EXHIBIT 2(A)
------------
TRANSACTION AGREEMENT
dated as of
July 20, 2000
among
THERMASYS HOLDING COMPANY,
THERMASYS CORPORATION
THERMASYS I, INC.,
THERMASYS II, INC.,
THERMASYS III, INC.,
THERMAL TRANSFER PRODUCTS, LTD.,
STEEL PARTS CORPORATION,
GREAT LAKE, INC.,
THERMAL COMPONENTS DIVISION, INC.,
INSILCO CORPORATION
and
INSILCO HOLDING CO.
TABLE OF CONTENTS
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ARTICLE 1
DEFINITIONS
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PAGE
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SECTION 1.01. DEFINITIONS....................................................2
ARTICLE 2
THE TRANSACTIONS
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SECTION 2.01. TRANSACTION CONSIDERATION AND ALLOCATION.......................8
SECTION 2.02. THE TRANSACTIONS...............................................9
SECTION 2.03. CONVERSION OF SHARES..........................................11
SECTION 2.04. DELIVERY AND PAYMENT..........................................13
SECTION 2.05. ASSET SALE TREATMENT OF MERGER FOR FEDERAL INCOME
TAX PURPOSES..................................................13
ARTICLE 3
THE SURVIVING CORPORATIONS
--------------------------
SECTION 3.01. CERTIFICATES OF INCORPORATION.................................14
SECTION 3.02. BYLAWS........................................................14
SECTION 3.03. DIRECTORS AND OFFICERS........................................14
ARTICLE 4
THE PURCHASE AND SALE TRANSACTION
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SECTION 4.01. PURCHASE AND SALE.............................................15
SECTION 4.02. EXCLUDED ASSETS...............................................17
SECTION 4.03. ASSUMED LIABILITIES...........................................17
SECTION 4.04. EXCLUDED LIABILITIES..........................................18
SECTION 4.05. ASSIGNMENT OF CONTRACTS AND RIGHTS............................19
SECTION 4.06. ASSET PURCHASE CONSIDERATION; ALLOCATION OF TRANSACTION
CONSIDERATION.................................................20
SECTION 4.07. CLOSING.......................................................21
SECTION 4.08. CLOSING BALANCE SHEET.........................................22
SECTION 4.09. ADJUSTMENT OF PURCHASE PRICE..................................23
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF SELLER
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PAGE
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SECTION 5.01. CORPORATE EXISTENCE AND POWER.................................24
SECTION 5.02. CORPORATE AUTHORIZATION.......................................24
SECTION 5.03. GOVERNMENTAL AUTHORIZATION....................................25
SECTION 5.04. NONCONTRAVENTION..............................................25
SECTION 5.05. SUBSIDIARIES..................................................25
SECTION 5.06. REQUIRED AND OTHER CONSENTS...................................26
SECTION 5.07. ABSENCE OF MATERIAL ADVERSE EFFECT............................26
SECTION 5.08. FINANCIAL STATEMENTS..........................................26
SECTION 5.09. SUFFICIENCY OF AND TITLE TO THE PURCHASED ASSETS..............27
SECTION 5.10. TAXES.........................................................27
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
SECTION 6.01. CORPORATE EXISTENCE AND POWER.................................28
SECTION 6.02. CORPORATE AUTHORIZATION.......................................29
SECTION 6.03. GOVERNMENTAL AUTHORIZATION....................................29
SECTION 6.04. NONCONTRAVENTION..............................................29
SECTION 6.05. FINANCING.....................................................29
SECTION 6.06. LITIGATION....................................................29
ARTICLE 7
COVENANTS OF SELLER
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SECTION 7.01. CONDUCT OF THE BUSINESS.......................................30
SECTION 7.02. ACCESS TO INFORMATION; CONFIDENTIALITY........................30
SECTION 7.03. NOTICES OF CERTAIN EVENTS.....................................31
SECTION 7.04. NONCOMPETITION................................................32
ARTICLE 8
COVENANTS OF BUYER
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SECTION 8.01. CONFIDENTIALITY...............................................33
SECTION 8.02. ACCESS........................................................34
SECTION 8.03. MANAGEMENT SERVICES...........................................34
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ARTICLE 9
COVENANTS OF BUYER AND SELLER
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PAGE
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SECTION 9.01. BEST EFFORTS; FURTHER ASSURANCES..............................34
SECTION 9.02. CERTAIN FILINGS...............................................35
SECTION 9.03. PUBLIC ANNOUNCEMENTS..........................................35
SECTION 9.04. TRADEMARKS; TRADE NAMES.......................................35
SECTION 9.05. WARN ACT......................................................36
SECTION 9.06. TAX COOPERATION; ALLOCATION OF TAXES..........................36
SECTION 9.07. SECTION 338(H)(10) ELECTION...................................38
ARTICLE 10
EMPLOYEE BENEFITS
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SECTION 10.01. EMPLOYEE BENEFITS DEFINITIONS.................................38
SECTION 10.02. EMPLOYEES AND OFFERS OF EMPLOYMENT............................39
SECTION 10.03. SELLER'S BENEFIT PLANS........................................40
SECTION 10.04. BUYER BENEFIT PLANS...........................................40
SECTION 10.05. W-2 REPORTING.................................................41
SECTION 10.06. NO THIRD PARTY BENEFICIARIES..................................41
ARTICLE 11
CONDITIONS TO CLOSING
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SECTION 11.01. CONDITIONS TO OBLIGATIONS OF ALL PARTIES......................41
SECTION 11.02. CONDITIONS TO OBLIGATION OF BUYER, THERMASYS, MERGER
SUB ONE, MERGER SUB TWO AND MERGER SUB THREE..................42
SECTION 11.03. CONDITIONS TO OBLIGATION OF SELLER, INSILCO, INSILCO SUB
ONE, INSILCO SUB TWO AND INSILCO SUB THREE....................43
ARTICLE 12
SURVIVAL; INDEMNIFICATION
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SECTION 12.01. SURVIVAL......................................................44
SECTION 12.02. INDEMNIFICATION...............................................44
SECTION 12.03. PROCEDURES FOR INDEMNITY CLAIMS...............................46
SECTION 12.04. EXCLUSIVE REMEDIES............................................47
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ARTICLE 13
TERMINATION
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PAGE
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SECTION 13.01. GROUNDS FOR TERMINATION.......................................47
SECTION 13.02. EFFECT OF TERMINATION.........................................47
ARTICLE 14
MISCELLANEOUS
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SECTION 14.01. NOTICES.......................................................48
SECTION 14.02. AMENDMENTS AND WAIVERS........................................49
SECTION 14.03. EXPENSES......................................................49
SECTION 14.04. SUCCESSORS AND ASSIGNS........................................49
SECTION 14.05. GOVERNING LAW.................................................49
SECTION 14.06. JURISDICTION..................................................50
SECTION 14.07. WAIVER OF JURY TRIAL..........................................50
SECTION 14.08. COUNTERPARTS; THIRD PARTY BENEFICIARIES.......................50
SECTION 14.09. ENTIRE AGREEMENT..............................................50
SECTION 14.10. BULK SALES LAWS...............................................50
SECTION 14.11. CAPTIONS......................................................51
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TRANSACTION AGREEMENT
AGREEMENT dated as of July 20, 2000 among ThermaSys Holding Company, a
Delaware corporation ("BUYER"), ThermaSys Corporation, a Delaware corporation
and a direct, wholly owned subsidiary of Buyer ("THERMASYS"), ThermaSys I, Inc.,
a Wisconsin corporation ("MERGER SUB ONE"), ThermaSys II, Inc., a Delaware
corporation ("MERGER SUB TWO"), ThermaSys III, Inc., a Delaware corporation
("MERGER SUB THREE"), Insilco Holding Co., a Delaware corporation ("SELLER"),
Insilco Corporation, a Delaware corporation and a direct, wholly owned
subsidiary of Seller ("INSILCO"), Thermal Transfer Products, Ltd., a Wisconsin
corporation ("INSILCO SUB ONE"), Steel Parts Corporation, a Delaware corporation
("INSILCO SUB TWO"), Great Lake, Inc., a Delaware corporation ("INSILCO SUB
THREE"), and Thermal Components Division, Inc., a Delaware corporation ("TCDI").
W I T N E S S E T H :
WHEREAS, Seller conducts businesses which manufacture, sell and
distribute tubing and heat transfer products and transmission and suspension
components through (i) the General Thermodynamics Division and Thermal
Components Division (the "THERMAL DIVISIONS") of Insilco, (ii) the following
wholly-owned subsidiaries of Insilco: Steel Parts Corporation, Arup Alu-▇▇▇▇ und
Profil GmbH, Thermal Transfer Products, Ltd., Great Lake, Inc., Thermal
Components Division, Inc. and Thermal Components, Inc. and (iii) Dalian General
Thermodynamics Incorporated, Ltd. ("DALIAN"), a People's Republic of China
limited liability company of which Insilco owns 51% (collectively, the
"BUSINESS");
WHEREAS, Merger Sub One, Merger Sub Two, Merger Sub Three, ThermaSys,
Insilco Sub One, Insilco Sub Two, and Insilco Sub Three deem it advisable to
consummate the Mergers (as defined herein) on the terms and conditions set forth
herein;
WHEREAS, Insilco is the owner of all of the assets of the Thermal
Divisions and desires to sell such assets to ThermaSys and ThermaSys desires to
purchase such assets from Insilco upon the terms and subject to the conditions
set forth in this Agreement (as defined herein); and
WHEREAS, Insilco is the record and/or beneficial owner of all of the
issued and outstanding shares of TCI and 51% of the issued and outstanding
shares of Dalian and all of the issued and outstanding shares of Insilco
Deutschland GmbH ("INSILCO DEUTSCHLAND") which is the record and/or beneficial
owner of all of the issued and outstanding shares of Arup, and Insilco desires
to sell or, in the case of Arup, cause to be sold, such shares to ThermaSys and
ThermaSys desires to buy such shares from Insilco or, in the case of Arup,
Insilco Deutschland, upon the terms and subject to the conditions set forth in
the Stock Purchase Agreement attached as Exhibit B-1, and with respect to the
shares of Arup and Dalian, as agreed by the parties prior to Closing (the "STOCK
PURCHASE AGREEMENTS");
The parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. DEFINITIONS.
(a) The following terms, as used herein, have the following meanings:
"ACCOUNTING PRINCIPLES" means generally accepted accounting principles
consistently applied by Seller in the preparation of its audited consolidated
financial statements, taking into account the accounting policies within
generally accepted accounting principles used in the preparation of the
Financial Statements.
"AFFILIATE" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control with
such other Person; PROVIDED, HOWEVER, that when used herein with respect to
Seller the term shall not include DLJ Merchant Banking Partners II, L.P., a
Delaware limited partnership, 399 Venture Partners, Inc., a Delaware
corporation, or any of their respective directors, officers, shareholders,
partners or subsidiaries, and when used herein with respect to Buyer the term
shall not include Seller, Insilco, Insilco Sub One, Insilco Sub Two, Insilco Sub
Three, Arup, Dalian, TCI, TCDI, Insilco Deutschland or any of their respective
directors or officers.
"ARUP" means Arup Alu-▇▇▇▇ und Profil GmbH, a corporation organized
under the laws of the Federal Republic of Germany.
"BALANCE SHEET" means the unaudited balance sheet of the Business as of
March 31, 2000.
"BALANCE SHEET DATE" means March 31, 2000.
2
"BASE OPERATING WORKING CAPITAL" means $40,195,000.00, which was the
Operating Working Capital as of the close of business on April 30, 2000.
"BUSINESS DAY" means any day other than a Saturday, Sunday or other day
on which commercial banks in New York, New York are authorized or required by
law to close.
"CLOSING DATE" means the date of the Closing.
"CODE" means the Internal Revenue Code of 1986, as amended.
"ENVIRONMENTAL LAWS" means all international, national, state,
provincial, regional, federal, municipal and local laws (including, without
limitation, principles or rules of common law and decisional law), statutes,
codes, ordinances, rules, regulations, decrees, judgments, directives, binding
policies, Environmental Permits, orders or other legally binding requirements
and any interpretations thereof by any Governmental Authority relating to or
addressing the environment (including, without limitation, natural resources) or
the health or safety of humans or other living organisms, whether now existing
or hereafter in effect, and in each case as amended, including, but not limited
to, (1) the Comprehensive Environmental Response, Compensation and Liability Act
of 1980, the Resource Conservation and Recovery Act, the Solid Waste Disposal
Act, the Oil Pollution Act of 1990, the Rivers and Harbors Act of 1899, the
Federal Water Pollution Control Act, the Clean Water Act, the Occupational
Safety and Health Act ("OSHA"), the Clean Air Act, the Coastal Zone Management
Act of 1972, the Emergency Planning and Community Right to Know Act, and (2)
those relating to or addressing (i) the introduction into commerce, use,
handling, transportation, treatment, storage, disposal, release or threatened
release, removal or remediation of, or response, abatement or corrective action
with respect to, any Hazardous Material, (ii) workplace or worker safety and
health or (iii) personal injury, sickness, disease, death, public welfare or
property damage relating to Hazardous Materials.
"ENVIRONMENTAL PERMITS" means all permits, consents, licenses, filings,
and other approvals, authorizations, or submissions of information required
under Environmental Laws.
"ESTIMATED OPERATING WORKING CAPITAL" means Seller's good faith
estimate of Closing Operating Working Capital delivered to Buyer not less than
five Business Days prior to the Closing.
"HAZARDOUS MATERIAL" means any pollutant, contaminant, waste or
chemical or any toxic, radioactive, ignitable corrosive, reactive or otherwise
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hazardous substance, waste or material or any substance, waste or material
having any constituent elements displaying any of the foregoing characteristics
including, without limitation, petroleum, its derivatives, by-products and other
hydrocarbons, and any substance, waste or material regulated under any
Environmental Law.
"HSR ACT" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended.
"INSILCO SUB ONE COMMON STOCK" means the common stock, par value $0.01
per share, of Insilco Sub One.
"INSILCO SUB ONE SHARES" means all issued shares of Insilco Sub One
Common Stock.
