EX-10.1





Exhibit 10.1


EXECUTION COPY


 



ASSET PURCHASE AGREEMENT


BY AND BETWEEN


CHEMETALL CORP.


AND


NALCO COMPANY


Dated as of July 24, 2008


SALE OF FINISHING TECHNOLOGIES BUSINESS


 



 








 




TABLE OF CONTENTS



	 	 	 	 	 
	 	 	Page	 
	ARTICLE I PURCHASE AND SALE OF ACQUIRED ASSETS
	 	 	1	 
	 
	 	 	 	 
	1.1 Purchase and Sale of Acquired Assets
	 	 	1	 
	1.2 Excluded Assets
	 	 	3	 
	1.3 Assumed Liabilities
	 	 	4	 
	1.4 Retained Liabilities
	 	 	4	 
	1.5 Certain Provisions Regarding Assignments
	 	 	5	 
	1.6 Shared Product Names and Trademarks
	 	 	6	 
	1.7 Shared Intellectual Property Rights and Technology
	 	 	6	 
	 
	 	 	 	 
	ARTICLE II PURCHASE PRICE; TERMS OF PAYMENT
	 	 	8	 
	 
	 	 	 	 
	2.1 Purchase Price
	 	 	8	 
	2.2 Allocation of the Purchase Price
	 	 	8	 
	2.3 Returns
	 	 	9	 
	2.4 Proration of Certain Items
	 	 	9	 
	 
	 	 	 	 
	ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER
	 	 	9	 
	 
	 	 	 	 
	3.1 Organization, Existence and Standing
	 	 	9	 
	3.2 Capacity to Sell; Authorization
	 	 	9	 
	3.3 Statements of Revenues
	 	 	10	 
	3.4 Operation of the Business
	 	 	11	 
	3.5 Acquired Assets; Title
	 	 	11	 
	3.6 Intellectual Property; Technology
	 	 	12	 
	3.7 Pending or Threatened Actions
	 	 	13	 
	3.8 Permits
	 	 	13	 
	3.9 Compliance with Legal Requirements
	 	 	14	 
	3.10 Transactions with Affiliates
	 	 	14	 
	3.11 Employees; Labor Relations
	 	 	14	 
	3.12 Employee Benefits
	 	 	15	 
	3.13 Taxes
	 	 	16	 
	3.14 Assumed Contracts
	 	 	16	 
	3.15 Environmental Matters
	 	 	16	 
	3.16 Warranties
	 	 	17	 
	 -i-





 








 





	 	 	 	 	 
	 	 	 	 
	TABLE OF CONTENTS
(continued)
	 	Page	 
	 
	 	 	 	 
	3.17 Inventory
	 	 	18	 
	3.18 Customers
	 	 	18	 
	3.19 Brokers or Finders
	 	 	18	 
	3.20 Exclusivity of Representations and Warranties
	 	 	18	 
	 
	 	 	 	 
	ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER
	 	 	19	 
	 
	 	 	 	 
	4.1 Organization, Existence and Standing
	 	 	19	 
	4.2 Capacity; Authorization
	 	 	19	 
	4.3 Brokers or Finders
	 	 	19	 
	4.4 Exclusivity of Representations and Warranties
	 	 	20	 
	 
	 	 	 	 
	ARTICLE V COVENANTS OF THE PARTIES
	 	 	20	 
	 
	 	 	 	 
	5.1 Covenants of Seller
	 	 	20	 
	5.2 Mutual Covenants
	 	 	23	 
	5.3 Solicitation of Other Purchasers
	 	 	25	 
	5.4 Inventory
	 	 	25	 
	5.5 Product Approvals
	 	 	25	 
	5.6 Notification of Certain Matters
	 	 	26	 
	5.7 Covenants Relating to the China Acquired Assets.
	 	 	26	 
	5.8 EPO
	 	 	27	 
	5.9 Specified Matter
	 	 	27	 
	 
	 	 	 	 
	ARTICLE VI ADDITIONAL COVENANTS
	 	 	27	 
	 
	 	 	 	 
	6.1 Non-Solicitation of Employees
	 	 	27	 
	6.2 Non-Competition
	 	 	28	 
	6.3 Unenforceability; Severability; Specific Performance
	 	 	28	 
	 
	 	 	 	 
	ARTICLE VII THE CLOSING
	 	 	29	 
	 
	 	 	 	 
	7.1 Date and Time
	 	 	29	 
	7.2 Seller’s Closing Documents
	 	 	29	 
	7.3 Purchaser’s Closing Documents
	 	 	31	 
	 
	 	 	 	 
	ARTICLE VIII CONDITIONS TO OBLIGATIONS OF PURCHASER
	 	 	31	 
	 
	 	 	 	 
	8.1 Material Adverse Effect
	 	 	31	 
	8.2 Representations and Warranties
	 	 	31	 
	 -ii-





 








 





	 	 	 	 	 
	 	 	 	 
	TABLE OF CONTENTS
(continued)
	 	Page	 
	 
	 	 	 	 
	8.3 Covenants
	 	 	32	 
	8.4 HSR
	 	 	32	 
	8.5 No Action or Injunction
	 	 	32	 
	 
	 	 	 	 
	ARTICLE IX CONDITIONS TO OBLIGATIONS OF SELLER
	 	 	32	 
	 
	 	 	 	 
	9.1 Representations, Warranties and Covenants
	 	 	32	 
	9.2 HSR
	 	 	33	 
	9.3 No Action or Injunction
	 	 	33	 
	 
	 	 	 	 
	ARTICLE X TERMINATION
	 	 	33	 
	 
	 	 	 	 
	10.1 Termination
	 	 	33	 
	 
	 	 	 	 
	ARTICLE XI INDEMNIFICATION
	 	 	34	 
	 
	 	 	 	 
	11.1 Survival
	 	 	34	 
	11.2 Seller’s Indemnification Obligation
	 	 	34	 
	11.3 Purchaser’s Indemnification Obligation
	 	 	35	 
	11.4 Procedure for Indemnification Claims.
	 	 	35	 
	11.5 Limitations on Indemnification
	 	 	37	 
	11.6 Procedures for Environmental Claims
	 	 	38	 
	11.7 Adjustment
	 	 	39	 
	 
	 	 	 	 
	ARTICLE XII EMPLOYEE MATTERS
	 	 	39	 
	 
	 	 	 	 
	12.1 Continued Employment
	 	 	39	 
	12.2 Employee Benefits
	 	 	40	 
	12.3 Employee Liabilities
	 	 	40	 
	12.4 Vacation
	 	 	40	 
	12.5 Credit for Service; Preexisting Conditions; Coordination
	 	 	41	 
	12.6 COBRA Coverage
	 	 	41	 
	12.7 Flexible Spending Accounts
	 	 	41	 
	12.8 Employer Contributions
	 	 	41	 
	12.9 Bonus Plans
	 	 	42	 
	12.10 Retiree Medical
	 	 	42	 
	12.11 Seconded Employees
	 	 	42	 
	12.12 Mexican Employees
	 	 	42	 
	 -iii-






 









 





	 	 	 	 	 
	 	 	 	 
	TABLE OF CONTENTS
(continued)
	 	Page	 
	 
	 	 	 	 
	12.13 General
	 	 	43	 
	12.14 Cooperation
	 	 	43	 
	 
	 	 	 	 
	ARTICLE XIII GENERAL PROVISIONS
	 	 	43	 
	 
	 	 	 	 
	13.1 Expenses
	 	 	43	 
	13.2 Notices
	 	 	43	 
	13.3 Governing Law; Consent to Jurisdiction
	 	 	44	 
	13.4 Counterparts
	 	 	44	 
	13.5 Headings; Schedules; Exhibits
	 	 	44	 
	13.6 Entire Agreement
	 	 	45	 
	13.7 Third-Party Beneficiaries
	 	 	45	 
	13.8 Assignment
	 	 	45	 
	13.9 Specific Performance
	 	 	45	 
	13.10 Nondisclosure
	 	 	46	 
	13.11 Interpretation; Absence of Presumption
	 	 	46	 
	13.12 Severability
	 	 	47	 
	13.13 Amendments; Waiver
	 	 	47	 
	13.14 Bulk Transfer Law
	 	 	47	 




 -iv-


 








 





LIST OF EXHIBITS




	 	 	 
	Exhibit A

	 	Defined Terms
	Exhibit B

	 	Dual Products
	Exhibit C

	 	Supplied Products
	Exhibit D

	 	Form of Distribution Agreement
	Exhibit E

	 	Form of Transition Services Agreement
	Exhibit F

	 	Form of License Agreement
	Exhibit G

	 	Transferred Products






LIST OF SCHEDULES




	 	 	 
	Schedule 1.1(b)

	 	Transferred Patents and Trademark Rights
	Schedule 1.1(c)

	 	Products Under Development
	Schedule 1.1(f)

	 	Assumed Contracts
	Schedule 1.1(g)

	 	Owned Real Property
	Schedule 1.1(h)-1

	 	On-Site Transferred Machinery and Equipment
	Schedule 1.1(h)-2

	 	Off-Site Transferred Machinery and Equipment
	Schedule 1.1(i)

	 	Assigned Permits
	Schedule 1.2(b)(iii)

	 	Excluded Trademarks
	Schedule 1.6(a)

	 	Seller Shared Trademarks
	Schedule 1.6(b)

	 	Purchaser Shared Trademarks
	Schedule 1.7(b)

	 	Designated Patents
	Schedule 2.1

	 	Inventory Valuation Basis
	Schedule 3.2

	 	Consents and Approvals
	Schedule 3.3

	 	Statements of Revenues
	Schedule 3.4

	 	Operation of the Business
	Schedule 3.5(a)

	 	Liens
	Schedule 3.5(c)

	 	Sufficiency of Assets
	Schedule 3.6(a)

	 	Transferred Intellectual Property, Nalco Licensed IP
and Domain Name Registrations
	Schedule 3.6(c)

	 	Licenses
	Schedule 3.7

	 	Pending or Threatened Actions
	Schedule 3.8(a)

	 	Product Approvals
	Schedule 3.8(b)

	 	Permits
	Schedule 3.10

	 	Transactions with Affiliates
	Schedule 3.11

	 	Business Employees
	Schedule 3.12

	 	Benefit Plans
	Schedule 3.14

	 	Contracts
	Schedule 3.16

	 	Warranties
	Schedule 3.18

	 	Significant Customers
	Schedule 11.2(a)(iii)

	 	Indemnified Litigation
	Schedule 12.2

	 	Merck Plan Employees and Benefit Plans
	Schedule 12.11

	 	Seconded Employees
	Schedule 12.12

	 	Mexican Employees
	Schedule A-1

	 	Supplied Products Customers






 v




 









 





ASSET PURCHASE AGREEMENT




     THIS AGREEMENT (this “Agreement”) is made as of July 24, 2008, by and between
Chemetall Corp., a Delaware corporation (“Purchaser”), and Nalco Company, a Delaware
corporation (“Seller”). Capitalized terms not otherwise defined in this Agreement are used
as defined in Exhibit A hereto.



WITNESSETH:




     WHEREAS, Seller is engaged in part in the business of producing (or having produced),
marketing, distributing and selling (i) the Transferred Products and (ii) the products listed on
Exhibit B (the “Dual Products”) for FTG Applications in the Territory
(collectively, the “Primary FTG Business”);



     WHEREAS, Seller is engaged in part in the business of marketing, distributing and selling the
products listed on Exhibit C (the “Supplied Products”) to the Supplied Products
Customers in the Territory (the “Supplied Products Business”, and together with the Primary
FTG Business, the “Business”);



     WHEREAS, Seller desires to sell and transfer, or cause to be sold and transferred, to
Purchaser, and Purchaser desires to purchase the Acquired Assets from Seller and its Affiliates, on
the terms and subject to the conditions set forth herein; and



     WHEREAS, Seller desires to sell and transfer, or cause to be sold and transferred, to
Purchaser, and Purchaser desires to purchase the Supplied Products from Seller and its Affiliates,
on the terms and subject to the conditions set forth in the Distribution Agreement (as defined
herein).



     NOW, THEREFORE, in consideration of the premises and the mutual representations, warranties,
covenants and agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound hereby,
the parties hereto hereby agree as follows:



ARTICLE I

PURCHASE AND SALE

OF ACQUIRED ASSETS




     1.1 Purchase and Sale of Acquired Assets. Upon the terms and subject to the
conditions of this Agreement, and for the consideration set forth in Section 2.1, at the
Closing, Seller shall (and shall cause its appropriate Affiliates to) sell, convey, transfer and
assign to Purchaser, and Purchaser shall purchase from Seller and its Affiliates, all right, title
and interest of Seller and its Affiliates in and to the following Assets, whether or not in the
possession or control of Seller or its Affiliates (collectively, the “Acquired Assets”),
free and clear of all Liens.



          (a) (i) raw materials located at the Owned Real Property; (ii) raw materials located elsewhere
in the Territory and used exclusively for the manufacture of the Transferred
Products; and (iii) work-in-process, finished goods inventories and related packaging of the
Transferred Products, in each case located in the Territory (collectively, the
“Inventory”);



 









 







          (b) (i) U.S. and foreign patents (including all reissues, divisions, continuations and
extensions thereof), patent applications and Trademark Rights, in each case as listed on
Schedule 1.1(b), and (ii) without limitation of clause (i), all other Intellectual Property
Rights related exclusively to the Transferred Products within the Territory (collectively,
“Transferred Intellectual Property”), together with the goodwill of the Primary FTG
Business in the Territory in connection with which all such Trademark Rights are used;




          (c) (i) all formulas for the Transferred Products, and (ii) without limitation of clause (i),
all Technology related exclusively to the Transferred Products, including products under
development exclusively for FTG Applications, including those products under development listed on
Schedule 1.1(c), and testing procedures and analytical techniques used exclusively in
support of the Transferred Products (“Transferred Technology”);




          (d) all customer lists, files and records relating to the sale of (x) the Transferred Products
in the Territory, (y) the Dual Products for FTG Applications in the Territory and (z) the Supplied
Products to the Supplied Products Customers;




          (e) all supplier lists with respect to or regarding the Primary FTG Business and all other
books, records, files and papers with respect to or regarding the Business, the Use of the
Transferred Products or the Dual Products for FTG Applications or the Use of the Supplied Products
by the Supplied Products Customers, in each case in the Territory (including sales reports, cost
sheets, bills of material, production data, information with respect to product development,
inventory data, business development plans; all documents evidencing Transferred Technology or
Transferred Intellectual Property; product formulations with respect to the Transferred Products
and batch tickets; specifications of raw materials used in the manufacture of the Transferred
Products in the Territory; marketing and other advertising and promotional materials, catalogs,
correspondence, mailing lists, sales materials and records, sales order files; copies of
information from accounting and employee records related to the Business Employees);
provided, however, Seller may keep copies of all such information to the extent
relating to any Retained Business;




          (f) subject to Section 1.2(b)(iv), all Contracts listed on Schedule 1.1(f) and
all open customer purchase orders of the Business (the “Assumed Contracts”);




          (g) the real property (including easements, rights of way and other privileges relating
thereto) and associated fixtures and improvements described on Schedule 1.1(g) (the
“Owned Real Property”);




          (h) (i) all machinery, installations, equipment, office equipment, laboratory, research and
development and technical service equipment, tools, furniture, raw materials, packaging, spare
parts, supplies and other fixed Assets or tangible personal property used or held by or acquired
for the Business, in each case that are located at the Owned Real Property, including those items
described on Schedule 1.1(h)-1, (ii) all laboratory, research and development and technical
service equipment, vehicles and field equipment listed on Schedule
1.1(h)-2, and (iii) any machinery, equipment and other tangible personal property of
the Primary FTG Business owned by Seller or any of its Affiliates that is (x) related exclusively
to the production of Transferred Products in the Territory and (y) held by customers;




2









 








          (i) all Approvals of the Business related to the ownership or operation of the Owned Real
Property to the extent currently in effect, including the Approvals listed on Schedule
1.1(i) (“Permits”);




          (j) all warranties in favor of Seller or its Affiliates with respect to any of the Acquired
Assets;




          (k) the right to (i) produce (or have produced), market, distribute and sell the (x) the
Transferred Products (subject to the License Agreement) and (y) the Dual Products within the
Territory and, in the case of the Dual Products, being limited to FTG Applications and being
subject to the terms of the licenses granted by Seller to Purchaser pursuant to Sections
1.6(a) and 1.7, and (ii) market, distribute and sell the Supplied Products subject to
the terms of the Distribution Agreement; and




          (l) the goodwill associated with the Assets listed above in this Section 1.1.




     1.2 Excluded Assets.



          (a) For the avoidance of doubt, the parties acknowledge that (i) Seller is engaged in, among
other businesses, (x) the business of producing (or having produced), marketing, distributing and
selling Products for FTG Applications in the Retained Territory (the “Retained Territory
Business”), (y) the business of producing (or having produced), marketing, distributing and
selling the Dual Products for applications other than the FTG Applications inside and outside the
Territory (the “Dual Products Business”), (z) the business of producing (or having
produced) the Supplied Products and (zz) the business of marketing, distributing and selling the
Supplied Products to customers other than the Supplied Products Customers for, among other
applications, water treatment and wastewater treatment applications (excluding, for the avoidance
of doubt, FTG Applications) (clauses (z) and (zz) collectively, the “Water Treatment
Business”), (ii) the Retained Territory Business, the Dual Products Business and the Water
Treatment Business are not included in the Acquired Assets, (iii) nothing in this Agreement shall
be interpreted to preclude Seller from conducting the Retained Territory Business, Dual Products
Business, the Water Treatment Business or any other Retained Business, (iv) subject to the terms of
Sections 1.6(a) and 1.7 and the licenses granted in the Distribution Agreement,
none of the product formulas, product names or any other Intellectual Property Rights and
Technology of Seller or its Affiliates related to (x) the Dual Products (the “Dual Products IP
and Technology”) and (y) the Supplied Products (the “Supplied Products IP and
Technology”) is included in the Acquired Assets and (v) Seller intends to continue to engage in
the Retained Territory Business, the Dual Products Business, the Water Treatment Business and the
other Retained Businesses from and after the Closing.




          (b) Notwithstanding the provisions of Section 1.1 or anything to the contrary in this
Agreement and without limiting Section 1.2(a), Seller and its Affiliates shall not sell to
Purchaser, and Purchaser shall not purchase from Seller and its Affiliates, any Assets other than
the Acquired Assets (the “Excluded Assets”). Without limiting the foregoing, the
Excluded Assets shall include:



3









 








     (i) all cash on hand and in deposit or bank accounts and cash equivalents held
by or on behalf of Seller and its Affiliates;




     (ii) all accounts receivable arising in connection with, or related to the
Business;




     (iii) subject to the terms of Sections 1.6(a) and 1.7 and the
Distribution Agreement, all Dual Products IP and Technology and Supplied Products IP
and Technology and all other Intellectual Property Rights and Technology of Seller
and its Affiliates (other than Transferred Intellectual Property and Transferred
Technology), including all Trademark Rights together with product codes, including
“YSLD” codes, listed on Schedule 1.2(b)(iii);




     (iv) all payments due to Seller from Calvary Industries, Inc. under sections 8
and 12 of the Stipulation and Order on Consent made as of January 31, 2008, by
Seller, Susan L. Kimball, Calvary Industries, Inc. and Pete Neff; and




     (v) without limitation of clauses (i), (ii), (iii) and (iv) above, all Assets
of Seller and its Affiliates other than the Acquired Assets, including the Retained
Business and all Assets described in clauses (i), (ii) and (iii) related to the
Retained Business.



     1.3 Assumed Liabilities. Subject to Sections 1.4 and 1.5, upon the
terms and subject to the conditions of this Agreement, Purchaser shall assume, and agree to pay,
perform and discharge, as of the Closing, the following liabilities and obligations arising in
connection with the Business (collectively, the “Assumed Liabilities”):



          (a) Liabilities of Seller or any of its Affiliates under each Assumed Contract to the extent
arising from and after the Closing with respect to periods after the Closing (provided,
however, that Purchaser and its Affiliates shall not assume any Liability under any Assumed
Contract arising out of a breach or default by Seller or any of its Affiliates under any Assumed
Contract (including any event prior to the Closing that with the passage of time or the giving of
notice, or both, would become such a breach or default);




          (b) Except as provided in the Ancillary Agreements, Liabilities to the extent arising from and
after the Closing with respect to periods after the Closing arising as a result of, or with respect
to, the operation of the Business, Acquired Assets and Owned Real Property after the Closing, other
than Liabilities described in the proviso to Section 1.3(a); and




          (c) Subject to Purchaser’s rights of indemnification pursuant to Article XI, Other
Environmental Liabilities.




