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): May 7, 1994
GROW GROUP, INC.
(Exact name of registrant as specified in its charter)
NEW YORK
(State or other jurisdiction of incorporation)
1-4596 11-1665588
(Commission File Number) (IRS Employer Identification No.)
200 Park Avenue, New York, New York 10166
(Address of principal executive offices) (Zip Code)
(212) 599-4400
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Exhibit Index is on page 4
<PAGE>
Item 5. Other Information
On May 7, 1994, Grow Group, Inc. (the "Company")
executed an agreement to purchase certain assets and assume
certain liabilities of Sinclair Paint, a Division of Insilco
Corporation, for a purchase price of $51,000,000 plus other
consideration (subject to adjustment at the closing). Sinclair
is a manufacturer and marketer of architectural paints which
generated approximately $98,000,000 of revenues in calendar 1993.
A copy of the Asset Purchase Agreement between Insilco
Corporation and the Company is annexed hereto as Exhibit 10.1.
In conjunction with the Asset Purchase Agreement, the
Company is negotiating an increase from $40 million to $60
million in its revolving credit line.
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits
(a) Financial statements of business acquired:
Not applicable.
(b) Pro forma financial information:
Not applicable.
(c) Exhibits:
The following Exhibit is filed with this Current Report
on Form 8-K:
Exhibit
Number Description
10.1 Asset Purchase Agreement,
dated as of May 7, 1994,
between Insilco Corporation
and Grow Group, Inc.
-2-
<PAGE>
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.
GROW GROUP, INC.
Date: May 10, 1994 By: /s/ Russell Banks
Russell Banks
President and Chief
Executive Officer
-3-
<PAGE>
Exhibit Index
Exhibit
Number Exhibit Location
10.1 Asset Purchase Agreement, 6
dated as of May 7, 1994,
between Insilco Corporation
and Grow Group, Inc.
-4-
<PAGE>
EXHIBIT 10.1
-5-
INSILCO CORPORATION
and
GROW GROUP, INC.
________________________________
ASSET PURCHASE AGREEMENT
________________________________
for the Sale of
Certain Assets of
INSILCO CORPORATION
Dated as of May 7, 1994
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I. Definitions. . . . . . . . . . . . . . . . . . . . 1
ARTICLE II. Purchase and Sale. . . . . . . . . . . . . . . . . 15
2.01 Purchase and Sale of the Transferred Assets and
Assumption of the Assumed Liabilities. . . . . . . 15
2.02 Post-Closing Adjustment. . . . . . . . . . . . . . 17
2.03 Assumption of Liabilities. . . . . . . . . . . . . 19
2.04 Post-Closing Liabilities . . . . . . . . . . . . . 20
ARTICLE III. Closing Date and Effective Time . . . . . . . . 20
ARTICLE IV. Representations and Warranties . . . . . . . . . . 20
4.01 Representations and Warranties by the Seller . . . 20
4.02 Representations and Warranties by the Purchaser. . 38
ARTICLE V. Additional Agreements and Covenants. . . . . . . . 42
5.01 Covenants of the Seller. . . . . . . . . . . . . . 42
5.02 Covenants of the Purchaser . . . . . . . . . . . . 47
ARTICLE VI. Conditions to Closing. . . . . . . . . . . . . . . 50
6.01 Conditions to the Obligations of the Purchaser . . 50
6.02 Conditions to the Obligations of the Seller. . . . 55
ARTICLE VII. Taxes . . . . . . . . . . . . . . . . . . . . . 59
7.01 Transfer Taxes . . . . . . . . . . . . . . . . . . 59
7.02 Ad Valorem or Property Taxes . . . . . . . . . . . 59
7.03 Purchase Price Allocation. . . . . . . . . . . . . 60
7.04 Real Property Transfer Fees. . . . . . . . . . . . 60
ARTICLE VIII. Employee Matters. . . . . . . . . . . . . . . . 61
8.01 Employment Offers; Benefits. . . . . . . . . . . . 61
8.02 WARN . . . . . . . . . . . . . . . . . . . . . . . 63
8.03 Termination of Participation in Certain Benefit
Plans. . . . . . . . . . . . . . . . . . . . . . . 63
8.04 Certain Agreements with Key Employees. . . . . . . 64
8.05 Multiemployer Plans. . . . . . . . . . . . . . . . 64
ARTICLE IX. Extent and Survival of Representations,
Warranties, Covenants and Agreements;
Indemnification. . . . . . . . . . . . . . . . . . 64
9.01 Scope of Representations of the Seller . . . . . . 64
9.02 Indemnification of Parties . . . . . . . . . . . . 65
9.03 Survival . . . . . . . . . . . . . . . . . . . . . 75
9.04 Indemnification Procedures . . . . . . . . . . . . 76
9.05 Insurance. . . . . . . . . . . . . . . . . . . . . 81
9.06 Acknowledgment of the Purchaser. . . . . . . . . . 82
ARTICLE X. Termination, Amendment and Waiver. . . . . . . . . 82
10.01 Grounds for Termination. . . . . . . . . . . . . . 82
10.02 Effect of Termination. . . . . . . . . . . . . . . 83
10.03 Amendment. . . . . . . . . . . . . . . . . . . . . 84
10.04 Extension; Waiver. . . . . . . . . . . . . . . . . 84
10.05 Procedure for Termination, Amendment, Extension
or Waiver. . . . . . . . . . . . . . . . . . . . . 84
ARTICLE XI. Brokers. . . . . . . . . . . . . . . . . . . . . . 85
ARTICLE XII. Expenses. . . . . . . . . . . . . . . . . . . . 85
ARTICLE XIII. Noncompetition. . . . . . . . . . . . . . . . . 85
13.01 Seller's Covenant Not to Compete . . . . . . . . . 86
13.02 Equitable Relief . . . . . . . . . . . . . . . . . 86
13.03 Scope of Covenant. . . . . . . . . . . . . . . . . 86
ARTICLE XIV. Real Property . . . . . . . . . . . . . . . . . 86
14.01 Transferred Stores . . . . . . . . . . . . . . . . 86
14.02 Lease. . . . . . . . . . . . . . . . . . . . . . . 87
14.03 Option to Purchase . . . . . . . . . . . . . . . . 88
14.04 Sale to Third Party. . . . . . . . . . . . . . . . 89
14.05 Sharing of Proceeds. . . . . . . . . . . . . . . . 89
ARTICLE XV. Environmental Assessments and Data . . . . . . . . 90
15.01 Environmental Assessments. . . . . . . . . . . . . 90
15.02 Environmental Data . . . . . . . . . . . . . . . . 91
ARTICLE XVI. Notices; Books and Records; Miscellaneous . . . 92
16.01 Notices. . . . . . . . . . . . . . . . . . . . . . 92
16.02 Books and Records. . . . . . . . . . . . . . . . . 93
16.03 Miscellaneous. . . . . . . . . . . . . . . . . . . 93
EXHIBITS
Exhibit A: General Conveyance and Assumption Agreement.
Exhibit B: Deed.
Exhibit C: Lease Assignment.
Exhibit D: Lease.
SCHEDULES
Schedule 1.01(A): Transferred Assets
Schedule 1.01(B): Certain Retained Assets.
Schedule 1.01(C): Collective Bargaining Agreements.
Schedule 1.01(D): Leased Real Property.
Schedule 1.01(E): Owned Real Property.
Schedule 1.01(F): Multiemployer Plans.
Schedule 1.01(G): Certain Retained Liabilities.
Schedule 1.01(H): Garfield Site.
Schedule 2.03(A): Assumed Current Liabilities.
Schedule 4.01(A): Seller Jurisdictions.
Schedule 4.01(C): Certain Seller Consents.
Schedule 4.01(D): Certain Seller Defaults and
Noncompliance.
Schedule 4.01(F): Certain Changes.
Schedule 4.01(G): Certain Contracts, Agreements,
Plans and Commitments.
Schedule 4.01(H): Insurance.
Schedule 4.01(I)(i): Patents, Trademarks and Copyrights.
Schedule 4.01(I)(ii): Intellectual Property Agreements.
Schedule 4.01(J): Plans.
Schedule 4.01(K): Seller Litigation.
Schedule 4.01(M): Encumbrances on Transferred Assets.
Schedule 4.01(N): Environmental Matters.
Schedule 4.01(O): Licenses.
Schedule 4.01(P): Inventory.
Schedule 4.01(Q): Receivables.
Schedule 4.01(R): Tax Matters.
Schedule 4.01(S): Bank Accounts.
Schedule 4.01(T): Product Warranties.
Schedule 4.01(U): Certain Employment Laws.
Schedule 4.02(A): Purchaser Jurisdictions.
Schedule 4.02(C): Certain Purchaser Consents.
Schedule 4.02(D): Certain Purchaser Defaults and
Noncompliance.
Schedule 4.02(F): Purchaser Litigation.
Schedule 8.01(A): Seller's Severance Pay Plan.
Schedule 8.04(A): Key Employee Agreements.
Schedule 13.01(A): California Counties.
Schedule 14.01(A): Book Values of the Stores.
Schedule 14.01(B): Appraisal Standards.
Schedule 14.05(A): Transferred Stores.
Schedule 15.01(A): Scope of Work.<PAGE>
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement") is
entered into May 7, 1994 (the "Signing Date"), between Insilco
Corporation, a Delaware corporation (the "Seller"), and Grow Group,
Inc., a New York corporation (the "Purchaser"),
W I T N E S S E T H:
WHEREAS, the Seller desires to sell to the Purchaser
certain assets and properties of the Seller's operating division
known as the Sinclair Paint Company (the "Division"), and the
Purchaser desires to purchase from the Seller such assets and
properties, upon the terms and subject to the conditions
hereinafter set forth; and
WHEREAS, the Seller desires to transfer to the Purchaser
certain liabilities and obligations of the Division, and the
Purchaser desires to assume such liabilities and obligations, upon
the terms and subject to the conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and of
the respective representations, warranties, covenants, agreements
and conditions contained herein, the parties hereto hereby agree as
follows:
ARTICLE I.
Definitions
The terms set forth below in this Article I will have the
meanings ascribed to them below or in the part of this Agreement
referred to below:
Accountant: KPMG Peat Marwick or any successor appointed
by the Seller and agreed to by the Purchaser.
Acquired Business: a person or entity whose assets or
stock has been acquired by the Predecessor or the Division (or the
Seller on behalf of the Division) prior to the Closing Date.
Aggregate Proceeds: as defined in Section 14.05.
Agreement: as defined in the preamble.
Appraiser: Cushman & Wakefield or any successor
appointed by the Seller and agreed to by the Purchaser.
Assumed Liabilities: the liabilities and obligations to
be assumed by the Purchaser as described in Section 2.03.
Audited Computations: as defined in Section 2.02(A).
Balance Sheet: the audited balance sheet (with
accompanying notes) of the Division as at the Balance Sheet Date
and audited by the Accountant.
Balance Sheet Adjustment: as defined in Section 2.01.
Balance Sheet Current Liabilities: the liabilities
included on the Balance Sheet as current liabilities, including the
accruals for workers' compensation and store closing expenses but
excluding the other Retained Liabilities and any other liability
for which the Seller is liable under this Agreement and all
reserves or accrued expenses related thereto.
Balance Sheet Date: December 31, 1993.
Balance Sheet Working Capital: as at the Balance Sheet
Date, Current Assets minus Balance Sheet Current Liabilities.
Bargaining Unit Employees: employees of the Division
that are included within one or more Collective Bargaining
Agreements.
Best Efforts: a party's best efforts in accordance with
reasonable commercial practice and without the incurrence of
unreasonable expense or the initiation or prosecution of legal
action.
Book Value: the value of all of the Stores as maintained
on the Seller's books, as at the Balance Sheet Date, as set forth
in Schedule 14.01(A).
Capital Expenditures: any capital expenditures made in
the Ordinary Course of Business of the Division after the Balance
Sheet Date and included in property, plant and equipment on the
Closing Balance Sheet.
CERCLA: the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended.
Charter Documents: with respect to any corporation, the
articles or certificate of incorporation and bylaws or code of
regulations of such corporation.
Claim Notice: as defined in Section 9.04(A).
Closing: as defined in Article III.
Closing Balance Sheet: the audited balance sheet (with
accompanying notes) of the Division as at the Closing Date,
prepared using the same accounting principles, practices and
procedures that were used to prepare the Balance Sheet applied in
a manner consistent therewith.
Closing Current Liabilities: the liabilities included
on the Closing Balance Sheet as current liabilities excluding all
Retained Liabilities (including accruals for workers' compensation
and store closing expenses) and any other liability for which the
Seller is liable under this Agreement and any reserves or accrued
expenses related thereto.
Closing Date: as defined in Article III.
Closing Working Capital: as at the Closing Date, Current
Assets minus Closing Current Liabilities.
Code: the Internal Revenue Code of 1986, as amended.
Collective Bargaining Agreement: a collective bargaining
agreement listed on Schedule 1.01(C) (collectively, Collective
Bargaining Agreements).
Comparable Employment: with respect to each Employee, an
offer for employment in a position reasonable for a person of the
Employee's qualifications and skills to accept under the terms of
the offer, and which offer provides that the wages (exclusive of
benefits) and hours of such employment are, taken as a whole,
generally comparable to the wages (exclusive of benefits) and hours
in effect for such Employee immediately prior to the Closing Date.
Confidentiality Agreement: the confidentiality agreement
executed between the Purchaser and the Seller, dated August 23,
1993.
Cost Recovery Action: as defined in Section 9.01(B)(v).
Current Assets: as of the applicable dates, the assets
included on the Balance Sheet as current assets and the assets
included as current assets on the Closing Balance Sheet, excluding
Retained Assets included therein.
currently conducted: as of any applicable date, the six
(6) month period immediately prior to such date.
Data Room: as defined in Section 9.01.
Deed: the form of Corporation Grant Deed attached hereto
as Exhibit B.
Division: as defined in the preamble.
Effective Time: as defined in Article III.
Election Period: as defined in Section 9.04(A).
Elective Corrective Action: as defined in
Section 9.02(B).
Employee: as defined in Section 8.01 (collectively,
Employees).
Environment: any surface water, ground water, drinking
water supply, land surface or subsurface strata, or ambient air.
Environmental Claim: any written notice by any person or
entity alleging any violation of any Environmental Law or any
potential liability (including, without limitation, potential
liability for investigatory costs, cleanup costs, harm or damages
to person, property or natural resources or fines or penalties)
arising out of, based on or resulting from (A) the emission,
discharge, disposal, release or threatened release in or into the
Environment of any Hazardous Material or (B) circumstances forming
the basis of any violation, or alleged violation, of any applicable
Environmental Law.
Environmental Consultant: Engineering Science, Inc., or
any successor agreed to by the Seller and the Purchaser.
Environmental Data: as defined in Section 15.02.
Environmental Estimate: as defined in the Scope of Work
(collectively, Environmental Estimates).
Environmental Laws: all federal, state and local laws,
codes, common law, regulations, rules and orders that may be
enforced by any applicable Governmental Authority relating to
pollution, the protection of the Environment or the emission,
discharge, disposal, release or threatened release of Hazardous
Materials in or into the Environment (and individually, an
Environmental Law).
Environmental Loss: any Loss, other than an Offsite
Environmental Loss and a Shared Successor Environmental Loss, that
(A) arises under or is based on any Environmental Law and
(B) results from the ownership or operation of, or the conduct of
the business of the Division (or the Seller on behalf of the
Division) or the Predecessor or any other person or entity on, the
Real Property prior to the Closing Date (but not including any Loss
arising under or based on requirements of Environmental Laws
promulgated, enacted or amended after the Closing Date to the
extent such requirements impose greater obligations (financial or
otherwise) than those in effect as of the Closing Date)
(collectively, Environmental Losses).
Environmental Permits: as defined in Section 4.01(N).
Environmental Warranty Losses: as defined in
Section 9.02(B).
ERISA: the Employee Retirement Income Security Act of
1974, as amended.
Exhibit: an exhibit to this Agreement.
Existing Purchaser Medical Plan: as defined in
Section 8.01(E).
Fair Market Value: as defined in Section 14.02(B).
Filings: any filings required to release or evidence the
release of the Insilco Liens with respect to the Transferred
Assets.
GAAP: generally accepted accounting principles,
consistently applied throughout the applicable period.
Garfield Site: a tract of land, together with the
improvements thereon, located at 6100 Garfield Avenue, Commerce,
California 90040-3611, as more specifically described in Schedule
1.01(H).
General Conveyance: a General Conveyance and Assumption
Agreement substantially in the form attached as Exhibit A.
Governmental Authority: the United States of America,
any state, commonwealth, territory or possession thereof, and any
political subdivision of any of the foregoing, including courts,
departments, commissions, boards, bureaus, agencies or other
instrumentalities.
Hazardous Materials: any material or substance defined
as hazardous or toxic under an applicable Environmental Law.
HSR Act: the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended.
Indemnified Party: as defined in Section 9.04(A).
Indemnifying Party: as defined in Section 9.04(A).
Indemnity Notice: as defined in Section 9.04(D).
Independent Accountant: Deloitte & Touche or any other
nationally recognized certified public accounting firm mutually
agreed to by the Seller and the Purchaser.
