-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LfoUJ5+Vghjc5wGT3BowT9/0EibbZMfKKEKl7TbsAplUm1+/zt7M2wapDte/u83b f0+am3FiQOYP2Z8+83ek3g== 0000950152-02-008510.txt : 20021114 0000950152-02-008510.hdr.sgml : 20021114 20021114173555 ACCESSION NUMBER: 0000950152-02-008510 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20020930 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20021114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FERRO CORP CENTRAL INDEX KEY: 0000035214 STANDARD INDUSTRIAL CLASSIFICATION: PAINTS, VARNISHES, LACQUERS, ENAMELS & ALLIED PRODUCTS [2851] IRS NUMBER: 340217820 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-00584 FILM NUMBER: 02826569 BUSINESS ADDRESS: STREET 1: 1000 LAKESIDE AVE CITY: CLEVELAND STATE: OH ZIP: 44114-1183 BUSINESS PHONE: 2166418580 MAIL ADDRESS: STREET 1: 1000 LAKESIDE AVE CITY: CLEVELAND STATE: OH ZIP: 44144-1183 8-K 1 l96640ae8vk.txt FERRO CORPORATION 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported) September 30, 2002 ------------------ FERRO CORPORATION ----------------- (Exact name of registrant as specified in its charter) Ohio 1-584 34-0217820 - ---------------------------- ----------- ------------------ (State or other jurisdiction (Commission (I.R.S. Employer of incorporation) File Number) Identification No.) 1000 Lakeside Avenue, Cleveland, OH 44114-1183 - ----------------------------------- ---------- (Address of Principal Executive Office) (Zip Code) Registrant's telephone number, including area code (216) 641-8580 -------------- N/A --- (Former name or former address, if changed since last report) ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. On September 30, 2002, Ferro Corporation and certain of its subsidiaries (collectively, the "Company") completed the disposition of its powder coatings business (the "Powder Coatings Business") through four separate sales transactions. The aggregate cash purchase price for the Powder Coatings Business was $132,000,000, subject to adjustment, which was determined as a result of arms-length negotiations among the Company and the buyers of the Powder Coatings Business. Pursuant to four separate purchase agreements, each dated August 2, 2002, the Company sold to Rohm and Haas Company, a Delaware corporation, certain assets and liabilities collectively constituting the Powder Coatings Business conducted in and from Europe, to International Paint, Inc., a Kentucky corporation, certain assets and liabilities collectively constituting the Powder Coatings Business conducted in and from North, Central and South America, to Akzo Nobel Sino Coatings B.V., a Dutch private company with limited liability, the Company's 100% equity interest in Ferro (Ningbo) Powder Coatings, Ltd., a Chinese wholly-owned foreign enterprise, through which the Company conducted, in part, its Powder Coatings Business in the Asia/Pacific region, and to Akzo Nobel Coatings International B.V., a Dutch private company with limited liability, the Company's 71.7% equity interest in LG Ferro Powder Coatings Ltd., a Korean limited liability company (yuhan hoesa), through which the Company conducted, in part, its Powder Coatings Business in the Asia/Pacific region. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. (a) Financial Statements of Business Acquired. Not Applicable (b) Pro forma financial information. The Powder Coatings business had sales of $175.2 million and $138.5 million for the twelve months ended December 31, 2001 and the nine months ended September 30, 2002, respectively. Earnings before income taxes of the Powder Coatings business were $12.0 million and $7.6 million for the twelve months ended December 31, 2001 and the nine months ended September 30, 2002, respectively. Following is a presentation of summary financial information reflecting the Powder Coatings business as discontinued operations for the periods presented. In addition, the Company has classified several other small businesses as discontinued based on the Company's intent to divest of such businesses over the next year. These businesses were previously included in the Coatings and Performance Chemicals segments.
($'s in thousands, except per share amounts) Year Nine Months Ended Ended December 31, 2001 September 30, 2002 ----------------- ------------------ Sales $ 1,246,503 $ 1,162,246 Income from Continuing Operations 30,012 26,693 Discontinued Operations: Results of discontinued operations, net of tax 9,185 6,590 Gain on disposal of discontinued operations, net of tax -- 32,465 ----------- ----------- Net Income $ 39,197 $ 65,748 =========== =========== Earnings Per Share Basic: Income from: Continuing operations $ 0.79 $ 0.66 Discontinued operations 0.26 1.04 ----------- ----------- $ 1.05 $ 1.70 Diluted: Income from: Continuing operations $ 0.79 $ 0.65 Discontinued operations 0.25 0.97 ----------- ----------- $ 1.04 $ 1.62
(c) Exhibits. 2.1 Asset Purchase Agreement, dated August 2, 2002, among Rohm and Haas Company, on one hand, and Ferro Corporation, Ferro Spain S.A., Ferro (Great Britain) Ltd., Ruhr-Pulverlack GmbH, and Ferro-Ruhr-Pulver Nordiska AB, on the other hand. (All appendices, other than Appendix A, Definitions, have been omitted, and Ferro Corporation will furnish to the Commission, upon request, a copy of any omitted appendix.) 2.2 Purchase Agreement, dated August 2, 2002, among International Paint, Inc., on one hand, and Ferro Corporation, Ferro Enamel Argentina S.A. and Ferro Mexicana S.A. de C.V., on the other hand. (All appendices, other than Appendix A, Definitions, have been omitted, and Ferro Corporation will furnish to the Commission, upon request, a copy of any omitted appendix.) 2.3 Purchase Agreement, dated August 2, 2002, between Akzo Nobel Sino Coatings B.V. and Ferro Corporation. (All appendices, other than Appendix A, Definitions, have been omitted, and Ferro Corporation will furnish to the Commission, upon request, a copy of any omitted appendix.) 2.4 Share Purchase Agreement, dated August 2, 2002, between Akzo Nobel Coatings International B.V. and Ferro Corporation. (All appendices, other than Appendix A, Definitions, have been omitted, and Ferro Corporation will furnish to the Commission, upon request, a copy of any omitted appendix.) SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized. Date: November 14, 2002 FERRO CORPORATION /s/ BRET W. WISE ----------------------------------- Bret W. Wise Senior Vice President and Chief Financial Officer EX-2.1 3 l96640aexv2w1.txt EXHIBIT 2.1 Exhibit 2.1 Conformed Copy ================================================================================ ASSET PURCHASE AGREEMENT DATED AS OF AUGUST 2, 2002 BY AND AMONG ROHM AND HAAS COMPANY ON ONE HAND AND FERRO CORPORATION, FERRO SPAIN S.A., FERRO (GREAT BRITAIN) LTD., RUHR-PULVERLACK GMBH, AND FERRO-RUHR-PULVER NORDISKA AB ON THE OTHER HAND ================================================================================ Conformed Copy TABLE OF CONTENTS
PAGE PREAMBLE ............................................................................................... 1 RECITALS ............................................................................................... 1 TERMS AND CONDITIONS ................................................................................... 2 ARTICLE 1 - GENERAL PROVISIONS ................................................................ 2 1.1 Definitions ................................................................. 2 1.2 Construction ................................................................ 2 1.3 RandH Guarantee ............................................................. 2 ARTICLE 2 - PURCHASE AND SALE ................................................................. 3 2.1 Transaction ................................................................ 3 2.2 Acquired Assets ............................................................. 3 2.3 Retained Assets ............................................................. 4 2.4 Assumed Liabilities ......................................................... 4 2.5 Retained Liabilities ........................................................ 5 2.6 Purchase Price .............................................................. 6 2.7 Adjustment .................................................................. 6 (A) Preliminary Working Capital Statement ................................. 6 (B) Review by Ferro ....................................................... 6 (1) Acceptance by Ferro ............................................ 6 (2) Dispute by Ferro ............................................... 7 (C) Informal Negotiations ................................................. 7 (D) Dispute Resolution..................................................... 7 (E) Base-Line Working Capital ............................................. 7 (F) Closing Working Capital ............................................... 7 (G) Amount of Adjustment .................................................. 7 2.8 Payment of Purchase Price ................................................... 8 (A) Payment at Closing .................................................... 8 (B) Final Payment ......................................................... 8 2.9 Refund of Adjustment ........................................................ 8 2.10 Method of Payment ........................................................... 8 (A) Directed Payments ..................................................... 8 (B) Other Payments ........................................................ 8 2.11 Allocation of Consideration ................................................. 8 2.12 Value Added Taxes ........................................................... 8 ARTICLE 3 - ACTIONS BEFORE CLOSING ............................................................ 9 3.1 Access to Records and Employees ............................................. 9 3.2 Interim Conduct of the Powder Coatings Business ............................. 9 3.3 The RandH Buyers' Approval of Certain Transactions .......................... 9 3.4 Shared Intellectual Property ................................................ 11 3.5 Consents .................................................................... 11 3.6 Coordination of Public Announcements ........................................ 12 3.7 Consultation with Employee Representatives .................................. 12 3.8 Regulatory Approvals ........................................................ 13
Conformed Copy ARTICLE 4 - CONDITIONS ....................................................................... 13 4.1 Conditions to the RandH Buyers' Obligations ................................. 13 4.2 Conditions to the Ferro Sellers' Obligations ................................ 15 4.3 Parties' Best Efforts ....................................................... 16 ARTICLE 5 - CLOSING ........................................................................... 16 5.1 The Closing ................................................................. 16 5.2 Date, Time, and Place of Closing ............................................ 16 5.3 The RandH Buyers' Obligations ............................................... 16 5.4 The Ferro Sellers' Obligations .............................................. 17 5.5 Local Formalities ........................................................... 17 ARTICLE 6 - ACTIONS AFTER CLOSING ............................................................. 18 6.1 Further Conveyances ......................................................... 18 6.2 Further Consents ............................................................ 18 6.3 Accounting Reports .......................................................... 19 6.4 Noncompetition .............................................................. 19 6.5 Use of Ferro Name and Mark .................................................. 20 6.6 Access to Former Business Records ........................................... 20 6.7 Access to Former Employees .................................................. 21 6.8 Termination of Insurance Coverage ........................................... 21 6.9 Removal of Retained Assets .................................................. 21 6.10 Change of Corporate Name .................................................... 21 ARTICLE 7 - REPRESENTATIONS AND WARRANTIES..................................................... 22 7.1 The Ferro Sellers' General Representations and Warranties ................... 22 (A) Organization and Existence ............................................ 22 (B) Power and Authority ................................................... 22 (C) Authorization ......................................................... 22 (D) Binding Effect ........................................................ 22 (E) No Default ............................................................ 22 (F) Finders ............................................................... 23 7.2 The Ferro Sellers' Representations and Warranties Concerning the Powder Coatings Disclosure Package ........................... 23 (A) Organization .......................................................... 23 (B) Financial Statements .................................................. 23 (C) Inventories ........................................................... 23 (D) Trade Accounts Receivable ............................................. 23 (E) Trade Accounts Payable ................................................ 24 (F) Real Property ......................................................... 24 (G) Tangible Personal Property ............................................ 24 (H) Intellectual Property ................................................. 24 (I) Indebtedness .......................................................... 25 (J) Litigation ............................................................ 25 (K) Contracts ............................................................. 25 (L) Employees and Employee Benefits ....................................... 25 (M) Compliance with Environmental Laws ................................... 26 (N) Compliance with Health and Safety Laws ................................ 26 (O) Compliance with Other Laws ............................................ 26 (P) Taxes ................................................................. 26 (Q) Insurance ............................................................. 27
Conformed Copy (R) Customers ............................................................. 27 (S) No Material Events .................................................... 27 7.3 RandH's Representations and Warranties ...................................... 27 (A) Organization and Existence ............................................ 27 (B) Power and Authority ................................................... 27 (C) Authorization ......................................................... 28 (D) Binding Effect ........................................................ 28 (E) No Default ............................................................ 28 (F) Finders ............................................................... 28 7.4 Meaning of the "Ferro Sellers' Knowledge" ................................... 28 7.5 Disclaimer .................................................................. 28 ARTICLE 8 - SPECIFIC OBLIGATIONS .............................................................. 29 8.1 Employee Obligations ........................................................ 29 (A) Employees ............................................................. 29 (B) Transfer of Transferred Employees...................................... 29 (C) The Ferro Sellers' Employee Obligations ............................... 29 (D) The RandH Buyers' Employee Obligations ............................... 30 (E) Computation of Transferred Obligations ................................ 31 (1) Generally .................................................... 31 (2) Transferred Obligations ...................................... 31 (3) Non-Lump Sum Obligations ..................................... 31 (4) German and Spanish Pension Obligations ....................... 32 (5) Benefit Plan Carriers ........................................ 33 (6) Plan Continuations ........................................... 33 (F) Non-Interference ...................................................... 33 (H) German Geschaftsfuhrer ................................................ 33 8.2 Environmental Obligations ................................................... 35 (A) Pre-Closing Environmental Matters...................................... 35 (B) The RandH Buyers' Operations After Closing............................. 35 (C) Remediation ........................................................... 36 (D) Spanish Permits ....................................................... 37 8.3 Health and Safety Obligations ............................................... 37 (A) Notice to the Ferro Sellers ........................................... 37 (B) Joint Investigation ................................................... 37 (C) Parties' Responsibilities ............................................. 38 8.4 Product Warranty Obligations ................................................ 39 (A) Product Warranty Claims ............................................... 39 (B) Processing of Product Warranty Claims ................................. 39 (C) Notice of Proposed Settlement ......................................... 39 (D) Disputes .............................................................. 39 (E) Parties' Responsibilities ............................................. 40 8.5 The RandH Buyers' Sole Remedy ............................................... 40 ARTICLE 9 - INDEMNIFICATION ................................................................... 41 9.1 Indemnification of the Ferro Sellers ........................................ 41 9.2 Indemnification of the RandH Buyers ......................................... 41 9.3 Claims ...................................................................... 41 (A) Notice ................................................................ 42 (B) Responsibility for Defense ............................................ 42 (C) Right to Participate .................................................. 42 (D) Settlement ............................................................ 42
Conformed Copy 9.4 Disputed Responsibility ..................................................... 43 9.5 Quantum Limitation on Indemnification ....................................... 43 9.6 Time Limitation on Indemnification .......................................... 44 9.7 Actual Amount ............................................................... 44 9.8 Exclusive Remedies .......................................................... 45 9.9 Indemnity Payments as Adjustments ........................................... 45 ARTICLE 10 - DISPUTE RESOLUTION .............................................................. 45 10.1 Dispute Notice .............................................................. 45 10.2 Informal Negotiations ....................................................... 45 10.3 Dispute Resolution Proceedings .............................................. 45 (A) Designation of Representatives ..................................... 45 (B) Selection of Neutral ............................................... 45 (C) Procedures and Process ............................................. 46 (D) Decision ........................................................... 46 10.4 Equitable Relief ............................................................ 46 10.5 Binding Effect .............................................................. 46 ARTICLE 11 - AMENDMENT, WAIVER, AND TERMINATION................................................ 47 11.1 Amendment ................................................................... 47 11.2 Waiver....................................................................... 47 11.3 Termination ................................................................. 47 ARTICLE 12 - MISCELLANEOUS .................................................................... 47 12.1 Cooperation ................................................................. 47 12.2 Severability ................................................................ 47 12.3 Costs and Expenses .......................................................... 47 12.4 Notices ..................................................................... 48 12.5 Assignment and Appointment .................................................. 48 12.6 No Third Parties ............................................................ 48 12.7 Incorporation by Reference .................................................. 48 12.8 Governing Law ............................................................... 48 12.9 Bulk Sales .................................................................. 49 12.10 Counterparts ................................................................ 49 12.11 Complete Agreement .......................................................... 49
Conformed Copy APPENDICES Appendix A - Definitions Appendix B - Retained Assets Appendix C - Retained Liabilities Appendix D - Form of Preliminary Working Capital Statement Appendix E - Accounting Principles Appendix F - Allocation of Consideration Appendix G - Aldridge Lease Appendix H - Aldridge Services Agreement Appendix I - Castellon Lease Appendix J - Castellon Services Agreement Appendix K - VAMP License Appendix L - Documents to Be Delivered by the Ferro Sellers at the Closing Appendix M - Documents to Be Delivered by the RandH Buyers at the Closing Appendix N - Contents of the Powder Coatings Disclosure Package Appendix O - Due Diligence Certifications Appendix P - Employees Appendix Q - Actuarial Assumptions Conformed Copy ASSET PURCHASE AGREEMENT This ASSET PURCHASE AGREEMENT (this "Purchase Agreement") is dated as of August 2, 2002, and is by and among: ROHM AND HAAS COMPANY ("RandH"), a Delaware corporation, on one hand; - and - FERRO CORPORATION ("Ferro"), an Ohio corporation, FERRO SPAIN S.A. ("Ferro Spain"), a Spanish corporation (sociedad anonima), FERRO (GREAT BRITAIN) LTD. ("Ferro UK"), a private limited company organized under the laws of England and Wales, RUHR-PULVERLACK GMBH ("RPL Germany"), a German limited liability company, and FERRO-RUHR-PULVER NORDISKA AB ("RP Sweden"), a Swedish company limited by shares (Aktiebolag) (collectively, the "Ferro Sellers"), on the other hand. RECITALS A. The Ferro Sellers are engaged in the business (the "Powder Coatings Business") of researching, designing, developing, formulating, manufacturing, and selling thermosetting-formulated powder coatings (the "Products") for a variety of decorative and protective end-use applications in the appliance, automotive, general industrial and other industries in and from Europe, including Products produced and manufactured in Europe and exported to other regions. (The term "Powder Coatings Business" does not, however, include the powder coatings business conducted by Ferro and its Affiliates in North and South America or in the Asia/Pacific region.) B. Rohm and Haas (UK) Limited ("RandH UK") is a private limited company organized under the laws of England and Wales; Rohm and Haas Espana, S.A. ("RandH Spain") is a Spanish corporation (sociedad anonima); Rohm and Haas Deutschland GmbH ("RandH Germany") is a German limited liability company (Gesellschaft mit beschrankter Haftung); and Rohm and Haas Denmark Finance A/S ("RandH Denmark") is a Danish joint stock company (Aktieselskab). C. RandH UK, RandH Spain, RandH Germany, and RandH Denmark are each wholly-owned subsidiaries of RandH. (RandH, RandH UK, RandH Spain, RandH Germany, and RandH Denmark are hereinafter referred to collectively as the "RandH Buyers.") D. The RandH Buyers desire to purchase from the Ferro Sellers, and the Ferro Sellers desire to sell to the RandH Buyers, the Powder Coatings Business on and subject to the terms and conditions of this Purchase Agreement. - 1 - Conformed Copy TERMS AND CONDITIONS In consideration of the matters recited above and of other good and valuable consideration, and intending to be legally bound by this Purchase Agreement, the RandH Buyers and the Ferro Sellers hereby agree as follows: ARTICLE 1- GENERAL PROVISIONS 1.1 DEFINITIONS. Appendix A sets forth the definitions of certain terms used in this Purchase Agreement. Those terms shall have the meanings set forth on Appendix A where used in this Purchase Agreement and identified with initial capital letters. 1.2 CONSTRUCTION. For purposes of this Purchase Agreement, except where the context otherwise requires -- (A) The term "parties" means the RandH Buyers and the Ferro Sellers. (B) The term "person" includes any natural person, firm, association, partnership, corporation, limited liability company, limited liability partnership, governmental agency or other entity. The term "third-party" means any person other than the parties and their Affiliates. (C) The term "today" means August 2, 2002. (D) All currency amounts stated in this Purchase Agreement are in United States Dollars. (Other currency amounts will translate into United States Dollars amounts at the spot exchange rate or rates as published in the Financial Times on the business day immediately preceding the date as of which translation is to occur.) (E) References to "days" mean calendar days. (If, however, an action or obligation is due to be undertaken by or on a day other than a business day, i.e., a Saturday, Sunday, or public holiday, in the United States, then that action or obligation will be deemed to be due on the next following business day.) (F) When introducing a series of items, the term "including" is not intended to limit the more general description that precedes the items listed. (G) The Table of Contents and the headings of the Articles and Sections are included for convenience of reference only and are not intended to affect the meaning of the operative provisions to which they relate. 1.3 RANDH GUARANTEE. RandH hereby unconditionally and irrevocably covenants and guarantees to the Ferro Sellers the full and seasonable performance by RandH UK, RandH Spain, RandH Germany, and RandH Denmark, both as to payment and performance, of each and every obligation of RandH UK, RandH Spain, RandH Germany, and RandH Denmark as RandH Buyers under this Purchase Agreement with exactly the same force and effect as if RandH UK, RandH Spain, RandH Germany, and RandH Denmark had executed and delivered this Purchase Agreement. The Ferro Sellers will not be required to resort to or to exhaust its remedies against RandH UK, RandH Spain, RandH Germany, and RandH Denmark before calling upon RandH to pay - 2 - Conformed Copy and/or perform the foregoing guarantee and such guarantee will be a continuing guarantee and the liability of RandH hereunder will not be affected by or diminished in any way by reason of any agreement or any amendment of agreement by any other RandH Buyer and the Ferro Sellers or by any extension of time or other waiver that may be granted by the Ferro Sellers. The foregoing guarantee will not be terminated, affected, or diminished in any manner by the seeking of relief, or the adjudication of any such other RandH Buyer as a bankrupt, under any bankruptcy, insolvency, or similar law relating to creditors' rights or debtors' relief. ARTICLE 2 - PURCHASE AND SALE 2.1 TRANSACTION. On and subject to the terms and conditions of this Purchase Agreement, (A) At the Closing, the RandH Buyers will purchase from the Ferro Sellers, and the Ferro Sellers will sell, transfer, and assign to the RandH Buyers, all of the Acquired Assets (as defined in Section 2.2); (B) At the Closing, the RandH Buyers will assume and become directly and solely responsible for the payment or discharge when due of all of the Assumed Liabilities (as defined in Section 2.4); (C) The RandH Buyers will pay the Ferro Sellers the Purchase Price as provided in Section 2.8. Notwithstanding such transaction, the Ferro Sellers will retain the Retained Assets (as defined in Section 2.3) and the Retained Liabilities (as defined in Section 2.5). 2.2 ACQUIRED ASSETS. For purposes of this Purchase Agreement, the term "Acquired Assets" means all of the Ferro Sellers' rights, title, and interest in and to, as the same shall exist as of the Closing: (A) All Trade Accounts Receivable; (B) All Inventories; (C) All Prepaid Items; (D) All Tangible Personal Property (other than automobiles of the Powder Coatings Business being used by Excluded Employees); (E) All of the Acquired Intellectual Property; (F) The unrestricted right to use the Shared Intellectual Property to the extent physically located at a Facility; (G) The benefits (so far as they can be or are lawfully assigned, transferred to, or held in trust for the RandH Buyers) of all Contracts, Leases, Licenses, and Permits; (H) All Third-Party Claims related to any of the Acquired Assets or any of the Assumed Liabilities; - 3 - Conformed Copy (I) All assets supporting the Employee Benefit Arrangements being assumed by RandH under Article 8; and (J) All Business Records. 2.3 RETAINED ASSETS. For purposes of this Purchase Agreement, the term "Retained Assets" means all assets other than the Acquired Assets, including the following rights, properties, and assets as the same shall exist as of the Closing: (A) All Cash; (B) All Real Property; (C) All of the Retained Intellectual Property; (D) All trademarks used by the Ferro Sellers (or any of them), whether or not registered, that incorporate the names and trademarks "Ferro" and "Check-in-a-Circle" logo and the goodwill associated with such names, marks, and logos; (E) The Shared Intellectual Property to the extent not physically located at a Facility; (F) All Third-Party Claims that relate to any of the Retained Assets or any of the Retained Liabilities; (G) All policies of insurance and claims and rights under such policies of insurance, whether or not related to the Powder Coatings Business, the Acquired Assets, or the Assumed Liabilities; (H) All assets of Employee Benefit Arrangements being retained by the Ferro Sellers under Article 8; and (I) All assets, whether or not used by the Ferro Sellers in their conduct of the Powder Coatings Business, which are identified as Retained Assets on Appendix B. 2.4 ASSUMED LIABILITIES. For purposes of this Purchase Agreement, the term "Assumed Liabilities" means the following liabilities and obligations as the same shall exist as of the Closing: (A) All Trade Accounts Payable and Other Current Liabilities; (B) All liabilities and obligations that arise after the Closing under, or as a direct consequence of the assignment of, the Contracts, Leases, Licenses, and Permits to the RandH Buyers under this Purchase Agreement; (C) The RandH Buyers' Employee Obligations (as defined in Section 8.1); (D) The RandH Buyers' Environmental Obligations (as defined in Section 8.2); (E) The RandH Buyers' Health and Safety Obligations (as defined in Section 8.3); - 4 - Conformed Copy (F) The RandH Buyers' Product Warranty Obligations (as defined in Section 8.4); and (G) Costs and expenses for which the RandH Buyers are responsible under Section 12.3. 2.5 RETAINED LIABILITIES. For the purposes of this Purchase Agreement the term "Retained Liabilities" means all liabilities and obligations of the Powder Coatings Business that have not been fully discharged or satisfied by the Ferro Sellers before the Closing, except for the Assumed Liabilities, including the following liabilities and obligations as the same shall exist as of the Closing: (A) All Financial Debt; (B) All liabilities, undertakings, and obligations incurred by the Ferro Sellers in connection with the conduct of businesses other than the Powder Coatings Business, including the powder coatings business conducted by Ferro and its Affiliates in North and South America and in the Asia/Pacific region; (C) All liabilities and obligations (other than those constituting Product Warranty Claims (as defined in Section 8.4(A) below)) arising out of, relating to, or resulting from any claims or actions, whether founded upon negligence, breach of warranty, strict liability in tort, and/or other similar legal theory, seeking compensation or recovery for injury to third-parties or damage to property alleged to have been caused by a Product manufactured and sold by any of the Ferro Sellers before the Closing; (D) All liabilities and obligations for the payment of Taxes, including (1) Any Taxes arising as a result of the Ferro Sellers' operation of the Powder Coatings Business or ownership of the Acquired Assets before the Closing, (2) Any Taxes measured on the basis of the Ferro Seller's gain on the sale of the Acquired Assets pursuant to this Purchase Agreement, and (3) Any deferred Taxes of any nature, in each case except to the extent any such Taxes are reflected in the Preliminary Working Capital Statement and included in the Working Capital Adjustment calculated in accordance with Section 2.7; (E) The Ferro Sellers' Employee Obligations (as defined in Section 8.1); (F) The Ferro Sellers' Environmental Obligations (as defined in Section 8.2); (G) The Ferro Sellers' Health and Safety Obligations (as defined in Section 8.3); (H) The Ferro Sellers' Product Warranty Obligations (as defined in Section 8.4); (I) Costs and expenses for which the Ferro Sellers are responsible under Section 12.3; - 5 - Conformed Copy (J) All liabilities and obligations under or in connection with the Retained Assets; (K) Any payment obligation of the Powder Coatings Business arising at or triggered by the Closing to any shareholders or Affiliate of the Ferro Sellers, including any liability to distribute to any of the Ferro Sellers' shareholders or otherwise apply all or any part of the consideration received under this Agreement; and (L) All liabilities, undertakings, and obligations, whether or not arising primarily out of the Ferro Sellers' conduct of the Powder Coatings Business, which are identified as Retained Liabilities on Appendix C. 2.6 PURCHASE PRICE. For purposes of this Purchase Agreement, the term "Purchase Price" means $60,000,000 plus or minus the amount of the Adjustment (and, if applicable, any further adjustment(s) pursuant to Section 9.9). 2.7 ADJUSTMENT. The Adjustment will be determined as follows: (A) PRELIMINARY WORKING CAPITAL STATEMENT. Immediately after the Closing, the RandH Buyers will cause management of the Powder Coatings Business to prepare a statement (the "Preliminary Working Capital Statement") of the Working Capital of the Powder Coatings Business at and as of the Closing, substantially in the form set forth on Appendix D. The Preliminary Working Capital Statement shall be prepared in accordance with the accounting principles (the "Accounting Principles") set forth on Appendix E. The RandH Buyers will deliver the Preliminary Working Capital Statement to Ferro within 90 days after the Closing. (B) REVIEW BY FERRO. Following receipt of the Preliminary Working Capital Statement, Ferro will be afforded a period of 60 days in which to review such statement. At or before the end of that period, Ferro will either -- (1) ACCEPTANCE BY FERRO. Accept the Preliminary Working Capital Statement in its entirety, in which case the Working Capital of the Powder Coatings Business at and as of the Closing will be deemed to be as set forth on the Preliminary Working Capital Statement, or (2) DISPUTE BY FERRO. Deliver to the RandH Buyers written notice and a detailed written explanation of those items in Preliminary Working Capital Statement which Ferro disputes, together with payment of the amount (if any) of the Adjustment not in dispute, in which case the items of Working Capital not affected by the dispute will be deemed to be as set forth on the Preliminary Working Capital Statement and the items identified by Ferro shall be deemed to be in dispute. If Ferro fails to provide the written notice as and when provided in Section 2.7(B)(2) above, then Ferro will be deemed to have accepted the Preliminary Working Capital Statement as provided in Section 2.7(B)(1) above. (C) INFORMAL NEGOTIATIONS. If Ferro delivers a notice under Section 2.7(B)(2), then during the 30-day period following the delivery of such notice, the parties will - 6 - Conformed Copy cause their representatives to meet and seek to resolve the disputed items cordially through informal negotiations. (D) DISPUTE RESOLUTION. If representatives of the parties are unable to resolve disputed items through the informal negotiations described in Section 2.7(C), then at the end of the 30-day period described in Section 2.7(C) the parties will refer the unresolved disputed items for final binding resolution to a mutually agreed internationally-recognized firm of independent certified public accountants. The parties will request such firm to review and resolve the disputed items in accordance with the Accounting Principles within 30 days of such reference. The resolution of the disputed items by such independent accounting firm will be binding on the Ferro Sellers and the RandH Buyers, will be neither appealable nor contestable by the Ferro Sellers or the RandH Buyers, and will not be subject to collateral attack by the Ferro Sellers or the RandH Buyers for any reason. (E) BASE-LINE WORKING CAPITAL. The "Base-Line Working Capital" will be an amount equal to $12,000,000. (F) CLOSING WORKING CAPITAL. The "Closing Working Capital" will be an amount equal to the Working Capital of the Powder Coatings Business at and as of the Closing as determined under Sections 2.7(A)-(D) above. (G) AMOUNT OF ADJUSTMENT. If the Closing Working Capital is - (1) Less than $12,000,000, then the Adjustment will be a negative amount equal to the amount by which the Closing Working Capital is less than the Base-Line Working Capital; (2) More than $12,000,000, then the Adjustment will be a positive amount equal to the amount by which the Closing Working Capital is greater than the Base-Line Working Capital; or (3) Equal to $12,000,000, then the Adjustment will be zero. The Purchase Price will finally be determined on the date the amount of the Adjustment is finally determined. 2.8 PAYMENT OF PURCHASE PRICE. The RandH Buyers will pay the Purchase Price as follows: (A) PAYMENT AT CLOSING. At the Closing, the RandH Buyers will pay Ferro (for itself and as agent for the other Ferro Sellers) the total sum of $60,000,000; and (B) FINAL PAYMENT. If the Adjustment is a positive amount, the RandH Buyers will, within 10 business days after the final determination of the Purchase Price, pay Ferro (for itself and as agent for the other Ferro Sellers) the amount of the Adjustment, together with interest thereon at the Prescribed Rate for the period from the Closing Date through and including the date on which the Adjustment is paid, within 10 business days after the final determination of the Purchase Price. - 7 - Conformed Copy (Payments of further adjustments pursuant to Section 9.9 will be made as provided in Section Article 9.) 2.9 REFUND OF ADJUSTMENT. If the Adjustment is a negative amount, then the Ferro Sellers will, within 10 business days after the final determination of the Purchase Price, refund to the RandH Buyers the amount of the Adjustment, less any amounts previously paid by the Ferro Sellers in respect of the Adjustment pursuant to Section 2.7, together with interest thereon at the Prescribed Rate for the period from the Closing Date through and including the date on which the Adjustment is paid. 2.10 METHOD OF PAYMENT. All payments under this Purchase Agreement shall be made by delivery to the payee as follows: (A) DIRECTED PAYMENTS. If a party which is entitled to a payment under this Purchase Agreement provides the other party five days' advance written designation of a bank and account number into which the payee wishes payment to be made, then the payer will make such payment by wire transfer (in immediately available funds) to the designated account of the payee. (B) OTHER PAYMENTS. In all other cases, the party obligated to make a payment under this Purchase Agreement will do so by delivering to the payee a bank cashier's check (in immediately available funds) payable to the order of the payee. 2.11 ALLOCATION OF CONSIDERATION. The total consideration paid by the RandH Buyers to purchase the Powder Coatings Business from the Ferro Sellers is the sum of the Purchase Price plus the book amount of the Assumed Liabilities as at the Closing, which consideration will be allocated among the Acquired Assets as set forth on Appendix F. 2.12 VALUE ADDED TAXES. The Purchase Price paid by the RandH Buyers will be exclusive of any value added taxes. The parties will use their best efforts to ensure, to the extent possible, that the transfer of the Powder Coatings Business in accordance with any local transfer agreement is treated as a transfer of a business as a going concern for the purposes of any applicable value added tax legislation or otherwise fall within another applicable exemption from value added taxes. ARTICLE 3 - ACTIONS BEFORE CLOSING 3.1 ACCESS TO RECORDS AND EMPLOYEES. From today until the Closing, the Ferro Sellers will cause the Powder Coatings Business to afford duly authorized representatives of the RandH Buyers free and full access during normal business hours to all of the assets, properties, books, records, and employees of the Powder Coatings Business and will permit such representatives to make abstracts from, or take copies of, such books, records, or other documentation, or to obtain temporary possession of any thereof as may be reasonably required by the RandH Buyers. During such period, the Ferro Sellers will furnish to the RandH Buyers such information concerning the Powder Coatings Business, and its assets, liabilities, or condition as the RandH Buyers may request. Notwithstanding the foregoing, however, the Ferro Sellers will not be obligated to disclose or make available to the RandH Buyers any information concerning the Powder Coatings Business that, in the reasonable opinion of Ferro's counsel, should not be disclosed to the RandH Buyers as a matter of law. - 8 - Conformed Copy 3.2 INTERIM CONDUCT OF THE POWDER COATINGS BUSINESS. From today until the Closing, the Ferro Sellers will conduct the Powder Coatings Business only in the ordinary and usual course, subject to the RandH Buyers' approval of certain transactions pursuant to Section 3.3. Without limiting the generality of the foregoing, insofar as the Powder Coatings Business is concerned, the Ferro Sellers will use their reasonable efforts to: (A) Preserve substantially intact the Powder Coatings Business' relationships and goodwill with suppliers, customers, employees, creditors, and others having business dealings with the Powder Coatings Business; (B) Maintain in full force and effect its existing policies of insurance, that materially affect the Powder Coatings Business; (C) Continue to perform, in all material respects, their obligations under all contracts, commitments, or other obligations to be included as part of the Acquired Assets; (D) Comply in all material respects with all legal requirements applicable to the operations of the Powder Coatings Business; (E) Maintain in full force and effect, without amendment, all Material Contracts; and (F) Continue to make, as planned, all pre-planned capital expenditures, and maintain the Acquired Assets in a state of repair and condition consistent with the ordinary course conduct of the Powder Coatings Business. 3.3 THE RANDH BUYERS' APPROVAL OF CERTAIN TRANSACTIONS. Except as may otherwise be required under this Purchase Agreement, from today until the Closing, insofar as the Powder Coatings Business is concerned, the Ferro Sellers will not do any of the following without the prior approval with written confirmation of the RandH Buyers, which approval shall not be unreasonably withheld: (A) Incur or permit the incurrence of any Financial Debt; (B) Purchase or dispose of any Real Property or interests in Real Property; (C) Enter into any Lease involving a term of more than one year or rental obligation exceeding $100,000 per annum in any single case; (D) Voluntarily permit to be incurred any Encumbrances on assets of the Powder Coatings Business except in the ordinary course of business; (E) Except for normal merit or cost-of-living increases in accordance with the Ferro Sellers' past practices, increase the rate of compensation for any of the employees of the Powder Coatings Business or otherwise enter into or alter any employment, consulting, or managerial services agreement primarily affecting the Powder Coatings Business; (F) Commence, enter into, or alter any Employee Benefit Arrangement affecting Employees of the Powder Coatings Business or otherwise commit to any payment to an employee that becomes due and payable as a result of the consummation of this transaction; - 9 - Conformed Copy (G) Add Employees to the Powder Coatings Business who would transfer with the business upon its sale; (H) Enter into, terminate or alter any existing contract of employment with any Employee (other than an Excluded Employee) or materially alter any Employee's duties or dismiss any Employee other than for disciplinary reasons outside the ordinary and usual course of business; (I) Make any single new commitment or increase any single previous commitment for capital expenditures for the Powder Coatings Business in an amount exceeding $100,000 in any individual case or $500,000 in the aggregate; (J) Accelerate or delay the sale of Products except as may be necessary in the ordinary course of business; (K) Make any material change in the credit policies or warranty terms extended to new or existing customers by the Powder Coatings Business; (L) Waive, cancel or compromise any material right or claim of the Ferro Sellers in respect of the Powder Coatings Business or modify, amend, cancel or terminate any Material Contract; or (M) Sell, assign, transfer, license, or convey any of the Intellectual Property to be included as part of the Acquired Assets. 3.4 SHARED INTELLECTUAL PROPERTY. Between today and the Closing, (A) The Ferro Sellers will convene a meeting among Detlev Brand, Arturo Gasco and one other Employee (to be designated by the RandH Buyers) of the Powder Coatings Business and Lee Winters, Susan Miller and Susan Sobek of Ferro's North American powder coatings operations. The purpose of such meeting will be to allow all such employees a full and free opportunity to discuss and educate themselves regarding the current status and development of the Ferro research and development projects related to Shared Intellectual Property in regions other than their own. (B) The Ferro Sellers will assemble a copy of all materials currently located outside the Facilities that either Detlev Brand and/or Arturo Gasco and/or the Employee designated by the RandH Buyers believe are necessary for a full understanding of the Shared Intellectual Property that is or might be useful to the Powder Coatings Business and assure that such copy is physically located at the German Facility at the Closing. Under no circumstances will the Ferro Sellers have any liability whatsoever to the RandH Buyers with respect to the transfer of information regarding the Shared Intellectual Property beyond what is stated in this Section 3.4 or as to the terms of the Shared Intellectual Property Agreement. 3.5 CONSENTS. From today until the Closing, the Ferro Sellers will use their reasonable efforts to obtain any required consents or approvals (collectively, the "Material Consents") relating to the following: - 10 - Conformed Copy (A) License(s) and maintenance agreement(s) for Data Match color matching hardware and software used at UK, German and Spain Facilities; (B) Lease for the German Facility effective September 1, 2002, by and between Manfred Wohlfahrt-Laymann and RPL Germany; (C) Software license and hardware/software maintenance agreements for Comet-Blending (ERP) software; (D) Software license and software/hardware maintenance agreements for Blending financial software; (E) Software license and software/hardware maintenance agreements for DB Direct MC e-commerce software connecting plant systems to the bank; (F) Consent of Severn Trent Water Authority to permit discharge of Waste Water Effluent by Rohm and Haas (UK) Limited under the authorization granted Ferro UK by consent dated March 1, 1988 (Permit No. 250/23320530); (G) Consent of Walsall Metropolitan Borough Council to the transfer of or subdivision of property and issuance of new permit or to permit RandH (UK) to operate under] Ferro Great Britain's Certificate of Lawful Existing Use or Development; and (H) Consent of electric utility permitting conveyance of electricity from Ferro Spain to RandH Spain under existing metering arrangement with Ferro Spain. In addition from today until the Closing, the Ferro Sellers will use their reasonable efforts to assist the RandH Buyers in obtaining the consents or approvals (or effective waivers thereof) of all other third-parties whose consents or approvals are required for the assignment of the Ferro Sellers' rights under Powder Coatings Business Contracts, Leases, Licenses, Permits and other similar items. Failure of the parties to obtain the consents or approvals described in this Section 3.5 shall not be deemed to be a breach of this Purchase Agreement and shall not give rise to monetary damages against either party. 3.6 COORDINATION OF PUBLIC ANNOUNCEMENTS. From today until the Closing, neither party will make any public announcement concerning the transactions contemplated by this Purchase Agreement without having previously consulted with and having received the consent of the other parties, such consent not to be withheld unreasonably. Nothing in the preceding sentence, however, shall prevent any party from making any announcement required by law, by the rules of any securities exchange, or by any listing agreement with a securities exchange to which such party is a party or by which it is bound. The parties will cooperate in the planning, preparation, and issuance of any and all public announcements concerning this Purchase Agreement and the transactions contemplated by this Purchase Agreement. 3.7 CONSULTATIONS WITH EMPLOYEE REPRESENTATIVES. From today until the Closing, the Ferro Sellers will timely comply with all obligations under applicable national laws to consult with employees or their representatives, consult with works councils and/or - 11 - Conformed Copy provide relevant information directly to affected employees and/or their employee representatives, including the following: (A) The UK Transfer of Undertakings (Protection of Employment) Regulations 1981 (as amended), (B) Section 613 of the German Civil Code (Burgerliches Gesetzbuch) and the German Employee-Works Council Relation Act (Betriebsverfassungsgesetz); and (C) Section 44 of the Spanish Worker's Statute (Estatuto de losTrabajadores, Articulo 44, La sucesion de empresa). Such information will include notification of the proposed Closing Date, the grounds for the transfer, the legal, economic, and social consequences of the transfer on the affected employees, and measures foreseen (consistent with the terms and conditions of this Purchase Agreement) for the affected employees. The RandH Buyers will provide the Ferro Sellers with full cooperation in connection with the preparation and delivery of such information to the relevant employee representatives. 3.8 REGULATORY APPROVALS. Immediately after the execution and delivery of this Purchase Agreement, the parties will promptly proceed with the preparation and filing of any required filings necessary in order to obtain the approval or authorization of those governmental agencies or instrumentalities whose approval or authorization is necessary in order to consummate the transactions contemplated by this Purchase Agreement, including the following: (A) If required, notification to the Spanish Competition Service (Servicio de Defensa de la Competencia) located within the Secretariat General of Economic Policy and Defense of Competition (Secretaria General de Politica Economica y Defensa de la Competencia) within the Ministry of Economy (Ministerio de Economia) pursuant to the Law on Defense of Competition (Ley de Defensa de la Competencia); (B) The required notification to the German Federal Cartel Office (Bundes-kartellamt) under ss. 39 GWB (Gesetz gegen Wettbewerbsbeschrankungen); and (C) The required notification to the Austrian Cartel Court (KartellgerichtI) pursuant to ss.42 of the Austrian Cartel Law. The parties will cooperate in good faith to take such action as may reasonably be necessary to obtain any necessary clearances or to procure the termination of any waiting or suspension periods under any relevant laws relating to antitrust or competition, including furnishing such additional information as may be required by relevant competition authorities, so as to make possible consummation of the transactions contemplated by this Purchase Agreement at the earliest practicable date. The RandH Buyers will not, however, be required to hold separate or dispose of (directly or indirectly) any assets or business units or agree to be subject to any material restriction on its right to conduct its business operations, including the Powder Coatings Business, after the Closing. - 12 - Conformed Copy ARTICLE 4 - CONDITIONS 4.1 CONDITIONS TO THE RANDH BUYERS' OBLIGATIONS. The obligation of the RandH Buyers to consummate the transactions contemplated by this Purchase Agreement is subject to the satisfaction of the following conditions at or before the Closing: (A) The representations and warranties of the Ferro Sellers contained in Section 7.1 of this Purchase Agreement shall be true, accurate, and complete as of today and as of the Closing (except with respect to the effect of transactions contemplated or permitted by this Purchase Agreement); (B) The representations and warranties of the Ferro Sellers contained in Section 7.2 of this Purchase Agreement shall be true, accurate, and complete in all material respects as of today and as of the Closing (as if such representations and warranties had been made anew as of the Closing except with respect to the effect of transactions contemplated or permitted by this Purchase Agreement, changes resulting from the passage of time on dated material in the Powder Coatings Disclosure Package, and transactions in the ordinary course of business not in breach of the Ferro Sellers' obligations under this Purchase Agreement); provided, however, that for purposes of determining the satisfaction of the condition contained in this Section 4.1(B), qualifications to such representations and warranties relating to materiality, Material Event or a material adverse effect will be disregarded but such condition will be deemed to be satisfied unless the failure or failures of such representations and warranties (after giving effect to the previous proviso) to be true, accurate and complete, would, individually or in the aggregate, represent or reasonably be expected to represent a Material Event; (C) The Ferro Sellers shall have performed and complied with all material undertakings required by this Purchase Agreement to be performed or satisfied by the Ferro Sellers before the Closing; (D) The Ferro Sellers shall have taken all corporate and other proceedings or actions necessary to be taken by the Ferro Sellers for consummation of the transactions contemplated by this Purchase Agreement; (E) The Ferro Sellers shall be prepared to execute and deliver the documents listed in Appendix L and the Other Agreements; (F) With respect to each of the Material Consents either (1) Such Material Consents shall have been obtained and be in full force and effect or (2) The Ferro Sellers shall have agreed - (a) To provide the RandH Buyers with an alternative arrangement that lawfully provides the RandH Buyers with the Ferro Sellers' rights and benefits under the under the Contract, Lease, License, or Permit to which the Material Consent relates, and - 13 - Conformed Copy (b) To indemnify the RandH Buyers and hold the RandH Buyers harmless from an against any liability, damage, claim, cost, or expenses (including reasonable attorneys' fees) arising out of or resulting from the failure to obtain such Material Consent; (G) All requisite waiting periods of governmental authorities shall have expired; (H) There shall not have been issued and in effect any injunction or similar legal order prohibiting or restraining consummation of any of the transactions contemplated in this Purchase Agreement by a governmental authority; (I) There shall not have been commenced or threatened by any governmental entity any lawsuit or proceeding challenging in any material way the legality or the consummation of the transactions contemplated in this Purchase Agreement; and (J) There shall not have been commenced by any person other than a governmental authority any lawsuit or proceeding that is likely to have the effect of preventing, delaying, making illegal, imposing material limitations or conditions on consummation of the transactions contemplated by this Purchase Agreement. 4.2 CONDITIONS TO THE FERRO SELLERS' OBLIGATIONS. The obligation of the Ferro Sellers to consummate the transactions contemplated by this Purchase Agreement is subject to the satisfaction of the following conditions at or before the Closing: (A) The representations and warranties of RandH contained in Section 7.3 of this Purchase Agreement shall be true, accurate, and complete in all material respects as of today and as of the Closing (except with respect to the effect of transactions contemplated or permitted by this Purchase Agreement); (B) The RandH Buyers shall have performed and complied with all material undertakings required by this Purchase Agreement to be performed or satisfied by the RandH Buyers before the Closing; (C) The RandH Buyers shall have taken all corporate and other proceedings or actions necessary to be taken by the RandH Buyers for consummation of the transactions contemplated by this Purchase Agreement; (D) The RandH Buyers shall be prepared to deliver the documents listed in Appendix M, the Other Agreements; (E) All Material Consents shall either have been obtained and be in full force and effect, or shall have been waived by the Ferro Sellers, (F) There shall not have been issued and in effect any injunction or similar legal order prohibiting or restraining consummation of any of the transactions contemplated in this Purchase Agreement by a governmental authority; (G) There shall not have been commenced or threatened by any governmental entity any lawsuit or proceeding challenging in any material way consummation of the transactions contemplated in this Purchase Agreement; - 14 - Conformed Copy (H) There shall not have been commenced by any person other than a governmental authority any lawsuit or proceeding that is likely to have the effect of preventing, delaying, making illegal, imposing material limitations or conditions on consummation of the transactions contemplated by this Purchase Agreement; and (I) All of the conditions precedent to the closing contemplated in a Purchase Agreement dated today's date by and among International Paint, Inc. ("IPI") and Ferro, Ferro Enamel Argentina S.A., and Ferro Mexicana S.A. de C.V. shall have been duly satisfied and/or waived and the parties thereto shall be prepared to proceed with such closing simultaneously with the Closing contemplated by this Purchase Agreement. 4.3 PARTIES' BEST EFFORTS. From today until the Closing, the parties will cooperate and use their respective best efforts to cause the conditions set forth in this Article 4 over which they may respectively have influence or control to be satisfied as soon as reasonably practicable. ARTICLE 5 - CLOSING 5.1 THE CLOSING. For purposes of this Purchase Agreement, the term "Closing" means the time at which the transactions contemplated by this Purchase Agreement will be consummated after satisfaction or waiver of the conditions set forth in Article 4 of this Purchase Agreement. 5.2 DATE, TIME, AND PLACE OF CLOSING. The Closing will take place at 10:00 a.m. (Eastern Time) on the later to occur of (A) August 30, 2002, or (B) a date to be mutually agreed by the parties not later than 30 days after the date on which the last of the conditions set forth in Sections 4.1 and 4.2 and comparable provisions in the purchase agreement with the IPI shall have occurred (the "Closing Date"). The Closing will take place at the offices of Squire, Sanders & Dempsey, 4900 Key Tower, 127 Public Square, Cleveland, Ohio, or at such other place or places as the parties may agree in writing. The Closing will be deemed to have occurred as of 11:59 p.m. on the Closing Date (the "Closing Time"). 5.3 THE RANDH BUYERS' OBLIGATIONS. At the Closing, the RandH Buyers will deliver the following to the Ferro Sellers: (A) The documents, certificates, and other items referred to in Appendix M; (B) Copies of the following agreements (the "Other Agreements") duly executed by authorized directors and/or officers of the RandH Buyers: (1) A lease (the "Aldridge Lease") of the Aldridge Facility in the form and to the effect set forth on Appendix G; provided, however, that, if the parties have not by the Closing obtained a court order pursuand to section 38(4) of the Landlord and Tenant Act 1954, as amended by the Law of Property Act 1969, to exclude the Aldridge Lease from the security of tenure legislation, then RandH UK will instead deliver a duly executed temporary license agreement on substantially the same terms as the Aldridge Lease pending receipt of such court order; - 15 - Conformed Copy (2) A transition and services agreement (the "Aldridge Services Agreement") for the Aldridge Facility in the form and to the effect set forth on Appendix H; (3) A lease (the "Castellon Lease") of the Castellon Facility in the form and to the effect set forth on Appendix I; (4) A transition and services agreement (the "Castellon Services Agreement") for the Castellon Facility in the form and to the effect set forth on Appendix J; and (5) A technology license agreement (the "VAMP License") in the form and to the effect set forth on Appendix K. (C) Such instruments as may be necessary or appropriate to reflect the RandH Buyers' assumption of the Assumed Liabilities effective as of the Closing; and (D) The amount specified in Section 2.8(A). 5.4 THE FERRO SELLERS' OBLIGATIONS. At the Closing, the Ferro Sellers will deliver to the RandH Buyers the following: (A) The documents, certificates, and other items referred to in Appendix L; (B) Copies of the Other Agreements as follows: (1) The Aldridge Lease (or the license referred to in Section 5.3(B)(2) above) duly executed by a director of Ferro UK; (2) The Aldridge Services Agreement duly executed by a director of Ferro UK; (3) The Castellon Lease duly executed by a director of Ferro Spain; (4) The Castellon Services Agreement duly executed by a director of Ferro Spain; and (5) The VAMP License duly executed by an authorized officer of Ferro. (C) Legal and beneficial Ownership of the Acquired Assets as contemplated in this Purchase Agreement; (and on the basis that all Tangible Personal Property located in the UK shall be delivered to RandH at the premises comprised in the Aldridge Lease), and (D) Such deeds, bills of sale, and such other instruments as may be necessary or appropriate to reflect the Ferro Sellers' conveyance of the Acquired Assets to the RandH Buyers. 5.5 LOCAL FORMALITIES. If, in the reasonable opinion of counsel for either party, local law or custom in Germany, Spain, Sweden, the United Kingdom or any other jurisdiction require additional formalities (such as notarization), filings, or consents in order to give legal effect to the transactions contemplated by this Purchase Agreement, then the - 16 - Conformed Copy parties will cooperate to carry out such formalities simultaneously with or before the Closing, but with effect as of the Closing Time. If either party desires that the specific terms and conditions (including price allocation) of this Purchase Agreement applicable to a given jurisdiction be put in writing in a separate agreement or instrument, then the parties will cooperate to prepare and execute such separate agreement, but such separate agreement will (unless the parties expressly agree otherwise in a signed document that refers to this Section 5.5) in all events be interpreted consistently with and as subordinate to the terms and conditions of this Purchase Agreement. ARTICLE 6 - ACTIONS AFTER CLOSING 6.1 FURTHER CONVEYANCES. After the Closing the Ferro Sellers will, without further cost or expense to the RandH Buyers, execute and deliver to the RandH Buyers (or cause the same be executed and delivered to the RandH Buyers), such additional instruments of conveyance, and the Ferro Sellers shall take such other and further actions as the RandH Buyers may reasonably request and which are ordinarily provided by a seller, more completely to sell, transfer, and assign to the RandH Buyers and vest in the RandH Buyers Ownership of the Acquired Assets. 6.2 FURTHER CONSENTS. Subject to the provisions of Section 4.1(F), if and to the extent the parties fail to obtain before Closing the consent or approval (or an effective waiver thereof) of any third-party with respect to any item described in Section 3.5, then after the Closing -- (A) Until such consent or approval (or an effective waiver thereof) has been obtained -- (1) On behalf of the Ferro Sellers, the RandH Buyers will perform all of the Ferro Sellers' duties with respect to such item, and (2) On behalf of the RandH Buyers, the Ferro Sellers will exercise all of the Ferro Sellers' rights with respect to such item as directed by the RandH Buyers. (B) The parties will use reasonable efforts to obtain from such third parties the consents or approvals (or effective waivers thereof). (C) If the parties are unable to obtain any such consent, approval, or waiver, then (1) This Purchase Agreement shall not constitute or be deemed to be a contract to assign the same if an attempted assignment without such consent, approval, or waiver would constitute a breach of such item or create in the issuer or any party thereto the right or power to cancel or terminate such item; and (2) The Ferro Sellers will cooperate with the RandH Buyers in any reasonable arrangement designed to provide the RandH Buyers with the benefit of the Ferro Sellers' rights under such item, including enforcement (at the RandH Buyers' expense) of any and all rights of the Ferro Sellers against such third-party as the RandH Buyers may reasonably request. - 17 - Conformed Copy In use of its reasonable efforts under subsection (C) above, the Ferro Sellers will not be obligated to pay any additional consideration in order to obtain any consent, approval, or waiver. The Ferro Sellers will, however, cooperate with the RandH Buyers in obtaining a reasonable and economic solution with such third-party. 6.3 ACCOUNTING REPORTS. After the Closing, the RandH Buyers will cause the management of the Powder Coatings Business to provide to the Ferro Sellers - (A) Such records and accounts as are prepared by the RandH Buyers in accordance with its normal accounting procedures and such other records, accounts or reports as the Ferro Sellers may reasonably request, or (B) In the alternative, at the RandH Buyers' election, access (including access by the Ferro Sellers' outside accountants), during normal business hours and upon at least five business days' prior written notice, to all such information as may reasonably be requested by the Ferro Sellers in order to permit the Ferro Sellers to complete their financial statements and reports relating to the pre-Closing activities of the Powder Coatings Business and to satisfy normal quarterly and year-end reporting and audit requirements. The RandH Buyers will not, however, be under any obligation to generate independent records or accounts for the Ferro Sellers. 6.4 NONCOMPETITION. In order to protect the goodwill of the Powder Coatings Business, the Ferro Sellers undertake that for a period of five years after the Closing neither the Ferro Sellers nor any of their Affiliates nor any successor or assign of any of the foregoing will, directly or indirectly, engage in, or have an ownership interest in or act as agent, advisor, consultant or licensor of or to any person that is engaged in any business that competes with the Powder Coatings Business (the "Noncompete Business"). Nothing in this Section 6.4, however, shall be deemed to prohibit or restrict the Ferro Sellers, nor any of their Affiliates nor any successor or assign of any of the foregoing - (A) From continuing to conduct and develop any business in which any of such companies are currently engaged, or, in the case of any successor or assign of any of the foregoing, any business in which such successor or assign was engaged before succeeding to the business of such company (whether by share acquisition, asset acquisition or otherwise), including the continued conduct of the Ferro Sellers' and their Affiliates' porcelain enamel, ceramic frit and glaze, and electronic component coatings businesses and the powder coatings business conducted by Ferro and its Affiliates in North and South America and Asia/Pacific; (B) From acquiring or owning less than a 5% equity interest in any publicly-traded company (whether or not such company is engaged in a business that competes with the Noncompete Business); (C) From acquiring less than a 20% equity interest in any company or other entity that is engaged in a business that competes with the Noncompete Business if the annual sales from such entity's competing business or entity do not exceed the lesser of $100,000,000 or 10% of such business' or entity's total revenues in the 12-month period immediately preceding such acquisition provided that - 18 - Conformed Copy (1) The acquisition of such competing business was not the principal purpose of such acquisition; and (2) Neither the Ferro name nor Ferro logo is used by such entity in the conduct of such business; (D) From acquiring a controlling equity interest in any company or other entity that is engaged in a business that competes with the Noncompete Business if the annual sales from such entity's competing business or entity do not exceed 10% of such entity's total revenues in the 12-month period immediately preceding such acquisition, provided that (1) The acquisition of such competing business was not the principal purpose of such acquisition; (2) Within 30 days of the closing of such acquisition, the Ferro Sellers provide the RandH Buyers written notice relating to the acquisition of the Noncompete Business and then affords the RandH Buyers (or its nominee) the right to purchase such Noncompete Business on terms and conditions to be agreed by the parties; (3) If the RandH Buyers do not execute a definitive agreement to purchase such Noncompete Business within 90 days after receiving such notice, the Ferro Sellers make a good faith effort to dispose of such Noncompete Business within 12 months from the end of such 90 day period; and (4) If the RandH Buyers does not purchase such Noncompete Business and the Ferro Sellers are unable, despite their good faith efforts, to complete the disposal of such Noncompete Business within the 12-month period described in Subsection 6.4(D)(3), then the Ferro Sellers will pay the RandH Buyers a royalty equal to 5% percent of the net sales prices on all sales of competing Products by the Noncompete Business made at any time from and after the earlier to occur of (i) the date the RandH Buyers provides written notice of its election not to purchase the Noncompete Business or (ii) the expiration of the 90-day period described in Section 6.4(D)(3), until and including the 5th anniversary of the date of this Purchase Agreement. 6.5 USE OF FERRO NAME AND MARK. Within 180 days after the Closing with respect to finished goods as the same shall exist at Closing and 90 days after the Closing in all other cases, the RandH Buyers will institute a procedure whereby a stamp or other indelible identifying mark is affixed to any stocks of inventory, supplies, sales literature, and similar items on hand at Closing which bear the Ferro name, trademark, or "Check-in-a-Circle" logo in order to indicate that the RandH Buyers, and not Ferro or its Affiliates, is the producer, provider, or manufacturer of such item. 6.6 ACCESS TO FORMER BUSINESS RECORDS. For a period of 10 years after the Closing, or until any audits of the Ferro Sellers' tax returns relating to periods before or including the Closing are completed, whichever occurs later, the RandH Buyers will retain all business records constituting part of the Acquired Assets. During such period, the RandH Buyers will, during normal business hours and upon at least five business day's prior written notice, afford duly authorized representatives of the Ferro Sellers reasonable access to - 19 - Conformed Copy all of such records and will permit such representatives, at the Ferro Sellers' expense, to make abstracts from, or to take copies of any of such records created, produced, or obtained before the Closing, for the purposes of the Ferro Sellers' participation in any tax audits, litigation, investigation by a governmental body or other proceeding relating to the Ferro Sellers' conduct of the Powder Coatings Business before the Closing. During such period, the RandH Buyers will, at the Ferro Sellers' sole cost and expense, cooperate with the Ferro Sellers, and cause employees of the Powder Coatings Business to cooperate with the Ferro Sellers, in furnishing information, evidence, testimony, and other assistance in connection with any such audit, litigation, investigation or proceeding relating to the Ferro Sellers' conduct of the Powder Coatings Business before the Closing. 6.7 ACCESS TO FORMER EMPLOYEES. After the Closing, each party will make available to the other party such employees (including former employees) of the Powder Coatings Business, and other employees with personal knowledge of a particular claim or event, as the other party may reasonably request in order to defend or prosecute any legal or administrative action to which the Ferro Sellers or the RandH Buyers are a party and which relates to the conduct of the Powder Coatings Business. The requesting party will pay or reimburse the other party for all reasonable expenses which may be incurred by such employees in connection therewith, including all travel, lodging, and meal expenses, and will further compensate the other for the number of whole business days spent by each such employee in providing such services at the rate of 130% of the average daily gross pay per business day (excluding the value of employee benefits) of such employee during the calendar month in which such services are performed. 6.8 TERMINATION OF INSURANCE COVERAGE. At or after the Closing, the Ferro Sellers and their Affiliates will have the right to terminate any and all insurance coverage affecting the Powder Coatings Business, with the effect that the RandH Buyers will have no right of recovery with respect to any claim under policies or for refunds of premiums of insurance that previously covered the Powder Coatings Business. The Powder Coatings Business will, however, continue to be entitled to recoveries (net of deductibles and out-of-pocket claims handling costs) after the Closing under occurrence-based insurance policies in respect of insured events that occurred before the Closing and the Ferro Sellers will promptly pay over such net recoveries upon receipt. The Ferro Sellers will be responsible for the administration of claims for such recoveries. 6.9 REMOVAL OF RETAINED ASSETS. At or as soon as reasonably practicable after the Closing, the Ferro Sellers will remove or cause to be removed from the Spanish Facility and the UK Facility any Retained Assets located thereat. 6.10 CHANGE OF CORPORATE NAME. Promptly after the Closing, the Ferro Sellers will cause RPL Germany and RP Sweden (and, as relevant, any other Affiliates) to take whatever action is required to change their corporate names to a name that does not include any reference to "Ruhr-Pulver", "Ruhr Pulverlack" or "RPL" or any name that is confusingly similar to any of such names. - 20 - Conformed Copy ARTICLE 7 - REPRESENTATIONS AND WARRANTIES 7.1 THE FERRO SELLERS' GENERAL REPRESENTATIONS AND WARRANTIES. The Ferro Sellers represent and warrant jointly and severally to the RandH Buyers the following: (A) ORGANIZATION AND EXISTENCE. With respect to the Ferro Sellers: (1) Ferro is a corporation duly organized, validly existing, and in good standing under the laws of the State of Ohio; (2) Ferro Holland is a private company with limited liability (besloten vennootschap) duly incorporated and existing under the laws of The Netherlands with its corporate seat in Rotterdam, The Netherlands; (3) Ferro Spain is a corporation (sociedad anonima) duly organized and existing under the laws of Spain; (4) Ferro UK is a private limited company duly organized and existing under the laws of England and Wales; (5) RPL Germany is a limited liability company (Gesellschaft mit beschrankter Haftung) duly organized and existing under the laws of Germany; and (6) RP Sweden is a company limited by shares (Aktiebolag) duly incorporated and existing under the laws of Sweden. (B) POWER AND AUTHORITY. The Ferro Sellers have full power and authority under their respective constitutive documents and the laws of the jurisdictions in which they respectively are organized to execute, deliver, and perform this Purchase Agreement and have full power and authority to own and operate their respective properties and conduct the Powder Coatings Business as the same has been and is being conducted. (C) AUTHORIZATION. The execution, delivery, and performance of this Purchase Agreement by the Ferro Sellers have been duly authorized by all requisite corporate action on the part of the Ferro Sellers. (D) BINDING EFFECT. This Purchase Agreement is a valid, binding, and enforceable legal obligation of the Ferro Sellers, except as enforceability may be limited by principles of equity and by bankruptcy and insolvency laws generally. (E) NO DEFAULT. Neither the execution and delivery of this Purchase Agreement nor the Ferro Sellers' full performance of their respective obligations under this Purchase Agreement will violate or breach, or otherwise constitute or give rise to a Default under, the terms or provisions of the Ferro Sellers' respective constitutive documents or of any material contract, commitment, or other obligation to which any of the Ferro Sellers are a party. (F) FINDERS. With the sole exception of Salomon Smith Barney Inc., the Ferro Sellers have not engaged and are not directly or indirectly obligated to any third- - 21 - Conformed Copy party acting as a broker, finder, or similar capacity in connection with the transactions contemplated by this Purchase Agreement. 