EXHIBIT 10.61
================================================================================
STOCK AND ASSET PURCHASE AGREEMENT
AMONG
BEL FUSE LTD.,
BEL FUSE MACAU, L.D.A.
BEL CONNECTOR INC. AND
BEL TRANSFORMER INC.,
AND
INSILCO TECHNOLOGIES, INC.
AND
CERTAIN OF ITS SUBSIDIARIES
SET FORTH ON THE SIGNATURE PAGES HERETO
DATED AS OF DECEMBER 15, 2002
================================================================================
TABLE OF CONTENTS
-----------------
Page
----
EXECUTION COPY
--------------
ARTICLE I
DEFINITIONS
Section 1.1 Definitions.............................................................................i
Section 1.2 Construction...........................................................................xi
ARTICLE II
PURCHASE AND SALE
Section 2.1 Purchase and Sale of the Shares.......................................................xii
Section 2.2 Purchase and Sale of Assets...........................................................xii
Section 2.3 Excluded Assets........................................................................xv
Section 2.4 Assumed Liabilities...................................................................xvi
Section 2.5 Excluded Liabilities.................................................................xvii
Section 2.6 Assumption of Certain Leases and Other Contracts.....................................xvii
ARTICLE III
PURCHASE PRICE
Section 3.1 Purchase Price........................................................................xix
Section 3.2 Purchase Price Adjustment.............................................................xix
ARTICLE IV
THE CLOSING
Section 4.1 Time and Place of Closing............................................................xxii
Section 4.2 Deliveries by the Sellers............................................................xxii
Section 4.3 Deliveries by the Buyers............................................................xxiii
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE SELLERs
Section 5.1 Organization; Qualification of the Sellers...........................................xxiv
Section 5.2 Authority Relative to this Agreement.................................................xxiv
Section 5.3 Organization, Authority and Qualification of the Foreign Corporations.................xxv
Section 5.4 Capitalization; Ownership of Shares...................................................xxv
Section 5.5 Consents and Approvals; No Violation...............................................xxviii
Section 5.6 Financial Statements and Reports.....................................................xxix
Section 5.7 Title to Assets......................................................................xxix
Section 5.8 Owned Real Property...................................................................xxx
Section 5.9 Leased Real Property.................................................................xxxi
Section 5.10 Environmental Matters............................................................xxxii
Section 5.11 ERISA; Benefit Plans............................................................xxxiii
Section 5.12 Certain Contracts and Arrangements..............................................xxxvii
Section 5.13 Legal Proceedings and Judgments.................................................xxxvii
Section 5.14 Permits.........................................................................xxxvii
Section 5.15 Compliance with Laws...........................................................xxxviii
Section 5.16 Taxes..........................................................................xxxviii
Section 5.17 Intellectual Property............................................................xxxix
Section 5.18 Labor and Employment Matters........................................................xl
Section 5.19 Absence of Certain Developments....................................................xli
Section 5.20 Brokers............................................................................xli
Section 5.21 Accounts Receivable................................................................xli
Section 5.22 Inventory..........................................................................xli
Section 5.23 Insurance.........................................................................xlii
Section 5.24 Customers and Suppliers...........................................................xlii
Section 5.25 Operating Names...................................................................xlii
Section 5.26 Overlapping Assets................................................................xlii
Section 5.27 Exhibits & Schedules..............................................................xlii
Section 5.28 Disclaimer of Other Representations and Warranties...............................xliii
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE BUYER
Section 6.1 Organization........................................................................xliii
Section 6.2 Authority Relative to this Agreement................................................xliii
Section 6.3 Consents and Approvals; No Violation................................................xliii
Section 6.4 Legal Proceedings and Judgments......................................................xliv
Section 6.5 Buyers' Financing....................................................................xliv
Section 6.6 Investment Purpose...................................................................xliv
ARTICLE VII
COVENANTS OF THE PARTIES
Section 7.1 Conduct of Business...............................................................xliv
Section 7.2 Access to Information; Maintenance of Records.....................................xlvi
Section 7.3 Expenses........................................................................xlviii
Section 7.4 Further Assurances..............................................................xlviii
Section 7.5 Public Statements.................................................................xlix
Section 7.6 Governmental Authority Consents and Approvals.....................................xlix
Section 7.7 Tax Matters..........................................................................l
Section 7.8 Employees..........................................................................lii
Section 7.9 Litigation Support.................................................................liv
Section 7.10 Notification.....................................................................lv
Section 7.11 Submission for Bankruptcy Court Approval.........................................lv
Section 7.12 Overbid Procedures...............................................................lv
Section 7.13 Collection of Receivables.......................................................lix
Section 7.14 Overlapping Assets..............................................................lix
ii
Section 7.15 Mail Received After the Closing....................................................lix
Section 7.16 Guarantees.........................................................................lix
Section 7.17 Sellers Guarantees.................................................................lix
Section 7.18 ▇▇▇▇ Rock Facility..................................................................lx
ARTICLE VIII
CONDITIONS TO CLOSING
Section 8.1 Conditions to Each Party's Obligations to Effect the Closing........................lx
Section 8.2 Conditions to Obligations of the Buyers.............................................lx
Section 8.3 Conditions to Obligations of the Sellers..........................................lxii
ARTICLE IX
TERMINATION AND ABANDONMENT
Section 9.1 Termination......................................................................lxiii
Section 9.2 Procedure and Effect of Termination...............................................lxiv
Section 9.3 Liquidated Damages.................................................................lxv
Section 9.4 Extension; Waiver.................................................................lxvi
ARTICLE X
MISCELLANEOUS PROVISIONS
Section 10.1 Amendment and Modification.....................................................lxvi
Section 10.2 Waiver of Compliance; Consents....................................................lxvi
Section 10.3 Survival..........................................................................lxvi
Section 10.4 No Impediment to Liquidation......................................................lxvi
Section 10.5 Notices..........................................................................lxvii
Section 10.6 Assignment.......................................................................lxvii
Section 10.7 Third-Party Beneficiaries.......................................................lxviii
Section 10.8 Severability....................................................................lxviii
Section 10.9 Governing Law...................................................................lxviii
Section 10.10 Submission to Jurisdiction......................................................lxviii
Section 10.11 Counterparts....................................................................lxviii
Section 10.12 Incorporation of Exhibits.........................................................lxix
Section 10.13 Entire Agreement..................................................................lxix
Section 10.14 Headings..........................................................................lxix
Section 10.15 Remedies..........................................................................lxix
Section 10.16 Bulk Sales or Transfer Laws.......................................................lxix
Section 10.17 WAIVER OF JURY TRIAL..............................................................lxix
EXHIBITS
--------
Exhibit A Assumed Agreements
Exhibit B Form of Assumption Agreement
Exhibit C Form of ▇▇▇▇ of Sale
Exhibit D Form of Bid Procedures Order
iii
Exhibit E Form of Approval Order
Exhibit F Form of Escrow Agreement
Exhibit G Form of Non-Competition Agreement
Exhibit H Form of Intellectual Property Assignment
Exhibit I-1 Form of Notice to Non-Bargaining Unit Employee
Exhibit I-2 Form of Notice to Chief Elected Officer of Each Labor
Organization
Exhibit I-3 Form of Notice to State Dislocated
Workers Unit
Exhibit I-4 Form of Notice to Chief Elected Official of Unit of Local
Government
Exhibit I-5 Form of WARN Cover Letter--PA and NY
Exhibit I-6 Form of WARN Cover Letter--CA Exhibit J Form of Share
Transfer and Assignment Agreement
DISCLOSURE SCHEDULE
-------------------
The Disclosure Schedule shall include the following Schedules:
2.3(d) Excluded Assets--Claims 2.3(f) Additional Excluded Assets
5.4(a) Capitalization; Ownership of Shares--Insilco Technologies Germany
5.4(b) Capitalization; Ownership of Shares--Top East
5.4(c) Capitalization; Ownership of Shares--▇▇▇▇▇▇▇ Connector Mexico
5.4(d) Capitalization; Ownership of Shares--ITI
5.4(e) Capitalization; Ownership of Shares--Sempco
5.4(f) Capitalization; Ownership of Shares--Signal Dominicana
5.4(g) Capitalization; Ownership of Shares--Signal Transformer Mexico
5.6(a) Financial Statements and Reports
5.8(a) Owned Real Property--List
5.8(b) Owned Real Property--Violations
5.8(d) Owned Real Property--Condemnation, Etc.
5.8(e) Owned Real Property--Other Violations
5.9(a) Leased Real Property--List
5.9(b) Leased Real Property--Leases and Subleases
5.10 Environmental Matters
5.11(a) ERISA; Benefit Plans--List
5.11(b) ERISA; Benefit Plans--Qualification
5.11(c) ERISA; Benefit Plans--Multi-employer Plans
5.11(f) ERISA; Benefits Plans--Reportable Events
5.11(g) ERISA; Benefit Plans--Sponsored Plans
5.11(h) ERISA; Benefit Plans--Obligations to Contribute to Multi-employer Plans
5.11(j) ERISA; Benefit Plans--Welfare Plans
5.11(k) ERISA; Benefit Plans--Obligations
5.11(m) ERISA; Benefit Plans--Other Obligations or Liabilities
5.11(o) ERISA; Benefit Plans--Foreign Plans
5.11(p) ERISA; Benefit Plans--Non-resident Beneficiaries
5.11(t) ERISA; Benefit Plans--Contributions
5.11(u) ERISA; Benefit Plans--Commitments to Create Plans
5.11(v) ERISA; Benefit Plans--Closings and Layoffs
iv
5.12 Certain Contracts and Arrangements
5.13 Legal Proceedings and Judgments
5.14 Permits
5.16 Taxes
5.17(a) Intellectual Property Rights--Copyrights, Patent Rights and Trademarks
5.17(b) Intellectual Property Rights--License Agreements
5.17(c) Intellectual Property Rights--Exceptions
5.18(a) Labor and Employment Matters--Collective Bargaining Agreements
5.18(b) Labor and Employment Matters--Employees; Policies and Manuals
5.23 Insurance
5.25 Operating Names
5.26 Overlapping Assets
7.1(a) Conduct of Business
7.1(b) Conduct of Business
v
STOCK AND ASSET PURCHASE AGREEMENT
This Stock and Asset Purchase Agreement (this "Agreement") is made as
of December 15, 2002 by and among Insilco Technologies, Inc., a Delaware
corporation ("Insilco"), ▇▇▇▇▇▇▇ Connector Systems, Inc., a Pennsylvania
corporation, InNet Technologies, Inc., a California corporation, Insilco
International Holdings, Inc., a Delaware corporation, Signal Caribe, Inc., a
Delaware corporation, Eyelets for Industry, Inc., a Connecticut corporation,
▇▇▇▇▇▇▇ Stamping Corp., a Delaware corporation, and Signal Transformer Co.,
Inc., a Delaware corporation, (each, a "Selling Subsidiary"; and, collectively
with Insilco, the "Sellers" and each of the Sellers, a "Seller"), Bel Fuse Ltd.,
a Hong Kong corporation, Bel Fuse Macau, L.D.A., a Macau corporation, Bel
Connector Inc., a Delaware corporation, and Bel Transformer Inc., a Delaware
corporation, (each, a "Buyer"; and, collectively, the "Buyers").
WHEREAS, Insilco and the Selling Subsidiaries own all the issued and
outstanding equity securities (the "Shares") of each of Insilco Technologies
GmbH, a German corporation ("Insilco Technologies Germany"), ▇▇▇▇▇▇▇ Connector
Systems de Mexico, S.A. de C.V., a Mexican corporation ("▇▇▇▇▇▇▇ Connector
Mexico"), Top East Corporation Limited, a Hong Kong corporation ("Top East"),
Insilco Technologies International, a Hong Kong corporation ("ITI"), Sempco,
S.A. de C.V., a Mexican corporation ("Sempco"), Signal Transformer Mexicana,
S.A. de C.V., a Mexican corporation ("Signal Transformer Mexico"), and Signal
Dominicana, S.A., a Dominican Republic corporation ("Signal Dominicana"; and,
collectively with Insilco Technologies Germany, ▇▇▇▇▇▇▇ Connector Mexico, Top
East, ITI, Sempco and Signal Transformer Mexico, the "Foreign Corporations" and
each of the Foreign Corporations, a "Foreign Corporation");
WHEREAS, the Sellers, directly and through the Foreign Corporations,
are engaged in the Business (as defined herein) at various locations around the
world; and
WHEREAS, the Sellers wish to sell to the Buyers, and the Buyers wish to
purchase from the Sellers, the Business, including the Shares and the Purchased
Assets (as defined herein), and in connection therewith the Buyers are willing
to assume from the Sellers all of the Assumed Liabilities (as defined herein),
all upon the terms and subject to the conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements hereinafter set forth, intending to
be legally bound hereby and subject to the approval of the Bankruptcy Court as
provided for herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. (a) As used in this Agreement, the following
terms have the meanings specified in this Section 1.1(a).
"Accounts Payable" means (i) any and all accounts payable and current
liabilities which (A) arise after the Petition Date and (B) are owed by the
Business to third parties and (ii) any
accounts payable which (A) arise on or before the Petition Date and (B) are owed
by the Foreign Corporations to third parties, together (in all cases) with any
interest or unpaid financing charges accrued thereon.
"Accounts Receivable" means any and all accounts receivable, notes
receivable and other amounts receivable owed to the Business, together with any
interest or unpaid financing charges accrued thereon.
"Affiliate" means, with respect to any specified Person, any other
Person that directly, or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, such specified
Person.
"Ancillary Agreements" means the ▇▇▇▇ of Sale, the Assumption
Agreement, the Non-Competition Agreement, the Escrow Agreement and the
Intellectual Property Assignment.
"Approval Order" means an order or orders entered by the Bankruptcy
Court, to be submitted by the Sellers substantially in the form and substance of
the order attached hereto as Exhibit E approving this Agreement and the
Ancillary Agreements and all of the terms and conditions hereof and thereof, and
approving and authorizing the Sellers to consummate the transactions
contemplated hereby, including the sale of the Purchased Assets to the Buyers
pursuant to Sections 363(b) and 363(f) of the Bankruptcy Code free and clear of
all Encumbrances (other than Closing Encumbrances) and the sale of the Shares to
the Buyers pursuant to Sections 363(b) and 363(f) of the Bankruptcy Code free
and clear of all Encumbrances and authorizing the assumption and assignment of
the Assumed Agreements pursuant to Section 365 of the Bankruptcy Code.
"Assumed Agreements" means any contract, agreement, real or personal
property lease, commitment, understanding or instrument which primarily relates
to the Business, the Shares or the Purchased Assets and which is listed on
Exhibit A attached hereto.
"Assumption Agreement" means the assumption agreement to be executed
and delivered by the Buyers and the Sellers at the Closing, such agreement to be
substantially in the form and substance of Exhibit B attached hereto.
"Audit Accountant" means PricewaterhouseCoopers LLP.
"Bankruptcy Code" means Title 11 of the United States Code, 11 U.S.C.
▇▇.▇▇. 101, et seq.
"Bankruptcy Court" means the United States Bankruptcy Court for the
Southern District of New York or such other court having competent jurisdiction
over the Chapter 11 Cases.
"Bid Procedures Order" means an order or orders entered by the
Bankruptcy Court to be submitted by the Sellers substantially in the form and
substance of the order attached hereto as Exhibit D approving (i) the form and
manner of the notice of sale of assets contemplated by this Agreement, (ii)
bidding procedures, (iii) termination fees payable to the Buyers and (iv)
expense reimbursement in favor of the Buyers.
ii
"▇▇▇▇ of Sale" means the ▇▇▇▇ of sale to be executed and delivered by
the Sellers at the Closing, such ▇▇▇▇ of sale to be substantially in the form
and substance of Exhibit C attached hereto.
"Business" means the Seller Parties' passive components business (as
such business is generally described in Insilco Holding Co.'s Annual Report on
Form 10-K for the year ended December 31, 2001, as such description may have
changed in subsequent filings made by Insilco Holding Co. with the SEC prior to
the date hereof or as such description may change to reflect the transactions
contemplated hereby), including, without limitation, as conducted from the
Business Real Properties described in Schedule 5.8(a) and Schedule 5.9(a) of the
Disclosure Schedule, whether conducted under the name of Insilco or the name of
any of the Affiliates of Insilco.
"Business Day" means any day that is not a Saturday, Sunday or other
day on which banks are required or authorized by law to be closed in The City of
New York.
"Business Real Properties" means the Leased Real Property and the Owned
Real Property.
"Buyers' Representatives" means the Buyers' accountants, employees,
counsel, financial advisors and other authorized representatives.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended through the Closing Date.
"Chapter 11 Cases" means the Sellers' cases commenced under Chapter 11
of the Bankruptcy Code.
"Closing Encumbrances" means (i) statutory liens for current Taxes or
assessments not yet due or delinquent or the validity or amount of which is
being contested in good faith by appropriate proceedings, (ii) zoning,
entitlement, conservation restriction and other land use and environmental
regulations by governmental authorities which, individually or in the aggregate,
do not materially interfere with the present use or operation or materially
impact the value of the Purchased Assets or the Business, (iii) all exceptions,
restrictions, easements, charges, rights-of-way and other Encumbrances set forth
in any state, local or municipal franchise under which the Business is conducted
which, individually or in the aggregate, do not materially interfere with the
present use or operation or materially impact the value of the Purchased Assets
or the Business, and (iv) such other liens, imperfections in or failure of
title, charges, easements, rights-of-way, encroachments, exceptions,
restrictions and encumbrances which, when considered with the items referred to
in clauses (i), (ii) and (iii), do not materially interfere with the present use
or operation of the Purchased Assets or the Business or materially impact the
value of the Purchased Assets or the Business and neither secure indebtedness or
the payment of the deferred purchase price of property nor individually or in
the aggregate create a Material Adverse Effect.
"COBRA" means the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended and set forth in Section 4980B of the Code and Part 6 of
Subtitle B of Title I of ERISA.
iii
"Code" means the Internal Revenue Code of 1986 (and the regulations
thereunder), as amended.
"Confidential Information" means the Information (as defined in the
Confidentiality Agreement) furnished to the Buyers' Representatives pursuant to
the Confidentiality Agreement and subject to the confidentiality provisions
thereof, and the confidential information relating to the Buyers provided to the
Sellers by the Buyers.
"Confidentiality Agreement" means the Confidentiality Agreement, dated
as of April 24, 2002, between Insilco Holding Co. and Bel Fuse, Inc.
"Copyrights" means all United States and foreign copyrights, whether
registered or unregistered, and pending applications to register the same, to
the extent that such copyrights and applications are owned by the Sellers and
primarily used in the Business.
"Creditors' Committee" means the official committee of unsecured
creditors appointed in connection with the Chapter 11 Cases.
"Disclosure Schedule" means the disclosure schedule attached hereto,
dated as of the date hereof, and forming a part of this Agreement.
"Employee Plan" means each employee benefit plan, program, arrangement
or contract (including, without limitation, any "employee benefit plan," as
defined in Section 3(3) of ERISA) maintained, sponsored, contributed to or
required to be contributed to by any Seller Party or any ERISA Affiliate for the
benefit of any current or former employee, officer or director thereof engaged
in the Business in the United States.
"Employee Records" means all existing personnel files related to
employees and former employees of the Business.
"Encumbrances" means any mortgages, pledges, liens, claims (as defined
in Section 101(5) of the Bankruptcy Code), charges, security interests,
conditional and installment sale agreements, activity and use limitations,
conservation easements, deed restrictions, encumbrances and charges of any kind.
"Environmental Laws" means all foreign, federal, state and local laws,
statutes, regulations, rules, ordinances, codes, decrees, judgments, or judicial
or administrative orders (i) relating to pollution (or the assessment,
investigation or cleanup thereof or the filing of information with respect
thereto), human health as such relates to exposure to Hazardous Substances, or
the protection of air, surface water, ground water, drinking water supply, land
(including land surface or subsurface), plant and animal life or any other
natural resource or (ii) concerning exposure to, or the use, storage, recycling,
treatment, generation, transportation, processing, handling, labeling,
production or disposal of Hazardous Substances, in each case as amended through
the Closing Date. The term "Environmental Laws" includes: (A) CERCLA, the Clean
Air Act, 42 U.S.C.A. ▇▇.▇▇. 7401, et seq., the Clean Water Act, 33 U.S.C.A.
▇▇.▇▇. 1251, et seq., the Solid Waste Disposal Act (including the Resource
Conservation and Recovery Act of 1976 and the Hazardous and Solid Waste
Amendments of 1984), 42 U.S.C.A. ▇▇.▇▇. 6901, et seq., the Toxic Substances
Control Act, 15 U.S.C.A. ▇▇.▇▇. 2601, et seq., the Federal Insecticide,
iv
Fungicide, and Rodenticide Act, 7 U.S.C.A. ▇▇.▇▇. 136, et seq., the Emergency
Planning and Community Right-To-Know Act of 1986, 42 U.S.C.A. ▇▇.▇▇. 11001, et
seq., and the Occupational Safety and Health Act of 1970 (as such Act relates to
exposure to Hazardous Substances), 29 U.S.C.A. ▇▇.▇▇. 51, et seq., each as
amended through the Closing Date; and (B) any common law (including negligence,
nuisance, trespass and strict liability) that may impose liability or
obligations for injuries or damages due to the presence of, exposure to, or
ingestion of, any Hazardous Substance.
"ERISA" means the Employee Retirement Income Security Act of 1974, and
the regulations thereunder, as amended.
"ERISA Affiliate" means any entity required to be aggregated with any
Selling Party under Section 414 of the Code or Section 4001 of ERISA.
"Escrow Agent" means Bank of New York or such other financial
institution as shall be mutually acceptable to Insilco and the Buyers.
"Escrow Agreement" means an escrow agreement to be executed and
delivered by the Sellers, the Buyers and the Escrow Agent at the Closing, such
agreement to be substantially in the form and substance of Exhibit F attached
hereto.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Excluded Subsidiaries" means all Subsidiaries of the Sellers other
than the Selling Subsidiaries and the Foreign Corporations.
"▇▇▇▇ Rock Agreement" means the Installment Sales Agreement, as
amended, between York County Industrial Development Corporation, a Pennsylvania
nonprofit corporation, and ▇▇▇▇▇▇▇ Connector Systems, Inc., a Pennsylvania
corporation, dated May 26, 1988.
"▇▇▇▇ Rock Property" means that property which is the subject of the
▇▇▇▇ Rock Agreement.
"Governmental Authority" means any United States or non-United States
federal, state, provincial, local or similar governmental, administrative or
regulatory authority, department, agency, commission or body, or judicial or
arbitral body.
"Hazardous Substances" means (i) any petrochemical or petroleum
products, oil, coal tar, or coal ash, radioactive materials, radon gas, asbestos
in any form that is or could become friable, urea formaldehyde foam insulation
or polychlorinated biphenyls, and (ii) any chemicals, materials or substances
defined as or included in the definition of "hazardous substances," "solid
wastes," "hazardous wastes," "hazardous materials," "restricted hazardous
materials," "extremely hazardous substances," "toxic substances," "contaminants"
or "pollutants" under any applicable Environmental Law.
"Intellectual Property" means all of the following property, rights or
interest owned by the Seller Parties, used primarily in the Business in any
jurisdiction throughout the world: (i) Patent Rights, (ii) Trademarks,
technology, product drawings, computer software (other than off-
v
the-shelf commercially available software), corporate names and data and
documentation (including electronic media), together with all goodwill
associated with each of the foregoing, (iii) Copyrights and copyrightable works,
(iv) registrations and applications for any of the foregoing and (v) trade
secrets, know-how, customer lists and confidential information; provided that
Intellectual Property shall not include the "Insilco" name, or any names similar
thereto, or logos or Trademarks related thereto.
"Intellectual Property Assignment" means an intellectual property
assignment to be executed and delivered by the Sellers and the Buyers at the
Closing, such assignment to be substantially in the form and substance of
Exhibit H attached hereto.
"Knowledge" means, as to a particular matter, the actual knowledge of
(i) with respect to the Buyers, the chief executive officer, the chief financial
officer and/or the general counsel, in each case, of Bel Fuse, Ltd., in each
case without independent investigation and (ii) with respect to the Sellers, the
chief executive officer, the chief financial officer and/or the general counsel,
in each case, of Insilco Holding Co., in each case without independent
investigation.
"Law" means any foreign or domestic federal, state, provincial, county,
municipal or local law, statute, ordinance, rule, regulation, directive, order,
writ, decree, injunction, judgment, stay, restraining order, permit, license,
registration, code, requirement or requirement of any Governmental Authority.
"Leased Real Property" means the real property leased or sub-leased by
the Seller Parties, as tenant or sub-tenant, that is primarily related to the
Business, together with, to the extent leased or sub-leased by the Seller
Parties primarily in connection with the Business, all buildings and other
structures, facilities or improvements currently or hereafter located thereon,
all fixtures, systems, equipment and items of personal property of the Seller
Parties (primarily related to the Business) attached or appurtenant thereto and
all easements, licenses, rights and appurtenances relating to the foregoing.
"Liability" means any debts, liabilities and obligations, whether
accrued or fixed, absolute or contingent, mature or unmature or determined or
determinable.
"Loss" means all Liabilities, losses, damages, claims, costs and
expenses, interest, awards, judgments and penalties (including, without
limitation, attorneys' and consultants' fees and expenses).
"Material Adverse Effect" means any change or changes in, or effect on,
the Business or the Purchased Assets that individually is, or in the aggregate
are, reasonably likely (i) to be materially adverse to the assets, business,
financial condition or results of operations of the Business, taken as a whole,
or (ii) to be materially adverse to the condition of the Purchased Assets and
the assets of the Foreign Corporations, taken as a whole, taking into account
the Sellers' status as a debtor under Chapter 11 of the Bankruptcy Code, other
than (i) any change or effect in any way resulting from or arising in connection
with the Chapter 11 Cases or this Agreement or any of the transactions
contemplated hereby (including any announcement with respect to the Chapter 11
Cases or this Agreement or any of the transactions contemplated hereby), (ii)
changes in (A) economic, regulatory or political conditions generally or (B)
general
vi
business, regulatory or economic conditions relating to any industries in which
the Sellers participates or (iii) any change in or effect on the Purchased
Assets or the Business which is cured (including by the payment of money) by
Insilco or any of its Affiliates before the Termination Date.