"INSILCO SUB THREE COMMON STOCK" means the common stock, par value
$0.01 per share, of Insilco Sub Three.
"INSILCO SUB THREE SHARES" means all issued shares of Insilco Sub Three
Common Stock.
"INSILCO SUB TWO COMMON STOCK" means the common stock, par value $0.01
per share, of Insilco Sub Two.
"INSILCO SUB TWO SHARES" means all issued shares of Insilco Sub Two
Common Stock.
"LIEN" means, with respect to any property or asset, any mortgage,
lien, pledge, charge, security interest, encumbrance or other adverse claim of
any kind in respect of such property or asset. For the purposes of this
Agreement, a Person shall be deemed to own subject to a Lien any property or
asset which it has acquired or holds subject to the interest of a vendor or
lessor under any conditional sale agreement, capital lease or other title
retention agreement relating to such property or asset.
"LOSSES" means any loss, liability, damage, cost, expense, action,
award, suit, proceeding, hearing, investigation, charge, complaint, demand,
claim, action, cause of action, arbitration, injunction, judgment, order decree,
ruling, taxes, liens, dues or removal or remediation obligation (including
reasonable costs of defense and investigations, settlements, and fees, including
court costs and reasonable attorneys' and witness fees) or penalties or fines.
4
"MATERIAL ADVERSE EFFECT" means a material adverse effect on the
condition (financial or otherwise), business, assets or results of operations of
the Business (other than the Excluded Assets) taken and considered as a whole.
"MERGER SUB ONE SHARES" means all of the issued and outstanding shares
of common stock, par value $1.00 per share, of Merger Sub One.
"MERGER SUB TWO SHARES" means all of the issued and outstanding shares
of common stock, par value $1.00 per share, of Merger Sub Two.
"MERGER SUB THREE SHARES" means all of the issued and outstanding
shares of common stock, par value $1.00 per share, of Merger Sub Three.
"1934 ACT" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
"OPERATING WORKING CAPITAL" means, as of the relevant date, an amount
equal to (i) cash and cash equivalents of the Business plus (ii) the sum of the
value of (A) the accounts receivable of the Business (net of reserves for bad
debts), (B) the inventory of the Business (net of reserves for slow moving and
obsolete items) and (C) prepaid expenses of the Business minus (iii) the sum of
(A) the accounts payable of the Business and (B) the accrued expenses of the
Business, in each case, determined in accordance with the Accounting Principles
and as recorded on the balance sheet as of such date.
"PERMITTED LIENS" means (i) Liens disclosed on the Balance Sheet or in
Schedule 5.09(b) hereto, (ii) Liens for taxes not yet due or being contested in
good faith (and for which adequate accruals or reserves have been established),
or (iii) Liens which do not materially detract from the value of a Purchased
Asset or Arup, Dalian, TCI, TCDI, Insilco Sub One, Insilco Sub Two, or Insilco
Sub Three or materially interfere with any present or intended use of a
Purchased Asset or Arup, Dalian, TCI, TCDI, Insilco Sub One, Insilco Sub Two, or
Insilco Sub Three.
"PERSON" means an individual, corporation, partnership, limited
liability company, association, trust or other entity or organization, including
a government or political subdivision or an agency or instrumentality thereof.
"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.
5
"POST-CLOSING TAX PERIOD" means (i) any Tax Period beginning after 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 beginning the day after
the Closing Date.
"SUBSIDIARIES" means Insilco, Arup, Dalian, TCI, Insilco Sub One,
Insilco Sub Two, Insilco Sub Three and TCDI.
"TAX" means (i) any tax, governmental fee or other like assessment or
charge of any kind whatsoever (including, but not limited to, withholding on
amounts paid to or by any Person), together with any interest, penalty, addition
to tax or additional amount imposed by any governmental authority (a "TAXING
AUTHORITY") responsible for the imposition of any such tax (domestic or
foreign), (ii) in the case of each Allocation Target or any Subsidiary,
liability for the payment of any amount of the type described in clause (i) as a
result of being or having been before the Closing Date a member of an
affiliated, consolidated, combined or unitary group, or a party to any agreement
or arrangement, as a result of which liability of the Allocation Target or any
Subsidiary to a Taxing Authority is determined or taken into account with
reference to the activities of any other Person, and (iii) liability for the
payment of any amounts of the type described in clause (i) or (ii) above as a
result of being party to any agreement or any express or implied obligation to
indemnify any other Person.
"TCI" means Thermal Components, Inc., a corporation organized under
the laws of the State of Delaware.
"THERMASYS SHARES" means all of the issued and outstanding shares of
common stock, par value $1.00 per share, of ThermaSys.
"TRANSACTIONS" means the Mergers, the transactions contemplated by the
Stock Purchase Agreements and the Asset Purchase.
"TRANSACTION DOCUMENTS" means this Agreement, the Stock Purchase
Agreements, the Management Services Agreement and the Assignment and Assumption
Agreement.
(b) Each of the following terms is defined in the Section set forth
opposite such term:
TERM SECTION
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Accounting Referee 4.08(c)
Active Employee 10.02
Apportioned Obligations 9.06(b)
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TERM SECTION
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Asset Allocation 4.06(b)
Asset Purchase 4.01
Asset Purchase Consideration 4.06
Assignment and Assumption Agreement 4.07(c)
Allocation Target 4.06(a)
Asset Purchase Consideration 4.06(a)
Assumed Liabilities 4.03
Benefit Arrangements 10.01
Benefit Plans 10.01
Business Recitals
Buyer Introductory Paragraph
Claim 12.03(a)
Closing 4.07
Closing Balance Sheet 4.08
Closing Operating Working Capital 4.08
Contracts 4.01(e)
Damages 12.02
Delaware Law 2.02(a)
Effective Time 2.02(c)
Employee Plan 10.01
ERISA 10.01
ERISA Affiliate 10.01
Excluded Assets 4.02
Excluded Liabilities 4.04
Financial Statements 5.08
Final Allocation 9.07
German Court 12.02(c)
Great Lake Merger 2.02(a)
Great Lake Surviving Corporation 2.02(a)
Indemnified Party 12.03(a)
Indemnifying Party 12.03(a)
Initial Operating Working Capital Difference 2.01
Insilco Introductory Paragraph
Insilco Sub One Introductory Paragraph
Insilco Sub Two Introductory Paragraph
Insilco Sub Three Introductory Paragraph
International Plan 10.01
Mergers 2.01
Merger Consideration 2.02(c)
Merger Sub One Introductory Paragraph
Merger Sub Two Introductory Paragraph
Modified Allocation 9.07
7
TERM SECTION
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Multiemployer Plan 10.01
Other Consents 5.06
▇▇▇▇▇ Cash 4.01(h)
Pre-Merger Shares 2.03
Proposed Allocation 9.07
Purchased Assets 4.01
Required Consents 5.06
Seller Trademarks and Trade Names 9.04
Stock Purchase Agreements Recitals
Subsidiary Securities 5.05(b)
Sub One Merger 2.02(b)(i)
Sub One Merger Consideration 2.03(a)(iii)
Sub One Surviving Corporation 2.02(b)(i)
Sub Three Merger 2.02(b)(iii)
Sub Three Merger Consideration 2.02(c)(iii)
Sub Three Surviving Corporation 2.01(b)(iii)
Sub Two Merger 2.02(b)(ii)
Sub Two Merger Consideration 2.03(b)(iii)
Sub Two Surviving Corporation 2.02(b)(ii)
TCDI Introductory Paragraph
Thermal Divisions Recitals
Thermalex 8.03
ThermaSys Introductory Paragraph
338 Election 9.07
Transaction Consideration 2.01
Transaction Consideration Allocation Statement 4.06(a)
Transferred Employees 10.02
Management Services Agreement 4.07(d)
Warranty Breach 11.02
WARN Act 9.05
Wisconsin Law 2.02(b)(i)
ARTICLE 2
THE TRANSACTIONS
SECTION 2.01. TRANSACTION CONSIDERATION AND ALLOCATION. The total
purchase price for the Business (the "TRANSACTION CONSIDERATION") is an amount
in cash equal to $147,000,000 (one hundred forty-seven million dollars) plus or
minus an amount in respect of the Initial Operating Working Capital Difference:
8
(i) if the Initial Operating Working Capital Difference is a
positive number, minus the Initial Operating Working Capital
Difference;
or
(ii) if the Initial Operating Working Capital Difference is a
negative number, plus the Initial Operating Working Capital Difference.
"INITIAL OPERATING WORKING CAPITAL DIFFERENCE" means a positive or
negative amount equal to Base Operating Working Capital MINUS Estimated
Operating Working Capital. Schedule 4.09 shows the calculation of Base Operating
Working Capital.
SECTION 2.02. THE TRANSACTIONS.
(a) (i) Immediately prior to the consummation of the Sub Three Merger
(referred to below), TCDI shall be merged (the "GREAT LAKE MERGER") with and
into Insilco Sub Three in accordance with the General Corporation Law of
Delaware ("DELAWARE LAW"), whereupon the separate existence of TCDI shall cease,
and Insilco Sub Three shall be the surviving corporation (the "GREAT LAKE
SURVIVING CORPORATION");
(ii) Pursuant to the Great Lake Merger, the Great Lake Surviving
Corporation shall possess all the rights, privileges, powers and
franchises and be subject to all of the restrictions, disabilities and
duties of TCDI and Insilco Sub Three, all as provided under Delaware
Law;
(iii) Pursuant to the Great Lake Merger:
(A) each TCDI share held by TCDI as treasury stock or owned
by Insilco Sub Three or any subsidiary of Insilco Sub Three
immediately prior to the effective time of the Great Lake Merger
shall be canceled, and no payment shall be made with respect
thereto;
(B) each Insilco Sub Three Share outstanding immediately
prior to the Effective Time shall be converted into and become
one share of common stock of the Great Lake Surviving Corporation
with the same rights, powers and privileges as the shares so
converted and shall constitute the only outstanding shares of
capital stock of the Great Lake Surviving Corporation; and
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(C) each TCDI share outstanding immediately prior to the
Effective Time shall be cancelled and no payment shall be made
with respect thereto.
(iv) (A) The certificate of incorporation of Insilco Sub Three
in effect at the effective time of the Great Lake Merger shall be the
certificate of incorporation of the Great Lake Surviving Corporation
until amended in accordance with Delaware law.
(B) The bylaws of Insilco Sub Three in effect at the
effective time of the Great Lake Merger shall be the bylaws of
the Great Lake Surviving Corporation until amended in accordance
with Delaware law.
(C) The directors of TCDI at the effective time of the
Great Lake Merger shall be the directors of the Great Lake
Surviving Corporation, and the officers of TCDI at the effective
time of the Great Lake Merger shall be the officers of the Great
Lake Surviving Corporation;
(b) At the Effective Time, which shall occur immediately prior to
the Closing:
(i) Merger Sub One shall be merged (the "SUB ONE MERGER") with
and into Insilco Sub One in accordance with the Wisconsin Business
Corporation Law ("WISCONSIN LAW"), whereupon the separate existence of
Merger Sub One shall cease, and Insilco Sub One shall be the surviving
corporation (the "SUB ONE SURVIVING CORPORATION");
(ii) Insilco Sub Two shall be merged (the "SUB TWO MERGER") with
and into Merger Sub Two in accordance with Delaware Law, whereupon the
separate existence of Insilco Sub Two shall cease, and Merger Sub Two
shall be the surviving corporation (the "SUB TWO SURVIVING
CORPORATION");
(iii) Merger Sub Three shall be merged with and into Insilco Sub
Three in accordance with Delaware Law, whereupon the separate existence
of Merger Sub Three shall cease, and Insilco Sub Three shall be the
surviving corporation (the "SUB THREE MERGER" and, together with the
Sub One Merger and the Sub Two Merger, the "MERGERS"); and
(c) As soon as practicable after satisfaction or, to the extent
permitted hereunder, waiver of all conditions to the Mergers: (i) Insilco Sub
One and
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Merger Sub One will file a certificate of merger with the Secretary of State of
the State of Wisconsin and make all other filings or recordings required by
Wisconsin Law in connection with the Merger and (ii) each of Insilco Sub Two and
Merger Sub Two and Insilco Sub Three and Merger Sub Three will file a
certificate of merger with the Secretary of State of the State of Delaware and
make all other filings or recordings required by Delaware Law in connection with
the Sub Two Merger and the Sub Three Merger. The Mergers shall become effective
concurrently at such time as the certificates of merger with respect to each of
the Mergers have been duly filed with the Secretary of State of the State of
Wisconsin or the State of Delaware, as the case may be, or at such later time as
is specified in each of the certificates of merger (as to each such Merger, the
"EFFECTIVE TIME").
(d) From and after the Effective Time:
(i) pursuant to the Sub One Merger, the Sub One Surviving
Corporation shall possess all the rights, privileges, powers and
franchises and be subject to all of the restrictions, disabilities and
duties of Insilco Sub One and Merger Sub One, all as provided under
Wisconsin Law;
(ii) pursuant to the Sub Two Merger, the Sub Two Surviving
Corporation shall possess all the rights, privileges, powers and
franchises and be subject to all of the restrictions, disabilities and
duties of Insilco Sub Two and Merger Sub Two, all as provided under
Delaware Law; and
(iii) pursuant to the Sub Three Merger, the Sub Three Surviving
corporation shall possess all the rights, privileges, powers and
franchises and be subject to all of the restrictions, disabilities and
duties of Insilco Sub Three and Merger Sub Three, all as provided under
Delaware Law.
SECTION 2.03. CONVERSION OF SHARES. At the Effective Time:
(a) Pursuant to the Sub One Merger:
(i) each Merger Sub One Share held by Merger Sub One as treasury
stock or owned by Buyer or any subsidiary of Buyer immediately prior to
the Effective Time shall be canceled, and no payment shall be made with
respect thereto;
(ii) each Insilco Sub One Share outstanding immediately prior to
the Effective Time shall be converted into and become one share of
common stock of the Sub One Surviving Corporation with the same rights,
powers and privileges as the shares so converted and shall constitute
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the only outstanding shares of capital stock of the Sub One Surviving
Corporation (the "SUB ONE SURVIVING SHARES"); and
(iii) on the Closing Date, each Sub One Surviving Share
outstanding immediately prior to the Effective Time shall be exchanged
for an amount of cash to be determined on or prior to the Closing Date
(subject to adjustment as set forth in Section 4.09), without interest
(the "SUB ONE MERGER CONSIDERATION").
