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RIGHT OF FIRST REFUSAL AGREEMENT
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THIS AGREEMENT is dated as of September 30, 1991, among
VALLEY WELDING SUPPLY CO., a West Virginia Corporation, having an
office at 67 - 43rd Street, Wheeling, West Virginia ("VALLEY");
WEST RENTALS, INC., a West Virginia Corporation, having an office
at 67 - 43rd Street, Wheeling, West Virginia ("WEST"); XXXX X.
XXXX, (the "VALLEY SHAREHOLDER"); and XXXXXXX X. XXXX (referred to
herein with Xxxx X. Xxxx as the "WEST SHAREHOLDERS"); and UNION
CARBIDE INDUSTRIAL GASES INC., a Delaware corporation with an
office at 00 Xxxxxxxxx Xxxx, Xxxxxxx, Xxxxxxxxxxx 00000-0000
("UCIG").
Valley, West and Linde Gases of the Great Lakes, Inc.
("LINDE"), a wholly-owned subsidiary of UCIG, are parties to an
Asset Purchase Agreement dated as of August ----, 1991, (the
"PURCHASE AGREEMENT") pursuant to which, among other things, Valley
and West are to acquire substantially all of the assets of Linde's
retail and wholesale packaged gas business located in Western
Pennsylvania ("BUSINESS"). The Valley Shareholders and the West
Shareholders expect to benefit substantially from the transactions
contemplated by the Purchase Agreement. It is a condition
precedent to the obligations of Linde and UCIG to proceed with the
transactions contemplated by the Purchase Agreement that Valley,
West, the Valley Shareholders and the West Shareholders grant to
UCIG certain Rights of First Refusal rights and Rights of First
Discussion rights with respect to proposed future transfers of
certain business and assets or stock of Valley and West. In order
to induce UCIG to consummate the transactions contemplated by the
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Purchase Agreement, each of Valley, West, the Valley Shareholders
and the West Shareholders have agreed to enter into this Agreement
affording to UCIG certain rights of first refusal or first
discussion.
Capitalized terms used herein without definition are used
with the meaning given to them in the Purchase Agreement.
NOW, THEREFORE, in consideration of the foregoing
premises and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
1. Representations and Warranties. Valley, West,
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the Valley Shareholders and the West Shareholders hereby jointly
and severally represent and warrant to UCIG that:
(a) Each of Valley and West is a corporation duly
organized, validly existing and in good standing under the laws of
its state of incorporation, with full corporate power to enter into
and perform this agreement; each of Valley and West has taken all
corporate action necessary to authorize the execution and
performance of this Agreement and the transactions contemplated
hereby by it; the execution, delivery and performance of this
Agreement by Valley and West does not violate any provisions of the
respective charters or bylaws or any other agreement to which
either is a party; and the Agreement is enforceable against each of
Valley and West in accordance with its terms.
(b) The execution, delivery and performance of this
Agreement by Valley Shareholder and the West Shareholders does not
violate any provision of any agreement to which either is a party.
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(c) Exhibit A attached hereto and made a part
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hereof, correctly describes Valley's capitalization on the date
hereof and correctly identify each subsidiary of Valley (Valley's
authorized capital stock together with and additional shares of
capital stock authorized after the date hereof being hereinafter
referred to as the "VALLEY SHARES"). The Valley Shares issued and
outstanding on the date hereof are owned beneficially and of record
by the Valley Shareholder, as set forth in Exhibit A, and all
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such outstanding Valley Shares are validly issued, fully paid and
nonassessable. No agreements of any type exist which provide for
the issuance, sale, redemption, exchange or other transfer of
Valley Shares.
(d) Exhibit B attached hereto and made a part
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hereof, correctly describes West's capitalization on the date
hereof and correctly identify each subsidiary of West (West's
authorized capital stock together with and additional shares of
capital stock authorized after the date hereof being hereinafter
referred to as the "WEST SHARES"). The West Shares issued and
outstanding on the date hereof are owned beneficially and of record
by the West Shareholder, as set forth in Exhibit B, and all
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such outstanding West Shares are validly issued, fully paid and
nonassessable. No agreements of any type exist which provide for
the issuance, sale, redemption, exchange or other transfer of West
Shares.
