UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(Amendment No. 5)
Insilco Corporation
(Name of Issuer)
Common Stock (Par Value $.001 Per Share)
(Title of Class of Securities)
457659704
(CUSIP Number)
David J. Greenwald, Esq.
Goldman, Sachs & Co.
85 Broad Street
New York, NY 10004
(212) 902-1000
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
July 10, 1997
(Date of Event Which Requires Filing of This Statement)
If the filing person has previously filed a statement on Sched-
ule 13G to report the acquisition which is the subject of this
Schedule 13D, and is filing this schedule because of Rule 13d-
1(b)(3) or (4), check the following box: / /<PAGE>
___________________
CUSIP NO. 457659704
___________________
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Water Street Corporate Recovery Fund I, L.P.
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) / /
(b) / /
3. SEC USE ONLY
4. SOURCE OF FUNDS
OO; WC
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(D) OR 2(E) / /
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
Number of 7. SOLE VOTING POWER
Shares -0-
Beneficially
Owned By 8. SHARED VOTING POWER
Each 3,061,300
Reporting
Person With 9. SOLE DISPOSITIVE POWER
-0-
10. SHARED DISPOSITIVE POWER
3,061,300
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
3,061,300
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES / /
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
45.2%
14. TYPE OF REPORTING PERSON
PN
PAGE 2 OF 15 PAGES<PAGE>
___________________
CUSIP NO. 457659704
___________________
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
The Goldman Sachs Group, L.P.
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) / /
(b) / /
3. SEC USE ONLY
4. SOURCE OF FUNDS
WC
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(D) OR 2(E) / /
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
Number of 7. SOLE VOTING POWER
Shares 334
Beneficially
Owned By 8. SHARED VOTING POWER
Each 3,061,300
Reporting
Person With 9. SOLE DISPOSITIVE POWER
334
10. SHARED DISPOSITIVE POWER
3,061,300
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
3,061,634
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES / /
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
45.2%
14. TYPE OF REPORTING PERSON
HC; PN
PAGE 3 OF 15 PAGES<PAGE>
___________________
CUSIP NO. 457659704
___________________
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Goldman, Sachs & Co.
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) / /
(b) / /
3. SEC USE ONLY
4. SOURCE OF FUNDS
WC
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(D) OR 2(E) /x/
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
Number of 7. SOLE VOTING POWER
Shares -0-
Beneficially
Owned By 8. SHARED VOTING POWER
Each 3,061,300
Reporting
Person With 9. SOLE DISPOSITIVE POWER
-0-
10. SHARED DISPOSITIVE POWER
3,061,300
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
3,061,300
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES / /
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
45.2%
14. TYPE OF REPORTING PERSON
BD; PN; IA
PAGE 4 OF 15 PAGES<PAGE>
AMENDMENT NO. 5 TO
SCHEDULE 13D
RELATING TO THE COMMON STOCK OF
INSILCO
CORPORATION
Water Street Corporate Recovery Fund I, L.P. ("Water
Street"), Goldman, Sachs & Co. ("Goldman Sachs") and The
Goldman Sachs Group, L.P. ("GS Group" and, collectively with
Water Street and Goldman Sachs, the "Reporting Persons")* here-
by file this Amendment No. 5 (this "Amendment No. 5") to the
statement on Schedule 13D filed with respect to the Common
Stock, par value $.001 per share (the "Common Stock"), of
Insilco Corporation, a Delaware corporation (the "Company"), as
most recently amended by Amendment No. 4 thereto dated August
12, 1996 (as amended, the "Schedule 13D"). Unless otherwise
indicated, all capitalized terms not otherwise defined herein
shall have the same meanings as those set forth in the Schedule
13D.
This Amendment No. 5 is being filed to report a
decrease in the number and the percentage of the outstanding
shares of Common Stock beneficially owned by the Reporting Per-
sons, which change resulted from the sale of 2,805,194 shares
of Common Stock by Water Street to the Company pursuant to a
Stock Purchase Agreement, dated as of July 10, 1997 (the "Water
Street Purchase Agreement"), and has otherwise been affected by
the vesting of 16,000 options issued pursuant to the Company's
nonemployee director stock incentive plan and certain stock
issuances by the Company.
