Exhibit 2.1
PURCHASE AGREEMENT
By and among
Material Sciences Corporation,
MSC Specialty Films, Inc.,
Bekaert Corporation,
And
N.V. Bekaert S.A.
Dated: June 10, 2001
Table of Contents
1. SALE AND PURCHASE OF MEMBERSHIP INTERESTS IN ISF AND NEWCO....... 3
1.1 Sale, Assignment and Transfer............................. 3
1.2 Purchase Price............................................ 3
1.3 Payment of Purchase Price................................. 4
1.4 Post-Closing Purchase Price Adjustments................... 4
1.5 Allocation of Purchase Price.............................. 6
1.6 Business Day.............................................. 6
1.7 Conveyance of Title....................................... 7
2. PURCHASE OF INTELLECTUAL PROPERTY BY NVB OR ITS AFFILIATE........ 7
2.1 Purchase of Intellectual Property Assets.................. 7
2.2 Research Frontiers Agreement.............................. 8
2.3 Purchase Price Allocation................................. 8
2.4 Conveyance of Title....................................... 8
3. REPRESENTATIONS AND WARRANTIES OF THE MSC PARTIES................ 8
3.1 Organization.............................................. 8
3.2 Agreements................................................ 10
3.3 Financial................................................. 11
3.4 Legal..................................................... 15
3.5 Business.................................................. 17
3.6 Assets.................................................... 24
3.7 Real Property............................................. 27
3.8 Environmental Matters..................................... 28
3.9 Health and Safety Matters................................. 29
3.10 Brokers and Finders....................................... 30
3.11 Full Disclosure........................................... 30
4. REPRESENTATIONS AND WARRANTIES OF THE BEKAERT PARTIES............ 30
4.1 Organization and Power.................................... 30
4.2 Agreements................................................ 30
4.3 Investment Intent......................................... 31
4.4 Brokers and Finders....................................... 31
4.5 Full Disclosure........................................... 31
5. INTENTIONALLY LEFT BLANK......................................... 31
6. PRE-CLOSING COVENANTS............................................ 32
6.1 Consents of Third Parties................................. 32
6.2 Conduct of Business....................................... 32
6.3 Forbearance by the MSC/SFI Entities....................... 32
6.4 Insurance and Maintenance of Assets....................... 33
6.5 Access.................................................... 33
6.6 Satisfaction of Conditions................................ 33
6.7 Public Announcements...................................... 33
6.8 Subsidiary Reorganizations................................ 33
6.9 No Negotiation............................................................. 33
7. CLOSING........................................................................... 34
7.1 Conditions to the MSC Parties' Obligations................................. 34
7.2 Conditions to the Bekaert Parties' Obligations............................. 35
7.3 Intentionally Omitted...................................................... 38
7.4 Closing.................................................................... 38
7.5 Termination................................................................ 39
7.6 Effect of Termination...................................................... 39
8. POST-CLOSING AND SPECIAL COVENANTS................................................ 40
8.1 Miscellaneous Covenants.................................................... 40
8.2 Employment................................................................. 41
8.3 Employee Programs.......................................................... 41
8.4 Non-Solicitation/No Hire of Employees...................................... 46
8.5 Nondisclosure; Noncompetition.............................................. 47
8.6 Dispute Resolution......................................................... 49
8.7 Survival of Contribution and Joint Venture Formation Agreement............. 51
8.8 Access to Information...................................................... 51
8.9 Resale Certificates........................................................ 51
8.10 Collection of Monies....................................................... 52
9. INDEMNIFICATION................................................................... 52
9.1 Survival; Right to Indemnification Not Effected by Knowledge............... 52
9.2 Indemnification by the MSC Parties......................................... 52
9.3 Indemnification by Bekaert................................................. 54
9.4 Third Party Claims......................................................... 54
9.5 Procedure for Indemnification - Other Claims............................... 55
9.6 Special Procedures Relating to Environmental Liabilities................... 55
9.7 Time Limitations on Indemnification by the MSC Parties..................... 57
9.8 Time Limitations on Indemnification by the Bekaert Parties................. 57
9.9 Limitations on Indemnification Amounts by the MSC Parties.................. 58
9.10 Limitations on Indemnification Amounts by Bekaert.......................... 59
9.11 Exceptional Product Warranty Claims........................................ 59
10. CONSTRUCTION AND MISCELLANEOUS.................................................... 61
10.1 Definitions................................................................ 61
10.2 Notices.................................................................... 70
10.3 Binding Effect............................................................. 72
10.4 Headings................................................................... 72
10.5 Exhibits Schedules and Disclosure Letter................................... 72
10.6 Counterparts............................................................... 73
10.7 No Waiver of Rights........................................................ 73
10.8 Pronouns................................................................... 73
10.9 Time Periods............................................................... 73
10.10 Modification or Amendment.................................................. 73
10.11 Entire Agreement........................................................... 73
10.12 No Assignment.............................................................. 73
10.13 Severability............................................... 73
10.14 Governing Law.............................................. 74
10.15 Survival................................................... 74
10.16 No Third Party Beneficiaries............................... 74
10.17 Mutual Non-Disclosure Agreement and Letter of Intent....... 74
Schedules
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1.4.1 Preliminary Closing Trial Balance
1.4.2 Working Capital Adjustment
1.4.3 Foreign Subsidiaries Cash-on-Hand Adjustment
1.4.4 Total EVA Plan Adjustment
1.4.5 Total SERP Adjustment
1.4.6 Foreign Subsidiary Intercompany Account Balance
1.4.7 Post-Closing Adjustment Summary
2.1.1 Trademarks
2.1.2 Patents
2.1.4 License Agreements
7.2.16 Released Guarantees
8.3.2 Restricted Stock/Transferred Employees
8.5.2 Noncompetition/Noninterference
Disclosure Schedule
Exhibits
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7.1.4 Form of Bekaert Parties Officer's Certificate
7.1.10 Form of Exclusive Supply Agreement
7.1.11 Form of Services Agreement
7.1.12 Form of License Agreement
7.2.5 Form of MSC Parties Officer's Certificate
7.2.14 Form of Contribution Agreement
8.3.2 Form of Long Term Cash Award Agreement
The registrant hereby agrees to furnish the above Schedules to the Securities
and Exchange Commission upon request.
PURCHASE AGREEMENT
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THIS AGREEMENT ("Agreement"), dated as of this 10/th/ day of June, 2001, is
made among Material Sciences Corporation ("MSC"), a Delaware corporation, with
its principal office at 0000 Xxxx Xxxxx Xxxxxxxxx, Xxx Xxxxx Xxxxxxx, XX 00000,
MSC Specialty Films, Inc. ("MSC/SFI"), a California corporation and wholly-owned
subsidiary of MSC, with its principal office at 0000 Xxxxxxxxx Xxxxxx, Xxx
Xxxxx, XX 00000 (MSC and MSC/SFI, collectively, herein the "MSC Parties"), and
Bekaert Corporation ("Bekaert"), a Delaware corporation and wholly-owned
subsidiary of N.V. Bekaert S.A., with its principal office at 0000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 000, Xxxxx, XX 00000, and N.V. Bekaert S.A. ("NVB"), a Belgian
corporation, with its principal office at Xxxxxxxxxxxxx 0, X-0000, Xxxxxxxx,
Xxxxxxx (Bekaert and NVB, collectively, herein the "Bekaert Parties").
RECITALS:
A. MSC/SFI (directly or through its subsidiaries) is in the business of
developing, manufacturing, marketing, distributing and selling coated flexible
substrates and films for both industrial and window film applications and has
substantial and valuable experience in such business (as conducted by MSC/SFI
and its subsidiaries, herein the "Business").
B. MSC/SFI is a wholly-owned subsidiary of MSC.
X. Xxxxxxx, through its Affiliates, is in the business, among other
activities, of developing, manufacturing, marketing and selling specialized
sputtered thin films on flexible substrates and has substantial and valuable
experience in such business.
X. Xxxxxxx is a wholly-owned subsidiary of NVB.
E. MSC/SFI and Bekaert formed Innovative Specialty Films, LLC ("ISF"), a
Delaware limited liability company, as a joint venture entity whose initial
purpose was to establish, own and operate development and production facilities
in the United States of America and Belgium to develop and manufacture sputter
coated films and to market and sell them to a variety of end-use markets.
F. As of the date hereof, MSC/SFI owns 50% of ISF.
G. Prior to the Closing of this transaction, two of MSC/SFI's wholly
owned subsidiaries, Pro Marketing, Inc., a Nebraska corporation ("Pro
Marketing"), and Solar-Gard International, Inc., a Florida corporation ("Solar-
Gard"), will be merged with and into MSC/SFI. MSC/SFI will be the surviving
entity. As a result of the Solar-Gard merger, MSC/SFI will own all of the equity
in MSC Specialty Films (UK) Ltd., a United Kingdom corporation, Solar Gard
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(SEA) Pte, Ltd., a Singapore corporation, and MSC Specialty Films (Canada) Inc.,
an Ontario corporation.
H. Prior to the Closing of this transaction, MSC/SFI will form a wholly
owned Delaware limited liability company ("Newco"). MSC/SFI will contribute the
Business through the contribution of substantially all of its assets (including
the assets that were formerly owned by Pro Marketing and Solar-Gard) to Newco in
accordance with that certain Contribution Agreement, between the MSC Parties and
Newco (the "Contribution Agreement"), in the form attached hereto as Exhibit
7.2.14.
I. Upon forming Newco, MSC/SFI will transfer to Newco the stock of three
(3) of its wholly owned subsidiaries, MSC Specialty Films (Australasia) Pty.
Limited, an Australian corporation, MSC Specialty Films de Mexico S.A. de C.V.,
a Mexican corporation, and Specialty Films de Services Company S.A. de C.V., a
Mexican corporation, except that 1% of the stock of each of MSC Specialty Films
de Mexico S.A. de C.V. and Specialty Films de Services Company S.A. de C.V. (the
"Mexican Subsidiaries") will be transferred to another Foreign Subsidiary.
J. MSC/SFI desires to sell to Bekaert all of MSC/SFI's right, title and
interest in and to its membership interest in ISF (the "ISF Membership
Interest") and in and to its membership interest in Newco (the "Newco Membership
Interest"), in accordance with the terms and conditions set forth in this
Agreement.
K. MSC/SFI desires to sell to NVB, or its designated Affiliate, all of
MSC/SFI's right, title and interest in and to the Intellectual Property and MSC
desires to sell to NVB, or its designated Affiliate, all of MSC's right, title
and interest in and to a certain agreement with Research Frontiers Incorporated,
and NVB, or its designated Affiliate, desires to purchase such intellectual
property, in accordance with the terms and conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the promises hereinafter set forth, and
for other good and valuable consideration, the mutual receipt and sufficiency of
which is hereby acknowledged, the parties hereby agree as follows:
1. SALE AND PURCHASE OF MEMBERSHIP INTERESTS IN ISF AND NEWCO.
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1.1 Sale, Assignment and Transfer. Subject to the terms and conditions of
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this Agreement, at the Closing, MSC/SFI shall sell, assign and transfer to
Bekaert all of MSC/SFI's right, title and interest in and to the ISF Membership
Interest and the Newco Membership Interest, and Bekaert shall purchase the ISF
Membership Interest and the Newco Membership Interest from MSC/SFI.
1.2 Purchase Price. Subject to the adjustments hereinafter provided in
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Section 1.4,
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the purchase price (the "Purchase Price") for the ISF Membership Interest, the
Newco Membership Interest and the NVB Intellectual Property Rights shall be an
amount equal to One Hundred Twenty-Two Million, One Hundred Thirty-Seven
Thousand, One Hundred Ninety-Five US Dollars (US $122,137,195).
1.3 Payment of Purchase Price. At the Closing, Bekaert and/or NVB shall
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pay MSC/SFI the Purchase Price via wire transfer of immediately available funds
to an account designated by MSC/SFI.
1.4 Post-Closing Purchase Price Adjustments.
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1.4.1 Closing Trial Balance Procedure. Within thirty (30) days
-------------------------------
following the Closing Date, Bekaert shall cause to be prepared and delivered to
MSC/SFI a consolidated closing trial balance for the Companies (the "Preliminary
Closing Trial Balance"), together with copies of all workpapers, notes and other
information relating to the preparation thereof. The Preliminary Closing Trial
Balance shall be prepared in accordance with GAAP consistently applied with the
February 28, 2001 audited financial statements except for Bekaert-approved
changes in accounting for ISF on a two month lag; shall be based on physical
inventories taken as of the Closing Date; and shall be in the form set forth as
an example in Schedule 1.4.1. During the thirty (30) day period following
MSC/SFI's receipt of the Preliminary Closing Trial Balance, Bekaert shall
cooperate, in good faith, with MSC/SFI in connection with MSC/SFI's review and
analysis of the Preliminary Closing Trial Balance. Within such thirty (30) day
period, MSC/SFI shall inform Bekaert in writing of any objections it may have
with respect to the Preliminary Closing Trial Balance. The Preliminary Closing
Trial Balance shall be deemed accepted by MSC/SFI if no objections are received
by Bekaert during such thirty (30) day period and shall become the Final Closing
Trial Balance. If MSC/SFI provides Bekaert with objections to the Preliminary
Closing Trial Balance, the parties shall negotiate in good faith to resolve any
disputes relating thereto. If the disputes cannot be resolved between the
parties within thirty (30) days following MSC/SFI's notice, all issues in
dispute shall be submitted to a mutually acceptable accounting firm, and such
accounting firm's determination as to the issues in dispute shall be final and
binding on all the parties. The fees and expenses of such accounting firm shall
be paid equally by MSC/SFI and Bekaert. The Preliminary Closing Trial Balance,
after all adjustments pursuant to the foregoing procedures, shall be considered
the "Final Closing Trial Balance."
1.4.2 Working Capital Adjustment. The parties acknowledge that the
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Purchase Price assumes that the Consolidated Closing Purchased Working Capital
outlined as on Schedule 1.4.2 shall be Fifteen Million Two Hundred and Fifty
Thousand US Dollars (US $15,250,000) (the "Target Working Capital").
Accordingly, if the Consolidated Closing Purchased Working Capital reflected on
the Final Closing Trial Balance, is greater than the Target Working Capital, the
Purchase Price shall be increased, dollar for dollar, by the amount that the
Consolidated Closing Purchased Working Capital exceeds the Target Working
Capital. If, on the other hand,
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the Consolidated Closing Purchased Working Capital reflected on the Final
Closing Trial Balance is less than the Target Working Capital, the Purchase
Price shall be decreased, dollar for dollar, by the amount that the Consolidated
Closing Purchased Working Capital is less than such amount. The calculation for
the working capital adjustment shall be in the form set forth as an example in
Schedule 1.4.2. The foregoing adjustment shall be coordinated and netted with
the other Purchase Price adjustments provided for in this Section 1.4 as set
forth in Section 1.4.7.
1.4.3 Foreign Subsidiaries Cash-on-Hand Adjustment. The parties
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acknowledge that the Purchase Price assumes that the aggregate cash-on-hand and
cash equivalents of the Foreign Subsidiaries on the Closing Date shall be Three
Hundred Thousand US Dollars (US $300,000) (the "Target Foreign Cash Amount").
Accordingly, if the aggregate cash on hand and cash equivalents of the Foreign
Subsidiaries reflected on the Final Closing Trial Balance is greater than the
Target Foreign Cash Amount, the Purchase Price shall be increased, dollar for
dollar, by the amount that the Target Foreign Cash Amount exceeds such amount.
If, on the other hand, the Target Foreign Cash Amount is less than the aggregate
amounts reflected on the Final Closing Trial Balance, the Purchase Price shall
be decreased, dollar for dollar, by the amount that the Target Foreign Cash
Amount is less than such aggregate amounts. The calculation for the Foreign
Subsidiaries' cash-on-hand adjustment shall be in the form set forth as an
example in Schedule 1.4.3. The foregoing adjustment shall be coordinated and
netted with the other Purchase Price adjustments provided for in this Section
1.4 as set forth in Section 1.4.7.
1.4.4 EVA Plan Adjustment. The parties acknowledge that the Purchase
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Price assumes that the estimated aggregate June 29, 2001 amount of the bonuses
related to the EVA Plan is Four Hundred and Fifty-Six Thousand Seven Hundred
Eighty-Six US Dollars (US $456,786) excluding the "banked" portion of the amount
assumed to be accrued under the EVA Plan as of June 29, 2001 (the "Preliminary
EVA Plan Accrual"). Within thirty (30) days after the Closing Date, Bekaert
shall prepare and deliver to MSC/SFI a calculation of a revised EVA Plan accrual
(the "Adjusted EVA Plan Accrual") determined by adjusting the Preliminary EVA
Plan Accrual to account for (i) employee hirings, terminations and changes in
compensation from May 25, 2001 to the Closing Date; and (ii) the actual EVA
performance of MSC/SFI through the Closing Date. The Purchase Price assumes an
estimated EVA bank balance on a discounted basis of Five Hundred Seventy-Four
Thousand Five Hundred Fifty-Nine US Dollars (US $574,559). The estimated EVA
bank achievement (Eighty-Nine Thousand Four Hundred Seventy-One US Dollars (US
$89,471)) shall be adjusted to account for increases or decreases in the
discounted achievement at June 29, 2001. The adjustment to the Purchase Price
made pursuant to this Section 1.4.4 (the "Total EVA Plan Adjustment") shall be
in the form set forth as an example in Schedule 1.4.4. If the Total EVA Plan
Adjustment is a positive amount, the Purchase Price shall be increased, dollar
for dollar by the Total EVA Plan Adjustment. If the Total EVA Plan Adjustment is
a negative amount, the Purchase Price shall be decreased dollar for dollar by
the Total EVA Plan Adjustment. The foregoing adjustment shall be coordinated and
netted with the other Purchase Price adjustments provided for in this Section
1.4 as set forth in Section 1.4.7.
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1.4.5 SERP Adjustment. The Purchase Price will be adjusted in
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accordance with Section 8.3.6. The Total SERP Adjustment shall be in the form
set forth on Schedule 1.4.5. The foregoing adjustment shall be coordinated and
netted with the other Purchase Price adjustments provided for in this Section
1.4 as set forth in Section 1.4.7.
1.4.6 Certain Foreign Subsidiary Intercompany Accounts Adjustment.
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An adjustment will be made to the Purchase Price for the intercompany accounts
of the Foreign Subsidiaries listed on Schedule 1.4.6 as of the Closing Date.
Within thirty (30) days after the Closing Date, Bekaert and the MSC Parties
shall determine the balance of the intercompany accounts of the Foreign
Subsidiaries listed on Schedule 1.4.6 (the "Foreign Subsidiary Intercompany
Account Balance") as of the Closing Date. If the Foreign Subsidiary Intercompany
Account Balance is positive, the Purchase Price will be increased, dollar for
dollar, by the positive amount. If the Foreign Subsidiary Intercompany Account
Balance is negative, the purchase price will be decreased, dollar for dollar, by
the negative amount. The foregoing adjustment shall be coordinated and netted
with the other Purchase Price adjustments provided for in this Section 1.4 as
set forth in Section 1.4.7. The corresponding assets or liabilities (which
remain with the Foreign Subsidiaries by virtue of the transfer of stock as set
forth in Section 2.5 of the Contribution Agreement) which are recorded on the
accounting ledgers of the applicable Foreign Subsidiary will be settled
(collected if an asset or paid if a liability) on the same day as the adjusting
payment is made in accordance with Section 1.4.7.
1.4.7 Coordination and Payment of Adjusting Amount. The adjustments
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to the Purchase Price provided for in this Section 1.4 shall be netted together
to arrive at a single overall purchase price adjustment consistent with the
formula for this calculation as set forth in Schedule 1.4.7 (Post Closing
Adjustment Summary). The party required to make the adjusting payment to the
other party shall make such payment within ten (10) days of the determination of
the Final Closing Trial Balance.
1.5 Allocation of Purchase Price. For purposes of Section 1060 of the Tax
----------------------------
Code, the Purchase Price shall be allocated among the underlying assets of
Newco, the underlying assets of ISF and the NVB Intellectual Property Rights as
determined by Bekaert and MSC; provided, however, that the allocation for
property, plant and equipment of Newco will be Twenty Million US Dollars (US
$20,000,000) and the allocation for NVB Intellectual Property Rights will be the
appraised value of such NVB Intellectual Property Rights as determined by the
independent appraiser engaged by NVB. The parties agree to be bound by such
allocation and to complete and attach Internal Revenue Service Form 8594 to
their respective tax returns accordingly.
1.6 Business Day. If a date of a payment to be made under this Article 1
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is not a Business Day, the payment shall be made on the next Business Day, but
shall be deemed to have been made on the date called for in this Agreement.
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1.7 Conveyance of Title. The conveyance of title to the ISF Membership
--------------------
Interest and the Newco Membership Interest shall be effected by the execution
and delivery of such instruments of transfer and assignments as shall be deemed
reasonably required to effectively transfer and assign to, and vest in, Bekaert
the ISF Membership Interest and the Newco Membership Interest and all rights
thereto, and to fully implement the provisions of this Agreement. The documents
of title delivered hereunder shall covenant that good title to the ISF
Membership Interest and the Newco Membership Interest shall vest in Bekaert,
free and clear of all Liens.
