<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
Date of Report (Date of earliest event reported): October 16, 2000.
INTERMAGNETICS GENERAL CORPORATION
-------------------------------------------------------
(Exact name of registrant as specified in its charter.)
Commission File Number 1-11344
New York 14-1537454
------------------------------- -------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
450 Old Niskayuna Road,
Latham, New York 12110
---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (518) 782-1122
--------------
<PAGE>
Item 2. Acquisition or Disposition of Assets.
On October 16, 2000, Intermagnetics General Corporation
("Intermagnetics") and its wholly-owned subsidiary, InterCool Energy Corporation
("ICE"), disposed of substantially all of the assets of InterCool pursuant to a
Bill of Sale dated October 16, 2000 and subject to an asset purchase agreement
among Intermagnetics, InterCool, CFC Refimax, LLC ("CFC"), Stonehill Trading
Ltd. ("Stonehill") and InterCool Distribution, LLC ("InterCool" and together
with CFC and Stonehill, the "Purchasers").
Under the agreements, the Purchasers purchased all assets (the
"Assets") associated with manufacture, sale and distribution of ICE's
proprietary replacement refrigerant, FRIGC-FR-12 (the "Product"). The purchase
consideration was arrived at by arm's length negotiation and consisted of
$1,811,547.90 in cash and a five-year royalty term during which Purchasers must
pay to Intermagnetics a royalty of twenty-five cents ($0.25) per pound for sales
of the Product by or to BOC Gases Australia, Ltd. in Australia, New Zealand,
Singapore and Malaysia under license from the Purchasers. Prior to its
acquisition of the Assets, Stonehill was a master distributor of the Product
pursuant to a distribution agreement between Stonehill and ICE.
Item 7. Financial Statements and Exhibits
(b) Pro forma financial information.
<PAGE>
Intermagnetics General Corporation
Pro Forma Condensed Consolidated Balance Sheets
August 27, 2000
(Dollars in Thousands)
The following unaudited Condensed Consolidated Balance Sheet as of August 27,
2000, gives effect to the sale of the assets of Intercool Energy Corporation
(ICE) by Intermagnetics General Corporation (IGC), which was consummated on
October 16, 2000, as if the transaction had occurred on August 27, 2000. The Pro
Forma Condensed Consolidated Balance Sheet should be read in conjunction with
the related Pro Forma Condensed Consolidated Statements of Operations and the
notes to the Pro Forma Condensed Consolidated Financial Statements appearing
elsewhere herein.
<TABLE>
<CAPTION>
Note 2
Delete Consolidated
Divested Without
Historical Entity Divested Entity
---------------- --------------- ------------------
ASSETS (unaudited)
<S> <C> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 17,701 $ 1,811 (a) $ 19,512
Trade accounts receivable, less allowance 0
(August 27, 2000 - $437; May 28, 2000 - $478) 21,067 21,067
Costs and estimated earnings in excess of 0
billings on uncompleted contracts 1,340 1,340
Inventories 20,362 (693)(b) 19,669
Deferred income taxes 6,187 6,187
Prepaid expenses and other 1,616 (62)(c) 1,554
-------- ------- --------
TOTAL CURRENT ASSETS 68,273 1,056 69,329
Property, plant and equipment, net 26,694 (41)(d) 26,653
INTANGIBLE AND OTHER ASSETS
Available for sale securities 10,207 10,207
Other investments 4,544 4,544
Excess of cost over net assets acquired, less accumulated 0
amortization (August 27, 2000- $4,203; May 28, 2000 - $3,866) 15,933 15,933
Other intangibles, less accumulated amortization 0
(August 27, 2000- $1,087; May 28, 2000 -$663) 10,760 10,760
Other assets 1,614 (5)(e) 1,609
-------- ------- --------
$138,025 $ 1,010 $139,035
======== ======= ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of long-term debt $ 1,432 $ 1,432
Accounts payable 6,315 6,315
Salaries, wages and related items 2,489 2,489
Accrual for compensated absences 892 892
Customer advances and deposits 2,054 2,054
Product warranty reserve 2,095 2,095
Accrued income taxes 2,644 391 (f) 3,035
Other liabilities and accrued expenses 4,028 (3)(g) 4,025
-------- ------- --------
TOTAL CURRENT LIABILITIES 21,949 388 22,337
LONG-TERM DEBT, less current portion 16,279 16,279
DEFERRED INCOME TAXES 4,822 4,822
SHAREHOLDERS' EQUITY
Common Stock, par value $.10 per share:
Authorized - 40,000,000 shares
Issued and outstanding (including shares in treasury):
August 27, 2000 - 15,208,775 shares;
May 28, 2000 - 14,425,981 shares 1,521 1,521
Additional paid-in capital 102,956 102,956
Notes receivable for executive stock purchases (1,666) (1,666)
Accumulated earnings (deficit) (3,732) 622 (h) (3,110)
Accumulated other comprehensive income (loss) 1,717 1,717
-------- ------- --------
100,796 622 101,418
Less cost of Common Stock in treasury
August 27, 2000 - 661,282 shares;
May 28, 2000 - 661,282 shares; (5,821) (5,821)
-------- ------- --------
94,975 622 95,597
-------- ------- --------
$138,025 $1,010 $139,035
======== ====== ========
</TABLE>
<PAGE>
[RESTUBBED TABLE]
<TABLE>
<CAPTION>
Note 3
Proforma Proforma
Adjustments Consolidate
--------------- -------------
ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 19,512
Trade accounts receivable, less allowance 0
(August 27, 2000 - $437; May 28, 2000 - $478) 21,067
Costs and estimated earnings in excess of 0
billings on uncompleted contracts 1,340
Inventories 19,669
Deferred income taxes 6,187
Prepaid expenses and other 1,554
-------------- --------
TOTAL CURRENT ASSETS 0 69,329
Property, plant and equipment, net 26,653
INTANGIBLE AND OTHER ASSETS
Available for sale securities 10,207
Other investments 4,544
Excess of cost over net assets acquired, less accumulated 0
amortization (August 27, 2000- $4,203; May 28, 2000 - $3,866) 15,933
Other intangibles, less accumulated amortization 0
(August 27, 2000- $1,087; May 28, 2000 -$663) 10,760
Other assets 1,609
-------------- --------
$0 $139,035
============== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of long-term debt $ 1,432
Accounts payable 6,315
Salaries, wages and related items 2,489
Accrual for compensated absences 892
Customer advances and deposits 2,054
Product warranty reserve 2,095
Accrued income taxes 3,035
Other liabilities and accrued expenses 4,025
-------------- --------
TOTAL CURRENT LIABILITIES 0 22,337
LONG-TERM DEBT, less current portion 16,279
DEFERRED INCOME TAXES 4,822
SHAREHOLDERS' EQUITY
Common Stock, par value $.10 per share:
Authorized - 40,000,000 shares
Issued and outstanding (including shares in treasury):
August 27, 2000 - 15,208,775 shares;
May 28, 2000 - 14,425,981 shares 1,521
Additional paid-in capital 102,956
Notes receivable for executive stock purchases (1,666)
Accumulated earnings (deficit) (3,110)
Accumulated other comprehensive income (loss) 1,717
-------------- --------
0 101,418
Less cost of Common Stock in treasury
August 27, 2000 - 661,282 shares;
May 28, 2000 - 661,282 shares; (5,821)
-------------- --------
0 95,597
-------------- --------
$0 $139,035
============== ========
</TABLE>
<PAGE>
Intermagnetics General Corporation
Pro Froma Condensed Consolidated Statement of Operations
Three Months Ended August 27, 2000
(Dollars in Thousands, Except Share and Per Share Amounts)
The following Condensed Consolidated Statement of Operations for the three
months ended August 27, 2000, gives effect to the sale of certain assets of
Intercool Energy Corporation (ICE) by Intermagnetics General Corporation (IGC),
which was consummated on October 16, 2000, as if the transaction occurred at the
beginning of the fiscal year. The Pro Forma Condensed Consolidated Statement of
Operation should be read in conjunction with the related Pro Forma Condensed
Consolidated Balance Sheet and the notes to the Pro Forma Condensed Consolidated
Financial Statements appearing elsewhere herein.