ITEM 2. IDENTITY AND BACKGROUND.
Item 2 is hereby amended and restated as follows:
Water Street, a Delaware limited partnership, is
engaged in the business of buying and selling securities of
entities that (i) are in bankruptcy (or other forms of legal
_____________________
* Neither the present filing nor anything contained herein
shall be construed as an admission that Water Street, Goldman
Sachs or GS Group constitute a "person" for any purpose other than
Section 13(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), or that Water Street, Goldman Sachs and GS
Group constitute a "group" for any purpose.
PAGE 5 OF 15 PAGES<PAGE>
reorganization) or have defaulted in the payment of any indebt-
edness for borrowed money or (ii) have outstanding debt securi-
ties meeting certain yield requirements. Goldman Sachs is the
sole general partner of Water Street. Pursuant to the terms of
its partnership agreement, Water Street's partnership term end-
ed on June 15, 1997 and, therefore, Water Street is in the pro-
cess of winding up. Water Street's partnership agreement pro-
vides that, upon the expiration of its term, Goldman Sachs, as
Water Street's sole general partner, will dispose of or dis-
tribute all partnership assets, or the proceeds from the dispo-
sition thereof, within one year, or June 15, 1998, although
such one-year period may be extended with the consent of the
holders of a majority of the partnership interests in Water
Street.
Goldman Sachs, a New York limited partnership, is an
investment banking firm and a member of the New York Stock
Exchange and other national exchanges. GS Group, one of the
general partners of Goldman Sachs, owns a 99% interest in
Goldman Sachs. GS Group is a Delaware limited partnership and
a holding partnership that (directly or indirectly through sub-
sidiaries or affiliated companies or both) is a leading invest-
ment banking organization. The other general partner of
Goldman Sachs is The Goldman, Sachs & Co. L.L.C., a Delaware
limited liability company ("GS L.L.C."), which is a wholly
owned subsidiary of GS Group and The Goldman Sachs Corporation,
a Delaware corporation ("GS Corp."). GS Corp. is the sole gen-
eral partner of GS Group. The principal business address of
each of Goldman Sachs, GS Group, GS Corp., GS L.L.C. and Water
Street is 85 Broad Street, New York, NY 10004.
The name, business address, present principal occupa-
tion or employment and citizenship of each director of GS Corp. and
GS L.L.C. and of each member of the executive committees of GS Corp.,
GS L.L.C., GS Group and Goldman Sachs are set forth on Schedule I
hereto and are incorporated herein by reference.
During the last five years, none of the Reporting
Persons, or to the knowledge of such Reporting Persons, any of
the persons listed on Schedule I hereto, (i) has been convicted
in a criminal proceeding (excluding traffic violations or simi-
lar misdemeanors) or (ii) except as set forth on Schedule II
hereto, has been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result
of such proceeding was or is subject to a judgment, decree or
final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities
laws, or finding any violation with respect to such laws.
PAGE 6 OF 15 PAGES<PAGE>
ITEM 4. PURPOSE OF TRANSACTION.
Item 4 is hereby amended and restated as follows:
The Company has announced that it has determined to
(i) refinance its existing indebtedness, (ii) seek to issue up
to $150 million of additional debt and (iii) effect a repur-
chase of Common Stock in the amount of approximately $220 mil-
lion (collectively, the "Transactions"). Pursuant to the
Transactions, on July 10, 1997, the Company and Water Street
entered into the Water Street Purchase Agreement, whereby the
Company has acquired 2,805,194 shares of Common Stock from
Water Street at $38.50 per share in cash for an aggregate pur-
chase price of $107,999,969 (the "Purchase Price"). On July
11, 1997, the Company commenced a self-tender offer for up to
2,857,142 shares of Common Stock at a purchase price of $38.50
per share net in cash to selling stockholders (the "Offer"),
pursuant to, and in accordance with the terms provided in, an
Issuer Tender Offer Statement on Schedule 13E-4, including the
Offer to Purchase, dated and filed with the Commission on July
11, 1997 (including all exhibits thereto, the "Tender Offer
Statement").
