SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED SEPTEMBER 30, 1996 COMMISSION FILE NUMBER 33-63044
VALCOR, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 74-2678674
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
5430 LBJ FREEWAY, SUITE 1700, DALLAS, TEXAS 75240-2697
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (972) 233-1700
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED
TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING
THE PRECEDING 12 MONTHS AND (2) HAS BEEN SUBJECT TO SUCH FILING REQUIREMENTS FOR
THE PAST 90 DAYS. YES X NO
THE REGISTRANT IS A WHOLLY-OWNED SUBSIDIARY OF VALHI, INC. (FILE NO. 1-5467) AND
MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTIONS H(1)(A) AND (B) OF FORM
10-Q FOR REDUCED DISCLOSURE FORMAT.
VALCOR, INC. AND SUBSIDIARIES
INDEX
PAGE
NUMBER
PART I. FINANCIAL INFORMATION
Item 1.Financial Statements.
Consolidated Balance Sheets - December 31, 1995
and September 30, 1996 3-4
Consolidated Statements of Operations - Three months
and nine months ended September 30, 1995 and 1996 5
Consolidated Statements of Cash Flows - Nine months
ended September 30, 1995 and 1996 6
Consolidated Statement of Stockholder's Equity -
Nine months ended September 30, 1996 7
Notes to Consolidated Financial Statements 8-13
Item 2.Management's Discussion and Analysis of Financial
Condition and Results of Operations. 14-17
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K. 18
VALCOR, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
ASSETS DECEMBER 31, SEPTEMBER 30,
1995 1996
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 17,618 $ 16,687
Accounts receivable 30,949 30,797
Receivable from affiliates 3,538 5,391
Inventories 36,385 33,920
Prepaid expenses 3,105 2,678
Deferred income taxes 2,409 4,263
Total current assets 94,004 93,736
Other assets:
Timber and timberlands 53,099 53,748
Intangible assets 18,145 16,701
Other 8,630 8,586
Total other assets 79,874 79,035
Property and equipment:
Land 22,290 21,845
Buildings 50,007 49,036
Equipment 184,240 170,649
Construction in progress 8,393 3,788
264,930 245,318
Less accumulated depreciation 111,216 107,785
Net property and equipment 153,714 137,533
$327,592 $310,304
</TABLE>
VALCOR, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (CONTINUED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDER'S EQUITY DECEMBER 31, SEPTEMBER 30,
1995 1996
<S> <C> <C>
Current liabilities:
Current long-term debt $ 12,383 $ 12,392
Accounts payable 19,933 19,562
Accrued liabilities 21,470 28,460
Payable to affiliates 17 13
Income taxes 2,275 2,430
Total current liabilities 56,078 62,857
Noncurrent liabilities:
Long-term debt 198,584 180,628
Deferred income taxes 24,461 19,756
Other 4,245 7,142
Total noncurrent liabilities 227,290 207,526
Stockholder's equity:
Common stock 1 1
Additional paid-in capital 520 520
Retained earnings 45,871 41,621
Adjustments:
Currency translation adjustment 30 (23)
Pension liabilities (2,198) (2,198)
Total stockholder's equity 44,224 39,921
$327,592 $310,304
</TABLE>
[FN]
Commitments and contingencies (Note 1)
VALCOR, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1995* 1996 1995* 1996
<S> <C> <C> <C> <C>
Revenues and other income:
Net sales $48,907 $50,815 $143,877 $150,617
Other, net 397 400 783 998
49,304 51,215 144,660 151,615
Costs and expenses:
Cost of sales 39,039 39,816 113,236 118,718
Selling, general and
administrative 3,763 3,762 11,902 11,839
Interest 2,969 2,945 8,793 8,948
45,771 46,523 133,931 139,505
Income before taxes 3,533 4,692 10,729 12,110
Income taxes 1,468 2,023 4,376 5,303
Income from continuing
operations 2,065 2,669 6,353 6,807
Discontinued operations - Medite 1,518 2,060 10,713 (10,674)
Net income (loss) $ 3,583 $ 4,729 $ 17,066 $ (3,867)
</TABLE>
*Reclassified for discontinued operations.
VALCOR, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
1995 1996
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 17,066 $ (3,867)
Depreciation, depletion and amortization 14,735 15,024
Plant closure charge - noncash portion - 15,200
Deferred income taxes (44) (6,712)
Other, net 1,361 754
33,118 20,399
Change in assets and liabilities:
Accounts receivable (7,599) (52)
Inventories (7,464) 956
Accounts payable and accrued liabilities 8,460 6,116
Accounts with affiliates (2,841) (1,857)
Other, net (813) 3,229
Net cash provided by operating activities 22,861 28,791
Cash flows from investing activities:
Capital expenditures (19,003) (17,658)
Purchase of business unit (5,982) -
Proceeds from disposition of property and equipment 137 6,395
Other, net (180) (101)
Net cash used by investing activities (25,028) (11,364)
Cash flows from financing activities:
Indebtedness:
Borrowings 32,671 27,186
Principal payments (37,640) (45,133)
Dividends (7,672) (383)
Government grants 2,916 -
Net cash used by financing activities (9,725) (18,330)
Net decrease (11,892) (903)
Currency translation 552 (28)
Cash and equivalents at beginning of period 23,256 17,618
Cash and equivalents at end of period $ 11,916 $ 16,687
Supplemental disclosures - cash paid for:
Interest, net of amounts capitalized $ 12,421 $ 13,431
Income taxes 13,809 6,781
</TABLE>
VALCOR, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY
NINE MONTHS ENDED SEPTEMBER 30, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
ADJUSTMENTS
ADDITIONAL CURRENCY TOTAL
COMMON PAID-IN RETAINED TRANSLATION PENSION STOCKHOLDER'S
STOCK CAPITAL EARNINGS ADJUSTMENT LIABILITIES EQUITY
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1995 $1 $520 $45,871 $ 30 $(2,198) $44,224
Net loss - - (3,867) - - (3,867)
Dividends - - (383) - - (383)
Other, net - - - (53) - (53)
Balance at September 30, 1996 $1 $520 $41,621 $(23) $(2,198) $39,921
</TABLE>
VALCOR, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 -BASIS OF PRESENTATION:
The consolidated balance sheet at December 31, 1995 has been condensed from
the Company's audited consolidated financial statements at that date. The
consolidated balance sheet at September 30, 1996 and the consolidated statements
of operations, cash flows and stockholder's equity for the interim periods ended
September 30, 1995 and 1996 have been prepared by the Company, without audit.
In the opinion of management, all adjustments necessary to present fairly the
consolidated financial position, results of operations and cash flows have been
made. The results of operations for the interim periods are not necessarily
indicative of the operating results for a full year or of future operations.
Certain information normally included in financial statements prepared in
accordance with generally accepted accounting principles has been condensed or
omitted, and the prior period statements of operations have been reclassified to
present the results of operations of Medite Corporation as discontinued
operations. See Note 8. The accompanying consolidated financial statements
should be read in conjunction with the Company's Annual Report on Form 10-K for
the year ended December 31, 1995 (the "1995 Annual Report"). Commitments and
contingencies are discussed in Note 8, "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the 1995 Annual Report.
NOTE 2 -BUSINESS SEGMENT INFORMATION - CONTINUING OPERATIONS:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1995 1996 1995 1996
(IN MILLIONS)
<S> <C> <C> <C> <C>
Net sales:
Component products - CompX
International Inc. $19.4 $21.8 $ 58.8 $ 64.7
Fast food - Sybra, Inc. 29.5 29.0 85.1 85.9
$48.9 $50.8 $143.9 $150.6
Operating income:
Component products $ 4.5 $ 5.4 $ 15.1 $ 14.8
Fast food 2.0 2.0 4.9 6.0
Total operating income 6.5 7.4 20.0 20.8
Interest expense (2.9) (3.0) (8.7) (8.9)
General corporate, net (.1) .3 (.6) .2
Income before taxes $ 3.5 $ 4.7 $ 10.7 $ 12.1
</TABLE>
NOTE 3 -INVENTORIES:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1995 1996
(IN THOUSANDS)
<S> <C> <C>
Raw materials:
Building products $12,404 $12,247
Component products 1,927 2,195
Fast food 1,379 1,276
15,710 15,718
In process products:
Building products 2,187 1,220
Component products 4,320 4,556
6,507 5,776
Finished products:
Building products 6,131 5,191
Component products 2,921 2,686
9,052 7,877
Supplies 5,116 4,549
$36,385 $33,920
</TABLE>
NOTE 4 -ACCRUED LIABILITIES:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1995 1996
(IN THOUSANDS)
<S> <C> <C>
Current accrued liabilities:
Employee benefits $ 7,894 $ 7,796
Plant closure costs - 5,039
Interest 3,636 4,208
Insurance claims and expenses 2,357 2,858
Other 7,583 8,559
$21,470 $28,460
Other noncurrent liabilities:
Insurance claims and expenses $ 1,066 $ 1,393
Environmental costs 750 3,650
Accrued pension and OPEB costs 957 957
Other 1,472 1,142
$ 4,245 $ 7,142
</TABLE>
NOTE 5 - LONG-TERM DEBT:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1995 1996
(IN THOUSANDS)
<S> <C> <C>
Valcor - 9 5/8% Senior Notes Due 2003 $100,000 $100,000
Medite:
Bank term loans:
U.S. 59,000 51,000
Ireland 14,770 11,488
Bank working capital facilities:
U.S. 4,000 2,000
Ireland 6,830 9,267
Other 4,117 3,950
88,717 77,705
Other:
Sybra bank credit agreements 16,770 10,500
Sybra capital leases 5,382 4,752
Other 98 63
22,250 15,315
210,967 193,020
Less current maturities 12,383 12,392
$198,584 $180,628
</TABLE>
Medite has entered into interest rate swaps to mitigate the impact of
changes in interest rates for $26 million of bank debt due in 1998-2000 that
results in a weighted average fixed interest rate of 7.6% for such borrowings.
At September 30, 1996, the fair value of the interest rate swaps, based upon
quotes obtained from the counter party financial institution, is a $.5 million
receivable, representing the estimated amount Medite would receive if it were to
terminate the swap agreements at that date. Medite's U.S. bank term and working
capital facilities were repaid and terminated in October 1996 following the sale
of Medite's timber and timberlands (see Note 8), and the interest rate swaps
were concurrently terminated.
NOTE 6 - PROVISION FOR INCOME TAXES ALLOCABLE TO CONTINUING OPERATIONS:
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
1995 1996
(IN MILLIONS)
<S> <C> <C>
Expected tax expense $3.7 $4.2
Non-U.S. tax rates .1 .3
Incremental tax on non-U.S. earnings .3 .4
State income taxes and other, net .3 .4
$4.4 $5.3
</TABLE>
NOTE 7 - INTANGIBLE AND OTHER NONCURRENT ASSETS:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1995 1996
(IN THOUSANDS)
<S> <C> <C>
Intangible assets:
Goodwill $ 5,162 $ 5,036
Franchise fees 5,605 4,893
Other 7,378 6,772
$18,145 $16,701
Other assets:
Deferred financing costs $ 3,003 $ 2,718
Prepaid pension cost 1,501 1,638
Property held for sale 3,920 3,715
Other 206 515
$ 8,630 $ 8,586
</TABLE>
NOTE 8 -DISCONTINUED OPERATIONS:
In September 1996, Medite Corporation, a wholly-owned subsidiary of the
Company, announced that it had signed three separate Letters of Intent involving
the sale of substantially all of its assets for total cash consideration of
approximately $230 million, subject to certain adjustments, plus the assumption
of approximately $20 million of foreign debt. The first transaction, the sale
of Medite's timber and timberlands, closed in October 1996 for approximately
$118 million cash proceeds, of which approximately $53 million was used to pay
off Medite's U.S. bank debt. Medite has executed a definitive agreement for the
second transaction involving the sale of Medite's Irish subsidiary, and that
transaction is expected to close by the end of November. The third transaction,
involving the sale of Medite's Oregon medium density fiberboard ("MDF") and
timber conversion facilities, is subject to completion of a definitive
agreement, and Medite currently expects to close that transaction by the end of
1996. Accordingly, the accompanying financial statements present Medite's
results of operations as discontinued operations for all periods presented.
Upon consummation of all three transactions, the Company expects to report an
aggregate pre-tax gain on disposal of discontinued operations of approximately
$100 million.
Condensed statements of operations for Medite are presented below.
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1995 1996 1995 1996
(IN MILLIONS)
<S> <C> <C> <C> <C>
Net sales $46.2 $43.6 $154.2 $138.2
Operating income (loss) $ 4.5 $ 5.0 $ 23.1 $(11.9)
Interest expense and other, net (2.2) (1.7) (6.4) (5.8)
Income (loss) before income
taxes 2.3 3.3 16.7 (17.7)
Income tax benefit (expense) (.8) (1.3) (6.0) 7.0
Net income (loss) $ 1.5 $ 2.0 $ 10.7 $(10.7)
</TABLE>
Condensed balance sheets for Medite, included in the Company's consolidated
balance sheets, are presented below.
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1995 1996
(IN MILLIONS)
<S> <C> <C>
Current assets $ 56.1 $ 52.2
Timber and timberlands 53.1 53.7
Property and equipment, net 84.8 69.6
Other assets 6.4 6.4
$200.4 $181.9
Current liabilities $ 33.9 $ 38.3
Long-term debt 77.2 66.2
Deferred income taxes 22.1 17.6
Loan from Valcor (*) 5.0 5.0
Other liabilities 2.9 6.1
Stockholder's equity (*) 59.3 48.7
$200.4 $181.9
(*) Eliminated in consolidation.
</TABLE>
Medite's 1996 results include a first quarter pre-tax restructuring charge
of $24 million based upon the estimated costs of permanently closing its New
Mexico MDF plant. Approximately $15 million of such charge represented non-cash
costs, most of which related to the net carrying value of property and equipment
in excess of estimated net realizable value. These non-cash costs were deemed
utilized upon adoption of the closure plan. Approximately $9 million of the
charge represented workforce, environmental and other estimated cash costs
associated with closure of this facility, of which approximately $2 million had
been paid at September 30, 1996. In August 1996, Medite completed the sale of
substantially all of the building and equipment of the New Mexico facility for
$5.5 million cash, which approximated the previously-estimated net realizable
value.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
RESULTS OF OPERATIONS:
OVERVIEW
The Company reported income from continuing operations of $6.8 million for
the first nine months of 1996 compared to $6.4 million in the first nine months
of 1995. Discontinued operations represent the results of operations of Medite
Corporation, and in 1996 includes a $15 million first quarter after-tax charge
related to the closure of Medite's New Mexico MDF operation. See Note 8.
The statements in this Quarterly Report on Form 10-Q relating to matters
that are not historical facts, including, but not limited to, statements found
in this `Management's Discussion and Analysis of Financial Condition and
Results of Operations,' are forward looking statements that involve a number of
risks and uncertainties. Factors that could cause actual future results to
differ materially from those expressed in such forward looking statements
include, but are not limited to, future supply and demand for the Company's
products (including cyclicality thereof), general economic conditions,
competitive products, customer and competitor strategies, the impact of pricing
and production decisions, environmental matters, government regulations and
possible changes therein, the ultimate resolution of pending litigation and
possible future litigation and completion of pending asset/business unit
dispositions.
COMPONENT PRODUCTS
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED % ENDED %
SEPTEMBER 30, SEPTEMBER 30,
1995 1996 CHANGE 1995 1996 CHANGE
(IN MILLIONS) (IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
Net sales $19.4 $21.8 +12% $58.8 $64.7 +10%
Operating income 4.5 5.4 +17% 15.1 14.8 - 2%
</TABLE>
Sales increased primarily from higher volumes in the Company's office
workstation components and drawer slide lines. Margins improved in the third
quarter of 1996 over those of the first half of the year due in part to
favorable changes in both product mix and currency exchange rates.
FAST FOOD
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED % ENDED %
SEPTEMBER 30, SEPTEMBER 30,
1995 1996 CHANGE 1995 1996 CHANGE
(IN MILLIONS) (IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
Net sales $29.5 $29.0 -2% $85.1 $85.9 + 1%
Operating income 2.0 2.0 +4% 4.9 6.0 +24%
</TABLE>
Comparable store sales, up slightly during the third quarter of 1996,
increased 2% in the first nine months of 1996. Operating income and margins
also improved due to successful promotions, reduced training and recruiting
costs associated with the slower rate of opening new stores in 1996 and the
closure of certain under-performing stores.
A significant portion of Sybra's restaurant employees work on a part-time
basis and are paid at rates related to the minimum wage rate. Restaurant labor
costs currently approximate 29% of sales. The two-step, 90-cent increase in the
minimum wage rate which became effective October 1, 1996 will increase Sybra's
labor costs. Sybra concurrently implemented certain price increases to offset
the impact of the wage rate increase. In addition, Sybra believes agricultural
market factors may result in higher beef costs in the relatively near future.
Although Sybra's competitors would likely experience similar increases, there
can be no assurance that further increases in sales prices can be implemented to
offset future increases in these costs.
Sybra operated 150 restaurants at September 30, 1996, and may close one or
more additional under-performing stores by the end of the year. One store is
under construction which is expected to open in the first quarter of 1997.
The Company is considering various strategic alternatives with respect to
this increasingly competitive business, including possible disposition of one or
more regions. No assurance can be given that any such transactions will be
consummated.
OTHER
At September 30, 1996, approximately $146 million of the Company's
indebtedness bears interest at fixed rates averaging 9.1%. The weighted average
interest rate on the $47 million of variable rate borrowings outstanding at
September 30, 1996 was 7.0% (7.5% at December 31, 1995 and 7.8% at December 31,
1994).
Income tax rates vary by jurisdiction, and relative changes in the
geographic source of the Company's pre-tax earnings, and in the related
availability and usage of foreign tax credits, can result in fluctuations in the
effective income tax rate. See Note 6 to the Consolidated Financial Statements.
Discontinued operations represent the results of operations of Medite
Corporation. See Note 8.
