UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT: FEBRUARY 11, 2000
INSILCO CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 0-22098 06-0635844
-------------- --------------------- ---------------------
(STATE OR OTHER (COMMISSION FILE NO.) (IRS EMPLOYER
JURISDICTION OF IDENTIFICATION NUMBER)
INCORPORATION OR
ORGANIZATION)
425 Metro Place North
Fifth Floor
Dublin, Ohio 43017
(614) 792-0468
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER
INCLUDING AREA CODE OF REGISTRANTS
PRINCIPAL EXECUTIVE OFFICES)
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On February 11, 2000, Insilco Holding Co. through its wholly-owned
subsidiary Insilco Corporation, sold its publishing business, Taylor
Publishing company to TP Acquisition Corp., a newly created,
wholly-owned subsidiary of Castle Harlan Partners III, L.P., for
gross proceeds of approximately $93.5 million, less transaction costs
and subject to adjustment for working capital and other post closing
items. The net proceeds will be utilized to reduce the outstanding
principal of Insilco Corporation's Credit Facility and/or fund future
acquisitions.
This transaction was accomplished through arms length negotiations
between Insilco Corporation management and Castle Harlan Partners
III, L.P. management.
Insilco Holding Co.'s press release issued February 11, 2000 is
attached as an exhibit and is incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Business Acquired
-----------------------------------------
Not applicable.
(b) Pro Forma financial Information
-------------------------------
The following unaudited pro forma condensed consolidated financial
statements are filed with this report:
Pro Forma Condensed Consolidated Balance
Sheet as of September 30, 1999 Page F-1
Pro Forma Condensed Consolidated Statement
Of Operations
Nine months ended September 30, 1999 Page F-2
Year ended December 31, 1998 Page F-3
The following pro forma unaudited condensed balance sheet as of September
30, 1999 presents the estimated impact of the sale of the Taylor Publishing
Company as discussed in Item 2 on Insilco Corporation's consolidated
financial position assuming such sale had occurred at September 30, 1999.
The following pro forma unaudited condensed consolidated statements of
operations for the nine months ended September 30, 1999 and the year ended
December 31, 1998 present the estimated impact of the sale of the Taylor
Publishing Company on Insilco Corporation's historical consolidated
statements of operations as if such sale had occurred at the beginning of
the applicable period. The nonrecurring transactions related directly to
the sale are excluded from the pro forma statements of operations. The
significant assumptions utilized for the pro forma financial statements
include: (i) the net proceeds will be utilized to reduce the outstanding
debt described above; (ii) the interest rates for the outstanding debt are
based upon the weighted average rates during the applicable period and
(iii) income tax expense (benefit) attributable to the pro forma
transactions is provided at the statutory tax rate.
2
<PAGE>
The unaudited pro forma condensed consolidated financial statements have
been prepared by Insilco Corporation based upon assumptions deemed proper.
The unaudited pro forma condensed consolidated financial statements
presented herein are shown for illustrative purposes only and are not
necessarily indicative of the future financial position or future results
of operations of Insilco Corporation or of the financial position or
results of operations that would have actually occurred had the transaction
been in effect as of the date or for the periods presented.
The unaudited pro forma condensed consolidated financial statements should
be read in conjunction with the historical financial statements and related
notes of Insilco Corporation.
(c) Exhibits.
---------
EXHIBIT NO. DESCRIPTION
2 (a) Merger agreement dated December 17, 1999 by and
among Insilco Corporation, Taylor Publishing
Company, and TP Acquisition Corp.
99 (a) Press release of Insilco Holding Co. issued
February 11, 2000.
3
<PAGE>
SIGNATURES
Pursuant to the requirements 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.
INSILCO CORPORATION
----------------------------
Registrant
Date: February 11, 2000 By: /s/ MICHAEL R. ELIA
----------------------------
Michael R. Elia
Senior Vice President, Chief Financial
Officer, Treasurer and Secretary
4
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
2 (a) Merger agreement dated December 17, 1999 by and
among Insilco Corporation, Taylor Publishing
Company and TP Acquisition Corp.
99 (a) Press release of Insilco Holding Co. issued
February 11, 2000.
5
<PAGE>
INSILCO CORPORATION AND SUBSIDIARIES
Unaudited Pro Forma Condensed Consolidated Balance Sheet
As of September 30, 1999
(In thousands)
<TABLE><CAPTION>
a)
Adjustment
to Record Sale,
Net Proceeds Pro
Historical and Interest Forma
---------- ------------ ---------
<S> <C> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 14,734 2 14,736
Trade receivables, net 95,188 (18,849) 76,339
Other receivables 11,570 (4,155) 7,415
Inventories 64,381 (8,577) 55,804
Deferred tax asset 1,547 (1,547) --
Prepaid expenses and other 4,563 (1,638) 2,925
--------- --------- ---------
Total current assets 191,983 (34,764) 157,219
Property, plant and equipment 125,048 (11,659) 113,389
Deferred tax asset 6,206 (6,206) --
Other assets 46,247 (1,329) 44,918
--------- --------- ---------
Total assets $ 369,484 (53,958) 315,526
========= ========= =========
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
Current liabilities
Current portion of long-term debt $ 1,264 -- 1,264
Accounts payable 38,581 (2,912) 35,669
Accrued expenses and other 55,113 (21,925) 33,188
--------- --------- ---------
Total current liabilities 94,958 (24,837) 70,121
Long-term debt, excluding current portion 355,530 (89,113) 266,417
Intercompany Payable Affiliate 2,980 -- 2,980
Other long-term obligations, excluding current portion 46,873 138 47,011
Stockholders' (deficit)
Minority Interest 100 -- 100
Stockholders' (deficit) (130,957) 59,854 (71,103)
--------- --------- ---------
Total liabilities and stockholders' (deficit) $ 369,484 (53,958) 315,526
========= ========= =========
</TABLE>
a) To reflect removal of Taylor Publishing Company's September 30, 1999
balance sheet and reflect paydown of debt with the net proceeds of
$89.1 million.
F-1
<PAGE>
INSILCO CORPORATION AND SUBSIDIARIES
Unaudited Pro Forma Condensed Consolidated Statement of Operations
Nine Months Ended September 30, 1999
(In thousands, except per share data)
<TABLE><CAPTION>
Net Proceeds
Taylor and Interest Pro
Historical Operations Adjustments Forma
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net sales $ 449,590 (92,047) -- 357,543
Cost of goods sold 327,216 (50,550) -- 276,666
Depreciation and amortization 17,507 (3,003) -- 14,504
Selling, general and administrative 75,486 (29,648) (175)a) 45,663
Restructuring Charge 6,532 -- -- 6,532
--------- --------- --------- ---------
Operating income 22,849 (8,846) 175 14,178
Other Income (expense):
Interest expense (27,745) 505 5,352 b) (21,888)
Interest income 347 -- -- 347
Equity in net income of Thermalex 2,596 -- -- 2,596
Other income, net 10,142 297 -- 10,439
--------- --------- --------- ---------
Income from continuing
operations before income taxes 8,189 (8,044) 5,527 5,672
Income tax (expense) benefit (1,176) 2,896 c) (1,990)c) (270)
--------- --------- --------- ---------
Net income $ 7,013 (5,148) 3,537 5,402
========= ========= ========= =========
</TABLE>
a) To remove legal fees related to the Jostens antitrust lawsuit.
b) To reflect decrease in interest expense resulting from the debt paydown
on Insilco's credit facility from the proceeds of the sale. Interest is
calculated on the net proceeds of $89.1 million using an assumed
interest rate of 8 percent. A change of 1/8 percent in the interest
rate would result in a change in interest expense and net income of
$83,619 and $53,517 before and after taxes, respectively.
c) To reflect the tax effect of Taylor operations and the pro forma
adjustments at a statutory rate, 34 percent for federal and 2 percent
for state.
F-2
<PAGE>
INSILCO CORPORATION AND SUBSIDIARIES
Unaudited Pro Forma Condensed Consolidated Statement of Operations
Year Ended December 31, 1998
(In thousands, except per share data)
<TABLE><CAPTION>
Net Proceeds
Taylor and Interest Pro
Historical Operations Adjustments Forma
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net sales $ 535,629 (101,325) -- 434,304
Cost of goods sold 383,269 (61,167) -- 322,102
Depreciation and amortization 20,159 (3,319) -- 16,840
Selling, general and administrative 91,488 (33,296) (682)a) 57,510
Merger Expenses 20,890 -- -- 20,890
Severance and write-downs 2,542 -- -- 2,542
--------- --------- --------- ---------
Operating income 17,281 (3,543) 682 14,420
Other Income (expense):
Interest expense (29,198) 610 5,782 b) (22,806)
Interest income 979 -- -- 979
Equity in net income of Thermalex 2,850 -- -- 2,850
Other income, net 3,027 713 -- 3,740
--------- --------- --------- ---------
Income from continuing
operations before income taxes (5,061) (2,220) 6,464 (817)
Income tax (expense) benefit 868 799 c) (2,327)c) (660)
--------- --------- --------- ---------
Net income (loss) $ (4,193) (1,421) 4,137 (1,477)
========= ========= ========= =========
</TABLE>
a) To remove legal fees related to the Jostens antitrust lawsuit.
b) To reflect decrease in interest expense resulting from the debt paydown
on Insilco's credit facility from the proceeds of the sale. Interest is
calculated on the weighted average proceeds of $82.6 million (adjusted
for seasonal working capital fluctuations) using a rate of 7 percent. A
change of 1/8 percent in the interest rate would result in a change in
interest expense and net income of $103,241 and $66,074 before and
after taxes, respectively.
c) To reflect the tax effect of Taylor operations and the pro forma
adjustments at a statutory rate, 34 percent for federal and 2 percent
for state.
F-3
EXHIBIT 2 (A)
-------------
EXECUTION COPY
PURCHASE AGREEMENT,
dated as of December 17, 1999,
among
INSILCO CORPORATION,
TAYLOR PUBLISHING COMPANY
AND
TP ACQUISITION CORP.
<PAGE>
TABLE OF CONTENTS
ARTICLE I DEFINITIONS........................................................ 1
ARTICLE II CLOSING........................................................... 10
2.1 Closing.......................................................... 10
2.2 Proceedings at Closing........................................... 10
ARTICLE III CONSIDERATION.................................................... 11
3.1 Amount and Form of Consideration................................. 11
3.2 Payment of Consideration......................................... 11
3.3 Working Capital Purchase Price Adjustment........................ 11
ARTICLE IV................................................................... 13
4.1 Organization; Power and Authority................................ 13
4.2 Authorizations; Execution and Validity........................... 13
4.3 Capitalization................................................... 13
4.4 Financial Statements............................................. 14
4.5 Consents......................................................... 14
4.6 No Defaults or Covenants......................................... 14
4.7 Owned Real Property.............................................. 14
4.8 Leased Real Property............................................. 15
4.9 Condition and Sufficiency of Assets.............................. 15
4.10 Insurance........................................................ 15
4.11 Contracts........................................................ 16
4.12 Intentionally Left Blank......................................... 17
4.13 Litigation; Orders............................................... 18
4.14 Environmental Laws............................................... 18
4.15 Patents, Trademarks and Similar Rights........................... 18
4.16 Employees........................................................ 20
4.17 Company Plans.................................................... 20
4.18 Taxes............................................................ 22
4.19 Title to Shares and the Limited Partner Interest................. 23
4.20 Fees............................................................. 23
4.21 Absence of Certain Changes or Events............................. 23
4.22 Permits.......................................................... 25
4.23 Inventories...................................................... 25
4.24 Accounts Receivable.............................................. 26
4.25 Compliance with Laws............................................. 26
4.26 Transactions with Related Parties................................ 26
4.27 Undisclosed Liabilities.......................................... 26
4.28 Suppliers........................................................ 27
4.29 Year 2000........................................................ 27
4.30 Sales Representatives............................................ 27
ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYERS........................... 27
5.1 Organization and Good Standing................................... 27
5.2 Authorization of Agreement....................................... 27
5.3 Conflicts, Consents of Third Parties............................. 28
5.4 Litigation....................................................... 28
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<PAGE>
5.5 Investment Intent; Sophisticated Buyer........................... 28
5.6 Financing........................................................ 28
5.7 Brokers.......................................................... 29
ARTICLE VI COVENANTS OF TPC AND SELLER....................................... 29
6.1 Access to Documents; Opportunity to Ask Questions................ 29
6.2 Conduct of Business.............................................. 29
6.3 Further Actions.................................................. 30
6.4 HSR Act Compliance............................................... 30
6.5 No Breach of Representations and Warranties...................... 30
6.6 Consents......................................................... 31
6.7 Notification of Certain Matters.................................. 31
6.8 No Solicitation.................................................. 31
6.9 Non-competition.................................................. 32
6.10 Release of Liens and Guaranty.................................... 32
6.11 Access to Insurance Coverage..................................... 32
ARTICLE VII COVENANTS OF BUYERS.............................................. 33
7.1 No Breach of Representations and Warranties...................... 33
7.2 Seller's Access to Documents; Preservation of Books and Records.. 33
7.3 HSR Act Compliance............................................... 33
7.4 Further Actions.................................................. 33
7.5 Release of Guarantees............................................ 34
7.6 Notification of Certain Matters.................................. 34
7.7 Return of Information............................................ 34
7.8 Consents......................................................... 34
7.9 Financing........................................................ 34
ARTICLE VIII CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS..................... 34
8.1 Accuracy of Representations and Warranties....................... 34
8.2 Performance of Covenants......................................... 35
8.3 Hart-Scott-Rodino................................................ 35
8.4 No Order......................................................... 35
8.5 Officers' Certificates........................................... 35
8.6 Delivery of Certificates......................................... 35
8.7 Certified Resolutions............................................ 35
8.8 Employment and Non-Competition Agreements........................ 35
8.9 Consents......................................................... 35
8.10 Opinion of Counsel for Seller and TPC............................ 36
8.11 Financing........................................................ 36
8.12 FIRPTA Affidavit................................................. 36
8.13 Indebtedness..................................................... 36
8.14 Release of Certain Liens......................................... 36
8.15 Material Adverse Change.......................................... 36
ARTICLE IX CONDITIONS PRECEDENT TO SELLER'S AND TPC'S OBLIGATIONS............ 37
9.1 Accuracy of Representations and Warranties....................... 37
9.2 Performance of Covenants......................................... 37
9.3 No Order......................................................... 37
9.4 Officer's Certificate............................................ 37
9.5 Certified Resolutions............................................ 37
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<PAGE>
9.6 Hart-Scott-Rodino................................................ 37
9.7 Delivery of Purchase Price....................................... 37
9.8 Consents......................................................... 37
9.9 Opinion of Counsel for Buyer..................................... 38
ARTICLE X DELIVERIES AT CLOSING.............................................. 38
10.1 Deliveries by Seller to Buyer.................................... 38
10.2 Deliveries by Buyer to Seller.................................... 38
ARTICLE XI COVENANTS REGARDING EMPLOYEES..................................... 39
11.1 Employment....................................................... 39
11.2 Benefit Plans.................................................... 39
11.3 Employee Liabilities............................................. 40
11.4 Severance........................................................ 40
11.5 401(k) Plan...................................................... 40
11.6 Insilco Pension Plan............................................. 40
ARTICLE XII TAXES AND LITIGATION............................................. 41
12.1 Tax Returns and Payments......................................... 41
12.2 Refunds.......................................................... 42
12.3 Cooperation...................................................... 43
12.4 Buyer's Taxes.................................................... 43
12.5 Miscellaneous.................................................... 43
12.6 Section 338(h)(10) Election Section 754 Election................. 43
12.7 Jostens Lawsuit.................................................. 44
ARTICLE XIII TERMINATION..................................................... 45
13.1 Termination of Agreement......................................... 45
13.2 Effect of Termination............................................ 45
ARTICLE XIV INDEMNIFICATION.................................................. 46
14.1 Seller Indemnification........................................... 46
14.2 Buyer Indemnification............................................ 46
14.3 Indemnification Procedures....................................... 46
14.4 Limits on Indemnification........................................ 48
14.5 Inapplicability to Taxes......................................... 48
14.6 Environmental Indemnification.................................... 48
ARTICLE XV GENERAL........................................................... 54
15.1 Amendments....................................................... 54
15.2 Waivers.......................................................... 54
15.3 Notices.......................................................... 54
15.4 Successors and Assigns; Parties in Interest...................... 55
15.5 Severability..................................................... 55
15.6 Entire Agreement................................................. 56
15.7 Governing Law.................................................... 56
15.8 Remedies......................................................... 56
15.9 Arbitration...................................................... 56
15.10 Expenses......................................................... 57
15.11 Release of Information; Confidentiality.......................... 57
15.12 Certain Construction Rules....................................... 57
15.13 Counterparts..................................................... 58
15.14 Survival......................................................... 58
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<PAGE>
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT, dated as of December 17, 1999 (this
"Agreement"), is entered into by and between TP Acquisition Corp., a Delaware
corporation ("Buyer"), Insilco Corporation, a Delaware corporation ("Seller")
and Taylor Publishing Company, a Delaware corporation ("TPC").
WHEREAS, Seller is the owner of all of the outstanding shares
of capital stock (collectively the "Shares") of TPC;
WHEREAS, TPC conducts substantially all of its production
business activities through Taylor Production Services Company, L.P., a Delaware
limited partnership (the "Partnership" and, collectively with TPC, the
"Company");
WHEREAS, TPC owns a 99% general partner interest in the
Partnership and Seller owns a 1% limited partner interest in the Partnership
(the "Limited Partner Interest");
WHEREAS, Castle Harlan Partners III, L.P., a Delaware limited
partnership ("Castle Harlan"), has delivered the Buyer Guaranty Agreement (as
defined herein); and
WHEREAS, Buyer desires to purchase from Seller, and Seller
desires to sell to Buyer, on the terms and subject to the conditions set forth
in this Agreement, all of the Shares and the Limited Partner Interest.
NOW, THEREFORE, in consideration of the mutual agreements,
representations and warranties contained herein, and subject to the conditions
contained herein, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement:
"338 Election" has the meaning specified in Section 12.6(a).
"Affiliate" means, as to any Person, (a) any subsidiary of
such Person and (b) any other Person which, directly or indirectly, controls, is
controlled by, or is under common control with, such Person and includes, in the
case of a Person other than an individual, each officer or director or general
partner or member of such Person, and each Person who is the beneficial owner of
10% or more of such Person's outstanding stock having ordinary voting power of
such Person. For the purposes of this definition, "control" means the possession
of the power to direct or cause the direction of management and policies of such
Person, whether through the ownership of voting securities, by contract or
otherwise.
"Affiliated Group" has the meaning specified in Section
4.18(a).
<PAGE>
"Aggregate Threshold Amount" has the meaning specified in
Section 14.6(d).
"Agreement" has the meaning specified in the preamble hereof.
"Approved Environmental Consultant" has the meaning specified
in Section 14.6(b)(ii).
"Audited Financial Statements" has the meaning specified in
Section 4.4.
"Basket Amount" has the meaning specified in Section 14.4(a).
"Books and Records" has the meaning specified in Section
7.2(a).
"Business Intellectual Property" means the Owned Intellectual
Property and the Licensed Intellectual Property.
"Business Trade Secrets" has the meaning specified in Section
4.15(h).
"Buyer" has the meaning specified in the preamble hereof.
"Buyer Confidentiality Agreement" means the Confidentiality
Agreement, dated April 27, 1999, between Seller and Castle Harlan.
"Buyer Guaranty Agreement" means the Letter Agreement executed
by Castle Harlan and delivered simultaneous with the execution of this Agreement
whereby Castle Harlan is providing a guaranty of Buyer's obligations contained
in this Agreement or any Buyer Transaction Agreement to the limited extent set
forth in such Letter Agreement.
"Buyer Transaction Agreements" means this Agreement, the Buyer
Guaranty Agreement and the agreements, instruments, documents and certificates
to be executed at the Closing by Buyer pursuant to Section 10.2 of this
Agreement.
"Cash Management Practices" has the meaning specified in
Section 4.21.
"Castle Harlan" has the meaning specified in the preamble
hereof.
"Castle Harlan Letter" has the meaning specified in Section
5.6(b).
"Closing" has the meaning specified in Section 2.1.
"Closing Balance Sheet" means the balance sheet of the Company
as of the Closing Date, prepared pursuant to Section 3.3.
"Closing Date" has the meaning specified in Section 2.1.
"Closing Working Capital" means the Working Capital of the
Company as of the Closing Date as shown on the Closing Balance Sheet.
2
<PAGE>
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Stock" means the common stock, par value $1.00 per
share, of TPC.
