notify
each of M.A. Hanna and Seller of any Actions that, to the
knowledge of M.A. Hanna or Seller, are commenced, made or
threatened against Buyer that are reasonably likely to impair the
ability of Buyer to perform its obligations under this Agreement.
8.5 Publicity. M.A. Hanna and Buyer shall make a
joint press release announcing the execution of this Agreement and
the transactions contemplated hereby and by the Day U.K. Agreement
and the Day Canada Agreement that shall be mutually acceptable to
M.A. Hanna and Buyer. No other publicity release or announcement
concerning the transactions contemplated hereby and by the Day
U.K. Agreement and the Day Canada Agreement shall be issued by
either party or any party to the Day U.K. Agreement or Day Canada
Agreement without the advance consent of such other party, except
any such release or announcement as may be required by applicable
Law or by obligations pursuant to any listing agreement with any
national securities exchange, in which case the party making the
release or announcement shall provide a copy of such release or
announcement in advance to the other party; provided, however,
that the foregoing shall not apply to any announcements or
materials distributed by Seller to the employees of Seller or its
Affiliates (including the Company and the Subsidiaries) with
respect to which Seller or M.A. Hanna has consulted with Buyer in
advance.
8.6 Regulatory Filings. (a) As promptly as
practicable after the date hereof, Buyer and Seller shall make, or
shall cause to be made, such filings as may be required pursuant
to the HSR Act with respect to the consummation of the
transactions contemplated by this Agreement. Thereafter, Buyer
and Seller will file or cause to be filed as promptly as
practicable with the United States Federal Trade Commission and
the United States Department of Justice any supplemental
information that may be requested pursuant to the HSR Act. All
filings referred to in this Section 8.6 will comply in all
material respects with the requirements of the respective Laws
pursuant to which they are made.
(b) Without limiting the generality or effect of
Section 8.6(a), each party to this Agreement will (i) use
reasonable efforts to comply as expeditiously as possible with all
lawful requests of Governmental Bodies for additional information
and documents pursuant to the HSR Act, (ii) not (A) extend any
waiting period under the HSR Act or (B) enter into any agreement
with any Governmental Body not to consummate the transactions
contemplated by this Agreement, except with the prior written
consent of the other party, and (iii) cooperate with the other
party and use reasonable best efforts to cause the lifting or
removal of any temporary restraining order, preliminary injunction
or other judicial or administrative order that may be entered into
in connection with the transactions contemplated by this
Agreement.
(c) As promptly as practicable, Buyer and Seller
will make, or cause to be made, all filings with courts or other
Governmental Bodies and apply in writing for all other material
governmental or third party approvals and consents in form
reasonably satisfactory to Buyer and Seller in their judgment
reasonably exercised, required to be taken, made or obtained by
them in order to effectuate the transactions contemplated hereby,
will co-operate with the other in effecting the foregoing, and
will deliver to the other copies of such filings, approvals and
consents.
8.7 Post-Closing Access; Closing Books. (a)
Buyer, on the one hand, and Seller, M.A. Hanna, Cadillac U.K. and
Day Canada, on the other hand, agree to retain for a period of six
years after the Closing Date any and all books and records
relating to the Assets, liabilities and business of the
Consolidated Entities that exist on, or existed prior to, the
Closing Date and that are related to the transactions contemplated
hereby and by the Day U.K. Agreement and the Day Canada Agreement.
In the event any of such parties needs access to such books and
records for the purposes of (i) responding to any inquiries of any
Governmental Body, (ii) preparing tax returns and financial
statements, or (iii) any other similar business purpose
(including, without limitation, effecting a registration of any
securities of the Company or any Subsidiary under the Securities
Act of 1933), each of the parties will allow authorized
representatives of the other parties access to such books and
records upon reasonable notice during normal business hours for
the sole purpose of obtaining information for use as aforesaid and
will permit the other parties to make such extracts and copies
thereof as may be necessary and, if required for such purpose, to
have access to and possession of original documents. Upon
request, each of the parties shall provide the authorized
representatives of the other parties with reasonable assistance
and guidance in connection with the retrieval, organization and
review of such records. Each of the parties shall maintain such
records during such six-year period in the format (electronic or
otherwise) in which such records are currently maintained. After
expiration of such six-year period, each of the parties shall have
the right to cause the disposition of any such books and records
in its possession, but shall do so only upon providing the other
parties with 30 days advance written notice. Each of the parties
shall have the right, at its own expense within 30 days after its
receipt of such notice, to make copies or extracts of such books
and records, or to obtain the originals thereof for its own use.
(b) Buyer shall close the books of the
Consolidated Entities as of the Closing Date no later than five
Business Days after the Closing Date.
8.8 Expenses of Sale. (a) Buyer shall pay all
fees and expenses associated with obtaining the title insurance
policies and surveys contemplated by Section 7.12. Buyer shall be
responsible for the cost of obtaining the endorsements to such
title insurance policies as required by Section 7.12.
(b) Except as otherwise expressly provided in this
Agreement, Seller, on the one hand, and Buyer, on the other hand,
shall bear its own direct and indirect expenses incurred in
connection with the negotiation and preparation of this Agreement
and the consummation and performance of the transactions
contemplated hereby, including, without limitation, all legal and
accounting fees and brokers' and finders' fees.
8.9 Tax Matters.
(a) Tax Liability of M.A. Hanna. M.A. Hanna shall
be responsible for all federal income taxes, including, without
limitation, any federal income taxes resulting from the sale of
the Shares, imposed on M.A. Hanna and its "affiliated group," as
such term is defined in Section 1504(a) of the Code, for all
taxable years or periods, whether ending before or after the
Closing Date.
(b) Tax Liability of Seller. Except as otherwise
provided in this Agreement, Seller shall be responsible for (i)
all Taxes imposed on members of Seller's Tax Group (other than the
Company, the Subsidiaries and Day U.K.) for any taxable year or
period, (ii) all Taxes imposed on the Company or any Subsidiary,
or for which the Company or any Subsidiary may otherwise be
responsible, for any taxable year or period of the Company or any
such Subsidiary that ends on or before the Closing Date, and (iii)
with respect to any taxable year of the Company or any Subsidiary
that begins before the Closing Date and ends after the Closing
Date, a portion of the income taxes, other than federal income tax
(which shall be an amount equal to the product of the taxable
income, as determined under the laws of each relevant
jurisdiction, of each of the Company and each Subsidiary from the
beginning of such taxable year through the Closing Date,
determined on the basis of a closing of the books of the Company
and each Subsidiary as of the Closing Date, times the statutory
tax rate applicable in the relevant jurisdiction) imposed on the
Company or such Subsidiary, or for which the Company or such
Subsidiary may otherwise be responsible, for such taxable year
that begins before the Closing Date and ends after the Closing
Date, but only to the extent that (in the case of clause (ii) and
clause (iii) of this sentence) any such Taxes or income taxes
imposed on the Company or any Subsidiary, or for which the Company
or any Subsidiary may be responsible, exceed the reserve for such
Taxes shown on the Closing Date Balance Sheet. In no event shall
Seller or M.A. Hanna be responsible for any Taxes (other than
federal income tax) for any taxable year of the Company or any
Subsidiary that begins before the Closing Date and ends after the
Closing Date which exceed the amount determined in accordance with
Section 8.9(b)(iii) above and, once such amount is paid by Seller
to Buyer, Seller and M.A. Hanna shall have no further
responsibility or liability to Buyer hereunder or otherwise for
any Taxes (other than federal income tax) relating to such period.
(c) Tax Liability of Buyer. Buyer shall be
responsible for (i) all Taxes imposed on the Company, any
Subsidiary or their respective successors for any taxable year of
the Company, any Subsidiary or any such successor that begins
after the Closing Date, (ii) with respect to any taxable year of
the Company or any Subsidiary that begins before the Closing Date
and ends after the Closing Date, a portion of the income taxes,
other than federal income tax (which amount shall be an amount
equal to the difference between the actual income tax liability of
the Company and the Subsidiaries for such taxable year and the
amount of such tax liability that Seller is responsible for
pursuant to Section 8.9(b)(iii)), imposed on the Company or such
Subsidiary, or for which the Company or such Subsidiary may
otherwise be responsible, for such taxable year that begins before
the Closing Date and ends after the Closing Date, and (iii) with
respect to any taxable year of the Company or any Subsidiary that
begins before the Closing Date and ends after the Closing Date,
for all Taxes (other than income taxes) imposed on the Company or
such Subsidiary, or for which the Company or such Subsidiary may
otherwise be responsible, for such taxable year. For purposes of
the preceding sentence, the date on which any Tax becomes a Lien
on the Company, any Subsidiary or their respective successors or
on any property owned by any such entity is not to be taken into
consideration.
(d) Tax Returns. (i) All Tax Returns required to
be filed on or before the Closing Date with respect to the
Company, the Subsidiaries or any of their respective income,
properties or operations, which as of the date hereof have not
been filed, will be timely filed on or before the Closing Date or
a filing extension from the appropriate Governmental Body with
respect thereto will be obtained on or before the Closing Date.
All Taxes shown to be due on any such Tax Returns that are filed
on or before the Closing Date or on any written assessments
relating thereto received by Seller, M.A. Hanna, the Company or
any Subsidiary on or before the Closing Date will either be timely
paid by the Company or such Subsidiary or the Company or such
Subsidiary will initiate appropriate proceedings to contest such
Taxes. In the event any such Taxes are being contested as of the
Closing Date, an adequate provision in accordance with United
States or applicable foreign GAAP for the amount of such contested
Taxes will be made on the books and records of the Company or such
Subsidiary, as the case may be, as of the Closing Date.
Notwithstanding anything in this Agreement to the contrary, if the
amount ultimately determined to be due for the contested Taxes
referred to in the preceding sentence exceeds the reserves for
such Taxes reflected on the books and records of the Company and
the Subsidiaries as of the Closing Date, then Seller shall be
liable for the amount of such excess Taxes, which liability shall
not be subject to the limitations on indemnification provided in
Section 9.4.1, and promptly upon demand Seller shall pay such
excess Taxes to the appropriate Governmental Body or to Buyer.
(ii) M.A. Hanna shall include the Company in
the consolidated U.S. federal income tax return that M.A. Hanna
will file for its taxable year that includes the Closing Date.