Pursuant to the Water Street Purchase Agreement,
Water Street has agreed to maintain the proceeds received by it
from the sale, together with all interest actually earned
thereon, in a segregated account and, upon consummation of the
Offer by the Company, to pay to the Company the interest actu-
ally earned thereon. In addition, Water Street and the Company
have agreed in the Water Street Purchase Agreement that if the
Offer expires or terminates without any shares having been purchased
thereunder, the purchase of the 2,805,194 shares of Common Stock by
the Company from Water Street pursuant to the Water Street Pur-
chase Agreement will be rescinded (the "Rescission"). In the
event of a Rescission, the purchase price (together with inter-
est actually earned thereon) will be repaid to the Company and
the Company will return to Water Street the 2,805,194 shares of
Common Stock.
In addition, pursuant to the Water Street Purchase
Agreement, (x) Water Street has agreed, among other things,
that it will not tender more than 960,577 shares of Common
Stock in the Offer and (y) the Company has agreed, among other
things, that it will not (i) accept for purchase or purchase
more than 2,857,142 shares of Common Stock in the Offer, (ii)
pay more than $38.50 per share or (iii) extend the Offer past
45 days from the date of its commencement, unless the Company
and Water Street shall first have entered into a written agree-
ment amending the Water Street Purchase Agreement. It is the
PAGE 7 OF 15 PAGES<PAGE>
current intention of Water Street to tender 960,577 shares of Common
Stock in the Offer. Additionally, in the Water Street Purchase
Agreement, Water Street represented, among other things, that, as of
the date thereof, it did not currently intend to sell or otherwise
dispose of any shares of Common Stock beneficially owned by it on the
date thereof other than pursuant to the Water Street Purchase Agreement
or the Offer, which intention Water Street has agreed to confirm to the
Company immediately prior to the Company's acceptance for payment of
the shares of Common Stock tendered pursuant to the Offer.
The foregoing summary of the Water Street Purchase
Agreement does not purport to be complete and is subject to,
and qualified in its entirety by reference to, the text of the
Water Street Purchase Agreement, which is filed as Exhibit 8
hereto.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
Item 5 is hereby amended and restated as follows:
(a) As of the date hereof, Water Street beneficially
owns an aggregate of 3,061,300 shares of Common Stock, includ-
ing 64,000 shares of Common Stock issuable upon the exercise of
options (32,000 shares at an exercise price of $17 per share
and 32,000 shares at an exercise price of $30 per share). Such
options were issued pursuant to the Company's nonemployee
director stock incentive plan. Based upon the foregoing, Water
Street beneficially owns approximately 45.2% of the Common
Stock reported by the Company to be outstanding as of July 3,
1997 (as disclosed in the Company's Tender Offer Statement),
less the shares of Common Stock repurchased by the Company pur-
suant to the Water Street Purchase Agreement and the number of
shares of Common Stock which, according to the Company's
Tender Offer Statement, the Company repurchased from Robert L.
Smialek, Chairman of the Board and President of the Company
(the "Smialek Purchase").
As of the date hereof, GS Group owns an aggregate of
334 shares of Common Stock and, in addition, each of GS Group
and Goldman Sachs may be deemed to be the beneficial owner of
the 3,061,300 shares of Common Stock, including the 64,000
shares of Common Stock issuable upon the exercise of options,
owned by Water Street, representing in the aggregate approxi-
mately 45.2% of the outstanding Common Stock. Each of GS Group
and Goldman Sachs disclaims beneficial ownership of the shares
of Common Stock held by Water Street to the extent the partner-
ship interests in Water Street are held by persons other than
GS Group, Goldman Sachs or their affiliates. To the knowledge
of the Reporting Persons, each of the persons listed on Sched-
ule I owns 167 shares of Common Stock. Each of the Reporting
Persons disclaims beneficial ownership with respect to such
shares.
As described in Item 4, pursuant to the Water Street
Purchase Agreement, the Company has certain rights of rescis-
sion under certain circumstances. The information set forth in
Item 4 is incorporated in this Item 5(a) by reference.
