1
Exhibit 2(a)
MERGER AGREEMENT
BY AND AMONG
INSILCO CORPORATION,
THERMAL TRANSFER ACQUISITION CORP.,
THERMAL TRANSFER PRODUCTS, LTD.,
XXXXX XXXXX
AND
XXXXXXX XXXXX
2
TABLE OF CONTENTS
1. THE MERGER........................................................1
1.1. The Merger.................................................1
1.2. Effective Time.............................................1
1.3. Conversion of Common Stock.................................2
1.4. Articles of Incorporation..................................2
1.5. By-Laws....................................................2
1.6. Exchange of Certificates...................................3
1.7. Dissenting Shares..........................................3
1.8. Directors and Officers.....................................3
2. PURCHASE PRICE - PAYMENT..........................................4
2.1. Calculation of Purchase Price; Per Share Purchase
Prices.....................................................4
2.2. Payment of Purchase Price..................................4
3. REPRESENTATIONS AND WARRANTIES OF COMPANY.........................5
3.1. Corporate..................................................5
3.2. No Violation...............................................7
3.3. Financial Statements.......................................7
3.4. Cash and Cash Equivalents..................................7
3.5. Tax Matters................................................7
3.6. Absence of Certain Changes.................................8
3.7. Absence of Undisclosed Liabilities.........................9
3.8. No Litigation..............................................9
3.9. Compliance With Laws and Orders...........................10
3.10. Title to and Condition of Properties......................11
3.11. Insurance.................................................12
3.12. Contracts and Commitments.................................13
3.13. Labor Matters.............................................14
3.14. Employee Benefit Plans....................................15
3.15. Employment; Compensation..................................17
3.16. Trade Rights..............................................17
3.17. Major Customers and Suppliers.............................18
3.18. Product Warranty and Product Liability....................18
3.19. Bank Accounts.............................................18
3.20. Affiliates' Relationships to Company......................19
3.21. Assets Necessary to Business..............................19
3.22. Records...................................................19
3.23. Year 2000 Compliance......................................19
3.24. Share Repurchases.........................................20
4. REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS...................20
4.1. Power.....................................................20
4.2. Validity..................................................20
4.3. No Violation..............................................20
4.4. Due Diligence Response....................................20
5. REPRESENTATIONS AND WARRANTIES OF NEWCO AND INSILCO..............21
5.1. Corporate.................................................21
5.2. Authority.................................................21
5.3. No Violation..............................................21
i
3
5.4. Due Diligence Investigation...............................22
5.5. Audit Status..............................................22
6. COVENANTS........................................................22
6.1. Consulting Agreements.....................................22
6.2. Noncompetition; Confidentiality...........................22
6.3. HSR Act Filings...........................................24
6.4. Access to Information and Records.........................24
6.5. Conduct of Business Pending the Closing...................24
6.6. Consents..................................................26
6.7. Other Action..............................................26
6.8. Disclosure Schedule.......................................26
6.9. Audit.....................................................26
6.10. Shareholder Notice and Approval...........................26
6.11. Title Insurance...........................................27
6.12. Surveys...................................................27
6.13. Indemnification Provisions of Surviving Corporation's
Articles and Bylaws.......................................27
6.14. Escrow Agreement..........................................28
6.15. Supplemental Medicare Coverage............................28
6.16. Form 5500s................................................28
6.17. Additional Supplier Disclosure............................28
7. CONDITIONS PRECEDENT TO INSILCO'S AND NEWCO'S
OBLIGATIONS......................................................28
7.1. Representations and Warranties True asof the
Closing Date..............................................28
7.2. Compliance With Agreement.................................29
7.3. Absence of Litigation.....................................29
7.4. Consents and Approvals....................................29
7.5. Shareholder Approval......................................29
7.6. No Exercise of Dissenters' Rights.........................29
7.7. Satisfaction of Customer Due Diligence....................29
7.8. Xxxx-Xxxxx-Xxxxxx Waiting Period..........................29
7.9. Satisfactory Completion of the Audit......................29
7.10. No Change in Recent Balance Sheet.........................30
7.11. Title Insurance...........................................30
7.12. Surveys...................................................30
7.13. Environmental Due Diligence...............................30
8. CONDITIONS PRECEDENT TO COMPANY'S AND SHAREHOLDERS'
OBLIGATIONS......................................................31
8.1. Representations and Warranties True on the
Closing Date..............................................31
8.2. Compliance With Agreement.................................31
8.3. Absence of Litigation.....................................31
8.4. Xxxx-Xxxxx-Xxxxxx Waiting Period..........................31
8.5. Shareholder Approval......................................31
9. INDEMNIFICATION..................................................31
9.1. By Shareholders...........................................31
9.2. By Insilco and/or Newco...................................33
9.3. Indemnification of Third-Party Claims.....................34
9.4. Payment...................................................34
ii
4
10. CLOSING..........................................................35
10.1. Documents to be Delivered by Company and Shareholders.....35
10.2. Documents to be Delivered by Insilco or Newco.............36
11. TERMINATION......................................................37
11.1. Right of Termination Without Breach.......................37
11.2. Termination for Breach....................................37
12. MISCELLANEOUS....................................................38
12.1. Disclosure Schedule.......................................38
12.2. Disclosures and Announcements.............................39
12.3. Assignment; Parties in Interest...........................39
12.4. Law Governing Agreement...................................39
12.5. Amendment and Modification................................39
12.6. Notice....................................................39
12.7. Expenses..................................................40
12.8. Entire Agreement..........................................41
12.9. Counterparts..............................................41
12.10. Headings..................................................41
EXHIBITS
--------
EXHIBIT A XXXXX XXXXX CONSULTING AGREEMENT
EXHIBIT B XXXXXXX XXXXX CONSULTING AGREEMENT
EXHIBIT C SELECTED TERMS AND CONDITIONS OF THE ESCROW AGREEMENT
EXHIBIT D OPINION OF XXXXXXX & XXXXX
iii
5
MERGER AGREEMENT
MERGER AGREEMENT (this "Agreement") dated May 17, 1999, by and among
INSILCO CORPORATION, a Delaware corporation ("Insilco"), THERMAL TRANSFER
ACQUISITION CORP., a Wisconsin corporation and wholly-owned subsidiary of
Insilco ("Newco"), THERMAL TRANSFER PRODUCTS, LTD., a Wisconsin corporation
("Company"), XXXXX XXXXX and XXXXXXX XXXXX (individually a "Shareholder," and
together, "Shareholders").
R E C I T A L S
A. Company is engaged in the design, manufacture, marketing and sale of
heat exchangers and related products (the "Business").
B. The respective Boards of Directors of Insilco, Newco and Company have
approved the merger of Newco with and into Company pursuant to the terms of this
Agreement as a means to enable Insilco to acquire 100% of the issued and
outstanding capital stock of Company.
C. Insilco owns one hundred percent (100%) of the issued and outstanding
capital stock of Newco, and as an inducement to Company and Shareholders to
enter into this Agreement with Newco and to grant Newco the rights described
herein, and in consideration of the valuable benefits to accrue to Insilco as a
result of this Agreement, Insilco desires to guaranty the payment and
performance of all Newco's obligations under this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants, agreements and conditions hereinafter
set forth, and intending to be legally bound hereby, the parties hereto agree as
follows:
1. THE MERGER
1.1. The Merger. Subject to the terms and conditions of this
Agreement, in accordance with the Wisconsin Business Corporation Law ("WBCL"),
at the Effective Time (as defined in Section 1.2), Newco shall merge with and
into Company (the "Merger"), and Company shall survive the Merger and shall
continue its corporate existence under the laws of the State of Wisconsin
(Company in its capacity as the corporation surviving the Merger is sometimes
referred to herein as "Surviving Corporation"). Upon consummation of the Merger,
the separate corporate existence of Newco shall terminate.
1.2. Effective Time. The Merger shall become effective upon the later
of (a) the time of filing of Articles of Merger with the Department of Financial
Institutions of the State of Wisconsin and (b) the effective date and time of
the Merger as set forth in such Articles of Merger (which shall in no event be
later than the first business day after the Closing Date (as defined in Article
10)). The parties shall each use reasonable efforts to cause such Articles of
Merger to be filed on the Closing Date. The term "Effective Time" shall be the
date and time when the Merger becomes effective, in accordance with this Section
1.2.
6
1.3. Conversion of Common Stock.
1.3.(a) At the Effective Time, subject to Section 1.6 and
Section 1.7, by virtue of the Merger and without any action on the
part of Company or the holder of any securities of Company, each
share of voting common stock, no par value, of Company (the "Voting
Common Stock") issued and outstanding immediately prior to the
Effective Time (other than shares canceled pursuant to Section
1.3.(d)) shall be converted into the right to receive the Voting
Share Purchase Price (as such term is defined in Section 2.1.(b)) and
the Voting Share Contingent Consideration Amount (as such term is
defined in Section 2.2(e)(ii)), if any (together with the Voting
Share Purchase Price, the "Voting Share Merger Consideration"), which
shall be payable in the manner provided in Section 2.2.
1.3.(b) At the Effective Time, subject to Section 1.6 and
Section 1.7, by virtue of the Merger and without any action on the
part of Company or the holder of any securities of Company, each
share of non-voting common stock, no par value, of Company (the
"Non-Voting Common Stock," and, together with the Voting Common
Stock, the "Common Stock") issued and outstanding immediately prior
to the Effective Time (other than shares canceled pursuant to Section
1.3.(d)) shall be converted into the right to receive the Non-Voting
Share Purchase Price (as such term is defined in Section 2.1.(c)) and
the Non-Voting Share Contingent Consideration Amount (as such term is
defined in Section 2.2(e)(iii)), if any (together with the Non-Voting
Share Purchase Price, the "Non-Voting Share Merger Consideration"),
which shall be payable in the manner provided in Section 2.2.
1.3.(c) All of the shares of Common Stock converted into
the right to receive the Voting Share Merger Consideration or the
Non-Voting Share Merger Consideration pursuant to this Article 1
shall no longer be outstanding and shall automatically be canceled
and shall cease to exist as of the Effective Time, and each
certificate previously representing any such share of Common Stock
(each a "Stock Certificate") shall thereafter represent only the
right to receive the Voting Share Merger Consideration or the
Non-Voting Share Merger Consideration, as applicable. Stock
Certificates previously representing shares of Common Stock shall be
exchanged for that portion of the Voting Share Merger Consideration
or the Non-Voting Share Merger Consideration, as applicable, that is
currently payable upon the surrender of such Stock Certificates in
accordance with Section 1.6, without any interest thereon.
1.3.(d) At the Effective Time, all shares of Common Stock
that are owned by Company as treasury stock shall be canceled and
shall cease to exist, and no consideration shall be delivered in
exchange therefor.
1.3.(e) At the Effective Time, each share of common stock,
$.01 par value, of Newco shall be converted into one share of common
stock, $.01 par value, of Surviving Corporation.
1.4. Articles of Incorporation. The Articles of Incorporation of
Newco in effect as of the Effective Time shall be the Articles of Incorporation
of Surviving Corporation after the Merger until thereafter amended in accordance
with applicable law, except that Article I thereof shall be amended as of the
Effective Time to read in its entirety as follows: "The name of the Corporation
shall be `Thermal Transfer Products, Ltd.'"
1.5. By-Laws. The By-Laws of Newco in effect as of the Effective Time
shall be the By-Laws of Surviving Corporation after the Merger until thereafter
amended in accordance with applicable law.
2
7
1.6. Exchange of Certificates
1.6.(a) Newco shall mail to all holders of record of one
or more Stock Certificates, prior to the Effective Time, a letter of
transmittal ("Letter of Transmittal"), in reasonable form prepared by
Insilco or Newco, which shall specify that delivery shall be
effected, and risk of loss and title to the Stock Certificates shall
pass, only upon delivery of the Stock Certificates to Surviving
Corporation, and which shall contain (i) a general release in a form
reasonably prescribed by Insilco or Newco of claims against Company,
Insilco and Newco arising prior to or as of the Effective Time
(except for claims arising pursuant to this Agreement), and (ii)
instructions for use in effecting the surrender of the Stock
Certificates. Following the Effective Time and upon proper surrender
of a Stock Certificate (or if applicable an affidavit of lost
certificate in a form reasonably acceptable to Surviving Corporation)
for exchange and cancellation to Surviving Corporation, together with
such properly completed Letter of Transmittal, duly executed by the
holder of such Stock Certificate, the holder of such Stock
Certificate shall be entitled to receive in exchange therefor (i)
payment for that portion of the Voting Share Purchase Price and/or
the Non-Voting Share Purchase Price, as applicable, to which such
holder is entitled as of the Closing Date pursuant to Section 2.2,
and(ii) the Voting Share Contingent Consideration Amount or the
Non-Voting Share Contingent Consideration Amount, if any and as
applicable, to which such holder becomes entitled pursuant to the
terms of and at the times designated in Section 2.2 and the Escrow
Agreement (as such term is defined in Section 6.14).
1.6.(b) Surviving Corporation shall not be liable to any
former holder of shares of Common Stock for any amount delivered in
good faith to a public official pursuant to applicable abandoned
property, escheat or similar laws.
1.7. Dissenting Shares. Notwithstanding anything in this Agreement to
the contrary, shares of Common Stock that are outstanding immediately prior to
the Effective Time and with respect to which dissenters' rights shall have been
properly demanded in accordance with Sections 180.1301-180.1331 of the WBCL
("Dissenting Shares") shall not be converted into the right to receive the
Voting Share Merger Consideration or the Non-Voting Share Merger Consideration,
as applicable. Instead, such shares of Common Stock shall be cancelled and the
holders thereof shall only be entitled to payment of the fair value of such
Dissenting Shares in accordance with the provisions of Sections
180.1301-180.1331 of the WBCL; provided, however, that (i) if any holder of
Dissenting Shares shall subsequently deliver a written withdrawal of his demand
for appraisal of such shares, or (ii) if any holder fails to establish his
entitlement to dissenters' rights as provided in Sections 180.1301-180.1331 of
the WBCL, then such holder or holders (as the case may be) shall forfeit its
rights under Sections 180.1301-180.1331 of the WBCL with respect to such shares,
and each of such shares shall thereupon be deemed to have been converted, as of
the Effective Time, into the right to receive the Voting Share Merger
Consideration or the Non-Voting Share Merger Consideration, as applicable.
1.8. Directors and Officers. The directors and officers of Newco as
of the Effective Time shall be the directors and officers of Surviving
Corporation after the Merger to serve thereafter in accordance with applicable
law and the Articles of Incorporation and By-Laws of Surviving Corporation.
2. PURCHASE PRICE - PAYMENT
2.1. Calculation of Purchase Price; Per Share Purchase Prices.
2.1.(a) Purchase Price. As used herein, the term "Purchase
Price" shall mean $26,500,000.
3
8
2.1.(b) Voting Share Purchase Price. As used herein, the
"Voting Share Purchase Price" shall mean the result obtained by (i)
multiplying (A) the Purchase Price times .5226 and (ii) dividing the
number reached in the preceding clause "(i)" by the fully diluted
number of shares of Voting Common Stock issued and outstanding on the
Closing Date.
2.1.(c) Non-Voting Share Purchase Price. As used herein,
the "Non-Voting Share Purchase Price" shall mean the result obtained
by (i) multiplying the Purchase Price times .4774 and (ii) dividing
the number reached in the preceding clause "(i)" by the fully diluted
number of shares of Non-Voting Common Stock issued and outstanding on
the Closing Date.
2.2. Payment of Purchase Price. Surviving Corporation shall pay, and
Insilco shall cause Surviving Corporation to pay, the Purchase Price as follows:
2.2.(a) Consideration to Holders of Voting Common Stock.
