<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) FEBRUARY 9, 1999
-------------------------------
TRANSMATION, INC.
- -------------------------------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
OHIO 0-3905 16-0874418
- -------------------------------------------------------------------------------
(STATE OR OTHER JURISDICTION (COMMISSION (IRS EMPLOYER
OF INCORPORATION) FILE NUMBER) IDENTIFICATION NO.)
10 VANTAGE POINT DRIVE, ROCHESTER, NEW YORK 14624
- -------------------------------------------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code (716) 352-7777
-----------------------------
- -------------------------------------------------------------------------------
(Former Name Or Former Address, If Changed Since Last Report)
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On February 9, 1999, the Registrant acquired all of the outstanding
shares of the capital stock of Metermaster Inc., a Georgia corporation
("Metermaster"), by merging MM Acquisition Corp., a New York corporation and
wholly-owned subsidiary of the Registrant ("Acquisition Sub"), into Metermaster.
The acquisition was made pursuant to an Agreement and Plan of Merger, dated
January 21, 1999 and amended and restated February 4, 1999, among the
Registrant, Metermaster, Acquisition Sub and certain shareholders of Metermaster
(the "Purchase Agreement").
The consideration for the acquisition was negotiated at arms length and
consisted of: (a) cash in the amount of approximately $1,800,000, and (b) the
Registrant paying off Metermaster's long-term debt totalling approximately
$3,100,000. The cash portion of the purchase price is subject to post-closing
adjustment based on an audited balance sheet as of the closing date of the
acquisition.
The source of the cash payments made at closing, together with payment
of other costs and expenses of the transaction and working capital needs, was
financing provided by an increase in the Registrant's existing $31,000,000
credit facility with KeyBank National Association and certain other parties (the
"Facility") by $5,000,000 pursuant to a Second Amendment to Credit and Loan
Agreement, dated as of February 9, 1999, among the Registrant, KeyBank National
Association and certain other parties (the "Credit Agreement Amendment"). In
connection with the acquisition and the Credit Agreement Amendment, the lenders
were given security interests in all of the assets of Metermaster.
Prior to the acquisition, Metermaster's assets were used in the value
added meter modification, test and measurement equipment distribution and repair
business. The Registrant intends to continue such use.
The foregoing information contained in this Form 8-K with respect to the
acquisition and the financing thereof is qualified in its entirety by reference
to the complete text of the Purchase Agreement, the Credit Agreement Amendment
and the Facility, copies of which are filed herewith or incorporated by
reference to previously filed Exhibits.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS.
(A) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
At the time of filing this Report, it is impracticable to provide
the required financial statements of the acquired business. The required
financial statements will be filed by the Registrant, under cover of Form 8-K/A,
as soon as practicable, but not later than April 12, 1999.
(B) PRO FORMA FINANCIAL INFORMATION.
2
<PAGE> 3
At the time of filing this Report, it is impracticable to provide
the required pro forma financial information. The required pro forma financial
information will be filed by the Registrant, under cover of Form 8-K/A, as soon
as practicable, but not later than April 12, 1999.
(C) EXHIBITS.
See Index to Exhibits.
3
<PAGE> 4
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 hereunto duly authorized.
TRANSMATION, INC.
February 10, 1999 By: /s/ Eric W. McInroy
-------------------
Eric W. McInroy
President
February 10, 1999 By: /s/ John A. Misiaszek
---------------------
John A. Misiaszek
Vice President-Finance
4
<PAGE> 5
INDEX TO EXHIBITS
(1) Underwriting Agreement
Not applicable.
(2) Plan of acquisition, reorganization, arrangement, liquidation or succession
* (a) Agreement and Plan of Merger dated January 21, 1999 and
amended and restated February 4, 1999 among the Registrant,
Metermaster Inc., MM Acquisition Corp., and certain other
parties, together with a brief identification of the contents of
all omitted exhibits and schedules thereto, is included herein as
Exhibit 2(a). Upon written request, the Registrant will provide
to security holders copies of any of the referenced omitted
exhibits and schedules.
(4) Instruments defining the rights of security holders, including indentures
(a) Credit and Loan Agreement dated August 7, 1998 between the
Registrant and KeyBank National Association is incorporated
herein by reference to Exhibit 4(a) to the Registrant's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1998.
* (b) Second Amendment to Credit and Loan Agreement, dated as of
February 9, 1999, by and among the Registrant, KeyBank National
Association and the Lenders Party Thereto From Time to Time,
together with a brief identification of the contents of all
omitted exhibits thereto, is included herein as Exhibit 4(b).
Upon written request, the Registrant will provide to security
holders copies of any of the referenced omitted exhibits.
(16) Letter re change in certifying accountant
Not applicable.
(17) Letter re director resignation
Not applicable.
(20) Other documents or statements to security holders
Not applicable.
(23) Consents of experts and counsel
Not Applicable.
5
<PAGE> 6
(24) Power of attorney
Not applicable.
(27) Financial Data Schedule
Not Applicable.
(99) Additional Exhibits
Not applicable.
- -----------------
* EXHIBIT FILED WITH THIS REPORT.
6
<PAGE> 1
EXHIBIT 2 (a)
AGREEMENT AND PLAN OF MERGER
DATED JANUARY 21, 1999
AND AMENDED AND RESTATED FEBRUARY 4, 1999
AMONG
TRANSMATION, INC.
MM ACQUISITION CORP.
AND
METERMASTER INC.
AND CERTAIN OF ITS SHAREHOLDERS
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
ARTICLE 1. DEFINITIONS............................................................. 1
1.1 Certain Definitions............................................... 1
1.2 Accounting Terms.................................................. 5
1.3 Other Definitional Provisions..................................... 5
1.4 Schedules and Other Instruments................................... 5
ARTICLE 2. MERGER CONSIDERATION.................................................... 5
2.1 Merger Consideration.............................................. 5
2.2 Estimated Payment at Closing...................................... 5
2.3 Post-Closing Determination........................................ 6
ARTICLE 3. THE MERGER AND ITS EFFECT............................................... 8
3.1 Closing........................................................... 8
3.2 Effective Time of the Merger...................................... 8
3.3 Effects of the Merger............................................. 9
3.4 Effect of Merger on Capital Stock................................. 9
3.5 Conditions on Rights to Merger Consideration...................... 11
ARTICLE 4. METERMASTER'S REPRESENTATIONS AND WARRANTIES............................ 11
4.1 Organization, Standing and Power.................................. 11
4.2 Capital Structure................................................. 11
4.3 Authority; Binding Obligations.................................... 12
4.4 No Conflict....................................................... 12
4.5 Financial Statements.............................................. 12
4.6 No Undisclosed Liabilities........................................ 13
4.7 Absence of Certain Changes........................................ 13
4.8 Title to Assets, Etc.............................................. 14
4.9 Compliance with Legal Requirements................................ 14
4.10 Tangible Property................................................. 14
4.11 Inventories....................................................... 15
4.12 Accounts Receivable............................................... 15
4.13 Intellectual Property............................................. 15
4.14 Contracts and Backlog............................................. 16
4.15 Legal Proceedings, Etc............................................ 16
4.16 Employment Matters................................................ 17
4.17 Employee Plans.................................................... 18
4.18 Environmental Matters............................................. 20
4.19 Taxes............................................................. 21
4.20 Related Party Transactions........................................ 21
4.21 Product and Service Warranties.................................... 21
4.22 Other Assets...................................................... 22
4.23 Metermaster Indebtedness.......................................... 22
4.24 [Intentionally Omitted]........................................... 22
4.25 Engineered Systems Division....................................... 22
</TABLE>
(i)
<PAGE> 3
<TABLE>
<S> <C> <C>
4.26 Vote Required..................................................... 22
4.27 Brokers' and Finders' Fees........................................ 22
4.28 Certain Due Diligence Matters..................................... 22
4.29 Material Misstatements or Omissions............................... 23
ARTICLE 5. TRANSMATION'S REPRESENTATIONS AND WARRANTIES............................ 23
5.1 Organization, Standing and Power.................................. 23
5.2 Authority; Binding Obligations.................................... 23
5.3 No Conflict....................................................... 23
5.4 Legal Proceedings, Etc............................................ 23
5.5 Brokers and Finders............................................... 24
5.6 Material Misstatements or Omissions............................... 24
ARTICLE 6. METERMASTER'S COVENANTS................................................. 24
6.1 Ordinary Course................................................... 24
6.2 Dividends; Changes in Stock....................................... 25
6.3 Issuance of Securities............................................ 25
6.4 Governing Documents............................................... 25
6.5 Spin-Off.......................................................... 26
6.6 Termination or Assignment of Certain Contracts.................... 26
6.7 Certain Employee-Related Matters.................................. 26
6.8 Advice of Changes................................................. 26
6.9 Access............................................................ 27
6.10 Exclusivity....................................................... 27
6.11 Shareholders' Approval............................................ 27
6.12 Notices to and Consents of Third Parties.......................... 27
ARTICLE 7. PARTY SHAREHOLDERS' COVENANTS........................................... 28
7.1 Voting on the Merger.............................................. 28
7.2 Current Financial Statements; Auditors' Consents.................. 28
7.3 Non-Disclosure.................................................... 28
7.4 Non-Competition................................................... 28
ARTICLE 8. TRANSMATION'S COVENANTS................................................. 29
8.1 Notices to and Consents of Third Parties.......................... 29
8.2 Due Diligence..................................................... 29
ARTICLE 9. INDEMNIFICATION......................................................... 29
9.1 Indemnification................................................... 29
9.2 Indemnification Procedure......................................... 30
ARTICLE 10. CONDITIONS TO PARTIES' OBLIGATIONS..................................... 30
10.1 Conditions to Transmation's Obligations........................... 30
10.2 Conditions to Metermaster's Obligations........................... 34
</TABLE>
(ii)
<PAGE> 4
<TABLE>
<S> <C> <C>
ARTICLE 11. TERMINATION............................................................ 36
11.1 Termination....................................................... 36
ARTICLE 12. FURTHER COVENANTS...................................................... 37
12.1 Taxes on Transaction.............................................. 37
12.2 Expenses of the Parties........................................... 37
12.3 Confidentiality................................................... 37
12.4 Further Assurances................................................ 37
12.5 Post-Closing Access to Information................................ 38
ARTICLE 13. IN GENERAL............................................................. 38
13.1 Survival of Representations, Warranties and Covenants............. 38
13.2 Amendment and Waiver.............................................. 38
13.3 Assignment........................................................ 38
13.4 Notices, Etc...................................................... 38
13.5 Inferences........................................................ 39
13.6 Binding Effect.................................................... 39
13.7 Governing Law..................................................... 39
13.8 Effect of Agreement............................................... 40
13.9 Headings; Counterparts............................................ 40
TABLE OF EXHIBITS AND SCHEDULES..................................................... 42
INDEX OF DEFINED TERMS.............................................................. 43
</TABLE>
(iii)
<PAGE> 5
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated January 21, 1999 and amended
and restated February 4, 1999, is made by and among TRANSMATION, INC., an Ohio
corporation ("TRANSMATION"), MM ACQUISITION CORP., a New York corporation and
wholly-owned subsidiary of Transmation ("SUB"), METERMASTER INC., a Georgia
corporation ("METERMASTER"), and STUART W. JONES ("JONES"), WILLIAM L. HOOPER,
JOHN W. MELLON ("MELLON") and WALTER R. YOUNG, JR., being certain of the holders
of the outstanding capital stock of Metermaster (collectively, the "PARTY
SHAREHOLDERS").
WHEREAS, the respective Boards of Directors of Transmation, Sub and
Metermaster, and Transmation acting as the sole shareholder of Sub, have
approved the merger, pursuant and subject to the terms and conditions of this
Agreement, of Sub with and into Metermaster (the "MERGER"), whereby all of the
issued and outstanding shares of the Common Stock, par value $1.00 per share, of
Metermaster (the "COMMON STOCK"), all of the issued and outstanding shares of
the Preferred Series I Eight (8%) Percent Cumulative Convertible Voting
Preferred Stock, par value $100.00 per share, of Metermaster (the "SERIES I
PREFERRED STOCK"), and all of the issued and outstanding shares of the Preferred
Series II Eight (8%) Percent Cumulative Convertible Voting Preferred Stock, par
value $100.00 per share, of Metermaster (the "SERIES II PREFERRED STOCK" and
together with the Series I Preferred Stock, the PREFERRED STOCK") (the Common
Stock and the Preferred Stock being collectively referred to herein as the
"METERMASTER STOCK") will be converted into the right to receive the Merger
Consideration as hereinafter provided; and the parties each desire to make
certain representations, warranties and agreements in connection with the Merger
and also to prescribe various conditions to the Merger;
NOW, THEREFORE, in consideration of the premises and the
representations, warranties and covenants herein contained, the parties agree to
effect the Merger on the terms and conditions herein provided and further agree
as follows:
ARTICLE 1. DEFINITIONS
1.1 CERTAIN DEFINITIONS. In addition to the other definitions contained
in this Agreement, the following terms will, when used in this Agreement, have
the following respective meanings:
"ACCOUNTS RECEIVABLE" means accounts receivable, trade receivables and
notes receivable, all as defined and determined in accordance with GAAP.
"AFFILIATE" means, with respect to any party, any Person which,
directly or indirectly, controls, is controlled by, or is under common control
with, the referenced party.
"AGREEMENT" means this Agreement and Plan of Merger, together with all
Exhibits and Schedules hereto.
"AUDITORS" means BDO Seidman, LLP, the independent certified public
accountants regularly engaged by Metermaster.
<PAGE> 6
"CLOSING" means the consummation of the Merger.
"CLOSING BALANCE SHEET" means the audited balance sheet of Metermaster
as of the Closing Date, prepared, audited and finally determined as provided by
Sections 2.3(a) and 2.3(b) and annexed hereto as SCHEDULE 2.3 subsequent to the
Closing Date.
"CODE" means the Internal Revenue Code of 1986, as amended, together
with all rules and regulations promulgated thereunder.
"CONSTITUENT CORPORATIONS" means Sub and Metermaster, as the
constituent corporations of the Merger.
"CONTRACTS" means and includes all contracts, subcontracts, agreements,
leases, options, notes, bonds, mortgages, indentures, deeds of trust, collateral
assignments of lease and rights, guarantees, licenses, franchises, permits,
purchase orders, arrangements, transactions, commitments, undertakings and
understandings of every kind, written or oral.
"CURRENT FINANCIAL STATEMENTS" means the audited balance sheet of
Metermaster as at December 31, 1998, and the related statements of income and
cash flows for the fiscal year then ended, certified by Auditors, and the notes
and schedules thereto.
"DISSENTER" means a Record Holder who dissents from the Merger and
exercises dissenters' rights in accordance with all of the applicable provisions
of article 13 of the GBCC.
"ENCUMBRANCES" means and includes: (a) all interests securing
obligations owed to any Person, whether based on or arising from Legal
Requirement or Contract, including those arising from liens, pledges,
consignments or bailments; (b) all reservations, exceptions, encroachments,
easements, rights-of-way, covenants, conditions, restrictions, charges, claims,
leases and other similar title exceptions and encumbrances; (c) all liens of any
Taxing authority; (d) all landlords', mechanics', materialmen's, warehousemen's,
carriers' and similar liens; and (e) all judgments and other burdens and charges
of every kind.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, together with all rules and regulations promulgated thereunder.
"ESCROW ACCOUNTS" means, collectively, the Lease Escrow Account, the
Long-Term Escrow Account and the Short-Term Escrow Account.
"ESCROW AGREEMENT" means the escrow agreement executed by Transmation,
the Party Shareholders and KeyBank National Association, as escrow agent (the
"ESCROW AGENT"), on or before the Closing Date, substantially in the form
annexed hereto as Exhibit A.
"GAAP" means, at any time, generally accepted accounting principles,
methods and practices (a) then set forth in the opinions and pronouncements of
the Accounting Principles Board and the American Institute of Certified Public
Accountants, and statements and pronouncements of the Financial Accounting
Standards Board or of such other entity as may then be
2
<PAGE> 7
approved by a significant segment of the accounting profession, which are (b)
consistently maintained and applied throughout the periods referenced.
"GBCC" means the Georgia Business Corporation Code.
"GOVERNMENTAL ENTITY" means any federal, state or local court,
legislative body, governmental or quasi-governmental body, municipality,
political subdivision, department, commission, board, bureau, department,
administration, council, agency, authority or other instrumentality.
"HISTORICAL FINANCIAL STATEMENTS" means the audited balance sheets of
Metermaster as at December 31, 1997 and 1996, and the related statements of
income and cash flows for the fiscal years then ended, certified by Auditors,
and the notes and schedules thereto, copies of all of which comprise SCHEDULE
4.5(A).
"INTELLECTUAL PROPERTY" means software, hardware, firmware, Internet,
Intranet and World Wide Web content and domain names and associated HTML and
other code, plug-ins and scripting, patents, applications for patents,
copyrights, licenses, assumed names, trade names, trademark and/or service mark
registrations and applications therefor, trademarks, service marks, procedures,
instructions, inventions, trade secrets, know-how, designs, specifications,
prints, tooling, molds, templates, operating data, customer lists, vendor lists,
parts lists and all other proprietary information.
"INVENTORIES" means all inventories of Metermaster used in the
operation of or associated with Metermaster's business.
"IRS" means the United States Internal Revenue Service.
"LEASE ESCROW ACCOUNT" means the account so named created pursuant to
the Escrow Agreement, as more fully defined therein. All references herein to
actions taken with respect to the Lease Escrow Account mean actions taken in
accordance with the provisions of the Escrow Agreement.
"LEGAL REQUIREMENTS" means, collectively, all laws, statutes, rulings,
rules, regulations, codes, judgments, orders, decrees, awards, injunctions,
writs, requirements, permits, certificates and ordinances of any Governmental
Entity, as in effect from time to time.
"LONG-TERM ESCROW ACCOUNT" means the account so named created pursuant
to the Escrow Agreement, as more fully defined therein. All references herein to
actions taken with respect to the Long-Term Escrow Account mean actions taken in
accordance with the provisions of the Escrow Agreement.
"LOSSES" means any and all losses, liabilities, claims, demands,
actions, suits, proceedings, audits, judgments, obligations, assessments, fines,
penalties, amounts paid in settlement, damages and deficiencies, of any kind or
nature whatsoever, and all costs and expenses incident thereto (including
reasonable attorneys' fees and all other reasonable expenses incident to the
foregoing), whether asserted by a party to this Agreement or by a third party.
3
<PAGE> 8
"PERMITTED ENCUMBRANCES" means those Encumbrances listed in SCHEDULE
1.0.
"PERSON" means and includes any individual, partnership, corporation,
trust, foundation, limited liability company, unincorporated organization or
other entity, including any Governmental Entity.
"RECORD HOLDER" means a holder of record of any Metermaster Stock as of
the Closing Date, as shown on the regularly maintained stock transfer records of
Metermaster.
"RELATED PARTY CONTRACTS" means those Contracts listed in SCHEDULE
4.20.
