EXHIBIT 2.2 (C)
November 9, 1999
Robert T. Collier, Jr.
Frank H. Gore
1150 Southern Minerals Road
Corpus Christi, Texas 78409
RE: COMPROMISE AND SETTLEMENT IN CONNECTION WITH TENDER OFFER
Gentlemen:
This letter agreement (the "Agreement") will evidence the agreement among
INNOVATIVE VALVE TECHNOLOGIES, INC., a Delaware corporation ("Invatec"), ROBERT
T. COLLIER, JR., an individual residing in Texas, and FRANK H. GORE, an
individual residing in Texas, to compromise and settle the obligations of
Invatec to Mr. Collier and Mr. Gore under that certain Merger Agreement (the
"Original Merger Agreement") dated effective July 9, 1998, executed by Invatec,
Collier Acquisition, Inc., Collier Equipment Corporation, Mr. Collier and Mr.
Gore, as amended by that certain Amendment to Merger Agreement (the "First
Amendment") dated effective August 20, 1998 (the Original Merger Agreement, as
amended by the First Amendment, is hereinafter referred to as the "Merger
Agreement"). Invatec, Mr. Collier and Mr. Gore are hereinafter sometimes
referred to collectively as the "Parties" and individually as a "Party." Except
as otherwise specifically indicated herein, all defined terms contained herein
shall have the same meanings as contained in the Merger Agreement.
Invatec has provided to Mr. Collier and Mr. Gore, on a confidential basis
pursuant to the Confidentiality and Nondisclosure Agreement entered into as of
October 25, 1999 (the "Confidentiality Agreement), information regarding one or
more possibilities for a potential Restructuring (as defined in the
Confidentiality Agreement) and, in connection with a Restructuring, Invatec has
requested that Mr. Collier, Mr. Gore and certain other third parties
(collectively, the "Holders"), including certain former owners of companies
acquired by Invatec, and certain holders of debt or preferred stock issued by
Invatec or its subsidiaries, compromise and settle the obligations owed by
Invatec to such Holders (any agreements entered into with any Holders, if any,
being hereinafter referred to collectively as the "Holders' Modification
Agreements"), in order to allow Invatec to pursue, discuss and negotiate a
Restructuring and induce the stockholders of Invatec to approve or otherwise
participate in a Restructuring and any other Restructuring approved by Invatec,
and to enter into and consummate any transactions which may arise therefrom or
in connection therewith.
Robert T. Collier, Jr.
Frank H. Gore
November 9, 1999
Page 2
In connection with Invatec's pursuit of a Restructuring, Invatec has
entered into negotiations with an independent third party regarding a possible
cash tender offer to purchase all of the outstanding shares of Invatec common
stock, on terms to be negotiated by Invatec and such third party. In order to
enable Invatec and such third party to reach agreement on the terms of the
tender offer currently contemplated, the Parties have agreed to compromise and
settle Invatec's obligations to Mr. Collier and Mr. Gore under the Merger
Agreement on the terms hereinafter set forth. For purposes of this agreement,
such tender offer, or any subsequent or competing tender offer, shall be
hereinafter referred to as the "Tender Offer," and the party making the Tender
Offer shall be hereinafter referred to as the "Offeror."
NOW, THEREFORE, for and in consideration of the premises, the mutual
covenants and agreements contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Parties hereby agree as follows:
1. Pursuant to Paragraph 6 of the Merger Agreement, Invatec is obligated
to pay each Stockholder for each share of Invatec Common Stock issued to such
Stockholder in the Acquisition and still owned by such Stockholder as of July 9,
1999, Seven and 50/100 Dollars ($7.50), at least one-half of such payment to be
made by Invatec issuing to the Stockholders Invatec Common Stock at a per share
price equal to the Current Market Price as of July 9, 1999. Notwithstanding the
foregoing or any provision of the Merger Agreement to the contrary, the Parties
hereby agree that at least three (3) business days prior to the expiration date
of the Tender Offer, if the Tender Offer is then scheduled to closed and fund on
or before January 31, 2000, Invatec will issue (a) to Mr. Collier the number of
shares of Invatec common stock equal to Four Hundred Fifty-Nine Thousand and
No/100 Dollars ($459,000.00) divided by the cash price offered to stockholders
of Invatec for their shares in the Tender Offer (the "Tender Offer Price"),
rounded down to the nearest whole share, and (b) to Mr. Gore the number of
shares of Invatec common stock equal to Four Hundred Forty- One Thousand and
No/100 Dollars ($441,000.00) divided by the Tender Offer Price, rounded down to
the nearest whole share (the shares being issued to Mr. Collier and Mr. Gore
hereunder being hereinafter referred to as the "Settlement Shares"). Further, if
the Tender Offer is closed and funded on or before January 31, 2000, then (a)
Mr. Collier will accept from Offeror Four Hundred Fifty- Nine Thousand and
No/100 Dollars ($459,000.00), all of which is to be paid in cash, in full and
complete compromise and settlement of his claims under the Merger Agreement, and
as full and final payment and performance of all debts, liabilities and
obligations of Invatec and its affiliates, successors and assigns with respect
to the Merger Agreement and the transactions contemplated therein, and (b) Mr.