LIQUIDITY AND CAPITAL RESOURCES:
Cash flows from operating activities. Cash flows from operating activities
before changes in assets and liabilities in the first nine months of 1996
declined from that of the same period in 1995 primarily due to the effect of the
charge related to the closure of Medite's New Mexico MDF facility. Changes in
working capital levels generated cash in 1996 and used cash in 1995 in large
part due to relative changes in MDF inventories. MDF sales volumes exceeded
production levels in 1996, thus reducing inventories, while production exceeded
sales during the first nine months of 1995. The New Mexico plant closure also
contributed to changes in asset and liability levels.
Cash flows from investing and financing activities. Capital expenditures
for calendar 1996 are expected to approximate $23 million, down from the $26
million spent in 1995 due primarily to lower planned spending by Sybra for new
stores, and are expected to be financed primarily from the respective unit's
operations or credit facilities.
Net repayments of indebtedness in both the 1995 and 1996 periods include $8
million of scheduled principal payments under Medite's U.S. bank debt. At
September 30, 1996, unused credit available under existing CompX International
and Sybra credit agreements aggregated approximately $24 million.
Other. Valcor's operations are conducted through its subsidiaries (Medite,
CompX International and Sybra). Accordingly, Valcor's long-term ability to meet
its parent company level obligations (principally debt service on the Senior
Notes) is largely dependent on the receipt of dividends or other distributions
from its subsidiaries. Various subsidiary credit agreements contain customary
limitations on the payment of dividends, typically a percentage of net income or
cash flow. Valcor has not guaranteed any indebtedness of its subsidiaries. The
Company believes that future distributions from its subsidiaries will be
sufficient to enable Valcor to meet its obligations. Valcor dividends to Valhi
are generally limited to 50% of consolidated net income, as defined in the
Senior Note Indenture. At September 30, 1996, no amounts were available for
dividends.
The Company routinely compares its liquidity requirements and alternative
uses of capital against the estimated future cash flows to be received from its
subsidiaries and the estimated sales value of those units. As a result of this
process, the Company may seek to raise additional capital, refinance or
restructure indebtedness, repurchase indebtedness in the market or otherwise,
modify its dividend policy, consider the sale of interests in subsidiaries,
business units or other assets, or take a combination of such steps or other
steps, to increase liquidity, reduce indebtedness and fund future activities.
The Company also evaluates acquisitions of interests in, or combinations with,
companies related to its current businesses and, in connection therewith, may
consider issuing additional equity securities and/or increasing indebtedness.
In this regard, the Senior Note Indenture contains limitations on the Company's
ability to incur additional indebtedness or hold noncontrolling interests in
business units.
The after-tax proceeds following the disposition of Medite, net of
repayment of Medite's U.S. bank debt, will be available for Valcor's general
corporate purposes, subject to compliance with certain restrictions contained in
the Valcor Senior Note Indenture. Also under the terms of the Indenture, Valcor
is required to tender for a portion of the Valcor Notes, at par, to the extent
that a specified amount of these proceeds are not used to either permanently
paydown senior indebtedness of Valcor or its subsidiaries or invest in related
businesses, both as defined in the Indenture, within one year of disposition.
If none of the proceeds from the disposition of Medite are so used, a
substantial portion of the Valcor Notes would be subject to a tender offer.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
10.1 - Asset Purchase Agreement between Medite Corporation and Rogue
Resources LLC dated October 7, 1996.
10.2 - Share Subscription and Redemption Agreement among Medite
Corporation, Willamette Industries, Inc. and Medford
International Holdings dated November 4, 1996.
27.1 - Financial Data Schedule for the nine-month period ended
September 30, 1996.
27.2- Reclassified Financial Data Schedule for the (i) three-month
period ended March 31, 1996 and (ii) six-month period ended June
30, 1996.
27.3- Reclassified Financial Data Schedule for the (i) three-month
period ended March 31, 1995, (ii) six-month period ended June 30,
1995, (iii) nine-month period ended September 30, 1995 and (iv)
year ended December 31, 1995.
27.4- Reclassified Financial Data Schedule for the (i) nine-month
period ended September 30, 1994 and (ii) year ended December 31,
1994.
(b) Reports on Form 8-K
Reports on Form 8-K for the quarter ended September 30, 1996 and the
month of October 1996:
July 25, 1996 - Reported Items 5 and 7.
September 18, 1996 - Reported Items 5 and 7.
October 25, 1996 - Reported Items 5 and 7.
October 31, 1996 - Reported Items 5 and 7.
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.
VALCOR, INC.
(Registrant)
Date November 11, 1996 By /s/ Bobby D. O'Brien
Bobby D. O'Brien
Vice President
(Principal Financial Officer)
Date November 11, 1996 By /s/ Gregory M. Swalwell
Gregory M. Swalwell
Controller
(Principal Accounting Officer)
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.
VALCOR, INC.
(Registrant)
Date November 11, 1996 By
Bobby D. O'Brien
Vice President
(Principal Financial Officer)
Date November 11, 1996 By
Gregory M. Swalwell
Controller
(Principal Accounting Officer)
EXHIBIT 10.1
ASSET PURCHASE AGREEMENT
BETWEEN
MEDITE CORPORATION
AND
ROGUE RESOURCES LLC
October 7, 1996
TABLE OF CONTENTS
1. Definitions.................................................1
2. Basic Transaction...........................................3
(a) Purchase and Sale of Assets...........................3
(b) Assumption of Liabilities.............................3
(c) Purchase Price........................................3
(d) The Closing...........................................3
(e) Deliveries at the Closing.............................4
(f) Adjustments to Purchase Price.........................4
(g) Allocation............................................4
3. Representations and Warranties of the Seller................5
(a) Organization of the Seller............................5
(b) Authorization of Transaction..........................5
(c) Noncontravention......................................5
(d) Brokers' Fees.........................................6
(e) Legal Compliance......................................6
(f) Timberlands...........................................6
(g) Contracts.............................................6
(h) Litigation............................................7
4. Representations and Warranties of the Buyer.................7
(a) Organization of the Buyer.............................7
(b) Authorization of Transaction..........................7
(c) Noncontravention......................................7
(d) Brokers' Fees.........................................8
(e) Financing.............................................8
5. Pre-Closing Covenants.......................................8
(a) General...............................................8
(b) Notices and Consents..................................8
(c) Operation of Business.................................9
(d) Access................................................9
(e) Notice of Developments................................9
(f) Casualty or Condemnation.............................10
6. Post-Closing Covenants....................................10
(a) General..............................................10
(b) Litigation Support...................................10
7. Conditions to Obligation to Close..........................11
(a) Conditions to Obligation of the Buyer................11
(b) Conditions to Obligation of the Seller...............12
8. Remedies for Breaches of this Agreement....................12
(a) Survival of Representations and Warranties...........12
(b) Indemnification Provisions for Benefit of the Buyer..13
(c) Indemnification Provisions for Benefit of the Seller.14
(d) Matters Involving Third Parties......................14
(e) Determination of Adverse Consequences................15
(f) Other Indemnification Provisions.....................15
9. Termination................................................15
(a) Termination of Agreement.............................15
(b) Effect of Termination................................16
10. Miscellaneous.............................................16
(a) Press Releases and Public Announcements..............16
(b) No Third Party Beneficiaries.........................16
(c) Entire Agreement.....................................16
(d) Succession and Assignment............................16
(e) Counterparts.........................................17
(f) Headings.............................................17
(g) Notices..............................................17
(h) Governing Law........................................18
(i) Amendments and Waivers...............................18
(j) Severability.........................................18
(k) Expenses.............................................18
(l) Construction.........................................19
(m) Incorporation of Exhibits............................19
(n) Allocation of Purchase Price.........................19
(o) Bulk Transfer Laws...................................19
EXHIBITS
EXHIBIT A Form of Assignment
EXHIBIT B Form of Assumption
EXHIBIT C Allocation Schedule
EXHIBIT D Disclosure Schedule
EXHIBIT F Valhi, Inc. Guaranty
SCHEDULE
SCHEDULE 1 Acquired Assets Listing
SCHEDULE 2 Assumed Liabilities Listing
SCHEDULE 3 Net Merchantable Conifer Volume as of May 31, 1996
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement") is entered into as of
October 7, 1996, by and between ROGUE RESOURCES LLC, an Oregon limited liability
company (the "Buyer"), and MEDITE CORPORATION, a Delaware corporation (the
"Seller"). The Buyer and the Seller are referred to individually as a "Party"
and collectively as the "Parties."
This Agreement contemplates a transaction in which the Buyer will purchase
the Acquired Assets (as defined below), assume the Assumed Liabilities (as
defined below) of the Seller and pay the Seller cash.
Now, therefore, in consideration of the premises and the mutual promises,
representations, warranties, and covenants set forth below, the Parties agree as
follows.
1. Definitions.
"Acquired Assets" means all of the right, title, and interest that the
Seller possesses and has the right to transfer in and to all of the assets
described on Schedule 1 attached to this Agreement and incorporated herein by
this reference, including without limitation all of the Timberlands and timber
rights owned by the Seller in Jackson, Josephine and Douglas Counties in the
State of Oregon consisting of the parcels described on Schedule 1.
"Adverse Consequences" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, reasonable
amounts paid in settlement, liabilities, obligations, taxes, liens, losses,
expenses, and fees, including court costs and reasonable attorneys' fees and
expenses.
"Applicable Rate" means the "Prime Rate" as identified in the Wall Street
Journal Money Rates section from time to time as the base rate of interest for
corporate loans.
"Assumed Liabilities" means all liabilities and obligations of the Seller
described on Schedule 2 attached to this Agreement and incorporated herein by
this reference.
"Business" means the Seller's business operations relating to the
Timberlands and timber rights.
"Buyer" has the meaning set forth in the preface above.
"Closing" has the meaning set forth in Section2(e) below.
"Closing Date" has the meaning set forth in Section2(e) below.
"Confidential Information" means any information concerning the Business
and any other businesses and affairs of the Seller and its Subsidiaries that is
not already generally available to the public.
"Disclosure Schedule" has the meaning set forth in Section3 below.
"Hart-Scott-Rodino Act" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended.
"Hazardous Substance" means any hazardous substances within the meaning of
the Comprehensive Environmental Response, Compensation and Liability Act, as
amended, or other hazardous substances regulated under any federal, state or
local environmental law, statute, regulation, ordinance, permit or other legal
requirement pertaining to the protection of human health or the environment.
"Indemnified Party" has the meaning set forth in Section8(d) below.
"Indemnifying Party" has the meaning set forth in Section8(d) below.
"Knowledge" means actual knowledge without independent investigation of the
referenced person or, if an entity, the executive officers of the referenced
entity and, with respect to Seller, Seller's Chief Forester.
"Medite Timber" means Medite Timber Acquisitions, Inc., a Delaware
corporation.
"Merchantable Conifer Volume" means that portion of the conifer species on
the Timberlands in merchantable grades, excluding both utility and select culls.
"Ordinary Course of Business" with respect to a Person means the ordinary
course of business consistent with that Person's past custom and practice
(including, without limitation, with respect to quantity and frequency).
"Party" has the meaning set forth in the preface above.
"Person" means an individual, a partnership, a corporation, an association,
a joint stock company, a limited liability company, a trust, a joint venture, an
unincorporated organization, or a governmental entity (or any department,
agency, or political subdivision thereof).
"Purchase Price" has the meaning set forth in Section2(c) below.
"Security Interest" means any mortgage, pledge, lien, encumbrance, charge,
or other security interest, other than (a) mechanic's, materialmen's, and
similar liens, (b) liens for taxes not yet due and payable or for taxes that the
taxpayer is contesting in good faith through appropriate proceedings, (c)
purchase money liens and liens securing rental payments under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of Business and
not incurred in connection with the borrowing of money.
"Seller" has the meaning set forth in the preface above.
"Subsidiary" means any Person with respect to which a specified Person (or
a Subsidiary thereof) owns a majority of the common stock or other equity
interests, or has the power to vote or direct the voting of sufficient
securities to elect a majority of the directors or other persons performing
similar functions with respect to such entity.
"Third Party Claim" has the meaning set forth in Section8(d) below.
"Timberlands" has the meaning set forth in Schedule 1 attached hereto.
2. Basic Transaction.
(a) Purchase and Sale of Assets. On the terms and subject to the
conditions of this Agreement, the Buyer agrees to purchase from the Seller, and
the Seller agrees to sell, transfer, convey, and deliver to the Buyer, all of
the Acquired Assets at the Closing for the consideration specified below in this
Section2. Seller agrees to convey the Timberlands by statutory warranty deed
in the form of Exhibit A.
(b) Assumption of Liabilities. On and subject to the terms and conditions
of this Agreement, the Buyer agrees to assume and become responsible for all of
the Assumed Liabilities at the Closing. The Buyer will not assume or have any
responsibility, however, with respect to any other obligation or liability of
the Seller not included within the definition of Assumed Liabilities.
(c) Purchase Price. The Buyer agrees to pay to the Seller at the Closing
$125,000,000, subject to adjustment as provided in Section2(f) below (as so
adjusted, the "Purchase Price") by delivery of cash in the amount of the
Purchase Price payable by wire transfer or delivery of other immediately
available funds.
(d) The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Haglund & Kirtley,
in Portland, Oregon commencing at 9:00 a.m. local time on the second business
day following the satisfaction or waiver of all conditions to the obligations of
the Parties to consummate the transactions contemplated by this Agreement (other
than conditions with respect to actions the respective Parties will take at the
Closing itself) or such other date as the Buyer and the Seller may mutually
determine (the "Closing Date"); provided, however that the Closing Date shall be
no later than October 30, 1996 unless extended by mutual agreement or pursuant
to Section5(f) below.
(e) Deliveries at the Closing. At the Closing, (i) the Seller will
deliver and, to the extent title to any of the Timberlands remains in Medite
Timber, will cause Medite Timber to deliver to the Buyer the various
certificates, instruments, and documents referred to in Section7(a) below; (ii)
the Buyer will deliver to the Seller the various certificates, instruments, and
documents referred to in Section7(b) below; (iii) the Seller will execute,
acknowledge (if appropriate), and deliver and, to the extent title to any of the
Timberlands remains in Medite Timber, will cause Medite Timber to execute,
acknowledge (if appropriate), and deliver to the Buyer (A) assignments,
including real property transfer conveyances in the form attached hereto as
Exhibit A, and (B) such other instruments of sale, transfer, conveyance, and
assignment as the Buyer and its counsel reasonably may request; (iv) the Buyer
will execute, acknowledge (if appropriate), and deliver to the Seller (A) an
assumption in the form attached hereto as Exhibit B and (B) such other
instruments of assumption as the Seller and its counsel reasonably may request;
and (v) the Buyer will deliver to the Seller the consideration specified in
Section2(c) above.
(f) Adjustments to Purchase Price. The Purchase Price will be adjusted as
follows: (i) shall be reduced or increased to the extent of the net amount
payable by or owed to Seller for use of roads pursuant to the road use
agreements identified in Section2(f) of the Disclosure Schedule; and (ii) shall
be reduced or increased at a rate of $500 per thousand board feet for net
Merchantable Conifer Volume removed or acquired from the Timberlands after May
31, 1996, taking only into account both Merchantable Conifer Volume removed from
the Timberlands and Merchantable Conifer Volume acquired after May 31, 1996 in
the form of standing timber (with no credit given for growth of standing timber
after May 31, 1996). The net Merchantable Conifer Volume as of May 31, 1996 is
set forth on Schedule 3 attached hereto. To the extent that any Purchase Price
adjustment cannot be finalized at Closing, such adjustment shall be agreed upon
as soon as practicable post-Closing and any payments as a result of such
adjustment shall be made by the appropriate party to the other party immediately
thereafter.
(g) Allocation. The Parties agree to allocate the Purchase Price (and all
other capitalizable costs) among the Acquired Assets for all purposes (including
financial accounting and tax purposes) in accordance with the allocation
schedule attached hereto as Exhibit C.
3. Representations and Warranties of the Seller. The Seller represents
and warrants to the Buyer that the statements contained in this Section3 are
correct and complete as of the date of this Agreement and will be correct and
complete as of the Closing Date (as though made then and as though the Closing
Date were substituted for the date of this Agreement throughout this Section3),
except as set forth in the disclosure schedule attached hereto as Exhibit D and
incorporated in this Agreement by this reference (the "Disclosure Schedule").
(a) Organization of the Seller. The Seller is a corporation validly
existing, and in good standing under the laws of the jurisdiction of its
incorporation and is qualified to do business as a foreign corporation under the
laws of the State of Oregon.
(b) Authorization of Transaction. The Seller has the corporate power and
authority to execute and deliver this Agreement and to perform its obligations
under this Agreement, and the execution and delivery of this Agreement has been
approved by the Seller's Board of Directors. This Agreement constitutes the
valid and legally binding obligation of the Seller, enforceable in accordance
with its terms and conditions.
(c) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated by this
Agreement, will (i) violate any valid constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which any of the Seller and the
Acquired Assets is subject or any provision of the charter or bylaws of the
Seller or (ii) conflict with, result in a breach of, constitute a default under,
result in the acceleration of, create in any party the right to accelerate,
terminate, modify, or cancel, or require any notice under any agreement,
contract, lease, license, instrument, or other arrangement to which the Seller
is a party or by which it is bound or to which any of its assets is subject (or
result in the imposition of any Security Interest upon any of its assets),
except where the violation, conflict, breach, default, acceleration,
termination, modification, cancellation, failure to give notice, or Security
Interest would not have a material adverse effect on the financial condition of
the Acquired Assets and Assumed Liabilities taken as a whole or on the ability
of the Parties to consummate the transactions contemplated by this Agreement.
To the Knowledge of the Seller, and other than in connection with the provisions
of the Hart-Scott-Rodino Act, the Seller does not need to give any notice to,
make any filing with, or obtain any authorization, consent, or approval of any
government or governmental agency in order for the Parties to consummate the
transactions contemplated by this Agreement, except where the failure to give
notice, to file, or to obtain any authorization, consent, or approval would not
have a material adverse effect on the financial condition of the Acquired Assets
and Assumed Liabilities taken as a whole or on the ability of the Parties to
consummate the transactions contemplated by this Agreement.
(d) Brokers' Fees. The Seller has no liability or obligation to pay any
fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement to which the Acquired Assets could
be subjected.
