<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT: MARCH 5, 1997
INSILCO CORPORATION
(Exact Name of Registrant as specified in its charter)
Delaware 0-22098 06-0635844
-------- ------- ----------
(State or other urisdiction of (Commission File No.) (IRS Employer
incorporation or organization) Identification Number)
425 Metro Place North
Fifth Floor
Dublin, Ohio 43017
(614) 792-0468
(Address, including zip code, and telephone number
including area code of Registrant's
principal executive offices)
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On March 5, 1997, Insilco Corporation (the "Company") sold its Rolodex office
products business unit ("Rolodex") to Newell Co. ("Newell") for estimated net
cash proceeds of approximately $111.5 million, after payment of transaction
costs and subject to adjustment for certain post closing items. The Company
expects to largely offset the cash taxes incurred on the gain from the sale by
utilizing its available tax loss carryforwards. The Company is considering
various alternatives for the use of the Rolodex proceeds including a one time
distribution to shareholders or a repurchase of shares. Any distribution to
shareholders will be subject to required bank approval.
The aggregate purchase price was arrived at by arm's-length negotiations between
the Company and Newell. There was no material relationship between Newell and
the Company or any of the Company's affiliates, directors or officers, or any
associate of any director or officer of the Company.
The Company's press release issued March 5, 1997 regarding this transaction is
attached as an exhibit to this report and is incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Business Acquired.
Not applicable.
(b) Pro Forma Financial Information.
The following unaudited pro forma condensed consolidated statements
are filed with this report:
Pro Forma Condensed Consolidated Balance Sheet as of
December 31, 1996........................................Page F-1
Pro Forma Condensed Consolidated Statements of Operations
For the Year Ended December 31, 1996.....................Page F-2
The following pro forma unaudited condensed consolidated balance
sheet as of December 31, 1996, presents the estimated impact of the
sale of Rolodex as discussed in Item 2 (and excludes the impact of
the sale of the Rolodex electronics product line) on the Company's
consolidated financial position assuming such sale had occurred at
December 31, 1996. The following pro forma unaudited condensed
consolidated statement of operations for the year ended December 31,
1996 presents the estimated impact of the sale of Rolodex on the
Company's historical consolidated statement of operations as if such
sale had occurred at the beginning of the period. The nonrecurring
transactions related directly to the sale are excluded from the pro
forma statement of operations. The significant assumptions utilized
for the pro forma financial statements include: (i) the net proceeds
less estimated cash taxes will be held as short term investments
because the ultimate use of the proceeds has not been determined;
(ii) the interest rate for the investment of the proceeds is based
upon the weighted average rates during the applicable period; (iii)
income tax expense (benefit) attributable to the pro forma
transactions is provided at the statutory tax rate adjusted for the
benefit of the possession tax credit on its qualifying Puerto Rico
operations.
2
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The unaudited pro forma condensed consolidated financial statements
have been prepared by the Company based upon assumptions deemed
proper. The unaudited pro forma condensed consolidated financial
statements presented herein are shown for illustrative purposes only
and are not necessarily indicative of the future financial position
or future results of operations of the Company, or of the financial
position or results of operations of the Company that would have
actually occurred had the transaction been in effect as of the date
or for the period presented. In addition, it should be noted that the
Company's consolidated financial statements will reflect the
disposition only from March 5, 1997, the Closing Date.
The unaudited pro forma condensed consolidated financial statements
should be read in conjunction with the historical financial
statements and related notes of the Company.
(c) Exhibits.
Exhibit No. Description
2(k) Asset Purchase Agreement, dated as of February 12, 1997,
between the Company and Newell Co.
20 Press release of the Company issued March 5, 1997.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
INSILCO CORPORATION
-------------------------
Registrant
Date: March 19, 1997 By: /s/ James D. Miller
------------------------
James D. Miller
Executive Vice President
3
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EXHIBIT INDEX
Exhibit No. Description Page
2(k) Asset Purchase Agreement, dated as of February 12,
1997, between the Company and Newell Co.
20 Press release of the Company issued March 5, 1997.
4
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INSILCO CORPORATION AND SUBSIDIARIES
Unaudited Pro Forma Condensed Consolidated Balance Sheet
December 31, 1996
(In thousands)
<TABLE>
<CAPTION>
Adjustment to
Record Sale of
Rolodex and
Historical Cash Proceeds Pro Forma
---------- ------------- ---------
(1)
Assets
------
Current assets:
<S> <C> <C> <C>
Cash and cash equivalents $ 3,481 111,500 114,981
Trade receivables, net 73,874 (8,481) 65,393
Other receivables 8,499 (325) 8,174
Inventories 66,385 (8,460) 57,925
Deferred tax asset 29,859 (27,863) 1,996
Prepaid expenses 7,010 (1,095) 5,915
-------- ------- --------
Total current assets 189,108 65,276 254,384
Property, plant and equipment, net 114,379 (3,944) 110,435
Deferred tax asset 7,542 - 7,542
Other assets, net 40,971 (4,990) 35,981
-------- ------- --------
Total assets $ 352,000 56,342 408,342
======== ======= ========
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
Current portion of long-term debt $ 24,272 - 24,272
Current portion of other long-term obligations 6,661 - 6,661
Accounts payable 37,984 (4,797) 33,187
Accrued income taxes 3,596 11,500 15,096
Accrued expenses and other 68,639 (7,033) 61,606
------- ------- --------
Total current liabilities 141,152 (330) 140,822
Long-term debt 136,770 - 136,770
Other long-term obligations 40,676 - 40,676
Stockholders' equity 33,402 56,672 90,074
-------- ------- -------
Total liabilities and stockholders' equity $ 352,000 56,342 408,342
======== ======= ========
</TABLE>
F-1
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INSILCO CORPORATION AND SUBSIDIARIES
Unaudited Pro Forma Condensed Consolidated Statement of Operations
Year Ended December 31, 1996
(In thousands, except share data)
<TABLE>
<CAPTION>
Pro Forma Adjustments to
Record Sale of Rolodex
----------------------
Historical Operations Interest Pro Forma
---------- ---------- -------- ---------
(2) (3)
<S> <C> <C> <C> <C>
Sales $ 572,474 (58,600) -- 513,874
Cost of products sold 389,893 (29,719) -- 360,174
Depreciation 16,593 (435) -- 16,158
Selling, general and administrative expenses 106,649 (15,439) -- 91,210
Amortization of intangibles 238 -- -- 238
--------- ------- ------ --------
Operating income 59,101 (13,007) -- 46,094
--------- ------- ------ --------
Other income (expense):
Interest expense (18,386) 8 -- (18,378)
Interest income 1,010 (286) 5,300 6,024
Other income, net 10,138 49 -- 10,187
--------- ------- ------ --------
Income before income taxes 51,863 (13,236) 5,300 43,927
Income tax expense (12,810) 2,814 (2,041) (12,037)
--------- ------- ------ --------
Net income $ 39,053 (10,422) 3,259 31,890
========= ======= ====== ========
Net income per common share and common
share equivalent $ 3.95 3.22
======== ========
Weighted average number of common shares
outstanding and common share equivalents 9,891,631 9,891,631
========= =========
</TABLE>
F-2
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The notes to the pro forma unaudited condensed consolidated statement of
operations and balance sheet follow:
(1) To record the sale of Rolodex as if it had occurred on December 31,
1996. The change in stockholder's equity of $56.7 million represents a
pre-tax gain on the sale of $96.0 million, total tax expense of $39.3
million and estimated cash taxes of $11.5 million. The actual gain and
tax consequences recorded in 1997 will be dependent on the book and tax
basis, as well as the tax loss carryforwards in existence at that time.
(2) To record the effect on sales and costs and expenses assuming Rolodex
was sold at the beginning of the year ended December 31, 1996.
(3) To record the incremental interest income and related income tax
expense assuming the net after tax proceeds were held in short term
investments from the beginning of the period.
F-3
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Exhibit 2(k)
INSILCO CORPORATION,
ROLODEX CORPORATION,
NEWELL CO.
and
STERLING PLASTICS CO.
------------------------
ASSET PURCHASE AGREEMENT
------------------------
for the Sale of
Certain Assets of
INSILCO CORPORATION
and
ROLODEX CORPORATION
Dated as of February 12, 1997
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE I Transactions.......................................................1
1.1. Purchase and Sale.......................................1
1.2. Excluded Assets.........................................4
1.3. Rolodex Liabilities.....................................5
1.4. Consents of Third Parties...............................7
1.5. Intercompany Accounts...................................7
ARTICLE II Closing............................................................7
2.1. Closing.................................................7
2.2. Purchase Price and Payment..............................8
2.3. Other Deliveries........................................8
ARTICLE III Representations and Warranties of Seller...........................9
3.1. Organization and Good Standing..........................9
3.2. Corporate Authority and Approval........................9
3.3. Capitalization of Rolodex PR; Ownership of
Rolodex PR Shares.......................................9
3.4. Consents................................................10
3.5. No Conflicts............................................10
3.6. Compliance with Laws....................................10
3.7. Financial Statements....................................11
3.8. Absence of Certain Changes or Events....................11
3.9. Title to Assets.........................................11
3.10. Intellectual Property...................................12
3.11. Commitments.............................................13
3.12. Litigation..............................................13
3.13. Insurance...............................................14
3.14. Employee Benefit Plans..................................14
3.15. Taxes...................................................16
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C>
3.16. Undisclosed Liabilities..............................17
3.17. Fees.................................................17
3.18. Receivables..........................................17
3.19. Inventory............................................17
3.20. Environmental Matters................................18
3.21. Arrangements with Related Parties....................19
3.22. Customers and Suppliers..............................19
3.23. Employees and Labor Relations........................20
3.24. Copies of Documents..................................20
3.25. Franklin Asset Purchase Agreement....................20
3.26. Real Property........................................20
3.27. Disclaimer...........................................20
ARTICLE IV Representations and Warranties of Purchaser and Parent..........21
4.1. Organization and Good Standing.......................21
4.2. Corporate Authority and Approval.....................21
4.3. Consents.............................................22
4.4. No Conflicts.........................................22
4.5. Funds Available......................................22
4.6. Litigation...........................................22
4.7. Fees.................................................22
ARTICLE V Covenants of Seller.............................................22
5.1. Cooperation by Seller................................22
5.2. Conduct of Rolodex Business..........................23
5.3. Access...............................................25
5.4. No Solicitation......................................25
5.5. Certification of Net Investment......................25
5.6. Name Change..........................................26
5.7. Further Assurances...................................26
ARTICLE VI Covenants of Purchaser and Parent...............................26
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C>
6.1. Cooperation by Purchaser and Parent..................26
6.2. Preservation of Books and Records....................27
6.3. Sellers' Representations Modified By
Purchaser's or Parent's Knowledge....................28
ARTICLE VII Conditions to Purchaser's and Parent's Obligations..............28
7.1. Representations, Warranties and Covenants of
Seller...............................................28
7.2. Consents.............................................29
7.3. No Prohibitions......................................29
7.4. Corporate Documents..................................29
7.5. Encumbrances.........................................29
7.6. Deliveries by Seller.................................29
7.7. Consents.............................................29
7.8. Preclosing Net Investment............................29
7.9. No Adverse Proceeding................................30
7.10. Resignation of Rolodex PR Board of Directors.........30
ARTICLE VIII Conditions To Seller's Obligations..............................30
8.1. Representations, Warranties and Covenants of
Purchaser............................................30
8.2. Consents.............................................30
8.3. No Prohibitions......................................31
8.4. Corporate Documents..................................31
8.5. Deliveries by Purchaser..............................31
8.6. No Adverse Proceeding................................31
ARTICLE IX Income Taxes; Tollgate Taxes; Allocation of Purchase Price......31
9.1. Indemnification......................................31
9.2. Filing Responsibility................................32
9.3. Refunds..............................................33
9.4. Audits...............................................34
9.5. Cooperation..........................................34
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C>
9.6. Purchase Price Allocation............................34
9.7. Section 338 Elections and Forms......................35
ARTICLE X Employment Matters..............................................36
10.1. Employment Offers....................................36
10.2. Employment Arrangements; Collective
Bargaining Agreement and Retained Employee
Compensation Agreements..............................36
10.3. Assumption of Rolodex PR Pension Plan................36
10.4. 401(k) Plan..........................................36
10.5. Insilco Pension Plan.................................37
10.6. Insilco Long-Term Incentive Plan.....................37
10.7. Other Benefit Plans..................................37
10.8. Severance............................................38
10.9. W-2 Matters..........................................38
10.10. Multiemployer Plan...................................39
10.11. Substitution of Parent...............................40
10.12. Indemnity............................................40
ARTICLE XI Termination, Amendment and Waiver...............................40
11.1. Termination..........................................40
11.2. Effect on Obligations................................40
ARTICLE XII Indemnification.................................................41
12.1. Survival.............................................41
12.2. Indemnification......................................41
12.3. Procedures for Claims................................42
12.4. Other Provisions.....................................44
ARTICLE XIII Miscellaneous...................................................45
13.1. Noncompetition; Non-Solicitation.....................45
13.2. Collection of Receivables; Other Assets..............46
13.3. Mail 46
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C>
13.4. Bulk Sales Laws......................................46
13.5. Expenses.............................................47
13.6 Exclusive Agreement; No Third-Party
Beneficiaries........................................47
13.7. Governing Law, Etc...................................47
13.8. Successors and Assigns...............................47
13.9. Publicity............................................48
13.10. Severability.........................................48
13.11. Notices..............................................48
13.12. Counterparts.........................................49
13.13. Interpretation.......................................50
13.14. Amendment............................................50
13.15. Extension; Waiver....................................50
13.16. Incorporation of Exhibits and Schedules..............50
</TABLE>
-v-
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "AGREEMENT"), dated as of
February 12, 1997, among Insilco Corporation, a Delaware corporation
("INSILCO"), Rolodex Corporation, a Delaware corporation ("RC") (Insilco and RC
being referred to herein individually and collectively as "SELLER"), Newell Co.,
a Delaware corporation ("PARENT"), and Sterling Plastics Co., a New Jersey
corporation and a wholly owned subsidiary of Parent ("Purchaser").
W I T N E S S E T H:
--------------------
WHEREAS, Insilco directly and through its wholly owned
subsidiaries Rolodex de Puerto Rico, Inc., a Delaware corporation ("ROLODEX
PR"), and RC is engaged in the manufacture and sale of personal information
filing systems, personal organizers, paper punches and certain other office
products (the "ROLODEX BUSINESS"); and
WHEREAS, Purchaser desires to purchase from Seller
substantially all of the assets of the Rolodex Business and Seller desires to
sell to Purchaser such assets, 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 and agreements contained
herein, the parties hereto hereby agree as follows:
ARTICLE I
TRANSACTIONS
------------
1.1. PURCHASE AND SALE. On the terms and subject to the conditions of
this Agreement, at the Closing (as defined in Section 2.1), Seller shall sell,
assign, transfer, convey and deliver to Purchaser, and Purchaser shall purchase
from Seller, all of Seller's right, title and interest in and to its business,
properties and assets that are used or held for use primarily (except as
provided below) in, or relate primarily (except as provided below) to, the
conduct of the Rolodex Business, of whatever kind or nature, real or personal,
tangible or intangible, known or unknown, actual or contingent, and wherever
located, as the same may exist on the Closing Date (as defined in Section 2.1)
(collectively, the "ACQUIRED ASSETS"), including all of Seller's right, title
and interest in and to the following:
(i) all machinery, equipment, vehicles, office
furniture, tools, computers, molds and parts and other
tangible property used primarily in the conduct of the Rolodex
Business;
(ii) all Inventory (as defined in Section 3.19);
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(iii) all Receivables (as defined in Section 3.18)
and other evidences of indebtedness of and rights to receive
payments from any individual, partnership, corporation, trust,
association, limited liability company, Governmental Authority
(as defined in Section 3.4) or any other entity (each, a
"PERSON") arising out of the Rolodex Business (including the
promissory note in the original principal amount of $50,000
from Brian P. Sullivan to Insilco, dated September 28, 1989);
(iv) subject to Section 1.4, all Commitments (as
defined in Section 3.11) including, without limitation,
Seller's right to receive payment for products sold or
services rendered pursuant to, and to receive goods and
services pursuant to, the Commitments and to assert claims and
take other rightful actions with respect to breaches, defaults
and other violations of the Commitments;
(v) originals or copies of all (A) sales and
promotional literature and catalogues, (B) books, records,
files and data (including books and records relating to
Inventory, purchasing, accounting, sales, pricing,
engineering, manufacturing, maintenance, repairs, marketing,
banking, Intellectual Property (as defined in Section 3.10),
shipping needs, customers and suppliers), and (C) recorded
knowledge, engineering reports, surveys, sales data, research
material and data, technical information, computerized storage
media and quality control data, in the case of each of clauses
(A), (B) and (C), to the extent pertaining exclusively to the
Rolodex Business, however evidenced (including, without
limitation, by computer disk or tape), and (D) personnel
records and files relating exclusively to Transferred
Employees (as defined in Section 10.1) to the extent transfer
of such records and files is permitted by law;
(vi) all Intellectual Property, including without
limitation those items listed in Schedule 3.10 to the
disclosure schedule delivered by Seller to Purchaser herewith
(the "DISCLOSURE SCHEDULE"), all know-how relating to the
Rolodex Business and all goodwill associated therewith, along
with all income, royalties, damages and payments due or
payable to Seller at the Closing or thereafter related to any
of the Intellectual Property, and all rights of Seller to sue
and recover for past or future infringements or
misappropriation of any of the Intellectual Property;
(vii) the Asset Purchase Agreement, dated as of
October 4, 1996, between Insilco and Franklin Electronic
Publishers, Incorporated ("FRANKLIN") (the "FRANKLIN ASSET
PURCHASE AGREEMENT") and the Trademark License Agreement,
dated October 4, 1996, by and between Insilco and
2
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Franklin (the "FRANKLIN LICENSE AGREEMENT"), and all rights of
Seller under those agreements;
(viii) all of the issued and outstanding capital
stock of Rolodex PR (the "ROLODEX PR SHARES");
(ix) all claims, deposits, prepayments, prepaid
assets, refunds, causes of action, choses in action, rights of
recovery, rights of recoupment and setoff rights of any kind
(collectively, "CLAIM RIGHTS") relating exclusively to the
Rolodex Business (including, to the extent Seller is able to
transfer such rights, all rights of recovery under Insurance
Policies (as defined in Section 3.13) of Seller with respect
to any Rolodex Liability (as defined in Section 1.3) or any
casualty affecting the Acquired Assets);
(x) all rights to receive and retain mail and other
communications to the extent pertaining to the Rolodex
Business ("COMMUNICATIONS RIGHTS");
(xi) all rights to any products under research or
development primarily for the Rolodex Business;
(xii) to the extent legally assignable, all permits,
approvals, authorizations, licenses, variance permissions or
product registrations required by Governmental Authorities
under any applicable laws ("PERMITS"), or applications
therefor, relating exclusively to the Rolodex Business;
(xiii) any other tangible assets of Seller primarily
related to the Rolodex Business and which are of a nature not
customarily reflected in the books and records of a business,
such as assets which have been written off for accounting
purposes, but which are still used primarily by, or are of
value primarily to, the Rolodex Business;
(xiv) any cash or cash equivalents reflected as an
asset on the Pre-Closing Statement of Net Investment (as
defined in Section 5.5);
(xv) all properties and assets, whether or not of a
type listed in any of clauses (i) through (xiv) of this
Section 1.1, that are located at the Rolodex Business'
facility in Secaucus, New Jersey; and
(xvi) all goodwill associated with the Rolodex
Business as a going concern.