7.2 THE FERRO SELLERS' REPRESENTATIONS AND WARRANTIES CONCERNING THE POWDER COATINGS DISCLOSURE PACKAGE. Simultaneously with the execution and delivery of this Purchase Agreement, the Ferro Sellers are delivering to the RandH Buyers a bound volume of disclosure materials (the "Disclosure Package") entitled the "Powder Coatings Disclosure Package" and consisting of 19 Parts, consecutively lettered A-S, inclusive. The Ferro Sellers represent and warrant jointly and severally to the RandH Buyers that the Disclosure Package contains the information described in Appendix N. In addition, the Ferro Sellers represent and warrant jointly and severally to the RandH Buyers the following: (A) ORGANIZATION. Except as otherwise disclosed on Part A of the Disclosure Package, except insofar as the powder coating business conducted by Ferro and its Affiliates in North and South America and the Asia/Pacific region are concerned, the Ferro Sellers do not hold any equity interest, directly or indirectly, in any company, corporation, partnership, joint venture, business, firm, or other entity which engages in any business in competition with the Powder Coatings Business. (B) FINANCIAL STATEMENTS. Except as otherwise disclosed on Part B, (1) the financial statements contained in Subparts B-1 to B-6 (the "Financial Statements") have been derived from the books of account of the Ferro Sellers which have been created and maintained by the relevant Ferro Seller in the ordinary course;and (2) the Financial Statements fairly present, in all material respects, in accordance with U.S. generally accepted accounting principles consistently applied, the financial condition, operating results and changes in financial position of the Powder Coatings Business for the periods and as of the dates stated. (C) INVENTORIES. Except as otherwise disclosed on Part C, (1) the Ferro Sellers Own all Inventories described on Part C; (2) such Inventories have been valued on the books of the Ferro Sellers in accordance with the Accounting Principles; (3) except as and to the extent reserves and provisions have been established on the books of the Powder Coatings Business in accordance with the Accounting Principles, such inventories are usable and saleable in the ordinary course of business and meet all applicable manufacturing specifications of the Ferro Sellers, and (4) in the Ferro Sellers' judgment, such inventories are sufficient for the continued conduct of the Powder Coatings Business as the same has been and is currently being conducted. (D) TRADE ACCOUNTS RECEIVABLE. Except as otherwise disclosed on Part D, (1) the Ferro Sellers Own all of the Trade Accounts Receivable listed or described on Part D; (2) such Trade Accounts Receivable arose out of the ordinary course conduct of the Powder Coatings Business and are valid obligations, (3) except as and to the extent reserves and provisions have been established on the books of the Powder Coatings Business in accordance with the Accounting Principles, such Trade Accounts Receivable are carried on the books of the Powder Coatings Business at net realizable values, and (4) none of such Trade Accounts Receivable is owing to the Ferro Sellers or any of their Affiliates. - 22 - Conformed Copy (E) TRADE ACCOUNTS PAYABLE. Except as otherwise disclosed on Part E, (1) all of the liabilities reflected on the books of the Ferro Sellers arose out of the ordinary course conduct of the Powder Coatings Business; (2) no such liabilities are owing to the Ferro Sellers or any of their Affiliates; and (3) no Ferro Seller is in Default in any manner likely to be materially adverse to the Powder Coatings Business Condition under any note, bond, debenture, mortgage, indenture, security agreement, guaranty, or other instrument of indebtedness. (F) REAL PROPERTY. Except as otherwise disclosed on Part F of the Disclosure Package, (1) the Ferro Sellers Own all of the real properties listed as "owned" on Subpart F-1; (2) the leases under which the real property listed as "leased" on Subpart F-2 are leased are valid and subsisting; (3) none of the Ferro Sellers is in material Default under any lease of any such real properties nor, to the Knowledge of the Ferro Sellers, is any third party in material Default under any such lease; and (4) the improvements to the real property listed on Part F are in reasonably good condition and repair, ordinary wear and tear excepted and are, in the Ferro Sellers' reasonable judgment, useable in the ordinary course in the conduct of the Powder Coatings Business as presently conducted. (G) TANGIBLE PERSONAL PROPERTY. Except as otherwise disclosed on Part G of the Disclosure Package, (1) the Ferro Sellers Own all tangible personal property listed as "owned" on Subparts G-1 to G-3; (2) the leases under which the tangible personal property listed as "leased" on Subparts G-4 to G-5 are leased are valid and subsisting; (3) the Ferro Sellers are not in material Default under any lease listed on Part G; (4) the items of tangible personal property listed on Part G are in reasonably good condition and repair, ordinary wear and tear excepted; and (5) in the Ferro Sellers' judgment, such tangible personal property is sufficient for the continued conduct of the Powder Coatings Business as the same has been and is currently being conducted. (H) INTELLECTUAL PROPERTY. Except as otherwise disclosed on Part H of the Disclosure Package, (1) the Ferro Sellers Own all of the Acquired Intellectual Property listed as "owned" on Subparts H-1 to H-4 and, for each patent described thereon, have filed and recorded with the patent offices in the countries where such patents exist all assignments necessary to establish their record ownership of such patents; (2) the license, technology transfer, or similar agreements to employ the Acquired Intellectual Property listed as "licensed by" on Subpart H-5 are valid and subsisting agreements; (3) except with respect to the items listed in such Subpart H-6, none of the Ferro Sellers is obligated to pay any amount, whether as a royalty, license, fee, or other payment to any person in order to use any of the Acquired Intellectual Property used by the Powder Coatings Business; (4) the license, technology transfer, or similar agreements to employ the Acquired Intellectual Property listed as "licensed to" on Subpart H-7 are valid and subsisting agreements; (5) except with respect to the items listed in such Subpart H-7, none of the Ferro Sellers has granted any rights or interest to any person in connection with any of the Intellectual Property described in Part H; (6) the Ferro Sellers have received no notice from any third party alleging that the conduct of the Powder Coating Business infringes the intellectual property rights of such third party, (7) in their conduct of the Powder Coatings Business, the Ferro Sellers do not infringe, in any material respect, any issued patent or published patent application of any third party; (8) the Ferro Sellers have no knowledge that any person is currently infringing any of the Acquired Intellectual - 23 - Conformed Copy Property; (9) the Acquired Intellectual Property, together with the Retained Intellectual Property, includes all material intellectual property used by the Ferro Sellers in their conduct of the Powder Coatings Business; and (10) in the Ferro Sellers' reasonable judgment, the Acquired Intellectual Property and the RandH Buyers' unrestricted right to use the Shared Intellectual Property as provided in Section 2.2(F) would (if used with the Ferro name and mark) be sufficient for the continued conduct of the Powder Coatings Business as the same has been and is currently being conducted. (I) INDEBTEDNESS. Except as otherwise disclosed on Part I of the Disclosure Package, the Powder Coatings Business is not in material Default under any note, bond, debenture, mortgage, indenture, security agreement, guaranty, or other instrument of Indebtedness. (J) LITIGATION. Except as otherwise disclosed on Part J of the Disclosure Package, (1) there exists no litigation, proceedings, actions, claims, or investigations at law or in equity pending or, to the Ferro Sellers' knowledge, threatened against the Ferro Sellers relating to or arising out of the Powder Coatings Business; and (2) none of the Ferro Sellers is subject to any material writ, injunction, order, or decree of any court, agency, or other governmental authority. (K) CONTRACTS. Except as otherwise disclosed on Part K of the Disclosure Package, (1) each of the contracts, commitments, and other obligations listed on Part K is a valid and binding obligation of the Ferro Sellers and, to the Ferro Sellers' knowledge, the other party or parties thereto; (2) neither the Ferro Sellers nor, to the Ferro Sellers' knowledge, any other party thereto has terminated, cancelled, or substantially modified any contract, commitment, or other obligation identified in Part K; (3) neither the Ferro Sellers nor, to the Ferro Sellers' knowledge, any other party thereto is in material Default under any contract, commitment, or other obligation identified in Part K; and (4) the Ferro Sellers have received no written notice from any third-party alleging that any of the Ferro Sellers is in material Default under any such contract, commitment, or other obligation identified in Part K. (L) EMPLOYEES AND EMPLOYEE BENEFITS. Except as otherwise disclosed on Part L of the Disclosure Package, (1) the Ferro Sellers have no employment contracts in respect of the Powder Coatings Business or its employees, including any non-competition agreements or agreements that provide for payments to employees upon the Closing of this transaction; (2) the Ferro Sellers have no material contingent liabilities in respect of any Employee Benefit Arrangements; (3) the Powder Coatings Business has performed all material obligations owing their respective employees; (4) the Ferro Sellers have supplied the RandH Buyers with all material details of the Employee Benefit Arrangements; (5) the Ferro Sellers have at all times been in material compliance with the terms of the Employee Benefit Arrangements and with all applicable laws, regulations, tax qualification requirements and other relevant requirements of a competent governmental body or regulatory authority applicable to such Employee Benefit Arrangements; (6) all contributions, premiums and other payments due from Ferro Sellers or any of their Affiliates to (or under) any Employee Benefit Arrangement have been fully paid or, to the extent not required to be paid on or before such date, have been provisioned for by the relevant Ferro Seller as required by law or generally accepted accounting principles; (7) the Ferro Sellers - 24 - Conformed Copy have complied with all applicable legal requirements governing consultations with employees, employee representatives, and works councils regarding this transaction and its anticipated consequences to employees of the Powder Coatings Business; and (8) none of the Employees listed on Part 1 of Appendix P has been treated by the Ferro Sellers as a self-employed agent or independent contractor (including for purposes of social security, income taxation, or otherwise). (M) COMPLIANCE WITH ENVIRONMENTAL LAWS. Except as otherwise disclosed on Part M of the Disclosure Package, (1) the conduct of the Powder Coatings Business is in material compliance with all Environmental Laws relating to emissions, discharges, and releases of Hazardous Materials into land, soil, ambient air, water, and the atmosphere; (2) the conduct of the Powder Coatings Business is in material compliance with all Environmental Laws applicable to the generation, treatment, storage, transportation, and disposal of Hazardous Materials; and (3) there exist no Hazardous Materials on or in the real properties that are part of the Powder Coatings Business the presence of which is likely to have a materially adverse effect on the Powder Coatings Business Condition. (N) COMPLIANCE WITH HEALTH AND SAFETY LAWS. Except as otherwise disclosed on Part N of the Disclosure Package, the conduct of the Powder Coatings Business is in material compliance with all Health and Safety Laws applicable to the Powder Coatings Business. (O) COMPLIANCE WITH OTHER LAWS. Except as otherwise disclosed on Part O of the Disclosure Package, the Powder Coatings Business is in material compliance with all statutes, ordinances, regulations, and other governmental requirements applicable to the conduct of the Powder Coatings Business (other than Environmental Laws and Health and Safety Laws). (P) TAXES. Except as otherwise disclosed in Part P of the Disclosure Package, (1) all tax returns required to be filed by the Powder Coatings Business before Closing with respect to the Powder Coatings Business have been or will be filed on or before the Closing and were true and correct in all material respects; (2) all taxes due and payable before Closing on such returns have been or will be paid when required by law and, to the extent not paid, have been accrued in accordance with Ferro standard accounting practice; and (3) the assets of the Powder Coatings Business are not encumbered by any Encumbrance arising out of unpaid taxes which are due and payable. (Q) INSURANCE. Except as otherwise disclosed in Part Q of the Disclosure Package, the Ferro Sellers have insured or self-insure the assets and properties of the Powder Coatings Business against those insurable risks and to an extent the Ferro Sellers deem reasonably necessary for their continued conduct of the Powder Coatings Business and for protection against injury, damage, or loss. (R) CUSTOMERS. Except as set forth on Part R of the Disclosure Package, since July 1, 2002, no customer that accounted for more than $500,000 of the aggregate sales revenues of the Powder Coatings Business during the 12-month period ended June 30, 2002, (1) terminated or elected not to renew (or provided written notice to the Ferro Sellers of its intent to terminate or not renew) its existing contractual relationship with the Powder Coatings Business, or (2) provided - 25 - Conformed Copy notice to the Ferro Sellers of its intent to materially reduce its purchases from the Powder Coatings Business over the 12-month period commencing July 1, 2002, in either case excluding any such development (a) resulting from the parties' public announcement of the transactions contemplated by this Purchase Agreement, (b) events beyond the Ferro Sellers' control occurring between today and the Closing Date, or (c) resulting from actions taken by the RandH Buyers that the RandH Buyers knows or should have known would have an adverse effect on the Powder Coatings Business. (S) NO MATERIAL EVENTS. Except as otherwise disclosed in Part S of the Disclosure Package, (1) the Powder Coatings Business has been conducted only in the ordinary and usual course since June 30, 2002, and (2) no Material Events have occurred since June 30, 2002. 7.3 RANDH'S REPRESENTATIONS AND WARRANTIES. RandH represents and warrants to the Ferro Sellers the following: (A) ORGANIZATION AND EXISTENCE. With respect to the RandH Buyers, (1) RandH is a corporation duly organized, validly existing, and in good standing in the State of Delaware; (2) RandH UK is a private limited company duly organized and existing under the laws of England and Wales; (3) RandH Spain is a corporation (sociedad anonima) duly organized and existing under the laws of Spain; (4) RandH Germany is a limited liability company (Gesellschaft mit beschrankter Haftung) duly organized and existing under the laws of Germany; and; (5) RandH Denmark is a joint stock company (Aktieselskab) duly organized and existing under the laws of Denmark. (B) POWER AND AUTHORITY. The RandH Buyers have full power and authority under their respective constitutive documents and the laws of the jurisdictions in which they respectively are organized to execute, deliver, and perform this Purchase Agreement. (C) AUTHORIZATION. The execution, delivery, and performance of this Purchase Agreement have been duly authorized by all requisite corporate actions on the part of the RandH Buyers. (D) BINDING EFFECT. This Purchase Agreement is a valid, binding, and enforceable legal obligation of the RandH Buyers, except as enforceability may be limited by principles of equity and by bankruptcy and insolvency laws generally. (E) NO DEFAULT. Neither the execution and delivery of this Purchase Agreement nor the RandH Buyers' full performance of their obligations under this Purchase Agreement will violate or breach, or otherwise constitute or give rise to a Default under, the terms or provisions of the RandH Buyers' respective constitutive - 26 - Conformed Copy documents or of any material contract, commitment, or other obligation to which any of the RandH Buyers is a party. (F) FINDERS. The RandH Buyers have not engaged and are not directly or indirectly obligated to any third-party acting as a broker, finder, or similar capacity in connection with the transactions contemplated by this Purchase Agreement. 7.4 MEANING OF THE "FERRO SELLERS' KNOWLEDGE". Where a statement contained in this Article 7 is said to be to the "Ferro Sellers' knowledge" (or words of similar import) such expression means that, after having conducted a due diligence review and in reliance on due diligence certifications, both as described in Appendix O, Senior Ferro Management and Powder Coatings Management believe the statement to be true, accurate, and complete in all material respects, but that the Ferro Sellers make no further representation or warranty concerning facts or circumstances that might have come to the Ferro Sellers' attention if they conducted a broader or more thorough investigation of the Powder Coatings Business. For purposes of this Purchase Agreement, (A) The term "Senior Ferro Management" means the Ferro Chairman & Chief Executive Officer and his direct reports, and (B) The term "Powder Coatings Management" means the Director of the Ferro's Industrial Coatings MBU, the Group Controller of Ferro's Industrial Coatings MBU, the plant manager of each Facility, the financial controller of each Facility, and the environmental compliance officer of each Facility. 7.5 DISCLAIMER. The warranties stated in this Article 7 and warranties contained in other certifications, instruments, or documents required to be delivered at the Closing are the only representations and warranties either party has given the other party in connection with the transactions contemplated by this Purchase Agreement. Except as set forth in this Article 7, neither party has made, and each party expressly disclaims, any other or further representation or warranty, either express or implied, concerning the subject matter of this Purchase Agreement. All other warranties either party or anyone purporting to represent either party gave or might have given, or which might be provided or implied by law or commercial practice, are hereby excluded. ARTICLE 8 - SPECIFIC OBLIGATIONS 8.1 EMPLOYEE OBLIGATIONS. The parties' respective obligations with respect to Employees will be as follows: (A) EMPLOYEES. For purposes of this Agreement, the term "Employees" means the employees listed on Part 1 of Appendix P, including - (1) The employees listed in Part 1.A of Appendix P (the "UK Employees"), (2) The employees listed in Part 1.B of Appendix P (the "Spanish Employees"), (3) The employees listed in Part 1.C of Appendix P (the "German Employees"), - 27 - Conformed Copy (4) The employees listed in Part 1.D of Appendix P (the "Other Employees"), and (5) The employees listed in Part 1.E of Appendix P (the "German Geschaftsfuhrer"); but not employees listed in Part 2 of Appendix P (the "Excluded Employees"). (B) TRANSFER OF TRANSFERRED EMPLOYEES. As of the Closing, all Employees who have not lawfully rejected transfer of their respective employment contracts to the RandH Buyers (collectively, the "Transferred Employees") will become employees of the RandH Buyers and will cease to be employees of the Ferro Sellers. (C) THE FERRO SELLERS' EMPLOYEE OBLIGATIONS. (1) The Ferro Sellers will be solely responsible for any and all liabilities and obligations to any employees or former employees of the Ferro Sellers who do not become Transferred Employees, whether arising as a result of any Employee Benefit Arrangement, by operation of law or otherwise, and whether existing as of, triggered by, or arising after the Closing. (2) The Ferro Sellers will be solely responsible for any and all liabilities and obligations to any Transferred Employees - (a) For payment of salaries and wages earned before the Closing; (b) For payment of bonuses and commissions earned as of the Closing; (c) For liabilities and obligations under Employee Benefit Arrangements (other than pension schemes and arrangements) accrued at or before the Closing; (d) For payment of all benefits under existing pension scheme covering the UK Employees (which scheme and assets associated with such schemes and arrangements will be retained by the Ferro Sellers) accrued at or before Closing; (e) For payment of all benefits under existing pension schemes and arrangements covering the Other Employees (which schemes and arrangements and assets associated with such schemes and arrangements will be retained by the Ferro Sellers) accrued at or before Closing, provided, however, that, if the liabilities under such pensions schemes and arrangements cannot by law be retained by the Ferro Sellers, then (i) the RandH Buyers will assume such schemes and arrangements and will be solely responsible for the payment of benefits under such schemes and arrangements and (ii) the Ferro Sellers will transfer to, or arrange for the transfer to, the RandH Buyers all assets which have been accumulated to support such schemes and arrangements; and - 28 - Conformed Copy (f) For sickness and/or disability payments (whether accrued before or after Closing) to Transferred Employees who are not actively working as of the Closing until such time as such Transferred Employees are certified to return to full time employment. (D) THE RANDH BUYERS' EMPLOYEE OBLIGATIONS. (1) The RandH Buyers will be solely responsible for any and all liabilities and obligations to any Transferred Employees - (a) For payment of salaries and wages earned after the Closing; (b) For payment of bonuses and commissions earned after the Closing; (c) For liabilities and obligations under Employee Benefit Arrangements (other than pension schemes and arrangements) accrued after the Closing; (d) For payment of benefits under existing pension schemes and arrangements covering the German Employees (whether accrued before or after the Closing); (e) For payment of benefits under existing pension schemes and arrangements covering the Spanish Employees (whether accrued before or after the Closing); and (e) For sickness and/or disability payments to Transferred Employees who are not actively working as of the Closing from and after such time as such Transferred Employees are certified to return to full time employment. (2) If the RandH Buyers terminate the employment of any Transferred Employee at or within one year after the Closing under circumstances in which such Transferred Employee would have been entitled to severance pay and/or benefits if he or she had terminated employment with a Ferro Seller immediately before the Closing, then the RandH Buyers will assure that such terminated Transferred Employee's severance pay and benefits will be substantially equivalent to the severance pay and benefits the Transferred Employee would have received under the applicable Ferro Seller's severance policy. (E) COMPUTATION OF TRANSFERRED OBLIGATIONS. (1) GENERALLY. If and to the extent either party pays or is required to pay any amount for which the other party is responsible under Section 8.1(C) or (D) above, then the responsible party will promptly reimburse the paying party for such payment. (2) TRANSFERRED OBLIGATIONS. If and to the extent the RandH Buyers are required to assume or agree to assume any liability in respect of service rendered or events occurring before the Closing (a "Transferred - 29 - Conformed Copy Obligation"), then, except as otherwise provided in Section 8.1(E)(3) or (E)(4) below, the RandH Buyers will pay such liability and the Ferro Sellers will reimburse the RandH Buyers' for the Ferro Sellers' share of such Transferred Obligations, which will equal - (a) The amount of the Transferred Obligation minus (b) The value of any assets directly related to such Transferred Obligation that have been or are transferred to the RandH Buyers at Closing. (3) NON-LUMP SUM OBLIGATIONS. If a Transferred Obligation is a defined benefit obligation (other than a pension obligation described in Section 8.1(E)(4) and 8.1(G)(4) below) and is not dischargeable through a lump sum payment, then (a) The RandH Buyers will calculate in good faith the amount of the Transferred Obligation on a Projected Benefit Obligation basis as defined in FAS 87, FAS 106 or FAS 112, as applicable (or, if FAS 87, FAS 106 or FAS 112 is not applicable, using accounting principles consistent with FAS 87, FAS 106 or FAS 112, as appropriate) using the Projected Unit Credit Method based on plan provisions as in effect at Closing and applying the economic assumptions set out in Appendix Q. (b) The Ferro Sellers will then review the RandH Buyers' calculation of Transferred Obligations within 60 days after the RandH Buyers deliver such calculations to the Ferro Sellers. (c) The parties will then seek to resolve amicably any difference in valuation results within 30 days. (d) If the parties cannot resolve such differences within such 30-day period, then either party will have the right to initiate the dispute resolution process set forth in Article 10 to resolve such dispute, in which case the dispute will be finally resolved as provided in Article 10. (e) The Ferro Sellers will promptly pay over to the RandH Buyers any amount for which the Ferro Sellers are or are found to be responsible under this Section 8.1(E)(3). (4) GERMAN AND SPANISH PENSION OBLIGATIONS. The Ferro Sellers will pay over to the appropriate RandH Buyer an amount equal to (i) the pension obligation to which the German Employees (other than the German Geschaftsfuhrer) and the Spanish Employees (and, if the RandH Buyers are required to assume the pension schemes and arrangements described in Section 8.1(C)(2)(e) above, the Other Employees) are entitled as of the Closing minus (ii) (euro)1,600,000. The amount of the pension obligation to which German Employees (other than the German Geschaftsfuhrer) and the Spanish Employees (and, if the RandH Buyers are required to assume the pension schemes and arrangements - 30 - Conformed Copy described in Section 8.1(C)(2)(e) above, the Other Employees) are entitled as of the Closing will be determined as follows: (a) The Ferro Sellers will calculate in good faith the amount of such pension obligation on the basis set forth in Section 8.1(E)(3) above. (b) The RandH Buyers will then review the Ferro Sellers calculation of such pension obligation within 60 days after the Ferro Sellers deliver such calculations to the RandH Buyers. (c) The parties will then seek to resolve amicably any difference in valuation results within the next 30 days. (d) If the parties cannot resolve such differences within such 30-day period, then either party will have the right to initiate the dispute resolution process set forth in Article 10 to resolve such dispute, in which case the dispute will be finally resolved as provided in Article 10. (e) The Ferro Sellers will promptly pay over to the RandH Buyers any amount for which the Ferro Sellers are or are found to be responsible under this Section 8.1(E)(4). (5) BENEFIT PLAN CARRIERS. If a transfer of an obligation is to be made from a benefit plan carrier of the Ferro Sellers or their Affiliates to a benefit plan carrier of the RandH Buyers or their Affiliates, then the Ferro Sellers and the RandH Buyers will use commercially reasonable efforts to obtain any necessary approval of the appropriate regulatory authority as soon as reasonably practicable after the Closing. (6) PLAN CONTINUATIONS. To the extent requested by the RandH Buyers, the Ferro Sellers will, if legally permitted and at the RandH Buyers' sole cost and expense, allow the RandH Buyers and their Affiliates to continue the participation of the Transferred Employees in specified Employee Benefit Arrangements of the Ferro Sellers and their Affiliates for up to one year after the Closing Date or, if shorter, such period which is admissible or practical under the respective local law or plan rules. (F) NON-INTERFERENCE. The Ferro Sellers will not employ, solicit employment or offer employment to any Transferred Employee during the 12-month period following the Closing without the prior written consent of RandH. During such period, RandH will not, without the prior written consent of the Ferro Sellers, employ, solicit, or offer employment to any Excluded Employee or to any former employee of the Powder Coatings Business who retired from or voluntarily terminated employment with the Ferro Sellers during the six-month period preceding the Closing. Notwithstanding anything to the contrary contained in this Subsection 8.1(E) neither RandH nor the Ferro Sellers will be deemed to be in violation of this Subsection 8.1(E) as a consequence of an otherwise unsolicited response to an advertisement of an employment opportunity on the internet or in any periodical of general circulation. - 31 - Conformed Copy (G) GERMAN GESCHAFTSFUHRER. The following will apply to each of the German Geschaftsfuhrer: (1) As soon as practicable after today, RPL Germany will give the three German Geschaftsfuhrer notice to effect termination of existing non-competition agreements with each such German Geschaftsfuhrer and RPL Germany will be solely responsible for any payment that may be payable to the German Geschaftsfuhrer under such noncompetition agreements. (2) RandH Germany will not terminate the employment of any German Geschaftsfuhrer before the first anniversary of the Closing. (3) If RandH Germany terminates a German Geschaftsfuhrer's employment with RandH Germany - (a) Between the first and second anniversaries of the Closing, then (i) the Ferro Sellers will be solely responsible for any severance payment due the German Geschaftsfuhrer as a consequence of such termination of employment and (ii) RandH Germany will be solely responsible for any notice payment due the German Geschaftsfuhrer as a consequence of such termination of employment; (b) Between the second and third anniversaries of the Closing, then (i) the Ferro Sellers will be responsible for 50% of any severance payment due the German Geschaftsfuhrer as a consequence of such termination of employment, (ii) RandH Germany will be responsible for the remaining 50% of such severance payment, and (iii) RandH will be solely responsible for any notice payment due the German Geschaftsfuhrer as a consequence of such termination of employment; and (c) After the third anniversary of the Closing, then RandH Germany will be solely responsible for any severance payment and any notice payment due the German Geschaftsfuhrer as a consequence of such termination of employment. provided, however, that, if before the third anniversary of the Closing, RandH Germany reaches an amicable termination agreement with any of the German Geschaftsfuhrer pursuant to which such Geschaftsfuhrer receives, in lieu of severance, in whole or in part, some other form of compensation or benefit, then the Ferro Sellers will contribute to such alternate form of compensation or benefit a sum equal to the present value of any amount for which the Ferro Sellers otherwise would have been responsible under the provisions of this Section 8.1(G). (4) The Ferro Sellers will pay over to RandH Germany an amount equal to pension obligation to which the German Geschaftsfuhrer are entitled as of the Closing, which amount will be determined as follows: - 32 - Conformed Copy (a) The Ferro Sellers will calculate in good faith the amount of the German Geschaftsfuhrer pension obligation on this basis set forth in Section 8.1(E)(3) above. (b) The RandH Buyers will then review the Ferro Sellers calculation of German Geschaftsfuhrer pension obligation within 60 days after the Ferro Sellers deliver such calculations to the RandH Buyers, together with all relevant information supporting the Ferro Sellers' calculation. (c) The parties will then seek to resolve amicably any difference in valuation results within 30 days. (d) If the parties cannot resolve such differences within such 30-day period, then either party will have the right to initiate the dispute resolution process set forth in Article 10 to resolve such dispute, in which case the dispute will be finally resolved as provided in Article 10. (e) The Ferro Sellers will promptly pay over to the RandH Buyers any amount for which the Ferro Sellers are or are found to be responsible under this Section 8.1(G)(4). The Ferro Sellers' duties and obligations arising out of the foregoing provisions of this Section 8.1 are the "Ferro Sellers' Employee Obligations." The RandH Buyers' duties and obligations arising out the foregoing provisions of this Section 8.1 are the "RandH Buyers' Employee Obligations." 8.2 ENVIRONMENTAL OBLIGATIONS. The parties' respective obligations with respect to Environmental Matters will be as follows: (A) PRE-CLOSING ENVIRONMENTAL MATTERS. The Ferro Sellers will be solely responsible for any Environmental Loss with respect to the Real Property or the Acquired Assets if such Environmental Loss resulted solely from by actions or omissions occurring prior to or conditions existing as of the Closing. (B) THE RANDH BUYERS' OPERATIONS AFTER CLOSING. After Closing, the RandH Buyers will conduct its operations at the Facilities only in full compliance with all Environmental Laws. Without limiting the foregoing, (1) The RandH Buyers will promptly inform the relevant site landlord of any release, emission, leak, discharge or other event that could be reasonably expected to create or exacerbate any Environmental Liability at the relevant Facility and will consult with site landlord regarding, and be solely responsible for performing, any remediation which may be necessary to ensure that such impact does not occur; (2) The RandH Buyers will afford representatives of the Ferro Sellers' at least 60 days' prior notice of and a full opportunity to observe any environmental, health, and/or safety audits of the RandH Buyers' operations at the Facilities that the RandH Buyers may conduct in the ordinary course of business after the Closing; - 33 - Conformed Copy (3) Representatives of the relevant site landlord and the Ferro Sellers will also be entitled to observe the conduct of any remediation carried out pursuant to the provisions of this Section 8.2(B); and (4) On request of the Ferro Sellers (such request to be made not more than once in each calendar year), the appropriate RandH Buyer will provide the Ferro Sellers with a certification of compliance with the provisions of this Section 8.2(B). If with respect to any Facility, the relevant RandH Buyer shall have complied with its obligations under this Section 8.2(B), then such RandH Buyer will be entitled to a rebuttable presumption that its operations at the Facility have not contributed any contamination to any existing environmental condition at such Facility, in which case the RandH Buyer will have no responsibility to contribute to or undertake any remediation with respect to such Facility. (C) REMEDIATION. (1) The Ferro Sellers will have sole authority for managing any necessary environmental remediation on the Real Property at the Facilities and the RandH Buyers hereby grant the Ferro Sellers such access to the Facilities as may reasonably be required to carry out such remediation. The Ferro Sellers will use all reasonable measures to avoid unreasonable interference with the RandH Buyers' operations in the design and implementation of any such environmental remediation. (2) If, with respect to any Facility, the Ferro Sellers rebut the presumption contained in Section 8.2(B) above or otherwise prove that any RandH Buyer or any of the RandH Buyers' Affiliates failed to comply with their respective obligations under Section 8.2(B) above, then the RandH Buyers will be responsible for reimbursing the Ferro Sellers for a portion of the remediation costs incurred at such Facility determined by multiplying such remediation costs by a fraction - (a) The numerator of which is quantity of the relevant contaminant that the Ferro Sellers can prove was caused by the RandH Buyers or their Affiliates after the Closing, and (b) The denominator of which is the total amount of such contaminant, which is present in the environmental media to be remediated, and the Ferro Sellers will be solely responsible for the balance of such costs. (3) If the Ferro Sellers cannot rebut the presumption contained in Section 8.2(B) or otherwise prove that the RandH Buyers or any of the RandH Buyers Affiliates failed to comply with their obligations under Section 8.2(B) above, then the Ferro Sellers will be solely responsible for paying the cost of any necessary environmental remediation at the Facility. - 34 - Conformed Copy For purposes of this Section 8.2(C), remediation costs include only such costs that are actually incurred by the relevant Ferro Seller and that are reasonably necessary in order to remediate the identified environmental condition to publicly-available or routinely-applied remediation standards, guidelines or policies, regulations, ordinances or other requirements of Environmental Laws imposed by applicable Governmental Authority with jurisdiction, consistent with the current use of the property, or those specifically required by a Governmental Authority. (D) SPANISH PERMITS. With respect to the possible need for a new or amended general municipal start-up permit and/or a waste water permit covering Ferro Spain's powder coatings operations - (1) The Ferro Sellers will have sole responsibility for the prosecution of any applications for such permits and for negotiating with local authorities in respect of such applications in a manner that ensures that the RandH Buyers will, at all times, have the necessary authorization to conduct the powder coatings operations in full compliance with the law, and provided that the Ferro Sellers keep the RandH Buyers fully apprised of such applications and negotiations; (2) The Ferro Sellers will be solely responsible for designing and implementing any remedial actions, including changes in the physical structure of the Spanish Facility, that may be necessary in order to obtain such permits or otherwise enable the RandH Buyers to operate the Powder Coatings Business without violating Spanish Enviromental Laws, provided that (i) the Ferro Sellers will cooperate fully with the RandH Buyers to assure that any such remedial plans are undertaken in such a manner as to minimize disruption of the RandH Buyers' operations, and (ii) any such remedial action proposed by the Ferro Sellers may not materially adversely impact the costs of operating the powder coatings business at the Spanish Facility; and (3) The RandH Buyers will cooperate fully with the Ferro Sellers in carrying out any such remedial actions in the most practicable and economic fashion reasonably available. The Ferro Sellers' duties and obligations arising out of the foregoing provisions of this Section 8.2 are the "Ferro Sellers' Environmental Obligations." The RandH Buyers' duties and obligations arising out of the foregoing provisions of this Section 8.2 are the "RandH Buyers' Environmental Obligations." 8.3 HEALTH AND SAFETY OBLIGATIONS. The parties' respective obligations with respect to Health and Safety Matters will be as follows: (A) NOTICE TO THE FERRO SELLERS. The RandH Buyers will promptly inform the Ferro Sellers if, after the Closing, any Transferred Employee alleges or claims that he or she suffers from an occupational disease as a result of exposure to hazardous substances during his employment with the Ferro Sellers or the RandH Buyers (or any of their respective Affiliates). (B) JOINT INVESTIGATION. If the RandH Buyers give the Ferro Sellers notice of an allegation or claim of a Transferred Employee pursuant to Section 8.3(A), then - 35 - Conformed Copy the parties will jointly investigate such allegation or claim and endeavor to determine the substance or substances which may or is alleged to have caused or contributed to that condition. (C) PARTIES' RESPONSIBILITIES. If either the RandH Buyers or the Ferro Sellers (or any Affiliate of any of the foregoing) are found liable under relevant Health and Safety Laws to a Transferred Employee a result of an occupational disease, then the RandH Buyers and the Ferro Sellers will share such liability as follows: (1) If a relevant tribunal (or other regulatory or administrative body which has assessed liability in the relevant case) has made a final and binding determination that a specific agent has caused the occupational disease (the "Causative Agent") and the parties can with reasonable accuracy assign an exposure rating reflecting the relative exposure of the Transferred Employee to the Causative Agent before and after the Closing, then the RandH Buyers will pay the entire resulting Health and Safety Liability, but the Ferro Sellers will reimburse the RandH Buyers (or their Affiliate) for such portion of the Health and Safety Liability as bears the same proportion to the total Health and Safety Liability as the exposure rating of the Transferred Employee to the Causative Agent for the period before the Closing bears to such Transferred Employee's total exposure rating to such Causative Agent. (2) If a relevant tribunal (or other regulatory or administrative body which has assessed liability in the relevant case) makes a final and binding determination as to a Causative Agent, but it is not possible with reasonable accuracy to assign an exposure rating reflecting the relative exposure of the Transferred Employee to the Causative Agent before and after the Closing, then: (a) If either party can prove the Transferred Employee was not exposed to the Causative Agent during his employment with that party but was exposed to the Causative Agent during his or her employment with the other party, then such other party will be solely responsible for such Health and Safety Liability; or (b) Otherwise, the RandH Buyers will pay the entire resulting Health and Safety Liability, but the Ferro Sellers will reimburse the RandH Buyers (or their Affiliate) for such portion of the Health and Safety Liability equal to a fraction, the numerator of which is the number of days the Transferred Employee worked in the operation where he or she was exposed to the Causative Agent on or before the Closing Date, and the denominator of which is the entire number of days the Transferred Employee worked in such operation. (3) If the relevant tribunal (or other regulatory or administrative body which has assessed liability in the relevant case) makes no final and binding determination as to the Causative Agent, and the Transferred Employee worked at the Facility in question both before and after the Closing, then the RandH Buyers will pay the entire resulting Health and Safety Liability, but the Ferro Sellers will reimburse the RandH Buyers (or their Affiliate) - 36 - Conformed Copy for such portion of the Health and Safety Liability equal to a fraction, the numerator of which is the number of days the Transferred Employee worked in the Powder Coatings Business on or before the Closing Date, and the denominator of which is the entire number of days the Transferred Employee worked in the Powder Coatings Business. The Ferro Sellers' duties and obligations arising out of the foregoing provisions of this Section 8.3 are the "Ferro Sellers' Health and Safety Obligations." The RandH Buyers' duties and obligations arising out the foregoing provisions of this Section 8.3 are the "RandH Buyers' Health and Safety Obligations." 8.4 PRODUCT WARRANTY OBLIGATIONS. The parties respective obligations with respect to claims that Products sold by the Ferro Sellers' are or were defective will be as follows: (A) PRODUCT WARRANTY CLAIMS. If after the Closing a claim ("Product Warranty Claim") is made by a purchaser or user of a Product which was sold by any Ferro Seller (or any Affiliate of a Ferro Seller) before the Closing that such product was defective, including any claim that such Product failed to meet any express or implied warranties or manufacturing specifications, then the RandH Buyers will promptly give the Ferro Sellers written notice of such claim. (B) PROCESSING OF PRODUCT WARRANTY CLAIMS. The RandH Buyers will be solely responsible for the processing of Product Warranty Claims, including having the full authority to settle, compromise, or deny any such Product Warranty Claim on such terms as the RandH Buyers may determine. The RandH Buyers will, however, provide the Ferro Sellers with full access to the allegedly defective Product and promptly provide the Ferro Sellers with copies of all relevant correspondence, tests, reports, analyses, and studies relating to such Product Warranty Claim. (C) NOTICE OF PROPOSED SETTLEMENT. If the RandH Buyers decide to settle any Product Warranty Claim, then the RandH Buyers will give the Ferro Sellers written notice of such decision. Such notice will provide the Ferro Sellers with (1) full particulars of the Product Warranty Claim, (2) the basis for the RandH Buyers' decision, (3) the payment or credit which the RandH Buyers propose to offer in settlement thereof, and (4) any amount which the RandH Buyers believe they are entitled to recover from the Ferro Sellers or to credit against the RandH Product Warranty Deductible (as defined in Section 8.4(E)(1) below) as a result of such proposed settlement. (D) DISPUTES. If the Ferro Sellers dispute a Product Warranty Claim or the Ferro Sellers' liability for such Product Warranty Claim, then the Ferro Sellers will give the RandH Buyers written notice of such dispute within 45 business days after receipt of the notice referred to in Section 8.4(C). If the Ferro Sellers fail to provide such notice within such period, then the Ferro Sellers will be deemed to have consented to such settlement and to have accepted any responsibility of the Ferro Sellers to contribute to such settlement or to any reduction in the RandH Product Warranty Deductible. The Ferro Sellers will state with particularity in any such dispute notice the basis for the Ferro Sellers objection to the proposed settlement and will provide the RandH Buyers a statement of the amount (if any) that the Ferro Sellers believe to be a reasonable settlement amount. In such case, if the parties cannot reach agreement within 30 days after - 37 - Conformed Copy the RandH Buyers receive such dispute notice, then either party will have the right to initiate the dispute resolution process set forth in Article 10 to resolve such dispute, in which case the dispute will be finally resolved as provided in Article 10. The initiation of such dispute process shall not affect the RandH Buyer's right to proceed without prejudice to either party with the settlement as proposed in the notice provided in Section 8.4(C) above. (E) PARTIES' RESPONSIBILITIES. The parties' respective obligations with respect to payments of Product Warranty Claims will be as follows: (1) The RandH Buyers will be responsible for the first $150,000 of Product Warranty Claims (the "RandH Product Warranty Deductible"), (2) In determining the amount of any settlement to be credited against the RandH Product Warranty Deductible - (a) In the case of a settlement effected through the replacement of defective product or the issuance of a credit note, the value of such portion of the settlement shall be deemed to be the standard manufacturing cost of the replacement product or any product furnished in satisfaction of the credit note, and (b) In the case of a settlement effected through the payment of cash, the value of settlement will be the lesser of (i) the amount paid and (ii) the amount the RandH Buyer was legally obligated to pay, giving effect to any legally enforceable limitation of remedy that may exist in favor of the RandH Buyers and/or the Ferro Sellers. In no event will the Ferro Sellers' obligation with respect to a Product Warranty Obligation exceed the amount that the RandH Buyer is legally obligated to pay, giving effect to any legally enforceable limitation of remedy that may exist in favor of the RandH Buyers and/or the Ferro Sellers. The Ferro Sellers' duties and obligations arising out of the foregoing provisions of this Section 8.4 are the "Ferro Sellers' Product Warranty Obligations." The RandH Buyers' duties and obligations arising out the foregoing provisions of this Section 8.4 are the "RandH Buyers' Product Warranty Obligations." 8.5 THE RANDH BUYERS' SOLE REMEDY. The RandH Buyers acknowledge that, absent actual fraud on the part of the Ferro Sellers, the RandH Buyers' right of indemnity under Section 9.2(C) for nonperformance of the Ferro Sellers' Employee Obligations, the Ferro Sellers' Environmental Obligations, the Ferro Seller's Health and Safety Obligations, and the Ferro Sellers' Product Warranty Obligations is the RandH Buyers' sole and exclusive remedy with respect thereto and the RandH Buyers hereby waive any other or further rights of recovery the RandH Buyers might otherwise have against the Ferro Sellers with respect to such matters on grounds of misrepresentation or breach of warranty, breach of covenant, or otherwise. The RandH Buyers also hereby release and discharge the Ferro Sellers from any other claims that the RandH Buyers may now or hereafter have against the Ferro Sellers for an Environmental Loss. - 38 - Conformed Copy ARTICLE 9 - INDEMNIFICATION 9.1 INDEMNIFICATION OF THE FERRO SELLERS. The RandH Buyers will indemnify and (in the case of third-party claims) defend the Ferro Sellers, and hold the Ferro Sellers harmless, from and against the Actual Amount of any and all liabilities, damages, claims, costs, and expenses (including reasonable attorneys' fees) arising out of or resulting from -- (A) Any misrepresentation or breach of warranty by RandH under Section 7.3; or (B) Nonperformance by the RandH Buyers of any obligations to be performed by or on the part of the RandH Buyers under this Purchase Agreement, including the RandH Buyers' obligations with respect to the Assumed Liabilities and the RandH Buyers' obligations under Article 8. 9.2 INDEMNIFICATION OF THE RANDH BUYERS. Subject to the limitations set forth in Section 9.4 and 9.5, the Ferro Sellers jointly and severally will indemnify and (in the case of third-party claims) defend the RandH Buyers, and hold the RandH Buyers harmless, from and against the Actual Amount of any and all liabilities, damages, claims, costs, and expenses (including reasonable attorneys' fees) arising out of or resulting from - (A) Any misrepresentation or breach of warranty by the Ferro Sellers under Section 7.1; (B) Any misrepresentation or breach of warranty by the Ferro Sellers under Section 7.2, or in any other instrument, certificate or document delivered by the Ferro Sellers at Closing, for which notice is given by the RandH Buyers within the period specified in Section 9.6; or (C) Nonperformance by the Ferro Sellers of any obligation to be performed by or on the part of the Ferro Sellers under this Purchase Agreement, or under any other instrument or document delivered by the Ferro Sellers at Closing, including the Ferro Sellers' obligations with respect to the Retained Liabilities and the Ferro Sellers' obligations under Article 8. 9.3 CLAIMS. If either party desires to make a claim against the other under Section 9.1 or 9.2 which does not involve a claim by any third-party, then such party shall make such claim by delivering written notice to the other within a reasonable period of time. If either the RandH Buyers or the Ferro Sellers (the "Claimant") desires to make a claim against the other (the "Indemnitor") under Section 9.1 or 9.2 which involves a claim by a third-party, then such claim will be made in the following manner and be subject to the following terms and conditions: (A) NOTICE. The Claimant will give notice to the Indemnitor within a reasonable period of time of any demand, claim, or threat of litigation or the actual institution of any action, suit, or proceeding (collectively, a "Claim") at any time served on or instituted against the Claimant with respect to which the Claimant believes it would have a right of indemnification under Section 9.1 or 9.2; provided, however that any failure to provide such notice shall not relieve the Indemnitor of any indemnity obligation for which it otherwise would have been responsible except to the extent the Indemnitor is actually prejudiced by such failure. In providing such notice, the Claimant shall only state the existence of such Claim and shall not admit or deny the validity of the facts or circumstances out of which such - 39 - Conformed Copy Claim arose. Solely for purposes of determining whether the Claimant is entitled to indemnification under Section 9.1 or 9.2, the alleged facts or circumstances on which such Claim is based shall be treated as if they were true pending final resolution of the facts and circumstances out of which such Claim arose. (B) RESPONSIBILITY FOR DEFENSE. Within 30 days after receipt of any such notice, but not less than five business days before the time the Claimant is required to respond to a Claim, the Indemnitor will (except in the case of Product Warranty Claims, which are covered separately in Section 8.4) by giving written notice to the Claimant, have the right to assume responsibility for the defense of the Claim in the name of the Claimant or otherwise as the Indemnitor may elect; provided that the Indemnitor also agrees that it does or might have responsibility to indemnify the Claimant with respect to such Claim and provided further that, in any case involving the joint defense of the Claimant and Indemnitor, such joint defense would not result in a conflict of interest by defending counsel. Otherwise, the Claimant will have responsibility for the defense of the Claim. Subject to the provisions of subsections 9.3(C) and (D) below, the party having responsibility for defense of a Claim (the "Defending Party") will have the full authority to defend, cure, adjust, compromise, or settle such Claim or appeal any judgment or ruling of a court or other tribunal in connection with such Claim in its own name and/or in the name of the other party. (C) RIGHT TO PARTICIPATE. Notwithstanding a Defending Party's responsibility for the defense of a Claim, the other party shall have the right to participate, at its own expense and with its own counsel, in the defense of a Claim and the Defending Party will consult with the other party from time to time on matters relating to the defense of such Claim. The Defending Party will provide the other party with copies of all pleadings and material correspondence relating to such Claim. (D) SETTLEMENT. A Defending Party will provide the other party with timely written notice of any proposed adjustment, compromise, or other settlement, including equitable or injunctive relief, of a Claim which the Defending Party intends to propose or accept. If the other party fails to provide the Defending Party with timely written notice of objection to such settlement, then the Defending Party shall have the authority to propose or accept such settlement and enter into any agreement, in its own name and/or in the name of the other party, giving legal effect to all aspects of such settlement. If the other party objects to such settlement, then the Defending Party may, if it so elects, tender the defense to the other party by paying to such other party the amount of money proposed to be paid in settlement of the Claim, in which case the Defending Party shall have no further liability to the other party under this Purchase Agreement with respect to such Claim and the other party shall have full authority for the future defense of such Claim and full responsibility for any and all liabilities, obligations, costs, and expenses resulting therefrom. 9.4 DISPUTED RESPONSIBILITY. If, after receiving a written indemnification notice under Section 9.3(A), the Indemnitor disputes -- (A) The fact that the Indemnitor in fact made a misrepresentation or breach a warranty under this Purchase Agreement giving rise to the claim to which the notice relates or that any such misrepresentation or breach in fact gave rise to - 40 - Conformed Copy the liabilities, damages, claims, costs, or expenses for which the Claimant seeks indemnification under this Article 9, or (B) The fact that the Indemnitor failed to perform any obligation to be performed on the part of the Indemnitor under this Purchase Agreement giving rise to the claim to which the notice relates or that any such failure in fact gave rise to the liabilities, damages, claims, costs, or expenses for which the Claimant seeks indemnification under this Article 9, then the Indemnitor will have the right to initiate the dispute resolution mechanism set forth in Article 10, in which case the dispute will be finally resolved as provided in Article 10. In such case, however, pending final resolution of the disputed item, the parties will proceed as if the Indemnitor had in fact made a misrepresentation, breached a warranty, or failed to perform an obligation to be performed on the part of that party under this Purchase Agreement and as if such act or failure in fact gave rise to the liabilities, damages, claims, costs, or expenses for which the Claimant seeks indemnification under this Article 9. If the disputed item is resolved in whole or in part in favor of the Indemnitor, then the Indemnitor will be entitled to an equitable reimbursement from the Claimant of any amounts expended or incurred in carrying out the Indemnitor's indemnification obligations under this Article 9. 9.5 QUANTUM LIMITATION ON INDEMNIFICATION. (A) Notwithstanding the provisions of Section 9.2(B), the Ferro Sellers will not be obligated to indemnify or defend the RandH Buyers, or hold the RandH Buyers harmless, from or against any liability, damage, claim, cost, or expense (including attorneys' fees) arising out of a misrepresentation or breach of warranty by the Ferro Sellers pursuant to Section 9.2(B) unless the Actual Amount of all claims exceeds $1,000,000, and then only to the extent of such excess. In no event will the Ferro Sellers' total obligation to the RandH Buyers under Section 9.2(B) exceed, in the aggregate, $20,000,000. (B) The RandH Buyers will not be obligated to indemnify or defend the Ferro Sellers, or hold the Ferro Sellers harmless, from or against any liability, damage, claim, cost, or expense (including attorneys' fees) arising out of a misrepresentation or breach of warranty by the RandH Buyers pursuant to Section 9.1(A) unless the Actual Amount of all claims exceeds $1,000,000, and then only to the extent of such excess. In no event will the RandH Buyers' total obligation to the Ferro Sellers under Section 9.1(A) exceed, in the aggregate, $20,000,000. 9.6 TIME LIMITATION ON INDEMNIFICATION. Notwithstanding the provisions of Section 9.2(B), the Ferro Sellers will not be obligated to indemnify or defend the RandH Buyers, or hold the RandH Buyers harmless, from or against any liability, damage, claim, cost, or expense (including attorneys' fees) arising out of a misrepresentation or breach of warranty by the Ferro Sellers pursuant to Section 9.2(B), and any cause of action based thereupon shall expire and terminate, unless the RandH Buyers delivers to the Ferro Sellers notice and a full explanation of the alleged breach on or before 5:00 p.m. (Eastern Time) - (A) In the case of claims by the RandH Buyers for misrepresentations or breaches of warranty of the Ferro Sellers' tax warranties under Section 7.2(P), 90 days after - 41 - Conformed Copy expiration of the applicable statute of limitation period with respect to the particular tax at issue; and (B) In the case of any other claim, the second anniversary of the Closing Date. 9.7 ACTUAL AMOUNT. For purposes of the parties' respective obligations under Sections 8.2, 9.1 and 9.2, in computing the "Actual Amount" of any liability, damage, claim, loss, cost, or expense, the following principles will apply: (A) The amount will be reduced to give full effect to any provision or reserve on the books of the Powder Coatings Business as of the Closing with respect to the particular item or category of items out of which the misrepresentation, breach, or nonperformance in question arose; (B) The amount will be reduced to give full effect to any insurance recoveries the indemnified party receives under insurance policies as a consequence of the fact, condition, or circumstance giving rise to the misrepresentation, breach, or nonperformance in question; (C) The amount will be reduced to give full effect to any indemnity, contractual, or noncontractual recoveries the indemnified party receives as a consequence of the fact, condition, or circumstance giving rise to the misrepresentation, breach, or nonperformance in question; (D) The amount will be reduced to give full effect to any act or omission of the indemnified party that either was the cause of or increased the ultimate amount of any liability, damage, claim, loss, cost, or expense incurred by the indemnified party; (E) The amount will be reduced to give full effect to any failure by an indemnified party to take reasonable efforts to mitigate any liability, damage, claim, loss, cost, or expense incurred by such indemnified party; (F) In addition, for purposes of determining whether a breach of a representation or warranty has occurred, and in computing the Actual Amount of a party's liability for such breach, any materiality or similar limitation on such representation or warranty will be disregarded; and (G) With respect to any Claim for a misrepresentation or breach of warranty under Section 7.2(H)(7), the Actual Amount will include 80% of such liabilities, damages, claims, costs, and expenses, which amount will have been first reduced to give full effect to any failure by the RandH Buyers to mitigate any such liabilities, damages, claims, costs, or expenses (less any amount that would have had to be incurred to effect such mitigation) by taking reasonable commercial steps, including changing Product formulations, designs, or production processes, to avoid or minimize infringement of third-party patent rights. 9.8 EXCLUSIVE REMEDIES. The remedies provided in this Article 9 will be the parties' exclusive remedies for claims arising out of or resulting from any misrepresentation, - 42 - Conformed Copy breach of warranty, breach of covenant, breach of undertaking, or nonperformance of any obligation to be performed on the part of any party under this Purchase Agreement. 9.9 INDEMNITY PAYMENTS AS ADJUSTMENTS. All indemnity payments under this Article 9 will constitute and be treated as adjustments to the Purchase Price. ARTICLE 10 - DISPUTE RESOLUTION If the parties ever have a dispute involving their respective rights and obligations under this Purchase Agreement or any of the Other Agreements (other than with respect to the determination of the amount of the Adjustment), then the parties will resolve such dispute as follows: 10.1 DISPUTE NOTICE. Either the RandH Buyers or the Ferro Sellers may at any time deliver to the other a written dispute notice setting forth a brief description of the issues for which such notice initiates the dispute resolution mechanism set forth in this Article 10. Such dispute notice shall also specify the provision or provisions of this Purchase Agreement and the facts or circumstances that are the subject matter of the dispute. 10.2 INFORMAL NEGOTIATIONS. During the 60-day period following delivery of a dispute notice described in Section 10.1, the parties will cause their representatives to meet and seek to resolve the disputed items cordially through informal negotiations 10.3 DISPUTE RESOLUTION PROCEEDINGS. If representatives of the parties are unable to resolve disputed items through the informal negotiations described in Section 10.3, then within 30 days after the informal negotiation period the parties will refer the disputed issues to a dispute resolution panel for final resolution as follows: (A) DESIGNATION OF REPRESENTATIVES. Within seven days after such informal negotiation period, the RandH Buyers and the Ferro Sellers will each designate one representative to serve on the dispute resolution panel. (If either party fails or refuses to designate a representative, then the other party will be entitled to have a representative appointed for such party by the CPR Institute.) (B) SELECTION OF NEUTRAL. Promptly after they have been designated, the designated representatives will meet and select a neutral third-party (the "Neutral") to serve as the third member of the dispute resolution panel. If the designated representatives of parties cannot agree on a Neutral, then either representative may request the CPR Institute to select the Neutral. (C) PROCEDURES AND PROCESS. At the time the matter is referred to the dispute resolution panel, the RandH Buyers and the Ferro Sellers will jointly establish the procedures to be followed with respect to the presentation of the parties' respective positions and the process by which the dispute resolution panel will reach and render its decision on the disputed issues. Such procedures and processes will, at a minimum, assure that - (a) Each party will have the right to submit evidence to the dispute resolution panel, - 43 - Conformed Copy (b) Each party will have the right to present a written statement concerning that party's position with respect to the disputed item, and (c) Before reaching a decision concerning the disputed item, the dispute resolution panel will convene a hearing at which the parties may be represented. If the RandH Buyers and the Ferro Sellers cannot agree on such procedures and processes, then the Neutral will establish such procedures and process that will, in all events, be consistent with the foregoing. (D) DECISION. The dispute resolution panel will act by majority vote. The dispute resolution panel will base its decision on applicable provisions of this Purchase Agreement or, if the provisions of this Purchase Agreement do not resolve the matter, on general principles of substantive Ohio law. (The dispute resolution panel may, if it so desires, seek the opinion of an attorney licensed to practice law in the State of Ohio on any matter of substantive Ohio law on which the panel desires clarification.) 10.4 EQUITABLE RELIEF. Notwithstanding any other provision of this Article 10, either party may seek from a court of competent jurisdiction interim injunctive relief in order to maintain the status quo or protect such party's rights under this Purchase Agreement pending resolution of a dispute pursuant to this Article 10. 10.5 BINDING EFFECT. The decisions of the dispute resolution panel under this Article 10 will be binding on the Ferro Sellers and the RandH Buyers and will be neither appealable, contestable, or subject to collateral attack by the Ferro Sellers or the RandH Buyers. ARTICLE 11 - AMENDMENT, WAIVER, AND TERMINATION 11.1 AMENDMENT. The parties may amend this Purchase Agreement at any time before the Closing, but only by written instrument executed by both parties. 11.2 WAIVER. Either party may at any time waive compliance by the other with any undertakes or conditions contained in this Purchase Agreement but only by written instrument executed by the party waiving such compliance. No such waiver, however, shall be deemed to constitute the waiver of any such undertaking or condition in any other circumstance or the waiver of any other undertaking or condition. 11.3 TERMINATION. The parties may terminate this Purchase Agreement by mutual consent at any time before the Closing, but only by written instrument signed by both parties. Either party may terminate this Purchase Agreement if the Closing has not occurred within 120 days following the execution of this Purchase Agreement; provided that the party so terminating has not, through its own action or inaction, caused such delay. ARTICLE 12 - MISCELLANEOUS 12.1 COOPERATION. The RandH Buyers and the Ferro Sellers will cooperate with the other party(ies), at the other party's(ies') request and expense, in furnishing information, testimony, and other assistance in connection with any actions, proceedings, arrangements, and disputes with other third-parties or governmental inquiries or - 44 - Conformed Copy investigations involving the Ferro Sellers' conduct of the Powder Coatings Business or the transactions contemplated by this Purchase Agreement. 12.2 SEVERABILITY. If any provision of this Purchase Agreement shall finally be determined to be unlawful, then such provision will be deemed to be severed from this Purchase Agreement and replaced by a lawful provision which carries out, as closely as possible, the intention of the parties and preserves the economic bargain contemplated by this Purchase Agreement and, in such case, each and every other provision of this Purchase Agreement will remain in full force and effect. 12.3 COSTS AND EXPENSES. The parties will be responsible for the following costs and expenses arising out of the transactions contemplated by this Purchase Agreement as follows: (A) The Ferro Sellers will be solely responsible for the fees and expenses of Salomon Smith Barney Inc. whether or not the transactions are consummated; (B) The RandH Buyers will be solely responsible for any filing fees that may be required in connection with any necessary regulatory applications and notifications; and (C) If the transactions are consummated, the RandH Buyers, on one hand, and the Ferro Sellers, on the other hand, will each bear one-half (1/2) the cost of any registration fees, stamp duties, or other transfer fees, taxes or imposts, if any, which arise out of or result from the transfer (or the perfection of the transfer) of the Acquired Assets from the Ferro Sellers to the RandH Buyers. Otherwise, each party will bear its own expenses incurred in connection with this Purchase Agreement and the transactions contemplated by this Purchase Agreement, whether or not the transactions are consummated. 12.4 NOTICES. All notices, requests and other communications under this Purchase Agreement shall be in writing and shall be deemed to have been duly given at the time of receipt if delivered by hand or communicated by electronic transmission, or, if mailed, three (3) days after mailing registered or certified mail, return receipt requested, with postage prepaid: If to the RandH Buyers, to: Rohm and Haas Company 100 Independence Hall West Philadelphia, Pennsylvania 19106 Attention: Secretary Telefax: 1.215.592.3377 - 45 - Conformed Copy If to the Ferro Sellers, to: Ferro Corporation 1000 Lakeside Avenue Cleveland, Ohio 44114 USA Attention: General Counsel Telefax: 1.216.875.7275 Either party may change its notice address above to a different address by giving the other party written notice of such change. 12.5 ASSIGNMENT AND APPOINTMENT. This Purchase Agreement will be binding upon and inure to the benefit of the successors of the parties, but will not be assignable by any party without the prior written consent of the other parties. The RandH Buyers other than RandH hereby irrevocably appoint RandH as their agent for purposes of this Purchase Agreement and grant RandH the power to enter into any further agreement or agreements in their names and on their behalf that RandH may deem necessary or appropriate for the orderly administration of this Purchase Agreement. Ferro Spain, Ferro UK, RPL Germany, and RP Sweden hereby irrevocably appoint Ferro as their agent for purposes of this Purchase Agreement and grant Ferro the power to enter into any further agreement or agreements in their names and on their behalf that Ferro may deem necessary or appropriate for the orderly administration of this Purchase Agreement. 12.6 NO THIRD PARTIES. Neither this Purchase Agreement nor any provisions set forth in this Purchase Agreement is intended to, or shall, create any rights in or confer any benefits upon any third-party. 12.7 INCORPORATION BY REFERENCE. The Appendices to this Purchase Agreement and the Disclosure Package constitute integral parts of this Purchase Agreement and are hereby incorporated into this Purchase Agreement by this reference. 12.8 GOVERNING LAW. This Purchase Agreement will be governed by and construed in accordance with the internal substantive laws of State of Ohio, except where the internal substantive laws of another jurisdiction mandatorily apply. 12.9 BULK SALES. The RandH Buyers hereby waive compliance by the Ferro Sellers with the provisions of any so-called "bulk sales" law or similar law requiring creditor notice of any jurisdiction. 12.10 COUNTERPARTS. The parties may execute more than one counterpart of this Purchase Agreement hereto, and each fully executed counterpart shall be deemed an original without production of the others. 12.11 COMPLETE AGREEMENT. This Purchase Agreement sets forth the entire understanding of the parties hereto with respect to the subject matter of this Purchase Agreement and supersedes all prior letters of intent, agreements, undertakes, arrangements, communications, representations, or warranties, whether oral or written, by any officer, employee, or representative of either party relating thereto. - 46 - Conformed Copy To evidence their agreement as stated above, ROHM AND HAAS COMPANY, on one hand, and FERRO CORPORATION, FERRO SPAIN S.A., FERRO (GREAT BRITAIN) LTD., RUHR-PULVERLACK GMBH, and FERRO-RUHR-PULVER NORDISKA AB, on the other hand, have each caused their respective duly authorized directors, officers, or attorneys to execute this Asset Purchase Agreement as of August 2, 2002. ROHM AND HAAS COMPANY FERRO CORPORATION By: /s/ James C. Swanson By: /s/ Millicent W. Pitts ------------------------------ ------------------------------------- James C. Swanson Millicent W. Pitts Vice President Vice President Business Director, Powder Coatings FERRO SPAIN S.A. By: /s/ Millicent W. Pitts ------------------------------------- Millicent W. Pitts Director FERRO (GREAT BRITAIN) LTD. By: /s/ James C. Bays ------------------------------------- James C. Bays Attorney-in-Fact RUHR-PULVERLACK GMBH By: /s/ Wolfgang Esser ------------------------------------- Wolfgang Esser Geschaftsfuhrer And /s/ Gunter Jung ------------------------------------- Gunter Jung Geschaftsfuhrer FERRO-RUHR-PULVER NORDISKA AB By: /s/ Tim Steenvoorden ------------------------------------- Tim Steenvoorden Director - 47 - Conformed Copy Appendix A DEFINITIONS The following terms identified with initial capital letters are defined in the following Sections of the Purchase Agreement:
TERM CROSS REFERENCE Accounting Principles ............................................ Section 2.7(A) Acquired Assets .................................................. Section 2.2 Actual Amount .................................................... Section 9.7 Adjustment........................................................ Section 2.7(G) Aldridge Lease ................................................... Section 5.3(B)(1) Aldridge Services Agreement ...................................... Section 5.3(B)(2) Assumed Liabilities .............................................. Section 2.4 Base-Line Working Capital ........................................ Section 2.7(E) Books of Account ................................................. Section 7.2(B) Castellon Lease .................................................. Section 5.3(B)(3) Castellon Services Agreement ..................................... Section 5.3(B)(4) Causative Agent................................................... Section 8.4(C) Claim ............................................................ Section 9.3(A) Claimant ......................................................... Section 9.3 Closing Section 5.1 Closing Date ..................................................... Section 5.2 Closing Working Capital .......................................... Section 2.7(F) Closing Time ..................................................... Section 5.2 Defending Party .................................................. Section 9.3(B) Employees ........................................................ Section 8.1(A) Excluded Employees ............................................... Section 8.1(A) Ferro ............................................................ Preamble Ferro Sellers..................................................... Preamble Ferro Sellers' Employee Obligations .............................. Section 8.1 Ferro Sellers' Environmental Obligations ......................... Section 8.2 Ferro Sellers' Health and Safety Obligations .................... Section 8.3 Ferro Sellers Product Warranty Obligations ...................... Section 8.4 Ferro Spain ...................................................... Preamble Ferro UK ......................................................... Preamble German Employees ................................................. Section 8.1(A)(3) German Geschaftsfuhrer ........................................... Section 8.1(A) Indemnitor ....................................................... Section 9.3 IPI .............................................................. Section 4.2(J)
- 1 - Conformed Copy Appendix A Material Consents ................................................ Section 3.5 Neutral .......................................................... Section 10.3(B) Noncompete Business .............................................. Section 6.4 Other Agreements ................................................. Section 5.3(B) Other Employees .................................................. Section 8.1(A)(4) Powder Coatings Business ......................................... Recital A Powder Coatings Disclosure Package ............................... Section 7.2 Powder Coatings Management ....................................... Section 7.4(B) Preliminary Working Capital Statement ............................ Section 2.7(A) Products ........................................................ Recital A Product Warranty Claim ........................................... Section 8.4(A) Purchase Agreement ............................................... Preamble Purchase Price ................................................... Section 2.6 RandH ............................................................ Preamble RandH Buyers ..................................................... Recital C RandH Buyers' Employee Obligations ............................... Section 8.1 RandH Buyers' Environmental Obligations .......................... Section 8.2 RandH Buyers' Health and Safety Obligations ..................... Section 8.3 RandH Buyers' Product Warranty Obligations ...................... Section 8.4 RandH Product Warranty Deductible ............................... Section 8.4(E)(1) RandH Denmark .................................................... Recital B RandH Germany .................................................... Recital B RandH Spain ...................................................... Recital B RandH UK ......................................................... Recital B Retained Assets .................................................. Section 2.3 Retained Liabilities.............................................. Section 2.5 RPL Germany ...................................................... Preamble RP Sweden ........................................................ Preamble Senior Ferro Management .......................................... Section 7.4(A) Shared Intellectual Property Projects ............................ Section 3.4 Spanish Employees ................................................ Section 8.1(A)(2) Transferred Employees ............................................ Section 8.1(C) Transferred Obligations .......................................... Section 8.1(E)(2) UK Employees ..................................................... Section 8.1(A)(1) VAMP License ..................................................... Section 5.3(B)(5)
In addition, the following terms have the meanings set forth below where used in the Purchase Agreement and identified with initial capital letters: - 2 - Conformed Copy Appendix A
TERM MEANING Acquired Intellectual Property All of the following: (1) Those patents and patent applications (including all renewals, extensions, modifications, continuations, continuations in part, divisions, re-examinations and re-issues thereof) listed in Subparts H-1 and H-2 of the Powder Coatings Disclosure Package; (2) Those trade names, trademarks (whether or not registered), service marks (whether or not registered), and applications therefor listed in Subparts H-3 and H-4 of the Powder Coatings Disclosure Package; (3) Those domain names, websites, and web pages listed on Subpart H-5 of the Powder Coatings Disclosure Package; and (4) All rights held or used by the Ferro Sellers in their conduct of the Powder Coatings Business consisting of, conferred by or otherwise relating to: (A) Trade secrets, including know- how, inventions, computerized data and information, business records, files and data, discoveries, formulae, production outlines, product designs, manufacturing information, processes and techniques, testing and quality control processes and techniques, drawings and customer lists, and (B) Copyrights, original works of authorship and disclaimers of moral rights, but (in the case of the items listed in part (4) above) only to the extent such items or matters are physically located at a Facility as of the Closing. Affiliate With respect to a party, any other entity controlling, controlled by, or under common control with such party.