(e) Legal Compliance. To the Knowledge of the Seller, the Seller has
complied with all applicable and valid laws (including rules, regulations,
codes, plans, injunctions, judgments, orders, decrees, rulings, and charges
thereunder) of federal, state, local, and foreign governments (and all agencies
thereof), except where the failure to comply would not have a material adverse
effect upon the financial condition of the Acquired Assets and Assumed
Liabilities taken as a whole.
(f) Timberlands. Section3(f) of the Disclosure Schedule lists all
Timberlands and other real property that is part of the Acquired Assets. With
respect to each such parcel of owned real property, and except for matters which
would not have a material adverse effect on the Acquired Assets as a whole:
(i) the identified owner has good title to the parcel of real
property, free and clear of any Security Interest, easement or covenant, except
for installments of special assessments not yet delinquent, recorded easements,
covenants, and other restrictions, and utility easements, building restrictions,
zoning restrictions, and other easements and restrictions existing generally
with respect to properties of a similar character;
(ii) there are no leases, subleases, licenses, concessions, or other
agreements granting to any party or parties the right of use or occupancy of any
portion of the parcel of real property; and
(iii) there are no outstanding options or rights of first refusal to
purchase the parcel of real property, or any portion thereof or interest
therein.
(iv) Seller has not entered into any timber deeds or other contracts
to sell timber on the Timberlands.
(v) To the Knowledge of the Seller, no Hazardous Substance has been
disposed of, spilled, leaked, or otherwise released on or under the Timberlands
or is located on or under the Timberlands except incident to timber operations
and activities ancillary thereto.
(g) Contracts. Section3(g) of the Disclosure Schedule lists all written
contracts and other written agreements relating to the Acquired Assets and
Assumed Liabilities the performance of which will involve consideration in
excess of $10,000. The Seller has delivered to the Buyer a correct and complete
copy of each contract or other agreement listed in Section3(g) of the
Disclosure Schedule (as amended to date).
(h) Litigation. Section3(h) of the Disclosure Schedule sets forth each
instance in which the Acquired Assets or Assumed Liabilities (i) is subject to
any outstanding injunction, judgment, order, decree, ruling, or charge or (ii)
is the subject of any action, suit, proceeding, hearing, or investigation of,
in, or before any court or quasi-judicial or administrative agency of any
federal, state, local, or foreign jurisdiction, except where the injunction,
judgment, order, decree, ruling, action, suit, proceeding, hearing, or
investigation would not reasonably be expected to involve consideration in
excess of $5,000.
4. Representations and Warranties of the Buyer. The Buyer represents and
warrants to the Seller that the statements contained in this Section4 are
correct and complete as of the date of this Agreement and will be correct and
complete as of the Closing Date (as though made then and as though the Closing
Date were substituted for the date of this Agreement throughout this Section4),
except as set forth in the Disclosure Schedule.
(a) Organization of the Buyer. The Buyer is a limited liability company
duly organized, validly existing, and in good standing under the laws of the
jurisdiction of its organization.
(b) Authorization of Transaction. The Buyer has the power and authority
to execute and deliver this Agreement and to perform its obligations hereunder
and the execution and delivery of this Agreement has been approved by all of the
Buyer's Members. This Agreement constitutes the valid and legally binding
obligation of the Buyer, enforceable in accordance with its terms and
conditions.
(c) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated by this
Agreement (including, without limitation, the assignments and assumptions
referred to in Section2 above), will (i) violate any valid constitution,
statute, regulation, rule, injunction, judgment, order, decree, ruling, charge,
or other restriction of any government, governmental agency, or court to which
the Buyer is subject or any provision of its articles of organization and
operating agreement or (ii) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, or other arrangement to which
the Buyer is a party or by which it is bound or to which any of its assets is
subject (or result in the imposition of any Security Interest upon any of its
assets) except where the violation, conflict, breach, default, acceleration,
termination, modification, cancellation, failure to give notice, or Security
Interest would not have a material adverse effect on the financial condition of
the Buyer or any of its Members or on the ability of the Parties to consummate
the transactions contemplated by this Agreement. To the Knowledge of the Buyer,
and other than in connection with the provisions of the Hart-Scott-Rodino Act,
the Buyer does not need to give any notice to, make any filing with, or obtain
any authorization, consent, or approval of any government or governmental agency
in order for the Parties to consummate the transactions contemplated by this
Agreement (including the assignments and assumptions referred to in Section2
above), except where the failure to give notice, to file, or to obtain any
authorization, consent, or approval would not have a material adverse effect on
the ability of the Parties to consummate the transactions contemplated by this
Agreement.
(d) Brokers' Fees. The Buyer has no liability or obligation to pay any
fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which the Seller could become
liable or obligated.
(e) Financing. Buyer will have, on the Closing Date, all funds necessary
to pay the Purchase Price and related fees and expenses, and has, or will have
on the Closing Date, the financial capacity to perform all of its other
obligations under this Agreement.
(f) Premerger Notification. Buyer is not controlled by any other entity as
"control" is defined by the Federal Trade Commission Premerger Notification
Rules. Buyer does not have annual net sales or total assets of ten million
dollars ($10,000,000) or more for purposes of reportability under the Federal
Trade Commission Premerger Notification Rules.
5. Pre-Closing Covenants. The Parties agree as follows with respect to
the period between the execution of this Agreement and the Closing.
(a) General. Each of the Parties will use its reasonable efforts to take
all action and to do all things necessary in order to consummate and make
effective the transactions contemplated by this Agreement (including
satisfaction, but not waiver, of the closing conditions set forth in Section7
below).
(b) Notices and Consents. Each Party will give any notices to third
parties, and each Party will use its reasonable efforts to obtain any third
party consents, that the other Party reasonably may request in connection with
the matters referred to in Section3(c) and Section4(c) above. Each of the
Parties will give any notices to, make any filings with, and use its reasonable
efforts to obtain any authorizations, consents, and approvals of governments and
governmental agencies in connection with the matters referred to in Section3(c)
and Section4(c) above. Without limiting the generality of the foregoing, each
of the Parties will file any notification and report forms and related material
that it may be required to file with the Federal Trade Commission and the
Antitrust Division of the United States Department of Justice under the Hart-
Scott-Rodino Act or otherwise, will use its reasonable efforts to obtain early
termination of the applicable waiting period, and will make any further filings
pursuant thereto that may be necessary.
(c) Operation of Business. The Seller will not engage in any practice,
take any action, or enter into any transaction in each case relating to the
Timberlands outside the Ordinary Course of Business. Effective on and after the
date of this Agreement and continuing until the Closing or termination of this
Agreement, the Seller agrees (i) to cease all felling of timber on the
Timberlands on or before October 21, 1996, provided however, that removal of
felled and bucked timber and felling of timber to complete existing contractual
obligations may continue until Closing, and (ii) not to acquire parcels of
timberland larger than 500 acres. Seller agrees that all felled and bucked
timber shall be removed on or before October 30, 1996. Seller agrees that it
will issue appropriate notices to ensure that all agreements or contracts for
felling and removal of timber will be terminated, and all operations of all
independent contractors shall cease on the Timberlands, on or before October 30,
1996.
(d) Access. The Seller will permit representatives of the Buyer to have
access at all reasonable times, and in a manner so as not to interfere with the
normal business operations of the Seller, to all premises, properties,
personnel, books, records (including tax records), contracts, and documents of
or pertaining to the Acquired Assets or the Assumed Liabilities as Buyer may
reasonably request from time to time solely for the purpose of confirming
Seller's compliance with Section5(c) above, review of title to the Acquired
Assets and review of Bureau of Land Management and United States Forest Service
agreements related thereto. The Buyer acknowledges and agrees that it has
completed to its satisfaction all of its due diligence in connection with the
transactions contemplated by this Agreement. The Buyer will treat and hold as
such any Confidential Information it receives from the Seller in the course of
the reviews contemplated by this Section5(d), will not use any of the
Confidential Information except in connection with this Agreement, and, if this
Agreement is terminated for any reason whatsoever, will return to the Seller all
tangible embodiments (and all copies) of the Confidential Information which are
in its possession.
(e) Notice of Developments.
(i) The Seller may elect at any time to notify the Buyer of any
development causing a breach of any of its representations and warranties in
Section3(e)-(h) above. Unless the Buyer has the right to terminate this
Agreement pursuant to Section9(a)(ii) below by reason of the development and
exercises that right within the period of ten (10) business days referred to in
Section9(a)(ii) below, the written notice pursuant to this Section5(e)(i) will
be deemed to have amended the Disclosure Schedule, to have qualified the
representations and warranties contained in Section3 above, and to have cured
any misrepresentation or breach of warranty that otherwise might have existed
hereunder by reason of the development.
(ii) Each Party will give prompt written notice to the other Party of
any material adverse development causing a breach of any of its own
representations and warranties in Section3(a)-(d) and, Section4 above. No
disclosure by any Party pursuant to this Section5(e)(ii), however, shall be
deemed to amend or supplement the Disclosure Schedule or to prevent or cure any
misrepresentation or breach of warranty.
(f) Casualty or Condemnation. In the event any insured loss, destruction,
casualty or damage occurs to the Acquired Assets after the date of this
Agreement, but before Closing, or in the event condemnation action is instituted
on part or all of the Acquired Assets after the date of this Agreement, but
before Closing, then Seller shall assign to Buyer at Closing all proceeds from
such policies or condemnation action, and there shall be no adjustment in the
Purchase Price. In the event any uninsured loss or damage occurs to the
Acquired Assets after the date of this Agreement, but before Closing, which
involves more than 10% of the aggregate Merchantable Conifer Volume on the
Timberlands when such event occurs, either Seller or Buyer shall have the right
to terminate this Agreement by written notice to the other party. If neither
Buyer nor Seller elects to terminate this Agreement in such event, or if the
uninsured loss or damage involves less than 10% of the aggregate Merchantable
Conifer Volume on the Timberlands, the Parties agree to reduce the Purchase
Price by the sum of the following amounts: (i) $500 per acre of pre-
merchantable timber lost or damaged, plus (ii) an amount calculated by
multiplying the Purchase Price by the percentage of the aggregate Merchantable
Conifer Volume on the Timberlands lost or damaged as of the date of the event.
6. Post-Closing Covenants. The Parties agree as follows with respect to
the period following the Closing:
(a) General. In case at any time after the Closing any further action is
necessary to carry out the purposes of this Agreement, including without
limitation, any conveyance to Buyer of the timberlands and timber rights
intended to be sold to Buyer pursuant to this Agreement, each of the Parties
will take such further action (including the execution and delivery of such
further instruments and documents) as the other Party reasonably may request,
all at the sole cost and expense of the requesting Party (unless the requesting
Party is entitled to indemnification therefor under Section8 below).
(b) Litigation Support. In the event and for so long as any Party
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand in connection with
(i) any transaction contemplated under this Agreement or (ii) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or prior
to the Closing Date involving any of Seller and its Subsidiaries, the other
Party shall cooperate with it and its counsel in the defense or contest, make
available its personnel, and provide such testimony and access to its books and
records as shall be necessary in connection with the defense or contest, all at
the sole cost and expense of the contesting or defending Party (unless the
contesting or defending Party is entitled to indemnification therefor under
Section8 below).
7. Conditions to Obligation to Close.
(a) Conditions to Obligation of the Buyer. The obligation of the Buyer to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in Section3 above
shall be true and correct in all material respects at and as of the Closing
Date;
(ii) the Seller shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(iii) there shall not be any injunction, judgment, order, decree,
ruling, or charge in effect preventing consummation of any of the transactions
contemplated by this Agreement;
(iv) the Seller shall have delivered to the Buyer a certificate to
the effect that each of the conditions specified above in Section7(a)(i)-(iii)
is satisfied in all respects;
(v) Valhi, Inc., the Seller's indirect stockholder, shall have
executed and delivered to the Buyer the Guaranty in the form of Exhibit F
attached hereto; and
(vi) all applicable waiting periods (and any extensions thereof)
under the Hart-Scott-Rodino Act shall have expired or otherwise been terminated
and the Seller, its Subsidiaries, and the Buyer shall have received all other
authorizations, consents, and approvals of governments and governmental agencies
referred to in Section3(c) and Section4(c) above;
(vii) all actions to be taken by the Seller in connection with
consummation of the transactions contemplated hereby and all certificates,
instruments, and other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in form and substance to the
Buyer.
The Buyer may waive any condition specified in this Section7(a) if it executes
a writing so stating at or prior to the Closing.
(b) Conditions to Obligation of the Seller. The obligation of the Seller
to consummate the transactions to be performed by it in connection with the
Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in Section4 above
shall be true and correct in all material respects at and as of the Closing
Date;
(ii) the Buyer shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(iii) there shall not be any injunction, judgment, order, decree,
ruling, or charge in effect preventing consummation of any of the transactions
contemplated by this Agreement;
(iv) the Buyer shall have delivered to the Seller a certificate to
the effect that each of the conditions specified above in Section7(b)(i)-(iii)
is satisfied in all respects;
(v) all applicable waiting periods (and any extensions thereof) under
the Hart-Scott-Rodino Act shall have expired or otherwise been terminated and
the Seller, its Subsidiaries, and the Buyer shall have received all other
authorizations, consents, and approvals of governments and governmental agencies
referred to in Section3(c) and Section4(c) above;
(vi) all actions to be taken by the Buyer in connection with
consummation of the transactions contemplated hereby and all certificates,
instruments, and other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in form and substance to the
Seller.
The Seller may waive any condition specified in this Section7(b) if it executes
a writing so stating at or prior to the Closing.
8. Remedies for Breaches of this Agreement.
(a) Survival of Representations and Warranties. All of the
representations and warranties of the Buyer and the Seller in this Agreement
and, with respect to the Seller, in the assignment documents transferring to
Buyer the Seller's interest in the Acquired Assets (including without
limitation, any statutory warranty deeds executed and delivered by Seller),
shall survive the Closing (unless the damaged Party knew or had reason to know
of any misrepresentation or breach of warranty contained in Section3 or
Section4 above at the time of Closing) and continue in full force (i) with
respect to the representations of the Seller in Section3(e) - (h) above and in
the assignment documents transferring to Buyer the Seller's interest in the
Acquired Assets (including without limitation, any statutory warranty deeds
executed and delivered by Seller), for a period of twenty (20) months after the
Closing at which time such representations and warranties shall be null and void
and cease to be of any effect whatsoever, and (ii) with respect to all other
representations and warranties of Buyer and Seller, in effect forever thereafter
(subject to any applicable statutes of limitations).
(b) Indemnification Provisions for Benefit of the Buyer.
(i) Subject to the limitations contained in Section8(b)(iii), in the
event the Seller breaches any of its representations in Section3 or in the
assignment documents transferring to Buyer the Seller's interest in the Acquired
Assets (including without limitation, any statutory warranty deeds executed and
delivered by Seller) or the Seller breaches any of its covenants contained in
Section6 above, the Seller agrees to indemnify the Buyer from and against any
Adverse Consequences the Buyer shall suffer through and after the date of the
claim for indemnification caused proximately by the breach, provided however,
that the indemnity in this Subsection (i) shall not apply at all to matters
disclosed on the Disclosure Schedule, to matters which Buyer knew or had reason
to know at the time of the Closing, to matters for which Buyer is indemnifying
Seller as provided in this Agreement or to any claims arising after the Seller's
representations and warranties become null and void. Solely for purposes of the
Seller's indemnification obligations under this Subsection (i), any
representation or covenant of Seller in Section3 and Section6 which includes
the term "material adverse effect" shall be construed as if such term instead
were "effect" without any additional qualification.
(ii) The Seller agrees to indemnify the Buyer from and against any
Adverse Consequences the Buyer shall suffer caused proximately by any liability
of the Seller which is not an Assumed Liability.
(iii) Seller's indemnification obligation to the Buyer pursuant to
Subsection (i) shall not exceed $1,500,000 million in the aggregate. Buyer
agrees that it will not seek indemnification for any claim under Subsection (i)
unless such claim has a value greater than $25,000. Buyer agrees that it will
not seek indemnification for any claim under Subsection (i) unless the aggregate
of all claims under Subsection (i) will result in loss to Buyer in excess of
$250,000 in the aggregate, provided however, that once such threshold is
exceeded, Seller shall indemnify Buyer for all such claims from the first dollar
of claims up to the $1,500,000 limitation specified above.
(c) Indemnification Provisions for Benefit of the Seller.
(i) Subject to the limitations contained in Section8(c)(iii), in the
event the Buyer breaches any of its representations in Section4 above or any of
its covenants contained in Section6 of this Agreement, the Buyer agrees to
indemnify the Seller from and against any Adverse Consequences the Seller shall
suffer through and after the date of the claim for indemnification caused
proximately by the breach. Solely for purposes of the Buyer's indemnification
obligations under this Subsection (i), any representation or covenant of Buyer
in Section3 and Section6 which includes the term "material adverse effect"
shall be construed as if such term instead were "effect" without any additional
qualification.
(ii) The Buyer agrees to indemnify the Seller from and against any
Adverse Consequences the Seller shall suffer caused proximately by any liability
which is an Assumed Liability.
(iii) Seller agrees that it will not seek indemnification for any
claim under Subsection (i) unless such claim has a value greater than $25,000.
(d) Matters Involving Third Parties.
(i) If any third party shall notify any Party (the "Indemnified
Party") with respect to any matter (a "Third Party Claim") which may give rise
to a claim for indemnification against the other Party (the "Indemnifying
Party") under this Section8, then the Indemnified Party shall promptly (and in
any event within ten (10) business days after receiving notice of the Third
Party Claim) notify the Indemnifying Party thereof in writing.
(ii) The Indemnifying Party will have the right to assume and
thereafter conduct the defense of the Third Party Claim with counsel of its
choice; provided, however, that the Indemnifying Party will not consent to the
entry of any judgment or enter into any settlement with respect to the Third
Party Claim without the prior written consent of the Indemnified Party (not to
be withheld unreasonably) unless the judgment or proposed settlement involves
only the payment of money damages and does not impose an injunction or other
equitable relief upon the Indemnified Party.
(iii) Unless and until the Indemnifying Party assumes the defense of
the Third Party Claim as provided in Section8(d)(ii) above, however, the
Indemnified Party may defend against the Third Party Claim in any manner it
reasonably may deem appropriate.