<TABLE>
<CAPTION>
Note 2 (i) Note 3
Delete Consolidated
Divested Without Proforma Proforma
Historical Entity Divested Entity Adjustments Consolidated
-------------- ----------- ------------------ ------------ -------------
<S> <C> <C> <C> <C> <C>
Net sales $31,711 $922 $30,789 $30,789
Cost of products sold 18,906 (826) 18,080 18,080
Inventory written off in restructuring
(Recovery) (38) (38) (38)
-------------- ----------- -------------- ------------ ------------
18,868 (826) 18,042 0 18,042
-------------- ----------- -------------- ------------ ------------
Gross margin 12,843 96 12,747 0 12,747
Product research and development 1,562 (3) 1,559 1,559
Marketing, general and administrative 6,053 (85) 5,968 5,968
Amortization of intangible assets 761 761 761
-------------- ----------- -------------- ------------ ------------
8,376 (88) 8,288 0 8,288
-------------- ----------- -------------- ------------ ------------
Operating income 4,467 8 4,459 0 4,459
Interest and other income 261 261 261
Interest and other expense (776) (776) (776)
Write off of investment of unconsolidated
affiliate 0 0
Equity in net loss of unconsolidated
affiliates 0 0
-------------- ----------- -------------- ------------ -----------
Income before income taxes 3,952 8 3,944 0 3,944
Provision for income taxes 1,525 3 1,522 0 1,522
-------------- ----------- -------------- ------------ -----------
NET INCOME $ 2,427 $ 5 $ 2,422 $ 0 $ 2,422
============== =========== ============== ============ ===========
Earnings per Common Share:
Basic $0.17 $ 0.17
============== ===========
Diluted $0.16 $ 0.17
============== ===========
Shares:
Basic 14,170,704 14,170,704
Diluted 14,293,285 14,293,285
</TABLE>
<PAGE>
Intermagnetics General Corporation
Pro Forma Condensed Consolidated Statement of Operations
Year Ended May 28, 2000
(Dollars in Thousands, Except Share and Per Share Amounts)
The following Condensed Consolidated Statement of Operations for the year ended
May 28, 2000, gives effect to the sale of certain assets of Intercool Energy
Corporation (ICE) by Intermagnetics General Corporation (IGC), which was
consummated on October 16, 2000 as if the transaction occurred at the beginning
of the fiscal year. The Pro Forma Condensed Consolidated Statement of Operation
should be read in conjunction with the related Pro Forma Condensed Consolidated
Balance Sheet and the notes to the Pro Forma Condensed Consolidated Financial
Statements appearing elsewhere herein.
<TABLE>
<CAPTION>
Note 2 (i) Note 3
Delete Consolidated
Divested Without Proforma Proforma
Historical Entity Divested Entity Adjustments Consolidated
-------------- ------------ -------------------- ----------- ------------
<S> <C> <C> <C>
Net sales $112,772 $5,030 $107,742 $107,742
Cost of products sold 70,616 (4,574) 66,042 66,042
Inventory written off in restructuring
(Recovery) 1,390 (1,770) (380) (380)
-------------- ------------ -------------- ---------- ----------
72,006 (6,344) 65,662 0 65,662
-------------- ------------ -------------- ---------- ----------
Gross margin 40,766 (1,314) 42,080 0 42,080
Product research and development 6,271 (109) 6,162 6,162
Marketing, general and administrative 23,107 (2,072) 21,035 21,035
Amortization of intangible assets 2,011 2,011 2,011
Restructuring Charges 80 (230) (150) (150)
-------------- ------------ -------------- ---------- -----------
31,469 (2,411) 29,058 0 29,058
-------------- ------------ -------------- ---------- -----------
Operating income (Loss) 9,297 (3,725) 13,022 0 13,022
Interest and other income 1,790 1,790 1,790
Interest and other expense (1,965) (1,965) (1,965)
Write off of investment of unconsolidated
affiliate 0 0
Recovery of investment in unconsolidated
affiliate 1,620 1,620 1,620
Equity in net loss of unconsolidated
affiliate (236) (236) (236)
-------------- ------------ -------------- ---------- -----------
Income (Loss) before income taxes 10,506 (3,725) 14,231 0 14,231
Provision for income taxes (benefit) 4,054 (1,438) 5,492 0 5,492
-------------- ------------ -------------- ---------- -----------
NET INCOME (Loss) $ 6,452 $(2,287) $ 8,739 $ 0 $ 8,739
============== ============ ============== ========== ===========
Earnings per Common Share:
Basic $0.49 $ 0.67
============== ============
Diluted $0.46 $ 0.62
============== ============
Shares:
Basic 13,115,785 13,115,785
Diluted 14,088,218 14,088,218
</TABLE>
<PAGE>
NOTE 1
On October 16, 2000 the company sold certain assets of Intercool Energy
Corporation (ICE). In return for these assets, mainly inventory and intellectual
property, the Company received $1.8 million in cash.
NOTE 2
In connection with the Pro Forma Condensed Consolidated Balance Sheet for the
period of August 27, 2000 the Company has reflected the divesting of ICE. In
connection with the Pro Forma Condensed Consolidated Statements of Operations
for the three months ended August 27, 2000 and twelve months ended May 28, 2000
the Company has removed the activity related to ICE.
(a) Consideration received for assets sold.
(b) Inventory sold in transaction, net of reserves.
(c) Prepaid expenses related to patents pending.
(d) Equipment disposed of as a result of the transaction, net of accumulated
depreciation.
(e) Patents sold in transaction, net of amortization.
(f) Income tax accrual required as a result of the gain on the transaction.
(g) Adjustment of accruals no longer required as a result of exiting the
business.
(h) Net income as a result of the gain on the transaction.
(i) Delete operations of divested entity.
NOTE 3
No Pro Forma adjustments are required.
<PAGE>
Item 7. (c) Exhibits.
The following Exhibits are filed with this Form 8-K.
---------------------- ------------------------------------------------
Exhibit No. Description
---------------------- ------------------------------------------------
2.1 Bills of Sale, Side Letter Agreement, Assignment
of Trademarks, Assignment of Patents, Covenant
not to Compete dated October 16, 2000; Letter
Agreement dated May 31, 2000
---------------------- ------------------------------------------------
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
INTERMAGNETICS GENERAL CORPORATION
Date: October 31, 2000 By: /s/Glenn H. Epstein
-----------------------------------------
Glenn H. Epstein
President and Chief Executive Officer
<PAGE>
BILL OF SALE
INTERMAGNETICS GENERAL CORPORATION, a New York corporation
("Intermagnetics"), and INTERCOOL ENERGY CORPORATION, a Delaware corporation
("InterCool" and, together with Intermagnetics, "Sellers"), for good and
valuable consideration as described in that certain letter agreement made and
entered into as of May 31, 2000 (the "Agreement"), by and among Sellers,
InterCool Distribution, LLC, a Georgia limited liability company, CFC Refimax,
LLC, a Georgia limited liability company ("Purchaser"), and Stonehill Trading
LTD., Inc., a Florida corporation, the receipt and sufficiency of which
consideration is hereby acknowledged, hereby grant sell, assign, transfer,
convey and deliver to Purchaser, its successors and assigns, free and clear of
all Encumbrances (as defined in Section 1 of the Agreement) except for the
License (as defined in Section 4 of the Agreement), all rights, title and
interests in and to the Assets set forth in Schedule A hereto. Capitalized terms
used but not defined herein shall have the meanings assigned to them in the
Agreement.
Purchaser is responsible for all costs and arrangements associated with
storing, dismantling (including labor and material), loading, transporting or
removing the Assets from the respective sites in which such Assets are located,
as set forth in Schedule A.
Sellers shall execute and deliver such further instruments of sale,
conveyance, transfer and assignment and take such other actions reasonably
requested by Purchaser in order to more effectively bargain, sell, assign,
transfer, convey to and vest in Purchaser all rights, title and interests to the
Assets as specified herein.
This Bill of Sale is made pursuant to and incorporates the terms and
conditions set forth in the Agreement. If there is any conflict as to the terms
of this Bill of Sale and the Agreement, the terms of the Agreement shall
prevail.
[Signatures appear on next page]
<PAGE>
IN WITNESS WHEREOF, Sellers have caused this Bill of Sale to be
executed this 13th day of October, 2000.