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TERM MEANING Business Records Business books and records, including financial, operating, inventory, legal, personnel, payroll, research and development, regulatory and/or customer product qualification and customer records and all sales and promotional literature, correspondence, and records - (1) Physically located at the German Facility, the Spanish Facility, the Swedish Facility or the UK Facility held or used by the Ferro Sellers in their conduct of the Powder Coatings Business and (2) Held or used by the Ferro Sellers and (but only to the extent) pertaining to the Powder Coatings Business, wherever located. Cash Cash and cash equivalent items held by the Ferro Sellers as of the Closing, including certificates of deposit, time deposits, marketable securities, and the proceeds of accounts receivable paid on or before the Closing Date, held or used by the Ferro Sellers primarily in their conduct of the Powder Coatings Business. Contracts Collectively, the Purchase Contracts, the Sales Contracts, and the Other Business Contracts. CPR Institute CPR Institute for Dispute Resolution, 366 Madison Avenue, New York, New York. Default An occurrence which constitutes a breach or default under a contract, order, or other commitment, after the expiration of any grace period provided without cure or with respect to which a notice of breach has been served by a third party and such breach is not cured or otherwise resolved to the satisfaction of the third party before the Closing. Employee Benefit Arrangement Any scheme, arrangement, plan, policy or program (other than State or statutory social security, unemployment insurance, workers compensation or pension arrangement), whether legally enforceable or not, whether formal or informal, and whether oral or written, operated by any Ferro Seller or in which any Ferro Seller providing for benefits Employees, including - (1) Retirement, early or part time retirement, death, or disability plans and schemes;
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TERM MEANING (2) Accidental death or dismemberment plans and schemes; (3) Medical benefit plans and schemes; (4) Termination indemnity payment plans and schemes; (5) Profit sharing, stock bonuses, stock options, stock purchases, incentive arrangements, deferred compensation, savings, phantom shares, stock appreciation rights, and share save plans and schemes; (6) Life, accident and health insurance, hospitalization plans and schemes; (7) Holiday, holiday bonus, vacation, severance pay, sick pay plans and schemes; (8) Leave, tuition refund, service awards, company car, scholarship, relocation, sabbatical, bonus, bridge pension, retirement indemnity plans and schemes; and (9) Company car and other executive or employee fringe benefit plans and schemes. Encumbrance Any encumbrance or lien, including, without limitation, any mortgage, judgment lien, materialman's lien, mechanic's lien, security interest, encroachment, easement, or other restriction. Environmental Liabilities Any cost, damages, expense, liability, fine, penalty, judgment, award, amount paid in settlement or any other obligation or responsibility arising from or under any Environmental Law, including those consisting of or relating to: (1) Any environmental matter or condition, including on-site or off-site contamination; (2) Any legal or administrative proceeding, claim, demand or response, remedial or inspection cost or expense arising under any Environmental Law;
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TERM MEANING (3) Financial responsibility under any Environmental Law for cleanup costs or corrective action, including any cleanup, removal, containment or other remediation or response actions required by any Environmental Law and for any natural resource damages; (4) Any chemical registration or product approval under food and drug laws; or (5) Any other compliance, corrective, or remedial measure required under any Environmental Law. Environmental Laws Laws, regulations, orders, decrees, standards, ordinances, codes, and other governmental mandates and restrictions that are applicable to the Powder Coatings Business or the Real Property and relate to emissions, discharges, and releases of Hazardous Materials into land, soil, ambient air, water, and atmosphere, and/or the generation, treatment, storage, transportation, and disposal of hazardous wastes. Environmental Matter Any action, condition, or event giving rise to a legal obligation under the Environmental Laws that relate to the Powder Coatings Business. Facility Any of the German Facility, the Spanish Facility, the Swedish Facility or the UK Facility. Financial Debt All indebtedness for money borrowed incurred by the Ferro Sellers. German Facility Those facilities used by the Ferro Sellers in the conduct of the Powder Coatings Business located at Zur alten Ruhr 4, Arnsberg, Germany. German Geschaftsfuhrer The following three management Employees of RPL Germany: (1) Wolfgang Esser, (2) Gunter Jung, and (3) Gunther Noll.
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TERM MEANING Hazardous Materials Any material or condition that is defined as "hazardous" or is subject to regulation under an Environmental Law, including pollutants, chemicals, contaminants, petroleum and petroleum products, and other hazardous or toxic substances. Health and Safety Liabilities Any cost, damages, expense, liability, fine, penalty, judgment, award, amount paid in settlement or any other obligation or responsibility arising from or under any Health and Safety Law, including those consisting of or relating to - (1) Any health or safety matter or condition, including on-site or off-site contamination and injury or occupational disease resulting from exposure to any chemical product or hazardous substance; (2) Any legal or administrative proceeding, claim, demand or response, remedial or inspection cost or expense arising under any Health and Safety Law; (3) Financial responsibility under any Health and Safety Law for cleanup costs or corrective action, including any cleanup, removal, containment, or other remediation or response actions required by any Health and Safety Law; or (4) Any other compliance, corrective, or remedial measure required under any Health and Safety Law. Health and Safety Laws Laws, regulations, orders, ordinances, codes, and other governmental mandates and restrictions applicable to the Powder Coatings Business relating to the health and/or safety of employees or others having business dealings with the Powder Coatings Business. Health and Safety Matter Any action, condition, or event giving rise to a legal obligation under the Health and Safety Laws that relate to the Powder Coatings Business.
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TERM MEANING Inventories Inventories, wherever located, including inventories of raw materials, work-in-process, finished goods, and packaging held or used by the Ferro Sellers primarily in their conduct of the Powder Coatings Business. Leases Leases and similar contractual rights affording the right to use or enjoy intangible property or property rights arising primarily out of the Ferro Sellers' conduct of the Powder Coatings Business. Licenses Leases and similar rights affording the right to use or enjoy intangible property or intangible property rights, including software, arising primarily out of the Ferro Sellers' conduct of the Powder Coatings Business. Material Event Any condition, circumstance, occurrence, or other event, which has had or could be reasonably expected to have a material and adverse effect on the Powder Coatings Business Condition or the ability of Sellers to consummate the transactions contemplated hereby or perform any of their obligations hereunder, including any of such event resulting from any -- (1) Act of God, flood, windstorm, earthquake, accident, fire, explosion, casualty, riot, requisition or taking of property by governmental authority, war, embargo, or other event outside the Ferro Sellers' control; (2) Termination, cancellation, or modification of any Contract, Lease, License, or Permit; (3) Default by any of the Ferro Sellers under any Contract, Lease, License, or Permit; or (4) Filing (whether voluntary or involuntary) of a petition in bankruptcy or commencement of any other action involving creditors' rights or debtors' remedies affecting any of the Ferro Sellers.
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Other Business Contracts Contracts other than Purchase Contracts and Sales Contract to which the Ferro Sellers are party or to which the Ferro Sellers are bound which arisen primarily out of the Ferro Sellers' conduct of the Powder Coatings Business. TERM MEANING Other Current Liabilities Those current liabilities of the Ferro Sellers arising primarily out of the Ferro Sellers conduct of the Powder Coating Business reflected in the Preliminary Working Capital Statement as the same shall exist at Closing. Owns or Ownership Such ownership as confers upon the party or person having it good and marketable title to and control over the thing or right owned, free and clear of any and all Encumbrances. Permits Permits, approvals, and qualifications issued by any government or governmental unit, agency, board, body, or instrumentality and all applications for such items held or used by the Ferro Sellers primarily in their conduct of the Powder Coatings Business. Permitted Encumbrances The following: (1) Liens for taxes accrued but not yet payable; (2) Liens arising as a matter of law in the ordinary course of business (provided the Ferro Sellers are not delinquent in respect of the obligations secured by such liens); and (3) Such other imperfections of title and other encumbrances which singly or taken together, do not and are not likely to materially interfere with the use of such property in the conduct of the Powder Coatings Business as it has been conducted prior to the Closing. Prescribed Rate 5%. Prepaid Items Prepaid and similar items arising out of the conduct of the Powder Coatings Business, including prepaid expenses, deferred charges, advance payments, and other prepaid items arising primarily out of the Ferro Sellers' conduct of the Powder Coatings Business.
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TERM MEANING Purchase Contracts Orders, contracts, and commitments for the purchase of goods and/or services, such items relating to the purchase of capital, tooling, products, supplies, and software arising primarily out of the Ferro Sellers' conduct of the Powder Coatings Business. Powder Coatings Business Condition The business, results of operations, prospects, properties, assets, liabilities (fixed and otherwise), and condition (financial and otherwise) of the Powder Coatings Business taken as a whole. Real Property Those real properties or portions thereof, including all land, buildings, improvements, fixtures, and appurtenances thereto, used by the Ferro Sellers in the conduct of the Powder Coatings Business. Retained Intellectual Property All intellectual property rights held or used by the Ferro Sellers whatsoever, other than the Acquired Intellectual Property, including all financial data relating to the Acquired Intellectual Property, all items or matters of the types listed in part (4) of the definition of Acquired Intellectual Property to the extent such items or matters are not physically located at a Facility as of the Closing, and items listed on Subpart H-9 of the Powder Coatings Disclosure Package Sales Contracts Orders, contracts, commitments, and proposals for the sale of Products, including such items relating to repair, restoration, maintenance, preservation, and similar operations arising primarily out of the Ferro Sellers' conduct of the Powder Coatings Business. Shared Intellectual Property That portion of the Retained Intellectual Property that relates to the following: (1) Novel formulations for non-traditional substrates, including next-generation Impress; (2) Low temperature, fast cure products; (3) Enhanced corrosion resistance coatings; (4) Coil coatings; and (5) Next-generation Valophene.
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TERM MEANING Spanish Facility Those spaces used by the Ferro Sellers in the conduct of the Powder Coatings Business at its facilities located at Carretera Valencia - Barcelona, km. 61,500, Almazora (Castellon), Spain and identified as such in Part F of the Disclosure Package. Swedish Facility Those facilities used by the Ferro Sellers in the conduct of the Powder Coatings Business located at Lia Fiskaregaten 5, Lund, Sweden. Tangible Personal Property Tangible personal property (whether owned, leased, or otherwise), including all machinery, equipment, tooling, dies, molds, jigs, patterns, gauges, materials handling equipment, furniture, office equipment, cars, trucks, and other vehicle held or used by the Ferro Sellers in their conduct of the Powder Coatings Business and listed in Part G of the Disclosure Package. Taxes All Federal, state, foreign and other net income, gross receipts, gains, sales, use, employment, social security, withholding, occupation, franchise, profits, excise, real and personal property, land, value added, capital, consumption, national insurance, registration, custom, stamp, transfer, environmental, alternative minimum or other taxes, fees, duties, assessments or charges of any kind whatsoever whether payable directly or by withholding, together with any interest and penalties, additions to Tax or additional amounts with respect thereto, imposed by any taxing authority. Third-Party Claims Causes of action, rights of action, and warranty and product liability claims against other persons arising primarily out of the Ferro Sellers' conduct of the Powder Coatings Business. Trade Accounts Payable The accounts payable of any of the Ferro Sellers arising primarily out of the Ferro Sellers' conduct of the Powder Coatings Business, including all such amounts owing under Contracts, Leases, and Licenses, as the same shall exist at Closing. Trade Accounts Receivable The accounts receivable of any of the Ferro Sellers arising primarily out of the Ferro Sellers' conduct of the Powder Coatings Business.
- 11 - Conformed Copy Appendix A
TERM MEANING UK Facility Those spaces used by the Ferro Sellers in the conduct of the Powder Coatings Business at its facilities located at Westgate, Aldridge, West Midlands, UK, and identified as such in Part F of the Disclosure Package. Working Capital The sum of following to the extent included in the Acquired Assets and Assumed Liabilities - (1) Trade Accounts Receivable plus (2) Inventories plus (3) Prepaid Items for which the benefit thereof will accrue to Buyer after the Closing minus (4) Trade Accounts Payable minus, (5) Other Current Liabilities, all as reflected on the books of the Powder Coatings Business in accordance with the Accounting Principles as of a given date.
- 12 - EX-2.2 4 l96640aexv2w2.txt EXHIBIT 2.2 Exhibit 2.2 Execution Copy ================================================================================ PURCHASE AGREEMENT DATED AS OF AUGUST 2, 2002 BY AND AMONG INTERNATIONAL PAINT INC. ON THE ONE HAND AND FERRO CORPORATION, FERRO ENAMEL ARGENTINA S.A., AND FERRO MEXICANA S.A. DE C.V. ON THE OTHER HAND ================================================================================ Execution Copy TABLE OF CONTENTS
PAGE PREAMBLE ............................................................................................... 1 RECITALS ............................................................................................... 1 TERMS AND CONDITIONS ................................................................................... 1 ARTICLE 1 - GENERAL PROVISIONS ................................................................ 1 1.1 Definitions ................................................................. 1 1.2 Construction ................................................................ 1 ARTICLE 2 - PURCHASE AND SALE ................................................................ 2 2.1 Transaction ................................................................ 2 2.2 Acquired Assets ............................................................. 2 2.3 Retained Assets ............................................................. 3 2.4 Assumed Liabilities ......................................................... 4 2.5 Retained Liabilities ........................................................ 4 2.6 Purchase Price .............................................................. 6 2.7 Adjustment .................................................................. 6 (A) Preliminary Working Capital Statement ................................. 6 (B) Ferro Sellers' Review ................................................. 6 (C) Dispute Resolution .................................................... 6 (D) Final Determination ................................................... 7 (E) Base Line Working Capital ............................................. 7 (F) Closing Working Capital................................................ 7 (G) Amount of Adjustment .................................................. 7 2.8 Payment of Purchase Price ................................................... 7 (A) Payment at Closing .................................................... 7 (B) Final Payment ......................................................... 7 2.9 Refund of Adjustment ........................................................ 8 2.10 Method of Payment ........................................................... 8 (A) Directed Payments ..................................................... 8 (B) Other Payments ........................................................ 8 2.11 Allocation of Consideration ................................................. 8 2.12 Taxes ....................................................................... 8 ARTICLE 3 - ACTIONS BEFORE CLOSING ............................................................ 8 3.1 Access to Records ........................................................... 8 3.2 Interim Conduct of the Powder Coatings Business ............................. 9 3.3 International Paint's Approval of Certain Transactions ...................... 9 3.4 Negotiation of Other Agreements ............................................. 10 3.5 Consents .................................................................... 11 3.6 Coordination of Public Announcements ........................................ 11 3.7 Regulatory Approvals ........................................................ 12
i Execution Copy 3.8 Shared Intellectual Property ................................................ 12 3.9 Hyperlink ................................................................... 13 ARTICLE 4 - CONDITIONS ....................................................................... 13 4.1 Conditions to International Paint's Obligations ............................. 13 4.2 Conditions to the Ferro Sellers' Obligations ................................ 14 4.3 Parties' Best Efforts ....................................................... 14 ARTICLE 5 - CLOSING ........................................................................... 15 5.1 The Closing ................................................................. 15 5.2 Date, Time, and Place of Closing ............................................ 15 5.3 International Paint's Obligations ........................................... 15 5.4 The Ferro Sellers' Obligations .............................................. 15 5.5 Local Formalities ........................................................... 15 ARTICLE 6 - ACTIONS AFTER CLOSING ............................................................. 16 6.1 Further Conveyances ......................................................... 16 6.2 Further Consents ............................................................ 16 6.3 Accounting Reports .......................................................... 16 6.4 Noncompetition .............................................................. 17 6.5 Use of Ferro Name and Mark .................................................. 18 6.6 Access to Former Business Records ........................................... 18 6.7 Access to Former Employees .................................................. 18 6.8 Termination of Insurance Coverage ........................................... 19 6.9 Trade Secrets ............................................................... 19 ARTICLE 7 - REPRESENTATIONS AND WARRANTIES..................................................... 19 7.1 Ferro's General Representations and Warranties .............................. 19 (A) Organization and Existence ............................................ 19 (B) Power and Authority ................................................... 20 (C) Authorization ......................................................... 20 (D) Binding Effect ........................................................ 20 (E) No Default ............................................................ 20 (F) Finders ............................................................... 20 (G) Consents and Approvals ................................................ 20 (H) No Knowledge of International Paint's Default ......................... 20 7.2 Ferro's Representations and Warranties Concerning the Powder Coatings Disclosure Package .......................................... 20 (A) Organization .......................................................... 21 (B) Financial Statements .................................................. 21 (C) Inventories ........................................................... 21 (D) Trade Accounts Receivable ............................................. 21 (E) Trade Accounts Payable ................................................ 21 (F) Real Property ......................................................... 21 (G) Tangible Personal Property ............................................ 22 (H) Intellectual Property ................................................. 22 (I) Indebtedness .......................................................... 22
ii Execution Copy (J) Litigation ............................................................ 23 (K) Contracts ............................................................. 23 (L) Employees and Employee Benefits ....................................... 23 (M) Compliance with Environmental Laws ................................... 23 (N) Compliance with Health and Safety Laws ................................ 24 (O) Compliance with Other Laws ............................................ 24 (P) Taxes ................................................................. 24 (Q) Insurance ............................................................. 24 (R) No Material Events .................................................... 24 7.3 International Paint's Representations and Warranties ........................ 24 (A) Organization and Existence ............................................ 24 (B) Power and Authority ................................................... 24 (C) Authorization ......................................................... 24 (D) Binding Effect ........................................................ 25 (E) No Default ............................................................ 25 (F) Finders ............................................................... 25 (G) No Knowledge of Ferro's Default ....................................... 25 7.4 Meaning of Ferro Sellers' Knowledge ......................................... 25 7.5 Disclaimer .................................................................. 25 ARTICLE 8 - SPECIFIC OBLIGATIONS .............................................................. 25 8.1 Employee Obligations ........................................................ 25 (A) Offers of Employment .................................................. 26 (B) Employment ............................................................ 26 (C) Pay and Benefits ...................................................... 26 (D) Workers' Compensation ................................................. 26 (E) Union Contracts ....................................................... 27 (F) Severance ............................................................. 27 (G) Non-Interference ...................................................... 27 8.2 Environmental Obligations ................................................... 27 (A) Identified Environmental Matters ...................................... 27 (B) Pre-Closing Environmental Matters...................................... 27 (C) Post Closing R&D Lab Environmental Matters ............................ 28 (1) Separate Post-Closing R&D Lab Environmental Matters ............... 28 (2) Mixed Post-Closing R&D Lab Environmental Matters .................. 28 (D) Notice and Remediation of Real Property ............................... 29 (E) Post-Closing Acquired Assets Environmental Matters .................... 29 (F) International Paint Responsibilities upon Identification of an Environmental Matter ............................. 29 (G) Responsibilities with regard to Economic Remediation Plans ............................................ 30 (H) Limitations on the Ferro Sellers' Obligations ......................... 31 (I) Environmental Assessment and Remediation of the Nashville Plant .................................... 32 (1) Environmental Assessment of the Nashville Plant ................... 32 (2) Participation of the Ferro Sellers' Consultant .................... 32 (3) Nashville Remediation Program ..................................... 32 (J) Release of Claims ..................................................... 34
iii Execution Copy ARTICLE 9 - INDEMNIFICATION .............................................................. 34 9.1 Indemnification of the Ferro Sellers ........................................ 34 9.2 Indemnification of International Paint ...................................... 34 9.3 Claims ...................................................................... 35 (A) Notice .............................................................. 35 (B) Responsibility for Defense ............................................ 35 (C) Right to Participate .................................................. 35 (D) Settlement ............................................................ 36 9.4 Disputed Responsibility ..................................................... 36 9.5 Quantum Limitation on Indemnification ....................................... 36 9.6 Time Limitation on Indemnification .......................................... 37 9.7 Actual Amount .............................................................. 37 9.8 Exclusive Remedies .......................................................... 38 9.9 Indemnity Payments as Adjustments ........................................... 38 ARTICLE 10 - DISPUTE RESOLUTION .............................................................. 38 10.1 Dispute Notice .............................................................. 38 10.2 Informal Negotiations ....................................................... 38 10.3 Dispute Resolution Proceedings .............................................. 38 (A) Designation of Representatives ..................................... 38 (B) Selection of Neutral ............................................... 39 (C) Procedures and Process ............................................. 39 (D) Decision ........................................................... 39 10.4 Equitable Relief ............................................................ 39 10.5 Binding Effect .............................................................. 39 ARTICLE 11 - AMENDMENT, WAIVER, AND TERMINATION................................................ 40 11.1 Amendment .............................................................. 40 11.2 Waiver....................................................................... 40 11.3 Termination ................................................................. 40 ARTICLE 12 - MISCELLANEOUS .............................................................. 40 12.1 Cooperation .............................................................. 40 12.2 Severability .............................................................. 40 12.3 Costs and Expenses .......................................................... 40 12.4 Notices ..................................................................... 41 12.5 Assignment and Appointment .................................................. 41 12.6 No Third Parties ............................................................ 41 12.7 Incorporation by Reference .................................................. 42 12.8 Governing Law .............................................................. 42 12.9 Bulk Sales .............................................................. 42 12.10 Counterparts .............................................................. 42 12.11 Complete Agreement .......................................................... 43
APPENDICES Appendix A - Definitions Appendix B - Retained Assets Appendix C - Retained Liabilities iv Execution Copy Appendix D - Form of Preliminary Working Capital Statement Appendix E - Accounting Principles Appendix F - Allocation of Consideration Appendix G - Terms Sheets - Cleveland Lease Agreement; Transition Services Agreement; California Transition Services Agreement Appendix H - Terms Sheet - Argentina Toll Agreement Appendix I - Terms Sheet - Joint Marketing Agreement Appendix J - Terms Sheet - Technology License Agreement Appendix K - Documents to Be Delivered by the Ferro Sellers at the Closing Appendix L - Documents to Be Delivered by International Paint at the Closing Appendix M - Contents of the Powder Coatings Disclosure Package Appendix N - Due Diligence Certifications Appendix O - Excluded Employees Appendix P - Employee Benefit and Welfare Plans Appendix Q - Identified Environmental Matters Appendix R - Unconditional Guarantee Appendix S - Environmental Scope of Work v PURCHASE AGREEMENT This PURCHASE AGREEMENT (this "Purchase Agreement") is dated as of August 2, 2002, and is by and among: INTERNATIONAL PAINT, INC. ("International Paint"), a Kentucky corporation, on one hand, - and - FERRO CORPORATION ("Ferro"), an Ohio corporation, FERRO ENAMEL ARGENTINA S.A. ("Ferro Argentina"), an Argentine corporation (sociedad anonima), and FERRO MEXICANA S.A. DE C.V. ("Ferro Mexico"), a Mexican corporation with variable capital (sociedad anonima de capital variable), on the other hand (collectively, the "Ferro Sellers"). RECITALS A. The Ferro Sellers are engaged in the business (the "Powder Coatings Business") of designing, developing, formulating, manufacturing, and selling thermosetting-formulated powder surface coatings (the "Products") for a variety of decorative and protective end-use applications within the appliance, automotive, and general industrial industries in the Americas. (For purposes of this Purchase Agreement, however, the term "Powder Coatings Business" shall not include any comparable business conducted by the Ferro Sellers and/or their Affiliates from outside the Americas.) B. International Paint is an indirect, wholly-owned subsidiary of Akzo Nobel NV ("Akzo Nobel"), a Dutch corporation (naamloze vennootschap). C. International Paint desires to purchase from the Ferro Sellers, and the Ferro Sellers desire to sell to International Paint, the Powder Coatings Business on and subject to the terms and conditions of this Purchase Agreement. TERMS AND CONDITIONS In consideration of the matters recited above and of other good and valuable consideration, and intending to be legally bound by this Purchase Agreement, International Paint and the Ferro Sellers hereby agree as follows: ARTICLE 1 - GENERAL PROVISIONS 1.1 DEFINITIONS. Appendix A sets forth the definitions of certain terms used in this Purchase Agreement. Those terms shall have the meanings set forth on Appendix A where used in this Purchase Agreement and identified with initial capital letters. 1.2 CONSTRUCTION. For purposes of this Purchase Agreement, except where the context otherwise requires -- Execution Copy (A) The term "parties" means International Paint and the Ferro Sellers. (B) The term "person" includes any natural person, firm, association, partnership, corporation, limited liability company, limited liability partnership, governmental agency or other entity. The term "third-party" means any person other than the parties and their Affiliates. (C) The term "today" means August 2, 2002. (D) All currency amounts stated in this Purchase Agreement are in United States Dollars. (Other currency amounts will translate into United States Dollar amounts at the exchange rate or rates quoted in the Currency Trading table of the Central Edition of The Wall Street Journal on the business day immediately preceding the date as of which translation is to occur.) (E) References to "days" mean calendar days. (If, however, an action or obligation is due to be undertaken by or on a day other than a business day, i.e., a Saturday, Sunday, or public holiday, in the United States, then that action or obligation will be deemed to be due on the next following business day.) (F) When introducing a series of items, the term "including" is not intended to limit the more general description that precedes the items listed. (G) The Table of Contents and the headings of the Articles and Sections are included for convenience of reference only and are not intended to affect the meaning of the operative provisions to which they relate. ARTICLE 2 - PURCHASE AND SALE 2.1 TRANSACTION. On and subject to the terms and conditions of this Purchase Agreement, (A) At the Closing, International Paint will purchase from the Ferro Sellers, and the Ferro Sellers will sell, transfer, and assign to International Paint, all of the Acquired Assets (as defined in Section 2.2); (B) At the Closing, International Paint will assume and become directly and solely responsible for the payment or discharge when due of all of the Assumed Liabilities (as defined in Section 2.4); (C) International Paint will pay the Ferro Sellers the Purchase Price as provided in Section 2.8. Notwithstanding such transaction, and without limitation, the Ferro Sellers will retain the Retained Assets (as defined in Section 2.3) and the Retained Liabilities (as defined in Section 2.5). 2.2 ACQUIRED ASSETS. For purposes of this Purchase Agreement, the term "Acquired Assets" means all of the Ferro Sellers' rights, title, and interest in and to each of the following, as the same shall exist at Closing: 2 Execution Copy (A) All Trade Accounts Receivable; (B) All Inventories; (C) All Prepaid Items; (D) All Real Property; (E) All Tangible Personal Property; (F) All Acquired Intellectual Property and all goodwill associated with the Powder Coatings Business; (G) The unrestricted right to use the Shared Intellectual Property to the extent physically located at the Real Property, the Argentina Facility, the R&D Lab or any of the locations that are the subject of the Real Property Leases; (H) All Contracts, Leases, Licenses, and Permits (so far as they can be or are lawfully assigned, transferred to, or held in trust for International Paint); (I) All Third-Party Claims that relate to the Acquired Assets and the Assumed Liabilities; and (J) To the extent not privileged, all Business Records. 2.3 RETAINED ASSETS. For purposes of this Purchase Agreement, the term "Retained Assets" means all of the Ferro Sellers' assets other than the Acquired Assets including, without limitation, the following rights, properties, and assets as the same shall exist as of the Closing: (A) All Cash; (B) All rights, properties, and assets of the Ferro Sellers that are used by them in businesses other than the Powder Coatings Business, including rights, properties, and assets held by and used by the Ferro Sellers and/or their Affiliates in conducting similar businesses from outside the Americas; (C) All Retained Intellectual Property and all Shared Intellectual Property to the extent not physically located at the Real Property or at any of the locations subject to the Real Property Leases; (D) All trademarks used by the Ferro Sellers (or any of them), whether or not registered, that incorporate the names and trademarks "Ferro" and "Check-In-A-Circle" logo and the goodwill associated with such names, marks and logos; (E) All Third Party Claims that relate to Retained Assets or Retained Liabilities; (F) All policies of insurance and claims, subject to Section 6.8, and rights under such policies of insurance, whether or not related to the Powder Coatings Business, the Acquired Assets, or the Assumed Liabilities; 3 Execution Copy (G) All privileged Business Records; (H) All assets of employee benefit plans being retained by the Ferro Sellers under Article 8; and (I) All assets, whether or not used by the Ferro Sellers in their conduct of the Powder Coatings Business, which are identified as Retained Assets on Appendix B. 2.4 ASSUMED LIABILITIES. For purposes of this Purchase Agreement, the term "Assumed Liabilities" means the following liabilities and obligations as the same shall exist as of the Closing: (A) All Trade Accounts Payable and Other Current Liabilities; (B) All liabilities and obligations that arise after the Closing under the Contracts, Leases, Licenses, and Permits assigned to International Paint under this Purchase Agreement; (C) All liabilities and obligations arising out of, relating to, or resulting from any claims that Products manufactured and sold by the Powder Coatings Business following the Closing are or were defective or failed to meet warranted specifications other than those retained by the Ferro Sellers pursuant to Section 2.5(D); (D) Any and all liabilities, duties and obligations of, and claims against (including any claim or action, whether founded upon negligence, breach of warranty, strict liability in tort and/or other similar legal theory, seeking compensation or recovery for injury to third-parties or damage to property alleged to have been caused by a Product manufactured and sold by the Powder Coatings Business after the Closing), or relating to, or incurred by, the Powder Coatings Business, or the operation of the Powder Coatings Business or the ownership, possession or use of any of the Acquired Assets, after the Closing; (E) International Paint's Employee Obligations (as defined in Section 8.1); (F) International Paint's Environmental Obligations (as defined in Section 8.2); and (G) Costs and expenses for which International Paint is responsible under Section 12.3. 2.5 RETAINED LIABILITIES. For the purposes of this Purchase Agreement the term "Retained Liabilities" means, without limitation, the following liabilities and obligations as the same shall exist as of the Closing: (A) All Financial Debt; (B) All liabilities and obligations that have been fully discharged or satisfied by the Ferro Sellers before the Closing in transactions in the ordinary course of business and not in breach of this Purchase Agreement; 4 Execution Copy (C) All liabilities, undertakings, and obligations incurred by the Ferro Sellers in connection with the conduct of businesses other than the Powder Coatings Business, including liabilities, undertakings, and obligations incurred by the Ferro Sellers and/or their Affiliates in conducting similar businesses from outside the Americas; (D) All liabilities and obligations in excess of $1,000 in any single case or in excess of $10,000 in the aggregate arising out of, relating to, or resulting from any claims that Products manufactured and sold by any of the Ferro Sellers before the Closing are or were defective or failed to meet warranted specifications if and to the extent - (i) Such claims are made in good faith by a customer unrelated to International Paint without solicitation or encouragement by or collusion with International Paint, (ii) International Paint notifies the Ferro Sellers of such claims within 18 months from the date of the Closing Date, and (iii) International Paint takes no action to admit, compromise or settle such claims; if International Paint elects to admit, compromise or settle any such claim, the Ferro Sellers shall have no further obligation hereunder with respect to such claim. In the event the Ferro Sellers desire to compromise or settle, or shall become obligated for, any such claim for which the Ferro Sellers are liable under this Section 2.5(D), International Paint shall sell to the Ferro Sellers replacement Products at International Paint's raw material and actual manufacturing costs. (E) The Ferro Sellers' Employee Obligations (as defined in Section 8.1); (F) The Ferro Sellers' Environmental Obligations (as defined in Section 8.2); (G) Costs and expenses for which the Ferro Sellers are responsible under Section 12.3; (H) All liabilities and obligations for the payment of Taxes accrued in connection with the conduct of the Powder Coatings Business with respect to periods or events occurring before the Closing; (I) All liabilities, undertakings, and obligations, whether or not arising out of the Ferro Sellers' conduct of the Powder Coatings Business, which are identified as Retained Liabilities on Appendix C; and (J) Any and all liabilities, duties and obligations of, and claims against (including any claim or action, whether founded upon negligence, breach of warranty, strict liability in tort and/or other similar legal theory, seeking compensation or recovery for injury to third-parties or damage to property alleged to have been caused by a Product manufactured and sold by the Ferro Sellers before the Closing), or relating to, or incurred by, the Ferro Sellers or any of them, or to the operation of the Powder Coatings Business or the ownership, possession or use of any of the 5 Execution Copy Acquired Assets, on or prior to the Closing, or to the ownership, possession or use of any of the Retained Assets, in each case whether accrued, unaccrued, matured, unmatured, absolute, contingent, known or unknown, asserted or unasserted, and whether now existing or arising at any time prior to, at, or after the Closing, and any Encumbrance against any of the Acquired Assets or any of the Retained Assets, except only for the Assumed Liabilities. 2.6 PURCHASE PRICE. For purposes of this Purchase Agreement, the term "Purchase Price" means $56,000,000, plus or minus the amount of the Adjustment (and, if applicable, any further adjustment(s) pursuant to Section 9.9). 2.7 ADJUSTMENT. The Adjustment will be determined as follows: (A) PRELIMINARY WORKING CAPITAL STATEMENT. As promptly as practicable, but in any event within forty-five (45) days after the Closing Date, International Paint shall prepare and deliver to the Ferro Sellers a statement (the "Preliminary Working Capital Statement") of the Working Capital of the Powder Coatings Business at and as of the Closing Date, substantially in the form set forth in Part 1 of Appendix D. The Preliminary Working Capital Statement shall be prepared in accordance with the accounting methods, policies, practices and procedures set forth on Appendix E (the "Accounting Principles"). (B) FERRO SELLERS' REVIEW. If the Ferro Sellers disagree with any items shown on the Preliminary Working Capital Statement, the Ferro Sellers shall notify International Paint in writing of such disagreement within forty-five (45) days after delivery of the Preliminary Working Capital Statement, which notice shall describe the nature of any such disagreement in reasonable detail, identify the specific items involved and the dollar amount of each such disagreement. After the end of such 45-day period, the Ferro Sellers may not introduce additional disagreements with respect to any item in the Preliminary Working Capital Statement or increase the amount of any disagreement, and any item not so identified shall be deemed to be agreed to by the Ferro Sellers and will be final and binding upon the parties. During the 45-day period of its review, the Ferro Sellers and their representatives shall have reasonable access to any documents, schedules or workpapers used in the preparation of the Preliminary Working Capital Statement. (C) DISPUTE RESOLUTION. The Ferro Sellers and International Paint agree to negotiate in good faith to resolve any such disagreement relating to items included on the Preliminary Working Capital Statement. If the Ferro Sellers and International Paint are unable to resolve all disagreements properly identified by the Ferro Sellers pursuant to Section 2.7(B) within sixty (60) days after delivery to International Paint of written notice of such disagreement, then such disagreements shall be submitted for final and binding resolution to Price Waterhouse Coopers or, if Price Waterhouse Coopers should decline such engagement, such other internationally recognized accounting firm as the Ferro Sellers and International Paint shall mutually agree (the "Accountants"). The Accountants so selected will only consider those items and amounts set forth in the Preliminary Working Capital Statement as to which the Ferro Sellers and International Paint have disagreed within the time periods and on the terms specified above and must resolve the matter in accordance with the terms and 6 Execution Copy provisions of the Agreement. The parties will instruct the Accountants to deliver to the Ferro Sellers and International Paint, as promptly as practicable and in any event within one hundred and twenty (120) days after its appointment, a written report setting forth the resolution of any such disagreement determined in accordance with the terms of this Purchase Agreement. The Accountants shall make its determination based solely on presentations and supporting material provided by the parties and not pursuant to any independent review. The determination of the Accountants shall be final and binding upon the Ferro Sellers and International Paint. The fees, expenses and costs of the Accountants shall be borne one-half by the Ferro Sellers and one-half by International Paint. (D) FINAL DETERMINATION. The Preliminary Working Capital Statement shall be deemed final for the purposes of this Section 2.7 upon the earliest of (A) the failure of the Ferro Sellers to notify International Paint of a dispute with 45 days of International Paint's delivery of the Preliminary Working Capital Statement to the Ferro Sellers, (B) the resolution of all disputes, pursuant to Section 2.7(C), by the Ferro Sellers and International Paint and (C) the resolution of all disputes, pursuant to Section 2.7(C), by the Accountants. (E) BASE-LINE WORKING CAPITAL. The "Base-Line Working Capital" will be an amount equal to $8,642,044 (the details of which are set forth in Part 2 of Appendix D). (F) CLOSING WORKING CAPITAL. The "Closing Working Capital" will be an amount equal to the Working Capital of the Powder Coatings Business at and as of the Closing as determined under Sections 2.7(A)-(D) above. (G) AMOUNT OF ADJUSTMENT. If the Closing Working Capital is (A) Less than the Base Line Working Capital, then the Adjustment will be a negative amount equal to the amount by which the Closing Working Capital is less than the Base-Line Working Capital; or (B) More than the Base Line Working Capital, then the Adjustment will be a positive amount equal to the amount by which the Closing Working Capital is greater than the Base-Line Working Capital. The Purchase Price will finally be determined on the date the amount of the Adjustment is finally determined. 2.8 PAYMENT OF PURCHASE PRICE. International Paint will pay the Purchase Price as follows: (A) PAYMENT AT CLOSING. At the Closing, International Paint will pay Ferro (for itself and as agent for the other Ferro Sellers) the total sum of $56,000,000; and (B) FINAL PAYMENT. If the Adjustment is a positive amount, International Paint will, within 10 business days after the final determination of the Purchase Price, pay Ferro (for itself and as agent for the other Ferro Sellers) the amount of the Adjustment, together with interest thereon at the Prescribed Rate for the period from the Closing Date through and including the date on which the Adjustment is paid. 7 Execution Copy (Payments of further adjustments pursuant to Section 9.9 will be made as provided in Article 9.) 2.9 REFUND OF ADJUSTMENT. If the Adjustment is a negative amount, then the Ferro Sellers will, within 10 business days after the final determination of the Purchase Price, refund to International Paint the amount of the Adjustment, together with interest thereon at the Prescribed Rate for the period from the Closing Date through and including the date on which the Adjustment is paid. 2.10 METHOD OF PAYMENT. All payments under this Purchase Agreement shall be made by delivery to the payee as follows: (A) DIRECTED PAYMENTS. If a party which is entitled to a payment under this Purchase Agreement provides the other party five days' advance written designation of a bank and account number into which the payee wishes payment to be made, then the payor will make such payment by wire transfer (in immediately available funds) to the designated account of the payee. (B) OTHER PAYMENTS. In all other cases, the party obligated to make a payment under this Purchase Agreement will do so by delivering to the payee a bank cashier's check (in immediately available funds) payable to the order of the payee. 2.11 ALLOCATION OF CONSIDERATION. The total consideration paid by International Paint to purchase the Powder Coatings Business from the Ferro Sellers is the sum of the Purchase Price plus the book amount of the Assumed Liabilities listed in Appendix D as at the Closing, which consideration will be allocated by mutual agreement between the Ferro Sellers and International Paint among the Acquired Assets under the principles set forth on Appendix F. The allocation for Tax purposes will follow the principles of section 1060 of the Internal Revenue Code of 1986, as amended (the "Code"). International Paint and the Ferro Sellers will, within 120 days following the Closing, agree to the Purchase Price allocation for Tax purposes consistent with the principles set forth in Appendix F. 2.12 TAXES. The Purchase Price paid by International Paint will be exclusive of any transfer taxes, including sales and use, real property recording fees and taxes, and value added taxes. The parties will use all reasonable efforts to ensure, to the extent possible, that the transfer of the Powder Coatings Business in accordance with any local transfer agreement is treated as a transfer of a business as a going concern or otherwise qualifies for exemption for the purposes of any applicable transfer taxes or otherwise falls within another applicable exemption from transfer taxes. ARTICLE 3 - ACTIONS BEFORE CLOSING 3.1 ACCESS TO RECORDS. From today until the Closing, the Ferro Sellers will cause the Powder Coatings Business to afford duly authorized representatives of International Paint free and full access during normal business hours to all of the assets, properties, books, and nonprivileged records of the Powder Coatings Business and will permit such representatives to make abstracts from, or take copies of, such books, records, or other documentation, or to obtain temporary possession of any thereof as may be reasonably 8 Execution Copy required by International Paint. During such period, the Ferro Sellers will furnish to International Paint such information concerning the Powder Coatings Business and its assets, liabilities, or condition as International Paint may request. Notwithstanding the foregoing, the Ferro Sellers will not be obligated to disclose or make available to International Paint any information concerning the Powder Coatings Business that, in the opinion of Ferro's counsel, should not be disclosed to International Paint as a matter of law, by contract or to protect a claim of privilege; provided, however, that in all cases, the Ferro Sellers represent and warrant to International Paint that such withheld information, both individually and in the aggregate, is not materially adverse to the Powder Coatings Business. 3.2 INTERIM CONDUCT OF THE POWDER COATINGS BUSINESS. From today until the Closing, the Ferro Sellers will conduct the Powder Coatings Business only in the ordinary and usual course, subject to International Paint's approval of certain transactions pursuant to Section 3.3. Without limiting the generality of the foregoing, insofar as the Powder Coatings Business is concerned, the Ferro Sellers will use their reasonable efforts to: (A) Preserve substantially intact the Powder Coatings Business' relationships with suppliers, customers, employees, creditors, and others having business dealings with the Powder Coatings Business; (B) Maintain in full force and effect its existing policies of insurance which materially affect the Powder Coatings Business; and (C) Continue performance in the ordinary course of its obligations under contracts, commitments, or other obligations to be included as part of the Powder Coatings Business. Notwithstanding the foregoing, the Ferro Sellers will, prior to Closing, issue a Termination Notice to Ferro Industrial Products (Proprietary) Limited under the License and Technical Assistance Agreement indicating that the license is, as of Closing, fully paid and non-exclusive with respect to the Products. 3.3 INTERNATIONAL PAINT'S APPROVAL OF CERTAIN TRANSACTIONS. Except as may otherwise be required under this Purchase Agreement, from today until the Closing, insofar as the Powder Coatings Business is concerned, the Ferro Sellers will not do any of the following without the prior approval with written confirmation of International Paint, which approval shall not be unreasonably withheld: (A) Purchase or dispose of any real property or interests in real property; (B) Enter into any lease for real property involving a term of more than one year or rental obligation exceeding $250,000 per annum in any single case; (C) Enter into any lease for personal property involving a term of more than one year or rental obligation exceeding $100,000 per annum in any single case; (D) Voluntarily permit to be incurred any Encumbrances on assets of the Powder Coatings Business except in the ordinary course of business; 9 Execution Copy (E) Except for normal merit or cost-of-living increases in accordance with the Ferro Sellers' past practices or required by Argentinean legal requirements and except for any changes generally affecting Ferro's salaried employees, increase the rate of compensation for any of the employees of the Powder Coatings Business or otherwise enter into or alter any employment, consulting, or managerial services agreement affecting the Powder Coatings Business; (F) Except for pension benefit plans and amendments that are required to be executed in response to determination letter requests filed with the Internal Revenue Service, and except for any changes generally affecting Ferro's salaried employees, commence, enter into, or alter any pension, retirement, profit-sharing, employee stock option or stock purchase, bonus, deferred compensation, incentive compensation, life insurance, health insurance, fringe benefit, or other employee benefit scheme, plan, or arrangement affecting employees of the Powder Coatings Business; (G) Make any single new commitment or increase any single previous commitment for capital expenditures for the Powder Coatings Business in an amount exceeding $375,000; (H) Accelerate or delay the sale of Products except as may be necessary in the ordinary course of business; (I) Sell, assign, transfer, license, or convey, abandon or fail to maintain any of the intellectual property to be included as part of the Acquired Assets. (J) Except for the resolution of any grievance, enter into, modify or terminate any labor or collective bargaining agreement relating to the Powder Coatings Business or, through negotiation or otherwise, make any commitment or incur any liability to any labor organization relating to employees of the Powder Coatings Business; (K) Enter into any transaction or make or enter into any Contract relating to the Powder Coatings Business which by reason of its size or otherwise is not in the ordinary course of business; (L) With respect to the Powder Coatings Business, authorize, propose, enter into or agree to enter into any acquisition of assets for a price in excess of $375,000; (M) Waive any claims or rights under any Material Contract or with respect to the Acquired Assets in any material respect; (N) Terminate any Material Contract or voluntarily consent to the termination of any Material Contract (including, without limitation, any lease) by any other party thereto; or (O) Except as otherwise provided in this Section 3.3, enter into any contract, agreement or arrangement with respect to any of the foregoing. 3.4 NEGOTIATION OF OTHER AGREEMENTS. From today until the Closing, the parties will negotiate in good faith and enter into such other and further agreements as they may 10 Execution Copy deem appropriate or necessary for the orderly transfer of the Powder Coatings Business from the Ferro Sellers to International Paint, including - (A) A Cleveland Facility Lease Agreement (the "Cleveland Lease Agreement") on substantially the terms set forth on Appendix G, Part 1; (B) A Transition Services Agreement (the "Transition Services Agreement") on substantially the terms set forth on Appendix G, Part 2; (C) An Argentina Toll Agreement (the "Argentina Toll Agreement") on substantially the terms set forth on Appendix H; (D) A Joint Marketing Agreement (the "Joint Marketing Agreement") on substantially the terms set forth on Appendix I; (E) A Technology License Agreement (the "Technology License Agreement") on substantially the terms set forth on Appendix J; and (F) A California Transition Services Agreement (the "California Transition Services Agreement") on terms and conditions mutually agreeable to the parties. (Such agreements, as well as any other agreements into which the parties enter in connection with the transactions contemplated by this Purchase Agreement which make specific reference to this Section 3.4, are collectively referred to as the "Other Agreements.") 3.5 CONSENTS. From today until the Closing, the Ferro Sellers will use their reasonable efforts to obtain the consents or approvals (or effective waivers thereof) of assignment from those third parties whose consents or approvals are required for the assignment or transfer of the Material Consents. In addition from today until the Closing, International Paint will use its reasonable efforts to assist the Ferro Sellers in obtaining the Material Consents and any other consents or approvals (or effective waivers thereof) of all other third-parties whose consents or approvals are required for the assignment of the Ferro Sellers' rights under Powder Coatings Business Contracts, Leases, Licenses, Permits and other similar items. Failure of the parties to obtain the Material Consents or any other consents or approvals shall not be deemed to be a breach of this Purchase Agreement and shall not give rise to monetary damages against either party; provided that obtaining all Material Consents remains a condition precedent to Closing under Section 4.1(H). 3.6 COORDINATION OF PUBLIC ANNOUNCEMENTS. From today until the Closing, neither party will make any public announcement concerning the transactions contemplated by this Purchase Agreement without having previously consulted with and having received the consent of the other parties, such consent not to be withheld unreasonably. Nothing in the preceding sentence, however, shall prevent any party from making any announcement required by law, by the rules of any securities exchange, or by any listing agreement with a securities exchange to which such party is a party or by which it is bound. The parties will cooperate in the planning, preparation, and issuance of any and all public announcements concerning this Purchase Agreement and the transactions contemplated by this Purchase Agreement. 11 Execution Copy 3.7 REGULATORY APPROVALS. Immediately after the execution and delivery of this Purchase Agreement, the parties will promptly proceed with the preparation and filing of any required filings necessary in order to obtain the approval or authorization of those governmental agencies or instrumentalities whose approval or authorization is necessary in order to consummate the transactions contemplated by this Purchase Agreement, including the following: (A) Notification under Title II of the Hart-Scott-Rodino Antitrust Improvements Act, as amended, and the rules of the Federal Trade Commission thereunder; (B) Such foreign filings as shall be deemed necessary by counsel to the respective parties hereto. If any of the foregoing governmental authorities require, as a condition to granting any such approval or authorization, or as a condition to not issuing a request for additional information or not commencing a second-phase investigation of the transactions contemplated by this Purchase Agreement, then the parties will cooperate in good faith to take such action as may reasonably be necessary to prevent or ameliorate any actual or perceived anti-competitive consequences of the transactions contemplated by this Purchase Agreement so as to make possible consummation of the transactions contemplated by this Purchase Agreement at the earliest practicable date; provided, however, that under no circumstances shall International Paint be required to hold separate or dispose (directly or indirectly) of any assets or business units. 3.8 SHARED INTELLECTUAL PROPERTY. Between today and the Closing, (A) The Ferro Sellers will convene a meeting of selected technical Employees of the Powder Coatings Business and selected technical employees of Ferro's powder coating business conducted in and from Europe. The purpose of such meeting will be to allow all such employees a full and free opportunity to discuss and educate themselves regarding the current status and development of the Ferro research and development projects related to Shared Intellectual Property in regions other than their own. The Ferro Sellers will select employees to participate in such meeting who are, in the Ferro Sellers' reasonable opinion, most appropriate to participate in such an exchange of technical information for the benefit of both the Powder Coatings Business and the powder coatings business conducted in and from Europe. (B) If materials needed for a full understanding of the Shared Intellectual Property projects being conducted in Europe are not already physically located at the Real Property, at any of the locations subject to the Real Property Leases or at the R&D Lab, then the Ferro Sellers will assemble a copy of such materials and assure that such copy is physically located at the R&D Lab at the Closing. (C) International Paint will negotiate with RandH a Shared Intellectual Property Agreement (the "Shared Intellectual Property Agreement") setting forth the terms and conditions under which International Paint and RandH will share the Shared Intellectual Property after the Closing. Under no circumstances will the Ferro Sellers have any liability whatsoever to International Paint with respect to the transfer of information regarding the Shared 12 Execution Copy Intellectual Property beyond what is stated in this Section 3.8 or as to the terms of the Shared Intellectual Property Agreement. 3.9 HYPERLINK. For a period of no less than 90 days after the Closing, Ferro shall maintain on the home page of its website a hyperlink to the following URL: www.akzonobelpowder.com, together with a statement indicating that the Powder Coatings Business has been sold to International Paint. The placement and design of such hyperlink shall be subject to Ferro's sole discretion. ARTICLE 4 - CONDITIONS 4.1 CONDITIONS TO INTERNATIONAL PAINT'S OBLIGATIONS. The obligation of International Paint to consummate the transactions contemplated by this Purchase Agreement is subject to the satisfaction of the following conditions at the Closing: (A) The representations and warranties of the Ferro Sellers contained in Section 7.1 of this Purchase Agreement shall be true, accurate and complete as of today and as of the Closing (except with respect to the effect of transactions contemplated or permitted by this Purchase Agreement); (B) The representations and warranties of the Ferro Sellers contained in Section 7.2 of this Purchase Agreement shall be true, accurate and complete in all material respects as of today and as of the Closing (as if such representations and warranties had been made anew as of the Closing) except with respect to the effect of transactions contemplated or permitted by this Purchase Agreement, changes resulting from the passage of time on dated material in the Powder Coatings Disclosure Package and transactions in the ordinary course of business not in breach of the Ferro Sellers' obligations under this Purchase Agreement; (C) The Ferro Sellers, in all material respects, shall have performed and complied with all undertakings required by this Purchase Agreement to be performed or satisfied by the Ferro Sellers before the Closing including entering into the Other Agreements; (D) The Ferro Sellers shall have taken all corporate and other proceedings or actions necessary to be taken by the Ferro Sellers for consummation of the transactions contemplated by this Purchase Agreement; (E) The Ferro Sellers shall be prepared to deliver the documents listed in Appendix K; (F) There shall not have been issued and in effect any injunction or similar legal order prohibiting or restraining consummation of any of the transactions contemplated in this Purchase Agreement; (G) All regulatory approvals described in Section 3.7 shall have been obtained; and (H) The Material Consents shall have been obtained (but only the Material Consents as defined in Appendix A and under no circumstance whatsoever shall the failure to obtain any consent or approval, other than the Material Consents, constitute a condition to International Paint's obligation to consummate the transactions contemplated in this Purchase Agreement). 13 Execution Copy 4.2 CONDITIONS TO THE FERRO SELLERS' OBLIGATIONS. The obligation of the Ferro Sellers to consummate the transactions contemplated by this Purchase Agreement is subject to the satisfaction of the following conditions at or before the Closing: (A) The representations and warranties of the International Paint contained in Section 7.3 of this Purchase Agreement shall be true, accurate, and complete in all material respects as of today and as of the Closing (except with respect to the effect of the transactions contemplated or permitted by this Agreement); (B) International Paint, in all material respects, shall have performed and complied with all undertakings required by this Purchase Agreement to be performed or satisfied by International Paint before the Closing including entering into the Other Agreements; (C) International Paint shall have taken all corporate and other proceedings or actions necessary to be taken by International Paint for consummation of the transactions contemplated by this Purchase Agreement; (D) International Paint shall be prepared to deliver the documents listed in Appendix L and a fully-executed copy of the Shared Intellectual Property Agreement; (E) If International Paint has assigned its rights and delegated its duties under this Purchase Agreement to an Affiliate as permitted under Section 12.5, International Paint shall provide the Guarantee; (F) There shall not have been issued and in effect any injunction or similar legal order prohibiting or restraining consummation of any of the transactions contemplated in this Purchase Agreement; (G) The Material Consents shall have been obtained; and (H) All of the conditions precedent to the closing contemplated in a Purchase Agreement dated today's date by and among Rohm and Haas Company ("RandH") and Ferro, Ferro Spain S.A., Ferro (Great Britain) Ltd., Ruhr-Pulverlack GmbH and Ferro-Ruhr-Pulver Nordiska AB (with respect to the sale of Ferro's European powder coatings business) and all of the conditions precedent to the closings contemplated in a Purchase Agreement dated today's date by and among International Paint (or an affiliate of International Paint) and Ferro (with respect to the sale of Ferro's Chinese powder coatings business) and a Purchase Agreement dated today's date by and among International Paint (or an affiliate of International Paint) and Ferro (with respect to the sale of Ferro's Korean powder coatings business) shall have been duly satisfied and/or waived and the parties thereto shall be prepared to proceed with such closing simultaneously with the Closing contemplated by this Agreement. 4.3 PARTIES' BEST EFFORTS. Except with respect to the condition set forth in Section 4.2(H), from today until the Closing, the parties will cooperate and use their respective reasonable best efforts to cause the conditions set forth in this Article 4 over which they may respectively have influence or control to be satisfied as soon as reasonably practicable. 14 Execution Copy ARTICLE 5 - CLOSING 5.1 THE CLOSING. For purposes of this Purchase Agreement, the term "Closing" means the time at which the transactions contemplated by this Purchase Agreement will be consummated after satisfaction or waiver of the conditions set forth in Article 4 of this Purchase Agreement. 5.2 DATE, TIME, AND PLACE OF CLOSING. The Closing will take place at 10:00 a.m. (Eastern Time) on the later to occur of (A) August 30, 2002, or (B) a date to be mutually agreed by the parties not later than 30 days after the date on which the last of the conditions set forth in Sections 4.1 and 4.2 and comparable provisions in the purchase agreements (referred to in subsection 4.2(H)) with RandH and with International Paint (or an affiliate of International Paint) (with respect to the sale of Ferro's European, Chinese and Korean powder coatings businesses) shall have been satisfied or waived (the "Closing Date"). The Closing will take place at the offices of Squire, Sanders & Dempsey, 4900 Key Tower, 127 Public Square, Cleveland, Ohio, or at such other place or places as the parties may agree in writing. The Closing will be deemed to have occurred as of 11:59 p.m. on the Closing Date (the "Closing Time"). 5.3 INTERNATIONAL PAINT'S OBLIGATIONS. At the Closing, International Paint will deliver to the Ferro Sellers the following: (A) The documents, certificates, and other items referred to in Appendix L and a copy of the fully-executed Shared Intellectual Property Agreement; (B) Such instruments as may be necessary or appropriate to reflect International Paint's assumption of the Assumed Liabilities effective as of the Closing; and (C) The amount specified in Section 2.8(a). 5.4 THE FERRO SELLERS' OBLIGATIONS. At the Closing, the Ferro Sellers will deliver to International Paint the following: (A) The documents, certificates, and other items referred to in Appendix K; (B) Ownership to the Acquired Assets as contemplated in this Purchase Agreement; and (C) Such deeds, bills of sale, and such other instruments as may be necessary or appropriate to reflect the Ferro Sellers' conveyance of the Acquired Assets to International Paint. 5.5 LOCAL FORMALITIES. If either party desires that the specific terms and conditions (including price allocation) of this Purchase Agreement applicable to a given jurisdiction be put in writing in a separate agreement or instrument, then the parties will cooperate to prepare and execute such separate agreement, but such separate agreement will (unless the parties expressly agree otherwise in a signed document that refers to this Section 5.5) in all events be interpreted consistently with and as subordinate to the terms and conditions of this Purchase Agreement. 