(iv) In no event will the Indemnified Party consent to the entry of
any judgment or enter into any settlement with respect to the Third Party Claim
without the prior written consent of the Indemnifying Party.
(e) Determination of Adverse Consequences. The Parties shall make
appropriate adjustments for tax benefits and insurance coverage and take into
account the time cost of money (using the Applicable Rate as the discount rate)
in determining Adverse Consequences for purposes of this Section8. All
indemnification payments under this Section8 shall be deemed adjustments to the
Purchase Price.
(f) Other Indemnification Provisions. The indemnification provisions in
this Section8 are the sole remedy any Party may have for breach of
representation, warranty, or covenant.
9. Termination.
(a) Termination of Agreement. The Parties may terminate this
Agreement as provided below:
(i) the Buyer and the Seller may terminate this Agreement by
mutual written consent at any time prior to the Closing;
(ii) the Buyer may terminate this Agreement by giving written
notice to the Seller at any time prior to the Closing in the event (A) the
Seller has within the then previous ten (10) business days given the Buyer any
notice pursuant to Section5(e)(i) above and (B) the development that is the
subject of the notice has had a material adverse effect upon the financial
condition of the Acquired Assets and Assumed Liabilities taken as a whole or,
when combined with similar prior notices, has a cumulative material adverse
effect upon the financial condition of the Acquired Assets and Assumed
Liabilities taken as a whole.
(iii) the Buyer may terminate this Agreement by giving written
notice to the Seller at any time prior to the Closing (A) in the event the
Seller has breached any material representation, warranty, or covenant contained
in this Agreement (other than the representations and warranties in
Section3(d)-(h) above) in any material respect, the Buyer has notified the
Seller of the breach, and the breach has continued without cure for a period of
thirty (30) days after the notice of breach or (B) if the Closing shall not
have occurred on or before October 30, 1996 by reason of the failure of any
condition precedent under Section7(a) hereof (unless the failure results
primarily from the Buyer itself breaching any representation, warranty, or
covenant contained in this Agreement); and
(iv) the Seller may terminate this Agreement by giving written
notice to the Buyer at any time prior to the Closing (A) in the event the Buyer
has breached any material representation, warranty, or covenant contained in
this Agreement in any material respect, the Seller has notified the Buyer of the
breach, and the breach has continued without cure for a period of thirty (30)
days after the notice of breach or (B) if the Closing shall not have occurred on
or before October 30, 1996 by reason of the failure of any condition precedent
under Section7(b) hereof (unless the failure results primarily from the Seller
itself breaching any representation, warranty, or covenant contained in this
Agreement).
(v) the Seller or Buyer may terminate this Agreement by giving
written notice to the other party pursuant to Section5(f).
(b) Effect of Termination. If any Party terminates this Agreement
pursuant to Section9(a) above, all rights and obligations of the Parties
hereunder shall terminate without any liability of any Party to any other Party
(except for any liability of any Party then in breach); provided, however, that
the confidentiality provisions contained in Section5(d) above shall survive any
such termination.
10. Miscellaneous.
(a) Press Releases and Public Announcements. No Party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement prior to the Closing without the prior written approval of the
other Party; provided, however, that any Party or any affiliate of such Party
may make any public disclosure it believes in good faith is required by
applicable law or any listing or trading agreement concerning its publicly-
traded securities (in which case the Party which intends, or which has an
affiliate that intends, to issue such press release or make such public
announcement will advise the other Party prior to making the disclosure and
provide the other Party opportunity to comment upon the release or
announcement).
(b) No Third Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
(c) Entire Agreement. This Agreement (including the documents referred to
herein) constitutes the entire agreement between the Parties and supersedes any
prior understandings, agreements, or representations by or between the Parties,
written or oral, to the extent they related in any way to the subject matter
hereof.
(d) Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other Party.
(e) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(f) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(g) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given if (and then
two business days after) it is sent by registered or certified mail, return
receipt requested, postage prepaid, and addressed to the intended recipient as
set forth below:
If to the Seller: Medite Corporation
Three Lincoln Centre, Suite 1700
5430 LBJ Freeway
Dallas, TX 75240-2697
Attention: President
Tel: 972-233-1700
Fax: 972-239-0142
Copy to: James L. Palenchar
Bartlit Beck Herman Palenchar & Scott
511 16th Street, Suite 500
Denver, CO 80202
Tel: 303-592-3100
Fax: 303-592-3140
If to the Buyer: Rogue Resources, LLC
101 East Broadway, Suite 305
Eugene, OR 97401-3177
Attention: Paul Farkas
Tel: 541-686-1040
Fax: 541-686-9673
Copy to: Michael E. Haglund
Haglund & Kirtley LLP
One Main Place
101 S. W. Main, Suite 1800
Portland, OR 97204
Tel: 503-225-0777
Fax: 503-225-1257
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Party
notice in the manner herein set forth.
(h) Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Oregon without giving effect
to any choice or conflict of law provision or rule (whether of the State of
Oregon or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Oregon.
(i) Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
Buyer and the Seller. No waiver by any Party of any default, misrepresentation,
or breach of warranty or covenant hereunder, whether intentional or not, shall
be deemed to extend to any prior or subsequent default, misrepresentation, or
breach of warranty or covenant hereunder or affect in any way any rights arising
by virtue of any such prior or subsequent occurrence.
(j) Severability. Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(k) Expenses. Each of the Buyer and the Seller will bear its own costs
and expenses (including legal fees and expenses) incurred in connection with
this Agreement and the transactions contemplated hereby. Notwithstanding the
foregoing sentence, (i) Seller shall bear the costs of owner's title insurance
policies insuring Buyer's title to the Timberlands in an aggregate amount not to
exceed the Purchase Price; (ii) Buyer shall bear the costs of any special title
insurance endorsements requested by Buyer and any and all transfer taxes,
including without limitation any use or sales taxes, associated with the sale of
the Acquired Assets or the assumption of the Assumed Liabilities. Escrow and
other closing costs will be divided equally between Seller and Buyer. Real
estate taxes and any other customary prorations shall be made as of the Closing
Date.
(l) Construction. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the Parties and no presumption or burden of proof shall arise favoring or
disfavoring any Party by virtue of the authorship of any of the provisions of
this Agreement. Any reference to any federal, state, local, or foreign statute
or law shall be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context otherwise requires. The word "including" shall
mean including without limitation.
(m) Incorporation of Exhibits. The Exhibits and any annexes and schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.
(n) Allocation of Purchase Price. The Buyer and the Seller will cooperate
in the preparation and filing of Form 8594.
(o) Bulk Transfer Laws. The Buyer acknowledges that the Seller will not
comply with the provisions of any bulk transfer laws of any jurisdiction in
connection with the transactions contemplated by this Agreement.
*****
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the
date first above written.
ROGUE RESOURCES LLC, an Oregon limited liability
company
By: Coast Range Resources LLC
By: Lone Rock Timber Co., managing member
By:
----------------------------------
Howard F. Sohn, President
By: Superior Lumber Co.
By:
----------------------------------
Steven D. Swanson, Vice President
By: Indian Hill Limited Partnership
By:
----------------------------------
Lewis N. Krauss, general partner
By: Silver Butte Timber Co.
By:
----------------------------------
David Johnson, President
By: C&D Lumber Co.
By:
----------------------------------
Everett P. Johnson, President
MEDITE CORPORATION, a Delaware corporation
By:
----------------------
EXHIBIT 10.2
SHARE SUBSCRIPTION AND REDEMPTION AGREEMENT
AMONG
MEDITE CORPORATION,
WILLAMETTE INDUSTRIES, INC.
AND
MEDFORD INTERNATIONAL HOLDINGS
November 4, 1996
TABLE OF CONTENTS
1. Definitions...........................................................1
2. Subscription and Redemption; Purchase and Sale of Intellectual
Property.............................................................6
(a) Subscription and Redemption of Ordinary Shares..................6
(i) Subscription for Ordinary Shares...........................6
(ii) Redemption of Issued Ordinary Shares.......................6
(iii)Sequence of Subscription and Redemption Transactions;
Cancellation..............................................6
(b) Purchase and Sale of Intellectual Property......................6
(c) Subscription and Redemption and Intellectual Property Prices....7
(i) Subscription Price for Ordinary Shares.....................7
(ii) Redemption Price for Issued Ordinary Shares................7
(iii)Purchase Price for the Intellectual Property...............7
(d) The Closing.....................................................7
(e) Deliveries at the Closing.......................................7
(f) Adjustment to Redemption Price..................................8
3. Representations and Warranties Concerning the Transaction.............8
(a) Representations and Warranties of Medite........................8
(i) Organization of Medite.....................................8
(ii) Authorization of Transaction...............................9
(iii)Noncontravention...........................................9
(iv) Brokers' Fees..............................................9
(v) Share Capital of Medford Holdings.........................10
(vi) No Obligations of Medford Holdings or Medite Europe.......10
(b) Representations and Warranties of Willamette...................10
(i) Organization of Willamette................................10
(ii) Authorization of Transaction..............................10
(iii)Noncontravention..........................................11
(iv) Brokers' Fees.............................................11
(v) Investment................................................11
(vi) Indebtedness..............................................11
4. Representations and Warranties Concerning MIH Group..................11
(a) Organization, Qualification, and Corporate Power...............12
(b) Medford Holdings Capitalization................................12
(c) Noncontravention...............................................13
(d) Brokers' Fees..................................................13
(e) Title to Tangible Assets Other than Real Property..............13
(f) Medite Europe and Sarasate Capitalization......................14
(g) Financial Statements...........................................14
(h) Events Subsequent to Most Recent Fiscal Quarter End............14
(i) Legal Compliance...............................................15
(j) Tax Matters....................................................15
(k) Real Property..................................................16
(l) Intellectual Property..........................................17
(m) Contracts......................................................17
(n) Litigation.....................................................17
(o) Employee Benefits..............................................18
(p) Subsidiaries...................................................18
(q) Holding Company Status.........................................18
(r) No Default in Funded Debt......................................18
(s) Environmental Matters..........................................18
(t) Employment Agreements..........................................19
(u) Insurance......................................................19
5. Pre-Closing Covenants................................................19
(a) General........................................................19
(b) Responsibility for Actions.....................................19
(c) Notices and Consents...........................................19
(d) Operation of Business..........................................19
(e) Access.........................................................19
(f) Notice of Developments.........................................20
(g) Corporate Documentation and Authorization......................20
6. Post-Closing Covenants..............................................21
(a) General........................................................21
(b) Litigation Support.............................................21
(c) Employee Benefits Matters......................................21
(d) Confidential Information.......................................21
(e) Section 338 Election...........................................22
(f) Filings........................................................22
(g) Medite Consent.................................................22
(h) Section 299 Election...........................................22
(i) Acknowledgment.................................................22
7. Conditions to Obligation to Close....................................22
(a) Conditions to Obligation of Willamette.........................22
(b) Conditions to Obligation of Medite.............................24
8. Remedies for Breaches of this Agreement..............................25
(a) Survival of Representations and Warranties.....................25
(b) Indemnification Provisions for Benefit of Willamette...........26
(c) Indemnification Provisions for Benefit of Medite...............26
(d) Matters Involving Restructuring and/or Aggregation.............27
(e) Matters Involving Third Parties................................28
(f) Determination of Adverse Consequences..........................29
(g) Other Indemnification Provisions...............................29
9. Termination..........................................................29
(a) Termination of Agreement.......................................29
(b) Effect of Termination..........................................30
10. Restructuring.......................................................30
(a) Restructuring of MIH Group.....................................30
(b) Tax Elections..................................................31
11. Miscellaneous.......................................................31
(a) Press Releases and Public Announcements........................31
(b) No Third Party Beneficiaries...................................31
(c) Entire Agreement...............................................31
(d) Succession and Assignment......................................31
(e) Counterparts...................................................32
(f) Headings.......................................................32
(g) Notices........................................................32
(h) Governing Law..................................................33
(i) Amendments and Waivers.........................................33
(j) Severability...................................................34
(k) Expenses. ....................................................34
(l) Construction...................................................34
(m) Incorporation of Disclosure Schedule...........................34
EXHIBITS
EXHIBIT A Disclosure Schedule
EXHIBIT B Financial Statements
EXHIBIT C Employment Agreements
EXHIBIT D Form of Valhi Guaranty
EXHIBIT E Form of Assignment
SCHEDULE 1 Insurance
SCHEDULE 2 Tax Returns
SCHEDULE 3 Capital Additions and Costs
SHARE SUBSCRIPTION AND REDEMPTION AGREEMENT
This Share Subscription and Redemption Agreement (the "Agreement") is
entered into as of November 4, 1996, by and among WILLAMETTE INDUSTRIES, INC.,
an Oregon corporation ("Willamette"), MEDITE CORPORATION, a Delaware corporation
("Medite") and MEDFORD INTERNATIONAL HOLDINGS, a company incorporated and
resident in Ireland with unlimited liability ("Medford Holdings"). Willamette,
Medite and Medford Holdings are referred to individually as a "Party" and
collectively as the "Parties."
Medford Holdings has an authorized share capital of IR Pounds10,000,000
divided into 9,750,000 Ordinary Shares of IR Pounds1 each and 250,000 Deferred
Shares of IR PoundsI each. 4,375,048 Ordinary Shares and 250,000 Deferred
Shares are issued and are fully paid. The entire issued share capital of
Medford Holdings is owned beneficially (directly or indirectly) by Medite.
This Agreement contemplates a transaction in which (i) Willamette and Trust
will subscribe for, and Medite will cause Medford Holdings to issue to
Willamette and Trust, an aggregate of 4,625,048 new Ordinary Shares for
US$53,500,000; (ii) Medford Holdings will redeem from Medite and Medite U.S. Sub
for US$53,000,000 all of the remaining 4,375,048 issued Ordinary Shares
registered in the names of Medite and Medite U.S. Sub and thereupon cancel such
redeemed shares; and (iii) Medite will assign certain Intellectual Property to
Willamette for US$8,000,000 and Willamette will license certain of such
Intellectual Property back to Medite.
Now, therefore, in consideration of the premises and the mutual promises,
representations, warranties and covenants set forth below, the Parties agree as
follows.
1. Definitions.
"Adverse Consequences" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, reasonable
amounts paid in settlement, liabilities, obligations, Taxes, liens, losses,
expenses, and fees, including court costs and reasonable attorneys' fees and
expenses. The Adverse Consequences of a Party include without duplication such
consequences realized by Subsidiaries.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act of 1934, as amended.
"Aggregation" means the transaction, which may occur after Closing, in
which (i) the movable assets referred to in Section10(a)(iv) are transferred by
delivery by Sarasate to Medite Europe at net book value (without change from the
net book value of the movable assets at the time of the Restructuring) in
exchange for cancellation of the non-interest bearing intercompany loan from
Sarasate to Medite Europe arising from the Restructuring, and (ii) the lease
referred to in Section10(a)(v) is terminated.
"Applicable Rate" means the "Prime Rate" as identified in the Wall Street
Journal Money Rates section from time to time as the base rate of interest for
corporate loans.
"Assignment" has the meaning set forth in Section2(b) below.
"Certificates of Title" has the meaning set forth in Section7(a)(xi)
below.
"Closing" has the meaning set forth in Section2(d) below.
"Closing Balance Sheet" has the meaning set forth in Section2(f) below.
"Closing Date" is the date upon which the transactions contemplated by this
Agreement as described in Section2 below are consummated.
"Confidential Information" means any information concerning the businesses
and affairs of Medite or any member of MIH Group that is not already generally
available to the public.
"Consolidated Adjusted Net Worth" means the consolidated shareholders'
funds of Medford Holdings as determined in accordance with GAAP. In calculating
the Consolidated Adjusted Net Worth, the value of any Intellectual Property
acquired by MIH Group after March 31, 1996, shall be deemed to be zero, and the
deferred tax liability shall be calculated on a basis consistent with the year-
end 1995 audited financial statements.
"Deferred Share" means any deferred share of IR Pounds1 each of the issued
share capital of Medford Holdings, having rights only to such dividends as are
declared thereon by the directors at the directors absolute discretion, no
voting rights, and no rights to participate in the distribution of the assets of
Medford Holdings in a winding up in excess of the par value thereof.
"Disclosure Schedule" has the meaning set forth in Section3 below.
"Employee Benefit Plan" means any benefit plan, retirement plan, employee
savings plan, death or disability benefit plan or other employee pension or
benefit arrangement.
"Environmental Law" means any national, international, or local statute,
law, ordinance, rule, regulation, order, consent, decree, judicial or
administrative decision or directive of applicable law now existing relating to
(A) pollution or protection of the environment, including natural resources,
(B) exposure of persons, including employees, to hazardous substances or other
products, materials or chemicals, or (C) protection of the public health or
welfare from the effects of products, by-products, waste, emissions, discharges
or releases of chemical or other substances from industrial or commercial
activities.
"Environmental Liabilities" means claims or liabilities based upon the
violation of Environmental Law arising from the operations of Medite Europe or
the contamination with Hazardous Materials of real properties owned or leased by
Medite Europe.
"Financial Statements" has the meaning set forth in Section4(g) below.
"GAAP" means generally accepted accounting principles as applied in a
consistent manner in accordance with Auditing Standards issued by the Auditing
Practices Board, as in effect at the time of preparation of any financial
statement or calculation of any amount, in the Republic of Ireland and applied
in accordance with the Companies Acts of Ireland, 1963 to 1990, and the European
Communities (Companies: Group Accounts) Regulations, 1992.
"Hazardous Materials" means any substance, whether liquid, solid or gas,
(i) listed, identified or designated as hazardous or toxic under any applicable
Environmental Law, (ii) which, applying criteria specified by any applicable
Environmental Law, is hazardous or toxic, or (iii) the use or disposal of which
is regulated under any applicable Environmental Law.
"Indemnified Party" has the meaning set forth in Section8(e) below.
"Indemnifying Party" has the meaning set forth in Section8(e) below.
"Industrial Development Authority" means the Industrial Development
Authority of the Republic of Ireland.
