STOCK PURCHASE AGREEMENT


Dated as of April 14, 2017


by and among

 

ASHLAND LLC,

PHARMACHEM LABORATORIES, INC.,

the holders of Common Stock identified on Exhibit A hereto,

DR. DAVID PEELE

and

PHOTON SH REPRESENTATIVE LLC, as the Shareholders’ Representative

 

 

 

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STOCK PURCHASE AGREEMENT

THIS STOCK PURCHASE AGREEMENT, dated as of April 14, 2017 (this “Agreement”), is made by and among: (i) Ashland LLC, a Kentucky limited liability company (“Parent”); (ii) Pharmachem Laboratories, Inc., a New Jersey corporation (the “Company”); (iii) the holders of Common Stock identified on Exhibit A hereto (the “Company Shareholders”); (iv) Dr. David Peele (the “Atom Minority Shareholder”); and (v) Photon SH Representative LLC, solely in its capacity as the shareholder representative hereunder (the “Shareholders’ Representative”).  Capitalized terms used herein without definition shall have the meanings specified in ARTICLE 1.

RECITALS

WHEREAS, the Company Shareholders own all of the issued and outstanding shares of Common Stock;

WHEREAS, on the terms and subject to the conditions set forth in this Agreement, the Company Shareholders desire to sell to Parent, and Parent desires to purchase from the Company Shareholders, all of the issued and outstanding shares of Common Stock;

WHEREAS, the Atom Minority Shareholder holds 16 shares of Atom Common Stock (the “Atom Minority Shares”) and the Company owns 84 shares of Atom Common Stock, together constituting all of the issued and outstanding shares of Atom Common Stock;

WHEREAS, on the terms and subject to the conditions set forth in this Agreement, the Atom Minority Shareholder desires to sell to the Company, and the Company desires to purchase from the Atom Minority Shareholder, all of the Atom Minority Shares;

WHEREAS, at the Closing following the purchase of the Common Stock, Parent desires to contribute cash to the capital of the Company for the purpose of funding the Company’s purchase of the Atom Minority Shares, and the Company desires that Parent pay such cash directly to the Atom Minority Shareholder on the Company’s behalf on the terms and subject to the conditions set forth in this Agreement;

WHEREAS, the ESOP Trustee has received an opinion from the Qualified Independent Appraiser (the “Fairness Opinion”) that (i) the price to be received by the ESOP for its shares of Common Stock is not less than fair market value (as such term is used in determining “adequate consideration” under section 3(18) of the Employee Retirement Income Security Act of 1974, as amended “ERISA”) of such shares and (ii) the terms and conditions of the transactions contemplated herein are fair and reasonable to the ESOP from a financial point of view;

NOW, THEREFORE, in consideration of the foregoing, and the respective representations, warranties, covenants and agreements set forth in this Agreement, and intending to be legally bound hereby, the parties hereto hereby agree as follows:

 

 

ARTICLE 1.
DEFINED TERMS

“Adjusted Base Consideration” means $660,000,000 plus (i) the Estimated Closing Cash, plus (ii) the Estimated Net Working Capital Adjustment Amount and minus (iii) Estimated Closing Indebtedness and minus (iv) Estimated Company Transaction Expenses.

“Adjustment Amount” equals the sum (which may be positive or negative) of:

An “affiliate” of any Person means another Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such first person; provided that such Person shall be deemed an affiliate for only so long as such control exists and, for purposes of this definition, “control” means the possession, directly or indirectly, of the power to direct, or cause the direction of, the management and policies of such person, whether through the ownership of voting securities, by Contract, or otherwise.

“Allocation Annex” means Annex 1.1(a) hereto.

“Antitrust Laws” means the HSR Act, the Sherman Antitrust Act of 1890, as amended, the Clayton Act of 1914, as amended, the Federal Trade Commission Act of 1914, as amended, and any other Laws that are designed or intended to prohibit, restrict or regulate (a) foreign investment or (b) actions having the purpose or effect of monopolization or restraint of trade or lessening of competition.

“Atom” means Avoca Inc., a North Carolina corporation.

“Atom Common Stock” means the common stock of Atom.

“Base Working Capital” means $78,000,000.

“Business Day” means a day, other than Saturday or Sunday, on which banks generally are open for the transaction of business in New York, New York.

“Cash” means all cash and cash equivalents (including certificates of deposit and restricted cash) of the Company and its Subsidiaries.  For the avoidance of doubt, Cash shall be

 

 

“Closing Date Cash Consideration” means an amount equal to (i) the Adjusted Base Consideration minus (ii) the Reserve Amount minus (iii) the Purchase Price Escrow Amount.

“Code” means the Internal Revenue Code of 1986, as amended.

“Common Stock” means the common stock of the Company.

“Company Fundamental Representations” means the representations and warranties set forth in the first sentence of Section 4.1 (Corporate Organization), Section 4.2 (Subsidiaries and Minority Interests), Section 4.3 (Capitalization; Ownership), Section 4.4 (Authority) and Section 4.23 (Broker’s Fees).

“Company Material Adverse Effect” means any change, effect, event, state of facts, development or occurrence that, individually or in the aggregate, has had or would reasonably be expected to have a material adverse effect on the condition (financial or otherwise), business, assets, properties or results of operations of the Company and its Subsidiaries, taken as a whole; provided that in no event shall any of the following, alone or in combination, be deemed to constitute, nor shall any of the following constitute, or be taken into account in determining whether there has been or may be a “Company Material Adverse Effect”: (a) changes generally affecting the United States or international economy or political, regulatory, business, economic, financial, credit or capital market conditions, including interest rates or exchange rates, or any changes therein; (b) changes generally in any industry or segments therein currently engaged in by the Company or its Subsidiaries; (c) the negotiation, execution, delivery, performance, pendency or announcement of this Agreement and the transactions contemplated hereby, including any litigation, customer cancellations of services or delays in the start of services, any reduction in sales and adverse change in customer, supplier, licensor, distributor, consultant, employee, independent contractor, financing source, shareholder, partner or similar relationships (it being understood that this clause (c) shall not apply with respect to any representation or warranty contained in this Agreement (including for purposes of Section 8.2) to the extent that the purpose of such representation or warranty is to address the consequences resulting from the negotiation, execution or delivery of this Agreement, the performance of obligations under this Agreement or the consummation of the transactions contemplated by this Agreement); (d) acts of war or military actions (whether or not declared), the commencement, continuation or escalation of a war, acts of armed hostility, sabotage or terrorism or other international or national calamity or any material worsening of such conditions threatened or existing as of the date of this Agreement; (e) any hurricane, tornado, volcano, earthquake, flood, or other natural disaster or act of God; (f) changes in applicable Laws, accounting requirements or principles, including GAAP, after the date hereof, or any interpretations thereof by any Governmental Entity (or other authoritative interpretation or enforcement thereof); or (g) any failure, in and of itself, by the Company or its Subsidiaries to meet any estimates of revenues, earnings, projections or other economic performance, whether published, internally prepared or provided to Parent or any of its Representatives (it being