Seller shall likewise (A) file and include the Company and the
Subsidiaries for such taxable year in each combined, consolidated
or unitary state or local income and franchise tax return
encompassing such period in which such inclusion is required by
applicable Law, and (B) prepare and cause the Company and each of
the Subsidiaries to file any separate state, local or foreign
income and franchise tax returns of the Company and the
Subsidiaries that are required to be filed with respect to the
short taxable year of the Company and any Subsidiary that ends on
the Closing Date. At the Closing, Buyer shall cause the Company
and each of the Subsidiaries to provide Seller and M.A. Hanna with
an irrevocable power of attorney to sign and file tax returns that
Seller or M.A. Hanna is required to prepare and file pursuant to
this Section 8.9(d)(ii). Buyer shall cause the Company to
cooperate with Seller and M.A. Hanna in the preparation of such
returns and to furnish Seller and M.A. Hanna with all required
information as soon as possible after requested by Seller and M.A.
Hanna. M.A. Hanna shall pay all U.S. federal, state, local and
foreign Taxes due in respect of the tax returns that M.A. Hanna or
Seller is required to file or cause to be filed pursuant to this
Section 8.9(d)(ii). Buyer shall file or cause to be filed when
due all other Tax Returns with respect to Taxes that are required
to be filed by or with respect to the Company or any Subsidiary
and shall pay any Taxes due in respect of such Tax Returns without
prejudice to (x) Buyer's right to be reimbursed for the amount of
such Taxes that Seller is obligated to pay pursuant to Section
8.9(b)(iii), or (y) if Seller shall fail to pay such Taxes
directly or reimburse Buyer for its payment of such Taxes, Buyer's
right to claim indemnity with respect to such amounts pursuant to
Section 9.1, which liability of Seller to Buyer shall not be
subject to the limitations on indemnification provided in Section
9.4.1.
(e) Contest Provisions. Buyer shall promptly
notify Seller and M.A. Hanna in writing upon receipt by Buyer, any
of its Affiliates, the Company or any Subsidiary or their
respective successors, of notice of any pending or threatened
audit or assessment of the Company or any Subsidiary with respect
to Taxes for any taxable year or period for which Seller is
responsible pursuant to Section 8.9(b)(ii) or Section 8.9(d)(i).
Seller and M.A. Hanna shall have the sole right to represent the
Company's or any Subsidiary's interest in any such tax audit or
administrative or court proceeding relating to any taxable year or
period ending on or before the Closing Date (provided, however,
that such right shall be conditioned upon receipt by Buyer of
written acknowledgement of Seller and/or M.A. Hanna that Seller
and/or M.A. Hanna are solely responsible for payment of any Taxes,
including interest and penalties, determined to be owing in such
proceeding), and to employ counsel of its choice at its expense,
and Buyer shall cause the Company, any Subsidiary or their
respective successors to promptly execute and deliver valid and
effective powers of attorney that will authorize Seller, M.A.
Hanna or their respective designee to represent the Company's or
any such Subsidiary's interest in any such audit or proceeding.
(f) Transfer Taxes. All stamp, transfer,
documentary, registration and other such taxes and fees (including
any penalties and interest thereon) incurred in connection with
this Agreement and the transactions contemplated hereby (other
than those imposed on or measured by the income or net worth of
M.A. Hanna, Seller or Sellers under the Day U.K. Agreement or the
Day Canada Agreement) (collectively, the "Transfer Taxes") shall
be timely paid by Buyer to the appropriate Governmental Body or to
Seller if such Transfer Taxes are imposed on Seller (in which
event such payment shall be made to Seller no later than three
days prior to the date such Transfer Taxes are due), and Buyer
shall, at its own expense, procure any required stock transfer
stamps. In addition and except for tax returns relating to
Transfer Taxes that are required by law to be filed by Seller
(which returns shall be timely filed by Seller), Buyer shall
timely file all tax returns and other necessary documentation
relating to any Transfer Tax.
(g) Tax Refunds. With respect to state, local and
foreign taxes only, Seller shall be entitled to any refund of
Taxes claimed by the Company or any Subsidiary that relate to any
taxable year or period (or partial period) of the Company or such
Subsidiary which ends on or before the Closing Date, and Buyer
shall be entitled to all other refunds of state, local or foreign
taxes received or recoverable by, or otherwise relating to, the
Company and its Subsidiaries. Should Buyer, the Company or any
Subsidiary after Closing receive any credit for Taxes paid or
payable by the Company or any such Subsidiary with respect to any
taxable year or period (or partial period) of the Company or such
Subsidiary which ends on or before the Closing Date, Buyer
thereafter shall promptly pay Seller an amount equal to the amount
of any such credit. M.A. Hanna shall be entitled to receive and
retain any refund or credit of federal income taxes resulting from
its inclusion of the Company in any consolidated U.S. corporation
income tax return that M.A. Hanna files or has filed for any
taxable year.
(h) Tax-Sharing Agreements. All Tax-sharing
agreements or similar agreements with respect to or involving the
Company or any Subsidiary shall be terminated as of the Closing
Date and, after the Closing Date, the Company or any such
Subsidiary shall not be bound thereby or have any liability
thereunder.
8.10 Tax Elections.
(a) Section 338(h)(10) Election. Buyer, on the
one hand, and Seller and M.A. Hanna, on the other hand, shall join
with each other in making the election provided by Section
338(h)(10) of the Code in accordance with Treasury Regulation
Section 1.338(h)(10)-1 with respect to the acquisition by Buyer of
the Shares (the "338(h)(10) Election"), and, if permissible,
similar elections under any applicable state or local income tax
laws. The 338(h)(10) Election shall be made on Form 8023-A. Such
Form 8023-A shall be prepared by Seller and delivered by Seller to
Buyer as promptly as practicable, but no later than one hundred
and eighty days after the Closing Date. A copy of the final
version of such Form 8023-A, after having been endorsed by Buyer,
shall be provided to Seller by Buyer at least 30 days prior to the
date on which M.A. Hanna files its consolidated U.S. corporation
income tax return for its taxable year that includes the Closing
Date. Seller shall file the Form 8023-A with the Internal Revenue
Service's Service Center in Cincinnati, Ohio, and M.A. Hanna shall
attach a copy of such form to the U.S. consolidated corporation
income tax return that it will file for its taxable year that
includes the Closing Date. Buyer shall attach a copy of the Form
8023-A to the Company's U.S. corporation income tax return that it
will file for the Company's taxable year that begins on the day
following the Closing Date. Seller shall be responsible for any
Taxes which are triggered by the 338(h)(10) Election provided for
in this Agreement.
(b) Section 338(g) Elections. Buyer shall make
the election provided by Section 338(g) of the Code in accordance
with Treasury Regulation Section 1.338-1(d) with respect to each
Subsidiary and Day U.K. (the "338(g) Election") and, if
permissible, similar elections under any applicable state or local
income tax laws with respect to such entities. The 338(g)
Election shall be made on Form 8023-A, which form shall be
prepared by Buyer. A copy of the final version of such Form 8023-
A shall be provided to Seller by Buyer at least 30 days prior to
the date on which M.A. Hanna files its consolidated U.S.
corporation income tax return for its taxable year that includes
the Closing Date. M.A. Hanna shall attach a copy of the Form 8023-
A to the consolidated U.S. corporation income tax return that it
will file for its taxable year that includes the Closing Date.
Buyer shall attach a copy of the Form 8023-A to the U.S.
corporation income tax return that Buyer will file for its taxable
year that includes the Closing Date. Buyer shall also file the
Form 8023-A with the Office of Assistant Commissioner
(International) of the Internal Revenue Service or the appropriate
Internal Revenue Service Center, as required.
8.11 Tax Allocation. As soon as practicable, but
in any event prior to the Closing, Seller and Buyer shall
negotiate in good faith the allocation, in accordance with the
rules prescribed in Treasury Regulation Section 1.338(b)-2, of the
modified aggregate deemed sales price (adjusted by the portion of
the Adjustment Amount allocated to the Purchase Price) at which
the Company will be deemed, as a result of the Section 338(h)(10)
Election referred to in Section 8.10(a) hereof, to have sold on
the Closing Date all of its assets, among the assets that the
Company owns on the Closing Date. Each of Buyer and Seller shall
(and Buyer shall cause the Company after the Closing to) adhere
to, and to be bound by, such allocation for U.S. federal income
tax purposes and, to the extent such Section 338(h)(10) Election
is recognized by any state or locality for state or local income
tax purposes, for all such state or local income tax purposes.
8.12 Employee Benefits. (a) Effective as of the
Closing, (i) contributions to the Polymer Group Retirement Savings
Plan (the "Seller 401(k) Plan") maintained on behalf of employees
of the Company (collectively, the "Employees") will cease, (ii)
the Company (and such of the Subsidiaries as are participating
employers under the Seller 401(k) Plan) shall withdraw as
participating employers under the Seller 401(k) Plan, and (iii)
Buyer shall establish for Employees covered by the Seller 401(k)
Plan a tax-qualified retirement plan (the "Buyer 401(k) Plan")
which will provide such Employees continuing accruals of
retirement benefits comparable to the benefits provided to such
Employees under the Seller 401(k) Plan as of the date hereof.
(b) As soon as practicable after the Closing,
Seller or M.A. Hanna shall cause the assets of the Seller 401(k)
Plan attributable to the account of each Employee, or the
beneficiaries or alternate payees of each Employee, to be
transferred by the trustee of the Seller 401(k) Plan to the Buyer
401(k) Plan. To the extent permitted under the Seller 401(k) Plan
and the Buyer 401(k) Plan, such assets shall be transferred in the
form of cash, M.A. Hanna securities, loans to participants, and
such other property as is agreed to by Buyer; provided, however,
that in the event that Buyer shall cause the Buyer 401(k) Plan to
liquidate M.A. Hanna securities transferred to the Buyer 401(k)
Plan in connection with the transfer of assets contemplated by
this Section 8.12, Buyer shall provide reasonable notice to M.A.
Hanna prior to any such liquidation. Such liquidation shall occur
over a period of not less than twelve months, and shall be
effected in a manner designed to be reasonably likely not to
disrupt the market for M.A. Hanna securities. The transfer of
funds and other property shall in no event be made sooner than 30
days after the filing with the Internal Revenue Service of Forms
5310 for the Seller 401(k) Plan or the Buyer 401(k) Plan, if
necessary. Buyer and Seller shall provide each other with such
information as is in their possession and necessary for the other
party to complete its Form 5310, if necessary. Seller shall cause
appropriate amendments to be made to the Seller 401(k) Plan and
Buyer shall cause appropriate provisions to be included in the
Buyer 401(k) Plan to carry out the provisions of this Section.