"Intellectual Property" means all patents, patent applications, registered
trademarks, trademark applications, brand names, trade names, technology,
production processes, and know-how owned by Medite (or any of its Subsidiaries)
and all license rights of Medite (or any of its Subsidiaries) in each such case
relating to the manufacture, use or sale of medium density fibreboard.
`Irish Mergers Act'' has the meaning set forth in Section3(a)(iii) below.
"Knowledge" means actual knowledge without independent investigation of the
referenced person or, if an entity, the executive officers of the referenced
entity or of any direct or indirect Subsidiary of the referenced entity.
"Letter Agreement" means the letter agreement of even date among the
Parties related to the share capital of Medford Holdings.
"License" has the meaning set forth in Section2(b) below
"Medford Holdings" has the meaning set forth in the preface above.
"Medite" has the meaning set forth in the preface above.
"Medite Europe" means Medite of Europe Limited, a company incorporated and
resident in Ireland with limited liability and a wholly owned Subsidiary of
Medford Holdings.
"Medite U.S. Sub" means Medite Timber Acquisitions Corporation, an Oregon
corporation and a wholly owned Subsidiary of Medite.
"MIH Group" means Medford Holdings, Medite Europe, and Sarasate.
"Most Recent Financial Statements" has the meaning set forth in
Section4(g) below.
"Most Recent Fiscal Quarter End" has the meaning set forth in Section4(g)
below.
"Ordinary Course of Business" means, with respect to any Person, the
ordinary course of such Person's business consistent with past custom and
practice (including, without limitation, with respect to quantity and
frequency).
"Ordinary Share" means any ordinary share of IR Pounds1 each of the share
capital of Medford Holdings.
"Party" has the meaning set forth in the preface above.
"Person" means an individual, a partnership, a company, a corporation, an
association, a limited liability company, an unlimited liability company, a
trust, a joint venture, an unincorporated organization, or a governmental entity
(or any department, agency, or political subdivision thereof).
"Redemption Price" has the meaning set forth in Section2(c) below.
"Restructuring" has the meaning set forth in Section10(a) below.
"Sarasate" means Sarasate, Limited, a company incorporated and resident in
Ireland with limited liability and a direct Subsidiary of Medford Holdings.
"Scheduled Closing Date" has the meaning set forth in Section2(d) below.
"Security Interest" means any mortgage, pledge, lien, encumbrance, charge,
or other security interest, other than (a) mechanic's, materialmen's, and
similar liens for amounts not past due, (b) liens for Taxes not yet due and
payable or for Taxes that the taxpayer is contesting in good faith through
appropriate proceedings, (c) purchase money liens and liens securing rental
payments under capital lease arrangements as set forth in the Disclosure
Schedule, and (d) other liens arising in the Ordinary Course of Business for
obligations which are not past due as to payment or performance and not incurred
in connection with the borrowing of money.
"Subsidiary" means any Person with respect to which a specified Person (or
a Subsidiary thereof) owns a majority of the common stock or other equity
interests, or has the power to vote or direct the voting of sufficient
securities to elect a majority of the directors or other persons performing
similar functions with respect to such entity.
"Tax" and "Taxes" includes all forms of governmental taxation, duties,
imposts, levies, and rates whatsoever and whether of Ireland or elsewhere
including income tax, corporation tax, corporation profits tax, advance
corporation tax, capital gains tax, capital acquisitions tax, residential
property tax, wealth tax, value added tax, customs and other import and export
duties, excise duties, stamp duty, capital duty, pay related social insurance
(PRSI), social welfare and social insurance contributions, payroll taxes, rates
and water rates, withholding tax, deposit interest retention tax, and any
penalty, charge, and interest included in or relating thereto whether incurred
as principal, agent, or trustee.
`Tax Return'' means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment.
"Third Party Claim" has the meaning set forth in Section8(e) below.
"Trust" means the revocable grantor trust established by Willamette by
instrument dated November 1, 1996.
"Valhi Guaranty" has the meaning set forth in Section7(a)(ix) below.
"Willamette" has the meaning set forth in the preface above.
2. Subscription and Redemption; Purchase and Sale of Intellectual
Property.
(a) Subscription and Redemption of Ordinary Shares. On the terms and
subject to the conditions of this Agreement and on the Closing Date:
(i) Subscription for Ordinary Shares. Willamette agrees to subscribe
for 4,625,047 Ordinary Shares and to cause Trust to subscribe for one Ordinary
Share for the consideration specified below in this Section2 on the Closing
Date. Medford Holdings shall accept the subscription upon receipt of the
consideration specified below and shall enter the names of Willamette and the
Trust in Medford Holdings' register of members as the owners, respectively, of
4,625,047 Ordinary Shares and one Ordinary Share. Medford Holdings agrees to
issue such shares to Willamette and Trust for such consideration.
(ii) Redemption of Issued Ordinary Shares. Medford Holdings agrees
to redeem 4,375,048 issued Ordinary Shares (constituting all of the issued
Ordinary Shares beneficially owned by Medite) held by Medite and Medite U.S.
Sub, and Medite agrees to accept and cause Medite U.S. Sub to accept such
redemptions, for the consideration specified below in this Section2. Medford
Holdings will issue to Medite and to Medite U.S. Sub a notice pursuant to
regulation 6 of the Articles of Association of Medford Holdings in relation to
the redemptions of the Ordinary Shares owned by Medite and Medite U.S. Sub in
accordance with the terms of this Agreement, which notice Medite will, and will
cause Medite U.S. Sub to, accept and acknowledge. Medford Holdings shall cause
the removal of the names of Medite and Medite U.S. Sub from Medford Holdings'
register of members in respect of the Ordinary Shares specified in the notice of
redemption.
(iii) Sequence of Subscription and Redemption Transactions;
Cancellation. At the Closing, the subscription transaction described in
Section2(a)(i) above shall immediately precede the redemption transaction
described in Section2(a)(ii) above. Medford Holdings agrees promptly to cancel
such redeemed shares.
(b) Purchase and Sale of Intellectual Property. On the terms and subject
to the conditions of this Agreement, at the Closing Willamette will purchase
from Medite and Medite will sell and transfer, or cause its Subsidiaries, other
than the members of MIH Group, to transfer to Willamette all Intellectual
Property owned by Medite and its Subsidiaries ((i) except to the extent owned by
the members of MIH Group; (ii) except for Medite's rights as licensee under the
Nonexclusive Patent License Agreement effective as of January 1, 1989, between
Celotex Corporation and Medite; and (iii) except for Medite's rights as licensee
under the License and Purchase Agreement dated August 25, 1983, between Medite
(formerly known as Medford Corporation) and AKA Industriprodukter AB), by
assignment in the form of Exhibit E attached hereto and incorporated herein by
this reference (the "Assignment"). The rights and interest of Willamette in the
Intellectual Property identified in the Assignment shall be subject to Medite's
contemporaneous reservation of rights of a license to use certain of such
Intellectual Property in form and substance acceptable to Medite and Willamette
(the "License"), which License shall be an exhibit to the Assignment.
Willamette will execute and deliver a counterpart of the Assignment and the
License to Medite.
(c) Subscription and Redemption and Intellectual Property Prices. The
subscription and redemption prices for the Ordinary Shares and the purchase
price for the Intellectual Property shall be as follows, and shall be paid at
the Closing by wire transfer or delivery of other immediately available funds:
(i) Subscription Price for Ordinary Shares. Willamette agrees to pay
to Medford Holdings US $53,500,000 for the Ordinary Shares issued to Willamette
and Trust.
(ii) Redemption Price for Issued Ordinary Shares. Willamette agrees
(and Medite agrees to cooperate) to cause Medford Holdings to pay to Medite
US$53,000,000, subject to adjustment as provided in Section2(f) (as adjusted,
the "Redemption Price") for the Ordinary Shares to be redeemed by Medford
Holdings from Medite and Medite U.S. Sub.
(iii) Purchase Price for the Intellectual Property. Willamette
agrees to pay to Medite U.S. $8,000,000 as the purchase price for the
Intellectual Property referred to in Section2(b) and as the consideration for
the Assignment.
(d) The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Medite in Dallas,
Texas, commencing at 9:00 a.m. local time on November 18, 1996, or such later
time and date as any Party may specify by notice to the other in order to obtain
the necessary governmental approvals under the Irish Mergers Act (such time and
date being hereinafter referred to as the "Scheduled Closing Date"); provided
that none of the Parties may extend the Scheduled Closing Date to a date later
than November 30, 1996.
(e) Deliveries at the Closing. At the Closing, (i) Medite will execute,
acknowledge (if appropriate), and deliver or cause to be delivered to Willamette
the various certificates, instruments, and documents referred to in Section7(a)
below, (ii) Willamette will deliver or cause to be delivered to Medite the
various certificates, instruments, and documents referred to in Section7(b)
below, (iii) Willamette will deliver to Medford Holdings or to its order the
consideration specified in Section2(c)(i) above, (iv) Medford Holdings will
deliver to Willamette share certificates registered in the names of Willamette
(for 4,625,047 Ordinary Shares) and Trust (for one Ordinary Share), (v) Medite
will deliver to Willamette, as agent for Medford Holdings, the share
certificates representing all the Ordinary Shares registered in the names of
Medite (for 4,375,047 Ordinary Shares) and Medite U.S. Sub (for one Ordinary
Share), (vi) Medford Holdings will deliver to Medite the consideration specified
in Section2(c)(ii) above, (vii) Medite will deliver to Willamette the
Assignment and the License, and (viii) Willamette will deliver to Medite a
counterpart of the Assignment and the License executed by Willamette and the
consideration specified in Section2(c)(iii) above.
(f) Adjustment to Redemption Price. As promptly as practicable, but no
later than 90 days following the Closing Date, Medite and Willamette shall
jointly prepare in accordance with GAAP financial statements of Medford
Holdings, Medite Europe, and Sarasate, including a consolidated balance sheet as
of the close of business in Clonmel, Ireland on the Closing Date (but before
giving effect to the transactions in Section2) which shall be audited by Arthur
Andersen Chartered Accountants (the "Closing Balance Sheet"). Promptly after
completion of the Closing Balance Sheet, Arthur Andersen Chartered Accountants
shall deliver to Willamette and Medite copies of the Closing Balance Sheet
together with their audit report. Within ten (10) days after receipt of the
Closing Balance Sheet, if the Consolidated Adjusted Net Worth as set forth in
the Closing Balance Sheet is less than U.S.$36,024,000, Medite shall make a cash
payment in immediately available funds to Medford Holdings in an amount equal to
the difference between U.S.$36,024,000 and the Consolidated Adjusted Net Worth
as set forth in the Closing Balance Sheet, plus interest on the amount of such
difference at the rate of eight percent (8%) per annum calculated from the
Closing Date through the date of such cash payment by Medite. Any payment
pursuant to the foregoing provisions shall be an adjustment (net of any interest
included in such payment) to the Redemption Price. If any Advance Corporation
Tax is accrued in the Closing Balance Sheet as a result of the Redemption of
Medite's Ordinary Shares, the amount of the net accrual shall be disregarded in
determining the Consolidated Adjusted Net Worth.
3. Representations and Warranties Concerning the Transaction.
(a) Representations and Warranties of Medite. Medite represents and
warrants to Willamette that the statements contained in this Section3(a) are
correct and complete as of the date of this Agreement and will be correct and
complete as of the Closing Date (as though made then and as though the Closing
Date were substituted for the date of this Agreement throughout this
Section3(a)), except as set forth in the disclosure schedule attached hereto as
Exhibit A and incorporated in this Agreement by this reference (the "Disclosure
Schedule").
(i) Organization of Medite. Medite is a corporation validly existing
and in good standing under the laws of Delaware.
(ii) Authorization of Transaction. Medite has the corporate power
and authority to execute and deliver this Agreement and to perform its
obligations under this Agreement, and the execution and delivery of this
Agreement has been approved by Medite's Board of Directors and its shareholder,
and no other approval is required by Medite's governing instruments. All
documents delivered by Medite to Willamette pursuant to Section5(g) of this
Agreement are true, correct and complete in all material respects. This
Agreement constitutes the valid and legally binding obligation of Medite,
enforceable in accordance with its terms and conditions.
(iii) Noncontravention. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions contemplated by this
Agreement, will (A) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which Medite is subject or any
provision of its certificate of incorporation or bylaws or (B) except for the
agreements listed in Section 3(b)(vi) of this Agreement, conflict with, result
in a breach of, constitute a default under, result in the acceleration of,
create in any party the right to accelerate, terminate, modify, or cancel, or
require any notice under any agreement, contract, lease, license, instrument, or
other arrangement to which Medite is a party or by which it is bound or to
which any of its assets is subject, including, without limitation, the grant
agreement dated December 31, 1993, by and among the Industrial Development
Authority, Medite Europe, and Medite, except where the violation, conflict,
breach, default, acceleration, termination, modification, cancellation, failure
to give notice, or Security Interest would not have a material adverse effect on
the ability of the Parties to consummate the transactions contemplated by this
Agreement. Other than as required by the Industrial Development Authority or
under the provisions of the Mergers, Take-overs and Monopolies (Control) Act,
1978 as amended (the `Irish Mergers Act''), Medite does not need to give any
notice to, make any filing with, or obtain any authorization, consent, or
approval of any government or governmental agency in order for the Parties to
consummate the transactions contemplated by this Agreement, except where the
failure to give notice, to file, or to obtain any authorization, consent, or
approval would not have a material adverse effect on the financial condition of
MIH Group taken as a whole or on the ability of the Parties to consummate the
transactions contemplated by this Agreement.
(iv) Brokers' Fees. Medite has no liability or obligation to pay any
fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which Willamette could become
liable or obligated.
(v) Share Capital of Medford Holdings. Medite is the registered and
beneficial owner of 4,375,047 Ordinary Shares and 250,000 Deferred Shares and
the beneficial owner of one Ordinary Share (of which Medite U.S. Sub is the
registered owner) which constitute all of the issued share capital of Medford
Holdings immediately before the Closing. Medite U.S. Sub is the registered
owner of one Ordinary Share upon trust and as nominee for Medite. The share
capital of Medford Holdings owned by Medite and Medite U.S. Sub is owned by them
free and clear of any restrictions on transfer (other than restrictions on
transfer imposed by the Irish Mergers Act or the declaration of trust for the
benefit of Medite), Taxes, Security Interests, options, warrants, purchase
rights, contracts, commitments, equities, claims, and demands. Except as
provided in this Agreement and in the Letter Agreement, Medite is not a party to
any option, warrant, purchase right, or other contract or commitment (other than
this Agreement and the Letter Agreement) that could require Medite to sell,
transfer, or otherwise dispose of any share capital of Medford Holdings. Medite
is not a party to any voting trust, proxy, or other agreement or understanding
with respect to the voting of any share capital of Medford Holdings that will
exist after the Closing.
(vi) No Obligations of Medford Holdings or Medite Europe. Except for
obligations existing among any members of MIH Group, this Agreement and the
Letter Agreement, no member of MIH Group is indebted to or contractually
obligated in any manner to Medite or any of its Affiliates. No member of MIH
Group has any obligation to defend or indemnify Medite or any of Medite's
Affiliates.
(b) Representations and Warranties of Willamette. Willamette represents
and warrants to Medite that the statements contained in this Section3(b) are
correct and complete as of the date of this Agreement and will be correct and
complete as of the Closing Date (as though made then and as though the Closing
Date were substituted for the date of this Agreement throughout this
Section3(b)), except as set forth in the Disclosure Schedule.
(i) Organization of Willamette. Willamette is a corporation validly
existing and in good standing under the laws of Oregon.
(ii) Authorization of Transaction. Willamette has the corporate
power and authority to execute and deliver this Agreement and to perform its
obligations hereunder and the execution and delivery of this Agreement has been
approved by the Executive Committee of Willamette's Board of Directors, which is
the only approval required by Willamette's governing instruments. All documents
delivered by Willamette to Medite pursuant to Section5(g) of this Agreement are
true, correct and complete in all material respects. This Agreement constitutes
the valid and legally binding obligation of Willamette, enforceable in
accordance with its terms and conditions.
(iii) Noncontravention. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions contemplated by this
Agreement, will (A) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which Willamette is subject or any
provision of its Articles of Incorporation or bylaws or (B) conflict with,
result in a breach of, constitute a default under, result in the acceleration
of, create in any party the right to accelerate, terminate, modify, or cancel,
or require any notice under any agreement, contract, lease, license, instrument,
or other arrangement to which Willamette is a party or by which it is bound or
to which any of its assets is subject. Other than in connection with the
provisions of the Irish Mergers Act, Willamette does not need to give any notice
to, make any filing with, or obtain any authorization, consent, or approval of
any government or governmental agency in order for the Parties to consummate the
transactions contemplated by this Agreement, except where the failure to give
notice, to file, or to obtain any authorization, consent, or approval would not
have a material adverse effect on the ability of the Parties to consummate the
transactions contemplated by this Agreement.
(iv) Brokers' Fees. Willamette has no liability or obligation to pay
any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which Medite could become liable
or obligated.
(v) Investment. Willamette and Trust are acquiring Ordinary Shares
for investment and not with a view to or for sale in connection with any
distribution thereof within the meaning of applicable United States securities
laws.
(vi) Indebtedness. Willamette acknowledges and agrees that the
liabilities of Medite Europe include, but are not limited to, the following
indebtedness obligations: Loan Agreement with the Bank of Ireland dated October
7, 1993, as amended by letter agreements dated August 9, 1995, and April 29,
1996; Finance Contract with the European Investment Bank and the Bank of Ireland
dated October 7, 1993 as amended by letter agreement dated March 10, 1995; and
Revolving Loan Facility with the Bank of Ireland dated April 13,1995, as amended
by letter agreement dated April 29, 1996.
4. Representations and Warranties Concerning MIH Group. Medite represents
and warrants to Willamette that the statements contained in this Section4 are
correct and complete as of the date of this Agreement and will be correct and
complete as of the Closing Date (as though made then and as though the Closing
Date were substituted for the date of this Agreement throughout this Section4),
except as set forth in the Disclosure Schedule.
(a) Organization, Qualification, and Corporate Power.