 

 

understood that this clause (g) shall not prevent a determination that any change or effect underlying such failure to meet estimates has resulted in a Company Material Adverse Effect (to the extent such change or effect is not otherwise excluded from this definition of Company Material Adverse Effect)); provided, however, that the foregoing clauses (a), (b), (d), (e) and (f) of this definition shall not apply to the extent such changes, effects, events, state of facts, developments or occurrences have a disproportionate adverse effect on the Company and its Subsidiaries, taken as a whole, relative to the adverse effect that such changes, effects, events, state of facts, developments or occurrences have on other companies in the industry in which the Company and its Subsidiaries primarily operate.

“Company Transaction Expenses” means (a) all out-of-pocket fees and expenses of third-party advisors incurred or payable by the Company or any of its Subsidiaries in connection with the transactions contemplated by this Agreement, including the fees and expenses of investment bankers, legal counsel and accountants, (b) 100% of the aggregate premium and costs relating to the procurement by the Company of the D&O Insurance, (c) all payments under the Pharmachem Laboratories, Inc. Sale Bonus Plan and all other change in control, bonus, retention, incentive and other similar payments incurred or payable by the Company or any of its Subsidiaries solely as a result of or in connection with the transactions contemplated by this Agreement (including as a result of an acceleration of any such payment), together with the employer-paid portion of any employment or payroll taxes related thereto, and (d) all other miscellaneous expenses or costs, in each case, incurred or payable by the Company or any of its Subsidiaries in connection with the transactions contemplated by this Agreement, but excluding ISRA Costs and Expenses.  Company Transaction Expenses shall not include any Company Transaction Expenses to the extent paid prior to 12:01 a.m. on the Closing Date and shall include, without duplication, any amounts paid at Closing pursuant to Section 3.2(c).

“Confidentiality Agreement” means that certain letter agreement, dated November 9, 2016, between the Company and Parent.

“Contract” means any written or oral contract, commitment, agreement, arrangement, note, bond, mortgage, lease, sublease, license or other agreement legally binding on any party, including all amendments thereto.

“Default” means, with respect to any Person, a default (or an event which, with notice or lapse of time or both would constitute a default) under, an event or circumstance which gives rise to any right of termination, acceleration, modification or cancelation of any right or obligation of such Person under, entitle any person to increased, additional or guaranteed rights or which result in the creation of any Lien on any of such Person’s assets pursuant to, or results in a loss of any benefit to which such Person is entitled under, any Contract to which such Person is a party, or by which any it or its properties or assets is bound.

 “Escrow Agent” means JPMorgan Chase Bank, N.A., or its successor, in its capacity as such pursuant to the Escrow Agreement.

“Escrow Agreement” means an escrow agreement in substantially the form attached hereto as Exhibit B among Parent, the Shareholders’ Representative and the Escrow Agent.

 

 

“ESOP” means the Pharmachem Laboratories, Inc. Employee Stock Ownership Plan.

“ESOP Trustee” means Wilmington Trust, N.A. and successors.

“Financial Statements” means (i) the audited consolidated balance sheet as of September 30, 2016 (the “Latest Balance Sheet”) and September 30, 2015 and the related statements of income and cash flows for the fiscal years then ended, together with the related notes thereto and reports thereon and (ii) the unaudited consolidated balance sheet as of December 31, 2016.

“Fraud” means, with respect to any Person, an actual and intentional fraud, provided, however, that such actual and intentional fraud of such Person shall only be deemed to exist if such Person had actual knowledge (as opposed to imputed or constructive knowledge) of the applicable misstatement or omission (whether oral or written) and such misstatement or omission was made with the specific intention to mislead the other party and for such other party to rely thereon to its detriment and such party did in fact rely thereon to such party’s detriment.  Section 11.2(c) sets forth the liability of, or other remedy with respect to, any Person (including any Shareholder) for any Losses for claims of, or causes of action arising from, Fraud.

“Fully Diluted Pro Rata Portion” has the meaning set forth in the Allocation Annex.

“Funded Debt” means, without duplication, (but, in each case, excluding obligations of the Company or any of its Subsidiaries to the Company or any of its Subsidiaries), the sum of (in each case, including any accrued interest, prepayment penalties, make-whole payments and premiums, breakage costs, fees and other amounts due on payment), (a) all obligations of the Company and its Subsidiaries for borrowed money; and (b) other indebtedness of the Company and its Subsidiaries evidenced by notes, bonds, debentures or other debt securities.

“GAAP” means United States generally accepted accounting principles.

“Governmental Entity” means any federal, state or local court, administrative or regulatory agency or commission or other governmental authority or instrumentality, domestic or foreign (including, without limitation, multi-national).

