SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
or
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission File No. 0-6512
TRANSTECH INDUSTRIES, INC.
(Exact name of small business issuer as specified in its charter)
Delaware 22-1777533
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
200 Centennial Avenue, Piscataway, New Jersey 08854
(Address of principal executive offices)
(908) 981-0777
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act of 1934 during the past
12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
APPLICABLE ONLY TO ISSUERS INVOLVED
IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the issuer filed all documents and reports required
to be filed by Section 12, 13 or 15(d) of the Exchange Act after
the distribution of securities under a plan confirmed by a court.
Yes______ No______
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date:
2,829,090 shares of common stock, $.50 par value, outstanding as of
November 7, 1995. In addition, at such date, the issuer held
1,885,750 shares of common stock, $.50 par value, in treasury.
Transitional Small Business Disclosure Format (Check One):
Yes No X
Page 1 of 95 pages
Exhibit index on page 32
TRANSTECH INDUSTRIES, INC.
AND SUBSIDIARIES
FORM 10-QSB
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1995
I N D E X
Page(s)
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Balance Sheets as of September
30, 1995 and December 31, 1994 3-4
Consolidated Statements of Operations for the
Nine Months Ended September 30, 1995 and 1994 5-6
Consolidated Statements of Operations for the
Three Months Ended September 30, 1995 and 1994 7-8
Consolidated Statements of Cash Flows for the
Nine Months Ended September 30, 1995 and 1994 9-10
Notes to Consolidated Financial Statements 11-17
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 18-28
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 29-30
Item 6. Exhibits and Reports on Form 8-K 30
SIGNATURES 31
EXHIBIT INDEX 32
EXHIBITS 33-95
TRANSTECH INDUSTRIES, INC.
AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
(In $000's)
(Unaudited)
ASSETS
<TABLE>
<CAPTION>
September 30, December 31,
<S> <C> <C>
1995 1994
CURRENT ASSETS
Cash and cash equivalents $ 1,233 $ 874
Marketable securities 2,347 2,465
Accounts and notes receivable
(net of allowance for doubtful
accounts of $11) 217 461
Deferred income taxes 730 587
Prepaid expenses and other 506 472
Net assets of discontinued operations:
Valve mfg. segment 4,483 5,506
Alkali products segment - 173
Total current assets 9,516 10,538
PROPERTY, PLANT AND EQUIPMENT
Land 799 799
Buildings and improvements 327 327
Machinery and equipment 2,966 2,931
4,092 4,057
Less: accumulated depreciation 3,164 3,144
Net property, plant and equipment 928 913
OTHER ASSETS
Notes receivable 797 968
Investment in leveraged lease 280 885
Assets held for sale 2,410 2,421
Clay deposits 1,077 1,077
Other 40 39
Total other assets 4,604 5,390
TOTAL ASSETS $15,048 $16,841
</TABLE>
TRANSTECH INDUSTRIES, INC.
AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION, Cont'd
CONSOLIDATED BALANCE SHEETS, Cont'd
(In $000's)
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
<S> <C> <C>
CURRENT LIABILITIES
Current portion of long-term debt $ 65 $ 93
Accounts payable 516 291
Accrued salaries and wages 35 26
Accrued income taxes 2,914 2,318
Accrued miscellaneous expenses 199 225
Total current liabilities 3,729 2,953
OTHER LIABILITIES
Long-term debt 360 388
Accrued remediation and closure
costs 12,740 14,355
Deferred income taxes 874 665
Total other liabilities 13,974 15,408
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, $.50 par value,
10,000,000 shares authorized:
4,714,840 shares issued 2,357 2,357
Additional paid-in capital 1,516 1,516
Retained earnings 4,396 5,420
Net unrealized gains on marketable
securities 90 201
Subtotal 8,359 9,494
Treasury stock, at cost -
1,885,750 shares (11,014) (11,014)
Total stockholders' equity
(deficit) (2,655) (1,520)
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY (DEFICIT) $15,048 $16,841
</TABLE>
TRANSTECH INDUSTRIES, INC.
AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION, Cont'd
CONSOLIDATED STATEMENTS OF OPERATIONS
(In $000's, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
For the Nine Months Ended
September 30,
1995 1994
<S> <C> <C>
REVENUES $ 292 $ 449
COST OF OPERATIONS
Direct operating costs 227 340
Selling, general and
administrative expenses 2,090 1,608
Total cost of operations 2,317 1,948
INCOME (LOSS) FROM OPERATIONS (2,025) (1,499)
OTHER INCOME (EXPENSE)
Investment income (loss) 202 208
Interest expense (258) (117)
Gain (loss) of sale of securities 269 -
Income from (writedown of)
interest in leveraged lease (279) (774)
Remediation accrual reversal 1,451 -
Other income (expense) 227 67
Total other income (expense) 1,612 (616)
INCOME (LOSS) FROM CONTINUING
OPERATIONS BEFORE INCOME TAXES
(CREDIT) (413) (2,115)
Income taxes (credit) (76) (409)
INCOME (LOSS) FROM CONTINUING
OPERATIONS (337) (1,706)
DISCONTINUED OPERATIONS (NOTE 2):
Valve Manufacturing Segment
Income from discontinued operation,
net of taxes of $134 and $298,
respectively 166 1,430
Loss on disposal of segment, net of
tax credits of $256 (1,150) -
Alkali Products Segment
Income (loss) from discontinued
operation, net of taxes (credits)
of $18 and $(9), respectively 35 (17)
Gain on disposal of segment, net of
taxes of $155,000 262 -
(687) 1,413
NET INCOME (LOSS) $(1,024) $ (293)
</TABLE>
TRANSTECH INDUSTRIES, INC.
AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION, Cont'd
CONSOLIDATED STATEMENTS OF OPERATIONS, Cont'd
(In $000's, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
For the Nine Months Ended
September 30,
1995 1994
<S> <C> <C>
INCOME (LOSS) PER COMMON SHARE:
INCOME (LOSS) FROM CONTINUING
OPERATIONS $(.12) $(.60)
DISCONTINUED OPERATIONS:
Income (loss) from discontinued
operations, net of taxes (credits) .07 .50
Gain (loss) on disposal of
discontinued operations (.31) -
NET INCOME (LOSS) $(.36) $(.10)
NUMBER OF SHARES USED IN
CALCULATION 2,829,090 2,829,090
</TABLE>
TRANSTECH INDUSTRIES, INC.
AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION, Cont'd
CONSOLIDATED STATEMENTS OF OPERATIONS, Cont'd
(In $000's, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended
September 30,
1995 1994
<S> <C> <C>
REVENUES $ 80 $ 134
COST OF OPERATIONS
Direct operating costs 79 96
Selling, general and
administrative expenses 803 513
Total cost of operations 882 609
INCOME (LOSS) FROM OPERATIONS (802) (475)
OTHER INCOME (EXPENSE)
Investment income (loss) 67 90
Interest expense (78) (38)
Gain (loss) of sale of securities - -
Income from (writedown of)
interest in leveraged lease (35) (166)
Remediation accrual reversal 1,451 -
Other income (expense) 126 26
Total other income (expense) 1,531 (88)
INCOME (LOSS) FROM CONTINUING
OPERATIONS BEFORE INCOME TAXES
(CREDIT) 729 (563)
Income taxes (credit) (210) (22)
INCOME (LOSS) FROM CONTINUING
OPERATIONS 939 (541)
DISCONTINUED OPERATIONS (NOTE 2):
Valve Manufacturing Segment
Income from discontinued operation,
net of taxes of $54 and $65,
respectively 77 82
Loss on disposal of segment,
net of tax credits of $256 (1,150) -
Alkali Products Segment
Income (loss) from discontinued
operation, net of taxes
of $15, - 29
Gain on disposal of segment,
net of taxes of $155 262 -
(811) 111
NET INCOME (LOSS) $ 128 $ (430)
</TABLE>
TRANSTECH INDUSTRIES, INC.
AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION, Cont'd
CONSOLIDATED STATEMENTS OF OPERATIONS, Cont'd
(In $000's, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended
September 30,
1995 1994
<S> <C> <C>
INCOME (LOSS) PER COMMON SHARE:
INCOME (LOSS) FROM CONTINUING
OPERATIONS $ .33 $(.19)
DISCONTINUED OPERATIONS:
Income (loss) from discontinued
operations net of taxes (credits) .03 .04
Gain (loss) on disposal of
discontinued operations (.31) -
NET INCOME (LOSS) $ .05 $(.15)
NUMBER OF SHARES USED IN
CALCULATION 2,829,090 2,829,090
</TABLE>
TRANSTECH INDUSTRIES, INC.
AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION, Cont'd
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In $000's)
(Unaudited)
<TABLE>
<CAPTION>
For the Nine Months Ended
September 30,
<S> <C> <C>
1995 1994
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers $ 433 $13,494
Cash paid to suppliers and employees (2,150) (12,745)
Interest and dividends received 152 181
Interest paid (35) (1,326)
Other income received 112 58
Cash received from discontinued
operations 553 -
Net cash provided by (used in)
operating activities (935) (338)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale and maturity
of marketable securities 2,851 2,469
Purchase of marketable securities (2,604) (1,961)
Purchase of property, plant and
equipment (51) (210)
Proceeds from sale of property,
plant and equipment 8 33
Collections of notes receivable 352 192
Rent sharing payments from
computer leases 325 159
(Increase) decrease in other assets (2) 11
Cash proceeds from sale of
discontinued segment 600 -
Net cash provided by (used in)
investing activities 1,479 693
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term debt (94) (871)
Proceeds from issuance of long-term debt 39 -
Payment of remediation and closure costs (130) (23)
Net cash provided by (used in)
financing activities (185) (894)
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 359 (539)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF THE YEAR 874 1,625
CASH AND CASH EQUIVALENTS AT END
OF THE QUARTER $ 1,233 $ 1,086
</TABLE>
TRANSTECH INDUSTRIES, INC.
AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION, Cont'd
CONSOLIDATED STATEMENTS OF CASH FLOWS, Cont'd
(In $000's)
(Unaudited)
<TABLE>
<CAPTION>
For the Nine Months Ended
September 30,
1995 1994
<S> <C> <C>
RECONCILIATION OF NET INCOME (LOSS)
TO NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES:
NET INCOME (LOSS) $(1,024) $ (293)
ADJUSTMENTS TO RECONCILE NET INCOME
(LOSS) TO NET CASH PROVIDED BY
(USED IN) OPERATING ACTIVITIES:
Loss on disposal of discontinued
segments 869 -
Extraordinary gain on elimination
of debt - (95)
Depreciation and amortization 41 1,063
(Gain) loss on sale of marketable
securities (269) -
(Gain) loss on sale of property,
plant and equipment (114) (12)
Increase (decrease) in deferred
income taxes 122 (166)
Leveraged lease (revenue) charge 279 774
Increase (decrease) in minority
interest in consolidated subsidiary - 285
(Increase) decrease in assets:
Accounts and notes receivable,
trade-net 174 (423)
Inventories - (561)
Prepaid expenses and other (85) (93)
Increase (decrease) in liabilities:
Accounts payable and accrued
expenses 216 219
Accrued taxes 307 120
Accrued remediation costs (1,451) -
Accrued retiree health care
benefit liability - (1,156)
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES $ (935) $ (338)
</TABLE>
TRANSTECH INDUSTRIES, INC.
AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION, Cont'd
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1995
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The accompanying financial statements are presented in
accordance with the requirements of Form 10-QSB and consequently do
not include all of the disclosures normally required by generally
accepted accounting principles or those normally made in the
Company's annual Form 10-KSB filing. Accordingly, the reader of
this Form 10-QSB may wish to refer to the Company's Form 10-KSB for
the year ended December 31, 1994 for further information.
The financial information has been prepared in accordance with
the Company's customary accounting practices except for certain
reclassifications to the 1994 financial statements in order to
conform to the presentation followed in preparing the 1995
financial statements. Quarterly financial information has not been
audited. In the opinion of management, the information presented
reflects all adjustments necessary for a fair statement of interim
results. All such adjustments are of a normal and recurring nature
except as disclosed herein.
NOTE 2 - DISCONTINUED OPERATIONS
The consolidated statements of operations have been restated to
report the net results of the Company's Alkali Products and Valve
Manufacturing Segments as discontinued operations. The net assets
of the discontinued segments have been classified as current assets
in the accompanying restated consolidated balance sheets.
Alkali Products Segment
On August 31, 1995, the Company sold certain machinery,
equipment, and contract rights, thereby effectively selling the on-
going operations, of its wholly-owned subsidiary, Cal-Lime, Inc.
for $600,000 in cash plus future payments of up to an additional
$25,000 which are contingent upon the availability of lime slurry
from a specified source to the purchaser. The sale resulted in a
gain of $281,000 after transaction costs and a provision for taxes
of $165,000.
The net assets of Cal-Lime sold have been classified as current
assets in the accompanying restated consolidated balance sheet as
of December 31, 1994. The Company intends to liquidate the
remaining assets of the subsidiary and has included the property,
buildings and equipment excluded from this transaction, having an
aggregate book value of $365,000 and $374,000, under the caption of
assets held for sale on the balance sheet as of September 30, 1995
and December 31, 1994, respectively. Such value approximates the
estimated net realizable value of those assets. The consolidated
statements of operations report the net results of Cal-Lime's
operations as income (loss) from discontinued operations.
Summarized results of Cal-Lime's operations for the period of
January 1 through September 30, 1995 and 1994 are as follows (in
$000's):
<TABLE>
<CAPTION>
1995 1994
Year-to-date Eight Months Nine Months
<S> <C> <C>
Revenues $582 $629
Income (loss) before income tax 23 (26)
Income (tax) credit (8) 9
Net income (loss) 15 (17)
Third Quarter Two Months Three Months
Revenues $ 94 $280
Income (loss) before income tax (30) 56
Income (tax) credit 10 (19)
Net income (loss) (20) 37
</TABLE>
Valve Manufacturing
On October 24, 1995, the Company executed a stock purchase
agreement pursuant to which the Company's wholly-owned subsidiary,
THV Acquisition Corp. ("THV"), agreed to sell all of the issued and
outstanding stock of HVHC, Inc. ("HVHC"), the parent of Hunt Valve
Company, Inc. ("Hunt"). The assets of Hunt may be deemed to
represent substantially all of the assets of the Company;
therefore, the sale is subject to approval by the Company's
shareholders.
The purchase agreement provides that at the closing the
purchaser shall purchase the HVHC common stock from THV for $18.0
million in cash, reduced by the sum of (i) the amount of Hunt's
indebtedness for borrowed money as of the closing of the proposed
sale ("Funded Debt"), (ii) the amount required to redeem the
warrants held by Hunt's senior secured note holders, (iii) the
amount required to be paid by Hunt to THV upon the redemption by
Hunt of its issued and outstanding 7% preferred stock, without par
value, all of which is owned by THV, (iv) the amount required to be
paid by Hunt to THV in repayment of the senior subordinated note
issued by Hunt to THV in the original principal amount of $500,000
and (v) any other intercompany payments required to be made by Hunt
or HVHC on or prior to the closing of the transactions contemplated
by the purchase agreement. A portion of the net proceeds,
$750,000, is to be placed in escrow to secure the Company's
indemnification obligations to the purchaser under the purchase
agreement, including indemnification for any payments made by Hunt
after the closing in respect of income taxes owed by the Company
during the period that Hunt was a member of the Company's
consolidated tax group. The escrow will terminate upon
the earlier to occur of (i) the release of all funds from escrow in
accordance with the terms thereof or (ii) the later to occur of (x)
the expiration of the applicable statute of limitations for the
assessment of federal income taxes for all taxable years with
respect to which Hunt or HVHC were members of the Company's
consolidated tax group and (y) the satisfaction by the Company of
all assessments or other claims by the Service for taxes of the
consolidated tax group during such years.
The Company expects the sale to be completed on or before
December 31, 1995 and anticipates net cash proceeds from the
proposed sale of approximately $4,187,000 if closed on or around
that date. The Company has estimated a loss on the proposed sale,
of approximately $1,150,000 for financial reporting purposes. The
loss has been reported as of September 30, 1995 and includes (i)
estimates of costs to be incurred in connection with the sale, (ii)
operating results through the date of disposition, (iii) a $675,000
charge, net of minority interest and taxes of $431,000, related to
the write-off of unamortized debt issuance costs and debt discounts
on Hunt's senior secured loan in connection with the sale, (iv) an
adjustment to the Company's deferred tax valuation allowance, (v)
a provision for the loss on redemption of Hunt's warrant, and (vi)
$280,000 payable to Hunt's lenders due to the early prepayment of
amounts borrowed under such loan and revolving credit facility.