"SHAREHOLDER APPROVAL" means approval of this Agreement by the
affirmative vote of a majority of the shares of Common Stock and Preferred Stock
outstanding on the record date for the vote, voting together as one voting
group.
"SHAREHOLDERS' REPRESENTATIVE" means Stuart W. Jones or such other
Person so designated in writing by a majority in interest of the holders of
the outstanding Common Stock.
"SHORT-TERM ESCROW ACCOUNT" means the account so named created pursuant
to the Escrow Agreement, as more fully defined therein. All references herein to
actions taken with respect to the Short-Term Escrow Account mean actions taken
in accordance with the provisions of the Escrow Agreement.
"SUBSIDIARY" means, with respect to any Person, any corporation,
partnership, limited liability company, joint venture, trust or other entity of
which such Person, directly or indirectly, owns an amount of voting securities,
or possesses other ownership interests, having the power, direct or indirect, to
elect a majority of the Board of Directors or other governing body thereof.
"SURVIVING CORPORATION" means Metermaster as the surviving corporation
of the Merger.
"TAXES" means, collectively, federal, state and local income, payroll,
withholding, employment, excise, sales, use, real and personal property, use and
occupancy, business and occupation, gross receipts, mercantile, real estate,
capital stock and franchise or other taxes, duties or assessments of any nature
whatsoever, including all penalties and interest thereon and estimated taxes.
"UNAUDITED FINANCIAL STATEMENTS" means the unaudited balance sheet of
Metermaster as at December 31, 1998, and the related statements of income and
cash flows for the fiscal year then ended, a copy of which comprises SCHEDULE
4.5(B).
"VIOLATION" means that the referenced event: (a) conflicts with, or
results in any violation of, or a default (with or without notice or lapse of
time, or both) under, or gives rise to a right of termination, cancellation or
acceleration of any obligation or the loss of a benefit under, or the creation
of an Encumbrance on assets in connection with, the referenced Contract; or (b)
conflicts with, or results in any violation (with or without notice or lapse of
time, or both)
4
<PAGE> 9
under, or gives rise to any damages, penalty or remedial action under, the
referenced Legal Requirement.
"VOTING DEBT" means bonds, debentures, notes or other evidences of
indebtedness having the right to vote (or convertible into securities having the
right to vote) on any matters on which the shareholders of the issuer thereof
may vote.
1.2 ACCOUNTING TERMS. As used in this Agreement, all accounting terms
not otherwise defined herein will have the meanings assigned to them in
accordance with GAAP.
1.3 OTHER DEFINITIONAL PROVISIONS. Unless the context requires
otherwise, references to "Articles" and "Sections" are to the Articles or
Sections of this Agreement, and references to "Exhibits" and "Schedules" are to
the Exhibits and Schedules annexed hereto. Any of the terms defined in this
Agreement may, unless the context requires otherwise, be used in the singular or
the plural depending on the reference. Wherever used herein, the masculine
pronoun will include the feminine and the neuter, as appropriate in the context.
With respect to any matter or thing, "including" or "includes" means including
but not limited to such matter or thing.
1.4 SCHEDULES AND OTHER INSTRUMENTS. Each Schedule, each certificate
provided hereunder and each written disclosure required hereby is incorporated
by reference into this Agreement and will be considered a part hereof as if set
forth herein in full; provided, however, that (except for SCHEDULE 2.3 (Closing
Balance Sheet) and SCHEDULE 11.1 (Transmation's Minimum Staffing Requirements),
the contents of which reflect the mutual agreement of the parties) information
set forth on any Schedule, certification or written disclosure constitutes a
representation and warranty of the party providing the same, and not the mutual
agreement of the parties as to the facts therein stated. Except for Schedules
expressly required hereby to be delivered after the Closing Date, each Schedule
will be (a) dated the date hereof and delivered to Transmation by Metermaster
prior to the date hereof, and (b) updated by Metermaster to the Closing Date and
delivered by Metermaster to Transmation in such updated form prior to the
Closing Date.
ARTICLE 2. MERGER CONSIDERATION
2.1 MERGER CONSIDERATION. The aggregate consideration payable to all
Record Holders in respect of the Merger (the "AGGREGATE MERGER CONSIDERATION")
will be an amount equal to (a) the Estimated Aggregate Merger Consideration,
adjusted by (b) the Adjustment Amount, all as determined as provided by this
Article 2. The consideration payable in the Merger to Record Holders in respect
of each share of Metermaster Stock will be that proportion of the Aggregate
Merger Consideration set forth in SCHEDULE 2.1 (each such per share amount, as
applicable, being called the "MERGER CONSIDERATION").
2.2 ESTIMATED PAYMENT AT CLOSING. For purposes of Closing, the parties
estimate the Aggregate Merger Consideration to be $1,769,252 (that being
$2,000,000 less $230,748, the amount by which the total stockholders' equity
shown on the Unaudited Financial Statements is
5
<PAGE> 10
less than $(500,000) (the "ESTIMATED AGGREGATE MERGER CONSIDERATION"). At
Closing Transmation will pay the Estimated Aggregate Merger Consideration to
the Record Holders by:
(A) wire transfer of federal funds on behalf of
Metermaster, in such amounts and to such accounts designated
by the Shareholders' Representative, in full settlement of
Metermaster's obligations under the Related Party Contracts
and in payment by Metermaster of all prepayment penalties on
all indebtedness of Metermaster outstanding on the Closing
Date;
(B) wire transfer of federal funds in the amount of
$400,000 to the Escrow Agent for deposit in the Short-Term
Escrow Account;
(C) wire transfer of federal funds in the amount of
$400,000 to the Escrow Agent for deposit in the Long-Term
Escrow Account;
(D) payment on behalf of the Record Holders of all
fees and expenses incurred by Metermaster in connection with
the Merger; and
(E) wire transfer of federal funds in the aggregate
amount of the balance of the Estimated Aggregate Merger
Consideration to one or more accounts, and in such amounts,
designated by the Shareholders' Representative.
Upon payment of the Estimated Aggregate Merger Consideration as provided by this
Section 2.2 (subject to the provisions of Section 3.5(b)), all obligations of
Transmation and the Surviving Corporation to Record Holders with respect to the
Merger Consideration will have been satisfied and extinguished, and neither
Transmation nor the Surviving Corporation will have any liability or obligation
to any Record Holder with respect thereto.
2.3 POST-CLOSING DETERMINATION.
(A) The Aggregate Merger Consideration will be finally
determined based upon an audit of the Closing Balance Sheet certified by
Auditors, such audit being conducted and the Closing Balance Sheet being
prepared at Transmation's expense. Transmation will prepare the Closing Balance
Sheet based upon the assets and liabilities of Metermaster on the Closing Date,
and the Party Shareholders will cooperate fully and promptly with Transmation
and Auditors to the end that the Closing Balance Sheet will be in accordance
with the books of account and records of Metermaster, will be prepared in
accordance with GAAP and Metermaster's past practices consistent with the
Historical Financial Statements, will present fairly and accurately
Metermaster's financial position as of the Closing Date, and will show all
assets and liabilities existing as of the Closing Date and required to be
disclosed in accordance with GAAP, including Metermaster's ratable percentage of
the cost of providing benefits under all Employee Plans through the Closing
Date. The Closing Balance Sheet will be examined by Auditors in accordance with
generally accepted auditing standards, and will include such tests of the
accounting records, observation of the taking of physical inventories and other
auditing procedures as prudent accountants would consider necessary in the
circumstances. At the Record Holders' expense, representatives of the Record
Holders and, at Transmation's expense, PricewaterhouseCoopers LLP, the certified
public accountants regularly retained by Transmation, may observe
6
<PAGE> 11
the taking of physical inventories and the auditing process and procedures
conducted by Auditors and examine the work papers of Auditors developed in
connection with such audit. Transmation will deliver the Closing Balance Sheet
to the Shareholders' Representative within 45 days after the Closing Date.
(B) The Closing Balance Sheet will be finally determined as
provided by this Section 2.3(b) (whereupon all references herein to the "Closing
Balance Sheet" will mean the same as so finally determined). Within 30 days
after receipt of the Closing Balance Sheet, the Shareholders' Representative
will deliver the Record Holders' written objections thereto (if any) to
Transmation, and Transmation will deliver its written objections thereto (if
any) to the Shareholders' Representative. To the extent that both the
Shareholders' Representative and Transmation fail to deliver any such objections
within such 30-day period, the Closing Balance Sheet (or such undisputed item(s)
thereof) will be final and binding upon all parties (including the Record
Holders) for all purposes. If the Shareholders' Representative or Transmation so
delivers any such objection, Transmation and the Shareholders' Representative
will use their respective best efforts to resolve such dispute(s) promptly by
mutual agreement, and any such mutually agreed resolution will be final and
binding upon all parties (including the Record Holders) for all purposes.
Failing mutually agreed resolution of any such dispute(s) within ten days of
delivery of any such objection, the Shareholders Representative and Transmation
will then each have the right to require that such dispute(s) be submitted to
the Rochester, New York office of Arthur Andersen LLP for computation or
verification in accordance with the provisions of this Agreement. Such firm's
resolution of such dispute(s), which will be delivered to Transmation and the
Shareholders' Representative within 30 days after submission to such firm, will
be final and binding upon all parties (including the Record Holders) for all
purposes, and such firm's fees and expenses therefor will be borne by the
non-prevailing parties or, in the event that all parties prevail on some of the
issues in dispute, will be shared proportionately, as determined by such firm.
The Closing Balance Sheet, as so finally determined, will be annexed hereto
subsequent to the Closing Date as SCHEDULE 2.3.
(C) Upon final determination of the Closing Balance Sheet as
provided by Section 2.3(b), the Aggregate Merger Consideration will be
determined by either (i) subtracting from the Estimated Aggregate Merger
Consideration the amount by which the total stockholders' equity shown on the
Closing Balance Sheet is less than $(730,748), or (ii) adding to the Estimated
Aggregate Merger Consideration the amount, not exceeding $100,000, by which the
total stockholders' equity shown on the Closing Balance Sheet is greater than
$(730,748) (in either case, the "ADJUSTMENT AMOUNT").
(D) If the Aggregate Merger Consideration, determined as
provided by Section 2.3(c), is less than the Estimated Aggregate Merger
Consideration, then within ten days after such final determination, Transmation
will direct the Escrow Agent to:
(I) pay out of the Short-Term Escrow Account to
Transmation the Adjustment Amount, together with all interest
accruing thereon pursuant to the Escrow Agreement; and
7
<PAGE> 12
(II) either:
(A) if the amount of principal and interest
then in the Short-Term Escrow Account exceeds the
Adjustment Amount, then:
(1) transfer from the Short-Term
Escrow Account to the Lease Escrow Account
the amount of such balance up to $150,000;
and
(2) pay out to the Record Holders
the amount (if any) of the balance remaining
in the Short-Term Escrow Account after such
transfer; or
(B) if the Adjustment Amount exceeds the
amount of principal and interest then in the
Short-Term Escrow Account, then:
(1) pay out of the Long-Term Escrow
Account to Transmation the amount of such
excess, together with all interest accruing
thereon pursuant to the Escrow Agreement;
and
(2) transfer from the Long-Term
Escrow Account to the Lease Escrow Account
an amount up to $150,000.
(E) If the Aggregate Merger Consideration, determined as
provided by Section 2.3(c), is greater than the Estimated Aggregate Merger
Consideration, then within ten days after such final determination, Transmation
will deposit the Adjustment Amount in the Long-Term Escrow Account and direct
the Escrow Agent to:
(I) transfer from the Short-Term Escrow Account to
the Lease Escrow Account the amount of $150,000; and
(II) pay out to the Record Holders the amount of the
balance remaining in the Short-Term Escrow Account after such
transfer.
ARTICLE 3. THE MERGER AND ITS EFFECT
3.1 CLOSING. The Closing will take place at 9:00 a.m., local time, on
the earliest date practicable after all of the conditions set forth in Article
10 are satisfied or waived by the appropriate party, but in no event later than
the applicable date referred to in Section 11.1(f) (the "CLOSING DATE"), at the
offices of Nelson Mullins Riley & Scarborough, L.L.P., First Union Plaza, Suite
1400, 999 Peachtree Street, N.E., Atlanta, Georgia 30309-3964, unless another
date or place is agreed to in writing by Transmation and Metermaster.
Immediately upon Closing, the parties will cause the Merger to be consummated as
provided by Section 3.2.
3.2 EFFECTIVE TIME OF THE MERGER. Subject to the provisions of this
Agreement, the Merger will be consummated by (a) the filing by the Secretary of
State of Georgia of a
8
<PAGE> 13
certificate of merger, in such form as required by, and signed and attested in
accordance with, the relevant provisions of the GBCC, and (b) the filing by the
Secretary of State of New York of a certificate of merger, in such form as
required by, and signed and attested in accordance with, the relevant provisions
of the New York Business Corporation Law (the time of the latter of such two
filings, or such later time and date as may be specified in both such filings,
being the "EFFECTIVE TIME").
3.3 EFFECTS OF THE MERGER. By virtue of the Merger and without the
necessity of any action by or on behalf of the Constituent Corporations, or
either of them:
(A) at the Effective Time, (i) the separate existence of Sub
will cease and Sub will be merged with and into Metermaster, (ii) the
articles of incorporation and bylaws of Metermaster in effect
immediately prior to the Effective Time will be the articles of
incorporation and bylaws of the Surviving Corporation until thereafter
amended, and (iii) the directors and officers of Sub in office
immediately prior to the Effective Time will be the directors and
officers of the Surviving Corporation until their successors are duly
elected or appointed; and
(B) at and after the Effective Time, the Surviving Corporation
will possess all the rights, privileges, powers and franchises of a
public as well as of a private nature, and be subject to all the
restrictions, disabilities and duties, of each of the Constituent
Corporations; and all property, real, personal and mixed, and all debts
due to either of the Constituent Corporations on whatever account, as
well for stock subscriptions as all other things in action or belonging
to each of the Constituent Corporations will be vested in the Surviving
Corporation; and all property, rights, privileges, powers and
franchises, and all and every other interest will be thereafter as
effectually be the property of the Surviving Corporation as they were
of the respective Constituent Corporations, and the title to any real
estate vested by deed or otherwise, in either of the Constituent
Corporations, will not revert or be in any way impaired; but all rights
of creditors and all Encumbrances upon any property of either of the
Constituent Corporations will be preserved unimpaired, and all debts,
liabilities and duties of the respective Constituent Corporations will
thenceforth attach to the Surviving Corporation, and may be enforced
against it to the same extent as if such debts and liabilities had been
incurred or contracted by it.
3.4 EFFECT OF MERGER ON CAPITAL STOCK. As of the Effective Time, by
virtue of the Merger and without any action on the part of any holder of shares
of Metermaster Stock or of shares of the capital stock of Sub:
(A) CAPITAL STOCK OF SUB. Each issued and outstanding share of
the capital stock of Sub will become one fully paid and non-assessable issued
and outstanding share of the Class A Common Stock of the Surviving Corporation,
which will constitute all of the capital stock of the Surviving Corporation
issued and outstanding at the Effective Time.
(B) CANCELLATION OF TREASURY STOCK. All shares of Metermaster
Stock, if any, that are held by Metermaster as treasury stock will be cancelled
and retired and will cease to exist, and no Merger Consideration will be paid
therefor.
9
<PAGE> 14
(C) CONVERTED SHARES. "CONVERTED SHARES" means all shares of
Metermaster Stock other than (i) shares (if any) held by Metermaster as treasury
stock and (ii) shares (if any) held by Dissenters. At the Effective Time, each
issued and outstanding Converted Share will automatically be converted into the
right to receive the Merger Consideration therefor. As of the Effective Time,
and except as otherwise provided by Section 3.4(d), all shares of Metermaster
Stock will no longer be outstanding and will automatically be cancelled and
retired and will cease to exist, and each holder of a certificate representing
any such shares will cease to have any rights with respect thereto, except the
right to receive the Merger Consideration therefor, without interest, upon the
surrender of such certificate to the Corporate Secretary of the Surviving
Corporation. In the case of any lost, stolen or destroyed certificate
representing Metermaster Stock, the holder thereof may be required, as a
condition precedent to delivery to him of any of the Merger Consideration, to
deliver to Transmation such affidavit and personal indemnity as Transmation may
reasonably request with respect to the certificate alleged to have been lost,
stolen or destroyed. Until surrendered to the Corporate Secretary of the
Surviving Corporation, each certificate representing Converted Shares will be
deemed at any time after the Effective Time to represent only the right to
receive upon such surrender the Merger Consideration therefor, without interest.
(D) SHARES OF DISSENTERS. Any issued and outstanding shares of
Metermaster Stock held by a Dissenter will not be converted as provided by
Section 3.4(c) but will from and after the Effective Time represent only the
right to receive such consideration as may be determined to be due to such
Dissenter pursuant to article 13 of the GBCC; provided, however, that shares of
Metermaster Stock outstanding immediately prior to the Effective Time and held
by a Dissenter who, after the Effective Time, withdraws his demand for payment
or loses his dissenters' right, in either case as provided by article 13 of the
GBCC, will be deemed to be converted, as of the Effective Time, into the right
to receive the Merger Consideration, without interest, as provided by Section
3.4(c). Prior to the Effective Time, Metermaster will give Transmation prompt
notice of any notices or demands by Dissenters under article 13 of the GBCC and
Transmation will have the right to participate in all negotiations and
proceedings with respect to any such notices or demands. Metermaster will not,
except with the prior written consent of Transmation, voluntarily make any
payment with respect to, or settle or offer to settle, any such demand for
payment. Payment to Dissenters will be made only as required by article 13 of
the GBCC and will be made by the Surviving Corporation from its own separate
funds, unless Transmation elects, in its discretion, to provide all or any
portion thereof.
(E) NO FURTHER OWNERSHIP RIGHTS IN METERMASTER STOCK.
Transmation's payment of the Aggregate Merger Consideration as provided by
Article 2 (subject to Transmation's rights hereunder (if any) to the amounts in
the Escrow Accounts) will be deemed to have been made in full satisfaction of
all rights pertaining to all outstanding shares of Metermaster Stock, and there
will be no further registration of transfers of shares of Metermaster Stock
after the Effective Time. If, after the Effective Time, certificates
representing Metermaster Stock are presented to the Surviving Corporation or its
transfer agent for any reason, such certificates will be cancelled and converted
as provided by this Article 3.
(F) NO LIABILITY. Neither Transmation, Metermaster nor the
Surviving Corporation will be liable to any holder of shares of Metermaster
Stock for any Merger
10
<PAGE> 15
Consideration delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
3.5 CONDITIONS ON RIGHTS TO MERGER CONSIDERATION.
(A) Notwithstanding any other provision of this Agreement to
the contrary, all rights of Record Holders to receive the Merger Consideration
will at all times be subject to all of the provisions of this Agreement,
including (i) Transmation's rights hereunder (if any) to the amounts in the
Escrow Accounts, (ii) Transmation's payments on behalf of Metermaster and the
Record Holders as provided by Section 2.2, (iii) the time period required for
determination of the amount of the Merger Consideration, as contemplated by
Section 2.3, and (iv) the payments contemplated by Section 3.5(b).