Following the Effective Time and pursuant to and subject to the terms
of Section 1.6, Surviving Corporation shall deliver to each holder of
Voting Common Stock, upon execution of a Letter of Transmittal by
such holder and delivery thereof to Surviving Corporation, cash in an
amount equal to (i) the Voting Share Purchase Price multiplied by the
number of shares of Voting Common Stock represented by the
Certificates delivered to the Surviving Corporation along with such
Letter of Transmittal, multiplied by (ii) .962.
2.2.(b) Consideration to Holders of Non-Voting Common
Stock. Following the Effective Time and pursuant to and subject to
the terms of Section 1.6, Surviving Corporation shall deliver to each
holder of Non-Voting Common Stock, upon execution of a Letter of
Transmittal by such holder and delivery thereof to Surviving
Corporation, cash in an amount equal to (i) the Non-Voting Share
Purchase Price multiplied by the number of shares of Non-Voting
Common Stock represented by the Certificates delivered to the
Surviving Corporation along with such Letter of Transmittal,
multiplied by (ii) .962.
2.2.(c) Cash to Escrow Agent. At the Closing, Surviving
Corporation shall deliver cash in an amount equal to 3.8% of the
Purchase Price to Escrow Agent (as such term is defined in the Escrow
Agreement).
2.2.(d) Cash to Paying Agent. If, within one week before
the likely Closing Date, Stock Certificates representing (i) at least
90% of the outstanding shares of Voting Common Stock and (ii) at
least 90% of the outstanding shares of Non-Voting Common Stock have
not been surrendered to Newco pursuant to Section 1.6, then the
parties hereto shall negotiate in good faith an amendment to this
Agreement to provide for payment of a portion of the Purchase Price
to a paying agent at the Closing.
2.2.(e) Payment of Contingent Consideration Amount.
Pursuant to the terms and conditions of the Escrow Agreement and on
the date specified therein for distribution of the Escrow Fund to the
shareholders of Company (the "Distribution Date"), Escrow Agent shall
deliver to (i) each holder of Voting Common Stock who has properly
executed and delivered a Letter of Transmittal and surrendered Stock
Certificates to Surviving Corporation in accordance with Section 1.6,
cash in an amount equal to (A) the Voting Share Contingent
Consideration Amount multiplied by the number of shares of Voting
Common Stock represented by the Stock Certificates delivered to the
Surviving Corporation along with such Letter of Transmittal and (ii)
each holder of Non-Voting Common Stock who has properly executed and
delivered a Letter of Transmittal and surrendered Stock Certificates
to Surviving Corporation in accordance with Section 1.6, cash in an
amount equal to (A) the Non-Voting Share Contingent Consideration
Amount (as such term is defined
4
9
herein) multiplied by the number of shares of Non-Voting Common Stock
represented by the Stock Certificates delivered to the Surviving
Corporation along with such Letter of Transmittal.
2.2.(e)(i) As used herein, the term "Contingent
Consideration Amount" shall mean the amount, if any, remaining in the
Escrow Fund on the Distribution Date.
2.2.(e)(ii) As used herein, the term "Voting Share
Contingent Consideration Amount" shall mean the result obtained by
(i) multiplying the Contingent Consideration Amount times .5226 and
(ii) dividing the number reached in the preceding clause "(i)" by the
fully diluted number of shares of Voting Common Stock issued and
outstanding on the Closing Date.
2.2.(e)(iii) As used herein, the term "Non-Voting Share
Contingent Consideration Amount" shall mean the result obtained by
(i) multiplying the Contingent Consideration Amount times .4774 and
(ii) dividing the number reached in the preceding clause "(i)" by the
fully diluted number of shares of Non-Voting Common Stock issued and
outstanding on the Closing Date.
2.2.(f) Method of Payment. All payments under this Section
2.2 shall be made in the form of certified or bank cashier's check
payable to the order of the recipient, except that payment to Escrow
Agent pursuant to Section 2.2(c) may be made by wire transfer of
immediately available funds to an account designated, at least 48
hours prior to the Closing Date, by Escrow Agent.
3. REPRESENTATIONS AND WARRANTIES OF COMPANY
Company (and not Shareholders) makes the following representations
and warranties to Insilco and Newco, each of which is true and correct on the
date hereof other than as specifically disclosed in the Disclosure Schedule (as
defined in Section 12.1) or in any revisions to the Disclosure Schedule
delivered to Insilco and Newco as provided for in Section 6.8, but shall not
survive the Closing of the transactions provided for herein, it being the intent
of the parties that the following representations and warranties facilitate
disclosure so as to allow Insilco and Newco to determine whether to proceed to
Closing. For purposes of the following representations and warranties, the terms
"Company's knowledge" or "knowledge of Company" shall mean the best of the
actual knowledge of the managerial employees of Company and those agents and
representatives of Company who have devoted substantive attention to those
matters that are the subject of the representation and warranty, and the term
"Material Adverse Effect" shall mean a material adverse effect on the financial
condition, assets, liabilities, business or operations of Company taken as a
whole.
3.1. Corporate.
3.1.(a) Organization. Company is a corporation duly
organized, validly existing and in good standing (meaning it has
filed its most recent required annual report and has not filed
articles of dissolution with the Wisconsin Department of Financial
Institutions) under the laws of the State of Wisconsin. Company was
incorporated on July 8, 1969. No other company has merged with or
into Company.
3.1.(b) Corporate Power. Company has all requisite
corporate power and authority to own, operate and lease its
properties and to carry on its business as and where such is now
being conducted.
3.1.(c) Qualification. Company is duly licensed or
qualified to do business as a foreign corporation, and is in good
standing, in each jurisdiction wherein the character of the
5
10
properties owned or leased by it, or the nature of its business,
makes such licensing or qualification necessary, except where the
failure to be so qualified will not have a Material Adverse Effect.
Company has no locations outside of, and is not licensed or qualified
to do business in any state other than, the State of Wisconsin.
3.1.(d) Subsidiaries. Company does not have a direct or
indirect equity interest of more than 5% of the total equity
interests of any corporation or other entity.
3.1.(e) Corporate Documents, etc. The copies of the
Articles of Incorporation and By-Laws of Company, including any
amendments thereto, that have been delivered by Company to Insilco
and Newco are true, correct and complete copies of such instruments
as presently in effect. Except as set forth on Schedule 3.1(e), the
corporate minute book and stock records of Company that have been
furnished to Insilco and Newco for inspection are true, correct and
complete and accurately reflect all material corporate action taken
by the board of directors and shareholders of Company. The directors
and officers of Company are listed in Schedule 3.1(e).
3.1.(f) Capitalization of Company. The authorized capital
stock of Company consists entirely of 8,000 shares of Voting Common
Stock and 40,000 shares of Non-Voting Common Stock. No shares of such
capital stock are issued or outstanding as of the date hereof except
for 3,217 shares of Voting Common Stock and 26,445 shares of
Non-Voting Common Stock which are owned of record and beneficially by
shareholders of Company in the respective numbers set forth in
Schedule 3.1(f). All such shares of capital stock of Company are
validly issued, fully paid and nonassessable, except to the extent
provided by Section 180.0622(2)(b) of the WBCL as judicially
interpreted. Except as set forth on Schedule 3.1(f) (which sets forth
the names of the holders of the securities described therein, number
of such securities held, and exercise prices of such securities, if
applicable), there are no (i) securities convertible into or
exchangeable for any of Company's capital stock or other securities,
(ii) options, warrants or other rights to purchase or subscribe to
capital stock or other securities of Company or securities that are
convertible into or exchangeable for capital stock or other
securities of Company, or (iii) contracts, commitments, agreements,
understandings or arrangements of any kind relating to the issuance,
sale or transfer of any capital stock or other equity securities of
Company, any such convertible or exchangeable securities or any such
options, warrants or other rights.
3.1.(g) Authorization; Enforceability. The execution and
delivery of this Agreement and the other documents and instruments to
be executed and delivered by Company pursuant hereto and the
consummation of the transactions contemplated hereby and thereby have
been duly authorized by the unanimous vote or consent of the Board of
Directors of Company. Subject only to obtaining approval of the
Merger by the shareholders of Company, no other corporate act or
proceeding on the part of Company or its shareholders is necessary to
authorize this Agreement or the other documents and instruments to be
executed and delivered by Company pursuant hereto or the consummation
of the transactions contemplated hereby and thereby. This Agreement
constitutes and, when executed and delivered, the other documents and
instruments to be executed and delivered by Company pursuant hereto
will constitute, valid and binding agreements of Company, enforceable
in accordance with their respective terms.
3.2. No Violation. Except as set forth on Schedule 3.2, and except
for matters that would not have a Material Adverse Effect, neither the execution
and delivery of this Agreement or the other agreements to be executed and
delivered pursuant hereto, nor the consummation by Company and Shareholders of
the transactions contemplated hereby and thereby (a) will violate any statute,
law, ordinance, rule or regulation (collectively, "Laws") or any order, writ,
injunction, judgment, plan or decree (collectively, "Orders") of any court,
arbitrator, department, commission, board, bureau, agency, authority,
6
11
instrumentality or other body, whether federal, state, municipal, foreign or
other (collectively, "Government Entities"), (b) except for applicable
requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 0000 (xxx
"XXX Xxx"), will require any authorization, consent, approval, exemption or
other action by or notice to any Government Entity (including, without
limitation, under any "plant-closing" or similar law), or (c) subject to
obtaining approval of the Merger by the shareholders of Company, and the
consents referred to in Schedule 3.2, will violate or conflict with, or
constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, or will result in the termination of, or
accelerate the performance required by, or result in the creation of any Lien
upon any of the assets of Company under, any term or provision of the Articles
of Incorporation or By-Laws of Company or of any contract, commitment,
understanding, arrangement, agreement or restriction of any kind or character to
which Company or either Shareholder is a party or by which Company or either
Shareholder or any of its or their assets or properties may be bound or
affected.
3.3. Financial Statements. Included as Schedule 3.3 are true and
complete copies of the financial statements of Company consisting of (i)
consolidated balance sheets of Company as of December 31, 1997, 1996 and 1995,
and the related consolidated statements of income and cash flows for the years
then ended (including the notes contained therein or annexed thereto), which
have been compiled by Xxxxxxx X. Xxxxx, Certified Public Accountant, and (ii) an
unaudited consolidated balance sheet of Company as of December 31, 1998 (the
"Recent Balance Sheet"), and the related unaudited consolidated statements of
income and cash flows for the twelve (12) months then ended.
3.4. Cash and Cash Equivalents. As of the date hereof, Company has
cash and cash equivalents of not less than $3,100,000.
3.5. Tax Matters.
3.5.(a) Tax Returns Filed. To Company's knowledge, except
as set forth on Schedule 3.5(a), all federal, state, foreign, county,
local and other tax returns required to be filed on or before the
date hereof by or on behalf of Company have been timely filed (taking
into account all extensions of due dates) and when filed were true
and correct in all material respects (except for such failures to so
file or inaccuracies in such filings as would not, individually or in
the aggregate, have a Material Adverse Effect), and the taxes shown
as due thereon were paid or adequately accrued. True and complete
copies of (i) all federal and Wisconsin state tax returns or reports
filed by Company for each of its five (5) most recent fiscal years
and (ii) all other state tax returns or reports filed by Company for
its last fiscal year have been made available to Insilco and Newco.
Company has duly withheld and paid all taxes which it is required to
withhold and pay through the date hereof relating to salaries and
other compensation heretofore paid to the employees of Company.
3.5.(b) Tax Audits. The federal and state income tax
returns of Company have been audited by the Internal Revenue Service
and appropriate state taxing authorities for the periods and to the
extent set forth in Schedule 3.5(b), and Company has not received
from the Internal Revenue Service or from the tax authorities of any
state, county, local or other jurisdiction any written notice of
underpayment of taxes or other deficiency which has not been paid or
settled, and does not have knowledge of any such notice pending or
threatened. There are outstanding no agreements or waivers extending
the statutory period of limitations applicable to any tax return or
report.
3.5.(c) Consolidated Group. Company has never been a
member of an affiliated group of corporations that filed a
consolidated tax return.
7
12
3.5.(d) Other. Except as set forth in Schedule 3.5(d),
Company has not (i) filed any consent or agreement under Section
341(f) of the Internal Revenue Code of 1986, as amended (the "Code"),
(ii) applied for any tax ruling, (iii) entered into a closing
agreement with any taxing authority, (iv) filed an election under
Section 338(g) or Section 338(h)(10) of the Code (nor has a deemed
election under Section 338(e) of the Code occurred), (v) made any
payments, or been a party to an agreement (including this Agreement)
that under any circumstances could obligate it or Insilco to make
payments that will not be deductible because of Section 280G of the
Code, or (vi) been a party to any tax allocation or tax sharing
agreement. Company is not a "United States real property holding
corporation" within the meaning of Section 897 of the Code.
3.6. Absence of Certain Changes. Except as and to the extent set
forth in Schedule 3.6, since the date of the Recent Balance Sheet there has not
been:
3.6.(a) No Material Adverse Change. Any material adverse
change in the financial condition, assets, liabilities, business or
operations of Company taken as a whole;
3.6.(b) No Damage. Any material loss, damage or
destruction, whether covered by insurance or not, affecting Company's
business or properties;
3.6.(c) No Increase in Compensation. Except for (i)
employee bonuses in the amounts and to the persons set forth on
Schedule 3.6 and (ii) the transfer prior to the Closing to
Shareholders of title to their respective automobiles, any increase
in the compensation, salaries or wages payable or to become payable
to any employee or agent of Company (including, without limitation,
any increase or change pursuant to any bonus, pension, profit
sharing, retirement or other plan or commitment), or any bonus or
other employee benefit granted, made or accrued, or any increase in
the number of employees of Company employed in the Business;
3.6.(d) No Commitments. Any material contract or
transaction by Company (including, without limitation, any borrowing
or capital expenditure) other than in the ordinary course of business
consistent with past practice;
3.6.(e) No Dividends. Any declaration, setting aside or
payment of any dividend or any other distribution in respect of
Company's capital stock; any redemption, purchase or other
acquisition by Company of any capital stock of Company, or any
security relating thereto; or any other payment to any shareholder of
Company by virtue of being a shareholder;
3.6.(f) No Disposition of Property. Any sale, lease or
other transfer or disposition of any material properties or assets of
Company, except for the sale or lease of inventory items in the
ordinary course of business;
3.6.(g) No Indebtedness. Any indebtedness for borrowed
money incurred, assumed or guaranteed by Company;
3.6.(h) No Liens. Any Lien (as defined in Section
3.10.(a)) made on any of the properties or assets of Company, other
than Permitted Liens (as defined in Section 3.10.(a));
3.6.(i) No Amendment of Contracts. Any entering into,
amendment or termination by Company of any material contract, or any
release or waiver of material rights thereunder, other than in the
ordinary course of business;
8
13
3.6.(j) Loans and Advances. Except as set forth on
Schedule 3.6(j), any loan or advance (other than advances to
employees in the ordinary course of business for travel and
entertainment in accordance with past practice) to any person that
exceeds $500, including, but not limited to, any Affiliate (for
purposes of this Agreement, the term "Affiliate" shall mean and
include all shareholders, directors and officers of Company; the
spouse of any such person; any person who would be the heir or
descendant of any such person if he or she were not living; and any
entity in which any of the foregoing has a direct or indirect
interest, except through ownership of less than 5% of the outstanding
shares of any entity whose securities are listed on a national
securities exchange or traded in the national over-the-counter
market);
3.6.(k) Credit. Any grant of credit to any customer or
distributor of Company on terms or in amounts more favorable in any
material respect than those which have been extended to such person
in the past, any other material change in the terms of any credit
heretofore extended, or any other material change of Company's
policies or practices with respect to the granting of credit;
3.6.(l) Trade Rights. Any agreement or settlement
regarding the breach or infringement of any Trade Right (as defined
in Section 3.16) or similar rights, or any modification or agreement
to modify any existing rights with respect thereto;
3.6.(m) Discharge of Obligations. Any discharge,
satisfaction of, or agreement to satisfy or discharge any material
liability, other than current liabilities shown on the Recent Balance
Sheet and current liabilities incurred since the date of the Recent
Balance Sheet in the ordinary course of business;
3.7. Absence of Undisclosed Liabilities. To Company's knowledge,
except to the extent disclosed in the Recent Balance Sheet or on the Disclosure
Schedule, Company does not have any liabilities, commitments or obligations
(secured or unsecured, and whether accrued, absolute, contingent, direct,
indirect or otherwise), other than commercial liabilities and obligations
incurred since the date of the Recent Balance Sheet in the ordinary course of
business and consistent with past practice, other than any such items that,
individually or in the aggregate, would not have a Material Adverse Effect.