"Non-Competition Agreement" means a non-competition agreement to be
executed and delivered by the Sellers at the Closing, such agreement to be
substantially in the form and substance of Exhibit G attached hereto.
"Owned Real Property" means the real property owned by the Sellers that
is primarily related to the Business, together with all buildings and other
structures, facilities or improvements currently or hereafter located thereon,
all fixtures, systems, equipment and items of personal property of the Sellers
(primarily related to the Business) attached or appurtenant thereto and all
easements, licenses, rights and appurtenances relating to the foregoing.
"Patent Rights" means United States and foreign patents, patent
applications, including provisional applications, continuations,
continuations-in-part, divisions, reissues, patent disclosures, and inventions
(whether or not patentable or reduced to practice) or improvements thereto owned
by the Seller Parties and primarily used in the Business.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permitted Encumbrances" means (i) statutory liens for current Taxes or
assessments not yet due or delinquent or the validity or amount of which is
being contested in good faith by appropriate proceedings, (ii) mechanics',
carriers', workers', repairers' and other similar liens arising or incurred in
the ordinary course of business relating to obligations as to which there is no
default on the part of the Seller Parties or the validity or amount of which is
being contested in good faith by appropriate proceedings, or pledges, deposits
or other liens securing the performance of bids, trade contracts, leases or
statutory obligations (including workers' compensation, unemployment insurance
or other social security legislation), (iii) zoning, entitlement, conservation
restriction and other land use and environmental regulations by governmental
authorities which, individually or in the aggregate, do not materially interfere
with the present use or operation of the Purchased Assets or the Business, (iv)
all exceptions, restrictions, easements, charges, rights-of-way and other
Encumbrances set forth in any state, local or municipal franchise under which
the Business is conducted which, individually or in the aggregate, do not
materially interfere with the present use or operation of the Purchased Assets
or the Business, (v) liens existing under the Prepetition Credit Agreement and
(vi) such other liens, imperfections in or failure of title, charges, easements,
rights-of-way, encroachments, exceptions, restrictions and encumbrances which do
not materially interfere with the present use or operation of the Purchased
Assets or the Business or materially impact the value of the Purchased Assets or
the Business and neither secure indebtedness or the payment of the deferred
purchase price of property, nor individually or in the aggregate create a
Material Adverse Effect.
"Person" means any individual, corporation, partnership, limited
partnership, limited liability company, syndicate, group, trust, association or
other organization or entity or government, political subdivision, agency or
instrumentality of a government.
vii
"Petition Date" means the date on which the Sellers file voluntary
petitions under Chapter 11 of the Bankruptcy Code, which shall be a date not
later than five (5) Business Days after the date of this Agreement.
"Pre-Closing Tax Period" means: (i) any Tax period ending on or before
the Closing Date; and (ii) with respect to a Tax period that commences before
but ends after the Closing Date, the portion of such period up to and including
the Closing Date.
"Prepetition Agent" means Bank One, NA.
"Prepetition Credit Agreement" means the Second Amended and Restated
Credit Agreement dated as of August 25, 2000, by and among Insilco, T.A.T.
Technology Inc., various financial institutions as lenders and Bank One, N.A. as
administrative agent.
"Sale Hearing" means the hearing at which the Bankruptcy Court
considers entry of the Approval Order.
"SEC" means the United States Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Seller Parties" means the Sellers and the Foreign Corporations.
"Seller Party" means a Seller or a Foreign Corporation.
"Sellers' Representatives" means the Sellers' accountants, employees,
counsel, financial advisors and other authorized representatives.
"Share Transfer and Assignment Agreement" means a share transfer and
assignment agreement to be executed and delivered on behalf of the
shareholder(s) of Insilco Technologies Germany and one of the Buyers at the
Closing, such agreement to be substantially in the form and substance of Exhibit
J attached hereto.
"Subsidiary" means, with respect to any Person, any corporation or
other entity of which the outstanding securities or equity interests having
ordinary voting power to elect a majority of the board of directors or other
Persons performing similar functions of such Person, corporation or other entity
are owned directly or indirectly by such other Person.
"Tax" or "Taxes" means all taxes, charges, fees, duties, levies,
penalties or other assessments of any kind or nature imposed by any Governmental
Authority, including income, net or gross receipts, excise, personal and real
property, sales, gain, use, license, custom duty, unemployment, capital stock,
transfer, franchise, payroll, withholding, social security, minimum estimated,
profit, gift, severance, value added, disability, premium, recapture, credit,
occupation, service, leasing, employment, stamp, add-on minimum, alternative,
intangible and other taxes, including interest, penalties or additions
attributable thereto or attributable to any failure to comply with any
requirement regarding Tax Returns.
viii
"Tax Return" means any return, report, claim for refund, information
return, declaration or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof, to be filed (whether on
a mandatory or elective basis) with any Governmental Authority.
"Trademarks" means all United States, state and foreign trademarks,
service marks, logos, trade dress, trade names and Internet domain names
(including all assumed or fictitious names under which the Business is
conducting its business or has within the previous five (5) years conducted its
business), whether registered or unregistered, and pending applications to
register the foregoing, owned by the Seller Parties and primarily used in the
Business.
"U.S. GAAP" means United States generally accepted accounting
principles in effect from time to time applied consistently throughout the
periods involved.
"WARN Act" means the Worker Adjustment and Retraining Notification Act
of 1988 (or any state or local equivalent), as amended.
(b) Each of the terms set forth below shall have the meaning ascribed thereto in
the following section:
Definition Location
---------- --------
"Accounts" ss. 5.24
--------
"Accounts Payable Amount" ss. 3.2(c)
-----------------------
"Accounts Receivable Amount" ss. 3.2(c)
--------------------------
"Affected Property" ss. 5.10(h)
-----------------
"Agreement" Preamble
---------
"Allocation" ss. 7.7(e)
----------
"Arbiter" ss. 3.2(d)
-------
"Assumed Liabilities" ss. 2.4
-------------------
"Auction" ss. 7.12(b)
-------
"Auction Date" ss. 7.12(b)
------------
"Auction Sale" ss. 7.12(c)
------------
"Audited Financial Statements" ss. 8.2(i)
----------------------------
"Backup Bid" ss. 7.12(a)(iii)
----------
"Backup Bidder" ss. 7.12(a)(iii)
-------------
"Balance Sheet" ss. 5.6(a)
-------------
"Benchmark Working Capital Amount" ss. 3.2(e)
--------------------------------
"Bid Deadline" ss. 7.12(a)(i)
------------
"Buyer(s)" Preamble
--------
"Buyers' Overlapping Assets" ss. 5.26
--------------------------
"Cash Price" ss. 3.1
----------
"Cause" ss. 7.8(j)
-----
"Closing" ss. 4.1
-------
"Closing Date" ss. 4.1
------------
"Cure Amount Ceiling" ss. 2.6(b)
-------------------
"Cure Amount Payment" ss. 2.6(b)
-------------------
ix
Definition Location
---------- --------
"Cure Amounts" ss. 2.6(b)
------------
"Deposit" ss. 7.12(a)(iii)
-------
"Disputed Items" ss. 3.2(d)
--------------
"Employee Agreements" ss. 7.8(i)
-------------------
"Environmental Permits" ss. 5.10(a)
---------------------
"Escrowed Amount" ss. 3.1
---------------
"Estimated Accounts Payable Amount" ss. 3.2(a)
---------------------------------
"Estimated Accounts Receivable Amount" ss. 3.2(a)
------------------------------------
"Estimated Accounts Report" ss. 3.2(a)
-------------------------
"Estimated Foreign Corporation Closing Liabilities" ss. 3.2(c)
-------------------------------------------------
"Estimated Inventory Amount" ss. 3.2(b)
--------------------------
"Estimated Working Capital Amount" ss. 3.2(c)
--------------------------------
"Excluded Assets" ss. 2.3
---------------
"Excluded Liabilities" ss. 2.5
--------------------
"Expense Reimbursement" ss. 7.12(c)
---------------------
"Final Working Capital Amount" ss. 3.2(d)
----------------------------
"Financial Statements" ss. 5.6(a)
--------------------
"Foreign Corporation Closing Liabilities" ss. 3.2(c)
---------------------------------------
"Foreign Corporation(s)" Recitals
----------------------
"Foreign Corporation Employee" ss. 7.8(a)
----------------------------
"Foreign Plans" ss. 5.11(o)
-------------
"Insilco" Preamble
-------
"Insilco Technologies Germany" Recitals
----------------------------
"Insilco Technologies Germany Shares" ss. 5.4(a)
-----------------------------------
"Inventory" ss. 2.2(a)
---------
"Inventory Amount" ss. 3.2(c)
----------------
"Inventory Date" ss. 3.2(b)
--------------
"Inventory Determination" ss. 3.2(b)
-----------------------
"ITI" Recitals
---
"ITI Shares" ss. 5.4(d)
----------
"License Agreements" ss. 5.17(b)
------------------
"Marked Agreement" ss. 7.12(a)(ii)
----------------
"Material Agreements" ss. 5.12
-------------------
"Operating Names" ss. 5.25
---------------
"Options" ss. 5.9(b)
-------
"Overbid Procedures" ss. 7.12
------------------
"Overbids" ss. 7.12(a)
--------
"Permits" ss. 5.14(a)
-------
"Purchase Price" ss. 3.1
--------------
"Purchased Assets" ss. 2.2
----------------
"Qualified Bid" ss. 7.12(a)(ii)
-------------
"Regulatory Approvals" ss. 7.6(a)
--------------------
"Resolution Period" ss. 3.2(d)
-----------------
"Retained Employee" ss. 7.8(a)
-----------------
x
Definition Location
---------- --------
"Retained Employee Payment Amount" ss. 7.8(j)
--------------------------------
"Seller(s)" Preamble
---------
"Sellers' Estimated Closing Report" ss. 3.2(c)
---------------------------------
"Sellers' Overlapping Assets" ss. 5.26
---------------------------
"Sellers' Retained Business" ss. 5.26
--------------------------
"Selling Subsidiary" Preamble
------------------
"Sempco" Recitals
------
"Sempco Shares" ss. 5.4(e)
-------------
"Shares" Recitals
------
"Signal Dominicana" Recitals
-----------------
"Signal Dominicana Shares" ss. 5.4(f)
------------------------
"Signal Transformer Mexico" Recitals
-------------------------
"Signal Transformer Mexico Shares" ss. 5.4(g)
--------------------------------
"▇▇▇▇▇▇▇ Connector Mexico" Recitals
------------------------
"▇▇▇▇▇▇▇ Connector Mexico Shares" ss. 5.4(c)
-------------------------------
"Successful Bid" ss. 7.12(a)(iii)
--------------
"Successful Bidder" ss. 7.12(a)(iii)
-----------------
"Termination Date" ss. 9.1(h)
----------------
"Third-Party Sale" ss. 9.1(f)
----------------
"Top East" Recitals
--------
"Top East Shares" ss. 5.4(b)
---------------
"Topping Fee" ss. 7.12(c)
-----------
"Transfer Taxes" ss. 7.7(b)
--------------
"Transferable Permits" ss. 2.2(f)
--------------------
"Transferred Employee" ss. 7.8(a)
--------------------
"Unaudited Annual Financial Statements" ss. 5.6(a)
-------------------------------------
"WARN Notices" ss. 7.8(e)
------------
"WC Objection" ss. 3.2(d)
------------
"Welfare Plan" ss. 5.11(j)
------------
Section 1.2 Construction. The terms "hereby," "hereto," "hereunder" and
any similar terms as used in this Agreement, refer to this Agreement in its
entirety and not only to the particular portion of this Agreement where the term
is used. The term "including", when used herein without the qualifier, "without
limitation," shall mean "including, without limitation." Wherever in this
Agreement the singular number is used, the same shall include the plural, and
the masculine gender shall include the feminine and neuter genders, and vice
versa, as the context shall require. The word "or" shall not be construed to be
exclusive. Provisions shall apply, when appropriate, to successive events and
transactions. All references to "$" are to United States Dollars.
xi
ARTICLE II
PURCHASE AND SALE
Section 2.1 Purchase and Sale of the Shares. Upon the terms and subject
to the conditions contained in this Agreement (including the entry of the
Approval Order), at the Closing, the Sellers shall sell the Shares to the
Buyers, and the Buyers shall, by payment of the Purchase Price, purchase and
acquire the Shares from the Sellers, free and clear of all Encumbrances.
Section 2.2 Purchase and Sale of Assets. Except for the Excluded
Assets, upon the terms and subject to the conditions contained in this Agreement
(including the entry of the Approval Order), at the Closing, the Sellers shall
sell, assign, convey, transfer and deliver to the Buyers, and the Buyers shall,
by payment of the Purchase Price, purchase and acquire from the Sellers, free
and clear of all Encumbrances (except for Closing Encumbrances), all of the
right, title and interest that the Sellers possess as of the Closing in, to and
under the real, personal, tangible and intangible property and assets of every
kind and description, wherever located, used, developed for use or intended for
use primarily in the conduct of the Business and related thereto and all other
assets of the Sellers related to the Business unless specifically excluded in
Section 2.3 (collectively, the "Purchased Assets"). Without limiting the effect
of the foregoing, the parties hereto acknowledge and agree that the Purchased
Assets shall include all right, title and interest of the Sellers in, to and
under all of the following assets primarily relating to the Business (except the
Excluded Assets):
(a) all raw materials, work in process, finished goods and
packaging materials, samples and other materials generally included in
the inventory of the Business in accordance with U.S. GAAP (the
"Inventory");
(b) all equipment;
(c) all machinery, vehicles, furniture and other tangible
personal property;
(d) all of the Accounts Receivable outstanding as of the
Closing Date;
(e) the Assumed Agreements, in each case, to the extent the
same are assignable as "executory contracts" under Section 365 of the
Bankruptcy Code or to the extent assignment is consented to by the
third party or third parties to such agreements, if required, including
any and all deposits and letters of credit related to any such Assumed
Agreements;
(f) the Permits, in each case, to the extent the same are
assignable (the "Transferable Permits");
(g) to the extent assignable as "executory contracts" under
Section 365 of the Bankruptcy Code or to the extent assignment is
consented to by the third party or third parties to such agreements, if
required, all License Agreements and all confidentiality, noncompete,
non-disparagement or nondisclosure agreements executed by vendors,
suppliers or employees of the Sellers or other third parties, in each
case, primarily relating to the Business;
xii
(h) originals or copies of all Employee Records of the Sellers
in respect of employees of the Business who become Transferred
Employees or who are employees of the Foreign Corporations;
(i) except as set forth on Schedule 2.3(d) of the Disclosure
Schedule and subject to Section 2.3(d), all of the rights, claims or
causes of action of the Sellers against any third party primarily
related to the Purchased Assets, the operation of the Business or the
Assumed Liabilities or Assumed Agreements arising out of transactions
occurring prior to the Closing Date, except where such rights, claims
or causes of action relate to Excluded Liabilities; to the extent such
rights, claims or causes of action relate to both Assumed Liabilities
and Excluded Liabilities, the Buyers and the Sellers shall share such
rights, claims or causes of action in the same proportion as their
respective liabilities bear to the total liability relating to those
rights, claims or causes of action;
(j) to the extent assignable under Section 365 of the
Bankruptcy Code, all Intellectual Property, together with all related
income, royalties, damages and payments due or payable at the Closing
or thereafter (including damages and payments for past or future
infringements or misappropriations thereof), the right to ▇▇▇ and
recover for past infringements or misappropriations thereof, any and
all corresponding rights that, now or hereafter, may be secured
throughout the world and all copies and tangible embodiments of any
such Intellectual Property;
(k) (i) to the extent assignable under Section 365 of the
Bankruptcy Code or to the extent consented to by the insurance
providers, if required, the rights of the Sellers pertaining primarily
to the Business under those insurance policies which primarily cover
risks covering the Business or the Purchased Assets, together with any
rights to insurance proceeds from any insurance policies owned by the
Sellers and pertaining primarily to the Business, other than insurance
proceeds from insurance policies for workers' compensation, director
and officer liability and fiduciary liability; provided that to the
extent that the rights to such insurance proceeds relate to a claim
against the Sellers that is not an Assumed Liability and is not a
Liability of the Foreign Corporations, the Sellers shall retain the
rights to such insurance proceeds and the Sellers shall not transfer
the rights to such insurance proceeds to the Buyers and (ii) any
proceeds from any insurance policies relating to claims arising after
the date hereof relating to the business of the Foreign Corporations;
(l) all rights under all accounts of the customers of the
Business which, at the Closing Date, are users of any of the services
or purchasers of any of the products provided by the Sellers in the
operation of the Business, including all rights under any contracts or
agreements relating to such accounts to the extent such contracts or
agreements are assignable as "executory contracts" under Section 365 of
the Bankruptcy Code or to the extent consented to by the third party or
third parties to such contracts or agreements;
(m) all evidences of indebtedness or other interests issued by
any Person other than any Seller Party or any Affiliate thereof and
owned by any of the Sellers primarily in connection with the Business;
xiii
(n) the Owned Real Property;
(o) all (i) brochures, catalogues, literature, forms,
advertising materials and media primarily relating to the Business
which are located at the Business Real Properties and (ii) sales data,
mailing lists and the content on the Sellers' respective websites
primarily used in the Business;
(p) to the extent transferable, all rights of the Sellers in
and to all telephone, telefax and data numbers primarily used in the
Business;
(q) the full benefit of all warranties, warranty rights,
performance bonds and indemnities (except for indemnities related to
any litigation that the Seller Parties are involved in) which apply to
any of the Purchased Assets;
(r) all rights of the Sellers in products in development
primarily used in or relating to the Business;
(s) all rights of the Sellers under any purchase orders for
products or merchandise to be sold by the Sellers in respect of the
Business which arise in the ordinary course of business to the extent
outstanding as of the Closing Date;
(t) all of the Sellers' rights to easements, rights of way,
variances, conditional uses, nonconforming uses, servitudes, leases,
licenses, privileges and options, which rights are primarily used, held
by or relating or appurtenant to the Business, the Business Real
Properties or any real estate lease primarily relating to the Business
to which any of the Sellers is a party (provided such real estate lease
is within the definition of the phrase "executory contracts" as defined
under Section 365 of the Bankruptcy Code), in each case, to the extent
that such rights are transferable;
(u) (i) all security deposits and other forms of security for
the performance of any agreements which constitute a portion of the
Purchased Assets, (ii) all refundable security deposits and prepaid
expenses relating to the Purchased Assets and (iii) any sums deposited,
escrowed or otherwise set aside by or on behalf of any Seller Party in
compliance with Law as a result of or in connection with any Assumed
Liability;
(v) any Tax refund payable to or paid to any Foreign
Corporation after the date hereof;
(w) all system passwords, resets, encryption technology,
archives, log files, engineering designs, software agreements, software
configurations, source codes and object codes maintained by the Sellers
primarily relating to the Business; and
(x) all other assets owned by the Sellers and related primarily
to the Business, whether or not reflected on the books and records of
any of the Seller Parties, all books, records, ledgers, data and
information, files, documents and correspondence primarily relating to
the Business, all regulatory filings primarily relating to the rates
and services provided by the Sellers in connection with the operation
of the Business, all general, financial and accounting records, sales
correspondence, customer lists, credit and sales
xiv
records, purchasing records, data processing records, copies of all
documents and records primarily relating to the Purchased Assets,
outstanding or uncollected sales orders and sales order log books,
correspondence records with respect to customers and supply sources,
and all papers primarily relating to, or necessary to the conduct of,
the Business, including drawings, engineering, manufacturing and
assembly information, operating and training manuals, manuals and data,
catalogs, quotations, bids, sales and promotional materials, research
and development records, prototypes and models, lists of present and
former suppliers, customer credit information, customers' pricing
information, plans, studies and analyses, whether prepared by any of
the Seller Parties or a third party, primarily relating to the
Business.
Section 2.3 Excluded Assets. Notwithstanding any provision herein to
the contrary, the Sellers shall not sell, convey, assign, transfer or deliver to
the Buyers, and the Buyers shall not purchase, and the Purchased Assets shall
not include, the Sellers' right, title and interest in and to the following
assets of the Sellers (the "Excluded Assets"):
(a) cash (including all cash residing in any collateral cash
account securing any obligation or contingent obligation of the
Sellers), cash equivalents and bank deposits, subject to the Buyers'
rights under Section 2.2(u) and Section 2.2(v), and any amount of
indebtedness for borrowed money owed by an Affiliate of any Seller to
any Seller Party;
(b) any equity interests held by the Sellers other than the
Shares;
(c) rights to (i) any Tax refunds relating to the Business or
the Purchased Assets that are attributable to any Pre-Closing Tax
Period, whether such refund is received as a payment or as a credit
against future Taxes and (ii) any net operating losses relating to the
Business or the Purchased Assets; provided, however, that any Tax
refund that is payable to or paid to any Foreign Corporation after the
date hereof and any net operating loss carryforward usable by any
Foreign Corporation shall not be deemed an Excluded Asset.
(d) the Sellers' claims, causes of action, choses in action and
rights of recovery pursuant to Sections 544 through 550 and Section 553
of the Bankruptcy Code, any other avoidance actions under any other
applicable provisions of the Bankruptcy Code and the claims, causes of
action, choses in action and rights of recovery set forth on Schedule
2.3(d) of the Disclosure Schedule;
(e) subject to Section 7.2(c), the corporate charter,
qualifications to conduct business as a foreign corporation,
arrangements with registered agents relating to foreign qualifications,
taxpayer and other identification numbers, seals, minute books, stock
transfer books, blank stock certificates, and other documents relating
to the organization, maintenance, and existence of the Sellers as
corporations, and, except as contemplated by Section 2.2(x), any books,
records or the like of the Sellers;
(f) all of the assets set forth on Schedule 2.3(f) of the
Disclosure Schedule;
(g) the "Insilco" name, or any names similar thereto, or logos,
trade names, service marks or Trademarks related thereto;
xv
(h) all of the agreements to which any of the Seller Parties is
a party which are not Assumed Agreements or License Agreements and any
and all customer deposits, customer advances and credits and security
deposits related to any such agreements which are not Assumed
Agreements or License Agreements;
(i) the rights of the Sellers under this Agreement and the
Ancillary Agreements;
(j) all of the real, personal, tangible or intangible property
(including Intellectual Property) or assets owned by the Excluded
Subsidiaries except to the extent that such property or assets primarily
relate to the Business;
(k) any and all assets of any Seller or an Affiliate of any
Seller primarily related to the custom assemblies or precision
stampings business segments operated by Insilco and its Subsidiaries,
including, without limitation, Sellers' Overlapping Assets;
(l) any and all amounts or other obligations owing to any
Seller Party by Insilco Holding Co. or any Affiliate of Insilco Holding
Co.;
(m) any and all prepaid workers' compensation premiums (other
than with respect to individuals who become Transferred Employees or
who are employees of the Foreign Corporations);
(n) claims against current or former directors, officers or
other employees of, or agents, accountants or other advisors of or to,
the Sellers;
(o) all Employee Records in respect of employees of the
Business who do not become Transferred Employees and who are not
employees of the Foreign Corporations; and
(p) any insurance policies and proceeds not included as
Purchased Assets pursuant to Section 2.2(k).
Section 2.4 Assumed Liabilities. Except for the Excluded Liabilities,
upon the terms and subject to the satisfaction of the conditions contained in
this Agreement (and subject to the entry of the Approval Order), on the Closing
Date, the Buyers shall execute and deliver to the Sellers the Assumption
Agreement pursuant to which the Buyers shall assume and agree to pay, perform
and discharge when due the following liabilities and obligations of the Sellers
(the "Assumed Liabilities"), in accordance with the respective terms and subject
to the respective conditions thereof:
(a) liabilities and obligations of the Sellers under the
Assumed Agreements, the License Agreements (to the extent assigned) and
the Transferable Permits in accordance with the terms thereof for
periods occurring after the Closing Date;
(b) the liabilities and obligations relating to (i) any
customer deposits and customer advances and credits, (ii) the security
deposits and (iii) letters of credit or similar instruments securing
customer deposits, advances or credits, in all such cases only with
respect to customer accounts which are assigned to the Buyers and only
with respect
xvi
to dollar amounts (if they exceed $25,000 in the aggregate) disclosed
to the Buyers within two (2) Business Days prior to the Closing;
provided, however, that to the extent that such liabilities and
obligations exceed $25,000 in the aggregate, then such liabilities and
obligations in excess of $25,000 in the aggregate shall be assumed by
the Buyers only to the extent that the Cash Price is reduced, prior to
the consummation of the Closing, by such excess amount;
(c) liabilities and obligations assumed by, or allocated to,
the Buyers pursuant to Section 7.7;
(d) all of the liabilities and obligations of the Sellers
allocated to the Buyers pursuant to Section 7.8;
(e) all of the Accounts Payable other than the Accounts Payable
of the Foreign Corporations (it being agreed that the Accounts Payable
of the Foreign Corporations shall continue to be the obligations of the
Foreign Corporations after the Closing and not obligations of the
Sellers) ; and
(f) all liabilities and obligations related to the Purchased
Assets, the Shares or the Business arising from any actions or
omissions occurring after the Closing Date.