Initial Term: as defined in Section 14.02(A).
Insilco Affiliate: any person that directly or
indirectly, through one or more intermediaries, controls or is
controlled by or is under common control with the Seller.
Insilco Liens: all liens on and security interests in
the Transferred Assets which secure the obligations of the Seller
under the Seller Credit Agreement or the Seller Indentures.
Intellectual Property: as defined in Section 4.01(I).
Intellectual Property Agreements: as defined in
Section 4.01(I).
Key Employees: the employees of or assigned to the
Division listed in Schedule 8.04(A).
knowledge: with respect to (A) the Seller, the knowledge
of any employee employed in a management function at the Division,
or any officer or director of the Seller, or the Seller's Risk
Manager, Environmental Manager, Tax Manager or Internal Auditor, or
(B) the Purchaser, the knowledge of any employee employed in a
management function, or any officer or director of the Purchaser.
Lease: a lease substantially in the form of Exhibit D,
with respect to a Store (collectively, Leases).
Lease Assignment: a lease assignment, substantially in
the form of Exhibit C, with respect to any of the Leased Real
Property (collectively, Lease Assignments).
Leased Real Property: the real property in which the
Seller has a leasehold interest and which is described in
Schedule 1.01(D).
License: as defined in Section 4.01(O) (collectively,
Licenses).
Loss: any claim, lawsuit, liability, loss, damage,
expense, penalty, fine or interest (including reasonable attorneys'
fees and costs, but excluding diminution in value and lost profits)
(collectively, Losses).
Material Adverse Effect: any material adverse effect on
the assets, business, operations or financial condition of the
Division or the Purchaser, as applicable.
Multiemployer Plans: the multiemployer plans listed in
Schedule 1.01(F).
NASD: National Association of Securities Dealers, Inc.
Net Assets: with respect to the Balance Sheet, total
assets less total current liabilities.
Net Sales Price: as defined in Section 14.04.
Offsite Environmental Loss: any Loss arising under or
based on any Environmental Law (a) resulting from the ownership or
operation of or conduct of the business of the Division (or the
Seller on behalf of the Division) or the Predecessor with respect
to real property previously owned or leased by the Division (or the
Seller on behalf of the Division) or the Predecessor, not included
in the Real Property, or (b) involving any transportation to,
storage at, or disposal at facilities not owned or leased (or not
previously owned or leased) by the Division (or the Seller on
behalf of the Division) or the Predecessor of Hazardous Materials
or petroleum products arranged for by the Division (or the Seller
on behalf of the Division) or the Predecessor prior to the Closing
Date, unless performed at the direction or request of the Purchaser
(but not including any Loss arising under or based on requirements
of Environmental Laws promulgated, enacted or amended after the
Closing Date to the extent such requirements impose greater
obligations (financial or otherwise) than those in effect as of the
Closing Date) (collectively, Offsite Environmental Losses).
Option Purchase Price: as defined in Section 14.03(B).
Ordinary Course of Business: with respect to the
Division, the ordinary course of its business, consistent with past
practices.
Owned Real Property: the real property in which the
Seller has a fee interest and which is described in
Schedule 1.01(E).
Permitted Encumbrances: (A) liens for current property
and similar taxes not yet due and payable, or being contested in
good faith by appropriate proceedings; (B) liens imposed by law and
incurred in the Ordinary Course of Business for obligations not yet
due and payable, or being contested in good faith by appropriate
proceedings, to carriers, warehousemen, laborers, materialmen and
the like; (C) easements, rights-of-way and other encumbrances that
do not materially detract from the value (assuming that the current
use is the best and highest use) or interfere with the current use
of the assets affected thereby; and (D) those liens listed in
Schedule 4.01(M).
Plans: as defined in Section 4.01(J).
Post-Closing Environmental Loss: any Loss, other than an
Environmental Loss, Offsite Environmental Loss and Shared Successor
Environmental Loss, that (A) arises under or is based on any
Environmental Law in effect on or after the Closing Date and (B)
results from the ownership or operation of, or the conduct of the
business of, the Division, on or after the Closing Date
(collectively, Post-Closing Environmental Losses).
Predecessor: Sinclair Paint Company, Inc., a California
corporation, the stock of which was acquired by the Seller on April
18, 1971.
Product Warranty Loss: any Loss arising on or after the
Closing Date with respect to the Products manufactured or sold by
the Division (or the Seller on behalf of the Division) prior to the
Closing Date, but excluding any claims for personal injury arising
from such Products and any claims asserted or litigation pending
with respect to the Products prior to the Closing Date
(collectively, Product Warranty Losses).
Products: the products currently produced, assembled,
distributed, marketed or sold by the Division, including, but not
limited to, architectural paints and coatings, together with
sundries, wallcoverings, spray equipment and other decorator
products produced by others and related tools and supplies
(individually, a Product).
Pro Forma Balance Sheet: the unaudited balance sheet
(with accompanying notes) of the Division as of December 31, 1993.
Pro Forma Closing Balance Sheet: the unaudited balance
sheet (with accompanying notes) of the Division as at the Closing
Date, prepared using the same accounting principles, practices and
procedures that were used to prepare the Balance Sheet applied in
a manner consistent therewith.
Pro Forma Net Assets: $31,418,000.
Purchase Price: as defined in Section 2.01(B).
Purchase Price Adjustment: as defined in Section
2.01(B).
Purchaser: as defined in the preamble.
Purchaser Indemnified Loss: as defined in Section
9.02(A) (collectively, Purchaser Indemnified Losses).
Purchaser Notified Items: as defined in Section 6.01(I).
Purchaser's Accountant: Ernst & Young or any successor
appointed by the Purchaser.
Purchaser's Computations: as defined in Section 2.02(A).
Purchaser's Share: as defined in Section 14.05.
Real Property: the Owned Real Property and the Leased
Real Property.
Recovered Amount: as defined in Section 9.02(B).
Required Corrective Action: as defined in Section
9.02(B).
Retained Assets: all assets, properties and rights of
the Seller, of any nature, including the Retained Assets listed in
Schedule 1.01(B), but excluding the Transferred Assets.
Retained Liabilities: all liabilities (other than the
Assumed Liabilities and the Environmental Losses) arising from or
in connection with the Transferred Assets or the conduct of the
business of the Division prior to the Closing Date, including the
liabilities set forth on Schedule 1.01(G).
Schedule: a schedule to this Agreement.
Scope of Work: the Scope of Environmental Work attached
as Exhibit 15.01(A).
Seller: as defined in the preamble.
Seller Credit Agreement: the Credit Agreement dated as
of April 1, 1993 among the Seller, as borrower, the Lenders and
Issuers parties thereto and Citicorp USA, Inc., as Agent, as
amended to date.
Seller Indemnified Loss: as defined in Section 9.02(E)
(collectively, Seller Indemnified Losses).
Seller Indentures: (A) the Indenture dated as of July 1,
1987 between the Seller and Shawmut Connecticut Bank, N.A., as
Trustee, as amended and supplemented to date, and (B) the 103/8%
Note
Indenture.
Seller Security Documents: collectively, the Loan
Documents (as such term is defined in the Seller Credit Agreement),
the New Collateral Trust Agreement (as such term is defined in the
103/8% Note Indenture) and the New Security Documents (as such term
is defined in the New Collateral Trust Agreement).
Severance Pay Plan: the Severance Pay Plan attached as
Schedule 8.01(A).
Severance Pay Agreements: the Seller's Severance Pay
Plan with respect to the Division, as set forth in Schedule
8.01(A), the Agreements set forth on Schedule 8.04(A) and any
severance pay agreements set forth in or required by the Collective
Bargaining Agreements (individually, a Severance Pay Agreement).
Shared Successor Environmental Loss: any Loss, other
than an Environmental Loss and an Offsite Environmental Loss,
arising under or based on any Environmental Law (a) with respect to
real property previously owned or leased by an Acquired Business,
or (b) involving any transportation to, storage at, or disposal at
facilities not owned or leased (or not previously owned or leased)
by the Division (or the Seller on behalf of the Division), or any
Acquired Business, of Hazardous Materials or petroleum products
arranged for by an Acquired Business prior to the Closing Date (but
not including any Loss arising under or based on requirements of
Environmental Laws promulgated, enacted or amended after the
Closing Date to the extent such requirements impose greater
obligations (financial or otherwise) than those in effect as of the
Closing Date) (collectively, Shared Successor Environmental
Losses).
Side Letter: the side letter between the Seller and the
Purchaser, dated effective the Signing Date, entered into in
connection with this Agreement.
Signing Date: as defined in the preamble.
Statement of Operating Earnings: the audited statement
of operating earnings of the Division for the past two (2) fiscal
years of the Seller, including the notes relating thereto, for the
twelve (12) month periods ended on December 31, 1992 and the
Balance Sheet Date prepared by the Seller and audited by the
Accountant.
Statements: collectively, the Balance Sheet, the audited
balance sheet (with accompanying notes) of the Division as at
December 31, 1992 prepared by the Seller and audited by the
Accountant, and the Statement of Operating Earnings.
Store: a tract of land, together with the improvements
thereon owned by the Seller, described in Schedule 1.01(E)(2)-(14)
(collectively, Stores).
Taxes: all taxes, charges, levies, penalties or other
assessments imposed by any United States federal, state, local or
foreign taxing authority, including income, excise, property,
sales, transfer, franchise, payroll, withholding, social security
or other taxes, including any interest, penalties or additions
attributable thereto, regardless of whether such interest,
penalties or additions are attributable to a period ending before
or after the Closing Date.
Tax Return: any return, report, information return,
schedule or other document (including any related or supporting
information) filed or required to be filed with any Governmental
Authority with respect to Taxes attributable to the Division.
103/8% Note Indenture: the Indenture dated as of April
1,
1993 among the Seller and each of the other subsidiaries of the
Seller that are parties thereto and State Street Bank and Trust
Company, as Trustee, as amended and supplemented to date.
Third Party Claim: as defined in Section 9.04(A).
Threshold Amount: as defined in Section 9.02(A)(i).
Transfer Agreements: with respect to any party to this
Agreement, this Agreement, the General Conveyance, the Leases and
the Lease Assignments, and with respect to the Seller, the Deeds.
Transferred Assets: as set forth in Schedule 1.01(A).
Transferred Employee: as defined in Section 8.01
(collectively, Transferred Employees).
Transferred Stores: as defined in Section 14.01.
Unions: Local 431, Local 572, Local 578, Local 860 and
Local 996, each of the International Brotherhood of Teamsters.
WARN Act: as defined in Section 8.02.
ARTICLE II.
Purchase and Sale
2.01 Purchase and Sale of the Transferred Assets and
Assumption of the Assumed Liabilities.
(A) On the terms and subject to the conditions of this
Agreement, at the Closing (i) the Seller will sell, assign,
transfer and convey to the Purchaser, and the Purchaser will
purchase and acquire from the Seller, all the Seller's right,
title and interest in and to the Transferred Assets, (ii) the
Seller will assign and transfer to the Purchaser, and the
Purchaser will assume from the Seller, the Assumed Liabilities
and (iii) the Seller will retain and continue to be solely
liable and responsible for the Retained Liabilities.
(B) The aggregate purchase price to be paid by the
Purchaser for the Transferred Assets will be $51,000,000, as
adjusted by the Balance Sheet Adjustment, plus any amounts to
be paid for the Transferred Stores as set forth in Section
14.01 (the "Purchase Price"), to be adjusted after the Closing
Date pursuant to Section 2.02 (the "Purchase Price
Adjustment"). On the Closing Date, the Purchaser will pay the
Seller the Purchase Price by wire transfer in immediately
available funds to the account or accounts specified in
writing by the Seller to the Purchaser. Simultaneously
therewith, (i) the Seller and the Purchaser will execute and
deliver, effective as of the Effective Time, the General
Conveyance, the Leases and the Lease Assignments and (ii) the
Seller will execute and deliver, effective as of the Effective
Time, the Deeds.
(C) As soon as practicable after the Signing Date, the
Accountant will conduct a special purpose audit of the Pro
Forma Balance Sheet. The Pro Forma Balance Sheet does not,
and the Balance Sheet will not, include adjustments to the
Division's balance sheet for: (i) the Seller's debt and other
corporate allocations; (ii) environmental remediation
liabilities; (iii) income tax accruals; (iv) litigation
reserves; and (v) the Seller's equity accounts. The
Accountant will make its "work papers" in connection with the
audit of the Pro Forma Balance Sheet available for review by
the Purchaser's Accountant, at the Purchaser's expense, during
normal business hours and on reasonable advance notice.
(D) An adjustment, if any, to the Purchase Price (the
"Balance Sheet Adjustment"), will be determined from the
Balance Sheet as follows:
(i) if the Net Assets exceed $31,918,000, the
Purchase Price will be increased by the amount of such
excess, if any; or
(ii) if the Pro Forma Net Assets exceed the Net
Assets, the Purchase Price will be decreased by the
amount of such excess.
(E) The Seller and the Purchaser will have ten (10) days
after receipt of the Balance Sheet to object to the Balance
Sheet Adjustment. If neither party objects by written notice
to the other party within such ten (10) days, each party will
be deemed to have accepted and agreed to the Balance Sheet
Adjustment. If a party objects to the Balance Sheet
Adjustment within such time period, then within ten (10) days
after such objection is received by the other party, the
parties will (i) meet to consider such objection and may agree
to revise the Balance Sheet Adjustment, which, on agreement,
will be binding on the Seller and the Purchaser, or
(ii) specify that the Independent Accountant perform certain
accounting procedures to determine whether the alleged error
or errors in the Balance Sheet or the Balance Sheet Adjustment
exist and report to the Seller and the Purchaser the
Independent Accountant's results and conclusions. The fees
and expenses of the Independent Accountant for such services
will be shared equally by the Purchaser and the Seller. The
Independent Accountant's determination will be made within
thirty (30) days after the date that the Independent
Accountant receives the Balance Sheet and its determination of
the Balance Sheet Adjustment will be final and binding on the
Purchaser and the Seller.
2.02 Post-Closing Adjustment. The Purchase Price will be
adjusted from the dollar amount stated in Section 2.01 as provided
in this Section 2.02.
(A) The Purchaser will prepare and deliver to the
Seller, within sixty (60) calendar days after the Closing
Date, (i) the Pro Forma Closing Balance Sheet, (ii) the
Purchaser's calculation of Closing Working Capital as derived
from the Pro Forma Closing Balance Sheet and (iii) the
resulting adjustment to the Purchase Price to be made pursuant
to Section 2.02(B) (collectively, the "Purchaser's
Computations"). The Accountant will have sixty (60) days
after receiving the Purchaser's Computations to audit the Pro
Forma Closing Balance Sheet and to deliver the Closing Balance
Sheet and the resulting adjustments, if any, to the
Purchaser's Computations (the "Audited Computations"). The
Seller and the Purchaser will have thirty (30) days after
receipt of the Audited Computations to review and object to
any error or item in the Closing Balance Sheet and the Audited
Computations. In connection with such review by the
Purchaser, the Purchaser's Accountant will have the
opportunity to review the Accountant's "work papers" at the
Purchaser's expense during normal business hours and on
reasonable advance notice. If neither party objects by
written notice to the other party within such thirty (30)
days, each party will be deemed to have accepted and agreed to
the Audited Computations. If a party objects to the Audited
Computations within such time period, then within thirty (30)
days after such objection is received by the other party, the
parties will (a) meet to consider such objection and may agree
to revise the Audited Computations, which, on agreement, will
be binding on the Seller and the Purchaser, or (b) specify
that the Independent Accountant perform certain accounting
procedures to determine whether the alleged error or errors in
the Audited Computations exist and report to the Seller and
the Purchaser the Independent Accountant's results and
conclusions. The fees and expenses of the Independent
Accountant for such services will be shared equally by the
Purchaser and the Seller. The Independent Accountant's
determination will be made within thirty (30) days after the
date that the Independent Accountant receives the Audited
Computations and such determination will be final and binding
on the Purchaser and the Seller.
(B) The Purchase Price will be, as determined by the
procedure set forth in Section 2.02(A), (i) increased by the
amount of any Capital Expenditures, not to exceed $500,000,
and (ii) increased by the amount by which Closing Working
Capital exceeds Balance Sheet Working Capital, or decreased by
the amount by which Balance Sheet Working Capital exceeds
Closing Working Capital, as applicable.
(C) The Purchaser or the Seller, as applicable, will pay
or cause to be paid the Purchase Price Adjustment to or at the
direction of the other party by wire transfer in immediately
available funds on or before the fifth (5th) business day
following the final determination thereof.
2.03 Assumption of Liabilities. The Purchaser agrees to
assume or otherwise be liable for (A) all current liabilities
described on Schedule 2.03(A) to the extent disclosed on the
Closing Balance Sheet, (B) all Environmental Losses specifically
assumed by the Purchaser under Article IX and Section 15.01,
(C) all liabilities specifically assumed by the Purchaser under
Articles VII, VIII and IX, (D) all liabilities specifically assumed
by the Purchaser in the Lease Assignments, (E) to the extent set
forth in Section 9.02(D), all liabilities for Product Warranty
Losses, and (F) all liabilities arising from purchase orders,
contracts and contract rights for unfilled or partially filled
orders from customers, sales representatives or distributors for
Products, existing on the Closing Date. Except as specifically
provided in this Agreement, the parties expressly agree that the
Purchaser will not be liable for any liability of the Seller or the
Division incurred or arising prior to the Closing Date.
