EXHIBIT 2.6
STOCK AND REAL ESTATE PURCHASE AGREEMENT
THIS STOCK AND REAL ESTATE PURCHASE AGREEMENT (the "Agreement") is
entered into effective the 22nd day of May 1997, by and among THE SAFE SEAL
COMPANY, INC. ("Purchaser"), a Texas corporation with its chief executive office
at 00000 Xxxxxxx Xxxxx, Xxxxx X000, Xxxxxxx, Xxxxx 00000, XXXXX X. XXXXXX ("XX.
XXXXXX"), an individual whose address is 0000 Xxxxxxx Xxxx, Xxxxxxx, Xxxxxxxxx
00000, XXXXXX X. XXXXXX ("XX. XXXXXX"), an individual whose address is 0000
Xxxxxxx Xxxx, Xxxxxxx, Xxxxxxxxx 00000, XXXXXXX XXXXXX XXXXXXX ("XX. XXXXXXX"),
an individual whose address is 0000 Xxxxxx Xxxx, Xxxxxxx, Xxxxxxxxx 00000, XXXXX
X. XXXXXX III ("XX. XXXXXX III"), an individual whose address is 0000 Xxxxxx
Xxxxx, Xxxxxxx, Xxxxxxxxx 00000, XXXXXX XXXX XXXXXX ("XX. XXXXXX"), an
individual whose address is 0000 Xxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxx 00000, XXXXX
XXX XXXXXX ("XX. XXXXXX"), an individual whose address is 7021 Xxxxxxxx,
Xxxxxxx, Xxxxxxxxx 00000, (Xx. Xxxxxx, Xx. Xxxxxx, Xx. Xxxxxxx, Xx. Xxxxxx III,
Xx. Xxxxxx and Xx. Xxxxxx being sometimes hereinafter referred to collectively
as the "SELLERS" and individually as a "SELLER") and PLANT SPECIALTIES, INC., a
Louisiana corporation (THE "COMPANY"), with its chief executive office and
principal place of business at 000 X. Xxxxxx Xxxxxxx, Xxxxxxx, Xxxxxxxxx 00000.
Purchaser, Sellers and the Company are sometimes hereinafter referred to
collectively as the "Parties" or individually as a "Party."
W I T N E S S E T H :
WHEREAS, Sellers are the legal and beneficial owners and holders of One
Million (1,000,000) shares (the "Subject Shares") of the Company, the Subject
Shares constituting all of the issued and outstanding capital stock of the
Company; and
WHEREAS, Purchaser desires to acquire from Sellers, and Sellers desire
to sell to Purchaser, all of the Subject Shares, on the terms and conditions and
for the consideration set forth in this Agreement;
WHEREAS, Purchaser desires to acquire from Xx. Xxxxxx and Xx. Xxxxxx,
and Xx. Xxxxxx and Xx. Xxxxxx desire to sell to Purchaser, or at the option of
Purchaser upon acquisition of the Subject Shares, to the Company, the Xxxxxx
Real Property, as hereinafter defined, on the terms and conditions and for the
consideration set forth in this Agreement;
NOW, THEREFORE, for and in consideration of the mutual covenants,
agreements, representations and warranties contained in this Agreement, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged and confessed, the Parties hereby agree as follows:
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ARTICLE I
CERTAIN DEFINITIONS
As used herein, the following terms shall have the following meanings:
1.1 ACCOUNTS. The term "Accounts " shall have the meaning ascribed
thereto in SECTION 3.14.
1.2 ADDITIONAL ACQUISITIONS. The term "Additional Acquisitions" shall
mean the acquisition by Purchaser or one or more Affiliates of several
additional companies prior to the IPO.
1.3 AFFILIATE. The term "Affiliate" of a person shall mean, with respect
to that person, a person who directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
or is acting as agent on behalf of, or as an officer or director of, that
person. The Sellers and their spouses are all agreed to be Affiliates of one
another and of the Company. As used in the definition of Affiliate, the term
"control" (including the terms "controlling," "controlled by," or "under common
control with") means the possession, direct or indirect, of the power to direct,
cause the direction of, or influence the management and policies of a person,
whether through the ownership of voting securities, by contract, through the
holding of a position as a partner, director or officer of such person, as a
trustee, or otherwise. As used in this SECTION 1.1, the term "person" means an
individual, a corporation, a partnership, a limited liability company, an
association, a joint stock company, a trust, an incorporated organization, or a
government or political subdivision thereof, or any other form of entity.
1.4 ARBITRATOR. The term "Arbitrator" shall have the meaning ascribed
thereto in SECTION 9.2.
1.5 ASSETS. The term "Assets" shall mean all of the assets, other than
the Leased Assets and the Xxxxxx Real Property, used by the Company in the
Business, including without limitation (i) those assets set forth on SCHEDULE
1.5 attached hereto and incorporated herein by reference, and (ii) the
buildings, structures, improvements, fixtures and fittings owned by the Company
and located at the address of the Company set forth in the preamble to this
Agreement.
1.6 AUDITED FINANCIAL STATEMENTS. The term "Audited Financial
Statements" shall mean an audited balance sheet and income statement of the
Company, and all notes thereto, prepared by the Company's outside accountants as
of October 31, 1996.
1.7 BALANCE SHEET DATE. The term "Balance Sheet Date" shall mean October
31, 1996.
1.8 BANK DEBT. The term "Bank Debt" shall mean the indebtedness of the
Company to Bank One, evidenced by the documents, instruments and agreements
referenced in SCHEDULE 3.17.
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1.9 BUSINESS. The term "Business" shall mean the current business of the
Company of (i) selling new valves, instrumentation and engineering and repair
services for valves and instrumentation, and (ii) designing, manufacturing, and
remanufacturing valves, instruments, mounting hardware and engineered products.
1.10 CLOSING. The term "Closing" shall have the meaning ascribed thereto
in SECTION 7.1 hereof.
1.11 CLOSING DATE. The term "Closing Date" shall mean the earliest of
the (i) fifteenth business day following the date of full execution of this
Agreement, (ii) the fifth business day following approval by Xxxxxx
Environmental Inc. (as evidenced by a certificate of a duly authorized officer
thereof delivered to the Purchaser) of Allwaste , Inc., a Delaware corporation
and a significant shareholder of Purchaser("Allwaste"), entering into the
obligations of Allwaste set forth in this Agreement or any other agreement to be
entered into by Allwaste or the Company in connection with this Agreement, or
(iii) such other date as may be otherwise provided in this Agreement or
otherwise established by agreement of the Parties.
1.12 CLOSING FINANCIAL STATEMENTS. The term "Closing Financial
Statements" shall mean the most recent available unaudited interim balance sheet
and income statement of the Company existing prior to Closing, and in any event
dated no earlier than March 31, 1997, which balance sheet shall be certified at
Closing by all of the Sellers by execution and delivery of the Closing Financial
Statements Certificates.
1.13 CLOSING FINANCIAL STATEMENTS CERTIFICATE. The term "Closing
Financial Statements Certificate" shall mean the certificate to be executed and
delivered by Sellers at Closing, certifying that the Closing Financial
Statements (i) are true, complete, and correct in all material respects, (ii)
fairly and accurately present the financial position of the Company as of the
periods described therein, and the results of the operations of the Company for
the periods indicated, (iii) have been prepared in accordance with generally
accepted accounting principles, consistently applied (except for certain
footnote disclosures normally required by GAAP, the omission of which, in the
good faith opinion of Sellers, do not cause the Closing Financial Statements to
be materially misleading), and (iv) reflect all necessary eliminating entries
and normal adjustments.
1.14 CODE. The term "Code" shall mean the Internal Revenue Code of 1986,
as amended.
1.15 CONTRACTS. The term "Contracts" shall have the meaning ascribed
thereto in SECTION 3.11.
1.16 CONVERTIBLE NOTES. The term "Convertible Notes" shall have the
meaning ascribed thereto in SECTION 2.2(B) hereof.
1.17 DAMAGES. The term "Damages" shall have the meaning ascribed thereto
in SECTION 9.1(A).
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1.18 EBIT. The term "EBIT" shall mean the Company's earnings before
interest and taxes, determined in accordance with GAAP.
1.19 EMPLOYEE. The term "Employee" shall mean any employee of the
Company who as of the Closing Date is employed or otherwise performs work or
provides services in connection with the operation of the Business, including
those, if any, on disability, sick leave, layoff or leave of absence, who, in
accordance with the Company's applicable policies, would be eligible to return
to active status, as set forth on SCHEDULE 3.23 attached hereto.
1.20 EMPLOYEE BENEFIT PLAN. The term "Employee Benefit Plan" means any
(a) nonqualified deferred compensation or retirement plan or arrangement which
is an Employee Pension Benefit Plan, (b) qualified defined contribution
retirement plan or arrangement which is an Employee Pension Benefit Plan, (c)
qualified defined benefit retirement plan or arrangement which is an Employee
Pension Benefit Plan (including any Multiemployer Plan), (d) Employee Welfare
Benefit Plan, or (e) material fringe benefit plan or program.
1.21 EMPLOYEE PENSION BENEFIT PLAN. The term "Employee Pension Benefit
Plan" has the meaning set forth in ERISA Sec. 3(2).
1.22 EMPLOYEE WELFARE BENEFIT PLAN. The term "Employee Welfare Benefit
Plan" has the meaning set forth in ERISA Sec. 3(1).
1.23 EMPLOYMENT AGREEMENT. The term "Employment Agreement" shall have
the meaning ascribed thereto in SECTION 3.25.
1.24 ENVIRONMENTAL, HEALTH & SAFETY LAWS The term "Environmental, Health
& Safety Laws" shall mean the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, the Resource Conservation and Recovery Act of 1976,
the Clean Water Act, the Clean Air Act, the Toxic Substances Control Act, the
Hazardous Materials Transportation Act, the Federal Insecticide, Fungicide and
Rodenticide Act and the Occupational Safety and Health Act of 1970, each as
amended, together with all other laws (including rules and regulations, codes,
plans, injunctions, judgments, orders, decrees, rulings, and charges thereunder)
of federal, state, local, and foreign governments and all agencies thereof
concerning pollution or protection of the environment, public health and safety,
or employee health and safety, including laws relating to emissions, discharges,
releases, or threatened releases of any solid, hazardous, industrial, or toxic
pollutants, contaminants, substances or wastes into ambient air, surface water,
ground water, or lands or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of any
solid, hazardous, industrial or toxic pollutants, contaminant, substances or
wastes.
1.25 EQUIPMENT. The term "Equipment" shall have the meaning ascribed
thereto in SECTION 3.13.
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1.26 EXCESS INVENTORY AND EQUIPMENT. The term "Excess Inventory and
Equipment" shall mean all inventory and equipment owned by the Company as of the
Closing which (i) was not used in the Company's fiscal year ended October 31,
1996, to produce the Company's EBIT set forth in the Audited Financial
Statements, and (ii) is not and will not be reasonably necessary or useful to
produce comparable EBIT in fiscal 1997. The Parties hereby acknowledge and agree
that the "Excess Inventory and Equipment" consists principally of equipment
purchased for a potential Baton Rouge location, and the inventory of valves
which have been remanufactured by the company.
1.27 EXCESS INVENTORY AND EQUIPMENT VALUE. The term "Excess Inventory
and Equipment Value" shall mean One Million One Hundred Seventy-Two Thousand and
No/100 Dollars ($1,172,000.00).
1.28 FINAL POST-CLOSING FINANCIAL STATEMENTS. The term "Final
Post-Closing Financial Statements" shall have the meaning ascribed thereto in
SECTION 9.2.
1.29 FTC. The term "FTC" shall have the meaning ascribed thereto in
SECTION 6.1.
1.30 IMPROVEMENTS. The term "Improvements" shall have the meaning
ascribed thereto in SECTION 3.18.
1.31 INTELLECTUAL PROPERTY. The term "Intellectual Property" shall mean
the following assets of the Company (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto
and all patents, patent applications, and patent disclosures together with all
reissuances, continuations, continuations-in-part, revisions, extensions, and
reexaminations thereof, (b) all trademarks, service marks, trade dress, logos,
trade names, and corporate names, together with all translations, adaptations,
derivations, and combinations thereof and including all goodwill associated
therewith, and all applications, registrations, and renewals in connection
therewith, (d) all trade secrets and confidential business information
(including ideas, research and development, know-how, formulas, compositions,
manufacturing and production processes and techniques, technical data, designs,
drawings, specifications, customer and supplier lists, pricing and cost
information and business and marketing plans and proposals), (e) all computer
software (including data and related documentation), (g) all other proprietary
rights, and (h) all copies and tangible embodiments thereof (in whatever form or
medium).
1.32 INVENTORIES. The term "Inventories" shall have the meaning ascribed
thereto in SECTION 3.15.
1.33 IPO. The term "IPO" shall mean an underwritten public offering of
the common stock of Invatec, Inc., an affiliate of the Purchaser, after the
consummation of the transactions contemplated herein.
1.34 LEASED ASSETS. The term "Leased Assets" shall have the meaning
ascribed thereto in SECTION 3.9.
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1.35 LIABILITIES. The term "Liabilities" shall have the meaning ascribed
thereto in SECTION 3.27.
1.36 LICENSES. The term "Licenses" shall have the meaning ascribed
thereto in SECTION 3.16.
1.37 MORTGAGE NOTE. The term "Mortgage Note" shall have the meaning
ascribed thereto in SECTION 2.4 hereof.
1.38 NOTICE OF DISAGREEMENT. The term "Notice of Disagreement" shall
have the meaning ascribed thereto in SECTION 9.2.
1.39 ORDINARY COURSE OF BUSINESS. The term "Ordinary Course of Business"
shall mean the ordinary course of the Company's business consistent with past
custom and practice (including with respect to quantity and frequency).