INTERMAGNETICS GENERAL
CORPORATION
By: /s/ Michael C. Zeigler
Michael C. Zeigler
Chief Financial Officer
INTERCOOL ENERGY CORPORATION
By: /s/ Michael C. Zeigler
Michael C. Zeigler
Treasurer
<PAGE>
SCHEDULE A
----------
ASSETS
LOCATION TYPE & QUANTITY
National Refrigerants, Inc. R416A Blended Bulk 271,911 lb
661 Kenyon Avenue R124 Bulk 43,605 lb
Rosenhayn, New Jersey 08352 R600 Bulk 760 lb
<PAGE>
BILL OF SALE
INTERMAGNETICS GENERAL CORPORATION, a New York corporation
("Intermagnetics"), and INTERCOOL ENERGY CORPORATION, a Delaware corporation
("InterCool" and, together with Intermagnetics, "Sellers"), for good and
valuable consideration as described in that certain letter agreement made and
entered into as of May 31, 2000 (the "Agreement"), by and among Sellers,
InterCool Distribution, LLC, a Georgia limited liability company, CFC Refimax,
LLC, a Georgia limited liability company, and STONEHILL TRADING LTD., INC., a
Florida corporation ("Purchaser"), the receipt and sufficiency of which
consideration is hereby acknowledged, hereby grant sell, assign, transfer,
convey and deliver to Purchaser, its successors and assigns, free and clear of
all Encumbrances (as defined in Section 1 of the Agreement) except for the
License (as defined in Section 4 of the Agreement), all rights, title and
interests in and to the Assets set forth in Schedule A hereto. Capitalized terms
used but not defined herein shall have the meanings assigned to them in the
Agreement.
Purchaser is responsible for all costs and arrangements associated with
storing, dismantling (including labor and material), loading, transporting or
removing the Assets from the respective sites in which such Assets are located,
as set forth in Schedule A.
Sellers shall execute and deliver such further instruments of sale,
conveyance, transfer and assignment and take such other actions reasonably
requested by Purchaser in order to more effectively bargain, sell, assign,
transfer, convey to and vest in Purchaser all rights, title and interests to the
Assets as specified herein.
This Bill of Sale is made pursuant to and incorporates the terms and
conditions set forth in the Agreement. If there is any conflict as to the terms
of this Bill of Sale and the Agreement, the terms of the Agreement shall
prevail.
[Signatures appear on next page]
<PAGE>
IN WITNESS WHEREOF, Sellers have caused this Bill of Sale to be
executed this 13th day of October, 2000.
INTERMAGNETICS GENERAL
CORPORATION
By: /s/ Michael C. Zeigler
Michael C. Zeigler
Chief Financial Officer
INTERCOOL ENERGY CORPORATION
By: /s/ Michael C. Zeigler
Michael C. Zeigler
Treasurer
<PAGE>
SCHEDULE A
----------
ASSETS
LOCATION TYPE & QUANTITY
Agway Systems, Inc. 30 lb Mobile Cylinders 3,030 cyl
12959 Ronaldson Road 30 lb HVAC Cylinders 1,010 cyl
Baton Rouge, Louisiana 70807
National Refrigerants, Inc. 12 oz R416A Cans 127,608 cans
661 Kenyon Avenue 125 lb R416A Cylinders 6 cyl
Rosenhayn, New Jersey 08352
Stonehill Trading LTD., Inc. 30 lb Mobile Cylinders 1,520 cyl
300 N. Swall Drive Suite #105 30 lb HVAC Cylinders 40 cyl
Beverly Hills, California 90211 12 oz R416A Cans 40,200 cans
(locations controlled by Stonehill)
<PAGE>
BILL OF SALE
INTERMAGNETICS GENERAL CORPORATION, a New York corporation
("Intermagnetics"), and INTERCOOL ENERGY CORPORATION, a Delaware corporation
("InterCool" and, together with Intermagnetics, "Sellers"), for good and
valuable consideration as described in that certain letter agreement made and
entered into as of May 31, 2000 (the "Agreement"), by and among Sellers,
INTERCOOL DISTRIBUTION, LLC, a Georgia limited liability company ("Purchaser"),
CFC Refimax, LLC, a Georgia limited liability company, and Stonehill Trading
LTD., Inc., a Florida corporation, the receipt and sufficiency of which
consideration is hereby acknowledged, hereby grant sell, assign, transfer,
convey and deliver to Purchaser, its successors and assigns, free and clear of
all Encumbrances (as defined in Section 1 of the Agreement) except for the
License (as defined in Section 4 of the Agreement), all rights, title and
interests in and to the Assets set forth in Schedule A hereto. With respect to
any trademarks included among the Assets, Sellers also assign, transfer, convey
and deliver to Purchaser, its successors and assigns, that part of the goodwill
of the business connected with the use of and symbolized by each of such
trademarks. Capitalized terms used but not defined herein shall have the
meanings assigned to them in the Agreement.
Purchaser is responsible for all costs and arrangements associated with
storing, dismantling (including labor and material), loading, transporting or
removing the Assets from the respective sites in which such Assets are located,
as set forth in Schedule A.
Sellers shall execute and deliver such further instruments of sale,
conveyance, transfer and assignment and take such other actions reasonably
requested by Purchaser in order to more effectively bargain, sell, assign,
transfer, convey to and vest in Purchaser all rights, title and interests to the
Assets as specified herein.
This Bill of Sale is made pursuant to and incorporates the terms and
conditions set forth in the Agreement. If there is any conflict as to the terms
of this Bill of Sale and the Agreement, the terms of the Agreement shall
prevail.
[Signatures appear on next page]
<PAGE>
IN WITNESS WHEREOF, Sellers have caused this Bill of Sale to be
executed this 13th day of October, 2000.
INTERMAGNETICS GENERAL
CORPORATION
By: /s/ Michael C. Zeigler
Michael C. Zeigler
Chief Financial Officer
INTERCOOL ENERGY CORPORATION
By: /s/ Michael C. Zeigler
Michael C. Zeigler
Treasurer
<PAGE>
SCHEDULE A
----------
ASSETS
LOCATION TYPE & QUANTITY
InterCool Energy Corporation Promotional Literature 3 boxes
450 Old Niskayuna Road User Manuals 10
Latham, New York 12110 Installation Instructions disk + hard copy
Thermodynamic Tables 1 each
Pressure Temperature Chart 1 box
MSDS disk + hard copy
Correspondence Files 16 boxes
OI Books and Shipment Logs 2 boxes
Production Purchasing Logs 1 box
Distributor Agreements 1 box
Customer List disk + hard copy
Fittings 24 boxes
U.S. Patent No. 5,425,890 and U.S. Patent No. 5,622,644 and all related foreign
filings and applications.
FRIGC, FR-12 and R416A Trademarks and Tradenames
FRIGC website URL www.frigc.com
-------------
Underwriters Laboratories (UL) file transfer (attached)
ASHRAE file transfer (attached)
Environmental Protection Agency (EPA) file transfer (attached)
<PAGE>
October 5, 2000
Ms. Jacqueline E. Alpert Sent Via Fax: 847-509-6306
Underwriters Laboratories, Inc.
333 Pfingsten Road
Northbrook, IL 60062-2096
Re: Ownership Transfer of UL File No. MH25671
Dear Ms. Alpert
Further to our conversation today, this letter will serve as notification that
InterCool Energy Corporation desires to transfer all rights and ownership of UL
File MH25671. The new owner will be InterCool Distribution, LLC., 1935-G Delk
Industrial Boulevard, S.E., Marietta, GA 30067. Effective date for this transfer
shall be the close of business Friday, October 13, 2000. I have requested the
new owners to contact you regarding this transaction.
You indicated there was certain "paperwork" required that could be completed by
Fax correspondence. Please contact me directly at 518-782-1122 ext. 3162 and by
Fax at 518-782-7749.
Best regards,
David M. Lapychak
Vice President & General Manager
InterCool Energy Corporation
Cc: Doug Romine, InterCool Distribution
<PAGE>
October 13, 2000
Ms. Claire B. Ramspeck
ASHRAE
1791 Tullie Circle, N.E.
Atlanta, GA 30329
Re: ASHRAE R416A (FRIGC FR-12) Blend Refrigerant
Dear Ms. Ramspeck:
This correspondence is to notify ASHRAE that effective with the close of
business Friday, October 13, 2000 InterCool Energy Corporation, a subsidiary of
Intermagnetics General Corporation, will no longer be the owner and producer of
the Blend Refrigerant R416A, Trade Name FRIGC FR-12.
The new owner and producer will be InterCool Distribution, LLC, 1935-G Delk
Industrial Boulevard, S.E., Marietta, GA 30067. I have requested the new owners
to contact you to acknowledge and confirm this notification.
Should you require additional information, please contact me directly at
518-782-1122 ext. 3162, by Fax at 518-782-7749 or email at [email protected].
Sincerely,
David M. Lapychak
Vice President & General Manager
InterCool Energy Corporation
Cc: Doug Romine, InterCool Distribution
Kathy Sheehan, Intermagnetics General
<PAGE>
October 13, 2000
Ms. Anhar Karimjee
US EPA Stratospheric Protection Division
ARIEL ROIS
1200 Pennsylvania Avenue NW
Washington, DC 20460
Re: FRIGC FR-12 (R416A) Blend Refrigerant
Dear Ms. Anhar:
This correspondence is to notify the EPA that effective with the close of
business Friday, October 13, 2000 InterCool Energy Corporation, a subsidiary of
Intermagnetics General, Corporation will no longer be the owner and producer of
the Alternative Blend Refrigerant known as FRIGC FR-12 (R416A).