3
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The certificates of deposit owned by Rolodex PR (the "Rolodex PR CDs") will be
acquired by Purchaser by virtue of its acquisition of the Rolodex PR Shares.
1.2. EXCLUDED ASSETS. Notwithstanding anything in Section 1.1 to
the contrary, specifically excluded from the Acquired Assets are the following
(collectively, the "EXCLUDED ASSETS"):
(i) all right, title, and interest in and to the mark
INSILCO(R), all derivations thereof and all goodwill generated
thereby or associated therewith;
(ii) all cash and cash equivalents (including for
this purpose all collected funds and items in the process of
collection received in bank accounts associated with the
Rolodex Business through 11:59 p.m., New York City time, on
the day prior to Closing Date), except for any cash or cash
equivalents reflected as an asset on the Pre-Closing Statement
of Net Investment and except for petty cash, if any,
physically located at the Rolodex Business' facilities in
Secaucus, New Jersey and Puerto Rico (and not in bank
accounts), not to exceed $1,000 in either location;
(iii) all refunds (including by credit) with respect
to Income Taxes or Tollgate Taxes (each as defined in Section
9.1) except to the extent set forth in Section 9.3;
(iv) any assets to the extent relating to any of the
Excluded Assets or the Excluded Liabilities (as defined in
Section 1.3), including, without limitation, any books,
records, files or data (including all Income Tax returns and
Tollgate Tax returns and related work papers), insurance
proceeds, Claim Rights and Communication Rights; PROVIDED,
HOWEVER, that Seller shall furnish to Purchaser copies of such
books and records to the extent they relate to Rolodex
Liabilities or Acquired Assets;
(v) the assets of the Insilco 401(k) Plan (as defined
in Section 10.4) and the assets of the Insilco Pension Plan
(as defined in Section 10.5);
(vi) all Insurance Policies of Seller other than
rights under such Insurance Policies with respect to any
Rolodex Liability or any casualty affecting any of the
Acquired Assets;
(vii) any shares held by Seller or Rolodex PR in
Insilco's subsidiary, Signal Dominicana S.A.; and
4
<PAGE> 11
(viii) any other assets set forth as Excluded Assets
in the Disclosure Schedule.
1.3. ROLODEX LIABILITIES. (a) Purchaser and Parent each agrees and
understands that, from and after the Closing, except for the liabilities and
obligations of Seller specifically provided for in Sections 1.3(c) and 1.3(d) as
being retained by Seller (the "EXCLUDED LIABILITIES"), neither Seller nor any of
its affiliates shall have any liability or responsibility for any liability or
obligation of or arising out of or relating to the Rolodex Business, or the
ownership or operation by Seller of the Rolodex Business (including, in each
case, as to Environmental Matters (as defined in Section 3.20)), of whatever
kind or nature, whether contingent or absolute, whether arising prior to or on
or after, and whether determined or indeterminable on, the Closing Date, and
whether or not specifically referred to in this Agreement (such liabilities and
obligations, except for the Excluded Liabilities, being collectively referred to
as the "ROLODEX LIABILITIES"). Accordingly, Purchaser and Parent each agrees
that, effective upon the Closing, Purchaser shall assume and be responsible for
and Purchaser and Parent shall jointly and severally indemnify Seller and its
affiliates and hold each of them harmless against any liability, loss, damage,
claim (including third party claims, whether or not meritorious), cost or
expense (including reasonable attorneys' fees and disbursements) (collectively,
"LOSSES") incurred or suffered by any of them arising out of any of the Rolodex
Liabilities.
(b) Without in any way limiting the generality of Section
1.3(a), effective upon the Closing, Purchaser hereby assumes and agrees timely
to perform all of Seller's obligations under the Franklin License Agreement.
(c) Anything in this Agreement to the contrary
notwithstanding, Purchaser shall not assume, and Seller shall be responsible for
the payment, performance and discharge of and shall indemnify Purchaser and its
affiliates and hold each of them harmless against any Losses incurred or
suffered by any of them arising out of any of the following liabilities and
obligations of Seller:
(i) any and all liabilities and obligations of Seller
under its Credit Agreement, dated as of October 21, 1994 with
Citicorp USA Inc. and Pearl Street L.P. as Co-Agents, Citicorp
USA, Inc. as Administrative Agent and certain Institutions (as
defined therein) and the other agreements with the lenders
thereunder entered into pursuant thereto (the "SELLER CREDIT
AGREEMENT");
(ii) any and all liabilities and obligations of
Seller or any of its affiliates, in its capacity as seller of
the Acquired Assets, arising under this Agreement (including,
without limitation, Sections 3.17 and 13.5);
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(iii) any and all liabilities and obligations for
Income Taxes or Tollgate Taxes to the extent set forth in
Section 9.1;
(iv) any and all liabilities and obligations of
Seller under the Stock Purchase Agreement, dated September 3,
1996, between RC and Esselte Corporation, including the
liability under the lease agreement between Curtis
Manufacturing Co., Inc. and Ragged Edge Realty, dated November
5, 1987, as amended, for certain property located in Jaffrey,
New Hampshire;
(v) the liability for certain retention and
remuneration awards and certain payments to John A. Bermingham
referred to in Section 10.2;
(vi) any and all liabilities under the Insilco 401(k)
Plan, the Insilco Pension Plan or the Insilco Incentive Plan
(as defined in Section 10.6);
(vii) the liability for wages and payroll deductions
with respect to Employees (as defined in Section 10.1) of
Seller to the extent set forth in Section 10.7; and
(viii) any and all liabilities that arose out of the
operation of the Rolodex Business and that are for
contamination on, or personal injury occurring on, any real
property owned or leased by the Rolodex Business prior to the
date hereof but no longer owned or otherwise used as of the
date hereof.
(d) (i) Anything in this Agreement to the contrary
notwithstanding, any Losses arising out of any of the Rolodex Liabilities
relating to the previously divested electronics products business of the Rolodex
Business shall be treated in the following manner:
(x) any Losses arising out of any claim
asserted by Franklin or its affiliates against Seller
or its affiliates pursuant to the Franklin Asset
Purchase Agreement shall be the responsibility of
Purchaser and Parent; and
(y) any Losses arising out of a claim
asserted by any Person other than Franklin or its
affiliates against Seller or its affiliates pursuant
to the Franklin Asset Purchase Agreement (1) shall be
the responsibility of Seller and not of Purchaser or
Parent if Purchaser, as assignee of Seller, has no
right to indemnification with respect to such claim
from Franklin under the Franklin Asset Purchase
Agreement (including without limitation claims
asserted against Seller by any Governmental Authority
for violations of Law),
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and (2) shall be the responsibility of Purchaser and
Parent if Purchaser, as assignee of Seller, has a
right to indemnification with respect to such claim
from Franklin under the Franklin Asset Purchase
Agreement.
(ii) Purchaser does not assume any of the obligations
contained in Section 5.01(b), 5.07 or 5.08 of the Franklin Asset Purchase
Agreement, but does assume all of Seller's other obligations under such
Agreement including Section 6.01 thereof.
(iii) Nothing in this Section 1.3(d) shall relieve
Purchaser or Parent from its obligations under Section 1.3(b).
1.4. CONSENTS OF THIRD PARTIES. Notwithstanding anything in this
Agreement to the contrary, to the extent the assignment of any Commitment to be
assigned to Purchaser pursuant to the provisions hereof shall require the
consent of any other party, this Agreement shall not constitute a breach thereof
or create rights in others not desired by Purchaser. If any such consent is not
obtained and the Closing occurs, Seller shall, at Purchaser's expense, cooperate
with Purchaser in any reasonable arrangement designed to provide for Purchaser
the benefit of any such Commitment, including enforcement of any and all rights
of Seller against the other party to any Commitment arising out of the breach or
cancellation thereof by such party or otherwise.
1.5. INTERCOMPANY ACCOUNTS. Effective upon the Closing, all
intercompany accounts reflecting amounts owing from Seller to Rolodex PR or from
Rolodex PR to Seller shall be canceled. Such cancellation shall be effectuated
by the declaration prior to the Closing of a dividend in the amount of the net
intercompany receivable of Rolodex PR from Seller, which dividend shall be
declared out of the Industrial Development Income ("IDI") earned with respect to
fiscal 1995, 1996 and 1997 (calculated as though the 1997 fiscal year had ended
on the day preceding the Closing Date) in the same proportion that each such
fiscal year's IDI bears to the sum of the IDI for fiscal 1995, 1996 and 1997.
ARTICLE II
CLOSING
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2.1. CLOSING. The closing of the transactions contemplated hereby (the
"CLOSING") shall be held at the offices of Fried, Frank, Harris, Shriver &
Jacobson, One New York Plaza, New York, New York 10004, at 9:00 a.m., New York
City time, on the fifth business day after the termination or expiration of the
applicable waiting period (and any extension thereof) under the Hart Scott
Rodino Antitrust Improvements Act of 1976, as amended, and the rules and
regulations promulgated thereunder (the "HSR ACT"), or at such other place, time
or date as Purchaser and Seller may agree (the "CLOSING DATE").
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<PAGE> 14
2.2. PURCHASE PRICE AND PAYMENT. (a) The aggregate purchase price
to be paid by Purchaser to Seller for the Acquired Assets (the "PURCHASE PRICE")
shall be $117,000,000.
(b) Payment of the Purchase Price shall be in U.S. dollars,
and shall be made no later than 12:00 noon, New York City time, on the Closing
Date by wire transfer of immediately available funds to an account or accounts
of Seller at a bank or banks specified by Seller. If all conditions to
Purchaser's obligation to close are satisfied (or waived by Purchaser) but
payment of the Purchase Price is not initiated by 12:00 noon, New York City
time, on the Closing Date, Purchaser shall pay to Seller, in the manner set
forth above, interest on the Purchase Price at an annual rate equal to the then
prime rate as published from time to time by Citibank, N.A. from and including
the Closing Date to but not including the next business day following the
Closing Date.
2.3. OTHER DELIVERIES. At the Closing, (i) Seller shall deliver to
Purchaser (1) duly executed instruments of transfer and assignment of the
Acquired Assets sufficient to vest in Purchaser the interests in the Acquired
Assets being conveyed at the Closing in accordance with the terms of this
Agreement, in the forms included as Exhibit 2.3A attached hereto, (2) stock
certificates evidencing the Rolodex PR Shares duly endorsed in blank or
accompanied by duly executed stock powers in blank, and (3) a written temporary
license to use the INSILCO(R) trademark for six months, as well as the other
deliveries required by Article VII; and (ii) Purchaser and Parent shall deliver
to Seller duly executed instruments of assumption evidencing the assumption by
Purchaser of the Rolodex Liabilities in accordance with the terms of this
Agreement, in the form included as Exhibit 2.3B attached hereto, as well as the
other deliveries required by Article VIII. Purchaser and Seller shall bear
equally the cost of any documentary, stamp, sales, excise, transfer, gross
receipts or other taxes payable (which shall in no event include taxes that are
an Excluded Liability) in respect of the sale of the Acquired Assets, and
Purchaser shall prepare and file, subject to Seller's review and consent, which
consent shall not be unreasonably withheld, all returns with respect to such
taxes. Purchaser shall furnish Seller at the Closing and from time to time
thereafter such "sale for resale" certificates as Seller may request.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
----------------------------------------
Seller hereby represents and warrants to Purchaser and Parent
as follows:
3.1. ORGANIZATION AND GOOD STANDING. Each of Seller and Rolodex PR is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite corporate right, power and
authority to own, operate and lease all of the facilities, properties and assets
it currently owns or leases and
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<PAGE> 15
to carry on the Rolodex Business as it is currently conducted. Each of Seller
and Rolodex PR is duly licensed or qualified to do business as a foreign
corporation and is in good standing in all jurisdictions in which the character
or location of the facilities, properties and assets now owned, operated 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, individually
or in the aggregate, have a material adverse effect on the business or financial
condition of the Rolodex Business (a "MATERIAL ADVERSE EFFECT").
3.2. CORPORATE AUTHORITY AND APPROVAL. Seller has all requisite
corporate power and authority to execute, deliver and perform this Agreement and
to consummate the transactions contemplated hereby. The execution, delivery and
performance of this Agreement by Seller and the consummation by Seller of the
transactions contemplated hereby have been duly authorized by all requisite
corporate action on the part of Seller. This Agreement constitutes the valid and
binding obligation of Seller enforceable against Seller in accordance with its
terms, except to the extent such enforceability may be limited by bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or other similar
laws affecting the enforcement of creditors' rights generally and except that
enforceability is subject to general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law).
3.3. CAPITALIZATION OF ROLODEX PR; OWNERSHIP OF ROLODEX PR SHARES. (a)
The authorized capital stock of Rolodex PR consists of 1000 shares of common
stock, par value $1.00 per share, of which 100 shares, constituting the Rolodex
PR Shares, are issued and outstanding. All of the issued and outstanding Rolodex
PR Shares have been validly issued and are fully paid and nonassessable. Insilco
is the record and beneficial owner of the Rolodex PR Shares. Except for the
Rolodex PR Shares, there are no shares of capital stock or other equity
securities of Rolodex PR outstanding, nor are there any securities outstanding
convertible into, exchangeable for or carrying the right to acquire, or any
voting agreements with respect to, any equity securities of Rolodex PR or any
subscriptions, warrants, options, rights or other arrangements obligating
Rolodex PR to issue or acquire any of its equity securities.
(b) Upon delivery to Purchaser at the Closing of certificates
representing the Rolodex PR Shares, duly endorsed by Seller for transfer to
Purchaser or accompanied by duly executed stock powers in blank, and upon the
receipt by Seller of the Purchase Price, legal and valid title to the Rolodex PR
Shares will pass to Purchaser, free and clear of any liens, security interests
or other encumbrances ("ENCUMBRANCES"). Other than this Agreement and the Seller
Credit Agreement, the Rolodex PR Shares are not subject to any voting trust
agreement or other Commitment, including any such Commitment restricting or
otherwise relating to the voting, dividend rights or disposition of the Rolodex
PR Shares.
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<PAGE> 16
(c) Other than the Rolodex PR Shares, the Acquired Assets do
not include the stock of, or any equity participation in, any Person.