"Company" has the meaning specified in the preamble hereof.
"Company Business" has the meaning specified in Section
6.9(a).
"Company Plan" has the meaning specified in Section 4.17(a).
"Company's Knowledge" means the actual knowledge, without
specific inquiry, of Craig Van Pelt, Stephen Kreider, Bill Cheney, Keith Lewis
and George Olsen.
"Contract" means any contract, agreement, indenture, note,
bond, loan, instrument, lease, conditional sale contract, mortgage, license,
franchise, insurance policy, commitment or other arrangement or agreement,
whether written or oral.
"Current Software" means that Software identified as Vision
2000 and Ultravision, including without limitation, all updates, upgrades,
versions or releases thereof.
"Debt Financing" has the meaning specified in Section 5.6(a).
"Dispute Notice" has the meaning specified in Section 3.3(c).
"Dispute Notification" has the meaning specified in Section
14.6(b)(iv).
"Disputed Item" has the meaning specified in Section 3.3(c).
"Employee(s)" means employees of the Company who are employed
by the Company, including any person on disability or leave of absence.
"Employee Benefit Plan" means any "employee benefit plan"
within the meaning of Section 3(3) of ERISA, which is sponsored, maintained or
contributed to by the Company, or which is sponsored, maintained or contributed
to by Seller for the benefit of Employees of the Company, other than a
"multiemployer plan", as defined in Sections 3(37) and 4001(a)(3) of ERISA.
"Environmental Claims" means any written complaint, summons,
citation, notice, directive, order or claim, or any litigation, investigation,
judicial or administrative proceeding or judgment, from or by any governmental
agency, department, bureau, office or other authority, or any third party
asserting or finding violations of Environmental Laws or Releases of Hazardous
Materials from (i) any assets, properties or businesses of the Company or any
corporate predecessor in interest for which the Company would be liable; (ii)
adjoining properties or businesses; or (iii) from or onto any facilities which
received Hazardous Materials generated by the Company or any corporate
predecessor in interest for which the Company would be liable.
3
<PAGE>
"Environmental Law" means any law concerning Releases into any
part of the indoor or outdoor environment, or activities that might result in
damage to the indoor or outdoor environment, or any law that is concerned in
whole or in part with the indoor or outdoor environment and with protecting or
improving the quality of the indoor or outdoor environment and protecting public
and employee health and safety and includes, without limitation, the
Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA")
(42 U.S.C.ss.9601 et seq.), the Hazardous Materials Transportation Act (49
U.S.C.ss. 1801 et seq.), the Resource Conversation and Recovery Act (42 U. S.
C.ss.6901 et seq.), the Clean Water Act (33 U. S. C.ss.7401 et seq.), the Toxic
Substances Control Act (15 U.S.C.ss.2601 et seq.), the Federal Insecticide,
Fungicide, and Rodenticide Act (7 U.S.C.ss.136 et seq.), and the Occupational
Safety and Health Act (29 U.S.C.ss.651 et seq.) ("OSHA"), as such laws have been
amended or supplemented, and the regulations promulgated pursuant thereto, and
any and all analogous federal, state or local statutes, ordinances and
regulations imposing liability or establishing standards of conduct for the
protection of the environment.
"Environmental Permit" means any Permit, approval, variance or
permission required or exemption granted under any applicable Environmental Law
and all supporting documents associated therewith.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Final Allocation" has the meaning specified in Section
12.6(a).
"Financial Statements" has the meaning specified in Section
4.4.
"Four Digit Year Format" means a format that allows entry and
processing of a four-digit year date where the first two digits designate the
century and the second two digits designate the year within the century.
"GAAP" means generally accepted accounting principles in the
United States of America as in effect from time to time set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and the statements and pronouncements
of the Financial Accounting Standards Board.
"Governmental Authority" means any federal, state, local or
foreign government or governmental regulatory body and any of their respective
subdivisions, agencies, instrumentalities, authorities or tribunals.
"Guaranty" means any guaranty or other obligation or liability
of TPC or the Partnership pursuant to the Insilco Credit Agreement or the
Insilco 12% Notes.
"Guaranty Contracts" has the meaning specified in Section 7.5.
"Hazardous Materials" means (a) any element, compound or
chemical that is defined, listed or otherwise classified as a toxic or hazardous
substance, extremely hazardous substance or chemical, hazardous waste, medical
waste, biohazardous or infectious waste, or special waste, under Environmental
Laws; (b) petroleum, petroleum-based or petroleum-derived
4
<PAGE>
products; (c) polychlorinated biphenyls; (d) any substance exhibiting a
hazardous waste characteristic including but not limited to corrosivity,
ignitibility, toxicity or reactivity as well as any radioactive or explosive
materials; and (e) any raw materials, building components (including but not
limited to asbestos-containing materials) and manufactured products containing
Hazardous Materials.
"Hourly Pension Plan" has the meaning specified in Section
11.2.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, and the rules and regulations promulgated thereunder.
"Indemnified Party" has the meaning specified in Section
14.3(a).
"Indemnifying Party" has the meaning specified in Section
14.3(a).
"Independent Accountant" means KPMG or such other independent
accounting firm of international standing jointly selected by Buyer and Seller
(it being agreed that the work to be performed shall, if performed by KPMG, be
performed by its Dallas office).
"Individual Threshold Amount" has the meaning specified in
Section 14.6(d).
"Insilco 12% Notes" means the 12% Series B Senior Subordinated
Notes of Seller due 2007 as well as financing, security and other agreements
related thereto.
"Insilco 401(k) Plan" has the meaning specified in Section
11.5.
"Insilco Credit Agreement" means that certain Credit
Agreement, dated as of October 21, 1994, by and among Seller, Citicorp USA, Inc.
and Pearl Street L.P. as Co-Agents, Citicorp USA, Inc. as Administrative Agent,
and the institutions from time to time a party thereto as lenders or issuing
banks, as well as all amendments thereto and all security agreements relating
thereto.
"Insilco Pension Plan" has the meaning specified in Section
11.6(a).
"Insilco Plan Participants" has the meaning specified in
Section 11.6(a).
"Intellectual Property" means all foreign and domestic (i)
trademarks, service marks, brand names, certification marks, collective marks,
d/b/a's, Internet domain names, logos, symbols, trade dress, assumed names,
fictitious names, trade names, and other indicia of origin, all applications and
registrations for the foregoing, and all goodwill associated therewith and
symbolized thereby, including all extensions, modifications and renewals of same
(collectively, "Trademarks"); (ii) inventions, discoveries and ideas, whether
patentable or not, and all patents, registrations, and applications therefor,
including divisions, continuations, continuations-in-part and renewal
applications, and including renewals, extensions and reissues (collectively,
"Patents"); (iii) confidential and proprietary information, trade secrets and
know-how, including processes, schematics, databases, formulae, drawings,
prototypes, models, designs and customer lists; (iv) published and unpublished
works of authorship, whether copyrightable or not,
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copyright rights therein and thereto, and registrations and applications
therefor, and all renewals, extensions, restorations and reversions thereof
(collectively, "Copyrights"); and (v) all other intellectual property or
proprietary rights, including, but not limited to, any Intellectual Property
rights in the Current Software and the Legacy Software.
"Intellectual Property Licenses" means all signed written
license agreements granting permission to use any of the Business Intellectual
Property, including without limitation agreements granting the Company rights to
use the Licensed Intellectual Property and the Technology Systems (or components
thereof), agreements granting rights to use the Owned Intellectual Property,
Trademark coexistence agreements, Trademark consent agreements and nonassertion
agreements.
"Jostens Lawsuit" has the meaning set forth in Section 12.7.
"Law" means any federal, state, local or foreign law, statute,
rule, ordinance, code or regulation.
"Leap Year" means a year during which an additional calendar
day is recognized in February (February 29th). A Leap Year occurs for each year
that is divisible without remainder by the number four (4), except that a year
that is divisible by the number 100 is not a Leap Year (unless it is also
divisible without remainder by the number 400). The year 2000 is a Leap Year.
"Legacy Software" means Software, other than the Current
Software, that was licensed or sold to third parties by the Company to aid in
the production of yearbooks.
"Legal Proceeding" means any judicial, administrative or
arbitral action, suit, proceeding (public or private), litigation, complaint,
claim or governmental proceeding.
"Lender Letter" has the meaning specified in Section 5.6(a).
"Licensed Intellectual Property" means the Intellectual
Property rights that the Company is licensed or otherwise permitted by other
Persons to use.
"Lien" means any lien, pledge, mortgage, deed of trust,
security interest, attachment, right of first refusal, option, claim, easement,
covenant, encroachment, title defect or any other encumbrance whatsoever.
"Limited Partner Interest" has the meaning specified in the
preamble hereof.
"Losses" has the meaning specified in Section 14.1.
"Lowest Cost Response" has the meaning specified in Section
14.3(c).
"Material Contract" has the meaning specified in Section
4.11(a).
"Material Sales Representatives" has the meaning specified in
Section 4.30.
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"Material Suppliers" has the meaning specified in Section
4.28.
"Modified Allocation" has the meaning specified in Section
12.6(a).
"Non-Competition Period" has the meaning specified in Section
6.9(a).
"Non-Responding Party" has the meaning specified in Section
14.6(b)(ii).
"Order" means any order, judgment, injunction, ruling, writ,
award or decree specifically identified by its terms as applicable to the
Company.
"Owned Intellectual Property" means Intellectual Property
owned by the Company.
"Owned Real Property" has the meaning specified in Section
4.7.
"Partnership" has the meaning specified in the preamble
hereof.
"PBGC" has the meaning specified in Section 4.17(d).
"Permit" means any permit, license, certificate (including a
certificate of occupancy) registration, authorization, application, filing,
notice, qualification, waiver of any of the foregoing or approval of a
Governmental Authority.
"Permitted Liens" means: (a) Liens for Taxes that are not yet
due and payable or that are being contested in good faith by appropriate
proceedings and as to which adequate reserves have been established in
accordance with GAAP, (b) workers', repairmen's, and similar Liens imposed by
Law that have been incurred in the ordinary course of business consistent with
past practices relating to obligations as to which there is no material default
on the part of the Company, (c) retention of title agreements with suppliers
entered into in the ordinary course of business, (d) the rights of customers to
customer deposits, (e) Liens securing indebtedness arising under the Insilco
Credit Agreement and other Liens that are to be released concurrently with or
prior to the Closing, and (f) Liens and other title defects that do not
materially impair the value or continued use as currently conducted of the
assets to which they relate.
"Person" means any natural person, corporation, partnership,
limited liability company, trust, unincorporated organization, Governmental
Authority, or other entity.
"Pre-Closing Taxes" has the meaning specified in Section
12.1(c)(i).
"Preliminary Closing Working Capital" has the meaning
specified in Section 3.3(a).
"Proposed Allocation" has the meaning specified in Section
12.6(a).
"Real Property Leases" has the meaning specified in Section
4.8(a).
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"Registered" means issued, registered, renewed or the subject
of a pending application.
"Related Party" means (i) any Affiliate of Seller, TPC or the
Partnership, or (ii) except for any non-natural equity holder of Seller, any
grandparent, parent, brother, sister, child or spouse of any such Affiliate.
"Release" means any release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, leaching, or
migration into the indoor or outdoor environment, or into or out of any property
owned, operated or leased by the Company including, without limitation, the
movement of any Hazardous Material or other substance through or in the air,
soil, surface water, groundwater or property, but excluding any release,
emission or discharge authorized under any Environmental Permit or provision of
Environmental Law.
"Remedial Action" means all actions taken to (i) clean up,
remove, remediate, contain, treat, monitor, assess, or evaluate Hazardous
Materials in the environment; (ii) bring any Facility into compliance with
Environmental Law, including but not limited to installing any air emission
control equipment required by a Governmental Authority or Environmental Law;
(iii) perform pre-remedial studies and investigations and post-remedial
operation and maintenance activities; or (iv) prevent or minimize a Release or
threatened Release so they do not migrate, endanger or threaten to endanger
public health or welfare or the environment; (v) any other actions authorized by
42 U.S.C. ss.9601(24). Notwithstanding the foregoing, any surface or subsurface
assessment or investigation performed by Buyer prior to the identification of a
Seller Environmental Liability, unless an Environmental Law requires such
assessment or investigation or a Governmental Authority expressly requires such
assessment or investigation, shall not be considered "Remedial Action" and the
costs associated therewith shall not be "Losses" hereunder.
"Remedial Action Plan" has the meaning specified in Section
14.6(b)(ii).
"Representatives" has the meaning specified in Section 6.1.
"Resolution Period" has the meaning specified in Section
3.3(d).
"Responding Party" has the meaning specified in Section
14.6(b)(ii).
"Rules" has the meaning specified in Section 15.9.
"Schedule" means a disclosure schedule provided by Seller to
Buyer pursuant to this Agreement.
"Section 14.6 Environmental Claim" has the meaning specified
in Section 14.6(b)(i).
"Securities Act" has the meaning specified in Section 5.5.
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"Seller" has the meaning specified in the preamble hereof.
"Seller Environmental Liabilities" means any Losses (including
all reasonable out-of-pocket fees, disbursements and expenses of counsel,
out-of-pocket expert and consulting fees and reasonable out-of-pocket costs for
environmental site assessments, remedial investigation, feasibility studies and
Remedial Actions), to the extent arising from (i) any Release or threatened
Release of a Hazardous Material to the surface or subsurface (including the
soils and groundwater) which occurred prior to the Closing Date at the Company's
facilities located at 1550 Mockingbird Lane, Dallas, Texas, 67 Great Valley
Parkway, Malvern, Pennsylvania, 2027 Industrial Drive, San Angelo, Texas, or
10365 Railroad Drive, El Paso, Texas (collectively, the "Current Facilities") or
3210 Dyer Street, El Paso, Texas; and (ii) any Release to the air from the
Company's operations at the Current Facilities that is in violation of any
Environmental Law which occurred (x) prior to the Closing Date, or (y) during
the 120 day period after the Closing Date, provided such Releases are not the
result of a material alteration in the Company's operations as those operations
existed during the twelve-month period prior to the Closing Date.
"Seller Refunds" has the meaning specified in Section 12.2.
"Seller Transaction Agreements" means this Agreement and the
other agreements, instruments, documents and certificates to be executed at the
Closing by Seller or TPC pursuant to Section 10.1 of this Agreement.
"Shares" has the meaning specified in the preamble hereof.
"Software" means (i) any and all computer software, including
all source and object code, (ii) machine readable databases and compilations,
including any and all data and collections of data, and (iii) all content
contained on the respective Internet site(s).
"Statement" has the meaning specified in Section 12.1(d).
"Straddle Period" has the meaning specified in Section
12.1(c)(ii).
"Tax" or "Taxes" means all income, profits, franchise, gross
receipts, capital, sales, use, withholding, value added, ad valorem, transfer,
employment, social security, disability, occupation, property, severance,
documentary, stamp, excise and other taxes, duties and similar governmental
charges or assessments imposed by or on behalf of any Governmental Authority and
any interest, fines, penalties or additions relating to any such tax, duty,
charge or assessment.
"Tax Return" means any return, report or similar statement
required to be filed with respect to any Taxes (including any attached
schedules), including, without limitation, any information return, claim or
refund, amended return and declaration of estimated Tax.
"Technology Systems" means the electronic data processing,
electronic information, electronic recordkeeping, electronic communications,
electronic telecommunications, and computer systems, computer firmware, computer
hardware (whether
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general or special purpose), Software and other similar or related items of
automated, computerized, and/or Software system(s) that are used internally by
the Company in the conduct of its business and are owned by or licensed to the
Company or that the Company otherwise possesses a contractual right to use.
"Technology Systems" does not mean third party systems such as the Internet, the
public telephone network, or any public utility.
"Third Party Consultant" has the meaning specified in Section
14.6(b)(v).
"TPC" has the meaning specified in the preamble hereof.
"Unaudited Financial Statements" has the meaning specified in
Section 4.4.
"Working Capital" means the current assets minus the current
liabilities of the Company determined in accordance with GAAP, applied in a
manner consistent with the preparation of the Audited Financial Statements.
"Year 2000 Compliant" means the ability of software, computer
systems, computer hardware and related electronic equipment, data, electronic
interfaces or computer processes in all material respects to accept (from a
system that is Year 2000 Compliant), calculate, process, maintain, output (to a
system that is Year 2000 Compliant), operate, store and produce data before, on
or after January 1, 2000 (including taking into account that such year is a Leap
Year), accurately and without corruption, interruption or error due to the fact
that the time at which and the date on which such items are operating is before,
on or after 00:00 on January 1, 2000 or due to the fact that such data
represents a time or date before, on or after 00:00 on January 1, 2000;
provided, however, that such compliance shall not be affected by any
inaccuracies, delays, corruption, interruptions or errors resulting from
receiving or transmitting data, software or other information from or to
software, computer systems, computer hardware and related electronic equipment,
data, electronic interfaces or computer processes (other than the Technology
Systems, Current Software or Legacy Software) that are not Year 2000 Compliant.
ARTICLE II
CLOSING
2.1 Closing. The Closing of the transactions contemplated
hereby (the "Closing") shall take place at the offices of Schulte Roth & Zabel
LLP, 900 Third Avenue, New York, New York at 10 a.m., New York, New York time,
as soon as practicable following the satisfaction or waiver of the conditions
set forth in Article VIII and IX, or at such other time and place or on such
other date as the parties may agree (the "Closing Date").
2.2 Proceedings at Closing. All proceedings to be taken and
all documents to be executed and delivered by all parties at the Closing shall
be deemed to have been taken and executed simultaneously, and no proceedings
shall be deemed taken nor any documents executed or delivered until all have
been taken, executed and delivered.
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ARTICLE III
CONSIDERATION
3.1 Amount and Form of Consideration. The purchase price
to be paid by Buyer to Seller in consideration of the Shares (subject to the
purchase price adjustment provisions of Section 3.3) is $92,545,200 in United
States dollars. The purchase price to be paid by Buyer to Seller in
consideration of the Limited Partner Interest (subject to the purchase price
adjustment provisions of Section 3.3) is $934,800 in United States dollars.
Buyer and Seller will bear equally the cost of any documentary, stamp, sales and
excise or other Taxes (other than income Taxes, including without limitation,
Texas franchise tax, which shall be payable by Seller) payable in respect of the
transfer of the Shares or the Limited Partner Interest.
3.2 Payment of Consideration. At the Closing, Buyer will
pay the entire purchase price to Seller, by wire transfer of immediately
available funds, and Seller will deliver to Buyer (i) a certificate or
certificates representing all of the Shares, in appropriate form for transfer to
Buyer or accompanied by duly executed stock powers, and (ii) the Limited Partner
Interest, in appropriate form for transfer to Buyer.
3.3 Working Capital Purchase Price Adjustment.
(a) No later than five days prior to the Closing Date, Seller
shall prepare and the parties shall jointly agree on a statement setting forth
their estimate of the Working Capital of the Company as of the Closing Date (the
"Preliminary Closing Working Capital"), which shall reflect the estimates of the
parties, based on the information available to them at the time, of amounts to
be reflected on the Closing Balance Sheet. If the parties cannot timely agree on
the statement of Preliminary Closing Working Capital, the statement shall be
submitted to the Independent Accountant, who shall be jointly retained by the
parties, for the purpose of determining the Preliminary Closing Working Capital
as soon as reasonably possible and the Closing Date shall be postponed, if
necessary, pending such determination. Notwithstanding the foregoing, in no
event shall the Closing Date be postponed pursuant to this Section 3.3(a) if
either party is willing temporarily to waive (pending and subject to the
determination of the Closing Balance Sheet) its objection to the statement of
the Preliminary Closing Working Capital. To the extent the Independent
Accountant is retained pursuant to this Section 3.3(a), Seller and Buyer shall
each bear one-half of all the fees and expenses incurred in connection with the
engagement of the Independent Accountant. The determination of the Preliminary
Closing Working Capital (pending and subject to the determination of the Closing
Balance Sheet) shall be final, conclusive and binding on the parties hereto and
not subject to appeal, absent fraud or manifest error. If the Preliminary
Closing Working Capital is less than $9,947,000, the purchase price set forth in
Section 3.1 shall be decreased by an amount equal to such shortfall. If the
Preliminary Closing Working Capital is greater than $9,947,000, the purchase
price set forth in Section 3.1 shall be increased by an amount equal to such
excess. Any adjustment to the purchase price required by this Section 3.3 shall
be appropriately allocated between the purchase price paid for the Shares and
the purchase price paid for the Limited Partner Interest.
