EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
Between
VALVECO INC.
As Buyer
and
THV ACQUISITION CORP.
As Seller
Dated as of October __, 1995
TABLE OF CONTENTS
Page
ARTICLE I PURCHASE AND SALE; CLOSING. . . . . . . . . . . . . .1
SECTION 1.1 Purchase and Sale of Shares . . . . . .1
SECTION 1.2 Consideration . . . . . . . . . . . . .1
SECTION 1.3 Payment . . . . . . . . . . . . . . . .2
SECTION 1.4 Closing . . . . . . . . . . . . . . . .2
ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLER . . . . . .3
SECTION 2.1 Status of the Shares. . . . . . . . . .3
SECTION 2.2 Title to Shares . . . . . . . . . . . .3
SECTION 2.3 Binding Nature of Agreements. . . . . .3
SECTION 2.4 No Conflicts; Consents. . . . . . . . .4
SECTION 2.5 Corporate Existence and Power;
Subsidiaries. . . . . . . . . . . . . .4
SECTION 2.6 Charter Documents and Corporate
Records . . . . . . . . . . . . . . . .4
SECTION 2.7 Capitalization. . . . . . . . . . . . .4
SECTION 2.8 Financial Condition . . . . . . . . . .5
SECTION 2.9 Finders; Fees . . . . . . . . . . . . .6
SECTION 2.10 Certain Approvals of the
Contemplated Transactions . . . . . . .6
ARTICLE III REPRESENTATIONS AND WARRANTIES OF BUYER . . . . . .7
SECTION 3.1 Binding Nature of Agreements. . . . . .7
SECTION 3.2 No Conflicts; Consents. . . . . . . . .7
SECTION 3.3 Corporate Existence and Power . . . . .7
SECTION 3.4 Acquisition for Investment. . . . . . .8
SECTION 3.5 Commitments . . . . . . . . . . . . . .8
SECTION 3.6 HSR Matters . . . . . . . . . . . . . .8
SECTION 3.7 Due Diligence Investigation . . . . . .8
SECTION 3.8 Finders; Fees . . . . . . . . . . . . .8
ARTICLE IV COVENANTS AND AGREEMENTS . . . . . . . . . . . . . .8
SECTION 4.1 Conduct of Business; Certain
Restrictions. . . . . . . . . . . . . .8
SECTION 4.2 Corporate Examinations and
Investigations. . . . . . . . . . . . 10
SECTION 4.3 Additional Financial Statements . . . 11
SECTION 4.4 Efforts to Consummate . . . . . . . . 11
SECTION 4.5 Negotiations with Others. . . . . . . 11
SECTION 4.6 Notices of Certain Events . . . . . . 12
SECTION 4.7 Public Announcements. . . . . . . . . 12
SECTION 4.8 Confidentiality . . . . . . . . . . . 13
SECTION 4.9 Expenses. . . . . . . . . . . . . . . 13
SECTION 4.10 Restrictive Covenants. . . . . . . . 13
SECTION 4.11 Books and Records . . . . . . . . . . 14
SECTION 4.12 Inter-Company Relationships;
Certain Obligations of Buyer. . . . . 14
SECTION 4.13 Employee Benefit Plans. . . . . . . . 17
SECTION 4.14 Actions Relating to Approval of
Contemplated Transactions . . . . . . 17
SECTION 4.15 Actions Relating to Portion of the
Funded Debt and
the Lender Warrants . . . . . . . . . 18
ARTICLE V CONDITIONS TO CLOSING . . . . . . . . . . . . . . . 19
SECTION 5.1 Conditions to the Obligations of
Seller and Buyer. . . . . . . . . . . 19
SECTION 5.2 Conditions to the Obligations of
Seller. . . . . . . . . . . . . . . . 20
SECTION 5.3 Conditions to the Obligations of
Buyer . . . . . . . . . . . . . . . . 22
ARTICLE VI INDEMNIFICATION. . . . . . . . . . . . . . . . . . 27
SECTION 6.1 Survival of Representations,
Warranties and Covenants. . . . . . . 27
SECTION 6.2 Obligation of Seller to Indemnify . . 28
SECTION 6.3 Obligation of Buyer to Indemnify. . . 28
SECTION 6.4 Notice and Opportunity to Defend
Third Party Claims. . . . . . . . . . 29
SECTION 6.5 Limits on Indemnification . . . . . . 30
SECTION 6.6 Adjustment. . . . . . . . . . . . . . 30
ARTICLE VII TERMINATION . . . . . . . . . . . . . . . . . . . 31
SECTION 7.1 Termination . . . . . . . . . . . . . 31
SECTION 7.2 Effect of Termination; Right to
Proceed . . . . . . . . . . . . . . . 31
ARTICLE VIII MISCELLANEOUS. . . . . . . . . . . . . . . . . . 32
SECTION 8.1 Notices . . . . . . . . . . . . . . . 32
SECTION 8.2 Entire Agreement. . . . . . . . . . . 33
SECTION 8.3 Waivers and Amendments;
NonContractual Remedies;
Preservation of Remedies. . . . . . . 33
SECTION 8.4 Governing Law . . . . . . . . . . . . 34
SECTION 8.5 Consent to Jurisdiction and Service
of Process. . . . . . . . . . . . . . 34
SECTION 8.6 Designated Buyer. . . . . . . . . . . 34
SECTION 8.7 Binding Effect; No Assignment . . . . 34
SECTION 8.8 Exhibits. . . . . . . . . . . . . . . 34
SECTION 8.9 Severability. . . . . . . . . . . . . 34
SECTION 8.10 Counterparts. . . . . . . . . . . . . 34
ARTICLE IX DEFINITIONS. . . . . . . . . . . . . . . . . . . . 35
SECTION 9.1 Definitions . . . . . . . . . . . . . 35
SECTION 9.2 Interpretation. . . . . . . . . . . . 40
EXHIBITS
Exhibit A Form of Escrow Agreement
Exhibit B Fairness Opinion of Xxxxxxx
Securities Corporation
Exhibit C Form of Irrevocable Proxy from
Members of the Xxxxx Family
Exhibit D Note and Warrant Purchase
Agreement
Exhibit E Recapitalization Agreement
Exhibit F Bring Along Agreement
SCHEDULES
Schedule 2.1A Restrictions on the Purchased
Shares
Schedule 2.1B Restrictions on the Company Shares
Schedule 2.4 Seller Required Consents
Schedule 2.7A Description of Xxxxx Warrant
Schedule 2.7B Description of Lender Warrants
Schedule 2.8A Interim Financial Statement GAAP
Exceptions
Schedule 2.8B Listing of Funded Debt as of
September 30,1995
Schedule 2.8C HVHC Liabilities
Schedule 2.8D Listing of Intercompany
Obligations as of September 30,
1995
Schedule 2.8E Listing of Transtech Liabilities
Assumed by the Company
Schedule 3.2 Buyer Required Consents
Schedule 3.7 Listing of Transtech's SEC Filings
since January 1, 1991
Schedule 4.13 Other Employee Benefit Plans of
the Company
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT dated as of October __, 1995
between VALVECO INC., a Delaware corporation ("Buyer"), and THV
ACQUISITION CORP., a Delaware corporation ("Seller"):
Transtech Industries, Inc. ("Transtech"), a Delaware
corporation that files periodic reports and other information
pursuant to the 1934 Act, owns all the issued and outstanding
shares of capital stock of Seller.
Seller owns: (i) all the issued and outstanding shares of
capital stock (the "Purchased Shares") of HVHC, Inc. ("HVHC"), a
Delaware corporation and (ii) all the issued and outstanding
preferred shares (the "Company Preferred Shares") of Xxxx Valve
Company, Inc. (the "Company"), an Ohio corporation. HVHC, in
turn, owns all the issued and outstanding shares of common stock
(the "Company Common Shares") of the Company. As used herein,
HVHC and the Company are referred to, collectively, as the
"Companies" and the Company Common Shares and Company Preferred
Shares are referred to, collectively, as the "Company Shares".
This Agreement contemplates a transaction in which Buyer
will purchase from Seller, and Seller will sell to Buyer, all of
the Purchased Shares so that Buyer will become the indirect owner
of the Company Common Shares, upon the terms and conditions set
forth herein (certain terms used herein having the respective
meanings set forth in Article IX).
Now, therefore, in consideration of the premises and for
other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree
as follows:
ARTICLE I
PURCHASE AND SALE; CLOSING
SECTION 1.1 Purchase and Sale of Shares. Subject to the
terms and conditions set forth herein, at the Closing, Seller
shall sell, transfer and deliver to Buyer, and Buyer shall
purchase and accept from Seller, the Purchased Shares.
SECTION 1.2 Consideration. (a) The purchase price (the
"Purchase Price") for the Purchased Shares shall be $18 million
reduced by the sum of the following: (i) the amount of Funded
Debt; (ii) the amount required to redeem the Lender Warrants;
(iii) the amount required to redeem the Company Preferred Shares
and all accrued and unpaid dividends thereon; (iv) the amount
required to be paid by the Company to the Seller in repayment of
the senior subordinated note issued by the Company to the Seller
in the original principal amount of $500,000 (the "Seller Senior
Subordinated Note"); and (v) any other intercompany payments
required to be made by the Companies on or before the Closing
Date. For purposes of this section, "Funded Debt" means (x) all
amounts outstanding under the revolving portion (the "Revolver")
of the Company's credit facility as reflected on the books of the
Company as of the close of business on the day immediately
preceding the Closing Date (the "Determination Date") (as such
amount may be adjusted pursuant to Section 1.2(b)) plus (y) the
outstanding principal of, plus accrued interest and penalties on
(including prepayment penalties, premiums or similar payments
payable to holders of Funded Debt), all other outstanding
indebtedness of the Companies on the Closing Date.
(b) Post Closing Adjustment to Purchase Price. In the
event that it is determined after the Closing Date that the
amount of the Revolver reflected on the books of the Company as
of the Determination Date should have been an amount (the "Actual
Revolver Amount") other than the amount used in the calculation
of the Purchase Price (the "Revolver Payment Amount") pursuant to
clause (x) of Section 1.2 above, the following payments shall be
made in connection with the Purchase Price: (i) if the Actual
Revolver Amount exceeds the Revolver Payment Amount, then Seller
shall pay by wire transfer to an account specified by Buyer,
within two Business Days after the making of such determination,
an amount equal to the Actual Revolver Amount minus the Revolver
Payment Amount; and (ii) if the Actual Revolver Amount is less
than the Revolver Payment Amount, then Buyer shall pay by wire
transfer to an account specified by Seller, within two Business
Days after the making of such determination, an amount equal to
the Revolver Payment Amount minus the Actual Revolver Amount.
SECTION 1.3 Payment. At the Closing, $750,000 of the
Purchase Price (the "Escrowed Portion") shall be paid to and held
by the Escrow Agent subject to the terms and conditions of the
Escrow Agreement, to be dated the Closing Date, among Seller,
Transtech, Buyer and the Escrow Agent, substantially in the form
of Escrow Agreement annexed as Exhibit A hereto (the "Escrow
Agreement"). The balance of the Purchase Price will be payable
in cash by wire transfer of immediately available funds to one or
more accounts designated by Seller by written notice given to
Buyer at least two (2) Business Day prior to the Closing Date.
SECTION 1.4 Closing. The closing (the "Closing") of the
purchase and sale of the Purchased Shares hereunder shall take
place at the offices of Xxxx Marks & Xxxxx, 000 Xxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx at 10:00 a.m., local time, on December 22, 1995
or, if on such date the conditions to closing specified in
Article V (other than conditions requiring the delivery of
certificates, opinions and other instruments and documents) shall
not have been satisfied or waived, on the second day following
such satisfaction or waiver, or on such other date as Buyer and
Seller shall agree. The time and date of the Closing is
hereinafter called the "Closing Date". All transactions
consummated at the Closing shall be deemed to have taken place
simultaneously.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Transtech and Seller, jointly and severally, represent and
warrant to Buyer that:
SECTION 2.1 Status of the Shares. (a) The Purchased
Shares constitute 100% of the issued and outstanding capital
stock of HVHC. Except as set forth on Schedule 2.1A, the
Purchased Shares are subject to no restrictions on
transferability other than restrictions imposed by (i) the 1933
Act and (ii) applicable state securities Laws.
(b) The Company Shares constitute 100% of the issued
and outstanding capital stock of the Company. Except as set
forth in Schedule 2.1B, the Company Shares are subject to no
restrictions on transferability other than restrictions imposed
by (i) the 1933 Act and (ii) applicable state securities Laws.
SECTION 2.2 Title to Shares. (a) Seller owns and holds
title to the Purchased Shares and the Company Preferred Shares
free and clear of any Lien of any kind. At the Closing, Buyer
will acquire title to the Purchased Shares, free and clear of any
Lien of any kind other than Liens created by Buyer.
(b) HVHC owns and holds title to the Company Common
Shares free and clear of any Lien of any kind, other than a Lien
that has been granted to certain lenders of the Company. After
payment of the Funded Debt and the release of Liens held by the
holders of such debt, HVHC will hold such shares free and clear
of any Lien of any kind other than Liens created by Buyer.
SECTION 2.3 Binding Nature of Agreements. (a) Each of
Seller and Transtech has full power, capacity and authority to
execute and deliver this Agreement and each other Transaction
Document to which it is a party and to consummate the
transactions contemplated hereby and thereby (the "Contemplated
Transactions"). The execution and delivery of this Agreement and
each other Transaction Document to which Seller or Transtech is a
party and the consummation of the Contemplated Transactions to
which Seller or Transtech is a party have been duly and validly
authorized by Seller and the Board of Directors of Transtech and,
except for obtaining the consent of holders of the stock of
Transtech, no other proceedings on the part of Seller or
Transtech (or any other person) are necessary to authorize the
execution and delivery by Seller or Transtech of this Agreement
or any other Transaction Document to which Seller or Transtech is
a party or the consummation of the Contemplated Transactions to
which Seller or Transtech is a party.
(b) This Agreement and the other Transaction Documents
to which Seller or Transtech is a party have been duly and
validly executed and delivered by Seller and Transtech, and
(assuming the valid execution and delivery thereof by the other
parties thereto) constitute the legal, valid and binding
agreements of Seller and Transtech enforceable against them in
accordance with their respective terms except as such obligations
and their enforceability may be limited by applicable bankruptcy
and other similar Laws affecting the enforcement of creditors'
rights generally and except that the availability of equitable
remedies is subject to the discretion of the court before which
any proceeding therefor may be brought (whether at law or in
equity).
SECTION 2.4 No Conflicts; Consents. The execution,
delivery and performance by Seller and Transtech of this
Agreement and each other Transaction Document to which Seller or
Transtech is a party, the consummation of the Contemplated
Transactions to which Seller or Transtech is a party and the
contemplated change of control of the stock ownership of the
Companies, will not (i) violate any provision of the Certificate
of Incorporation or By-laws (or comparable instruments) of
Seller, Transtech, HVHC or the Company; (ii) require Seller,
Transtech, HVHC or the Company to obtain any consent, approval or
action of or waiver from, or make any filing with, or give any
notice to, any Governmental Body or any other person, except as
set forth on Schedule 2.4 (the "Seller Required Consents"); (iii)
if the Seller Required Consents are obtained prior to Closing, to
Seller's knowledge, violate, conflict with or result in a breach
or default under (after the giving of notice or the passage of
time or both), or permit the termination of, any Material
Contract to which Seller, Transtech, HVHC or the Company is a
party or by which any of them or any of their assets may be bound
or subject, or result in the creation of any Lien upon the
Purchased Shares or upon any of the assets of HVHC or the Company
pursuant to the terms of any such Contract; or (iv) if the Seller
Required Consents are obtained prior to Closing, to Seller's
knowledge, violate any Law, Order or material Permit of any
Governmental Body against, or binding upon, HVHC or the Company
or upon their respective assets or the Business.
SECTION 2.5 Corporate Existence and Power; Subsidiaries.
(a) Each of the Companies is a corporation duly organized,
validly existing and in good standing under the laws of its
jurisdiction of incorporation, and has all requisite powers,
authorizations, consents and approvals required to carry on its
respective businesses.
(b) HVHC does not have any Subsidiaries and does not
directly or indirectly own any interest or investment in any
person, other than the Company.
(c) The Company does not have any Subsidiaries and
does not directly or indirectly own any interest or investment in
any other person.
SECTION 2.6 Charter Documents and Corporate Records.
Seller has heretofore delivered to Buyer true and complete copies
of the Certificate of Incorporation and By-laws, or comparable
instruments, of HVHC and the Company as in effect on the date
hereof. The stock and transfer books of HVHC and the Company
have been made available to Buyer for its inspection.
SECTION 2.7 Capitalization. (a) The authorized capital
stock of HVHC consists of 100,000 shares of common stock, having
a par value of $1 each, of which 9,000 shares are issued and
outstanding. All such shares are duly authorized, validly
issued, fully paid and nonassessable, and were not issued in
violation of any preemptive or other rights of shareholders.
Except for a warrant held by Xxxxxx X. Xxxxx more particularly
described on Schedule 2.7A hereto (the "Xxxxx Warrant"), there
are no outstanding securities of HVHC convertible into or
exchangeable for or evidencing the right to purchase or subscribe
for any shares of capital stock of HVHC. There are no voting
trusts or other agreements or understandings with respect to the
voting of the HVHC capital stock. Except for the Xxxxx Warrant,
there are no outstanding or authorized options, warrants, calls,
subscriptions, rights, commitments or any other agreements of any
character obligating HVHC to issue any shares of its capital
stock or any securities convertible into or evidencing the right
to purchase or subscribe for any shares of such stock.
(b) The authorized capital stock of the Company
consists of (i) 12,000 shares of common stock, without par value,
of which 8,000 shares are issued and outstanding and (ii) 2,000
shares of Series A, 7% cumulative Preferred Stock, without par
value, of which 200 shares are issued and outstanding. All of
such shares are duly authorized, validly issued, fully paid and
nonassessable and were not issued in violation of any preemptive
or other rights of shareholders. Except for (i) certain warrants
held by lenders to the Company more particularly described on
Schedule 2.7B hereto (the "Lender Warrants") and (ii) certain
equity appreciation rights in the common stock of the Company
held by Xxxxx Xxxxxxxxxx (the "Huberfield Rights"), there are no
outstanding securities of the Company convertible into or
exchangeable for or evidencing the right to purchase or subscribe
for any shares of capital stock of the Company. There are no
voting trusts or other agreements or understandings with respect
to the voting of the Company capital stock. Except for the
Lender Warrants and the Huberfield Rights, there are no
outstanding or authorized options, warrants, calls,
subscriptions, rights, commitments or any other agreements of any
character obligating the Company to issue any shares of its
capital stock or any securities convertible into or evidencing
the right to purchase or subscribe for any shares of such stock.