Summarized results of Hunt's operations for the nine and three
month periods ended September 30, 1995 and 1994 are as follows (in
$000):
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Nine Months
Revenues $13,497 $12,823
Income (loss) before income taxes (82) 1,662
Income (tax) credit (134) (298)
Extraordinary item - 95
Minority interest 42 (285)
Net income (loss) (174) 1,174
Three Months
Revenues $4,662 $4,293
Income (loss) before income taxes 10 61
Income (tax) credit (53) (66)
Minority interest 9 1
Net income (loss) (34) (4)
</TABLE>
Certain intercompany charges have been eliminated in the amount
presented as income (loss) from discontinued operations on the
accompanying consolidated statements of operations.
The net assets of Hunt as of September 30, 1995 and December 31,
1994 consisted of:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Current assets $ 8,471 $ 7,323
Current liabilities (3,065) (6,073)
Net fixed assets 6,168 6,504
Other non-current assets 10,145 11,327
Non-current liabilities (17,176) (13,575)
Net Assets 4,543 5,506
</TABLE>
The Company's President and Chairman of the board of directors,
and the Company's Vice President and Chief Financial Officer, who
is also a member of the board, as well as a director of Hunt and
Hunt's President and Chief Operating Officer are to acquire 15% of
the equity of the purchaser for $150,000. These four individuals
together with certain other members of senior management of Hunt,
will also have the opportunity to acquire up to an additional 15%
of the common stock of the purchaser pursuant to the exercise of
performance and value based options that will be issued to them.
In addition, the four directors and executive officers of the
Company and Hunt will be employed as officers and/or directors of
Hunt after the proposed sale.
In September and October 1995, representatives of the Company,
Hunt, Hunt's senior term lenders ("Term Lenders") and the purchaser
conducted negotiations with respect to the repurchase of the
warrants for Hunt's stock ("Lender Warrants") and Hunt's senior
term debt ("Term Debt"), and with respect to the amount payable to
the Term Lenders upon the prepayment of the Term Debt prior to
September 27, 2001 (the "Prepayment Premium"). The Prepayment Premium
was determined by the Term Lenders to the approximately $1,700,000. On
October 24, 1995 (the "Term Debt Assignment Date"), the Term
Lenders entered into an agreement to assign their entire interests
in the Term Debt and the Lender Warrants (the "Term Debt and
Warrant Assignment") to a designee of the purchaser (the "Term Debt
Purchaser"), in consideration for a total of $11,822,480 paid to
the Term Lenders. Of this amount, (x) $10,822,480 represented
principal plus accrued and unpaid interest on the Term Debt through
the Term Debt Assignment Date, (y) $500,000 represented payment for
the Lender Warrants and (z) $500,000 was a transaction fee payable
to the Term Lenders in lieu of the Payment Premium. Such transaction
fee is to be shared equally by the Term Debt Purchaser and THV.
In connection with the Term Debt and Warrant Assignment, the Company,
THV, the Term Debt Purchaser and the purchaser entered into an
agreement on the Term Debt Assignment Date (the "Recapitalization
Agreement") pursuant to which the parties agreed as follows: On
or before the earlier of (i) the closing of the proposed sale and
(ii) December 26, 1995, the Company will cause Hunt to merge with and into
HVHC, with HVHC being the surviving corporation in the merger (the
"Merger"). If a closing of the proposed sale has not occurred by
December 27, 1995, the Term Debt Purchaser will exercise the Lender
Warrants to purchase such number of shares of HVHC Common Stock as
represents an equivalent percentage of HVHC Common Stock as the
Term Debt Purchaser would have acquired upon exercise of the Lender
Warrants to purchase shares of common stock of Hunt. Concurrently
with such exercise, the Term Debt Purchaser shall purchase from the
Seller a number of shares representing 2% of the common stock of
HVHC at a price of $50,000. Accordingly, after giving effect to the
exercise by the Term Debt Purchaser of the Lender Warrants and the
purchase by the Term Debt Purchaser of the foregoing percentage of
HVHC common stock, the Company will own less than 80%
of the outstanding HVHC common stock, thereby relieving HVHC and
Hunt from joint and several liability for the Company's taxes
for periods beyond 1995. Furthermore, if the proposed sale is
consummated, the Term Debt Purchaser will waive its right to collect
the Prepayment Premium. However, if the proposed sale is not
consummated and a person or entity other than the purchaser acquires
the business of Hunt, the Term Debt Purchaser need not waive the
Prepayment Premium. In such event, if the Term Debt Purchaser is
paid a premium for the Term Debt and $500,000 for the Lender Warrants,
then THV will be entitled to recover from the Term Debt Purchaser
that portion of the Prepayment Premium which exceeds $250,000, up to
a maximum of $250,000.
NOTE 3 - MARKETABLE SECURITIES
Effective January 1, 1994, the Company adopted FASB Statement
No. 115 ("Accounting for Certain Investments in Debt and Equity
Securities"). In accordance with the statement, the Company
classifies all debt securities purchased with remaining maturities
of less than one year as securities held to maturity which are
carried at amortized cost. All other debt and equity securities
are classified as securities available for sale which are carried
at fair value as determined by quoted market prices. The aggregate
excess of fair value over cost of such securities as of September
30, 1995, of $138,000, net of deferred income taxes of $48,000 is
included as a separate component of stockholders' equity.
NOTE 4 - LONG-TERM DEBT
At September 30, 1995, long-term debt consisted of the following
(in $000's):
<TABLE>
<CAPTION>
<S> <C>
10.5% and 11% mortgages payable due in $390
monthly and semi-annual installments
through July 1996 and April 2000;
secured by land and buildings
Other 36
Total long-term debt 426
Less: current portion (66)
$360
</TABLE>
NOTE 5 - REMEDIATION AND CLOSURE COSTS
The Company and certain subsidiaries were previously active in
the resource recovery and waste management industries. These
activities included the operation of three landfills. Although
the sites are now closed, the Company continues to own and/or
remediate them and has both incurred and accrued for the
substantial costs associated therewith.
The Company's accruals for closure and remediation activities
equal the present value of its allocable share of the estimated
future costs related to a site less funds held in trust for such
purposes. Such estimates require a number of assumptions, and
therefore may differ from the ultimate outcome. The costs of
litigation associated with a site are expensed as incurred.
As of September 30, 1995, the Company has accrued $22.0
million for its estimated share of remediation and closure costs
in regard to the Company's former landfills, $9.2 million of
which is held in trusts and maintained by trustees for financing
of the $11.3 million closure plan related to the landfill owned
by the Company's subsidiary, Kinsley's Landfill,Inc.
The most significant portion of the balance of the accrual
relates to remediation efforts at the landfill owned by the
Company's subsidiary, Kin-Buc, Inc. ("Kin-Buc Landfill"). The
Company and other respondents have been remediating the Kin-Buc
Landfill under an Amended Unilateral Administrative Order issued
by the United States Environmental Protection Agency ("EPA") in
September 1990. In November 1992, EPA issued an Administrative
Order for the remediation of certain areas neighboring the Kin-
Buc Landfill. (For a discussion of this matter, see Remediation
and Closure Costs contained in Management's Discussion and
Analysis of Financial Condition and Results of Operations of this
Form 10-QSB).
As previously reported, the Company was named, along with a
group of waste generators, to an order issued by the EPA which
required remediation of a site in Carlstadt, New Jersey. In
September 1995, the Court approved a settlement agreement which
allocated remediation costs for the site among the Company and
substantially all of the waste generators who have been
remediating the site. This agreement substantially relieves the
Company from future obligations for the site in exchange for a
cash payment, proceeds from the settlement of certain insurance
claims and an assignment of Carlstadt-related claims filed
against the Company's excess insurance carriers. The Company has
reversed the balance of the accrual for future expenditures
related to this site, and recognized income of $1,451,000
associated with such adjustment in the period ended September 30,
1995. (See Part II, Item 1 of this Form 10-QSB for a further
discussion of this matter).
The impact of future events or changes in environmental laws
and regulations, which cannot be predicted at this time, could
result in material increases in remediation and closure costs
related to the Company's past waste handling activities, possibly
in excess of the Company's available financial resources.
NOTE 6 - LEGAL PROCEEDINGS
See Item 1 of Part II of this Form 10-QSB for a discussion of
legal matters.
<PAGE>
Results of operations for the nine months ended September
30, 1995 compared to the nine months ended September 30, 1994
Consolidated revenues by business segment for the nine months
ended September 30, 1995 and 1994 were as follows (in $000):
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Electricity Generation $ 150 $ 249
Environmental Services 380 393
Intercompany (238) (193)
Total $ 292 $ 449
</TABLE>
Consolidated revenues for the nine months ended September 30,
1995, were $292,000, a decrease of $157,000, or 35%, compared to
the same period of 1994.
Revenues from operations which generate electricity from
methane gas were $150,000, a decrease of $99,000 or 40% compared
to the same period last year. The decrease is the result of a
series of unrelated equipment failures which subjected two of the
four electric generating units to significant down-time for
repairs. Normal capacity was restored during September 1995.
The environmental services subsidiary contributed $142,000 to
revenues, after elimination of intercompany sales, compared to
$200,000 for the same period last year. Approximately $238,000
or 63% of the environmental services subsidiary's revenues for
the period, compared to $193,000 or 49% for the same period last
year, were either to other members of the consolidated group or
to third parties providing services to another member of the
consolidated group, and were therefore eliminated in
consolidation.
Consolidated direct operating costs for the nine months ended
September 30, 1995 were $227,000, a decrease of 33%, or $113,000,
when compared to the same period of 1994, due primarily to the
decrease in sales volume and expenses incurred during 1994 for
the overhaul of certain electric generation equipment.
Consolidated selling, general and administrative expenses for
the nine months ended September 30, 1995 increased $482,000, or
30%, from the same period last year to $2,090,000, due to a
$453,000 increase in professional fees primarily relating to the
Company's ongoing environmental and tax litigation, and a $50,000
charge related to an increase in the bad debt reserve pertaining
to a note held by the Company.
The Company's consolidated operating loss for the nine months
ended September 30, 1995 increased to $2,025,000 from a loss of
$1,499,000 in 1994.
Investment income decreased by $6,000 to $202,000 for the nine
months ended September 30, 1995 from the comparable period last
year.
Consolidated interest expense increased $141,000 to $258,000
for the nine months ended September 30, 1995 compared to the same
period last year, due to an increase in the amount of interest
accrued during the period on amounts reserved for income taxes,
as discussed below.
The Company charged $279,000 against income for the nine
months ended September 30, 1995 to reflect a reduction in the
carrying value of its investment in computer equipment. The
charge reflects a decline in the current market value for IBM
mainframe computer equipment. The Company incurred a $774,000
charge related to the revaluation of this equipment during the
comparable period in 1994.
In September 1995, the Court approved a settlement of
litigation regarding the allocation of the cost of remediation of
a site in Carlstadt, New Jersey, on which the Company had
operated a solvents recovery facility. The settlement agreement
substantially relieves the Company from future obligations with
respect to the site in exchange for cash payment,
proceeds of the settlement of certain insurance claims and an
assignment of Carlstadt-related claims that had been filed
against the Company's excess insurance carriers. The Company has
recognized income of $1,451,000 in September 1995 due to the
reversal of the balance of amounts previously accrued for future
expenditures related to the site.
Consolidated miscellaneous income for the nine months ended
September 30, 1995 increased $160,000 to $227,000 when compared
to the same period of 1994 due primarily to the recognition in
1995 of $106,000 of deferred gain related to the sale of real
property in 1992.
The consolidated loss from continuing operations before income
tax credits was $413,000 for the nine months ended September 30,
1995, compared to income of $2,115,000 for the same period last
year.
Income tax credit for the nine months ended September 30, 1995
equalled $76,000, a $333,000 decrease over the $409,000 credit
for 1994. The current period's credit is less than that
calculated using the statutory rates since the recognition of
deferred tax benefits have been limited because realization is
not assured.
Income (loss) from discontinued operations relates to the
Company's subsidiaries which manufactures commercial valves and
hydraulic systems, and marketed alkali products.
On August 31, 1995, the Company sold certain machinery and
equipment, and contract rights, and thereby effectively selling
the on-going operations of the subsidiary which markets alkali
products to a competitor. The decision to sell the segment was
influenced by the recent loss of two contracts (effective May 1,
1995 and July 1, 1995) which accounted for approximately 64% of
the subsidiary's revenues for the twelve months ended June 30,
1995. Management believes the loss of such revenues would likely
have resulted in the need to infuse capital into the segment in
order to meet its on-going expenses. The Company received a cash
payment of $600,000 for certain machinery and equipment, contract
rights, rights to the subsidiary's name and a non-compete
covenant, and is entitled to additional payments of up to $25,000
which are contingent upon the availability of lime slurry from a
specified source to the purchaser. The Company has reported a
gain from the sale of $262,000 which is net of taxes of $155,000.
The Company intends to liquidate the remaining fixed assets of
the subsidiary and has included the book value of the property,
buildings and equipment not part of this transaction under the
caption assets held for sale on the accompanying balance sheet.
The amount reported as income (loss) from discontinued operations
of $35,000 and $(17,000) for the nine months ended September 30,
1995 and 1994, respectively, is reported net of a provision for
income taxes (credit) of $18,000 and $(9,000), respectively.
On October 24, 1995, the Company executed a stock purchase
agreement pursuant to which the Company's wholly-owned
subsidiary, THV Acquisition Corp. ("THV") agreed to sell all of
the issued and outstanding stock of HVHC, Inc. ("HVHC"), the
parent of Hunt Valve Company, Inc. ("Hunt"). The assets of Hunt
may be deemed to represent substantially all of the assets of the
Company; therefore, the sale is subject to approval by the
Company's shareholders.
The purchase agreement provides that at the closing the
purchaser shall purchase the HVHC common stock from THV for $18.0
million in cash, reduced by the sum of (i) the amount of Hunt's
indebtedness for borrowed money as of the closing of the proposed
sale ("Funded Debt"), (ii) the amount required to redeem the
lender warrants held by Hunt's senior secured note holders, (iii)
the amount required to be paid by Hunt to THV upon the redemption
by Hunt of its issued and outstanding 7% preferred stock, without
par value, all of which is owned by THV, (iv) the amount required
to be paid by Hunt to THV in repayment of the senior subordinated
note issued by Hunt to THV in the original principal amount of
$500,000 and (v) any other intercompany payments required to be
made by Hunt or HVHC on or prior to the closing of the
transactions contemplated by the purchase agreement. A portion
of the net proceeds, $750,000, is to be placed in escrow to
secure the Company's indemnification obligations to the purchaser
under the purchase agreement, including indemnification for any
payments made by Hunt after the closing in respect of income
taxes owed by the Company during the period that Hunt was a
member of the Company's consolidated tax group. The escrow
will terminate upon the earlier to occur of (i) the
release of all funds from escrow in accordance with the terms
thereof or (ii) the later to occur of (x) the expiration of the
applicable statute of limitations for the assessment of federal
income taxes for all taxable years with respect to which Hunt or
HVHC were members of the Company's consolidated tax group and (y)
the satisfaction by the Company of all assessments or other
claims by the Service for taxes of the consolidated tax group
during such years (See Note 2 of Notes to Consolidated Financial
Statements contained herein for information regarding interested
parties to the transaction and the acquisition of Hunt's senior
term loan by a designee of the purchaser).
The Company expects the sale to be completed on or before
December 31, 1995 and anticipates net cash proceeds from the
proposed sale of approximately $4,187,000 if closed on or around
that date. The Company has estimated a loss on the proposed
sale of approximately $1,150,000 for financial reporting
purposes. The loss has been reported as of September 30, 1995
and includes estimates of costs to be incurred in connection with
the sale, operating results through the date of disposition, a
charge related to the write-off of unamortized debt issuance
costs and debt discounts on Hunt's senior secured loan in
connection with the sale, and amounts payable to Hunt's lenders
due to the early prepayment of amounts borrowed under such loan
and revolving credit facility.