(i) Each member of MIH Group is a company duly organized and existing
under the laws of Ireland, having the authority to carry on its business as it
is now being carried on and to own and operate its properties, and Medite Europe
is duly authorized to conduct business in Holland and England. The certified
copies of the Memorandum of Association and the Articles of Association of each
member of MIH Group, which have been furnished to Willamette, are true and
complete and have embodied therein or annexed thereto a copy of every such
resolution or agreement as is referred to in Section 143 of the Companies Act,
1963 of Ireland and set out all rights attaching to each class of the share
capital of Medford Holdings, Medite Europe or Sarasate, as the case may be.
Each member of MIH Group has carried on its respective business in accordance
with its Memorandum of Association and its Articles of Association, except where
the failure to do so would not have a material adverse effect on the financial
condition of MIH Group taken as a whole. Except for filings to be made in
connection with the actions intended to be taken at the Closing, all returns,
particulars, resolutions and other documents required to be delivered on behalf
of any member of MIH Group to the Registrar of Companies pursuant to the
Companies Acts, 1963 to 1990, of Ireland and the European Community's
Regulations of 1973 have been properly made and delivered. Section4(a) of the
Disclosure Schedule lists the directors, executive officers and secretary of
each member of MIH Group.
(ii) Medford Holdings is the registered and beneficial owner of the
entire issued share capital of Medite Europe and Sarasate (which share capital
is registered in the Register of Members in the name of Medford Holdings) free
and clear of any restrictions on transfer (other than restrictions on transfer
imposed by the Irish Mergers Act), Taxes, Security Interests, options, warrants,
purchase rights, contracts, commitments, equities, claims, and demands. Medford
Holdings is not a party to any voting trust, proxy, or other agreement or
understanding with respect to the voting of any share capital of Medite Europe
or Sarasate that will exist after the Closing.
(b) Medford Holdings Capitalization. The entire authorized share capital
of Medford Holdings is IR Pounds10,000,000 divided into 9,750,000 Ordinary
Shares of which 4,375,048 have been issued and 250,000 Deferred Shares all of
which have been issued and are fully paid. None of the issued share capital of
Medford Holdings is held in treasury. All of the issued share capital of
Medford Holdings has been duly authorized, is validly issued and is fully paid.
Medite (as to 4,375,047 Ordinary Shares and 250,000 Deferred Shares) and Medite
U.S. Sub (as to one Ordinary Share) are the registered owners of such issued
share capital and Medite is the beneficial owner of such issued share capital.
Except as provided in this Agreement and the Letter Agreement, no person has the
right to call for the allotment, issue, sale, transfer or redemption of any
share capital of Medford Holdings under any option or other agreement (including
conversion rights and preemption). No shares in the capital of Medford Holdings
have been issued and no transfer(s) of shares in the capital of Medford Holdings
have been registered except in accordance with the Articles of Association of
Medford Holdings. Medford Holdings has not capitalized or agreed to capitalize
any profits or reserves or agreed to pass any resolution to do so.
(c) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated by this
Agreement, will (i) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which any member of MIH Group is
subject or any provision of the Memorandum of Association or Articles of
Association of any member of MIH Group or (ii) conflict with, result in a breach
of, constitute a default under, result in the acceleration of, create in any
party the right to accelerate, terminate, modify, or cancel, or require any
notice under any agreement, contract, lease, license, instrument, or other
arrangement to which any member of MIH Group is a party or by which any member
of MIH Group is bound or to which any of their respective assets is subject (or
result in the imposition of any Security Interest upon any of their respective
assets), except where the violation, conflict, breach, default, acceleration,
termination, modification, cancellation, failure to give notice, or Security
Interest would not have a material adverse effect on the financial condition of
MIH Group taken as a whole or on the ability of the Parties to consummate the
transactions contemplated by this Agreement. Other than in connection with the
provisions of the Irish Mergers Act or as required by the Industrial Development
Authority, no member of MIH Group needs to give any notice to, make any filing
with, or obtain any authorization, consent, or approval of any government or
governmental agency in order for the Parties to consummate the transactions
contemplated by this Agreement, except where the failure to give notice, to
file, or to obtain any authorization, consent, or approval would not have a
material adverse effect on the financial condition of MIH Group taken as a whole
or on the ability of the Parties to consummate the transactions contemplated by
this Agreement.
(d) Brokers' Fees. No member of MIH Group has any liability or obligation
to pay any fees or commissions to any broker, finder, or agent with respect to
the transactions contemplated by this Agreement.
(e) Title to Tangible Assets Other than Real Property. Each member of MIH
Group, respectively, has absolute ownership of, or (where a leasehold interest
has been disclosed on the Disclosure Schedule) a valid leasehold interest in,
the tangible assets (other than real property owned or leased by Medite Europe)
used in, or held for the purposes of its respective businesses. Such assets are
the absolute property of MIH Group except for the liens and other matters set
forth in Section4(e) of the Disclosure Schedule and except that certain of such
assets may be subject to claims or liens which are not, in the aggregate,
material.
(f) Medite Europe and Sarasate Capitalization. The entire authorized
share capital of Medite Europe is IR Pounds5,000,000 divided into 5,000,000
ordinary shares of IR Pounds1 each, of which 2,610,000 ordinary shares have been
issued and are fully paid and the entire authorized share capital of Sarasate is
IR Pounds10,000 divided into 10,000 ordinary shares of IR Pounds1 each, of which
two (2) shares have been issued and are fully paid. No Medite Europe shares or
Sarasate shares are held in treasury. All of the issued Medite Europe and
Sarasate shares have been duly authorized, are validly issued and are fully
paid. Medford Holdings is the registered and beneficial owner of all such
shares. No person has the right to call for the allotment, issue, sale or
transfer of any share capital of Medite Europe or Sarasate under any option or
other agreement (including conversion rights and preemption). No shares in the
capital of Medite Europe or Sarasate have been issued and no transfer(s) of
shares in the capital of Medite Europe or Sarasate have been registered except
in accordance with the Articles of Association of Medite Europe and Sarasate,
respectively. Neither Medite Europe nor Sarasate has capitalized or agreed to
capitalize any profits or reserves or agreed to pass any resolution to do so,
other than as set forth in the Financial Statements.
(g) Financial Statements. Attached hereto as Exhibit B are the following
financial statements (collectively the "Financial Statements"): (i) audited
balance sheets and statements of profit and loss account and cash flow as of and
for the fiscal years ended December 31, 1993, December 31, 1994, and December
31, 1995 for Medford Holdings on a consolidated basis and for Medite Europe; and
(ii) unaudited consolidated balance sheets and statements of profit and loss
account and cash flow (the "Most Recent Financial Statements") as of and for the
six months ended June 30 (the "Most Recent Fiscal Quarter End") for Medite
Europe. The Financial Statements (including the notes thereto) have been
prepared in accordance with GAAP applied on a consistent basis throughout the
periods covered thereby and present fairly the financial condition of MIH Group
as of such dates and the results of operations of MIH Group for such periods;
provided, however, that the Most Recent Financial Statements are subject to
normal year-end adjustments and lack footnotes and other presentation items. At
Closing, Medite shall deliver to Willamette an unaudited balance sheet of
Sarasate which balance sheet shall be true and complete in all material respects
as of the Closing Date.
(h) Events Subsequent to Most Recent Fiscal Quarter End. Since the Most
Recent Fiscal Quarter End, there has not been any material adverse change in the
business operations, earnings or financial condition of MIH Group taken as a
whole. Without limiting the generality of the foregoing, since that date no
member of MIH Group has engaged in any practice, taken any action, or entered
into any transaction outside the Ordinary Course of Business except the
Restructuring, the increase in the authorized share capital of Medford Holdings
to IR Pounds10,000,000 and the conversion of 250,000 Ordinary Shares issued to
Medite to 250,000 Deferred Shares.
(i) Legal Compliance. Each member of MIH Group has complied with all
applicable laws (including rules, regulations, codes, plans, injunctions,
judgments, orders, decrees, rulings, and charges thereunder) of all governmental
authorities having jurisdiction over it (and all agencies thereof), except where
the failure to comply would not have a material adverse effect upon the
financial condition of MIH Group taken as a whole. For purposes of the
indemnification provisions of Section8(b)(i), the foregoing representation
shall be deemed to include the following qualification at the beginning thereof:
"To the Knowledge of Medite,".
(j) Tax Matters.
(i) Each member of MIH Group has timely filed all Tax Returns that it
was required to file, and has paid all Taxes shown thereon as owing, except
where the failure to file Tax Returns or to pay Taxes would not have a material
adverse effect on the financial condition of MIH Group taken as a whole. To the
Knowledge of Medite, all such returns are complete and accurate in all material
respects and properly reflect the Taxes of Medford Holdings or any member of MIH
Group, as the case may be, for the periods covered thereby. For purposes of the
indemnification provisions of Section8(b)(i), the foregoing representation
shall be deemed not to include the qualification at the beginning thereof, i.e.,
"To the Knowledge of Medite,".
(ii) Section4(j) of the Disclosure Schedule lists all Tax Returns
filed with respect to any member of MIH Group for taxable periods ended on or
after December 31, 1989, indicates those Tax Returns that have been audited, and
indicates those Tax Returns that currently are the subject of audit. Medite has
delivered to Willamette correct and complete copies of all Irish income Tax
Returns, examination reports, and statements of deficiencies assessed against or
agreed to by any member of MIH Group since December 31, 1989.
(iii) No member of MIH Group has waived any statute of limitations in
respect of Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency.
(iv) No member of MIH Group is a party or subject to any income Tax
allocation or sharing agreement.
(k) Real Property.
(i) Medford Holdings and Sarasate do not own or lease from any other
Person any real property.
(ii) Section4(k)(ii) of the Disclosure Schedule lists all real
property that Medite Europe owns. With respect to each parcel of real property
owned by Medite Europe and listed in Section4(k)(ii) of the Disclosure
Schedule, to the Knowledge of Medite, the information provided by Medite Europe
to the issuer of the Certificates of Title was true, correct and complete in all
material respects. With respect to each such parcel of owned real property, and
except for matters set forth in the Certificates of Title and except for matters
which would not have a material adverse effect on the financial condition of MIH
Group taken as a whole,:
(A) Medite Europe has absolute ownership to the parcel of real
property, free and clear of any Security Interest, easement or covenant,
recorded easements, covenants, and other restrictions, and public utility
easements, building restrictions, zoning restrictions, and other easements and
restrictions generally applicable to properties of a similar character and
which, to the Knowledge of Medite, do not unreasonably interfere with the uses
to which the property has been put by Medite Europe;
(B) there are no leases, subleases, licenses, concessions, or
other agreements granting to any party or parties the right of use or occupancy
of any portion of the parcel of real property;
(C) there are no issued options or rights of first refusal to
purchase the parcel of real property, or any portion thereof or interest
therein; and
(iii) Section4(k)(iii) of the Disclosure Schedule lists all real
property leased or subleased to Medite Europe. Medite has delivered to
Willamette correct and complete copies of the leases and subleases listed in
Section4(k)(iii) of the Disclosure Schedule (as amended to date). To the
Knowledge of Medite, except for the real property covered by such leases and
subleases, Medite Europe does not occupy and is not dependent on the right to
use the real property of others. To the Knowledge of Medite, each lease and
sublease listed in Section4(k)(iii) of the Disclosure Schedule is legal, valid,
binding, enforceable in accordance with its terms, and in full force and effect,
except where the illegality, invalidity, non-binding nature, unenforceability,
or ineffectiveness would not have a material adverse effect on the financial
condition of Medford Holdings and Medite Europe taken as a whole.
(l) Intellectual Property. Section4(l) of the Disclosure Schedule
identifies each patent and trademark registration which has been issued to
Medite or any member of MIH Group, with respect to any of their respective
Intellectual Property, identifies each pending patent application and
application for trademark registration which Medite, or any member of MIH Group
has made with respect to any of its Intellectual Property, and, to the Knowledge
of Medite, identifies each material license, agreement, or other permission
which Medite or any member of MIH Group has granted to or received from any
third party with respect to any of its Intellectual Property. The
representations and warranties made with respect to certain Intellectual
Property in Section Section7 and 9 of the Assignment apply equally to
Intellectual Property held by any member of MIH Group and not transferred
pursuant to the Assignment.
(m) Contracts. Section4(m) of the Disclosure Schedule lists all written
contracts and other written agreements to which Medford Holdings or Medite
Europe is a party (i) the performance of which will involve consideration in
excess of IR Pounds75,000, (ii) which evidences any indebtedness of Medford
Holdings or Medite Europe for borrowed money, (iii) which provides for the
employment or compensation of an individual as a director, officer, or
managerial employee of Medford Holdings or Medite Europe, (iv) which grants a
power of attorney executed on behalf of Medford Holdings or Medite Europe, (v)
which constitutes a note, bond, debt security, or otherwise guarantees, incurs,
or assumes indebtedness for borrowed money or a capitalized lease obligation of
any Person, (vi) which (A) restricts Medite Europe from sales or distribution in
any market or to any class of customers or potential customers, (B) which
requires Medite Europe to purchase from specific vendors to the exclusion of
others or to sell to specific distributors to the exclusion of others, (C) which
expressly obligates Medite Europe to guaranty the debts or obligations of a
third party, (D) which expressly obligates Medite Europe to indemnify or defend
a third party, or (E) which limits the price or future prices which Medite
Europe may charge for its products. Section4(m) of the Disclosure Schedule
also lists all written contracts and other agreements to which Sarasate is a
party. To the Knowledge of Medite, no member of MIH Group has received any
written communications from any other party to the contracts required to be
disclosed under this Section4(m) which asserts a material breach to such
contract or which claims such contract is not valid or enforceable in some
material respect. Medite has delivered to Willamette a correct and complete
copy of each contract or other agreement (including all material amendments
thereto) listed in Section4(m) of the Disclosure Schedule (as amended to date).
(n) Litigation. To the Knowledge of Medite, Section4(n) of the
Disclosure Schedule sets forth each instance in which any member of MIH Group
(i) is subject to any outstanding injunction, judgment, order, decree, ruling,
or charge or (ii) is a party to any action, suit, proceeding, hearing, or
investigation of, in, or before any court or quasi-judicial or administrative
agency of any federal, state, local, or foreign jurisdiction.
(o) Employee Benefits.
(i) Section4(o) of the Disclosure Schedule lists each Employee
Benefit Plan that any member of MIH Group maintains or to which any member of
MIH Group contributes, or has contributed in the prior six years.
(ii) To the Knowledge of Medite, each such Employee Benefit Plan (and
each related trust, insurance contract, or fund) complies in form and in
operation with the applicable requirements of Irish and European laws, except
where the failure to comply would not have a material adverse effect on the
financial condition of MIH Group taken as a whole.
(iii) All contributions (including all employer contributions and
(where appropriate) employee salary reduction contributions) which are due have
been paid to each such Employee Benefit Plan.
(iv) Since December 31, 1995, contributions have been made consistent
with prior practice and no withdrawal or distribution of funds has been
made from any Employee Benefit Plan other than distributions to or in respect of
employee beneficiaries.
(p) Subsidiaries. Medite Europe and Sarasate have no Subsidiaries and
Medford Holdings has no Subsidiaries other than Medite Europe and Sarasate. No
member of MIH Group holds or has agreed to acquire any equity interest or any
share or loan capital in any other Person as a partner, joint venturer,
shareholder or otherwise. Neither Sarasate nor Medite Europe has been a direct
Subsidiary of any company other than Medford Holdings.
(q) Holding Company Status. Medford Holdings has (i) no assets other than
its share capital of Medite Europe, the share capital of Sarasate, a
subordinated loan to Medite Europe which is and at the Closing will be in the
principal amount of US $3,801,976, and (ii) no material liabilities other than
under agreements with its Affiliates (all of which will be terminated without
cost to any member of MIH Group at or prior to the Closing except this Agreement
and the Letter Agreement).
(r) No Default in Funded Debt. Medite Europe is in compliance in all
material respects with the terms and conditions of the indebtedness obligations
specified in Section 3(b)(vi).
(s) Environmental Matters. To the Knowledge of Medite, no member of MIH
Group has any Environmental Liabilities.
(t) Employment Agreements. The employment agreements attached as Exhibit
C are the only employment agreements in effect for management employees of
Medite Europe and are true, correct, and complete in all material respects.
Medford Holdings and Sarasate do not have any employment agreements with respect
to any person.
(u) Insurance. Details of all existing insurance policies maintained by
any member of MIH Group are set out in Section4(u) of the Disclosure Schedule.
All the policies are in full force and effect and are not voidable on account
of any act, omission or non-disclosure on the part of the insured party.
5. Pre-Closing Covenants. The Parties agree as follows with respect to
the period between the execution of this Agreement and the Closing.
(a) General. Each of the Parties will use its reasonable efforts to take
all action and to do all things necessary in order to consummate and make
effective the transactions contemplated by this Agreement (including
satisfaction, but not waiver, of the closing conditions set forth in Section7
below).
(b) Responsibility for Actions. Medite agrees to cause Medford Holdings
to perform the obligations to be performed by Medford Holdings under this
Agreement until the deliveries referred to in Section 2(e)(i) - (v) have been
made, and Willamette agrees to cause Medford Holdings to perform the obligations
to be performed by Medford Holdings under this Agreement after such deliveries
have been made.
(c) Notices and Consents. Medite will give any notices (and cause each of
its Subsidiaries to give any notices) to third parties, and will use its
reasonable efforts to obtain (and will cause each of its Subsidiaries to use its
reasonable efforts to obtain) any third party consents, required in connection
with the matters referred to in Section3(a)(iii) and Section4(c) above.
Willamette will give any notices to third parties and will use its reasonable
efforts to obtain any third party consents required in connection with the
matters referred to in Section 3(b)(iii).
(d) Operation of Business. Medite will not cause or permit any member of
MIH Group to engage in any practice, take any action, or enter into any
transaction outside the Ordinary Course of Business, except that MIH Group may
consummate the Restructuring. Medite will ensure that Sarasate is, and at all
times remains, solvent.
(e) Access. Medite will permit (and will cause each member of MIH Group
to permit) representatives of Willamette to have access at all reasonable times,
and in a manner so as not to interfere with the normal business operations of
each such member, to all premises, properties, personnel, books, records
(including tax records), contracts, and documents of or pertaining to each such
member as Willamette may reasonably request from time to time. Willamette
acknowledges and agrees that additional due diligence by Willamette is not a
condition to the Closing of the transactions contemplated by this Agreement.