SECTION 2.8 Financial Condition. (a) Seller has
previously furnished to Buyer true and complete copies of (i)
HVHC's unaudited financial statements at and for the years ended
December 31, 1994, 1993 and 1992 and for the six months ended
June 30, 1995 and 1994, (ii) the Company's (A) audited financial
statements (including the footnotes thereto) at and for the years
ended December 31, 1994, 1993 and 1992 and (B) unaudited
financial statements at and for the eight months ended August 31,
1995 and 1994, and (iii) Transtech's (A) audited consolidated
financial statements (including the footnotes thereto) at and for
the years ended December 31, 1994, 1993 and 1992 and
(B) unaudited consolidated financial statements for the six
months ended June 30, 1995 and 1994. Except as set forth in
Schedule 2.8A with respect to unaudited financial statements, the
foregoing financial statements (collectively, the "Financial
Statements") were prepared in accordance with GAAP and fairly
present the financial condition of the respective entities as of
the dates of the balance sheets included in such Financial
Statements and the results of operations and, where applicable,
changes in financial position of such respective entities for the
periods indicated.
(b) A listing of the Companies' Funded Debt as of
September 30, 1995 is set forth on Schedule 2.8B hereto.
(c) HVHC's sole asset consists of the Company Common
Shares. Except for its obligations under the Tax Sharing
Agreement and as disclosed in Schedule 2.8C hereto, HVHC has no
Liabilities.
(d) Schedule 2.8D sets forth, as of September 30,
1995, a listing of all intercompany obligations involving
Transtech, Seller, HVHC and the Company.
(e) Schedule 2.8E sets forth a listing of all
Liabilities of Transtech in respect of which the Company has
agreed to be jointly and severally or independently liable (the
"Transtech Assumed Liabilities").
SECTION 2.9 Finders; Fees. Except for Xxxxxxx Securities
Corporation ("Xxxxxxx"), which has been retained to render an
opinion as to the fairness of the Contemplated Transactions to
the stockholders of Transtech, and whose fees and expenses will
be borne by Transtech, there is no investment banker, broker,
finder or other intermediary which has been retained by or is
authorized to act on behalf of Transtech, Seller, HVHC or the
Company who might be entitled to any fee or commission from the
Company or HVHC upon consummation of the Contemplated
Transactions.
SECTION 2.10 Certain Approvals of the Contemplated
Transactions. On or before the date hereof:
(a) The independent director of Transtech (the
"Independent Transtech Director") has: (i) approved and adopted
this Agreement and the Contemplated Transactions; (ii) resolved,
subject to the exercise of his fiduciary duties, to recommend at
all times prior to and including the Stockholders' Meeting that
Transtech's stockholders approve the sale of the Companies and
adopt this Agreement and the Contemplated Transactions and (iii)
determined that this Agreement and the Contemplated Transactions
are in the best interest of Transtech and its stockholders;
(b) Xxxxxxx has rendered to the Independent Transtech
Director its written opinion (a copy of which is annexed as
Exhibit B hereto) to the effect that the Purchase Price is fair
to Transtech from a financial point of view (the "Fairness
Opinion").
(c) The holders of not less than 33.8% of each of the
issued and outstanding common stock of Transtech (the "Xxxxx
Shares") have executed an irrevocable proxy in favor of Buyer
substantially in the form annexed as Exhibit C hereto.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller that:
SECTION 3.1 Binding Nature of Agreements. (a) Buyer has
full power and authority to execute and deliver this Agreement
and each other Transaction Document to which it is a party and to
consummate the Contemplated Transactions. The execution and
delivery of this Agreement and each other Transaction Document to
which it is a party and the consummation of the Contemplated
Transactions to which Buyer is a party have been duly and validly
authorized and approved by Buyer's board of directors and no
other corporate proceedings on the part of Buyer are necessary to
authorize the execution and delivery by Buyer of this Agreement
or any other Transaction Document to which Buyer is a party or
the consummation of the Contemplated Transactions to which Buyer
is a party.
(b) This Agreement and the other Transaction Documents
to which Buyer is a party have been duly and validly executed and
delivered by Buyer and (assuming the valid execution and delivery
thereof by the other parties hereto) constitute the legal, valid
and binding agreements of Buyer, enforceable against Buyer in
accordance with their respective terms, except as such
obligations and their enforceability may be limited by applicable
bankruptcy and other similar Laws affecting the enforcement of
creditors' rights generally and except that the availability of
equitable remedies is subject to the discretion of the court
before which any proceeding therefor may be brought (whether at
law or in equity).
SECTION 3.2 No Conflicts; Consents. The execution,
delivery and performance by Buyer of this Agreement and each
other Transaction Document to which it is a party, the
consummation of the Contemplated Transactions to which Buyer is a
party and the contemplated change of control of the stock
ownership of the Companies will not (i) violate any provision of
the Certificate of Incorporation or By-laws of Buyer;
(ii) require Buyer to obtain any consent, approval or action of
or waiver from, or make any filing with, or give any notice to,
any Governmental Body or any other person, except as set forth in
Schedule 3.2 (the "Buyer Required Consents"); (iii) if the Buyer
Required Consents are obtained prior to the Closing, violate,
conflict with or result in the breach or default under (after the
giving of notice or the passage of time or both), or permit the
termination of, any Material Contract to which Buyer is a party
or by which it or its assets may be bound or subject, or (iv) if
the Buyer Required Consents are obtained prior to the Closing,
violate any Law, Order or material Permit of any Governmental
Body against, or binding upon, Buyer or upon its assets or
business.
SECTION 3.3 Corporate Existence and Power. Buyer is a
corporation duly organized, validly existing and in good standing
under the laws of its state of incorporation and has all
requisite corporate powers, authorizations, consents and
approvals required to carry on its business.
SECTION 3.4 Acquisition for Investment. Buyer is acquiring
the Purchased Shares for its own account and not with a present
intention to make any sale, disposition, distribution or other
transfer of the Purchased Shares in a manner that will be in
violation of any applicable securities Laws and understands that
the Purchased Shares have not been registered under the 1933 Act
or under the securities Laws of any state.
SECTION 3.5 Commitments. Buyer has obtained loan and
equity commitments, copies of which have been provided to Seller,
for the purpose of financing this transaction in the amount of at
least $18 million and has paid or committed to pay all commitment
fees due and payable on or before the date hereof related to such
loan commitment.
SECTION 3.6 HSR Matters. The "ultimate parent entity" (as
such term is defined in HSR) of Buyer does not have total assets
or annual net sales in excess of $100,000,000 within the meaning
of HSR.
SECTION 3.7 Due Diligence Investigation. (a) Buyer
acknowledges having examined the registration statements, proxy
statements, reports and other information filed by or concerning
Transtech and its Subsidiaries with the Securities and Exchange
Commission ("SEC") since January 1, 1991 that are listed on
Schedule 3.7 hereto. Buyer further acknowledges that certain
members of its senior management have previously been associated
with the Company for many years in senior positions and, as such,
Buyer is fully aware of the financial condition, operations,
properties, assets, liabilities and other matters relating to the
Company.
(b) Notwithstanding the provisions of Section 3.7(a),
Buyer shall be entitled to rely on the representations and
warranties made by Seller and Transtech in Article II hereof and
the indemnification rights of Buyer relating to such
representations and warranties shall not be adversely affected by
the provisions of Section 3.7(a).
SECTION 3.8 Finders; Fees. There is no investment banker,
broker, finder or other intermediary (including Xxxxx and
Company) which has been retained by or is authorized to act on
behalf of Buyer who might be entitled to any fee or commission
from Transtech or the Seller upon consummation of the
Contemplated Transactions.
ARTICLE IV
COVENANTS AND AGREEMENTS
SECTION 4.1 Conduct of Business; Certain Restrictions. (a)
From and after the date hereof and until the Closing Date, Seller
hereby covenants and agrees with Buyer that, unless Buyer
otherwise agrees in writing:
(i) The Company will carry on its business and
activities diligently and in substantially the same manner as has
been previously carried out, and shall not make or institute any
unusual or novel methods of purchase, sale, lease, management,
accounting or operation that will vary materially from those
methods used by it as of the date of this Agreement, except as
may be required by the provisions of the Agreement.
(ii) The Company will use its reasonable efforts
to preserve its business organization intact, to keep available
its present officers and employees, and to preserve its present
relationships with suppliers, customers and others having
business relationships with it.
(b) In furtherance of, and not in limitation of the
provisions set forth in Section 4.1:
(i) Each of the Companies will continue to carry
its existing insurance, insuring its assets, business and
properties, subject to variations in amounts required by the
ordinary operations of its business.
(ii) The Companies shall not cause, permit or
suffer any of their respective assets to become subject to any
additional Lien other than in the ordinary course of business.
(iii) Except in the ordinary course of business
consistent with past practice, the Company shall not pay, prepay,
discharge or satisfy any Liability, Lien or obligation or
materially alter the aging of its payables.
(iv) The Company shall not in any one month (A)
sell or dispose of any capital assets having a fair market value
individually in excess of $25,000 or a fair market value in the
aggregate for all such capital assets in excess of $50,000, (B)
make any capital expenditures for any single item having a cost
in excess of $25,000 or all items in the aggregate having a cost
in excess of $50,000 or enter into a lease with capital or other
equipment providing for rentals aggregating more than $25,000 per
annum for all such leases or (C) otherwise transfer, sell,
distribute or otherwise dispose of any of its assets or
properties, other than in the ordinary course of business.
(v) The Companies shall not enter into any
Material Contract or modify, amend, cancel or terminate any of
its existing Material Contracts.
(vi) The Company shall not modify its practices
with respect to the collection of receivables or the discharge of
payables or take any other action, out of the ordinary course,
that would affect its cash position or the amount of Funded Debt,
other than any action contemplated hereby;
(vii) Except in the ordinary course of business,
the Company shall not: (A) write off as uncollectible any notes,
trade accounts or other receivables or (B) write off or dispose
of any inventory.
(viii) The Company shall not cancel or compromise
any debt or Claim or settle or discharge any balance sheet
receivable for less than the stated amount, except in the
ordinary course of business, or otherwise cancel, compromise or
waive any Claims or rights of substantial value.
(ix) The Company shall not create or incur any
indebtedness for borrowed money other than pursuant to an
existing line of credit, or guaranty, indemnify or otherwise
become liable for any obligation of any third party.
(x) Except for credit extended to customers in
the ordinary course of business, and under normal credit terms,
the Company shall not make any loans, advances or extensions of
credit to any person.
(xi) All tangible property of the Company shall be
used, maintained and repaired in the usual and ordinary course.
(xii) With respect to its employees, the Company
will not (A) make, institute, agree to or change any bonus,
profit sharing, pension, retirement, severance, termination,
"parachute" or similar arrangement or plan for employees and (B)
except and in accordance with past practices and in similar
amounts, increase the compensation payable or to become payable
to any employee.
(xiii) Except for the redemption of the Company
Preferred Shares and the payments referred to in Section 4.12,
neither of the Companies will (A) amend its certificate of
incorporation or bylaws, (B) issue or sell any shares of capital
stock, (C) issue, sell or create any warrants, obligations,
subscriptions, options, convertible securities or other
agreements or commitments under which any additional shares of
capital stock of any class may be directly or indirectly
authorized, issued or sold, (D) declare, set aside or pay any
dividend or make any distribution, directly or indirectly, in
respect of its capital stock; (E) directly or indirectly
purchase, redeem or otherwise acquire any shares of its capital
stock other than the contemplated redemption of the Company
Preferred Shares or (F) enter into any Contract obligating it to
do any of the foregoing prohibited acts.
SECTION 4.2 Corporate Examinations and Investigations.
Prior to the Closing Date, Seller agrees that Buyer shall be
entitled, through the directors, officers, Affiliates, employees,
attorneys, accountants, representatives, lenders, consultants and
other agents (collectively, "Representatives") of Buyer to make
such investigation of the Assets, the Business and operations of
the Company, and such examination of the books, records and
financial condition of the Company, as Buyer reasonably deems
necessary. Any such investigation and examination shall be
conducted at reasonable times, under reasonable circumstances and
upon reasonable notice, and Seller shall, and shall cause the
Company to, cooperate fully therein. In that connection, Seller
shall make available and shall cause the Company to make
available to the Representatives of Buyer during such period,
without however causing any unreasonable interruption in the
operations of the Company, all such information and copies of
such documents and records concerning the affairs of the Company
as such Representatives may reasonably request, shall permit the
Representatives of Buyer access to the Assets of Company and all
parts thereof and to its employees, customers, suppliers and
others, and shall cause the Company's Representatives to
cooperate fully in connection with such review and examination.
SECTION 4.3 Additional Financial Statements. Prior to the
Closing Date, as soon as available and in any event within thirty
(30) calendar days after the end of each monthly accounting
period of the Company ending after the date of the most recent
interim statement included in the Financial Statements, Seller
shall furnish Buyer with unaudited financial statements of the
Company for such month in the form routinely prepared by the
Company, consistent with prior practice, for the Company's board
of directors and lenders.
SECTION 4.4 Efforts to Consummate. Subject to the terms
and conditions herein, each party hereto, without payment or
further consideration, shall use its reasonable, good faith
efforts to take or cause to be taken all action and to do or
cause to be done all things necessary, proper or advisable under
applicable Laws, Permits and Orders to consummate and make
effective, as soon as reasonably practicable, the Contemplated
Transactions, including, but not limited to, the obtaining of all
Seller Required Consents and Buyer Required Consents and Permits
or consents of any third party, whether private or governmental,
required in connection with such party's performance of such
transactions and each party hereto shall cooperate with the other
in all of the foregoing.
SECTION 4.5 Negotiations with Others. (a) From and after
the date hereof and until this Agreement shall have been
terminated in accordance with its terms, Transtech and Seller
agree that they will not, directly or indirectly, and will not
permit HVHC or the Company, directly or indirectly, to, encourage
or solicit any inquiries or proposals by or engage in any
discussions or negotiations with, or enter into any other
Contract or understanding with, any person concerning an
Acquisition Proposal subject, however, to such actions which, in
the good faith judgment of the Board of Directors of Seller or
Transtech, based upon the advice of counsel, are required under
applicable Law to be taken by the Board of Directors of Seller or
Transtech in exercise of its fiduciary duties. Seller shall
advise Buyer of any written proposal or offer to enter into an
Acquisition Proposal.
(b) If, between the date hereof and February 17, 1996
(a Closing hereunder not having occurred), Transtech, Seller,
HVHC or the Company should wish to enter into an Acquisition
Proposal with any person other than Buyer or any of its
Affiliates, Seller shall give written notice thereof (the "Sales
Notice") to Buyer. Such Sales Notice shall set forth or be
accompanied by a full statement of the terms of the proposed
Acquisition Proposal including the: (i) purchase price therefor;
(ii) method of payment; (iii) proposed date of closing; and (iv)
name, address and telephone number of the proposed transferee.
Within thirty days after the giving of the Sales Notice, Buyer
shall have the option, by giving written notice thereof to
Seller, to match such other Acquisition Proposal on substantially
the same terms and conditions set forth therein.
(c) If: (i) Buyer has not exercised its rights of
first refusal in accordance with Section 4.5(b); (ii) Buyer is
willing and able to consummate the Contemplated Transactions and
the conditions to such consummation, not within the control of
Seller, have been satisfied or waived, and (iii) Seller
consummates an Acquisition Proposal with any person other than
Buyer or any of its Affiliates on or before February 17, 1996,
Seller and Transtech, jointly and severally, shall pay or cause
the Company to pay to Buyer at the closing of such transaction a
fee of $450,000 as compensation for its efforts hereunder. In
addition, Transtech, Seller or the Company shall reimburse Xxxxx
and Company and Buyer for the expenses of negotiating the terms
of this Agreement including the reasonable fees and expenses due
to its investment bankers, investors, lawyers and advisors;
provided, that, such reimbursement shall not exceed $1,000,000,
in the aggregate.
SECTION 4.6 Notices of Certain Events. Prior to the
Closing Date, each of Seller and Buyer shall promptly notify the
other of:
(a) any notice or other communication from any person
alleging that the consent of such person is or may be required in
connection with the Contemplated Transactions;
(b) any notice or other communication from any
Governmental Body in connection with the Contemplated
Transactions;
(c) the commencement or written threat of any
litigation against Buyer or against Seller, HVHC or the Company;
and
(d) any event, condition or circumstance occurring
from the date hereof through the Closing Date that would
constitute a violation or breach of any representation or
warranty, whether made as of the date hereof or as of the Closing
Date, or that would constitute a violation or breach of any
covenant of any party contained in this Agreement.
SECTION 4.7 Public Announcements. Transtech and Seller, on
the one hand, and Buyer, on the other, will consult with each
other before issuing any press release or otherwise making any
public statement with respect to the Contemplated Transactions,
and will not issue any such press release or make any such public
statement without the prior approval of Buyer or Transtech, as
the case may be, except as may be required by applicable Law in
which event the other party shall have the right to review and
comment upon (but not approve) any such press release or public
statement prior to its issuance.
SECTION 4.8 Confidentiality. (a) Buyer shall hold in
strict confidence, and shall use its best efforts to cause all
its Representatives to hold in strict confidence, unless
compelled to disclose by judicial or administrative process, or
by other requirements of Law, all information concerning
Transtech, Seller, HVHC and the Company which it has obtained
from Transtech, Seller, HVHC, the Company or their respective
Representatives prior to, on or after the date hereof in
connection with the Contemplated Transactions, and Buyer shall
not use or disclose to others, or permit the use of or disclosure
of, any such information so obtained, and will not release or
disclose such information to any other person, except its
Representatives who need to know such information in connection
with this Agreement and who shall be advised of the provisions of
this Section 4.8. The foregoing provision shall not apply to any
such information to the extent (i) made known to Buyer from a
third party not in breach of any confidentiality requirement or
(ii) made public through no fault of Buyer or any of its
Representatives. If the Contemplated Transactions are not
consummated and if requested by Seller, Buyer shall return to
Seller all tangible evidence of such information regarding
Transtech, Seller, HVHC and the Company.