PAGE 8 OF 15 PAGES<PAGE>
(b) Each Reporting Person shares the power to vote
or direct the vote and dispose or direct the disposition of
shares of Common Stock beneficially owned by such Reporting
Person as indicated in the second through fourth pages of this
filing. To the knowledge of the Reporting Persons, each of the
persons listed on Schedule I owns 167 shares of Common Stock.
Each of the Reporting Persons disclaims beneficial ownership
with respect to such shares.
(c) As described in Item 4 above, on July 10, 1997,
Water Street and the Company entered into the Water Street Pur-
chase Agreement, pursuant to which the Company purchased from
Water Street 2,805,194 shares of Common Stock at the Purchase
Price. Pursuant to the Water Street Purchase Agreement, Water
Street has agreed to maintain the proceeds received by it from
the sale in a segregated account and, upon consummation of the
Offer by the Company, to pay to the Company the interest actu-
ally earned thereon. In addition, Water Street and the Company
have agreed that, in the event of a Rescission, the purchase
price (together with interest actually earned thereon) will be
repaid to the Company and the 2,805,194 shares of Common Stock
will be returned to Water Street.
In connection with the Offer, it is the current
intention of Water Street to tender 960,577 shares of Common
Stock in the Offer.
(d) No other Person is known by Water Street,
Goldman Sachs or GS Group to have the right to receive or the
power to direct the receipt of dividends from, or the proceeds
from the sale of, any shares of Common Stock beneficially owned
by Water Street, Goldman Sachs or GS Group, or by any of the
persons listed on Schedule I and Schedule II hereto.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATION-
SHIPS WITH RESPECT TO SECURITIES OF THE ISSUER.
Item 6 is amended as follows:
As discussed Item 4, on July 10, 1997, Water Street
entered into the Water Street Purchase Agreement, pursuant to
which the Company agreed to purchase from Water Street
2,805,194 shares of Common Stock for the Purchase Price. Pur-
suant to the Water Street Purchase Agreement, Water Street has
agreed to maintain the proceeds received by it from the sale in
a segregated account and, upon consummation of the Offer by the
Company, to pay to the Company the interest actually earned
thereon.
PAGE 9 OF 15 PAGES<PAGE>
In addition, the Water Street Purchase Agreement pro-
vides, among other things, that, in the event of a Rescission,
the purchase price (together with interest actually earned
thereon) will be repaid to the Company and the 2,805,194 shares
of Common Stock will be returned to Water Street, and that the
Company will not (i) accept for purchase or purchase more than
2,857,142 shares of Common Stock in the Offer, (ii) pay more
than $38.50 per share or (iii) extend the Offer past 45 days
from the date of its commencement, unless the Company and Water
Street shall first have entered into a written agreement amend-
ing the Water Street Purchase Agreement.
On July 11, 1997, the Company commenced the Offer
pursuant to, and in accordance with the terms provided in the
Tender Offer Statement. Pursuant to the Water Street Purchase
Agreement, Water Street has agreed that it will not tender in
the Offer more than 960,577 shares of Common Stock. It is
Water Street's current intention to tender 960,577 shares of
Stock in the Offer. Additionally, in the Water Street Purchase
Agreement, Water Street represented, among other things, that, as of
the date thereof, it did not currently intend to sell or otherwise
dispose of any shares of Common Stock beneficially owned by it on the
date thereof other than pursuant to the Water Street Purchase Agreement
or the Offer, which intention Water Street has agreed to confirm to the
Company immediately prior to the Company's acceptance for payment of
the shares of Common Stock tendered pursuant to the Offer.