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(b) Within 45 days after the Closing Date, Buyer shall deliver
to Seller the Closing Balance Sheet, which shall be prepared in a manner
consistent with the preparation of the Audited Financial Statements, including
using the same methods, policies, practices, principles and procedures with
consistent classification, judgments and estimation that were used in the
preparation of the Audited Financial Statements except that the Closing Balance
Sheet shall be prepared on an interim basis, if applicable, and shall not take
into account the transactions contemplated by this Agreement or any changes in
circumstances or events occurring after the close of business on the Closing
Date. The Closing Balance Sheet shall contain or be accompanied by a schedule
setting forth the calculation of the Closing Working Capital.
(c) Seller shall have reasonable access to the books and
records of the Company during normal business hours, and reasonable access to
the management of Company, for the purpose of verifying the Closing Balance
Sheet. Seller may dispute any amounts reflected on the Closing Balance Sheet
(each, a "Disputed Item") within 30 days after delivery of the Closing Balance
Sheet if it submits to Buyer a written notice (a "Dispute Notice") identifying
each Disputed Item and the line items of the Closing Balance Sheet to which it
relates and setting forth the amount in dispute and a reasonably detailed
statement of the basis thereof.
(d) For a period of 20 days following the date of delivery of
a Dispute Notice by Seller pursuant to paragraph (c) above (the "Resolution
Period"), Buyer and Seller shall negotiate in good faith in an attempt to
resolve the Disputed Items. If, at the end of the Resolution Period, the parties
have not reached an agreement in writing as to all Disputed Items, all
unresolved Disputed Items shall be submitted to the Independent Accountant, who
shall be jointly engaged by Buyer and Seller within 10 days after the end of the
Resolution Period for the purpose of making a final determination with respect
to such items. The parties shall take all action reasonably required to cause
the Independent Accountant to make its determination within 30 days after the
date of its engagement, which determination shall be made in accordance with the
provisions of this Section 3.3. Upon making its determination, the Independent
Accountant shall deliver to Buyer and Seller (i) a report setting forth its
adjustments, if any, to the Disputed Items on the Closing Balance Sheet and the
calculations supporting such adjustments, and (ii) the Closing Balance Sheet
accompanied by a schedule setting forth the calculation of Closing Working
Capital. Such report, Closing Balance Sheet and calculation of Closing Working
Capital shall be final, conclusive and binding on the parties hereto and not
subject to appeal, absent fraud or manifest error. Seller and Buyer shall each
bear one-half of all the fees and expenses incurred in connection with the
engagement of the Independent Accountant.
(e) No later than five days after the expiration of the 30-day
period set forth in paragraph (c) above or after all Disputed Items have been
resolved in accordance with the provisions of this Section 3.3, if the Closing
Working Capital is less than the Preliminary Closing Working Capital, Seller
shall pay to Buyer an amount in cash equal to such shortfall. Likewise, if the
Closing Working Capital exceeds the Preliminary Working Capital, Buyer shall pay
to Seller an amount in cash equal to such excess. The amount payable pursuant to
this Section 3.3(e) shall be paid by wire transfer of immediately available
funds to such bank account as is designated by the party entitled to receive
such payment.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Each of TPC and Seller jointly and severally hereby represents
and warrants to Buyer as follows:
4.1 Organization; Power and Authority. TPC is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware and is qualified and in good standing to transact business in
each jurisdiction in which such qualification is required by Law, except where
the failure to be so qualified would not be material. The Partnership is a
limited partnership duly formed, validly existing and in good standing under the
laws of the State of Delaware and is qualified and in good standing to transact
business in each jurisdiction in which such qualification is required by Law,
except where the failure to be so qualified would not be material. Each of
Seller and TPC has all requisite corporate or partnership power and authority,
as the case may be, to execute, deliver and perform its obligations under each
of the Seller Transaction Agreements and to consummate the transactions
contemplated hereby and thereby to be consummated by it. The Company has all
power needed to own or lease and operate its assets and to carry on its business
as it is now being conducted.
4.2 Authorizations; Execution and Validity. The execution and
delivery of the Seller Transaction Agreements by Seller, the performance of the
Seller Transaction Agreements by Seller and the consummation by Seller of the
transactions contemplated hereby and thereby to be consummated by it, have been
duly authorized by all necessary corporate action and no other corporate action
on the part of Seller is necessary with respect thereto. The execution and
delivery of the Seller Transaction Agreements by TPC, the performance of the
Seller Transaction Agreements by TPC and the consummation by TPC of the
transactions contemplated hereby and thereby to be consummated by it, have been
duly authorized by all necessary corporate action and no other corporate action
on the part of the TPC is necessary with respect thereto. Each of the Seller
Transaction Agreements has been duly and validly executed and delivered by each
of Seller and TPC and constitutes a valid and binding obligation of each of
Seller and TPC and is enforceable against each of Seller and TPC in accordance
with its terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization and similar laws affecting creditors generally and by
the availability of equitable remedies.
4.3 Capitalization. The total authorized number of shares of
capital stock of TPC is 1,000 shares of Common Stock. There are an aggregate of
10 shares of Common Stock outstanding, all of which shares are owned, free and
clear of any Liens except for Liens resulting from the Insilco Credit Agreement,
by Seller, have been duly authorized and validly issued, and are fully paid and
non-assessable. There are no outstanding options, subscriptions, warrants,
calls, commitments or other rights obligating TPC to issue or sell any shares of
its capital stock or any securities convertible into or exercisable for any
shares of its capital stock. None of the outstanding shares of capital stock of
TPC were issued in violation of any preemptive rights. TPC is the sole general
partner of the Partnership and owns free and clear of any Lien, except for Liens
resulting from the Insilco Credit Agreement, a 99% general partner interest in
the Partnership. Seller is the sole limited partner of the Partnership and owns
free and clear of any
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Lien, except for Liens resulting from the Insilco Credit Agreement, the Limited
Partner Interest which represents the remaining equity interest in the
Partnership. There are no outstanding options, subscription, warrants, calls,
commitments or other rights obligating the Partnership to issue or sell any
additional interest in the Partnership or any securities convertible into or
exercisable for any interest of the Partnership. Excluding TPC's equity interest
in the Partnership, neither TPC nor the Partnership owns, directly or
indirectly, any capital of or other equity interest in any corporation,
partnership or other entity or organization.
4.4 Financial Statements. The Company has made available to
Buyer, (i) the unaudited statement of net assets of the Company as of December
31, 1998 and December 31, 1997, with the related statements of operations and
operating cash flows for the years ended on such dates and the accompanying
notes (the "Unaudited Financial Statements"), and (ii) audited financial
statements of the Company for the fiscal year ended August 31, 1999, including a
balance sheet of the Company at such date and the related statements of income
and cash flow for the period then ended and the accompanying notes (the "Audited
Financial Statements" and collectively with the Unaudited Financial Statements,
the "Financial Statements"). The Financial Statements have been prepared from
the books and records of the Company. The Financial Statements present fairly,
in all material respects, the financial position of the Company as of the dates
indicated, and the results of its operations and cash flows for the periods
presented in conformity with GAAP, except as described in the accompanying
notes.
4.5 Consents. Except as would not be material, neither the
execution and delivery by TPC or Seller of the Seller Transaction Agreements nor
consummation or performance by TPC or Seller of the transactions contemplated by
the Seller Transaction Agreements to be consummated or performed by it will
require prior to the Closing (on the part of TPC or Seller) any consent from,
authorization or approval or other action by, notice to or declaration filing or
a registration with, any Governmental Authority, except to comply with the HSR
Act.
4.6 No Defaults or Conflicts. Except as set forth in Schedule
4.6 neither the execution and delivery by TPC or Seller of the Seller
Transaction Agreements nor the consummation or performance by TPC or Seller of
the transactions contemplated by the Seller Transaction Agreements to be
consummated or performed by it (i) results or, on the Closing Date, will result
in any violation of the certificate of incorporation or by-laws of TPC; (ii)
results or, on the Closing Date, will result in any violation of the certificate
of limited partnership or agreement of limited partnership of the Partnership;
or (iii) conflicts with or, on the Closing Date, will conflict with, or
constitutes or, on the Closing Date, will constitute a breach of any of the
terms or provisions of or a default under, or results or, on the Closing Date,
will result in the creation or imposition of any Lien upon any property or asset
of the Company, the trigger of any charge or payment or requirement of consent,
or the acceleration of the maturity of any payment date under: (A) any Material
Contract, (B) any existing applicable Law or Order to which the Company or any
of its properties is subject, other than such conflicts, breaches and defaults
as would not be material, or would be waived or avoided by the consents,
approvals, authorizations, filings or notices described in Schedule 4.6.
4.7 Owned Real Property. Schedule 4.7 lists all the real
property owned in fee simple by the Company (the "Owned Real Property"). The
Company has good and marketable
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title to the Owned Real Property, free and clear of Liens other than Permitted
Liens. There are no leases on all or any portion thereof or any interest
therein. The Company has not received written notice of any eminent domain
proceedings affecting the Owned Real Property.
4.8 Leased Real Property.
(a) Schedule 4.8 contains a complete and correct list of all
real property leases and any and all amendments thereto relating to the leased
real property to which the Company is a party or is bound (the "Real Property
Leases"). The Company has made available to Buyer correct and complete copies of
the Real Property Leases. Except as disclosed in Schedule 4.8, (i) each of the
Real Property Leases is in full force and effect, and, to the Company's
Knowledge, is enforceable in all material respects against the landlord which is
party thereto in accordance with its terms, (ii) there are no subleases under
the Real Property Leases and none of the leases has been assigned, (iii) no
notices of default or notices of termination have been received by the Company
with respect to the Real Property Leases which have not been withdrawn or
canceled and (iv) the Company is not, and to the Company's Knowledge, no other
party is, in material default under any Real Property Lease, except in the case
of clause (i), as such enforceability may be limited by bankruptcy, insolvency,
reorganization and similar laws affecting creditors generally and by the
availability of equitable remedies.
(b) The Company has not received written notice of a
proceeding in eminent domain or other similar proceeding affecting property
listed on Schedule 4.8.
4.9 Condition and Sufficiency of Assets.
(a) The items of material tangible personal property owned or
leased by the Company and the material improvements and structures (and the
fixtures and appurtenances thereto) located on the Owned Real Property and the
real property subject to the Real Property Leases are (i) in good working order,
reasonable wear and tear excepted and (ii) reasonably suitable for the uses for
which they are intended. EXCEPT AS OTHERWISE SPECIFICALLY SET FORTH IN THIS
AGREEMENT, NO PARTY MAKES ANY EXPRESS OR IMPLIED WARRANTY OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE, OR ANY OTHER WARRANTY AS TO THE CONDITION OR
OPERATION OF ANY ASSETS OF THE COMPANY.
(b) Since January 1, 1996, the business of the Company, as
currently being conducted, has been conducted solely by TPC and the Partnership
and not through any other subsidiary, Affiliate, joint venture or other Person.
The Company owns or has valid leasehold interests in all of the material
properties and assets which are used in the business of the Company, or are
necessary to conduct the business of the Company, in substantially the same
manner as currently conducted, except for the properties or assets owned or
leased by Seller and identified on Schedule 4.9(b) and except for assets or
services used by businesses generally such as the internet, the public telephone
network, and public utilities. Seller does not provide any material services to
the Company other than those identified in Schedule 4.9(b).
4.10 Insurance. Schedule 4.10 contains a true and complete
list of all insurance policies, and formal self-insurance programs, covering or
maintained by the Company and its
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owned or leased properties, employees or Employee Benefit Plan fiduciaries and
describing each pending claim thereunder for more than $50,000 per claim. All
insurance policies listed on Schedule 4.10 have been made available to Buyer,
are occurrence-based (except for the Company's Directors and Officers Liability
coverage) and are subject to the deductibles or retentions referenced on
Schedule 4.10. The Company maintains insurance, in coverages and amounts
believed by the Company to be customary in the industry and which are believed
adequate in the reasonable judgment of the Company. Except as would not be
material, all such insurance is in full force and effect. The Company has not
received any written notice of cancellation or nonrenewal of any such insurance
policy. The Company has not failed to give any notice or present any claim for
more than $50,000 under any of the policies in due and timely fashion. The
Company has not been refused any insurance with respect to its assets,
properties or businesses, nor has any coverage been materially limited by any
insurance carrier to which the Company has applied for any such insurance or
with which the Company has carried insurance during the last three years. No
further payments of premiums will be due following the Closing by the Company
with respect to insurance coverages prior to the Closing. Other than with
respect to related deductible and/or self-insurance amounts, the insurance
coverage currently applicable to the Company (or comparable coverage) has been
in effect for at least the last three years. To Seller's knowledge, neither this
Agreement, nor any of the transactions contemplated by this Agreement to occur
at the Closing, will adversely affect the Company's coverage with respect to
periods prior to the Closing under the terms of the insurance policies. To
Seller's knowledge, the Company will continue to enjoy the same coverage under
the policies after the Closing that it did prior to the Closing with respect to
periods prior to Closing.
4.11 Contracts.
(a) Material Contracts. Other than (i) Real Property Leases,
(ii) Company Plans, (iii) Contracts listed on Schedule 4.16(a) and 4.16(b) and
(iv) Intellectual Property Licenses, Schedule 4.11(a) lists, as of the date
hereof, all of the following executory contracts to which the Company is a party
or by which its assets are bound (the "Material Contracts"):
(1) individual Contracts with customers with respect
to which the Company billed more than $100,000 during 1999;
(2) any individual Contract which is an exclusive
dealing, requirements or take or pay agreement involving
expenditures in excess of $50,000 during 1998;
(3) Contracts not listed or required to be listed
pursuant to Section 4.11(a)(2) which provide for aggregate
future annual payments by the Company of more than $100,000,
except for purchase orders or sales orders arising in the
ordinary and usual course of business, in which case they are
listed only if any party thereto is obligated to make payments
pursuant thereto aggregating more than $200,000;
(4) Contracts which establish a partnership, joint
venture, material agency or other similar arrangement;
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(5) any Contract which relates to indebtedness for
borrowed money in excess of $50,000 or the deferred purchase
price of property (whether incurred, assumed, guaranteed or
secured by any asset);
(6) any Contract which provides for future payments
that are conditioned on or result from, in whole or in part, a
change of control of the Company or a change of management of
the Company;
(7) any Contract which relates to marketing, sales or
advertising and provides for aggregate future payments of more
than $100,000;
(8) any Contract under which the Company has
guaranteed the obligations of any Person, agreed to indemnify
any Person (other than in the ordinary course of business), or
agreed to share Tax liability with any Person;
(9) any Contract which relates to the acquisition by
the Company of any of the capital stock or substantially all
of the assets of another Person;
(10) any Contract which restricts the right of the
Company to compete in any way with any other Person, or which
contains covenants pursuant to which any non-natural Person
has agreed not to compete, or otherwise restricts a
non-natural Person's ability to engage freely, in any part of
the Company Business;
(11) any Contract not disclosed herein or not
otherwise required to be disclosed pursuant to this Schedule
4.11 which provides for annual payments in excess of $100,000
which extends more than a year from the date hereof and is not
cancelable by the Company on 30 days' written notice without
penalty;
(12) any Contract which provides for the sale or
lease after the date hereof of any of the assets of the
Company other than in the ordinary course of business; and
(13) any Contract which binds the Company to make
payments to any director or any former director of the
Company.
(b) Material Contract Exceptions. All Material Contracts are
valid, binding and in full force and effect, except to the extent enforceability
may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other similar laws relating to creditors' rights generally and to
general principles of equity (regardless of whether enforcement is considered in
a proceeding in equity or at law) and except for such failures to be valid,
binding and enforceable which, individually or in the aggregate, would not be
material. Neither the Company nor, to the Company's Knowledge, any other party
to such Material Contracts, is in material default under any Material Contract.
4.12 [Intentionally Left Blank]
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4.13 Litigation; Orders. Schedule 4.13 lists all material
Legal Proceedings pending or, to the Company's Knowledge, threatened in writing
against or affecting the Company or any of its assets. Except as disclosed on
Schedule 4.13, the Company is not subject to any Order. There are no Legal
Proceedings pending against or, to the Company's Knowledge or the knowledge of
Seller, threatened in writing against, Seller or the Company that questions the
validity or legality of any of the Seller Transaction Agreements or any action
taken or to be taken by Seller or TPC in connection herewith or therewith.
4.14 Environmental Laws. Except as set forth on Schedule
4.14: (i) the Company is in material compliance with all Environmental Laws;
(ii) the Company is in material compliance with all Environmental Permits
required to operate the facilities, assets and business of the Company; (iii)
the Company is in material compliance with all Orders to which it is a party or
by which it is bound that relates to any Environmental Law; (iv) the Company is
not subject to any Environmental Claims and, to the Company's Knowledge, no
material unresolved Environmental Claims have been asserted or threatened in
writing against the Company or any predecessor in interest; (v) except where not
material, there has been no Release at any of the properties owned or operated
by the Company or, to the Company's Knowledge, a corporate predecessor in
interest for which the Company would be liable, or to the Company's Knowledge,
at any disposal or treatment facility which received Hazardous Materials
generated by the Company or any corporate predecessor in interest for which the
Company would be liable; (vi) except where not material, no Environmental Claims
have been asserted in writing against any facilities that may have received
Hazardous Materials generated by the Company or any corporate predecessor in
interest for which the Company would be liable; and (vii) Seller has delivered
to, or made available for review by, Buyer true and complete copies of all
material environmental reports, studies, investigations or correspondence
regarding any environmental liabilities of the Company or any environmental
conditions at any property operated by the Company or any corporate predecessor
in interest for which the Company would be liable which are in possession of
Seller, the Company or their agents.
4.15 Patents, Trademarks and Similar Rights.
(a) Schedule 4.15(a) sets forth a true and complete
list and summary description of all (i) Registered Patents, Trademarks and
Copyrights, and material trademarks, service marks and internet domain names
that are not Registered, comprising a part of the Owned Intellectual Property
and (ii) material Intellectual Property Licenses.
(b) Except as set forth on Schedule 4.15(b) and
except with respect to applications for Registered Patents, Trademarks and
Copyrights, to the Company's Knowledge, all Registered Patents, Trademarks, and
Copyrights comprising a part of the Owned Intellectual Property are valid,
subsisting and enforceable. Except where not material, all documentation
necessary to confirm the Company's ownership of the Registered Patents,
Trademarks, and Copyrights comprising a part of the Owned Intellectual Property
has been recorded in the United States Patent and Trademark Office.
(c) Except as set forth on Schedule 4.15(c), no
material Legal Proceeding is pending concerning any claim or position, and to
the Company's Knowledge no such claim has been threatened in writing or asserted
in writing, that the Company has violated
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any Intellectual Property rights, and, to the Company's Knowledge, no valid
basis for any such material Legal Proceeding exists which would result in a
successful claim against the Company.
(d) No material Legal Proceeding is pending, and to
the Company's Knowledge no claim has been threatened in writing or asserted in
writing, concerning any claim or position that the Company or another Person has
breached any of the Intellectual Property Licenses, and, to the Company's
Knowledge, no valid basis for any such material Legal Proceeding exists which
would result in a successful claim against the Company. No party to any of the
Intellectual Property Licenses has given the Company notice of its intention to
cancel, terminate or fail to renew any of the Intellectual Property Licenses.
(e) Except as set forth on Schedule 4.15(e), no
material Legal Proceeding is pending concerning the Owned Intellectual Property,
Current Software, or Legacy Software, including any Legal Proceeding concerning
a claim or position that the Business Intellectual Property has been violated or
is invalid, unenforceable, unpatentable, unregisterable, or cancelable, that the
Owned Intellectual Property, Current Software, or Legacy Software is not owned
or not owned exclusively by the Company and to the Company's Knowledge no such
claim has been threatened in writing or asserted in writing, and, to the
Company's Knowledge, no valid basis for any such material Legal Proceedings or
claims exists which would result in a successful claim against the Company.
(f) Except where not material or as set forth on
Schedule 4.15(f), to the Company's Knowledge in the Company's opinion, no Person
is infringing or misappropriating any of the Owned Intellectual Property.
(g) Except as set forth on Schedule 4.15(g) or as
would not be material, the Company exclusively owns all Owned Intellectual
Property, and owns or otherwise holds valid rights to use all Intellectual
Property, Current Software, and Technology Systems (and components thereof)
necessary for use in the operation of the business of the Company as currently
operated. Except where not material or as set forth on Schedule 4.15(g), all
such rights in the Owned Intellectual Property are free of all Liens (except
Permitted Liens) and are fully assignable by the Company to any Person, without
payment, consent of any Person or other assignment, condition or restriction.