Gore will accept from Offeror Four Hundred Forty-One Thousand and No/100 Dollars
($441,000.00), all of which is to be paid in cash, in full and complete
compromise and settlement of his claims under the Merger Agreement, and as full
and final payment and performance of all debts, liabilities and obligations of
Invatec and its affiliates, successors and assigns with respect to the Merger
Agreement and the transactions contemplated therein, except the existing and
continuing obligations of Invatec
Robert T. Collier, Jr.
Frank H. Gore
November 9, 1999
Page 3
under that certain Employment Agreement dated as of July 9, 1998, executed by
Invatec and Mr. Gore (the "Gore Employment Agreement"), all of which shall
continue unimpaired by this Agreement. The cash payments to be made to Mr.
Collier and Mr. Gore contemplated in clauses (a) and (b) of the preceding
sentence are hereinafter referred to collectively as the "Settlement Payments."
Mr. Collier and Mr. Gore hereby acknowledge and agree that if the Settlement
Shares are issued, and the Tender Offer is not closed and funded on or before
January 31, 2000, then they will return to Invatec on or before February 4,
2000, all certificates evidencing Settlement Shares, and upon receipt by Invatec
of such certificates this Agreement shall be void and of no force or effect.
2. The Parties hereby acknowledge and agree that as of July 9, 1999, (a)
Mr. Collier owned One Hundred Eighty Three Thousand Six Hundred (183,600) shares
of Invatec Common Stock issued to him in the Acquisition, and (b) Mr. Gore owned
One Hundred Seventy-Six Thousand Four Hundred (176,400) shares of Invatec Common
Stock issued to him in the Acquisition.
3. Mr. Collier and Mr. Gore shall pay and be solely responsible for all
income taxes assessed against them, and Invatec shall pay and be solely
responsible for all income taxes against it or CECORP, Inc., which result from
or arise out of (a) the issuance, receipt or tender of the Settlement Shares,
(b) the payment or receipt of the Settlement Payments or the Tender Offer Price,
or (c) the failure of the Acquisition to qualify as a tax-free reorganization
for any reason.
4. Each Party hereby agrees not to file any claim or cause of action
against any person or entity, whether or not a party to this Agreement, with
respect to the Merger Agreement or any of the transactions contemplated therein,
prior to January 31, 2000 (the "Standstill Expiration Date").
5. The Parties agree that any limitations periods for bringing a claim or
cause of action not already barred at the date of this Agreement but which would
expire before the Standstill Expiration Date, are hereby tolled and extended
through and including March 15, 2000. This Agreement shall not serve to extend
or in any manner affect limitations periods which would not otherwise expire
prior to the Standstill Expiration Date, nor shall it serve to revive any claims
or actions upon which limitations have expired at the date of this Agreement.
Each Party acknowledges and confirms that in no way shall the terms and
provisions hereof be, or be construed to be, an admission of any liability of
any Party to any other Party, or an acknowledgment of the validity of any claim
or potential claim of any other Party.
6. Effective upon receipt of the Settlement Shares and the Settlement
Payments, to the maximum extent permitted by applicable law, each of Mr. Collier
and Mr. Gore releases and forever discharges Invatec and Offeror and their
respective officers, directors, shareholders, employees, agents, representatives
and affiliates, and their respective heirs, administrators, successors and
Robert T. Collier, Jr.