“Indebtedness” means, without duplication (but, in each case, excluding obligations of the Company or any of its Subsidiaries to the Company or any of its Subsidiaries), the sum of (in each case, including any accrued interest, prepayment penalties, make-whole payments and premiums, breakage costs, fees and other amounts due on payment), (a) all Funded Debt; (b) any obligations of the Company or any of its Subsidiaries to pay the deferred purchase price of property, goods or services already received, except trade accounts payable and other current liabilities arising in the ordinary course of business; (c) capitalized lease obligations of

 

 

the Company and its Subsidiaries; (d) all obligations by which the Company or any of its Subsidiaries assures a creditor against loss, including reimbursement obligations with respect to letters of credit, (e) all indebtedness secured by a Lien on the assets or properties of the Company or any of its Subsidiaries, whether or not the indebtedness secured thereby has been assumed by the Company or its applicable Subsidiary, (f) all obligations of the Company or any of its Subsidiaries in respect of interest rate protection agreements, foreign currency exchange agreements or other interest or exchange rate hedging arrangements and (g) indebtedness of the types described in clauses (a) through (f) that is guaranteed, directly or indirectly, in any manner by the Company or any of its Subsidiaries; provided, however, that, notwithstanding the foregoing, for purposes of calculating Estimated Closing Indebtedness and Closing Indebtedness, Indebtedness of the type described in clause (d) or clause (g) shall be included only to the extent there is a demand for payment of such Indebtedness.

“Intellectual Property” means all intellectual property rights arising from or in respect of the following, whether protected, created or arising under the Laws of the United States or any other jurisdiction or under any international convention, including all (a) patents and patent applications (including all utility and design patents), statutory invention registrations, including all continuations, divisionals, continuations-in-part and provisionals and patents issuing on any of the foregoing, and all reissues, reexaminations, substitutions, renewals and extensions (including supplementary protection certificates) of any of the foregoing (“Patents”); (b) trademarks, service marks, trade dress, trade names, logos, corporate names and other source or business identifiers, and all of the goodwill associated with any of the foregoing, and all registrations, applications for registration, renewals and extensions for any of the foregoing (collectively, “Marks”); (c) copyrights and copyrightable works, including Software, documentation, databases and Internet website content and all registrations, applications for registration, renewals, extensions and reversions of any of the foregoing (collectively, “Copyrights”); (d) Internet domain names, and registrations and applications for registration therefor, and social media identifiers, handles and tags; and (e) Trade Secrets.

“ISRA Costs and Expenses” means any fees, expenses or costs incurred by the Company or its Subsidiaries pursuant to Section 7.5(c) or any other fees, expenses or costs (including fees, expenses or costs of third party advisors) arising from compliance with ISRA in connection with the transactions contemplated by this Agreement.

“Knowledge of the Company” and similar phrases mean the actual knowledge, without investigation, of Colin MacIntyre, Joe Wesolowski, Paul Borrell, Paul Halada, David Peele, Guus Gerritsen and Peter Hafermann.

“Law” means any statute, code, law, ordinance, rule, regulation, directive or Order of any Governmental Entity.

“Liens” means all liens, mortgages, pledges, charges, encumbrances (including restrictive covenants or deed restrictions in connection with environmental or remedial obligations), options, leases, subleases, licenses, adverse rights or claims and security interests whatsoever, including any rights of refusal or offer, and any restriction on the right to vote, sell or otherwise dispose of such capital stock or other ownership interests.

 

 

“Loss” or “Losses” means any liability, obligations, fines, penalties, losses, settlements, damages, claims, interest, awards and judgments, costs, Taxes and expenses (including reasonable attorneys’ fees and other reasonable costs and expenses of investigating or contesting any of the foregoing).

“Net Working Capital” means the sum of, without duplication, (a) a positive amount equal to the consolidated current assets of the Company and its Subsidiaries and (b) a negative amount equal to the consolidated current liabilities of the Company and its Subsidiaries, each component as calculated on a consolidated basis and determined in accordance with Annex 1.1(b), as calculated as of 12:01 a.m. on the Closing Date, and for the avoidance of doubt, not taking into account any of the transactions contemplated hereby.  Notwithstanding the foregoing, for purposes of calculating Net Working Capital, current assets and current liabilities shall exclude (A) any Indebtedness, (B) Cash (C) Company Transaction Expenses, (D) all current or deferred income Tax assets and liabilities and (E) ISRA Costs and Expenses.

“Order” means any writ, judgment, order, decree, injunction or ruling of any Governmental Entity.

“Parent Fundamental Representations” means the representations and warranties set forth in the first two sentences of Section 5.1 (Organization), Section 5.2 (Authority), Section 5.8 (Solvency) and Section 5.9 (Broker’s Fees).

“Parent Material Adverse Effect” means any material adverse effect on the ability of Parent to consummate the Closing in a timely manner or to perform any of its material obligations under this Agreement.

“Payoff Letter” means the letters provided by any Person holding Funded Debt setting forth the amount of such Funded Debt and the instructions for the payment of such Funded Debt.

“Permitted Liens” means all (a) mechanics’, carriers’ materialman’s, workmen’s, warehousemen’s, repairmen’s and similar statutory Liens arising by operation of Law in the ordinary course of business consistent with past practice for amounts not yet due and payable and for which adequate accruals or reserves have been established on the Financial Statements in accordance with GAAP or which are being contested in good faith by appropriate proceedings; (b) Liens for Taxes and assessments and other governmental charges and levies that are not yet due and payable or that may thereafter be paid without interest or penalty or which are being contested in good faith by appropriate proceedings and for which adequate accruals and reserves have been established on the Financial Statements in accordance with GAAP; (c) pledges or deposits to secure obligations under workers’ compensation or other similar Laws or to secure public or statutory obligations; (d) easements, covenants, rights of way, deed restrictions, restrictive covenants and other similar restrictions and agreements, and options, rights of first refusal or offer and other similar agreements, including any such covenants and restrictions in connection with environmental or remedial obligations that do not adversely affect in any material respect the current use of the property; (e) zoning and building Laws and codes and other similar land use Laws; (f) Liens arising under the Indebtedness; (g) with respect to Leased Real Property, Liens for which any landlord or overlandlord is responsible, including mortgages,

 

 

ground leases, mechanics’ and similar Liens and unpaid Taxes, assessments and other governmental charges and levies (other than Taxes, assessments, other governmental charges and levies and other payments which the Company or any of its Subsidiaries is obligated to pay pursuant to the terms of the applicable Lease); and (h) Liens described on Section 1.1 of the Company Disclosure Schedule.

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

“Qualified Independent Appraiser” means Adamy Valuation Advisors, Inc.