1.40 PERMITTED EXCEPTIONS. The term "Permitted Exceptions" shall have
the meaning ascribed thereto in SECTION 5.4 hereof.
1.41 PBGC. The term "PBGC" shall mean the Pension Benefits Guaranty
Compensation.
1.42 POST-CLOSING FINANCIAL STATEMENTS. The term "Post-Closing Financial
Statements" shall have the meaning ascribed thereto in SECTION 9.2.
1.43 PREMERGER ACT. The term "Premerger Act" shall have the meaning
ascribed thereto in SECTION 6.1.
1.44 REAL PROPERTY. The term "Real Property" shall have the meaning
ascribed thereto in SECTION 3.18.
1.45 REGISTRATION RIGHTS AGREEMENT. The term "Registration Rights
Agreement" shall have the meaning ascribed thereto in SECTION 7.2.
1.46 SITE ASSESSMENT. The term "Site Assessment" shall have the meaning
ascribed thereto in SECTION 5.6.
1.47 SURVEY. The term "Survey" shall have the meaning ascribed thereto
in SECTION 5.5.
1.48 TITLE COMMITMENT. The term "Title Commitment" shall have the
meaning ascribed thereto in SECTION 5.3.
1.49 TITLE COMPANY. The term "Title Company" shall have the meaning
ascribed thereto in SECTION 5.3.
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1.50 TITLE POLICY. The term "Title Policy" shall have the meaning
ascribed thereto in SECTION 5.4.
1.51 XXXXXX EMPLOYMENT AGREEMENT. The term "Xxxxxx Employment Agreement"
shall have the meaning ascribed thereto in SECTION 7.2.
1.52 XXXXXX NONCOMPETE AGREEMENT. The term "Xxxxxx Noncompete Agreement"
shall have the meaning ascribed thereto in SECTION 7.2.
1.53 XXXXXX REAL PROPERTY. The term "Xxxxxx Real Property" shall mean
those certain tracts or parcels of land being in the aggregate 17.55 acres, more
or less, in Sulphur, Calcasieu Parish, Louisiana, owned by Xx. Xxxxxx and Xx.
Xxxxxx, individually, and more particularly described on EXHIBIT A, attached
hereto and incorporated herein by reference, a portion of which is more commonly
referred to as 000 X. Xxxxxx Xxxxxxx, and all lots, strips, tracts and parcels
adjacent thereto, together with the buildings, structures, improvements,
fixtures, and fittings owned by Xx. Xxxxxx and Xx. Xxxxxx on any of the
foregoing, and all of Mr. and Xx. Xxxxxx'x right, title and interest in and to
all oil, gas, coal and other minerals in, on or under such tracts or parcels,
and all rights and appurtenances pertaining to any of the foregoing. The Xxxxxx
Real Property does not include the buildings, structures, improvements, fixtures
or fittings owned by the Company which are located on the 17.55 acre tract
referenced above.
1.54 XXXXXX REAL PROPERTY VALUE. The term "Xxxxxx Real Property Value"
shall mean Eight Hundred and Fifty -Two Thousand Five Hundred and Thirty-Six and
NO/100 ($852,536.00).
ARTICLE II
PURCHASE AND SALE OF
SUBJECT SHARES AND XXXXXX REAL PROPERTY
2.1 PURCHASE AND SALE OF SUBJECT SHARES. Subject to the term and
conditions set forth in this Agreement, Sellers hereby agree to sell, convey,
transfer, assign and deliver to Purchaser, and Purchaser hereby agrees to
purchase, on the Closing Date, the Subject Shares, free and clear of any
restrictions or conditions to transfer or assignment, rights of first refusal,
mortgages, liens, pledges, charges, encumbrances, equities, claims, covenants,
conditions, restrictions, options or agreements.
2.2 STOCK PURCHASE PRICE CONSIDERATION. As consideration for the
purchase of the Subject Shares and upon delivery thereof to Purchaser at Closing
(except for the Cash Down Payment described in Subsection 2.2(A), which shall be
delivered immediately following execution of this Agreement by all of the
Parties), Purchaser shall deliver to Sellers the following (the "Stock Purchase
Price"), which shall be payable to Sellers pro rata in accordance with their
respective percentages of ownership of the Subject Shares as set forth by
Sellers on SCHEDULE 2.2 attached hereto:
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(A) in cash or other immediately available funds, the aggregate amount
(such amount being sometimes hereinafter referred to as the "Cash Down
Payment") of Two Hundred Ninety Six Thousand Eight Hundred and No/100
Dollars ($296,800.00); and
(B) Five (5) Convertible Subordinated Promissory Notes (the "Convertible
Notes") in the aggregate principal amount of Three Million Two Hundred
and Ninety Five Thousand One Hundred and Twenty Five and No/100 Dollars
($3,295,125.00) in the form of the Convertible Subordinated Promissory
Note attached hereto as EXHIBIT B and incorporated herein by reference,
convertible into the stock of Invatec, Inc., which is or will be the
parent of the Purchaser..
In addition, Purchaser shall pay to Xx. Xxxxxx at Closing, in cash or
other immediately available funds, the amount of Ten Thousand and No/100 Dollars
($10,000.00), all of which is independent consideration for the execution,
delivery and performance of the Confidentiality and Noncompetition Agreement to
be entered into at Closing between Purchaser and Xx. Xxxxxx, pursuant and
ancillary to this Agreement, in the form attached hereto as EXHIBIT C. The
parties acknowledge that the cash portion of the Purchase Price has been reduced
by $3,200 to cover Purchaser with respect to the lien in like amount filed by
"Plant Specialists" with respect to the Real Property. Upon termination or
expiration of such lien, the Purchaser shall promptly remit to the Sellers such
amount less all amounts, if any, required to obtain the release or termination
of such lien, including any ancillary legal fees, filing fees or other third
party costs paid or incurred by Purchaser related to such lien.
2.3 PURCHASE AND SALE OF XXXXXX REAL PROPERTY. Subject to the terms and
conditions set forth in this Agreement, Xx. Xxxxxx and Xx. Xxxxxx hereby agree
to sell, convey, transfer, assign and deliver to Purchaser, or at the request of
Purchaser upon acquisition of the Subject Shares, to the Company, and Purchaser
hereby agrees to purchase, or upon acquisition of the Subject Shares, to cause
the Company to purchase, from Xx. Xxxxxx and Xx. Xxxxxx, on the Closing Date,
the Xxxxxx Real Property, free and clear of any restrictions or conditions to
transfer or assignment, rights of first refusal, mortgages, liens, pledges,
charges, encumbrances, equities, claims, covenants, restrictions, easements,
conditions, restrictions, options, agreements or other exceptions to title,
other than the Permitted Exceptions.
2.4 MORTGAGE NOTE; APPRAISAL. As consideration for the purchase of the
Xxxxxx Real Property, Purchaser shall deliver to Xx. Xxxxxx and Xx. Xxxxxx at
Closing a Promissory Note (the "Mortgage Note") in an original principal amount
equal to the sum of (i) the Xxxxxx Real Property Value and (ii) $650 which $650
amount represents (x) half of the $4,000 of the cost of the third appraisal
(which half the Company has agreed to bear), (y) minus $1,350 which constitutes
half of the cost of the Title Policy (as such term is defined in Section 5.4),
in the form of the Promissory Note attached hereto as EXHIBIT D and incorporated
herein by reference. The Mortgage Note shall be executed by the grantee of the
Xxxxxx Real Property, provided that if the Grantee is the Company, the Purchaser
shall join in the execution of the Mortgage Note as a guarantor.
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2.5 TAXES OF SELLERS. Sellers, Xx. Xxxxxx and Xx. Xxxxxx shall pay all
income, documentary, transfer, stamp or other taxes or arising out of the
transfer of the Subject Shares or the Xxxxxx Real Property, respectively, or
receipt of payments therefor, or any consideration delivered in connection
therewith (including any payments received in connection with the
Confidentiality and Noncompetition Agreement , and any taxes, fees or
assessments relating to the mortgage securing payment of the Mortgage Note).
Neither Purchaser nor the Company shall be responsible for any business,
occupation, income, withholding or similar tax, or any taxes of any kind, of the
Sellers.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers hereby represent and warrant, jointly and severally, to
Purchaser that:
3.1 ORGANIZATION. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Louisiana, has all
necessary corporate powers to own its properties and to operate the Business as
now owned and operated by it, and is qualified to do business in all of the
states in which the Assets or Leased Assets are located or the nature and
operation of the Business require such qualification. Sellers shall deliver at
Closing certificates (i) issued by the Louisiana Secretary of State evidencing
the Company's existence and good standing in the State of Louisiana, and (ii)
issued by the appropriate public authorities evidencing the Company's good
standing and authority to do business in all other states in which the Company
is required to qualify to do business.
3.2 AUTHORITY. Each Seller has the full right, power, legal capacity and
authority to execute, deliver and perform such Seller's obligations under this
Agreement.
3.3 CONSENTS AND APPROVALS; NO BREACH OR DEFAULT. Except as set forth on
SCHEDULE 3.3(A), no consent, approval or authorization of, or filing or
registration with, any governmental or regulatory authority, or any other person
or entity, is required to be made or obtained by any Seller or by the Company in
connection with the execution, delivery or performance of this Agreement, or the
consummation by Sellers of the transactions contemplated hereby. Except as set
forth on SCHEDULE 3.3(B), neither the execution and delivery of this Agreement
by Sellers, nor the consummation of the transactions contemplated herein by
Sellers, will (A) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency or court to which any Seller or the Company is
subject, or (B) conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify or cancel, or require any notice under any
agreement, contract, lease, license, instrument, promissory note, conditional
sales contract, partnership agreement or other arrangement to which any Seller
or the Company is a party, or by which any Seller or the Company is bound, or to
which any of their assets are subject, or (C) conflict with or violate the
Articles of Incorporation, Bylaws or other charter document of the Company.
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3.4 VALID AND BINDING OBLIGATION. Upon execution and delivery, this
Agreement and each document, instrument or agreement to be executed by Sellers,
or any of them, in connection herewith, will constitute the legal, valid, and
binding obligation of each Seller which is a party thereto, enforceable against
each such Seller in accordance with its terms, except as same may be limited by
applicable bankruptcy laws, insolvency laws, or other similar laws affecting the
rights of creditors generally.
3.5 CAPITAL. The authorized capital stock of the Company consists of two
million (2,000,000) shares of voting common stock, no par value, of which one
million (1,000,000) shares are issued and outstanding, and one million
(1,000,000) shares of non-voting common stock, no par value, none of which is
issued or outstanding. The Company has neither authorized nor issued any
preferred stock. The Subject Shares constitute all of the Company's outstanding
capital stock, and have been duly and validly authorized and issued, and are
fully paid and nonassessable. None of such capital stock has been issued in
violation of the rights of any present or former stockholder of the Company. The
only outstanding subscriptions, options, rights, warrants, convertible
securities, conversion rights, exchange rights or other agreements or
commitments which obligate the Company to issue or transfer from treasury
additional shares of the Company's common stock are set forth in SCHEDULE 3.5.
There are no outstanding or authorized stock appreciation, phantom stock, profit
participation, or similar rights with respect to the Company or its capital
stock. There are no voting rights, voting agreements, proxies or other
agreements or understandings with respect to the voting of any capital stock of
the Company.
3.6 TITLE TO SUBJECT SHARES. The Sellers have, and shall deliver to
Purchaser at Closing, good, indefeasible and marketable title to the Subject
Shares, free and clear of restrictions or conditions to transfer or assignment,
rights of first refusal, mortgages, liens, pledges, charges, encumbrances,
equities, claims, covenants, conditions, restrictions, options or agreements.
3.7 TITLE TO ASSETS. Except as set forth on SCHEDULE 3.7, the Company
has good, indefeasible and marketable title to the Assets, free and clear of
restrictions or conditions to transfer or assignment, or mortgages, liens,
pledges, charges, encumbrances, equities, claims, easements, rights-of-way,
covenants, conditions or restrictions.
3.8 TITLE TO XXXXXX REAL PROPERTY. Except as set forth on SCHEDULE 3.8,
Xx. Xxxxxx and Xx. Xxxxxx have , and shall deliver to Purchaser (or at the
option of Purchaser upon acquisition of the Subject Shares to the Company) at
Closing, good, indefeasible and marketable title to the Xxxxxx Real Property,
free and clear of restrictions or conditions to transfer or assignment, rights
of first refusal, or mortgages, liens, pledges, charges, encumbrances, equities,
claims, easements, rights-of-way, covenants, conditions or restrictions.
3.9 POSSESSION OF ASSETS; LEASED ASSETS. The Company is in possession of
all of the Assets, the Xxxxxx Real Property and all of the assets leased to the
Company from others. All assets leased to the Company from others, whether real,
personal or mixed, are described on SCHEDULE 3.9 and SCHEDULE 3.18(B) attached
hereto (the "Leased Assets"). The Assets, the Leased Assets and the Xxxxxx Real
Property constitute all of the property, whether real, personal, mixed,
tangible, or
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intangible, that is owned or used in the Business by the Company. The Company
does not own legal or equitable title to any assets or interests in assets
except the Assets and the Leased Assets. Sellers shall deliver to Purchaser on
the Closing Date, possession of and/or control or dominion over all of the
Assets, the Xxxxxx Real Property and the Leased Assets, including without
limitation all of the Company's cash, accounts receivable, property, plant and
equipment, other personal property, contract rights and general intangibles,
customer and supplier lists, and assumed and trade names.
3.10 CONDITION. Except as expressly set forth on SCHEDULE 3.10, all of
the Assets , the Xxxxxx Real Property and the Leased Assets are in good
operating condition and repair, ordinary wear and tear excepted, and, as
applicable, good working order. The Xxxxxx Real Property and the buildings,
fixtures, and improvements owned or leased by the Company, including but not
limited to the parking areas, roofs, foundations, plumbing, electrical, air
conditioning, heating and ventilating systems, doors, building exteriors,
landscaping, and interior areas, are in good condition, ordinary wear and tear
excepted, and, as applicable, good working order.