(b) If the Contemplated Transactions are consummated,
Seller shall hold in strict confidence, and shall use its best
efforts to cause all its Representatives to hold in strict
confidence, unless compelled to disclose by judicial or
administrative process, or by other requirements of Law, all
confidential information concerning the Company which it has in
its possession on or prior to the Closing Date, and Seller shall
not use or disclose to others, or permit the use of or disclosure
of, any such information and will not release or disclose such
information to any other person, except its Representatives who
need to know such information and who shall be advised of the
provisions of this Section 4.8. The foregoing provision shall
not apply to any such information to the extent made public
through no fault of Seller, Transtech or any of their respective
Representatives.
SECTION 4.9 Expenses. Except as otherwise specifically
provided in this Agreement, Buyer and Seller shall bear their
respective expenses incurred in connection with the preparation,
execution and performance of this Agreement and the Contemplated
Transactions, including, without limitation, all fees and
expenses of their respective Representatives.
SECTION 4.10 Restrictive Covenants. (a) In furtherance of
the sale of the Business and more effectively to protect the
value of the Business, each of Transtech and Seller agrees that
during the two (2) year period commencing on the Closing Date
(the "Restricted Period"), it will not, directly or indirectly,
own, manage, operate, control, participate in, interest itself
in, perform services for, provide advice to or otherwise carry on
a business, for itself or on behalf of any other person, similar
to or competitive with the Business in such additional
geographical areas where the Company or any of its Subsidiaries
or Affiliates, have made any significant sales in the preceding
12 months; provided that the ownership of not more than 2% of the
issued and outstanding shares of a class of securities regularly
traded on a national securities exchange or quoted in an
automated inter-dealer quotation system shall not be deemed to be
ownership of the issuer of such shares for purposes hereof.
(b) For purposes of this Agreement, a business shall
be deemed to be similar to or competitive with the Business if it
involves the design, manufacture, sale or distribution of any
products or group of products that are similar to or compete with
any product category of the Company (a "Product Category") if
such Product Category accounted for sales by the Company of any
of its Subsidiaries or Affiliates of $1 million or more in the
preceding 12 months.
(c) Each of Transtech and Seller acknowledges and
agrees that the restrictive covenants set forth in this Section
4.10 (collectively, the "Restrictive Covenants") are reasonable
and valid in geographical and temporal scope and in all other
respects. If any court determines that any of the Restrictive
Covenants, or any part thereof, is invalid or unenforceable, the
remainder of the Restrictive Covenants shall not thereby be
affected and shall be given full force and effect, without regard
to the invalid or unenforceable parts.
(d) If any court determines that any of the
Restrictive Covenants, or any part thereof, is invalid or
unenforceable for any reason, such court shall have the power to
modify such Restrictive Covenants, or any part thereof, and, in
its modified form, such Restrictive Covenant shall then be valid
and enforceable.
(e) In the event of a breach by Transtech or Seller of
any of the Restrictive Covenants, Buyer shall be entitled to a
temporary restraining order, preliminary injunction and/or a
permanent injunction restraining such Seller from continuing to
breach any of said covenants.
SECTION 4.11 Books and Records. From and after the
Closing, Buyer and Seller, at the expense of the requesting
party, shall make available to each other (including the right to
make copies) any and all books and records of or relating to the
Companies reasonably requested in connection with (a) any matter
for which indemnification is claimed or (b) any inquiry or
investigation by any Governmental Body. Buyer and Seller shall
retain, or cause to be retained, for as long as any taxable year
in the Tax period (including partial periods) that ends on or
prior to the Closing Date, including but not limited to any short
taxable year required under Section 1.1502-76 of the Treasury
regulations, shall remain open for assessment of Taxes, any
material records or information which may be relevant to any such
Tax returns or audits or other examinations by any Tax Authority
relating to the Companies, and shall not dispose of any such Tax
returns, books or records relating to the Companies during such
period.
SECTION 4.12 Inter-Company Relationships; Certain
Obligations of Buyer. (a) On or prior to the Closing Date, the
Company or Companies, as appropriate, shall pay to Transtech:
(i) all accrued and unpaid fees owing under the
Management Agreement for services rendered through the Closing
Date;
(ii) all accrued and unpaid dividends on the
Company Preferred Shares; and
(iii) or Seller any and all obligations that may
then be due and owing by either of the Companies under the Tax
Sharing Agreement; or Seller any and all other obligations that
may then be owing by either of the Companies under any other
agreement or instrument pursuant to which either of the
Companies, Seller or Transtech are parties.
(b) On the Closing Date, the Company or Companies, as
appropriate, shall:
(i) Redeem the Company Preferred Shares at a
redemption price equal to $2 million plus; and
(ii) Pay to Seller the outstanding principal of
and all accrued and unpaid interest on the Seller Senior
Subordinated Note.
(c) On the Closing Date, Buyer shall provide the
Company with sufficient funds to enable it to make the payments
referred to in Sections 4.12(b) and shall also pay all Funded
Debt and the amount required to redeem the Lender Warrants.
(d) On or prior to the Closing Date, Transtech shall:
(i) Pay to the Company any and all obligations
that may then be due and owing by Transtech to either of the
Companies under the Tax Sharing Agreement; and
(ii) Pay to the Company any and all other
obligations that may then be owing by Transtech or Seller under
any other agreement or instrument pursuant to which either
Company, Seller or Transtech are parties.
(e) As of the close of business on the Closing Date,
Seller and Buyer agree that (except for their continuing
obligations under this Agreement, the Tax Sharing Agreement and
any Transaction Document) all agreements, instruments or
indebtedness between Transtech or Seller, on the one hand, and
either of the Companies, on the other hand, or whereby Seller or
Transtech agreed to assume any responsibility or liability for
the obligations of either of the Companies, or whereby either of
the Companies agreed to assume any responsibility or liability of
Seller or Transtech, shall be terminated and be of no further
force or effect and none of such parties shall have any further
liability or responsibility to the others arising therefrom.
(f) Notwithstanding the foregoing provisions of this
Section 4.12 or any provision of the Tax Sharing Agreement:
(i) Neither Transtech nor HVHC nor the Company
shall be required to make any payment to the other under the
second, third or fourth sentence of Section 3.2 of the Tax
Sharing Agreement for the taxable year of Transtech beginning
January 1, 1995 (the "Final Consolidated Year").
(ii) Transtech shall not be required to make any
payment to HVHC or the Company under Section 3.3(a) of the Tax
Sharing Agreement for the Final Consolidated Year.
(iii) No later than 60 days prior to the due date
(including duly authorized extensions) for filing the
consolidated federal income tax return of Transtech for the Final
Consolidated Year, Transtech shall submit such return to Buyer
together with relevant work papers. Buyer and Buyer's attorneys
and accountants shall have 20 days in which to review such
return, and during such period Transtech shall cooperate in any
manner reasonably requested by Buyer in providing such
information as may be reasonably required for Buyer to have a
complete understanding of the material items reflected in such
return. Buyer shall notify Transtech, in writing, on or before
such 30th day of any material item (or the omission of any
material item) with which it disagrees. The parties shall
endeavor in good faith to resolve their dispute. If the parties
have not resolved such dispute within 5 days, it shall be
resolved in accordance with the dispute resolution mechanism set
forth in Section 7.9 of the Escrow Agreement and Transtech shall
file such return reflecting such resolution. If Buyer fails to
notify Transtech of any such item on or before such 30th day,
then Transtech may file such return on such due date.
(iv) With respect to all taxable years of
Transtech for which the Company was included in its consolidated
federal income tax return ("Consolidated Years"), Transtech shall
not file any amended federal income tax return (or any
consolidated, combined or unitary return with respect to which
the Company has liability analogous to that provided for in
Treas. Reg. 1.1502-6) without the consent of Buyer, which consent
shall not be unreasonably withheld.
(v) With respect to all Consolidated Years, Buyer
shall be entitled to control, from the initial audit through the
final resolution of any contest, any audit of any consolidated
federal return (or any consolidated, combined or unitary state
return) filed for any such year to the extent that the relevant
issue pertains to HVHC or the Company. In furtherance of the
foregoing, Transtech shall permit Buyer and Buyer's
representative to participate fully in all meetings, conferences
and other activities pertaining to such audit and in connection
with such issues shall act in accordance with Buyer's reasonable
directions. In no event shall Transtech either settle or contest
any such issue without Buyer's express permission and Transtech
shall take all steps reasonably possible to duly authorize Buyer
to deal directly with the Internal Revenue Service (or other
relevant taxing authority) in respect of such issues.
Notwithstanding the foregoing, Buyer may not settle any such
issue (and Transtech may not be required to acquiesce in any such
settlement) if the result of such settlement would be that
Transtech would be obliged to make a refund payment to HVHC or
the Company under the Tax Sharing Agreement, unless Transtech
shall have consented to such settlement, which consent shall not
be unreasonably withheld.
SECTION 4.13 Employee Benefit Plans. (a) Effective as of
the Closing, Buyer will assume sponsorship of: (i) the Company's
employee health care benefit plan for employees and eligible
retirees; (ii) the Xxxx Valve Company, Inc. Hourly Employees'
Pension Plan; and (iii) the Company's other Employee Benefit
Plans listed on Schedule 4.13 hereto.
(b) On and after the date of this Agreement and prior
to the Closing Date, no Employee Benefit Plan for which Buyer
will have any responsibility after the Closing will be amended in
any manner which: (i) would directly or indirectly increase the
benefit accrued or which may be accrued by any participant
thereunder, except as may be required by law or (ii) materially
increase the cost to Buyer of maintaining such Plan, except as
may be required by law.
(c) Effective as of the Closing Date, Buyer shall
cause the Company to terminate its participation in the Transtech
Industries, Inc. Retirement Savings and Profit Sharing Plan and
Trust by delivering written notice of such termination of
participation to the Trustees of the Transtech Industries, Inc.
Retirement Savings and Profit Sharing Plan.
(d) On or before the Closing Date, Buyer shall
establish or designate one or more existing profit sharing plans
in which the employees of the Company shall participate effective
as of the Closing Date. The Buyer's profit sharing plan shall be
a tax-qualified plan under Section 401(a) of the Code (any
related trust shall be tax exempt under Section 501(a) of the
Code). Buyer shall provide Seller written evidence reasonably
satisfactory to Seller of the tax-qualified status of the Buyer's
profit sharing plan and any related trust. As soon as
practicable after the Closing Date, Transtech will transfer the
assets of the Transtech Industries, Inc. Retirement Savings
Profit Sharing Plan and Trust attributable to the employees of
the Company to the profit sharing plan maintained by Buyer.
Subject to and from and after the completion of such asset
transfer, Buyer shall assume and be solely responsible for the
pension benefit obligations in respect of the employees of the
Company.
(e) Buyer and Seller agree to use their respective
diligent efforts to execute all necessary documents, file all
required forms with any governmental agencies and to undertake
all actions that may be necessary or desirable to implement
expeditiously the transfer of assets contemplated by this Section
4.13.
SECTION 4.14 Actions Relating to Approval of Contemplated
Transactions. (a) The Independent Transtech Director, acting on
behalf of Transtech, may withdraw, modify or change its
recommendation regarding this Agreement, or recommend any other
offer or proposal, only if (i) he determines, in good faith,
after consulting with his financial advisor, that such
withdrawal, modification, change or recommendation is likely to
result in a superior financial transaction to Transtech and its
stockholders and (ii) outside counsel for Transtech provides him
with a written opinion to the effect that the failure to take
such actions would subject Transtech's directors to a substantial
risk of liability for breach of their fiduciary duties or for
failure to conform to the requirements of the securities Laws.
(b) As promptly as practicable, Transtech shall
prepare and file a preliminary proxy statement with the SEC
containing the recommendation of the Independent Transtech
Director, use reasonable efforts to have such proxy statement
cleared by the SEC, and disseminate a final proxy statement (the
"Proxy Statement") containing such recommendation as required by
Rule 14a-3 promulgated under the 1934 Act. Transtech and Buyer
agree to correct promptly any information provided by either of
them for use in the Proxy Statement that shall have become false
or misleading.
(c) Transtech shall promptly take all action necessary
in accordance with Delaware law and its Certificate of
Incorporation and Bylaws to convene a meeting of its shareholders
(the "Stockholders' Meeting") to consider and vote upon the
approval and adoption of this Agreement and the sale of the
Purchased Shares. The Stockholders' Meeting shall be scheduled
for a date no later than December 22, 1995, which date may be
postponed so long as Transtech is in compliance with its
obligations in Section 4.14(a). Except in accordance with the
standards set forth in Section 4.14(a), Transtech shall use
reasonable efforts to (i) solicit from its stockholders proxies
in favor of the sale of the Purchased Shares, and (ii) secure the
vote or consent of stockholders required by Delaware law to
effect the sale of the Purchased Shares.
(d) Buyer agrees to vote the Xxxxx Shares in favor of
any matters presented at the Stockholder's Meeting, except that
Buyer shall not be required to vote such shares in favor of any
transaction competing with the Contemplated Transactions.
SECTION 4.15 Actions Relating to Portion of the Funded Debt
and the Lender Warrants. (a) Terold N.V. ("Terold") and Buyer,
jointly and severally, warrant and represent to Transtech and the
Seller that, on the date hereof, Terold has entered into a
Purchase Agreement, in the form of Exhibit D hereto (the "Note
and Warrant Purchase Agreement") with the holders of (i) the
Company's 13% Senior Secured Notes in the aggregate original
principal amount of $11.5 million (the "Senior Notes") and (ii)
the Lender Warrants, pursuant to which Terold has agreed to
acquire such Senior Notes and Lender Warrants upon the terms and
conditions set forth therein; that Terold has the power and
authority to enter into, and perform its obligations under, such
agreement and each other Transaction Document to which it is a
party, and that such agreements constitute the legal, valid and
binding agreements of Terold, enforceable against it in
accordance with their respective terms, except as such
obligations and their enforceability may be limited by applicable
bankruptcy and other similar Laws affecting the enforcement of
creditors' rights generally and except that the availability of
equitable remedies is subject to the discretion of the court
before which any proceeding therefor may be brought (whether at
law or in equity).
(b) Terold agrees to consummate the acquisition
of the Senior Notes and the Lender Warrants, upon the terms and
conditions set forth in the Note and Warrant Purchase Agreement,
on or before October 31, 1995.
(c) In furtherance of the transactions
contemplated by the Note and Warrant Purchase Agreement, there is
being executed and delivered concurrently herewith:
(i) a Recapitalization Agreement (the
"Recapitalization Agreement"), in the form of Exhibit E hereto,
among Terold, the Company, HVHC, Transtech, Seller and Buyer; and
(ii) a Bring Along Agreement (the "Bring
Along Agreement"), in the form of Exhibit F hereto, among
Transtech, Seller and Terold.
ARTICLE V
CONDITIONS TO CLOSING
SECTION 5.1 Conditions to the Obligations of Seller and
Buyer. The obligations of Buyer and Seller to consummate the
Contemplated Transactions are subject to the satisfaction of the
following conditions, which, in the case of Section 5.1(b), may
be waived by Buyer and Seller:
(a) No Injunction. No provision of any applicable Law
and no Order shall prohibit the consummation of the Contemplated
Transactions.
(b) No Proceeding or Litigation. No Claim instituted
by any person shall have been commenced or pending against
Transtech, Seller, HVHC, the Company, Buyer or any of their
respective Affiliates, officers or directors which Claim seeks to
restrain, prevent, change or delay in any material respect the
Contemplated Transactions or seeks to challenge any of the
material terms or provisions of this Agreement or seeks material
damages in connection with any of such transactions.
(c) Payment in Full of the Funded Debt. The Company
or Buyer shall have paid, or caused to be paid or otherwise
satisfied, all Funded Debt as of the Closing Date: (i) upon
terms and conditions mutually satisfactory to Seller and Buyer
and (ii) in complete extinguishment of such Funded Debt and all
Liens relating thereto shall have been released.
(d) Satisfaction of Inter-Company Obligations. All
obligations of the parties referred to in Sections 4.12 and 4.13
shall have been paid and satisfied in full or complied with, as
the case may be.
(e) Escrow Agreement. There shall have been delivered
to Seller and Buyer fully executed counterparts of the Escrow
Agreement and the Escrowed Portion shall have been deposited with
the Escrow Agent.
(f) Xxxxx Warrants and Huberfield Rights. The Xxxxx
Warrants and the Huberfield Rights shall have been cancelled and
surrendered by the holders thereof without compensation or
liability to any other person.
(g) Recapitalization Agreement. The transactions
contemplated by the Recapitalization Agreement shall have been
consummated in accordance with its terms on or before the dates
set forth therein. Without derogating from the generality of the
foregoing, HVHC and the Company shall have ceased, on or before
December 31, 1995, to be members of Transtech's consolidated
group for federal income tax purposes.
(h) Fairness Opinion. Xxxxxxx shall not have
withdrawn its Fairness Opinion or modified it in any manner.
SECTION 5.2 Conditions to the Obligations of Seller. All
obligations of Transtech and Seller hereunder are subject, at the
option of Seller, to the fulfillment prior to or at the Closing
of each of the following further conditions:
(a) Performance. Buyer and, where applicable, Terold
shall have performed and complied with all agreements,
obligations and covenants required by this Agreement and each
other Transaction Document to be performed or complied with by
them at or prior to the Closing Date.
(b) Representations and Warranties. The
representations and warranties of Buyer contained in this
Agreement and each other Transaction Document and in any
certificate or other writing delivered by Buyer or Terold, as
applicable, pursuant hereto shall be true in all material
respects at and as of the Closing Date as if made at and as of
such time, except to the extent such representations and
warranties speak as of an earlier time.
(c) Purchase Price. Buyer shall have delivered by
wire transfer of immediately available funds the Purchase Price
as provided in Section 1.3.
(d) Buyer Required Consents. All Buyer Required
Consents shall have been obtained.