(B) The Shareholders' Representative may instruct Transmation
to deduct from any payments to or for the benefit of the Record Holders that
would otherwise be payable under this Agreement or the Escrow Agreement amounts
to pay the expenses associated with the performance of the covenants of the
Shareholders' Representative, the Party Shareholders and the Record Holders
hereunder or under the Escrow Agreement, which expenses may include professional
fees, costs associated with reletting the premises subject to the Marietta
Lease, and out-of-pocket travel expenses incurred in connection with the
determination of the Closing Balance Sheet and the preparation of the Current
Financial Statements.
ARTICLE 4. METERMASTER'S REPRESENTATIONS AND WARRANTIES
Metermaster hereby represents and warrants to Transmation and to Sub,
as of the date hereof, as of the Closing Date and as of immediately prior to the
Effective Time, as follows:
4.1 ORGANIZATION, STANDING AND POWER. Metermaster is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Georgia. Metermaster has all necessary corporate power and authority to own, use
and transfer its properties and assets and to transact its business as now being
conducted. SCHEDULE 4.1 contains a listing of each Subsidiary of Metermaster and
its jurisdiction of organization. Each Subsidiary of Metermaster is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of organization, and has all necessary corporate power and
authority to own, use and transfer its properties and assets and to transact its
business as now being conducted. Except as set forth in SCHEDULE 4.1, there is
no other jurisdiction in which the nature of Metermaster's business or the
character or use of its or its Subsidiaries' assets makes necessary the
licensing or qualification of Metermaster or any of its Subsidiaries to do
business as a foreign corporation, the failure to obtain which would have an
adverse effect on Metermaster's business, and Metermaster and each of its
Subsidiaries is duly licensed or qualified and in good standing in each
jurisdiction set forth in SCHEDULE 4.1.
4.2 CAPITAL STRUCTURE. The authorized capital stock of Metermaster
consists entirely of (a) 2,000,000 shares of Class A Common Stock, 100,000
shares of Class B Common Stock, 200,000 shares of Series I Preferred Stock, and
500 shares of Series II Preferred Stock, of which (b) 24,000 shares of Class A
Common Stock, no shares of Class B Common Stock, 8,000 shares
11
<PAGE> 16
of Series I Preferred Stock, and 500 shares of Series II Preferred Stock are
issued and outstanding. No shares of Metermaster Stock are held by Metermaster
in its treasury. Except for this Agreement and the Preferred Stock (which is
convertible into shares of Common Stock), there are no options, warrants, calls,
rights, claims, commitments or Contracts to which Metermaster or any of its
Subsidiaries is a party or by which any of them is bound obligating Metermaster
or any of its Subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock or any Voting Debt of
Metermaster or any of its Subsidiaries, or obligating Metermaster or any of its
Subsidiaries to grant, extend or enter into any such option, warrant, call,
right or Contract (collectively, "STOCK RIGHTS"), and no shares of Metermaster
Stock are reserved for issuance for any purpose. No shares of Metermaster Stock
are held by any of Metermaster's Subsidiaries. Neither Metermaster nor any of
its Subsidiaries has any Voting Debt issued or outstanding. All outstanding
shares of Metermaster Stock are validly issued, fully paid and non-assessable.
No shares of Metermaster Stock other than the Class A Common Stock have
preemptive rights, and consummation of the Merger does not give rise to such
preemptive rights. Transmation's payment of the Aggregate Merger Consideration
as provided by Article 2 (subject to Transmation's rights hereunder (if any) to
the amounts in the Escrow Accounts) satisfies all rights of all record or
beneficial owners of Metermaster Stock to any accrued and unpaid dividends
thereon. All of the record or beneficial owners of Metermaster Stock are listed
in SCHEDULE 4.2.
4.3 AUTHORITY; BINDING OBLIGATIONS. Except for obtaining Shareholder
Approval, Metermaster's execution and delivery of this Agreement, its compliance
with the provisions hereof and the consummation of the Merger have all been duly
and validly authorized by all necessary corporate action on the part of
Metermaster, and this Agreement is valid and binding upon Metermaster and each
Party Shareholder in accordance with its terms, except that such enforceability
may be subject to bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights or
remedies generally, and subject to general equitable principles (regardless of
whether enforcement is sought in a proceeding at law or in equity).
4.4 NO CONFLICT. Neither the execution and delivery of this Agreement
by Metermaster or any Party Shareholder, nor compliance by Metermaster or any
Party Shareholder with any of the provisions hereof, nor the consummation of the
Merger, will: (i) conflict with or result in a breach of any provision of
Metermaster's articles of incorporation or bylaws; (ii) result in a Violation of
any Contract, Encumbrance or other instrument or obligation to which
Metermaster, any Subsidiary or any Party Shareholder is a party or by which they
or any of their respective properties or assets may be bound, except for such
Contracts, Encumbrances, instruments and obligations set forth in SCHEDULE 4.4;
or (iii) result in a Violation of any Legal Requirement applicable to
Metermaster, any Subsidiary, any Party Shareholder or any of their respective
properties or assets. Except for obtaining Shareholder Approval and except as
set forth in SCHEDULE 4.4, no consent, waiver or approval by, notice to or
filing with any Person is required in connection with the execution and delivery
of this Agreement by Metermaster or any Party Shareholder, compliance by
Metermaster or any Party Shareholder with any of the provisions hereof or the
consummation of the Merger.
4.5 FINANCIAL STATEMENTS. SCHEDULE 4.5(A) comprises a true, correct and
complete copy of the Historical Financial Statements, and SCHEDULE 4.5(B)
comprises a true, correct and
12
<PAGE> 17
complete copy of the Unaudited Financial Statements. The Historical Financial
Statements and the Unaudited Financial Statements are, and when delivered the
Current Financial Statements will be, in accordance with the books of account
and records of Metermaster and have been, and will have been, prepared in
accordance with GAAP (subject, in the case of the Unaudited Financial
Statements, to audit adjustments and the absence of footnotes). The Historical
Financial Statements and the Unaudited Financial Statements present, and when
delivered the Current Financial Statements will present, fairly and accurately
Metermaster's financial position as at the dates thereof and the results of
Metermaster's operations, cash flows and other information with respect to
Metermaster included therein for the periods or as at the dates therein set
forth. The Historical Financial Statements and the Unaudited Financial
Statements show, and when delivered the Current Financial Statements will show,
all assets and liabilities of Metermaster of any kind or nature, direct or
indirect, absolute or contingent, existing as of the dates indicated and
required to be disclosed in accordance with GAAP.
4.6 NO UNDISCLOSED LIABILITIES. Except as disclosed in this Agreement,
the Historical Financial Statements or the Unaudited Financial Statements,
Metermaster does not have, nor are any of its assets subject to, any debt,
liability, obligation or commitment of any kind or nature, direct or indirect,
whether accrued, absolute, contingent or otherwise (other than current
liabilities incurred since December 31, 1998 in the ordinary course of
business). To Metermaster's best knowledge, there are no facts which could serve
as the basis for any debt, liability, obligation or commitment of Metermaster
not so disclosed.
4.7 ABSENCE OF CERTAIN CHANGES. Except as disclosed in SCHEDULE 4.7,
the Historical Financial Statements or the Unaudited Financial Statements, since
December 31, 1997, there has not been any adverse change in the condition
(financial or otherwise) of Metermaster, or in its assets or liabilities, nor
any damage, destruction or loss, whether or not covered by insurance, adversely
affecting Metermaster's business or any of its assets. Except as disclosed in
SCHEDULE 4.7, the Historical Financial Statements or the Unaudited Financial
Statements, and except for the transactions contemplated by this Agreement,
since December 31, 1997, neither Metermaster nor any Subsidiary has: (a)
created, assumed or permitted to exist any Encumbrance, other than a Permitted
Encumbrance, on any of its assets; (b) sold, leased or otherwise transferred any
assets other than in the ordinary course of business; (c) cancelled any of its
rights or claims, other than in the ordinary course of business for fair and
adequate consideration in money or money's worth; (d) sold, assigned or
transferred any patent, trademark, trade name, copyright or other intangible
asset; (e) incurred any other liability or obligation, whether absolute or
contingent (other than current liabilities incurred since December 31, 1998 in
the ordinary course of business); (f) paid, prepaid or discharged any liability
or obligation, except as required by the terms thereof or in the ordinary course
of business; (g) lost, surrendered or had revoked or limited any license, permit
or other right granted by any Governmental Entity to operate its business or any
of its assets; (h) entered into any Contract or arrangement not in the ordinary
course of business; (i) cancelled, modified adversely, assigned, encumbered or
in any way discharged or terminated (other than by performance) any Contract;
(j) received any notice of termination of or default under any Contract which
would have an adverse effect on Metermaster's business, except for defaults
under the loan documents evidencing Metermaster's financing arrangements with
Congress Financial Corporation (Southern); (k) allowed to occur or exist any
event of default under any Contract which would have an adverse effect on
Metermaster's business; (l) made any loan or advance, acquired any Accounts
Receivable or
13
<PAGE> 18
otherwise extended any credit, except to customers in the ordinary course of
business pursuant to established credit policies, or acquired the securities or
obligations of any Person; (m) made any capital expenditure or any commitment
therefor; (n) paid or accrued any bonuses, benefits or other compensation not
pursuant to an established Employee Plan; (o) made any change in the rate of
compensation or benefits payable or to become payable by Metermaster or any
Subsidiary to any shareholder, director, officer, employee or agent, or in the
formula for determining any such compensation or benefits, or entered into or
amended in any respect any Contract providing for such compensation or benefits;
(p) made any commitment (through negotiations or otherwise) or incurred any
liability to any labor organization or become aware of any threat of strike or
other interruption of work arising from labor difficulties; (q) reduced or
failed to carry insurance in at least the respective amounts carried on December
31, 1997; (r) experienced any adverse change in its relationship with any of its
suppliers, distributors, dealers or customers which would have an adverse effect
on its business or business prospects; (s) experienced any other change in its
business which could have an adverse effect on the future ongoing operations or
financial condition of the Surviving Corporation's business after consummation
of the Merger, except for market conditions affecting Metermaster's industry as
a whole; (t) altered or revised any of its accounting principles, procedures,
methods or practices; or (u) agreed to do any of the things described in this
Section 4.7. Notwithstanding the foregoing, Metermaster makes no representation
or warranty that its business operations and prospects will not deteriorate
between the date of this Agreement and the Closing Date.
4.8 TITLE TO ASSETS, ETC. Metermaster and its Subsidiaries collectively
have good title to each of their assets, tangible and intangible, free and clear
of all Encumbrances except Permitted Encumbrances. All information necessary to
operate Metermaster's business as heretofore conducted is in commercially
acceptable written form and is readily accessible on Metermaster's premises.
Neither Metermaster nor any Subsidiary has granted any outstanding licenses or
other rights in any way relating to Metermaster's business or any of its assets.
4.9 COMPLIANCE WITH LEGAL REQUIREMENTS. Metermaster and its
Subsidiaries are in full compliance with all applicable Legal Requirements, of
every kind or nature whatsoever, in any way relating to or affecting
Metermaster's business and, to Metermaster's best knowledge, there is no basis
for any action, suit, proceeding or remedial action arising out of or in
connection therewith. Neither Metermaster nor any Subsidiary has received any
notice of any Violation of any such Legal Requirement, nor is it subject to any
settlement agreement or consent decree with continuing obligations or
restrictions. All of Metermaster's assets and the current uses thereof conform
to all such Legal Requirements, and all franchises, permits, licenses and other
documents necessary for Metermaster or any Subsidiary to own, use and transfer
its assets have been obtained and are in full force and effect, and at the
Effective Time the Surviving Corporation will be entitled to the full benefits
thereof, except where failure so to conform or obtain would not have an adverse
effect on Metermaster's business.
4.10 TANGIBLE PROPERTY. SCHEDULE 4.10 is a listing of all capitalized
tangible personal property of Metermaster, including machinery, equipment, test
equipment, furniture, fixtures, computer equipment, leasehold improvements and
vehicles. All of Metermaster's tangible assets are in good condition and repair,
ordinary wear and tear excepted. All of Metermaster's machinery, equipment and
vehicles are in good working order and have been maintained in accordance with
the recommendations of the manufacturers thereof and in accordance with good
14
<PAGE> 19
practice prevailing in the industry. To Metermaster's best knowledge, no
extraordinary expenditures either for repair or replacement of any of its assets
is now foreseeable. Without limiting the foregoing, Metermaster will perform all
normal repair and maintenance with respect to all of its assets in accordance
with commercially reasonable practices through and including the Closing Date.
4.11 INVENTORIES. SCHEDULE 4.11 is a listing of all Inventories,
including the quantities thereof. All Inventories: (a) are new and are not used
or refurbished (other than demonstration inventory specifically identified in
SCHEDULE 4.11 by virtue of being segregated as 02 inventory within report number
IN128); (b) were paid for in full or liability for the unpaid purchase price
thereof was fully recognized in the Historical Financial Statements or the
Unaudited Financial Statements or, in the case of Inventories purchased after
December 31, 1998, will be fully recognized in the Closing Balance Sheet; (c)
consist of inventories of the kind, quality and quantity regularly and currently
used in Metermaster's business; and (d) are in good and salable condition and
fit for the purposes intended. Except for certain items, valued at approximately
$6,000, consigned to Solid State Controls, none of the Inventories has been
consigned to or from others.
4.12 ACCOUNTS RECEIVABLE. SCHEDULE 4.12 is a listing of all Accounts
Receivable of Metermaster. All of Metermaster's Accounts Receivable (including
the accounts, obligations, Contracts and instruments which underlie such
Accounts Receivable), net of a reserve for doubtful accounts of $60,000, are
valid and collectible, and such reserve of $60,000 is adequate as of the Closing
Date. Upon Transmation's payment of Metermaster's secured indebtedness to
Congress Financial Corporation (Southern), Instrument Specialties, Inc. and
EISCO, Inc. as contemplated by this Agreement, all of Metermaster's Accounts
Receivable will be owned by Metermaster or its Subsidiaries on the Closing Date
free of all claims and Encumbrances. Except as set forth in SCHEDULE 4.7, the
Historical Financial Statements or the Unaudited Financial Statements, since
December 31, 1997 Metermaster has not: (a) rescinded, cancelled, settled,
written off, modified or otherwise compromised any Accounts Receivable, or any
indebtedness due thereunder, or any guarantee or repurchase obligation related
thereto; or (b) accelerated the collection of any Accounts Receivable except in
the ordinary course of business in accordance with prior practices.
4.13 INTELLECTUAL PROPERTY. SCHEDULE 4.13 is a listing of all
Intellectual Property owned by Metermaster or any of its Subsidiaries or used in
the operation of or associated with its business. None of the current or former
employees, officers, directors or shareholders of Metermaster or any Subsidiary
has any rights in any of Metermaster's Intellectual Property. Except as set
forth in SCHEDULE 4.13, neither Metermaster nor any Subsidiary has granted any
outstanding licenses or other rights to any Intellectual Property in any way
relating to Metermaster's business or any of its assets. Neither Metermaster nor
any Subsidiary is liable, nor has it made any Contract whereby it may become
liable, to any Person for any royalty or other compensation for the use of any
Intellectual Property in any way relating to Metermaster's business or any of
its assets. None of the rights of Metermaster or its Subsidiaries in, to or
under any of its Intellectual Property will be adversely affected by
consummation of the Merger, and at the Effective Time the Surviving Corporation
will be entitled to the full benefits thereof. Neither Metermaster nor any
Subsidiary has received any notice or claim of infringement of any Intellectual
Property, and to Metermaster's best knowledge, there is no substantial basis for
any
15
<PAGE> 20
such claim if made hereafter. To Metermaster's best knowledge, there is no
patent, technical development or invention owned by any other Person which could
adversely affect Metermaster's business. Metermaster has the unrestricted right
to use the name "Metermaster" and all other names and marks set forth in
SCHEDULE 4.13, and at the Effective Time the Surviving Corporation will be
entitled to the full benefits thereof.
4.14 CONTRACTS AND BACKLOG. SCHEDULE 4.14(A) is a listing of all
Contracts to which Metermaster or any of its Subsidiaries is or may be a party
or by which any of their respective assets are or may be bound, except for (i)
those Contracts referenced in SCHEDULE 4.14(B) and (ii) those Contracts under
which Metermaster is not reasonably expected to be obligated to pay or receive
more than $5,000 singly or $25,000 in the aggregate. Except for those Contracts
referenced in SCHEDULE 4.14(B): (A) Metermaster has heretofore made available to
Transmation a true, correct and complete copy of each of its Contracts which is
written; (B) SCHEDULE 4.14(A) contains a true, correct and complete description
of the material terms of each of its Contracts which is oral; and (C) except as
disclosed in SCHEDULE 4.14(A), there has been no oral modification of any of its
Contracts. Each of Metermaster's Contracts is valid and binding, in full force
and effect and (except for obtaining any consents, waivers, novations or
approvals, or giving any notice, listed in SCHEDULE 4.14(A)) at the Effective
Time the Surviving Corporation will be entitled to the full benefits thereof.
Except as described in SCHEDULE 4.14(A), there has not been under any Contract
any default by Metermaster or any Subsidiary or, to Metermaster's best
knowledge, by any other party thereto, nor any event which, after notice or
lapse of time, or both, would constitute any such default or result in a right
to accelerate against or a loss of rights by Metermaster or any Subsidiary. No
options to renew or extend the term of any Contract which are exercisable by
Metermaster or any Subsidiary on or before the date hereof have been exercised,
and no such options which are exercisable on or before the Closing Date will be
exercised without Transmation's prior written consent. Neither Metermaster nor
any Subsidiary is subject to any renegotiation or price redetermination relating
to any Contract. SCHEDULE 4.14(B) is a listing of Metermaster's backlog by
customer.
4.15 LEGAL PROCEEDINGS, ETC. Except as set forth in SCHEDULE 4.15,
there is no legal, equitable, administrative or arbitration action, suit,
proceeding or known investigation pending or, to Metermaster's best knowledge,
threatened against or affecting Metermaster or any Subsidiary, or any of their
respective assets, which, if adversely determined, could adversely affect the
operations of Metermaster's business, its assets or the condition, financial or
otherwise, of Metermaster or any Subsidiary in any way, or the business,
operations or properties, or the condition, financial or otherwise, of the
Surviving Corporation immediately following the Effective Time, or the ability
of Metermaster to consummate the Merger. Except as set forth in SCHEDULE 4.15,
there is no judgment, decree, injunction, rule or order of any Governmental
Entity or arbitrator outstanding against Metermaster or any Subsidiary and, to
Metermaster's best knowledge, there is no basis for any action, suit, proceeding
or investigation against Metermaster or any Subsidiary relating to or affecting
Metermaster's business, its assets or the Merger. Except as set forth in
SCHEDULE 4.15, no such action, suit, proceeding, known investigation, judgment,
decree, injunction, rule or order arises out of the employment of labor, equal
employment opportunity, occupational health and safety, economic stabilization
or environmental protection. Neither Metermaster nor any Subsidiary is in
default with respect to any order, injunction or decree of any Governmental
Entity or arbitrator, and no such order, injunct-
16
<PAGE> 21
ion or decree is now in effect which restrains the operations or the use of the
properties of Metermaster or of any Subsidiary.