3.11 CONTRACTS AND LEASES. All of the contracts, leases, documents,
instruments, agreements, and other written or oral arrangements to which the
Company is a party or by which the Company or its assets or the Xxxxxx Real
Property may be bound (collectively, the "Contracts") are set forth on SCHEDULE
3.11. Except as set forth on SCHEDULE 3.11, all of the Contracts are valid and
in full force and effect, and there has not been any default by the Company or
any third party to any of said Contracts, or any event, fact or circumstance
which with notice or lapse of time or both, would constitute a default by the
Company or any other party to any of the Contracts. Neither the Company nor any
of the Sellers has received notice that any party to any of the Contracts
intends to cancel or terminate any of the Contracts or exercise or not exercise
any options that such party might have under any of the Contracts.
3.12 OTHER CONTRACTS. Except as set forth in SCHEDULE 3.12, the Company
is not a party to, nor is any of its property bound by, any distributor's or
manufacturer's representative or agency agreement, any output or requirements
agreement, any agreement not entered into in the Ordinary Course of Business, or
any agreement requiring the performance of any obligation for a period of time
extending beyond one (l) year from the date hereof or calling for consideration
of more than $3,000 per agreement or $10,000 in the aggregate. The Company is
not a party to, nor is any of its property bound by, any agreement which is
materially adverse to the businesses, properties or financial condition of the
Company. Except as set forth in SCHEDULE 3.12, the Company is not a party to any
agreement which: (i) prohibits it from engaging in the business that it
currently conducts, or upon consummation of the transactions contemplated
herein, will prohibit it from engaging in any type of business, or (ii) will,
upon consummation of the transactions contemplated herein, prohibit Purchaser
from engaging in any type of business.
3.13 EQUIPMENT. Except as set forth on SCHEDULE 3.13, all of the
equipment owned by the Company (collectively, the "Equipment") is owned free and
clear of any lien, security, claim or encumbrance, and none of the Equipment is
held under any security agreement, conditional sales contract, or other title
retention or security arrangement or is located other than in the possession of
11
the Company. The Equipment is in good operating condition and repair, ordinary
wear and tear excepted.
3.14 ACCOUNTS RECEIVABLE. All of the accounts receivable of the Company
as set forth in the books and records of the Company (collectively, the
"Accounts"), and all papers and documents relating thereto, are genuine and in
all respects what they purport to be, and each such Account is valid and
subsisting and arises out of a bona fide sale or lease of goods sold or leased
and delivered to, or out of and for services theretofore actually rendered by
the Company to, the account debtor named in such Account. The amount of each
Account represented as owing as of the date indicated (i) is the correct amount
actually and unconditionally owing as of the date indicated, except for normal
cash discounts, (ii) is not subject to any set-offs, credits, disputes,
defenses, deductions or countercharges, and (iii) to the best knowledge of each
Seller, will be paid in the Ordinary Course of Business. The Company is the
owner of each such Account free and clear of any charges, liens, security
interests, adverse claims, and encumbrances of any and every nature whatsoever,
other than the security interests securing payment of the Bank Debt.
3.15 INVENTORIES. The inventories of raw materials, work in process and
finished goods (collectively, the "Inventories") shown on the Audited Financial
Statements, consisted of items of a quality and quantity useable and saleable in
the Ordinary Course of Business by the Company, except for obsolete and slow
moving items and items below standard quality, all of which have been written
down on the books of the Company to estimated net realizable value or have been
provided for by adequate reserves. All items included in the Inventories are the
property of the Company and in its possession, except for sales made in the
Ordinary Course of Business since October 31, 1996; for each of these sales
either the purchaser has made full payment or the purchaser's liability to make
payment is reflected in the books of the Company. No items included in the
Inventories have been pledged as collateral or are held on consignment from
others, except for the pledge thereof securing repayment of the Bank Debt. The
Inventories shown on the Audited Financial Statements or any other balance sheet
or income statement are based on quantities determined by physical count or
measurement, taken within the preceding twelve (12) months, and are valued at
the lower of cost (determined in almost all instances on a last-in, first-out
basis) or market value and on a basis consistent with that of prior years.
3.16 LICENSES. All licenses owned by the Company or in which the Company
has any rights, licenses or sublicenses (collectively, the "Licenses"), together
with a brief description of each, are set forth on SCHEDULE 3.16. The Company
has not infringed, and is not now infringing, on any license belonging to any
other person or other entity. The Company owns and holds adequate licenses
necessary for the Business as now conducted by it, and that use does not, and
will not, conflict with, infringe on or otherwise violate any rights of others.
The Company will continue to enjoy the use and benefit of all of such Licenses,
notwithstanding the sale of the Subject Shares and the Xxxxxx Real Property
contemplated herein.
3.17 INTELLECTUAL PROPERTY. All of the Intellectual Property of the
Company is set forth on SCHEDULE 3.17, and except as set forth on SCHEDULE 3.17,
the Company is the sole owner of all of the Intellectual Property, free and
clear of any liens, encumbrances, restrictions, or legal or equitable
12
claims of others. The Company has registered the Intellectual Property in all
jurisdictions necessary to evidence and protect its ownership thereof, and to
permit the Company to conduct the Business in the manner in which it is
currently conducted, and has all rights or licenses necessary to use the same.
The Intellectual Property constitutes all of the intellectual property necessary
to the lawful conduct of the Business without any infringement or conflict with
the rights of others, and no adverse claims have been asserted against the
Intellectual Property, the Sellers, the Company or the Business with respect
thereto. All of the patents of the Company are valid and in full force and
effect and are not subject to any taxes, maintenance fees, or actions which have
not been currently paid. None of the Intellectual Property infringes upon any
patents, trade or assumed names, trademarks, service marks, or copyrights
belonging to any other person or other entity. Except as expressly set forth in
SCHEDULE 3.17, the Company is not a party to any license, agreement, or
arrangement, whether as licensor, licensee, or otherwise, with respect to any of
the Intellectual Property. The Company does not have a license or a right to use
any other patents, service marks, trademarks, trade or assumed names, trade
secrets, royalty rights or other proprietary intangibles which is not set forth
on SCHEDULE 3.17.
3.18 REAL PROPERTY; LEASED REAL PROPERTY. Except as set forth in
SCHEDULE 3.18(A) with respect to real property owned by the Company, and
SCHEDULE 3.18(B) with respect to real property leased by the Company (such real
property, including the Xxxxxx Real Property, being hereinafter referred to
collectively as the "Real Property"), the Company neither owns nor leases any
real property or improvements or interests therein. Sellers have no information
or knowledge of any change contemplated in any applicable laws, ordinances or
restrictions, or any judicial or administrative action, or any action by
adjacent landowners, or natural or artificial conditions upon the Real Property,
which would have a material adverse effect upon the Real Property, the Business,
the Assets, the Leased Assets or their respective values. There is no zoning,
deed restriction, land use provision or restriction, or other material adverse
fact or condition of any kind or character whatsoever, which adversely affects
the continued use of the Real Property in the manner in which it is currently
used. Except for the Company, there are no parties in possession of any portion
of the Real Property as lessees, tenants at will or at sufferance, trespassers
or otherwise. The improvements included within the Real Property (the
"Improvements") and any renovations thereof have been, or by Closing will be,
substantially completed and installed in compliance with all applicable laws and
in a good and workmanlike manner, and will have no structural defects. The
heating, electrical, plumbing and other building equipment, as of the Closing,
will be adequate in quantity and quality for normal operations of the Business,
as presently conducted. All utilities required for the operation of the
Improvements enter the Real Property through adjoining public streets or, if
they pass through an adjoining private tract, do so in accordance with valid
public easements or private easements which inure to the benefit of and are
enforceable by the Company. The Real Property has full and free access to and
from public streets and roads and Sellers have no knowledge of any fact or
condition which would result in the termination of such access. The Improvements
do not encroach upon any adjacent real property nor any easements or building
set-back lines to which the Real Property is subject, and no improvements upon
adjacent real property encroach upon the Real Property. There is no pending
condemnation or similar proceeding affecting the Real Property or any portion
thereof, and Sellers have no information or knowledge that any such action is
presently contemplated.
13
3.19 SUBSIDIARIES. Except as set forth on SCHEDULE 3.19, the Company
does not own, and has never previously owned, directly or indirectly, any
interest or investment (whether equity or debt) in any corporation, partnership,
business, trust, or other entity.
3.20 INSURANCE. Attached hereto as SCHEDULE 3.20 is a true, complete and
accurate list of all insurance policies maintained by (i) the Company, or (ii)
with respect to Xxxxxx Real Property, by Xx. Xxxxxx or Xx. Xxxxxx (the owner of
each policy being as set forth in SCHEDULE 3.20). The Company maintains (i)
insurance on the Assets (and as applicable, the Leased Assets), the Business and
the Company's operations of such types and in such amounts as are customarily
insured by similar companies in the same industry, covering property damage and
loss of income by fire or other casualty, and (ii) adequate insurance protection
against all liabilities, claims and risks against which it is customary to
insure, including but not limited to product liability insurance.
3.21 BANKING. The names and addresses of all banks or other financial
institutions in which the Company has an account, deposit or safe deposit box,
with the names of all persons authorized to draw on these accounts or deposits
or access to these boxes, are set forth on SCHEDULE 3.21 attached hereto.
3.22 POWERS OF ATTORNEY. Except as set forth on SCHEDULE 3.22, no person
or other entity holds a general or special power of attorney from the Company.
Each person set forth on SCHEDULE 3.22 holds only a special power of attorney,
pursuant to which his or her authority is limited to representation of the
Company before the Internal Revenue Service.
3.23 PERSONNEL. Attached hereto as SCHEDULE 3.23 is a list of the names,
addresses, hire dates, dates of birth and job descriptions of all Employees of
the Company, stating their rates of compensation including, if determined,
bonuses payable to each. Also set forth on SCHEDULE 3.23 is a list of those
Employees who are not actively working in the Business and the reasons therefor.
3.24 EMPLOYEE BENEFITS.
(A) SCHEDULE 3.24 is a true, correct and complete list of each Employee
Benefit Plan that the Company maintains, or to which the Company contributes.
(i) Each such Employee Benefit Plan (and each related trust,
insurance contract, or fund) complies in form and in operation in all
respects with the applicable requirements of ERISA, the Code, and other
applicable laws.
(ii) All required reports and descriptions (including Form 5500
Annual Reports, Summary Annual Reports, PBGC-1's, and Summary Plan
Descriptions) have been filed or distributed appropriately with respect
to each such Employee Benefit Plan. The requirements of Part 6 of
Subtitle B of Title I of ERISA and of Code Sec. 4980B have been met with
respect to each such Employee Benefit Plan which is an Employee Welfare
Benefit Plan.
14
(iii) All contributions (including all employer contributions and
employee salary reduction contributions) which are due have been paid to
each such Employee Benefit Plan which is an Employee Pension Benefit
Plan and all contributions for any period ending on or before the
Closing Date which are not yet due have been paid to each such Employee
or accrued in accordance with the past custom and practice of the
Company. All premiums or other payments for all periods ending on or
before the Closing Date have been and will be paid with respect to each
such Employee Benefit Plan which is an Employee Welfare Benefit Plan.
(iv) Each such Employee Benefit Plan which is an Employee Pension
Benefit Plan meets the requirements of a "qualified plan" under Code
Sec. 401(a) and has received, within the last two years, a favorable
determination letter from the Internal Revenue Service.
(v) The market value of assets under each such Employee Benefit
Plan which is an Employee Pension Benefit Plan (other than any
Multiemployer Plan) equals or exceeds the present value of all vested
and nonvested liabilities thereunder determined in accordance with PBGC
methods, factors, and assumptions applicable to an Employee Pension
Benefit Plan terminating on the date for determination.
(vi) The Sellers have delivered to the Purchaser correct and
complete copies of the plan documents and summary plan descriptions, the
most recent determination letter received from the Internal Revenue
Service, the most recent Form 5500 Annual Report, and all related trust
agreements, insurance contracts, and other funding agreements which
implement each such Employee Benefit Plan.
(B) With respect to each Employee Benefit Plan that the Company
maintains or ever has maintained or to which the Company contributes, ever has
contributed, or ever has been required to contribute:
(i) No such Employee Benefit Plan which is an Employee Pension Benefit
Plan (other than any Multi-Employer Plan) has been completely or
partially terminated or been the subject of a reportable event as to
which notices would be required to be filed with the PBGC. No proceeding
by the PBGC to terminate any such Employee Pension Benefit Plan (other
than any Multi-employer Plan) has been instituted or threatened.
(ii) There have been no prohibited transactions with respect to any such
Employee Benefit Plan. No action, suit, proceeding, hearing, or
investigation with respect to the administration or the investment of
the assets of any such Employee Benefit Plan (other than routine claims
for benefits) is pending, or, to the best of any Seller's knowledge,
threatened. None of the Sellers has any knowledge of any basis for any
such action, suit, proceeding, hearing, or investigation.
(iii) The Company has not incurred, and none of the Sellers expects that
the Company will incur, any Liability to the PBGC (other than PBGC
premium payments) or otherwise under
15
Title IV or ERISA (including any withdrawal liability) or under the Code
with respect to any such Employee Benefit Plan which is an Employee
Pension Benefit Plan.
(C) The Company does not contribute to, and has never contributed to,
and has never been required to contribute to, any Multiemployer Plan, and the
Company does not have, and has never had, any liability (including withdrawal
liability) under any Multiemployer Plan.