(b) Pursuant to the Sub Two Merger:
(i) each Insilco Sub Two Share held by Insilco Sub Two as
treasury stock or owned by Buyer or any subsidiary of Buyer immediately
prior to the Effective Time shall be canceled, and no payment shall be
made with respect thereto;
(ii) each Merger Sub Two Share outstanding immediately prior to
the Effective Time shall be converted into and become one share of
common stock of the Sub Two Surviving Corporation with the same rights,
powers and privileges as the shares so converted and shall constitute
the only outstanding shares of capital stock of the Sub Two Surviving
Corporation (the "SUB TWO SURVIVING SHARES"); and
(iii) each Insilco Sub Two Share outstanding immediately prior to
the Effective Time shall be converted into the right to receive an
amount of cash to be determined on or prior to the Closing Date
(subject to adjustment as set forth in Section 4.09), without interest
(the "SUB TWO MERGER CONSIDERATION").
(c) Pursuant to the Sub Three Merger:
(i) each Merger Sub Three Share held by Merger Sub Three as
treasury stock or owned by Buyer or any subsidiary of Buyer immediately
prior to the Effective Time shall be canceled, and no payment shall be
made with respect thereto;
(ii) each Insilco Sub Three Share outstanding immediately prior
to the Effective Time shall be converted into and become one share of
common stock of the Sub Three Surviving Corporation with the same
rights, powers and privileges and shall constitute the only outstanding
shares of capital stock of the Sub Three Surviving Corporation; and
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(iii) on the Closing Dates, each Sub Three Surviving Share
outstanding immediately prior to the Effective Time shall be exchanged
for an amount of cash to be determined on the Closing Date (subject to
adjustment as set forth in Section 4.09), without interest, (the "SUB
THREE MERGER CONSIDERATION" and, together with the Sub One Merger
Consideration and the Sub Two Merger Consideration, the "MERGER
CONSIDERATION"). The Merger Consideration shall be subject to
adjustment as provided in Section 4.09.
SECTION 2.04. DELIVERY AND PAYMENT. (a) On the Closing Date, Buyer and
Seller shall mutually agree on the Merger Consideration. Each holder of Sub One
Surviving Shares and Sub Three Surviving Shares who delivers such shares to the
holder of the Merger Sub One Shares and Merger Sub Three Shares will be entitled
to receive the applicable Merger Consideration payable in respect of the Sub One
Surviving Shares and Sub Three Surviving Shares. Each holder of Insilco Sub Two
Shares that have been converted into a right to receive the Sub Two Merger
Consideration, upon surrender to the Sub Two Surviving Corporation of a
certificate or certificates representing such Sub Two Surviving Corporation
Shares, will be entitled to receive the Sub Two Merger Consideration payable in
respect of such Insilco Sub Two Shares. Until so surrendered, each such
certificate shall, after the Effective Time, represent for all purposes, only
the right to receive such Merger Consideration. The Insilco Sub One Shares, the
Insilco Sub Two Shares and the Insilco Sub Three Shares are hereafter referred
to as the Pre-Merger Shares.
(b) No portion of the Merger Consideration will be paid to a Person
other than Seller or the registered holder of the Pre-Merger Shares represented
by the certificate or certificates surrendered in exchange therefor.
(c) After the Effective Time, there shall be no further registration
of transfers of Pre-Merger Shares. If, after the Effective Time, certificates
representing Pre-Merger Shares are presented to the Sub One Surviving
Corporation, the Sub Two Surviving Corporation or ThermaSys, as the case may be,
such Pre-Merger Shares shall be canceled and exchanged for the consideration
provided for in this Article 2.
SECTION 2.05. ASSET SALE TREATMENT OF MERGER FOR FEDERAL INCOME TAX
PURPOSES. The parties agree to treat Sub Two Merger as (i) an acquisition of the
assets of Insilco Sub Two by Merger Sub Two, (ii) followed by a liquidation of
Insilco Sub Two into Insilco. The parties also agree that for federal income tax
purposes and any corresponding or analogous provisions of state and local tax
law, any gain or loss with respect to such asset acquisition will be taken into
account as of the last day that Insilco Sub Two is a member of Seller's group
and will be included in any consolidated or combined tax returns of Seller for
the tax period that includes the Closing Date.
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ARTICLE 3
THE SURVIVING CORPORATIONS
SECTION 3.01. CERTIFICATES OF INCORPORATION. The certificates of
incorporation of Insilco Sub One, Merger Sub Two and Insilco Sub Three in effect
at the Effective Time shall be the certificates of incorporation of the Sub One
Surviving Corporation, the Sub Two Surviving Corporation and the Sub Three
Surviving Corporation, respectively, until amended in accordance with applicable
law.
SECTION 3.02. BYLAWS. The bylaws of Insilco Sub One, Merger Sub Two and
Insilco Sub Three in effect at the Effective Time shall be the bylaws of the Sub
One Surviving Corporation, the Sub Two Surviving Corporation and the Sub Three
Surviving Corporation, respectively, until amended in accordance with applicable
law.
SECTION 3.03. DIRECTORS AND OFFICERS. From and after the Effective
Time, until successors are duly elected or appointed and qualified in accordance
with applicable law:
(a) the directors of Insilco Sub One at the Effective Time shall be the
directors of the Sub One Surviving Corporation, and the officers of the Insilco
Sub One at the Effective Time shall be the officers of the Sub One Surviving
Corporation;
(b) the directors of Insilco Sub Two at the Effective Time shall be the
directors of the Sub Two Surviving Corporation, and the officers of Insilco Sub
Two at the Effective Time shall be the officers of the Sub Two Surviving
Corporation; and
(c) the directors of Insilco Sub Three at the Effective Time shall be
the directors of the Sub Three Surviving Corporation and the officers of Insilco
Sub Three at the Effective Time shall be the officers of the Sub Three Surviving
Corporation.
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ARTICLE 4
THE PURCHASE AND SALE TRANSACTION
SECTION 4.01. PURCHASE AND SALE. Except as otherwise provided below,
upon the terms and subject to the conditions of this Agreement, ThermaSys agrees
to purchase from Insilco (the "ASSET PURCHASE") and Insilco agrees to sell,
convey, transfer, assign and deliver, or cause to be sold, conveyed,
transferred, assigned and delivered, to ThermaSys at the Closing, free and clear
of all Liens, other than Permitted Liens, all of Insilco's right, title and
interest in, to and under the assets, properties and business, of every kind and
description, wherever located, real, personal or mixed, tangible or intangible,
owned, held or used primarily in the conduct of the Business by Insilco through
the Thermal Divisions (or though the previously divested business units known as
"McKenica" and "Romac" or through one or more subsidiaries through which such
business units may have operated) as the same shall exist on the Closing Date,
including all assets shown on the Balance Sheet and not disposed of in the
ordinary course of business as permitted by this Agreement, and all assets of
the Thermal Divisions thereafter acquired by Buyer and its subsidiaries and
related primarily to the conduct of the Business, (the "PURCHASED ASSETS"), and
including, without limitation, all right, title and interest of Insilco in, to
and under:
(a) all cash, cash equivalents and marketable securities held in
or by the Thermal Divisions, on hand and in banks;
(b) all real property and leases of, and other interests in, real
property used or held for use primarily in the conduct of the Business,
in each case together with all buildings, fixtures, and improvements
erected thereon, including without limitation the items listed on
Schedule 4.01(b);
(c) all personal property and interests therein used or held for
use primarily in the conduct of the Business, including machinery,
equipment, furniture, office equipment, communications equipment,
vehicles, storage tanks, spare and replacement parts, fuel and other
tangible property, including without limitation, the personal property
of the Thermal Divisions listed on Schedule 4.01(c);
(d) all raw materials, work-in-process, finished goods, supplies
and other inventories used or held for use primarily in the conduct of
the Business;
(e) all rights under all contracts, agreements, leases, licenses,
commitments, sales and purchase orders and other instruments relating
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primarily to the Business, including, without limitation, the items
listed on Schedule 4.01(e) (collectively, the "CONTRACTS");
(f) all accounts, notes and other receivables arising out of the
conduct of the Business prior to the Closing;
(g) all prepaid expenses relating exclusively to the Business,
including, but not limited to, ad valorem taxes, leases and rentals;
(h) all ▇▇▇▇▇ cash located at the operating facilities of the
Business ("▇▇▇▇▇ CASH");
(i) all rights, claims, credits, causes of action or rights of
set-off Insilco or any of its Affiliates may have against third parties
relating to the Purchased Assets, including, without limitation,
unliquidated rights under manufacturers' and vendors' warranties;
(j) all patents, copyrights, trademarks, trade names, mask works,
service marks, service names, technology, know-how, processes, trade
secrets, inventions, proprietary data, formulae, research and
development data, computer software programs and other intangible
property (excluding any of the foregoing pertaining to the name Insilco
and any derivative thereof) and any applications for the same, in each
case owned by or, to the fullest extent permitted by the applicable
license, licensed to, Insilco or any of its Affiliates and used or held
for use primarily in the conduct of the Business, including without
limitation the items listed on Schedule 4.01(j);
(k) all transferable licenses, permits or other governmental
authorizations primarily affecting or relating to the Business,
including without limitation, the items listed on Schedule 4.01(k);
(l) all books, records, files and papers, whether in hard copy or
computer format, used primarily in the Business, including, without
limitation, engineering information, sales and promotional literature,
manuals and data, sales and purchase correspondence, lists of present
and former suppliers, lists of present and former customers, personnel
and employment records, and any information relating to any Tax imposed
on the Purchased Assets;
(m) all of the outstanding capital stock of Arup and TCI and 51%
of the outstanding capital stock of Dalian to be purchased pursuant to
the Stock Purchase Agreements; and
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(n) all goodwill associated primarily with the Business or the
Purchased Assets, together with the right to represent to third parties
that Buyer is the successor to the Business.
SECTION 4.02. EXCLUDED ASSETS. Buyer expressly understands and agrees
that the following assets and properties of Insilco (the "EXCLUDED ASSETS")
shall be excluded from the Purchased Assets:
(a) all of Insilco's cash, cash equivalents and marketable
securities not held in or by the Thermal Divisions;
(b) any refund for Taxes or Prepaid Tax expenses with respect to
which Insilco is responsible for;
(c) the name "Insilco" and any variations thereof, including any
and all monograms, logos, trademarks and trade names consisting of or
incorporating such name or any variations thereof;
(d) all of Insilco's insurance policies;
(e) any Purchased Assets consumed, sold or otherwise disposed of
in the ordinary course of business and not in violation of any
provisions of this Agreement during the period from the date hereof
until the Closing Date;
(f) any portion of any account receivable or other amount due to
Insilco that is collected by Insilco prior to the Closing in the
ordinary course of the conduct of the Business consistent with past
practice;
(g) all rights, properties and assets of Insilco of every kind,
character and description, wherever located and whether real or
personal or fixed or contingent, used or held for use primarily in
connection with the conduct of business by Insilco's Escod Industries
Division; and
(h) all of the equity interests in Signal Dominicana S.A. owned
or held by Insilco Sub One and Insilco Sub Three.
SECTION 4.03. ASSUMED LIABILITIES. Upon the terms and subject to the
conditions of this Agreement, Buyer agrees, effective at the time of the
Closing, to assume (and thereafter to pay, perform and discharge, as and when
the same shall become due and payable) the following obligations and liabilities
(the "ASSUMED LIABILITIES"):
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(a) all obligations and liabilities set forth on the Balance
Sheet relating to the Thermal Divisions;
(b) all liabilities and obligations of Insilco arising under the
Contracts; and
(c) all Losses and obligations arising primarily out of the
conduct of the Business (including, for purposes of the definition of
Assumed Liabilities only, the previously divested business units known
as "Romac" and "McKenica" or any one or more subsidiaries through which
such business units may have operated) or the ownership, operation or
possession of the Purchased Assets, including, without limitation, (i)
all Losses and obligations arising under any Environmental Law in each
case arising primarily out of the conduct of the Business, including,
but not limited to, any liability for the treatment, transportation,
disposal or release of any hazardous substances, as each of those terms
is defined under the Comprehensive Environmental Response, Compensation
and Liability Act, and specifically including, without limitation, all
Losses and obligations associated with the environmental matters
described on Schedule 4.03(c)(i) attached hereto, (ii) all Losses and
obligations associated with both asserted and unasserted claims and
causes of action arising out of the conduct of the Business, including,
without limitation, those claims, causes of action and similar matters
described on Schedule 4.03(c)(ii) attached hereto, (iii) all Losses and
obligations arising primarily from product liability and product
warranty claims in respect of sales of products by the Business or any
predecessor thereto and (iv) all Losses arising on or after the Closing
Date from the operation, maintenance, or termination of the pension
plan assumed by the Buyer pursuant to Section 10.03(c) and all
liabilities assumed by Buyer pursuant to Sections 10.03 and 10.04.
SECTION 4.04. EXCLUDED LIABILITIES. Notwithstanding any provision in
this Agreement or any other writing to the contrary, Buyer is assuming only the
Assumed Liabilities and is not assuming any other liability or obligation of
Insilco (or any predecessor of Insilco or any prior owner of all or part of its
businesses and assets) of whatever nature, whether presently in existence or
arising hereafter. All such other liabilities and obligations shall be retained
by and remain obligations and liabilities of Insilco (all such liabilities and
obligations not being assumed being herein referred to as the "EXCLUDED
LIABILITIES"), and, notwithstanding anything to the contrary in this Section
4.04, none of the following shall be Assumed Liabilities for the purposes of
this Agreement:
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(a) any liability or obligation of Insilco, or any member of any
consolidated, affiliated, combined or unitary group of which Insilco is
or has been a member, for Taxes (other than (i) Taxes of Insilco Sub
One, Insilco Sub Three, TCI, Arup and Dalian for any Post-Closing Tax
Period (ii) any Tax liability to the extent reflected in the Final
Working Capital or (iii) for which Seller is not liable under Section
9.06(b) or as otherwise expressly set forth herein); PROVIDED that
Transfer Taxes incurred in connection with the transactions
contemplated by this Agreement and Apportioned Obligations shall be
paid in the manner set forth in Section 9.06(c) hereof;
(b) except to the extent provided in Sections 10.02, 10.03 and
10.04, any liability or obligation relating to employee benefits or
compensation arrangements existing on or prior to the Closing Date,
including, without limitation, any liability or obligation under any of
Seller's employee benefit agreements, plans or other arrangements; and
(c) any liability or obligation relating primarily to an Excluded
Asset.