4.16 EMPLOYMENT MATTERS.
(A) Except as set forth in SCHEDULE 4.16(A): (i) neither
Metermaster nor any Subsidiary has entered into any collective bargaining
agreement or other Contract with any employee, union, labor organization or
other employee representative or group of employees and, to Metermaster's best
knowledge, no such organization or Person has made or is making any attempt to
organize or represent employees of Metermaster or any Subsidiary; (ii) there is
no pending grievance or arbitration and no unsatisfied or unremedied grievance
or arbitration award against Metermaster or any Subsidiary, or any agent,
representative or employee thereof and, to Metermaster's best knowledge, there
is no basis for any such grievance or arbitration; (iii) Metermaster has not
been notified of any unfair labor practice charge, and there is no pending trial
of unfair labor practice charges, unremedied unfair labor practice finding or
adverse decision of the National Labor Relations Board or any state labor
authority, or any hearing officer or administrative law judge thereof, against
Metermaster or any Subsidiary, or any agent, representative or employee thereof
and, to Metermaster's best knowledge, there is no basis for any such unfair
labor practice charge; and (iv) there is not pending or, to Metermaster's best
knowledge, threatened with respect to Metermaster, any Subsidiary or their
employees any labor dispute, strike or work stoppage.
(B) SCHEDULE 4.16(B) is a listing of all employees of
Metermaster whose employment was terminated since January 1, 1997, setting forth
for each such employee his name and the reason for the termination of his
employment.
(C) Without limiting the generality of Section 4.9, except as
set forth in SCHEDULE 4.16(C), Metermaster and its Subsidiaries are in full
compliance with all applicable Legal Requirements, standards and Contracts
relating to employment, including those relating to wages, hours, working
conditions, leaves of absence, hiring, promotion, equal employment opportunity,
collective bargaining, occupational health and safety (including those dealing
with employee handling or use of or exposure to hazardous or toxic substances
and the training of employees with respect to such substances), and the payment
and withholding of Taxes, special assessments and other similar obligations, and
neither Metermaster nor any Subsidiary has received any notice of any Violation
of any such Legal Requirement, standard or Contract. Except as set forth in
SCHEDULE 4.16(C), Metermaster and its Subsidiaries are in full compliance with
all applicable affirmative action and equal employment opportunity obligations
arising under any Legal Requirement or any Contract with any Governmental Entity
or other Person.
(D) Without limiting the generality of Section 4.15, except as
set forth in SCHEDULE 4.15 or SCHEDULE 4.16(A), there is no employment-related
claim, cause of action, grievance, judgment or other adverse charge or decision
of any kind (including any in the nature of employment discrimination of any
type, breach of Contract, wrongful discharge, retaliation, health, safety or
right-to-know violations, child labor violations or non-payment of wages,
benefits or wage supplements), under any Legal Requirement, standard, collective
bargaining agreement or other Contract, pending against Metermaster, any
Subsidiary, or any of their
17
<PAGE> 22
officers, employees or agents and, to Metermaster's best knowledge, there is no
basis for any such claim, cause of action, grievance, judgment or other adverse
charge or decision.
(E) To Metermaster's best knowledge, no current or former
employee of Metermaster or any Subsidiary has any claim against Metermaster, any
Subsidiary or any of their officers, employees or agents under any Legal
Requirement, standard or Contract on account of or for: (i) overtime pay (other
than overtime pay for the current payroll period); (ii) wages or salary for any
period other than the current payroll period; (iii) vacation, holiday or other
time off or pay in lieu thereof (other than time off or pay in lieu thereof
earned in respect of the current year); or (iv) any Violation of any Legal
Requirement, standard or Contract relating to the payment of wages, fringe
benefits, wage supplements or hours of work.
4.17 EMPLOYEE PLANS.
(A) Metermaster has heretofore provided to Transmation a true,
correct and complete copy of Metermaster's employee benefits handbook, which was
never distributed to Metermaster's employees, and no other employee benefits
handbook was ever distributed to Metermaster's employees. SCHEDULE 4.17 lists
all employment Contracts, all union, guild, labor or collective bargaining
agreements, all employee benefit plans, and all other arrangements or
understandings, explicit or implied, written or oral, whether for the benefit of
one or more Persons, relating to employment, compensation or benefits, to which
Metermaster or any of its Subsidiaries is a party or is obligated to contribute,
or by which Metermaster or any of its Subsidiaries is bound, including: (i) all
employee benefit plans within the meaning of section 3(3) of ERISA; (ii) all
deferred compensation, bonus, stock option, stock purchase, stock incentive,
stock appreciation rights, restricted stock, severance or incentive compensation
plans, agreements or arrangements; (iii) all plans, agreements or arrangements
providing for "fringe benefits" or perquisites to employees, officers, directors
or agents; and (iv) all employment, consulting, termination or indemnification
Contracts (collectively, "EMPLOYEE PLANS"). Metermaster has delivered to or made
available for inspection by Transmation true, correct and complete copies of all
Employee Plans, all related summary plan descriptions, the most recent
determination letters received from the IRS, Form 5500 Annual Reports for the
last three years (including all attachments thereto), the most recent financial
reports and summary annual reports and, where applicable, summary descriptions
of any Employee Plans not otherwise reduced to writing. Except for ongoing
negotiations in settlement of the Related Party Contracts, there are no
negotiations, demands or proposals that are pending or have been made since the
respective dates of the Employee Plans which concern matters now covered, or
that would be covered, by any Employee Plan.
(B) Metermaster and each of its Subsidiaries and each of the
Employee Plans have complied and are in compliance with the applicable
provisions of the Code, ERISA and all other applicable Legal Requirements.
Metermaster and each of its Subsidiaries have performed all of their obligations
under all of the Employee Plans, including the full payment of all amounts
required to be made as contributions thereto or otherwise. Any failure by
Metermaster or its Subsidiaries to make all required contributions to Employee
Plans in a timely fashion has not created, and cannot reasonably be expected to
create, any liability or obligation.
18
<PAGE> 23
(C) With respect to each Employee Plan that is an "employee
benefit plan" within the meaning of section 3(3) of ERISA, or a "plan" within
the meaning of section 4975(e)(1) of the Code, no transaction has occurred which
is prohibited by section 406 of ERISA or which could give rise to a liability
under section 4975 of the Code or sections 502(i) or 409 of ERISA. None of the
Employee Plans nor any fiduciary thereof has been the direct or indirect subject
of an audit, investigation or examination by any Governmental Entity within the
last five years. There are no actions, suits, penalties or claims (other than
routine undisputed claims for benefits) pending or threatened against or arising
our of any of the Employee Plans or the respective assets thereof and, to
Metermaster's best knowledge, no facts exist which could give rise to any such
actions, suits, penalties or claims which might have an adverse effect on any
Employee Plan or on Metermaster or any Subsidiary.
(D) Each Employee Plan that is intended to qualify under
section 401(a) of the Code is so qualified and has received a favorable
determination letter from the IRS. There have been no developments since the
respective dates of such determination letters that would create a risk of
causing the loss of qualification of the subject Employee Plan.
(E) Neither Metermaster nor any of its Subsidiaries maintains
or has at any time maintained, or has or could have any liability with respect
to, an Employee Plan subject to Title IV of ERISA. No Employee Plan is or ever
has been a "multiemployer plan" within the meaning of section 3(37) of ERISA.
Neither Metermaster nor any of its Subsidiaries has or could have any liability
with respect to a "multiemployer plan" as defined under section 3(37) of ERISA.
No Employee Plan now holds or has heretofore held any stock or other securities
issued by Metermaster or any of its Subsidiaries. Neither Metermaster nor any of
its Subsidiaries has established or contributed to, is required to contribute to
or has or could have any liability with respect to any "voluntary employees'
beneficiary association" within the meaning of section 501(c)(9) of the Code,
any "welfare benefit fund" within the meaning of section 419 of the Code, any
"qualified asset account" within the meaning of section 419A of the Code or any
"multiple employer welfare arrangement" within the meaning of section 3(40) of
ERISA.
(F) All group health plans of Metermaster and its Subsidiaries
have been operated in compliance with the group health plan continuation
coverage requirements of sections 601 through 608 of ERISA and section 4980B of
the Code, Title XXII of the Public Health Service Act and the provisions of the
Social Security Act, to the extent such requirements are applicable. Except to
the extent required under section 4980B of the Code, neither Metermaster nor any
of its Subsidiaries provides health or welfare benefits (through the purchase of
insurance or otherwise) for any retired employee or any former employee.
(G) No provision of any Employee Plan restricts the ability of
Transmation or the Surviving Corporation to terminate the future accruals of
obligations thereunder after the Effective Time; provided, however, that no such
representation or warranty is made with respect to liabilities already accrued
at the time of such termination.
(H) Except as set forth in SCHEDULE 4.17, each Form 5500
required to be filed by Metermaster or any of its Subsidiaries has been filed in
accordance with all applicable Legal Requirements.
19
<PAGE> 24
(I) There has been no act or omission by Metermaster or any of
its Subsidiaries that has given rise or may give rise to fines, penalties, Taxes
or related charges under sections 4980D, 502(c) or 502(l) of ERISA, Chapters 43,
46 or 47 of Subtitle D of the Code, or Chapter 68 of Subtitle F of the Code.
(J) Solely for purposes of this Section 4.17, all references
to Metermaster or any of its Subsidiaries includes any Person which, together
with Metermaster or any of its Subsidiaries, is considered an affiliated
organization within the meaning of sections 414(b), 414(c), 414(m) or 414(o) of
the Code or sections 3(5) or 4001(b)(1) of ERISA.
4.18 ENVIRONMENTAL MATTERS.
(A) As used herein, the term "ENVIRONMENTAL LAWS OR
REGULATIONS" means and includes regulatory programs involving: air emissions;
liquid discharges to streams, ponds, ditches or other surface waters, ground
waters, or publicly-owned treatment works; disposal of solid and/or hazardous
wastes; marking, maintenance and/or removal of electrical equipment containing
PCBs; manufacture and/or construction (including renovation) involving asbestos
materials; activities in or adjacent to fresh water wetlands, flood hazard
areas, coastal zone management areas and/or historic preservation areas;
registration, operation, testing and/or removal or replacement of storage tanks
for petroleum products and/or hazardous substances; or emergency, planning and
community right-to-know laws, including submission of hazardous substance
inventory information to any Governmental Entity.
(B) Metermaster and its Subsidiaries are and have been in full
compliance with all applicable Environmental Laws or Regulations, and all other
Legal Requirements of Governmental Entities relating to Environmental Laws or
Regulations, in any way relating to or affecting Metermaster's business. Neither
Metermaster nor any Subsidiary has ever disposed of hazardous or toxic
substances, hazardous wastes or petroleum (collectively, "HAZARDOUS SUBSTANCES")
on any of the premises on which Metermaster's business is or has been conducted
and, to Metermaster's best knowledge, there has been no such disposal by any
other Person, including any current or prior owner or operator of any of such
premises. To Metermaster's best knowledge, there is no asbestos or
asbestos-containing material in any premises leased by Metermaster.
(C) Except as set forth in SCHEDULE 4.18: (i) to Metermaster's
best knowledge, there are no underground Hazardous Substance storage tanks
located on any premises on which Metermaster's business is conducted; (ii)
neither Metermaster nor any Subsidiary has ever received any requests for
information from any Governmental Entity concerning the alleged disposal, spill
or release of Hazardous Substances on any premises on which Metermaster's
business is or has been conducted; and (iii) neither Metermaster nor any
Subsidiary has ever been or, to Metermaster's best knowledge, alleged to be, in
any way relating to or affecting Metermaster's business, a "potentially
responsible party" under the Comprehensive Environmental Response, Compensation
and Liability Act, as amended, or any corresponding state statute. From the date
hereof through and including the Closing Date, Metermaster will immediately
provide Transmation with a copy of any notice, citation, complaint or other
directive
20
<PAGE> 25
from any Person whereby compliance by Metermaster, any Subsidiary or
Metermaster's business with Environmental Laws or Regulations is called into
question.
4.19 TAXES. Metermaster and its Subsidiaries have filed all Tax returns
required to be filed by any of them and have paid all Taxes required to be paid
as shown on such returns. The Historical Financial Statements and the Unaudited
Financial Statements reflect, and the Current Financial Statements and the
Closing Balance Sheet will reflect, an adequate accrual, based on the facts and
circumstances existing as of the respective dates thereof, for all Taxes payable
by Metermaster and its Subsidiaries (whether or not shown in any return) through
the respective dates thereof. All such filed Tax returns are correct, complete
and accurate. Neither Metermaster nor any of its Subsidiaries has taken, plans
or intends to take any action which would result in any liability to Metermaster
or any of its Subsidiaries for Taxes as a result of the Merger. To Metermaster's
best knowledge, there are no deficiencies for any Taxes proposed, asserted or
assessed against Metermaster or any of its Subsidiaries. The federal income Tax
returns of Metermaster and its Subsidiaries consolidated in such returns have
been examined by and settled with the IRS, or the statute of limitations with
respect to such years has expired, for all fiscal years through the fiscal year
ended December 31, 1996, except with respect to claims for refund. Except as set
forth in SCHEDULE 4.19, neither Metermaster nor any Subsidiary: (a) is the
beneficiary of any extension of time within which to file any Tax return; (b)
has a Tax return under audit; (c) has waived or agreed to an extension of time
with respect to the statute of limitations for any Tax assessment or deficiency;
(d) has made or is obligated to make any payments that will not be deductible
under section 280G of the Code; (e) has been a member of a consolidated federal
income Tax return (except for one in which Metermaster is the common parent); or
(f) has any liability for the Taxes of any other Person by Legal Requirement, by
contract, as a transferee or successor, or otherwise. Metermaster and its
Subsidiaries have withheld and paid all Taxes required to have been withheld and
paid in connection with amounts paid or owing to any employee, independent
contractor or other third party, and are not liable for any arrears of wages or
any Tax or penalty in connection therewith.
4.20 RELATED PARTY TRANSACTIONS. Except for the Related Party
Contracts, neither Metermaster nor any Subsidiary is indebted in any amount
whatsoever to, nor is there any business relationship, whether under any
Contract or otherwise, between Metermaster (or any Subsidiary) and, any Related
Party, nor is any Related Party indebted to Metermaster or any Subsidiary in any
amount whatsoever. The Related Party Contracts constitute all of the Contracts
between Metermaster or a Subsidiary, on the one hand, and any Related Party who
is a current or former employee or consultant, on the other hand, providing for
employment, the provision of consulting services, compensation, benefits or the
like. To Metermaster's best knowledge, no Related Party has any interest in any
competitor, supplier or customer of Metermaster, except for immaterial interests
in publicly held companies. "RELATED PARTY" means any shareholder, director or
officer of Metermaster or of any of its Subsidiaries, or any spouse, parent,
sibling or child of any of the foregoing and, with respect to the Party
Shareholders, any of their Affiliates.
4.21 PRODUCT AND SERVICE WARRANTIES. Metermaster passes through to its
customers all applicable manufacturers' product or service warranties or
guaranties. Copies or summaries of all forms of product or service warranties or
guaranties extended directly by Metermaster with respect to the products sold or
services performed by its business comprise SCHEDULE 4.21.
21
<PAGE> 26
There are no outstanding claims or liabilities outside of the ordinary course of
business with respect to Metermaster's products or services under any product
warranty or guaranty or with respect to any product sold or service rendered by
Metermaster.
4.22 OTHER ASSETS. SCHEDULE 4.22 lists all other assets of Metermaster
not included on any other Schedule, including prepaid expenses and deposits.
4.23 METERMASTER INDEBTEDNESS. The aggregate amount of principal and
accrued interest (but not any prepayment penalties) of all indebtedness of
Metermaster outstanding as of the beginning of the day on January 21, 1999 is
$2,585,805.
4.24 [Intentionally Omitted]
4.25 ENGINEERED SYSTEMS DIVISION. SCHEDULE 4.25 lists all of the assets
and all of the liabilities comprising Metermaster's Engineered Systems Division,
including the stated historical purchase prices of such assets. The information
set forth on SCHEDULE 4.25 is not different from that set forth in the Due
Diligence Information. At Closing, Metermaster will have no rights, and no
liabilities or obligations whatsoever, with respect to the assets, liabilities
or business conducted by the Engineered Systems Division.
4.26 VOTE REQUIRED. The affirmative vote of a majority of the shares of
Common Stock and Preferred Stock outstanding on the record date for the vote,
voting together as one voting group, is the only vote of the holders of
Metermaster Stock necessary to approve this Agreement and the consummation of
the Merger.
4.27 BROKERS' AND FINDERS' FEES. Neither Metermaster nor any of
Metermaster's shareholders, officers, directors, employees or agents has
employed any broker or finder as to which Transmation, Sub or the Surviving
Corporation would have any liability whatsoever for any brokerage fees,
commissions or finders' fees in connection with the Merger.
4.28 CERTAIN DUE DILIGENCE MATTERS.
(A) Metermaster together with all of its Subsidiaries and
other Affiliates, on a consolidated basis, had neither net sales nor total
assets in the amount of $25,000,000 or more for the fiscal year ended December
31, 1998.
(B) Except as Metermaster may have heretofore specifically
disclosed to Transmation in writing, no officer or director of Metermaster has
been informed by a third party that the consummation of the Merger would result
in the loss of any significant customer, potential customer or vendor of
Metermaster's business.
(C) With the exception of Raymond E. Grande and Robert A.
Reese, Jr., all of the directors and officers of Metermaster are either (i)
officers of Metermaster who are obligated to Metermaster under valid and
enforceable non-disclosure agreements, or (ii) Party Shareholders.
22
<PAGE> 27
4.29 MATERIAL MISSTATEMENTS OR OMISSIONS. No representation or warranty
of Metermaster made in this Agreement or in any Schedule or Closing certificate
furnished or to be furnished to Transmation or Sub by or on behalf of
Metermaster, nor any information contained in the due diligence information
dated October 28, 1998 provided by Metermaster to Transmation, as subsequently
modified orally or in writing (the "DUE DILIGENCE INFORMATION"), contains (or
will when furnished contain) any untrue or misleading statement of a material
fact, or omits (or will then omit) to state a material fact necessary in order
to make the statement of facts made therein not misleading.