(D) The Company does not maintain nor contribute to, and has never
maintained nor contributed to, and has never been required to contribute to, any
Employee Welfare Benefit Plan providing medical, health, or life insurance or
other welfare-type benefits for current or future retired or terminated
employees, their spouses, or their dependents (other than in accordance with
Code Sec.
4980B).
3.25 EMPLOYMENT AGREEMENTS. SCHEDULE 3.25 is a list of all employment
agreements, consulting agreements, collective bargaining agreements, and
agreements providing for director and officer indemnification or other
agreements or arrangements providing for employee or other remuneration or
benefits (other than the Plans) to which the Company or any of its Affiliates is
a party or by which the Company or any of its Affiliates is bound (collectively,
the "Employment Agreements"). All of the Employment Agreements are in full force
and effect, and neither the Company nor any other party is in default under any
of them. There have been no claims of default, and to the best knowledge and
reasonable belief of Sellers there are no facts or conditions which if
continued, or on notice, will result in a default, under any of the Employment
Agreements. The Company is in compliance with, and upon the closing of the
transactions set forth or contemplated herein will remain in compliance with,
all of its obligations under such Employment Agreements. Except as set forth on
SCHEDULE 3.25, no Employees are represented by any labor organization, and, as
of the date hereof, no labor organization or group of Employees has made a
written demand to the Company for recognition, or filed a petition with the
National Labor Relations Board, or announced its intention to hold an election
of a collective bargaining representative. There is no pending, or to the best
knowledge and reasonable belief of Sellers threatened, labor dispute, strike or
work stoppage affecting or potentially affecting the Business.
3.26 NO SEVERANCE PAYMENTS. The Company will not owe a severance payment
or similar obligation to any of its employees, officers, or directors, as a
result of the transactions contemplated by this Agreement, nor will any of such
persons be entitled to an increase in severance payments or other benefits as a
result of the transactions contemplated hereby, nor in the event of the
subsequent termination of their employment.
3.27 LIABILITIES. The Company does not have, and as of the Closing Date
will not have, any liabilities, obligations or commitments of any nature,
whether accrued, absolute, contingent or otherwise, and whether due or to become
due (herein "Liabilities"), except (i) Liabilities which are adequately
disclosed or accrued against in the Audited Financial Statements, (ii)
Liabilities which have been incurred in the Ordinary Course of the Business and
in accordance with standard, customary and historical practices and experiences
of the Company, and (iii) Liabilities expressly set forth, as to the nature and
amount thereof, on SCHEDULE 3.27. In no event shall the Company or the
16
Purchaser be liable for (or have paid any) legal, accounting or other costs or
expenses incurred by the Company or any Seller in connection with the transfer
of the Subject Shares or the Xxxxxx Real Property, or any of the transactions
contemplated in this Agreement.
3.28 LITIGATION. Except as set forth on SCHEDULE 3.28, there is no suit,
action, arbitration or legal, administrative or other proceeding or governmental
investigation pending or threatened against or affecting the Company, its
Affiliates, the Assets, the Leased Assets, the Xxxxxx Real Property or the
Business.
3.29 TAX MATTERS.
(A) The Company has filed all tax returns that the Company was required
to file, and all such tax returns were correct and complete in all respects. All
taxes owed by the Company (whether or not shown on any tax return) have been
paid. Except for an extension through July 15, 1997, which the Company has
obtained with respect to the filing of its 1996 federal income tax return and
the extension of its Louisiana income tax return, both of which returns will be
filed prior to the Closing, the Company is not the beneficiary of any extension
of time within which to file any tax return. No claim has ever been made by an
authority in a jurisdiction where the Company does not file tax returns, that
the Company is or may be subject to taxation by that jurisdiction. There are no
security interests on any of the assets of the Company that arose in connection
with any failure (or alleged failure) to pay any tax.
(B) The Company has withheld and paid all taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder, or other third party.
(C) No Seller or director or officer (or employee responsible for tax
matters) of the Company has reason to believe that any authority might assess
any additional taxes for any period for which tax returns have been filed. There
is no dispute or claim concerning any tax liability of the Company either (i)
claimed or raised by any authority in writing or (ii) as to which any of the
Sellers or the directors and officers (and employees responsible for tax
matters) of the Company has knowledge. SCHEDULE 3.29 lists all federal, state,
local, and foreign income tax returns filed with respect to the Company for
taxable periods ended on or after December 31, 1989, indicates those tax returns
that have been audited, and indicates those tax returns that currently are the
subject of audit. The Sellers have delivered to the Purchaser correct and
complete copies of all federal income tax returns, examination reports, and
statements of deficiencies assessed against or agreed to by the Company since
December 31, 1989.
(D) The Company has not waived any statute of limitations in respect of
taxes or agreed to any extension of time with respect to a tax assessment or
deficiency.
3.30 COMPLIANCE WITH LAWS. Except as to matters pertaining to
Environmental, Health & Safety Laws specifically described in SCHEDULE 3.31, the
Company has complied with, and is not
17
in violation of, applicable federal, state or local ordinances, statutes, laws,
rules, restrictions and regulations (including, without limitation, any
applicable building, zoning, Environmental, Health & Safety Laws or other law,
ordinance or regulation) that affects, or is likely to affect, directly or
indirectly, the Business, the Assets, the Leased Assets, the Real Property or
the customers, suppliers or financial prospects of the Company. Except as to
matters pertaining to Environmental, Health & Safety Laws specifically described
in SCHEDULE 3.31, there are not any uncured violations of federal, state or
local laws, ordinances, statutes, orders, rules, restrictions, regulations or
requirements affecting any portion of the Business, the Real Property, the
Assets or the Leased Assets, and neither any of the Assets, the Leased Assets or
the Real Property, nor the operation thereof nor the conduct of the Business,
violates any applicable federal, state or municipal laws, ordinances, orders,
regulations or requirements.
3.31 ENVIRONMENTAL, HEALTH & SAFETY LAWS. Except as described on
SCHEDULE 3.31 (i) neither the ownership nor the operation of the Business, the
Assets, the Leased Assets or the Real Property has violated or violates any
Environmental, Health & Safety Laws, (ii) neither the Real Property, nor any
real property previously owned or occupied by the Company, nor to the knowledge
of the Sellers any property adjacent to any of the foregoing, has been used for
the use, manufacture, storage, treatment, generation, transportation,
processing, handling or disposal of any solid, hazardous, industrial or toxic
pollutant, contaminant, substance or waste in violation of any Environmental,
Health & Safety Laws, (iii) neither the Company nor any of the Sellers has
received nor has knowledge of any notice of or any threat of any claim, suit,
proceeding, inquiry, investigation, citation, notice, violation, consent order
or judicial or administrative action arising out of or based upon any
Environmental, Health & Safety Laws, (iv) no solid, hazardous, industrial or
toxic pollutant, contaminant, substance or waste has been disposed of, spilled
onto, discharged or released (as those terms are defined in the Environmental,
Health & Safety Laws) on or within the Real Property or, to the best of Sellers'
knowledge, any property adjacent thereto, nor any real property previously owned
or occupied by the Company, (v) no underground storage tanks, above ground
storage tanks, solid or hazardous waste management units, xxxxx, underground
injection systems, landfills, lagoons, settling ponds or any other impoundment
used to treat, store or dispose of any solid, hazardous or toxic substances,
pollutants, contaminants or wastes regulated by the Environmental Health &
Safety Laws have ever been placed on the Real Property, and if any underground
storage tanks are disclosed in SCHEDULE 3.31, none of such tanks are leaking,
(vi) neither the Company nor any of the Sellers have received notice of any
past, present or future event, condition, circumstance, activity, practice,
incident or action or plan which may interfere with or prevent compliance or
continued compliance with the Environmental, Health & Safety Laws or which may
give rise to any common law or legal liability, or otherwise form the basis of
any claim, action, demand, lawsuit, proceeding, hearing, study or investigation,
based on, related to, or alleging any violation of the Environmental Health &
Safety Laws, and (vii) all wastes generated by the Company have been treated
and/or disposed of at appropriately licensed recycling, reclamation, reuse, or
treatment, storage and disposal facilities. Except as to matters pertaining to
Environmental, Health & Safety Laws specifically described in SCHEDULE 3.31,
there is no environmental condition relating to any of the Assets, the Leased
Assets, the Real Property or the Business that may reasonably be expected to
have a materially adverse effect on any of the Assets, the Leased Assets, the
Real Property or the Business or the value thereof.
18
Except as to matters pertaining to Environmental, Health & Safety Laws
specifically described in SCHEDULE 3.31, the Company has all permits, licenses,
franchises, operating authorities and other authorizations or documented
exemptions or variances thereto necessary to the conduct of the Business in the
manner and in the areas in which the Business is presently conducted, and all
such permits, licenses, franchises, and authorizations are valid and in full
force and effect. The Company is in full compliance with all the terms and
conditions of such permits, licenses, franchises, or other authorizations, and
has not engaged in any activity which could cause the revocation or suspension
of any such permits, licenses, franchises, or other authorizations. No actions
or proceedings looking to or contemplating revocation or suspension of any
thereof are pending or, to the best knowledge and reasonable belief of Sellers,
threatened.
3.32 FINANCIAL STATEMENTS. The Audited Financial Statements (I) are
true, complete, and correct in all material respects, (ii) fairly and accurately
present the financial position of the Company as of the periods described
therein, and the results of the operations of the Company for the periods
indicated, and (iii) have been prepared in accordance with generally accepted
accounting principles, consistently applied. Sellers shall also furnish to
Purchaser, immediately when available and in any event at least fifteen (15)
business days prior to the Closing Date, all available interim financial
statements and balance sheets of the Company (and in any event through at least
through March 31, 1997), and including the Closing Financial Statements, all of
which shall (i) be true, complete, and correct in all material respects, (ii)
fairly and accurately present the financial position of the Company as of the
periods described therein, and the results of the operations of the Company for
the periods indicated, and (iii) have been prepared in accordance with generally
accepted accounting principles, consistently applied (except that the interim
financial statements, including the Closing Financial Statements, may omit
certain footnote disclosures normally required by GAAP, the omission of which,
in the good faith opinion of Sellers, will not cause such financial statements
to be materially misleading), and (iv) reflect all necessary eliminating entries
and normal adjustments.
3.33 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in
SCHEDULE 3.33, since the Balance Sheet Date, there has been no:
(A) material adverse change in the financial condition,
liabilities, business or prospects of the Company, nor in the Xxxxxx
Real Property;
(B) loss, destruction or damage to any property of the Company
or the Xxxxxx Real Property, whether or not insured;
(C) acquisition or disposition of any material assets,
individually or in the aggregate, nor any material contract, commitment
or obligation entered into or incurred by the Company, nor any other
transaction by the Company, other than for value in the Ordinary Course
of Business and in accordance with prudent business practices;
19
(D) labor trouble, pending or threatened, involving the Company,
or change in the personnel of the Company or the terms or conditions of
their employment;
(E) other event or condition of any character that has or might
reasonably be expected to have an adverse effect on the financial
condition, business, liabilities or prospects of the Company, or the
Xxxxxx Real Property.
3.34 CUSTOMERS. SCHEDULE 3.34 to this Agreement is a correct and current
list of all customers of the Company, together with summaries of the sales made
to each customer during the two most recent fiscal years of the Company. Except
as indicated in SCHEDULE 3.34, Sellers do not have any information, nor are they
aware of any facts, indicating that any of these customers intend to cease doing
business with the Company, or to materially alter the volume or terms of such
business.
3.35 INTERESTS IN CUSTOMERS, SUPPLIERS AND COMPETITORS. None of the
Sellers, and no shareholder, officer, director or employee (nor any former
shareholder, officer, director or employee) of the Company, nor to the best
knowledge and reasonable belief of Sellers any relative of any of them, has any
direct or indirect interest in any competitor, supplier or customer of the
Company, or any person or other entity who has done business with the Company in
the twenty-four (24) months preceding the Closing.
3.36 CORPORATE DOCUMENTS. Sellers have furnished to Purchaser for its
examination (i) true, complete and correct copies of the certificates or
articles of incorporation and bylaws of the Company, as amended to date; (ii)
true, complete and correct copies of the contents of the minute books of the
Company (including proceedings of audit and other committees), each of which
contains all records for all proceedings, consents, actions and meetings of the
shareholders, board of directors and committees, of the Company since its date
of incorporation.
3.37 ADVERSE INFORMATION. Neither the Company nor any of the Sellers has
any information or knowledge of any change contemplated in any applicable laws,
ordinances or restrictions, or any judicial or administrative action, or any
event, fact or circumstance which will, or could be reasonably expected to, have
a material adverse effect on the Company or its condition, financial or
otherwise, the Assets, the Leased Assets, the Xxxxxx Real Property or the
condition, value or operation thereof.
3.38 DISCLOSURE. Sellers have provided to Purchaser actual copies of all
Contracts, documents concerning all litigation and administrative proceedings,
employee benefit plans, Licenses, insurance policies, lists of suppliers,
customers, and Employees, and corporate and partnership records relating to the
Company or its assets and liabilities, the Business and the Xxxxxx Real
Property, and such information covers all material commitments and liabilities
of the Company. In addition, (i) Purchaser has been kept fully informed with
respect to all material developments in the business of the Company since the
Balance Sheet Date, (ii) management of the Company has not made any material
business decisions, nor taken any material actions, since the Balance Sheet Date
20
of which Purchaser has not been advised, and (iii) Purchaser and its agents have
been granted unlimited access to the books and records of the Company (whether
retained electronically, on disc or on paper).