“R&W Insurance” means the insurance coverage provided pursuant to a buyer-side representation and warranty insurance policy that is summarized in that certain policy, effective as of the date hereof, by and between AIG Specialty Insurance Company and Parent.

“Representatives” means, as to any person, its officers, directors, employees, legal counsel, accountants, financial advisors, financing sources, consultants, insurers (including insurers and underwriters in respect of the R&W Insurance) and other agents and advisors.

“Reserve Amount” means $2,500,000.

“Shareholder Fundamental Representations” means the representations and warranties set forth in Section 3.6(a) (Organization; Power and Authority), Section 3.6(b) (Title), Section 3.6(c) (Authorization; Enforceability) and Section 3.6(f) (Brokers’ Fees).

“Shareholders” means the Company Shareholders and the Atom Minority Shareholder.

“Specified Person” means any person listed in the definition of “Knowledge of the Company”, Howard Tatz or Catherine Holmes.

“Subsidiary” when used with respect to any Person means any corporation, partnership, limited liability company or other organization, whether incorporated or unincorporated, of which at least fifty percent of the securities, or other interests having by their terms voting power to elect at least half of the board of directors or others performing similar functions with respect to such corporation or other organization, is directly or indirectly owned by such Person or by any one or more of its subsidiaries.

“Tax” or “Taxes” means all taxes or similar duties, fees, charges or assessments imposed by a Governmental Entity, in each case in the nature of a tax, including all taxes measured by or referred to as income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental (including taxes under Section 59A of the Code), customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated or other tax, together with any interest and any penalties, additions to tax or additional amounts.

 

 

“Tax Return” means any return, report or statement required or permitted to be filed with any Governmental Entity with respect to Taxes, including any schedules, attachments or amendments thereto.

“Trade Secrets” means trade secrets, know-how, confidential and proprietary information, including financial, business or technical information, inventions (whether patentable or not), invention disclosures, improvements, designs, schematics, processes, formulas,  methodologies, techniques, plans and projections, customer, vendor and other business partner information, clinical data, chemistry, manufacturing and controls data, other data and all documentation (in whatever form or medium) embodying any of the foregoing not generally known to the public and that are maintained under secrecy.

“Treasury Regulation” means the income tax regulations promulgated by the Internal Revenue Service, Department of Treasury, pursuant to the Code.

 

 

 

 

well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such term.

ARTICLE 2.
PURCHASE AND SALE

 

 

that by their terms cannot be satisfied until the Closing, but subject to the satisfaction or waiver of such conditions) or such other date or time as may be mutually agreed in writing by Parent and the Company (the date on which the Closing actually occurs is the “Closing Date”).

ARTICLE 3.
CLOSING MATTERS; REPRESENTATIONS AND WARRANTIES OF THE

SHAREHOLDERS

 

 

“Certificates”) or, in the case of book-entry shares, an “agent’s message” (or such other evidence, if any, of transfer to Parent as Parent may reasonably request).

 

 

Representatives such workpapers (including the workpapers of any accountant or auditor retained by the Shareholders’ Representative in connection with this Section 3.4) or other documents or information under its control that is reasonably requested by Parent for purposes of reviewing any Notice of Objection and participating in the resolution of any items set forth in any Notice of Objection.

 

 

Arbitrator equal to (1) the absolute value of the difference between the Shareholders’ Representative’s aggregate position with respect to the Disputed Items and the Arbitrator’s final determination with respect to the Disputed Items over (2) the absolute value of the difference between the Shareholders’ Representative’s aggregate position with respect to the Disputed Items and Parent’s aggregate position with respect to the Disputed Items, and Parent shall be responsible for the remainder of such fees and costs.

i.

to the Shareholders’ Representative, any amount thereof specified by the Shareholders’ Representative to be added to the Reserve; and

ii.

the remaining amount to each Shareholder of its Fully Diluted Pro Rata Portion of such amount, in accordance with the Allocation Annex; and

 

 

i.

to the Shareholders’ Representative, any amount thereof specified by the Shareholders’ Representative to be added to the Reserve; and

ii.

the remaining amount to each Shareholder of its Fully Diluted Pro Rata Portion of such amount, in accordance with the Allocation Annex;

 

 

transfer of immediately available funds to an account (the “Tax Return Escrow Account”) that will be designated and administered by the Escrow Agent pursuant to the Escrow Agreement.  Promptly following the date on which all Pre-Closing Tax Returns have been filed (the “Tax Return Escrow Release Date”), Parent and the Shareholders’ Representative shall provide joint written instructions to the Escrow Agent to release the available funds in the Tax Return Escrow Account, less the ESOP’s Fully Diluted Pro Rata Portion of any amounts claimed by any Parent Indemnified Party as indemnification claims in accordance with Section 7.2(b) and (c) for Taxes shown as due and payable on any Pre-Closing Tax Return, properly claimed against the Tax Return Escrow Account and not fully resolved prior to the Tax Return Escrow Release Date (“Outstanding Tax Return Claims”), to the ESOP.  Releases from the Tax Return Escrow Account in respect of indemnification claims in accordance with Section 7.2(b) and (c) for Taxes shown as due and payable on any Pre-Closing Tax Return properly claimed against the Tax Return Escrow Account shall be made in accordance with Section 10.7.

 

 

 

 

Parent or the Company, as applicable, free and clear of any Liens, other than those arising from the acts of Parent or its affiliates.

 

 

by such Shareholder of the transactions contemplated hereby, except in each case where the failure to give such notice or obtain such approval would not prevent or materially adversely affect the Shareholder’s ability to consummate the Closing in a timely manner or to perform any of its material obligations under this Agreement.

ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Subject to Section 11.15 (Company Disclosure Schedule), as set forth in the disclosure schedules delivered to Parent concurrently with the execution of this Agreement (the “Company Disclosure Schedule”), the Company represents and warrants to Parent as follows:

 

 

warrants, calls, rights (including preemptive rights), commitments or agreements of any character calling for the purchase, redemption or other acquisition or issuance, of any equity securities of any Subsidiary of the Company or requiring any payments based on or related to the value of any equity securities of any Subsidiary of the Company, including any equity securities representing the right to purchase or otherwise receive any other equity securities of any Subsidiaries of the Company.  Except as set forth in Section 4.2 of the Company Disclosure Schedule, there are no voting trusts, stockholder agreements, proxies or other similar agreements, including rights of first refusal, in effect with respect to the voting or transfer of any equity interest of any Subsidiary of the Company.