(e) Opinion of Buyer's Counsel. Seller shall have
received a legal opinion, dated the Closing Date, of counsel for
Buyer to the effect that:
(i) Buyer is a corporation validly existing and
in good standing under the laws of its state of incorporation and
has all requisite corporate powers, authorizations, consents and
approvals required to carry on its business;
(ii) Buyer has full power and authority to execute
and deliver this Agreement and each other Transaction Document to
which it is a party and to consummate the Contemplated
Transactions. The execution and delivery of this Agreement and
each other Transaction Document to which it is a party and the
consummation of the Contemplated Transactions to which Buyer is a
party have been duly and validly authorized and approved by
Buyer's board of directors and no other corporate proceedings on
the part of Buyer (or any other person) are necessary to
authorize the execution and delivery by Buyer of this Agreement
or any other Transaction Document to which Buyer is a party or
the consummation of the Contemplated Transactions to which Buyer
is a party.
(iii) This Agreement and the other Transaction
Documents to which Buyer is a party have been duly and validly
executed and delivered by Buyer and (assuming the valid execution
and delivery thereof by the other parties hereto) constitute the
legal, valid and binding obligations of Buyer, enforceable
against Buyer in accordance with their respective terms, except
as such obligations and their enforceability may be limited by
applicable bankruptcy and other similar Laws affecting the
enforcement of creditors' rights generally and except that the
availability of equitable remedies is subject to the discretion
of the court before which any proceeding therefor may be brought
(whether at law or in equity).
(iv) The execution, delivery and performance by
Buyer of this Agreement and each other Transaction Document to
which it is a party, the consummation of the Contemplated
Transactions to which Buyer is a party and the contemplated
change of control of the stock ownership of the Companies will
not (A) violate any provision of the Certificate of Incorporation
or By-laws of Buyer; (B) to such counsel's knowledge, require
Buyer to obtain any consent, approval or action of or waiver
from, or make any filing with, or give any notice to, any
Governmental Body or any other person, except for the Buyer
Required Consents, all of which have been obtained and are in
full force and effect, other than those which, if not obtained,
would individually or in the aggregate not be reasonably expected
to have a materially adverse effect on the business, assets,
financial condition or the results of operations of Buyer
("Condition of Buyer"); (C) to such counsel's knowledge,
violate, conflict with or result in the breach or default under
(after the giving of notice or the passage of time or both), or
permit the termination of, any Material Contract to which Buyer
is a party or by which it or its assets may be bound or subject
other than such violations, conflicts, breaches or defaults that
individually or in the aggregate would not be reasonably expected
to have a materially adverse effect on the Condition of Buyer;
(D) to such counsel's knowledge, violate any Law binding upon
Buyer or its assets or business, other than such violations that
individually or in the aggregate would not be reasonably expected
to have a materially adverse effect on the Condition of Buyer or
(E) to such counsel's knowledge, violate any Order or material
Permit of any Governmental Body against, or binding upon, Buyer
or upon its assets or business other than such violations that
individually or in the aggregate would not be reasonably expected
to have a materially adverse effect on the Condition of Buyer.
(v) The acquisition by Buyer of the Purchased
Shares is exempt from registration under the 1933 Act and under
applicable state securities Laws.
In rendering its opinion, counsel for Buyer may rely,
as to factual matters, on certificates of officers and directors
of Buyer.
(f) Documentation. There shall have been delivered
to Seller the following:
(i) A certificate, dated the Closing Date, of the
Chairman of the Board, the President or any Vice President of
each of Buyer and Terold confirming the matters set forth in
Sections 5.2(a) and (b) hereof.
(ii) A certificate, dated the Closing Date, of the
Secretary or Assistant Secretary of each of Buyer and Terold
certifying, among other things, that attached or appended to such
certificate (A) is a true and correct copy of its Certificate of
Incorporation and all amendments if any thereto as of the date
thereof; (B) is a true and correct copy of its By-laws as of the
date thereof; (C) is a true copy of all corporate actions taken
by it, including resolutions of its Board of Directors
authorizing the execution, delivery and performance of this
Agreement (in the case of Buyer), the Transaction Documents, and
each other Transaction Document to be delivered by Buyer or
Terold, as the case may be, pursuant hereto; and (D) are the
names and signatures of its duly elected or appointed officers
who are authorized to execute and deliver this Agreement (in the
case of Buyer), the Transaction Documents and any certificate,
document or other instrument in connection herewith.
(iii) a good standing certificate of Buyer and
Terold.
(iv) Copies of all Buyer Required Consents.
SECTION 5.3 Conditions to the Obligations of Buyer. All
obligations of Buyer hereunder are subject, at its option, to the
fulfillment prior to or at the Closing of each of the following
further conditions:
(a) Performance. Seller and Transtech shall have
performed and complied with all agreements, obligations and
covenants required by this Agreement and each other Transaction
Document to be performed or complied with by them at or prior to
the Closing Date.
(b) Representations and Warranties. The
representations and warranties of Seller and Transtech contained
in this Agreement and each other Transaction Document and in any
certificate or other writing delivered by them pursuant hereto
shall be true in all material respects at and as of the Closing
Date as if made at and as of such time, except: (i) to the extent
such representations or warranties speak as of an earlier time
and (ii) for the failure to obtain any Seller Required Consents
if such failure will not have a materially adverse effect on the
business, assets, financial condition or the results of
operations of the Company (collectively, the "Condition of the
Business").
(c) No Material Adverse Change. During the period
from August 31, 1995 to the Closing Date there shall not have
been any material adverse change in the Condition of the
Business. During the period from June 30, 1995 to the Closing
Date there shall not have been any material adverse change in the
financial condition of Transtech.
(d) Seller Required Consents. All material Seller
Required Consents shall have been obtained.
(e) Legal Opinion of Seller's New York Counsel. Buyer
shall have received an opinion, dated the Closing Date, from
Seller's New York counsel to the effect that:
(i) Each of Transtech and Seller is a corporation
validly existing and in good standing under the laws of its
jurisdiction of incorporation, and has all requisite powers,
authorizations, consents and approval required to carry on its
respective businesses.
(ii) Each of Seller and Transtech has full power,
capacity and authority to execute and deliver this Agreement and
each other Transaction Document to which it is a party and to
consummate the Contemplated Transactions or any other Transaction
Document to which Seller or Transtech is a party. The execution
and delivery of this Agreement, and the consummation of the
Contemplated Transactions to which Seller or Transtech is a party
have been duly and validly authorized by Seller and Transtech and
no other proceedings on the part of Seller or Transtech (or any
other person) are necessary to authorize the execution and
delivery by Seller or Transtech of this Agreement or any other
Transaction Document to which Seller or Transtech is a party or
the consummation of the Contemplated Transactions to which Seller
or Transtech is a party.
(iii) This Agreement and the other Transaction
Documents to which Seller or Transtech is a party have been duly
and validly executed and delivered by Seller or Transtech, as the
case may be, and (assuming the valid execution and delivery
thereof by the other parties thereto) constitute the legal, valid
and binding obligations of Seller and Transtech enforceable
against them in accordance with their respective terms except as
such obligations and their enforceability may be limited by
applicable bankruptcy and other similar Laws affecting the
enforcement of creditors' rights generally and except that the
availability of equitable remedies is subject to the discretion
of the court before which any proceeding therefor may be brought
(whether at law or in equity).
(iv) The execution, delivery and performance by
Seller and Transtech of this Agreement and each other Transaction
Document to which either of them is a party, the consummation of
the Contemplated Transactions to which either of them is a party
and the contemplated change of control of the stock ownership of
the Companies, will not (A) violate any provision of the
Certificate of Incorporation or By-laws (or comparable
instruments) of Seller, Transtech or HVHC; (B) to such counsel's
knowledge, require Seller or Transtech to obtain any consent,
approval or action of or waiver from, or make any filing with, or
give any notice to, any Governmental Body or any other person,
except for the Seller Required Consents, all of which have been
obtained and are in full force and effect, other than those
which, if not obtained, would not be reasonably expected to have
a materially adverse effect on the Condition of the Business;
(C) to such counsel's knowledge, violate, conflict with or result
in a breach or default under (after the giving of notice or the
passage of time or both), or permit the termination of, any
Material Contract to which Seller, Transtech or HVHC is a party
or by which any of them or any of their assets may be bound or
subject, or result in the creation of any Lien upon the Purchased
Shares or upon any of the assets of the Company pursuant to the
terms of any such Contract, other than such violations,
conflicts, breaches or defaults that individually or in the
aggregate would not be reasonably expected to have a materially
adverse effect on the Condition of the Business; (D) violate any
Federal or New York Law binding upon HVHC or its assets, other
than such violations that individually or in the aggregate would
not be reasonably expected to have a materially adverse effect on
the Condition of the Business; or (E) to Seller's knowledge,
violate any Order or material Permit of any Governmental Body
against, or binding upon, HVHC or upon its assets other than such
violations that individually or in the aggregate would not be
reasonably expected to have a materially adverse effect on the
Condition of the Business.
(v) The authorized capital stock of HVHC consists
of 100,000 shares of common stock, having a par value of $1 each,
of which, to such counsel's knowledge, after due inquiry, 9,000
shares are issued and outstanding. To such counsel's knowledge,
all such shares are duly authorized, validly issued, fully paid
and nonassessable, and were not issued in violation of any
preemptive or other rights of shareholders. To such counsel's
knowledge, there are no outstanding securities of HVHC
convertible into or exchangeable for or evidencing the right to
purchase or subscribe for any shares of capital stock of HVHC.
To such counsel's knowledge, there are no voting trusts or other
agreements or understandings with respect to the voting of the
HVHC capital stock. To such counsel's knowledge, there are no
outstanding or authorized options, warrants, calls,
subscriptions, rights, commitments or any other agreements of any
character obligating HVHC to issue any shares of its capital
stock or any securities convertible into or evidencing the right
to purchase or subscribe for any shares of such stock.
(vi) The authorized capital stock of the Company
consists of (A) 12,000 shares of common stock, without par value,
of which, to such counsel's knowledge, after due inquiry, 8,000
shares are issued and outstanding and (B) 2,000 shares of Series
A, 7% cumulative Preferred Stock, without par value. To such
counsel's knowledge, there are no outstanding securities of the
Company convertible into or exchangeable for or evidencing the
right to purchase or subscribe for any shares of capital stock of
the Company. To such counsel's knowledge, there are no voting
trusts of other agreements or understandings with respect to the
voting of the Company capital stock. To such counsel's
knowledge, there are no outstanding or authorized options,
warrants, calls, subscriptions, rights, commitments or any other
agreements of any character obligating the Company to issue any
shares of its capital stock or any securities convertible into or
evidencing the right to purchase or subscribe for any shares of
such stock.
(vii) Based solely upon an examination of the stock
books of HVHC, Seller owns and holds record title to the
Purchased Shares.
(viii) Based solely upon an examination of the stock
books of the Company, HVHC owns and holds record title to the
Company Common Shares.
In rendering its opinion, counsel for Seller may rely,
as to factual matters, on the representations of Seller contained
in this Agreement and on certificates of officers and directors
of Seller and its subsidiaries.
(f) Opinion of Seller's Ohio Counsel. Buyer shall
have received an opinion, dated the Closing Date, of Ohio counsel
to Seller to the effect that:
(i) The Company is a corporation validly existing
and in good standing under the laws of its jurisdiction of
incorporation, and has all requisite powers, authorizations,
consents and approval required to carry on its respective
businesses.
(ii) The execution, delivery and performance by
Seller and Transtech of this Agreement and each other Transaction
Document to which either of them is a party, the consummation of
the Contemplated Transactions to which either of them is a party
and the contemplated change of control of the stock ownership of
the Companies, will not (A) violate any provision of the
Certificate of Incorporation or By-laws (or comparable
instruments) of the Company; (B) to such counsel's knowledge,
require the Company to obtain any consent, approval or action of
or waiver from, or make any filing with, or give any notice to,
any Governmental Body or any other person, except for the Seller
Required Consents, all of which have been obtained and are in
full force and effect, other than those which, if not obtained,
would not be reasonably expected to have a materially adverse
effect on the Condition of the Business; (C) to such counsel's
knowledge, violate, conflict with or result in a breach or
default under (after the giving of notice or the passage of time
or both), or permit the termination of, any Material Contract to
which the Company is a party or by which it or its their assets
may be bound or subject, or result in the creation of any Lien
upon any of the assets of the Company pursuant to the terms of
any such Contract, other than such violations, conflicts,
breaches or defaults that individually or in the aggregate would
not be reasonably expected to have a materially adverse effect on
the Condition of the Business; (D) violate any Ohio Law binding
upon the Company or upon its respective businesses or assets,
other than such violations that individually or in the aggregate
would not be reasonably expected to have a materially adverse
effect on the Condition of the Business; or (E) to such counsel's
knowledge, violate any Order or material Permit of any
Governmental Body against, or binding upon, HVHC or the Company
or upon their respective assets or the Business, other than such
violations that individually or in the aggregate would not be
reasonably expected to have a materially adverse effect on the
Condition of the Business.
(iii) The authorized capital stock of the Company
consists of (A) 12,000 shares of common stock, without par value,
of which, to such counsel's knowledge, after due inquiry, 8,000
shares are issued and outstanding (the "Company Common Shares")
and (B) 2,000 shares of Series A, 7% cumulative Preferred Stock,
without par value, of which, to such counsel's knowledge, the 200
previously issued and outstanding shares have been redeemed. To
such counsel's knowledge, all of the Company Common Shares are
duly authorized, validly issued, fully paid and nonassessable and
were not issued in violation of any preemptive or other rights of
shareholders. To such counsel's knowledge, there are no
outstanding securities of the Company convertible into or
exchangeable for or evidencing the right to purchase or subscribe
for any shares of capital stock of the Company. To such
counsel's knowledge, there are no voting trusts of other
agreements or understandings with respect to the voting of the
Company capital stock. To such counsel's knowledge, there are no
outstanding or authorized options, warrants, calls,
subscriptions, rights, commitments or any other agreements of any
character obligating the Company to issue any shares of its
capital stock or any securities convertible into or evidencing
the right to purchase or subscribe for any shares of such stock.
In rendering its opinion, such counsel may rely, as to
factual matters, on the representations of Seller contained in
this Agreement and on certificates of officers and directors of
Seller and its subsidiaries.
(g) Documentation. There shall have been delivered to
Buyer the following:
(i) Stock certificates representing the Purchased
Shares, duly endorsed in blank or accompanied by stock powers
duly executed in blank, in proper form for transfer.
(ii) A certificate, dated the Closing Date, of the
Chairman of the Board, the President or any Vice President of
each of Seller and Transtech confirming the matters set forth in
Sections 5.3(a) and (b).
(iii) A certificate, dated the Closing Date, of the
Secretary or Assistant Secretary of Seller certifying, among
other things, that attached or appended to such certificate (A)
is a true and correct copy of the Certificate of Incorporation of
the Company, and all amendments, if any, thereto as of the date
thereof; (B) is a true and correct copy of its By-laws as of the
date thereof; (C) is a true copy of all corporate actions taken
by it, including resolutions of its Board of Directors,
authorizing the execution, delivery and performance of this
Agreement, and each other document to be delivered by Seller
pursuant hereto; and (D) are the names of the directors and
officers of the Company in office on the day before the Closing
Date; and (E) are the names and signatures of its duly elected or
appointed officers who are authorized to execute and deliver this
Agreement and any certificate, document or other instrument in
connection herewith.
(iv) A certificate, dated the Closing Date, of the
Secretary or Assistant Secretary of Transtech certifying, among
other things, that attached or appended to such certificate (A)
is a true and correct copy of the Certificate of Incorporation of
Transtech, and all amendments, if any, thereto as of the date
thereof; (B) is a true and correct copy of its By-laws as of the
date thereof; (C) is a true copy of all corporate actions taken
by it or its shareholders, including resolutions of its Board of
Directors, authorizing the execution, delivery and performance of
this Agreement, and each other document to be delivered by
Transtech or Seller pursuant hereto; and (D) are the names and
signatures of its duly elected appointed officers who are
authorized to execute and deliver this Agreement and any
certificate, document or other instrument in connection herewith.
(v) A good standing certificate of each of
Transtech, Seller and HVHC.
(vi) The resignations, dated on or before the
Closing Date, of each director and officer of HVHC and the
Company.
(vii) Copies of all Seller Required Consents
obtained by Seller.
(viii) Possession and control of the Assets of HVHC
and the Company (including all corporate books, bank accounts,
records and documents).
ARTICLE VI
INDEMNIFICATION
SECTION 6.1 Survival of Representations, Warranties and
Covenants. (a) The representations, warranties, covenants or
agreements of Transtech and Seller shall survive the Closing
hereunder for a period of six months from the Closing Date
except:
(i) for the representations and warranties
concerning the Company contained in Sections 2.4(ii), (iii) and
(iv) and 2.8(a)(ii)(B) which shall not survive the Closing
hereunder;
(ii) for the representations and warranties
contained in Sections 2.1, 2.2 and 2.3 which shall survive for a
period of six years from the Closing Date; and
(iii) for the covenants and agreements contained in
Sections 4.7, 4.8, 4.9, 4.10, 4.11, 4.12, 4.13 and 4.14 which
covenants and agreements shall survive until such covenants and
agreements have been complied with in accordance with their
respective terms. Notwithstanding the foregoing, the liability
of Transtech and Seller shall not terminate as to any specific
Claim or Claims of the type referred to in Section 6.2 hereof,
whether or not fixed as to liability or liquidated as to amount,
to the extent Seller shall have been given specific notice,
describing any such Claim with particularity, on or prior to the
date on which such liabilities would otherwise terminate pursuant
to the terms of this Section 6.1(a).
(b) All representations, warranties, covenants and
agreements of Buyer shall survive for the greater of 24 months
after the Closing Date or such longer period as may specifically
apply to any such representation, warranty, covenant or
agreement. Notwithstanding the foregoing, the liability of Buyer
shall not terminate as to any specific Claim or Claims of the
type referred to in Section 6.3 hereof, whether or not fixed as
to liability or liquidated as to amount, to the extent that Buyer
has been given specific notice, describing any such Claim with
particularity, on or prior to the date on which such liabilities
would otherwise terminate pursuant to the terms of this Section
6.1(b).