Notwithstanding the foregoing clause (c), the fact that a Purchased Asset is
sold between the date hereof, and the Closing Date (and therefore becomes an
Excluded Asset pursuant to Section 4.02(d)), shall not cause any product
liability or warranty claim described in Section 4.03(c)(iii) arising from such
sale to become an Excluded Liability.
SECTION 4.05. ASSIGNMENT OF CONTRACTS AND RIGHTS. Anything in this
Agreement to the contrary notwithstanding, this Agreement shall not constitute
an agreement to assign any Purchased Asset or any claim or right or any benefit
arising thereunder or resulting therefrom if such assignment, without the
consent of a third party thereto, would constitute a breach or other
contravention of such Purchased Asset or in any way materially adversely affect
the rights of ThermaSys or Insilco thereunder. Insilco and ThermaSys will use
their reasonable best efforts (but without any payment of money by Insilco or
ThermaSys) to obtain the consent of the other parties to any such Purchased
Asset or any claim or right or any benefit arising thereunder for the assignment
thereof to ThermaSys as ThermaSys may reasonably request. If such consent is not
obtained, or if an attempted assignment thereof would be ineffective or would
adversely affect the rights of Insilco thereunder so that ThermaSys would not in
fact receive all such rights, Insilco and ThermaSys will cooperate in a mutually
agreeable arrangement under which ThermaSys would obtain the benefits and assume
the obligations thereunder in accordance with this Agreement, including
sub-contracting, sub-licensing, or sub-leasing to ThermaSys, or under which
Insilco would enforce
19
for the benefit of ThermaSys, with ThermaSys assuming Insilco's obligations, any
and all rights of Insilco against a third party thereto. Insilco will promptly
pay to ThermaSys when received all monies received by Insilco under any
Purchased Asset or any claim or right or any benefit arising thereunder, except
to the extent the same represents an Excluded Asset. In such event, Insilco and
ThermaSys shall, to the extent the benefits therefrom and obligations thereunder
have not been provided by alternate arrangements reasonably satisfactory to
ThermaSys and Insilco, negotiate in good faith an adjustment in the
consideration paid by ThermaSys for the Purchased Assets, to the extent not
otherwise adjusted pursuant to Section 4.09.
SECTION 4.06. ASSET PURCHASE CONSIDERATION; ALLOCATION OF TRANSACTION
CONSIDERATION. (a) On the Closing Date, Buyer and Seller shall agree on an
allocation statement (the "TRANSACTION CONSIDERATION ALLOCATION STATEMENT")
allocating the Transaction Consideration among Insilco Sub One, Insilco Sub Two,
Insilco Sub Three, the stock of each of Arup, Dalian and TCI and the portion of
aggregate Purchased Assets held by the Thermal Divisions (each an "ALLOCATION
TARGET"). As soon as practicable after the Closing, Buyer shall provide Seller
with an allocation statement (the "ASSET ALLOCATION STATEMENT"), allocating (i)
the portion of the Transaction Consideration allocated to the Purchased Assets
(the "ASSET PURCHASE CONSIDERATION") (plus Assumed Liabilities, to the extent
properly taken into account under Section 1060 of the Code) among the Purchased
Assets held by the Thermal Divisions and (ii) the Sub Two Merger Consideration
(plus liabilities of Insilco Sub Two assumed by operation of law, to the extent
properly taken into account under Section 1060 of the Code) among the assets of
Insilco Sub Two. Seller shall accept the Asset Allocation Statement unless the
allocation therein is unreasonable in which case, Seller shall notify Buyer
within 30 days of its receipt of the Asset Allocation Statement and the manner
in which Seller would modify the allocation to make it reasonable. If Buyer and
Seller are unable to agree on the allocation within 15 days, the matter shall be
referred to an Independent Accountant. The Independent Accountant's
determination of which party's allocation is more reasonable shall be
conclusive.
(b) Seller and Buyer agree to be bound by the Asset Allocation
Statement and the Transaction Consideration Allocation Statement, and act in
accordance with such allocation statements in the preparation, filing and audit
of any Tax return (including, without limitation, filing Form 8594 with its
federal income Tax return for the taxable year that includes the date of the
Closing).
(c) If an adjustment is made with respect to the Transaction
Consideration pursuant to Section 4.09, the Transaction Consideration Allocation
Statement and Asset Allocation Statement shall be adjusted in accordance with
20
Section 1060 of the Code and as mutually agreed by the Buyer and Seller. Buyer
and Seller agree to file any additional information return required to be filed
pursuant to Section 1060 of the Code and to treat the Transaction Consideration
Allocation Statement and Asset Allocation Statement as adjusted in the manner
described in Section 4.06(c).
(d) Not later than 30 days prior to the filing of their respective
Forms 8594 relating to the transactions contemplated by this Agreement, each
party shall deliver to the other party a copy of its Form 8594.
SECTION 4.07. CLOSING. The closing (the "CLOSING") of the purchase and
sale of the Purchased Assets and the assumption of the Assumed Liabilities
hereunder and the Mergers shall take place at the offices of ▇▇▇▇▇ ▇▇▇▇ &
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, as soon as possible, but in
no event later than 10 business days, after satisfaction of the conditions set
forth in Article 11, or at such other time or place as Buyer and Seller may
agree. At the Closing:
(a) The Mergers shall have occurred and the Buyer shall have
delivered to Seller the Merger Consideration in immediately available
funds by wire transfer to an account of Seller with a bank designated
by Seller, by notice to Buyer, on the Closing Date (or if not so
designated, then by certified or official bank check payable in
immediately available funds to the order of Seller in such amount).
(b) Buyer shall deliver to Seller the Transaction Consideration
(less the Merger Consideration) in immediately available funds by wire
transfer to an account of Seller with a bank designated by Seller, by
notice to Buyer, on the Closing Date (or if not so designated, then by
certified or official bank check payable in immediately available funds
to the order of Seller in such amount).
(c) Insilco and Buyer shall enter into an Assignment and
Assumption Agreement substantially in the form attached hereto as
Exhibit C (the "ASSIGNMENT AND ASSUMPTION AGREEMENT"), and Insilco
shall deliver to Buyer such special warranty deeds, bills of sale,
endorsements, consents, assignments and other good and sufficient
instruments of conveyance and assignment as the parties and their
respective counsel shall deem reasonably necessary or appropriate to
vest in Buyer all right, title and interest in, to and under the
Purchased Assets.
21
(d) Seller and Buyer shall enter into a Management Services
Agreement substantially in the form attached as Exhibit D (the
"MANAGEMENT SERVICES AGREEMENT").
(e) ThermaSys, Insilco and, in the case of Arup, Insilco
Deutschland, shall execute agreements with respect to the purchase of
the stock of Arup, Dalian and TCI in the form attached as Exhibit B-1
hereto, and with respect to the shares of Arup and Dalian, as the Buyer
and Seller may agree, and shall deliver stock certificates or other
evidence of ownership in accordance with local law.
SECTION 4.08. CLOSING BALANCE SHEET. (a) As promptly as practicable,
but no later than 60 days, after the Closing Date, Buyer will cause to be
prepared and delivered to Seller a closing balance sheet (the "CLOSING BALANCE
SHEET"), together with a report of KPMG Peat Marwick thereon, and a certificate
based on such Closing Balance Sheet setting forth Buyer's calculation of Closing
Operating Working Capital. The Closing Balance Sheet shall (x) fairly present
the consolidated financial position of the Business as at the close of business
on the Closing Date in accordance with generally accepted accounting principles
applied on a basis consistent with those used in the preparation of the Balance
Sheet, (y) include line items substantially consistent with those in the Balance
Sheet, and (z) be prepared in accordance with accounting policies and practices
consistent with those used in the preparation of the Balance Sheet except that
in preparing the Closing Balance Sheet, Buyer shall assume that none of the
Mergers has occurred. "CLOSING OPERATING WORKING CAPITAL" means the Operating
Working Capital of the Business as shown on the Closing Balance Sheet.
(b) If Seller disagrees with Buyer's calculation of Closing Operating
Working Capital delivered pursuant to Section 4.08(a), Seller may, within 20
days after delivery of the documents referred to in Section 4.08(a), deliver a
notice to Buyer disagreeing with such calculation and setting forth Seller's
calculation of such amount. Any such notice of disagreement shall specify those
items or amounts as to which Seller disagrees, and Seller shall be deemed to
have agreed with all other items and amounts contained in the Closing Balance
Sheet and the calculation of Closing Operating Working Capital delivered
pursuant to Section 4.08(a).
(c) If a notice of disagreement shall be duly delivered pursuant to
Section 4.08(b), Buyer and Seller shall, during the 15 days following such
delivery, use their best efforts to reach agreement on the disputed items or
amounts in order to determine, as may be required, the amount of Closing
Operating Working Capital, which amount shall not be less than the amount
thereof shown in Buyer's calculations delivered pursuant to Section 4.08(a) nor
22
more than the amount thereof shown in Seller's calculation delivered pursuant to
Section 4.08(b). If during such period, Buyer and Seller are unable to reach
such agreement, they shall promptly thereafter cause a mutually acceptable
nationally recognized accounting firm (the "ACCOUNTING REFEREE") promptly to
review this Agreement and the disputed items or amounts for the purpose of
calculating Closing Operating Working Capital. In making such calculation, the
Accounting Referee shall consider only those items or amounts in the Closing
Balance Sheet or Buyer's calculation of Closing Operating Working Capital as to
which Seller has disagreed. The Accounting Referee shall deliver to Buyer and
Seller, as promptly as practicable, a report setting forth such calculation.
Such report shall be final and binding upon Buyer and Seller. The cost of such
review and report shall be borne (i) by Buyer if the aggregate difference
between Final Operating Working Capital and Closing Operating Working Capital,
as set forth in Buyer's calculation of Closing Operating Working Capital, as the
case may be, delivered pursuant to Section 4.08(a) is greater than the
difference between Final Operating Working Capital and Closing Operating Working
Capital, as set forth in Seller's calculation of Closing Operating Working
Capital, as the case may be, delivered pursuant to Section 4.08(b), (ii) by
Seller if the first such aggregate difference is less than the second such
aggregate difference and (iii) otherwise equally by Buyer and Seller.
(d) Buyer and Seller agree that they will, and agree to cause their
respective independent accountants to, cooperate and assist in the preparation
of the Closing Balance Sheet and the calculation of Closing Operating Working
Capital and in the conduct of the audits and reviews referred to in this Section
4.08, including without limitation, the making available to the extent necessary
of books, records, work papers and personnel.
SECTION 4.09. ADJUSTMENT OF PURCHASE PRICE. (a) If Estimated Operating
Working Capital exceeds Final Operating Working Capital, Seller shall pay to
Buyer, as an adjustment to the Transaction Consideration, in the manner and with
interest as provided in Section 4.09(b), the amount of such excess. If Final
Operating Working Capital exceeds Estimated Operating Working Capital, Buyer
shall pay to Seller, as an adjustment to the Transaction Consideration, in the
manner and with interest as provided in Section 4.09(b), the amount of such
excess. "FINAL OPERATING WORKING CAPITAL" means Closing Operating Working
Capital (i) as shown in Buyer's calculation delivered pursuant to Section
4.08(a) if no notice of disagreement with respect thereto is duly delivered
pursuant to Section 4.08(b); or (ii) if such a notice of disagreement is
delivered, (A) as agreed by Buyer and Seller pursuant to Section 4.08(c) or (B)
in the absence of such agreement, as shown in the Accounting Referee's
calculation delivered pursuant to Section 4.08(c).
23
(b) Any payment pursuant to Section 4.09(a) shall be made at a mutually
convenient time and place within 10 days after Final Operating Working Capital
has been determined by delivery by Buyer or Seller, as the case may be, of a
certified or official bank check payable in immediately available funds to the
other party or by causing such payments to be credited to such account of such
other party as may be designated by such other party. The amount of any payment
to be made pursuant to this Section 4.09 shall bear interest from and including
the Closing Date to but excluding the date of payment at a rate per annum equal
to the Prime Rate as published in The Wall Street Journal, Eastern Edition, in
effect from time to time during the period from the Closing Date to the date of
payment. Such interest shall be payable at the same time as the payment to which
it relates and shall be calculated daily on the basis of a year of 365 days and
the actual number of days elapsed.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as of the date hereof and as of
the Closing Date that:
SECTION 5.01. CORPORATE EXISTENCE AND POWER. Each of Seller, Insilco,
Insilco Sub One, Insilco Sub Two, Insilco Sub Three and TCDI is a corporation
duly incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all corporate powers and all material
governmental licenses, authorizations, permits, consents and approvals required
to carry on its business as now conducted, except for those licenses,
authorizations, permits, consents and approvals the absence of which would not
have, individually or in the aggregate, a Material Adverse Effect. Seller is
duly qualified to do business as a foreign corporation and is in good standing
in each jurisdiction where such qualification is necessary, except for those
jurisdictions where failure to be so qualified would not, individually or in the
aggregate, have a Material Adverse Effect. Seller has heretofore delivered to
Buyer true and complete copies of the certificate of incorporation and bylaws of
Seller as currently in effect.