 

 

 

 

Disclosure Schedule, none of the Company or its Subsidiaries, or to the Knowledge of the Company, any auditor, accountant or representative thereof has received any complaint, allegation or assertion of a problem or claim in writing or otherwise, regarding the accounting or auditing practices, procedures, methodologies or methods of any of the Company or its Subsidiaries or their respective accounting controls, except for any such complaint, allegation or assertion that has been finally resolved.

 

 

that will be terminated at or prior to the Closing (each of which such Lien that will be terminated at or prior to the Closing is set forth on Section 4.11 of the Company Disclosure Schedule) .  Each such item of material personal property is in all material respects in operable condition and repair, subject to normal wear and tear, ongoing repairs or refurbishments in the ordinary course and obsolescence in the ordinary course, and is suitable for the purpose for which it is used by the Company and its Subsidiaries.

conducted therein, and (iii) there is no condemnation or other proceeding in eminent domain, pending or threatened in writing, affecting any portion of a Leased Real Property.

(d)            With respect to the Owned Real Property, except in any such case as would not, individually or in the aggregate, have a material, adverse impact on the continued use thereof, (i) none of the Company or its Subsidiaries has leased or otherwise granted to anyone (other than to the Company or another Subsidiary, and other than Permitted Liens) the right to use or occupy any Owned Real Property or any portion thereof, (ii) there are no outstanding contracts, options, rights of first offer or rights of first refusal granted by the Company or its Subsidiaries, in favor of any third parties to purchase any of the Owned Real Property or any portion thereof or interest therein, (iii) all improvements upon the Owned Real Property are in good operating condition and repair (ordinary wear and tear excepted) and sufficient in all material respects for the conduct of the business as currently conducted therein, and (iv) there is no condemnation or other proceeding in eminent domain, pending or threatened in writing, affecting any parcel Owned Real Property or any portion thereof or interest therein.

 

 

days after the date of this Agreement shall be completed or appropriate steps shall be taken to complete by the date of this Agreement.

 

 

Company and its Subsidiaries collect, store, use or maintain for the operation and conduct of the business of the Company and its Subsidiaries and to prevent unauthorized use, disclosure, loss, processing, transmission or destruction of or access to such Personal Data or non-public information by any other Person and no Person has made any illegal or unauthorized use of Personal Data that was so collected by the Company and its Subsidiaries.  With respect to the operation and conduct of the business of the Company and its Subsidiaries (i) the Company and its Subsidiaries have not been legally required to provide any notices in connection with a disclosure of Personal Data or non-public information, nor have the Company or its Subsidiaries provided any such notice, and (ii) there are no claims pending or threatened against the Company or its Subsidiaries alleging a violation of any Person’s Personal Data, privacy or data rights.

 

 

(C) that provide for the Company or its Subsidiaries to exclusively purchase from a third party or exclusively sell to a third party any product or material in the case where the payments made for such product or material are reasonably expected to exceed $100,000 for the year ended September 30, 2017 or are otherwise material to the Company and its Subsidiaries, taken as a whole;

 

 

Each Contract of the type described in clauses (i) through (xii) above is referred to herein as a “Material Contract”.

 

 

(including any Law required or implemented pursuant to Regulation (EC) No. 1907/2006 concerning the Regulation, Evaluation, Authentication and Restriction of Chemicals) or otherwise relating to the sale, distribution, marketing or labeling of any of the Company’s or any of its Subsidiary’s products, except for: (i) violations relating to employee, labor and benefits matters, which are subject to Sections 4.18 and 4.19, (ii) violations relating to Environmental Laws, which are subject to Section 4.20, (iii) violations relating to Taxes, which are subject to Section 4.21 or (iv) violations that would not, individually or in the aggregate, reasonably be expected to result in a Company Material Adverse Effect.  To the Knowledge of the Company, no investigation or review by any Governmental Entity concerning any such possible violation of Law or other requirement is pending or threatened.  The Company and each of its Subsidiaries holds all licenses, permits, registrations and other authorizations (“Permits”) required to conduct its business, and all such licenses, Permits, registrations and other authorizations are valid and in full force and effect, except for those the absence of which would not, individually or in the aggregate, reasonably be expected to constitute a Company Material Adverse Effect.  The Company and each of its Subsidiaries is in compliance with all such licenses, Permits, registrations and other authorizations, except for possible failures to be so in compliance that would not, individually or in the aggregate, reasonably be expected to constitute a Company Material Adverse Effect.  Except as set forth in Section 4.16 of the Company Disclosure Schedule, the consummation of the transactions contemplated by this Agreement, in and of itself, will not cause the revocation or cancellation of any material Permit or material Environmental Permit.

 

 

injunction relating to any Company Personnel, (ii) there is no current or threatened strike, lockout, slowdown or work stoppage by or with respect to any Company Personnel and (iii) there are no current or written threats to engage in activities or proceedings of any Company Personnel or any labor organization to organize or certify a collective bargaining unit or to gain recognition or bargaining rights.

 

 

intended to be “qualified” within the meaning of Section 401(a) of the Code has received a favorable determination letter as to such qualification from the IRS or is entitled to rely upon a favorable opinion issued by the IRS and, to the Knowledge of the Company, there are no existing circumstances or any events that have occurred that could reasonably be expected to cause the loss of any such qualification status of any such Company Benefit Plan.

 

 

complete copies of the Section 280G calculations (whether or not final) with respect to the Disqualified Individuals in connection with the transactions contemplated by this Agreement.

 

 

Environmental Law or Environmental Permit that has not been resolved with no outstanding costs or obligations.

 

 

treat, remediate, or to conduct any response, monitoring, restoration or corrective action with respect to, Hazardous Materials in the Environment undertaken in connection with any order or demand of any Governmental Entity.