(h) Except as set forth on Schedule 4.15(h), the
Company has taken commercially reasonable measures to protect the secrecy,
confidentiality and value of trade secrets and other confidential and
proprietary information owned by the Company which were worth protecting
(collectively, "Business Trade Secrets") (including without limitation, where
necessary, entering into appropriate confidentiality agreements with officers,
directors, consultants, employees, and other Persons with access to the Business
Trade Secrets). To the Company's Knowledge, the Business Trade Secrets have not
been disclosed to any Persons other than Company's employees, consultants or
contractors who use such Business Trade Secrets in the ordinary course of
employment or contract performance.
(i) Except as set forth on Schedule 4.15(i) or where
not material, all former and current employees, consultants and contractors of
the Company who worked on the development of the Current Software have executed
sufficient written instruments or agreements
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with the Company that assign to the Company all of their rights to any
improvements, discoveries, works, information or other Intellectual Property.
4.16 Employees.
(a) Employees. Schedule 4.16(a) sets forth a list, as
of the date hereof, of all written individual employment, consulting,
non-compete or severance agreements with Employees or former employees of the
Company that individually provide for annual payments after the date hereof in
excess of $50,000.
(b) Unions. Except as disclosed on Schedule 4.16(b),
there is no collective bargaining or other labor union agreement applicable to
any of the Employees of the Company. Except as set forth on Schedule 4.16(b), no
organized work stoppage or material labor dispute against the Company is pending
or, to the Company's Knowledge, threatened in writing. Except as disclosed on
Schedule 4.16(b), the Company has not received written notice of any unfair
labor practice and, to the Company's Knowledge, no such complaints are pending
before the National Labor Relations Board or other similar governmental
authority which, in each case, if adversely determined, would be material.
(c) The Company has not incurred any material
liability or obligation under the Workers Adjustment and Retraining Notification
Act or any similar laws, which remains unpaid or unsatisfied.
4.17 Company Plans.
(a) Company Plans. Schedule 4.17(a) lists, as of the
date hereof, all current Employee Benefit Plans, and all material bonus, stock
option, stock purchase, stock appreciation right, incentive, deferred
compensation, workers' compensation arrangements, supplemental retirement,
severance or material fringe benefit plan, program, policy or arrangements of
the Company (or such plans, programs, policies or arrangements of Seller in
which any employees of the Company participate) (together with the Employee
Benefit Plans, the "Company Plans").
(b) Employee Benefit Plan Exceptions. Except as
disclosed on Schedule 4.17(b), each Employee Benefit Plan has been administered
in all material respects in accordance with the applicable requirements of ERISA
and the Code. Except as disclosed on Schedule 4.17(b), each Company Plan has
been administered in all material respects in accordance with the documents and
instruments governing the plan. There have been no nonexempt material
"prohibited transactions" (as that term is defined in ERISA or the Code) with
respect to any Employee Benefit Plan. Each Employee Benefit Plan intended to
qualify under Section 401 of the Code has received a ruling or determination
letter from the Internal Revenue Service concluding that such Employee Benefit
Plan so qualifies. There has been no occurrence since the date of the most
recent determination letter for each such Employee Benefit Plan that would
adversely affect the qualified status of such Employee Benefit Plan, assuming
the proper amendment of the Employee Benefit Plan to comply with changes in
applicable law prior to the expiration of any applicable remedial amendment
period.
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(c) Records. Except as disclosed on Schedule 4.17(c),
the Company has made available to Buyer copies of each Company Plan and any
amendment thereto and any related trust agreement, funding agreement and
insurance contract relating thereto, and if applicable: (i) the most recent
actuarial valuation report, (ii) the last filed Form 5500 or 5500-C, (iii) the
summary plan description currently in effect for each Employee Benefit Plan and
all material modifications thereto, (iv) the last financial statement for each
Employee Benefit Plan and its related trust, if any, and (v) the most recent
determination letter issued with respect to each Employee Benefit Plan. Except
as provided on Schedule 4.17(c), all reports and returns with respect to any
Employee Benefit Plan required to be filed for 1996, 1997 or 1998 under ERISA or
the Code that must be filed prior to the Closing Date to be timely filed, have
been filed or will be filed before the Closing Date.
(d) Funding. All contributions required by applicable
law or the terms of a Company Plan to be made on or at any time prior to the
date hereof (or, with respect to the Closing Date, by the Closing Date) by the
Company to a Company Plan have been made or will have been made within the time
prescribed by the applicable Law or Company Plan. Except as set forth on
Schedule 4.17(d), the assets of each Employee Benefit Plan as of the Closing
Date, exceed the present value of the benefits liabilities (as defined in
Section 4001(a)(16) of ERISA) in the event of termination of the Employee
Benefit Plan as of the Closing Date. With respect to each Employee Benefit Plan
subject to Title IV of ERISA, there has not occurred, and the transactions
contemplated by this Agreement will not result in the occurrence of, a
"reportable event" within the meaning of Section 4043(b) of ERISA or the
regulations thereunder, excluding any reportable events with respect to which
the reporting requirement has been waived by the Pension Benefit Guaranty
Corporation ("PBGC"). The PBGC has not instituted or, to the Company's
Knowledge, threatened, a proceeding to terminate any Employee Benefit Plan
subject to Title IV of ERISA. All premiums due to the PBGC on or before the
Closing Date with respect to any Employee Benefit Plans subject to Title IV of
ERISA have been or will be paid in full, including late fees, interest and
penalties, if and to the extent applicable. The Company has not, within the 5
year period preceding the Closing Date, entered into any transaction the
principal purpose of which was to evade liability to which Seller or the Company
would otherwise be subject under Title IV of ERISA. The principal purpose of
Seller entering into the transactions contemplated by this Agreement is not to
evade liability to which Seller or the Company would otherwise be subject under
Title IV of ERISA.
(e) Multiemployer Plans. Except as disclosed on
Schedule 4.17(e), the Company has not (i) contributed to or is required to
contribute to a "Multiemployer Plan" as that term is defined in Sections 3(37)
and 4001(a)(3) of ERISA, or (ii) completely or partially withdrawn from a
Multiemployer Plan under Section 4201 of ERISA. With respect to any
Multiemployer Plan to which the Company is or was required to contribute, there
is no event or condition, including, without limitation, on account of or in
connection with the transactions contemplated by this Agreement, which would to
the Company's Knowledge be expected to cause the Company to incur any liability
under Section 4201 of ERISA.
(f) Pending Actions. There are no actions pending in
any court or, to the Company's Knowledge, asserted in writing to the Company
against the assets of any of the Company Plans or against the Company (that
would not be required to be referenced on Schedule 4.13) or against any
fiduciary of the Company Plans with respect to the Company
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Plans, except undisputed claims for benefits payable in the ordinary course of
operation of the Company Plans.
(g) Post Retirement Welfare Benefits. Except as
disclosed on Schedule 4.17(g), and except as required by Section 4980B of the
Code, no Company Plan or binding arrangement provides medical or death benefits
(whether or not insured) with respect to Employees or former employees of the
Company beyond their retirement or other termination of employment. Any
continuation coverage provided under any Employee Benefit Plan complies with
Section 4980B of the Code and the participant or beneficiary pays premiums at
costs computed pursuant to Section 4980B of the Code.
(h) Deal Payments. No Company Plan or any other
agreement, program, policy or other arrangement by or to which the Company is a
party provides for the payment of money, or transfer of other property or other
consideration as a result of the transactions contemplated by this Agreement,
except as disclosed on Schedule 4.17(h), whether or not any such payment would
constitute a "parachute payment" or "excess parachute payment" within the
meaning of Section 280G of the Code.
4.18 Taxes.
(a) Except as set forth on Schedule 4.18(a), (i) all
Tax Returns required to be filed as of the date hereof and on or before the
Closing Date (taking into account extensions of time within which to file) by or
on behalf of the Company, or any affiliated consolidated, combined or unitary
group of corporations (under federal, state or local tax law) of which the
Company or TPC is or has been a member (each, an "Affiliated Group") have been
(or, as of the Closing Date, will have been) filed, all such Tax Returns are (or
will be) true, correct and complete and all Taxes required to be paid by the
Company or any Affiliated Group for the periods to which such returns relate
have been (or will have been) paid, (ii) the Company is not the beneficiary of
any extension of time to file any Tax Return, and (iii) there are no pending
proposed deficiencies or other claims for unpaid Taxes received by or relating
to Taxes of the Company or any Affiliated Group (to the extent applicable to the
Company or TPC).
(b) All Taxes that the Company is required to
withhold or collect have been duly withheld or collected and have been paid
over, as required, to the appropriate taxing authority.
(c) Except as set forth on Schedule 4.18(c), there
are no audits or proceedings pending or, to the Company's Knowledge, threatened
with respect to Taxes of the Company. Except as set forth on Schedule 4.18(c),
no waivers of statutes of limitations have been given with respect to any Taxes
owed by the Company, which waivers are in effect as of the date hereof.
(d) Except as otherwise disclosed in Schedule
4.18(d), no notices of Tax liens have been filed with respect to any assets of
the Company. For any taxable period that remains open, TPC has been included
only in combined, consolidated or unitary groups for federal, state and local
income tax purposes that are described in Schedule 4.18(d). Neither TPC nor the
Partnership is a party to or bound by any agreement or understanding providing
for the
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allocation or sharing of Taxes other than with respect to each other and/or
Seller. Except as set forth on Schedule 4.18(d), neither TPC nor the Partnership
is required to include in income any adjustment pursuant to Section 481(a) of
the Code by reason of a voluntary change in accounting method and neither TPC
nor the Partnership has knowledge that the Internal Revenue Service has proposed
any such adjustment or change in accounting method. The acquisition of the stock
of TPC will not be a factor causing any payments to be made by TPC or the
Partnership to be nondeductible (in whole or in part) pursuant to Section 280G
of the Code. No disclosure statement pursuant to Section 6662 of the Code or any
comparable disclosure with respect to foreign, state and/or local tax statutes
has been filed with respect to any item relating to TPC or the Partnership. Set
forth on Schedule 4.18(d) is a list of all federal income tax audits relating to
TPC or the Partnership that have, within three years of the date of this
Agreement, been completed by the Internal Revenue Service. No consent or
election under Section 341 of the Code has been made for TPC or any of its
assets. No property of TPC or the Partnership is "tax exempt use property"
within the meaning of Section 168(h) of the Code, and neither TPC nor the
Partnership is a party to any lease made pursuant to Section 168(f)(8) of the
Internal Revenue Code of 1954, as amended, except as set forth on Schedule 4.18.
4.19 Title to Shares and the Limited Partner Interest. The
delivery by Seller to Buyer at the Closing of the certificates representing the
Shares, duly endorsed in blank or accompanied by stock powers endorsed in blank
will vest Buyer on the Closing Date with good and marketable title to all of the
Shares, free and clear of all Liens. The transfer of the Limited Partner
Interest to Buyer at Closing will vest Buyer with good and marketable title to
the Limited Partner Interest, free and clear of all Liens. Except as set forth
on Schedule 4.19, Seller has the full power, right and authority to vote and
transfer the Shares and the Limited Partner Interest and, on the Closing Date,
Seller will have the full power, right and authority to vote and transfer the
Shares and the Limited Partner Interest.
4.20 Fees. Except for the fees payable to Donaldson,
Lufkin & Jenrette Securities Corporation, which are the responsibility of
Seller, neither Seller nor the Company has paid or become obligated to pay any
fee or commission to any broker, finder or intermediary in connection with the
transactions contemplated hereby.
4.21 Absence of Certain Changes or Events. Except for the
sweep of cash from the Company by Seller or the payment by Seller of accounts
payable on behalf of the Company (such cash sweeps and payment of accounts
payable sometimes collectively referred to herein as the "Cash Management
Practices"), or as expressly contemplated by this Agreement, since August 31,
1999, there has not been any transaction or occurrence in which the Company has:
(a) suffered any material adverse change nor has
there been any event which has had or may reasonably be expected to have a
material adverse effect on the Company;
(b) other than in relation to the Guaranty, incurred
any material obligations or liabilities of any nature other than items incurred
in the regular and ordinary course of business, or increased (or experienced any
change in the assumptions underlying or the methods of calculating) any bad
debt, contingency, or other reserve, other than in the ordinary course of
business;
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(c) paid, discharged, or satisfied any material
claim, lien, encumbrance, obligation or liability (whether absolute, accrued,
contingent, and whether due or to become due), other than the payment,
discharge, or satisfaction in the ordinary course of business of claims, liens,
encumbrances, obligations or liabilities of the type reflected or reserved
against in the Audited Financial Statements or which were incurred in the
ordinary course of business;
(d) permitted, allowed or suffered any of its
properties or assets (real, personal or mixed, tangible or intangible) to be
subject to any Lien, other than Permitted Liens;
(e) written down or written up the value of any
equipment, inventory (including write-downs by reason of shrinkage or
markdowns), determined as collectible any accounts receivable or any portion
thereof which were previously considered uncollectible, or written off as
uncollectible any accounts receivable or any portion thereof, except for
write-downs, write-ups and write-offs in the ordinary course of business, none
of which is material in amount;
(f) canceled any debts or waived any claims or rights
in excess of $50,000 individually or $100,000 in the aggregate;
(g) disposed of or permitted to lapse any right to
the use of any material patent, trademark, assumed name, service mark, trade
name, copyright, license or application therefor;
(h) except for commitments for capital expenditures
not exceeding $750,000 in the aggregate made in the ordinary course of business,
committed to make any capital expenditure not paid for or accrued prior to the
Closing Date for additions to property, plant, equipment, intangible or capital
assets or for any other purpose, other than for emergency repairs or
replacement;
(i) other than in relation to the Guaranty, incurred
any indebtedness for borrowed money;
(j) other than to independent sales representatives,
paid, loaned, distributed, or advanced any amounts to, sold or transferred any
properties or assets (real, personal or mixed, tangible or intangible) to,
purchased, licensed or otherwise acquired any properties or assets from or
entered into any other agreement or arrangement with any Affiliate of the
Company except for compensation not exceeding the rate of compensation as of
August 31, 1999 or as not required to be scheduled pursuant to Section 4.21(p)
and for routine travel advances to officers and employees;
(k) other than cash (in each case), declared, set
aside or paid any dividend or other distribution (whether in stock or property)
with respect to any of the outstanding Common Stock or partnership interests, or
made any redemption, purchase or other acquisition of any of its equity
securities;
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(l) issued, sold, split, combined or reclassified any
of the shares of Common Stock or interests in the Partnership, or issued,
committed to issue or authorized any issuance of any options, warrants or other
similar convertible securities;
(m) made any change in its accounting methods,
principles or practices, except insofar as may have been required by a change in
GAAP;
(n) entered into any collective bargaining or labor
agreement (oral and legally binding or written), or experienced any organized
slowdown, material work interruption, strike or work stoppage;
(o) sold, transferred, or otherwise disposed of any
of its material assets except in the ordinary course of business;
(p) granted or incurred any obligation for any
increase in the compensation of any of its officers or Employees (including,
without limitation, any increase pursuant to any bonus, pension, profit-sharing,
retirement, or other plan or commitment) except for raises to officers or
Employees in the ordinary course of business and not in excess of the Company's
1999 salary increase guidelines attached to Schedule 4.21(p);
(q) suffered any uninsured casualty loss or damage in
excess of $100,000 individually or $200,000 in the aggregate;
(r) made or agreed to make any charitable
contributions or incurred or agreed to incur any non-business expenses in excess
of $50,000 in the aggregate;
(s) amended any provisions of its Certificate of
Incorporation, bylaws or the Agreement of Limited Partnership of the Partnership
or changed any of its authorized capital stock or interests;
(t) taken any other material action except in the
ordinary course of business; or
(u) agreed, so as to legally bind them whether in
writing or otherwise, to take any of the actions set forth in this Section 4.21
and not otherwise permitted by this Agreement.
4.22 Permits. The Company has all material Permits that
are necessary for the Company Business. Except as would not be material, there
has occurred no default under any Permits. There are no pending Legal
Proceedings relating to the suspension, revocation or modification of any
Permit. The execution, delivery and performance of this Agreement, and the
consummation of the transactions contemplated hereby, do not and will not result
in any suspension, revocation, cancellation or invalidation of any material
Permit that is necessary for the Company Business.
4.23 Inventories. All inventory, whether reflected on the
Audited Financial Statements or subsequently acquired, (a) has been and on the
Closing Date will have been
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acquired by the Company only in bona fide transactions entered into in the
ordinary course of business, and (b) is of good and merchantable quality except
to the extent reserves have been taken consistent with past practices. Except as
described in Schedule 4.23, the Company has now and on the Closing Date will
have valid legal title to its inventory free and clear of any Liens other than
Permitted Liens. Since August 31, 1999, the Company has not established reserves
regarding obligations with respect to the return of inventory in a manner
inconsistent with past practice.
4.24 Accounts Receivable. All accounts receivable shown on
the Audited Financial Statements represent, and the accounts receivable of the
Company outstanding on the Closing Date will represent, sales actually made or
services actually performed in the ordinary course of business in bona fide
transactions completed in accordance with the terms and provisions contained in
any documents relating thereto.
4.25 Compliance with Laws. Except where not material, the
Company has not engaged and is not engaging in any activity and has not omitted
and is not omitting to take any action that was, is, created or creates a
violation of any law applicable to the Company, its business or its assets.
4.26 Transactions with Related Parties. Except for the Cash
Management Practices or as set forth in Schedule 4.26:
(a) No executory agreement or transaction between the
Company and any Related Party has been entered into which, if not existing,
would have resulted in a material adverse effect in the results of operations
reflected in the Audited Financial Statements or, irrespective of whether such
would result in a material adverse effect, will continue after the Closing Date;
(b) No Related Party is a director or officer of, or
has any direct or indirect interest in (other than the ownership of not more
than 5% of the publicly traded shares of), any person or entity which is a
supplier, vendor, landlord, sales representative or competitor of the Company;
(c) No Related Party owns or has any interest in,
directly or indirectly, in whole or in part, any tangible or intangible property
used in the conduct of the business of the Company;
(d) Other than amounts owed to Seller pursuant to any
intercompany debts, or expense advance reimbursements in the ordinary course of
business, no Affiliate of the Company owes any money to, nor is any such
Affiliate owed any money by, the Company; and
(e) The Company has not, directly or indirectly,
guaranteed or assumed any indebtedness for borrowed money or otherwise for the
benefit of any Related Party, other than the Guaranty.
4.27 Undisclosed Liabilities. Except as expressly
permitted hereby, the Company does not have any material liabilities or
obligations of a nature required by GAAP
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to be reflected on a balance sheet of the Company except for (i) liabilities and
obligations reflected or reserved for in the Audited Financial Statements, (ii)
liabilities or obligations incurred after August 31, 1999 in the ordinary course
of business consistent with past practice and (iii) liabilities and obligations
under or reflected on a Schedule for this Agreement.
4.28 Suppliers. Set forth in Schedule 4.28 is a list of
the five suppliers that accounted for the largest dollar volume of purchases by
the Company during each of the last three fiscal years (the "Material
Suppliers"). No Material Supplier has canceled or otherwise terminated, or
threatened in writing to cancel or otherwise terminate, its relationship with
the Company during the twelve months immediately preceding the date hereof (or
the Closing Date, as of the Closing Date) or has during such period materially
decreased, or threatened to materially decrease or materially limit, its
services, supplies or materials to the Company. The Company has not received any
notice during the twelve months immediately preceding the date hereof that any
Material Supplier intends to cancel or otherwise materially modify its
relationship with the Company or to materially decrease or materially limit its
services, supplies or materials to the Company.
4.29 Year 2000. The material Technology Systems and
Current Software are Year 2000 Compliant, and the Company has implemented a
compliance program and conducted reasonable tests sufficient to ensure such Year
2000 Compliance.
4.30 Sales Representatives. Set forth on Schedule 4.30 is
a list of all independent sales representatives who generated sales in excess of
$2,000,000 for the Company during 1998 (the "Material Sales Representatives").
The Company has a written contract with each of its independent sales
representatives. As of the date hereof, no Material Sales Representative has
canceled or otherwise terminated its relationship with the Company.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller as follows:
5.1 Organization and Good Standing. Buyer is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware.
5.2 Authorization of Agreement. The execution and
delivery of the Buyer Transaction Agreements by Buyer (or Castle Harlan, if
applicable), the performance of the Buyer Transaction Agreements and the
consummation by Buyer (or Castle Harlan, if applicable) of the transactions
contemplated by the Buyer Transaction Agreements, have been duly authorized by
all necessary action and no other action on the part of Buyer (or Castle Harlan,
if applicable) is necessary with respect thereto. Each of the Buyer Transaction
Agreements has been duly and validly executed and delivered by Buyer (or Castle
Harlan, if applicable), constitutes a valid and binding obligation of Buyer (or
Castle Harlan, if applicable) and is enforceable against Buyer (or Castle
Harlan, if applicable) in accordance with its terms, except as such
enforceability may be
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limited by bankruptcy, insolvency, reorganization and similar laws affecting
creditors generally and by the availability of equitable remedies.