SECTION 5.02. CORPORATE AUTHORIZATION. The execution, delivery and
performance by Seller, Insilco, Insilco Sub One, Insilco Sub Two and Insilco Sub
Three of the Transaction Documents to which it is a party and the consummation
of the transactions contemplated thereby are within the corporate powers of
Seller, Insilco Sub One, Insilco Sub Two and Insilco Sub Three and have been
duly authorized by all necessary corporate action on the part of Seller, Insilco
Sub One,
24
Insilco Sub Two and Insilco Sub Three. To the extent each of them is a party
thereto, the Transaction Documents constitute valid and binding agreements of
Seller, Insilco Sub One, Insilco Sub Two and Insilco Sub Three.
SECTION 5.03. GOVERNMENTAL AUTHORIZATION. The execution, delivery and
performance by Seller, Insilco, Insilco Sub One, Insilco Sub Two and Insilco Sub
Three of the Transaction Documents to which it is a party and the consummation
of the transactions contemplated thereby require no action by or in respect of,
or material filing with, any governmental body, agency or official other than
compliance with any applicable requirements of the HSR Act.
SECTION 5.04. NONCONTRAVENTION. The execution, delivery and performance
by Seller, Insilco, Insilco Sub One, Insilco Sub Two and Insilco Sub Three of
the Transaction Documents to which it is a party and the consummation of the
transactions contemplated thereby do not and will not (i) violate the
certificate of incorporation or bylaws of Insilco, Insilco Sub One, Insilco Sub
Two or Insilco Sub Three, (ii) assuming compliance with the matters referred to
in Section 5.03, violate any applicable law, rule, regulation, judgment,
injunction, order or decree, except for any such violation which would not,
individually or in the aggregate, have a Material Adverse Effect, (iii) assuming
the obtaining of all Required Consents and Other Consents, constitute a default
under or give rise to any right of termination, cancellation or acceleration of
any material right or obligation of Buyer or to a loss of any benefit relating
to the Business to which Seller, Insilco, Insilco Sub One, Insilco Sub Two or
Insilco Sub Three is entitled under any provision of any agreement or other
instrument binding upon Seller, Insilco, Insilco Sub One, Insilco Sub Two or
Insilco Sub Three or by which any of the Purchased Assets is or may be bound or
(iv) result in the creation or imposition of any Lien on any Purchased Asset,
other than Permitted Liens.
SECTION 5.05. SUBSIDIARIES. (a) Each Subsidiary is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation, has all corporate powers and all governmental
licenses, authorizations, permits, consents and approvals required to carry on
its business as now conducted, except for those licenses, authorizations,
permits, consents and approvals the absence of which would not have,
individually or in the aggregate, a Material Adverse Effect. Each such
Subsidiary is duly qualified to do business as a foreign corporation and is in
good standing in each jurisdiction where such qualification is necessary, except
for those jurisdictions where failure to be so qualified would not have,
individually or in the aggregate, have a Material Adverse Effect.
(b) Schedule 5.05(b) sets forth the authorized and outstanding capital
stock or other voting securities or ownership interests in the Subsidiaries.
Except
25
as otherwise specified in Schedule 5.05(b), all of the outstanding capital stock
of, or other voting securities or ownership interests in, each Subsidiary is
owned by Seller, directly or indirectly, free and clear of any Lien and free of
any other limitation or restriction (including any restriction on the right to
vote, sell or otherwise dispose of such capital stock or other voting securities
or ownership interests). There are no outstanding (i) securities of any
Subsidiary convertible into or exchangeable for shares of capital stock or other
voting securities or ownership interests in any Subsidiary or (ii) options or
other rights to acquire from Insilco or any Subsidiary, or other obligation of
Insilco or any Subsidiary to issue, any capital stock or other voting securities
or ownership interests in, or any securities convertible into or exchangeable
for any capital stock or other voting securities or ownership interests in, any
Subsidiary (the items in clauses (i) and (ii) being referred to collectively as
the "SUBSIDIARY SECURITIES"). There are no outstanding obligations of Insilco or
any Subsidiary to repurchase, redeem or otherwise acquire any of the Subsidiary
Securities.
SECTION 5.06. REQUIRED AND OTHER CONSENTS. (a) Schedule 5.06(a) sets
forth each agreement, contract or other instrument binding upon Seller, Insilco,
Insilco Sub One, Insilco Sub Two or Insilco Sub Three or any permit (including,
without limitation, any Environmental Permit) requiring a consent or other
action by any Person as a result of the execution, delivery and performance of
the Transaction Documents, except such consents or actions as would not,
individually or in the aggregate, have a Material Adverse Effect if not received
or taken by the Closing Date (the "REQUIRED CONSENTS").
(b) Schedule 5.06(b) sets forth each other consent or action by any
Person (the "OTHER CONSENTS") under such agreements, contracts or other
instruments or such Permits that is necessary with respect to the execution,
delivery and performance of the Transaction Documents.
SECTION 5.07. ABSENCE OF MATERIAL ADVERSE EFFECT. Since the Balance
Sheet Date, there has not been any event, occurrence, development or state of
circumstances or facts which, individually or in the aggregate, has had or could
reasonably be expected to have a Material Adverse Effect.
SECTION 5.08. FINANCIAL STATEMENTS. The audited balance sheets as of
December 31, 1998 and 1999 and the related audited statements of income and cash
flows for each of the years ended December 31, 1998 and 1999 and the unaudited
interim balance sheet as of March 31, 2000 and the related unaudited interim
statements of income and cash flows for the three (3) months ended March 31,
2000 prepared by Seller (collectively, the "FINANCIAL STATEMENTS"), fairly
present, in conformity with generally accepted accounting principles the
financial position of the Business (except as may be indicated in the notes
thereto
26
and with respect to the unaudited interim consolidated financial statements as
permitted by Accounting Principles), as of the dates thereof and its results of
operations and cash flows for the periods then ended (subject to normal year-end
adjustments in the case of any unaudited interim financial statements).
SECTION 5.09. SUFFICIENCY OF AND TITLE TO THE PURCHASED ASSETS. (a) The
Purchased Assets, together with the assets and properties of Arup, Dalian, TCI,
TCDI, Insilco Sub One, Insilco Sub Two and Insilco Sub Three, constitute all of
the property and assets used or held for use primarily in the Business and are
adequate to conduct the Business as currently conducted.
(b) Insilco has good and marketable, indefeasible, fee simple title to,
or in the case of leased Real Property or personal property, has valid leasehold
interests in, all Purchased Assets (whether real, personal, tangible or
intangible) reflected on the Balance Sheet or acquired after the Balance Sheet
Date, except for properties and assets consumed or sold since the Balance Sheet
Date in the ordinary course of business consistent with past practices. Except
as disclosed on Schedule 5.09(b), no Purchased Asset is subject to any Lien,
except for Permitted Liens and except where the failure to have such title or
interests would not have, individually or in the aggregate, a Material Adverse
Effect.
(c) Upon consummation of the transactions contemplated hereby,
ThermaSys will have acquired good and marketable title in and to, or a valid
leasehold interest in, each of the Purchased Assets, free and clear of all
Liens, except for Permitted Liens and except where the failure to have such
title or interests would not have, individually or in the aggregate, a Material
Adverse Effect.
(d) Insilco Sub One, Insilco Sub Two and Insilco Sub Three each has
good and marketable, indefeasible, fee simple title to, or in the case of leased
real property or personal property, has valid leasehold interests in all of the
property or assets used or held by it for use primarily in the Business, except
when the failure to have such title or interests would not have, individually or
in the aggregate, a Material Adverse Effect. Except as disclosed on Schedule
5.09(d), none of the assets of Insilco Sub One, Insilco Sub Two and Insilco Sub
Three is subject to any Lien, except for Permitted Liens.
SECTION 5.10. TAXES.
(a) All material Tax returns, statements, reports and forms (including
estimated Tax returns and reports and information returns and reports),
collectively, "Returns," required to be filed with any taxing authority by or on
27
behalf of Seller and the Subsidiaries, were filed when due (including any
applicable extension periods).
(b) All Taxes shown as due and payable on the Returns that have been
filed by or on behalf of Seller and its Subsidiaries have been timely paid, or
withheld and remitted to the appropriate taxing authority.
(c) The charges, accruals and reserves reflected in the Financial
Statements for Taxes with respect to Seller and the Subsidiaries are adequate to
cover unpaid Taxes attributable to tax periods, or portions of tax periods,
ending on or before the Closing Date which arise from or with respect to the
operation of the Business, and Seller will timely pay such Taxes or cause them
to be paid to the appropriate taxing authority (and shall be entitled (i) to
credit toward such payment for any prepayments, estimated payments or deposits
required to be made and made on or before the closing date and (ii) to receive
any refund of Taxes for any such periods.)
(d) Except as disclosed on Schedule 5.10(d), there is no material claim
(including under any indemnification or tax-sharing agreement), audit, action,
suit, proceeding, or investigation now pending or threatened in writing against
or in respect of any Tax or Tax asset of Seller and the Subsidiaries.
(e) Except as disclosed on Schedule 5.10(e), there are no outstanding
agreements or waivers extending the statutory period of limitation applicable to
any Returns of Arup, Dalian, TCI, Insilco Sub One, Insilco Sub Two or Insilco
Sub Three.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as of the date hereof and as of
the Closing Date that:
SECTION 6.01. CORPORATE EXISTENCE AND POWER. Each of Buyer, ThermaSys,
Merger Sub One, Merger Sub Two and Merger Sub Three is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all corporate powers and all material
governmental licenses, authorizations, permits, consents and approvals required
to carry on its business as now conducted and, assuming the accuracy of Seller's
representations and warranties in Article 5, as the Business is intended to
28
be conducted following consummation of the transactions contemplated by this
Agreement.
SECTION 6.02. CORPORATE AUTHORIZATION. The execution, delivery and
performance by Buyer, ThermaSys, Merger Sub One, Merger Sub Two and Merger Sub
Three of the Transaction Documents to which it is a party and the consummation
of the transactions contemplated thereby are within the corporate powers of
Buyer, ThermaSys, Merger Sub One, Merger Sub Two and Merger Sub Three have been
duly authorized by all necessary corporate action on the part of Buyer,
ThermaSys, Merger Sub One, Merger Sub Two and Merger Sub Three. To the extent
that each of them is a party thereto, the Transaction Documents constitute valid
and binding agreements of Buyer, ThermaSys, Merger Sub One, Merger Sub Two and
Merger Sub Three.
SECTION 6.03. GOVERNMENTAL AUTHORIZATION. The execution, delivery and
performance by Buyer, ThermaSys, Merger Sub One, Merger Sub Two and Merger Sub
Three of the Transaction Documents to which it is a party and the consummation
of the transactions contemplated thereby require no material action by or in
respect of, or material filing with, any governmental body, agency or official
other than compliance with any applicable requirements of the HSR Act.
SECTION 6.04. NONCONTRAVENTION. The execution, delivery and performance
by Buyer, ThermaSys, Merger Sub One, Merger Sub Two and Merger Sub Three of the
Transaction Documents to which it is a party and the consummation of the
transactions contemplated thereby do not and will not (i) violate the
certificate of incorporation or bylaws of Buyer, ThermaSys, Merger Sub One,
Merger Sub Two and Merger Sub Three or (ii) assuming compliance with the matters
referred to in Section 6.03, violate any applicable material law, rule,
regulation, judgment, injunction, order or decree.
SECTION 6.05. FINANCING. Buyer has received and previously provided to
Seller copies of a commitment letter dated July 17, 2000 (the "COMMITMENT
LETTER") from DLJ Capital Funding, Inc. ("DLJ") pursuant to which DLJ has
committed, subject to the terms and conditions set forth therein, to provide
certain senior secured credit facilities to enable Buyer to make payment of the
Transaction Consideration and any other amounts to be paid by it hereunder. The
Commitment Letter is in full force and effect and Buyer has received no notice
of any actual or planned withdrawal, modification or termination of the
Commitment Letter.
SECTION 6.06. LITIGATION. There is no action, suit, investigation or
proceeding pending against, or to the knowledge of Buyer threatened against or
affecting, Buyer, ThermaSys, Merger Sub One, Merger Sub Two and Merger Sub
29
Three before any court or arbitrator or any governmental body, agency or
official which in any manner challenges or seeks to prevent, enjoin, alter or
materially delay the transactions contemplated by the Transaction Documents.
ARTICLE 7
COVENANTS OF SELLER
Seller agrees that:
SECTION 7.01. CONDUCT OF THE BUSINESS. From the date hereof until the
Closing Date, Seller shall conduct the Business in the ordinary course
consistent with past practice and shall use its reasonable efforts to preserve
intact the business organizations and relationships with third parties and to
keep available the services of the present employees of the Business. Without
limiting the generality of the foregoing, from the date hereof until the Closing
Date, Seller will not:
(a) with respect to the Business, acquire a material amount of assets
from any other Person;
(b) sell, lease, license or otherwise dispose of any Purchased Assets
except (i) pursuant to existing contracts or commitments and (ii) in
the ordinary course consistent with past practice;
(c) agree or commit to do any of the foregoing; or
(d) (i) take or agree or commit to take any action that would make any
representation or warranty of Seller hereunder inaccurate in any
material respect at, or as of any time prior to, the Closing Date or
(ii) omit or agree or commit to omit to take any action necessary to
prevent any such representation or warranty from being inaccurate in
any material respect at any such time.
SECTION 7.02. ACCESS TO INFORMATION; CONFIDENTIALITY. (a) From the date
hereof until the Closing Date, Seller will (i) give Buyer, its counsel,
financial advisors, auditors and other authorized representatives full access
during normal business hours to the offices, properties, books and records of
Seller relating to the Business, (ii) furnish to Buyer, its counsel, financial
advisors, auditors and other authorized representatives such financial and
operating data and other information relating to the Business as such Persons
may reasonably request and (iii) instruct the employees, counsel and financial
advisors of Seller to cooperate
30
with Buyer in its investigation of the Business. Any investigation pursuant to
this Section shall be conducted in such manner as not to interfere unreasonably
with the conduct of the Business or any other business of Seller.
Notwithstanding the foregoing, Buyer shall not have access to personnel records
of Seller relating to individual performance or evaluation records, medical
histories or other information which in Seller's good faith opinion is sensitive
or the disclosure of which could subject Seller to risk of liability. No
investigation by Buyer or other information received by Buyer shall operate as a
waiver or otherwise affect any representation, warranty or agreement given or
made by Seller hereunder.