     1.4 Retained Liabilities. Notwithstanding any provision of this Agreement to the
contrary, except for the Assumed Liabilities, Purchaser and its Affiliates shall not assume any
Liabilities of, or arising as a result of or with respect to
actions or omissions of, Seller or any of its Affiliates (whether arising before or after the
Closing) (collectively, “Retained Liabilities”). The Retained Liabilities include the
following:



4









 





          (a) Except as provided in Article XII, Liabilities arising out of, or with respect to,
any Benefit Plan or any other current or former benefit plan, policy or arrangement of Seller or
any of its Affiliates and Liabilities with respect to current or former employees, or current or
former agents or independent contractors, of Seller or any of its Affiliates or any its or their
predecessors, or any of their beneficiaries, heirs and assigns, in each case whether arising before
or after the Closing;




          (b) Off-Site Environmental Liabilities;




          (c) Liabilities arising or resulting from the distribution, sale or use (whether or not
intended) of products manufactured or sold by Seller or any of its Affiliates prior to the Closing
(regardless of whether the particular Liability occurs prior to or following the Closing),
including, without limitation, Liabilities constituting or arising out of death, personal injury,
other injury to natural persons, property or consumer fraud;




          (d) Liabilities of Seller and its Affiliates for Taxes, except to the extent provided in
Section 13.1 and excluding, for the avoidance of doubt, any Taxes imposed on Purchaser
attributable to its operation of the Business from and after the Closing;




          (e) Except as provided in Section 1.3(c), Liabilities arising out of, in connection
with or as a result of the operation of the Business, Acquired Assets or Owned Real Property prior
to the Closing (including the matters set forth on Schedule 3.7 and all Actions relating
thereto or arising therefrom); and




          (f) Liabilities to Seller or any of its Affiliates.




     1.5 Certain Provisions Regarding Assignments.



          (a) Notwithstanding anything in this Agreement to the contrary, this Agreement shall not
constitute an agreement to assign or transfer any Assumed Contract or other Acquired Asset or any
claim, right, benefit or obligation thereunder or resulting therefrom if an assignment or transfer
thereof, without a Consent or Approval of a third party thereto, would constitute a breach or
violation thereof or would in any way adversely affect the rights (upon transfer) of Purchaser
under such Contract or other Acquired Asset or result in the loss or cancellation thereof or
require a payment thereunder by reason of the assignment or transfer thereof. Seller will use
reasonable best efforts to obtain any such Consent or Approval at or prior to the Closing, and if
such Consent or Approval is not obtained at or prior to the Closing, the provisions of Section
1.5(b) will apply.




          (b) Without limitation of the rights or obligations of Seller or Purchaser under Article
XI or otherwise, if any Assumed Contract, Permit or other Acquired Asset to be assigned,
transferred, conveyed or reissued to Purchaser pursuant to this Article I is not capable of
being validly and fully assigned, transferred, conveyed or reissued to Purchaser without a Consent
or Approval, and such Consents and Approvals have not been obtained prior to the Closing or do
not remain in full force and effect at or after the Closing, then until such time as such
Consent or Approval is obtained, (i) Seller shall, and shall cause its Affiliates to, use their
reasonable best efforts to obtain such Consents or Approvals and (ii) Seller and Purchaser shall
cooperate in any



5









 






reasonable and lawful arrangement designed to provide to Purchaser the benefits of
any Assumed Contract, Permit or other Acquired Asset as to which such Consent or Approval has not
been obtained or does not remain in full force and effect. To the extent that Purchaser is
provided the benefits pursuant to this Section 1.5 of any such Assumed Contract, Permit or
other Acquired Asset, Purchaser shall perform the obligations of Seller and its Affiliates
thereunder or in connection therewith with respect to periods following the Closing, but only to
the extent that such obligation would have been an Assumed Liability but for the fact that such a
Consent or Approval has not been so obtained.




     1.6 Shared Product Names and Trademarks.



          (a) For the period from the Closing Date through the six-month anniversary of the Closing
Date, Seller (on behalf of itself and its Affiliates) hereby grants to Purchaser a fully paid-up,
royalty-free, non-exclusive, license to use in the Territory all Trademark Rights together with the
product codes, including “YSLDs”, used in the Business prior to the date of this Agreement or the
Closing Date that refer, as applicable, to (x) the Transferred Products or (y) the Dual Products
for FTG Application in the Territory, but are not included in the Transferred Intellectual
Property, including the Trademark Rights listed on Schedule 1.6(a) (the “Seller Shared
Trademarks”), in each case solely for FTG Applications in the Territory. On or before the
six-month anniversary of the Closing Date, Purchaser shall cease and discontinue any use of the
Seller Shared Trademarks.




          (b) For the period from the Closing Date through the six-month anniversary of the Closing
Date, Purchaser hereby grants to Seller a fully paid-up, royalty-free, non-exclusive, license to
use the Trademark Rights listed on Schedule 1.6(b) (“Purchaser Shared Trademarks”)
used in the Retained Business prior to the date of this Agreement and the Closing Date that refer
to products of the Retained Business solely for applications within the Retained Business. On or
before the six-month anniversary of the Closing Date, Seller shall cease and discontinue any use of
the Purchaser Shared Trademarks.




     1.7 Shared Intellectual Property Rights and Technology.



          (a) Effective as of the Closing Date, Seller (on behalf of itself and its Affiliates) hereby
grants to Purchaser a fully paid-up, royalty-free, exclusive (except that such license as it
relates to Plastic Facia Applications shall be non-exclusive), perpetual right and license to Use
in the Territory solely for FTG Applications and Plastic Facia Applications in the Territory (the
“FTG IP License”) (x) any and all Dual Products IP and Technology and (y) other
Intellectual Property Rights and Technology of Seller and its Affiliates, in each case of clauses
(x) and (y) if in existence and used in the Primary FTG Business prior to the Closing Date (other
than Seller Shared Trademarks, which are addressed in Section 1.6(a)); provided,
however, that the exclusivity of the FTG IP License to Purchaser shall not be deemed to
prohibit Seller from using any Intellectual Property Rights and Technology that derives independent
economic value
from not being generally known and that enters the public domain (other than Intellectual
Property Rights and Technology which becomes known to the public through a breach by Seller of its
obligations under this Agreement or any other obligation of confidentiality of Seller or any of its
Affiliates to Purchaser or any of its Affiliates). Purchaser shall have the right to freely grant
sublicenses with respect to or to assign (in whole or in part) the FTG IP License, in each



6









 






case
consistent with the terms of this Agreement. At the Closing, subject to the confidentiality
provisions contained in Section 13.10, Seller shall, or shall cause its Affiliates to,
disclose any and all formulas for the Dual Products and any and all Technology related to the
production of the Dual Products for use in FTG Applications in the Territory (the “Disclosed
Dual Products Information”), it being agreed that the Purchaser may use such formulas only in
accordance with the license grant in this Section 1.7.




          (b) Seller shall have the sole right to prosecute and maintain the patents and patent
applications included in the Nalco Licensed IP and Dual Products IP and Technology at its own
expense, and to select patent counsel of its choosing to conduct such prosecution and maintenance.
Seller shall have no obligation to Purchaser to maintain any such patents or patent applications.
With respect to the patent and patent applications listed on Schedule 1.7(b) (the
“Designated Patents”), if Seller chooses not to prosecute or maintain the Designated
Patents in the Territory, Seller will promptly notify Purchaser and Purchaser will have the right
to prosecute and maintain such Designated Patents and pay the applicable prosecution and/or
maintenance fees.




          (c) Each party shall promptly notify the other party in writing when it becomes aware of any
infringement or suspected infringement of any of the Designated Patents (including provision of any
supporting evidence of which that party has knowledge). No litigation or other assertions of
infringement or unauthorized use of the Designated Patents shall be undertaken by Purchaser without
prior notice to and the express prior written consent of Seller. Notwithstanding the foregoing, if
Seller, after being given a reasonable opportunity of not less than thirty (30) days to do so,
fails, refuses or is otherwise unwilling or unable to undertake any such litigation or assertion
with respect to infringement or unauthorized use of any one of the Designated Patents in the
Territory, Purchaser shall have the right, but not the obligation, to undertake at its own expense
such litigation or assertion. The party that takes action with respect to any infringement or
unauthorized use of any one of the Designated Patents in the Territory (the “Enforcing
Party”) shall be reimbursed for any out-of-pocket costs and expenses incurred by it in
connection with such suit out of funds recovered in any such action, and the balance of such funds
shall be allocated in accordance with the damages incurred by each party. Seller agrees to
cooperate with Purchaser to the extent necessary to enable Purchaser to institute and prosecute any
such action or proceeding. In any such suit or proceeding brought by Seller with respect to the
Designated Patents, Purchaser agrees to cooperate with Seller. The Enforcing Party shall obtain
the prior written approval (not to be unreasonably withheld) of the other party before entering
into any settlement of any such suit or proceeding, if pursuant to or as a result of such
settlement, injunctive or other equitable relief would be imposed against such party or its
Affiliates or such settlement could reasonably be expected to have a material adverse effect upon
the Business (in the case of Purchaser) or the Retained Business (in the case of Seller).




          (d) In the event that a third party institutes litigation or otherwise alleges or claims that
any one of the Designated Patents is invalid or unenforceable in the Territory, and Seller, after
being given a reasonable opportunity to do so, fails, refuses or is otherwise unwilling or unable
to undertake the defense of such claims of invalidity or unenforceabilty, Purchaser shall have the
right, but not the obligation, to undertake at its own expense such defense. Seller



7









 






agrees to
cooperate with Purchaser to the extent necessary to enable Purchaser to prosecute any such defense.




ARTICLE II

PURCHASE PRICE; TERMS OF PAYMENT




     2.1 Purchase Price. The purchase price for the Acquired Assets and the covenants
contained in Sections 6.1 and 6.2 shall be U.S. $75 million, subject to adjustment
pursuant to this Section 2.1 and Section 5.7 (the “Purchase Price”). At
the Closing, Purchaser shall pay to Seller an amount equal to the Purchase Price in accordance with
Section 7.3. The parties agree that the Acquired Assets will include Inventory in full
containers conforming with the representations and warranties set forth in Section 3.17 as
if for such purposes such representations and warranties were made as of the date such Inventory is
delivered to Purchaser as provided herein and in the Transition Services Agreement and valued on a
cost basis at $2.5 million as of the expiration or termination of the Transition Services
Agreement, such valuation to be determined in accordance with GAAP applied on the basis set forth
in Schedule 2.1. The parties agree that (x) a portion of such Inventory will be located at
the Owned Real Property as of the Closing and (y) a portion of such Inventory will be located at
other facilities of the Seller until the expiration or termination of the Transition Services
Agreement (the “Off-Site Inventory”), with such Off-Site Inventory to be delivered to
Purchaser in accordance with the Transition Services Agreement and Section 5.4 of this
Agreement. If and to the extent that as of the expiration or termination of the Transition
Services Agreement the value of all such Inventory included in the Acquired Assets (determined on
such basis) is (a) more than $2.5 million, Purchaser will pay to Seller an amount equal to the
excess or (b) less than $2.5 million, Seller will pay to Purchaser an amount equal to the
shortfall. Purchaser and Seller will cooperate in verifying the value of all such Inventory
included in the Acquired Assets. Any payment made to Purchaser pursuant to the fifth sentence of
this Section 2.1 will be deemed to be an adjustment to the Purchase Price and will be made
within fifteen (15) Business Days of the determination of the value of all Inventory included in
the Acquired Assets by wire transfer of immediately available funds to a bank account designated by
Purchaser in writing to the Seller. Any payment made to Seller pursuant to the fifth sentence of
this Section 2.1 will be deemed to be an additional payment made pursuant to the Transition
Services Agreement (and, for the avoidance of doubt, will not be deemed to be an adjustment to the
Purchase Price) and will be made within fifteen (15) Business Days of the determination of the
value of all Inventory included in the Acquired Assets by wire transfer of immediately available
funds to a bank account designated by Seller in writing to the Purchaser.



     2.2 Allocation of the Purchase Price. Within 15 days of the date hereof, Seller shall
deliver to Purchaser a schedule allocating the Purchase Price and Assumed Liabilities (the
“Allocation”) among (x) the Owned Real Property and (y) each of the countries in which the
Business is conducted. If, within 15
days of receipt of the Allocation from Seller, Purchaser notifies Seller in writing that
Purchaser objects to one or more items reflected in the Allocation, Purchaser and Seller shall
negotiate in good faith to resolve such dispute. If Purchaser and Seller fail to resolve any such
dispute within 15 days of Seller’s receipt of Purchaser’s objections, Purchaser and Seller shall
submit the dispute for resolution of the dispute to a mutually acceptable nationally recognized
public accounting firm with no material relationship to either Purchaser or Seller (the
“Selected Accountant”), which resolution shall be final and
binding on



8









 







Purchaser and
Seller. One-half of the fees and expenses of the Selected Accountant shall be borne by Seller and
one-half shall be borne by Purchaser. Purchaser and Seller will each report the federal, state,
local and foreign income and other Tax consequences of the transactions contemplated by this
Agreement in a manner consistent with the Allocation as agreed to by the parties or determined by
the Selected Accountant and cooperate in the preparation and filing of IRS Form 8594 under section
1060 of the Code (or any successor form or successor provision of any future Tax law, or any
comparable provisions of state, local or foreign Tax law), with their respective federal, state and
local income Tax returns for the taxable year that includes the Closing Date.



     2.3 Returns. Following the Closing, Purchaser may grant credits and refunds in
respect of Products sold by the Business prior to the Closing due to the failure of such Products
to meet Seller’s manufacturing specifications in effect at the time of sale of such Products
(“Returns”). Seller shall from time to time at the request of Purchaser reimburse
Purchaser for the cost of such Returns (which cost, for purposes of this Section 2.3, shall
equal the full amount of the return or credit, plus any disposal costs).



     2.4 Proration of Certain Items. Purchaser and Seller agree that the following
expenses of the Business shall be calculated and prorated as of the Closing, with Seller
responsible for such expenses for the period up to the Closing, and Purchaser to be responsible for
the period on and after the Closing Date: (i) real property and personal property Taxes, water,
electric, fuel, gas, telephone, sewer and other utility charges, in each case, to the extent
relating to the Owned Real Property and the Business, (ii) rentals and other charges under Assumed
Contracts, and (iii) fees under Permits to be transferred to Purchaser as part of the Acquired
Assets. Such proration shall be preliminarily made at the Closing and completed within 45 days of
the Closing, and any amount due from one party to the other in respect of such proration shall be
paid within ten days thereafter.



ARTICLE III

REPRESENTATIONS AND

WARRANTIES OF SELLER




     Seller hereby represents and warrants to Purchaser as follows:



     3.1 Organization, Existence and Standing. Seller is a corporation validly existing
and in good standing under the laws of the State of Delaware. Seller is qualified to do business
and in good standing or its functional equivalent in each jurisdiction where the nature of the
Business requires such qualification, with such exceptions as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.



     3.2 Capacity to Sell; Authorization. Seller has full corporate power and authority to
own, lease and operate the Acquired Assets owned, leased or operated (as the case may be) by it and
to carry on the Business as now being conducted by it. Seller has full corporate power and
authority to execute, deliver and perform this Agreement and the Ancillary Agreements to be
executed and delivered by Seller and to consummate the transactions contemplated hereby and thereby
to be consummated by Seller. The execution, delivery and performance of this Agreement and the
Ancillary Agreements to be executed and delivered by Seller or any of its



9









 







Affiliates and the
consummation of the transactions contemplated hereby and thereby to be consummated by Seller and
its Affiliates have been duly authorized by all necessary corporate action on the part of Seller
and, in the case of the Ancillary Agreements to be executed and delivered by an Affiliate of
Seller, at the Closing Date will have been duly authorized by all necessary corporate (or other
Entity) action on the part of such Affiliate. Except as set forth on Schedule 3.2, the
execution, delivery and performance of this Agreement and the Ancillary Agreements to be executed
and delivered by Seller or any of its Affiliates, and the consummation of the transactions
contemplated hereby and thereby to be consummated by Seller and its Affiliates do not and will not
(i) contravene or violate the certificate of incorporation or by-laws (or comparable governing
instruments) of Seller or such Affiliate; (ii) conflict with, violate, result in a breach or
termination of, result in any default under, entitle any Person (with due notice or lapse of time
or both) to terminate, cancel, accelerate, modify or call a default with respect to, any contract,
agreement, mortgage, Lien, lease, order, arbitration award, judgment or decree or other commitment
to which Seller or any of its Affiliates is a party or by which Seller or any of its Affiliates or
any of their respective Assets is bound, or result in the acceleration of the due date of any
Liability of Seller or any of its Affiliates; (iii) require Seller or any of its Affiliates to
obtain, secure or make any Approval or Consent, require Seller or any of its Affiliates to obtain,
secure or make any Approval or Consent, other than compliance with and filings under the Hart Scott
Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), and under the Anti
Monopoly Law in the People’s Republic of China (the “AML”); or (iv) conflict with, or
result in a breach of, any Legal Requirement to which Seller or any of its Affiliates is subject.
No Consent or other action by the stockholders, security holders or other equity holders of Seller
or any of its Affiliates is required in connection with the execution, delivery and performance by
Seller or any of its Affiliates of this Agreement and the Ancillary Agreements to be executed and
delivered by Seller or such Affiliates, as the case may be, that has not heretofore been
irrevocably obtained. This Agreement has been, and the Ancillary Agreements to be executed and
delivered by Seller or any Affiliate of Seller will at the Closing have been, duly executed and
delivered by Seller or such Affiliate, as the case may be. This Agreement constitutes, and as of
the Closing the Ancillary Agreements to be executed and delivered by Seller or any Affiliate of
Seller will constitute, the legal, valid and binding obligation of Seller or such Affiliate, as the
case may be, enforceable against Seller or such Affiliate, as the case may be, in accordance with
their respective terms, except as such enforceability may be limited by applicable Legal
Requirements relating to bankruptcy, insolvency, reorganization, moratorium or other similar Legal
Requirements relating to or affecting creditors’ rights generally and except as such enforceability
is subject to general principles of equity (regardless of whether enforceability is considered in a
proceeding in equity or at law).



     3.3 Statements of Revenues. A true, correct and complete copy of unaudited statements
of revenues of the Business, less cost of
goods sold and direct selling expenses for the twelve-month periods ended December 31, 2006
and December 31, 2007 are attached as Schedule 3.3 (all such statements of revenues, the
“Statements of Revenues”). The Statements of Revenues fairly present the revenues of the
Business, less cost of goods sold and direct selling expenses for the periods indicated, in each
case, in a manner consistent with past practices applied by Seller for its other business units,
applied on a consistent basis throughout the periods specified.



10









 





     3.4 Operation of the Business. Except as set forth on Schedule 3.4, since
December 31, 2007 the Business has been conducted only in the ordinary course of business
consistent with past practices and there has not been:



          (a) any change, event or occurrence that has had, or could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect;




          (b) any amendment or modification to, or waiver of any rights by Seller or any other Person
under, any Assumed Contract;




          (c) any increase in the compensation, pension, or other benefits payable or to become payable
to any Business Employee, or any bonus payments or arrangements made or promised to or with any of
them, except for increases or bonuses paid in the ordinary course of business consistent with past
practices pursuant to periodic evaluations of employees;




          (d) any sale or transfer of any of the Acquired Assets, except in the ordinary course of
business and consistent with past practices;




          (e) any mortgage, pledge or subjection to any Lien of any of the Acquired Assets;




          (f) any transaction entered into by Seller or any of its Affiliates with respect to the
Business, other than in the ordinary course of business consistent with past practices;




          (g) any change or modification in any material respect in the Business’ credit and collection
policies, procedures and practices with respect to accounts receivable;




          (h) any settlement of any material claim or Action involving money damages or waiver or
release any material rights or claims in connection with the Business, except in the ordinary
course of business consistent with past practices; or




          (i) any authorization, approval, agreement or commitment, whether in writing or otherwise, to
do any of the foregoing.