5.3 Conflicts, Consents of Third Parties. Neither the
execution and delivery by Buyer (or Castle Harlan, if applicable) of the Buyer
Transaction Agreements nor consummation or performance by Buyer (or Castle
Harlan, if applicable) of the transactions contemplated by the Buyer Transaction
Agreements to be consummated or performed by it will: (a) violate any Law, (b)
violate the certificate of incorporation or bylaws of Buyer, (c) violate any
Order to which Buyer is a party or by which it is bound or (d) require any
consent from, authorization or approval or other action by, and no notice to or
declaration, filing or registration with any Governmental Authority, except to
comply with the HSR Act.
5.4 Litigation. There are no Legal Proceedings pending
against Buyer or Castle Harlan or, to the best knowledge of Buyer, threatened in
writing against Buyer or Castle Harlan that question the validity or legality of
any Buyer Transaction Agreement or any action taken or to be taken by Buyer or
Castle Harlan in connection herewith or therewith, or which seeks to enjoin or
obtain monetary damages in respect of, the consummation of the transactions
contemplated hereby or thereby.
5.5 Investment Intent; Sophisticated Buyer. Buyer (a) is
an informed sophisticated entity with sufficient knowledge and experience in
investing so as to be able to evaluate the risks and merits of its purchase of
the Shares and the Limited Partner Interest, (b) is financially able to bear the
risks of purchasing the Shares and the Limited Partner Interest, (c) has had an
opportunity to discuss the business, management and financial affairs of the
Company with the Company's management, (d) is acquiring the securities relating
to this Agreement for its own account for the purpose of investment and not with
a view to or for sale in connection with any distribution thereof, (e)
understands that (i) such securities have not been registered under the
Securities Act of 1933, as amended (the "Securities Act"), (ii) such securities
must be held indefinitely unless a subsequent disposition thereof is registered
under the Securities Act or is exempt from such registration, (f) has no present
need for liquidity in connection with its purchase of the Shares and the Limited
Partner Interest, (g) understands that the purchase of the Shares and Limited
Partner Interest involves a high degree of risk, and (h) acknowledges that the
purchase of such securities is consistent with its general investment
objectives.
5.6 Financing.
(a) Lenders. Buyer has obtained and furnished to
Seller a letter dated December 17, 1999, from Heller Financial, Inc. (the
"Lender Letter"), with respect to its financing (the "Debt Financing") a portion
of the transactions contemplated hereby. The Lender Letter is in full force and
effect on the date hereof and neither Buyer nor Castle Harlan has received any
notice from such lender that it intends to cancel such Lender Letter. If
delivered as contemplated by Section 13.1(d), on the date of delivery to Seller
the revised Lender Letter referred to in Section 13.1(d) will be in full force
and effect, and on such date neither Buyer nor Castle Harlan will have received
any notice from such lender that it intends to cancel such Lender Letter.
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(b) Castle Harlan. Pursuant to that certain letter
(the "Castle Harlan Letter") dated December 17, 1999 from Castle Harlan, Buyer
has obtained a commitment from Castle Harlan to supply the equity and
subordinated debt financing for the transactions contemplated hereby. Other than
having obtained the Debt Financing and satisfaction of the conditions in this
Agreement, Buyer has satisfied all conditions to the Castle Harlan Letter and it
is in full force and effect on the date hereof and is not subject to
cancellation.
(c) Upon funding of the Castle Harlan Letter and the
Lender Letter, Buyer will have sufficient cash to enable it to consummate the
transactions contemplated by this Agreement, including, without limitation,
paying all fees and expenses incurred by or on behalf of Buyer in connection
with the consummation of the transactions contemplated hereby.
5.7 Brokers. Buyer has not paid or become obligated to
pay any fee or commission to any broker, finder or intermediary in connection
with the transactions contemplated hereby.
ARTICLE VI
COVENANTS OF TPC AND SELLER
From and after the date hereof and until the Closing Date, each of TPC
and Seller hereby covenants and agrees, as applicable, that:
6.1 Access to Documents; Opportunity to Ask Questions.
Seller shall, and shall cause the Company to, make available for inspection by
Buyer and its directors, officers, employees, counsel, representatives,
financing sources, accountants and auditors (collectively, "Representatives"),
during normal business hours, corporate records, books of accounts, (including
accountants' work papers), Contracts and all other documents requested by Buyer,
and shall permit Buyer and its Representatives reasonable access to the
properties, facilities, suppliers, customers and employees of the Company
(provided that Buyer has identified, in the case of employees, the persons to
Seller and Seller has consented to such access, with such consent not to be
unreasonably withheld) so that Buyer and such Representatives may make
reasonable inspection and examination of the business, operations and affairs of
the Company and to facilitate the transactions contemplated by this Agreement.
All access and information is subject to the terms and conditions of Buyer
Confidentiality Agreement.
6.2 Conduct of Business. Until the Closing Date, Seller
shall cause the Company to (unless Buyer shall otherwise consent in writing, or
except as otherwise specifically contemplated by this Agreement):
(a) operate only in the usual, regular and ordinary
manner consistent with past practice, provided that Seller may (at its option)
sweep up to 100% of the cash of the Company as of the Closing Date
contemporaneous with or immediately prior to the Closing, and use its
commercially reasonable efforts to preserve its present business operations,
organization and goodwill and maintain to the extent appropriate its existing
relations with material customers and suppliers, key employees, material
creditors and business partners;
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(b) maintain all of its assets and properties in
their current condition, normal wear and tear excepted;
(c) maintain its books, accounts and records in the
usual, regular and ordinary manner, on a basis consistent with prior years, and
comply with all contractual and other obligations;
(d) maintain supplies of similar kind, amount and
quality as that maintained on the date hereof;
(e) comply in all material respects with all
applicable Laws to which it is subject;
(f) not adopt or enter into any plan of complete or
partial liquidation, dissolution, merger, consolidation, restructuring,
recapitalization or other reorganization of the Company or with any Person, and
not engage in any new business;
(g) not amend or modify TPC's certificate of
incorporation or by-laws and not amend or modify the Partnership's certificate
of limited partnership or agreement of limited partnership;
(h) not incur or agree to incur any obligations to,
directly or indirectly, sell, transfer, pledge or issue any securities nor
issue, sell, transfer or pledge its securities; and
(i) not take or suffer any action which, if taken or
suffered prior to the date hereof, would have required disclosure on Schedule
4.21; or
(j) not agree to take any action or actions
prohibited by any of the foregoing clauses (a) through (i) or to authorize,
recommend, propose or announce an intention to do any of the foregoing.
6.3 Further Actions. Seller shall, and shall cause the
Company to, execute and deliver such instruments and take such other actions as
may reasonably be required to (a) carry out the intent of this Agreement and (b)
consummate the transactions contemplated hereby.
6.4 HSR Act Compliance. Promptly after the execution of
this Agreement, TPC and Seller shall file any notification required to be filed
under the HSR Act to consummate the transactions contemplated hereby, and shall
request early termination of the waiting period thereunder. TPC and Seller shall
use commercially reasonable efforts to comply as promptly as practicable with
any request made pursuant to the HSR Act for additional information.
6.5 No Breach of Representations and Warranties. Each of
Seller and TPC will not take any action, and will use commercially reasonable
efforts not to permit any event to occur, which would result in any of the
representations and warranties of Seller or TPC contained in any Seller
Transaction Agreement not being true and correct on and as of the Closing Date
with the same force and effect as if such representations and warranties had
been made on and as of the Closing Date.
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6.6 Consents. Each of Seller and TPC shall obtain the
consents of the third parties to the Contracts listed on Schedule 6.6. The
Company will use good faith efforts, at Buyer's expense, to obtain the consent
of Lernout & Hauspie Speech Products N.V. (assignee of Inso Dallas Corporation)
to the transactions contemplated by this Agreement, as required by that certain
License Agreement between the Company and Lernout & Hauspie Speech Products
N.V., dated April 11, 1996 and amended on September 23, 1999.
6.7 Notification of Certain Matters. Seller and TPC shall
give prompt notice to Buyer of (i) the occurrence or non-occurrence of any event
the occurrence or non-occurrence of which is reasonably likely to cause any
representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect at the Closing Date and (ii) any material
failure of Seller, TPC or the Company to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder;
provided, however, that the delivery of any notice pursuant to this Section 6.7
shall not limit or otherwise affect the remedies available hereunder to the
party receiving such notice.
6.8 No Solicitation. None of Seller, TPC nor any of their
Affiliates shall (and Seller and TPC shall use commercially reasonable efforts
to cause its respective officers, directors, Employees, representatives and
agents, including, but not limited to, investment bankers, attorneys and
accountants, not to), directly or indirectly, encourage, solicit, participate in
or initiate discussions or negotiations with, or provide any information to, any
Person or group (other than Buyer, any of its Affiliates or Representatives)
concerning any merger, tender offer, exchange offer, sale of assets, sale of
shares of capital stock or debt securities or similar transactions involving the
Company or any division or operating or principal business unit of the Company.
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6.9 Non-Competition. Seller and its subsidiaries will not
for a period of five years following the Closing (the "Non-Competition Period"),
without the express written consent of the Company, directly or indirectly, in
any geographic area where the Company conducts business during the
Non-Competition Period, (i) engage or participate in the following businesses:
(1) scholastic yearbook publishing, (2) specialty publishing, featuring sports,
gardening, health and other special interests, or (3) reunion services providing
event planning services of school alumni (the "Company Business"); (ii) request,
induce, attempt to influence or have any other business contact with any Company
Business customers or potential customers which have been in contact with the
Company, to curtail or cancel any business they may transact with the Company;
(iii) solicit for employment or employ an officer, director, or employee earning
in excess of $75,000 of the Company, or any subsidiary thereof to become an
officer, director or employee of Seller or its Affiliates; (iv) request, induce,
attempt to influence or have any other business contact with any distributor or
supplier of goods or services to the Company, to curtail or cancel any business
they may transact with the Company; (v) request, induce, attempt to influence or
have any other business contact with any Governmental Authority to terminate,
revoke or materially and adversely alter or impair any Permit held, owned, used
or reserved for the Company or (vi) engage in or participate in, directly or
indirectly, any business conducted under any name that shall be the same as or
similar to the name of the Company or any trade name used by it. For purposes of
this Section 6.9, Seller shall be deemed to engage or participate in a business
if it, directly or indirectly, engages in, owns, manages, operates, controls or
substantially invests in any business engaged in the Company Business; provided,
however, that Seller or any subsidiary may invest in the securities of any
enterprise if (x) such securities are publicly traded and (y) Seller or any
subsidiary does not beneficially own (as defined in Rule 13d-3 promulgated under
the Securities Exchange Act of 1934) in excess of 5%, in the aggregate, of the
outstanding equity of such enterprise. Seller is entering into the foregoing
covenant to induce Buyer to consummate the transactions contemplated by this
Agreement, including the transfer of the goodwill of the Company.
6.10 Release of Liens and Guaranty. Seller shall obtain on,
or prior to, the Closing the release of (i) Liens (other than Permitted Liens)
affecting the Company or its assets, and (ii) the Guaranty.
6.11 Access to Insurance Coverage. Prior to Closing, Seller
shall not cancel any of the existing insurance policies referred to on Schedule
4.10 (the "Insurance Policies"). Seller shall impose no obstacle following the
Closing to the Company's giving notice of or presenting any claim covered by the
occurrence-based Insurance Policies directly to the insurance carrier if the
Company is a named insured thereunder. If the Company is not a named insured of
any Insurance Policy, Seller shall give notice of or present all claims to the
insurance carrier on the Company's behalf as soon as is commercially reasonable
after its receipt of written notice from the Company requesting Seller to do so.
All proceeds from insurance claims made on behalf of the Company to insurance
carriers under this Section 6.11 will be tendered by Seller to the Company
promptly upon receipt and Seller will take all commercially reasonable actions
necessary to otherwise cooperate with the Company in pursuing such claims,
provided that the Company will bear all costs and expenses incurred by Seller in
fulfilling its obligations pursuant to this Section 6.11.
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ARTICLE VII
COVENANTS OF BUYER
From and after the date hereof and until the Closing (except
with respect to Section 7.2 and Section 7.5 which shall survive the Closing),
Buyer hereby covenants and agrees that:
7.1 No Breach of Representations and Warranties. Buyer will
not take any action, and will use its commercially reasonable efforts not to
permit any event to occur, which would result in any of the representations and
warranties of Buyer contained in any Buyer Transaction Agreement not being true
and correct on and as of the Closing Date with the same force and effect as if
such representations and warranties had been made on and as of the Closing Date.
7.2 Seller's Access to Documents; Preservation of Books and
Records.
(a) For a period of seven years from the Closing Date
(or such longer period as may be necessary with respect to any Tax period ended
on or prior to the Closing Date for which the statute of limitations has not
expired as of the end of such seven-year period), (i) Buyer shall cause the
Company not to dispose of or destroy any of the books and records of the Company
relating to periods prior to the Closing ("Books and Records") without first
offering to turn over possession thereof to Seller by written notice to Seller
at least 90 days prior to the proposed date of such disposition or destruction
and (ii) Buyer shall cause the Company to allow Seller and its agents access to
all Books and Records and any other documents, and information therefrom, to the
extent necessary to allow Seller to prepare its Tax Returns, and shall provide
reasonable assistance of Company personnel in making available such Books,
Records, documents and information; provided, however, that any such access or
copying shall be had or done in such a manner so as not to unduly interfere with
the normal conduct of the Company's business. Seller shall reimburse the Company
for the reasonable out-of-pocket expenses incurred by it in performing any of
the covenants contained in Section 7.2.
(b) The seven-year period referred to in Section
7.2(a) shall be extended in the event that Seller advises Buyer in writing that
any Legal Proceeding or investigation is pending or threatened in writing at the
termination of such seven-year period and such extension shall continue until
any such Legal Proceeding or investigation has been settled through judgment or
otherwise and/or is no longer pending or threatened.
7.3 HSR Act Compliance. Promptly after the execution of this
Agreement, Buyer shall file any notification required to be filed under the HSR
Act to consummate the transactions contemplated hereby, and shall request early
termination of the waiting period thereunder. Buyer shall use commercially
reasonable efforts to comply as promptly as practicable with any request made
pursuant to the HSR Act for additional information.
7.4 Further Actions. Buyer agrees to execute and deliver such
instruments and take such other actions as may reasonably be required to (a)
carry out the intent of this Agreement and (b) consummate the transactions
contemplated hereby.
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7.5 Release of Guarantees. Buyer shall from time to time
before or after the Closing Date provide to Seller and to the Company such
information with respect to Buyer as may be reasonably requested to assist the
Company and Seller in obtaining a valid and binding full release, in form
reasonably satisfactory to Seller, of all of Seller's obligations under any
Contract (however denominated) relating to the guarantee of any obligation or
liability of the Company (collectively, the "Guaranty Contracts"), including,
but not limited to, the agreements listed on Schedule 7.5. Buyer agrees to
indemnify and hold Seller, and each of its Affiliates and the officers,
directors, employees and agents thereof, harmless from and against all Losses
arising out of, based upon, attributable to or resulting from all of Seller's
obligations under the Guaranty Contracts. For purposes of this Section 7.5, the
indemnification procedures of Section 14.3 shall be applicable.
7.6 Notification of Certain Matters. Buyer shall give prompt
notice to Seller and TPC of (i) the occurrence or non-occurrence of any event
the occurrence or non-occurrence of which is reasonably likely to cause any
representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect at the Closing Date and (ii) any material
failure of Buyer to comply with or satisfy any covenant, condition or agreement
to be complied with or satisfied by it hereunder; provided, however, that the
delivery of any notice pursuant to this Section 7.6 shall not limit or otherwise
affect the remedies available hereunder to the party receiving such notice.
7.7 Return of Information. In the event of termination of this
Agreement, Buyer will return or cause to be returned to the Company all
documents and other materials obtained from, or on behalf of, the Company in
connection with the transactions contemplated hereby and will keep confidential
any such information, all in accordance with the provisions of the Buyer
Confidentiality Agreement.
7.8 [Intentionally Left Blank]
7.9 Financing. Buyer will take all commercially reasonable
actions necessary to satisfy all of its obligations contained in the Lender
Letter and the Castle Harlan Letter.
ARTICLE VIII
CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS
The obligation of Buyer to consummate the transactions
contemplated hereby on the Closing Date is subject to the satisfaction of the
following conditions at or prior to the Closing:
8.1 Accuracy of Representations and Warranties. Each of the
representations and warranties of Seller and TPC contained herein shall be true
and correct in each case at and as of the Closing Date as if made at and as of
the Closing Date (except for the representations and warranties that address
matters only as of a particular date or only with respect to a specific period
of time which need only be true
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and accurate as of such date or with respect to such period) except to the
extent that the failure of such representations and warranties to be true and
correct (in the aggregate) does not have or will not be reasonably likely to
have a material adverse effect on the Company or materially adversely affect the
consummation of the transactions contemplated hereby or Seller's or TPC's
ability to perform its obligations hereunder in a timely manner. Notwithstanding
anything contained herein to the contrary, in making the determination required
by the preceding sentence, deviations which result solely from actions or
inactions expressly requested or consented to in writing by Buyer shall not be
considered.
8.2 Performance of Covenants. Seller and TPC shall have
performed and complied, in all material respects, with the covenants and
provisions of this Agreement required to be performed or complied with by them
between the date hereof and the Closing Date.
8.3 Hart-Scott-Rodino. All applicable waiting periods in
respect of the transactions contemplated by this Agreement under the HSR Act
shall have expired or been terminated.
8.4 No Order. No Order shall be in effect forbidding,
enjoining or restraining the consummation of the transactions contemplated in
this Agreement or which would limit or affect the ability of Buyer to own or
control the Company and there shall not have been threatened, nor shall there be
pending, any Legal Proceeding seeking to forbid, enjoin, refrain or delay,
challenge the validity of, or seek damages in respect of, the material
transactions contemplated by this Agreement which has a reasonable likelihood of
success.
8.5 Officers' Certificates. Buyer shall have received a
certificate from TPC and Seller to the effect set forth in Sections 8.1 and 8.2
hereof, dated the Closing Date, signed on behalf of TPC by a duly authorized
officer of TPC, and signed on behalf of Seller by a duly authorized officer of
Seller.
8.6 Delivery of Certificates. Seller shall have delivered
to Buyer, at the Closing, the certificates representing the Shares and the
Limited Partner Interest, duly endorsed in blank or accompanied by stock powers
duly endorsed in blank and such other instruments reasonably deemed to be
necessary or required to vest in Buyer all of Seller's right, title and interest
with respect to the Shares and the Limited Partnership Interest, free and clear
of all Liens.
8.7 Certified Resolutions. Buyer shall have received a
certificate of the Secretary or an Assistant Secretary of Seller, dated the
Closing Date, setting forth resolutions of the board of directors of Seller
authorizing the consummation of the transactions contemplated hereby, and
certifying that such resolutions were duly adopted and have not been rescinded
or amended as of the Closing Date.
8.8 Employment and Non-Competition Agreements. The employment
and non-competition agreements between the Company and Messrs. Van Pelt, Kreider
and Lewis entered into concurrently herewith shall be in effect (excluding any
failure of any such agreement to be in effect as a result of Buyer's actions,
omissions or fault) and Buyer shall not have received notice that such employees
are not ready and willing to perform under such agreements at Closing.
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8.9 Consents. All consents or waivers required pursuant to the
Insilco Credit Agreement and the Insilco 12% Notes shall have been obtained.
8.10 Opinion of Counsel for Seller and TPC. Buyer shall have
received an opinion from Baker & Botts, L.L.P., counsel for Seller and the
Company, in substantially the form attached hereto as Exhibit A.
8.11 Financing. Buyer shall have received financing
substantially as set forth in the Lender Letter.
8.12 FIRPTA Affidavit. Buyer shall have received an affidavit
from Seller in accordance with Section 1445(b)(2) of the Code wherein Seller
states that it is not a foreign person.
8.13 Indebtedness. The Company shall have no indebtedness for
borrowed money, other than any indebtedness included in the calculation of the
Closing Working Capital.