3.4. CONSENTS. Except as set forth in the Disclosure Schedule, no
consent, approval, authorization or exemption from any governmental or
administrative authority, whether foreign, federal, state, provincial or local,
or any political subdivision or agency of any of the foregoing ("GOVERNMENTAL
AUTHORITY"), is required to be obtained by Seller or Rolodex PR in connection
with the execution, delivery and performance by Seller of this Agreement or the
taking by Seller or Rolodex PR of any action contemplated hereby, other than (i)
filings in compliance with HSR Act, (ii) filings in compliance with the New
Jersey Industrial Site Recovery Act ("ISRA"), if any, and (iii) routine filings,
if any, required by the corporate laws of jurisdictions in which Seller or
Rolodex PR is qualified to transact business as a foreign corporation.
3.5. NO CONFLICTS. Except as set forth in the Disclosure Schedule, the
execution, delivery and performance by Seller of this Agreement and the
consummation of the transactions contemplated hereby will not, with or without
the giving of notice or the lapse of time, or both, subject to obtaining any
required consents referred to in Section 3.4, (i) violate any provision of the
charter or by-laws of Seller or Rolodex PR, (ii) violate any order, judgment,
writ, injunction, arbitration award or decree (collectively "COURT ORDER")
applicable to Seller or Rolodex PR or (iii) conflict with or result in the
breach of any agreement reflecting obligations of Seller or Rolodex PR for
borrowed money, in each case except for violations, conflicts, breaches or
defaults which individually or in the aggregate would not have a Material
Adverse Effect.
3.6. COMPLIANCE WITH LAWS. Except as set forth in the Disclosure
Schedule, to Seller's knowledge, the Rolodex Business is in compliance with all
applicable federal, state, local and foreign laws, rules and regulations
("LAWS") currently in effect, all of its existing Permits and all outstanding
Court Orders, except where the failure to comply therewith, individually or in
the aggregate, does not have a Material Adverse Effect. Neither Seller with
respect to the Rolodex Business nor Rolodex PR has, since January 1, 1995,
received any written notice from any Governmental Authority alleging any
non-compliance of any Laws, Permits or Court Orders other than non-compliances
which (together with the consequences thereof) have been cured or which
individually or in the aggregate do not have a Material Adverse Effect. Except
as set forth in the Disclosure Schedule, Seller and Rolodex PR have all Permits
necessary for the conduct of the Rolodex Business as presently conducted, except
where the absence thereof, individually or in the aggregate, does not have a
Material Adverse Effect, and all of such Permits are valid and in full force and
effect and will not be invalidated by the consummation of the transactions
contemplated hereby, except where the failure to be valid and in full force and
effect or where the invalidity would not, individually or in the aggregate, have
a Material Adverse Effect.
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<PAGE> 17
3.7. FINANCIAL STATEMENTS. Seller has delivered to Purchaser unaudited
combined statements of net investment of the Rolodex Business as at December 31,
1994, 1995 and 1996 and unaudited combined statements of income and cash flow of
the Rolodex Business for the fiscal year ended December 31, 1994, 1995 and 1996,
including the notes thereto (collectively, the "FINANCIAL STATEMENTS"), a copy
of each of which is included in the Disclosure Schedule. The Financial
Statements present fairly in all material respects the combined financial
position and combined results of operations and cash flow of the Rolodex
Business as at the respective dates indicated and for the respective periods
then ended in conformity with generally accepted accounting principles except as
set forth in the footnotes thereto or in the Disclosure Schedule.
3.8. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in the
Disclosure Schedule or permitted or contemplated by this Agreement, since
December 31, 1996, (A) the Rolodex Business has been conducted in the ordinary
course of business (other than actions taken in connection with the potential
sale of the Rolodex Business), (B) the Rolodex Business has not experienced any
change which, individually or in the aggregate, has a Material Adverse Effect,
and (C) neither Seller nor Rolodex PR has taken any of the actions or has
permitted to occur any of the events specified in Section 5.2(a) or entered into
a legally binding Commitment to do any of the foregoing, except as would not
have a Material Adverse Effect.
3.9. TITLE TO ASSETS. (a) Seller has good and marketable title to or a
valid leasehold in all of the assets and properties relating to the Rolodex
Business which it purports to own or lease and Rolodex PR has good and
marketable title to or a valid leasehold in all of the assets and properties
which it purports to own or lease and, in each case, which are material to the
business or financial condition of the Rolodex Business ("MATERIAL"), free and
clear of all Encumbrances, except (i) as set forth in the Disclosure Schedule,
(ii) liens for Taxes which are not yet due or which are being contested in good
faith by appropriate proceedings and for which appropriate reserves have been
provided for, and (iii) minor imperfections of title, none of which is
substantial in amount nor materially detracts from the value or impairs the use
of the asset or property or the operations of the Rolodex Business
(collectively, "PERMITTED ENCUMBRANCES"). Neither Seller in respect of the
Rolodex Business nor Rolodex PR owns any real property.
(b) Seller does not own or lease any assets, other than the
Acquired Assets and the Excluded Assets, which are used in and are significant
to the operation of the Rolodex Business.
(c) When Purchaser acquires title to the Acquired Assets
pursuant to this Agreement, none of the Acquired Assets will remain subject to
any Encumbrances under the Seller Credit Agreement, all of which shall have been
fully and finally released as to all of the Acquired Assets.
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<PAGE> 18
(d) To Seller's knowledge, the machinery and equipment used in
the conduct of the Rolodex Business are in adequate operating condition and
repair (subject to normal wear and tear) and are adequate for the particular
purpose for which they are being used, except for machinery and equipment the
cost of repair or replacement of which is included in Seller's 1996 or 1997
Budget.
3.10. INTELLECTUAL PROPERTY. The Disclosure Schedule sets forth a list,
as of the date hereof, of all letters patent, patent applications, utility
models, utility model applications, trademarks, trade names, service marks,
trademark registrations and applications, copyrights and copyright registrations
and applications which are used or held for use by Seller or Rolodex PR
primarily in the conduct of the Rolodex Business (the "INTELLECTUAL PROPERTY")
which are Material and all Material Commitments with respect to Intellectual
Property (including Material computer software licenses) to which Seller or
Rolodex PR is a party. Except as set forth in the Disclosure Schedule, (a)
Seller or Rolodex PR owns or has a binding, enforceable right to use all of the
Intellectual Property except where the failure to have such rights individually
or in the aggregate would not have a Material Adverse Effect; (b) the conduct of
the Rolodex Business as now being conducted does not conflict with any
intellectual property rights of others in the United States or Canada in any way
which, individually or in the aggregate, has a Material Adverse Effect, and, to
Seller's knowledge, the conduct of the Rolodex Business as now being conducted
does not conflict with any intellectual property rights of others in any other
jurisdiction in any way which, individually or in the aggregate, has a Material
Adverse Effect; and (c) to Seller's knowledge, none of the Intellectual Property
is being infringed upon by others in any way which, individually or in the
aggregate, has a Material Adverse Effect.
3.11. COMMITMENTS. The Disclosure Schedule sets forth a list, as of the
date hereof, of each contract, agreement or commitment relating to the Rolodex
Business to which Seller or Rolodex PR is a party or by which Seller or Rolodex
PR is bound (collectively, the "COMMITMENTS") (a) which involves an aggregate
consideration of more than $150,000 per year, including, without limitation, all
such Commitments which are (i) Commitments for capital expenditures, (ii)
manufacturing, distribution, dealer or sales agency or representative
Commitments, (iii) guarantees of third party obligations, and (iv) Commitments
for the sale of any assets, but excluding purchase orders or other Commitments
for the purchase of raw materials, components or supplies and sales orders or
other Commitments for the sale of finished goods entered into in the ordinary
course of business; (b) which restricts the kinds of businesses in which Seller
in respect of the Rolodex Business, or Rolodex PR may engage or the geographical
area in which Seller, in respect of the Rolodex Business, or Rolodex PR may
conduct its business; (c) which is an indenture, mortgage, loan agreement or
other Commitment for the borrowing of money or a line of credit (other than the
Seller Credit Agreement); (d) which is a collective bargaining agreement; (e)
which is a Material license (whether as licensor or licensee) or
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similar agreement permitting the use of any Intellectual Property; (f) which is
a joint venture, partnership or similar agreement; (g) which is an agreement
under which Seller has advanced or loaned any amount to any employee of the
Rolodex Business; (h) which is an agreement entered into since January 1, 1995
which imposes an obligation on Seller or Rolodex PR to keep information of
another Person confidential (other than those agreements entered into in
connection with the transactions contemplated hereby, or which are not
Material); (i) which is a written agreement (1) for employment on a full-time,
part-time, consulting or other basis with respect to any individual who received
total compensation in 1996 in excess of $50,000 or who has an annual base
compensation for 1997 in excess of $50,000 or (2) providing for severance
payments in excess of $50,000; (j) which is a real property lease; or (k) which
is not of the foregoing type and is Material. Except as set forth in the
Disclosure Schedule, each of such Commitments is a valid and binding obligation
of Seller or Rolodex PR, and is enforceable against Seller or Rolodex PR in
accordance with its terms, except to the extent such enforceability may be
limited by bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other similar laws relating to creditors' rights generally and to
general principles of equity (regardless of whether enforcement is considered in
a proceeding in equity or at law), and neither Seller nor Rolodex PR nor, to the
knowledge of Seller, any other party is in default under any Commitment, except
in each case for such failures to be valid, binding and enforceable and for such
defaults which, individually or in the aggregate, would not have a Material
Adverse Effect.
3.12. LITIGATION. Except as set forth in the Disclosure Schedule, there
is no action, suit, claim, hearing or proceeding in any federal, state, local or
foreign court or before any Governmental Authority ("LITIGATION") pending or, to
Seller's knowledge, threatened against Seller with respect to the Rolodex
Business or Rolodex PR or, to Seller's knowledge, any investigation by any court
or Governmental Authority of Seller with respect to the Rolodex Business or
Rolodex PR pending or threatened (i) with respect to which there is a reasonable
likelihood of a determination or settlement which, individually, would result in
a liability to Seller or Rolodex PR in excess of $50,000 or (ii) which seeks to
enjoin or obtain damages in respect of the consummation of the transactions
contemplated hereby. Except as set forth in the Disclosure Schedule, neither
Seller nor Rolodex PR is subject to any outstanding Court Orders that,
individually or in the aggregate, have a Material Adverse Effect.
3.13. INSURANCE. The Disclosure Schedule sets forth a list, as of the
date hereof, of all casualty, general liability and other insurance policies
maintained by Seller or Rolodex PR relating to the Rolodex Business (the
"INSURANCE POLICIES"), and Seller has made available to Purchaser correct and
complete copies of all such policies. Each of the Material Insurance Policies is
in full force and effect and no written notice has been received by Seller or
Rolodex PR from any insurance carrier purporting to cancel coverage under any of
the Insurance Policies which cancellation would have, individually
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or in the aggregate, a Material Adverse Effect. Except as set forth in the
Disclosure Schedule, there are no pending Material claims against the Insurance
Policies by Seller with respect to the Rolodex Business or by Rolodex PR as to
which the insurers have denied liability in writing. Seller and Rolodex PR have
made timely premium payments with respect to all of the Material Insurance
Policies. Since December 31, 1996, the Rolodex Business has not suffered any
theft, damage, destruction or casualty loss to any of its physical assets,
whether or not covered by insurance, which, individually or in the aggregate,
has a Material Adverse Effect.
3.14. EMPLOYEE BENEFIT PLANS. (a) The Disclosure Schedule lists all
employee benefit plans (within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) and all other
employee benefits arrangements and policies (including individual written
employment, consulting or severance arrangements providing for payment to an
individual of an amount in excess of $50,000 per year), termination or severance
policies and bonus programs relating to the Rolodex Business which are
maintained or contributed to by Seller or Rolodex PR and (except with respect to
individual written employment, consulting or severance arrangements) which have
a value to each employee covered by such plan, arrangement or policy of at least
$5,000 per year or a cost to Seller or Rolodex PR of at least $50,000 per year
(the "ROLODEX BENEFIT Plans"). Seller has provided to Purchaser (a) true and
complete copies of all Rolodex Benefit Plans; (b) the most recent annual
actuarial evaluation, if any, prepared for each Rolodex Benefit Plan; (c) the
most recent annual report (series 5500), if any, required under ERISA with
respect to each Rolodex Benefit Plan; (d) the most recent determination letter
received from the Internal Revenue Service (the "IRS") or Puerto Rico Treasury
Department, if any, for each Rolodex Benefit Plan; and (e) the most recent
Summary Plan Description, if any, required under ERISA with respect to each
Rolodex Benefit Plan. Except as set forth in the Disclosure Schedule, (i) with
respect to each Rolodex Benefit Plan that is intended to be qualified under
Section 401(a) of the Internal Revenue Code of 1986, as amended (the "CODE") or
under Section 165(a) of the Puerto Rico Income Tax Act of 1954, as amended, and
is maintained by Seller or Rolodex PR for any of their employees, (x) Seller or
Rolodex PR has obtained a favorable determination letter from the IRS or Puerto
Rico Treasury Department, (y) such plan has been operated in compliance with
ERISA and the Code and the regulations thereunder and in accordance with its
terms and the requirements of all other applicable statutes covering such plan
except where the failure to so comply does not, individually or in the
aggregate, have a Material Adverse Effect, and (z) Seller and Rolodex PR are
not, and to Seller's knowledge no other Person is, engaged in a transaction
prohibited by Section 4975 of the Code or Section 406 of ERISA which would
result in a liability to Seller and Rolodex PR which would, individually or in
the aggregate, have a Material Adverse Effect; (ii) each Rolodex Benefit Plan
which is subject to Part III of Subtitle B of Title I of ERISA or Section 412 of
the Code has been maintained in compliance with the minimum funding standards of
ERISA and the Code except for any failure to comply
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<PAGE> 21
which would not, individually or in the aggregate, have a Material Adverse
Effect; (iii) no reportable event, within the meaning of Section 4043 of ERISA,
has occurred with respect to any Rolodex Benefit Plan which is subject to Title
IV of ERISA, other than reportable events with respect to which notice has been
waived by the Pension Benefit Guaranty Corporation or which would not,
individually or in the aggregate, have a Material Adverse Effect; and (iv) there
are no actions pending or, to Seller's knowledge, threatened before any court or
Governmental Authority, against any benefit plans maintained by Seller with
respect to the Rolodex Business or by Rolodex PR (excluding any "multiemployer
plan" within the meaning of Section 3(37) of ERISA and those plans or coverages
administered by third parties) with respect to which there is a reasonable
likelihood of a determination or settlement which, individually or in the
aggregate, would have a Material Adverse Effect.
(b) All contributions to each Rolodex Benefit Plan for all
benefits earned and other liabilities accrued through the Closing Date,
determined in accordance with the terms and conditions of each such Rolodex
Benefit Plan, ERISA and the Code, will have been paid or otherwise provided for
prior to the Closing. With respect to any Rolodex Benefit Plan that is a
"multiemployer plan" within the meaning of Section 3(37) of ERISA and to which
Seller has any obligation to contribute: (i) Seller has provided to Purchaser
any Material document relating to Seller's obligation to contribute to any such
plan and the most recent statements of unfunded vested benefits provided to
Seller, if any, by the administrator of such plan; (ii) Seller has made or will
make prior to the Closing all contributions required in connection with any such
multiemployer plan to be made on or prior to the Closing by the terms of the
multiemployer plan or by the terms of any collective bargaining agreement; and
(iii) Seller has not withdrawn from and (except for any withdrawal that would
result from the transactions contemplated hereby but for compliance with Section
4204 of ERISA) does not expect to withdraw from, nor has any withdrawal
liability (as defined in Section 4201 of ERISA) been assessed against Seller
with respect to, any multiemployer plan.
3.15. TAXES. (a) Except as set forth in the Disclosure Schedule, all
Material Tax (as defined in Section 3.15(f)) returns required to be filed by
Seller with respect to the Rolodex Business or by Rolodex PR have been filed in
a timely manner (taking into account all extensions of due dates), and Seller
and Rolodex PR have paid all Taxes required to be paid, except as would not have
a Material Adverse Effect. Except as set forth in the Disclosure Schedule, no
deficiencies for any Taxes have been asserted or assessed in writing against
Seller with respect to the Rolodex Business or against Rolodex PR which remain
unpaid and which individually or in the aggregate are Material.
(b) Except as set forth in the Disclosure Schedule, Rolodex PR
is in compliance with the terms of the Current Tax Grant (as defined below), and
was in compliance with the terms of the Prior Tax Grant (as defined below) for
all years covered by such Tax Grant except where the failure to be in compliance
would not,
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individually or in the aggregate, have a Material Adverse Effect. The term
"CURRENT TAX GRANT" means the grant of industrial tax exemption issued under the
provisions of Act No. 8 of January 24, 1987 of the Commonwealth of Puerto Rico,
as amended, in Case No. 88-8-I-29, as amended, and the term "Prior Tax Grant"
means the grant of industrial tax exemption issued under the provisions of Act
No. 57 of June 13, 1963 of the Commonwealth of Puerto Rico, as amended, in Case
No. 73-57-I-5, as amended.
(c) Except as set forth in the Disclosure Schedule, complete
and correct copies of all Tax returns (including all amendments or modifications
thereto) relating exclusively to the Rolodex Business and filed with respect to
any period beginning January 1, 1993 up to and including the quarter ended
September 30, 1996 have been made available to Purchaser.