Consolidated net loss for the nine months ended September 30,
1995 was $1,024,000 or $.36 per share, compared to net loss of
$293,000, or $.10 per share, for the nine months ended September
30, 1994.
Results of operations for the three months ended September 30,
1995 compared to the three months ended September 30, 1994
Consolidated revenues by business segment for the three months
ended September 30, 1995 and 1994 were as follows (in $000):
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Electricity Generation $ 36 $ 74
Environmental Services 92 131
Intercompany (48) (71)
Total $ 80 $134
</TABLE>
Consolidated revenues decreased 40%, or $54,000 for the three
months ended September 30, 1995, compared to the same period of
1994.
Revenues from operations which generate electricity from
methane gas were $36,000, a decrease of $38,000 or 51% compared
to the same period last year. The decline is the result of down-
time for repairs to the electric generating equipment due to the
continuation of a series of equipment failures. The
environmental services subsidiary contributed $44,000 to
consolidated revenues versus $60,000 for the same period last
year. Approximately 52% of the environmental services
subsidiary's revenues for the period were to either other members
of the consolidated group or third parties providing services to
another member of the consolidated group, and, were, therefore,
eliminated in consolidation, versus 54% for the same period last
year.
Consolidated direct operating costs for the three months ended
September 30, 1995 were $79,000, a decrease of 18%, or $17,000,
when compared to the same period of 1994, due primarily to the
decrease in sales volume.
Consolidated selling, general and administrative expenses for
the three months ended September 30, 1995 increased $290,000 or
57%, from the same period last year to $803,000, due primarily to
a $215,000 increase in professional fees and a $50,000 charge
related to an increase in the bad debt reserve pertaining to a
note held by the Company.
The Company's consolidated operating income for the three
months ended September 30, 1995 decreased to a loss of $802,000,
from a loss of $475,000 in 1994.
Investment income decreased by $23,000 to $67,000 for the
three months ended September 30, 1995 from the comparable period
last year.
Consolidated interest expense increased $40,000 to $78,000 for
the three months ended September 30, 1995 compared to the same
period last year, due primarily to an increase in the amount of
interest accrued during the period on amounts reserved for income
taxes, as discussed below.
The Company charged $35,000 and $166,000 against income for
the three months ended September 30, 1995 and 1994, respectively,
to reflect a reduction in the carrying value of its investment in
computer equipment. The charges reflect a decline in the current
market value of IBM mainframe computer equipment.
In September 1995, the Court approved a settlement of
litigation regarding the allocation of the cost of remediation of
a site in Carlstadt, New Jersey, on which the Company had
operated a solvents recovery facility. The settlement agreement
substantially relieves the Company from future obligations with
respect to the site in exchange for a cash payment of $81,000,
proceeds of the settlement of certain insurance claims and an
assignment of Carlstadt-related claims that had been filed
against the Company's excess insurance carriers. The Company has
recognized income of $1,451,000 in September 1995 due to the
reversal of the balance of amounts previously accrued for future
expenditures related to the site.
Consolidated miscellaneous income for the three months ended
September 30, 1995 increased $100,000 to $126,000 when compared
to the same period of 1994 due primarily to the recognition in
1995 of $106,000 of deferred gain related to the sale of real
property in 1992.
The consolidated income from continuing operations before
income tax (credits), was $729,000 for the three months ended
September 30, 1995, compared to a loss of $563,000 for the same
period last year.
Income tax credit for the three months ended September 30,
1995 equalled $210,000, a $188,000 increase over the $22,000
credit for 1994.
Income (loss) from discontinued operations relates to the
operations of the Company's subsidiaries which manufactures
commercial valves and hydraulic systems and markets alkali
products (see discussion regarding sale of these segments in
management's discussion of the results of operations for the nine
months ended September 30, 1995).
Consolidated net income for the three months ended September
30, 1995 was $128,000, or $.05 per share, compared to a net loss
of $430,000, or $.15 per share, for the three months ended
September 30, 1994.
Liquidity and Capital Resources
Liquidity
Net cash used by operating activities for the nine months
ended September 30, 1995 increased to $935,000 from $338,000 when
compared to the same period last year, due in part to the
inclusion of activities of the discontinued segments in 1994.
Net cash provided by investing activities increased for the
current period to $1,479,000 from $693,000, due in part to
$600,000 in proceeds from the sale of a discontinued segment in
the current period. The amount of cash used in financing
activities decreased to $185,000 from a use of $894,000 for the
same period last year. Funds held by the Company in the form of
cash and cash equivalents increased as of September 30, 1995 to
$1,233,000 from $1,086,000. The sum of cash, cash equivalents
and marketable securities as of September 30, 1995 increased
$241,000 to $3,580,000 when compared to last year.
Working capital was $5.8 million and the ratio of current
assets to current liabilities was 2.6 to 1 as of September 30,
1995, versus $7.5 million and 3.5 to 1 as of December 31, 1994.
The Company will be facing significant cash requirements due
to (i) the settlement of certain issues in the litigation before
the United States Tax Court as described below, (ii) the
recognition in 1995 to 1997 of deferred taxable income generated
from the Company's investment in computer equipment, and (iii)
expenses associated with environmental remediation activity and
related litigation. In light of its need for liquidity to
address these obligations, the Company has been required to
initiate sales of significant assets, including operations of
Cal-Lime and the capital stock of Hunt, the Company's principal
operating subsidiary.
In addition, the uncertainty of the outcome of the Company's
ongoing tax and environmental litigation, discussed below and in
the notes to the Company's consolidated financial statements for
the year ended December 31, 1994, in the Company's Annual Report
on Form 10-KSB, and the impact of future events or changes in
environmental laws or regulations, which cannot be predicted at
this time, could result in material increases in remediation and
closure costs, tax and other potential liabilities. The Company
may ultimately incur costs and liabilities in excess of its
available financial resources.
Taxes
In 1991, the Internal Revenue Service (the "Service") asserted
numerous adjustments to the tax liability of the Company and its
subsidiaries for tax years 1980 through 1988, along with interest
and penalties thereon. In 1993, after the conclusion of
administrative proceedings before the Service, the Service issued
a deficiency notice to the Company, asserting adjustments to
income of $33.3 million, and a corresponding deficiency in
federal income taxes of approximately $13.5 million, as well as
penalties of $2.5 million and interest on the asserted deficiency
and penalties. In addition, the Service challenged the carryback
of losses incurred by the Company in taxable years 1989 through
1991, thereby bringing those years, which had been the subject of
an ongoing audit, into the Tax Court case. The 1989-1991 tax
audit is discussed below. The Company filed a petition with the
Tax Court contesting many of the proposed adjustments asserted in
the deficiency notice. On June 5, 1995 and August 14, 1995,
respectively, the Company and the Service executed a stipulation
of settlement and a revised stipulation of settlement covering
most of the adjustments asserted in the deficiency notice. On
September 18, 1995, the Company's Board of Directors approved a
proposed settlement of additional issues for which the Service
had sought adjustments to income totalling approximately $5.8
million. The Service has agreed in principle to the proposed
settlement. Taking into account the proposed settlement, the
Company has accepted approximately $5.2 million of the $33.3
million of total proposed adjustments to income. Many of the
adjustments accepted by the Company relate to issues on which the
Service would likely have prevailed in court. If the Service
accepts the recent settlement proposal that was approved by the
Company's board and agreed to in principle by the Service, the
Service will have conceded adjustments totalling $27.4 million of
taxable income as well as penalties.
The Company has incurred net operating loss and tax credit
carryforwards that will partly offset the taxable income
resulting from the settled adjustments. This will reduce the
federal liability that will result from the settlements,
including the recently proposed settlement, to approximately
$1,280,000 ($94,000 of taxes and $1,186,000 of interest as of
September 30, 1995). The settlements also will result in
approximately $495,000 of state liabilities ($211,000 of state
income tax and $284,000 of interest as of September 30, 1995),
not including penalties and penalty interest that may be assessed
by the states involved. Payment of the federal tax liability and
interest resulting from both the settled adjustments and any
issues litigated before the Tax Court will be due after the
conclusion of the Tax Court case. The date for payment of the
state tax liabilities varies by state. The first of such
payments, in the amount of approximately $284,000 including
interest to September 30, 1995, will be made in full by the end
of the first quarter of 1996 absent an agreement permitting
payment in installments.
The use of the Company's net operating loss and tax credit
carryforwards to offset the settled adjustments will reduce the
net operating loss and tax credit carryforwards that otherwise
would have been available to offset the future tax liabilities
that will arise when the Company recognizes an estimated $15.8
million of taxable income attributable to deferred tax
liabilities generated by the Company's investment in leased
computer equipment. Approximately $5.8, $6.5 and $3.5 million of
taxable income is anticipated for 1995, 1996 and the first seven
months of 1997, respectively, on account of the deferred taxes.
The Company's accrual of $2,634,000 as of September 30, 1995
for taxes and interest relating to the Tax Court litigation does
not give affect to the pending settlement because the settlement
has not yet been formally accepted by the Service.
The Service has concluded an audit of the Company's federal
income tax returns for 1989 through 1991, and has questioned
certain deductions claimed by the Company in connection with its
investment in leased computer equipment. The Service also
challenged certain real property deductions and certain expenses
that were deducted by the Company, but that the Service believes
should have been capitalized. The deductions challenged by the
Service for 1989 through 1991 will be addressed in the pending
Tax Court litigation because those deductions resulted in net
operating losses that were carried back and deducted in years
covered by the Tax Court litigation. Settlement discussions on
the 1989-1991 issues are just beginning. If the Service prevails
in disallowing the computer equipment deductions, the Company's
taxable income for 1989 through 1992 would be materially
increased and its taxable income from the computer equipment for
1994 through 1997 would be reduced by a corresponding amount.
Remediation and Closure Costs
The Company and other responsible parties have been
remediating the Kin-Buc Landfill under an Amended Unilateral
Administrative Order issued by the United States Environmental
Protection Agency ("EPA") in September 1990 (the "1990 Order").
In November 1992, EPA issued an Administrative Order (the "1992
Order", and, together with the 1990 Order, the "Orders") for the
remediation of certain areas neighboring the Kin-Buc Landfill.
During May 1993, a $22 million contract was awarded for the
construction of a containment system and leachate treatment plant
at the Kin-Buc Landfill in accordance with the engineered design
and standards accepted by the EPA in satisfaction of certain
requirements of the 1990 Order. The contract was to be financed
with funds available in the trust established in 1993 from
proceeds provided from a negotiated settlement with certain
parties to a suit the Company initiated in 1990 with the intent
of obtaining contribution toward the cost of remediation. During
May 1994, the Company met with representatives of EPA to discuss
the impact delays in securing settlement proceeds would have on
the Company's ability to finance the construction within the time
frame required by EPA. In July 1994, after meeting with EPA, SCA
Services, Inc. ("SCA"), an affiliate of WMX Technologies, Inc.
("WMX") and a respondent to the Orders, entered into a contract
with the contractor installing the containment system and
treatment plant, thereby alleviating the potential for delays in
this phase of the construction due to financial limitations.
WMX, formerly known as Waste Management, Inc., had previously
provided EPA with a financial guaranty of SCA's and the Company's
obligations under the Orders. In August 1994, a contract was
awarded by SCA for certain activities mandated by the 1992 Order.
The execution of the contracts between SCA and the contractors
has not relieved the Company of liability for such costs since
the Company entered into an agreement with SCA and certain
affiliates ("SCA Group") in 1986 which allocated 75% of the
costs incurred by the parties for the remediation of the site to
the Company. The Company filed a demand for arbitration in 1993
seeking rescission or reformation of the agreement with the SCA
Group. During March 1995, the SCA Group filed a demand for
arbitration seeking reimbursement from the Company of $10.7
million, which equals 75% of the $14.3 million of remediation
expenses purportedly funded by WMX through December 31, 1994.
The status of such arbitration demands, as yet unresolved, is
described in Part II, Item 1 of this report.
The contractors have essentially completed the construction
required under the Orders, and the Company is awaiting EPA's
acknowledgment of same. Operation of the treatment plant and
maintenance of the facilities is being conducted by an affiliate
of SCA.
A study of an approximating one acre area, adjacent to the
enclosed mound is about to begin with the intent to determine the
extent of apparent contamination as well as the nature and
possible source of the possible contamination. Such property may
be added to the scope of remediation addressed in the Orders.
Other areas within the vicinity of the site may become the
subject of future studies due to the historic use of the area for
disposal.
Additional material adjustments to the Company's current
accrual may become necessary as the allocations to all
respondents and potentially responsible parties are determined.
Accounting Principles
Effective January 1, 1994, the Company adopted Financial
Accounting Standards Board ("FASB") Statement No. 115
("Accounting for Certain Investments in Debt and Equity
Securities"). In accordance with the statement, the Company
classifies all debt securities purchased with remaining
maturities of less than one year as securities held to maturity
which are carried at amortized cost. All other debt and equity
securities are classified as securities available for sale which
are carried at fair value as determined by quoted market prices.
The aggregate excess of fair value over cost of such securities
as of September 30, 1995, of $138,000, net of deferred income
taxes of $48,000, is included as a separate component of
stockholders' equity.
TRANSTECH INDUSTRIES, INC.
AND SUBSIDIARIES
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
In 1991, the Internal Revenue Service (the "Service") asserted
numerous and, in some cases, significant adjustments in
connection with its audit of the Company's federal income tax
returns for the years 1982 through 1988. In 1993, the Service
issued a deficiency notice to the Company, asserting a deficiency
in federal income taxes of approximately $13.5 million, penalties
of $2.5 million and a significant amount of accrued interest. The
Company filed a petition with the tax court contesting many of
the proposed adjustments in the deficiency notice. On June 5,
1995 and August 14, 1995, respectively, the Company and the
Service executed a stipulation of settlement and a revised
stipulation of settlement covering most of the adjustments
asserted in the deficiency notice. On September 18, 1995, the
Company's Board of Directors approved a proposed settlement of
additional issues for which the Service had sought adjustments to
income totalling approximately $5.8 million. The Service has
agreed in principle to the proposed settlement. Taking into
account the proposed settlement, the Company has accepted
approximately $5.2 million of the $33.3 million of total proposed
adjustments to income. The adjustments accepted by the Company
relate principally to issues on which the Service would likely
have prevailed in court. If the Service accepts the Company's
September 18 settlement proposal, the Service will have conceded
adjustments totalling $27.4 million of taxable income and
penalties. (See Part I, Item 2, Management's Discussion and
Analysis of Financial Condition and Results of Operations -
Taxes, for further information about this matter.)
The Company has previously reported in its Form 10-KSB for the
year ended December 31, 1994 about litigation brought by a group
of generators and transporters of waste handled at a site in
Carlstadt, New Jersey (the "Carlstadt Site") against the Company,
Inmar Associates, Inc. ("Inmar"), a company owned and controlled
by Marvin H. Mahan, a former officer, director and principal
shareholder of the Company, and Mr. Mahan, the purpose of which
was to allocate to the Company, Inmar and Mr. Mahan a portion of
the costs of remediating the Carlstadt Site under orders of the
EPA mandating such remediation. In September 1995, the Court
approved a settlement among Transtech, Inmar and these generators
and transporters and other parties who have contributed to the
costs of the remediation pursuant to which Transtech, Inmar and
Mr. Mahan agreed to (i) pay $4.1 million of proceeds from
settlements with primary insurers of a coverage action brought by
the Company and Inmar against their primary and excess insurers,
(ii) pay an additional $145,000, $72,500 from Transtech and
$72,500 from Inmar and Mr. Mahan, and (iii) assign their
Carlstadt Site-related insurance claims against an excess
insurer, in exchange for a complete release from these parties of
all liability arising from or on account of environmental
contamination at the Carlstadt Site and the parties' remediation
of the same.
TRANSTECH INDUSTRIES, INC.
AND SUBSIDIARIES
PART II. OTHER INFORMATION, Cont'd
In 1993, the Company's demand for arbitration concerning,
(among other things), the enforceability of provisions of the
1986 agreement among the Company, the SCA Group and others
allocating the costs of the remediation of the Kin-Buc Landfill
75% to the Company (jointly and severally with others), and 25%
to the SCA Group was stayed pending a decision by the Supreme
Court of New York County (the "Court"), on motion of the SCA
Group, that the Company's demand for arbitration was barred by
the statute of limitations. In October 1995, a referee appointed
by the Court to determine when the Company knew or should have
known facts giving rise to its legal right to challenge the 1986
agreement (that is, what the cost to remediate the Kin-Buc
Landfill would be), found that the Company knew or should have
known such facts as early as 1986. The Company plans to object
to the adoption by the Court of the referee's report, but if the
Court should accept it, it could permanently enjoin the Company's
arbitration.