3.39 FULL DISCLOSURE. This Agreement, the schedules and exhibits hereto,
and all other documents and written information furnished by the Sellers, the
Company, or their Affiliates on behalf of Sellers, the Company or their
respective Affiliates, to Purchaser or its representatives pursuant hereto or in
connection herewith, are true, complete and correct, and do not include any
untrue statement of a material fact or omit to state any material fact necessary
to make the statements made herein and therein not misleading. There are no
facts or circumstances relating to the Business or the Company's liabilities,
prospects, operations or financial condition, or the Xxxxxx Real Property, which
materially and adversely affect or, so far as the Sellers can now reasonably
foresee, will materially and adversely affect, the Business, the Company or the
assets, liabilities, prospects, operations or financial condition thereof, the
Xxxxxx Real Property, or the ability of the Sellers to perform this Agreement or
the obligations of any Seller hereunder.
ALL OF THE REPRESENTATIONS AND WARRANTIES OF SELLERS CONTAINED IN THIS
AGREEMENT SHALL BE TRUE, COMPLETE AND CORRECT AS OF THE DATE OF THIS AGREEMENT
AND SHALL BE DEEMED TO HAVE BEEN MADE AGAIN AT AND AS OF THE CLOSING DATE, AND
THEN SHALL BE TRUE, COMPLETE AND CORRECT IN ALL RESPECTS, AND SHALL SURVIVE THE
CLOSING AND THE EXECUTION AND DELIVERY OF ALL DOCUMENTS, INSTRUMENTS AND
AGREEMENTS EXECUTED IN CONNECTION THEREWITH.
ARTICLE IV
PURCHASER'S REPRESENTATIONS AND WARRANTIES
Purchaser represents and warrants that:
4.1 ORGANIZATION. Purchaser is a corporation duly organized, validly
existing, and in good standing under the laws of the state of Texas, and has all
necessary corporate powers to own its properties and to carry on its business as
now owned and operated by it.
4.2 AUTHORITY. Purchaser has the right, power, legal capacity, and
authority to execute, deliver and perform its obligations under this Agreement.
The execution, delivery and performance of this Agreement by Purchaser has been
duly authorized by Purchaser's Board of Directors, which constitutes all of the
necessary corporate action for Purchaser to consummate the transactions
contemplated by this Agreement and to perform its obligations hereunder.
4.3 CONSENTS AND APPROVALS. Except as set forth on SCHEDULE 4.3, no
consent, approval or authorization of, or filing or registration with, any
governmental or regulatory authority, or any other person or entity, is required
to be made or obtained by Purchaser in connection with the execution, delivery
or performance of this Agreement or the consummation by Purchaser of the
transactions contemplated hereby.
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4.4 VALID AND BINDING OBLIGATIONS. Upon execution and delivery, this
Agreement and each document, instrument or agreement to be executed by Purchaser
in connection herewith will constitute the legal, valid, and binding obligation
of Purchaser, enforceable against Purchaser in accordance with its terms, except
as same may be limited by bankruptcy laws, insolvency laws, and other similar
laws affecting the rights of creditors generally.
ALL OF THE REPRESENTATIONS AND WARRANTIES OF PURCHASER CONTAINED IN THIS
AGREEMENT SHALL BE TRUE, COMPLETE AND CORRECT AS OF THE DATE OF THIS AGREEMENT
AND SHALL BE DEEMED TO HAVE BEEN MADE AGAIN AT AND AS OF THE CLOSING DATE, AND
THEN SHALL BE TRUE, COMPLETE AND CORRECT IN ALL RESPECTS, AND SHALL SURVIVE THE
CLOSING AND THE EXECUTION AND DELIVERY OF ALL DOCUMENTS, INSTRUMENTS AND
AGREEMENTS EXECUTED IN CONNECTION THEREWITH.
ARTICLE V
ADDITIONAL WARRANTIES AND
CERTAIN COVENANTS AND AGREEMENTS
5.1 SELLERS' COVENANTS. Sellers jointly and severally represent,
warrant, covenant and agree that from the Balance Sheet Date through the Closing
Date:
(A) the Company and the Sellers have used and will use their best
efforts to preserve the business organization of the Company intact, to
keep available to the Business the Employees, and to preserve the
present relationships of the Company with its suppliers, customers and
others having business relationships with it;
(B) the Company has maintained and will maintain its existing
insurance as to the Business and the Assets (and as applicable, the
Leased Assets);
(C) Xx. Xxxxxx has maintained and will maintain the existing
insurance as to the Xxxxxx Real Property;
(D) the Company has maintained and operated and will maintain and
operate the Business in a good and businesslike manner in accordance
with good and prudent business practices and the Company's historical
policies;
(E) the Company has maintained and operated, and will continue to
maintain and operate, the Assets and the Leased Assets, including the
Real Property, in a good and businesslike manner in accordance with good
and prudent business practices and the Company's historical policies, in
as good working order and condition as existed as of the Balance Sheet
Date, ordinary wear and tear excepted;
(F) the Company has not issued or sold, nor directly or
indirectly redeemed or acquired, and will not issue or sell, nor
directly or indirectly redeem or acquire, any shares of its capital
stock, or any other of its securities, or granted or agreed to grant
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any options or rights with respect thereto, and has not changed nor
agreed to change and will not change nor agree to change its capital
structure;
(G) the Company has not declared, set aside nor paid and will not
declare, set aside nor pay a dividend or other distribution with respect
to its capital stock;
(H) the Company has not made and will not make any payment of any
type to the holders of any capital stock of the Company or any of their
Affiliates, other than ordinary salary or expenses which have been fully
disclosed to Purchaser; or
(I) the Company has neither waived nor released and will not
waive nor release any material right of or material claim held by it,
and has not discounted and will not discount any of its receivables;
(J) the Company has not acquired nor disposed of and will not
acquire nor dispose of, any material assets, individually or in the
aggregate, and has not entered into and will not enter into any contract
or arrangement therefor, and has not entered into and will not enter
into any other transaction other than for value in the Ordinary Course
of Business and in accordance with prudent business practices;
(K) the Company has not revalued and will not revalue any of its
assets or liabilities;
(L) the Company has not changed and will not change the salary or
other compensation payable or to become payable by the Company to any of
its officers, directors, employees, agents or other personnel, and has
not declared, made or committed, and will not declare, make or commit to
any kind of payment of a bonus or other additional salary or
compensation to any such person, except for customary bonuses (not to
exceed an aggregate of $52,000) paid to various Xxxxxx family members
employed by the Company, for the purpose of paying life insurance
premiums;
(M) the Company has not made and will not make a loan to any
person or entity, and has not guarantied and will not guaranty any loan;
(N) the Company has not amended nor terminated, and will not
amend nor terminate, any material contract, agreement, permit or license
to which the Company is a party, or by which the Company or any of the
Assets or Leased Assets are bound;
(O) Neither Xx. Xxxxxx nor Xx. Xxxxxx has amended or terminated,
and neither will amend or terminate, any material contract, agreement,
permit or license to which he or she is a party, or by which he, she or
the Xxxxxx Real Property is bound;
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(P) the Company has maintained and will maintain all debt and
lease instruments, and has not entered into and will not enter into any
new or amended debt or lease instruments, without the prior written
approval of Purchaser;
(Q) the Company has not entered into and will not enter into any
agreement or instrument which would constitute an encumbrance, mortgage
or pledge of the Assets, or which would bind Purchaser, the Company or
the Assets after Closing, which have been entered into outside the
normal scope of maintaining and operating the Business and the Assets in
the Ordinary Course of Business;
(R) Neither Xx. Xxxxxx nor Xx. Xxxxxx has entered into, and
neither of them will not enter into, any agreement or instrument which
would constitute an encumbrance, mortgage or pledge of the Xxxxxx Real
Property, or which would bind Purchaser or the Xxxxxx Real Property
after Closing;
(S) the Company has not removed, nor permitted the removal of,
and will not remove nor permit the removal of, any personal property or
fixtures from the Real Property, unless such personal property or
fixtures are replaced with an item of at least equal value that is
properly suited for its intended purpose, other than inventory sold in
the Ordinary Course of Business, or other personal property in an amount
which is not material, either individually or in the aggregate;
(T) the Company and the Sellers will afford Purchaser the
continuing right to review and inspect the Assets and the Leased Assets,
including the Real Property, at reasonable hours, and any and all books,
records, contracts, and other documents or data pertaining to the
ownership, use, insurance, operation, renovation and maintenance of the
Assets and Leased Assets, including the Real Property, and the Business;
(U) the Company and the Sellers will afford Purchaser free and
open access to the Employees during regular business hours, to assist
Purchaser in the contemplated due diligence review, and to allow
Purchaser to gather information to make employment decisions to be
effective after Closing;
(V) the Company has performed and will perform all of the
Company's obligations under all contracts and commitments applicable to
the Company, the Assets and the Leased Assets, and has maintained and
will maintain the Company's books of account and records in the usual,
regular and customary manner;
(W) except as otherwise expressly set forth in this Agreement,
the Company has complied and will comply with all statutes, laws,
ordinances and regulations applicable to the Company, the Assets, the
Leased Assets, the Xxxxxx Real Property
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and the conduct of the Business and will provide Purchaser with
immediate notice of any violation of any Environmental, Health & Safety
Laws;
(X) the Company has paid and will pay in the Ordinary Course of
Business all bills and other payments due with respect to the ownership,
use, insurance, operation and maintenance of the Business, the Assets,
the Leased Assets and the Xxxxxx Real Property, as and when such bills
or other payments were due, and has taken and will take all action
necessary or prudent to prevent liens or other claims for the same from
being filed or asserted against any part of the Assets, the Leased
Assets, or the Xxxxxx Real Property, provided however, that the Company
shall not make any expenditures outside the Ordinary Course of Business,
nor any capital expenditures, individually or in the aggregate in excess
of $3,000, without the prior written approval of Purchaser;
(Y) the Company has not made and will not make any material
changes in its management, operations, accounting or business practices
or methods (including without limitation, any change in depreciation or
amortization policies or rates), nor negotiate or pursue the acquisition
or the start-up of any new business or line of business;
(Z) all revenues or cash or other receipts from all sources in
all media received by the Company have been deposited and will be
deposited in the Company's account;
(AA) the Sellers will cause all of the representations and
warranties set forth in SECTION 3.33 hereof to be and remain true,
complete and correct as of the Closing;
(BB) to the extent any Seller receives notice, such Seller will
immediately advise Purchaser in writing of any material adverse change
in the financial condition, results of operations, business or prospects
of the Company, and any material adverse change in the Xxxxxx Real
Property, and any event which could reasonably be expected to result in
such a change; and
(CC) there has been no agreement by the Company to do any of the
things described above in this SECTION 5.1 which, if such were to occur
between the Balance Sheet Date and the Closing Date, would constitute a
breach of a covenant contained in this SECTION 5.1.
5.2 THIRD PARTY CONSENTS. Sellers shall use their best efforts to obtain
the respective consents or approvals of each third party whose consent or
approval is required for the consummation of the transactions contemplated
hereby.
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5.3 TITLE COMMITMENT. Within ten (10) business days from the date of
execution hereof, Xx. Xxxxxx shall cause Commonwealth Land Title Insurance
Company (the "Title Company") to deliver to Purchaser and Purchaser's attorney
an up-to-date and complete Commitment for Title Insurance (herein called "Title
Commitment") issued by the Title Company and covering the Xxxxxx Real Property,
together with legible copies of all documents and instruments referenced therein
showing the title of Xx. Xxxxxx and Xx. Xxxxxx to the Xxxxxx Real Property to be
good, marketable, indefeasible and insurable in accordance with the terms
hereof. Xx. Xxxxxx shall cause the Title Company to continually update and renew
the Title Commitment prior to its contractual expiration and the Closing, and
deliver same to Purchaser and Purchaser's attorney together with legible copies
of all documents and instruments relating to any new matters reflected thereon.
Xx. Xxxxxx is hereby obligated, at Xx. Xxxxxx'x sole cost and expense, to remove
or cure at or before Closing (i) all mortgages, deeds of trust, judgments,
liens, mechanics' and materialmen's liens, and all other liens against the
Xxxxxx Real Property, whether or not Purchaser objects to such liens prior to
Closing, as well (ii) any other easements, rights of ways, covenants, set-back
lines, restrictions or other matters set forth in the Title Commitment to which
Purchaser objects. Xx. Xxxxxx shall have until the Closing Date to cure any of
the foregoing, and to deliver notice thereof to Purchaser and Purchaser's
attorney, together with written or other evidence, acceptable to Purchaser, that
the same have been cured. Xx. Xxxxxx must exercise due diligence and exert his
best efforts to cure Purchaser's objections.
5.4 TITLE INSURANCE. Xx. Xxxxxx shall cause the Title Company to issue
through its underwriter and deliver to Purchaser or the Company, as applicable,
at Closing, or within a reasonable time thereafter (provided that an updated
Title Commitment is delivered at Closing), an Owner's Policy of Title Insurance
(herein called "Title Policy"), insuring title to the Xxxxxx Real Property in an
amount equal to the Xxxxxx Real Property Value, naming Purchaser or the Company,
as applicable, their successors or assigns, as the insured, and subject only to
those matters to which Purchaser consents in writing (collectively, the
"Permitted Exceptions"). Xx. Xxxxxx and the Company shall evenly divide the cost
and expense associated with obtaining the Title Policy.