(d) Except as set forth in the Disclosure Schedule, to
Seller's knowledge, there are no Encumbrances, other than Permitted
Encumbrances, on any of the assets of the Rolodex Business that arose in
connection with any failure (or alleged failure) by Seller or Rolodex PR to pay
any Taxes.
(e) Except as set forth in the Disclosure Schedule, the
Rolodex Business is not currently under examination by the IRS nor any other
taxing authority with respect to Taxes. Except as set forth in the Disclosure
Schedule, no waivers of statutes of limitations are in effect with respect to
Taxes.
(f) For purposes of this Agreement, "TAX" or "TAXES" shall
mean all taxes, charges, fees, levies or other assessments, including, without
limitation, all net income, gross income, alternative or add-on minimum,
environmental, gross receipts, sales, use, goods and services, ad valorem,
transfer, tollgate, capital stock, franchise, profits, license, withholding,
payroll, single business, employment, excise, severance, stamp, occupation,
property, unemployment or other taxes, customs, duties, fees, assessments or
charges of any kind whatsoever, and any installments with respect thereto,
together with any interest, penalties, additions to tax or additional amounts
imposed by any taxing authority (domestic or foreign) upon the Rolodex Business.
3.16. UNDISCLOSED LIABILITIES. Seller and Rolodex PR do not have any
liabilities of any nature relating to the Rolodex Business that would be
required by generally accepted accounting principles to be reflected on a
balance sheet or in the notes thereto of the Rolodex Business, other than (a)
liabilities that are reflected or reserved against in the Financial Statements;
(b) liabilities disclosed or referred to in the Disclosure Schedule (or the
documents listed in the Disclosure Schedule); (c) liabilities as to which no
disclosure is required pursuant to this Article III because the making of the
representation and warranty is disclaimed pursuant to Section 3.27 or because
the liability involves an amount which is less than the threshold above which
disclosure is required; and (d) liabilities arising since December 31, 1996 in
the ordinary course of business.
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3.17. FEES. Except for the fees payable to Goldman, Sachs & Co., which
are the responsibility of Insilco, neither Seller nor Rolodex PR has paid or
become obligated to pay any fee or commission to any broker, finder or
intermediary in connection with the transactions contemplated hereby.
3.18. RECEIVABLES. Except as set forth in the Disclosure Schedule, all
accounts, notes and other receivables and amounts owing to Seller with respect
to the Rolodex Business or Rolodex PR (other than intercompany receivables)
(collectively, "RECEIVABLES"), whether reflected on the unaudited combined
statements of net investment of the Rolodex Business as of December 31, 1994,
December 31, 1995 or December 31, 1996, represent bona-fide arm's length
transactions in the ordinary course of business.
3.19. INVENTORY. All inventory of the Rolodex Business (whether or not
allocated to contracts in process), including without limitations raw materials,
work in process and finished products, packaging, items purchased for
distribution or resale and items which have been ordered or purchased by Seller
for the Rolodex Business ("INVENTORY"), including inventory shown on the
unaudited combined statements of net investment of the Rolodex Business as of
December 31, 1994, December 31, 1995 or December 31, 1996 or acquired
thereafter, was acquired or manufactured in the ordinary course of business. The
Inventory reflected on the unaudited combined statements of net investment of
the Rolodex Business as of December 31, 1994, December 31, 1995 and December 31,
1996 was valued on a first-in-first-out method stated at the lower of cost or
market.
3.20. ENVIRONMENTAL MATTERS. Except as set forth in Schedule 3.20 of
the Disclosure Schedule:
(a) COMPLIANCE. To the knowledge of Seller, the Rolodex
Business is in compliance with all applicable Laws, Court Orders and Permits
relating to protection of public health or the environment, pollution control,
or Hazardous Materials (collectively, "ENVIRONMENTAL LAWS"), except where the
failure to be in compliance does not, individually or in the aggregate, have a
Material Adverse Effect. Environmental Laws include the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA"), the Resource
Conservation and Recovery Act ("RCRA"), the Clean Water Act and the common law.
"HAZARDOUS MATERIALS" shall mean any materials containing any (i) "hazardous
substance" as defined by CERCLA, (ii) petroleum, including crude oil or any
fraction thereof, (iii) natural gas, natural gas liquids or synthetic gas usable
for fuel and (iv) asbestos, polychlorinated biphenyls ("PCBS") or isomers of
dioxin.
(b) NOTICES. Since April 1, 1993, neither Seller with respect
to the Rolodex Business nor Rolodex PR has received any claim, notice,
complaint, court order, administrative order, or request for information, in
each case in writing, from any Governmental Authority or private party (i)
alleging violation of, or asserting any
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exceedance or non-compliance with or potential liability under, any
Environmental Laws by it, which allegation or assertion, if true, would,
individually or in the aggregate, have a Material Adverse Effect or (ii)
requesting investigation or clean-up of any site under the Clean Water Act,
CERCLA or under any state law comparable to CERCLA, which investigation or
clean-up would, individually or in the aggregate, have a Material Adverse
Effect.
(c) GOVERNMENT AUTHORIZATIONS. Seller, with respect to the
Rolodex Business, and Rolodex PR possess all Permits required under the
Environmental Laws and necessary to the ownership and to the conduct of the
Rolodex Business, except where the absence thereof, individually or in the
aggregate, does not have a Material Adverse Effect.
(d) HAZARDOUS MATERIALS. To the knowledge of Seller, since
April 1, 1993, no Hazardous Materials have been used, generated, stored or
disposed of by Seller with respect to the Rolodex Business or by Rolodex PR in a
manner which may lead to claims for penalties, damages, clean-up costs, or
remedial work, which claims would have, individually or in the aggregate, a
Material Adverse Effect.
(e) HAZARDOUS MATERIALS TRANSPORTATION. To the knowledge of
Seller, neither Seller, with respect to the Rolodex Business, nor Rolodex PR
has, since April 1, 1993, transported Hazardous Materials, or arranged for the
transportation of Hazardous Materials, to any site which is the subject of
federal, state or local enforcement actions, or other governmental or private
investigations, and which may lead to claims for penalties, damages, clean-up
costs or remedial work, which claims would have, individually or in the
aggregate, a Material Adverse Effect.
(f) RELEASE OF HAZARDOUS MATERIALS. To the knowledge of
Seller, since April 1, 1993, there has been no release, as defined in CERCLA, of
Hazardous Materials at or from any facility or real property now or previously
owned, operated or leased by Seller with respect to the Rolodex Business or
Rolodex PR, which release would have, individually or in the aggregate, a
Material Adverse Effect.
(g) ENVIRONMENTAL REPORTS. Seller has made available to
Purchaser or Parent all environmental audits, assessments or studies within the
possession of Seller or Rolodex PR that are listed in Schedule 3.20 of the
Disclosure Schedule with respect to facilities or real property used in the
conduct of the Rolodex Business.
(h) EXCLUSIVITY. Purchaser, Parent and Seller agree that the
only representations and warranties of Seller made herein as to any
Environmental Matter are those contained in this Section 3.20 and those
contained in Section 3.15 with respect to environmental taxes. As used herein,
the term "ENVIRONMENTAL MATTER" means any matter
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arising out of or relating to the environment, safety or health or the
production, storage, handling, use, emission, release, discharge or disposal of
any Hazardous Materials.
3.21. ARRANGEMENTS WITH RELATED PARTIES. Except as set forth in the
Disclosure Schedule, no director, officer or employee of Seller or Rolodex PR:
(a) is, to Seller's knowledge, a director, officer or employee of, or consultant
to or owns, directly or indirectly, any significant interest in any Person who
is a Material competitor, supplier or customer of the Rolodex Business or who
owns any Material property, asset or right used by the Rolodex Business or who
otherwise has a Material business relationship with the Rolodex Business, or (b)
has any contractual relationship with the Rolodex Business (other than
contractual relationships, disclosure of which would be required by other
Sections of this Article III if not for the fact that such contractual
relationships fall below the thresholds set forth in such Sections).
3.22. CUSTOMERS AND SUPPLIERS. Seller has delivered to Purchaser a list
of the ten largest customers and a list of the ten largest suppliers (measured
by dollar volume) of the Rolodex Business during each of the last three years
("MAJOR CUSTOMERS" and "MAJOR SUPPLIERS," respectively) and the amount of
business done with each supplier or customer. Except as set forth in the
Disclosure Schedule, to Seller's knowledge, no Major Customer or Major Supplier
is currently threatening any Material change in the business relationship with
the Rolodex Business (excluding any change arising out of the transactions
contemplated by this Agreement).
3.23. EMPLOYEES AND LABOR RELATIONS. The Disclosure Schedule sets forth
all labor and collective bargaining agreements to which Seller with respect to
the Rolodex Business or Rolodex PR is a party or by which any of them is bound.
No unfair labor practice charges or complaints are pending against Seller with
respect to the Rolodex Business or Rolodex PR with the National Labor Relations
Board. The Rolodex Business is in compliance with all applicable Laws relating
to the employment of labor, including those related to wages, hours, collective
bargaining, the withholding and payment of taxes and contributions, safety and
civil rights, except where the failure to comply does not, individually or in
the aggregate, have a Material Adverse Effect. There have been no work stoppages
by employees of the Rolodex Business during the last three years.
3.24. COPIES OF DOCUMENTS. Copies of any underlying documents listed in
the Disclosure Schedule have been delivered to or made available for inspection
by Purchaser or Parent. Except as set forth in the Disclosure Schedule, all
copies of such documents are true, complete and correct copies and there are no
written amendments to such documents.
3.25. FRANKLIN ASSET PURCHASE AGREEMENT. As of the date hereof,
Franklin has not asserted any written claim for Losses under the Franklin Asset
Purchase Agreement or, to
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the knowledge of Seller, any oral claim for Losses in excess of $50,000 under
the Franklin Asset Purchase Agreement.
3.26. REAL PROPERTY. (a) The Disclosure Schedule sets forth an accurate
and complete list of all real property leases to which Seller with respect to
the Rolodex Business or Rolodex PR is a party (the "Real Property Leases").
(b) Except as set forth in the Disclosure Schedule, to
Seller's knowledge, the improvements leased by Seller with respect to the
Rolodex Business or by Rolodex Puerto Rico under the Real Property Leases (i)
are in adequate condition and repair (subject to normal wear and tear) and (ii)
are adequate for the particular purposes for which they are being used in the
conduct of the Rolodex Business except in each case for repairs and improvements
which are included in Seller's 1996 or 1997 budget.
3.27. DISCLAIMER. SELLER HAS NOT MADE AND SHALL NOT BE DEEMED TO HAVE
MADE TO PURCHASER OR PARENT ANY REPRESENTATION OR WARRANTY OTHER THAN THOSE
EXPRESSLY MADE BY SELLER IN SECTIONS 3.1 THROUGH 3.26 HEREOF (AND IN SELLER'S
CERTIFICATE (AS DEFINED IN SECTION 12.1)). IN ANY EVENT, SELLER MAKES NO
REPRESENTATION OR WARRANTY TO PURCHASER OR PARENT (1) AS TO MERCHANTABILITY,
SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OR QUALITY, WITH RESPECT TO ANY
OF THE TANGIBLE ASSETS BEING SO TRANSFERRED, OR AS TO THE CONDITION OR
WORKMANSHIP THEREOF OR THE ABSENCE OF ANY DEFECTS THEREIN, WHETHER LATENT OR
PATENT (OR ANY OTHER REPRESENTATION OR WARRANTY REFERRED TO IN SECTION 2-312 OF
THE UNIFORM COMMERCIAL CODE OF ANY APPLICABLE JURISDICTION) (OTHER THAN AS
SPECIFICALLY CONTAINED IN SECTION 3.9(D)) OR 3.26(B), (2) WITH RESPECT TO ANY
PROJECTIONS, ESTIMATES OR BUDGETS DELIVERED TO OR MADE AVAILABLE TO PURCHASER OR
PARENT, OR (3) WITH RESPECT TO ANY OTHER INFORMATION OR DOCUMENTS MADE AVAILABLE
TO PURCHASER OR PARENT EXCEPT, IN THE CASE OF THIS CLAUSE (3) ONLY, AS EXPRESSLY
COVERED BY A REPRESENTATION OR WARRANTY CONTAINED IN SECTIONS 3.1 THROUGH 3.26
HEREOF.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER AND PARENT
------------------------------------------------------
Purchaser and Parent hereby jointly and severally represent
and warrant to Seller as follows:
4.1. ORGANIZATION AND GOOD STANDING. Purchaser and Parent each is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has all requisite corporate right,
power and authority to own, operate and lease all of the facilities, properties
and assets it currently owns or leases and to carry on its business as such
business is currently conducted. Purchaser and Parent each is duly licensed or
qualified to do business as a foreign corporation and is in good standing in all
jurisdictions in which the character or location of the facilities,
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properties and assets now owned, operated 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, individually or in the aggregate,
materially hinder or impair the consummation of the transactions contemplated
hereby.
4.2. CORPORATE AUTHORITY AND APPROVAL. Purchaser and Parent each has
all requisite corporate power and authority to execute, deliver and perform this
Agreement and to consummate the transactions contemplated hereby. The execution,
delivery and performance of this Agreement by Purchaser and Parent and the
consummation by Purchaser and Parent of the transactions contemplated hereby
have been duly authorized by all requisite corporate action on the part of
Purchaser and Parent. This Agreement constitutes the valid and binding
obligation of Purchaser and Parent enforceable against Purchaser and Parent in
accordance with its terms, except to the extent such enforceability may be
limited by bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and except that enforceability is subject to general principles of
equity (regardless of whether enforcement is considered in a proceeding in
equity or at law).
4.3. CONSENTS. Except as set forth in Schedule 4.3, no consent,
approval, authorization or exemption from any Governmental Authority, other than
pursuant to the HSR Act, is required to be obtained by Purchaser or Parent in
connection with the execution, delivery and performance by Purchaser and Parent
of this Agreement or the taking by Purchaser or Parent of any action
contemplated hereby.
4.4. NO CONFLICTS. Neither the execution, delivery and performance by
Purchaser and Parent of this Agreement nor the consummation by Purchaser and
Parent of the transactions contemplated hereby will, with or without the giving
of notice or the lapse of time, or both, subject to obtaining any required
consents referred to in Section 4.3, (i) violate any provision of their
respective charters or bylaws, (ii) violate any Court Order applicable to
Purchaser or Parent, or (iii) conflict with or result in the breach of any
agreement reflecting obligations of Purchaser or Parent for borrowed money, in
each case except for violations, conflicts or breaches which would not
individually or in the aggregate materially hinder or impair the consummation of
the transactions contemplated hereby.
4.5. FUNDS AVAILABLE. Purchaser has, or shall have on the Closing Date,
sufficient funds to enable it to pay the Purchase Price and otherwise to
consummate the transactions contemplated by this Agreement.
4.6. LITIGATION. There is no Litigation pending or, to Purchaser's
knowledge, threatened against Purchaser or Parent (a) with respect to which
there is a reasonable likelihood of a determination which, individually or in
the aggregate, would materially hinder or impair the consummation of the
transactions contemplated hereby or (b) which
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seeks to enjoin or obtain damages in respect of the consummation of the
transactions contemplated hereby.
4.7. FEES. Except for the fees payable to Robert W. Baird & Co.
Incorporated, which are the responsibility of Parent and Purchaser, neither
Parent nor Purchaser has paid or become liable to pay any fee or commission to
any broker, finder or intermediary in connection with the transactions
contemplated hereby.
ARTICLE V
COVENANTS OF SELLER
-------------------
Seller hereby covenants and agrees with Purchaser and Parent
as follows:
5.1. COOPERATION BY SELLER. From the date hereof and prior to the
Closing, Seller shall, and shall cause Rolodex PR to, use its best efforts and
cooperate with Purchaser and Parent to secure all necessary consents, approvals,
authorizations, exemptions and waivers from third parties as shall be required
in order to enable Purchaser and Parent to effect the transactions contemplated
hereby, and shall otherwise use its best efforts to cause the consummation of
such transactions in accordance with the terms and conditions hereof. Without
limiting the provisions set forth in this Section 5.1, Seller shall file with
the Department of Justice and the Federal Trade Commission a Pre-Merger
Notification and Report Form pursuant to the HSR Act in respect of the
transactions contemplated hereby within five business days of the date of this
Agreement, and Seller shall use, and shall cause each of its affiliates to use,
its best efforts to take or cause to be taken all actions necessary, including
to promptly and fully comply with any requests for information from regulatory
authorities, to obtain any consent, waiver, approval or authorization relating
to the HSR Act that is necessary to enable the parties to consummate the
transactions contemplated by this Agreement.