ARTICLE 5. TRANSMATION'S REPRESENTATIONS AND WARRANTIES
Transmation hereby represents and warrants to Metermaster, as of the
date hereof, as of the Closing Date and as of immediately prior to the Effective
Time, as follows:
5.1 ORGANIZATION, STANDING AND POWER. Transmation is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Ohio. Sub is a corporation duly organized, validly existing and in good standing
under the laws of the State of New York. Each of Transmation and Sub has all
necessary corporate power and authority to execute and deliver this Agreement,
to comply with the provisions hereof and to consummate the Merger.
5.2 AUTHORITY; BINDING OBLIGATIONS. Transmation's and Sub's respective
execution and delivery of this Agreement, their compliance with the provisions
hereof and the consummation of the Merger have been duly and validly authorized
by all necessary corporate action on the part of Transmation and Sub,
respectively, and this Agreement is valid and binding upon Transmation and Sub
in accordance with its terms, except that such enforceability may be subject to
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights or remedies generally, and
subject to general equitable principles (regardless of whether enforcement is
sought in a proceeding at law or in equity).
5.3 NO CONFLICT. Neither the execution and delivery of this Agreement
by Transmation or Sub, nor compliance by Transmation or Sub with any of the
provisions hereof, nor the consummation of the Merger will: (a) conflict with or
result in a breach of any provision of the respective certificates of
incorporation or bylaws of Transmation or Sub; (b) result in a Violation of any
Contract, Encumbrance or other instrument or obligation to which Transmation or
Sub is a party or by which they or any of their respective properties or assets
may be bound, except for certain credit agreements between Transmation and
KeyBank National Association, with respect to which Transmation has obtained all
necessary consents or waivers; or (c) result in a Violation of any Legal
Requirement applicable to Transmation or Sub or any of their properties or
assets. No consent, waiver or approval by, notice to or filing with any Person
other than KeyBank National Association is required in connection with the
execution and delivery of this Agreement by Transmation or Sub, compliance by
Transmation or Sub with any of the provisions hereof or the consummation of the
Merger.
5.4 LEGAL PROCEEDINGS, ETC. There is no legal, equitable,
administrative or arbitration action, suit, proceeding or known investigation
pending or, to Transmation's best
23
<PAGE> 28
knowledge, threatened against or affecting Transmation or Sub or any of their
assets which, if adversely determined, would adversely affect the ability of
Transmation or Sub to consummate the Merger.
5.5 BROKERS AND FINDERS. Neither Transmation, Sub nor any of their
officers, directors, employees or agents has employed any broker or finder as to
which Metermaster or the Record Holders would have any liability whatsoever for
any brokerage fees, commissions or finders' fees in connection with the Merger.
5.6 MATERIAL MISSTATEMENTS OR OMISSIONS. No representation or warranty
of Transmation made in this Agreement or in any Schedule or Closing certificate
furnished or to be furnished to Metermaster by or on behalf of Transmation or
Sub, contains (or will when furnished contain) any untrue or misleading
statement of a material fact, or omits (or will then omit) to state a material
fact necessary in order to make the statement of facts made therein not
misleading.
ARTICLE 6. METERMASTER'S COVENANTS
During the period from the date of this Agreement and continuing until
the Effective Time, Metermaster agrees, for itself and its Subsidiaries, to
perform as provided by this Article 6 (except as otherwise expressly
contemplated or permitted by this Agreement, or to the extent that Transmation
otherwise consents in writing).
6.1 ORDINARY COURSE. Except for the Spin-Off, each of Metermaster and
its Subsidiaries will: (a) carry on its business in substantially the same
manner as has heretofore been conducted and not make any change in its
personnel, operations, finance, accounting practices or policies or assets; (b)
maintain its assets and all parts thereof in good working order and condition,
ordinary wear and tear excepted; (c) perform all of its obligations under its
Contracts (except that Metermaster may continue to pay its accounts payable late
or otherwise outside of their payment terms to the extent that Metermaster's
cash flow is insufficient to allow timely payment), and not enter into any
Contract except in the ordinary course of business, nor cancel, modify
adversely, assign, encumber or in any way discharge or terminate (other than by
performance) any Contract; (d) not allow to occur or exist any event of default
under any Contract to which it is a party, except for defaults under the loan
documents evidencing Metermaster's financing arrangements with Congress
Financial Corporation (Southern), and defaults under the payment terms of
Contracts; (e) take all reasonable actions necessary and appropriate to obtain
appropriate releases, consents, novations, estoppels and other instruments as
Transmation may reasonably request; (f) neither cancel, nor allow to lapse nor
make any change in the coverage of any insurance policy applicable to
Metermaster, any of its Subsidiaries or any of their assets; (g) pay all Taxes
as they become due, confer with Transmation prior to the filing of any Tax
return or protest by it or any of its Subsidiaries and not take any position
with respect to Taxes to which Transmation reasonably objects; (h) use its best
efforts to maintain and preserve its business organization intact, retain
employees (except for employment terminations in accordance with past
practices), maintain business relationships with suppliers, customers and others
consistent with the terms of such relationships, and take such other actions as
are necessary to cause the smooth, efficient and successful transition of such
business operations and employee
24
<PAGE> 29
and other relations at the Effective Time; (i) neither make offers of employment
to any Persons for periods subsequent to the Effective Time (except for offers
made in the ordinary course for employment on an at will basis), nor enter into
any Employee Plan with respect thereto, nor incur or agree to incur any
liability not in the ordinary course of business, except for those offers,
Employee Plans and liabilities currently under negotiation and identified in
SCHEDULE 6.1; (j) neither adopt nor amend any Employee Plan; (k) not increase
the compensation, in any form, payable or to become payable to any director,
officer, employee, consultant or agent, except for employees' compensation
increases in the ordinary course of business in accordance with existing
personnel policies, or bonus compensation earned in conjunction with valid
incentive agreements or otherwise disclosed to Transmation in the Due Diligence
Information; (l) except as set forth in SCHEDULE 6.1, not incur any indebtedness
or guarantee any indebtedness except in the ordinary course of business
consistent with past practices, nor issue any debt securities; (m) not create or
assume any Encumbrance upon any of its assets, irrespective of when acquired,
other than Permitted Encumbrances; (n) neither acquire nor agree to acquire by
merging or consolidating with, or by purchasing any equity interest in or any
portion of the assets of, or by any other manner, any Person; (o) neither make
nor authorize any purchase order except in the ordinary course of business, nor
any capital expenditure except as identified in SCHEDULE 6.1; (p) neither sell,
lease, assign nor otherwise transfer or dispose of any assets (other than
supplies), except in the ordinary course of business; (q) neither pay, prepay
nor discharge any liability or obligation except as required pursuant to the
terms thereof; (r) neither lose, surrender nor have revoked or limited any
license, permit or other right granted by any Governmental Entity to operate
Metermaster's business or any of its assets; (s) neither write off any Accounts
Receivable or Inventories, nor increase or decrease the amount of reserves
against any Accounts Receivable or Inventories, except for actions required by
GAAP with respect to the Current Financial Statements; (t) neither alter nor
revise any of its accounting principles, procedures, methods or practices; (u)
neither amend, terminate nor waive any right, except in the ordinary course of
business; and (v) not take any other action outside the ordinary course of
business that would adversely affect the business operations of Metermaster or
any of its Subsidiaries, or of the Surviving Corporation immediately after the
Effective Time. Notwithstanding the foregoing, Metermaster makes no
representation or warranty that its business operations and prospects will not
deteriorate between the date of this Agreement and the Closing Date.
6.2 DIVIDENDS; CHANGES IN STOCK. Metermaster will not: (a) declare or
pay any dividends, whether in cash, stock or otherwise, nor make any other
distributions or returns on capital in respect of any Metermaster Stock, except
for the Spin-Off; (b) split, combine, reclassify or recapitalize any Metermaster
Stock, or issue, authorize or propose the issuance of any other securities in
respect of, in lieu of or in substitution for shares of Metermaster Stock; or
(c) repurchase or otherwise acquire, or permit any of its Subsidiaries to
purchase or otherwise acquire, any shares of Metermaster Stock.
6.3 ISSUANCE OF SECURITIES. Metermaster will not, nor will it permit
any of its Subsidiaries to: (a) issue, deliver or sell, or authorize or propose
the issuance, delivery or sale of, any shares of capital stock or Voting Debt or
any securities convertible into any such shares, Voting Debt or convertible
securities; or (b) grant any Stock Rights.
6.4 GOVERNING DOCUMENTS. Neither Metermaster nor any of its
Subsidiaries will amend or propose to amend its articles of incorporation or
bylaws.
25
<PAGE> 30
6.5 SPIN-OFF. Prior to the Closing Date, Metermaster will transfer all
assets and liabilities comprising its Engineered Systems Division, so that at
Closing Metermaster will have no rights or obligations whatsoever with respect
thereto or to the business conducted by the Engineered Systems Division (the
"SPIN-OFF").
6.6 TERMINATION OR ASSIGNMENT OF CERTAIN CONTRACTS.
(A) At Closing, and subject to Transmation's payment of the
Estimated Aggregate Merger Consideration as provided by Section 2.2, Metermaster
will effectively terminate each of the Related Party Contracts with the consent
of the other party thereto.
(B) Transmation will pay all rent and other occupancy expenses
coming due between the Closing Date and March 31, 1999 pursuant to the lease
dated August 9, 1995 between Metermaster and Trans-FABU, L.P., as successor to
the original lessor (the "MARIETTA LEASE"). The Party Shareholders will use
their best efforts to relet the premises subject to the Marietta Lease effective
April 1, 1999 for the remainder of the lease term of the Marietta Lease. To the
extent that Transmation bears any expenses (including rent, utilities,
insurance, Taxes, common area maintenance and the like) relating to the Marietta
Lease from and after April 1, 1999, Transmation will direct the Escrow Agent to
pay the amount thereof to Transmation out of the Lease Escrow Account. If the
premises subject to the Marietta Lease are not relet on or before December 31,
1999, then Transmation will direct the Escrow Agent to pay to Transmation out of
the Lease Escrow Account all expenses incurred by Transmation to terminate the
Marietta Lease. On the earlier of (i) Transmation's receipt of evidence,
reasonably satisfactory to Transmation, that the lessor under the Marietta Lease
has released Metermaster and Transmation from all liability under the Marietta
Lease, or (ii) September 30, 2000, Transmation will direct the Escrow Agent to
pay out to the Record Holders the amount of the balance then remaining in the
Lease Escrow Account.
6.7 CERTAIN EMPLOYEE-RELATED MATTERS. Transmation will cause
Metermaster to continue with respect to its then-current employees the Employee
Plans set forth in SCHEDULE 4.17 (other than Related Party Contracts) through
February 28, 1999, or such later date as Transmation determines. Transmation
will cause Metermaster to offer group health plan continuation coverage under
the Consolidated Omnibus Budget Reconciliation Act of 1985, and to provide
severance, to all employees of Metermaster who are then entitled thereto as a
result of any termination of employment after Closing.
6.8 ADVICE OF CHANGES. Metermaster will confer on a regular and
frequent basis with Transmation, report on all operational matters, including
business plans, sales and contract negotiations, and promptly advise Transmation
orally and in writing of any change or event having, or which, insofar as can
reasonably be foreseen, could have, an adverse effect on Metermaster or any of
its Subsidiaries or on the ability of Metermaster to perform its obligations
hereunder. Except as may otherwise be set forth in writing signed by the
Transmation and Metermaster, Metermaster acknowledges that Transmation does not
and will not waive any rights it may have under this Agreement as a result of
such consultations, nor will Transmation be responsible for any decisions made
by Metermaster's officers and directors with respect to matters which are the
subject of such consultation.
26
<PAGE> 31
6.9 ACCESS. Metermaster and its Subsidiaries will afford to the
authorized representatives and agents of Transmation full and complete access to
the employees and other personnel of Metermaster and its Subsidiaries, to the
customers, vendors and other third parties having business relationships with
Metermaster and its Subsidiaries, and to the assets and the books, records and
other information of Metermaster and its Subsidiaries, including the right to
inspect the same and conduct audits and verifications thereof; provided,
however, that: (a) Transmation has first provided reasonable notice of such
access and inspection and conducts the same during normal business hours and in
such a manner as not to interfere unreasonably with the conduct of the business
of Metermaster and its Subsidiaries; and (b) no such access or inspection by
Transmation will limit the effect of Metermaster's representations and
warranties contained in this Agreement.
6.10 EXCLUSIVITY. Metermaster will not, nor will it permit any of its
Subsidiaries to, nor will it authorize or permit any of its officers, directors
or employees or any investment banker, financial advisor, attorney, accountant
or other representative retained by it or by any of its Subsidiaries to,
initiate, solicit, encourage (by way of furnishing information or otherwise),
negotiate or take any other action to facilitate any inquiries or the making of
any proposal which constitutes, or may reasonably be expected to lead to, any
proposal or offer to acquire all or any substantial part of the business or
assets of Metermaster and its Subsidiaries, or any portion of the capital stock
of Metermaster, whether by merger, consolidation, purchase of assets, tender
offer, exchange offer or otherwise, whether for cash, securities or any other
consideration or combination thereof, nor entertain, agree to, endorse,
participate in any discussions or negotiations or recommend any such
transaction. In the event that Metermaster, any of its Subsidiaries or any of
its officers, directors, employees, investment bankers, financial advisors,
attorneys, accountants or other representatives receives any inquiries,
proposals or offers as contemplated by this Section 6.10, Metermaster will
promptly inform Transmation as to that fact and furnish to Transmation the
specifics thereof.
6.11 SHAREHOLDERS' APPROVAL. The Board of Directors of Metermaster will
call a special meeting of the holders of Metermaster Stock for the purpose of
considering and voting to approve this Agreement, or seek to obtain such
approval by unanimous written consent. The Board of Directors of Metermaster
will, subject to their fiduciary duties under the laws of the State of Georgia,
recommend that Metermaster's shareholders approve this Agreement, and will not
condition its recommendation on any basis other than the terms and conditions of
this Agreement. Metermaster will deliver to Transmation promptly (and in all
events prior to Closing) a certificate of the Secretary of Metermaster
certifying the number of shares of Metermaster Stock as to which written notices
of intent to demand payment were delivered prior to the vote thereon in
accordance with section 14-2-1321 of the GBCC and which were not voted in favor
of approval of this Agreement, such certificate to include the names, mailing
addresses and number of shares owned of record by each Record Holder who has
delivered such a notice.
6.12 NOTICES TO AND CONSENTS OF THIRD PARTIES. Metermaster will in a
timely fashion give all notices to and make all filings with all Governmental
Entities and other Persons required to be given or made by Metermaster or any
Subsidiary under any license, authorization, Contract or other instrument or
otherwise in connection with the transactions contemplated by this Agreement.
Metermaster will use its best efforts to obtain, as soon as practicable after
the date hereof but in any event prior to the Closing Date, all written
consents, waivers or novations of all
27
<PAGE> 32
Governmental Entities and other Persons required to be obtained by Metermaster
or any Subsidiary under any license, authorization, Contract or other instrument
or otherwise in connection with the transactions contemplated by this Agreement,
and to assist Transmation in obtaining the consents and waivers referred to in
Section 8.1.
ARTICLE 7. PARTY SHAREHOLDERS' COVENANTS
In consideration of all of the covenants, agreements and obligations
undertaken by Transmation and Sub pursuant to this Agreement, each Party
Shareholder agrees for the benefit of Transmation and the Surviving Corporation
as provided by this Article 7.
7.1 VOTING ON THE MERGER. Each Party Shareholder agrees to vote all
shares of Metermaster Stock owned directly or indirectly by him in favor of
approval of this Agreement and the consummation of the Merger.
7.2 CURRENT FINANCIAL STATEMENTS; AUDITORS' CONSENTS. On or before
March 10, 1999, the Party Shareholders will cause to be delivered to
Transmation, at the Record Holders' expense, the Current Financial Statements
and the consent of Auditors to the inclusion of its reports on the Historical
Financial Statements and the Current Financial Statements in one or more filings
by Transmation under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended.
7.3 NON-DISCLOSURE. Each Party Shareholder acknowledges that
Transmation and Metermaster are engaged in a highly competitive industry, that
such Party Shareholder has knowledge of the operations of Metermaster's
business, and that details of the operations of Metermaster's business
constitute valuable confidential information, the disclosure of which to a
competitor of Transmation would diminish the value of the Surviving Corporation
to Transmation. Therefore, each Party Shareholder covenants that he will not,
directly or indirectly, at any time disclose any information concerning the
customers, vendors, suppliers, price lists, catalogs, products, operations,
procedures, sales techniques or other information of Metermaster or its
Subsidiaries to any Person not specifically authorized in writing by Transmation
to have such information. Each Party Shareholder acknowledges that the
restrictive covenant contained in this Section 7.3 is necessary to preserve the
value of the Surviving Corporation, is an essential element of this Agreement
and is reasonable notwithstanding the expense or hardship it may impose on such
Party Shareholder, and each Party Shareholder agrees that he has received
pursuant to this Agreement fair and adequate consideration for making such
restrictive covenant. Each Party Shareholder agrees that if any of the
provisions of this Section 7.3 are or become unenforceable, the remainder of
this Section 7.3 will nevertheless remain binding to the fullest extent
possible, taking into consideration the purposes and spirit hereof.
7.4 NON-COMPETITION. Jones and Mellon each further acknowledges that
the usual and natural territory of Metermaster's business is and has been those
customers worldwide who purchase or maintain electronic test or measurement
instrumentation or purchase modification, calibration or repair services, and
that the value of the Surviving Corporation would be seriously diminished if he
were to compete with Transmation or the Surviving Corporation in such
28
<PAGE> 33
territory. Therefore, Jones and Mellon each covenants that for a period of one
year from and after the Closing Date:
(A) he will not, directly or indirectly, solicit in any manner
any business competitive with the business of Metermaster from any
Person which is a customer of Metermaster on the date hereof or on the
Closing Date; and
(B) he will not, within the territory described in this
Section 7.4, directly or indirectly compete with the Surviving
Corporation or become an interested party, as shareholder, director,
employee, partner, investor or otherwise, in any Person which competes
with Transmation or the Surviving Corporation.
Jones and Mellon each acknowledges that the restrictive covenants contained in
this Section 7.4 are necessary to preserve the value of the Surviving
Corporation, are essential elements of this Agreement and are reasonable
notwithstanding the expense or hardship they may impose on him, and Jones and
Mellon each agrees that he has received pursuant to this Agreement fair and
adequate consideration for making such restrictive covenants. Jones and Mellon
each agrees that if any of the provisions of this Section 7.4 are or become
unenforceable, the remainder of this Section 7.4 will nevertheless remain
binding to the fullest extent possible, taking into consideration the purposes
and spirit hereof.
ARTICLE 8. TRANSMATION'S COVENANTS
8.1 NOTICES TO AND CONSENTS OF THIRD PARTIES. Transmation will in a
timely fashion give all notices to and make all filings with all Governmental
Entities and other Persons required to be given or made by Transmation under any
license, authorization, Contract or other instrument or otherwise in connection
with consummation of the transactions contemplated by this Agreement.