(e) The Valley Shareholder and the West
Shareholders have full power to enter into and perform this
Agreement; this Agreement constitutes a valid and binding agreement
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of each of the Valley Shareholder and the West Shareholders
enforceable against each in accordance with its terms. All of the
Valley Shares and the West Shares are free of any liens, claims,
encumbrances or rights of others under any redemption, option,
shareholders or similar agreement.
2. Right of First Refusal.
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(a) Valley, West, the Valley Shareholder and the
West Shareholders hereby grant to UCIG a right of first refusal
(the "RIGHT OF FIRST REFUSAL") with respect to any (A) proposed
"transfer" (as hereinafter defined) of all or a material part of
(i) the Business and Assets acquired by Valley or West pursuant to
the Purchase Agreement, (ii) any business operations, branches or
assets opened or acquired after the date hereof by Valley, West,
the Valley Shareholder, the West Shareholders or any entity owned
or controlled by any of them, (iii) the Valley Shares, or (iv) the
West Shares or (B) issuance, sale of grant, or agreement to issue,
sell or grant, by Valley or West of any shares of this capital
stock or any security exchangeable or convertible into shares of
its capital stock or any options or acquire any such securities,
which could result in a "Change in Control" (as hereinafter
defined) of Valley or West. For purposes of this Agreement a
"Change of Control" shall mean the Valley Shareholder or the West
Shareholders ceasing to be the holders, beneficially and of record
of 51% of the voting stock of Valley or West, as applicable.
As used herein, the term "TRANSFER" means any sale,
transfer, conveyance or other disposition, whether by sale of
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assets, sale of stock, merger, consolidation, reorganization,
exchange or conversion of securities, gift or otherwise.
(b) In the event of any proposed Transfer to which
the Right of First Refusal applies, Valley, West, the Valley
Shareholder or the West Shareholders, or any of them (individually
or collectively "SELLER"), as the case may be, prior to any such
Transfer, shall give UCIG prior written notice of each such
proposed Transfer, which notice will (i) set forth the price and
all the terms and conditions of such proposed transaction
(including without limitation any collateral agreements by a party
to this Agreement or any affiliate or associate of any such party,
such as agreements for the sale and/or lease of property owned by
others and used by Valley, West or a subsidiary thereof, covenant
not to compete, etc.) and identify the proposed Transferee (the
"PROSPECTIVE PURCHASER"); (ii) contain an offer on behalf of Seller
to sell to UCIG the assets or securities which are the subject of
the proposed Transfer and to enter into with UCIG any and all such
collateral agreements, all upon the same terms and conditions,
offered by Seller to the Prospective Purchaser, or offered by the
Prospective Purchaser and accepted by Seller; (provided, however,
that if the consideration proposed to be paid by the Prospective
Purchaser is not payable all in cash, the offer to UCIG shall also
afford UCIG an option to accept such offer by paying all cash to
Seller in an amount which is the economic equivalent of the
consideration proposed to be paid by such Prospective Purchaser or,
if some portion of the non-cash consideration offered by the
Prospective Purchaser does not have an ascertainable cash
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equivalent, by providing to Seller cash or other consideration
acceptable to Seller which is the substantial economic equivalent
of the non-cash or deferred consideration offered by the
Prospective Purchaser); (iii) contain a true and complete copy of
the offer to the Prospective Purchaser, or offer acceptable to
Seller from Prospective Purchaser which offer must be bona fide;
(iv) contain a copy of all financial, business or other information
and material furnished the Prospective Purchaser (or its
representatives) by Seller; and (v) disclose the terms of each
brokerage, sales consultant, finders and other similar arrangements
applicable to the proposed Transfer (or any portion thereof).
(c) UCIG shall have the right to accept such offer
from Seller (hereinafter the "OFFER") by giving written notice
thereof to the Seller at any time until ninety (90) days following
the date Seller furnished the notice required to be delivered to
UCIG pursuant to Paragraph 2(b) (such period of time being
hereinafter referred to as the "OPTION PERIOD"). If UCIG does not
accept the Offer within the Option Period, then Seller may sell
such assets or securities as are described in the Offer to the
Prospective Purchaser; but only in strict accordance with the
price, terms and conditions set forth in the original offer, being
the Offer to UCIG.