 

 

group the common parent of which is the Company or any of its Subsidiaries) or (ii) has any liability for Taxes of any Person (other than the Company or any of its Subsidiaries) arising from the application of Treasury Regulation Section 1.1502-6 or any analogous provision of state, local or foreign Law, as a transferee or successor or by Contract (other than any Contract a primary purpose of which is not the indemnification or sharing of Taxes).

 

 

paid by the Company and its Subsidiaries during the 12-month period ended September 30, 2016 and (iii) the 10 most significant distributors (the “Material Distributors”) of products of the Company and its Subsidiaries, taken as a whole, based on amounts paid to the Company and its Subsidiaries during the 12-month period ended September 30, 2016.  Except as set forth in Section 4.24 of the Company Disclosure Schedule, since the date of the Latest Balance Sheet, no Material Customer, Material Supplier or Material Distributor has cancelled, terminated, failed to renew, materially reduced or provided written notice of or taken any material actions with the Company and its Subsidiaries to cancel, terminate, fail to renew or materially reduce its relationship with the Company or any of its Subsidiaries.

ARTICLE 5.
REPRESENTATIONS AND WARRANTIES OF PARENT

Parent represents and warrants to the Company and the Shareholders as follows:

 

 

 

 

 

 

Company and their respective Subsidiaries will have adequate capital to carry on their respective businesses.

 

 

information was provided, that provides the basis for an assumption underlying any Forward-Looking Statements.

ARTICLE 6.
COVENANTS

 

on Section 6.1(e) of the Company Disclosure Schedule, or (ii) sales or other dispositions of inventory and obsolete equipment in the ordinary course of business consistent with past practice;

 

 

 

 

stuffing” (i.e., materially accelerating the timing or amount of sales in excess of those that would have been sold in the ordinary course of business);

ARTICLE 7.
ADDITIONAL AGREEMENTS

 

 

on or before and ending after the Closing Date (a “Straddle Period”), all Taxes of (or payable by) the Company and its Subsidiaries which are allocable, pursuant to subsection (g) below, to the portion of such taxable period ending on the Closing Date (a “Pre-Closing Straddle Period”); provided, however, that there shall be no liability to the extent of the amount of Taxes taken into account in determining Closing Net Working Capital; provided, further, that the amount of Taxes allocable to any Pre-Closing Tax Period or Pre-Closing Straddle Period shall be determined by taking into account all Tax deductions that arise or become available as a result any expenses or costs that in each case are (x) attributable to, incurred or payable by the Company or any of its Subsidiaries in connection with the transactions contemplated by this Agreement and (y) properly deductible by the Company or any of its Subsidiaries in any Pre-Closing Tax Period or Pre-Closing Straddle Period (the “Transaction Tax Deductions”).

 

 

which the Shareholders would otherwise be entitled under this Section 7.2(d) shall be reduced by the amount of any Taxes described in Section 7.2(b) that have been paid by Parent or any of its Subsidiaries (including, after the Closing Date, the Company and its Subsidiaries) and for which none of the Parent Indemnified Parties has been indemnified under this Agreement.  If (x) any such refund or credit is subsequently disallowed or (y) Parent or any of its Subsidiaries subsequently pays any Taxes described in Section 7.2(b) for which none of the Parent Indemnified Parties is indemnified under this Agreement, the Shareholders shall promptly repay to Parent the amount of any payment previously paid by Parent under this Section 7.2(d), increased by any interest or penalty imposed as a result of such disallowance in the case of clause (x) and up to the amount of the unindemnified Taxes paid by Parent or any of its Subsidiaries in the case of clause (y).  The determination of the amount of any refund of any Taxes, and any credits in lieu of a refund, allocable to a Pre-Closing Straddle Period shall be made in accordance with the allocation of Taxes to a Pre-Closing Straddle Period under subsection (g) below.  The Shareholders’ Representative shall have the right to determine whether any claim for refund for such Taxes shall be made on behalf of the Company or any of its Subsidiaries.  If the Shareholders’ Representative elects to make a claim for refund, Parent, the Company and any of its Subsidiaries shall cooperate fully in connection therewith.

 

 

Closing Straddle Period if such Pre-Closing Straddle Period were an actual taxable period that ended on (and included) the Closing Date (assuming, for this purpose, that the safe harbor election provided for in IRS Revenue Procedure 2011-29 is made with respect to any Transaction Tax Deduction that constitutes a “success-based fee”.

 

 

acknowledges that the ESOP shall have the right to disclose this Agreement and any agreements, instruments and documents contemplated hereby to the ESOP participants.  Notwithstanding the foregoing, each of the Parties may make public statements regarding this Agreement or the transactions contemplated hereby so long as any such statements are not materially inconsistent with previous press releases, public disclosure or public statements made in accordance with this Agreement and do not reveal material, non-public information regarding the other Parties, this Agreement or the transactions contemplated hereby.

 

 

and comply with the provisions set forth in the Confidentiality Agreement as if such provisions were set forth herein, which provisions are hereby incorporated herein by reference.

 

 

provided that, with respect to Trade Secrets of the Company or any Subsidiary, the foregoing covenant shall survive indefinitely.  If the disclosure of such information is required by applicable Law, such Shareholder shall cooperate with and, to the extent reasonably practicable and not prohibited by Law, provide Parent an opportunity to object to the disclosure and shall give Parent as much prior written notice as is reasonably practicable under the circumstances.  If requested by Parent, such Shareholder shall use commercially reasonable efforts, at Parent’s expense, to obtain reliable assurance that confidential treatment will be accorded to any such information required by applicable Law to be disclosed.

 

 

offer to commit to take any action which it is capable of taking and if the offer is accepted, take or commit to take such action that limits its freedom of action with respect to, or its ability to retain, any of the businesses, services or assets of Parent or its Subsidiaries, in order to avoid the entry of, or to effect the dissolution of, any injunction, temporary restraining order or other Order in any suit or proceeding, which would otherwise have the effect of preventing or delaying the Closing beyond the Outside Date.  At the request of Parent, the Company shall agree to divest, hold separate or otherwise take or commit to take any action that limits its freedom of action with respect to, or its ability to retain, any of the businesses, services or assets of the Company or any of its Subsidiaries; provided that any such action shall be conditioned upon the consummation of the Closing and the transactions contemplated hereby.

 

 

approvals required in order to consummate the transactions contemplated herein and the Company and its Subsidiaries shall not be entitled to bear any such expense or pay any such fee or grant any such concession without Parent’s prior written consent.

 

 

 

 

Released Party or any claim or right to indemnification by the Company and its Subsidiaries for service by such Shareholder Releasing Party as an officer, director, employee, agent or similar capacity of the Company, any of its Subsidiaries or any related enterprise.  As of the Closing Date, each Shareholder, on behalf of each of the applicable Shareholder Releasing Parties, expressly acknowledges that it has had, or has had and waived, the opportunity to be advised by independent legal counsel.

 

 

modification or termination of the provisions of the R&W Insurance in respect of the restriction described in the preceding sentence.

 

 

group of Persons other than Parent or its affiliates of any of the capital stock of the Company or any of its Subsidiaries, or (iii) merger, consolidation, other business combination or similar transaction involving the Company or any of its Subsidiaries pursuant to which any Person or group of Persons other than Parent or its affiliates would own ten percent (10%) or more of the consolidated assets, net revenues or net income of the Company and the Subsidiaries, taken as a whole.

 

 

Shareholder pursuant to this Agreement (it being understood that no such assumption shall relieve such Company Shareholder of its obligations hereunder).

ARTICLE 8.
CONDITIONS PRECEDENT

 

 

 

 

certificate certifying that the conditions set forth in Sections 8.2(a)(iii) and (iv) and Section 8.2(b) with respect to such Shareholder have been satisfied.

ARTICLE 9.
TERMINATION, AMENDMENT AND WAIVER

 

 

Any proper termination of this Agreement pursuant to this Section 9.1 shall be effective immediately upon the delivery of written notice of the terminating party to the other parties.

 

 

Representatives, other than pursuant to the provisions of Section 7.1 (Expenses), Section 7.3 (Publication/Distribution of Agreement), this Section 9.2 (Effect of Termination), and ARTICLE 11 (General Provisions) (which Sections and Articles shall survive any termination of this Agreement); provided that no such termination of this Agreement shall relieve or otherwise affect the liability of any party hereto for any willful and intentional breach of this Agreement by such party prior to such termination or any Fraud by or on behalf of such party.  For purposes hereof, a “willful and intentional breach” shall mean a material breach of any representation, warranty, covenant or other agreement set forth in this Agreement that is a consequence of an act undertaken or failure to act by the breaching party with the actual knowledge that the taking of such act or failure to act would cause a breach of this Agreement.

ARTICLE 10.
INDEMNIFICATION

 

 

applicable Shareholder to whom such representation relates and the obligation to provide indemnification pursuant to Section 10.1(a)(iv) shall be borne solely by the Shareholders holding the Common Stock subject to the estate tax Lien described in Section 3.6(b)(i) of the Company Disclosure Schedule.  Each Shareholder’s obligation to provide indemnification pursuant to Section 10.1 shall be several and not joint.

 

 

covering any such Loss including but not limited to the R&W Insurance.  In the event that an insurance or other recovery is made by any Parent Indemnitee with respect to any Loss for which any such Parent Indemnitee has been indemnified hereunder, then a refund for such amount (after giving effect to any applicable deductible, retention, collection costs, retrospectively rated premiums and increase in future premiums as a result of or incurred in connection with the claim) shall be promptly made to the applicable indemnifying party.  Parent waives, to the extent permitted under its applicable insurance policies, any subrogation rights that its insurer may have with respect to any indemnifiable Losses.

 

 

entitled to assume the defense of such Third Party Claim with such counsel if it gives notice of its intention to do so to such indemnified party within 30 days of the receipt of notice of the Third Party Claim required by Section 10.5(a); provided that, prior to assuming control of such defense, the indemnifying party representative shall acknowledge that assuming that the claims made are true it would have an indemnity obligation for any Loss resulting from such Third Party Claim as provided under Section 7.2 or this ARTICLE 10 (it being understood that such acknowledgment would be based on the facts known at the time it is made).  The indemnifying party representative shall not be entitled to assume or control the defense of any Third Party Claim, and shall pay the fees and expenses of a single firm of principal counsel retained by the indemnified party in connection therewith, if (x) the indemnifying party representative does not deliver the acknowledgment described in the immediately preceding sentence of this Section 10.5(b) within 30 days of receipt of notice of the claim pursuant hereto; (y) the claim arises in connection with any criminal proceeding, action, indictment, allegation or investigation; or (z) the indemnifying party representative has failed or is failing to prosecute or defend vigorously the claim.  If the indemnifying party representative assumes such defense, the indemnified party shall have the right to participate in the defense thereof and to employ counsel (not reasonably objected to by the indemnifying party representative) separate from the counsel employed by the indemnifying party representative, it being understood that the indemnifying party representative shall control such defense.  The indemnifying party representative shall be liable for the fees and expenses of a single firm of principal counsel employed by the indemnified party.  If the indemnifying party representative chooses to defend or prosecute a Third Party Claim, all the indemnified parties shall cooperate in the defense or prosecution thereof.  Such cooperation shall include the retention and (upon the indemnifying party representative’s request) the provision to the indemnifying party representative of records and information that are reasonably relevant to such Third Party Claim, and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder.  Whether or not the indemnifying party representative assumes the defense of a Third Party Claim, the indemnified party shall not admit any liability with respect to, or settle, compromise or discharge, such Third Party Claim without the indemnifying party representative’s prior written consent.  If the indemnifying party representative assumes the defense of a Third Party Claim, the indemnified party shall agree to any settlement, compromise or discharge of a Third Party Claim that the indemnifying party representative may recommend and which (i) by its terms obligates the indemnifying party to pay the full amount of the liability in connection with such Third Party Claim, (ii) expressly and unconditionally releases the indemnified party completely in connection with such Third Party Claim, (iii) does not impose any injunctive or other equitable relief on the indemnified party and (iv) does not include any admission or finding of any violation of applicable Law by or otherwise expressly disparage the indemnified party.