Transmation will use its best efforts to obtain, as soon as practicable after
the date hereof but in any event prior to the Closing Date, all written consents
or waivers of all Governmental Entities and other Persons required to be
obtained by Transmation under any license, authorization, Contract or other
instrument or otherwise in connection with consummation of the transactions
contemplated by this Agreement, and to assist Metermaster in obtaining the
consents, waivers and novations referred to in Section 6.12.
8.2 DUE DILIGENCE. Transmation will use its best efforts to conduct and
complete its due diligence investigation of Metermaster and Metermaster's
business as soon as reasonably practicable after the date hereof.
ARTICLE 9. INDEMNIFICATION
9.1 INDEMNIFICATION. Transmation and the Surviving Corporation, and
their respective directors, officers, employees, agents, successors and assigns
(collectively, the "INDEMNIFIED PARTIES"), will be indemnified and held
harmless, as provided by this Article 9, from and after the Closing Date, from,
against and in respect of all Losses arising out of:
29
<PAGE> 34
(A) any failure or breach of any representation or
warranty, or any breach or nonfulfillment of any covenant or
agreement, of Metermaster or any Party Shareholder made in
this Agreement; or
(B) any Related Party Contract; or
(C) any prepayment penalties on any indebtedness of
Metermaster outstanding on the Closing Date; or
(D) any Accounts Receivable of Metermaster which
remain uncollected on December 1, 1999, to the extent that the
aggregate amount of such Accounts Receivable exceeds $65,000;
or
(E) any act of commission or omission of Metermaster,
its Subsidiaries, or their respective shareholders, directors,
employees, officers, agents or independent contractors prior
to the Closing Date.
9.2 INDEMNIFICATION PROCEDURE.
(A) If any Indemnified Party asserts one or more claims for
indemnification, which claims must be asserted, if at all, on or before December
31, 1999, each such claim will be satisfied, as provided by the Escrow
Agreement, out of the Long-Term Escrow Account and/or the Lease Escrow Account,
and only to the extent thereof. Other than to the extent of such Record Holder's
rights to the Aggregate Merger Consideration in escrow, no Record Holder will
have any liability to any Indemnified Party with respect to any such
indemnification.
(B) In the absence of fraud, and except for non-monetary
equitable relief, if Closing occurs, indemnification pursuant to the provisions
of this Article 9 will be the sole and exclusive remedy of the Indemnified
Parties for any breach of any representation, warranty or covenant contained in
this Agreement. The indemnification obligations provided by this Article 9 are
subject to the limitation that the Indemnified Parties may make no claim for
indemnification hereunder unless the total Losses would exceed $50,000 in the
aggregate, and then indemnification will be available only to the extent of such
excess. The parties acknowledge and agree that to the extent not paid out in
satisfaction of Losses for which indemnification is available, or as provided by
Section 2.3(d), the funds in the Long-Term Escrow Account will be paid out to
the Record Holders as provided by the Escrow Agreement.
ARTICLE 10. CONDITIONS TO PARTIES' OBLIGATIONS
10.1 CONDITIONS TO TRANSMATION'S OBLIGATIONS. The obligations of
Transmation and Sub to complete the Merger will be subject, at Transmation's
election, to satisfaction on or before the Closing Date of each of the following
conditions:
(A) REPRESENTATIONS AND WARRANTIES: all representations and
warranties of Metermaster contained in this Agreement, and all
information contained in each Schedule, will be true and correct (and,
in the case of any Schedule, complete) in all
30
<PAGE> 35
material respects as of the date hereof and as of the Closing Date as
though made on and as of the Closing Date (except as may be otherwise
provided in this Agreement), and Transmation will have received a
certificate to that effect, dated the Closing Date, signed by the chief
executive officer and the chief financial officer of Metermaster;
(B) PRE-CLOSING OBLIGATIONS: Metermaster and each Party
Shareholder will have performed in all material respects all
obligations required to be performed by it or him hereunder on or
before the Closing Date, the performance of which has not been waived
by Transmation, and Transmation will have received a certificate to
that effect, dated the Closing Date, signed by the chief executive
officer and the chief financial officer of Metermaster;
(C) DUE AUTHORIZATION: Metermaster's execution and delivery of
this Agreement, its compliance with the provisions hereof and the
consummation of the Merger will have been duly and validly authorized
by all necessary corporate action on the part of Metermaster, including
Shareholder Approval, and Transmation will have received a duly
certified copy of all actions taken by Metermaster's Board of Directors
and shareholders effecting the same;
(D) METERMASTER'S CONSENTS, ETC.: all notices, filings,
consents, waivers and approvals set forth in SCHEDULE 4.4 will have
been given, made or obtained, as the case may be, by Metermaster, and
Transmation will have received a true copy of each thereof;
(E) TRANSMATION'S CONSENTS, ETC.: all notices, filings,
consents, waivers and approvals set forth in Section 5.3 will have been
given, made or obtained, as the case may be, by Transmation;
(F) TRANSMATION'S DUE DILIGENCE: Transmation will have
completed its due diligence investigation of Metermaster and, as a
result thereof, there is no material adverse change of any material
fact from that heretofore represented, whether orally or in writing, to
Transmation by Metermaster; provided, however, that, except as
otherwise provided by Sections 11.1(d) or 11.1(e), neither a further
deterioration in Metermaster's ability to pay its accounts payable in a
timely fashion, nor the decision of employees not to continue
employment with Metermaster, nor the loss or potential loss of any key
customers or vendors, will be deemed to be such a material adverse
change;
(G) DISSENTERS: Prior to the taking of the vote on the Merger,
written notices of intent to demand payment in accordance with section
14-2-1321 of the GBCC will not have been delivered with respect to more
than 10 percent of the outstanding shares of Metermaster Stock;
(H) NO BAR: there will not be in effect any judgment, decree
or order of, or position taken by, any Governmental Entity of competent
jurisdiction, nor will there have been any action, suit, proceeding or
known investigation instituted or threatened, nor will any Legal
Requirement have been enacted or any action taken thereunder, which
would,
31
<PAGE> 36
in Transmation's reasonable judgment, restrain or prohibit, make
illegal, or subject Transmation to material damage as a result of, the
consummation of the Merger;
(I) FURTHER CLOSING DOCUMENTS: Metermaster will have delivered
to Transmation the following documents and instruments:
(I) the Escrow Agreement, duly executed by the
Party Shareholders and by the Escrow Agent;
(II) a copy of the articles of incorporation of
Metermaster and of all amendments thereto, certified as of a
date reasonably proximate to the Closing Date by the Secretary
of State of Georgia;
(III) certificates of the Secretary of State of
Georgia, and of each jurisdiction listed in SCHEDULE 4.1, each
attesting to the good standing or existence of Metermaster and
each of its Subsidiaries in such jurisdiction as of a date
reasonably proximate to the Closing Date;
(IV) evidence, in form reasonably satisfactory to
counsel to Transmation, of termination of each Related Party
Contract;
(V) evidence, in form reasonably satisfactory to
counsel to Transmation, that Metermaster has all rights to the
registered trademark and service mark "Metermaster";
(VI) evidence, in form reasonably satisfactory to
counsel to Transmation, of termination of each loan obligation
of Metermaster outstanding on the Closing Date, together with
a customary general release of Metermaster with respect
thereto;
(VII) Non-Disclosure Agreements, in substantially
the form of Section 7.3, duly executed by Raymond E. Grande
and Robert A. Reese, Jr.;
(VIII) a landlord's waiver, in form reasonably
satisfactory to KeyBank National Association, duly executed by
the respective lessors under the Marietta Lease and
Metermaster's leases in Chicago, Cleveland, Detroit, Anaheim,
Tempe and St. Louis, unless receipt of any of such landlord's
waivers is waived by KeyBank National Association; and
(IX) a personal property search, in form reasonably
satisfactory to counsel to Transmation, made by a search
agency acceptable to Transmation, indicating that as of a date
reasonably proximate to the Closing Date there are no
Encumbrances or judgments of record against Metermaster or its
Subsidiaries, except for Permitted Encumbrances and
Encumbrances securing obligations of less than $5,000 in the
aggregate;
32
<PAGE> 37
(J) OPINION OF COUNSEL: Transmation will have received an
opinion addressed to Transmation, dated the Closing Date, of Nelson
Mullins Riley & Scarborough, L.L.P., counsel to Metermaster, in form
and substance reasonably satisfactory to Transmation, to the effect
that: (i) each of Metermaster and its Subsidiaries is a corporation
duly incorporated, validly existing and in good standing under the laws
of its jurisdiction of incorporation and has all requisite corporate
power and authority to own, lease and operate its properties and carry
on its business as now conducted; (ii) Metermaster has the requisite
corporate power and authority and has taken all corporate action
necessary to execute and deliver this Agreement and to consummate the
Merger; (iii) this Agreement has been duly and validly authorized,
executed and delivered by Metermaster and by each Party Shareholder,
and this Agreement constitutes a legal, valid and binding obligation of
Metermaster and each Party Shareholder, enforceable against them in
accordance with its terms, except that such enforceability may be
subject to bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights
or remedies generally, and subject to general equitable principles
(regardless of whether enforcement is sought in a proceeding at law or
in equity); (iv) the authorized capital stock of Metermaster consists
entirely of 2,000,000 shares of Class A Common Stock, 100,000 shares of
Class B Common Stock, 200,000 shares of Series I Preferred Stock and
500 shares of Series II Preferred Stock; (v) to the knowledge of such
counsel based upon the stock records of Metermaster provided to such
counsel, on the Closing Date, 24,000 shares of Class A Common Stock, no
shares of Class B Common Stock, 8,000 shares of Series I Preferred
Stock, and 500 shares of Series II Preferred Stock are issued and
outstanding, no shares of Metermaster Stock are held by Metermaster in
its treasury, no shares of Metermaster Stock are reserved for issuance
for any purpose, no shares of Metermaster Stock are held of record by
any of Metermaster's Subsidiaries and, to such counsel's knowledge, no
Voting Debt is issued or outstanding; (vi) to such counsel's knowledge,
except for this Agreement, no Person has any Stock Rights; (vii) to
such counsel's knowledge, all outstanding shares of Metermaster Stock
are validly issued, fully paid and non-assessable, and consummation of
the Merger does not give rise to any preemptive rights not previously
waived; (viii) the execution and delivery of this Agreement by
Metermaster does not, and the consummation of the Merger and the
fulfillment of the obligations and undertakings hereunder will not,
result in any Violation of any provision of: (A) the articles of
incorporation or bylaws of Metermaster or any of its Subsidiaries; (B)
any Contract listed on SCHEDULE 4.14(A) (other than purchase orders
from customers or to vendors) which is governed by the laws of Georgia,
except for Contracts which are listed on SCHEDULE 4.4; or (C) any Legal
Requirement applicable to Metermaster, any of its Subsidiaries or any
of their respective assets; except, in the case of Contracts and Legal
Requirements, for Violations which could not reasonably be expected,
individually or in the aggregate, to have any adverse effect on the
validity or enforceability of this Agreement or a material adverse
effect on the operations or financial condition of Metermaster and its
Subsidiaries; and (ix) to such counsel's knowledge without independent
investigation, except as disclosed in SCHEDULE 4.15, there is no
action, suit, proceeding, arbitration or investigation pending against
Metermaster or any of its Subsidiaries, nor is there any judgment,
injunction or decree, rule or order of any Governmental Entity or
arbitrator outstanding against Metermaster or any of its Subsidiaries;
provided, however, that such
33
<PAGE> 38
opinion will only extend to the effect of the laws of the jurisdictions
in which such firm is licensed to practice; and
(K) OTHER MATTERS: Transmation will have received such other
instruments and documents as will have been reasonably requested by
counsel to Transmation within a reasonable time on or before the
Closing Date.
10.2 CONDITIONS TO METERMASTER'S OBLIGATIONS. The obligations of
Metermaster and the Party Shareholders to complete the transactions provided for
herein will be subject, at Metermaster's election, to satisfaction on or before
the Closing Date of each of the following conditions:
(A) REPRESENTATIONS AND WARRANTIES: all representations and
warranties of Transmation contained in this Agreement will be true and
correct in all material respects as of the date hereof and as of the
Closing Date as though made on and as of the Closing Date (except as
may be otherwise provided in this Agreement), and Metermaster will have
received a certificate to that effect, dated the Closing Date, signed
by the chief executive officer of Transmation;
(B) PRE-CLOSING OBLIGATIONS: Transmation will have performed
in all material respects all obligations required to be performed by it
hereunder on or before the Closing Date, the performance of which has
not been waived by Metermaster, and Metermaster will have received a
certificate to that effect, dated the Closing Date, signed by the chief
executive officer of Transmation;
(C) DUE AUTHORIZATION: each of Transmation's and Sub's
execution and delivery of this Agreement, its compliance with the
provisions hereof and the consummation of the Merger will have been
duly and validly authorized by all necessary corporate action on the
part of Transmation and Sub, and Metermaster will have received a duly
certified copy of all actions taken by Transmation's Board of Directors
and Sub's Board of Directors and sole shareholder effecting the same;
(D) METERMASTER'S CONSENTS, ETC.: all notices, filings,
consents, waivers and approvals set forth in SCHEDULE 4.4 will have
been given, made or obtained, as the case may be, by Metermaster;
(E) TRANSMATION'S CONSENTS, ETC.: all notices, filings,
consents, waivers and approvals set forth in Section 5.3 will have been
given, made or obtained, as the case may be, by Transmation, and
Metermaster will have received a true copy of each thereof;
(F) NO BAR: there will not be in effect any judgment, decree
or order of, or position taken by, any Governmental Entity of competent
jurisdiction, nor will there have been any action, suit, proceeding or
known investigation instituted or threatened, nor will any Legal
Requirement have been enacted or any action taken thereunder, which
would,
34
<PAGE> 39
in Metermaster's reasonable judgment, restrain or prohibit, make
illegal, or subject Metermaster to material damage as a result of, the
consummation of the Merger;
(G) FURTHER CLOSING DOCUMENTS: Transmation will have delivered
to Metermaster the following documents and instruments:
(I) the Escrow Agreement, duly executed by
Transmation and by the Escrow Agent;
(II) a copy of the certificates of incorporation of
Transmation and of Sub, including all amendments thereto,
certified as of a date reasonably proximate to the Closing
Date by the Secretaries of State of Ohio and New York,
respectively;
(III) a certificate of the Secretary of State of
Ohio, attesting to the good standing of Transmation in Ohio,
and a certificate of the Secretary of State of New York,
attesting to the good standing of Sub in New York, each as of
a date reasonably proximate to the Closing Date; and
(IV) the Estimated Aggregate Merger Consideration,
payable as provided by Section 2.2;
(H) OPINION OF COUNSEL: Metermaster will have received an
opinion addressed to Metermaster, dated the Closing Date, of Harter,
Secrest & Emery LLP, counsel to Transmation, in form and substance
reasonably satisfactory to Metermaster, to the effect that: (i) each of
Transmation and Sub is a corporation duly incorporated, validly
existing and in good standing under the laws of its jurisdiction of
incorporation, and each has all requisite corporate power and authority
to own, lease and operate its properties and carry on its business as
now conducted; (ii) each of Transmation and Sub has the requisite
corporate power and authority and has taken all corporate action
necessary to execute and deliver this Agreement and to consummate the
Merger; (iii) this Agreement has been duly and validly authorized,
executed and delivered by each of Transmation and Sub, and this
Agreement constitutes a legal, valid and binding obligation of each of
Transmation and Sub, enforceable against it in accordance with its
terms, except that such enforceability may be subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights or remedies generally
and subject to general equitable principles (regardless of whether
enforcement is sought in a proceeding at law or in equity); and (iv)
the execution and delivery of this Agreement by Transmation and by Sub
does not, and the consummation of the Merger and the fulfillment of the
obligations and undertakings hereunder will not, result in any
Violation of any provision of: (A) the certificates of incorporation or
bylaws of Transmation or of Sub; (B) any Contract known to such counsel
and applicable to Transmation, Sub or any of their respective assets;
or (C) any Legal Requirement applicable to Transmation, Sub or any of
their respective assets; except, in the case of Contracts and Legal
Requirements, for Violations which could not reasonably be expected,
individually or in the aggregate, to have any adverse effect on the
validity or enforceability of this Agreement or a material adverse
effect on the operations or
35
<PAGE> 40
financial condition of Transmation and its Subsidiaries taken as a
whole; provided, however, that such opinion will only extend to the
effect of the laws of the jurisdictions in which such firm is licensed
to practice; and
(I) OTHER MATTERS: Metermaster will have received such other
instruments and documents as will have been reasonably requested by
counsel to Metermaster within a reasonable time on or before the
Closing Date.
ARTICLE 11. TERMINATION
11.1 TERMINATION. This Agreement may be terminated at any time prior to
Closing, as follows:
(A) by the mutual consent of Transmation and Metermaster; or
(B) by Transmation, upon notice to Metermaster, if (without
any breach by Transmation or Sub of any of its obligations hereunder)
compliance with any condition set forth in Section 10.1 becomes
impossible, and such failure of compliance is not waived by
Transmation; or
(C) by Metermaster, upon notice to Transmation, if (without
any breach by Metermaster or any Party Shareholder of any of its or his
obligations hereunder) compliance with any condition set forth in
Section 10.2 becomes impossible, and such failure of compliance is not
waived by Metermaster; or
(D) by Transmation, upon notice to Metermaster, if between the
date hereof and the Closing Date employees of Metermaster terminate
their employment such that Metermaster no longer meets the minimum
staffing requirements set forth in SCHEDULE 11.1; or
(E) by Transmation, upon notice to Metermaster, if between the
date hereof and the Closing Date:
(I) there has occurred (or been discovered) any
event, condition or change in the operations of Metermaster's
business, or in the financial condition, assets, liabilities
(contingent or otherwise), income or backlog of Metermaster
(other than those resulting from inclement weather or from the
termination by employees of their employment with
Metermaster), or any damage, destruction or loss, whether or
not covered by insurance, that adversely impairs the use or
value of Metermaster's business or assets; or
(II) any one or more representations or warranties of
Metermaster contained in this Agreement, or any information
contained in any Schedule, is not true and correct (or, in the
case of any Schedule, complete) in any respect as of the date
hereof and as of the Closing Date, or there is an adverse
change,
36
<PAGE> 41
between the date of original delivery thereof and the Closing
Date, in the contents of any Schedule;
and the reasonably anticipated aggregate ongoing effect thereof on the
operations and financial condition of the Surviving Corporation after
the Effective Time exceeds $250,000; or
(F) by Transmation or by Metermaster, upon notice to the
other, at any time after February 8, 1999 (or such later date as
Transmation and Metermaster may mutually agree in writing).
In the event of any termination as provided by this Section 11.1, this Agreement
will thereupon become void and of no effect, without any liability on the part
of either party to the other.
ARTICLE 12. FURTHER COVENANTS
12.1 TAXES ON TRANSACTION. All Taxes payable by reason of the
consummation of the Merger will be paid by Metermaster, as contemplated by
Section 2.2(d), or by the Record Holders out of the Escrow Accounts.