8.14 Release of Certain Liens. Buyer, at its discretion,
shall have received Uniform Commercial Code searches (which searches shall be
made or caused to made by and at the expense of Buyer) of filings made pursuant
to Article 9 thereof in all jurisdictions where any of the Company's material
assets are located, in form, scope and substance reasonably satisfactory to
Buyer, which searches shall reflect the release or termination of all Liens
against any the Company's assets disclosed thereby that are not Permitted Liens,
or Buyer shall have received evidence satisfactory to it, that all such Liens
other than Permitted Liens or as set forth on Schedule 8.14 have been released
or terminated prior to Closing.
8.15 Material Adverse Change. There shall not have been any
material adverse change, nor any events that would reasonably be expected to
have a material adverse change to the Company, from the date hereof to the
Closing Date.
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ARTICLE IX
CONDITIONS PRECEDENT TO SELLER'S AND TPC'S OBLIGATIONS
9.1 Accuracy of Representations and Warranties. Each of the
representations and warranties of Buyer contained herein shall be true and
correct in all material respects in each case at and as of the Closing Date as
if made at and as of the Closing Date except for the representations and
warranties that address matters only as of a particular date or only with
respect to a specific period of time which need only be true and accurate as of
such date or with respect to such period except to the extent that the failure
of such representations and warranties to be true and correct does not have or
will not be reasonably likely to have a material adverse effect on the
consummation of the transactions contemplated hereby or Buyer's ability to
perform its obligations hereunder in a timely manner. Notwithstanding anything
contained herein to the contrary, in making the determination required by the
preceding sentence, deviations which result solely from actions or inactions
expressly requested or consented to in writing by Seller or TPC shall not be
considered.
9.2 Performance of Covenants. Buyer shall have performed
and complied, in all material respects, with the covenants and provisions in
this Agreement required herein to be performed or complied with by it between
the date hereof and the Closing Date.
9.3 No Order. No Order shall be in effect forbidding,
enjoining or restraining the consummation of the transactions contemplated in
this Agreement or which would limit or affect the ability of Buyer to own or
control the Company and there shall not have been threatened, nor shall there be
pending, any Legal Proceeding seeking to forbid, enjoin, refrain or delay,
challenge the validity of, or seek damages in respect of, the material
transactions contemplated by this Agreement upon which has a reasonable
likelihood of success.
9.4 Officer's Certificate. Seller shall have received a
certificate from Buyer to the effect set forth in Sections 9.1 and 9.2 hereof,
dated the Closing Date, signed by a duly authorized officer thereof.
9.5 Certified Resolutions. Seller shall have received a
certificate of a duly authorized officer of Buyer, dated the Closing Date,
setting forth the resolutions of the board of directors of Buyer authorizing the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, and certifying that such resolutions were duly
adopted and have not been rescinded or amended as of the Closing Date.
9.6 Hart-Scott-Rodino. All applicable waiting periods in
respect of the transactions contemplated by this Agreement under the HSR Act
shall have expired or been terminated.
9.7 Delivery of Purchase Price. Seller shall have received
the purchase price payable pursuant to this Agreement.
9.8 [Intentionally Left Blank]
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9.9 Opinion of Counsel for Buyer. Seller shall have
received an opinion from Schulte Roth & Zabel, LLP, counsel for Buyer, in
substantially the form attached hereto as Exhibit B.
ARTICLE X
DELIVERIES AT CLOSING
10.1 Deliveries by Seller to Buyer. At the Closing, Seller
shall deliver, or shall cause to be delivered, to Buyer the following:
(a) the certificates evidencing the Shares, and such
instruments or documents evidencing the sale, assignment, transfer and
conveyance by Seller to Buyer of the Shares and the Limited Partner Interest in
accordance with the terms hereof;
(b) the certificates referred to in Section 8.5
hereof;
(c) the certified resolutions of the board of
directors of Seller referred to in Section 8.7 hereof;
(d) a certificate of the Secretary or an Assistant
Secretary of each of Seller and TPC attesting as to the incumbency and signature
of each officer of Seller and TPC, respectively, who shall execute this
Agreement and any other Seller Transaction Agreement and certifying as being
complete and correct the copies attached to such certificate of the certificate
of incorporation and bylaws of TPC and the certificate of limited partnership
and agreement of limited partnership of the Partnership, each as in effect on
such date;
(e) a certificate of the good standing of TPC and the
Partnership in the State of Delaware, and a certificate of qualification of TPC
and the Partnership as a foreign entity authorized to do business in each state
in which they are so qualified, in each case dated as of a date not earlier than
ten (10) days prior to the Closing Date;
(f) satisfactory evidence of the resignation of such
of the present directors and officers of TPC as Buyer may require;
(g) a release by Seller in favor of the Company in
the form contained at Exhibit C;
(h) an Assignment and Assumption Agreement executed
by Seller and the Company in the form contained at Exhibit D; and
(i) an Assignment of Partnership Interest executed by
Seller in the form contained at Exhibit E.
10.2 Deliveries by Buyer to Seller. At the Closing, Buyer
shall deliver to Seller the following:
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(a) confirmation of the wire transfer of immediately
available funds (to the account of Seller specified by Seller to Buyer within 24
hours prior to the required payment thereof) in the amount equal to $93,480,000;
(b) the certificate referred to in Section 9.4 hereof
signed by a duly authorized officer of Buyer;
(c) the certified resolutions of the board of
directors of Buyer referred to in Section 9.5 hereof;
(d) a certificate of the Secretary or an Assistant
Secretary of Buyer attesting as to the incumbency and signature of each officer
of Buyer who shall execute this Agreement or any other Buyer Transaction
Agreement;
(e) a release by the Company in favor of Seller in
the form contained at Exhibit C; and
(f) an Assignment and Assumption Agreement executed
by the Company and Seller in the form contained at Exhibit D.
ARTICLE XI
COVENANTS REGARDING EMPLOYEES
11.1 Employment. Following the Closing, all Employees shall
continue in the employment of the Company on substantially equivalent terms and
conditions of employment. Nothing in Section 11.1 shall be deemed to require,
however, that the employment of any Employee be continued for any specific
period of time after the Closing Date. Buyer acknowledges that, following the
Closing, neither the Employees nor the Company shall continue to participate in,
or be a member of, any Employee Benefit Plan which is not sponsored or
maintained by the Company (including, without limitation, the Employee Benefit
Plans maintained or sponsored by Seller which, prior to the Closing Date,
covered employees of Seller in addition to Employees of the Company).
11.2 Benefit Plans. To the extent that any employee benefit
plan or arrangement is made available by Buyer or the Company to any Employees
following the Closing Date, (i) Buyer shall, or shall cause the Company to,
grant all such Employees after the Closing Date credit for all service with the
Company and any predecessors prior to the Closing Date for all purposes for
which such service was recognized by Seller and its Affiliates; and (ii) with
respect to any "Employee Benefit Welfare Plan" (as that term is defined in
Section 3(1) of ERISA), Buyer shall, or shall cause the Company to, waive any
waiting periods, pre-existing condition exclusions and actively-at-work
requirements and provide that any expenses incurred on or before the Closing
Date by a covered Employee or a covered Employee's covered dependent shall be
taken into account for purposes of satisfying applicable deductible,
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coinsurance and maximum out-of-pocket provisions. Buyer expressly agrees that
the Company or Buyer shall continue to maintain the Taylor Publishing Company
Pension Plan For Hourly Paid Employees (the "Hourly Pension Plan") on
substantially the same terms as it was constituted on the Closing Date, except
as may otherwise be required by applicable Law and/or the terms of any
applicable collective bargaining agreement, with plan administrators and other
fiduciaries as shall be determined and selected by Buyer pursuant to the terms
of the Hourly Pension Plan. The Hourly Pension Plan shall not be terminated, and
accruals thereunder may not be halted or frozen, prior to the expiration of the
term (and any extensions thereof) of the collective bargaining agreement
covering participants in the Hourly Pension Plan who are active employees of the
Company on the Closing Date, or the first anniversary of the Closing Date,
whichever event last occurs. As soon as practicable after the Closing Date,
Seller shall cause, or use its best efforts to effectuate, the transfer of the
assets of the Hourly Pension Plan out of the Insilco Corporation Master Trust
and into a trust newly established by the Company as is necessary for the
purposes of holding the assets of the Hourly Pension Plan, provided that the
Company provides Seller with sufficient evidence of the tax-exempt status of the
newly established trust.
11.3 Employee Liabilities. On and after the Closing Date,
Seller shall retain liability for benefits arising under the Company Plans
listed in Schedule 11.3 in accordance with the terms of such Company Plans and
to the extent described in Schedule 11.3, but Employees of the Company shall
cease to be covered as active employee participants in the Company Plans listed
in Schedule 11.3 on and after the Closing Date. Except as provided in the
preceding sentence and in Sections 11.5 and 11.6, the Seller shall have no
liability, for benefits or otherwise, under any Company Plan, and the Company
and Buyer shall be responsible for all benefits under the Company Plans.
Notwithstanding the foregoing, Seller shall be responsible for, and Buyer and
the Company shall not be obligated to pay, that portion owed under the
agreements listed on Schedule 4.17(h) that is attributable to the "Sales
Incentive Program". Buyer and the Company shall retain liability for payments
attributable to the "Income Protection Program" under such agreements, in each
case as such programs are described in the agreements listed on Schedule
4.17(h).
11.4 Severance. If the employment of any Employee is
terminated on or within one year after the Closing Date or by reasons of the
transactions contemplated hereby, Buyer shall cause the Company to provide such
Employee severance pay and benefit entitlement in accordance with the severance
policy applicable to such Employee as in effect on the date hereof, if more
favorable than the severance policy of Buyer or the Company, as applicable, in
effect on or after the Closing.
11.5 401(k) Plan. On or prior to the Closing Date, Seller
shall take all action necessary to vest participating Employees in their account
balances in the Insilco Corporation Thrift Plan (the "Insilco 401(k) Plan").
There shall be no transfer of assets or liabilities of the Insilco 401(k) Plan
to any Employee Benefit Plan of Buyer or any of its Affiliates (including the
Company), and Buyer acknowledges that Buyer and its Affiliates (including the
Company) shall have no right, title or interest in any of the assets of the
Insilco 401(k) Plan.
11.6 Insilco Pension Plan.
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(a) As of the Closing Date, Seller shall take all
actions necessary to provide that the Insilco Corporation Retirement Plan for
Salaried Employees (the "Insilco Pension Plan") shall retain all liabilities
with respect to all benefits accrued by participating Employees (the "Insilco
Plan Participants") under the Insilco Pension Plan through the Closing Date, as
if all such Insilco Plan Participants had terminated employment in respect of
the Insilco Pension Plan on the Closing Date. Seller shall vest Insilco Plan
Participants in their accrued benefits as of the Closing Date. All Insilco Plan
Participants shall be treated as terminated vested employees or retired
employees, if they are then eligible for retirement and so elect to retire under
the Insilco Pension Plan for the purpose of determining benefit entitlement
thereunder.
(b) There shall be no transfer of assets or
liabilities of the Insilco Pension Plan to any Employee Benefit Plan of Buyer or
of any of its Affiliates (including the Company), and Buyer acknowledges that
Buyer and its Affiliates (including the Company) shall have no right, title or
interest in any of the assets of the Insilco Pension Plan.
ARTICLE XII
TAXES AND LITIGATION
12.1 Tax Returns and Payments.
(a) Buyer shall, at Seller's request, cause the
Company to consent to join, for all taxable periods of the Company ending on or
before the Closing Date for which the Company is eligible to do so, in any
consolidated or combined federal, state, local or foreign income Tax Returns
with Seller. Seller shall cause to be prepared and filed all such consolidated
or combined income Tax Returns. Buyer agrees to cooperate with Seller in the
preparation of the portions of such income Tax Returns pertaining to the
Company, and hereby agrees to take no position inconsistent with the Company's
being a member of the consolidated or combined group of which Seller is a member
for all such periods. Seller shall timely pay all income taxes to which such
income Tax Returns relate for all periods covered thereby.
(b) Seller shall cause to be prepared and Buyer shall
cause to be timely filed all required state, local and foreign Tax Returns of
the Company (other than those caused to be filed by Seller pursuant to Section
12.1(a)) for any period which ends on or before the Closing Date, for which Tax
Returns have not been filed as of the Closing Date. Buyer shall be responsible
for preparing and filing all Tax Returns required to be filed by or on behalf of
TPC or the Partnership for taxable periods ending after the Closing Date. All
such returns for periods ending on or prior to, or which include, the Closing
Date shall be prepared on a basis that is consistent with the manner in which
Seller prepared or filed such Tax Returns for prior periods.
(c)(i) Seller shall indemnify and hold harmless
Buyer, TPC, the Partnership and their respective Affiliates, successors and
assigns and the employees, directors, officers and agents of each with respect
to any and all Taxes that may be imposed on Buyer, TPC
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or the Partnership or in respect of their business or assets (A) with respect to
any taxable period of TPC, the Partnership or any Affiliated Group ending on or
prior to the Closing Date or allocated to Seller pursuant to subparagraph (ii)
of this Section 12.1(c) (the "Pre-Closing Taxes"), (B) to the extent such Taxes
arise as a result of a breach or inaccuracy of any representation contained in
Section 4.18, and (C) under Treasury Regulation ss.1.1502-6 or any comparable
state, local or foreign tax provision.
(ii) If, for any United States federal, state, local
or foreign tax purposes, the taxable period of the Company does not terminate on
the Closing Date, Taxes, if any, and partnership tax items attributable to any
taxable period of TPC or the Partnership that includes (but does not end on) the
Closing Date (each such period, a "Straddle Period") shall be allocated to (A)
Seller for the period up to and including the Closing Date, and (B) Buyer for
the period subsequent to the Closing Date. For purposes of the preceding
sentence, Taxes for the period up to and including the Closing Date and for the
period subsequent to the Closing Date shall be determined on the basis of an
interim closing of the books as of the close of business on the Closing Date as
if such taxable period consisted of one taxable period ending on and including
the Closing Date followed by a taxable period beginning on the day following the
Closing Date or under such other reasonable method as the parties may agree. For
purposes of this subparagraph (ii), exemptions, allowances or deductions that
are calculated on an annual basis, such as the deduction for depreciation, shall
be apportioned on a daily basis. In addition, the Texas franchise tax determined
with respect to capital or income of TPC, Seller or the Partnership (i) during
1999 shall be considered a tax with respect to the period from January 1, 1999,
to December 31, 1999, for purposes of this Agreement, and (ii) during 2000 shall
be considered a tax with respect to the period from January 1, 2000, to December
31, 2000, for the purposes of this Agreement.
(d) With respect to any Tax Return required to be
filed by Buyer pursuant to Section 12.1(b) for a Straddle Period, Buyer shall
provide Seller with copies of such completed Tax Return and a statement setting
forth the amount of Tax shown on such Tax Return that is allocable to Seller
pursuant to Section 12.1(c)(ii) (the "Statement") at least 15 business days
prior to the due date for the filing of such Tax Return. Not later than five
days before the due date for payment of Taxes with respect to such Tax Return,
Seller shall pay to Buyer an amount equal to the Taxes shown on the Statement as
being allocable to Seller. In addition, if the Pre-Closing Taxes with respect to
a Straddle Period, calculated in accordance with Section 12. 1(c), are less than
the Tax payments made on or before the Closing Date by the Company with respect
to such Straddle Period Buyer shall cause the Company to pay over to Seller the
excess of such Tax payments over such Pre-Closing Taxes concurrently with the
filing of the Tax Return for the Straddle Period.
12.2 Refunds. Any refunds or credits of federal, state,
local and foreign Taxes (including any interest thereon) received by or credited
to the Company or Seller attributable to periods ending on or prior to the
Closing Date, or attributable to periods which include the Closing Date that
were not borne by Buyer pursuant to Section 12.1(c) (collectively, "Seller
Refunds"), shall be for the benefit of Seller, and Buyer shall use reasonable
commercial efforts to obtain any Seller Refunds and shall cause the Company to
pay over to Seller any Seller Refunds within 15 business days after receipt or
credit thereof; provided, however, that Seller shall
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reimburse Buyer for any costs or expenses incurred in connection with obtaining
such Seller Refunds.
12.3 Cooperation. After the Closing Date, Buyer and Seller
shall each make available to the other, as reasonably requested, and to any
taxing authority, all information, records or documents relating to Tax
liabilities or potential Tax liabilities of the Company for all periods prior to
or including the Closing Date and shall preserve all such information, records
and documents until the expiration of any applicable statute of limitations or
extensions thereof. Buyer shall prepare and provide to Seller such federal,
state, local and foreign Tax information packages as Seller shall reasonably
request for use in preparing any Tax Return that relates to the Company. Such
information packages shall be completed by Buyer and provided to Seller within
60 days after a request therefor. Notwithstanding any other provisions hereof,
each party shall bear its own expenses in complying with the foregoing
provisions. The obligations of Buyer contained in this Section 12.3 shall be in
addition to Buyer's obligations contained in Section 7.2 of this Agreement.
12.4 Buyer's Taxes. Buyer shall pay, or cause to be paid,
and Buyer and the Company shall jointly and severally indemnify Seller and its
Affiliates against and hold them harmless from any liability for Taxes of Buyer,
TPC or the Partnership with respect to any taxable period after the Closing,
other than any such Taxes allocable to Seller, pursuant to Section 12.1(c)(ii).
12.5 Miscellaneous.
(a) Except as otherwise required by law, the parties
agree to treat all payments made pursuant to Section 12.1 to 12.4 as adjustments
to the purchase price for Tax purposes. The representations and warranties set
forth in Section 4.18 and the indemnities and covenants set forth in this
Article XII shall survive indefinitely.
(b) For purposes of Sections 12.1(c)(i) and 12.4, the
indemnification procedures of Section 14.3 shall be applicable.
12.6 Section 338(h)(10) Election: Section 754 Election.
(a) If requested by Buyer, Seller shall join Buyer in
an election to have the provisions of Section 338(h)(10) of the Code and any
analogous provision of state or local law (any such election, a "338 Election")
apply to the acquisition of the Shares of TPC. The allocation of the purchase
price (or, if applicable, the "modified aggregate deemed sale price") among
TPC's assets shall be made in accordance with Section 338 and the Treasury
Regulations thereunder and any comparable provisions of state or local law, as
applicable. Such allocation shall be determined by Buyer and delivered to Seller
at least 90 days prior to the date an IRS Form 8023 is required to be filed in
respect of the acquisition of the Shares (such allocation, the "Proposed
Allocation"). Seller shall accept the Proposed Allocation unless it would be
unreasonable to do so. If Seller believes that the Proposed Allocation is
unreasonable, it shall notify Buyer within 30 days of its receipt of the
Proposed Allocation and the manner in which Seller would modify the Proposed
Allocation to make it reasonable (such modified allocation, the "Modified
Allocation"). If Buyer and Seller are unable to resolve their differences within
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days, the matter shall be referred the Independent Accountant. The Independent
Accountant shall determine whether the Proposed Allocation was reasonable. If
the Independent Accountant determines that the Proposed Allocation was
reasonable, such allocation shall be the "Final Allocation." If the Independent
Accountant determines that the Proposed Allocation was not reasonable, the
Modified Allocation shall be the "Final Allocation." Buyer and Seller shall each
file Internal Revenue Service Form 8023 (and any applicable forms required under
state or local law) in respect of each 338 Election in a manner consistent with
the Final Allocation and shall not take any position on any Tax Return that is
inconsistent with the Final Allocation.
(b) Seller shall take any action reasonably requested
by Buyer in connection with making an election under Section 754 of the Code
(and any comparable provision of state or local law) with respect to the
Partnership for the taxable year of the Partnership that ends on or includes the
Closing Date.