In March 1995, while the Court's referral on the Company's
arbitration was pending, the SCA Group demanded that an
arbitrator enforce the cost allocation provisions of the 1986
agreement by ordering the Company to reimburse it $10.7 million,
or 75% of the $14.3 million of remediation expenses purportedly
funded by it through December 31, 1994. On the Company's motion,
the Court narrowed the issues to be arbitrated to the amount of
funds expended on the remediation and the reasonableness of such
expenditures. The Court also made any findings on such issues
subject to resolution of the Company's arbitration as to the
enforceability of the 1986 agreement. The arbitrators have
scheduled discovery, which is ongoing, and a hearing is
tentatively set for March 1996.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
Exhibit 10 - Material Contracts
Exhibit 11 - Computation of Earnings (Loss) Per Common
Share
Exhibit 27 - Financial Data Schedule
b) Reports on Form 8-K
None
TRANSTECH INDUSTRIES, INC.
AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
TRANSTECH INDUSTRIES, INC.
(Registrant)
Date: November 14, 1995 By: /s/ Robert V. Silva
Robert V. Silva, President
and Chief Executive Officer
and
Date: November 14, 1995 By: /s/ Andrew J. Mayer, Jr.
Andrew J. Mayer, Jr.
Vice President-Finance, Chief
Financial Officer and Secretary
TRANSTECH INDUSTRIES, INC.
AND SUBSIDIARIES
FORM 10-QSB
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1995
EXHIBIT INDEX
EXHIBIT PAGE
NO. NO.
10 Material Contracts
10(aq) Amendment No. 14 dated as of July 27, 1995
between Hunt Valve Company, Inc. and LaSalle
Business Credit, Inc. to Loan and Security
Agreement dated January 30, 1987, as amended
through Amendment No. 5 and Restatement of Loan
and Security Agreement dated September 27, 1991,
and as amended through Amendment No. 13 dated as
of June 27, 1995; 33-37
10(ar) Letter Agreement dated as of July 27, 1995
between Hunt Valve Company, Inc., Rhode Island
Hospital Trust National Bank, as Trustee for the
Textron Collective Investment Trust B, Balboa
Life Insurance Company and Balboa Insurance
Company, as consented to by LaSalle Business
Credit, Inc. 38-40
10(as) Amendment No. 15 dated as of August 28, 1995
between Hunt Valve Company, Inc. and LaSalle
Business Credit, Inc. to Loan and Security
Agreement dated January 30, 1987, as amended
through Amendment No. 5 and Restatement of Loan
and Security Agreement dated September 27, 1991,
and as amended through Amendment No. 14 dated as
of July 27, 1995; 41-49
10(at) Third Amendment Agreement dated as of August 1,
1995 between Hunt Valve Company, Inc., Rhode
Island Hospital Trust National Bank, as Trustee
for the Textron Collective Investment Trust B,
Balboa Life Insurance Company and Balboa
Insurance Company, to the Note Agreement dated as
of August 15, 1991; 50-57
10(au) Settlement Agreement approved in September 1995
among Transtech Industries, Inc., Inmar
Associates, Inc., Marvin H. Mahan and certain
members of the 216 Paterson Plank Road
Cooperating PRP Group. 58-94
11 Computation of Earnings (Loss) Per Common Share 95
27 Financial Data Schedule N/A
AMENDMENT NO. 14
TO THE LOAN AND SECURITY AGREEMENT
BETWEEN HUNT VALVE COMPANY, INC.
AND LASALLE BUSINESS CREDIT, INC.
This Amendment No. 14 dated as of July 27, 1995 ("Amendment")
to the Loan Agreement (defined below) is entered into by and
between Hunt Valve Company, Inc. ("Borrower") and LaSalle Business
Credit, Inc. ("LaSalle") (formerly known as StanChart Business
Credit, Inc.).
WITNESSETH
WHEREAS, the Borrower and LaSalle are parties to a Loan and
Security Agreement originally dated as of January 30, 1987, as
previously amended by amendments through Amendment No. 5 and
Restatement of Loan and Security Agreement, dated as of September
27, 1991, by Amendment No. 6, dated as of April 8, 1994, by
Amendment No. 7, dated as of September 27, 1994, by Amendment No.
8, dated as of December 16, 1994, by Amendment No. 9, dated as of
January 25, 1995, by Amendment No. 10, dated as of February 27,
1995, by Amendment No. 11, dated as of March 27, 1995, by Amendment
No. 12, dated April 27, 1995, and by Amendment No. 13, dated as of
June 27, 1995 (as amended heretofore and hereafter, the "Loan
Agreement"), under which the Initial Term shall expire July 27,
1995;
WHEREAS, Borrower has requested that LaSalle extend the
Expiration Date of the Initial Term of the Loan Agreement from July
27, 1995 to August 27, 1995;
WHEREAS, Borrower has represented to LaSalle that Borrower's
request for LaSalle's agreement to such extension is conditioned on
the extension of the due date for
Borrower's $1,000,000 required (mandatory) principal prepayment to
the Term Lender under the terms of the Term Notes (and pursuant to
the Note Agreement, dated as of August 15, 1991, as amended, under
which the Term Notes have been issued) from July 31, 1995 (as
previously extended) to August 31, 1995;
WHEREAS, the Term Lender has agreed to extend the due date of
such $1,000,000 required (mandatory) prepayment to August 31, 1995
WHEREAS, Borrower has acknowledged that its payment of any
part of such $1,000,000 required (mandatory) prepayment to the Term
Lender prior to the due date thereof of August 31, 1995, would
constitute an Event of Default under the Loan Agreement;
WHEREAS, LaSalle has agreed to such waivers and amendments of
the Loan agreement, on the terms and conditions set forth in this
Amendment, subject to the satisfaction by Borrower as required
hereunder of certain preconditions to such waivers and to
effectiveness of such amendments as set forth below;
WHEREAS, terms, unless otherwise defined herein, are used
herein with the meanings assigned to them in the Loan Agreement;
NOW THEREFORE, in consideration of the mutual promises and
agreements of the parties hereinafter set forth and for other good
and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:
SECTION I - AMENDMENTS.
Upon fulfillment of the conditions to effectiveness under
Section III of this Amendment, the Loan Agreement shall be, and is
hereby, amended to be and read as follows:
A. Section 1.26 of the Loan Agreement, the definition of
"Expiration Date", shall be amended to read as follows:
"1.26 The Term 'Expiration Date' shall mean August 27, 1995,
or such later date as may be agreed by LaSalle and Borrower
pursuant to Section 3.1 hereof. "
B. The first paragraph of Section 3.1 of the Loan Agreement
shall be amended to read as follows:
"3.1 This Agreement shall have a term (the 'Initial Term')
commencing on the Effective Date and expiring on August 27, 1995,
or any other scheduled Expiration Date, the then-scheduled
Expiration date may be extended for a period of one (1) year or
less only upon mutual written consent of Borrower and LaSalle. In
no event shall the Expiration Date be extended to a date after
September 27, 1996."
SECTION II - RENEWAL FEE.
Borrower shall pay to LaSalle a renewal fee in the amount of
$ 500, which shall be earned and payable on August 1, 1995.
SECTION III - CONDITIONS OF EFFECTIVENESS OF THIS AMENDMENT.
This Amendment shall not be effective unless and until:
(a) execution of this Amendment by the parties listed as
signatories below;
(b) execution and delivery of a Company General Certificate
for Borrower, including as Exhibits Borrower's current Certificate
of Incorporation and current By-laws (or statement that they have
not been changed since the date of the last Company General
Certificate delivered to LaSalle by Borrower), resolutions of
Borrower's Board of Directors adopting this Amendment and related
instruments and documents and relevant good standing certificates;
(c) delivery of a Reaffirmation of the Amended and Restated
Guaranty of HVHC, Inc.;
(d) delivery to LaSalle of an executed copy of a letter
agreement between the Term Lender and Borrower extending the due
date of the $1,000,000 required (mandatory) prepayment due to the
Term Lender from July 31, 1995 to August 31, 1995, consenting to
the extension by LaSalle of the expiration date of the Loan
Agreement, and to the extension of the due date of Borrower's
principal and other obligations pursuant to such extension of the
expiration date, from July 31, 1995 to August 31, 1995, under
Section 2.4 of the Note Agreement, and otherwise in form and
substance satisfactory to LaSalle; and
(e) delivery of any other agreements, consents, filings or
other documents relating to the Loan Agreement and documents
delivered thereunder which are reasonably requested by LaSalle in
relation to this Amendment.
SECTION IV - GENERAL.
(a) Except as herein amended or modified, the Loan Agreement,
as previously amended, shall remain unchanged and in full force and
effect and is hereby ratified, approved, and confirmed in all
respects.
(b) After the date hereof all references in the Loan
Agreement to "Agreement", "hereof", or the like shall refer to the
Loan Agreement as herein amended or modified.
(c) Borrower agrees to furnish to LaSalle upon request, such
resolutions, opinions, certificates, documents and assurances which
LaSalle may request in connection with this Amendment.
(d) This Amendment shall be binding upon Borrower and LaSalle
and their respective successors and assigns, and shall inure to the
benefit of LaSalle and Borrower and their respective successors and
assigns.
(e) This Amendment may be executed in any number of
counterparts and each such counterpart shall be deemed to be an
original, but all such counterparts shall together constitute but
one and the same Amendment.
(f) This Amendment shall be governed by and construed in
accordance with the laws of the State of Illinois.
Dated as of the date and year first above written
HUNT VALVE COMPANY, INC.
By: /s/ Robert V. Silva
Title: Chairman
LASALLE BUSINESS CREDIT, INC.
By: /s/ William A. Stapel
Title: Vice President
GUARANTY REAFFIRMATION
THE UNDERSIGNED hereby acknowledges and accepts the terms and
conditions of the above-stated Amendment No. 14 and reaffirms the
terms and conditions of that certain Amended and Restated General
Continuing Guaranty dated September 27, 1991.
Dated: July 27, 1995 HVHC, INC.
By: /s/ Robert V. Silva
Its: President
RHODE ISLAND HOSPITAL TRUST NATIONAL BANK
BALBOA LIFE INSURANCE COMPANY
BALBOA INSURANCE COMPANY
July __, 1995
Hunt Valve Company, Inc.
1913 E. State Street
Salem, Ohio 44460
Re: Note Agreement
Gentlemen:
Reference is made to the Note Agreement, dated as of August
15, 1991, among Hunt Valve Company, Inc. (the "Company), Rhode
Island Hospital Trust National Bank, as Trustee for the Textron
Collective Investment Trust B ("RIHT"), Balboa Life ("Balboa";
RIHT, Balboa Life and Balboa collectively referred to as the
"Purchasers"), as amended by the First Amendment, dated as of March
31, 1993 but effective as of September 30, 1992, and by the Second
Amendment, dated as of July 30, 1993 but effective as of September
30, 1992 (as so amended, the "Note Agreement"). Capitalized terms
used but not defined herein have the meanings given to them in the
Note Agreement.
In connection therewith, the Company has advised the
Purchasers that the Company desires to extend the expiration date
of its secured revolving credit facility (the "LaSalle Facility")
with LaSalle Business Credit, Inc. (f/k/a StanChart Business
Credit, Inc.) ("LaSalle") from July 27, 1995 to August 27, 1995.
The Company has further advised the Purchasers that the Company's
request for LaSalle's agreement to such extension is conditioned on
the extension of the due date for the Company's $1,000,000 required
(mandatory) principal prepayment to the Purchasers under the terms
of the Note Agreement from August 1, 1995 to September 1, 1995.
Hunt Valve Company, Inc.
July __, 1995
Page Two
The Purchasers hereby advise the Company as follows:
1. Notwithstanding any provision to the contrary in the
Intercreditor Agreement, dated as of September 27, 1991,
between the Purchasers and LaSalle, the Purchasers hereby
consent to the extension by the Company and LaSalle of
the expiration date of the LaSalle Facility, and the
extension of the due date of the Company's principal and
other Obligations (as defined in the LaSalle Facility)
pursuant to such extension of the expiration date, from
July 27, 1995 to August 27, 1995.
2. The Purchasers hereby agree that Section 2.1 of the Note
Agreement is amended to provide that the due date for the
required prepayment of $1,000,000 with respect to the
Notes, previously extended to August 1, 1995, is further
extended to September 1, 1995.
3. The Purchasers hereby agree that Section 2.4 of the Note
Agreement is amended as follows: (a) the current
reference to "August 1, 1995", is hereby changed to
"September 1, 1995" and (b) the current reference to
"August 3, 1995", is hereby changed to "September 3,
1995".
4. The provisions of this letter are limited as specified
and shall not constitute a modification or waiver of any
other provision of the Note Agreement.
5. Purchasers agreement to extend the due date for the
Company's $1,000,000 pricipal payment as set forth above
is contingent upon LaSalle's agreement to extend the
expiration date of the LaSalle Facility as set forth
herein.
Very truly yours,
RHODE ISLAND HOSPITAL TRUST
NATIONAL BANK, as Trustee for the
Textron Collective Investment
Trust B
By: /s/ David E. Makin
Name: David E. Makin
Title: Assistant Vice President
Hunt Valve Company, Inc.
July __, 1995
Page Three
BALBOA LIFE INSURANCE COMPANY
By: /s/ Lawrence G. Knowles, Jr.
Name: Lawrence G. Knowles, Jr.
Title: 2nd Vice President
BALBOA INSURANCE COMPANY
By: /s/ Lawrence G. Knowles, Jr.
Name: Lawrence G. Knowles, Jr.
Title: 2nd Vice President
AGREED AND CONSENTED TO:
HUNT VALVE COMPANY
By: /s/ Robert V. Silva
Name: Robert V. Silva
Title: Chairman
PARAGRAPH 2 ABOVE HEREBY IS
CONSENTED TO:
LASALLE BUSINESS CREDIT, INC.
By: /s/ William A. Stapel
Name: William A. Stapel
Title: Vice President
AMENDMENT NO. 15
TO THE LOAN AND SECURITY AGREEMENT
BETWEEN HUNT VALVE COMPANY, INC.
AND LASALLE BUSINESS CREDIT, INC.
This Amendment No. 15 dated as of August 5 , 1995
("Amendment") to the Loan Agreement (defined below) is entered into
by and between Hunt Valve Company, Inc. ("Borrower") and LaSalle
Business Credit, Inc. ("LaSalle") (formerly known as StanChart
Business Credit, Inc.).
W I T N E S S E T H
WHEREAS, the Borrower and LaSalle are parties to a Loan and
Security Agreement originally dated as of January 30, 1987, as
previously amended by amendments through Amendment No. 5 and
Restatement of Loan and Security Agreement, dated as of September
27, 1991, by Amendment No. 6, dated as of April 8, 1994, by
Amendment No. 7, dated as of September 27, 1994, by Amendment No.
8, dated as of December 16, 1994, by Amendment No. 9, dated as of
January 25, 1995, by Amendment No. 10, dated as of February 27,
1995, by Amendment No. 11, dated as of March 27, 1995, by Amendment
No. 12, dated as of April 27, 1995, by Amendment No. 13, dated as
of June 27, 1995 and by Amendment No. 14, dated as of July 27, 1995
(as amended heretofore and hereafter, the "Loan Agreement") under
which the Initial Term shall expire on August 27, 1995;
WHEREAS, Borrower has requested that LaSalle extend the
Expiration Date of the initial term of the Loan Agreement from
August 27, 1995 through December 31, 1996 and make certain other
amendments in connection therewith;
WHEREAS, Borrower has represented to LaSalle that Borrower's
request for LaSalle's agreement to such extension is conditioned on
the revision of the dates and amounts for payment of certain
required (mandatory) principal prepayments due from Borrower to the
Term Lender under the terms of the Term Notes (and pursuant to the
Note Agreement, dated as of August 15, 1991, as amended, under
which the Term Notes have been issued);
WHEREAS, the Term Lender has agreed to revise and extend the
due dates of such required (mandatory) prepayments as requested by
Borrower;
WHEREAS, Borrower has acknowledged that its payment of any
part of such extended and revised required (mandatory) prepayments
to the Term Lender prior to the due dates thereof would constitute
an Event of Default under the Loan Agreement;
WHEREAS, Borrower has requested that LaSalle institute a
sub-facility allowing for the issuance of letters of credit;
WHEREAS, LaSalle has agreed to such amendments to the Loan
Agreement, on the terms and conditions set forth in this Amendment,
subject to the satisfaction by Borrower as required hereunder of
certain preconditions to such waivers and to effectiveness of such
amendments as set forth below;
WHEREAS, terms, unless otherwise defined herein, are used
herein with the meanings assigned to them in the Loan Agreement;
NOW, THEREFORE, in consideration of the mutual promiseS and
agreements of the parties hereinafter set forth and for other good
and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:
SECTION I - AMENDMENTS.