(d) It is the intention of the parties that this
Article 2 shall apply to each and every proposed Transfer described
in Paragraph 2(a) above, regardless of whether one or more earlier
Offers for the same assets or securities have been made or are
outstanding.
(e) The term of this Right of First Refusal granted
UCIG by Valley and West and all powers, rights and options relative
thereto is fifteen (15) years and shall expire at midnight (EDT) on
September 29, 2006.
(f) If UCIG accepts an Offer, closing shall occur
within the later to occur of (i) ten (10) days after the date of
UCIG's delivery of its acceptance, (ii) the date which is ten (10)
days after all applicable bulk transfer laws have been compiled with
(unless such compliance has been waived by UCIG), or (iii) the
expiration of any applicable waiting period under the Xxxx-
Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended, or any
similar law all in accordance with the Offer terms and conditions.
3. Right of First Discussion. Valley, West, the
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Valley Shareholder, and the West Shareholders hereby grant to UCIG
a Right of First Discussion with respect to any proposed Transfer
of [i] all or substantially all of the assets of Valley not subject
of paragraph 2(a), [ii] all or substantially all of the assets of
West not subject of paragraph 2(a) and utilized in conjunction with
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the business and operations of Valley, and [iii] ownership or
control of any entity which owns assets of the type described in
items (i) and (ii) above and does not own any assets subject to the
Right of First Refusal (paragraph items [i], [ii], and [iii]
collectively or individually "FIRST DISCUSSION ASSETS"). Prior to
any such proposed Transfers of First Discussion Assets, Valley,
West, the Valley Shareholder, or the West Shareholders, as the case
may be, shall give UCIG prior written notice of each such proposed
Transfer and afford UCIG the opportunity to engage in good faith
negotiations with such proposed transferor regarding a Transfer of
such Right of First Discussion Assets to UCIG. The term of this
Right of First Discussion granted to UCIG by Valley, West, the
Valley Shareholder and the West Shareholders and all powers, rights
and options relative thereto is fifteen (15) years and shall expire
at midnight (EDT) on September 29, 2006.
4. Permitted Transfer. Notwithstanding the
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provisions of Articles 2 and 3 hereof, the Valley Shareholder, and
the West Shareholders or either of them, may from time to time,
sell or transfer any or all of the Valley Shares or the West
Shares, as applicable, to such Valley Shareholder's or West
Shareholders' parents, children, grandchildren, spouse, siblings,
Valley or West (collectively or individually "PERMITTED
TRANSFEREES") without first offering UCIG a right of first refusal
or entering into the discussions with UCIG as required by Article
2 or 3 hereof. Such Permitted Transferees shall execute and
deliver to UCIG as well as Valley and West an instrument, pursuant
to which such Permitted Transferee becomes a party to and is
legally bound as Valley
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Shareholders or West Shareholders, as applicable, under this Agreement.
5. Access to Information. Upon receipt of an
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Offer, each Seller shall promptly provide UCIG with access to (and
permit UCIG to copy) the Seller's books and records. All such
information, materials and documents provided or made available to
UCIG shall, unless and until conveyed to UCIG, be treated by UCIG
as proprietary and confidential information of the Seller and shall
not at any time be used in any manner or disclosed or revealed to
any third party (other than for purposes of having Seller and its
agents and representatives evaluate the offer or as may be required
by law).
6. Conduct of Business. During the Option Period
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and, if the Offer is accepted, until the closing held pursuant to
UCIG's acceptance of the Offer, Valley or West, as applicable,
shall conduct the business of the target of the Offer diligently
and in the ordinary course and will not make or institute any
unusual or novel methods of business operations or declare or pay
any dividends on, or make any other distribution in respect of, its
capital stock.
