Yeats Valves and Controls, Inc.
1. Price: A. TEV: $97.5 Million B. VE: Same as TEV C. Share Value: N/A 2. Form of Transaction: A. Asset purchase. A new entity, TSEYEATS LLC will be created and most of Yeats assets to be transferred to this new entity. B. All assets including: manufacturing equipment and processes, engineering documents and intellectual property including engineering and process patents shall be transferred to the new entity. C. All real-state assets shall remain in the current Yeats legal entity (land and buildings) D. All facilities will be leased back to the new TSEYEATS LLC entity by the original skeleton of Yeats Corporation. E. Capital Lease value will be based on a 30 year amortization schedule and 7.5% per year interest rate F. Cash payment of $92.5 Million for all assets to be transferred to TSE, as described in items A through E G. Yeats bonus payment: $350K total bonus to be paid over a period of 5 years in 5 installments of $70K H. No layoffs for 18 months with ability to relocate labor as needed across organization. First refusal right granted to YVC employees 3. Form of Consideration: A. Cash: $92.5 million for selected YVC assets B. TSE Stock: N/A C. Notes: N/A D. Other: Capital Lease of current Yates Facilities E. Total per Share: N/A 4. Proposed Closing Date: A. Closing to take place in 90 days pending on due-diligence due to start on the day this instrument is executed 5. Conditions Precedent to Closing: A. Main representations made by Yeats to be verified during the due-diligence period: 1. Yates is unaware of any existing liability related to defective product or manufacturing process 2. No Labor union pending suits or know non-compliance with labor regulations 3. No known violation of Intellectual Property and/or Patent Law and regulations 4. All data in presented financial statements represented the true financial condition of the firm 5. No violations of applicable environmental codes and regulations B. As part of the purchase agreement, new TSEYEATS LLC will set up a $2,500,000 stock option plan in which all current employees will be 100% vested on TSE stock over a 5 year period. C. Offering price is based on a current $5 Million market value of all real-state assets (land and physical facilities). D. All mid and upper level managers to sign employment agreements with new entit