5.5 CURRENT SURVEY. Within ten (10) business days from the date of
execution hereof, Xx. Xxxxxx, at Xx. Xxxxxx'x sole cost and expense, shall
deliver to Purchaser five (5) certified copies and one (1) reproducible copy of
a current on-the-ground survey (herein called "Survey") and five (5) copies of
the metes and bounds description of the Xxxxxx Real Property prepared by a duly
licensed land surveyor acceptable to Purchaser and the Title Company. Review of,
objection to and cure of objectionable matters reflected on the Survey shall be
handled in the same manner and within the same time periods as provided in
SECTION 5.3 above for review of, objection to and cure of objectionable matters
reflected in the Title Commitment. The survey shall (a) reflect all matters
deemed Permitted Exceptions hereunder and all exceptions to title reflected in
the Real Property Records of Calcasieu Parish, Louisiana, and the recording data
identifying same; (b) locate all improvements on the Xxxxxx Real Property
including, without limitation, any signs, fences and walkways and the distance
between them and all boundaries and building setback lines; any easements under,
over or across the Xxxxxx Real Property, whether for utilities or otherwise; any
rights-of-way, streets, alleys or roadways adjacent to, passing across or giving
access to or from the Xxxxxx Real Property, whether publicly or privately
dedicated; any encroachments, buffer zones or uses upon the Xxxxxx Real Property
or
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between the Xxxxxx Real Property and adjacent property, and the size and
dimensions thereof; any ponds, creeks, rivers or other bodies of water on the
Xxxxxx Real Property to the high bank thereof; any portion of the Xxxxxx Real
Property within a flood plain or flood prone area designated as such by the
Federal Flood Insurance Administration of the Department of Housing and Urban
Development, or other governmental authority, whether federal, state or local;
all building setback lines, whether created by instruments of public record or a
governmental entity with authority to do so; and any other physical items
observed by the surveyor either on or affecting the Xxxxxx Real Property; (c)
contain the surveyor's registered number and seal, the date of the survey, and a
certificate which shall be addressed to Purchaser and the Company, , and their
respective successors and assigns, the Title Company and other interested
parties, and shall state that the survey is true and correct; that the survey
reflects all conditions affecting the Xxxxxx Real Property set forth in the
Title Commitment, or of record in the appropriate real property records, or
observed by the surveyor; that the Xxxxxx Real Property has unlimited access to
and from the publicly dedicated rights-of way shown thereon and that no gaps or
strips of land exist between the boundaries of the Xxxxxx Real Property and
those rights-of-way; that no portion of the Xxxxxx Real Property lies within a
flood plain or flood prone area; and (d) otherwise be in form and content
acceptable to Purchaser.
5.6 ENVIRONMENTAL SITE ASSESSMENT. Purchaser may, at Purchaser's sole
cost and expense, arrange for a complete Phase I environmental site assessment
or such other environmental due diligence as Purchaser may elect (in any event,
the "Site Assessment") on the Real Property for the purpose of determining
whether there exists on the Real Property any environmental condition that could
result in any liability, cost or expense to the owner, occupier, or operator of
such property arising under any applicable law. The Site Assessment may be
performed at any time or any times, upon reasonable notice, and under reasonable
conditions established by Xx. Xxxxxx that do not impede the performance of the
Site Assessment, and Purchaser and its agents and environmental consultants are
hereby authorized (a) to enter upon the Real Property for such purposes, (b) to
perform both above and below the ground testing for environmental damage or the
presence of hazardous substances, solid wastes, or other substances known or
suspected to pose a threat to health or the environment on the Real Property,
and (c) to conduct such other tests on the Real Property as may be necessary to
conduct the Site Assessment in the reasonable opinion of Purchaser, its agents
or consultants. Xx. Xxxxxx and Sellers will supply to Purchaser, its agents and
consultants such historical and operational information regarding the Real
Property as may be reasonably requested to facilitate the Site Assessment and
will make available for meetings appropriate personnel having knowledge of such
matters. In the event that the results of the Site Assessment are unsatisfactory
in the good faith reasonable business judgment of Purchaser, then Purchaser may
terminate this Agreement.
5.7 COMPETING PROPOSALS. In consideration of the time and money that
Purchaser has spent and will spend in connection with the preparation of this
Agreement and other agreements required to complete the transactions
contemplated herein and in performing its due diligence with respect thereto,
each of the Sellers and the Company Agrees that until June 15, 1997, each will
not initiate, and will not permit the Company to initiate, directly or
indirectly, contact with any person or entity in an effort to solicit any
takeover proposal, nor will any of them authorize any officer, director or
employee of the Company, or any investment banker, attorney, accountant or any
representative,
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to directly or indirectly initiate any such contact. As used in this SECTION
5.7, "takeover proposal" shall mean any proposal for an acquisition, merger or
other business combination involving the Company or for the acquisition of a
substantial equity interest therein or a substantial portion of any of their
assets, other than the transaction contemplated by this Agreement. Further,
prior to June 15, 1997, the Sellers will not, and will not permit the Company
to, directly or indirectly, cooperate or negotiate with, or furnish or cause to
be furnished any non-public information concerning the Business, properties or
assets to, any person or entity in connection with any takeover proposal.
Sellers shall immediately notify Purchaser orally of, and confirm in writing,
all relevant details relating to any takeover proposal which Sellers or the
Company may receive. Sellers will use their best efforts to consummate the
transactions contemplated in this Agreement on the Closing Date, and will, at or
prior to Closing, take all necessary action to perform their obligations under
this Agreement.
5.8 DUE DILIGENCE; COOPERATION; SATISFACTION OF CONDITIONS. From the
date hereof through the Closing, expiration or other termination hereof, Sellers
and the Company will afford the Purchaser full and free access to the Company
and its management, employees, properties, contracts, books and records and all
other documents and data. Such access shall include the completion of review by
the Purchaser and its management, agents, lenders, investment bankers,
accountants and attorneys of the financial condition, business, prospects,
operations, property and plant and equipment of the Company and any of its
Affiliates. Sellers shall (a) give assistance, to the extent within their
control, to Purchaser in preparing any required filings and seeking any required
consents or approvals in any manner reasonably requested, and (b) use their best
efforts to pursue, to the extent within their control, the satisfaction of all
other conditions to the consummation of the transactions contemplated herein.
Upon the fulfillment of all the conditions precedent to the obligations of the
Parties contained herein, Sellers will forthwith proceed to Closing.
5.9 COMPANY'S INDEBTEDNESS; SELLER LOANS. At Closing, Sellers shall
cause the indebtedness of the Company to third parties to be not more than Three
Million and No/100 Dollars ($3,000,000.00) (exclusive of trade payables).
Following the Closing, and in no event more than one hundred twenty (120) days
after the Closing Date, Purchaser will use reasonable efforts to have the
Sellers released from any and all guarantees of the indebtedness of the Company.
There is not, and at Closing there will not be, any indebtedness owed by the
Company to any shareholder, (other than salary accrued in the ordinary course of
business) Xx. Xxxxxx shall repay to the Company at Closing the indebtedness owed
by him to the Company, which as of the date hereof has an outstanding balance,
principal and interest, of $68,555.64. Such indebtedness represents and at
Closing will represent, all indebtedness owed to the Company by any Seller.
ARTICLE VI
CONDITIONS TO CLOSING
6.1 CONDITIONS TO PURCHASER'S OBLIGATIONS. The obligations of Purchaser
hereunder to consummate the transactions contemplated hereby are subject to the
satisfaction, as of the Closing Date, of the following respective conditions
(any of which may be waived in whole or in part in writing by Purchaser at or
prior to the Closing):
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(A) REPRESENTATIONS AND WARRANTIES OF SELLERS TO BE TRUE. The
representations and warranties of Sellers herein contained shall be
true, complete and correct in all material respects at the Closing Date
with the same effect as though made at Closing (except insofar as such
representations and warranties are given as of a particular date) except
to the extent waived hereunder or affected by the transactions
contemplated or permitted herein.
(B) PERFORMANCE BY SELLERS. Sellers shall have performed in all
material respects all obligations and complied in all material respects
with all covenants and conditions required by this Agreement to be
performed or complied with by them at or prior to the Closing Date.
(C) NO LEGAL PROCEEDINGS. No injunction shall have been obtained,
and no suit, action or other proceeding shall be pending before any
court or governmental agency, in which it is sought to restrain or
prohibit the consummation of the transactions contemplated hereby, the
Additional Acquisitions or the IPO, or in which it is sought to obtain
damages in connection therewith, or involving a claim that the
consummation of the transactions contemplated hereby, the Additional
Acquisitions or the IPO would result in a violation of any law, decree
or regulation of any government or agency thereof having jurisdiction.
There shall not have been enacted, voted or promulgated by any
legislative or administrative body having jurisdiction any legislation,
ruling or decree which in the reasonable judgment of Purchaser would be
materially prejudicial to Purchaser with respect to the transactions
contemplated by this Agreement, the Additional Acquisitions or the IPO.
(D) PREMERGER ACT. If required by applicable law, Purchaser and
Sellers shall have previously submitted a premerger notification report
form as required by the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
(the "Premerger Act") to the Federal Trade Commission (the "FTC") and
the Justice Department and the applicable waiting period pursuant to the
Premerger Act shall have passed or been terminated early without the FTC
or the Justice Department challenging, questioning or requesting
additional information (which request remains unsatisfied) with respect
to the transactions contemplated by this Agreement.
(E) STATUTORY REQUIREMENTS. All other statutory requirements for
the valid consummation by Purchaser of the transactions contemplated by
this Agreement shall have been fulfilled; all authorizations, consents
and approvals of all federal, state and local governmental agencies and
authorities required to be obtained in order to permit consummation by
Purchaser of the transactions contemplated by this Agreement and to
permit the businesses presently carried on by the Purchaser, and the
Company to continue unimpaired immediately following the Closing, shall
have been obtained and shall be in full force and effect.
(F) REQUIRED CONSENTS. Sellers shall have obtained the written
consent or approval of each person listed on SCHEDULE 3.3, in form and
content reasonably acceptable to Purchaser. Purchaser shall have
obtained all governmental, lender or third party approvals
29
required to be obtained in connection with the consummation of the
Additional Acquisition and the IPO.
(G) RESIGNATIONS OF DIRECTORS AND OFFICERS. There shall have been
delivered to Purchaser the immediately effective written resignations of
such directors and officers of the Company as Purchaser may request.
(H) ACCOUNTING AND TAX TREATMENT. The Parties intend that the
acquisition of the Subject Shares will be treated as a stock purchase
under generally accepted accounting principles. At Purchaser's option,
Sellers will join with Purchaser in making an election under Section
338(h)(10) of the Internal Revenue Code (and any corresponding elections
under state or local tax law) with respect to the purchase and sale of
the Company. The Shareholders will have opportunity to review any
election forms prior to filing. The Purchaser shall promptly reimburse
the Sellers the amount equal to the amount of any tax liability realized
and paid by Sellers as a result of any such election under Section
338(h)(10) of the Code (and any corresponding elections under state or
local tax law) contemplated herein.
(I) FINANCIAL DUE DILIGENCE. Purchaser shall have completed, to
the satisfaction of Purchaser and its officers, directors, attorneys,
accountants and other representatives, reasonable due diligence
regarding the operations and financial condition of the Company.
(J) FINANCIAL STATEMENT REVIEW; FISCAL 1996 EBIT; OUTSTANDING
INDEBTEDNESS. Purchaser shall have completed a review of the Audited
Financial Statements, the Closing Financial Statements and all interim
financial statements of the Company, and determined, to the satisfaction
of Purchaser and its officers, directors, attorneys, accountants and
other representatives, that (i) the Audited Financial Statements and
such other financial statements are true, complete and accurate in all
respects, and (ii) no material adverse change in the financial
condition, results of operations, Business or prospects of the Company
has occurred since the Balance Sheet Date. The Purchaser's independent
accountant shall have also determined that the historical financial
statements of the Company are suitable or readily adaptable for
incorporation into the registration statements and annual and other
reports to be filed by the Purchaser with the Securities and Exchange
Commission. Further, the Audited Financial Statements shall indicate
that the Company's EBIT for the fiscal year ended October 31, 1996,
equals or exceeds Five Hundred Thousand and No/100 Dollars
($500,000.00). Finally, in the event that the Company's Indebtedness
(exclusive of trade payables) exceeds $3,000,000, in violation of
Sellers' covenant set forth in SECTION 5.9, Purchaser may elect to waive
this condition and proceed to Closing, in which event the Purchase Price
shall be reduced by the amount of the excess. This reduction shall be
effected first by reducing the amount of cash payable at Closing, and
then by reducing the aggregate original principal amount of the
Convertible Notes.
(K) ENVIRONMENTAL, HEALTH AND SAFETY DUE DILIGENCE. Purchaser
shall have completed, to the satisfaction of Purchaser and its officers,
directors, attorneys, accountants
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and other representatives, reasonable due diligence regarding the
environmental practices and procedures of the Company, including without
limitation compliance by the Company with Environmental, Health & Safety
Laws, and the existence of any solid, hazardous, industrial, or toxic
pollutants, contaminants, substances or wastes on any of the Real
Property, and determined that, except as to matters pertaining to
Environmental, Health & Safety Laws specifically described in SCHEDULE
3.31, there exist no material actual or probable violations, compliance
problems, required capital expenditures or other substantive
environmental, health or safety concerns.
(L) PERMIT AND LICENSE DUE DILIGENCE. Purchaser shall have
completed, to the satisfaction of Purchaser and its officers, directors,
attorneys, accountants and other representatives, reasonable due
diligence in order to verify the existence and sufficiency of all
operating permits, licenses and authorities necessary or advisable for
the operation of the Business.
(M) NO MATERIAL ADVERSE CHANGE. Except for matters of a general
economic or political nature, no event or series of events shall have
occurred between the Balance Sheet Date and the Closing Date, the effect
of which is or may reasonably be expected to be materially adverse to
the business, prospects or financial condition of the Company, other
than the information already disclosed to Purchaser by Sellers pursuant
to this Agreement. As of the date of this Agreement, Sellers hereby
represent and warrant that none of them is aware of any such event or
series of events which would represent such a change from the
information already disclosed. Any material change in any disclosure set
forth in any of the Schedules to the Agreement shall for purposes of
this condition be deemed to be a material adverse change.
(N) TITLE AND SURVEY DUE DILIGENCE. Acceptable title, survey,
environmental and other conditions exist as provided in Article V
hereof.