The new owner and producer will be InterCool Distribution, LLC, 1935-G Delk
Industrial Boulevard, S.E., Marietta, GA 30067. I have requested the new owners
to contact you to acknowledge and confirm this notification.
Should you require additional information, please contact me directly at
518-782-1122 ext. 3162, by Fax at 518-782-7749 or email at [email protected].
Sincerely,
David M. Lapychak
Vice President & General Manager
InterCool Energy Corporation
Cc: Doug Romine, InterCool Distribution
Kathy Sheehan, Intermagnetics General
<PAGE>
October 13, 2000
Intermagnetics General Corporation
P.O. Box 461
Latham, New York 12110-0461
InterCool Energy Corporation
P.O. Box 461
Latham, New York 12110-0461
Re: Sale of Assets Related to InterCool FR12 Product
------------------------------------------------
Dear Madams and Sirs:
This letter agreement is delivered in connection with that
certain letter agreement dated as of May 31, 2000 (the "Agreement"), by and
among Intermagnetics General Corporation ("IGC"), InterCool Energy Corporation
("InterCool"; and, together with IGC, "Sellers"), InterCool Distribution, LLC
("InterCool Distribution"), CFC Refimax, LLC ("CFC") and Stonehill Trading LTD.,
Inc. ("Stonehill"; and, together with InterCool Distribution and CFC,
"Purchasers"). Capitalized terms used but not defined herein shall have the
respective meanings ascribed thereto in the Agreement.
The parties hereto acknowledge and agree as follows:
1. The Purchase Price for the Assets is $1,811,547.90.
2. The entire Purchase Price shall be allocated to those
Assets that are Product inventory (the "Inventory").
3. Notwithstanding the provisions of Section 1 of the
Agreement, certain of the Inventory shall be purchased by CFC, the remaining
Inventory shall be purchased by Stonehill, and all other Assets shall be
purchased by InterCool Distribution, all in accordance with the bills of sale to
be executed at the Closing.
4. Purchasers shall be responsible for Inventory storage costs
as of the Closing Date. Purchasers acknowledge and agree that they were given
the opportunity to inspect the Inventory (except for the Inventory located at
National Refrigerants, Inc.) and to conduct such due diligence as they deemed
necessary in connection with the purchase of the Business. Notwithstanding the
foregoing, any examination, inspection or audit of the Inventory conducted by
Purchasers shall in no way limit, affect or impair the ability of Purchasers to
rely upon the representations, warranties, covenants and obligations of Sellers
set forth in the Agreement.
5. Purchasers shall be liable for all taxes, levies,
assessments and the like arising out of, or in any way connected with, any sale,
dismantling, loading, transportation, removal, possession or use of any of the
Assets from and after the Closing Date.
<PAGE>
6. Each of Sellers covenants and agrees that it shall provide
assistance from time to time as requested by Purchaser with respect to the
transfer of any patents and/or trademarks registered in a foreign country
(including any applications therefore) and included among the Assets. Any such
transfer or registration shall be at the sole expense of Purchaser.
If the terms of this letter are acceptable, please indicate
your acceptance by signing in the space provided below. Thank you for your
consideration of this letter.
Very truly yours,
/s/ K. Douglas Romine
InterCool Distribution, LLC
By: K. Douglas Romine, Manager
/s/ K. Douglas Romine
CFC Refimax, LLC
By: K. Douglas Romine, Manager
/s/ Lewis M. Steinberg
Stonehill Trading LTD., Inc.
By: Lewis M. Steinberg, President
AGREED TO AND ACCEPTED this 13th day of October, 2000.
INTERMAGNETICS GENERAL CORPORATION
By: /s/ Michael C. Zeigler
Printed Name: Michael C. Zeigler
Title: Chief Financial Officer
INTERCOOL ENERGY CORPORATION
By: /s/ Michael C. Zeigler
Printed Name: Michael C. Zeigler
Title: Treasurer
<PAGE>
ASSIGNMENT OF TRADEMARKS
WHEREAS, InterCool Energy Corporation, a Delaware corporation
("ASSIGNOR"), adopted, used, is using and is the owner of the entire right,
title and interest in and to certain trademarks and trade names (the "Marks")
and registrations and pending applications therefor identified and listed on
Schedule A hereto (the "Applications"; and, together with the Marks, the
"Scheduled Marks"), and the priority rights associated therewith;
WHEREAS, the ASSIGNOR desires to transfer, assign, convey, deliver, set
over and vest all right, title and interest in the Scheduled Marks for the
United States unto and in InterCool Distribution, LLC, a Georgia limited
liability company ("ASSIGNEE");
WHEREAS, ASSIGNEE desires to receive from ASSIGNOR all of said right,
title and interests in the Scheduled Marks; and
WHEREAS, ASSIGNEE has purchased the business of ASSIGNOR, or the
portion thereof, to which the Scheduled Marks pertain, and that business is
existing and ongoing;
NOW, THEREFORE, in consideration of One Dollar ($1.00) and other
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, ASSIGNOR does hereby assign, convey, transfer, deliver, set over
and vest to and in ASSIGNEE, its successors and assigns, absolutely and forever,
its entire right, title and interest, whether statutory or common law, in and to
the Scheduled Marks within the United States, and all the rights and privileges
relating thereto, including but not limited to priority rights arising from any
Applications, the right to recover and take all such proceedings as may be
necessary for the recovery of damages or otherwise in respect of past, present
and future infringement and dilution, together with that part of the goodwill of
the business connected with the use of and symbolized by each of the Scheduled
Marks.
ASSIGNOR agrees, at ASSIGNEE'S expense, to execute such further papers
and do such other acts as may be reasonably necessary to obtain, renew, issue or
enforce the Scheduled Marks, including, but not limited to, any acts which may
be necessary for claiming said priority rights, for securing and maintaining the
Scheduled Marks and for vesting title in each of the Scheduled Marks in said
ASSIGNEE, its successors, assigns and legal representatives.
<PAGE>
IN WITNESS WHEREOF, InterCool Energy Corporation has caused this
Trademark Assignment to be executed and delivered this 13th day of October,
2000.
INTERCOOL ENERGY CORPORATION
By: /s/ Michael C. Zeigler
Michael C. Zeigler
Treasurer
IN WITNESS WHEREOF, InterCool Distribution, LLC accepts this Trademark
Assignment executed and delivered as of this 13th day of October, 2000.
INTERCOOL DISTRIBUTION, LLC
By: /s/ K. Douglas Romine
---------------------
Name: K. Douglas Romine
Title: Operating Manager
<PAGE>
ASSIGNMENT OF PATENTS
WHEREAS, InterCool Energy Corporation, a Delaware corporation
("ASSIGNOR"), is the owner of the entire right, title and interest in and to the
United States Patents (the "Patents") and pending United States patent
applications identified and listed on Schedule A hereto (the "Applications";
and, together with the Patents, the "Scheduled Patents"), and the priority
rights associated therewith;
WHEREAS, ASSIGNOR desires to transfer, assign, convey, deliver, set
over and vest all right, title and interest in the Scheduled Patents for the
United States unto and in InterCool Distribution, LLC, a Georgia limited
liability company ("ASSIGNEE"); and
WHEREAS, ASSIGNEE desires to receive from ASSIGNOR all of said right,
title and interests in the Scheduled Patents;
NOW, THEREFORE, in consideration of One Dollar ($1.00) and other
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, ASSIGNOR does hereby assign, convey, transfer, deliver, set over
and vest to and in ASSIGNEE, its successors and assigns, absolutely and forever,
but subject to Section 4 of that certain letter agreement dated as of May 31,
2000, by and among ASSIGNOR, ASSIGNEE and certain other parties, its entire
right, title and interest in and to the Scheduled Patents within the United
States, together with any and all reissues, renewals, continuations, divisionals
or extensions thereof that may be issued or granted, and all right, title and
interest to the inventions covered by the Scheduled Patents, and all rights and
privileges relating thereto, including but not limited to the priority rights
arising from any Applications, the right to recover and take all such
proceedings as may be necessary for the recovery of damages or otherwise in
respect of any infringement that occurs after the date of this assignment, and
the right to apply for, take and maintain patents on said inventions in the
United States.