(b) For a period five (5) years after the Closing, Seller and its
Affiliates will hold, and will use their best efforts to cause their respective
officers, directors, employees, accountants, counsel, consultants, advisors and
agents to hold, in confidence, unless compelled to disclose by judicial or
administrative process or by other requirements of law, all confidential
documents and information concerning the Business, except to the extent that
such information can be shown to have been (i) previously known on a
nonconfidential basis by Seller, (ii) in the public domain through no fault of
Seller or its Affiliates or (iii) later lawfully acquired by Seller from sources
other than those related to its prior ownership of the Business. The obligation
of Seller and its Affiliates to hold any such information in confidence shall be
satisfied if they exercise the same care with respect to such information as
they would take to preserve the confidentiality of their own similar
information.
(c) For a period of five (5) years after the Closing Date, Seller will
afford promptly to Buyer and its agents reasonable access to its books of
account, financial and other records, information, employees and auditors to the
extent necessary or useful for Buyer in connection with any audit,
investigation, dispute or litigation or any other reasonable business purpose
relating to the Business; PROVIDED that any such access by Buyer shall not
unreasonably interfere with the conduct of the business of Seller. Buyer shall
bear all of the out-of-pocket costs and expenses (including, without limitation,
attorneys' fees, but excluding reimbursement for general overhead, salaries and
employee benefits) reasonably incurred in connection with the foregoing.
SECTION 7.03. NOTICES OF CERTAIN EVENTS. Seller shall promptly (and in
any event, within three (3) business days) notify Buyer of:
(a) any notice or other communication from any Person alleging that
the consent of such Person is or may be required in connection with the
transactions contemplated by this Agreement;
31
(b) any notice or other communication from any governmental or
regulatory agency or authority in connection with the transactions
contemplated by this Agreement;
(c) any actions, suits, claims, investigations or proceedings
commenced or, to its knowledge threatened against, relating to or
involving or otherwise affecting Seller or the Business that would
have, or that could reasonably be expected to have, a Material Adverse
Effect or materially adversely affect the consummation of the
transactions contemplated by this Agreement; and
(d) the damage or destruction by fire or other casualty of any
Purchased Asset or part thereof, or in the event that any Purchased
Asset or part thereof becomes the subject of any proceeding or, to the
knowledge of Seller, threatened proceeding for the taking thereof or
any part thereof or of any right relating thereto by condemnation,
eminent domain or other similar governmental action.
SECTION 7.04. NONCOMPETITION. (a) Seller agrees that for a period of
two (2) full years from the Closing Date, neither it nor any of its subsidiaries
shall:
(i) engage, either directly or indirectly, as a principal or for its
own account or solely or jointly with others, or as stockholders in any
corporation or joint stock association, in any business that competes
with the Business as it exists on the Closing Date within the United
States; PROVIDED that nothing herein shall prohibit the acquisition by
Seller or any of its subsidiaries of (A) a diversified company having
not more than 10% of its sales (based on its latest published annual
audited financial statements) attributable to any business that
competes with the Business or(B) beneficial ownership of not more than
5% of the outstanding capital stock of any entity having a class of
equity securities registered under the 1934 Act; or
(ii) employ or solicit, or receive or accept the performance of
services by, any Transferred Employee, except as set forth under the
Management Services Agreement or may be otherwise agreed in writing by
Buyer and Seller.
(b) If any provision contained in this Section shall for any reason be
held invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provisions of this
Section, but this Section shall be construed as if such invalid, illegal or
unenforceable provision had never been contained herein. It is the intention of
the parties that if any of the
32
restrictions or covenants contained herein is held to cover a geographic area or
to be for a length of time which is not permitted by applicable law, or in any
way construed to be too broad or to any extent invalid, such provision shall not
be construed to be null, void and of no effect, but to the extent such provision
would be valid or enforceable under applicable law, a court of competent
jurisdiction shall construe and interpret or reform this Section to provide for
a covenant having the maximum enforceable geographic area, time period and other
provisions (not greater than those contained herein) as shall be valid and
enforceable under such applicable law. Seller acknowledges that Buyer would be
irreparably harmed by any breach of this Section and that there would be no
adequate remedy at law or in damages to compensate Buyer for any such breach.
Seller agrees that in the event of any such breach by Seller, Buyer shall be
entitled to injunctive relief requiring specific performance by Seller of this
Section.
ARTICLE 8
COVENANTS OF BUYER
Buyer agrees that:
SECTION 8.01. CONFIDENTIALITY. Prior to the Closing Date and after any
termination of this Agreement or abandonment of the transactions contemplated
hereby, Buyer and its Affiliates will hold, and will use their best efforts to
cause their respective officers, directors, employees, accountants, counsel,
consultants, advisors, sources of finance and agents to hold, in confidence,
unless compelled to disclose by judicial or administrative process or by other
requirements of law, all confidential documents and information concerning the
Business or Seller furnished to Buyer or its Affiliates in connection with the
transactions contemplated by this Agreement, except to the extent that such
information can be shown to have been (i) previously known on a nonconfidential
basis by Buyer, (ii) in the public domain through no fault of Buyer or (iii)
later lawfully acquired by Buyer from sources other than Seller; provided that
Buyer may disclose such information to its officers, directors, employees,
accountants, counsel, consultants, advisors and agents in connection with the
transactions contemplated by this Agreement so long as such Persons are informed
by Buyer of the confidential nature of such information and are directed by
Buyer to treat such information confidentially. The obligation of Buyer and its
Affiliates to hold any such information in confidence shall be satisfied if they
exercise the same care with respect to such information as they would take to
preserve the confidentiality of their own similar information. If this Agreement
is terminated or the transactions contemplated hereby abandoned, Buyer and its
Affiliates will, and will use their best efforts to cause their respective
officers, directors, employees, accountants,
33
counsel, consultants, advisors and agents to, destroy or deliver to Seller, upon
request, all documents and other materials, and all copies thereof, obtained by
Buyer or its Affiliates or on their behalf from Seller in connection with this
Agreement.
SECTION 8.02. ACCESS. For a period of six (6) years after the Closing
Date, Buyer will afford promptly to Seller and its agents reasonable access to
its properties, books, records, employees and auditors to the extent necessary
to permit Seller to determine any matter relating to its rights and obligations
hereunder or to any period ending on or before the Closing Date; PROVIDED that
any such access by Seller shall not unreasonably interfere with the conduct of
the business of Buyer. Seller will hold, and will use its best efforts to cause
its officers, directors, employees, accountants, counsel, consultants, advisors
and agents to hold, in confidence, unless compelled to disclose by judicial or
administrative process or by other requirements of law, all confidential
documents and information concerning Buyer or the Business provided to it
pursuant to this Section. Seller shall bear all of the out-of-pocket costs and
expenses (including, without limitation, attorneys' fees, but excluding
reimbursement for general overhead, salaries and employee benefits) reasonably
incurred in connection with the foregoing.
SECTION 8.03. MANAGEMENT SERVICES. Buyer hereby specifically agrees to
provide Thermalex, Inc. ("THERMALEX"), a joint venture incorporated under the
laws of the State of Alabama wholly-owned by TCI and Mitsubishi Aluminum Co,
Ltd., a company organized under the laws of Japan, with substantially similar
sales, administrative, financial and other services as were being provided to
Thermalex by the Thermal Components Division of Seller immediately prior to the
Closing.
ARTICLE 9
COVENANTS OF BUYER AND SELLER
Buyer and Seller agree that:
SECTION 9.01. BEST EFFORTS; FURTHER ASSURANCES. (a) Subject to the
terms and conditions of this Agreement, Buyer and Seller will use their best
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary or desirable under applicable laws and regulations to
consummate the transactions contemplated by this Agreement. Seller and Buyer
agree to execute and deliver such other documents, certificates, agreements and
other writings and to take such other actions as may be necessary or desirable
in order to
34
consummate or implement expeditiously the transactions contemplated by this
Agreement (including the financing thereof) and to vest in ThermaSys good and
marketable title to the Purchased Assets.
(b) Insilco hereby constitutes and appoints, effective as of the
Closing Date, ThermaSys and its successors and assigns as the true and lawful
attorney of Insilco with full power of substitution in the name of ThermaSys, or
in the name of Insilco but for the benefit of ThermaSys, (i) to collect for the
account of ThermaSys any items of Purchased Assets and (ii) to institute and
prosecute all proceedings which ThermaSys may in its sole discretion deem proper
in order to assert or enforce any right, title or interest in, to or under the
Purchased Assets, and to defend or compromise any and all actions, suits or
proceedings in respect of the Purchased Assets. ThermaSys shall be entitled to
retain for its own account any amounts collected pursuant to the foregoing
powers, including any amounts payable as interest in respect thereof. ThermaSys
shall indemnify and hold Insilco harmless from and against all Losses incurred
by Insilco as a result of ThermaSys's use or exercise of the power of attorney
conferred by this Section 9.01(b).
SECTION 9.02. CERTAIN FILINGS. Seller and Buyer shall cooperate with
one another (i) in determining whether any action by or in respect of, or filing
with, any governmental body, agency, official or authority is required, or
whether any actions, consents, approvals or waivers are required to be obtained
from parties to any material contracts, in connection with the consummation of
the transactions contemplated by this Agreement and (ii) in taking such actions
or making any such filings, furnishing information required in connection
therewith and seeking timely to obtain any such actions, consents, approvals or
waivers.
SECTION 9.03. PUBLIC ANNOUNCEMENTS. Seller and Buyer agree to consult
with each other before issuing any press release or making any public statement
with respect to this Agreement or the transactions contemplated hereby and,
except for any release or statement that may be required by applicable law or
any listing agreement with any national securities exchange, will not issue any
such press release or make any such public statement prior to such consultation.
SECTION 9.04. TRADEMARKS; TRADE NAMES. (a) Except as set forth in the
other subsections of this Section 9.04, after the Closing, Buyer and its
Affiliates shall not use any of the marks or names set forth on Schedule 9.04
(collectively or individually as the context requires, the "SELLER TRADEMARKS
AND TRADE NAMES").
(b) After the Closing, Buyer shall have the right to sell existing
inventory and to use existing packaging, labeling, containers, supplies,
advertising
35
materials, technical data sheets and any similar materials bearing any Seller
Trademarks and Trade Names until the earlier of (i) one year after the Closing
Date and (ii) the date existing stocks are exhausted. Buyer shall have the right
to use the Seller Trademarks and Trade Names in advertising that cannot be
changed by Buyer using reasonable efforts for a period not to exceed one year
after the Closing Date. Buyer shall comply with all applicable laws or
regulations in any use of packaging or labeling containing the Seller Trademarks
and Trade Names.
(c) Buyer shall not be obligated to change the Seller Trademarks and
Trade Names on goods in the hands of dealers, distributors and customers at the
time of the expiration of a time period set forth in subsection 9.04(b) above.
The obliteration of the Seller Trademarks and Trade Names shall be deemed
compliance with the covenant not to use the Seller Trademarks and Trade Names
pursuant to this Section 9.04.
(d) Buyer agrees to use reasonable efforts to cease using the Seller
Trademarks and Trade Names on buildings, cars, trucks and other fixed assets as
soon as possible within a period not to exceed one year after the Closing Date.
(e) Seller agrees that its consent to the amendment or extension of
this Section will not be unreasonably withheld if Buyer cannot exhaust existing
inventory within one year of the Closing Date.
SECTION 9.05. WARN ACT. Buyer and Seller acknowledge and agree that as
a result of ThermaSys's agreement under Section 10.02 to offer employment to all
employees of the Thermal Divisions at Closing, no "employment loss" (as that
term is defined in the WARN ACT) will occur under the Worker Adjustment and
Retraining Notification Act (the "WARN ACT") as a result of the transactions
contemplated by this Agreement. ThermaSys will be responsible for providing any
notification that may be required under the WARN Act with respect to any
Transferred Employees.
SECTION 9.06. TAX COOPERATION; ALLOCATION OF TAXES. (a) Buyer and
Seller agree to furnish or cause to be furnished to each other, upon request, as
promptly as practicable, such information and assistance relating to the
Business, Arup, Dalian, TCI, the assets of Insilco Sub One, Insilco Sub Two,
Insilco Sub Three, TCDI and the Purchased Assets (including, without limitation,
access to books and records) as is reasonably necessary for the filing of all
Tax returns, the making of any election relating to Taxes, the preparation for
any audit by any taxing authority, and the prosecution or defense of any claim,
suit or proceeding relating to any Tax. Buyer and Seller shall retain all books
and records with respect to Taxes pertaining to the Business for a period of at
least six years following the Closing Date. At the end of such period, each
party shall provide
36
the other with at least 45 days prior written notice before destroying any such
books and records, during which period the party receiving such notice can elect
to take possession, at its own expense, of such books and records. Seller and
Buyer shall cooperate with each other in the conduct of any audit or other
proceeding relating to Taxes involving the Business.
(b) All real property taxes, personal property taxes and similar ad
valorem obligations levied with respect to the Purchased Assets or the assets of
any of the Subsidiaries for a taxable period which includes (but does not end
on) the Closing Date (collectively, the "APPORTIONED OBLIGATIONS") shall be
apportioned between Seller and Buyer based on the number of days of such taxable
period included in the Pre-Closing Tax Period and the number of days of such
taxable period after the Closing Date (with respect to any such taxable period,
the "POST-CLOSING TAX PERIOD"). Seller shall be liable for the proportionate
amount of such taxes that is attributable to the Pre-Closing Tax Period, and
Buyer shall be liable for the proportionate amount of such taxes that is
attributable to the Post-Closing Tax Period. Any prepayment or estimated payment
or other deposit creditable against such tax, required to be made and made on or
before the Closing Date, shall be for the credit of Seller.
(c) Subject to Section 14.10, all excise, sales, use, value added,
registration stamp, recording, documentary, conveyancing, franchise, property,
transfer, gains and similar Taxes, levies, charges and fees (collectively,
"TRANSFER TAXES") incurred in connection with the transactions contemplated by
this Agreement shall be borne by Buyer. Buyer and Seller shall cooperate in
providing each other with any appropriate resale exemption certifications and
other similar documentation.