2. PURCHASE OF INTELLECTUAL PROPERTY BY NVB OR ITS AFFILIATE.
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2.1 Purchase of Intellectual Property Assets. Subject to the terms and
-----------------------------------------
conditions of this Agreement including, without limitation, Section 8.1.3, at
the Closing, MSC/SFI shall sell, assign, transfer, convey and deliver to NVB, or
its designated Affiliate, all of MSC/SFI's right, title and interest in and to
the Intellectual Property, free and clear of all Liens, and NVB, or its
designated Affiliate, shall purchase, accept and acquire from MSC/SFI such
Intellectual Property ("MSC/SFI Intellectual Property") including, without
limitation, all of MSC/SFI's right, title and interest in and to the following:
2.1.1 Trademarks. All trademarks, service marks, trade dress, logos,
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and allapplications, registrations and renewals in connection therewith,
including, without limitation, those set forth in Schedule 2.1.1;
2.1.2 Patents. All patents, patent applications and patent
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disclosures, together with all reissuances, continuations, continuations-in-
part, divisionals, revisions, extensions, reexaminations and corresponding
patent applications and patents thereof, including, without limitation, those
set forth in Schedule 2.1.2;
2.1.3 Trade Secrets. All trade secrets and confidential business
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information (including, without limitation, secret processes, procedures, ideas,
research and development, know-how, formulas, compositions, engineering,
manufacturing and production processes and techniques, technical data, assembly
design, installation, other technical designs, drawings and specifications,
working notes and memos, market studies, consultants' reports, technical and
laboratory data, competitive samples, engineering prototypes, pricing lists,
cost information, and all similar property of any nature tangible or
intangible);
2.1.4 License Agreements. All contracts, agreements, purchase
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orders, licenses and commitments and arrangements set forth on Schedule 2.1.4
including, without limitation, the Manufacturing Agreement between MSC/SFI and
Orcon Corporation dated February 2, 2001, and the MSC/SFI Technology Agreement
between MSC/SFI and ISF dated November 19, 1998; and
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2.1.5 Other. All licenses and sublicenses granted and obtained
-----
with respect thereto, and rights thereunder, remedies against infringement
thereof, and rights to protection of interests therein under the laws of all
jurisdictions; all know how, techniques, processes, manufacturing methods known
by MSC/SFI, whether patentable or not.
2.2 Research Frontiers Agreement. Subject to the terms and conditions of
-----------------------------
this Agreement, at the Closing, MSC shall sell, assign, transfer, convey and
deliver to NVB, or its designated Affiliate, all of MSC's right, title and
interest in and to the Agreement between Research Frontiers Incorporated and MSC
dated November, 1996, free and clear of all Liens, and NVB shall purchase,
accept and acquire from MSC the assignment of such agreement ("MSC Intellectual
Property").
2.3 Purchase Price Allocation. The amount of the Purchase Price allocated
-------------------------
for the MSC/SFI Intellectual Property and the MSC Intellectual Property shall be
the appraised value of such NVB Intellectual Property Rights as determined by an
independent appraiser.
2.4 Conveyance of Title. The conveyance of title to the MSC/SFI
--------------------
Intellectual Property and the MSC Intellectual Property shall be effected by the
execution and delivery of such instruments of transfer and assignments as shall
be deemed reasonably required to effectively transfer and assign to, and vest
in, NVB, or its designated Affiliate, the MSC/SFI Intellectual Property and the
MSC Intellectual Property and all rights thereto, and to fully implement the
provisions of this Agreement. The documents of title delivered hereunder shall
covenant that good and marketable title to the MSC/SFI Intellectual Property and
the MSC Intellectual Property shall vest in NVB, or its designated Affiliate,
free and clear of all Liens.
3. REPRESENTATIONS AND WARRANTIES OF THE MSC PARTIES.
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As a material inducement to the Bekaert Parties to enter into this
Agreement and consummate the transactions contemplated hereby, the MSC Parties,
jointly and severally, represent and warrant to the Bekaert Parties the
following are true, correct and complete as of the date hereof except as
expressly disclosed in the Disclosure Letter with respect to a specific
representation and warranty as referenced therein:
3.1 Organization.
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3.1.1 Organization and Power of the MSC Parties. Each of the MSC
-----------------------------------------
Parties is a corporation duly organized, validly existing and in good standing
under the laws of the State of its state of incorporation. Each of the MSC
Parties has full corporate power to:
(a) own, lease and operate its assets and carry on its
business as and where such assets are now owned or leased and as such business
is presently being conducted; and
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(b) execute, deliver and perform this Agreement, the
Contribution Agreement, and all other agreements and documents to be executed
and delivered by it in connection herewith.
3.1.2 Organization and Power of the MSC/SFI Entities. Each of the
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MSC/SFI Entities is a corporation duly organized, validly existing and in good
standing under the laws of the state or country of its incorporation or
organization. Each of the MSC/SFI Entities has full corporate power to own,
lease and operate its assets and carry on its business as and where such assets
are now owned or leased and as such business is presently being conducted.
3.1.3 Qualification. Section 3.1.3 of the Disclosure Letter lists
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the only states and countries in which the MSC/SFI Entities (a) own or lease
real property; (b) maintain sales offices or sales agents; or (c) maintain
inventory. Each of the MSC/SFI Entities is duly qualified to do business as a
foreign corporation in each of the states and countries listed on Section 3.1.3
of the Disclosure Letter, and in each other jurisdiction where failure to
qualify would have an adverse effect on such MSC/SFI Entity.
3.1.4 Capitalization. Section 3.1.4 of the Disclosure Letter sets
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forth for each MSC/SFI Entity: (a) the number and class of authorized shares of
capital stock or membership interests, (b) the number of issued and outstanding
shares of capital stock or membership interests, the names of the holders
thereof, and the number of shares of capital stock or membership interests held
by each such holder, and (c) the directors and officers of each MSC/SFI Entity.
The issued and outstanding shares of capital stock or membership interests set
forth in Section 3.1.4 of the Disclosure Letter constitute all of the issued and
outstanding shares or membership interests for such MSC/SFI Entity. All of the
issued and outstanding shares of capital stock or membership interests of each
MSC/SFI Entity have been duly authorized and are validly issued, fully paid and
non-assessable. Except as set forth in Section 3.1.4 of the Disclosure Letter,
none of the MSC/SFI Entities has any ownership interest in or agency
relationship with any other business entity, and none of the MSC/SFI Entities
are a member of any limited liability company, partnership or joint venture.
None of the outstanding equity securities or other securities of any MSC/SFI
Entity was issued in violation of any Laws including, without limitation, the
securities laws of the state or country of incorporation or organization.
3.1.5 Beneficial Ownership. MSC/SFI is the sole record and
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beneficial owner of the ISF Membership Interest and the Newco Membership
Interest (collectively, the "Membership Interests"), and owns the Membership
Interests free and clear of all Taxes, Liens, purchase right, conversion right,
exchange right or other contract commitment. Each of the Membership Interests
have been duly authorized and validly issued, and are fully-paid and non-
assessable. There are no contracts, options, warrants, rights, commitments,
obligations, promises, preemptive rights, undertakings or agreements of any kind
(whether written or oral,
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and whether express or implied) relating to the issuance, sale or transfer of
the Membership Interests. There are no voting trusts, voting agreements, proxies
or other agreements, instruments or undertakings with respect to the voting of
the Membership Interests to which MSC/SFI is a party.
3.1.6 Beneficial Ownership of the MSC/SFI Entities. Each of the
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MSC/SFI Entities is owned of record and beneficially as indicated in Section
3.1.4 of the Disclosure Letter hereto, free and clear of any Taxes, Liens,
options, warrants, purchase rights, conversion rights, exchange rights, or other
contracts or commitments that could require the equity owner to sell, transfer,
or otherwise dispose of shares of capital stock or membership interests of the
applicable MSC/SFI Entity or that could require any MSC/SFI Entity to issue,
sell, or otherwise cause to become outstanding any of its shares of capital
stock or membership interests. There are no contracts, options, warrants,
rights, commitments, obligations, promises, preemptive rights, undertakings or
agreements of any kind (whether written or oral, and whether express or implied)
relating to the issuance, sale or transfer of the capital stock or membership
interests of any MSC/SFI Entity. There are no outstanding equity appreciation,
profit participation, or similar rights with respect to the MSC/SFI Entities.
There are no voting trusts, proxies, or other agreements or understandings with
respect to the voting of any shares of capital stock or membership interest of
the MSC/SFI Entities.
3.1.7 Corporate Records. MSC/SFI has permitted Bekaert to examine
-----------------
each Company's corporate minute and stock record books, all of which are
complete and correct. The corporate minute books contain the Articles or
Certificate of Incorporation or Organization, as applicable, and the bylaws or
governing agreement, as applicable, of the Companies, as applicable, as in
effect on the date hereof and a true and complete record of all actions by and
meetings of the directors (and committees thereof) and equity holders of the
Companies and accurately reflect all transactions referred to therein. At the
Closing, all of those books and records will be in the possession of Newco and
MSC/SFI.
3.2 Agreements.
----------
3.2.1 Enforceability. All requisite corporate action to approve,
--------------
execute, deliver and perform this Agreement, the Contribution Agreement and each
other agreement and document to be delivered by the MSC Parties or a Company in
connection herewith has been taken by the MSC Parties or such Company. This
Agreement, the Contribution Agreement and each other agreement and document to
be delivered by the MSC Parties or a Company in connection herewith have been
duly executed and delivered by the MSC Parties or such Company and constitute
the legal, valid and binding obligations of the MSC Parties or such Company
enforceable in accordance with their respective terms.
3.2.2 Consents. No approval or consent of, or filing with, any
--------
Person or Governmental Authority is required in connection with the transactions
contemplated hereby, in
10
the Contribution Agreement or the execution, delivery or performance by the MSC
Parties or a Company of this Agreement, the Contribution Agreement or any other
agreement or document to be delivered by or on behalf of the MSC Parties or a
Company in connection herewith, which has not been obtained or which is not set
forth in Section 3.2.2 of the Disclosure Letter.
3.2.3 No Conflicts. No action taken by or on behalf of the MSC
-------------
Parties or a Company in connection with the execution, delivery and performance
of this Agreement, the Contribution Agreement and each other agreement and
document delivered by it in connection herewith:
(a) results or will result in a breach or violation of, or
constitute a default under, or gives rise to a right of termination,
modification or acceleration under any MSC Parties or Companies' material
contract, agreement, instrument or indenture to which any MSC Party or Company
is a party;
(b) to the Knowledge of the MSC Parties, disrupts or impairs
any business relationship which any MSC/SFI Entity has with any dealer,
distributor, sales representative, supplier or customer;
(c) conflicts with or violates or will conflict with or
violate:
(i) any Law;
(ii) a MSC Parties' or any Company's Articles or
Certificate of Incorporation or Organization, as applicable, or By-Laws or
governing agreement, as applicable;
(iii) any agreement or contract by which a MSC Party or a
Company is bound; or
(iv) any order, arbitration award, judgment, decree or
other similar restriction to which any MSC Party or any Company is subject;
or
(d) constitutes an event which, after notice or lapse of time
or both, could result or reasonably be expected to result in any of the
foregoing.
3.3 Financial.
---------
3.3.1 Financial Records. Attached to Section 3.3.1 of the Disclosure
-----------------
Letter are:
(a) (1) the Consolidated Financial Statements of the MSC/SFI
Entities as of February 28, 2001, and the related consolidated statements of
income, cash flows,
11
shareowner's equity and comprehensive income for the year ending February 28,
2001, audited by Xxxxxx Xxxxxxxx LLP;
(2) The balance sheet of MSC Specialty Films (Canada) Inc.
as at February 28, 2001, and statements of loss and deficit and changes in
financial position for the year ending February 28, 2001, reviewed by Xxxxxx
Xxxxxx Chartered Accountant; and
(3) the MSC Specialty Films (UK) Limited Report of the
Directors and Financial Statements for the year ended February 28, 2001, audited
by Xxxxxxx Xxxxx Chartered Accountants;
(b) the Consolidated Financial Statements of the MSC/SFI
Entities as of February 28, 2001, and the related consolidated statements of
income, cash flows, shareowner's equity and comprehensive income for the year
ending February 28, 2001, and the balance sheets of the Companies as of February
28, 2001 (the "Acquisition Balance Sheets"), and related income statement for
the twelve (12) month period then ended prepared by the MSC/SFI Entities.
All such financial statements were prepared from the MSC/SFI Entities' books of
account in accordance with GAAP, consistently applied, are accurate and
complete, and present fairly the financial position, results of operations and
cash flows of the MSC/SFI Entities at the dates and for the periods indicated,
except for the absence of footnote disclosure and customary year-end audit
adjustments of a normal recurring type which would not be material in the
aggregate in the Acquisition Balance Sheets and related income statements. The
books of account of the MSC/SFI Entities accurately reflect all items of income
and expense (including, but not limited to, accruals) and all assets and
liabilities of the MSC/SFI Entities in accordance with normal accrual accounting
practices, subject to customary year-end and audit adjustments of a normal,
recurring type which would not be material in the aggregate.
3.3.2 Liabilities. The MSC/SFI Entities have no Liabilities except:
-----------
(a) with respect to MSC/SFI, Pro Marketing and Solar-Gard
(prior to the contribution of the assets in accordance with the Contribution
Agreement, and thereafter, with respect to Newco), the Assumed Liabilities; and
(b) with respect to the Foreign Subsidiaries,
(i) to the extent provided for or reserved against on
the Acquisition Balance Sheets;
(ii) Liabilities which have arisen in the ordinary course
of business consistent with past practice since the date of the Acquisition
Balance Sheets not to exceed US
12
$15,000 in the aggregate per Foreign Subsidiary; or
(iii) as listed in Section 3.3.2 of the Disclosure Letter.
Since February 28, 2001, there has not been any incidence (whether discharged or
not) of any Liability by an MSC/SFI Entity other than Liabilities incurred, and
obligations entered into, in the ordinary course of business consistent with
past practice.
3.3.3 No Changes. Since February 28, 2001, each MSC/SFI Entity has
----------
been operated only in the ordinary course, consistent with past practice, except
for the contribution of the Contributed Assets to Newco in accordance with the
Contribution Agreement. Since that date, there has not been any adverse change,
or event or circumstance which might reasonably be expected to result in an
adverse change, in any MSC/SFI Entities' assets, liabilities, operating
performance, business relationships or prospects. Without limiting the
generality of the foregoing, since February 28, 2001, except as listed in
Section 3.3.3 of the Disclosure Letter, there has not been with respect to any
MSC/SFI Entity any:
(a) waiver, release, cancellation or compromise of any debts
owed to it or claims or rights against others exceeding US $10,000 in the
aggregate;
(b) adverse change in existing credit arrangements with any
bank or other institution;
(c) act or omission by an MSC/SFI Entity out of the ordinary
course of business which had the effect of increasing the cash to be retained by
MSC/SFI at Closing;
(d) purchase or lease (or commitment to purchase or lease) any
assets (other than inventory) in excess of US $20,000 individually or US $60,000
in the aggregate;
(e) (i) creation, incurrence or assumption of any debt, (ii)
assumption, guarantee, endorsement or other act of becoming liable or
responsible for the obligation of any other Person, or (iii) making of any loans
or advances or capital contributions to, or investments in, any other Person;
(f) new contract entered into, except in the ordinary course
of business consistent with past practice, or then existing contract modified or
terminated under circumstances which might adversely affect the condition
(financial or otherwise) or prospects of any MSC/SFI Entity's business;
(g) payment of a dividend or a distribution;
(h) sale or disposition of any assets other than inventory in
the
13
ordinary course of business;
(i) payment or increase by an MSC/SFI Entity of any bonus,
salary or other compensation (except for payment in the ordinary course
consistent with past practice), any employment, severance or similar agreement
with any employee;
(j) adopt or change or increase in the payments to or benefits
under any Employee Program; or
(k) unusual or novel method of transacting business engaged in
by an MSC/SFI Entity or any change in an MSC/SFI Entity's accounting procedures
or practices or its financial structure.
3.3.4 Taxes.
-----
(a) Each MSC/SFI Entity has paid, caused to be paid, or has accrued
or established a proper reserve for on its books and records, all federal,
state, local, foreign, and other taxes, including without limitation, income
taxes, estimated taxes, alternative minimum taxes, excise taxes, sales taxes,
use taxes, value-added taxes, gross receipts taxes, franchise taxes, capital
stock taxes, employment and payroll-related taxes, withholding taxes, stamp
taxes, transfer taxes, windfall profit taxes, environmental taxes and property
taxes, whether or not measured in whole or in part by net income, and all
deficiencies, or other additions to tax, interest, fines and penalties owed by
it (collectively, "Taxes"), owed or required to be paid by it through the date
hereof whether disputed or not. Each MSC/SFI Entity has in accordance with
applicable law filed all federal, state, local and foreign tax returns required
to be filed by it through the date hereof, and all such returns correctly and
accurately set forth the amount of any Taxes relating to the applicable period.
(b) Except as set forth in Section 3.3.4 of the Disclosure Letter,
within the past seven (7) years from the date of this Agreement, there has not
been any audit of any tax return filed by an MSC/SFI Entity , no such audit is
in progress, and no MSC/SFI Entity has been notified by any Taxing Authority
that any such audit is contemplated or pending. No extension of time with
respect to any date on which a tax return was or is to be filed by an MSC/SFI
Entity is in force, and no waiver or agreement by an MSC/SFI Entity is in force
for the extension of time for the assessment or payment of any Taxes.
(c) There is no claim with respect to any MSC/SFI Entity for any
Taxes, and no assessment, deficiency or adjustment has been asserted or proposed
with respect to any return of or with respect to any MSC/SFI Entity.
(d) Section 3.3.4 of the Disclosure Letter contains a true and
complete copy of each written tax allocation or sharing agreement and a true and
complete description of each
14
unwritten tax allocation or sharing arrangement affecting an MSC/SFI Entity. All
such agreements shall be terminated prior to the Closing Date, and no payments
are due or will become due on or after the Closing Date pursuant to any such
agreement or arrangement.
(e) To the Knowledge of the MSC Parties, no Foreign Subsidiaries
will be required to include any amount in income for any taxable period
beginning after the Closing Date as a result of a change in accounting method
for any taxable period ending on or before the Closing Date or pursuant to any
agreement with any Taxing Authority with respect to any such taxable period.
(f) No liens (whether filed or arising by operation of law) have
been imposed upon or asserted against an MSC/SFI Entity as a result of or in
connection with the failure or alleged failure to pay any Taxes.
(g) Except as provided under Treasury Regulations Section 1.1502-6
(or any similar provision of state, local or foreign law), no MSC/SFI Entity has
any Liabilities for the Taxes of any Person as a transferee or successor, or by
contract or otherwise.
(h) No amount that could be received (whether in cash or property
or the vesting of property) as a result of any of the transactions contemplated
by this Agreement by any employee, officer or director of an MSC/SFI Entity who
is a "disqualified individual" (as such term is defined in proposed Treasury
Regulation Section 1.280G-1) under any employment, severance or termination
agreement, other compensation arrangement or plan currently in effect would be
characterized as an "excess parachute payment" (as such term is defined in
Section 280G(b)(1) of the Code) or would be non-deductible by reason of Code
Section 162(m).
(i) No MSC/SFI Entity owns or has owned, within the past ten (10)
years from the date hereof, a direct or indirect interest in any trust,
partnership, corporation or other entity, other than MSC/SFI's ownership of the
Companies.
3.4 Legal.
-----
3.4.1 Compliance with Laws.
--------------------
(a) None of the MSC/SFI Entities:
(i) is in violation of any outstanding arbitration award,
judgment, order or decree;
(ii) is in violation of any Law, including, but not
limited to, any anti-discrimination, antitrust, wage, hour, working
condition, payroll withholding, pension, building, zoning and Tax Law;
15
(b) Except as listed in Section 3.4.1 of the Disclosure Letter
(i) to the Knowledge of the MSC Parties, there have been no allegations of or
inquiries concerning any violations of Law by an MSC/SFI Entity within the past
three (3) years; (ii) no permits, registrations, licenses, franchises,
certifications, registries, approvals or authorizations ("Approvals") of any
Governmental Authority are required to conduct an MSC/SFI Entity's business;
(iii) all such Approvals have been legally obtained and maintained by the
MSC/SFI Entities and are in full force and effect, and the MSC/SFI Entities are
operating in compliance therewith; (iv) all requests for renewals of the
Approvals have been timely filed; (v) no proceeding is pending or, to the
Knowledge of the MSC Parties, is threatened to revoke or limit any of them or
otherwise impose any conditions or obligations on the possession or transfer of
any of them; (vi) there is no state of facts or event which could reasonably be
expected to form the basis for any revocation or limitation of them or other
imposition of conditions or obligations on the possession or transfer of any of
them; (vii) in the past three (3) years, there have been no claims, notices,
orders or directives issued by any Governmental Authority with respect to an
MSC/SFI Entity's business. No MSC/SFI Entity is required to make, and has no
reasonable expectation that any MSC/SFI Entity will be required to make, in
order to operate the Business, any expenditures to achieve or maintain
compliance with any Law, except as set forth in Section 3.4.1 of the Disclosure
Letter. Notwithstanding the foregoing, Section 3.8, and not this Section 3.4.1,
shall apply with respect to any Environmental Matters, except the Permits
relating to environmental shall be listed in this Section 3.4.1(b)(ii).
3.4.2 Product Warranty. Except as listed in Section 3.4.2 of the
----------------
Disclosure Letter, there:
(a) have been no product or service warranty claims made by
customers of any MSC/SFI Entity in the past five (5) years inconsistent with
historical claims experience;
(b) are no product and service warranties outstanding or
currently being offered to customers of any MSC/SFI Entity;
(c) are no other product and service warranties, whether oral
or written, granted by an MSC/SFI Entity except as listed in Section 3.4.2 of
the Disclosure Letter;
(d) to the Knowledge of the MSC Parties, has been no sale of
inventory by an MSC/SFI Entity to a customer for a use which deviates from the
intended use thereof;
(e) has been no sale of inventory by an MSC/SFI Entity with
warranties more beneficial to the customer than the standard warranty;
16
(f) has been no sale of inventory by an MSC/SFI Entity that is
not finished goods inventory; and
(g) has been no intentional sale by an MSC/SFI Entity of
damaged inventory.
Copies of all product and service warranties of each MSC/SFI Entity are attached
to Section 3.4.2 of the Disclosure Letter.
3.4.3 Product Liability. Except as listed in Section 3.4.3 of the
-----------------
Disclosure Letter, no product liability or other tort claims have been made or
threatened against an MSC/SFI Entity relating to products sold or services
performed by an MSC/SFI Entity in the past five (5) years. To the Knowledge of
the MSC Parties, there are no defects in the design or manufacture of products
manufactured or sold by an MSC/SFI Entity, or any failure by an MSC/SFI Entity
to warn, test, inspect or instruct of dangers which could form the basis for a
product recall (whether or not at the request of a Governmental Authority) or a
cause of action for product liability (including, without limitation, failure to
warn, test, inspect or instruct) against an MSC/SFI Entity, nor is there any
reason to know of any such defect or failure. MSC/SFI has given Bekaert copies
of all the product liability insurance policies purchased by the MSC/SFI
Entities in the past five (5) years.