12.2 EXPENSES OF THE PARTIES. Except as otherwise expressly provided in
this Agreement, all expenses involved in the preparation, negotiation,
authorization and consummation of this Agreement and the Merger, including all
fees and expenses of agents, representatives, counsel and accountants, will be
borne solely by the party which has incurred the same, and no other party will
have any responsibility with respect thereto; provided, however, that such
expenses of Metermaster will be paid by Metermaster, as contemplated by Section
2.2(d), or by the Record Holders.
12.3 CONFIDENTIALITY. Except for (a) necessary disclosure to such
party's directors, officers, employees, counsel, accountants, bankers and other
agents, (b) the disclosure contemplated by Sections 6.12 and 8.1, and (c)
disclosures deemed appropriate by Transmation, upon the advice of counsel, under
federal securities laws and regulations, each party will keep the provisions of
this Agreement confidential both prior and subsequent to the Closing Date.
Without limiting the generality of the foregoing, neither party will make any
press release or advertisement with respect to the Merger without the prior
consent of the other party, unless the disclosing party determines, upon the
advice of counsel, that such action is required by law. The terms of a certain
Confidentiality Agreement dated October 9, 1998 between Transmation and
Metermaster are incorporated herein by reference as if set forth herein in full.
12.4 FURTHER ASSURANCES. Each party will cooperate with the other, take
such further action, and execute and deliver such further documents, as may be
reasonably requested by the other party in order to carry out the terms and
purposes of this Agreement. Without limiting the generality of the foregoing,
Transmation may file an election under section 338 of the Code in connection
with the Merger and, if made, from and after the Closing Date no other party
will take any position on audit or in litigation which is inconsistent with such
election by Transmation.
37
<PAGE> 42
12.5 POST-CLOSING ACCESS TO INFORMATION. Transmation acknowledges that
subsequent to Closing the Record Holders may need access to information or
documents in the control or possession of Transmation or the Surviving
Corporation for the purposes of audits, compliance with Legal Requirements, the
prosecution or defense of claims, compliance with the terms of this Agreement,
or for other legitimate purposes. Accordingly, subsequent to Closing Transmation
will make available to the Record Holders and their agents, upon reasonable
notice, under reasonable conditions and upon reimbursement of Transmation for
all costs reasonably and actually incurred in connection therewith, such
documents and information in respect of Metermaster to the extent necessary to
facilitate the purposes described in this Section 12.5.
ARTICLE 13. IN GENERAL
13.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. The several
representations, warranties and covenants of the parties herein contained will
survive the Closing Date through December 31, 1999, except that: (a) to the
extent that any representation, warranty or covenant is the subject of a claim
for indemnification under Article 9 which is asserted on or before December 31,
1999, such representation, warranty and covenant will survive until such claim
is resolved as provided by the Escrow Agreement; and (b) the covenants of the
parties and other provisions herein contained which by their terms are to be
performed after the Closing Date will survive the Closing Date until they are
performed. All such representations, warranties, covenants and provisions will
be effective regardless of any investigation which may have been or may be made
at the time by or on behalf of the party to whom such representations,
warranties, covenants and provisions are made.
13.2 AMENDMENT AND WAIVER. This Agreement may be amended only by a
writing executed by Transmation and by Metermaster and the Record Holders
holding a majority in interest of the outstanding Common Stock. No waiver of
compliance with any provision or condition hereof, and no consent provided for
herein, will be effective unless evidenced by an instrument in writing duly
executed by the party sought to be charged therewith. No failure on the part of
any party to exercise, and no delay in exercising, any of its rights hereunder
will operate as a waiver thereof, nor will any single or partial exercise by any
party of any right preclude any other or future exercise thereof or the exercise
of any other right.
13.3 ASSIGNMENT. No party will assign or attempt to assign any of its
rights or obligations under this Agreement without the prior written consent of
the other parties. Notwithstanding the foregoing, without such consent, but upon
notice to Metermaster, Transmation or Sub may assign all of its rights hereunder
to any Subsidiary of Transmation so designated by Transmation, in which event
the term "Transmation" or "Sub" as used herein will mean and include such
Subsidiary; provided, however, that any such assignment will not relieve
Transmation of any of its obligations hereunder.
13.4 NOTICES, ETC. Each notice, report, demand, waiver, consent and
other communication required or permitted to be given hereunder will be in
writing and will be sent either by registered or certified first-class mail,
postage prepaid and return receipt requested, or by telex or telecopier,
addressed as follows:
38
<PAGE> 43
If to Transmation: Transmation, Inc.
10 Vantage Point Drive
Rochester, New York 14624
Attention: Eric W. McInroy, President
Fax: (716) 352-7788
with a copy to: Harter, Secrest & Emery LLP
700 Midtown Tower
Rochester, New York 14604-2070
Attention: Susan Mascette Brandt, Esq.
Fax: (716) 232-2152
If to Metermaster, the Stuart W. Jones
Party Shareholders or the 109 Radford Circle
Shareholders' Representative: Marietta, Georgia 30060
Fax: (770) 432-8011
with a copy to: Nelson Mullins Riley & Scarborough, L.L.P.
First Union Plaza, Suite 1400
999 Peachtree Street, N.E.
Atlanta, Georgia 30309-3964
Attention: Charles D. Vaughn, Esq.
Fax: (404) 817-6050
Each such notice and other communication given by mail will be deemed to have
been given when it is deposited in the United States mail in the manner
specified herein, and each such notice and other communication given by telex,
telecopier or facsimile machine will be deemed to have been given when it is so
transmitted and the appropriate answerback is received. Any party may change its
address for the purpose hereof by giving notice in accordance with the
provisions of this Section 13.4.
13.5 INFERENCES. Inasmuch as this Agreement is the result of
negotiations between sophisticated parties of equal bargaining power represented
by counsel, no inference in favor of or against any party will be drawn from the
fact that any portion of this Agreement has been drafted by or on behalf of such
party.
13.6 BINDING EFFECT. Subject to the provisions of Section 13.3, this
Agreement will be binding upon and will inure to the benefit of the parties and
their respective successors and assigns. This Agreement creates no rights of any
nature in any Person not a party hereto.
13.7 GOVERNING LAW. Except to the extent that the GBCC is applicable to
the Merger, this Agreement will be governed by and construed in accordance with
the laws of the State of New York applicable to agreements made and to be
performed entirely within such State.
39
<PAGE> 44
13.8 EFFECT OF AGREEMENT. This Agreement sets forth the entire
understanding of the parties, and supersedes any and all prior agreements,
arrangements and understandings, written or oral, relating to the subject matter
hereof.
13.9 HEADINGS; COUNTERPARTS. The Article and Section headings of this
Agreement are for convenience of reference only and do not form a part hereof
and do not in any way modify, interpret or construe the intention of the
parties. This Agreement may be executed in one or more counterparts, each of
which will be deemed an original, but all of which together will constitute one
and the same instrument.
40
<PAGE> 45
IN WITNESS WHEREOF, the parties have duly executed this Agreement, as
amended and restated, on the respective dates first written above.
TRANSMATION, INC.
By: /s/ Eric W. McInroy
-----------------------------------
Eric W. McInroy
President and Chief Executive
Officer
MM ACQUISITION CORP.
By: /s/ Eric W. McInroy
-----------------------------------
Eric W. McInroy
President and Chief Executive
Officer
METERMASTER INC.
By: /s/ Stuart W. Jones
-----------------------------------
Stuart W. Jones
Chief Executive Officer
/s/ Stuart W. Jones
----------------------------------
STUART W. JONES
/s/ William L. Hooper
---------------------------------
WILLIAM L. HOOPER
/s/ John W. Mellon
----------------------------------
JOHN W. MELLON
/s/ Walter R. Young, Jr.
---------------------------------
WALTER R. YOUNG, JR.
41
<PAGE> 46
TABLE OF EXHIBITS AND SCHEDULES
* Exhibit A Form of Escrow Agreement
* Schedule 1.0 Permitted Encumbrances
* Schedule 2.1 Merger Consideration
* Schedule 2.3 Closing Balance Sheet
* Schedule 4.1 Subsidiaries, Foreign Qualifications, Etc.
* Schedule 4.2 Holders of Metermaster Stock
* Schedule 4.4 Conflicts; Required Consents, Notices, Etc.
* Schedule 4.5(a) Historical Financial Statements
* Schedule 4.5(b) Unaudited Financial Statements
* Schedule 4.7 Changes Since December 31, 1997
* Schedule 4.10 Tangible Property
* Schedule 4.11 Inventories
* Schedule 4.12 Accounts Receivable
* Schedule 4.13 Intellectual Property
* Schedule 4.14(a) Contracts
* Schedule 4.14(b) Backlog
* Schedule 4.15 Legal Proceedings, Etc.
* Schedule 4.16(a) Employment Matters
* Schedule 4.16(b) Employment Terminations
* Schedule 4.16(c) Compliance with Employment Laws
* Schedule 4.17 Employee Plans
* Schedule 4.18 Environmental Matters
* Schedule 4.19 Tax Matters
* Schedule 4.20 Related Party Contracts
* Schedule 4.21 Product and Service Warranties
* Schedule 4.22 Other Assets
* Schedule 4.25 Engineered Systems Division
* Schedule 6.1 Actions Prior to Closing
* Schedule 11.1 Transmation's Minimum Staffing Requirements
* OMITTED EXHIBITS AND SCHEDULES
UPON WRITTEN REQUEST, THE REGISTRANT WILL PROVIDE COPIES OF ANY OF THE
REFERENCED OMITTED EXHIBITS AND SCHEDULES.
42
<PAGE> 47
<TABLE>
<CAPTION>
INDEX OF DEFINED TERMS
PAGE
<S> <C>
Accounts Receivable............................................................1
Adjustment Amount .............................................................7
Affiliate......................................................................1
Aggregate Merger Consideration.................................................5
Agreement......................................................................1
Articles.......................................................................5
Auditors.......................................................................1
Closing........................................................................2
Closing Balance Sheet..........................................................2
Closing Date...................................................................8
Code...........................................................................2
Common Stock...................................................................1
Constituent Corporations.......................................................2
Contracts......................................................................2
Converted Shares..............................................................10
Current Financial Statements...................................................2
Dissenter......................................................................2
Due Diligence Information.....................................................23
Effective Time.................................................................9
Employee Plans................................................................18
Encumbrances...................................................................2
Environmental Laws or Regulations.............................................20
ERISA..........................................................................2
Escrow Accounts ...............................................................2
Escrow Agent...................................................................2
Escrow Agreement...............................................................2
Estimated Aggregate Merger Consideration.......................................6
Exhibits.......................................................................5
GAAP...........................................................................2
GBCC...........................................................................3
Governmental Entity............................................................3
Hazardous Substances..........................................................20
Historical Financial Statements................................................3
includes, including............................................................5
Indemnified Parties...........................................................29
Intellectual Property..........................................................3
Inventories....................................................................3
IRS............................................................................3
Jones..........................................................................1
Lease Escrow Account...........................................................3
Legal Requirements.............................................................3
Long-Term Escrow Account.......................................................3
Losses .............................................................3
</TABLE>
43
<PAGE> 48
<TABLE>
<S> <C>
Mellon.........................................................................1
Merger.........................................................................1
Merger Consideration...........................................................5
Metermaster....................................................................1
Metermaster Stock .............................................................1
Party Shareholders.............................................................1
Permitted Encumbrances.........................................................4
Person.........................................................................4
Preferred Stock................................................................1
Record Holder..................................................................4
Related Party.................................................................21
Related Party Contracts........................................................4
Schedules......................................................................5
Sections.......................................................................5
Series I Preferred Stock.......................................................1
Series II Preferred Stock......................................................1
Shareholder Approval...........................................................4
Shareholders' Representative...................................................4
Short-Term Escrow Account......................................................4
Spin-Off......................................................................26
Stock Rights..................................................................12
Sub............................................................................1
Subsidiary.....................................................................4
Surviving Corporation..........................................................4
Taxes..........................................................................4
Transmation ...................................................................1
Unaudited Financial Statements.................................................4
Violation .....................................................................4
Voting Debt....................................................................5
</TABLE>
44
<PAGE> 1
EXHIBIT 4 (b)
SECOND AMENDMENT TO CREDIT AND LOAN AGREEMENT
---------------------------------------------
THIS SECOND AMENDMENT (the "Amendment"), dated as of February 9, 1999,
is made to that certain Credit and Loan Agreement, dated as of August 7, 1998,
as the same was amended by that certain First Amendment to Credit Agreement and
Loan Agreement, dated as of October 6, 1998 (collectively, the "Loan
Agreement"), by and among TRANSMATION, INC., an Ohio corporation (the
"Borrower'), THE LENDERS PARTY THERETO FROM TIME TO TIME (the "Lenders") and
KEYBANK NATIONAL ASSOCIATION, a national banking association, as Agent (in such
capacity, together with its successors in such capacity, the "Agent").
RECITALS:
WHEREAS, the Borrower has requested that certain changes and
modifications be made to the Loan Agreement, including, but not limited to,
increasing the principal amount of Term Loan A and consenting to Borrower's
entering into a certain Agreement and Plan of Merger (the "Merger Agreement"),
dated January 21, 1999 and amended and restated February 4, 1999 among Borrower,
Metermaster Inc. ("Metermaster"), MM Acquisition Corp., a wholly owned
subsidiary of Borrower ("Sub"), and others, pursuant to which Sub will merge
with and into Metermaster, at which time Metermaster will be a wholly owned
subsidiary of Borrower (the "Merger"), and the Lenders are agreeable to making
the same in accordance with the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the promises and of the mutual
covenants herein contained, the receipt and sufficiency of which are hereby
mutually acknowledged, and intending to be legally bound hereby, the parties
hereto agree as follows:
1. DEFINITIONS. All capitalized terms used and not otherwise defined in
this Amendment shall have the meanings ascribed to such terms in the Loan
Agreement.
2. CERTAIN DEFINITIONS.
(a) The definition of "Applicable Margin Ratio" set forth in
Section 1.01 of the Loan Agreement is amended in its entirety to read
as follows: "'Applicable Margin Ratio' shall mean (i) as of the date of
this Amendment, 3.75; (ii) beginning on April 1, 1999 and ending ten
(10) Business Days after receipt by the Agent of the quarterly
financial statements described in Section 5.01 for the fiscal quarter
ending March 31, 1999, 4.25; and (iii) thereafter, the ratio of Funded
Debt at the end of the most recently completed fiscal quarter to EBITDA
for the period of the four (4) then most recently completed fiscal
quarters, calculated pursuant to SECTIONS 2.04(A)(II)(III),
2.06(II)(III), and 2.08(II)(III) respectively."
(b) The definition of "Term Loan A Maturity Date" set forth in
SECTION 1.01 of the Loan Agreement is amended in its entirety to read
as follows: "'Term Loan A Maturity Date' shall mean February 1, 2004."
<PAGE> 2
3. TERM LOAN A.
(a) Subsection 2.05(a)(ii) is amended to read in its entirety as
follows: "Notwithstanding anything to the contrary in the foregoing paragraph
(i), at no time during the term of this Agreement shall the aggregate amount of
the Lenders' Term Loan A Commitment, or the aggregate outstanding principal
balance of Term Loan A, exceed $13,000,000."
(b) Subsection 2.05(d) is amended to read in its entirety as follows:
(d) PAYMENT TERMS. The Borrower shall make payments
of principal to the Lenders with respect to the Term
Loan A as follows:
i) in the aggregate amount of $550,000 plus interest
calculated in accordance with Section 2.06 on the
outstanding principal amount thereof on every third
(3rd) Regular Payment Date through February 1, 2000;
and
ii) in the aggregate amount of $675,000 plus interest
calculated in accordance with Section 2.06 on the
outstanding principal amount thereof on every third
(3rd) Regular Payment Date beginning on May 1, 2000
through the Term Loan A Maturity Date, at which time
the entire outstanding principal balance, all accrued
interest and all other sums due from the Borrower
shall be fully due and payable.
The Borrower hereby irrevocably authorizes the Agent,
without further action or authorization by or notice
to the Borrower, to make payments of any amounts
owing under this Section by debiting and
automatically transferring any amounts from any
account of Borrower now or hereafter established with
Agent and for such purpose, the Borrower hereby
appoints the Agent as its agent and attorney-in-fact.
Nothing contained herein shall be deemed to obligate
the Agent at any time to make any such debit,
transfer and/or payment nor shall the Agent be liable
to the Borrower or any other Person for any such
debit, transfer or payment or its failure or refusal
at any time to do so.
4. CERTAIN INTEREST RATES.
(a) Section 2.04 is amended to read in its entirety as follows:
(a) OPTIONAL BASES OF BORROWING. The unpaid principal
amount of the Revolving Credit Loans shall bear interest
for each day until due on one or more bases selected by
the Borrower from among the interest rate options set
forth below. Subject to the provisions and limitations of
this Agreement, the Borrower may select different Options
to apply simultaneously to different Revolving Credit
Loans and may select different Funding Periods to apply
simultaneously to different parts of each Fixed LIBOR Rate
Loan.
2
<PAGE> 3
(i) FLOATING RATE OPTION. A rate per annum (computed on a
basis of a year of 360 days and actual days elapsed) for
each day equal to the Prime Rate plus or minus, as the
case may be, the amount of basis points hereinafter set
forth next to the Applicable Margin Ratio in effect as of
the date the Floating Rate Option is selected by the
Borrower or otherwise goes or remains in effect pursuant
to this Agreement.
<TABLE>
<CAPTION>
---------------------------------------------------------------------- ------------------------------
APPLICABLE MARGIN RATIO (measured as of the date the
Floating Rate Option selected by Borrower goes into PLUS OR MINUS, AS INDICATED,
effect or otherwise goes or remains in effect pursuant to THE FOLLOWING BASIS POINTS:
this Agreement)
---------------------------------------------------------------------- ------------------------------
<S> <C>
greater than or equal to 4.00 but less than 4.50 50
---------------------------------------------------- ------------------------------------------------
greater than or equal to 3.25 but less than 4.00 25
---------------------------------------------------- ------------------------------------------------
greater than or equal to 2.25 but less than 3.25 0
---------------------------------------------------- ------------------------------------------------
greater than or equal to 1.00 but less than 2.25 -12.5
---------------------------------------------------- ------------------------------------------------
less than 1.00 -25
---------------------------------------------------- ------------------------------------------------
</TABLE>
(ii) FIXED LIBOR RATE OPTION. A rate per annum (based on a
year of 360 days and actual days elapsed) for each day
during the applicable Funding Period equal to the Fixed
LIBOR Rate for such Funding Period plus the amount of
basis points hereinafter set forth next to the Applicable
Margin Ratio in effect as of the date the Fixed LIBOR Rate
Option is selected by the Borrower (subject to the
provisions of SECTION 2.09 hereinafter set forth):
<TABLE>
<CAPTION>
------------------------------------------------------------- -------------------------------
APPLICABLE MARGIN RATIO (measured as of the
date the Fixed LIBOR RATE Option selected by ADDITIONAL BASIS
Borrower goes into effect) POINTS:
------------------------------------------------------------- -------------------------------
<S> <C>
greater than or equal to 4.00 but less than 4.50 240
------------------------------------------------------------- -------------------------------
greater than or equal to 3.25 but less than 4.00 185
------------------------------------------------------------- -------------------------------
greater than or equal to 2.25 but less than 3.25 152.5
------------------------------------------------------------- -------------------------------
greater than or equal to 1.00 but less than 2.25 127.5
------------------------------------------------------------- -------------------------------
less than 1.00 102.5
------------------------------------------------------------- -------------------------------
</TABLE>
The Agent shall give prompt notice to the Borrower and
each Lender (in any event within ten (10) Business Days of
its receipt of the quarterly financial statements or
annual reports described in SECTION 5.01 hereof) of (i)
the Floating Rate determined or adjusted in accordance
with the definition of the Floating Rate, (ii) the Fixed
3
<PAGE> 4
LIBOR Rate determined or adjusted in accordance with the
definition of the Fixed LIBOR Rate, and (iii) the
Applicable Margin Ratio (and corresponding Basis Points
added or subtracted) determined in accordance with the
definition of the Applicable Margin Ratio based upon the
information set forth in the most recent quarterly
financial statements or annual reports described in
SECTION 5.01 hereof, which determinations or adjustments
shall be conclusive absent manifest error, each such
determination or adjustment to be effective as of the
first Business Day following the most recently concluded
fiscal quarter.