2.04 Post-Closing Liabilities. Except as specifically
provided in this Agreement, the parties expressly agree that the
Seller will not be liable for any liabilities of the Division
incurred, or arising from the operation of the business of the
Division, after the Closing Date, including any Post-Closing
Environmental Losses.
ARTICLE III.
Closing Date and Effective Time
The closing of the purchase and sale of the Transferred
Assets and the transfer and assumption of the Assumed Liabilities
(the "Closing") will be held at the offices of Brobeck, Phleger &
Harrison, 550 South Hope Street, Los Angeles, California 90071-2604
at 10:00 a.m., Los Angeles time, on August 1, 1994, or at such
other place or time as the Purchaser and the Seller may agree (the
"Closing Date"). The effective time of the transfer of the
Transferred Assets and the assumption of the Assumed Liabilities
will be deemed to have been 12:01 a.m., Los Angeles time, on the
Closing Date (the "Effective Time").
ARTICLE IV.
Representations and Warranties
4.01 Representations and Warranties by the Seller.
Except as otherwise disclosed in this Agreement or the applicable
Schedules, and except as otherwise indicated below, the Seller
hereby individually represents and warrants as to itself and, where
indicated, as to the Division, as of the Signing Date and the
Closing Date, and with respect to any laws, including Environmental
Laws, as of the Signing Date and the Closing Date, as applicable,
that:
(A) Organization and Good Standing.
(i) The Seller is a corporation duly organized,
validly existing and in good standing under the laws of
the State of Delaware and has all requisite corporate
power and authority to own and lease the properties and
assets it currently owns and leases and to carry on its
business as such business is currently conducted.
(ii) The Seller has previously delivered to the
Purchaser true, correct and complete copies of its
Charter Documents, each as amended to date. The Seller
is duly licensed or qualified to do business as a foreign
corporation and is in good standing in all jurisdictions
in which the character of the properties and assets now
owned or leased by it or the nature of the business now
conducted by it requires it to be so licensed or
qualified and where the failure so to qualify would
reasonably be expected to (a) have a Material Adverse
Effect on the Division or (b) prevent the Seller from
consummating the transactions contemplated by this
Agreement. Schedule 4.01(A) sets forth a list of all
jurisdictions in which the Seller is licensed or
qualified to transact, as a foreign corporation, the
business being transacted by the Division.
(B) Corporate Authority and Approval.
(i) The Seller has all requisite corporate power
and authority to execute and deliver its Transfer
Agreements, to consummate the transactions contemplated
thereby and to perform all the terms and conditions
thereof to be performed by it. The execution and
delivery by the Seller of its Transfer Agreements, the
performance by the Seller of all the terms and conditions
thereof to be performed by it and the consummation of the
transactions contemplated thereby have been duly
authorized and approved by all requisite corporate action
on the part of the Seller.
(ii) This Agreement constitutes, and upon execution
and delivery the other Transfer Agreements will
constitute, the valid and binding obligations of the
Seller enforceable against the Seller in accordance with
their respective terms.
(C) No Violation. Except as set forth in Schedule
4.01(C), this Agreement and the execution and delivery hereof
by the Seller does not, and the other Transfer Agreements and
the execution and delivery thereof by the Seller will not, and
the fulfillment and compliance with the terms and conditions
of each of the Transfer Agreements and the consummation of the
transactions contemplated thereby will not:
(i) violate or conflict with any provision of the
Charter Documents of the Seller, each as amended to date;
(ii) violate or conflict with any provision of, or,
except with respect to the HSR Act, require any filing,
consent, authorization or approval under, any law or
administrative regulation or any judicial, administrative
or arbitration order, award, judgment, writ, injunction,
decree or license applicable to or binding upon the
Seller (assuming receipt of all governmental consents and
the making of all governmental filings which by their
nature cannot be obtained or made prior to the Signing
Date or the Closing Date, as applicable);
(iii) conflict with, result in a breach of,
constitute a default under (whether with notice or the
lapse of time or both), or accelerate or permit the
acceleration of the performance required by, or give rise
to any right of termination or cancellation under, or
require any filing, consent, authorization or approval
under, (a) any mortgage, indenture, loan or credit
agreement or any other agreement or instrument evidencing
indebtedness for money borrowed to which the Seller is a
party or by which the Seller is bound or to which any of
its properties is subject or (b) any lease, license,
contract or other agreement or instrument to which the
Seller is a party or by which it is bound or to which any
of its properties is subject; or
(iv) result in the creation or imposition of any
lien, charge or other encumbrance upon the assets of the
Seller,
which violation, conflict, breach, default, acceleration,
lien, charge or encumbrance, or failure to make or obtain such
filing, consent, authorization or approval, with respect to
the matters specified in clauses (ii) through (iv) of this
paragraph (C), individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect on
the Division or would prevent the Seller from consummating the
transactions contemplated by this Agreement.
(D) No Default; Compliance with Laws and Regulations.
Except as set forth in Schedule 4.01(D), and except with
respect to Environmental Laws (which are addressed in
Section 4.01(N)), to the knowledge of the Seller:
(i) the Seller is not in default under, and no
condition exists that with notice or lapse of time or
both would constitute a default under, (a) any mortgage,
loan agreement, indenture, evidence of indebtedness or
other instrument evidencing borrowed money to which the
Seller is a party or by which the Seller or its
properties are bound, (b) any judgment, order or
injunction of any arbitrator or Governmental Authority or
(c) any other agreement, contract, lease, license or
other instrument, which defaults or potential defaults,
individually or in the aggregate, in any such case would
reasonably be expected to have a Material Adverse Effect
on the Division or prevent the Seller from consummating
the transactions contemplated by this Agreement; and
(ii) the Seller is in compliance with all laws,
regulations, orders, judgments or decrees of any
Governmental Authority applicable to its respective
businesses and operations, noncompliance with which would
reasonably be expected to (a) have, individually or in
the aggregate, a Material Adverse Effect on the Division
or (b) prevent the Seller from consummating the
transactions contemplated by this Agreement; and the
Seller has not received any written notice to the effect
that, or otherwise been advised that, the Seller is not
in compliance with any of such laws, regulations, orders,
judgments or decrees, including any notification that the
Real Property is in violation, in any material respect,
of any applicable building, zoning, fire protection or
health law, ordinance or regulation.
(E) Statements. The Seller has delivered to the
Purchaser copies of the Statements prepared both in accordance
with the books and records of the Division and in accordance
with GAAP, except as otherwise noted therein. The Statements
fairly present, in accordance with GAAP, except as otherwise
noted therein, the financial condition of the Division as at
the dates indicated and its results of operations for the
periods then ended, subject, in the case of interim
statements, to normal year-end audit adjustments.
(F) Absence of Certain Changes. Except as set forth in
Schedule 4.01(F), and except as may be contemplated by this
Agreement, since December 31, 1993, there has not been:
(i) any damage, destruction or loss to the
Transferred Assets, whether covered by insurance or not,
or other change or development with respect to the
Division, which, individually or in the aggregate, has
had, or would reasonably be expected to have, a Material
Adverse Effect on the Division;
(ii) any sale, lease or other disposition of the
Transferred Assets other than in the Ordinary Course of
Business of the Division;
(iii) any change in the accounting methods or
principles used by the Seller with respect to the
Division;
(iv) any increase in the compensation of the
directors, officers or employees of, or assigned to, the
Division (other than in the Ordinary Course of Business
of the Division) or any increase in benefits or benefit
plan costs, or any increase in any bonus, insurance,
pension, compensation or other benefit plan made for or
with or covering any of such employees, officers or
directors;
(v) any loss of any supplier of the Division, the
loss of which would reasonably be expected to have a
Material Adverse Effect on the Division;
(vi) any receipt of a notice from any customer of
the Division with annual volume in excess of $100,000 for
the year ended December 31, 1993 that such customer plans
to cease doing business with the Division (other than as
a result of the cessation of its business), except for
any notice that the Division was not the successful
bidder in a bid process;
(vii) any Capital Expenditures with respect to
the Transferred Assets, or commitments for the same,
except those made in the Ordinary Course of Business of
the Division;
(viii) any entry into any transaction by the
Division with respect to the operation of the business of
the Division, including the incurrence of any
indebtedness, not in the Ordinary Course of Business of
the Division;
(ix) any material change in any of the business
policies, including advertising, distributing, marketing,
purchasing, sales or return policies, of the Division;
(x) any amendment or, except pursuant to its terms,
any termination of any material lease, customer or
supplier contract or other material agreement with
respect to the Division;
(xi) any waiver of any rights by the Division (or
the Seller on behalf of the Division), which waivers,
individually or in the aggregate, would reasonably be
expected to have a Material Adverse Effect on the
Division; or
(xii) any contract or commitment to do any of
the foregoing.
(G) Contracts, Agreements, Plans and Commitments.
Schedule 4.01(G) sets forth a list of the following written or
oral contracts, agreements, plans and commitments to which the
Division (or the Seller on behalf of the Division) is a party
or by which any of its material properties are bound and which
are not terminable by the Division (or the Seller on behalf of
the Division) without penalty or cost to the Division on
thirty (30) days' advance notice, and, to the extent that such
contracts, agreements, plans and commitments are oral, a
description of the terms thereof:
(i) any contract, commitment or agreement which
involves aggregate expenditures by or on behalf of the
Division of more than $50,000 per year;
(ii) any indenture, loan agreement or note under
which the Division has outstanding indebtedness,
obligations or liabilities for borrowed money in an
amount in excess of $10,000, or pursuant to which any
mortgage, pledge or other lien, other than the Insilco
Liens and Permitted Encumbrances, has been placed on any
Transferred Asset;
(iii) any lease or sublease for the use or
occupancy of Real Property (other than the Leases),
together with a list of the respective locations of such
Real Property, the date of expiration of such
arrangements and the name of the other parties thereto
and the monthly rental payments made by the Division (or
the Seller on behalf of the Division) to the lessor for
such arrangements;
(iv) any employment, consulting or sales
representative agreements or any collective bargaining or
other agreements with any labor union;
(v) any agreement that restricts the right of the
Division (or the Seller with respect to the Division) to
engage in any type of business anywhere in the world;
(vi) any guaranty, direct or indirect, of the Seller
or any Insilco Affiliate of any contract, lease or
agreement entered into by or on behalf of the Division;
(vii) any contract, agreement, plan or
commitment of the Division (or the Seller on behalf of
the Division) with any Insilco Affiliate; and
(viii) any contract, agreement, plan or
commitment with any supplier or distributor of the
Division which involves expenditures in excess of $50,000
per year.
To the knowledge of the Seller, (i) each contract,
agreement, plan, commitment or other arrangement disclosed in
Schedule 4.01(G) is in full force and effect with respect to
the Division (or the Seller on behalf of the Division) and
(ii) the Division (or the Seller on behalf of the Division) is
not, in any material respect, in default under any such
contract, agreement, plan, commitment or arrangement.
(H) Insurance. Schedule 4.01(H) sets forth a list of
all material insurance policies, against occurrences since
February 1, 1991, of or with respect to the Division, other
than directors' and officers' liability policies and policies
under any Plan, by which the Division or any of its
businesses, properties, assets, sales persons, agents or
employees are covered against present losses, all of which are
in full force and effect, copies of which the Seller has made
available to the Purchaser. To the extent that any such
policy is owned or held by the Seller or any Insilco
Affiliate, it may be terminated in whole or with respect to
the Division after the Closing Date.
(I) Patents, Trademarks and Copyrights.
(i) Schedule 4.01(I)(i) sets forth a list of the
patents, patent applications, trademarks (whether
registered or unregistered), trademark applications,
trade names or copyrights directly relating to, or used
by the Division (or the Seller on behalf of the Division)
in, the business or operations of the Division, and which
are either owned by the Seller or a third party and are
not generally commercially available ("Intellectual
Property"). Schedule 4.01(I)(ii) sets forth a list of
each agreement, license, sublicense, permission or
registration pursuant to which the Seller grants or
receives rights in the Intellectual Property (the
"Intellectual Property Agreements"). The Seller has made
available to the Purchaser complete and accurate copies
of each Intellectual Property Agreement.
(ii) Except as set forth in Schedule 4.01(I)(ii),
the execution of this Agreement and the consummation of
the transactions contemplated hereby will not impair the
Division's rights in or to the Intellectual Property.
Except pursuant to the Intellectual Property Agreements
or as otherwise disclosed on Schedule 4.01(I)(ii), no
person has a right to receive a royalty or similar
payment with respect to the Intellectual Property
pursuant to any contractual arrangements entered into by
the Division (or the Seller on behalf of the Division),
and the Division (or the Seller on behalf of the
Division) has not granted any license, sublicense or
other similar agreement relating in whole or in part to
the Intellectual Property. Except as set forth in
Schedule 4.01(K), no proceedings have been instituted
against or notices received by the Seller alleging that
use or proposed use of any Intellectual Property by the
Division (or the Seller on behalf of the Division) or any
third party infringes upon any rights of a third party or
the Division (or the Seller on behalf of the Division) in
or to such Intellectual Property.
(J) Employee Benefit Matters. Schedule 4.01(J) sets
forth a list of all the following documents (copies or
descriptions of which have been made available to the
Purchaser and which collectively are referred to as "Plans"):
(i) each "employee benefit plan," as such term is
defined in Section 3(3) of ERISA, which is maintained, or
otherwise contributed to, by the Seller for the benefit
of one or more Employees, all amendments thereto as of
the date hereof and all current summary plan descriptions
provided to employees regarding the Plans;
(ii) each trust agreement pertaining to any of the
Plans, including all amendments to such documents to the
date hereof;
(iii) each management or employment contract or
contract for personal services between the Division (or
the Seller on behalf of the Division), and any officer,
consultant, director, employee or any other person or
entity that is not by its terms terminable at will or on
not more than thirty (30) days' notice without penalty or
severance liability;
(iv) each other plan, contract or arrangement
providing for bonuses, pensions, deferred compensation,
retirement plan payments, profit sharing, incentive pay,
hospitalization or medical expense or insurance for any
officer, consultant, director, annuitant or employee of,
or assigned to, the Division or members of their families
(other than directors' and officers' liability policies),
whether or not insured;
(v) each collective bargaining agreement or other
contract with any labor union to which the Seller, on
behalf of the Division, is a party and which is not
listed in Schedule 4.01(G); and
(vi) any other agreement to which the Seller, on
behalf of the Division, is a party or is bound that
provides for the payment of severance benefits.
Except for the Multiemployer Plans, no Plan is a
"multi-employer plan" as defined in Section 3(37) of ERISA.
(K) Litigation. Except as set forth in Schedule
4.01(K), there are no (i) material actions, suits, proceedings
or governmental investigations or inquiries pending, or to the
knowledge of the Seller threatened, against the Division (or
the Seller with respect to the Division) or the Division's
properties, assets, operations or businesses or (ii) actions,
suits, proceedings or governmental investigations or inquiries
pending, or to the knowledge of Seller threatened, against the
Seller which might delay, prevent or hinder the consummation
of the transactions contemplated hereby.
(L) Termination of Subsidiary Guaranties and Release of
Insilco Liens Under the Seller Security Documents. When the
Purchaser acquires title to the Transferred Assets pursuant to
the General Conveyance and the Deeds, none of the Transferred
Assets shall remain subject to any of the Insilco Liens, which
shall have been fully and finally released as to all such
Transferred Assets, except to the extent that any Filings have
not been made.
(M) Transferred Assets.
(i) The Transferred Assets constitute all the
property, assets and rights primarily used in, or
reasonably necessary for the conduct of, the business of
the Division in the manner and to the extent conducted by
it on the Closing Date, except for any Transferred Asset
for which, as listed in Schedule 4.01(C), any required
consent to assignment has not been received as of the
Closing Date;
(ii) except as set forth in Schedule 4.01(M), the
Seller has good and marketable title to all Transferred
Assets other than the Real Property, and a good and
indefeasible fee simple interest in and to the Owned Real
Property, in each case free and clear of all mortgages,
liens, charges, easements, security interests, title
imperfections or other encumbrances except Permitted
Encumbrances and the Insilco Liens;
(iii) except as set forth in Schedule 4.01(M),
the Seller owns a leasehold interest in the Leased Real
Property, has not assigned any such leasehold interest,
other than in connection with the Insilco Liens, and is
not in default in any material respect under, and, to the
Seller's knowledge, the lessor of such Leased Real
Property is not in default under, each lease pursuant to
which the Division (or the Seller on behalf of the
Division) leases the Leased Real Property; and
(iv) except for the Owned Real Property leased by
the Seller to third parties as disclosed on Schedule
4.01(G), the Division is in possession of each parcel of
Owned Real Property, together with all buildings,
structures, facilities, fixtures and other improvements
thereon; and the Division has rights of ingress and
egress with respect to the Real Property, and all
buildings, structures, facilities, fixtures and other
improvements thereon reasonably necessary for the
operation of its business as currently conducted.