Section 2.5 Excluded Liabilities. NOTWITHSTANDING ANY PROVISION HEREIN
TO THE CONTRARY, THE BUYERS SHALL NOT ASSUME OR BE OBLIGATED TO PAY, PERFORM OR
DISCHARGE ANY LIABILITIES OR OBLIGATIONS OF THE SELLERS OTHER THAN THE ASSUMED
LIABILITIES (ALL LIABILITIES AND OBLIGATIONS OTHER THAN THE ASSUMED LIABILITIES
ARE REFERRED TO HEREIN AS THE "EXCLUDED LIABILITIES"). The Excluded Liabilities
include (a) all liabilities that the Sellers may have with respect to the
underfunding of any Employee Plan relating to the Business, (b) all guarantees
by any Seller of the Liabilities of Insilco or any of its Affiliates other than
as specified in Section 7.17 and (c) all Taxes of the Sellers attributable to
the Purchased Assets and the Business with respect to any Pre-Closing Tax
Period, provided that, for this purpose, with respect to any such Taxes that are
payable with respect to a taxable period that begins before the Closing Date and
that ends after the Closing Date (but excluding for the avoidance of doubt, any
Taxes referred to and governed by Section 7.7(b)), the portion of such Taxes
allocable to the portion of such taxable period ending on the Closing Date shall
be considered to equal the amount of such Taxes for such taxable period,
multiplied by a fraction, the numerator of which of which is the number of days
in the portion of such taxable period ending on the Closing Date and the
denominator of which is the number of days in the entire taxable period.
Section 2.6 Assumption of Certain Leases and Other Contracts. The
Approval Order shall provide for the assumption by the Sellers and assignment to
the Buyers, effective upon the Closing, of the Assumed Agreements on the
following terms and conditions:
(a) At the Closing, the Sellers shall assume and assign to the
Buyers the Assumed Agreements. The Assumed Agreements are listed on
Exhibit A hereto. Simultaneously with delivery of cure amount notices
(in accordance with the terms of the Bid Procedures
xvii
Order) to the other party or parties to the Assumed Agreements, Sellers
shall deliver a copy of such cure amount notices to Buyers (such
notices to include the estimated amounts necessary to cure monetary and
non-monetary defaults, if any, under each of such Assumed Agreements as
determined by the Sellers based on the Sellers' books and records, the
date of the Assumed Agreement (if available), the other party or
parties to the Assumed Agreement and the address of such party or
parties, as the case may be). From and after the date hereof until
three (3) Business Days prior to the commencement of the Sale Hearing,
the Sellers shall make such additions and deletions to the list of the
Assumed Agreements as the Buyers shall request and the Sellers shall
give prompt notice of any such addition or deletion to the respective
counsels to the Prepetition Agent and the Creditors' Committee, and to
the third parties to each such executory contract added to or deleted
from the list of the Assumed Agreements.
(b) If Insilco advises the Buyers at or prior to the Closing
Date that there exists on the Closing Date any defaults under the
Assumed Agreements, the Buyers shall be responsible for (i) the first
$150,000 (the "Cure Amount Ceiling") of Cure Amounts (as defined below)
associated with personal property leases and/or real estate leases
constituting Assumed Agreements and (ii) all other Cure Amounts under
all other Assumed Agreements. At the Closing, the Buyers shall provide
funds to the Sellers (by wire transfer of immediately available U.S.
funds) in an amount equal to (i) with respect to the Assumed Agreements
which are personal property leases and/or real estate leases, the
lesser of the aggregate Cure Amounts for such Assumed Agreements and
the Cure Amount Ceiling plus (ii) with respect to all other Assumed
Agreements, the aggregate Cure Amounts for such Assumed Agreements (the
aggregate amount of clauses (i) and (ii) being the "Cure Amount
Payment"). Promptly (and in any event by the end of the next Business
Day) upon receipt by the Sellers of the Cure Amount Payment and the
Purchase Price at the Closing, the Sellers shall pay all Cure Amounts
for all Assumed Agreements. The Sellers, jointly and severally, shall
be responsible for paying all Cure Amounts and shall pay such Cure
Amounts from, and promptly (and in any event, by the end of the next
Business Day) upon receipt of, such funds and the Purchase Price. For
purposes of this Agreement, "Cure Amount" means any and all amounts to
be cured pursuant to Section 365(a) of the Bankruptcy Code as a
condition to the assumption and assignment of such Assumed Agreements.
(c) The Buyers shall be solely responsible for any and all
costs and expenses necessary in connection with providing adequate
assurance of future performance, i.e., for periods after the Closing
Date, with respect to any of the Assumed Agreements under Section 365
of the Bankruptcy Code.
(d) In addition to the payment of the Purchase Price and the
payment of the Cure Amounts and expenses referred to in clause (c)
above, on the Closing Date, the Buyers shall reimburse the Sellers in
cash and in full for any and all postpetition deposits, advances,
credits and security deposits and replace any letters of credit, in all
such cases, related to any agreements of the Sellers with third parties
transferred to the Buyers pursuant to Section 2.2; provided, however,
the Buyers shall not be obligated to reimburse the Sellers for any
postpetition deposits, advances, credits and security deposits or be
obligated to replace any postpetition letters of credit in the event
that, prior
xix
to the Closing Date, (i) the Sellers fail to provide the Buyers with
copies of written postpetition correspondence which evidences that a
third party required the Sellers to provide such third party with such
deposit, advance, credit, security deposit or letter of credit, (ii)
the Sellers fail to provide the Buyers written evidence that the
Sellers delivered such deposit, advance, credit, security deposit or
secured a letter of credit to/on behalf of such third party or (iii)
the Buyers make a reasonable good faith determination that (y) the
Buyers will not be entitled to the return of, recover or otherwise use
for their benefit any such deposit, advance, credit or security deposit
and/or (z) the Buyers will be required to secure a replacement letter
of credit, as applicable.
ARTICLE III
PURCHASE PRICE
Section 3.1 Purchase Price. In consideration for the Shares and the
Purchased Assets, and subject to the terms and conditions of this Agreement and
the entry of the Approval Order, at the Closing the Buyers shall (a) assume the
Assumed Liabilities as provided in Section 2.4, (b) pay one million dollars
($1,000,000) to the Escrow Agent to be held and disbursed pursuant to the terms
of the Escrow Agreement (the "Escrowed Amount"), (c) pay to the Sellers (in
immediately available funds, by wire transfer to an account or accounts
designated by Insilco) the Cure Amount Payment and (d) pay to the Sellers, in
immediately available funds, by wire transfer to an account or accounts
designated by Insilco, an amount in cash equal to thirty five million dollars
($35,000,000) less the Escrowed Amount (the "Cash Price"). The sum of the Cure
Amount Payment, the Escrowed Amount and the Cash Price, as same may be adjusted
(i) downward pursuant to Section 2.4(b), (ii) upward pursuant to Section 2.6(d)
and (iii) upward or downward pursuant to Section 3.2, is referred to herein as
the "Purchase Price."
Section 3.2 Purchase Price Adjustment. (a) Delivery of Estimated
Accounts Report. At least two (2) Business Days prior to the Closing, the
Sellers shall deliver to the Buyers a report reflecting the Sellers' good faith
estimate of all of the Accounts Receivable and the Accounts Payable as of the
Closing Date (the "Estimated Accounts Report"). The Estimated Accounts Report
shall (i) identify the dollar amount of each Account Receivable and Account
Payable, (ii) identify the entity to which each Account Receivable and Account
Payable pertains, (iii) exclude Accounts Receivable and Accounts Payable due to
any of the Sellers from any of the other Seller Parties or from any Affiliate of
any of the Sellers and (iv) include an aging schedule for each Account
Receivable reflecting, as of the Closing Date, the aggregate amount of the
Accounts Receivable outstanding that: (A) would not be past due; (B) would be
past due 30 days or less; (C) would be past due more than 30 days but less than
or equal to 60 days; and (D) would be past due more than 60 days. The aggregate
dollar value of the Accounts Receivable and Accounts Payable evidenced on the
Estimated Accounts Report shall be determined in a manner consistent with U.S.
GAAP and the determination of the value of Accounts Receivable and Accounts
Payable in the Financial Statements and shall be referred to herein as the
"Estimated Accounts Receivable Amount" and the "Estimated Accounts Payable
Amount", as applicable.
(b) Taking of Inventory; Inventory Report. Prior to the date
hereof, the Buyers' accountants and Insilco's accountants have taken a
joint physical inventory of the Inventory,
xix
wherever located (the "Inventory Determination"). Prior to Closing,
Insilco shall update the Inventory Determination through a date as near
to the Closing Date as practicable (the "Inventory Date"), through
application of methodologies and procedures consistent with the
Sellers' past practices of inventory determination utilized in the
preparation of the Financial Statements. The Sellers shall prepare a
report setting forth the aggregate value of the Inventory of the
Business as of the Inventory Date (the "Estimated Inventory Amount"),
determined in accordance with the procedures set forth above.
(c) Closing Report. On the second (2nd) Business Day prior to
the Closing, the Sellers shall deliver to the Buyers a report
("Sellers' Estimated Closing Report") which identifies (i) the
Estimated Accounts Receivable Amount, (ii) the Estimated Inventory
Amount, (iii) the Estimated Accounts Payable Amount and (iv) the
Sellers' estimate of all Liabilities of the Foreign Corporations (other
than Accounts Payable and Liabilities for Taxes) as of the Closing Date
but only to the extent that such Liabilities are required to be
reflected on a balance sheet prepared in accordance with U.S. GAAP and
in a manner consistent with the preparation of the Financial Statements
(the "Estimated Foreign Corporation Closing Liabilities"). Within five
(5) Business Days after the Closing, the Sellers shall, working in
cooperation with the Buyers, deliver a report (the "Sellers' Closing
Report") which identifies (i) the dollar value of all Accounts
Receivable (the "Accounts Receivable Amount") and Accounts Payable (the
"Accounts Payable Amount") as of the Closing Date, determined using the
procedures and methodologies set forth in Section 3.2(a), (ii) the
value of the Inventory of the Business as of the Closing Date,
determined using the methodologies and procedures set forth in Section
3.2(b) (the "Inventory Amount") and (iii) all Liabilities of the
Foreign Corporations (other than Accounts Payable and Liabilities for
Taxes) as of the Closing Date, but only to the extent that such
Liabilities are required to be reflected on a balance sheet prepared in
accordance with U.S. GAAP and in a manner consistent with the
preparation of the Financial Statements (the "Foreign Corporation
Closing Liabilities"). The sum of the Accounts Receivable Amount plus
the Inventory Amount, less the Accounts Payable Amount and less the
Foreign Corporation Closing Liabilities, in each case as set forth in
the Sellers' Closing Report, shall be referred to herein as the
"Estimated Working Capital Amount."
(d) Disputes. Concurrent with the delivery of the Sellers'
Closing Report and until such time as all disputes are resolved
pursuant to this Section 3.2(d), the Sellers shall deliver to the
Buyers such back-up information as the Buyers' Representatives shall
reasonably request in order to review the calculation of the Accounts
Receivable Amount, the Inventory Amount, the Accounts Payable Amount
and the Foreign Corporation Closing Liabilities. In the event that the
Buyers believe that the Sellers' Closing Report overstates or
understates the Accounts Receivable Amount, the Inventory Amount, the
Accounts Payable Amount and/or the Foreign Corporation Closing
Liabilities, the Buyers shall, within ten (10) Business Days after the
Buyers' receipt of the Sellers' Closing Report, advise Insilco in
writing of any objections that the Buyers may have with respect to the
Sellers' Closing Report (any such objection shall (x) be set forth in
reasonable detail, (y) include supporting calculations and
documentation and (z) propose an adjustment to the Estimated Working
Capital Amount) (a "WC Objection"); provided, however, that the Buyers
shall not object to the Inventory Amount based upon the methodologies
and procedures utilized in determining the Inventory Amount, provided
that such methodologies and procedures are consistent with the Sellers'
past practices of inventory determination utilized in the preparation
of the Financial Statements. In the event that the Buyers fail to
deliver to
xx
Insilco a WC Objection within such ten (10) Business Day period, the
Buyers shall be deemed to have accepted and consented to the
calculations and determinations made in the Sellers' Closing Report and
the calculation of the Estimated Working Capital Amount contained in
the Sellers' Closing Report shall be deemed to be the "Final Working
Capital Amount." In the event that the Buyers deliver a WC Objection
within ten (10) Business Days after the Buyers' receipt of the Sellers'
Closing Report, the Buyers and Insilco shall utilize commercially
reasonable efforts to try to resolve the objections set forth in the WC
Objection (the "Disputed Items") within ten (10) Business Days of
Insilco's receipt of a WC Objection (the "Resolution Period"). If the
Buyers and Insilco are unable to resolve the Buyers' objections within
the Resolution Period, Insilco and the Buyers shall refer the Disputed
Items to the New York office of BDO ▇▇▇▇▇▇▇ or, if such firm is
unwilling or unable to serve, the Buyers and Insilco shall engage
another mutually acceptable accounting firm (BDO ▇▇▇▇▇▇▇ or such other
firm, the "Arbiter"), in either case within five (5) Business Days of
the end of the Resolution Period, to determine how the Disputed Items
should be resolved. The Buyers and Insilco shall use reasonable efforts
to cause the Arbiter, within ten (10) Business Days after it is
selected, to (y) resolve all of the Disputed Items, based solely upon
the provisions of this Agreement, such data as the Arbiter shall
request from the Buyers and Insilco and the presentations by the
Buyers, Insilco and their respective representatives, and not by
independent review, and (z) re-calculate the Estimated Working Capital
Amount by giving effect to the Arbiter's resolution of the Disputed
Items. In resolving any Disputed Item, the Arbiter: (x) shall limit its
review to matters specifically set forth in the WC Objection; (y) shall
further limit its review to whether the calculations are mathematically
accurate and have been prepared in accordance with the provisions of
this Agreement; and (z) shall not assign a value to any item greater
than the greatest value for such item claimed by a party hereto or less
than the smallest value for such item claimed by a party hereto. The
calculation by Insilco and the Buyers or by the Arbiter, as the case
may be, of the Accounts Receivable Amount plus the Inventory Amount
minus the Accounts Payable Amount and minus the Foreign Corporation
Closing Liabilities in accordance with this Section 3.2(d) shall be
final, conclusive and binding and shall serve as the "Final Working
Capital Amount." The fees and expenses of the Arbiter shall be shared
equally between the Buyers and Insilco, with Insilco's obligations to
be satisfied from the Escrowed Amount pursuant to the terms of the
Escrow Agreement.
(e) Purchase Price Adjustment. On the third (3rd) Business Day
following the date on which the Final Working Capital Amount is
determined, the Purchase Price shall be adjusted as follows: in the
event that (i) the Final Working Capital Amount is greater than
$24,057,000 (the "Benchmark Working Capital Amount"), the Purchase
Price shall be increased, on a dollar for dollar basis, in an amount
equal to the lesser of (y) one million dollars ($1,000,000) and (z) the
difference between the Final Working Capital Amount and the Benchmark
Working Capital Amount and the Buyers shall deliver such lesser amount
to the Sellers by wire transfer to one or more accounts designated by
Insilco or (ii) the Final Working Capital Amount is less than the
Benchmark Working Capital Amount, the Purchase Price shall be reduced,
on a dollar for dollar basis, in an amount equal to the lesser of (y)
one million dollars ($1,000,000) and (z) the difference between the
Benchmark Working Capital Amount and the Final Working Capital Amount
and the Buyers shall be entitled to receive from the Escrowed Amount,
pursuant to the Escrow Agreement, an amount equal to such lesser
amount; provided, however, (A) if such lesser amount exceeds the funds
available for distribution pursuant to the Escrow Agreement then the
Buyers shall be entitled to receive only such available funds (and the
xxi
Sellers shall not be obligated to the Buyers for any amount in excess
of such available funds) and (B) if such lesser amount is less than
such available funds, then after payment to the Buyers of such lesser
amount pursuant to this Agreement and the Escrow Agreement any
remaining balance of such available funds shall be immediately
transferred to the Sellers.
ARTICLE IV
THE CLOSING
Section 4.1 Time and Place of Closing. Upon the terms and subject to
the satisfaction of the conditions contained in Article VIII of this Agreement,
the closing of the sale of the Shares and the Purchased Assets and the
assumption of the Assumed Liabilities and Assumed Agreements contemplated by
this Agreement (the "Closing") shall take place at the offices of Shearman &
Sterling, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, at 10:00 A.M. (local time)
no later than the fifth (5th) Business Day following the date on which the
conditions set forth in such Article VIII have been satisfied (other than the
conditions with respect to actions the respective parties hereto will take at
the Closing itself) or, to the extent permitted, waived in writing, or at such
other place or time as the Buyers and Sellers may mutually agree. The date and
time at which the Closing actually occurs is hereinafter referred to as the
"Closing Date."
Section 4.2 Deliveries by the Sellers. At or prior to the Closing, the
Sellers shall deliver the following to the Buyers:
(a) stock certificates or similar instruments evidencing the
Shares duly endorsed in blank, or accompanied by stock powers duly
executed in blank, and with all required stock transfer tax stamps
affixed;
(b) the ▇▇▇▇ of Sale, duly executed by the Sellers and all such
other instruments of assignment or conveyance as shall be reasonably
necessary to transfer to the Buyers all of the Sellers' right, title
and interest in, to and under all of the Purchased Assets and the
Shares, in accordance with this Agreement, in each case duly executed
by the Sellers;
(c) all consents, waivers or approvals obtained by the Sellers
with respect to the Purchased Assets, the transfer of the Transferable
Permits and the consummation of the transactions required in connection
with the sale of the Purchased Assets contemplated by this Agreement,
to the extent specifically required hereunder;
(d) the certificate contemplated by Section 8.2(b);
(e) the Assumption Agreement, duly executed by the Sellers;
(f) the Intellectual Property Assignment, duly executed by the
Sellers;
(g) the Non-Competition Agreement, duly executed by the
Sellers;
(h) the Escrow Agreement, duly executed by the Sellers;
xxii
(i) certified copies of the Certificate of Incorporation and
the Bylaws (or similar governing documents) of each of the Sellers,
each as in effect as of the Closing;
(j) certified copies of the resolutions duly adopted by the
board of directors of each of the Sellers authorizing the execution,
delivery and performance of this Agreement and each of the other
transactions contemplated hereby;
(k) deeds and other necessary documents of conveyance (as
customarily utilized in the sale of commercial real property in the
states where each Owned Real Property is located) evidencing the
conveyance of each Owned Real Property to the Buyers;
(l) the Share Transfer and Assignment Agreement, duly executed
on behalf of the shareholder of Insilco Technologies Germany before a
German or Swiss Notary Public; and
(m) all such other agreements, documents, instruments and
writing as are required to be delivered by Sellers at or prior to the
Closing Date pursuant to this Agreement.
Section 4.3 Deliveries by the Buyers. At or prior to the Closing, the
Buyers shall deliver the following:
(a) to the Sellers, an amount of cash equal to the Cash Price
less all amounts required by Section 2.4(b) plus all amounts required
by Section 2.6(d), by wire transfer of immediately available U.S. funds
to an account or accounts designated by Insilco;
(b) to the Sellers, an amount of cash equal to the Cure Amount
Payment, by wire transfer of immediately available U.S. funds to an
account or accounts designated by Insilco;
(c) to the Sellers, an amount of cash equal to the Retained
Employee Payment Amount, by wire transfer of immediately available U.S.
funds to an account or accounts designated by Insilco;
(d) to the Escrow Agent, an amount of cash equal to the
Escrowed Amount;
(e) to Insilco, certified copies of the Certificate of
Incorporation and the Bylaws (or similar governing documents) of each
of the Buyers, each as in effect as of the Closing;
(f) to Insilco, certified copies of the resolutions duly
adopted by the board of directors of each of the Buyers authorizing the
execution, delivery and performance of this Agreement and each of the
other transactions contemplated hereby;
(g) to Insilco, the Assumption Agreement, duly executed by the
Buyers;
(h) to Insilco, the Escrow Agreement, duly executed by the
Buyers;
(i) to Insilco, the Intellectual Property Assignment, duly
executed by the Buyers;
xxiii
(j) to Insilco, the Share Transfer and Assignment Agreement,
duly executed on behalf of one of the Buyers before a German or Swiss
Notary Public;
(k) to Insilco, the certificate contemplated by Section 8.3(b);
(l) to Insilco, all such other instruments of assumption as
shall be reasonably necessary for the Buyers to assume the Assumed
Liabilities in accordance with this Agreement; and
(m) all such other agreements, documents, instruments and
writings as are required to be delivered by the Buyers at or prior to
the Closing Date pursuant to this Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE SELLERs
The Buyers specifically acknowledge and agree to the following with
respect to the representations and warranties of the Sellers:
A. The Buyers have conducted their own due diligence
investigations of the Business.
B. Except when the context otherwise requires, the Sellers
make no representations or warranties in this Article V with respect to
the Excluded Assets or the Excluded Liabilities.
As an inducement to the Buyers to enter into this Agreement and to
consummate the transactions contemplated hereby, the Sellers, jointly and
severally, represent and warrant to the Buyers as follows:
Section 5.1 Organiz ation; Qualification of the Sellers. Each Seller
(a) is a corporation duly incorporated, validly existing and in good standing
under the laws of its jurisdiction of incorporation and has all requisite
corporate power and authority to own, lease, and operate the Purchased Assets
and to carry on the Business as is now being conducted except where the failure
to be so qualified or licensed and in good standing would not have a Material
Adverse Effect and (b) as related to the operation of the Business, is duly
qualified or licensed to do business as a foreign corporation and is in good
standing in each jurisdiction in which the property owned, leased or operated by
it or the nature of the business conducted by it makes such qualification
necessary, except in those jurisdictions where the failure to be so duly
qualified or licensed and in good standing would not have a Material Adverse
Effect. Each Seller has heretofore furnished to the Buyers complete and correct
copies of the certificates of incorporation and by-laws or similar
organizational documents of each Seller as presently in effect. None of the
Business has been conducted by or from any of the Excluded Subsidiaries since
June 2001.
Section 5.2 Authority Relative to this Agreement. Each Seller has all
corporate power and, upon entry and effectiveness of the Approval Order, will
have all corporate authority
xxiv
necessary to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly authorized by the board of directors or other similar governing body of
each Seller and no other corporate proceedings on the part of any Seller is
necessary to authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by each Seller, and assuming that this Agreement constitutes a valid
and binding agreement of the Buyers, and subject to the entry and effectiveness
of the Approval Order, constitutes a valid and binding agreement of each Seller,
enforceable against each Seller in accordance with its terms, except that such
enforceability may be limited by applicable bankruptcy, insolvency, moratorium
or other similar laws affecting or relating to enforcement of creditors' rights
generally or general principles of equity.
Section 5.3 Organization, Authority and Qualification of the Foreign
Corporations. (a) Each Foreign Corporation is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization and has all necessary power and authority to own, operate or lease
the properties and assets now owned, operated or leased by it and to carry on
the Business as it has been and is currently conducted, except to the extent
that the failure to be in good standing would not materially adversely affect
the ability of the Foreign Corporations to conduct the Business or otherwise
have a Material Adverse Effect. Each Foreign Corporation is duly licensed or
qualified to do business and is in good standing in each jurisdiction in which
the properties owned or leased by it or the operation of the Business makes such
licensing or qualification necessary or desirable, except to the extent that the
failure to be so licensed or qualified and in good standing would not materially
adversely affect the ability of the Foreign Corporations to conduct the Business
or otherwise have a Material Adverse Effect. True and correct copies of the
Certificate of Incorporation and By-laws (or the equivalent thereof) of each
Foreign Corporation have been delivered by the Seller Parties to the Buyer.
(b) No Foreign Corporation has guaranteed the Liabilities of
any Affiliate of Insilco other than another Foreign Corporation.
Section 5.4 Capitalization; Ownership of Shares. (a) The authorized
capital stock of Insilco Technologies Germany consists of the following: 60,000
shares of common stock, 1 Euro par value per share (the "Insilco Technologies
Germany Shares"). As of the date hereof, one (1) Insilco Technologies Germany
Share is issued and outstanding, which is validly issued, fully paid and
nonassessable and was not issued in violation of any preemptive rights. There
are no options, warrants, convertible securities or other rights, agreements,
arrangements or commitments relating to the Insilco Technologies Germany Shares
or obligating any Seller Party or Insilco Technologies Germany to issue or sell
any Insilco Technologies Germany Shares, or any other interest in, Insilco
Technologies Germany. There are no outstanding contractual obligations of
Insilco Technologies Germany to repurchase, redeem or otherwise acquire any
Insilco Technologies Germany] Shares. The Insilco Technologies Germany Shares
constitute all the issued and outstanding capital stock of Insilco Technologies
Germany and are owned of record and beneficially by ▇▇▇▇▇▇▇ Connector Systems,
Inc. free and clear of all Encumbrances, except as set forth in Schedule 5.4(a)
of the Disclosure Schedule. Except as set forth on Schedule 5.4(a) of the
Disclosure Schedule, after December 31, 1997 Insilco Technologies Germany has
never declared, issued or otherwise made any capital repayments nor has Insilco
xxv
Technologies Germany had a hidden profit distribution asserted against it. Upon
consummation of the transactions contemplated by this Agreement and registration
of the Insilco Technologies Germany Shares in the name of the Buyers in the
stock records of Insilco Technologies Germany, assuming Buyers shall have
purchased the Insilco Technologies Germany Shares for value in good faith and
without notice of any adverse claim, the Buyers will own all the issued and
outstanding capital stock of Insilco Technologies Germany free and clear of all
Encumbrances.
(b) The authorized capital stock of Top East consists of the
following: 10,000 shares of common stock, HK$1.00 par value per share (the "Top
East Shares"). As of the date hereof, 10,000 Top East Shares are issued and
outstanding, all of which are validly issued, fully paid and nonassessable and
were not issued in violation of any preemptive rights. There are no options,
warrants, convertible securities or other rights, agreements, arrangements or
commitments relating to the Top East Shares or obligating any Seller Party or
Top East to issue or sell any Top East Shares, or any other interest in, Top
East. There are no outstanding contractual obligations of Top East to
repurchase, redeem or otherwise acquire any Top East Shares. The Top East Shares
constitute all the issued and outstanding capital stock of Top East and are
owned of record and beneficially by InNet Technologies, Inc. free and clear of
all Encumbrances, except as set forth in Schedule 5.4(b) of the Disclosure
Schedule. Upon consummation of the transactions contemplated by this Agreement
and registration of the Top East Shares in the name of the Buyers in the stock
records of Top East, assuming Buyers shall have purchased the Top East Shares
for value in good faith and without notice of any adverse claim, the Buyers will
own all the issued and outstanding capital stock of Top East free and clear of
all Encumbrances.