3.4.4 Litigation. Except as listed in Section 3.4.4 of the
----------
Disclosure Letter:
(a) no claim, litigation, investigation or proceeding:
(i) is pending and has been served or, to the Knowledge
of the MSC Parties, is threatened against an MSC/SFI Entity; or
(ii) involving an MSC/SFI Entity has been concluded in
the past three (3) years;
(b) to the Knowledge of the MSC Parties, there is no state of
facts or event which could reasonably be expected to form the basis for such a
claim, litigation, investigation or proceeding; and
(c) no arbitration award, judgment, order, decree or similar
restriction is outstanding against or related to an MSC/SFI Entity or its
products or any of their assets.
3.5 Business.
--------
3.5.1 Employees; Labor Matters. Section 3.5.1 of the Disclosure
------------------------
Letter sets forth the total number of full-time employees and part-time
employees for each MSC/SFI Entity
17
as of May 31, 2001. No MSC/SFI Entity is delinquent in payment to any of their
employees for any wages, salaries, commissions, bonuses or other direct
compensation for any services performed for them to the date hereof or amounts
required to be reimbursed to such employees. Upon termination of the employment
of any of said employees, no MSC/SFI Entity will by reason of the transactions
contemplated under this Agreement, the Contribution Agreement or anything done
prior to the Closing, be liable to any of said employees for so-called
"severance pay" or any other payments. Except as listed in Section 3.5.1 of the
Disclosure Letter, the MSC/SFI Entities do not have any formal policy, practice,
plan or program of paying severance pay or any form of severance compensation in
connection with the termination of employment. The MSC/SFI Entities are in
compliance with all applicable laws and regulations respecting labor,
employment, fair employment practices, work place safety and health, terms and
conditions of employment, and wages and hours. There are no charges of
employment discrimination or unfair labor practices, nor are there any strikes,
slowdowns, stoppages of work, or any other concerted interference with normal
operations which are existing, pending or threatened against or involving any
MSC/SFI Entity. There are no grievances, complaints or charges that have been
filed against an MSC/SFI Entity under any dispute resolution procedure
(including, but not limited to, any proceedings under any dispute resolution
procedure under any collective bargaining agreement) that might have an adverse
effect on an MSC/SFI Entity or the conduct of their business, and there is no
arbitration or similar proceeding pending and no claim therefor has been
asserted. No collective bargaining agreement is in effect or is currently being
or is about to be negotiated by an MSC/SFI Entity. None of the MSC/SFI Entities
has received any information indicating that any of its employment policies or
practices is currently being audited or investigated by any foreign, federal,
state or local government agency. As of the Closing Date, there were no existing
claims (whether asserted or unasserted) against an MSC/SFI Entity for, and the
MSC/SFI Entities have no liabilities in connection with, any worker's
compensation claims and/or COBRA claims or benefits, except as set forth in
Section 3.5.1 of the Disclosure Letter.
3.5.2 Contracts. Section 3.5.2 of the Disclosure Letter sets
---------
forth the following material agreements (whether written or oral) with respect
to the MSC/SFI Entities and to which any MSC/SFI Entity is a party or bound
(collectively, herein, the "Material Contracts"):
(a) all contracts or agreements involving amounts in
excess of US $50,000 for MSC/SFI or US $15,000 for any Company or which are
cancelable by a Company only after giving at least thirty (30) days' notice;
(b) all loan, financing, security, credit or other
contracts evidencing or relating to indebtedness, guarantees, or Liens;
(c) all contracts with distributors, dealers or sales
representatives;
(d) all management, employment, or agency contracts and
collective
18
bargaining contracts;
(e) all contracts providing employee benefits not listed
in Section 3.5.8 of the Disclosure Letter;
(f) all contracts which contain an obligation of
confidentiality with respect to information furnished by an MSC/SFI Entity to a
third party or received by an MSC/SFI Entity from a third party;
(g) all contracts containing covenants limiting the
freedom of an MSC/SFI Entity to compete in any line of business or with any
Person or in any geographic area or market or to own, operate, sell, transfer,
pledge or otherwise dispose of or encumber any MSC/SFI Entity's assets;
(h) all contracts relating to patents, trademarks, trade
names or copyrights or applications for any thereof, inventions, trade secrets
or other proprietary information;
(i) all contracts for the past or present disposal of
waste;
(j) the Leases;
(k) all outstanding purchase orders or sale orders
("Sales Orders") that involve commitments of the Business in excess of US
$50,000 for MSC/SFI or US $15,000 for any Company;
(l) all partnership, joint venture or other similar
agreements currently in effect;
(m) all agreements relating to the acquisition or
disposition of any Real Property, any MSC/SFI Entity's assets or the Business
(whether by merger, sale of stock, sale of assets or otherwise) within the past
ten (10) years;
(n) all options, licenses, franchise or similar
agreements;
(o) all contracts with any affiliate, shareholder,
officer, director, consultant or employee of an MSC/SFI Entity or any relative
of any of the foregoing; and
(p) all other contracts entered into other than in the
ordinary course of business consistent with past practices, including, but not
limited to, contracts (i) with suppliers for the purchase of goods or services
in excess of normal requirements or at prices in excess of the current market
price, (ii) for the sale by an MSC/SFI Entity of goods or services at prices not
19
reasonably calculated to produce gross profit margins consistent with those
achieved by an MSC/SFI Entity during its three (3) prior fiscal years, or (iii)
which contain terms or conditions which an MSC/SFI Entity cannot reasonably
expect to fulfill in their entirety.
MSC/SFI has delivered to Bekaert accurate and complete copies of each Material
Contract, in each case with all modifications and amendments thereto. Each
Material Contract is a valid and binding agreement of the MSC/SFI Entity, as the
case may be, and is in full force and effect. There has been no modification or
termination of any Material Contract under circumstances which could reasonably
be expected to have a material adverse effect on an MSC/SFI Entity.
3.5.3 Compliance with Contracts. With respect to the Material
-------------------------
Contracts :
(a) None of the MSC/SFI Entities, as applicable, is in
default under or in violation of any thereof; and
(b) no event has occurred which, with notice or lapse of
time or both, would constitute such a default or violation.
None of the MSC/SFI Entities has received written notice of breach
by an MSC/SFI Entity or termination of any of the Material Contracts. To the
Knowledge of the MSC Parties, there is no default under or any violation of any
of the foregoing by any other party thereto.
3.5.4 Insurance. Section 3.5.4 of the Disclosure Letter lists all
---------
insurance policies maintained by any MSC/SFI Entity and identifies for each such
policy the following: underwriter, policy number, coverage type, premium,
expiration date, coverage amount and deductible. Such insurance policies protect
the MSC/SFI Entities' and the Companies' properties and business from losses and
risks in a manner reasonable for its business and assets and are of the type and
in amounts customarily carried by Persons conducting similar businesses or
operating similar assets for similar purposes in the localities of the
businesses and assets of the MSC/SFI Entities. All such policies are in full
force and effect and all premiums have been paid. Except for amounts deductible
under policies of insurance described in Section 3.5.4 of the Disclosure Letter
or as otherwise set forth in such Schedule, none of the MSC/SFI Entities is, or
has been at any time, subject to Liability as a self-insurer. There is no
dispute pending, and no state of facts or event which could reasonably be
expected to form the basis for a dispute, with any underwriter of an MSC/SFI
Entity insurance. In the past three (3) years, none of the MSC/SFI Entities has
received notice from any insurer threatening to cancel any insurance coverage or
requiring any changes or corrective work which has not been satisfied. Section
3.5.4 of the Disclosure Letter also sets forth a description of all claims
pending under such insurance policies.
3.5.5 Suppliers and Customers. No supplier or customer which
-----------------------
accounted for
20
more than ten percent (10%) of any MSC/SFI Entity's sales or purchases in any
one of the past three (3) fiscal years and no other supplier or customer
material to any MSC/SFI Entity's business (including, but not limited to, any
supplier who is an MSC/SFI Entity's sole source of supply of any product or
service) has terminated, or threatened to terminate, its relationship with an
MSC/SFI Entity or has during the past year decreased or delayed materially, or
threatened to decrease or delay materially, its services or supplies to an
MSC/SFI Entity or its usage of an MSC/SFI Entity's services or products, and
there is no state of facts or event which could reasonably be expected to form
the basis for such a decrease or delay. The transactions contemplated in this
Agreement or the Contribution Agreement will not adversely affect the
relationship of any MSC/SFI Entity with any such supplier or customer. None of
the MSC/SFI Entities is required, in the ordinary course of business, to provide
any bonding or any other financial security arrangements in connection with any
transactions with any customers or suppliers.
3.5.6 Purchases and Sales. Since February 28, 2001:
-------------------
(a) none of the MSC/SFI Entities has made any purchase
commitments in excess of its normal business requirements; and
(b) there have been no reductions in the aggregate
dollar volume of an MSC/SFI Entity's backlog of Sales Orders.
3.5.7 Prepayments and Deposits. No MSC/SFI Entity has received
------------------------
any prepayments or deposits from customers for products to be shipped, or
services to be performed, by an MSC/SFI Entity in the future.
3.5.8 Employee Benefit Programs.
-------------------------
(a) Section 3.5.8 of the Disclosure Letter lists every
Employee Program (as defined below) that has been maintained (as defined
below) by an MSC/SFI Entity at any time during the six-year period ending
on the Closing Date.
(b) Each Employee Program which has ever been maintained
by an MSC/SFI Entity and which has at any time been intended to qualify
under Section 401(a) or 501(c)(9) of the Code has received a favorable
determination or approval letter from the Internal Revenue Service ("IRS")
regarding its qualification under such section and has, in fact, been
qualified under the applicable section of the Code from the effective date
of such Employee Program through and including the Closing Date (or, if
earlier, the date that all of such Employee Program's assets were
distributed). To the Knowledge of the MSC Parties, no event or omission has
occurred which would cause any such Employee Program to lose its
qualification or otherwise fail to satisfy the relevant requirements to
provide tax-favored benefits under the applicable Code section (including,
without limitation Code Sections 105, 125, 401(a) and 501(c)(9)). Each
asset held under any such Employee Program may be liquidated or terminated
21
without the imposition of any redemption fee, surrender charge or
comparable liability. No partial termination (within the meaning of Section
411(d)(3) of the Code) has occurred, or will occur as a result of the
transaction contemplated herein, with respect to any Employee Program.
(c) Neither the MSC Parties nor any Company knows, nor
should any of them have reason to know, of any failure of any party to
comply with any laws applicable to the Employee Programs that have been
maintained by the MSC/SFI Entities. With respect to any Employee Program
ever maintained by the MSC/SFI Entities or the Companies, there has
occurred no (i) "prohibited transaction," as defined in Section 406 of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA") or
Section 4975 of the Code, or breach of any duty under ERISA or other
applicable law (including, without limitation, any health care continuation
requirements or any other tax law requirements, or conditions to favorable
tax treatment, applicable to such plan), which could result, directly or
indirectly, in any taxes, penalties or other liability to the MSC/SFI
Entities, (ii) failure to comply with any provision of ERISA, the Code, or
any other applicable law, or any agreement, or (iii) non-deductible
contribution, which in the case of (i), (ii) or (iii), could subject the
MSC/SFI Entities to liability either directly or indirectly (including,
without limitation, through any obligation of indemnification or
contribution) for any damages, penalties or taxes, or any other loss or
expense. No litigation, arbitration, or governmental administrative
proceeding (or investigation) or other proceeding (other than those
relating to routine claims for benefits) is pending or threatened with
respect to any such Employee Program. All payments and/or contributions
required to have been made (under the provisions of any agreements or other
governing documents or applicable law) with respect to all Employee
Programs ever maintained by the MSC/SFI Entities, for all periods prior to
the Closing Date, either have been made or have been accrued.
(d) None of the MSC/SFI Entities (i) has ever maintained
any Employee Program which has been subject to title IV of ERISA or Code
Section 412 or ERISA Section 302 (including, but not limited to, any
multiemployer plan) or (ii) has ever provided health care or any other non-
pension benefits to any employees after their employment is terminated
(other than as required by part 6 of subtitle B of title I of ERISA) or has
ever promised to provide such post-termination benefits. Neither MSC/SFI
nor any Controlled Group Member has directly or indirectly acted in any
manner or incurred any obligation or Liability with respect to any Employee
Program which has or could give rise to any liens against any of the assets
of any MSC/SFI Entity or which could result in any Liability to an MSC/SFI
Entity or Bekaert. None of the MSC/SFI Entities have any actual or
potential liabilities under Section 4201 of ERISA for any complete or
partial withdrawal from a multiemployer plan (as defined in ERISA Section
3(37)).
(e) With respect to each Employee Program maintained by
the MSC/SFI Entities within the six (6) years preceding the Closing Date,
complete and correct copies of the following documents (if applicable to
such Employee Program) have previously
22
been delivered to Bekaert: (i) all documents embodying or governing such
Employee Program, and any funding medium for the Employee Program
(including, without limitation, trust agreements) as they may have been
amended; (ii) the most recent IRS determination or approval letter with
respect to such Employee Program under Code Sections 401(a) or 501(c)(9),
and any applications for determination or approval subsequently filed with
the IRS; (iii) the three (3) most recently filed IRS Forms 5500, with all
applicable schedules and accountants' opinions attached thereto; (iv) the
summary plan description for such Employee Program (or other descriptions
of such Employee Program provided to employees) and all modifications
thereto; (v) any insurance policy (including any fiduciary liability
insurance policy) related to such Employee Program; (vi) any registration
statement or other filing made pursuant to any federal or state securities
law; and (vii) the six (6) most recent actuarial valuation reports
completed with respect to each such Employee Program.
(f) Each Employee Program required to be listed in
Section 3.5.8 of the Disclosure Letter may be amended, terminated, or
otherwise modified by the MSC/SFI Entities to the greatest extent permitted
by applicable law, including the elimination of any and all future benefit
accruals under any Employee Program and no employee communications or
provision of any Employee Program document has failed to effectively
reserve the right of an MSC/SFI Entity to so amend, terminate or otherwise
modify such Employee Program.
(g) Each Employee Program ever maintained by an MSC/SFI
Entity (including each non-qualified deferred compensation arrangement) has
been maintained in compliance with all applicable requirements or federal
and state securities laws including, without limitation, the requirements
that the offering of interests in such Employee Program be registered under
the Securities Act of 1933 and/or state "Blue Sky" laws.
(h) Each Employee Program ever maintained by an MSC/SFI
Entity has complied with the applicable notification and other applicable
requirements of the Consolidated Omnibus Budget Reconciliation Act of 1985
("COBRA"), Health Insurance Portability and Accountability Act of 1996, the
Newborns' and Mothers' Health Protection Act of 1996, and the Mental Health
Parity Xxx 0000.
(i) For purposes of this Section:
(1) "Employee Program" means, whether in oral or
written form, (A) all employee benefit plans within the meaning of ERISA
Section 3(3), including, but not limited to, multiemployer plans (within
the meaning of ERISA Section 3(37), multiple employer welfare arrangements
(within the meaning of ERISA Section 3(40)), plans to which more than one
unaffiliated employer contributes and employee benefit plans (such as
foreign or excess benefit plans) which are not subject to ERISA; and (B)
all stock option plans, stock purchase plans, bonus or incentive award
plans (including training loans), severance pay policies or agreements,
deferred compensation agreements, supplemental income arrangements,
vacation
23
plans, and all other employee benefit plans, agreements, payroll practices,
and arrangements not described in (A) above, including without limitation,
any arrangement intended to comply with Code Section 120, 125, 127, 129 or
137; and (C) all plans, policies, practices, or arrangements providing
compensation to employee and non-employee directors. In the case of an
Employee Program funded through a trust described in Code Section 401(a) or
an organization described in Code Section 501(c)(9), each reference to such
Employee Program shall include a reference to such trust, organization or
other vehicle.
(2) An entity "maintains" an Employee Program if
such entity sponsors, contributes to, or provides (or has promised to
provide) benefits under or through such Employee Program, or has any
obligation (by agreement or under applicable law) to contribute to or
provide benefits under or through such Employee Program, or if such
Employee Program provides benefits to or otherwise covers employees of such
entity, or their spouses, dependents, or beneficiaries.
(3) "Controlled Group Member" means MSC/SFI and
each other person or entity required to be aggregated with MSC/SFI under
Code Section 414(b), (c), (m) or (o).
3.6 Assets.
------
3.6.1 Title. Each MSC/SFI Entity has good and marketable title to
-----
all the assets owned by it free and clear of all Liens except those listed on
Section 3.6.1 of the Disclosure Letter, except for the Retained Assets. The
assets of the MSC/SFI Entities acquired under this Agreement and the
Contribution Agreement include all assets owned by the MSC/SFI Entities in the
conduct of their Business as such business had been conducted and constitute all
the assets necessary to conduct the Business as it had been conducted and as
proposed to be conducted in accordance with this Agreement, except for the
Retained Assets. There exists no condition affecting the title to or use of any
part of the MSC/SFI Entities' assets which would prevent the Company from
occupying, using, or enforcing its rights in respect of any part of the assets
to the same full extent that MSC/SFI (prior to its contribution of the
Contributed Assets to Newco) or a Company could continue to do so if the
transactions contemplated hereby did not take place.
3.6.2 Receivables. All accounts receivable of each MSC/SFI Entity
-----------
represent valid obligations arising from sales actually made, services actually
performed, or value actually given. To the Knowledge of the MSC Parties, such
accounts receivable are subject to no contest, claim or right of setoff other
than returns and credits in the ordinary course of business. All accounts
receivable of the MSC/SFI Entities are collectable in full without any set-off
within 75-90 days after the Closing Date. Section 3.6.2 of the Disclosure Letter
sets forth a 30/60/90 day aging summary of each MSC/SFI Entity's accounts
receivable as of April 30, 2001. MSC/SFI has delivered to Bekaert on behalf of
the MSC/SFI Entities their complete aging schedule of accounts receivable as of
the Closing Date.
24
3.6.3 Inventories. All Inventory has been valued on the MSC/SFI
-----------
Entities' as applicable, Books and Records at the lower of cost (determined on a
first in, first out basis) or market value, in accordance with GAAP. The
Inventory that is obsolete or below standard quality has been written down to
amounts not in excess of realizable market value. All of the Inventory of
finished goods are currently saleable in the ordinary course of business
consistent with past practice at gross profit margins consistent with levels
reflected in the financial statements of the MSC/SFI Entities for the twelve
(12) calendar months immediately preceding the date of this Agreement. All of
the Inventory of work-in-process, raw materials and supplies can be used or
consumed in the usual and ordinary course of business as now conducted and are
not in amounts in excess of normal requirements. Since the date of the
Acquisition Balance Sheets, there has been no change in the amount of Inventory,
except for changes as a result of the purchase and sale of, or adjustment to,
inventory in the ordinary course of business consistent with past practice.
3.6.4 Condition. Except as set forth in Section 3.6.4 of the
---------
Disclosure Letter, all of the tangible assets owned or used by the MSC/SFI
Entities in the conduct of the Business are in good operating condition, normal
wear and tear excepted, neither require nor are reasonably expected to require
any special or extraordinary expenditures to remain in such condition beyond
maintenance and repairs necessary in the ordinary course of operations, and are
capable of being used for their intended purpose in the ordinary course of
business consistent with past practice.
3.6.5 Location. The complete addresses of all locations of any of
--------
the MSC/SFI Entities assets are listed in Section 3.6.5 of the Disclosure
Letter.
3.6.6 Intellectual Property. Section 3.6.6 of the Disclosure Letter
---------------------
lists all Intellectual Property owned by the MSC/SFI Entities or in which (as
noted in the Disclosure Letter) any MSC/SFI Entity has any rights or licenses.
Except as set forth in Section 3.6.6, there has not been any infringement or
alleged infringement by others of any such Intellectual Property. Except as set
forth in Section 3.6.6 of the Disclosure Letter, none of the MSC/SFI Entities is
a party to any contract, whether as licensor, licensee, franchisor, franchisee,
dealer, distributor, or otherwise, with respect to any Intellectual Property or
trade secret. The MSC/SFI Entities as applicable, have the right to use all
Intellectual Property as are necessary to enable the MSC/SFI Entities to conduct
their business in the manner presently conducted by the MSC/SFI Entities, and to
the Knowledge of the MSC Parties that use has not conflicted with, infringed, or
otherwise violated any rights of any Person. Each of the MSC/SFI Entities has
the unrestricted right to transfer or assign to NVB, or its designated
Affiliate, all such owned Intellectual Property and all such licenses or other
rights. The Intellectual Property listed in Section 3.6.6 of the Disclosure
Letter are valid and in full force and effect and are not subject to any Taxes,
maintenance fees, or actions falling due within the next three months. Except as
set forth in Section 3.6.6 of the Disclosure Letter, there have been no
interference actions or other judicial, arbitration, or other adversary
proceedings concerning the Intellectual Property listed in Section
25
3.6.6 of the Disclosure Letter. Each application for an intellectual property
right listed in Section 3.6.6 of the Disclosure Letter is awaiting action by its
respective appropriate recording office except as otherwise indicated in Section
3.6.6 of the Disclosure Letter. To the Knowledge of the MSC Parties, the
manufacture, use, performance or sale of products or services incorporating or
in connection with the Intellectual Property listed in Section 3.6.6 of the
Disclosure Letter does not violate or infringe on any intellectual property
right or other right of any Person, and to the Knowledge of the MSC Parties,
none of the MSC/SFI Entities has otherwise infringed any Intellectual Property
right, trade secret or other right of any Person. The MSC/SFI Entities as
applicable, have the exclusive right to use and the unrestricted right to
transfer to NVB, or its designated Affiliate, all of the MSC/SFI Entities' trade
secrets, and none of the MSC/SFI Entities trade secrets have been used,
divulged, or appropriated for the benefit of any past or present employees of an
MSC/SFI Entity or other Person, or to the detriment of an MSC/SFI Entity. None
of the MSC/SFI Entities has disposed of or permitted to lapse, or otherwise
failed to preserve its right to use any rights referenced in this Section 3.6.6.
3.6.7 Sufficiency of Assets. Except as set forth otherwise in this
---------------------
Section or in Section 3.6.7 of the Disclosure Letter, the MSC/SFI Entities'
assets acquired pursuant to this Agreement (i) constitute all the assets used in
connection with the Business and (ii) are sufficient to permit the operation of
the Business by the MSC/SFI Entities in substantially the same manner as
conducted at the date hereof, except the Retained Assets. The MSC/SFI Entities'
assets acquired pursuant to this Agreement include all assets reflected on the
Acquisition Balance Sheets (as assets of the MSC/SFI Entities) and all assets
acquired by the MSC/SFI Entities after the date of the Acquisition Balance
Sheets, except those assets which:
(a) have been disposed of prior to the Closing in the
ordinary course of business consistent with past practice;
(b) have been disposed of with the prior written consent of
Bekaert;
(c) are listed in Section 3.6.7 of the Disclosure Letter;
or
(d) following the consummation of the Contribution
Agreement, are Retained Assets.
Since February 28, 2001, there has not been any damage to or disposition (except
for the sale of inventory in the ordinary course of business consistent with
past practice and the contribution of the Contributed Assets to Newco in
accordance with the Contribution Agreement) or loss of (whether or not covered
by insurance) any asset of the MSC/SFI Entities.
3.6.8 Contribution Agreement.
----------------------
(a) The Contribution Agreement attached to this Agreement
is the
26
correct and complete copy of the Contribution Agreement, whereby MSC/SFI will
contribute the Contributed Assets and only the Contributed Assets to Newco.
(b) Upon execution and consummation of the Contribution
Agreement, Newco will assume only the Assumed Liabilities and the Liabilities of
the Foreign Subsidiaries (which remain with the Foreign Subsidiaries by virtue
of the stock transfer of those entities to Newco subject to the indemnity
provided in Section 9.2.5), and all Liabilities not assumed by Newco pursuant to
the terms of the Contribution Agreement will be retained by MSC/SFI as set forth
in the Contribution Agreement including the Retained Liabilities.
3.7 Real Property.
-------------
3.7.1 Real Property. Section 3.7.1 of the Disclosure Letter
-------------
identifies the following: (a) the real property presently owned by each of the
MSC/SFI Entities (the "Owned Real Property"), and (b) all real property
presently demised or proposed to be demised by a lease or sublease ("Leases") to
the MSC/SFI Entities or otherwise occupied by the Companies (the "Leased Real
Property") (collectively, the Leased Real Property and the Owned Real Property,
the "Real Property").
3.7.2 Lease. Each Lease is in full force and effect, and each
-----
MSC/SFI Entity holds a valid and existing leasehold interest under each of the
Leases to which it is a party for the terms set forth therein, respectively.
Neither MSC/SFI (prior to the contribution of assets to Newco) nor any Company
is in default under any Lease, and, no events have occurred and no circumstances
exist which, if unremedied, and whether with or without notice or the passage of
time or both, would result in such a default. MSC/SFI has made available to
Bekaert a complete and accurate copy of each of the Leases, including all
amendments thereto.
3.7.3 Title. Each MSC/SFI Entity, as the case may be, owns with good
-----
title, each parcel of the Owned Real Property identified in Section 3.7.1 of the
Disclosure Letter, free and clear of all Liens.
3.7.4 Buildings. All buildings located on the Real Property are in
---------
good condition, suitable for the operation of the business and for the specific
purposes for which they are intended to be used.
3.7.5 Zoning. The Real Property is presently zoned to permit the
------
current use of the Real Property, and said zoning is pursuant to statute or
ordinance, not pursuant to any variance or conditional permit granted with
respect to the Real Property, and does not require any further approval nor any
other action by the MSC/SFI Entities. There are no contemplated or pending
zoning changes that would affect the Real Property.
3.7.6 Restrictive Covenant. The Real Property, and the use,
--------------------
operation, and
27
maintenance thereof, are not in violation of any restrictive covenant, agreement
or permit applicable thereto, or of any building code, ordinance, statute,
regulation or requirement of any Governmental Authority having jurisdiction
thereof, and none of the MSC/SFI Entities has received any notice regarding any
such violation.
3.7.7 No Condemnation or Improvement. There is no state of facts or
------------------------------
event which could reasonably be expected to form the basis for any condemnation
proceedings which could affect the Real Property or any possible future
improvements by any public authority, any part of the cost of which could be
assessed against the Real Property, or any contemplated future assessments of
any kind.
3.7.8 Utilities. In the past three (3) years none of the MSC/SFI
---------
Entities has experienced any interruption in the delivery of adequate service of
any utilities or other public authorities required in the operation of its
business. The Real Property has adequate water supply, storm and sanitary
sewage facilities, telephone, gas, electricity, fire protection, and, without
limitation, other public utilities.
3.8 Environmental Matters. Except as listed in Section 3.8 of the
----------------------
Disclosure Letter:
(a) the operations of the MSC/SFI Entities have complied, and
currently comply, with all applicable Environmental Laws;
(b) each MSC/SFI Entity has obtained all Permits necessary for their
business's operation, and all such Permits are in good standing, and the MSC/SFI
Entities are in compliance with all terms and conditions of such Permits;
(c) none of the MSC/SFI Entities' business nor any of the present, or
to the Knowledge of the MSC Parties, past property used by it is subject to any
written order from, or agreement with or judicial or administrative proceeding
initiated by, any Governmental Authority or private party respecting (1) any
violation of Environmental Laws, (2) any assessment, investigatory or cleanup
activity or (3) any liabilities and costs arising from the Release or Threat of
Release of a Hazardous Material into the Environment;
(d) no Release or Threat of Release of a Hazardous Material has
occurred at any property or facility previously or currently owned or operated
by an MSC/SFI Entity;
(e) none of the present or past operations of the MSC/SFI Entities is
the subject of any inquiry or investigation by any Governmental Authority
evaluating whether remedial action is needed to respond to a Release or Threat
of Release of a Hazardous Material into the Environment and none of the MSC/SFI
Entities has received any notice or claim to the effect that it is or may be
liable to any Person as a result of any such Release or Threat of Release;
28
(f) none of the MSC/SFI Entities has filed any notice, including but
not limited to, manifest discrepancy notification, disposal extension, and/or
episodic waste report under any Environmental Law indicating past or present
compliance exceptions with the generation, treatment, storage or disposal of a
Hazardous Material, or reporting a Release of a Hazardous Material into the
Environment;
(g) except in compliance with applicable Environmental Laws, during
the course of the MSC/SFI Entities' past and present operations, there has been
no (1) generation, treatment, recycling, storage or disposal of hazardous waste,
as that term is defined under 40 CFR Part 261 or any state equivalent, (2) use
of surface impoundments, (3) use of injection xxxxx, (4) use of asbestos-
containing materials, (4) use of polychlorinated biphenyls (PCBs) in hydraulic
oils, electrical transformers or other equipment; or (5) use of lead-based
paints.
(h) Each of the MSC/SFI Entities' past and present operations have
not and do not utilize underground storage tanks;
(i) The MSC/SFI Entities have not entered into any negotiations or
agreements with any Person relating to any remedial action or environment-
related claim;
(j) no environmental Lien has attached to any property previously or
currently owned, operated or leased by an MSC/SFI Entity; and
(k) none of the MSC/SFI Entities has treated, stored, disposed of,
arranged for or permitted the disposal of, transported, handled, or Released any
substance, including without limitation any Hazardous Material, or has
previously or currently owned or operated any property or facility (and no such
property or facility is contaminated by any such substance) in a manner that has
given or would give rise to Liabilities, including any Liability for response
costs, corrective action costs, personal injury, property damage, natural
resources damages or attorney fees, pursuant to any Environmental Laws, on the
Real Property or any other location for purposes of waste treatment or disposal.
3.9 Health and Safety Matters.
--------------------------
(a) The MSC/SFI Entities have complied, and currently comply, with
all governmental health and safety laws and regulations applicable to each of
its operations regardless of location, including, without limitation, the safety
and health regulations promulgated pursuant to the OSH Act, if applicable, and
all state, local and foreign rules and regulations relating to employee safety
and health.
(b) None of the past or present operations of the MSC/SFI Entities is
the subject of any inquiry or investigation by any Governmental Authority
evaluating the health,
29
safety and protection compliance practices at such facility locations. None of
the MSC/SFI Entities has received any notice or claim to the effect that it is
or may be liable to any Person or Former Employees as a result of such
noncompliance, worker exposure and/or worker safety or health violation.
3.10 Brokers and Finders. Neither MSC, MSC/SFI nor any Company, and/or their
-------------------
agents, have incurred any Liability, contingent or otherwise, for brokerage or
finder's fees or agents' commissions or other similar payment in connection with
this Agreement.
3.11 Full Disclosure. No representation or warranty by the MSC Parties in
---------------
this Agreement and no statement of the MSC Parties contained in the Disclosure
Letter contains any untrue statement of a material fact, or omits to state a
material fact necessary to make the statements contained therein, in light of
the circumstances in which they are made, not misleading. Except as set forth in
Section 3.11 to the Disclosure Letter, to the Knowledge of the MSC Parties,
there is no event or circumstance which the MSC Parties have not disclosed to
Bekaert in writing which would or could reasonably be expected to have a
material adverse effect on the business, prospects or condition (financial or
other) of the Business or the MSC/SFI Entities or the ability of the MSC Parties
to perform this Agreement.
4. REPRESENTATIONS AND WARRANTIES OF THE BEKAERT PARTIES
-----------------------------------------------------
As a material inducement to the MSC Parties to enter into this Agreement
and consummate the transactions contemplated hereby, the Bekaert Parties
represent and warrant to the MSC Parties the following are true, correct and
complete as of the date hereof:
4.1 Organization and Power. Each of the Bekaert Parties is a
----------------------
corporation duly organized, validly existing and in good standing under the laws
of its state or country of incorporation. Each of the Bekaert Parties has full
corporate power to execute, deliver and perform this Agreement and all other
agreements and documents to be executed and delivered by it in connection
herewith.
4.2 Agreements.
----------
4.2.1 Enforceability. All requisite corporate action to approve,
--------------
execute, deliver and perform this Agreement and each other agreement and
document to be delivered by the Bekaert Parties in connection herewith has been
taken by the Bekaert Parties. This Agreement and each other agreement and
document to be delivered by the Bekaert Parties in connection herewith have been
duly executed and delivered by the Bekaert Parties and constitute the legal,
valid and binding obligations of the Bekaert Parties enforceable in accordance
with their respective terms.
4.2.2 Consents. Except for the consent and approval of the Boards of
--------
Directors
30
of the Bekaert Parties and the consents required under the Xxxx-Xxxxx-
Xxxxxx Act, no approval or consent of, or filing with, any Person or
Governmental Authority is required in connection with the transactions
contemplated hereby or the execution, delivery or performance by the Bekaert
Parties of this Agreement or any other agreement or document to be delivered by
or on behalf of the Bekaert Parties in connection herewith.
4.2.3 No Conflicts. No action taken by or on behalf of the Bekaert
------------
Parties in connection herewith, including, but not limited to, the execution,
delivery and performance of this Agreement, and each other agreement and
document to be delivered by it in connection herewith, conflicts with or
violates:
(a) any Law;
(b) a Bekaert Parties' Articles of Association or Incorporation
or By-Laws;
(c) any contract by which a Bekaert Party is bound; or
(d) any order, arbitration award, judgment, decree or other
similar restriction to which a Bekaert Party is subject;
or constitutes an event which, after notice or lapse of time or both, could
reasonably be expected to result in any of the foregoing.
4.3 Investment Intent. Bekaert is purchasing the Membership Interests
for investment for its own account and not with a view to or for sale in
connection with any distribution thereof. Bekaert (either alone or together with
its advisors) has sufficient knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of its investments
in the Membership Interests and is capable of bearing the economic risk of such
investment.
4.4 Brokers and Finders. NVB, Bekaert and/or their agents, have not
-------------------
incurred any Liability, contingent or otherwise, for brokerage or finder's fees
or agents' commissions or other similar payment in connection with this
Agreement.
4.5 Full Disclosure. No representation or warranty by the Bekaert
---------------
Parties in this Agreement contains any untrue statement of a material fact, or
omits to state a material fact necessary to make the statements contained
therein, in light of the circumstances in which they are made, not misleading.
5. INTENTIONALLY LEFT BLANK.
------------------------
31
6. PRE-CLOSING COVENANTS.
---------------------
6.1 Consents of Third Parties. Each of the MSC Parties and the Bekaert
-------------------------
Parties shall use commercially reasonable efforts to obtain any third party
consents required to consummate the transactions contemplated hereunder and in
the Contribution Agreement in accordance with the terms hereof and thereof prior
to the Closing Date, including, without limitation, any action required for
early termination of any applicable waiting period under the Xxxx-Xxxxx-Xxxxxx
Act.
6.2 Conduct of Business. Subject to Section 6.3, from the date hereof
-------------------
until the Closing Date, except to the extent that Bekaert otherwise consents in
writing, the MSC/SFI Entities shall conduct their business prudently and in the
ordinary course consistent with past practice, except as expressly provided
herein. MSC/SFI for itself shall, and shall cause each Company to, use
commercially reasonable efforts to preserve intact the present business
organization and the relationships with Persons having business dealings with
the MSC/SFI Entities.
6.3 Forbearance by the MSC/SFI Entities. From the date hereof until the
-----------------------------------
Closing Date, except to the extent that the Bekaert Parties otherwise consent in
writing or as expressly provided herein, MSC/SFI shall not and it shall cause
the Companies not to:
(a) Incur any liability other than in the ordinary course of
business or pay any liability other than current liabilities and current
maturities of existing long term debt;
(b) Incur any indebtedness for borrowed money or assume, guarantee
or otherwise become responsible for the obligations of any other person;
(c) Mortgage, pledge, or otherwise encumber any of its assets;
(d) Sell or transfer any of its assets other than sales of inventory
in the ordinary course of business;
(e) Sell any of the inventory of the business other than in the
ordinary course of business;
(f) Cancel, release, or assign any obligations owed to MSC/SFI or
the Companies or any claims held by them;
(g) Enter into any leases or contracts except for sales or purchases
entered into in the ordinary course of business;
(h) Terminate any leases or contracts or make any material changes
therein;
32
(i) Adopt any new method of accounting;
(j) Agree to do any of the foregoing.
6.4 Insurance and Maintenance of Assets. From the date hereof until
------------------------------------
the Closing Date, except to the extent that Bekaert otherwise consents in
writing, MSC/SFI shall continue to insure and cause the Companies to insure the
Business, employees and the MSC/SFI Entities' assets against all insurable risks
in the manner and to the extent such items were insured on the date hereof and
the MSC/SFI Entities' assets shall be used, maintained, and repaired in a manner
consistent with prior practice.
6.5 Access. From the date hereof until the Closing Date, MSC/SFI for
------
itself and shall cause the Companies to provide Bekaert and its representatives
full access to the MSC/SFI Entities' facilities and all Books and Records and
such other information and Persons relating to the MSC/SFI Entities as Bekaert
may request. In addition, MSC/SFI shall permit Bekaert to perform environmental
surveys and such other physical inspections as Bekaert deems necessary at the
MSC/SFI Entities' locations.
6.6 Satisfaction of Conditions. Without limiting the generality or
--------------------------
effect of any provision of Article 7, prior to the Closing Date, the Bekaert
Parties and the MSC Parties will use commercially reasonable efforts with due
diligence and in good faith to satisfy promptly all conditions required hereby
to be satisfied by the Bekaert Parties and the MSC Parties in order to
consummate the transactions contemplated hereby, except to the extent that the
other party otherwise consents in writing.
6.7 Public Announcements. Prior to the Closing, neither the MSC Parties
--------------------
nor the Bekaert Parties (nor any of their respective affiliates) shall make any
public announcement or disclosure relating to the transactions contemplated
herein without the prior written agreement of the MSC Parties and the Bekaert
Parties; provided, that the MSC Parties and the Bekaert Parties shall use
reasonable commercial efforts to consult with the other in advance of any
disclosure required by Law, but the agreement of the other parties hereto shall
not be required with respect to any disclosure required by Law.
6.8 Subsidiary Reorganizations. Prior to the Closing Date, MSC/SFI shall
--------------------------
cause the following corporate actions to be taken and consummated: (i) Pro
Marketing and Solar-Gard shall be merged with and into MSC/SFI, with MSC/SFI to
be the surviving entity; (ii) MSC/SFI shall contribute its assets (including the
assets formerly owned by Pro Marketing and Solar-Gard) to Newco in accordance
with the Contribution Agreement; and (iii) all of the capital stock of the
Foreign Subsidiaries shall be transferred to Newco, except 1% of the stock of
each of the Mexican Subsidiaries will be transferred to another Foreign
Subsidiary.
6.9 No Negotiation. Until such time, if any, as this Agreement is
--------------
terminated pursuant
33
to Section 7.5, the MSC Parties will not, and will cause each Company and each
of their representatives not to, directly or indirectly solicit any inquiries or
proposals from or entertain any offers from, or negotiate or enter into an
agreement with any other Person or entity with respect to the sale, merger,
consolidation, transfer or other conveyance of any shares of the capital stock
or assets of MSC/SFI including through a sale of MSC, except actions by MSC in
response to an unsolicited offer to purchase MSC or MSC/SFI that may be required
of it by its fiduciary relationship under Delaware case law to maximize
shareholder value or by the rules of the New York Stock Exchange or the
Securities and Exchange Commission.
7. CLOSING.
-------
7.1 Conditions to the MSC Parties' Obligations. The obligations of the
------------------------------------------
MSC Parties to be performed hereunder on the Closing Date are subject to
satisfaction of the following conditions on or before the Closing Date (or their
waiver by the MSC Parties):
7.1.1 Representations and Warranties True and Accurate as of Closing.
--------------------------------------------------------------
The representations and warranties of the Bekaert Parties contained herein shall
be true and correct in all material respects as of the date of this Agreement
and continue to be true and correct in all material respects as of the Closing
Date with the same force and effect as though made at such time;
7.1.2 Performance of Obligations of the Bekaert Parties. The Bekaert
-------------------------------------------------
Parties shall have performed in all material respects all of its covenants
hereunder to be performed by it on or before the Closing Date;
7.1.3 Form of Documents. All certificates and other documents to be
-----------------
delivered by the Bekaert Parties or their Affiliates hereunder shall be in form
and substance satisfactory to the MSC Parties;
7.1.4 The Bekaert Parties Certificate. The MSC Parties shall have
-------------------------------
received an officer's certificate, in substantially the form of Exhibit 7.1.4
signed by each of the Bekaert Parties;
7.1.5 Good Standing. The MSC Parties shall have received good
-------------
standing certificates dated no more than ten (10) days prior to the Closing Date
from Bekaert's state of incorporation;
7.1.6 Legal Action. There shall be no pending or threatened legal
------------
action or inquiry which challenges the validity or legality of or seeks or could
reasonably be expected to prevent, delay or impose conditions on the
consummation of any of the transactions contemplated by this Agreement or the
Contribution Agreement;
34
7.1.7 Xxxx-Xxxxx-Xxxxxx. Any applicable waiting period under the
-----------------
Xxxx-Xxxxx-Xxxxxx Act, if applicable, relating to the transactions contemplated
by this Agreement shall have expired or been terminated;
7.1.8 Board Approval of Material Sciences Corporation. The board of
-----------------------------------------------
directors of MSC shall have approved this Agreement, and the completion of the
transactions contemplated in this Agreement;
7.1.9 Delivery of Documents. The Bekaert Parties shall have executed
---------------------
and delivered at the Closing all other agreements to be executed by the Bekaert
Parties;
7.1.10 Exclusive Supply Agreement. The Exclusive Supply Agreement
--------------------------
between MSC, on the one hand, and ISF and the Bekaert Parties, on the other
hand, shall have been executed and delivered at the Closing by the Bekaert
Parties, in substantially the form attached hereto as Exhibit 7.1.10;
7.1.11 Services Agreement. A Services Agreement shall have been
------------------
executed and delivered at the Closing by Newco, in substantially the form
attached hereto as Exhibit 7.1.11;
7.1.12 License Agreement. A License Agreement for use of the names
-----------------
MSC, Material Sciences and Material Sciences Corporation among NVB, Newco, the
Foreign Subsidiaries and MSC shall have been executed and delivered by NVB and
Newco, in substantially the form attached hereto as Exhibit 7.1.12;
7.1.13 Letter. The Bekaert Parties shall have delivered to the MSC
------
Parties a letter concerning nondisclosure surrounding certain environmental
matters reasonably acceptable to the parties; and
7.1.14 Other. The MSC Parties shall have received each other
-----
document required to be delivered by the Bekaert Parties under the terms of this
Agreement.
7.2 Conditions to the Bekaert Parties' Obligations. The obligations of
----------------------------------------------
the Bekaert Parties to be performed hereunder on the Closing Date are subject to
satisfaction of the following conditions on or before the Closing Date (or their
waiver by the Bekaert Parties):
7.2.1 Representations and Warranties True and Accurate as of
------------------------------------------------------
Closing. The representations and warranties of the MSC Parties contained herein
-------
shall be true and correct in all material respects as of the date of this
Agreement and continue to be true and correct in all material respects as of the
Closing Date with the same force and effect as though made at such time;
provided, however, that with respect to any representation and warranty given by
the MSC Parties with regard to Pro Marketing or Solar-Gard in Article 3 such
representation and warranty on the Closing Date will be made by MSC/SFI, the
successor to Pro Marketing and Solar-Gard,
35
except as to the representations and warranties with regard to corporate status
and good standing of Pro Marketing and Solar-Gard on the Closing Date, which as
of the Closing Date will have been lawfully merged out of existence;
7.2.2 Performance of Obligations of the MSC Parties. The MSC Parties
---------------------------------------------
shall have performed in all material respects all of its covenants hereunder to
be performed by it on or before the Closing Date;
7.2.3 Material Adverse Facts. There shall not have occurred after
----------------------
the date hereof, any events, facts, or circumstances which reflect in any
material adverse way on the financial condition, assets, liabilities, business,
or prospects of the MSC/SFI Entities;
7.2.4 Form of Documents. All certificates, assignments, documents of
-----------------
title and other documents to be delivered by the MSC Parties or their Affiliates
hereunder shall be in form and substance satisfactory to the Bekaert Parties;
7.2.5 The MSC Parties' Certificate. The Bekaert Parties shall have
----------------------------
received an officer's certificates, in substantially the form of Exhibit 7.2.5
signed by the MSC Parties;
7.2.6 Good Standing. The Bekaert Parties shall have received good
-------------
standing certificates dated no more than ten (10) days prior to the Closing Date
from each of the MSC/SFI Entities from their country or state of incorporation
or organization and each state in which each of the MSC/SFI Entities is
qualified to do business as a foreign corporation;
7.2.7 Legal Action. There shall be no pending or threatened legal
------------
action or inquiry which challenges the validity or legality of or seeks or could
reasonably be expected to prevent, delay or impose conditions on the
consummation of any of the transactions contemplated by this Agreement or the
Contribution Agreement including, without limitation, any claim or threat of
claim by any Person asserting an ownership, voting or equity interest in or the
right to acquire the Membership Interests or the NVB Intellectual Property
Rights;
7.2.8 Consents. The Companies shall have received all consents,
--------
approvals, permits, licenses and registrations of all Persons and Governmental
Authorities necessary for NVB, Bekaert, MSC and MSC/SFI to execute, deliver and
perform this Agreement, the Contribution Agreement and for the Companies to
operate the Business as heretofore conducted;
7.2.9 Xxxx-Xxxxx-Xxxxxx. Any applicable waiting period under the
-----------------
Xxxx-Xxxxx-Xxxxxx Act, if applicable, relating to the transactions contemplated
by this Agreement shall have expired or been terminated;
7.2.10 Delivery of Documents. The MSC Parties shall have executed
---------------------
and
36
delivered at the Closing all other agreements to be executed by the MSC Parties;
7.2.11 Termination of Prior Agreements. MSC shall terminate the
-------------------------------
Indemnification Agreement between MSC and Bekaert Coordinatiecentrum, n.v. dated
November 19, 1998 and the Indemnification Agreement between MSC and Bekaert
dated November 19, 1998, and shall deliver to the Bekaert Parties at Closing
such terminations;
7.2.12 Transfer of Intellectual Property to NVB or its Designated
----------------------------------------------------------
Affiliate. The MSC Parties shall have received all material consents,
---------
approvals, permits, licenses and registration of all Persons and Governmental
Authorities necessary for MSC/SFI to transfer, assign and deliver the
Intellectual Property to NVB, or its designated Affiliate;
7.2.13 Reorganization. MSC/SFI shall have caused the following
--------------
actions to have occurred and been completed prior to the Closing Date: (i) Pro
Marketing and Solar-Gard to be merged with and into MSC/SFI, with MSC/SFI as the
surviving entity; and (ii) all of the capital stock of the Foreign Subsidiaries
to have been transferred to Newco, except 1% of the stock of each of the Mexican
Subsidiaries will be transferred to another Foreign Subsidiary;
7.2.14 Closing of the Contribution Agreement. The closing of the
-------------------------------------
transaction contemplated by the Contribution Agreement and the consummation of
the transactions contemplated thereby shall have closed in accordance with the
form of the Contribution Agreement attached hereto as Exhibit 7.2.14;
7.2.15 Board Approval of the Bekaert Parties. The Boards of
-------------------------------------
Directors of the Bekaert Parties shall have approved the Agreement, and the
completion of the transactions contemplated in this Agreement;
7.2.16. Release of Guarantees. The MSC/SFI Entities, as applicable,
---------------------
shall have received (and delivered to the Bekaert Parties evidence of) releases
of the guarantees listed on Schedule 7.2.16 attached hereto;
7.2.17 Release of MSC/SFI. Receipt of a general release executed by
------------------
MSC/SFI of all claims it may have against ISF and a general release executed by
MSC/SFI of all claims it may have against Newco, in the form mutually agreed to
by the parties, for obligations or claims occurring or accruing before the
Closing Date;
7.2.18 Resignations. Receipt of the resignations of all officers and
------------
MSC/SFI's Steering Committee Representatives of ISF; the resignations of all
officers and Representatives (Directors) of Newco; and the resignations of the
officers and directors of the Companies as requested by the Bekaert Parties;
7.2.19 Exclusive Supply Agreement. The Exclusive Supply Agreement
--------------------------
between
37
MSC, on the one hand, ISF and the Bekaert Parties, on the other hand, shall have
been executed and delivered at the Closing by MSC, in substantially the form
attached hereto as Exhibit 7.1.10;
7.2.20 Assignment Agreement. An assignment agreement shall have been
--------------------
executed and delivered at the Closing by the MSC Parties conveying the
Membership Interests to Bekaert, in the form mutually agreed to by the parties,
together with such other instruments of transfer and assignment as may be
necessary or appropriate to vest in Bekaert good title to the Membership
Interests, duly executed by MSC/SFI;
7.2.21 NVB Assignment. An assignment of the Intellectual Property to
--------------
NVB, or its designated Affiliate, shall have been executed and delivered at the
Closing by MSC/SFI to NVB, or its designated Affiliate, in the form mutually
agreed to by the parties;
7.2.22 Services Agreement. A Services Agreement shall have been
------------------
executed and delivered at the Closing by MSC, in substantially the form attached
hereto as Exhibit 7.1.11;
7.2.23 License Agreement. A License Agreement for use of the names
-----------------
MSC, Material Sciences and Material Sciences Corporation among NVB, Newco, the
Foreign Subsidiaries and MSC shall have been executed and delivered by MSC, in
substantially the form attached hereto as Exhibit 7.1.12;
7.2.24 Open Due Diligence Matters. Information compromising the Open
--------------------------
Due Diligence Matters shall have been received and reviewed by the Bekaert
Parties, and the implication thereof under the Purchase Agreement, the
Contribution Agreement and the other agreements contemplated hereby, resolved to
the reasonable satisfaction of the Bekaert Parties; and
7.2.25 Other. Bekaert and NVB shall have received each other
-----
document required to be delivered by the MSC Parties under the terms of this
Agreement.
7.3 Intentionally Omitted.
---------------------
7.4 Closing . If the conditions to the parties' obligations enumerated
-------
in Article 7 are satisfied, consummation of the transactions contemplated hereby
(the "Closing") shall take place on June 29, 2001, at the offices of MSC, at
0000 Xxxx Xxxxx Xxxxxxxxx, Xxx Xxxxx, XX, or by the exchange of documents by
courier and facsimile, or on such other date as the parties may agree (the
"Closing Date"). The transfers and deliveries described in this Article 7 shall
be mutually interdependent and regarded as occurring simultaneously; and no such
transfer or delivery shall become effective until all such other transfers and
deliveries have also been consummated. The transfers and deliveries herein
contemplated shall be deemed to have occurred and the Closing shall be effective
as of the close of business on the Closing Date.
38
7.5 Termination . This Agreement may be terminated at any time prior to
-----------
the Closing Date:
(a) by mutual written consent of the MSC Parties and the Bekaert
Parties; or
(b) by either of the Bekaert Parties or the MSC Parties:
(i) if the Closing has not occurred on or before September 15,
2001 (the "End Date"); provided, however, that the right to terminate the
Agreement under this Section 7.5(b)(i) shall not be available to any party
whose breach of any obligation under this Agreement, has been the cause of
or resulted in the failure to Close on or before the End Date; provided,
further, that the MSC Parties cannot rely upon termination under this
Section 7.5(b)(i) if the MSC Parties' are considering an unsolicited offer
pursuant to Section 6.9 hereof; or
(ii) if there has been a material breach of any representation,
warranty, or covenant of the other party set forth in this Agreement, and
such violation or breach is not cured or adequate assurance of such cure
shall not have been given by or on behalf of the breaching party within
fifteen (15) U.S. business days following receipt by the breaching party of
notice of such breach; or
(c) by the MSC Parties, upon two days' prior notice to the Bekaert
Parties, if the Board of Directors of the MSC Parties determines in good faith
after consultation with outside counsel that the termination of this Agreement
and the acceptance of an unsolicited offer described in Section 6.9 is required
pursuant to its or their fiduciary duties under Delaware case law or by the
rules of the New York Stock Exchange or Securities and Exchange Commission.
7.6 Effect of Termination .
---------------------
(a) Termination of Obligations. If this Agreement is terminated
--------------------------
pursuant to Section 7.5, all further obligations of the parties under this
Agreement will terminate, except that the obligations in Sections 6.7, 7.5, 7.6,
and 8.1.2 will survive in accordance with their terms; subject to the terms of
Sections 7.6(b) and 7.6(c) below.
(b) Liquidated Damages. If this Agreement is terminated by either the
------------------
Bekaert Parties or the MSC Parties pursuant to Section 7.5(b)(ii) because of a
material breach by the other party, then the breaching party shall pay to the
terminating party in cash an amount equal to Five Million US Dollars (US
$5,000,000), as the sole and exclusive remedy for all claims arising out of
relating to this Agreement and the transactions contemplated hereby and the sole
and exclusive measure of damages. The parties agree that it would be extremely
difficult to determine the amount of damages which the terminating party would
suffer as a result of the breaching party's default pursuant to Section
7.5(b)(ii), and have agreed, after specific
39
negotiation relating thereto, that the amount of Five Million US Dollars (US
$5,000,000) is a reasonable estimate of the terminating party's damages and is
intended to constitute a fixed amount of liquidated damages and is not intended
to constitute a penalty.
(c) Additional Termination Fee. If this Agreement is terminated by
--------------------------
the MSC Parties pursuant to Section 7.5(c), the MSC Parties shall pay the
Bekaert Parties a termination fee equal to Five Million US Dollars (US
$5,000,000) in cash, in full compensation to the Bekaert Parties for the
consequences suffered thereby.
8. POST-CLOSING AND SPECIAL COVENANTS .
----------------------------------
8.1 Miscellaneous Covenants .
-----------------------
. 8.1.1 Consents. The MSC Parties and the Bekaert Parties shall
--------
cooperate with each other in preparing, filing and taking any other actions
necessary with respect to any application, request or actions which are or may
be necessary to obtain the consent of any government or third party to the
transactions contemplated by this Agreement or the Contribution Agreement or
which are or may be necessary or helpful in order to accomplish such
transactions.
8.1.2 Expenses. Except to the extent otherwise specifically provided
--------
herein, the Bekaert Parties shall pay all of the expenses incident to the
transactions contemplated by this Agreement or the Contribution Agreement, which
are incurred by the Bekaert Parties, their Affiliates (defined pre-Closing), or
their representatives, and the MSC Parties shall pay all of the expenses
incident to the transactions contemplated by this Agreement or the Contribution
Agreement, which are incurred by the MSC Parties, their Affiliates, or their
representatives.
8.1.3 Post-Closing Consents. The MSC Parties shall deliver to NVB,
---------------------
or its designated Affiliates, or Newco, as applicable, as soon as practical
after the Closing Date the consents, approvals, permits, licenses and
registrations not delivered pursuant to Section 7.2.12 at Closing, including,
without limitation, the execution of all trademark, service xxxx, patent or
other intellectual property instruments of assignment or otherwise required to
transfer the ownership of the NVB Intellectual Property Rights, or by Newco
pursuant to the Contribution Agreement.
8.1.4 Assignment of Contracts, Rights, Etc. Neither this Agreement
------------------------------------
or the Contribution Agreement, nor any document of assignment contemplated
herein or therein, shall constitute an agreement to assign any Assigned
Contract, or any claim or any right or benefit arising thereunder or resulting
therefrom if an attempted assignment thereof, without the consent of a third
party thereto, would constitute a breach thereof or in any way affect the rights
of the Companies or the Bekaert Parties hereunder or under the Contribution
Agreement. MSC/SFI shall use commercially reasonable efforts to obtain the
consent of the other party to any of the
40
foregoing to the assignment thereof to the Companies or the Bekaert Parties, as
the case may be, in all cases in which such consent is required for assignment
or transfer. If such consent is not obtained, the parties agree to cooperate
with each other in any reasonable arrangement designed to provide for the
Companies or the Bekaert Parties, as the case may be, the benefits thereunder,
including, but not limited to, having (a) the Companies or the Bekaert Parties,
as the case may be, act as agent for MSC/SFI, and (b) MSC/SFI enforcing for the
benefit of the Companies or the Bekaert Parties, as the case may be, any and all
rights of MSC/SFI against the other party thereto arising out of the
cancellation by such other party or otherwise.
8.1.5 Additional Foreign Subsidiary Financial Statements. The MSC
--------------------------------------------------
Parties shall cause the year-end, audited or reviewed, financial statements of
Solar Gard (SEA) Pte, Ltd., a Singapore corporation and MSC Specialty Films
(Australasia) Pty. Limited, an Australian corporation to be delivered to the
Bekaert Parties immediately upon receipt thereof by the MSC Parties, whether
received prior to or after the Closing Date.
8.2 Employment. MSC/SFI shall terminate the employment of the MSC/SFI
----------
workforce on the Closing Date and shall bear all Liability in connection
therewith except as expressly provided herein. Bekaert's intention is to offer
employment to the MSC/SFI workforce under terms of employment and Employee
Programs that are comparable to those provided to ISF employees on the Closing
Date together with such other benefits as Bekaert has expressly agreed to make
available to Transferred Employees under Section 8.3. With respect to employees
of the Foreign Subsidiaries, Bekaert's intention is to maintain employment of
the employees of the Foreign Subsidiaries under terms of employment and Employee
Programs comparable to those provided to such Employees by the Foreign
Subsidiaries on the Closing Date.
8.3 Employee Programs.
-----------------
8.3.1 Stock Options. All stock options that have been granted or
-------------
awarded by MSC in written agreements to former employees of MSC/SFI who are
employed by Newco on and after the Closing ("Transferred Employees") under the
MSC1992 Omnibus Stock Awards Plan for Key Employees, which includes without
limitation, the MSC1993 Restricted Stock/Stock Option Awards Program, the
MSC1994 Restricted Stock/Stock Option Awards Program, the MSC1995 Stock Option
Plan, the MSC Corporation 1996 Stock Option Grant and the MSC1997 Stock Option
Grant (the "Option Agreements"), shall remain outstanding and shall be
exercisable by the optionees in accordance with the applicable terms of such
Option Agreements.
8.3.2 Restricted Stock. Awards of restricted stock and cash, which
----------------
have been made by MSC to Transferred Employees under the MSC1992 Omnibus Stock
Awards Plan for Key Employees, which includes without limitation, the XXX 0000
Long-Term Incentive/ Leveraged Stock Awards Program, the XXX 0000 Long-Term
Incentive/ Leveraged Stock Awards Program, and the XXX 0000 Long-Term Incentive/
Leveraged Stock
41
Awards Program and which have not become fully vested as of the Closing Date
(the "Restricted Stock Awards"), shall become vested, and the restrictions
thereon shall lapse, in accordance with the applicable terms of the agreements
applicable to such Restricted Stock Awards. On or before the thirtieth (30th)
day after the Closing Date, MSC shall distribute to the holders of each
Restricted Stock Award, the portion of the stock and cash pertaining to his
Restricted Stock Award that becomes vested as of the Closing Date pursuant to
this Section 8.3.2 less all applicable payroll taxes and withholding. In the
case of the XXX 0000 Long-Term Incentive/Leveraged Stock Award Program, MSC/SFI
shall use its best efforts to obtain the approval of the Board of Directors of
MSC to accelerate the vesting of the 1999 Restricted Stock Awards on a pro rata
basis through Closing. If the MSC Board of Directors fails to approve the
accelerated vesting of the 1999 Restricted Stock Awards, MSC/SFI shall pay to
each Transferred Employee an amount in cash equal to sum of: (i) the fair market
value of the prorated shares of stock under the Transferred Employee's 1999
Restricted Stock Award using the closing price of the MSC stock on June 29,
2001; (ii) the value of the prorated cash award; and (iii) the forfeited
investment amount made by the Transferred Employee multiplied by 22.2%. The
amount of each 1999 Restricted Stock Award that becomes vested on the Closing
Date shall be determined by multiplying the number of shares and the cash
portion pertaining to such 1999 Restricted Stock Award by 77.8%. Effective as of
the Closing, Bekaert shall cause Newco to enter into Long-Term Incentive Cash
Award Agreements, in the form attached hereto as Exhibit 8.3.2, with each of the
Transferred Employees listed on Schedule 8.3.2, pursuant to which Newco shall be
obligated to pay each such Transferred Employee a distribution in cash, but not
in stock, equal to the value of the portion of his Restricted Stock Award that
did not become vested on the Closing Date, which amount is set forth in a
schedule agreed upon by the parties.
8.3.3 EVA Plan. Effective as of the Closing and for the twelve-month
--------
period ending February 28, 2002, Bekaert will cause Newco to cover Transferred
Employees, who are participants in the MSC EVA Improvement and Incentive Plan
(the "EVA Plan") on the Closing Date, by a plan, the terms and conditions of
which are comparable to those applicable to MSC/SFI employees under the EVA Plan
(the "Newco EVA Plan"). Pursuant to the Newco EVA Plan, Newco will assume the
responsibility to pay any bonuses, in addition to any applicable employer
related payroll taxes attributable thereto, earned by Transferred Employees
under the EVA Plan for the twelve-month period ending February 28, 2002 in
accordance with the targets and methodology applicable to the Transferred
Employees under the EVA Plan on the Closing Date. The application of the Newco
EVA Plan shall not penalize any of the Transferred Employees as a result of the
transactions contemplated by this Agreement or the acquisition of NeoVac. In
addition, the Newco EVA Plan shall provide that Newco will pay to Transferred
Employees the portion of their compensation under the EVA Plan that was "banked"
under the EVA Plan as of February 28, 2001, increased or decreased for any
changes in the amount banked after February 28, 2001 and through February 28,
2002. If the Newco EVA Plan does not continue the "banking" provisions of the
EVA Plan past February 28, 2002, then Newco shall establish a plan pursuant to
which the banked amounts will be distributed to Transferred
42
Employees over a period not to exceed five years in accordance with terms of
payment that are comparable to those contained in the EVA Plan.
8.3.4 Employee Stock Purchase Plans. Effective as of the Closing
-----------------------------
Date, MSC shall terminate the participation of the Transferred Employees in the
MSC Employee Stock Purchase Plan. Any amounts withheld from Transferred
Employees under such plan that have not been applied toward the purchase of MSC
stock as of the Closing Date shall be distributed to such Transferred Employees
in accordance with the terms of such plan.
8.3.5 Merit/Stock Exchange Program.
----------------------------
(a) Effective as of the Closing Date, MSC shall terminate the
participation of the Transferred Employees in the MSC Merit/Stock Exchange
Program. MSC shall use its best efforts to obtain the approval of the Board of
Directors of MSC to remove any and all restrictions applicable to MSC stock
awarded to such employees under such plan and, within thirty (30) days after the
Closing Date, shall distribute the stock to such employees under the MSC
Merit/Stock Exchange Program. Effective March 1, 2002, Newco shall increase the
base salary of each Transferred Employee, who elected under the MSC Merit/Stock
Exchange Program to receive MSC restricted stock or options in lieu of his merit
increase for the fiscal year beginning March 1, 2001, to the base salary that
such Transferred Employee would have received during the fiscal year beginning
March 1, 2001 if he had not elected to receive MSC restricted stock or options
in lieu of such merit increase. If the MSC Board fails to remove any and all
restrictions applicable to such Transferred employee pursuant to this Section
8.3.5, MSC/SFI shall pay to the respective Transferred Employee an amount in
cash equal to the fair market value of the stock of MSC as designated for the
closing price on June 29, 2001, multiplied by the number of shares each holder
of the Restricted Stock Award would have received had the restrictions been
removed. This amount net of applicable payroll taxes shall be distributed within
30 days .
(b) For each Transferred Employee who elected to be granted stock
options ("Stock Options") on March 1, 2001 in lieu of a merit increase under the
MSC Merit/Stock Exchange Program ("Award"), MSC will honor such terms of the
agreement for such Stock Options between MSC and such Transferred Employee. If
the market price per share of MSC stock exceeds the exercise price of the Stock
Options between the Closing Date and the expiration of the Stock Options such
that had the Transferred Employee exercised the Stock Options prior to
expiration of the Stock Options (the "Expiration Date") the value of the Award
would have yielded a before tax value higher than the Transferred Employee's
merit increase for the twelve-month period ending February 28, 2002, no further
payment will be due to the affected Transferred Employee. If the market price
per share of MSC stock does not exceed the exercise price of the Stock Options
between the Closing Date and the expiration of the Stock Options such that had
the Transferred Employee exercised the Stock Options prior to the Expiration
Date the value of the Award would have yielded a before tax value lower than the
43
Transferred Employee's merit increase for the twelve-month period ending
February 28, 2002, MSC will pay the prorated merit increase in cash plus
interest of seven percent (7.00%) on a compounded basis from March 1, 2001 until
the Closing Date; and Bekaert will increase the salary of the Transferred
Employee effective on one day after Closing Date on a retroactive basis by such
amount.
8.3.6 SERP. Effective as of the Closing Date, Bekaert shall cause
----
Newco to offer to cover the two Transferred Employees, who are covered under the
MSC Supplemental Retirement Plan (the "SERP") on the Closing Date (the "SERP
Participants"), under a nonqualified supplemental executive retirement plan with
terms and conditions comparable to those applicable to each of them under the
SERP, in each case conditioned upon his agreement to release MSC from its
obligations to him under the SERP. If a SERP Participant refuses to release MSC
from its obligations to him under the SERP, then Newco shall not be obligated to
provide such SERP Participant with the benefits described in the preceding
sentence and MSC shall remain obligated to pay such SERP Participant's benefits
under the SERP in accordance with the terms of the SERP and the SERP agreement
entered into with such SERP Participant. If a SERP Participant refuses to
release MSC from its obligations to him under the SERP, then, on the Closing
Date, the Purchase Price shall be increased by either Eighty Eight Thousand Four
Hundred Thirty One US Dollars (US $88,431) or Sixty Nine Thousand Two Hundred
Thirty Three (US $69,233), depending upon which SERP Participant refuses to
release MSC. In addition, effective as of the Closing Date, Bekaert will
consider providing nonqualified supplemental executive retirement plan benefits
to those certain Transferred Employees who MSC/SFI has proposed to add to the
SERP as of the date of this Agreement (the "Additional SERP Participants"). The
supplemental executive retirement plan benefits provided to the Additional SERP
Participants shall be the same as those provided to the SERP Participants on the
date of this Agreement. In the event Bekaert determines not to provide such
benefits to the Additional SERP Participants by the Closing Date as contemplated
herein, the Purchase Price shall be increased by the amount of Sixty Two
Thousand Nine Hundred Thirty-Three US Dollars (US $62,933.00).
8.3.7 Post Retirement Medical. On the Closing Date, Bekaert shall
-----------------------
cause Newco to assume all of MSC's obligations to provide post-retirement
medical benefits under the MSC Post-Retirement Medical Plan to Transferred
Employees. Newco shall adopt a plan document with terms and conditions that are
comparable to those contained in the MSC Post-Retirement Medical Plan.
8.3.8 401(k) Plan. On or before December 31, 2001, MSC shall take
-----------
all necessary and appropriate steps to transfer to the Newco LLC Savings and
Investment Plan, or such other qualified plan as Newco may establish (the "Newco
401(k) Plan"), all of the assets in the MSC Savings and Investment Plan (the
"MSC 401(k) Plan") associated with Transferred Employees, including assets
attributable to all employer and employee contributions, whether or not vested.
Newco agrees to maintain the Newco 401(k) Plan as a defined contribution plan
and
44
related trust, which is intended to be (i) qualified under Section 401(a) of
the Code; (ii) exempt from taxation under Section 501(a) of the Code and (iii)
in compliance with the applicable requirements of the Employee Retirement Income
Security Act of 1974 ("ERISA"), as amended. The Newco 401(k) Plan will preserve
all benefit options pursuant to Code Section 411(d)(6) as provided under the MSC
401(k) Plan; will credit to each Transferred Employee for purposes of
eligibility, vesting and crediting of allocations under the Newco 401(k) Plan,
all service earned by such employees under the MSC 401(k) Plan; will accept the
transfer in kind of all outstanding loans from the MSC 401(k) Plan to such
employees and will assume all MSC 401(k) Plan liabilities and obligations
associated with the Transferred Employees, subject to the Newco 401(k) Plan's
receipt of the assets transferred pursuant to this subparagraph 8.3.8. All
future forfeitures from the accounts of Transferred Employees in the Newco
401(k) Plan shall remain in such plan and shall be available to offset future
employer contributions or to pay the expenses of administration of such plan.
8.3.9 Retirement Plan. On or before December 31, 2001, MSC shall take
---------------
all necessary and appropriate steps to transfer to the Newco 401(k) Plan all of
the assets in the MSC Retirement Plan (the "MSC Retirement Plan") associated
with the Transferred Employees, including employer contributions, whether or not
vested. Newco agrees to establish and maintain the Newco 401(k) Plan as a
defined contribution plan and related trust, which is intended to be (i)
qualified under Section 401(a) of the Code; (ii) exempt from taxation under
Section 501(a) of the Code and (iii) in compliance with the applicable
requirements of ERISA, as amended. The Newco 401(k) Plan will preserve all
benefit options pursuant to Code Section 411(d)(6) as provided under the MSC
Retirement Plan; will credit to each Transferred Employee for purposes of
eligibility, vesting and crediting of allocations under the Newco 401(k) Plan,
all service earned by such employees under the MSC Retirement Plan; and will
assume all MSC Retirement Plan liabilities and obligations associated with the
Transferred Employees, subject to the Newco 401(k) Plan's receipt of the assets
transferred pursuant to this subparagraph 8.3.9. All future forfeitures from
the accounts of Transferred Employees in the Newco 401(k) Plan shall remain in
such plan and shall be available to offset future employer contributions or to
pay the expenses of administration of such plan.
8.3.10 Deferred Compensation Plan. Effective as of the Closing Date,
--------------------------
Bekaert shall cause Newco to cover the Transferred Employees, who are
participants in, and have accounts under, the MSC Deferred Compensation Plan
(the "MSC Deferred Compensation Plan") on the Closing Date, under a nonqualified
deferred compensation plan that has substantially the same terms and conditions
as the MSC Deferred Compensation Plan and to assume the liability to pay to such
Transferred Employees the amounts credited to them under the MSC Deferred
Compensation Plan as of the Closing Date. Such Transferred Employees shall not
be permitted to make any further deferrals under the Newco plan after the
Closing Date. As soon as practicable after the Closing Date MSC shall cause
Xxxxxxx Xxxxx to transfer to the trustee of a rabbi trust to be established by
Newco all of the assets of the Xxxxxxx Xxxxx Non-Qualified Deferred Compensation
Plan Trust Agreement applicable to the MSC Deferred
45
Compensation Plan that are credited to Transferred Employees who become
participants in Newco deferred compensation plan established pursuant to this
subparagraph 8.3.10.
8.3.11 Severance. On the Closing Date, Bekaert shall cause Newco to
---------
establish a severance policy for Transferred Employees that is comparable to the
MSC/SFI severance policy and such policy shall be maintained in such form for
the remainder of calendar year 2001, unless otherwise expressly agreed between
Newco and a Transferred Employee.
8.3.12 Workers Compensation. Neither Bekaert nor the Companies shall
--------------------
be liable for any workers compensation claim, or claim made for work-related
injuries or illnesses covered under any occupational benefits plan of MSC/SFI,
which pertains to injuries or illnesses occurring prior to or on the Closing
Date, unless an adequate and appropriate accrual for the payment of such claim
has been established on the MSC/SFI balance sheet as of the Closing Date. The
Companies shall assume liability for the payment of each claim to the extent of
the amount accrued on the MSC/SFI financial statements with respect to such
claim.
8.3.13 Vacation and Holiday Pay. On and after the Closing Date, the
------------------------
Companies shall assume the responsibility to pay to Transferred Employees any
and all vacation and holiday pay when earned and payable in accordance with
Newco's vacation and holiday pay policies, which, for the remainder of calendar
year 2001, shall be substantially similar to the vacation and holiday pay
policies of MSC/SFI.
8.3.14 Cooperation. MSC/SFI and the Companies agree to cooperate in
-----------
collecting any information that may be required by either in order to discharge
their respective obligations under this Section 8.3.
Except as set forth in this Section 8.3, neither Bekaert nor the Companies
shall be responsible or liable for any payment or benefit under any Employee
Program of MSC/SFI, whether written or unwritten, collective or individual,
formal or informal, except as expressly set forth otherwise in this Agreement or
in the Contribution Agreement.
8.4 Non-Solicitation/ No Hire of Employees.
--------------------------------------
8.4.1 Neither MSC Party nor their Affiliates shall for a period of
four (4) years after the Closing Date, directly or indirectly, hire or offer to
hire any Former Employee (as defined hereafter). For purposes of this paragraph,
a "Former Employee" shall mean any Person who is or was in the employ of
MSC/SFI, Newco, the Foreign Subsidiaries, Pro Marketing or Solar-Gard on or
after February 28, 2001.
8.4.2 Neither Bekaert Party nor their Affiliates shall, for a period
of four (4) years after the Closing Date, directly or indirectly hire or offer
to hire any person who was an employee on the Closing Date of MSC or any of its
Affiliates (other than the Companies).
46
8.5 Nondisclosure; Noncompetition.
-----------------------------
8.5.1 Nondisclosure. Each of the MSC Parties agrees (on behalf of
--------------
itself and its successors and assigns) that, from and after the Closing Date,
neither such party nor any Affiliate thereof will, in any fashion, form or
manner, either directly or indirectly, divulge, disclose, use, disseminate or
communicate to any person, firm or corporation in any manner, any trade secrets
(which are comprised of any information, including a formula, pattern,
compilation, program, data, device, method, technique, or process, that: (i)
derives independent economic value, actual or potential, from not being
generally known to, and not being readily ascertainable by proper means by other
persons who can obtain economic value from its disclosure or use; and (ii) is
the subject of efforts that are reasonable under the circumstances to maintain
its secrecy) or confidential or proprietary information relating to the Business
(collectively, the "Protected Information"). Without limiting the generality of
the foregoing, the parties specifically acknowledge and agree that the Protected
Information shall include:
(a) information regarding customers, customer
accounts, the nature and volume of goods purchased by the customers, the prices
the Business obtains or has obtained or at which it sells or has sold its
products or services, merchandising and sales methods, and profit margins of the
Business or particular lines of products; and
(b) financial or sales data, and information relating
to business plans, strategies or processes, of the Business. The parties
specifically stipulate that as between them, the Protected Information is
important, material and seriously affects the effective and successful conduct
of the Companies business following the date hereof and its goodwill and that
any breach of the terms of this paragraph is a material breach hereof.
8.5.2 Noncompetition/Noninterference. Commencing on the Closing Date
------------------------------
and continuing thereafter:
(c) for the term of years specified in Schedule 8.5.2,
the MSC Parties shall not engage in any Restricted Business anywhere in the
world. For purposes of this Section, a "Restricted Business" shall mean a
business that involves in whole or in part the development, manufacture or sale
of (i) products with the applications set forth in Schedule 8.5.2, or (ii)
products that incorporate the technologies specified in Schedule 8.5.2. For
purposes of this Section 8.5.2, an MSC Party shall be deemed to engage in a
Restricted Business if it should, directly or indirectly, through any person,
corporation, partnership, limited liability company, proprietorship, firm,
association, or other business entity (foreign or domestic), own, manage,
control or participate in the ownership, management or control of, provide
financing or other financial or other assistance to, or otherwise affiliate or
associate (as a consultant, independent contractor or otherwise) with, any
person, corporation, partnership, limited liability
47
company, proprietorship, firm, association, or other business entity (foreign or
domestic) that engages in a Restricted Business; or
(d) for the period of one (1) year, the MSC Parties
shall not induce any person who is an employee of the Companies or ISF,
following the Closing Date, to terminate said relationship.
(e) The parties acknowledge that (a) the business of MSC/SFI
is international in scope, (b) MSC/SFI's products and services
are marketed throughout the world; (c) MSC/SFI competes with
other businesses that are located throughout the world, and (d)
this noncompetition restriction is necessary to protect
legitimate business interests, including trade secrets,
confidential information, relationships with prospective and
existing customers and the goodwill associated with the
Business, and is provided by the MSC Parties to Bekaert as
further inducement for Bekaert to purchase the Membership
Interests and the NVB Intellectual Property Rights.
(a) 8.5.3 Modifications; Tolling. The parties
----------------------
expressly agree that if any claim is made that any covenant set
forth in Section 8.5.1 or Section 8.5.2 above is invalid or
unenforceable, due to the duration or geographic area thereof,
and/or otherwise, the covenant shall not thereby be rendered
invalid or unenforceable, but it shall instead be modified to
the maximum duration, maximum geographic area, and/or otherwise
as the arbitrator(s) or a court examining the covenant shall
find to be reasonable and legally enforceable. In the event a
MSC Party shall violate any legally enforceable provision of
this Agreement as to which there is a specific time period
during which such party is prohibited from taking certain
actions or from engaging in certain activities, as set forth in
such provision, then, in such event, such violation shall toll
the running of such time period from the date of such violation
until such violation shall cease.
(b) 8.5.4 Immediate Equitable Relief.
--------------------------
Notwithstanding anything contained in this Agreement to the
contrary, the parties acknowledge that a violation or
threatened violation of the provisions set forth in Section
8.5.1 or Section 8.5.2 above will result in irreparable harm to
the Bekaert Parties, and, accordingly, the parties agree that
the Bekaert Parties shall be entitled to institute judicial
proceedings, seeking immediate injunctive relief (or similar
equitable relief) against such violation or threatened
violation without any requirement to post a bond as a condition
of such relief, as well as damages at law as may be
48
recovered by the Bekaert Parties, and the attorney fees it
incurs in enforcing any of the covenants contained herein.
8.5.5 Separate Covenants; Independent Covenant.
----------------------------------------
(a) The covenant in Section 8.5.2 above, ("Covenant") shall be
construed as a separate Covenant covering competition in each of the separate
states of the United States and foreign countries in which MSC/SFI has been
engaged in business and to the extent that it shall be unenforceable under New
York law as applied by that state or country, the Covenant shall not be affected
thereby with respect to each other state and country, the Covenant with respect
to each state and country being construed as severable and independent.
(b) The Covenant and the covenants in Section 8.5.1 are independent
of any of the covenants of the Bekaert Parties under this Agreement and shall
not be affected or impaired by claims relating to such other covenants.
8.5.6 Joint and Several Liability. The MSC Parties each agree that
---------------------------
its liability under the provisions of this Section 8.5 shall be joint and
several.
8.6 Dispute Resolution.
------------------
8.6.1 Construction. This Agreement and the Contribution Agreement,
------------
the only texts of which are in English, shall be interpreted in accordance with
the commonly understood meaning of the words and phrases hereof in the United
States of America, and they and the performance of the parties hereto and
thereto shall be construed and governed according to the laws of the State of
New York, without reference to conflicts of law principles. No provision of
this Agreement and the Contribution Agreement shall be construed in favor of or
against any party on the ground that such party or its counsel drafted the
provision.
8.6.2 Dispute Resolution. In the event of any dispute, controversy
------------------
or claim arising out of or related to this Agreement or the Contribution
Agreement or to a breach hereof or thereof, whether based in contract, tort, or
statute, including its interpretation, scope, formation, performance or
termination ("Dispute") the parties hereto shall attempt to settle such Dispute
by friendly discussions between any MSC Party and any NVB Party. If no
settlement is reached within thirty (30) days after one party notifies the other
party of the existence of a Dispute, then either party may select to submit the
Dispute to mediation. The demand for mediation must be submitted by the
demanding party within thirty (30) days of notice of the Dispute. The parties
may mutually agree upon a mediator (who must be experienced in the area of the
Dispute) and the rules which will apply to the mediation. If the parties are
unable to agree on either or both of a mediator or the rules to apply to the
mediation, then the parties will use the then current applicable mediation rules
of the CPR Institute for Dispute Resolution to choose the mediator or set rules
of the mediation, or both as applicable. Any mediation will be held in New
00
Xxxx Xxxx, Xxx Xxxx. If after seven (7) calendar days the Dispute is not
resolved, or if the mediator declares an impasse prior to the end of such seven
(7) calendar day period, then if the parties do not mutually agree to continue
mediation within two (2) further calendar days, mediation shall terminate
effective at the close of business on such second calendar day ("Termination of
Mediation"). The resolution of the Dispute by mediation shall not be binding on
either party unless the parties mutually agree prior to the Termination of the
Mediation to accept the resolution of the Dispute achieved through the
mediation. If the Dispute is not resolved through mediation, either party may
within thirty (30) days of the Termination of Mediation submit the Dispute to
arbitration in accordance with the then-current International Rules of the
American Arbitration Association ("AAA"). The arbitration, including the
rendering of the award, shall take place in: (i) if a MSC Party initiates the
arbitration process then the arbitration shall be held in Brussels, Belgium; or
(ii) if a NVB Party initiates the arbitration process then the arbitration shall
be held in San Diego, California. In either case the applicable forum shall be
the exclusive forum for final resolution of the Dispute. The governing
procedural and substantive law of the arbitration shall be the internal laws of
the State of New York, without regard to conflicts of law principles, as
provided by Section 5-1401 of the New York General Obligations Law. There shall
be three (3) arbitrators, at least one of whom shall be trained in the law and
the other two of whom shall have prior experience in arbitration of
transnational commercial disputes. If any Dispute involves a claim of damages
for Twenty-Five Thousand US Dollars (US $25,000) or less, the arbitration shall
be conducted by one (1) arbitrator appointed by the AAA and who shall be trained
in the law. The language of the arbitration shall be English. The arbitrators
shall have no power to add to, or subtract from, or modify any of the terms of
this Agreement or the Contribution Agreement, nor to award punitive damages.
The arbitrators may award legal or equitable relief. The MSC Parties and the
NVB Parties waive any rights they may have under the laws of any jurisdiction
(1) to apply to the courts of any such jurisdiction for relief from the
provisions of this Section 8.6.2 or from any decision of the arbitrators absent
fraud, or (2) to contest the enforceability of any arbitral award made
hereunder. The MSC Parties and the NVB Parties shall each bear its own legal
fees and costs and other expenses in connection with the arbitration and in the
enforcement of any arbitral award. Any arbitral award shall be promptly paid by
the party against which it is assessed in United States Dollars. The arbitral
award shall be enforceable under the United Nations Convention on the
Recognition and Enforcement of Foreign Arbitral Awards. The arbitral award
shall be binding, and judgment upon the award rendered by the arbitrators may be
entered in any court having jurisdiction thereof. Performance of this Agreement
shall continue unabated during the pending of any arbitration which may arise
out of a Dispute, except with regard to the matter in Dispute.
8.6.3 Equitable Relief. Notwithstanding anything contained in this
----------------
Article 8 to the contrary, any party to this Agreement or the Contribution
Agreement shall have the right to institute judicial proceedings against any
other party or anyone acting by, through or under any such other party, in order
to enforce the instituting party's rights hereunder through reformation of
contract, specific performance, injunction or similar equitable relief.
50
8.7 Survival of Contribution and Joint Venture Formation Agreement. The
--------------------------------------------------------------
MSC Parties and Bekaert acknowledge and agree that the Contribution and Joint
Venture Formation Agreement between MSC/SFI and Bekaert dated October 15, 1998
("Joint Venture Agreement"), continue in full force and effect including,
without limitation, all rights to indemnification as provided therein.
8.8 Access to Information. For a period of seven (7) years after the
---------------------
Closing Date:
(a) The Bekaert Parties shall grant or cause to be granted to the MSC
Parties (or their designees) access at reasonable times to all of the
information, books and records relating to the MSC/SFI Business or ISF prior to
the Closing Date within the possession or control of a Foreign Subsidiary or
ISF, as applicable, (including workpapers and correspondence with any Taxing
Authority), and shall afford the MSC Parties (or their designees) the right (at
their expense) to take extracts therefrom and make copies thereof, to the extent
reasonably necessary including, without limitation, to permit the MSC Parties
(or their designees) to prepare tax returns, to conduct negotiations with any
Taxing Authority and to implement the provisions of, or to investigate or defend
any claims between the parties arising under this Agreement or the Contribution
Agreement.
(b) The Bekaert Parties will preserve and retain all schedules,
workpapers and other documents relating to any tax returns of or with respect to
the Foreign Subsidiaries or ISF prior to the Closing Date, or to any claims,
audits or other proceedings affecting such businesses for periods prior to the
Closing Date.
(c) The MSC Parties shall grant or cause to be granted to the Bekaert
Parties (or their designees) access at reasonable times to all of the
information, books and records relating to the MSC/SFI Business or ISF prior to
the Closing Date within the possession or control of a MSC Party, as applicable,
(including workpapers and correspondence with any Taxing Authority), and shall
afford the Bekaert Parties (or their designees) the right (at their expense) to
take extracts therefrom and make copies thereof, to the extent reasonably
necessary including, without limitation, to permit the Bekaert Parties (or their
designees) to prepare tax returns, to conduct negotiations with any Taxing
Authority and to implement the provisions of, or to investigate or defend any
claims between the parties arising under this Agreement or the Contribution
Agreement.
(d) The MSC Parties will preserve and retain all schedules, workpapers
and other documents relating to any tax returns of or with respect to the
MSC/SFI Business or ISF prior to the Closing Date, or to any claims, audits or
other proceedings affecting such businesses for periods prior to the Closing
Date.
8.9 Resale Certificates. Bekaert will make available to the MSC Parties
-------------------
resale
51
certificates received by Bekaert in connection with Bekaert obtaining sales tax
exemption for the transactions contemplated by this Agreement.
8.10 Collection of Monies. In the event that, after the Closing Date,
--------------------
the MSC Parties receive any monies related to the assets transferred under this
Agreement or the Contribution Agreement, including, without limitation, payments
received on outstanding accounts receivables, the MSC Parties shall promptly
remit such funds to Bekaert.
9. INDEMNIFICATION .
---------------
9.1 Survival; Right to Indemnification Not Effected by Knowledge . The
------------------------------------------------------------
representations and warranties of the MSC Parties in Article 3 and of Bekaert in
Article 4 shall survive the Closing and continue to be binding thereafter. The
right to indemnification, payment of damages or other remedy based on the
representations, warranties, agreements, covenants and obligations will not be
affected by any investigation conducted with respect to, or any knowledge
acquired (or capable of being acquired) at any time, whether before or after the
execution and delivery of this Agreement or the Closing Date, with respect to
the accuracy or inaccuracy of or compliance with, any such representation,
warranty, agreement, covenant or obligation. The waiver of any condition based
on the accuracy of the representation or warranty, or on the performance of or
compliance with any covenant or obligation, will not affect the right to
indemnification, payment of damages, or other remedy based on such
representations, warranties, covenants, and obligations. The expiration or
limitations on a right to indemnification for breaches of representations or
warranties under Section 9.2.1 shall not impair the right to indemnification
under the other applicable provisions of Section 9.2 for the same claim, subject
to the express terms applicable to such provisions.
9.2 Indemnification by the MSC Parties . The MSC Parties, jointly and
----------------------------------
severally, shall indemnify NVB, Bekaert, the Companies and their Affiliates and
their respective shareholders, directors, officers, partners, employees, agents
and representatives (the "Bekaert Indemnified Parties") against and hold them
harmless from, and will pay to the Bekaert Indemnified Party the amount of, any
loss, cost, expense (including costs of investigation and defense and reasonable
attorney's fees), claim, Liability, demands, recoveries, lawsuits, deficiencies,
fines, penalties, causes of action, settlements, disbursements, or damage
(including incidental and consequential damages), whether or not involving a
third-party claim (collectively, "Damages"), arising or relating, directly or
indirectly, from or to or in connection with:
9.2.1 Representations. Any inaccuracy in or breach of any
---------------
representation or warranty by the MSC Parties herein; and
9.2.2 Covenants. Any breach or nonperformance of any covenant or
---------
obligation made or incurred by the MSC Parties herein or in the Contribution
Agreement; and
52
9.2.3 Retained Assets. The Retained Assets; and
---------------
9.2.4 Retained Liabilities. The Retained Liabilities; and
--------------------
9.2.5 Foreign Subsidiaries' Liabilities. The Foreign Subsidiaries
---------------------------------
Liabilities; and
9.2.6. Express Environmental Indemnity Matters.
---------------------------------------
(a) Any of the matters arising out of the potential
contamination related to any past or present improper storage, handling,
disposal or discharge of Hazardous Materials, debris, process waste waters or
fill material associated with:
(i) the influent and effluent into and from the common
septic system at the MSC/SFI Houston, Texas facility.
(ii) the sand filtration system and the septic system as the
matter relates to the potential for migration to the southeast portion
of the property at the MSC/SFI Clearwater, Florida facility.
(iii) the former on-site pond or lagoon previously located on
the western portion of the property at the MSC/SFI Clearwater, Florida
facility.
(iv) an internal trench system within the facility that
discharges into an adjacent drainage ditch and the associated
operations of a former automobile repair facility at the MSC/SFI
Lincoln, Nebraska facility.
(v) the historical disposition and/or land application of
soils, fill materials and/or construction debris upon one-third
portion of the property at the MSC/SFI leased San Diego, CA, facility
(0000 Xxxxxxxxx Xxx., Xxx Xxxxx, XX).
(vi) the reconciliation of the toxic release inventory
reporting as related to the volatile organic compounds (VOCs) fugitive
air emissions associated with the operations at the MSC/SFI San Diego,
CA, manufacturing facility (0000 Xxxxxxxxx Xxx., Xxx Xxxxx, XX).
(vii) air permit compliance matters, including but not
limited to, operational terms and conditions, proper documentation and
record Diego, CA, manufacturing facility (0000 Xxxxxxxxx Xxx., Xxx
Xxxxx, XX).
53
(b) Disposal by an MSC/SFI Entity for periods prior to the Closing
Date at (i) the Onyx disposal facility located in Azusa, CA, (ii) the Chatham
disposal facility located in Escondido, CA, or (iii) any other disposal site or
facility subsequently designated as a Superfund site ("Superfund Liability")
established under CERCLA.
9.3 Indemnification by Bekaert. Bekaert shall indemnify MSC, MSC/SFI
--------------------------
and its Affiliates and their respective shareholders, directors, officers,
partners, employees, agents and representatives (the "MSC/SFI Indemnified
Parties") against and hold them harmless from, and will pay to the MSC/SFI
Indemnified Party the amount of, any Damages, arising or relating, directly or
indirectly, from or to or in connection with:
9.3.1 Representations. Any inaccuracy in or breach of any
---------------
representation or warranty by the Bekaert Parties herein;
9.3.2 Covenants. Any breach or nonperformance of any covenant or
---------
obligation made or incurred by the Bekaert Parties herein or in the
nondisclosure letter delivered pursuant to Section 7.1.13; provided, however, in
the event of a breach of Section 8.3 hereof by the Bekaert Parties, the MSC
Parties shall be able to seek Damages for such breach whether or not any
employee has asserted a claim against the MSC Parties;
9.3.3 Assumed Liabilities. The Assumed Liabilities (which pursuant
-------------------
to the Contribution Agreement include, without limitation, responsibility for
product warranty claims (but not product liability claims) for defective or non-
conforming products made or sold by the MSC/SFI Entities prior to the Closing
Date (such claims, herein "Product Warranty Claims"); provided, however, that
this indemnification for Product Warranty Claims excludes any claims for Damages
by an MSC/SFI Indemnified Party for Product Warranty Claims set forth in Section
9.11);
9.3.4 Zulte Assets. The ownership or use of the Zulte assets by IST
------------
Belgium (as defined in the Joint Venture Agreement) prior to their contribution
to ISF on April 1, 2000.
9.4 Third Party Claims. If any legal proceedings shall be instituted or
------------------
any claim is asserted by any third party in respect of which the MSC/SFI
Indemnified Parties or the Bekaert Indemnified Parties, may be entitled to
indemnity hereunder, the party asserting such right to indemnity shall give the
party from whom indemnity is sought written notice thereof. A delay in giving
notice shall only relieve the recipient of liability to the extent the recipient
suffers actual prejudice because of the delay. The party from whom indemnity is
sought shall have the right, at its option and expense, to participate in the
defense of such a proceeding or claim, but not to control the defense,
negotiation or settlement thereof, which control shall at all times rest with
the party asserting such right to indemnity, unless the proceeding or claim
involves only money damages, not an injunction or other equitable relief, and
unless the party from whom indemnity is sought:
54
(a) irrevocably acknowledges in writing complete responsibility for
and agrees to indemnify the party asserting such right to indemnity, and
(b) furnishes satisfactory evidence of its financial ability to
indemnify the party asserting such right to indemnity,
in which case the party from whom indemnity is sought may assume such control
through counsel of its choice and at its expense, but the party asserting such
right to indemnity shall continue to have the right to be represented, at its
own expense, by counsel of its choice in connection with the defense of such a
proceeding or claim. If the party from whom indemnity is sought does not assume
control of the defense of such a proceeding or claim, the entire defense of the
proceeding or claim by the party asserting such right to indemnity, any
settlement made by the party asserting such right to indemnity, and any judgment
entered in the proceeding or claim shall be deemed to have been consented to by,
and shall be binding on, the party from whom indemnity is sought as fully as
though it alone had assumed the defense thereof and a judgment had been entered
in the proceeding or claim in the amount of such settlement or judgment, except
that the right of the party from whom indemnity is sought to contest the right
of the other to indemnification under this Agreement with respect to the
proceeding or claim shall not be extinguished. If the party from whom indemnity
is sought does assume control of the defense of such a proceeding or claim, it
will not, without the prior written consent of the party asserting such right to
indemnity, settle the proceeding or claim or consent to entry of any judgment
relating thereto which does not include as an unconditional term thereof the
giving by the claimant to the party asserting such right to indemnity a release
from all Liability in respect of the proceeding or claim. The parties hereto
agree to cooperate fully with each other in connection with the defense,
negotiation or settlement of any such proceeding or claim.
Notwithstanding the foregoing, for any audit of a Foreign Subsidiary by a Taxing
Authority of that Foreign Subsidiary's jurisdiction for which a right of
indemnification will be sought by the Bekaert Indemnified Parties under Section
9.2.5, the Bekaert Parties shall give prompt notice to the MSC Parties of the
request for such audit. A delay in giving notice shall only relieve the MSC
Parties of liability to the extent the MSC Parties suffer actual prejudice
because of the delay including, without limitation, the loss of ability to
obtain an extension on any tax filing. The terms of this Section 9.4 shall
otherwise apply.
9.5 Procedure for Indemnification - Other Claims. A claim for
--------------------------------------------
indemnification for any matter not involving a third-party claim may be asserted
by notice to the other party from whom indemnification is sought.
9.6 Special Procedures Relating to Environmental Liabilities .
--------------------------------------------------------
9.6.1 The following procedures govern the conduct of assessment,
investigatory,
55
corrective or remedial action in connection with Environmental Liabilities.
Third party claims with respect to such matters shall additionally be governed
by applicable provisions of Section 9.4 hereof to the extent not inconsistent
with this Section 9.6. Upon assertion by a Bekaert Indemnified Party of such a
claim, Bekaert or a Company shall be entitled to assume Principal Management of
the subject matter of such claim without the admissions of responsibility and/or
liability as related to the underlying basis of the claim. Bekaert or the
applicable Company may assert the necessary defenses as afforded under the
applicable Environmental Law. In the event Bekaert or a Company elects in
writing not to undertake Principal Management, an MSC Party shall assume
Principal Management. The parties not exercising Principal Management with
respect to a particular matter shall be entitled, at their sole cost and
expense, to reasonably participate in the management of such matter. Such
participation shall include, without limitation: (i) the right to receive copies
of all work proposals, reports, workplans and analytical data submitted to
Governmental Authorities, all notices or other written correspondence or
documents received from Governmental Authorities, any other non-privileged
documentation and correspondence materially bearing to the claim, and notices of
material meetings; (ii) the opportunity to attend and participate in such
material meetings; and (iii) the right to reasonably consult with and approve in
advance material actions (actions exceeding US $25,000) by the party exercising
Principal Management, such approval not to be unreasonably withheld, conditioned
or delayed.
9.6.2 In the event an MSC Party undertakes Principal Management of
any matter in accordance with Section 9.6.1, the MSC Party shall, upon
reasonable notice to Bekaert, have reasonable access to the relevant subject
facility. The MSC Party 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 the Company.
9.6.3 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 reasonable best efforts, subject to the
schedules and approvals required by the applicable Governmental Authority. The
parties agree to reasonably cooperate with one another in connection with
addressing any matter hereunder. Any Company may take such action as is
reasonable under the circumstances, and without prejudice to its rights to
indemnification under this Agreement, to respond to an actual or threatened
emergency or imminent endangerment situation arising from a matter otherwise
covered hereunder.
9.6.4 Any remedial action covered hereunder shall be deemed to have
been adequately completed to the extent that it attains compliance with
Environmental Laws, including without limitation, all applicable action levels,
corrective action or cleanup standards promulgated thereunder, if any, and any
lawful order or directive of an appropriate Governmental Authority.
56
9.7 Time Limitations on Indemnification by the MSC Parties. The
------------------------------------------------------
indemnification of the Bekaert Indemnified Parties provided for under Section
9.2 shall be limited in time as follows:
9.7.1 Any claim for indemnification under Section 9.2.1 (MSC Parties'
Representation and Warranty Indemnification) shall be made by the second (2/nd/)
anniversary of the Closing Date, except that there shall be:
(i) No time limits for making a claim under the
representations and warranties found in Section 3.1.4 (Capitalization), Section
3.1.5 (Beneficial Ownership), Section 3.1.6 (Beneficial Ownership of MSC/SFI
Entities), Section 3.6.1 (Title) and Section 3.7.3 (Real Estate Title), and the
foregoing shall survive indefinitely (the "Excepted Warranties");
(ii) the time limit for making a claim under the
representations and warranties found in Section 3.3.4 (Taxes) and Section 3.5.8
(Employee Benefit Programs) shall be the expiration of the applicable statutes
of limitation (including extensions); and
(iii) the time limit for making a claim under the
representation and warranty found in Section 3.8 (Environmental Matters) shall
be the fifth (5/th/) anniversary of the Closing Date.
9.7.2 Any claim for indemnification under Section 9.2.2 (MSC Parties'
Covenants Indemnification) shall not be limited in time, and shall survive
indefinitely;
9.7.3 Any claim for indemnification under Section 9.2.3 (Retained
Assets Indemnification) shall be made by the fifth (5/th/) anniversary of the
Closing Date; and
9.7.4 Any claim for indemnification under Section 9.2.4 (Retained
Liabilities Indemnification) and Section 9.2.5 (Foreign Subsidiaries'
Liabilities Indemnification) shall be made by the fifth (5/th/) anniversary of
the Closing Date, except that claims made under Section 9.2.4 and Section 9.2.5
for Liabilities for Taxes shall be made by the expiration of the statute of
limitations (including extensions) in the jurisdiction applicable to such Taxes;
and
9.7.5 Any claim for indemnification under Section 9.2.6 (Express
Environmental Indemnity Matters) shall be made by the tenth (10/th/) anniversary
of the Closing Date, except that there shall be no limits on the time for making
a claim for Damages from Superfund Liability.
9.8 Time Limitations on Indemnification by the Bekaert Parties. The
----------------------------------------------------------
indemnification of the MSC/SFI Indemnified Parties provided for under Section
9.3 shall be limited in time as follows:
57
9.8.1 Any claim for indemnification under Section 9.3.1 (Bekaert's
Warranty and Representation Indemnification) shall be made by the second (2/nd/)
anniversary of the Closing Date;
9.8.2 Any claim for indemnification under Section 9.3.2 (Bekaert's
Covenant Indemnification) shall not be limited in time, and shall survive
indefinitely; and
9.8.3 Any claim for indemnification under Section 9.3.3 (Assumed
Liabilities Indemnification) and Section 9.3.4 (the Zulte Assets
Indemnification) shall be made by the fifth (5/th/) anniversary of the Closing
Date.
9.9 Limitations on Indemnification Amounts by the MSC Parties. The
---------------------------------------------------------
indemnification of the Bekaert Indemnified Parties provided for under certain
of the provisions of Section 9.2 shall be limited in amount as follows:
9.9.1 The maximum aggregate amount of indemnification with respect to
all claims made by the Bekaert Indemnified Parties:
(a) Section 9.2.1 (MSC Parties' Representation and Warranty
Indemnification); and
(b) Section 9.2.4 (Retained Liabilities Indemnification);
and
(c) Section 9.2.5 (Foreign Subsidiaries' Liabilities
Indemnification); and
(d) Section 9.2.6 (Express Environmental Indemnity
Matters);
shall be Twenty Two Million Five Hundred Thousand US Dollars (US $22,500,000 ),
except there shall be no limits on the maximum aggregate amount for claims:
------
(x) Under Section 9.2.1 for the Excepted Warranties;
(y) Under Section 9.2.6(b) for Superfund Liability.
The foregoing clauses (x) and (y), together with the representations and
warranties found in Section 3.4.4 (Pending Litigation) for pending litigation
not disclosed in the Disclosure Letter and Section 9.2.6(a) (Express
Environmental Indemnity Matters) shall be referred to herein, the "Full Coverage
Matters."
9.9.2. No indemnification shall be provided for claims identified in
Section 9.9.1 (a) through (c) until the aggregate amount of all of the Bekaert
Indemnified Parties' claims for
58
indemnification exceed Six Hundred Thousand US Dollars (US $600,000), at which
time, the full amount from the first dollar of all such claims shall be covered
(the "Basket Threshold"), except for claims for Full Coverage Matters which
shall have no thresholds. No indemnity shall be provided for individual claims
under Thirty Thousand US Dollars (US $30,000), except for claims for Full
Coverage Matters and Disclosed Matters which shall have no per claim limits. For
purposes of computing the Basket Threshold, the full amount of each claim
greater than Thirty Thousand US Dollars (US $30,000) and the full amount of the
Full Coverage Matters and Disclosed Matters shall be considered, except that the
amount of claims for Section 9.2.6 (Express Environmental Matters) shall not be
counted for purposes of computing the Basket Threshold.
9.10 Limitations on Indemnification Amounts by the Bekaert Parties. The
-------------------------------------------------------------
indemnification of the MSC/SCI Indemnified Parties provided for under certain of
the provisions of Section 9.3 shall be limited in amount as follows:
9.10.1 The maximum aggregate amount of indemnification with respect
to all claims made by the MSC/SFI Indemnified Parties under Section 9.3.1
(Bekaert's Representation and Warranty Indemnification) and Section 9.3.3
(Bekaert's Assumed Liabilities Indemnification) shall be Twenty Two Million Five
Hundred Thousand US Dollars (US $22,500,000 USD); and
9.10.2 No indemnification shall be provided for claims arising under
Section 9.3.1 (Bekaert's Representation and Warranty Indemnification) until the
aggregate amount of all of the MSC/SFI Indemnified Parties claims for
indemnification exceed Six Hundred Thousand US Dollars (US $600,000), at which
time, the full amount from the first dollar of all such claims shall be covered
(the "Basket Threshold"), except for claims for the Assumed Liability of sales
and transfer Taxes as set forth in Section 2.3.3 of the Contribution Agreement
which shall have no thresholds ("Sales Tax Matter"). No indemnity shall be
provided for individual claims under Thirty Thousand US Dollars (US $30,000),
except for claims for a Sales Tax Matter. For purposes of computing the Basket
Threshold, the full amount of each claim greater than Thirty Thousand US Dollars
(US $30,000) shall be considered.
9.11 Exceptional Product Warranty Claims. Notwithstanding any other
-----------------------------------
indemnity contained in this Article 9, the MSC Parties, jointly and severally,
shall indemnify the Bekaert Indemnified Parties against and hold them harmless
from, and will pay to the Bekaert Indemnified Parties the amount of, any
Damages, arising or relating, directly or indirectly, from or to or in
connection with the Product Warranty Claims described in Section 9.11.1, solely
on the terms and conditions contained in this Section 9.11.
9.11.1. The indemnity set forth in Section 9.11 shall only apply to
Product Warranty Claims that exceed the Trigger Amount (as defined below) in any
of the following specified categories (the "Category"):
59
(a) Defects or non-conformances of the product related to the optical
properties, e.g. contamination, distortion or hazing;
(b) Functional defects or non-conformances of the products related to
the technical properties, e.g. UV protection or safety film standards; and
(c) Defects or non-conformances relating to the instability of the
product, e.g. film de-lamination and flaking, including, without
limitation, the outside weatherable film being sold in Spain as disclosed
in Section 3.4.3 of the Disclosure Letter and the attached schedules
thereto.
9.11.2. The following additional provisions shall apply to the
indemnity under this Section 9.11, and the limits set forth in this Section
9.11.2 shall be the only limits on the indemnification set forth in Section 9.11
and shall be separate from the limits set forth in Sections 9.7 and 9.9:
(a) No indemnity shall be provided for claims within a Category (the
"Category Claims") unless and until the aggregate of all claims asserted
following the Closing Date for such Category exceed Six Hundred Thousand US
Dollars (US $600,000) (the "Trigger Amount"), at which time the full amount from
the first dollar of all such Category Claims shall be covered (the "Covered
Category Claims"). For purposes of computing the Trigger Amount:
(i) No per claim deductible shall apply; and
(ii) Category Claims may be accumulated on a rolling
consecutive twelve (12) month basis commencing on the Closing
Date. If the Trigger Amount is achieved on that basis, then
all such Category Claims shall be paid commencing on the first
month in such computation period and for all periods
thereafter until the expiration of the indemnity in this
Section 9.11 as provided below; and
(iii) The calculation shall be made without regard to any accrual
for product warranty reserves on the balance sheet of the
MSC/SFI Entities.
(b) The maximum liability of the MSC Parties for all Covered Category
Claims in the aggregate shall be Five Million US Dollars (US $5,000,000);
(c) Any claim for indemnification under this Section 9.11 shall be made by
the second (2/nd/) anniversary of the Closing Date;
(d) The MSC Parties shall be obligated to indemnify Covered Category
Claims only to
60
the extent of ninety percent (90%) of the Damages from such claims; and
(e) The provisions of Section 9.4 (Third Party Claims) shall apply to
claims for indemnity under this Section to the extent not inconsistent with the
terms hereof.
10. CONSTRUCTION AND MISCELLANEOUS.
------------------------------
10.1 Definitions. Accounting terms used herein and not otherwise
-----------
defined herein shall have the meanings attributed to them under generally
accepted accounting principles. When used in this Agreement, the following
terms in all of their tenses and cases shall have the meanings assigned to them
below or elsewhere in this Agreement as indicated below:
"AAA" shall have the meaning set forth in Section 8.6.2.
"Acquisition Balance Sheets" shall have the meaning set forth in
Section 3.3.1.
"Additional SERP Participants" shall have the meaning set forth in
Section 8.3.6.
"Adjusted EVA Plan Accrual" shall have the meaning set forth in
Section 1.4.4.
"Affiliate" of any Person means any person directly or indirectly
controlling, controlled by, or under common control with, such Person and any
officer, director or controlling person of such Person.
"Agreement" shall mean this Purchase Agreement.
"Approvals" shall have the meaning set forth in Section 3.4.1(b).
"Assigned Contract" shall have the meaning set forth in Section 2.1.7
of the Contribution Agreement.
"Assumed Liabilities" shall have the meaning set forth in Section 2.3
of the Contribution Agreement.
"Award" shall have the meaning set forth in Section 8.3.5(b).
"Basket Threshold" shall have the meaning set forth in Section 9.9.2
and 9.10.2, as the case may be.
"Bekaert" shall mean Bekaert Corporation, a Delaware corporation.
61
"Bekaert Parties" shall mean NVB and Bekaert, collectively.
"Bekaert Indemnified Parties" shall have the meaning set forth in
Section 9.2.
"Books and Records" means all books and records of any Person relating
to such Person's business and properties, including, but not limited to, (i)
all books and records relating to the purchase of materials and supplies, sales
of products, dealings with customers, invoices, suppliers' lists and personnel
records, (ii) all contracts, reports, opinions, maps and other documents
affecting the title to or the value of its properties, (iii) Tax returns, and
(iv) all financial and operating data, files and other information with respect
to its business and properties.
"Business" shall have the meaning set forth in Recital A.
"Business Day" shall mean Monday through Friday, except for a legal or
bank holiday in the jurisdiction of the payor.
"Category" shall have the meaning set forth in Section 9.11.1.
"Category Claims" shall have the meaning set forth in Section
9.11.2(a).
"CERCLA" shall mean 42 USCA Sections 9601 to 9675.
"Closing Date" or "Closing" shall have the meaning set forth in
Section 7.4, or such other date as is mutually agreed upon by the parties.
"COBRA" shall mean the Consolidated Omnibus Budget Reconciliation Act
of 1985.
"Companies" or "Company" shall mean Newco, Pro Marketing, Solar-Gard
and the Foreign Subsidiaries collectively, or each of them individually.
"Consolidated Closing Purchased Working Capital" shall mean, as of the
Closing Date, the Working Capital of Newco and the Foreign Subsidiaries,
determined on a consolidated basis.
"Controlled Group Member" shall have the meaning set forth in Section
3.5.8(i)(3).
"Contributed Assets" shall have the meaning set forth in the
Contribution Agreement.
"Contribution Agreement" shall have the meaning set forth in Recital
H.
62
"Covenant" shall have the meaning set forth in Section 8.5.5.
"Covered Category Claims" shall have the meaning set forth in Section
9.11.2(a).
"Damages" shall have the meaning set forth in Section 9.2.
"Disclosed Matters" shall mean the matters marked *DM in the
Disclosure Letter and the schedules attached thereto.
"Disclosure Letter" shall mean the disclosure letter delivered by the
MSC Parties to Bekaert concurrently with the execution and delivery of this
Agreement.
"Dispute" shall have the meaning set forth in Section 8.6.2.
"Employee Program" shall have the meaning set forth in Section
3.5.8(i)(1).
"End Date" shall have the meaning set forth in Section 7.5(b)(i).
"Environment" shall mean soil, surface waters, groundwaters, stream
sediments, ambient air and any other environmental medium.
"Environmental Law" shall mean any international (e.g. European
Community), national (e.g. U.S or Belgian federal), regional (e.g. U.S. state or
Belgian region) or state or local environmental, health and/or safety-related
law (including common law), statute, regulation, decree, ordinance, rule or
order, whether existing previously or as of the date hereof.
"Environmental Liabilities" means any Liabilities (known or unknown,
fixed or contingent and including liability for response costs, personal injury,
property damage or natural resource damage) or investigatory, corrective or
remedial obligations arising under Environmental Laws arising out of, related
to, attributable to or caused by the operations of MSC/SFI or the Companies (or
any predecessor of MSC/SFI or any Company or any prior owner of all or part of
their respective businesses or assets) including any past and present operations
and their corresponding locations prior to the Closing Date, including, without
limitation, those relating to the handling, treatment, generation, transport,
recycling, storage, disposal, Release or Threat of Release of Hazardous
Materials at or from any past or current property or facility of MSC/SFI or any
Company or their predecessors, or any offsite waste treatment, storage or
disposal facility receiving waste from MSC/SFI or any Company or their
predecessors prior to the Closing Date, and shall include, without limitation,
all obligations and Liabilities arising from, caused by, or relating directly or
indirectly to that set forth in Section 3.8 of the Disclosure Letter.
"Environmental Matters" shall mean the matters set forth in Section
3.8.
63
"ERISA" shall have the meaning set forth in Section 3.5.8.
"EVA Plan" shall have the meaning set forth in Section 8.3.3.
"Excepted Warranties" shall have the meaning set forth in Section
9.7.1(i).
"Expiration Date" shall have the meaning set forth in Section
8.3.5(b).
"Final Closing Trial Balance" shall have the meaning set forth in
Section 1.4.1.
"Foreign Subsidiaries" shall mean MSC Specialty Films (UK) Ltd., a
United Kingdom corporation, Solar Gard (SEA) Pte, Ltd., a Singapore corporation,
MSC Specialty Films (Canada) Inc., an Ontario corporation, MSC Specialty Films
(Australasia) Pty. Limited, an Australian corporation, MSC Specialty Films de
Mexico SA de SV, a Mexican corporation, and Specialty Films de Services Company
SA de SV, a Mexican corporation collectively.
"Foreign Subsidiary Intercompany Account Balance" shall have the
meaning set forth in Section 1.4.6.
"Foreign Subsidiary Liabilities" shall mean the following Liabilities
relating to the Foreign Subsidiaries:
(a) Liabilities for indebtedness for borrowed monies or guarantees
incurred by the Foreign Subsidiaries prior to the Closing Date (including
intercompany debt due to MSC);
(b) Except for the Liabilities for Taxes reflected on the Final
Closing Trial Balance, all Liabilities for Taxes (including, without
limitation, all foreign, federal, state and local income and franchise
Taxes) of the Foreign Subsidiaries for periods prior to the Closing Date,
other than transfer or sales Taxes imposed on the Foreign Subsidiaries as a
result of the transaction contemplated by this Agreement;
(c) Except for Product Warranty Claims, all Liabilities to third
parties with respect to products, designed, manufactured, acquired for
resale, which are sold or leased by the Foreign Subsidiaries prior to the
Closing Date, without regard to (i) the basis or theory of claim
(negligence, strict tort, breach of express or implied warranty, fraud or
failure to warn, test, inspect or instruct or otherwise), (ii) the nature
of the damages sought (property damage, economic loss, personal injury,
wrongful death or other), or (iii) whether the claim arose or is asserted
before or after the Closing Date;
(d) All Liabilities arising out of, related to or attributable to any
of the Foreign Subsidiaries' or any predecessor's infringement of third
party intellectual property rights
64
prior to the Closing Date;
(e) All Liabilities of any of the Foreign Subsidiaries to any
Affiliate prior to the Closing Date;
(f) All Liabilities to shareholders, officers and directors of the
Foreign Subsidiaries in their capacities as such for actions or omissions
prior to the Closing Date;
(g) All Environmental Liabilities of the Foreign Subsidiaries;
(h) Liabilities arising out of the ownership, leasing or operation of
any property or facility of the Foreign Subsidiaries prior to the Closing
Date, including, without limitation, any Liabilities relating to personal
injury, property damage or any contractual indemnification provided in
connection with such property or facility except to the extent to which
proceeds from insurance coverage of the Foreign Subsidiaries prior to the
Closing are available to the Foreign Subsidiaries after the Closing to
reimburse for such Liabilities and only to such an extent;
(i) Liabilities related to or arising from or in connection with any
Foreign Subsidiary's employees, and Liabilities related to or arising from
the Employee Programs in each case in respect of the period prior to the
Closing Date; and
(j) Liabilities relating to the Disclosed Matter set forth in Section
3.4.1(b)(iv).
"Former Employee" shall have the meaning set forth in Section 8.4.
"Full Coverage Matters" shall have the meaning set forth in Section
9.9.1.
"GAAP" shall mean generally accepted accounting principles as used in
the financial statements referenced in Section 3.3.1.
"Governmental Authority" means any foreign, federal, state, regional
or local authority, agency, body, court or instrumentality, regulatory or
otherwise, which, in whole or in part, was formed by or operates under the
auspices of any foreign, federal, state, regional or local government.
"Hazardous Material" shall mean any pollutant, toxic substance,
chemical, hazardous waste, hazardous material, hazardous substance, oil or
petroleum-based compound as regulated by any Environmental Law.
"Intellectual Property" shall mean all intellectual property
including, without
65
limitation, inventions (whether or not patentable), all improvements thereto,
and all patents, patent applications, and patent disclosures, together with all
reissuances, continuations, continuations-in-part, divisionals, revisions,
extensions, and reexaminations and corresponding patent applications and patents
thereof; all trademarks (excluding Specular +, +CR and +SR), service marks,
trade dress, logos, trade names, and corporate names, and all applications,
registrations, and renewals in connection therewith; all copyrightable works,
all copyrights, and all applications, registrations, and renewals in connection
therewith; all trade secrets and confidential business information (including,
without limitation, secret processes, procedures, ideas, research and
development, know-how, formulas, compositions, engineering, manufacturing and
production processes and techniques, technical data, assembly design,
installation, other technical designs, drawings, and specifications, working
notes and memos, market studies, consultants' reports, technical and laboratory
data, competitive samples, engineering prototypes, pricing lists, cost
information, and all similar property of any nature, tangible or intangible),
all computer software (including data and related documentation); and all copies
and tangible embodiments thereof (in whatever form or medium); all know how,
techniques, processes, manufacturing methods, whether patentable or not, except
as provided in Section 2.1 of the Exclusive Supply Agreement described in
Section 7.1.10; in each case together with all licenses and sublicenses granted
and obtained with respect thereto, and rights thereunder, remedies against
infringements thereof, and rights to protection of interests therein under the
laws of all jurisdictions.
"Inventory" shall mean the inventory of the Companies.
"IRS" shall have the meaning set forth in Section 3.5.8(b).
"ISF" shall mean Innovative Specialty Films LLC, a Delaware limited
liability company.
"ISF Membership Interest" shall have the meaning set forth in Recital
J.
"Joint Venture Agreement" shall have the meaning set forth in Section
8.7.
"Knowledge" means the knowledge of the corporate officers of each of
the MSC Parties and the Companies charged with responsibility for the particular
function currently in the position. An individual will be deemed to have
Knowledge of a particular fact or matter if a reasonable business person would
be aware of such fact or matter in the ordinary course of business.
"Law" shall mean any international (e.g. European Community), national
(e.g. U.S or Belgian federal), regional (e.g. U.S. state or Belgian region) or
local law, statute, regulation, decree, ordinance, rule or order, whether
existing previously or as of the date hereof.
66
"Leases" shall have the meaning set forth in Section 3.7.1.
"Leased Real Property" shall have the meaning set forth in Section
3.7.1.
"Letter of Intent" shall have the meaning set forth in Section 10.17.
"Liabilities" means responsibilities, obligations, duties,
commitments, claims, and liabilities of any and every kind, whether known or
unknown, accrued, absolute, contingent or otherwise.
"Lien" means any lien, charge, covenant, condition, easement, adverse
claim, demand, encumbrance, limitation, security interest, option, pledge,
warrant or any other title defect or restriction of any kind.
"MSC" shall mean Material Sciences Corporation, a Delaware
corporation.
"MSC 401(k) Plan" shall have the meaning set forth in Section 8.3.8
"MSC Deferred Compensation Plan" shall have the meaning set forth in
Section 8.3.10.
"MSC Intellectual Property" shall have the meaning set forth in
Section 2.2.
"MSC Parties" shall mean MSC and MSC/SFI collectively.
"MSC Retirement Plan" shall have the meaning set forth in Section
8.3.9
"MSC/SFI" shall mean MSC Specialty Films, Inc., a California
corporation.
"MSC/SFI Entities" shall mean MSC/SFI, Newco, Pro Marketing, Solar-
Gard and Foreign Subsidiaries.
"MSC/SFI Indemnified Parties" shall have the meaning set forth in
Section 9.3.
"MSC/SFI Intellectual Property" shall have the meaning set forth in
Section 2.1.
"Material Contracts" shall have the meaning set forth in Section
3.5.2.
"Membership Interests" shall have the meaning set forth in Section
3.1.5.
"Mexican Subsidiaries" shall have the meaning set forth in Recital I.
67
"Newco" shall have the meaning set forth in Recital H.
"Newco 401(k) Plan" shall have the meaning set forth in Section 8.3.8.
"Newco EVA Plan" shall have the meaning set forth in Section 8.3.3
"Newco Membership Interest" shall have the meaning set forth in
Recital J.
"Non-Disclosure Agreement" shall have the meaning set forth in Section
10.17.
"NVB" shall mean N.V. Bekaert S.A., a corporation formed under the
laws of Belgium.
"NVB Intellectual Property Rights" shall mean the MSC/SFI Intellectual
Property and the MSC Intellectual Property.
"NVB Parties" shall mean NVB, Bekaert and the Companies.
"Open Due Diligence Matters" shall mean the items marked *OD in the
Disclosure Letter and the schedules attached thereto.
"Option Agreements" shall have the meaning set forth in Section 8.3.1.
"OSH Act" means the Occupational Safety and Health Act of (1970), 29
U.S.C. 651 et seq, 29 CFR Parts 1901 through 1910x and Part 1926.
-- ---
"Owned Real Property" shall have the meaning set forth in Section
3.7.1.
"Permit" shall mean any environmental permit, license, approval,
consent, or authorization issued by a federal, state, regional, or local
Governmental Authority.
"Person" means any individual, corporation, partnership, association
or any other entity or organization.
"Preliminary Closing Trial Balance" shall have the meaning set forth
in Section 1.4.1.
"Preliminary EVA Plan Accrual" shall have the meaning set forth in
Section 1.4.4.
"Principal Management" means the authority to principally direct the
handling of the subject matter of an environmental matter, including, without
limitation, selection of consultants, contractors, experts or advisors;
evaluation, selection and implementation of remedial
68
measures; and negotiations with or challenges to any governmental bodies or
third parties.
"Product Warranty Claims" shall have the meaning set forth in Section
9.3.3.
"Pro Marketing" shall mean Pro Marketing, Inc., a Nebraska
corporation.
"Protected Information" shall have the meaning set forth in Section
8.5.1.
"Purchase Price" shall have the meaning set forth in Section 1.2.
"Real Property" shall have the meaning set forth in Section 3.7.1.
"Release" shall mean any releasing, spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching,
migrating, disposing, or dumping into the Environment.
"Restricted Business" shall have the meaning set forth in Section
8.5.2(a).
"Restricted Stock Awards" shall have the meaning set forth in Section
8.3.2.
"Retained Assets" shall have the meaning set forth in Section 2.2 of
the Contribution Agreement.
"Retained Liabilities" shall have the meaning set forth in Section 2.4
of the Contribution Agreement.
"Sales Orders" shall have the meaning set forth in Section 3.5.2(k).
"Sales Tax Matter" shall have the meaning set forth in Section 9.10.2.
"SERP" shall have the meaning set forth in Section 8.3.6
"SERP Participants" shall have the meaning set forth in Section 8.3.6.
"Solar-Gard" shall mean Solar-Gard International, Inc., a Florida
corporation.
"Stock Options" shall have the meaning set forth in Section 8.3.5(b).
"Superfund Liability" shall have the meaning set forth in Section
9.2.6(b).
"Target Foreign Cash Amount" shall have the meaning set forth in
Section 1.4.3.
69
"Target Working Capital" shall have the meaning set forth in Section
1.4.2.
"Tax" or "Taxes" shall have the meaning set forth in Section 3.3.4.
"Tax Code" or "Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Taxing Authority" means any Governmental Authority having
jurisdiction over the assessment, determination, collection, or other imposition
of Tax.
"Termination of Mediation" shall have the meaning set forth in Section
8.6.2.
"Threat of Release" shall mean a substantial likelihood of a Release
that requires action to prevent or mitigate damage to the Environment that may
result from such Release.
"Total EVA Plan Adjustment" shall have the meaning set forth in
Section 1.4.4.
"Transferred Employees" shall have the meaning set forth in Section
8.3.1.
"Trigger Amount" shall have the meaning set forth in Section
9.11.2(a).
"Working Capital" shall have the meaning set forth in Section 1.4.2.
10.2 Notices. All notices, consents, waivers, and other communications
-------
required or permitted under this Agreement shall be in writing and shall be
deemed given to a party when (a) delivered to the appropriate address by hand or
by a nationally recognized overnight courier service (costs prepaid), (b) sent
by facsimile with confirmation of transmission by the transmitting equipment
with hard copy to immediately follow by mail, or (c) received or rejected by the
addressee if sent by registered or certified mail, return receipt requested; in
each case to the following addresses or facsimile numbers and marked to the
attention of the person (by name or title) designated below (or to such other
addresses or facsimile numbers or person as a party may designate by notice to
the other parties:
(a) If to Bekaert, to:
Bekaert Corporation
0000 Xxxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxx, Xxxx 00000
Facsimile Number: (000) 000-0000
Attn: Xxxxx Xxxx, Chief Financial Officer
With a copy to:
70
N.V. Bekaert S.A.
President Xxxxxxxxxxx 00
X-0000 Xxxxxxxx
Xxxxxxx
Facsimile Number: 32 56 23 0546
Attn: Legal Department
and
Xxxxxx XxXxxxxx
000 Xxxxx Xxxxxxxx Xxxxx
Xxxxx, XX 00000
Facsimile Number: (000) 000-0000
Attn: Xxxxxx X. Xxxxxxx, Esq.
(b) If to MSC/SFI, to:
Material Sciences Corporation
0000 Xxxx Xxxxx Xxxxxxxxx
Xxx Xxxxx Xxxxxxx, XX 00000
United States of America
Facsimile Number: (000) 000-0000
Attention: Chief Financial Officer
With a copy to:
Xxxx, Forward, Xxxxxxxx & Scripps
000 Xxxx Xxxxxxxx, Xxxxx 0000
Xxx Xxxxx, XX 00000
United States of America
Facsimile Number: (000) 000-0000
Attention: Xxxx X. Xxxxxx, Esq.
(c) If to MSC, to:
Material Sciences Corporation
0000 Xxxx Xxxxx Xxxxxxxxx
Xxx Xxxxx Xxxxxxx, XX 00000
United States of America
Facsimile Number: (000) 000-0000
Attention: Chief Financial Officer
71
With a copy to:
Xxxx, Forward, Xxxxxxxx & Scripps
000 Xxxx Xxxxxxxx, Xxxxx 0000
Xxx Xxxxx, XX 00000
United States of America
Facsimile Number: (000) 000-0000
Attention: Xxxx X. Xxxxxx, Esq.
(d) If to NVB, to:
N.V. Bekaert S.A.
President Xxxxxxxxxxx 00
X-0000 Xxxxxxxx
Xxxxxxx
Facsimile Number: 32 56 23 0546
Attn: President
With a copy to:
N.V. Bekaert S.A.
President Xxxxxxxxxxx 00
X-0000 Xxxxxxxx
Xxxxxxx
Facsimile Number: 32 56 23 0546
Attn: Legal Department
Any party may change its address for purposes of this Agreement by giving each
other party written notice thereof.
10.3 Binding Effect. Except as may be otherwise provided herein, this
--------------
Agreement shall be binding upon and inure to the benefit of the successors and
permitted assigns of the parties hereto.
10.4 Headings. The headings in this Agreement are intended solely for
--------
convenience of reference and shall be given no effect in the construction or
interpretation of this Agreement.
10.5 Exhibits, Schedules and Disclosure Letter. The Exhibits, Schedules
-----------------------------------------
and Disclosure Letter referred to in this Agreement shall be deemed to be a part
of this Agreement.
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10.6 Counterparts. This Agreement may be executed in multiple
------------
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same document.
10.7 No Waiver of Rights. The rights and remedies of the parties to
-------------------
this Agreement are cumulative and not alternative. None of the conditions or
provisions of this Agreement shall be held to have been waived by any act or
knowledge on the part of either party, except by an instrument in writing signed
by an authorized representative of such party. Neither the failure nor delay by
either party in the exercise of any power or right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such power or
right preclude other or further exercise thereof or of any other right or power.
No waiver by either party of any breach hereof shall be deemed a waiver of any
preceding, continuing or succeeding breach of the same or any other term hereof.
10.8 Pronouns. The use of a particular pronoun herein shall not be
--------
restrictive as to gender or number but shall be interpreted in all cases as the
context may require.
10.9 Time Periods. Any action required hereunder to be taken within a
------------
certain number of days shall be taken within that number of calendar days;
--------
provided, however, that if the last day for taking such action falls on a
weekend or a holiday, the period during which such action may be taken shall be
automatically extended to the next business day.
10.10 Modification or Amendment. No supplement, modification or
-------------------------
amendment of this Agreement shall be binding unless made in a written instrument
which is signed by all of the parties and which specifically refers to this
Agreement.
10.11 Entire Agreement. This Agreement (including all exhibits,
----------------
schedules and the Disclosure Letter), the Contribution Agreement and the
agreements and documents referred to in this Agreement or delivered hereunder
are the exclusive statement of the agreement among the parties concerning the
subject matter hereof. All negotiations among the parties are merged into this
Agreement, and there are no representations, warranties, covenants,
understandings, or agreements, oral or otherwise, in relation thereto among the
parties other than those incorporated herein and to be delivered hereunder.
10.12 No Assignment. Neither this Agreement nor any interest herein may
-------------
be assigned, or any obligation delegated, by either party hereto without the
prior written consent of the other party except as expressly provided in this
Agreement or to an Affiliate of a party.
10.13 Severability. If any one or more of the provisions contained in
------------
this Agreement or in any document executed in connection herewith (other than
provisions constituting a material consideration to a party's entering into this
Agreement or such other document) shall be invalid, illegal or unenforceable in
any respect under any applicable law, the validity, legality, and
73
enforceability of the remaining provisions contained herein shall not in any way
be affected or impaired, provided, however, that in such case the parties shall
use their best efforts to achieve the purpose of the invalid provision.
10.14 Governing Law. This Agreement and all actions contemplated hereby
-------------
shall be governed by and construed and enforced in accordance with the internal
laws of the State of New York without reference to the principles of conflict of
laws, as provided in Section 5-1401 of New York General Obligations Laws.
10.15 Survival. The provisions of this Agreement shall survive the
--------
Closing.
10.16 No Third Party Beneficiaries. This Agreement shall not be construed
----------------------------
as giving any Person, other than the parties hereto and their successors and
permitted assignees, any legal or equitable right, remedy or claim herein
contained, this Agreement and all provisions and conditions hereof being
intended to be, and being, for the sole and exclusive benefit of the parties,
successors and permitted assignees and for the benefit of no other Person or
entity.
10.17 Mutual Non-Disclosure Agreement and Letter of Intent. Reference is
----------------------------------------------------
made to the Mutual Non-Disclosure Agreement between the MSC Parties, on the one
hand, and the Bekaert Parties, on the other hand, dated April 17, 2001 (the
"Non-Disclosure Agreement") and Letter of Intent between the MSC Parties, on the
one hand, and the Bekaert Parties, on the other hand, dated June 8, 2001
("Letter of Intent"). All rights and remedies for a breach of the Non-
Disclosure Agreement and the Letter of Intent are reserved and survive the
execution of this Agreement, including, without limitation, claims by the
Bekaert Parties arising out of the events surrounding announcement of the
transaction on June 8, 2001.
[Signatures on the following page]
74
INTENDING TO BE LEGALLY BOUND, the parties hereto have caused this Agreement to
be duly executed as of the date and year first above written.
BEKAERT:
BEKAERT CORPORATION
By: /s/ Xxxxx X. Best
----------------------------------------
Title: Chief Financial & Administrative Officer
By: /s/ Xxxx Xxxxxxx
----------------------------------------
Title: Assistant Secretary
MSC:
MATERIAL SCIENCES CORPORATION
By: /s/ Xxxxxx X. Xxxxx
----------------------------------------
Title: Chairman, President and Chief Executive
Officer
MSC/SFI:
MSC SPECIALTY FILMS, INC.
By: /s/ Xxxxx X. Xxxxxxxx, Xx.
---------------------------------------
Title: Vice President, Chief Financial Officer
and Secretary
NVB:
N.V. BEKAERT S.A.
By: /s/ Xxx Xxxxxxx
---------------------------------------
Title: Executive Vice-President
By: /s/ Raf Xxxxxxxx
---------------------------------------
Title: Chief Executive Officer
-i-