SECTION 6.2 Obligation of Seller to Indemnify. (a) Seller
agrees to indemnify, defend and hold harmless Buyer (and its
directors, officers, employees, Affiliates, successors and
assigns) from and against all Claims, losses, liabilities,
damages, deficiencies, judgments, settlements, costs of
investigation or other expenses (including interest, penalties
and reasonable attorneys' fees and disbursements and expenses
incurred in enforcing this indemnification or in any litigation
between the parties or with third parties) (collectively, the
"Losses") suffered or incurred by Buyer or any of the foregoing
persons arising out of or in connection with:
(i) any breach of the representations,
warranties, covenants or agreements of Seller or Transtech
contained in this Agreement, any Transaction Document or the Tax
Sharing Agreement; and
(ii) any Claim asserted against the Company after
the Closing Date in respect of an obligation or liability of
Transtech other than in respect of Taxes or the Transtech Assumed
Liabilities.
(b) In addition, except as otherwise provided in the
Tax Sharing Agreement, Seller agrees to indemnify HVHC or the
Company with respect to any Taxes that HVHC or the Company, after
the Closing Date, pays resulting from any liability for Taxes of
the Transtech consolidated group (determined as if the Transtech
consolidated Federal income tax return consisted solely of
Transtech and its consolidated subsidiaries other than HVHC and
the Company) under Section 1.1502-6 of the Treasury Regulations.
SECTION 6.3 Obligation of Buyer to Indemnify. Buyer agrees
to indemnify, defend and hold harmless Transtech and Seller (and
their respective directors, officers, employees, Affiliates,
successors and assigns) from and against any Losses suffered or
incurred by Seller or any of the foregoing persons arising out of
or in connection with:
(a) Any breach of the representations, warranties,
covenants or agreements of (i) Buyer contained in this Agreement
or in any Transaction Document and (ii) the Company contained in
the Tax Sharing Agreement.
(b) The conduct of the Business or the operation of
the Company, HVHC or Buyer after the Closing Date.
(c) Any Liability under the Code or ERISA with respect
to any Employee Benefit Plan maintained on or after the Closing
Date by Buyer or an ERISA Affiliate; or any Liabilities resulting
from the termination at any time on or after the Closing Date of
any Employee Benefit Plan or the termination of employment of any
employees which termination occurs at any time on or after the
Closing Date.
SECTION 6.4 Notice and Opportunity to Defend Third Party
Claims. (a) Promptly after receipt by any party hereto (the
"Indemnitee") of notice of any demand, Claim, circumstance or Tax
audit which would or might give rise to a Claim or the
commencement (or threatened commencement) of any action,
proceeding or investigation (an "Asserted Liability") that may
result in a Loss, the Indemnitee shall give prompt notice thereof
(the "Claims Notice") to the party or parties obligated to
provide indemnification pursuant to Section 6.2 or 6.3 (the
"Indemnifying Party"). The Claims Notice shall describe the
Asserted Liability in reasonable detail and shall indicate the
amount (estimated, if necessary, and to the extent feasible) of
the Loss that has been or may be suffered by the Indemnitee.
(b) The Indemnifying Party may elect to defend, at its
own expense and with its own counsel, any Asserted Liability
unless (i) the Asserted Liability seeks an Order, injunction or
other equitable or declaratory relief against the Indemnitee or
(ii) the Indemnitee shall have reasonably concluded that (x)
there is a substantial conflict of interest between the
Indemnitee and the Indemnifying Party in the conduct of such
defense or (y) the Indemnitee shall have one or more significant
defenses not available to the Indemnifying Party. If the
Indemnifying Party elects to defend such Asserted Liability, it
shall within thirty days (or sooner, if the nature of the
Asserted Liability so requires) notify the Indemnitee of its
intent to do so, and the Indemnitee shall cooperate, at the
expense of the Indemnifying Party, in the defense of such
Asserted Liability. If the Indemnifying Party elects not to
defend the Asserted Liability, fails to notify the Indemnitee of
its election as herein provided or contests its obligation to
indemnify under this Agreement with respect to such Asserted
Liability, the Indemnitee may pay, compromise or defend such
Asserted Liability at the sole cost and expense of the
Indemnifying Party. If the Indemnifying Party is not permitted
to defend the Asserted Liability by reason of the first sentence
of this Section 6.4(b), the Indemnitee may pay, compromise or
defend such Asserted Liability at the sole cost and expense of
the Indemnifying Party provided, that, with respect to any
litigated issue the Indemnifying Party shall not be required to
pay the legal fees and costs of more than one law firm.
Notwithstanding the foregoing, neither the Indemnifying Party nor
the Indemnitee may settle or compromise any Claim over the
reasonable written objection of the other, provided that the
Indemnitee may settle or compromise any Claim as to which the
Indemnifying Party has failed to notify the Indemnitee of its
election as herein provided or is contesting its indemnification
obligations hereunder. In any event, the Indemnitee and the
Indemnifying Party may participate, at their own expense, in the
defense of such Asserted Liability. Any expenses of any
Indemnitee for which indemnification is available hereunder shall
be paid upon written demand therefor.
SECTION 6.5 Limits on Indemnification. Notwithstanding
anything contained in this Article VI or elsewhere in this
Agreement to the contrary:
(a) Seller shall not have any obligation to indemnify
Buyer pursuant to Section 6.2 hereof with respect to any Claim
unless and until Buyer shall have incurred Losses in an aggregate
amount in excess of $50,000 (the "Stipulated Amount") in which
event Buyer shall be entitled to be indemnified for all of its
Losses commencing at $1; provided that the foregoing limitation
shall not apply to the obligations of Seller or Transtech under
Section 4.9 and the Tax Sharing Agreement; provided, further,
that the liability of Seller hereunder shall in no event exceed
$4 million.
(b) Buyer shall have no obligation to indemnify Seller
or Transtech pursuant to Section 6.3 hereof with respect to any
Claim unless and until any such person shall have incurred Losses
in an aggregate amount in excess of the Stipulated Amount in
which event they shall be entitled to be indemnified for all of
their Losses commencing at $1; provided that the foregoing
limitation shall not apply to the obligations of: (i) Buyer under
Sections 1.3 and 4.9; and (ii) the Company under the Tax Sharing
Agreement.
(c) Prior to asserting any claim against Transtech or
Seller for any Loss contemplated by the provisions of Section
6.2(b), Buyer agrees first to exhaust all its remedies with
respect to such Loss against the Escrowed Portion in accordance
with the provisions of the Escrow Agreement.
SECTION 6.6 Adjustment. It is the intent of the parties
that any amounts paid under Sections 6.2 or 6.3 shall represent
an adjustment of the Purchase Price and the parties will report
such payments consistent with such intent. Nevertheless, if any
payment pursuant to Section 6.2 or 6.3 hereof would be treated by
any Tax Authority as other than a Purchase Price adjustment and
would, on that basis, be includable in the gross income of the
Indemnitee that is reported to such Tax Authority, then such
payment shall be increased by the amount necessary so that the
Indemnitee is fully and completely indemnified on an after-tax
basis.
ARTICLE VII
TERMINATION
SECTION 7.1 Termination. This Agreement may be terminated
and the Contemplated Transactions may be abandoned at any time
prior to the Closing:
(a) By mutual written consent of Seller and Buyer;
(b) By Seller if (i) there has been a material
misrepresentation or breach of warranty on the part of Buyer in
the representations and warranties contained herein and such
material misrepresentation or breach of warranty, if curable, is
not cured within 30 days after written notice thereof from Seller
(ii) Buyer has committed a material breach of any covenant
imposed upon it hereunder and fails to cure such breach within 30
days after written notice thereof from Seller; or (iii) any
condition to Seller's obligations hereunder becomes incapable of
fulfillment through no fault of Seller and is not waived by
Seller;
(c) By Buyer, if (i) there has been a material
misrepresentation or breach of warranty on the part of Seller in
the representations and warranties contained herein and such
material misrepresentation or breach of warranty, if curable, is
not cured within 30 days after written notice thereof from Buyer;
(ii) Seller has committed a material breach of any covenant
imposed upon it hereunder and fails to cure such breach within 30
days after written notice thereof from Buyer; or (iii) any
condition to Buyer's obligations hereunder becomes incapable of
fulfillment through no fault of Buyer and is not waived by Buyer;
(d) By Seller or by Buyer, if there shall be any Law
that makes consummation of the Contemplated Transactions illegal
or otherwise prohibited, or if any Order enjoining Buyer or
Seller from consummating the Contemplated Transactions is entered
and such Order shall have become final and nonappealable;
(e) By Seller or Buyer, if the Closing shall not have
occurred on or before February 17, 1996 or if an Acquisition
Proposal shall have been accepted with a party other than Buyer
or any of its Affiliates; and
(f) By written notice of Buyer given on or before
November 22, 1995 if the engineering consultants of Buyer issue a
written certificate to Buyer to the effect that the costs of
investigating the environmental condition of the Company's
properties coupled with the costs of any recommended remediation
thereof are reasonably expected to exceed $100,000.
SECTION 7.2 Effect of Termination; Right to Proceed. In
the event that this Agreement shall be terminated pursuant to
Section 7.1, all further obligations of the parties under the
Agreement shall terminate without further liability of any party
hereunder except (i) to the extent that a party has made a
material misrepresentation hereunder or committed a breach of the
material covenants and agreements imposed upon it hereunder; (ii)
to the extent that any condition to a party's obligations
hereunder became incapable of fulfillment because of the breach
by the other party of its obligations hereunder and (iii) that
the covenants and agreements contained in Sections 4.5, 4.7, 4.8
and 4.9 shall survive the termination hereof. In the event that
a condition precedent to its obligation is not met, nothing
contained herein shall be deemed to require any party to
terminate this Agreement, rather than to waive such condition
precedent and proceed with the Contemplated Transactions.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 Notices. (a) Any notice or other
communication required or permitted hereunder shall be in writing
and shall be delivered personally by hand or by recognized
overnight courier, telecopied or mailed (by registered or
certified mail, postage prepaid) as follows:
(i) If to Buyer, one copy to:
ValveCo Inc.
c/o Three Cities Research, Inc.
24th Floor
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier: (000) 000-0000
Attention: H. Xxxxxxx Xxxxxx
with a simultaneous copy to:
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier: 000-000-0000
Attention: Xxxxxx X. Xxxxx, Esq.
(ii) If to Seller or Transtech, one copy to:
THV Acquisition Corp.
000 Xxxxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxxx, Xxx Xxxxxx 00000
Telecopier: 000-000-0000
Attention: Xxxxxx X. Xxxxxxxxxx, III
with a simultaneous copy to:
Xxxx Marks & Xxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier: 000-000-0000
Attention: Xxxx X. Xxxxxx, Esq.
(b) Each such notice or other communication shall be
effective (i) if given by telecopier, when such telecopy is
transmitted to the telecopier number specified in Section 8.1(a)
(with confirmation of transmission) or (ii) if given by any other
means, when delivered at the address specified in Section 8.1(a).
Any party by notice given in accordance with this Section 8.1 to
the other party may designate another address (or telecopier
number) or person for receipt of notices hereunder. Notices by a
party may be given by counsel to such party.
SECTION 8.2 Entire Agreement. This Agreement (including
the Schedules and Exhibits hereto) and any collateral agreements
executed in connection with the consummation of the Contemplated
Transactions contain the entire agreement between the parties
with respect to the subject matter hereof and related
transactions and supersede all prior agreements, written or oral,
with respect thereto.
SECTION 8.3 Waivers and Amendments; Non-Contractual
Remedies; Preservation of Remedies. This Agreement may be
amended, superseded, cancelled, renewed or extended only by a
written instrument signed by Seller and Buyer. The provisions
hereof may be waived in writing by Seller and Buyer. No delay on
the part of any party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any waiver
on the part of any party of any such right, power or privilege,
nor any single or partial exercise of any such right, power or
privilege, preclude any further exercise thereof or the exercise
of any other such right, power or privilege. Except as otherwise
provided herein, the rights and remedies herein provided are
cumulative and are not exclusive of any rights or remedies that
any party may otherwise have at law or in equity.
SECTION 8.4 Governing Law. This Agreement shall be
governed and construed in accordance with the laws of the State
of New York applicable to agreements made and to be performed
entirely within such State, without regard to the conflict of
laws rules thereof.
SECTION 8.5 Consent to Jurisdiction and Service of Process.
The parties hereto irrevocably: (a) agree that any suit, action
or other legal proceeding arising out of this Agreement may be
brought in the courts of the State of New York or the courts of
the United States located in New York County, New York, (b)
consent to the jurisdiction of each court in any such suit,
action or proceeding, (c) waive any objection which they, or any
of them, may have to the laying of venue of any such suit, action
or proceeding in any of such courts, and (d) waive the right to a
trial by jury in any such suit, action or other legal proceeding.
SECTION 8.6 Designated Buyer. It is understood and agreed
between the parties that Buyer may cause one or more Affiliates,
direct or indirect Subsidiaries or other entities designated by
it (the "Designated Buyer") to carry out all or part of the
Contemplated Transactions to be carried out by Buyer; provided,
however, that, in addition to such Designated Buyer, Buyer
nevertheless shall remain liable (as principal and not as
guarantor) for all of its obligations and those of any Designated
Buyer hereunder.
SECTION 8.7 Binding Effect; No Assignment. This Agreement
and all of its provisions, rights and obligations shall be
binding upon and shall inure to the benefit of the parties hereto
and their respective successors, heirs and legal representatives.
This Agreement may not be assigned (including by operation of
Law) by a party without the express written consent of (i) Buyer
(in the case of assignment by Seller) or, except as otherwise
provided in Section 8.6, (ii) Seller (in the case of assignment
by Buyer) and any purported assignment, unless so consented to,
shall be void and without effect. Nothing herein express or
implied is intended or shall be construed to confer upon or to
give anyone other than the parties hereto and their respective
heirs, legal representatives and successors any rights or
benefits under or by reason of this Agreement and no other party
shall have any right to enforce any of the provisions of this
Agreement.
SECTION 8.8 Exhibits. All Exhibits and Schedules attached
hereto are hereby incorporated by reference into, and made a part
of, this Agreement. The disclosure contained in any one Schedule
to this Agreement, if by its description in such Schedule is
clearly applicable to other Sections of this Agreement, will also
be deemed to have been made with respect to such other Sections
even if such disclosure is not repeated in any other Schedules.
SECTION 8.9 Severability. If any provision of this
Agreement for any reason shall be held to be illegal, invalid or
unenforceable, such illegality shall not affect any other
provision of this Agreement, but this Agreement shall be
construed as if such illegal, invalid or unenforceable provision
had never been included herein.
SECTION 8.10 Counterparts. The Agreement may be executed
in any number of counterparts, each of which shall be deemed to
be an original as against any party whose signature appears
thereon, and all of which shall together constitute one and the
same instrument. This Agreement shall become binding when one or
more counterparts hereof, individually or taken together, shall
bear the signatures of all of the parties reflected hereon as the
signatories.
ARTICLE IX
DEFINITIONS
SECTION 9.1 Definitions. (a) The following terms, as used
herein, have the following meanings:
"Acquisition Proposal" shall mean any proposal for the
acquisition of, or merger or other business combination involving
the Company or the sale of the Purchased Shares or the sale of
any controlling equity interest in, or the Business or
substantially all the Assets of, the Company, other than the
transactions contemplated by this Agreement.
"Affiliate" of any person means any other person directly or
indirectly through one or more intermediary persons, controlling,
controlled by or under common control with such person.
"Agreement" or "this Agreement" shall mean, and the words
"herein", "hereof" and "hereunder" and words of similar import
shall refer to, this agreement as it from time to time may be
amended.
"Assets" shall mean properties, rights, interests and assets
of every kind, real, personal or mixed, tangible and intangible,
used or usable in the Business.
The term "audit" or "audited" when used in regard to
financial statements shall mean an examination of the financial
statements by a firm of independent certified public accountants
in accordance with generally accepted auditing standards for the
purpose of expressing an opinion thereon.
"Business" shall mean the ownership and operation of the
Assets comprising the business operations of the Company.
"Business Day" shall mean each Monday, Tuesday, Wednesday,
Thursday and Friday which is not a day on which banking
institutions in the Borough of Manhattan, the City of New York,
are authorized or obligated by law or executive order to close.
"Certificate of Incorporation" shall mean, in the case of
any corporation, the certificate of incorporation, articles of
incorporation or charter of a corporation, howsoever denominated
under the laws of the jurisdiction of its incorporation.
"Claims" shall mean any actions, suits, claims,
counterclaims or legal, administrative or arbitral proceedings or
investigations of any kind.
"Contract" shall mean any contract, agreement, indenture,
note, bond, lease, conditional sale contract, mortgage, license,
franchise, instrument, commitment or other binding arrangement,
whether written or oral.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
The term "control", with respect to any person, shall mean
the power to direct the management and policies of such person,
directly or indirectly, by or through stock ownership, agency or
otherwise, or pursuant to or in connection with an agreement,
arrangement or understanding (written or oral) with one or more
other persons by or through stock ownership, agency or otherwise;
and the terms "controlling" and "controlled" shall have meanings
correlative to the foregoing.
"Employee Benefit Plan" shall mean any qualified or
nonqualified deferred compensation plan or arrangement that the
Company maintains or to which the Company contributes or which
the Company has ever maintained or contributed for the benefit of
any director, officer or employee of the Company, including but
not limited to employee benefit plans (as defined in Section 3(3)
of ERISA).
"ERISA" shall mean the Employee Retirement Income Security
Act of 1976, as amended.
"ERISA Affiliate" shall mean any company or entity which
together with the Buyer constitutes a member of the Buyer's
controlled group within the meaning of Section 414 of the Code or
4001 of ERISA.
"Escrow Agent" shall mean Xxxxx Brothers Xxxxxxxx & Co. or
such other financial institution as may be mutually acceptable to
Seller and Buyer and any successor thereof.
"GAAP" shall mean generally accepted accounting principles
in effect on the date hereof as set forth in the opinions and
pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity as may be approved by
a significant segment of the accounting profession of the United
States.
"Governmental Body" shall mean any government or political
subdivision thereof whether federal, state, local or foreign, or
any agency or instrumentality of any such government or political
subdivision or any court or arbitrator.
"HSR" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvement
Act of 1976, as amended, and all rules and regulations
promulgated thereunder.