(d) Apportioned Obligations and Taxes described in Section 9.06(b) and
9.06(c) shall be timely paid, and all applicable filings, reports and returns
shall be filed, as provided by applicable law. The paying party shall be
entitled to reimbursement from the non-paying party in accordance with Section
9.06(b) or (c), as the case may be. Upon payment of any such Apportioned
Obligation or Tax, the paying party shall present a statement to the non-paying
party setting forth the amount of reimbursement to which the paying party is
entitled under Section 9.06(b) or (c), as the case may be, together with such
supporting evidence as is reasonably necessary to calculate the amount to be
reimbursed. The non- paying party shall make such reimbursement promptly but in
no event later than 10 days after the presentation of such statement. Any
payment not made within such time shall bear interest at the rate set forth in
Section 4.09(b) for each day until paid.
37
SECTION 9.07. SECTION 338(H)(10) ELECTION. (a) If requested by Buyer,
Seller shall join Buyer in an election to have the provisions of Section
338(h)(10) of the Code and any analogous provision of state or local law (any
such election, a "338 ELECTION") apply to the acquisition of the Shares of TCI.
The allocation of the purchase price (or, if applicable, the "modified aggregate
deemed sale price") among TCI's assets shall be made in accordance with Section
338 and the Treasury Regulations thereunder and any comparable provisions of
state or local law, as applicable. Such allocation shall be determined by Buyer
and delivered to Seller at least 90 days prior to the date an IRS Form 8023 is
required to be filed in respect of the acquisition of the Shares (such
allocation, the "PROPOSED ALLOCATION"). Seller shall accept the Proposed
Allocation unless it would be unreasonable to do so. If Seller believes that the
Proposed Allocation is unreasonable, it shall notify Buyer within 30 days of its
receipt of the Proposed Allocation and the manner in which Seller would modify
the Proposed Allocation to make it reasonable (such modified allocation, the
"MODIFIED ALLOCATION"). If Buyer and Seller are unable to resolve their
differences within 15 days, the matter shall be referred to the Independent
Accountant. The Independent Accountant shall determine whether the Proposed
Allocation was reasonable. If the Independent Accountant determines that the
Proposed Allocation was reasonable, such allocation shall be the "FINAL
ALLOCATION." If the Independent Accountant determines that the Proposed
Allocation was not reasonable, the Modified Allocation shall be the "FINAL
ALLOCATION." Buyer and Seller shall each file Internal Revenue Service Form 8023
(and any applicable forms required under state or local law) in respect of each
338 Election in a manner consistent with the Final Allocation and shall not take
any position on any Tax Return that is inconsistent with the Final Allocation.
ARTICLE 10
EMPLOYEE BENEFITS
SECTION 10.01. EMPLOYEE BENEFITS DEFINITIONS. The following terms, as
used herein, having the following meanings:
"BENEFIT ARRANGEMENTS" means the employment, severance or other similar
contracts, arrangements or policies (written or oral) and plans or arrangements
(written or oral) providing for insurance coverage (including any self-insured
arrangements), workers' compensation, disability benefits, supplemental
unemployment benefits, vacation benefits, retirement benefits or for deferred
compensation, profit-sharing, bonuses, stock options, stock appreciation or
other forms of incentive compensation or post-retirement insurance, compensation
or benefits which (i) are not an Employee Plan, (ii) are entered into,
38
maintained or contributed to, as the case may be, by Seller or any of its
Affiliates and (iii) cover any U.S. employee of the Business.
"BENEFIT PLAN" an Employee Plan, Benefit Arrangement or International
Plan.
"EMPLOYEE PLAN" means an "employee benefit plan," as such term is
defined in Section 3(3) of ERISA, which (i) is subject to any provision of
ERISA, (ii) is maintained, administered or contributed to by Seller or any of
its ERISA Affiliates (as defined below) and (iii) covers any employee of the
Business.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA AFFILIATE" of any entity means any other entity which, together
with such entity, would be treated as a single employer under Section 414 of the
Code.
"INTERNATIONAL PLAN" means an employment, severance or similar
contract, arrangement or policy (exclusive of any such contract which is
terminable within 30 days without liability of Seller or any of its ERISA
Affiliates), or a plan or arrangement providing for severance, insurance
coverage (including any self-insured arrangements), workers' compensation,
disability benefits, supplemental unemployment benefits, vacation benefits,
pension or retirement benefits or for deferred compensation, profit-sharing,
bonuses, stock options, stock appreciation rights or other forms of incentive
compensation or post-retirement insurance, compensation or benefits that (a) is
not an Employee Plan or a Benefit Arrangement, (b) is maintained or contributed
to by Seller or any ERISA Affiliate and (c) covers any employee or former
employee of the Business.
SECTION 10.02. EMPLOYEES AND OFFERS OF EMPLOYMENT. (a) On the Closing
Date, Buyer shall offer employment to all employees of the Thermal Divisions,
such offers to be for the same or substantially equivalent positions and to be
under the same or substantially equivalent terms and conditions as those
prevailing immediately prior to the Closing Date; PROVIDED, that Buyer may
terminate at any time after the Closing Date the employment of any such employee
who accepts such offer. For purposes of this Article 10, the term "employee"
shall mean any Person who, on the Closing Date, is actively employed by the
Thermal Divisions or who is on short-term disability leave, authorized leave of
absence, military service or lay-off with recall rights as of the Closing Date,
but shall exclude any other inactive or former employee of the Thermal
Divisions, including any Person who has been on long-term disability leave or
unauthorized leave of absence or who has terminated his or her employment,
retired or died on or before the
39
Closing Date. The employees of the Thermal Divisions who accept and commence
employment with Buyer (including, without limitation, all employees of all the
Subsidiaries) are hereinafter collectively referred to as the "TRANSFERRED
EMPLOYEES". Seller will not take, and will cause each of its subsidiaries not to
take, any action which would impede, hinder, interfere or otherwise compete with
Buyer's effort to hire any employees of the Thermal Division. Buyer shall not
assume responsibility for any Transferred Employee until such employee commences
employment with Buyer.
SECTION 10.03. SELLER'S BENEFIT PLANS. (a) Except to the extent
previously funded or covered through insurance purchased prior to the Closing
Date, Buyer shall assume responsibility for all Benefit Plan liabilities and
obligations for Transferred Employees on and after the Closing Date and Seller
shall not have any liability with respect thereto. Except to the extent that
such obligation or liability is associated with a Benefit Plan sponsored or
maintained by the Thermal Divisions or a subsidiary included in the Business, or
as otherwise expressly set forth herein, Seller shall retain all obligations and
liabilities under the Benefit Plans in respect of each employee or former
employee (including any beneficiary thereof) who is not a Transferred Employee.
(b) Notwithstanding the foregoing, from and after the Closing Date for
a period of one year after the Closing, Seller shall permit any Transferred
Employees who participated in the Seller's Benefit Plans prior to Closing to
continue to participate in Seller's Benefit Plans, except that any such Benefit
Plans that were sponsored or maintained by the Thermal Divisions or the
Subsidiaries before the Closing Date shall continue to be so sponsored and
maintained after the Closing Date. Buyer shall reimburse Seller for the
reasonable costs and expenses of providing such coverage after the Closing Date.
(c) Notwithstanding Section 10.03(b), (i) Buyer will assume Seller's
obligation to contribute to the Steel Parts Corporation Contractual Pension Plan
for Hourly Paid Employees on behalf of all employees of Insilco Sub Two who are
entitled to participate in such Plan, (ii) Buyer shall have sole responsibility
for all liabilities arising from or attributable to any postretirement
healthcare and life insurance benefits for both terminated and retired former
employees and Transferred Employees of the Thermal Divisions and Subsidiaries
included in the Business and (iii) Seller shall take all steps necessary to
freeze the accrual of benefits for employees of Insilco Sub Two in the Insilco
Corporation Retirement Plan for Salaried Employees as of the Closing Date.
SECTION 10.04. BUYER BENEFIT PLANS. (a) For such period of time as
Buyer shall determine in its sole discretion, beginning on the Closing Date,
Buyer shall maintain for Transferred Employees all Benefit Plans sponsored or
maintained by
40
the Thermal Divisions or any subsidiary included in the Business immediately
prior to the Closing Date.
(b) Buyer shall take all actions required to permit all salaried
employees of Insilco Sub Two who cease to accrue benefits in the Insilco
Corporation Retirement Plan for Salaried Employees, as provided in Section
10.03(c)(iii), to participate in the profit sharing portion of the Insilco
Corporation Employee Thrift Plan on and after the Closing Date.
(c) Effective as of the Closing Date, Buyer will permit executive-level
Transferred Employees to participate in bonus, stock option and incentive
compensation plans no less favorable than those in effect for such employees
immediately prior to the Closing Date, and which reflect any unpaid benefits
accrued under Seller's plans prior to the Closing Date.
SECTION 10.05. W-2 REPORTING. Buyer shall be responsible for issuing
W-2 reports to all Transferred Employees for the entire calendar year that
includes the Closing Date. Seller shall provide to Buyer any and all such
information as may be necessary to permit Buyer to fulfill its obligation set
forth in the preceding sentence.
SECTION 10.06. NO THIRD PARTY BENEFICIARIES. No provision of this
Article shall create any third party beneficiary or other rights in any employee
or former employee (including any beneficiary or dependent thereof) of Seller or
of any of its subsidiaries in respect of continued employment (or resumed
employment) with either Buyer or the Businesses or any of their Affiliates and
no provision of this Article 10 shall create any such rights in any such Persons
in respect of any benefits that may be provided, directly or indirectly, under
any Benefit Plan or any plan or arrangement which may be established by Buyer or
any of its Affiliates. No provision of this Agreement shall constitute a
limitation on rights to amend, modify or terminate after the Closing Date any
such plans or arrangements of Buyer or any of its Affiliates.
ARTICLE 11
CONDITIONS TO CLOSING
SECTION 11.01. CONDITIONS TO OBLIGATIONS OF ALL PARTIES. The
obligations of the parties hereto to consummate the Closing are subject to the
satisfaction of the following conditions:
41
(a) Any applicable waiting period under the HSR Act relating to the
transactions contemplated hereby shall have expired or been terminated;
(b) No provision of any applicable law or regulation and no judgment,
injunction, order or decree shall prohibit the consummation of
Transactions; and
(c) All actions by or in respect of or filings with any governmental
body, agency, official or authority required to permit the consummation
of the Transactions shall have been taken, made or obtained.
SECTION 11.02. CONDITIONS TO OBLIGATION OF BUYER, THERMASYS, MERGER SUB
ONE, MERGER SUB TWO AND MERGER SUB THREE. The obligation of Buyer, ThermaSys,
Merger Sub One, Merger Sub Two and Merger Sub Three to consummate the
Transactions is subject to the satisfaction of the following further conditions:
(a) (i) Each of Seller, Insilco, Insilco Sub One, Insilco Sub Two
and Insilco Sub Three shall have performed in all material respects all
of its obligations hereunder required to be performed by it on or prior
to the Closing Date, (ii) except to the extent expressly permitted
under this Agreement, the representations and warranties of Seller
contained in this Agreement and in any certificate or other writing
delivered by Seller pursuant hereto (x) that are qualified by
materiality or Material Adverse Effect shall be true at and as of the
Closing Date as if made at and as of such date, and (y) that are not
qualified by materiality or Material Adverse Effect, shall be true in
all material respects at and as of the Closing Date, as if made at and
as of such date and (iii) Buyer shall have received a certificate
signed by the President of Seller to the foregoing effect.
(b) There shall not be threatened, instituted or pending any
action or proceeding by any Person before any court or governmental
authority or agency, domestic or foreign, (i) seeking to restrain,
prohibit or otherwise interfere with the ownership or operation by
Buyer or any of its Affiliates of all or any material portion of the
Purchased Assets or the business or assets of Buyer or to compel Buyer
or any of its Affiliates to dispose of all or any material portion of
the Purchased Assets or the business or assets of Buyer or (ii) seeking
to require divestiture by Buyer or any of its Affiliates of all or any
material portion of the Purchased Assets or the business or assets of
Buyer.
42
(c) There shall not be any action taken, statute, rule,
regulation, injunction, order or decree proposed, enacted, enforced,
promulgated, issued or deemed applicable to the purchase of the
Purchased Assets by any court, government or governmental authority or
agency, domestic or foreign, other than the application of the waiting
period provisions of the HSR Act to the purchase of the Purchased
Assets, that, in the reasonable judgment of Buyer could, directly or
indirectly, result in any of the consequences referred to in clauses
11.02(b)(i) and 11.02(b)(ii) above.
(d) Buyer and Insilco shall have executed a Management Services
Agreement in substantially the form attached as Exhibit D.
(e) Seller shall have received all Required Consents and all
consents, authorizations or approvals from the governmental agencies
referred to in Section 5.03 in form and substance reasonably
satisfactory to Buyer, and no such consent, authorization or approval
shall have been revoked.
(f) Buyer shall have obtained funds (other than equity to be
provided by its stockholders) to enable it to make payment of the
Transaction Consideration and any other amounts to be paid by it
hereunder.
