Exhibit 10.1


EXECUTION
COPY




 









MERGER
AND UNIT PURCHASE AGREEMENT






By and Among


CROMPTON HOLDING CORPORATION, 

THE SHAREHOLDERS OF BCCM HOLDINGS, INC., 

THE MANAGEMENT MEMBERS OF DAVIS-STANDARD, LLC,

DAVIS-STANDARD, LLC,

BCCM HOLDINGS, INC., 

THE CARRYHOLDERS’ AGENT



and


D-S ACQUISITION CO.


Dated as of October 30,
2006















 


Table of Contents


	
  

  	
   

  	
  Page #

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  I DEFINITIONS

  	
  2

  
	
   

  	
   

  	
   

  
	
  Section 1.1

  	
  Definitions

  	
  2

  
	
  Section 1.2

  	
  Construction

  	
  12

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  II MERGER

  	
  12

  
	
   

  	
   

  	
   

  
	
  Section 2.1

  	
  The Merger

  	
  12

  
	
  Section 2.2

  	
  Effective Time

  	
  12

  
	
  Section 2.3

  	
  Effect of the Merger

  	
  12

  
	
  Section 2.4

  	
  Certificate of
  Incorporation; Bylaws

  	
  13

  
	
  Section 2.5

  	
  Directors and
  Officers

  	
  13

  
	
  Section 2.6

  	
  Merger
  Consideration

  	
  13

  
	
  Section 2.7

  	
  BCCM Holdback

  	
  13

  
	
  Section 2.8

  	
  Conversion of
  the BCCM Shares

  	
  13

  
	
  Section 2.9

  	
  Exchange of
  Certificates

  	
  14

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  III UNIT PURCHASE AND CLOSING

  	
  14

  
	
   

  	
   

  	
   

  
	
  Section 3.1

  	
  Unit Purchase

  	
  14

  
	
  Section 3.2

  	
  Purchase Price

  	
  14

  
	
  Section 3.3

  	
  Crompton,
  Management Members’ and Carryholders’ Holdback

  	
  14

  
	
  Section 3.4

  	
  Sellers’ Agents

  	
  15

  
	
  Section 3.5

  	
  The Closing

  	
  15

  
	
  Section 3.6

  	
  Adjustment
  Amount

  	
  15

  
	
  Section 3.7

  	
  Free Cash Flow
  Payment

  	
  16

  
	
  Section 3.8

  	
  Post-Closing
  Free Cash Flow Payment

  	
  16

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY

  	
  17

  
	
   

  	
   

  	
   

  
	
  Section 4.1

  	
  Existence and
  Power

  	
  17

  
	
  Section 4.2

  	
  Authorization;
  Enforceability

  	
  17

  
	
  Section 4.3

  	
  Governmental
  Authorization

  	
  18

  
	
  Section 4.4

  	
  Non-Contravention;
  Consents

  	
  18

  
	
  Section 4.5

  	
  Capitalization

  	
  18

  
	
  Section 4.6

  	
  Subsidiaries

  	
  19

  
	
  Section 4.7

  	
  Financial
  Statements

  	
  19

  
	
  Section 4.8

  	
  No Undisclosed
  Liabilities

  	
  19

  
	
  Section 4.9

  	
  Tax Matters

  	
  19

  
	
  Section 4.10

  	
  Absence of
  Certain Changes

  	
  20

  
	
  Section 4.11

  	
  Contracts

  	
  20

  
	
  Section 4.12

  	
  Insurance
  Coverage

  	
  22

  
	
  Section 4.13

  	
  Litigation

  	
  23

  
	
  Section 4.14

  	
  Compliance with
  Laws; Permits

  	
  23

  
	
  Section 4.15

  	
  Assets;
  Properties; Sufficiency of Assets

  	
  23

  
	
  Section 4.16

  	
  Intellectual
  Property

  	
  24

  
	
  Section 4.17

  	
  Environmental
  Matters

  	
  25

  
	
  Section 4.18

  	
  Plans and
  Material Documents

  	
  26

  



 



 i
 






 



 


	
  Section 4.19

  	
  Affiliate
  Transactions

  	
  28

  
	
  Section 4.20

  	
  Customer and
  Supplier Relations

  	
  28

  
	
  Section 4.21

  	
  Other Employment
  Matters

  	
  28

  
	
  Section 4.22

  	
  Accounts
  Receivable

  	
  29

  
	
  Section 4.23

  	
  Inventory

  	
  29

  
	
  Section 4.24

  	
  Product and
  Service Warranties; Liability

  	
  29

  
	
  Section 4.25

  	
  Finders’ Fees

  	
  29

  
	
  Section 4.26

  	
  Disclaimer of
  Other Representations and Warranties

  	
  29

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  V REPRESENTATIONS AND WARRANTIES OF CROMPTON

  	
  30

  
	
   

  	
   

  	
   

  
	
  Section 5.1

  	
  Existence and
  Power

  	
  30

  
	
  Section 5.2

  	
  Authorization;
  Enforceability

  	
  30

  
	
  Section 5.3

  	
  Governmental
  Authorization

  	
  30

  
	
  Section 5.4

  	
  Non-Contravention;
  Consents

  	
  30

  
	
  Section 5.5

  	
  Capitalization

  	
  30

  
	
  Section 5.6

  	
  Litigation

  	
  31

  
	
  Section 5.7

  	
  Finders’ Fees

  	
  31

  
	
  Section 5.8

  	
  Crompton’s
  Knowledge

  	
  31

  
	
  Section 5.9

  	
  Disclaimer of
  Other Representations and Warranties

  	
  31

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  VI REPRESENTATIONS AND WARRANTIES OF THE BCCM SHAREHOLDERS

  	
  31

  
	
   

  	
   

  	
   

  
	
  Section 6.1

  	
  Existence and
  Power

  	
  31

  
	
  Section 6.2

  	
  Authorization;
  Enforceability

  	
  32

  
	
  Section 6.3

  	
  Governmental
  Authorization

  	
  32

  
	
  Section 6.4

  	
  Non-Contravention;
  Consents

  	
  33

  
	
  Section 6.5

  	
  Capitalization

  	
  33

  
	
  Section 6.6

  	
  Subsidiaries

  	
  34

  
	
  Section 6.7

  	
  No Undisclosed
  Liabilities

  	
  34

  
	
  Section 6.8

  	
  Tax Matters

  	
  34

  
	
  Section 6.9

  	
  Litigation

  	
  35

  
	
  Section 6.10

  	
  Finders’ Fees

  	
  35

  
	
  Section 6.11

  	
  Disclaimer of
  Other Representations and Warranties

  	
  35

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  VII REPRESENTATIONS AND WARRANTIES OF THE MANAGEMENT MEMBERS

  	
  36

  
	
   

  	
   

  	
   

  
	
  Section 7.1

  	
  Authorization;
  Enforceability

  	
  36

  
	
  Section 7.2

  	
  Governmental
  Authorization

  	
  36

  
	
  Section 7.3

  	
  Non-Contravention;
  Consents

  	
  36

  
	
  Section 7.4

  	
  Capitalization

  	
  36

  
	
  Section 7.5

  	
  Litigation

  	
  37

  
	
  Section 7.6

  	
  Finders’ Fees

  	
  37

  
	
  Section 7.7

  	
  Disclaimer of
  Other Representations and Warranties

  	
  37

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  VIII REPRESENTATIONS AND WARRANTIES OF PURCHASER

  	
  37

  
	
   

  	
   

  	
   

  
	
  Section 8.1

  	
  Corporate
  Existence and Power

  	
  37

  
	
  Section 8.2

  	
  Corporate
  Authorization; Enforceability

  	
  37

  



 



 ii
 






 



 


	
  Section 8.3

  	
  Non-Contravention

  	
  38

  
	
  Section 8.4

  	
  Governmental
  Authorization

  	
  38

  
	
  Section 8.5

  	
  Finders’ Fees

  	
  38

  
	
  Section 8.6

  	
  Litigation

  	
  38

  
	
  Section 8.7

  	
  Investigation by
  Purchaser; Exclusivity of Representations

  	
  38

  
	
  Section 8.8

  	
  Hart-Scott-Rodino

  	
  39

  
	
  Section 8.9

  	
  Purchaser’s
  Knowledge

  	
  39

  
	
  Section 8.10

  	
  Payments Under
  the Credit Agreement.

  	
  39

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  IX CERTAIN COVENANTS

  	
  39

  
	
   

  	
   

  	
   

  
	
  Section 9.1

  	
  Access

  	
  39

  
	
  Section 9.2

  	
  Employees and
  Employment

  	
  39

  
	
  Section 9.3

  	
  Commercially
  Reasonable Efforts

  	
  40

  
	
  Section 9.4

  	
  Transfer Laws.

  	
  40

  
	
  Section 9.5

  	
  Further
  Assurances

  	
  40

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  X TAX MATTERS

  	
  41

  
	
   

  	
   

  	
   

  
	
  Section 10.1

  	
  Tax Allocation

  	
  41

  
	
  Section 10.2

  	
  Tax Returns

  	
  41

  
	
  Section 10.3

  	
  Refunds

  	
  42

  
	
  Section 10.4

  	
  Miscellaneous

  	
  42

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  XI CLOSING DELIVERABLES

  	
  42

  
	
   

  	
   

  	
   

  
	
  Section 11.1

  	
  Seller
  Deliverables

  	
  42

  
	
  Section 11.2

  	
  Purchaser
  Deliverables

  	
  43

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  XII LIABILITIES AND INDEMNIFICATION

  	
  43

  
	
   

  	
   

  	
   

  
	
  Section 12.1

  	
  Survival Periods

  	
  43

  
	
  Section 12.2

  	
  Sellers’
  Agreement to Indemnify

  	
  44

  
	
  Section 12.3

  	
  Purchaser’s
  Agreement to Indemnify

  	
  46

  
	
  Section 12.4

  	
  Indemnification
  Procedure

  	
  48

  
	
  Section 12.5

  	
  Reduction of
  Sellers’ Holdbacks

  	
  49

  
	
  Section 12.6

  	
  Settlement of
  Claims

  	
  50

  
	
  Section 12.7

  	
  Insurance

  	
  51

  
	
  Section 12.8

  	
  No Duplication

  	
  51

  
	
  Section 12.9

  	
  Contribution
  Agreement Indemnities

  	
  51

  
	
  Section 12.10

  	
  Remedies

  	
  51

  
	
  Section 12.11

  	
  No Special
  Damages

  	
  52

  
	
  Section 12.12

  	
  Materiality

  	
  52

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  XIII MISCELLANEOUS

  	
  52

  
	
   

  	
   

  	
   

  
	
  Section 13.1

  	
  Notices

  	
  52

  
	
  Section 13.2

  	
  Amendments and
  Waivers

  	
  54

  
	
  Section 13.3

  	
  Expenses

  	
  54

  
	
  Section 13.4

  	
  Successors and
  Assigns

  	
  54

  
	
  Section 13.5

  	
  No Third-Party
  Beneficiaries

  	
  54

  
	
  Section 13.6

  	
  Governing Law

  	
  54

  



 



 iii
 






 



 


	
  Section 13.7

  	
  Public
  Announcements

  	
  54

  
	
  Section 13.8

  	
  Jurisdiction

  	
  55

  
	
  Section 13.9

  	
  Counterparts

  	
  55

  
	
  Section 13.10

  	
  Table of
  Contents; Headings

  	
  55

  
	
  Section 13.11

  	
  Entire Agreement

  	
  55

  
	
  Section 13.12

  	
  Termination of
  Certain Agreements

  	
  55

  
	
  Section 13.13

  	
  Severability;
  Injunctive Relief

  	
  55

  
	
  Section 13.14

  	
  Waiver of
  Conflict

  	
  56

  



 



 iv














 


MERGER AND UNIT PURCHASE AGREEMENT


MERGER AND UNIT
PURCHASE AGREEMENT, dated as of October 30, 2006, by and among Davis-Standard,
LLC, a limited liability corporation organized under the laws of Delaware (“DS
LLC”), BCCM Holdings, Inc., a corporation organized under the laws of
Delaware (“BCCM”), Crompton Holding Corporation, a corporation organized
under the laws of Delaware (“Crompton”), the shareholders of BCCM listed
on Exhibit A (the “BCCM Shareholders”), the persons listed
on Exhibit B, each of whom is a management member in DS LLC (the “Management
Members”), Robert Armstrong as agent for the Carryholders hereunder (the “Carryholders’
Agent”) and together with Crompton, the BCCM Shareholders and the
Management Members, the “Sellers”) and D-S Acquisition Co., a
corporation organized under the laws of Delaware (the “Purchaser”).


R E C I T A L S


WHEREAS, the BCCM
Shareholders own, as a group, all of the authorized, issued and outstanding
shares of every class of Capital Stock of BCCM (the “BCCM Shares”);


WHEREAS, BCCM owns
an Interest in DS LLC (the “BCCM Interest”);


WHEREAS, Crompton
owns an Interest in DS LLC (the “Crompton Interest”);


WHEREAS, the
Management Members own an Interest in DS LLC (the “Management Members’
Interest”);


WHEREAS, the
Carryholders have a contingent right to receive certain amounts from the sale
of DS LLC pursuant to the terms of the DS Operating Agreement (the “Carried
Interest”);


WHEREAS, the BCCM
Interest, the Crompton Interest, the Management Members’ Interest and the
Carried Interest constitute all of the Interests in DS LLC;


WHEREAS, the
respective governing bodies of Purchaser and BCCM have approved the merger of
the Purchaser with and into BCCM (the “Merger”), pursuant to which BCCM
will be the surviving company and the BCCM Shareholders will be entitled to
receive the consideration provided for in this Agreement, all upon the terms
and subject to the conditions set forth herein; and


WHEREAS, Crompton,
the Management Members and the Carryholders (together, the “DS Sellers”)
desire to sell to the Purchaser and the Purchaser desires to purchase from the
DS Sellers, their respective interests in DS LLC, upon the terms and subject to
the conditions set forth herein (the “Unit Purchase”).


NOW, THEREFORE, in
consideration of the premises and the mutual agreements and covenants
hereinafter set forth, the Purchaser, the Sellers, DS LLC and BCCM hereby agree
as follows:









 



ARTICLE I

DEFINITIONS


Section 1.1     Definitions.  The capitalized terms used in this Agreement
shall have the meanings set forth below:


“Accountants” as used in this Agreement, means
a mutually acceptable independent accounting firm.


“Accounts Receivable” means all accounts and
notes receivable relating to the Business.


“Adjustment Amount” has the meaning set forth
in Section 3.6(a).


“Adjustment
EBITDA” means EBITDA of the Company for the fiscal year ended the Balance
Sheet Date, based on the Audited Balance Sheet.


“Adjustment
Percentage” means with respect to any Seller, the percentage set forth
opposite such Seller’s name in column C of Schedule 3.1.


“Affiliate”
means, with respect to any Person, any other Person directly or indirectly
controlling, controlled by or under common control with the first Person and,
if such first Person is an individual, any member of the immediate family
(including parents, spouse and children) of such individual and any trust whose
principal beneficiary is such individual or one or more members of such
individual’s immediate family, and any Person who is controlled by any such
member or trust.  For the purposes of
this Agreement, “control,” when used with respect to any Person, means
the possession, directly or indirectly, of the power to (a) vote 10% or more of
the securities having ordinary voting power for the election of directors (or
comparable positions) of such Person or (b) direct or cause the direction of
the management and policies of such Person, whether through the ownership of
voting securities, by contract or otherwise, and the terms “controlling”
and “controlled” have meanings correlative to the foregoing.


“Agency
Agreement” shall mean any of the BCCM Agency Agreement, the Management
Members’ Agency Agreement or the Carryholders’ Agency Agreement.


“Agreement”
means this Merger and Unit Purchase Agreement, as the same may be amended from
time to time in accordance with the terms hereof.


“Ancillary
Agreements” means the Certificate of Merger, the Non-Competition
Agreements, each Agency Agreement and all other instruments, certificates and
other agreements entered into by one or more of the Sellers, BCCM, the Company
or the Purchaser in connection with the consummation of the transactions
contemplated by this Agreement.


“Anniversary
EBITDA” means EBITDA of the Company for the period ending on the twelve
(12) month anniversary of the Closing Date or any twelve (12) month period
ending on any calendar month thereafter, excluding Transaction Expenses and
management fees.


“Applicable
Reserves” means the aggregate reserves for Accounts Receivable.



 2
 






 



“Audited
Balance Sheet” means the audited balance sheet of the Company as of the
Balance Sheet Date, prepared by the Purchaser in accordance with Section
3.6(b).


“Balance Sheet
Date” means September 30, 2006.


“BCCM” has
the meaning set forth in the recitals to this Agreement.


“BCCM Agency
Agreement” means the Agency Agreement among the BCCM Agent and the BCCM
Shareholders, in substantially the form attached hereto as Exhibit C-1.


“BCCM Agent”
means the agent appointed by the BCCM Shareholders pursuant to the BCCM Agency
Agreement.


“BCCM Holdback”
has the meaning set forth in Section 2.7.


“BCCM Interest”
has the meaning set forth in the recitals to this Agreement.


“BCCM
Representations and Warranties” means the representations and warranties
contained in Article VI other than the BCCM Selected Representations and
Warranties.


“BCCM
Shareholder Representations” means the representations and warranties
contained in Section 6.1(b), Section 6.4(b), Section 6.5(b)
and Section 6.9.


“BCCM
Shareholders’ Agreement” means the Stockholders and Registration Rights Agreement
of BCCM, dated March 31, 2005, among the BCCM Shareholders and BCCM.


“BCCM Shares”
has the meaning set forth in the recitals to this Agreement.


“BCCM Title
Representation” means the representations and warranties contained in Section
6.5(b).


“Benefit Plan”
means any employee benefit plan within the meaning of Section 3(3) of ERISA,
and any other plan, program, agreement, arrangement, policy, contract,
commitment or scheme, written or oral, statutory or contractual, that provides
for compensation or benefits, including any deferred compensation, severance,
supplemental income, executive compensation, bonus, stock option or incentive
plan, any welfare plan, cafeteria plan or any holiday, personnel or vacation
plan or practice.


“Business”
means the business of the Company as presently conducted, including, but not
limited to, the business of the design, sale, installation, service and support
of extrusions systems and converting machinery.


“Business Day”
means a day that is not a Saturday, Sunday or a day on which commercial banking
institutions located in New York City, New York are authorized or required to
close.



 3
 






 



“Capitalized
Lease Obligations” means the obligations of such Person that are required
to be classified and accounted for as capital lease obligations under GAAP,
together with all obligations to make termination payments under such
capitalized lease obligations.


“Capital Stock”
means (a) with respect to any Person that is a corporation, any and all shares,
interests, participation or other equivalents (however designated and whether
or not voting) of corporate stock, including the common stock of such Person
but excluding stock held as treasury stock, and (b) with respect to any Person
that is not a corporation, any and all partnership or other equity interests of
such Person.


“Carried
Interest” has the meaning set forth in the recitals to this Agreement.


“Carryholders”
means the individuals listed in Schedule 1.1 hereto.


“Carryholders’
Agency Agreement” means the Agency Agreement among the Carryholders’ Agent,
the Carryholders and the Purchaser, in substantially the form attached hereto
as Exhibit C-2.


“Carryholders’
Agent” has the meaning set forth in the recitals to this Agreement.


“Carryholders’
Holdback” has the meaning set forth in Section 3.3.


“CERCLA”
means the Comprehensive Environmental Response, Compensation, and Liability Act
of 1980, 42 U.S.C. §§ 9601, et  seq., as amended.


“Certificate of
Merger” has the meaning set forth in Section 2.2.


“Closing”
has the meaning set forth in Section 3.5.


“Closing Date”
has the meaning set forth in Section 3.5.


“Closing
Balance Sheet” means the audited balance sheet of the Company as of the
Closing Date, prepared by the Purchaser in accordance with Section 3.8(a).


“Closing Free
Cash Flow Payment” has the meaning set forth in Section 3.7.


“CMP” has
the meaning set forth in Section 13.14.


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


“Company”
means, collectively, DS LLC and its Subsidiaries.


“Company
Knowledge” means,
for the purposes of this Agreement, the
actual knowledge of Messrs. Charles Buckley, Robert Armstrong, Steven
Rachlis, Mark Panozzo, James Murphy, Ernest Plasse, Hassan Helmy and Joseph
Genovese.


“Company
Representation and Warranty” means the representations and warranties
contained in Article IV.



 4
 






 



“Consideration”
means the Merger Consideration and the Purchase Price.