"IRS" shall mean the Internal Revenue Service.
The term "knowledge" with respect to (a) any individual
shall mean actual knowledge and (b) any corporation shall mean
the actual knowledge of the directors or the executive officers
of such corporation; and "knows" has a correlative meaning.
"Laws" shall mean any law, statute, code, ordinance, rule,
regulation or other requirement.
"Liability" shall mean any direct or indirect indebtedness,
liability, assessment, claim, loss, damage, deficiency,
obligation or responsibility, fixed or unfixed, xxxxxx or
inchoate, liquidated or unliquidated, secured or unsecured,
accrued, absolute, actual or potential, contingent or otherwise
(including any liability under any guaranties, letters of credit,
performance credits or with respect to insurance loss accruals).
"Lien" shall mean, with respect to any asset, any mortgage,
lien (including mechanics, warehousemen, laborers and landlords
liens), claim, pledge, charge, security interest, preemptive
right, right of first refusal, option, judgment, title defect, or
encumbrance of any kind in respect of or affecting such asset.
"Management Agreement" shall mean the Management Agreement
dated as of September 27, 1991 between Transtech and the Company
as amended.
"Material Contract" shall mean any Contract that: (i) may be
terminated only on more than 30 days notice and which termination
is reasonably likely to expose the Company to a potential
liability in excess of $50,000; and (ii) involves payments in the
aggregate during any one calendar year of more than $50,000.
"Orders" shall mean any order, judgment, injunction, award,
citation, decree, consent or writ.
"1933 Act" shall mean the Securities Act of 1933, as
amended, and all rules and regulations promulgated thereunder.
"1934 Act" shall mean the Securities Exchange Act of 1934,
as amended, and all rules and regulations promulgated thereunder.
"Permits" shall mean any license, permit, certificate,
certificate of occupancy, order, authorization or approval.
The term "person" shall mean an individual, corporation,
partnership, joint venture, association, trust, unincorporated
organization or other entity, including a government or political
subdivision or an agency or instrumentality thereof.
"Subsidiary" of a person shall mean any entity of which
securities or other ownership interests having ordinary voting
power to elect a majority of the board of directors or other
persons performing similar functions are owned directly or
indirectly through one or more intermediaries, or both, by such
person.
"Tax" (including, with correlative meaning, the terms
"Taxes" and "Taxable") shall mean (i) any net income, gross
income, gross receipts, sales, use, ad valorem, transfer,
transfer gains, franchise, profits, license, withholding,
payroll, employment, excise, severance, stamp, rent, recording,
occupation, premium, real or personal property, intangibles,
environmental or windfall profits tax, alternative or add-on
minimum tax, customs duty or other tax, fee, duty, levy, impost,
assessment or charge of any kind whatsoever (including but not
limited to taxes assessed to real property and water and sewer
rents relating thereto), together with any interest and any
penalty, addition to tax or additional amount imposed by any
Governmental Body (domestic or foreign) (a "Tax Authority")
responsible for the imposition of any such tax, with respect to
the Company, the Business or the Assets (or the transfer thereof
or of the Purchased Shares); (ii) any liability for the payment
of any amount of the type described in the immediately preceding
clause (i) as a result of the Company being a member of an
affiliated or combined group with any other corporation at any
time on or prior to the Closing Date and (iii) any liability of
the Company for the payment of any amounts of the type described
in the immediately preceding clause (i) as a result of a
contractual obligation to indemnify any other person.
"Tax Return" shall mean any return or report (including
elections, declarations, disclosures, schedules, estimates and
information returns) required to be supplied to any Tax
Authority.
"Tax Sharing Agreement" shall mean the Income Tax Sharing
Agreement dated as of September 27, 1991 among Transtech, Seller,
HVHC and the Company.
"Transaction Documents" shall mean, collectively, this
Agreement, the Escrow Agreement, the Note and Warrant Purchase
Agreement, the Recapitalization Agreement, the Bring Along
Agreement and each of the other agreements and instruments
executed and delivered by all or some of the parties hereto in
connection with the consummation of the Contemplated
Transactions.
The term "voting power" when used with reference to the
capital stock of, or units of equity interests in, any person
shall mean the power under ordinary circumstances (and not merely
upon the happening of a contingency) to vote in the election of
directors of such person (if such person is a corporation) or to
participate in the management and control of such person (if such
person is not a corporation).
(b) The following terms are defined in the following
sections of this Agreement:
Term Section
Actual Revolver Amount 1.2(b)
Asserted Liability 6.4(a)
Xxxxxxx 2.9
Bring Along Agreement 4.15(c)
Buyer Recital
Buyer Required Consents 3.2
Claims Notice 6.4(a)
Closing 1.4
Closing Date 1.4
Companies Recital
Company Recital
Company Preferred Shares Recital
Company Common Shares Recital
Company Shares Recital
Condition of the Business 5.3(b)
Consolidated Years 4.12(f)(iii)
Contemplated Transactions 2.3
Designated Buyer 8.6
Determination Date 1.2(a)(x)
Escrow Agreement 1.3
Escrowed Portion 1.3
Fairness Opinion 2.10(b)
Final Consolidated Year 4.12(f)(i)
Financial Statements 2.8
Funded Debt 1.2
Huberfield Rights 2.7(b)
HVHC Recital
Indemnifying Party 6.4(a)
Indemnitee 6.4(a)
Independent Transtech Director 2.10(a)
Lender Warrants 2.7(b)
Losses 6.2
Xxxxx Shares 2.10(c)
Note and Warrant Purchase Agreement4.15(a)
Product Category 4.10(b)
Proxy Statement 4.14(b)
Purchase Price 1.2
Purchased Shares Recital
Recapitalization Agreement 4.15(c)
Representatives 4.2
Restricted Period 4.10(a)
Restrictive Covenants 4.10(c)
Revolver 1.2(a)(x)
Revolver Payment Amount 1.2(b)
SEC 3.7
Sales Notice 4.5(b)
Seller Recital
Seller Required Consents 2.4
Seller Senior Subordinated Note 1.2(a)(iv)
Senior Notes 4.15(a)
Xxxxx Warrant 2.7(a)
Stipulated Amount 6.5(a)
Stockholders' Meeting 4.14(c)
Terold 4.15(a)
Transtech Recital
Transtech Assumed Liabilities 2.8(e)
SECTION 9.2 Interpretation. Unless the context otherwise
requires, the terms defined in Section 9.1 shall have the
meanings herein specified for all purposes of this Agreement,
applicable to both the singular and plural forms of any of the
terms defined herein. All accounting terms defined in
Section 9.1, and those accounting terms used in this Agreement
not defined in Section 9.1, except as otherwise expressly
provided herein, shall have the meanings customarily given
thereto in accordance with GAAP. When a reference is made in
this Agreement to Sections, such reference shall be to a Section
of this Agreement unless otherwise indicated. The headings
contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include", "includes" or
"including" are used in this Agreement, they shall be deemed to
be followed by the words "without limitation".
IN WITNESS WHEREOF, the undersigned have executed this Stock
Purchase Agreement as of the date set forth above.
BUYER: VALVECO INC.
By:
Name:
Title:
SELLER: THV ACQUISITION CORP.
By:
Name:
Title:
The undersigned is signing this Agreement solely to agree to the
provisions of Article II and Sections 4.4, 4.5, 4.7, 4.8, 4.9,
4.10, 4.11, 4.12, 4.13 and 4.14 hereof. In addition, by such
signature, the undersigned hereby unconditionally and irrevocably
guarantees to Buyer the full and prompt performance of all the
obligations imposed on Seller under the within Agreement and
under any other Transaction Document.
TRANSTECH INDUSTRIES INC.
By:
Name:
Title:
The undersigned is signing this Agreement solely to agree to the
provisions of Section 4.14.
TEROLD N.V.
By:
Name:
EXHIBIT A
FORM OF
ESCROW AGREEMENT
ESCROW AGREEMENT (this "Agreement"), dated December
__, 1995, by and among THV Acquisition Corp. ("Seller"), a
Delaware corporation and a wholly-owned subsidiary of
Transtech Industries, Inc. ("Transtech"), ValveCo Inc., a
Delaware corporation ("Buyer"), and Xxxxx Brothers Xxxxxxxx
& Co., as Escrow Agent (the "Escrow Agent").
Buyer and Seller have entered into a Stock Purchase
Agreement (the "Purchase Agreement"), dated as of October
__, 1995, pursuant to which Buyer is purchasing from Seller
all of the issued and outstanding shares of capital stock of
HVHC, Inc. ("HVHC"), the parent corporation of Xxxx Valve
Company, Inc., an Ohio corporation (the "Company").
Pursuant to the Purchase Agreement, the Seller has
agreed to indemnify the Buyer with respect to certain claims
and liabilities, including, without limitation, any Taxes
that HVHC or the Company may pay, after the Closing Date,
resulting from any liability for Taxes of the Transtech
Group under Section 1.1502-6 of the Treasury Regulations (as
such terms are defined in the Purchase Agreement).
The Purchase Agreement provides that, at the Closing,
$750,000 representing a portion of the Purchase Price shall
be paid to and held by the Escrow Agent subject to the terms
and conditions of this Agreement.
NOW, THEREFORE, the parties agree as follows:
1. Definitions. Unless otherwise defined herein,
all capitalized terms shall be used with the meaning or
meanings ascribed to them in the Purchase Agreement.
2. Establishment of Escrow Fund. The Buyer hereby
deposits with the Escrow Agent $750,000 (the "Funds"),
representing a portion of the Purchase Price; the Funds,
together with any interest accrued thereon, shall be
hereinafter referred to as the "Escrow Fund." The Escrow
Fund shall be held as security for all of the Seller's
obligations to indemnify the Buyer under Section 6.2 of the
Purchase Agreement, including, without limitation, the
Seller's indemnification obligations under Section 6.2(b) of
the Purchase Agreement with respect to any Taxes that HVHC
or the Company may pay after the Closing Date that result
from any liability for Taxes of the Transtech Group under
Section 1.1502-6 of the Treasury Regulations. The Escrow
Agent will hold, invest and dispose of the Escrow Fund in
accordance with the terms and conditions hereof.
3. Procedure as to Distributions.
(i) The Buyer may notify the Escrow Agent in
writing, with a copy to the Seller, at any time and from
time to time before the termination of this Escrow Agreement
in accordance with Section 4, of any and all claims ("Buyer
Claims") which, in the opinion of the Buyer, entitle the
Buyer under the Purchase Agreement to the payment of any
portion of the Escrow Fund. The Buyer shall notify the
Escrow Agent of a Buyer Claim if the provisions of Section
6.5(c) of the Purchase Agreement apply. When the Escrow
Agent receives notice of a Buyer Claim, it shall promptly
notify the Seller.
(ii) If the Escrow Agent is given any notice
of a Buyer Claim, it shall, to the extent there are
sufficient funds in the Escrow Fund, disburse the amount
requested (not in the aggregate in excess of the Escrow
Fund) to the Buyer on the date which is twenty days after
Seller receives notice of a Buyer Claim from the Escrow
Agent, unless prior to the date for disbursement the Escrow
Agent has received written notice from the Seller, with a
copy to the Buyer, that the Buyer is not entitled to the
disbursement and that the Escrow Agent is not to make the
disbursement, in which event the Escrow Agent shall be
entitled with respect to that portion of the Escrow Fund
represented by the Buyer Claim to take any action authorized
by Sections 6.4 and 6.6.
(iii) The Seller may notify the Escrow Agent in
writing, with a copy to the Buyer, of any offer (a
"Settlement Offer") by the Internal Revenue Service for the
satisfaction, by Transtech or the Seller, for all
Consolidated Years (defined in Section 4) of all outstanding
assessments and other claims for federal income taxes
("Claims") for which the Company would be severally liable.
The Seller shall certify to the Escrow Agent and the Buyer
in such notice the amount being sought by the Internal
Revenue Service for the full satisfaction of all Claims for
all Consolidated Years. When the Escrow Agent receives
notice of a Settlement Offer, it shall promptly notify the
Buyer.
(iv) If the Escrow Agent is given any notice of
a Settlement Offer, it shall, to the extent there are
sufficient funds in the Escrow Fund to satisfy in full all
Claims for all Consolidated Years, disburse the amount
required (not in the aggregate in excess of the amount
remaining in the Escrow Fund) to the Internal Revenue
Service on the date which is twenty days after the Buyer
receives notice of the Settlement Offer from the Escrow
Agent, unless prior to the date for disbursement the Escrow
Agent has received written notice from the Buyer, with a
copy to the Seller, that the Seller is not entitled to have
such funds disbursed and that the Escrow Agent is not to
make the disbursement, in which case the Escrow Agent shall
be entitled with respect to that portion of the Escrow Fund
represented by the Settlement Offer to take any action
authorized by Sections 6.4 and 6.6.
(v) The Escrow Agent shall, to the extent there
are sufficient funds in the Escrow Fund, disburse the amount
in the Escrow Fund (or portions thereof) from time to time
within ten days of receiving a joint written notice from the
Seller and the Buyer requesting such disbursement.
4. Termination of this Escrow Agreement. This
Agreement shall terminate upon the earlier to occur of (i)
the later to occur of (x) the expiration of the statute of
limitations for the assessment of federal income taxes of
the affiliated group of corporations for which Transtech
filed a consolidated federal income tax return (the
"Transtech Group") for all taxable years of the Transtech
Group with respect to which HVHC or the Company or both of
them were members of the Transtech Group (the "Consolidated
Years") and (y) the satisfaction by Transtech or the Seller
of all outstanding assessments or other claims for income
taxes of the Transtech Group by the Internal Revenue Service
for all Consolidated Years and (ii) the distribution and
transfer of the Escrow Fund as provided above, unless sooner
terminated by a written agreement of all the parties;
provided, however, that the events set forth in clauses (i)
and (ii) of this Section 4 shall not result in the
termination of this Agreement with respect to any Buyer
Claims that had previously been asserted by the Buyer with
respect to any provision under the Purchase Agreement other
than Section 6.2(b) thereof.
5. Investment of the Escrow Fund. All cash held in
the Escrow Fund shall be invested by the Escrow Agent in
United States government issued securities and in such other
investments as Seller may instruct the Escrow Agent in
writing.
6. Escrow Agent.
6.1 Duties. The duties and obligations of the
Escrow Agent shall be determined solely by the express
provisions of this Agreement and shall be limited to the
performance of such duties and obligations as are
specifically set forth in this Agreement.
6.2 Reliance. In the performance of its duties
hereunder, the Escrow Agent shall be entitled to rely upon
any document, instrument or signature reasonably believed by
it to be genuine and signed by Buyer or Seller, as the case
may be. The Escrow Agent may assume that any person
purporting to give any notice in accordance with the
provisions hereof has been duly authorized to do so.
6.3 Liability. The Escrow Agent shall not be
liable for any error of judgment, or any action taken or
omitted to be taken hereunder in good faith, except in the
case of its bad faith, gross negligence or willful
misconduct.
6.4 Resignation and Removal. The Escrow Agent
or any successor as escrow agent hereafter appointed may at
any time resign and be discharged of the duties imposed
hereunder by giving notice to Buyer and Seller, such
resignation to take effect upon the earlier of (i) the
appointment of a successor escrow agent by Buyer and Seller
or (ii) 90 days after the giving of such notice (provided
that prior to the expiration of such 90 day period the
Escrow Agent (or any successor) shall have deposited the
Escrow Fund with a court of competent jurisdiction to
determine the relative rights of Buyer and Seller to the
Escrow Fund). Buyer and Seller, acting jointly, may at any
time substitute a new Escrow Agent by giving ten days'
notice thereof to the current Escrow Agent then acting and
paying all fees and expenses of the current Escrow Agent.
6.5 Compensation. The Escrow Agent shall be
entitled to receive reasonable compensation, as agreed upon
between the Escrow Agent, Buyer and Seller, for the Escrow
Agent's services hereunder, and to be reimbursed for its
reasonable out-of-pocket expenses, including reasonable
counsel fees, disbursements and other charges, incurred in
the performance of its duties and the enforcement of its
rights hereunder. Such compensation and expenses shall not
be paid out of the Escrow Fund but shall be borne by the
Buyer and Seller equally and shall be paid by them promptly
following receipt of the Escrow Agent's invoices therefor.
6.6 Limited Actions. The Escrow Agent shall
not take any action by reason of any instructions given by
the Buyer or Seller (together, the "Parties") or by any
other person, firm or corporation, except only (i) such
instructions as are herein specifically provided for, (ii)
such instructions as are signed by both Parties, and (iii)
such instructions as are pursuant to orders or process of
any court entered or issued with competent jurisdiction. In
the event that the Escrow Agent shall be uncertain as to its
duties or rights hereunder, (a) it shall be entitled to
refrain from taking any action until it shall be directed
otherwise in writing by the Parties or by an order of a
court of competent jurisdiction, and (b) it shall have the
right (but not the obligation) to file a suit in
interpleader (with its expenses covered pursuant to Section
6.5) and obtain an order from a court of appropriate
jurisdiction requiring all persons involved to interplead
and litigate in such court their several claims and rights
among themselves and upon the conclusion thereof to instruct
the Escrow Agent as to how to proceed.
6.7 Indemnification. The Parties hereby
jointly and severally agree to hold harmless and indemnify
the Escrow Agent against any loss or claim, including
reasonable counsel fees, disbursements and other charges,
arising out of or in connection with the performance of the
Escrow Agent's obligations hereunder, including the costs
and expenses incurred in connection with the collection of
its fees and expenses and including the costs and expenses
of defending itself against any claim or liability arising
out of or in connection with the performance of its duties
hereunder, except for any loss or claim resulting from its
bad faith, gross negligence or willful misconduct. Any
claim by the Escrow Agent for indemnification or
reimbursement hereunder shall be evidenced by a notice to
the Parties describing the nature of the claim sought. The
foregoing indemnities in this paragraph shall survive the
resignation of the Escrow Agent or the termination of this
Agreement.
7. Miscellaneous.
7.1 Notices. All notices, notifications,
demands or other communications required or permitted by
this Agreement shall be in writing and shall be deemed given
when delivered personally, by facsimile transmission or
overnight express delivery, or three business days after
being sent by registered or certified mail, postage prepaid
(but notice shall be given in the same manner to every party
entitled to such notice hereunder):
(a) If to Buyer, addressed to:
ValveCo Inc.
c/o Three Cities Research, Inc.