Frank H. Gore
November 9, 1999
Page 4
assigns (individually a "Released Party" and collectively, the "Released
Parties"), from any and all debts, liabilities, obligations, claims, demands,
actions or causes of action that arise out of or are based upon any
misrepresentation, omission, transaction, fact, event or other matter related
to, based upon or arising out of the Merger Agreement, the Tender Offer, this
Agreement or any of the transactions contemplated herein or therein (INCLUDING
ANY ACT OR FAILURE TO ACT THAT CONSTITUTES ORDINARY OR GROSS NEGLIGENCE OR
RECKLESS OR WILLFUL, WANTON MISCONDUCT), OTHER, THAN (a) the existing and
continuing obligations of Invatec under the Gore Employment Agreement, and (b)
the covenants and agreement of Invatec under Section 3 hereof, all of which
shall continue unimpaired by this Agreement. Each of Mr. Collier and Mr. Gore
(a) acknowledges that he fully comprehends and understands all the terms of this
release and its legal effects, and (b) expressly represents and warrants that
(i) he is competent to effect the release made herein knowingly and voluntarily
and without reliance on any statement or representation of any Released Party or
any of their agents, employees or representatives, and (ii) he has had the
opportunity to consult with an attorney of his choice regarding this release and
has done so.
7. Mr. Collier and Mr. Gore understand that Invatec is subject to the
reporting requirements of Section 13 of the Securities Exchange Act of 1934 (the
"Exchange Act"). Mr. Collier and Mr. Gore have been furnished a copy of
Invatec's Annual Report on Form 10-K for the fiscal year ended December 31, 1998
and its quarterly reports on Form 10-Q for the fiscal quarters ended March 31
and June 30, 1999.
8. All of the terms, conditions and covenants contained in the Merger
Agreement shall remain in full force and effect except for those debts,
liabilities and obligations compromised, settled and released herein. The
Parties hereby authorize, adopt, ratify, confirm and approve the Acquisition on
the terms and conditions set forth in the Merger Agreement, except for those
debts, liabilities and obligations compromised, settled and released herein.
9. Although Invatec agrees to pursue the execution and delivery of the
Holders' Modification Agreements by the other Holders, this Agreement shall be
binding upon, and inure to the benefit of, each of the Parties, and their
respective heirs, executors, administrators, successors and assigns, regardless
of whether any other Holder executes a Holders' Modification Agreement. In
addition, the Parties acknowledge and agree that (a) the final terms and
provisions of the Tender Offer may be different from any terms or provisions
disclosed to Mr. Collier or Mr. Gore, (b) any changes in the terms or provisions
may be material, (c) the Tender Offer may be abandoned for a different
Restructuring, and (d) the obligations of each Party hereunder shall remain in
full force and effect regardless of the final terms and provisions of the Tender
Offer.
10. From time to time after the execution hereof, at the request of
Invatec or its successors or assigns, each other Party shall execute and deliver
such further documents and take
Robert T. Collier, Jr.
Frank H. Gore
November 9, 1999
Page 5
such other and further actions as may be reasonably requested by Invatec or its
successors or assigns arising out of this Agreement or any of the agreements or
transactions contemplated herein.
11. Each of the undersigned representatives of each Party represents and
warrants that his signature constitutes the valid and binding act of such Party,
and that he has been duly authorized, empowered and directed to execute and
deliver this Agreement.
12. The Merger Agreement, this Agreement and the Confidentiality Agreement
embody the entire agreement and understanding among the Parties relating to the
subject matter hereof, and supersede all prior proposals, negotiations,
agreements, commitments and understandings relating to such subject matter.
There are no unwritten agreements among the Parties.
13. This Agreement may be executed simultaneously in a number of identical
counterparts, each of which shall be an original and all of which together shall
constitute but one and the same instrument. Facsimile signatures shall be
treated as original signatures for all purposes relating to this Agreement.
IN WITNESS WHEREOF, this Agreement has been executed and delivered to be
effective as of the date first set forth above.
INNOVATIVE VALVE
TECHNOLOGIES, INC.
By: /s/ CHARLES F. SCHUGART
Charles F. Schugart, President
ROBERT T. COLLIER, JR.
ROBERT T. COLLIER, JR.
FRANK H. GORE
FRANK H. GORE