SECTION 11.03. CONDITIONS TO OBLIGATION OF SELLER, INSILCO, INSILCO SUB
ONE, INSILCO SUB TWO AND INSILCO SUB THREE. The obligation of Seller, Insilco,
Insilco Sub One, Insilco Sub Two and Insilco Sub Three to consummate the Closing
is subject to the satisfaction of the following further conditions:
(a) (i) Each of Buyer, ThermaSys, Merger Sub One, Merger Sub Two
and Merger Sub Three shall have performed in all material respects all
of its obligations hereunder required to be performed by it at or prior
to the Closing Date, (ii) the representations and warranties of Buyer
contained in this Agreement and in any certificate or other writing
delivered by Buyer pursuant hereto shall be true in all material
respects at and as of the Closing Date, as if made at and as of such
date and (iii) Seller shall have received a certificate signed by the
Chief Financial Officer of Buyer to the foregoing effect;
(b) Buyer, ThermaSys, Merger Sub One, Merger Sub Two and Merger
Sub Three shall have received all consents, authorizations or approvals
from governmental agencies referred to in Section 6.03, in each case in
form and substance reasonably satisfactory to Seller, and no such
consent, authorization or approval shall have been revoked; and
43
(c) Seller shall have received all consents, authorizations or
approvals referred to on Schedule 5.06(a), in each case in form and
substance reasonably satisfactory to Seller, and no such consent
authorization or approval shall have been revoked; and
(d) Insilco Sub One and Insilco Sub Three shall have transferred
all of the outstanding capital stock of Signal Dominicana S.A. owned by
each such entity to an entity to be designated by Insilco;
ARTICLE 12
SURVIVAL; INDEMNIFICATION
SECTION 12.01. SURVIVAL. Except for representations and warranties
related to Taxes which shall survive for the relevant statute of limitations
period the representations and warranties of the parties hereto contained in
this Agreement or in any certificate delivered pursuant hereto or in connection
herewith shall survive the Closing until the one year anniversary of the Closing
Date. Notwithstanding the preceding sentence, any representation or warranty in
respect of which indemnity may be sought under this Agreement shall survive the
time at which it would otherwise terminate pursuant to the preceding sentence,
if notice of the inaccuracy thereof giving rise to such right of indemnity shall
have been given to the party against whom such indemnity may be sought prior to
such time.
SECTION 12.02. INDEMNIFICATION. (a) Seller hereby indemnifies Buyer and
its subsidiaries and shareholders, and their respective partners, members,
shareholders and subsidiaries, against and agrees to hold each of them harmless
from any and all Losses and expenses (including, without limitation, reasonable
expenses of investigation and reasonable attorneys' fees and expenses in
connection with any action, suit or proceeding) ("DAMAGES") incurred or suffered
by Buyer or any of its subsidiaries or shareholders, or their respective
partners, members, shareholders and subsidiaries, arising out of:
(i) any breach of any representation or warranty set forth in
this Agreement or in any certificate delivered pursuant hereto or in
connection herewith (a "WARRANTY BREACH"), or any breach of any
covenant or agreement made or to be performed by Seller pursuant to
this Agreement; PROVIDED that (A) Seller shall not be liable in respect
of any Warranty Breach under Section 12.02(a)(i) unless the aggregate
amount of Damages with respect to all Warranty Breaches referred to in
Section 12.02(a)(i)
44
(determined without regard to any materiality qualification contained
in any representation or warranty giving rise to the claim for
indemnity hereunder) exceeds $500,000 and then only to the extent of
such excess and (B) Seller's maximum liability in respect of Warranty
Breaches under Section 12.02(a)(i) shall not exceed $20.0 million of
the Transaction Consideration;
(ii) any Excluded Liability;
(iii) Taxes incurred by or imposed with respect to Seller or any
of the Subsidiaries with respect to any Pre-Closing Tax Period.
(b) Buyer hereby indemnifies Seller and its subsidiaries against and
agrees to hold each of them harmless from any and all Damages incurred or
suffered by Seller or any of its Subsidiaries arising out of:
(i) any Warranty Breach, or any breach of any covenant or
agreement made or to be performed by Buyer pursuant to this Agreement,
PROVIDED that (A) Buyer shall not be liable in respect of any Warranty
Breach under this Section 12.02(b)(i) unless the aggregate amount of
Damages with respect to all Warranty Breaches referred to in this
Section 12.02(b)(i) (determined without regard to any materiality
qualification contained in any representation or warranty giving rise
to the claim for indemnity hereunder) exceeds $500,000 and then only to
the extent of such excess and (B) Buyer's maximum liability in respect
of Warranty Breaches under this Section 12.02(b)(i) shall not exceed
$20.0 million of the Transaction Consideration; or
(ii) any Assumed Liability.
(c) In the event a court of competent jurisdiction in the Federal
Republic of Germany (a "GERMAN COURT") awards any Damages for a Warranty Breach
arising from the sale of the shares of Arup by Insilco Deutschland:
(i) if such award is duplicative of any prior awards by another
court for the same breach, the Indemnified Party shall be entitled to
receive an amount equal to the greater of (A) the prior award amount or
(B) the amount awarded by the German Court, but in no event will the
Indemnifying Party (or its affiliates) be required to pay both awards;
(ii) if such award results in the payment of an amount, in the
aggregate, by the Indemnifying Party in excess of the limitations set
forth in Section 12.02(a)(i)(B) and 12.02(b)(i)(B), the Indemnified
Party shall
45
promptly repay the Indemnifying Party the amount by which the total
payments by the Indemnifying Party (or its affiliates) exceeds the
limitations on Damages; and
(iii) any such award paid by an Indemnifying Party shall be
applied toward such party's maximum liability as set forth in Section
12.02(a)(i)(B) and 12.02(b)(i)(B).
SECTION 12.03. PROCEDURES FOR INDEMNITY CLAIMS. The following
procedures shall be applicable with respect to indemnification for indemnity
claims arising in connection with any provision of this Agreement.
(a) Promptly after receipt by the party seeking indemnification,
hereunder (an "INDEMNIFIED PARTY") of notice of the assertion or the
commencement of any claim, liability or obligation, whether by legal process or
otherwise (a "CLAIM"), with respect to any matter within the scope of Section
12.02, the Indemnified Party shall give written notice thereof (the "NOTICE") to
the Person from whom indemnification is sought pursuant hereto (the
"INDEMNIFYING PARTY") and shall thereafter keep the Indemnifying Party
reasonably informed with respect thereto; PROVIDED that the failure of the
Indemnified Party to give the Indemnifying Party prompt notice as provided
herein shall not relieve the Indemnifying Party of its obligations hereunder
unless such failure results in (i) a default judgment, (ii) the expiration of
the time to answer a complaint or (iii) material prejudice to the Indemnifying
Party's defense of such Claim. In case any such Claim is brought against any
Indemnified Party, the Indemnifying Party shall be entitled to assume the
defense thereof, by written notice of its intention to the Indemnified Party
within 30 days after receipt of the Notice, with counsel reasonably satisfactory
to the Indemnified Party at the Indemnifying Party's own expense. If the
Indemnifying Party shall assume the defense of such Claim, it shall not settle
such Claim without the prior written consent of the Indemnified Party, which
consent shall not be unreasonably withheld. Notwithstanding the assumption by
the Indemnifying Party of the defense of any Claim as provided in this Section
12.03, the Indemnified Party shall be permitted to join in the defense of such
Claim and to employ counsel at its own expense.
(b) If the Indemnifying Party shall fail to notify the Indemnified
Party of its desire to assume the defense of any such Claim within the
prescribed period of time, or shall notify the Indemnified Party that it will
not assume the defense of any such Claim, then the Indemnified Party shall
assume the defense of any such Claim, in which event it may do so in such manner
as it may deem appropriate. The Indemnifying Party shall at the expense of the
Indemnifying Party be permitted to join in the defense of such Claim and to
employ counsel at its own expense.
46
SECTION 12.04. EXCLUSIVE REMEDIES. Seller and Buyer acknowledge and
agree that the remedies set forth in Section 12.01, Section 12.02, and Section
12.03, including the deductibles, liability limits, survival periods,
disclaimers and limitations, are, absent fraud, intended to be, and shall be,
the parties' exclusive remedies with respect to any of the matters covered
therein. Without in any way limiting the generality of the preceding sentence,
Seller and Buyer hereby expressly release, waive and discharge, and covenant not
to ▇▇▇ with respect to, any cause of action or claim not expressly provided for
in this Agreement.
ARTICLE 13
TERMINATION
SECTION 13.01. GROUNDS FOR TERMINATION. This Agreement may be
terminated at any time prior to the Closing:
(a) by mutual written agreement of Seller and Buyer;
(b) by either Seller or Buyer if the Closing shall not have been
consummated on or before September 30, 2000;
(c) by Seller if, on or prior to September 15, 2000, Buyer shall not
have obtained firmly committed financing for the transactions contemplated by
this Agreement and waived the condition to Closing set forth in Section
11.02(f); or
(d) by either Seller or Buyer if there shall be any law or regulation
that makes consummation of the transactions contemplated hereby illegal or
otherwise prohibited or if consummation of the transactions contemplated hereby
would violate any nonappealable final order, decree or judgment of any court or
governmental body having competent jurisdiction.
The party desiring to terminate this Agreement pursuant to clauses
13.01(b), 13.01(c) or 13.01(d) shall give notice of such termination to the
other party.
SECTION 13.02. EFFECT OF TERMINATION. If this Agreement is terminated
as permitted by Section 13.01, such termination shall be without liability of
either party (or any stockholder, director, officer, employee, agent, consultant
or representative of such party) to the other party to this Agreement; provided
that if such termination shall result from the (i) willful failure of either
party to fulfill a condition to the performance of the obligations of the other
party, (ii) failure to
47
perform a covenant of this Agreement or (iii) breach by either party hereto of
any representation or warranty or agreement contained herein, such party shall
be fully liable for any and all Damages incurred or suffered by the other party
as a result of such failure or breach. The provisions of Sections 8.01, 12.01,
12.02, 12.03, 12.04, 14.03, 14.05, 14.06 and 14.07 shall survive any termination
hereof pursuant to Section 13.01.
ARTICLE 14
MISCELLANEOUS
SECTION 14.01. NOTICES. All notices, requests and other communications
to any party hereunder shall be in writing (including facsimile transmission)
and shall be given,
if to Buyer, to:
ThermaSys Holding Company
c/o DLJ Merchant Banking Partners II, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
if to Seller, to:
Insilco Holding Co.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
48
with a copy to:
▇▇▇▇▇ ▇▇▇▇▇ L.L.P.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇.
Fax: ▇▇▇-▇▇▇-▇▇▇▇
All such notices, requests and other communications shall be deemed received on
the date of receipt by the recipient thereof if received prior to 5 p.m. in the
place of receipt and such day is a business day in the place of receipt.
Otherwise, any such notice, request or communication shall be deemed not to have
been received until the next succeeding business day in the place of receipt.
SECTION 14.02. AMENDMENTS AND WAIVERS. (a) Any provision of this
Agreement may be amended or waived if, but only if, such amendment or waiver is
in writing and is signed, in the case of an amendment, by each party to this
Agreement, or in the case of a waiver, by the party against whom the waiver is
to be effective.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 14.03. EXPENSES. Except as otherwise provided herein, all costs
and expenses incurred in connection with this Agreement shall be paid by the
party incurring such cost or expense.
SECTION 14.04. SUCCESSORS AND ASSIGNS. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided that no party may assign, delegate
or otherwise transfer any of its rights or obligations under this Agreement
without the consent of each other party hereto, except that Buyer may transfer
or assign, in whole or from time to time in part, to one or more of its
Affiliates, the right to purchase all or a portion of the Purchased Assets, but
no such transfer or assignment will relieve Buyer of its obligations hereunder.
SECTION 14.05. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the law of the State of New York.
49
SECTION 14.06. JURISDICTION. Except as otherwise expressly provided in
this Agreement, the parties hereto agree that any suit, action or proceeding
seeking to enforce any provision of, or based on any matter arising out of or in
connection with, this Agreement or the transactions contemplated hereby shall be
brought in the United States District Court for the Southern District of New
York or any New York State court sitting in New York City, so long as one of
such courts shall have subject matter jurisdiction over such suit, action or
proceeding, and that any cause of action arising out of this Agreement shall be
deemed to have arisen from a transaction of business in the State of New York,
and each of the parties hereby irrevocably consents to the jurisdiction of such
courts (and of the appropriate appellate courts therefrom) in any such suit,
action or proceeding and irrevocably waives, to the fullest extent permitted by
law, any objection that it may now or hereafter have to the laying of the venue
of any such suit, action or proceeding in any such court or that any such suit,
action or proceeding which is brought in any such court has been brought in an
inconvenient forum. Process in any such suit, action or proceeding may be served
on any party anywhere in the world, whether within or without the jurisdiction
of any such court. Without limiting the foregoing, each party agrees that
service of process on such party as provided in Section 14.01 shall be deemed
effective service of process on such party.
SECTION 14.07. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
SECTION 14.08. COUNTERPARTS; THIRD PARTY BENEFICIARIES. This Agreement
may be signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement shall become effective when each party hereto shall
have received a counterpart hereof signed by the other party hereto. Except as
provided in Section 12.02, no provision of this Agreement is intended to confer
upon any Person other than the parties hereto any rights or remedies hereunder.
SECTION 14.09. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter of this
Agreement and supersedes all prior agreements and understandings, both oral and
written, between the parties with respect to the subject matter of this
Agreement.
SECTION 14.10. BULK SALES LAWS. Buyer and Seller each hereby waive
compliance by Seller with the provisions of the "bulk sales", "bulk transfer" or
similar laws of any state. Seller agrees to indemnify and hold Buyer harmless
50
against any and all claims, losses, damages, liabilities, costs and expenses
incurred by Buyer or any of its Affiliates as a result of any failure to comply
with any such "bulk sales", "bulk transfer" or similar laws.
SECTION 14.11. CAPTIONS. The captions herein are included for
convenience of reference only and shall be ignored in the construction or
interpretation hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
INSILCO HOLDING CO.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President and Chief
Executive Officer
INSILCO CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President and Chief
Executive Officer
THERMASYS HOLDING COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Senior Vice President, Chief
Financial Officer, Treasurer
and Secretary
THERMASYS CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Senior Vice President, Chief
Financial Officer, Treasurer
and Secretary
52
THERMASYS I, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Senior Vice President, Chief
Financial Officer, Treasurer
and Secretary
THERMASYS II, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Senior Vice President, Chief
Financial Officer, Treasurer
and Secretary
THERMASYS III, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Senior Vice President, Chief
Financial Officer, Treasurer
and Secretary
THERMAL TRANSFER PRODUCTS, LTD.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President - Corporate
Taxes and Assistant Secretary
STEEL PARTS CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President - Corporate
Taxes and Assistant Secretary
53
GREAT LAKE, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President - Corporate
Taxes and Assistant Secretary
THERMAL COMPONENTS DIVISION, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President - Corporate
Taxes and Assistant Secretary