Upon fulfillment of the conditions to effectiveness under
Section III of this Amendment, the Loan Agreement shall be, and is
hereby, amended to be and read as follows:
A. Section 1.26 of the Loan Agreement, the definition of
"Expiration Date", shall be amended to read as follows:
"1.26 The term 'Expiration Date' shall mean December 31, 1996
or such later date as may be agreed by LaSalle and Borrower
pursuant to Section 3.1 hereof."
B. New Sections 1.36A, 1.36B, 1.36C and 1.36D are hereby
inserted after Section 1.36 of the Loan Agreement to read as
follows:
" 'L/C Bank' shall mean LaSalle National Bank or any other
bank which issues Letters of Credit, as consented to by LaSalle in
LaSalle's discretion, which consent shall not be unreasonably
withheld.
'L/C Guaranty' shall mean each and any agreement or
arrangement between LaSalle and the L/C Bank indemnifying L/C Bank
in connection with the Letters of Credit.
'L/C Reserve' shall mean the aggregate face value of all
Letters of Credit issued by L/C Bank at the request of and for the
account of Borrower.
'Letters of Credit' shall mean any stand-by Letters of Credit
which are now or hereafter at any time issued by L/C Bank at the
request of and for the account of Borrower, pursuant to the terms
of this Agreement, and which have not expired or been cancelled or
terminated, including without limitation all Letters of Credit
guaranteed or for which LaSalle shall have any obligation under the
terms of the L/C Guaranty."
C. 1.58 The term "Senior Note" shall mean the Senior
Subordinated Promissory Note, dated March 29, 1993, made by the
borrower to THV Acquisition Corp. in the original principal amount
of $500,000, as amended and restated in the form set forth in
Exhibit A hereto.
D. Section 2.1 is hereby amended by the addition thereto in
the eleventh line thereof, immediately before the current provison
therein, of the phrase "less the L/C Reserve; . . . . ."
E. Section 2.1 of the Loan Agreement is hereby amended by the
addition thereto of the following paragraph at the end thereof:
"Subject to the terms and provisions of this Agreement and
provided that no Event of Default has occurred, LaSalle may, at
Borrower's request and for the account of Borrower, guaranty the
payment of, or otherwise indemnify the L/C Bank for, Borrower's
reimbursement obligations with respect to, one or more Letters of
Credit pursuant to the L/C Guaranty; provided that the aggregate
outstanding face amount of the Letters of Credit shall not at any
time exceed the lesser of (a) $200,000 and (b) the amount which is
available for borrowing as Loans at such time as provided in the
first paragraph of Section 2.1 above. The Letters of Credit shall
be for purposes of supporting performance bonds on orders given to
Borrower and shall be in form and substance satisfactory to
LaSalle. Borrower shall reimburse LaSalle, immediately upon demand,
in the amount of any payments made by LaSalle to any Person with
respect to the Letters of Credit or L/C Guaranty, and until LaSalle
shall have been so reimbursed by Borrower, such payments by LaSalle
shall be deemed to be Loans. In connection with the Letters of
Credit and L/C Guaranty, Borrower hereby indemnifies LaSalle for
any payments made by LaSalle with respect to the Letters of Credit
or L/C Guaranty and for any taxes (other than income taxes),
levies, deductions, charges and costs and expenses incurred by
LaSalle with respect to the Letters of Credit or the L/C Guaranty.
No letter of Credit shall have an expiration date after the end of
the Initial Term or any extension term of this Agreement unless so
agreed by LaSalle, and if any such Letter of Credit shall not have
expired upon the end of the Initial Term of any extension term of
this Agreement or any earlier termination, Borrower shall deposit
into a cash collateral account at a bank satisfactory to LaSalle an
amount equal to the face amount of any Letters of Credit having an
expiration date after the end of the Initial Term or any extension
term of this Agreement, which account shall be in the name of
LaSalle or LaSalle will have a first perfected security interest
therein for purposes of reimbursing LaSalle for any payments made
by LaSalle with respect to the Letters of Credit or the L/C
Guaranty. Borrower shall pay to LaSalle a Letter of Credit fee with
respect to the face amount of each Letter of Credit issued, which
fee shall be in an amount equal to 28 per annum, payable monthly in
arrears on the first day of each month after issuance. In addition,
Borrower shall pay to LaSalle all expenses incurred by LaSalle and
the L/C Bank in connection with the issuance, amendment, payment
and negotiation of any Letter of Credit, payable on the date
incurred by LaSalle or the L/C Bank, including, without limitation,
all the standard costs, fees and expenses charged by the L/C Bank
or other issuer of a Letter of Credit."
F. The first paragraph of Section 3.1 of the Loan Agreement
shall be amended to read as follows:
"3.1 This Agreement shall have a term (the 'Initial Term)
commencing on the Effective Date and expiring on the Expiration
Date of December 31, 1996. As of December 31, 1996 or any other
scheduled Expiration Date, the then scheduled Expiration Date may
be extended for a period of one (1) year or less only upon mutual
written consent of Borrower and LaSalle."
G. Section 6.3(o) is hereby amended by substitution for the
clause specifying permissible management fees beginning in line 9
thereof and currently ending with the date September 30, 1994 in
line 13 hereof (but not amending the proviso beginning thereafter)
of the following:
"and Borrower may pay management, consulting, or similar fees
to Transtech not to exceed $75,000 during any fiscal quarter ending
after September 30, 1991 and on or before December 31, 1994, and
$100,000 during any fiscal quarter ending on or after March 31,
1995 and on or prior to the Expiration Date."
H. Section 6.3(q) of the Loan Agreement is hereby amended by
the addition at the end of said Section 6.3(q) of the following
sentence:
"Notwithstanding the foregoing, the base salary of the
Chairman of the Board of Directors, Robert Silva, for the
Borrower's fiscal year ending December 31, 1995 may be increased to
115% of such base compensation paid for the Borrower's fiscal year
ended December 31, 1994 without such excess causing Borrower to
violate any other provision of this Section 6.2(q)."
I. Section 6.13 is hereby amended to read in its entirety as
follows:
"6.13 Effective as of January 1, 1995, Borrower shall maintain
at all times Adjusted Net Worth in an amount of not less than Four
Million Five Hundred Seventy Thousand Four Hundred Dollars
($4,570,400.00). The minimum Adjusted Net Worth provided for herein
shall be increased, effective as of the beginning of each fiscal
year of Borrower, by an amount equal to eighty percent (80%) of
Borrower's after tax profit for the fiscal year just ended and
shall be decreased by dividends paid to the extent permitted under
Section 6.3(n)."
J. Section 6.17 is hereby amended by deletion of the
parenthetical phrase "(if this Agreement should be extended
hereafter by mutual agreement of Borrower and LaSalle at LaSalle's
discretion)" after the phrase "Each fiscal quarter thereafter" from
the provision in Section 6.17 setting the minimum EBITDA at
$700,000 per each fiscal quarter of the Borrower thereunder.
K. Section 14 (ii) of the Loan Agreement shall be amended by
substitution of the amount of "$500" therein as the amount of
reimbursements to LaSalle for audit charges per person day for the
current amount of "$450" therein, but said Section 14 shall
otherwise not be amended.
SECTION II - RENEWAL FEE.
Borrower shall pay to LaSalle a renewal fee in the amount of
$8,000, which shall be earned and payable on the date hereof.
SECTION III - CONDITIONS OF EFFECTIVENESS OF THIS AMENDMENT.
This Amendment shall not be effective unless and until:
(a) execution of this Amendment by the parties listed as
signatories below;
(b) execution and delivery of a Company General Certificate
for Borrower, including as Exhibits Borrower's current Certificate
of Incorporation and current By-laws (or statements that they have
not been changed since the date of the last Company General
Certificate delivered to LaSalle by Borrower), resolutions of
Borrower's Board of Directors adopting this Amendment and related
instruments and documents and relevant good standing certificates;
(c) delivery of a Reaffirmation of the Amended and Restated
Guaranty of HVHC, Inc.;
(d) delivery to LaSalle of an executed copy of an agreement
between the Term Lender and Borrower revising the amount and
extending the due dates of certain required (mandatory) prepayments
due by Borrower to the Term Lender as set forth on Exhibit B
hereto, consenting to the extension by LaSalle of the expiration
date of the Loan Agreement, and to the extension of the due date of
Borrower's principal and other obligations pursuant to such
extension of the expiration date, from August 27, 1995 to December
31, 1996, amending the reference to August 3, 1995 to January 3,
1997 under Section 2.4 of the Note Agreement, and otherwise in form
and substance satisfactory to LaSalle;
(e) delivery to LaSalle of an amended and restated
Subordinated Note in form and substance satisfactory to LaSalle,
such Subordinated Note to provide that no payments of principal or
interest may be made thereon prior to December 31, 1996, except
that prepayments of principal may be made at the time payments are
permitted to be made and are made to the Term Lender as set forth
on Exhibit B hereto, in the proportions for each payment as a
percentage of the then principal face amount of such Note which are
the same as the proportions that each of such permitted payments to
the Term Lender are as a percentage to the total principal amount
then due to the Term Lender; and
(f) delivery of any other agreements, consents, filings or
other documents relating to the Loan Agreement and documents
delivered thereunder which are reasonably requested by LaSalle in
relation to this Amendment.
SECTION IV - GENERAL.
(a) Except as herein amended or modified, the Loan Agreement,
as previously amended, shall remain unchanged and in full force and
effect and is hereby ratified, approved, and confirmed in all
respects.
(b) After the date hereof all references in the Loan Agreement
to "Agreement", "hereof", or the like shall refer to the Loan
Agreement as herein amended or modified.
(c) Borrowers agree to furnish to LaSalle upon request, such
resolutions, opinions, certificates, documents and assurances which
LaSalle may request in connection with this Amendment.
(d) This Amendment shall be binding upon Borrowers and LaSalle
and their respective successors and assigns, and shall inure to the
benefit of LaSalle and Borrowers and their respective successors
and assigns.
(e) This Amendment may be executed in any number of
counterparts and each such counterpart shall be deemed to be an
original, but all such counterparts shall together constitute but
one and the same Amendment.
(f) This Amendment shall be governed by and construed in
accordance with the laws of the State of Illinois.
Dated as of the date and year first above written.
HUNT VALVE COMPANY, INC.
By: /s/ Robert V. Silva
Title: Chairman
LASALLE BUSINESS CREDIT, INC.
By:
Title:
HUNT VALVE COMPANY
THIRD AMENDMENT AGREEMENT
Re: Note Agreements dated as of August 15, 1991
Dated as of
August 1, 1995
To the Institutional Investor
named in Schedule I hereto
which is a signatory to this
Amendment Agreement
Ladies and Gentlemen:
Reference is made to the separate Note Agreements, each dated
as of August 15, 1991, as amended (the "Note Agreements"), between
HUNT VALVE COMPANY, INC., an Ohio corporation (the "Company"), and,
respectively, each of the institutional investors listed therein,
under and pursuant to which $11,500,000 aggregate principal amount
of the Company's 13% Senior Secured Notes due September 30, 2001
(the "Outstanding Notes") were originally issued and are presently
outstanding.
The Company now desires to amend certain provisions of the
Note Agreements. You are the owner and holder of the Outstanding
Notes set opposite your name on Schedule I to the Note Agreements.
The Company hereby requests that from and after your acceptance
hereof in the manner hereinafter provided and upon receipt by the
Company of similar acceptances from the holders of all other
Outstanding Notes, said Note Agreements shall be amended in the
respects, but only in the respects, hereinafter set forth.
ARTICLE I
AMENDMENTS TO NOTE AGREEMENTS
1.1. The portion of 2.1 of the Note Agreements beginning with
the first sentence and ending at the end of the table contained
therein shall be and is hereby amended as follows:
"The Company agrees that on (i) the Effective Date
of the Third Amendment Agreement dated as of August 1,
1995, it will prepay and apply and there shall become due
and payable on the principal indebtedness evidenced by
the Notes an amount equal to $133,333 and (ii) the last
day of each calendar quarter beginning September 30, 1995
and ending June 30, 2001, both inclusive, it will prepay
and apply and there shall become due and payable on the
principal indebtedness evidenced by the Notes an amount
equal to the respective principal amount set forth
opposite the period encompassing such fiscal quarter
ending date as indicated in the following table:
PERIOD PREPAYMENT AMOUNT
September 30, 1995
to and including
December 31, 1995 $133,333 as of the end of each fiscal quarter
March 31, 1996 to
and including
December 31, 1996 $250,000 as of the end of each fiscal quarter
March 31, 1997 to
and including
December 31, 1997 $300,000 as of the end of each fiscal quarter
March 31, 1998 to
and including
December 31, 1998 $425,000 as of the end of each fiscal quarter
March 31, 1999 to
and including
December 31, 1999 $500,000 as of the end of each fiscal quarter
March 31, 2000 to
and including
December 31, 2000 $600,000 as of the end of each fiscal quarter
March 31, 2001 to
and including
June 30, 2001 $700,000 as of the end of each fiscal quarter"
1.2. 2.2 of the Note Agreements shall be and is hereby
amended by adding the following subsection thereto:
"(c) The Company shall have the privilege, upon compliance
with 2.5, on the last day of any fiscal quarter on which a
prepayment is made pursuant to 2.1, of prepaying the Notes, in
multiples of $100,000, up to a principal amount equal to the
difference between the principal balance of the Notes outstanding
immediately after giving effect to the prepayment required to be
made on such date pursuant to 2.1 and the Original Scheduled
Principal Balance as of the date of prepayment pursuant to this
2.2(c). Any such prepayment shall be made by payment of the
principal amount to be prepaid together with accrued and unpaid
interest thereon to the date of prepayment and without premium. The
"Original Scheduled Principal Balance" shall mean, as of the date
of any determination of the amount permitted to be prepaid pursuant
to this 2.2(c), the amount as of such date that would have been
outstanding if the Company had prepaid the Notes on such date
pursuant to and in accordance with the provisions of 2.1 hereof,
without giving effect to any amendment or modification of 2.1
after the Closing Date."
1.3. The first sentence of 2.4 shall be and is hereby amended
so that the same shall henceforth read as follows:
"In the event that the Company is unable to deliver an
Unencumbered First Lien to the Noteholders on or before the earlier
of (i) the first date on which Stanchart no longer provides a
senior credit facility to the Company or (ii) December 31, 1996,
the Company will, within three business days after the first to
occur of the dates described in clauses (i) and (ii) above, give
written notice (the "Company Notice") of such failure to all
holders of the Notes who are also holders of the Warrants."
1.4. The last three entries in the table in 5.7 shall be and
are hereby deleted and replaced by the following:
"January 1, 1995 through
December 31, 1995 82%
January 1, 1996 through
December 31, 1996 79%
January 1, 1997 through
December 31, 1997 75%
January 1, 1998 and thereafter 71%"
1.5. 5.11 shall be and is hereby amended in its entirety so
that the same shall henceforth read as follows:
"5.11. Fixed Charge Coverage Ratio. The Company will have, at
the end of each fiscal quarter, a ratio of Net Income Available for
Fixed Charges to Fixed Charges (such calculation to be made in
accordance with Sec 5.26) of not less than the following levels for
each period of four consecutive fiscal quarters (taken as a single
accounting period) ending during the respective period set forth
below (determined as of the end of each fiscal quarter):
PERIOD OF FOUR CONSECUTIVE
FISCAL QUARTERS ENDING ON THE
FOLLOWING DATE OR DURING THE
FOLLOWING PERIODS MINIMUM RATIO
January 1, 1995 through
December 31, 1995 1.25:1.0
January 1, 1996 through
December 31, 1996 1.75:1.0
January 1, 1997 through
December 31, 1997 2.0:1.0
January 1, 1998 and thereafter 2.5:1.0"
1.6. SEC 5.17 of the Note Agreements shall be and is hereby amended as
follows:
SEC 5.17(ii)(y)(a) shall be and is hereby amended by deleting the
reference to the word "Excess" contained therein.