(c) The authorized capital stock of ▇▇▇▇▇▇▇ Connector Mexico
consists of the following: 500 shares of common stock, 100 pesos par value per
share (the "▇▇▇▇▇▇▇ Connector Mexico Shares"). As of the date hereof, 500
▇▇▇▇▇▇▇ Connector Mexico Shares are issued and outstanding, all of which are
validly issued, fully paid and nonassessable and were not issued in violation of
any preemptive rights. There are no options, warrants, convertible securities or
other rights, agreements, arrangements or commitments relating to the ▇▇▇▇▇▇▇
Connector Mexico Shares or obligating any Seller Party or ▇▇▇▇▇▇▇ Connector
Mexico to issue or sell any ▇▇▇▇▇▇▇ Connector Mexico Shares, or any other
interest in, ▇▇▇▇▇▇▇ Connector Mexico. There are no outstanding contractual
obligations of ▇▇▇▇▇▇▇ Connector Mexico to repurchase, redeem or otherwise
acquire any ▇▇▇▇▇▇▇ Connector Mexico Shares. The ▇▇▇▇▇▇▇ Connector Mexico Shares
constitute all the issued and outstanding capital stock of ▇▇▇▇▇▇▇ Connector
Mexico and are owned of record and beneficially by ▇▇▇▇▇▇▇ Connector Systems,
Inc. in the amount of 490 of the ▇▇▇▇▇▇▇ Connector Mexico Shares and by Insilco
in the amount of 10 of the ▇▇▇▇▇▇▇ Connector Mexico Shares free and clear of all
Encumbrances, except as set forth in Schedule 5.4(c) of the Disclosure Schedule.
Upon consummation of the transactions contemplated by this Agreement and
registration of the ▇▇▇▇▇▇▇ Connector Mexico Shares in the name of the Buyers in
the stock records of ▇▇▇▇▇▇▇ Connector Mexico, assuming Buyers shall have
purchased the ▇▇▇▇▇▇▇ Connector Mexico Shares for value in good faith and
without notice of any adverse claim, the Buyers will own all the issued and
outstanding capital stock of ▇▇▇▇▇▇▇ Connector Mexico free and clear of all
Encumbrances.
xxvi
(d) The authorized capital stock of ITI consists of the
following: 1,000,000 shares of common stock, HK$1.00 par value per share (the
"ITI Shares"). As of the date hereof, 1,000,000 ITI Shares are issued and
outstanding, all of which are validly issued, fully paid and nonassessable and
were not issued in violation of any preemptive rights. There are no options,
warrants, convertible securities or other rights, agreements, arrangements or
commitments relating to the ITI Shares or obligating any Seller Party or ITI to
issue or sell any ITI Shares, or any other interest in, ITI. There are no
outstanding contractual obligations of ITI to repurchase, redeem or otherwise
acquire any ITI Shares. The ITI Shares constitute all the issued and outstanding
capital stock of ITI and are owned of record and beneficially by InNet
Technologies, Inc. free and clear of all Encumbrances, except as set forth in
Schedule 5.4(d) of the Disclosure Schedule. Upon consummation of the
transactions contemplated by this Agreement and registration of the ITI Shares
in the name of the Buyers in the stock records of ITI, assuming Buyers shall
have purchased the ITI Shares for value in good faith and without notice of any
adverse claim, the Buyers will own all the issued and outstanding capital stock
of ITI free and clear of all Encumbrances.
(e) The authorized capital stock of Sempco consists of the
following: 50,000 Series B1 shares of common stock, 1 Mexican peso par value per
share (the "Sempco Shares"). As of the date hereof, 50,000 Sempco Shares are
issued any outstanding, all of which are validly issued, fully paid and
nonassessable and were not issued in violation of any preemptive rights. There
are no options, warrants, convertible securities or other rights, agreements,
arrangements or commitments relating to the Sempco Shares or obligating any
Seller Party or Sempco to issue or sell any Sempco Shares, or any other interest
in, Sempco. There are no outstanding contractual obligations of Sempco to
repurchase, redeem or otherwise acquire any Sempco Shares. The Sempco Shares
constitute all the issued and outstanding capital stock of Sempco and are owned
of record and beneficially by Insilco International Holdings, Inc. in the amount
of 500 of the Sempco Shares and by Signal Transformer Co., Inc. in the amount of
49,500 of the Sempco Shares free and clear of all Encumbrances, except as set
forth in Schedule 5.4(e) of the Disclosure Schedule. Upon consummation of the
transactions contemplated by this Agreement and registration of the Sempco
Shares in the name of the Buyers in the stock records of Sempco, assuming Buyers
shall have purchased the Sempco Shares for value in good faith and without
notice of any adverse claim, the Buyers will own all the issued and outstanding
capital stock of Sempco free and clear of all Encumbrances.
(f) The authorized capital stock of Signal Dominicana consists
of the following: 100 shares of common stock, 100 pesos par value per share (the
"Signal Dominicana Shares"). As of the date hereof, 100 Signal Dominican Shares
are issued and outstanding, all of which are validly issued, fully paid and
nonassessable and were not issued in violation of any preemptive rights. There
are no options, warrants, convertible securities or other rights, agreements,
arrangements or commitments relating to the Signal Dominicana Shares or
obligating any Seller Party or Signal Dominicana to issue or sell any Signal
Dominicana Shares, or any other interest in, Signal Dominicana. There are no
outstanding contractual obligations of Signal Dominicana to repurchase, redeem
or otherwise acquire any Signal Dominicana Shares. The Signal Dominicana Shares
constitute all the issued and outstanding capital stock of Signal Dominicana and
are owned of record and beneficially by Insilco free and clear of all
Encumbrances, except as set forth in Schedule 5.4(f) of the Disclosure Schedule.
Upon consummation of the transactions contemplated by this Agreement and
registration of the Signal Dominicana Shares in the name of
x27
the Buyers in the stock records of Signal Dominicana, assuming Buyers shall have
purchased the Signal Dominicana Shares for value in good faith and without
notice of any adverse claim, the Buyers will own all the issued and outstanding
capital stock of Signal Dominicana free and clear of all Encumbrances.
(g) The authorized capital stock of Signal Transformer Mexico
consists of the following: 50,000 Series B1 shares of common stock, 1 Mexican
peso par value per share (the "Signal Transformer Mexico Shares"). As of the
date hereof, 50,000 Signal Transformer Mexico Shares are issued and outstanding,
all of which are validly issued, fully paid and nonassessable and were not
issued in violation of any preemptive rights. There are no options, warrants,
convertible securities or other rights, agreements, arrangements or commitments
relating to the Signal Transformer Mexico Shares or obligating any Seller Party
or Signal Transformer Mexico to issue or sell any Signal Transformer Mexico
Shares, or any other interest in, Signal Transformer Mexico. There are no
outstanding contractual obligations of Signal Transformer Mexico to repurchase,
redeem or otherwise acquire any Signal Transformer Mexico Shares. The Signal
Transformer Mexico Shares constitute all the issued and outstanding capital
stock of Signal Transformer Mexico and are owned of record and beneficially by
ITI in the amount of 500 of the Signal Transformer Mexico Shares and by Signal
Transformer Co., Inc. in the amount of 49,500 of the Signal Transformer Mexico
Shares free and clear of all Encumbrances, except as set forth in Schedule
5.4(g) of the Disclosure Schedule. Upon consummation of the transactions
contemplated by this Agreement and registration of the Signal Transformer Mexico
Shares in the name of the Buyers in the stock records of Signal Transformer
Mexico, assuming Buyers shall have purchased the Signal Transformer Mexico
Shares for value in good faith and without notice of any adverse claim, the
Buyers will own all the issued and outstanding capital stock of Signal
Transformer Mexico free and clear of all Encumbrances.
Section 5.5 Consents and Approvals; No Violation. Except to the extent
excused by or unenforceable as a result of the filing of the Chapter 11 Cases or
the applicability of any provision of the Bankruptcy Code, and except for the
entry and effectiveness of the Approval Order, the execution and delivery of
this Agreement by the Sellers, the sale by the Sellers of the Shares and the
sale by the Sellers of the Purchased Assets pursuant to this Agreement will not
(a) conflict with or result in any breach of any provision of the Certificate or
Articles of Incorporation or Bylaws (or other similar governing documents) of
any Seller Party, (b) require any consent, approval, authorization or permit of,
or filing with or notification to, any Governmental Authority or third party
which has not otherwise been obtained or made, except (i) where the failure to
obtain such consent, approval, authorization or permit, or to make such filing
or notification, would not have a Material Adverse Effect or prevent or
materially delay
xxviii
the consummation of the transactions contemplated by this Agreement or (ii) for
those requirements which become applicable to the Sellers as a result of the
specific regulatory status of the Buyers (or any of their Affiliates) or as a
result of any other facts that specifically relate to the business or activities
in which the Buyers (or any of their Affiliates) is or proposes to be engaged;
(c) result in a default (or give rise to any right of termination, cancellation
or acceleration) under any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, license, agreement or other instrument or obligation
to which any Seller Party is a party or by which any Seller Party, the Shares or
any of the Purchased Assets may be bound, except for such defaults (or rights of
termination, cancellation or acceleration) as to which requisite waivers or
consents have been obtained or which would not have a Material Adverse Effect or
prevent or materially delay the consummation of the transactions contemplated by
this Agreement; or (d) violate any order, writ, injunction, decree, statute,
rule or regulation applicable to any Seller Party, or any of their assets, which
violation would have a Material Adverse Effect.
Section 5.6 Financial Statements and Reports. (a) Schedule 5.6(a) of
the Disclosure Schedule includes true and complete copies of: (i) the unaudited
consolidated balance sheets of the Business as of December 31, 1999, 2000 and
2001, and the related unaudited consolidated statements of operations and cash
flows for the years ended December 31, 1999, 2000 and 2001 (the "Unaudited
Annual Financial Statements") and (ii) the unaudited consolidated balance sheet
of the Business as of September 27, 2002 (the "Balance Sheet"), and the related
unaudited consolidated statement of operations and cash flows of the Business
for nine (9) months ended September 28, 2001 and September 27, 2002 and for the
three (3) months ended March 29, 2002, June 28, 2002 and September 27, 2002
(together with the Unaudited Annual Financial Statements, the "Financial
Statements").
(b) The Financial Statements present fairly in all material
respects the financial condition and results of operations of the Business as of
the dates and for the periods included therein. The Financial Statements are a
component of the consolidated financial statements of Insilco Holding Co. and
Insilco. The consolidated financial statements of Insilco Holding Co. and
Insilco for the period ended September 27, 2002 have been certified to the
extent required by the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002.
(c) To the Sellers' Knowledge, there have not been: (i) any
funds or assets of the Business used, directly or indirectly, for illegal
purposes; (ii) an accumulation or use of the Business' funds without being
properly accounted for in the respective books and records of the Business;
(iii) any material payments by or on behalf of the Business not duly and
properly recorded and accounted for in its books and records; (iv) any false or
artificial entries made in the books and records of the Business for any reason;
or (v) any payment made by or on behalf of the Business with the understanding
that any part of such payment is to be used for any purpose other than that
described in the documents supporting such payment.
Section 5.7 Title to Assets. At the Closing, the Buyers shall acquire
(a) all of the Sellers' right, title and interest in, to and under (subject to
such being assumed and assigned in accordance with Section 2.6) all of the
Purchased Assets, in each case free and clear of all Encumbrances except for
Closing Encumbrances and (b) the Shares free and clear of all Encumbrances. At
the Closing, the Foreign Corporations' right, title and interest in their assets
shall be free and clear of all Encumbrances except for Closing Encumbrances. The
Purchased Assets and the assets owned, leased or licensed by the Foreign
Corporations include all of the assets and properties necessary to conduct, in
all material respects, the Business as currently conducted. The Purchased
Assets, the assets owned by the Foreign Corporations, the assets leased or
licensed by the Foreign Corporations and the assets subject to the Assumed
Agreements are in good operating condition, fit for operation in the ordinary
course of the Business, with no material defects that could reasonably be
expected to interfere with their good operating condition, ordinary wear and
tear excepted.
xxix
Section 5.8 Owned Real Property. (a) Schedule 5.8(a) of the Disclosure
Schedule lists, as of the date of this Agreement, the street address of each
parcel of Owned Real Property and the current owner of each parcel of Owned Real
Property.
(b) Except as set forth on Schedule 5.8(b) of the Disclosure
Schedule, no Seller Party is in material violation of any law, rule, regulation,
ordinance or judgment of any Governmental Authority (including, without
limitation, any building, planning or zoning law) relating to any of the Owned
Real Property. The Seller Parties have made available to the Buyers true and
complete copies of each deed for each parcel of Owned Real Property and all the
title insurance policies, title reports, surveys, title documents and other
documents relating to or otherwise affecting the Owned Real Property as it
relates to the Business. The Seller Parties are in peaceful and undisturbed
possession of each parcel of Owned Real Property, and there are no contractual
or legal restrictions that preclude or restrict the ability to use the Owned
Real Property for the purposes for which it is currently being used. Immediately
prior to the Closing, the Sellers will have good and marketable title to each
parcel of Owned Real Property free and clear of all Encumbrances other than
Permitted Encumbrances. There are no Persons in possession of any parcel of
Owned Real Property other than the Seller Parties.
(c) No improvements on the Owned Real Property and none of the
current uses and conditions thereof violate any Encumbrance, applicable deed
restrictions or other applicable covenants, restrictions, agreements, existing
site plan approvals, zoning or subdivision regulations or urban redevelopment
plans as modified by any duly issued variances, and no permits, licenses or
certificates pertaining to the ownership or operation of all improvements on the
Owned Real Property, other than those which are transferable with the Owned Real
Property, are required by any Governmental Authority having jurisdiction over
the Owned Real Property.
(d) Except as set forth on Schedule 5.8(d) of the Disclosure
Schedule, the Seller Parties have not received any notice of threatened
condemnation proceedings, lawsuits or administrative actions relating to any of
the Owned Real Property or any other matters which do or may materially
adversely affect the current use, occupancy or value thereof as it relates to
the Business, and there are no pending or, to the Sellers' Knowledge, threatened
condemnation proceedings, lawsuits or administrative actions relating to any of
the Owned Real Property or any other matters which do or may materially
adversely affect the current use, occupancy or value thereof as it relates to
the Business.
(e) Except as set forth on Schedule 5.8(e) of the Disclosure
Schedule, the Seller Parties have not received any notice that any of the Owned
Real Property or any of the structures thereon, or the use, occupancy or
operation thereof by any Seller Party, violate any material governmental
requirements, deed or other title covenants or restrictions or Permits.
(f) To the Knowledge of the Sellers, the Seller Parties have
obtained all material approvals of Governmental Authorities (including
certificates of use and occupancy, licenses and other Permits) required to be
held by them in connection with the use and occupancy of the Owned Real Property
and the structures located thereon. To the Sellers' Knowledge, the structures on
the Owned Real Properties are within the applicable boundary lines and there are
no encroachments on the Owned Real Properties.
xxx
Section 5.9 Leased Real Property. (a) Schedule 5.9(a) of the Disclosure
Schedule, lists, as of the date of this Agreement, the street address of each
parcel of Leased Real Property and the identity of the lessor, lessee and
current occupant (if different from lessee) of each such parcel of Leased Real
Property.
(b) Schedule 5.9(b) of the Disclosure Schedule sets forth a
true and complete list of all leases and subleases relating to the Leased Real
Property and any and all ancillary documents pertaining thereto (including all
amendments, modifications, supplements, exhibits, schedules, addenda and
restatements thereto and thereof and all consents, including consents for
alterations, assignments and sublets, documents recording variations, memoranda
of lease, options, rights of expansion, extension, first refusal and first offer
and evidence of commencement dates and expiration dates). With respect to each
of such leases and subleases, except as otherwise set forth on Schedule 5.9(b)
of the Disclosure Schedule, no Seller Party has exercised or given any notice of
exercise, nor has any lessor or landlord exercised or received any notice of
exercise of, any option, right of first offer or right of first refusal
contained in any such lease or sublease, including, without limitation, any such
option or right pertaining to purchase, expansion, renewal, extension or
relocation (collectively, "Options").
(c) The rental set forth in each lease or sublease of the
Leased Real Property is the actual rental being paid, and there are no separate
agreements or understandings with respect to the same. Each Seller Party has the
full right to exercise its respective Options contained in its respective leases
and subleases pertaining to the Leased Real Property on the terms and conditions
contained therein and upon due exercise would be entitled to enjoy the full
benefit of such Options with respect thereto.
(d) No Seller Party has received any notice of threatened
condemnation proceedings, lawsuits or administrative actions relating to any of
the Leased Real Property or any other matters which do or may materially
adversely affect the current use, occupancy or value thereof as it relates to
the Business, and there are no pending or, to the Sellers' Knowledge, threatened
condemnation proceedings, lawsuits or administrative actions relating to any of
the Leased Real Property or any other matters which do or may materially
adversely affect the current use, occupancy or value thereof as it relates to
the Business.
(e) No Seller Party has received any notice that any of the
Leased Real Property or any of the structures thereon, or the use, occupancy or
operation thereof by the Seller Party or any of its Affiliates, violate any
material governmental requirements, deed or other title covenants or
restrictions or Permits.
(f) To the Seller's Knowledge, the Seller Parties have obtained
all material approvals of Governmental Authorities (including certificates of
use and occupancy, licenses and other Permits) required to be held by them in
connection with the use and occupancy of the Leased Real Property and the
structures located thereon.
xxxi
Section 5.10 Environmental Matters. Except as disclosed on Schedule
5.10 of the Disclosure Schedule:
(a) to the Sellers' Knowledge, the Seller Parties hold, and
are, and have been for the three years prior to the date hereof, in
substantial compliance with all material permits, licenses and
governmental authorizations required for the Seller Parties to conduct
the Business under applicable Environmental Laws ("Environmental
Permits") (all of the Environmental Permits required for the conduct of
the Business are identified on Schedule 5.10 of the Disclosure
Schedule), and the Seller Parties are otherwise in material compliance
with the terms and conditions of the Environmental Permits and
applicable Environmental Laws with respect to the Business and the
Purchased Assets;
(b) no Seller Party has received any written notice that it is
a potentially responsible party under CERCLA or any similar state law
with respect to the Business or the Purchased Assets;
(c) no Seller Party has entered into or agreed to any consent
decree or order, or other binding agreement with a Governmental
Authority or is subject to any outstanding judgment, decree, or
judicial or administrative order relating to compliance with or
liability under any Environmental Law or to the investigation or
cleanup of Hazardous Substances under any Environmental Law relating to
the Business or the Purchased Assets;
(d) there are no civil, criminal or administrative actions,
suits, demands, claims, hearings, or, to Sellers' Knowledge,
investigations or other proceedings pending or threatened against the
Business or any Seller Party or their Affiliates with respect to the
Business or, to the Sellers' Knowledge, the Purchased Assets relating
to any violations, or alleged violations, of any Environmental Law that
could reasonably be expected to result in a material liability;
(e) with respect to the Business, no Seller Party nor any of
their respective Affiliates have received any notices, demand letters
or requests for information, arising out of, in connection with, or
resulting from, a violation, or alleged violation, of any Environmental
Law that could reasonably be expected to result in a material
liability;
(f) no Seller Party nor any of their respective Affiliates have
been notified by any Governmental Authority or any other Person that
the Business, any Seller Party or any of their respective Affiliates
have, or may have, any material liability relating to the Business
pursuant to any Environmental Law;
(g) to the Knowledge of the Sellers, no Person has generated,
manufactured, stored, transported, treated, recycled, disposed of or
otherwise handled, in any way, any material quantities or
concentrations of Hazardous Substances in violation of any applicable
Environmental Law on any of the Owned Real Property or Leased Real
Property;
(h) to the Sellers' Knowledge, copies of all environmental
investigations, studies, audits, tests, reviews, or other analyses
conducted by or which are in the possession of the
xxxii
Seller Parties or any of its respective Affiliates relating to the
Business, Owned Real Property or Leased Real Property (including, with
respect to each of the Owned Real Property and Leased Real Property,
the soil, groundwater or surface water on, under or adjacent to the
Owned Real Property and Leased Real Property (the "Affected Property"))
have been made available to the Buyers prior to the date hereof;
(i) to the Knowledge of the Sellers, there has not occurred and
there is not occurring a release or unlawful discharge of Hazardous
Substances into the environment resulting from the operation of the
Business on any of the Owned Real Property or Leased Real Property that
could reasonably be expected to result in a material liability; and
(j) to the Knowledge of the Sellers, (i) there are no and there
have been no underground storage tanks or any open dumps, landfills,
surface impoundments, lagoons, in-ground vaults, PCB-containing
substances or waste storage, treatment or disposal areas on, in or
under the Owned Real Property or Leased Real Property and (ii) no
friable asbestos insulation or other asbestos-containing material has
been installed at the Owned Real Property or Leased Real Property by
any Seller Party or anyone acting on their behalf or, to Sellers'
Knowledge, by any other Person, and (iii) no facts, events or
conditions exist that would reasonably be expected to prevent, hinder
or limit continued compliance, in all material respects, by the
Business as currently conducted with any Environmental Law or
Environmental Permit after the Closing Date.
The representations and warranties made in this Section 5.10 are the
Seller Parties' exclusive representations and warranties relating to any
environmental matters, including any arising under any Environmental Laws.
Section 5.11 ERISA; Benefit Plans. (a) Schedule 5.11(a) of the
Disclosure Schedule lists each Employee Plan.
(b) Except as set forth in Schedule 5.11(b) of the Disclosure
Schedule, any Employee Plan that is intended to be qualified under Section
401(a) of the Code and exempt from Tax under Section 501(a) of the Code has been
determined by the Internal Revenue Service to be so qualified or an application
for such determination is pending. Any such determination that has been obtained
remains in effect and has not been revoked, and with respect to any application
that is pending, no Seller Party has any reason to believe that such application
for determination will be denied. Nothing has occurred since the date of any
such determination that is reasonably likely to affect adversely such
qualification or exemption, or result in the imposition of excise Taxes or
income Taxes on unrelated business income under the Code or ERISA with respect
to any such Employee Plan.
(c) Each Employee Plan conforms (and at all times has
conformed) in all material respects to, and is being administered and operated
(and at all time has been administered and operated) in material compliance with
its terms and, the requirements of ERISA, the Code (where applicable), all other
applicable laws and any applicable collective bargaining agreement. All returns,
reports and disclosure statements required to be made under ERISA and the Code
with respect to any such Employee Plan has been timely filed or delivered.
Except as disclosed
xxxiii
in Schedule 5.11(c) of the Disclosure Schedule, none of the Employee Plans is a
multiemployer plan (as such term is defined in Section 3(37) of ERISA).
(d) No Seller Party nor any ERISA Affiliate maintains an
Employee Plan which would be reasonably likely to result in the payment to any
employee or former employee of the Business by the Buyers of any money or other
property or rights or accelerate or provide any other right or benefit to any
employee or former employee of the Business which would become a Liability of
the Buyers as a result of the transactions contemplated by this Agreement,
whether or not such payment, right or benefit would constitute a parachute
payment within the meaning of Section 280G of the Code.
(e) The Sellers have delivered to the Buyers true and complete
copies of: (i) each Employee Plan and all amendments not reflected in such
Employee Plan; (ii) all related trust agreements or annuity agreements (and any
other funding document) for each Employee Plan; (iii) for the three (3) most
recent plan years, all annual reports (Form 5500 series) and attached schedules
for each Employee Plan; (iv) for the three (3) most recent plan years, all
financial statements and actuarial reports with respect to each Employee Plan
for which financial statements or actuarial reports are required or have been
prepared; (v) the current summary plan description and subsequent summaries of
material modifications for each Employee Plan; and (vi) the most recent
determination letter for each Employee Plan intended to qualify under Section
401(a) of the Code.
(f) Neither any Employee Plan, any Seller Party or any ERISA
Affiliate nor any trusts created under the Employee Plans or any trustee,
administrator or other fiduciary thereof has engaged in a "prohibited
transaction" (as such term is defined in Section 4975 of the Code or Section 406
of ERISA) which could result in a Tax or penalty. Except as set forth in
Schedule 5.11(f) of the Disclosure Schedule, there have not been any "reportable
events" (as defined in Section 4043 of ERISA) with respect to any Employee Plan.
(g) Except as set forth in Schedule 5.11(g) of the Disclosure
Schedule, no Seller Party or ERISA Affiliate sponsors, or during the last six
(6) years has sponsored, an Employee Plan subject to Title IV of ERISA or
Section 412 of the Code. No event, transaction, or condition has occurred or
exists which could result in the incurrence by any of the Sellers or any ERISA
Affiliate of any Liability or potential Liability pursuant to Title I or IV of
ERISA, the penalty or excise Tax provisions of the Code relating to employee
benefit plans, or Section 412 of the Code, or in the imposition of any
Encumbrance on any of the rights, properties or assets of any Seller Party or
any ERISA Affiliate.
(h) Except as set forth in Schedule 5.11(h) of the Disclosure
Schedule, no Seller Party or ERISA Affiliate has a current or contingent
obligation to contribute to any multiemployer plan (as defined in Section 3(37)
of ERISA). No Seller Party or ERISA Affiliate has incurred (and no event,
transaction or condition has occurred or exists which could result in any Seller
Party or ERISA Affiliate incurring) any withdrawal liability under Section 4201
or 4202 of ERISA in respect of any multiemployer plan. At no time has any Seller
Party or ERISA Affiliate incurred any Liability which could subject the Buyers
to material liability under Sections 4062, 4063 or 4064 of ERISA.
xxxiv
(i) No Seller Party or ERISA Affiliate, nor any other
organization of which any of them is a successor corporation as defined in
Section 4069(b) of ERISA, have engaged in any transaction described in Section
4069(a) of ERISA with respect to any Employee Plan.