     3.5 Acquired Assets; Title.



          (a) Seller has, and at the Closing will convey to Purchaser good, marketable and indefeasible
fee simple title to the Owned Real Property, free and clear of all Liens, except as set forth on
Schedule 3.5(a), Liens for Taxes, assessments and other governmental charges which are not
due and payable and which may thereafter be paid without penalty and public rights of ways and
other easements benefiting the property.




          (b) No condemnation or eminent domain proceeding against or affecting all or any portion of
the Owned Real Property is pending or, to the Knowledge of Seller, threatened. Seller’s and its
Affiliates’ use of the Owned Real Property is in compliance in all material respects with all Legal
Requirements and other applicable requirements relating to the use thereof, and all necessary
occupancy and other certificates and Approvals for the occupancy and lawful use thereof have been
issued and are in full force and effect. The Owned Real Property



11









 






does not encroach on property or
rights of others, and the property of others does not encroach upon the Owned Real Property. The
Owned Real Property has direct and unrestricted access over currently utilized facilities and land
to such public roads, owned roads and driveways presently in use (which include at least one public
road), and such utilities and other services, as are necessary for the uses thereof and the conduct
of the Business as currently conducted by Seller and its Affiliates. No use of any of the Owned
Real Property in connection with the Business as currently conducted by Seller and its Affiliates
is dependent upon the continuance of a nonconforming use, zoning variance or other Approval.
Neither Seller nor any of its Affiliates has applied for any change in the zoning or land use
classification of the Owned Real Property. The fixtures and improvements on the Owned Real
Property and all tangible Acquired Assets located on the Owned Real Property are in good operating
condition, ordinary wear and tear excepted, and are suitable for the purposes for which they are
being used by Seller and have been maintained in accordance with normal industry practice.




          (c) Except as set forth on Schedule 3.5(c), the Acquired Assets include all Assets
required for the conduct of the Business as currently conducted by Seller and its Affiliates.




          (d) Seller has, and at the Closing will convey to Purchaser, good and marketable title to, all
of the Acquired Assets (other than the Owned Real Property), free and clear of all Liens.




     3.6 Intellectual Property; Technology.



          (a) Schedule 3.6(a) contains a true, complete and correct list of all Transferred
Intellectual Property and Nalco Licensed IP for which registration has been issued by, or has been
applied for and is pending with, the United States Patent and Trademark Office (the “PTO”),
the United States Copyright Office, any state trademark offices and the patent, trademark,
copyright and other corresponding offices of foreign jurisdictions within the Territory; specifying
as to each, as applicable: (i) the owner of such Transferred Intellectual Property and Nalco
Licensed IP and (ii) the jurisdictions within the Territory in which such Transferred Intellectual
Property and Nalco Licensed IP has been registered, or in which an application for registration has
been filed, and the registration or application numbers. Schedule 3.6(a) further sets
forth a true, complete and correct list of all domain name registrations that are included in the
Transferred Intellectual Property.




          (b) To the Knowledge of Seller, each item of the Transferred Intellectual Property and Nalco
Licensed IP will be valid and enforceable as of the Closing Date, and all registrations thereof are
valid and subsisting. All necessary registration, maintenance, renewal fees, annuity fees and
Taxes in connection with such Transferred Intellectual Property and Nalco
Licensed IP for which registration has been issued have been duly paid (and no such payment is
overdue or requires a paid extension of time), and all necessary documents and certificates in
connection with such Transferred Intellectual Property and Nalco Licensed IP for which registration
has been issued have been filed with the relevant trademark, patent, copyright or other authorities
in the United States or foreign jurisdictions within the Territory, as the case may be, for the
purposes of maintaining such Transferred Intellectual Property and Nalco Licensed IP.



12









 







          (c) There are no licenses or other agreements from or with third parties under which Seller or
any of its Affiliates uses or exercises any rights with respect to any of the Transferred
Intellectual Property, Transferred Technology or Nalco Licensed IP (other than standard,
commercially available off-the-shelf software). Neither Seller nor any of its Affiliates has
received (and Seller has no Knowledge of) any written notice from any other Person pertaining to or
challenging the right of Seller or any of its Affiliates or any other Person) to use any of the
Transferred Intellectual Property, Transferred Technology or Nalco Licensed IP, and there is no
interference, opposition, cancellation, reexamination or other Action, pending or to Seller’s
Knowledge threatened with respect to any Transferred Intellectual Property, Transferred Technology
or Nalco Licensed IP. Except as set forth on Schedule 3.6(c), no licenses have been
granted and neither Seller nor any of its Affiliates have an obligation to grant licenses with
respect to any Transferred Intellectual Property, Transferred Technology or Nalco Licensed IP. No
claims have been made by Seller or any of its Affiliates of any violation or infringement by others
of rights with respect to any Transferred Intellectual Property, Transferred Technology or Nalco
Licensed IP, and Seller has no Knowledge of any basis for the making of any such claim. To the
Knowledge of Seller, the use by Seller and its Affiliates of the Transferred Intellectual Property,
Transferred Technology and Nalco Licensed IP has not violated or infringed any rights of other
Persons, or constituted a breach of any Contract (or other agreement or commitment).




          (d) The Transferred Intellectual Property, Transferred Technology, the Nalco Licensed IP and
the licenses of Intellectual Property Rights contained in the Distribution Agreement include all
such rights necessary to produce (with respect to Transferred Products and Dual Products), market,
distribute and sell the Products in the manner now conducted by the Business, without the payment
of a royalty or other fee to any Person, and such rights will not be adversely affected by the
execution and delivery of this Agreement, the Ancillary Agreements or the consummation of the
transactions contemplated hereby and thereby.




          (e) Seller and its Affiliates have used reasonable best efforts to protect all of their rights
in confidential information and trade secrets related to the Transferred Products or the Business
or provided by any other Person to the Business subject to a duty of confidentiality.




     3.7 Pending or Threatened Actions. Except as set forth on Schedule 3.7, there
is no material Action pending or, to the Knowledge of Seller, threatened against Seller or any of
its Affiliates relating to the Business or the Transferred Products, at law or in equity, before or
by any Governmental Authority. Neither Seller, any of its Affiliates nor any of their officers or
employees is subject to any judgment, decree, writ, injunction or order of any Governmental
Authority relating to the Business or the Transferred Products.



     3.8 Permits.



          (a) Schedule 3.8(a) lists all Approvals issued to Seller or its Affiliates which are
necessary to market, distribute and sell the Products (“Product Approvals”) in all material
respects in the manner currently conducted by the Business. None of the Product Approvals are
assignable to Purchaser.




          (b) Attached as Schedule 3.8(b) hereto is a true, complete and correct list of all
Permits issued to Seller or its Affiliates in effect as of the date hereof. Seller has been
granted



13









 






and holds, and has made, all Approvals necessary for Seller’s operation of the Business as
conducted on the Owned Real Property. Each of the Permits is in full force and effect, Seller and
its Affiliates are in compliance in all material respects with all of its obligations with respect
thereto, and to the Knowledge of Seller, no event has occurred which permits, or upon the giving of
notice or lapse of time or otherwise would permit, revocation, early termination or non-renewal of
any of the Permits. True, complete and correct copies of the Permits have heretofore been
delivered to Purchaser. Seller has not received written notice that Seller or the Owned Real
Property is not in compliance with the Permits.




     3.9 Compliance with Legal Requirements. Excluding Legal Requirements relating to the
protection of public health or the environment (as to which reference is made to Section
3.15), Seller and its Affiliates are conducting the Business in compliance in all material
respects with all applicable Legal Requirements. No notice of non-compliance by Seller or any of
its Affiliates with any Legal Requirement applicable to the Business has been received by Seller or
any of its Affiliates (and Seller has no Knowledge of any such notice delivered to any other
Person), except in respect of instances of non-compliance that are not material (individually and
in the aggregate) and have been discharged without Liability to, or adverse effect on, the Business
following the Closing.



     3.10 Transactions with Affiliates. Set forth on Schedule 3.10 is a true,
correct and complete list and description of (i) each Assumed Contract between the Business, on the
one hand, and Seller and/or one or more of its Affiliates, on the other hand, (ii) all intercompany
transactions between the Business, on the one hand, and Seller and/or one or more of its
Affiliates, on the other hand, that have occurred since January 1, 2005.



     3.11 Employees; Labor Relations.



          (a) Schedule 3.11 sets forth a complete and correct list of all employees of Seller
and its Affiliates that perform services primarily for the Business as of the date hereof
(“Business Employees”), including for each such Business Employee the name of the entity by
which each such employee is employed and his or her (i) name, (ii) job title and description,
(iii) status as a full-time, part-time or temporary employee, (iv) base salary or wage rate and
(v) 2007 bonus. Schedule 3.11 also lists each Business Employee who is not actively at
work for any reason other than vacation and the reason for such absence.




          (b) None of the Business Employees as of the date hereof are covered by a collective
bargaining agreement or bound by any other agreement with a labor union. To the Knowledge of
Seller, there are no employee organizing efforts pending or threatened with respect to the Business
Employees. No collective bargaining agreement or any other agreement with a labor union is
currently being negotiated by Seller or its Affiliates with respect to the Business Employees.
Since January 1, 2005, there has been no strike, work slowdown or other material labor dispute with
respect to Business Employees, and, to the Knowledge of Seller, no strike, work slowdown or other
material labor dispute involving any of the Business Employees is pending or threatened. There are
no unfair labor practice claims or charges pending or, to the Knowledge of Seller, threatened,
involving Seller or any of its Affiliates with respect to the Business Employees.



14









 







          (c) Seller and its Affiliates are in compliance in all material respects with all applicable
Legal Requirements relating to labor and employment practices, including those relating to terms
and conditions of employment, wages, hours, discrimination, harassment, occupational safety and
health, wage and hour laws, and/or social contribution Taxes and similar Taxes, national pension,
national medical insurance, worker’s compensation insurance, unemployment insurance and other
mandatory social security matters, with respect to the Business Employees. No Action of any kind
with respect to the Business Employees is pending in any agency, commission, court or other
tribunal, and Seller has no Knowledge of any such threatened Action.




          (d) There are no complaints, audits or Actions pending or to Seller’s Knowledge, threatened by
or on behalf of (i) the National Workers’ Housing Fund Institute (Instituto del Fondo Nacional de
la Vivienda para los Trabajadores), pursuant to the Mexican Labor Law or the National Housing Fund
Law (Ley del Instituto del Fondo Nacional de la Vivienda para los Trabajadores), or (ii) the
Mexican Social Security Institute (Instituto Mexicano del Seguro Social) or the Social Security Law
(Ley del Seguro Social) with respect to the Mexican Employees.




     3.12 Employee Benefits.



          (a) Schedule 3.12 sets forth a complete and correct list of (i) any “employee benefit
plan” within the meaning of section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended (“ERISA”), (ii) any other employee benefit plan, arrangement or policy, including,
without limitation, any stock option, stock purchase, stock award, stock appreciation, phantom
stock, deferred compensation, pension, retirement, savings, profit sharing, incentive, bonus,
health, life insurance, cafeteria, flexible spending, dependent care, fringe benefit, vacation pay,
holiday pay, disability, sick pay, workers compensation, unemployment, severance, employee loan or
educational assistance plan, arrangement or policy, and (iii) any employment, indemnification,
consulting, severance or change-in-control agreement, in each case, which is sponsored or
maintained by Seller or its Affiliates, or to which Seller or its Affiliates contributes or is
required to contribute, on behalf of current or former employees, consultants or directors of the
Business or their beneficiaries or dependents (“Benefit Plans”). Neither Seller nor its
Affiliates has communicated to present or former employees of the Business or formally adopted or
authorized any additional Benefit Plan or any change in or termination of any existing Benefit
Plan.




          (b) Seller has delivered to Purchaser complete and correct copies of each Benefit Plan, or
written summaries of any unwritten Benefit Plan, any employee handbook applicable to the Business
Employees, and, with respect to each such Benefit Plan, the current summary plan description.




          (c) Each Benefit Plan is and has been operated and administered in accordance with its terms
and all applicable Legal Requirements. Each such Benefit Plan intended to be tax-qualified under
section 401(a) of the Code has received a favorable determination letter from the IRS as to its
tax-qualified status under the Code and nothing has occurred since the date of such favorable
determination letter which would adversely affect the



15









 






qualified status of such plan. All
contributions and premium payments required to have been paid under or with respect to any Benefit
Plan have been timely paid.




          (d) No event has occurred and no condition exists with respect to any Benefit Plan or any
employee benefit plan currently or formerly maintained, sponsored, or contributed to by Seller of
any of its Affiliates which has resulted in, or could reasonably be expected to result in, the
imposition of a Lien on the Assets of the Business or the Acquired Assets or which could reasonably
be expected to subject Purchaser or any of its Affiliates or their respective officers, directors,
employees or agents, directly or indirectly (through indemnification or otherwise) to any Tax,
penalty, fine or other Liability.




          (e) All amounts owed by Seller or its Affiliates, and payable to the Mexican Employees in
connection with PTU, have been fully paid.




     3.13 Taxes.



          (a) Seller and its Affiliates have timely filed all Tax returns which are required to be filed
by them, which returns are true, correct and complete in all material respects, and timely paid in
full all Taxes that are required to be shown as due pursuant to such returns or otherwise required
to be paid.




          (b) Solely as relates to the Business, there are no Actions now pending, nor, to the Knowledge
of Seller, are there any Actions or claims pending or threatened against Seller or its Affiliates,
nor are there any pending audits, investigations or examinations by any Governmental Authority
relating to any Taxes or assessments, or any claims or deficiencies asserted with respect thereto.




     3.14 Assumed Contracts. Except as set forth on Schedule 3.14, as of the date
of this Agreement there are no (i) open orders (other than blanket purchase orders or Assumed
Contracts) in North America for more than $5,000 with the Business or (ii) Contracts (other than
purchase orders) pursuant to which customers of the Business purchase Products from Seller or any
of its Affiliates. Schedule 1.1(f) lists all Contracts (other than purchase orders) (a)
pursuant to which customers of the Business purchase Products from the Business as of the date of
this Agreement and (b) pursuant to which Seller or any of its Affiliates purchase goods and
services exclusively for the Business as of the date of this Agreement. Schedule 3.14 sets
forth a complete and correct list of all Contracts (other than Assumed Contracts) as of the date of
this Agreement providing for the services of any
distributor, sales representative or similar representative related to the marketing,
distribution and/or sale of the Products by the Business. Neither Seller nor any of its
Affiliates, nor, to the Knowledge of Seller, any other party to any Assumed Contract, is in breach
or default under any Assumed Contract, and no event has occurred that, with the giving of notice or
the lapse of time or both, would constitute a breach or default under any Assumed Contract by
Seller or any of its Affiliates or, to the Knowledge of Seller, any other party to any Assumed
Contract. True, complete and correct copies of all Assumed Contracts listed on Schedule
1.1(f) and all Contracts listed on Schedule 3.14 (other than purchase orders), if any,
have heretofore been delivered to Purchaser.



     3.15 Environmental Matters.



16









 





          (a) Seller and its Affiliates are conducting the Business in compliance in all material
respects with all applicable Legal Requirements relating to the protection of public health or the
environment. To the Knowledge of Seller, there are no material Environmental Liabilities. Neither
Seller nor any of its Affiliates has received (or has Knowledge of) with respect to the Business or
the Owned Real Property (i) a request for information from any Governmental Authority with respect
to any discharge or removal of any Hazardous Material, or (ii) written notice that Seller or any of
its Affiliates in respect of the Business has been or may be identified in any Action as a
responsible party or a potentially responsible party for any Liability under any Legal Requirement
with respect to the generation, use, handling, storage, transportation, treatment or Release of any
Hazardous Material, except for any of the above that have been resolved without material Liability
to the Business during the five years prior to the date of this Agreement and have had no
substantive action for more than five years prior to the date hereof. Neither Seller nor any of
its Affiliates has filed any notice under any Legal Requirement reporting a Release of a Hazardous
Material at the Owned Real Property, except for any such notice that has been resolved without
material Liability to the Business during the five years prior to the date of this Agreement and
has had no substantive action for more than five years prior to the date hereof.




          (b) Neither Seller nor any of its Affiliates in respect of the Business has entered into any
negotiations, agreements or undertakings with any Person relating to any Remedial Action in respect
of the Owned Real Property, except for any of the above that have been resolved without material
Liability to the Business during the five years prior to the date of this Agreement and have had no
substantive action for more than five years prior to the date hereof. There are no underground
storage tanks located on the Owned Real Property, and Seller and its Affiliates have at all times
complied with all Legal Requirements applicable to any such tanks previously located on the Owned
Real Property, including those governing removal or abandonment of underground storage tanks.
Seller has made available to Purchaser all material reports, analyses, data and investigatory
materials in the possession of Seller related to surface and subsurface environmental conditions at
the Owned Real Property.




          (c) Notwithstanding any other provision of this Agreement, the representations and warranties
set forth in this Section 3.15 are the only representations and warranties relating to
Environmental Liabilities, Hazardous Materials, or Remedial Actions made by Seller under this
Agreement.




     3.16 Warranties. Except for such terms and conditions (including guaranty, warranty
and indemnity provisions) as may be set forth in purchase orders for Products from the Business
(other than blanket purchase orders) or Assumed Contracts, complete and correct copies of the
standard written terms and conditions for sale for the Products in the Territory (containing all
applicable guaranty, warranty and indemnity provisions) in connection with the Business as of the
date of this Agreement have heretofore been delivered to Purchaser. Except as may be (i) set forth
on Schedule 3.16, (ii) set forth in purchase orders for products (other than blanket
purchase orders) or in the Assumed Contracts or (iii) required by any Legal Requirement, as of the
date of this Agreement no Product manufactured, sold or delivered by or on behalf of Seller or its
Affiliates in connection with the Business is subject to any written guaranty, warranty or other
indemnity expressly given, made or agreed by Seller or its Affiliates beyond such standard terms
and conditions.



17









 





     3.17 Inventory. All of the Inventory (i) is of good and merchantable quality, fit for
the purpose for which it is intended and saleable and useable in the ordinary course of business
and (ii) meets the current manufacturing standards and specifications of Seller and has not aged
beyond its applicable shelf-life.



     3.18 Customers. Schedule 3.18 sets forth (in each case with respect to
customers of the Business in North America only) (a) the names and addresses of all customers of
Seller that ordered Products from the Business from Seller with an aggregate value for each
customer of $20,000 or more during either of the twelve-month periods ended December 31, 2006 and
December 31, 2007 (each, a “Significant Customer”), and (b) the amount for which each
Significant Customer was invoiced during each such period. As of the date of this Agreement,
Seller and its Affiliates have not received any written notice, nor do Seller and its Affiliates
have any reason to believe, that any Significant Customer (i) has ceased, or will cease, to use the
Products of the Business, (ii) has substantially reduced, or will substantially reduce, the
purchase of Products of the Business or (iii) has sought, or is seeking, to reduce the price it
will pay the Business for Products of the Business. To the Knowledge of Seller as of the date of
this Agreement, no Significant Customer has otherwise threatened to take any action described in
the preceding sentence as a result of the consummation of the transactions contemplated by this
Agreement.



     3.19 Brokers or Finders. No broker, finder or investment banker is entitled to any
brokerage, finder’s or other fee or commission in connection with this Agreement, the Ancillary
Agreements or the transactions contemplated hereby or thereby based upon any agreements, written,
oral or otherwise, made by or on behalf of Seller or any of its Affiliates.