1.7. SEC 6.1(h) of the~Note Agreement shall be and is hereby
amended to read as follows:
"(h) An Event of Default under any Collateral Document or the
Stanchart Facility or (ii) any termination of the Stanchart
Facility on or before January 1, 1997;"
1.8. Paragraph 2 of Exhibit A to the First Amendment-Note
Agreement dated March 29, 1993 to the Note Agreements shall be and
is hereby amended by inserting the following provisions at the end
thereof:
"Notwithstanding anything contained in this paragraph 2 or in
this Note to the contrary, the aggregate principal amount paid or
prepaid hereunder shall not exceed at any time an amount equal to
$571,260 multiplied by the remainder of one minus a fraction the
numerator of which is equal to the then aggregate unpaid principal
amount of the 13% Senior Secured Notes due September 30, 2001 and
the denominator of which is equal to $11,000,000."
1.9. Paragraph 2(a) and paragraph 2(c) of Exhibit A to the
First Amendment-Note Agreement dated March 29, 1993 to the Note
Agreements shall be and is hereby amended by (i) changing the
ratios of "2.25:1" and "2.50:1," respectively, therein, to "2.00:1"
and (ii) changing the number"$1,000,000" therein to "$500,000."
ARTICLE II
CONDITIONS PRECEDENT
2.1. The Noteholders' agreements set forth in this Third
Amendment Agreement are effective subject to the satisfaction of
the following conditions precedent on or before August 31, 1995
(the "Effective Date "):
(a) Each Noteholder shall have received this Third Amendment
Agreement, duly executed by the Company.
(b) The Company shall have (i) extended the Stanchart Facility
for a period ending on or after December 31, 1996 which extension
is hereby consented to by ,he Noteholders and (ii) obtained all
necessary consents of approvals of all necessary parties (including
Stanchart and THV Acquisition Corp.) and shall have delivered
executed copies thereof to you.
(c) The Senior Subordinated Note shall have been amended in a
manner contemplated by SEC 1.8 and SEC 1.9 of Article I above.
(d) The representations and warranties of the Company
contained in Article III hereof shall be true and correct on and as
of the Effective Date
(e) On or prior to the Effective Date, the Company shall have
paid a consent fee to the Noteholders equal to $8,000 in the
aggregate.
(f) On or prior to the Effective Date, the Company shall have
paid the fees and expenses of Chapman and Cutler, special counsel
to the Noteholders.
(g) The Noteholders shall have received such representations
and warranties, legal opinions and closing certificates as they may
request with respect to the transactions contemplated by this Third
Amendment Agreement.
(h) All proceedings taken in connection with the transactions
contemplated by this Third Amendment Agreement (including, without
limitation, any amendment or modification of the Stanchart
Facility) and all documents necessary to the consummation thereof
shall be satisfactory in form and substance to you and you shall
have received a copy of all legal documents or proceedings taken in
connection with the consummation of such transactions in form and
substance satisfactory to you.
ARTICLE III
REPRESENTATIONS
The Company hereby represents and warrants that as of the date
hereof and as of the Effective Date and after giving effect to the
provisions of this Third Amendment Agreement:
(a) The Company is duly incorporated, validly existing and in
good standing under the laws of its state of incorporation.
(b) This Third Amendment Agreement, and the Financing
Documents are within the corporate powers of the Company (if the
Company is a party), and have been duly authorized by all necessary
corporate action on the part of the Company and constitute legal,
valid and binding obligations of the Company enforceable in
accordance with their respective terms.
(c) No Default or Event of Default under the Note Agreements
has occurred and is continuing.
ARTICLE IV
MISCELLANEOUS
4.1 The capitalized terms used in this Third Amendment
Agreement shall have the respective meanings specified in the Note
Agreements unless otherwise herein defined or the context hereof
shall otherwise require.
4.2 Except as amended herein, all other terms and provisions
of the Note Agreements are hereby ratified, confirmed and approved
in all respects.
4.3 Any and all notices, requests, certificates and other
instruments, including the Notes, may refer to the "Note
Agreements" without making specific reference to this Third
Amendment Agreements, but nevertheless all such references shall be
deemed to include this third Amendment Agreement unless the context
shall otherwise require.
4.4 This Third Amendment Agreement and all covenants herein
contained shall be binding upon and inure to the benefit of the
respective successors and assigns of the parties hereunder. All
covenants made by the Company herein shall survive the closing and
the delivery of this Third Amendment Agreement.
4.5 The Company will pay and/or reimburse all expenses of the
Noteholders in connection with the negotiation, preparation,
execution and delivery of this Third Amendment Agreement and the
transactions contemplated hereby.
4.6 This Third Amendment Agreement may be executed in any
number of counter parts, each executed counterpart constituting an
original but all together only one
Very truly yours,
HUNT VALVE COMPANY, INC.
By: /s/ Robert V. Silva
its Chairman and CEO
The foregoing Amendment Agreement and the amendments referred
to therein are hereby accepted and agreed to as of August 1, 1995,
and the undersigned hereby confirms that on August 1, 1995 it held
Outstanding Notes of the Company as indicated on Schedule I to the
Note Agreements and that on the date of actual execution hereof it
continues to hold such Outstanding Notes.
RHODE ISLAND HOSPITAL TRUST NATIONAL
BANK, as Trustee for the Textron
Collective Investment Trust B
BY: /s/ David E. Makin
Its Assistant Vice President
The Paul Revere Investment Management
Corporation, as Agent
BALBOA LIFE INSURANCE COMPANY
By /s/ Kent M. Phillips
Its Vice President
The Paul Revere Investment Management
Corporation, as Agent
BALBOA LIFE INSURANCE COMPANY
By /s/ Kent M. Phillips
Its Vice President
Each of the undersigned, severally acknowledges and agrees to
the foregoing Amendment Agreement and all prior amendments and
modification so any Financing Documents and any guaranty thereof
and hereby ratifies and confirms any and all of its respective
obligations under any Financing Documents (as defined in the Note
Agreements) and any guaranty thereof to which it is a party or by
which it is bound.
HVHC, Inc.
By /s/ Robert V. Silva
Its President
TRANSTECH INDUSTRIES, INC.
By /s/ Robert V. Silva
Its Chairman
TRANSTECH INDUSTRIES, INC.
AND SUBSIDIARIES
EXHIBIT 11 - COMPUTATION OF INCOME (LOSS) PER SHARE
<TABLE>
<CAPTION>
For the Nine Months Ended
September 30,
1995 1994
<S> <C> <C>
PRIMARY:
Weighted average common shares
outstanding 2,829,090 2,829,090
Dilutive effect of common stock
equivalents - -
2,829,090 2,829,090
INCOME (LOSS) FROM CONTINUING
OPERATIONS $(.12) $(.60)
DISCONTINUED OPERATIONS:
Income (loss) from operations, net
of taxes (credits) .07 .50
Gain (loss) on disposal of
discontinued operations (.31) -
NET INCOME (LOSS) per common
and common equivalent share $(.31) $(.10)
FULLY DILUTED*
<FN>
* For the nine months ended September 30, 1995 and 1994, fully
diluted earnings per share did not differ significantly from
primary earnings per share and therefore is not presented.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 1,233
<SECURITIES> 2,347
<RECEIVABLES> 228
<ALLOWANCES> 11
<INVENTORY> 0
<CURRENT-ASSETS> 9,516
<PP&E> 4,092
<DEPRECIATION> 3,164
<TOTAL-ASSETS> 15,048
<CURRENT-LIABILITIES> 3,729
<BONDS> 360
<COMMON> 2,357
0
0
<OTHER-SE> (5,012)
<TOTAL-LIABILITY-AND-EQUITY> 15,048
<SALES> 292
<TOTAL-REVENUES> 292
<CGS> 2,317
<TOTAL-COSTS> 2,317
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 50
<INTEREST-EXPENSE> 258
<INCOME-PRETAX> (413)
<INCOME-TAX> (76)
<INCOME-CONTINUING> (337)
<DISCONTINUED> (687)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,024)
<EPS-PRIMARY> (.36)
<EPS-DILUTED> (.36)
</TABLE>
SETTLEMENT AGREEMENT
WHEREAS, Plaintiffs and certain third-party defendants
(collectively "Settling Generators/Transporters") are members of
the 216 Paterson Plank Road Cooperating PRP Group (identified
individually on the list attached hereto as Exhibit A) which has
been addressing issues related to contamination at an NPL site in
Carlstadt, New Jersey, known as 216 Paterson Plank Road, and more
particularly described as Lots 1-5 of Block 124 on the Tax Map of
the Borough of Carlstadt (the "Carlstadt Site"); and
WHEREAS, Plaintiffs have commenced litigation against, inter
alia, defendants Transtech Industries, Inc. ("Transtech"), Inmar
Associates, Inc. ("Inmar") and Marvin H. Mahan ("Mahan")
(collectively "Settling Defendants") entitled AT&T Technologies
Inc., et al. v. Transtech Industries. Inc.. et al. (Civil Action
No. 88-4267 (HLS) (the "Litigation") in order to recover costs
incurred and to be incurred by Plaintiffs in connection with the
investigation, remediation and post-remediation monitoring of
environmental hazards associated with the Carlstadt Site (the
"Response Costs"), including but not limited to, on-site and off-
site soil contamination, groundwater contamination and
contamination in the sediments of Peach Island Creek, Berry's Creek
and the Hackensack River (the "Carlstadt Site Contamination") and
natural resource damages; and to declare and fix the liability of
Settling Defendants for conditions and damages at or arising from
the Carlstadt Site; and
WHEREAS, Transtech (formerly named Scientific, Inc. and
Scientific Chemical Treatment Company, Inc.) is alleged to have
been an operator, as defined in 42 U.S.C. Section 9607(a), at the
Carlstadt Site from approximately November 1965 until approximately
November 1970 and to have continued to use portions of the
Carlstadt Site thereafter until at least 1974, a period during
which various and discrete discharges and releases of hazardous
substances are alleged to have occurred at the Carlstadt Site; and
WHEREAS, Inmar, for itself and as successor to Inmar Realty,
Inc. and Sparrow Associates, Inc. (collectively hereinafter
denominated "Inmar"), is alleged to be, and since approximately
November 1965, to have been an owner, as defined in 42 U.S.C.
Section 9607(a), of the Carlstadt Site, during which period various
discharges and releases of hazardous substances are alleged to have
occurred; and
WHEREAS, Mahan was at all relevant times a principal of Inmar
and Transtech; and
WHEREAS, Settling Defendants have brought third-party claims
against certain primary and excess insurance carriers, namely,
Allstate Insurance Company ("Allstate"); Continental Insurance
Company ("Continental"); City Insurance Company ("City"); National
Union Fire Insurance Company ("National Union"); certain
underwriters at Lloyds London and companies subscribing to certain
excess insurance policies ("Lloyds/London Market"); First State
Insurance Company ("First State"); Hartford Insurance Company
("Hartford"); and Mount Vernon Insurance Company/U.S. Liability
Insurance, Company ("Mt. Vernon/U.S. Liability") seeking a
declaratory judgment that coverage for their liabilities in the
Litigation exists under various comprehensive general liability
insurance policies; and
WHEREAS, Settling Defendants have brought counterclaims and
third-party claims against various persons, including Settling
Generators/Transporters, and other entities alleged to have been
generators or transporters who arranged for disposal of waste at
the Carlstadt Site; and
WHEREAS, Settling Generators/Transporters and Settling
Defendants have reviewed documents and interrogatory responses
produced by all parties in discovery, as well as records produced
by the United States Environmental Protection Agency ("EPA") and
the U.S. Attorney's Office relating to a grand jury investigation
involving the Carlstadt Site, and testimony of witnesses with
knowledge of the events; and
WHEREAS, Settling Generators/Transporters have expended and
will expend substantial amounts in connection with the design and
implementation of a Remedial Investigation and Feasibility Study
pursuant to either an Administrative Order on Consent in Matter of
Scientific Chemical Processing Site, Carlstadt, Bergen County, New
Jersey, Index No. II CERCLA-50114, dated September 30, 1985 or a
unilateral Administrative Order in Matter of Alfa Ink & Chemc.
Corp., Index No. II CERCLA-60102, dated October 23, 1985; and
WHEREAS, Settling Generators/Transporters have expended and
will expend substantial amounts in connection with the design,
implementation and operation of an Interim Remedy pursuant to a
unilateral Administrative Order in Matter of Scientific Chemical
Processing Site, Carlstadt, Bergen County, New Jersey, Index No. II
CERCLA-0016, dated September 28, 1990, consisting of the
construction of a slurry wall, dewatering of the Carlstadt Site
down to the clay layer, off-site treatment of removed ground water
and placement of an interim cap over the Carlstadt Site
(hereinafter the "Interim Remedy"); and
WHEREAS, Inmar has expended substantial sums in connection
with removal of certain materials from the Carlstadt Site and
Transtech has expended substantial sums in connection with the
Interim Remedy at the Carlstadt Site; and
WHEREAS, EPA has not yet determined the nature or cost of a
permanent remedy at the Carlstadt Site and such a determination is
not expected to be made for several years; however, the cost of a
permanent remedy is expected to far exceed the cost of the Interim
Remedy; and
WHEREAS, in order to avoid the costs and inconveniences of
protracted litigation and further the goal of funding the
remediation of the Carlstadt Site, Settling Generators/Transporters
and Settling Defendants have agreed to resolve amicably and
compromise their differences and, except as hereinafter
specifically excluded, settle all claims they have against one
another for any and all Response Costs related to the Carlstadt
Site Contamination;
IT IS NOW, THEREFORE, AGREED AND STIPULATED by and among the
undersigned parties that:
SETTLEMENT PAYMENTS
In satisfaction of Settling Defendants' share of liability for
the Carlstadt Site Contamination, Settling Defendants agree as
follows:
1. Settling Defendants agree to pay to Settling
Generators/Transporters the sum of $4,220,000 to be paid as
follows:
A. Payments totalling $145,000 shall be made in two $72,500
cash payments from Settling Defendants, the first payment to be
made immediately upon execution of this Agreement; and the second
payment to be made by May 31, 1995.
B. Payment of the remaining $4,075,000 shall be made no
later than 10 days after execution of this Agreement by Settling
Defendants. Settling Defendants represent that this sum consists
of the entire cash proceeds previously paid by Settling Defendants'
primary insurance carriers, namely, Allstate, Continental, City and
National Union in settlement of the Settling Defendants' claims for
indemnification for liabilities related to the Carlstadt Site,
together with the entire proceeds of settlement of a claim asserted
by Inmar against Mount Vernon/U.S. Liability, an excess insurer of
Scientific Chemical Processing Co., Inc., Inmar's lessee. All of
these insurance carrier settlement proceeds have been and are
currently held in trust for Settling Generators/Transporters by
Schenck, Price, Smith & King, Esqs. Unless otherwise directed by
Settling Generators/Transporters in writing to Settling Defendants,
the payments described in subparagraphs A and B of this paragraph
shall be paid by direct electronic transfer and wired in accordance
with the following instructions:
PNC Bank
Philadelphia, PA ABA #031000053
Credit 3-5 Trust Funds A/C #110-262-1
For further credit to Carlstadt Committee Fund
Account 0160822
Attn: Tom Hatton, Ext. 8887
1700 Market Street, Suite 1412
Philadelphia, Pennsylvania 19103-3914
C. As further consideration for this settlement, each of the
Settling Defendants, for and as to itself alone, represents that it
has not now made a decision to file a petition in bankruptcy under
chapters 7, 11 or 13.