Buyer's and Seller's obligations to effectuate the asset transfer
described in this Section shall be conditioned on each receiving
evidence reasonably satisfactory to it that such transfer will not
adversely affect the qualified status of its 401(k) Plan under
Section 401(a) or 401(k) of the Code. Seller shall provide Buyer
with such information regarding the Seller 401(k) Plan as Buyer
shall reasonably request. Buyer shall provide Seller with such
information regarding the Buyer 401(k) Plan as Seller shall
reasonably request.
(c) From and after the Closing Date, Buyer shall
cause the Company and the Subsidiaries to continue for persons
formerly employed by the Company, or any Subsidiary or their
predecessors (collectively, "Former Employees"), the Employee
Plans, or to adopt other such plans, programs, policies,
arrangements or agreements that will provide such Former Employees
with benefits that are in the aggregate comparable to the benefits
provided to such Former Employees under the Employee Plans on the
date hereof, and shall cause the Company to continue such Employee
Plans for at least two years following the Closing Date.
Notwithstanding the foregoing, effective as of the Closing Date,
Seller shall assume and be responsible for any and all liability
of the Company for benefits for Former Employees whose last
employment with the Company or any of its predecessors was at the
Waynesville, Indiana plant. From and after the Closing Date,
Buyer shall cause the Company and the Subsidiaries to continue for
Employees the Employee Plans, or to adopt other such plans,
programs, policies, arrangements or agreements that will provide
such Employees with benefits that are in the aggregate comparable
to the benefits provided to such Employees under the Employee
Plans on the date hereof, and shall cause the Company to continue
such Employee Plans in effect for at least two years following the
Closing Date. Seller and M.A. Hanna will not be liable for any
liability or obligation that may arise from employment with or
termination by Buyer, the Company or any Subsidiary or from the
amendment or termination by Buyer, the Company or any Subsidiary
of any employee benefit plan providing benefits to Employees or
Former Employees.
(d) Seller and M.A. Hanna shall be responsible for
any liability (including all costs and expenses) which Buyer or
the Company incurs because the IRS Form 5500s identified on
Schedule 8.12 were due but had not been filed prior to the Closing
Date. Seller and M.A. Hanna shall have the right, in their sole
discretion, to determine when and if to make any such filings.
8.13 WARN Act. Buyer shall be responsible for any
and all Damages that may arise under or in connection with the
Workers' Assistance and Retraining Notification Act of 1989, as
amended, and all rules and regulations promulgated thereunder (the
"WARN Act"), relating to the transactions contemplated by this
Agreement, including all Damages imposed or incurred as a result
of any failure to give the requisite WARN notice or from Buyer's
implementing a "mass layoff" or "plant closing" (as defined by the
WARN Act) on or after the Closing Date.
8.14 Environmental Matters. (a) Subject to the
terms and limits set forth on Schedule 4.18, Seller shall (i)
retain all of its and the Company's ongoing obligations with
respect to the matters set forth on Schedule 4.18 (collectively,
the "Known Environmental Matters") and (ii) assume and be
responsible for (A) any and all Damages (which shall include, for
purposes of this Section 8.14, all investigatory, corrective or
remedial obligations and all claims by third parties for personal
injury, property damage, natural resource damage or other Damages)
which may arise with respect to the Known Environmental Matters,
and (B) any and all Damages arising from the offsite treatment,
storage or disposal of wastes generated at the Company's
facilities prior to the Closing Date with respect to which the
Company or Buyer receives any notice of liability or potential
responsibility within 18 months after the Closing Date ("Post-
Closing Offsite Matters"); provided, however, that Seller shall
not retain and shall not assume or be responsible for any such
obligation or Damage described in clauses (i) or (ii) of this
sentence to the extent arising from wastes or other contaminants
generated at the Company's facilities after the Closing Date.
(b) After the Closing Date, Buyer will not
perform, or allow to be performed, any sampling of soil, surface
water or groundwater on the Owned Property unless: (i) Buyer
provides Seller with written notice that it proposes to perform,
or allow to be performed, such sampling because it believes the
sampling is Sampling Prudent for Good Environmental Management,
and Seller does not object in writing to such sampling within ten
days of Seller's receipt of the written notice; (ii) such sampling
is necessary because of an imminent danger to human health or the
environment; (iii) such sampling is ordered by a Governmental
Body; or (iv) such sampling is required by any applicable
Environmental Laws; provided, however, that Buyer shall provide
Seller with written notice, as soon as reasonably possible, of the
sampling described in clauses (ii), (iii) or (iv). If Buyer and
Seller disagree concerning whether the sampling described in
clause (i) is Sampling Prudent for Good Environmental Management,
the disagreement shall be resolved according to the procedures set
forth in Section 9.6(b)(ii)(D). If Buyer performs, or allows to
be performed, sampling of soil, surface water or groundwater on
the Owned Property that (A) was not necessary because of an
imminent danger to human health or the environment, (B) has not
been ordered by a Governmental Body, (C) was not required by any
applicable Environmental Laws or (D) was not agreed to by Buyer
and Seller or determined according to the procedures set forth in
Section 9.6(b)(ii)(D) to be Sampling Prudent for Good
Environmental Management, then Seller shall have no obligation
under this Section 8.14 or Section 9 to defend, indemnify or hold
Buyer harmless in connection with any Loss to the extent it arises
from such sampling.
8.15 Covenant Not to Compete.
(a) During the Non-competition Term, M.A. Hanna
covenants that it shall not, and shall not permit any of its
Affiliates to, either individually or as a partner, joint
venturer, agent, consultant or shareholder of another Person, or
otherwise, directly or indirectly, (i) participate in, engage in,
or have a financial or management interest in any business
operation of any enterprise if such business operation engages in
the business of designing, manufacturing or marketing (A) printing
blankets or (B) engineered rubber or plastic parts for textile
mill machinery (for purposes of this Section 8.15, the "Business")
anywhere in the world (the "Non-competition Area"), (ii) solicit
any other Person to engage in the Business in the Non-competition
Area, or (iii) assist any other Person to engage in the Business
in the Non-competition Area (such activities described in clauses
(i), (ii) and (iii) shall hereinafter collectively be referred to
as "Engaging in Competition"); provided, however, that the direct
or indirect ownership by either of Seller or M.A. Hanna of an
interest constituting no more than five percent in the aggregate
of the outstanding voting capital stock in a corporation whose
shares are traded on a recognized stock exchange or in an over-
the-counter market shall not, of itself, constitute Engaging in
Competition and the development, compounding or marketing of
rubber or thermoplastic compounds shall not constitute Engaging in
Competition.
(b) M.A. Hanna covenants, during the Non-
competition Term, that it will not, and will not permit any of its
Affiliates to, solicit any individual who is as of the date
hereof, or was during the 12 months prior to the date hereof, an
employee of any of the Consolidated Entities to leave the employ
of any of the Consolidated Entities or Buyer or refuse the employ
of Buyer.
(c) From and after the Closing Date, M.A. Hanna
covenants that it will not, and it will not permit any of its
Affiliates to, take any action that is designed to be materially
detrimental to the goodwill of the Consolidated Entities or Buyer,
except as compelled by judicial or administrative process.
(d) "Non-competition Term" means a period
beginning on the Closing Date and continuing through and including
the day before the fifth anniversary of the Closing Date. If
either Seller or M.A. Hanna is not in compliance with this Section
8.15 during any calendar month within the Non-competition Term,
then Buyer shall be entitled, among other remedies, to compliance
by Seller and M.A. Hanna with the terms of this Section 8.15 for
an additional number of days that equals the number of days during
which such noncompliance occurred. The term "Non-competition Term"
shall also include this additional period.
(e) Each of Seller and M.A. Hanna hereby agrees
that all restrictions in this Section 8.15, including, without
limitation, those relating to duration and the restricted
territory, are necessary and fundamental to the protection of the
Business of Buyer, and are reasonable and valid, and all defenses
to the strict enforcement thereof by Buyer are hereby waived by
Seller and M.A. Hanna.
(f) Notwithstanding the foregoing, if after the
Closing Date, M.A. Hanna or Seller acquires any company or
business which derives 20% or less of the total income of such
company or business from activities which would conflict with any
obligations set forth above, M.A. Hanna and Seller shall be deemed
not to have breached their obligations in this Section 8.15, so
long as such activities are terminated, by sale of the conflicting
business or otherwise, not later than two years after such
acquisition; provided, however, that in no event shall the
acquisition by M.A. Hanna or Seller of any company or business
that derives annual revenues of less than $10,000,000 from
activities that conflict with any obligations set forth above be
deemed to be a breach of any of their respective obligations in
this Section 8.15.
8.16 Notice of Developments. Between the date
hereof and the Closing Date, Seller and M.A. Hanna shall give
prompt written notice to Buyer of any material development
affecting the Condition of the Company of which it has knowledge.
Each party to this Agreement will give prompt written notice to
the others of (a) any material development affecting the ability
of the parties to consummate the transactions contemplated by this
Agreement and (b) any inaccuracy of or material omission from any
representation or warranty, or any material breach of any covenant
or other agreement contained in this Agreement of which such party
has knowledge.
8.17 Exclusivity. Neither Seller or M.A. Hanna
will, or will cause or permit any of their respective officers,
directors, agents or Affiliates to, (a) enter into any written or
oral agreement or understanding with any Person (other than Buyer
or any Affiliate of Buyer) regarding a sale of any of the
Consolidated Entities or any substantial part of their stock,
assets or business, or a merger, consolidation, or
recapitalization involving any of the Consolidated Entities
("Another Transaction"), (b) enter into or continue any
negotiations or discussions with any Person (other than Buyer or
any Affiliate of Buyer) regarding the possibility of Another
Transaction; or (c) provide any non-public financial or other
confidential or proprietary information regarding any of the
Consolidated Entities (including this Agreement or any financial
information, projections, or proposals regarding any of the
Consolidated Entities' businesses) to any Person (other than to
Buyer or any Affiliate of Buyer, its financing sources and their
respective representatives) whom Seller or M.A. Hanna knows, or
has reason to believe, would have any interest in acquiring the
capital stock, assets or business of any of the Consolidated
Entities, or would disclose such information to any such Person.