5.2. CONDUCT OF ROLODEX BUSINESS. (a) Except as may be otherwise
contemplated by this Agreement or required by any of the documents listed in the
Disclosure Schedule or except as the Chief Executive Officer, President or Vice
President-Finance of Parent may otherwise consent to in writing (which consent
shall not be unreasonably withheld or delayed), from the date hereof and prior
to the Closing, Seller shall and shall cause Rolodex PR to conduct the Rolodex
Business only in the ordinary course of business. Without limiting the
generality of the foregoing or Section 5.2(b), except as otherwise contemplated
by this Agreement or required by any of the documents listed in the Disclosure
Schedule, without the prior written consent of the Chief Executive Officer,
President or Vice President-Finance of Parent (which consent shall not be
unreasonably withheld or delayed), Seller with respect to the Rolodex Business
will not, and will cause Rolodex PR not to, take any of the following actions or
permit to occur any of the following events:
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(i) except in the ordinary course of business, sell,
transfer or otherwise dispose of any of its Receivables;
(ii) account for, manage, or treat Receivables or
Inventory in any manner other than the ordinary course of
business, or (without limiting the generality of the
foregoing) write off as uncollectible any notes or accounts
receivable or write down the value of any Inventory other than
in amounts that are not Material or in the ordinary course of
business;
(iii) cancel or waive any Material claims or Material
rights of value or sell, transfer, distribute or otherwise
dispose of any Material assets, (including the Rolodex PR CDs)
except in the ordinary course of business;
(iv) dispose of or permit to lapse any rights in, to
or for the use of any Material Intellectual Property or
disclose to any Person not an employee any Material trade
secret, process or know-how not theretofore a matter of public
knowledge, except, in the case of a trade secret, process or
know how, if done in such a way as to preserve the proprietary
nature thereof, and in each case except pursuant to judicial
or administrative process;
(v) grant any increase in the base compensation or
other payment to any of its directors or officers (in the case
of Rolodex PR) or employees, or increase the rate or terms of
any bonus, pension or other employee benefit plan covering any
of its directors or officers (in the case of Rolodex PR) or
employees, except in each case increases occurring in the
ordinary course of business in accordance with its customary
practices (including normal periodic performance reviews and
related compensation and benefit increases) or as required by
any pre-existing Commitment which is disclosed in the
Disclosure Schedule or as to which no disclosure is required
pursuant to Article III;
(vi) make any change in any method of accounting or
keeping its books of account or accounting practices except as
required by newly applicable generally accepted accounting
principles;
(vii) increase its indebtedness for borrowed money
with respect to the Rolodex Business other than pursuant to
the Seller Credit Agreement or, in the case of Rolodex PR,
borrowings from Seller;
(viii) enter into, amend or modify in any respect any
collective bargaining agreement;
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(ix) incur or guarantee any Material liabilities
(whether accrued, contingent, absolute or otherwise), except
in the ordinary course of business;
(x) lend any money in excess of $50,000 to any Person
other than an affiliate or trade debtor;
(xi) mortgage, pledge or subject to any Encumbrance
(other than Permitted Encumbrances) any Material asset, except
under the Seller Credit Agreement; or
(xii) enter into or amend any Material Commitment in
connection with the Rolodex Business except in the ordinary
course of business.
(b) Except as may be otherwise contemplated by this Agreement
or required by any of the documents listed in the Disclosure Schedule or except
as the Chief Executive Officer, President or Vice President-Finance of Parent
may otherwise consent to in writing (which consent shall not be unreasonably
withheld or delayed), during the period from the date hereof and prior to the
Closing, Seller shall and shall cause Rolodex PR to use its reasonable efforts
to maintain (ordinary wear and tear excepted) the Rolodex Business, including
its present operations, facilities, working conditions and relationships with
Material lessors, licensors, licensees, suppliers and customers and others with
whom the Rolodex Business has a Material business relationship such that the
Rolodex Business will not be materially impaired.
5.3. ACCESS. From the date hereof and prior to the Closing, Seller
shall and shall cause Rolodex PR to provide Purchaser and Parent with such
information as Purchaser and Parent may from time to time reasonably request
with respect to the Rolodex Business and the transactions contemplated by this
Agreement and provide Purchaser and Parent and their representatives reasonable
access during regular business hours and upon reasonable notice to the
facilities, properties, books and records of the Rolodex Business as Purchaser
and Parent may from time to time reasonably request; PROVIDED that Seller and
Rolodex PR shall not be obligated to provide Purchaser or Parent with any
information which would violate any Law or term of any Commitment. Any
disclosure whatsoever during such investigation by Purchaser or Parent shall not
constitute an enlargement of or additional representations or warranties of
Seller beyond those specifically set forth in this Agreement. All such
information and access shall be subject to the terms and conditions of the
letter agreement dated October 8, 1996 between Purchaser and Seller (the
"CONFIDENTIALITY AGREEMENT").
5.4. NO SOLICITATION. From the date hereof and prior to the Closing,
Seller shall not, nor shall it authorize or permit any officer, director or
employee of or any investment banker or other representative or agent retained
by it to, directly or indirectly, solicit,
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initiate, encourage or participate in any way (including by way of furnishing
information) in any discussions or negotiations with any Person (other than
Purchaser or an affiliate of Purchaser) or enter into any Commitment with any
third party concerning any merger, consolidation, sale of shares of capital
stock or similar transactions involving Seller with respect to the Rolodex
Business or Rolodex PR or a sale of a substantial portion of the assets of the
Rolodex Business.
5.5. CERTIFICATION OF NET INVESTMENT.CERTIFICATION OF NET INVESTMENT
Not later than three days prior to the Closing, Seller shall deliver to
Purchaser a statement of net investment of the Rolodex Business (the
"PRE-CLOSING STATEMENT OF NET INVESTMENT") and certificate by the Chief
Financial Officer of Insilco (the "INSILCO C.F.O."), each dated the same date
which shall be the last day of the fiscal month preceding the month in which the
termination or expiration of the applicable waiting period under the HSR Act
occurs, in form and substance reasonably satisfactory to the Chief Financial
Officer of Parent. The Pre-Closing Statement of Net Investment shall set forth
the changes, to the extent such changes exist, in assets, liabilities and net
investment of the Rolodex Business from December 31, 1996. In the certificate,
the Insilco C.F.O. will certify that the Pre-Closing Statement of Net Investment
(i) was prepared on a basis consistent with the statement of net investment of
the Rolodex Business as at December 31, 1996 that was included in the Financial
Statements (except that (1) normal year end adjustments will not have been made
to the Pre-Closing Statement of Net Investment, (2) cash and cash equivalents
may be reflected on the Pre-Closing Statement of Net Investment in which event
cash or cash equivalents in the amount so reflected shall be included in the
Acquired Assets, (3) the Pre-Closing Statement of Net Investment shall not
reflect a liability for the items referred to in clauses (iii), (vi) and (vii)
of Section 1.3(c), and (4) the Pre-Closing Statement of Net Investment shall
include a liability for tollgate taxes payable with respect to IDI for fiscal
1995 and 1996 and the portion of 1997 ending on the day preceding the Closing
Date (calculated as though the cancellation of the intercompany accounts
pursuant to Section 1.5 had occurred in the amount then estimated to be
cancelled)), and (ii) presents fairly in all material respects the combined
financial position of the Rolodex Business as at the date indicated in
accordance with generally accepted accounting principles except (x) as set forth
in the footnotes to the Financial Statements or in the Disclosure Schedule, (y)
that no liability will have been reflected for the items referred to in clauses
(iii), (vi) and (vii) of Section 1.3(c), and (z) that normal year end
adjustments will not have been made.
5.6. NAME CHANGE. Promptly after the Closing, Seller shall take all
necessary action to cause RC to change its name to eliminate the word "Rolodex"
therefrom.
5.7. FURTHER ASSURANCES. At any time after the Closing Date, Seller
shall, at Purchaser's expense and without incurring any legal liability beyond
that provided for in this Agreement, promptly execute, acknowledge and deliver
any other assurances or
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documents reasonably requested by Purchaser or Parent and necessary for
Purchaser and Parent to satisfy their obligations hereunder or obtain the
benefits contemplated hereby.
ARTICLE VI
COVENANTS OF PURCHASER AND PARENT
---------------------------------
Purchaser and Parent hereby jointly and severally covenant and
agree with Seller as follows:
6.1. COOPERATION BY PURCHASER AND PARENT. From the date hereof and
prior to the Closing, Purchaser and Parent shall each use its best efforts, and
shall cooperate with Seller, to secure all necessary consents, approvals,
authorizations, exemptions and waivers from third parties as shall be required
in order to enable Seller to effect the transactions contemplated hereby, and
shall otherwise use its best efforts to cause the consummation of such
transactions in accordance with the terms and conditions hereof. Without
limiting the provisions set forth in this Section 6.1, Parent shall file with
the Department of Justice and the Federal Trade Commission a Pre-Merger
Notification and Report Form pursuant to the HSR Act in respect of the
transactions contemplated hereby within five business days of the date of this
Agreement, and Purchaser and Parent each shall use, and shall cause each of its
affiliates to use, its best efforts to take or cause to be taken all actions
necessary, including to promptly and fully comply with any requests for
information from regulatory authorities, to obtain any consent, waiver, approval
or authorization relating to the HSR Act that is necessary to enable the parties
to consummate the transactions contemplated by this Agreement.
6.2. PRESERVATION OF BOOKS AND RECORDS. (a) For a period of seven years
from the Closing Date:
(i) Neither Purchaser nor Parent shall dispose of or
destroy any of the books and records of the Rolodex Business
relating to periods prior to the Closing ("BOOKS AND RECORDS")
without first offering to turn over possession thereof to
Seller by written notice to Seller at least 90 days prior to
the proposed date of such disposition or destruction.
(ii) Purchaser and Parent shall allow Seller and its
agents access to all Books and Records on reasonable notice
and at reasonable times at Purchaser's principal place of
business or at any location where any Books and Records are
stored, and Seller shall have the right, at its own expense,
to make copies of any Books and Records; provided, however,
that any such access or copying shall be had or done in such a
manner so as not to unduly interfere with the normal conduct
of Purchaser's business.
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(iii) Purchaser and Parent shall make available to
Seller upon reasonable notice to Seller and at reasonable
times and upon written request (A) Purchaser's or Parent's
personnel to assist Seller in locating and obtaining any Books
and Records, and (B) any of Purchaser's or Parent's personnel
whose assistance or participation is reasonably required by
Seller or any of its affiliates in anticipation of, or
preparation for, existing or future Litigation or other
matters in which Seller or any of its affiliates is involved.
Seller shall reimburse Purchaser and Parent for the reasonable
out-of-pocket expenses incurred by them in performing the
covenants contained in this Section 6.2(a).
(b) The seven-year period referred to in Section 6.2(a) shall
be extended in the event that any Litigation or investigation has been commenced
or is pending or threatened at the termination of such seven-year period and
such extension shall continue until any such Litigation or investigation has
been settled through judgment or otherwise or is no longer pending or
threatened.
(c) The provisions of this Section 6.2 shall be in addition to
any other obligations of Purchaser and Parent under this Agreement.
6.3. SELLER'S REPRESENTATIONS MODIFIED BY PURCHASER'S OR PARENT'S
KNOWLEDGE. Purchaser and Parent each hereby agrees that to the extent any
representation or warranty of Seller is, to the knowledge of Purchaser or Parent
acquired prior to the date hereof, untrue or incorrect, (a) Purchaser and Parent
shall have no rights by reason of such untruth or inaccuracy, and (b) any such
representation or warranty by Seller shall be deemed to be amended to the extent
necessary to render it consistent with such knowledge of Purchaser or Parent. In
addition, between the date hereof and the Closing, Purchaser or Parent may
acquire additional knowledge concerning the matters covered by Seller's
representations and warranties. Accordingly, Purchaser and Parent agree (without
prejudice to any rights which Purchaser or Parent may have under Section 7.1)
that, if the Closing occurs, then to the extent any representation or warranty
of Seller made herein or in Seller's Certificate or any Ancillary Agreement (as
defined in Section 12.1), to the knowledge of Purchaser or Parent acquired from
and after the date hereof and prior to the Closing, is untrue or incorrect, (x)
Purchaser and Parent shall have no rights thereunder by reason of such untruth
or inaccuracy, and (y) any such representation or warranty by Seller shall be
deemed to be amended to the extent necessary to render it consistent with such
knowledge of Purchaser or Parent.
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ARTICLE VII
CONDITIONS TO PURCHASER'S AND PARENT'S OBLIGATIONS
--------------------------------------------------
The obligations of Purchaser and Parent to consummate the
transactions contemplated by this Agreement shall be subject to the satisfaction
(or waiver, where permissible) at or prior to the Closing of all of the
following conditions:
7.1. REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER. Seller shall
have complied with its agreements and covenants contained in Section 5.5 and
shall have complied in all material respects with each of its other agreements
and covenants contained herein to be complied with on or prior to the Closing
Date, and all the representations and warranties of Seller contained herein
shall be true in all Material respects (or, in the case of representations and
warranties of Seller contained herein that are already qualified by Materiality
or Material Adverse Effect qualifiers, such representations and warranties shall
be true as written) on and as of the Closing Date with the same effect as though
made on and as of the Closing Date, except (a) as otherwise contemplated hereby,
and (b) to the extent that such representations and warranties were made as of a
specified date and as to such representations and warranties the same shall
continue on the Closing Date to have been true in all Material respects (or true
as written, as applicable) as of the specified date. Purchaser shall have
received a certificate executed by or on behalf of Seller, dated as of the
Closing Date, certifying as to the fulfillment of the conditions set forth in
this Section 7.1.
7.2. CONSENTS. The applicable waiting period under the HSR Act shall
have expired or been terminated and all other consents, approvals,
authorizations, exemptions and waivers from Governmental Authorities that shall
be required in order to enable Purchaser and Parent to consummate the
transactions contemplated hereby shall have been obtained (except for such
consents, approvals, authorizations, exemptions and waivers, the absence of
which would not prohibit consummation of such transactions or render such
consummation illegal).
7.3. NO PROHIBITIONS. No statute, rule or regulation or order or decree
of any court or Governmental Authority shall be in effect which prohibits
Purchaser or Parent from consummating the transactions contemplated by this
Agreement.
7.4. CORPORATE DOCUMENTS. Purchaser and Parent shall have received from
Seller certified copies of the resolutions duly adopted by the Board of
Directors of each Seller approving the execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby, and such
resolutions shall be in full force and effect as of the Closing Date.
7.5. ENCUMBRANCES. The Acquired Assets shall be free and clear of all
Encumbrances (other than Permitted Encumbrances) (it being understood that the
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Encumbrances under the Seller Credit Agreement will be released concurrently
with the receipt by Seller of the Purchase Price).
7.6. DELIVERIES BY SELLER. Purchaser and Parent shall receive the
deliveries of Seller listed in Section 2.3(i).
7.7. CONSENTS. All consents to the transfer to Purchaser of the
Commitments or Permits listed on Schedule 7.7 shall have been obtained.
7.8. PRECLOSING NET INVESTMENT. The Pre-Closing Statement of Net
Investment shall reflect a net investment of the Rolodex Business as of the date
of such statement of not less than $14,400,000.
7.9. NO ADVERSE PROCEEDING. As of the Closing Date, there shall not
have been instituted or be pending or threatened any suit, action or proceeding
by a Governmental Authority in which it is sought to restrain, prohibit or
question the validity or legality of the transactions contemplated by this
Agreement.
7.10. RESIGNATION OF ROLODEX PR BOARD OF DIRECTORS. Parent and
Purchaser shall have received the written resignation of the Board of Directors
of Rolodex PR effective upon the Closing.
ARTICLE VIII
CONDITIONS TO SELLER'S OBLIGATIONS
----------------------------------
The obligation of Seller to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction (or waiver,
where permissible) at or prior to the Closing of all of the following
conditions:
8.1. REPRESENTATIONS, WARRANTIES AND COVENANTS OF PURCHASER. Purchaser
and Parent each shall have complied in all material respects with each of its
agreements and covenants contained herein to be complied with on or prior to the
Closing Date, and all the representations and warranties of Purchaser and Parent
contained herein shall be true in all material respects (or in the case of
representations and warranties of Purchaser or Parent contained herein that are
already qualified by materiality qualifiers, such representations and warranties
shall be true as written) on and as of the Closing Date with the same effect as
though made on and as of the Closing Date, except (a) as otherwise contemplated
hereby, and (b) to the extent that such representations and warranties were made
as of a specified date and as to such representations and warranties the same
shall continue on the Closing Date to have been true in all material respects
(or true as written, as applicable) as of the specified date. Seller shall have
received a certificate executed by or on behalf of Purchaser and Parent, dated
as of the Closing Date, certifying as to the fulfillment of the conditions set
forth in this Section 8.1.
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8.2. CONSENTS. The applicable waiting period under the HSR Act shall
have expired or been terminated and all other consents, approvals,
authorizations, exemptions and waivers from any Governmental Authority that
shall be required in order to enable Seller to consummate the transactions
contemplated hereby shall have been obtained (except for such consents,
approvals, authorizations, exemptions and waivers, the absence of which would
not prohibit consummation of such transactions or render such consummation
illegal).
8.3. NO PROHIBITIONS. No statute, rule or regulation or order or decree
of any court or Governmental Authority shall be in effect which prohibits Seller
from consummating the transactions contemplated by this Agreement.