(b) Section 2.06 is amended to read in its entirety as
follows:
The unpaid principal amount of the Term Loan A shall bear
interest for each day until due on the basis selected by
the Borrower from between the interest rate options set
forth below.
(i) FLOATING RATE OPTION. A rate per annum (computed on a
basis of a year of 360 days and actual days elapsed) for
each day equal to the Prime Rate plus or minus, as the
case may be, the amount of basis points hereinafter set
forth next to the Applicable Margin Ratio in effect as of
the date the Floating Rate Option is selected by the
Borrower or otherwise goes or remains in effect pursuant
to this Agreement.
<TABLE>
<CAPTION>
---------------------------------------------------------------------- ----------------------------------
APPLICABLE MARGIN RATIO (measured as of the date the
Floating Rate Option selected by Borrower goes into effect PLUS OR MINUS, AS INDICATED,
or otherwise goes or remains in effect pursuant to this THE FOLLOWING BASIS POINTS:
Agreement)
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
greater than or equal to 4.00 but less than 4.50 50
--------------------------------------------------------------------------------------------------------
greater than or equal to 3.25 but less than 4.00 25
--------------------------------------------------------------------------------------------------------
greater than or equal to 2.25 but less than 3.25 0
--------------------------------------------------------------------------------------------------------
greater than or equal to 1.00 but less than 2.25 -12.5
--------------------------------------------------------------------------------------------------------
less than 1.00 -25
--------------------------------------------------------------------------------------------------------
</TABLE>
(ii) FIXED LIBOR RATE OPTION. A rate per annum (based on a
year of 360 days and actual days elapsed) for each day
during the applicable Funding Period equal to the Fixed
LIBOR Rate for such Funding Period plus the amount of
basis points hereinafter set forth next to the Applicable
Margin Ratio in effect as of the date the Fixed LIBOR Rate
Option is selected by the Borrower (subject to the
provisions of SECTION 2.09 hereinafter set forth):
4
<PAGE> 5
<TABLE>
<CAPTION>
------------------------------------------------------------- -------------------------------
APPLICABLE MARGIN RATIO (measured as of the
date the Fixed LIBOR RATE Option selected by ADDITIONAL
Borrower goes into effect) BASIS POINTS:
------------------------------------------------------------- -------------------------------
<S> <C> <C>
greater than or equal to 4.00 but less than 4.50 240
------------------------------------------------------------- -------------------------------
greater than or equal to 3.25 but less than 4.00 185
------------------------------------------------------------- -------------------------------
greater than or equal to 2.25 but less than 3.25 152.5
------------------------------------------------------------- -------------------------------
greater than or equal to 1.00 but less than 2.25 127.5
------------------------------------------------------------- -------------------------------
less than 1.00 102.5
------------------------------------------------------------- -------------------------------
</TABLE>
The Agent shall give prompt notice to the Borrower and
each Lender (in any event within ten (10) Business Days of
its receipt of the quarterly financial statements or
annual reports described in SECTION 5.01 hereof) of (i)
the Floating Rate determined or adjusted in accordance
with the definition of the Floating Rate, (ii) the Fixed
LIBOR Rate determined or adjusted in accordance with the
definition of the Fixed LIBOR Rate, and (iii) the
Applicable Margin Ratio (and corresponding Basis Points
added or subtracted) determined in accordance with the
definition of the Applicable Margin Ratio based upon the
information set forth in the most recent quarterly
financial statements or annual reports described in
SECTION 5.01 hereof, which determinations or adjustments
shall be conclusive absent manifest error, each such
determination or adjustment to be effective as of the
first Business Day following the most recently concluded
fiscal quarter.
(c) Section 2.08 is amended to read in its entirety as
follows:
The unpaid principal amount of the Term Loan B shall bear
interest for each day until due on the basis selected by
the Borrower from between the interest rate options set
forth below:
(i) FLOATING RATE OPTION. A rate per annum (computed on a
basis of a year of 360 days and actual days elapsed) for
each day equal to the Prime Rate plus or minus, as the
case may be, the amount of basis points hereinafter set
forth next to the Applicable Margin Ratio in effect as of
the date the Floating Rate Option is (A) selected by the
Borrower or (B) otherwise goes or remains in effect
pursuant to this Agreement:
5
<PAGE> 6
<TABLE>
<CAPTION>
--------------------------------------------------------------------- -----------------------------------
APPLICABLE MARGIN RATIO (measured as of the date the
Floating Rate Option selected by Borrower goes into
effect or otherwise goes or remains in effect pursuant PLUS OR MINUS, AS INDICATED,
to this Agreement) THE FOLLOWING BASIS POINTS:
--------------------------------------------------------------------- -----------------------------------
<S> <C>
greater than or equal to 4.00 but less than 4.50 75
--------------------------------------------------------------------- -----------------------------------
greater than or equal to 3.25 but less than 4.00 62.5
--------------------------------------------------------------------- -----------------------------------
greater than or equal to 2.25 but less than 3.25 37.5
--------------------------------------------------------------------- -----------------------------------
greater than or equal to 1.00 but less than 2.25 25
--------------------------------------------------------------------- -----------------------------------
less than 1.00 12.5
--------------------------------------------------------------------- -----------------------------------
</TABLE>
Such interest rate shall change automatically from time to
time effective as of the effective date of each change in
the Prime Rate and each change in the Applicable Margin
Ratio.
(ii) FIXED LIBOR RATE OPTION. A rate per annum (based on a
year of 360 days and actual days elapsed) for each day
during the applicable Funding Period equal to the Fixed
LIBOR Rate for such Funding Period plus the amount of
basis points hereinafter set forth next to the Applicable
Margin Ratio in effect as of the date the Fixed LIBOR Rate
Option is selected by the Borrower (subject to the
provisions of SECTION 2.09 hereinafter set forth):
<TABLE>
<CAPTION>
------------------------------------------------------------- -------------------------------
APPLICABLE MARGIN RATIO (measured as of the
date the Fixed LIBOR RATE Option selected by ADDITIONAL BASIS
Borrower goes into effect) POINTS:
------------------------------------------------------------- -------------------------------
<S> <C>
greater than or equal to 4.00 but less than 4.50 300
------------------------------------------------------------- -------------------------------
greater than or equal to 3.25 but less than 4.00 240
------------------------------------------------------------- -------------------------------
greater than or equal to 2.25 but less than 3.25 215
------------------------------------------------------------- -------------------------------
greater than or equal to 1.00 but less than 2.25 190
------------------------------------------------------------- -------------------------------
less than 1.00 165
------------------------------------------------------------- -------------------------------
</TABLE>
The Agent shall give prompt notice to the Borrower and
each Lender (in any event within ten (10) Business Days of
its receipt of the quarterly financial statements or
annual reports described in SECTION 5.01 hereof) of (i)
the Floating Rate determined or adjusted in accordance
with the definition of the Floating Rate, (ii) the Fixed
LIBOR Rate determined or adjusted in accordance with the
definition of the Fixed LIBOR Rate, and (iii) the
Applicable Margin Ratio (and corresponding Basis Points
added or subtracted) determined in accordance with the
definition of the Applicable Margin Ratio based
6
<PAGE> 7
upon the information set forth in the most recent
quarterly financial statements or annual reports described
in SECTION 5.01 hereof, which determinations or
adjustments shall be conclusive absent manifest error,
each such determination or adjustment to be effective as
of the first Business Day following the most recently
concluded fiscal quarter.
5. CERTAIN USE OF PROCEEDS. Clauses (iii) and (iv) of the first
sentence of SECTION 5.09 of the Loan Agreement are added to read in their
entirety as follows: "; (iii) finance the acquisition of Metermaster in
accordance with the Merger Agreement; and (iv) acquire or redeem capital stock
of Borrower for an aggregate consideration of up to $1,000,000, provided such
acquisition or redemption does not violate the provisions of SECTION 6.05
regarding Restricted Payments."
6. CERTAIN FINANCIAL COVENANTS.
(a) Subsection (a) of SECTION 6.01 of the Loan Agreement is
amended in its entirety to read as follows:
(a) For the fiscal quarter ending March 31, 1999 permit
the Fixed Charge Coverage Ratio (measured as of the period
of the four (4) then most recently completed fiscal
quarters of the Borrower) to be less than 1.00 to 1.00;
for the fiscal quarters ending June 30, 1999 and September
30, 1999, permit the Fixed Charge Coverage Ratio (measured
as of the period of the four (4) then most recently
completed fiscal quarters of the Borrower) to be less than
1.10 to 1.00; for the fiscal quarter ending December 31,
1999, permit the Fixed Charge Coverage Ratio (measured as
of the period of the four (4) then most recently completed
fiscal quarters of the Borrower) to be less than 1.15 to
1.00; and thereafter, permit the Fixed Charge Coverage
Ratio (measured as of the period of the four (4) then most
recently completed fiscal quarters of the Borrower) to be
at any time less than 1.25 to 1.00.
(b) Subsection (c) of SECTION 6.01 of the Loan Agreement is
amended in its entirety to read as follows:
(c) Permit the ratio of consolidated Funded Debt of
Borrower and its Subsidiaries to the consolidated EBITDA
of Borrower and its Subsidiaries, calculated at the same
point in time, and measured as of the period of the four
(4) then most recently completed fiscal quarters of the
Borrower to be greater than 4.50 to 1.00 from the date of
this Amendment to and including March 31, 1999; greater
than 4.00 to 1.00 from April 1, 1999 to and including
September 30, 1999; greater than 3.50 to 1.00 from October
1, 1999 to and including December 31, 2000; and greater
than 2.50 to 1.00 from January 1, 2001 and at all times
thereafter.
7
<PAGE> 8
7. CONDITIONS TO ENTERING INTO AMENDMENT.
The obligation of each Lender to enter into this Amendment and to make
Loans on the date hereof is subject to the satisfaction of the following
conditions precedent, in addition to the conditions precedent set forth in
SECTION 4.02 of the Loan Agreement:
(a) AGREEMENT; NOTES. The Agent shall have received an executed
counterpart of this Agreement for each Lender, duly executed by the
Borrower, and executed Restated Term Loan A Notes in the form attached
hereto as EXHIBIT A conforming to the requirements hereof, duly
executed on behalf of the Borrower.
(b) GUARANTEES. The Agent shall have received an original Guaranty, in
the form attached hereto as EXHIBIT B, executed by Metermaster.
(c) SECURITY DOCUMENTS. The Agent shall have received an executed
counterpart of each Security Document with respect to Metermaster for
each governmental office in which the same may be recorded or filed, if
any, duly executed, and accompanied by all immediately available funds
and all certificates, affidavits and other documents necessary to
record or file the same.
(d) CORPORATE PROCEEDINGS. The Agent shall have received certificates
by the Secretary or Assistant Secretary of Borrower and Metermaster,
after giving effect to the Merger, dated as of the date hereof as to
(i) with respect to Metermaster, true copies of the articles of
incorporation and by-laws (or other constituent documents) of
Metermaster in effect on such date (which, in the case of articles of
incorporation or other constituent documents filed or required to be
filed with the Secretary of State or other Governmental Authority in
its jurisdiction of incorporation, shall be certified to be true,
correct and complete by such Secretary or Assistant Secretary of
Metermaster as of the date hereof), (ii) true copies of all corporate
action taken by Borrower and Metermaster relative to the Merger, this
Amendment and the other Loan Documents and (iii) the incumbency and
signature of the respective officers of Borrower and Metermaster
executing this Amendment and the other Loan Documents, together with
satisfactory evidence of the incumbency of such Secretary or Assistant
Secretary. The Agent shall have received certificates from the
appropriate Secretaries of State or other applicable Governmental
Authorities dated not more than sixty (60) days before the date hereof
showing the good standing of Borrower in its state of incorporation and
of Metermaster in its state of incorporation and each state in which
Metermaster does business.
(e) INSURANCE. The Agent shall have received a certificate setting
forth all policies of insurance in force with respect to Metermaster,
issued by an insurance agent reasonably acceptable to the Agent and
satisfactory in form and substance to the Agent and naming Agent as
payee and additional insured.
(f) FINANCIAL STATEMENTS. The Agent shall have received copies of the
consolidated financial statements of Borrower for the quarter ending
December 31, 1998 satisfactory to Lenders.
8
<PAGE> 9
(g) LEGAL OPINION OF COUNSEL TO BORROWER AND SUB. The Agent shall have
received, with an executed counterpart for each Lender, (i) an opinion
addressed to the Agent and each Lender, dated the date hereof, of
Harter, Secrest & Emery, LLP, Rochester, New York, counsel to the
Borrower and Sub, as to such matters as may be requested by the Agent
and in form and substance satisfactory to the Agent and its counsel,
including but not limited to completion of the transactions
contemplated by the Merger Agreement; and (ii) copies of all legal
opinions rendered in connection with the Merger, each of which legal
opinions shall contain a provision that each Lender shall be entitled
to rely on such legal opinion as if it were an addressee of such legal
opinion.
(h) FEES, EXPENSES, ETC. All fees and other compensation to be paid to
the Agent or the Lenders pursuant hereto, including but not limited to
those fees set forth in Section 9.06 of the Loan Agreement and
underwriting fees of $14,000 to Agent and $36,000 to State Street Bank
& Trust Company ("State Street"), and pursuant to any other written
agreement on or prior to the date hereof shall have been paid or
received, and all invoiced expenses incurred by the Agent pursuant
hereto shall have been paid.
(i) METERMASTER COST REDUCTIONS. The Agent shall have received a
certificate from an officer of Borrower identifying reductions in costs
of Metermaster taken by Borrower, including identification of those
that have taken place prior to the date hereof and those that will
occur following the date hereof, along with completion dates for those
reductions, on a line-by-line basis using the same format as the audit
report, with detailed explanations, in accordance with the "Forecast
P&L" for the 12-months ended March 31, 2000, as prepared by John
Misiaszek and dated December 29, 1998, reflecting post-acquisition
EBITDA of at least $1,584,332 from Metermaster alone.
(j) SYNDICATION. The Agent shall have obtained the consent of State
Street to the terms of the Amendment, including but not limited to the
principal amounts of the Term Loan A Notes attached hereto as Exhibit
A.
(k) DUE DILIGENCE. The Agent shall have received a certificate from an
officer of Borrower setting forth any derogatory information discovered
during its due diligence review of Metermaster, including but not
limited to Metermaster's Year 2000 progress toward compliance and
Borrower's plan to make Metermaster compliant, including by
transferring Metermaster's accounting and operations computer systems
to Borrower's computer system.
(l) FIELD EXAMINATION. State Street shall have completed its field
examination of Borrower on February 4, 1999 and February 5, 1999.
(m) LANDLORD WAIVERS. The Agent shall have received landlord waivers in
form satisfactory to Agent and its counsel from each owner of real
property at which Metermaster has assets, except as specifically waived
by Agent.
(n) ADDITIONAL MATTERS. The Agent shall have received such other
certificates, opinions, documents and instruments as may be requested
by the Agent or any Lender. All corporate and other proceedings, and
all documents, instruments and other matters in
9
<PAGE> 10
connection with the transactions contemplated by this Agreement and the
other Loan Documents shall be satisfactory in form and substance to the
Agent and each Lender.
8. CERTAIN REPRESENTATIONS. Borrower represents and warrants to the
Agent and each Lender as follows:
(a) All Conditions contained in Section 4.02 of the Loan Agreement have
been satisfied in all material respects except as otherwise
specifically set forth herein.
(b) Borrower's Articles of Incorporation and Code of Regulations
provided to Agent on August 7, 1998 have not been amended or repealed.
9. CONSENT OF AGENT AND LENDERS. Agent and Lenders hereby acknowledge
notice of and provide their consent to the Merger, notwithstanding any
provisions of the Loan Agreement prohibiting the transactions contemplated
thereby, including the provisions of Section 5.13 regarding Subsidiaries and
Section 6.13 regarding Acquisitions. Schedules 3.01 and 3.22 to the Loan
Agreement are hereby amended to add Metermaster Inc., a Georgia Corporation,
wholly owned by Borrower.
10. MISCELLANEOUS. This Amendment is entered into pursuant to and in
accordance with SECTION 9.03 of the Loan Agreement. This Amendment may be
executed in counterparts, each of which shall be deemed an original and all of
which together shall constitute one and the same instrument. Except as expressly
modified or amended herein, the Loan Agreement and each of the other Loan
Documents to which the Borrower is a party is hereby restated, ratified and
confirmed and shall remain in full force and effect.
10
<PAGE> 11
IN WITNESS WHEREOF, the parties hereto, by their officers thereunto
duly authorized, have caused this Second Amendment to Credit and Loan Agreement
to be duly executed and delivered as of the date first above written.
TRANSMATION, INC.
By: /s/ Eric W. McInroy
------------------------------------------
Name: Eric W. McInroy
---------------------------------------
Title: President And Chief Executive Office
---------------------------------------
KEYBANK NATIONAL ASSOCIATION,
as Agent and a Lender
By: /s/ Timothy R. Beers
------------------------------------------
Timothy R. Beers
Title: Vice President
LENDERS:
STATE STREET BANK AND TRUST
COMPANY
By: /s/ Girard Sargent
------------------------------------------
Girard Sargent
Title: Vice President
11
<PAGE> 12
TABLE OF EXHIBITS
* Exhibit A Restated Term Loan A Notes
* Exhibit B Guaranty
* OMITTED EXHIBITS
UPON WRITTEN REQUEST, THE REGISTRANT WILL PROVIDE COPIES OF ANY OF THE
REFERENCED OMITTED EXHIBITS.