8.18 Audit. Seller shall cause its accountants to
conduct an audit of the Company Financial Statements, and Seller
shall use its reasonable efforts to cause such audit to be
completed prior to May 1, 1995. Seller shall provide Buyer and
its accountants with access to Seller's accountants work papers
not later than seven days subsequent to delivery of Audited
Company Financial Statements. Seller shall be responsible for the
cost of conducting the audit.
8.19 Obtaining of Financing. (a) Buyer shall take
all commercially reasonable actions necessary to (i) maintain the
Equity Commitment and satisfy any conditions to the obtaining of
the funds contemplated by the Equity Commitment, (ii) maintain the
NationsBank Commitment and satisfy any conditions to the obtaining
of the funds contemplated by the NationsBank Commitment,
(iii) maintain the Bridge Commitment and satisfy any conditions to
obtaining the financing described in the Bridge Commitment, and
(iv) obtain subordinated debt financing in an aggregate principal
amount of $100,000,000 through a public or private offering of
subordinated notes of Buyer (the "Subordinated Debt Financing").
At the Closing, Buyer will accept the funding of any financing
available under (i) NationsBank Commitment, (ii) the Equity
Commitment, and (iii) the Bridge Commitment or the Subordinated
Debt Financing. In the event that the financing under the
NationsBank Commitment is not obtained by Buyer, Buyer shall use
all commercially reasonable efforts to obtain and shall accept
other debt financing in amounts and on terms no less favorable to
Buyer than the terms set forth in the NationsBank Commitment.
(b) In the event the Subordinated Debt Financing
or any of the financing under the Bridge Commitment is not
obtained by Buyer, Buyer shall use all commercially reasonable
efforts to obtain from another investment bank, bank or
institutional investor and accept other debt financing in amounts
and on terms no less favorable to Buyer than the terms set forth
in the Bridge Commitment; provided, however, that nothing in this
Agreement shall require (i) Buyer to obtain equity financing in an
amount greater than $50,000,000 in the aggregate or (ii) Buyer or
its Affiliates to issue equity securities in connection with such
other financing unless Buyer borrows funds under a bridge
financing arrangement obtained to replace the Bridge Commitment
and then only to the extent Buyer would have been required to
issue securities pursuant to the Bridge Commitment.
(c) In the event the condition set forth in
Section 7.11 has not been satisfied on or prior to the Second
Trigger Date, M.A. Hanna shall have the right, in its sole
discretion, at any time and from time to time, to cause Buyer to
accept, and, if so requested, Buyer shall accept at the Closing,
all financing available pursuant to the Bridge Commitment (the
"Bridge Power"); provided, however, that M.A. Hanna shall not be
entitled to exercise the Bridge Power prior to the later of (i)
the Second Trigger Date or (ii) seven days after the execution by
Buyer of either a purchase agreement or firm commitment
underwriting agreement with the purchasers or underwriters of the
subordinated debt securities if such execution occurs on or prior
to the Second Trigger Date.
(d) From and after the tenth day following the
Second Trigger Date, Buyer shall have the right to make the
Qualified Bridge Drawdown.
(e) Notwithstanding the provisions of Section
8.19(b), in the event that the funds to be provided under the
Bridge Commitment and Subordinated Debt Financing are not obtained
by Buyer by the Second Trigger Date, Buyer shall accept at the
Closing any subordinated debt financing arranged by M.A. Hanna in
an amount not to exceed $100,000,000 that is on terms no less
favorable to Buyer than those described on Schedule 8.19(e).
8.20 Insurance. M.A. Hanna and Seller shall
reasonably cooperate with Buyer and the Company after the Closing
Date in the processing of insurance claims made by Buyer or the
Company after the Closing Date.
9. Indemnification and Survival.
9.1 Indemnification by Seller, M.A. Hanna, Day
U.K. and Day Canada. (a) Subject to Sections 9.4 and 9.5,
following the Closing, Seller and M.A. Hanna shall, and hereby do,
jointly and severally indemnify, defend and hold Buyer and any of
its Affiliates, and their respective stockholders, directors,
officers, employees and agents (collectively, the "Buyer Group"),
harmless from and against any and all Damages actually incurred or
suffered by the Buyer Group based upon, relating to, arising out
of, resulting from or otherwise in respect of (i) any inaccuracy
of any representation or warranty, breach of any covenant
(including any covenants set forth on Schedule 4.18) or agreement
of Seller, or failure to satisfy any obligation that Seller
assumes, is responsible for or is liable for contained in this
Agreement that survives the Closing, (ii) the operation or
ownership of any former subsidiaries, former divisions or other
former assets of the Company or any of the Subsidiaries that were
sold, transferred, terminated or otherwise discontinued prior to
the Closing Date (excluding (i) sales of assets (other than real
property) in the ordinary course of business and (ii) matters
relating to Hanna Services de Mexico S.A. de CV and Day
International Pty. Ltd.), and (iii) liabilities under ERISA or the
Code arising from the Company's or any Subsidiary's membership in
the Controlled Group of which M.A. Hanna is a member (other than
in respect of any employee benefit plan sponsored or maintained by
the Company or any of the Subsidiaries for the sole benefit of
present or former employees of the Company or any of the
Subsidiaries or their dependents).
(b) Subject to Sections 9.4 and 9.5 of this
Agreement, following the Closing, M.A. Hanna shall, and hereby
does, indemnify, defend and hold Buyer Group harmless from and
against any and all Damages actually incurred or suffered by Buyer
Group based upon, relating to, arising out of, resulting from or
otherwise in respect of any inaccuracy of any representation or
warranty, breach of any covenant (including any covenant set forth
on Schedule 4.18) or agreement of M.A. Hanna, or failure to
satisfy any obligation that M.A. Hanna assumes, is responsible for
or is liable for contained in this Agreement that survives the
Closing.
(c) Subject to Sections 9.4 and 9.5 of this
Agreement, following the Closing, M.A. Hanna and Cadillac U.K. or
M.A. Hanna and Day Canada, as the case may be, shall, and hereby
do, jointly and severally indemnify, defend and hold Buyer Group
harmless from and against any and all Damages actually incurred or
suffered by Buyer Group based upon, relating to, arising out of,
resulting from or otherwise in respect of any inaccuracy of any
representation or warranty or breach of any covenant (including
any covenant set forth on Schedule 4.18) or agreement of Cadillac
U.K. or Day Canada, or failure to satisfy any obligation that Day
Canada or Day U.K. assumes, is responsible for or is liable for
contained in the Day U.K. Agreement or Day Canada Agreement,
respectively, that survives the Closing; provided, however, that
no member of the Buyer Group will make a demand upon M.A. Hanna
for payment of Damages pursuant to this Section 9.1(c) until (and
only to the extent that) such member has made a demand for payment
of such Damages upon Cadillac U.K. or Day Canada (as applicable)
and such demand remains unsatisfied for ten consecutive Business
Days after the date it is made.
9.2 Indemnification by Buyer. Subject to Sections
9.4 and 9.5, following the Closing, Buyer shall indemnify, defend
and hold Seller and M.A. Hanna and any of their respective
Affiliates, stockholders, directors, officers, employees and
agents (collectively, the "Seller Group") harmless from and
against any and all Damages actually incurred or suffered by the
Seller Group based upon, relating to, arising out of, resulting
from or otherwise in respect of (a) any inaccuracy of any
representation or warranty or breach of any covenant or agreement
of Buyer, or failure to satisfy any obligation that Buyer assumes,
is responsible for or is liable for contained in this Agreement
that survives the Closing, and (b) the ownership or operation of
the Company and the Subsidiaries after the Closing, including,
without limitation, the failure by the Company or any Subsidiary
to satisfy any of their respective obligations as they become due
and payable after the Closing Date; provided, however, that
nothing in this clause (b) shall be deemed to limit the rights of
the Buyer Group in respect of, or relieve the Seller Group of any
responsibility for, Damages incurred or suffered by any member of
the Buyer Group based upon, relating to, arising out of, resulting
from or otherwise in respect of, actions or events occurring, or
circumstances existing, on or prior to the Closing Date or any
breach of this Agreement by any member of the Seller Group.
9.3 Notice and Opportunity to Defend. Except as
otherwise provided in Section 9.6 of this Agreement, with respect
to third party claims, promptly after receipt by any Beneficiary
of notice of any Action, claim or potential claim (any of which is
hereinafter individually referred to as a "Circumstance"), which
could give rise to a right to indemnification pursuant to Section
9.1 or 9.2, the Beneficiary shall give the Indemnitor written
notice describing the Circumstance in reasonable detail. The
Indemnitor shall have the right, at its option, to compromise or
defend, at its own expense and by its own counsel (which counsel
shall be subject to the reasonable approval of the Beneficiary),
any such third party claim involving the asserted liability of the
Beneficiary; provided, however, that the Indemnitor shall not have
the right to compromise or assume the defense of any claim giving
rise to Damages with respect to which the Indemnitor is not
obligated to provide full indemnification under Section 9 unless
the portion of such Damages of which there is any reasonable
likelihood of liability for which the Indemnitor has an obligation
to provide indemnification hereunder exceeds the portion of such
Damages of which there is any reasonable likelihood of liability
for which the Indemnitor has no obligation to provide
indemnification hereunder. The assumption of any third party
claim under this Section 9.3 by the Indemnitor shall constitute an
acknowledgement by the Indemnitor of its obligation to indemnify
the Beneficiary with respect to the full amount of such claim,
subject to the limitations described in Sections 9.4 and 9.5 and
the Indemnitor's right to rescind such acknowledgement upon its
reasonable determination, and upon prompt written notice to the
Beneficiary, that it does not bear sole or principal
responsibility for such third party claim under this Agreement;
provided, however, that the Indemnitor shall no longer be entitled
to rescind its acknowledgement of its obligation to indemnify
after the Indemnitor has irrevocably committed to the expenditure
of any material costs related to such claim. If any Indemnitor
shall undertake to compromise or defend any such asserted
liability, it shall promptly notify the Beneficiary of its
intention to do so, and the Beneficiary shall cooperate fully
with, and provide appropriate documentation as reasonably
requested by the Indemnitor and its counsel in the compromise of,
or defense against, any such asserted liability. If the
Indemnitor elects to defend any matter and the Beneficiary decides
to participate in such defense, the Indemnitor shall not be liable
to the Beneficiary for any fees or expenses of counsel to the
Beneficiary unless the Indemnitor shall receive a legal opinion
from counsel to the Beneficiary that representation of the
Indemnitor and the Beneficiary by the Indemnitor's counsel would
result in actual or potential differing interests between the
Indemnitor and Beneficiary which would make joint representation
inappropriate. Under no circumstances shall the Beneficiary or
the Indemnitor compromise any such asserted liability without the
written consent of the other, which consent shall not be
unreasonably withheld, unless the Indemnitor shall have failed or
refused to undertake the defense or compromise of any such
asserted liability after a reasonable period of time has elapsed
following the notice of a Circumstance received by such Indemnitor
pursuant to this Section 9.3; and, provided, further, that the
Beneficiary shall not be required to consent to any settlement
either involving the imposition of equitable remedies or leaving
unsettled related claims for equitable remedies.
9.4 Limitations.
9.4.1 (a) Except as otherwise provided in
this Agreement and notwithstanding anything in the Day U.K.
Agreement or the Day Canada Agreement to the contrary, none
of Seller, M.A. Hanna, Cadillac U.K. or Day Canada shall be
obligated to indemnify any Person otherwise entitled to
indemnification under this Agreement, the Day Canada
Agreement or the Day U.K. Agreement for any Damages (whether
arising under this Agreement, the Day U.K. Agreement or the
Day Canada Agreement), (i) unless and until the amount of all
such Damages exceed in the aggregate an amount equal to
$15,000,000, and then only to the extent of such excess, and
(ii) to the extent that the aggregate amount of all such
payments by Seller, M.A. Hanna, Cadillac U.K. and Day Canada
would exceed $100,000,000. Notwithstanding the foregoing, if
the amount of any claim for Damages does not exceed $500,000,
then the amount of such claim shall be excluded from the
calculation of the aggregate amount of Damages for purposes
of clause (i) above; provided that all claims for Damages
arising out of the same facts or events resulting in a claim
for indemnification under this Agreement, the Day U.K.
Agreement or the Day Canada Agreement shall be treated as a
single claim; and provided, further, that any Damages of the
Buyer Group arising out of, resulting from or related to (w)
matters described in clauses (ii) or (iii) of Section 9.1(a)
of this Agreement, clause (b) or (c) of Section 9.1 of the
Day U.K. Agreement and clause (b) or (c) of Section 11.1 of
the Day Canada Agreement, (x) any failure on the part of
Seller, M.A. Hanna, Day Canada or Cadillac U.K. to satisfy
any obligation that it assumes, is responsible for or is
liable for under this Agreement, the Day U.K. Agreement, or
the Day Canada Agreement, (y) any inaccuracy of any
representation or warranty of Seller or M.A. Hanna contained
in Section 4.3, Section 4.5(b) or Section 4.23 of this
Agreement, any representation or warranty of Day U.K.
contained in Section 4.3 or Section 4.20 of the Day U.K.
Agreement or any representation or warranty of Day Canada
contained in Section 5.20 of the Day Canada Agreement and (z)
any breach of any covenant or agreement of Seller or M.A.
Hanna contained in Sections 2.1, 2.3, 8 (including Schedule
4.18), 9, 11.7 or 11.15 of this Agreement or of Cadillac U.K.
or Day Canada contained in Sections 2.1, 2.3, 8, 9 or 11.6 of
the Day U.K. Agreement or Sections 2.1, 2.3, 4.3, 8, 10, 11,
13.6 or 13.11 of the Day Canada Agreement, respectively,
shall not be subject to the foregoing limitations.
(b) Except as otherwise provided in this
Agreement, Buyer shall not be obligated to indemnify any Person
otherwise entitled to indemnification under this Agreement, the
Day U.K. Agreement or the Day Canada Agreement for any Damages
unless the amount of such claim for Damages exceeds $500,000;
provided, that all claims for Damages arising out of the same
facts or events resulting in a claim for indemnification under
this Agreement, the Day U.K. Agreement or the Day Canada Agreement
shall be treated as a single claim; and provided further that any
Damages of any Person otherwise entitled to indemnification under
this Agreement, the Day U.K. Agreement or the Day Canada Agreement
arising out of, resulting from or related to any inaccuracy of any
representation or warranty in this Agreement, the Day U.K.
Agreement, or the Day Canada Agreement that survives Closing, any
breach of a covenant set forth in Sections 2.1, 2.2, 2.3, 8, 9, or
11.7 of this Agreement, Sections 2.1, 2.2, 2.3, 8, 9 or 11.6 of
the Day U.K. Agreement or Sections 2, 3, 4, 7, 8, 10, 11, 13.6,
13.11 or 13.12 of the Day Canada Agreement by Buyer or any
Affiliate of Buyer, and any failure on the part of Buyer or any
Affiliate of Buyer to satisfy any obligation that it assumes, is
responsible for, or is liable for under this Agreement, the Day
U.K. Agreement or the Day Canada Agreement shall not be subject to
the foregoing limitations.
9.4.2 Liability for Damages shall not be
enforced against the Indemnitor to the extent of any Net
Insurance Recovery received or receivable by the Beneficiary
with respect to such Damages. If the Beneficiary receives
any such Net Insurance Recovery after the Indemnitor shall
have made any payment to the Beneficiary with respect to such
Damages, the Beneficiary shall promptly return such payment
to the Indemnitor to the extent of such Net Insurance
Recovery.
9.4.3 For all purposes of this Section 9, the
amount payable by an Indemnitor to a Beneficiary with respect
to Damages under Section 9 shall be computed in a manner that
does not take into account the value of any net Tax benefit
or Tax savings by such Beneficiary as a result of or related
to any such Damages. Buyer, Seller, M.A. Hanna, Day Canada
and Cadillac U.K. shall treat all payments made pursuant to
this Section 9 (or Section 11 of the Day Canada Agreement or
Section 9 of the Day U.K. Agreement) as an adjustment to the
Purchase Price (or the purchase price under the Day U.K.
Agreement or Day Canada Agreement, as applicable) for all
purposes relating to Taxes.
9.4.4 For purposes of determining whether an
event described in Section 9.1 or 9.2 has occurred (and for
purposes of making any similar determination under Section 9
of the Day U.K. Agreement or Section 11 of the Day Canada
Agreement), any requirement in any representation or warranty
that an event or fact be material or have a material adverse
effect on the Condition of the Company (or have a similar
effect on Day U.K. or the Business (as defined in the Day
Canada Agreement)) in order for such event or fact to
constitute a misrepresentation or breach of such warranty and
clause (d) of the representation and warranty made in Section
4.20 (each, a "Materiality Condition") shall be ignored, and
if the conditions set forth in Section 9.4.1, as the case may
be, are satisfied, in each case ignoring all Materiality
Conditions, Beneficiary shall be indemnified in accordance
with this Agreement (or the Day U.K. Agreement or Day Canada
Agreement, as applicable).
9.5 Survival of Representations and Warranties and
Covenants.
9.5.1 The representations and warranties of
Seller, M.A. Hanna and Buyer contained in this Agreement
shall each survive the Closing for a period of one year,
except for (a) the representations and warranties made in
Section 4.7(a), which shall not survive the Closing, (b) the
representations and warranties made in Section 4.18 of this
Agreement, which shall survive the Closing for a period of
three years, (c) the representations and warranties made in
Section 4.3, 4.5(b), 4.23, 5.5, 5.8 and 5.10 of this
Agreement, which shall survive the Closing and remain in
effect indefinitely, and (d) the representations and
warranties made in Section 4.13 of this Agreement, which
shall survive the Closing until the applicable statute of
limitations has commenced and expired. Any claim for
indemnification hereunder with respect to any alleged
inaccuracy of any representation or warranty that is not
asserted by notice given as provided in this Agreement, which
notice shall set forth in reasonable detail the particular
inaccuracy and the underlying facts and Damage relating
thereto (to the extent reasonably ascertainable at that
time), within the applicable period of survival is hereby
irrevocably waived after such time. The representations and
warranties contained in the Day U.K. Agreement and the Day
Canada Agreement shall survive the Closing as provided in
such agreements.
9.5.2 Except as limited below, after the
Closing the Buyer Group may bring an action under this
Section 9 for breach of any covenant in this Agreement by
M.A. Hanna or the Seller, and the Seller Group may bring an
action under this Section 9 for breach of any covenant in
this Agreement by Buyer or any Affiliate of Buyer, subject
only to applicable common law and statutory statutes of
limitation and any specific provision in this Agreement
limiting the time which such claim may be asserted, provided
that there shall be no indemnity under this Section 9 for
breaches of the covenants in Section 8.1, 8.2(a) or 8.5, and
provided further that Seller, M.A. Hanna, Buyer and Affiliate
of Buyer shall have no liability under this Section 9 for
breaches of the covenants set forth below unless a claim
relating to such breach is asserted by notice given as
provided in this Agreement, which notice shall set forth in
reasonable detail the nature of the breach and the Damages
related thereto (to the extent reasonably ascertainable at
that time) prior to the period specified in relation to such
covenants. The notice periods are as follows: Section 8.3
(other than Section 8.3.1) shall be 18 months after the
Closing Date; Section 8.14(a)(ii)(B) shall be 18 months after
the Closing Date; and Section 8.15 shall be five years after
the Closing Date. The covenants contained in the Day U.K.
Agreement and the Day Canada Agreement shall survive the
Closing as provided in such agreements.
9.6 Indemnification Procedures for Environmental
Matters. (a) Notwithstanding anything in this Agreement to the
contrary, but without limiting the provisions of Sections 9.4 and
9.5, the indemnification procedures in this Section 9.6 shall
apply to any claim for indemnification arising with respect to:
(i) the Known Environmental Matters; (ii) any Post-Closing Offsite
Matters; and (iii) any inaccuracy of any of the representations
and warranties set forth in Section 4.18 of this Agreement,
Section 5.15 of the Day Canada Agreement or Section 4.17 of the
Day U.K. Agreement for which Buyer is entitled to receive
indemnification pursuant to Section 9 of this Agreement, Section
11 of the Day Canada Agreement or Section 9 of the Day U.K.
Agreement.
(b)(i) A claim for indemnification that is subject
to the indemnification procedures set forth in this Section 9.6,
which also constitutes a Third Party Claim, shall be governed by
the procedures set forth in Section 9.3. Any Onsite Remedial
Action associated with such Third Party Claim shall additionally
be subject to the procedures set forth in Section 9.6(b)(ii) below
(it being understood that any inconsistencies between Section 9.3
and Section 9.6(b)(ii) with respect to such Onsite Remedial Action
shall be resolved in favor of the provisions set forth in Section
9.6(b)(ii)).
(ii) Any claim for indemnification that is subject
to the indemnification procedures set forth in this Section, as
described in Section 9.6(a) above, that does not arise from a
Third Party Claim is defined as a "Direct Claim". Buyer shall
notify Seller of the claim in writing promptly after learning of
the existence of such claim, which notice shall describe in
reasonable detail the claim, the amount thereof (if known and
quantifiable), and a reasonably detailed description of the facts
giving rise to such claim. Any dispute as to whether such notice
was prompt and the effect of the failure to give prompt notice on
Seller's obligations hereunder shall be resolved by arbitration
pursuant to the procedures set forth in Section 9.6(b)(ii)(C). As
of the Closing Date, such notice is deemed to have been given to
Seller with respect to the Known Environmental Matters. Any
Direct Claim shall be subject to the following procedures:
(A)(1) Upon assertion of Direct Claim or the Onsite
Remedial Action associated with a Third Party Claim, Seller
shall be entitled to assume Principal Management of the
subject matter of the Direct Claim or the Onsite Remedial
Action. To assume Principal Management, Seller must notify
Buyer within 60 days of said notice that it intends to assume
Principal Management. To assume Principal Management, Seller
must also in such notice first acknowledge in writing that it
will undertake sole or principal responsibility for the
Direct Claim or Onsite Remedial Action, subject to Seller's
right to rescind such acknowledgement upon its reasonable
determination, and upon prompt written notice to Buyer (a
"Denial Notice") that it does not bear sole or principal
liability for the Direct Claim or Onsite Remedial Action
under this Agreement. If Seller has elected to assume
Principal Management, it shall no longer be entitled to issue
a Denial Notice after Seller has irrevocably committed to a
Governmental Body the expenditure of any material costs with
respect to the Onsite Remedial Action. In the event Seller
either elects not to undertake Principal Management or has
provided Buyer with a Denial Notice, Buyer shall assume
Principal Management of the subject matter of the Direct
Claim or the Onsite Remedial Action. Any acknowledgement of
sole or principal responsibility by Seller shall be without
prejudice to any of Seller's rights to seek indemnity or
contribution from any third parties. As of the Closing Date,
Seller is deemed to have assumed Principal Management with
respect to all Known Environmental Matters.
(2) The party not exercising Principal Management
with respect to a particular claim shall be entitled, at its
sole cost and expense, to reasonably participate in the
management of such Direct Claim or Onsite Remedial Action.
Such participation shall include, without limitation: (i)
the right to receive copies of all reports, workplans and
analytical data submitted to a Governmental Body, all notices
or other letters or documents received from a Governmental
Body, any other documentation and correspondence materially
bearing to the Direct Claim or Onsite Remedial Action, and
notices of material meetings; (ii) the opportunity to attend
and participate in such material meetings; and (iii) the
right of reasonable consultation with the party exercising
Principal Management.
(3) In the event it undertakes Principal
Management of any matter, Seller shall, upon reasonable
notice to Buyer, have all necessary and reasonable access to
the relevant subject facility of Buyer. Seller shall
undertake all activities that it conducts or coordinates
hereunder in a manner that does not unreasonably interfere
with the day-to-day operation of such facility of Buyer;
provided, however, that Seller shall not be liable or
responsible to Buyer for costs or losses caused by
interruption of the Company's or any Subsidiary's business
resulting from work done by Seller or its agents in
connection with any Onsite Remedial Action.
(4) The party undertaking Principal Management
hereunder for any matter shall manage the matter in good
faith and in a responsible manner, and any activities
conducted in connection therewith shall be undertaken
promptly and completed expeditiously using commercially
reasonable efforts, subject to the schedules and approvals
required by the applicable Governmental Body. The parties
agree to reasonably cooperate with one another in connection
with addressing any Direct Claim or Onsite Remedial Action.
Either party may take such action as is reasonable under the
circumstances to respond to an actual or threatened emergency
or imminent endangerment situation arising from a Direct
Claim or Onsite Remedial Action, and such action on the part
of Buyer or the Company shall be included as Damages arising
from such Direct Claim or Onsite Remedial Action.
(B) An Onsite Remedial Action or Direct Claim shall be
deemed to have been adequately completed to the extent that
it attains compliance with Environmental Laws, including,
without limitation, all action levels or cleanup standards
promulgated thereunder, and any lawful order or directive of
an appropriate Governmental Body. An Onsite Remedial Action
shall not be required to render any affected industrial
facility suitable for use beyond use as an industrial
property; provided, however, that an Onsite Remedial Action
shall meet all lawful requirements imposed by a Governmental
Body. Except as otherwise provided on Schedule 4.18, Seller
shall be responsible for any costs arising out of changes in
Environmental Laws that specifically affect the Onsite
Remedial Action of Known Environmental Matters or otherwise
during the period from the Closing Date until the completion
of an Onsite Remedial Action. Any costs arising out of
changes in Environmental Laws after the completion of an
Onsite Remedial Action of Known Environmental Matters or
otherwise shall be the responsibility of Buyer.
(C) If a dispute arises with respect to a Direct Claim
or Onsite Remedial Action, the parties agree to negotiate in
good faith in an attempt to resolve such dispute. In the
event such dispute cannot be resolved within 20 days (or such
shorter period as exigent circumstances may warrant), the
parties shall select within 14 days thereafter (or such
shorter period as exigent circumstances may warrant) a
mutually satisfactory technical consultant, lawyer, or other
person (the "Environmental Arbitrator"), who shall review the
information relevant to the dispute provided by the parties
and within 30 days (or such shorter period as exigent
circumstances may warrant) render a decision binding upon the
parties hereto irrespective of whether either party contests
or participates in the dispute resolution. Any fees charged
by the Environmental Arbitrator shall be borne equally by
Buyer and Seller. In making its determination, the
Environmental Arbitrator shall be bound by the standards set
forth in this Section 9.6. The final determination of the
Environmental Arbitrator shall be final and binding on the
parties and there shall be no appeal from or reexamination of
such final determination, except for fraud, perjury, evident
partiality or misconduct by the Environmental Arbitrator
prejudicing the rights of any party, and to correct manifest
clerical errors. Buyer and Seller may enforce any final
determination of the Environmental Arbitrator in any court of
competent jurisdiction.
9.7 Exclusive Remedy. Except as provided in
Section 11.14 of this Agreement, Section 11.13 of the Day U.K.
Agreement or Section 13.16 of the Day Canada Agreement, following
the Closing, the indemnification rights provided in this Section 9
(and those provided in Section 9 of the Day U.K. Agreement or
Section 11 of the Day Canada Agreement) shall be the sole and
exclusive remedy for any inaccuracy of any representation or
warranty or breach of any covenant or agreement of (a) Buyer,
Seller or M.A. Hanna contained in this Agreement or otherwise
relating to this Agreement or in respect of this Agreement or the
current or previous assets or operations of the Company and the
Subsidiaries, or (b) Cadillac U.K. or Day Canada contained in the
Day U.K. Agreement or the Day Canada Agreement, as the case may
be, or otherwise relating to such agreements or in respect of such
agreements or the current or previous assets or operations of Day
U.K. or Day Canada, and none of Buyer, Seller or M.A. Hanna shall
(and M.A. Hanna shall not permit Day Canada or Cadillac U.K. to)
assert any claim following the Closing, whether for indemnity,
contribution or otherwise and whether based in contract, tort,
statute or otherwise, against each other or their respective
Affiliates, shareholders, directors, officers, employees or agents
relating to this Agreement, the Day U.K. Agreement or the Day
Canada Agreement or based hereon or relating to or in respect of
the current or previous assets or operations of the Consolidated
Entities except by exercising its rights under this Section 9.
10. Termination.
10.1 Termination. Anything in this Agreement to
the contrary notwithstanding, this Agreement may be terminated and
the transactions contemplated hereby abandoned at any time prior
to the Closing Date only:
10.1.1 By mutual written consent of Seller
and Buyer;
10.1.2 By Seller, if Buyer has breached in
any material respect any representation, warranty, covenant
or agreement contained in this Agreement, the Day U.K.
Agreement or the Day Canada Agreement, and such breach has
not been remedied within five Business Days after receipt of
notice specifying such breach and demanding such breach to be
remedied;
10.1.3 By Buyer, if M.A. Hanna, Seller, Day
Canada or Cadillac Plastic Limited, as applicable, has
breached in any material respect any representation,
warranty, covenant or agreement contained in this Agreement,
the Day U.K. Agreement or the Day Canada Agreement, such
breach is material to the Consolidated Entities, taken as a
whole, and such breach has not been remedied within five
Business Days after receipt of notice specifying such breach
and demanding such breach to be remedied;
10.1.4 By Seller or Buyer, if the Closing
does not occur on or before September 1, 1995; provided,
however, that if the Closing does not occur on or prior to
the expiration of 14 days after the Second Trigger Date, (i)
Seller shall be entitled to terminate this Agreement, and
(ii) even if Seller does not terminate this Agreement, Seller
shall no longer be required to comply with Sections 8.16 or
8.17;
10.1.5 By Buyer or Seller if either (i) the
Day Canada Agreement is terminated pursuant to Section 12.1
thereof or (ii) the Day U.K. Agreement is terminated pursuant
to Section 10.1 thereof; and
10.1.6 By Buyer or Seller, if notwithstanding
Buyer's and Seller's efforts pursuant to Section 8.6(b)
hereof, any Governmental Body shall have issued an Order or
taken any other action restraining, enjoining or otherwise
prohibiting the transactions contemplated hereby, and such
Order or other action shall have become final and
nonappealable.
10.2 Effects of Termination. (a) If this
Agreement is terminated pursuant to Section 10.1 and the
transactions contemplated hereby are not consummated, this
Agreement shall become void and of no further force and effect,
except for the provisions of Section 8.2 relating to the
obligations of Buyer under the Confidentiality Agreement, Section
8.5 relating to publicity and Section 8.8 relating to expenses and
except that such termination shall not relieve any party then in
breach of any covenant or agreement contained in this Agreement,
the Day Canada Agreement or the Day U.K. Agreement from liability
in respect of such breach or breaches.
