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EXHIBIT 99.1
TRANSCISCO INDUSTRIES, INC.
000 XXXXXXXXXX XXXXXX, XXXXX 0000
XXX XXXXXXXXX, XX 00000
July 1, 1995
Xx. Xxxx X. Xxxxxxxxxx
00 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Dear Xxxx:
Pursuant to our meeting on June 27, 1995, and our conversation
on June 28, 1995, this letter agreement sets forth our understanding of the
manner in which we will resolve the following matters:
(1) your status as a Class F creditor under the provisions of
the Joint Plan of Reorganization approved by the United States Bankruptcy Court
for the Northern District of California, which involves two claims, the first of
which relates to deferred compensation (the "Deferred Compensation Claim"); and
the second claim relates to the unliquidated amount (the "Unliquidated Claim")
relating to the controversy with the Great American Insurance Company ("Great
American");
(2) the number of shares of the outstanding stock of
Transcisco Industries, Inc. (the "Company") owned by you and certain other
persons;
(3) the status of the Form S-3 Registration Statement
presently on file with the Securities and Exchange Commission relating to the
shares owned by, among others, you and Ozora Corporation;
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July 1, 1995
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(4) the sale of a portion of your shares of stock in the
Company to the Company or an assignee; and
(5) the loss of principal that you and Xxxx Xxxxx suffered in
connection with an investment in GIC II by each of your accounts in the
Company's Section 401(k) plan.
Our agreement with respect to each of these matters follows:
1. Deferred Compensation Claim. On July 5, 1995, or, if you so
request, July 3, 1995, or such other date as we may agree (for convenience, I
refer to this date as the "Closing"), the Company will pay to you on account of
your Deferred Compensation Claim that percentage of the outstanding balance of
the Deferred Compensation Claim which bears the same relationship as the option
payment made to First Interstate Bank on June 15, 1995, bore to the then
outstanding principal balance of the amount owed by the Company to First
Interstate Bank on that date. As you know, we are in the process of attempting
to refinance and prepay the amount owed to the Class F Creditors, including
First Interstate Bank, on terms and conditions set forth in an option (the "FIB
Option") which First Interstate Bank granted to the Company, the terms and
conditions of which we discussed in our telephone conversation. If and when we
exercise the FIB Option, at the closing of the payment of the indebtedness to
First Interstate Bank, the Company will pay to you 100% of the remaining balance
owed by the Company on your Deferred Compensation Claim. As of June 30, 1995,
the principal balance and accrued interest thereon is $147,106.96 and $6,878.26,
respectively.
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2. Unliquidated Claim. With respect to your potential claim
against the Company relating to Great American; the following will apply:
(a) Effective as of the Closing, in consideration of the
indemnity set forth in paragraph (b), below, you will be considered to have
withdrawn your Proof of Claim filed in the Company's Bankruptcy Case No.
91-32674-TC in the amount of $54,000,000. This withdrawal will be without
prejudice to your Deferred Compensation Claim.
(b) The Company, effective as of the Closing, will
indemnify, defend and hold you harmless from and against any and all claims,
complaints, liabilities, causes of action, costs and expenses (including,
without limitation, reasonable attorneys' fees) which arise out of any action
Great American hereafter may file against you in connection with the Great
American matter or the payment of any amounts in settlement thereof, so long as
the Company, in its discretion, approves of any such settlement.
(c) As a condition precedent to your right to be
indemnified under paragraph (b) above, you must (i) use your best efforts to
assist the Company in its efforts to settle all matters with Great American,
(ii) give the Company notice in writing as soon as practicable of any claim made
against you by Great American for which you will be seeking indemnification and
(iii) provide the Company with such information and cooperation as it may
require. In the event of such notice provided to the Company, the Company will
assume the defense of any such proceeding with counsel to be selected by the
Company, but
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subject to your reasonable approval. Provided the Company assumes the defense,
the Company will not be liable to you for any fees or costs of your counsel with
respect to the same proceeding; you will have the right, however, to employ at
your expense your own counsel in such proceeding.
3. Ownership of Shares in the Company.
(a) Within 10 days after the Closing (the "Disclosure
Date"), you will provide the Company with an affidavit signed under penalty of
perjury setting forth, as of the Disclosure Date and as of each day from June
30, 1992, through the Disclosure Date, the number of shares of common stock in
the Company owned by you, Xxxxx Xxxxxxxxxx, Ozora Corporation or the Southern
Cross Trust or any affiliate of any of the foregoing, with such ownership being
defined as both legal and beneficial. The affidavit will have attached to it the
certificate numbers and the record owner for all of such shares. Within 5 days
of the Disclosure Date, you will file a Form 4 and Schedule 13D as necessary to
accurately reflect your ownership of shares of stock in the Company.