(O) PROPERTY CONDITION. The Xxxxxx Real Property shall not have
been damaged by fire, vandalism, acts of God, or other casualty or
cause, unless Sellers have diligently repaired and restored the Xxxxxx
Real Property, at Sellers' sole cost and expense and subject to the
supervision, control and consent of Purchaser, to a condition at least
as good as the condition in which the Xxxxxx Real Property exists on the
date of execution hereof.
(P) CONDEMNATION. Neither the Xxxxxx Real Property, nor any
portion thereof, shall have been taken, or threatened with taking, by
eminent domain. If only part of the Xxxxxx Real Property is so taken,
Purchaser shall have the option of (i) proceeding with the Closing and
acquiring the Xxxxxx Real Property as affected by such taking, together
with all compensation and damages awarded or the right to receive same,
or (ii) canceling this Agreement. If Purchaser elects option (i) above,
Xx. Xxxxxx agrees to assign to Purchaser, or at the option of Purchaser
to the Company, at Closing his rights to such compensation and
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damages, and will not settle any proceedings relating to such taking
without Purchaser's prior written consent.
(Q) CONTEMPORANEOUS CLOSING. Purchaser shall acquire the Xxxxxx
Real Property and all of the Subject Shares contemporaneously at
Closing, in accordance with the terms and provisions of this Agreement.
(R) APPROVAL OF DOCUMENTS. The form and substance of the Audited
Financial Statements, all interim financial statements, including the
Closing Financial Statements, and all certificates, instruments,
opinions and other documents delivered or to be delivered to Purchaser
under this Agreement shall be satisfactory in all reasonable respects to
Purchaser and its counsel.
Purchaser may waive any or all of the foregoing conditions in whole or in part
only in writing but without prior notice; provided, however, that no such waiver
of a condition shall constitute a waiver by Purchaser of any other conditions or
of its other rights or remedies, at law or in equity, if Sellers shall be in
default of any of their representations, warranties, covenants or agreements
under this Agreement.
6.2 CONDITIONS TO SELLERS' OBLIGATIONS. The obligations of Sellers'
hereunder to consummate the transactions contemplated hereby are subject to the
satisfaction, as of the Closing Date, of the following respective conditions
(any of which may be waived in whole or in part in writing by Sellers at or
prior to the Closing):
(A) REPRESENTATIONS AND WARRANTIES OF PURCHASER TO BE TRUE. The
representations and warranties of Purchaser herein contained shall be
true, complete and correct in all material respects at the Closing Date
with the same effect as though made at Closing (except insofar as such
representations and warranties are given as of a particular date) except
to the extent waived hereunder or affected by the transactions
contemplated or permitted herein.
(B) PERFORMANCE BY PURCHASER. Purchaser shall have performed in
all material respects all obligations and complied in all material
respects with all covenants and conditions required by this Agreement to
be performed or complied with by Purchaser at or prior to the Closing
Date.
(C) NO LEGAL PROCEEDINGS. No injunction shall have been obtained,
and no suit, action or other proceeding shall be pending before any
court or governmental agency, in which it is sought to restrain or
prohibit the consummation of the transactions contemplated hereby, or in
which it is sought to obtain damages in connection therewith, or
involving a claim that the consummation of the transactions contemplated
hereby would result in a violation of any law, decree or regulation of
any government or agency thereof having jurisdiction. There shall not
have been enacted, voted or promulgated by any legislative or
administrative body having jurisdiction any legislation, ruling or
decree which in the reasonable judgment of Sellers would
32
be materially prejudicial to Sellers with respect to the transactions
contemplated by this Agreement.
(D) PREMERGER ACT. If required by applicable law, Purchaser and
Sellers shall have previously submitted a premerger notification report
form as required by the Premerger Act to the FTC and the Justice
Department and the applicable waiting period pursuant to the Premerger
Act shall have passed or been terminated early without the FTC or the
Justice Department challenging, questioning or requesting additional
information (which request remains unsatisfied) with respect to the
transactions contemplated by this Agreement.
(E) STATUTORY REQUIREMENTS. All other statutory requirements for
the valid consummation by Sellers of the transactions contemplated by
this Agreement shall have been fulfilled; all authorizations, consents
and approvals of all federal, state and local governmental agencies and
authorities required to be obtained in order to permit consummation by
Sellers of the transactions contemplated by this Agreement shall have
been obtained and shall be in full force and effect.
(F) REQUIRED CONSENTS. Purchaser shall have obtained the written
consent or approval of each person listed on SCHEDULE 4.3, in form and
content reasonably acceptable to Sellers.
(G) ACCOUNTING AND TAX TREATMENT. The Parties intend that the
acquisition of the Subject Shares be treated as a stock purchase under
generally accepted accounting principles. At Purchaser's option, Sellers
will join with Purchaser in making an election under Section 338(h)(10)
of the Internal Revenue Code (and any corresponding elections under
state or local tax law) with respect to the purchase and sale of the
Company. The Shareholders will have opportunity to review any election
forms prior to filing.
(H) NO MATERIAL ADVERSE CHANGE. Except for matters of a general
economic or political nature, no event or series of events shall have
occurred between the Balance Sheet Date and the Closing Date, the effect
of which is or may reasonably be expected to be materially adverse to
the business, prospects or financial condition of Purchaser, other than
the information already disclosed to Sellers by Purchaser pursuant to
this Agreement. As of the date of this Agreement, Purchaser hereby
represents and warrants that it is not aware of any such event or series
of events which would represent such a change from the information
already disclosed.
(I) APPROVAL OF DOCUMENTS. The form and substance of all
certificates, instruments, opinions and other documents delivered or to
be delivered to Sellers under this Agreement shall be satisfactory in
all reasonable respects to Sellers and their counsel.
Sellers may waive any or all of the foregoing conditions in whole or in part
only in writing but without prior notice; provided, however, that no such waiver
of a condition shall constitute a waiver by Sellers
33
of any other conditions or of their other rights or remedies, at law or in
equity, if Purchaser shall be in default of any of its representations,
warranties, covenants or agreements under this Agreement.
ARTICLE VII
THE CLOSING
7.1 TIME AND PLACE. Delivery of the Stock Purchase Price by Purchaser to
Sellers, and the transfer of the Subject Shares by Sellers, and the conveyance
of the Xxxxxx Real Property to Purchaser or the Company, as applicable, and
delivery to Xx. Xxxxxx of the Mortgage Note, and the other transactions
contemplated hereby (the "Closing") shall take place at the offices of Xxxxx,
Xxxxx & Xxxxxx Incorporated, 0 Xxxxxxxx Xxxxx Xxxxx 0000, Xxxxxxx, Xxxxx 00000,
at or about 10:00 a.m.
on the Closing Date.
7.2 SELLERS' DELIVERIES. At or before the Closing, Sellers shall deliver
or cause to be delivered to Purchaser:
(a) All of the stock certificates evidencing the Subject Shares,
together with irrevocable stock powers in form and content acceptable to
Purchaser, duly authorized and executed by the record holder of each
such stock certificate;
(b) An Investor Representation Letter in substantially the form
attached hereto as EXHIBIT E executed by each of the Sellers with
respect to each Seller's acquisition of a Convertible Note as part of
the Stock Purchase Price at Closing;
(c) Resignations of all directors as officers of the Company,
effective as of the Closing;
(d) Employment Agreement in substantially the form attached
hereto as EXHIBIT F, duly executed by Xx. Xxxxxx (the "Xxxxxx Employment
Agreement");
(e) Confidentiality and Noncompetition Agreement in
substantially the form attached hereto as EXHIBIT C, duly executed by
Xx. Xxxxxx (the "Xxxxxx Noncompete Agreement");
(f) Registration Rights Agreement in substantially the form
attached hereto as EXHIBIT G, duly executed by all of the Sellers (the
"Registration Rights Agreement");
(g) Act of Sale and Vendor's Lien in substantially the form
attached hereto as EXHIBIT H, duly executed by Xx. Xxxxxx and Xx.
Xxxxxx, in order to convey the Xxxxxx Real Property to Purchaser or, at
the option of Purchaser, to the Company;
34
(h) The Title Policy, or the updated Title Commitment, together
with payment of one-half (1/2) of the cost and expense of obtaining the
Title Policy, as contemplated in SECTION 5.4 hereof;
(i) Copies of all certificates of occupancy, licenses, permits,
authorizations and approvals required by law and issued by all
governmental authorities having jurisdiction, and the original of each
invoice for current real estate and personal property taxes;
(j) A sworn affidavit, in form and substance acceptable to the
Purchaser and the Title Company, duly executed by Xx. Xxxxxx and
acknowledged, stating, under penalty of perjury, that Xx. Xxxxxx is not
a "foreign person" within the meaning of Section 1445 of the Internal
Revenue Code of the United States, as amended through the Closing Date,
and setting forth Xx. Xxxxxx'x taxpayer identification number;
(k) All original promissory notes or other debt instruments
executed by the Company to any Seller, marked "Paid in Full;"
(l) Payment of any outstanding amounts owed by any Seller to the
Company, as expressly set forth in SECTION 5.9 hereof;
(m) Such subordination or other agreements as the Company's
lender may require with respect to payment of the Convertible Notes, or
substantially in the form of EXHIBIT I;
(n) An opinion of counsel issued by Xxxxx & Xxxxxx, counsel for
Sellers, in form and content reasonably satisfactory to Purchaser and
Purchaser's counsel;
(o) Certificate in form and substance satisfactory to Purchaser,
dated the Closing Date and executed by all of the Sellers, stating that
after due inquiry, each of them has determined that (1) all of the
Sellers' representations and warranties set forth in ARTICLE III of this
Agreement are true, complete and correct as of the Closing Date, (2)
Sellers' have performed all of the covenants and agreements to be
performed by Sellers pursuant to ARTICLE V of this Agreement, and (3)
all conditions to Closing set forth in SECTION 6.1 of this Agreement
have been satisfied;
(p) The Closing Financial Statements Certificates;
(q) The certificates of existence, good standing and authority
of the Company as contemplated in SECTION 3.1 of this Agreement;
35
(r) Such documents as Purchaser may require in connection with
the election under 338(h)(10) under the Internal Revenue Code (and any
corresponding elections under state and local tax law);
(s) Such consents, waivers, estoppel letters, lien releases or
similar documentation as Purchaser shall request, in Purchaser's sole
discretion, in connection with the transfer of the Subject Shares or the
conveyance of the Xxxxxx Real Property; and
(t) All other items required to be delivered hereunder or as may
be reasonably requested which are necessary or would reasonably
facilitate consummation of the transactions contemplated hereby,
including such certificates as are necessary from third parties to
establish the truth and accuracy of Sellers' representations and
warranties set forth herein, or any items requested by the Title
Company.
In addition, Sellers will put Purchaser into full possession and enjoyment of
the Company, the Business, the Assets, the Leased Assets, the Xxxxxx Real
Property and all documents, books, records, agreements, and financial data of
any sort relating to the Business or the Xxxxxx Real Property, immediately upon
the occurrence of the Closing.
7.3 PURCHASER'S OBLIGATIONS. At the Closing, Purchaser will deliver or
cause to be delivered to Sellers, the following:
(a) The Convertible Notes;
(b) Certified check or wire transfer of funds to Xx. Xxxxxx in
the amount of Ten Thousand and No/100 Dollars ($10,000.00), as payment
of the independent consideration payable pursuant to SECTION 2.2 of this
Agreement;
(c) The Mortgage Note;
(d) Guaranty of Specific Indebtedness in substantially the form
attached hereto as EXHIBIT I, duly executed by Allwaste guaranteeing
repayment of the Convertible Notes;
(e) The Xxxxxx Employment Agreement, duly executed by the
Purchaser;
(f) The Xxxxxx Noncompete Agreement, duly executed by the
Purchaser;
(g) The Registration Rights Agreement, duly executed by Invatec;
(h) Payment of any outstanding amounts payable to Sellers
pursuant to SECTION 5.9 of this Agreement;
36
(i) An opinion of counsel issued by Xxxxx, Xxxxx & Xxxxxx
Incorporated, counsel for Purchaser, in form and content reasonably
satisfactory to Sellers and Sellers' legal counsel;
(j) Certificate in form and substance satisfactory to Sellers,
dated the Closing Date and executed by Purchaser, stating that after due
inquiry, Purchaser has determined that (1) all of Purchaser's
representations and warranties set forth in ARTICLE IV of this Agreement
are true, complete and correct as of the Closing Date, (2) Purchaser has
performed all of the covenants and agreements to be performed by
Purchaser pursuant to SECTION 5.9 of this Agreement, and (3) all
conditions to Closing set forth in SECTION 6.2 of this Agreement have
been satisfied;
(k) Certified resolutions of the Board of Directors of Purchaser,
in form and content reasonably acceptable to Sellers, authorizing the
transactions contemplated herein; and
(l) All other items required to be delivered hereunder or as may
be requested or which are necessary or would reasonably facilitate
consummation of the transactions contemplated hereby, including such
certificates as are necessary from third parties to establish the truth
and accuracy of Purchaser's representations and warranties set forth
herein.
7.4 FURTHER ASSURANCES. At and after the Closing, each of the Parties
shall take all appropriate action and execute all documents of any kind which
may be reasonably necessary or desirable to carry out the transactions
contemplated hereby. Each Seller, at any time at or after the Closing, will
execute, acknowledge and deliver any further stock powers, deeds, bills of sale,
assignments and other assurances, documents and instruments of transfer,
reasonably requested by Purchaser, and will take any other action consistent
with the terms of this Agreement that may reasonably be requested by Purchaser,
for the purpose of assigning and confirming to Purchaser (or, with respect to
the Xxxxxx Real Property, the Company), all of the Subject Shares, or if
necessary, any of the Assets, and the Xxxxxx Real Property.