(b) Notwithstanding anything in the Day Canada
Agreement and the Day U.K. Agreement to the contrary, termination
of this Agreement in accordance with the terms of Section 10.1
shall constitute termination of the Day Canada Agreement and Day
U.K. Agreement pursuant to Section 12.1.1 of the Day Canada
Agreement and Section 10.1 of the Day U.K. Agreement.
11. Miscellaneous.
11.1 Assignment; Successors and Assigns. No party
to this Agreement shall convey, assign or otherwise transfer any
of its rights or obligations under this Agreement without the
express written consent of the other party to this Agreement;
provided, however, that (a) Seller may assign its rights hereunder
to any of its Affiliates without the consent of Buyer, (b) Buyer
may assign its rights hereunder to any direct or indirect wholly
owned subsidiary of Buyer without the consent of Seller, and
(c) Buyer Group may assign Buyer Group's rights to seek
indemnification pursuant to Section 9 to its senior lender to
secure the senior debt; and provided, further, that an assignment
of rights under this Agreement shall in no way diminish the
obligations of the parties to this Agreement and, from and after
any such assignment, the representations and warranties made by
the assignor shall be made by the assignor and the assignee. Such
assignment shall not cause the lenders to be indemnitees under
this Agreement and their rights shall be limited to the rights of
the Company under Section 9. This Agreement shall be binding upon
and shall inure to the benefit of the parties to this Agreement
and their respective successors and permitted assigns.
11.2 Notices. All notices or other communications
required or permitted to be given hereunder shall be in writing
and shall be delivered by hand or sent by telecopy or by reputable
overnight courier service, and shall be deemed given when so
delivered by hand, telecopied, or one business day after sending
in the case of overnight courier service as follows:
11.2.1 If to Seller or any member of the
Seller Group, as follows:
c/o M.A. Hanna Company
Suite 36-5000
200 Public Square
Cleveland, Ohio 44114-2304
Attention: General Counsel
Chief Financial Officer
Telecopy No.: (216) 589-4329
Copy to:
Jones, Day, Reavis & Pogue
North Point
901 Lakeside Avenue
Cleveland, Ohio 44114
Attention: Lyle G. Ganske, Esq.
Telecopy No.: (216) 579-0212
11.2.2 If to Buyer or any member of the Buyer
Group, as follows:
Day International Holdings, Inc.
c/o American Industrial Partners
One Maritime Plaza, Suite 2415
San Francisco, CA 94111
Attention: Lawrence W. Ward, Jr.
Telecopy No.: (415) 788-5302
Copies to:
American Industrial Partners
One Maritime Plaza, Suite 2415
San Francisco, CA 94111
Attention: Lawrence W. Ward, Jr.
Telecopy No.: (415) 788-5302
And
Kirkland & Ellis
655 Fifteenth Street, N.W.
Suite 1200
Washington, D.C. 20005
Attention: Jack M. Feder, Esq.
Telecopy No.: (202) 879-5200
or in any case to such other address or telecopy number as
hereinafter shall be furnished as provided in this Section 11.2 by
any of the parties to this Agreement to Seller and Buyer.
11.3 Waiver; Remedies. No delay on the part of
Buyer or Seller in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any waiver
on the part of Buyer or Seller of any right, power or privilege
hereunder operate as a waiver of any other right, power or
privilege hereunder, nor shall any single or partial exercise of
any right, power or privilege hereunder preclude any other or
further exercise thereof or the exercise of any other right, power
or privilege hereunder.
11.4 No Recourse Against Others. Each of the
parties hereto agrees that no director, officer, employee or
agent, in his capacity as such, of M.A. Hanna, the Company, any
Subsidiary, Seller, or Buyer have any liability hereunder or for
any claim related to this Agreement, the Day Canada Agreement or
the Day U.K. Agreement.
11.5 Entire Agreement. This Agreement, together
with the Annexes and Schedules hereto and the Confidentiality
Agreement, constitute the entire agreement between the parties
with respect to the subject matter of this Agreement and
supersedes all other prior agreements or understandings of the
parties relating thereto.
11.6 Amendment. This Agreement may be modified or
amended only by written agreement of the parties.
11.7 Further Assurances. Seller and M.A. Hanna
shall, at the written request and expense of Buyer, at any time
and from time to time following the Closing hereunder, execute and
deliver to Buyer all such further instruments and take all such
further action as may be reasonably necessary or appropriate in
order to more effectively sell, assign, transfer and convey to
Buyer the Shares or otherwise to confirm or carry out the
provisions of this Agreement. Buyer shall, and shall cause the
Company to, at any time and from time to time following the
Closing hereunder, execute and deliver to Seller and M.A. Hanna
all such further instruments and take all such further action as
may be reasonably necessary or appropriate in order to confirm or
carry out the provisions of this Agreement.
11.8 Counterparts. This Agreement may be executed
in counterparts, each of which shall be deemed an original but all
of which together shall constitute a single instrument.
11.9 Governing Law; Language. This Agreement
shall be governed by, and construed in accordance with, the laws
of the State of Ohio without regard to principles of conflicts of
law. This Agreement and all other agreements, instruments and
notices referred to in this Agreement or supplementary to this
Agreement shall be prepared, furnished in, and governed and
controlled by the English language.
11.10 Schedules. The Schedules attached to this
Agreement and to the Day U.K. Agreement and Day Canada Agreement
are incorporated in this Agreement and shall be part of this
Agreement for all purposes, and information disclosed in response
to any Section of this Agreement, the Day U.K. Agreement or the
Day Canada Agreement shall, should the existence of such
information be relevant to any other Section, be deemed to be
disclosed with respect to such Section whether or not a specific
cross-reference appears.
11.11 Captions. All section titles or captions
contained in this Agreement and the table of contents to this
Agreement are for convenience only, shall not be deemed a part of
this Agreement and shall not affect the meaning or interpretation
of this Agreement. Unless otherwise indicated, all references in
this Agreement to numbered Sections are to Sections of this
Agreement.
11.12 Rights of Third Parties. Except as provided
in Section 9 hereof, nothing in this Agreement is intended, or
shall be construed, to confer upon or give any Person other than
the parties to this Agreement any rights or remedies under or by
reason of this Agreement.
11.13 Severability. If it is found in a final
judgment by a court of competent jurisdiction (not subject to
further appeal) that any term or provision of this Agreement is
invalid or unenforceable, (a) the remaining terms and provision
hereof shall be unimpaired and shall remain in full force and
effect and (b) the invalid or unenforceable provision or term
shall be replaced by a term or provision that is valid and
enforceable and that comes closest to expressing the intention of
such invalid or unenforceable term or provision.
11.14 Equitable Relief. The parties hereto agree
that irreparable damage would occur in the event that any of the
covenants or agreements of this Agreement were not performed in
accordance with their specific terms or were otherwise breached.
Accordingly, it is agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof in any
court of the United States or any state having jurisdiction, this
being in addition to any other remedy to which they are entitled
pursuant to this Agreement at law or in equity.
11.15 Integration. M.A. Hanna, on behalf of
itself, Day Canada and Cadillac U.K., and Buyer, on behalf of
itself and its Affiliates that will be bound under each of the Day
U.K. Agreement and Day Canada Agreement, hereby agree as follows:
(a) If there is any inconsistency or conflict
among the terms of this Agreement, the Day U.K. Agreement, or the
Day Canada Agreement, the terms of this Agreement shall take
precedence.
(b) The Closing under each of the Day U.K.
Agreement and the Day Canada Agreement shall occur only on the
Closing Date (so long as the conditions of each of the parties to
the Day U.K. Agreement and the Day Canada Agreement have been
satisfied or waived at such time).
(c) The conditions set forth in Section 7.1 and
7.2 of the Day U.K. Agreement and Section 9.1.1 and 9.1.2 of the
Day Canada Agreement shall be deemed to have been satisfied unless
the failure of an event described in any of those Sections would
be material to the Consolidated Entities, taken as a whole.
(d) The procedure for adjusting the Purchase Price
set forth in Section 2.3 of this Agreement satisfies the
requirement for an adjustment of the purchase price payable under
the Day U.K. Agreement and the Day Canada Agreement set forth in
Section 2.4 of the Day U.K. Agreement and Section 4.2 of the Day
Canada Agreement, respectively.
(e) The term "Closing Date Accounts" as used in
the Day U.K. Agreement shall mean the Closing Date Balance Sheet.
(f) Buyer shall not be liable to Day Canada in
respect of any "Assumed Liability" under the Day Canada Agreement
to the extent that the existence of such liability or obligation
constitutes an inaccuracy in any representation or warranty or a
breach of any covenant made by Seller or M.A. Hanna in this
Agreement.
IN WITNESS WHEREOF, the parties have caused this
Agreement to be duly executed and delivered as of the date first
above written.
BUYER:
DAY INTERNATIONAL HOLDINGS, INC.
By: /s/ Lawrence W. Ward, Jr.
Name: Lawrence W. Ward, Jr.
Title: Vice President
SELLER:
CADILLAC PLASTIC GROUP, INC.
By: /s/ Michael S. Duffey
Name: Michael S. Duffey
Title: Treasurer
M.A. HANNA:
M.A. HANNA COMPANY
By: /s/ Michael S. Duffey
Name: Michael S. Duffey
Title: Treasurer
FIRST AMENDMENT TO
STOCK PURCHASE AGREEMENT
FIRST AMENDMENT (this "Amendment") dated as of June 1,
1995 to the Stock Purchase Agreement dated April 11, 1995 (the
"Purchase Agreement") among DAY INTERNATIONAL GROUP, INC.
(formerly known as Day International Holdings, Inc.), a Delaware
corporation ("Buyer"), CADILLAC PLASTIC GROUP, INC., a Michigan
corporation ("Seller"), and M.A. HANNA COMPANY, a Delaware
corporation ("M.A. HANNA"). Capitalized terms used herein but
not defined herein shall have the meanings assigned such terms in
the Purchase Agreement.
Section 1. Amendment to Article II. Article II of the
Purchase Agreement is hereby amended and supplemented by adding
the following as Section 2.5:
"2.5 Day France Capital Reduction. Notwithstanding
anything in this Agreement to the contrary, Seller shall,
prior to the Closing, cause (a) Day International S.A.R.L.