 

 

 

 

ARTICLE 11.
GENERAL PROVISIONS

 

 

11.2(b).  Notwithstanding anything to the contrary herein, this Section 11.2(b) shall not limit the rights (including the right to pursue all available remedies) or obligations of Parent, its Subsidiaries (including, for the avoidance of doubt, the Company and its Subsidiaries) or any other party to any of the Contracts listed in Section 4.15 of the Company Disclosure Schedule under any such Contracts.

 

Ashland Global Holdings, Inc.

50 East RiverCenter Boulevard,

Covington, Kentucky 41011

Attention: Peter Ganz

Email: Pganz@ashland.com

with a copy to:

Cravath, Swaine & Moore LLP

Worldwide Plaza

825 Eighth Avenue

New York, NY 10019

Attention:  Thomas E. Dunn
Facsimile No.:  (212) 474-3700
Email:  tdunn@cravath.com

 

 

Pharmachem Laboratories Inc.

265 Harrison Avenue

Kearny, New Jersey 07032

Attention: Colin MacIntyre

Facsimile No.: 201.991.5674

Email: cmacintyre@pharmachemlabs.com

with a copy to:

Arnold & Porter Kaye Scholer LLP
250 West 55^th Street
New York, New York  10019-9710
Attention:  Derek Stoldt, Aaron Gardner and John Geelan
Facsimile No.:  (212) 836-6532, (212) 836-6574 and (212) 836-6421
Email:  derek.stoldt@apks.com, aaron.gardner@apks.com and

             john.geelan@apks.com

Raich Ende Malter & Co. LLP

175 Broadhollow Road, Suite 250

Melville, NY 11747

Attention: Howard P. Tatz

Facsimile No.: (516) 228-9122

Email:  htatz@rem-co.com

 

and

 

Catherine Holmes

15 Saddle Ridge Road

Ho-Ho-Kus, New Jersey 07423

Email: catherinefiscoholmes@gmail.com

 

with copies to:

 

Arnold & Porter Kaye Scholer LLP
250 West 55^th Street
New York, New York 10019-9710
Attention:  Derek Stoldt, Aaron Gardner and John Geelan
Facsimile No.:  (212) 836-6532, (212) 836-6574 and (212) 836-6421
Email:  derek.stoldt@apks.com, aaron.gardner@apks.com and
              john.geelan@apks.com

and

 

 

Greenberg Traurig, P.A.
5100 Town Center Circle, Suite 400
Boca Raton, Florida  33486
Attention:  Jeffrey S. Kahn
Facsimile No.: (561) 367 6235
Email:  KahnJ@gtlaw.com

 

 

Subsidiaries but no such assignment shall relieve Parent of its obligations hereunder.  No assignment by any party shall relieve such party of any of its obligations hereunder.  Subject to the preceding sentences, this Agreement shall be binding upon, and shall inure to the benefit of, and shall be enforceable by the parties hereto and their respective successors and assigns.

 

 

expenses or potential obligations which may arise in connection with this Agreement for payment after the Closing Date.  Each Shareholder shall be entitled to its Fully Diluted Pro Rata Portion of any amount released from the Reserve to the Shareholders, except to the extent that the Shareholders’ Representative shall have paid a disproportionate amount of any expenses or obligations on behalf of any Shareholder. The retention of amounts by the Shareholders’ Representative shall not be evidence that the Company, the Shareholders or Parent has breached any provision of this Agreement or that any amount is due or owing hereunder.

 

 

contemplated hereby in any court other than the Chancery Court of the State of Delaware (or in the event, but only in the event, that such court does not have subject matter jurisdiction over such action or proceeding, in the Superior Court of the State of Delaware or the United States District Court for the District of Delaware).  Each of the parties hereby irrevocably waives, and agrees not to assert, by way of motion, as a defense, counterclaim or otherwise, in any litigation with respect to this Agreement, (x) any claim that it is not personally subject to the jurisdiction of the above-named courts for any reason other than the failure to serve in accordance with this Section 11.12(a), (y) any claim that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) and (z) to the fullest extent permitted by the applicable Law, any claim that (A) the suit, action or proceeding in such court is brought in an inconvenient forum, (B) the venue of such suit, action or proceeding is improper or (C) this Agreement, or the subject matter of this Agreement, may not be enforced in or by such courts.  Each of the parties hereby irrevocably consents to service being made through the notice procedures set forth in Section 11.3 and agrees that service of any process, summons, notice or document by personal delivery to the respective addresses set forth in Section 11.3 shall be effective service of process for any litigation in connection with this Agreement or the transactions contemplated hereby.  Nothing in this Section 11.12(a) shall affect the right of any party to serve legal process in any other manner permitted by Law.

 

 

hereby are not affected in a manner materially adverse to any party hereto.  Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible to the fullest extent permitted by applicable Law in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the extent possible.

 

 

transactions contemplated by this Agreement, the attorney-client privilege and the expectation of client confidence belongs to the Shareholders and their respective affiliates and/or the Shareholders’ Representative, as applicable, and may be controlled by the Shareholders and their respective affiliates and/or the Shareholders’ Representative and shall not pass to or be claimed by Parent or the Company or its Subsidiaries.  Notwithstanding the foregoing, in the event that a dispute arises between Parent or the Company or its Subsidiaries and a third party other than a party to this Agreement after the Closing, the Company may assert the attorney-client privilege to prevent disclosure of confidential communications by Arnold & Porter Kaye Scholer LLP to such third party; provided, however, that the Company may not have access to such confidential communications or waive such privilege without the prior written consent of the Shareholders’ Representative.  This Section 11.16 is for the benefit of the Shareholder Group and such Persons are intended third-party beneficiaries of this Section 11.16.

 

IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly executed and delivered as of the date first above written.

 

	ASHLAND LLC
	By:	/s/ J. Kevin Willis
		Name:	J. Kevin Willis
		Title:	Senior Vice President and Chief Financial Officer

 

 

 

 

[SIGNATURE PAGE TO THE STOCK PURCHASE AGREEMENT]