12.7 Jostens Lawsuit. Regarding the Legal Proceeding styled
Taylor Publishing Co. v. Jostens, Inc. No. 4:97 CV 11 in the United States
District Court for the Eastern District of Texas and No. 99-40154 in the United
States Court of Appeals for the Fifth Circuit (collectively, the "Jostens
Lawsuit"), each of Buyer and TPC acknowledge that Seller is currently paying
expenses and fees associated with the proceeding of the Jostens Lawsuit before
the United States Court of Appeals for the Fifth Circuit. After the Closing
Date, Seller will continue to pay and be fully responsible for any fees and
expenses incurred after the Closing Date that are associated with the
prosecution of the Jostens Lawsuit and will indemnify and hold the Company
harmless from any Losses arising out of, based upon, attributable to or
resulting from the Jostens Lawsuit. Each of Buyer and TPC agree to make
available to Seller upon prior written request (i) any of the Company's
personnel whose assistance or participation is reasonably required by Seller and
(ii) those Books and Records which are reasonably required by Seller for the
prosecution of the Jostens Lawsuit and all future proceedings relating to the
Jostens Lawsuit, including providing documents, witnesses, reasonable access to
management and other assistance; provided, however, that any such assistance or
participation by such personnel or availability of such Books and Records does
not unduly interfere with the normal conduct of the Company's business. Seller
shall pay to Company a per diem charge at the rate of $500 per 8-hour day
(prorated for partial days to the nearest quarter of a day) for each of the
Company's personnel required to assist Seller pursuant to this Section 12.7 and
shall reimburse the Company for any reasonable documented out-of-pocket
expenses, including travel and other related expenses, as and when incurred by
the Company or such personnel pursuant to this Section 12.7 to the extent such
expenses are not paid directly by Seller. TPC hereby grants and assigns to
Seller an undivided interest in any proceeds actually collected from the Jostens
Lawsuit and each of Buyer, TPC and Seller agree that proceeds actually collected
in relation to the Jostens Lawsuit will be allocated as follows:
(i) TPC is entitled to an amount equal to 10% of the
amount actually collected pursuant to the Jostens Lawsuit (net of fees and
expenses of the Jostens Lawsuit that have been incurred directly by Seller,
including legal fees); provided, however, that TPC will receive at least
$100,000 (assuming the lawsuit results in a net amount in excess of $100,000)
and that the maximum amount the Company is entitled to receive pursuant to this
Section 12.7(i) is $2,500,000. If the Jostens Lawsuit results in an amount
actually collected that is less than $100,000, TPC is entitled to the entire
amount collected.
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(ii) Seller will be entitled to all remaining amounts
received as a result of the Jostens Lawsuit not allocated to TPC pursuant to
Section 12.7(i), including, but not limited to, all amounts received in excess
of $25,000,000.
Buyer and TPC each agree that they shall not have a right to offset any
liability Seller may have to Buyer or the Company against any amount Seller is
entitled to pursuant to this Section 12.7. TPC and Buyer acknowledge and agree
that Seller has complete discretion and authority regarding decisions and
strategy relating to the Jostens Lawsuit, including any decision to settle the
lawsuit, as well as any decision to instigate or terminate any Legal Proceeding
regarding the same. Notwithstanding anything to the contrary in this Agreement,
TPC acknowledges and agrees that it will remain solely responsible and liable
for the judgment dated January 4, 1999 granted by the District Court to Jostens,
Inc. requiring TPC to pay Jostens, Inc.'s costs, which were stipulated by the
parties of the lawsuit to be $50,000.
ARTICLE XIII
TERMINATION
13.1 Termination of Agreement. Anything herein to the
contrary notwithstanding, this Agreement and the transactions contemplated
hereby, may be terminated at any time before the Closing Date, as follows:
(a) Mutual Consent. By the mutual written consent of
Seller and Buyer.
(b) Expiration Date. By Seller, on the one hand, or
Buyer, on the other hand, if the Closing shall not have occurred by March 31,
2000 (which date may be extended by mutual agreement of Buyer and Seller)
provided that the terminating party is not then in default hereunder.
(c) Consummation Prohibited. By Seller, on the one
hand, or Buyer, on the other hand, if consummation of the transactions
contemplated hereby would violate any non-appealable final Order of a
Governmental Authority having competent jurisdiction.
(d) Failure of Heller Financial, Inc. ("Heller") to
Remove All Conditions Regarding Due Diligence and the Environmental Insurance
Policy Requirements in the Lender Letter. By Seller by notice given to Buyer on
or prior to January 7, 2000 if Seller has not received by 5:00 p.m., Texas time,
on December 23, 1999 from Buyer a revised Lender Letter executed and agreed to
by Buyer (i) eliminating from the Lender Letter (to the sole satisfaction of
Seller) all conditions to the commitment of Heller related to due diligence,
including without limitation legal and environmental due diligence, and all
conditions to the commitment of Heller related to the environmental insurance
policy referred to in the Lender Letter and (ii) containing no other changes not
acceptable to Seller in its sole discretion.
13.2 Effect of Termination. If this Agreement shall be
terminated pursuant to Section 13.1, all further obligations of the parties to
this Agreement shall terminate without
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further liability of any party to another and each party shall pay all costs and
expenses incident to its negotiation and preparation of this Agreement and to
its performance of and compliance with all agreements and conditions contained
herein on its part to be performed or complied with, including the fees,
expenses and disbursements of its counsel; provided, however, that (i) the
obligations of Buyer under the Buyer Confidentiality Agreement shall survive any
such termination and (ii) nothing herein shall relieve a breaching or defaulting
party for liability arising from any breach or default by it hereunder.
ARTICLE XIV
INDEMNIFICATION
14.1 Seller Indemnification. Subject to the limitations set
forth in Section 14.4 hereof, Seller hereby agrees to indemnify and hold Buyer
and each of its Affiliates, and the officers, directors, employees and agents
thereof, harmless from and against any and all claims, judgments, causes of
action, liabilities, obligations, damages, losses, deficiencies, costs,
penalties, interest and expenses, including without limitation, cost of
investigation and defense, and reasonable attorneys' fees and expenses
(collectively, "Losses") arising out of, based upon, attributable to or
resulting from any breach of any representation, warranty, agreement or covenant
on the part of Seller or TPC (excluding, however, in the case of TPC, any breach
of any agreement or covenant occurring following the Closing Date) contained in
or pursuant to this Agreement or any certificate delivered pursuant to Section
8.5 of this Agreement.
14.2 Buyer Indemnification. Buyer hereby agrees to indemnify
and hold Seller and each of its Affiliates, and the officers, directors,
employees and agents thereof, harmless from and against any and all Losses
arising out of, based upon, attributable to or resulting from any breach of any
representation, warranty, agreement or covenant on the part of Buyer contained
in or made pursuant to this Agreement or any certificate delivered pursuant to
Section 9.4 of this Agreement.
14.3 Indemnification Procedures
(a) If any third party asserts any claim against a
party to this Agreement which, if successful, would entitle the party to
indemnification under this Article XIV (the "Indemnified Party"), it shall give
notice of such claim to the party from whom it intends to seek indemnification
(the "Indemnifying Party") and, subject to Section 14.6, the Indemnifying Party
shall have the right to assume the defense and, further subject to Section
14.3(b), settlement of such claim at its expense by representatives of its own
choosing acceptable to the Indemnified Party (which acceptance shall not be
unreasonably withheld). The failure of the Indemnified Party to notify the
Indemnifying Party of such claim shall not relieve the Indemnifying Party of any
liability that the Indemnifying Party may have with respect to such claim,
except to the extent that the defense is materially prejudiced by such failure.
The Indemnified Party shall have the right to participate in the defense of such
claim at its expense, in which case the Indemnifying Party shall cooperate in
providing information to and consulting with the Indemnified Party about the
claim. If the Indemnifying Party fails or does not assume the defense of any
such claim within 15 days after written notice of such claim has been given by
the Indemnified Party to the Indemnifying Party, the Indemnified Party may
defend against or,
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subject to Section 14.3(b), settle such claim with counsel of its own choosing
at the expense (to the extent reasonable under the circumstances) of the
Indemnifying Party.
(b) If the Indemnifying Party does not assume the
defense of a claim involving the asserted liability of the Indemnified Party
under this Article XIV, no settlement of such claim shall be made by the
Indemnified Party without the prior written consent of the Indemnifying Party,
which consent shall not be unreasonably withheld or delayed. If the Indemnifying
Party assumes the defense of such a claim, (i) no settlement thereof may be
effected by the Indemnifying Party without the Indemnified Party's consent
unless (A) there is no finding or admission of any violation of Law or any
violation of the rights of any Person and no effect on any other claim that may
be made against the Indemnified Party, (B) the sole relief provided is monetary
damages that have been paid in full by the Indemnifying Party, and (C) the
settlement includes, as an unconditional term thereof, the giving by the
claimant or the plaintiff to the Indemnified Party of a release in form and
substance reasonably satisfactory to the Indemnified Party, from all liability
in respect of such claim, and (ii) the Indemnified Party shall have no liability
with respect to any compromise or settlement thereof effected without its
consent.
(c) The parties acknowledge and agree that the
Indemnifying Party's indemnity obligation relating to any Remedial Action shall
be satisfied by implementation or indemnification of the Lowest Cost Response.
"Lowest Cost Response" shall mean any Remedial Action that both meets the most
stringent of the following and is in compliance with Environmental Law: (a) the
least stringent corrective action or cleanup standards acceptable under
Environmental Laws or required by the Governmental Authority, in effect at the
time of the Remedial Action, based upon use of differential clean-up standards
based upon the nature of the land use of the affected property as of the Closing
Date, that will allow continued use and operation of the property for such
purpose without material interference; provided, however, in the event Lowest
Cost Response would require institutional controls, the institutional controls
shall not be considered "Lowest Cost Response" to the extent they would render
any portion of the property that the Company has a reasonable expectation of use
for industrial purpose at the time of implementation of the Remedial Action in
question, nonusable for such intended use it being further understood and agreed
that if Remedial Action with respect to air emissions is required and a permit
or other authorization covering the historical level of air emissions at a
facility that does not impose conditions requiring material adverse changes to
the operations of the facility can be obtained without the need for control
equipment, the installation of control equipment shall not be considered "Lowest
Cost Response;" (b) in the absence of cleanup standards or corrective action
required under Environmental Laws, the cleanup standard or corrective action
shall be deemed to be such specifications as reasonably determined by the
Approved Environmental Consultant in consultation with the Non-Responding Party;
(c) the corrective action or cleanup standard established in any applicable
lease in effect on or prior to the closing governing the Company's occupancy of
any of the real property that is subject to the Remedial Action; or (d) the
corrective action or cleanup standard required by any judicial or administrative
resolution or settlement agreement of a third party claim achieved or entered
into pursuant to the procedures set forth in this Article XIV. Except with
respect to post-Closing Releases to air for a period of up to 120 days expressly
included in clause (ii) of the definition of "Seller Environmental Liabilities,"
the Indemnifying Party shall not have any indemnity obligation in respect of
that portion of any environmental condition caused by the Indemnified
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Party, including, without limitation, any contribution made by the Indemnified
Party to an environmental condition for which the Indemnifying Party otherwise
has an indemnity obligation under this Section 14.6.
14.4 Limits on Indemnification. Notwithstanding anything to
the contrary contained in this Agreement:
(a) Seller shall not have any obligation to provide
indemnification for Losses pursuant to Section 14.1 arising out of or related to
breaches of representations and warranties (but not for any breach of any
covenant or agreement of Seller) except to the extent that the aggregate amount
of all such Losses pursuant to such Section exceeds $1,000,000, in which case
Seller shall be liable to Buyer only for such Losses in excess of $1,000,000
(the "Basket Amount"). Seller shall be obligated to provide indemnification for
all Losses arising out of or related to the breach of any covenant or agreement
of Seller. The maximum obligation of Seller to provide indemnification for all
Losses pursuant to (i) Section 14.1 arising out of or related to breaches of
representations and warranties (but not for any breach of any covenant or
agreement of Seller) and (ii) Section 14.6, shall be limited to $9,400,000 in
the aggregate.
(b) Buyer shall not have any obligation to provide
indemnification for Losses pursuant to Section 14.2 arising out of or related to
breaches of representations and warranties (but not for any breach of any
covenant or agreement of Buyer) except to the extent that the aggregate amount
of all such Losses pursuant to such Section exceeds the Basket Amount in which
case Buyer shall be liable to Seller only for such Losses in excess of Basket
Amount. Buyer shall be obligated to provide indemnification for all Losses
arising out of or related to the breach of any covenant or agreement of Buyer or
any post-Closing covenant or agreement of TPC. The maximum obligation of Buyer
to provide indemnification for Losses pursuant to Section 14.2 arising out of or
related to breaches of representations and warranties (but not for any breach of
any covenant or agreement of Buyer, or TPC if applicable) shall be limited to
$9,400,000 in the aggregate.
(c) The representations and warranties of TPC and
Seller on the one hand, and Buyer, on the other, contained in this Agreement
shall survive the Closing until the 13th month anniversary of the Closing Date;
provided, however, that (i) the representations contained in Section 4.14 shall
last for six years, (ii) the representations contained in Section 4.17 and
Section 4.18 shall continue until the expiration of the applicable statute of
limitations relating to the cause of action giving rise to Losses and (ii) the
representations contained in Sections 4.2 and 4.3 shall survive indefinitely.
14.5 Inapplicability to Taxes. Except for indemnification
procedures set forth in Section 14.3, this Article XIV shall not apply to Taxes,
liability for which is subject to Sections 12.1 through 12.5 hereof.
14.6 Environmental Indemnification.
(a) Subject to the limitations set forth in this
Section 14.6, in addition to the indemnification provided by Seller pursuant to
Section 14.1 above, Seller will defend, indemnify and hold harmless Buyer from
and against, subject to the cost sharing provisions of
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Section 14.6(g) below, any and all Seller Environmental Liabilities for which
notice of a Section 14.6 Environmental Claim (as defined below) is given during
the ten year period commencing on the Closing Date and which were discovered
prior to the end of such ten year period (whether before or after the Closing
Date).
(b) PROCEDURES WITH RESPECT TO SELLER ENVIRONMENTAL
LIABILITIES
(i) Any Section 14.6 Environmental Claim (as defined
below) that does not require Remedial Action shall be governed by the procedures
set forth in Section 14.3 of this Agreement. The term "Section 14.6
Environmental Claim" means any Environmental Claim all or a portion of which, if
successful, would entitle Buyer to indemnification under this Section 14.6.
(ii) Unless otherwise agreed by Seller and Buyer,
Buyer shall take the lead in any Remedial Action. The party controlling a
Remedial Action shall be referred to as the "Responding Party" and the other
party shall be referred to as the "Non-Responding Party." The Responding Party
shall, subject to the reasonable approval of the Non-Responding Party, select
one or more environmental engineers or consultants (the "Approved Environmental
Consultant"), to plan, conduct, coordinate, and supervise the Remedial Action.
The Responding Party shall arrange for an Approved Environmental Consultant to
prepare as part of the Remedial Action and, in compliance with any applicable
Environmental Law, a remedial action plan, which shall describe in reasonable
detail the Remedial Action, the scope of the work to be performed (to the extent
then determinable), and the estimated schedule for and the estimated costs
associated with such activities (to the extent then estimable) ("Remedial Action
Plan") for each Remedial Action. The Remedial Action Plan shall be designed to
achieve compliance with the Lowest Cost Response, shall keep to a minimum the
disruption of operations at the affected property, and shall not interfere in
any material respect with such operations.
(iii) The Non-Responding Party shall have the right
to review the Remedial Action Plan in accordance with the review procedure set
forth in this Section 14.6, and to reasonably monitor any Remedial Action; the
Responding Party shall provide a reasonable opportunity to the Non-Responding
Party for review and comment in advance, subject to Section 14.6(b)(x) below, of
(x) the implementation of any material element of the Remedial Action or
finalization of a report thereof, and (y) any material filing relating to the
Remedial Action with an applicable Governmental Authority. The Responding Party
shall reasonably attempt to incorporate or respond to any comment received from
the Non-Responding Party. Each party shall timely provide to the other any
information concerning the Remedial Action reasonably requested in writing by
the other.
(iv) Upon receipt of a Remedial Action Plan from an
Approved Environmental Consultant, the Responding Party shall notify the
Non-Responding Party in writing of the action it proposes to take and submit a
copy of the Remedial Action Plan. In the event that the Non-Responding Party
objects to the Remedial Action Plan as being inconsistent (other than in a de
minimis respect) with the Lowest Cost Response or Seller's indemnity obligations
hereunder, in whole or in part, the Non-Responding Party shall notify the
Responding Party in writing of its specific disagreement (and its basis
therefor) regarding such Remedial Action Plan and shall provide an alternative
proposal describing in reasonable detail an
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alternative proposal ("Dispute Notification") within thirty (30) days of its
receipt of notice of the Remedial Action Plan. The parties shall thereafter
negotiate in good faith in an attempt to reach agreement as to the disputed
Remedial Action Plan. Although the Non-Responding Party may offer comments and
suggestions to the Responding Party on de minimis aspects of the Remedial Action
Plan, which the Responding Party will consider in good faith, the ultimate
resolution of comments regarding de minimis matters shall be within the
discretion of the Responding Party and shall not be included in any Dispute
Notification.
(v) In the event the parties are unable to resolve a
dispute within thirty (30) days after the Responding Party's receipt of a
Dispute Notification, the parties shall designate an independent environmental
engineer or consultant familiar with environmental remediation requirements and
practices in the area where the remediation activity is to be performed (the
"Third Party Consultant"), provided that if the parties are unable to agree upon
a Third Party Consultant, Seller shall select one environmental consultant or
engineer, Buyer shall select a second environmental consultant or engineer, and
such consultants or engineers shall choose the Third Party Consultant, within
fifteen (15) days after such 30-day period. If either party fails to select such
consultant or engineer, the consultant or engineer selected by the other party
shall be the Third Party Consultant. The Third Party Consultant shall review the
Remedial Action Plan and the Dispute Notification, may discuss the Remedial
Action Plan with Seller and Buyer and, within thirty (30) days after its
selection as the Third Party Consultant, shall make written findings as to the
fairness and appropriateness of, and any changes that it would recommend to, the
Remedial Action Plan, taking into account the requirements of the provisions of
this Section 14.6, including the concept of "Lowest Cost Response." The Third
Party Consultant may make findings that the Remedial Action Plan is consistent
with these requirements, that the Non-Responding Party's alternative proposal as
set forth in the Dispute Notification is consistent with these requirements, or
that different activities would be consistent with these requirements. Seller
and Buyer shall thereafter negotiate in good faith in an attempt to reach
agreement as to the disputed Remedial Action Plan considering the findings of
the Third Party Consultant; in the event the parties are unable to resolve the
dispute within fifteen (15) days after receipt of the Third Party Consultant's
findings, all such findings shall become part of and shall be deemed to amend
the Remedial Action Plan, Lowest Cost Response, and Remedial Action Plan. The
costs of the Third Party Consultant shall be borne one-half by Seller and
one-half by Buyer.
Notwithstanding the foregoing, it is not the intent of the
parties to refer disputes concerning matters of contract or lease interpretation
or disputes concerning matters not within the reasonable judgment or experience
of an environmental consultant to the Third Party Consultant for resolution; it
being understood and agreed that such disputes shall be resolved in accordance
with the provisions of Section 15.9 of this Agreement, and, if appropriate, the
Dispute Notification shall be modified prior to submission to the Third Party
consultant to delete references to such matters.
(vii) In the event the Responding Party reasonably
believes that the Remedial Action Plan warrants expedited review and resolution,
the Responding Party shall so notify the Non-Responding Party in writing
concurrently with delivery of the Remedial Action Plan and the parties will use
good faith efforts to minimize the time periods for reviewing
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proposals and resolving disputes established by this Section 14.6 and, in any
event, 30 day periods shall be reduced to 15 days and 15 day periods shall be
reduced to 7 days.
(viii) The Responding Party will consult with the
Non-Responding Party regarding material discussions with any Governmental
Authority concerning any Remedial Action. The Non-Responding Party may have a
representative present during any meeting with any Governmental Authority;
provided, however, that such representative will not actively participate in any
such meetings and the Non-Responding Party will not attempt to independently
contact or influence the Governmental Authority.
(ix) Buyer will notify Seller in writing promptly
after, and in any event within thirty (30) calendar days of, Buyer's receipt of
any written Section 14.6 Environmental Claim or gaining of any knowledge of a
Seller Environmental Liability that could require Remedial Action. Buyer also
hereby agrees to provide Seller written notice promptly after, and in any event
within thirty (30) calendar days of, the discovery of any Release or threatened
Release of a Hazardous Material that may give rise to a Seller Environmental
Liability and is reportable under Environmental Law to a Governmental Authority
at any Facility after the Closing Date. Failure to provide such notice on a
timely basis will not result in the Losses relating thereto being excluded as
Seller Environmental Liabilities, except to the extent Seller has been
prejudiced thereby.
(x) Notwithstanding the preparation and review of the
Remedial Action Plan provisions in Section 14.6(b), the "no-hunt" provisions in
Section 14.6(f) and the notice provisions in this Section 14.6, Buyer may take
any necessary Remedial Action to respond to an emergency condition for which
Seller may have an indemnification obligation (i) in the event Buyer has a good
faith belief that such conditions require an immediate response to protect human
health or the environment, (ii) such action is expressly directed by a
Governmental Authority to respond to the emergency condition, or (iii) such
action is required by applicable Environmental Law to respond to the emergency
condition. Buyer shall promptly notify Seller of the emergency condition, which
notice shall in any event be given within forty-eight (48) hours of completion
of the Remedial Action responding to the emergency condition. The taking of such
action shall not have any impact on a determination of whether the Remedial
Action is properly within Seller's indemnity obligation contained in this
Section 14.6.