("Day France") to amend its Charter Documents to reduce the
par value of the shares of Day France to enable Day France
to pay cash dividends (the "Capital Reduction"), and (b) Day
France and the Company to take any and all actions required
to effect the Capital Reduction. In the event that a
creditor of Day France shall make a claim against Day France
as a result of the Capital Reduction in accordance with
applicable Law and (i) such claim exceeds $50,000, and (ii)
a court of competent jurisdiction orders Day France to pay
such claim more than 30 days prior to its stated maturity,
then Seller, at Buyer's written request, shall promptly pay
to Buyer the amount of such claim so ordered by the court
and Buyer shall thereafter promptly repay such amount to
Seller on the stated maturity date of such claim. Seller
shall indemnify and hold harmless Buyer and Day France from
any (i) Taxes or (ii) penalties, fines or government actions
resulting from the actions of Day France contemplated by
this Section 2.5 and the reasonable costs of defending
against such claims or Taxes, if required."
Section 2. Amendment to Section 4.18(a). Section
4.18(a) of the Purchase Agreement is hereby amended and
superseded in all respects by the provisions set forth in this
Amendment. As amended and restated Section 4.18(a) shall read in
its entirety:
"(a) The Company possesses, is in compliance
in all material respects with, and has complied in all
material respects with, all material permits, licenses
and government authorizations required for the conduct
of its business under all Laws, regulations, Orders and
other requirements having the force and effect of Law
relating to public or workplace health and safety or
pollution and protection of the environment (including,
without limitation, those relating to the discharge of
materials into the environment) ("Environmental Laws"),
and the Company is otherwise in compliance in all
material respects with, and has otherwise complied in
all material respects with, all applicable
Environmental Laws."
Section 3. Amendment to Section 11.15. Section 11.15
of the Purchase Agreement is hereby amended and supplemented by
adding the following as clause (g) thereto:
"(g) The term "Senior Debt Agreements" as
used in Section 2.3 of the Day U.K. Agreement shall
mean (i) any and all agreements relating to debt
financing incurred by Buyer or its affiliate or one or
more of the Consolidated Entities to finance a portion
of the Purchase Price (as such term is defined in this
Agreement, the Day U.K. Agreement and the Day Canada
Agreement), and any amendments, restatements or
refinancings thereof, including without limitation any
debt contemplated by the Commitment Letters attached
hereto as Annex D (or any substitutions therefor
contemplated by Section 8.19), and (ii) any agreements
relating to debt financing incurred by any transferee
or assignee of Buyer, its affiliates or any
Consolidated Entity; provided, however, that in no
event shall any amendments or restatements of the
Senior Debt Agreements or refinancings of the
indebtedness evidenced thereby cause Cadillac U.K.'s
right to receive payment from Buyer or any transferee
or assignee of Buyer under the Buyer Note to be
subordinated to any indebtedness other than the
indebtedness originally incurred by Buyer under the
Senior Debt Agreements prior to giving effect to any
such amendments, restatements or refinancings."
Section 4. Amendments to Annex A-2.
(a) Item 7 of Annex A-2 of the Purchase Agreement is
hereby amended and superseded in all respects by the provisions
set forth in this Amendment. As amended and restated, Item 7 of
Annex A-2 shall read in its entirety:
"7. The Audited December 31, 1994 Balance
Sheet will reflect the long term portion of the FASB
106 accrual in the amount of $3.358 million (which
together with the $.306 million of liability related to
certain pension plans total the $3.664 million
reflected as other post retirement benefits on the
unaudited balance sheet on Schedule 4.7(a)). The
Closing Date Balance Sheet will reflect a FASB 106
accrual determined in accordance with Section 2.3."
(b) Item 9 of Annex A-2 of the Purchase Agreement is
hereby amended and superseded in all respects by the provisions
set forth in this Amendment. As amended and restated, Item 9 of
Annex A-2 shall read in its entirety:
"9. No tax provision shall be made in the
Audited December 31, 1994 Balance Sheet or the Closing
Date Balance Sheet related to Inland Revenue's
disallowance of a 1993 obsolete inventory provision of
118,000 pounds sterling."
(c) Annex A-2 of the Purchase Agreement is hereby
amended and supplemented by the addition of Items 10, 11, and 12
which shall read as follows:
"10. The LTIP liabilities (resulting from the
LTIP Unit Award program of Seller) recorded in the
Company's historical financial statements shall not be
reflected on the Audited December 31, 1994 Balance
Sheet or the Closing Date Balance Sheet."
"11. The 157,000 pounds sterling reserve of Day U.K.
reflected on the Audited December 31, 1994 Balance Sheet, which
may have been reversed on the books and records of Day U.K., shall be
reflected on the Closing Date Balance Sheet notwithstanding
such reversal."
"12. All assets and liabilities of Day
International Pty. Ltd. shall be excluded from the Audited
December 31, 1994 Balance Sheet and the Closing Date Balance
Sheet."
Section 5. Amendment to Schedule 8.3. Schedule 8.3 of
the Purchase Agreement is hereby amended and supplemented by the
addition of the following:
"The Company shall be permitted to dividend the
capital stock of Day International Pty. Ltd. to Seller prior
to the Closing."
Section 6. Acknowledgment. Buyer hereby acknowledges
receipt from Seller of notice and information regarding
litigation involving Day International GmbH and that such notice
and information satisfies Seller's obligations under Section 8.4
of the Purchase Agreement.
Section 7. Continued Effectiveness. Except as
specifically amended hereby, the Purchase Agreement shall
continue in full force and effect.
Section 8. Governing Law. This Amendment shall be
governed by, and construed in accordance with, the laws of the
State of Ohio without regard to principles of conflicts of law.
Section 9. Counterparts. This Amendment may be
executed in counterparts, each of which shall be deemed an
original but all of which taken together shall constitute a
single instrument.
IN WITNESS WHEREOF, Buyer, Seller and M.A. Hanna have
each caused this Amendment to be duly executed as of the day and
year first above written.
DAY INTERNATIONAL GROUP, INC.
By: /s/ Lawrence W. Ward, Jr.
Name: Lawrence W. Ward, Jr.
Title: Vice President
CADILLAC PLASTIC GROUP, INC.
By: /s/ Michael S. Duffey
Name: Michael S. Duffey
Title: Treasurer
M.A. HANNA COMPANY
By: /s/ Michael S. Duffey
Name: Michael S. Duffey
Title: Vice President, Chief
Financial Officer,
and Treasurer
EXHIBIT 99.1
For Immediate Release
Investor Contact: Barb Gould (216) 589-4085
Media Contact: Andy Opila (216) 589-4018
American Industrial Partners Contact: Larry Ward (415) 788-7354
M.A. HANNA SIGNS AGREEMENT TO SELL DAY INTERNATIONAL, INC.
Cleveland (April 12, 1995) ... M.A. Hanna Company (NYSE/CHX:MAH),
an international specialty chemicals company, has entered into an
agreement to sell its Day International, Inc. business to American
Industrial Partners Capital Fund. The agreement is contingent on
American Industrial Partners securing financing and regulatory and other
approvals.
Day International, with 1994 sales of $100 million, produces
highly engineered printing blankets used on offset printing presses to
transfer ink from the printing plate to substrates, like paper, and
consumable parts used by textile mills in the production of yarns and
fabrics. It has manufacturing facilities in Asheville, North Carolina;
Three Rivers, Michigan; Dundee, Scotland; and Lerma, Mexico. All are
ISO registered.
Terms of the agreement -- which is expected to close in the next
90 days -- were not disclosed.
HANNA SIGNS AGREEMENT TO SELL DAY INTERNATIONAL -- 2
"We purchase well-run, profitable businesses which are leaders in their
fields. Our philosophy and focus are on internal improvements and
growth," said Burnell H. Roberts, former Chief Executive Officer and
Chairman of Mead and a partner of American Industrial Partners. "Day
International is a technology and market leader in the United States.
We are interested in helping them maintain and improve their position in
the United States and expand in Europe and Asia."
M.A. Hanna Chairman and Chief Executive Officer Martin D. Walker
said, "We believe that the customers and associates of Day International
will be well served with the company in the hands of an owner focused on
strengthening Day's presence in the printing and textiles industries.
The M.A. Hanna shareholders will benefit from the opportunity to
reinvest the proceeds from Day into Hanna's higher growth core polymer
businesses."
Based in San Francisco and New York, American Industrial Partners
directs an equity fund of over $500 million. The firm's partners
include a number of former chief executive officers of leading public
companies. Investments are focused on companies with strong operating
management, reliable cash flow and significant market shares. The firm
has extensive knowledge of the rubber and graphic arts supply
industries.
M.A. HANNA SIGNS AGREEMENT TO SELL DAY INTERNATIONAL -- 3
Based in Cleveland, M.A. Hanna's primary businesses are plastics
and rubber compounding, color and additive concentrates, and
distribution of resins and engineered plastic shapes.
EXHIBIT 99.2
For Immediate Release
M.A. Hanna Company
Investor Contact: Barb Gould (216) 589-4085
Media Contact: Andy Opila (216) 589-4018
American Industrial Partners Contact: Larry Ward (415) 788-7354
M.A. HANNA COMPLETES SALE
OF DAY INTERNATIONAL, INC.
CLEVELAND (June 6, 1995) ... Day International Group Inc. , a
company organized by American Industrial Partners, has acquired Day
International, Inc., effective June 6, 1995. Day International was a
business unit of M.A.Hanna Company (NYSE/CHX:MAH), an international
specialty chemicals company.
Terms of the sale were not disclosed. M.A. Hanna announced the
agreement to sell Day International on April 12, 1995.
"The funds from the sale of Day International will provide the
financial flexibility to pursue growth opportunities in compounding, color
and additive concentrates and distribution both internally and through
acquisitions in North America, Europe and Asia," said M.D. Walker,
chairman and chief executive officer of M.A. Hanna Company.
Day International, with 1994 sales of $120 million, produces highly
engineered printing blankets used on offset printing presses to transfer
ink from the printing plate to substrates, like paper, and consumable
parts used by textile mills in the production of yarns and fabrics. It
has manufacturing facilities in Asheville, North Carolina; Three Rivers,
Michigan; Dundee, Scotland; and Lerma, Mexico.
Based in San Francisco and New York, American Industrial Partners
directs equity funds of over $500 million. The firm's partners include a
number of former chief executive officers of leading public companies.
Investments are focused on companies with strong operating management and
significant market shares. The firm has extensive knowledge of the rubber
and graphic arts supply industries.
M.A. Hanna is an international specialty chemicals company with 1994
sales of $1.7 billion. Its primary businesses are plastics and rubber
compounding, color and additive concentrates, and distribution of plastic
resins and engineered shapes.