15 Execution Copy ARTICLE 6 - ACTIONS AFTER CLOSING 6.1 FURTHER CONVEYANCES. After the Closing the Ferro Sellers will, without further cost or expense to International Paint, except as otherwise provided in Section 12.3(C), execute and deliver to International Paint or (cause the same to be executed and delivered to International Paint), such additional instruments of conveyance, and the Ferro Sellers shall take such other and further actions as International Paint may reasonably request and which are ordinarily provided by a seller, more completely to sell, transfer, and assign to International Paint and vest in International Paint Ownership to the Acquired Assets. 6.2 FURTHER CONSENTS. If and to the extent the parties fail to obtain before Closing the consent or approval (or an effective waiver thereof), other than a Material Consent, of any third-party required for the assignment of the Ferro Sellers' rights under Powder Coatings Business Contracts, Leases, Licenses, Permits or other similar items, then after the Closing-- (A) Until such consent or approval (or an effective waiver thereof) has been obtained (1) On behalf of the Ferro Sellers, International Paint will perform all of the Ferro Sellers' duties with respect to such item, and (2) On behalf of International Paint, the Ferro Sellers will exercise all of the Ferro Sellers' rights with respect to such item as directed by International Paint. (B) The parties will use reasonable efforts to obtain from such third-party the consent or approval (or effective waiver thereof). (C) If the parties are unable to obtain any such consent, approval, or waiver, then (1) This Purchase Agreement shall not constitute or be deemed to be a contract to assign the same if an attempted assignment without such consent, approval, or waiver would constitute a breach of such item or create in the issuer or any party thereto the right or power to cancel or terminate such item; and (2) The Ferro Sellers will cooperate with International Paint in any reasonable arrangement designed to provide International Paint with the benefit of the Ferro Sellers' rights under such item, including enforcement (at International Paint's expense) of any and all rights of the Ferro Sellers against such third-party as International Paint may reasonably request. In use of its reasonable efforts under subsection (C) above, the Ferro Sellers will not be obligated to pay any additional consideration in order to obtain any consent, approval, or waiver. The Ferro Sellers will, however, cooperate with International Paint in obtaining a reasonable and economic solution with such third-party. 6.3 ACCOUNTING REPORTS. International Paint will cause the management of the Powder Coatings Business to provide to the Ferro Sellers such records and accounts as are prepared by International Paint in accordance with its normal accounting procedures and 16 Execution Copy such other records, accounts or reports as the Ferro Sellers may reasonably request or, in the alternative to the latter, access to the Ferro Sellers to all such other information as may reasonably be requested by the Ferro Sellers, in order to permit the Ferro Sellers to complete their financial statements and reports relating to the pre-Closing activities of the Powder Coatings Business; provided that International Paint will be under no obligation to generate independent records or accounts for Ferro. International Paint will also cause management of the Powder Coatings Business to afford Ferro's internal and external auditors reasonable access upon at least three days prior notice and during normal business hours to the books and records of the Powder Coatings Business as they may need in order for Ferro to satisfy normal quarterly and year-end reporting and audit requirements. 6.4 NONCOMPETITION. In order to protect the goodwill of the Powder Coatings Business, the Ferro Sellers undertake that for a period of five years after the Closing neither the Ferro Sellers nor any of their Affiliates will, directly or indirectly, engage in, or have an ownership interest in or act as agent, advisor, or consultant of or to any third-party that is engaged in, the business of designing, developing, formulating, manufacturing, or selling thermosetting-formulated powder surface coatings for decorative or protective end-use applications of the nature currently sold by the Powder Coatings Business (the "Noncompete Business") in the Americas, nor during such period will the Ferro Sellers sell or license (in a stand-alone transaction not in connection with a sale of substantially all of the assets of Ferro) the use of the Ferro name or the Ferro "Check-In-A-Circle" logo to any third-party for use in connection with the conduct of a Noncompete Business. Nothing in this Section 6.4, however, shall be deemed to prohibit or restrict the Ferro Sellers, nor any of their Affiliates or any successor or assign of any of the foregoing - (A) From continuing to conduct any business in which any of such companies are currently engaged, or, in the case of any successor or assign of any of the foregoing, any business in which such successor or assign was engaged prior to succeeding to the business of such company (whether by share acquisition, asset acquisition or otherwise), and logical extensions (by product line or technology) of such businesses, including comparable businesses conducted by the Ferro Sellers and/or their Affiliates in conducting similar businesses from outside the Americas; (B) From acquiring or owning less than a controlling equity interest in any publicly-traded company (whether or not such company is engaged in a business that competes with the Noncompete Business); (C) From acquiring a controlling equity interest in any company or other entity that is engaged in a business that competes with the Noncompete Business if the annual sales from such entity's competing business or entity do not exceed 20% of such business' or entity's total revenues in the 12-month period immediately preceding such acquisition provided that the acquisition of such competing business was not the principal purpose of such acquisition; (D) From acquiring a controlling equity interest in any company or other entity that is engaged in a business that competes with the Noncompete Business if the annual sales from such entity's competing business or entity exceed 20% provided that (1) the acquisition of such competing business was not the principal 17 Execution Copy purpose of such acquisition and (2) the acquiring company makes a good faith effort to dispose of any such competing business within one year after its acquisition; or (E) From carrying out its obligations under the Joint Marketing Agreement. In addition to the foregoing, International Paint will not, and will cause its Affiliates not to, use, for a period of one year beginning on the Closing Date and ending on the first anniversary of the Closing Date, any of the Acquired Intellectual Property or any of the Shared Intellectual Property in any manner whatsoever in the Republic of South Africa. 6.5 USE OF FERRO NAME AND MARK. As soon as practicable after Closing, but in no event no later than nine (9) months after the Closing Date, International Paint shall discontinue all use in any manner whatsoever of the Ferro name, the Ferro "Check-In-A-Circle" logo and all similar names and logos; provided, however, that during such period prior to ceasing all use, International Paint shall be permitted to use the Ferro name and the Ferro "Check-In-A-Circle" logo solely in connection with the operation of the Powder Coatings Business and substantially in the same manner as the name and logo were used by the Ferro Sellers in connection with the operation of the Powder Coatings Business immediately prior to Closing. Under no circumstances whatsoever will International Paint use the Ferro name or the Ferro "Check-In-A-Circle" logo in connection with the conduct of any other business or operation of International Paint or any of its Affiliates, including any other powder coatings business presently conducted by International Paint or any of its Affiliates. International Paint shall not take any action or fail to take any action that could be reasonably expected to have an adverse effect on the Ferro name or the Ferro "Check-In-A-Circle" logo. 6.6 ACCESS TO FORMER BUSINESS RECORDS. For a period of 10 years after the Closing, or until any audits of the Ferro Sellers' Tax returns relating to periods before or including the Closing are completed, whichever occurs later, International Paint will retain all business records constituting part of the Acquired Assets. During such period, International Paint, upon at least three days notice, and during normal business hours will afford duly authorized representatives of the Ferro Sellers free and full access to all of such records and will permit such representatives, at the Ferro Sellers' expense, to make abstracts from, or to take copies of any of such records created, produced, or obtained before the Closing, as may be reasonably requested by the Ferro Sellers. During such period, International Paint will cooperate with the Ferro Sellers, and cause employees of the Powder Coatings Business to cooperate with the Ferro Sellers, in furnishing information, evidence, testimony, and other assistance in connection with any action, proceeding, or investigation relating to the Ferro Sellers' conduct of the Powder Coatings Business before the Closing, and Ferro will provide reimbursement for all out-of-pocket expenses incurred by International Paint or such employees in connection with providing the assistance contemplated in this Section 6.6. 6.7 ACCESS TO FORMER EMPLOYEES. After the Closing, each party will make available to the other party employees of International Paint, the Ferro Sellers, and the Powder Coatings Business whom the other party may reasonably need in order to defend or prosecute any legal or administrative action to which the Ferro Sellers or International Paint are a party and which relates to the conduct of the Powder Coatings Business before the Closing. The requesting party will pay or reimburse the other party for all reasonable expenses which may be incurred by such employees in connection therewith, including 18 Execution Copy all travel, lodging, and meal expenses, and will further compensate the other for the number of whole business days spent by each such employee in providing such services at the rate of 130% of the average daily gross pay per business day (excluding the value of employee benefits) of such employee during the calendar month in which such services are performed. 6.8 TERMINATION OF INSURANCE COVERAGE. At or after the Closing, the Ferro Sellers and their Affiliates will have the right to terminate any and all insurance coverage affecting the Powder Coatings Business with the effect that International Paint will have no right of recovery with respect to any claim under policies or for refunds of premiums of insurance that previously covered the Powder Coatings Business. International Paint will, however, continue to be entitled to recoveries (net of deductibles and out-of-pocket claims handling costs) after the Closing under occurrence-based insurance policies to the extent the recovery constitutes an Acquired Asset as a Third Party Claim related to an Acquired Asset or an Assumed Liability. The Ferro Sellers will be responsible for the administration of claims for such recoveries. 6.9 TRADE SECRETS. From and after the Closing, the Ferro Sellers will not, and will use their reasonable best efforts to cause their employees not to, disclose to any third-party any trade secrets of the Powder Coatings Business or any other information regarding the Powder Coatings Business of a type held in confidence under the practices and policies of the Powder Coatings Business immediately prior to Closing. Such information shall not include information that (A) is or becomes generally available to the public other than as a result of a disclosure by the Ferro Sellers or any of its employees or (B) became available to the Ferro Sellers or any of its employees on a non-confidential basis from a source other than the Ferro Sellers or any employee of the Ferro Sellers that was an employee of the Powder Coatings Business at any time prior to the Closing. The provisions of this Section 6.9 shall not apply to any disclosure of information to the extent (1) International Paint or any Affiliate of International Paint has given its prior written consent to such disclosure, (2) such disclosure is required by law or by any applicable ruling, decree or order of a governmental agency or judicial or regulatory authority, provided, however, that in such an event, the Ferro Sellers will give International Paint notice of such requirement to disclose in order to provide International Paint with the opportunity to challenge the disclosure, the scope of the disclosure and/or obtain a protective order regarding the disclosure. ARTICLE 7 - REPRESENTATIONS AND WARRANTIES 7.1 THE FERRO SELLERS' GENERAL REPRESENTATIONS AND WARRANTIES. The Ferro Sellers represent and warrant to International Paint the following: (A) ORGANIZATION AND EXISTENCE. With respect to the Ferro Sellers, (1) Ferro is a corporation duly organized, validly existing, and in good standing under the laws of the State of Ohio; (2) Ferro Argentina is a corporation (sociedad anonima) duly organized and existing under the laws of Argentina; and (3) Ferro Mexico is a corporation with variable capital (sociedad anonima de capital variable) duly organized and existing under the laws of Mexico. 19 Execution Copy (B) POWER AND AUTHORITY. The Ferro Sellers have full power and authority under their respective constitutive documents and the laws of the jurisdictions in which they respectively are organized to execute, deliver, and perform this Purchase Agreement. (C) AUTHORIZATION. The execution, delivery, and performance of this Purchase Agreement by the Ferro Sellers have been duly authorized by all requisite corporate action on the part of the Ferro Sellers. (D) BINDING EFFECT. This Purchase Agreement is a valid, binding, and enforceable legal obligation of the Ferro Sellers, except as enforceability may be limited by principles of equity and by bankruptcy and insolvency laws generally. (E) NO DEFAULT. Neither the execution and delivery of this Purchase Agreement nor the Ferro Sellers' full performance of their respective obligations under this Purchase Agreement will violate or breach, or otherwise constitute or give rise to (with the giving of notice or passage of time or both) a Default under, the terms or provisions of the Ferro Sellers' respective constitutive documents or of any material contract, commitment, or other obligation to which any of the Ferro Sellers are a party or by which they are bound, except for any such Default which would not, either individually or in the aggregate have a material adverse effect on the ability of the Ferro Sellers to consummate the transaction contemplated hereby. (F) FINDERS. With the sole exception of Salomon Smith Barney Inc., the Ferro Sellers have not engaged and are not directly or indirectly obligated to any third-party acting as a broker, finder, or similar capacity in connection with the transactions contemplated by this Purchase Agreement. (G) CONSENTS AND APPROVALS. No consent, approval, license, permit, order or authorization of, or notice to, or registration, declaration or filing with, any Governmental Authority or any other third-party is required to be obtained or made by or with respect to the Ferro Sellers in connection with the execution, delivery or performance of this Purchase Agreement by the Ferro Sellers or the consummation of the transactions contemplated hereby by the Ferro Sellers or in order to preclude any termination, suspension, acceleration, modification or impairment of any of the Contracts or any legal or contractual right, privilege, license or franchise which is included in the Acquired Assets, other than (i) the Material Consents and (ii) any such consents, approvals, licenses, permits, orders or authorizations, notices, registrations, declarations or filings, the failure of which to obtain or be made, in each case, would not have a material adverse effect on the Powder Coatings Business Condition. (H) NO KNOWLEDGE OF INTERNATIONAL PAINT'S DEFAULT. The Ferro Sellers have no knowledge that any of International Paint's representations and warranties are untrue, incorrect, or incomplete or that International Paint is in Default under any term or provision of this Purchase Agreement. 7.2 THE FERRO SELLERS' REPRESENTATIONS AND WARRANTIES CONCERNING THE DISCLOSURE PACKAGE. Simultaneously with the execution and delivery of this Purchase Agreement, 20 Execution Copy the Ferro Sellers are delivering to International Paint a bound volume of disclosure materials (the "Disclosure Package") entitled the "Powder Coatings Disclosure Package" and consisting of 18 Parts, consecutively lettered A-R, inclusive. The Ferro Sellers represent and warrant to International Paint that the Disclosure Package contains the information described in Appendix M. In addition, the Ferro Sellers represent and warrant to International Paint the following with respect to the Disclosure Package: (A) ORGANIZATION. Except as otherwise disclosed on Part A of the Disclosure Package, the Ferro Sellers neither own nor hold any other equity interest, directly or indirectly, in any company, corporation, partnership, joint venture, business, firm, or other entity which, to the Ferro Sellers' knowledge, engages in any business in competition with the Powder Coatings Business. (B) FINANCIAL STATEMENTS. Except as otherwise disclosed on Part B, the financial statements contained in Subparts B-1 to B-6 are true and correct copies of financial reports derived from management accounts created and maintained by Ferro in the ordinary course in accordance with its standard practice. To the Ferro Sellers' knowledge, such financial reports present fairly, in all material respects, the financial position of the Powder Coatings Business as of the dates thereof. (C) INVENTORIES. Except as otherwise disclosed on Part C, (1) the Ferro Sellers Own all Inventories described on Part C; (2) such Inventories have been valued on the books of the Ferro Sellers in accordance with the Accounting Principles and (3) all Inventories are saleable in the ordinary course of business. (D) TRADE ACCOUNTS RECEIVABLE. Except as otherwise disclosed on Part D, (1) the Ferro Sellers Own all of the Trade Accounts Receivable listed or described on Part D; (2) none of such Trade Accounts Receivable is owing to the Ferro Sellers or any of their Affiliates and (3) all of the Trade Accounts Receivable are genuine and were entered into in the ordinary course conduct of the Powder Coatings Business. (E) TRADE ACCOUNTS PAYABLE. Except as otherwise disclosed on Part E, (1) all of the liabilities reflected on the books of the Ferro Sellers arose out of the ordinary course conduct of the Powder Coatings Business; and (2) no such liabilities are owing to the Ferro Sellers or any of their Affiliates. (F) REAL PROPERTY. Except as otherwise disclosed on Part F of the Disclosure Package, (1) the Ferro Sellers Own all of the Real Property; (2) the Real Property Leases are valid and subsisting; (3) none of the Ferro Sellers is in Default in any material respect under any of the Real Property Leases; (4) the improvements to the Real Property and Real Property Leases listed on Part F are, taking into account their age and prior use, in good condition and repair, ordinary wear and tear excepted; (5) the Real Property is not subject to any Encumbrance other than a Permitted Encumbrance; (6) the Ferro Sellers have not received any written notice within the two years prior to the date hereof of any pending zoning or other land-use regulation proceedings or any proposed change in any applicable laws that could reasonably be expected to have a material adverse effect on the use or operation of the Real Property or the Real Property Leases, nor have any of the Ferro Sellers received written notice prior to the date hereof 21 Execution Copy of any special assessment proceedings affecting the Real Property or Real Property Leases; and (7) the Ferro Sellers have not received written notice of prior to the date hereof, and, to the Ferro Sellers' knowledge, there is not pending as of the date hereof, any eminent domain proceeding relating to the Real Property or the property covered by the Real Property Leases. (G) TANGIBLE PERSONAL PROPERTY. Except as otherwise disclosed on Part G of the Disclosure Package, (1) the Ferro Sellers Own all tangible personal property listed as "owned" on Subparts G-1 to G-4; (2) the leases under which the tangible personal property listed as "leased" on Subparts G-5 to G-6 are leased are valid and subsisting; (3) neither of the Ferro Sellers is in Default in any material respect under any lease listed on Part G in any manner likely to be materially adverse to the Powder Coatings Business Condition; and (4) the items of tangible personal property listed on Part G are, taking into account their age and prior use, in good condition and repair, ordinary wear and tear excepted. (H) INTELLECTUAL PROPERTY. Except as otherwise disclosed on Part H of the Disclosure Package, (1) the Ferro Sellers Own all of the Acquired Intellectual Property listed as "owned" on Subparts H-1 to H-4; (2) the license, technology, or similar agreements to employ the Acquired Intellectual Property listed as "licensed by" on Subpart H-5 to H-6 are valid and subsisting agreements; (3) except with respect to the items listed in such Subpart H-5 to H-6, to the Ferro Sellers' knowledge, none of the Ferro Sellers is obligated to pay any amount, whether as a royalty, license, fee, or other payment to any person in order to use any of the Acquired Intellectual Property used by the Powder Coatings Business; (4) the license, technology, or similar agreements to employ the Acquired Intellectual Property listed as "licensed to" on Subpart H-7 are valid and subsisting agreements; (5) except with respect to the items listed in such Subpart H-7, none of the Ferro Sellers have granted any rights or interest to any person in connection with any of the Acquired Intellectual Property described in Part H; (6) the Ferro Sellers have no knowledge of any infringement by the Ferro Sellers in their conduct of the Powder Coatings Business of the intellectual property rights of any person in any manner likely to be materially adverse to the Powder Coatings Business Condition; (7) together with the Retained Intellectual Property, the Acquired Intellectual Property includes all intellectual property currently used by the Ferro Sellers in connection with its conduct of the Powder Coatings Business; and (8) the Acquired Intellectual Property and International Paint's unrestricted right to use the Shared Intellectual Property as provided in Section 2.2(G) would (if used with the Ferro name and mark) be sufficient for the continued conduct of the Powder Coatings Business as the same has been and is currently being conducted. To the Ferro Sellers' knowledge, there is no infringement of the Acquired Intellectual Property and the Ferro Sellers have taken reasonable steps to maintain trade secrets, including, without limitation, requiring its employees in the United States to sign agreements requiring them to keep such trade secrets confidential. (I) INDEBTEDNESS. Except as otherwise disclosed on Part I of the Disclosure Package, no Ferro Seller is in Default in any material respect under any note, bond, debenture, mortgage, indenture, security agreement, guaranty, or other instrument of indebtedness for borrowed money. 22 Execution Copy (J) LITIGATION. Except as otherwise disclosed on Part J of the Disclosure Package, to the Ferro Sellers' knowledge, (1) there exists no litigation, proceedings or actions affecting the Powder Coatings Business Condition or claims or investigations that would have a material adverse effect on the Powder Coatings Business Condition, in either case at law or in equity pending or threatened against the Ferro Sellers; and (2) none of the Ferro Sellers is subject to any writ, injunction, order, or decree of any court, agency, or other governmental authority affecting the Powder Coatings Business Condition. (K) CONTRACTS. Except as otherwise disclosed on Part K of the Disclosure Package, (1) each of the contracts, commitments, and other obligations listed on Part K is a valid and binding obligation of the Ferro Sellers and, to the Ferro Sellers' knowledge, the other party or parties thereto; (2) neither the Ferro Seller nor, to the Ferro Sellers' knowledge, any other party thereto has terminated, cancelled, or substantially modified any contract, commitment, or other obligation identified in Part K; and (3) neither the Ferro Sellers nor, to the Ferro Sellers' knowledge, any other party thereto is in Default in any material respect under any contract, commitment, or other obligation identified in Part K. (L) EMPLOYEES AND EMPLOYEE BENEFITS. Except as otherwise disclosed on Part L of the Disclosure Package or Appendix P of this Purchase Agreement, (1) none of the Ferro Sellers has entered into any employment contract in respect of the Powder Coatings Business or its employees; (2) none of the Ferro Sellers has any pension, retirement, profit-sharing, deferred compensation, employee share option or share purchase, bonus, or incentive compensation plans, schemes, or arrangements in respect of the Powder Coatings Business or its employees; (3) none of the Ferro Sellers has any employee health, dental, vision, life insurance, long-term or short-term disability, vacation, tuition reimbursement, redundancy, severance or other social plans, schemes, or arrangements relating and applicable to the Powder Coatings Business or its employees; and (4) the Powder Coatings Business has substantially performed all material obligations owing to their respective employees. (M) COMPLIANCE WITH ENVIRONMENTAL LAWS. Except as otherwise disclosed on Part M of the Disclosure Package, to the Ferro Sellers' knowledge, (1) in their conduct of the Powder Coatings Business, the Ferro Sellers are in compliance with all Environmental Laws applicable to the Powder Coatings Business relating to emissions, discharges, and releases of Hazardous Materials into land, soil, ambient air, water, and the atmosphere the noncompliance with which is likely to have a materially adverse effect on the Powder Coatings Business Condition; (2) in their conduct of the Powder Coatings Business, the Ferro Sellers are in compliance with all Environmental Laws applicable to the generation, treatment, storage, transportation, and disposal of Hazardous Materials the noncompliance with which is likely to have a materially adverse effect on the Powder Coatings Business Condition; and (3) all Products manufactured and sold by the Powder Coatings Business during the calendar years 2000, 2001 and 2002, and all current inventories of finished goods, were manufactured in accordance with the Toxic Substances Control Act, 15 U.S.C. Section 2601 et. seq., as amended and the California Safe Drinking Water and Toxic Enforcement Act of 1986. 23 Execution Copy (N) COMPLIANCE WITH HEALTH AND SAFETY LAWS. Except as otherwise disclosed on Part N of the Disclosure Package, to the Ferro Sellers' knowledge, in their conduct of the Powder Coatings Business, the Ferro Sellers are in compliance with all Health and Safety Laws applicable to the Powder Coatings Business the noncompliance with which is likely to have a materially adverse effect on the Powder Coatings Business Condition. (O) COMPLIANCE WITH OTHER LAWS. Except as otherwise disclosed on Part O of the Disclosure Package, to the Ferro Sellers' knowledge the Powder Coatings Business is in compliance with all statutes, ordinances, regulations, permits and approvals and other governmental requirements applicable to the conduct of the Powder Coatings Business (other than Environmental Laws and Health and Safety Laws) the noncompliance with which is likely to have a materially adverse effect on the Powder Coatings Business Condition. (P) TAXES. Except as otherwise disclosed in Part P of the Disclosure Package, (1) all Tax returns required to be filed by the Powder Coatings Business before Closing with respect to the Powder Coatings Business have been or will be filed on or before the Closing; (2) all Taxes due and payable before Closing on such returns have been or will be paid when required by law; and (3) any Taxes relating to the Powder Coatings Business with respect to any transaction or any period beginning on or before the Closing Date required to have been or to be paid prior to Closing have been or will be paid; (4) the assets of the Powder Coatings Business are not encumbered by any Encumbrance arising out of unpaid Taxes. (Q) INSURANCE. Except as otherwise disclosed in Part Q of the Disclosure Package, the Ferro Sellers have insured or self-insure the assets and properties of the Powder Coatings Business against those insurable risks and to an extent the Ferro Sellers deem reasonably necessary for their continued conduct of the Powder Coatings Business and for protection against injury, damage, or loss. (R) NO MATERIAL EVENTS. Except as otherwise disclosed in Part R of the Disclosure Package, (1) the Powder Coatings Business has been conducted only in the ordinary and usual course since March 1, 2002, and (2) no Material Events have occurred since March 1, 2002. 7.3 INTERNATIONAL PAINT'S REPRESENTATIONS AND WARRANTIES. International Paint represents and warrants to the Ferro Sellers the following: (A) ORGANIZATION AND EXISTENCE. International Paint is a corporation duly organized, validly existing and in good standing under the laws of Kentucky. (B) POWER AND AUTHORITY. International Paint has full corporate power and authority under its constitutive documents and under the laws of Kentucky to execute, deliver, and perform this Purchase Agreement. (C) AUTHORIZATION. The execution, delivery, and performance of this Purchase Agreement have been duly authorized by all requisite corporate actions on the part of International Paint. 24 Execution Copy (D) BINDING EFFECT. This Purchase Agreement is a valid, binding, and enforceable legal obligation of International Paint except as enforceability may be limited by principles of equity and by bankruptcy and insolvency laws generally. (E) NO DEFAULT. Neither the execution and delivery of this Purchase Agreement nor International Paint's full performance of its obligations under this Purchase Agreement will violate or breach, or otherwise constitute or give rise to (with the giving of notice or passage of time or both) a Default under, the terms or provisions of International Paint's constitutive documents or of any material contract, commitment, or other obligation to which International Paint is a party or by which it is bound except for any such Default which would not, either individually or in the aggregate have a material adverse effect on the ability of International Paint to consummate the transaction contemplated hereby. (F) FINDERS. International Paint has not engaged and is not directly or indirectly obligated to any third-party acting as a broker, finder, or similar capacity in connection with the transactions contemplated by this Purchase Agreement other than Einhorn Associates. (G) NO KNOWLEDGE OF THE FERRO SELLERS' DEFAULT. International Paint has no knowledge that any of the representations and warranties of the Ferro Sellers contained in this Purchase Agreement are untrue, incorrect, or incomplete or that the Ferro Sellers are in Default of any term or provision under this Purchase Agreement. 7.4 MEANING OF FERRO SELLERS' KNOWLEDGE". Where a statement contained in this Article 7 is said to be to the "Ferro Sellers' knowledge" (or words of similar import) such expression means that, after having conducted a due diligence review and in reliance on due diligence certifications, both as described in Appendix N, senior Ferro management believes the statement to be true, accurate and complete in all material respects, but that the Ferro Sellers make no further representation or warranty concerning facts or circumstances that might have come to the Ferro Sellers' attention if they conducted a broader or more thorough investigation of the Powder Coatings Business. For purposes of this Section 7.4, the term "senior Ferro management" means those Ferro executives who report directly to Ferro's Chairman and Chief Executive Officer and the Director of Ferro's Industrial Coatings MBU and the Group Controller of Ferro's Industrial Coatings MBU. 7.5 DISCLAIMER. The warranties stated in this Article 7 are the only representations and warranties either party has given the other party in connection with the transactions contemplated by this Purchase Agreement. Except as set forth in this Article 7, neither party has made, and each party expressly disclaims, any other or further representation or warranty, either express or implied, concerning the subject matter of this Purchase Agreement. All other warranties either party or anyone purporting to represent either party gave or might have given, or which might be provided or implied by law or commercial practice, are hereby excluded. ARTICLE 8 - SPECIFIC OBLIGATIONS 8.1 EMPLOYEE OBLIGATIONS. The parties' respective obligations with respect to Employees will be as follows: 25 Execution Copy (A) OFFERS OF EMPLOYMENT. At or before the Closing, International Paint will make written offers of employment effective as of the Closing to all employees of the Powder Coatings Business (the "Employees") except the Employees absent from work due to short term or long-term disability and the Employees listed on Appendix O (the "Excluded Employees"). A written offer will be made to any employee currently on short term disability upon the termination of such disability. Each such offer to Employees not covered by the Union Contracts will be on terms and conditions of employment (including employment location) identical or substantially similar to the existing terms and conditions of each such Employee's employment other than with respect to benefits. International Paint will provide the same International Paint benefits that it provides to similarly situated International Paint employees. Each offer to Employees covered by the Union Contracts will be subject to the terms and conditions of the Union Contracts. (B) EMPLOYMENT. As of the Closing, all Employees who have accepted International Paint's written offers of employment pursuant to Section 8.1(A) (the "Transferred Employees") will become employees of International Paint (with the effect that no period of unemployment shall have occurred with respect to any such Transferred Employees) and all of the Transferred Employees will cease to be employees of the Ferro Sellers. (C) PAY AND BENEFITS. The Ferro Sellers will be solely responsible for all pay and benefits of the Excluded Employees earned or incurred before or after the Closing and for pay and benefits of the Transferred Employees earned or incurred before the Closing. International Paint will be solely responsible for all pay and benefits of the Transferred Employees earned or incurred at or after the Closing. The parties' respective obligations with respect to employee retirement plans and employee welfare plans will be as set forth on Appendix P. (D) WORKERS' COMPENSATION. The Ferro Sellers will be solely responsible for the entire cost and expense of all workers' compensation claims made by Excluded Employees or by Transferred Employees with respect to injuries or conditions identifiably occurring and sustained before the Closing. International Paint will be solely responsible for the entire cost and expense of all workers' compensation claims made by Transferred Employees with respect to injuries or conditions identifiably occurring or sustained after the Closing. With respect to injuries or conditions without an identifiable date or occurrence, the parties will share responsibility as follows: (1) The Ferro Sellers will be solely responsible for the entire cost and expense of all such workers' compensation claims made by Transferred Employees before the Closing; and (2) International Paint will be solely responsible for the entire cost and expense of all such workers' compensation claims made by Transferred Employees after the Closing. 26 Execution Copy With respect to injuries or conditions with a period of occurrence both before and after the Closing, the parties will share equitably based on the duration of such period before and after the Closing. (E) UNION CONTRACTS. Effective as of the Closing, International Paint will become the "employer" under the Union Contracts and will assume all liabilities and obligations of the Ferro Sellers as the "employer" under the Union Contracts in respect of the Powder Coatings Business. (F) SEVERANCE. The Ferro Sellers will be solely responsible for any and all severance pay and benefits that become due Excluded Employees on termination of their employment with the Ferro Sellers. International Paint will be solely responsible for any and all severance pay and benefits that become due to Transferred Employees on termination of their employment with International Paint after the Closing. If International Paint elects to terminate the employment of any Transferred Employee within one year after the Closing in circumstances in which such Transferred Employee would have been entitled to severance pay and/or benefits if his or her employment with Ferro had terminated immediately before the Closing, then International Paint will provide to such terminated Transferred Employee severance pay and benefits that are substantially equivalent to the severance pay and benefits that similarly situated employees would be entitled to under International Paint's severance policy; provided, however, that in no event will any such terminated Transferred Employee receive severance equal to less than one week for each year of service the terminated Transferred Employee had with the Ferro Sellers. (G) NON-INTERFERENCE. The Ferro Sellers will neither employ nor offer employment to any Transferred Employee during the 24-month period following the Closing without the prior written consent of International Paint. During such period, International Paint will not, without the prior written consent of the Ferro Sellers, employ or offer employment to any Excluded Employee. Nothing in this Section 8.1(G), however, will be deemed to prohibit any party from hiring an Employee who responds to a general public advertisement of employment or who is identified as a consequence of a non-directed executive search or who is involuntarily terminated. The Ferro Sellers' duties and obligations arising out of the foregoing provisions of this Section 8.1 are the "Ferro Sellers' Employee Obligations." International Paint's duties and obligations arising out of the foregoing provisions of this Section 8.1 are the "International Paint's Employee Obligations." 8.2 ENVIRONMENTAL OBLIGATIONS. The Parties' respective obligations with respect to Environmental Matters will be as follows: (A) IDENTIFIED ENVIRONMENTAL MATTERS. The Ferro Sellers will be solely responsible for any action, condition, or event giving rise to an Environmental Loss with respect to the Environmental Matters identified on Appendix Q (the "Identified Environmental Matters"). (B) PRE-CLOSING ENVIRONMENTAL MATTERS. The Ferro Sellers will be solely responsible for any action, condition, or event giving rise to an Environmental 27 Execution Copy Loss with respect to the Real Property, the R&D Lab, or Acquired Assets to the extent caused by actions or omissions or conditions that occurred or arose on or before the Closing. (C) POST CLOSING R&D LAB ENVIRONMENTAL MATTERS. The Parties' respective obligations with respect to post-closing Environmental Matters regarding the R&D Lab will be as follows: (1) SEPARATE POST-CLOSING R&D LAB ENVIRONMENTAL MATTERS. The Ferro Sellers will be solely responsible for any action, condition, or event giving rise to an Environmental Loss with respect to the R&D Lab to the extent caused solely by actions or omissions by the Ferro Sellers or conditions that occur or arise as the result of conduct by the Ferro Sellers after the Closing. International Paint will be solely responsible for any action, condition, or event giving rise to an Environmental Loss with respect to the R&D Lab to the extent caused solely by actions or omissions by International Paint or conditions that occur or arise as the result of conduct by International Paint after the Closing. (2) MIXED POST-CLOSING R&D LAB ENVIRONMENTAL MATTERS. If any action, condition, or event giving rise to an Environmental Loss with respect to the R&D Lab results from both (i) actions or omissions by International Paint or conditions that occur or arise as the result of conduct by International Paint after the Closing, and (ii) actions or omissions by the Ferro Sellers or conditions that occur or arise as the result of conduct by the Ferro Sellers after the Closing and/or conditions that are caused by actions or omissions or conditions that occurred or arose before the Closing, then the liability for such mixed Environmental Loss ("Mixed Loss") will be apportioned between International Paint and the Ferro Sellers as follows: (a) The Ferro Sellers will be responsible for any Mixed Loss in an amount equal to the total Mixed Loss times the appropriate one of the following two fractions - (i) If the Mixed Loss resulting from the Environmental Matter is directly proportional to the amount of Hazardous Materials that were used, emitted, discharged or released and the amount of Hazardous Materials is known or estimable based on credible, objective evidence, then a fraction (A) the numerator of which is the amount of Hazardous Materials contributed by the Ferro Sellers to the Environmental Matter before the Closing and (B) the denominator of which is the total amount of Hazardous Materials contributed both before and after the Closing; or (ii) If either the Mixed Loss resulting from the Environmental Matter is not directly proportional to the amount of Hazardous Materials that were used, emitted, discharged or released or the amount of Hazardous Materials is not known or not estimable based on credible, objective 28 Execution Copy evidence, then a fraction (A) the numerator of which is 12 months and (B) the denominator of which is 12 months plus the number of months from the Closing Date until the date International Paint delivers a Notice described in Section 8.2(D) below. (b) International Paint will be solely responsible for any Mixed Loss in an amount equal to the total Mixed Loss minus the proportion allocable to the Ferro Sellers as calculated in Section 8.2(C)(2)(a) above. (D) NOTICE AND REMEDIATION OF REAL PROPERTY AND R&D LAB ENVIRONMENTAL MATTERS. With respect to the Real Property and the R&D Lab, if International Paint becomes aware of any circumstance that might constitute an Environmental Matter, International Paint will immediately notify the Ferro Sellers of such circumstance. The Ferro Sellers will have sole authority for managing any necessary environmental remediation at the Real Property or the R&D Lab. The Ferro Sellers will use all reasonable measures to avoid unreasonable interference with International Paint's operations in the design and implementation of any such environmental remediation. International Paint hereby grants the Ferro Sellers a perpetual easement and license to enter upon the Real Property or the R&D Lab for the purpose of carrying out any remediation relating to Environmental Matters. International Paint will also make available to the Ferro Sellers at cost such utilities at such sites as the Ferro Sellers may reasonably require in order to carry out such remediation. Upon request, the Ferro Sellers shall share with International Paint any plans, diagrams, studies, reports assessments, maps, surveys, sampling results, or similar documents generated pursuant to the environmental remediation of the Real Property or the R&D Lab. To the extent that environmental remediation of the Real Property or the R&D Lab will affect International Paint's operations, International Paint will have the right to review and comment upon any plans for such environmental remediation before the Ferro Sellers submit those plans to any Government Authorities. (E) POST-CLOSING ACQUIRED ASSET ENVIRONMENTAL MATTERS. Except as otherwise provided in Section 7.2(M) or this Section 8.2, International Paint will be solely responsible for any Environmental Loss arising out of the ownership or operation of the Acquired Assets after the Closing. (F) INTERNATIONAL PAINT RESPONSIBILITIES UPON IDENTIFICATION OF AN ENVIRONMENTAL MATTER. If after Closing International Paint becomes aware of an Environmental Matter (other than an Identified Environmental Matter) not involving the Real Property or the R&D Lab, then: (1) International Paint will conduct a preliminary investigation to determine whether remedial action is legally required under Environmental Laws with respect to such Environmental Matter. (2) If International Paint determines in good faith that remedial action is legally required under Environmental Laws with respect to such Environmental Matter and may be the responsibility of the Ferro Sellers 29 Execution Copy pursuant to this Section 8.2, then International Paint will give the Ferro Sellers notice without undue delay of the facts and circumstances that caused International Paint to conclude that remedial action is legally required and may be the responsibility of the Ferro Sellers. (3) After giving the Ferro Sellers such notice, International Paint will in good faith design, develop, and deliver to the Ferro Sellers a plan or program (a "Remediation Plan") for remediating the Environmental Matter. International Paint will assure such plan or program corrects or ameliorates any existing violation of Environmental Laws in the most economical manner reasonably possible, including the use of institutional controls and deed restrictions limiting future use of the real property for industrial purposes so long as such institutional controls and deed restrictions allow International Paint to conduct the Powder Coatings Business as it was conducted at the time of the Closing. (A Remediation Plan that satisfies the requirements of the preceding sentence is referred to below as an "Economic Remediation Plan".) (4) The Ferro Sellers will promptly review International Paint's Remediation Plan and will advise International Paint if and in what respects (if any) the Ferro Sellers do not believe the Remediation Plan qualifies as an Economic Remediation Plan. (5) If the Ferro Sellers and International Paint agree that International Paint's Remediation Plan or an agreed modified Remediation Plan constitutes an Economic Remediation Plan, then International Paint will proceed with implementing such Remediation Plan. (6) If the Ferro Sellers and International Paint do not agree on a Remediation Plan that both believe is an Economic Remediation Plan, then International Paint will proceed with implementing International Paint's Remediation Plan and either party will have the right to initiate the dispute resolution process set forth in Article 10 to resolve the dispute over whether International Paint's Remediation Plan is an Economic Remediation Plan, in which case the dispute will be finally resolved as provided in Article 10. (G) RESPONSIBILITIES WITH REGARD TO ECONOMIC REMEDIATION PLANS. The Ferro Sellers and International Paint will share responsibility for the cost of Economic Remediation Plans (a Remediation Plan not involving the Real Property or the R&D Lab that meets the criteria of Section 8.2(F)(3)) on the following basis: (1) International Paint will responsible for the first $2,000,000.00 of the Actual Amount of the aggregate costs of such Economic Remediation Plans. (2) Subject to the limitations set forth in Section 9.5, the Ferro Sellers will be responsible for the Actual Amount of the costs of Economic Remediation Plans as follows: (a) The total costs in excess of $2,000,000.00 of carrying out Economic Remediation Plans times 30 Execution Copy (b) The appropriate one of the following two fractions -- (i) If the costs resulting from the Environmental Matter are directly proportional to the amount of Hazardous Materials that were used, emitted, discharged or released and the amount of Hazardous Materials is known or estimable based on credible, objective evidence, then a fraction (A) the numerator of which is the amount of Hazardous Materials contributed by the Ferro Sellers to the Environmental Matter before the Closing and (B) the denominator of which is the total amount of Hazardous Materials contributed by both the Ferro Sellers before the Closing and International Paint after the Closing; or (ii) If either the costs resulting from the Environmental Matter are not directly proportional to the amount of Hazardous Materials that were used, emitted, discharged or released or the amount of Hazardous Materials is not known or not estimable based on credible, objective evidence, then a fraction (A) the numerator of which is 12 months and (B) the denominator of which is 12 months plus the number of months International Paint has carried on the Powder Coatings Business from the Closing until the date International Paint delivers the notice described in Sections 8.2(D) or (F)(2) above. (iii) International Paint will be responsible for all costs of carrying out Remediation Plans and for discharging all other liabilities and obligations resulting from Environmental Matters for which the Ferro Sellers are not responsible. (H) LIMITATIONS ON THE FERRO SELLERS' OBLIGATIONS. (1) With respect to Environmental Matters not involving the Real Property or the R&D Lab, in no event will the Ferro Sellers have any responsibility for any Environmental Matter for which International Paint has not given the Ferro Sellers notice in accordance with Sections 8.2(D) or (F)(2) above on or before 5:00 PM (Eastern Time) on December 31, 2007. (2) With respect to the Real Property, except as specifically provided for in Section 8.2(I), in no event will the Ferro Sellers have any responsibility for any Environmental Matter for which International Paint has not given the Ferro Sellers notice in accordance with Section 8.2(D) above on or before 5:00 p.m. (Eastern time) on the tenth anniversary of the Closing Date. (3) In no event will the Ferro Sellers have any responsibility for any Environmental Losses that relate solely to actions or practices that International Paint carried out after the Closing Date and that the Ferro Sellers did not carry out before the Closing Date. 31 Execution Copy (I) ENVIRONMENTAL ASSESSMENT AND REMEDIATION OF THE NASHVILLE PLANT. (1) ENVIRONMENTAL ASSESSMENT OF THE NASHVILLE PLANT. Upon notice to the Ferro Sellers of its intent to do so, and no sooner than 90 days after the Closing Date, International Paint will retain Arcadis G&M, Inc. ("Arcadis") to conduct the tests and studies (including review of records and historical research) that are described in the scope of work attached hereto as Appendix S and to prepare and furnish to International Paint an environmental assessment study (the "Environmental Assessment") to establish a baseline description of the soil and groundwater conditions at the Real Property. International Paint will be solely responsible for the cost of the Environmental Assessment. International Paint and the Ferro Sellers will cooperate in all reasonable respects to complete the Environmental Assessment in a timely and efficient manner. In addition, International Paint will conduct no other tests, studies, or environmental assessments at the Real Property until such time as the Nashville Remediation Program shall have been completed in accordance with this Section 8.2. (2) PARTICIPATION OF THE FERRO SELLERS' CONSULTANT. The Ferro Sellers and the Ferro Sellers' designated consultant shall have the right to observe and/or participate in the tests and studies included within the Environmental Assessment provided such observation and/or participation does not unreasonably disrupt the conduct of the Environmental Assessment. The Ferro Sellers' consultant shall participate at The Ferro Sellers' sole expense. Such observation and/or participation may include, without limiting the generality of the foregoing, access to all preliminary data, presence during sampling, and provisions of split samples. The Ferro Sellers and The Ferro Sellers' consultant shall be given the opportunity to review any drafts of the Environmental Assessment or portions thereof that are provided by Arcadis for International Paint's review. (3) NASHVILLE REMEDIATION PROGRAM. Upon completion of the Environmental Assessment, International Paint will provide Ferro with a copy of the final version of the Environmental Assessment and the Ferro Sellers will develop a program (the "Nashville Remediation Program") to remediate any Environmental Matters identified in the Environmental Assessment for which remedial action is legally required. In no case, however, will the Ferro Sellers be required to remediate the Environmental Matters identified in the Environmental Assessment beyond the higher (less restrictive) of the levels required by the State of Tennessee for industrial facilities or the U.S. Environmental Protection Agency, Region IX for industrial facilities. The Nashville Remediation Program may include remediation goals based on human health and environmental risk assessment methods. (a) In developing and executing the Nashville Remediation Program, the Ferro Sellers will have the option to either (i) apply to the Tennessee Division of Superfund to proceed under Tennessee's 32 Execution Copy Voluntary Cleanup Oversight and Assistance Program and enter into a Consent Order and Agreement or an Innocent Party Agreement ("Innocent Party Agreement"), or (ii) to the extent permissible under Environmental Laws, remediate the Environmental Matters without the involvement of Governmental Authorities. (b) The Parties recognize that the Nashville Remediation Program may include limiting future use of the Real Property through the use of institutional controls, deed restrictions, and/or land use restrictions including a Notice of Land Use Restriction pursuant to Tennessee Code Annotated Section 68-212-225. Limitations on future use of the Real Property may apply to activities on, over, or under the land, including, but not limited to, use of property, use of groundwater, building, filling, grading, excavating, and mining, but may not materially impair the Real Property's suitability for use as part of the Powder Coatings Business as it was conducted at the time of Closing. (c) The Ferro Sellers will undertake the Nashville Remediation Program in a prompt and expeditious manner so as to minimize disruption of the normal operations of International Paint at the Nashville facility. (d) The Ferro Sellers will have no further obligation regarding the Real Property and International Paint shall, notwithstanding Sections 8.2(B), (D) and (H), be responsible and indemnify Ferro for any Environmental Loss with respect to the Real Property when either (i) the Tennessee Division of Superfund issues a letter of completion regarding the Innocent Party Agreement or Ferro fulfills the requirements of any consent order under Tennessee's Voluntary Cleanup Oversight and Assistance Program or (ii) the Environmental Matters identified in the Environmental Assessment have been remediated such that constituent levels are less than or equal to the higher (less restrictive) of the levels required by the State of Tennessee for industrial facilities or the U.S. Environmental Protection Agency, Region IX for industrial facilities (upon completion of such remediation to the levels required in this Subsection 8.2(I)(3)(d)(ii), the parties shall execute and deliver a joint letter to one another acknowledging and agreeing that such remediation has been completed to the required levels and that the Ferro Sellers have no further obligations regarding the Real Property; in the event of any dispute between the parties regarding completion of such remediation to the required levels, the disagreement will be finally resolved as provided in Article 10). (e) Arcadis will not be requested to determine whether remedial action is legally required for a specific soil or groundwater condition identified in the Environmental Assessment. If the Ferro Sellers and International Paint do not agree on whether remedial 33 Execution Copy action is legally required for a specific soil or groundwater condition identified in the Environmental Assessment, then the Ferro Sellers will implement the Nashville Remediation Program with respect to undisputed Environmental Matters and either party will have the right to initiate the dispute resolution process set forth in Article 10 to resolve the dispute over the remaining Environmental Matters, in which case the dispute will be finally resolved as provided in Article 10. (J) RELEASE OF CLAIMS. Except as expressly provided in this Section 8.2, the Ferro Sellers and International Paint (and their respective parent and subsidiary corporations) hereby agree to release each other from any and all claims of any kind under common law or statute (including without limitation any claims based on a theory of strict liability or claims that might exist under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. ss. 9601 et seq.) arising out of any Environmental Matters relating to the Acquired Assets, the R&D Lab or the Real Property. The Ferro Sellers' duties and obligations arising out of the foregoing provisions of this Section 8.2 are the "Ferro Sellers' Environmental Obligations." International Paint duties and obligations arising out of the foregoing provisions of this Section 8.2 are the "International Paint's Environmental Obligations." ARTICLE 9 - INDEMNIFICATION 9.1 INDEMNIFICATION OF THE FERRO SELLERS. International Paint, subject to the limitations set forth in this Article 9, will indemnify and (in the case of third party claims) defend the Ferro Sellers, and hold the Ferro Sellers harmless, from and against the Actual Amount of any and all liabilities, damages, claims, costs, and expenses (including reasonable attorneys' fees) arising out of or resulting from -- (A) Any misrepresentation or breach of warranty by International Paint under Article 7; (B) Nonperformance by International Paint of any obligations to be performed by or on the part of International Paint under this Purchase Agreement, including International Paint's obligations with respect to the Assumed Liabilities and International Paint's obligations under Article 8; or (C) International Paint's use of the Ferro name or the Ferro "Check-In-A-Circle" logo in any manner whatsoever (other than instances where there is a claim of infringement by a third-party involving the name or the logo). 9.2 INDEMNIFICATION OF INTERNATIONAL PAINT. Subject to the limitations set forth in this Article 9, the Ferro Sellers will indemnify and (in the case of third party claims) defend International Paint, and hold International Paint harmless, from and against the Actual Amount of any and all liabilities, damages, claims, costs, and expenses (including reasonable attorneys' fees) arising out of or resulting from -- (A) Any misrepresentation or breach of warranty by the Ferro Sellers under Article 7; provided, however, that under no circumstances shall International Paint be 34 Execution Copy entitled to any indemnity with respect to any breach of the representations and warranties set forth in Section 7.1(G) until and so long as the Ferro Sellers have failed to perform its obligations in all material respects set forth in Section 6.2; (B) Nonperformance by the Ferro Sellers of any obligation to be performed by or on the part of the Ferro Sellers under this Purchase Agreement, including the Ferro Sellers' obligations with respect to the Retained Liabilities and the Ferro Sellers' obligations under Article 8; or (C) Any liability resulting from non-compliance with any so called "bulk sales" law or similar law requiring creditor notice in any jurisdiction, except to the extent the associated payable owed to such creditor constituted an Assumed Liability. 9.3 CLAIMS. If either party desires to make a claim against the other under Section 9.1 or 9.2 which does not involve a claim by any third-party, then such party shall make such claim by delivering written notice to the other within a reasonable period of time. If either International Paint or the Ferro Sellers (the "Claimant") desires to make a claim against the other (the "Indemnitor") under Section 9.1 or 9.2 which involves a claim by a third-party, then such claim will be made in the following manner and be subject to the following terms and conditions: (A) NOTICE. The Claimant will give notice to the Indemnitor within a reasonable period of time of any demand, claim, or threat of litigation or the actual institution of any action, suit, or proceeding (collectively, a "Claim") at any time served on or instituted against the Claimant with respect to which the Claimant believes it would have a right of indemnification under Section 9.1 or 9.2. In providing such notice, the Claimant shall only state the existence of such Claim and shall not admit or deny the validity of the facts or circumstances out of which such Claim arose. Solely for purposes of determining whether the Claimant is entitled to indemnification under Section 9.1 or 9.2, the alleged facts or circumstances on which such Claim is based shall be treated as if they were true pending final resolution of the facts and circumstances out of which such Claim arose. (B) RESPONSIBILITY FOR DEFENSE. Within 30 days after receipt of any such notice, but not less than five working days before the time the Claimant is required to respond to a Claim, the Indemnitor will, by giving written notice to the Claimant, have the right to assume responsibility for the defense of the Claim in the name of the Claimant or otherwise as the Indemnitor may elect; provided that the Indemnitor also agrees that it does or might have responsibility to indemnify the Claimant with respect to such Claim. Otherwise, the Claimant will have responsibility for the defense of the Claim. Subject to the provisions of subsections 9.3(C) and (D) below, the party having responsibility for defense of a Claim (the "Defending Party") will have the full authority to defend, cure, adjust, compromise, or settle such Claim or appeal any judgment or ruling of a court or other tribunal in connection with such Claim in its own name and/or in the name of the other party. (C) RIGHT TO PARTICIPATE. Notwithstanding a Defending Party's responsibility for the defense of a Claim, the other party shall have the right to participate, at its own expense and with its own counsel, in the defense of a Claim and the Defending Party will consult with the other party from time to time on matters relating to the 35 Execution Copy defense of such Claim. The Defending Party will provide the other party with copies of all pleadings and material correspondence relating to such Claim. (D) SETTLEMENT. A Defending Party will provide the other party with timely written notice of any proposed adjustment, compromise, or other settlement, including equitable or injunctive relief, of a Claim which the Defending Party intends to propose or accept. If the other party fails to provide the Defending Party with timely written notice of objection to such settlement, then the Defending Party shall have the authority to propose or accept such settlement and enter into any agreement, in its own name and/or in the name of the other party, giving legal effect to all aspects of such settlement. If the other party objects to such settlement, then the Defending Party may, if it so elects, tender the defense to the other party by paying to such other party the amount of money proposed to be paid in settlement of the Claim, in which case the Defending Party shall have no further liability to the other party under this Purchase Agreement with respect to such Claim and the other party shall have full authority for the future defense of such Claim and full responsibility for any and all liabilities, obligations, costs, and expenses resulting therefrom. 9.4 DISPUTED RESPONSIBILITY. If, after receiving a written indemnification notice under Section 9.3(A), the party receiving such notice disputes -- (A) The fact that such party in fact made a misrepresentation or breach a warranty under this Purchase Agreement giving rise to the claim to which the notice relates or that any such misrepresentation or breach in fact gave rise to the liabilities, damages, claims, costs, or expenses for which the other party seeks indemnification under this Article 9, or (B) The fact that such party in fact failed to perform any obligation to be performed on the part of that party under this Purchase Agreement giving rise to the claim to which the notice relates or that any such failure in fact gave rise to the liabilities, damages, claims, costs, or expenses for which the other party seeks indemnification under this Article 9, then such party will have the right to initiate the dispute resolution mechanism set forth in Article 10, in which case the dispute will be finally resolved as provided in Article 10. In such case, however, pending final resolution of the disputed item, the parties will proceed as if the party receiving the indemnification notice had in fact made a misrepresentation, breached a warranty, or failed to perform an obligation to be performed on the part of that party under this Purchase Agreement and as if such act or failure in fact gave rise to the liabilities, damages, claims, costs, or expenses for which the other party seeks indemnification under this Article 9. If the disputed item is resolved in whole or in part in favor of the party receiving the indemnification notice, then such party will be entitled to an equitable reimbursement from the other party of any amounts expended or incurred in carrying out the receiving party's indemnification obligations under this Article 9. 9.5 QUANTUM LIMITATION ON INDEMNIFICATION. Notwithstanding the provisions of Section 9.2, the Ferro Sellers will not be obligated to indemnify or defend International Paint, or hold International Paint harmless, from or against any liability, damage, claim, cost, or expense (including attorneys' fees) arising out of a misrepresentation or breach of 36 Execution Copy warranty by the Ferro Sellers pursuant to Section 9.2 unless and to the extent by which the Actual Amount of all claims exceeds $1,000,000. In no event will the Ferro Sellers' total obligation to International Paint under Section 8.2(G) or Section 9.2 exceed, in the aggregate, $18,000,000. 9.6 TIME LIMITATION ON INDEMNIFICATION. Notwithstanding the provisions of Section 9.2, the Ferro Sellers will not be obligated to indemnify or defend International Paint, or hold International Paint harmless, from or against any liability, damage, claim, cost, or expense (including attorneys' fees) arising out of a misrepresentation or breach of warranty by the Ferro Sellers pursuant to Section 9.2, and any cause of action based thereupon shall expire and terminate, unless International Paint delivers to the Ferro Sellers notice and a full explanation of the alleged breach on or before 5:00 p.m. (Eastern Time) - (A) In the case of claims by International Paint for misrepresentations or breaches of warranty of the Ferro Sellers' Tax warranties under Section 7.2(P), 90 days after expiration of the applicable statute of limitation period with respect to the particular Tax at issue; and (B) In the case of any other claim, the 18 month anniversary of the Closing Date. The foregoing time limitations shall not apply with respect to any breach of the representations and warranties set forth in Section 7.1(A), (B), (C) or (D), which representations and warranties shall survive indefinitely or to any breach of the representations and warranties set forth in Section 7.2(M) or (N), any breach of which shall be governed solely by Section 8.2. 9.7 ACTUAL AMOUNT. For purposes of the parties' respective obligations under Sections 8.2, 9.1 and 9.2, in computing the "Actual Amount" of any liability, damage, claim, loss, cost or expense, the following principles will apply: (A) The amount will be reduced to give full effect to any provision or reserve on the books of the Powder Coatings Business as of the Closing with respect to the particular item or category of items out of which the misrepresentation, breach or nonperformance in question arose; (B) The amount will be reduced to give full effect to any indemnity, contractual or noncontractual recoveries the indemnified party receives (or, in the event the indemnified party fails to use reasonable efforts to pursue any such recoveries it might otherwise be entitled to receive, the amount that it might otherwise be entitled to receive) from any third-party as a consequence of the fact, condition or circumstance giving rise to the misrepresentation, breach or nonperformance in question; (C) The amount will be reduced to give full effect to any act or omission of the indemnified party that either was the cause of or increased the ultimate amount of any liability, damage, claim, loss, cost or expense incurred by the indemnified party; 37 Execution Copy (D) The amount will be reduced to give full effect to any failure by any indemnified party to take reasonable efforts to mitigate any liability, damage, claim, loss, cost or expense incurred by such indemnified party. 9.8 EXCLUSIVE REMEDIES. The remedies provided in this Article 9 and in Section 8.2 will be the parties' exclusive remedies for claims arising out of or resulting from any misrepresentation, breach of warranty, breach of covenant, breach of undertaking, or nonperformance any obligation to be performed on the part of either party under this Purchase Agreement. Neither party shall be liable to the other party as the result of any breach or alleged breach of this Agreement for any (a) damages for loss or harm to business reputation; or (b) damages that are not the proximate and foreseeable consequence of the breach or alleged breach of this Agreement. Under no circumstances will any party be responsible to another party for any consequential, incidental, special, or punitive damages or damages resulting from lost profits or lost business opportunity arising out of or relating to any such Claim. The foregoing shall not be interpreted, however, to limit indemnification for losses incurred as a result of the assertion by a claimant (other than the parties hereto and their successors and assigns) in a third-party claim of claims for damages of the foregoing type. 9.9 INDEMNITY PAYMENTS AS ADJUSTMENTS. All indemnity payments under this Article 9 will constitute and be treated as adjustments to the Purchase Price. ARTICLE 10 - DISPUTE RESOLUTION. If the parties ever have a dispute involving their respective rights and obligations under this Purchase Agreement or any of the Other Agreements (other than with respect to the determination of the amount of the Adjustment), then the parties will resolve such dispute as follows: 10.1 DISPUTE NOTICE. Either International Paint or the Ferro Sellers may at any time deliver to the other a written dispute notice setting forth a brief description of the issues for which such notice initiates the dispute resolution mechanism set forth in this Article 10. Such dispute notice shall also specify the provision or provisions of this Purchase Agreement and the facts or circumstances that are the subject matter of the dispute. 