Goldman Sachs is acting as financial advisor to the
Company in connection with the Transactions. Pursuant to such
engagement, the Company has agreed to pay to Goldman Sachs a
fee of $2 million for advice in connection with the Transac-
tions (other than the approximately $220 million of share
repurchases (the "Share Repurchase") by the Company pursuant to
the Offer, the Water Street Purchase Agreement and the Smialek
Purchase, respectively) and a fee of $200,000 for advice in connection
with the Share Repurchase. The Company has also agreed to reimburse
Goldman Sachs for certain of its out-of-pocket expenses and to
indemnify Goldman Sachs against certain liabilities, including certain
liabilities under the federal securities laws, in connection with the
Transactions. In addition, Goldman Sachs has acted as a
co-syndication agent of the Company's new senior debt arrangements
and will assist the Company in its new subordinated debt offering, for
which Goldman Sachs has received or will receive customary fees and
indemnification.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Item 7 is hereby amended by adding thereto the fol-
lowing:
The following is to be filed herewith as an Exhibit
to this Amendment No. 5:
PAGE 10 OF 15 PAGES<PAGE>
(8) Stock Purchase Agreement, dated as of July 10,
1997, by and between Insilco Corporation and
Water Street Corporate Recovery Fund I, L.P.
PAGE 11 OF 15 PAGES<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge
and belief, I certify that the information set forth in this state-
ment is true, complete and correct.
WATER STREET CORPORATE RECOVERY
FUND I, L.P.
By: Goldman, Sachs & Co.,
its General Partner
By: /s/ Terence M. O'Toole
_________________________
Name: Terence M. O'Toole
Title: Managing Director
GOLDMAN, SACHS & CO.
By: /s/ Terence M. O'Toole
_________________________
Name: Terence M. O'Toole
Title: Managing Director
THE GOLDMAN SACHS GROUP, L.P.
By: The Goldman Sachs Corporation,
its general partner
By: /s/ Terence M. O'Toole
_________________________
Name: Terence M. O'Toole
Title: Executive Vice President
Dated: July 16, 1997
PAGE 12 OF 15 PAGES<PAGE>
SCHEDULE I
The name of each director of The Goldman Sachs
Corporation and The Goldman, Sachs & Co. L.L.C. and of each member
of the executive committees of The Goldman Sachs Corporation, The
Goldman, Sachs & Co. L.L.C., The Goldman Sachs Group, L.P. and
Goldman, Sachs & Co. is set forth below.
The business address of each natural person listed below
except John A. Thain and John L. Thornton is 85 Broad Street, New
York, NY 10004. The business address of John A. Thain and John L.
Thornton is 133 Fleet Street, London EC4A 2BB, England. Each per-
son is a citizen of the United States of America. The present
principal occupation or employment of each of the listed persons
is a managing director of Goldman, Sachs & Co. or another of
Goldman, Sachs & Co. operating entity and a member of the executive
committee.
Jon Z. Corzine
Henry M. Paulson, Jr.
Roy J. Zuckerberg
Robert J. Hurst
John A. Thain
John L. Thornton
PAGE 13 OF 15 PAGES<PAGE>
SCHEDULE II
In settlement of Securities and Exchange Commission
Administrative Proceeding File No. 3-7646 In the Matter of the Dis-
tribution of Securities Issued by Certain Government Sponsored
Enterprises, Goldman, Sachs & Co. (the "Firm"), along with numerous
other securities firms, without admitting or denying any of the
findings of the Securities and Exchange Commission (the "SEC") con-
sented to the entry of an Order, dated January 16, 1992. The SEC
found that the Firm, in connection with its participation in the
primary distributions of certain unsecured debt securities issued
by Government Sponsored Enterprises ("GSEs"), made and kept certain
records that did not accurately reflect the Firm's customers'
orders for GSEs' securities and/or offers, purchases or sales by
the Firm of the GSEs' securities effected by the Firm in violation
of Section 17(a) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and 17 C.F.R. Sections 240.17a-3 and 240.17a-
4.
The Firm was ordered to cease and desist from committing
or causing future violations of the aforementioned sections of the
Exchange Act in connection with any primary distributions of unse-
cured debt securities issued by the GSEs, pay a civil money penalty
to the United States Treasury in the amount of $100,000 and main-
tain policies and procedures reasonably designed to ensure the
Firm's future compliance with the aforementioned sections of the
Exchange Act in connection with any primary distributions of unse-
cured debt securities issued by the GSEs.
In Securities and Exchange Commission Administrative Pro-
ceeding File No. 3-8282 In the Matter of Goldman, Sachs & Co., the
Firm, without admitting or denying any of the SEC's allegations,
settled administrative proceedings involving alleged books and
records and supervisory violations relating to eleven trades of
U.S. Treasury securities in the secondary markets in 1985 and 1986.
The SEC alleged that the Firm had failed to maintain certain
records required pursuant to Section 17(a) of the Exchange Act and
had also failed to supervise activities relating to the aforemen-
tioned trades in violation of Section 15(b)(4)(E) of the Exchange
Act.
The Firm was ordered to cease and desist from committing
or causing any violation of the aforementioned sections of the
Exchange Act, pay a civil money penalty to the SEC in the amount of
$250,000 and establish policies and procedures reasonably designed
to assure compliance with Section 17(a) of the Exchange Act and
Rules 17a-3 and 17a-4 thereunder.
PAGE 14 OF 15 PAGES<PAGE>
INDEX TO EXHIBITS
Exhibit No. Exhibit Page
(8) Stock Purchase Agreement, dated as of
July 10, 1997, by and between Insilco
Corporation and Water Street Corporate
Recovery Fund I, L.P.
PAGE 15 OF 15 PAGES
Exhibit 8
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (this "Agreement"), dated as
of July 10, 1997, by and between Insilco Corporation, a
Delaware corporation (the "Company"), and Water Street
Corporate Recovery Fund I, L.P., a Delaware limited partnership
("Water Street").
WHEREAS, the Company desires to purchase up to
5,714,284 shares of Common Stock, par value $.001, of the
Company (the "Shares"), constituting 59.7% of the outstanding
Shares;
WHEREAS, Water Street owns 5,802,494 Shares,
constituting 60.6%of the outstanding Shares;
WHEREAS, the Company intends, within one business day
from the date hereof, to commence a tender offer to purchase up
to 2,857,142 Shares at a purchase price of $38.50 per Share in
cash in all material respects on the terms of the draft Tender
Offer Statement on Schedule 13E-4 delivered to Water Street on
the date hereof (the "Offer");
WHEREAS, the Company desires to purchase from Water
Street and Water Street desires to sell to the Company
2,805,194 Shares (the "Initial Shares") at a purchase price of
$38.50 per Share in cash pursuant to this Agreement;
WHEREAS, on March 5, 1997, the Company sold its
Rolodex office products business (the "Rolodex Sale") for gross
proceeds of $117 million;
WHEREAS, the Board of Directors of the Company
adopted a plan of partial liquidation with respect to a
distribution of the proceeds of the Rolodex Sale and filed a
Form 966 with the Internal Revenue Service with respect
thereto; and
WHEREAS, immediately upon receipt of the proceeds of
the Rolodex Sale, the Company deposited $110 million of such
proceeds (the "Rolodex Proceeds") into a separate bank account,
Link DDA Account, account no. 4072-3545, Citibank, New York
(the "Link Account"), from which account the Rolodex Proceeds
were then deposited into CUSA FAO Insilco Corp. Cash Collateral
Custody Account, account no. 846-881, Citibank, Tampa (the
"Rolodex Proceeds Account").
WHEREAS, on the date hereof the Company has entered
into an agreement with Robert L. Smialek (the "Smialek Stock
Purchase Agreement") pursuant to which the Company is
purchasing 51,948 Shares on substantially the same terms and
conditions as this Agreement.<PAGE>
NOW, THEREFORE, in consideration of the foregoing and
intending to be legally bound hereby, the parties hereto hereby
agree as follows:
ARTICLE 1
PURCHASE AND SALE OF THE SHARES
Section 1.1. The Purchase. On the terms and
subject to the conditions of this Agreement, Water Street
hereby sells, transfers and conveys the Initial Shares to the
Company, and the Company hereby purchases the Initial Shares
from Water Street, at a purchase price of $38.50 per Share for
an aggregate purchase price of $107,999,969 (the "Purchase
Price"). Water Street, concurrently with the execution hereof,
is delivering to the Company certificates representing the
Initial Shares together with stock powers duly executed in
blank (the "Stock Powers").