(j) With respect to any Employee Plan that is an employee
welfare benefit plan (within the meaning of Section 3(1) of ERISA) (a "Welfare
Plan") and except as specified in Schedule 5.11(j) of the Disclosure Schedule,
(i) each Welfare Plan for which contributions are claimed by any Seller Party as
deductions under any provisions of the Code is in material compliance with all
applicable requirements pertaining to such deductions, (ii) with respect to any
welfare benefit fund (within the meaning of Section 419 of the Code) related to
a Welfare Plan, there are no disqualified benefits (within the meaning of
Section 4976(b) of the Code), (iii) any Employee Plan that is a group heath plan
(within the meaning of Section 4980B(g)(2) of the Code) complies, and in each
and every case has complied, with all the applicable material requirements of
Section 4980B of the Code, ERISA, Title XXII of the Public Health Service Act
and the Social Security Act, and (iv) all Welfare Plans may be amended or
terminated at any time on or after the Closing Date without any cost, other than
administrative expenses, to the Seller Parties.
(k) Except as set forth on Schedule 5.11(k) of the Disclosure
Schedule, none of the Employee Plans provides, and no Seller Party or ERISA
Affiliate has any obligation to provide, health, medical, life or other
non-pension benefits to retired or other former employees, except as
specifically required by Section 4980B of the Code or Part 6 of Title I of
ERISA, or under the continuation of coverage provisions of the laws of any state
or locality.
(l) To any Seller Party's Knowledge, there are no pending or
threatened claims, suits or other proceedings with respect to any Employee Plan
or Foreign Plan by or on behalf of the individual participants or beneficiaries
of such Employee Plan or Foreign Plan, alleging any breach of fiduciary duty on
the part of any Seller Party or any of their respective officers, directors or
employees under ERISA or other applicable laws, or claiming benefits (other than
those made in the ordinary operation of such Employee Plan or Foreign Plan) or
is there any basis for such claim. To the Sellers' Knowledge, no Employee Plan
or Foreign Plan is the subject to any pending or threatened investigation or
audit by the Internal Revenue Service, the Department of Labor, the PBGC or any
other Governmental Authority.
(m) There is no contract, agreement or benefit arrangement
covering any current or former employee of any Seller Party which, with respect
to the Business, individually or in the aggregate, could reasonably be expected
to give rise to the payment of any amount which would constitute an "excess
parachute payment" (as defined in Section 280G of the Code). Except as set forth
in Schedule 5.11(m) of the Disclosure Schedule, neither the execution of this
Agreement nor the consummation of the transactions contemplated hereby will
likely result in any obligation or Liability (with respect to accrued benefits
or otherwise) of Buyers to the PBGC, to any Employee Plan, or to any present or
former employee, director, officer, stockholder, contractor or consultant of any
Seller Party.
(n) None of the assets of any Seller Party or ERISA Affiliate
constitutes "plan assets" of one or more employee benefit plans within the
meaning of C.F.R. Section 2510.3-101.
xxxv
(o) Except as set forth in Schedule 5.11(o) of the Disclosure
Schedule, there are no employee benefit plans, programs, contracts or
arrangements that would be Employee Plans, and listed on Schedule 5.11(a) of the
Disclosure Schedule, but for the fact that such plans, programs, contracts or
arrangements are subject to the Laws of a jurisdiction other than the United
States and maintained for the benefit of any current or former employee, officer
or director of the Business outside the United States (the "Foreign Plans").
(p) None of the Employee Plans set forth in Schedule 5.11(a) of
the Disclosure Schedule cover any non-United States employee or former employee
(who is not a resident of the United States) of any Seller Party.
(q) Any contributions required to be made to any Foreign Plan
have been made or, if applicable, accrued in accordance with normal accounting
practices and a prorated contribution for the period prior to and including the
Closing Date has been made or accrued.
(r) The fair market value of the assets of any funded Foreign
Plan, the Liability of each insurer for any Foreign Plan funded through
insurance or the book reserve established for any Foreign Plan, together with
any accrued contributions, is sufficient to procure or provide the benefits
determined on an ongoing basis (actual or contingent) accrued to the Closing
Date payable to all current and former participants of any such Foreign Plan
according to the actuarial assumptions and valuations most recently used to
determine employer contributions to such Foreign Plan and the transactions
contemplated hereby shall not cause such assets or insurance obligations to be
less than such benefit obligations.
(s) Each Foreign Plan required to be registered has been
registered and has been maintained in good standing with applicable regulatory
or Governmental Authorities, and each such Foreign Plan is now and has always
been operated in full compliance with all applicable non-United States Law.
(t) All contributions to, and payments from, the Employee Plans
which may have been required to be made in accordance with the Employee Plans
and, when applicable, Section 302 of ERISA or Section 412 of the Code, have been
timely made. All such contributions to the Employee Plans, and all payments
under the Employee Plans, except those to be made from a trust qualified under
Section 401(a) of the Code, for any period ending before the Closing Date that
are not yet, but will be, required to be made are properly accrued and reflected
on the Balance Sheet. No asset of any Seller Party or any ERISA Affiliate is
subject to any Encumbrance under Sections 401(a)(29) or 412(n) of the Code,
Sections 302(f) or 4068 of ERISA or arising out of any action filed under
Section 4301(b) of ERISA.
(u) Except as set forth in Schedule 5.11(u) of the Disclosure
Schedule, no Seller Party nor any ERISA Affiliate has any commitment, whether
formal or informal and whether legally binding or not, to create any additional
Employee Plan or Foreign Plan or modify any existing Employee Plan or Foreign
Plan applicable to any Person employed in the conduct of the Business.
(v) Except as set forth in Schedule 5.11(v) of the Disclosure
Schedule, there has not been in respect of the Business any plant closing or
mass layoff of employees (as those terms
xxxvi
are defined in the WARN Act or any similar state or local Law or regulation)
within the one hundred twenty (120) day period prior to the date hereof, and
within the ninety (90) day period prior to the Closing Date, there has been no
layoff or termination of more than ten (10) employees at any location related
primarily to the Business.
Section 5.12 Certain Contracts and Arrangements. Except for contracts,
agreements, personal property leases, service agreements, customer agreements,
commitments, understandings or instruments which (a) are listed on Schedule
5.9(b), Schedule 5.17(b) or Schedule 5.12 of the Disclosure Schedule (in each
case, "Material Agreements") or (b) have been entered into in the ordinary
course of business and do not involve obligations payable by the Seller Parties
in excess of $50,000 individually, neither the Sellers nor the Foreign
Corporations are, as of the date hereof, a party to any written contract,
agreement, personal property lease, commitment, understanding or instrument
relating to the Business or the Purchased Assets. As of the date of this
Agreement, to the Knowledge of the Sellers, none of the other parties to any
Assumed Agreement or Material Agreements of the Foreign Corporations intends to
terminate or materially alter the provisions of such Assumed Agreement or
Material Agreement, either as a result of the transactions contemplated hereby
or otherwise. As of the date of this Agreement, no Seller Party has been given
or received written notice of any default or claimed, purported or alleged
default, or facts that, with notice or lapse of time, or both, would constitute
a default (or give rise to a termination right) on the part of any party in the
performance of any obligation to be performed under any of the Assumed
Agreements or Material Agreements of the Foreign Corporations (other than
monetary defaults by a Seller Party identified in the Bankruptcy Case). True and
complete copies of all written Assumed Agreements and Material Agreements of the
Foreign Corporations, including any amendments thereto, have been delivered to
Buyers and such documents constitute the legal, valid and binding obligation of
the respective Seller Party.
Section 5.13 Legal Proceedings and Judgments. Except as set forth on
Schedule 5.13 of the Disclosure Schedule and except with respect to actions
commenced in the Chapter 11 Cases, (a) there are no claims, actions, proceedings
or investigations pending or, to the Knowledge of the Seller Parties, threatened
against or involving the Business, the Purchased Assets, the Shares, the Assumed
Liabilities or the Seller Parties before any court or other Governmental
Authority acting in an adjudicative capacity, which would, if adversely
determined, have a Material Adverse Effect; and (b) there are no claims,
actions, proceedings or investigations pending against or, to the Knowledge of
the Sellers, relating to the Seller Parties before any court or other
Governmental Authority acting in an adjudicative capacity, which have been
commenced after the filing of the Chapter 11 Cases and which would, if adversely
determined, have a Material Adverse Effect. Except as set forth on Schedule 5.13
of the Disclosure Schedule, the Seller Parties are not subject to any
outstanding judgment, rule, order, writ, injunction or decree of any court or
other Governmental Authority which would have a Material Adverse Effect.
Section 5.14 Permits. (a) The Sellers and the Foreign Corporations have
all permits, certificates, licenses, franchises and other governmental
authorizations, consents and approvals, other than with respect to Environmental
Laws (which are addressed in Schedule 5.10) (collectively, "Permits"), necessary
for the operation of the Business as presently conducted, except where the
failure to have such Permits would not have a Material Adverse Effect.
xxxvii
Schedule 5.14 of the Disclosure Schedule sets forth a list of all material
Permits and Environmental Permits held by the Sellers and the Foreign
Corporations as of the date hereof and necessary for the operation of the
Business as presently conducted. Except as would not have a Material Adverse
Effect: (i) the Sellers and the Foreign Corporations have fulfilled and
performed their obligations under the Permits, and no event has occurred or
condition or state of facts exists which constitutes or, after notice or lapse
of time or both, would constitute a breach or default under any Permit or which
permits or, after notice or lapse of time or both, would permit revocation or
termination of any Permit, or which might adversely affect the rights of the
Sellers and/or the Foreign Corporations under any such Permit; (ii) no written
notice of cancellation, of default or of any dispute concerning any Permit has
been received by any Seller Party; and (iii) each of the Permits is valid,
subsisting and in full force and effect.
(b) With respect to the Business: (i) no notice of cancellation
of any Permit has been received by, or is known to, the Sellers and (ii) each of
the Permits is valid and in full force and effect, except where such failure of
such Permit to be valid and in full force and effect would not have a Material
Adverse Effect.
Section 5.15 Compliance with Laws. Except to the extent excused by or
unenforceable as a result of the filing of the Chapter 11 Cases or the
applicability of any provision or applicable law of the Bankruptcy Code, to the
Knowledge of the Sellers, the Seller Parties are in compliance, in all material
respects, with all Permits and Laws of any Governmental Authority applicable to
the Business, except for violations which do not have a Material Adverse Effect.
Without limiting the foregoing, to the Knowledge of the Sellers, the Seller
Parties are not in material violation of the Foreign Corrupt Practices Act of
1977.
Section 5.16 Taxes. Each of the Seller Parties has provided to the
Buyers all material income Tax Returns filed by each Foreign Corporation or
filed by a Seller Party with respect to each Foreign Corporation (including IRS
Forms 5471) for any Tax Period for which the applicable statute of limitation
remains open as of the date hereof. Except as set forth on Schedule 5.16 of the
Disclosure Schedule, (a) each of the Seller Parties has filed all material Tax
Returns (including, but not limited to, those filed on a consolidated, combined
or unitary basis) relating to or affecting the Business or any Purchased Asset
that they were required to file (taking into account any extension of time to
file granted to or obtained on behalf thereof), which Tax Returns were correct
and complete in all material respects, (b) each of the Seller Parties has timely
paid all material Taxes shown on such Tax Returns for any taxable period for
which the applicable statute of limitations remains open as of the date hereof,
(c) each of the Seller Parties has, or will have, adequate reserves on its
financial statements for any unpaid material Taxes which (i) relate to the
Business or the Purchased Assets with respect to the Pre-Closing Tax Period and
(ii) are not required to be paid on or prior to the Closing Date, (d) no
deficiency for any material amount of Tax has been asserted or assessed in
writing by any Governmental Authority against the Seller Parties for which there
are not adequate reserves, (e) no Seller Party has waived any statute of
limitations in respect of Taxes or agreed to any extension of time with respect
to any Tax assessment or deficiency with respect to the Business or the
Purchased Assets, (f) no Seller Party is the subject of any audit or other
pending action or, to its Knowledge, has been threatened to be made a party to
any action, the subject of any audit or other proceeding relating to the
assessment or collection of Taxes with respect to the Business or the Purchased
Assets, (g) there are no Tax Liens other than Permitted Encumbrances on any
Purchased Asset or
xxxviii
on any of the Shares, (h) no claim has been made within the five (5) years prior
to the date hereof in writing by a Governmental Authority in any jurisdiction
where any Seller Party does not file Tax Returns that the Seller Party is or may
be subject to taxation by that jurisdiction, (i) no Foreign Corporation is a
party to any Tax allocation or Tax sharing agreement, (j) no Foreign Corporation
has ever had in effect any election to be treated as a domestic corporation
pursuant to Section 897(i) of the Code, (k) no Foreign Corporation has any
liability for any Taxes of any Person under Treasury Regulations section
1.1502-6 or any comparable provision of state, local or foreign Law, as a
transferee or successor, by contract, or otherwise, and (l) to the Sellers'
Knowledge, no Foreign Corporation has had income effectively connected with the
conduct of a United States trade or business within the meaning of Section
882(a)(1) of the Code in any taxable year for which unpaid material Taxes may be
assessed by the Internal Revenue Service.
Section 5.17 Intellectual Property. (a) Schedule 5.17(a) of the
Disclosure Schedule identifies all of the Seller Parties' (to the extent
material to the operation of the Business) registered or applied for Copyrights,
Patent Rights and Trademarks.
(b) Schedule 5.17(b) of the Disclosure Schedule sets forth a
true, complete and correct list of all material written agreements relating to
the Intellectual Property to which the Sellers and/or the Foreign Corporations
are a party or otherwise bound (collectively, the "License Agreements"). To the
Sellers' Knowledge, the License Agreements are valid and binding obligations of
the Sellers and/or the Foreign Corporati.ons enforceable against them in
accordance with their terms. To the Sellers' Knowledge, the Sellers and/or the
Foreign Corporations are not currently in default under any License Agreement
nor with notice or lapse of time or both would they be in default, and, to the
Sellers' Knowledge, there exists no event or condition which constitutes a
material violation or material breach of, or constitutes (with or without due
notice or lapse of time or both) a material default by any party under, any such
License Agreement. The Sellers and/or the Foreign Corporations have not
sublicensed their rights to any Intellectual Property rights except pursuant to
the License Agreements. No royalties, honoraria or other fees are payable by the
Sellers and/or the Foreign Corporations to any third parties (other than
Governmental Authorities) for the use of or right to any Intellectual Property
except pursuant to the License Agreements. The Sellers and/or the Foreign
Corporations have delivered to the Buyers true, complete and correct copies of
each License Agreement.
(c) Except as set forth on Schedule 5.17(c) of the Disclosure
Schedule, with respect to the Intellectual Property:
(i) One of the Sellers or the Foreign Corporations is the sole
current owner of record for each application and registration listed on
Schedule 5.17(a) of the Disclosure Schedule.
(ii) The Seller Parties have not received a notice of any
pending and, to the Sellers' Knowledge there is no, threatened claim,
suit, arbitration or other adversarial proceeding before any court,
agency, arbitral tribunal, or registration authority in any
jurisdiction involving any material Intellectual Property or alleging
that the activities or the conduct of the Seller Parties infringes
upon, violates or constitutes the unauthorized use of the proprietary
rights of any third party or challenging the Sellers and/or the
xxxix
Foreign Corporations' ownership, use, validity, enforceability or
registrability of any material Intellectual Property. To the Sellers'
Knowledge, there are no material settlements, forbearances to ▇▇▇,
consents, judgments, or orders or similar obligations other than the
License Agreements which (A) restrict the Sellers and/or the Foreign
Corporations' rights to use the Intellectual Property, (B) restrict the
Business in order to accommodate a third party's intellectual property
rights or (C) permit third parties to use Intellectual Property.
(iii) To the Sellers' Knowledge, the conduct of the Business as
currently conducted does not infringe upon (either directly or
indirectly such as through contributory infringement or inducement to
infringe), in any material respect, any intellectual property rights
owned or controlled by any third party. To the Sellers' Knowledge, no
third party is misappropriating, infringing, diluting or violating any
intellectual property rights of the Sellers and/or the Foreign
Corporations in and to any material Intellectual Property and no such
claims, suits, arbitrations or other adversarial proceedings are
currently being brought against any third party by the Seller Parties.
(iv) To the Sellers' Knowledge, no trade secret material to the
Business has been disclosed or authorized to be disclosed to any third
party other than pursuant to a written non-disclosure agreement. To the
Sellers' Knowledge, no party to any non-disclosure agreement relating
to the Sellers and/or the Foreign Corporations' trade secrets is in
material breach or default (with or without due notice or lapse of time
or both) thereof.
Except as otherwise contemplated by this Agreement, the consummation of
the transactions contemplated hereby will not (i) result in any third party
having a right of first refusal to purchase or license any Intellectual Property
or (ii) require the consent of any Governmental Authority or third party in
respect of any Intellectual Property.
Section 5.18 Labor and Employment Matters. (a) Except as disclosed on
Schedule 5.18(a) of the Disclosure Schedule, no Seller Party is a party to any
collective bargaining agreement or other labor union contract applicable to
employees of the Business, nor are there any organizational campaigns, petitions
or other unionization activities seeking recognition of a collective bargaining
unit which could materially affect the Business. As of the date hereof, there
are no controversies, strikes, slowdowns or work stoppages pending or, to the
Knowledge of the Sellers, threatened, and none of the Seller Parties has
experienced any such controversy, strike, slowdown or work stoppage within the
past three (3) years, which may materially interfere with the Business. There
are no unfair labor practice complaints pending against any of the Sellers or
the Foreign Corporations before the National Labor Relations Board or any other
Governmental Authority. To the Knowledge of the Sellers, no Seller Party has
received, during the last three (3) years, any threats, relating to the
Business, concerning the bringing of an action before the National Labor
Relations Board or any other Governmental Authority concerning any alleged
unfair labor practice. To the Knowledge of the Sellers, none of the Seller
Parties or their respective representatives or employees has committed any
unfair labor practice in connection with the operation of the Business which
could have a Material Adverse Effect.
xl
(b) Schedule 5.18(b) of the Disclosure Schedule contains a
true, correct and complete list of (i) the employees currently employed by the
Seller Parties in the conduct of the Business, and (ii) all personnel policies,
manuals, employee handbooks, summary plan descriptions and similar materials
pertaining to the Business. The Seller Parties have delivered to the Buyers all
documents referred to in clauses (i) and (ii).
(c) The Seller Parties have been and are in compliance in all
material respects with all applicable Laws respecting employment and employment
practices, terms and conditions of employment and wages and hours, including any
such laws respecting employment discrimination, workers' compensation, family
and medical leave, the Immigration Reform and Control Act, the Americans with
Disabilities Act, employment standards and labor relations. To the Knowledge of
the Sellers, none of the Seller Parties or their respective representatives or
employees has committed any violation of such Laws in connection with the
operation of the Business that could have a Material Adverse Effect.
(d) The Sellers are in compliance with the requirements of the
WARN Act and have no Liabilities pursuant to the WARN Act.
Section 5.19 Absence of Certain Developments. Since September 27, 2002
through the date of this Agreement, the Business has been conducted in the
ordinary and usual course of business consistent with past practices and no
Seller Party has: (a) sold, leased, transferred or otherwise disposed of any of
the material assets related to the Business (other than dispositions in the
ordinary course of business consistent with past practices); (b) to the
Knowledge of the Sellers, terminated or amended in any material respect any
Material Agreement to which such Seller Party is a party or to which it is bound
or to which its properties are subject; (c) suffered any material loss, damage
or destruction of any tangible assets with a value in excess of $100,000
individually or $500,000 in the aggregate, unless any such loss, damage or
destruction is covered by insurance, the proceeds of which are payable to the
Buyers in accordance with this Agreement or otherwise made payable to the
Buyers; (d) made any change in the accounting methods or practices it follows,
whether for general financial or Tax purposes, other than as required by U.S.
GAAP; (e) to the Knowledge of the Sellers, incurred any material Liabilities
other than in the ordinary course of business; (f) suffered any material labor
dispute, strike or other work stoppage; or (g) agreed or offered to do any of
the above.
Section 5.20 Brokers. Except for Gleacher Partners LLC, no person is
entitled to any brokerage, financial advisory, finder's or similar fee or
commission payable by the Seller Parties or any of their Affiliates in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Seller Parties. Such fees shall be paid
in full by the Sellers at Closing.
Section 5.21 Accounts Receivable. All Accounts Receivable of the Seller
Parties were incurred in the normal course of business and represent arm's
length sales actually made in the ordinary course of business.
Section 5.22 Inventory. The Inventory is in merchantable condition and
is of a quality useable and saleable in the ordinary course of business. All raw
materials used in the Business have been replenished in the ordinary course of
business. The raw materials now on hand in the
xli
Business were acquired in the ordinary course of business at a cost not
exceeding market prices generally prevailing at the time of purchase.
Section 5.23 Insurance. Schedule 5.23 of the Disclosure Schedule sets
forth a true and correct list of all insurance policies or binders maintained by
the Seller Parties on the date hereof or at any time within the previous ten
(10) years relating to the Business or the Purchased Assets showing, as to each
policy or binder, the carrier, policy number, coverage limits, expiration dates,
deductibles or retention levels and a general description of the type of
coverage provided. Such policies and binders are in full force and effect and
the Seller Parties are otherwise in compliance in all material respects with the
terms and provisions of such policies. Other than as disclosed on Schedule 5.23
of the Disclosure Schedule, the Seller Parties have not received any notice of
cancellation or non-renewal of any such policy or arrangement nor, to the
Sellers' Knowledge, is the termination of any such policies or arrangements
threatened. There is no claim pending under any of such policies or arrangements
as to which coverage has been questioned, denied or disputed by the underwriters
of such policies or arrangements excluding medical claims not in a material
amount as measured against the applicable policy limits. None of such policies
or arrangements provides for any material retrospective premium adjustment,
experienced-based liability or loss sharing arrangement. Schedule 5.23 of the
Disclosure Schedule includes a list of all pending insurance claims of the
Seller Parties pertaining to the Business involving amounts in excess of
$25,000. Schedule 5.23 of the Disclosure Schedule also includes a list of all
insurance claims of any Seller Party relating to environmental matters
pertaining to the Business in excess of $25,000 that have been made by any
Seller Party during the ten (10) year period prior to the date hereof.
Section 5.24 Customers and Suppliers. The Seller Parties have
previously provided the Buyers with a list of the Business' material customer
accounts, including the complete name, address and telephone number of each (the
"Accounts"). The Seller Parties (a) have not made any representations,
warranties, promises, undertakings or agreements to change or modify the
financial, business or operating terms with respect to any of the Accounts,
except in the ordinary course of business; and (b) have not received notice of
any violation of the terms of any arrangement with any Account.
Section 5.25 Operating Names. Schedule 5.25 of the Disclosure Schedule
contains a complete and accurate list of all of the names under which the
Business has operated during the last three (3) years (the "Operating Names").
Section 5.26 Overlapping Assets. Schedule 5.26 of the Disclosure
Schedule sets forth a list (a) of the Purchased Assets ("Buyers' Overlapping
Assets") that are used in the operation of the Sellers' businesses other than
the Business (the "Sellers' Retained Business") and the nature of the usage by
the Seller's Retained Business of Buyers' Overlapping Assets and (b) of the
assets not included in the Purchased Assets ("Sellers' Overlapping Assets")
which are used in the operation of the Business and the nature of the usage by
the Business of Sellers' Overlapping Assets.
Section 5.27 Exhibits & Schedules. All the facts recited in the
Disclosure Schedule annexed hereto shall be deemed to be representations of fact
as though recited in this Article V.
xlii
Section 5.28 Disclaimer of Other Representations and Warranties. EXCEPT
AS EXPRESSLY SET FORTH IN THIS ARTICLE V, THE SELLER PARTIES MAKE NO
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AT LAW OR IN EQUITY, IN RESPECT
OF THE SHARES OR ANY OF THEIR ASSETS (INCLUDING THE PURCHASED ASSETS),
LIABILITIES OR OPERATIONS, INCLUDING, WITH RESPECT TO MERCHANTABILITY OR FITNESS
FOR ANY PARTICULAR PURPOSE, AND ANY SUCH OTHER REPRESENTATIONS OR WARRANTIES ARE
HEREBY EXPRESSLY DISCLAIMED. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING,
THE SELLER PARTIES MAKE NO REPRESENTATION OR WARRANTY REGARDING ANY ASSETS OTHER
THAN THE SHARES AND THE PURCHASED ASSETS, AND NONE SHALL BE IMPLIED AT LAW OR IN
EQUITY.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE BUYER
As an inducement to the Sellers to enter this Agreement and to
consummate the transactions contemplated hereby, the Buyers, jointly and
severally, represent and warrant to the Sellers as follows:
Section 6.1 Organization. Each of the Buyers is a corporation duly
incorporated, validly existing and in good standing under the laws of the
jurisdiction of its organization and has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as is now being conducted.
Section 6.2 Authority Relative to this Agreement. Each of the Buyers
has full corporate power and authority to execute and deliver this Agreement and
to consummate the transactions contemplated hereby. The execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby
have been duly and validly authorized by the board of directors of each of the
Buyers and no other corporate proceedings on the part of any of the Buyers are
necessary to authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by the Buyers, and assuming that this Agreement constitutes a valid
and binding agreement of the Sellers, constitutes a valid and binding agreement
of each of the Buyers, enforceable against each of the Buyers in accordance with
its terms, except that such enforceability may be limited by applicable
bankruptcy, insolvency, moratorium or other similar laws affecting or relating
to enforcement of creditors' rights generally or general principles of equity.
Section 6.3 Consents and Approvals; No Violation. Subject to the entry
and effectiveness of the Approval Order, neither the execution and delivery of
this Agreement by the Buyers nor the purchase by the Buyers of the Shares and
the Purchased Assets and the assumption by the Buyers of the Assumed Liabilities
and Assumed Agreements pursuant to this Agreement will (a) conflict with or
result in any breach of any provision of the Certificate of Incorporation or
Bylaws (or other similar governing documents) of any of the Buyers; (b) require
any consent, approval, authorization or permit of, or filing with or
notification to, any Governmental Authority which has not been otherwise
obtained or made; or (c) result in a default (or give rise to any right of
termination, cancellation or acceleration) under any of the
xliv
terms, conditions or provisions of any material note, bond, mortgage, indenture,
agreement, lease or other instrument or obligation to which any of the Buyers is
a party or by which any of the Buyers' assets may be bound, except for such
defaults (or rights of termination, cancellation or acceleration) as to which
requisite waivers or consents have been obtained.