10.2 INFORMAL NEGOTIATIONS. During the 60-day period following delivery of a dispute notice described in Section 10.1, the parties will cause their representatives to meet and seek to resolve the disputed items cordially through informal negotiations 10.3 DISPUTE RESOLUTION PROCEEDINGS. If representatives of the parties are unable to resolve disputed items through the informal negotiations described in Section 10.3, then within 30 days after the informal negotiation period the parties will refer the disputed issues to a dispute resolution panel for final resolution as follows: (A) DESIGNATION OF REPRESENTATIVES. Within seven days after such informal negotiation period, International Paint and the Ferro Sellers will each designate one representative to serve on the dispute resolution panel. (If either party fails or refuses to designate a representative, then the other party will be entitled to have a representative appointed for such party by the CPR Institute.) 38 Execution Copy (B) SELECTION OF NEUTRAL. Promptly after they have been designated, the designated representatives will meet and select a neutral third-party (the "Neutral") to serve as the third member of the dispute resolution panel. If the designated representatives of parties cannot agree on a Neutral, then either representative may request the CPR Institute to select the Neutral. (C) PROCEDURES AND PROCESS. At the time the matter is referred to the dispute resolution panel, International Paint and the Ferro Sellers will jointly establish the procedures to be followed with respect to the presentation of the parties' respective positions and the process by which the dispute resolution panel will reach and render its decision on the disputed issues. Such procedures and processes will, at a minimum, assure that - (a) Each party will have the right to submit evidence to the dispute resolution panel, (b) Each party will have the right to present a written statement concerning that party's position with respect to the disputed item, and (c) Before reaching a decision concerning the disputed item, the dispute resolution panel will convene a hearing at which both parties may be represented. If International Paint and the Ferro Sellers cannot agree on such procedures and processes, then the Neutral will establish such procedures and process which will, in all events, be consistent with the foregoing. (D) DECISION. The dispute resolution panel will act by majority vote. The dispute resolution panel will base its decision on applicable provisions of this Purchase Agreement or, if the provisions of this Purchase Agreement do not resolve the matter, on general principles of substantive Ohio law. (The dispute resolution panel may, if it so desires, seek the opinion of an attorney licensed to practice law in the State of Ohio on any matter of substantive Ohio law on which the panel desires clarification.) 10.4 EQUITABLE RELIEF. Notwithstanding any other provision of this Article 10, either party may seek from a court of competent jurisdiction interim injunctive relief in order to maintain the status quo or protect such party's rights under this Purchase Agreement pending resolution of a dispute pursuant to this Article 10. 10.5 BINDING EFFECT. The decisions of the dispute resolution panel under this Article 10 will be binding on both the Ferro Sellers and International Paint and will be neither appealable, contestable, or subject to collateral attack by the Ferro Sellers or International Paint. 39 Execution Copy ARTICLE 11 - AMENDMENT, WAIVER, AND TERMINATION 11.1 AMENDMENT. The parties may amend this Purchase Agreement at any time before the Closing, but only by written instrument executed by both parties. 11.2 WAIVER. Either party may at any time waive compliance by the other with any undertakes or conditions contained in this Purchase Agreement but only by written instrument executed by the party waiving such compliance. No such waiver, however, shall be deemed to constitute the waiver of any such undertaking or condition in any other circumstance or the waiver of any other undertaking or condition. 11.3 TERMINATION. The parties may terminate this Purchase Agreement at any time before the Closing, but only by written instrument signed by both parties. This Purchase Agreement will terminate automatically, and without further action by either party, if the Closing has not occurred within 120 days following the execution of this Purchase Agreement, unless the parties otherwise extend this Purchase Agreement by a written instrument executed by both parties. ARTICLE 12 - MISCELLANEOUS 12.1 COOPERATION. International Paint and the Ferro Sellers will cooperate with the other party(ies), at the other party's(ies') request and expense, in furnishing information, testimony and other assistance in connection with any actions, proceedings, arrangements, and disputes with other third-parties or governmental inquiries or investigations involving the Ferro Sellers' conduct of the Powder Coatings Business or the transactions contemplated by this Purchase Agreement. 12.2 SEVERABILITY. If any provision of this Purchase Agreement shall finally be determined to be unlawful, then such provision will be deemed to be severed from this Purchase Agreement and replaced by a lawful provision which carries out, as closely as possible, the intention of the parties and preserves the economic bargain contemplated by this Purchase Agreement and, in such case, each and every other provision of this Purchase Agreement will remain in full force and effect. 12.3 COSTS AND EXPENSES. The parties will be responsible for the following costs and expenses arising out of the transactions contemplated by this Purchase Agreement as follows: (A) The Ferro Sellers will be solely responsible for the fees and expenses of Salomon Smith Barney Inc. whether or not the transactions are consummated; (B) International Paint will be solely responsible for any filing fees that may be required in connection with any necessary regulatory applications and notifications except for filing fees under the HSR Act or any other Antitrust law payable as a result of a filing by the Ferro Sellers; and (C) If the transactions are consummated, registration fees, stamp duties, or other transfer fees, Taxes or imposts, if any, which arise out of or result from the transfer of the Acquired Assets from the Ferro Sellers to International Paint will be shared equally between the parties, provided that International Paint and the Ferro Sellers shall calculate the portion of any real or personal property tax due 40 Execution Copy relating to a period beginning before the Closing but ending after the Closing using the most recent Tax assessment as the Tax to be prorated. The Ferro Sellers shall be liable for the amount prorated through the date of Closing. International Paint shall be responsible for the remaining Tax. Otherwise, each party will bear its own expenses incurred in connection with this Purchase Agreement and the transactions contemplated by this Purchase Agreement, whether or not the transactions are consummated. 12.4 NOTICES. All notices, requests and other communications under this Purchase Agreement shall be in writing and shall be deemed to have been duly given at the time of receipt if delivered by hand or communicated by telefax, or, if mailed, three (3) days after mailing registered or certified mail, return receipt requested, with postage prepaid: If to International Paint, to: International Paint, Inc. 7 Livingstone Ave Dobbs Ferry, New York 10522-3408 Attention: General Counsel Telefax: 1.914.693.4108 If to Ferro Sellers, to: Ferro Corporation 1000 Lakeside Avenue Cleveland, Ohio 44114 USA Attention: General Counsel Telefax: 1.216.875.7275 Either party may change its notice address above to a different address by giving the other party written notice of such change. 12.5 ASSIGNMENT AND APPOINTMENT. This Purchase Agreement will be binding upon and inure to the benefit of the successors of the parties, but will not be assignable by any party without the prior written consent of the other parties. International Paint will have the right, however, if it so elects, to assign all or an identified portion of its rights and delegate all or an identified portion of its duties under this Purchase Agreement to an Affiliate of International Paint provided that at the time of such assignment and delegation International Paint provides the Ferro Sellers with an unconditional guarantee (the "International Paint Guarantee") in the form set forth on Appendix R. Ferro Mexico hereby irrevocably appoints Ferro as its agent for purposes of this Purchase Agreement and grants Ferro the power to enter into any further agreement or agreements in its name and on its behalf that Ferro may deem necessary or appropriate for the orderly administration of this Purchase Agreement. 12.6 NO THIRD PARTIES. Neither this Purchase Agreement nor any provisions set forth in this Purchase Agreement is intended to, or shall, create any rights in or confer any benefits upon any third-party, including any employee of the Powder Coatings Business. 41 Execution Copy 12.7 INCORPORATION BY REFERENCE. The Appendices to this Purchase Agreement and the Disclosure Package constitute integral parts of this Purchase Agreement and are hereby incorporated into this Purchase Agreement by this reference. 12.8 GOVERNING LAW. This Purchase Agreement will be governed by and construed in accordance with the internal substantive laws of the State of Ohio, except where the internal substantive laws of another jurisdiction mandatorily apply. 12.9 BULK SALES. International Paint hereby waives compliance by the Ferro Sellers with the provisions of any so-called "bulk sales" law or similar law requiring creditor notice of any jurisdiction. 12.10 COUNTERPARTS. More than one counterpart of this Purchase Agreement may be executed by the parties hereto, and each fully executed counterpart shall be deemed an original without production of the others. 42 Execution Copy 12.11 COMPLETE AGREEMENT. This Purchase Agreement sets forth the entire understanding of the parties hereto with respect to the subject matter of this Purchase Agreement and supersedes all prior letters of intent, agreements, undertakes, arrangements, communications, representations, or warranties, whether oral or written, by any officer, employee, or representative of either party relating thereto. To evidence their agreement as stated above, INTERNATIONAL PAINT, INC., on one hand, and FERRO CORPORATION, FERRO ENAMEL ARGENTINA S.A., and FERRO MEXICANA S.A. DE C.V., on the other hand, have each caused their respective duly authorized directors, officers, or attorneys to execute this Purchase Agreement as of August 2, 2002. INTERNATIONAL PAINT, INC. FERRO CORPORATION By: /s/ D.W. Welch By: /s/ Millicent W. Pitts --------------------------- ------------------------------- Name: D.W. Welch Name: Millicent W. Pitts Title: Authorized Signatory Title: Vice President FERRO ENAMEL ARGENTINA S.A. FERRO MEXICANA S.A. DE C.V. By: /s/ James C. Bays By: /s/ James C. Bays --------------------------- ------------------------------- Name: James C. Bays Name: James C. Bays Title: Attorney-in-Fact Title: Attorney-in-Fact 43 APPENDIX A DEFINITIONS The following terms identified with initial capital letters are defined in the following Sections of the Purchase Agreement:
TERM CROSS REFERENCE Accountants ................................................. Section 2.7(C) Accounting Principles ....................................... Section 2.7(A) Acquired Assets ............................................. Section 2.2 Actual Amount ............................................... Section 9.7 Adjustment................................................... Section 2.7 Akzo Nobel .................................................. Recital B Argentina Toll Agreement .................................... Section 3.4(C) Assumed Liabilities ......................................... Section 2.4 Base-Line Working Capital ................................... Section 2.7(E) Base-Line Working Capital Statement ......................... Section 2.7(A) California Transition Services Agreement .................... Section 3.4(F) Claim ....................................................... Section 9.3(A) Claimant .................................................... Section 9.3 Cleveland Lease Agreement ................................... Section 3.4(A) Closing Section 5.1 Closing Date ................................................ Section 5.2 Closing Time ................................................ Section 5.2 Closing Working Capital ..................................... Section 2.7(F) Defending Party ............................................. Section 9.3(B) Economic Remediation Plan ................................... Section 8.2(F)(3) Employees ................................................... Section 8.1(A) Excluded Employees .......................................... Section 8.1(A) Ferro ....................................................... Preamble Ferro Argentina ............................................. Preamble
A-1 Execution Copy
TERM CROSS REFERENCE Ferro Mexico ................................................ Preamble Ferro Sellers................................................ Preamble Ferro Sellers' Employee Obligations ......................... Section 8.1 Ferro Sellers' Environmental Obligations .................... Section 8.2 Identified Environmental Matter ............................. Section 8.2(A) Indemnitor .................................................. Section 9.3 International Paint ......................................... Preamble International Paint's Employee Obligations .................. Section 8.1 International Paint's Environmental Obligations ............. Section 8.2 International Paint Guarantee ............................... Section 12.5 Joint Marketing Agreement ................................... Section 3.4(D) Neutral ..................................................... Section 10.3(B) Noncompete Business ......................................... Section 6.4 Other Agreements ............................................ Section 3.4 Powder Coatings Business .................................... Recital A Powder Coatings Disclosure Package .......................... Section 7.2 Preliminary Working Capital Statement ....................... Section 2.7(A) Products ................................................... Recital A Purchase Agreement .......................................... Preamble Purchase Price .............................................. Section 2.6 RandH........................................................ Section 4.2(H) Remediation Plan............................................. Section 8.2(F)(3) Retained Assets ............................................. Section 2.3 Retained Liabilities......................................... Section 2.5 Shared Intellectual Property Agreement....................... Section 3.8(C) Technology License Agreement ................................ Section 3.4(E) Transferred Employees ....................................... Section 8.1(B) Transition Services Agreement ............................... Section 3.4 (B)
A-2 Execution Copy In addition, the following terms have the meanings set forth below where used in the Purchase Agreement and identified with initial capital letters:
TERM MEANING Acquired Intellectual Property All of the following: (1) those patents and patent applications (including all renewals, extensions, modifications, inventor's certificates, continuations, divisions, continuations in part, reexaminations and reissues thereof) listed in Subpart H-1 and H-2 of the Disclosure Package; (2) those trade names, trademarks (whether or not registered), service marks (whether or not registered) and applications therefor listed in Subparts H-3 and H-4 of the Disclosure Package; (3) those domain names, websites, and web pages listed in Subpart H-8 of the Disclosure Package; and (4) all rights held or used by the Ferro Sellers in their conduct of the Powder Coatings Business consisting of, conferred by or otherwise relating to: 1 (A) trade secrets, including without limitation, know-how, inventions (whether or not patentable or reduced to practice), computerized data and information, business records, files and data, discoveries, formulae, production outlines, product designs, manufacturing information, processes and techniques, testing and quality control processes and techniques, drawings and customer lists, and (B) copyrights, original works of authorship and disclaimers of moral rights; but (in the case of the items listed in part (4) above) only to the extent the items or matters are physically located at, or arise out of the conduct of the Powder Coatings Business at, the Real Property, the Argentina Facility, the R&D Lab or any of the locations that are the subject of the Real Property Leases.
A-3 Execution Copy
TERM MEANING Affiliate With respect to a party, any other entity controlling, controlled by, or under common control with such party. Americas Collectively, North, Central and South America Argentina Facility Those facilities used by the Ferro Sellers in the conduct of the Powder Coatings Business located at Gibraltar 1365, 1872 Sarandi Providence de Buenos Aires, Argentina. Business Records Business books and records, including financial, operating, inventory, legal, personnel, payroll, and customer records and all sales and promotional literature, correspondence, and records held or used by the Ferro Sellers primarily in their conduct of the Powder Coatings Business. Cash Cash and cash equivalent items held by the Ferro Sellers as of the Closing, including certificates of deposit, time deposits, marketable securities, and the proceeds of accounts receivable paid on or before the Closing Date, held or used by the Ferro Sellers in their conduct of the Powder Coatings Business. Contracts Collectively, the Purchase Contracts, the Sales Contracts, and the Other Business Contracts. Control Background The concentration of hazardous materials consistently present in the environment due to long term localized industrial or commercial activities. CPR Institute CPR Institute for Dispute Resolution, 366 Madison Avenue, New York, New York. Default An occurrence which constitutes a breach or default under a contract, order, or other commitment, after the expiration of any grace period provided without such breach or default being cured within such period. Encumbrance Any encumbrance or lien, including, without limitation, any mortgage, judgment lien, materialman's lien, mechanic's lien, security interest, encroachment, easement, or other restriction, in each case having a material adverse effect on the thing or right so encumbered.
A-4 Execution Copy
TERM MEANING Environmental Laws Laws, regulations, orders, decrees, standards, ordinances, codes, and other governmental mandates and restrictions in effect today that are applicable to the Powder Coatings Business and relate to emissions, discharges, and releases of Hazardous Materials into land, soil, ambient air, water, and atmosphere, and/or the generation, treatment, storage, transportation, and disposal of hazardous wastes, including (in the case of operations of the Powder Coating Business in the United States) - (1) The Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. Sections 9601 et. seq., as amended; (2) The Solid Waste Disposal Act, 42 U.S.C. Sections 6901 et. seq., as amended; (3) The Clean Air Act, 42 U.S.C. Sections 7401 et. seq., as amended; (4) The Clean Water Act. 33 U.S.C. Sections 1251 et. seq., as amended; (5) The Hazardous Materials Transportation Act, 49 U.S.C.Section 1801 et. seq., as amended; (6) The Toxic Substances Control Act, 15 U.S.C. Section 2601 et. seq., as amended; and (7) The Emergency Planning & Community Right-to-Know Act, 42 U.S.C. Sections 11001 et. seq., as amended; and comparable legislation in other jurisdictions in which the Powder Coatings Business is conducted.
A-5 Execution Copy
TERM MEANING Environmental Loss Any liability, damage, cost, expense, claim or action, whether in law or equity, arising under Environmental Laws or any other theory of recovery, including but not limited to nuisance, negligence, and strict liability relating to emissions, discharges, and releases of Hazardous Materials into land, soil, ambient air, water, and atmosphere, and/or the generation, treatment, storage, transportation, and disposal of hazardous wastes at or from the Real Property or the Acquired Assets. Environmental Matter Any action, condition, or event giving rise to a legal obligation under the Environmental Laws that relate to the Powder Coatings Business. Financial Debt All indebtedness for money borrowed incurred by the Ferro Sellers. Governmental Authority Any nation or government, any state or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory administrative functions of or pertaining to government, whether U.S. or foreign. Hazardous Materials Any material or condition that is defined as "hazardous" or is subject to regulation under an Environmental Law, including pollutants, chemicals, contaminants, petroleum and petroleum products, asbestos, PCBs, radioactive materials and other hazardous or toxic substances.. Health and Safety Laws Laws, regulations, orders, ordinances, codes, and other governmental mandates and restrictions applicable to the Powder Coatings Business relating to the health and/or safety of employees or others having business dealings with the Powder Coatings Business. Inventories Inventories, wherever located, including inventories of raw materials, components, assemblies, subassemblies, work-in-process, finished goods, replacement parts, spare parts, operating supplies, and packaging held or used by the Ferro Sellers in their conduct of the Powder Coatings Business. Leases Collectively, the Real Property Leases and the Personal Property Leases
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TERM MEANING Licenses Licenses and similar rights affording the right to use or enjoy intangible property or intangible property rights, including software, arising primarily out of the Ferro Sellers' conduct of the Powder Coatings Business. Material Consents The third-party and governmental consents and approvals required in connection with the transfer of the following: (1) Lease dated July 7, 1994 and First Amendment to Lease dated July 13, 1999 with Fogg-Brecksville Development Co. (2) Powder Primer Coatings Agreement dated July 3, 2000 with E. I. DuPont de Nemours and Company (3) Metropolitan Government of Nashville and Davidson County: Industrial Discharge Permit No. CP-0193 (4) Metropolitan Government of Nashville and Davidson County: Synthetic Minor Discharge Permit No. 27-12 Material Contract Any contract listed, or required to be listed, in items 1 through 4 on Part K of the Disclosure Package. Material Event Any condition, circumstance, occurrence, or other event which has had or is reasonably likely to have a material and adverse effect on the Powder Coatings Business Condition, including (without limitation) any of such event resulting from any -- (1) Act of God, flood, windstorm, earthquake, accident, fire, explosion, casualty, riot, requisition or taking of property by governmental authority, war, embargo, or other event outside the Ferro Sellers' control; (2) Termination, cancellation, or substantial modification of any Contract, Lease, License, or Permit; (3) Default by any of the Ferro Sellers under any Contract, Lease, License, or Permit; or
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TERM MEANING (4) Filing (whether voluntary or involuntary) of a petition in bankruptcy or commencement of any other action involving creditors' rights or debtors' remedies affecting any of the Ferro Sellers. Other Business Contracts Contracts other than Purchase Contracts and Sales Contract to which the Ferro Sellers are party or to which the Ferro Sellers and/or Subsidiaries are bound which arise primarily out of the Ferro Sellers' conduct of the Powder Coatings Business. Other Current Liabilities Those current liabilities of the Ferro Sellers arising out of the Ferro Sellers conduct of the Powder Coatings Business as the same shall exist at Closing, including accrued expenses, customer rebates and payroll expenses, bonuses, incentives, benefits and taxes. Owns or Ownership Such ownership as confers upon the party or third-party having it good and marketable title to and control over the thing or right owned, free and clear of any and all Encumbrances except Permitted Encumbrances. Permits Permits, approvals, and qualifications issued by any government or governmental unit, agency, board, body, or instrumentality and all applications for such items held or used by the Ferro Sellers primarily in their conduct of the Powder Coatings Business at the R&D Lab and held or used by the Ferro Sellers in their conduct of the Powder Coatings Business elsewhere. Permitted Encumbrances The following: (1) Liens for Taxes accrued but not yet payable; (2) Liens arising as a matter of law in the ordinary course of business (provided neither the Ferro Sellers are delinquent in respect of the obligations secured by such liens); and (3) Such other imperfections of title and other encumbrances which, singly or taken together, do not and are not likely to have a material adverse effect on the relevant property.
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TERM MEANING Personal Property Leases Leases and similar contractual rights affording the right to use or enjoy tangible personal property or tangible personal property rights located at the Ferro Sellers' facilities identified as owned by the Ferro Sellers and used by the Ferro Sellers in the conduct of the Powder Coatings Business in Part F of the Disclosure Package and the Ferro Sellers' facilities identified as leased by the Ferro Sellers and used by the Ferro Sellers in the conduct of the Powder Coatings Business in Part F of the Disclosure Package. Powder Coatings Business Condition The properties, assets, liabilities (fixed and otherwise), and condition (financial and otherwise) of the Powder Coatings Business taken as a whole. Prescribed Rate The rate of interest publicly announced by National City Bank, Cleveland, Ohio, from time to time as its prime or base rate for U.S. Dollar loans. Prepaid Items Prepaid and similar items arising out of the conduct of the Powder Coatings Business, including prepaid expenses, deferred charges, advance payments, supplier rebates and other prepaid items arising out of the Ferro Sellers' conduct of the Powder Coatings Business. Purchase Contracts Orders, contracts, and commitments for the purchase of goods and/or services, including, without limitation, such items relating to the purchase of capital, tooling, products, supplies, and software arising primarily out of the Ferro Sellers' conduct of the Powder Coatings Business, except, in all cases, those contracts listed in Subpart K-5 of the Disclosure Package. R&D Lab The real property, including all land, buildings, improvements, fixtures and appurtenances thereto, leased by International Paint pursuant to the Cleveland Lease Agreement. Real Property The following real properties, including all land, buildings, improvements, fixtures, and appurtenances thereto: Ferro's manufacturing facility located at 20 Culvert Street, Nashville, Tennessee, USA.
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TERM MEANING Real Property Leases Those leases and similar contractual rights affording the right to use and enjoy certain real property listed in Subpart F-2 of the Disclosure Package Retained Intellectual Property All intellectual property rights held or used by the Ferro Sellers whatsoever, other than (i) the Acquired Intellectual Property, and (ii) all financial data relating to the Acquired Intellectual Property, (iii) all items or matters of the types listed in part (4) of the definition of Acquired Intellectual Property to the extent such items or matters are not physically located at the Real Property or any of the locations that are the subject of the Real Property Leases, and (iv) the items listed in Subpart H-9 of the Disclosure Package. Sales Contracts Orders, contracts, commitments, and proposals for the sale of Products, including such items relating to repair, restoration, maintenance, preservation, and similar operations arising out of the Ferro Sellers' conduct of the Powder Coatings Business, except, in all cases, those contracts listed in Subpart K-5 of the Disclosure Package Shared Intellectual Property That portion of the Retained Intellectual Property that relates to the following: (1) Novel formulations for non-traditional substrates including next-generation in-mold coating; (2) Low temperature, fast cure products; (3) Enhanced corrosion resistance coatings; (4) PCB Banks and Coil coatings; and (5) Next-generation metalization primer.
A-10 Execution Copy
TERM MEANING Tangible Personal Property All tangible personal property (whether owned, leased, or otherwise), including all machinery, equipment, tooling, dies, molds, jigs, patterns, gauges, materials handling equipment, furniture, office equipment, cars, trucks, and other vehicles held or used by the Ferro Sellers in their conduct of the Powder Coatings Business and either (i) listed in Part G of the Disclosure Package or (ii) located at the Ferro Sellers' facilities identified as owned by the Ferro Sellers and used by the Ferro Sellers in the conduct of the Powder Coatings Business in Part F of the Disclosure Package and the Ferro Sellers' facilities identified as leased by the Ferro Sellers and used by the Ferro Sellers in the conduct of the Powder Coatings Business in Part F of the Disclosure Package. Tax All Federal, state, foreign and other net income, gross receipts, gains, sales, use, employment, social security, withholding, occupation, franchise, profits, excise, real and personal property, land, value added, capital, consumption, national insurance, registration, custom, stamp, transfer, environmental, alternative minimum or other taxes, fees, duties, assessments or charges of any kind whatsoever whether payable directly or by withholding, together with any interest and penalties, additions to Tax or additional amounts with respect thereto, imposed by any taxing authority. Third-Party Claims Causes of action, rights of action, and warranty and product liability claims against other third-parties arising out of the Ferro Sellers' conduct of the Powder Coatings Business. Trade Accounts Payable Third-party notes, accounts, and other items payable arising out of the Ferro Sellers' conduct of the Powder Coatings Business, including all such amounts owing under Contracts, Leases, and Licenses. Trade Accounts Receivable Third-party notes and accounts receivable arising out of the Ferro Sellers' conduct of the Powder Coatings Business. Union Contracts The following collective bargaining agreements with the unions indicated below:
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TERM MEANING (1) Agreement between Ferro Corporation, Powder Coatings Division, Nashville, Tennessee, and United Steel Workers of America, AFL-CIO, CLC, on Behalf of Its Nashville Local No. 501 (April 22, 2000 through April 22, 2003); and (2) Collective Bargaining Agreement between Ferro Corporation at Its Brecksville, Ohio Plant and United Steelworkers of America, AFL-CIO, on Behalf of Its Location Union No. 1170-1 of United Steelworkers of America, AFL-CIO. Working Capital The difference between (x) the sum of (i) Trade Accounts Receivable and (ii) Inventories and (y) Trade Accounts Payable, all as reflected on the books of the Powder Coatings Business in accordance with the Accounting Principles as of a given date.
A-12 EX-2.3 5 l96640aexv2w3.txt EXHIBIT 2.3 Exhibit 2.3 Execution Copy ================================================================================ PURCHASE AGREEMENT DATED AS OF AUGUST 2, 2002 BY AND BETWEEN AKZO NOBEL SINO COATINGS B.V. ON ONE HAND AND FERRO CORPORATION ON THE OTHER HAND ================================================================================ Execution Copy TABLE OF CONTENTS
PAGE PREAMBLE ............................................................................................... 1 RECITALS ............................................................................................... 1 TERMS AND CONDITIONS ................................................................................... 1 ARTICLE 1 - GENERAL PROVISIONS ................................................................ 1 1.1 Definitions ................................................................. 1 1.2 Construction ................................................................ 1 ARTICLE 2 - PURCHASE AND SALE ................................................................ 2 2.1 Transaction ................................................................ 2 2.2 Purchase Price .............................................................. 2 2.3 Adjustment .................................................................. 2 (A) Working Capital Adjustment ............................................ 2 (1) Preliminary Working Capital Statement .......................... 2 (2) Ferro's Review ................................................. 3 (3) Dispute Resolution ............................................. 3 (4) Final Determination ............................................ 3 (5) Base-Line Working Capital ...................................... 4 (6) Closing Working Capital ........................................ 4 (7) Amount of the Working Capital Adjustment ....................... 4 (B) Cash Items Adjustment ................................................. 4 (C) Amount of Adjustment .................................................. 4 2.4 Payment of Purchase Price ................................................... 4 (A) Payment at Closing .................................................... 4 (B) Final Payment ......................................................... 4 2.5 Refund of Adjustment ........................................................ 5 2.6 Method of Payment ........................................................... 5 (A) Directed Payments ..................................................... 5 (B) Other Payments ........................................................ 5 ARTICLE 3 - ACTIONS BEFORE CLOSING ............................................................ 5 3.1 Access to Records ........................................................... 5 3.2 Interim Conduct of the Powder Coatings Business ............................. 5 3.3 Akzo Nobel China's Approval of Certain Transactions ......................... 6 3.4 Negotiation of Other Agreements ............................................. 7 3.5 Coordination of Public Announcements ........................................ 7 3.6 Government Approvals ....................................................... 8
- i - Execution Copy ARTICLE 4 - CONDITIONS ....................................................................... 8 4.1 Conditions to Akzo Nobel China's Obligations ................................ 8 4.2 Conditions to Ferro's Obligations ........................................... 9 4.3 Parties' Best Efforts ....................................................... 10 ARTICLE 5 - CLOSING ........................................................................... 10 5.1 The Closing ................................................................. 10 5.2 Date, Time, and Place of Closing ............................................ 10 5.3 Akzo Nobel China's Obligations .............................................. 10 5.4 Ferro's Obligations ......................................................... 10 5.5 Local Formalities ........................................................... 10 ARTICLE 6 - ACTIONS AFTER CLOSING ............................................................. 11 6.1 Further Conveyances ......................................................... 11 6.2 Accounting Reports .......................................................... 11 6.3 Noncompetition .............................................................. 11 6.4 Use of Ferro Name and Mark .................................................. 12 6.5 Access to Former Business Records ........................................... 12 6.6 Access to Former Employees .................................................. 13 6.7 Termination of Insurance Coverage ........................................... 13 6.8 Trade Secrets................................................................ 13 ARTICLE 7 - REPRESENTATIONS AND WARRANTIES..................................................... 13 7.1 Ferro's General Representations and Warranties .............................. 13 (A) Organization and Existence ............................................ 13 (B) Power and Authority ................................................... 14 (C) Authorization ......................................................... 14 (D) Binding Effect ........................................................ 14 (E) No Default ............................................................ 14 (F) Finders ............................................................... 14 (G) Consents and Approvals ................................................ 14 (H) Existence and Capitalization of the Subsidiary......................... 14 (I) Ownership of the Shares ............................................... 14 (J) No Knowledge of Akzo Nobel China's Default ............................ 14 7.2 Ferro's Representations and Warranties Concerning the Disclosure Package .......................................................... 15 (A) Organization .......................................................... 15 (B) Financial Statements .................................................. 15 (C) Inventories ........................................................... 15 (D) Trade Accounts Receivable ............................................. 15 (E) Trade Accounts Payable ................................................ 15 (F) Real Property ......................................................... 15 (G) Tangible Personal Property ............................................ 16 (H) Intellectual Property ................................................. 16 (I) Indebtedness .......................................................... 16 (J) Litigation ............................................................ 16 (K) Contracts ............................................................. 16
- ii - Execution Copy (L) Employees and Employee Benefits ....................................... 17 (M) Compliance with Environmental Laws ................................... 17 (N) Compliance with Health and Safety Laws ................................ 17 (O) Compliance with Other Laws ............................................ 17 (P) Taxes ................................................................. 17 (Q) Insurance ............................................................. 18 (R) No Material Events .................................................... 18 7.3 Akzo Nobel China's Representations and Warranties ........................... 18 (A) Organization and Existence ............................................ 18 (B) Power and Authority ................................................... 18 (C) Authorization ......................................................... 18 (D) Binding Effect ........................................................ 18 (E) No Default ............................................................ 18 (F) Finders ............................................................... 18 (G) No Knowledge of Ferro's Default ....................................... 18 (H) Consents and Approvals ................................................ 19 7.4 Meaning of "Ferro's Knowledge" .............................................. 19 7.5 Disclaimer .................................................................. 19 ARTICLE 8 - SPECIFIC OBLIGATIONS .............................................................. 19 8.1 Employee Obligations ........................................................ 19 (A) Severance ............................................................. 19 (B) Non-Interference ...................................................... 19 8.2 Environmental Obligations ................................................... 20 (A) Identified Environmental Matters ...................................... 20 (B) Pre-Closing Environmental Matters...................................... 20 (C) Post-Closing Environmental Matters .................................... 20 (D) Mixed Post-Closing Environmental Matters .............................. 20 (E) Akzo Nobel China's Phase 2 Study ..................................... 21 (F) Responsibilities With Regard To Economic Remediation Plans ..................................................... 22 (G) Limitations On Ferro's Obligations .................................... 22 (H) Release of Claims ..................................................... 22 8.3 Other Obligations............................................................ 22 (A) Akzo Nobel China's Responsibilities ................................... 22 (B) Ferro's Responsibilities .............................................. 23 8.4 Akzo Nobel China's Sole Remedy .............................................. 24 8.5 Collection of Trade Accounts Receivable...................................... 25 ARTICLE 9 - INDEMNIFICATION ................................................................... 25 9.1 Indemnification of Ferro .................................................... 25 9.2 Indemnification of Akzo Nobel China ......................................... 26 9.3 Claims ...................................................................... 26 (A) Notice ................................................................ 26 (B) Responsibility for Defense ............................................ 26 (C) Right to Participate .................................................. 27 (D) Settlement ............................................................ 27 9.4 Disputed Responsibility ..................................................... 27 9.5 Quantum Limitation on Indemnification ....................................... 28
- iii - Execution Copy 9.6 Time Limitation on Indemnification .......................................... 28 9.7 Actual Amount ............................................................... 28 9.8 Exclusive Remedies .......................................................... 29 9.9 Indemnity Payments as Adjustments ........................................... 29 ARTICLE 10 - DISPUTE RESOLUTION .............................................................. 29 10.1 Dispute Notice .............................................................. 29 10.2 Informal Negotiations ....................................................... 29 10.3 Dispute Resolution Proceedings .............................................. 29 (A) Designation of Representatives ..................................... 30 (B) Selection of Neutral ............................................... 30 (C) Procedures and Process ............................................. 30 (D) Decision ........................................................... 30 10.4 Equitable Relief ............................................................ 30 10.5 Binding Effect .............................................................. 31 ARTICLE 11 - AMENDMENT, WAIVER, AND TERMINATION................................................ 31 11.1 Amendment ................................................................... 31 11.2 Waiver ...................................................................... 31 11.3 Termination ................................................................. 31 ARTICLE 12 - MISCELLANEOUS .................................................................... 31 12.1 Cooperation ................................................................. 31 12.2 Severability ................................................................ 31 12.3 Costs and Expenses .......................................................... 31 12.4 Notices ..................................................................... 32 12.5 Assignment and Appointment .................................................. 32 12.6 No Third Parties ............................................................ 32 12.7 Incorporation by Reference .................................................. 32 12.8 Governing Law ............................................................... 32 12.9 Counterparts ................................................................ 33 12.10 Complete Agreement .......................................................... 33
APPENDICES Appendix A - Definitions Appendix B - Form of Preliminary Working Capital Statement Appendix C - Accounting Principles Appendix D - Documents to Be Delivered by Ferro at the Closing Appendix E - Documents to Be Delivered by Akzo Nobel China at the Closing Appendix F - Contents of the Powder Coatings Disclosure Package Appendix G - Due Diligence Certifications Appendix H - Identified Environmental Matters - iv - Execution Copy PURCHASE AGREEMENT This PURCHASE AGREEMENT (this "Purchase Agreement") is dated as of August 2, 2002, and is by and among: AKZO NOBEL SINO COATINGS B.V. ("Akzo Nobel China"), a Dutch private company with limited liability (besloten vennootschap), - and - FERRO CORPORATION ("Ferro"), an Ohio corporation. RECITALS A. Ferro (Ningbo) Powder Coatings, Ltd., a Chinese wholly-owned foreign enterprise and a wholly-owned subsidiary of Ferro (the "Subsidiary"), is engaged in the business (the "Powder Coatings Business") of designing, developing, formulating, manufacturing, and selling thermosetting-formulated powder surface coatings (the "Products") for a variety of decorative and protective end-use applications within the appliance, automotive, and general industrial industries in the Asia/Pacific region. (The term "Powder Coatings Business" does not, however, include the powder coatings business conducted by Ferro and its Affiliates in Europe or North and South America.) B. Akzo Nobel China is an indirect wholly-owned subsidiary of Akzo Nobel NV ("Akzo Nobel"), a Dutch corporation (naamloze vennootschap). C. Akzo Nobel China desires to purchase from Ferro, and Ferro desires to sell to Akzo Nobel China, the Shares on and subject to the terms and conditions of this Purchase Agreement. TERMS AND CONDITIONS In consideration of the matters recited above and of other good and valuable consideration, and intending to be legally bound by this Purchase Agreement, Akzo Nobel China and Ferro hereby agree as follows: ARTICLE 1 - GENERAL PROVISIONS 1.1 DEFINITIONS. Appendix A sets forth the definitions of certain terms used in this Purchase Agreement. Those terms shall have the meanings set forth on Appendix A where used in this Purchase Agreement and identified with initial capital letters. 1.2 Construction. FOR PURPOSES OF THIS PURCHASE AGREEMENT, EXCEPT WHERE THE CONTEXT OTHERWISE REQUIRES -- (A) The term "parties" means Akzo Nobel China and Ferro. Execution Copy (B) The term "person" includes any natural person, firm, association, partnership, corporation, limited liability company, limited liability partnership, governmental agency or other entity. The term "third-party" means any person other than the parties and their Affiliates. (C) The term "today" means August 2, 2002. (D) All currency amounts stated in this Purchase Agreement are in United States Dollars. (Other currency amounts will translate into United States Dollar amounts at the exchange rate or rates quoted in the Currency Trading table of the Central Edition of The Wall Street Journal on the business day immediately preceding the date as of which translation is to occur.) (E) References to "days" mean calendar days. (If, however, an action or obligation is due to be undertaken by or on a day other than a business day, i.e., a Saturday, Sunday, or public holiday, in the United States, then that action or obligation will be deemed to be due on the next following business day.) (F) When introducing a series of items, the term "including" is not intended to limit the more general description that precedes the items listed. (G) The Table of Contents and the headings of the Articles and Sections are included for convenience of reference only and are not intended to affect the meaning of the operative provisions to which they relate. ARTICLE 2 - PURCHASE AND SALE 2.1 TRANSACTION. On and subject to the terms and conditions of this Purchase Agreement, at the Closing, (A) Akzo Nobel China will purchase from Ferro, and Ferro will sell, transfer, and assign to Akzo Nobel China, all of the Shares; and (B) Akzo Nobel China will pay Ferro the Purchase Price as provided in Section 2.2. 2.2 PURCHASE PRICE. For purposes of this Purchase Agreement, the term "Purchase Price" means $10,000,000 plus or minus the amount of the Adjustment (and, if applicable, any further adjustment(s) pursuant to Section 9.9). 2.3 ADJUSTMENT. The Adjustment will be determined as follows: (A) WORKING CAPITAL ADJUSTMENT. (1) PRELIMINARY WORKING CAPITAL STATEMENT. As promptly as practicable, but in any event within 45 days after the Closing Date, Akzo Nobel China will prepare and deliver to Ferro a statement (the "Preliminary Working Capital Statement") of the Working Capital of the Subsidiary at and as of the Closing Date substantially in the form set forth in Part 1 of Appendix B. The Preliminary Working Capital Statement will be prepared in - 2 - Execution Copy accordance with the accounting methods, policies, practices and procedures set forth on Appendix C (the "Accounting Principles"). (2) FERRO'S REVIEW. If Ferro disagrees with any items shown on the Preliminary Working Capital Statement, Ferro will notify Akzo Nobel China in writing of such disagreement within 45 days after delivery of the Preliminary Working Capital Statement, which notice shall describe the nature of any such disagreement in reasonable detail, identify the specific items involved and the dollar amount of each such disagreement. After the end of such 45-day period, Ferro may not introduce additional disagreements with respect to any item in the Preliminary Working Capital Statement or increase the amount of any disagreement, and any item not so identified will be deemed to be agreed to by Ferro and will be final and binding upon the parties. During the 45-day period of its review, Ferro and its representatives will have reasonable access to any documents, schedules or workpapers used in the preparation of the Preliminary Working Capital Statement. (3) DISPUTE RESOLUTION. Ferro and Akzo Nobel China agree to negotiate in good faith to resolve any such disagreement relating to items included on the Preliminary Working Capital Statement. If Ferro and Akzo Nobel China are unable to resolve all disagreements properly identified by Ferro pursuant to Section 2.3(A)(2) within sixty (60) days after delivery to Akzo Nobel China of written notice of such disagreement, then such disagreements will be submitted for final and binding resolution to Price Waterhouse Coopers or, if Price Waterhouse Coopers should decline such engagement, such other internationally recognized accounting firm as Ferro and Akzo Nobel China shall mutually agree (the "Accountants"). The Accountants so selected will only consider those items and amounts set forth in the Preliminary Working Capital Statement as to which Ferro and Akzo Nobel China have disagreed within the time periods and on the terms specified above and must resolve the matter in accordance with the terms and provisions of the Agreement. The Accountants will be instructed to deliver to Ferro and Akzo Nobel China, as promptly as practicable and in any event within one hundred and twenty (120) days after its appointment, a written report setting forth the resolution of any such disagreement determined in accordance with the terms of this Purchase Agreement. The Accountants will make their determination based solely on presentations and supporting material provided by the parties and not pursuant to any independent review. The determination of the Accountants shall be final and binding upon Ferro and Akzo Nobel China. Ferro and Akzo Nobel China will each bear one-half the fees, expenses and costs of the Accountants. (4) FINAL DETERMINATION. The Preliminary Working Capital Statement will be deemed final for the purposes of this Section 2.3(A) upon the earliest of (A) the failure of Ferro to notify Akzo Nobel China of a dispute with 45 days of Akzo Nobel China's delivery of the Preliminary Working Capital Statement to Ferro, (B) the resolution of all disputes, pursuant to Section 2.3(A)(3), by Ferro and Akzo Nobel China and (C) the resolution of all disputes, pursuant to Section 2.3(A)(3), by the Accountants. - 3 - Execution Copy (5) BASE-LINE WORKING CAPITAL. The "Base-Line Working Capital" will be an amount equal to $4,841,002 (the details of which are set forth in Part 2 of Appendix B). (6) CLOSING WORKING CAPITAL. The "Closing Working Capital" will be an amount equal to the Working Capital of the Subsidiary at and as of the Closing as determined under Sections 2.3(A)(1)-(4) above. (7) AMOUNT OF THE WORKING CAPITAL ADJUSTMENT. If the Closing Working Capital is - (A) Less than the Base Line Working Capital, then the Working Capital Adjustment will be a negative amount equal to the amount by which the Closing Working Capital is less than the Base-Line Working Capital; or (B) More than the Base Line Working Capital, then the Working Capital Adjustment will be a positive amount equal to the amount by which the Closing Working Capital is greater than the Base-Line Working Capital. (B) CASH ITEMS ADJUSTMENT. The Cash Items Adjustment will be a positive or negative amount equal to - (1) The amount of Cash on the books of the Subsidiary as of the Closing, minus (2) The amount of Financial Debt on the books of the Subsidiary as of the Closing. (C) AMOUNT OF ADJUSTMENT. The Adjustment will be an amount, positive or negative, equal to the Working Capital Adjustment plus the Cash Items Adjustment. The Purchase Price will finally be determined on the date the amount of the Working Capital Adjustment is finally determined. 2.4 PAYMENT OF PURCHASE PRICE. Akzo Nobel China will pay the Purchase Price as follows: (A) PAYMENT AT CLOSING. At the Closing, Akzo Nobel China will pay Ferro the total sum of $10,000,000; and (B) FINAL PAYMENT. If the Adjustment is a positive amount, Akzo Nobel China will, within 10 business days after the final determination of the Purchase Price, pay Ferro the amount of the Adjustment, together with interest thereon at the Prescribed Rate for the period from the Closing Date through and including the date on which the Adjustment is paid. (Payments of further adjustments pursuant to Section 9.9 will be made as provided in Article 9.) - 4 - Execution Copy 2.5 REFUND OF ADJUSTMENT. If the Adjustment is a negative amount, then Ferro will, within 10 business days after the final determination of the Purchase Price, refund to Akzo Nobel China the amount of the Adjustment, together with interest thereon at the Prescribed Rate for the period from the Closing Date through and including the date on which the Adjustment is paid. 2.6 METHOD OF PAYMENT. All payments under this Purchase Agreement will be made by delivery to the payee as follows: (A) DIRECTED PAYMENTS. If a party which is entitled to a payment under this Purchase Agreement provides the other party five days' advance written designation of a bank and account number into which the payee wishes payment to be made, then the payor will make such payment by wire transfer (in immediately available funds) to the designated account of the payee. (B) OTHER PAYMENTS. In all other cases, the party obligated to make a payment under this Purchase Agreement will do so by delivering to the payee a bank cashier's check (in immediately available funds) payable to the order of the payee. ARTICLE 3 - ACTIONS BEFORE CLOSING 3.1 ACCESS TO RECORDS. From today until the Closing, Ferro will cause the Subsidiary to afford duly authorized representatives of Akzo Nobel China free and full access during normal business hours to all of the assets, properties, books, and nonprivileged records of the Subsidiary and will permit such representatives to make abstracts from, or take copies of, such books, records, or other documentation, or to obtain temporary possession of any thereof as may be reasonably required by Akzo Nobel China. During such period, Ferro will furnish to Akzo Nobel China such information concerning the Subsidiary and its assets, liabilities, or condition as Akzo Nobel China may request. Notwithstanding the foregoing, Ferro will not be obligated to disclose or make available to Akzo Nobel China any information concerning the Subsidiary that, in the opinion of Ferro's counsel, should not be disclosed to Akzo Nobel China as a matter of law, by contract or to protect a claim of privilege; provided, however, that in all cases, Ferro represents and warrants to Akzo Nobel China that such withheld information, both individually and in the aggregate, is not materially adverse to the Subsidiary. 3.2 INTERIM CONDUCT OF THE POWDER COATINGS BUSINESS. From today until the Closing, Ferro will conduct the business of the Subsidiary and the Powder Coatings Business only in the ordinary and usual course, subject to Akzo Nobel China's approval of certain transactions pursuant to Section 3.3. Without limiting the generality of the foregoing, insofar as the Subsidiary is concerned, Ferro will use their reasonable efforts to: (A) Preserve substantially intact the Subsidiary's relationships with suppliers, customers, employees, creditors, and others having business dealings with the Subsidiary; (B) Maintain in full force and effect its existing policies of insurance which materially affect the Subsidiary; - 5 - Execution Copy (C) Continue performance in the ordinary course of its obligations under contracts, commitments, or other obligations to which it or the Subsidiary is a party; and (D) Keep all the financial statements and records and other documents in connection with the Subsidiary and/or the Powder Coatings Business in a manner consistent with the historical and ordinary course of business. 3.3 AKZO NOBEL CHINA'S APPROVAL OF CERTAIN TRANSACTIONS. Except as may otherwise be required under this Purchase Agreement, from today until the Closing, Ferro will not permit the Subsidiary to do any of the following without the prior approval with written confirmation of Akzo Nobel China, which approval shall not be unreasonably withheld: (A) Purchase or dispose of any real property or interests in real property; (B) Enter into any lease for real property involving a term of more than one year or rental obligation exceeding $250,000 (or the equivalent thereof in local currency) per annum in any single case; (C) Enter into any lease for personal property involving a term of more than one year or rental obligation exceeding $100,000 (or the equivalent thereof in local currency) per annum in any single case; (D) Voluntarily permit to be incurred any Encumbrances on assets of the Subsidiary except in the ordinary course of business; (E) Except for any changes required by applicable law and except for any changes generally affecting Ferro's salaried employees, increase the rate of compensation for any of the employees of the Subsidiary or otherwise enter into or alter any employment, consulting, or managerial services agreement affecting the Subsidiary; (F) Except for pension benefit plans and insurance plans that are required to be executed under the applicable laws, and except for any changes generally affecting Ferro's salaried employees, commence, enter into, or alter any pension, retirement, profit-sharing, employee stock option or stock purchase, bonus, deferred compensation, incentive compensation, life insurance, health insurance, fringe benefit, or other employee benefit scheme, plan, or arrangement affecting employees of the Subsidiary; (G) Make any single new commitment or increase any single previous commitment for capital expenditures for the Subsidiary in an amount exceeding $375,000 (or the equivalent thereof in local currency); (H) Accelerate or delay the sale of Products except as may be necessary in the ordinary course of business; (I) Except for the resolution of any grievance, enter into, modify or terminate any labor or collective bargaining agreement relating to the Subsidiary or, through negotiation or otherwise, make any commitment or incur any liability to any labor organization relating to employees of the Subsidiary; - 6 - Execution Copy (J) Enter into any transaction or make or enter into any Contract relating to the Subsidiary which by reason of its size or otherwise is not in the ordinary course of business; (K) With respect to the Subsidiary, authorize, propose, enter into or agree to enter into any acquisition of assets for a price in excess of $375,000 (or the equivalent thereof in local currency); (L) Waive any claims or rights under any Material Contract; (M) Terminate any Material Contract or voluntarily consent to the termination of any Material Contract (including, without limitation, any lease) by any other party thereto; (N) Except as otherwise provided in this Section 3.3, enter into any contract, agreement or arrangement with respect to any of the foregoing; (O) Make any amendment to the Articles of Association or other constitutional document of the Subsidiary except for the purpose of the transactions under this Purchase Agreement; or (P) Waive any claim or right in any judicial or administrative proceedings. 3.4 NEGOTIATION OF OTHER AGREEMENTS. From today until the Closing, the parties will negotiate in good faith and enter into such other and further agreements as they may deem appropriate or necessary for the orderly transfer of the Shares from Ferro to Akzo Nobel China, including - (A) Assignment to Akzo Nobel China of the Agreement on Assignment of Related Agreements by and between Ferro Far East Limited and Ferro dated June 7, 1999; and (B) Termination of that certain Trademark License Agreement by and between Ferro and the Subsidiary dated as of May 13, 1998. (Such agreements, as well as any other agreements into which the parties enter in connection with the transactions contemplated by this Purchase Agreement which make specific reference to this Section 3.4, are collectively referred to as the "Other Agreements.") 3.5 COORDINATION OF PUBLIC ANNOUNCEMENTS. From today until the Closing, neither party will make any public announcement concerning the transactions contemplated by this Purchase Agreement without having previously consulted with and having received the consent of the other party, such consent not to be withheld unreasonably. Nothing in the preceding sentence, however, will prevent either party from making any announcement required by law, by the rules of any securities exchange, or by any listing agreement with a securities exchange to which such party is a party or by which it is bound. The parties will cooperate in the planning, preparation, and issuance of any and all public announcements concerning this Purchase Agreement and the transactions contemplated by this Purchase Agreement. - 7 - Execution Copy 3.6 GOVERNMENT APPROVALS. Immediately after the execution and delivery of this Purchase Agreement, the parties will promptly proceed with the preparation and filing of any required filings and applications necessary in order to obtain the approval or authorization of those governmental agencies or instrumentalities whose approval or authorization is necessary in order to consummate the transactions contemplated by this Purchase Agreement (the "Government Approvals"). If any of the foregoing governmental authorities require, as a condition to granting any such approval or authorization, or as a condition to not issuing a request for additional information or not commencing a second-phase investigation of the transactions contemplated by this Purchase Agreement, then the parties will cooperate in good faith to take such action as may reasonably be necessary to prevent or ameliorate any actual or perceived anti-competitive consequences of the transactions contemplated by this Purchase Agreement so as to make possible consummation of the transactions contemplated by this Purchase Agreement at the earliest practicable date; provided, however, that under no circumstances will Akzo Nobel China be required to hold separate or dispose (directly or indirectly) of any assets or business units. ARTICLE 4 - CONDITIONS 4.1 CONDITIONS TO AKZO NOBEL CHINA'S OBLIGATIONS. The obligation of Akzo Nobel China to consummate the transactions contemplated by this Purchase Agreement is subject to the satisfaction of the following conditions at the Closing: (A) The representations and warranties of Ferro contained in Section 7.1 of this Purchase Agreement shall be true, accurate and complete as of today and as of the Closing (except with respect to the effect of transactions contemplated or permitted by this Purchase Agreement); (B) The representations and warranties of Ferro contained in Section 7.2 of this Purchase Agreement shall be true, accurate and complete in all material respects as of today and as of the Closing (as if such representations and warranties had been made anew as of the Closing) except with respect to the effect of transactions contemplated or permitted by this Purchase Agreement, changes resulting from the passage of time on dated material in the Powder Coatings Disclosure Package and transactions in the ordinary course of business not in breach of Ferro's obligations under this Purchase Agreement; (C) Ferro, in all material respects, shall have performed and complied with all undertakings required by this Purchase Agreement to be performed or satisfied by Ferro before the Closing including entering into the Other Agreements; (D) Ferro shall have taken all corporate and other proceedings or actions necessary to be taken by Ferro for consummation of the transactions contemplated by this Purchase Agreement; (E) Ferro shall be prepared to deliver the documents listed in Appendix D at the Closing; (F) There shall not have been issued and in effect any injunction or similar legal order prohibiting or restraining consummation of any of the transactions contemplated in this Purchase Agreement; and - 8 - Execution Copy (G) The Government Approvals shall have been obtained. 4.2 CONDITIONS TO FERRO'S OBLIGATIONS. The obligation of Ferro to consummate the transactions contemplated by this Purchase Agreement is subject to the satisfaction of the following conditions at or before the Closing: (A) The representations and warranties of the Akzo Nobel China contained in Section 7.3 of this Purchase Agreement shall be true, accurate, and complete in all material respects as of today and as of the Closing (except with respect to the effect of the transactions contemplated or permitted by this Purchase Agreement); (B) Akzo Nobel China, in all material respects, shall have performed and complied with all undertakings required by this Purchase Agreement to be performed or satisfied by Akzo Nobel China before the Closing including entering into the Other Agreements; (C) Akzo Nobel China shall have taken all corporate and other proceedings or actions necessary to be taken by Akzo Nobel China for consummation of the transactions contemplated by this Purchase Agreement; (D) Akzo Nobel China shall be prepared to deliver the documents listed in Appendix E at the Closing; (E) If Akzo Nobel China has assigned its rights and delegated its duties under this Purchase Agreement to an Affiliate, Akzo Nobel China shall provide the Guarantee; (F) There shall not have been issued and in effect any injunction or similar legal order prohibiting or restraining consummation of any of the transactions contemplated in this Purchase Agreement; (G) The Government Approvals shall have been obtained; and (H) All of the conditions precedent to the closing contemplated in a Purchase Agreement dated today's date by and among Rohm and Haas Company and Ferro, Ferro B.V., Ferro Spain S.A., and Ferro (Great Britain) Ltd. (with respect to the sale of Ferro's powder coatings business in Europe) and in a Purchase Agreement dated today's date by and among Akzo Nobel China and Ferro, Ferro Enamel Argentina S.A. and Ferro Mexicana S.A. de C.V. (with respect to the sale of Ferro's powder coatings business in the Americas) and in a Purchase Agreement dated today's date by and between Ferro and Akzo Nobel Coatings International B.V. (with respect to the sale of Ferro's powder coatings business in Korea) shall have been duly satisfied and/or waived and the parties thereto shall be prepared to proceed with such closings simultaneously with the Closing contemplated by this Purchase Agreement. 4.3 PARTIES' BEST EFFORTS. Except with respect to the condition set forth in Section 4.2(H), from today until the Closing, the parties will cooperate and use their respective reasonable best efforts to cause the conditions set forth in this Article 4 over which they - 9 - Execution Copy may respectively have influence or control to be satisfied as soon as reasonably practicable. ARTICLE 5 - CLOSING 5.1 THE CLOSING. For purposes of this Purchase Agreement, the term "Closing" means the time at which the transactions contemplated by this Purchase Agreement will be consummated after satisfaction or waiver of the conditions set forth in Article 4 of this Purchase Agreement. 5.2 DATE, TIME, AND PLACE OF CLOSING. The Closing will occur at 10:00 a.m. (Eastern Time) on the later to occur of August 30, 2002, or a date to be mutually agreed by the parties not later than 30 days after the date on which the last of the conditions set forth in Sections 4.1 and 4.2 and comparable provisions in the purchase agreements referred to in Subsection 4.2(H) shall have been satisfied or waived (the "Closing Date"). The Closing will take place at the offices of Squire, Sanders & Dempsey, 4900 Key Tower, 127 Public Square, Cleveland, Ohio, or at such other place as the parties may agree in writing. The Closing will be deemed to have occurred as of 11:59 p.m. on the Closing Date (the "Closing Time"). 5.3 AKZO NOBEL CHINA'S OBLIGATIONS. At the Closing, Akzo Nobel China will deliver to Ferro the following: (A) The documents, certificates, and other items referred to in Appendix E; (B) The amount specified in Section 2.4(a). 5.4 FERRO'S OBLIGATIONS. At the Closing, Ferro will deliver to Akzo Nobel China the following: (A) The documents, certificates, and other items referred to in Appendix D; (B) Ownership of the Shares; and (C) Such deeds, bills of sale, and such other instruments as may be necessary or appropriate to reflect Ferro's conveyance of the Shares to Akzo Nobel China. 5.5 LOCAL FORMALITIES. If either party desires that the specific terms and conditions (including price allocation) of this Purchase Agreement applicable to a given jurisdiction be put in writing in a separate agreement or instrument, then the parties will cooperate to prepare and execute such separate agreement, but such separate agreement will (unless the parties expressly agree otherwise in a signed document that refers to this Section 5.5) in all events be interpreted consistently with and as subordinate to the terms and conditions of this Purchase Agreement. ARTICLE 6 - ACTIONS AFTER CLOSING 6.1 FURTHER CONVEYANCES. After the Closing Ferro will, without further cost or expense to Akzo Nobel China, except as otherwise provided in Section 12.3(C), execute and deliver to Akzo Nobel China (or cause the same to be executed and delivered to Akzo Nobel China), such additional instruments of conveyance, and Ferro will take such other and - 10 - Execution Copy further actions as Akzo Nobel China may reasonably request and which are ordinarily provided by a seller, more completely to sell, transfer, and assign to Akzo Nobel China and vest in Akzo Nobel China Ownership to the Shares. 6.2 ACCOUNTING REPORTS. Akzo Nobel China will cause the management of the Subsidiary to provide to Ferro such records and accounts as are prepared by Akzo Nobel China in accordance with its normal accounting procedures and such other records, accounts or reports as Ferro may reasonably request or, in the alternative to the latter, access to all such other information as may reasonably be requested by Ferro, in order to permit Ferro to complete their financial statements and reports relating to the pre-Closing activities of the Subsidiary; provided that Akzo Nobel China will be under no obligation to generate independent records or accounts for Ferro. Akzo Nobel China will also cause management of the Subsidiary to afford Ferro internal and external auditors reasonable access upon at least three days prior notice and during normal business hours to the books and records of the Subsidiary as they may need in order for Ferro to satisfy normal quarterly and year-end reporting and audit requirements. 6.3 NONCOMPETITION. In order to protect the goodwill of the Subsidiary, Ferro undertakes that for a period of five years after the Closing neither Ferro nor any of its Affiliates will, directly or indirectly, engage in, or have an ownership interest in or act as agent, advisor, or consultant of or to any third-party that is engaged in, the business of designing, developing, formulating, manufacturing, or selling thermosetting-formulated powder surface coatings for decorative or protective end-use applications of the nature currently sold by the Subsidiary (the "Noncompete Business") in Asia nor during such period will Ferro sell or license (in a stand-alone transaction not in connection with a sale of substantially all of the assets of Ferro) the use of the Ferro name or the Ferro "Check-In-A-Circle" logo to any third party for use in connection with the conduct of a Noncompete Business. Nothing in this Section 6.3, however, will be deemed to prohibit or restrict Ferro, nor any of their Affiliates or any successor or assign of any of the foregoing - (A) From continuing to conduct any business in which any of such companies (other than the Subsidiary) are currently engaged, or, in the case of any successor or assign of any of the foregoing, any business in which such successor or assign was engaged prior to succeeding to the business of such company (whether by share acquisition, asset acquisition or otherwise), and logical extensions (by product line or technology) of such businesses, including comparable businesses conducted by Ferro and/or its Affiliates in conducting similar businesses from outside Asia; (B) From acquiring or owning less than a controlling equity interest in any publicly-traded company (whether or not such company is engaged in a business that competes with the Noncompete Business); (C) From acquiring a controlling equity interest in any company or other entity that is engaged in a business that competes with the Noncompete Business if the annual sales from such entity's competing business or entity do not exceed 20% of such business' or entity's total revenues in the 12-month period immediately preceding such acquisition provided that the acquisition of such competing business was not the principal purpose of such acquisition; or - 11 - Execution Copy (D) From acquiring a controlling equity interest in any company or other entity that is engaged in a business that competes with the Noncompete Business if the annual sales from such entity's competing business or entity exceed 20% provided that (1) the acquisition of such competing business was not the principal purpose of such acquisition and (2) the acquiring company makes a good faith effort to dispose of any such competing business within one year after its acquisition. 6.4 USE OF FERRO NAME AND MARK. As soon as practicable after Closing, but in no event no later than nine (9) months after the Closing Date, Akzo Nobel China shall discontinue all use in any manner whatsoever of the Ferro name, the Ferro "Check-In-A-Circle" logo and all similar names and logos; provided, however, that during such period prior to ceasing all use, Akzo Nobel China shall be permitted to use the Ferro name and the Ferro "Check-In-A-Circle" logo solely in connection with the operation of the Powder Coatings Business and substantially in the same manner as the name and logo were used by Ferro in connection with the operation of the Powder Coatings Business immediately prior to Closing. Under no circumstances whatsoever will Akzo Nobel China use the Ferro name or the Ferro "Check-In-A-Circle" logo in connection with the conduct of any other business or operation of Akzo Nobel China or any of its Affiliates, including any other powder coatings business presently conducted by Akzo Nobel China or any of its Affiliates. Akzo Nobel China shall not take any action or fail to take any action that could be reasonably expected to have an adverse effect on the Ferro name or the Ferro "Check-In-A-Circle" logo. 6.5 ACCESS TO FORMER BUSINESS RECORDS. For a period of 10 years after the Closing, or until any audits of Ferro's Tax returns relating to periods before or including the Closing are completed, whichever occurs later, Akzo Nobel China will retain all business records associated with or related to the Subsidiary when acquired. During such period, Akzo Nobel China upon at least three days notice, and during normal business hours will afford duly authorized representatives of Ferro free and full access to all of such records and will permit such representatives, at Ferro's expense, to make abstracts from, or to take copies of any of such records created, produced, or obtained before the Closing, as may be reasonably requested by Ferro. During such period, Akzo Nobel China will cooperate with Ferro, and cause employees of the Subsidiary to cooperate with Ferro, in furnishing information, evidence, testimony, and other assistance in connection with any action, proceeding, or investigation relating to the Subsidiary before the Closing and the calculation of the "earn out" referred to in Section 8.3(B)(7), and Ferro will provide reimbursement for all out-of-pocket expenses incurred by Akzo Nobel China or such employees in connection with providing the assistance contemplated in this Section 6.5. 6.6 ACCESS TO FORMER EMPLOYEES. After the Closing, each party will make available to the other party employees of Akzo Nobel China, Ferro, and the Subsidiary whom the other party may reasonably need in order to defend or prosecute any legal or administrative action to which Ferro or Akzo Nobel China are a party and which relates to the Subsidiary before the Closing. The requesting party will pay or reimburse the other party for all reasonable expenses which may be incurred by such employees in connection therewith, including all travel, lodging, and meal expenses, and will further compensate the other for the number of whole business days spent by each such employee in providing such services at the rate of 130% of the average daily gross pay per business day (excluding the value of employee benefits) of such employee during the calendar month in which such services are performed. - 12 - Execution Copy 6.7 TERMINATION OF INSURANCE COVERAGE. At or after the Closing, Ferro and its Affiliates will have the right to terminate any and all insurance coverage affecting the Subsidiary with the effect that Akzo Nobel China will have no right of recovery with respect to any claim under policies or for refunds of premiums of insurance that previously covered the Subsidiary. Akzo Nobel China will, however, continue to be entitled to recoveries (net of deductibles and out-of-pocket claims handling costs) after the Closing under occurrence-based insurance policies to the extent the recovery relates to a claim made prior to Closing. Ferro will be responsible for the administration of claims for such recoveries. 6.8 TRADE SECRETS. From and after the Closing, Ferro will not, and will use its reasonable best efforts to cause its employees not to, disclose to any third-party any trade secrets of the Subsidiary or any other information regarding the Powder Coatings Business of a type held in confidence under the practices and policies of the Subsidiary or the Powder Coatings Business immediately prior to Closing. Such information shall not include information that (A) is or becomes generally available to the public other than as a result of a disclosure by Ferro or any of its employees or (B) became available to Ferro or any of its employees on a non-confidential basis from a source other than Ferro or any employee of Ferro that was an employee of the Subsidiary or relating to the Powder Coatings Business at any time prior to the Closing. The provisions of this Section 6.8 shall not apply to any disclosure of information to the extent (1) Akzo Nobel China or any Affiliate of Akzo Nobel China has given its prior written consent to such disclosure, or (2) such disclosure is required by law or by any applicable ruling, decree or order of a governmental agency or judicial or regulatory authority; provided, however, that in such an event, Ferro will give Akzo Nobel China notice of such requirement to disclose in order to provide Akzo Nobel China with the opportunity to challenge the disclosure, the scope of the disclosure and/or obtain a protective order regarding the disclosure. ARTICLE 7 - REPRESENTATIONS AND WARRANTIES 7.1 FERRO'S GENERAL REPRESENTATIONS AND WARRANTIES. Ferro represents and warrants to Akzo Nobel China the following: (A) ORGANIZATION AND EXISTENCE. Ferro is a corporation duly organized, validly existing, and in good standing under the laws of the State of Ohio; and (B) POWER AND AUTHORITY. Ferro has full power and authority under its constitutive documents and the laws of the jurisdictions in which they respectively are organized to execute, deliver, and perform this Purchase Agreement. (C) AUTHORIZATION. The execution, delivery, and performance of this Purchase Agreement by Ferro has been duly authorized by all requisite corporate action on the part of Ferro. (D) BINDING EFFECT. This Purchase Agreement is a valid, binding, and enforceable legal obligation of Ferro, except as enforceability may be limited by principles of equity and by bankruptcy and insolvency laws generally. (E) NO DEFAULT. Neither the execution and delivery of this Purchase Agreement nor Ferro's full performance of its obligations under this Purchase Agreement will violate or breach, or otherwise constitute or give rise to (with the giving of notice - 13 - Execution Copy or passage of time or both) a Default under, the terms or provisions of Ferro's and the Subsidiary's respective constitutive documents or of any material contract, commitment, or other obligation to which any of Ferro is a party or by which they are bound, except for any such Default which would not, either individually or in the aggregate, have a material adverse effect on the ability of Ferro to consummate the transaction contemplated hereby. (F) FINDERS. With the sole exception of Salomon Smith Barney Inc., Ferro has not engaged and are not directly or indirectly obligated to any third-party acting as a broker, finder, or similar capacity in connection with the transactions contemplated by this Purchase Agreement. (G) CONSENTS AND APPROVALS. No consent, approval, license, permit, order or authorization of, or notice to, or registration, declaration or filing with, any Governmental Authority or any other third-party is required to be obtained or made by or with respect to Ferro in connection with the execution, delivery or performance of this Purchase Agreement by Ferro or the consummation of the transactions contemplated hereby by Ferro or in order to preclude any termination, suspension, acceleration, modification or impairment of any of the Contracts or any legal or contractual right, privilege, license or franchise other than (i) the Government Approvals and (ii) any such consents, approvals, licenses, permits, orders or authorizations, notices, registrations, declarations or filings the failure of which to obtain or be made, in each case, would not have a material adverse effect on the Powder Coatings Business Condition. (H) EXISTENCE AND CAPITALIZATION OF THE SUBSIDIARY. Except as otherwise disclosed in Part A of the Disclosure Package, the Subsidiary is a wholly foreign owned enterprise duly organized and existing under the laws of the Peoples Republic of China with registered capital of $9,000,000. (I) OWNERSHIP OF THE SHARES. Ferro Owns all of the Shares. (J) NO KNOWLEDGE OF AKZO NOBEL CHINA'S DEFAULT. Ferro has no knowledge that any of Akzo Nobel China's representations and warranties are untrue, incorrect, or incomplete or that Akzo Nobel China is in Default under any term or provision of this Purchase Agreement. 7.2 FERRO'S REPRESENTATIONS AND WARRANTIES CONCERNING THE DISCLOSURE PACKAGE. Simultaneously with the execution and delivery of this Purchase Agreement, Ferro is delivering to Akzo Nobel China a bound volume of disclosure materials (the "Disclosure Package") entitled the "Powder Coatings Disclosure Package" and consisting of 18 Parts, consecutively lettered A-R, inclusive. Ferro represents and warrants to Akzo Nobel China that the Disclosure Package contains the information described in Appendix F. In addition, Ferro represents and warrants to Akzo Nobel China the following with respect to the Disclosure Package: (A) ORGANIZATION. Except as otherwise disclosed on Part A of the Disclosure Package, Ferro neither owns nor holds any other equity interest, directly or indirectly, in any company, corporation, partnership, joint venture, business, firm, or other entity which, to Ferro's knowledge, engages in any business in competition with the Powder Coatings Business in Asia. - 14 - Execution Copy (B) FINANCIAL STATEMENTS. Except as otherwise disclosed on Part B, the financial statements contained in Subparts B-1 to B-6 are true and correct copies of financial reports derived from management accounts created and maintained by Ferro in the ordinary course in accordance with its standard practice. To Ferro's knowledge, such financial reports present fairly, in all material respects, the financial position of the Subsidiary as of the dates thereof. (C) INVENTORIES. Except as otherwise disclosed on Part C, (1) the Subsidiary Owns all Inventories described on Part C; (2) such Inventories have been valued on the books of the Subsidiary in accordance with the Accounting Principles and (3) all Inventories are saleable in the ordinary course of business. (D) TRADE ACCOUNTS RECEIVABLE. Except as otherwise disclosed on Part D, (1) the Subsidiary Owns all of the Trade Accounts Receivable listed or described on Part D; (2) none of such Trade Accounts Receivable is owing to Ferro or any of their Affiliates; (3) all of the Trade Accounts Receivable are genuine and were entered into in the ordinary course conduct of the Powder Coatings Business; and (4) to the best of Ferro's knowledge, the Subsidiary has complied with all laws and customs necessary to maintain the collectibility of such Trade Accounts Receivable. (E) TRADE ACCOUNTS PAYABLE. Except as otherwise disclosed on Part E, (1) all of the liabilities reflected on the books of the Subsidiary arose out of the ordinary course conduct of the Powder Coatings Business; and (2) no such liabilities are owing to Ferro or any of their Affiliates. (F) REAL PROPERTY. Except as otherwise disclosed on Part F of the Disclosure Package, (1) the Subsidiary Owns all of the land use rights to real properties listed as "owned" on Subpart F-1; (2) the leases under which the real property listed as "leased" on Subpart F-2 are valid and subsisting; (3) the Subsidiary is not in Default in any material respect under any lease of any such real properties; and (4) the improvements to the real property listed on Part F are, taking into account their age and prior use, in good condition and repair, ordinary wear and tear excepted. (G) TANGIBLE PERSONAL PROPERTY. Except as otherwise disclosed on Part G of the Disclosure Package, (1) the Subsidiary Owns all tangible personal property listed as "owned" on Subparts G-1 to G-3; (2) the leases under which the tangible personal property listed as "leased" on Subparts G-4 to G-5 are leased are valid and subsisting; (3) the Subsidiary is not in Default in any material respect under any lease listed on Part G in any manner likely to be materially adverse to the Powder Coatings Business Condition; and (4) the items of tangible personal property listed on Part G are, taking into account their age and prior use, in good condition and repair, ordinary wear and tear excepted. (H) INTELLECTUAL PROPERTY. Except as otherwise disclosed on Part H of the Disclosure Package, (1) the Subsidiary Owns all of the intellectual property listed as "owned" on Subparts H-1 to H-4; (2) the license, technology, or similar agreements to employ the intellectual property listed as "licensed by" on Subpart H-5 are valid and subsisting agreements; (3) except with respect to the items - 15 - Execution Copy listed in such Subpart H-5, to Ferro's knowledge, the Subsidiary is not obligated to pay any amount, whether as a royalty, license, fee, or other payment to any person in order to use any of the intellectual property used by the Subsidiary; (4) the license, technology, or similar agreements to employ the intellectual property listed as "licensed to" on Subpart H-6 are valid and subsisting agreements; (5) except with respect to the items listed in such Subpart H-7, the Subsidiary has not granted any rights or interest to any person in connection with any of the intellectual property described in Part H; and (6) Ferro has no knowledge of any infringement by the Subsidiary in its conduct of the Powder Coatings Business of the intellectual property rights of any person in any manner likely to be materially adverse to the Powder Coatings Business Condition. (I) INDEBTEDNESS. Except as otherwise disclosed on Part I of the Disclosure Package, the Subsidiary is not in Default in any material respect under any note, bond, debenture, mortgage, indenture, security agreement, guaranty, or other instrument of indebtedness for borrowed money. (J) LITIGATION. Except as otherwise disclosed on Part J of the Disclosure Package, to Ferro's knowledge, (1) there exists no litigation, proceedings or actions affecting the Powder Coatings Business Condition or claims or investigations that would have a material adverse effect on the Powder Coatings Business Condition, in either case pending or threatened against the Subsidiary; and (2) the Subsidiary is not subject to any writ, injunction, order, or decree of any court, agency, or other governmental authority affecting the Powder Coatings Business Condition. (K) CONTRACTS. Except as otherwise disclosed on Part K of the Disclosure Package, (1) each of the contracts, commitments, and other obligations listed on Part K is a valid and binding obligation of the Subsidiary and, to Ferro's knowledge, the other party or parties thereto; (2) neither the Subsidiary nor, to Ferro's knowledge, any other party thereto has terminated, cancelled, or substantially modified any contract, commitment, or other obligation identified in Part K; and (3) neither the Powder Coatings Business nor, to Ferro's knowledge, any other party thereto is in Default in any material respect under any contract, commitment, or other obligation identified in Part K. (L) EMPLOYEES AND EMPLOYEE BENEFITS. Except as otherwise disclosed on Part L of the Disclosure Package or Appendix F of this Purchase Agreement, (1) the Subsidiary has not entered into any employment contract; (2) the Subsidiary does not have any pension, retirement, profit-sharing, deferred compensation, employee share option or share purchase, bonus, or incentive compensation plans, schemes, or arrangements; (3) the Subsidiary does not have any employee health, dental, vision, life insurance, long-term or short-term disability, vacation, tuition reimbursement, redundancy, severance or other social plans, schemes, or arrangements; and (4) the Subsidiary has substantially performed all material obligations owing to their respective employees. (M) COMPLIANCE WITH ENVIRONMENTAL LAWS. Except as otherwise disclosed on Part M of the Disclosure Package, to Ferro's knowledge, (1) the Subsidiary is in compliance with all Environmental Laws applicable to the Subsidiary relating to emissions, discharges, and releases of Hazardous Materials into land, soil, - 16 - Execution Copy ambient air, water, and the atmosphere the noncompliance with which is likely to have a materially adverse effect on the Powder Coatings Business Condition; and (2) the Subsidiary is in compliance with all Environmental Laws applicable to the generation, treatment, storage, transportation, and disposal of Hazardous Materials the noncompliance with which is likely to have a materially adverse effect on the Powder Coatings Business Condition. (N) COMPLIANCE WITH HEALTH AND SAFETY LAWS. Except as otherwise disclosed on Part N of the Disclosure Package, to Ferro's knowledge, the Subsidiary is in compliance with all Health and Safety Laws applicable to the Subsidiary the noncompliance with which is likely to have a materially adverse effect on the Powder Coatings Business Condition. (O) COMPLIANCE WITH OTHER LAWS. Except as otherwise disclosed on Part O of the Disclosure Package, to Ferro's knowledge the Subsidiary is in compliance with all statutes, ordinances, regulations, and other governmental requirements (other than Environmental Laws and Health and Safety Laws) the noncompliance with which is likely to have a materially adverse effect on the Powder Coatings Business Condition. (P) TAXES. Except as otherwise disclosed in Part P of the Disclosure Package, (1) all Tax returns required to be filed by the Subsidiary before Closing have been or will be filed on or before the Closing; (2) all Taxes due and payable before Closing on such returns have been or will be paid when required by law; (3) any Taxes relating to the Subsidiary with respect to any transaction or any period beginning on or before the Closing Date required to have been or to be paid prior to Closing have been or will be paid; and (4) the assets of the Subsidiary are not encumbered by any Encumbrance arising out of unpaid Taxes. (Q) INSURANCE. Except as otherwise disclosed in Part Q of the Disclosure Package, the Subsidiary has insured or self-insured the assets and properties of the Subsidiary against those insurable risks and to an extent the Subsidiary deems reasonably necessary for its continued conduct of the Powder Coatings Business and for protection against injury, damage, or loss. (R) NO MATERIAL EVENTS. Except as otherwise disclosed in Part R of the Disclosure Package, (1) the business of the Subsidiary and the Powder Coatings Business has been conducted only in the ordinary and usual course since March 1, 2002, and (2) no Material Events have occurred since March 1, 2002. 7.3 AKZO NOBEL CHINA'S REPRESENTATIONS AND WARRANTIES. Akzo Nobel China represents and warrants to Ferro the following: (A) ORGANIZATION AND EXISTENCE. Akzo Nobel China is a Dutch private company with limited liability (besloten vennootschap) corporation duly organized, validly existing and in good standing under the laws of The Netherlands. (B) POWER AND AUTHORITY. Akzo Nobel China has full corporate power and authority under its constitutive documents and under the laws of The Netherlands to execute, deliver, and perform this Purchase Agreement. - 17 - Execution Copy (C) AUTHORIZATION. The execution, delivery, and performance of this Purchase Agreement have been duly authorized by all requisite corporate actions on the part of Akzo Nobel China. (D) BINDING EFFECT. This Purchase Agreement is a valid, binding, and enforceable legal obligation of Akzo Nobel China except as enforceability may be limited by principles of equity and by bankruptcy and insolvency laws generally. (E) NO DEFAULT. Neither the execution and delivery of this Purchase Agreement nor Akzo Nobel China's full performance of its obligations under this Purchase Agreement will violate or breach, or otherwise constitute or give rise to (with the giving of notice or passage of time or both) a Default under, the terms or provisions of Akzo Nobel China's constitutive documents or of any material contract, commitment, or other obligation to which Akzo Nobel China is a party or by which it is bound except for any such Default which would not, either individually or in the aggregate, have a material adverse effect on the ability of Akzo Nobel China to consummate the transaction contemplated hereby. (F) FINDERS. Akzo Nobel China has not engaged and is not directly or indirectly obligated to any third-party acting as a broker, finder, or similar capacity in connection with the transactions contemplated by this Purchase Agreement other than Einhorn Associates. (G) NO KNOWLEDGE OF FERRO'S DEFAULT. Akzo Nobel China has no knowledge that any of the representations and warranties of Ferro contained in this Purchase Agreement are untrue, incorrect, or incomplete or that Ferro is in Default of any term or provision under this Purchase Agreement. (H) CONSENTS AND APPROVALS. Except for the Government Approvals, no consent, approval, license, permit, order or authorization of, or notice to, or registration, declaration or filing with, any Governmental Authority or any other third-party is required to be obtained or made by or with respect to Akzo Nobel China in connection with the execution, delivery or performance of this Purchase Agreement by Akzo Nobel China or the consummation of the transactions contemplated hereby by Akzo Nobel China or in order to preclude any termination, suspension, acceleration, modification or impairment of any of the Contracts or any legal or contractual right, privilege, license or franchise, the failure of which to obtain or be made, in each case, would not have a material adverse effect on the Closing of the contemplated transaction in this Purchase Agreement. 7.4 MEANING OF "FERRO'S KNOWLEDGE". Where any statement contained in this Article 7 is said to be to the "Ferro' knowledge" (or words of similar import) such expression means that, after having conducted a due diligence review and in reliance on due diligence certifications, both as described in Appendix H, senior Ferro management believes the statement to be true, accurate and complete in all material respects, but that Ferro makes no further representation or warranty concerning facts or circumstances that might have come to Ferro's attention if it conducted a broader or more thorough investigation of the Subsidiary. For purposes of this Section 7.4, the term "senior Ferro management" means those Ferro executives who report directly to Ferro's Chairman and Chief Executive Officer and the Director of Ferro's Industrial Coatings MBU, the - 18 - Execution Copy Group Controller of Ferro's Industrial Coatings MBU, the Regional Controller - Asia/Pacific and the Subsidiary's General Manager and Finance Director. 7.5 DISCLAIMER. The warranties stated in this Article 7 are the only representations and warranties either party has given the other party in connection with the transactions contemplated by this Purchase Agreement. Except as set forth in this Article 7, neither party has made, and each party expressly disclaims, any other or further representation or warranty, either express or implied, concerning the subject matter of this Purchase Agreement. All other warranties either party or anyone purporting to represent either party gave or might have given, or which might be provided or implied by law or commercial practice, are hereby excluded. ARTICLE 8 - SPECIFIC OBLIGATIONS 8.1 EMPLOYEE OBLIGATIONS. The parties' respective obligations with respect to Employees will be as follows: (A) SEVERANCE. If Akzo Nobel China terminates the employment of any Employee within one year after the Closing in circumstances in which such Employee would have been entitled to severance pay and/or benefits if he or she had terminated employment with a Subsidiary immediately before the Closing, then Akzo Nobel China will assure that such terminated Employee's severance pay and benefits will be substantially equivalent to the severance pay and benefits the employee would have received under the Subsidiary's severance policy as of the Closing. (B) NON-INTERFERENCE. Ferro will neither employ nor offer employment to any employee of the Subsidiary who was an employee of the Subsidiary at Closing during the 24-month period following the Closing without the prior written consent of Akzo Nobel China. During such period, Akzo Nobel China will not, without the prior written consent of Ferro, employ or offer employment to any former employee of the Subsidiary who retired from or voluntarily terminated employment with Ferro during the six-month period preceding the Closing. Nothing in this Section 8.1(B), however, will be deemed to prohibit either party from hiring an Employee who responds to a general public advertisement of employment or who is identified as a consequence of a non-directed executive search or who is involuntarily terminated. Ferro's duties and obligations arising out of the foregoing provisions of this Section 8.1 are the "Ferro' Employee Obligations." Akzo Nobel China's duties and obligations arising out of the foregoing provisions of this Section 8.1 are the "Akzo Nobel China's Employee Obligations." 8.2 ENVIRONMENTAL OBLIGATIONS. The Parties' respective obligations with respect to Environmental Matters will be as follows: (A) IDENTIFIED ENVIRONMENTAL MATTERS. Ferro will be solely responsible, and will indemnify Akzo Nobel China, for any action, condition, or event giving rise to an Environmental Loss with respect to the Environmental Matters identified on Appendix I (the "Identified Environmental Matters"). - 19 - Execution Copy (B) PRE-CLOSING ENVIRONMENTAL MATTERS. Ferro will be solely responsible, and will indemnify Akzo Nobel China, for any action, condition, or event giving rise to an Environmental Loss arising out of the ownership or operation of the Powders Coatings Business to the extent caused by actions or omissions or conditions that occurred or arose on or before the Closing Date. (C) POST-CLOSING ENVIRONMENTAL MATTERS. Akzo Nobel China will be solely responsible, and will indemnify Ferro, for any action, condition, or event giving rise to an Environmental Loss arising out of the ownership of the Shares to the extent caused by actions or omissions by Akzo Nobel China or conditions that occur or arise as the result of conduct by the Subsidiary after the Closing Date. (D) MIXED POST-CLOSING ENVIRONMENTAL MATTERS. If any action, condition, or event giving rise to an Environmental Loss results from both (i) actions or omissions by Akzo Nobel China or conditions that occur or arise as the result of conduct by Akzo Nobel China after the Closing, and (ii) actions or omissions by Ferro or conditions that occur or arise as the result of conduct by Ferro after the Closing and/or conditions that are caused by actions or omissions or conditions that occurred or arose before the Closing, then the liability for such mixed Environmental Loss ("Mixed Loss") will be apportioned between Akzo Nobel China and Ferro as follows: (1) FERRO WILL BE RESPONSIBLE FOR ANY MIXED LOSS IN AN AMOUNT EQUAL TO THE TOTAL MIXED LOSS TIMES THE APPROPRIATE ONE OF THE FOLLOWING TWO FRACTIONS - (a) If the Mixed Loss resulting from the Environmental Matter is directly proportional to the amount of Hazardous Materials that were used, emitted, discharged or released and the amount of Hazardous Materials is known or estimable based on credible, objective evidence, then a fraction (A) the numerator of which is the amount of Hazardous Materials contributed by Ferro to the Environmental Matter before the Closing and (B) the denominator of which is the total amount of Hazardous Materials contributed both before and after the Closing; or (b) If either the Mixed Loss resulting from the Environmental Matter is not directly proportional to the amount of Hazardous Materials that were used, emitted, discharged or released or the amount of Hazardous Materials is not known or not estimable based on credible, objective evidence, then a fraction (A) the numerator of which is 12 months and (B) the denominator of which is 12 months plus the number of months from the Closing Date until the date Akzo Nobel China delivers a Notice described in Section 8.2(F)(2) below. (2) AKZO NOBEL CHINA WILL BE SOLELY RESPONSIBLE FOR ANY MIXED LOSS IN AN AMOUNT EQUAL TO THE TOTAL MIXED LOSS MINUS THE PROPORTION ALLOCABLE TO FERRO AS CALCULATED IN SECTION 8.2(D)(1). (E) AKZO NOBEL CHINA'S PHASE 2 STUDY. Immediately after the execution and delivery of this Purchase Agreement, Akzo Nobel China will conduct a Phase 2 - 20 - Execution Copy environmental study to determine whether remedial action is legally required under Environmental Laws (which, for purposes of this Section 8.2(E) only, shall include any applicable local regulations concerning permissible noise levels and spill containment) with respect to conditions existing at the Subsidiary's manufacturing site as of the Closing. (1) If, as a consequence of such study, Akzo Nobel China determines in good faith that remedial action is legally required under Environmental Laws with respect to such Environmental Matter and may be the responsibility of Ferro pursuant to this Section 8.2, then Akzo Nobel China will give Ferro notice without undue delay of the facts and circumstances that caused Akzo Nobel China to conclude that remedial action is legally required and may be the responsibility of Ferro. (2) After giving Ferro such notice, Akzo Nobel China will in good faith design, develop, and deliver to Ferro a plan or program (a "Remediation Plan") for remediating the Environmental Matter. Akzo Nobel China will assure such plan or program corrects or ameliorates any existing violation of Environmental Laws in the most economical manner reasonably possible, including the use of institutional controls and deed restrictions limiting future use of the Subsidiary's real property for industrial purposes so long as such institutional controls and deed restrictions allow Akzo Nobel China to conduct the Powder Coatings Business as it was conducted at the time of the Closing. (A Remediation Plan that satisfies the requirements of the preceding sentence is referred to below as an "Economic Remediation Plan".) (3) Ferro will promptly review Akzo Nobel China's Remediation Plan and will advise Akzo Nobel China if and in what respects (if any) Ferro do not believe the Remediation Plan qualifies as an Economic Remediation Plan. (4) If Ferro and Akzo Nobel China agree that Akzo Nobel China's Remediation Plan or an agreed modified Remediation Plan constitutes an Economic Remediation Plan, then Akzo Nobel China will obtain any necessary government approvals and proceed with implementing such Remediation Plan. (5) If Ferro and Akzo Nobel China do not agree on a Remediation Plan that both believe is an Economic Remediation Plan, then Akzo Nobel China will proceed with implementing Akzo Nobel China's Remediation Plan and either party will have the right to initiate the dispute resolution process set forth in Article 10 to resolve the dispute over whether Akzo Nobel China's Remediation Plan is an Economic Remediation Plan, in which case the dispute will be finally resolved as provided in Article 10. (F) RESPONSIBILITIES WITH REGARD TO ECONOMIC REMEDIATION PLANS. Ferro will be solely responsible for the Actual Amount of any Economic Remediation Plan. - 21 - Execution Copy (G) LIMITATIONS ON FERRO'S OBLIGATIONS. (1) In no event will Ferro have any responsibility for any Environmental Matter for which Akzo Nobel China has not given Ferro notice in accordance with Section 8.2(E)(2) above on or before 5:00 PM (Eastern Time) on December 31, 2007. (2) In no event will Ferro have any responsibility for any Environmental Losses that relate solely to actions or practices that Akzo Nobel China carried out after the Closing and that Ferro did not carry out before the Closing. (H) RELEASE OF CLAIMS. Except as expressly provided in this Section 8.2, Ferro and Akzo Nobel China (and their respective parent and subsidiary corporations) hereby agree to release each other from any and all claims of any kind under applicable statutes arising out of any Environmental Matters relating to the Subsidiary. Ferro's duties and obligations arising out of the foregoing provisions of this Section 8.2 are the "Ferro's Environmental Obligations." Akzo Nobel China duties and obligations arising out of the foregoing provisions of this Section 8.2 are the "Akzo Nobel China's Environmental Obligations." 8.3 OTHER OBLIGATIONS. The parties respective obligations with respect to other liabilities and obligations of the Subsidiary will be as follows: (A) AKZO NOBEL CHINA'S RESPONSIBILITIES. As between the parties, Akzo Nobel China will be solely responsible for the following: (1) All Trade Accounts Payable and Other Current Liabilities; (2) All Financial Debt; (3) All liabilities and obligations that arise after the Closing under the Contracts, Leases, Licenses, and Permits; (4) All liabilities and obligations arising out of, relating to, or resulting from any claims that Products manufactured and sold by the Subsidiary following the Closing are or were defective or failed to meet warranted specifications other than those retained by Ferro pursuant to Section 8.3(B); (5) Any and all liabilities, duties and obligations of, and claims against (including any claim or action, whether founded upon negligence, breach of warranty, strict liability in tort and/or other similar legal theory, seeking compensation or recovery for injury to third-parties or damage to property alleged to have been caused by a Product manufactured and sold by the Subsidiary after the Closing), or relating to, or incurred by, the Subsidiary, or the operation of the Powder Coatings Business or the ownership, possession or use of any of the assets of the Subsidiary, after the Closing; and - 22 - Execution Copy (6) Costs and expenses for which Akzo Nobel China is responsible under Section 12.3. (B) FERRO'S RESPONSIBILITIES. As between the parties, Ferro will be solely responsible for the following: (1) All liabilities and obligations that have been fully discharged or satisfied by the Subsidiary before the Closing in transactions in the ordinary course of business and not in breach of this Purchase Agreement; (2) All liabilities, undertakings, and obligations incurred by Ferro in connection with the conduct of businesses other than the Powder Coatings Business, including liabilities, undertakings, and obligations incurred by Ferro and/or its Affiliates in conducting similar businesses from outside China; (3) All liabilities and obligations in excess of $1,000 in any single case or in excess of $10,000 in the aggregate arising out of, relating to, or resulting from any claims that Products manufactured and sold by the Subsidiary before the Closing are or were defective or failed to meet warranted specifications if and to the extent - (a) Such claims are made in good faith by a customer unrelated to Akzo Nobel China without solicitation or encouragement by or collusion with Akzo Nobel China, (b) Akzo Nobel China notifies Ferro of such claims within 18 months from the date of the Closing Date, and (c) Akzo Nobel China takes no action to admit, compromise or settle such claims; if Akzo Nobel China elects to admit, compromise or settle any such claim, Ferro shall have no further obligation hereunder with respect to such claim. In the event Ferro desires to compromise or settle, or shall become obligated for, any such claim for which Ferro is liable under this Section 8.3(C), Akzo Nobel China shall sell to the Ferro replacement Products at Akzo Nobel China's raw material and actual manufacturing costs; (4) Costs and expenses for which Ferro is responsible under Section 12.3. (5) All liabilities and obligations for the payment of Taxes accrued by the Subsidiary with respect to periods or events occurring before the Closing; (6) Any and all liabilities, duties and obligations of, and claims against (including any claim or action, whether founded upon negligence, breach of warranty, strict liability in tort and/or other similar legal theory, seeking compensation or recovery for injury to third-parties or damage to property alleged to have been caused by a Product manufactured and sold by the - 23 - Execution Copy Subsidiary before the Closing, or relating to, or incurred by, the Subsidiary, or to the operation of the Powder Coatings Business or the ownership, possession or use of any assets of the Subsidiary, on or prior to the Closing, in each case whether accrued, unaccrued, matured, unmatured, absolute, contingent, known or unknown, asserted or unasserted, and whether now existing or arising at any time prior to, at, or after the Closing; (7) Any obligation to the former owner of the Subsidiary that may come due and payable as a consequence of the so-called "earn out" provision in the agreement pursuant to which Ferro purchased the Subsidiary. Ferro's duties and obligations arising out of the foregoing provisions of this Section 8.3 are the "Ferro's Other Obligations." Akzo Nobel China duties and obligations arising out of the foregoing provisions of this Section 8.3 are the "Akzo Nobel China's Other Obligations." 8.4 AKZO NOBEL CHINA'S SOLE REMEDY. Akzo Nobel China acknowledges that Akzo Nobel China's right of indemnity under Section 9.2(B) for nonperformance of Ferro's Employee Obligations, Ferro's Environmental Obligations and Ferro's Other Obligations is Akzo Nobel China's sole and exclusive remedy with respect thereto and Akzo Nobel China hereby waives any other or further rights of recovery Akzo Nobel China might otherwise have against Ferro with respect to such matters on grounds of misrepresentation or breach of warranty, breach of covenant, or otherwise. Akzo Nobel China also hereby releases and discharges Ferro from any other claims that Akzo Nobel China may now or hereafter have against Ferro under any Environmental Law. 8.5 COLLECTION OF TRADE ACCOUNTS RECEIVABLE. With respect to the Trade Accounts Receivable listed or described on Part D of the Disclosure Package (the "Collection Accounts"): (A) Between Closing and the first anniversary of the Closing, (1) the Subsidiary will serve as Ferro's agent for collection of the Collection Accounts, (2) Akzo Nobel China will use, and will cause the Subsidiary to use, their good faith, reasonable efforts to collect the Collection Accounts in full as promptly as possible, (3) payments received by the Subsidiary shall, for purposes of calculating the payment required in Section 8.5(C), be applied to the Collection Accounts (whether or not identified as being a payment on or of a Collection Account) as payments are received form each obligor under the Collection Accounts until such time as such obligor's duty to pay Collection Accounts has been fully discharged (subject only to any bona fide customer disputes as to quality or delivery of Products sold by the Subsidiary before the Closing), and (4) Akzo Nobel China will cause the Subsidiary not to take any action to settle any of the Collection Accounts for less than their face values or otherwise compromise or impair the full collectability of the Collection Accounts without Ferro's prior written consent. (B) Between the Closing and the first anniversary of the Closing, a Collection Accounts Committee, consisting of an equal number of members appointed by both Ferro and Akzo Nobel China, will meet no less than once a month to review the Collection Accounts. Each of the members of the Collection Accounts Committee shall have equal right to participate in the meetings and to receive - 24 - Execution Copy copies of all committee meeting minutes and all correspondence relating to the Collection Accounts. (C) Promptly after the first anniversary of the Closing, Akzo Nobel China will deliver to Ferro a detailed statement of all Collection Accounts outstanding as of the first anniversary of Closing. Subject to Section 8.5(A), no later than 14 days after delivery of such statement, Ferro will pay to Akzo Nobel China an amount equal to 90% of the difference between (1) the unpaid portion of those Collection Accounts that have not been paid in full, if any, on or before the first anniversary of the Closing less (2) the amount of the reserve on the books of the Subsidiary for bad debt as of the Closing. Together with such payment, Akzo Nobel China will cause the Subsidiary to take such steps as are necessary or appropriate to transfer to Ferro (or its designee) the corresponding Collection Accounts. ARTICLE 9 - INDEMNIFICATION 9.1 INDEMNIFICATION OF FERRO. Akzo Nobel China, subject to the limitations set forth in this Article 9, will indemnify and (in the case of third party claims) defend Ferro, and hold Ferro harmless, from and against the Actual Amount of any and all liabilities, damages, claims, costs, and expenses (including reasonable attorneys' fees) arising out of or resulting from -- (A) Any misrepresentation or breach of warranty by Akzo Nobel China under Section 7.3; (B) Nonperformance by Akzo Nobel China of any obligations to be performed by or on the part of Akzo Nobel China under this Purchase Agreement, including Akzo Nobel China's obligations with respect to the Assumed Liabilities and Akzo Nobel China's obligations under Article 8; or (C) Akzo Nobel China's use of the Ferro name or the Ferro "Check-In-A-Circle" logo in any manner whatsoever (other than instances where there is a claim of infringement by a third-party involving the name or the logo). 9.2 INDEMNIFICATION OF AKZO NOBEL CHINA. Subject to the limitations set forth in this Article 9, Ferro will indemnify and (in the case of third party claims) defend Akzo Nobel China, and hold Akzo Nobel China harmless, from and against the Actual Amount of any and all liabilities, damages, claims, costs, and expenses (including reasonable attorneys' fees) arising out of or resulting from -- (A) Any misrepresentation or breach of warranty by Ferro under Sections 7.1 or 7.2; (B) Nonperformance by Ferro of any obligation to be performed by or on the part of Ferro under this Purchase Agreement, including Ferro's obligations with respect to Ferro's obligations under Article 8; (C) Any liability resulting from non-compliance with any so called "bulk sales" law or similar law requiring creditor notice in the jurisdiction of China. 9.3 CLAIMS. If either party desires to make a claim against the other under Section 9.1 or 9.2 which does not involve a claim by any third-party, then such party shall make such - 25 - Execution Copy claim by delivering written notice to the other within a reasonable period of time. If either Akzo Nobel China or Ferro (the "Claimant") desires to make a claim against the other (the "Indemnitor") under Section 9.1 or 9.2 which involves a claim by a third-party, then such claim will be made in the following manner and be subject to the following terms and conditions: (A) NOTICE. The Claimant will give notice to the Indemnitor within a reasonable period of time of any demand, claim, or threat of litigation or the actual institution of any action, suit, or proceeding (collectively, a "Claim") at any time served on or instituted against the Claimant with respect to which the Claimant believes it would have a right of indemnification under Section 9.1 or 9.2. In providing such notice, the Claimant shall only state the existence of such Claim and shall not admit or deny the validity of the facts or circumstances out of which such Claim arose. Solely for purposes of determining whether the Claimant is entitled to indemnification under Section 9.1 or 9.2, the alleged facts or circumstances on which such Claim is based shall be treated as if they were true pending final resolution of the facts and circumstances out of which such Claim arose. (B) RESPONSIBILITY FOR DEFENSE. Within 30 days after receipt of any such notice, but not less than five working days before the time the Claimant is required to respond to a Claim, the Indemnitor will, by giving written notice to the Claimant, have the right to assume responsibility for the defense of the Claim in the name of the Claimant or otherwise as the Indemnitor may elect; provided that the Indemnitor also agrees that it does or might have responsibility to indemnify the Claimant with respect to such Claim. Otherwise, the Claimant will have responsibility for the defense of the Claim. Subject to the provisions of subsections 9.3(C) and (D) below, the party having responsibility for defense of a Claim (the "Defending Party") will have the full authority to defend, cure, adjust, compromise, or settle such Claim or appeal any judgment or ruling of a court or other tribunal in connection with such Claim in its own name and/or in the name of the other party. (C) RIGHT TO PARTICIPATE. Notwithstanding a Defending Party's responsibility for the defense of a Claim, the other party shall have the right to participate, at its own expense and with its own counsel, in the defense of a Claim and the Defending Party will consult with the other party from time to time on matters relating to the defense of such Claim. The Defending Party will provide the other party with copies of all pleadings and material correspondence relating to such Claim. (D) SETTLEMENT. A Defending Party will provide the other party with timely written notice of any proposed adjustment, compromise, or other settlement, including equitable or injunctive relief, of a Claim which the Defending Party intends to propose or accept. If the other party fails to provide the Defending Party with timely written notice of objection to such settlement, then the Defending Party shall have the authority to propose or accept such settlement and enter into any agreement, in its own name and/or in the name of the other party, giving legal effect to all aspects of such settlement. If the other party objects to such settlement, then the Defending Party may, if it so elects, tender the defense to the other party by paying to such other party the amount of money proposed to be paid in settlement of the Claim, in which case the Defending Party shall have no further liability to the other party under this Purchase Agreement with respect - 26 - Execution Copy to such Claim and the other party shall have full authority for the future defense of such Claim and full responsibility for any and all liabilities, obligations, costs, and expenses resulting therefrom. 9.4 DISPUTED RESPONSIBILITY. If, after receiving a written indemnification notice under Section 9.3(A), the party receiving such notice disputes -- (A) The fact that such party in fact made a misrepresentation or breach a warranty under this Purchase Agreement giving rise to the claim to which the notice relates or that any such misrepresentation or breach in fact gave rise to the liabilities, damages, claims, costs, or expenses for which the other party seeks indemnification under this Article 9, or (B) The fact that such party in fact failed to perform any obligation to be performed on the part of that party under this Purchase Agreement giving rise to the claim to which the notice relates or that any such failure in fact gave rise to the liabilities, damages, claims, costs, or expenses for which the other party seeks indemnification under this Article 9, then such party will have the right to initiate the dispute resolution mechanism set forth in Article 10, in which case the dispute will be finally resolved as provided in Article 10. In such case, however, pending final resolution of the disputed item, the parties will proceed as if the party receiving the indemnification notice had in fact made a misrepresentation, breached a warranty, or failed to perform an obligation to be performed on the part of that party under this Purchase Agreement and as if such act or failure in fact gave rise to the liabilities, damages, claims, costs, or expenses for which the other party seeks indemnification under this Article 9. If the disputed item is resolved in whole or in part in favor of the party receiving the indemnification notice, then such party will be entitled to an equitable reimbursement from the other party of any amounts expended or incurred in carrying out the receiving party's indemnification obligations under this Article 9. 9.5 QUANTUM LIMITATION ON INDEMNIFICATION. Notwithstanding the provisions of Section 9.2, Ferro will not be obligated to indemnify or defend Akzo Nobel China, or hold Akzo Nobel China harmless, from or against any liability, damage, claim, cost, or expense (including attorneys' fees) arising out of a misrepresentation or breach of warranty by Ferro pursuant to Section 9.2 unless and to the extent the Actual Amount of all claims exceeds $250,000. In no event will Ferro's total obligation to Akzo Nobel China under Section 8.2(F) or Section 9.2 exceed, in the aggregate, $3,250,000. 9.6 TIME LIMITATION ON INDEMNIFICATION. Notwithstanding the provisions of Section 9.2, Ferro will not be obligated to indemnify or defend Akzo Nobel China, or hold Akzo Nobel China harmless, from or against any liability, damage, claim, cost, or expense (including attorneys' fees) arising out of a misrepresentation or breach of warranty by Ferro pursuant to Section 9.2, and any cause of action based thereupon shall expire and terminate, unless Akzo Nobel China delivers to Ferro notice and a full explanation of the alleged breach on or before 5:00 p.m. (Eastern Time) (A) In the case of claims by Akzo Nobel China for misrepresentations or breaches of warranty of Ferro's Tax warranties under Section 7.2(P), 90 days after expiration - 27 - Execution Copy of the applicable statute of limitation period with respect to the particular Tax at issue; and (B) In the case of any other claim, the 18 month anniversary of the Closing Date. The foregoing time limitations shall not apply with respect to any breach of the representations and warranties set forth in Section 7.1(A), (B), (C) or (D), which representations and warranties shall survive indefinitely or to any breach of the representations and warranties set forth in Section 7.2(M) or (N), any breach of which shall be governed solely by Section 8.2. 9.7 ACTUAL AMOUNT. For purposes of the parties' respective obligations under Sections 8.2, 9.1 and 9.2, in computing the "Actual Amount" of any liability, damage, claim, loss, cost, or expense, the following principles will apply: (A) The amount will be reduced to give full effect to any provision or reserve on the books of the Subsidiary as of the Closing with respect to the particular item or category of items out of which the misrepresentation, breach or nonperformance in question arose; (B) The amount will be reduced to give full effect to any indemnity, contractual or noncontractual recoveries the indemnified party receives (or, in the event the indemnified party fails to use reasonable efforts to pursue any such recoveries it might otherwise be entitled to receive, the amount that it might otherwise be entitled to receive) from any third-party as a consequence of the fact, condition or circumstance giving rise to the misrepresentation, breach or nonperformance in question; (C) The amount will be reduced to give full effect to any act or omission of the indemnified party that either was the cause of or increased the ultimate amount of any liability, damage, claim, loss, cost or expense incurred by the indemnified party; and (D) The amount will be reduced to give full effect to any failure by any indemnified party to take reasonable efforts to mitigate any liability, damage, claim, loss, cost or expense incurred by such indemnified party. 9.8 EXCLUSIVE REMEDIES. The remedies provided in this Article 9 and in Section 8.2 will be the parties' exclusive remedies for claims arising out of or resulting from any misrepresentation, breach of warranty, breach of covenant, breach of undertaking, or nonperformance any obligation to be performed on the part of either party under this Purchase Agreement. Neither party shall be liable to the other party as the result of any breach or alleged breach of this Purchase Agreement for any (A) damages for loss or harm to business reputation, or (B) damages that are not the proximate and foreseeable consequence of the breach or alleged breach of this Purchase Agreement. Under no circumstances will either party be responsible to another party for any consequential, incidental, special, or punitive damages or damages resulting from lost profits or lost business opportunity arising out of or relating to any such Claim. The foregoing shall not be interpreted, however, to limit indemnification for losses incurred as a result of the assertion by a claimant (other than the parties hereto and their successors and assigns) in a third-party claim of claims for damages of the foregoing type. - 28 - Execution Copy 9.9 INDEMNITY PAYMENTS AS ADJUSTMENTS. All indemnity payments under this Article 9 will constitute and be treated as adjustments to the Purchase Price. ARTICLE 10 - DISPUTE RESOLUTION IF THE PARTIES EVER HAVE A DISPUTE INVOLVING THEIR RESPECTIVE RIGHTS AND OBLIGATIONS UNDER THIS PURCHASE AGREEMENT OR ANY OF THE OTHER AGREEMENTS (OTHER THAN WITH RESPECT TO THE DETERMINATION OF THE AMOUNT OF THE ADJUSTMENT), THEN THE PARTIES WILL RESOLVE SUCH DISPUTE AS FOLLOWS: 10.1 DISPUTE NOTICE. Either Akzo Nobel China or Ferro may at any time deliver to the other a written dispute notice setting forth a brief description of the issues for which such notice initiates the dispute resolution mechanism set forth in this Article 10. Such dispute notice shall also specify the provision or provisions of this Purchase Agreement and the facts or circumstances that are the subject matter of the dispute. 10.2 INFORMAL NEGOTIATIONS. During the 60-day period following delivery of a dispute notice described in Section 10.1, the parties will cause their representatives to meet and seek to resolve the disputed items cordially through informal negotiations 10.3 DISPUTE RESOLUTION PROCEEDINGS. If representatives of the parties are unable to resolve disputed items through the informal negotiations described in Section 10.3, then within 30 days after the informal negotiation period the parties will refer the disputed issues to a dispute resolution panel for final resolution as follows: (A) DESIGNATION OF REPRESENTATIVES. Within seven days after such informal negotiation period, Akzo Nobel China and Ferro will each designate one representative to serve on the dispute resolution panel. (If either party fails or refuses to designate a representative, then the other party will be entitled to have a representative appointed for such party by the CPR Institute.) (B) SELECTION OF NEUTRAL. Promptly after they have been designated, the designated representatives will meet and select a neutral third-party (the "Neutral") to serve as the third member of the dispute resolution panel. If the designated representatives of parties cannot agree on a Neutral, then either representative may request the CPR Institute to select the Neutral. - 29 - Execution Copy (C) PROCEDURES AND PROCESS. At the time the matter is referred to the dispute resolution panel, Akzo Nobel China and Ferro will jointly establish the procedures to be followed with respect to the presentation of the parties' respective positions and the process by which the dispute resolution panel will reach and render its decision on the disputed issues. Such procedures and processes will, at a minimum, assure that (a) Each party will have the right to submit evidence to the dispute resolution panel, (b) Each party will have the right to present a written statement concerning that party's position with respect to the disputed item, and (c) Before reaching a decision concerning the disputed item, the dispute resolution panel will convene a hearing at which both parties may be represented. If Akzo Nobel China and Ferro cannot agree on such procedures and processes, then the Neutral will establish such procedures and process which will, in all events, be consistent with the foregoing. (D) DECISION. The dispute resolution panel will act by majority vote. The dispute resolution panel will base its decision on applicable provisions of this Purchase Agreement or, if the provisions of this Purchase Agreement do not resolve the matter, on general principles of substantive Ohio law. (The dispute resolution panel may, if it so desires, seek the opinion of an attorney licensed to practice law in the State of Ohio on any matter of substantive Ohio law on which the panel desires clarification.) 10.4 EQUITABLE RELIEF. Notwithstanding any other provision of this Article 10, either party may seek from a court of competent jurisdiction interim injunctive relief in order to maintain the status quo or protect such party's rights under this Purchase Agreement pending resolution of a dispute pursuant to this Article 10. 10.5 BINDING EFFECT. The decisions of the dispute resolution panel under this Article 10 will be binding on both Ferro and Akzo Nobel China and will be neither appealable, contestable, or subject to collateral attack by Ferro or Akzo Nobel China. ARTICLE 11 - AMENDMENT, WAIVER, AND TERMINATION 11.1 AMENDMENT. The parties may amend this Purchase Agreement at any time before the Closing, but only by written instrument executed by both parties. 11.2 WAIVER. Either party may at any time waive compliance by the other with any undertakes or conditions contained in this Purchase Agreement but only by written instrument executed by the party waiving such compliance. No such waiver, however, - 30 - Execution Copy shall be deemed to constitute the waiver of any such undertaking or condition in any other circumstance or the waiver of any other undertaking or condition. 11.3 TERMINATION. The parties may terminate this Purchase Agreement at any time before the Closing, but only by written instrument signed by both parties. This Purchase Agreement will terminate automatically, and without further action by either party, if the Closing has not occurred within 120 days following the execution of this Purchase Agreement unless the parties otherwise extend this Purchase Agreement by a written instrument executed by both parties. ARTICLE 12 - MISCELLANEOUS 12.1 COOPERATION. Akzo Nobel China and Ferro will cooperate with the other party(ies), at the other party's(ies') request and expense, in furnishing information, testimony and other assistance in connection with any actions, proceedings, arrangements, and disputes with other third-parties or governmental inquiries or investigations involving the Subsidiary or the transactions contemplated by this Purchase Agreement. 12.2 SEVERABILITY. If any provision of this Purchase Agreement shall finally be determined to be unlawful, then such provision will be deemed to be severed from this Purchase Agreement and replaced by a lawful provision which carries out, as closely as possible, the intention of the parties and preserves the economic bargain contemplated by this Purchase Agreement and, in such case, each and every other provision of this Purchase Agreement will remain in full force and effect. 12.3 COSTS AND EXPENSES. The parties will be responsible for the following costs and expenses arising out of the transactions contemplated by this Purchase Agreement as follows: (A) Ferro will be solely responsible for the fees and expenses of Salomon Smith Barney Inc. whether or not the transactions are consummated; (B) Akzo Nobel China will be solely responsible for any filing fees that may be required in connection with any necessary regulatory applications and notifications; and (C) If the transactions are consummated, all registration fees, stamp duties, or other transfer fees, Taxes or imposts, if any, which arise out of or result from the transfer of the Shares from Ferro to Akzo Nobel China will be shared equally by the parties. Otherwise, each party will bear its own expenses incurred in connection with this Purchase Agreement and the transactions contemplated by this Purchase Agreement, whether or not the transactions are consummated. 12.4 NOTICES. All notices, requests and other communications under this Purchase Agreement shall be in writing and shall be deemed to have been duly given at the time of receipt if delivered by hand or communicated by telefax, or, if mailed, three (3) days after mailing registered or certified mail, return receipt requested, with postage prepaid: - 31 - Execution Copy If to Akzo Nobel China, to: Akzo Nobel Sino Coatings B.V. c/o International Paint, Inc. 7 Livingstone Ave. Dobbs Ferry, New York 10522-3408 Attention: General Counsel Telefax: 1.914.693.4108 If to Ferro, to: Ferro Corporation 1000 Lakeside Avenue Cleveland, Ohio 44114 USA Attention: General Counsel Telefax: 1.216.875.7275 Either party may change its notice address above to a different address by giving the other party written notice of such change. 12.5 ASSIGNMENT AND APPOINTMENT. This Purchase Agreement will be binding upon and inure to the benefit of the successors of the parties, but will not be assignable by either party without the prior written consent of the other party. 12.6 NO THIRD PARTIES. Neither this Purchase Agreement nor any provisions set forth in this Purchase Agreement is intended to, or shall, create any rights in or confer any benefits upon any third-party, including any employee of the Subsidiary. 12.7 INCORPORATION BY REFERENCE. The Appendices to this Purchase Agreement and the Disclosure Package constitute integral parts of this Purchase Agreement and are hereby incorporated into this Purchase Agreement by this reference. 12.8 GOVERNING LAW. This Purchase Agreement will be governed by and construed in accordance with the internal substantive laws of the State of Ohio, except where the internal substantive laws of another jurisdiction mandatorily apply. 12.9 COUNTERPARTS. More than one counterpart of this Purchase Agreement may be executed by the parties hereto, and each fully executed counterpart shall be deemed an original without production of the others. 12.10 COMPLETE AGREEMENT. This Purchase Agreement sets forth the entire understanding of the parties hereto with respect to the subject matter of this Purchase Agreement and supersedes all prior letters of intent, agreements, undertakes, arrangements, communications, representations, or warranties, whether oral or written, by any officer, employee, or representative of either party relating thereto. - 32 - Execution Copy To evidence their agreement as stated above, AKZO NOBEL SINO COATINGS B.V. and FERRO CORPORATION have each caused their respective duly authorized directors, officers, or attorneys to execute this Purchase Agreement as of August 2, 2002. AKZO NOBEL SINO COATINGS B.V. FERRO CORPORATION By: /s/ D.W. Welch By: /s/ Millicent W. Pitts ----------------------------- ---------------------------------- Name: D.W. Welch Name: Millicent W. Pitts Title: Authorized Signatory Title: Vice President - 33 - Execution Copy Appendix A DEFINITIONS The following terms identified with initial capital letters are defined in the following Sections of the Purchase Agreement:
TERM CROSS REFERENCE Accountants .................................................. Section 2.3(A)(3) Accounting Principles ........................................ Section 2.3(A)(1) Actual Amount ................................................ Section 9.7 Adjustment.................................................... Section 2.3(C) Akzo Nobel ................................................... Recital B Akzo Nobel China ............................................. Preamble Akzo Nobel China's Employee Obligations ...................... Section 8.1 Akzo Nobel China's Environmental Obligations ................. Section 8.2 Akzo Nobel China's Other Obligations ......................... Section 8.3 Base-Line Working Capital .................................... Section 2.3(A)(5) Cash Items Adjustment ........................................ Section 2.3(B) Claim ........................................................ Section 9.3(A) Claimant ..................................................... Section 9.3 Closing ...................................................... Section 5.1 Closing Date ................................................. Section 5.2 Closing Time ................................................. Section 5.2 Closing Working Capital ...................................... Section 2.3(A)(6) Defending Party .............................................. Section 9.3(B) Economic Remediation Plan .................................... Section 8.2(E)(3) Employees .................................................... Section 8.1 Ferro ........................................................ Preamble Ferro's Employee Obligations ................................. Section 8.1 Ferro's Environmental Obligations ............................ Section 8.2 Ferro's Other Obligations .................................... Section 8.3
A-1 Execution Copy Appendix A
TERM CROSS REFERENCE Government Approvals ......................................... Section 3.6 Identified Environmental Matter .............................. Section 8.2(A) Indemnitor ................................................... Section 9.3 Neutral ...................................................... Section 10.3(B) Noncompete Business .......................................... Section 6.4 Other Agreements ............................................. Section 3.4 Powder Coatings Business ..................................... Recital A Powder Coatings Disclosure Package ........................... Section 7.2 Preliminary Working Capital Statement ........................ Section 2.3(A)(1) Products .................................................... Recital A Purchase Agreement ........................................... Preamble Purchase Price ............................................... Section 2.2 Remediation Plan.............................................. Section 8.2(E)(3) Subsidiary.................................................... Recital A Working Capital Adjustment ................................... Section 2.3(A)(7)
A-2 Execution Copy Appendix A In addition, the following terms have the meanings set forth below where used in the Purchase Agreement and identified with initial capital letters:
TERM MEANING Affiliate With respect to a party, any other entity controlling, controlled by, or under common control with such party. Business Records Business books and records, including financial, operating, inventory, legal, personnel, payroll, and customer records and all sales and promotional literature, correspondence, and records held or used by the Subsidiary. Cash Cash and cash equivalent items held by the Subsidiary as of the Closing, including certificates of deposit, time deposits, marketable securities, and the proceeds of accounts receivable paid on or before the Closing Date, held or used by the Subsidiary. Contracts Collectively, the Purchase Contracts, the Sales Contracts, and the Other Business Contracts. CPR Institute CPR Institute for Dispute Resolution, 366 Madison Avenue, New York, New York. Default An occurrence which constitutes a breach or default under a contract, order, or other commitment, after the expiration of any grace period provided without such breach or default being cured within such period. Encumbrance Any encumbrance or lien, including, without limitation, any mortgage, judgment lien, materialman's lien, mechanic's lien, security interest, encroachment, easement, or other restriction, in each case having a material adverse effect on the thing or right so encumbered. Environmental Laws The relevant laws, regulations, orders, decrees, standards, ordinances, codes, and other governmental mandates and restrictions in effect today that are applicable to the Subsidiary and relate to emissions, discharges, and releases of Hazardous Materials into land, soil, ambient air, water, and atmosphere, and/or the generation, treatment, storage, transportation, and disposal of hazardous wastes.
A-3 Execution Copy Appendix A
TERM MEANING Environmental Loss Any liability, damage, cost, expense, claim or action, whether in law or equity, arising under Environmental Laws or any other theory of recovery, including but not limited to nuisance, negligence, and strict liability relating to emissions, discharges, and releases of Hazardous Materials into land, soil, ambient air, water, and atmosphere, and/or the generation, treatment, storage, transportation, and disposal of hazardous wastes at or from the Real Property. Environmental Matter Any action, condition, or event giving rise to a legal obligation under the Environmental Laws that relate to the Subsidiary. Financial Debt All indebtedness for money borrowed incurred by the Subsidiary. Governmental Authority Any nation or government, any state or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory administrative functions of or pertaining to government, whether U.S. or foreign. Hazardous Materials Any material or condition that is defined as "hazardous" or is subject to regulation under an Environmental Law, including pollutants, chemicals, contaminants, petroleum and petroleum products, asbestos, PCBs, radioactive materials and other hazardous or toxic substances. Health and Safety Laws The relevant laws, regulations, orders, ordinances, codes, and other governmental mandates and restrictions applicable to the Subsidiary relating to the health and/or safety of employees or others having business dealings with the Subsidiary. Inventories Inventories, wherever located, including inventories of raw materials, components, assemblies, subassemblies, work-in-process, finished goods, replacement parts, spare parts, operating supplies, and packaging held or used by the Subsidiary. Leases Collectively, the Real Property Leases and the Personal Property Leases
A-4 Execution Copy Appendix A
TERM MEANING Licenses Licenses and similar rights of the Subsidiary affording the right to use or enjoy intangible property or intangible property rights, including software. Material Contract Any contract listed, or required to be listed, in items 1 through 4 on Part K of the Disclosure Package. Material Event Any condition, circumstance, occurrence, or other event which has had or is reasonably likely to have a material and adverse effect on the Powder Coatings Business Condition, including (without limitation) any of such event resulting from any -- (1) Act of God, flood, windstorm, earthquake, accident, fire, explosion, casualty, riot, requisition or taking of property by governmental authority, war, embargo, or other event outside Ferro's control; (2) Termination, cancellation, or substantial modification of any Contract, Lease, License, or Permit; (3) Default by Ferro under any Contract, Lease, License, or Permit; or (4) Filing (whether voluntary or involuntary) of a petition in bankruptcy or commencement of any other action involving creditors' rights or debtors' remedies affecting Ferro. Other Business Contracts Contracts other than Purchase Contracts and Sales Contract to which the Subsidiary is a party or to which the Subsidiary is bound. Other Current Assets Those miscellaneous and other current assets of the Subsidiary as the same shall exist at Closing. Other Current Liabilities Those current liabilities of the Subsidiary as the same shall exist at Closing, including accrued expenses, customer rebates and payroll expenses, bonuses, incentives, benefits, taxes and other current liabilities incurred in the ordinary course of business.
A-5 Execution Copy Appendix A
TERM MEANING Owns or Ownership Such ownership as confers upon the party or third-party having it good and marketable title to and control over the thing or right owned, free and clear of any and all Encumbrances except Permitted Encumbrances. Permits Permits, approvals, and qualifications issued by any government or governmental unit, agency, board, body, or instrumentality and all applications for such items held or used by the Subsidiary. Permitted Encumbrances The following: (1) Liens for Taxes accrued but not yet payable; (2) Liens arising as a matter of law in the ordinary course of business (provided the Subsidiary is not delinquent in respect of the obligations secured by such liens); and (3) Such other imperfections of title and other encumbrances which, singly or taken together, do not and are not likely to have a material adverse effect on the Powder Coatings Business Condition. Personal Property Leases Leases and similar contractual rights of the Subsidiary affording the right to use or enjoy tangible personal property or tangible personal property rights. Powder Coatings Business The properties, assets, liabilities (fixed and otherwise), Condition and condition (financial and otherwise) of the Subsidiary taken as a whole. Prescribed Rate The rate of interest publicly announced by National City Bank, Cleveland, Ohio, from time to time as its prime or base rate for U.S. Dollar loans. Prepaid Items Prepaid and similar items of the Subsidiary, including prepaid expenses, deferred charges, advance payments, supplier rebates and other prepaid items arising out of the conduct of the Powder Coatings Business.
A-6 Execution Copy Appendix A
TERM MEANING Purchase Contracts Orders, contracts, and commitments for the purchase of goods and/or services, including, without limitation, such items relating to the purchase of capital, tooling, products, supplies, and software, to which the Subsidiary is a party, except, in all cases, those contracts listed in Subpart K-5 of the Disclosure Package. Real Property The following real properties, including all land, buildings, improvements, fixtures, and appurtenances thereto: (1) Subsidiary's powder coatings plant site located at Ningchun Road, Wuxiang Town, Ningbo, Zhejiang, China. Real Property Leases Those leases, grants of land use rights, and similar contractual rights affording the right to use and enjoy certain real property listed in Subpart F-2 of the Disclosure Package Sales Contracts Orders, contracts, commitments, and proposals for the sale of Products, including such items relating to repair, restoration, maintenance, preservation, and similar operations, to which the Subsidiary is a party. Shares An undivided equity participation with a registered capital of $9,000,000 in the Subsidiary. Tangible Personal Property Tangible personal property (whether owned, leased, or otherwise), including all machinery, equipment, tooling, dies, molds, jigs, patterns, gauges, materials handling equipment, furniture, office equipment, cars, trucks, and other vehicles held or used by the Subsidiary and listed in Part G of the Disclosure Package.
A-7 Execution Copy Appendix A
TERM MEANING Tax All Federal, state, foreign and other net income, gross receipts, gains, sales, use, employment, social security, withholding, occupation, franchise, profits, excise, real and personal property, land, value added, capital, consumption, national insurance, registration, custom, stamp, transfer, environmental, alternative minimum or other taxes, fees, duties, assessments or charges of any kind whatsoever whether payable directly or by withholding, together with any interest and penalties, additions to Tax or additional amounts with respect thereto, imposed by any taxing authority. Third-Party Claims Causes of action, rights of action, and warranty and product liability claims of the Subsidiary against other third-parties. Trade Accounts Payable Third-party notes, accounts, and other items payable of the Subsidiary, including all such amounts owing under Contracts, Leases, and Licenses. Trade Accounts Receivable Third-party notes and accounts receivable of the Subsidiary. Working Capital The difference between (X) the sum of (i) Trade Accounts Receivable, (ii) Inventories, (iii) Prepaid Items and (iv) Other Current Assets, and (Y) the sum of (i) Trade Accounts Payable and (ii) Other Current Liabilities, all as reflected on the books of the Subsidiary in accordance with the Accounting Principles as of a given date.
A-8 EX-2.4 6 l96640aexv2w4.txt EXHIBIT 2.4 Exhibit 2.4 Execution Copy ================================================================================ SHARE PURCHASE AGREEMENT DATED AS OF AUGUST 2, 2002 BY AND BETWEEN AKZO NOBEL COATINGS INTERNATIONAL B.V. ON ONE HAND AND FERRO CORPORATION ON THE OTHER HAND ================================================================================ Execution Copy TABLE OF CONTENTS
PAGE PREAMBLE ............................................................................................... 1 RECITALS ............................................................................................... 1 TERMS AND CONDITIONS ................................................................................... 1 ARTICLE 1 - GENERAL PROVISIONS ................................................................ 1 1.1 Definitions ................................................................. 1 1.2 Construction ................................................................ 1 ARTICLE 2 - PURCHASE AND SALE ................................................................. 2 2.1 Transaction ................................................................. 2 2.2 Purchase Price .............................................................. 2 2.3 Adjustment .................................................................. 2 (A) Working Capital Adjustment ............................................ 2 (1) Preliminary Working Capital Statement .......................... 2 (2) Ferro's Review ................................................. 3 (3) Dispute Resolution ............................................. 3 (4) Final Determination ............................................ 3 (5) Base-Line Working Capital ...................................... 4 (6) Closing Working Capital......................................... 4 (7) Amount of the Working Capital Adjustment ....................... 4 (B) Cash Items Adjustment ................................................. 4 (C) Amount of Adjustment .................................................. 4 2.4 Payment of Purchase Price ................................................... 4 (A) Payment at Closing .................................................... 4 (B) Final Payment ......................................................... 4 2.5 Refund of Adjustment ........................................................ 5 2.6 Method of Payment ........................................................... 5 (A) Directed Payments ..................................................... 5 (B) Other Payments ........................................................ 5 ARTICLE 3 - ACTIONS BEFORE CLOSING ............................................................ 5 3.1 Access to Records ........................................................... 5 3.2 Interim Conduct of the Powder Coatings Business ............................. 5 3.3 Akzo Nobel Korea's Approval of Certain Transactions ......................... 6 3.4 Negotiation of Other Agreements ............................................. 7 3.5 Coordination of Public Announcements ........................................ 7 3.6 Government Approvals ....................................................... 8 ARTICLE 4 - CONDITIONS ....................................................................... 8
Execution Copy 4.1 Conditions to Akzo Nobel Korea's Obligations ................................ 8 4.2 Conditions to Ferro's Obligations ........................................... 9 4.3 Parties' Best Efforts ....................................................... 10 ARTICLE 5 - CLOSING ........................................................................... 10 5.1 The Closing ................................................................. 10 5.2 Date, Time, and Place of Closing ............................................ 10 5.3 Akzo Nobel Korea's Obligations .............................................. 11 5.4 Ferro's Obligations ......................................................... 11 5.5 Local Formalities ........................................................... 11 ARTICLE 6 - ACTIONS AFTER CLOSING ............................................................. 11 6.1 Further Conveyances ......................................................... 11 6.2 Accounting Reports .......................................................... 11 6.3 Noncompetition .............................................................. 12 6.4 Use of Ferro Name and Mark .................................................. 12 6.5 Access to Former Business Records ........................................... 13 6.6 Access to Former Employees .................................................. 13 6.7 Termination of Insurance Coverage ........................................... 13 6.8 Trade Secrets................................................................ 13 ARTICLE 7 - REPRESENTATIONS AND WARRANTIES..................................................... 14 7.1 Ferro's General Representations and Warranties .............................. 14 (A) Organization and Existence ............................................ 14 (B) Power and Authority ................................................... 14 (C) Authorization ......................................................... 14 (D) Binding Effect ........................................................ 14 (E) No Default ............................................................ 14 (F) Finders ............................................................... 14 (G) Consents and Approvals ................................................ 14 (H) Existence and Capitalization of the Subsidiary......................... 15 (I) Ownership of the Shares ............................................... 15 (J) No Knowledge of Akzo Nobel Korea's Default ............................ 15 7.2 Ferro's Representations and Warranties Concerning the Disclosure Package .......................................................... 15 (A) Organization .......................................................... 15 (B) Financial Statements .................................................. 15 (C) Inventories ........................................................... 16 (D) Trade Accounts Receivable ............................................. 16 (E) Trade Accounts Payable ................................................ 16 (F) Real Property ......................................................... 16 (G) Tangible Personal Property ............................................ 16 (H) Intellectual Property ................................................. 16 (I) Indebtedness .......................................................... 17 (J) Litigation ............................................................ 17 (K) Contracts ............................................................. 17 (L) Employees and Employee Benefits ....................................... 17 (M) Compliance with Environmental Laws ................................... 17
- iii - Execution Copy (N) Compliance with Health and Safety Laws ................................ 18 (O) Compliance with Other Laws ............................................ 18 (P) Taxes ................................................................. 18 (Q) Insurance ............................................................. 18 (R) No Material Events .................................................... 18 7.3 Akzo Nobel Korea's Representations and Warranties ........................... 18 (A) Organization and Existence ............................................ 18 (B) Power and Authority ................................................... 18 (C) Authorization ......................................................... 18 (D) Binding Effect ........................................................ 19 (E) No Default ............................................................ 19 (F) Finders ............................................................... 19 (G) No Knowledge of Ferro's Default ....................................... 19 (H) Consents and Approvals ................................................ 19 7.4 Meaning of "Ferro's Knowledge" .............................................. 19 7.5 Disclaimer .................................................................. 20 ARTICLE 8 - SPECIFIC OBLIGATIONS .............................................................. 20 8.1 Employee Obligations ........................................................ 20 (A) Severance ............................................................. 20 (B) Non-Interference ...................................................... 20 8.2 Environmental Obligations ................................................... 20 (A) Identified Environmental Matters ...................................... 20 (B) Pre-Closing Environmental Matters...................................... 20 (C) Post-Closing Real Property Environmental Matters ...................... 21 (D) Mixed Post-Closing Environmental Matters .............................. 21 (E) Akzo Nobel Korea's Responsibilities Upon Identification of an Environmental Matter ............................................ 22 (F) Responsibilities With Regard To Economic Remediation Plans ..................................................... 23 (G) Limitations On Ferro's Obligations .................................... 23 (H) Release of Claims ..................................................... 24 8.3 Other Obligations ........................................................... 24 (A) Akzo Nobel Korea's Responsibilities ................................... 24 (B) Ferro's Responsibilities .............................................. 25 8.4 Akzo Nobel Korea's Sole Remedy .............................................. 26 ARTICLE 9 - INDEMNIFICATION ................................................................... 26 9.1 Indemnification of Ferro .................................................... 26 9.2 Indemnification of Akzo Nobel Korea ......................................... 26 9.3 Claims ...................................................................... 27 (A) Notice ................................................................ 27 (B) Responsibility for Defense ............................................ 27 (C) Right to Participate .................................................. 27 (D) Settlement ............................................................ 27 9.4 Disputed Responsibility ..................................................... 28 9.5 Quantum Limitation on Indemnification ....................................... 28 9.6 Time Limitation on Indemnification .......................................... 29 9.7 Actual Amount ............................................................... 29
- iv - Execution Copy 9.8 Exclusive Remedies .......................................................... 29 9.8 Indemnity Payments as Adjustments ........................................... 30 ARTICLE 10 - DISPUTE RESOLUTION ............................................................... 30 10.1 Dispute Notice .............................................................. 30 10.2 Informal Negotiations ....................................................... 30 10.3 Dispute Resolution Proceedings .............................................. 30 (A) Designation of Representatives ..................................... 30 (B) Selection of Neutral ............................................... 30 (C) Procedures and Process ............................................. 31 (D) Decision ........................................................... 31 10.4 Equitable Relief ............................................................ 31 10.5 Binding Effect .............................................................. 31 ARTICLE 11 - AMENDMENT, WAIVER, AND TERMINATION................................................ 31 11.1 Amendment ................................................................... 31 11.2 Waiver ...................................................................... 31 11.3 Termination ................................................................. 32 ARTICLE 12 - MISCELLANEOUS .................................................................... 32 12.1 Cooperation ................................................................. 32 12.2 Severability ................................................................ 32 12.3 Costs and Expenses .......................................................... 32 12.4 Notices ..................................................................... 32 12.5 Assignment and Appointment .................................................. 33 12.6 No Third Parties ............................................................ 33 12.7 Incorporation by Reference .................................................. 33 12.8 Governing Law ............................................................... 33 12.9 Counterparts ................................................................ 33 12.10 Complete Agreement .......................................................... 33
APPENDICES Appendix A - Definitions Appendix B - Form of Preliminary Working Capital Statement Appendix C - Accounting Principles Appendix D - Documents to Be Delivered by Ferro at the Closing Appendix E - Documents to Be Delivered by Akzo Nobel Korea at the Closing Appendix F - Contents of the Powder Coatings Disclosure Package Appendix G - Due Diligence Certifications Appendix H - Identified Environmental Matters - v - Execution Copy SHARE PURCHASE AGREEMENT This SHARE PURCHASE AGREEMENT (this "Purchase Agreement") is dated as of August 2, 2002, and is by and among: AKZO NOBEL COATINGS INTERNATIONAL B.V. ("Akzo Nobel Korea"), a Dutch private company with limited liability (besloten vennootschap), - and - FERRO CORPORATION ("Ferro"), an Ohio corporation. RECITALS A. LG Ferro Powder Coatings Ltd., a Korean limited liability company (yuhan hoesa) and a 71.7%-owned subsidiary of Ferro (the "Subsidiary"), is engaged in the business (the "Powder Coatings Business") of designing, developing, formulating, manufacturing, and selling thermosetting-formulated powder surface coatings (the "Products") for a variety of decorative and protective end-use applications within the appliance, automotive, and general industrial industries in the Asia/Pacific region. (The term "Powder Coatings Business" does not, however, include the powder coatings business conducted by Ferro and its Affiliates in Europe or North and South America.) B. Akzo Nobel Korea is an indirect, wholly-owned subsidiary of Akzo Nobel NV ("Akzo Nobel"), a Dutch corporation (naamloze vennootschap). C. Akzo Nobel Korea desires to purchase from Ferro, and Ferro desires to sell to Akzo Nobel Korea, the Shares on and subject to the terms and conditions of this Purchase Agreement. TERMS AND CONDITIONS In consideration of the matters recited above and of other good and valuable consideration, and intending to be legally bound by this Purchase Agreement, Akzo Nobel Korea and Ferro hereby agree as follows: ARTICLE 1 - GENERAL PROVISIONS 1.1 DEFINITIONS. Appendix A sets forth the definitions of certain terms used in this Purchase Agreement. Those terms shall have the meanings set forth on Appendix A where used in this Purchase Agreement and identified with initial capital letters. 1.2 Construction. FOR PURPOSES OF THIS PURCHASE AGREEMENT, EXCEPT WHERE THE CONTEXT OTHERWISE REQUIRES -- (A) The term "parties" means Akzo Nobel Korea and Ferro. - 2 - Execution Copy (B) The term "person" includes any natural person, firm, association, partnership, corporation, limited liability company, limited liability partnership, governmental agency or other entity. The term "third-party" means any person other than the parties and their Affiliates. (C) The term "today" means August 2, 2002. (D) All currency amounts stated in this Purchase Agreement are in United States Dollars. (Other currency amounts will translate into United States Dollar amounts at the exchange rate or rates quoted in the Currency Trading table of the Central Edition of The Wall Street Journal on the business day immediately preceding the date as of which translation is to occur.) (E) References to "days" mean calendar days. (If, however, an action or obligation is due to be undertaken by or on a day other than a business day, i.e., a Saturday, Sunday, or public holiday, in the United States, then that action or obligation will be deemed to be due on the next following business day.) (F) When introducing a series of items, the term "including" is not intended to limit the more general description that precedes the items listed. (G) The Table of Contents and the headings of the Articles and Sections are included for convenience of reference only and are not intended to affect the meaning of the operative provisions to which they relate. ARTICLE 2 - PURCHASE AND SALE 2.1 TRANSACTION. On and subject to the terms and conditions of this Purchase Agreement, at the Closing, (A) Akzo Nobel Korea will purchase from Ferro, and Ferro will sell, transfer, and assign to Akzo Nobel Korea, all of the Shares; and (B) Akzo Nobel Korea will pay Ferro the Purchase Price as provided in Section 2.2. 2.2 PURCHASE PRICE. For purposes of this Purchase Agreement, the term "Purchase Price" means $6,000,000 plus or minus the amount of the Adjustment (and, if applicable, any further adjustment(s) pursuant to Section 9.9). 2.3 ADJUSTMENT. The Adjustment will be determined as follows: (A) WORKING CAPITAL ADJUSTMENT. (1) PRELIMINARY WORKING CAPITAL STATEMENT. As promptly as practicable, but in any event within 45 days after the Closing Date, Akzo Nobel Korea will prepare and deliver to Ferro a statement (the "Preliminary Working Capital Statement") of the Working Capital of the Subsidiary at and as of the Closing Date, substantially in the form set forth in Part 1 of Appendix B. The Preliminary Working Capital Statement will be prepared in accordance with the accounting methods, policies, practices and procedures set forth on Appendix C (the "Accounting Principles"). - 3 - Execution Copy (2) FERRO'S REVIEW. If Ferro disagrees with any items shown on the Preliminary Working Capital Statement, Ferro will notify Akzo Nobel Korea in writing of such disagreement within 45 days after delivery of the Preliminary Working Capital Statement, which notice shall describe the nature of any such disagreement in reasonable detail, identify the specific items involved and the dollar amount of each such disagreement. After the end of such 45-day period, Ferro may not introduce additional disagreements with respect to any item in the Preliminary Working Capital Statement or increase the amount of any disagreement, and any item not so identified will be deemed to be agreed to by Ferro and will be final and binding upon the parties. During the 45-day period of its review, Ferro and its representatives will have reasonable access to any documents, schedules or workpapers used in the preparation of the Preliminary Working Capital Statement. (3) DISPUTE RESOLUTION. Ferro and Akzo Nobel Korea agree to negotiate in good faith to resolve any such disagreement relating to items included on the Preliminary Working Capital Statement. If Ferro and Akzo Nobel Korea are unable to resolve all disagreements properly identified by Ferro pursuant to Section 2.3(A)(2) within sixty (60) days after delivery to Akzo Nobel Korea of written notice of such disagreement, then such disagreements will be submitted for final and binding resolution to Price Waterhouse Coopers or, if Price Waterhouse Coopers should decline such engagement, such other internationally recognized accounting firm as Ferro and Akzo Nobel Korea shall mutually agree (the "Accountants"). The Accountants so selected will only consider those items and amounts set forth in the Preliminary Working Capital Statement as to which Ferro and Akzo Nobel Korea have disagreed within the time periods and on the terms specified above and must resolve the matter in accordance with the terms and provisions of the Agreement. The Accountants will be instructed to deliver to Ferro and Akzo Nobel Korea, as promptly as practicable and in any event within one hundred and twenty (120) days after its appointment, a written report setting forth the resolution of any such disagreement determined in accordance with the terms of this Purchase Agreement. The Accountants will make their determination based solely on presentations and supporting material provided by the parties and not pursuant to any independent review. The determination of the Accountants shall be final and binding upon Ferro and Akzo Nobel Korea. Ferro and Akzo Nobel Korea will each bear one-half the fees, expenses and costs of the Accountants. (4) FINAL DETERMINATION. The Preliminary Working Capital Statement will be deemed final for the purposes of this Section 2.3(A) upon the earliest of (A) the failure of Ferro to notify Akzo Nobel Korea of a dispute with 45 days of Akzo Nobel Korea's delivery of the Preliminary Working Capital Statement to Ferro, (B) the resolution of all disputes, pursuant to Section 2.3(A)(3), by Ferro and Akzo Nobel Korea and (C) the resolution of all disputes, pursuant to Section 2.3(A)(3), by the Accountants. - 4 - Execution Copy (5) BASE-LINE WORKING CAPITAL. The "Base-Line Working Capital" will be an amount equal to $2,505,567 (the details of which are set forth in Part 2 of Appendix B). (6) CLOSING WORKING CAPITAL. The "Closing Working Capital" will be an amount equal to the Working Capital of the Subsidiary at and as of the Closing as determined under Sections 2.3(A)(1)-(4) above. (7) AMOUNT OF THE WORKING CAPITAL ADJUSTMENT. If the Closing Working Capital is (A) Less than the Base Line Working Capital, then the Working Capital Adjustment will be a negative amount equal to the amount by which the Closing Working Capital is less than the Base-Line Working Capital; or (B) More than the Base Line Working Capital, then the Working Capital Adjustment will be a positive amount equal to the amount by which the Closing Working Capital is greater than the Base-Line Working Capital. (B) CASH ITEMS ADJUSTMENT. The Cash Items Adjustment will be a positive or negative amount equal to- (1) The amount of Cash on the books of the Subsidiary as of the Closing, minus (2) The amount of Financial Debt on the books of the Subsidiary as of the Closing. (C) AMOUNT OF ADJUSTMENT. The Adjustment will be an amount, positive or negative, equal to the Working Capital Adjustment plus the Cash Items Adjustment. The Purchase Price will finally be determined on the date the amount of the Working Capital Adjustment is finally determined. 2.4 PAYMENT OF PURCHASE PRICE. Akzo Nobel Korea will pay the Purchase Price as follows: (A) PAYMENT AT CLOSING. At the Closing, Akzo Nobel Korea will pay Ferro the total sum of $6,000,000; and (B) FINAL PAYMENT. If the Adjustment is a positive amount, Akzo Nobel Korea will, within 10 business days after the final determination of the Purchase Price, pay Ferro the amount of the Adjustment, together with interest thereon at the Prescribed Rate for the period from the Closing Date through and including the date on which the Adjustment is paid. (Payments of further adjustments pursuant to Section 9.9 will be made as provided in Article 9.) - 5 - Execution Copy 2.5 REFUND OF ADJUSTMENT. If the Adjustment is a negative amount, then Ferro will, within 10 business days after the final determination of the Purchase Price, refund to Akzo Nobel Korea the amount of the Adjustment, together with interest thereon at the Prescribed Rate for the period from the Closing Date through and including the date on which the Adjustment is paid. 2.6 METHOD OF PAYMENT. All payments under this Purchase Agreement will be made by delivery to the payee as follows: (A) DIRECTED PAYMENTS. If a party which is entitled to a payment under this Purchase Agreement provides the other party five days' advance written designation of a bank and account number into which the payee wishes payment to be made, then the payor will make such payment by wire transfer (in immediately available funds) to the designated account of the payee. (B) OTHER PAYMENTS. In all other cases, the party obligated to make a payment under this Purchase Agreement will do so by delivering to the payee a bank cashier's check (in immediately available funds) payable to the order of the payee. ARTICLE 3 - ACTIONS BEFORE CLOSING 3.1 ACCESS TO RECORDS. From today until the Closing, Ferro will cause the Subsidiary to afford duly authorized representatives of Akzo Nobel Korea free and full access during normal business hours to all of the assets, properties, books, and nonprivileged records of the Subsidiary and will permit such representatives to make abstracts from, or take copies of, such books, records, or other documentation, or to obtain temporary possession of any thereof as may be reasonably required by Akzo Nobel Korea. During such period, Ferro will furnish to Akzo Nobel Korea such information concerning the Subsidiary and its assets, liabilities, or condition as Akzo Nobel Korea may request. Notwithstanding the foregoing, Ferro will not be obligated to disclose or make available to Akzo Nobel Korea any information concerning the Subsidiary that, in the opinion of Ferro's counsel, should not be disclosed to Akzo Nobel Korea as a matter of law, by contract or to protect a claim of privilege; provided, however, that in all cases, Ferro represents and warrants to Akzo Nobel Korea that such withheld information, both individually and in the aggregate, is not materially adverse to the Subsidiary. 3.2 INTERIM CONDUCT OF THE POWDER COATINGS BUSINESS. From today until the Closing, Ferro will conduct the business of the Subsidiary and the Powder Coatings Business only in the ordinary and usual course, subject to Akzo Nobel Korea's approval of certain transactions pursuant to Section 3.3. Without limiting the generality of the foregoing, insofar as the Subsidiary is concerned, Ferro will use its reasonable efforts to: (A) Preserve substantially intact the Subsidiary's relationships with suppliers, customers, employees, creditors, and others having business dealings with the Subsidiary; (B) Maintain in full force and effect its existing policies of insurance which materially affect the Subsidiary; - 6 - Execution Copy (C) Continue performance in the ordinary course of its obligations under contracts, commitments, or other obligations to which it or the Subsidiary is a party; and (D) Keep all the financial statements and records and other documents in connection with the Subsidiary and/or the Powder Coatings Business in a manner consistent with the historical and ordinary course of business. 3.3 AKZO NOBEL KOREA'S APPROVAL OF CERTAIN TRANSACTIONS. Except as may otherwise be required under this Purchase Agreement, from today until the Closing, Ferro will not permit the Subsidiary to do any of the following without the prior approval with written confirmation of Akzo Nobel Korea, which approval shall not be unreasonably withheld: (A) Purchase or dispose of any real property or interests in real property; (B) Enter into any lease for real property involving a term of more than one year or rental obligation exceeding $250,000 (or the equivalent thereof in local currency) per annum in any single case; (C) Enter into any lease for personal property involving a term of more than one year or rental obligation exceeding $100,000 (or the equivalent thereof in local currency) per annum in any single case; (D) Voluntarily permit to be incurred any Encumbrances on assets of the Subsidiary except in the ordinary course of business; (E) Except for any changes required by applicable law and except for any changes generally affecting Ferro's salaried employees, increase the rate of compensation for any of the employees of the Subsidiary or otherwise enter into or alter any employment, consulting, or managerial services agreement affecting the Subsidiary; (F) Except for pension benefit plans and insurance plans that are required to be executed under the applicable laws, and except for any changes generally affecting Ferro's salaried employees, commence, enter into, or alter any pension, retirement, profit-sharing, employee stock option or stock purchase, bonus, deferred compensation, incentive compensation, life insurance, health insurance, fringe benefit, or other employee benefit scheme, plan, or arrangement affecting employees of the Subsidiary; (G) Make any single new commitment or increase any single previous commitment for capital expenditures for the Subsidiary in an amount exceeding $375,000 (or the equivalent thereof in local currency); (H) Accelerate or delay the sale of Products except as may be necessary in the ordinary course of business; (I) Except for the resolution of any grievance, enter into, modify or terminate any labor or collective bargaining agreement relating to the Subsidiary or, through negotiation or otherwise, make any commitment or incur any liability to any labor organization relating to employees of the Subsidiary; - 7 - Execution Copy (J) Enter into any transaction or make or enter into any Contract relating to the Subsidiary which by reason of its size or otherwise is not in the ordinary course of business; (K) With respect to the Subsidiary, authorize, propose, enter into or agree to enter into any acquisition of assets for a price in excess of $375,000 (or the equivalent thereof in local currency); (L) Waive any claims or rights under any Material Contract; (M) Terminate any Material Contract or voluntarily consent to the termination of any Material Contract (including, without limitation, any lease) by any other party thereto; (N) Except as otherwise provided in this Section 3.3, enter into any contract, agreement or arrangement with respect to any of the foregoing; (O) Make any amendment to the Articles of Association or other constitutional document of the Subsidiary except for the purpose of the transactions under this Purchase Agreement; or (P) Waive any claim or right in any judicial or administrative proceedings. 3.4 NEGOTIATION OF OTHER AGREEMENTS. From today until the Closing, the parties will negotiate in good faith and enter into such other and further agreements as they may deem appropriate or necessary for the orderly transfer of the Shares from Ferro to Akzo Nobel Korea, including the Novation Agreement by and among Ferro, Akzo Nobel Korea and LG Chem, Ltd. to replace Ferro with Akzo Nobel Korea as a party to the Joint Venture Agreement dated May 22, 2001 between Ferro and LG Chem, Ltd. (Such agreements, as well as any other agreements into which the parties enter in connection with the transactions contemplated by this Purchase Agreement which make specific reference to this Section 3.4, are collectively referred to as the "Other Agreements.") 3.5 COORDINATION OF PUBLIC ANNOUNCEMENTS. From today until the Closing, neither party will make any public announcement concerning the transactions contemplated by this Purchase Agreement without having previously consulted with and having received the consent of the other party, such consent not to be withheld unreasonably. Nothing in the preceding sentence, however, will prevent either party from making any announcement required by law, by the rules of any securities exchange, or by any listing agreement with a securities exchange to which such party is a party or by which it is bound. The parties will cooperate in the planning, preparation, and issuance of any and all public announcements concerning this Purchase Agreement and the transactions contemplated by this Purchase Agreement. - 8 - Execution Copy 3.6 Government Approvals. IMMEDIATELY AFTER THE EXECUTION AND DELIVERY OF THIS PURCHASE AGREEMENT, THE PARTIES WILL PROMPTLY PROCEED WITH THE PREPARATION AND FILING OF ANY REQUIRED FILINGS AND APPLICATIONS NECESSARY IN ORDER TO OBTAIN THE APPROVAL OR AUTHORIZATION OF THOSE GOVERNMENTAL AGENCIES OR INSTRUMENTALITIES WHOSE APPROVAL OR AUTHORIZATION IS NECESSARY IN ORDER TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED BY THIS PURCHASE AGREEMENT (THE "GOVERNMENT APPROVALS"), INCLUDING THE FOLLOWING: (A) With respect to Akzo Nobel Korea, the following Government Approvals: (1) Foreign investment report to a foreign exchange bank pursuant to the Foreign Investment Promotion Act of Korea (if applicable). (B) With respect to Ferro, the following Government Approvals: (1) Share transfer report to a foreign exchange bank pursuant to the Foreign Investment Promotion Act of Korea. (C) With respect to the Subsidiary, Ferro shall cause, and Akzo Nobel Korea shall cooperate with and assist, the Subsidiary to file for the following Government Approvals: (1) A report regarding the change of control contemplated by this Agreement with the Korea Industrial Complex Corporation in charge of Onsan National Industrial Complex pursuant to and in accordance with the Law Concerning Industry Allocation and Factory Establishment in Korea; and (2) A new occupancy agreement with the Korea Industrial Complex Corporation in charge of Onsan National Industrial Complex reflecting the change of control contemplated by this Agreement. IF ANY OF THE FOREGOING GOVERNMENTAL AUTHORITIES REQUIRE, AS A CONDITION TO GRANTING ANY SUCH APPROVAL OR AUTHORIZATION, OR AS A CONDITION TO NOT ISSUING A REQUEST FOR ADDITIONAL INFORMATION OR NOT COMMENCING A SECOND-PHASE INVESTIGATION OF THE TRANSACTIONS CONTEMPLATED BY THIS PURCHASE AGREEMENT, THEN THE PARTIES WILL COOPERATE IN GOOD FAITH TO TAKE SUCH ACTION AS MAY REASONABLY BE NECESSARY TO PREVENT OR AMELIORATE ANY ACTUAL OR PERCEIVED ANTI-COMPETITIVE CONSEQUENCES OF THE TRANSACTIONS CONTEMPLATED BY THIS PURCHASE AGREEMENT SO AS TO MAKE POSSIBLE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED BY THIS PURCHASE AGREEMENT AT THE EARLIEST PRACTICABLE DATE; PROVIDED, HOWEVER, THAT UNDER NO CIRCUMSTANCES WILL AKZO NOBEL KOREA BE REQUIRED TO HOLD SEPARATE OR DISPOSE (DIRECTLY OR INDIRECTLY) OF ANY ASSETS OR BUSINESS UNITS. ARTICLE 4 - CONDITIONS 4.1 CONDITIONS TO AKZO NOBEL KOREA'S OBLIGATIONS. The obligation of Akzo Nobel Korea to consummate the transactions contemplated by this Purchase Agreement is subject to the satisfaction of the following conditions at the Closing: (A) The representations and warranties of Ferro contained in Section 7.1 of this Purchase Agreement shall be true, accurate and complete as of today and as of the Closing (except with respect to the effect of transactions contemplated or permitted by this Purchase Agreement); - 9 - Execution Copy (B) The representations and warranties of Ferro contained in Section 7.2 of this Purchase Agreement shall be true, accurate and complete in all material respects as of today and as of the Closing (as if such representations and warranties had been made anew as of the Closing) except with respect to the effect of transactions contemplated or permitted by this Purchase Agreement, changes resulting from the passage of time on dated material in the Powder Coatings Disclosure Package and transactions in the ordinary course of business not in breach of Ferro's obligations under this Purchase Agreement; (C) Ferro, in all material respects, shall have performed and complied with all undertakings required by this Purchase Agreement to be performed or satisfied by Ferro before the Closing including entering into the Other Agreements; (D) Ferro shall have taken all corporate and other proceedings or actions necessary to be taken by Ferro for consummation of the transactions contemplated by this Purchase Agreement; (E) Ferro shall be prepared to deliver the documents listed in Appendix D at the Closing; (F) There shall not have been issued and in effect any injunction or similar legal order prohibiting or restraining consummation of any of the transactions contemplated in this Purchase Agreement; (G) The Government Approvals shall have been obtained; and (H) Resignation of the Ferro nominated directors of the Subsidiary effective as of the Closing Date. 4.2 CONDITIONS TO FERRO'S OBLIGATIONS. The obligation of Ferro to consummate the transactions contemplated by this Purchase Agreement is subject to the satisfaction of the following conditions at or before the Closing: (A) The representations and warranties of the Akzo Nobel Korea contained in Section 7.3 of this Purchase Agreement shall be true, accurate, and complete in all material respects as of today and as of the Closing (except with respect to the effect of the transactions contemplated or permitted by this Purchase Agreement); (B) Akzo Nobel Korea, in all material respects, shall have performed and complied with all undertakings required by this Purchase Agreement to be performed or satisfied by Akzo Nobel Korea before the Closing including entering into the Other Agreements; (C) Akzo Nobel Korea shall have taken all corporate and other proceedings or actions necessary to be taken by Akzo Nobel Korea for consummation of the transactions contemplated by this Purchase Agreement; (D) Akzo Nobel Korea shall be prepared to deliver the documents listed in Appendix E at the Closing; - 10 - Execution Copy (E) If Akzo Nobel Korea has assigned its rights and delegated its duties under this Purchase Agreement to an Affiliate, Akzo Nobel Korea shall provide the Guarantee; (F) There shall not have been issued and in effect any injunction or similar legal order prohibiting or restraining consummation of any of the transactions contemplated in this Purchase Agreement; (G) The Government Approvals shall have been obtained; and (H) All of the conditions precedent to the closing contemplated in a Purchase Agreement dated today's date by and among Rohm and Haas Company and Ferro, Ferro B.V., Ferro Spain S.A., and Ferro (Great Britain) Ltd. (with respect to the sale of Ferro's powder coatings business in Europe) and in a Purchase Agreement dated today's date by and among Akzo Nobel Korea and Ferro, Ferro Enamel Argentina S.A. and Ferro Mexicana S.A. de C.V. (with respect to the sale of Ferro's powder coatings business in the Americas) and in a Purchase Agreement dated today's date by and between Ferro and Akzo Nobel Sino Coatings B.V. (with respect to the sale of Ferro's powder coatings business in China) shall have been duly satisfied and/or waived and the parties thereto shall be prepared to proceed with such closings simultaneously with the Closing contemplated by this Purchase Agreement. 4.3 PARTIES' BEST EFFORTS. Except with respect to the condition set forth in Section 4.2(H), from today until the Closing, the parties will cooperate and use their respective reasonable best efforts to cause the conditions set forth in this Article 4 over which they may respectively have influence or control to be satisfied as soon as reasonably practicable. ARTICLE 5 - CLOSING 5.1 THE CLOSING. For purposes of this Purchase Agreement, the term "Closing" means the time at which the transactions contemplated by this Purchase Agreement will be consummated after satisfaction or waiver of the conditions set forth in Article 4 of this Purchase Agreement. 5.2 DATE, TIME, AND PLACE OF CLOSING. The Closing will occur at 10:00 a.m. (Eastern Time) on the later to occur of August 30, 2002 or a date to be mutually agreed by the parties not later than 30 days after the date on which the last of the conditions set forth in Sections 4.1 and 4.2 and comparable provisions in the purchase agreements referred to in Subsection 4.2(H) shall have been satisfied or waived (the "Closing Date"). The Closing will take place at the offices of Squire, Sanders & Dempsey, 4900 Key Tower, 127 Public Square, Cleveland, Ohio, or at such other place as the parties may agree in writing. The Closing will be deemed to have occurred as of 11:59 p.m. on the Closing Date (the "Closing Time"). 5.3 AKZO NOBEL KOREA'S OBLIGATIONS. At the Closing, Akzo Nobel Korea will deliver to Ferro the following: (A) The documents, certificates, and other items referred to in Appendix E; - 11 - Execution Copy (B) The amount specified in Section 2.4(a). 5.4 FERRO'S OBLIGATIONS. At the Closing, Ferro will deliver to Akzo Nobel Korea the following: (A) The documents, certificates, and other items referred to in Appendix D; (B) Ownership of the Shares; and (C) Such deeds, bills of sale, and such other instruments as may be necessary or appropriate to reflect Ferro's conveyance of the Shares to Akzo Nobel Korea. 5.5 LOCAL FORMALITIES. If either party desires that the specific terms and conditions (including price allocation) of this Purchase Agreement applicable to a given jurisdiction be put in writing in a separate agreement or instrument, then the parties will cooperate to prepare and execute such separate agreement, but such separate agreement will (unless the parties expressly agree otherwise in a signed document that refers to this Section 5.5) in all events be interpreted consistently with and as subordinate to the terms and conditions of this Purchase Agreement. ARTICLE 6 - ACTIONS AFTER CLOSING 6.1 FURTHER CONVEYANCES. After the Closing Ferro will, without further cost or expense to Akzo Nobel Korea, except as otherwise provided in Section 12.3(C), execute and deliver to Akzo Nobel Korea (or cause the same to be executed and delivered to Akzo Nobel Korea), such additional instruments of conveyance, and Ferro will take such other and further actions as Akzo Nobel Korea may reasonably request and which are ordinarily provided by a seller, more completely to sell, transfer, and assign to Akzo Nobel Korea and vest in Akzo Nobel Korea Ownership to the Shares. 6.2 ACCOUNTING REPORTS. Akzo Nobel Korea will cause the management of the Subsidiary to provide to Ferro such records and accounts as are prepared by Akzo Nobel Korea in accordance with its normal accounting procedures and such other records, accounts or reports as Ferro may reasonably request or, in the alternative to the latter, access to all such other information as may reasonably be requested by Ferro, in order to permit Ferro to complete their financial statements and reports relating to the pre-Closing activities of the Subsidiary; provided that Akzo Nobel Korea will be under no obligation to generate independent records or accounts for Ferro. Akzo Nobel Korea will also cause management of the Subsidiary to afford Ferro's internal and external auditors reasonable access upon at least three days prior notice and during normal business hours to the books and records of the Subsidiary as they may need in order for Ferro to satisfy normal quarterly and year-end reporting and audit requirements. 6.3 NONCOMPETITION. In order to protect the goodwill of the Subsidiary, Ferro undertakes that for a period of five years after the Closing neither Ferro nor any of its Affiliates will, directly or indirectly, engage in, or have an ownership interest in or act as agent, advisor, or consultant of or to any third-party that is engaged in, the business of designing, developing, formulating, manufacturing, or selling thermosetting-formulated powder - 12 - Execution Copy surface coatings for decorative or protective end-use applications of the nature currently sold by the Subsidiary (the "Noncompete Business") in Asia nor during such period will Ferro sell or license (in a stand-alone transaction not in connection with a sale of substantially all of the assets of Ferro) the use of the Ferro name or the Ferro "Check-In-A-Circle" logo to any third-party for use in connection with the conduct of a Noncompete Business. Nothing in this Section 6.3, however, will be deemed to prohibit or restrict Ferro, nor any of their Affiliates or any successor or assign of any of the foregoing - (A) From continuing to conduct any business in which any of such companies (other than the Subsidiary) are currently engaged, or, in the case of any successor or assign of any of the foregoing, any business in which such successor or assign was engaged prior to succeeding to the business of such company (whether by share acquisition, asset acquisition or otherwise), and logical extensions (by product line or technology) of such businesses, including comparable businesses conducted by Ferro and/or its Affiliates in conducting similar businesses from outside Asia; (B) From acquiring or owning less than a controlling equity interest in any publicly-traded company (whether or not such company is engaged in a business that competes with the Noncompete Business); (C) From acquiring a controlling equity interest in any company or other entity that is engaged in a business that competes with the Noncompete Business if the annual sales from such entity's competing business or entity do not exceed 20% of such business' or entity's total revenues in the 12-month period immediately preceding such acquisition provided that the acquisition of such competing business was not the principal purpose of such acquisition; or (D) From acquiring a controlling equity interest in any company or other entity that is engaged in a business that competes with the Noncompete Business if the annual sales from such entity's competing business or entity exceed 20% provided that (1) the acquisition of such competing business was not the principal purpose of such acquisition and (2) the acquiring company makes a good faith effort to dispose of any such competing business within one year after its acquisition. 6.4 USE OF FERRO NAME AND MARK. Within 180 days after the Closing with respect to finished goods as the same shall exist at Closing and 90 days after the Closing in all other cases, Akzo Nobel Korea will cause the name of the Subsidiary to be changed to a name not including the word "Ferro" and will institute a procedure whereby a stamp or other indelible identifying mark is affixed to any stock of inventory, supplies, sales literature, and similar items on hand at Closing that bear the Ferro name, trademark or "Check-in-a-Circle" logo in order to indicate that Akzo Nobel Korea, and not Ferro or its Affiliates, is the producer, provider or manufacturer of such item. For purposes of clarification only, the parties acknowledge and agree that under no circumstances shall this Purchase Agreement be interpreted to provide for the transfer in any manner whatsoever to Akzo Nobel Korea of any trademarks used by the Subsidiary, whether or not registered, that incorporate the names and trademarks "Ferro" and "Check-In-A-Circle" logo or any of the goodwill associated with such names, marks and logos. 6.5 ACCESS TO FORMER BUSINESS RECORDS. For a period of 10 years after the Closing, or until any audits of Ferro's Tax returns relating to periods before or including the Closing - 13 - Execution Copy are completed, whichever occurs later, Akzo Nobel Korea will retain all business records associated with or related to the Subsidiary when acquired. During such period, Akzo Nobel Korea, upon at least three days notice, and during normal business hours will afford duly authorized representatives of Ferro free and full access to all of such records and will permit such representatives, at Ferro's expense, to make abstracts from, or to take copies of any of such records created, produced, or obtained before the Closing, as may be reasonably requested by Ferro. During such period, Akzo Nobel Korea will cooperate with Ferro, and cause employees of the Subsidiary to cooperate with Ferro, in furnishing information, evidence, testimony, and other assistance in connection with any action, proceeding, or investigation relating to the Subsidiary before the Closing, and Ferro will provide reimbursement for all out-of-pocket expenses incurred by Akzo Nobel Korea or such employees in connection with providing the assistance contemplated in this Section 6.5. 6.6 ACCESS TO FORMER EMPLOYEES. After the Closing, each party will make available to the other party employees of Akzo Nobel Korea, Ferro, and the Subsidiary whom the other party may reasonably need in order to defend or prosecute any legal or administrative action to which Ferro or Akzo Nobel Korea are a party and which relates to the Subsidiary before the Closing. The requesting party will pay or reimburse the other party for all reasonable expenses which may be incurred by such employees in connection therewith, including all travel, lodging, and meal expenses, and will further compensate the other for the number of whole business days spent by each such employee in providing such services at the rate of 130% of the average daily gross pay per business day (excluding the value of employee benefits) of such employee during the calendar month in which such services are performed. 6.7 TERMINATION OF INSURANCE COVERAGE. At or after the Closing, Ferro and its Affiliates will have the right to terminate any and all insurance coverage affecting the Subsidiary with the effect that Akzo Nobel Korea will have no right of recovery with respect to any claim under policies or for refunds of premiums of insurance that previously covered the Subsidiary. Akzo Nobel Korea will, however, continue to be entitled to recoveries (net of deductibles and out-of-pocket claims handling costs) after the Closing under occurrence-based insurance policies to the extent the recovery relates to a claim made prior to Closing. Ferro will be responsible for the administration of claims for such recoveries. 6.8 TRADE SECRETS. From and after the Closing, Ferro will not, and will use its reasonable best efforts to cause its employees not to, disclose to any third-party any trade secrets of the Subsidiary or any other information regarding the Powder Coatings Business of a type held in confidence under the practices and policies of the Subsidiary or the Powder Coatings Business immediately prior to Closing. Such information shall not include information that (A) is or becomes generally available to the public other than as a result of a disclosure by Ferro or any of its employees or (B) became available to Ferro or any of its employees on a non-confidential basis from a source other than Ferro or any employee of Ferro that was an employee of the Subsidiary or the Powder Coatings Business at any time prior to the Closing. The provisions of this Section 6.8 shall not apply to any disclosure of information to the extent (1) Akzo Nobel Korea or any Affiliate of Akzo Nobel Korea has given its prior written consent to such disclosure, or (2) such disclosure is required by law or by any applicable ruling, decree or order of a governmental agency or judicial or regulatory authority; provided, however, that in such an event, Ferro will give Akzo Nobel Korea notice of such requirement to disclose in - 14 - Execution Copy order to provide Akzo Nobel Korea with the opportunity to challenge the disclosure, the scope of the disclosure and/or obtain a protective order regarding the disclosure. ARTICLE 7 - REPRESENTATIONS AND WARRANTIES 7.1 FERRO'S GENERAL REPRESENTATIONS AND WARRANTIES. Ferro represents and warrants to Akzo Nobel Korea the following: (A) ORGANIZATION AND EXISTENCE. Ferro is a corporation duly organized, validly existing, and in good standing under the laws of the State of Ohio; and (B) POWER AND AUTHORITY. Ferro has full power and authority under its constitutive documents and the laws of the jurisdictions in which they respectively are organized to execute, deliver, and perform this Purchase Agreement. (C) AUTHORIZATION. The execution, delivery, and performance of this Purchase Agreement by Ferro has been duly authorized by all requisite corporate action on the part of Ferro. (D) BINDING EFFECT. This Purchase Agreement is a valid, binding, and enforceable legal obligation of Ferro, except as enforceability may be limited by principles of equity and by bankruptcy and insolvency laws generally. (E) NO DEFAULT. Neither the execution and delivery of this Purchase Agreement nor Ferro's full performance of its obligations under this Purchase Agreement will violate or breach, or otherwise constitute or give rise to (with the giving of notice or passage of time or both) a Default under, the terms or provisions of Ferro's and the Subsidiary's respective constitutive documents or of any material contract, commitment, or other obligation to which any of Ferro is a party or by which they are bound, except for any such Default which would not, either individually or in the aggregate, have a material adverse effect on the ability of Ferro to consummate the transaction contemplated hereby. (F) FINDERS. With the sole exception of Salomon Smith Barney Inc., Ferro has not engaged and are not directly or indirectly obligated to any third-party acting as a broker, finder, or similar capacity in connection with the transactions contemplated by this Purchase Agreement. (G) CONSENTS AND APPROVALS. No consent, approval, license, permit, order or authorization of, or notice to, or registration, declaration or filing with, any Governmental Authority or any other third-party is required to be obtained or made by or with respect to Ferro in connection with the execution, delivery or performance of this Purchase Agreement by Ferro or the consummation of the transactions contemplated hereby by Ferro or in order to preclude any termination, suspension, acceleration, modification or impairment of any of the Contracts or any legal or contractual right, privilege, license or franchise other than (i) the consent of the Subsidiary's shareholders to the transactions contemplated hereby and Government Approvals and (ii) any such consents, approvals, licenses, permits, orders or authorizations, notices, registrations, declarations or filings, the failure of which to obtain or be made, in each case, - 15 - Execution Copy would not have a material adverse effect on the Powder Coatings Business Condition. (H) EXISTENCE AND CAPITALIZATION OF THE SUBSIDIARY. Except as otherwise disclosed in Part A of the Disclosure Package, the Subsidiary is a limited liability company (yuhan hoesa) duly organized and existing under the laws of the Republic of Korea with paid-in capital of 7,790,245,000 Korean Won consisting of 1,558,049 shares of a single class of common stock with a par value of 5,000 Korean Won per share, of which there are only 1,558,049 shares outstanding. (I) OWNERSHIP OF THE SHARES. Ferro Owns all of the Shares. To Ferro's knowledge, LG Chem, Ltd. owns all of the remaining outstanding shares of common stock of the Subsidiary other than the Shares. (J) NO KNOWLEDGE OF AKZO NOBEL KOREA'S DEFAULT. Ferro has no knowledge that any of Akzo Nobel Korea's representations and warranties are untrue, incorrect, or incomplete or that Akzo Nobel Korea is in Default under any term or provision of this Purchase Agreement. 7.2 FERRO'S REPRESENTATIONS AND WARRANTIES CONCERNING THE DISCLOSURE PACKAGE. Simultaneously with the execution and delivery of this Purchase Agreement, Ferro is delivering to Akzo Nobel Korea a bound volume of disclosure materials (the "Disclosure Package") entitled the "Powder Coatings Disclosure Package" and consisting of 18 Parts, consecutively lettered A-R, inclusive. Ferro represents and warrants to Akzo Nobel Korea that the Disclosure Package contains the information described in Appendix F. In addition, Ferro represents and warrants to Akzo Nobel Korea the following with respect to the Disclosure Package: (A) ORGANIZATION. Except as otherwise disclosed on Part A of the Disclosure Package, Ferro neither owns nor holds any other equity interest, directly or indirectly, in any company, corporation, partnership, joint venture, business, firm, or other entity which, to Ferro's knowledge, engages in any business in competition with the Powder Coatings Business in Asia. (B) FINANCIAL STATEMENTS. Except as otherwise disclosed on Part B, the financial statements contained in Subparts B-1 to B-6 are true and correct copies of financial reports derived from management accounts created and maintained by Ferro in the ordinary course in accordance with its standard practice. To Ferro's knowledge, such financial reports present fairly, in all material respects, the financial position of the Subsidiary as of the dates thereof. (C) INVENTORIES. Except as otherwise disclosed on Part C, (1) the Subsidiary Owns all Inventories described on Part C; (2) such Inventories have been valued on the books of the Subsidiary in accordance with the Accounting Principles and (3) all Inventories are saleable in the ordinary course of business. (D) TRADE ACCOUNTS RECEIVABLE. Except as otherwise disclosed on Part D, (1) the Subsidiary Owns all of the Trade Accounts Receivable listed or described on Part D; (2) none of such Trade Accounts Receivable is owing to Ferro or any of their Affiliates; (3) all of the Trade Accounts Receivable are genuine and were entered into in the ordinary course conduct of the Powder Coatings Business; and (4) to - 16 - Execution Copy the best of Ferro's knowledge, the Subsidiary has complied with all laws and customs necessary to maintain the collectibility of such Trade Accounts Receivable. (E) TRADE ACCOUNTS PAYABLE. Except as otherwise disclosed on Part E, (1) all of the liabilities reflected on the books of the Subsidiary arose out of the ordinary course conduct of the Powder Coatings Business; and (2) no such liabilities are owing to Ferro or any of their Affiliates. (F) REAL PROPERTY. Except as otherwise disclosed on Part F of the Disclosure Package, (1) the Subsidiary Owns all of the real properties listed as "owned" on Subpart F-1; (2) the leases or grants of land use rights under which the real property listed as "leased or used" on Subpart F-2 are valid and subsisting; (3) the Subsidiary is not in Default in any material respect under any lease of any such real properties; and (4) the improvements to the real property listed on Part F are, taking into account their age and prior use, in good condition and repair, ordinary wear and tear excepted. (G) TANGIBLE PERSONAL PROPERTY. Except as otherwise disclosed on Part G of the Disclosure Package, (1) the Subsidiary Owns all tangible personal property listed as "owned" on Subparts G-1 to G-3; (2) the leases under which the tangible personal property listed as "leased" on Subparts G-4 to G-5 are leased are valid and subsisting; (3) the Subsidiary is not in Default in any material respect under any lease listed on Part G in any manner likely to be materially adverse to the Powder Coatings Business Condition; and (4) the items of tangible personal property listed on Part G are, taking into account their age and prior use, in good condition and repair, ordinary wear and tear excepted. (H) INTELLECTUAL PROPERTY. Except as otherwise disclosed on Part H of the Disclosure Package, (1) the Subsidiary Owns all of the intellectual property listed as "owned" on Subparts H-1 to H-4; (2) the license, technology, or similar agreements to employ the intellectual property listed as "licensed by" on Subpart H-5 are valid and subsisting agreements; (3) except with respect to the items listed in such Subpart H-5, to Ferro's knowledge, the Subsidiary is not obligated to pay any amount, whether as a royalty, license, fee, or other payment to any person in order to use any of the intellectual property used by the Subsidiary; (4) the license, technology, or similar agreements to employ the intellectual property listed as "licensed to" on Subpart H-6 are valid and subsisting agreements; (5) except with respect to the items listed in such Subpart H-6, the Subsidiary has not granted any rights or interest to any person in connection with any of the intellectual property described in Part H; and (6) Ferro has no knowledge of any infringement by the Subsidiary in its conduct of the Powder Coatings Business of the intellectual property rights of any person in any manner likely to be materially adverse to the Powder Coatings Business Condition. (I) INDEBTEDNESS. Except as otherwise disclosed on Part I of the Disclosure Package, the Subsidiary is not in Default in any material respect under any note, bond, debenture, mortgage, indenture, security agreement, guaranty, or other instrument of indebtedness for borrowed money. - 17 - Execution Copy (J) LITIGATION. Except as otherwise disclosed on Part J of the Disclosure Package, to Ferro's knowledge, (1) there exists no litigation, proceedings or actions affecting the Powder Coatings Business Condition or claims or investigations that would have a material adverse effect on the Powder Coatings Business Condition, in either case pending or threatened against the Subsidiary; and (2) the Subsidiary is not subject to any writ, injunction, order, or decree of any court, agency, or other governmental authority affecting the Powder Coatings Business Condition. (K) CONTRACTS. Except as otherwise disclosed on Part K of the Disclosure Package, (1) each of the contracts, commitments, and other obligations listed on Part K is a valid and binding obligation of the Subsidiary and, to Ferro's knowledge, the other party or parties thereto; (2) neither the Subsidiary nor, to Ferro's knowledge, any other party thereto has terminated, cancelled, or substantially modified any contract, commitment, or other obligation identified in Part K; and (3) neither the Powder Coatings Business nor, to Ferro's knowledge, any other party thereto is in Default in any material respect under any contract, commitment, or other obligation identified in Part K. (L) EMPLOYEES AND EMPLOYEE BENEFITS. Except as otherwise disclosed on Part L of the Disclosure Package or Appendix P of this Purchase Agreement, (1) the Subsidiary has not entered into any employment contract; (2) the Subsidiary does not have any pension, retirement, profit-sharing, deferred compensation, employee share option or share purchase, bonus, or incentive compensation plans, schemes, or arrangements; (3) the Subsidiary does not have any employee health, dental, vision, life insurance, long-term or short-term disability, vacation, tuition reimbursement, redundancy, severance or other social plans, schemes, or arrangements; and (4) the Subsidiary has substantially performed all material obligations owing to their respective employees. (M) COMPLIANCE WITH ENVIRONMENTAL LAWS. Except as otherwise disclosed on Part M of the Disclosure Package, to Ferro's knowledge, (1) the Subsidiary is in compliance with all Environmental Laws applicable to the Subsidiary relating to emissions, discharges, and releases of Hazardous Materials into land, soil, ambient air, water, and the atmosphere the noncompliance with which is likely to have a materially adverse effect on the Powder Coatings Business Condition; and (2) the Subsidiary is in compliance with all Environmental Laws applicable to the generation, treatment, storage, transportation, and disposal of Hazardous Materials the noncompliance with which is likely to have a materially adverse effect on the Powder Coatings Business Condition. (N) COMPLIANCE WITH HEALTH AND SAFETY LAWS. Except as otherwise disclosed on Part N of the Disclosure Package, to Ferro's knowledge, the Subsidiary is in compliance with all Health and Safety Laws applicable to the Subsidiary the noncompliance with which is likely to have a materially adverse effect on the Powder Coatings Business Condition. (O) COMPLIANCE WITH OTHER LAWS. Except as otherwise disclosed on Part O of the Disclosure Package, to Ferro's knowledge the Subsidiary is in compliance with all statutes, ordinances, regulations, and other governmental requirements (other than Environmental Laws and Health and Safety Laws the noncompliance with - 18 - Execution Copy which is likely to have a materially adverse effect on the Powder Coatings Business Condition). (P) TAXES. Except as otherwise disclosed in Part P of the Disclosure Package, (1) all Tax returns required to be filed by the Subsidiary before Closing have been or will be filed on or before the Closing; (2) all Taxes due and payable before Closing on such returns have been or will be paid when required by law; (3) any Taxes relating to the Subsidiary with respect to any transaction or any period beginning on or before the Closing Date required to have been or to be paid prior to Closing have been or will be paid; and (4) the assets of the Subsidiary are not encumbered by any Encumbrance arising out of unpaid Taxes. (Q) INSURANCE. Except as otherwise disclosed in Part Q of the Disclosure Package, the Subsidiary has insured or self-insured the assets and properties of the Subsidiary against those insurable risks and to an extent the Subsidiary deems reasonably necessary for its continued conduct of the Powder Coatings Business and for protection against injury, damage, or loss. (R) NO MATERIAL EVENTS. Except as otherwise disclosed in Part R of the Disclosure Package, (1) the business of the Subsidiary and the Powder Coatings Business has been conducted only in the ordinary and usual course since March 1, 2002, and (2) no Material Events have occurred since March 1, 2002. 7.3 AKZO NOBEL KOREA'S REPRESENTATIONS AND WARRANTIES. Akzo Nobel Korea represents and warrants to Ferro the following: (A) ORGANIZATION AND EXISTENCE. Akzo Nobel Korea is a Dutch private company with limited liability (besloten vennootschap) corporation duly organized, validly existing and in good standing under the laws of The Netherlands. (B) POWER AND AUTHORITY. Akzo Nobel Korea has full corporate power and authority under its constitutive documents and under the laws of The Netherlands to execute, deliver, and perform this Purchase Agreement. (C) AUTHORIZATION. The execution, delivery, and performance of this Purchase Agreement have been duly authorized by all requisite corporate actions on the part of Akzo Nobel Korea. (D) BINDING EFFECT. This Purchase Agreement is a valid, binding, and enforceable legal obligation of Akzo Nobel Korea except as enforceability may be limited by principles of equity and by bankruptcy and insolvency laws generally. (E) NO DEFAULT. Neither the execution and delivery of this Purchase Agreement nor Akzo Nobel Korea's full performance of its obligations under this Purchase Agreement will violate or breach, or otherwise constitute or give rise to (with the giving of notice or passage of time or both) a Default under, the terms or provisions of Akzo Nobel Korea's constitutive documents or of any material contract, commitment, or other obligation to which Akzo Nobel Korea is a party or by which it is bound except for any such Default which would not, either individually or in the aggregate, have a material adverse effect on the ability of Akzo Nobel Korea to consummate the transaction contemplated hereby. - 19 - Execution Copy (F) FINDERS. Akzo Nobel Korea has not engaged and is not directly or indirectly obligated to any third-party acting as a broker, finder, or similar capacity in connection with the transactions contemplated by this Purchase Agreement other than Einhorn Associates. (G) NO KNOWLEDGE OF FERRO'S DEFAULT. Akzo Nobel Korea has no knowledge that any of the representations and warranties of Ferro contained in this Purchase Agreement are untrue, incorrect, or incomplete or that Ferro is in Default of any term or provision under this Purchase Agreement. (H) CONSENTS AND APPROVALS. Except for the Government Approvals, no consent, approval, license, permit, order or authorization of, or notice to, or registration, declaration or filing with, any Governmental Authority or any other third-party is required to be obtained or made by or with respect to Akzo Nobel Korea in connection with the execution, delivery or performance of this Purchase Agreement by Akzo Nobel Korea or the consummation of the transactions contemplated hereby by Akzo Nobel Korea or in order to preclude any termination, suspension, acceleration, modification or impairment of any of the Contracts or any legal or contractual right, privilege, license or franchise, the failure of which to obtain or be made, in each case, would not have a material adverse effect on the Closing of the contemplated transaction in this Purchase Agreement. 7.4 MEANING OF "FERRO'S KNOWLEDGE". Where any statement contained in this Article 7 is said to be to the "Ferro' knowledge" (or words of similar import) such expression means that, after having conducted a due diligence review and in reliance on due diligence certifications, both as described in Appendix H, senior Ferro management believes the statement to be true, accurate and complete in all material respects, but that Ferro make no further representation or warranty concerning facts or circumstances that might have come to Ferro's attention if it conducted a broader or more thorough investigation of the Subsidiary. For purposes of this Section 7.4, the term "senior Ferro management" means those Ferro executives who report directly to Ferro's Chairman and Chief Executive Officer and the Director of Ferro's Industrial Coatings MBU, the Group Controller of Ferro's Industrial Coatings MBU, the Regional Controller - Asia/Pacific and the Subsidiary's General Manager and Finance Director. 7.5 DISCLAIMER. The warranties stated in this Article 7 are the only representations and warranties either party has given the other party in connection with the transactions contemplated by this Purchase Agreement. Except as set forth in this Article 7, neither party has made, and each party expressly disclaims, any other or further representation or warranty, either express or implied, concerning the subject matter of this Purchase Agreement. All other warranties either party or anyone purporting to represent either party gave or might have given, or which might be provided or implied by law or commercial practice, are hereby excluded. ARTICLE 8 - SPECIFIC OBLIGATIONS 8.1 EMPLOYEE OBLIGATIONS. The parties' respective obligations with respect to Employees will be as follows: - 20 - Execution Copy (A) SEVERANCE. If Akzo Nobel Korea terminates the employment of any Employee within one year after the Closing in circumstances in which such Employee would have been entitled to severance pay and/or benefits if he or she had terminated employment with a Subsidiary immediately before the Closing, then Akzo Nobel Korea will assure that such terminated Employee's severance pay and benefits will be substantially equivalent to the severance pay and benefits the employee would have received under the Subsidiary's severance policy as of the Closing. (B) NON-INTERFERENCE. Ferro will neither employ nor offer employment to any employee of the Subsidiary who was an employee of the Subsidiary at Closing during the 24-month period following the Closing without the prior written consent of Akzo Nobel Korea. During such period, Akzo Nobel Korea will not, without the prior written consent of Ferro, employ or offer employment to any former employee of the Subsidiary who retired from or voluntarily terminated employment with Ferro during the six-month period preceding the Closing. Nothing in this Section 8.1(B), however, will be deemed to prohibit either party from hiring an Employee who responds to a general public advertisement of employment or who is identified as a consequence of a non-directed executive search or who is involuntarily terminated. Ferro's duties and obligations arising out of the foregoing provisions of this Section 8.1 are the "Ferro' Employee Obligations." Akzo Nobel Korea's duties and obligations arising out of the foregoing provisions of this Section 8.1 are the "Akzo Nobel Korea's Employee Obligations." 8.2 ENVIRONMENTAL OBLIGATIONS. The Parties' respective obligations with respect to Environmental Matters will be as follows: (A) IDENTIFIED ENVIRONMENTAL MATTERS. Ferro will be solely responsible, and will indemnify Akzo Nobel Korea, for any action, condition, or event giving rise to an Environmental Loss with respect to the Environmental Matters identified on Appendix I (the "Identified Environmental Matters"). (B) PRE-CLOSING ENVIRONMENTAL MATTERS. Ferro will be solely responsible, and will indemnify Akzo Nobel Korea, for any action, condition, or event giving rise to an Environmental Loss arising out of the ownership or operation of the Powders Coatings Business to the extent caused by actions or omissions or conditions that occurred or arose on or before the Closing Date. (C) POST-CLOSING ENVIRONMENTAL MATTERS. Akzo Nobel Korea will be solely responsible, and will indemnify Ferro, for any action, condition, or event giving rise to an Environmental Loss arising out of the ownership of the Shares to the extent caused by actions or omissions by Akzo Nobel Korea or conditions that occur or arise as the result of conduct by the Subsidiary after the Closing Date. (D) MIXED POST-CLOSING ENVIRONMENTAL MATTERS. If any action, condition, or event giving rise to an Environmental Loss results from both (i) actions or omissions by Akzo Nobel Korea or conditions that occur or arise as the result of conduct by Akzo Nobel Korea after the Closing, and (ii) actions or omissions by Ferro or conditions that occur or arise as the result of conduct by Ferro after the Closing and/or conditions that are caused by - 21 - Execution Copy actions or omissions or conditions that occurred or arose before the Closing, then the liability for such mixed Environmental Loss ("Mixed Loss") will be apportioned between Akzo Nobel Korea and Ferro as follows: (1) FERRO WILL BE RESPONSIBLE FOR ANY MIXED LOSS IN AN AMOUNT EQUAL TO THE TOTAL MIXED LOSS TIMES THE APPROPRIATE ONE OF THE FOLLOWING TWO FRACTIONS - (a) If the Mixed Loss resulting from the Environmental Matter is directly proportional to the amount of Hazardous Materials that were used, emitted, discharged or released and the amount of Hazardous Materials is known or estimable based on credible, objective evidence, then a fraction (A) the numerator of which is the amount of Hazardous Materials contributed by Ferro to the Environmental Matter before the Closing and (B) the denominator of which is the total amount of Hazardous Materials contributed both before and after the Closing; or (b) If either the Mixed Loss resulting from the Environmental Matter is not directly proportional to the amount of Hazardous Materials that were used, emitted, discharged or released or the amount of Hazardous Materials is not known or not estimable based on credible, objective evidence, then a fraction (A) the numerator of which is 12 months and (B) the denominator of which is 12 months plus the number of months from the Closing Date until the date Akzo Nobel Korea delivers a Notice described in Section 8.2(F)(2) below. (2) AKZO NOBEL KOREA WILL BE SOLELY RESPONSIBLE FOR ANY MIXED LOSS IN AN AMOUNT EQUAL TO THE TOTAL MIXED LOSS MINUS THE PROPORTION ALLOCABLE TO FERRO AS CALCULATED IN SECTION 8.2(D)(1). (E) AKZO NOBEL KOREA RESPONSIBILITIES UPON IDENTIFICATION OF AN ENVIRONMENTAL MATTER. If Akzo Nobel Korea becomes aware of an Environmental Matter other than an Identified Environmental Matter after the Closing, then: (1) Akzo Nobel Korea will conduct a preliminary investigation to determine whether remedial action is legally required under Environmental Laws with respect to such Environmental Matter. (2) If Akzo Nobel Korea determines in good faith that remedial action is legally required under Environmental Laws with respect to such Environmental Matter and may be the responsibility of Ferro pursuant to this Section 8.2, then Akzo Nobel Korea will give Ferro notice without undue delay of the facts and circumstances that caused Akzo Nobel Korea to conclude that remedial action is legally required and may be the responsibility of Ferro. - 22 - Execution Copy (3) For Environmental Matters not relating to the Real Property, after giving Ferro such notice, Akzo Nobel Korea will in good faith design, develop, and deliver to Ferro a plan or program (a "Remediation Plan") for remediating the Environmental Matter. Akzo Nobel Korea will assure such plan or program corrects or ameliorates any existing violation of Environmental Laws in the most economical manner reasonably possible, including the use of institutional controls and deed restrictions limiting future use of the Real Property for industrial purposes so long as such institutional controls and deed restrictions allow Akzo Nobel Korea to conduct the Powder Coatings Business as it was conducted at the time of the Closing. (A Remediation Plan that satisfies the requirements of the preceding sentence is referred to below as an "Economic Remediation Plan".) (4) Ferro will promptly review Akzo Nobel Korea's Remediation Plan and will advise Akzo Nobel Korea if and in what respects (if any) Ferro do not believe the Remediation Plan qualifies as an Economic Remediation Plan. (5) If Ferro and Akzo Nobel Korea agree that Akzo Nobel Korea's Remediation Plan or an agreed modified Remediation Plan constitutes an Economic Remediation Plan, then Akzo Nobel Korea will obtain any necessary government approvals and proceed with implementing such Remediation Plan. (6) If Ferro and Akzo Nobel Korea do not agree on a Remediation Plan that both believe is an Economic Remediation Plan, then Akzo Nobel Korea will proceed with implementing Akzo Nobel Korea's Remediation Plan and either party will have the right to initiate the dispute resolution process set forth in Article 10 to resolve the dispute over whether Akzo Nobel Korea's Remediation Plan is an Economic Remediation Plan, in which case the dispute will be finally resolved as provided in Article 10. (F) RESPONSIBILITIES WITH REGARD TO ECONOMIC REMEDIATION PLANS. Ferro and Akzo Nobel Korea will share responsibility for the cost of Economic Remediation Plans on the following basis: (1) Akzo Nobel Korea will responsible for the first $200,000 of the Actual Amount of the aggregate costs of such Economic Remediation Plans. (2) Subject to the limitation set forth in Section 8.2(G) below, Ferro will be responsible for the Actual Amount of the costs of Economic Remediation Plans as follows: (a) The total costs in excess of $200,000 of carrying out Economic Remediation Plans times (b) The appropriate one of the following two fractions -- (i) If the costs resulting from the Environmental Matter are directly proportional to the amount of Hazardous Materials that were used, emitted, discharged or released and the - 23 - Execution Copy amount of Hazardous Materials is known or estimable based on credible, objective evidence, then a fraction (A) the numerator of which is the amount of Hazardous Materials contributed by Ferro to the Environmental Matter before the Closing and (B) the denominator of which is the total amount of Hazardous Materials contributed by both Ferro before the Closing and Akzo Nobel Korea after the Closing; or (ii) If either the costs resulting from the Environmental Matter are not directly proportional to the amount of Hazardous Materials that were used, emitted, discharged or released or the amount of Hazardous Materials is not known or not estimable based on credible, objective evidence, then a fraction (A) the numerator of which is 12 months and (B) the denominator of which is 12 months plus the number of months between the Closing Date and the date Akzo Nobel Korea delivers the notice described in Section 8.2(F)(2) above. (iii) Akzo Nobel Korea will be responsible for all costs of carrying out Remediation Plans and for discharging all other liabilities and obligations resulting from Environmental Matters for which Ferro is not responsible. (G) LIMITATIONS ON FERRO'S OBLIGATIONS. (1) In no event will Ferro have any responsibility for any Environmental Matter for which Akzo Nobel Korea has not given Ferro notice in accordance with Section 8.2(E)(2) above on or before 5:00 PM (Eastern Time) on December 31, 2007. (2) In no event will Ferro have any responsibility for any Environmental Losses that relate solely to actions or practices that Akzo Nobel Korea carried out after the Closing and that Ferro did not carry out before the Closing. (H) RELEASE OF CLAIMS. Except as expressly provided in this Section 8.2, Ferro and Akzo Nobel Korea (and their respective parent and subsidiary corporations) hereby agree to release each other from any and all claims of any kind under applicable statutes arising out of any Environmental Matters relating to the Subsidiary. Ferro's duties and obligations arising out of the foregoing provisions of this Section 8.2 are the "Ferro's Environmental Obligations." Akzo Nobel Korea duties and obligations arising out of the foregoing provisions of this Section 8.2 are the "Akzo Nobel Korea's Environmental Obligations." 8.3 OTHER OBLIGATIONS. The parties respective obligations with respect to other liabilities and obligations of the Subsidary will be as follows: - 24 - Execution Copy (A) AKZO NOBEL KOREA'S REPONSIBILITIES. As between the parties, Akzo Nobel Korea will be solely responsible the following: (1) All Trade Accounts Payable and Other Current Liabilities; (2) All Financial Debt; (3) All liabilities and obligations that arise after the Closing under the Contracts, Leases, Licenses, and Permits; (4) All liabilities and obligations arising out of, relating to, or resulting from any claims that Products manufactured and sold by the Subsidiary following the Closing are or were defective or failed to meet warranted specifications other than those retained by Ferro pursuant to Section 8.3(B); (5) Any and all liabilities, duties and obligations of, and claims against (including any claim or action, whether founded upon negligence, breach of warranty, strict liability in tort and/or other similar legal theory, seeking compensation or recovery for injury to third-parties or damage to property alleged to have been caused by a Product manufactured and sold by the Subsidiary after the Closing), or relating to, or incurred by, the Subsidiary, or the operation of the Powder Coatings Business or the ownership, possession or use of any of the assets of the Subsidiary, after the Closing; and (6) Costs and expenses for which Akzo Nobel Korea is responsible under Section 12.3. (B) FERRO'S REPONSIBILITIES. As between the parties, Ferro will be solely responsible for the following: (1) All liabilities and obligations that have been fully discharged or satisfied by the Subsidiary before the Closing in transactions in the ordinary course of business and not in breach of this Purchase Agreement; (2) All liabilities, undertakings, and obligations incurred by Ferro in connection with the conduct of businesses other than the Powder Coatings Business, including liabilities, undertakings, and obligations incurred by Ferro and/or its Affiliates in conducting similar businesses from outside China; (3) All liabilities and obligations in excess of $1,000 in any single case or in excess of $10,000 in the aggregate arising out of, relating to, or resulting from any claims that Products manufactured and sold by the Subsidiary before the Closing are or were defective or failed to meet warranted specifications if and to the extent - (a) Such claims are made in good faith by a customer unrelated to Akzo Nobel Korea without solicitation or encouragement by or collusion with Akzo Nobel Korea, - 25 - Execution Copy (b) Akzo Nobel Korea notifies Ferro of such claims within 18 months from the date of the Closing Date, and (c) Akzo Nobel Korea takes no action to admit, compromise or settle such claims; if Akzo Nobel Korea elects to admit, compromise or settle any such claim, Ferro shall have no further obligation hereunder with respect to such claim. In the event Ferro desires to compromise or settle, or shall become obligated for, any such claim for which Ferro is liable under this Section 8.3(C), Akzo Nobel Korea shall sell to the Ferro replacement Products at Akzo Nobel Korea's raw material and actual manufacturing costs; (4) Costs and expenses for which Ferro is responsible under Section 12.3. (5) All liabilities and obligations for the payment of Taxes accrued by the Subsidiary with respect to periods or events occurring before the Closing; (6) Any and all liabilities, duties and obligations of, and claims against (including any claim or action, whether founded upon negligence, breach of warranty, strict liability in tort and/or other similar legal theory, seeking compensation or recovery for injury to third-parties or damage to property alleged to have been caused by a Product manufactured and sold by the Subsidiary before the Closing, or relating to, or incurred by, the Subsidiary, or to the operation of the Powder Coatings Business or the ownership, possession or use of any assets of the Subsidiary, on or prior to the Closing, in each case whether accrued, unaccrued, matured, unmatured, absolute, contingent, known or unknown, asserted or unasserted, and whether now existing or arising at any time prior to, at, or after the Closing; (7) Any obligation to the former owner of the Subsidiary that may come due and payable as a consequence of the provisions of ss.8.2 of the Joint Venture Agreement between Ferro and LG Chem, Ltd. dated May 22, 2001. Ferro's duties and obligations arising out of the foregoing provisions of this Section 8.3 are the "Ferro's Other Obligations." Akzo Nobel Korea duties and obligations arising out of the foregoing provisions of this Section 8.3 are the "Akzo Nobel Korea's Other Obligations." 8.4 AKZO NOBEL KOREA'S SOLE REMEDY. Akzo Nobel Korea acknowledges that Akzo Nobel Korea's right of indemnity under Section 9.2(B) for nonperformance of Ferro's Employee Obligations, Ferro's Environmental Obligations and Ferro's Other Obligations is Akzo Nobel Korea's sole and exclusive remedy with respect thereto and Akzo Nobel Korea hereby waives any other or further rights of recovery Akzo Nobel Korea might otherwise have against Ferro with respect to such matters on grounds of misrepresentation or breach of warranty, breach of covenant, or otherwise. Akzo Nobel Korea also hereby releases and discharges Ferro from any other claims that Akzo Nobel Korea may now or hereafter have against Ferro under any Environmental Law. - 26 - Execution Copy ARTICLE 9 - INDEMNIFICATION 9.1 INDEMNIFICATION OF FERRO. Akzo Nobel Korea, subject to the limitations set forth in this Article 9, will indemnify and (in the case of third party claims) defend Ferro, and hold Ferro harmless, from and against the Actual Amount of any and all liabilities, damages, claims, costs, and expenses (including reasonable attorneys' fees) arising out of or resulting from -- (A) Any misrepresentation or breach of warranty by Akzo Nobel Korea under Section 7.3; (B) Nonperformance by Akzo Nobel Korea of any obligations to be performed by or on the part of Akzo Nobel Korea under this Purchase Agreement, including Akzo Nobel Korea's obligations with respect to the Assumed Liabilities and Akzo Nobel Korea's obligations under Article 8 or (C) Akzo Nobel Korea's use of the Ferro name or the Ferro "Check-In-A-Circle" logo in any manner whatsoever (other than instances where there is a claim of infringement by a third-party involving the name or the logo). 9.2 INDEMNIFICATION OF AKZO NOBEL KOREA. Subject to the limitations set forth in this Article 9, Ferro will indemnify and (in the case of third party claims) defend Akzo Nobel Korea, and hold Akzo Nobel Korea harmless, from and against the Actual Amount of any and all liabilities, damages, claims, costs, and expenses (including reasonable attorneys' fees) arising out of or resulting from -- (A) Any misrepresentation or breach of warranty by Ferro under Sections 7.1 or 7.2; (B) Nonperformance by Ferro of any obligation to be performed by or on the part of Ferro under this Purchase Agreement, including Ferro's obligations with respect to Ferro's obligations under Article 8; (C) Any liability resulting from non-compliance with any so called "bulk sales" law or similar law requiring creditor notice in the jurisdiction of Korea. 9.3 CLAIMS. If either party desires to make a claim against the other under Section 9.1 or 9.2 which does not involve a claim by any third-party, then such party shall make such claim by delivering written notice to the other within a reasonable period of time. If either Akzo Nobel Korea or Ferro (the "Claimant") desires to make a claim against the other (the "Indemnitor") under Section 9.1 or 9.2 which involves a claim by a third-party, then such claim will be made in the following manner and be subject to the following terms and conditions: (A) NOTICE. The Claimant will give notice to the Indemnitor within a reasonable period of time of any demand, claim, or threat of litigation or the actual institution of any action, suit, or proceeding (collectively, a "Claim") at any time served on or instituted against the Claimant with respect to which the Claimant believes it would have a right of indemnification under Section 9.1 or 9.2. In providing such notice, the Claimant shall only state the existence of such Claim and shall not admit or deny the validity of the facts or circumstances out of which such Claim - 27 - Execution Copy arose. Solely for purposes of determining whether the Claimant is entitled to indemnification under Section 9.1 or 9.2, the alleged facts or circumstances on which such Claim is based shall be treated as if they were true pending final resolution of the facts and circumstances out of which such Claim arose. (B) RESPONSIBILITY FOR DEFENSE. Within 30 days after receipt of any such notice, but not less than five working days before the time the Claimant is required to respond to a Claim, the Indemnitor will, by giving written notice to the Claimant, have the right to assume responsibility for the defense of the Claim in the name of the Claimant or otherwise as the Indemnitor may elect; provided that the Indemnitor also agrees that it does or might have responsibility to indemnify the Claimant with respect to such Claim. Otherwise, the Claimant will have responsibility for the defense of the Claim. Subject to the provisions of subsections 9.3(C) and (D) below, the party having responsibility for defense of a Claim (the "Defending Party") will have the full authority to defend, cure, adjust, compromise, or settle such Claim or appeal any judgment or ruling of a court or other tribunal in connection with such Claim in its own name and/or in the name of the other party. (C) RIGHT TO PARTICIPATE. Notwithstanding a Defending Party's responsibility for the defense of a Claim, the other party shall have the right to participate, at its own expense and with its own counsel, in the defense of a Claim and the Defending Party will consult with the other party from time to time on matters relating to the defense of such Claim. The Defending Party will provide the other party with copies of all pleadings and material correspondence relating to such Claim. (D) SETTLEMENT. A Defending Party will provide the other party with timely written notice of any proposed adjustment, compromise, or other settlement, including equitable or injunctive relief, of a Claim which the Defending Party intends to propose or accept. If the other party fails to provide the Defending Party with timely written notice of objection to such settlement, then the Defending Party shall have the authority to propose or accept such settlement and enter into any agreement, in its own name and/or in the name of the other party, giving legal effect to all aspects of such settlement. If the other party objects to such settlement, then the Defending Party may, if it so elects, tender the defense to the other party by paying to such other party the amount of money proposed to be paid in settlement of the Claim, in which case the Defending Party shall have no further liability to the other party under this Purchase Agreement with respect to such Claim and the other party shall have full authority for the future defense of such Claim and full responsibility for any and all liabilities, obligations, costs, and expenses resulting therefrom. 9.4 DISPUTED RESPONSIBILITY. If, after receiving a written indemnification notice under Section 9.3(A), the party receiving such notice disputes -- (A) The fact that such party in fact made a misrepresentation or breach a warranty under this Purchase Agreement giving rise to the claim to which the notice relates or that any such misrepresentation or breach in fact gave rise to the liabilities, damages, claims, costs, or expenses for which the other party seeks indemnification under this Article 9, or - 28 - Execution Copy (B) The fact that such party in fact failed to perform any obligation to be performed on the part of that party under this Purchase Agreement giving rise to the claim to which the notice relates or that any such failure in fact gave rise to the liabilities, damages, claims, costs, or expenses for which the other party seeks indemnification under this Article 9, then such party will have the right to initiate the dispute resolution mechanism set forth in Article 10, in which case the dispute will be finally resolved as provided in Article 10. In such case, however, pending final resolution of the disputed item, the parties will proceed as if the party receiving the indemnification notice had in fact made a misrepresentation, breached a warranty, or failed to perform an obligation to be performed on the part of that party under this Purchase Agreement and as if such act or failure in fact gave rise to the liabilities, damages, claims, costs, or expenses for which the other party seeks indemnification under this Article 9. If the disputed item is resolved in whole or in part in favor of the party receiving the indemnification notice, then such party will be entitled to an equitable reimbursement from the other party of any amounts expended or incurred in carrying out the receiving party's indemnification obligations under this Article 9. 9.5 QUANTUM LIMITATION ON INDEMNIFICATION. Notwithstanding the provisions of Section 9.2, Ferro will not be obligated to indemnify or defend Akzo Nobel Korea, or hold Akzo Nobel Korea harmless, from or against any liability, damage, claim, cost, or expense (including attorneys' fees) arising out of a misrepresentation or breach of warranty by Ferro pursuant to Section 9.2 unless and to the extent the Actual Amount of all claims exceeds $100,000. In no event will Ferro's total obligation to Akzo Nobel Korea under Section 8.2(F) or Section 9.2 exceed, in the aggregate, $2,000,000. 9.6 TIME LIMITATION ON INDEMNIFICATION. Notwithstanding the provisions of Section 9.2, Ferro will not be obligated to indemnify or defend Akzo Nobel Korea, or hold Akzo Nobel Korea harmless, from or against any liability, damage, claim, cost, or expense (including attorneys' fees) arising out of a misrepresentation or breach of warranty by Ferro pursuant to Section 9.2, and any cause of action based thereupon shall expire and terminate, unless Akzo Nobel Korea delivers to Ferro notice and a full explanation of the alleged breach on or before 5:00 p.m. (Eastern Time) - (A) In the case of claims by Akzo Nobel Korea for misrepresentations or breaches of warranty of Ferro's Tax warranties under Section 7.2(P), 90 days after expiration of the applicable statute of limitation period with respect to the particular Tax at issue; and (B) In the case of any other claim, the 18 month anniversary of the Closing Date. The foregoing time limitations shall not apply with respect to any breach of the representations and warranties set forth in Section 7.1(A), (B), (C) or (D), which representations and warranties shall survive indefinitely or to any breach of the representations and warranties set forth in Section 7.2(M) or (N), any breach of which shall be governed solely by Section 8.2. 9.7 ACTUAL AMOUNT. For purposes of the parties' respective obligations under Sections 8.2, 9.1 and 9.2, in computing the "Actual Amount" of any liability, damage, claim, loss, cost, or expense, the following principles will apply: - 29 - Execution Copy (A) The amount will be reduced to give full effect to any provision or reserve on the books of the Subsidiary as of the Closing with respect to the particular item or category of items out of which the misrepresentation, breach or nonperformance in question arose; (B) The amount will be reduced to give full effect to any indemnity, contractual or noncontractual recoveries the indemnified party receives (or, in the event the indemnified party fails to use reasonable efforts to pursue any such recoveries it might otherwise be entitled to receive, the amount that it might otherwise be entitled to receive) from any third-party as a consequence of the fact, condition or circumstance giving rise to the misrepresentation, breach or nonperformance in question; (C) The amount will be reduced to give full effect to any act or omission of the indemnified party that either was the cause of or increased the ultimate amount of any liability, damage, claim, loss, cost or expense incurred by the indemnified party; and (D) The amount will be reduced to give full effect to any failure by any indemnified party to take reasonable efforts to mitigate any liability, damage, claim, loss, cost or expense incurred by such indemnified party. 9.8 EXCLUSIVE REMEDIES. The remedies provided in this Article 9 and in Section 8.2 will be the parties' exclusive remedies for claims arising out of or resulting from any misrepresentation, breach of warranty, breach of covenant, breach of undertaking, or nonperformance any obligation to be performed on the part of either party under this Purchase Agreement. Neither party shall be liable to the other party as the result of any breach or alleged breach of this Purchase Agreement for any (A) damages for loss or harm to business reputation, or (B) damages that are not the proximate and foreseeable consequence of the breach or alleged breach of this Purchase Agreement. Under no circumstances will either party be responsible to another party for any consequential, incidental, special, or punitive damages or damages resulting from lost profits or lost business opportunity arising out of or relating to any such Claim. The foregoing shall not be interpreted, however, to limit indemnification for losses incurred as a result of the assertion by a claimant (other than the parties hereto and their successors and assigns) in a third-party claim of claims for damages of the foregoing type. 9.9 INDEMNITY PAYMENTS AS ADJUSTMENTS. All indemnity payments under this Article 9 will constitute and be treated as adjustments to the Purchase Price. ARTICLE 10 - DISPUTE RESOLUTION IF THE PARTIES EVER HAVE A DISPUTE INVOLVING THEIR RESPECTIVE RIGHTS AND OBLIGATIONS UNDER THIS PURCHASE AGREEMENT OR ANY OF THE OTHER AGREEMENTS (OTHER THAN WITH RESPECT TO THE DETERMINATION OF THE AMOUNT OF THE ADJUSTMENT), THEN THE PARTIES WILL RESOLVE SUCH DISPUTE AS FOLLOWS: - 30 - Execution Copy 10.1 DISPUTE NOTICE. Either Akzo Nobel Korea or Ferro may at any time deliver to the other a written dispute notice setting forth a brief description of the issues for which such notice initiates the dispute resolution mechanism set forth in this Article 10. Such dispute notice shall also specify the provision or provisions of this Purchase Agreement and the facts or circumstances that are the subject matter of the dispute. 10.2 INFORMAL NEGOTIATIONS. During the 60-day period following delivery of a dispute notice described in Section 10.1, the parties will cause their representatives to meet and seek to resolve the disputed items cordially through informal negotiations 10.3 DISPUTE RESOLUTION PROCEEDINGS. If representatives of the parties are unable to resolve disputed items through the informal negotiations described in Section 10.3, then within 30 days after the informal negotiation period the parties will refer the disputed issues to a dispute resolution panel for final resolution as follows: (A) DESIGNATION OF REPRESENTATIVES. Within seven days after such informal negotiation period, Akzo Nobel Korea and Ferro will each designate one representative to serve on the dispute resolution panel. (If either party fails or refuses to designate a representative, then the other party will be entitled to have a representative appointed for such party by the CPR Institute.) (B) SELECTION OF NEUTRAL. Promptly after they have been designated, the designated representatives will meet and select a neutral third-party (the "Neutral") to serve as the third member of the dispute resolution panel. If the designated representatives of parties cannot agree on a Neutral, then either representative may request the CPR Institute to select the Neutral. (C) PROCEDURES AND PROCESS. At the time the matter is referred to the dispute resolution panel, Akzo Nobel Korea and Ferro will jointly establish the procedures to be followed with respect to the presentation of the parties' respective positions and the process by which the dispute resolution panel will reach and render its decision on the disputed issues. Such procedures and processes will, at a minimum, assure that - (a) Each party will have the right to submit evidence to the dispute resolution panel, (b) Each party will have the right to present a written statement concerning that party's position with respect to the disputed item, and - 31 - Execution Copy (c) Before reaching a decision concerning the disputed item, the dispute resolution panel will convene a hearing at which both parties may be represented. If Akzo Nobel Korea and Ferro cannot agree on such procedures and processes, then the Neutral will establish such procedures and process which will, in all events, be consistent with the foregoing. (D) DECISION. The dispute resolution panel will act by majority vote. The dispute resolution panel will base its decision on applicable provisions of this Purchase Agreement or, if the provisions of this Purchase Agreement do not resolve the matter, on general principles of substantive Ohio law. (The dispute resolution panel may, if it so desires, seek the opinion of an attorney licensed to practice law in the State of Ohio on any matter of substantive Ohio law on which the panel desires clarification.) 10.4 EQUITABLE RELIEF. Notwithstanding any other provision of this Article 10, either party may seek from a court of competent jurisdiction interim injunctive relief in order to maintain the status quo or protect such party's rights under this Purchase Agreement pending resolution of a dispute pursuant to this Article 10. 10.5 BINDING EFFECT. The decisions of the dispute resolution panel under this Article 10 will be binding on both Ferro and Akzo Nobel Korea and will be neither appealable, contestable, or subject to collateral attack by Ferro or Akzo Nobel Korea. ARTICLE 11 - AMENDMENT, WAIVER, AND TERMINATION 11.1 AMENDMENT. The parties may amend this Purchase Agreement at any time before the Closing, but only by written instrument executed by both parties. 11.2 WAIVER. Either party may at any time waive compliance by the other with any undertakes or conditions contained in this Purchase Agreement but only by written instrument executed by the party waiving such compliance. No such waiver, however, shall be deemed to constitute the waiver of any such undertaking or condition in any other circumstance or the waiver of any other undertaking or condition. 11.3 TERMINATION. The parties may terminate this Purchase Agreement at any time before the Closing, but only by written instrument signed by both parties. This Purchase Agreement will terminate automatically, and without further action by either party, if the Closing has not occurred within 120 days following the execution of this Purchase Agreement, unless the parties otherwise extend this Purchase Agreement by a written instrument executed by both parties. ARTICLE 12 - MISCELLANEOUS 12.1 COOPERATION. Akzo Nobel Korea and Ferro will cooperate with the other party(ies), at the other party's(ies') request and expense, in furnishing information, testimony and - 32 - Execution Copy other assistance in connection with any actions, proceedings, arrangements, and disputes with other third-parties or governmental inquiries or investigations involving the Subsidiary or the transactions contemplated by this Purchase Agreement. 12.2 SEVERABILITY. If any provision of this Purchase Agreement shall finally be determined to be unlawful, then such provision will be deemed to be severed from this Purchase Agreement and replaced by a lawful provision which carries out, as closely as possible, the intention of the parties and preserves the economic bargain contemplated by this Purchase Agreement and, in such case, each and every other provision of this Purchase Agreement will remain in full force and effect. 12.3 COSTS AND EXPENSES. The parties will be responsible for the following costs and expenses arising out of the transactions contemplated by this Purchase Agreement as follows: (A) Ferro will be solely responsible for the fees and expenses of Salomon Smith Barney Inc. whether or not the transactions are consummated; (B) Akzo Nobel Korea will be solely responsible for any filing fees that may be required in connection with any necessary regulatory applications and notifications; and (C) If the transactions are consummated, all registration fees, stamp duties, or other transfer fees, Taxes or imposts, if any, which arise out of or result from the transfer of the Shares from Ferro to Akzo Nobel Korea will be shared equally by the parties. Otherwise, each party will bear its own expenses incurred in connection with this Purchase Agreement and the transactions contemplated by this Purchase Agreement, whether or not the transactions are consummated. 12.4 NOTICES. All notices, requests and other communications under this Purchase Agreement shall be in writing and shall be deemed to have been duly given at the time of receipt if delivered by hand or communicated by telefax, or, if mailed, three (3) days after mailing registered or certified mail, return receipt requested, with postage prepaid: If to Akzo Nobel Korea, to: Akzo Nobel Coatings International B.V. International Paint, Inc. 7 Livingstone Ave. Dobbs Ferry, New York 10522-3408 Attention: General Counsel Telefax: 1.914.693.4108 - 33 - Execution Copy If to Ferro, to: Ferro Corporation 1000 Lakeside Avenue Cleveland, Ohio 44114 USA Attention: General Counsel Telefax: 1.216.875.7275 Either party may change its notice address above to a different address by giving the other party written notice of such change. 12.5 ASSIGNMENT AND APPOINTMENT. This Purchase Agreement will be binding upon and inure to the benefit of the successors of the parties, but will not be assignable by either party without the prior written consent of the other party. 12.6 NO THIRD PARTIES. Neither this Purchase Agreement nor any provisions set forth in this Purchase Agreement is intended to, or shall, create any rights in or confer any benefits upon any third-party, including any employee of the Subsidiary. 12.7 INCORPORATION BY REFERENCE. The Appendices to this Purchase Agreement and the Disclosure Package constitute integral parts of this Purchase Agreement and are hereby incorporated into this Purchase Agreement by this reference. 12.8 GOVERNING LAW. This Purchase Agreement will be governed by and construed in accordance with the internal substantive laws of the State of Ohio, except where the internal substantive laws of another jurisdiction mandatorily apply. 12.9 COUNTERPARTS. More than one counterpart of this Purchase Agreement may be executed by the parties hereto, and each fully executed counterpart shall be deemed an original without production of the others. 12.10 COMPLETE AGREEMENT. This Purchase Agreement sets forth the entire understanding of the parties hereto with respect to the subject matter of this Purchase Agreement and supersedes all prior letters of intent, agreements, undertakes, arrangements, communications, representations, or warranties, whether oral or written, by any officer, employee, or representative of either party relating thereto. - 34 - Execution Copy To evidence their agreement as stated above, AKZO NOBEL COATINGS INTERNATIONAL B.V. and FERRO CORPORATION have each caused their respective duly authorized directors, officers, or attorneys to execute this Purchase Agreement as of August 2, 2002. AKZO NOBEL COATINGS INTERNATIONAL B.V. FERRO CORPORATION By: /s/ D.W. Welch By: /s/ Millicent W. Pitts --------------------------------- -------------------------------- Name: D.W. Welch Name: Millicent W. Pitts Title: Authorized Signatory Title: Vice President - 35 - Execution Copy Appendix A DEFINITIONS The following terms identified with initial capital letters are defined in the following Sections of the Purchase Agreement: TERM CROSS REFERENCE Accountants ......................................... Section 2.3(A)(3) Accounting Principles ............................... Section 2.3(A)(1) Actual Amount ....................................... Section 9.7 Adjustment........................................... Section 2.3(C) Akzo Nobel .......................................... Recital B Akzo Nobel Korea..................................... Preamble Akzo Nobel Korea's Employee Obligations.............. Section 8.1 Akzo Nobel Korea's Environmental Obligations......... Section 8.2 Akzo Nobel Korea's Other Obligations................. Section 8.3 Base-Line Working Capital ........................... Section 2.3(A)(5) Cash Items Adjustment................................ Section 2.3(B) Claim ............................................... Section 9.3(A) Claimant ............................................ Section 9.3 Closing ............................................ Section 5.1 Closing Date ........................................ Section 5.2 Closing Time ........................................ Section 5.2 Closing Working Capital ............................. Section 2.3(A)(6) Defending Party ..................................... Section 9.3(B) Economic Remediation Plan ........................... Section 8.2(E)(3) Employees ........................................... Section 8.1 Ferro ............................................... Preamble Ferro's Employee Obligations ........................ Section 8.1 Ferro's Environmental Obligations ................... Section 8.2 Ferro's Other Obligations ........................... Section 8.3 Government Approvals ................................ Section 3.6 Execution Copy Appendix A TERM CROSS REFERENCE Identified Environmental Matter ..................... Section 8.2(A) Indemnitor .......................................... Section 9.3 Neutral ............................................. Section 10.3(B) Noncompete Business ................................. Section 6.4 Other Agreements .................................... Section 3.4 Powder Coatings Business ............................ Recital A Powder Coatings Disclosure Package .................. Section 7.2 Preliminary Working Capital Statement ............... Section 2.3(A)(1) Products ........................................... Recital A Purchase Agreement .................................. Preamble Purchase Price ...................................... Section 2.2 Remediation Plan..................................... Section 8.2(E)(3) Subsidiary........................................... Recital A Working Capital Adjustment .......................... Section 2.3(A)(7) - ii - Execution Copy Appendix A In addition, the following terms have the meanings set forth below where used in the Purchase Agreement and identified with initial capital letters: TERM MEANING Affiliate With respect to a party, any other entity controlling, controlled by, or under common control with such party. Business Records Business books and records, including financial, operating, inventory, legal, personnel, payroll, and customer records and all sales and promotional literature, correspondence, and records held or used by the Subsidiary. Cash Cash and cash equivalent items held by the Subsidiary as of the Closing, including certificates of deposit, time deposits, marketable securities, and the proceeds of accounts receivable paid on or before the Closing Date, held or used by the Subsidiary. Contracts Collectively, the Purchase Contracts, the Sales Contracts, and the Other Business Contracts. CPR Institute CPR Institute for Dispute Resolution, 366 Madison Avenue, New York, New York. Default An occurrence which constitutes a breach or default under a contract, order, or other commitment, after the expiration of any grace period provided without such breach or default being cured within such period. Encumbrance Any encumbrance or lien, including, without limitation, any mortgage, judgment lien, materialman's lien, mechanic's lien, security interest, encroachment, easement, or other restriction, in each case having a material adverse effect on the thing or right so encumbered. Environmental Laws The relevant laws, regulations, orders, decrees, standards, ordinances, codes, and other governmental mandates and restrictions in effect today that are applicable to the Subsidiary and relate to emissions, discharges, and releases of Hazardous Materials into land, soil, ambient air, water, and atmosphere, and/or the generation, treatment, storage, transportation, and disposal of hazardous wastes. - iii - Execution Copy Appendix A TERM MEANING Environmental Loss Any liability, damage, cost, expense, claim or action, whether in law or equity, arising under Environmental Laws or any other theory of recovery, including but not limited to nuisance, negligence, and strict liability relating to emissions, discharges, and releases of Hazardous Materials into land, soil, ambient air, water, and atmosphere, and/or the generation, treatment, storage, transportation, and disposal of hazardous wastes at or from the Real Property. Environmental Matter Any action, condition, or event giving rise to a legal obligation under the Environmental Laws that relate to the Subsidiary. Financial Debt All indebtedness for money borrowed incurred by the Subsidiary. Governmental Authority Any nation or government, any state or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory administrative functions of or pertaining to government, whether U.S. or foreign. Hazardous Materials Any material or condition that is defined as "hazardous" or is subject to regulation under an Environmental Law, including pollutants, chemicals, contaminants, petroleum and petroleum products, asbestos, PCBs, radioactive materials and other hazardous or toxic substances. Health and Safety Laws The relevant laws, regulations, orders, ordinances, codes, and other governmental mandates and restrictions applicable to the Subsidiary relating to the health and/or safety of employees or others having business dealings with the Subsidiary. Inventories Inventories, wherever located, including inventories of raw materials, components, assemblies, subassemblies, work-in-process, finished goods, replacement parts, spare parts, operating supplies, and packaging held or used by the Subsidiary. Leases Collectively, the Real Property Leases and the Personal Property Leases - iv - Execution Copy Appendix A TERM MEANING Licenses Licenses and similar rights of the Subsidiary affording the right to use or enjoy intangible property or intangible property rights, including software. Material Contract Any contract listed, or required to be listed, in items 1 through 4 on Part K of the Disclosure Package. Material Event Any condition, circumstance, occurrence, or other event which has had or is reasonably likely to have a material and adverse effect on the Powder Coatings Business Condition, including (without limitation) any of such event resulting from any -- (1) Act of God, flood, windstorm, earthquake, accident, fire, explosion, casualty, riot, requisition or taking of property by governmental authority, war, embargo, or other event outside Ferro's control; (2) Termination, cancellation, or substantial modification of any Contract, Lease, License, or Permit; (3) Default by Ferro under any Contract, Lease, License, or Permit; or (4) Filing (whether voluntary or involuntary) of a petition in bankruptcy or commencement of any other action involving creditors' rights or debtors' remedies affecting Ferro. Other Business Contracts Contracts other than Purchase Contracts and Sales Contract to which the Subsidiary is a party or to which the Subsidiary is bound. Other Current Assets Those miscellaneous and other current assets of the Subsidiary as the same shall exist at Closing. Other Current Liabilities Those current liabilities of the Subsidiary as the same shall exist at Closing, including accrued expenses, customer rebates and payroll expenses, bonuses, incentives, benefits, taxes and other current liabilities incurred in the ordinary course of business. - v - Execution Copy Appendix A TERM MEANING Owns or Ownership Such ownership as confers upon the party or third-party having it good and marketable title to and control over the thing or right owned, free and clear of any and all Encumbrances except Permitted Encumbrances. Permits Permits, approvals, and qualifications issued by any government or governmental unit, agency, board, body, or instrumentality and all applications for such items held or used by the Subsidiary. Permitted Encumbrances The following: (1) Liens for Taxes accrued but not yet payable; (2) Liens arising as a matter of law in the ordinary course of business (provided the Subsidiary is not delinquent in respect of the obligations secured by such liens); and (3) Such other imperfections of title and other encumbrances which, singly or taken together, do not and are not likely to have a material adverse effect on the Powder Coatings Business Condition. Personal Property Leases Leases and similar contractual rights of the Subsidiary affording the right to use or enjoy tangible personal property or tangible personal property rights. Powder Coatings Business The properties, assets, liabilities (fixed and Condition otherwise), and condition (financial and otherwise) of the Subsidiary taken as a whole. Prescribed Rate The rate of interest publicly announced by National City Bank, Cleveland, Ohio, from time to time as its prime or base rate for U.S. Dollar loans. Prepaid Items Prepaid and similar items of the Subsidiary, including prepaid expenses, deferred charges, advance payments, supplier rebates, and other prepaid items arising out of Ferro's conduct of the Powder Coatings Business. - vi - Execution Copy Appendix A TERM MEANING Purchase Contracts Orders, contracts, and commitments for the purchase of goods and/or services, including, without limitation, such items relating to the purchase of capital, tooling, products, supplies, and software, to which the Subsidiary is a party, except, in all cases, those contracts listed in Subpart K-5 of the Disclosure Package. Real Property The following real properties, including all land, buildings, improvements, fixtures, and appurtenances thereto: (1) Subsidiary's powder coatings plant site located at 858-1, Hwasan-ri, Onsan-eup, Uljoo-gun, Ulsan City, Korea. Real Property Leases Those leases, grants of land use rights, and similar contractual rights affording the right to use and enjoy certain real property listed in Subpart F-2 of the Disclosure Package Sales Contracts Orders, contracts, commitments, and proposals for the sale of Products, including such items relating to repair, restoration, maintenance, preservation, and similar operations, to which the Subsidiary is a party. Shares 1,116,602 shares of common stock, par value Won 5,000 per share, of the Subsidiary. Tangible Personal Property Tangible personal property (whether owned, leased, or otherwise), including all machinery, equipment, tooling, dies, molds, jigs, patterns, gauges, materials handling equipment, furniture, office equipment, cars, trucks, and other vehicles held or used by the Subsidiary and listed in Part G of the Disclosure Package. Tax All Federal, state, foreign and other net income, gross receipts, gains, sales, use, employment, social security, withholding, occupation, franchise, profits, excise, real and personal property, land, value added, capital, consumption, national insurance, registration, custom, stamp, transfer, environmental, alternative minimum or other taxes, fees, duties, assessments or charges of any kind whatsoever whether payable directly or by withholding, together with any interest and penalties, additions to Tax or additional amounts with respect thereto, imposed by any taxing authority. - vii - Execution Copy Appendix A TERM MEANING Third-Party Claims Causes of action, rights of action, and warranty and product liability claims against other third-parties of the Subsidiary. Trade Accounts Payable Third-party notes, accounts, and other items payable of the Subsidiary, including all such amounts owing under Contracts, Leases, and Licenses. Trade Accounts Receivable Third-party notes and accounts receivable of the Subsidiary. Union Contracts The following collective bargaining agreement indicated below: (1) Collective Bargaining Agreement between the Subsidiary and the Subsidiary's employees Working Capital The difference between (X) the sum of (i) Trade Accounts Receivable, (ii) Inventories, (iii) Prepaid Items and (iv) Other Current Assets, and (Y) the sum of (i) Trade Accounts Payable and (ii) Other Current Liabilities, all as reflected on the books of the Subsidiary in accordance with the Accounting Principles as of a given date. - viii - -----END PRIVACY-ENHANCED MESSAGE-----