7. Restrictive Covenants. In the event of any
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purchase by UCIG pursuant to this Agreement:
(a) No Seller shall, directly or indirectly, except
at the request of UCIG, use or disclose to any third party any of
the technical, financial, operational, marketing or similar or
different information pertaining to the assets and the business
which are the subject of the sale, except when, after and to the
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extent such information is or becomes generally available to the
public through no fault of the Seller.
(b) For a period of three (3) years from and after
the date of any such purchase by UCIG, no Seller shall, directly or
indirectly, engage in any business which sells or engages in the
sale of any industrial gas and or welding products in any county
which an office or retail outlet then sold to UCIG is located or in
any other county contiguous with any such county, except that this
restriction shall not apply to any Seller's sale of industrial gas
and/or welding products in any such counties or counties contiguous
thereto where Seller has an established business operation
(including retail outlet or other branch) which Seller retains
after date of such purchase by UCIG, or to the sale by Seller to
customers (wherever located) with whom such Seller has established
industrial gas and/or welding products customers which Seller
retains after any such sale or transfer to UCIG. In applying the
preceding sentence to a sale of stock which results in UCIG
becoming a majority shareholder of Valley, West and/or any
subsidiary thereof, UCIG shall be deemed to have acquired all the
offices and retail outlets of the entity for which a change of
control has occurred and/or of each subsidiary of such entity. To
the extent that the obligations of a Seller (or any of them)
provided in this clause (ii) are invalid or unenforceable because
they are not sufficiently limited in respect of duration,
geographic area or otherwise, they shall be deemed to be limited so
that they are enforceable to the maximum extent permitted by law.
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8. Integration; Amendments; etc. This Agreement
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contains the entire understanding of the parties with respect to
the subject matter contained herein and may be amended only by a
written instrument executed by Seller and UCIG.
9. Notices. It shall be a sufficient giving of any
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notice or other communication hereunder if the party giving the
same shall either deliver said notice personally or shall mail a
copy thereof by Express Mail or registered or certified first class
mail, postage prepaid, addressed in the case of UCIG to the
attention of its President at its address first set forth above,
and in the case of Valley, West and/or one or more of Valley
Shareholders or West Shareholders to Valley's office to attention
of its President at its address first set forth above. The date of
giving any such notice or other communication shall be deemed to be
the date on which such notice was personally delivered or deposited
in accordance herewith. The Post Office receipt showing the date
of such deposit shall be prima facie evidence of these
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facts. Any party may change the address to which notices to such
person are sent by so notifying the other parties in the manner
herein provided for giving notice. A change of address shall be
effective only after actually received by the recipient.
10. Expenses. Each party to this Agreement shall
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bear its own expenses incurred in the performance hereof,
irrespective of whether the transactions contemplated herein are
consummated. This Agreement, however, shall not be deemed to
include expenses of any Seller whose expenses of any proposed
transaction, in whole or
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in part, are to be paid by a Prospective Purchaser as part of an Offer or
transfer agreement.
11. Counterparts. This Agreement may be signed in
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any number of counterparts, each of which shall be deemed an
original.
12. No Restriction on Valley or West Financing.
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Nothing in this Agreement shall impair or restrict present or
future financing arrangements (including all financing collateral
requirements) of either Valley or West. UCIG expressly agrees that
any power, right or option granted it in this Agreement shall be
subordinate to any and all collateral security rights and interests
in and to Valley and West's assets, which are or may be, either now
or in the future, required by any and all of Valley and/or West's
sources of business financing.
13. Legend. Until the expiration of UCIG's rights
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pursuant to Article 2 hereof, Valley, West and the Valley and West
Shareholders shall cause to be noted on each certificate evidencing
any of the Valley or West Shares, the following legend:
"The shares represented by this certificate
are subject to the terms and conditions of a
Right of First Refusal Agreement with Union
Carbide Industrial Gases Inc., dated as of
September 30, 1991, and may be transferred
only in accordance with the provisions
thereof."
14. Further Assurances. At any time and from time
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to time upon the request of UCIG, Valley, West, the Valley
Shareholder or the West Shareholders shall execute, deliver and
acknowledge or cause to be executed, delivered and acknowledged,
such further documents and instruments and do such other acts and
things as UCIG may reasonably request in order to fully effect the
purpose of this
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Agreement and to validly transfer or confirm the transfer of any business,
assets, shares and/or securities sold to UCIG pursuant to this Agreement.