     The parties agree as follows:



     3.20 Exclusivity of Representations and Warranties. EXCEPT FOR THE REPRESENTATIONS
AND WARRANTIES CONTAINED IN THIS ARTICLE III, SELLER MAKES NO REPRESENTATION OR WARRANTY,
INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY OR OF FITNESS FOR A PARTICULAR PURPOSE OR ANY
OTHER IMPLIED WARRANTY CONCERNING THE ACQUIRED ASSETS, THE BUSINESS, OR
ANY OTHER MATTER WHATSOEVER. PURCHASER HEREBY DISCLAIMS ANY RELIANCE UPON SUCH OTHER OR
IMPLIED REPRESENTATIONS OR WARRANTIES, NOTWITHSTANDING THE DELIVERY OR DISCLOSURE BY SELLER OR ANY
OTHER PERSON TO PURCHASER OR ANY OF ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES,
OF ANY DOCUMENTATION OR OTHER INFORMATION IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.



18









 





ARTICLE IV

REPRESENTATIONS AND

WARRANTIES OF PURCHASER




     Purchaser hereby represents and warrants to Seller as follows:



     4.1 Organization, Existence and Standing. Purchaser is a corporation validly existing
and in good standing under the laws of the State of Delaware.



     4.2 Capacity; Authorization. Purchaser has full corporate power and authority to
execute, deliver and perform this Agreement and the Ancillary Agreements to be executed and
delivered by Purchaser and to consummate the transactions contemplated hereby and thereby to be
consummated by Purchaser. The execution, delivery and performance of this Agreement and the
Ancillary Agreements to be executed and delivered by Purchaser, and the consummation of the
transactions contemplated hereby and thereby to be consummated by Purchaser have been duly
authorized by all necessary corporate action on the part of Purchaser. The execution, delivery and
performance of this Agreement and the Ancillary Agreements to be executed and delivered by
Purchaser, and the consummation of the transactions contemplated hereby and thereby to be
consummated by Purchaser do not and will not (i) contravene or violate the certificate of
incorporation or by-laws of Purchaser; (ii) conflict with, violate, result in a breach or
termination of, result in any default under, entitle any Person (with due notice or lapse of time
or both) to terminate, cancel, accelerate, modify or call a default with respect to any contract,
agreement, mortgage, Lien, lease, order, arbitration award, judgment or decree or other commitment
to which Purchaser or any of its Affiliates is a party or by which Purchaser or any of its
Affiliates or any of their respective Assets is bound or result in the acceleration of the due date
of any Liability of Purchaser or any of its Affiliates; (iii) require Purchaser or any of its
Affiliates to obtain, secure or make any Approval or Consent, other than compliance with and
filings under the HSR Act and under the AML; or (iv) conflict with, or result in a breach of, any
Legal Requirement to which Purchaser or any of its Affiliates is subject. No Consent or other
action by the shareholders or other security holders of Purchaser or any of its Affiliates is
required in connection with the execution, delivery and performance by Purchaser of this Agreement
or the Ancillary Agreements to be executed and delivered by Purchaser that has not heretofore been
irrevocably obtained. This Agreement has been, and the Ancillary Agreements to be executed and
delivered by Purchaser will at the Closing have been, duly executed and delivered by Purchaser.
This Agreement constitutes, and as of the Closing the Ancillary Agreements to be executed and
delivered by Purchaser will constitute, the legal, valid and binding obligation of Purchaser,
enforceable against Purchaser in accordance with their
respective terms, except as such enforceability may be limited by applicable Legal
Requirements relating to bankruptcy, insolvency, reorganization, moratorium or similar Legal
Requirements relating to or affecting creditors’ rights generally and except as such enforceability
is subject to general principles of equity (regardless of whether enforceability is considered in a
proceeding in equity or at law).



     4.3 Brokers or Finders. No broker, finder or investment banker is entitled to any
brokerage, finder’s or other fee or commission in connection with this Agreement, the Ancillary
Agreements or the transactions contemplated hereby or thereby based upon any agreements, written,
oral or otherwise, made by or on behalf of Purchaser or its Affiliates.



19









 





     The parties agree as follows:



     4.4 Exclusivity of Representations and Warranties. EXCEPT FOR THE REPRESENTATIONS AND
WARRANTIES CONTAINED IN THIS ARTICLE IV, PURCHASER MAKES NO REPRESENTATION OR WARRANTY,
INCLUDING ANY IMPLIED WARRANTY CONCERNING ANY MATTER WHATSOEVER. SELLER HEREBY DISCLAIMS RELIANCE
UPON ANY SUCH OTHER OR IMPLIED REPRESENTATIONS OR WARRANTIES, NOTWITHSTANDING THE DELIVERY OR
DISCLOSURE BY PURCHASER OR ANY OTHER PERSON TO SELLER OR ANY OF ITS OFFICERS, DIRECTORS, EMPLOYEES,
AGENTS OR REPRESENTATIVES, OF ANY DOCUMENTATION OR OTHER INFORMATION IN CONNECTION WITH THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.



ARTICLE V

COVENANTS OF THE PARTIES




     5.1 Covenants of Seller. Seller covenants and agrees with Purchaser as follows:



          (a) Conduct of the Business. Between the date hereof and the Closing, Seller shall,
and shall cause its Affiliates to, conduct the Business only in the ordinary course of business
consistent with past practice. Seller will, and will cause its Affiliates to, use their reasonable
best efforts consistent with past practice to preserve intact the business organization of Seller,
to keep available to Purchaser the services of all Business Employees and to preserve for Purchaser
the goodwill of the suppliers, distributors, customers and others having business relationships
with the Business. In furtherance and without limitation of the foregoing, Seller agrees that
Seller will not, and will cause its Affiliates not to, without the prior consent of the Purchaser:





     (i) sell, lease or transfer any Acquired Assets, or purchase any Asset that
would be an Acquired Asset, except for (x) the sale, lease, transfer or purchase of
an Asset that has a book value of less than $50,000 in the ordinary
course of the Business consistent with past practice or (y) sales of Inventory
in the ordinary course of business consistent with past practice;




     (ii) make, or enter into any Contract involving consideration of in excess of
$50,000 (excluding purchase or sales orders entered into in the ordinary course of
business consistent with past practice) or having a term of more than one year, or
terminate, amend, modify, waive any provision of, or fail to observe any covenant or
agreement contained in, any Assumed Contract;




     (iii) mortgage, pledge or subject to any Lien any of the Acquired Assets;




     (iv) engage in bargaining with any union representing any Business Employee,
except bargaining that is done after notice to and consultation with Purchaser;



20









 






     (v) change any compensation or benefits or grant, establish, adopt, enter into
or institute any material new compensation or benefits payable to or in respect of
any Business Employee (except for regularly scheduled increases in the ordinary
course of business consistent with past practice or as required by Legal
Requirements), enter into any employment, consulting, special retirement, change of
control, separation, severance or retention agreement with any Business Employee or
terminate the employment of any Business Employee;




     (vi) change or modify in any material respect the Business’ existing inventory
management or credit and collection policies, procedures and practices with respect
to accounts receivable;




     (vii) enter into any transaction (with respect to the Business) with Seller or
any Affiliate of Seller;




     (viii) settle any material claim or Action involving money damages or waive or
release any material rights or claims in connection with the Business, except in the
ordinary course of business consistent with past practice;




     (ix) transfer or dispose of or permit to lapse any right to the use of any
Transferred Intellectual Property or Transferred Technology, or dispose of or
disclose (except as necessary in the conduct of the Business consistent with past
practice) to any Person, other than representatives of Purchaser, any Transferred
Technology that is not a matter of public knowledge prior to such disclosure; or




     (x) authorize any of, or commit or agree to take, whether in writing or
otherwise, any of the foregoing actions.



          (b) Access. At the reasonable request of Purchaser, and upon reasonable advance
notice, Seller shall from time to time prior to the Closing use reasonable best efforts to give or
cause to be given to the officers, employees, accountants, counsel and other authorized
representatives of Purchaser (x) access during normal business hours to any and all properties,
including the Owned Real Property, files, books, records, documents and other information and
employees, officers and directors of Seller and its Affiliates relating to the Business, the
Acquired Assets and/or the Assumed Liabilities and (y) all such other information in Seller’s or
its Affiliates’ possession otherwise concerning the Business, the Acquired Assets and the Assumed
Liabilities, as Purchaser may reasonably request; provided, however, that such
access shall not include the right to conduct physically invasive tests of soil, groundwater or
other environmental media on the Owned Real Property unless a proposal for the same by Purchaser is
approved by Seller in advance.




          (c) Liabilities and Obligations. Following the Closing, Seller shall fully pay and
discharge all of its Liabilities (other than Assumed Liabilities), arising from the operation of or
with respect to the Business as they become due.




          (d) Enforcement of Confidentiality and Non-Competition Agreements. Following the
Closing, Seller agrees, from time to time, at the request of Purchaser, to assign to



21









 






Purchaser (or
cause the appropriate Affiliate of Seller to assign to Purchaser) any rights of Seller under
agreements or contracts that require other Persons, including any Business Employee, to hold
confidential and/or not use to some extent any Assets included in the Acquired Assets or other
confidential information, Intellectual Property Rights or trade secrets used in the Business, to
not compete in some fashion with the Business or to not solicit employees or customers of the
Business. To the extent any such rights under such agreements or contracts are not assignable to
Purchaser, Seller agrees to use (and to cause its Affiliates to use) reasonable best efforts to
enforce, or to permit Purchaser to enforce in the name of Seller (or the appropriate Affiliate of
Seller), in each case for the benefit and at the sole expense of Purchaser and its successors and
assigns, at Purchaser’s request, from time to time, such rights of Seller or its Affiliates under
such agreements or contracts.




          (e) Referral of Inquiries. Following the Closing, Seller will use reasonable best
efforts to refer all Persons making inquiries regarding the Business to Purchaser and shall
promptly notify Purchaser of the name of each such Person and the nature of the inquiry.




          (f) Payments. Following the Closing, (i) if Seller or any of its Affiliates receives
a payment on account of sales of products or services made by or on behalf of Purchaser or its
Affiliates following the Closing, Seller will promptly turn such payment over to Purchaser and (ii)
if Purchaser or any of its Affiliates receives a payment on account of sales of products or
services made by or on behalf of Seller or any of its Affiliates prior to the Closing, Purchaser
will promptly turn such payment over to Seller.




          (g) Books and Records. Seller will (and will cause its Affiliates to) for a period of
five (5) years after the Closing Date, retain and make available to Purchaser and its
representatives for examination and copying, at Purchaser’s expense and upon reasonable notice, all
books, records and files, including all Tax records, related to the Business that are Excluded
Assets for any reasonable purpose of Purchaser, such as for use in financial reporting, Tax return
preparation or Tax compliance matters. Such records may be destroyed or disposed of prior to the
end of such five (5) year period, provided that written notice thereof is first given to Purchaser
and Purchaser is afforded a reasonable opportunity to make copies (or take possession) of all or
any part of such records.




          (h) Reporting Assistance Obligations of Seller. Seller will (and will cause its
Affiliates to) use reasonable best efforts to assist Purchaser in preparing information for various
Governmental Authorities after the Closing Date on the condition that such information relates to
the transactions contemplated by this Agreement, the Business, the Acquired Assets and/or the
Assumed Liabilities. Such information includes, but is not limited to, information required by
Purchaser and its Affiliates to comply with their financial reporting requirements. Purchaser
shall reimburse Seller for all reasonable out-of-pocket expenses actually incurred by Seller and
its Affiliates in connection with the compliance by Seller with its obligations under this
Section 5.1(h).




          (i) Title Insurance. Seller, at no cost to Seller, will reasonably cooperate, and
will use reasonable efforts to cause its Affiliates to cooperate, with Purchaser in its efforts to
obtain title insurance in respect of the Owned Real Property. Seller agrees to sign and deliver to
Purchaser’s title company (being Chicago Title Insurance Company or another national title



22









 






insurance company selected by Purchaser in its sole discretion reasonably exercised) such customary
affidavits and other documents required of sellers of real property in the State of Michigan by
Purchaser’s title company in order to issue a title insurance policy and any desired endorsements
to a title policy that are customarily underwritten based on information provided by a seller,
including, without limitation, a creditor’s rights fact sheet, an owner’s affidavit, gap indemnity,
and proof of Seller existence, good standing  and authority. The premiums for such title insurance
and any endorsements will be Purchaser’s responsibility.




     5.2 Mutual Covenants. Purchaser covenants and agrees with Seller, and Seller
covenants and agrees with Purchaser, that:



          (a) Cooperation.





     (i) Seller and Purchaser will each promptly give notice to the other upon
becoming aware that any Action is pending or threatened by or before any
Governmental Authority with respect to the acquisition of the Acquired Assets
contemplated by this Agreement. Seller and its Affiliates, on the one hand, and
Purchaser and its Affiliates, on the other hand, (x) will cooperate with each other
in connection with the prosecution, investigation or defense of any such Action, (y)
will supply promptly all information reasonably and legally requested by the other,
by any such court or arbitrator or other Governmental Authority or by any party to
any such Action and (z) will each use their reasonable best efforts to cause any
such Action to be determined as promptly as practicable and in a manner which does
not impact adversely on, and is consistent with, the transactions contemplated by
this Agreement and the Ancillary Agreements.




     (ii) Without limiting the specific obligations of Seller and Purchaser under
any agreement or covenant hereunder, Seller and Purchaser shall each use reasonable
best efforts to (and to the extent necessary, will use its reasonable best efforts
to cause its Affiliates to) promptly take, or cause to be taken, all actions and do,
or cause to be done, all things necessary or desirable in order to consummate the
acquisition of the Acquired Assets contemplated by this Agreement, including
satisfaction, but not waiver, of the closing conditions set
forth in Articles VIII and IX. In furtherance of and not in
limitation of the foregoing sentence, Seller and Purchaser shall:




          (1) make any filings required under the HSR Act and the AML in connection with
the transactions contemplated hereby, which will be made within five (5) Business
Days of the date hereof, for the HSR Act, and within fifteen (15) days of the date
hereof for the AML Act, and seek to terminate any waiting periods under the HSR Act
and the AML as soon as practicable;




          (2) use reasonable best efforts to obtain, in a timely manner, any other
Consents and Approvals required to be obtained from any Person in connection with
the consummation of the transactions contemplated by this Agreement;
provided, however, that no party shall be required to pay or commit
to pay any amount to (or incur any obligation in favor of) any Person from whom



23









 







any
such Consent may be required (other than nominal filing or application fees); and




          (3) furnish the other party and the other party’s counsel with all such
information as may be reasonably required in order to effectuate the foregoing
actions.




     (iii) Notwithstanding anything to the contrary contained herein, nothing in
this Agreement will be deemed to require Purchaser or any of its Affiliates to (A)
make any proposals, execute or carry out any agreements or submit to any Legal
Requirement (1) providing for the license, sale or other disposition or holding
separate (through the establishment of a trust or otherwise) of any Assets or
categories of Assets (including any portion of the Acquired Assets), or (2) seeking
to impose any limitation on the ability of Purchaser or any of its Affiliates to
conduct its businesses (including the Business), or any portion thereof, in a
specified manner, or to own such Assets or to acquire, hold or exercise full rights
of ownership of the Acquired Assets or the Business or (B) agree to take any action
that could reasonably be expected to adversely impact the benefits expected to be
derived by Purchaser and its Affiliates from the transactions contemplated by this
Agreement, to avoid or eliminate any impediment that may be asserted under any Legal
Requirement governing competition, monopolies or restrictive trade practices.




     (iv) In connection with the efforts to obtain all requisite Approvals and
Consents for the transactions contemplated by this Agreement and the Ancillary
Agreements, Purchaser and Seller shall each (and to the extent necessary, will use
its reasonable best efforts to cause its Affiliates to) furnish to the other party
and the other party’s counsel as promptly as practicable, such information and
reasonable assistance as the other party may reasonably request. Purchaser and
Seller shall each keep the other informed in all material respects of any material
communication received by such party from, or given by such party or its Affiliates
to, any Governmental Authority, and to consult with each other in advance of any
meeting or conference with any Governmental Authority
regarding the transactions contemplated by this Agreement and the Ancillary
Agreements.



          (b) Announcements. Except as may be required by applicable Legal Requirements or
stock exchange rules, neither party (nor any of it Affiliates) will make a public announcement of
the transactions contemplated hereby without the prior written consent of Seller, in the case of an
announcement by Purchaser or any of its Affiliates, or Purchaser in the case of an announcement by
Seller or any of its Affiliates, such consent not to be unreasonably withheld or delayed.




          (c) Further Assurances. From time to time after the Closing and without further
consideration, the parties will execute and deliver, or arrange for the execution and delivery of,
such other instruments of conveyance and transfer or other instruments or documents



24









 




and take or
arrange for such other actions as may reasonably be requested to complete more effectively any of
the transactions provided for in this Agreement or the Ancillary Agreements.


          (d) Tax Matters. Seller and Purchaser will each (a) provide the other with such
assistance as may reasonably be requested by either of them in connection with the preparation of
any Tax return relating to the Business, any audit or other examination by any taxing Governmental
Authority or any judicial or administrative proceeding with respect to Taxes relating to the
Business and (b) retain and provide the other with any records or other information which may be
relevant to such return, audit, examination or proceeding.


     5.3 Solicitation of Other Purchasers. From the date hereof to the Closing Date,
Seller will not, and will not permit or authorize any of its Affiliates, or its or their officers,
directors, employees, representatives or agents to, directly or indirectly, (i) initiate, solicit,
encourage, agree to or take any other action to facilitate or accept any inquiries, proposals or
offers from, (ii) enter into any discussions or negotiations with or (iii) disclose any
non-confidential information, or afford any access to its properties, books and records to any
Person (other than Purchaser and its Affiliates and their representatives and advisors) in
connection with the sale or other disposition of (w) the Acquired Assets or (x) the Business
(whether directly or through the transfer of the Acquired Assets and Business into a separate
subsidiary followed by the sale of that subsidiary), provided, that the foregoing shall not
restrict any issuance of securities by Seller or any merger or consolidation involving Seller, it
being agreed that no such issuance, merger or consolidation shall relieve Seller of its obligations
under this Agreement.


     5.4 Inventory. Seller shall continue to store all Off-Site Inventory from and after
the Closing through the expiration or termination of the Transition Services Agreement. During the
term of the Transition Services Agreement, all orders for Products by Purchaser under the
Transition Services Agreement will be first satisfied from the Off-Site Inventory in preference to
manufacturing any new Products, and no fees will be payable under the Transition Services to the
extent orders are satisfied from any finished goods which comprise the Off-Site Inventory. All
remaining Off-Site Inventory upon expiration or termination of the Transition Services Agreement
will be shipped to Purchaser (as directed by Purchaser) f.o.b. Seller’s facility as soon as
practicable following such expiration or termination, at the expense of Purchaser. Prior to
shipment of the Off-Site Inventory in accordance with this Section 5.4 or the Transition Services Agreement, Seller shall ensure that all such
Off-Site Inventory is stored in a manner that clearly identifies it as property of Purchaser, and
shall take such other actions as Purchaser shall reasonably request in order to protect Purchaser’s
ownership interest in and to such Off-Site Inventory. In no event shall Seller sell, assign, or
subject to any Lien any such Off-Site Inventory. Seller further agrees to cause all such Off-Site
Inventory to be maintained and preserved in accordance with Seller’s established practices as
applied immediately prior to the date of this Agreement in respect of the Business. Seller shall
indemnify and hold harmless Purchaser for any loss or damage to, or any theft of, any of such
Off-Site Inventory prior to shipment in accordance with this Section 5.4 or the Transition
Services Agreement.


     5.5 Product Approvals. Seller shall, and shall cause its Affiliates to, cooperate
with Purchaser and provide Purchaser with access to Seller’s regulatory personnel and information,
data, analytical procedures and documentation (all to the extent then existing) necessary in order
to permit Purchaser to obtain all registrations and other Product Approvals needed by Purchaser,


25








 







its Affiliates and its and their customers to sell or resell the Products in each jurisdiction in
the Territory where Seller and its Affiliates currently sell Products of the Business. Prior to
receipt of all such required registrations and other Product Approvals, and while such
registrations and other Product Approvals are pending, to the extent permitted by applicable Legal
Requirements, Seller will provide, or cause its Affiliates to provide, Purchaser with all
subregistrations and other Approvals needed in order to permit the sale or resale of the Products
by Purchaser for FTG Applications or Plastic Facia Applications in each jurisdiction in the
Territory where Seller and its Affiliates currently sell Products of the Business in accordance
with applicable Legal Requirements and otherwise permit, in each case to the extent permitted by
applicable Legal Requirements, Purchaser to sell Products pursuant to rights granted under Seller’s
Product Approvals, in each case, until the last to occur of (x) the date that is 180 days from the
Closing Date and (y) the date the relevant Governmental Authority acts on the request for such
registrations and other Product Approvals.