24th Floor
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: H. Xxxxxxx Xxxxxx
with a copy to:
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx
1285 Avenue of the Americas
Xxx Xxxx, Xxx Xxxx 00000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxx, Esq.
(b) If to Seller, addressed to:
THV Acquisition Corp.
000 Xxxxxxxxxx Xxxxxx - Xxxxx 000
Xxxxxxxxxx, Xxx Xxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Holdsmith, III
with a copy to:
Xxxx Xxxxx & Xxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxxx, Esq.
(c) If to the Escrow Agent, addressed to:
Xxxxx Brothers Xxxxxxxx & Co.
[Address]
or to any other address or addresses which shall hereafter
have been designated from time to time by the respective
parties by notice to the others for such purpose. A copy of
any notice, notification, demand or other communication
given by any party to any other party hereto, with reference
to this Agreement, shall be given at the same time to the
other parties to this Agreement.
7.2 Successors and Assigns. This Agreement
shall be binding upon and inure to the benefit of the
parties, their legal representatives, successors and
assigns.
7.3 Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the
State of New York applicable to agreements made and to be
performed entirely within such State.
7.4 Counterparts. This Agreement may be
executed in one or more counterparts, each of which shall be
deemed an original but all of which together shall
constitute one and the same agreement.
7.5 Headings. The section headings in this
Agreement are for convenience only and do not constitute
part of this Agreement.
7.6 Amendment. This Agreement can be amended
only by a writing signed by Buyer, Seller, and the Escrow
Agent.
7.7 Assignability. This Agreement is not
assignable except by operation of law, provided, that Seller
may freely assign its rights (but not its obligations)
hereunder.
7.8 Waiver of Compliance; Consents. Except as
otherwise provided in this Agreement, any failure of any of
the parties to comply with any obligation, covenant,
agreement or condition herein may be waived by the party
entitled to the benefits thereof only by a written
instrument signed by (i) the party granting such waiver and
(ii) the Escrow Agent, but such waiver or failure to insist
upon strict compliance with such obligation, covenant,
agreement or condition shall not operate as a waiver of, or
estoppel with respect to, any subsequent or other failure.
7.9 Dispute Resolution. Either Buyer or
Seller may elect to resolve any disputes relating to the
distribution of funds held in the Escrow Fund through the
appointment of KPMG Peat Marwick LLP or another so-called
"Big Six" accounting firm acceptable to both Buyer and
Seller (the "Independent Accountant") for such purpose.
Such election shall be binding on the other parties hereto.
Upon retaining such Independent Accountant, Seller and Buyer
(i) shall each submit to the Independent Accountant in
writing, no later than ten days after the Independent
Accountant is retained, their respective positions with
respect to the disputed matter or matters, together with
such supporting documentation as they deem necessary or as
the Independent Accountant requests, and (ii) shall direct
the Independent Accountant to render its decision as to the
dispute within 30 days after receiving the positions of both
Seller and Buyer and all supplementary supporting
documentation requested by the Independent Accountant. The
decision of the Independent Accountant shall be final and
binding on, and nonappealable by, Seller and Buyer. The
fees of the Independent Accountant shall be borne equally by
Buyer and Seller.
IN WITNESS WHEREOF, the parties have executed this
Agreement on the date first above written.
VALVECO INC.
By___________________________
Name:
Title:
THV ACQUISITION CORP.
By___________________________
Name:
Title:
XXXXX BROTHERS XXXXXXXX & CO.,
As Escrow Agent
By________________________
Name:
Title:
Exhibit B
XXXXXXX SECURITIES
Corporation
Xxx Xxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
(000) 000-0000 Tel
(000) 000-0000 Fax
October 24, 1995
The Independent Member of the Board of Directors
Transtech Industries, Inc.
000 Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Sir:
You have requested our opinion, as investment bankers, as to the
fairness, from a financial point of view, of the Consideration (as
hereafter defined) to be received by Transtech Industries, Inc.,
(the "Company") from the proposed sale of the stock of HVHC, Inc.,
the parent company of Xxxx Valve Company, Inc. ("Xxxx Valve") to a
newly-formed corporation organized by Three Cities Research, Inc.
in conjunction with certain management of the Company and Xxxx
Valve ("Purchaser") (the "Transaction"). Pursuant to the Stock
Purchase Agreement dated October 24, 1995, Purchaser will pay the
Company $18 million in cash for the stock of HVHC, Inc., less the
amount of Xxxx Valve's funded debt at closing (the
"Consideration").
In arriving at our opinion, and as the basis therefor, we (i)
reviewed the Stock Purchase Agreement dated October 24, 1995; (ii)
met with or had telephonic conversations with certain senior
officers, directors and other representatives and advisors of the
Company and Xxxx Valve to discuss the business, operations,
prospects, financial condition, assets and potential contingent tax
and other liabilities of Xxxx Valve; (iii) examined certain
business, historical and forecast financial information and other
data relating to Xxxx Valve reflected in the Carleton, McCreary,
Xxxxxx & Co. "Xxxx Valve Financing Memorandum" dated September,
1995; (iv) reviewed the audited financial statements of Xxxx Valve
for the fiscal years ended December 31, 1993 and 1994; (v) reviewed
unaudited interim financial statements of Xxxx Valve as of, and
for, the 7 months ended, July 31, 1995; (vi) to the extent publicly
available, analyzed valuation multiples derived from certain
acquisition data for private and public companies which we deemed
reasonably similar to Xxxx Valve; (vii) analyzed valuation
multiples derived from historical market prices, trading activity
and results of operations of certain publicly traded companies
which we deemed reasonably similar to Xxxx Valve; (viii) performed
a discounted cash flow analysis; and (ix) conducted such other
analyses and examinations and considered such other financial,
economic and market criteria as we deemed necessary for purposes of
the opinion expressed herein.
In rendering our opinion, we have assumed and relied, without
independent verification, upon the accuracy and completeness of all
financial and other information publicly available or furnished to
or otherwise discussed with us by the Company or Xxxx Valve or
their respective agents. With respect to financial forecasts and
other information provided to or otherwise discussed with us, we
assumed that such forecasts and other information were reasonably
prepared or provided on bases reflecting the best currently
available estimates and judgments of the managements of the Company
and Xxxx Valve as to, among other things, the expected future
financial condition and performance of Xxxx Valve. We have not
independently verified such information or assumptions, including
financial forecasts. We have not made or been provided with an
independent evaluation or appraisal of the assets, liabilities
(contingent or otherwise), or the stock of HVHC, Inc. or Xxxx
Valve.
Our opinion herein is necessarily based upon financial, economic,
stock market and other conditions and circumstances existing and
disclosed to us as of the date hereof. We disclaim any undertaking
or obligation to advise any person of any change in any fact or
matter affecting our opinion which may come or be brought to our
attention after the date of the opinion. We have not been
requested to solicit or entertain any other offers for the purchase
of the stock or assets of Xxxx Valve or any other transaction
involving Xxxx Valve. We have not been asked to consider, and our
opinion does not in any manner address, the relative merits of the
Transaction as compared to any alternative strategic, financial or
business strategies that might exist for the Company or the
decision of the Board of Directors of the Company to proceed with
the Transaction. This opinion does not constitute a recommendation
to any shareholder of the Company as to how such shareholder should
vote on the Transaction.
We have previously performed an analysis of the fair market value
of Xxxx Valve for the Company for which we received customary
compensation. In addition, in the ordinary course of Xxxxxxx'x
business, we may actively trade the equity securities of the
Company for our own account or for the account of our customers
and, accordingly, may at any time hold a long or short position in
such securities.
The opinion expressed herein is provided solely for the use of the
Company's Board of Directors in evaluating the Transaction and is
not on behalf of, and is not intended to confer rights or remedies
upon the Purchaser, any holder of securities or creditors of the
Company, HVHC, Inc. or Xxxx Valve or any other person other than
the Company's Board of Directors. Our opinion may not be
reproduced, summarized, described, referred to or given to any
other person, nor shall any public reference to our firm or any of
its affiliated entities or persons be made, without our prior
written consent, except for: (i) inclusion of our opinion in full
in the proxy statement to be sent to the Company's shareholders in
connection with obtaining shareholder approval of the Transaction,
or (ii) any references to our firm or any of its affiliated
entities or persons may be made only subsequent to our review and
with our prior written approval.
Based upon and subject to the foregoing, we are the opinion, as
investment bankers, that, as of the date hereof, the Consideration
to be paid to the Company by Purchaser in the Transaction is fair,
from a financial point of view, to the Company.
Very truly yours,
XXXXXXX SECURITIES CORPORATION
EXHIBIT C
Form of
IRREVOCABLE PROXY
The undersigned shareholder of Transtech Industries, Inc., a
Delaware corporation ("Transtech"), hereby grants to ValveCo Inc.,
a Delaware corporation ("ValveCo"), an irrevocable proxy to vote
shares of common stock, par value $.50 per share, of
Transtech held by the undersigned at a Special Meeting of
Stockholders of Transtech in favor of the transaction involving the
sale by THV Acquisition Corp., a wholly owned subsidiary of
Transtech, of all of the issued and outstanding shares of common
stock of HVHC, Inc. and Xxxx Valve Company, Inc. to ValveCo,
substantially as such transaction is described in the October ,
1995 draft of the Proxy Statement (the "Proxy Statement") relating
to such transaction. This proxy is irrevocable but shall expire on
March 31, 1996. The undersigned acknowledges that he has been
provided with and has reviewed a copy of the Proxy Statement.
_______________________________
(shareholder)
Dated: , 1995
EXHIBIT D
PURCHASE AGREEMENT
PURCHASE AGREEMENT (this "Agreement"), dated as of
October 24, 1995, among Rhode Island Trust National Bank as
Trustee for the Textron Collective Investment Trust Fund B
("Textron"), Balboa Life Insurance Company ("BLIC") and
Balboa Insurance Company ("BIC") (each a "Holder" and
collectively, the "Holders"), and Terold N.V. ("Terold").
Textron is the holder of 13.00% Senior Secured Note
(a "Note") No. R-1 of Xxxx Valve Company, Inc. ("Xxxx" or
the "Company") in the original principal amount of
$11,000,000, BLIC is the holder of Note. No. R-2 in the
original principal amount of $250,000 and BIC is the holder
of Note No. R-3 in the original principal amount of $250,000
(collectively, the "Notes"), and Textron, BLIC and BIC are
holders of Warrant Nos. W-1, W-2 and W-3, respectively, to
purchase common stock of the Company (collectively, the
"Warrants"), all of which Notes and Warrants were issued by
Xxxx pursuant to the Note Agreement (the "Note Agreement")
dated as of August 15, 1991 among Xxxx and the Purchasers
named in Schedule I thereto.
Terold desires to purchase from the Holders, and the
Holders desire to sell to Terold, all of the Holders' right
and interest in the Notes and the Warrants upon the terms
and subject to the conditions set forth in this Agreement.
In consideration of the mutual covenants and
agreements set forth herein, and for other good and valuable
consideration, the receipt of which is hereby acknowledged,
the parties hereto agree as follows:
1. Purchase and Sale of Notes and Warrants.
Terold hereby agrees to purchase from the
Holders, and each Holder hereby agrees to sell to Terold,
all of such Holders' interests in the Notes and the
Warrants, together with all of such Holders' other rights
and interests arising under or in connection with the Note
Agreement and all other documents related thereto including,
without limitation, the rights of the Holders under the
security documents (including all Uniform Commercial Code
filings) entered into in connection with the Note Agreement
(all such rights and interests, the "Textron Interests").
2. Payment of Purchase Price.
The aggregate purchase price (the "Purchase
Price") for the Textron Interests shall be $11,822,480.28 in
cash, consisting of (i) $10,822,480.28 representing the
outstanding principal balance of the Notes on the date
hereof plus accrued and unpaid interest on the Notes through
such date, (ii) $500,000 in payment for the Warrants, and
(iii) a $500,000 transaction fee payable to the Holders, all
of which will be paid by Terold. Schedule A sets forth the
portion of the Purchase Price payable to each Holder.
3. Closing.
The closing of the sale and purchase of the
Notes and the Warrants hereunder (the "Closing") shall occur
on October 27, 1995 at such place and time in New York City
as shall be selected by the Holders upon two days' prior
written notice to Terold of the place and time of the
Closing. Delivery of the Notes and the Warrants shall be
against payment of the Purchase Price in Federal Funds or
other immediately available funds transmitted as follows or
to such other account(s) as the Holders may direct: (1) for
Textron, $11,307,437.83 to Bank of Boston, ABA #000-000-000,
Institutional Trust Services, Canton Office, Mail Stop
45-01-11, for credit to the account of Textron Collective
Investment Trust Fund B, Account No. 4-0000000; (2) for
BIC, $257,521.20 to Bank of America, Los Angeles, CA, ABA
#000-000-000, Advantage/South Coast, Account # 12574-03335,
Attn: Xxxxx Xxxxxxxxx, for credit to the account of Balboa
Insurance Co. - Casualty, Account No. QA-7-20045-0; and (3)
for BLIC, $257,521.25 to Bank of America, Los Angeles, CA,
ABA #000-000-000, Advantage/South Coast, Account
#12574-03335, Attn: Xxxxx Xxxxxxxxx, for credit to the
account of Balboa Life Insurance Co., Account No.
QA-7-20044-0.
4. Representations and Warranties of the Holders.
Each Holder hereby represents and warrants to
Terold as follows: (i) such Holder is the lawful owner of
the Note and the Warrant to be sold by such Holder pursuant
to this Agreement and has good and valid title to such Note
and Warrant, free and clear of any claim, lien, encumbrance,
security interest, restriction on transfer or other defect
in title; (ii) except for its interest in the Note and the
Warrant to be sold by such Holder, such Holder has no other
claim, interest or right in, against, or with respect to,
the Company; (iii) the Holders have delivered to Terold
copies of the Note Agreement, the Notes, the Warrants and
the security agreements relating to the Textron Interests
(including all amendments to any of such documents)
(collectively, the "Documents"); and (iv) all of the
Documents are listed on Schedule B hereto.
5. Further Assurances.
Each of the parties shall execute such documents
and other papers and take such further action as may be
reasonably required or desirable to carry out the provisions
hereof and the transactions contemplated hereby.
6. Governing Law.
THIS AGREEMENT SHALL BE GOVERNED BY AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK APPLICABLE TO AGREEMENTS TO BE MADE AND PERFORMED
ENTIRELY WITHIN SUCH STATE.
7. Counterparts.
This Agreement may be executed by the parties
hereto in separate counterparts, each of which when executed
and delivered shall be an original, but all of such
counterparts shall together constitute one and the same
instrument.
8. Headings.
The headings in this Agreement are for reference
only, and shall not affect the interpretation of this
Agreement.
IN WITNESS WHEREOF, the parties have caused this
Agreement to be duly executed and delivered by their
respective officers thereunto duly authorized as of the date
first above written.
RHODE ISLAND TRUST NATIONAL BANK AS
TRUSTEE FOR THE TEXTRON COLLECTIVE
INVESTMENT TRUST FUND B
By:
Name:
Title:
BALBOA LIFE INSURANCE COMPANY
By:_____________________________
Name:
Title:
BALBOA INSURANCE COMPANY
By:_____________________
Name:
Title:
TEROLD N.V.
By:
Name:
Title:
Schedule A to
Purchase Agreement
Accrued Interest
Interest 10/20 Warrants
through through and
Holder Principal 10/19/95 10/23/95 Fee Total
Textron $10,265,739.84 $70,434.38 $14,828.28 $ 956,435.33 $11,307,437.83
BLIC 233,797.84 1,604.11 337.68 21,782.33 257,521.20
BIC 233,797.08 1,604.11 337.72 21,782.34 257,521.25
Total $10,733,334.00 $73,642.60 $15,503.68 $1,000,000.00 $11,822,480.28
Schedule B to
Purchase Agreement
1. Note Agreement dated as of August 15, 1991
among Xxxx Valve Company, Inc. (the
"Company"), Rhode Island Hospital Trust
National Bank, as Trustee for the
Textron Collective Investment Trust Fund
B ("Textron"), Balboa Life Insurance
Company ("BLIC") and Balboa Insurance
Company ("BIC") (the "Note Agreement").
2. Open-End Mortgage and Security Agreement
dated as of August 15, 1991 from the
Company to Textron, BLIC and BIC.
3. Pledge and Security Agreement dated as of
August 15, 1991 between HVHC, Inc.
("HVHC") and Textron, BLIC and BIC.
4. Intercreditor Agreement dated as of
September 27, 1991 between StanChart
Business Credit, Inc. and Textron, BLIC
and BIC.
5. Management Subordination Agreement dated as
of August 15, 1991 among Textron, BLIC,
BIC, Transtech Industries, Inc. and the
Company.
6. Guaranty Agreements, each dated as of
August 15, 1991, by HVHC in favor of
each of (i) Textron; (ii) BIC; and (iii)
BLIC.
7. Rights Agreement dated as of September 27,
1991 among HVHC, the Company, Textron,
BLIC and BIC (the "Rights Agreement").
8. First Amendment - Note Agreement dated
March 31, 1993 among the parties to the
Note Agreement.
9. Amendment to Rights Agreement dated March
31, 1993 among the parties to the Rights
Agreement.
10. Amendment, dated March __, 1993, to Warrant
to Purchase Common Shares of the Company.
11. Warrant No. W-1 to purchase 1,834.894
Common Shares of Xxxx Valve Company,
Inc., dated September 27, 1995, issued
by the Company to Textron.
12. Warrant No. W-2 to purchase 41.702 Common
Shares of Xxxx Valve Company, Inc.,
dated September 27, 1991, issued by the
Company to BLIC.
13. Warrant No. W-3 to purchase 41.702 Common
Shares of Xxxx Valve Company, Inc.,
dated September 27, 1991, issued by the
Company to BIC.
14. 13.00% Senior Secured Note No. R-1 of the
Company dated September 27, 1991 in
favor of Textron in the principal amount
of $11,000,000.
15. 13.00% Senior Secured Note No. R-2 of the
Company dated September 27, 1991 in
favor of BLIC in the principal amount of
$250,000.