2. As additional consideration, Settling Defendants agree to
and hereby do assign to Settling Generators/Transporters,
individually and collectively, any and all claims and rights of
action against Lloyds/London Market issued to, or naming as
insureds, Transtech or its predecessor(s) in name, Scientific
Chemical Treatment Company, Inc. or Scientific, Inc., and/or Inmar
at any time during the period extending from November 1, 1966
through November 30, 1973. This includes all or part of the
following policies but does not include the assignment of any
rights or claims for any policy years prior to November 1, 1966:
Policy No. Policy Period
020784000 11/20/64 - 11/20/67
031127000 11/20/64 - 11/20/67
031126000 11/20/64 - 11/20/67
025065000 11/20/67 - 11/20/70
025067000 il/20/67 - 11/20/70
025066000 11/20/67 - 11/20/70
027068000 11/20/70 - 11/20/73
The claims and rights assigned hereunder include, without
limitation, all claims asserted by Settling Defendants under the
above policies in this action and all insurance coverage claims for
any and all losses related in any way to the Carlstadt Site, and
the right to proceeds under the above policies.
3. Settling Defendant Inmar also agrees to and hereby does
assign to Settling Generators/Transporters, individually and
collectively, any and all claims and rights of action, including
the right to insurance proceeds, it has now or may have against
Hartford under primary and excess insurance policies issued to
Scientific Chemical Processing Co., Inc. by Hartford during the
period September 27, 1971 through February 7, 1975 and accruing to
Inmar, whether as an additional insured property owner, as a named
or intended beneficiary or on any other basis, for any and all
losses related to the Carlstadt Site. This period includes the
following policies:
Policy No. Policy Period
18C828983 9/27/71 - 9/27/72
18C833730 9/27/72 - 9/27/73
18HU44059 2/5/72 - 2/5/73
18HU440123 2/7/73 - 2/7/74
18C841123 9/27/73 - 9/27/74
18HU44095 2/7/74 - 2/7/75
18C845715 9/27/74 - 9/27/75
4. The claims described in paragraphs 2 and 3 hereof are
referred to as the "Assigned Claims".
5. Each Settling Defendant, for and as to itself alone,
represents that it has not transferred, assigned or conveyed any of
the Assigned Claims in any manner to any party other than Settling
Generators/Transporters Settling Defendants will execute releases
or waivers of coverage as may be requested by Settling
Generators/Transporters, if and only as requested by them. In the
event the assignment or attempted assignment of the Assigned Claims
is for any reason ineffective or would constitute a breach of any
policy term or coverage obligation, Settling Defendants agree they
will, at the request of Settling Generators/Transporters,
participate as necessary as a named party plaintiff at Settling
Generators/Transporters' cost and expense (with the exception of
any cost or expense associated with employees of Transtech, Inmar
or their counsel in connection with the obligations set forth in
paragraph 7 hereof), in any litigation commenced by Settling
Generators/Transporters on the Assigned Claims and assign to the
Settling Generators/Transporters the proceeds of any judgment or
settlement of that litigation.
6. As additional consideration for this settlement, Inmar
shall grant to Settling Generators/Transporters a 15 year option to
purchase the Carlstadt Site for $1.00, subject to Inmar's right to
be reimbursed without interest for any real estate taxes paid on
the Site from 1990 onward. The option purchase shall be recorded by
the Bergen County Clerk and in the form attached as Exhibit B.
COOPERATION
7. Settling Defendants agree to cooperate with Settling
Generators/Transporters fully, in all ways without limitation and
without cost to Settling Generators/Transporters, except for the
costs specifically identified in paragraphs 5 and 7 (iv) hereof,
which shall be borne by Settling Generators/Transporters, and
whether or not specifically referred to in this Agreement, in
connection with Settling Generators/Transporters' prosecution of
the Assigned Claims. Such cooperation shall include but not be
limited to (i) producing documents and files for inspection and
review by Settling Generators/Transporters; (ii) making witnesses
or potential witnesses who may then be employed or controlled by
the Settling Defendants available to Settling
Generators/Transporters for purposes of investigation or discovery;
(iii) making Settling Defendants' counsel available from time to
time as needed to consult with or assist Settling
Generators/Transporters in prosecuting any of the Assigned Claims,
except that with respect to Transtech the procedure to be followed
to secure access to its present or former counsel shall be that
Settling Generators/Transporters will first ask Transtech, in
writing, for the information required from Transtech's counsel and
Transtech will promptly provide to Settling Generators/Transporters
the information requested or will provide the Settling
Generators/Transporters with access to Transtech's counsel; and
(iv) taking any actions that may be required to preserve, hold or
defend the Assigned Claims, including, if necessary, participating
as a named party at Settling Generators/Transporters' cost and
expense (with the exception of any cost or expense associated with
employees of Transtech, Inmar or their counsel in connection with
the obligations of this paragraph) in any action brought on the
Assigned Claims and agreeing to waive any conflict they may have
with respect to counsel retained to prosecute such actions. The
frequency and the extent of requests by the Settling
Generators/Transporters for information from or access to Settling
Defendants' counsel will be of a reasonable nature.
8. Settling Defendant Inmar, for itself and its transferees,
successors in interest and any person or entity which shall have or
take property rights in or with respect to all or any portion of
the Carlstadt Site, covenants and agrees to cooperate promptly and
fully with and to assist Settling Generators/Transporters without
charge at all times from the execution of the Agreement in
implementing any program developed by Settling
Generators/Transporters which they believe will enable them
expeditiously, efficiently and/or at the least possible cost to
comply with any directions, orders or instructions from any
governmental entity or to propose any remedial program to any
governmental entity with respect to the Carlstadt Site. Such
cooperation and assistance shall include but not be limited to:
(i) Providing Settling Generators/Transporters, their
employees, agents and contractors and any representatives or agents
of EPA, or NJDEP or any other governmental entity full and complete
access to the Carlstadt Site for the purpose of performing any
investigation, sampling, cleanup, monitoring, maintenance and
inspection of the Carlstadt Site;
(ii) Making available to Settling Generators/Transporters any
records or employees for the purpose of providing information which
may assist Settling Generators/Transporters in complying with any
directions, orders or instructions from EPA, NJDEP or any other
governmental entity;
(iii) Executing such documents as may assist Settling
Generators/Transporters in complying with any directions, orders or
instructions from EPA, NJDEP or any other governmental entity;
(iv) Prohibiting disturbance of impervious or other cover,
caps or sealants located at the Carlstadt Site as well as any
engineering or institutional controls located on the Carlstadt Site
as Settling Generators/Transporters may direct;
(v) Limiting development, improvement, alteration,
disturbance, excavation, access or use of the Carlstadt Site or any
portion thereof as directed by Settling Generators/Transporters;
(vi) Notifying Settling Generators/Transporters, EPA, NJDEP,
or any other governmental entity concerning development,
disposition, lease, sale, assignment, transfer or changes of use at
the Carlstadt Site or any portion thereof or any interest therein;
(vii) Agreeing to such cleanup levels for the Carlstadt Site
as Settling Generators/Transporters may deem necessary and
appropriate and, if requested by Settling Generators/Transporters,
executing and filing such documents restricting use of the
Carlstadt Site as may be deemed appropriate by Settling
Generators/Transporters;
(viii) Executing and filing at any time subsequent to the
execution of this Agreement one or more easements, notices or other
restrictions of record, as Settling Generators/Transporters may
direct, which shall provide notice of subparagraphs (i) through
(vii) above and, to the extent possible, run with the Carlstadt
Site and legally obligate any person or entity who shall
subsequently take any interest in the Carlstadt Site to comply with
these subparagraphs; and
(ix) Cause all lessees, grantees, transferees and holders of
any interest in all or any portion of the Carlstadt Site to take
the Site and/or their interest in the Carlstadt Site subject to the
limitations and obligations set out in subparagraphs (i) through
(viii) above.
b. Settling Defendant Inmar further agrees that the deed to
the Carlstadt Site and every document which conveys, transfers,
assigns or evidences any property right or interest in the
Carlstadt Site shall contain the following covenants, conditions
and restrictions:
THE 216 PATERSON PLANK ROAD COOPERATING PRP GROUP, THEIR
SUCCESSORS AND ASSIGNS, EMPLOYEES, AGENTS AND CONTRACTORS ARE
HEREBY GRANTED FULL AND COMPLETE ACCESS TO THE PROPERTY FOR THE
PURPOSE OF PERFORMING WORK RELATED TO ANY OBLIGATIONS THEY MAY HAVE
WITH RESPECT TO SAMPLING, CLEANUP, MONITORING AND INSPECTING. THIS
EASEMENT IS HEREBY DEEMED TO RUN WITH THE LAND.
COVENANT NOT TO SUE FROM SETTLING GENERATORS/TRANSPORTERS
AND RELEASE FROM SETTLING DEFENDANTS
9. Except as specifically reserved in this Agreement, Settling
Generators/Transporters agree that, by the execution of this
Agreement they hereby covenant and agree not to sue Settling
Defendants, their respective past, present and future parents,
subsidiaries and affiliates and their respective heirs, successors
and assigns, executors, administrators or personal representatives,
employees, officers, directors, shareholders and agents on any and
all claims, demands, damages, actions or suits at law or in equity,
of whatsoever kind or nature, for or because of any matter or thing
done, omitted or suffered to be done arising out of the Carlstadt
Site Contamination, including, but not limited to, the claims and
allegations made in the Litigation, or arising out of claims that
were or could have been asserted, whether presently known or
unknown, contingent or real, including, but not limited to, claims
for costs, expenses and attorneys' fees. This covenant shall not
apply to any future parent, subsidiary or affiliate of Transtech or
Inmar to the extent that Settling Generators/Transporters' claims
against such future parent, subsidiary or affiliate are based on
its actions independent of its relationship as a parent, subsidiary
or affiliate of Transtech or Inmar. Settling
Generators/Transporters further acknowledge that if they may
hereafter discover facts different from or in addition to those
which they now know or believe to be true with respect to the above
claims, each agrees that, in such event and absent any fraudulent
concealment of a material fact or material misrepresentation by
Settling Defendants, in either case which materially and adversely
affects the Settling Generators/Transporters, this Agreement shall
nevertheless be and remain effective in all respects,
notwithstanding such different or additional facts, or the
discovery thereof. The fraudulent concealment of a material fact or
material misrepresentation by one Settling Defendant shall not be
grounds to render this Agreement invalid or ineffective as to any
other Settling Defendant.
10. By this Agreement and the foregoing covenant not to sue,
Settling Defendants and Settling Generators/Transporters intend to
preserve, retain and continue all rights and claims under the
Hartford primary and excess insurance policies identified in
paragraph 3 and the Lloyd's/London Market excess insurance policies
identified in paragraph 2. No rights under those policies are
waived or released by any provision of this Agreement.
11. It is not the intent of this Agreement to release or
extinguish the claims against Settling Defendants for losses
arising from the Carlstadt Site, but only to limit recovery on such
claims to recovery under the insurance policies assigned to
Settling Generators/Transporters. The Settling
Generators/Transporters shall seek recovery for their claims as to
which they have covenanted not to sue the Settling Defendants
solely and exclusively from the Lloyds London Market excess
insurance policies identified in paragraph 2 and the Hartford
primary and excess insurance policies identified in paragraph 3,
and not from the Settling Defendants or any of them.
12. Settling Defendants agree that, by the execution of this
Agreement, they hereby release and forever discharge Settling
Generators/Transporters from all claims, demands, damages, actions
or suits at law or in equity, of whatsoever kind or nature for or
because of any matter or thing done, omitted or suffered to be done
arising out of the Carlstadt Site Contamination, including, but not
limited to, the claims and allegations made in the Litigation, or
arising out of claims that were or could have been asserted,
whether presently known or unknown, contingent or real, including,
but not limited to, claims for costs, expenses, and attorneys'
fees; except that Settling Defendants do not release but expressly
reserve against Settling Generators/Transporters any claims, rights
or causes of action that exist or may in the future exist relating
in any way to
(i) any liabilities Settling Generators/Transporters
may have at sites other than the Carlstadt Site,
including any liabilities that may relate in whole
or in part to any contamination resulting from any
delivery, transfer, shipment or transshipment of
hazardous materials, pollutants or waste from the
Carlstadt Site to any other location,
notwithstanding that such materials, waste or
pollutants may have been related to activities at
the Carlstadt Site; and
(ii) any bodily injury, property damage or personal
injuries suffered by any third parties relating to
or arising out of the Carlstadt Site Contamination;
and
(iii) natural resource damages relating to or arising out
of the Carlstadt Site Contamination.
The Settling Defendants further acknowledge that if they or any of
them may hereafter discover facts different from or in addition to
those which they now know or believe to be true with respect to the
released claims, each agrees that, in such event and absent any
fraudulent concealment of a material fact or material
misrepresentation by Settling Generators/Transporters which
materially and adversely affects Settling Defendants, this
Agreement shall nevertheless be and remain effective in all
respects, notwithstanding such different or additional facts, or
the discovery thereof. The fraudulent concealment of a material
fact or material misrepresentation by one Settling
Generator/Transporter shall not be grounds to render this Agreement
invalid or ineffective as to any other Settling
Generator/Transporter.
13. For as long as the Assigned Claims remain unresolved,
Settling Defendants shall not assert, in any manner, any and all
rights, claims or causes of action they have or may have concerning
the Carlstadt Site under excess insurance policies issued from
November 1964 through October 1966 and from December 1973 through
September 1981 (collectively the "Non-Assigned Lloyds Policies"),
and agree that they shall not make any claims for coverage for
liabilities at or arising from the Carlstadt Site under such
policies. Upon request by Settling Generators/Transporters,
Settling Defendants will provide a waiver and release of all rights
and claims for coverage under the Non-Assigned Lloyds Policies
arising from the Carlstadt Site but only so long as the insurers
under such policies acknowledge, or the Settling
Generators/Transporters provide other assurances satisfactory to
Settling Defendants, that the payment of insurance proceeds on the
Assigned Claims does not reduce the limits of coverage otherwise
available to Settling Defendants under the Non-Assigned Lloyds
Policies. Commencing on a date five (5) years from the date of
Settling Defendants' execution of this Agreement, but only in the
event the Settling Generators/Transporters have not previously
requested Settling Defendants to release, waive or discharge their
rights and claims for coverage under the Non-Assigned Lloyds
Policies, Settling Defendants may bring claims, actions or suits
relating to the Carlstadt Site under such policies, provided that
such claims, actions or suits shall be be limited to Settling
Defendants' liabilities with respect to claims by EPA to recover
oversight costs related to the Carlstadt Site.
14. Settling Generators/Transporters do not release but
expressly reserve against Settling Defendants any claims, rights or
causes of action that exist or may in the future exist relating in
any way to:
(i) any liabilities Settling Defendants may have at
sites other than the Carlstadt Site, including any
liabilities that may relate in whole or in part to
any contamination resulting from any delivery,
transfer, shipment or transshipment of hazardous
materials, pollutants or waste from the Carlstadt
Site to any other location, notwithstanding that
such materials, waste or pollutants may have been
related to activities at the Carlstadt Site; and
(ii) any bodily injury, property damage or personal
injuries suffered by any third parties relating to
or arising out of the Carlstadt Site Contamination;
and
(iii) natural resource damage relating to or arising out
of the Carlstadt Site Contamination; and
(iv) fraudulent concealment of a material fact or
material misrepresentation of any kind by any
Settling Defendant in connection with any insurance
policies issued to the Settling Defendants or any
of them which denies to the Settling Defendants (or
the Settling Generators/Transporters as a result of
the assignment set out in paragraphs 2 and 3 above)
recovery under excess insurance policies issued
between November 1966 and November 1973, provided
that the fraudulent concealment of a material fact
or a material misrepresentation by one Settling
Defendant shall not affect the rights of the other
Settling Defendants hereunder; and
(v) Settling Defendants' material breach of any
obligation on their part under this Agreement;
provided that a material breach by one Settling
Defendant shall not be considered a breach of any
obligation hereunder by any other Settling
Defendant.
EXPRESS RESERVATION OF CLAIMS SUBJECT TO
REPRESENTATION BY MAHAN
15. Settling Generators/Transporters' covenant not to sue on
their claims against Settling Defendant Mahan is subject to and
conditioned upon Settling Defendant Mahan's representation that, as
of the date of execution of this Agreement, he lacks the ability to
pay any substantial portion of the Response Costs thus far incurred
by Settling Generators/Transporters. If this representation should
prove to be false, Settling Generators/Transporters release shall
be deemed void ab initio, Settling Generators/Transporters shall
have the right to re-open this action against him, and all other
terms of this Agreement shall be null and void as to Settling
Defendant Mahan. In such event, Settling Generators/Transporters'
release of Transtech shall nevertheless remain valid and in full
force and effect.