ASSIGNOR agrees, at ASSIGNEE'S expense, to execute such further papers
and do such other acts as may be reasonably necessary to obtain, renew, issue or
enforce all of the Scheduled Patents, including, but not limited to, any acts
which may be necessary for claiming said priority rights, for securing and
maintaining the Scheduled Patents and for vesting title thereto in said
ASSIGNEE, its successors, assigns and legal representatives.
<PAGE>
IN WITNESS WHEREOF, InterCool Energy Corporation has caused this Patent
Assignment to be executed and delivered this 13th day of October, 2000.
INTERCOOL ENERGY CORPORATION
By: /s/ Michael C. Zeigler
Michael C. Zeigler
Treasurer
IN WITNESS WHEREOF, InterCool Distribution, LLC accepts this Patent
Assignment executed and delivered as of this 13th day of October, 2000.
INTERCOOL DISTRIBUTION, LLC
By: /s/ K. Douglas Romine
Name: K. Douglas Romine
Title: Operating Manager
<PAGE>
COVENANT NOT TO COMPETE
THIS COVENANT NOT TO COMPETE (this "Agreement"), is made and entered
into this 13th day of October, 2000, by and between Intermagnetics General
Corporation, a New York corporation ("Intermagnetics"), on behalf of itself and
all of its subsidiaries listed in Attachment A hereto (the "Subsidiaries"; and,
together with Intermagnetics, "IGC"), and InterCool Distribution, LLC, a Georgia
limited liability company (the "LLC").
W I T N E S S E T H:
WHEREAS, IGC is a party to that certain letter agreement (the
"Acquisition Agreement") dated May 31, 2000, by and among IGC, InterCool Energy
Corporation, a Delaware corporation ("Intercool"; and, together with IGC, the
"Sellers"), the LLC, CFC Refimax, LLC, a Georgia limited liability company
("CFC"), and Stonehill Trading Ltd., Inc., a Florida corporation ("Stonehill";
and, together with the LLC and CFC, the "Purchasers"), pursuant to which the
Sellers are selling to the Purchasers certain of the Sellers' assets related to
the production, sale and distribution of that product known as "FR-12", "Frigc"
and/or "R416A", which is a replacement refrigerant for use in air conditioning
and refrigeration systems designed to use the refrigerant R-12 (the "Product";
and the manufacture, distribution and sale of the Product being referred to
hereinafter as the "Business");
WHEREAS, the LLC will thereafter conduct the Business in the same
manner as the Business was conducted by the Sellers prior to the acquisition,
and IGC has intimate knowledge of the Business, which, if exploited by the
Sellers in contravention of this Agreement, would seriously, adversely and
irreparably affect the ability of the LLC to continue the Business previously
conducted by the Sellers; and
WHEREAS, to induce the Purchasers to enter into the Acquisition
Agreement, IGC has agreed to execute this Agreement;
NOW, THEREFORE, in consideration of the premises, the mutual promises and
covenants of the parties hereto set forth herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby specifically
agreed to and acknowledged, IGC and the LLC, intending to be legally bound,
agree as follows:
1. Noncompetition.
--------------
1.1 IGC covenants and agrees that, for a period of five (5)
years from the date of this Agreement, IGC will not, within the
territories listed on Exhibit A attached hereto, directly or
indirectly, compete with the LLC by carrying on a business which is
substantially similar to the Business. For purposes of this Agreement,
a business is "substantially similar to the Business" if such business
manufactures, distributes or sells either the Product or any product
that can reasonably be substituted or interchanged with the Product's
use as a replacement for the CFC refrigerant "R-12". IGC represents and
warrants to the LLC that the Sellers have been carrying on the Business
throughout the entire aforesaid territory.
1.2 IGC hereby acknowledges that the acquisition of the
Business pursuant to the Acquisition Agreement is good and valuable
consideration received by IGC for the covenants and undertakings as
described in this Agreement, and such covenants and undertakings are
ancillary to the sale of the Business.
<PAGE>
1.3 Notwithstanding the above, nothing in Section 1.1 shall be
construed to prohibit IGC from acquiring the business or assets of any
entity partially engaged in a business that is substantially similar to
the Business, so long as (i) such activity does not exceed five percent
(5%) of the net revenues of such entity, and (ii) IGC shall either (A)
terminate conduct of the business of the acquired entity that is
substantially similar to the Business as soon as practicable after such
acquisition; (B) utilize any Product produced by such acquired business
solely for IGC's internal use and not for re-sale to third parties; or
(C) offer to sell to the LLC that portion of such acquired business
that is substantially similar to the Business (a "Competitive
Business") in accordance with the terms of Section 1.4 hereof.
1.4 In the event that IGC acquires the business or assets of
an entity partially engaged in a Competitive Business (which
acquisition must, in any event, comply with the other requirements of
Section 1.3 hereof), then, and in each such case, IGC shall, no later
than ten (10) business days after the closing of such acquisition,
provide written notice to the LLC of such acquisition (the "Offer
Notice"), which notice shall (i) describe in reasonable detail the
Competitive Business and (ii) shall contain IGC's offer to sell to the
LLC the Competitive Business for the Fair Market Value (as defined)
thereof. For purposes of this Agreement, "Fair Market Value" shall mean
the value of the Competitive Business as determined by the parties
through negotiation in good faith; provided, however, that if the
parties are unable to agree upon the Fair Market Value of the
Competitive Business within thirty (30) days after delivery of the
Offer Notice, then the Fair Market Value of the Competitive Business
shall be determined by an independent third-party appraiser selected by
mutual agreement of the parties or, failing agreement by the parties on
such selection, selected by the office of the American Arbitration
Association located in New York, New York, which appraiser must, in any
event, be knowledgeable with respect to the refrigerant industry. In
determining the Fair Market Value, the appraiser shall take into
account the assets of the Competitive Business and those liabilities of
the Competitive Business that are disclosed in writing by IGC to the
appraiser and the LLC. The LLC shall have ninety (90) days from the
date of determination of the Fair Market Value of the Competitive
Business to notify ICG whether it desires to purchase the Competitive
Business, in order that the LLC may complete its due diligence
regarding, and obtain financing for, such acquisition. The closing of
the acquisition of all of the assets and assumption of all of the
liabilities of the Competitive Business that are disclosed in writing
to the LLC shall occur within five (5) business days after the end of
such ninety (90)-day period at the offices of the LLC. At such closing,
(i) IGC shall deliver to the LLC such good and sufficient bills of
sale, assignment, deeds and other good and sufficient instruments of
sale, conveyance, transfer and assignment as the LLC may reasonably
deem appropriate in order to effectively vest in the LLC good and
marketable title to all of the assets of the Competitive Business and
(ii) the LLC shall deliver to IGC the Fair Market Value by certified
check or wire transfer.
<PAGE>
2. Definition of "Compete". For the purposes of this Agreement, the
term "compete" shall mean with respect to the Business: (i) managing,
supervising, or otherwise participating in a management or sales or service
capacity in any enterprise substantially similar to the Business, (ii) calling
on, soliciting, taking away, accepting as a customer with respect to sale of the
Product (or any reasonable substitute for the Product) or attempting to call on,
solicit, take away or accept as a customer with respect to sale of the Product
(or any reasonable substitute for the Product) any individual, partnership,
corporation, limited liability company or association that is or was a customer
of the Business during the twelve calendar month period immediately prior to the
date hereof, (iii) for the period of this Agreement, entering into or attempting
to enter into any business substantially similar to the Business, either alone
or with any individual, partnership, corporation, limited liability company or
association.
3. Direct or Indirect Competition. For the purposes of this Agreement,
the words "directly or indirectly" as they modify the word "compete" shall mean
(i) acting as an agent, representative, consultant, officer, director,
independent contractor, or employee of any entity or enterprise which is
competing (as defined in Section 2 hereof) with the Business, (ii) participating
in any such competing entity or enterprise as an owner, partner, limited
partner, joint venturer, creditor or stockholder (except as a stockholder
holding less than a one percent (1%) interest in a corporation whose shares are
actively traded on a regional or national securities exchange or in the
over-the-counter market), and (iii) communicating to any such competing entity
or enterprise the names or addresses or any other information concerning any
past, present, or identified prospective broker or customer of the Business as
of the effective date of this Agreement.