16. 13.00% Senior Secured Note No. R-3 of the
Company dated September 27, 1991 in
favor of BIC in the principal amount of
$250,000.
17. Second Amendment - Note Agreement, dated as
of July 30, 1993 (effective September
30, 1992), among the Company, Textron,
BLIC and BIC.
18. Third Amendment Agreement, dated as of
August 15, 1991, among the Company,
Textron, BLIC and BIC amending the Note
Agreements.
19. Stock Certificate representing 8,000 shares
of common stock of the Company.
EXHIBIT E
RECAPITALIZATION AGREEMENT
RECAPITALIZATION AGREEMENT (this "Agreement"), dated
as of October 24, 1995, among Terold N.V. ("Terold"), Xxxx
Valve Company, Inc. ("Xxxx" or the "Company), HVHC, Inc.
("HVHC"), Transtech Industries, Inc. ("Transtech"), THV
Acquisition Corp. ("THV") and ValveCo Inc. ("ValveCo").
ValveCo and THV have entered into a Stock Purchase
Agreement (the "Stock Purchase Agreement"), dated as of the
date hereof, pursuant to which ValveCo has agreed to
purchase from THV, and THV has agreed to sell to ValveCo,
all of the issued and outstanding shares (the "Shares") of
common stock of HVHC, the direct parent corporation of Xxxx.
Rhode Island Hospital Trust National Bank, as Trustee
for the Textron Collective Investment Trust Fund B
("Textron"), is the holder of 13.00% Senior Secured Note (a
"Note") No. R-1 of Xxxx in the original principal amount of
$11,000,000, Balboa Life Insurance Company ("BLIC") is the
holder of Note No. R-2 in the original principal amount of
$250,000 and Balboa Insurance Company ("BIC") is the holder
of Note No. R-3 in the original principal amount of $250,000
(collectively, the "Notes"), and Textron, BLIC and BIC are
holders of Warrant Nos. W-1, W-2 and W-3, respectively, to
purchase common stock of Xxxx (collectively, the
"Warrants"), all of which Notes and Warrants were issued by
Xxxx pursuant to the Note Agreement (the "Note Agreement")
dated as of August 15, 1991 among Xxxx and the Purchasers
named in Schedule I thereto.
In furtherance of the transactions contemplated by
the Stock Purchase Agreement, Textron, BLIC, BIC (together,
the "Holders") and Terold have entered into a Purchase
Agreement (the "Textron Agreement") on the date hereof,
whereby Terold will purchase from the Holders all of the
Holders' interests in the Notes and the Warrants.
The parties wish to enter into certain agreements
with respect to, among other things, the exercise of the
Warrants and future amendments to the Stock Purchase
Agreement.
In consideration of the mutual covenants and
agreements set forth herein, and for other good and valuable
consideration, the receipt of which is hereby acknowledged,
the parties hereto agree as follows:
1. Payment to Terold.
In order to induce Terold to purchase the Notes
and the Warrants and to enter into the Textron Agreement and
this Agreement, THV hereby agrees to pay to Terold on the
date of the Closing (as defined in the Textron Agreement)
the sum of $250,000. In consideration of such payment,
Terold hereby agrees with THV that in the event a premium is
received in the future in connection with the prepayment at
par of the Notes plus the payment of $500,000 for the
Warrants, then THV shall be entitled to receive from Terold
concurrently with Terold's receipt of such payments the
portion of such premium that exceeds $250,000, but excluding
amounts in excess of $500,000, for a payment to THV of a
maximum amount of $250,000.
2. Representations and Warranties of Transtech,
THV, HVHC and the Company.
As a further inducement to Terold to purchase
the Notes and the Warrants and to enter into the Textron
Agreement and this Agreement, each of Transtech, THV, HVHC
and the Company hereby makes the following representations
and warranties to Terold:
(i) Except as set forth on
Schedule A hereto, the Company has not obtained
any waivers relating to any period following the
date of the Closing (as defined in the Textron
Agreement) with respect to any defaults under or
provisions of the Note Agreement; and
(ii) There are no agreements or
other documents that affect or relate to the
rights or obligations of the Holders or any other
person with respect to the Notes or the Warrants
(and the agreements relating thereto) that are not
listed on Schedule A to the Textron Agreement.
3. Merger; Exercise of Warrants.
The parties agree to cause the merger (the "Merger")
described below to occur and to take the following other
actions (the "Warrant Exercise Transactions"):
(i) Each of Transtech, THV and
HVHC hereby agrees to cause the Company to merge
with and into HVHC on or before the earlier of
December 26, 1995 and the closing under the Stock
Purchase Agreement, with HVHC being the surviving
corporation upon the consummation of the Merger.
Each of the parties agrees that the Merger is a
condition precedent to the Buyer's obligations
with respect to the closing of the transactions
under the Stock Purchase Agreement.
(ii) On December 27, 1995, following the
Merger, if a closing under the Stock Purchase
Agreement has not occurred by such date, Terold
will exercise the Warrants to purchase such number
of shares of HVHC's common stock as represents an
equivalent percentage of HVHC's outstanding common
stock as Terold would have acquired upon exercise
of the Warrants to purchase shares of common stock
of Xxxx. In addition, concurrently with its
exercise of the Warrants, Terold hereby agrees to
purchase from THV on such date 2% of the common
stock of HVHC at a price of $50,000. Terold and
the other parties hereby agree that the exercise
of the Warrants on such date will not trigger any
of the anti-dilution provisions under the Note
Agreement or the Warrants. Transtech, THV, HVHC
and Xxxx hereby represent to Terold and ValveCo
that immediately following Terold's purchase of
common stock of HVHC and Terold's exercise of the
Warrants as contemplated in this paragraph,
Transtech and THV will own, directly or
indirectly, less than 80% of the common stock of
HVHC.
(iii) The parties agree to amend
the Stock Purchase Agreement to take into account
the Merger and, if applicable, the Warrant
Exercise Transactions, including the making of
appropriate changes to the representations,
warranties, covenants and indemnities to reflect
such transactions.
4. Redemption of Notes and Warrants.
Transtech, THV, HVHC and Xxxx hereby agree that
if ValveCo's purchase of the Shares pursuant to the Stock
Purchase Agreement is consummated, then HVHC will (1)
promptly redeem the Notes with no prepayment penalty and (2)
promptly pay to Terold the amount of $500,000 to redeem the
shares of HVHC's common stock issued upon Terold's exercise
of the Warrants or to redeem the Warrants, as the case may
be.
5. Further Assurances.
Each of the parties shall execute such documents
and other papers and take such further action as may be
reasonably required or desirable to carry out the provisions
hereof and the transactions contemplated hereby.
6. Governing Law.
THIS AGREEMENT SHALL BE GOVERNED BY AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK APPLICABLE TO AGREEMENTS TO BE MADE AND PERFORMED
ENTIRELY WITHIN SUCH STATE.
7. Consent to Jurisdiction and Service of Process.
The parties hereto irrevocably: (a) agree that
any suit, action or other legal proceeding arising out of
this Agreement may be brought in the courts of the State of
New York or the courts of the United States located in New
York County, New York, (b) consent to the jurisdiction of
each court in any such suit, action or proceeding, (c) waive
any objection which they, or any of them, may have to the
laying of venue of any such suit, action or proceeding in
any of such courts, and (d) waive the right to a trial by
jury in any such suit, action or other legal proceeding.
Terold hereby irrevocably appoints Xxxx, Weiss, Rifkind,
Xxxxxxx & Xxxxxxxx, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx,
XX 00000, as its agent for the purpose of accepting the
service of any process within the State of New York.
8. Counterparts.
This Agreement may be executed by the parties
hereto in separate counterparts, each of which when executed
and delivered shall be an original, but all of such
counterparts shall together constitute one and the same
instrument.
9. Headings.
The headings in this Agreement are for reference
only, and shall not affect the interpretation of this
Agreement.
IN WITNESS WHEREOF, the parties have caused this
Agreement to be duly executed and delivered by their
respective officers thereunto duly authorized as of the date
first above written.
TEROLD N.V.
By:
Name:
Title:
VALVECO INC.
By:
Name:
Title:
TRANSTECH INDUSTRIES, INC.
By:
Name:
Title:
THV ACQUISITION CORP.
By:
Name:
Title:
HVHC, INC.
By:
Name:
Title:
XXXX VALVE COMPANY, INC.
By:
Name:
Title:
EXHIBIT F
BRING ALONG AGREEMENT
among
TRANSTECH INDUSTRIES, INC.,
TEROLD N.V.
and
THV ACQUISITION CORP.
October 24, 1995
TABLE OF CONTENTS
Page
1. Third Party Offer for All Outstanding Shares 2
1.1 Sale of the Company 2
1.2 Conditions 2
1.3 Obligation to Sell 3
1.4 Prepayment of Notes 4
2. Specific Performance 4
3. Definitions 4
4. Miscellaneous 5
4.1 Notices 5
4.2 Severability 6
4.3 Entire Agreement; Amendment 6
4.4 Waiver 6
4.5 Term of Agreement 7
4.6 Variations in Pronouns 7
4.7 Consent to Jurisdiction and Service of Process 7
4.8 Governing Law 8
4.9 Further Assurances 8
4.10 Successors and Assigns 8
4.11 Counterparts 8
BRING ALONG AGREEMENT
BRING ALONG AGREEMENT, dated as of October 24, 1995,
among Transtech, Inc., a Delaware corporation ("Transtech"),
THV Acquisition Corp, a Delaware corporation (the "Seller"),
and Terold N.V. ("Terold").
WHEREAS, pursuant to a Stock Purchase Agreement dated
as of the date hereof between ValveCo Inc. ("ValveCo") and
THV Acquisition Corp. (the "Seller"), ValveCo has agreed to
purchase from the Seller, and the Seller has agreed to sell
to ValveCo, all of the issued and outstanding shares (the
"Shares") of common stock of HVHC, Inc. ("HVHC"), the parent
corporation of Xxxx Valve Company, Inc. ("Xxxx" or the
"Company").
WHEREAS, pursuant to an agreement dated the date
hereof, Terold has agreed to purchase from certain persons
the outstanding 13.00% Senior Secured Notes of the Company
(the "Notes") in an aggregate original principal amount of
$11,500,000 and warrants (the "Warrants") to purchase common
stock of the Company, which Notes and Warrants were issued
by the Company pursuant to the terms of a certain Note
Agreement, dated as of August 15, 1991, among Xxxx and the
purchasers named therein (the "Note Agreement").
WHEREAS, the parties hereto wish to provide for take
along rights under certain circumstances.
Certain capitalized terms used herein are defined in
Section 3 hereof.
NOW, THEREFORE, in consideration of the mutual
promises and agreements set forth herein, the adequacy of
which is hereby acknowledged, the parties hereto agree as
follows:
1. Third Party Offer for All Outstanding Shares.
1.1 Sale of the Company. Subject to Section
1.2, during the Effective Period, whenever the Seller has
received a bona fide third party offer to buy all the
outstanding Shares and the Warrants, if then outstanding
(including, without limitation, pursuant to a merger)(the
"Offer"), the Seller shall have the right (the "Take Along
Right") to cause Terold to accept the Offer and shall give
notice (the "Take Along Notice") to Terold stating that it
proposes to effect such transaction and containing the name
and address of the offeror and the purchase price under the
Offer (the "Third Party Price"), and attaching a copy of all
writings between the Seller and the other parties to such
transaction necessary to establish the terms of such
transaction.
1.2 Conditions. Subject to Section 1.4, the
Seller shall have the right to exercise the Take Along Right
pursuant to this Section 1 (i) if the Offer shall propose a
Third Party Price in which the consideration to be received
by Terold would be paid wholly in cash and (ii) provided
that all payments, whether designated for stock, covenants
not to compete or otherwise, shall be made on a pro rata
basis according to the number of Shares owned by each
stockholder of HVHC, and provided further that if any of the
Warrants are outstanding at such time, then for this purpose
Terold shall be deemed to own the number of Shares (in
addition to all outstanding Shares it owns) issuable upon
exercise of the Warrants pursuant to Section 3 of the
Recapitalization Agreement, dated as of the date hereof,
among Terold, Xxxx, HVHC, the Seller, Transtech and ValveCo.
1.3 Obligation to Sell. Upon receipt of the
Take Along Notice, Terold agrees that it shall be obligated
to sell all Shares held by it (including the Warrants, if
applicable) upon the terms and conditions of such
transaction and in accordance with Section 1.3.1 (and
otherwise take all necessary action to cause the Seller or
Transtech to consummate the proposed transaction, including
voting such Shares in favor of such transaction), provided
that Terold shall only be obligated as provided above in
this Section 1.3 if (a) it receives per share consideration
of equivalent value as the per share consideration received
by the Seller or Transtech, as the case may be, and (b) all
of the consideration to be received by Terold is in the form
of cash.
1.3.1 Sale to Offeror. Terold shall sell
all of its Shares (including the Warrants) to the Offeror
upon the terms and conditions of the Offer (or otherwise
take all necessary action to cause the Seller or Transtech
to consummate the proposed transaction) at a closing to be
held at the principal office of the Seller on such date and
at such time and place as the parties to the transaction
shall agree.
1.4 Prepayment of Notes. Notwithstanding
anything to the contrary in this Section 1, the Seller shall
not have the right to exercise its Take Along Right unless
any principal of, accrued interest on and any fees payable
under or in connection with the Notes are paid no later than
concurrently with the closing of any sale pursuant to the
exercise of such right by the Seller.
2. Specific Performance. The parties hereto intend
that each of the parties have the right to seek damages
and/or specific performance in the event that any other
party hereto fails to perform such party's obligations
hereunder. Therefore, if any party shall institute any
action or proceeding to enforce the provisions hereof, any
party against whom such action or proceeding is brought
hereby waives any claim or defense therein that the
plaintiff party has an adequate remedy at law.
3. Definitions. The following terms shall have the
meanings set forth below:
"Effective Period" means the period beginning on
the date hereof and ending on the earlier of (i) the
termination of the Purchase Agreement and (ii) February 17,
1996.
"Person" means any individual, corporation,
partnership, firm, joint venture, association, joint stock
company, trust, unincorporated organization, governmental
body or other entity.
4. Miscellaneous.
4.1 Notices. All notices or other communi
cation required or permitted hereunder shall be in writing
and shall be delivered personally, telegraphed, telecopied
or sent by certified, registered or express mail, postage
prepaid. Any such notice shall be deemed given when so
delivered personally, telegraphed, telecopied or sent by
certified, registered or express mail or, if mailed, five
days after the date of deposit in the United States mail, as
follows:
(i) If to the Seller or Transtech, to it at:
THV Acquisition Corp. or Transtech Industries, Inc.
000 Xxxxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxxx, Xxx Xxxxxx 00000
Facsimile: 000-000-0000
Attention: Xxxxxx X. Xxxxxxxxxx, III
with a copy to:
Xxxx Marks & Xxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: 000-000-0000
Attention: Xxxx X. Xxxxxx, Esq.
(ii) If to Terold, in care of:
Three Cities Research, Inc.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: H. Xxxxxxx Xxxxxx
with a copy to:
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx
1285 Avenue of the Americas
Xxx Xxxx, Xxx Xxxx 00000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxx, Esq.
Any party may by notice given in accordance with this
Section 4.1 designate another address or person for receipt
of notices hereunder.
4.2 Severability. In the event any provision
hereof is held void or unenforceable by any court, then such
provisions shall be severable and shall not effect the
remaining provisions hereof.
4.3 Entire Agreement; Amendment. This
Agreement is the entire agreement among the parties with
respect to the subject matter hereof, and supersedes all
prior agreements and communications, whether oral or
written, among the parties hereto with respect to such
subject matter. Any amendment or modification of this
Agreement must be in writing and duly signed by Transtech,
the Seller and Terold.
4.4 Waiver. Any failure by a party hereto to
comply with any obligation, agreement or condition herein
may be expressly waived in writing by each of the other
parties hereto, but such waiver or failure to insist upon
strict compliance with such obligation, agreement or
condition shall not operate as a waiver of, or estoppel with
respect to, any such subsequent or other failure.
4.5 Term of Agreement. This Agreement shall
become effective upon the execution hereof and shall
continue in effect until the earlier to occur of (i)
February 17, 1996, unless prior to such date the Seller has
given to the Buyer a Take Along Notice in connection with an
Offer received before such date, in which case this date
shall be extended through the earlier of the termination or
the closing of such transaction, but in no event later than
June 30, 1996, and (ii) the execution of a written agreement
by the parties hereto to terminate this Agreement.
4.6 Variations in Pronouns. All pronouns and
any variations thereof refer to the masculine, feminine or
neuter, singular or plural, as the context may require.
4.7 Consent to Jurisdiction and Service of
Process. The parties hereto irrevocably: (a) agree that
any suit, action or other legal proceeding arising out of
this Agreement may be brought in the courts of the State of
New York or the courts of the United States located in New
York County, New York, (b) consent to the jurisdiction of
each court in any such suit, action or proceeding, (c) waive
any objection which they, or any of them, may have to the
laying of venue of any such suit, action or proceeding in
any of such courts, and (d) waive the right to a trial by
jury in any such suit, action or other legal proceeding.
Terold hereby irrevocably appoints Xxxx, Weiss, Rifkind,
Xxxxxxx & Xxxxxxxx, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx,
XX 00000, as its agent for the purpose of accepting the
service of any process within the State of New York.
4.8 Governing Law. This Agreement shall be
governed and construed in accordance with the laws of the
State of Delaware applicable to agreements made and to be
performed entirely within such State.
4.9 Further Assurances. Each of the parties
shall, and shall cause their respective Affiliates to,
execute such instruments and take such action as may be
reasonably required or desirable to carry out the provisions
hereof and the transactions contemplated hereby.
4.10 Successors and Assigns. This Agreement
shall be binding upon and inure to the benefit of the
parties and their respective successors and legal
representatives.
4.11 Counterparts. This Agreement may be
executed in one or more counterparts, each of which shall be
deemed an original, but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have executed, or
have cause to be executed, this Agreement as of the date
first written above.
TRANSTECH INDUSTRIES, INC.
By:________________________________
Name:
Title:
THV ACQUISITION CORP.
By:______________________________
Name:
Title:
TEROLD N.V.
By:______________________________
Name:
Title:
