UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. )*
VTX Electronics Corp.
(Name of Issuer
Common Stock
(Title of Class of Securities)
(CUSIP Number)
Edward Goodstein, TW Cable, L.L.C.,
81 Excutive Boulevard, Farmingdale, New York 11735
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
February 14, 1997
(Date of Event which Requires Filing of this Statement
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Check the following box if a fee is being paid with the statement [x]. (A
fee is not required only if the reporting person: (1) has a previous statement
on file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
SEC 1746 (12-91)
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SCHEDULE 13D
CUSIP No. Page 2 of _ Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
TW Cable, L.L.C. - 11-3355710
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [x]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
00
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 4,950,000
OWNED BY
EACH
REPORTING
PERSON
WITH 8 SHARED VOTING POWER
0
9 SOLE DISPOSITIVE POWER
0
10 SHARED DISPOSITIVE POWER
0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
53,300,000 shares of Common Stock assuming conversion of all shares
of convertible Preferred Stock and Warrants beneficially ownd by TW
Cable, L.L.C.
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
63.24%, assuming conversion of all shres of Preferred Stock and
exercise of all Warrants beneficially owned by TW Cable, L.L.C.
14 TYPE OF REPORTING PERSON*
00
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 2 of 7
(INCLUDING EXHIBITS) OF THE SCHEDULE AND THE SIGNATURE ATTESTATION
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Item 1. Security and Issuer
This statement relates to the common stock, par value $.01 per share (the
"Common Stock") of VTX Electronics Corp., a Delaware corporation (the
"Company"), having a principal executive office located at 61 Executive Drive,
Farmingdale, New York 11735. This statement also relates to the Cumulative
Convertible Preferred Stock, par value $.01 (the "Convertible Preferred Stock")
and Stock Subscription Warrants (the "Warrants"), which are convertible or
exercisable by their terms into shares of the Common Stock.
Item 2. Identity and Background
This Statement is filed on behalf of TW Cable, L.L.C., a New York limited
liability company (the "Purchaser") having a principal executive office at 81
Executive Drive, Farmingdale, New York 11735. The principal business of the
Purchaser is the distribution of wire and cable throughout the United States.
The name and business address of the sole member ("Controlling Person") of
the Purchaser is as follows:
Edward Goodstein
Member
TW Cable, L.L.C.
81 Executive Drive
Farmingdale, NY 11735
During the last five years, neither the Purchaser nor the Controlling
Person has (i) been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) or (ii) been a party to a civil proceeding
of a judicial or administrative body of competent jurisdiction and as a result
of such proceeding was or is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities subject
to, federal or state securities laws or finding any violation with respect to
such laws.
Item 3. Source and Amount of Funds or Other Consideration
On January 10, 1997, Purchaser entered into the Securities Purchase
Agreement, by and among the Purchaser and the Owners of Preferred Stock and
Subordinated Debentures, a copy of which is attached hereto as Exhibit 1 (the
"Purchase Agreement"), pursuant to which Purchaser agreed to purchase, subject
to the prior tender for sale, at least 90% of the 12,375 shares of the Company's
issued and outstanding Convertible Preferred Stock and at least 90% of Secured
Subordinated Debentures (the "Subordinated Debentures") issued by the Company
having a face value of $2,615,000, together with Warrants to purchase 53,350,000
shares of Common Stock, for a total purchase price of $1,100,000.
The funding of the purchase price was provided by TW Communication Corp.
("TW ComCorp"), an affiliate under common control with the Purchaser.
Convertible Preferred Stock
The Convertible Preferred Stock is convertible into 4,950,000 shares of
Common Stock at a conversion rate equal to the stated value of the Convertible
Preferred Stock, $100 per share, divided by the conversion price of $.25 per
common share, or 400 common shares for each share of Convertible Preferred Stock
that is converted. Pursuant to the Certificate of Designation, Preferences and
Rights with respect to the Convertible Preferred Stock each share of Convertible
Preferred Stock entitles the holder thereof to cast 1,500 votes on all matters
subject to a vote of the common stockholders of the Company other than with
respect to the election of directors. The holders of the Convertible Preferred
Stock, voting as a class, are entitled to elect seventy-five percent of the
members of the Board of Directors.
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Warrants
The Warrants to be purchased by the Purchaser pursuant to the Purchase
Agreement are exercisable into an aggregate 53,350,000 shares of Common Stock at
an exercise price of $.125 per share as follows: Warrants issued on November 30,
1995 ("November 1995 Warrants") exercisable into 19,800,000 shares of Common
Stock, of which warrants to purchase 4,950,000 shares of Common Stock are
currently exercisable through December 1, 2000 and warrants to purchase
14,850,000 shares of Common Stock become exercisable from April 1, 1999 through
March 31, 2009 and Warrants issued on March 21, 1996 and June 19, 1996 to
purchase 24,750,000 and 8,800,000 shares of Common Stock, respectively are
exercisable from April 1, 1999 through March 31, 2009.
Item 4. Purpose of Transaction
The Purchaser entered into the Purchase Agreement for the purpose of
acquiring control of the Company.
On January 10, 1997, Purchaser agreed to purchase, pursuant to the Purchase
Agreement, the outstanding Convertible Preferred Stock and up to $2,615,000 face
amount of Subordinated Debentures, together with Warrants to purchase 53,350,000
shares of Common Stock of the Company, for a total purchase price of $1,100,000,
subject to the prior tender of not less than 90% of the Convertible Preferred
Stock and at least $2,353,000 face amount of the Subordinated Debentures on or
before February 14, 1997.
On January 10, 1997, the Board of Directors of the Company caused it and
its wholly-owned subsidiary, Vertex Technologies, Inc. ("Vertex") to file
bankruptcy petitions under Chapter 11 of the United States Bankruptcy Code (In
Re VTX Electronics Corp., 897-80918 (Bankr., E.D.N.Y., 1997) (DTE-478); In Re
Vertex Technologies, Inc., 897-80917 (Bankr., E.D.N.Y., 1997) (DTE-478).
On February 14, 1997, Purchaser was notified that the Purchase Agreement
had been executed by all of the holders of the Convertible Preferred Stock, the
Subordinated Debentures and Warrants thereby satisfying a material condition to
the conclusion of the transactions contemplated by the Purchase Agreement. The
closing of the transactions contemplated by the Purchase Agreement will occur,
subject to the approval of the U.S. Bankruptcy Court, on or before May 31, 1997.
On December 30, 1996, in anticipation of entering into the Purchase
Agreement, the Board of Directors of VTX, except for Albert Roth ("Roth"),
Chairman of the Board and Chief Executive Officer of VTX, resigned. On January
10, 1997, upon execution of the Purchase Agreement by Purchaser, Roth appointed
Edward Goodstein and Carl Palazzolo, a Vice President of TW ComCorp, as
directors of the Company and Vertex.
In addition to the Purchase Price, after the Plan of Reorganization is
approved by the United States Bankruptcy Court, Purchaser will cause the
redemption or will purchase most, if not all, of the $400,000 face amount of the
Subordinated Debentures then outstanding or reduce the amount of such
Subordinated Debentures in payment for certain assets of the Company.
Additionally, upon the emergence of the Company from bankruptcy, Purchaser will
cause the Debentureholders to own in the aggregate such number of shares of
Common Stock as shall equal to 10% of the Common Stock owned by Purchasers, but
in no event more than 5% of the total amount of shares of Common Stock
outstanding at that time.
The Purchaser anticipates that it will submit a Plan of Reorganization to
the Bankruptcy Court which will provide, inter alia, that the Purchaser will
purchase all of the assets of Vertex's distribution business, including certain
inventory, furniture and fixtures and intangible assets including contracts and
customer lists.
Item 5. Interest in Securities of the Issuer
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(a) After receipt of approval from the Bankruptcy Court and the
consummation of the transactions contemplated by the Purchase Agreement,
Purchaser will beneficially own 58,300,000 shares of the Company's Common Stock,
of which 4,950,000 shares are issuable upon conversion of the Convertible
Preferred Stock and 53,350,000 shares are issuable upon exercise of the
Warrants. This represents 63.24% of the Company's outstanding shares of Common
Stock giving effect to such transactions.
(b) As of February 14, 1997, upon all the holders of the Convertible
Preferred Stock and the Subordinated Debentures executing the Purchase
Agreement, Purchaser received full power to vote, or direct the vote of the
4,950,000 shares of Convertible Preferred Stock beneficially owned by Purchaser.
(c) During the past 60 days, Purchaser has entered into the transaction to
purchase all of the Convertible Preferred Stock and the Subordinated Debentures
and the Warrants of the Company which are convertible or exercisable by their
terms into 58,300,000 shares of Common Stock of the Company.
(d) No other person is known to have the right to receive or the power to
direct the receipt of dividends from, or the proceeds from, the sale of the
above-mentioned securities.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer
Except as described elsewhere in this Statement and as set forth in the
Purchase Agreement, to the best knowledge of the Reporting Persons, there exists
no contract, arrangement, understanding or relationship (legal or otherwise)
among the persons named in Item 2 and between such persons and any other person
with respect to any securities of the Company, including, but not limited to,
transfer or voting of any of the securities, finders fees, joint ventures, loan
or option arrangements, puts or calls, guarantees of profits, divisions of
profits or loss, or giving or withholding of proxies.
Item 7. Material to be Filed as Exhibits
Exhibit 1 - Securities Purchase Agreement, dated as of January 10,
1997, by and between the Purchasers and the Owners of
Preferred Stock and Subordinated Debentures
Exhibit 2 - Escrow Agreement, dated as of January 10, 1997, among
Purchaser, the Owners of Preferred Stock and
Subordinated Debentures and Todtman, Young, Tunick,
Nachamie, Hendler & Spizz, P.C., as Escrow Agent
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Statement is true, complete and
correct.
Dated: February 24, 1997
TW CABLE, L.L.C.
By:\s\ Edward Goodstein
-------------------------
Edward Goodstein, Member
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5
Exhibit 1
SECURITIES PURCHASE AGREEMENT
BY AND AMONG
TW CABLE, L.L.C.
AND
OWNERS OF PREFERRED STOCK
AND SUBORDINATED DEBENTURES
TABLE OF CONTENTS
PAGE
ARTICLE 1
PURCHASE AND SALE OF SECURITIES......................................... 1
1.1 Purchase and Sale of Securities....................... 1
ARTICLE 2
PURCHASE PRICE AND TERMS OF PAYMENT..................................... 2
2.1 Purchase Price........................................ 2
ARTICLE 3
CLOSING................................................................. 2
3.1 Closing............................................... 2
ARTICLE 4
OBLIGATIONS OF SELLERS AND PURCHASER.................................... 2
4.1 Obligation of Sellers Upon Execution of Agreement..... 2
4.2 Obligation of Albert Roth............................. 2
4.3 Obligations of Purchaser.............................. 2
4.4 Further Assurances.................................... 3
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF SELLERS............................... 3
5.1 Capacity to Execute Agreement and Enforceability...... 3
5.2 Ownership of Preferred Shares......................... 3
5.3 Ownership of Senior Secured Debentures................ 3
5.4 Limitation of Representations and Warranties.......... 3
ARTICLE 6
EPRESENTATIONS AND WARRANTIES OF ALBERT ROTH AND KENNETH RIND........... 4
6.1 Effect of Agreement................................... 4
6.2 Organization and Good Standing of Seller.............. 4
6.3 Capitalization........................................ 5
6.4 Government and Other Consents......................... 5
6.5 Books and Records..................................... 5
6.6 No Subsidiaries or Investments........................ 5
6.7 Title to Properties; Encumbrances..................... 5
6.8 Leases................................................ 6
6.9 Business Practices.................................... 6
6.10 Officers, Directors and Key Employees................. 6
6.11 Employment Arrangements............................... 7
6.12 Employee Relations.................................... 7
6.13 Contracts and Liabilities............................. 7
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6.14 Insurance Policies.................................... 9
6.15 Compliance with ERISA................................. 9
6.16 Tax Matters........................................... 11
6.17 Intellectual Property................................. 11
6.18 Environmental Matters................................. 12
6.19 Permits, Licenses, Compliance with Laws............... 12
6.20 Litigation............................................ 13
6.21 Conditions of Equipment............................... 13
6.22 Inventories........................................... 13
6.23 Notes and Accounts Receivable......................... 13
6.24 Broker................................................ 13
6.25 Banks; Safe Deposit Boxes; Powers of Attorney......... 14
6.26 SEC Filings........................................... 14
6.28 Material Information; Full Disclosure................. 14
6.29 Limitation of Representations and Warranties.......... 14
ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF PURCHASER............................. 15
7.1 Organization and Good Standing of Purchaser........... 15
7.2 Authorization of Agreement and Enforceability......... 15
7.3 Effect of Agreement................................... 15
7.4 Government and Other Consents......................... 15
7.5 Broker................................................ 15
7.6 Material Information; Full Disclosure................. 15
7.7 Limitation of Representations and Warranties.......... 16
ARTICLE 8
COVENANTS AND CONDITIONS................................................ 16
8.1 Covenants Relative to VTX Common Stock................ 16
8.2 Covenants Related to Retained Debentures
by Purchaser.......................................... 16
8.3 Covenants Related to Retained Debentures by
Debentureholders...................................... 16
8.4 Covenants Related to Closing Conditions............... 16
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ARTICLE 9
CONDITIONS PRECEDENT TO CLOSING......................................... 17
9.1 Conditions Precedent to Purchaser's Obligations....... 17
9.2 Conditions Precedent to Sellers' Obligations.......... 18
ARTICLE 10
INDEMNIFICATION......................................................... 19
10.1 Indemnification by Sellers............................ 19
10.2 Limitation of Liability and Property.................. 19
10.3 No Waiver............................................. 19
10.4 Indemnification by Purchaser.......................... 20
10.5 Third Party Claims.................................... 20
ARTICLE 11
GENERAL................................................................. 21
11.1 Expenses.............................................. 21
11.2 Sales, Transfer and Documentary Taxes, etc............ 21
11.3 Survival of Representations and Warranties............ 21
11.4 No Third Party Beneficiaries.......................... 22
11.5 Notices............................................... 22
11.6 Entire Agreement...................................... 23
11.7 Headings.............................................. 23
11.8 Counterparts.......................................... 23
11.9 Governing Law......................................... 23
11.10 Severability...................................... 23
11.11 Amendments........................................ 23
11.12 Assignment........................................ 23
11.13 Successors and Assigns............................ 24
11.14 No Joint Venture.................................. 24
11.15 Construction of Agreement......................... 24
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<PAGE>
SECURITIES PURCHASE AGREEMENT
AGREEMENT ("Agreement"), made as of the 10th day of January, 1997, by and
among TW CABLE, L.L.C., a New York limited liability company with principal
offices at 81 Executive Boulevard, Farmingdale, New York 11735-4710
("Purchaser") and the Owners of Preferred Stock ("Preferred Shareholders") and
Subordinated Debentures ("Debentureholders") and together with the Preferred
Shareholders hereafter collectively referred to as the "Sellers") of VTX
Electronics Corp., a Delaware Corporation ("VTX") whose names are set forth on
the signature page hereof. The Purchaser and Sellers are sometimes referred to
collectively herein as the "Parties" and individually as a "Party."
W I T N E S S E T H:
WHEREAS, each of the Sellers owns the Preferred Stock and Subordinated
Debentures (and Warrants issued in connection therewith) (collectively, the
"Securities") of VTX set forth opposite their respective names in the schedule
annexed hereto, made a part hereof and referred to as Exhibit "1;" and
WHEREAS, each of the Preferred Shareholders is the record and beneficial
owner of shares of the Senior Redeemable Cumulative Convertible Preferred Stock
of VTX with a stated per share value of One Hundred ($100) Dollars of VTX
("Preferred Shares"); and
WHEREAS, each of the Debentureholders is the record and beneficial owner of
Secured Subordinated Debentures (and Warrants issued in connection therewith)
(collectively, the "Debentures") of VTX; and
WHEREAS, Purchaser desires to purchase the Securities from the Sellers and
the Sellers desire to sell the Securities to Purchaser upon the terms and
conditions set forth in this Agreement, so that, following the consummation of
the transaction contemplated hereby, Purchaser shall be the record and
beneficial owner of such amount of the Securities as described herein.
NOW, THEREFORE, in consideration of the promises and of the mutual
representations, warranties, covenants and agreements hereinafter contained, and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the Parties agree as follows:
ARTICLE 1
PURCHASE AND SALE OF SECURITIES
1.1 Purchase and Sale of Securities. Subject to and upon the terms and
conditions set forth in this Agreement, at the Closing (as hereinafter defined)
each of the Sellers shall sell, assign, transfer and deliver the Securities to
Purchaser free and clear of all liens, claims, encumbrances and restrictions of
any kind, and Purchaser shall purchase the Securities from the Sellers.
ARTICLE 2
PURCHASE PRICE AND TERMS OF PAYMENT
2.1 Purchase Price. In consideration of the sale, assignment, transfer and
delivery of the Securities by the Sellers to Purchaser, and in reliance upon the
representations, warranties, covenants and agreements herein and in the Escrow
Agreement, Purchaser agrees to pay the purchase price ("Purchase Price") of One
Million One Hundred Thousand ($1,100,000) Dollars to the persons in the amounts
set forth in Exhibit "1" hereto. Simultaneously herewith, Purchaser has executed
this Purchase Agreement and deposited the Purchase Price into escrow pursuant to
the Escrow Agreement ("Escrow Agreement") of even date herewith, among
Purchaser, Sellers and the escrow agent, Todtman, Young, Tunick, Nachamie,
Hendler & Spizz, P.C. ("Escrow Agent").
ARTICLE 3
CLOSING
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3.1 Closing. The closing of the transactions hereunder (the "Closing")
shall take place at the offices of counsel to Purchaser, Ruskin, Moscou, Evans &
Faltischek, P.C., 170 Old Country Road, Mineola, New York 11501 upon fulfillment
of the conditions precedent to Closing described in Article 9 hereof.
ARTICLE 4
OBLIGATIONS OF SELLERS AND PURCHASER
4.1 Obligation of Sellers Upon Execution of Agreement. Upon execution of
this Agreement, each of the Sellers has executed the Escrow Agreement and
delivered his Securities to Escrow Agent, as provided in the Escrow Agreement.
4.2 Obligation of Albert Roth. Upon execution of this Agreement, Albert
Roth ("Roth"), one of the Sellers, shall cause to be delivered to Purchaser the
following:
(a) Secretarial Certificate with resolutions of the Board of Directors of
VTX setting forth resignations of the officers and directors of VTX and its
subsidiaries and the appointment of Edward Goodstein and Carl Palazzolo as
directors of VTX and its subsidiaries; and
(b) written opinion of Shustak, Jalil & Heller, Esqs., counsel to VTX, as
to the due appointments as directors of Edward Goodstein and Carl Palazzolo
described in Section 4.2(a) above.
4.3 Obligations of Purchaser. Upon execution of this Agreement, Purchaser
has delivered, or caused to be delivered, to the Escrow Agent pursuant to the
Escrow Agreement the following:
(a) the sum of One Million One Hundred Thousand ($1,100,000) Dollars; and
(b) a copy of the Escrow Agreement executed by Purchaser.
4.4 Further Assurances. At any time and from time to time after the
Closing, at Purchaser's request and without further consideration, Sellers will
execute and deliver such other instruments of sale, transfer, assignment and
delivery and take such action as Purchaser may reasonably deem necessary or
desirable in order to more effectively transfer, assign and deliver to Purchaser
and to confirm Purchaser's title to the Securities.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF SELLERS
Each Seller hereby severally, and not jointly, represents and warrants to
Purchaser, as follows:
5.1 Capacity to Execute Agreement and Enforceability. Such Seller has full
authority and capacity to execute, deliver and perform such Seller's obligations
under this Agreement and the Escrow Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by such Seller and (assuming the valid execution and delivery of the
Agreement by Purchaser and the other Sellers) constitutes the legal, valid and
binding obligation of such Seller, enforceable against him in accordance with
its terms, except to the extent that enforcement thereof may be limited by
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or similar laws of general application relating to or affecting the
enforcement of the rights of creditors and the application of general principles
of equity (regardless of whether enforcement is sought in a proceeding at law or
in equity).
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5.2 Ownership of Preferred Shares. Such Preferred Shareholder is the lawful
record and/or beneficial owner of the number of Preferred Shares set forth
opposite his name in Exhibit "1" hereto, free and clear of any liens, claims,
encumbrances or restrictions of any kind.
5.3 Ownership of Senior Secured Debentures. Such Debentureholder is the
lawful record and/or beneficial owner of the Subordinated Debentures set forth
opposite his name in Exhibit "1" hereto, free and clear of any liens, claims,
encumbrances or restrictions of any kind.
5.4 Limitation of Representations and Warranties. Except for the
representations and warranties made pursuant to this Article 5 and as otherwise
provided in Article 6 with respect to the representations and warranties made by
Roth and Kenneth Rind ("Rind"), no other representations or warranties are made
by any Sellers pursuant to this Agreement, the Escrow Agreement or otherwise.
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ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF
ALBERT ROTH AND KENNETH RIND
In addition to those representations and warranties described in Article 5,
above, Roth and Rind, jointly and severally, represent and warrant to Purchaser
as follows, it being the intention and agreement among the parties hereto that
no other Seller is making the representations and warranties provided for in
this Article 6:
6.1 Effect of Agreement. Neither the execution, delivery and performance of
this Agreement by the Sellers, nor the consummation by the Sellers of the
transactions contemplated hereby will (a) conflict with or result in a breach of
any provision of the Articles of Incorporation or By-Laws of VTX or any
subsidiary; (b) constitute or result in the breach of, conflict with or give
rise to a right of forfeiture, termination, cancellation or acceleration with
respect to, any term, condition or provision of, any note, bond, mortgage,
indenture, license or other contract or obligation to which VTX, its
subsidiaries or the Sellers are a party or by which VTX, its subsidiaries or the
Sellers are subject, except for such conflicts, breaches or defaults as to which
written waivers or consents have been obtained, or (c) violate any law, statute,
regulation, judgment, order, writ, injunction, or decree applicable to VTX, its
subsidiaries or the Sellers, and their respective business, properties or
assets.
6.2 Organization and Good Standing of Seller.
(a) VTX. VTX is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. VTX has all requisite
corporate power and authority, licenses, permits and franchises to own, lease
and operate its properties and assets and to carry on its business as currently
conducted. VTX is qualified and in good standing to do business as a foreign
corporation in each jurisdiction in which the property owned, leased or operated
by it or the nature of the business conducted by it makes such qualification
necessary, except where the failure to so qualify would not have a material
adverse effect on its business, properties or assets. True and correct copies of
the Articles or Certificates of Incorporation and all amendments thereto, to
date, of VTX (certified by its secretary) and of its By-Laws as amended to date
(certified by its secretary) have been delivered. All the issued and outstanding
shares of stock of VTX are validly issued and outstanding, fully paid and
non-assessable and are free and clear of all liens, encumbrances, options,
calls, commitments or other agreements.
(b) Subsidiaries. Schedule 6.2(b) (certified as true and correct by the
President of VTX), is a true and complete list setting forth (i) the name and
jurisdiction of incorporation of each of the subsidiaries of VTX, (ii) the
authorized capital stock of each, and (iii) the number of share of capital stock
of each outstanding. The corporations set forth in the aforementioned Schedule
6.2(b), namely Vertex Technologies, Inc., a New York corporation, Vertex
Electronics UK, Ltd., a United Kingdom corporation, and Vertex Data Systems,
Inc., a Delaware corporation, are herein collectively called the "Subsidiaries"
or individually a "Subsidiary". All of the outstanding shares of the capital
stock of the Subsidiaries are owned by VTX. Except as disclosed in Schedule
6.2(b), each of the Subsidiaries is qualified and in good standing to do
business as a foreign corporation in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification necessary, except where the failure to so qualify would
not have a material adverse effect on its business, properties or assets. Each
of the Subsidiaries has full power and authority, licenses, permits and
franchises to own, lease and operate its properties and assets and to carry on
its business as currently conducted. True and correct copies of the Articles or
Certificates of Incorporation and all amendments thereto, to date, of each of
the Subsidiaries (certified by its secretary) and of its by-laws as amended to
date (certified by its secretary) have been delivered. All the issued and
outstanding shares of stock of each of the Subsidiaries are validly issued and
outstanding, fully paid and non-assessable and are free and clear of all liens,
encumbrances, options, calls, commitments or other agreements.
6.3 Capitalization. There has heretofore been delivered to Purchaser
Schedule 6.3, certified as true and correct by the President of VTX which is a
schedule containing the names and addresses of all of the (a) beneficial
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owners of the common stock of VTX as of the most recent practical date, (b)
preferred stock, and (c) capital stock of the Subsidiaries as of the date
hereof, its Subsidiaries. Except as set forth in Schedule 6.3, there are no
outstanding subscriptions, options, warrants, calls, contracts, demands,
commitments, convertible securities or other agreements or arrangements of any
character or nature whatsoever under which VTX or its Subsidiaries are or may
become obligated to issue, assign or transfer any shares of the capital stock of
VTX or its Subsidiaries.
6.4 Government and Other Consents. No consent, order, authorization,
qualification, or approval of, or exemption by, or filing with any governmental,
public, or regulatory body or authority is required in connection with the
execution, delivery and performance by the Sellers under this Agreement.
6.5 Books and Records. All financial, business and accounting books,
ledgers, accounts and official and other records relating to VTX and its
Subsidiaries have been substantially, properly and accurately kept and
completed, and there are no material inaccuracies or discrepancies of any kind
contained or reflected therein.
6.6 No Subsidiaries or Investments. Except as disclosed in Schedule 6.6,
heretofore delivered to Purchaser and certified as true and correct by the
President of VTX, VTX and its Subsidiaries do not own capital shares or other
equity or ownership or proprietary interest in any corporation, limited
liability company, partnership, association, trust, joint venture or other
entity.
6.7 Title to Properties; Encumbrances. Except as disclosed in Schedule 6.7
heretofore delivered to Purchaser and certified as true and correct by the
President of VTX, VTX and its Subsidiaries do not own any real property or have
any lease or other interest in real property. VTX and its Subsidiaries do not
use any real estate or have an interest in real estate, including, without
limitation, any building, office, plant, factory, warehouse, improvement or
structure in connection with its business other than as identified in Schedule
6.7. Except as disclosed in Schedule 6.7, VTX and its Subsidiaries have good
title to all their respective properties and assets. Except as set forth in
Schedule 6.7, none of such properties or assets is subject to any mortgage,
pledge, lien, security interest, encumbrance or charge of any kind except (a)
liens securing specified liabilities or obligations with respect to which no
default exists; (b) liens arising in the ordinary course of business, consistent
with past practice and liens arising by operation of law or minor imperfections
of title, if any, none of which is substantial in amount, materially detracts
from the value or materially impairs the use of the property subject thereof, or
materially impairs the operations of VTX and its Subsidiaries; and (c) liens for
current taxes not yet due, or, if due, that are being contested in good faith in
the ordinary course of business. Except as disclosed in Schedule 6.7, VTX and
its Subsidiaries do not use in their businesses any assets owned by a
shareholder or affiliate of VTX. For purposes of this Agreement, "affiliate"
shall have the same meaning as it is defined in Rule 12b-2 promulgated under the
Securities Exchange Act of 1934, as amended.
6.8 Leases. Schedule 6.8 heretofore delivered to Purchaser and certified as
true and correct by the President of VTX, contains an accurate and complete list
and description of the terms of all leases to which VTX and its Subsidiaries is
a party (as lessee or lessor), true and complete copies of which have been
previously delivered to Purchaser. Except as disclosed in Schedule 6.8, each
lease set forth in Schedule 6.8 (or required to be set forth in Schedule 6.8) is
in full force and effect; all rents and additional rents due to date on each
such lease have been paid; in each case, the lessee has been in peaceable
possession since the commencement of the original term of such lease and is not
in default thereunder and no waiver, indulgence or postponement of the lessee's
obligations thereunder has been granted by the lessor; and there exists no event
of default or event, occurrence, condition or act (including the purchase of the
Sellers Securities hereunder) which, with the giving of notice, the lapse of
time or the happening of any further event or condition, would become a breach
under such lease. Except as disclosed in Schedule 6.8, VTX and its Subsidiaries
have not violated any of the terms or conditions under any such lease in any
material respect, and to the knowledge of Roth and Rind, all of the covenants to
be performed by any other party under any such lease have been fully performed.
The properties owned and leased by VTX and its Subsidiaries are in a state of
reasonable maintenance and repair and are adequate and suitable for the purposes
for which they are presently being used.
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6.9 Business Practices. None of VTX, its Subsidiaries or any employee have
made, offered or agreed to offer anything of value to any government official,
political party or candidate for government office nor have any of them taken
any action which would be in violation of the Foreign Corrupt Practices Act of
1977 or any anti- boycott or export laws.
6.10 Officers, Directors and Key Employees. Schedule 6.10 heretofore
delivered to Purchaser and certified as true and correct by the President of VTX
sets forth a complete and correct list of the officers and directors of VTX
prior to the transaction contemplated by this Agreement; the name, position and
total compensation, including bonuses, of each officer and director of VTX,
except as set forth in Schedule 6.10, none of such persons has, in writing or
(to the knowledge of Roth and Rind) verbally, threatened, informed or otherwise
indicated to VTX or any officer or director of VTX that he or she plans to
cancel or otherwise terminate his or her relationship with VTX for any reason,
including, without limitation, the consummation of the transaction contemplated
hereby.
6.11 Employment Arrangements. VTX and its Subsidiaries do not have any
obligation, contingent or otherwise, under any employment agreement, collective
bargaining or other labor agreement, any agreement containing severance or
termination pay arrangements, deferred compensation agreement, retainer or
consulting arrangement, pension or retirement plan, bonus or profit-sharing
plan, stock option or purchase plan or other employee contract or non-terminable
(whether with or without penalty) arrangement, group, life, health, medical or
hospitalization insurance plan or program or other employee or fringe benefit
plan, including vacation plans or programs and sick leave plans or programs,
other than those listed or described in Schedule 6.11 heretofore delivered to
Purchaser and certified as true and correct by the President of VTX, and true
and complete copies of seller agreements, plans and arrangements have heretofore
been delivered to Purchaser. VTX and its Subsidiaries performed all of their
respective obligations required to be performed by them under all such
agreements, plans and arrangements, and no party thereto is in breach of or in
default or arrears under any of the provisions thereof.
6.12 Employee Relations. VTX and its Subsidiaries are in compliance with
all Federal, state or other applicable laws, domestic or foreign, respecting
employment and employment practices, terms and conditions of employment and
wages and hours, and have not and are not engaged in any unfair labor practice.
No unfair labor practice complaint against VTX or its Subsidiaries is pending
before the National Labor Relations Board. No labor strike, picket, dispute,
slowdown, stoppage or other labor trouble has ever occurred or is pending or,
threatened against or involving VTX and its Subsidiaries. No union
representation question exists respecting the employees of VTX and its
Subsidiaries. No grievance or arbitration proceeding is pending and no such
claim has been asserted or is threatened. No collective bargaining agreement is
currently being negotiated by VTX and its Subsidiaries. Except as disclosed in
Schedule 6.12 (certified as true and correct by the President of VTX), no claim
of discrimination or harassment is pending or, threatened before the Equal
Employment Opportunity Commission, or any other judicial or administrative body
or agency.
6.13 Contracts and Liabilities.
(a) Except as may otherwise be expressly provided for in Schedule 6.13
heretofore delivered to Purchaser and certified as true and correct by the
President of VTX, that Schedule sets forth all of the following contracts,
commitments and obligations of, or which relate to the business of VTX and its
Subsidiaries, written or otherwise, to which any of them is a party or by or to
which any of them or their assets or properties are bound or subject which are
not listed in any Schedule described in this Agreement and delivered to
Purchaser, including, without limitation the following:
(i) contracts, commitments and other agreements with any current or former
officer, director, employee, independent contractor, consultant, agent or other
representative;
(ii) contracts and other agreements with any labor union or association
representing any employee;
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(iii) contracts, commitments and other agreements for the sale of any of
their respective assets or properties other than in the ordinary course of
business or for the grant to any person of any preferential rights to purchase
any of the assets or properties of VTX or its Subsidiaries;
(iv) joint venture or other agreements involving sharing of profits or
joint ownership of assets or sharing of obligations or liabilities;
(v) contracts or other agreements under which VTX or any Subsidiary agrees
to indemnify any party or to share tax liability of or with any Party;
(vi) loan, factoring, credit line, security, collateral assignment or
pledge agreement, guaranty, subordination or similar type agreement;
(vii) contracts, commitments and other agreements with customers or
suppliers for the sharing of fees, the rebating of charges or other similar
arrangements;
(viii) contracts, commitments and other agreements containing obligations
or liabilities of any kind to or with any of the Sellers as such;
(ix) contracts and other agreements containing covenants of VTX or any
Subsidiary not to compete in any line of business or with any person in any
geographical area (or not to solicit or accept any business) or covenants of any
other person not to compete with VTX or any Subsidiary in any line of business
or in any geographical area (or not to solicit or accept any business);
(x) contracts and other agreements relating to the acquisition by VTX or
any of its Subsidiaries of (a) the capital shares of any other person; or (b)
any operating business including the assumption of any lease and acquisition by
consignment of any inventory;
(xi) options for the purchase of any asset, tangible or intangible;
(xii) contracts and other agreements requiring the payment to any person of
an override or similar commission or fee;
(xiii) contracts and other agreements for the payment of fees or other
consideration to any officer or director of VTX or any Subsidiary or to any
other entity in which any of the foregoing has a direct or indirect interest;
(xiv) contracts and other agreements relating to the borrowing of money;
(xv) purchase orders, contracts and commitments for the purchase or sale of
any goods or services to or by VTX or any Subsidiary, except for those orders,
contracts and commitments which are less than $10,000 in amount or which cannot
be canceled at will by VTX or any Subsidiary without penalty or premium; and
(xvi) other contracts or business arrangements which are not made in the
ordinary course of business.
(b) Except as set forth in Schedule 6.13, all such contracts are valid,
binding and enforceable and in full force and effect. Except as set forth in
Schedule 6.13, neither VTX or any Subsidiary is in default under any such
contract and there have been no claims of default and there are no existing
factors or conditions which with the passage of time or giving of notice or both
would constitute such a default or in any case in which such default would
45120-1 2/24/97
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give rise to a right of termination by the other party thereto or which
would result in any material cost, expense or penalty to VTX or any Subsidiary.
(c) Roth and Rind have delivered to Purchaser correct and complete copies
of all of the written contracts and documents constituting commitments set forth
in Schedule 6.13.
6.14 Insurance Policies. Schedule 6.14 heretofore delivered to Purchaser
and certified as true and correct by the President of VTX, contains a complete
and correct list and description of all insurance polices with respect to the
business, properties, assets and employees of VTX and its Subsidiaries. Such
policies are in full force and effect and insure adequately against risks to
which VTX, its Subsidiaries and its assets, properties and employees are exposed
in the operation of their respective businesses. No notice of cancellation,
expiration or non-renewal of any such policy has been received by VTX or any
Subsidiary and no cause for such termination exists.
6.15 Compliance with ERISA.
(a) Schedule 6.15 heretofore delivered to Purchaser and certified as true
and correct by the President of VTX, sets forth a complete and correct list of
all "employee pension benefit plans" and "employee benefit plans" as defined
respectively in Sections 3(2) and 3(3) of ERISA, including "multiemployer plans"
as defined in Section 3(37) of ERISA, and any other pension, profit sharing,
retirement, deferred compensation, vacation, severance, disability,
hospitalization, medical insurance or other employee benefit plan or program, if
any, which VTX, any Subsidiary or any other entity which constitutes part of a
"controlled group" (within the meaning of Section 4001(b) of ERISA and/or
Sections 414(b)-(o) of the Code and the Treasury Regulations proposed
thereunder) which VTX or any Subsidiary maintains or to which VTX or any
Subsidiary has any present or future obligation to contribute (collectively, the
"VTX Plans"). Sellers have caused VTX and its Subsidiaries to deliver to
Purchaser true and complete copies of all VTX Plans (including other instruments
relating thereto), if any, as they may have been amended to the date hereof,
embodying, relating to or summarizing the VTX Plans. Sellers have made available
to Purchaser the most recent annual report (Form 5500) filed and the most recent
summary plan description with respect to each VTX Plan.
(b) Other than those employee pension benefit plans set forth in Schedule
6.15, neither VTX or any Subsidiary maintains any "employee pension benefit
plan" as defined in ERISA Section 3(2) for the benefit of the employees any VTX
and any Subsidiary and has maintained no such plan during any part of the past
five (5) years.
(c) Neither VTX nor any Subsidiary has any obligation to contribute to any
"multiemployer" plan, as defined in Section 3(37) of ERISA.
(d) VTX and its Subsidiaries are in compliance in all material respects
with the requirements prescribed by any and all statutes, orders, governmental
rules or regulations applicable to the VTX Plans and all reports and disclosures
relating to the VTX Plans required to be filed with or furnished to governmental
agencies, participants or beneficiaries prior to the date of this Agreement have
been filed in accordance with applicable law.
(e) None of VTX or its Subsidiaries, as of the date of this Agreement, have
completely or partially withdrawn from any "multiemployer plan" within the
meaning of the Multiemployer Pension Plan Amendments Act of 1990. Neither VTX or
any Subsidiary has suffered a seventy (70%) percent decline in "contribution
base units" (within the meaning of ERISA Section 4205(b)(1)(A)) in any plan year
beginning after 1979.
(f) There are no actions, audits, suits or claims pending (other than
routine claims for benefits) or threatened, against any of the VTX Plans or any
fiduciary of any of the VTX Plans or against the assets of any of the VTX Plans.
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(g) The consummation of the transactions contemplated hereby will not
accelerate any liability under any of the benefit plans because of an
acceleration of any rights or benefits to which employees or any of them may be
entitled thereunder.
(h) With respect to any VTX Plan that is an "employee welfare benefit plan"
within the meaning of Section 3(1) of ERISA ("VTX Welfare Plan") (i) each such
VTX Welfare Plan, the contributions to which are claimed as a deduction under
any provision of the Code, is in compliance in all material respects with all
applicable requirements pertaining to such deduction, (ii) with respect to any
"welfare benefit fund" within the meaning of Section 419 of the Code that
comprises part of a VTX Welfare Plan, there is no disqualified benefit within
the meaning of Section 4976(a) of the Code, (iii) any such VTX Welfare Plan that
is a "group health plan" within the meaning of Section 162(i)(3) of the Code
meets all of the requirements of Section 162(k) of the Code.
(i) Except as disclosed in Schedule 6.15 hereto, neither VTX or any
Subsidiary has any obligation to any retired or former employee under any
disability (long or short term), hospitalization, medical, dental or life
insurance plans (whether insured or self-insured) or other employee welfare plan
as defined in ERISA Section 3(1) maintained by VTX or any Subsidiary.
6.16 Tax Matters.
Filing of Tax Returns; Payment of Taxes; No Audits, Investigations or
Claims. There has heretofore been delivered to Purchaser true, complete and
correct copies of all Federal, state and local tax returns filed by VTX and its
Subsidiaries for each of the three (3) taxable years of VTX and its Subsidiaries
ended December 31, 1995, any statement of audit adjustments applicable thereto
and all Federal, state and local returns of estimated taxes filed during fiscal
1996. VTX and its Subsidiaries have duly and timely filed all federal, state,
local and other tax and information returns required to be filed by them with
regard to any income, sales, use, gross receipts, property, employment and other
taxes, charges, levies or other assessments related to its business, properties
or assets, and have duly paid in full or made adequate provision for all taxes
and other charges shown as due on such returns or which otherwise have been
accrued or have become due prior to the date hereof whether or not shown on any
such return. Neither VTX or any Subsidiary has received written notice of any
claim or claims for additional taxes which are claimed to be due from any of
them by Federal, state, local or foreign taxing authorities in connection with
such reports or returns. There are no liens for Federal, state, local or foreign
taxes, assessments or government charges or levies upon any of the properties or
assets of VTX or any Subsidiary. There are no outstanding agreements or waivers
extending the statutory period of limitation applicable to any income tax or
other return of VTX or any Subsidiary for any period and there are not, nor have
there been, any audits of VTX or any Subsidiary by any Federal, state or local
governmental tax authority and no notice of any audit has been received by any
of them.
6.17 Intellectual Property. Schedule 6.17 heretofore delivered to Purchaser
and certified as true and correct by the President of VTX, contains a list of
all Intellectual Property ("Intellectual Property") of VTX and any Subsidiary.
VTX or its Subsidiaries, as the case may be, has full ownership, right, title
and interest in and to the Intellectual Property and the Intellectual Property
constitutes valid and enforceable rights of VTX or a Subsidiary. Neither VTX or
any Subsidiary has received any notice and has no reason to believe that the
validity of the Intellectual Property or VTX's (or its Subsidiary's) interest
therein can be or is being challenged by any third party. Neither VTX or any
Subsidiary has heretofore granted any licenses or conveyed any other rights or
interests to any of the Intellectual Property. The operation of VTX and its
Subsidiaries as currently conducted does not infringe upon any patents or other
intellectual property rights of any third party. All trade names and trademarks
used by VTX or its Subsidiaries to identify its products and services are
protected by registration in the name of VTX and its Subsidiaries on the
principal register in the United States Patent and Trademark Office, state
registrations and/or by rights in the United States accorded to VTX or its
Subsidiary by virtue of the common law.
6.18 Environmental Matters.
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(a) Neither VTX or any Subsidiary has received any notice from any
governmental agency or private or public entity advising that any of them is
potentially responsible for response costs or other costs with respect to a
release or threatened release of any Hazardous Substance and neither VTX or any
Subsidiary nor any predecessors in interest or any of them with respect to their
business, properties or assets have conducted activities which could reasonably
be expected to result in such a notice. No administrative, civil or criminal
actions, including without limitation third-party actions for personal injury or
property damage, are pending or threatened with respect to Environmental Laws or
related to the business of VTX or any Subsidiary. No judgements, consent orders,
consent decrees, stipulations, or other restrictions have been entered or
applied with respect to Environmental Laws or related to the business,
properties or assets of VTX or any Subsidiary. VTX or any Subsidiary has
received or is aware of any governmental orders, notifications, notices of
violation, or requests for information relating to environmental or health and
safety conditions at or related to the business, properties or assets of VTX or
any Subsidiary, nor is VTX or any Subsidiary aware of any past or current
violations of any Environmental Law related to the business, properties or
assets of VTX or any Subsidiary or of environmental conditions related to the
business, properties or assets of VTX or any Subsidiary. Neither the operation
of VTX or any Subsidiary, either as currently conducted or conducted in the past
at any office space or other facility or real property owned, leased, used or
occupied by VTX or any Subsidiary, whether currently or at any time in the past,
violate nor have violated any Environmental Laws.
(b) For purposes of this Agreement, (i) "Environmental Laws" shall mean
statute, law, ordinance or regulation of any federal, state, county, local or
foreign governmental authority relating to the environment, including air, water
or noise pollution, emissions or discharges, the environment, public health,
employee health, safety or welfare, land use or the production, processing,
distribution, use, storage, labeling, handling, transportation, treatment or
disposition of any Hazardous Substance; and (ii) "Hazardous Substance" shall
mean asbestos, paints, solvents, ureaformaldehyde, polychlorinated biphenyls,
nuclear fuel or material, chemical waste, hazardous waste, radioactive material,
explosives, known carcinogens, petroleum products and by-products and other
dangerous, toxic, infectious or hazardous pollutants, contaminants, chemicals,
materials, wastes or substances listed or identified in, or regulated by, any
Environmental Laws.
6.19 Permits, Licenses, Compliance with Laws. VTX and its Subsidiaries have
all permits, licenses, orders, consents and approvals of federal, state, local
or foreign governmental or regulatory bodies that are required in order to
permit them to carry on their respective businesses as currently conducted.
Schedule 6.19 heretofore delivered to Purchaser and certified as true and
correct by the President of VTX, sets forth a correct and complete list of all
such permits, licenses, orders and approvals, all of which are in full force and
effect, and no suspension or cancellation of any of them is threatened, and no
cause exists for such suspension or cancellation. The business of VTX and its
Subsidiaries have been and are being conducted in accordance and in compliance
with all applicable federal, state, local or foreign laws, codes, ordinances,
rules and regulations.
6.20 Litigation. Except as set forth in Schedule 6.20 (certified as true
and correct by the President of VTX), there is no claim, action, suit,
proceeding, arbitration, investigation or inquiry pending before any federal,
state, local, or other court or governmental, administrative, or self-regulatory
body or agency, or any private arbitration tribunal, or threatened against VTX
and any Subsidiary relating to the business of VTX and its Subsidiaries, any of
the properties or assets of VTX and its Subsidiaries or the transactions
contemplated by this Agreement; nor is there any basis for any such claim,
action, suit, proceeding, arbitration, investigation or inquiry. Neither VTX nor
any Subsidiary is in default under any order, license, regulation or demand of
any federal, state or local, or other court or governmental, administrative or
self-regulatory body or agency.
6.21 Conditions of Equipment. All offices, shops and other structures and
all machinery, equipment, tools, dies, fixtures, motor vehicles and other
properties owned or used by VTX and its Subsidiaries are in good operating
condition and repair, ordinary wear and tear excepted, and are adequate and
sufficient for all current operations of VTX and its Subsidiaries.
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6.22 Inventories. The inventories of VTX and its Subsidiaries shown on
their books of account consist of items of a quality and quantity usable and
saleable in the normal course of business, and the values of obsolete materials
and materials below standard quality have been written down on such books of
account to realizable market value, or adequate reserves have been provided
therefor, and the values at which such inventories are carried reflect the
customary inventory valuation policy consistently applied by VTX and its
Subsidiaries of stating inventory at the lower of cost or realizable market
value, on a first in first out basis, all in accordance with the generally
accepted accounting principles.
6.23 Notes and Accounts Receivable. Schedule 6.23 heretofore delivered to
Purchaser and certified as true and correct by the President of VTX sets forth a
complete and correct aging schedule of accounts receivable as of December 31,
1996, resulting from the sale of inventory in the ordinary course of business.
Except as disclosed in Schedule 6.23, Roth and Rind have no knowledge that such
accounts receivable are not collectible in full in the ordinary course of
business. Except with respect to liens in favor of Congress and the subordinated
liens of the Debentureholders, as reflected in Exhibit "1" hereto, all such
accounts receivable are owned by VTX or the Subsidiaries free and clear of all
liens, claims, charges, encumbrances, and other interest of third parties.
6.24 Broker. No broker, finder, agent or other intermediary has acted on
behalf of the Sellers or otherwise assisted in bringing about the transactions
contemplated by this Agreement and no broker, finder, agent or other
intermediary is entitled to any commission or finder's fee in respect thereof
based in any way on agreements, understandings or arrangements with or the
conduct of VTX (any Subsidiary).
6.25 Banks; Safe Deposit Boxes; Powers of Attorney. There has heretofore
been delivered to Purchaser Schedule 6.25 (certified as true and correct by the
President of VTX) setting forth (i) the name of each bank in which VTX and each
Subsidiary has an account or safe deposit box and the names of all persons
authorized to draw thereon or to have access thereto, and (ii) the names of all
persons, firms, associations, corporations or business organizations holding
general or special powers of attorney from VTX and each Subsidiary and a summary
of the terms thereof.
6.26 SEC Filings. VTX has filed and there has been made available to the
Purchaser all forms, reports and documents required to be filed by VTX with the
Securities and Exchange Commission ("SEC") since January 1, 1995 (collectively,
the "VTX's SEC Reports"). The VTX's SEC Reports (i) at the time filed, complied
in all material respects with the applicable requirements of the Securities Act
of 1933, as amended, and the Securities Exchange Act of 1934, as the case may
be; and (ii) did not at the time they were filed (or if amended or superseded by
a filing prior to the date of this Agreement, then on the date of such filing)
contain any untrue statement of a material fact or omit to state a material fact
required to be stated in such VTX's SEC Reports or necessary in order to make
the statements in such VTX's SEC Reports, in the light of the circumstances
under which they were made, not misleading.
6.27 Related-Party Transactions. Except as disclosed in Schedule 6.27
heretofore delivered to Purchaser and certified as true and correct by the
President of VTX, none of VTX, any Subsidiary, the Sellers, or any person
controlling, controlled by or under common control with any of the foregoing or
any relative or spouse of any of the foregoing has any interest, financial or
otherwise, in any business, corporate or otherwise (the value of which equals or
exceeds $2,000 per annum), which is a party to, or has an interest in any
property which is the subject of, or has business relationships or arrangements
of any kind with VTX or any Subsidiary, including, without limitation, any
customer, supplier, competitor, or potential competitor or lessor.
6.28 Material Information; Full Disclosure. This Agreement and any other
certificate, document, agreement or information furnished (including, without
limitation, any schedule hereto) or to be furnished pursuant to this Agreement
to Purchaser does not contain and will not contain any untrue statement of a
material fact or omits or will omit to state a material fact necessary to make
the statement herein or therein not misleading.
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6.29 Limitation of Representations and Warranties. Except for the
representations and warranties made pursuant to this Article 6, or as otherwise
provided in Article 5, with respect to the representations and warranties made
by the Sellers, no other representations and warranties are made by Roth and
Rind pursuant to this Agreement, the Escrow Agreement or otherwise.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Sellers as follows:
7.1 Organization and Good Standing of Purchaser. Purchaser is a limited
liability company duly formed and subsisting under the laws of the State of New
York. Purchaser has all requisite power and authority to make the
representations, warranties, covenants and agreements hereunder, to own, lease
and operate its properties and assets and to carry on its business as currently
conducted, to execute and deliver this Agreement and to perform its obligations
under this Agreement.
7.2 Authorization of Agreement and Enforceability. Purchaser has full power
and authority to execute and deliver this Agreement and the Escrow Agreement and
to perform its obligations hereunder and thereunder. This Agreement and the
Escrow Agreement have been duly and validly, executed and delivered by Purchaser
and (assuming the valid execution and delivery of the Agreement by Sellers and,
in the case of the Escrow Agreement, by the Escrow Agent) constitutes the legal,
valid and binding obligation of Purchaser, enforceable against Purchaser in
accordance with its terms.
7.3 Effect of Agreement. Neither the execution, delivery and performance of
this Agreement by Purchaser, nor the consummation by Purchaser of the
transactions contemplated hereby will (a) conflict with or result in a breach of
any provision of Purchaser's Articles of Organizations or Operating Agreement,
(b) constitute or result in the breach of, conflict with or give rise to a right
of termination, cancellation or acceleration with respect to, any term,
condition or provision of, any note, bond, mortgage, indenture, license or other
contract or obligation to which Purchaser is a party or by which it or any of
its properties or assets may be bound, except for such conflicts, breaches or
defaults as to which written waivers or consents have been obtained, or (c)
violate any law, statute, regulation, judgment, order, writ, injunction, or
decree applicable to Purchaser or any of its properties or assets.
7.4 Government and Other Consents. No consent, order, authorization,
qualification, or approval of, or exemption by, or filing with any governmental,
public, or regulatory body or authority is required in connection with the
execution, delivery and performance by Purchaser of this Agreement.
7.5 Broker. No broker, finder, agent or other intermediary has acted on
behalf of Purchaser or otherwise assisted in bringing about the transactions
contemplated by this Agreement and no broker, finder, agent or other
intermediary is entitled to any commission or finder's fee in respect thereof
based in any way on agreements, understandings or arrangements with or the
conduct of Purchaser.
7.6 Material Information; Full Disclosure. This Agreement and any other
certificate, document, agreement or information furnished (including, without
limitation, any schedule hereto) or to be furnished pursuant to this Agreement
by the Purchaser to the Sellers does not contain and will not contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary to make the statement herein or therein not misleading.
7.7 Limitation of Representations and Warranties. Except for the
representations and warranties made pursuant to this Article 7, no other
representations or warranties are made by Purchaser pursuant to this Agreement,
the Escrow Agreement or otherwise.
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<PAGE>
ARTICLE 8
COVENANTS AND CONDITIONS
8.1 Covenants Relative to VTX Common Stock. Purchaser covenants and agrees
that immediately following approval by the Bankruptcy Court of the Plan of
Reorganization of VTX and one or more Subsidiaries, the Debentureholders will
own in the aggregate such number of shares of VTX common stock ("VTX Common") as
shall equal ten (10%) percent of the VTX Common owned by Purchaser, but in no
event more than five (5%) percent of VTX Common outstanding at that time. The
parties covenant and agree to deliver VTX Common, one to the other, to comply
with the provisions of this subsection.
8.2 Covenants Related to Retained Debentures by Purchaser. Notwithstanding
Section 8.1 above, Purchaser covenants and agrees with respect to those
Debentures (and Warrants) in the aggregate face amount of Four Hundred Thousand
($400,000) Dollars retained by the Debentureholders ("Retained Debentures")
following execution of this Purchase Agreement, to purchase and Sellers agree to
sell such Retained Debentures, proportional to Sellers' ownership thereof, as
Purchaser either (a) causes VTX to redeem its Debentures, or (b) reduces the
face amount of its Debentures in payment for certain assets of VTX or any
Subsidiary acquired by Purchaser. The face amount of Debentures redeemed by
Purchaser or face amount of Debentures surrendered by Purchaser, described in
(a) and (b) above, is individually or collectively called the "Consideration."
Such purchase price of the Retained Debentures by Purchaser shall be an amount
equal to Twenty-Six and Sixty-Six Hundredths (26.66%) percent of the
Consideration. Upon notice from Purchaser to the Retained Debentureholders
describing the nature and amount of the purchase of and payment for the Retained
Debentures due to each of them, each Debentureholder shall deliver his
Debenture(s) to VTX, with the appropriate endorsement, and VTX shall issue
replacement debentures in the reduced amount thereof.
8.3 Covenants Related to Retained Debentures by Debentureholders.
Debentureholders covenants and agree not to transfer their Retained Debentures
for one (1) year from the date hereof.
8.4 Covenants Related to Closing Conditions. Each of the parties hereto
will use their best efforts to fulfill the closing conditions contained in this
Agreement.
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<PAGE>
ARTICLE 9
CONDITIONS PRECEDENT TO CLOSING
9.1 Conditions Precedent to Purchaser's Obligations. All obligations of
Purchaser under this Agreement are subject, at Purchaser's option, to the
fulfillment, prior to or at the Closing, of each of the following conditions:
(a) by May 30, 1997, there shall have been issued a final, non-appealable
order or judgment (which may be an order confirming a plan of reorganization by
the U.S. Bankruptcy Court acceptable to Purchaser) clearly confirming the
extent, priority and validity of the liens of Congress Financial Corporation
(the "Congress Lien") and the Debentureholders (the "Debentureholders' Lien"),
and providing as follows:
(i) that the Congress Lien is a first priority, perfected secured lien.
(ii) that the Debentureholders' Lien is a perfected secured lien subject
only to the Congress Lien and any debtor-in-possession financing provide by TW
Communications Corp.
(iii) that the Congress Lien is valid to the extent of all monies owed to
Congress.
(iv) that the Debentureholders' Lien is valid to the extent of Three
Million Fifteen Thousand ($3,015,000) Dollars, plus interest and costs from
December 1, 1996.
(b) the delivery to Purchaser of valid stock certificates representing not
less than ninety (90%) percent of Preferred Shares or 11,375 Preferred Shares
accompanied by stock powers, duly endorsed in blank, with signature guarantee by
a bank, trust company or New York Stock Exchange member firm.
(c) the delivery to Purchaser of Debentures (and assignments of Warrants)
in the face amount of at least Two Million Three Hundred Fifty-Three Thousand
Five Hundred ($2,353,500) Dollars, accompanied by bond powers, duly endorsed to
the Purchaser with signature guarantee by a bank, or trust company or New York
Stock Exchange member firm.
(d) the delivery to Purchaser of that portion of the Purchase Price (and
interest earned thereon) for which Securities were not delivered to the
Purchaser (provided that the minimum amount of Securities required to be
delivered hereunder have in fact been delivered).
(e) all representations and warranties contained in this Purchase Agreement
and in any statement (including financial statements), deed, certificate,
schedule or other document delivered pursuant hereto (including all filings with
the U.S. Securities and Exchange Commission) or in connection with the
transactions contemplated hereby, shall be true and accurate in all material
respects as of the date when made.
(f) each of Roth and Rind shall have delivered to Purchaser a certificate
dated the date of Closing, certifying to the fulfillment of the conditions set
forth in Section 9.1 hereof.
(g) There shall be delivered to Purchaser an opinion of counsel to VTX
dated the date of the Closing, stating the following:
(i) VTX is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware.
(ii) Vertex is a corporation duly organized, validly existing and in good
standing under the laws of the State of New York.
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<PAGE>
(iii) The authorized capitalization of VTX is 40,000,000 shares of common
stock having a par value of $.10 per share and 5,000,000 shares of Preferred
Stock of which 12,375 shares are issued and outstanding.
(iv) The authorized capitalization of Vertex is 200 shares of common stock,
having no par value, and to the best of such counsel's knowledge, all such
shares are issued and outstanding and are owned of record by VTX.
(h) no suit, action, investigation, inquiry or proceeding by any
governmental body, or other legal or administrative proceeding shall have been
instituted or threatened which questions the validity or legality of this
Agreement or any of the transactions contemplated hereby, or which seeks to
enjoin the consummation thereof.
(i) that following the election of Edward Goodstein and Carl Palazzolo as
two of the three directors of VTX, the Preferred Shareholders have not, prior to
the approval of a Plan of Reorganization, elected, appointed or removed any of
Albert Roth, Edward Goodstein or Carl Palazzolo as directors of VTX.
9.2 Conditions Precedent to Sellers' Obligations. All obligations of
Sellers under this Agreement are subject to the fulfillment prior to or at the
Closing of each of the following conditions:
(a) all representations and warranties of Purchaser contained in this
Purchase Agreement shall be true and accurate in all material respects as of the
date when made.
(b) no suit, action, investigation, inquiry or proceeding by any
governmental body, or other legal or administrative proceeding shall have been
instituted or threatened which questions the validity or legality of this
Purchase Agreement or any of the transactions contemplated hereby, or which
seeks to enjoin the consummation thereof.
(c) there shall be delivered to sellers' representative an opinion of
counsel to Purchaser, dated the date of Closing, in respect of the existence and
good standing and the power and authority of Purchaser is as represented and
warranted in Section 7.1 hereof.
ARTICLE 10
INDEMNIFICATION
10.1 Indemnification by Sellers. Sellers agree that, notwithstanding the
Closing, and the sale of the Securities provided for herein, until such time as
the Bankruptcy Court approves a Plan of Reorganization of VTX or one (1) year
from the date hereof, whichever is sooner, the Sellers will indemnify and hold
Purchaser harmless from and against any damage, liability, loss or deficiency
(including, without limitation, reasonable attorneys' fees and other costs and
expenses incident to any suit, action or proceeding) (collectively, "damages")
arising out of or resulting from, and will pay to Purchaser up to the aggregate
amount specified in Section 10.2, below, on account of: (a) any inaccuracy in
any representation or the breach of any warranty made to Purchaser hereunder, or
(b) any failure of the Sellers duly to perform or observe any term, provision,
covenant or agreement delivered pursuant to this Agreement on the part of
Sellers to be performed or observed. Notwithstanding any provisions to the
contrary, the parties hereto acknowledge and agree that the Purchaser will not
be entitled to any indemnification resulting from Sections 10.1(a) or (b) above
if the claim has been discharged in bankruptcy.
10.2 Limitation of Liability and Property. In satisfaction of the
indemnification described in Section 10.1 hereof, Purchaser may look solely to
the following to the extent that Purchaser's, VTX's or its Subsidiaries' damages
exceed Fifty Thousand ($50,000) Dollars, it being the intention and agreement
among the parties hereto that all the amounts of damages under the first Fifty
Thousand ($50,000) Dollars are payable by Purchaser:
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<PAGE>
(a) the VTX Debentures in the full amount of Four Hundred Thousand
($400,000) Dollars, and all interest thereon pro rata among the Sellers retained
by the Sellers (including Roth and Rind) not subject to this Agreement; and
(b) an amount equal to the proceeds from the respective sales of the
Securities hereunder by Roth and Rind.
The maximum liability of all Sellers, for any and all claims made pursuant
to this Agreement, the Escrow Agreement or otherwise is limited as provided in
this Section 10.2.
10.3 No Waiver. No failure or delay on the part of any party hereto in
exercising any right, power or remedy under this Purchase Agreement, or
available to any party hereto at law or in equity shall operate as a waiver of
such right, power or remedy, nor shall any single or partial exercise of any
such right, power or remedy preclude any or further exercise thereof or the
exercise of an other right, power or remedy available to any party hereto.
Subject to the limitations of Section 10.2, the remedies provided in this
Agreement are exclusive.
10.4 Indemnification by Purchaser. Purchaser agrees that, notwithstanding
the Closing, and the sale of the Securities provided for herein, until such time
as the Bankruptcy Court approves a Plan of Reorganization of VTX or one (1) year
from the date hereof, whichever is sooner, the Purchaser will indemnify and hold
Sellers harmless from and against any damage, liability, loss or deficiency
(including, without limitation, reasonable attorneys' fees and other costs and
expenses incident to any suit, action or proceeding) (collectively, "damages")
arising out of or resulting from, and will pay to Sellers up to the aggregate
amount on account of: (a) any inaccuracy in any representation or the breach of
any warranty made to Sellers hereunder, or (b) any failure of the Purchaser duly
to perform or observe any term, provision, covenant or agreement delivered
pursuant to this Agreement on the part of Purchaser to be performed or observed.
10.5 Third Party Claims. In case of the assertion in writing of any claim
initiated or asserted by any person, firm, governmental authority or corporation
other than Purchaser or any affiliate of Purchaser (a "Third Party Claim")
against VTX or any Subsidiary or the commencement of any litigation asserting a
Third Party Claim which may give rise to any indemnification obligation of
Sellers (each an "Indemnitor") to Purchaser or VTX or any Subsidiary under the
provisions of this Article, Purchaser shall give notice thereof as provided
hereunder as promptly as practicable after Purchaser's receipt of such written
assertion or the commencement of such litigation unless the failure to give such
notice would not materially prejudice Sellers, such notice to be given by
Purchaser not later than would materially prejudice Sellers if they chose to
defend such litigation as hereinafter provided. If Indemnitor demonstrates to
Purchaser that Indemnitor will be able to pay the full amount of potential
liability in connection with any Third Party Claim, Indemnitor may at its sole
cost and expense, upon written notice given to Purchaser within fifteen (15)
days after its receipt of Purchaser's notice under this Section 10.5, assume the
defense, with counsel reasonably satisfactory to Purchaser, of any such Third
Party Claim or litigation, provided that Indemnitor admits in writing to
Purchaser its liability solely as between it and Purchaser with respect to all
material elements thereof. If Indemnitor assumes the defense of any such claim
or litigation, the obligations of Indemnitor hereunder as to such claim or
litigation shall be limited to taking all steps necessary in the defense or
settlement thereof and to holding Purchaser harmless from and against any and
all losses, liabilities, expenses and damages caused by or arising out of any
settlement approved by Indemnitor or any judgment in connection with such claim
or litigation, and Purchaser shall make available or cause to be made available
to Indemnitor such books and records in VTX's or any Subsidiary's possession as
Indemnitor may reasonably require in connection with such defense. Except with
the express prior written consent of Purchaser, Indemnitor shall not consent to
the settlement or entry of any judgment arising from any such claim or
litigation which in each case does not include as an unconditional term thereof
the giving by the claimant or plaintiff, as the case may be, to Purchaser of an
unconditional release from all liability in respect thereof unless Indemnitor
shall have actually paid the full amount of any such settlement or judgment.
Purchaser shall be entitled to be consulted about (but not control) the defense
of, and receive copies of all pleadings and other material papers in connection
with, any such claim or litigation unless prohibited by law or contract. If
Indemnitor does not
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<PAGE>
assume the defense of any such claim or litigation Purchaser may defend the
same in such manner as it may deem appropriate, including but not limited to
settling such claim or litigation after giving reasonable notice of the same to
Indemnitor on such terms as Purchaser may deem appropriate, and Indemnitor will
promptly reimburse Purchaser in accordance with the provisions of this Section
10.5, subject to the indemnification limits contained in Section 10.2, provided
that Purchaser furnish Indemnitor with copies of all pleadings and other
material documents in connection with any such claim or litigation and that
Indemnitor is consulted about (albeit not in control of) such litigation.
Anything contained in this Section 10.5 to the contrary notwithstanding, (i)
Indemnitor shall not be entitled to assume the defense of any such claim or
litigation if the Third Party Claim seeks an order, injunction or other
equitable relief against Purchaser which, if successful, might materially
interfere with, or adversely affect, the operation of its business by Purchaser
or VTX or any Subsidiary; and (ii) Purchaser or VTX or any Subsidiary may defend
any Third Party Claim to which Purchaser or VTX or any Subsidiary may have a
defense or counterclaim which Indemnitor is not entitled to assert to the extent
necessary to assert and maintain such defense or counterclaim provided that
Purchaser provide or cause to be provided to Indemnitor copies of all pleadings
and other material documents in connection with any such claim or litigation and
that Indemnitor is consulted about (albeit not in control of) such litigation.
With regard to the assertion of any claim or the commencement of any
litigation described in the immediately preceding paragraph against VTX or any
Subsidiary which may give rise to any indemnification obligation of Purchaser to
Sellers under the provisions of this Article, Sellers' Representative or
Herrick, Feinstein L.L.P. shall give notice thereof as provided hereunder as
promptly as practicable after Sellers' receipt of such written assertion or the
commencement of such litigation unless the failure to do so would not materially
prejudice Purchaser, such notice to be given by Purchaser not later than would
materially prejudice Sellers if they chose to defend such litigation as
hereinafter provided. Thereafter, the rights and obligations of the Parties
under this subparagraph shall be the same as described in the immediately
preceding paragraph except that wherever the term "Indemnitor" is used it shall
mean "Purchaser" and wherever "Purchaser" is used it shall mean "Sellers'
Representative."
ARTICLE 11
GENERAL
11.1 Expenses. Purchaser and Sellers shall pay their own respective
counsel, accountants and other advisors' fees and expenses arising in connection
with the negotiation and preparation of this Agreement and the consummation of
the transactions contemplated hereby.
11.2 Sales, Transfer and Documentary Taxes, etc.. Sellers shall pay all
sales, transfer and documentary taxes, if any, due as a result of the sale of
the Securities to Purchaser and all other fees applicable to Sellers directly
relating to the transfer of the Securities to Purchaser.
11.3 Survival of Representations and Warranties. Each of the Parties
covenants and agrees that all of the representations warranties, covenants, and
agreements set forth in this Agreement shall survive until the Bankruptcy Court
approves the Plan of Reorganization of VTX or any Subsidiary or from one (1)
year from the date hereof, whichever is sooner, and shall not be merged into any
instruments of transfer or other documents delivered by any of the Parties at
Closing or at any other time.
11.4 No Third Party Beneficiaries. Nothing in this Agreement, expressed or
implied, is intended to confer on any person other than the Parties or their
respective heirs, successors and assigns any rights, remedies, obligations, or
other liabilities under or by reason of this Agreement.
11.5 Notices. All notices permitted or required under this Agreement shall
be in writing and shall be either (a) delivered by personal service, (b)
delivered by courier service, (c) telecopied and confirmed immediately in
writing by a copy mailed by registered or certified mail, postage prepaid,
return receipt requested, or (d) sent by certified
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<PAGE>
or registered mail, postage prepaid, return receipt requested, to the
parties hereto at their addresses set forth below or at such other addresses
which may be designated in writing by the parties:
If to Sellers to: Todtman, Young, Tunick, Nachamie, Hendler & Spizz, P.C.
425 Park Avenue
New York, New York 10022
Attention: Arthur Goldstein. Esq.
Telecopier: (212) 754-6262
Herrick, Feinstein LLP
2 Park Avenue
21st Floor
New York, New York 10016
Attention: Irwin Kishner, Esq.
Telecopier: (212) 889-7577
With a copy to: Shustak, Jalil & Heller
545 Madison Avenue
New York, NY 10022
Attention: James Jalil, Esq.
Telecopier No.: (212) 688-6151
If to Purchaser to: Edward Goodstein, President
TW Cable, L.L.C.
81 Executive Boulevard
Farmingdale, NY 11735-4710
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<PAGE>
With a copy to: Ruskin, Moscou, Evans & Faltischek, P.C.
170 Old Country Road
Mineola, New York 11501
Attention: Irvin Brum, Esq.
Telecopier No.: (516) 663-6610
Such notices shall be effective upon receipt in the case of personal or
courier service or telecopier delivery and on the third (3rd) day after posting
in the U.S. mail.
11.6 Entire Agreement. This Agreement (including the Schedules hereto)
supersedes all prior agreements and understandings, oral and written, among the
parties with respect to the subject matter, and this Agreement constitutes the
entire agreement of the parties with respect to the subject matter hereof.
11.7 Headings. The article, section and other headings contained in this
Agreement are for reference purposes only and shall not be deemed to be a part
of this Agreement or to affect the meaning or interpretation of this Agreement.
11.8 Counterparts. This Agreement may be executed in any number of
counterparts, each of which, when executed, shall be deemed to be an original,
and all of which together shall be deemed to be one and the same instrument.
Facsimile signatures of the parties hereto shall be acceptable subject to
delivery within ten (10) days thereafter of documents with original signatures.
11.9 Governing Law. This Agreement shall be construed as to both validity
and performance and governed by and enforced in accordance with the laws of the
State of New York, without giving effect to the choice of law principles.
11.10 Severability. If any term, covenant, condition, or provision of this
Agreement or the application thereof to any circumstance shall be invalid or
unenforceable to any extent, the remaining terms, covenants, conditions, and
provisions of this Agreement shall not be affected and each remaining term,
covenant, condition, and provision of this Agreement shall be valid and shall be
enforceable to the fullest extent permitted by law. If any provision of this
Agreement is so broad as to be unenforceable, such provision shall be
interpreted to be only as broad as is enforceable.
11.11 Amendments. This Agreement may not be modified or changed except by
an instrument or instruments in writing signed by all Parties.
11.12 Assignment. None of the Parties shall assign its rights or
obligations under this Agreement without the prior written consent of the other
Parties, except that Purchaser may assign this Agreement to any Affiliate of
Purchaser without the consent of Sellers, provided, however, that if Purchaser
assigns this Agreement then Purchaser is liable for all breaches of this
Agreement occurring prior to such assignment.
11.13 Successors and Assigns. The covenants, agreements, and conditions
contained or granted shall be binding upon and shall inure to the benefit of
Purchaser and Sellers and their respective heirs, successors and permitted
assigns.
11.14 No Joint Venture. The Parties, by entering into this Agreement and
consummating the transactions contemplated in this Agreement, shall not be and
shall not be considered a partner or joint venturer of one another.
11.15 Construction of Agreement. This Agreement was negotiated at arm's
length by the Parties and their respective counsel. This Agreement shall not be
construed as having been "drafted" by any one Party and shall not be construed
against any Party as a drafting party.
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<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first written above.
TW CABLE L.L.C.
By:
---------------------------------
Edward Goodstein, President
81 Executive Drive
Farmingdale, New York 11735
---------------------------------
Steel Partners II, L.P.
c/o Warren Lichtenstein
750 Lexington Avenue
New York, NY 10022
---------------------------------
Quota Fund NV
c/o Warren Lichtenstein
750 Lexington Avenue
New York, NY 10022
---------------------------------
Marshall D. Butler
750 Lexington Avenue
New York, NY 10022
---------------------------------
Kenneth Rind
44 West 77th Street, Apt. 8W
New York, NY 10024
---------------------------------
Hiro Hiranandani
c/o Computer Power, Inc.
124 West Main Street
High Bridge, New York 08829
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---------------------------------
Herman Fialkov
c/o PolyVentures
199 Middle Neck Road
Great Neck, New York 11021
---------------------------------
Albert Roth
200 Winston Drive
Apartment 2515
Cliffside Park, New Jersey 07010
---------------------------------
Long Island Venture Fund, L.P.
Paul Lowell, Partner
110 Lake Avenue South
Nesconset, NY 11767
---------------------------------
Alexander Wohlgemuth
Ernst & Co.
One Battery Park Plaza
New York, NY 10004
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<PAGE>
---------------------------------
LEG Partners SBIC, L.P.
c/o Golub Associates
Attention: Lawrence E. Golub
230 Park Avenue South
New York, NY 10169
---------------------------------
Rabinowitz Family 1986 Trust
c/o Odyssey Partners
Attention: Martin Rabinowitz
31 West 52nd Street
New York, New York 10169
---------------------------------
Rabinowitz Family 1991 Trust
c/o Odyssey Partners
Attention: Martin Rabinowitz
31 West 52nd Street
New York, New York 10169
---------------------------------
Martin Rabinowitz
31 West 52nd Street
New York, New York 10169
---------------------------------
Doris L. Payson
290 Kings Point Road
Kings Point, NY 11024
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---------------------------------
Seymour Leslie Trust
c/o Leslie Group
1370 Avenue of the Americas
26th Floor
New York, New York 10019
---------------------------------
Fred Heim
4900 Gloria Avenue
Encino, CA 91436
---------------------------------
Alexander D. MacCallum
Janet M. MacCallum
1 Tennyson Road
New Hartford, NY 13413
---------------------------------
Fundex Capital Corp.
555 Theodore Fremd Avenue
Suite 200-C
Rye, New York 10580
---------------------------------
Roland A. Catalano
3215 Crabtree Lane
Hunting Valley, Ohio
---------------------------------
Tradewind Fund L.P. I
c/o Henry Hackel
2701 Summer Street
Stamford, Connecticut 06905
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---------------------------------
R.F. Lafferty & Co., Inc.
Pension Profit Plan
c/o Henry Hackel
80 Broad Street
New York, New York 10004
---------------------------------
Stourbridge Investments, Ltd.
c/o Kalis Shvarbir
Private Trust Limited
P.O. Box N-75
Nassau, Bahamas
---------------------------------
Martin and Miriam Knecht
735 Park Avenue
Elizabeth, New Jersey 07208
TW Communications Corp. hereby
guarantees the performance of
Purchaser under this Agreement
By:
---------------------------------
Edward Goodstein, President
81 Executive Drive
Farmingdale, New York 11735
45120-1 2/24/97
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Exhibit 2
ESCROW AGREEMENT
ESCROW AGREEMENT, dated as of January 10, 1997, among TW CABLE, L.L.C., a
New York limited liability company, with offices located at 81 Executive
Boulevard, Farmingdale, New York, 11735 (the "Purchaser"), the Owners of
Preferred Stock ("Preferred Shareholders") and Secured Subordinated Debentures
and Warrants issued in connection therewith ("Debentureholders" and together
with the Preferred Shareholders hereafter collectively referred to as the
"Sellers") of VTX Electronics Corp., a Delaware Corporation ("VTX"), whose names
and addresses are set forth in the schedule, annexed hereto, made part hereof
and referred to as Exhibit "1," and Todtman, Young, Tunick, Nachamie, Hendler &
Spizz, P.C., with offices as 425 Park Avenue, New York, New York 10022, as
escrow agent (the "Escrow Agent").
Purchaser desires to purchase from the Sellers all, but not less than
ninety (90%) percent, of the outstanding VTX (a) Senior Redeemable Cumulative
Convertible Preferred Stock ("Preferred Shares"), and (b) Secured Subordinated
Debentures in the principal unpaid amount of Two Million Six Hundred Fifty
Thousand ($2,615,000) Dollars and Seventy Million Three Hundred Fifty Thousand
(70,350,000) warrants (the "Warrants") issued in connection therewith
(collectively, the "Debentures," and, together with the Preferred Shares, the
"Securities") for a maximum aggregate purchase price of One Million One Hundred
Thousand ($1,100,000) Dollars (the "Purchase Price" and, together with the
Preferred Shares and Debentures, collectively referred to as the "Escrow
Property"), pursuant to the Securities Purchase Agreement between the Purchaser
and the Sellers, dated as of the date hereof (the "Purchase Agreement") a copy
of which is annexed hereto, made a part hereof and referred to as Exhibit "2".
This Escrow Agreement is being entered into for the purpose of assuring
Purchaser of the fulfillment
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<PAGE>
of those conditions described in Article 1 hereof. Capitalized terms
hereunder shall have the same meaning as in the Purchase Agreement unless the
context clearly indicates the contrary.
In consideration of the execution of the Purchase Agreement and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE 1
ESCROW PROPERTY
1.1. Simultaneously with the execution and delivery hereof by Purchaser and
the Escrow Agent, there has been delivered to the Escrow Agent a copy of the
Purchase Agreement executed by Purchaser, accompanied by Purchaser's wire
transfer for the Purchase Price payable to the order of the Escrow Agent in the
sum of One Million One Hundred Thousand ($1,100,000) Dollars and conditional
letters of resignation of Edward Goodstein and Carl Palazzolo.
1.2. Escrow Agent agrees to deposit the Purchase Price into escrow in an
interest bearing segregated bank account at Republic National Bank and to
promptly notify Purchaser and Albert Roth (the "Sellers' Representative") of the
address of said bank where the funds are on deposit and the account number.
1.3. Escrow Agent agrees to give notice to Purchaser and Sellers'
Representative of due receipt from the Sellers of delivery into escrow of the
Agreements and Securities described in Section 1.5 hereof.
1.4. If by February 14, 1997, Purchaser fails to receive the notice from
the Escrow Agent, as described in Section 1.5 hereof, then Purchaser shall
thereafter have the right (until such notice is received by Purchaser) to cancel
this Escrow Agreement (and the Purchase Agreement) upon notice to the Escrow
Agent and Sellers' Representative and the Escrow Agent agrees thereafter to
forthwith deliver the Purchase Price (and all interest earned thereon) to the
Purchaser.
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<PAGE>
1.5. The Escrow Agent shall deliver notice to Purchaser by midnight on
February 14, 1997 that there has been delivered to the Escrow Agent the
following:
(i) Certificates for an aggregate of at least Eleven Thousand Three Hundred
Seventy-Five (11,375) VTX Preferred Shares which is equal to at least ninety
(90%) percent of VTX's outstanding Preferred Shares, accompanied by stock
powers, endorsed by the registered owners thereof with signatures guaranteed by
a bank, trust company or New York Stock Exchange member firm.
(ii) Secured Subordinated Debentures (and Warrants issued in connection
therewith) in the aggregate face amount of Two Million Three Hundred Fifty-Three
Thousand Five Hundred ($2,353,500) Dollars which is equal to at least ninety
(90%) percent of Two Million Six Hundred Fifteen Thousand ($2,615,000) Dollars
of VTX's outstanding Debentures, such Debentures being duly endorsed by the
registered owners thereof or accompanied by bond powers and such Warrants being
accompanied by stock powers, endorsed by the registered owners thereof, with
signatures guaranteed by a bank, trust company or New York Stock Exchange member
firm.
(iii) Purchase Agreements and Escrow Agreements duly executed by the
Preferred Shareholders and Debentureholders owning a minimum of the Securities
described in Sections 1.5(i) and 1.5(ii) hereof.
1.6. Escrow Agent covenants and agrees promptly to deliver to Purchaser and
Sellers' Representative originals of the Agreements and photostatic copies of
certificates for the Preferred Shares, Debentures and Warrants delivered to the
Escrow Agent as described in Section 1.5 hereof.
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1.7. Following delivery to the Escrow Agent of the Agreements and
Securities described in Section 1.5 hereof and Purchaser delivering notice to
the Escrow Agent requesting release of the Escrow Property, the Escrow Agent
shall forthwith deliver (a) the Preferred Shares and Debentures to the
Purchaser, (b) the pro rata portion of the Purchase Price, together with
interest thereon, representing payment for the Preferred Shares and Debentures
actually purchased to the Sellers, and (c) the balance of the Purchase Price
with interest thereon to the Purchaser.
1.8. Following delivery to the Escrow Agent of the Agreements and
Securities described in Section 1.5 hereof and the Sellers' Representative or
Herrick, Feinstein LLP delivering notice (the "Sellers' Notice") to the Escrow
Agent that the conditions set forth in Section 9.1 of the Purchase Agreement
have been fulfilled and requesting that the Escrow Property be released from
escrow, Escrow Agent shall deliver a copy of the Seller's Notice to the
Purchaser. If, within ten (10) days thereafter, Purchaser fails to deliver
notice to the Escrow Agent objecting thereto ("Purchaser's Notice"), Escrow
Agent shall deliver the Escrow Property to the Purchaser and Sellers in the
manner described in Section 1.7 hereof.