(b) Effective as of the Closing, the Registration and
Market Standoff Agreement will remain in effect. The Company, however, only will
be obligated to continue to maintain the Form S-3 in effect until December 31,
1995. The December 31, 1995 date, however, will be extended for that number of
days during which you do not have the right to sell the shares as a result of
the standoff provisions of Section 2 of that Agreement. (For your reference, I
have attached a copy of the Registration and Market Standoff Agreement.) You
recognize, however, that you may be in possession of material inside information
with respect
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to the Company and, therefore, except for sales to "insiders" of the Company,
you may not be able to sell any such shares until such information is disclosed
by the Company in a filing made by the Company under the Securities Exchange Act
of 1934.
(c) You will have the right to extend the December 31,
1995, date referred to in paragraph (b), above, to April 30, 1996, so long as
you provide the Company with an irrevocable proxy to vote the shares owned by
you, Katie, Ozora Corporation and the Southern Cross Trust, and any affiliate of
any of the foregoing, at the next annual meeting of the Company and any special
meeting of the Company prior thereto. Such proxy must be in form and substance
satisfactory to the Company.
(d) As a condition to Close, the Company will provide you
with a purchaser for 50,000 shares of stock in the Company owned by you at a
purchase price of $1.85 per share with an initial payment of 20% of such amount
to be paid on July 3, 1995, with the balance to be paid on July 15, 1995. The
form of such purchase agreement is attached.
4. Section 401(k) Plan. On the Close, the Company will deliver
a check to you in the amount of $15,263.04 and a check payable to Xxxx Xxxxx in
the amount of $1,703.86, which represents the principal balance in your accounts
under the Company's Section 401(k) plan which were invested in GIC II and, in
consideration therefor, you will be treated as irrevocably assigning to the
Company any rights you may have against GIC II or any other person who may have
any liability for the loss of such sums.
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5. Confidentiality. Xxxx, it is extremely important that the
terms of this Agreement remain confidential in all respects to facilitate our
negotiation of a settlement with Great American. Therefore, you agree that, with
respect to any of the terms hereof which relate to Great American, including the
obligation of the Company to indemnify you, you will not disclose to anyone such
provisions for any purpose whatsoever except to your counsel and tax accountant
to the extent necessary provided each such person is advised as to the
confidentiality of the matter and agrees not to so disclose such information.
Notwithstanding the foregoing, if you receive a request to disclose the
information set forth herein relating to Great American by a court of competent
jurisdiction or by a governmental agency, you will (1) promptly notify us of the
existence, terms and circumstances surrounding such request, (2) consult with us
on the advisability of taking steps to resist or narrow that request, if
disclosure is required, (3) furnish only such portion as you are advised by
counsel is legally required to be disclosed and (4) cooperate with us in our
effort to obtain an order or other reasonable assurance that confidential
treatment will be accorded to that portion of the information that is required
to be disclosed. If you breach the provisions of this paragraph 5, the Company
will not be obligated to indemnify you with respect to the Great American matter
and paragraph 2(b) will be void and of no force or effect.
6. Closing. The Closing shall occur at the offices of the
Company at 000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxxxx, Xxxxxxxxxx 000000,
or such other place as we may mutually agree. At the Closing, each of us will
deliver the documents and instruments required to be delivered pursuant to the
terms of this letter agreement.
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7. Attorneys' Fees. If either of us brings any legal action or
other proceeding for the enforcement of this letter agreement or as a result of
an alleged breach or misrepresentation in connection with any of the provisions
hereof, the prevailing party will be entitled to recover court costs and
reasonable attorneys' fees and other costs incurred in that action or proceeding
in addition to any other relief to which such party may be entitled.
Xxxx, this letter is intended to be an enforceable agreement
and, if the foregoing is acceptable, please execute and return to me the
enclosed copy of this letter. Assuming that you so execute the enclosure, we
each will be under an obligation to execute such documents and take such actions
as may be reasonably required to carry out the provisions of this Agreement.
Very truly yours,
/s/ Xxxxxx X. Xxxxx
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Xxxxxx X. Xxxxx
SLP:mnt
Enclosure
AGREED AND ACCEPTED THIS
FIRST DAY OF JULY, 1995
/s/ Xxxx X. Xxxxxxxxxx
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XXXX X. XXXXXXXXXX