8.4. CORPORATE DOCUMENTS. Seller shall have received from Purchaser and
Parent certified copies of the resolutions duly adopted by the Boards of
Directors of Purchaser and Parent approving the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby, and such
resolutions shall be in full force and effect as of the Closing Date.
8.5. DELIVERIES BY PURCHASER. Seller shall receive from Purchaser and
Parent payment of the Purchase Price and the deliveries referred to in Section
2.3(ii) as well as such "sale for resale" certificates with respect to the
Inventory as may be requested by Seller.
8.6. NO ADVERSE PROCEEDING. As of the Closing Date, there shall not
have been instituted or be pending or threatened any suit, action or proceeding
by a Governmental Authority in which it is sought to restrain, prohibit or
question the validity or legality of the transactions contemplated by this
Agreement.
ARTICLE IX
INCOME TAXES; TOLLGATE TAXES; ALLOCATION OF PURCHASE PRICE
----------------------------------------------------------
9.1. INDEMNIFICATION. (a) Seller shall be responsible for and shall
indemnify and hold harmless Purchaser and its affiliates (including Rolodex PR)
against (i) all federal, state, local and foreign income taxes and franchise
taxes which are based on net income, and any interest or penalties thereon
("INCOME TAXES"), (1) of Seller or any consolidated, combined or unitary group
of which Seller is or has been a member, and (2) with respect to tax periods or
portions of periods ending on or before the day preceding the Closing Date, of
Rolodex PR (including, subject to Section 9.3, any deferred Income Taxes of
Rolodex PR with respect to such periods described in the first item of Schedule
3.15 of the Disclosure Schedule (the "DEFERRED INCOME TAXES")), (ii) except to
the extent provided in Section 9.1(b), all withholding taxes, and any interest
or penalties thereon, imposed by Puerto Rico on dividends paid by Rolodex PR to
Seller ("TOLLGATE TAXES") (including any deferred Tollgate Taxes described in
the first item of Schedule 3.15 of the
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Disclosure Schedule) and (iii) all federal or state income taxes, and any
interest or penalties thereon, payable by Rolodex PR on the "deemed" sale of its
assets under Treasury Regulation Section 1.338(h)(10) - 1(e)(1) by reason of the
Section 338(h)(10) Election (as defined in Section 9.7(a)).
(b) Purchaser and Parent jointly and severally shall be
responsible for and shall indemnify and hold harmless Seller and its affiliates
against all (1) Income Taxes (i) of Purchaser, or any consolidated, combined or
unitary group of which Purchaser is or will be a member, and (ii) except to the
extent provided in Section 9.1(a)(iii), with respect to tax periods or portions
of tax periods beginning on or after the Closing Date, of Rolodex PR and (2) all
Tollgate Taxes which would not have been payable but for Purchaser's failure to
maintain or cause Rolodex PR to maintain the level of investment or activity in
Puerto Rico required to qualify for a 2.5% effective Tollgate Tax rate for
distributions made with respect to IDI earned prior to January 1, 1996, or
Purchaser's failure to comply or cause Rolodex PR to comply with any other
provisions of its Current Tax Grant or any requirement of Act No. 8 of January
24, 1987 of the Commonwealth of Puerto Rico, as amended.
(c) Any Income Taxes of Rolodex PR attributable to a tax
period which begins before and ends after the Closing Date (a "STRADDLE PERIOD")
shall be apportioned between Seller and Purchaser based on the actual operations
and transactions of Rolodex PR during the portion of such period ending on the
day prior to the Closing Date, and the portion of such period beginning on the
Closing Date, respectively, calculated as though the taxable year of Rolodex PR
terminated at the close of business on the day prior to the Closing Date.
Nothing in this Section 9.1(c) shall be deemed to affect Seller's obligation to
indemnify Purchaser and its affiliates pursuant to Section 9.1(a)(iii).
(d) Upon timely notice from Purchaser or Parent, Seller shall
pay to Purchaser any payment of Income Taxes or Tollgate Taxes required to be
paid by Seller pursuant to Section 9.1(a), and upon timely notice from Seller,
Purchaser or Parent shall pay to Seller any payment of Income Taxes or Tollgate
Taxes required to be paid by Purchaser or Parent pursuant to Section 9.1(b), in
each case at least five business days prior to the date any such payment is due.
(e) The indemnification obligations contained in this Section
9.1 shall survive the Closing and continue in full force and effect until the
applicable statute of limitations has expired with respect to each such Income
Tax or Tollgate Tax.
9.2. FILING RESPONSIBILITY. (a) Seller shall timely prepare and file,
or cause to be timely prepared and filed, (i) all Income Tax returns of Rolodex
PR for all tax periods ending on or before the Closing Date, and (ii) all
Tollgate Tax returns, and timely pay, or cause to be paid, when due, all Income
Taxes or Tollgate Taxes, as applicable, relating to such returns.
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(b) Purchaser shall timely prepare and file, or cause to be
timely prepared and filed, all Income Tax returns of Rolodex PR for all Straddle
Periods, and timely pay, or cause to be paid, when due, all Income Taxes
relating to such returns. Such Income Tax returns shall be prepared in a manner
consistent with prior practice of Rolodex PR concerning its respective income,
properties or operations (including transfer pricing methodologies and all
elections and accounting methods and conventions), except as otherwise required
by law or regulation, or otherwise agreed to by Seller prior to the filing
thereof. Purchaser shall provide, or cause to be provided, to Seller a
substantially final draft of such Income Tax return at least 30 days prior to
the due date for filing such Income Tax return, for Seller's review. Seller
shall notify Purchaser of any reasonable objections Seller may have to any items
set forth in such draft Income Tax return and Purchaser and Seller agree to
consult and resolve in good faith any such objection and to mutually consent to
the filing of such Income Tax return.
9.3. REFUNDS. Any refunds or credits of Income Taxes (including any
interest thereon) received by or credited to Rolodex PR attributable to (i)
periods or portions of periods ending prior to the Closing Date or (ii) the
Section 338(h)(10) Election and any refunds or credits of Tollgate Taxes
(including any interest thereon) received by or credited to Rolodex PR
("SELLER'S REFUNDS"), shall be for the benefit of Seller, and Seller shall have
the sole right, at its expense, to pursue any Seller's Refunds (including filing
amended returns and applying for competent authority or analogous relief) and
Purchaser shall cause Rolodex PR to pay over to Seller any Seller's Refunds
immediately upon receipt thereof; PROVIDED, HOWEVER, that any pre-paid tollgate
taxes set forth on the Pre-Closing Statement of Net Investment remaining after
the Closing shall not be considered to be a Seller's Refund and shall be for the
exclusive benefit of Rolodex PR and Purchaser. In the case of a Seller's Refund
which is a credit to Rolodex PR, Rolodex PR shall pay such Seller's Refund to
Seller immediately upon receipt of the benefit of such credit through a
reduction in any Tax payment required to be made by Rolodex PR after the
Closing. In addition, if the Income Taxes with respect to the pre-Closing
portion of a Straddle Period of Rolodex PR are less than the payments previously
made (or deemed made) by Rolodex PR with respect to the pre-Closing portion of
such Straddle Period, Purchaser shall cause Rolodex PR to pay to Seller the
excess of such previous payments over such Income Taxes immediately upon Rolodex
PR's receiving the benefit of such excess payments through a reduction in any
Tax payment required to be made by Rolodex PR after the Closing. Notwithstanding
the preceding three sentences, no payment to Seller shall be required of Rolodex
PR in respect of Seller's Refunds until the aggregate amount of Seller's Refunds
exceeds the aggregate amount of Deferred Income Taxes, and then payment shall be
made only in the amount of such excess. The aggregate amount of any Seller's
Refunds not paid to Seller shall offset on a dollar for dollar basis Seller's
indemnity obligations under Section 9.1(a) with respect to the Deferred Income
Taxes.
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9.4. AUDITS. Purchaser or Parent shall promptly notify Seller in
writing upon receipt by Purchaser or any affiliate of Purchaser of notice of any
pending or threatened Income Tax or Tollgate Tax audits or assessments which may
affect the Income Tax or Tollgate Tax liabilities or indemnification obligations
of, or otherwise relate to, Seller for tax periods ending on or prior to the
Closing Date. Seller shall have the sole right, at its expense, to represent all
interests in any tax audit, administrative or court proceeding or other tax
matter ("TAX MATTERS") with respect to Income Taxes for such tax periods or
Tollgate Taxes, and to employ counsel of its choice; PROVIDED, HOWEVER, that
Purchaser's consent shall be required prior to the settlement of any Puerto
Rican Income Tax Matter relating to Rolodex PR which has the effect of shifting
income or deductions from a period ending on or prior to the Closing Date to a
period or portion of a period beginning after the Closing Date to the detriment
of Purchaser, which consent shall not be unreasonably withheld. Purchaser and
Parent each agrees that it will cooperate fully with Seller and its counsel in
the defense against or compromise of any claim in any said proceeding. Purchaser
shall have the sole right, at its expense, to represent all interests in any Tax
Matter for tax periods ending after the Closing Date, and to employ counsel of
its choice; PROVIDED, HOWEVER, that Seller's consent shall be required prior to
the settlement of (i) any Tax Matter with respect to Straddle Periods and (ii)
any Puerto Rican Income Tax Matter relating to Rolodex PR which has the effect
of shifting income or deductions from a period beginning on or after the Closing
Date to a period or portion of a period ending on or prior to the Closing Date
to the detriment of Seller, which consent in each case shall not be unreasonably
withheld.
9.5. COOPERATION. After the Closing, Purchaser, Parent and Seller shall
promptly make available or cause to be made available to the other, as
reasonably requested, and to any taxing authority, all information, records or
documents relating to Tax liabilities, potential Tax liabilities, or refunds of
or relating to the Rolodex Business for all periods prior to or including the
Closing Date and shall preserve all such information, records and documents
until the expiration of any applicable statute of limitations or extensions
thereof. Purchaser, Parent and Seller shall otherwise cooperate with respect to
any Tax Matter or claim for Seller's Refunds, including by provision of
appropriate powers of attorney. Purchaser shall prepare and provide to Seller
any Tax information packages requested by Seller for Seller's use in preparing
its or Rolodex PR's Tax returns. Such Tax information packages shall be
completed by Purchaser and provided to Seller within 45 days after Seller's
request therefor. Each party shall bear its own expenses in complying with the
foregoing provisions.
9.6. PURCHASE PRICE ALLOCATION. The Purchase Price, liabilities of
Seller with respect to the Rolodex Business, and other relevant items shall be
allocated among the Acquired Assets (including the Rolodex PR Shares) in
accordance with the rules of Section 1060 of the Code and Treasury Regulations
thereunder. Such allocation shall be set forth on a schedule which shall be
prepared by Purchaser and provided to Seller
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within 75 days following the Closing Date for Seller's review and approval,
which approval shall not be unreasonably withheld, provided however that
Purchaser and Seller hereby agree that the amount allocated to the Rolodex PR
Shares shall be not less than $12,000,000 nor more than $15,000,000. All
allocations contained in such schedule shall be used by each party in preparing
any filings required pursuant to Section 1060 of the Code or any similar
provisions of state or local law and all relevant tax returns, subject to
adjustment to reflect (x) Seller's selling expenses as a reduction of sales
proceeds, and (y) Purchaser's and Parent's acquisition expenses as an addition
to purchase price.
9.7. SECTION 338 ELECTIONS AND FORMS. (a) With respect to Purchaser's
acquisition of the Rolodex PR Shares hereunder, Seller and Purchaser hereby
covenant and agree with each other that they will join in making an election
under Section 338(h)(10) of the Code, and the Treasury Regulations promulgated
thereunder (the "SECTION 338(H)(10) ELECTION") within one day after Seller and
Purchaser have agreed upon the allocation referred to in Section 9.7(b);
PROVIDED, HOWEVER, that in the event (a) any legislation is enacted into law
prior to that time which (i) amends Section 338 of the Code and (ii) has an
effective date applicable to transactions occurring on the Closing Date, and (b)
Purchaser's outside accounting firm has certified that such legislation will
cause the Section 338(h)(10) Election to produce a material net tax detriment to
Purchaser or, after the Closing Date, Rolodex PR, then Purchaser may elect not
to join in making the Section 338(h)(10) Election and the provisions of this
Section 9.7 shall be null and void. Purchaser shall be responsible for the
preparation and timely filing of Form 8023-A (or any successor form) in
connection with the Section 338(h)(10) Election and Seller shall cooperate with
Purchaser to enable Purchaser to prepare and file such form and to complete the
Section 338(h)(10) Election.
(b) The amount allocated to the Rolodex PR Shares pursuant to
Section 9.6 and the liabilities of Rolodex PR and other relevant items shall be
allocated to the assets of Rolodex PR in accordance with the rules of Section
338(h)(10) of the Code and the Treasury Regulations promulgated thereunder. Such
allocation shall be set forth on a schedule which shall be prepared by Purchaser
and provided to Seller within 75 days following the Closing Date for Seller's
review and approval, which approval shall not be unreasonably withheld. All
allocations contained in such schedule shall be used by each party in preparing
Form 8023-A (or any successor form) and all relevant tax returns, subject to
adjustment to reflect (x) Seller's selling expenses as a reduction of sales
proceeds, and (y) Purchaser's and Parent's acquisition expenses as an addition
to purchase price.
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ARTICLE X
EMPLOYMENT MATTERS
------------------
10.1. EMPLOYMENT OFFERS. (a) Purchaser shall offer employment as of the
Closing Date to any person who is employed by, or on behalf of, Seller in
connection with the Rolodex Business as of the Closing Date and shall cause
Rolodex PR to continue to employ all persons who are employees of Rolodex PR as
of the Closing Date (including in each case any persons on layoff, disability
(other than those persons on total permanent disability, which Purchaser shall
have no obligation to employ even though such persons are Employees), maternity
leave or leave of absence) (all such persons being referred to individually as
an "EMPLOYEE" and collectively as "EMPLOYEES" and each current Employee of
Seller who accepts employment with Purchaser being referred to as a "TRANSFERRED
EMPLOYEE").
10.2. EMPLOYMENT ARRANGEMENTS; COLLECTIVE BARGAINING AGREEMENT AND
RETAINED EMPLOYEE COMPENSATION AGREEMENTS. Effective upon the Closing, Seller
shall assign all of its rights, and Purchaser shall assume and shall timely
perform all of Seller's obligations under (i) the individual employment
Commitments listed in the Disclosure Schedule, (ii) the collective bargaining
agreement listed in the Disclosure Schedule and (iii) the retained employee
compensation agreements listed in the Disclosure Schedule, provided, however,
that Seller shall retain all liability for (1) the retention and remuneration
awards payable under the agreements referred to in clause (iii) of this sentence
and (2) the amounts payable to John A. Bermingham under paragraphs 1 and 3 of
the Revised Severance and Long-Term Compensation Agreement, dated October 10,
1996, amending the letter agreement between Insilco and John A. Bermingham dated
February 27, 1996.
10.3. ASSUMPTION OF ROLODEX PR PENSION PLAN. As of the Closing Date,
Purchaser shall cause Rolodex PR to continue to maintain the Rolodex de Puerto
Rico, Inc. Pension Plan (the "ROLODEX PR PENSION PLAN") in accordance with its
terms, including any provisions relating to termination and amendment. Effective
upon the Closing, Purchaser shall assume and shall timely perform all of
Seller's administrative responsibilities with respect to the Rolodex PR Pension
Plan, and Seller shall cease to have any responsibilities with respect thereto.
Prior to the Closing, Seller and Purchaser shall take all action necessary to
effect a transfer of all of Seller's responsibilities under the Rolodex PR
Pension Plan, including amendment of the Rolodex PR Pension Plan and related
trust, if necessary.
10.4. 401(K) PLAN. On or prior to the Closing Date, Seller shall take
all action necessary to vest participating Employees in their account balances
in the Insilco Corporation Thrift Plan (the "Insilco 401(k) Plan"). There shall
be no transfer of assets or liabilities of the Insilco 401(k) Plan to any
benefit plan of Purchaser or any of its affiliates
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and Purchaser and Parent acknowledge that Purchaser and its affiliates shall
have no right, title or interest in any of the assets of the Insilco 401(k)
Plan.
10.5. INSILCO PENSION PLAN. (a) As of the Closing Date, Seller shall
take all actions necessary to provide that the Insilco Corporation Retirement
Plan for Salaried Employees (the "INSILCO PENSION PLAN") shall retain all
liabilities with respect to all benefits accrued by Employees who are
participants as of the Closing Date in the Insilco Pension Plan (the "INSILCO
PLAN PARTICIPANTS") under the Insilco Pension Plan through the Closing Date, as
if all such Insilco Plan Participants had terminated employment in respect of
the Insilco Pension Plan on the Closing Date. Seller shall vest Insilco Plan
Participants in their accrued benefits as of the Closing Date. All Insilco
Pension Participants shall be treated as terminated vested employees under the
Insilco Pension Plan for the purpose of determining benefit entitlements
thereunder.
(b) There shall be no transfer of assets or liabilities of the
Insilco Pension Plan to any benefit plan of Purchaser or any of its affiliates
and Purchaser and Parent acknowledge that Purchaser and its affiliates shall
have no right, title or interest in any of the assets of the Insilco Pension
Plan.
10.6. INSILCO LONG-TERM INCENTIVE PLAN. Seller shall take all actions
necessary to vest, as of the Closing Date, Employees who are participants in the
1993 Insilco Long-Term Incentive Plan (the "Insilco Incentive Plan") in a
fractional portion of their outstanding options which would otherwise vest on
the next vesting date pursuant to the terms of the option awards. Such fraction
will be determined by using 365 as the denominator and, as the numerator, the
number of days which have passed since the grant date, or, if later, the last
vesting date. Such Employees shall have one year after the Closing Date in which
to exercise their vested options. Seller shall retain all liability with respect
to the Insilco Incentive Plan.
10.7. OTHER BENEFIT PLANS. As of the Closing Date, Purchaser shall
provide Transferred Employees, and shall cause Rolodex PR to provide Rolodex
PR's Employees, with either (i) the medical, dental, life, accidental death and
dismemberment and long term disability coverage ("WELFARE COVERAGE") provided to
them immediately prior to the Closing Date under the Rolodex Benefit Plans or
(ii) Welfare Coverage under Purchaser's or Parent's plans on terms substantially
similar to those applicable to Purchaser's or Parent's employees. Purchaser
shall grant all Transferred Employees after the Closing Date credit for all
service with Seller and its affiliates and their respective predecessors prior
to the Closing Date for all purposes for which such service was recognized by
Seller and its affiliates; PROVIDED, HOWEVER, that a Transferred Employee's
service with any Seller shall not be counted for purposes of determining any
benefit accruals under any defined benefit plan of Purchaser or Parent.
Purchaser shall waive any pre-existing condition exclusions and actively-at-work
requirements and provide that any expenses incurred on or before the Closing
Date by a Transferred Employee or a Transferred Employee's
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covered dependent shall be taken into account for purposes of satisfying
applicable deductible, coinsurance and maximum out-of-pocket provisions. Without
limiting the generality of Section 1.3(a), except as otherwise provided in
Sections 10.4, 10.5 and 10.6 or in the proviso below, Purchaser shall assume, as
of the Closing Date, all Employee-related liabilities and obligations of Seller,
including all liabilities and obligations under the Rolodex Benefit Plans and
workers' compensation arrangements with respect to Employees and their
dependents and beneficiaries, including, but not limited to, (i) liabilities and
obligations for benefits, accrued vacation, compensation, contributions,
insurance and health maintenance organization premiums, reserves and
administrative expenses, whether incurred or accrued before, on or after the
Closing Date and whether or not reported as of the Closing Date, and (ii)
liabilities and obligations arising under the continuation coverage requirements
of Section 4980B(f) of the Code and Section 601 of ERISA with respect to all
Employees (or any beneficiary or dependent of any Employee) who, as of the
Closing Date, have exercised or are eligible to exercise their right to such
continuation coverage; PROVIDED that Seller shall retain all liability for wages
and payroll deductions with respect to Employees of Seller (but not with respect
to Employees of Rolodex PR, which liability (as well as all other
Employee-related liabilities of Rolodex PR) shall continue to be that of Rolodex
PR) for the period ending on the day preceding the Closing Date. Purchaser shall
reimburse Seller for any employee benefit liabilities relating to Employees paid
for by Seller after the Closing Date which liabilities have been assumed by
Purchaser as of the Closing Date pursuant hereto.
10.8. SEVERANCE. Purchaser agrees to provide severance pay and other
benefit entitlements which may be owing to any Employee (i) whose employment is
terminated by Purchaser on or after the Closing Date or (ii) by reason of the
transactions contemplated hereby, and Seller shall reimburse Purchaser for one
half of any payment made by Purchaser by reason of clause (ii) of this sentence
(but not by reason of clause (i) of this sentence or by reason of any payments
owing under any written employment or severance Commitment). If such severance
occurs on or within one year after the Closing Date or by reason of the
transactions contemplated hereby, such severance pay and benefit entitlements
shall be determined (on an Employee by Employee basis) in accordance with the
severance policy of Seller applicable to such Employee immediately prior to the
Closing, if more favorable than the severance policy of Purchaser, as
applicable, in effect after the Closing.
10.9. W-2 MATTERS. Pursuant to IRS Revenue Procedure 84-77, Purchaser
shall assume Seller's obligation to furnish Forms W-2 to Transferred Employees
for the calendar year in which the Closing Date occurs. Seller shall cause ADP
to provide Purchaser, upon request, with any information relating to periods
ending on the Closing Date necessary for Purchaser to prepare and distribute
Forms W-2 to Transferred Employees for the calendar year in which the Closing
Date occurs, which Forms W-2 will
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include all remuneration earned by Employees from both Seller and Purchaser
during such year, and Purchaser shall prepare and distribute such forms.
10.10. MULTIEMPLOYER PLAN. (a) With respect to the United Wire, Metal
and Machine Pension Fund (the "MULTIEMPLOYER PLAN"), Purchaser and Seller intend
to satisfy the requirements of Section 4204 of ERISA to avoid a withdrawal by
Seller as a result of the transactions contemplated hereby from the
Multiemployer Plan in respect of the Employees covered by the Multiemployer
Plan. In this regard, effective as of 12:01 a.m., New York City time, on the
Closing Date, Purchaser shall become a successor employer contributing to the
Multiemployer Plan on behalf of the Employees participating therein pursuant to
the terms of the applicable collective bargaining agreement and Purchaser shall
make contributions from and after the Closing Date to the Multiemployer Plan for
substantially the same number of contribution base units (as defined in Section
4001(a)(11) of ERISA) that Seller had an obligation to contribute to the
Multiemployer Plan.
(b) With respect to the Multiemployer Plan, Purchaser shall
provide, as soon as practicable after the Closing Date, a bond issued by a
corporate surety company that is an acceptable surety for purposes of Section
412 of ERISA with a five-year term commencing as of the first day of the first
plan year of the Multiemployer Plan immediately following the Closing Date (the
"PROTECTED PERIOD") or establish an escrow account with a bank or similar
financial institution, with the same term, satisfactory to the trustees of the
Multiemployer Plan, in an amount equal to the greater of (x) the average of
Seller's annual contributions to the Multiemployer Plan for the three plan years
preceding the plan year in which the Closing Date occurs, or (y) Seller's
contributions to the Multiemployer Plan for the plan year preceding the plan
year in which the Closing Date occurs.
(c) If there is a partial or complete withdrawal (as such
terms are defined in Sections 4205(a) and 4203(a) of ERISA, respectively) from
the Multiemployer Plan by Purchaser prior to the end of the Protected Period,
Seller shall, to the extent required by applicable law, rule or regulation, be
secondarily liable for any withdrawal liability Seller would have had to the
Multiemployer Plan if Seller and Purchaser had not entered into the agreements
contained in this Section 10.10 to the extent the liability of Purchaser to the
Multiemployer Plan as a result of either a complete or partial withdrawal
therefrom is not paid by Purchaser to the Multiemployer Plan in respect of such
withdrawal. With respect to the Multiemployer Plan, if either Purchaser or
Seller or its affiliates requests the Pension Benefit Guaranty Corporation to
grant a variance or exemption from the requirements of Section 4204(a)(1)(B) or
(C) of ERISA and such variance or exemption is granted or in the event an
exemption from such requirements is available under applicable law, rule or
regulation and the Multiemployer Plan confirms that such exemption is
applicable, then this subparagraph (c) shall be void and not enforceable.
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<PAGE> 45
(d) Notwithstanding anything to the contrary set forth in
subparagraphs (b) and (c) above, Purchaser and Parent jointly and severally
shall indemnify and hold harmless Seller and its affiliates for all Losses
(including any secondary liability contemplated by subparagraph (c) above) which
are incurred or become payable (i) as a result of Purchaser's failure to comply
with the provisions of this Section 10.10 or (ii) as a result of Purchaser's
partial or complete withdrawal from the Multiemployer Plan after the Closing
Date. Purchaser or Seller, as the case may be, shall promptly notify the other
party of any demand for payment of withdrawal liability received by Purchaser or
Seller from the Multiemployer Plan.
10.11. SUBSTITUTION OF PARENT. If permitted by law, Parent may assume
any of the obligations to be assumed by Purchaser pursuant to this Article X.
10.12. INDEMNITY. Without in any way limiting the generality of Section
1.3(a), (i) Purchaser and Parent jointly and severally shall indemnify Seller
and its affiliates and hold each of them harmless from and against any Losses
which may be incurred or suffered by any of them in connection with any claim
made by any Employee by reason of Purchaser's failure to comply with any of the
provisions of this Article X and (ii) Seller shall indemnify Purchaser and
Parent and hold each of them harmless from and against any Losses which may be
incurred or suffered by either of them in connection with any claim made by an
Employee by reason of Seller's failure to comply with any of the provisions of
this Article X.
ARTICLE XI
TERMINATION, AMENDMENT AND WAIVER
---------------------------------
11.1. TERMINATION. This Agreement may be terminated prior to the
Closing:
(a) by the mutual written consent of Seller and Purchaser; or
(b) by either Purchaser, on the one hand, or Seller, on the
other hand, if the Closing shall not have occurred on or before the 120th day
following the date hereof (in the case of Purchaser's ability to terminate) or
the 60th day following the date hereof (in the case of Seller's ability to
terminate).
11.2. EFFECT ON OBLIGATIONS. Termination of this Agreement pursuant to
this Article XI shall terminate all rights and obligations of the parties
hereunder and none of the parties shall have any liability to the other party
hereunder, except that Sections 13.5, 13.7 and 13.9, the Confidentiality
Agreement and the last sentence of Section 5.3 shall remain in effect, and
provided that nothing herein shall relieve any party from liability for any
breach of any covenant or agreement in this Agreement prior to such termination.
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ARTICLE XII
INDEMNIFICATION
---------------
12.1. SURVIVAL. The representations and warranties made in this
Agreement or in the certificates referred to in Sections 7.1 and 8.1 (the
"CERTIFICATES") or any agreement executed at or prior to the Closing in
connection herewith (an "ANCILLARY AGREEMENT") shall survive the Closing until
April 15, 1998 (the period ending on such date being herein referred to as the
"INDEMNIFICATION PERIOD") and on such date shall expire, together with any right
to indemnification for breach thereof except to the extent a Valid Third Party
Claim Notice (as defined in Section 12.3(a)) or Valid Other Claim Notice (as
defined in Section 12.3(b)) (each, a "VALID CLAIM NOTICE") shall have been given
prior to such date in accordance with Section 12.3 by the party seeking
indemnification (the "INDEMNITEE") to the party from which indemnification is
being sought (the "INDEMNITOR"), in which case the representation or warranty
alleged in the Valid Claim Notice to have been breached shall survive, to the
extent of the claim set forth in the Valid Claim Notice only, until such claim
is resolved, and except that if Purchaser or any of its affiliates has given a
Valid Claim Notice prior to the end of the Indemnification Period, the covenants
and agreements contained in Section 6.3 shall not expire until the claim with
respect to which such Notice was given is resolved. The covenants and agreements
contained herein to be performed or complied with at or prior to the Closing
shall expire at the Closing along with all rights and remedies with respect to
the breach thereof. The covenants and agreements contained herein to be
performed or complied with after the Closing (other than the covenant and
agreement to indemnify against breaches of representations and warranties, which
shall expire as set forth in the first sentence of this Section 12.1)
("POST-CLOSING Covenants") shall survive the Closing until the expiration of the
applicable statute of limitations. Such Post-Closing Covenants shall include,
without limitation, those contained in Sections 1.3 and 9.1.
12.2. INDEMNIFICATION. (a) If the Closing shall occur, Seller shall
indemnify Purchaser and its affiliates and hold each of them harmless from and
against all Losses which are incurred or suffered by any of them (i) by reason
of the breach of any of the representations or warranties made by Seller herein
or in Seller's Certificate (such breach to be determined for this purpose
without regard to any Materiality or Material Adverse Effect standard set forth
in any representation or warranty) or in any Ancillary Agreement or (ii) by
reason of the failure by Seller to perform or comply with any of its
Post-Closing Covenants.
(b) Any recovery by Purchaser and its affiliates for
indemnification shall be limited as follows: (1) Purchaser and its affiliates
shall not be entitled to any recovery unless a claim for indemnification is made
in accordance with Section 12.3, so as to constitute a Valid Claim Notice, and
within the time period of survival set forth in Section 12.1; (2) Purchaser and
its affiliates shall not be entitled to recover any amount for
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indemnification claims under clause (i) of Section 12.2(a) unless and until the
amount which Purchaser and its affiliates are entitled to recover in respect of
such claims exceeds, in the aggregate, $1,750,000 (the "DEDUCTIBLE"), in which
event (subject to clause (3) below) the entire amount which Purchaser and its
affiliates are entitled to recover in respect of such claims less the Deductible
shall be payable; and (3) the maximum amount recoverable by Purchaser and its
affiliates for indemnification claims under clause (i) of Section 12.2(a) shall
in the aggregate be equal to $12,000,000. No Losses shall be included in
determining whether the Deductible has been reached unless a Valid Claim Notice
seeking indemnification for such Losses has been given by the Indemnitee to the
Indemnitor in accordance with Section 12.3.
(c) If the Closing shall occur, Parent and Purchaser shall
jointly and severally indemnify each Seller and its affiliates and hold each of
them harmless from and against all Losses which are incurred or suffered by any
of them (i) by reason of the breach by Parent or Purchaser of any of the
representations or warranties made by Parent or Purchaser herein or in their
Certificate or in any Ancillary Agreement, or (ii) by reason of the failure by
Parent or Purchaser to perform or comply with any of their Post-Closing
Covenants; PROVIDED, HOWEVER, that Sellers and their affiliates shall not be
entitled to any recovery unless a claim for indemnification is made in
accordance with Section 12.3, so as to constitute a Valid Claim Notice, and
within the time period of survival set forth in Section 12.1.
12.3. PROCEDURES FOR CLAIMS. (a)(i) In order for an Indemnitee to be
entitled to any indemnification provided for under this Article XII in respect
of, arising out of or involving a claim made by any third party against the
Indemnitee (a "THIRD PARTY CLAIM"), the Indemnitee must notify the Indemnitor in
writing of the Third Party Claim (a "THIRD PARTY CLAIM NOTICE") promptly
following receipt by such Indemnitee of written notice of the Third Party Claim,
which notification, to be a valid Third Party Claim Notice, with the effect set
forth in Sections 12.1(a) and 12.2 (a "VALID THIRD PARTY CLAIM NOTICE"), must be
accompanied by a copy of the written notice of the third party claimant to the
Indemnitee asserting the Third Party Claim; PROVIDED that the failure to provide
such Notice promptly (so long as a Valid Third Party Claim Notice is given
before the expiration of the Indemnification Period) shall not affect the
obligations of the Indemnitor hereunder except to the extent the Indemnitor is
prejudiced thereby. The Indemnitee shall deliver to the Indemnitor copies of all
other notices and documents (including court papers) received by the Indemnitee
relating to the Third Party Claim.
(ii) The Indemnitor shall have the right to defend
against any such Third Party Claim (including to conduct any proceedings or
settlement negotiations, provided that the Indemnitor shall not settle any Third
Party Claim without the Indemnitee's consent, which consent shall not be
unreasonably withheld) with counsel of its own choosing. The Indemnitee shall
have the right to participate in the defense of any Third Party Claim and to
employ its own counsel (it being understood that the Indemnitor
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<PAGE> 48
shall control such defense), at its own expense. Prior to the time the
Indemnitee is notified by the Indemnitor as to whether the Indemnitor will
assume the defense of a Third Party Claim, the Indemnitee shall take all actions
reasonably necessary to timely preserve the collective rights of the parties
with respect to such Third Party Claim, including responding timely to legal
process. If the Indemnitor shall decline to assume the defense of a Third Party
Claim (or shall fail to notify the Indemnitee of its election to defend such
Third Party Claim) within 30 days after the giving by the Indemnitee to the
Indemnitor of a Valid Third Party Claim Notice with respect to the Third Party
Claim, the Indemnitee shall defend against the Third Party Claim and the
Indemnitor shall be liable to the Indemnitee for all reasonable fees and
expenses incurred by the Indemnitee in the defense of the Third Party Claim,
including without limitation the reasonable fees and expenses of counsel
employed by the Indemnitee, if and to the extent that the Indemnitor is
responsible to indemnify for such Third Party Claim. Regardless of which party
assumes the defense of a Third Party Claim, the parties agree to cooperate with
one another in connection therewith. Such cooperation shall include providing of
records and information which are relevant to such Third Party Claim, and making
employees and officers available on a mutually convenient basis to provide
additional information and explanation of any material provided hereunder and to
act as a witness or respond to legal process. Whether or not the Indemnitor
assumes the defense of a Third Party Claim, the Indemnitee shall not admit any
liability with respect to, or settle, compromise or discharge, such Third Party
Claim without the Indemnitor's prior written consent (which consent shall not be
unreasonably withheld).