1.9. If within ten (10) days after delivery of Sellers' Notice to the
Purchaser, the Purchaser delivers Purchaser's Notice to the Escrow Agent and
Seller's Representative, the Escrow Agent shall thereafter continue to hold and
thereafter release the Escrow Property solely in accordance with any of the
following:
(a) instruction signed jointly by Purchaser and Sellers' Representative;
(b) separate instructions of written like tenor from Purchaser and Sellers'
Representative; or
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(c) a certified copy of a judgment of a Court of competent jurisdiction as
to which the Escrow Agent shall have received an opinion of Purchaser's counsel
or Herrick, Feinstein LLP satisfactory to the Escrow Agent that such judgment is
final and beyond appeal.
1.10. Anything in the foregoing to the contrary notwithstanding, at the
sole discretion of the Escrow Agent, the Escrow Agent may at any time upon
notice to Purchaser and Sellers' Representative deposit the Escrow Property and
letters of resignation with a Court located in New York State selected by the
Escrow Agent and, in such event, all liability and responsibility of the Escrow
Agent shall terminate upon such deposit having been made.
1.11. So long as the Escrow Property is held by the Escrow Agent, and until
such time as the Escrow Agent receives written notice from Purchaser directing
the Escrow Agent to deliver the Escrow Property to Purchaser, Purchaser shall
have the right to vote the Shares for all purposes. If requested by Purchaser,
Sellers' Representative and the Escrow Agent shall execute and deliver to
Purchaser such proxies and authorizations as are reasonably required to confirm
the voting rights of Purchaser during this period.
1.12. So long as the Escrow Property is held by the Escrow Agent, and until
such time as the Escrow Agent receives written notice from Purchaser directing
the Escrow Agent to deliver the Escrow Property to Purchaser, all dividends upon
the Escrow Property shall be paid to and held by the Escrow Agent. Upon
termination of this escrow, any dividends, interest or other distributions of
the Escrow Property, shall be delivered to the Party to whom the Securities are
delivered.
ARTICLE 2
CONCERNING THE ESCROW AGENT
2.1. The Escrow Agent shall not be entitled to a fee for its services
hereunder.
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2.2. The Escrow Agent may resign and be discharged from its duties
hereunder at any time by giving notice of such resignation to the Purchaser and
the Sellers' Representative specifying a date (not less than 30 days after the
giving of such notice) when such resignation shall take effect. Promptly after
such notice, a successor escrow agent shall be appointed by mutual agreement of
the Purchaser and the Sellers' Representative, such successor escrow agent to
become Escrow Agent hereunder upon the resignation date specified in such
notice. If the Purchaser and the Sellers's Nominee are unable to agree upon a
successor escrow agent within 30 days after such notice, the Escrow Agent shall
continued to serve until a successor accepts the escrow and receives the Escrow
Property. The Purchaser and the Seller's Nominee may agree at any time to
substitute a new escrow agent by giving notice thereof to the Escrow Agent then
acting.
2.3. The Escrow Agent undertakes to perform only such duties as are
specifically set forth herein. The Escrow Agent, acting or refraining from
acting in good faith, shall not be liable for any mistake of fact or error of
judgment by it or for any acts or omissions by it of any kind, unless caused by
willful misconduct or gross negligence, and shall be entitled to rely, and shall
be protected in doing so, upon (a) any written notice, instrument, or signature
believed by it be genuine and to have been signed or presented by the proper
party or parties duly authorized to do so, or (b) the advice of counsel (which
may be of the Escrow Agent's own choosing). The Escrow Agent shall have no
responsibility for the contents of any writing submitted to it hereunder and
shall be entitled in good faith to rely without any liability upon the contents
thereof.
2.4. Each party (in the case of the Sellers, only to the extent of their
Purchase Price, except to Roth and Rind, to whom no such limitation applies),
agrees to indemnify the Escrow Agent and hold it harmless against any and all
liabilities incurred by it hereunder as a consequence of such party's actions
(including reasonable
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legal fees and expenses), and the parties further agree, subject to the
above limitation, to indemnify the Escrow Agent and hold it harmless against any
and all liabilities incurred by it hereunder that are not a consequence of their
respective action, except in either case for liabilities incurred by the Escrow
Agent resulting from its own willful misconduct or gross negligence.
2.5. The Escrow Agent shall not be prevented from acting as counsel to the
Sellers as a result of serving as Escrow Agent hereunder.
2.6. Anything in the foregoing to the contrary notwithstanding, at the sole
discretion of the Escrow Agent, said Escrow Agent may, at any time, deposit the
Escrow Property with a court selected by the Escrow Agent and upon such event,
all liability and responsibility of the Escrow Agent shall terminate upon such
deposit.
ARTICLE 3
MISCELLANEOUS
3.1. This Escrow Agreement will be binding upon, inure to the benefit of,
and be enforceable by the respective heirs, beneficiaries, representatives,
successors and assigns of the parties hereto.
3.2. This Escrow Agreement contains the entire understanding of the parties
with respect to its subject matter, and may be amended only by a written
instrument duly executed by all the parties hereto.
3.3. Notices. All notices permitted or required under this Agreement shall
be in writing and shall be either (a) delivered by personal service, (b)
delivered by courier service, (c) telecopied and confirmed immediately in
writing by a copy mailed by registered or certified mail, postage prepaid,
return receipt requested, or (d) sent by certified or registered mail, postage
prepaid, return receipt requested, to the parties hereto at their addresses set
forth below or at such other addresses which may be designated in writing by the
parties:
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<PAGE>
If to Escrow Agent to: Todtman, Young, Tunick, Nachamie, Hendler & Spizz, P.C.
425 Park Avenue
New York, New York 10022
Attention: Arthur Goldstein. Esq./Alex Spizz, Esq.
Telecopier: (212) 754-6262
With a copy to Sellers'
Representative: Albert Roth
200 Winston Drive
Apartment 2515
Cliffside Park, New Jersey 07010
With a copy to: Herrick, Feinstein LLP
2 Park Avenue
21st Floor
New York, New York 10016
Attention: Irwin Kishner, Esq.
Telecopier: (212) 889-7577
With a copy to: Shustak, Jalil & Heller
545 Madison Avenue
New York, NY 10022
Attention: James Jalil, Esq.
Telecopier No.: (212) 688-6151
If to Purchaser to: Edward Goodstein
TW Cable, L.L.C.
81 Executive Boulevard
Farmingdale, New York 11735-4710
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<PAGE>
With a copy to: Ruskin, Moscou, Evans & Faltischek, P.C.
170 Old Country Road
Mineola, New York 11501
Attention: Irvin Brum, Esq.
Telecopier No.: (516) 663-6610
Such notices shall be effective upon receipt in the case of personal or
courier service or telecopier delivery and on the third (3rd) day after posting
in the U.S. mail.
3.4. This Escrow Agreement shall be governed by, and construed and enforced
in accordance with, the laws of the State of New York without regard to its
conflict-of-laws rules.
3.5. This Escrow Agreement may be executed simultaneously 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.
3.6. This Escrow Agreement shall remain in full force and effect until the
Escrow Agent has delivered all the Escrow Property in its possession in
accordance with the terms thereof.
3.7. Article headings contained herein are for reference purposes only and
shall not in any way affect the meaning or interpretation of this Escrow
Agreement.
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<PAGE>
IN WITNESS WHEREOF, this Escrow Agreement has been duly executed and
delivered by the duly authorized officer of the Purchaser, Sellers and the
Escrow Agent as of the date first above written.
THE PURCHASER:
TW CABLE, L.L.C.
By:
----------------------------------
Edward Goodstein, President
Employer ID No.
-------------------
THE ESCROW AGENT:
TODTMAN, YOUNG, TUNICK, NACHAMIE,
HENDLER & SPIZZ, P.C.
By:
----------------------------------
Employer ID No.
-------------------
----------------------------------
Steel Partners II, L.P.
c/o Warren Lichtenstein
750 Lexington Avenue
New York, NY 10022
Employer ID No.
----------------------------------
Quota Fund NV
c/o Warren Lichtenstein
750 Lexington Avenue
New York, NY 10022
Employer ID No.
-------------------
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<PAGE>
----------------------------------
Marshall D. Butler
750 Lexington Avenue
New York, NY 10022
SSN
-------------------------------
----------------------------------
Kenneth Rind
44 West 77th Street, Apt. 8W
New York, NY 10024
SSN
-------------------------------
----------------------------------
Hiro Hiranandani
c/o Computer Power, Inc.
124 West Main Street
High Bridge, New York 08829
SSN
-------------------------------
----------------------------------
Herman Fialkov
c/o PolyVentures
199 Middle Neck Road
Great Neck, New York 11021
SSN
-------------------------------
----------------------------------
Albert Roth
200 Winston Drive
Apartment 2515
Cliffside Park, New Jersey 07010
SSN
-------------------------------
45120-1 2/24/97
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<PAGE>
----------------------------------
Long Island Venture Fund, L.P.
Paul Lowell, Partner
110 Lake Avenue South
Nesconset, NY 11767
Employer ID No.
-------------------
----------------------------------
Alexander Wohlgemuth
Ernst & Co.
One Battery Park Plaza
New York, NY 10004
SSN
-------------------------------
----------------------------------
LEG Partners SBIC, L.P.
c/o Golub Associates
Attention: Lawrence E. Golub
230 Park Avenue South
New York, NY 10169
Employer ID No.
-------------------
----------------------------------
Rabinowitz Family 1986 Trust
c/o Odyssey Partners
Attention: Martin Rabinowitz
31 West 52nd Street
New York, New York 10169
Employer ID No.
-------------------
----------------------------------
Rabinowitz Family 1991 Trust
c/o Odyssey Partners
Attention: Martin Rabinowitz
31 West 52nd Street
New York, New York 10169
Employer ID No.
-------------------
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<PAGE>
----------------------------------
Martin Rabinowitz
31 West 52nd Street
New York, New York 10169
SSN
-------------------------------
----------------------------------
Doris L. Payson
290 Kings Point Road
Kings Point, NY 11024
SSN
-------------------------------
----------------------------------
Seymour Leslie Trust
c/o Leslie Group
1370 Avenue of the Americas
26th Floor
New York, New York 10019
Employer ID No.
-------------------
----------------------------------
Fred Heim
4900 Gloria Avenue
Encino, CA 91436
SSN
-------------------------------
----------------------------------
Alexander D. MacCallum
Janet M. MacCallum
1 Tennyson Road
New Hartford, NY 13413
SSN
-------------------------------
----------------------------------
Fundex Capital Corp.
555 Theodore Fremd Avenue
Suite C-200
Rye, New York 10580
Employer ID No.
-------------------
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<PAGE>
----------------------------------
Roland A. Catalano
3215 Crabtree Lane
Hunting Valley, Ohio
SSN
-------------------------------
----------------------------------
Tradewind Fund L.P. I
c/o Henry Hackel
2701 Summer Street
Stamford, Connecticut 06905
Employer ID No.
-------------------
----------------------------------
R.F. Lafferty & Co., Inc.
Pension Profit Plan
c/o Henry Hackel
80 Broad Street
New York, New York 10004
Employer ID No.
-------------------
----------------------------------
Stourbridge Investments, Ltd.
c/o Kalis Shvarbir
Private Trust Limited
P.O. Box N-75
Nassau, Bahamas
Employer ID No.
-------------------
----------------------------------
Martin and Miriam Knecht
735 Park Avenue
Elizabeth, New Jersey 07208
SSN
-------------------------------
TW Communications Corp. hereby
guarantees the performance of
Purchaser under this Agreement
By:
----------------------------------
45120-1 2/24/97
14