15. Waiver. Except as expressly provided herein, no
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failure or delay on the part of UCIG in exercising any power, right
or option hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of any such power, right or option
preclude any other, further or subsequent exercise thereof or an
exercise of any other power, right or option hereunder; it being
understood that the powers, rights and options of UCIG under this
Agreement are cumulative, repetitive and in addition to any rights
and remedies now or hereafter existing in law or in equity.
Nothing herein contained shall be construed to extend the option
period or rights except as specifically provided herein.
16. Governing Law. This Agreement and the rights
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and obligations of the parties hereunder shall be construed and
interpreted in accordance with the laws of the State of
Connecticut.
17. Severability. The provisions of this Agreement
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are severable, and if any provision shall be held invalid or
unenforceable in whole or in part, then such invalidity or
unenforceability shall not affect any other provision of this
Agreement, which shall remain in full force and effect.
18. Successors and Assigns. This Agreement shall be
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binding upon and inure to the benefit of Valley, West, the Valley
Shareholder, the West Shareholders and their respective heirs,
personal representatives, successors and assigns. The powers,
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rights and options of UCIG under this Agreement are personal to it
and are not assignable or otherwise transferable; provided, however
that UCIG may transfer and assign such powers, rights and options
under this Agreement to any subsidiary, of which UCIG is the record
and beneficial holder of not less than one hundred percent (100%)
of the issued and outstanding capital stock, and which subsidiary,
for the purposes of this Agreement shall be subject to all such
UCIG prohibitions against assignment and transfer.
IN WITNESS WHEREOF, the parties hereto have set their
hands and seals as of the day and year first above written.
UNION CARBIDE INDUSTRIAL GASES, INC.
By -----------------------------------
Its--------------------------------
VALLEY WELDING SUPPLY CO.
By -----------------------------------
Its President
WEST RENTALS, INC.
By -----------------------------------
Its President
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Xxxx X. Xxxx, Shareholder of VALLEY
WELDING SUPPLY CO. as well as
Shareholder of WEST RENTALS, INC.
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Xxxxxxx X. Xxxx, Shareholder of WEST
RENTALS, INC.
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EXHIBIT "A"
CAPITALIZATION OF VALLEY
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The authorized capital stock of VALLEY WELDING SUPPLY CO.
("Company") consists of 80 shares of common stock, par value
$100.00 per share, and -0- shares of preferred stock, $-0- per
share. On the date hereof 30.6 shares of Company's common stock
are issued and outstanding and -0- shares of its preferred stock
are issued and outstanding, and Company holds 49.4 shares of its
common stock in its treasury and -0- shares of its preferred stock
in its treasury.
* XXXX X. XXXX HOLDS AND OWNS 30.6 SHARES.
Set forth below for each Subsidiary (as defined in
Section 1 of this Agreement) is: (a) its correct name, (b) state
of incorporation, (c) an accurate description of its authorized,
outstanding and treasury stock and (d) a description of such
capital stock which is owned by Company.
COMPANY HAS NO SUBSIDIARIES.
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EXHIBIT "B"
CAPITALIZATION OF WEST
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The authorized capital stock of WEST RENTALS, INC.
("Company") consists of 5000 shares of common stock, par value
$1.00 per share, and -0- shares of preferred stock, $-0- per share.
On the date hereof 1000 shares of Company's common stock are issued
and outstanding and ----- shares of its preferred stock are issued
and outstanding, and Company holds 4000 shares of its common stock
in its treasury and -0- shares of its preferred stock in its
treasury.
* XXXX X. XXXX OWNS AND HOLDS 500 SHARES.
* XXXXXXX X. XXXX OWNS AND HOLDS 500 SHARES.
Set forth below for each Subsidiary (as defined in
Section 1 of this Agreement) is: (a) its correct name, (b) state
of incorporation, (c) an accurate description of its authorized,
outstanding and treasury stock and (d) a description of such
capital stock which is owned by Company.
COMPANY HAS NO SUBSIDIARIES.
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