Section 6.4 Legal Proceedings and Judgments. There are no material
claims, actions, proceedings or investigations pending or, to the Buyers'
Knowledge, threatened against or relating to any of the Buyers before any court
or other Governmental Authority acting in an adjudicative capacity that could
reasonably be expected to have a material adverse effect on the Buyers' ability
to consummate the transactions contemplated hereby.
Section 6.5 Buyers' Financing. As of the date of this Agreement and on
the Closing Date, the Buyers have and will have funds sufficient to pay the
Purchase Price and all of their fees and expenses incurred in connection with
the transactions contemplated hereby, including the Cure Amount Payment in
respect of Assumed Agreements and any applicable transfer Taxes.
Section 6.6 Investment Purpose. The Buyers are acquiring the Shares
solely for the purpose of investment and not with a view to, or for offer or
sale in connection with, any distribution thereof.
ARTICLE VII
COVENANTS OF THE PARTIES
Section 7.1 Conduct of Business. (a) Except as described on Schedule 7.1(a) of
the Disclosure Schedule and except as required by the Bankruptcy Court, the
Bankruptcy Code, and any order or agreement relating to the use of cash
collateral or postpetition financing, during the period commencing on the date
of this Agreement and ending on the Closing Date, the Sellers shall, and shall
cause the Foreign Corporations to, (i) operate the Business in the usual,
regular and ordinary course, (ii) other than as permitted in writing by the
Buyers, preserve in all material respects the Business, its employees and its
operations, (iii) reasonably cooperate with the Buyers in communicating with the
employees employed in the conduct of the Business regarding the transactions
contemplated hereby, (iv) endeavor to preserve, in all material respects, the
goodwill and relationships with customers, suppliers, employees and others
having business dealings with the Business, in each case taking into account the
Sellers' status as a debtor under Chapter 11 of the Bankruptcy Code, (v)
maintain the books, records and accounts of the Sellers and Foreign Corporations
in accordance with prudent business practices, (vi) file, on a timely basis,
with the appropriate Governmental Authorities all Tax Returns required to be
filed and pay all Taxes due prior to the Closing Date, (vii) maintain, preserve
and protect all of the Purchased Assets and the assets of the Foreign
Corporations in the condition in which they exist on the date hereof, except for
ordinary wear and tear, and (viii) use commercially reasonable efforts to obtain
from third-parties all consents necessary to assign to the Buyers all agreements
assignable to the Buyers hereunder and to avoid defaults (other than any default
relating to or arising from the commencement of the Chapter 11 cases) under any
agreements to which any of the Foreign Corporations is a party.
xliv
(b) Prior to the Closing Date, without the prior written consent of the
Buyers, except as set forth in Schedule 7.1(b) of the Disclosure Schedule, the
Sellers shall not, and shall cause the Foreign Corporations not to:
(i) create, incur, assume or suffer to exist any material
Encumbrance upon the Purchased Assets or the assets of the Foreign
Corporations, other than (A) Permitted Encumbrances (all of which shall
be removed prior to Closing except for Closing Encumbrances), (B) the
liens in favor of the Prepetition Agent under the Prepetition Credit
Agreement (which shall be removed prior to Closing) and (C) the liens
in favor of the agent of the lenders under a postpetition cash
collateral agreement,
(ii) sell, lease (as lessor), transfer or otherwise dispose of
(other than sales and dispositions in the ordinary course of business)
any of the Purchased Assets or the assets of any Foreign Corporation,
(iii) take any action, or omit to take any action, which would
have the effect of artificially increasing Accounts Receivable or
Inventory or artificially reducing or deferring the payment of Accounts
Payable or the Foreign Corporation Closing Liabilities beyond levels
that would exist in the absence of this Agreement,
(iv) amend their certificates of incorporation, by-laws or
other organizational documents in a manner adverse to the Buyers,
(v) issue, sell, transfer, pledge, dispose of or encumber any
shares of any class or series of the capital stock of any of the
Foreign Corporations, or securities convertible into or exchangeable
for, or options, warrants, calls, commitments or rights of any kind to
acquire, any shares of any class or series of the capital stock of the
Foreign Corporations,
(vi) modify or amend in any material respect or terminate any
Material Agreement of the Foreign Corporations or any Assumed
Agreements or materially default under any Material Agreement of any of
the Foreign Corporations or, prior to the Petition Date, materially
default under any Assumed Agreement,
(vii) other than as contemplated by this Agreement or pursuant
to the Sellers' Chapter 11 Cases, take, or agree to or commit to take
any action that would materially impair the ability of the Sellers or
the Buyers to consummate the Closing in accordance with the terms
hereof or materially delay such consummation,
(viii) except with respect to bonus or retention plans
disclosed in Schedule 5.11(a) of the Disclosure Schedule and retention
and severance arrangements made in connection with the Sellers' Chapter
11 Cases, grant or agree to grant any bonus to any employee employed in
the conduct of the Business, or increase the rates of salaries or
compensation of such employees (other than increases made in the
ordinary course of business consistent with prior practices, in any
event not in excess of 5%) or increase or provide any new pension,
retirement or other employment benefits to any of the employees
employed in the conduct of the business,
xlv
(ix) make any election with respect to the Foreign Corporations
relating to Taxes, or make any other Tax election that is inconsistent
with past practices, change any currently or previously effective
election relating to Taxes, or adopt or change any accounting method
relating to Taxes or cause a Foreign Corporation to enter into any
closing agreement relating to Taxes, settle or consent to any claim or
assessment relating to Taxes, waive the statute of limitations for any
such claim or assessment, or file any amended Tax Return or claim for
refund of Taxes,
(x) redeem or purchase any shares of their capital stock,
(xi) incur, assume, guarantee, endorse or otherwise become
liable for long-term third party indebtedness for borrowed money, or
incur, assume, guarantee, endorse or otherwise become liable for
short-term third party indebtedness for borrowed money exceeding
$200,000 in the aggregate from the date hereof until the Closing,
(xii) permit any insurance policy naming any Seller Party as a
beneficiary or as a loss payable payee to be canceled or terminated
without notice to the Buyers, except policies which are replaced
without diminution in or gaps in coverage,
(xiii) except any actions taken pursuant to the Bid Procedures
Order or the Chapter 11 Cases, take, or agree to or commit to take, any
action that would or is reasonably likely to result in (A) any of the
conditions to the Closing set forth in Article VIII not being
satisfied, (B) any of the representations and warranties of the Sellers
set forth in this Agreement which are not qualified by "Material
Adverse Effect", "materiality" or other similar qualifications not
being so true, complete and correct in all material respects and (C)
any of the representations and warranties of the Sellers set forth in
this Agreement which are qualified by "Material Adverse Effect",
"materiality" or other similar qualifications not being so true,
complete and correct,
(xiv) make any distributions of any assets other than cash and
cash equivalents (it being expressly agreed that the Seller Parties may
make any distributions of any and all cash and cash equivalents without
the consent of the Buyers),
(xv) with respect to the Foreign Corporations, incur any
material Liabilities other than in the ordinary course of business,
(xvi) make any change in the accounting methods or practices it
follows other than changes required by U.S. GAAP, or
(xvii) agree to do any of the foregoing.
Section 7.2 Access to Information; Maintenance of Records. (a) Between
the date of this Agreement and the Closing Date, the Seller Parties shall,
during ordinary business hours, upon reasonable notice (i) give the Buyers and
the Buyers' Representatives reasonable access to all supervisory employees and
to all books, records, plants, offices and other facilities and properties
relating to the Business to which the Buyers are not denied access by law, (ii)
permit the Buyers to make such reasonable inspections thereof as the Buyers may
reasonably request, including permitting a representative of the Buyers to
maintain a physical presence at each of the
xlvi
Business Real Properties at all times prior to the Closing, provided that such
representative of the Buyers shall not be present at any time during which due
diligence is being conducted by third parties in connection with the bankruptcy
proceedings or any other time (which shall be of a limited nature) at which the
Sellers' management reasonably believes that such presence would result in a
material impact on the Business, (iii) furnish the Buyers with such financial
and operating data and other information with respect to the Business as the
Buyers may from time to time reasonably request and (iv) furnish the Buyers with
a copy of any pleading, report, schedule or other document filed by Insilco with
the SEC or the Bankruptcy Court or received by Insilco with respect to the
Business; provided, however, that with respect to each of the provisions of this
Section 7.2, (A) any such physical presence which shall exist and any such
access shall be conducted in such a manner so as not to interfere with the
operation or conduct of the Business, (B) the Sellers shall not be required to
take any action which would constitute a waiver of the attorney-client privilege
and (C) the Sellers need not supply the Buyers or the Buyers' Representatives
with any information which the Sellers are under a legal obligation not to
supply or any information, documents or materials related to customer specific
costing and pricing information; provided, however, that at the request of the
Buyers, the Sellers shall provide customer specific costing and pricing
information to the Buyers' independent accountants if such independent
accountants shall have agreed with Insilco in writing not to provide such
information to the Buyers except solely on an aggregate basis. Notwithstanding
anything in this Section 7.2(a) to the contrary, the Buyers shall not have
access to any Employee Records or other personnel and medical records which, in
Insilco's good faith judgment, are sensitive or the disclosure of which could
subject Insilco to any meaningful risk of liability. To the extent that the
Buyers wish to have access to customers and suppliers of the Business prior to
the Closing, the Buyers shall coordinate such access with the Sellers and shall
be accompanied by an employee of the Sellers who is reasonably acceptable to the
Buyers.
(b) The Buyers and the Sellers acknowledge that they are
subject to the Confidentiality Agreement. All information furnished to or
obtained by the Buyers or any of the Buyers' Representatives or the Sellers or
any of the Sellers' Representatives pursuant to this Agreement shall be subject
to the provisions of the Confidentiality Agreement and shall be treated as
Confidential Information for all purposes of the Confidentiality Agreement,
subject to the terms of the Confidentiality Agreement. Furthermore, the Buyers
acknowledge that the Sellers or the Sellers' Representatives may furnish
Confidential Information to counsel for the Creditors' Committee and to the
Prepetition Agent and their respective counsel, subject to the provisions of the
Confidentiality Agreement.
(c) Between the Closing Date and the later of (x) the third
anniversary of the Closing Date or (y) the date of entry of an order of the
Bankruptcy Court closing the Chapter 11 Cases, or if converted to a case under
Chapter 7 of the Bankruptcy Code, an order of the Bankruptcy Court closing such
case, the Sellers and the Sellers' Representatives shall have reasonable access
to all of the books and records relating to the Business or the Purchased
Assets, including all information pertaining to the Assumed Agreements, all
Employee Records or other personnel and medical records required by Law, legal
process or subpoena, in the possession of the Buyers to the extent that such
access may reasonably be required by the Sellers in connection with the Assumed
Liabilities or the Excluded Liabilities, or other matters relating to or
affected by the operation of the Business and the Purchased Assets, provided,
however, that the Sellers and the Sellers' Representatives shall not have access
to any Employee Records or
xlvii
other personnel and medical records which, in the Buyers' good faith judgment,
are sensitive or the disclosure of which could subject the Buyers or their
Affiliates to any meaningful risk of liability. Such access shall be afforded by
the Buyers upon receipt of reasonable advance notice and during normal business
hours; provided, however, that (i) any such access shall be conducted in such a
manner as not to interfere unreasonably with the operation of the business of
the Buyers or their Affiliates, (ii) the Buyers shall not be required to take
any action which would constitute a waiver of the attorney-client privilege, and
(iii) the Buyers need not supply the Sellers with any information which the
Buyers are under a legal obligation not to supply. The Sellers shall be solely
responsible for any costs or expenses incurred by the Sellers pursuant to this
Section 7.2(c). If the Buyers shall desire to dispose of any such books and
records upon or prior to the expiration of such period, the Buyers shall, prior
to such disposition, give the Sellers a reasonable opportunity at the Sellers'
expense, to segregate and remove such books and records as the Sellers may
select. Furthermore, the Buyers acknowledge that the Sellers shall have
reasonable access to all Transferred Employees with respect to the litigation
matters set forth on Schedule 2.3(d) and Schedule 5.13 of the Disclosure
Schedule for so long as such matters are pending. In addition to the foregoing,
the Buyers agree to maintain the Employee Records in their possession for a
period of three (3) years after the Closing Date or such longer period(s) as
required by Law, and to give former and current employees of the Sellers
reasonable access to their own Employee Records during such period.
(d) The Sellers shall reasonably cooperate, and shall use all
reasonable efforts to cause their directors, officers, employees, accountants,
attorneys and other agents to reasonably cooperate, with the Audit Accountant in
connection with the preparation of such financial statements of the Business as
the Audit Accountant shall prepare on behalf of the Buyers, including providing
the Audit Accountant with reasonable access to all of the books and records of
the Business, reasonably responding to any inquiries or requests for information
from the Audit Accountant, making executive officers of the Sellers reasonably
available to meet with the Audit Accountant and discuss the Business' past
accounting practices and providing such other assistance as the Buyers and the
Audit Accountant may reasonably require in connection with the preparation of
such financial statements. The Audit Accountant shall be retained by the Buyers
in connection with the preparation of any such financial statements, including
the performance of the activities contemplated by Section 8.2(i), and the Buyers
shall be fully responsible for the fees and expenses of the Audit Accountant.
Section 7.3 Expenses. Except to the extent specifically provided
herein, in the Bid Procedures Order or in the Approval Order, whether or not the
transactions contemplated hereby are consummated, all costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be borne by the party incurring such costs and expenses.
Section 7.4 Further Assurances. (a) Subject to the terms and conditions
of this Agreement, prior to the Closing each of the parties hereto shall use
their respective commercially reasonable efforts to take, or cause to be taken,
all action, and to do, or cause to be done, all things reasonably necessary,
proper or advisable under applicable Laws to consummate and make effective the
sale of the Shares and the Purchased Assets in accordance with this Agreement,
including using commercially reasonable efforts to ensure timely satisfaction of
the conditions precedent to each party's obligations hereunder and the
preparation, filing, execution and delivery of all forms, registrations and
notices required to be filed to consummate the
xlviii
Closing and the taking of such actions as are necessary to obtain any requisite
Permits or waivers from any Governmental Authority. Neither the Sellers, on the
one hand, nor the Buyers, on the other hand, shall, without the prior written
consent of the other parties, take any action which would reasonably be expected
to prevent or materially impede, interfere with, or delay the transactions
contemplated by this Agreement. From time to time on or after the Closing Date,
the Sellers shall, at the Buyers' expense, execute and deliver such documents to
the Buyers as the Buyers may reasonably request in order to more effectively
vest in the Buyers the Sellers' title to the Purchased Assets, subject to
Closing Encumbrances, and the Shares. From time to time after the date hereof,
the Buyers shall, at the Sellers' own expense, execute and deliver such
documents to the Sellers as the Sellers may reasonably request in order to more
effectively consummate the sale of the Purchased Assets and the Shares and the
assumption and assignment of the Assumed Liabilities and the Assumed Agreements
in accordance with this Agreement.
(b) In the event that any Purchased Asset shall not have been
conveyed to the Buyers at the Closing, the Sellers shall, subject to Section
7.4(c), use commercially reasonable efforts to convey such Purchased Asset to
the Buyers as promptly as is practicable after the Closing.
(c) To the extent that the Sellers' rights under any Assumed
Agreement may not be assigned without the consent of another Person and such
consent has not been obtained, this Agreement shall not constitute an agreement
to assign the same if an attempted assignment would constitute a breach thereof
or be unlawful, and the Sellers shall use commercially reasonable efforts
(without being required to make any payment to any third party or to incur any
economic burden), taking into account Sellers' status as a debtor under Chapter
11 of the Bankruptcy Code, to obtain any such required consent(s) as promptly as
reasonably possible. The Buyers agree to fully cooperate with Sellers in their
efforts to obtain any such consent (including the submission of such financial
or other information concerning the Buyers and the execution of any assumption
agreements or similar documents reasonably requested by a third party) without
being required to make any payment to any third party or to incur any economic
burden (other than the payment of any Cure Amount Payment required under Section
2.6(b)).
Section 7.5 Public Statements. Until the consummation of the Closing,
the Sellers and the Buyers shall consult with each other prior to issuing any
public announcement, statement or other disclosure with respect to this
Agreement or the transactions contemplated hereby, except that the parties may
make disclosures with respect to this Agreement and the transactions
contemplated hereby to the extent required by Law or by the rules or regulations
of any securities exchange or self-regulatory organization and to the extent and
under the circumstances in which the parties are expressly permitted by the
Confidentiality Agreement to make disclosures of Confidential Information.
Section 7.6 Governmental Authority Consents and Approvals. (a) The Sellers and
the Buyers shall each use commercially reasonable efforts to cooperate with each
other in determining and making any filings, notifications and requests for
approval required to be made and received prior to the Closing under applicable
Laws (collectively, the "Regulatory Approvals"). In connection with any
Regulatory Approvals, neither the Buyers nor the Sellers will, and the Buyers
and the Sellers will use commercially reasonable efforts not to, cause or permit
any of their officers, directors, partners or other Affiliates to, take any
action which could
xlix
reasonably be expected to materially and adversely affect the submission of any
required filings or notifications or the grant of any such approvals.
(b) Cooperation. Each party (i) shall promptly inform each
other of any communication from any Governmental Authority concerning this
Agreement, the transactions contemplated hereby, and any filing, notification or
request for approval made in connection herewith and (ii) shall permit the other
parties hereto to review in advance any proposed written communication or
information submitted to any such Governmental Authority in response thereto. In
addition, each of the Sellers and each of the Buyers agrees not to participate
in any meeting with any Governmental Authority in respect of any filings,
investigation or other inquiry with respect to this Agreement, the transactions
contemplated hereby or any such filing, notification or request for approval
unless it consults with the other parties hereto in advance and, to the extent
permitted by any such Governmental Authority, gives the other parties hereto the
opportunity to attend and participate thereat, in each case to the maximum
extent practicable. Subject to any restrictions under applicable Laws, each of
the Sellers and each of the Buyers shall furnish the other party with copies of
all correspondence, filings and communications (and memoranda setting forth the
substance thereof) between it and its Affiliates and their respective
representatives on the one hand, and the Governmental Authority or members of
its staff on the other hand, with respect to this Agreement, the transactions
contemplated hereby (excluding documents and communications which are subject to
preexisting confidentiality agreements and to the attorney-client privilege or
work product doctrine) or any such filing, notification or request for approval.
The Sellers and the Buyers shall also furnish the other parties with such
necessary information and assistance as such other parties and their Affiliates
may reasonably request in connection with their preparation of necessary
filings, registration, or submissions of information to the Governmental
Authority in connection with this Agreement, the transactions contemplated
hereby and any such filing, notification or request for approval. The Sellers
and the Buyers shall prosecute all required requests for approval with all
necessary diligence and otherwise use their respective reasonable best efforts
to obtain the grant thereof as soon as possible.
Section 7.7 Tax Matters. (a) Each party hereto will provide each other
with such assistance, cooperation and information (including access to books and
records) as either of them reasonably may request of the other (and the Buyers
shall cause the Foreign Corporations to provide such assistance, cooperation and
information) in filing any Tax Return, amended Tax Return or claim for refund,
determining any liability for Taxes or a right to a refund of Taxes or
participating in or conducting any audit or other proceeding in respect of Taxes
relating to the Foreign Corporations, (including, but not limited to, any claim
by the Foreign Corporations pertaining to the use or availability of net
operating losses), the Purchased Assets and the Business. The Sellers
acknowledge and agree that any Tax refunds payable to or paid to any Foreign
Corporation after the date hereof shall, after the Closing, notwithstanding
anything contained herein to the contrary, remain an asset of such Foreign
Corporation.
(b) Transfer Taxes. All excise, sales, use, transfer, value
added, registration, stamp, recording, documentary, conveyancing, franchise,
property, gains and similar Taxes, levies, charges and recording, filing and
other fees (collectively, "Transfer Taxes") incurred in connection with the
transactions contemplated by this Agreement shall be paid by the Buyers. The
Buyers shall, at their own expense, timely pay, and file all necessary Tax
returns and other
l
documentation (including any required notice of a bulk sale) with respect to,
all such Transfer Taxes and, only to the extent required by applicable law, the
Sellers shall join in the execution of any Tax returns and other documentation
at the Buyers' request. The Buyers shall, at their own expense, complete and
execute a resale or other exemption certificate with respect to the Purchased
Assets consisting of inventory, and shall provide the Sellers with an executed
copy thereof. Notwithstanding the foregoing, the Sellers shall cooperate with
the Buyers for the purpose of reducing any and all Transfer Taxes provided that
such cooperation shall not materially prejudice the Sellers in any way (the
Buyers shall reimburse the Sellers for all reasonable out-of-pocket expenses
incurred by the Sellers in fulfilling the Buyers' request(s)). Without limiting
the foregoing provisions of this Section 7.7(b), the parties hereby agree that
the transfer and delivery of title to any of the Purchased Assets presently
located in Mexico may occur, to the extent permitted by applicable law, either
in the United States or in Mexico at the sole option of the Buyers.
(c) FIRPTA Certification. In accordance with Treasury
Regulation section 1.1445-2(b)(2), each of the Sellers shall deliver to the
Buyers a certification of non-foreign status substantially in the form set forth
in Treasury Regulation section 1.1445-2(b)(2)(iii)(B) or in such other form as
may be specified by applicable Law.
(d) Allocation of Taxes. For purposes of Section 2.4(c), the
Buyers shall be liable for and shall be allocated all Taxes in respect of the
Purchase Assets with respect to taxable periods (or portions thereof) that end
after the Closing Date. For this purpose, Taxes that are payable with respect to
a taxable period that begins on or before the Closing Date and ends after the
Closing Date, the portion of any such Tax that is allocable to the portion of
the period beginning on the day following the Closing Date and allocated to the
Buyers shall be considered to equal the amount of such taxes for such entire
taxable period, multiplied by a fraction, the numerator of which is the number
of days in the portion of such taxable period that begins on the day following
the Closing Date and the denominator of which is the number of days in the
entire taxable period. For the avoidance of doubt, all Taxes imposed on the
Foreign Corporations shall be allocated to, and shall be the responsibility of,
the Buyers.
(e) Allocation of Purchase Price. The Buyers and the Sellers
shall (i) attempt in good faith, within sixty (60) days after the determination
of the Purchase Price pursuant to Article III, to agree on the allocation of the
sum of the Purchase Price and the Assumed Liabilities (and any adjustments
thereof) among the Shares and the Purchased Assets as of the Closing Date (the
"Allocation") in accordance with Section 1060 of the Code and the Treasury
Regulations thereunder and (ii) cooperate in connection with the preparation of
Internal Revenue Service Form 8594 for its timely filing. Except as otherwise
required by applicable Law, the Buyers and Sellers shall report for all Tax
purposes all transactions contemplated by this Agreement in a manner consistent
with the Allocation, if any, and shall not take any position inconsistent
therewith in any Tax Return, in any refund claim, in any litigation or
otherwise.
(f) Code Section 338(g) Election. The Buyers shall have the
right, but not the obligation, to make an election under Section 338(g) of the
Code with respect to any Foreign Corporation, and shall promptly notify the
Sellers in writing if such an election is made; provided, however, in the event
the Buyers make such an election with respect to any Foreign Corporation, the
Buyers shall be solely responsible for all additional costs and Taxes resulting
li
from making such election, and shall indemnify the Sellers and hold them
harmless against any such additional costs and Taxes. For this purpose, such
additional Taxes shall be determined by comparing the Tax consequences to the
Sellers as a result of the Code Section 338(g) election with the Tax
consequences that would have applied to the Sellers in the absence of the Code
Section 338(g) election and shall take into account the present value of the
amount of any net operating losses or tax credits of the Sellers that are
reduced, lost or otherwise foregone as a result of the Code Section 338(g)
election. In the event that the Buyers do not make an election under Section
338(g) with respect to a Foreign Corporation, for the remainder of the taxable
year of such Foreign Corporation in which taxable year the Closing occurs, the
Buyers shall cause such Foreign Corporation to refrain from paying a dividend or
otherwise distributing property to the extent that such dividend or distribution
would (i) increase the Sellers' or any of their Affiliates' liability for Taxes,
(ii) result in the recognition of, or change the character of, any income or
gain (including Subpart F income, as defined under the Code) that the Sellers or
any of their Affiliates must report on any Tax Return, or (iii) result in a
decrease of any credits against Tax (including credits for foreign Taxes paid or
deemed paid) that would otherwise be available to the Sellers or any of their
Affiliates.
Section 7.8 Employees. (a) Prior to the Sale Hearing, the Buyers shall
make offers of employment, effective as of the Closing Date, to all employees of
the Sellers listed on Schedule 7.8(a) of the Disclosure Schedule (as same may be
amended by the Buyers from time to time through the date of the Sale Hearing),
and shall provide Insilco with the general terms of such offers. Each such
employee who accepts the Buyer's offer of employment shall be referred to herein
as a "Transferred Employee". Each employee of the Foreign Corporations shall be
referred to herein as a "Foreign Corporation Employee". Each employee and former
employee of the Business other than the Transferred Employees and the Foreign
Corporation Employees shall be referred to herein as a "Retained Employee". No
provision contained in this Section 7.8 shall be construed as an agreement for,
or guarantee of, continued employment. The Buyers shall not, and shall be under
no obligation to, assume, continue or adopt any Liabilities with respect to any
Employee Plan.
(b) The Buyers shall extend to all Transferred Employees
eligibility to participate in employee benefit and compensation plans, including
without limitation welfare benefit plans, that are comparable to the employee
benefit and compensation plans that Bel Fuse Ltd. offers to its general employee
population.