“Constituent of
Concern” means any substance defined as a hazardous substance, hazardous
waste, hazardous material, pollutant or contaminant by any Environmental Law,
any petroleum hydrocarbon and any degradation product of a petroleum
hydrocarbon, asbestos, PCB or similar substance, the generation, recycling,
use, treatment, storage, transportation, Release, disposal or exposure of or to
which is subject to regulation under any Environmental Law.


“Contracts”
has the meaning set forth in Section 4.11(a).


“Contribution
Agreement” means the Contribution Agreement among Crompton, Davis Standard
Corporation, BCCM, BCCM LLC and DS LLC, dated as of March 31, 2005.


“Credit
Agreement” means the Credit and Security Agreement, dated the date of this
Agreement, among the Company, as borrower, KeyBank National Association, as
lead arranger, sole book runner and administrative agent and the lenders named
therein.


“Crompton”
has the meaning set forth in the recitals to this Agreement.


“Crompton
Holdback” has the meaning set forth in Section 3.3.


“Crompton
Interest” has the meaning set forth in the recitals to this Agreement.


“Crompton
Knowledge” means, for
the purposes of this Agreement, the
actual knowledge of Gregory McDaniel and Arthur Wienslaw.


“Crompton
Representations and Warranties” means the representations and warranties
contained in Article V.


“Crompton Title
Representation” means the representations and warranties contained in
Section 5.5(a).


“Damages”
means Purchaser Damages and Sellers’ Damages.


“DGCL”
means the Delaware General Corporations Law.


“DS LLC”
has the meaning set forth in the recitals to this Agreement.


“DS Operating
Agreement” means the Amended and Restated Limited Liability Agreement of DS
LLC, dated April 29, 2005, as amended from time to time prior to the Closing
Date.


“DS Sellers”
has the meaning set forth in the recitals to this Agreement.


“DS Units”
has the meaning set forth in Section 4.5.


“EBITDA”
means, with regard to the Company for any twelve month period, the net income
of the Company for that period plus, to the
extent deducted from revenues in determining net income, (i) interest
expense, (ii) expense for income or similar taxes paid or accrued,



 5
 






 



(iii) 
depreciation, (iv) amortization and (v) extraordinary non-recurring
losses, minus, to the extent included in net
income, extraordinary non-recurring gains, all in accordance with GAAP.


“Effective Time”
has the meaning set forth in Section 2.2.


“Election
Period” has the meaning set forth in Section 12.4.


“Environmental
Claims” means administrative, regulatory or judicial actions, suits,
demands, demand letters, claims, liens, citations, summonses, notices of
non-compliance or violation, requests for information, investigations or
proceedings relating in any way to the Release of Constituents of Concern or
any Environmental Law, including (a) Environmental Claims by Governmental
Authorities for enforcement, cleanup, removal, response, remedial or other
actions or damages pursuant to any applicable Environmental Law and (b)
Environmental Claims by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief resulting
from a Release of Constituents of Concern on at or underlying the Real
Property.


“Environmental
Condition” means a condition with respect to the environment which has
resulted or could reasonably be expected to result in a loss, liability, cost
or expense to the Company.


“Environmental
Law” means any Law, administrative order, consent decree or judgment, or
common law relating to the environment, human health and safety, including
CERCLA, and any state and local counterparts or equivalents.


“Environmental Liabilities and Costs” shall
mean any Sellers’ Damages arising from or relating to: (a) any Claim pursuant
to Environmental Law for personal injury, property damage, damage to natural
resources or the Environment, or threatened or actual Release (whether based on
negligent acts or omissions, statutory liability, or strict liability without
fault or otherwise); (b) any investigation, study, assessment, testing,
monitoring, containment, removal, remediation, response, cleanup or abatement of
any threatened or actual Release, whether on-site or off-site, in connection
with the Property or the activities or operations conducted thereon; and (c)
the failure at any time to comply with all applicable Environmental Laws,
including without limitation: (i) any fines and penalties assessed, levied or
asserted by a Governmental Authority; and (ii) any Sellers’ Damages necessary
to enable compliance with all applicable Environmental Laws currently in effect
and requiring compliance as of the Closing.


“Environmental
Permits” means all Permits, licenses, authorizations, certificates and
approvals of Governmental Authorities relating to or required by Environmental
Laws.


“ERISA”
means the Employee Retirement Income Security Act of 1974, as amended, and any successor
thereto.


“ERISA
Affiliate” means any Person that, together with the Company, would be
considered a single employer within the meaning of Section 4001 of ERISA or
Section 414 of the Code.



 6
 






 



“Exchange Act”
means the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.


“Financial
Statements” means the audited balance sheet of the Company as of September
30, 2005 and the unaudited balance sheet of the Company as of September 30,
2006, together with the related statements of income and cash flow for the
periods then ended, all of which are attached hereto as Schedule 4.7.


“FTC” has
the meaning set forth in Section 8.8.


“GAAP”
means U.S. generally accepted accounting principles, as consistently applied by
the Company.


“Governmental
Authority” means any domestic or foreign governmental or regulatory agency,
authority, bureau, commission, department, official or similar body or
instrumentality thereof, or any governmental court, arbitral tribunal or other
body administering alternative dispute resolution.


“Holdback
Acceleration Event” has the meaning set forth in Section 12.5(b).


“Holdback
Percentage” means, with respect to any Seller, the percentage set forth
opposite such Seller’s name in column B of Schedule 3.1 hereof, calculated as
the quotient of (i) the original amount of such Seller’s Holdback and (ii) $10
million.


“HRCo” has
the meaning set forth in Section 13.14.


“HSR Act”
means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.


“HSR Letter”
has the meaning set forth in Section 8.8.


“Indebtedness”
means with respect to any Person, at any date, without duplication, (a) all
obligations of such Person for borrowed money, including all principal,
interest, premiums, fees, expenses, overdrafts and penalties with respect
thereto, (b) all obligations of such Person evidenced by bonds, debentures,
notes or other similar instruments, (c) all obligations of such Person to pay
the deferred purchase price of the property or services, except trade payables
incurred in the Ordinary Course of Business, (d) all guaranties of any nature
with respect to the indebtedness of any Person and obligations of such Person
to reimburse any bank or other Person in respect of amounts paid under a letter
of credit or similar instrument, (e) all Capitalized Lease Obligations, (f) all
other obligations of a Person which would be required to be shown as
indebtedness on a balance sheet of such Person prepared in accordance with
GAAP, (g) every obligation of a Person under interest rates swaps, caps,
collars and similar arrangements, and (h) all indebtedness of any other Person
of the type referred to in Sections (a) to (g) above directly or indirectly
guaranteed by such Person or secured by any assets of such Person, whether or
not such Indebtedness has been assumed by such Person.


“Indemnity
Notice” has the meaning set forth in Section 12.4(b).



 7
 






 



“Indemnified
Party” has the meaning set forth in Section 12.4(a)(i).


“Indemnifying
Party” has the meaning set forth in Section 12.4(a)(i).


“Intellectual
Property” means any trademark, service mark, trade name, product
designation, logo, slogan, invention, patent, trade secret, copyright,
know-how, proprietary design or process, computer software and database,
Internet address or domain name (including any registrations or applications
for registration or renewal of any of the foregoing), research in progress, or
any other similar type of proprietary intellectual property right.


“Intellectual
Property Right” means any Intellectual Property which is used or held for
use or otherwise necessary in connection with the conduct of the Business.


“Interest”
means the DS Units owned by a Person, together with such Person’s contractual
rights pursuant to the DS Operating Agreement.


“Inventory”
means raw materials, work in progress and finished goods inventory.


“IRS” means
the Internal Revenue Service.


“Law” means
any applicable federal, foreign, state or local statute, law, including common
law, rule, regulation, ordinance, code, permit or license.


“Lien”
means, with respect to the Company’s ownership or leasehold interest in any
Property or asset, any mortgage, lien, pledge, charge or security
interest.  For the purposes of this
Agreement, a Person will be deemed to own, subject to a Lien, any property or
asset which it has acquired or holds subject to the interest of a vendor or
lessor under any conditional sale agreement, Capitalized Lease Obligations or
other title retention agreement relating to such property or asset.


“LR” has
the meaning set forth in Section 13.14(c).


“Management
Members” has the meaning set forth in the recitals to this Agreement.


“Management
Members’ Agency Agreement” means the Agency Agreement among the Management
Members’ Agent and the Management Members, in substantially the form attached
hereto as Exhibit C-3.


“Management
Members’ Interest” has the meaning set forth in the recitals to this
Agreement.


“Management
Members’ Agent” means the agent appointed by the Management Members
pursuant to the Management Members’ Agency Agreement.


“Management
Members’ Holdback” has the meaning set forth in Section 3.3.


“Management
Members’ Representations and Warranties” means the representations and
warranties contained in Article VII.



 8
 






 



“Management
Members’ Title Representation” means the representations and warranties
contained in Section 7.4(a).


“Material
Adverse Effect” means a material adverse effect on the business, assets,
liabilities, condition (financial or otherwise), results of operations of the
Company or the Business, taken as a whole, provided that the effects of
changes that are generally applicable to the industries or economies of the
countries in which the Business operates or does business shall be excluded
from such determination.


“Merger”
has the meaning set forth in the recitals to this Agreement.


“Merger
Consideration” has the meaning set forth in Section 2.6.


“Non-Competition
Agreement” means the non-competition agreement between Purchaser and
Crompton in substantially the form of Exhibit D hereto.


“Order”
means any judgment, injunction, judicial or administrative order or decree.


“Ordinary
Course of Business” means, with respect to any Person, the ordinary course
of business of such Person, substantially consistent with such Person’s past
practice and custom, including, with respect to any category, quantity or
dollar amount, term and frequency of payment, delivery, accrual, expense or any
other accounting entry.


“Permit”
has the meaning set forth in Section 4.14(b).


“Permitted Lien”
means (a) mechanics’ Liens, workmen’s Liens, carriers’ Liens, repairmen’s
Liens, material men’s Liens, landlord’s Liens or other like Liens arising or
incurred in the Ordinary Course of Business in respect of obligations that are
not overdue, (b) Liens for Taxes, assessments and other similar governmental
charges that are not overdue or are being contested in good faith and for which
appropriate reserves have been established, (c) Liens incurred or deposits made
to secure the performance of bids, contracts, statutory obligations, surety and
appeal bonds incurred in connection with the Business and in the Ordinary
Course of Business by the Company, (d) Liens that arise under or violations of
or non-compliance with any zoning, land use or other similar imperfections of
title that arise in the Ordinary Course of Business that, in the aggregate, do
not materially affect the value or use of the property subject thereto, or (e)
statutory liens held by landlords under leases and liens expressly created in
any lease against fixtures, chattels or other property of the Company that are
placed in, or become a part of, the leased real property.


“Person”
means an individual, corporation, partnership, limited liability company, joint
venture, association, trust or other entity or organization or Governmental Authority.


“Post-Closing
Tax Period” means any Tax period (or portion thereof) ending after the
Closing Date.


“Pre-Closing
Tax Period” means any Tax period (or portion thereof) that ends on or
before the Closing Date.



 9
 






 



“Product
Liability Claims” shall mean any product liability and/or product
warranties Claims or Losses (as each is defined in the Contribution Agreement)
arising out of or relating to goods manufactured, sold and/or shipped by the
Davis Standard Business (as defined in the Contribution Agreement), or
the services provided in connection thereto, including without
limitation the services provided and goods manufactured, sold
and/or shipped during the period of time the business of Davis-Standard
was operated as a division of Crompton Corporation (as defined in the
Contribution Agreement), together with any equipment and related
service product liability and/or product warranty liabilities assumed by
Davis-Standard and/or Crompton Corporation as a result of an
acquisition of a business or manufacturing facility that is now
operated by the Company.


“Property”
means any Real Property and improvements at any time owned, leased, used,
operated or occupied (whether for storage, disposal or otherwise) by the
Company.


“Purchaser”
has the meaning set forth in the introductory paragraph of this Agreement.


“Purchaser Damages” has the meaning set forth
in Section 12.2(a).


“Purchaser Indemnitees” has the meaning set
forth in Section 12.2(a).


“Purchaser
Knowledge” means,
for the purposes of this Agreement, the
actual knowledge of Messrs. Scott I. Oakford and Phillip J. Cagnassola.


“Real Property”
has the meaning set forth in Section 4.15(b).


“Reference
Balance Sheet” means the balance sheet of the Company as of the Balance
Sheet Date attached hereto as Section 4.7.


“Release”
means any release, spill, emission, discharge, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching or migration into the
environment (including ambient air, surface water, groundwater and surface or
subsurface strata) or into or out of any Property, including the movement of
Constituents of Concern through or in the air, soil, surface water, groundwater
or property.


“Restrictive
Covenants” has the meaning set forth in Section 12.10(a).


“Sellers”
has the meaning set forth in the recitals to this Agreement.


“Sellers’
Indemnification Cap” has the meaning set forth in Section 12.2(b)(ii).


“Sellers’
Indemnitees” has the meaning set forth in Section 12.3.


“Sellers’
Damages” has the meaning set forth in Section 12.3.


“Sellers’
Holdbacks” means the Crompton Holdback, the BCCM Holdback, the Management
Members’ Holdback and the Carryholders’ Holdback.



 10
 






 



“Subsidiary”
means, with respect to any Person, (a) any corporation 50% or more of whose
stock of any class or classes having by the terms thereof ordinary voting power
to elect a majority of the directors of such corporation (irrespective of
whether or not at the time stock of any class or classes of such corporation
have or might have voting power by reason of the happening of any contingency)
is at the time owned by such Person, directly or indirectly through
Subsidiaries, and (b) any partnership, limited liability company, association,
joint venture, trust or other entity in which such Person, directly or
indirectly through Subsidiaries, is either a general partner, has a 50% or
greater equity interest at the time or otherwise owns a controlling interest.


“Survival
Period” has the meaning set forth in Section 12.1.


“Surviving
Company” has the meaning set forth in Section 2.1.


“Tax” or “Taxes”
shall mean all federal, state, local or foreign income, gross receipts,
windfall profits, severance, property, production, sales, use, license, excise,
franchise, employment, withholding, transfer, payroll, goods and services, ad
valorem, value-added or minimum tax, or any other tax, custom, duty,
governmental fee, or other like assessment or charge of any kind whatsoever,
together with any interest or any penalty, addition to tax or additional amount
imposed by any Governmental Authority, whether disputed or not and including
any obligations to indemnify or otherwise assume or succeed to the liability of
any other Person for any of the foregoing.


“Tax Return”
shall mean any return, report or similar statement required to be filed with
respect to any Taxes (including any attached schedules), including, without
limitation, any information return, claim or refund, amended return and
declaration of estimated Tax.


“Third-Party
Claim” has the meaning set forth in Section 12.4(a)(i).


“Third-Party
Claim Notice” has the meaning set forth in Section 12.4(a)(i).


“Title
Representations” means the BCCM Title Representations, the Crompton Title
Representations and the Management Members Title Representations.


“Transaction
Expenses” means all fees and expenses of any broker, finder, financial
advisor, legal advisor or similar Person paid by the Company in connection with
the transactions contemplated in this Agreement.


“Transfer Laws” has the meaning set
forth in Section 9.4.


“Utilities”
has the meaning set forth in Section 4.15(b).


“Unit Purchase”
has the meaning set forth in the recitals to this Agreement.


“Workers
Compensation Claims” shall mean liability under United States workers’
compensation laws or comparable foreign laws for Claims or Losses (as each is defined
in the Contribution Agreement) for, by or related to, employees of the
Davis-Standard Business (as defined in the Contribution Agreement),
including when the business of Davis-Standard was



 11
 






 



operated
as a division of Crompton Corporation (as defined in the Contribution
Agreement), together with any liability under United States workers’
compensation laws or comparable foreign laws assumed by
Davis-Standard and/or Crompton Corporation as a result of an
acquisition of a business or manufacturing facility that is now operated
by the Company.


Section 1.2     Construction.  (a) 
Whenever the context requires, the meanings of the terms set forth in Article
1.1 shall be equally applicable to the singular and plural forms thereof,
and the gender of all words used in this Agreement shall include the masculine,
feminine and neuter.  All references to
Articles refer to articles of this Agreement, and all references to Schedules
and Exhibits are to schedules and exhibits attached to this Agreement, each of
which is made a part of this Agreement for all purposes.


(b)   No provision of this Agreement
will be interpreted in favor of, or against, any of the parties hereto by
reason of the extent to which any such party or its counsel participated in the
drafting thereof or by reason of the extent to which any such provision is
inconsistent with any prior draft hereof or thereof.


ARTICLE II

MERGER


Section 2.1     The Merger.  Upon the terms and subject to the conditions
of this Agreement, and in accordance with the DGCL, at the Effective Time the
Purchaser shall be merged with and into BCCM. 
As a result of the Merger, the separate corporate existence of the
Purchaser shall cease, and BCCM shall continue as the surviving company of the
Merger (BCCM from and after the Effective Time hereinafter referred to as the “Surviving
Company”).


Section 2.2     Effective Time.  Upon the terms and subject to the conditions
of this Agreement, on the Closing Date, BCCM and the Purchaser shall cause the
Merger to be consummated by filing the certificate of merger (the “Certificate
of Merger”) substantially in the form attached hereto as Exhibit E
with the Secretary of State of the State of Delaware, in such form as is
required by, and executed in accordance with the applicable provisions of, the
DGCL (the date and time of such filing being hereinafter referred to as the “Effective
Time”). Notwithstanding the foregoing, the parties hereto shall be under no
obligation to effect the Merger hereunder unless Crompton, the Management
Members, and the Carryholders, as a group, sell to Purchaser all of their
respective Interests pursuant to Article III.


Section 2.3     Effect of the Merger.  At the Effective Time, the effect of the
Merger shall be as provided in this Agreement and the applicable provisions of
the DGCL.  Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time all the
property, rights, privileges, powers and franchises of the Purchaser and BCCM
shall vest in the Surviving Company, and all debts, liabilities, obligations
and duties of the Purchaser and BCCM shall become the debts, liabilities,
obligations and duties of the Surviving Company.



 12
 






 



Section 2.4     Certificate of
Incorporation; Bylaws.


(a)   At the Effective Time, the
certificate of incorporation of the Surviving Company shall be amended to
conform to the certificate of incorporation of the Purchaser, as in effect
immediately prior to the Effective Time, and to change the name of the
Surviving Company to “Davis-Standard Corporation”, until such time as it may be
thereafter further amended in accordance with the applicable provisions of the
DGCL and such certificate of incorporation.


(b)   At the Effective Time, the
bylaws of the Surviving Company shall be amended to conform to the bylaws of
the Purchaser, as in effect immediately prior to the Effective Time, until such
time as it may be thereafter amended in accordance with the applicable
provisions of the DGCL, the certificate of incorporation and such bylaws.


Section 2.5     Directors and Officers.  The directors, officers and managers of the
Purchaser immediately prior to the Effective Time shall be the initial
directors, officers and managers of the Surviving Company, each to hold office
in accordance with the certificate of incorporation and bylaws of the Surviving
Company.


Section 2.6     Merger Consideration.  The aggregate consideration payable pursuant
to the Merger to each of the BCCM Shareholders shall be equal to the amounts
set forth opposite their names on Schedule 6.5 (the “Merger
Consideration”), payable at Closing by wire transfer of immediately
available funds pursuant to written wire transfer instructions delivered by the
BCCM Shareholders to Purchaser at least two (2) business days prior to the
Closing.


Section 2.7     BCCM Holdback.    Subject to the rights contained in Article
XII, including Section 12.5 and Section 12.6 therein, the
Surviving Company shall pay to the BCCM Shareholders the amounts set forth
opposite their names on Schedule 3.1, plus interest accrued thereon at
the rate of ten percent (10%) per annum (in the aggregate, the “BCCM
Holdback”) as follows: (a) one half of such total amount, after such amount
is adjusted pursuant to Section 12.5 and Section 12.6, on the
twelve (12) month anniversary of the Closing Date, and (b) the remainder of
such total amount, after such amount is adjusted pursuant to Section 12.5
and Section 12.6, on the eighteen (18) month anniversary of the Closing
Date; provided, that such payment schedule may be adjusted upon the occurrence
of a Holdback Acceleration Event pursuant to Section 12.5(b); provided
further that no such amount shall be payable if, and to the extent, that any
claim for Purchaser Damages under Article XII remains in dispute and
unsettled with respect to such BCCM Shareholder; and provided further that any amounts
in dispute and unsettled shall be deposited into an interest bearing escrow
account at the time such amount would otherwise be payable to the BCCM
Shareholders hereunder and released upon settlement or final disposition of
such claim.  If the Company fails to
deposit any such amounts into such escrow account at such time, the Company
will be deemed to have waived its right to indemnification with respect to such
disputed and unsettled matters.