Section 1.2. Payment. On the terms and subject to
the conditions of this Agreement, in consideration for the sale
of the Initial Shares, concurrently with the execution hereof
the Company is paying the Purchase Price to Water Street solely
out of the Rolodex Proceeds by delivery to Water Street of a
cashiers check drawn on the Link Account payable to the order
of Water Street in the amount of $107,999,969.
ARTICLE 2
REPRESENTATIONS
Section 2.1. Representations of the Company. The
Company hereby represents and warrants to Water Street that:
(a) The Company has all requisite corporate power
and authority to enter into this Agreement and to consummate
the transactions contemplated hereby.
(b) The execution and delivery by the Company of
this Agreement, and the consummation by the Company of the
transactions contemplated hereby, have been duly authorized by
all necessary corporate action on the part of the Company.
(c) This Agreement has been duly executed and
delivered by the Company and constitutes a valid and binding
obligation of the Company enforceable against the Company in
accordance with its terms.
(d) At all times prior to the payment of the
Purchase Price referred to in Section 1.2, both the Rolodex
Proceeds Account and the Link Account contained only the
Rolodex Proceeds and interest earned thereon that had not yet
been withdrawn by the Company. No distributions have been made
out of the Rolodex Proceeds Account other than to the Link
Account, and no distributions have been made out of the Link
Account other than (i) pursuant to this Agreement or the
Smialek Stock Purchase Agreement, or <PAGE>
(ii) to withdraw from time to time the interest earned on the
Rolodex Proceeds. The Purchase Price is being paid solely out
of the Rolodex Proceeds.
(e) The Company intends to commence the Offer on the
business day immediately following the date hereof.
Section 2.2. Representations of Water Street.
Water Street hereby represents and warrants to the Company
that:
(a) Water Street has all requisite power and
authority to enter into this Agreement and to consummate the
transactions contemplated hereby.
(b) The execution and delivery by Water Street of
this Agreement, and the consummation by Water Street of the
transactions contemplated hereby, have been duly authorized by
all necessary partnership action on the part of Water Street.
(c) This Agreement has been duly executed and
delivered by Water Street and constitutes a valid and binding
obligation of Water Street enforceable against Water Street in
accordance with its terms.
(d) Water Street owns the Initial Shares, and is
conveying the Initial Shares to the Company, free and clear of
any lien, pledge, security interest or other encumbrance
whatsoever (collectively, "Liens").
(e) Water Street does not currently intend to sell,
transfer, assign, pledge, distribute or otherwise dispose of
any of the Shares beneficially owned by it on the date hereof,
other than pursuant to this Agreement or the Offer.
ARTICLE 3
COVENANTS
Section 3.1. Maintenance of Rolodex Proceeds. No
later than the next business day following the receipt thereof,
Water Street shall deposit the Purchase Price in a new account
at Citibank, New York, account no. 40734201 (the "Water Street
Account"), and shall maintain such funds, together with all
interest actually earned thereon, in the Water Street Account
(and no other money shall be deposited in such account) until
the earlier of (x) the first date on which the Company pays for
Shares tendered in the Offer (the "Payment Date") or (y) the
date on which Water Street returns the Purchase Price to the
Company pursuant to Section 3.5(a).
Section 3.2. Offer; Agreement Not to Tender. (a)
The Offer shall be for not more than 2,857,142 Shares at a
purchase price of $38.50 per Share and shall be in all material
respects on the terms of the draft Tender Offer Statement on
Schedule 13E-4 delivered to Water Street on the date hereof.<PAGE>
(b) Water Street shall tender no more than 960,577
Shares in the Offer.
(c) The Company shall not (i) accept for purchase or
purchase more than 2,857,142 Shares in the Offer (including in
connection with odd lot purchases), nor (ii) pay more than
$38.50 per Share, nor (iii) extend the Offer past 45 days from
the date of its commencement, unless the Company and Water
Street shall first have entered into a written agreement
amending this Agreement with respect thereto.
Section 3.3. Interest Payment. If the Company
purchases Shares in the Offer, Water Street shall, on the
Payment Date, pay to the Company, by wire transfer of
immediately available funds, all interest actually earned on
the Purchase Price from and including the date of its deposit
in the Water Street Account up to the Payment Date.