     5.6 Notification of Certain Matters. Seller will promptly deliver notice to Purchaser
in writing of any specific event or circumstance of which it has Knowledge, or of which it receives
notice, that (i) has had or could reasonably be expected to have, individually or in the aggregate,
taken together with other events or circumstances, a Material Adverse Effect, or (ii) has resulted
or could reasonably be expected to result in any of the conditions to Purchaser’s obligations to
consummate the transactions contemplated by this Agreement not being satisfied. Purchaser will
promptly deliver notice to Seller in writing of any specific event or circumstance of which it has
knowledge, or of which it receives notice, that has resulted or could reasonably be expected to
result in any of the conditions to Seller’s obligations to consummate the transactions contemplated
by this Agreement not being satisfied.



     5.7 Covenants Relating to the China Acquired Assets.



          (a) If, on the Closing Date, the China Transfer Requirements shall not have been satisfied,
Purchaser and Seller shall still proceed to consummate the Closing; provided,
however, (A) the Acquired Assets related to the China Business (as defined below) (the
“China 
Acquired Assets”) will be deemed to constitute Excluded Assets, all liabilities and
obligations related to the China Business (the “China Liabilities”) will be deemed to
constitute Excluded Liabilities and (B) the Purchase Price will be reduced by $4,000,000 (such
amount, the “China Purchase Price”). Prior to a Delayed Closing (as defined below), (1)
Seller shall continue to own and operate the portion of the Business conducted in the People’s
Republic of China (the “China Business”) and (2) all covenants and agreements contained in
this Agreement which by their terms apply to periods between the date of this Agreement through the
Closing (notwithstanding the Closing with respect to the rest of the Business), shall apply in
respect of the China Business, the China Assets, the China Liabilities and the Business Employees
of the China Business (“China Employees”) mutatis mutandis (including for
such purposes that references therein to (x) “Business” shall be deemed to refer to the China
Business, (y) the “Acquired Assets” shall be deemed to refer to the China Assets and (z) the
“Business Employees” shall be deemed to refer to the China Employees.




          (b) A subsequent closing (the “Delayed Closing”) with respect to the China Business
shall occur as soon as reasonably practicable after the satisfaction of the China Transfer
Requirements. At the Delayed Closing, (i) Seller shall convey the China Acquired Assets to



26









 






Purchaser, free and clear of all Liens, (ii) Purchaser shall pay to Seller an amount equal to the
China Purchase Price by wire transfer of immediately available funds to an account designated by
Seller and (iii) Purchaser shall assume as of the Delayed Closing the Assumed Liabilities related
to the China Business (the “China Assumed Liabilities”). In addition, at the Delayed
Closing, Seller shall deliver (or cause to be delivered) to Purchaser duly executed bills of sale
for the China Acquired Assets, and such endorsements, assignments and other good and sufficient
instruments of conveyance and transfer, in form and substance reasonably satisfactory to Purchaser,
to transfer to Purchaser all right, title and interest of Seller and its Affiliates in and to the
China Acquired Assets as provided herein, and Purchaser shall deliver (or cause to be delivered) to
Seller an instrument of assumption, in form and substance reasonably satisfactory to Seller, duly
executed by Purchaser, pursuant to which Purchaser assumes the China Assumed Liabilities. The
parties agree that if a Delayed Closing occurs, notwithstanding anything to the contrary contained
herein or in the Ancillary Agreements, (x) all of the covenants and agreements contained in
Article XII which by their terms apply to the China Employees shall apply in respect of the
China Employees, provided that solely for such purposes references therein to (A) “Business
Employees” shall be deemed to refer to China Employees and (B) the “Closing” and “Closing Date”
shall be deemed to refer to the “Delayed Closing” and the “date the Delayed Closing occurs” and (y)
Seller shall provide or cause to be provided the transitions services related to the China Business
described in the Transition Services Agreement upon the terms and conditions set forth therein
commencing on the date of the Delayed Closing. If a Delayed Closing shall not occur prior to
December 31, 2008, then this Section 5.7 shall automatically terminate and become null and
void, provided that clause (A) of Section 5.7(a) shall permanently apply to the
China Acquired Assets and China Liabilities.




     5.8 EPO. Seller shall retain all right, title and interest to (i) EPO patent
application 03808159.2, (ii) the EPO patent application to be filed prior to Closing based on PCT
patent application US 2008/064847 and (iii) the EPO patent application to be filed prior to Closing
based on U.S. patent application 11/953,502. Seller shall have the right, but not the obligation,
to prosecute such EPO patent applications at its expense, provided that Seller shall promptly
notify Purchaser if it determines not to prosecute any such EPO patent
applications. If Seller chooses not to prosecute any such EPO patent applications, Purchaser
shall have the right, but not the obligation, to prosecute such EPO patent applications at its
expense. Seller shall, upon issuance of such patent application(s), assign all right, title, and
interest to register any EPO patent issuing therefrom in those member states of the EPO in the
Territory. Purchaser shall bear any expenses related to registering such EPO patents in those
member states.



     5.9 Specified Matter. Seller will used reasonable best efforts to resolve the
litigation described on Schedule 11.2(a)(iii) in a manner that does not impose adverse
restrictions on the operation of the Business.



ARTICLE VI

ADDITIONAL COVENANTS




     6.1 Non-Solicitation of Employees. Seller agrees, to the maximum extent not in
violation of applicable Legal Requirements, that for a period of three (3) years following the
Closing (the “Non-Solicit Period”), it will not, nor will it permit any of its Affiliates
to, directly or indirectly, solicit for employment or hire any Transferred Employee, who is or has
been



27









 







employed by Purchaser or any of its Affiliates, at, or at any time within one (1) year prior
to, the time of the act of solicitation or hiring; provided, however, that Seller
shall be permitted to continue the employment of the Merck Plan Employees pursuant to Section
12.2. Without limitation on such prohibition on hiring, general solicitation, such as through
newspaper advertisements not directed at Transferred Employees, shall not be deemed to violate the
prohibition on solicitation contained in this Section 6.1.



     6.2 Non-Competition. Seller agrees, to the maximum extent not in violation of
applicable Legal Requirements, that during the five (5) year period following the Closing (the
“Non-Compete Period”):



          (a) it will not, nor will it permit any of its Affiliates to, directly or indirectly (other
than through Existing Distributors solely with respect to the Supplied Products) (i) engage
(whether as owner, operator, shareholder, manager, consultant, strategic partner or otherwise) in
the Business in the Territory, (ii) market or sell any products for FTG Applications in the
Territory, (iii) market or sell any Supplied Products or products that compete with the Supplied
Products to the Supplied Products Customers in the Territory or (iv) license, sell or transfer to
any Person other than Purchaser and its Affiliates any Intellectual Property Rights or Technology
for Use in the Business in the Territory;




          (b) in the case of the Dual Products, Seller and its Affiliates shall not sell such Dual
Products to any Person (other than Purchaser and its Affiliates) that Seller and/or such Affiliate
knows or reasonably believes intends to Use such Dual Products in the Territory for FTG
Applications, and upon receiving notice of any such intent (or actual Use), shall cease sale of the
relevant Dual Products to such Person; and




          (c) it will not, nor will it permit any of its Affiliates to, sell or otherwise transfer (i)
Transferred Products or Dual Products to any Person outside the Territory that Seller
and/or such Affiliates knows or reasonably believes intends to resell or transfer such
Transferred Products or Dual Products to a Person or Persons for Use in the Territory in an FTG
Application, or (ii) Supplied Products or products that compete with the Supplied Products to any
Person (other than any Existing Distributor) that Seller and/or such Affiliates knows or reasonably
believes intends to resell or transfer such Supplied Products or such products that compete with
the Supplied Products to a Supplied Products Customer, and in each case upon receiving notice of
any such intent (or actual Use), shall cease sale of the relevant Products to such Person.



Notwithstanding anything to the contrary contained herein, this Section 6.2 shall not
prohibit Seller or any of its Affiliates from (i) fulfilling its obligations under the Distribution
Agreement or the Transition Services Agreement, or (ii) holding less than five-percent (5%) of the
capital stock of any corporation listed on any stock exchange if such stockholding does grant any
preference or other special rights and/or influence on the management of such corporation.




     6.3 Unenforceability; Severability; Specific Performance.



          (a) It is the desire and intent of the parties hereto that the restrictions contained in
Sections 6.1 and 6.2 shall be enforced to the fullest extent permitted under the
Legal Requirements of each jurisdiction in which enforcement is sought. If any court determines
that



28









 






any provision included in Sections 6.1 or 6.2 is unenforceable, such court
will have the power to reduce the duration or scope of such provision, as the case may be, or
terminate such provision and, in reduced form, such provision shall be enforceable; it is the
intention of the parties hereto that the foregoing restrictions shall not be terminated, unless so
terminated by a court, but shall be deemed amended to the extent required to render them valid and
enforceable, such amendment to apply only with respect to the operation of this Agreement in the
jurisdiction of the court that has made the adjudication.




          (b) Each of the covenants contained in Sections 6.1 and 6.2 shall be construed
as a series of separate covenants, (i) in the case of Section 6.1, one for each one-year
period of the Non-Solicit Period and (ii) in the case of Section 6.2, one for each country,
one for each state, province or other political subdivision included in each such country, one for
each county and city included within each such state, province or other political subdivision, and,
for each such country, state, province or other political subdivision, county or city, and one for
each one-year period of the Non-Compete Period.




          (c) Seller acknowledges and agrees that the restrictions contained in Sections 6.1 and
6.2 are a reasonable and necessary protection of the immediate interests of Purchaser, and
any violation of these restrictions would cause substantial injury to Purchaser and that Purchaser
would not have entered into this Agreement without receiving the additional consideration offered
by Seller in binding itself and its Affiliates to these restrictions. In the event of a breach or
a threatened breach by Seller or any of its Affiliates of these restrictions, Purchaser will be
entitled to an injunction restraining Seller or such Affiliate from such breach or threatened
breach without the necessity of (i) proving the inadequacy as a remedy of money damages or (ii)
posting a bond or other surety; provided, however, that the right to injunctive
relief will not be construed as prohibiting Purchaser from pursuing any other available remedies,
whether at law or in equity, for such breach or threatened breach.




ARTICLE VII

THE CLOSING




     7.1 Date and Time. The closing of the transactions contemplated hereunder (the
“Closing”) will take place at the New York offices of Hughes Hubbard & Reed LLP, at 10:00
a.m., Eastern Standard Time, on the earlier to occur of (i) October 5, 2008 (provided that all of
the conditions required to be satisfied or waived pursuant to Articles VIII and IX have
been satisfied or waived (other than those requiring the delivery of a certificate or other
documents or the taking of other action at the Closing)) or (ii) the second (2nd) Business Day
after the satisfaction or waiver of the last of the conditions required to be satisfied or waived
pursuant to Articles VIII and IX (other than those requiring the delivery of a
certificate or other documents or the taking of other action at the Closing), or such other date
and such other place as may be mutually agreed upon by Purchaser and Seller. The date on which the
Closing occurs is referred to herein as the “Closing Date.” The Closing shall be deemed to
be effective between the parties as of 12:01 a.m. (E.S.T.) on the Closing Date.



     7.2 Seller’s Closing Documents. At the Closing, Seller shall deliver (or cause to be
delivered) to Purchaser the following instruments and documents:




29











 





          (a) duly executed bills of sale for the Acquired Assets, and such endorsements, assignments
and other good and sufficient instruments of conveyance and transfer, in form and substance
reasonably satisfactory to Purchaser, to transfer to Purchaser all right, title and interest of
Seller and its Affiliates in and to the Acquired Assets as provided herein; a limited warranty deed
in respect of the Owned Real Property in proper form for recording and such customary affidavits
and other documents required of sellers of real property in the State of Michigan by Purchaser’s
title company (being Chicago Title Insurance Company or another national title insurance company
selected by Purchaser in its sole discretion reasonably exercised) in order to issue a title
insurance policy and any desired endorsements to a title policy that are customarily underwritten
based on information provided by a seller, including, without limitation, a creditor’s rights fact
sheet, an owner’s affidavit, gap indemnity and proof of authority; such disclosures and reports as
are required of a seller by applicable state and local law in connection with the conveyance of
real property, including, without limitation, a real estate transfer tax valuation affidavit (if
the valuation is not disclosed on the deed);




          (b) a distribution agreement, pursuant to which Seller will supply the Supplied Products to
Purchaser for resale to the Supplied Products Customers in the Territory and other customers who
purchase products for FTG Applications, substantially in the form of Exhibit D (the
“Distribution Agreement”), duly executed by Seller;




          (c) a transition services agreement, substantially in the form of Exhibit E (the
“Transition Services Agreement”), duly executed by Seller;




          (d) U.C.C. termination statements, mortgage lien releases (or pay-off statements from the
mortgage holder if the lien of the mortgage is to be satisfied out of closing proceeds and if
Purchaser’s title insurance company (being Chicago Title Insurance Company or another national
title insurance company selected by Purchaser in its sole discretion reasonably
exercised) is willing to accept such pay-off statement in order to insure title to the Owned
Real Property free of such lien) and other appropriate releases, in form and substance satisfactory
to Purchaser, with respect to all recorded or otherwise filed Liens in the Acquired Assets;




          (e) duly executed instruments of assignment to Purchaser of all patents, patent applications,
trademarks and trademark applications included in the Transferred Intellectual Property, suitable
for filing in the PTO or the appropriate governmental office in other jurisdictions;




          (f) duly executed instruments of assignment to Purchaser of all domain names and website
addresses included in the Acquired Assets;




          (g) a duly executed certificate that Seller is not a foreign person subject to withholding
under section 1445 of the Code;



copies of all Consents and Approvals obtained or made in connection with the consummation of the
transactions contemplated hereby;




          (h) copies of resolutions adopted by the Board of Directors of Seller, certified as of the
Closing Date by the Secretary of Seller, approving the execution and delivery of this




30









 




Agreement,
the Ancillary Agreements to be executed and delivered by Seller and the performance by Seller of
its obligations hereunder and thereunder;




          (i) the certificate required by Section 8.3, duly executed by a senior executive
officer of Seller;




          (j) a license agreement substantially in the form of Exhibit F (the “License
Agreement”), duly executed by Seller; and




          (k) such other documents or instruments as Purchaser reasonably requests to effect the
transactions contemplated hereby.




     7.3 Purchaser’s Closing Documents. At the Closing, Purchaser shall pay to Seller an
amount equal to the Purchase Price by wire transfer of immediately available funds to an account
designated by Seller at least one (1) Business Days prior to the Closing. Purchaser shall at the
Closing deliver to Seller the following instruments and documents:



          (a) an instrument of assumption, in form and substance reasonably satisfactory to Seller, duly
executed by Purchaser, pursuant to which Purchaser assumes the Assumed Liabilities;




          (b) the Distribution Agreement, Transition Services Agreement and License Agreement, duly
executed by Purchaser;




          (c) copies of resolutions adopted by the Board of Directors of Purchaser, certified as of the
Closing Date by the Secretary of Purchaser, approving the execution and
delivery of this Agreement, the Ancillary Agreements to be executed and delivered by Purchaser
and the performance by Purchaser of its obligations hereunder and thereunder; and




          (d) the certificate required by Section 9.1, duly executed by a senior executive
officer of Purchaser.




ARTICLE VIII

CONDITIONS TO OBLIGATIONS OF PURCHASER




     The obligations of Purchaser under this Agreement to consummate the Closing are subject to the
satisfaction at or prior to the Closing of the following conditions (each of which may be waived in
whole or in part by Purchaser without prejudice to the rights of Purchaser under Article XI
hereof or otherwise):



     8.1 Material Adverse Effect. Between December 31, 2007 and the Closing Date, there
shall have been no change, event or occurrence that has had, or could reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect.



     8.2 Representations and Warranties. The representations and warranties of Seller
contained in this Agreement shall be true and correct as of the Closing Date with the same effect
as though such representations and warranties had been made at and as of the Closing Date, except
for representations and warranties that speak as of a specific date or time other than the



31









 







Closing
Date (which need only be true and correct as of such date or time); provided,
however, that this condition shall be conclusively deemed to have been satisfied
notwithstanding the existence of any breaches of any representations or warranties that have not
had, or could not reasonably be expected to have, a Material Adverse Effect.



     8.3 Covenants. Seller shall have performed and complied in all material respects with
all covenants and agreements required by this Agreement to be performed or complied with by Seller
at or prior to the Closing, other than the covenants and agreements contained in Section
7.2, which shall be performed and complied with in all respects. At the Closing, Seller shall
have each furnished to Purchaser a certificate dated the Closing Date, and signed by a senior
executive officer of Purchaser to the effect that the conditions set forth in Section 8.2
and this Section 8.3 have been satisfied.



     8.4 HSR. All applicable waiting periods under the HSR Act shall have expired or been
terminated.



     8.5 No Action or Injunction. At the Closing, no Action shall be pending that, if
sustained, could reasonably be expected to enjoin or prevent in whole or in part the consummation
of the transactions contemplated by this Agreement, or result in the award to any Person (other
than Purchaser or its Affiliates) of substantial damages in connection therewith payable by
Purchaser or its Affiliates. There shall
be in effect no order or injunction of any Governmental Authority of competent jurisdiction
restraining or prohibiting the transactions contemplated hereby.



ARTICLE IX

CONDITIONS TO OBLIGATIONS OF SELLER




     The obligations of Seller under this Agreement to consummate the Closing are subject to the
satisfaction at or prior to the Closing of the following conditions (each of which may be waived in
whole or in part by Seller without prejudice to the rights of Seller under Article XI
hereof or otherwise):



     9.1 Representations, Warranties and Covenants. Each of the representations and
warranties of Purchaser contained in this Agreement shall be true and correct in all material
respects, except that representations and warranties qualified by materiality shall be true and
correct in all respects, in each case as of the Closing Date with the same effect as though such
representations and warranties had been made at and as of the Closing Date, except for
representations and warranties that speak as of a specific date or time other than the Closing Date
(which need only be true and correct as of such date or time). Purchaser shall have performed and
complied in all material respects with all covenants and agreements required by this Agreement to
be performed or complied with by Purchaser at or prior to the Closing, other than the covenants and
agreements contained in Section 7.3, which shall be performed and complied with in all
respects. At the Closing, Purchaser shall have each furnished to Seller a certificate dated the
Closing Date, and signed by a senior executive officer of Purchaser to the effect that the
conditions set forth in this Section 9.1 have been satisfied. At the Closing, Purchaser
shall have each furnished to Seller a certificate dated the Closing Date, and signed by a senior



32









 







executive officer of Purchaser to the effect that the conditions set forth in this Section
9.1 have been satisfied.



     9.2 HSR. All applicable waiting periods under the HSR Act shall have expired or been
terminated.



     9.3 No Action or Injunction. At the Closing, no Action shall be pending that, if
sustained, could reasonably be expected to enjoin or prevent in whole or in part the consummation
of the transactions contemplated by this Agreement, or result in the award to any Person (other
than Seller or its Affiliates) of substantial damages in connection therewith payable by Seller or
its Affiliates. There shall be in effect no order or injunction of any Governmental Authority of
competent jurisdiction restraining or prohibiting the transactions contemplated hereby.



ARTICLE X

TERMINATION




     10.1 Termination. This Agreement may be terminated and the transactions contemplated
hereby abandoned at any time on or prior to the Closing Date:



          (a) by the written consent of Purchaser and Seller;




          (b) by Purchaser or Seller by giving written notice to the other party hereto, if a permanent
or preliminary injunction has been issued restraining or prohibiting in any material respect the
transactions contemplated hereby;




          (c) by Purchaser by giving written notice to Seller, if any of the conditions set forth in
Article VIII of this Agreement have become incapable of fulfillment (other than as a result
of action or inaction taken by Purchaser in contravention of this Agreement);




          (d) by Seller by giving written notice to Purchaser, if any of the conditions set forth in
Article IX of this Agreement have become incapable of fulfillment (other than as a result
of action or inaction taken by Seller in contravention of this Agreement); or




          (e) by Purchaser or Seller by giving written notice to the other party hereto, if the Closing
has not taken place on or before October 15, 2008 (other than as a result of action or inaction by
the party seeking to terminate this Agreement) in contravention of this Agreement.




     Upon the termination of this Agreement pursuant to this Section 10.1, except for the
obligations contained in this Section 10.1, Section 13.1, the representations and
warranties contained in Sections 3.19 and 4.3 hereof and the obligations contained
in Article XI hereof (to the extent relating to Sections 3.19 and 4.3, this
Section 10.1 and Section 13.1), which will survive any termination of this
Agreement, this Agreement shall forthwith become null and void, and no party hereto or any of its
Affiliates, officers, directors, employees, agents, consultants, shareholders, members or
principals shall have any rights or Liabilities hereunder or with respect hereto; except that
nothing contained herein shall relieve any party from Liability for (i) any breach or inaccuracy of
any representation or warranty contained herein or (ii) any failure to comply with any covenant or
agreement contained herein, including the obligation of each party



33









 







to consummate the Closing
(subject to the respective conditions of the parties set forth herein), and the provisions of
Article XI hereof shall in each such case survive any termination of this Agreement with
respect to any such breach, inaccuracy or failure.



ARTICLE XI

INDEMNIFICATION




     11.1 Survival. The representations, warranties, covenants and agreements contained in
or made pursuant to this Agreement will indefinitely survive (and not be affected in any way by)
the Closing or any investigation and inquiry made (or omitted) by or on behalf of Purchaser or its
representatives or any information that any party or their representatives may receive, except that
(a) the representations and warranties contained in Articles III and IV (other than
those contained in Sections 3.1, 3.2, 3.5(a), 3.5(d), 3.12,
3.13, 3.19, 4.1, 4.2 and 4.3 (the “Specified
Representations”)) shall terminate on the date that is two (2) years following the Closing
Date, (b) each representation and warranty set forth in Section 3.13 shall terminate upon
the expiration of the statute of limitation applicable to the matter to which such representation
or warranty relates, and (c) any right of any Purchaser Indemnified Party to indemnification for
Other Environmental Liabilities shall terminate on the date that is 7 years following the Closing
Date; provided, however, that such representations, warranties,
covenants and rights of indemnification shall survive to the extent a claim for
indemnification or other claim based upon, resulting from or arising out of a breach or inaccuracy
of such a representation and warranty or under such covenants or rights of indemnification is made
prior to such date until such claim is finally resolved.



     11.2 Seller’s Indemnification Obligation. Seller shall indemnify and hold harmless
Purchaser and its Affiliates and the respective directors, officers and employees of the foregoing
Persons (“Purchaser Indemnified Parties”) from and against:



          (a) any and all Losses which are imposed on, incurred by or asserted against any one or more
of the Purchaser Indemnified Parties, (i) based upon, resulting from or arising out of any (x)
breach or inaccuracy of any representation or warranty as if made on and as of the Closing Date,
except for representations and warranties that speak as of a specific date or time other than the
Closing Date (which shall be made for this purpose on and as of such date or time) or (y) breach of
any agreement or covenant, in each case of clauses (x) and (y) made by Seller in or pursuant to
this Agreement, (ii) constituting, based upon, resulting from or arising out of (x) Retained
Liabilities, or (y) subject to the time limitation set forth in Section 11.1(c) and the
procedures set forth in Section 11.6, Other Environmental Liabilities or (iii) subject to
Seller’s right to defend against such Action pursuant to Section 11.4, as a result of,
relating to or arising from any Action brought against any one or more of the Purchaser Indemnified
Parties related to the facts and circumstances that are the subject of the litigation listed on
Schedule 11.2(a)(iii) (it being agreed that notwithstanding Section 11.5(c) and for
purposes of this clause (iii) only, Losses that may be claimed by Purchaser (subject to proof by
Purchaser) shall include lost profits resulting from Purchaser’s inability, due to such Action, to
sell Products to any Persons that were customers of the Business prior to Closing and that were the
subject of such Action; and




34









 








          (b) any cost or expense (including settlement costs and reasonable attorneys’, accountants’
and experts’ fees and court costs) incurred by Purchaser Indemnified Parties in connection with any
of the foregoing (including any reasonable cost or expense incurred by Purchaser Indemnified
Parties in enforcing their rights pursuant to this Section 11.2).



Without limitation of clause (a)(i) above, claims for indemnification under clause (a)(ii) (and, to
the extent related to such claims, clause (b)) above may be made notwithstanding any matter
disclosed on any Schedule hereto and regardless of whether or not the matter giving rise to such
claims would constitute a breach of a representation and warranty made in Article III
hereof. No Purchaser Indemnified Party shall be required to make any claim or demand against any
other Person prior to the making of any claim or demand for indemnification or at any other time.




     11.3 Purchaser’s Indemnification Obligation. Purchaser shall indemnify and hold
harmless Seller and its Affiliates and the respective directors, officers and employees of the
foregoing Persons (“Seller Indemnified Parties”) against:



          (a) any and all Losses which are imposed on, incurred by or asserted against any one or more
of the Seller Indemnified Parties, (i) based upon, resulting from or arising out of
any (x) breach or inaccuracy of any representation or warranty as if made on and as of the
Closing Date, except for representations and warranties that speak as of a specific date or time
other than the Closing Date (which shall be made for this purpose on and as of such date or time)
or (y) breach of any agreement or covenant, in each case of clauses (x) and (y) made by Purchaser
in or pursuant to this Agreement, or (ii) constituting, based upon, resulting from or arising out
of Assumed Liabilities; and




          (b) any cost or expense (including settlement costs and reasonable attorneys’, accountants’
and experts’ fees and court costs) incurred by Seller Indemnified Parties in connection with the
foregoing (including any reasonable cost or expense incurred by Seller Indemnified Parties in
enforcing their rights pursuant to this Section 11.3).



No Seller Indemnified Party will be required to make any claim or demand against any other Person
prior to the making of any claim or demand for indemnification or at any other time.




     11.4 Procedure for Indemnification Claims.



          (a) Any claim for indemnification under Sections 11.2 or 11.3 will be made in
accordance with this Section 11.4. Purchaser Indemnified Parties and Seller Indemnified
Parties are referred to herein as “Indemnified Parties,” and the Persons from whom
indemnification may be sought pursuant to Sections 11.2 and 11.3 are referred to
herein as “Indemnifying Parties.”




          (b) In the case of any claim for indemnification under Sections 11.2 or 11.3
arising from a claim of a third Person, the Indemnified Party will give the Indemnifying Party
notice of such claim within twenty (20) days following the Indemnified Party’s receipt of such
claim, provided that the failure to notify or a delay in notifying an Indemnifying Party as
provided in this sentence will not relieve the Indemnifying Party of its obligations pursuant to
Section 11.2 or 11.3, as applicable, except to the extent the Indemnifying Party is
prejudiced by such failure or delay. If at any time an Indemnified Party determines to assert a
right to



35









 






indemnification hereunder in respect of any other matter, the Indemnified Party will give
to the Indemnifying Party written notice of such determination.




          (c) Within fifteen (15) days after receipt of any notice referred to in paragraph (b) above,
the Indemnifying Party will, either, (i) acknowledge in writing its responsibility in accordance
with the terms of this Agreement for all or part of such matter for which indemnification is sought
under this Article XI, and pay or otherwise satisfy the portion of such matter as to which
responsibility is acknowledged or take such other action as is satisfactory to the Indemnified
Party to provide security for the performance of its obligations hereunder and/or (ii) give written
notice to the Indemnified Party of its intention to dispute or contest all or part of such
responsibility. Upon delivery of such notice of intention to contest, the parties will negotiate
in good faith to resolve as promptly as possible any dispute as to responsibility for, or the
amount of, any such matter.




          (d) Each party hereto shall cooperate in good faith with, make its relevant files and records
available for inspection and copying by, and make its employees reasonably available and otherwise
render reasonable assistance to, the other party in its defense of any such
claims. Each Indemnifying Party shall have the right, at its sole expense, to control the
defense of any claim brought by any third Person (as to which indemnification is sought pursuant to
this Article XI) with counsel of such Indemnifying Party’s choice that is reasonably
satisfactory to the Indemnified Party, and shall have the right to settle or otherwise protect
against the imposition of liability with respect to such claim, in each case if such Indemnifying
Party shall have taken the action described in clause (i) of the first sentence of Section
11.4(c) with respect to such claim; provided, however, that:





     (i) the Indemnified Parties shall be entitled to participate in the defense of
such claim and to employ counsel at their own expense to assist in the handling of
such claim and shall have the right, but not the obligation, to assert any and all
cross-claims and counterclaims they may have;




     (ii) such Indemnifying Party shall obtain the prior written approval of each
Indemnified Party before entering into any settlement of any such claim or ceasing
to defend against any such claim, if pursuant to or as a result of such settlement
or cessation, injunctive or other equitable relief would be imposed against such
Indemnified Party or its Affiliates or (if such Indemnified Party is a Purchaser
Indemnified Party) such settlement or cessation could reasonably be expected to have
a material adverse effect upon the Business, or;




     (iii) such Indemnifying Party shall not consent to the entry of any judgment or
enter into any settlement that does not include as an unconditional term thereof the
giving by each claimant or plaintiff to each Indemnified Party of a release from all
Liability in respect of such claim; and




     (iv) at the election of the Indemnified Party, such Indemnifying Party and
Indemnified Party shall have joint control over the defense or settlement of any
such claim, each party to employ counsel at its own expense, to the extent such
claim seeks an order, injunction or other equitable relief against such Indemnified
Party or, if such



36









 







Indemnified Party is a Purchaser Indemnified Party, to the extent
such claim (x) could reasonably be expected to have an adverse effect upon the
business of Purchaser, its Affiliates or the Business or (y) involves Liability of
Purchaser or any Affiliates for Taxes.



          (e) In the event the Indemnifying Party shall fail to defend, contest or otherwise protect
against the imposition of any such damages as to any such claim, the Indemnified Party shall have
the right, but not the obligation, to defend, contest or assert any cross claim or counterclaim or
otherwise protect against such claim and may make any compromise or settlement thereof and recover
from and be indemnified by the Indemnifying Party for the entire reasonable cost thereof, including
from legal expenses, disbursements and all amounts paid as a result of such matter. If the
Indemnifying Party does not take the action described in clause (i) of the first sentence of
Section 11.4(c) with respect to a claim, the Indemnified Party shall, without limitation of
its rights under this Article XI, retain sole control over the defense or settlement of
such claim.




          (f) The parties acknowledge and agree that the foregoing indemnification provisions in this
Article XI shall be the exclusive remedy of the parties with respect to (x) any breach or
inaccuracy of any of the representations or warranties contained in or made pursuant to this
Agreement or (y) any Losses or Liabilities related to Environmental Liabilities or Remedial Actions
with respect to the Owned Real Property, except that nothing in this Agreement shall be deemed to
limit any party’s rights or remedies in the event that the other party has committed fraud or other
intentional acts in connection therewith.




     11.5 Limitations on Indemnification.



          (a) Notwithstanding any other provision herein to the contrary, (i) Seller shall not be
responsible pursuant to Section 11.2(a)(i)(x) for Losses based upon, resulting from or
arising out of the breach or inaccuracy of representations and warranties made by Seller pursuant
to this Agreement (other than the Specified Representations) (for which purposes Losses with
respect to related matters will be aggregated) until the cumulative aggregate amount of the Losses
with respect to such matter or related matters or matters arising out of the same facts or
circumstances exceeds $25,000 (the “Threshold Amount”), in which case the amount of all
such Losses (without regard to the Threshold Amount) shall be included for purposes of computing
the Losses that are indemnifiable hereunder and applicable against the Basket Amount pursuant to
clause (ii) below, and (ii) Seller shall not be required to indemnify Purchaser Indemnified Parties
under Section 11.2(a)(i)(x) for Losses of the Purchaser Indemnified Parties based upon,
resulting from or arising out of the breach or inaccuracy of representations and warranties made by
Seller pursuant to this Agreement (other than the Specified Representations) until the aggregate
amount of all such Losses of the Purchaser Indemnified Parties for which indemnification would
otherwise be available under Section 11.2(a)(i)(x) exceeds $1,500,000 (the “Basket
Amount”), after which Seller will be obligated to indemnify Purchaser Indemnified Parties for
only that portion of such Losses that exceed the Basket Amount.




          (b) Notwithstanding any other provision herein to the contrary, (i) the cumulative aggregate
indemnity obligations of Seller under Section 11.2(a)(i)(x) for Losses based upon,
resulting from or arising out of the breach or inaccuracy of representations and



37









 






warranties made by
Seller pursuant to this Agreement (other than the Specified Representations) shall in no event
exceed $26,875,000.




          (c) In no event shall either party be liable to the other for any special, exemplary, punitive
(whether arising under contract or tort, or any other legal theory), incidental or consequential
damages, including economic loss, lost profits or business interruption, except to the extent such
damages constitute Retained Liabilities (if the Indemnifying Party is Seller) or Assumed
Liabilities (if the Indemnifying Party is Purchaser) and are payable by an Indemnified Party to a
third party.




     11.6 Procedures for Environmental Claims. As to any indemnification claim under
Article XI related to an Environmental Liability or an alleged breach of any representation
or warranty obtained in Section 3.15 or otherwise involving the conduct of a Remedial
Action, the following provisions shall apply (in addition to Sections 11.4 and
11.5, where applicable, it being understood and
agreed that any inconsistencies between Section 11.4 and this Section 11.6
shall be resolved in favor of this Section 11.6):



          (a) The Indemnified Party shall not perform or allow, with respect to any Owned Real Property,
any physically invasive tests of soil, groundwater or other environmental media, and the Losses or
other costs and expenses otherwise recoverable hereunder shall not include any amounts caused by or
resulting from such tests; provided, however, that this limitation shall not apply
if such test is (i) required by Legal Requirements related to Hazardous Materials or Remedial
Actions, (ii) required by a Governmental Authority with jurisdiction over Hazardous Materials or
Remedial Actions, (iii) necessary in connection with any claim brought by an unaffiliated third
party or (iv) necessary in connection with a bona fide expansion of the facility or site. The
parties agree that an Indemnified Party shall not take any affirmative action to solicit from any
Governmental Authority any request, order, directive or other mandate to conduct any such tests.
To the extent that any such tests are required pursuant to the proviso of the first sentence of
this Section 11.6(a), the Indemnified Party will notify the Indemnifying Party in advance
of such tests and permit the Indemnifying Party, at its expense, to obtain split or duplicate
samples.




          (b) To the extent known, the notice of claim provided by the Indemnified Party under
Section 11.4 shall describe any Remedial Actions believed to be necessary to satisfy the
claim. The rights and obligations of the Indemnifying Party and the Indemnified Party to conduct
or perform any Remedial Actions shall be equivalent to those applying to third party claims under
Section 11.4(d) unless the Remedial Actions would be conducted, in whole or part, on, at or
under the Owned Real Property. If the Remedial Action would be conducted, in whole or part, on, at
or under the Owned Real Property and the Seller is the Indemnifying Party, then the Seller shall
retain an Environmental Consultant to prepare a written report containing a scope of work for the
Remedial Action consistent with the requirements of this Section 11.6 and submit the report
to Purchaser. Purchaser shall reasonably and in good faith cooperate with the Seller and the
Environmental Consultant in the preparation of the written report, including by providing access to
the Owned Real Property, which shall not unreasonably interfere with Purchaser’s ongoing
operations. Purchaser will notify Seller if it disagrees with all or any portion of the Remedial
Action scope of work contained in the written report of the Environmental Consultant and Purchaser
and Seller shall negotiate in good faith to try and resolve any disagreement with



38









 






respect to such
Remedial Action scope of work. Regardless of whether Purchaser and Seller are able to resolve any
disagreement with respect to such Remedial Action scope of work, following submission of such
Remedial Action scope of work to Purchaser, Purchaser shall have the right to control any Remedial
Action to be conducted, in whole or part, on, at or under the Owned Real Property consistent with
the requirements of this Section 11.6, including the selection of consultants, contractors,
experts and advisors and the conduct of any negotiations, proceedings, meetings or other
communication with any Governmental Authority.




          (c) In connection with the performance of any Remedial Action, the party conducting the
Remedial Action (whether the Indemnifying Party or the Indemnified Party) shall (A) use reasonable
best efforts to consult with the other party in good faith prior to conducting any Remedial Action,
(B) provide copies of material, non-privileged documents to the other party and a reasonable
opportunity for the other party to comment on such documents prior to submission to any third
party, (C) keep the other party reasonably informed relating to the
progress of the Remedial Action, (D) allow the other party to observe, at the other party’s
expense, any communications, meetings or proceedings involving a Governmental Authority or any
third party, (E) permit the other party and its representatives, at their own expense, to observe
any Remedial Action, and (F) select counsel, contractors, consultants and other representatives of
recognized standing and competence.




          (d) Any Remedial Action performed by the Indemnified Party shall be performed in a
Commercially Reasonable Manner, except that the Indemnified Party may perform a Remedial Action
that is more expensive than a Commercially Reasonable Manner if the Indemnified Party bears the
incremental costs and expenses.




          (e) The Losses or other costs and expenses recoverable shall not include amounts associated
with (i) the Indemnified Party’s failure to maintain an institutional control or environmental land
use control established on the Owned Real Property in connection with a Remedial Action; (ii) the
use of any Owned Real Property for any non-industrial use; or (iii) internal personnel costs.




     11.7 Adjustment. Any payment made by Seller or Purchaser pursuant to this Article
XI will be deemed an adjustment to the Purchase Price.



ARTICLE XII

EMPLOYEE MATTERS




     12.1 Continued Employment. Except as otherwise provided in Section 12.12,
Purchaser (or its Affiliates) may (but shall not be required) to offer employment to each of the
Business Employees, such employment to be effective as of immediately following the Closing Date
or, in the case of any Business Employee on leave of absence on the Closing Date whether due to
short-term disability, family leave, maternity leave, long-term disability or other leave
(“Inactive Business Employee”), effective on the date such Inactive Business Employee is
able to return to active employment so long as the date is within 12 months of the Closing Date.
Prior to the Closing, neither Seller nor its officers or directors shall, either directly or
indirectly, induce or encourage any of the Business Employees to decline Purchaser’s offer of
employment or become employed by Seller. Seller shall not offer employment to, or continue the
employment



39









 




of, any Business Employee who does not accept Purchaser’s offer of employment for a
period of six (6) months following the Closing Date. Such Business Employees who accept any such
offer of employment and become employees of Purchaser immediately following the Closing or upon
return to active employment, as the case may be, shall be referred to herein as “Transferred
Employees,” and the Transferred Employees employed in the United States shall be referred to as
“US Transferred Employees.” Nothing in this Agreement shall obligate Purchaser to continue
the employment of any Transferred Employee after the Closing.



     12.2 Employee Benefits. Except as otherwise provided in the Transition Services
Agreement or in this Article XII, the Transferred Employees shall cease active
participation in the Benefit Plans effective as of the Closing Date and shall commence
participation in certain benefit plans established or maintained by Purchaser or its affiliates
(“Purchaser Benefit Plans”) in accordance with the
terms of such plans, provided, however, that (i) each of the Transferred Employees listed on Schedule 12.2
who is hired as an employee of Purchaser following the Closing (collectively, the “Merck Plan
Employees”) may also continue to be an employee of Seller to the extent necessary to remain
eligible for the Benefit Plans set forth on Schedule 12.2 (the “Merck Plans”) (but
such continuation of employment shall not affect such Merck Plan Employees’ status as Transferred
Employees under this Agreement) and (ii) the Inactive Business Employees shall remain in the
Benefit Plans in accordance with the terms of such plans and until their active employment with
Purchaser begins whereupon they shall commence participation in Purchaser Benefit Plans.