3.8. No Litigation. Except as set forth in Schedule 3.8, there is no
action, suit, arbitration, proceeding, investigation or inquiry, whether civil,
criminal or administrative ("Litigation") pending or, to Company's knowledge,
threatened against Company, its directors (in such capacity), its business or
any of its assets, and Company does not know of any basis for any Litigation.
Schedule 3.8 also identifies all Litigation to which Company or any of its
directors (in such capacity) have been parties since January 1, 1994. Except as
set forth in Schedule 3.8, neither Company nor its business or assets is subject
to any Order of any Government Entity.
3.9. Compliance With Laws and Orders.
3.9.(a) Compliance. Except as set forth in Schedule
3.9(a), Company to its knowledge (including each and all of its
operations, practices, properties and assets) is in compliance with
all applicable Laws and Orders, including, without limitation, those
applicable to discrimination in employment, occupational safety and
health, trade practices, competition and pricing, product warranties,
zoning, building and sanitation, employment, retirement and labor
relations or product advertising and the Environmental Laws (as
hereinafter defined), except for instances of noncompliance where
neither the costs and penalties associated with noncompliance nor the
costs associated with rectifying the noncompliance, individually or
in the aggregate with those associated with other instances of
noncompliance subject to this or similar exceptions under this
Section 3.9, would have a Material Adverse Effect. Except as set
forth in Schedule 3.9(a),
9
14
Company has not received written notice of any violation or alleged
violation, and is subject to no Liability for past or continuing
violation of, any Laws or Orders. To Company's knowledge, except as
set forth on Schedule 3.9(a), all material reports and returns
required to be filed by Company with any Government Entity have been
filed, and were accurate and complete in all material respects when
filed.
3.9.(b) Licenses and Permits. Company to its knowledge has
all material licenses, permits, approvals, authorizations and
consents of all Government Entities required for the conduct of the
Business (as presently conducted) and operation of the facilities
used in the Business. To Company's knowledge, all such licenses,
permits, approvals, authorizations and consents are in full force and
effect and will not be affected or made subject to loss, limitation
or any obligation to reapply as a result of the transactions
contemplated hereby. To Company's knowledge except as set forth in
Schedule 3.9(b), Company (including its operations, practices,
properties and assets) is and has been in compliance with all such
permits and licenses, approvals, authorizations and consents, except
for instances of noncompliance where neither the costs and penalties
associated with noncompliance nor the costs associated with
rectifying the noncompliance, individually or in the aggregate with
those associated with other instances of noncompliance subject to
this or similar exceptions under this Section 3.9, would have a
Material Adverse Effect.
3.9.(c) Environmental Matters. The applicable Laws
relating to pollution or protection of the environment, including
Laws relating to emissions, discharges, generation, storage, releases
or threatened releases of pollutants, contaminants, chemicals or
industrial, toxic, hazardous or petroleum or petroleum-based
substances or wastes ("Waste") into the environment (including,
without limitation, ambient air, surface water, ground water, land
surface or subsurface strata) or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Waste including, without
limitation, the Comprehensive Environmental Response Compensation
Liability Act ("CERCLA"), as amended, and its state and local
counterparts are herein collectively referred to as the
"Environmental Laws." Except as set forth on Schedule 3.9(c),
Company, to its knowledge, is in compliance with all limitations,
restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in the Environmental
Laws or contained in any regulations, code, plan, order, decree,
judgment, injunction, notice or demand letter issued, entered,
promulgated or approved thereunder, except for instances of
noncompliance where neither the costs and penalties associated with
noncompliance nor the costs associated with rectifying the
noncompliance, individually or in the aggregate with those associated
with other instances of noncompliance subject to this or similar
exceptions under this Section 3.9, would have a Material Adverse
Effect. Except as set forth in Schedule 3.9(c), there is no
Litigation or any demand, claim, hearing or notice of violation
pending or, to Company's knowledge, threatened against Company and,
to Company's knowledge, no basis for any such Litigation or any
demand, claim, hearing or notice of violation relating in any way to
the Environmental Laws or any Order issued, entered, promulgated or
approved thereunder. Company has made available to Insilco and Newco
copies of all environmental reports and other environmental
assessments in the possession of Company or any of Company's agents
or representatives of any property relating to or impacting Company's
assets or liabilities or the Business, now or at any time in the
past, whether conducted or issued by a Government Entity, independent
third party or otherwise.
3.10. Title to and Condition of Properties.
3.10.(a) Marketable Title. Company has good and marketable
title to all assets and properties owned by Company, including,
without limitation, all properties (tangible and intangible)
reflected in the Recent Balance Sheet, except for inventory disposed
of in the ordinary
10
15
course of business or the disposition of immaterial assets since the
date of such Recent Balance Sheet, free and clear of all mortgages,
liens (statutory or otherwise), security interests, claims, pledges,
licenses, equities, options, conditional sales contracts,
assessments, levies, easements, covenants, reservations,
encroachments, hypothecations, equities, restrictions, rights-of-way,
exceptions, limitations, charges, possibilities of reversion, rights
of refusal or encumbrances of any nature whatsoever (collectively,
"Liens") except those described in Schedule 3.10(a) and, in the case
of real property, Liens for taxes not yet due or which are being
contested in good faith by appropriate proceedings (and which have
been sufficiently accrued or reserved against in the Recent Balance
Sheet), municipal and zoning ordinances and easements for public
utilities, none of which interfere with the use of the property as
currently utilized ("Permitted Liens"). Company's title thereto will
not be affected in any way by the transactions contemplated hereby.
Except as set forth in Schedule 3.10(a), Company is not using, in the
present conduct of the Business, any properties, rights or assets
that are not owned, licensed or leased by it.
3.10.(b) Condition. Except as set forth on Schedule
3.10(b), all tangible property (real or personal) owned or leased by
Company is in good operating condition and repair in all material
respects (ordinary wear and tear excepted), free from any material
defects, and is sufficient to carry on the business of Company as
conducted during the preceding 12 months. To Company's knowledge,
except as set forth on Schedule 3.10(b), all buildings and other
structures owned or otherwise utilized by Company are in good
condition and repair and have no material structural defects or
material defects affecting the plumbing, electrical, sewerage, or
heating, ventilating or air conditioning systems.
3.10.(c) No Condemnation or Expropriation. Neither the
whole nor any portion of the property or any other assets of Company
is subject to any Order to be sold or is being condemned,
expropriated or otherwise taken by any Government Entity with or
without payment of compensation therefor, nor to Company's knowledge
has any such condemnation, expropriation or taking been proposed.
3.10.(d) Real Property. Schedule 3.10(d) lists all real
property currently owned or leased by Company (the "Real Property"),
including a description of all land, and all encumbrances, easements
or rights of way of record (or, if not of record, of which Company
has notice or knowledge) granted on or appurtenant to or otherwise
affecting such Real Property, the zoning classification thereof, and
all plants, buildings or other structures located thereon. Schedule
3.10(d) also lists all real property previously owned or leased at
any time by Company or any predecessor thereto. There are now in full
force and effect duly issued certificates of occupancy permitting the
Real Property and improvements located thereon to be legally used and
occupied as the same are now constituted. All of the Real Property
has rights of access to dedicated public highways. To Company's
knowledge, no fact or condition exists which would prohibit or
adversely affect the ordinary rights of access to and from the Real
Property from and to the existing highways and roads and there is no
pending or threatened restriction or denial, governmental or
otherwise, upon such ingress and egress. To Company's knowledge,
there is not (i) any claim of adverse possession or prescriptive
rights involving any of the Real Property, (ii) any structure located
on any Real Property which encroaches on or over the boundaries of
neighboring or adjacent properties or (iii) any structure of any
other party which encroaches on or over the boundaries of any of such
Real Property. To Company's knowledge, none of the Real Property is
located in a flood plain, flood hazard area, wetland or lakeshore
erosion area within the meaning of any Law, regulation or ordinance.
No public improvements have been commenced and to Company's knowledge
none are planned which in either case may result in special
assessments against or otherwise materially adversely affect any Real
Property. Company has no notice or knowledge of any (A) planned or
proposed increase in assessed valuations of any Real Property,
11
16
(B) Order requiring repair, alteration, or correction of any existing
condition affecting any Real Property or the systems or improvements
thereat, (C) condition or defect which could give rise to an order of
the sort referred to in "(B)" above, (D) underground storage tanks,
or any structural, mechanical, or other defects of material
significance affecting any Real Property or the systems or
improvements thereat (including, but not limited to, inadequacy for
normal use of mechanical systems or disposal or water systems at or
serving the Real Property), or (E) work that has been done or labor
or materials that has or have been furnished to any Real Property
during the period of six (6) months immediately preceding the date of
this Agreement for which liens could be filed against any of the Real
Property.
3.11. Insurance. Set forth in Schedule 3.11 is a complete and
accurate list and description of all policies of fire, liability, product
liability, workers compensation, health and other forms of insurance presently
in effect with respect to the business and properties of Company, including
coverage limits with respect to such policies, true and correct copies of which
have heretofore been made available to Insilco and Newco. Schedule 3.11 sets
forth a brief description of each pending claim in excess of $10,000 under each
such policy other than health or disability. To Company's knowledge, all such
policies are valid, outstanding and enforceable policies and no such policy (nor
any previous policy) provides for or is subject to any currently enforceable
retroactive rate or premium adjustment, loss sharing arrangement or other actual
or contingent liability arising wholly or partially out of events arising prior
to the date hereof. No written notice of cancellation or termination has been
received with respect to any such policy, and Company has no knowledge of any
act or omission of Company which could result in cancellation of any such policy
prior to its scheduled expiration date. Company has not been refused any
insurance with respect to any aspect of the operations of the business nor has
its coverage been limited by any insurance carrier to which it has applied for
insurance or with which it has carried insurance during the last three years.
Company has duly and timely made all claims it has been entitled to make under
each policy of insurance. Company has made copies of all product liability and
general liability insurance policies in effect since January 1, 1994 available
to Insilco for inspection. There is no claim by Company pending under any such
policies as to which coverage has been questioned, denied or disputed by the
underwriters of such policies, and Company does not know of any basis for denial
of any claim under any such policy. Company has not received any written notice
from or on behalf of any insurance carrier issuing any such policy that
insurance rates therefor will hereafter be substantially increased (except to
the extent that insurance rates may be increased for all similarly situated
risks) or that there will hereafter be a cancellation or an increase in a
deductible (or an increase in premiums in order to maintain an existing
deductible) or nonrenewal of any such policy. To Company's knowledge, such
policies are sufficient in all material respects for compliance by Company with
all requirements of law and with the requirements of all material contracts to
which Company is a party.
3.12. Contracts and Commitments.
3.12.(a) Real Property Leases. Schedule 3.12(a) lists each
of Company's leases of real property.
3.12.(b) Personal Property Leases. Except as set forth in
Schedule 3.12(b), Company has no leases of personal property
involving the payment of consideration or other expenditure to be
incurred by Company after the date hereof in excess of $50,000 or
involving performance over a period of more than 12 months.
3.12.(c) Purchase Commitments. Except as set forth on
Schedule 3.12(c), Company has no purchase commitments for inventory
items or supplies that, together with amounts on hand, constitute in
excess of twelve months normal usage. Except as set forth on Schedule
12
17
3.12(c), Company has no individual purchase contracts or commitments
or group of related purchase contracts or commitments that aggregate
in excess of $50,000.
3.12.(d) Sales Related Commitments. Except as set forth in
Schedule 3.12(d), Company has no outstanding contracts or commitments
to customers (including, without limitation, service agreements,
license agreements, express warranty obligations or written sales
proposal that will result in expenditures or costs incurred by
Company, and/or revenues received by Company, in excess of $50,000
related to any one customer (or affiliated groups of any customer).
Except as set forth in Schedule 3.12(d), Company has no contracts or
commitments with distributors, value added resellers, consultants,
sales representatives or implementers. Schedule 3.12(d) contains a
true, correct and complete copy of Company's standard warranty or
warranties for products provided by Company and identifies all
material instances in which Company has expressly agreed in writing
to significant variations thereof.
3.12.(e) Contracts With Employees and Others. Except as
set forth on Schedule 3.12(e), Company has no written or oral,
agreement, understanding, contract or commitment with any employee or
agent.
3.12.(f) Powers of Attorney. Company has not given a power
of attorney, which is currently in effect, to any person, firm or
corporation for any purpose whatsoever.
3.12.(g) Collective Bargaining Agreements. Except as set
forth on Schedule 3.12(g), Company is not a party to any collective
bargaining agreements with any unions, guilds, shop committees or
other collective bargaining groups.
3.12.(h) Loan Agreements. Except as set forth in Schedule
3.12(h), Company is not obligated under any loan agreement,
promissory note, letter of credit, or other evidence of indebtedness
as a signatory, guarantor or otherwise.
3.12.(i) Guarantees. Except as disclosed on Schedule
3.12(i), Company has not guaranteed the payment or performance of any
person, firm or corporation, agreed to indemnify any person (other
than pursuant to purchase orders or invoices entered into in the
ordinary course of business) or act as a surety, or otherwise agreed
to be contingently or secondarily liable for the obligations of any
person.
3.12.(j) Surety, Bid and Performance Bonds. Set forth on
Schedule 3.12(j) is a list and description of all surety, bid,
performance bonds and other similar instruments securing the
obligations, if any, of Company with respect to Company's assets or
the operation of the Business. Also set forth on Schedule 3.12(j) is
a list and description of all material letters of credit, surety, bid
and performance bonds and other similar instruments in favor of
Company that secure any outstanding payment obligations of a third
party to Company in respect of the Business.
3.12.(k) Governmental Contracts. Except as set forth on
Schedule 3.12(k), Company is not a party to any contract with any
federal governmental body.
3.12.(l) Restrictive Agreements. Company is not a party to
nor is it bound by any agreement requiring Company to assign any
interest in any trade secret or proprietary information, or
prohibiting or restricting Company from competing in any business or
geographical area or soliciting customers or otherwise restricting it
from carrying on its business anywhere in the world.
13
18
3.12.(m) Other Material Contracts. Company has no lease,
contract or commitment of any nature involving payment obligations or
other expenditure by Company, or requiring Company to incur any
costs, in excess of $50,000, or which is otherwise individually
material to the operations of Company, except as explicitly described
in Schedule 3.12(m) or in any other Schedule.
3.12.(n) No Default. Company is not in default under any
lease, contract or commitment, nor to Company's knowledge has any
event or omission occurred which through the passage of time or the
giving of notice, or both, would constitute a default by Company
thereunder or cause the acceleration of any of Company's obligations
or result in the creation of any Lien on any of the assets owned,
used or occupied by Company except for any thereof as will not,
individually or in the aggregate, have a Material Adverse Effect. To
Company's knowledge, no third party is in default under any lease,
contract or commitment to which Company is a party, nor has any event
or omission occurred which, through the passage of time or the giving
of notice, or both, would constitute a default thereunder or give
rise to an automatic termination, or the right of discretionary
termination, thereof, except such defaults which will not,
individually or in the aggregate, have a Material Adverse Effect.
3.12.(o) Hedge Contracts and Derivatives. Except as
disclosed on Schedule 3.12(o), Company has no currency xxxxxx,
derivatives or any other type of instrument intended to eliminate or
diminish financial risk.
3.13. Labor Matters. Except to the extent set forth in Schedule 3.13,
(a) Company to its knowledge is in compliance with all applicable laws
respecting employment and employment practices, terms and conditions of
employment and wages and hours, and is not engaged in any unfair labor practice,
except for instances of noncompliance where neither the costs and penalties
associated with noncompliance nor the costs associated with rectifying the
noncompliance, individually or in the aggregate with those associated with other
instances of noncompliance subject to this exception, would have a Material
Adverse Effect; (b) there is no unfair labor practice charge or complaint
against Company pending or to Company's knowledge threatened; (c) there is no
labor strike, general labor dispute, request for representation, slowdown or
stoppage actually pending or to Company's knowledge threatened against or
affecting Company nor any secondary boycott with respect to products of Company;
and (d) there are no administrative charges or court complaints against Company
concerning alleged employment discrimination or other employment related matters
pending or to Company's knowledge threatened before the U.S. Equal Employment
Opportunity Commission or any Government Entity.
3.14. Employee Benefit Plans.
3.14.(a) Disclosure. Schedule 3.14(a) sets forth all
pension, thrift, savings, profit sharing, retirement, incentive bonus
or other bonus, medical, dental, life, accident insurance, benefit,
employee welfare, disability, group insurance, stock purchase, stock
option, stock appreciation, stock bonus, executive or deferred
compensation, hospitalization and other similar fringe or employee
benefit plans, programs and arrangements, and severance agreements or
plans, vacation and sick leave plans, programs, arrangements and
policies, including, without limitation, all "employee benefit plans"
(as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")), all employee manuals and
other material written Company policies applicable to employees which
are provided to, for the benefit of, or relate to, any persons
employed by Company ("Company Employees"). The items described in the
foregoing sentence are hereinafter sometimes referred to collectively
as "Employee Plans," and each individually as an "Employee Plan."
True and correct copies of all the Employee Plans, including all
amendments thereto, have heretofore been made available to Insilco
and Newco except
14
19
that, where an Employee Plan constitutes an individual agreement
between Company and an employee and Company has entered into
substantially similar agreements with multiple employees, Company has
made available a true and correct copy of a representative form of
such agreement to Insilco and Newco and disclosed to Insilco and
Newco any material deviations therefrom. No Employee Plan is a
"multiemployer plan" (as defined in Section 4001 of ERISA), and
Company has never contributed nor been obligated to contribute to any
such multiemployer plan.
3.14.(b) Title IV of ERISA. Company does not maintain or
contribute to, and has never maintained or contributed to, a benefit
plan that is or was subject to Title IV of ERISA or Section 412 of
the Code.
3.14.(c) Prohibited Transactions, etc. To Company's
knowledge, there have been no "prohibited transactions" within the
meaning of Section 406 or 407 of ERISA or Section 4975 of the Code
for which a statutory or administrative exemption does not exist with
respect to any Employee Plan and no event or omission has occurred to
Company's knowledge in connection with which Company or any of its
assets or any Employee Plan, directly or indirectly, could be subject
to any liability under ERISA, the Code or any other Law or Order
applicable to any Employee Plan, or under any agreement, instrument,
Law or Order pursuant to or under which Company has agreed to
indemnify or is required to indemnify any person against liability
incurred under any such Law or Order.
3.14.(d) Full Funding. The funds available under each
Employee Plan which is intended to be a funded plan equal or exceed
the amounts required to be paid, or which would be required to be
paid if such Employee Plan were terminated, on account of rights
vested or accrued as of the Closing Date (using the actuarial methods
and assumptions then used by Company's actuaries in connection with
the funding of such Employee Plan).
3.14.(e) Controlled Group; Affiliated Service Group;
Leased Employees. Company is not and never has been a member of a
"controlled group" of corporations as defined in Section 414(b) of
the Code or in common control with any unincorporated trade or
business as determined under Section 414(c) of the Code. Company is
not and never has been a member of an "affiliated service group"
within the meaning of Section 414(m) of the Code.
3.14.(f) Payments and Compliance. Except as disclosed on
Schedule 3.14(f), with respect to each Employee Plan, (i) all
payments due from Company to date have been made and all amounts
properly accrued to date as liabilities of Company which have not
been paid have been properly recorded on the books of Company and are
either reflected on the Recent Balance Sheet or have been incurred in
the ordinary course of business since December 31, 1998; (ii) Company
has complied with, and each such Employee Plan conforms in form and
operation to, all applicable laws and regulations, including but not
limited to ERISA and the Code, in all material respects and all
reports and information relating to such Employee Plan required to be
filed with any governmental entity have been timely filed; (iii) no
contributions have been made that would subject the Company or any
Company Employee to any liability (including, but not limited to, an
excise tax) under ERISA or the Code; (iv) all material reports and
information relating to each such Employee Plan required to be
disclosed or provided by Company to participants or their
beneficiaries are accurate in all material respects and have been
timely disclosed or provided by Company; (v) each such Employee Plan
which is intended to qualify under Section 401 of the Code has
received a favorable determination letter from the Internal Revenue
Service with respect to such qualification, its related trust has
been determined to be exempt from taxation under Section 501(a) of
the Code, and nothing has occurred since the date of such letter that
has or is likely to adversely affect such qualification or exemption;
(vi) there are no actions, suits or claims pending (other than
15
20
routine claims for benefits) or threatened with respect to such
Employee Plan or against the assets of such Employee Plan; and (vii)
no Employee Plan is a plan which is established and maintained
outside the United States primarily for the benefit of individuals
substantially all of whom are nonresident aliens.
3.14.(g) Post-Retirement Benefits. No Employee Plan
provides benefits, including, without limitation, death or medical
benefits (whether or not insured) with respect to current or former
Company employees beyond their retirement or other termination of
service other than (i) coverage mandated by applicable law, (ii)
death or retirement benefits under any Employee Plan that is an
employee pension benefit plan, (iii) deferred compensation benefits
accrued as liabilities on the books of Company (including the Recent
Balance Sheet), (iv) disability benefits under any Employee Plan that
is an employee welfare benefit plan and which have been fully
provided for by insurance or otherwise or (v) benefits in the nature
of severance pay.
3.14.(h) No Triggering of Obligations. Except as set forth
on Schedule 3.14(h), the consummation of the transactions
contemplated by this Agreement will not (i) entitle any current or
former employee of Company to severance pay, unemployment
compensation or any other payment, except as expressly provided in
this Agreement, (ii) accelerate the time of payment or vesting, or
increase the amount of compensation due to any such employee or
former employee or (iii) result in any prohibited transaction
described in Section 406 of ERISA or Section 4975 of the Code for
which an exemption is not available.
3.14.(i) Delivery of Documents. There has been made
available to Insilco and Newco, with respect to each Employee Plan:
3.14.(i)(i) a copy of the annual report, if required under
ERISA, with respect to each such Employee Plan for the last two
years;
3.14.(i)(ii) a copy of the summary plan description,
together with each summary of material modifications, required under
ERISA with respect to such Employee Plan, all material employee
communications relating to such Employee Plan, and, unless the
Employee Plan is embodied entirely in an insurance policy to which
Company is a party, a true and complete copy of such Employee Plan;
3.14.(i)(iii) if the Employee Plan is funded through a
trust or any third party funding vehicle (other than an insurance
policy), a copy of the trust or other funding agreement and the
latest financial statements thereof; and
3.14.(i)(iv) the most recent determination letter received
from the Internal Revenue Service with respect to each Employee Plan
that is intended to be a "qualified plan" under Section 401 of the
Code.
With respect to each Employee Plan for which an annual report has been filed and
made available to Insilco and Newco pursuant to clause (i) of this Section
3.14.(i), no material adverse change has occurred with respect to the matters
covered by the latest such annual report since the date thereof.
3.14.(j) Future Commitments. Company has no announced plan
or legally binding commitment to create any additional Employee Plans
or to amend or modify any existing Employee Plan.
16
21
3.15. Employment; Compensation. Schedule 3.15 contains a true and
correct list of all employees of Company as of the date hereof, including each
employee's location of employment, and all forms of compensation (including the
respective amounts) paid to such employees in the year ended December 31, 1998
(other than health, disability and other benefits subject to plans available to
employees generally). Since January 1, 1999, Company is not paying or has not
paid or agreed to pay, directly or indirectly, any compensation, fee or bonus to
any employee of Company in excess of the rates or plans identified on Schedule
3.6, Schedule 3.14.(a) or Schedule 3.15. Company is not paying or has not paid
or agreed to pay, directly or indirectly, any compensation, fee or bonus to any
employee of Company in connection with the transactions contemplated by this
Agreement. Schedule 3.15 also sets forth a list by location in the United States
of the number of former employees of Company whose employment was terminated
within the 90-day period preceding the date of this Agreement.
3.16. Trade Rights. Schedule 3.16 lists all trademarks, trade dress,
service marks, trade names, brand names, copyright registrations, patents and
all registrations and applications for the foregoing in which Company now has
any interest, specifying whether such items are owned, controlled, used or held
(under license or otherwise) by Company, and also indicating which of such items
are registered. To conduct the business of Company, as such is currently being
conducted, Company does not require any Trade Rights (as defined below) that it
does not already have. To Company's knowledge, Company is not infringing and has
not infringed any Trade Rights or any proprietary of another in the operation of
the business of Company, nor is any other person infringing the Trade Rights or
any proprietary rights of Company. Company is not aware of any pending patent
applications belonging to others which would be infringed by Company if a patent
which included such claims were granted on such pending applications. Company
has not granted any license or made any assignment of any Trade Right listed on
Schedule 3.16 except as set forth in Schedule 3.16. Except as set forth on
Schedule 3.16, Company does not pay any royalties or other consideration for the
right to use any Trade Rights of others. There is no Litigation pending or to
Company's knowledge threatened to challenge Company's right, title and interest
with respect to its continued use and right to preclude others from using any
Trade Rights of Company. To Company's knowledge, the consummation of the
transactions contemplated hereby will not alter or impair any Trade Rights owned
or used by Company. As used herein, the term "Trade Rights" shall mean and
include: (a) all trademark rights, business identifiers, trade dress, service
marks, trade names and brand names, all registrations thereof and applications
therefor; (b) all copyrights, copyright registrations and copyright
applications, and all other rights associated with the foregoing and the
underlying works of authorship; (c) all patents and patent applications, and all
international proprietary rights associated therewith; (d) all contracts or
agreements granting any right, title, license or privilege under the
intellectual property rights of any third party; (e) all inventions, mask works
and mask work registrations, know-how, discoveries, improvements, designs, trade
secrets, shop and royalty rights and all other types of intellectual property;
(f) all intellectual property relating to software; and (g) all internet
addresses, sites and domain names.
3.17. Major Customers and Suppliers.
3.17.(a) Major Customers. Schedule 3.17(a) contains a list
of the ten (10) largest customers of Company for each of the two (2)
most recently completed fiscal years (determined on the basis of the
total dollar amount of net sales) showing the total dollar amount of
net sales to each such customer during each such year. Company has
not received notice that any of the customers listed on Schedule
3.17(a) will not continue to be customers of the business of Company
after the Closing at substantially the same level of purchases as
heretofore.
3.17.(b) Major Suppliers; Dealers and Distributors.
Schedule 3.17(b) contains a list of the ten (10) largest suppliers to
Company for fiscal 1998 (determined on the basis of the total dollar
amount of purchases). Company has not received notice that any of the
suppliers listed on Schedule 3.17(b) will not be willing to continue
to be suppliers to the business of Company after the
17
22
Closing and will not continue to supply Company with substantially
the same quantity and quality of goods at competitive prices.
Schedule 3.17(b) also contains a list by general product division of
all sales representatives, dealers and franchisees of Company,
together with representative copies of all sales representative,
dealer and franchise contracts and policy statements, and a
description of all substantial modifications or exceptions.
3.18. Product Warranty and Product Liability. Schedule 3.18 contains
a history of returns and warranty repair, replacement and credit by water cooled
units and air cooled units for each of the three (3) preceding fiscal years.
Schedule 3.18 also contains a description of all product liability Litigation
relating to products manufactured or sold, or services rendered, which are
presently pending or which to Company's knowledge are threatened, or which have
been asserted or commenced against Company within the last three (3) years, in
which a party thereto either requests injunctive relief or alleges damages
(whether or not covered by insurance). To Company's knowledge, there are no
material defects in design, construction or manufacture of Products which would
materially adversely affect performance or create an unusual risk of injury to
persons or property. None of the Products has been the subject of any recall
campaign by Company and, to Company's knowledge, no facts or conditions exist
which could reasonably be expected to result in such a recall campaign. To
Company's knowledge, the Products have been designed and manufactured so as to
meet and comply with all governmental standards and specifications currently in
effect. To Company's knowledge, such Products have received all governmental
approvals necessary to allow for such Products' sale. As used in this Section
3.18, the term "Products" means any and all products currently or at any time
manufactured, distributed or sold by Company.
3.19. Bank Accounts. Schedule 3.19 sets forth the names and locations
of all banks, trust companies, savings and loan associations and other financial
institutions at which Company maintains a safe deposit box, lock box or
checking, savings, custodial or other account of any nature, the type and number
of each such account and the signatories therefore, a description of any
compensating balance arrangements, and the names of all persons authorized to
draw thereon, make withdrawals therefrom or have access thereto.
3.20. Affiliates' Relationships to Company.
3.20.(a) Contracts With Affiliates. All leases, contracts,
agreements or other arrangements between Company and any (i)
Shareholder; (ii) member of a Shareholder's immediate family; (iii)
director of Company; or (iv) trust in which any of the foregoing is a
trustee or beneficiary (any person in clauses (i) through (iv) above
being hereinafter referred to as an "Insider Affiliate") are
described on Schedule 3.20(a). To Company's knowledge, all leases,
contracts, agreements or other arrangements between Company and any
other Affiliate are described on Schedule 3.20(a).
3.20.(b) No Adverse Interests. Except as set forth on
Schedule 3.20(b), no Insider Affiliate nor, to Company's knowledge,
other Affiliate has any direct or indirect interest in (i) any entity
which does business with Company or is competitive with Company's
business; or (ii) any property, asset or right which is used by
Company in the conduct of its business.
3.20.(c) Obligations. All obligations of any Insider
Affiliate to Company, and all obligations of Company to any Insider
Affiliate, are listed on Schedule 3.20(c). To Company's knowledge,
all obligations of any other Affiliate to Company, and all
obligations of Company to any other Affiliate, are listed on Schedule
3.20(c).
3.21. Assets Necessary to Business. Except as otherwise provided in
Section 3.10, Company owns, leases or licenses all property and assets, whether
tangible or intangible, necessary to
18
23
permit Surviving Corporation to carry on the business of Company in all material
respects as presently conducted.
3.22. Records. To Company's knowledge, the books and records of
Company (including the assets and liabilities of Company) are complete and
correct in all material respects, and all material transactions have been
accurately set forth in such books and records.
3.23. Year 2000 Compliance. A "Year 2000 Defect" as used herein means
a failure of any property, equipment or assets, including but not limited to
computer software, databases, hardware, controls and peripherals, to (a) operate
and produce data on and after January 1, 2000 (including taking into effect that
such year is a leap year), or use data based on time periods on and after
January 1, 2000 (including taking into effect that such year is a leap year),
accurately and without delay, interruption or error relating to the fact that
the time at which and the date on which such software is operating is on or
after 12:00 a.m. on January 1, 2000 (including taking into effect that such year
is a leap year) and (b) accept, calculate, process, maintain, store and output,
accurately and without delay, interruption or error, all times or dates, or
both, whether before, on or after 12:00 a.m. January 1, 2000 (including taking
into effect that such year is a leap year), and any time periods determined or
to be determined based on such times or date or both. Schedule 3.23 describes
the efforts Company has made to determine whether any of its assets or
properties, or any of its vendors or customers, is subject to a Year 2000 Defect
that could have a Material Adverse Effect, and a brief description of the
results and/or anticipated results of such efforts. Company has no obligations
under warranty agreements, service agreements or otherwise to rectify a Year
2000 Defect of any customer or to indemnify any customer in the event Company
experiences a Year 2000 Defect. Company has not been notified that any specific
vendor or supplier of Company expects or is likely to experience a Year 2000
Defect that could cause a Material Adverse Effect.
3.24. Share Repurchases. Schedule 3.24 sets forth all repurchases by
Company of Common Stock in the past two (2) years, and includes the amount of
such shares repurchased, the date of such repurchases, the price paid by Company
for each such share repurchased, and the names of the sellers of such shares.
Company has made available to Insilco and Newco true and correct documentation
of each transaction referenced in Schedule 3.24.
4. REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS
Shareholders jointly and severally make the following representations
and warranties to Insilco and Newco, each of which is true and correct on the
date hereof other than as specifically disclosed in the Disclosure Schedule or
in any revisions to the Disclosure Schedule delivered to Insilco and Newco as
provided for in Section 6.8, and each of which shall survive the Closing of the
transactions provided for herein.
4.1. Power. Each Shareholder has full power, legal right and
authority to enter into, execute and deliver this Agreement and the other
agreements, instruments and documents contemplated hereby and to carry out the
transactions contemplated hereby.
4.2. Validity. This Agreement has been duly and validly executed and
delivered by each Shareholder and is, and when executed and delivered by each
Shareholder each other agreement, instrument and document contemplated hereby
will be, the legal, valid and binding obligation of such Shareholder,
enforceable in accordance with their respective terms.
4.3. No Violation. Neither the execution and delivery of this
Agreement or the Consulting Agreements nor the consummation by Shareholders of
the transactions contemplated hereby or thereby (a) will violate any Law or any
Order or (b) will violate or conflict with, or constitute a default (or
19
24
an event which, with notice or lapse of time, or both, would constitute a
default) under, or will result in the termination of, or accelerate the
performance required by, any term or provision of any contract, commitment,
understanding, arrangement, agreement or restriction of any kind or character to
which any Shareholder is a party or by which any Shareholder or any of his, her
or their assets or properties may be bound or affected.
4.4. Due Diligence Response. In response to the due diligence
inquiries made by Insilco in connection with Insilco's independent investigation
referenced in Section 5.4, the managerial employees of Company (including,
without limitation, Shareholders) and those agents and representatives of
Company who have devoted substantive attention to those matters which are the
subject of particular inquiries have endeavored to provide responsive
information which is accurate and complete in all material respects, to the best
of the actual knowledge of those managerial employees (including, without
limitation, Shareholders), agents and representatives providing such responsive
information. Furthermore, to the best of the actual knowledge of those
managerial employees (including, without limitation, Shareholders), agents and
representatives providing such responsive information, no such responsive
information omits to state a material fact necessary to make such responsive
information, in light of the circumstances in which it was provided, not
misleading.
5. REPRESENTATIONS AND WARRANTIES OF NEWCO AND INSILCO
Insilco and Newco jointly and severally make the following
representations and warranties to Company, each of which is true and correct on
the date hereof other than as specifically disclosed in the Schedules hereto
delivered by Insilco and Newco at the time of the execution of this Agreement,
each of which shall survive the Closing of the transactions provided for herein.
5.1. Corporate.
5.1.(a) Organization. Newco is a corporation duly
organized and validly existing under the laws of the State of
Wisconsin. Insilco is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware.
5.1.(b) Corporate Power. Insilco and Newco have all
requisite corporate power to enter into this Agreement and the other
documents and instruments to be executed and delivered by Insilco and
Newco and to carry out the transactions contemplated hereby and
thereby.
5.2. Authority. The execution and delivery of this Agreement and the
other documents and instruments to be executed and delivered by Insilco and
Newco pursuant hereto and the consummation of the transactions contemplated
hereby and thereby have been duly authorized by all requisite corporate action
on the part of Insilco and Newco. No other corporate act or proceeding on the
part of Insilco, Newco or their shareholders is necessary to authorize this
Agreement or the other documents and instruments to be executed and delivered by
Insilco and Newco pursuant hereto or the consummation of the transactions
contemplated hereby and thereby. This Agreement constitutes and, when executed
and delivered, the other documents and instruments to be executed and delivered
by Insilco and Newco pursuant hereto will constitute, valid and binding
agreements of Insilco and Newco, enforceable in accordance with their respective
terms.
5.3. No Violation. Except as set forth on Schedule 5.3, neither the
execution and delivery of this Agreement or the other documents and instruments
to be executed and delivered by Insilco and Newco pursuant hereto, nor the
consummation by Insilco and Newco of the transactions contemplated hereby and
thereby (a) will violate any applicable Law or Order, (b) except for applicable
requirements of the HSR Act, will require any authorization, consent, approval,
exemption or other action by or notice to
20
25
any Government Entity (including, without limitation, under any "plant-closing"
or similar law), or (c) subject to obtaining the consents referred to in
Schedule 5.3, will violate or conflict with, or constitute a default (or an
event which, with notice or lapse of time, or both, would constitute a default)
under, or will result in the termination of, or accelerate the performance
required by, or result in the creation of any Lien, upon any of the assets of
Insilco or Newco under, any term or provision of the articles of incorporation
or by-laws of Insilco or Newco or of any contract, commitment, understanding,
arrangement, agreement or restriction of any kind or character to which Insilco
or Newco is a party or by which Insilco or Newco or any of its assets or
properties may be bound or affected.
5.4. Due Diligence Investigation. Insilco has sufficient knowledge
and experience in financial and business matters to enable it to evaluate the
merits and risks of the transactions contemplated by this Agreement. Insilco has
been given access to the information it requested regarding Company, including
the opportunity to ask questions of and receive answers from the managerial
employees of Company concerning the business activities and assets of Company
and to obtain information which Insilco deems necessary or advisable in order to
evaluate the merits and risks of the transactions contemplated by this
Agreement. Insilco has made its own independent investigation of Company, and is
relying upon that independent investigation to evaluate the merits and risks of
the transactions contemplated by this Agreement, and not upon any
representations and warranties of Company or Shareholders, other than those
expressly provided for in this Agreement.
5.5. Audit Status. Neither Insilco nor Newco has been advised by
Insilco Accountants that any reason or condition exists that will prevent
Insilco Accountants from (a) completing an audit of Company's financial
statements as of and for the interim period commencing October 1, 1998 and
ending June 30, 1999 (the "Interim Statements") in accordance with Securities
and Exchange Commission requirements and at reasonable expense or (b) delivering
their unqualified opinion with respect thereto at reasonable expense.
6. COVENANTS
6.1. Consulting Agreements. Newco and Shareholders shall deliver to
each other at Closing a Consulting Agreement, substantially in the form of
Exhibit A hereto, duly executed by Xxxxx Xxxxx, and a Consulting Agreement,
substantially in the form of Exhibit B hereto, duly executed by Xxxxxxx Xxxxx
(together, the "Consulting Agreements").
6.2. Noncompetition; Confidentiality. Subject to the Closing, and as
an inducement to Insilco and Newco to execute this Agreement and complete the
transactions contemplated hereby, and in order to preserve the goodwill
associated with the business of Company being acquired pursuant to this
Agreement, each Shareholder hereby covenants and agrees as follows:
6.2.(a) Covenant Not to Compete. For a period of five (5)
years from the Closing Date, neither Shareholder will directly or
indirectly:
6.2.(a)(i) engage in, continue in or carry on any business
which competes with the Business or is substantially similar thereto,
including owning or controlling any financial interest in any
corporation, partnership, firm or other form of business organization
which is so engaged;
6.2.(a)(ii) consult with, advise or assist, whether or not
for consideration, any corporation, partnership, firm or other
business organization which is now or becomes a competitor of
Company, Insilco or Surviving Corporation in any aspect with respect
to the Business, including, but not limited to, advertising or
otherwise endorsing the products of any such competitor; soliciting
customers or otherwise serving as an intermediary for any such
competitor; loaning
21
26
money or rendering any other form of financial assistance to or
engaging in any form of business transaction on other than an arm's
length basis with any such competitor;
6.2.(a)(iii) solicit for employment, offer employment to
or employ an employee of Company or Surviving Corporation, or a
former employee of Company or Surviving Corporation, whose employment
with Company or Surviving Corporation, as the case may be, terminated
less than six (6) months before such solicitation, offer or
employment, without the prior written consent of Insilco; or
6.2.(a)(iv) engage in any practice the intended purpose of
which is to evade the provisions of this covenant not to compete;
provided, however, that the foregoing shall not prohibit the
ownership of securities of corporations which are listed on a
national securities exchange or traded in the national
over-the-counter market in an amount which shall not exceed 5% of the
outstanding shares of any such corporation. The parties agree that
the geographic scope of this covenant not to compete shall extend to
North America. The parties agree that Surviving Corporation may sell,
assign or otherwise transfer this covenant not to compete, in whole
or in part, to any person, corporation, firm or entity that purchases
all or part of the business of Company. In the event a court of
competent jurisdiction determines that the provisions of this
covenant not to compete are excessively broad as to duration,
geographical scope or activity, it is expressly agreed that this
covenant not to compete shall be construed so that the remaining
provisions shall not be affected, but shall remain in full force and
effect, and any such overbroad provisions shall be deemed, without
further action on the part of any person, to be modified, amended
and/or limited, but only to the extent necessary to render the same
valid and enforceable in such jurisdiction.
6.2.(b) Covenant of Confidentiality. Neither Shareholder
shall at any time subsequent to the Closing, use for any purpose,
disclose to any person, or keep or make copies of documents, tapes,
discs, programs or other information storage media ("records")
containing, any confidential information concerning the Business, all
such information being deemed to be transferred to Surviving
Corporation hereunder, except (i) as requested or permitted by
Insilco, (ii) as may be required in connection with any obligation
Shareholders may have subsequent to the Closing to file returns or
reports with, or maintain certain records required by, any
Governmental Entity, (iii) for this Agreement and any and all
schedules and exhibits attached hereto and any and all documents and
instruments contemplated hereby, which may be disclosed and/or used
for reasonable purposes only, (iv) for any and all work product and
documentation relating to the negotiation and drafting of this
Agreement and the other documents and instruments contemplated
hereby, which may be disclosed and/or used for reasonable purposes
only, (v) any information distributed to all shareholders of Company
in connection with the transactions contemplated by this Agreement,
and (vi) as may be reasonably necessary in connection with the
discussions, negotiation, mediation, arbitration or litigation of any
dispute arising under this Agreement. For purposes hereof,
"confidential information" shall mean and include, without
limitation, all Trade Rights in which Company has an interest, all
customer and vendor lists and related information, all information
concerning Company's processes, products, costs, prices, sales,
marketing and distribution methods, properties and assets,
liabilities, finances, employees, all privileged communications and
work product, and any other information not previously disclosed to
the public directly by Company. The term "confidential information"
does not include information which (A) is or becomes generally
available to the public other than as a result of a disclosure by
Shareholders; or (B) is required by law to be disclosed or is
requested by any Governmental Entity, provided that Shareholders
shall provide at least five (5) days notice to Insilco prior to such
disclosure. If at any time after Closing either Shareholder should
discover that he or she is in
22
27
possession of any records containing the confidential information of
Company, the retention of which is not permitted hereunder, then the
party making such discovery shall immediately turn such records over
to Surviving Corporation. Each Shareholder severally agrees that he
and/or she will not assert a waiver or loss of confidential or
privileged status of the information based upon such possession or
discovery. Company hereby consents to Insilco's consultation with
legal, accounting and other professional advisors to Company
concerning advice rendered to Company prior to the Closing regarding
the Business, excluding, however, the negotiation and drafting of
this Agreement and the transactions entered into pursuant hereto.
6.2.(c) Equitable Relief for Violations. Each Shareholder
agrees that the provisions and restrictions contained in this Section
6.2 are necessary to protect the legitimate continuing interests of
Insilco, and that any violation or breach of these provisions will
result in irreparable injury to Insilco for which a remedy at law
would be inadequate and that, in addition to any relief at law which
may be available to Insilco, Newco or Surviving Corporation for such
violation or breach and regardless of any other provision contained
in this Agreement, Insilco, Newco and Surviving Corporation shall be
entitled to injunctive and other equitable relief as a court may
grant after considering the intent of this Section 6.2.
6.3. HSR Act Filings. As soon as is practicable following the date
hereof, each party shall, in cooperation with the other parties, file or cause
to be filed any reports or notifications that may be required to be filed by it
under the HSR Act with the Federal Trade Commission and the Antitrust Division
of the Department of Justice (requesting early termination of applicable waiting
periods), and shall furnish to the others all such information in its possession
as may be necessary for the completion of the reports or notifications to be
filed by the other. Prior to making any communication, written or oral, with the
Federal Trade Commission, the Antitrust Division of the federal Department of
Justice or any other governmental agency or authority or members of their
respective staffs with respect to this Agreement or the transactions
contemplated hereby, Company shall consult with Insilco and Newco, and Insilco
and Newco shall consult with Company.
6.4. Access to Information and Records. During the period prior to
the Closing, Company and Shareholders shall give Insilco, Newco, their counsel,
accountants and other representatives (a) access, during normal business hours
and in a manner that is not unduly disruptive to Company's business, to all of
the properties, books, records, contracts and documents of Company for the
purpose of such inspection, investigation and testing as Insilco and Newco
reasonably deem appropriate (and Company shall make available to Insilco and
Newco and their representatives all information with respect to the business and
affairs of Company as Insilco or Newco may reasonably request); (b) access to
employees, agents and representatives for the purposes of such meetings and
communications as Insilco or Newco reasonably desires; and (c) with the prior
consent of Company in each instance (which consent shall not be unreasonably
withheld), access to vendors, customers, lenders, and others having business
dealings with Company.
6.5. Conduct of Business Pending the Closing. From the date hereof
until the Closing, except as otherwise approved in writing by Newco or
contemplated by this Agreement, (a) Company covenants to comply with the
following; and (b) Shareholders jointly and severally agree to comply with
Section 6.5.(i) and Section 6.5.(j):
6.5.(a) No Changes. Company will carry on its business in
the same manner as heretofore and will not make or institute any
material changes in its methods of purchase, sale, management,
accounting or operation.
23
28
6.5.(b) Maintain Organization. Company will use all
reasonable efforts to maintain, preserve, renew and keep in favor and
effect the existence, rights and franchises of Company and will use
all reasonable efforts to preserve the business organization of
Company intact, to keep available to Company the present officers and
employees, and to preserve for Company its present relationships with
suppliers and customers and others having business relationships with
Company.
6.5.(c) No Breach. Company will not knowingly do or omit
any act that will cause a breach of any material contract, commitment
or obligation, or any breach of any representation, warranty,
covenant or agreement made by Company herein, or which would have
required disclosure on Schedule 3.6 had it occurred after the date of
the Recent Balance Sheet and prior to the date of this Agreement.
6.5.(d) No Material Contracts. No contract or commitment
will be entered into by or on behalf of Company, except contracts or
commitments which are in the ordinary course of business and
consistent with past practice, are not material to Company
(individually or in the aggregate) and would not have been required
to be disclosed in the Disclosure Schedule had they been in existence
on the date of this Agreement.
6.5.(e) No Corporate Changes. Company shall not amend its
Articles of Incorporation or By-Laws or make any changes in
authorized or issued capital stock.
6.5.(f) Maintenance of Insurance. Company shall maintain
all of the insurance in effect as of the date hereof.
6.5.(g) Maintenance of Property. Company shall use,
operate, maintain and repair all property of Company in a normal
business manner consistent with past practice.
6.5.(h) Interim Financials. Company will provide Newco
with interim monthly financial statements as and when they are
available.
6.5.(i) No Negotiations. Company will not directly or
indirectly (through a representative or otherwise) solicit or furnish
any information to any prospective buyer, commence, or conduct
presently ongoing, negotiations with any other party or enter into
any agreement with any other party concerning the sale of Company,
Company's assets or Business or any part thereof or any equity
securities of Company (an "acquisition proposal") except in the
ordinary course of business, and Company shall immediately advise
Newco of the receipt of any written acquisition proposal received
after the date hereof.
6.5.(j) Restricted Shareholder Actions. No Shareholder
will (i) transfer (which term shall include, without limitation, any
sale, gift, pledge or other disposition), or consent to any transfer
of, any or all of the shares of Voting Common Stock or Non-Voting
Common Stock beneficially owned by such Shareholder (with respect to
a Shareholder, his or her "Shares"), or any interest therein; (ii)
enter into any contract, option or other agreement or understanding
with respect to any transfer of any or all of the Shares or any
interest therein; (iii) grant any proxy, power-of-attorney or other
authorization in or with respect to the Shares; (iv) deposit the
Shares into a voting trust or enter into a voting agreement or
arrangement with respect to the Shares; (v) vote against or refrain
from voting for the approval of this Agreement and the transactions
contemplated hereby at a meeting of the shareholders of Company
called for such purpose; or (vi) take any other action that would in
any way restrict, limit or interfere with the performance of his or
her obligations under this Agreement or the transactions contemplated
hereby.
24
29
6.6. Consents. Company and Shareholders will use all reasonable
efforts (without the requirement of incurring unreasonable expense) prior to
Closing to obtain all consents necessary for the consummation of the
transactions contemplated hereby, including, without limitation, the consent of
Company's lenders, if applicable.
6.7. Other Action. Company and Shareholders shall use all reasonable
efforts to cause the fulfillment at the earliest practicable date of all of the
conditions to Company's and Shareholders' respective obligations to consummate
the transactions contemplated in this Agreement. Insilco and Newco shall use all
reasonable efforts to cause the fulfillment at the earliest practicable date of
all of the conditions to their obligations to consummate the transactions
contemplated in this Agreement.
6.8. Disclosure Schedule. Company and Shareholders shall have a
continuing obligation to promptly notify Newco in writing with respect to any
matter hereafter arising or discovered which, if existing or known at the date
of this Agreement, would have been required to be set forth or described in the
Disclosure Schedule. For purposes of determining the accuracy of the
representations and warranties of Company and Shareholders contained in Article
3 in order to determine the fulfillment of the conditions in Section 7.1, the
Disclosure Schedule shall be deemed to include only that information contained
therein on the date hereof and shall be deemed to exclude any information
contained in any subsequent supplement or amendment thereto.
6.9. Audit. Company shall, and Shareholders shall cause Company to,
from the date hereof through the Effective Time, provide Insilco, Newco, and
Insilco's and Newco's independent accountants ("Insilco Accountants"), at
reasonable times and upon reasonable notice to Company, access to the
properties, books, records, and other documents, including the books, records,
schedules, work papers and audit programs of Company and company's independent
accountants ("Company Accountants"), and including the right to inspect, examine
and audit all documents and to conduct a physical inventory, for the purpose of
allowing Insilco Accountants, at Insilco's expense, to conduct an audit of
Company's financial results for the year ended December 31, 1998 or a partial
period commencing October 1, 1998 and ending June 30, 1999 (the "Audit").
Company agrees to provide Insilco, Newco and Insilco Accountants with the
opportunity, at reasonable times and upon reasonable notice to Company, to
discuss with Company and Company's Accountants its or their questions or
concerns in connection with the Audit. Company further agrees to provide Insilco
and Insilco Accountants with the results of Company's year-end physical
inventory.
6.10. Shareholder Notice and Approval. In accordance with applicable
law and its Articles of Incorporation and By-Laws, Company shall prepare a
notice to be sent to its shareholders (the "Notice"), in connection with a
special meeting of such shareholders to approve this Agreement and the
transactions contemplated hereby (the "Special Meeting"), which Notice shall
include, without limitation, (a) information regarding the material terms of the
transactions contemplated hereby; (b) information, notices and/or forms relating
to shareholders' dissenters' rights as required by the WBCL; and (c) the
unanimous recommendation of Company's Board of Directors that the shareholders
approve this Agreement and the transactions contemplated hereby. Company shall
mail the Notice to its shareholders no later than June 21, 1999, and shall
convene the Special Meeting no later than July 16, 1999. Company shall (i) cause
appropriate employees to contact shareholders by telephone to confirm receipt of
proxy materials and ask for prompt return of proxy cards; and (ii) cause
Shareholders to promptly respond to shareholder questions regarding this
Agreement and the transactions contemplated hereby, and, where appropriate, to
advise shareholders of Company, in response to requests, that Shareholders, as
directors and shareholders of Company, believe the transactions contemplated by
this Agreement are in the best interests of Company and shareholders of Company,
all in an effort to obtain from the shareholders of Company the vote necessary
under the WBCL to approve this Agreement and the transactions contemplated
hereby. Company shall provide Insilco with a copy of any notice and other
disclosure materials to be sent to shareholders of
25
30
Company at least five (5) business days prior to the date on which Company
intends to send such notice to shareholders, and will consider in good faith any
reasonable concerns or suggestions of Insilco and its representatives regarding
with the content of such notice and other disclosure materials.
6.11. Title Insurance. Not less than 15 days prior to the Closing,
Company, at Insilco's expense, shall provide to Insilco title insurance
commitments, issued by a title insurance company or companies reasonably
satisfactory to Insilco, agreeing to issue to Surviving Corporation standard
form owner's and mortgagee's policies of title insurance with respect to all
Real Property, together with a copy of each document to which reference is made
in such commitments. Company shall provide the title insurance company with such
affidavits, certificates or indemnities as the title insurance company may
reasonably require. Such policies shall be standard ALTA Form 1992 owner's and
mortgagee's policies in an amount that is not less than the book value and not
more than the appraised value of any such Real Property, insuring good and
marketable title thereto (expressly including all easements and other
appurtenances) and shall include extended coverage deleting all of the standard
exceptions and endorsements for the following: gap coverage, zoning 3.1, access,
location, owner's comprehensive and contiguity. All policies shall insure title
in full accordance with the representations and warranties set forth herein and
shall be subject only to such conditions and exceptions as shall be reasonably
acceptable to Insilco, and shall contain such endorsements as Insilco shall
reasonably request.
6.12. Surveys. Not less than 15 days prior to the Closing, Company,
at Insilco's expense, shall provide to Insilco surveys of all Real Property
prepared in accordance with ALTA/ASCM standards, each dated no more than ninety
(90) days prior to the Closing and each detailing the legal description, the
perimeter boundaries, all improvements located thereon, all easements and
encroachments affecting each such parcel of Real Property and such other matters
as may be reasonably requested by Insilco or the title insurance companies, each
containing a surveyor certificate reasonably acceptable to Insilco and the title
insurance companies, and each prepared by a registered land surveyor
satisfactory to Insilco.
6.13. Indemnification Provisions of Surviving Corporation's Articles
and Bylaws. Newco and Insilco hereby agree that the Articles of Incorporation
and/or By-Laws of Newco (which will become the Articles of Incorporation and
By-Laws of Surviving Corporation following the Effective Time) shall contain
provisions regarding indemnification of present and former officers and
directors of Newco or the Company from and against Litigation arising out of or
pertaining to the fact that such any person was or is an officer or director of
Newco or the Company which will (a) apply to the former officers and directors
of Company; (b) be substantially similar in effect to the comparable provisions
included in the Articles of Incorporation and/or By-Laws of Company on the date
hereof; and (c) not be amended, modified, rescinded or otherwise altered or
deleted in any way that would reduce the indemnification rights and other
protections available to current officers and directors of Company under
Company's Articles of Incorporation and/or By-Laws, unless required by Law or
Order.
6.14. Escrow Agreement. At the Closing, Shareholders, Insilco and
Newco shall execute and deliver an Escrow Agreement (the "Escrow Agreement")
containing substantially the same terms and conditions set forth on Exhibit C
hereto and such other terms as are reasonably acceptable to Shareholders,
Insilco and Newco.
6.15. Supplemental Medicare Coverage. In consideration of
Shareholders entering into the Consulting Agreements, from and after the Closing
Date, Insilco agrees to cause Surviving Corporation or any successor thereto to
provide to each Shareholder, at no cost to Shareholders, for their respective
lifetimes, supplemental Medicare insurance coverage and prescription medication
coverage reasonably acceptable to Shareholders, which supplemental Medicare
coverage shall be in conformance with the Medicare supplemental coverage
described in Schedule 6.15 hereto. To that end, Surviving Corporation
26
31
shall timely reimburse Shareholders for any and all premium payments that
Shareholders, or either of them, make under such supplemental Medicare insurance
coverage arrangement and/or for prescription medication coverage. However,
Surviving Corporation reserves the right to provide, at no cost to Shareholders,
in lieu of such reimbursement, supplemental Medicare insurance coverage and
prescription medication coverage substantially identical to the coverage
described herein, subject to the consent of the Shareholder (which consent shall
not be unreasonably withheld).
6.16. Form 5500s. Prior to the Closing and at Company's expense,
Company shall file with the Internal Revenue Service the past due Form 5500 for
fiscal 1997 in connection with Company's health plan.
6.17. Additional Supplier Disclosure. Prior to the Closing, Company
shall provide Insilco with a list of (a) the ten (10) largest suppliers to
Company for fiscal 1997 (determined on the basis of the total dollar amount of
purchases) showing the total amount of purchases from each supplier during such
year; (b) the total amount of purchases from each supplier listed on Schedule
3.17(b) during fiscal 1998; and (c) a list by general product division of the
ten (10) largest distributors of Company for fiscal 1998, together with
representative copies of all distributor contracts and policy statements and a
description of all substantial modifications or exceptions.
7. CONDITIONS PRECEDENT TO INSILCO'S AND NEWCO'S OBLIGATIONS
Each and every obligation of Insilco and Newco to be performed on the
Closing Date shall be subject to the satisfaction prior to or at the Closing of
each of the following conditions:
7.1. Representations and Warranties True as of the Closing Date. Each
of the representations and warranties made by Company and Shareholders in this
Agreement, and the statements contained in the Disclosure Schedule or in any
instrument, list, certificate or writing delivered by Company or Shareholders
pursuant to this Agreement, shall be true and correct in all material respects
when made (except that statements in any representations and warranties that
expressly include a standard of materiality shall be true and correct in all
respects) and shall be true and correct in all material respects at and as of
the Closing Date (except that statements in any representations and warranties
that expressly include a standard of materiality shall be true and correct in
all respects) as though such representations and warranties were made or given
on and as of the Closing Date, except to the extent that such representations
and warranties speak as of an earlier date and except for any changes permitted
by the terms of this Agreement or consented to in writing by Insilco.
7.2. Compliance With Agreement. Company shall have in all material
respects performed and complied with all of its agreements and obligations under
this Agreement which are to be performed or complied with by it prior to or on
the Closing Date, including the delivery of the closing documents specified in
Section 9.1.
7.3. Absence of Litigation. No Litigation shall have been commenced
or overtly threatened, and no investigation by any Government Entity shall have
been commenced, against Insilco, Newco, Company or any of the affiliates,
officers or directors of any of them, with respect to the transactions
contemplated hereby; provided, however, that this Section 7.3 shall not be
available to Insilco or Newco if a failure by either Insilco or Newco to fulfill
its obligations under this Agreement shall have been the cause of, or shall have
resulted in, such Litigation or investigation.
7.4. Consents and Approvals. All material approvals, consents and
waivers that are required to effect the transactions contemplated hereby shall
have been received, including, without
27
32
limitation, consents of Company's lenders, if applicable, and executed
counterparts thereof shall have been delivered to Newco not less than two
business days prior to the Closing.
7.5. Shareholder Approval. This Agreement and the transactions
contemplated hereby shall have been approved by Company's shareholders at a
meeting duly called and held for such purpose.
7.6. No Exercise of Dissenters' Rights. No shareholder of Company
shall have exercised dissenters' rights under Sections 180.1301-1331 of the WBCL
in respect of the Merger.
7.7. Satisfaction of Customer Due Diligence. Insilco shall have
completed its due diligence inquiry of certain of Company's customers, with the
results of such inquiry reasonably satisfactory to Insilco and Newco.
7.8. Xxxx-Xxxxx-Xxxxxx Waiting Period. All applicable waiting periods
related to the HSR Act shall have expired.
7.9. Satisfactory Completion of the Audit. Either (a) Insilco
Accountants shall have completed the Audit as contemplated by Section 6.9 and
shall have delivered their unqualified opinion with respect thereto with the
results of such Audit reasonably satisfactory to Insilco and Newco or (b)
Insilco Accountants shall not have advised Insilco that they will not be able to
(i) complete an audit of the Interim Statements in accordance with Securities
and Exchange Commission requirements and at reasonable expense or (ii) deliver
their unqualified opinion with respect thereto at reasonable expense; provided,
however, that if Insilco intends to exercise its right not to close the
transactions contemplated hereby in reliance on the preceding clause (b), then
(A) Insilco shall give prompt written notice to such effect to Company, which
notice shall include the basis on which Insilco Accountants have indicated they
believe they will be unable to complete such audit and/or deliver such
unqualified opinion and (B) Company may engage Xxxxxx Xxxxxxxx LLP, or another
internationally recognized firm of independent public accountants as to which
Company and Insilco mutually agree ( "CPA Firm"), which CPA Firm shall either
agree or disagree with the basis on which Insilco Accountants believe they will
be unable to complete such audit and/or deliver such unqualified opinion.
Company and Insilco shall direct the CPA Firm to use its best efforts to render
its determination within 15 days. If CPA Firm agrees with the conclusion of
Insilco Accountants as contained in the notice referenced above, then Insilco
and Newco shall be entitled to rely on clause (b) of this Section 7.9. If (1)
CPA Firm disagrees with the conclusion of Insilco Accountants as contained in
the notice referenced above to the effect that Insilco Accountants believe they
will be unable to complete such audit and CPA Firm agrees to conduct the audit
of the Interim Statements in accordance with Securities and Exchange Commission
requirements, upon receipt of customary representations and at customary
engagement terms (including reasonable and customary fees) and/or (2) CPA Firm
disagrees with the conclusion of Insilco Accountants as contained in the notice
referenced above to the effect that Insilco Accountants believe they will be
unable to deliver such unqualified opinion and CPA Firm agrees to deliver their
unqualified opinion, upon receipt of customary representations and at customary
engagement terms (including reasonable and customary fees) and assuming the
accuracy of Insilco Accountants' audit of the Interim Statements, then Insilco
and Newco shall not be entitled to rely on clause (b) of this Section 7.9. The
CPA Firm's determination shall be conclusive and binding upon Company, Insilco
and Newco. The fees and disbursements of the CPA Firm shall be shared equally by
Company and Insilco. Company, Insilco and Newco shall make readily available to
the CPA Firm all relevant books and records and any work papers and all other
items reasonably requested by the CPA Firm and shall otherwise cooperate with
reasonable requests of the CPA Firm in connection with reaching its
determination.
7.10. No Change in Recent Balance Sheet. Insilco shall have not have
determined that a balance sheet of Company as of the Effective Time would not
reflect any change from the Recent Balance Sheet constituting a Material Adverse
Effect; provided, however, that any determination by Insilco under
28
33
this Section must be made in good faith and be reasonable. For purposes of this
Section 7.10 only, a Material Adverse Effect shall be deemed to include, without
limitation, a reduction in Company's cash and cash equivalents to any number
below $3,100,000.
7.11. Title Insurance. Insilco shall have obtained good and valid
title insurance policies or, a marked-up title insurance commitment, dated as of
the Effective Time, conforming to the specifications set forth in Section 6.11.
7.12. Surveys. Insilco shall have obtained surveys of all Real
Property, conforming to the requirements set forth in Section 6.12.
7.13. Environmental Due Diligence. Insilco shall have completed an
environmental investigation of the property located at 0000 Xxxxxx Xxxxx,
Xxxxxx, Xxxxxxxxx, with the results of such investigation reasonably
satisfactory to Insilco and Newco; provided, however, that Insilco and Newco may
not rely on this condition solely on the basis that Insilco was not able to
conduct an on-site investigation of such property.
8. CONDITIONS PRECEDENT TO COMPANY'S AND SHAREHOLDERS' OBLIGATIONS
Each and every obligation of Company and Shareholders to be performed
on the Closing Date shall be subject to the satisfaction prior to or at the
Closing of the following conditions:
8.1. Representations and Warranties True on the Closing Date. Each of
the representations and warranties made by Insilco and Newco in this Agreement,
and the statements contained in any instrument, list, certificate or writing
delivered by Insilco or Newco pursuant to this Agreement, shall be true and
correct in all material respects when made (except that statements in any
representations and warranties that expressly include a standard of materiality
shall be true and correct in all respects) and shall be true and correct in all
material respects at and as of the Closing Date (except that statements in any
representations and warranties that expressly include a standard of materiality
shall be true and correct in all respects) as though such representations and
warranties were made or given on and as of the Closing Date, except to the
extent that such representations and warranties speak as of an earlier date and
except for any changes permitted by the terms of this Agreement or consented to
in writing by Company.
8.2. Compliance With Agreement. Insilco and Newco shall have in all
material respects performed and complied with all of Insilco's and Newco's
agreements and obligations under this Agreement which are to be performed or
complied with by Insilco or Newco prior to or on the Closing Date, including the
delivery of the closing documents specified in Section 10.2.
8.3. Absence of Litigation. No Litigation or investigation shall have
been commenced by any Government Entity, and no injunction or other restrictive
order shall be in force, against Insilco, Newco, Company or any of the
affiliates, officers or directors of any of them, restraining or preventing the
transactions contemplated hereby.
8.4. Xxxx-Xxxxx-Xxxxxx Waiting Period. All applicable waiting periods
related to the HSR Act shall have expired.
8.5. Shareholder Approval. This Agreement and the transactions
contemplated hereby shall have been approved by Company's shareholders at a
meeting duly called and held for such purpose.
29
34
9. INDEMNIFICATION
9.1. By Shareholders.
9.1.(a) Indemnification. Subject to the terms and
conditions of this Article 9, each Shareholder, jointly and
severally, hereby agrees to indemnify, defend and hold harmless
Insilco, Newco, their directors, officers, employees and controlled
and controlling persons (hereinafter "Insilco's Affiliates") and
Surviving Corporation from and against all Claims asserted against,
resulting to, imposed upon, or incurred by Insilco, Insilco's
Affiliates or Surviving Corporation, directly or indirectly, by
reason of, arising out of or resulting from: (i) the inaccuracy or
breach of any representation or warranty of any Shareholder contained
in or made pursuant to Article 4; and (ii) the breach of any covenant
of any Shareholder contained in Section 6.2. As used in this Article
9, the term "Claim" shall mean all debts, liabilities, obligations,
losses, damages, judgments, awards, settlements, costs and expenses
(including, without limitation, interest (including prejudgment
interest in any litigated matter), penalties, and reasonable
attorneys fees and expenses), demands, claims, suits, actions,
reasonable costs of investigation, causes of action, proceedings and
assessments.
9.1.(b) Limitations on Indemnification. Notwithstanding
Section 9.1.(a), no Indemnified Party shall be entitled to
indemnification under Section 9.1.(a): (i) so as to allow more than
one recovery for any single Claim even though such Claim may have
resulted from the breach or inaccuracy of more than one of the
representations and warranties made by Shareholders in or pursuant to
this Agreement; (ii) with respect to any Claim arising out of a
claimed breach of the representations and warranties made by
Shareholders in Section 4.4, unless the Indemnified Party has given
written notice of such Claim to Shareholders, setting forth in
reasonable detail the facts and circumstances pertaining thereto,
prior to the expiration of the first anniversary of the Closing;
(iii) if the facts surrounding the claimed breach of a representation
or warranty that is the basis for the Claim were (A) within the
actual knowledge of those managerial employees, agents and
representatives of Insilco who devoted substantive attention to those
matters that are the subject of such representation and warranty, or
(B) contained in written reports prepared for, or delivered to, any
such person by or on behalf of Insilco or Newco to communicate
results of Insilco's and Newco's due diligence investigation of
Company, in either case if such facts were not disclosed to the
Indemnifying Party by such Indemnified Party prior to the Closing;
(iv) with respect to any Claim arising out of a claimed breach of the
representations and warranties made by Shareholders in Section 4.4,
to the extent of any amounts actually and irrevocably recovered by
the Indemnified Party with respect to the matter for which the
Indemnified Party is being indemnified under (A) insurance polices of
Company in effect as of the date hereof that reduce a Claim that
would otherwise be sustained or (B) other insurance policies for the
benefit of the Indemnified Party that reduce a Claim that would
otherwise be sustained but, in the case of this clause (B), (1) net
of any increase that will occur, or is reasonably likely to occur, in
insurance premiums payable by the Indemnified Party, whether by
retrospective or retroactive premium adjustments or any other premium
increase under the policy or policies under which the claim is made
or any other policy, where the increase results directly from filing
the claim and (2) less, dollar for dollar, the amount by which the
claim when filed or at any time during the applicable policy period,
either singly or in the aggregate with all other claims made under
applicable policy or policies, exceeds a policy coverage limit;
provided, however, that this clause (iv) shall apply only if this
provision does not constitute an improper waiver of the insurer's
rights of subrogation against the Indemnified Party; (v) with respect
to any Claim arising out of a claimed breach of the representation
and warranty made by Shareholders in Section 4.4, for any Claims as
to which any Indemnified Party otherwise may be entitled to indemnity
hereunder until such Claims, in the aggregate, exceed $250,000,
provided that (A) in such event, the Indemnified Party shall be
entitled to indemnification in full for all such Claims and (B) for
purposes of determining the existence of any breach of any
representation or warranty made by Shareholders hereunder, or the
amount of Claims with respect
30
35
thereto, there shall be ignored any "materiality" or similar
qualifier associated with such representation or warranty; and (vi)
to the extent any Claims, either individually or in the aggregate,
exceed that portion of the Purchase Price received by Shareholders.
Notwithstanding the foregoing, Newco shall not have any obligation or
liability to pay for the maintenance of coverage for Newco or Company
under any policies of insurance after the Closing or to name
Shareholders as additional insureds or to obtain approval for any
waiver of rights of subrogation.
9.1.(c) Exclusive Remedy. Except for any remedy for fraud
and for the availability of equitable relief as provided for in
Section 6.2.(c) after the Closing: (i) indemnification pursuant to
this Section 9.1 shall be the sole and exclusive remedy of Insilco,
Newco, Insilco's Affiliates or Surviving Corporation for any matter
arising out of or related to this Agreement and the transactions
contemplated hereby, including but not limited to any breach or
inaccuracy of any of the representations and warranties made by
Shareholders under Article 4, any breach of a covenant made by
Shareholders under Section 6.2, or any claimed deficiency in the
disclosures made in connection with this Agreement or Insilco's
independent investigation referenced in Section 5.4; and (ii) Insilco
and Newco each waives, releases, discharges, and shall not make or
assert, and agrees that neither Insilco's Affiliates nor Surviving
Corporation will make or assert, against Shareholders, any claim
(whether characterized as a claim based upon contract, tort,
misrepresentation, statute, common law, or otherwise) for any remedy
other than for indemnification pursuant to Section 9.1.
9.2. By Insilco and/or Newco.
9.2.(a) Subject to the terms and conditions of this
Article 9, Insilco and Newco, jointly and severally, hereby agree to
indemnify, defend and hold harmless all of the officers, directors
and shareholders of Company, including but not limited to
Shareholders, from and against all Claims asserted against, resulting
to, imposed upon, or incurred by any of such persons, directly or
indirectly, by reason of, arising out of or resulting from: (i) the
inaccuracy or breach of any representation or warranty of Insilco and
Newco contained in or made pursuant to Article 5; (ii) failure of
Insilco or Newco to carry out any of their respective obligations
under the Agreement; (iii) the assertion of any Claim by Insilco,
Newco, Insilco's Affiliates or the Surviving Corporation against
Shareholders other than as specifically provided for in this
Agreement; (iv) the imposition of taxes of any kind or nature upon
the Company and/or Newco by reason of the transactions contemplated
by this Agreement; (v) the operations of the Business and the
ownership of the assets associated with the Business from and after
the Closing Date, other than any Claim for which Insilco, Newco,
Insilco's Affiliates or Surviving Corporation is entitled to be
indemnified pursuant Section 9.1(a); and (vi) the liabilities of
Company specifically reflected on the Recent Balance Sheet or
specifically disclosed in the Disclosure Schedule.
9.2.(b) Notwithstanding Section 9.2.(a), no Indemnified
Party shall be entitled to indemnification under Section 9.2.(a) so
as to allow more than one recovery for any single Claim even though
such Claim may have resulted from the breach or inaccuracy of more
than one of the representations and warranties made by Insilco or
Newco, as applicable, in or pursuant to this Agreement.
9.2.(c) Exclusive Remedy. Except for any remedy for fraud,
(i) indemnification pursuant to this Section 9.2 shall be the sole
and exclusive remedy of shareholders of Company, including
Shareholders, for any matter arising out of or related to this
Agreement and the transactions contemplated hereby, including but not
limited to any breach or inaccuracy of any of the representations and
warranties made by Newco and Insilco under Article 5; and (ii)
Shareholders each waive, release, discharge, and shall not make or
assert, and agree that neither
31
36
will make or assert, against Insilco or Surviving Corporation, any
claim (whether characterized as a claim based upon contract, tort,
misrepresentation, statute, common law, or otherwise) for any remedy
other than for indemnification pursuant to Section 9.2.
9.3. Indemnification of Third-Party Claims.
The obligations and liabilities of any party to indemnify any other
under this Article 9 with respect to Claims relating to third parties shall be
subject to the following terms and conditions:
9.3.(a) Notice and Defense. The party or parties to be
indemnified (whether one or more, the "Indemnified Party") will
promptly give the party from whom indemnification is sought (the
"Indemnifying Party") written notice of any such Claim, and the
Indemnifying Party will undertake the defense thereof by
representatives chosen by it. Failure to give such notice shall not
affect the Indemnifying Party's duty or obligations under this
Article 9, except to the extent the Indemnifying Party is prejudiced
thereby. So long as the Indemnifying Party is defending any such
Claim actively and in good faith, the Indemnified Party shall not
settle such Claim. The Indemnified Party shall make available to the
Indemnifying Party or its representatives all records and other
materials required by them and in the possession or under the control
of the Indemnified Party, for the use of the Indemnifying Party and
its representatives in defending any such Claim, and shall in other
respects give reasonable cooperation in such defense.
9.3.(b) Failure to Defend. If the Indemnifying Party,
within a reasonable time after notice of any such Claim, fails to
defend such Claim actively and in good faith, the Indemnified Party
will (upon further notice) have the right to undertake the defense,
compromise or settlement of such Claim or consent to the entry of a
judgment with respect to such Claim, on behalf of and for the account
and risk of the Indemnifying Party, and the Indemnifying Party shall
thereafter have no right to challenge the Indemnified Party's
defense, compromise, settlement or consent to judgment therein.
9.3.(c) Indemnified Party's Rights. Anything in this
Section 9.3 to the contrary notwithstanding, (i) if there is a
reasonable probability that a Claim may materially and adversely
affect the Indemnified Party other than as a result of money damages
or other money payments, then, without prejudice to the Indemnifying
Party's right to challenge the Indemnified Party's defense,
compromise, settlement or consent to judgment, the Indemnified Party
shall have the right to defend, compromise or settle such Claim, and
(ii) the Indemnifying Party shall not, without the written consent of
the Indemnified Party, settle or compromise any Claim or consent to
the entry of any judgment which does not include as an unconditional
term thereof the giving by the claimant or the plaintiff to the
Indemnified Party of a release from all Liability in respect of such
Claim No third party Claim shall be settled or compromised without
the prior consent of the Indemnified Party and the Indemnifying
Party, which consent shall not be unreasonably withheld or delayed.
If (i) a firm written offer is made to settle any third party Claim
by the party asserting the Claim or if the party asserting the Claim
and the Indemnifying Party have agreed on a settlement of such Claim;
(ii) such third party Claim will not result in either (A) the
Indemnified Party paying monetary damages other than to the extent
required by this Agreement or (B) any effect on the Indemnified Party
other than the payment of monetary damages; and (iii) the Indemnified
Party refuses to consent to such settlement, then the Indemnifying
Party shall be excused from, and the Indemnified Party shall be
solely responsible for, all further defense of such Claim and the
maximum amount of liability of the Indemnifying Party relating to
such Claim shall be the amount of the proposed settlement or
compromise, if the amount recovered pursuant to such Claim is greater
than the amount of the proposed settlement or compromise.
32
37
9.4. Payment. The Indemnifying Party shall promptly pay the
Indemnified Party any amount due under this Article 9. Upon judgment,
determination, settlement or compromise of any third party Claim, the
Indemnifying Party shall pay promptly on behalf of the Indemnified Party, and/or
to the Indemnified Party in reimbursement of any amount theretofore required to
be paid by it, the amount so determined by judgment, determination, settlement
or compromise and all other Claims of the Indemnified Party with respect
thereto, unless in the case of a judgment an appeal is made from the judgment.
If the Indemnifying Party desires to appeal from an adverse judgment, then the
Indemnifying Party shall post and pay the cost of the security or bond to stay
execution of the judgment pending appeal. Upon the payment in full by the
Indemnifying Party of such amounts, the Indemnifying Party shall succeed to the
rights of such Indemnified Party, to the extent not waived in settlement,
against the third party who made such third party Claim.
10. CLOSING
Unless this Agreement shall have been terminated and the transactions
herein contemplated shall have been abandoned pursuant to Article 11, and
provided that the conditions to the Closing set forth in Article 7 and Article 8
are satisfied or waived, the closing with respect to the transactions provided
for in this Agreement (the "Closing") shall take place at the offices of Xxxxx &
Xxxxxxx, 000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxx at 9:00 a.m. (Milwaukee
time), on the fifth business day after the latest of (i) June 24, 1999; (ii)
satisfaction or waiver of the conditions to the Closing set forth in Section 7.8
and Section 8.4; or (iii) the end of the time period set forth in Section
180.1323 of the WBCL for delivery to Company by shareholders of Company of
notice regarding such shareholders' intention to exercise dissenters' rights
with respect to such shares; or at such other time, date and place as the
parties hereto shall agree. Notwithstanding the foregoing, if the Closing does
not take place in accordance with the preceding sentence because any condition
to the obligations of Company or Insilco and Newco under this Agreement is not
met on that date, then any party may postpone the Closing from time to time to
any designated subsequent business day not more than five (5) business days
after the original or postponed date on which the Closing was to occur by
delivering notice of such postponement on the date the closing was to occur. The
actual time and date of the Closing are herein called the "Closing Date."
Assuming the Closing occurs, the Closing shall be deemed to be effective as of
the Effective Time.
10.1. Documents to be Delivered by Company and Shareholders. At the
Closing, Company and Shareholders shall deliver to Insilco and Newco the
following documents, in each case duly executed or otherwise in proper form:
10.1.(a) Compliance Certificate of Company. A certificate
signed by Shareholders in their capacities as officers of Company
that each of the representations and warranties made by Company in
this Agreement, and the statements contained in the Disclosure
Schedule or in any instrument, list, certificate or writing delivered
by Company pursuant to this Agreement, is true and correct in all
material respects at and as of the Closing Date (except that
statements in any representations and warranties that expressly
include a standard of materiality are true and correct in all
respects) as though such representations and warranties were made or
given on and as of the Closing Date, except to the extent that such
representations and warranties speak as of an earlier date and except
for any changes permitted by the terms of this Agreement or consented
to in writing by Insilco; and that Company has performed and complied
in all material respects with all of Company's obligations under this
Agreement which are to be performed or complied with on or prior to
the Closing Date.
10.1.(b) Compliance Certificate of Shareholders. A
certificate signed by each Shareholder that each of the
representations and warranties made by Shareholders in this
Agreement, the Letters of Transmittal of such Shareholders and the
Consulting Agreements is true
33
38
and correct in all material respects at and as of the Closing Date
(except that statements in any representations and warranties that
expressly include a standard of materiality are true and correct in
all respects) as though such representations and warranties were made
or given on and as of the Closing Date, except to the extent that
such representations and warranties speak as of an earlier date and
except for any changes permitted by the terms of this Agreement or
consented to in writing by Insilco; and that Shareholders have
performed and complied in all material respects with all of their
obligations under this Agreement which are to be performed or
complied with on or prior to the Closing Date.
10.1.(c) Opinion of Counsel. A written opinion of Xxxxxxx
& Xxxxx, counsel to Company, dated as of the Closing Date, addressed
to Insilco and Newco, in substantially the form attached as Exhibit D
hereto.
10.1.(d) Consulting Agreements. The Consulting Agreements
duly executed by Shareholders.
10.1.(e) Certified Resolutions. Certified copies of the
resolutions of the Board of Directors and shareholders of Company,
authorizing and approving this Agreement and the consummation of the
transactions contemplated by this Agreement.
10.1.(f) Articles; By-Laws. A copy of the By-Laws of
Company certified by the secretary of Company, and a copy of the
Articles of Incorporation of Company certified by the Secretary of
State of the state of incorporation of Company.
10.1.(g) Incumbency Certificate. Incumbency certificates
relating to each person executing (as a corporate officer or
otherwise on behalf of another person) any document executed and
delivered to Insilco and Newco pursuant to the terms hereof.
10.1.(h) Accrued Transaction Expenses. Copies of all bills
or invoices of Company's Accountants, Xxxxxxx & Xxxxx LLP, XxXxxx,
Xxxxx & Xxxxxx, S.C., and any other firms that Company is obligated
or has agreed to pay or has paid in connection with professional fees
and expenses for services rendered by such parties related to the
transactions contemplated by this Agreement.
10.1.(i) Escrow Agreement. The Escrow Agreement, duly
executed by Shareholders and the Escrow Agent, containing
substantially the same terms and conditions set forth on Exhibit C
hereto and such other terms as are reasonably acceptable to
Shareholders, Insilco and Newco.
10.1.(j) Other Documents. All other documents, instruments
or writings required to be delivered to Insilco or Newco at or prior
to the Closing pursuant to this Agreement and such other certificates
of authority and documents as Newco may reasonably request.
10.2. Documents to be Delivered by Insilco or Newco. At the Closing,
Insilco and/or Newco shall deliver to Shareholders the following amounts and
documents, in each case duly executed or otherwise in proper form:
10.2.(a) Purchase Price. To shareholders who deliver Stock
Certificates and duly executed Letters of Transmittal to Newco at the
Closing, the consideration described in Article 1.
34
39
10.2.(b) Compliance Certificate. A certificate signed by
an officer of each of Insilco and Newco that each of the
representations and warranties made by Insilco and Newco in this
Agreement, and the statements contained in any instrument, list,
certificate or writing delivered by Insilco or Newco pursuant to this
Agreement, is true and correct in all material respects at and as of
the Closing Date (except that statements in any representations and
warranties that expressly include a standard of materiality are true
and correct in all respects) as though such representations and
warranties were made or given on and as of the Closing Date, except
to the extent that such representations and warranties speak as of an
earlier date and except for any changes permitted by the terms of
this Agreement or consented to in writing by Insilco; and that
Insilco and Newco have performed and complied with all of Insilco's
and Newco's obligations under this Agreement which are to be
performed or complied with on or prior to the Closing Date.
10.2.(c) Consulting Agreements. The Consulting Agreements
duly executed by Insilco and Newco.
10.2.(d) Certified Resolutions. A certified copy of the
resolutions of the Board of Directors and shareholders of Newco
authorizing and approving this Agreement and the consummation of the
transactions contemplated by this Agreement.
10.2.(e) Incumbency Certificate. Incumbency certificates
relating to each person executing any document executed and delivered
to Company by Insilco or Newco pursuant to the terms hereof.
10.2.(f) Escrow Agreement. The Escrow Agreement, duly
executed by Insilco, Newco and the Escrow Agent, containing
substantially the same terms and conditions set forth on Exhibit C
hereto and such other terms as are reasonably acceptable to
Shareholders, Insilco and Newco.
10.2.(g) Other Documents. All other documents, instruments
or writings required to be delivered to Company at or prior to the
Closing pursuant to this Agreement and such other certificates of
authority and documents as Company may reasonably request.
11. TERMINATION
11.1. Right of Termination Without Breach. This Agreement may be
terminated without further liability of any party at any time prior to the
Closing:
11.1.(a) by mutual written agreement of Newco and Company;
or
11.1.(b) by either Newco or Company if the Closing shall
not have occurred on or before July 31, 1999, provided the
terminating party (including, if the terminating party is Company,
Shareholders) has not, through breach of a representation, warranty
or covenant, prevented the Closing from occurring on or before such
date.
11.2 Termination for Breach.
11.2.(a) Termination by Newco. If (i) an event has
occurred such that a condition to the obligations of Insilco or Newco
cannot be satisfied or (ii) Company or Shareholders shall have
attempted to terminate this Agreement under this Article 11 or
otherwise without grounds to do so, and such failure or wrongful
termination attempt has not been cured, within ten (10) days after
notice thereof is given to Company and Shareholders, then Newco may,
by written notice to
35
40
Company and Shareholders at any time prior to the Closing that such
failure or wrongful termination attempt is continuing, terminate this
Agreement with the effect set forth in Section 11.2.(c).
Notwithstanding the foregoing, if Insilco or Newco has breached a
representation, warranty or covenant in any material respect, then
Newco may not terminate this Agreement on the basis of such breach.
11.2.(b) Termination by Company or Shareholders. If (i) an
event has occurred such that a condition to the obligations of
Company or Shareholders cannot be satisfied or (ii) Insilco or Newco
shall have attempted to terminate this Agreement under this Article
11 or otherwise without grounds to do so, and such failure or
wrongful termination attempt has not been cured, within ten (10) days
after notice thereof is given to Newco, then Company or Shareholders
may, by written notice to Newco at any time prior to the Closing that
such failure or wrongful termination attempt is continuing, terminate
this Agreement with the effect set forth in Section 11.2.(c).
Notwithstanding the foregoing, if Company or Shareholders have
breached a representation, warranty or covenant in any material
respect, then neither Company nor Shareholders may terminate this
Agreement on the basis of such breach.
11.2.(c) Effect of Termination. Termination of this
Agreement pursuant to Article 11 shall not in any way terminate,
limit or restrict the rights and remedies of any party hereto against
any other party that has violated, breached or failed to satisfy any
of the representations, warranties, covenants, agreements, conditions
or other provisions of this Agreement prior to termination hereof. In
addition to the right of any party under common law to redress for
any such breach or violation, each party whose breach or violation
has occurred prior to termination shall jointly and severally
indemnify each other party for whose benefit such representation,
warranty, covenant, agreement or other provision was made
("indemnified party") from and against all losses, damages, costs and
expenses (including, without limitation, interest (including
prejudgment interest in any litigated matter), penalties, court
costs, and reasonable attorneys fees and expenses) asserted against,
resulting to, imposed upon, or incurred by the indemnified party,
directly or indirectly, by reason of, arising out of or resulting
from such breach or violation. Subject to the foregoing, the parties'
obligations under Section 12.7 shall survive termination.
12. MISCELLANEOUS
12.1. Disclosure Schedule. The Schedules that Company has delivered
and to which statements in Article 3 refer have been compiled in a bound volume
(the "Disclosure Schedule"), executed by Company and dated and delivered to
Insilco and Newco on the date of this Agreement. The Disclosure Schedule is
deemed to constitute an integral part of this Agreement, but information set
forth in the Disclosure Schedule shall not be deemed to have been disclosed with
respect to any statement not qualified by reference to the Disclosure Schedule,
unless the applicability of the information to such statement is reasonably
apparent. The Disclosure Schedule shall not vary, change or alter the language
of the representations and warranties contained in this Agreement. The inclusion
of an item in the Disclosure Schedule shall not be construed as an indication of
the materiality or lack of materiality of such item. Provided Company has used
reasonable efforts to assure that information set forth in the Disclosure
Schedule specifically refers to the article and section of this Agreement to
which such information is responsive, the failure to provide a specific
reference or cross-reference with respect to an item disclosed in the Disclosure
Schedule shall not be considered a failure to disclose such item with respect to
any representation or warranty so long as the applicability of the information
to other Schedules or sections of this Agreement is reasonably apparent.
36
41
12.2. Disclosures and Announcements. Announcements concerning the
transactions provided for in this Agreement by Insilco, Newco, Company or
Shareholders shall be subject to the approval of the other parties in all
essential respects, except that approval of the other parties shall not be
required as to any statements and other information which a party is required to
disclose by law, or which Company may submit to its shareholders.
Notwithstanding the foregoing, Company shall provide Newco access to, and
facilitate meetings with, the employees of the Business for the purpose of
making announcements concerning, and preparing for the consummation of, the
transactions contemplated hereby, and information provided by Newco to such
employees with respect to such transactions shall not be construed as an
announcement within the meaning or intent of this Section 12.2.
12.3. Assignment; Parties in Interest.
12.3.(a) Assignment. Except as expressly provided herein,
the rights and obligations of a party hereunder may not be assigned,
transferred or encumbered without the prior written consent of the
other parties. Notwithstanding the foregoing, Newco may, without
consent of any other party, cause one or more subsidiaries of Newco
to carry out all or part of the transactions contemplated hereby;
provided, however, that Newco and Insilco shall, nevertheless, remain
liable for all of its obligations, and those of any such subsidiary,
to Company and Shareholders hereunder.
12.3.(b) Parties in Interest. This Agreement shall be
binding upon, inure to the benefit of, and be enforceable by the
respective successors and permitted assigns of the parties hereto.
Nothing contained herein shall be deemed to confer upon any other
person any right or remedy under or by reason of this Agreement.
12.4. Law Governing Agreement. This Agreement shall be construed and
interpreted according to the internal laws of the State of Wisconsin, excluding
any choice of law rules that may direct the application of the laws of another
jurisdiction.
12.5. Amendment and Modification. No amendment or modification of or
supplement to this Agreement shall be valid unless such amendment, modification
or supplement is agreed upon in writing between Insilco, Newco, Company and
Shareholders.
12.6. Notice. All notices, requests, demands and other communications
hereunder shall be given in writing and shall be: (a) personally delivered; (b)
sent by telecopier, facsimile transmission or other electronic means of
transmitting written documents; or (c) sent to the parties at their respective
addresses indicated herein by registered or certified U.S. mail, return receipt
requested and postage prepaid, or by private overnight mail courier service. The
respective addresses to be used for all such notices, demands or requests are as
follows:
(a) If to Insilco or to Newco, to:
Insilco Corporation
000 Xxxxx Xxxxx Xxxxx
Xxxxx Xxxxx
Xxx 0000
Xxxxxx, Xxxx 00000
Attention: General Counsel
Facsimile: (000) 000-0000
(with a copy to)
37
42
Xxxxx & Xxxxxxx
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xx. Xxxxxxx X. Quick
Facsimile: (000) 000-0000
or to such other person or address as Insilco or Newco shall furnish to Company
in writing.
(b) If to Company or Shareholders, to:
Xx. Xxxxx Xxxxx
Thermal Transfer Products, Ltd.
0000 00xx Xxxxxx
Xxxxxx, Xxxxxxxxx 00000-0000
Facsimile: (000) 000-0000
(with a copy to)
Xxxxxxx & Xxxxx LLP
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
or to such other person or address as Company or Shareholders shall furnish to
Insilco in writing.
If personally delivered, such communication shall be deemed delivered
upon actual receipt; if electronically transmitted pursuant to this paragraph,
such communication shall be deemed delivered the next business day after
transmission (and sender shall bear the burden of proof of delivery), unless
sender confirms receipt through personal contact, in which case such
communication shall be deemed delivered upon such confirmation; if sent by
overnight courier pursuant to this paragraph, such communication shall be deemed
delivered upon receipt; and if sent by U.S. mail pursuant to this paragraph,
such communication shall be deemed delivered as of the date of delivery
indicated on the receipt issued by the relevant postal service, or, if the
addressee fails or refuses to accept delivery, as of the date of such failure or
refusal. Any party to this Agreement may change its address for the purposes of
this Agreement by giving notice thereof in accordance with this Section.
12.7. Expenses. Regardless of whether or not the transactions
contemplated hereby are consummated:
12.7.(a) Brokerage. Company, Shareholders, Insilco and
Newco each represent and warrant to each other that there is no
broker involved or in any way connected with the transactions
provided for herein on their behalf respectively and each agrees to
hold the other harmless from and against all other claims for
brokerage commissions or finder's fees in connection with the
execution of this Agreement or the transactions provided for herein.
12.7.(b) Expenses to be Paid by Shareholders. Except for
expenses reflected on the bills and invoices delivered at Closing
pursuant to Section 10.1.(h), all holders of Company capital stock
(including Shareholders) shall be obligated to pay their own expenses
in connection
38
43
with the transactions contemplated by this Agreement, including any
tax imposed with respect to the transactions contemplated by this
Agreement.
12.7.(c) Other. Except as otherwise provided herein, each
of the parties shall bear its own expenses and the expenses of its
counsel and other agents in connection with the transactions
contemplated hereby.
12.8. Entire Agreement. This instrument embodies the entire agreement
between the parties hereto with respect to the transactions contemplated herein
and therein, and there have been and are no agreements, representations or
warranties between the parties other than those set forth or provided for herein
or therein.
12.9. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
12.10. Headings. The headings in this Agreement are inserted for
convenience only and shall not constitute a part hereof.
39
44
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date and year first above written.
INSILCO CORPORATION THERMAL TRANSFER ACQUISITION CORP.
("INSILCO") ("NEWCO")
By: /s/ Xxxxxxx X. Xxxx By: /s/ Xxxxxxx X. Xxxx
------------------------- --------------------------
THERMAL TRANSFER PRODUCTS, LTD. XXXXX XXXXX
("COMPANY") ("SHAREHOLDER")
By: /s/ Xxxxx Xxxxx /s/ Xxxxx Xxxxx
------------------------- --------------------------
XXXXXXX XXXXX
("SHAREHOLDER")
/s/ Xxxxxxx Xxxxx
--------------------------
40