PRESERVATION OF OTHER CLAIMS
16. Settling Generators/Transporters expressly preserve all of
their rights, claims and/or causes of action, whether or not
related to the Carlstadt Site Contamination, against any person or
entity, whether or not a party to the Litigation, other than
against the Settling Defendants, and all such rights, claims and/or
causes of action shall be preserved against all defenses arising
out of participation in this Agreement or the commencement,
dismissal or termination of this Litigation, in whole or in part,
based on the entire controversy doctrine or any similar doctrine of
mandatory joinder of parties or claims, statutes of limitation,
laches, estoppel or waiver.
17. Settling Defendants expressly preserve all of their
rights, claims and/or causes of action relating to the Carlstadt
Site Contamination and any and all other claims, whether or not
brought in the Litigation, against any person or entity, whether or
not a party to the Litigation (including without limitation
Lloyd's/London Market and First State except to the extent already
assigned, waived or released under this Agreement), other than
against Settling Generators/Transporters, and all such rights,
claims and/or causes of action shall be preserved against all
defenses arising out of participation in this Agreement and/or the
dismissal or termination of the Litigation, in whole or in part,
including but not limited to defenses based on the entire
controversy doctrine or any similar doctrine of mandatory joinder
of parties or causes of action, statute of limitations, laches,
estoppel or waiver.
18. Settling Generators/Transporters expressly preserve all of
their rights, claims and/or causes of action which either do not
relate to Carlstadt Site Contamination or are not expressly waived
or released in this Agreement against Settling Defendants and all
such rights, claims and/or causes of action shall be preserved
against all defenses arising out of participation in this Agreement
or the dismissal or termination of the Litigation, in whole or in
part, based on the entire controversy doctrine or any similar
doctrine of mandatory joinder of parties or causes of action,
statute of limitations, laches, estoppel or waiver.
19. Settling Defendants expressly preserve all of their
rights, claims and/or causes of action which do not relate to the
Carlstadt Site Contamination against any person or entity, whether
or not a party to the Litigation, and all such rights, claims,
and/or causes of action shall be preserved against all defenses
arising out of participation in this Agreement or the dismissal or
termination of the Litigation, in whole or in part, based on the
entire controversy doctrine or any similar doctrine of mandatory
joinder of parties or causes of action, statute of limitations,
laches, estoppel or waiver.
20. Settling Generators/Transporters and Settling Defendants
have entered into this Agreement with the understanding and
expectation that the Litigation will be administratively terminated
or stayed by the Court subject to re-opening by any party-after
December 31, 1995.
NO INDEMNIFICATION RIGHTS OR CONTRIBUTION PROTECTION
21. Nothing in this Agreement grants or confers any rights to
indemnification or protection from claims by other parties.
PRESERVATION OF ALL CLAIMS AND RIGHTS AGAINST THIRD PARTIES
22. Except as specifically provided herein, this Agreement
does not restrict, waive, constrain, diminish or destroy any
rights, claims or causes of action that Settling
Generators/Transporters or Settling Defendants or any of them had,
have, or may have against each other or any persons or entities,
whether parties in the Litigation or not, and all such rights,
claims or causes of action shall be preserved against all defenses
based on the entire controversy doctrine, laches, estoppel and
waiver.
23. Settling Generators/Transporters represent and agree that,
in the event new members shall join the 216 Paterson Plank Road
Cooperating PRP Group after the date of Settling Defendants'
execution of this Agreement, they will periodically identify such
new members to Settling Defendants and make known to each such new
member Settling Defendants' willingness to enter into mutual
releases and/or covenants-not-to sue with respect to Carlstadt Site
liabilities and provide the address and telephone number of each
Settling Defendant and its counsel.
NO ADMISSION OF LIABILITY
24. The execution of this Agreement, the assignment of any
rights, and/or the payment of any funds hereunder shall not
constitute, and shall not be construed as, an admission or
acknowledgment of liability, fault or any intentional conduct in
relation to the Carlstadt Site Contamination, nor shall any such
action waive or affect any rights, except as expressly assigned or
relinquished herein, any party may have under policies of insurance
that may provide coverage for liability arising from the presence,
release or threatened release of any hazardous substances at or
from the Carlstadt Site.
SETTLING DEFENDANTS' LIABILITY SHARE
25. Pursuant to an order of the Court, the proportionate share
of the Settling Defendants' liability has been determined by a
special master in a report and recommendation to the Court. The
special master has determined Settling Defendants' allocated share
of liability for the Carlstadt Site Contamination to be 60%. For
purposes of this Agreement, the parties have agreed to be bound by
the determination of the special master for purposes of
establishing the proportionate share of Settling Defendants'
liabilities for past, present and future remediation of the
Carlstadt Site Contamination, and for purposes of determining the
extent and amount of Settling Defendants' liabilities at the Site
covered by the insurance policies issued to Settling Defendants,
including those described in paragraphs 2 and 3.
ENTIRE AGREEMENT
26. This Agreement constitutes the entire understanding among
the parties hereto respecting the subject matter hereof and
supersedes and replaces in all respects all prior agreements,
negotiations or understandings, whether formal or informal, oral or
in writing, in court or out of court, among the parties or between
any of them. This Agreement may only be amended or terminated by a
writing signed by all the parties hereto. The unnumbered paragraphs
found on pages 1, 2, 3 and 4 of this Agreement which begin with the
term "WHEREAS" are part of this Agreement.
27. This Agreement may be executed in counterpart by each of
the Settling Generators/Transporters individually, or their
representatives, and each signatory hereto represents that it is
authorized to execute this Agreement on behalf of the parties
indicated below.
GOVERNING LAW
28. This Agreement shall be governed by the law of New Jersey
without regard to New Jersey conflict of law rules.
APPROVAL BY THE COURT
29. Settling Generators/Transporters and Settling Defendants
shall jointly submit an application to the Court, on notice to
Settling Defendants' insurance carriers and all other parties to
the Litigation, to have this settlement approved and entered on the
docket. In the event that the Court shall not approve this
settlement, Settling Generators/Transporters and Settling
Defendants shall be relieved of all obligations under this
Agreement.
So Ordered:
Dated:
COHEN, SHAPIRO, POLISHER, INMAR ASSOCIATES, INC.
SHIEKMAN AND COHEN
By:/s/ Vincent E. Gentile, Esq. By: /s/ Marvin H. Mahan
Vincent E. Gentile, Esq. Marvin H. Mahan
On behalf of Settling Title: President
Generators/Transporters
listed in Exhibit C
TRANSTECH INDUSTRIES, INC. MARVIN H. MAHAN
By: /s/ Robert V. Silva By:/s/ Marvin H. Mahan
Robert V. Silva
Title: President and Chief
Executive Officer
EXHIBIT A
PRP NAME
___________________________________
3M Company
Air Products and Chemicals, Inc.
ALCOA Aluminum Co. Of America
Allied Corporation/Baron Blakslee
American Can Company
American Cyanamid/Lederle/Shul
American Flange & Manuf. Co.
American Hoechst/Celanese
American Inks & Coatings
American Standard, Inc.
Armitage, JL/Indus. Coat.
Armstrong World Industries
Arrow Group/Chromalloy/Sequa
Ashland Chemical Company
AT&T/Western Electric
BASF Wyandotte
Bee Chemical (Morton Thiokol)
Benjamin Moore & Company
Ber Mar Manufacturing Co.
Borden, Inc./Fabric Leather
Browning Ferris (BFI)/CECOS/Newco
CBS Inc./CBS Toys
Cellu-Craft Inc.
*Chemcoat Inc.
Chemical Dynamics Corporation
Chemical Pollution Control Inc.
Chenray Coatings Company
Chevron/Kewanee/Harshaw
Ciba-Geigy Corporation
Cities Service (OXY USA)
Conestoga Fuels, Inc.
Congoleum Corp.
Continental Can Company, Inc.
Converters Ink Co. (Beatrice)
*Decorative Industries, Inc.
Diamond Shamrock/Occidental
Dri Print Foils (Beatrice)
Ell Bee Chemical
Engelhard Corporation
Environmental Waste Removal
Esselte Pendaflex (Oxford)
E. I. duPont de Nemours & Co.
E. R. Squibb
EXXON/Bayway/Bayonne
Faberge
Fairchild Semiconductors
PRP NAME
___________________________________
Fitchburg Coated Products (Litton)
GAF Corporation
Ganes Chemical, Inc.
General Electric/RCA
General Foods (Maxwell)
General Motors Corporation
Grumman Corporation
GTE Electronics Corporation
Hexcel Corporation
Hoffmann-La Roche Inc.
IBM Corporation
Inland Steel Container
Inmont Corporation
*Interstab (Div. Of AKZO Chemie)
J. Josephson, Inc.
J. M. Huber Corporation
J. T. Baker Chemical Company
Kirker Chemical Co.
LE Carpenter/Day International
M & T Chemicals, Inc. (Atochem)
Mack Trucks, Inc.
*Magid Corporation
Mallory Battery/Duracell/Dart
Marisol, Inc.
Matlack, Inc.
Merck & Company, Inc.
Mobay Corp. Harmon Colors
Mobil Oil Corporation
Monroe Chemical Co. (Kalama)
Monsanto Polymer Products Co.
Nepera, Inc.
New England Laminates (NELCO)
*Novick Chemical Company, Inc.
Olin Corporation/Phillip Hunt
Owens-Illinois
Pacquet Oneida Corporation
PAXAR/Packaging Systems/Fasco
Penetone (Amerace)
Pennwalt Corporation (Atochem)
*Perk Chemical Co., Inc
Permacel (Johnson & Johnson)
Pfizer Inc
Pyrolac Corporation Q
Quality Chemicals, Inc.
Randolph Products Co.
Recycling Indus. (Chem Waste)
PRP NAME
___________________________________
Reliance Universal (AKZO Coatings)
Revlon
Reynolds Metals Company
Rheem Manufacturing Company
Ridge Printing Co.
Rohm & Haas Company
Schenectady Chemicals, Inc.
Schering Corporation
*SCM Corporation
Seton Co.
Sherwin-Williams Company
Simon Wrecking Company
SmithKline Beckman Corporation
Southland Corporation
Stauffer/ICI Americas
*Stimpson Company
Stork-Bowen Engineering
*Syntex Beauty Care, Inc.
Technical Coatings/Benj. Moore
Tenax Finishing Products Co.
Tenneco Polymers, Inc.
Troy Chemical Corporation
Union Carbide/Gas Products
Uniroyal Chemical Company, Inc.
Upjohn Company
U.S. Pipe & Foundry Company
U.S. Polymeric Company/Armco
Westinghouse Electric Corp.
Whittaker Corporation
*WR Grace
XCEL Corp. (Georgia-Pacific)
EXHIBIT B
OPTION TO PURCHASE
This option made this, 23rd day of March, 1995, by and between
Inmar Associates, Inc. ("Optionor and/or Grantor"), and Cohen,
Shapiro, Polisher, Shiekman and Cohen, as agent and representative
for and on behalf of the members of the 216 Paterson Plank Road
Cooperating PRP Group, identified individually on the list attached
hereto as Exhibit B ("Optionee and/or "Grantee"),
W I T N E S S E T H
WHEREAS, Optionor is the owner of certain Property identified
and described on attached Schedule A ("Property"); and
WHEREAS, Optionor and Optionee have entered into an agreement
to settle and resolve certain disputes existing between them
concerning responsibility for the environmental conditions on the
Property, consideration for which Settlement Agreement Optionor has
agreed to grant to Optionee this Option;
NOW, THEREFORE, Optionor grants to Optionee the right to
purchase the Property in accordance with the terms and conditions
set forth herein.
1. Property. The Property included within this Option is
identified and described on attached Schedule A. It is commonly
known as 216 Paterson Plank Road, Carlstadt, New Jersey and
designated as Lots 1 through 5, Block 124 on the tax map for the
Borough of Carlstadt.
2. Grant of Ontion. In consideration of one dollar ($1.00)
plus the agreement of the Optionee to settle its disputes with the
Optionor concerning the environmental conditions of the Property,
as more particularly set forth in a Settlement Agreement between
the Optionor and Optionee dated May 1, 1995, Optionor grants to
Optionee the exclusive option to purchase the Property identified
and described on attached Schedule A.
3. Expiration Date. This Option shall expire in fifteen (15)
years from the date of its creation.
4. Notice of Exercise. Optionee may exercise this Option by
giving written notice thereof to Optionor c/o Schenck, Price, Smith
& King, 10 Washington Street, CN 905, Morristown, New Jersey 07960,
(201) 539-1000, by registered or certified mail, prior to the
expiration date.
5. Purchase Price. The total purchase price for the Property
shall be one dollar ($1.00), which Optionee shall pay to Optionor
at the time title to the Property closes. In addition, in the event
Optionor has made any payments for real estate taxes on the
property from 1990 to the date the Option is exercised, Optionee
shall reimburse Optionor for any such payments as a condition of
exercising the Option.
6. Failure to Exercise Option. In the event Optionee does not
exercise this Option on or before the expiration date, then neither
party shall have any further rights or claims against the other
with respect to purchase and/or sale of the Property.
7. Exercise of Option. In the event Optionee exercises this
Option, Optionor and Optionee shall perform their respective
obligations as set forth in the annexed form of agreement as Seller
and Purchaser respectively.
8. Assignment. This Option and all rights hereunder shall be
freely assignable without the consent of the Optionor. If Optionee
shall assign this Option, all acts to be performed by him with
respect to the purchase of the Property, including the execution
and delivery of the notice to exercise the Option and payment of
the purchase price for the Property, may be performed by any
Assignee, whether the assignment is made before or after the
exercise of this Option.
IN WlTNESS WHEREOF, Optionor has signed and acknowledged this
Option Agreement intending to be legally bound by all of its terms
and conditions.
INMAR ASSOCIATES, INC.
By:/s/ Marvin H. Mahan
Marvin H. Mahan, President
ATTEST:
/s/ Marie Boring
Marie Boring, Secretary
CORPORATE ACKNOWLEDGMENT
COUNTY OF UNION )
) ss:
STATE OF NEW JERSEY )
I certify that on March 23, 1995, Marvin H. Mahan personally
came before me and this person acknowledged under oath, to my
satisfaction, that:
(a) this person is the President of Optionor, the Corporation
named in this document;
(b) this person is the attending witness to the signing of
this document by the proper corporate officer who is Marvin H.
Mahan, President of the corporation;
(c) this document was signed and delivered by the corporation
as its voluntary act duly authorized by a proper resolution of its
Board of Directors;
(d) this person knows the proper seal of the corporation
which was affixed to this document; and
(e) this person signed this proof to attest to the truth of
these facts.
Subscribed and sworn to before me
this 23 day of March, 1995.
/s/ Michael K. Mullen, Esq.
MICHAEL K. MULLEN, ESQ.
AN ATTORNEY-AT-LAW OF THE STATE OF NEW JERSEY
Prepared by:
/s/ Vincent E. Gentile, Esq.
VINCENT E. GENTILE, ESQ.
EXHIBIT C
3M Company
Air Products and Chemicals, Inc.
Allied Corporation/Baron Blakslee
American Can Company
American Cyanamid/Lederle/Shul
American Hoechst/Celanese
Armitage, JL/Indus. Coat.
Armstrong World Industries
Ashland Chemical Company
AT&T/Western Electric
BASF Wyandotte
Benjamin Moore & Company
Ber Mar Manufacturing Co.
Browning Ferris (BFI)/CECOS/Newco
Chemical Pollution Control Inc.
Ciba-Geigy Corporation
Continental Can Company, Inc.
Diamond Shamrock/Occidental
Ell Bee Chemical
E.I. duPont de Nemours & Co.
E.R. Squibb
GAF Corporation
Ganes Chemical, Inc.
General Electric/RCA
General Motors Corporation
Grumman Corporation
Hoffman-LaRoche Inc.
Inmont Corporation
Mack Trucks, Inc.
Merck & Company, Inc.
Mobay Corp. - Harmon Colors
Mobil Oil Corporation
Monroe Chemical Co. (Kalama)
Nepera, Inc.
New England Laminates (NELCO)
Pfizer Inc
Reliance Universal (AKZO Coatings)
Revlon
Reynolds Metals Company
Rohm & Haas Company
Sherwin-Williams Company
Technical Coatings/Benjamin Moore
Tenax Finishing Products Co.
Union Carbide/Gas Products
U.S. Polymeric Company/Armco
Whittaker Corporation