(N) Environmental Matters.
(i) Except as set forth in Schedule 4.01(N), the
Division is in substantial compliance with all applicable
Environmental Laws, as in effect on the Signing Date or
prior to the Closing Date, as applicable.
(ii) The Division (or the Seller on behalf of the
Division) has obtained all licenses, registrations,
permits or other authorizations of any Governmental
Authority that are required under any applicable
Environmental Law, as in effect as of the Signing Date or
the Closing Date, as applicable, that are necessary for
the conduct of the business of the Division as currently
conducted (hereinafter referred to as "Environmental
Permits"). All Environmental Permits are listed in
Schedule 4.01(N). The Division (or the Seller on behalf
of the Division) has not received written notice from any
applicable Governmental Authority that any Environmental
Permit will be suspended or revoked, or modified, which
modification would reasonably be expected to have a
Material Adverse Effect on the Division, or cannot be
renewed in the Ordinary Course of Business of the
Division.
(iii) Except as set forth in Schedule 4.01(N),
the Seller has not received during the past five (5)
years an Environmental Claim from any Governmental
Authority or other person or entity with respect to the
Division.
(iv) Except as set forth in Schedule 4.01(N), there
are no pending or, to the knowledge of the Seller,
threatened actions, suits, inquiries, proceedings or
investigations against the Seller relating to the
Division under an applicable Environmental Law. Except
as set forth in Schedule 4.01(N), to the knowledge of the
Seller, there are no pending or threatened actions,
suits, inquiries, proceedings or investigations against
any third party whose liability may have been retained or
assumed by or could reasonably be imputed or attributed
to the Division.
(v) Other than the representations set forth in
this Section 4.01(N), the Seller makes no representation
or warranty about the Division's or the Seller's
compliance with or obligation or liability under any
Environmental Law.
(O) Licenses. Except for Environmental Permits,
Schedule 4.01(O) contains a true and complete list of all
licenses, permits, consents and other authorizations of any
Governmental Authority (collectively, "Licenses," and each a
"License") used in and material, individually or in the
aggregate, to the business or operations of the Division.
Except as set forth in Schedule 4.01(O), to the Seller's
knowledge, each License is in full force and effect and
neither the Division nor the Seller on behalf of the Division
has violated any condition or requirement of any License.
Except as set forth in Schedule 4.01(O), the Division (or the
Seller on behalf of the Division) has all Licenses that are
necessary to the business or operations of the Division,
except to the extent that the failure to have any such License
would not have a Material Adverse Effect on the Division.
(P) Inventory. The inventory of the Division is usable
in the Ordinary Course of Business of the Division or saleable
at not less than its book value (less any reserves therefor
set forth on the Balance Sheet) in the Ordinary Course of
Business for the purposes for which it is intended, is in good
and merchantable condition and is reflected on the Statements
and carried on the accounting books of the Division in
accordance with GAAP. Except as set forth in Schedule
4.01(P), all inventory of the Division is owned by the
Division (or the Seller on behalf of the Division) free and
clear of any liens or encumbrances, except for Permitted
Encumbrances and Insilco Liens.
(Q) Accounts Receivable. Except as set forth in
Schedule 4.01(Q), the accounts receivable and all other
receivables shown on the Statements (subject to reserves for
noncollectibility as reflected therein), and all receivables
acquired or generated by the Division since December 31, 1993
(subject to reserves for noncollectibility as reflected on the
books and financial statements of the Division), represent
amounts due to the Division in the Ordinary Course of Business
of the Division and are binding obligations of the obligors.
Such receivables have been reflected on the accounting books
and the Statements of the Division in accordance with GAAP.
(R) Tax Matters. With respect to the operations of the
Division, the Seller (i) has or will have filed with the
appropriate Governmental Authorities all Tax Returns required
to be filed by or with respect to the Seller before the
Closing Date, and such Tax Returns are or will be true,
correct and complete in all material respects and (ii) has
paid in full or has made adequate provision in the Statements
or the Seller's books (in accordance with GAAP) for all Taxes
which are due or claimed to be due from it by any Governmental
Authority. Except as set forth in Schedule 4.01(R), there are
no liens for Taxes upon any of the Transferred Assets except
for statutory liens for current Taxes not yet due, the
liability for which is governed by Article VII. The reserves
for Taxes reflected in the Statements or the Seller's books
are sufficient for payment of all unpaid Taxes with respect to
the Division (whether or not currently disputed) accrued
through the date thereof. Since December 31, 1993, the
Division (or the Seller on behalf of the Division) has not
incurred any liability for Taxes other than in the Ordinary
Course of Business of the Division. Except as set forth in
Schedule 4.01(R), the Seller has not requested any extension
of time within which to file any Tax Return, which Tax Return
has not since been filed, or waived any statute of limitations
for, or agreed to any extension of time with respect to, the
assessment of Taxes in respect of the Division. Except as set
forth in Schedule 4.01(R), the statute of limitations for all
Tax Returns of the Seller has expired for all Taxes, or the
Tax Returns of the Seller have been examined by the
appropriate Governmental Authorities for all periods. Except
as set forth in Schedule 4.01(R), the Seller has not received
any notice of deficiency or assessment from any Governmental
Authority with respect to liabilities for Taxes in respect of
the Division which have not been fully paid or finally
settled, and any such deficiency or assessment shown on
Schedule 4.01(R) is being contested in good faith through
appropriate proceedings, and no issue has been raised by any
Governmental Authority which could reasonably be expected to
result in a proposed deficiency for any subsequent period. To
the knowledge of the Seller, no state of facts exists or has
existed which would constitute grounds for the assessment of
any liability for Taxes with respect to the Division for the
periods prior to the Closing Date which have not been audited
by any Governmental Authority. The Division or the Seller on
behalf of the Division is not a party to any agreement,
contract or other arrangement that would result, separately or
in the aggregate, in the payment of any "excess parachute
payments" within the meaning of Section 280G of the Code with
respect to Employees.
(S) Bank Accounts. To the Seller's knowledge, Schedule
4.01(S) contains a complete and accurate list of each deposit
account in the Division's name that is maintained with any
bank, brokerage house or other financial institution,
specifying with respect to each the name and address of the
institution, the name under which the account is maintained,
the account number, and the name and title or capacity of each
person authorized to have access thereto.
(T) Product Warranties. Schedule 4.01(T) sets forth the
standard forms of express warranties being made on the Signing
Date or the Closing Date, as applicable, by the Division with
respect to any products manufactured by the Division.
(U) Employees. Except as set forth on Schedule 4.01(U),
with respect to the Employees, to the Seller's knowledge, the
Division (or the Seller on behalf of the Division) has
complied in all material respects with all applicable laws
relating to the employment of labor, including provisions
thereof relating to wages, employee benefits, hours, equal
opportunity, collective bargaining, age and sex discrimination
and the withholding and payment of social security and other
taxes. Except as set forth on Schedule 4.01(U), to the
Seller's knowledge, there are no work stoppages involving the
Division or any applications filed by a Union or employee of
the Division with the National Labor Relations Board or
similar Governmental Authority, or any complaint filed with
the National Labor Relations Board.
(V) Customers and Suppliers. The Seller has provided to
the Purchaser a true and correct list of the customers and
suppliers of the Division with annual volume in excess of
$100,000 for the year ended December 31, 1993.
(W) Disclosure. To the Seller's knowledge, the
representations and warranties by the Seller in the Transfer
Agreements do not contain any untrue statement of material
fact and do not omit to state any material fact necessary to
make the statements herein or therein not misleading.
4.02 Representations and Warranties by the Purchaser.
Except as otherwise disclosed in this Agreement or in the
applicable Schedules, the Purchaser hereby represents and warrants,
as of the Signing Date and the Closing Date, that:
(A) Organization and Good Standing.
(i) The Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of
the State of New York and has all requisite corporate
power and authority to own and lease the properties and
assets it currently owns and leases and to carry on its
business as such business is currently conducted.
(ii) The Purchaser has previously delivered to the
Seller true, correct and complete copies of its Charter
Documents, each as amended to date. The Purchaser is
duly licensed or qualified to do business as a foreign
corporation and is in good standing in all jurisdictions
in which the character of the properties and assets now
owned or leased by it or the nature of the business now
conducted by it requires it to be so licensed or
qualified and where the failure so to qualify would
reasonably be expected to (a) have a Material Adverse
Effect on the Purchaser or (b) prevent the Purchaser from
consummating the transactions contemplated by this
Agreement. Schedule 4.02(A) sets forth a list of all
jurisdictions in which the Purchaser is licensed or
qualified to transact, as a foreign corporation, the
business being transacted by the Purchaser.
(B) Corporate Authority and Approval.
(i) The Purchaser has all requisite corporate power
and authority to execute and deliver its Transfer
Agreements, to consummate the transactions contemplated
thereby and to perform all the terms and conditions
thereof to be performed by it. The execution and
delivery by the Purchaser of its Transfer Agreements, the
performance by the Purchaser of all the terms and
conditions thereof to be performed by it and the
consummation of the transactions contemplated thereby
have been duly authorized and approved by all requisite
corporate action on the part of the Purchaser.
(ii) This Agreement constitutes, and upon execution
and delivery the other Purchaser's Transfer Agreements
will constitute, the valid and binding obligations of the
Purchaser enforceable against the Purchaser in accordance
with their respective terms.
(C) No Violation. Except as set forth in
Schedule 4.02(C), this Agreement and the execution and
delivery hereof by the Purchaser does not, and the other
Purchaser's Transfer Agreements and the execution and delivery
thereof by the Purchaser will not, and the fulfillment and
compliance with the terms and conditions thereof and the
consummation of the transactions contemplated thereby will
not:
(i) violate or conflict with any provision of the
Charter Documents of the Purchaser, each as amended to
date;
(ii) violate or conflict with any provision of or,
except with respect to the HSR Act, require any filing,
consent, authorization or approval under any law or
administrative regulation or any judicial, administrative
or arbitration order, award, judgment, writ, injunction,
decree or license applicable to or binding upon the
Purchaser or any of its subsidiaries (assuming receipt of
all governmental consents and the making of all
governmental filings which by their nature cannot be
obtained or made prior to the Signing Date or the Closing
Date, as applicable); or
(iii) conflict with, result in a breach of,
constitute a default under (whether with notice or the
lapse of time or both), or accelerate or permit the
acceleration of the performance required by, or give rise
to any right of termination or cancellation under, or
require any consent, authorization or approval under,
(a) any mortgage, indenture, loan or credit agreement or
any other agreement or instrument evidencing indebtedness
for money borrowed to which the Purchaser is a party or
by which the Purchaser is bound or to which any of its
properties is subject or (b) any lease, license, contract
or other agreement or instrument to which the Purchaser
is a party or by which it is bound or to which any of its
properties is subject,
which violation, conflict, breach, default, acceleration or
failure to make or obtain such filing, consent, authorization
or approval, with respect to the matters specified in clauses
(ii) and (iii) of this paragraph (C), individually or in the
aggregate, would reasonably be expected to have a Material
Adverse Effect on the Purchaser.
(D) No Default; Compliance with Laws and Regulations.
Except as set forth in Schedule 4.02(D), to the knowledge of
the Purchaser:
(i) the Purchaser is not in default under, and no
condition exists that with notice or lapse of time or
both would constitute a default under, (a) any mortgage,
loan agreement, indenture, evidence of indebtedness or
other instrument evidencing borrowed money to which the
Purchaser is a party or by which the Purchaser or its
properties are bound, (b) any judgment, order or
injunction of any arbitrator or Governmental Authority or
(c) any other agreement, contract, lease, license or
other instrument, which default or potential default in
any such case would reasonably be expected to (1) have a
Material Adverse Effect on the Purchaser or (2) prevent
the Purchaser from consummating the transactions
contemplated by this Agreement; and
(ii) the Purchaser is in compliance in all material
respects with all laws, regulations, orders, judgments or
decrees of any Governmental Authority applicable to its
businesses and operations, noncompliance with which would
reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Purchaser or
prevent the Purchaser from consummating the transactions
contemplated by this Agreement.
(E) Funds Available. The Purchaser will have on and
after the Closing Date sufficient sources of immediately
available funds to enable it to pay the Purchase Price and any
Purchase Price Adjustment, as applicable, to be paid by the
Purchaser.
(F) Litigation. Except as set forth in
Schedule 4.02(F), there are no material actions, suits,
proceedings or governmental investigations or inquiries
pending, or to the knowledge of the Purchaser threatened,
against the Purchaser or its subsidiaries or their respective
properties, assets, operations or businesses which might
delay, prevent or hinder the consummation of the transactions
contemplated hereby.
(G) Disclosure. The representations and warranties by
the Purchaser in the Transfer Agreements do not contain any
untrue statement of material fact and do not omit to state any
material fact necessary to make the statements herein or
therein not misleading.
ARTICLE V.
Additional Agreements and Covenants
5.01 Covenants of the Seller. Except as otherwise
indicated, the Seller covenants and agrees with the Purchaser as
follows:
(A) Certain Changes. Except as expressly permitted
hereunder, or set forth in the Schedules, from the date hereof
until the Closing Date, without first obtaining the written
consent of the Purchaser (which consent will not be
unreasonably withheld), and without limiting the generality of
Section 5.01(B), the Seller will not:
(i) make any material change in the conduct of the
business or operations of the Division;
(ii) terminate or amend in any material respect any
contract or agreement required to be disclosed pursuant
to Section 4.01(G) or 4.01(J), except in the Ordinary
Course of Business;
(iii) make any Capital Expenditures with respect
to the Transferred Assets except in the Ordinary Course
of Business of the Division;
(iv) enter into any contract for the purchase or
sale of inventory other than in the Ordinary Course of
Business of the Division;
(v) enter into any contract, agreement, plan or
commitment that would be required to be disclosed
pursuant to Section 4.01(G) or 4.01(J);
(vi) sell, lease, transfer, pledge, encumber, grant
any interest in, mortgage or otherwise dispose of any of
the Transferred Assets other than pursuant to existing
contracts, agreements or commitments or in the Ordinary
Course of Business of the Division; or
(vii) commit itself to do any of the foregoing.
(B) Operation of Properties. From the date hereof until
the Closing Date, except as permitted hereunder or as
consented to in writing by the Purchaser, the Division (or the
Seller on behalf of the Division) will conduct the Division's
business and operations in accordance with its Ordinary Course
of Business and seek to preserve intact its current
relationships with the customers, suppliers and other persons
with whom the Division has business relations consistent with
its Ordinary Course of Business.
(C) Access. It will (i) provide the Purchaser and its
authorized representatives, at the Purchaser's sole expense,
risk and cost, reasonable access from the date hereof until
the Closing Date, during normal business hours, to the
personnel, properties, books and records of the Division and
(ii) furnish to the Purchaser such additional financial and
operating data and other information as the Purchaser may
reasonably request to the extent that such access and
disclosure would not violate the terms of any agreement to
which the Division, the Seller or any Insilco Affiliate is a
party or by which any of them is bound or any applicable law
or regulation; provided, however, that (a) any data or
information so acquired by the Purchaser will be maintained
confidential by the Purchaser and its representatives in
accordance with Section 5.02(E) and (b) no environmental
testing or sampling will take place except in accordance with
the environmental assessments contemplated by Article XV.
(D) Antitrust Notification. As promptly as practicable
(and, in any event, within ten (10) days of the execution
hereof) it or an appropriate Insilco Affiliate will file with
the United States Federal Trade Commission and the Department
of Justice the notification and report form required for the
transactions contemplated hereby and any supplemental
information which may be reasonably requested in connection
therewith pursuant to the HSR Act.
(E) Best Efforts. It will use its Best Efforts to
obtain the satisfaction of the conditions to Closing set forth
in Section 6.01.
(F) Public Announcements. Subject to applicable
securities law, stock exchange or NASD requirements, until the
Closing Date, it will promptly advise, and obtain the approval
of, the Purchaser before issuing, or permitting any of the
directors, officers, employees or agents of the Seller or the
Division to issue, any press release with respect to this
Agreement or the transactions contemplated hereby.
(G) Change of Name. As promptly as practicable after
the Closing Date, to the extent applicable, the Seller will
cause any Insilco Affiliate to change its name so as not to
include the word "Sinclair," and otherwise cease to use the
word "Sinclair" in connection with its business.
(H) Negotiations with the Unions. Prior to the Closing
Date, and to the extent required by the Collective Bargaining
Agreements and applicable law, the Seller will enter into good
faith negotiations with the Unions regarding the effects of
the transactions contemplated by this Agreement on the
Bargaining Unit Employees.
(I) Insurance. The Seller will maintain, or cause to be
maintained, the insurance policies listed in Schedule 4.01(H)
(or policies of substantially the same nature) in full force
and effect at all times through the Closing Date.
(J) Filings. On or as soon as practicable after the
Closing Date, the Seller will make, or cause to be made, any
Filings, to the extent that any such Filings have not been
made.
(K) Consents. As soon as practicable, the Seller will
use its Best Efforts to obtain all applicable permits,
consents, approvals and agreements of, and to give all notices
and make all filings with, any third parties as may be
necessary to authorize, approve or permit the full and
complete sale, conveyance, assignment or transfer of the
Transferred Assets to the Purchaser on the Closing Date.
(L) Notification of Certain Matters. The Seller will
promptly notify the Purchaser from time to time prior to the
Closing Date of (i) any facts of which it has knowledge which
make any of its representations or warranties made herein or
in any Exhibit or Schedule or other Transfer Agreement
materially false or that are necessary in order to make such
representations or warranties not materially false; and (ii)
any failure of the Seller to comply with or satisfy in any
material respect any covenant, condition or agreement to be
complied with or satisfied by it hereunder; and the Seller
will use its Best Efforts to take such action necessary so as
to make any such representation or warranty not materially
false, and to remedy any such failure on its part to comply
with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder. During the period
from the date of this Agreement to the Closing Date, the
Seller will promptly notify the Purchaser of any material
change in, or outside of, the Ordinary Course of Business of
the Division and of any written complaints or investigative
hearings by a Governmental Authority, or the institution,
threat (to the extent the Seller has knowledge of such threat)
or settlement of litigation, in each case involving an amount
in excess of $10,000 with respect to the Division, and will
keep the Purchaser informed in reasonable detail of such
events, to the extent permitted by law but without waiving any
attorney/client privilege.
(M) Schedules. The Seller may revise or supplement the
Schedules at any time at or prior to the Closing; provided,
however, that if any such revision or supplement revises or
supplements any such Schedule to reflect any information that
was not included in the Schedules as of the Signing Date
(i) that is, individually or in the aggregate, materially
adverse to the Purchaser or (ii) that would, individually or
in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Division except to the extent the effect
of the change in such information will be included in the
Purchase Price Adjustment, or the Purchaser has consented to
in writing such change, the Purchaser will have the rights and
remedies set forth in Section 6.01(I) with respect to
Purchaser Notified Items. The Seller will use its Best
Efforts to deliver to the Purchaser substantially complete
Schedules not less than seven (7) days prior to the Closing
Date.
5.02 Covenants of the Purchaser. The Purchaser covenants
and agrees with the Seller as follows:
(A) Antitrust Notification. As promptly as practicable
(and, in any event, within ten (10) days of the execution
hereof) it or an appropriate affiliate of the Purchaser will
file with the United States Federal Trade Commission and the
Department of Justice the notification and report form
required for the transactions contemplated hereby and any
supplemental information which may be reasonably requested in
connection therewith pursuant to the HSR Act.
(B) Best Efforts. It will use its Best Efforts to
obtain the satisfaction of the conditions to Closing set forth
in Section 6.02.
(C) Preservation of Books and Records. For a period of
seven (7) years after the Closing Date, it will (i) preserve
and retain the corporate, accounting, legal, auditing and
other books and records of the Division existing as of the
Closing Date (including any documents relating to any
governmental or nongovernmental actions, suits, proceedings or
investigations arising out of the conduct of the business and
operations of the Division prior to the Closing Date),
(ii) make such books and records available, at the Seller's
sole expense, risk and costs, to the Seller and its officers,
employees and agents, on reasonable notice and at reasonable
times, it being understood that the Seller will be entitled to
make copies of any such books and records as it deems
necessary, (iii) permit representatives of the Seller to meet
with employees of the Purchaser on a mutually convenient basis
in order to enable the Seller to obtain additional information
on and explanations of any materials provided pursuant to this
Section 5.02(C) and (iv) provide the Seller, upon reasonable
request, for the purposes of preparing or adjusting Tax
Returns and in connection with any related Tax audits, with
such information as is customarily provided to the Seller by
the Division, consistent with past practices, in connection
with the preparation of Tax Returns. The Purchaser will
notify the Seller of any intended destruction of such books
and records not less than thirty (30) days before such
destruction. The Seller shall have fifteen (15) days from the
receipt of such notice to request that the Purchaser return,
and the Purchaser shall return, at the Seller's sole cost and
expense, to the Seller any such books and records that the
Purchaser plans to destroy.
(D) Public Announcements. Subject to applicable
securities laws, stock exchange or NASD requirements, until
the Closing Date, it will promptly advise, and obtain the
approval of, the Seller before issuing, or permitting any of
the Purchaser's directors, officers, employees, agents or
subsidiaries or other affiliates to issue, any press release
with respect to this Agreement or the transactions
contemplated hereby.
(E) Confidential Information. If this Agreement is
terminated or, if not terminated, until the Closing Date, it
and its representatives will keep confidential any data or
information received by them regarding the business and assets
of the Seller or the Division, including any data or
information disclosed to or received by them pursuant to
Article XV, in accordance with the Confidentiality Agreement
executed by the Purchaser.
(F) Negotiations with the Unions. To the extent
required by the Collective Bargaining Agreements and
applicable law, the Purchaser will enter into good faith
negotiations with the Unions. The Purchaser will not in such
negotiations add to or create obligations or liabilities of
the Division (or the Seller on behalf of the Division) either
under the Collective Bargaining Agreements or with respect to
contributions to the Multiemployer Plans attributable to
periods prior to the Closing Date.
(G) Audit Fees. The Purchaser will pay all fees of the
Accountant in connection with the audit of the Division's
financial statements for the two (2) year period ended
December 31, 1993, and for the interim period ending on the
Closing Date.
(H) Consents. As soon as practicable, the Purchaser
will use its Best Efforts to obtain all applicable permits,
consents, approvals and agreements of, and to give all notices
and make all filings with, any third parties as may be
necessary for the consummation by the Purchaser of the
transactions contemplated by this Agreement.
(I) Notification of Certain Matters. The Purchaser from
time to time prior to the Closing Date will promptly notify
the Seller of (i) any facts of which it has knowledge which
make any of its representations or warranties made herein or
in any Exhibit or Schedule or other Transfer Agreement
materially false or that are necessary in order to make such
representations or warranties not materially false; and (ii)
any failure of the Purchaser to comply with or satisfy in any
material respect any covenant, condition or agreement to be
complied with or satisfied by it hereunder; and the Purchaser
will use its Best Efforts to take such action necessary so as
to make any such representation or warranty not materially
false, and to remedy any such failure on its part to comply
with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder.
(J) Sale of Stores. The Purchaser shall use its Best
Efforts to assist the Seller as may reasonably be requested in
selling the Stores (other than the Transferred Stores).
ARTICLE VI.
Conditions to Closing
6.01 Conditions to the Obligations of the Purchaser. The
obligations of the Purchaser to proceed with the Closing are
subject to the satisfaction on or prior to the Closing Date of all
the following conditions, any one or more of which may be waived,
in whole or in part, by the Purchaser:
(A) Compliance. The Seller shall have complied in all
material respects with each of its covenants and agreements
contained herein, and each of the Seller's representations and
warranties contained in Section 4.01 (as supplemented by
changes to the Schedules as contemplated by this Agreement)
shall be true on and as of the Closing Date.
(B) Officer's Certificate. The Purchaser shall have
received a certificate, dated the Closing Date, of an
executive officer of the Seller certifying as to the matters
specified in Section 6.01(A).
(C) Legal Opinions. The Purchaser shall have received
from:
(i) Baker & Botts, L.L.P., counsel for the Seller,
an opinion, limited to the laws of the State of Delaware,
stating that:
(a) the Seller is a corporation duly
organized, validly existing and in good standing
under the laws of the State of Delaware, with the
corporate power and authority to own its properties
and assets and to carry on its business as is now
being conducted;
(b) the Seller has the corporate power under
its Charter Documents and the laws of the State of
Delaware to execute and deliver the Transfer
Agreements and to consummate the transactions
contemplated thereby; and
(c) the execution and delivery by the Seller
of its Transfer Agreements, and the consummation of
the transactions contemplated by such Transfer
Agreements, do not violate any provision of or
constitute a default (whether with notice or the
lapse of time or both) under the Charter Documents,
each as amended to date, of the Seller and any
provision of any material indenture, mortgage,
lien, lease, agreement, instrument, order,
arbitration award, judgment or decree known to such
counsel to which the Seller or the Division is a
party or by which any of them or any of their
respective assets or properties is bound, which
violation, breach or default would reasonably be
expected to have a Material Adverse Effect on the
Division; and
(d) all corporate acts and other proceedings
required to be taken by or on the part of the
Seller to execute and deliver its Transfer
Agreements and to consummate the transactions
contemplated thereby have been duly and validly
taken; and
(ii) Latham & Watkins, California counsel for the
Seller, an opinion, limited to the laws of the State of
California and U.S. Federal law, stating that:
(a) the Seller's Transfer Agreements have been
duly executed and delivered by, and constitute the
valid and binding obligations of, the Seller
enforceable against the Seller in accordance with
their respective terms, subject to any applicable
bankruptcy, insolvency, reorganization, fraudulent
conveyance or other similar laws relating to or
affecting the enforcement of creditors' rights
generally and general principles of equity
(regardless of whether such enforceability is
considered in a proceeding in equity or at law);
(b) the General Conveyance is legally
sufficient in form to pass title to all the
Transferred Assets, other than the Real Property,
to the Purchaser as contemplated by, and subject
to, the conditions, limitations and reservations
contained in the General Conveyance and this
Agreement;
(c) the Deeds are legally sufficient in form
to pass title to the Garfield Site and the
Transferred Stores to the Purchaser as contemplated
by, and subject to, the conditions, limitations and
reservations contained in the Deeds and this
Agreement; and
(d) the Lease Assignments are collectively
legally sufficient in form to pass the Seller's
leasehold interests to the Leased Real Property to
the Purchaser as contemplated by, and subject to,
the conditions, limitations and reservations
contained in the Lease Assignments and this
Agreement.
(D) HSR Act. The waiting period (and any extension
thereof) under the HSR Act applicable to the transactions
contemplated hereby shall have expired or been terminated.
(E) No Orders. The Closing shall not violate any order
or decree of any Governmental Authority having competent
jurisdiction over the transactions contemplated by this
Agreement.
( Environmental Report. The Environmental Estimates
set forth in the reports prepared by the Environmental
Consultant pursuant to Article XV shall not exceed $7,500,000.
(G) Consents. All permits, authorizations, consents,
approvals and waivers from third parties and Governmental
Authorities and other parties necessary to permit the Seller
to transfer the Transferred Assets to the Purchaser, to permit
the Seller and the Purchaser to consummate the other
transactions contemplated hereby, and to permit the Purchaser
to operate the business of the Division on and after the
Closing Date, shall have been obtained.
(H) Title Insurance. A current form of an ALTA extended
coverage owner's policy of title insurance, or a binding
commitment for such, for the benefit of the Purchaser shall
have been obtained by the Seller with respect to the Garfield
Site and the Transferred Stores in the respective amounts
allocated to the Garfield Site and each Transferred Store
pursuant to Section 7.03 (but not to exceed the respective
values for the Garfield Site and each Transferred Store
determined by the Appraiser pursuant to Section 14.01).
(I) Absence of Certain Changes.
(i) Except for changes, the effects of which are
included in the Purchase Price Adjustment (but only to
such extent), or changes to which the Purchaser has
consented, there shall have been no changes to the
Schedules which changes are, individually or in the
aggregate, materially adverse to the Purchaser or would
reasonably be expected to have a Material Adverse Effect
on the Division; provided, however, that no item or
condition included in the Environmental Estimates shall
constitute a basis for the failure to satisfy the closing
condition set forth in this Section 6.01(I)(i). If the
Purchaser determines that any such changes to the
Schedules are, individually or in the aggregate,
materially adverse to the Purchaser or would reasonably
be expected to have a Material Adverse Effect on the
Division, it will notify the Seller of such
determination, describing in reasonable detail the
changes it claims to be materially adverse ("Purchaser
Notified Items").
(ii) If the Purchaser elects to proceed with the
Closing notwithstanding the Purchaser Notified Items, (a)
the Purchaser will not be deemed to have waived the
Seller's indemnification obligations, if any, with
respect to the Purchaser Notified Items, including any
claim for indemnification for a breach of the
representations and warranties set forth in Section 4.01
as if the Purchaser Notified Items were not set forth in
the Schedules, (b) the Seller will not be deemed to have
admitted or acknowledged that the Purchaser Notified
Items are, individually or in the aggregate, materially
adverse to the Purchaser or would reasonably be expected
to have a Material Adverse Effect on the Division and (c)
the Seller retains all rights to contest its
indemnification obligations with respect to the Purchaser
Notified Items.
(J) Net Assets. Net Assets shall not be less than
$28,418,000.
6.02 Conditions to the Obligations of the Seller. The
obligations of the Seller to proceed with the Closing are subject
to the satisfaction on or prior to the Closing Date of all the
following conditions, any one or more of which may be waived, in
whole or in part, by the Seller:
(A) Compliance. The Purchaser shall have complied in
all material respects with each of its covenants and
agreements contained herein, and each of its representations
and warranties contained in Section 4.02 (as supplemented by
changes to the Schedules as contemplated by this Agreement)
shall be true on and as of the Closing Date.
(B) Officer's Certificate. The Seller shall have
received a certificate, dated the Closing Date, of an
executive officer of the Purchaser certifying as to the
matters specified in Section 6.02(A).
(C) Legal Opinion. The Seller shall have received from
Parker Chapin Flattau & Klimpl and Brobeck, Phleger &
Harrison, each counsel for the Purchaser, an opinion or
opinions dated the Closing Date to the combined effect that:
(i) the Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of
the State of New York, with the corporate power and
authority to own its property and assets and carry on its
business as is now being conducted;
(ii) the Purchaser has the corporate power under its
Charter Documents and the laws of the State of New York
to execute and deliver its Transfer Agreements and to
consummate the transactions contemplated thereby; all
corporate acts and other proceedings required to be taken
by or on the part of the Purchaser to authorize it to
execute and deliver its Transfer Agreements and to
consummate the transactions contemplated thereby have
been duly and validly taken; and the Purchaser's Transfer
Agreements have been duly executed and delivered by the
Purchaser and constitute the valid and binding
obligations of the Purchaser enforceable against the
Purchaser in accordance with their respective terms,
subject to any applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance or other similar
laws relating to or affecting the enforcement of
creditors' rights generally and general principles of
equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law); and
(iii) the execution and delivery by the
Purchaser of its Transfer Agreements do not, and the
consummation of the transactions contemplated by such
Transfer Agreements shall not, violate any provision of
or constitute a default (whether with notice or the lapse
of time or both) under (a) the Charter Documents, each as
amended to date, of the Purchaser or (b) any provision of
any material indenture, mortgage, lien, lease, agreement,
instrument, order, arbitration award, judgment or decree
known to such counsel to which the Purchaser is a party
or by which any of its assets or properties is bound,
which violation, breach or default, in the case of clause
(b), would reasonably be expected to have a Material
Adverse Effect on the Purchaser.
(D) HSR Act. The waiting period (and any extension
thereof) under the HSR Act applicable to the transactions
contemplated hereby shall have expired or been terminated.
(E) No Orders. The Closing shall not violate any order
or decree of any Governmental Authority having competent
jurisdiction over the transactions contemplated by this
Agreement.
(F) Environmental Report. The Environmental Estimates
set forth in the reports prepared by the Environmental
Consultant pursuant to Article XV shall not exceed $7,500,000.
(G) Consents. All permits, authorizations, consents,
approvals and waivers from third parties and Governmental
Authorities and other parties necessary to permit the
Purchaser to purchase the Transferred Assets and to permit the
Seller and the Purchaser to consummate the other transactions
contemplated hereby shall have been obtained.
(H) Transferred Stores. The Purchaser shall have
selected the Transferred Stores pursuant to Section 14.01, and
notified the Seller of its selections at least thirty (30)
days prior to the Closing.
(I) Absence of Certain Changes. Except for changes, the
effects of which are reflected in the Purchase Price
Adjustment (but only to such extent), or changes to which the
Purchaser has consented, there shall have been no changes to
the Schedules, which changes, individually or in the
aggregate, are materially adverse to the Purchaser or would
reasonably be expected to have a Material Adverse Effect on
the Division; provided, however, that no item or condition
included in the Environmental Estimates shall constitute a
basis for the failure to satisfy the closing condition set
forth in this Section 6.02(I).
(J) Net Assets. Net Assets shall not be less than
$28,418,000.
ARTICLE VII.
Taxes
7.01 Transfer Taxes. The Purchaser and the Seller will
each be liable for one-half (1/2) of all transfer Taxes, sales and
use Taxes and similar Taxes relating to the sale of the Transferred
Assets. Each party will promptly indemnify and defend the other
party against, and hold the other party harmless from, any
liability for any Taxes for which such party is liable pursuant to
this Section 7.01. Any such claim for indemnification will be made
pursuant to the procedures set forth in Section 9.04. Each party
agrees to notify the other party promptly of the receipt of any
bills or other communications relating to such Taxes.
7.02 Ad Valorem or Property Taxes. Ad valorem or
property Taxes will be allocated between the portion of any taxable
period which is prior to the Closing Date and the portion of such
period which is on or after the Closing Date on a daily basis. The
Purchaser will be liable for any incremental or additional ad
valorem or property Taxes resulting from any adjustment to Taxes
resulting from the transactions contemplated by this Agreement.
Except with respect to any incremental or additional ad valorem or
property Taxes described above, the Seller will be liable for any
and all ad valorem or property Taxes with respect to the
Transferred Assets allocable to the portion of the taxable period
prior to the Closing Date. The Purchaser will be liable for any
and all ad valorem or property Taxes with respect to the
Transferred Assets allocable to the portion of the taxable period
on or after the Closing Date. Any refund of ad valorem or property
Taxes will belong to the party who is liable for such Taxes under
this Agreement. The Seller and the Purchaser will indemnify and
defend the other party against, and hold the other party harmless
from, any Taxes for which any such party is liable pursuant to this
Section 7.02. Any such claim for indemnification will be made
pursuant to the procedures set forth in Section 9.04.
7.03 Purchase Price Allocation. On or before the Closing
Date, the Purchaser and the Seller will agree on the allocation of
the Purchase Price and the Assumed Liabilities (subject, upon
determination of the Purchase Price Adjustment, to appropriate
adjustment for the specific items which are the subject of the
Purchase Price Adjustment) among the Transferred Assets, provided
that no amount of the Purchase Price will be allocated to the
obligations of the Seller under Article XIII. As soon as
practicable after the Closing Date and the determination of the
Purchase Price Adjustment, the Purchaser and the Seller will file
Forms 8594 with the Internal Revenue Service in accordance with
such allocation.
7.04 Real Property Transfer Fees. The Seller will pay
the following fees in connection with the transfer to the Purchaser
of the Seller's interest in any Real Property transferred pursuant
to the terms of this Agreement: any recordation fees, surveying
fees, appraisal fees, title insurance fees (not to exceed the fees
for CLTA standard Owners title insurance policies), escrow fees (if
any) and any fees for preparation of any deeds, including the
Deeds. The Purchaser will pay all other fees in connection with
the transfer to the Purchaser of the Seller's interest in any Real
Property transferred pursuant to the terms of this Agreement,
including any fees incurred in transferring Environmental Permits;
provided, however, that the Purchaser will pay, and the Seller will
reimburse the Purchaser for one-half (1/2) of, any fees, including
any third party's attorneys' fees and costs, required to transfer
to the Purchaser any Leased Real Property.
ARTICLE VIII.
Employee Matters
8.01 Employment Offers; Benefits.
(A) Employees employed at the Division immediately prior
to the Closing Date (each an "Employee" and collectively,
"Employees") who are offered employment by the Purchaser and
who accept an offer of employment will become employees of the
Purchaser on the Closing Date (each a "Transferred Employee"
and collectively, "Transferred Employees"). Each Employee who
is offered employment by the Purchaser will be offered
Comparable Employment to what such Employee is entitled to
receive from the Seller immediately prior to the Closing Date.
The Seller will provide the Purchaser upon request with
information as to the respective title, employment history and
compensation level of Employees designated by the Purchaser
and will assist the Purchaser in effecting an orderly change
of employment. Employees who decline offers of Comparable
Employment will be treated as having voluntarily terminated
their employment with the Seller.
(B) The Purchaser agrees that any Employee (i) who is
not made an offer of Comparable Employment with the Purchaser
or (ii) who accepts employment with the Purchaser and is
involuntarily terminated by the Purchaser without cause within
one (1) year of the Closing Date will receive severance pay
from the Purchaser in an amount that such individual would
have received had his termination of employment been subject
to the Severance Pay Agreement applicable to such Employee in
effect on the Closing Date; provided, however, that any
severance pay amounts previously paid by the Purchaser with
respect to an Employee as a result of the transactions
contemplated by this Agreement will be credited against
payments to be made pursuant to this Section 8.01(B) to such
Employee.
(C) The Purchaser will assume liability for accrued
vacation pay for any Employee who is not offered employment by
the Purchaser or who is offered employment by the Purchaser
and accepts such employment. The Seller will pay accrued
vacation pay for any Employee who declines an offer of
Comparable Employment by the Purchaser.
(D) The Purchaser agrees to indemnify and defend the
Seller against, and hold the Seller harmless from, any Loss or
Losses resulting from any claim by an Employee against the
Seller for severance pay under any Severance Pay Agreement as
a result of the transactions contemplated by this Agreement.
Any such claim for indemnification pursuant to this Section
8.01(D) shall be made pursuant to the procedures set forth in
Section 9.04.
(E) Effective as of the Closing Date, the Purchaser will
provide the Transferred Employees with medical benefits not
less favorable, as to both conditions covered, amounts of
coverage and costs (to the Employees) of coverage, as those
provided by the Purchaser to the Purchaser's employees at the
Purchaser's subsidiary, Ameritone Paint Corporation,
immediately prior to the Closing Date. The Purchaser may
provide such benefits through a group medical plan newly
established by it effective as of the Closing Date, or a group
medical plan maintained by the Purchaser for its own employees
as of the Closing Date (an "Existing Purchaser Medical Plan");
provided, however, that the Purchaser will use its Best
Efforts to cause there to be waived any pre-existing condition
restrictions under any such Existing Purchaser Medical Plan or
newly established group medical plan with respect to the
Transferred Employees.
8.02 WARN. The Purchaser will indemnify and hold the
Seller harmless from any Loss which the Seller may incur due to
Employee terminations with respect to, arising under or relating to
the Worker Adjustment and Retraining Notification Act and any other
similar state or local "plant-closing" law ( the "WARN Act") as a
result of the transactions contemplated by this Agreement;
provided, however, that such indemnity will be limited to Losses
related to or incurred with respect to Employees whose employment
is terminated on or after the Closing Date. The Seller will
indemnify and hold the Purchaser harmless from, any Loss with
respect to, arising under or relating to the WARN Act as a result
of any action taken by the Seller to terminate an Employee prior to
the Closing Date which the Purchaser may incur with respect to any
and all of the Employees and former employees of the Seller. Any
claim for indemnification pursuant to this Section 8.02 will be
made pursuant to the procedures set forth in Section 9.04.
8.03 Termination of Participation in Certain Benefit
Plans.
(A) Pension Plan. As of the Closing Date, benefit
accruals relating to Transferred Employees under the Insilco
Corporation Retirement Plan for Salaried Employees will cease.
(B) Savings Plan. As of the Closing Date, all employee
contributions by Transferred Employees will cease and the
Seller will not have any obligation to make employer
contributions under the Insilco Corporation Employee Thrift
Plan for Transferred Employees attributable to service after
the Closing Date.
(C) Other Plans. Except as otherwise expressly provided
herein, as of the Closing Date, all Transferred Employees will
cease to participate in all Plans, except for any benefits
then accrued under such Plans.
(D) Responsibility. Unless specifically provided to the
contrary in this Agreement, the Purchaser assumes no
obligation for benefits payable under any Plan.
8.04 Certain Agreements with Key Employees. The
Purchaser will assume, effective as of the Closing Date, the
Seller's severance obligations (but not any incentive payment
obligations payable upon the sale of the Transferred Assets, which
obligations are retained by the Seller) to Key Employees under the
agreements listed in Schedule 8.04(A).
8.05 Multiemployer Plans. The Seller will treat the
transactions contemplated by this Agreement as triggering a
withdrawal from the Multiemployer Plans. The Seller will be solely
responsible for any withdrawal liability assessment imposed as a
result of such withdrawal. Nothing in this Section 8.05 will be
interpreted to relieve the Purchaser of any obligation the
Purchaser may independently incur from and after Closing to
contribute to the Multiemployer Plans.
ARTICLE IX.
Extent and Survival of Representations,
Warranties, Covenants and Agreements; Indemnification
9.01 Scope of Representations of the Seller. Except as
and to the extent set forth in this Agreement, the Schedules and
the Exhibits and the other Transfer Agreements, the Seller makes no
representation or warranty whatsoever and disclaims all liability
and responsibility for any representation, warranty or statement
made or information communicated (orally or in writing) to the
Purchaser (including any opinion, information or advice which may
have been provided to the Purchaser or any affiliate thereof by any
officer, stockholder, director, employee, accounting firm, legal
counsel or any other agent, consultant or representative of the
Seller or the Division). The Purchaser acknowledges and affirms
that it has had full access to the data room prepared by the Seller
to assist persons investigating the Division (the "Data Room") and
the information contained in, or made available or provided with
respect to materials contained in, the Data Room and that the
Purchaser has made its own independent investigation, analysis and
evaluation of the Division and its respective properties, assets,
business, financial condition, operations and prospects;
notwithstanding the foregoing, such access, investigation, analysis
and evaluation of the Purchaser prior to the Closing Date shall not
release the Seller from any of its representations, warranties or
covenants in this Agreement, nor waive or compromise the
Purchaser's right to enforce against the Seller any provision of
this Agreement.
9.02 Indemnification of Parties. Neither the Seller nor
the Purchaser will be obligated to make any payment of indemnity
under this Agreement except pursuant to the procedures set forth in
Article IX.
(A) Indemnification of the Purchaser for Losses from
Breaches of Representations, Warranties and Covenants.
(i) Other than Losses for Environmental Losses and
Environmental Warranty Losses, which are governed by
Section 9.02(B), and Losses for Offsite Environmental
Losses, Retained Liabilities and Shared Successor
Environmental Losses, which are governed by Section
9.02(C), and Product Warranty Losses, which are governed
by Section 9.02(D), the Seller agrees to indemnify and
defend the Purchaser against, and hold the Purchaser
harmless from, any Loss (each of which Loss must exceed
$5,000) or Losses incurred by the Purchaser after the
Closing Date and resulting from any inaccuracy in or
breach of any of the representations, warranties or
covenants made by the Seller herein or in the other
Transfer Agreements (any such Loss or Losses being
referred to herein as a "Purchaser Indemnified Loss" or
"Purchaser Indemnified Losses"); provided, however, that
the Purchaser will not be entitled to assert rights of
indemnification under this Section 9.02(A) for Purchaser
Indemnified Losses until the aggregate of all Purchaser
Indemnified Losses exceeds $500,000 (the "Threshold
Amount") (it being understood that all such Purchaser
Indemnified Losses will accumulate until such time or
times as the aggregate of all Purchaser Indemnified
Losses exceeds such Threshold Amount, whereupon the
Purchaser will be entitled to indemnification hereunder
for any Purchaser Indemnified Losses in excess of, but
excluding, such Threshold Amount and, then, only for such
Purchaser Indemnified Losses in excess of the Threshold
Amount that in the aggregate do not exceed $5,000,000);
and provided, further, that the Threshold Amount will not
apply to the Seller's obligations to the Purchaser
pursuant to Articles II and VII and Section 10.02.
(ii) The Purchaser's rights pursuant to this
Section 9.02(A) will expire on the earlier of (a) the
date the Seller has reimbursed the Purchaser for
Purchaser Indemnified Losses or made payments in respect
of Purchaser Indemnified Losses (which may include
reasonable attorneys' fees and costs) pursuant to this
Section 9.02(A) and Section 9.04 equal to or in excess of
$5,000,000 or (b) the expiration of the time periods set
forth in Section 9.03.
(B) Indemnification of the Purchaser for Environmental
Losses.
(i) The Seller agrees to indemnify and defend the
Purchaser against, and hold the Purchaser harmless from,
any Environmental Losses incurred by the Purchaser (other
than the Purchaser's share of the expenses in a Cost
Recovery Action as set forth in this Section 9.02(B)) or
any Loss or Losses incurred by the Purchaser for the
breach of the representation in Section 4.01(N)
("Environmental Warranty Losses") to the extent and in
the manner set forth as follows:
(a) Ninety percent (90%) of the first
$5,000,000 (in the aggregate) of such Losses
will be reimbursed fully by the Seller
pursuant to the procedures of Section 9.04,
and the Purchaser will be liable for the
remaining ten percent (10%) thereof;
(b) Seventy-five percent (75%) of the next
$5,000,000 (in the aggregate) of such Losses
will be reimbursed fully by the Seller
pursuant to the procedures of Section 9.04,
and the Purchaser will be liable for the
remaining twenty-five percent (25%) thereof;
(c) Sixty-five percent (65%) of the next
$10,000,000 (in the aggregate) of such Losses
will be reimbursed fully by the Seller
pursuant to the procedures of Section 9.04,
and the Purchaser will be liable for the
remaining thirty-five percent (35%) thereof;
and
(d) Any such Losses incurred by the Purchaser
in excess of $20,000,000 will be the sole
responsibility of the Purchaser.
(ii) The Seller will not be required to reimburse
the Purchaser for Environmental Losses incurred in
undertaking activities in response to Environmental Laws
unless: (a) the Seller has been provided with advance
written notice of the proposed corrective action and has
had the opportunity to review and comment thereon (which
comments the Purchaser will incorporate where reasonably
appropriate) pursuant to the procedures of Section 9.04;
(b) such activities are reasonable and cost-effective;
and (c) such activities are either (1) specifically
required by a Governmental Authority pursuant to an
applicable Environmental Law (but not including any
Environmental Law promulgated, enacted or amended after
the Closing Date to the extent such Environmental Law
imposes greater obligations (financial or otherwise) than
those in effect as of the Closing Date) ("Required
Corrective Action") or (2) if not specifically required
by a Governmental Authority, are deemed necessary
pursuant to an applicable Environmental Law ("Elective
Corrective Action"), and have been approved in advance by
the Seller, which approval will not unreasonably be
withheld. If the Seller determines that the proposed
corrective action, as described in the Purchaser's
written notice, is not reasonable or cost-effective, the
Seller will provide the Purchaser with written notice of
such determination, describing the basis thereof.
Notwithstanding the provisions of Section 9.04 that
provide for the Indemnifying Party to have full control
of proceedings involving indemnified Losses, the
Purchaser and its consultants will control the
remediation activity in connection with Required
Corrective Action and approved Elective Corrective
Action. The Seller will have the right to monitor such
remediation activity as it is performed. The Purchaser
will be fully liable for all Losses incurred in
connection with unapproved Elective Corrective Action and
the Purchaser will not have any right to indemnification
from the Seller therefor. All payments (which may
include reasonable attorneys' fees and costs) made by the
Seller in connection with any Required Corrective Action
or Elective Corrective Action shall be credited against
any then remaining indemnification obligation of the
Seller under this Section 9.02(B). All payments (which
may include reasonable attorneys' fees and costs) made by
the Seller in response to claims by a third party which,
if such claims had been made against the Purchaser would
have provided the Purchaser with a claim for
indemnification under this Section 9.02(B) for
Environmental Losses or Environmental Warranty Losses,
shall be credited against any then remaining outstanding
obligation of the Seller under this Section 9.02(B). The
Seller shall be subrogated to the rights of the Purchaser
against such third parties. Notwithstanding the
provisions of this Section 9.02(B) that limit claims for
indemnification of Environmental Losses and Environmental
Warranty Losses to Losses incurred by the Purchaser, if
the Seller (but not the Purchaser) is required by a
Governmental Authority to make payments or undertake
activities pursuant to Environmental Laws as a result of
or in response to conditions identified in the
environmental assessments pursuant to Article XV: (i) the
Purchaser will contribute on behalf of the Seller, or
reimburse the Seller for such payments made by the
Seller, in the percentage amounts set forth in
Section 9.02(B)(i); and (ii) Losses incurred by the
Seller in connection therewith will be deemed Losses
incurred by the Purchaser, subject to the provisions,
procedures and limitations of this Section 9.02(B) and
Section 9.04.
(iii) The Purchaser's rights pursuant to this
Section 9.02(B) will expire on the earlier of (a) the
date the Seller has reimbursed the Purchaser for
Environmental Losses and Environmental Warranty Losses or
made payments in respect of Environmental Losses and
Environmental Warranty Losses (which may include
reasonable attorneys' fees and costs) pursuant to this
Section 9.02(B) and Section 9.04 equal to or in excess of
the aggregate dollar limitation set forth in
Section 9.02(B)(i)(d) or (b) the date five (5) years
after the Closing Date.
(iv) The indemnification of the Purchaser provided
by this Section 9.02(B) will be the Purchaser's exclusive
remedy for recovering from the Seller any Losses for
Environmental Losses and Environmental Warranty Losses,
and, to the extent the Environmental Losses and
Environmental Warranty Losses incurred by the Purchaser
exceed the amounts for which the Seller is liable under
this Section 9.02(B), the Purchaser hereby expressly
releases the Seller and Insilco Affiliates from any claim
for such Losses that the Purchaser may have under
statutory or common law, including any claim that may
arise under CERCLA; provided, however, that nothing
contained in this Section 9.02(B)(iv) is intended to
apply to any claim under this Agreement that the
Purchaser may have with respect to Offsite Environmental
Losses and Shared Successor Environmental Losses.
(v) The Purchaser and the Seller will cooperate
with each other if either party pursues a cost recovery
action under CERCLA or similar action for Environmental
Loss against any third party in connection with the Real
Property ("Cost Recovery Action"). The Purchaser and the
Seller will share equally any costs incurred by either
party in pursuing a Cost Recovery Action (excluding any
action against a party's insurance carrier). To the
extent that the Seller has paid the Purchaser any amounts
pursuant to this Section 9.02(B) in connection with an
Environmental Loss which is the subject of a Cost
Recovery Action, and the Purchaser or the Seller recovers
or is paid any amount (a "Recovered Amount") through such
Cost Recovery Action (excluding any amount recovered by
a party against its insurance carrier), the Seller will
be entitled to retain or receive or be reimbursed, and
the Purchaser will be entitled to retain or receive or be
reimbursed, from such Recovered Amounts the amounts
previously paid by each in their respective percentages
set forth in this Section 9.02(B), and the aggregate
amount that the Seller has paid pursuant to this
Section 9.02(B) will be deemed reduced by the amount that
the Seller has retained, received or been reimbursed.
(C) Indemnification of the Purchaser for Losses Arising
from Offsite Environmental Losses, Retained Liabilities and
Shared Successor Environmental Losses.
(i) The Seller agrees to indemnify and defend the
Purchaser against, and hold the Purchaser harmless from
(a) Offsite Environmental Losses incurred by the
Purchaser and, (b) any Loss or Losses, whether arising
before, on or after the Closing Date, incurred by the
Purchaser arising from any Retained Liability.
(ii) The Seller agrees to indemnify and defend the
Purchaser against, and hold the Purchaser harmless from,
any Shared Successor Environmental Losses incurred by the
Purchaser to the extent and in the manner as follows:
fifty percent (50%) of such Losses will be reimbursed by
the Seller pursuant to the procedures of Section 9.04,
and the Purchaser will be liable for the remaining fifty
percent (50%) thereof.
(D) Indemnification of the Purchaser for Product
Warranty Losses.
(i) The Purchaser will not be entitled to assert a
claim for indemnification against the Seller for Product
Warranty Losses until such Losses incurred by the
Purchaser exceed $100,000. Product Warranty Losses in
excess of $100,000 will be credited against the Threshold
Amount to the Seller's indemnity obligation under Section
9.02(A) without regard to the requirement of Section
9.02(A) that each Loss claimed thereunder exceed $5,000.
The Seller agrees to indemnify and defend the Purchaser
against, and hold the Purchaser harmless from, such
Product Warranty Losses to the extent that the aggregate
of Product Warranty Losses and other Purchaser
Indemnified Losses under Section 9.02(A) exceeds the
Threshold Amount, not to exceed the limits for
indemnification for Purchaser Indemnified Losses provided
in Section 9.02(A). Notwithstanding the provisions of
Section 9.04 with respect to notices, including Claim
Notices, the Seller will not be required to credit
against the Threshold Amount or reimburse the Purchaser
for Product Warranty Losses unless the Purchaser has
provided the Seller prior to the settlement of such claim
with: (a) written notice of each such claim in excess of
$1,000 for a Product Warranty Loss and (b) quarterly
reports of all claims and Losses actually incurred for
Product Warranty Losses. Such notices and quarterly
reports will specify such claims and Losses, as
applicable, in reasonable detail. Notwithstanding the
provisions of Section 9.04 that provide for the
Indemnifying Party to have full control of proceedings
involving indemnified Losses, until the Threshold Amount
to the Seller's indemnity obligation has been exceeded
the Purchaser will control the defense and resolution
(including any payment) of Product Warranty Losses;
thereafter, Product Warranty Loss claims will be subject
to the procedures of Section 9.04. Notwithstanding
anything to the contrary contained in this
Section 9.02(D), the Purchaser will only be entitled to
assert a claim for indemnification against the Seller for
any Product Warranty Loss with respect to Products not
manufactured by the Division to the extent that the
Purchaser has used its Best Efforts to recover, and has
not recovered, such Product Warranty Loss from such third
party manufacturer, supplier or seller (other than the
Seller) who may be liable for such Product Warranty Loss.
The Seller will be subrogated to the rights of the
Purchaser against any third party for Product Warranty
Losses.
(ii) In determining the amount of any Loss for which
the Purchaser is entitled to indemnification under this
Section 9.02(D), in addition to any reduction for
insurance recoveries contemplated by Section 9.05, the
gross amount thereof will be reduced by any other
proceeds from third parties actually realized by the
Purchaser; provided, however, that if the Purchaser has
been indemnified but does not actually receive such
proceeds until after being indemnified, the Purchaser
will reimburse the Seller for amounts paid to or on
behalf of the Purchaser to the extent of the proceeds so
received. The Purchaser's right to submit claims for
indemnification pursuant to Section 9.02(D) will expire
on the earlier of (a) the date the Seller has reimbursed
the Purchaser or directly incurred costs (which may
include reasonable attorneys' fees and costs) pursuant to
Sections 9.02(D) and 9.04 for Product Warranty Losses
equal to or in excess of the aggregate dollar limitations
set forth in Section 9.02 (A) or (b) five (5) years after
the Closing Date.
(iii) The indemnification of the Purchaser
provided by this Section 9.02(D) will be the Purchaser's
exclusive remedy for recovering from the Seller any
Product Warranty Losses, and the Seller will have no
indemnification obligation with respect to Product
Warranty Losses in excess of the limits for
indemnification for Purchaser Indemnified Losses provided
in Section 9.02(A).
(E) Indemnification of the Seller for Losses. The
Purchaser agrees to indemnify and defend the Seller against,
and hold the Seller harmless from, any Loss or Losses incurred
by the Seller after the Closing Date (any such Loss or Losses
being referred to herein as a "Seller Indemnified Loss" or
"Seller Indemnified Losses"):
(i) arising out of or resulting from any inaccuracy
in or breach of any of the representations, warranties or
covenants made by the Purchaser in the Purchaser's
Transfer Agreements;
(ii) arising from or related to the conduct of the
business of the Division or any Transferred Asset, which
Loss or Losses arise from actions or events occurring on
or after the Closing Date, including any Loss or Losses
resulting from any Post-Closing Environmental Loss; or
(iii) arising from or related to any Assumed
Liabilities;
provided, however, that the Seller will not be entitled to
assert rights of indemnification under this Article IX for
Seller Indemnified Losses until the aggregate of all Seller
Indemnified Losses exceeds the Threshold Amount (it being
understood that all such Seller Indemnified Losses will
accumulate until such time or times as the aggregate of all
Seller Indemnified Losses exceeds such Threshold Amount,
whereupon the Seller will be entitled to indemnification
hereunder for any Seller Indemnified Losses in excess of, but
excluding, such Threshold Amount); and provided, further, that
the Threshold Amount will not apply to the Purchaser's
obligations to the Seller pursuant to Articles II and VII and
Section 10.02 or the Purchaser's obligations to make any
payment of severance or vacation pay pursuant to Article VIII.
9.03 Survival. The representations and warranties set
forth in this Agreement and in any certificate or instrument
delivered in connection herewith will terminate and expire two (2)
years after the Closing Date, after which no party may institute
any action or present any claim for a breach of such
representations or warranties; provided, however, that the
representations and warranties in Section 4.01(N) will terminate
and expire five (5) years after the Closing Date, and the
representations and warranties in Sections 4.01(A) and (B), and
Sections 4.02(A) and (B) will survive indefinitely. The covenants
and agreements set forth in this Agreement will expire upon
completion of the Closing; provided, however, that the covenants
and agreements set forth in Section 6.01(I)(ii) will terminate and
expire five (5) years after the Closing Date with respect to
Purchaser Notified Items that are disclosed on Schedule 4.01(N),
and two (2) years after the Closing Date with respect to all other
Purchaser Notified Items, and provided further that the covenants
and agreements set forth in Sections 2.01, 2.02, 2.03, 5.01(G),
5.01(J), 5.02(C), 5.02(E) (to the extent such confidential data or
information does not relate to the Division), 5.02(F) and 5.02(J),
this Article IX and Articles VII, VIII, X, XI, XII, XIII, XIV, XV
and XVI will survive until the expiration of the applicable statute
of limitations period (including all periods of extension or
tolling), after which respective time periods no party may
institute any action or present any claim for a breach of such
covenant or agreement.
9.04 Indemnification Procedures. Except to the extent
otherwise provided in Section 9.02(B) and 9.02(D), all claims for
indemnification under this Agreement will be asserted and resolved
as follows:
(A) A party claiming indemnification under this
Agreement (an "Indemnified Party") will promptly (i) notify
the party from whom indemnification is sought (the
"Indemnifying Party") of any third party claim or claims
("Third Party Claim") asserted against the Indemnified Party
which could give rise to a right of indemnification under this
Agreement and (ii) transmit to the Indemnifying Party a
written notice ("Claim Notice") describing in reasonable
detail the nature of the Third Party Claim, a copy of all
papers served with respect to such claim (if any), an estimate
of the amount of damages attributable to the Third Party
Claim, if reasonably possible, and the basis of the
Indemnified Party's request for indemnification under this
Agreement.
Within thirty (30) days after receipt of any Claim Notice
or, with respect to any Claim Notice received for any
Environmental Loss, such lesser period as may be required in
order to comply with any applicable Environmental Law or to
respond to any complaint or pleading (the "Election Period"),
the Indemnifying Party will notify the Indemnified Party
(i) whether the Indemnifying Party disputes its potential
liability to the Indemnified Party under this Agreement with
respect to such Third Party Claim and (ii) whether the
Indemnifying Party desires, at the sole cost and expense of
the Indemnifying Party, to defend the Indemnified Party
against such Third Party Claim.
(B) If the Indemnifying Party notifies the Indemnified
Party within the Election Period that the Indemnifying Party
does not dispute its potential liability to the Indemnified
Party under this Agreement and that the Indemnifying Party
elects to assume the defense of the Third Party Claim, then
the Indemnifying Party will have the right to defend, at its
sole cost and expense, such Third Party Claim by all
appropriate proceedings, which proceedings will be prosecuted
diligently by the Indemnifying Party to a final conclusion or
settled at the discretion of the Indemnifying Party in
accordance with this Section 9.04(B). The Indemnifying Party
will have full control of such defense and proceedings,
including any compromise or settlement thereof. The
Indemnified Party is hereby authorized, at the sole cost and
expense of the Indemnifying Party (but only if the Indemnified
Party is actually entitled to indemnification hereunder or if
the Indemnifying Party assumes the defense with respect to the
Third Party Claim), to file, during the Election Period, any
motion, answer or other pleadings which the Indemnified Party
deems necessary or appropriate to protect its interests or
those of the Indemnifying Party and which are not
unnecessarily prejudicial to the Indemnifying Party. If
requested by the Indemnifying Party, the Indemnified Party
will, at the sole cost and expense of the Indemnifying Party,
cooperate with the Indemnifying Party and its counsel in
contesting any Third Party Claim which the Indemnifying Party
elects to contest, including the making of any related
counterclaim against the person asserting the Third Party
Claim or any cross-complaint against any person. The
Indemnified Party may participate in, but not control, any
defense or settlement of any Third Party Claim controlled by
the Indemnifying Party pursuant to this Section 9.04(B) and,
except as permitted above or pursuant to Section 9.04(C), will
bear its own costs and expenses with respect to such
participation. Notwithstanding anything in this Section 9.04
to the contrary, the Indemnifying Party will not, without the
written consent of the Indemnified Party, (i) settle or
compromise any action, suit or proceeding or consent to the
entry of any judgment which does not include as an
unconditional term thereof the delivery by the claimant or
plaintiff to the Indemnified Party of a written release from
all liability in respect of such action, suit or proceeding or
(ii) settle or compromise any action, suit or proceeding in
any manner that may materially and adversely affect the
Indemnified Party other than as a result of money damages or
other money payments.
(C) If the Indemnifying Party fails to notify the
Indemnified Party within the Election Period that the
Indemnifying Party elects to defend the Indemnified Party
pursuant to Section 9.04(B), or if the Indemnifying Party
elects to defend the Indemnified Party pursuant to
Section 9.04(B) but fails to diligently and promptly prosecute
or settle the Third Party Claim, then the Indemnified Party
will have the right to defend, at the sole cost and expense of
the Indemnifying Party, the Third Party Claim by all
appropriate proceedings, which proceedings will be promptly
and vigorously prosecuted by the Indemnified Party to a final
conclusion or settled. The Indemnified Party will have full
control of such defense and proceedings; provided, however,
that the Indemnified Party may not, without the Indemnifying
Party's consent, which will not be unreasonably withheld, (i)
settle or compromise any action, suit or proceeding or consent
to the entry of any judgment which does not include as an
unconditional term thereof the delivery by the claimant or
plaintiff to the Indemnified Party of a written release from
all liability in respect of such action, suit or proceeding,
(ii) settle or compromise any action, suit or proceeding in
any manner that may materially and adversely affect the
Indemnified Party other than as a result of money damages or
other money payments or (iii) except as otherwise provided in
Section 9.02(B), take any action to respond to any
Environmental Loss. Notwithstanding the foregoing, if the
Indemnifying Party has delivered a written notice to the
Indemnified Party to the effect that the Indemnifying Party
disputes its potential liability to the Indemnified Party
under this Agreement and if such dispute is resolved in favor
of the Indemnifying Party by final, nonappealable order of a
court of competent jurisdiction, the Indemnifying Party will
not be required to bear the costs and expenses of the
Indemnified Party's defense pursuant to this Section 9.04(C)
or of the Indemnifying Party's participation therein at the
Indemnified Party's request and the Indemnified Party will
reimburse the Indemnifying Party in full for all costs and
expenses of such litigation. The Indemnifying Party may
participate in, but not control, any defense or settlement
controlled by the Indemnified Party pursuant to this Section
9.04(C), and the Indemnifying Party will bear its own costs
and expenses with respect to such participation.
(D) If an Indemnified Party should have a claim against
an Indemnifying Party hereunder which does not involve a Third
Party Claim, or knowledge of facts which could give rise to
such a claim, the Indemnified Party will transmit to the
Indemnifying Party a written notice (the "Indemnity Notice")
describing in reasonable detail the nature of the claim, an
estimate of the amount of damages attributable to such claim
and the basis of the Indemnified Party's request for
indemnification under this Agreement. If the Indemnifying
Party does not notify the Indemnified Party within sixty (60)
days from its receipt of the Indemnity Notice that the
Indemnifying Party disputes such claim, the claim specified by
the Indemnified Party in the Indemnity Notice will be deemed
a liability of the Indemnifying Party hereunder. If the
Indemnifying Party has timely disputed such claim, as provided
above, such dispute will be resolved by litigation in an
appropriate court of competent jurisdiction.
Payments of all amounts owing by the Indemnifying
Party pursuant to Sections 9.04(B) and (C) and 9.05 will be
made within thirty (30) days after the latest of (i) the
effective date of the settlement of the Third Party Claim,
(ii) the date an adjudication of such Third Party Claim
becomes final and nonappealable or (iii) the date an
adjudication of the Indemnifying Party's liability to the
Indemnified Party under this Agreement becomes final and
nonappealable. Payments of all amounts owing by the
Indemnifying Party pursuant to Section 9.04(D) will be made
within thirty (30) days after the later of (i) the expiration
of the sixty (60) day Indemnity Notice period or (ii) the date
an adjudication of the Indemnifying Party's liability to the
Indemnified Party under this Agreement becomes final and
nonappealable.
9.05 Insurance.
Except with respect to Cost Recovery Actions:
(A) in determining the amount of any Loss for which any
party is entitled to indemnification under this Agreement, the
gross amount thereof will be reduced by any proceeds actually
realized under insurance policies by such party; provided,
however, that if such party has been indemnified but does not
actually receive such insurance proceeds until after being
indemnified, such party will reimburse the Indemnifying Party
for amounts paid to or on behalf of such party to the extent
of the insurance proceeds so received;
(B) following the Closing Date, if the Seller should
suffer any Loss covered by any of the Seller's insurance
policies and wishes to make a claim against the issuer of such
policy, the Purchaser will cooperate with the Seller, at the
Seller's expense, in ascertaining and establishing coverage,
pursuing such claim and collecting under such policy; and
(C) if both the Indemnifying Party and the Indemnified
Party have insurance coverage respecting a particular Loss for
which indemnification is provided pursuant to this Article IX,
the Purchaser and the Seller agree that the insurance coverage
of the Indemnifying Party will be called upon before the
insurance coverage of the Indemnified Party is called upon.
9.06 Acknowledgment of the Purchaser. The Purchaser
expressly agrees and acknowledges that, in consummating the
transactions contemplated hereby, it is only relying on the
representations and warranties of the Seller made in the Transfer
Agreements and is not relying on any representation or warranty of
any present, former or future stockholder, director, officer,
employee, agent, consultant or representative of the Seller or any
Insilco Affiliate.
ARTICLE X.
Termination, Amendment and Waiver
10.01 Grounds for Termination. This Agreement may be
terminated at any time prior to the Closing Date:
(A) by the mutual written agreement of the Seller and
the Purchaser;
(B) by the Seller by notice thereof to the Purchaser if
the conditions to the obligations of the Seller to proceed
with the Closing which are contained in Section 6.02 are not
satisfied on or before September 30, 1994;
(C) by the Purchaser by notice thereof to the Seller if
the conditions to the obligations of the Purchaser to proceed
with the Closing which are contained in Section 6.01 are not
satisfied on or before September 30, 1994; or
(D) by the Seller or the Purchaser if the consummation
of such transactions would violate any nonappealable final
order, decree or judgment of any court or governmental body
having competent jurisdiction enjoining, restraining or
otherwise preventing, or awarding substantial damages in
connection with, the consummation of this Agreement or the
transactions contemplated hereby;
provided, however, that a party will not be allowed to exercise any
right of termination pursuant to this Section 10.01 if the event
giving rise to such termination right shall be due to the
negligent, bad faith or willful failure of the party seeking to
terminate this Agreement to perform or observe in any material
respect any of the covenants or agreements set forth herein to be
performed or observed by such party.