Section 2.8     Conversion of the BCCM
Shares.


(a)   Conversion of Shares.
All of the BCCM Shares outstanding as of the Effective Time shall, by virtue of
the Merger and without any action on the part of the BCCM



 13
 






 



Shareholders or the Purchaser,
automatically be converted into the right to receive Merger Consideration.


(b)   Treasury Shares.  Each share of capital stock held in BCCM’s
treasury as of the Effective Time, if any, shall, by virtue of the Merger, be
canceled without payment of any consideration therefor.


(c)   Purchaser Shares. Each
share of capital stock of Purchaser issued and outstanding immediately prior to
the Effective Time will remain issued and outstanding and shall constitute one
(1) share of capital stock of the Surviving Company.


Section 2.9     Exchange of Certificates.
At the Closing, certificates representing the BCCM Shares shall be canceled in
exchange for the Merger Consideration.


ARTICLE III

UNIT PURCHASE AND CLOSING


Section 3.1     Unit Purchase.  (a) 
Upon the terms and subject to the conditions of this Agreement, at the
Closing, (i) Crompton agrees to sell to Purchaser, and the Purchaser shall
purchase from Crompton, the Crompton Interest, free and clear of all Liens,
(ii) each of the Management Members agrees to sell to Purchaser, and the
Purchaser shall purchase from the Management Members, the Management Members’
Interest, free and clear of all Liens and (iii) each of the Carryholders agrees
to receive payment hereunder in full satisfaction of such Carryholder’s rights
to its Carried Interest, all in accordance with numbers and amounts set forth
on Schedule 4.5, with respect to the Crompton and Management Members, and Schedule
1.1 with respect to the Carryholders.


(b)   Purchaser shall not be required
to purchase the Crompton Interest, the Management Members’ Interest or the
Carried Interest, unless (i) the DS Sellers, as a group, sell and convey to
Purchaser all of the Crompton Interest, the Management Members’ Interest and
the Carried Interest, and (ii) the Merger has been effected pursuant to Article
II.


Section 3.2             Purchase Price.  (a)  In
consideration for the sale and conveyance by Crompton to Purchaser of the
Crompton Interest, the sale and conveyance by the Management Members of the
Management Members’ Interest and the full satisfaction of all Carryholders’
right to their respective Carried Interest, Purchaser shall, at the Closing,
subject to Section 3.1(b), (i) pay to Crompton the amount set forth
opposite its name on Schedule 4.5, (ii) pay to each of the
Management Members the amounts set forth opposite each of their names on Schedule
4.5 and (iii) pay to each of the Carryholders the amounts set forth
opposite each of their names on Schedule 1.1 pursuant to the terms of
the Carryholders’ Agency Agreement (the consideration described in the
foregoing items (i) through (iii), the “Purchase Price”).  All amounts payable at Closing shall be paid
in cash by wire transfer in immediately available funds to accounts designated
by DS Sellers at least two Business Days prior to Closing.


Section 3.3     Crompton, Management
Members’ and Carryholders’ Holdback.   
Subject to the rights contained in Article XII, including Section
12.5 and Section 12.6 therein, the Surviving Company shall pay (a)
to Crompton the amount set forth opposite its name on Schedule 3.1, plus
interest accrued thereon at the rate of ten percent (10%) per annum (the



 14
 






 



“Crompton Holdback”),
(b) to the Management Members the amounts set forth opposite their names on Schedule
3.1, plus interest accrued thereon at the rate of ten percent (10%) per
annum (in the aggregate, the “Management Members’ Holdback”), and (c) to
the Carryholders the amounts set forth opposite their names on Schedule 3.1,
plus interest accrued thereon at the rate of ten percent (10%) per annum,
pursuant to the terms of the Carryholders’ Agency Agreement (in the aggregate,
the “Carryholders’ Holdback”) as follows: (a) one half of each such
Sellers’ Holdback, after such amount is adjusted pursuant to Section 12.5
and Section 12.6, on the twelve (12) month anniversary of the Closing
Date, and (b) the remainder of each such Sellers’ Holdback, after such amount
is adjusted pursuant to Section 12.5 and Section 12.6, on the
eighteen (18) month anniversary of the Closing Date, provided that no such
amount shall be payable if, and to the extent, that any claim for Purchaser
Damages under Article XII remains in dispute and unsettled with respect
to such Seller; provided further that any amounts in dispute and unsettled
shall be deposited into an interest bearing escrow account at the time such
amount would otherwise be payable to a DS Seller hereunder and released upon
settlement or final disposition of such claim.  If the Company fails to deposit
any such amounts into such escrow account at such time, the Company will be
deemed to have waived its right to indemnification with respect to such
disputed and unsettled matters.


Section 3.4     Sellers’ Agents.  The BCCM Agent, the Management Members’ Agent
and the Carryholders’ Agent shall serve as the representative of, respectively,
the BCCM Shareholders, the Management Members and the Carryholders with respect
to all matters set forth in the respective Agency Agreement.  Crompton shall act on its own behalf with
respect to the Crompton Holdback. The duties and obligations of each Agent
shall be determined solely by the express provisions of the respective Agency
Agreement.


Section 3.5     The Closing.  The closing of the Merger and Unit Purchase
(the “Closing”) will take place at the offices of Curtis,
Mallet-Prevost, Colt & Mosle LLP, 101 Park Avenue, New York, NY 10178 at
10:00 a.m., Eastern Standard Time, on the date of this Agreement, unless the
parties agree in writing to change the Closing to another time, date or
place.  The date upon which the Closing
occurs is herein called the “Closing Date.”  Notwithstanding any other provision hereof,
the Closing will be deemed effective for accounting, tax and all other purposes
as of 12:00 a.m., Eastern Standard Time, on the Closing Date.


Section 3.6     Adjustment Amount


(a)   The “Adjustment Amount”
(which may only be a positive number) will be the amount equal to the product
of (i) two and (ii) the Adjustment EBITDA less $24,000,000; provided
that such amount may not exceed $5,000,000, and if such amount is a negative
number, the Adjustment Amount shall be zero.


(b)   As promptly as practicable, but
in any event within sixty (60) calendar days following the Closing Date,
Purchaser shall deliver to Sellers the Audited Balance Sheet, together with a
certificate of Purchaser containing a calculation of the Adjustment Amount on
the same basis and applying the same accounting principles, including GAAP,
that were used to prepare the Reference Balance Sheet.  If within thirty (30) days following delivery
of the Audited Balance Sheet, none of Crompton, the BCCM Agent or the Management
Members’ Agent have given Purchaser notice of an objection to the Audited
Balance Sheet (including a



 15














 


statement of the basis of such
objection), then the Audited Balance Sheet will be determinative in computing
the Adjustment Amount, based on the formula set forth in Section 3.6(a) hereof. If any of
Crompton, the BCCM Agent or the Management Members’ Agent gives such notice of
objection, Crompton, the BCCM Agent, the Management Members’ Agent and
Purchaser shall attempt a good faith resolution of the dispute.  If no such resolution is reached within a
period of twenty (20) days from such objection, then the issues in dispute will
be submitted to the Accountants for resolution. If issues in dispute are
submitted to the Accountants for resolution, (i) each party will furnish
to the Accountants such workpapers and other documents and information relating
to the disputed issues as the Accountants may request and are available to that
party or its subsidiaries (or its independent public accountants), and will be
afforded the opportunity to present to the Accountants any material relating to
the determination and to discuss the determination with the Accountants; (ii)
the determination by the Accountants, as set forth in a notice delivered to
both parties by the Accountants as soon as practicable following submission of
such dispute to the Accountants, will be binding and conclusive on the parties;
and (iii) Sellers on the one hand and Purchaser on the other hand will each
bear fifty percent (50%) of the fees of the Accountants for such determination.


(c)   Payment of any Adjustment Amount that is owed
by Purchaser to Sellers pursuant to this Section 3.6 shall be made by
Purchaser to Sellers, pro rata
based on their Adjustment Percentage as follows: (i) 50% of the Adjustment
Amount shall be paid to the Sellers on the twelve (12) month anniversary of the
Closing Date, and (ii) 50% of the Adjustment Amount shall be paid to the
Sellers on the eighteen (18) month anniversary of the Closing Date; provided
that if a Holdback Acceleration Event occurs, the full amount of the Adjustment
Amount shall be paid to the Sellers on the twelve (12) month anniversary of the
Closing Date (or at the completion of any calendar month thereafter during
which the Holdback Acceleration Event occurs as set forth in Section 12.5(b)
below).  The Adjustment Amount will
accrue interest at the rate of ten percent (10%) per annum from the Closing
Date.  The Adjustment Amount, including
any accrued interest, will not be made part of the Holdback Amount, nor will it
be subject to any indemnification or other claims by Purchaser or any Purchaser
Indemnitees, except as provided in Section 3.8(b).


Section 3.7     Free Cash Flow Payment.  As of the Closing Date, the Company shall
have distributed to its members on a pro rata
basis as set forth on Schedule 3.7, the aggregate Free Cash Flow (as
such term is defined in the DS Operating Agreement, which amount reflects all
prior distributions of Free Cash Flow, including but not limited to the BCCM
Special Distribution Amount (as defined in the DS Operating Agreement)), since
April 29, 2005, through and including the Balance Sheet Date (the “Closing
Free Cash Flow Payment”).


Section 3.8     Post-Closing Free Cash Flow Payment.


(a)   As promptly as practicable, but in any event
within sixty (60) calendar days following the Closing Date, Purchaser shall
deliver to Sellers the Closing Balance Sheet. 
If within thirty (30) days following delivery of the Closing Balance
Sheet, none of Crompton, the BCCM Agent or the Management Members’ Agent have
given Purchaser notice of an objection to the Closing Balance Sheet (including
a statement of the basis of such objection), then the Closing Balance Sheet
will be determinative in computing the Free Cash Flow Adjustment Amount, based
on the formula set forth in Section
3.8(b) hereof. If any of Crompton, the BCCM



 16
 






 



Agent or the Management Members’
Agent gives such notice of objection, Crompton, the BCCM Agent, the Management
Members’ Agent and Purchaser shall attempt a good faith resolution of the
dispute.  If no such resolution is
reached within a period of twenty (20) days from such objection, then the
issues in dispute will be submitted to the Accountants for resolution. If
issues in dispute are submitted to the Accountants for resolution,
(i) each party will furnish to the Accountants such workpapers and other
documents and information relating to the disputed issues as the Accountants
may request and are available to that party or its subsidiaries (or its
independent public accountants), and will be afforded the opportunity to
present to the Accountants any material relating to the determination and to
discuss the determination with the Accountants; (ii) the determination by the
Accountants, as set forth in a notice delivered to both parties by the
Accountants as soon as practicable following submission of such dispute to the
Accountants, will be binding and conclusive on the parties; and (iii) Sellers
on the one hand and Purchaser on the other hand will each bear fifty percent
(50%) of the fees of the Accountants for such determination.


(b)   As soon as practicable following the date on
which the Closing Balance Sheet is finally accepted pursuant to the terms of Section
3.8(a), but in no event more than ten (10) days following such date, the
Purchaser shall cause the Company to pay to the Sellers pro rata based on Schedule 3.7, an
amount, if a positive number, equal to (i) the amount of Free Cash Flow (as
such term is defined in the DS Operating Agreement, which amount reflects all
prior distributions of Free Cash Flow, including but not limited to the BCCM
Special Distribution Amount (as defined in the DS Operating Agreement)) since
April 29, 2005, through and including the date of the Closing, less (ii)
the Closing Free Cash Flow Payment (the “Free Cash Flow Adjustment Amount”).  In the event that the Free Cash Flow
Adjustment Amount is a negative number, the Adjustment Amount shall be reduced pro rata by the amount of such Free Cash
Flow Adjustment Amount; provided that the Adjustment Amount may not be reduced
below zero.


ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE COMPANY


The Company represents
and warrants to the Purchaser as follows:


Section 4.1     Existence and Power.  DS LLC is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of
Delaware.  A copy of the certificate of
formation and the DS Operating Agreement have been delivered to Purchaser and,
as of the Closing Date, are complete, correct and are in full force and effect,
and there have been no amendments or modifications thereto either made and/or
approved.


Section 4.2     Authorization; Enforceability.  The
execution, delivery and performance by DS LLC of this Agreement and each of the
Ancillary Agreements to which it will be a party at the Closing are, and will
be at the Closing, duly authorized by all necessary actions, and no other
action on the part of DS LLC is necessary to authorize this Agreement or any of
the Ancillary Agreements to which DS LLC will be a party at the Closing.  This Agreement has been, and each of the
Ancillary Agreements to which DS LLC will be a party at the Closing will have
been, duly executed and delivered by DS LLC. 
Assuming the due execution and delivery by Purchaser of this Agreement
and each of the Ancillary Agreements to



 17
 






 



which DS LLC will be a party at
the Closing, this Agreement constitutes, and each Ancillary Agreement to which
DS LLC will be a party at the Closing will constitute at the Closing, the valid
and binding agreements of DS LLC, enforceable against DS LLC in accordance with
their terms, except as such enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
enforcement of creditors’ rights generally and by general principles of equity
(whether applied in a proceeding at law or in equity).


Section 4.3     Governmental Authorization.  Except as disclosed in Schedule 4.3,
the execution, delivery and performance by DS LLC of this Agreement and each
Ancillary Agreement to which DS LLC will be a party at the Closing require no
consent, approval, order, authorization or action by or in respect of, or
filing with, any Governmental Authority, except that the Company makes no
representation or warranties regarding the HSR Act.


Section 4.4     Non-Contravention; Consents.  Except as disclosed in Schedule 4.4,
the execution, delivery and performance by DS LLC of this Agreement and each
Ancillary Agreement to which DS LLC will be a party at the Closing, and the
consummation of the transactions contemplated hereby and thereby do not and
will not at the Closing (i) violate the certificate of formation of DS LLC or
the DS Operating Agreement, (ii) violate any Law or Order, (iii) require any
filing with or the issuance of any Permit, consent or approval of, or the
giving of any notice to, any Person (including filings, consents or approvals
required under any Permits of DS LLC or any licenses to which DS LLC is a
party) except that the Company makes no representation or warranties regarding
the HSR Act, (iv) result in a violation or breach of, constitute (with or
without due notice or lapse of time or both) a default under, or give rise to
any right of termination, cancellation or acceleration of any right or
obligation of the Company or to a loss of any benefit to which the Company is
entitled under, any Contract, agreement or other instrument binding upon the
Company or any license, franchise, Permit or other similar authorization held
by the Company, or (v) result in the creation or imposition of any Lien (other
than Permitted Liens) on any ownership or leasehold interest in any asset of
the Company, except to the extent that any of the foregoing would not have a
Material Adverse Effect.


Section 4.5     Capitalization.  The authorized capital stock of DS LLC
consists of 100 Common Units, all of which are issued and outstanding and owned
of record as set forth on Schedule 4.5. 
All of the Capital Stock of DS LLC (the “DS Units”) are duly
authorized, validly issued and outstanding, fully paid and nonassessable, and
were issued, except as set forth in the DS Operating Agreement, free of
preemptive rights.  Except as set forth
in the DS Operating Agreement, there are no options, warrants, purchase rights,
subscription rights, conversion rights, exchange rights, convertible securities
or other rights, agreement, arrangements or commitments of any character
relating to the DS Units or obligating DS LLC to issue, sell or otherwise cause
to become outstanding any shares of capital stock.  There are no outstanding contractual
obligations of DS LLC to repurchase, redeem or otherwise acquire any shares of,
or interests in, DS LLC or to provide funds to, or make any investment (in the
form of a loan, capital contribution or otherwise) in, any other Person.  Except as may be set forth in the DS
Operating Agreement, there are no outstanding or authorized stock appreciation,
phantom stock participation or similar rights with respect to DS LLC.



 18
 






 



Section 4.6     Subsidiaries.  Except as disclosed in Schedule 4.6,
DS LLC does not own any Capital Stock or other equity or ownership or
proprietary interest in any corporation, partnership, association, trust, joint
venture or other entity.


Section 4.7     Financial Statements.  (a)  DS
LLC has heretofore furnished Purchaser with a true and complete copy of the
Financial Statements which are attached hereto as Schedule 4.7.  The Financial Statements have been derived
from the books and records of the Company, have been prepared in accordance
with GAAP (except for, with respect to the Reference Balance Sheet and the
related statement of income and cash flow, the absence of footnote disclosure
and usual and customary year-end audit adjustments) and fairly present in
all material respects the financial position of the Company at the respective
dates thereof and the results of the operations of the Company for the periods
indicated.


(b)   The books of account of the Company, all of
which have been made available to Purchaser, reflect the operations of the
Company in all material respects.


Section 4.8     No Undisclosed Liabilities.  To the Company’s Knowledge, the Company has
no liabilities, whether accrued, contingent, absolute, determined, determinable
or otherwise, other than (i) liabilities provided for in the Financial
Statements, (ii) liabilities disclosed in Schedule 4.8, (iii) other
undisclosed liabilities incurred since the Balance Sheet Date in the Ordinary
Course of Business, and (iv) liabilities arising out of the terms and
conditions of the Company’s contracts, including the Contracts and, in each
case (i) – (iv), which would not have a Material Adverse Effect.  Except as disclosed in the Schedules to this
Agreement, including, Schedule 4.8 and Schedule 4.11(a), or
provided for in the Financial Statements of the Company, the Company has no
material Indebtedness.


Section 4.9     Tax Matters.


(a)   DS LLC is a “partnership” for purposes of
Code §7701 and the associated Treasury Regulations.  Each of DS LLC’s Subsidiaries is a “corporation”
for purposes of Code §7701 and the associated Treasury Regulations.


(b)   Except as set forth on Schedule 4.9, the
Company has filed all Tax Returns that it was required to file under applicable
laws and regulations.  All such Tax
Returns were correct and complete in all respects and have been prepared in
substantial compliance with all applicable laws and regulations.  All Taxes due and owing by the Company
(whether or not shown on any Tax Return) have been paid.  Except as set forth on Schedule 4.9,
the Company is not currently the beneficiary of any extension of time within
which to file any Tax Return.  To the
Company’s Knowledge, no claim has been made by an authority in a jurisdiction
where the Company does not file Tax Returns that it is or may be subject to
taxation by that jurisdiction.  No Tax
authority has formally or, to the Company’s Knowledge, informally proposed any
adjustment relating to such Tax Returns. 
Except as set forth on Schedule 4.9, there are no pending or, to Company’s
Knowledge, threatened actions or proceedings for the assessment or collection
of Taxes against the Company.  There are
no liens for Taxes (other than Taxes not yet due and payable) upon any of the
assets of the Company.



 19
 






 



(c)   Except as set forth on Schedule 4.9, the
Company has withheld and paid all Taxes required to have been withheld and paid
in connection with any amounts paid or owing to any employee, independent
contractor, stockholder or, to the Company’s Knowledge, any creditor or other
third party.


(d)   Schedule 4.9 lists all federal, state,
local, and foreign Tax Returns filed with respect to the Company for taxable
periods ended on or after December 31, 2001, indicates those Tax Returns that
have been audited, and indicates those Tax Returns that currently are the
subject of audit.  The Company has
delivered, or made available, to the Purchaser correct and complete copies of
all federal income Tax Returns, examination reports, and statements of
deficiencies assessed against, or agreed to by the Company since December 31,
2001.


(e)   The Company has not waived any statute of
limitations in respect of Taxes since April 28, 2005, and has no current
agreement in effect that grants an extension of time with respect to a Tax
assessment or deficiency.


(f)    The DS Units are not and have not been “United
States real property interests” within the meaning of Code §897 at any
time.  The Company is not a party to or
bound by any Tax allocation or sharing agreement.  The Company has not been a member of an
affiliated group filing a consolidated federal income Tax Return, and the
Company does not have any liability for the Taxes of any Person under Treasury
Regulation §1.1502-6 (or any similar provision of state, local, or foreign
law), as a transferee or successor, by contract, or otherwise.


(g)   The Company will not be required to include
any item of income in, or exclude any item of deduction from, taxable income
for any taxable period (or portion thereof) ending after the Closing Date as a
result of any: (A) change in method of accounting for a taxable period ending
on or prior to the Closing Date; (B) “closing agreement” as described in Code
§7121 (or any corresponding or similar provision of state, local or foreign
income Tax law) executed on or prior to the Closing Date; (C) intercompany
transactions or any excess loss account described in Treasury Regulations under
Code §1502 (or any corresponding or similar provision of state, local or
foreign income Tax law); (D) installment sale or open transaction disposition
made on or prior to the Closing Date; or (E) prepaid amount received on or
prior to the Closing Date.


(h)   The Company has not participated in any
transaction required to be disclosed under Treasury Regulation §301.6011-4.


Section 4.10   Absence of Certain Changes.  Except as disclosed in Schedule 4.10,
since the Balance Sheet Date, the Company has conducted the Business in the
Ordinary Course of Business and to the Company’s Knowledge there has not been
any event, occurrence, development or circumstances that has had or which could
reasonably be expected to have a Material Adverse Effect.  Since the Balance Sheet Date, there has not
occurred any material damage, destruction or casualty loss (whether or not
covered by insurance) with respect to any material asset owned or operated by
the Company.


Section 4.11   Contracts.  (a)  Except as disclosed in Schedule 4.11(a),
the Company is not a party to or bound by any lease, agreement, contract,
commitment or other



 20
 






 



legally binding contractual
right or obligation (whether written or oral) (collectively, “Contracts”)
that is of a type described below:


(i)            any
lease (whether of real or personal property) under which the aggregate payments
would be $300,00
or more annually, including the leases disclosed or required to be disclosed on
Schedule 4.15(b);


(ii)           except
pursuant to purchase orders issued in the Ordinary Course of Business, any
agreement for the purchase of materials, supplies, goods, services, equipment
or other assets that provides for aggregate payments by the Company of $300,000 or more annually;


(iii)          any sales, distribution
or other similar agreement providing for the sale by the Company of materials,
supplies, goods, services, equipment or other assets that provides for
aggregate payments to the Company of $500,000 or more annually;


(iv)          any
partnership or joint venture agreement that involves the sharing of profits,
losses, costs or liabilities with any other Person;


(v)           except
pursuant to any contract or commitment made in the Ordinary Course of Business
in connection with the sale of products or services to the Company’s customers,
any Contract pursuant to which any third party has rights to acquire or use any
material asset owned by the Company, including any Intellectual Property Right
of the Company;


(vi)          any
agreement relating to the acquisition or disposition of any business (whether
by merger, sale of stock, sale of assets or otherwise) or, except pursuant to
any contract or commitment made in the Ordinary Course of Business, granting to
any Person a right of first refusal, first offer or other right to purchase any
of the assets owned by the Company;


(vii)         any
agreement pursuant to which the Company incurs material Indebtedness, other
than accruals recorded in the Ordinary Course of Business;


(viii)        except
pursuant to any Contract made in the Ordinary Course of Business in connection
with the sale of products or services to the Company’s customers, any license,
franchise or similar agreement;


(ix)           any
material agency, dealer, sales representative, marketing or other similar
agreement;


(x)            except
pursuant to any Contract made in the Ordinary Course of Business in connection
with the sale of products or services to the Company’s customers, any Contract
(other than leases and subleases, but including shared services and occupancy
agreements) that provide for payment by or to the Company of $300,000 or more annually and may not
be terminated by the Company without payment of penalty on less than 90 days’
prior notice;



 21
 






 



(xi)           except
pursuant to any Contract made in the Ordinary Course of Business, any
management service or consulting agreement providing for payment by the Company
of $300,000
or more annually or made with an Affiliate of the Company;


(xii)          except
pursuant to any sale of products or services in the Ordinary Course of
Business, any warranty, guaranty or other similar undertaking with respect to
any contractual performance (including any liquidated damage or performance
penalty provisions) or agreement to indemnify any Person (other than in
connection with any leases and subleases) for which the Company has liability
or potential liability of $500,000 or more;


(xiii)         any
management employment agreement or deferred compensation, severance, bonus or
retirement agreement or plan in effect as of the date hereof (including in
respect of any advances or loans to any employees) and entered into or adopted
by the Company;


(xiv)        any
Contract involving foreign currency transactions entered into for the purpose
of hedging any currency or pricing risk; or


(xv)         any
other agreement, commitment, arrangement or plan not made in the Ordinary
Course of Business of the Company that provides for the payment by or to the
Company of $300,000 or more annually that may not be terminated by the Company
without penalty on less than 90 days’ prior notice.


(b)   Except as set forth in Schedule 4.11(b),
each Contract disclosed in Schedule 4.11(a) is a valid and binding
agreement of the Company and, to the Company’s Knowledge, each other party
thereto, enforceable in accordance with its respective terms, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting enforcement of creditors’ rights
generally and by general principles of equity (whether applied in a proceeding
at law or in equity).  Except as set
forth in Schedule 4.11(b), neither the Company nor, to the Company’s
Knowledge, any other party to any such Contract is in default or breach (with
or without due notice or lapse of time or both) in any material respect under
the terms of any such Contract.  The
Company has delivered or made available to Purchaser true and complete
originals or copies of all Contracts disclosed in Schedule 4.11(a).


Section 4.12   Insurance Coverage.  Schedule 4.12 contains a list of
all of the insurance policies and fidelity bonds covering the assets, Business,
operations, employees, officers and directors of the Company.  There is no material claim by the Company
pending under any of such policies or bonds as to which coverage has been
questioned, denied or disputed in writing by the underwriters of such policies
or bonds.  All premiums due and payable
under all such policies and bonds have been paid and the Company has complied
with the terms and conditions of all such policies and bonds in all material
respects.  To the Company’s Knowledge,
such policies of insurance and bonds (or other policies and bonds providing
substantially similar insurance coverage) are in full force and effect.  To the Company’s Knowledge, since the last
renewal date of any insurance policy, there has been no written notice



 22
 






 



of any material adverse change
in the relationship of the Company with its respective insurers or the premiums
payable pursuant to such policies.


Section 4.13   Litigation.  (a)  Except as disclosed in Schedule 4.13(a),
there is no action, suit, investigation, arbitration or administrative or other
proceeding pending or, to the Company’s Knowledge, threatened, against the
Company before any court or arbitrator or any Governmental Authority which
would have or could reasonably be expected to have a Material Adverse Effect or
which in any manner challenges or seeks to prevent, enjoin, alter or materially
delay the transactions contemplated by this Agreement and any Ancillary
Agreements to which Seller will be a party at Closing.  Except as disclosed in Schedule 4.13(a),
there are no outstanding judgments, orders, injunctions, decrees, stipulations
or awards (whether rendered by a court, administrative agency, arbitral body or
Governmental Authority) against the Company.


(b)   All material written claims, whether in
contract or tort, for defective or allegedly defective products or workmanship
pending against the Company are listed or described on Schedule 4.13(b).


Section 4.14   Compliance with Laws; Permits.  (a)  Except as described in Schedule 4.14(a),
the Company has complied with all Laws applicable to its business in all
material respects, except where failure to so comply would not have a Material
Adverse Effect.  The Company has not
received written notice that the use or condition of any of the leased Real
Property or any other asset owned or leased by the Company is in violation of
any Law.  Except as set forth in Schedule 4.14(a),
the Company has not received written notice of any violation of any Law
relating to the operation of the Business or to any of its assets, operations,
processes, results or products.


(b)   Schedule 4.14(b) sets forth a
list of each government or regulatory license, authorization, permit,
franchise, consent and approval (the “Permits”) issued to and held by
the Company as same are required to be so issued and held to carry on the
Business as currently conducted except where failure to have any such Permit
would not have a Material Adverse Effect. 
The Company is the authorized legal holder of the Permits, and, to the
Company’s Knowledge, each Permit is valid and in full force and effect.  The Company is not in default under, and, to
the Company’s Knowledge, no condition exists that with notice or lapse of time
or both would constitute a material default or would give rise to a right of
termination, cancellation or acceleration under, any Permit held by the Company
except where such default would not have a Material Adverse Effect.


Section 4.15   Assets; Properties; Sufficiency of Assets.  (a)  Except for Inventory disposed
of in the Ordinary Course of Business of the Company, the Company has good
title to, or in the case of leased Property has valid leasehold interests in
(except as set forth in Schedule 4.11(b)) the property and assets
(whether real or personal, tangible or intangible) reflected in the Reference
Balance Sheet or acquired after the date thereof, free and clear of all Liens,
except for Permitted Liens and Liens disclosed in Schedule 4.15(a).


(b)   Schedule 4.15(b) sets forth a list of
all real property assets owned, leased or used and occupied by the Company (the
“Real Property”).  With respect to
leased Real Property, Schedule 4.15(b) sets forth, with respect to each
such lease, the remaining term of each lease and



 23
 






 



identifies each lease
containing rent escalation provisions. 
The Company has good, valid and indefeasible fee simple title to all
owned Real Property indicated on Schedule 4.15(b), free and clear
of all Liens, other than Permitted Liens or as set forth in the title policies
issued to the Company.  There are no
outstanding options or rights of first refusal to purchase any owned Real
Property, or any portion thereof or any interest therein.  With respect to leased Real Property, except
as set forth in Schedule 4.15(b), the Company is a tenant or possessor
in good standing in accordance with the terms of its lease, sublease or
sub-sublease and all rents due and owing as of the date hereof and all demands
for payment of additional rent, to the extent such demands have been received
as of the date hereof, under such leases have been paid.  Except as set forth on Schedule 4.15(b),
neither the Company nor, to the Company’s Knowledge, any other party to any
such lease is in default or breach in any material respect under the terms of
any such lease.  The Company is in
peaceful and undisturbed possession of the space and/or estate under each lease
to which it is a tenant.  Except as set
forth on Schedule 4.15(b), the Company has not received any written
notice of any appropriation, condemnation or like proceeding, or of any
violation of any applicable zoning Law or Order relating to or affecting the
Real Property.  To Company’s Knowledge,
the Real Property has adequate Utilities (as hereinafter defined) to serve such
Real Property for the use to which such Real Property is presently being put,
subject to the terms and provisions of the leases and subleases and the rights
and interests of the landlords and owners of such properties.  For purposes of this Agreement, the term “Utilities”
means all or some of the following (to the extent presently applicable): water
distribution and service facilities; electrical distribution and service
facilities; and natural gas distribution and service facilities.


(c)   Except as set forth on Schedule 4.15(c), the tangible
personal property of the Company when taken as a whole, and all improvements
located on Real Property owned or leased by the Company, are, in all material respects,
in operating condition (subject to normal maintenance requirements and normal
wear and tear excepted).


Section 4.16   Intellectual Property.  (a)  Schedule 4.16(a)(1)
sets forth a list of all material Intellectual Property Rights which are owned
by the Company.  Schedule 4.16(a)(2)
sets forth a list of all Intellectual Property Rights to which the Company is a
licensee (except for commercially available third party software to which the
Company has a valid right to use in connection with the Business), and all
material licenses, sublicenses and other written agreements as to which the
Company is a party and pursuant to which any Person is authorized to use such
Intellectual Property Right, including the identity of all parties thereto
except such agreements made in the Ordinary Course of Business.


(b)   Except as disclosed in Schedule 4.16(b):


(i)            All
of the Intellectual Property Rights necessary for or used in the conduct of the
Business as currently conducted are set forth in Schedule 4.16(a)(1)
and Schedule 4.16(a)(2);


(ii)           To
the Company’s Knowledge, the conduct of the Business by the Company as
currently conducted does not infringe upon any Intellectual Property of any
third party.  There is no claim, suit,
action or proceeding that is either pending or, to the Company’s Knowledge,
threatened, that, in either case, involves a claim of infringement



 24
 






 



by the Company of any Intellectual Property
of any third party, or challenging the Company’s ownership, right to use, or
the validity of any Intellectual Property Right listed in Schedule 4.16(a)(1)
that would or could reasonably be expected to have a Material Adverse Effect;


(iii)          No
Intellectual Property Right listed in Schedule 4.16(a)(1) is
subject to any outstanding order, judgment, decree, stipulation or agreement
restricting the use thereof by the Company or restricting the licensing thereof
by the Company to any Person;


(iv)          The
Company has not entered into any agreement to indemnify any other Person
against any charge of infringement of any Intellectual Property Right, except
such agreements made in the Ordinary Course of Business in connection with the
sale of products or services to the Company’s customers; and


(v)           The
Company has duly maintained all registrations for any Intellectual Property
Rights listed or required to be listed in Schedule 4.16(a) except
where failure to so maintain would not have a Material Adverse Effect.


Section 4.17   Environmental Matters.  (a)  Notwithstanding any other
provision of this Agreement to the contrary, the provisions of this Section
4.17 and Section 5.8 (only to the extent related to this Section
4.17) shall be the exclusive representations and warranty provisions
governing Environmental Matters.  Except
as disclosed in Schedule 4.17(a):


(i)            To
Company’s Knowledge the Company has not and no other party has, generated,
recycled, used, treated or stored on, transported to or from, or Released or
disposed on, the Property any material Constituents of Concern except in
material compliance with applicable Environmental Law;


(ii)           To
the Company’s Knowledge, the Company has not disposed of any material
Constituents of Concern from the Property at any off-site facility except in
material compliance with applicable Environmental Laws;


(iii)          To
the Company’s Knowledge, the Company has been and is in material compliance in
all material respects with (a) Environmental Laws and (b) the requirements of
Permits issued under such Environmental Laws with respect to the Property;


(iv)          To
the Company’s Knowledge there are no pending or threatened material
Environmental Claims against the Company or any Property;


(v)           To
the Company’s Knowledge, no underground storage tanks are located on any
Property;


(vi)          To
the Company’s Knowledge neither the Company nor any Property is listed nor, has
the Company received written notice that any Property is proposed for listing
on the National Priorities List under CERCLA or on any similar federal, state
list of sites requiring investigation or clean-up, and the Company has not



 25
 






 



received any written requests for information
pursuant to 104(e) of CERCLA or any state counterpart or equivalent which, are
to the Company’s knowledge, still unresolved;


(vii)         To
the Company’s Knowledge, the Company has obtained all required Environmental
Permits, except where failure to so obtain would not have a Material Adverse
Effect, and is in compliance in all material respects with the terms of each
Environmental Permit; and


(viii)        To
the Company’s Knowledge, the Company has received no notice of liability
pursuant to any judgment, order, injunction, decree or stipulation rendered by
a court, administrative agency, arbitral body or Governmental Authority under
any Environmental Law (including an obligation to of the Company to remediate
any Environmental Condition whether caused by the Company or any other Person).


(b)   The Company has delivered or made available
to Purchaser true and complete copies of Phase I and Phase II, if
any, environmental reports commenced or conducted by or on behalf of the
Company within the preceding three (3) years or which are in the Company’s
possession.


Section 4.18   Plans and Material Documents.  (a)  Schedule 4.18(a)
sets forth a list of all Benefit Plans with respect to which the Company or any
ERISA Affiliate has or has had prior to the date hereof any obligation or
liability or which are or were prior to the date hereof maintained, contributed
to or sponsored by the Company or any ERISA Affiliate for the benefit of any
current or former employee, officer or director of the Company or any ERISA
Affiliate.  With respect to each Benefit
Plan subject to ERISA, the Company has delivered or made available to Purchaser
a true and complete copy of each such Benefit Plan (including all amendments
thereto) and a true and complete copy of each material document (including all
amendments thereto) prepared in connection with each such Benefit Plan
including (i) a copy of each trust or other funding arrangement, (ii) each
summary plan description and summary of material modifications, (iii) the most
recently filed IRS Form 5500 for each such Benefit Plan, if any, and (iv) the
most recent determination letter referred to in Section 4.18(d).


(b)   Except as disclosed in Schedule 4.18(b),
none of the Benefit Plans is a plan that is or has ever been subject to Title
IV of ERISA, Section 302 of ERISA or Section 412 of the Code.  None of the Benefit Plans is a “multiemployer
plan” as defined in Section 3(37) of ERISA.  Except as disclosed in Schedule 4.18(b),
none of the Benefit Plans provides for the payment of separation, severance,
termination or similar-type benefits to any person or provides for or, except
to the extent required by Law, promises retiree medical or life insurance
benefits to any current or former employee, officer or director of the Company
or any ERISA Affiliate.


(c)   Except as disclosed in Schedule 4.18(c),
each Benefit Plan is in compliance with, and has been operated in accordance
with, its terms and the ERISA Affiliates have satisfied all of their statutory,
regulatory and contractual obligations with respect to each such Benefit
Plan.  No legal action, suit or claim is
pending or, to the Company’s Knowledge, threatened with respect to any Benefit
Plan (other than claims for benefits in the ordinary course) and no fact or
event exists that could, individually or in the aggregate, reasonably be
expected to give rise to any such action, suit or claim.



 26
 






 



(d)   Except as disclosed in Schedule 4.18(d),
each Benefit Plan or trust which is intended to be qualified or exempt from
taxation under Section 401(a), 401(k) or 501(a) of the Code has received a
favorable determination letter from the IRS that it is so qualified or exempt,
and, to the Company’s Knowledge, nothing has occurred since the date of such
determination letter that would adversely affect the qualified or exempt status
of any Benefit Plan or related trust.


(e)   There has been no non-exempt prohibited
transaction (within the meaning of Section 406 of ERISA or
Section 4975 of the Code) with respect to any Benefit Plan.  Neither the Company nor any ERISA Affiliate
has incurred any liability for any excise tax arising under the Code with
respect to a Benefit Plan and, to the Company’s Knowledge, no fact or event
exists which could, individually or in the aggregate, reasonably be expected to
give rise to such liability.


(f)    All contributions, premiums or payments
required to be made with respect to any Benefit Plan have been made on or
before their due dates.  For completed
plan years of such Benefit Plans, all such contributions have been fully deducted
for income tax purposes and, to the Company’s Knowledge, no such deduction has
been challenged or disallowed by any Governmental Authority, and, to the
Company’s Knowledge, no fact or event exists which could give rise to any such
challenge or disallowance.


(g)   There has been no amendment to, written
interpretation of or announcement (whether or not written) by the Company,
other than as required by applicable law, relating to, or change in employee
participation or coverage under, any Benefit Plan that would increase
materially the expense of maintaining such Benefit Plan above the level of the
expense incurred in respect thereto for the most recent fiscal year ended prior
to the date hereof.


(h)   Except as disclosed in Schedule 4.18(h),
no employee or former employee of the Company will become entitled to any
bonus, retirement, severance, job security or similar benefit or enhanced such
benefit (including acceleration of vesting or exercise of an incentive award)
as a result of the transactions contemplated by this Agreement.


(i)    All reports and disclosures relating to the
Benefit Plans required to be filed with or furnished to Governmental
Authorities, participants or beneficiaries have been filed or furnished in
accordance with applicable law in a timely manner.


(j)    The Company does not now, nor has it ever,
maintained or contributed to or been a party to any Benefit Plan subject to
Title IV of ERISA.


(k)   As to any Benefit Plan intended to be
qualified under Section 401 of the Code, there has been no termination or
partial termination of the Benefit Plan within the meaning of Section 411(d)(3)
of the Code.


(l)    No act, omission or transaction has occurred
which would result in imposition on the Company of (A) breach of fiduciary duty
liability damages under Section 409 of ERISA, (B) a civil penalty assessed
pursuant to subsections (c), (i) or (l) of Section 502 of ERISA, or (C) a tax
imposed pursuant to Chapter 43 of Subtitle D of the Code.



 27
 






 



(m)  To the Company’s Knowledge, there is no matter
pending (other than routine qualification determination filings) with respect
to any of the Benefit Plans before the Internal Revenue Service, the Department
of Labor, the PBGC, or any other Governmental Authority.


(n)   Each Benefit Plan which is an “employee
welfare benefit plan,” as such term is defined in Section 3(1) of ERISA, may be
unilaterally amended or terminated in its entirety without liability except as
to benefits accrued thereunder prior to such amendment or termination.


Section 4.19   Affiliate Transactions.  (a)  Except as disclosed in Schedule 4.19(a),
there are no outstanding payables, receivables, loans, advances and other
similar accounts between the Company, on the one hand, and any of its
Affiliates, on the other hand, relating to the Business.


(b)   Except as disclosed in Schedule 4.19(b),
to the Company’s Knowledge, no director, officer or employee of the Company
possesses, directly or indirectly, any ownership interest in, or is a director,
officer or employee of, any Person which is a supplier, customer, lessor,
lessee, licensor, or competitor of the Company. 
Ownership of 1% or less of any class of securities of a Person whose
securities are registered under the Exchange Act will not be deemed to be an
ownership interest for purposes of this Section 4.19(b).


Section 4.20   Customer and Supplier Relations.  Schedule 4.20 includes a complete
and correct list of (a) all customers of the Business who have made aggregate
purchases in excess of 5% of the total revenues of the Company to date in
fiscal year 2006 and (b) all suppliers from whom the Company has purchased in
excess of $500,000 in equipment or supplies to date in fiscal year 2006.  Except as disclosed in Schedule 4.20,
to the Company’s Knowledge, none of such customers or suppliers has canceled,
terminated or otherwise materially altered or notified the Company in writing
of any intention to cancel, terminate or materially alter its relationship with
the Company since the Balance Sheet Date.


Section 4.21   Other Employment Matters.  (a)  Except as disclosed in Schedule
4.21, the Company is not a party to any labor or collective bargaining
agreement.


(b)   Except as disclosed in Schedule 4.21,
or which would not, or could not reasonably be expected to have, a Material
Adverse Effect, no labor organization or group of Company employees has made a
pending demand for recognition, there are no representation proceedings or
petitions seeking a representation proceeding presently pending or, to the
Company’s Knowledge, threatened to be brought or filed with the National Labor
Relations Board or other labor relations tribunal, and there is no organizing
activity involving the Company pending or, to the Company’s Knowledge,
threatened by any labor organization or group of employees.


(c)   There are no (i) strikes, work stoppages,
slow-downs, lockouts or arbitrations or (ii) grievances or other labor disputes
pending or, to the Company’s Knowledge, threatened against or involving the
Company.


(d)   The Company is in material compliance with
all Laws and Orders in respect of employment and employment practices and the
terms and conditions of employment and



 28
 






 



wages and hours, and to Company’s
Knowledge has not, and is not, engaged in any unfair labor practice.


(e)   Schedule 4.21(e) contains a
complete and accurate list of the following information for each employee,
officer or director of the Company, including each employee on leave of
absence, long term disability, short term disability or layoff status:
employer; name; job title; any change in compensation since the Balance Sheet
Date; and all bonuses and any other amounts to be paid by the Company at or in
connection with the Closing other than the Carried Interest.


(f)    Except as set forth in Schedule 4.21(f),
to the Company’s Knowledge, no employee, officer or director of the Company is
a party to, or is otherwise bound by, any confidentiality, non-competition,
proprietary rights agreement or similar agreement that would affect (i) the
performance of his or her duties as an employee, officer or director or (ii)
the ability of Purchaser to conduct the Business after the Closing Date.


Section 4.22   Accounts Receivable.  Except as set forth in Schedule 4.22,
all of the Accounts Receivable reflected on the Reference Balance Sheet (net of
any Applicable Reserves set forth on the Reference Balance Sheet) and all
Accounts Receivable which have arisen since the Balance Sheet Date (net of any
additional Applicable Reserves established since such date in the Ordinary
Course of Business of the Company) are valid claims, and the goods and services
sold and delivered which gave rise to such Accounts Receivable were sold and
delivered in the Ordinary Course of Business.


Section 4.23   Inventory.  Except as set forth in Schedule 4.23,
all Inventories reflected on the Reference Balance Sheet (net of any applicable
reserves set forth on the Reference Balance Sheet) and all Inventories which
have been acquired or produced since the Balance Sheet Date (net of any
additional applicable reserves established since such date in the Ordinary
Course of Business of the Company) are in good condition, conform in all
material respects with the applicable specifications and warranties of the
Company, are not obsolete or excessive in amount, and are usable and salable in
the Ordinary Course of Business.


Section 4.24   Product and Service Warranties; Liability.  Except as disclosed in Schedule 4.24,
the Applicable Reserves set forth on the Reference Balance Sheet are sufficient
to cover the liability of the Company related to or arising from each product
manufactured, sold, leased, delivered or installed or services performed by the
Company prior to the Closing.


Section 4.25   Finders’ Fees.  Except as set forth on Schedule 4.25,
there is no investment banker, broker, finder or other intermediary which has
been retained by or is authorized to act on behalf of the Company who might be
entitled to any fee or other commission in connection with the transactions
contemplated by this Agreement or any of the Ancillary Agreements.


Section 4.26   Disclaimer
of Other Representations and Warranties.  Except as provided in this
Agreement, in the Ancillary Agreements, or in any exhibit hereto or thereto or
other agreement or document delivered by the Company in connection with the
transactions contemplated hereby, the Company makes no representations or warranties
of any kind, and the



 29
 






 



Company disclaims
all other representations and warranties to the fullest extent permitted by
applicable law, including warranties of merchantability and fitness for a
particular purpose.


ARTICLE V

REPRESENTATIONS AND WARRANTIES OF CROMPTON


Crompton
represents and warrants to the Purchaser as follows:


Section 5.1     Existence and Power.  Crompton is a corporation duly formed,
validly existing and in good standing under the laws of the State of
Delaware.  Crompton has all corporate
power required to carry on its business as now conducted.


Section 5.2     Authorization; Enforceability.  The execution, delivery and performance by
Crompton of this Agreement and each of the Ancillary Agreements to which it
will be a party at the Closing are duly authorized by all necessary actions,
and no other action on the part of Crompton is necessary to authorize this
Agreement or any of the Ancillary Agreements to which Crompton will be a party
at the Closing.  This Agreement has been,
and each of the Ancillary Agreements to which Crompton will be a party at the
Closing will have been duly executed and delivered by Crompton.  Assuming the due execution and delivery by
Purchaser of this Agreement and each of the Ancillary Agreements to which
Crompton will be a party at the Closing, this Agreement constitutes, and each
Ancillary Agreement to which Crompton will be a party at the Closing will
constitute at the Closing, the valid and binding agreement of Crompton,
enforceable against it in accordance with their terms, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting enforcement of creditors’ rights
generally and by general principles of equity (whether applied in a proceeding
at law or in equity).


Section 5.3     Governmental Authorization.  Except as disclosed in Schedule 5.3,
the execution, delivery and performance by Crompton of this Agreement and each
Ancillary Agreement to which Crompton will be a party at the Closing requires
no consent, approval, order, authorization or action by or in respect of, or
filing with, any Governmental Authority and except that Crompton makes no
representation or warranties regarding the HSR Act.


Section 5.4     Non-Contravention; Consents.  Except as disclosed in Schedule 5.4,
the execution, delivery and performance by Crompton of this Agreement and each
Ancillary Agreement to which Crompton will be a party at the Closing and the
consummation of the transactions contemplated hereby and thereby do not and
will not at the Closing (i) violate the charter documents or bylaws of
Crompton, (ii) violate any Law or Order, or (iii) require any filing with or
the issuance of any permit, consent or approval of, or the giving of any notice
to, any Person (including filings, consents or approvals required under any
permits of Crompton or any licenses to which Crompton is a party), except to
the extent that any of the foregoing would not have a Material Adverse Effect
and except that Crompton makes no representation or warranties regarding the
HSR Act.


Section 5.5     Capitalization.  (a) Crompton is and will be at Closing the
sole and exclusive legal and beneficial owner of that number of DS Units set
forth opposite Crompton’s name on Schedule 5.5 hereof, free and clear of
all Liens and, upon consummation of the



 30














 


transactions contemplated by
this Agreement, the Purchaser will acquire good, valid and indefeasible title
to Crompton’s Interest.


(b)           Except as set forth in the DS
Operating Agreement, there are no voting trusts, agreements, proxies or other
understandings in effect with respect to the voting or transfer of the Crompton
Interest.  Except as may be set forth in
the DS Operating Agreement, there are no outstanding or authorized stock
appreciation, phantom stock participation or similar rights with respect to the
Crompton Interest.


Section 5.6     Litigation.  Except as disclosed in Schedule 5.6,
there are no outstanding judgments, orders, injunctions, decrees, stipulations
or awards (whether rendered by a court, administrative agency, arbitral body or
Governmental Authority) against Crompton with respect to the Crompton Interest.


Section 5.7     Finders’ Fees.  Except as set forth on Schedule 5.7,
there is no investment banker, broker, finder or other intermediary which has
been retained by or is authorized to act on behalf of Crompton who might be
entitled to any fee or other commission in connection with the transactions
contemplated by this Agreement or any of the Ancillary Agreements.


Section 5.8     Crompton’s Knowledge.  To Crompton’s Knowledge, no representation or
warranty made by the Company in this Agreement (including any Schedule hereto),
without giving effect to any Company Knowledge qualification modifying any such
representation or warranty, contains any untrue statement or omits information
necessary in order to make the statements herein not misleading.


Section 5.9     Disclaimer
of Other Representations and Warranties.  Except as provided in this
Agreement, in the Ancillary Agreements, or in any exhibit hereto or thereto or
other agreement or document delivered by Crompton in connection with the
transactions contemplated hereby, Crompton does not make any representations or
warranties of any kind, and Crompton disclaims all other representations and
warranties to the fullest extent permitted by applicable law, including
warranties of merchantability and fitness for a particular purpose.


ARTICLE VI

REPRESENTATIONS AND WARRANTIES OF THE BCCM SHAREHOLDERS


The BCCM
Shareholders, jointly and severally with respect to the BCCM Representations
and Warranties and individually and not jointly with respect to the BCCM
Selected Representations and Warranties, represent and warrant to the Purchaser
as follows:  


Section 6.1     Existence and Power.


(a)   BCCM is a corporation duly formed, validly
existing and in good standing under the laws of the State of Delaware.  The copy of the Certificate of Incorporation
of the company that has been delivered to Purchaser is complete and correct and
such Certificate of Incorporation is in full force and effect and there have
been no amendments or modifications thereto either made and/or approved. BCCM
has all corporate power required to carry on its business as now conducted.



 31
 






 



(b)   Excluding those BCCM Shareholders who are
individuals and with regard only to each BCCM Shareholder that is an entity,
and with respect to that BCCM Shareholder only, such BCCM Shareholder is duly
formed, validly existing and in good standing under the laws of its
jurisdiction of organization.  Each such
BCCM Shareholder has all corporate or equivalent power required to carry on its
business as now conducted.


Section 6.2     Authorization; Enforceability.  (a)  The execution, delivery and
performance by BCCM of this Agreement and each of the Ancillary Agreements to
which it will be a party at the Closing are duly authorized by all necessary
actions, and no other action on the part of BCCM is necessary to authorize this
Agreement or any of the Ancillary Agreements to which BCCM will be a party at
the Closing.  This Agreement has been, and
each of the Ancillary Agreements to which BCCM will be a party at the Closing
will have been, duly executed and delivered by BCCM.  Assuming the due execution and delivery by
Purchaser of this Agreement and each of the Ancillary Agreements to which BCCM
will be a party at the Closing, this Agreement constitutes, and each Ancillary
Agreement to which BCCM will be a party at the Closing will constitute at the
Closing, the valid and binding agreements of BCCM, enforceable against BCCM in
accordance with their terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting enforcement of creditors’ rights generally and by general principles
of equity (whether applied in a proceeding at law or in equity).


(b)   The execution, delivery and performance by
each BCCM Shareholder of this Agreement and each of the Ancillary Agreements to
which such BCCM Shareholder will be a party at the Closing, with respect to
that BCCM Shareholder only, are duly authorized by all necessary actions, and
no other action on the part of any such BCCM Shareholder is necessary to
authorize this Agreement or any of the Ancillary Agreements to which any such
BCCM Shareholder will be a party at the Closing.  This Agreement has been, and each of the
Ancillary Agreements to which such BCCM Shareholder will be a party at the
Closing will have been, with respect to that Seller only, duly executed and
delivered by such Seller.  Assuming the
due execution and delivery by Purchaser of this Agreement and each of the Ancillary
Agreements to which such BCCM Shareholders will be a party at the Closing, this
Agreement constitutes, and each Ancillary Agreement to which such BCCM
Shareholder will be a party at the Closing will constitute at the Closing,
valid and binding agreements of each such BCCM Shareholder, enforceable against
each in accordance with their terms, except as such enforcement may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting enforcement of creditors’ rights generally and by general principles
of equity (whether applied in a proceeding at law or in equity).


Section 6.3     Governmental Authorization.  (a) 
Except as disclosed in Schedule 6.3(a), the execution,
delivery and performance by BCCM of this Agreement and each Ancillary Agreement
to which BCCM will be a party at the Closing require no consent, approval,
order, authorization or action by or in respect of, or filing with, any
Governmental Authority.


(b)   Except as disclosed in Schedule 6.3(b),
the execution, delivery and performance by each BCCM Shareholder of this
Agreement and each Ancillary Agreement to which such BCCM Shareholder will be a
party at the Closing, with respect to that BCCM



 32
 






 



Shareholder only, requires no
consent, approval, order, authorization or action by or in respect of, or
filing with, any Governmental Authority.


Section 6.4     Non-Contravention; Consents.  (a)  Except as disclosed in Schedule 6.4(a),
the execution, delivery and performance by BCCM of this Agreement and each
Ancillary Agreement to which BCCM will be a party at the Closing, and the
consummation of the transactions contemplated hereby and thereby do not and
will not at the Closing (i) violate the certificate of incorporation or bylaws
of BCCM, (ii) violate any Law or Order, (iii) require any filing with or the
issuance of any Permit, consent or approval of, or the giving of any notice to,
any Person (including filings, consents or approvals required under any Permits
of BCCM or any licenses to which BCCM is a party), (iv) result in a violation
or breach of, constitute (with or without due notice or lapse of time or both)
a default under, or give rise to any right of termination, cancellation or
acceleration of any right or obligation of the BCCM or to a loss of any benefit
to which the BCCM is entitled under, any Contract, agreement or other
instrument binding upon BCCM or any license, franchise, Permit or other similar
authorization held by BCCM, or (v) result in the creation or imposition of any
Lien (other than Permitted Liens) on any ownership or leasehold interest in any
asset of BCCM, except to the extent that any of the foregoing would not have a
Material Adverse Effect.


(b)   Except as disclosed in Schedule 6.4(b),
the execution, delivery and performance by each BCCM Shareholder of this
Agreement and each Ancillary Agreement to which such BCCM Shareholder will be a
party at the Closing and the consummation of the transactions contemplated
hereby and thereby, with respect to that BCCM Shareholder only, do not and will
not at the Closing (i) if such BCCM Shareholder is an entity, violate the
charter documents or bylaws of such BCCM Shareholder, (ii) violate any Law or
Order, (iii) require any filing with or the issuance of any permit, consent or
approval of, or the giving of any notice to, any Person (including filings,
consents or approvals required under any permits of such BCCM Shareholder or
any licenses to which such BCCM Shareholder is a party), (iv) result in a
violation or breach of, constitute (with or without due notice or lapse of time
or both) a default under, or give rise to any right of termination,
cancellation or acceleration of any right or obligation of the BCCM Shareholder
or to a loss of any benefit to which such BCCM Shareholder is entitled under,
any Contract, agreement or other instrument binding upon that BCCM Shareholder
or any license, franchise, permit or other similar authorization held by such
BCCM Shareholder, or (v) result in the creation or imposition of any Lien
(other than Permitted Liens) on any ownership or leasehold interest in any
asset of such BCCM Shareholder, except to the extent that any of the foregoing
would not have a Material Adverse Effect.


Section 6.5     Capitalization.  (a)  The authorized capital stock
of BCCM consists of 1,851 shares of common stock, no par value per share, of
which (A) 1,586 shares are issued and outstanding, fully paid and nonassessable
and (B) none are held as treasury shares and (ii) 6,129 shares of preferred
stock, all of which are designated as Series A Preferred Stock and all of which
are issued and outstanding, fully paid and nonassessable.  The BCCM Shares are owned of record by the
BCCM Shareholders in the amounts as set forth on Schedule 6.5(a).  All of the BCCM Shares are duly authorized,
validly issued and outstanding, fully paid and nonassessable.  Except as set forth in the BCCM Shareholders’
Agreement, there are no options, warrants, purchase rights, subscription
rights, conversion rights, exchange rights, convertible securities or other
rights, agreement, arrangements or commitments of any character relating to the
BCCM



 33
 






 



Shares or obligating BCCM to
issue, sell or otherwise cause to become outstanding any shares of capital
stock.  There are no outstanding
contractual obligations of BCCM to repurchase, redeem or otherwise acquire any
shares of, or interests in, BCCM or to provide funds to, or make any investment
(in the form of a loan, capital contribution or otherwise) in, any other
Person.  Except as set forth in the BCCM
Shareholders’ Agreement, there are no outstanding or authorized stock
appreciation, phantom stock participation or similar rights with respect to
BCCM.


(b)   Each BCCM Shareholder, with respect to such
BCCM Shareholder only, is and will be at Closing the sole and exclusive legal
and beneficial owner of that number of BCCM Shares set forth opposite such BCCM
Shareholder’s name on Schedule 6.5 hereof, free and clear of all Liens.


Section 6.6     Subsidiaries.  Except as disclosed in Schedule 6.6,
BCCM does not own any Capital Stock or other equity or ownership or proprietary
interest in any corporation, partnership, association, trust, joint venture or
other entity.


Section 6.7     No Undisclosed Liabilities.  The sole purpose of BCCM is as a holding
company for its Interest in DS LLC and a vehicle for issuing management
options.  BCCM owns no material assets
other than its Interest in DS LLC.  Since
the date of the Contribution Agreement, BCCM has not engaged in any business
except for the holding of the BCCM Interest, nor since such date has it
incurred any liabilities of any nature whatsoever, other than for Taxes,
whether contingent or otherwise.


Section 6.8     Tax Matters.


(a)   BCCM is a “corporation” for purposes of Code
§7701 and the associated Treasury Regulations.


(b)   BCCM has filed all Tax Returns that it was
required to file under applicable laws and regulations.  All such Tax Returns were correct and
complete in all material respects and have been prepared in substantial
compliance with all applicable laws and regulations.  All Taxes due and owing by BCCM (whether or
not shown on any Tax Return) have been paid. 
Except as set forth on Schedule 6.8(b), BCCM is not currently the
beneficiary of any extension of time within which to file any Tax Return.  To the BCCM Shareholders’ knowledge, no claim
has ever been made by an authority in a jurisdiction where BCCM does not file
Tax Returns that it is or may be subject to taxation by that jurisdiction.  No Tax authority has formally or, to the BCCM
Shareholders’ knowledge, informally proposed any adjustment relating to such
Tax Returns.  There are no pending or, to
BCCM Shareholders’ knowledge, threatened actions or proceedings for the
assessment or collection of Taxes against BCCM. 
There are no liens for Taxes (other than Taxes not yet due and payable)
upon any of the assets of BCCM.


(c)   BCCM has withheld and paid all Taxes required
to have been withheld and paid in connection with any amounts paid or owing to
any employee, independent contractor, stockholder, or, to the BCCM Shareholders’
knowledge, any creditor or other third party.


(d)   Schedule 6.8(d) lists all federal,
state, local, and foreign Tax Returns filed with respect to BCCM for taxable
periods ended on or after December 31, 2001, indicates those Tax Returns that
have been audited, and indicates those Tax Returns that currently are the



 34
 






 



subject of audit.  BCCM has delivered, or made available, to the
Purchaser correct and complete copies of all federal income Tax Returns,
examination reports, and statements of deficiencies assessed against, or agreed
to by BCCM since December 31, 2001.


(e)   BCCM has not waived any statute of
limitations in respect of Taxes or agreed to any extension of time with respect
to a Tax assessment or deficiency.


(f)    BCCM is not a party to any agreement,
contract, arrangement or plan that has resulted or would result, separately or
in the aggregate, in the payment of (i) any “excess parachute payment” within
the meaning of Code §280G (or any corresponding provision of state, local or
foreign Tax law) and (ii) any amount that will not be fully deductible as a
result of Code §162(m) (or any corresponding provision of state, local or
foreign Tax law).  BCCM has not been a
United States real property holding corporation within the meaning of Code
§897(c)(2) during the applicable period specified in Code
§897(c)(1)(A)(ii).  BCCM is not a party
to or bound by any Tax allocation or sharing agreement.  BCCM has not been a member of an affiliated
group filing a consolidated federal income Tax Return, and BCCM does not have
any liability for the Taxes of any Person under Treasury Regulation §1.1502-6
(or any similar provision of state, local, or foreign law), as a transferee or
successor, by contract, or otherwise.


(g)   BCCM will not be required to include any item
of income in, or exclude any item of deduction from, taxable income for any
taxable period (or portion thereof) ending after the Closing Date as a result
of any: (A) change in method of accounting for a taxable period ending on or
prior to the Closing Date; (B) “closing agreement” as described in Code §7121
(or any corresponding or similar provision of state, local or foreign income
Tax law) executed on or prior to the Closing Date; (C) intercompany
transactions or any excess loss account described in Treasury Regulations under
Code §1502 (or any corresponding or similar provision of state, local or
foreign income Tax law); (D) installment sale or open transaction disposition
made on or prior to the Closing Date; or (E) prepaid amount received on or
prior to the Closing Date.


(h)   BCCM has not participated in any transaction
required to be disclosed under Treasury Regulation §301.6011-4.


Section 6.9     Litigation.  Except as disclosed in Schedule 6.9,
there are no outstanding judgments, orders, injunctions, decrees, stipulations
or awards (whether rendered by a court, administrative agency, arbitral body or
Governmental Authority) against any BCCM Shareholder with respect to the BCCM
Shares or the Business.


Section 6.10   Finders’ Fees.  Except as set forth on Schedule 6.10,
there is no investment banker, broker, finder or other intermediary which has
been retained by or is authorized to act on behalf of the BCCM Shareholders who
might be entitled to any fee or other commission in connection with the
transactions contemplated by this Agreement or any of the Ancillary Agreements.


Section 6.11   Disclaimer
of Other Representations and Warranties.  Except as provided in this
Agreement, in the Ancillary Agreements, or in any exhibit hereto or thereto or
other agreement or document delivered by the BCCM Shareholders in connection
with the transactions contemplated hereby, none of the BCCM Shareholders make
any representations or



 35
 






 



warranties of any kind, and the
BCCM Shareholders disclaim all other representations and warranties to the
fullest extent permitted by applicable law, including warranties of
merchantability and fitness for a particular purpose.


ARTICLE VII

REPRESENTATIONS AND WARRANTIES OF THE MANAGEMENT MEMBERS


Each of the
Management Members, individually and not jointly and with respect to such
Management Member only, represents and warrants to the Purchaser as
follows:  


Section 7.1     Authorization; Enforceability.  This Agreement has been, and each of the
Ancillary Agreements to which such Management Member will be a party at the
Closing will have been, with respect to that Management Member only, duly
executed and delivered by such Management Member.  Assuming the due execution and delivery by
Purchaser of this Agreement and each of the Ancillary Agreements to which such
Management Member will be a party at the Closing, this Agreement constitutes,
and each Ancillary Agreement to which such Management Member will be a party at
the Closing will constitute at the Closing, valid and binding agreements of
each such Management Member, enforceable against each in accordance with their
terms, except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting enforcement of
creditors’ rights generally and by general principles of equity (whether
applied in a proceeding at law or in equity).


Section 7.2     Governmental Authorization.  Except as disclosed in Schedule 7.2,
the execution, delivery and performance by each Management Member of this
Agreement and each Ancillary Agreement to which such Management Member will be
a party at the Closing, with respect to that Management Member only, requires
no consent, approval, order, authorization or action by or in respect of, or
filing with, any Governmental Authority except that no Management Member makes
any representation or warranty regarding the HSR Act.


Section 7.3     Non-Contravention; Consents.  Except as disclosed in Schedule 7.3,
the execution, delivery and performance by each Management Member of this
Agreement and each Ancillary Agreement to which such Management Member will be
a party at the Closing and the consummation of the transactions contemplated
hereby and thereby, with respect to that Management Member only, do not and
will not at the Closing (i) violate any Law or Order applicable to such Management
Member, or (ii) require any filing with or the issuance of any permit, consent
or approval of, or the giving of any notice to, any Person (including filings,
consents or approvals required under any permits of such Management Member or
any licenses to which such Management Member is a party) by such Management
Member, except to the extent that any of the foregoing would not have a
Material Adverse Effect and except that no Management Member makes any
representation or warranty regarding the HSR Act.


Section 7.4     Capitalization.  (a)        Each
Management Member, with respect to such Management Member only, is and will be
at Closing the sole and exclusive legal and beneficial owner of that number of
DS Units set forth opposite such Management Member’s name on Schedule 4.5
hereof, free and clear of all Liens and, upon consummation of the transactions



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contemplated by this Agreement,
the Purchaser will acquire good, valid and indefeasible title to such
Management Member’s DS Units.


(b)           There are no voting trusts,
agreements, proxies or other understandings in effect with respect to the
voting or transfer of such Management Member’s DS Units.  Except as may be set forth in the DS
Operating Agreement, there are no outstanding or authorized stock appreciation,
phantom stock participation or similar rights with respect to such Management
Member’s DS Units.


Section 7.5     Litigation.  Except as disclosed in Schedule 7.5,
there are no outstanding judgments, orders, injunctions, decrees, stipulations
or awards (whether rendered by a court, administrative agency, arbitral body or
Governmental Authority) against any Management Member with respect to the
Interests or the Business.


Section 7.6     Finders’ Fees.  Except as set forth on Schedule 7.6,
there is no investment banker, broker, finder or other intermediary which has
been retained by or is authorized to act on behalf of the Management Members
who might be entitled to any fee or other commission in connection with the
transactions contemplated by this Agreement or any of the Ancillary Agreements.


Section 7.7     Disclaimer
of Other Representations and Warranties.  Except as provided in this
Agreement, in the Ancillary Agreements, or in any exhibit hereto or thereto,
none of the Management Members make any representations or warranties of any
kind, and the Management Members disclaim all other representations and
warranties to the fullest extent permitted by applicable law, including
warranties of merchantability and fitness for a particular purpose.


ARTICLE VIII

REPRESENTATIONS AND WARRANTIES OF PURCHASER


Purchaser represents and warrants to Sellers as of the
date hereof and the Closing Date as follows:


Section 8.1     Corporate Existence and Power.  Purchaser is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of
Delaware.  Purchaser has all corporate
power required to carry on its business as now conducted.  Purchaser is duly qualified to conduct
business as a foreign corporation and is in good standing in each jurisdiction
where such qualification is necessary.


Section 8.2     Corporate Authorization; Enforceability.  The execution, delivery and performance by
Purchaser of this Agreement and each of the Ancillary Agreements to which it
will be a party at the Closing are, and will be at the Closing, within
Purchaser’s corporate power and have been duly authorized by the board of
directors of Purchaser and no other corporate action on the part of Purchaser
is necessary to authorize this Agreement or any of the Ancillary Agreements to
which Purchaser will be a party at the Closing. 
This Agreement has been, and each of the Ancillary Agreements to which
Purchaser will be a party at the Closing will have been, duly executed and
delivered by Purchaser.  Assuming the due
execution and delivery by DS LLC, BCCM and Sellers of this Agreement and each
of the Ancillary Agreements to which



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Purchaser will be a party at
the Closing, this Agreement constitutes, and each Ancillary Agreement to which
Purchaser will be a party at the Closing will constitute at the Closing, valid
and binding agreements of Purchaser, enforceable against Purchaser in
accordance with their terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting enforcement of creditors’ rights generally and by general principles
of equity (whether applied in a proceeding at law or in equity).


Section 8.3     Non-Contravention.  Except as set forth on Schedule 8.3,
the execution, delivery and performance by Purchaser of this Agreement and each
Ancillary Agreement to which Purchaser will be a party at the Closing do not
and will not at the Closing (a) violate the certificate of incorporation or
bylaws or other similar constituent documents of Purchaser, (b) violate any Law
or Order, or (c) require any filing with or Permit, consent or approval of, or
the giving of any notice to, any Person (including filings, consents or
approvals required under any Permits of Purchaser or any licenses to which
Purchaser is a party), except to the extent that any of the foregoing would not
have a Material Adverse Effect and except that, other than pursuant to Section
8.8, Purchaser makes no representation or warranties regarding the HSR Act.


Section 8.4     Governmental Authorization.  Except as disclosed in Schedule 8.4,
the execution, delivery and performance by Purchaser of this Agreement and each
Ancillary Agreement to which the Purchaser will be a party at the Closing
require no consent, approval, order, authorization or action by or in respect
of, or filing with, any Governmental Authority, except that, other than
pursuant to Section 8.8, Purchaser makes no representation or warranties
regarding the HSR Act.


Section 8.5     Finders’ Fees.  Except as set forth in Schedule 8.5,
there is no investment banker, broker, finder or other intermediary which has
been retained by or is authorized to act on behalf of Purchaser who might be
entitled to any fee or other commission in connection with the transactions
contemplated by this Agreement or any of the Ancillary Agreements.


Section 8.6     Litigation.  There is no claim, action, suit, proceeding,
dispute or governmental investigation pending or, to the Purchaser’s Knowledge,
threatened against or involving Purchaser by or before any Governmental
Authority that, individually or in the aggregate, would adversely affect the
ability of Purchaser to effect the transactions contemplated hereby.


Section 8.7     Investigation by Purchaser; Exclusivity
of Representations.  In connection
with Purchaser’s investigation of the Business, Purchaser has received certain
projections, forecasts, plans and other forward-looking information with
respect to the Business and acknowledges that there are uncertainties inherent
in attempting to make such projections, forecasts and plans, that Purchaser is
familiar with such uncertainties, as well as assumptions underlying such
projections, forecasts, plans and other forward-looking information and there
can be no assurance that such projections, forecasts and plans will be
attained.  The Purchaser acknowledges
that it:  (i) has made an
investigation of the pertinent facts relating to the business, financial
condition and operations of the Company, (ii) has had a reasonable
opportunity to ask questions of, and receive answers from, a person or persons
acting on behalf of the Company



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concerning the business,
financial condition and operations of the Company and other related matters and
all such questions have been answered to the full satisfaction of the Purchaser
and (iii) the representations and warranties made by the Sellers in this
Agreement are in lieu of and are exclusive of all other representations and
warranties, including any implied warranties.


Section 8.8     Hart-Scott-Rodino.  On
October 12, 2006, Purchaser’s counsel delivered the letter attached hereto as
Schedule 8.8 (the “HSR Letter”) to the Premerger Notification Office,
Bureau of Competition, Federal Trade Commission (the “FTC”), in order to
confirm that the transaction contemplated herein need not be reported under the
HSR Act.  Neither Purchaser nor counsel
to Purchaser has received any written or oral communication from the FTC
contradicting the statements contained in the HSR Letter.


Section 8.9     Purchaser’s Knowledge.  To the Purchaser’s Knowledge, no
representation or warranty made by the Company in this Agreement (including any
Schedule hereto), without giving effect to any Company Knowledge qualification
modifying any such representation or warranty, contains any untrue statement or
omits information necessary in order to make the statements herein not
misleading.


Section 8.10   Payments Under the Credit Agreement.  The Credit Agreement allows for payment of
the Closing Free Cash Flow Payment and the Post-Closing Free Cash Flow
Adjustment as provided in this Agreement, including Section 3.7 and Section
3.8, in all events and, provided that an Event of Default (as defined in
the Credit Agreement) has not occurred and is continuing, the Credit Agreement
permits the Purchaser to make all other post-Closing payments to Sellers contemplated
by this Agreement.


ARTICLE IX

CERTAIN COVENANTS


Section 9.1     Access.  Following the Closing, the Purchaser shall,
and shall cause the Company and BCCM to, provide to the Sellers reasonable
access to the books and records of the Company and BCCM and to promptly furnish
the Sellers with such financial, operating data and other information as
Sellers may reasonably request for accounting, Tax, litigation or any related
purposes.


Section 9.2     Employees and Employment.  (a)  For the purposes of this
Agreement the term “Active Employees” shall mean all employees actively
employed by DS LLC on the Closing Date and all employees of DS LLC on layoff,
leave of absence or short term disability on the Closing Date (but specifically
excluding any individual on long term disability for which the Purchaser
assumes no responsibility).  Schedule 9.2(a)
lists all Active Employees as of the date of this Agreement.


(b)   The Purchaser shall provide all Active
Employees upon the commencement of their employment by the Company with pension
benefit plans and welfare benefit programs which provide benefits which are
comparable, in the aggregate, to the benefits provided under the pension
benefit plans and welfare benefit programs maintained by DS LLC for such Active
Employees immediately prior to the Closing Date. Purchaser shall be solely
responsible for any salary, severance or unemployment benefits of any Active
Employee on and after the Closing.



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(c)   Notwithstanding any other provision of this
Agreement, the parties intend that all employee benefit matters covered in this
Section 9.2 materially comply with the applicable laws of the affected
jurisdiction and, to the extent of any noncompliance, the provisions herein
shall be reformed to achieve compliance in accordance with the intent of the
parties hereto.


(d)   Nothing contained in this Agreement shall be
construed to limit in any manner the discretion of the Company or the persons
vested with such responsibility by the relevant plan documents, from amending,
modifying or terminating any employee benefit plan within the meaning of
Section 3(3) of ERISA.


Section 9.3     Commercially Reasonable Efforts.  DS LLC, BCCM, Sellers and Purchaser will
cooperate and use their respective commercially reasonable efforts to take, or
cause to be taken, all appropriate actions, and to make, or cause to be made,
all filings necessary, proper or advisable under Laws to consummate and make
effective the transactions contemplated by this Agreement, including their
respective commercially reasonable efforts to obtain, prior to the Closing
Date, all licenses, Permits, consents, approvals, authorizations,
qualifications and orders of Governmental Authorities and parties to Contracts
with the Company as are necessary to consummate the transactions contemplated
by the Agreement and to fulfill the conditions to the sale contemplated
hereby.  DS LLC shall be responsible for
the payment of all fees or other costs incurred by DS LLC in connection with
obtaining any third-party consent required hereunder, including any costs
associated with any change of control provision contained in any DS LLC
Contract.  The Purchaser or DS LLC will
pay or cause to be paid all of the fees and expenses contemplated by this
Section, including the fees and expenses of any broker, finder, financial
advisor, legal advisor or similar person engaged by, respectively, the
Purchaser or the Sellers.  The Purchaser
shall be responsible for the fees and expenses of Crowe Chizek and Company LLP
and Curtis, Mallet-Prevost, Colt & Mosle LLP.  Each of the parties will notify and keep the
other advised in reasonable detail as to such party’s efforts in complying with
its obligations under this Section 9.3.


Section 9.4     Transfer Laws.  The Company will
be the certifying and responsible party for compliance with the Connecticut
Transfer Act C.G.S. 22a-134 et seq. and the New Jersey Industrial Site Recovery
Act N.J.S.A 13:1K et seq. and the respective associated rules and regulations
(together “Transfer Laws”).  The Company will sign all documents
related to the Transfer Laws. The Company will pay or cause to be paid all
fees, costs and expenses, including without limitation, all Environmental
Liabilities and Costs associated with complying with the Transfer Laws.


Section 9.5     Further Assurances.  From time to time, as and when requested by
any party hereto, such other party will execute and deliver, or cause to be
executed and delivered, all such documents and instruments and will take, or
cause to be taken, all such further actions, as the requesting party may
reasonably deem necessary or desirable to consummate the transactions
contemplated by this Agreement.



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ARTICLE X

TAX MATTERS


Section 10.1   Tax Allocation.


(a)   The “Company Tax Amount” means (i) Taxes
imposed on the Company with respect to Pre-Closing Tax Period, excluding taxes
which have been properly accrued or reserved for in the Financial Statements or are reflected in the Company’s books of
account; (ii) Taxes imposed on the Company with respect to a
Post-Closing Tax Period beginning before the Closing Date, which are allocable,
pursuant to Section 10.1(c), to the portion of such period ending on the
Closing Date, excluding Taxes which have been accrued or reserved for in the
Financial Statements; and (iii) any and all stock transfer, stamp, or similar
Taxes payable in connection with the transactions contemplated by Section
3.1.


(b)   The “BCCM Tax Amount” means (i) Taxes imposed
on BCCM with respect to Pre-Closing Tax Period; and (ii) Taxes imposed on BCCM
with respect to a Post-Closing Tax Period beginning before the Closing Date,
which are allocable, pursuant to Section 10.1(c), to the portion of such
period ending on the Closing Date.


(c)   In the case of Taxes imposed with respect to
a Post-Closing Tax Period that begins before the Closing Date, the portion of
any such Taxes that is allocable to the portion of the period ending on the
Closing Date shall be:


(i)            in
the case of Taxes that are either (x) based upon or related to income or
receipts, or (y) imposed in connection with any sale or other transfer or
assignment of property (other than conveyances pursuant to this Agreement or
deemed made as a result of the transactions contemplated herein), deemed equal
to the amount which would be payable if the taxable year ended on the Closing
Date with any calculation of the allocable amount made in accordance with past
practices consistently applied; and


(ii)           in
the case of Taxes not described in subparagraph (i) that are imposed on a
periodic basis and measured by the value of any asset, deemed to be the amount
of such Taxes for the entire period (or, in the case of such Taxes determined
on an arrears basis, the amount of such Taxes for the immediately preceding
period) multiplied by a fraction the numerator of which is the number of
calendar days in the period ending on the Closing Date and the denominator of
which is the number of calendar days in the entire period.


(d)   The Free Cash Flow Adjustment Amount payable
to the BCCM Shareholders will be reduced by an amount (the “Tax Reduction
Amount”) equal to the taxes imposed on BCCM for the period from October 1, 2006
through the Closing Date plus the amount of taxes allocable to BCCM under
Section 10.1(b)(ii), and Purchaser shall pay or cause BCCM to pay the Tax
Reduction Amount to the appropriate taxing authority on behalf of BCCM and the
BCCM Shareholders.


Section 10.2   Tax Returns.  Purchaser shall cause the Company and BCCM to
prepare and file all Tax Returns for the Company and BCCM for all periods
ending on or after the Closing Date. 
Purchaser shall permit Sellers and BCCM Shareholders to examine and
comment on any Tax Return which could give rise to, respectively, a Company Tax
Amount or BCCM Tax Amount prior to filing such Tax Return.



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Section 10.3   Refunds.  Any refund of Taxes that are received by Purchaser
(or its Affiliates), the Company or BCCM, and any amounts credited against
Taxes to which Purchaser (or its Affiliates), the Company, or BCCM become
entitled shall be for the account of the Purchaser, except to the extent that
such refunds or amounts credited relate to the BCCM Tax Amount, which shall be
for the account of BCCM.


Section 10.4   Miscellaneous.  The parties hereto agree to treat all
payments made by any of them to or for the benefit of another party (including
any payments to or from the Company or BCCM) under the indemnification
provisions of this Agreement and for any misrepresentations or breach of
representations, warranties or covenants as adjustments to the Consideration
for Tax purposes and that such treatment shall govern for purposes hereof.


ARTICLE XI

CLOSING DELIVERABLES


Section 11.1   Seller Deliverables.  At the Closing, the following shall be
delivered to the Purchaser:


(a)   Certificates.  The BCCM Shareholders shall have delivered
original stock certificates representing the BCCM Shares, together with such
instruments of assignment, conveyance and transfer as Purchaser may deem
necessary or desirable, duly executed by the BCCM Shareholders.


(b)   Officer’s Certificate.  The Company shall have delivered a
certificate of an officer of DS LLC and its Subsidiaries certifying as
to each such company’s certificate of formation, bylaws or other comparable
documents.


(c)   Ancillary Agreements.  Sellers shall have delivered each Ancillary
Agreement required to be executed and delivered by parties other than Purchaser
or its Affiliates, including the BCCM Agency Agreement, the Management Members’
Agency Agreement, the Carryholders’ Agency Agreement and the Non-Competition
Agreements.


(d)   FIRPTA Affidavits.  Sellers shall cause DS LLC to deliver an
affidavit substantially in the form of Exhibit F-1 hereto to the
Purchaser that the DS Units are not and have not been “United States real
property interests” under the Code.  BCCM
Shareholders shall cause BCCM to deliver an affidavit substantially in the form
of Exhibit F-2 hereto to the Purchaser that BCCM is not and has not been
a “United States real property holding corporation” under the Code.


(e)   Resignations.  To the extent requested by the Purchaser, (i)
the Sellers shall have delivered resignations of the members of the board of
directors (or comparable governing body) of DS LLC, and (ii) the BCCM
Shareholders shall have delivered resignations of the members of the board of
directors (or comparable governing body) of BCCM.


(f)    Termination of Security Interests.  Sellers shall have obtained releases and
other documentation reasonably requested by Purchaser in form and substance
reasonably satisfactory to Purchaser providing for the termination and release
of all Liens (other than



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Permitted Liens and Liens
disclosed on Schedule 4.15(a)) on the assets or leasehold interests of
DS LLC or any Subsidiary.


(g)   Certificate of Merger.  The Certificate of Merger shall have been
duly filed and accepted with the Secretary of State of the State of Delaware.


(h)   Other Documents.  Sellers shall have delivered such other
documents and instruments as may be reasonably required to consummate the
transactions contemplated by this Agreement and the Ancillary Agreements.


Section 11.2   Purchaser Deliverables.  At the Closing, the following shall be
delivered to the Sellers:


(a)   Consideration.  Purchaser shall have delivered the Merger
Consideration and Purchase Price by wire transfer of immediately available
funds pursuant to the terms of Section 2.6 and Section 3.2, respectively.


(b)   Secretary’s Certificate.  The Purchaser shall have delivered a
certificate of the secretary of Purchaser certifying as to its certificate of
incorporation and bylaws.


(c)   Ancillary Agreements.  Purchaser shall have delivered each Ancillary
Agreement required to be duly authorized and delivered by Purchaser or its
Affiliates;


(d)   Transfer Laws.  The Company will execute all documents
necessary or advisable to be executed by the Company in connection with the
Transfer Laws; and


(e)   Other Documents.  Purchaser shall have delivered such other
documents and instruments as may be reasonably required to consummate the
transactions contemplated by this Agreement and the Ancillary Agreements.


ARTICLE XII

LIABILITIES AND INDEMNIFICATION


Section 12.1   Survival Periods.  All representations, covenants and warranties
of the parties contained in this Agreement and the right to indemnification
provided in Section 12.2(a) shall be continuing and shall survive the
Closing as follows: (a) for the Title Representations and the obligation of any
breaching Seller to indemnify Purchaser Indemnitees with respect to such Seller’s
Title Representations as provided in Section 12.2(a)(iv), the expiration
of the applicable statutes of limitation period, and (b), for all other
representations, warranties, covenants and agreements contained in this
Agreement, including the covenants contained in this Article XII, eighteen (18)
months from the Closing.  The time
periods set forth in subsections (a) and (b) of this Section
12.1 are collectively the “Survival Period”). 
The parties intend to shorten the statute of limitations and agree that
no claims or causes of action, may be brought against any party based upon,
directly or indirectly, any of the representations, warranties or agreements
contained in Article IV, Article V, Article VI, Article
VII and Article VIII or any of the matters set forth in Section
12.2(a) hereof after the applicable Survival Period.  Except as specifically provided in this Section
12.1, this Section 12.1 shall not limit any covenant or agreement of
the parties that contemplates performance after the Closing, including



 43
 






 



the covenants and agreements
set forth in Article X hereof and any other Ancillary Agreement;
provided, however, for the avoidance of doubt, the right to indemnification set
forth in Section 12.2(a) shall expire upon expiration of the applicable
Survival Period with the sole exception of those matters for which Purchaser
has given proper notice as set forth in Section 12.2(b)(v).


Section 12.2   Sellers’ Agreement to Indemnify.  (a)  Subject
to the terms and conditions set forth herein, from and after the Closing, the
Sellers shall indemnify and hold harmless Purchaser and its respective
directors, officers, employees, Affiliates, controlling persons, agents and
representatives and its successors and assigns (collectively, the “Purchaser
Indemnitees”) from and against all liability, demands, claims, actions or
causes of action, assessments, losses, damages, costs and expenses (including
reasonable attorneys’ fees and expenses) (collectively, “Purchaser Damages”) asserted against or
incurred by any Purchaser Indemnitee as a result of or arising out of:


(i)            a
breach of any representation or warranty contained in Article IV, Article V,
Article VI, and Article VII of this Agreement when made or at and
as of the Closing Date (or at and as of such different date or period specified
for such representation or warranty) as though such representation and warranty
were made at and as of the Closing Date (or such different date or period);
provided that


(A)          each
Seller is required to indemnify and hold harmless the Purchaser Indemnitees
with respect to any Purchaser Damages relating to any breach of a Company
Representation and Warranty pro rata
against the amount of such Seller’s Holdback as of the time of such claim,


(B)           only
Crompton is required to indemnify and hold harmless the Purchaser Indemnitees
with respect to any Purchaser Damages relating to any breach of a Crompton
Representation and Warranty,


(C)           only
the BCCM Shareholders as a group are required to indemnify and hold harmless
the Purchaser Indemnitees with respect to any Purchaser Damages relating to any
breach of any BCCM Representations and Warranties pro rata against the amount of such BCCM Shareholders’
Holdback as of the time of such claim;


(D)          only
the breaching BCCM Shareholder is required to indemnify and hold harmless the
Purchaser Indemnitees with respect to any Purchaser Damages relating to any
breach of a BCCM Shareholder Representation, against the amount of such BCCM
Shareholders’ Holdback as of the time of such claim;


(E)           only
the breaching Management Member is required to indemnify and hold harmless the
Purchaser Indemnitees with respect to any Purchaser Damages relating to any
breach of a Management Member Representation and Warranty, against the amount
of such Management Member’s Holdback as of the time of such claim;



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(F)           only
the breaching Seller is required to indemnify and hold harmless the Purchaser
Indemnitees with respect to any Purchaser Damages relating to any breach of
such Seller’s Title Representations;


(ii)           product
liability and product warranties relating to products manufactured, sold and
shipped by the Company after April 29, 2005 and prior to the Closing Date,
except to the extent reserved on the Reference Balance Sheet;


(iii)          the lawsuits (A)
DiBonaventura v. Black Clawson Converting Machinery LLC (Black Clawson
Converting Machinery Inc. named a successor)(New Jersey) in excess of any
amount reserved for such specific matter on the Reference Balance Sheet, and
(B) General Cable v. Davis-Standard (Greece), in excess of any amount reserved
for such specific matter on the Reference Balance Sheet, provided that only the
BCCM Shareholders shall bear responsibility for lawsuit (A) pro rata
against the amount of such BCCM Shareholders’ Holdback as of the time of such
claim, and only Crompton shall bear responsibility for lawsuit (B) against the
amount of Crompton’s Holdback as of the time of such claim, as more fully
described in Section 12.5;


(iv)          a
breach of any covenant or agreement of any Seller contained in this Agreement,
in any Ancillary Agreement or in any other agreement delivered by Sellers in
connection with the transactions contemplated hereby, provided that only the
breaching Seller is required to indemnify and hold harmless the Purchaser
Indemnitees pursuant to this Section 12.2(a)(iv); and


(v)           any
Company Tax Amount or BCCM Tax Amount, provided that only the BCCM Shareholders
are required to indemnify and hold harmless the Purchaser Indemnitees with
respect to any Purchaser Damages relating to any BCCM Tax Amount.


(b)   The Sellers’ obligation to indemnify
Purchaser Indemnitees pursuant to Section 12.2(a) hereof or otherwise is
subject to the following limitations:


(i)            No
indemnification shall be made by the Sellers pursuant to Section 12.2(a)(i)
unless the aggregate amount of Purchaser Damages (for all claims) pursuant to Section
12.2(a)(i) exceeds $500,000 and, in such event, indemnification shall be
made by the Sellers only to the extent of such excess; provided, that each respective Seller’s Title Representations shall not
be subject to this $500,000 threshold;


(ii)           In
no event shall Sellers’ aggregate obligation to indemnify Purchaser Indemnitees
pursuant to this Agreement or otherwise exceed $10 million in the aggregate
(the “Sellers’ Indemnification Cap”), provided that the Sellers’
Indemnification Cap shall be reduced automatically on the date that the
distributions set forth in Section 2.7, Section 3.3 or Section
12.5(b) are required to be made, even if such distributions are not made
for reasons other than in connection with a disputed and unsettled matter
handled in accordance with Section 2.7 or Section 3.3 for which
timely notice has been given, as applicable; provided further, that
subject to Section 12.2(b)(iii) below, Sellers’ aggregate obligation to
indemnify Purchaser Indemnitees for breaches of the Title Representations shall
not be subject to the Sellers’ Indemnification Cap;



 45














 


(iii)          Notwithstanding
anything to the contrary that may be contained in this Agreement, (A) except
with respect to claims against a breaching Seller with respect to such Seller’s
Title Representations, the Purchaser Indemnitees’ recourse for Purchaser Damages
shall be solely and exclusively as provided in Section 12.5 below, and
(B) in no event shall the individual liability of any Seller for Purchaser
Damages with respect to such Seller’s Title Representations exceed the Merger
Consideration and/or Purchase Price actually received by such Seller.


(iv)          The
amount of any Purchaser Damages shall be reduced by any amount finally received
by the Company or a Purchaser Indemnitee with respect thereto under any
insurance coverage or from any other party alleged to be responsible
therefor.  Purchaser Indemnitees and the
Company shall use commercially reasonable efforts to collect any amounts
available under such insurance coverage and from such other party alleged to
have responsibility.  If a Purchaser
Indemnitee or the Company receives an amount under insurance coverage or from
such other party with respect to Purchaser Damages at any time subsequent to
any indemnification provided by Sellers pursuant to this Section 12.2,
then such Purchaser Indemnitee or the Company, as applicable, shall promptly
reimburse the applicable Sellers for any payment made or expense incurred by
Sellers in connection with providing such indemnification up to such amount
received by Purchaser Indemnitee or the Company;


(v)           Sellers
shall be obligated to indemnify Purchaser Indemnitees pursuant to Section
12.2 only for those claims giving rise to Purchaser Damages as to which
Purchaser Indemnitees have given Sellers written notice thereof prior to the
end of the applicable Survival Period.  Any
written notice delivered by a Purchaser Indemnitee to Sellers with respect to
Purchaser Damages shall set forth with as much specificity as is reasonably
practicable the basis of the claim for Purchaser Damages and, to the extent
reasonably practicable, a reasonable estimate of the amount thereof;


(vi)          Crompton
shall not be obligated to indemnify Purchaser Indemnitees pursuant to Section
12.2 for any claims arising from Crompton’s breach of the representation
and warranties contained in Section 5.8 if, and to the extent, Sellers
are obligated to indemnify Purchaser Indemnitees with respect to the same
Purchaser Damages; and


(vii)         If
and to the extent that Purchaser breaches the representation and warranties
contained in Section 8.9, Purchaser waives any claim for indemnification
arising as a result of a breach of a Company representation with respect to the
same Purchaser Damages.


Section 12.3   Purchaser’s Agreement to Indemnify.  (a) 
Subject to the terms and conditions set forth herein, from and after the
Closing, Purchaser shall indemnify and hold harmless Sellers and their
respective directors, officers, employees, Affiliates, controlling persons,
agents and representatives and their successors and assigns (collectively, the “Sellers’ Indemnitees”) from and against all liability,
demands, claims, actions or causes of action, assessments, losses, damages,
costs and expenses (including reasonable attorneys’ fees and



 46
 






 



expenses) (collectively, “Sellers’ Damages”) asserted
against or incurred by any Sellers’ Indemnitee as a result of or arising out
of:


(i)            a
breach of any representation or warranty contained in Article VIII of
this Agreement when made or at and as of the Closing Date (or at and as of such
different date or period specified for such representation or warranty) as
though such representation and warranty were made at and as of the Closing Date
(or such different date or period); and


(ii)           a
breach of any covenant or agreement of Purchaser contained in this Agreement,
in any Ancillary Agreement, or in any other agreement delivered by Purchaser in
connection with the transactions contemplated hereby and a breach by the
Company of the covenant contained in Section 9.4.


(b)   Purchaser’s obligation to indemnify Sellers’
Indemnitees pursuant to Section 12.3(a) hereof or otherwise, but not
pursuant to Section 12.9, is subject to the following limitations:


(i)            No
indemnification shall be made by Purchaser pursuant to Section 12.3(a)(i)
unless the aggregate amount of Sellers’ Damages (for all claims) pursuant to Section
12.3(a)(i) exceeds $500,000 and, in such event, indemnification shall be
made by Purchaser only to the extent of such excess;


(ii)           In
no event shall Purchaser’s aggregate obligation to indemnify Sellers’
Indemnitees pursuant to Section 12.3(a) exceed $10 million in the
aggregate; provided,
Purchaser’s obligations to pay the Holdback Amount, Adjustment Amount and
accrued interest on such amounts shall not be subject to this $10 million cap;


(iii)          The
amount of any Sellers’ Damages shall be reduced by any amount received by a
Sellers’ Indemnitee with respect thereto under any insurance coverage or from
any other party alleged to be responsible therefor.  Sellers’ Indemnitees shall use reasonable
efforts to collect any amounts available under such insurance coverage and from
such other party alleged to have responsibility.  If a Sellers’ Indemnitee receives any amount
under insurance coverage or from such other party with respect to Sellers’
Damages at any time subsequent to any indemnification provided by Purchaser
pursuant to this Section 12.3, then such Seller Indemnitee shall
promptly reimburse Purchaser for any payment made or expense incurred by
Purchaser in connection with providing such indemnification up to such amount
received by Sellers’ Indemnitee; and


(iv)          Purchaser
shall be obligated to indemnify Sellers’ Indemnitee pursuant to Section
12.3(a)(i) only for those claims giving rise to Sellers’ Damages as to
which Sellers’ Indemnitees have given Purchaser written notice thereof prior to
the end of the applicable Survival Period. 
Any written notice delivered by a Sellers’ Indemnitee to Purchaser with
respect to Sellers’ Damages shall set forth with as much specificity as is
reasonably practicable the basis of the claim for Sellers’ Damages and, to the
extent reasonably practicable, a reasonable estimate of the amount thereof.



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Section 12.4   Indemnification
Procedure.  (a)  The
obligations of Sellers to indemnify Purchaser Indemnitees under Section 12.2
with respect to Purchaser Damages and the obligations of Purchaser to indemnify
Sellers’ Indemnitees under Section 12.3 with respect to Sellers’
Damages, in any case resulting from the assertion of liability by third parties
and under Article X (each, as the case may be, a “Third Party Claim”), will be subject to the following terms
and conditions:


(i)            A party claiming indemnification under this
Agreement (an “Indemnified Party”) shall with reasonable promptness and
within the applicable Survival Period (i) notify the party from whom
indemnification is sought (the “Indemnifying Party”) of any Third Party
Claims for which indemnification is sought and (ii) transmit to the
Indemnifying Party a written notice (“Third Party Claim Notice”)
describing in reasonable detail the nature of the Third Party Claim, a copy of
all papers served with respect to such Third Party Claim (if any), an estimate
of the amount of damages attributable to the Third Party Claim to the extent
feasible (which estimate shall not be conclusive of the final amount of such
Third Party Claim) and the basis of the Indemnified Party’s request for
indemnification under this Agreement. 
Failure to provide such notice shall not affect the right of an
Indemnified Party to indemnification, except to the extent the Indemnifying
Party is materially prejudiced by such failure. 
Within 60 calendar days after receipt of any Third Party Claim Notice
(the “Election Period”), the Indemnifying Party shall notify the
Indemnified Party (i) whether the Indemnifying Party disputes its
potential liability to the Indemnified Party under this Article XII with
respect to such Third Party Claim and (ii) whether the Indemnifying Party
desires, at its sole cost and expense, to defend the Indemnified Party against
such Third Party Claim.


(ii)           If
the Indemnifying Party notifies the Indemnified Party within the Election
Period that the Indemnifying Party elects to assume the defense of the Third
Party Claim, then the Indemnifying Party shall have the right to defend, at its
sole cost and expense (if the Indemnified Party is entitled to indemnification
hereunder), such Third Party Claim by all appropriate proceedings, which
proceedings shall be promptly and diligently, in the reasonable judgment of
counsel selected by the Indemnifying Party, prosecuted by the Indemnifying
Party to a final conclusion or settled at the discretion of the Indemnifying
Party in accordance with this Section 12.4(a)(ii).  The Indemnifying Party shall have full
control of such defense and proceedings, including any compromise or settlement
thereof.  The Indemnified Party is hereby
authorized, at the sole cost and expense of the Indemnifying Party (but only if
the Indemnified Party is entitled to indemnification hereunder), to file,
during the Election Period, any motion, answer or other pleadings that the
Indemnified Party shall reasonably deem necessary or appropriate to protect its
interests or those of the Indemnifying Party and not prejudicial to the
Indemnifying Party (it being understood and agreed that if an Indemnified Party
takes any such action that is materially prejudicial and causes a final
adjudication that is adverse to the Indemnifying Party, the Indemnifying Party
shall be relieved of its obligations hereunder with respect to such Third Party
Claim to the extent the Indemnifying Party was so prejudiced and harmed).  If requested by the Indemnifying Party, the
Indemnified Party agrees to cooperate with the Indemnifying Party and its
counsel in contesting any Third Party Claim that the Indemnifying Party
reasonably elects to contest, including the making of any related counterclaim
against the person



 48
 






 



asserting the Third Party Claim or any
cross-complaint against any person. 
Except as otherwise provided herein, the Indemnified Party may
participate in, but not control, any defense or settlement of any Third Party
Claim controlled by the Indemnifying Party pursuant to this Section 12.4
and shall bear its own costs and expenses with respect to such
participation.  Notwithstanding the
foregoing, the Indemnifying Party may not agree to any compromise or settlement
that would require any action other than the payment of money that shall be
fully paid by the Indemnifying Party without the express written consent of the
Indemnified Party.


(iii)          If
the Indemnifying Party fails to notify the Indemnified Party within the
Election Period that the Indemnifying Party elects to defend the Indemnified
Party pursuant to Section 12.4(a)(ii), or if the Indemnifying Party
elects to defend the Indemnified Party pursuant to Section 12.4(a)(ii)
but fails to diligently and promptly prosecute or settle the Third Party Claim
as herein provided, then the Indemnified Party shall have the right to defend,
at the sole cost and expense of the Indemnifying Party (if the Indemnified
Party is entitled to indemnification hereunder), the Third Party Claim by all
appropriate proceedings, which proceedings shall be promptly and vigorously
prosecuted by the Indemnified Party to a final conclusion or settled.  The Indemnified Party shall have full control
of such defense and proceedings. 
Notwithstanding the foregoing, if the Indemnifying Party has delivered a
written notice to the Indemnified Party to the effect that the Indemnifying
Party disputes its potential liability to the Indemnified Party under this Article
XII and if such dispute is resolved in favor of the Indemnifying Party, the
Indemnifying Party shall not be required to bear the costs and expenses of the
Indemnified Party’s defense pursuant to this Section or of the Indemnifying
Party’s participation therein at the Indemnified Party’s request, and the
Indemnified Party shall reimburse the Indemnifying Party in full for all costs
and expenses of such litigation.  The
Indemnifying Party may participate in, but not control, any defense or
settlement controlled by the Indemnified Party pursuant to this Section 12.4,
and the Indemnifying Party shall bear its own costs and expenses with respect
to such participation.


(b)   In the event any Indemnified Party should
have a claim against any Indemnifying Party hereunder that does not involve a
Third Party Claim, the Indemnified Party shall transmit to the Indemnifying
Party a written notice (the “Indemnity Notice”) describing in reasonable detail the
nature of the claim, an estimate of the amount of damages attributable to such
claim to the extent feasible (which estimate shall not be conclusive of the
final amount of such claim) and the basis of the Indemnified Party’s request
for indemnification under this Agreement.


(c)   The provisions of this Section 12.4
are in all cases subject to the limitations and restrictions of Section 12.1,
Section 12.2 and Section 12.3.


Section 12.5   Reduction of Sellers’ Holdbacks.


(a)   The Purchaser shall have the right to reduce
the amount of each of the Sellers’ Holdbacks by an amount equal to the product
of (i) the Purchaser Damages arising from a breach of the Company
Representations and Warranties, and (ii) each such Seller’s Holdback



 49
 






 



Percentage; provided, however,
any Purchaser Damages arising from a breach of a Crompton Representation and
Warranty or pursuant to Section 12.2(a)(iii)(B) may only reduce, and
only to the extent of, any amounts owed pursuant to the Crompton Holdback; provided,
further that any Purchaser Damages arising from a breach of a BCCM
Representation and Warranty, pursuant to Section 12.2(a)(iii)(A)  or with respect to a BCCM Tax Amount pursuant
to Section 12.2(a)(v) may only reduce, and only to the extent of, any
amounts owed pursuant to the BCCM Holdback; provided, further,
that any Purchaser Damages arising from a breach of BCCM Shareholder
Representation may only reduce, and only to the extent of, any amounts owed
pursuant to the breaching BCCM Shareholder’s Holdback; provided, further,
that any Purchaser Damages arising from a breach of a Management Member
Representation and Warranty may only reduce, and only to the extent of, any
amounts owed pursuant to the breaching Management Member’s Holdback; and provided
further any Purchaser Damages arising from a breach of a Title
Representation may only reduce the specific Seller’s Holdback payable to or on
behalf of the breaching Seller and only to the extent of the amount payable to
such Seller pursuant to such Sellers’ Holdback. 
Notwithstanding the foregoing, Purchaser shall have no recourse against
any Seller for Purchaser Damages beyond the amount available at the time of
such claim pursuant to such Seller’s Holdback, after giving effect to any
payments made or that should have been made pursuant to Section 2.7 or Section
3.3 or pursuant to Section 12.5(b), except with respect to a breach
of a Title Representation which shall not be limited by the breaching Seller’s
Holdback.  The exercise of such right of
reduction by Purchaser in good faith, whether or not ultimately determined to
be justified, will not constitute a breach of Section 2.7 or Section
3.3 hereunder provided that Purchaser complies with the provisions therein
with respect to depositing disputed amounts in an escrow account.


(b)   In the event that, as of the twelve (12)
month anniversary of the Closing Date or any twelve (12) month period ending on
any calendar month thereafter, the Anniversary EBITDA is in excess of $26
million (a “Holdback Acceleration Event”), Purchaser shall pay the full
amount remaining on each Seller’s Holdback, provided, that no such payment shall
be made if, and for so long as, an Event of Default (as defined in the Credit
Agreement) has occurred and is continuing under the terms of the Credit
Agreement, and no claims for indemnification may be made thereafter against the
Sellers regardless of whether or not such payment has been made, except with
respect to the Title Representations.


Section 12.6   Settlement of Claims.   Any claims for Purchaser Damages that have
reduced Sellers’ Holdbacks pursuant to Section 12.5 may be settled or
disputed with respect to each Sellers’ Holdback as follows:


(a)   With respect to any claims for Purchaser
Damages reducing the Crompton Holdback, with the consent of Crompton;


(b)   With respect to any claims for Purchaser
Damages reducing the BCCM Holdback, with the consent of the BCCM Agent;


(c)   With respect to any claims for Purchaser
Damages reducing the Management Members’ Holdback, with the consent of the
Management Members’ Agent;



 50
 






 



(d)   With respect to any claims for Purchaser
Damages reducing the Carryholders’ Holdback, with the consent of the
Carryholders’ Agent;


provided,
however, that no claims for Purchaser Damages arising from a breach of a
BCCM Shareholder Representation, a Management Member Representation and
Warranty or a Title Representation may be settled without the consent of the
breaching Seller.


Section 12.7   Insurance.  The Indemnifying Party shall be subrogated to
the rights of the Indemnified Party in respect of any insurance relating to
Damages to the extent of any indemnification payments made hereunder, including
any indemnification payments made pursuant to Section 12.9.


Section 12.8   No Duplication.  Any liability for indemnification hereunder
shall be determined without duplication of recovery by reason of the state of
facts giving rise to such liability constituting a breach of more than one
representation, warranty, covenant or agreement.


Section 12.9   Contribution Agreement Indemnities.   The indemnification obligations of DS LLC, BCCM
and Crompton set forth in Article VII of the Contribution Agreement shall
remain in full force and effect following the Closing Date; provided that no
indemnification obligations of DS LLC shall be enforceable with respect to any
liability, demand, claim, cause of action, assessment, loss, damage, cost or
expense for which Sellers would have an obligation to indemnify the Purchaser
hereunder; and provided further that the indemnification obligations set forth
in Section 7.2 of the Contribution Agreement shall terminate and be of
no further force or effect on the Closing Date, except for Losses (as defined
in the Contribution Agreement) related to (i) Product Liability Claims,
(ii)  Environmental Claims and (iii)
Workers Compensations Claims.


Section 12.10 Remedies.  (a)  The parties agree that the
sole and exclusive remedy of any party hereto or their respective Affiliates
and Indemnitees with respect to this Agreement and the Ancillary Agreements or
any other claims relating to the Business, the events giving rise to this
Agreement and the Ancillary Agreements and the transactions provided for herein
and therein or contemplated hereby or thereby shall be limited to the
indemnification provisions set forth in this Article XII and, in
furtherance of the foregoing, each of the parties, on behalf of itself, its
Affiliates and Indemnitees, hereby waives and releases the other parties hereto
(and such other parties’ Affiliates and Indemnitees) from, to the fullest
extent permitted under any Applicable Law, any and all rights, claims and
causes of action it or its Affiliates or Indemnitees may have against the other
party hereto; provided
that this limitation shall not apply in the event of fraud; and provided further that if an
Indemnifying Party shall breach or threaten to commit a breach of any of its
restrictive covenants set forth in Article IX of this Agreement or any
Ancillary Agreement (the “Restrictive
Covenants”), any Indemnified Party shall have the right in addition
to, and not in lieu of, any other rights and remedies available to such
Indemnified Party, under law or in equity, to seek to have the Restrictive
Covenants specifically enforced by any court, including the right to seek entry
against such Indemnifying Party, any of its Affiliates and any shareholder,
officer, director, employee of each of the foregoing of restraining orders and
injunctions (preliminary, mandatory, temporary and permanent) against
violations, threatened or actual, and whether or not then continuing, of the
Restrictive Covenants,



 51
 






 



it being acknowledged and
agreed that money damages may not provide such Indemnified Party an adequate
remedy.


(b)   The parties hereto intend that, even though
indemnification and other obligations appear in various sections and articles
of this Agreement, the indemnification procedures and limitations contained in
this Article XII shall apply to all indemnity and other obligations of
the parties under this Agreement.


Section 12.11 No Special Damages.  NO PARTY SHALL BE LIABLE UNDER THIS ARTICLE
XII OR OTHERWISE IN RESPECT OF THIS AGREEMENT FOR EXEMPLARY, SPECIAL, PUNITIVE,
INDIRECT, REMOTE, SPECULATIVE OR CONSEQUENTIAL DAMAGES EXCEPT TO THE EXTENT ANY
INDEMNIFIED PARTY BECOMES LIABLE FOR SUCH DAMAGES INCURRED BY AN UNAFFILIATED
THIRD PARTY IN CONNECTION WITH A THIRD PARTY CLAIM SUBJECT TO INDEMNIFICATION
RIGHTS SET FORTH IN SECTION 12.2 OR SECTION 12.3, IN WHICH EVENT
SUCH DAMAGES MAY BE RECOVERABLE, SUBJECT TO THE LIMITATIONS AND RESTRICTIONS OF
SECTION 12.1, SECTION 12.2 AND SECTION 12.3.


Section 12.12 Materiality.  When the term “material”, “materially” or “in
all material respects” is used in this Agreement or any schedule hereto to
qualify a representation, warranty, covenant, agreement or definition set forth
in this Agreement or schedule hereto, such representation, warranty, covenant
and/or agreement shall be deemed to have been breached when any Damage singly
arising from the breach together with any and all damages, liabilities, losses
and expenses resulting from such Damage exceeds $100,000.


ARTICLE XIII

MISCELLANEOUS


Section 13.1   Notices.  All notices and other communications required
or permitted hereunder will be in writing and, unless otherwise provided in
this Agreement, will be deemed to have been duly given when delivered in person
or when dispatched by electronic facsimile transfer (receipt confirmed) or one
business day after having been dispatched by a nationally recognized overnight
courier service to the appropriate party at the address specified below:


(a)   If to Purchaser to:


D-S Acquisition
Co. 

c/o Hamilton Robinson LLC

2 Stamford Plaza

281 Tresser Boulevard

4th Floor

Stamford, Connecticut 06901

Attn:  Scott Oakford

Facsimile:  203-602-2206



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with a copy to:


Curtis, Mallet-Prevost, Colt & Mosle LLP

101 Park Avenue

New York, New York 10178

Attn:  Philip von Mehren, Esq.

Facsimile:  212-697-1559


(b)   If to Crompton Holding Corporation to:


c/o Chemtura Corp.

199 Benson Road
Middlebury, CT 06749

Attn: Lynn A. Schefsky

Facsimile: 203-573-4430


with a copy to:


Robinson & Cole LLP

One Boston Place

Boston, MA 02108-4404

Attn: Kathleen M. Porter

Facsimile:  617-557-5999


(c)   if to the BCCM Shareholders, to the addresses
set forth for each BCCM Shareholder on such BCCM Shareholder’s signature page
hereto.


with a copy to:


Levett Rockwood P.C.

33 Riverside Avenue

Westport, Connecticut 06880

Attn:  Cheryl L. Johnson, Esq.

Facsimile:  203-226-8025


(d)   if to the Management Member Sellers, to the
addresses set forth for each Management Member Seller on such Management Member
Seller’s signature page hereto;


with a copy to:


Adler Pollock
& Sheehan P.C.

One Citizens Plaza, 8th Floor

Providence, RI 02903-1345

Attn:  John F. Corrigan


Facsimile:  401-751-0604



 53
 






 



or to
such other address or addresses as any such party may from time to time
designate as to itself by like notice.


Section 13.2   Amendments and Waivers.  (a)  Any provision of this
Agreement may be amended or waived if, but only if, such amendment or waiver is
in writing and is signed, in the case of an amendment, by each of Purchaser,
Crompton, BCCM Agent, the Management Members’ Agent and the Carryholders’
Agent, or in the case of a waiver, by the party against whom the waiver is to
be effective.


(b)   No failure or delay by any party in
exercising any right, power or privilege hereunder will operate as a waiver
thereof nor will any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege.  The rights and remedies
herein provided will be cumulative and not exclusive of any rights or remedies
provided by Law.


Section 13.3   Expenses.  Whether or not the transactions contemplated
by this Agreement are consummated, except as otherwise expressly provided for
herein, the parties will pay or cause to be paid all of their own fees and
expenses incident to this Agreement and in preparing to consummate and in
consummating the transactions contemplated hereby, including the fees and
expenses of any broker, finder, financial advisor, investment banker, legal
advisor or similar person engaged by such party.


Section 13.4   Successors and Assigns.  The provisions of this Agreement will be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns.  No
party may assign, delegate or otherwise transfer any of its rights or
obligations under this Agreement (including any transfer by way of merger or
operation of law) without the consent of each other party hereto; provided,
however, that Purchaser may assign its rights under this Agreement to a
wholly-owned Affiliate of Purchaser, it being understood that such assignment
will not relieve Purchaser from its obligations hereunder.  Any assignment in violation of the preceding
sentence will be void ab  initio.


Section 13.5   No Third-Party Beneficiaries.  Except as provided in Article XII and Section
13.4, this Agreement is for the sole benefit of the parties hereto and
their permitted successors and assigns, and nothing herein expressed or implied
will give or be construed to give to any Person, other than the parties hereto
and such permitted successors and assigns, any legal or equitable rights
hereunder.


Section 13.6   Governing Law.  This Agreement will be governed by, and
construed in accordance with, the laws of the State of New York, regardless of
the Laws that might otherwise govern under principles of conflict of laws
thereof.


Section 13.7   Public Announcements.  From the date hereof until the Closing Date,
Sellers and Purchaser will obtain the approval of each other before issuing, or
permitting any agent or Affiliate to issue, any press releases or otherwise
making or permitting any agent or Affiliate to make any public statements with
respect to this Agreement and the transactions contemplated hereby; provided,
that this provision will not restrict either party from issuing any



 54
 






 



press release or public
statement required by applicable securities laws or applicable stock exchange
rules or regulations.


Section 13.8   Jurisdiction.  Any suit, action or proceeding seeking to
enforce any provision of, or based on any matter arising out of or in
connection with, this Agreement or the transactions contemplated hereby may be
brought in the courts of the State of New York, in New York County, and the
federal courts in the Southern District of New York.  Each of the parties (i) consents to the
exclusive jurisdiction of such courts (and of the appropriate appellate courts
therefrom) in any such suit, action or proceeding, (ii) irrevocably
waives, to the fullest extent permitted by Law, any objection which it may now
or hereafter have to the laying of the venue of any such suit, action or proceeding
in any such court or that any such suit, action or proceeding which is brought
in any such court has been brought in an inconvenient forum, (iii) will
not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court, and (iv) will not bring any action
relating to this Agreement or any of the transactions contemplated by this
Agreement in any other court.  Process in
any such suit, action or proceeding may be served on any party anywhere in the
world, whether within or without the jurisdiction of any such court; provided,
that such consent to jurisdiction is solely for the purpose referred to in this
Section 13.8 and shall not be deemed to be general submission to the
jurisdiction of said courts or in the State of New York other than for such
purpose.  Without limiting the foregoing,
each party agrees that service of process on such party as provided in Section
13.1 will be deemed effective service of process on such party.


Section 13.9   Counterparts.  This Agreement may be executed in one or more
counterparts, all of which will be considered one and the same agreement and
will become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party.


Section 13.10 Table of Contents; Headings.  The table of contents and headings in this
Agreement are for convenience of reference only and will not control or affect
the meaning or construction of any provisions hereof.


Section 13.11 Entire Agreement.  This Agreement (including the Schedules and
Exhibits hereto) and the Ancillary Agreements constitute the entire agreement
among the parties with respect to the subject matter of this Agreement.  This Agreement (including the Schedules and
Exhibits hereto) and the Ancillary Agreements supersede all prior agreements
and understandings, both oral and written, between the parties with respect to
the subject matter hereof of this Agreement. 
If there is any conflict between this Agreement and any Ancillary
Agreements, the provisions of this Agreement shall govern.


Section 13.12 Termination of Certain Agreements.  The execution and delivery of this Agreement
by the parties hereto shall terminate any rights or obligations of any of the
parties hereto under (i) the Letter of Intent between the Purchaser and
Sellers, dated August 1, 2006, (ii) the BCCM Shareholders’ Agreement, and (iii)
the DS Operating Agreement.


Section 13.13 Severability; Injunctive Relief.   If any provision of this Agreement or
the application of any such provision to any Person or circumstance is held
invalid, illegal or unenforceable in any respect by a court of competent
jurisdiction, the remainder of the



 55
 






 



provisions of this Agreement
(or the application of such provision in other jurisdictions or to Persons or
circumstances other than those to which it was held invalid, illegal or
unenforceable) will in no way be affected, impaired or invalidated, and to the
extent permitted by Law, any such provision will be restricted in applicability
or reformed to the minimum extent required for such provision to be
enforceable.  This provision will be
interpreted and enforced to give effect to the original written intent of the
parties prior to the determination of such invalidity or unenforceability.


Section 13.14 Waiver of Conflict.


(a)   Each of the parties hereto acknowledge that
Curtis, Mallet-Prevost, Colt & Mosle LLP (“CMP”), counsel to
Purchaser, has previously represented the Company, BCCM and certain of BCCM’s
shareholders, namely, Cygnet Capital Partners LP SBIC and its general partner
Hamilton Robinson LLC (together with its Affiliates, “HRCo”) and, in
addition to representing HRCo in its capacity as general partner of D-S
Partners L.P., the controlling shareholder of the Purchaser, in connection with
the transactions contemplated herein, is currently assisting the Company with
respect to several matters, including on-going environmental assistance and
advice on various corporate law issues. Accordingly, each party to this
Agreement (i) acknowledges that such party has had an opportunity to ask for
information relevant to this disclosure, (ii) acknowledges that CMP represented
only the Purchaser in the transactions contemplated by this Agreement and (iii)
gives its informed written consent to CMP’s representation of the Purchaser in
connection with the transactions contemplated herein and to CMP’s ongoing
representation of the Company in such unrelated matters.


(b)   Each of the parties hereto acknowledges that
HRCo is the general partner of D-S Partners L.P., the controlling shareholder
of the Purchaser, and is the general partner of the largest shareholder of
BCCM.  Each of DS LLC, BCCM, Crompton,
the BCCM Shareholders, the Management Members and the Carryholders acknowledges
that such party has had an opportunity to ask for information relevant to this
disclosure and waives any claim or cause of action such party may have against HRCo, its directors, officers, employees, Affiliates,
controlling persons, agents and representatives, including, but not limited to,
CMP, with respect to the actual or potential conflicts described in the
foregoing sentence.


(c)   Each of the parties hereto acknowledge that
Levett Rockwood P.C. (“LR”), counsel to the BCCM Shareholders, has
previously represented MSR I SBIC, L.P. and its Affiliates, and HRCo, each of
which are, or are affiliates of, BCCM Shareholders.  LR is currently representing MSR I SBIC, L.P.
in connection with several matters. 
Accordingly, each party to this Agreement (i) acknowledges that such
party has had an opportunity to ask for information relevant to this
disclosure, (ii) acknowledges that LR represented only the BCCM Shareholders in
the transactions contemplated by this Agreement and (iii) gives its informed
written consent to LR’s representation of the BCCM Shareholders in connection
with the transactions contemplated herein.


[Remainder of page intentionally left blank.]



 56














 


The parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.


	
  

  	
  D-S ACQUISITION CO.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CROMPTON HOLDING CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
					



 















 


BCCM SHAREHOLDERS


	
  c/o Hamilton Robinson LLC

  281 Tresser Boulevard

  Suite 1000

  	
   

  	
   

  
	
  Stamford, CT 06901

  	
   

  	
  Owen S. Crihfield

  



 



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  c/o Hamilton Robinson LLC

  281 Tresser Boulevard

  Suite 1000

  	
   

  	
   

  
	
  Stamford, CT 06901

  	
   

  	
  Mark A. Riser

  



 



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  c/o Hamilton Robinson LLC

  281 Tresser Boulevard

  Suite 1000

  	
   

  	
   

  
	
  Stamford, CT 06901

  	
   

  	
  Phillip J. Cagnassola

  



 



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  c/o Hamilton Robinson LLC

  281 Tresser Boulevard

  Suite 1000

  	
   

  	
   

  
	
  Stamford, CT 06901

  	
   

  	
  Christian E. Lund

  



 



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  2575 S. Bayshore Drive

  Unit 12A

  Miami, FL 33133

  	
   

  	
   

  
	
   

  	
   

  	
  Gordon E. Ettie

  



 



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  c/o Hamilton Robinson LLC

  	
  CYGNET CAPITAL PARTNERS LP SBIC

  
	
  281 Tresser Boulevard

  	
   

  	
   

  
	
  Suite 1000

  	
  By: 

  	
  Hamilton Robinson Associates LLC

  
	
  Stamford CT 06901

  	
  Its:

  	
  General Partner 

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 



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  4 Indian Spring Trail

  Darien, CT 06901

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Green Arc LLC

  



 



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  8 Wright Street

  	
  MSR I SBIC, L.P.

  
	
  Westport, CT
  06880

  	
   

  	
   

  
	
   

  	
  By:

  	
  MSR I SBIC Partners, LLC

  
	
   

  	
   

  	
  (its General Partner)

  
	
   

  	
  By:

  	
  MSR Advisors, Inc.

  
	
   

  	
   

  	
  (its Manager)

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name: Daniel A. Levinson

  
	
   

  	
   

  	
  Title: President

  



 



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  281 Tresser Blvd.

  Suite 100

  Stamford, CT 06901

  	
   

  	
   

  
	
   

  	
   

  	
  Scott I. Oakford

  



 



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  204 Mallard Dr.

  Camillus, NY 13031

  	
   

  	
   

  
	
   

  	
   

  	
  John D. Buckla

  



 



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  1734 State Route 48

  Fulton, NY 13069

  	
   

  	
   

  
	
   

  	
   

  	
  William P. Stevenson

  



 



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  706 Meadowbrook Circle

  Fulton, NY 13069

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  James P. Vescio

  



 



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  4138 Metauro Dr.

  Liverpool, NY 13090

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Orland F. Cole

  



 



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  172 Riverside Ave.

  Fulton, NY 13069

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Richard S. Tetro

  



 



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  49 Maple Avenue

  Fulton, NY 13069

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Ronald E. Bowering

  



 



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  143 Ridge Road

  Fulton, NY 13069

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  William A. Ditzer

  



 



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  1138 Orchard Drive

  Fort Mills, SC 29715

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Charles D. Hubbard

  



 



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  8828 Wandering Way

  Baldwinsville, NY 13027

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Robert F. Moeller

  



 



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  7716 Black Willow

  Liverpool, NY 13090

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Matthew C. Pestle

  



 



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  2828 Hiltonwood Road

  Baldwinsville, NY 13027

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Donald L. Teich

  



 



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  212 7th Street

  Liverpool, NY 13088

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Raymond E. Whitmore

  



 



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  4500 Red Spruce Lane|

  Manlius, NY 13104

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Harry M. Challender

  



 



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BCCM
SHAREHOLDERS/MANAGEMENT MEMBER SELLERS


	
  4561
  Cone Wood Trail

  Manlius, NY 13104

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Mark A. Panozzo

  



 



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  75 Hamilton Drive

  East Greenwich, RI 02818

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Charles Buckley

  



 



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MANAGEMENT
MEMBERS SELLERS


	
  599 Taugwonk Road

  Stonington, CT 06378

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Robert W. Ackley

  



 



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  2006 Holland Brook West

  Branchburg, NJ 08876

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Hassan A. Helmy

  



 



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  25 Seabury Drive

  Westerly, RI 02891

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  James O. Murphy

  



 



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  14 Willow Street

  Mystic, CT 06355

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Ernest W. Plasse

  



 



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  27 Sumac Lane

  North Attleborough, MA 02760

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Robert M. Armstrong

  



 



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CARRYHOLDERS’
AGENT


	
  27 Sumac Lane

  North Attleborough, MA 02760

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Robert Armstrong

  



 



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