(xi) Unless Seller otherwise expressly agrees in
writing to the contrary, the parties acknowledge and agree that Seller's
indemnity obligation relating to any Remedial Action shall be satisfied by the
Lowest Cost Response. Unless Seller otherwise expressly agrees in writing to the
contrary, to the extent Buyer requests or implements any changes to any Remedial
Action which exceed Lowest Cost Response, Buyer will be solely responsible for
any increased costs attributable to such changes.
(xii) The Non-Responding Party will have the right to
assist in the settlement or defense of any administrative enforcement action
relating to a Section 14.6 Environmental Claim, with its own counsel and at its
own expense, so long as it does not interfere with or delay in any manner the
Responding Party's resolution of any such Section 14.6 Environmental Claim. In
the event the Section 14.6 Environmental Claim involves third party litigation,
this right to assist in settlement or defense, shall be governed by Section
14.3(a).
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(xiii) Seller hereby agrees prior to Closing to
initiate at its cost an air emissions inventory and evaluate whether each of the
Company's four current facilities is required to have any air permit or
authorization that it currently does not have. For purposes of Section 14.6(e)
below, all third-party out-of-pocket costs and expenses incurred in connection
with such inventory and evaluation shall be deemed to be Losses for which Seller
was obligated to pay pursuant to this Section 14.6 (but not subject to the
Individual or Aggregate Threshold Amounts). Buyer has the independent right, at
Buyer's cost (unless required of Buyer after Closing as part of a Remedial
Action), to conduct its own air emissions survey and evaluation regarding the
Current Facilities' (defined below) compliance with Environmental Law. Upon
completion of such inventory and evaluation, Seller and Buyer shall consult in
good faith to determine whether any Remedial Action is required. Any dispute
with respect thereto and any related Remedial Action shall be handled in
accordance with the procedures set forth in this Section 14.6. To the extent any
Releases to the air are identified or discovered to be violations of
Environmental Law prior to the Closing Date, or during the 120 day period after
the Closing Date (provided such Releases are not the result of a material
alteration in the Company's operations as those operations existed during the
twelve-month period prior to the Closing Date), by Seller as the result of its
air emissions inventory, or by Buyer as the result of any air emission survey or
inventory, such Releases are deemed to be a Seller Environmental Liability and
deemed to be a Section 14.6 Environmental Claim subject to all of the procedures
with respect to Seller Environmental Liabilities set forth in Section 14.6(b),
including the notice provisions set forth in Section 14.6(b)(ix).
(xiv) To the extent access to any area requiring
Remedial Action is within the control of the Non-Responding Party or its
Affiliates, Non-Responding Party shall provide Responding Party, its
environmental consultants and Governmental Authority with reasonable access to
the areas affected in order for Responding Party to carry out its obligations
under this Agreement. During the implementation of any Remedial Action, the
parties shall use commercially reasonable best efforts to cooperate in good
faith to ensure compliance with all applicable Environmental Laws, to minimize
the costs of the Remedial Action and to minimize business disruptions related to
the implementation of the Remedial Action. The parties acknowledge and agree
that it may be in the parties' interest to conduct the Remedial Action under a
state voluntary cleanup program and agree to reasonably cooperate with each
other in taking such steps as may be necessary or desirable to facilitate such
participation.
(c) All obligations contained in this Section 14.6 shall
expire on the tenth anniversary of the Closing Date, except with respect to
matters for which a notice of a Section 14.6 Environmental Claim has been
received by Seller on or before said tenth anniversary.
(d) Regarding each environmental condition, Seller shall not
have any obligation to provide indemnification for Losses pursuant to this
Section 14.6 arising out of or related to Seller Environmental Liabilities of
such environmental condition except to the extent that the amount of Losses
relating to such condition exceeds $100,000 (the "Individual Threshold Amount")
or the cumulative amount of Losses that have been incurred by Buyer and applied
against Individual Threshold Amounts for environmental conditions exceeds
$750,000 (the "Aggregate Threshold Amount"), in which case Seller shall be
liable to Buyer only for
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Losses for such environmental condition in excess of the Threshold Amount or
Aggregate Threshold Amount, as applicable.
(e) The maximum obligation of Seller to provide
indemnification for all Losses pursuant to (i) this Section 14.6 and (ii)
Section 14.1 (arising out of or related to breaches of representations and
warranties) hereof, shall be limited to $9,400,000 in the aggregate.
(f) Unless and except to the extent required to do so
under any Environmental Law or in fulfillment of the express requirement of a
Governmental Authority that is not required as a result of intentional actions
or inactions of Buyer or its Affiliates designed in whole or in part to effect
such a requirement and, then, only with prior notice to Seller and after
providing Seller with an opportunity to be present at any surface or subsurface
investigation and an ability to split any samples taken at Seller's cost, in the
event Buyer initiates, conducts, or authorizes any surface or subsurface
investigation of an environmental condition at any facility which may constitute
a Seller Environmental Liability, without the express written consent of Seller,
any Losses incurred or matters discovered as a result of such investigation
shall be excluded from Seller Environmental Liabilities and Seller shall not
have any indemnification or obligation with respect thereto. Activities
conducted by Buyer or its Affiliates in the ordinary course of business, such as
improvements or repairs, will not be considered a surface or subsurface
investigation, provided Buyer and its Affiliates do not intend in connection
with such activity to identify environmental liabilities.
(g) COST-SHARING
(i) During the first year of the environmental
indemnity set forth in this Section 14.6 (i.e., the twelve month period
commencing on the Closing Date), Seller will be responsible for eighty-five
percent (85%) of the Losses above the Threshold Amount or Aggregate Threshold
Amount, as the case may be, that constitute Seller Environmental Liabilities;
(ii) During the second, third and fourth years of the
environmental indemnity set forth in this Section 14.6, Seller will be
responsible for seventy-five percent (75%) of the Losses above the Threshold
Amount or the Aggregate Threshold Amount, as the case may be, that constitute
Seller Environmental Liabilities;
(iii) During the fifth year of the environmental
indemnity set forth in this Section 14.6, Seller will be responsible for sixty
percent (60%) of the Losses above the Threshold Amount or the Aggregate
Threshold Amount, as the case may be, that constitute Seller Environmental
Liabilities;
(iv) During the sixth year of the environmental
indemnity set forth in this Section 14.6, Seller will be responsible for fifty
percent (50%) of the Losses above the Threshold Amount or the Aggregate
Threshold Amount, as the case may be, that constitute Seller Environmental
Liabilities;
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(v) During the last four years of the environmental
indemnity set forth in this Section 14.6, Seller will be responsible for
twenty-five percent (25%) of the Losses above the Threshold Amount or the
Aggregate Threshold Amount, as the case may be, that constitute Seller
Environmental Liabilities; and
(vi) It is understood that the cost sharing ratio for
an environmental condition shall be established based on the date Buyer notifies
Seller in writing of the Section 14.6 Environmental Claim.
(h) Seller will provide Buyer a one year Letter of
Credit, renewable to Buyer for two additional consecutive one year terms, in the
amount of $1,000,000.00, issued by a financial institution and in a form
reasonably acceptable to Buyer on the Closing Date as security for its indemnity
obligations contained in this Section 14.6. The amount of the Letter of Credit
will be reduced by the actual amounts paid by Seller to cover any Losses related
to Seller Environmental Liabilities (excluding Section 14.6(b)(xiii)) or by any
amounts drawn against the Letter of Credit to cover any Losses that constitute
Seller Environmental Liabilities. Further, once Seller has fulfilled the maximum
obligation for Losses set forth in Section 14.6(e) above, Seller may terminate
the Letter of Credit.
(i) The duty and obligation of Seller to provide
indemnification hereunder will be limited to the net amount of any Losses
actually sustained and/or paid. In determining the net amount of Losses, the
actual amount of Losses will be reduced by the aggregate value of any assets,
properties and rights, including without limitation, proceeds of insurance,
claims, cross-claims, counterclaims and the like which are either received
directly by Buyer, or by Seller on behalf of Buyer and remitted to Buyer. In
such connection, Buyer will fully cooperate with Seller in pursuing and
realizing all amounts which may be available from third persons (without being
obligated to incur any additional non-reimbursable expense, or liability in
respect of specious or unfounded lawsuits filed in its name).
GENERAL
15.1 Amendments. This Agreement may only be amended by an
instrument in writing executed by Buyer and Seller.
15.2 Waivers. The observance of any term of this Agreement
may be waived (either generally or in a particular instance and either
retroactively or prospectively) by the party entitled to enforce such term, but
such waiver shall be effective only if it is in a writing signed by the party
entitled to enforce such term and against which such waiver is to be asserted.
Unless otherwise expressly provided in this Agreement, no delay or omission on
the part of any party in exercising any right or privilege under this Agreement
shall operate as a waiver thereof, nor shall any waiver on the part of any party
of any right or privilege under this Agreement operate as a waiver of any other
right or privilege under this Agreement nor shall any single or partial exercise
of any right or privilege preclude any other or further exercise thereof or the
exercise of any other right or privilege under this Agreement.
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15.3 Notices. Any notices or other communications required
or permitted hereunder shall be in writing and shall be sufficiently given (and
shall be deemed to have been duly given upon receipt) if sent by overnight mail,
registered mail or certified mail, postage prepaid, or by hand, to the parties
at the following addresses (or at such other address for a party as shall be
specified by like notice):
(a) If to Seller, to:
Insilco Corporation
425 Metro Place North
Fifth Floor
Dublin, Ohio 43017
Attn: Chief Executive Officer
With a copy (which shall not constitute effective notice) to:
Andrew M. Baker
Baker & Botts, L.L.P.
2001 Ross Avenue
Dallas, Texas 75201
(b) If to TPC, to:
Taylor Publishing Company
1550 W. Mockingbird Lane
Dallas, Texas 75235
Attn: President
(b) If to Buyer to:
c/o Castle Harlan Partners III, L.P.
150 East 58th Street
New York, New York 10155
Attention: David B. Pittaway
With a copy (which shall not constitute effective notice) to:
Schulte Roth & Zabel LLP
900 Third Avenue
New York, New York 10022
Attention: Marc Weingarten
15.4 Successors and Assigns; Parties in Interest. This
Agreement shall be binding upon and shall inure solely to the benefit of the
parties hereto and their respective successors, legal representatives and
permitted assigns. Neither this Agreement nor any rights or obligations
hereunder may be assigned without the written consent of the other parties
except that Buyer may assign any or all of its rights, interest and obligations
hereunder to any of its
55
<PAGE>
Affiliates and/or its financing sources (provided that no such assignment shall
discharge Buyer from any such obligations). Nothing in this Agreement, express
or implied, is intended to or shall confer upon any Person, other than the
parties hereto and their respective successors, legal representatives and
permitted assigns, any rights, benefits or remedies of any nature whatsoever
under or by reason of this Agreement, and no Person shall be deemed a third
party beneficiary under or by reason of this Agreement.
15.5 Severability. If any provision of this Agreement or
the application of any such provision to any Person or circumstance, shall be
declared judicially to be invalid, unenforceable or void, such decision shall
not have the effect of invalidating or voiding the remainder of this Agreement,
it being the intent and agreement of the parties that this Agreement shall be
deemed amended by modifying such provision to the extent necessary to render it
valid, legal and enforceable while preserving its intent or, if such
modification is not possible, by substituting therefor another provision that is
valid, legal and enforceable and that achieves the same objective.
15.6 Entire Agreement. This Agreement (including the
exhibits and Schedules hereto, and the documents and instruments executed and
delivered in connection herewith) constitutes the entire agreement among the
parties with respect to the subject matter hereof and supersedes all prior and
contemporaneous agreements and understandings, whether written or oral, among
the parties or any of them with respect to the subject matter hereof, and there
are no representations, understandings or agreements relating to the subject
matter hereof that are not fully expressed in this Agreement and the documents
and instruments executed and delivered in connection herewith; provided,
however, that the Buyer Confidentiality Agreement shall remain in full force and
effect according to its terms and shall survive and remain in full force and
effect in the event this Agreement is terminated. All exhibits and Schedules
attached to this Agreement are expressly made a part of, and incorporated by
reference into, this Agreement.
15.7 Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware, without
giving effect to any choice-of-law rules that may require the application of the
laws of another jurisdiction.
15.8 Remedies. Each of the parties hereto acknowledges and
agrees that (i) the provisions of this Agreement are reasonable and necessary to
protect the proper and legitimate interests of the other parties hereto, and
(ii) the other parties hereto would be irreparably damaged in the event any of
the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties hereto shall be entitled to preliminary and permanent injunctive relief
to prevent breaches of the provisions of this Agreement by other parties hereto
without the necessity of proving actual damages or of posting any bond, and to
enforce specifically the terms and provisions hereof and thereof, which rights
shall be cumulative and in addition to any other remedy to which the parties
hereto may be entitled hereunder or at law or equity.
15.9 Arbitration. Except as set forth in Section 14.6 of
this Agreement, Seller, TPC and Buyer agree that all disputes, controversies or
claims that may arise out of the transactions contemplated by this Agreement, or
the breach, termination or invalidity thereof, shall be submitted to, and
determined by, binding arbitration. Such arbitration shall be conducted
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pursuant to the Commercial Arbitration Rules (the "Rules") then in effect of the
American Arbitration Association, except to the extent such Rules are
inconsistent with this Section 15.9. If the amount in controversy in the
arbitration exceeds $100,000, exclusive of interest, attorneys' fees and costs,
the arbitration shall be conducted by a panel of three (3) neutral arbitrators.
Otherwise, the arbitration shall be conducted by a single neutral arbitrator.
The arbitrator(s) shall be selected pursuant to the Rules. Exclusive venue for
such arbitration shall be in Wilmington, Delaware. The arbitrator(s) shall apply
the internal laws of the State of Delaware (without regard to conflict of law
rules) in determining the substance of the dispute, controversy or claim and
shall decide the same in accordance with the applicable usages and terms of
trade. Evidentiary questions shall be governed by the Federal Rules of Evidence.
The arbitrator(s)' award shall be in writing and shall set forth the findings
and conclusions upon which the arbitrator(s) based the award. The prevailing
party in any such arbitration shall be entitled to recover its reasonable
attorneys' fees, costs and expenses incurred in connection with the arbitration.
Any award pursuant to such arbitration shall be final and binding upon the
parties hereto, and judgment on the award may be entered in any federal or state
court sitting or located in the State of Ohio or in any other court having
jurisdiction. The provisions of this Section 15.9 shall survive the termination
of this Agreement. A party hereto may seek and obtain from a court of competent
jurisdiction a temporary restraining order, temporary injunction or other
temporary emergency relief without first having to submit such dispute to
arbitration.
15.10 Expenses. Seller and Buyer shall each bear its own
expenses (including, without limitation, fees and disbursements of its counsel,
accountants and other experts) incurred by it in connection with the
preparation, negotiation, execution, delivery and performance of this Agreement,
each of the other documents and instruments executed in connection with or
contemplated by this Agreement and the consummation of the transactions
contemplated hereby and thereby it being understood that if the Closing is
consummated, Seller shall bear any transaction expenses incurred by the Company
(except any costs or expenses specifically associated with the audit of the
Company conducted for the purpose of the transactions contemplated by this
Agreement which under any circumstances are the obligation of Buyer) and Buyer
may cause the Company (but not Seller) to bear the transaction costs incurred by
Buyer. Notwithstanding the foregoing, Buyer will pay all filing fees required by
the HSR Act.
15.11 Release of Information; Confidentiality. The parties
shall cooperate with each other in releasing information concerning this
Agreement and the transactions contemplated hereby. No press releases or other
public announcements concerning the transactions contemplated by this Agreement
shall be made by any party without prior consultation with, and agreement of,
the other parties, except for any legally required communication by any party
and then only with prior consultation and as much advance notice as is
practicable under the circumstances requiring any announcement, together with
copies of all drafts of the proposed text. The provisions of the Buyer
Confidentiality Agreement shall remain in full force and effect.
15.12 Certain Construction Rules. The article and section
headings and the table of contents contained in this Agreement are for
convenience of reference only and shall in no way define, limit, extend or
describe the scope or intent of any provisions of this Agreement. Whenever the
context may require, any pronoun used in this Agreement shall include the
corresponding masculine, feminine or neuter forms, and the singular form of
nouns, pronouns and verbs shall include the plural and vice versa. In addition,
as used in this Agreement, unless
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otherwise provided to the contrary, (a) all references to days, months or years
shall be deemed references to calendar days, months or years and (b) any
reference to a "Section," "Article," or "Schedule" shall be deemed to refer to a
section or article of this Agreement or an exhibit or schedule attached to this
Agreement. The words "hereof", "herein", and "hereunder" and words of similar
import referring to this Agreement refer to this Agreement as a whole and not to
any particular provision of this Agreement. Unless otherwise specifically
provided for herein, the term "or" shall not be deemed to be exclusive.
15.13 Counterparts. This Agreement may be executed in
multiple counterparts, each of which shall be deemed an original and all of
which taken together shall constitute one instrument binding on all the parties,
notwithstanding that all the parties are not signatories to the original or the
same counterpart.
15.14 Survival. Except as otherwise set forth in this
Agreement, the representations and warranties made in this Agreement or in any
agreement, certificate or other document executed in connection herewith and the
covenants and agreements contained herein to be performed or complied with prior
to the Closing shall not survive the Closing.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, this Agreement has been duly executed as
of the date first above written.
SELLER:
Insilco Corporation, a Delaware corporation
By: /s/ David A. Kauer
-----------------------
Name: David A. Kauer
-----------------
Title: President
----------------
TPC:
Taylor Publishing Company, a
Delaware corporation
By: /s/ Michael R. Elia
-----------------------
Name: Michael R. Elia
-----------------
Title: Vice President
-----------------
BUYER:
TP Acquisition Corp., a Delaware corporation
By: /s/ David B. Pittaway
-----------------------
Name: David B. Pittaway
-----------------
Title: President
----------------
59
EXHIBIT 99(A)
-------------
Excellence in Telecommunications, Electronics, Automotive
================================================================================
NEWS RELEASE
================================================================================
FOR IMMEDIATE RELEASE
INVESTORS: MICHAEL R. ELIA MEDIA: MELODYE DEMASTUS
SR. VICE PRESIDENT & CFO MELROSE CONSULTING
(614) 791-3117 (614) 771-0860
INSILCO HOLDING CO. COMPLETES SALE OF SPECIALTY PUBLISHING UNIT
COLUMBUS, OHIO, FEBRUARY 11, 2000 - INSILCO HOLDING CO. (OTC BULLETIN
BOARD: INSL) reported today that it has completed the previously announced sale
of Taylor Publishing, its Dallas-based specialty publishing business unit, to a
newly formed company owned by Castle Harlan Partners III, L.P. for proceeds of
$93.48 million before adjustments for working capital and transaction-related
costs.
David A. Kauer, Insilco President and CEO, reiterated, "Taylor is a
fine business with solid prospects, however it does not fit with our long-term
strategy of pursuing growth in our core technology and heat exchanger
businesses." Kauer concluded, "We have benefited from our long association with
Taylor Publishing and wish them much success in the future."
The statements made in this press release that are not historical facts
are forward looking statements, including statements with respect the Company's
ability reduce its debt and invest in its core businesses and complete
acquisitions, and as such, are subject to certain risks and uncertainties. It is
important to note that results could differ materially from those projected in
such forward-looking statements. Factors which could cause results to differ
materially include, but are not limited to: the inability to obtain bank
approval for potential acquisitions, changes in demand for the Company's
products, changes in market trends, general competitive pressures from existing
and new competitors, adverse changes in operating performance, and adverse
economic conditions. Further information concerning factors that could cause
actual results to differ materially from those in the forward-looking statements
are contained from time to time in the Company's SEC filings, including but not
limited to the Company's report on Form 10-K for the year ended December 31,
1998 and reports on 10-Q for the quarters ended March 31, June 30 and September
30, 1999. Copies of these filings may be obtained by contacting the Company or
the SEC.
Insilco Holding Co., based in suburban Columbus, Ohio, is a diversified
manufacturer of industrial components. The Company's business units serve the
telecommunications, electronics, automotive and other industrial markets. It had
revenues in 1999 of $580 million.
Investor Relations Contact: Michael Elia (614) 792-0468 or write to Insilco
Holding Co., Investor Relations, 425 Metro Place North, Box 7196, Dublin, OH
43017 or call Melodye Demastus, Melrose Consulting (614) 771-0860. You may also
visit our web site at http://www.investor-access.com/insilco.html.
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