(c) Provided that a Transferred Employee or a Foreign
Corporation Employee remains continuously employed by the Buyers on the day
following six (6) months after the Closing Date, for purposes of all employee
compensation plans, programs and arrangements in which the Transferred Employees
and the Foreign Corporation Employees may be eligible to participate after the
Closing Date, the Buyers shall cause each such plan, program or arrangement to
treat the prior service of each Transferred Employee and Foreign Corporation
Employee with Insilco, any Affiliate thereof, or any predecessor thereof, as
service rendered to the Buyers for purposes of benefits entitlements and benefit
accrual for non-retirement-type benefits and eligibility and vesting except to
the extent that such treatment would result in duplicative benefits. From and
after the Closing Date, the Buyers shall, with respect to any welfare benefit
plan in which any Transferred Employee or Foreign Corporation Employee may be
eligible to participate after the Closing Date, (i) cause any limitations as to
pre-existing
lii
conditions and any exclusions and waiting periods to be waived with
respect to the Transferred Employees and the Foreign Corporation Employees and
their eligible dependents and (ii) give each Transferred Employee and Foreign
Corporation Employee credit for the plan year in which the Closing occurs
towards applicable deductibles and annual out-of-pocket limits for expenses
incurred prior to the Closing Date.
(d) The Buyers shall be responsible for providing continuation
healthcare coverage in accordance with COBRA to the Retained Employees and their
qualified beneficiaries who incur or incurred a qualifying event prior to, on or
after the Closing Date. The Buyers shall be responsible for providing
continuation healthcare coverage in accordance with COBRA to all Transferred
Employees and their qualified beneficiaries who incur a qualifying event after
the Closing Date.
(e) The Buyers shall not be responsible for any Liability or
obligation under the WARN Act in respect of any employee or former employee of
the Business arising before or on the Closing Date, and in respect of any
Retained Employee, arising from employee termination after the Closing Date. The
Buyers shall be responsible for any Liability or obligation under the WARN Act
in respect of any Transferred Employee arising from employee termination after
the Closing Date. Immediately after execution of this Agreement, the Sellers
shall provide WARN notices in substantially the forms attached hereto as
Exhibits I-1 to I-4 (collectively, the "WARN Notices"), with (i) unrepresented
employees receiving Exhibit I-1, (ii) labor organization(s) and collective
bargaining representatives receiving Exhibit I-2, (iii) state dislocated workers
unit receiving Exhibit I-3 and (iv) chief elected official of the unit of local
government receiving Exhibit I-4. When the Sellers provide the WARN Notices to
the employees of (i) ▇▇▇▇▇▇▇ Connector Systems, Inc. and Signal Transformer Co.,
Inc., they shall do so by attaching the appropriate WARN Notice to the WARN
Notice cover letter attached hereto as Exhibit I-5 and (ii) InNet Technologies,
Inc., they shall do so by attaching the appropriate WARN Notice cover letter
attached hereto as Exhibit I-6.
(f) Unless otherwise specifically identified and defined as an
Assumed Liability herein, the Buyers shall not, with respect to all employees
(other than the Foreign Corporation Employees and Transferred Employees for
periods commencing after the Closing Date) have any responsibility for any
matters relating to the maintenance of personnel and payroll records, the
withholding and payment of federal, state and local income and payroll Taxes,
the payment of workers' compensation and unemployment compensation insurance,
salaries, wages, pension, welfare and other fringe benefits. The Buyers do not
assume any responsibility for severance pay that may be due to Retained
Employees, except as provided in this Section 7.8(f).
(g) Except as required by Law, the Buyers shall not assume any
Liability for compliance with all applicable labor and employment Laws relating
to the Transferred Employees and the Retained Employees in connection with their
employment by the Sellers during periods prior to the Closing Date and any such
Liability shall be a claim against only the Sellers' estate.
(h) Except for the Foreign Corporation Employees or unless
otherwise specifically identified and defined as an Assumed Liability herein, or
otherwise set forth in this Section 7.8 or as required by Law, the Buyers shall
not have any responsibility for any Liabilities
liii
under the Sellers' employee benefits plans, programs, agreements and
arrangements, including (i) any Liabilities relating to any noncompliance with
applicable Laws, including ERISA, the Internal Revenue Code and COBRA, and (ii)
any Liabilities which arise as a result of the Sellers' joint and several
liability through their relationship with any Affiliate.
(i) Except as provided for in this Section 7.8(j) or as
required by Law, if any of the Sellers has entered into employment, termination
or retention agreements with any employee of the Business pursuant to which
retention bonuses, or severance, or termination payments may be paid in
connection with the transactions contemplated hereby (the "Employee
Agreements"), the Sellers agree that the Buyers shall have no liability or
responsibility for any payments or costs related to the Employment Agreements
and that any Liability or responsibility in respect thereof shall be a claim
against only the Sellers' estate. With respect to all employees, except as
required by Law, the Buyers are not assuming and will not have any
responsibility for the continuation of any Employee Plan and the Buyers will not
be deemed a successor employer to any of the Sellers with respect to any
Employee Plan. Except as required by Law, no employee benefit plan adopted or
maintained by the Buyers will be deemed a successor plan of any of the Sellers.
(j) Notwithstanding anything to the contrary in this Section
7.8, the Sellers will, on the Closing Date, pay to each Retained Employee that
is covered by a severance plan (other than Retained Employees that are (i)
employees represented by a labor organization or (ii) employees covered by the
key employees severance plan) the severance payment due to such Retained
Employee pursuant to such severance plan (the actual aggregate amount of such
payments made by the Sellers, plus any related payroll taxes, hereinafter is
referred to as the "Retained Employee Payment Amount"); provided, however, that
it will be a condition precedent to any Retained Employee receiving any
severance payment pursuant to this Section 7.8(j) and the related severance plan
that such Retained Employee (i) be an employee of the Business on the Closing
Date or (ii) had been terminated as an employee of the Business by the Sellers
prior to the Closing Date without Cause. For purposes of this Section 7.8(j),
"Cause" means inappropriate or unsatisfactory conduct, unsatisfactory
performance, commission of an act involving fraud or moral turpitude, or
commission of an act that is considered a felony in the jurisdiction in which it
occurs. Any amounts paid pursuant to this Section 7.8(j) will not be included in
the calculation of benefits under any Employee Plan. At the Closing, the Buyers
shall reimburse the Sellers, in cash, an amount equal to the Retained Employee
Payment Amount. Nothing in this Section 7.8(j) shall change, modify or alter the
employment of any employee of the Business, who is currently an employee at
will, as an employee at will whose employment may be terminated by the Sellers,
with or without Cause, at any time.
Section 7.9 Litigation Support. In the event and for so long from and
after the Closing Date as any party hereto is actively contesting or defending
against any action, suit, proceeding, hearing, investigation, charge, complaint,
claim, or demand in connection (other than litigation among the parties hereto
and/or their respective Affiliates arising out of this Agreement, the Ancillary
Agreements or the transactions contemplated thereby) with (a) any transaction
contemplated under this Agreement or (b) any fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction on or prior to the Closing Date involving
the Business, the parties hereto will cooperate with the contesting or defending
party and its counsel in the contest or defense, make available their
liv
personnel, and provide such testimony and access to their books and records as
shall be reasonably necessary in connection with the contest or defense, all at
the sole cost and expense of the contesting or defending party. In the event
that the Approval Order is the subject of an appeal, the Buyers and the Sellers
agree to use commercially reasonable efforts to seek an expedited review and
decision of such appeal and to seek the dissolution of any stay which might be
entered in connection with such an appeal; provided that each party shall bear
the cost of complying with this sentence as it relates to any appeal and the
dissolution of any stay in connection therewith.
Section 7.10 Notification. Sellers shall notify the Buyers and keep the
Buyers advised of the occurrence, to the Knowledge of the Sellers, of (a) any
litigation or administrative proceeding pending or threatened against any of the
Sellers which could, if adversely determined, have a Material Adverse Effect,
(b) any act or omission which would cause any of the Sellers' representations
herein to be inaccurate in any material respect (or, with respect to
representations qualified as to materiality, in any respect), including by way
of updating any Disclosure Schedules and (c) any material damage or destruction
of any of the Purchased Assets or the assets of the Foreign Corporations. The
Buyers shall notify and keep Insilco advised of the occurrence of any event or
occurrence which could reasonably be expected to materially adversely affect the
Buyers' ability to consummate the transactions contemplated hereby. No such
notice shall be deemed to cure any breach of any representation or warranty made
in this Agreement or have any effect for the purpose of determining satisfaction
of the conditions set forth in Article VIII hereof or the compliance by the
Sellers with any covenant set forth herein.
Section 7.11 Submission for Bankruptcy Court Approval. On the Petition
Date or as soon as practicable thereafter, the Sellers shall file (a) a motion
or motions and supporting papers (including, a form of order substantially in
the form and substance of the Bid Procedures Order) seeking the entry of an
order by the Bankruptcy Court approving the Overbid Procedures and (b) a motion
for approval of this Agreement and supporting papers (including the Approval
Order) seeking entry of the Approval Order, all in a form and substance
reasonably acceptable to the Buyers. The Bid Procedures Order and the Approval
Order may, at the Sellers' option, be sought under one combined set of motion
papers, which shall be in form and substance reasonably acceptable to the
Buyers. All parties hereto shall use their commercially reasonable efforts to
have the Bankruptcy Court enter the Bid Procedures Order as soon as practicable
following the filing of the motion therefor. The Sellers shall give appropriate
notice under the Bankruptcy Code of the request for such relief, including such
additional notice as the Bankruptcy Court shall direct, and provide appropriate
opportunity for hearing, to all parties entitled thereto, of all motions,
orders, hearings, or other proceedings relating to this Agreement or the
transactions contemplated hereby.
Section 7.12 Overbid Procedures. The Buyers and the Sellers acknowledge
that the Sellers must take reasonable steps to demonstrate that they have sought
to obtain the highest and best price for the Purchased Assets and the Shares and
the consummation of the transactions contemplated by this Agreement, including
giving notice thereof to the Sellers' creditors and other interested parties,
providing information about the Business to prospective bidders (subject to
appropriate confidentiality agreements), entertaining higher and better offers
from such prospective bidders, and, if necessary, conducting an auction. To
facilitate the foregoing, the Sellers shall seek entry of the Bid Procedures
Order, which, among other things, shall provide for
lv
the bidding provisions and procedures as set forth in Exhibit A to the Bid
Procedures Order (the "Overbid Procedures"). These procedures shall include the
following provisions:
(a) The Sellers shall consider as higher and better offers (the
"Overbids") only those offers that meet the following requirements:
(i) Overbid Deadline. A Qualified Bidder (as defined in
Exhibit A to the Bid Procedures Order) that desires to make a
bid shall deliver written copies of its bid to (A) Gleacher
Partners LLC, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, (B) Insilco Technologies, Inc., ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, Attn: ▇▇▇▇▇
▇. ▇▇▇▇▇, (C) Shearman & Sterling, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attn: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, and (D)
Sidley ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇, Bank One Plaza, ▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attn: ▇▇▇▇ ▇▇▇▇▇▇▇▇, not later
than such date and time as is specified in the Bid Procedures
Order (the "Bid Deadline"). The Sellers may extend the Bid
Deadline in their sole discretion, but shall have no obligation
to do so. If the Sellers extend the Bid Deadline, they shall
promptly notify the Buyers and all other Qualified Bidders of
such extension; provided that any extension of the Bid Deadline
shall be subject to the approval of the Prepetition Agent;
provided further that Sellers may not extend the Bid Deadline
to a date that is less than two (2) Business Days prior to the
Auction Date.
(ii) Overbid Requirements. A bid is a letter from a
Qualified Bidder (other than the Buyers, whose participation as
a Qualified Bidder shall be on the terms set forth in this
Agreement) stating that (A) the Qualified Bidder offers to
purchase the Purchased Assets and the Shares upon the terms and
conditions set forth in a copy of this Agreement attached to
such letter, marked to show those amendments and modifications
to this Agreement, including price, terms, and assets to be
acquired, that the Qualified Bidder proposes (a "Marked
Agreement") and (B) the Qualified Bidder's offer is irrevocable
until the earlier of forty-eight (48) hours after the closing
of the sale of the Purchased Assets and the Shares or such date
as is specified in the Bid Procedures Order. A Qualified Bidder
(other than the Buyers) shall accompany its bid with written
evidence of a commitment for financing or other evidence of
ability to consummate the transaction. The Sellers will
consider a bid only if the bid:
(A) provides overall value for the Purchased
Assets and the Shares to the Sellers of at least
$1,500,000 over the Purchase Price in the Asset
Purchase Agreement;
(B) is on terms that, in the Sellers'
reasonable business judgment, are not materially more
burdensome or conditional than the terms of this
Agreement;
lvi
(C) is not conditioned on obtaining
financing or on the outcome of unperformed due
diligence by the bidder with respect to the assets
sought to be acquired;
(D) does not request or entitle the bidder
to any topping fee, termination fee, expense
reimbursement or similar type of payments; and
(E) is received by the Bid Deadline.
A bid received from a Qualified Bidder (as defined in the
Overbid Procedures) that meets the above requirements is a
"Qualified Bid." A Qualified Bid will be valued based upon
factors such as the net value provided by such bid (including
consideration of any obligations of the Sellers in respect of
any Topping Fee) and the likelihood and timing of consummating
such transaction. The Buyers' offer contained in this
Agreement shall constitute a Qualified Bid.
(iii) Deposit Requirement. All initial Overbids shall be
accompanied by a deposit of Five Hundred Thousand Dollars
($500,000) (the "Deposit") payable by wire transfer to an
escrow agent designated by the Sellers. Following the Auction
or the Auction Date if no Qualified Bids are received, the
Sellers shall seek the approval of the Bankruptcy Court of the
highest or best offer submitted for the Purchased Assets and
the Shares (the "Successful Bid" and the bidder making such
bid, the "Successful Bidder") and, in the event that the sale
to the Successful Bidder is not consummated (to the extent
that there is another bid), the next highest and best offer
(the "Backup Bid", and such bidder, the "Backup Bidder"). The
Deposit submitted by the Successful Bidder, together with
interest thereon, shall be applied against the payment of the
cash portion of the consideration upon closing of the sale to
the Successful Bidder. If the Successful Bidder fails to
consummate the purchase of the Purchased Assets and the Shares
due to such party's breach of its purchase agreement with the
Sellers, then the Sellers shall retain the Deposit of such
Successful Bidder, if any, as liquidated damages and continue
with the sale of the Purchased Assets and the Shares to the
Backup Bidder. Within three (3) Business Days after the
closing of the sale of the Purchased Assets, any Deposit (A)
not applied to the purchase of such Purchased Assets and the
Shares or (B) not retained by the Sellers due to a breach by
the Successful Bidder shall, together with interest, be
returned to the appropriate bidders.
(b) If, prior to the Bid Deadline, the Sellers have received at
least one Qualified Bid that the Sellers determine is higher or
otherwise better than the bid of the Buyers set forth in this
Agreement, the Sellers shall conduct an auction (the "Auction") with
respect to the Purchased Assets and the Shares and provide to the
Buyers and all Qualified Bidders the opportunity to submit additional
bids at the Auction. The Auction shall take place no later than such
date and time as is specified in the Bid Procedures Order (the "Auction
Date"), at the offices of Shearman & Sterling, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or such later time or other place as the
Sellers shall notify the Buyers and all other Qualified Bidders who
have submitted Qualified Bids and expressed
lvii
their intent to participate in the Auction, as set forth above, but in
no event shall the Auction occur later than two Business Days prior to
the Sale Hearing scheduled in the Bid Procedures Order. Only Qualified
Bidders will be eligible to participate at the Auction. At least two
(2) Business Days prior to the Auction, each Qualified Bidder who has
submitted a Qualified Bid must inform the Sellers whether it intends to
participate in the Auction. The Sellers may, at their option, provide
or make available copies of any Qualified Bid(s) that the Sellers
believe are the highest or otherwise best offer(s) to all Qualified
Bidders who intend to participate in the Auction prior to the
commencement thereof, but are required to provide copies of any
Qualified Bid(s) to the Buyers within two (2) Business Days after
receipt thereof and, in any event, no later than two (2) Business Days
prior to the Auction Date.
Based upon the terms of the Qualified Bids received, the
number of Qualified Bidders participating in the Auction, and such
other information as the Sellers determine is relevant, the Sellers, in
their sole discretion, may conduct the Auction in the manner it
determines will achieve the maximum value for the Purchased Assets and
the Shares. At the beginning of the Auction, a representative of the
Sellers shall announce the amount of the bid that is at such time
determined by the Sellers to be the highest and best bid. Thereafter,
all additional bids shall be in increments of $500,000 or integral
multiples thereof. The Sellers may adopt such other rules for bidding
at the Auction, that, in the Sellers' business judgment, will better
promote the goals of the bidding process and that are not inconsistent
with any of the provisions of the Bid Procedures Order, the Bankruptcy
Code or any order of the Bankruptcy Court entered in connection
herewith. Prior to the start of the Auction, the Sellers will inform
the Qualified Bidders participating in the Auction of the manner in
which the Auction will be conducted.
As soon as practicable after the conclusion of the Auction,
the Sellers, in consultation with their legal and financial advisors
and the Prepetition Agent, shall (i) review each Qualified Bid on the
basis of financial and contractual terms and the factors relevant to
the sale process, including those factors affecting the speed and
certainty of consummating the sale and any obligations of the Sellers
in respect of any Topping Fee, and (ii) identify the highest or
otherwise best offer for the Purchased Assets and the Shares at the
Auction. At the Sale Hearing, the Sellers shall present the Successful
Bid or, if required pursuant to Section 7.12(a)(iii), the Backup Bid to
the Bankruptcy Court, for approval.
(c) If the Buyers do not buy the Purchased Assets and the
Shares at the sale of the Purchased Assets and the Shares approved at
the Sale Hearing (an "Auction Sale"), the Buyers are not then in
material breach of any material provision of this Agreement (other than
any breach which Buyers shall have cured within ten (10) Business Days
of receipt of notice thereof), the Buyers have not terminated this
Agreement and an Auction Sale of the same is consummated with a party
other than the Buyers, then the Buyers will be entitled to receive, as
a "topping fee" out of the proceeds of the consummated Auction Sale, an
amount equal to the sum of (i) $1,050,000 (the "Topping Fee") and (ii)
reimbursement of all reasonable and documented out-of-pocket expenses
incurred in connection with the transactions contemplated hereby
(including, but not limited to, legal,
lviii
accounting and other professional fees) up to $400,000 in the aggregate
(the "Expense Reimbursement").
(d) The Buyers shall be permitted to credit the amount of the
Topping Fee and the Expense Reimbursement to their bid if they make a
competing bid at the Auction Sale as a result of which the Buyers shall
be permitted to match the dollar value of any competing bid submitted
by another entity by submitting a bid in an amount at least equal to
the difference between the bid to be matched minus the amount of the
Topping Fee and the Expense Reimbursement.
Section 7.13 Collection of Receivables. If, after the Closing, the
Sellers shall receive any payment from any account debtor with respect to any
Accounts Receivable included in the Purchased Assets, the Sellers shall promptly
endorse such payment to the Buyers.
Section 7.14 Overlapping Assets. The Sellers shall use commercially
reasonable efforts to make Sellers' Overlapping Assets available for the use of
the Buyers with respect to the Business, as currently used therein, at no charge
to the Buyers, for a period of ninety (90) days following the Closing, and the
Buyers shall use commercially reasonable efforts to make Buyers' Overlapping
Assets available for the use of the Sellers with respect to Sellers' Retained
Business, as currently used therein, at no charge to the Sellers, for a period
of ninety (90) days following the Closing. Nothing in this Section 7.14 shall be
construed as restricting the Sellers' or the Buyers' right to encumber or
transfer Sellers' Overlapping Assets or Buyers' Overlapping Assets, as the case
may be.
Section 7.15 Mail Received After the Closing. Following the Closing,
the Buyers may receive and open all mail addressed to the Sellers and deal with
the contents thereof in their discretion to the extent that such mail and the
contents thereof relate to the Purchased Assets, the Business, the Foreign
Corporations or any of the Assumed Liabilities. The Buyers shall promptly
deliver or cause to be delivered to the Sellers all mail received by the Buyers
after the Closing addressed to the Sellers which does not relate to the
Purchased Assets, the Business, the Foreign Corporations or the Assumed
Liabilities.
Section 7.16 Guarantees. Insilco irrevocably and unconditionally
guarantees, as a primary obligor and not merely as a surety, the full and prompt
performance by each Seller of its obligations, covenants and agreements under
the terms of this Agreement and each Ancillary Agreement to which a Seller may
be a party. Insilco waives all presentment, demands, protest and notice of
protest of this guarantee.
Section 7.17 Sellers Guarantees. To the extent any of Insilco Holding
Co. or any of the Sellers shall have guaranteed any Liabilities of the Foreign
Corporations to a third party, each of Bel Fuse Ltd. and Bel Fuse Macau, L.D.A.
shall prior to or as of the Closing: (a) provide a substantially similar
guarantee of such Liability to such third party; (b) use all reasonable efforts
to cause such third party to release Insilco Holding Co. and any of the Sellers
from such guarantee; and (c) indemnify Insilco Holding Co. and the Sellers from
any and all Losses related to such guarantee. From the date hereof until
Closing, neither Insilco nor any of its Affiliates shall enter into any new
guarantees of the obligations of the Foreign Corporations.
lix
Section 7.18 ▇▇▇▇ Rock Facility. Prior to Closing, the Sellers shall
(a) use all reasonable efforts to acquire fee simple title to the ▇▇▇▇ Rock
Property by payment of all outstanding amounts due under the ▇▇▇▇ Rock Agreement
and (b) if such title is obtained, convey title to the ▇▇▇▇ Rock Property to the
Buyers at the Closing (and in such instance, the ▇▇▇▇ Rock Property shall be
deemed to be Owned Real Property for all purposes of this Agreement). If the
Sellers are unable to acquire title to the ▇▇▇▇ Rock Property, then the Sellers
shall (a) assume the ▇▇▇▇ Rock Agreement and (b) cause the assignment of the
▇▇▇▇ Rock Agreement to the Buyers pursuant to Section 365 of the Bankruptcy Code
or, if Section 365 of the Bankruptcy Code is unavailable with respect to the
▇▇▇▇ Rock Agreement, use all reasonable efforts to assign or cause to be
assigned the ▇▇▇▇ Rock Agreement to the Buyers, including, without limitation,
obtaining the consent of the York County Industrial Development Corporation and
The Pennsylvania Industrial Development Authority to such assignment. Upon such
assignment of the ▇▇▇▇ Rock Agreement to the Buyers, the ▇▇▇▇ Rock Agreement
shall be deemed to be an Assumed Agreement for all purposes of this Agreement
and the Sellers shall pay any and all amounts to be cured under the ▇▇▇▇ Rock
Agreement pursuant to Section 365(a) of the Bankruptcy Code; provided that in
the event that the Sellers shall have assigned or caused to have been assigned
the ▇▇▇▇ Rock Agreement to the Buyers, the Purchase Price shall be reduced at
Closing by an amount equal to the remaining payments due under the ▇▇▇▇ Rock
Agreement as of the Closing plus $10,000 in consideration of the cost incurred
or to be incurred by the Buyers in connection with such assignment of the ▇▇▇▇
Rock Agreement.
ARTICLE VIII
CONDITIONS TO CLOSING
Section 8.1 Conditions to Each Party's Obligations to Effect the
Closing. The respective obligations of each party to effect the sale and
purchase of the Shares and the Purchased Assets shall be subject to the
fulfillment at or prior to the Closing Date of the following conditions:
(a) no preliminary or permanent injunction or other order,
judgment or decree by any federal or state court which prevents the
consummation of the sale of a material part of the Shares and the
Purchased Assets contemplated hereby shall have been issued and remain
in effect (each party agreeing to use its commercially reasonable
efforts to have any such injunction, order or decree lifted) and no
statute, rule or regulation shall have been enacted by any Governmental
Authority which prohibits the consummation of the sale of the Shares
and the Purchased Assets;
(b) the Bankruptcy Court shall have entered the Approval Order
substantially in the form and substance of Exhibit E and such Approval
Order shall be final and non-appealable; and
(c) the Escrow Agent shall have executed the Escrow Agreement.
Section 8.2 Conditions to Obligations of the Buyers. The obligation of
the Buyers to effect the purchase of the Shares and the Purchased Assets
contemplated by this Agreement shall be subject to the fulfillment at or prior
to the Closing Date of the following additional conditions:
lx
(a) (i) the Sellers shall have performed and complied in all
material respects with the covenants contained in this Agreement
which are required to be performed and complied with by the Sellers
at or prior to the Closing; (ii) the representations and warranties
of the Sellers set forth in this Agreement that are not qualified by
"Material Adverse Effect", "materiality" or other similar
qualifications shall each be true, complete and correct in all
material respects as of the date of this Agreement and as of the
Closing Date as though made on and as of the Closing Date (except to
the extent any such representation and warranty expressly speaks as
of an earlier date, which representation and warranty need only be so
true, complete and correct as of such earlier date); and (iii) the
representations and warranties of the Sellers set forth in this
Agreement that are qualified by "Material Adverse Effect",
"materiality" or other similar qualifications shall each be true,
complete and correct as of the date of this Agreement and as of the
Closing Date as though made on and as of the Closing Date (except to
the extent any such representation and warranty expressly speaks as
of an earlier date, which need only be so true, complete and correct
as of such earlier date);
(b) the Buyers shall have received a certificate from the
chief executive officer of Insilco, dated as of the Closing Date, to
the effect that, to the best of such chief executive officer's
knowledge, the conditions set forth in Section 8.2(a) have been
satisfied;
(c) the Shares and the Purchased Assets shall have been
released from all Encumbrances (other than Closing Encumbrances with
respect to the Purchased Assets) and there shall be no Encumbrances
on the Shares and the Purchased Assets (other than Closing
Encumbrances with respect to the Purchased Assets);
(d) since the date hereof, there shall have been no: (i)
Material Adverse Effect or (ii) material damage, destruction or loss
to any tangible assets with a value in excess of $100,000
individually or $500,000 in the aggregate, unless such damage,
destruction or loss is covered by insurance the proceeds of which are
used by Sellers to repair or replace such tangible Assets or which
are payable to the Buyers in accordance with this Agreement or
otherwise made payable to the Buyers;
(e) the Approval Order shall provide that any and all
Encumbrances on the Purchased Assets (other than Closing
Encumbrances) and the Shares shall, upon Closing, attach only to the
proceeds of the transactions contemplated hereby and not to the
Shares and the Purchased Assets;
(f) the Buyers shall have received the other items to be
delivered pursuant to Section 4.2;
(g) the Sellers shall have delivered to Buyers evidence that
(i) all Liabilities owed by the Foreign Corporations to Insilco
and/or any of its Affiliates or Subsidiaries shall have been canceled
and that the Foreign Corporations shall have no further Liability
with respect thereto and (ii) all Liabilities owed to the Foreign
Corporations by Insilco and/or any of its Affiliates or Subsidiaries
shall have been canceled and that
lxi
Insilco and/or any of its Affiliates or Subsidiaries shall have no
further Liability with respect thereto;
(h) (i) all authorizations, consents, waivers, approvals or
other actions legally required in connection with the execution,
delivery and performance of this Agreement and the instruments of
transfer by the Sellers and the consummation by the Sellers of the
transactions contemplated hereby and thereby shall have been obtained
(without the imposition of any material conditions) and shall be in
full force and effect; (ii) the Sellers shall have obtained any
material authorizations, consents, waivers, approvals or other
actions required to prevent a material breach or default by the
Sellers under any of the Assumed Agreements; and (iii) all material
authorizations, consents, waivers, approvals or other actions
necessary to permit the Buyers to operate the Business in compliance
with all applicable Laws immediately after the Closing shall have
been obtained and shall be in full force and effect;
(i) there shall have been delivered to the Buyers audited
balance sheets of the Business as of December 31, 2001 and October
31, 2002 and audited income statements, audited statements of cash
flows and audited statements of changes in stockholders' equity of
the Business for the years ended December 31, 2000 and December 31,
2001 and the ten month period ended October 31, 2002, together with
the notes to such financial statements (such financial statements and
notes, the "Audited Financial Statements"), which Audited Financial
Statements shall have been prepared in accordance with U.S. GAAP and
shall be in compliance with Regulation S-X of the Securities and
Exchange Commission; the Audit Accountant (i) shall have completed
its audit of the Audited Financial Statements, (ii) shall have issued
to the Buyers an unqualified opinion with respect to the Audited
Financial Statements and (iii) shall have consented no more than four
(4) days prior to Closing to the inclusion of such opinion in a
Current Report on Form 8-K to be filed by Bel Fuse Inc. with the
Securities and Exchange Commission immediately after the Closing is
consummated; and
(j) pursuant to Section 7.18, the Sellers shall be in possession
of all necessary documentation to either (i) convey title to the ▇▇▇▇
Rock Property to the Buyers or (ii) if the Sellers shall not be able
to convey title to the ▇▇▇▇ Rock Property to the Buyers, assign or
cause to have assigned the ▇▇▇▇ Rock Agreement to the Buyers (and pay
all cure amounts in connection therewith).
Any condition specified in this Section 8.2 may be waived by the Buyers;
provided that no such waiver shall be effective against the Buyers unless it is
set forth in a writing executed by the Buyers.
Section 8.3 Conditions to Obligations of the Sellers. The obligation of
the Sellers to effect the sale of the Shares and the Purchased Assets
contemplated by this Agreement shall be subject to the fulfillment at or prior
to the Closing Date of the following additional conditions:
(a) (i) the Buyers shall have performed and complied in all
material respects with the covenants contained in this Agreement which
are required to be performed and complied with by the Buyers at or
prior to the Closing; (ii) the representations and
lxii
warranties of the Buyers set forth in this Agreement that are not
qualified by "materiality" or other similar qualifications shall each
be true, complete and correct in all material respects as of the date
of this Agreement and as of the Closing Date as though made on and as
of the Closing Date (except to the extent any such representation and
warranty expressly speaks as of an earlier date, which representation
and warranty need only be so true, complete and correct as of such
earlier date); and (iii) the representations and warranties of the
Buyers set forth in this Agreement that are qualified by "materiality"
or other similar qualifications shall each be true, complete and
correct as of the date of this Agreement and as of the Closing Date as
though made on and as of the Closing Date (except to the extent any
such representation and warranty expressly speaks as of an earlier
date, which need only be so true, complete and correct as of such
earlier date);
(b) the Sellers shall have received a certificate from an
authorized officer of the Buyers, dated as of the Closing Date, to the
effect that, to the best of such officer's knowledge, the conditions
set forth in Section 8.3(a) have been satisfied; and
(c) the Sellers shall have received the other items to be
delivered to it pursuant to Section 4.3.
Any condition specified in this Section 8.3 may be waived by the Sellers;
provided that no such waiver shall be effective against the Sellers unless it is
set forth in writing executed by Insilco.
ARTICLE IX
TERMINATION AND ABANDONMENT
Section 9.1 Termination. This Agreement may be terminated at any time
prior to the Closing by:
(a) mutual written consent of the Sellers and the Buyers;
(b) the Buyers if:
(i) the Board of Directors of any of the Sellers shall
have withdrawn its support for the transactions contemplated
hereby or modified its support for the transactions
contemplated hereby in a manner adverse to the Buyers; or
(ii) the Chapter 11 Cases are converted from cases under
Chapter 11 of the Bankruptcy Code to cases under Chapter 7 of
the Bankruptcy Code;
(c) the Buyers, if there has been (i) a material violation or
breach by any of the Sellers of any (A) representation or warranty made
by it contained in this Agreement which is not qualified by
"materiality" or "Material Adverse Effect" or (B) any covenant made by
it contained in this Agreement or (ii) a violation or breach of any
representation or warranty made by it contained in this Agreement which
are qualified by "materiality" or "Material Adverse Effect" which, in
the case of either clause (i) or (ii), has prevented the satisfaction
of any condition to the obligations of the Buyers to effect the Closing
and
lxiii
such violation or breach has not been cured by the Sellers within ten
(10) Business Days of receipt of written notice thereof or waived by
the Buyer;
(d) the Sellers, if there has been a material violation or
breach by the Buyers of any covenant, representation or warranty made
by it contained in this Agreement which has prevented the satisfaction
of any condition to the obligations of the Sellers to effect the
Closing and such violation or breach has not been cured by the Buyers
within ten (10) Business Days of receipt of written notice thereof or
waived by the Sellers;
(e) the Sellers or the Buyers, if (i) there shall be any law or
regulation that makes consummation of the transactions contemplated
hereby illegal or otherwise prohibited or (ii) consummation of the
transactions contemplated hereby would violate any nonappealable final
order, decree or judgment of (A) the Bankruptcy Court or (B) any court
or Governmental Authority having competent jurisdiction;
(f) the Sellers, if the Bankruptcy Court enters an order
approving a sale of the Shares and the Purchased Assets other than the
sale thereof contemplated by this Agreement to the Buyers or any of
their Affiliates (a "Third-Party Sale");
(g) the Buyers or the Sellers, if the Bid Procedures Order has
not been entered by the Bankruptcy Court within forty-five (45) days
after the Petition Date; provided that the Buyers or the Sellers, as
the case may be, shall not be entitled to terminate this Agreement
pursuant to this Section 9.1(g) if the failure to obtain such approval
within such time period results primarily from such party itself
breaching any representation, warranty or covenant contained in this
Agreement;
(h) the Buyers or the Sellers, if the Approval Order has not
been entered by the Bankruptcy Court within forty-five (45) days after
the entry of the Bid Procedures Order on the docket of the Bankruptcy
Court; provided that the Buyers or the Sellers, as the case may be,
shall not be entitled to terminate this Agreement pursuant to this
Section 9.1(h) if the failure to obtain such approval within such time
period results primarily from such party itself breaching any
representation, warranty or covenant contained in this Agreement; or
(i) the Buyers or the Sellers, if the Closing shall not have
occurred on or prior to March 31, 2003 (the "Termination Date");
provided that the Buyers or the Sellers, as the case may be, shall not
be entitled to terminate this Agreement pursuant to this Section 9.1(i)
if the failure of the Closing to occur on or prior to such date results
primarily from such party itself breaching any representation, warranty
or covenant contained in this Agreement.
Section 9.2 Procedure and Effect of Termination. In the event of
termination of this Agreement and abandonment of the transactions contemplated
hereby by either or both of the parties pursuant to Section 9.1, written notice
thereof shall forthwith be given by the terminating party to the other parties
and this Agreement shall terminate and the transactions contemplated hereby
shall be abandoned, without further action by any of the parties hereto. If this
Agreement is terminated as provided herein:
lxiv
(a) said termination shall be the sole remedy of the parties
hereto with respect to breaches of any covenant, representation or
warranty contained in this Agreement and none of the parties hereto nor
any of their respective trustees, directors, officers or Affiliates, as
the case may be, shall have any liability or further obligation to the
other parties or any of their respective trustees, directors, officers
or Affiliates, as the case may be, pursuant to this Agreement, except
for the parties hereto in each case as stated in this Section 9.2,
Section 9.3, Section 10.15 and in Sections 7.2(b) and 7.3, and upon a
willful breach by a party, in which case the non-breaching party shall
have all rights and remedies existing at law or in equity; provided,
however, the Seller Parties shall not be responsible for liability for
any misrepresentation or breach of any warranty or covenant by any
Seller Party contained in this Agreement prior to the time of such
termination;
(b) all filings, applications and other submissions made
pursuant to this Agreement, to the extent practicable, shall be
withdrawn from the agency or other Person to which they were made; and
(c) all Confidential Information from the Seller Parties shall
be returned to the Seller Parties or destroyed, and all Confidential
Information from the Buyers shall be returned to the Buyers or
destroyed (provided that the party doing such destruction shall deliver
a written certification of such destruction to the other party).
Section 9.3 Liquidated Damages. (a) If the Buyers shall terminate this
Agreement pursuant to (i) Section 9.1(i) and as of the Termination Date (A) the
closing condition set forth in Section 8.2(j) shall not have been satisfied or
waived by the Buyers and (B) the closing conditions specified in Sections
8.1(a), 8.1(b) and 8.3(a) shall have been satisfied or waived or (ii) Section
9.1(c), then the Buyers shall be entitled to the Expense Reimbursement as
liquidated damages from the Sellers, subject to the proviso in Section 9.3(b).
(b) If (i) the Buyers shall terminate this Agreement pursuant to
Sections 9.1(b)(i) or 9.1(c) and (ii) the Sellers shall have committed fraud in
connection with the transactions contemplated by this Agreement or materially
and willfully breached their obligations to sell the Purchased Assets and the
Shares to the Buyers pursuant to Articles II, III and IV of this Agreement
(except if the Sellers sell the Purchased Assets and the Shares to a third party
pursuant to Section 7.12 or an Approval Order, in which case the provisions of
Section 7.12 shall govern), then the Buyers shall be entitled to the Topping Fee
and the Expense Reimbursement as liquidated damages from the Sellers; provided,
however, that if the Buyers are entitled to the Topping Fee and the Expense
Reimbursement as liquidated damages from the Sellers pursuant to this Section
9.3(b), then the Buyers shall not also be entitled to the Expense Reimbursement
pursuant to Section 9.3(a).
(c) Any payment required to be made to the Buyers pursuant to either
Section 7.12 or Section 9.3(a) or (b) shall be made by wire transfer of same day
funds to an account designated by the Buyers. In the event that a payment is due
to the Buyers pursuant to Section 7.12, such payment shall be made on the date
on which the sale of the Business to the Successful Bidder, Backup Bidder or any
other Person that acquires the Business as a result of and in connection with a
bid submitted at the Auction is closed. In the event that a payment is due to
lxv
the Buyers pursuant to Section 9.3(a) or (b), such payment shall be made within
two (2) Business Days of the date the Buyers terminate this Agreement.
(d) The Sellers obligation to pay the Topping Fee and the Expense
Reimbursement (whether pursuant to Section 7.12 or Section 9.3(a) or (b)) shall
survive the termination of this Agreement and, provided that they are approved
by the Bankruptcy Court as part of the Bid Procedures Order, shall constitute an
administrative expense in the Sellers' Chapter 11 Cases or any subsequent
conversion of the Sellers' Chapter 11 Cases to cases under Chapter 7 of the
Bankruptcy Code under Sections 503(b) and 507(a)(1) of the Bankruptcy Code.
Section 9.4 Extension; Waiver. At any time prior to the Closing, the
Sellers, on the one hand, or the Buyers, on the other hand, may (a) extend the
time for the performance of any of the obligations or acts of the other party,
(b) waive any inaccuracies in the representations and warranties of the other
party contained herein or in any document delivered pursuant hereto, (c) waive
compliance with any of the agreements of the other party contained herein or (d)
waive any condition to its obligations hereunder. Any agreement on the part of
the Sellers, on the one hand, or the Buyers, on the other hand, to any such
extension or waiver shall be valid only if set forth in a written instrument
signed on behalf of the Sellers or the Buyers, as applicable.
ARTICLE X
MISCELLANEOUS PROVISIONS
Section 10.1 Amendment and Modification. This Agreement may be amended,
modified or supplemented only by written agreement of Insilco and the Buyers;
provided that the consent of the Prepetition Agent shall be required in
connection with any amendment of this Agreement that materially modifies this
Agreement.
Section 10.2 Waiver of Compliance; Consents. Except as otherwise
provided in this Agreement, any failure of any of the parties to comply with any
obligation, covenant or condition herein may be waived by the party entitled to
the benefits thereof only by a written instrument signed by the party granting
such waiver, but such waiver or failure to insist upon strict compliance with
such obligation, covenant, or condition shall not operate as a waiver of, or
estoppel with respect to any subsequent or other failure.
Section 10.3 Survival. The parties hereto agree that the
representations and warranties contained in this Agreement shall not survive the
Closing hereunder, and neither party nor any of their respective officers,
directors, representatives, employees, advisors or agents shall have any
liability to the other after the Closing for any breach thereof. The parties
hereto agree that only the covenants contained in this Agreement to be performed
at or after the Closing Date shall survive the Closing hereunder, and each party
hereto shall be liable to the other after the Closing Date for any breach
thereof.
Section 10.4 No Impediment to Liquidation. Nothing herein shall be
deemed or construed as to limit, restrict or impose any impediment to the
Sellers' right to liquidate, dissolve and wind-up their affairs and to cease all
business activities and operations at such time as it may determine following
the Closing. Subject to Section 7.7, the Sellers shall not be obligated to
lxvi
retain assets or employees or to continue operations following the Closing (or
to retain outsource assistance) in order to satisfy their obligations hereunder.
Section 10.5 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given (a) when personally
sent/delivered, by facsimile transmission (with hard copy to follow) or sent by
reputable express courier or (b) five (5) days following mailing by registered
or certified mail postage prepaid and return receipt requested. Unless another
address is specified in writing, notices, demands and communications to the
Sellers and the Buyers shall be sent to the addresses indicated below:
(i) If to the Sellers, to:
Insilco Technologies, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
with a copy to:
Shearman & Sterling
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇, Esq.
(ii) if to any of the Buyers, to:
Bel Fuse Inc.
▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇
with a copy (which shall not constitute notice)to:
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ PC
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Section 10.6 Assignment. This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns and with respect to the
Sellers, any entity that may succeed to substantially all the assets of the
Sellers, but neither this Agreement nor any of the rights, interests or
obligations
l67
hereunder shall be assigned by any parties hereto, including by operation of
law, without the prior written consent of the other party. Any assignment of
this Agreement or any of the rights, interests or obligations hereunder in
contravention of this Section 10.6 shall be null and void and shall not bind or
be recognized by the Sellers or the Buyers.
Section 10.7 Third-Party Beneficiaries. Nothing in this Agreement shall
be construed as giving any person other than the parties hereto and the
Prepetition Agent any legal or equitable right, remedy or claim under or with
respect to this Agreement.
Section 10.8 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any Law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect for so long as the economic or
legal substance of the transactions contemplated by this Agreement is not
affected in any manner materially adverse 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 in order that the transactions contemplated by
this Agreement are consummated as originally contemplated to the greatest extent
possible.
Section 10.9 Governing Law. This Agreement shall be governed by the
laws of the State of New York excluding (to the greatest extent a New York court
would permit) any rule of law that would cause the application of the laws of
any jurisdiction other than the State of New York.
Section 10.10 Submission to Jurisdiction. (a) The parties hereto
irrevocably submit to the exclusive jurisdiction of the Bankruptcy Court (or any
court exercising appellate jurisdiction over the Bankruptcy Court) over any
dispute arising out of or relating to this Agreement or any other agreement or
instrument contemplated hereby or entered into in connection herewith or any of
the transactions contemplated hereby or thereby. Each party hereby irrevocably
agrees that all claims in respect of such dispute or proceedings may be heard
and determined in such courts. The parties hereby irrevocably waive, to the
fullest extent permitted by applicable law, any objection which they may now or
hereafter have to the laying of venue of any such dispute or proceeding brought
in such court or any defense of inconvenient forum in connection therewith.
(b) Service of process in connection with any such suit, action
or proceeding may be served on each party hereto anywhere in the world by the
same methods as are specified for the giving of notices under Section 10.5 of
this Agreement.
(c) Bel Fuse Ltd. and Bel Fuse Macau, L.D.A. hereby irrevocably
appoint Bel Connector Inc. and Bel Transformer Inc. as agents thereof for the
service of process thereon, and service of process on Bel Connector Inc. and Bel
Transformer Inc. shall be deemed to be valid service of process on Bel Fuse Ltd.
and Bel Fuse Macau, L.D.A.
Section 10.11 Counterparts. This Agreement may be executed and
delivered (including by facsimile transmission) in one or more counterparts, and
by the different parties hereto in separate counterparts, each of which, when
executed and delivered, shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
lxviii
Section 10.12 Incorporation of Exhibits. The Disclosure Schedule and
all Exhibits attached hereto and referred to herein are hereby incorporated
herein by reference and made a part of this Agreement for all purposes as if
fully set forth herein.
Section 10.13 Entire Agreement. This Agreement (including the Exhibits
and the Disclosure Schedule), the Ancillary Agreements and the Confidentiality
Agreement constitute the entire agreement among the parties with respect to the
subject matter hereof and supersede all prior agreements and understandings
among the parties with respect thereto.
Section 10.14 Headings. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
Section 10.15 Remedies. Subject to Section 10.3, the Sellers and the
Buyers hereby acknowledge and agree that money damages may not be an adequate
remedy for any breach or threatened breach of any of the provisions of this
Agreement and that, in such event, the Sellers or their successors or assigns,
or the Buyers or their successors or assigns, as the case may be, may, in
addition to any other rights and remedies existing in their favor, apply to the
Bankruptcy Court or any other court of competent jurisdiction for specific
performance, and injunctive and/or other relief in order to enforce or prevent
any violations of this Agreement.
Section 10.16 Bulk Sales or Transfer Laws. The Buyers hereby waive
compliance by the Seller Parties with the provisions of the bulk sales or
transfer laws of all applicable jurisdictions.
Section 10.17 WAIVER OF JURY TRIAL. THE PARTIES HERETO HEREBY WAIVE TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT THEY MAY HAVE TO A
TRIAL BY JURY WITH RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT
OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
BY THIS AGREEMENT. THE PARTIES HERETO (a) CERTIFY THAT NO REPRESENTATIVE, AGENT
OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THAT
FOREGOING WAIVER AND (b) ACKNOWLEDGES THAT THEY AND THE OTHER PARTIES HERETO
HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
BY THIS AGREEMENT, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 10.17.
* * * * *
lxix
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written by their respective officers
thereunto duly authorized.
THE SELLERS: INSILCO TECHNOLOGIES, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President and Chief Executive
Officer
▇▇▇▇▇▇▇ CONNECTOR SYSTEMS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Senior Vice President and Chief
Financial Officer
INNET TECHNOLOGIES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Senior Vice President and Chief
Financial Officer
INSILCO INTERNATIONAL HOLDINGS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President and Chief Executive
Officer
SIGNAL CARIBE, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President and Chief Executive
Officer
EYELETS FOR INDUSTRY, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President and Chief Executive
Officer
lxx
▇▇▇▇▇▇▇ STAMPING CORP.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President and Chief Executive
Officer
SIGNAL TRANSFORMER CO., INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Senior Vice President and Chief
Financial Officer
THE BUYERS: BEL FUSE, LTD.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Director
BEL FUSE MACAU, L.D.A.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Director
BEL CONNECTOR INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇
Title: Vice President & Secretary
BEL TRANSFORMER INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇
Title: Vice President & Secretary
lxxi
AMENDMENT NO. 1 TO THE
STOCK AND ASSET PURCHASE AGREEMENT
Dated as of March 21, 2003
THIS AMENDMENT (this "Amendment") is entered into by and among
Insilco Technologies, Inc., a Delaware corporation, ▇▇▇▇▇▇▇ Connector Systems,
Inc., a Pennsylvania corporation, InNet Technologies, Inc., a California
corporation, Insilco International Holdings, Inc., a Delaware corporation,
Signal Caribe, Inc., a Delaware corporation, Eyelets for Industry, Inc., a
Connecticut corporation, ▇▇▇▇▇▇▇ Stamping Corp., a Delaware corporation, and
Signal Transformer Co., Inc., a Delaware corporation, (collectively, the
"Sellers"), Bel Fuse Inc., a New Jersey corporation, Bel Fuse Ltd., a Hong Kong
corporation, Bel Fuse Macau, L.D.A., a Macau corporation, Bel Connector Inc., a
Delaware corporation, and Bel Transformer Inc., a Delaware corporation,
(collectively, the "Buyers").
WHEREAS, the Buyers (with the exception of Bel Fuse Inc.) and
the Sellers have entered into a Stock and Asset Purchase Agreement dated as of
December 15, 2002 (the "Agreement"), the terms defined therein being used herein
as therein defined unless otherwise defined herein;
WHEREAS, Section 5.4(a) of the Agreement provides certain
information regarding the capitalization of Insilco Technologies Germany that is
inaccurate, and the Sellers and the Buyers wish to amend the Agreement to
correct such inaccurate information.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements and covenants set forth herein, the parties hereto agree as
follows:
SECTION 1. Amendment to the Agreement. The Agreement is hereby
amended in accordance with Section 10.1 of the Agreement as follows:
(a) The terms "Buyer" and "Buyers" are hereby amended to
include Bel Fuse Inc., a New Jersey corporation.
(b) In the first WHEREAS clause of the Agreement, the word
"Limited" is hereby inserted after the words "Insilco Technologies
International".
(c) In Section 5.4(a) of the Agreement, the first sentence is
hereby replaced in its entirety as follows:
"The authorized nominal capital of Insilco Technologies
Germany consists of the following: one (1) share of nominal capital at nominal
value of 60,000 Euro (the "Insilco Technologies Germany Shares")."
(d) In Section 5.4(a) of the Agreement, the fifth sentence is
hereby replaced in its entirety as follows:
"The Insilco Technologies Germany Shares constitute all of the
issued and outstanding capital stock of Insilco Technologies Germany and are
owned of record and beneficially by Insilco free and clear of all Encumbrances,
except as set forth in Schedule 5.4(a) of the Disclosure Schedule."
(e) In Section 5.4(b) of the Agreement, the fifth sentence is
hereby replaced in its entirety as follows:
"The Top East Shares constitute all the issued and outstanding
capital stock of Top East and are owned of record and beneficially by ITI free
and clear of all Encumbrances, except as set forth in Schedule 5.4(b) of the
Disclosure Schedule."
(f) In Section 5.4(g) of the Agreement, the fifth sentence is
hereby replaced in its entirety as follows:
"The Signal Transformer Mexico Shares constitute all the
issued and outstanding capital stock of Signal Transformer Mexico and are owned
of record and beneficially by Insilco International Holdings, Inc. in the amount
of 500 of the Signal Transformer Mexico Shares and by Signal Transformer Co.,
Inc. in the amount of 49,500 of the Signal Transformer Mexico Shares free and
clear of all Encumbrances, except as set forth in Schedule 5.4(g) of the
Disclosure Schedule."
SECTION 2. Effect on Agreement. By execution of this
Amendment, Bel Fuse Inc. agrees to be deemed to be a party to, and shall be
fully bound by, the terms and conditions of the Agreement. In addition, except
as specifically amended above, the Agreement shall continue to be in full force
and effect and is hereby ratified and confirmed.
SECTION 3. Execution in Counterparts. This Amendment may be
executed and delivered (including by facsimile transmission) in one or more
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed to be an original but all
of which taken together shall constitute but one and the same instrument.
SECTION 4. Governing Law. This Amendment shall be governed by,
and construed in accordance with, the laws of the State of New York.
[The remainder of this page is left blank intentionally.]
2
IN WITNESS WHEREOF, the Buyers and the Sellers have caused
this Amendment to be executed as of the date first written above.
THE SELLERS: INSILCO TECHNOLOGIES, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President and Chief Executive
Officer
▇▇▇▇▇▇▇ CONNECTOR SYSTEMS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Senior Vice President and Chief
Financial Officer
INNET TECHNOLOGIES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Senior Vice President and Chief
Financial Officer
INSILCO INTERNATIONAL HOLDINGS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President and Chief Executive
Officer
SIGNAL CARIBE, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President and Chief Executive
Officer
EYELETS FOR INDUSTRY, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President and Chief Executive
Officer
▇▇▇▇▇▇▇ STAMPING CORP.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President and Chief Executive
Officer
SIGNAL TRANSFORMER CO., INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Senior Vice President and Chief
Financial Officer
THE BUYERS: BEL FUSE INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: President
BEL FUSE LTD.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Director
BEL FUSE MACAU, L.D.A.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Director
BEL CONNECTOR INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇
Title: Vice President & Secretary
BEL TRANSFORMER INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇
Title: Vice President & Secretary