4. Equitable Relief. IGC acknowledges that IGC's expertise in the
Business described herein is of a special, unique, unusual, extraordinary, and
intellectual character, which gives said expertise a peculiar value, that a
breach by IGC of the provisions of this Agreement cannot reasonably or
adequately be compensated in damages in an action at law and that a breach of
any of the provisions contained in this Agreement will cause the LLC irreparable
injury and damage. IGC further acknowledges that IGC possesses unique skills,
knowledge and ability and that competition in violation of this Agreement or any
other breach of the provisions of this Agreement would be extremely detrimental
to the LLC. By reason thereof, IGC agrees that the LLC shall be entitled, in
addition to any other remedies it may have under this Agreement or otherwise, to
preliminary and permanent injunctive and other equitable relief to prevent or
curtail any breach of this Agreement; provided, however, that no specification
in this Agreement of a specific legal or equitable remedy shall be construed as
a waiver or prohibition against the pursuing of other legal or equitable
remedies in the event of such a breach.
5. Severability. In the event that any provision of this Agreement or
any word, phrase, clause, sentence or other portion thereof (including, without
limitation, the geographical and temporal restrictions contained herein) should
be held to be unenforceable or invalid for any reason, such provision or portion
thereof shall be modified or deleted in such a manner so as to make this
Agreement as modified legal and enforceable to the fullest extent permitted
under applicable laws.
<PAGE>
6. Successors and Assigns. The covenants, terms and provisions set
forth herein shall inure to the benefit of, and be enforceable by, the LLC, its
successors, assigns and successors in interest, including, without limitation,
any corporation with which the LLC may be merged or by which it may be acquired.
This Agreement is nonassignable except that the LLC's rights, duties and
obligations under this Agreement may be assigned to its acquiror in the event
the LLC is merged, acquired, sells substantially all of the assets of the
Business, or transfers the Business to any other entity.
7. Integrated Agreement. This Agreement constitutes the entire
Agreement between the parties hereto with regard to the subject matter hereof,
and there are no agreements, understandings, restrictions, warranties or
representations relating to said subject matter among the parties other than
those set forth herein or herein provided.
8. Counterparts. This Agreement may be executed in two or more
counterparts, each of which will take effect as an original and all of which
shall evidence one and the same agreement.
9. Governing Law. The terms of this Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
10. Modification. Neither this Agreement nor any provision hereof may
be changed, waived, discharged or terminated orally, but only by an agreement in
writing signed by the party against whom or which the enforcement of such
change, waiver, discharge or termination is sought.
11. Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be delivered by hand, mailed by
registered or certified mail, return receipt requested, or sent by Federal
Express or other nationally recognized overnight delivery service addressed as
follows:
11.1 If to IGC:
Intermagnetics General Corporation
Attention: Chief Financial Officer
P.O. Box 461
Latham, New York 12110-0461
11.2 If to the LLC:
InterCool Distribution, LLC
Attention: Operating Manager
1935-G Delk Industrial Boulevard, S.E.
Marietta, Georgia 30067
<PAGE>
11.3 If delivered personally, the date on which a notice,
request, instruction or document is delivered shall be the date on
which such delivery is made. If delivered by mail or overnight delivery
service, the date on which such notice, request, instruction or
document is received shall be the date of delivery. In the event any
such notice, request, instruction or document is mailed or sent to a
party in accordance with this Section 11 and is returned to the sender
as nondeliverable, then such notice, request, instruction or document
shall be deemed to have been delivered or received on the fifth day
following the deposit of such notice, request, instruction or document
in the United States mails or overnight delivery service, as the case
may be.
11.4 Any party hereto may change its address specified for
notices herein by designating a new address by notice in accordance
with this Section 11.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
"IGC"
INTERMAGNETICS GENERAL
CORPORATION (on behalf of
itself and the Subsidiaries)
By: /s/ Michael C. Zeigler
Title: Chief Financial Officer
"LLC"
INTERCOOL DISTRIBUTION, LLC
By: /s/ K. Douglas Romine
Title: Manager
<PAGE>
EXHIBIT A
---------
RESTRICTED TERRITORIES
United States (including Puerto Rico)
Canada
All member nations of the European Union
Australia
New Zealand
Singapore
Malaysia
Israel
Philippines
<PAGE>
ATTACHMENT A
------------
SUBSIDIARIES
IGC-APD Cryogenics, Inc.
IGC-Medical Advances, Inc.
IGC-Polycold Systems, Inc.
InterCool Energy Corporation
Intermagnetics General (Europe) Ltd.
Magstream Corporation
Intermagnetics General Corporation Foreign Sales Corporation
IGC-SuperPower, LLC
<PAGE>
May 31, 2000
Intermagnetics General Corporation
InterCool Energy Corporation
P.O. Box 461
Latham, NY 12110-0461
Re: Sale of Assets Related to InterCool FR12 Product
------------------------------------------------
Gentlemen:
This letter agreement (this "Agreement") sets forth the
agreement of the signatories hereto with respect to the sale (the "Transaction")
by Intermagnetics General Corporation, a New York State Corporation ("IGC"), and
InterCool Energy Corporation, a Delaware Corporation ("InterCool"; and together
with IGC, the "Sellers"), of certain assets of the Sellers related to the
production, distribution and sale of that product known as "FR-12", "Frigc"
and/or "R416A", which is a replacement refrigerant for use in air conditioning
and refrigeration systems designed to use the refrigerant "R-12" (the "Product";
and the manufacture, distribution and sale of the Product being referred to
hereinafter as the "Business") to a Georgia limited liability company (the
"LLC") to be formed jointly by CFC Refimax, LLC, a Georgia limited liability
company ("CFC"), and Stonehill Trading LTD., Inc., a Florida corporation,
("Stonehill"; and, together with the LLC and CFC, the "Purchasers").
<PAGE>
1. The Sellers shall sell, and CFC and Stonehill shall cause the LLC to
purchase, subject to the terms and conditions of this Agreement, the
following assets (the "Assets") of the Sellers: the Product inventory of the
Sellers as of September 30, 2000; all intellectual property rights,
intangible assets and know-how of the Sellers related to the Product and the
Business, whether or not patentable, including, without limitation, all
customer lists, phone numbers, website URL, promotional literature, user
manuals and other literature, trade dress, trade names, and trademarks used
in the Business (other than the respective corporate names and logos of the
Sellers), whether or not registered or registrable (collectively, the
"Product IP"). Except as set forth in Section 4 hereof, all Assets shall be
delivered at the closing of the Transaction (the "Closing"), free and clear
of all liens, claims, charges, security interests, taxes, options or
contractual rights of third parties of any nature whatsoever (collectively,
"Encumbrances"). Within ten (10) business days after execution of this
Agreement, the Sellers shall deliver to the Purchasers a complete list of all
of the Assets in reasonable detail which shall include all patents,
including, without limitations, all foreign patents and any patent
applications, related to the Product; provided, however, the Product
Inventory will be determined as provided in Section 8 hereof.
2. The Sellers hereby, jointly and severally, represent and warrant to the
Purchasers that (i) except as set forth in Section 4 hereof, all Assets are
currently held by the Sellers free and clear of all Encumbrances; (ii) to the
knowledge of the Sellers, none of the Product IP infringes the intellectual
property rights of third parties and, to the knowledge of Sellers, except as
set forth on Exhibit A attached hereto, no third party is infringing
the intellectual property rights associated with the Product IP; (iii)
there is no suit, action, claim or proceeding with respect to the
Assets or the Business pending or, to the knowledge of the Sellers,
threatened, and, to the knowledge of the Sellers, there exists no grounds for
any such suit, action, claim or proceeding; (iv) to the knowledge of the
Sellers, there exists no set of facts or circumstances pertaining to the
Sellers or the Product that may prevent the LLC from selling the Product
purchased from the Sellers or conducting the Business after consummation of
the Transaction in the same manner as conducted by Sellers prior to the
Closing; (v) the execution of this Agreement and consummation of the
Transaction has been authorized by all necessary corporate action on the part
of each of the Sellers; (vi) the execution of this Agreement and consummation
of the Transaction does not require the Sellers to obtain the approval or
consent of any governmental authority; and (vii) the execution of this
Agreement and consummation of the Transaction will not violate the terms of,
cause a default under, or necessitate consent or notification under, any
agreement or instrument to which either of the Sellers is a party. For
purposes of this Agreement, "knowledge" shall mean, with respect to a party,
the actual knowledge of such party and such knowledge as would have been
obtained by such party after inquiry reasonable under the circumstances.
3. Each of the Purchasers hereby represents and warrants to the Sellers that (i)
the execution of this Agreement and consummation of the Transaction has been
authorized by all necessary corporate action on the part of each of the
Purchasers; (ii) the execution of this Agreement and consummation of the
Transaction will not violate the terms of, or necessitate consent or
notification under, any agreement or instrument to which any of the
Purchasers is a party; and (iii) the execution of the Agreement and the
consummation of the Transaction does not require the Purchasers to obtain
approval or consent of any governmental authority.
<PAGE>
4. Notwithstanding the provisions of Section 1 hereof, the assignment by the
Sellers to the LLC of U.S. Patent No. 5,425,890 and U.S. Patent No. 5,622,644
(together, the "Patents"), which Patents are included in the Assets, shall be
subject to the disclosed, pre-existing rights, if any, of Praxair, Inc.
("Praxair"), pursuant to that certain Mixed Gas Refrigant License Agreement
executed June 4, 1999 by and between Praxair and APD Cryogenics, Inc. (the
"License"). After the Closing, Sellers shall continue to be entitled to all
rights and payments under the License and shall be responsible for all
obligations, claims or liabilities associated with, arising under or due to
the License (and the Sellers shall indemnify the Purchasers against all such
obligations, claims or liabilities in accordance with the terms of Section 12
hereof). From and after the Closing Date (as defined in Section 5 below) the
Purchasers shall be responsible for all costs associated with maintenance of
the Patents, including, without limitation, all patent maintenance fees, and
the Purchasers hereby covenant to pay such patent maintenance fees, with
respect to each Patent, so long as such Patent is subject to the disclosed,
pre-existing rights of Praxair under the License as in effect on the date
hereof.
5. The Closing shall be at the offices of LLC's counsel in Atlanta, Georgia, and
will take place on or about October 4, 2000 (the "Closing Date"), or such
other date as may be mutually agreed by the parties. This Agreement may be
terminated at any time by mutual written agreement of the parties. Either the
Sellers, on the one hand, or the Purchasers, on the other hand, may terminate
this Agreement after October 16, 2000 if (i) the Closing has not occurred by
such date, (ii) the other party is unwilling or unable to close the
Transaction (unless such party's ability to close has been made impossible by
an act or failure to act of the other party) in accordance with this
Agreement and (iii) the party so terminating has delivered or is willing to
deliver all documents and other deliveries as set forth in Section 6, in the
case of the Sellers, or Section 7, in the case of the Purchasers.
6. At the Closing, the Sellers shall deliver to the LLC the following: (i) such
good and sufficient bills of sale, assignments, deeds and other good and
sufficient instruments of sale, conveyance, transfer and assignment as the
Purchasers may reasonably deem appropriate in order to effectively vest in
the LLC good and marketable title to the Assets free and clear of all
Encumbrances (except for the License); (ii) a certificate executed by
authorized officers of the Sellers stating that (a) all representations and
warranties made by the Sellers in this Agreement are true and correct on the
Closing Date with the same force and effect as though such representations
and warranties had been made on and as of such date and (b) that the Sellers
have performed all covenants, acts and undertakings to be performed by them
on or prior to the Closing Date; and (iii) the executed Covenants Not to
Compete described in Section 15 hereof. The Purchasers' obligation to proceed
with the Closing is expressly conditioned upon delivery of each of the items
listed in the foregoing clauses (i), (ii) and (iii).
<PAGE>
7. At the Closing, the Purchasers (i) shall cause the LLC to pay by certified
check or wire transfer, the Purchase Price described in Section 8 hereof;
and (ii) shall deliver a certificate executed by duly authorized officers of
the Purchasers stating that (a) all representations and warranties made by
the Purchasers in this Agreement are true and correct on the Closing Date
with the same force and effect as though such representations and warranties
had been made on and as of such date; and (b) that the Purchasers have
performed all of the covenants, acts and undertakings to be performed by
them on or prior to the Closing Date. The Sellers' obligation to proceed
with the Closing is expressly conditioned upon delivery of each of the items
listed in the foregoing clauses (i) and (ii).
8. The purchase price for the Assets shall be the sum of amounts determined by
multiplying the following three terms: the physical quantity of Product
owned by Sellers as of September 30, 2000, multiplied by the standard price
per unit as detailed in the document entitled "INTERCOOL ENERGY--INVENTORY
NOV FY00" (attached as Exhibit B), multiplied by eighty-five percent (85%)
(the "Purchase Price"). Purchasers shall have the right to observe Sellers
perform a physical inventory on a date or dates mutually agreeable to the
Parties (the "Inventory Date") and the Parties shall, on the Inventory Date,
mutually agree upon the resulting inventory quantity. In the event that the
Sellers sell any such Product inventory between the Inventory Date and the
Closing Date, the Purchase Price shall be adjusted downward accordingly. In
the event that the size of Sellers' Product inventory increases between the
Inventory Date and the Closing Date, the Purchase Price shall be adjusted
upward accordingly.
9. The parties will use their best efforts to mutually agree upon allocation of
the Purchase Price among the Assets on or prior to the Closing Date and
shall report the sale and purchase of the Assets for all federal, state,
local, foreign and other tax purposes in a manner consistent with such
mutually agreed upon allocation. If the parties are not able to reach such
agreement, then each party shall use such allocation as it reasonably
believes to be correct.
10. For a period of five (5) years after the Closing Date (the "Royalty Term"),
the LLC shall pay to IGC a royalty of twenty-five cents ($0.25) per pound
for all purchases of the Product from the Purchasers made by BOC Gases
Australia Limited, its successors and assigns, and for all Product
manufactured by, or for, BOC Gases Australia Limited, its successors and
assigns, under license from the Purchasers, for Australia, New Zealand,
Singapore and Malaysia. Sale of the Product by the Purchasers after the
Closing Date shall otherwise be without royalty to the Sellers. Within
forty-five days after the end of each fiscal quarter during the Royalty
Term, the LLC shall furnish the Sellers with a royalty statement indicating
the total pounds of the Product for which royalty is due in respect of such
fiscal quarter in accordance with the terms of this Section 10. Upon request
of the Sellers, the LLC shall furnish such records to the Sellers as are
reasonably necessary to substantiate the amount of royalty due.
11. Promptly after the date hereof, CFC and Stonehill will use all reasonable
efforts to establish a sales distribution network and support services for
sale of the Product, in order that the LLC may be fully operational to
continue the Business from and after the Closing Date.
<PAGE>
12. None of the Purchasers shall assume, nor shall any of the Purchasers have
any liability with regard to, nor shall the Purchasers incur any costs,
expenses, claims or losses (including any attorneys' fees and costs of
litigation) (collectively, "Losses") with respect to, any liabilities, known
or unknown, in connection with the Assets or the Business which exist as of
the Closing Date or which arise after the Closing Date but which are based
upon or arise from an act of the Sellers which occurred before the Closing
Date or a set of facts or circumstances (which are unrelated to any act or
failure to act of the Purchasers prior to the Closing Date) existing on or
prior to the Closing Date, regardless of whether such Losses are asserted
against, or incurred by, the Sellers or, alternatively, such Losses are
asserted directly against, or incurred directly by, the Purchasers. The
Sellers shall agree to indemnify and hold the Purchasers harmless from any
Losses (i) associated with any such liabilities, including, without
limitation, liability for all express warranties offered by the Sellers,
warranties implied under applicable law, and products liability, in each
case, related to Product manufactured prior to the Closing Date, (ii)
incurred as the result of any breach of a representation, warranty or
undertaking of the Sellers contained in this Agreement or any certificate
delivered pursuant hereto or (iii) based upon any claims relating to or
associated with the License. Notwithstanding the foregoing, with respect to
claims that either of the Patents infringes the intellectual property rights
of a third party, the Sellers' indemnification obligations shall be limited
to indemnification for Losses incurred as the result of a breach of a
representation or warranty made by the Sellers in this Agreement.
13. Sellers shall not assume, and shall have no liability with regard to any
liabilities, known or unknown, of the Purchasers in connection with the
Purchasers' production, distribution and sale of the Product after the
Closing Date (other than for warranty and products liability for sale after
the Closing Date of Product manufactured prior to the Closing Date, as
provided under paragraph 12 hereof). The Purchasers shall agree to indemnify
and hold Sellers harmless from any Losses (i) associated with any such
liabilities including, without limitation, liability for all warranty and
other claims related to the Product manufactured after the Closing Date or
(ii) incurred as the result of any breach of a representation, warranty or
undertaking of the Purchasers contained in this Agreement on any certificate
delivered pursuant hereto.
14. (a) If any party to this Agreement (an "Indemnitee") receives notice of the
assertion of a third party claim, which assertion, if presumed to be true,
would obligate another party or parties to this Agreement (the "Indemnifying
Parties") to provide indemnification under Sections 12 or 13 of this
Agreement, as the case may be, then the Indemnitee shall give notice as soon
as practicable to the Indemnifying Parties of such third party claim;
provided, however, that any failure to give notice shall not relieve any
party of its obligation to indemnify except to the extent that such failure
materially prejudices such party's ability to contest any such claim. If the
Indemnifying Parties admit their obligation to indemnify the Indemnitee for
such claim and give security reasonably satisfactory to the Indemnitee for
the full amount of such claim, then, and only in such event, shall the
Indemnifying Party have the right to control the defense, compromise and
<PAGE>
settlement of such claim (which it shall conduct at its own expense).
Notwithstanding the foregoing, the Indemnitee shall be entitled, at the
expense of the Indemnifying Parties, to control the defense, compromise or
settlement of any claim to the extent that it seeks an injunction or other
equitable or nonmonetary relief against the Indemnitee. In cases where the
Indemnifying Party does not have the right to control the defense of a claim
as provided above, the Indemnifying Party shall have the right to
participate in the defense of such claim, but the Indemnitee shall have the
sole right to make any significant decisions with respect to the conduct of
such defense or its settlement or compromise.
(b) The maximum aggregate liability of the Seller for indemnification under
this Agreement after the Closing shall be the lesser of (i) One Million
Dollars ($1,000,000.00) and (ii) the actual Purchase Price determined in
accordance with Section 8 hereof (the Maximum Aggregate Liability Amount"),
and the obligation of the Sellers for indemnification hereunder will
terminate when the Maximum Aggregate Liability Amount has been paid;
provided, however, there shall be no Maximum Aggregate Liability Amount and
the Maximum Aggregate Liability Amount shall not be charged for (i) any
breach under the Covenant Not to Compete or (ii) the breach of any
representation or warranty made in this Agreement that is made as to the
knowledge of the Sellers. Purchasers agree not to seek recourse after the
Closing against, and shall not recover from, the Sellers for indemnification
under this Agreement on account of any Losses until the aggregate amount
thereof exceeds Ten Thousand Dollars $10,000.00 (the "Minimum Aggregate
Liability Amount"), at which time claims may be asserted for the Minimum
Aggregate Liability Amount and amounts in excess of the Minimum Aggregate
Liability Amount; provided, however, that there shall be no Minimum
Aggregate Liability Amount, and the Minimum Aggregate Liability Amount shall
not be charged for, the breach of any representation or warranty made in
this Agreement that is made as to the knowledge of the Sellers.
(c) The maximum aggregate liability of Purchasers for indemnification under
this Agreement after the Closing shall be equal to the Maximum Aggregate
Liability Amount, and the obligation of the Purchasers for indemnification
hereunder will terminate when the Maximum Aggregate Liability Amount has
been paid. Sellers agree not to seek recourse after the Closing against, and
shall not recover from, the Purchasers for indemnification under this
Agreement on account of any Losses until the aggregate amount thereof
exceeds the Minimum Aggregate Liability Amount at which time claims may be
asserted for, the Minimum Aggregate Liability Amount and amounts in excess
of the Minimum Aggregate Liability Amount.
15. At the Closing, each of the Sellers shall enter into a Covenant Not to
Compete in the form attached as Exhibit C, pursuant to which each of the
Sellers shall agree, for a period of five (5) years from the Closing Date,
not to, either alone or in combination with others, own, manage, operate,
control, finance, participate in as an investor, shareholder, consultant,
joint venturer or otherwise, or permit their respective names to be used by
or in connection with, any business or enterprise competitive with the
Business. The Covenant Not to Compete shall provide for an exception to this
<PAGE>
covenant not to compete in the event that the Sellers obtain through an
acquisition transaction a business competitive with the Business, so long as
(i) the business competitive with the Business represents five percent (5%)
or less of the total revenues of such enterprise and (ii) the Sellers shall
either (A) terminate conduct of the business of the acquired entity that is
substantially similar to the Business as soon as practicable after such
acquisition; (B) utilize any Product produced by such acquired business
solely for the Sellers' internal use and not for re-sale to third parties;
or (C) offer to sell to the LLC that portion of the enterprise competitive
with the Business, all in accordance with the terms of the Covenant Not to
Compete.
16. Neither of the Sellers shall authorize or permit any officer, director,
employee, shareholder or other representative of either of the Sellers to
solicit, initiate, encourage (including by way of furnishing information),
discuss, negotiate or enter into any agreement with respect to any proposal
or offer, or the making of any proposal or offer, by a party other than the
Purchasers for the acquisition of a substantial portion of the Assets or a
business combination involving the Business (any such offer or proposal
being referred to as an "Acquisition Proposal") unless and until this
Agreement is terminated. The Sellers shall as soon as reasonably practicable
advise the Purchasers of any Acquisition Proposal communicated to the
Sellers after the date hereof, or any inquiries or discussions with respect
thereto.
17. In the event that the Agreement is not mutually terminated but is terminated
by a party under the circumstances set forth in the last sentence of Section
5 hereof, then the other party shall pay, as sole and exclusive liquidated
damages, Five Hundred Thousand Dollars ($500,000.00) to the party that so
terminated this Agreement. The parties acknowledge and agree that the amount
of Five Hundred Thousand Dollars ($500,000.00) represents the sum of the
lost opportunity costs incurred by such party if the Transaction is not
completed and a reasonable estimate of costs and expenses expected to be
incurred by such party.
18. Except as provided in Paragraph 17, each party shall bear its own costs and
expenses in connection with the Transaction.
19. Prior to the Closing Date, the Sellers shall operate the Business in the
ordinary course and shall use their best efforts to preserve the Assets and
the Business intact. The parties acknowledge that the Sellers' performance
pursuant to the Master Distribution Agreement by and between Intercool and
Stonehill dated May 1, 2000, and the Sellers' refraining from taking any
action with respect to the Business or the Assets other than as required by
such agreement or as contemplated hereby, shall satisfy the requirement to
operate the Business in the ordinary course.
20. The obligation of the Purchasers to proceed with the Transaction is
expressly conditioned upon completion of their due diligence review of the
Patents and any other patents, including without limitation, foreign patents
and patent applications related to the Product, and the License and their
reasonable determination made in good faith that the results of such review
are satisfactory. Purchasers shall use their best efforts to complete such
review by May 26, 2000, and such review shall be completed in any event by
<PAGE>
June 19, 2000. Purchasers shall provide the Sellers with a written statement
of any of their objections with regard to the License or Patents as soon as
practicable and, in any event, prior to June 19, 2000. As of the date
hereof, the only patents and patent applications with respect to the Product
and the Business that have been disclosed to Purchasers are the Patents and
the patent applications with respect to the Patents listed on Exhibit D
attached hereto. Notwithstanding any other provision hereof, in the event
that any additional patents or patent applications with respect to the
Product or the Business are disclosed, or otherwise become known, to the
Purchasers prior to the Closing, the Purchasers shall have thirty (30) days
from the date of such disclosure or discovery to complete their due
diligence review of any such additional patents or patent applications.
21. Prior to the Closing Date, none of the parties hereto shall make any public
statements, including, without limitation, any press releases, with respect
to the transactions contemplated hereby without the prior written consent of
the other parties hereto, except as may be required by law.
22. Immediately upon the effectiveness of its formation as a limited liability
company under Georgia law, the LLC shall become, without the necessity of
any further action, a party to this Agreement and bound hereby in all
respects as the "LLC" defined hereunder. In the event that the LLC is not
formed for any reason, the remaining Purchasers shall be obligated to
perform hereunder as if the LLC had been formed.
If this Agreement accurately reflects your understanding and
agreement as to the foregoing matters, please indicate by signing a counterpart
to this Agreement at the places indicated.
Sincerely,
CFC REFIMAX, LLC
By: /s/ K. D. Romine
---------------------------
Printed Name: K.D. Romine
Title: President
STONEHILL TRADING LTD, INC.
By: /s/ Lewis M. Steinberg
---------------------------
Printed Name: Lewis M. Steinberg
Title: President
ACCEPTED AND AGREED TO, this
31st day of May, 2000
INTERMAGNETICS GENERAL CORPORATION
By: /s/ Glenn H. Epstein
----------------------------------------
Printed Name: Glenn H. Epstein
Title: President and Chief Executive Officer
INTERCOOL ENERGY CORPORATION
By: /s/ Glenn H. Epstein
---------------------------
Printed Name: Glenn H. Epstein
Title: President
<PAGE>
EXHIBIT A
INTELLECTUAL PROPERTY RIGHT INFRINGEMENTS
<PAGE>
EXHIBIT B
[INTERCOOL ENERGY--INVENTORY NOV FY00]
<PAGE>
EXHIBIT C
[FORM OF COVENANT TO COMPETE]
<PAGE>
EXHIBIT D
PATENT APPLICATIONS
Australia
Brazil
Canada
China
European Patent Office
Israel
Japan
New Zealand
United States