     12.3 Employee Liabilities. Except as otherwise expressly provided in this Article
XII, Seller shall be responsible for, covenants to pay or otherwise discharge, and shall
indemnify and hold harmless, Purchaser against any Liability or claim (including reasonable
attorney’s fees) relating to or arising out of (i) any Benefit Plan or the Merck Plans, (ii) the
employment of any Transferred Employees with respect to periods of employment prior to the Closing,
(iii) the employment or termination of employment of any current or former employee of the Business
who is not a Transferred Employee, (iv) the employment or termination of any current or former
Seconded Employees on or prior to the Closing, (v) the service or termination of service of any
independent contractor, including any accrued payroll, bonus or incentive compensation, vacation
pay, sick pay, termination pay, severance pay, pay-in-lieu-of-notice, notice requirements
(including any notice requirements under the Worker Adjustment Retraining and Notification Act and
the regulations thereunder) on or prior to the Closing, and (vi) unemployment benefits, workers
compensation benefits, or any other benefits (whether or not under the Benefit Plans) to which any
current or former employee of the Business (including any Transferred Employee) or independent
contractor may be entitled as a result of his or her employment by Seller on or prior to the
Closing Date, or the termination of such employment as a result of the transactions contemplated by
this Agreement. For the avoidance of doubt, Purchaser shall be responsible for, covenants to pay
and otherwise discharge, and shall indemnify and hold harmless, Seller against any Liability or
claim (including reasonable attorney’s fees) relating to or arising out of the employment of the
Merck Plan Employees following the Closing (other than with respect to Liabilities or claims
arising from the Merck Plans).



     12.4 Vacation. Seller shall be responsible for, covenants to pay or otherwise
discharge all accrued, unused vacation of the Transferred Employees as of the Closing Date.



40









 




     12.5 Credit for Service; Preexisting Conditions; Coordination. To the extent that
service is relevant for purposes of eligibility and vesting (and, in order to calculate the amount
of any vacation, sick days, severance, layoff and similar benefits, but not for purposes of pension
benefit accruals) under any retirement plan, employee benefit plan, program or arrangement
established or maintained by Purchaser for the benefit of the US Transferred Employees, such plan,
program or arrangement shall credit such US Transferred Employees for service earned on and prior
to the Closing with Seller, Seller’s Affiliates or any of their respective predecessors to the same
extent such service was credited under the comparable plan, program or arrangement maintained by
Seller for such US Transferred Employees. Purchaser shall waive limitations on benefits relating
to any preexisting conditions of the US Transferred Employees and their eligible dependents.
Purchaser shall also recognize, for purposes of annual deductible and out of pocket limits
under its health plans, deductible and out of pocket expenses paid by the US Transferred Employees
and their respective dependents under Seller’s health plans in the calendar year in which the
Closing occurs.


     12.6 COBRA Coverage.


          (a) Seller shall provide continuation coverage required by COBRA to all employees and former
employees of the Business and their covered beneficiaries who are entitled to COBRA with respect to
“qualifying events” (as defined in section 4980B of the Code and Title I, Subtitle B, Part 6 of
ERISA) which are incurred on or prior to the Closing Date and Seller agrees to pay and be
responsible for all Liabilities, costs, expenses, Taxes and sanctions under section 4980B of the
Code and Title I, Subtitle B, Part 6 of ERISA, and interest and penalties imposed upon, incurred
by, or assessed against Purchaser or its Affiliates or Seller or its Affiliates that arise by
reason of or relate to any such failure by Seller to comply with COBRA. Purchaser shall provide
any COBRA coverage with respect to any US Transferred Employees and their covered beneficiaries who
are entitled to COBRA coverage with respect to “qualifying events” that are incurred after the
Closing Date under any group health plan of Purchaser in which US Transferred Employees
participate.



          (b) With respect to the US Transferred Employees and their covered beneficiaries who have a
COBRA “qualifying event” as a result of the transactions contemplated by this Agreement, Seller
shall automatically provide continuation coverage required by COBRA for the period beginning on the
Closing and ending on the last day of the year in which the Closing occurs (the “COBRA
Transition Period”) under the group health plans (excluding any health or dependent care
flexible spending account plans) maintained by Seller and its Affiliates that such US Transferred
Employees and beneficiaries participated in prior to the Closing, and Purchaser shall pay Seller
the premiums for such COBRA coverage for the COBRA Transition Period.



     12.7 Flexible Spending Accounts. To the extent that a Transferred Employee has not
used all amounts deferred to a health or dependent care spending
account plan as of the Closing Date, Seller shall transfer to Purchaser in cash any positive balance in such Transferred
Employee’s health or dependent care flexible spending account as of the Closing Date.


     12.8 Employer Contributions. Seller shall timely make all contributions and payments
(including premium payments) required to be paid with respect to any
period through the Closing

41








 




Date under or with respect to any Benefit Plan. Seller shall fully vest or caused to be fully
vested as of the Closing Date any amounts in the accounts of the Transferred Employees attributable
to employer matching contributions or other employer contributions under any Benefit Plan.



     12.9 Bonus Plans. With respect to any Benefit Plan that is a bonus plan or a sales
commission plan, Seller shall be responsible for, and covenants to pay or otherwise discharge, a
pro rata portion of any bonus or commission that any Transferred Employee would have been paid had
they remained an employee of Seller through the calendar
year in which the Closing occurs, payable as soon as practicable following the Closing Date.
For the avoidance of doubt the pro rata portion of any bonus or commission payable by Seller in
respect of the calendar year in which the Closing occurs pursuant to this Section 12.9
shall be determined based on (x) in the case of commissions, the sales of Products by such
Transferred Employee during the portion of such calendar year occurring prior to the Closing Date,
and (y) in all other cases, the number of days in such calendar year occurring prior to the Closing
Date.



     12.10 Retiree Medical. Seller shall retain responsibility for providing, and shall
continue to provide, post-retirement medical benefits on terms and conditions substantially
equivalent in duration, scope, value, participant cost, vesting and otherwise to those in effect on
the Closing Date with respect to (i) Transferred Employees who have satisfied the eligibility
requirements for post-retirement medical benefits as of the Closing Date and (ii) Transferred
Employees who will satisfy the eligibility requirements for post-retirement medical as of the end
of the calendar year in which the Closing Date occurs and subsequently become entitled to receive
such benefits, in each case upon retirement from employment with Purchaser and its Affiliates.



     12.11 Seconded Employees. Purchaser agrees to provide Seller with the services of
certain employees of Purchaser (as Seller shall determine and as initially set forth on
Schedule 12.11) (the “Seconded Employees”) as of the Closing Date, as provided for
in the Transition Services Agreement.



     12.12 Mexican Employees. Effective as of the Closing Date, Seller shall terminate, or
shall cause Nalco de Mexico S. de R.L. de C.V. — Mexico (“Nalco Mexico”) to terminate, the
employees listed on Schedule 12.12 (the “Mexican Employees”), in accordance with
ordinary statutory severance payments and obligations applicable under the form of termination
without cause in accordance with the Mexican Labor Law; and (i) shall fully indemnify Purchaser and
its Affiliates and pay in full all compensation, fees, consideration, commissions, bonuses and
other compensation, if any, due to the Mexican Employees or otherwise arising under the Mexican
Labor Law or any policy, practice, agreement, contract, plan, program, or any other applicable law
for termination by Seller or Nalco Mexico without cause, and (ii) shall indemnify Purchaser and its
Affiliates for and from any claim by the Mexican Employees or by any labor or other competent
authority, including, without limitation the (Instituto del Fondo Nacional de la Vivienda para los
Trabajadores), the National Housing Fund Law (Ley del Instituto del Fondo Nacional de la Vivienda
para los Trabajadores), the Mexican Social Security Institute (Instituto Mexicano del Seguro
Social), derived from any past obligation during the time the Mexican Employees were employed by
Seller or Nalco Mexico. Seller shall deliver to Purchaser at the Closing Date, copies of all
documents which evidence termination of the Mexican Employees (finiquito), on terms and conditions
satisfactory to Purchaser, including, without limitation,



42









 




copies of
evidence of payment. Effective
immediately following the Closing Date, Purchaser or its Affiliates shall offer employment to the
Mexican Employees, as new employees, without Purchaser or its Affiliates being liable for any past
labor obligations of Seller or Nalco Mexico and without being considered an alternate employer
(Patron Sustituto) under the terms of Article 41 of the Mexican Labor Law.



     12.13 General. Nothing in this Article XII or elsewhere in this Agreement
shall be construed as (i) conferring any legal rights upon any Transferred Employee for
continuation of employment by Purchaser or its Affiliates, (ii) obligating Purchaser with respect
to any Business Employee, including any Transferred Employee in any manner for any payment upon
discontinuation of employment by Purchaser, (iii) requiring Purchaser to implement, or limiting the
rights of Purchaser to amend or discontinue, any fringe benefit plan, program or practice or any
other employee benefit plan of any nature whatsoever, (iv) conferring upon any Transferred Employee
or Business Employee any rights or remedies under this Agreement (including under this Article
XII) or (v) entitling any Transferred Employee to any particular level of compensation or
benefits.



     12.14 Cooperation. Upon request, Seller shall provide Purchaser, and Purchaser shall
provide Seller, such documents, data and information as may reasonably be necessary to implement
the provisions of this Article XII and to administer their respective benefit plans.



ARTICLE XIII

GENERAL PROVISIONS




     13.1 Expenses. Purchaser and its Affiliates, on the one hand, and Seller and its
Affiliates, on the other hand, shall pay their own expenses (including the fees and expenses of
their accountants, advisors, and counsel) in connection with negotiating, preparing, closing and
carrying out this Agreement, the Ancillary Agreements and the transactions contemplated hereby and
thereby. Any sales, use, value-added and other transfer Taxes and charges (any such Taxes and
charges, “Transfer Taxes”) applicable to the sale and transfer to, and purchase by,
Purchaser of the Acquired Assets will be paid one-half by Purchaser and one-half by Seller. Seller
will cooperate with Purchaser in the preparation and filing of any certificates or other documents
that may reduce or eliminate any such Transfer Taxes and any Tax returns required to be filed in
connection with such Transfer Taxes. Purchaser and Seller shall each pay one-half of all filing
fees relating to the transactions contemplated hereby due under the HSR Act and the AML.



     13.2 Notices. Any notice or other communication required or permitted to be given
hereunder will be in writing and shall be delivered via an overnight courier such as Federal
Express or delivered against receipt (including by confirmed facsimile transmission), as follows:




	 	(a)	 	In the case of Purchaser, to:




Chemetall Corp.

c/o Rockwood Specialties, Inc.

100 Overlook Center

Princeton, NJ 08540




43









 







Telecopy: (609) 514-8722

Attn: General Counsel



with a copy to:



Hughes Hubbard & Reed LLP

One Battery Park Plaza

New York, NY 10004

Telecopy: (212) 422-4726

Attn: James Modlin, Esq.





	 	(b)	 	In the case of Seller, to:




Nalco Company

1601 West Diehl Road

Naperville, IL 60563

Telecopy: 630-305-2985

Attn: General Counsel



or to such other address as the party may have furnished in writing in accordance with the
provisions of this Section 13.2. Any notice or other communication shall be deemed to have
been given, made and received upon receipt. Any party may change the address to which notices are
to be addressed by giving the other party notice in the manner herein set forth.




     13.3 Governing Law; Consent to Jurisdiction.



          (a) This Agreement shall be governed by the laws of the State of Illinois, without regard to
any conflicts of law rules or principles that would result in the application of the laws of
another jurisdiction.




          (b) Each party hereto hereby consents to, and confers nonexclusive jurisdiction upon, the
courts of the State of Illinois and the Federal courts of the United States of America located in
the State of Illinois, and appropriate appellate courts therefrom, over any Action arising out of
or relating to this Agreement. Each party hereto hereby waives, and agrees not to assert, as a
defense in any such Action that it is not subject to such jurisdiction or that such Action may not
be brought or is not maintainable in said courts or that this Agreement may not be enforced in or
by said courts or that its property is exempt or immune from execution, that such Action is brought
in an inconvenient forum, or that the venue of such Action is improper. Service of process in any
such Action may be served on any party anywhere in the world, whether within or without the State
of Illinois, as provided in Section 13.2 herein.




     13.4 Counterparts. This Agreement may be executed in one or more counterparts, each
of which will be deemed an original, but all of which together shall constitute but one and the
same instrument.



     13.5 Headings; Schedules; Exhibits. The headings, subheadings and captions in this
Agreement, the Schedules and in any Exhibit or Schedule hereto or thereto are for reference
purposes only and are not intended to affect the meaning or interpretation of this Agreement.



44









 







Disclosure of any fact, circumstance or matter in any Schedule hereto shall, should the existence
of such fact, circumstance or matter be relevant to any other Schedule hereto, be deemed to be
disclosed with respect to that other
Schedule to the extent the relevance of such disclosure to such other Schedule is reasonably
apparent. Any capitalized terms used in any Schedule hereto but not otherwise defined therein
shall be defined as set forth in this Agreement.



     13.6 Entire Agreement. This Agreement and the Ancillary Agreements (including the
Preambles, Recitals, Exhibits and Schedules of this Agreement and of each of the Ancillary
Agreements, which shall be incorporated into and form a part of this Agreement or the Ancillary
Agreements, as applicable) contain the entire agreement between the parties hereto with respect to
the subject matter hereof and supersede all negotiations, prior discussions, agreements,
arrangements, and understandings, written or oral, relating to the subject matter of this Agreement
(including the Confidentiality Agreement, which will terminate upon occurrence of the Closing with
respect to information related to the Business but will otherwise remain in effect in accordance
with its terms), and there are no other covenants, provisions, agreements, representations or
warranties, whether written or oral, among the parties hereto.



     13.7 Third-Party Beneficiaries. Except as provided in Article XI, this
Agreement is not intended to confer upon any other Person any rights or remedies hereunder.



     13.8 Assignment. This Agreement and all of the provisions hereof will be binding upon
and inure to the benefit of the parties and their respective successors and permitted assigns.
Neither this Agreement nor any of the rights, interests or obligations hereunder may be assigned by
any party without the prior written consent of the other party. Notwithstanding the preceding
sentence, (a) prior to the Closing, Purchaser may elect to have one or more Affiliates of Purchaser
acquire all or part of the Acquired Assets and assume all or any part of the Assumed Liabilities,
but in each case only if each such Affiliate agrees to be bound by the representations, warranties,
covenants and obligations herein in respect of the portion of the Acquired Assets acquired and
Assumed Liabilities assumed by such Affiliate, provided that no such election shall relieve
Purchaser of its obligations hereunder, (b) Purchaser may, at any time following the Closing,
assign all or any part of its right, title and interest in, to and under this Agreement and any
Ancillary Agreement to any Affiliate of Purchaser and/or to any transferee of that part of its
business or any Acquired Assets to which such rights relate, and such Affiliate or transferee will
succeed to, and be substituted for, and may exercise every such right and power so assigned of
Purchaser under this Agreement with the same effect as if such Affiliate or transferee had been
named as Purchaser herein, provided that no such assignment shall relieve Purchaser of its
obligations hereunder; and (c) Purchaser may, at any time following the Closing, assign its rights
hereunder and under any Ancillary Agreement as collateral security to Persons extending financing
to Purchaser or any of their Affiliates (and such Persons may at any time foreclose on such
security interest), provided that no such assignment shall relieve Purchaser of its obligations
hereunder. Any purported assignment or delegation in violation of this Agreement shall be null and
void ab initio.



     13.9 Specific Performance. Seller and Purchaser recognize that any breach of the
terms of this Agreement may give rise to irreparable harm for which money damages would not be an
adequate remedy, and that the Acquired Assets and Business are unique and not available on the open
market, and accordingly
agree that, in addition to all other remedies available to the



45









 







parties, the parties shall be
entitled to enforce the terms of this Agreement by a decree of specific performance, without the
necessity of (a) proving the inadequacy as a remedy of money damages or (b) posting a bond or other
surety.



     13.10 Nondisclosure. The parties will, and will cause their respective Affiliates and
their and their Affiliate’s respective employees, agents and representatives (collectively,
“Representatives”) to, at all times from and after the Closing Date hold in strictest
confidence any and all Confidential Information of the other party that may have come or may come
into their or any of their Representatives’ possession or within their or their Representatives’
knowledge. In furtherance and not in limitation of the foregoing, the parties agree that they will
not, and will cause their Representatives to not, from and after the Closing, for any reason,
directly or indirectly, for themselves or any other Person, use or disclose any such Confidential
Information of the other party, except (a) as expressly permitted under this Agreement or the
Ancillary Agreements, (b) as necessary to exercise its rights or fulfill its obligations under this
Agreement or the Ancillary Agreements or (c) in the case of Seller, with respect to the Supplied
Products, as required to satisfy its obligations to Existing Distributors. As used in this
Section 13.10, (i) “Confidential Information” of Purchaser shall mean, all
confidential information of or related exclusively to the Business, including Transferred
Technology, other than information which is or becomes known to the public, other than through a
breach by Seller of this Section 13.10 or any other obligation of confidentiality of Seller
or its Affiliates to Purchaser or any of its Affiliates and (ii) “Confidential Information”
of Seller, shall mean all confidential information of or related to the Retained Business,
including Disclosed Dual Products Information, other than information (w) which is or becomes known
to the public, other than through a breach by Purchaser of this Section 13.10 or any other
obligation of confidentiality of Purchaser or its Affiliates to Seller or its Affiliates, (x) is
legally in the possession of Purchaser or its Representatives prior to receipt thereof from Seller
(or any Representative thereof); (y) is disclosed to Purchaser or any of its Representatives by a
third party who did not to the knowledge of Purchaser or such Representative disclose such
information in violation of an obligation of confidentiality to Seller or its Affiliates; or (z)
can be shown by Purchaser to have been independently developed or derived by Representatives of
Purchaser who did not have access to any Confidential Information of Seller. Notwithstanding
anything to the contrary contained herein, this Section 13.10 shall not restrict any
disclosure by either party or its Representatives of any Confidential Information to the extent
that such party or Representative is required (in its good faith judgment) to disclose any of such
Confidential Information pursuant to any judgment, decree or order or any court, or otherwise
pursuant to any applicable Legal Requirements, or pursuant to the applicable rules or regulations
of, or any listing or similar agreement with, any United States or foreign stock exchange, provided
that in the case of any such disclosure pursuant to any such judgment, decree or order, Purchaser
or Seller, as the case may be, will, or will cause its relevant Representative to (in each case, to
the extent that it may do so consistent with such requirements), provide the other party with
prompt notice of any such required disclosure so that the other party may, if it desires, seek an
appropriate protective order.



     13.11 Interpretation; Absence of Presumption.



          (a) For the purposes of this Agreement, (i) words in the singular shall be held to include the
plural and vice versa, (ii) the terms “hereof,” “herein,” and “herewith” and words of similar
import shall, unless otherwise stated, be construed to refer to this Agreement as a



46









 






whole
(including all of the Schedules and Exhibits hereto) and not to any particular provision of this
Agreement, and Article, Section, Exhibit and Schedule references are to the Articles, Sections,
Exhibits, and Schedules to this Agreement unless otherwise specified, (iii) except where the
context otherwise requires, references to a “party” or “parties” shall mean Purchaser or Seller, or
all of them as the context requires, (iv) the word “including” and words of similar import when
used in this Agreement shall mean “including, without limitation,” unless the context otherwise
requires or unless otherwise specified and (v) the word “or” shall not be exclusive.




          (b) With regard to each and every term and condition of this Agreement and any and all
agreements and instruments subject to the terms hereof, the parties understand and agree that the
same have or has been mutually negotiated, prepared and drafted, and if at any time the parties
hereto desire or are required to interpret or construe any such term or condition or any agreement
or instrument subject hereto, no consideration will be given to the issue of which party actually
prepared, drafted or requested any term or condition of this Agreement or any agreement or
instrument subject hereto.




     13.12 Severability. If any one or more of the provisions of this Agreement shall be
held to be invalid, illegal or unenforceable, the validity, legality or enforceability of the
remaining provisions of this Agreement will not be affected thereby and the parties will use all
reasonable efforts to substitute one or more valid, legal and enforceable provisions which, insofar
as practicable, implement the purposes and intents hereof. To the extent permitted by applicable
Legal Requirements, each party waives any provision of any Legal Requirement which renders any
provision of this Agreement invalid, illegal or unenforceable in any respect.