Except for Confidential Information which becomes known through no fault of
Willamette, Willamette will treat and hold as such any Confidential Information
it receives from Medite, or any member of MIH Group in the course of the reviews
contemplated by this Section5(e), will keep secret and confidential and not use
any of the Confidential Information except in connection with this Agreement,
unless and only to the extent that disclosure (after making reasonable efforts
to avoid such disclosure and after advising and consulting with Medite about the
intention to make, and the proposed contents of, such disclosure) is, in the
opinion of Willamette's counsel, required by applicable law. If this Agreement
is terminated for any reason whatsoever, Willamette will return to Medite, all
tangible embodiments (and all copies) of the Confidential Information which are
in its possession, provided that if this Agreement is terminated because of a
breach by Medite, Willamette may retain the Confidential Information reasonably
required to prosecute any claim Willamette may have against Medite. Willamette
shall be responsible for any breach of this Section5(e) by any of its
directors, officers, employees or agents.
(f) Notice of Developments.
(i) Medite may elect at any time prior to Closing to provide
Willamette with written notice describing in reasonable detail any development
causing a breach of any of its representations and warranties in Section4
above. Unless Willamette has the right to terminate this Agreement pursuant to
Section9(a)(ii) below by reason of the development and exercises that right
within the period of ten (10) business days referred to in Section9(a)(ii)
below, the written notice pursuant to this Section5(f)(i) will be deemed to
have amended the Disclosure Schedule, to have qualified the representations and
warranties contained in Section4 above, and to have cured any misrepresentation
or breach of warranty that otherwise might have existed hereunder by reason of
the development.
(ii) Each Party will give prompt written notice to the other Parties,
describing in reasonable detail, any development causing a breach of any of its
own representations and warranties in Section3 above. No disclosure by any
Party pursuant to this Section5(f)(ii), however, shall be deemed to amend or
supplement the Disclosure Schedule or to prevent or cure any misrepresentation
or breach of warranty.
(g) Corporate Documentation and Authorization. Medite shall deliver to
Willamette (with respect to Medite and Valhi, Inc.), and Willamette shall
deliver to Medite (with respect to Willamette), the following corporate
documentation and authorizations: (i) copies of organizational documents
consisting of articles or certificates of incorporation, bylaws and such other
documents, including shareholder consents, as the receiving party may reasonably
request; (ii) copies of resolutions of the respective board(s) of directors (or,
in the case of Willamette, its Executive Committee) with respect to the
transactions contemplated by this Agreement together with an original
certificate issued by an appropriate officer with respect thereto; and (iii) an
incumbency certificate issued by an appropriate officer with respect to all
officers executing documents in connection with the transactions contemplated by
this Agreement.
(h) At Closing, Medite will cause Valhi, Inc. to execute and deliver to
Willamette a guaranty in the form of Exhibit D.
6. Post-Closing Covenants. Willamette and Medite agree as follows with
respect to the period following the Closing:
(a) General. In case at any time after the Closing any further action is
necessary to carry out the purposes of this Agreement, each of them will take
such further action (including the execution and delivery of such further
instruments and documents) as the other Party reasonably may request. The
requesting Party shall be responsible for the reasonable out-of-pocket costs and
expenses of the other Party (unless the requesting Party is entitled to
indemnification therefor under Section8 below).
(b) Litigation Support. In the event and for so long as any Party
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand in connection with
(i) any transaction contemplated under this Agreement or (ii) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or prior
to the Closing Date involving any member of MIH Group, the other Parties shall
cooperate with it and its counsel in the defense or contest, make available its
personnel, and provide such testimony and access to its books and records as
shall be necessary in connection with the defense or contest. The contesting or
defending Party shall be responsible for the reasonable out-of-pocket costs and
expenses of the other Parties (unless the contesting or defending Party is
entitled to indemnification therefor under Section8 below).
(c) Employee Benefits Matters. Willamette will cause Medite Europe to
continue in the manner and to the extent required by applicable law each of the
Employee Benefit Plans listed in Section4(o) of the Disclosure Schedule and
each trust, insurance contract, annuity contract, or other funding arrangement
that is established with respect thereto.
(d) Confidential Information. From and after the Closing, Medite agrees
that (i) Medite will treat as confidential any non-public, Confidential
Information concerning the businesses of MIH Group that is not already generally
known or becomes known through no fault of Medite; and (ii) Medite will not use
any non-public information for purposes of the manufacture and sale of medium
density fibreboard except as permitted by the License.
(e) Section 338 Election. Willamette will make an election under Section
338(g) of the Internal Revenue Code of 1986, as amended, with respect to the
transaction contemplated by this Agreement, and Willamette will provide promptly
any required notification of such election to Medite.
(f) Filings. Within the relevant period required by Irish law, each of
Willamette and Medford Holdings shall make all necessary returns and filings
with all governmental authorities required to be made by it in respect of the
Closing of the transactions contemplated by this Agreement.
(g) Medite Consent. At Willamette's request, Medite will consent to the
redemption proceeds not being treated as a distribution for the purposes of the
Irish Taxes Act, in accordance with Section 47 of the Irish Finance Act 1983.
(h) Section 299 Election. Willamette agrees that, if the Aggregation is
consummated, Willamette will cause the members of MIH Group to make and maintain
timely elections under Section 299 of the Income Tax Act 1967 (of Ireland), as
appropriate, after the Closing Date, to transfer the movable assets referred to
in Section10(a)(iv) at the sum referred in Section 299(4)(b)(ii), i.e., their
tax written down value for Irish capital allowance purposes. Willamette further
agrees that until such time as the Aggregation is consummated, Willamette will
maintain the appropriate group registration for VAT purposes for Sarasate and
Medite Europe and will maintain all members of MIH Group as Irish resident
companies.
(i) Acknowledgment. The parties acknowledge their obligation to minimize
any Adverse Consequences to the Indemnified Party with respect to the matters
covered by the indemnities in Section8.
7. Conditions to Obligation to Close.
(a) Conditions to Obligation of Willamette. The obligation of Willamette
to consummate the transactions to be performed by it in connection with the
Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in Section3(a) and
Section4 above shall be true and correct at and as of the Closing Date;
(ii) Each of Medite and Medford Holdings shall have performed and
complied with all of its covenants hereunder through the Closing;
(iii) there shall not be any injunction, judgment, order, decree,
ruling, or charge in effect and there shall not be any pending legal action (or
legal action expressly threatened in writing) by an Irish or United States
governmental authority which would prevent consummation of any of the
transactions contemplated by this Agreement, provided, however, that if there is
a pending legal action by a third party which could prevent consummation of any
of the transactions contemplated by this Agreement, either Willamette or Medite
may postpone the Closing for up to ten (10) days (except that with respect to a
pending legal action by a non-governmental party, or any affiliate of a non-
governmental party, to the Woodfab litigation for which the period of
postponement will be only two (2) days) and the parties agree to cooperate fully
to analyze and evaluate the claim raised by such action;
(iv) all applicable waiting periods (and any extensions thereof)
under the Irish Mergers Act shall have expired or otherwise been terminated and
the Parties and MIH Group shall have received all other authorizations,
consents, and approvals of governments, governmental agencies and third parties
referred to in Section4(c) above and Section3(a)(iii) and Section3(b)(iii) of
the Disclosure Schedule;
(v) Insofar as they are not in the custody of any member of MIH
Group, Medite shall have delivered or shall deliver effective at Closing all of
the financial and accounting books and records of MIH Group;
(vi) Simultaneously with completion of the Closing, Medite shall have
delivered or shall have caused to be delivered to Willamette's counsel in
Ireland, all the statutory books, minute books, and other record books (duly
written up to date) of MIH Group and the Memorandum of Association, Articles of
Association, common seals and Certificates of Incorporation for MIH Group;
(vii) Medite shall have delivered to Willamette the documentation
described in Section5(g) above and the balance sheet of Sarasate described in
Section4(g);
(viii) Medite shall have delivered to Willamette a certificate to the
effect that each of the conditions specified above in Section 7(a)(i)-(vii) is
satisfied.
(ix) Valhi shall have duly executed and delivered to Willamette the
Valhi Guaranty in the form of Exhibit D (the "Valhi Guaranty");
(x) Each of those existing directors and officers (including the
secretaries) of MIH Group identified in Section7(a)(x) of the Disclosure
Schedule shall have delivered, effective as of the redemption of Medite's
Ordinary Shares, a written resignation which includes an acknowledgment that he
or she is entitled to no unpaid compensation or severance pay in connection with
resignation as a director or secretary, and the persons specified by Willamette
shall have been appointed (effective at the redemption of Medite's Ordinary
Shares) as replacements;
(xi) With respect to each parcel of real property owned by Medite
Europe, Medite shall have delivered to Willamette a certificate or certificates
of title issued by A & L Goodbody and addressed to Willamette and satisfactory
to Willamette (collectively, the "Certificates of Title");
(xii) Medite shall have delivered to Medite Europe title to the
equipment covered by that certain Lease Agreement dated July 14, 1982 and
amended by agreement dated February 18, 1985, between Medite of Ireland Limited
n/k/a Medite Europe and the Governor and Company of the Bank of Ireland (at no
cost to Willamette or MIH Group) or an amendment and lease extension allowing
Medite Europe to continue to use such equipment at nominal cost, which amendment
shall be in form and substance satisfactory to Willamette;
(xiii) Medite shall have executed and delivered to Willamette a
counterpart of the License; and
(xiv) All actions to be taken by Medite or any member of the MIH Group
in connection with consummation of the transactions contemplated hereby and by
Section10 and all certificates, instruments, and other documents required to
effect the transactions contemplated hereby and by Section10 will be reasonably
satisfactory in form and substance to Willamette.
Willamette may waive any condition specified in this Section7(a) if it executes
a writing so stating at or prior to the Closing.
(b) Conditions to Obligation of Medite. The Parties agree that Medford
Holdings is obligated to proceed with the Closing if the conditions to the
obligation of Medite to proceed are satisfied or waived by Medite. The
obligation of Medite to consummate the transactions to be performed by it in
connection with the Closing is subject to satisfaction of the following
conditions:
(i) the representations and warranties set forth in Section3(b)
above shall be true and correct at and as of the Closing Date;
(ii) Willamette shall have performed and complied with all of its
covenants hereunder through the Closing;
(iii) there shall not be any injunction, judgment, order, decree,
ruling, or charge in effect and there shall not be any pending legal action (or
legal action expressly threatened in writing) by an Irish or United States
governmental authority which would prevent consummation of any of the
transactions contemplated by this Agreement, provided, however, that if there is
a pending legal action by a third party which could prevent consummation of any
of the transactions contemplated by this Agreement, either Willamette or Medite
may postpone the Closing for up to ten (10) days (except that with respect to a
pending legal action by a non-governmental party, or any affiliate of a non-
governmental party, to the Woodfab litigation for which the period of
postponement will be only two (2) days) and the parties agree to cooperate
fully to analyze and evaluate the claim raised by such action;
(iv) all applicable waiting periods (and any extensions thereof)
under the Irish Mergers Act shall have expired or otherwise been terminated and
the Parties and MIH Group, Medford Holdings, and Medite Europe shall have
received all other authorizations, consents, and approvals of governments,
governmental agencies and third parties referred to in Section4(c) above and
Section3(a)(iii) and Section3(b)(iii) of the Disclosure Schedule;
(v) Willamette shall have delivered to Medite the documentation
described in Section5(g) above and in paragraph 6 of the Letter Agreement;
(vi) Willamette shall have delivered to Medite a certificate to the
effect that each of the conditions specified above in Section7(b)(i)-(v) is
satisfied in all respects;
(vii) Willamette shall have executed and delivered to Medite a
counterpart of the License; and
(viii) all actions to be taken by Willamette in connection with
consummation of the transactions contemplated hereby and all certificates,
instruments, and other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in form and substance to
Medite.
Medite may waive any condition specified in this Section7(b) if it executes a
writing so stating at or prior to the Closing.
8. Remedies for Breaches of this Agreement.
(a) Survival of Representations and Warranties. All of the
representations and warranties of Willamette and Medite in this Agreement, the
Assignment and any certificate delivered pursuant to this Agreement shall
survive the Closing (unless the damaged Party had Knowledge of any breach of
such warranty or representation at the time of Closing) and continue in full
force (i) with respect to the representations of Medite in Section
Section4(a)(i), (c), (d), (e)(to the extent it relates to assets other than the
medium density fibreboard plant), (g) - (j), (k)(to the extent it relates to
real property other than Medite Europe's medium density fibreboard plant in
Ireland), and (l) - (u) of this Agreement, the Assignment and any certificate
delivered pursuant to this Agreement for a period of twenty-four (24) months
after the Closing at which time no further claims arising from a breach (or
alleged breach) of such representations and warranties may be presented, and
(ii) with respect to all other representations and warranties of Willamette and
Medite, subject to any applicable statutes of limitations under the laws of the
State of Delaware.
(b) Indemnification Provisions for Benefit of Willamette.
(i) Subject to the limitations contained in Section8(b)(ii), in the
event Medite breaches any of its representations in Section3 and Section4 of
this Agreement, in the Assignment, in any certificate delivered pursuant to this
Agreement or any of its covenants contained in Section6 above, Medite agrees to
indemnify, without duplication, Willamette and MIH Group from and against any
Adverse Consequences Willamette shall suffer caused proximately by the breach,
provided however, that the indemnity in this Subsection (i) shall not apply to
matters for which Willamette is indemnifying Medite as provided in this
Agreement or any claims arising after Medite's representations and warranties
expire. Solely for purposes of Medite's indemnification obligations under this
Subsection (i), any representation or warranty of Medite in Section3(a) and
Section4 which includes the term "material adverse effect" shall be construed as
if such term instead were "effect" without any additional qualification
including the phrase "taken as a whole."
(ii) Except with respect to (A) any breach of Section4(s) with
respect to Environmental Liabilities Known to Medite and not disclosed in this
Agreement, and (B) any breach of Medite's representations in Section
Section3(a)(v) and (vi), Section4(a)(ii), Section4(b) and Section4(f), (Y)
Medite's indemnification obligations to Willamette pursuant to this Section8(b)
shall not exceed U.S.$3,000,000 in the aggregate, and (Z) Willamette agrees that
it will not seek indemnification for any claim under this Section8(b) unless
such claim individually or together with related claims has a value greater than
U.S.$50,000. Medite shall have no liability for any breach of the
representations set forth in Section4(s) if, at the Closing, Medite had no
Knowledge of such breach.
(c) Indemnification Provisions for Benefit of Medite.
(i) In the event (i) Willamette breaches any of its representations
in Section3 of this Agreement or any certificate delivered pursuant to this
Agreement or any of its covenants contained in Section6 of this Agreement, or
(ii) Medford Holdings commences winding up proceedings within twelve months of
the Closing, Willamette agrees to indemnify Medite and Medite U.S. Sub from and
against any Adverse Consequences Medite or Medite U.S. Sub shall suffer caused
proximately by the breach and/or from and against any Adverse Consequences
Medite and/or Medite U.S. Sub shall suffer by virtue of Section 207 of the
Companies Act 1963 in connection with any winding up proceedings instituted in
respect of Medford Holdings within twelve months of the Closing. Medite and
Medite U.S. Sub each agree that it will not seek indemnification for any claim
unless such claim individually or together with related claims, including all
claims of both Medite and Medite U.S. Sub, has a value greater than US $50,000.
Solely for purposes of Willamette's indemnification obligations under this
Subsection (c), any representation or warranty of Willamette in Section3(b)
which includes the term "material adverse effect" shall be construed as if such
term instead were "effect" without any additional qualification.
(ii) Willamette agrees to defend and indemnify Medite from and
against and hold it harmless with respect to any Adverse Consequences incurred
as a result of, or which arise out of a claim that the redemption of its
Ordinary Shares is subject to any Irish capital duty, sales or use (VAT) taxes,
transfer tax, stamp duty or Advance Corporation Tax. Willamette agrees to
defend and indemnify Medite from and against and hold it harmless with respect
to any Adverse Consequences it may suffer by reason of its holding of Deferred
Shares from and after the consummation of the subscription by Willamette
described in Section2, other than income or gains taxes (excluding Irish stamp
duty or Advance Corporation Tax) on the redemption or sale of such shares.
(d) Matters Involving Restructuring and/or Aggregation. Medite will
indemnify Willamette (and, after Closing, MIH Group) from and against any
Adverse Consequences, incurred as a result of, or which arise out of, the
Restructuring (whether or not the Restructuring, once commenced, is concluded)
or the Aggregation, including net increased MIH Group income taxes resulting
from the sale and leaseback arrangement, it being understood that payments made
by a member of MIH Group to another member of MIH Group pursuant to the lease or
as principal on the intercompany loan described in Section10(a) do not
themselves constitute Adverse Consequences; provided however, that Willamette is
not entitled to indemnification for Adverse Consequences to the extent caused by
(i) Sarasate, after Closing, engaging in any business other than owning and
leasing to Medite Europe the movable assets described in Section10(a)(iv); (ii)
Sarasate acquiring any assets after Closing other than such movable assets, such
lease and intercompany accounts relating to the lease, or (iii) Sarasate
incurring any liabilities after Closing other than (A) its share capital; (B)
obligations to the Bank of Ireland secured by the assets of Sarasate at the
Closing; (C) obligations to any other creditors of Medite Europe, if any, who
have claims secured by the assets of Sarasate at the Closing; (D) claims arising
from the Restructuring or the Aggregation; (E) the intercompany loan described
in Section10(a)(iv); (F) obligations as lessor under the lease described in
Section10(a)(v); and (G) obligations directly arising from any the obligations
described in (A) - (F).
(e) Matters Involving Third Parties.
(i) If any third party shall notify any Party (the "Indemnified
Party") with respect to any matter (a "Third Party Claim") which may give rise
to a claim for indemnification against the other Party (the "Indemnifying
Party") under this Section8, then the Indemnified Party shall promptly (and in
any event within ten (10) business days after receiving notice of the Third
Party Claim) notify the Indemnifying Party thereof in writing. Any delay of
more than ten (10) business days by the Indemnified Party in notifying the
Indemnifying Party of a Third Party Claim shall not relieve the Indemnifying
Party from its obligations hereunder unless and to the extent the Indemnifying
Party is prejudiced by the delay.