(b) In order for an Indemnitee to be entitled to any
indemnification provided for under this Article XII in respect of a claim that
does not involve a Third Party Claim being asserted against such Indemnitee (an
"OTHER CLAIM"), the Indemnitee must promptly notify the Indemnitor in writing of
such Other Claim (the "OTHER CLAIM NOTICE"), which notification, to be a valid
Other Claim Notice, with the effect set forth in Sections 12.1(a) and 12.2 (a
"VALID OTHER CLAIM NOTICE"), (i) must certify that the Indemnitee has in good
faith already sustained some (though not necessarily all) Losses with respect to
such claim and (ii) if the Other Claim Notice is asserting a claim for breach of
any of the representations and warranties contained in Section 3.20 (or in the
Seller's Certificate insofar as its pertains to Section 3.20) as to
Environmental Matters (an "ENVIRONMENTAL BREACH"), must be accompanied by a
written report from a reputable nationally or regionally recognized
environmental consulting firm confirming, in reasonable detail, the existence of
the conditions as to which an Environmental Breach is claimed. The failure by
any Indemnitee to notify the Indemnitor promptly (so long as a Valid Other Claim
Notice is given before the expiration of the Indemnification Period) shall not
relieve the Indemnitor from any liability that it may have to such Indemnitee
under Section 12.2, except to the extent that the Indemnitor has been prejudiced
by such failure.
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12.4. OTHER PROVISIONS. (a) The indemnification provided in this
Article XII shall be the sole and exclusive remedy for any inaccuracy or breach
of any representation or warranty made by Seller or Parent or Purchaser in this
Agreement or in the Certificates or in any Ancillary Agreement. All amounts
payable by one party in indemnification of the other shall be considered an
adjustment to the Purchase Price.
(b) In no event shall Seller be liable for loss of profits or
consequential damages incurred by Purchaser or any of its affiliates in
connection with an Other Claim, it being understood that Seller shall only be
liable (subject to the limitations on liability set forth in this Article XII)
for loss of profits or consequential damages that are incurred or suffered by a
third party and that form a part of the Third Party Claim of such third party.
(c) Upon making any payment to an Indemnitee for any
indemnification claim under this Agreement, the Indemnitor shall be subrogated,
to the extent of such payment (an "Indemnification Payment"), to any rights
which the Indemnitee or its affiliate may have against any other parties
(including under any insurance policies) with respect to the subject matter
underlying such indemnification claim. The Indemnitee and its affiliates shall
cooperate with the Indemnitor in the pursuit of such rights and shall promptly
turn over to the Indemnitor any payments (up to the amount of the
Indemnification Payment) received in respect of such rights.
(d) Notwithstanding anything in this Agreement to the
contrary, Seller shall have no liability for any failure by Purchaser or any of
its affiliates (including Rolodex PR) to comply with applicable Law after the
Closing by reason of the Rolodex Business being operated after the Closing in
the manner operated prior to the Closing.
(e) Parent, Purchaser and Rolodex PR each understands and
agrees that the rights accorded by Section 12.2(a) in respect of Sections
1.3(c)(viii) and 3.20 are its sole and exclusive remedy against Seller with
respect to any Environmental Matters whatsoever. Parent, Purchaser and Rolodex
PR (each on its own behalf and on behalf of its affiliates and the successors
and assigns of any of the foregoing) each hereby waives any right to seek
contribution or other recovery from either Seller or from any of their
affiliates that any of them may now or in the future ever have under any
Environmental Laws, including, without limitation, 42 U.S.C. ss.ss. 9607 and
9613(f) of CERCLA, as such Laws were in the past or are currently in effect, or
may in the future be enacted or be in effect. Parent, Purchaser and Rolodex PR
(each on its own behalf and on behalf of its affiliates and the successors and
assigns of any of the foregoing) each hereby further unconditionally releases
each Seller and their affiliates from any and all claims, demands and causes of
action that any of them may now or in the future ever have against either Seller
or any of their affiliates for recovery under CERCLA or under any other
Environmental Laws as such Laws were in the past or are currently in effect, or
may in the future be enacted or be in effect. Nothing in this Section 12.4(e)
shall affect any
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rights which Purchaser and its affiliates may have under Section 12.2 for
indemnification for any breach by Seller of the representations and warranties
contained in Section 3.20 subject to the limitations set forth in Sections 12.1
and 12.2.
ARTICLE XIII
MISCELLANEOUS
-------------
13.1. NONCOMPETITION; NON-SOLICITATION. (a) Seller agrees that, for a
period of five years from the Closing Date, or until there has been a Change in
Control (as defined in Section 13.1(d)), whichever period is shorter, it will
not engage, either directly or indirectly, solely or jointly with others, or as
a stockholder (other than as a holder of less than 5% of the shares of a
publicly traded corporation) in any corporation or joint stock association, in
any business that is engaged in the manufacture and sale of non-electronic
personal information filing systems, non-electronic personal organizers, paper
punches and other similar office products.
(b) Seller agrees that, for a period of three years from the
Closing Date, it will not, without the prior written consent of Purchaser,
employ or directly or indirectly knowingly solicit for employment any current
employee of the Rolodex Business (excluding secretarial and clerical employees),
if employed by Purchaser following the Closing; PROVIDED, HOWEVER, that if
Purchaser terminates any such employee of the Rolodex Business for any reason,
Seller may rehire such employee.
(c) If any provision contained in this Section 13.1 shall for
any reason be held invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provisions
of this Section 13.1, but this Section 13.1 shall be construed as if such
invalid, illegal or unenforceable provision had never been contained herein. It
is the intention of the parties that if any of the restrictions or covenants
contained herein is held to cover a geographic area or to be of a length of time
which is not permitted by applicable law, or in any way construed to be too
broad or to any extent invalid, such provision shall not be construed to be
null, void and of no effect, but the extent such provision would be valid or
enforceable under applicable law, a court of competent jurisdiction shall
construe and interpret or reform this Section 13.1 to provide for a covenant
having the maximum enforceable geographic area, time period and other provisions
(not greater than those contained herein) as shall be valid and enforceable
under such applicable law. Seller acknowledges that Purchaser would be
irreparably harmed by any breach of this Section 13.1 and that there would be no
adequate remedy at law or in damages to compensate Purchaser for any such
breach. Seller agrees that Purchaser shall be entitled to injunctive relief
requiring specific performance by Seller of this Section 13.1, and Seller
consents to the entry thereof.
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(d) For purposes hereof, a "CHANGE IN CONTROL" shall be deemed
to occur if (i) there occurs any transaction or series of transactions that has
the result that shareholders of Insilco immediately before such transaction
cease to own at least fifty-one percent of the voting stock of Insilco or any
entity that results from the participation of Insilco in a merger,
reorganization, consolidation, liquidation or any other form of corporate
transaction; (ii) the shareholders of Insilco approve a plan of merger,
consolidation, reorganization, liquidation or dissolution in which Insilco does
not survive (unless the approved merger, consolidation, reorganization,
liquidation or dissolution is subsequently abandoned); (iii) Insilco disposes of
all or substantially all of its assets; or (iv) a majority or more of the
directors nominated by the Board of Directors of Insilco to serve as directors,
each having agreed to serve in such capacity, fail to be elected in a contested
election of directors.
13.2. COLLECTION OF RECEIVABLES; OTHER ASSETS. Seller agrees that, from
and after the Closing, Purchaser shall have the right and authority to collect
for its own account or the account of its affiliates all Receivables which are
transferred and assigned to Purchaser as provided herein, and Purchaser and its
affiliates have the right to endorse with the name of Seller any checks received
on account of any such Receivable. Seller agrees that it will promptly transfer
and deliver to Purchaser any cash or other property which Seller may receive in
respect of the Receivables or any other Acquired Asset and Purchaser and Parent
each agrees that it will promptly transfer and deliver to Seller any cash or
other property which Purchaser or Parent may receive in respect of any Excluded
Asset.
13.3. MAIL. Seller agrees that, from and after the Closing, Purchaser
and its affiliates shall have the right and authority to open all mail received
by the Rolodex Business, even if addressed to Seller, for processing or
forwarding to Seller, as appropriate. Purchaser shall promptly forward to Seller
any mail received by it that does not relate to the Rolodex Business or that
relates to any Excluded Assets or Excluded Liabilities.
13.4. BULK SALES LAWS. Purchaser and Parent each hereby waives any
requirement that Seller comply with any bulk sales laws applicable to the
transactions contemplated hereby, and in exchange therefor Seller agrees to pay,
honor and discharge when due any claims of creditors asserted against Purchaser
by reason of such noncompliance other than claims which are Rolodex Liabilities.
13.5. EXPENSES. Seller, on the one hand, and Purchaser and Parent on
the other hand, shall pay all costs and expenses incurred by such party or on
its behalf in connection with this Agreement and the transactions contemplated
hereby, including without limiting the generality of the foregoing, fees and
expenses of its financial consultants, accountants and counsel.
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13.6. EXCLUSIVE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This Agreement
(including the Disclosure Schedule and all other Schedules and Exhibits hereto),
and the Confidentiality Agreement constitute the sole understanding of the
parties with respect to the subject matter hereof. The disclosure of any matter
in the Disclosure Schedule shall be deemed to be a disclosure for all purposes
of this Agreement, except that disclosures with respect to Section 3.20 are
contained only in Schedule 3.20 of the Disclosure Schedule. Any such disclosure
shall expressly not be deemed to constitute an admission by Seller or to
otherwise imply that any such matter is Material for the purposes of this
Agreement. Notwithstanding anything contained in this Agreement to the contrary,
nothing in this Agreement, express or implied, is intended to confer on any
Person other than the parties hereto and their respective affiliates, successors
and assigns any rights, remedies, obligations or liabilities under or by reason
of this Agreement.
13.7. GOVERNING LAW, ETC. This Agreement shall be construed in
accordance with and governed by the laws of the State of New York applicable to
agreements made and to be performed wholly within such jurisdiction. Each of the
parties hereto hereby irrevocably and unconditionally consents to submit to the
exclusive jurisdiction of the courts of the State of New York and of the United
States of America in each case located in the County of New York for any
Litigation arising out of or relating to this Agreement and the transactions
contemplated hereby (and agrees not to commence any Litigation relating thereto
except in such courts), and further agrees that service of any process, summons,
notice or document by U.S. registered mail to its respective address set forth
in Section 13.11 shall be effective service of process for any Litigation
brought against it in any such court. Each of the parties hereto hereby
irrevocably and unconditionally waives any objection to the laying of venue of
any Litigation arising out of this Agreement or the transactions contemplated
hereby in the courts of the State of New York or the United States of America in
each case located in the County of New York and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such Litigation brought in any such court has been brought in an
inconvenient forum.
13.8. SUCCESSORS AND ASSIGNS. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties hereto; PROVIDED, HOWEVER, that this
Agreement may not be assigned by Purchaser or Parent without the prior written
consent of Seller except that Purchaser may, at its election, assign this
Agreement to a direct or indirect wholly-owned subsidiary so long as (a) the
representations and warranties of Purchaser made herein are equally true of such
assignee and (b) such assignment does not have any adverse consequences to
Seller or any of its affiliates (including, without limitation, any adverse tax
consequences or any adverse effect on the ability of Seller to timely consummate
the transactions contemplated hereby), but no such assignment of this Agreement
or any of the rights or obligations hereunder shall relieve Purchaser of any of
its obligations under this Agreement. Such
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assignee shall execute a counterpart of this Agreement agreeing to be bound by
the provisions hereof as "Purchaser," and agreeing to be jointly and severally
liable with Purchaser and any other assignee for all of the obligations of the
assignor hereunder.
13.9. PUBLICITY. No public release or announcement concerning the
transactions contemplated hereby shall be issued by any party without the prior
consent of the other party (which consent shall not be unreasonably withheld),
except as such release or announcement may be required by law or the rules or
regulations of any United States or foreign securities exchange, in which case
the party required to make the release or announcement shall give the other
party notice in advance of such issuance.
13.10. 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 shall 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 adverse manner to
any party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall 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.
13.11. NOTICES. Any notice, request, instruction or other document to
be given hereunder by any party hereto to any other party shall be in writing
and shall be given (and will be deemed to have been duly given upon receipt) by
delivery in person, by electronic facsimile transmission, cable, telegram, telex
or other standard forms of written telecommunications, by overnight courier or
by registered or certified mail, postage prepaid:
(a) If to Seller, to:
Insilco Corporation
425 Metro Place North
Fifth Floor
Dublin, Ohio 43017
Attention: Kenneth H. Koch
Vice President and General Counsel
Telecopy: (614) 791-3195
with a copy to:
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004
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Attention: Aviva Diamant
Telecopy: (212) 859-4000
(b) If to Purchaser or Parent, to:
Newell Co.
One Millington Road
Beloit, Wisconsin 53512-0117
Attention: William T. Alldredge
Vice President - Finance
Telecopy: (608) 365-3453
and
Newell Co.
4000 Auburn Street
Rockford, Illinois 61125
Attention: Dale L. Matschullat
Vice President - General Counsel
Telecopy: (815) 969-6106
with a copy to:
Schiff Hardin & Waite
7200 Sears Tower
Chicago, Illinois 60606
Attention: Stuart L. Goodman
Telecopy: (312) 258-5600
or at such other address for a party as shall be specified by like notice.
13.12. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute but one and the same agreement.
13.13. 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 shall 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 shall be understood to be followed
by the words "without limitation." The inclusion of a dollar amount with respect
to any representation, warranty, covenant or agreement contained herein shall
not be deemed an admission that such amount is a Material amount.
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Whenever used in this Agreement, the knowledge of Seller shall mean the actual
knowledge of the persons listed on Schedule 13.13A and the knowledge of
Purchaser or Parent shall mean the actual knowledge of the persons listed on
Schedule 13.13B.
13.14. AMENDMENT. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties.
13.15. EXTENSION; WAIVER. At any time the parties may extend the time
for the performance of any of the obligations or other acts of the other party,
waive any inaccuracies in the representations and warranties contained in this
Agreement 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 shall be valid only if set forth in an instrument signed on
behalf of such party. The waiver by any party hereto of a breach of any
provision hereunder shall not operate to be construed as a waiver of any prior
or subsequent breach of the same or any other provision hereunder.
13.16. INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first written above.
INSILCO CORPORATION
By: /s/ Kenneth H. Koch
---------------------------------
Name: Kenneth H. Koch
Title: Vice President and General Counsel
ROLODEX CORPORATION
By: /s/ Kenneth H. Koch
---------------------------------
Name: Kenneth H. Koch
Title: Vice President and General Counsel
NEWELL CO.
By /s/ Dale L. Matschullat
---------------------------------
Name: Dale L. Matschullat
Title: Vice President - General Counsel
STERLING PLASTICS CO.
By: /s/ Dale L. Matschullat
---------------------------------
Name: Dale L. Matschullat
Title: Vice President - General Counsel
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The undersigned hereby agrees to be bound by the provisions of Section 12.4(e)
of the foregoing Agreement effective as of the Closing, as though the
undersigned were an original signatory thereto.
ROLODEX DE PUERTO RICO, INC.
By: /s/ Kenneth H. Koch
------------------------------
Name: Kenneth H. Koch
Title: Vice President and General Counsel
51
<PAGE> 1
Exhibit 20
Excellence in Electronics, Telecommunications, Automotive, Publishing
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NEWS RELEASE
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FOR IMMEDIATE RELEASE CONTACT: DAVID A. KAUER
TREASURER
(614) 792-0468
INSILCO CORPORATION COMPLETES SALE OF ROLODEX
COLUMBUS, OHIO, MARCH 5, 1997 -- INSILCO CORPORATION (NASDAQ:INSL)
announced today that it has completed the previously announced sale of its
Rolodex business unit to NEWELL CO. (NYSE:NWL) for $117 million, less
transaction costs.
Rolodex, with 1996 revenues of $68 million, is headquartered in
Secaucus, New Jersey, and markets office products including card files, personal
organizers and paper punches. Newell, with 1996 revenues of $2.9 billion, is
headquartered in Freeport, Illinois, and makes and sells consumer housewares,
office products, hardware and tools, and home furnishings.
The Company commented that the completion of this transaction, coupled
with the sale of the Company's computer accessories business and the Rolodex
electronics product line in 1996, furthers Insilco's strategy to focus on its
core businesses. The Company also commented that it is continuing its
examination of various alternatives for the use of the Rolodex proceeds,
including a possible one-time distribution to shareholders, or a repurchase of
shares.
Insilco Corporation, based in suburban Columbus, Ohio, with 1996
revenues of $572 million, is a diversified manufacturer of industrial components
and a supplier of specialty publications. The Company's industrial business
units serve the automotive, electronics, telecommunications and other industrial
markets, and its publishing business serves the school yearbook market.
Investor Relations Contact: David A. Kauer, (614) 792-0468 or write to
Insilco Corporation, Investor Relations, 425 Metro Place North, Box 7196,
Dublin, OH 43017 or call Melodye Demastus, Melrose Consulting (614) 771- 0860.