Section 3.4. Rescission. If the Offer expires or
terminates without any Shares having been purchased therein,
the purchase and sale of the Initial Shares pursuant to this
Agreement shall automatically, and without any further action
by any party, be rescinded (the "Rescission"). The Company
shall promptly notify Water Street in writing of the
Rescission.
Section 3.5. Effect of Rescission. If there is a
Rescission, then on the business day immediately following
receipt by Water Street of written notice of the Rescission:
(a) Water Street shall return to the Company the
Purchase Price, together with all interest actually earned
thereon from and including the date of its deposit in the Water
Street Account up to the date of such return, by wire transfer
of immediately available funds from the Water Street Account to
the Link Account; and
(b) the Company shall return to Water Street the
certificates representing the Initial Shares, together with the
Stock Powers, free and clear of all Liens, other than Liens
created by Water Street.
Section 3.6. Confirmation of Intent. Water Street
will confirm to the Company in writing immediately prior to the
Company's acceptance for payment of Shares in the Offer that it
does not at that time have a current intention to sell,
transfer, assign, pledge, distribute or otherwise dispose of
any of the Shares beneficially owned by it on the date hereof
(except for the Initial Shares), other than pursuant to the
Offer.<PAGE>
ARTICLE 4
MISCELLANEOUS
Section 4.1. Governing Law. This Agreement shall
be construed in accordance with and governed by the laws of the
State of New York applicable to agreements made and to be
performed wholly within such jurisdiction.
Section 4.2. Severability. If any provision of
this Agreement is invalid, illegal or incapable of being
enforced by any rule of law or public policy, all other
provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any
adverse manner to any party. Upon such determination that any
provision is invalid, illegal or incapable of being enforced,
the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as
closely as possible in an acceptable manner so that the
transactions contemplated hereby are fulfilled to the greatest
extent possible.
Section 4.3. Counterparts; Facsimile Signatures.
This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but all of
which together shall constitute but one and the same agreement.
Delivery of a photocopy or transmission by telecopy of a signed
signature page of this Agreement shall constitute delivery of
such signed signature page.
Section 4.4. Notice. All notices and other
communications required or permitted to be given under this
Agreement shall be in writing and shall be deemed to have been
validly given, made or served on the date of delivery, if
delivered personally or by telecopier, or on the day after
having been sent by overnight courier, or seven days after
having been sent by registered or certified mail, return
receipt requested, postage prepaid, to the other party to this
Agreement at the following address or to such other address as
such party shall specify by notice to the other party:
(a) If to the Company, addressed to:
Insilco Corporation
425 Metro Place N.
Fifth Floor
Dublin, Ohio 43017
Attention: Vice President and
General Counsel
Telephone: (614) 791-3110
Telecopier: (614) 791-3195<PAGE>
with a copy to
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004
Attention: Aviva Diamant
Telephone: (212) 859-8185
Telecopier: (212) 859-4000
(b) If to Water Street, addressed to:
Water Street Corporate Recovery Fund I, L.P.
c/o Goldman Sachs & Co.
85 Broad Street
New York, New York 10004
Attention: David J. Greenwald
Telephone: (212) 902-1000
Telecopier: (212) 902-3000
with a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: Mitchell S. Presser
Telephone: (212) 403-1000
Telecopier: (212) 403-2000
Section 4.5. Exclusive Agreement. This Agreement
constitutes the sole understanding of the parties with respect
to the subject matter hereof and any verbal or written
communication between the parties prior to the adoption of this
Agreement shall be deemed merged herein and of no further force
or effect.<PAGE>
IN WITNESS WHEREOF, the parties have executed this
Agreement and caused the same to be duly delivered on their
behalf as of the day and year first written above.
INSILCO CORPORATION
By: /s/ Kenneth H. Koch
_______________________________
Name: Kenneth H. Koch
Title: Vice President
WATER STREET RECOVERY FUND I, L.P.
By: GOLDMAN, SACHS & CO., its General
Partner
By: /s/ Terence M. O'Toole
_______________________________
Name: /s/ Terence M. O'Toole
Title: Managing Director