10.02 Effect of Termination. The following
provisions will apply in the event of a termination of this
Agreement:
(A) If this Agreement is terminated by the Seller or by
the Purchaser as permitted under Section 10.01, such
termination will be without liability to any party to this
Agreement or any stockholder, director, officer, employee,
agent or representative of such party.
(B) If this Agreement is otherwise terminated, the
terminating party will be fully liable for any and all damages
sustained or incurred by the other party to this Agreement,
and such other party will be entitled to equitable relief,
including injunctive relief, and specific performance to the
full extent available at law or in equity, as well as to all
other remedies available at law or in equity.
(C) The Seller and the Purchaser agree that the
provisions of this Section 10.02, Section 5.02(E), and
Articles XI, XII and XV will survive any termination of this
Agreement.
10.03 Amendment. This Agreement may be amended by
the parties at any time, but may not be amended except by an
instrument signed on behalf of each of the parties.
10.04 Extension; Waiver. At any time the parties may
extend, to the extent permitted by applicable law, the time for the
performance of any of the obligations or other acts of the other
parties, waive any inaccuracies in the representations and
warranties contained in this Agreement or in any document delivered
pursuant to it and waive compliance with any of the agreements or
conditions contained in this Agreement. Any agreement on the part
of a party to any such extension or waiver will be valid only if,
and to the extent, set forth in an instrument signed on behalf of
such party.
10.05 Procedure for Termination, Amendment, Extension
or Waiver. A termination or amendment of this Agreement or an
extension or waiver pursuant to any of the foregoing Sections of
this Article X by any party will, in order to be effective, require
the action of such party's Board of Directors or an authorized
committee, officer or designee thereof.
ARTICLE XI.
Brokers
The Purchaser and the Seller each represent to the other
that, except for Goldman, Sachs & Co., which the Seller
acknowledges has been retained by it to assist and advise it in
connection with the transactions contemplated by this Agreement,
and except for Wertheim Schroder & Co. Incorporated and Pinnacle
Partners, which the Purchaser acknowledges have been retained by it
to assist and advise it in connection with the transactions
contemplated by this Agreement, neither the Purchaser nor the
Seller has, directly or indirectly, employed any broker, finder or
intermediary in connection with such transactions who might be
entitled to a fee or commission upon the execution of this
Agreement or consummation of the transactions contemplated hereby.
ARTICLE XII.
Expenses
The parties agree that the Seller will pay the costs and
expenses of Goldman, Sachs & Co., and the Purchaser will pay the
costs and expenses of Wertheim Schroder & Co. Incorporated and
Pinnacle Partners, each in connection with the transactions
contemplated by this Agreement. Except as specifically provided
herein, all legal and other costs and expenses in connection with
this Agreement and the transactions contemplated hereby will be
paid by the Seller or the Purchaser, as the case may be, depending
upon which party incurred such costs and expenses.
ARTICLE XIII.
Noncompetition
13.01 Seller's Covenant Not to Compete. For and
during the period commencing on the Closing Date and continuing for
a period of five (5) years thereafter, the Seller will not, and
will cause its subsidiaries not to, engage in the operation of any
commercial enterprise which competes with the Purchaser and its
subsidiaries within the States of California (including the
counties set forth on Schedule 13.01(A)), Hawaii, Nevada or
Arizona, U.S.A. or the United States of Mexico, in the sale and
distribution of architectural paints and architectural coatings,
including the Products.
13.02 Equitable Relief. The Seller agrees that upon
the Seller's violation of Section 13.01, (A) the Purchaser will be
entitled to equitable relief, including injunctive relief, and (B)
in the event of any such violation, the Seller will not oppose the
granting of such relief. Nothing in this Section 13.02 will be
deemed to limit the Purchaser's remedies at law or in equity for
any breach by the Seller of any of the provisions of this
Agreement.
13.03 Scope of Covenant. If any court of competent
jurisdiction determines that the specified time period or the
geographical areas set forth in Section 13.01 are unreasonable,
arbitrary or against public policy, then such lesser time period or
more limited geographical area that is determined by the court to
be reasonable, non-arbitrary and not against public policy may be
enforced.
ARTICLE XIV.
Real Property
14.01 Transferred Stores. As soon as practicable
after the Signing Date, the parties will cause an appraisal of the
Stores to be made by the Appraiser in accordance with the standards
set forth in Schedule 14.01(B). On receipt of the appraisal, the
Purchaser will select the Stores, fee title to which is to be
transferred to it at the Closing (the "Transferred Stores"). The
Purchaser and the Seller will share equally both the cost of such
appraisal and any refunds or credits by the Appraiser, which
refunds or credits are contemplated by Schedule 14.01(B). If the
aggregate Fair Market Value of the Transferred Stores exceeds the
Book Value, the Purchaser will pay the amount of such excess to the
Seller on the Closing Date. If the Fair Market Value of the
Transferred Stores is less than the Book Value, the Seller will
credit the amount of such difference against the monthly base rent
payable by the Purchaser to the Seller under the Leases. The
Seller and the Purchaser will execute and deliver at the Closing a
Lease with respect to each Store which is not a Transferred Store.
14.02 Lease. Each Lease will provide for the
following:
(A) An initial term of two (2) years from the Closing
Date (the "Initial Term"), with base rent payable monthly in
advance by the Purchaser to the Seller in an amount equal to
the Seller's monthly depreciation attributable to the Store
covered by the Lease.
(B) Options in favor of the Purchaser for two (2)
renewal terms of six (6) months each and a third renewal term
of five (5) years, each of which options will be exercisable
only by ninety (90) days' prior written notice from the
Purchaser to the Seller, and provided that no default beyond
the applicable cure period exists under such Lease either as
of the date of the exercise of the option or as of the date of
the commencement of the renewal term. All terms and
conditions of the Lease shall remain in effect for any renewal
term for which the Purchaser has exercised its option, except
monthly base rent shall equal one-twelfth (1/12) of that sum
which will result in a rate of return on capital equal to ten
percent (10%) per annum, where "capital" equals the Fair
Market Value (as hereinafter defined) of such Store. As used
herein, "Fair Market Value" means the value of a Store as
determined in its most recent appraisal by the Appraiser. If
at least sixty (60) days in advance of the commencement of the
first six (6) month renewal term or the five (5) year renewal
term either party requests a new appraisal, the Seller will
cause a new appraisal to be made by the Appraiser.
(C) Any material default by the Purchaser or the Seller,
as applicable, under a Lease that remains uncured after
expiration of the applicable cure period will constitute a
default by the Purchaser or the Seller, as applicable, under
each other Lease, which default under each other Lease will
not be subject to additional notice and opportunity to cure.
14.03 Option to Purchase.
(A) In each Lease, the Seller will grant the Purchaser
an option to purchase the Store covered by the Lease, provided
the Purchaser is not in default beyond the applicable cure
period under the Lease at the time of exercise of such option
or at the time of the purchase contemplated by such option.
(B) The option may be exercised by the Purchaser at any
time before the expiration of the Lease, including any
extensions thereof, by giving the Seller written notice of
such exercise no less than ninety (90) days prior to the
expiration of the term of the Lease, provided such notice is
given prior to the Purchaser's receipt of written notice from
the Seller of the Seller's written agreement, as such
agreement may be modified, to sell the Store to a third party;
the Purchaser's Option will automatically terminate on the
receipt of such notice. If the sale of such Store pursuant to
such written agreement is not consummated, the Purchaser's
Option will be automatically reinstated and in full force and
effect (subject to subsequent notice of any other sales to
third parties). The price payable by the Purchaser will equal
the appraised value of such Store as set forth in the
Appraiser's appraisal pursuant to Section 14.01 ("Option
Purchase Price"), and will be payable in cash at closing.
Such closing must occur in accordance with the terms of the
option provisions set forth in the applicable Lease, and the
parties will use their respective Best Efforts to cause such
closing to occur within sixty (60) days after the Purchaser's
notice to the Seller of exercise of its option.
On the closing of a sale of any Store to the
Purchaser resulting from the Purchaser's exercise of its
option described in Section 14.03(A), the Seller will credit
against the Option Purchase Price the Purchaser's Share (as
hereinafter defined) resulting from such sale.
14.04 Sale to Third Party. Within thirty (30) days
after closing a sale of any Store to a third party or the Purchaser
during the term of the Lease covering such Store, the Seller will
pay the Purchaser (or, if applicable, credit the Purchaser against
the Option Purchase Price), from the Net Sales Price (as
hereinafter defined), the Purchaser's Share, if any. "Net Sales
Price" for a Store means the gross sales price for a Store, less
all customary fees, costs and expenses incurred in connection with
its sale that are paid by the Seller or credited against the
purchase price. If a third party pays any portion of the purchase
price for a Store on a deferred basis, the Purchaser will be
entitled to the Purchaser's Share of the deferred portion of the
purchase price only when and to the extent that such deferred
portion is paid to the Seller in cash. Any sale of a Store to a
third party during the term of such Store's Lease will be made
subject to the Lease.
14.05 Sharing of Proceeds. After the Seller has
received $6,000,000 in Aggregate Proceeds (as hereinafter defined)
from the sale of the Stores (other than Transferred Stores), the
Purchaser will receive 50% of the Net Sales Price resulting from
each sale of a Store (whether to a third party or the Purchaser)
(the "Purchaser's Share"); provided, however, that the Purchaser
will only be entitled to share in the Aggregate Proceeds with
respect to a Store if the Closing of such sale occurs within eight
(8) years after the Closing Date. "Aggregate Proceeds" means, as
of the closing of the sale of any Store, the sum of the Net Sales
Prices of previously sold Stores (other than Transferred Stores).
ARTICLE XV.
Environmental Assessments and Data
15.01 Environmental Assessments. On or as soon as
practicable after the Signing Date, the Environmental Consultant
will conduct the environmental assessments of the Real Property in
the manner and according to the schedule set forth in the Scope of
Work. Although the Environmental Consultant's contract will be
executed and administered by the Seller, the Environmental
Consultant's fees and costs will be invoiced half to the Seller and
half to the Purchaser and will be paid as they are incurred,
provided that the Seller will not be obligated to pay more than
$150,000 of such fees and costs. The Purchaser and the Seller will
receive the reports prepared by the Environmental Consultant at
least thirty (30) days prior to the Closing Date that will set
forth specific cost estimates of Environmental Losses that relate
to the operations of the Division and the operations of any former
owner of or operator at any Real Property that is evaluated as part
of the Scope of Work. The Purchaser will have the right to observe
any testing or sampling activities undertaken by the Environmental
Consultant, and the Purchaser will have the right to receive split
samples derived from such testing or sampling activities, which
split samples may be individually analyzed at the Purchaser's sole
cost and expense. Each party will indemnify and defend the other
against, and hold the other harmless from, one-half (1/2) of Losses
pursuant to any applicable Environmental Law directly resulting
from the Environmental Consultant's testing or sampling activities
in connection with the Scope of Work, which activities create
Environmental Losses, including any exacerbation of existing
environmental conditions at the Real Property. Any claim for
indemnification pursuant to this Section 15.01 will be made
pursuant to the procedures of Section 9.04.
15.02 Environmental Data. All information or data
collected or generated during the environmental assessments
performed pursuant to Section 15.01 ("Environmental Data") will be
subject to the terms of the Confidentiality Agreement executed by
the Purchaser. Without in any way limiting the terms of the
Confidentiality Agreement, the Purchaser expressly agrees to not
disclose or release any Environmental Data prior to the Closing
Date without the prior written consent of the Seller, except to the
Purchaser's consultants, employees, representatives, attorneys and
agents, and the Purchaser's lenders and their consultants and
attorneys, who have a need to know such information in connection
with the transactions contemplated hereby. After the Closing Date,
the Purchaser will provide the Seller with ten (10) days' written
notice before releasing any Environmental Data to any third party,
including a Governmental Authority, unless otherwise required under
an applicable Environmental Law. The Environmental Data will be
prepared at the request of the Seller's counsel and, to the fullest
extent permitted by applicable law, will be the work product of
such counsel and constitute confidential attorney/client
communications. The Purchaser expressly agrees that (i) the Seller
will be entitled to equitable relief, including injunctive relief,
in the event that the Purchaser breaches any obligation under this
Section 15.02 and (ii) in the event of any such breach, the
Purchaser will not oppose the granting of such relief.
ARTICLE XVI.
Notices; Books and Records; Miscellaneous
Notices. All notices and other communications
hereunder will be in writing and will be deemed given when
delivered personally or when received if sent by registered or
certified mail, return receipt requested, or telecopy to the
parties at the following addresses (or at such other address as a
party may specify by like notice):
(A) If to the Purchaser, to:
Grow Group, Inc.
200 Park Avenue
New York, New York 10166
Attention: Lloyd Frank, Secretary
Telecopy: (212) 986-8268
with a copy (which will not constitute effective
notice pursuant to this Section 16.01) to:
Brobeck, Phleger & Harrison
550 South Hope Street
Los Angeles, California 90071-2604
Attention: Kenneth R. Bender, Esq.
Telecopy: (213) 745-3345
and (which will not constitute effective notice
pursuant to this Section 16.01) to:
Parker Chapin Flattau & Klimpl
1211 Avenue of the Americas
New York, New York 10036
Attention: Richard A. Rubin
Telecopy: (212) 704-6288
(B) If to the Seller, to:
Insilco Corporation
425 Metro Place North
Fifth Floor
Dublin, Ohio 43017
Attention: General Counsel
Telecopy: (614) 791-3195
with a copy (which will not constitute effective
notice pursuant to this Section 16.01) to:
Baker & Botts, L.L.P.
2001 Ross Avenue
Dallas, Texas 75201-2916
Attention: Karen Wolf
Telecopy: (214) 953-6503
16.02 Books and Records. The Seller agrees that the
Seller will, promptly after the Closing, deliver or cause to be
delivered to the Purchaser all books and records in the possession
of the Seller relating to the Transferred Assets, to the extent not
then in the possession of the Purchaser.
16.03 Miscellaneous.
(A) Exclusive Agreement; Third Party Beneficiaries.
This Agreement (i) supersedes all prior agreements between the
parties (written or oral) other than the Confidentiality
Agreement and the Side Letter, (ii) together with the
Confidentiality Agreement, the Side Letter and the other
Transfer Agreements, is intended as a complete and exclusive
statement of the terms of the agreement between the parties to
this Agreement and (iii) except pursuant to Section 9.06, does
not and is not intended to confer on any person other than the
parties to this Agreement any rights or remedies.
(B) Choice of Law. This Agreement will be governed by
the laws of the State of California.
(C) Assignments. No party hereto will assign this
Agreement or any part hereof without the prior written consent
of the other party or parties. Except as otherwise provided
herein, this Agreement will be binding upon and inure to the
benefit of and shall be specifically assumed by the parties
hereto and their respective permitted successors and assigns.
No such assignment will release the Purchaser of any of its
obligations under this Agreement.
(D) Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being
enforced by any rule of law or public policy, all other
conditions and provisions of this Agreement will nevertheless
remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not
affected in any manner adverse to any party. Upon such
determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto
will negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as
possible in an acceptable manner so that the transactions
contemplated hereby are fulfilled to the greatest extent
possible.
(E) Counterparts. This Agreement may be executed in any
number of counterparts, each of which will be deemed to be an
original, but all of which together will constitute but one
and the same agreement.
(F) Further Assurances. The Seller and the Purchaser
agree to deliver or cause to be delivered to each other such
additional instruments, to take such additional action or to
make any such filings on the Closing Date and at such other
times thereafter as any of them may reasonably request for the
purpose of carrying out this Agreement.
(G) Interpretation. When a reference is made in this
Agreement to Articles, Sections, Schedules or Exhibits, such
reference is to an Article or a Section of, or a Schedule or
an Exhibit to, this Agreement, unless otherwise indicated.
The table of contents and headings contained in this Agreement
are for reference purposes only and will not affect in any way
the meaning or interpretation of this Agreement. Whenever the
words "include," "includes" or "including" are used in this
Agreement, they will be understood to be followed by the words
"without limitation." References to statutes are to be
construed as including all rules and regulations issued or
promulgated in connection therewith.
(H) Waiver of Compliance with Bulk Transfer Laws. The
Purchaser hereby waives compliance by the Seller with the
provisions of any bulk transfer laws that may be applicable to
the transactions contemplated by this Agreement. The Seller
hereby agrees to indemnify and defend the Purchaser against,
and hold the Purchaser harmless from, any Loss or Losses
incurred by the Purchaser based upon, arising out of or<PAGE>
otherwise
in respect of such noncompliance. Any such indemnification will
be made pursuant to the procedures set forth in Section 9.04.
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date first written above.
INSILCO CORPORATION
By:
Name:
Title:
GROW GROUP, INC.
By:
Name:
Title:
The Exhibits and Schedules to this Asset Purchase Agreement will be
provided to the Securities and Exchange Commission upon request.