(ii) The Indemnifying Party will have the right to assume and
thereafter conduct, at its own expense, the defense of the Third Party Claim
with counsel of its choice reasonably satisfactory to the Indemnified Party;
provided, however, that the Indemnifying Party will not consent to the entry of
any judgment or enter into any settlement with respect to the Third Party Claim
without the prior written consent of the Indemnified Party (not to be withheld
or delayed unreasonably) unless the judgment or proposed settlement involves
only the payment of money damages and does not impose an injunction or other
equitable relief upon the Indemnified Party and does not, in the reasonable
judgment of the board of directors of the Indemnified Party, establish a
precedent materially adverse to the Indemnified Party. The Indemnified Party
shall be entitled to employ separate counsel at its expense to participate in
the defense of the Third Party Claim.
(iii) In the event the Indemnifying Party does not assume the defense
of the Third Party Claim as provided in Section8(d)(ii), the Indemnified Party
may defend against the Third Party Claim in any manner it reasonably may deem
appropriate. and the Indemnifying Party shall, in addition to its other
obligations, reimburse the Indemnified Party monthly for the costs and expenses,
including reasonable attorney fees, incurred by the Indemnified Party in the
defense of the Third Party Claim.
(iv) In no event will the Indemnified Party consent to the entry of
any judgment or enter into any settlement with respect to the Third Party Claim
without the prior written consent of the Indemnifying Party (not to be withheld
or delayed unreasonably).
(f) Determination of Adverse Consequences. The Parties shall make
appropriate adjustments for tax benefits and insurance coverage and take into
account the time cost of money (using the Applicable Rate as the discount rate)
in determining Adverse Consequences for purposes of this Section8.
(g) Other Indemnification Provisions. The indemnification provisions in
this Section8 are the sole remedy any Party may have for breach of
representation, warranty, or covenant in this Agreement, the Assignment, the
Letter Agreement and any certificate delivered pursuant to this Agreement except
that (i) prior to the Closing, each Party shall be entitled to enforce specific
performance of the covenants set forth in Section2, 5 and 10, (ii) after the
Closing, each Party shall be entitled to enforce specific performance of the
covenants set forth in Section6, Section2(f), Section10(b) and Section11(k)
hereof, in the Assignment and in the Letter Agreement, and (iv) Medite shall be
entitled to exercise all of its remedies with respect to the Letter of Credit
provided pursuant to the Letter Agreement.
9. Termination.
(a) Termination of Agreement. Willamette and Medite may terminate this
Agreement as provided below:
(i) Willamette and Medite may terminate this Agreement by mutual
written consent at any time prior to the Closing;
(ii) if Medite has, within the then previous ten (10) business days
given to Willamette any notice of a development that is the subject of any
notice pursuant to Section5(f)(i) above and the development that is (A) the
subject of the notice has a material adverse effect upon the financial condition
of MIH Group taken as a whole or (B) a breach of the fourth or fifth sentences
of either Section4(b) or Section4(f). Willamette may either waive the breach
(and the Disclosure Schedule shall be deemed modified accordingly) or terminate
this Agreement in accordance with Section 9(a)(iii)(A), at Willamette's sole
option;
(iii) Willamette may terminate this Agreement by giving written
notice to Medite at any time prior to the Closing (A) in the event Medite has
breached any representation, warranty, or covenant contained in this Agreement
(except to the extent that the representations and warranties have been amended
pursuant to Section9(a)(ii) above) in any material respect, Willamette has
notified Medite of the breach, and the breach is not cured prior to the Closing,
(B) if the Closing shall not have occurred on or before the Scheduled Closing
Date, by reason of the failure of any condition precedent under Section7(a)
hereof (unless the failure results primarily from Willamette itself breaching
any representation, warranty, or covenant contained in this Agreement), or (C)
in the event Willamette obtains Knowledge of any material breach of the
representations and warranties of Medite set forth in Section 4(s); and
(iv) Medite may terminate this Agreement by giving written notice to
Willamette at any time prior to the Closing (A) in the event Willamette has
breached any representation, warranty, or covenant contained in this Agreement
in any material respect, Medite has notified Willamette of the breach, and the
breach is not cured prior to the Closing, or (B) if the Closing shall not have
occurred on or before the Scheduled Closing Date, by reason of the failure of
any condition precedent under Section7(b) hereof (unless the failure results
primarily from Medite itself breaching any representation, warranty, or covenant
contained in this Agreement).
(b) Effect of Termination. If any Party terminates this Agreement
pursuant to Section9(a) above, all rights and obligations of the Parties
hereunder shall terminate without any liability of any Party to any other Party
(except for any liability of any Party then in breach); provided, however, that
the confidentiality provisions contained in Section5(e) above shall survive
termination.
10. Restructuring.
(a) Restructuring of MIH Group. Prior to Closing, MIH Group may enter
into the following transactions which must be in the order set forth below
(collectively referred to as the "Restructuring"), provided that (A) if step
(iv) is entered into then step (v) must be completed, and (B) Willamette shall
not be required to provide any guaranty, consent, or approval or to incur any
expense in connection with the Restructuring other than as set forth below:
(i) Sarasate and Medite Europe shall apply for group registration for
VAT purposes;
(ii) Sarasate and Medite Europe shall obtain evidence from the
appropriate Irish tax authority that the group VAT registration is proper (which
evidence shall be reasonably satisfactory to Willamette);
(iii) Medite Europe may, to the extent authorized by its governing
instruments, sell, assign and transfer to Sarasate the movable assets
(consisting of the machinery and equipment set forth in Section10(a)(iv) of the
Disclosure Schedule, but not including any real property or buildings) at net
book value in exchange for a non-interest bearing intercompany loan from
Sarasate in the principal amount of such net book value (which loan shall be
reasonably satisfactory to Willamette); and
(iv) Sarasate may lease back to Medite Europe all of the assets
transferred pursuant to Section10(a)(iv) above (which lease shall be reasonably
satisfactory to Willamette).
(b) Tax Elections.
Willamette agrees that, if the Restructuring has been consummated,
Willamette will cause the members of MIH Group to make and maintain timely
elections under Section 299 of the Income Tax Act 1967, as appropriate, after
the Closing Date, to transfer the movable assets referred to in
Section10(a)(iv) at the sum referred in Section 299(4)(b)(ii), i.e., their tax
written down value for Irish capital allowance purposes.
11. Miscellaneous.
(a) Press Releases and Public Announcements. Neither Willamette nor
Medite shall issue, or shall permit any of their respective Affiliates to issue
any press release or make any public announcement relating to the subject matter
of this Agreement after the date of this Agreement and prior to the Closing
without the prior written approval of the other; provided, however, that any
Party or any Affiliate of such Party may make any public disclosure it believes
in good faith is required by applicable law or any listing or trading agreement
concerning its publicly-traded securities (in which case the Party which
intends, or which has an Affiliate that intends, to issue such press release or
make such public announcement will advise the other Party prior to making the
disclosure and provide the other Party opportunity to comment upon the release
or announcement).
(b) No Third Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
(c) Entire Agreement. This Agreement (including the Letter Agreement and
the other documents referred to herein) constitutes the entire agreement between
the Parties and supersedes any prior understandings, agreements, or
representations by or between the Parties, written or oral, to the extent they
related in any way to the subject matter hereof.
(d) Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of its
rights, interests, or obligations hereunder (other than to an Affiliate) without
the prior written approval of the other Party. No such assignment shall relieve
the assigning party from any of its obligations under this Agreement.
(e) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(f) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(g) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given if (and then
four business days after) it is sent by expedited courier (such as Federal
Express or DHL Worldwide Express) which guarantees delivery to the intended
recipient within three business days, addressed to the intended recipient as set
forth below:
If to Medite: Medite Corporation
Three Lincoln Centre, Suite 1700
5430 LBJ Freeway
Dallas, TX 75240-2697
Attention: President
Tel: 972-233-1700
Fax: 972-239-0142
Copy to: James L. Palenchar
Bartlit Beck Herman Palenchar & Scott
511 16th Street, Suite 500
Denver, Colorado 80202
Tel: 303-592-3100
Fax: 303-592-3140
If to Willamette: Willamette Industries, Inc.
1300 S.W. Fifth Avenue, Suite 3800
Portland, Oregon 97201
Tel: 503-227-5581
Fax: 503-273-5604
Copy to: J. Franklin Cable
Miller, Nash, Wiener, Hager & Carlsen LLP
111 S. W. 5th Avenue
Portland, OR 97204
Tel: 503-224-5858
Fax: 503-224-0155
If to Medford Holdings: Medford International Holdings
(prior to closing) c/o David Sanfey
A & L Goodbody, Solicitors
1 Earlsfort Centre
Hatch Street
Dublin 2, Ireland
Tel: 353-1-661-3311
Fax: 353-1-661-3278
If to Medford Holdings: Medford International Holdings
(subsequent to closing) c/o Gerard Coll
Eugene F. Collins, Solicitors
61 Fitzwilliam Square
Dublin 2, Ireland
Tel: 353-1-676-1924
Fax: 353-1-661-8906
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Party
notice in the manner herein set forth.
(h) Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Delaware without giving effect
to any choice or conflict of law provision or rule (whether of the State of
Delaware or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Delaware.
(i) Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by each
Party. No waiver by any Party of any default, misrepresentation, or breach of
warranty or covenant hereunder, whether intentional or not, shall be deemed to
extend to any prior or subsequent default, misrepresentation, or breach of
warranty or covenant hereunder or affect in any way any rights arising by virtue
of any such prior or subsequent occurrence.
(j) Severability. Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(k) Expenses. Each of Willamette and Medite will bear its own costs and
expenses (including legal fees and expenses) incurred in connection with this
Agreement and the transactions contemplated hereby. Medite will bear the costs
and expenses of Medford Holdings (including legal fees and expenses) and will
bear the costs and expenses of the Restructuring, provided that if any such
costs are capitalized as an asset in the Closing Balance Sheet, it shall be
disregarded in the calculation of the Consolidated Adjusted Net Worth.
Notwithstanding the foregoing sentence, Willamette shall bear the costs of any
and all transfer taxes, including without limitation any capital duty, Advance
Corporation Tax or stamp taxes, associated with the subscription for the
ordinary shares and redemption of Ordinary Shares and Deferred Shares, and
Medite shall bear the costs of the audit referred to in Section2(f).
(l) Construction. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the Parties and no presumption or burden of proof shall arise favoring or
disfavoring any Party by virtue of the authorship of any of the provisions of
this Agreement. Any reference to any federal, state, local, or foreign statute
or law shall be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise. The word "including" shall
mean including without limitation. Medite has made no representations or
warranties other than those expressly made in this Agreement, the officer's
certificates delivered pursuant to Section5(g) and Section2(e), and in
Section Section7 and 9 of the Assignment. Medford Holdings has not made any
representations and warranties.
(m) Incorporation of Disclosure Schedule. The Disclosure Schedule
identified in this Agreement is incorporated herein by reference and made a part
hereof.
* * * * *
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the date first above written.
WILLAMETTE INDUSTRIES, INC., an Oregon corporation
By:
--------------------------
Title:
------------------------
MEDITE CORPORATION, a Delaware corporation
By:
--------------------------
Title:
-------------------------
MEDFORD INTERNATIONAL HOLDINGS, a company
incorporated in Ireland with unlimited liability
By:
--------------------------
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM VALCOR INC'S
CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996,
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH CONSOLIDATED FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 16,687
<SECURITIES> 0
<RECEIVABLES> 31,994
<ALLOWANCES> 1,309
<INVENTORY> 33,920
<CURRENT-ASSETS> 93,736
<PP&E> 245,318
<DEPRECIATION> 107,785
<TOTAL-ASSETS> 310,304
<CURRENT-LIABILITIES> 72,124
<BONDS> 171,361
0
0
<COMMON> 1
<OTHER-SE> 39,920
<TOTAL-LIABILITY-AND-EQUITY> 310,304
<SALES> 150,617
<TOTAL-REVENUES> 150,617
<CGS> 118,718
<TOTAL-COSTS> 118,718
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 275
<INTEREST-EXPENSE> 8,948
<INCOME-PRETAX> 12,110
<INCOME-TAX> 5,303
<INCOME-CONTINUING> 6,807
<DISCONTINUED> (10,674)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,867)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM VALCOR,
INC.'S CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIODS NOTED BELOW AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH CONSOLIDATED FINANCIAL
STATEMENTS. SUCH SUMMARY FINANCIAL INFORMATION HAS BEEN RECLASSIFIED TO PRESENT
THE RESULTS OF OPERATIONS OF MEDITE CORPORATION AS DISCONTINUED OPERATIONS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1996
<PERIOD-START> JAN-01-1996 JAN-01-1996
<PERIOD-END> MAR-31-1996 JUN-30-1996
<CASH> 21,379 19,242
<SECURITIES> 0 0
<RECEIVABLES> 32,932 32,837
<ALLOWANCES> 1,391 1,287
<INVENTORY> 32,033 31,024
<CURRENT-ASSETS> 96,991 93,060
<PP&E> 265,400 270,876
<DEPRECIATION> 125,770 129,515
<TOTAL-ASSETS> 316,001 314,597
<CURRENT-LIABILITIES> 64,156 70,516
<BONDS> 196,331 184,634
0 0
0 0
<COMMON> 1 1
<OTHER-SE> 30,644 35,245
<TOTAL-LIABILITY-AND-EQUITY> 316,001 314,597
<SALES> 48,763 99,802
<TOTAL-REVENUES> 48,763 99,802
<CGS> 38,945 78,902
<TOTAL-COSTS> 38,945 78,902
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 128 224
<INTEREST-EXPENSE> 3,016 6,003
<INCOME-PRETAX> 3,051 7,418
<INCOME-TAX> 1,335 3,280
<INCOME-CONTINUING> 1,716 4,138
<DISCONTINUED> (14,884) (12,734)
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (13,168) (8,596)
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM VALCOR,
INC.'S CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIODS NOTED BELOW AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH CONSOLIDATED FINANCIAL
STATEMENTS. SUCH SUMMARY FINANCIAL INFORMATION HAS BEEN RECLASSIFIED TO PRESENT
THE RESULTS OF OPERATIONS OF MEDITE CORPORATION AS DISCONTINUED OPERATIONS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS 9-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1995 DEC-31-1995 DEC-31-1995
<PERIOD-START> JAN-01-1995 JAN-01-1995 JAN-01-1995 JAN-01-1995
<PERIOD-END> MAR-31-1995 JUN-30-1995 SEP-30-1995 DEC-31-1995
<CASH> 18,594 22,812 11,916 17,618
<SECURITIES> 0 0 0 0
<RECEIVABLES> 34,820 29,074 34,677 31,614
<ALLOWANCES> 572 718 799 800
<INVENTORY> 28,418 34,920 39,225 36,385
<CURRENT-ASSETS> 88,321 96,397 99,040 94,004
<PP&E> 248,455 249,838 259,302 264,930
<DEPRECIATION> 100,884 104,958 108,401 111,216
<TOTAL-ASSETS> 320,390 325,592 332,900 327,592
<CURRENT-LIABILITIES> 56,487 64,190 66,804 56,078
<BONDS> 194,743 189,037 190,266 198,584
0 0 0 0
0 0 0 0
<COMMON> 1 1 1 1
<OTHER-SE> 39,413 42,287 44,790 44,223
<TOTAL-LIABILITY-AND-EQUITY> 320,390 325,592 332,900 327,592
<SALES> 46,926 94,970 143,877 195,608
<TOTAL-REVENUES> 46,926 94,970 143,877 195,608
<CGS> 36,821 74,197 113,236 153,755
<TOTAL-COSTS> 36,821 74,197 113,236 153,755
<OTHER-EXPENSES> 0 0 0 0
<LOSS-PROVISION> 83 189 284 313
<INTEREST-EXPENSE> 2,875 5,824 8,793 11,802
<INCOME-PRETAX> 2,955 7,196 10,729 15,355
<INCOME-TAX> 1,159 2,908 4,376 6,416
<INCOME-CONTINUING> 1,796 4,288 6,353 8,939
<DISCONTINUED> 4,957 9,195 10,713 10,607
<EXTRAORDINARY> 0 0 0 0
<CHANGES> 0 0 0 0
<NET-INCOME> 6,753 13,483 17,066 19,546
<EPS-PRIMARY> 0 0 0 0
<EPS-DILUTED> 0 0 0 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM VALCOR,
INC.'S CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIODS NOTED BELOW AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH CONSOLIDATED FINANCIAL
STATEMENTS. SUCH SUMMARY FINANCIAL INFORMATION HAS BEEN RECLASSIFIED TO PRESENT
THE RESULTS OF OPERATIONS OF MEDITE CORPORATION AS DISCONTINUED OPERATIONS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 9-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1994 DEC-31-1994
<PERIOD-START> JAN-01-1994 JAN-01-1994
<PERIOD-END> SEP-30-1994 DEC-31-1994
<CASH> 13,980 23,256
<SECURITIES> 0 0
<RECEIVABLES> 28,595 27,354
<ALLOWANCES> 641 570
<INVENTORY> 28,936 31,016
<CURRENT-ASSETS> 77,718 90,593
<PP&E> 236,130 243,322
<DEPRECIATION> 94,653 97,483
<TOTAL-ASSETS> 304,225 320,695
<CURRENT-LIABILITIES> 59,938 54,762
<BONDS> 185,105 201,796
0 0
0 0
<COMMON> 1 1
<OTHER-SE> 30,308 34,849
<TOTAL-LIABILITY-AND-EQUITY> 304,225 320,695
<SALES> 135,010 185,522
<TOTAL-REVENUES> 135,010 185,522
<CGS> 104,451 142,807
<TOTAL-COSTS> 104,451 142,807
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 175 184
<INTEREST-EXPENSE> 8,311 11,124
<INCOME-PRETAX> 12,491 18,711
<INCOME-TAX> 4,398 5,960
<INCOME-CONTINUING> 8,093 12,751
<DISCONTINUED> 14,237 18,347
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 22,330 31,098
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
</TABLE>