     13.13 Amendments; Waiver. This Agreement may not be amended or modified except by
written agreement of the parties. No breach of any covenant, agreement, representation or warranty
made herein shall be deemed waived unless expressly waived in writing by the party who might assert
such breach. Subject to Section 11.4(f), the rights and remedies of the parties hereunder
are cumulative.



     13.14 Bulk Transfer Law. The parties hereby waive compliance by Seller with the
provisions of any applicable “bulk sales law” or “bulk transfer law” of any jurisdiction in
connection with the transactions contemplated by this Agreement. Seller shall indemnify and hold
harmless the Purchaser Indemnified Parties as provided in Section 11.2(a)(ii) from and
against any and all Losses which exist or which are imposed on, incurred by or asserted against the
Purchaser Indemnified Parties as a result of any such non-compliance.



[Signature page follows]




47









 




     IN WITNESS WHEREOF, each of the parties has caused this Agreement to be duly executed and
delivered as of the day and year first above written.


	 	 	 	 	 
	 	CHEMETALL CORP.
 	 
	 	By:  	/s/ RONALD J. FELBER 	 
	 	 	Name:  	Ronald J. Felber 	 
	 	 	Title:  	President 	 
	 
	 	NALCO COMPANY
 	 
	 	By:  	/s/ J. ERIK FYRWALD 	 
	 	 	Name:  	J. Erik Fyrwald 	 
	 	 	Title:  	Chairman, President and Chief Executive
Officer 	 
	 



 








 





EXHIBIT A




Certain Definitions




     “Acquired Assets” shall have the meaning specified in Section 1.1.



     “Action” shall mean any action (at law or in equity), suit, arbitration, review,
inquiry, proceeding or investigation.



     “Affiliate” shall mean, with respect to a Person, another Person, directly or
indirectly, through one or more intermediaries, controlled by, under common control with or which
controls, the Person specified.



     “Agreement” shall have the meaning specified in the Preamble.



     “Allocation” shall have the meaning specified in Section 2.2.



     “AML” shall have the meaning specified in Section 3.2.



     “Ancillary Agreements” shall mean the Distribution Agreement, the Transition Services
Agreement, the License Agreement and the instruments described in clauses (a), (e), (f), (g) and
(j) of Section 7.2 and clauses (a) and (d) of Section 7.3.



     “Approval” shall mean any franchise, license, certificate of compliance,
authorization, consent, order, permit, approval or other action of, or any filing, registration or
qualification with, any Governmental Authority.



     “Assets” shall mean all properties, assets, privileges, rights, interests and claims,
personal, tangible and intangible, of every type and description.



     “Assumed Contracts” shall have the meaning specified in Section 1.1(f).



     “Assumed Liabilities” shall have the meaning specified in Section 1.3.



     “Basket Amount” shall have the meaning specified in Section 11.5(a).



     “Benefit Plans” shall have the meaning specified in Section 3.12(a).



     “Business” shall have the meaning specified in the Recitals to this Agreement.



     “Business Day” shall mean any day other than a Saturday or Sunday or any other day on
which commercial banks in New York, New York are authorized or required by Legal Requirements to
close.



     “Business Employees” shall have the meaning specified in Section 3.11(a).



     “China Acquired Assets” shall have the meaning specified in Section 5.7(a).



     “China Assumed Liabilities” shall have the meaning specified in Section
5.7(b).



A-1









 





     “China Business” shall have the meaning specified in Section 5.7(a).



     “China Employees” shall have the meaning specified in Section 5.7(a).



     “China Liabilities” shall have the meaning specified in Section 5.7(a).



     “China Purchase Price” shall have the meaning specified in Section 5.7(a).



     “China Transfer Requirements” shall mean (i) the expiration or termination of the
relevant waiting period in relation to the merger notification in the People’s Republic of China in
respect of the transactions contemplated hereby, without any objections or conditions (other than
immaterial conditions) having been (and continuing to be) raised or imposed by Governmental
Authorities operating under the AML, and (ii) there shall be in effect no order or injunction of
any Governmental Authority of competent jurisdiction restraining or prohibiting the consummation of
purchase and sale of the China Acquired Assets and the China Business.



     “Clean-it Application” shall mean any cleaning or cleaner/rust preventative
application for (i) soil removal prior to or after any Cut-it Application or (ii) use for
pre-paint, rubber to metal bonding, metal break-in and cold forming processes, in each case only as
applied during the manufacturing process (prior to shipment) of a Metal Product.



     “Closing” shall have the meaning specified in Section 7.1.



     “Closing Date” shall have the meaning specified in Section 7.1.



     “Coat-it Application” shall mean any coating application for pre-paint, rubber to
metal bonding, metal break-in and cold forming processes, in each case only as applied during the
manufacturing process (prior to shipment) of a Metal Product.



     “COBRA Transition Period” shall have the meaning specified in Section 12.6(b).



     “Code” shall mean the Internal Revenue Code of 1986, as amended, and the rules and
regulations promulgated thereunder.



     “Commercially Reasonable Manner” shall mean methods that are reasonably estimated to
mitigate costs (from the perspective of a reasonable business person acting without regard to the
availability of indemnification hereunder) for performing a particular Remedial Action, taking into
account the industrial uses of any real property, to achieve compliance with (and in a manner
consistent with) Legal Requirements related to Remedial Action and Hazardous Materials or an order
or determination by a Governmental Authority or judgment in connection with an Action brought by an
unaffiliated third party, it being understood that such Commercially Reasonable Manner shall
include, where appropriate, risk-based remedies or remedial standards, institutional or engineering
controls or deed restrictions on real property.



     “Confidential Information” shall have the meaning specified in Section 13.10.



     “Confidentiality Agreement” shall mean the Confidentiality Agreement dated as of
October 30, 2007, between Seller and Purchaser.



A-2









 





     “Consent” shall mean any consent or approval of, or notice, declaration, report or
statement filed with or submitted to, any Person (other than an Approval).



     “Contract” shall mean any agreement, contract, lease, license agreement, franchise
agreement, obligation, instrument or other commitment or understanding of any kind (whether written
or oral), in each case regarding or affecting the Business, to which Seller or any of its
Affiliates is a party or by which Seller or any of its Affiliates or any of their respective Assets
may be bound or affected, including all amendments, modifications, extensions or renewals of any of
the foregoing.



     “Cut-it Application” shall mean any application for metalworking, forming, stamping
and drawing, in each case only as applied during the manufacturing process (prior to shipment) of a
Metal Product.



     “Delayed Closing” shall have the meaning specified in Section 5.7(b).



     “Designated Patents” shall have the meaning specified in Section 1.7(b)



     “Disclosed Dual Products Information” shall have the meaning specified in Section
1.7.



     “Distribution Agreement” shall have the meaning specified in Section 7.2(b).



     “Dual Products” shall have the meaning specified in the Recitals to this
Agreement.



     “Dual Products Business” shall have the meaning specified in Section 1.2(a).



     “Dual Products IP and Technology” shall have the meaning specified in Section
1.2(a).



     “Enforcing Party” shall have the meaning specified in Section 1.7(c).



     “Entity” shall mean any corporation, partnership, limited liability company, joint
venture, trust, unincorporated organization, other form of business or legal entity or Governmental
Authority.



     “Environmental Consultant” shall mean an environmental consultant selected by Seller
to prepare a written report in response to a notice of claim from Purchaser including proposed
Remedial Actions to be conducted, in whole or part, on, at or under the Owned Real Property. The
selected consultant must be one of Delta Environmental Consultants, Inc., Environmental Resources
Management (ERM) or Roux Associates, Inc.



     “Environmental Liabilities” shall mean any and all Liabilities based upon, resulting
from or arising out of (i) any generation, use, handling, storage, treatment, transportation or
Release by any Person of any Hazardous Material occurring at or prior to the Closing at or from any
real property owned or leased by the Business or at any other real property in which Seller or any
of its Affiliates or the Business (or their predecessors) has or at any time in the past, has had,
an interest, (ii) any pollution or contamination of air, soil, groundwater, surface water,
buildings, structures, improvements and machinery and equipment by or with any Hazardous Material
occurring at or prior to the Closing at or on any real property owned or leased by the Business,



A-3









 




(iii) without limitation of clause (ii), underground storage tanks in or at any real property
owned or leased by the Business at or prior to the Closing, and the presence of asbestos,
asbestos-containing materials, polychlorinated biphenyls (PCBs) or PCB wastes that are not in
compliance with Legal Requirements and are in or at any owned or leased property of the Business at
or prior to the Closing, (iv) any off-site storage, transportation or Release of any Hazardous
Material by Seller or any of its Affiliates (or their predecessors), their agents, employees or
Persons with whom they have had a contractual or other relationship that was related to the
Business and occurred at or prior to the Closing or (v) any violation or non-compliance by Seller
or any of its Affiliates with Legal Requirements for the protection of public health or the
environment occurring at or prior to the Closing in connection with the Business. Environmental
Liabilities described in clauses (i), (ii), (iii) or (v) above to the extent arising from the
contamination of air, soil, groundwater, surface water, buildings, structures, improvements and
machinery and equipment at the Owned Real Property with Hazardous Materials shall be referred to as
“Other Environmental Liabilities.” All other Environmental Liabilities shall be referred
to as “Off-Site Environmental Liabilities.”




     “ERISA” shall have the meaning specified in Section 3.12(a).



     “Excluded Application” shall mean any application (i) at any integrated steel mill or
minimill, (ii) in any mining or mineral processing operation, (iii) in any scrap reclamation
operation, (iv) in any energy (including oil and gas) production operation (or related refining
activities), (v) in any chemical production operation or (vi) in any aluminum, copper, lead, zinc
or nickel smelter operation or rolling mill or extruder operation utilized in the primary
production of such metals.



     “Excluded Assets” shall have the meaning specified in Section 1.2(b).



     “Existing Distributors” shall have the meaning specified in the Distribution
Agreement.



     “FTG Application” shall mean any Cut-it Application, Coat-it Application, Clean-it
Application, Protect-it Application or (excluding, for the avoidance of doubt, any Excluded
Application).



     “FTG IP License” shall have the meaning specified in Section 1.7. 



     “GAAP” shall mean generally accepted accounting principles in the United States as in
effect from time to time.



     “Governmental Authority” shall mean any national, federal, state, provincial, county
or municipal government, domestic or foreign, any agency, board, bureau, commission, court,
department or other instrumentality of any such government, or any arbitrator in any case that has
jurisdiction over a party or any of its Assets.



     “Hazardous Material” shall mean any substance, material or waste that (i) is regulated
under any Legal Requirement that concerns the protection of persons, natural resources or the
environment, (ii) without limitation of the generality of clause (i), is deemed under or by any
Legal Requirement or Governmental Authority to be “hazardous,” “toxic,” a “contaminant,” “solid
waste,” “waste,” a “pollutant” or words with similar meaning, and includes petroleum and



A-4









 







petroleum products, crude oil or any fraction or by-product thereof, PCBs, PCB wastes,
asbestos, asbestos containing products and materials and radioactive substances or (iii) the
presence of which requires Remedial Action pursuant to applicable Legal Requirements.



     “HSR Act” shall have the meaning specified in Section 3.2.



     “Inactive Business Employee” shall have the meaning specified in Section 12.1.



     “Indemnified Parties” shall have the meaning specified in Section 11.4(a).



     “Indemnifying Parties” shall have the meaning specified in Section 11.4(a).



     “Intellectual Property Rights” shall mean all patent rights, service marks, trademarks
and tradenames, all product names, all assumed or fictitious names and the logos associated
therewith, copyrights, applications for the foregoing, licenses and other contractual rights with
respect to the foregoing and other intellectual property rights, together with the goodwill
associated with any such service marks, trademarks, tradenames, product names or logos.



     “Inventory” shall have the meaning specified in Section 1.1(a).



     “IRS” shall mean the Internal Revenue Service.



     “Knowledge” shall mean the knowledge of Mary Kay Kaufmann, Michael A. Romano, Greg
Tranor, Skip Schepisi, Edward O. Yonter, Susan Buchanan, Laurie Marsh and Dr. David Slinkman.



     “Legal Requirement” shall mean any judgment, decree, injunction, order, writ, ruling,
law, ordinance, statute, rule, regulation, code or other requirement of any Governmental Authority,
or the common law.



     “Liability” shall mean any direct or indirect debt, obligation or liability of any
kind or nature, whether accrued or fixed, absolute or contingent, determined or determinable,
matured or unmatured, and whether due or to become due, asserted or unasserted, or known or
unknown.



     “License Agreement” shall have the meaning specified in Section 7.2(k).



     “Liens” shall mean any claim, lien, pledge, encumbrance, mortgage, deed of trust,
charge, easement, right of way, encroachment, security interest, option, or any other similar right
or interest whatsoever.



     “Losses” shall mean any liability, action, claim, proceeding, litigation,
investigation, obligation, loss, damage, Lien, assessment, deficiency, capital expenditure or
Remedial Action.



     “Material Adverse Effect” shall mean any circumstances, facts, changes, events or
occurrences that have had, or could reasonably be expected to have, (i) an adverse effect on the
business, Assets, Liabilities, financial condition and results of operations of the Business (taken
as a whole) or (ii) a material adverse effect on Seller’s and its Affiliates’ ability to perform
their



A-5









 







obligations under this Agreement and the Ancillary Agreements to be executed and delivered by
Seller and/or such Affiliates.



     “Merck Plan Employee” shall have the meaning specified in Section 12.2.



     “Merck Plans” shall have the meaning specified in Section 12.2.



     “Metal Product” shall mean any manufactured metal component or manufactured finished
metal product.



     “Mexican Employees” shall have the meaning specified in Section 12.12.



     “Mexican Labor Law” shall mean the Mexican Federal Labor Law (Ley Federal del
Trabajo).



     “Nalco Licensed IP” shall mean the Intellectual Property Rights and Technology to be
licensed to Purchaser as of the Closing Date pursuant to Sections 1.6(a) and 1.7.



     “Nalco Mexico” shall have the meaning specified in Section 12.12.



     “Non-Compete Period” shall have the meaning specified in Section 6.2.



     “Non-Solicit Period” shall have the meaning specified in Section 6.1.



     “Off-Site Environmental Liabilities” shall have the meaning specified in the
definition of Environmental Liabilities.



     “Off-Site Inventory” shall have the meaning specified in Section 2.1.



     “Other Environmental Liabilities” shall have the meaning specified in the definition
of Environmental Liabilities.



     “Owned Real Property” shall have the meaning specified in Section 1.1(g).



     “Permits” shall have the meaning specified in Section 1.1(i).



     “Person” shall mean any individual or Entity.



     “Plastic Facia Application” means any application using plastic facia washing
chemicals.



     “Primary FTG Business” shall have the meaning specified in the Recitals to
this Agreement.



     “Product Approvals” shall have the meaning specified Section 3.8(a).



     “Products” shall mean the Transferred Products, the Dual Products and the Supplied
Products.



A-6









 





     “Protect-it Application” shall mean any application for the prevention of corrosion of
Metal Products during any Cut-it Application, Coat-it Application or Clean-it Application, in each
case only as applied during the manufacturing process (prior to shipment) of such Metal Products.



     “PTO” shall have the meaning specified in Section 3.6(a).



     “PTU” shall mean the Mexican statutory employee profit sharing provision.



     “Purchase Price” shall have the meaning specified in Section 2.1.



     “Purchaser” shall have the meaning specified in the Preamble to this
Agreement.



     “Purchaser Benefit Plans” shall have the meaning specified in Section 12.2.



     “Purchaser Indemnified Parties” shall have the meaning specified in Section
11.2.



     “Purchaser Shared Trademarks” shall have the meaning specified in Section
1.6(b).



     “Release” shall mean any release, spill, emission, leaking, dumping, injection,
pouring, deposit, disposal, discharge, dispersal, leaching or migration into the environment (i.e.,
ambient air, surface water, groundwater, land surface or subsurface strata) or within any building,
structure, facility or fixture.



     “Remedial Action” shall mean all action necessary: (i) to cleanup, close, remove,
treat or in any other way remediate any Hazardous Material; (ii) to prevent or contain the Release
of any Hazardous Material so that it does not endanger or otherwise adversely affect the
environment or public health or welfare or (iii) to perform pre-remedial studies, investigations or
monitoring, in, under or of any real property, facilities or other Assets.



     “Representative” shall have the meaning specified in Section 13.10.



     “Retained Business” shall mean all businesses conducted by Seller as of the date of
this Agreement (other than the Business), including the Dual Products Business, the Retained
Territory Business and the Water Treatment Business.



     “Retained Liabilities” shall have the meaning specified in Section 1.4.



     “Retained Territory” shall mean those countries comprising the European Union as of
the date of this Agreement, South Africa and China; provided, however, that
effective upon the consummation of a closing of a sale by Seller to Purchaser of the China
Business, China shall be deemed to be part of the Territory rather than the Retained Territory.



     “Retained Territory Business” shall have the meaning specified in Section
1.2(a).



     “Returns” shall have the meaning specified in Section 2.3.



     “Seconded Employees” shall have the meaning specified in Section 12.11.



A-7









 





     “Selected Accountant” shall have the meaning specified in Section 2.2.



     “Seller” shall have the meaning specified in the Preamble to this Agreement.



     “Seller Indemnified Parties” shall have the meaning specified in Section 11.3.



     “Seller Shared Trademarks” shall have the meaning specified in Section 1.6(a).



     “Significant Customer” shall have the meaning specified in Section 3.18.



     “Specified Representations” shall have the meaning specified in Section 11.1.



     “Statements of Revenues” shall have the meaning specified in Section 3.3.



     “Supplied Products” shall have the meaning specified in the Recitals to this
Agreement.



     “Supplied Products Business” shall have the meaning specified in the Recitals
to this Agreement.



     “Supplied Products Customers” shall mean the customers set forth on Schedule
A-1.



     “Supplied Products IP and Technology” shall have the meaning specified in Section
1.2(a).



     “Taxes” shall mean all taxes, charges, fees, levies or other assessments, including
income, excise, property, sales, franchise, withholding, social security and unemployment taxes,
imposed by the United States, any possession thereof, any state, county, local or foreign
government, or any subdivision or agency of any of the foregoing, and any interest, penalties or
additions relating to such taxes, charges, fees, levies or other assessments.



     “Technology” shall mean all formulas, processes, procedures, designs, ideas, research
records, inventions, records of inventions, test information, technical information, engineering
data, marketing know-how, proprietary information, manufacturing information, know-how, and trade
secrets (and all related manuals, books, files, journals, models, instructions, patterns, drawings,
blueprints, plans, designs and specifications).



     “Territory” shall mean shall mean all countries and other parts of the world other
than the Retained Territory.



     “Threshold Amount” shall have the meaning specified in Section 11.5(a).



     “Transferred Employees” shall have the meaning specified in Section 12.1.



     “Trademark Rights” shall mean all service marks, trademarks and tradenames, product
names, assumed or fictitious names and the logos associated therewith.



     “Transferred Intellectual Property” shall have the meaning specified in Section
1.1(b).



A-8









 





     “Transferred Products” shall mean the products listed on Exhibit G and the
following products produced, marketed and sold by Seller for use exclusively in FTG Applications:
any (i) coolant, (ii) lubricant, (iii) additive, (iv) biocide registered specifically for use in
any FTG Application, (v) iron, zinc or manganese phosphate, (vi) chromate conversion coating or
(vii) final sealing rinse.



     “Transferred Technology” shall have the meaning specified in Section 1.1(c).



     “Transfer Taxes” shall have the meaning specified in Section 13.1.



     “Transition Services Agreement” shall have the meaning specified in Section
7.2(c).



     “U.C.C.” shall mean the Uniform Commercial Code, as amended, and any successor
thereto.



     “Use” shall mean to develop, have developed, produce, have produced, make use of,
offer to sell, sell, import, practice, reproduce, distribute, transmit or otherwise exploit.



     “US Transferred Employees” shall have the meaning specified in Section 12.1.



     “Water Treatment Business” shall have the meaning specified in Section 1.2(a).




A-9