7.5 PRORATION OF RENT AND AD VALOREM TAXES. Xx. Xxxxxx, Xx. Xxxxxx and
Purchaser hereby agree that all ad valorem taxes on the Xxxxxx Real Property for
the 1997 tax year, and any rental amounts owed by the Company to Xx. Xxxxxx
and/or Xx. Xxxxxx for the month in which Closing occurs and disclosed to the
Purchaser in the Schedules attached to this Agreement, shall be prorated as of
the Closing Date.
ARTICLE VIII
TERMINATION OF OBLIGATIONS, WAIVERS
OF CONDITIONS, PAYMENT OF EXPENSES AND LIQUIDATED DAMAGES
37
8.1 TERMINATION OF AGREEMENT. Anything herein to the contrary
notwithstanding, this Agreement and the transactions contemplated herein may be
terminated at any time prior to Closing, as follows, and in no other manner:
(A) MUTUAL CONSENT. By mutual written consent of Purchaser and
Sellers;
(B) EXPIRATION DATE. By either Purchaser or Sellers if Closing
shall not have occurred on or before June 15, 1997 (as same may be
extended by mutual agreement of the Purchaser and Sellers), provided,
however, that the Party seeking to terminate shall be in compliance with
all of its covenants and obligations hereunder.
(C) PURCHASER'S OPTION. By the Board of Directors of Purchaser at
any time after the Closing Date (as same may be extended by mutual
agreement of the Purchaser and Sellers) if, by that date, the conditions
set forth in SECTION 6.1 hereof have not been met, provided, however,
that the failure to meet such conditions was not caused by the failure
of Purchaser to perform any of its covenants or obligations hereunder.
(D) SELLERS' OPTION. By any Seller at any time after the Closing
Date (as same may be extended by mutual agreement of the Purchaser and
Sellers) if, by that date, the conditions set forth in SECTION 6.2
hereof have not been met, provided, however, that the failure to meet
such conditions was not caused by the failure of any Seller to perform
any of his or her covenants or obligations hereunder.
8.2 PAYMENT OF EXPENSES; WAIVER OF CONDITIONS. In the event that this
Agreement shall be terminated pursuant to SECTION 8.1, all obligations of the
Parties under this Agreement shall terminate and there shall be no liability of
any Party to another (except by reason of default hereunder which has not been
waived). Absent such default, each Party will pay all costs and expenses
incident to such Party's negotiation and preparation of this Agreement and all
documents, instruments and agreements relating to the transactions contemplated
herein, and such Party's performance of and compliance with all agreements and
conditions contained herein or therein on such Party's part to be performed or
complied with, including the fees, expenses and disbursements of such Party's
counsel, auditors and investment bankers. If any of the conditions specified in
SECTION 6.1 have not been satisfied, Purchaser may nevertheless elect to waive
such conditions and proceed with the transactions contemplated hereby and, if
any of the conditions specified in SECTION 6.2 have not been satisfied, Sellers
may nevertheless elect to waive such conditions and proceed with the
transactions contemplated hereby. Any such waiver and election shall be
evidenced by a written instrument executed by the President of Purchaser and all
of the Sellers, setting forth with particularity the condition which has been
waived.
8.3 FORFEITURE OF CASH DOWN PAYMENT FOR FAILING TO CLOSE/LIQUIDATED
DAMAGES. In the event that his Agreement is validly terminated by the Sellers
under Section 8.1 (D) for failure of the Purchaser to close the transactions
contemplated in this Agreement on or prior to the Closing Date and the Sellers
are not in breach of this Agreement, the Sellers shall be entitled to retain the
Cash
38
Down Payment. In the event of such termination and notwithstanding any other
provision of this Agreement, the Cash Down Payment shall be full and liquidated
damages for any breach by the Purchaser of any term or condition of this
Agreement or any other claim whatsoever related to or arising out of this
agreement or the transactions contemplated herein and the Sellers' shall have no
further recourse whatsoever against the Purchaser, Invatec or any Affiliate of
any of the foregoing relating to or arising out of this Agreement or the
transactions contemplated herein or therein.
ARTICLE IX
INDEMNIFICATION, ADJUSTMENT TO
STOCK PURCHASE PRICE AND OTHER REMEDIES
9.1 INDEMNIFICATION.
A. BY SELLERS. Sellers shall, jointly and severally, indemnify,
save, defend and hold harmless Purchaser, and Purchaser's shareholders,
directors, officers, agents, attorneys, accountants, investment bankers,
representatives and employees from and against any and all costs,
lawsuits, losses, liabilities, deficiencies, claims and expenses,
including interest, penalties, attorneys' fees and all amounts paid in
investigation, defense or settlement of any of the foregoing
(collectively referred to herein as "Damages"), incurred in connection
with or arising out of or resulting from or incident to any breach of
any covenant or warranty, or the inaccuracy of any representation, made
by any Seller in or pursuant to this Agreement or any other agreement
contemplated hereby or in any schedule, certificate, exhibit, or other
instrument furnished by the Company, any Seller or any Affiliate of any
Seller under this Agreement.
B. BY PURCHASER. Purchaser shall indemnify, save, defend and
hold harmless Sellers, and Sellers' agents, attorneys, accountants,
investment bankers, representatives and employees from and against any
and all Damages incurred in connection with or arising out of or
resulting from or incident to any breach of any covenant or warranty, or
the inaccuracy of any representation, made by Purchaser in or pursuant
to this Agreement or any other agreement contemplated hereby or in any
schedule, certificate, exhibit, or other instrument furnished by
Purchaser under this Agreement.
C. DEFENSE OF CLAIMS. If any lawsuit or enforcement action is
filed against any person or entity entitled to the benefit of indemnity
hereunder, written notice thereof describing such lawsuit or enforcement
action in reasonable detail and indicating the amount (estimated, if
necessary) or good faith estimate of the reasonably foreseeable
estimated amount of Damages (which estimate shall in no way limit the
amount of indemnification the indemnified person or entity is entitled
to receive hereunder), shall be given to the indemnifying Party as
promptly as practicable (and in any event within ten (10) business days
after the service of the citation or summons); provided that the failure
of any indemnified person or entity to give timely notice shall not
affect such Party's rights to indemnification hereunder to the extent
that the indemnified person or entity demonstrates that the amount the
indemnified
39
person or entity is entitled to recover exceeds the actual damages to
the indemnifying Party caused by such failure to so notify within ten
(10) days. After such notice, if the indemnifying Party elects to
compromise or defend any such asserted liability and to assume all
obligations contained in this SECTION 9.1 to indemnify the indemnified
person or entity, then the indemnifying Party shall be entitled, if the
indemnifying Party so elects, to take control of the defense and
investigation of such lawsuit or action and to employ and engage
attorneys of such indemnifying Party's own choice to handle and defend
the same, at the indemnifying Party's sole cost, risk and expense, and
such indemnified person or entity shall cooperate in all reasonable
respects, at the indemnifying Party's sole cost, risk and expense, with
the indemnifying Party and such attorneys in the investigation, trial,
and defense of such lawsuit or action and any appeal arising therefrom;
provided, however, that the indemnified person or entity may, at its or
his own cost, risk and expense, participate in such investigation, trial
and defense of such lawsuit or action and any appeal arising therefrom.
If the indemnifying Party promptly notifies the indemnified person or
entity that it or he intends to defend the claim and to assume all
obligations contained in this SECTION 9.1 to indemnify the indemnified
person or entity, the indemnified person or entity shall not pay, settle
or compromise such claim without the indemnifying Party's consent, which
consent shall not be unreasonably withheld. If the indemnifying Party
elects not to defend the claim of the indemnified person or entity, the
indemnified person or entity may, but shall not be obligated to, defend
or the indemnified person or entity may compromise or settle (exercising
reasonable business judgment) the claim or other matter on behalf, for
the account, and at the risk, of the indemnifying Party.
D. THIRD PARTY CLAIMS. The provisions of this SECTION 9.1 are
not limited to matters asserted by the Parties, but cover costs, losses,
liabilities, damages, lawsuits, claims and expenses incurred in
connection with third party claims. The indemnity hereunder is in
addition to any and all rights and remedies of the Parties in connection
herewith.
9.2 POST-CLOSING ADJUSTMENT TO STOCK PURCHASE PRICE. Within thirty (30)
days after the Closing Date, the Sellers shall deliver to Purchaser an unaudited
balance sheet and income statement of the Business, prepared as of the Closing
Date (the "Post-Closing Financial Statements"), which shall be true, complete
and correct in all respects and prepared in accordance with generally accepted
accounting principles, consistently applied, and certified as true, complete and
correct by Sellers. These Post-Closing Financial Statements shall become final
and binding on the Parties on the 15th day following receipt thereof by
Purchaser unless Purchaser furnishes written notice of Purchaser's disagreement
("Notice of Disagreement") to Xx. Xxxxxx prior to such date. Any Notice of
Disagreement shall specify in detail the nature of any disagreement so asserted.
If a Notice of Disagreement is sent by Purchaser to Xx. Xxxxxx in accordance
with this SECTION 9.2, then the Post-Closing Financial Statements shall become
final and binding upon the Parties on the earlier to occur of: (i) the date the
Parties resolve in writing any differences they have with respect to any matter
specified in the Notice of Disagreement, or (ii) the date any disputed matters
are finally resolved in writing by the Arbitrator (as defined below). During the
10-day period following the delivery of a Notice of Disagreement, the Parties
shall seek in good faith to resolve in writing any differences which they may
have with respect to any matter specified in the Notice of Disagreement. If, at
the end of
40
such 10-day period (or such longer period of time as the Parties may agree upon
in writing), the Parties have not reached agreement on such matters, the matters
which remain in dispute, together with copies of this Agreement, the
Post-Closing Financial Statements, and the Notice of Disagreement, shall be
submitted, within five (5) days following the expiration of such 10-day period
(or any agreed upon extension thereof), to an arbitrator (the "Arbitrator") for
review and resolution. The Arbitrator shall be such nationally recognized
independent public accounting firm as shall be agreed upon by the Parties in
writing, after disclosure of any services provided by such firm to any of the
Parties, Allwaste, Inc., or any of their affiliates during the preceding
five-year period. All proceedings conducted by the Arbitrator shall be conducted
at the offices of the Arbitrator in Houston, Texas. The Arbitrator shall render
a decision resolving the matters in dispute as soon as practicable following the
date of the submission to the Arbitrator. The cost of any arbitration (including
the fees of the Arbitrator but excluding the fees and disbursements of each
party's independent auditors and counsel) pursuant to this SECTION 9.2 shall be
borne one-half by Purchaser and one-half by Sellers. The fees and disbursements
of Sellers' independent auditors and counsel incurred in connection with this
SECTION 9.2 shall be borne by Sellers, and the fees and disbursements of
Purchaser's independent auditors and counsel incurred in connection with this
SECTION 9.2 shall be borne by Purchaser. The final determination as described in
the procedures set forth hereinabove shall constitute the "Final Post-Closing
Financial Statements". To the extent that Two Million Four Hundred Thirty-Two
Thousand and No/100 Dollars ($2,432,000.00) exceeds the net book value of the
Company, as set forth in the Final Post-Closing Financial Statements (which net
book value shall not include the amount of any Xxxxxx Real Property Value or
Excess Inventory and Equipment Value), then the Purchase Price shall be
decreased by the amount of such excess. This decrease in the Purchase Price
shall be effected by reducing the original principal amount of each Convertible
Note, pro rata in the ratio which the original principal amount of such
Convertible Note bears to the aggregate original principal amount of all
Convertible Notes, and each Seller hereby covenants and agrees to execute and
deliver to Purchaser, within three (3) business days after receipt of an
execution counterpart thereof from Purchaser, a note modification agreement
reflecting this modification of the Purchase Price and of the original principal
amount of such Seller's Convertible Note.
9.3 SPECIFIC PERFORMANCE. Each of the Parties hereby acknowledges and
agrees that the transactions contemplated by this Agreement are unique, and that
it would be impossible to measure the damages which would result if any Party
should default in such Party's obligations under this Agreement; accordingly the
Parties hereby agree that each Party shall have, in addition to any other legal
or equitable remedy available to such Party, the right to enforce this Agreement
by decree of specific performance or other equitable remedy, and each Party
hereby irrevocably waives any defense, claim or assertion that a remedy in
damages will be adequate.
9.4 OFFSET; ATTORNEYS' FEES. To the extent permitted by applicable law,
all amounts due and owing to any Seller under this Agreement, the Convertible
Notes, the Mortgage Note or any document, instrument, or agreement executed in
connection herewith or therewith shall be subject to offset by the Purchaser to
the extent of any damages incurred as a result of any Seller's breach of this
Agreement or any document, instrument, or agreement executed by any Seller in
connection herewith. Each Seller hereby acknowledges and agrees that but for the
right of offset contained in this SECTION
41
9.4, the Purchaser would not have entered into this Agreement or any of the
transactions contemplated herein. If any legal action or other proceeding is
brought for the enforcement of this Agreement, or because of an alleged dispute,
breach, default or misrepresentation in connection with any of the provisions of
this Agreement, the successful or prevailing Party or Parties shall be entitled
to recover reasonable attorneys' fees and other costs incurred in that action or
proceeding in addition to any other remedies to which such Party or Parties may
be entitled at law or equity. The rights and remedies granted herein are
cumulative and not exclusive of any other right or remedy granted herein or
provided by law.
9.5 RIGHTS AND LIABILITIES OF PARTIES. Except as set forth in SECTION
9.1 with respect to certain indemnified third parties, nothing in this
Agreement, whether express or implied, is intended to confer any rights or
remedies under or by reason of this Agreement on any persons other than the
Parties and their respective successors and assigns, nor is anything in this
Agreement intended to relieve or discharge the obligation or liability of any
third persons to any Party to this Agreement, nor shall any provision give any
third person any right of subrogation or action over against any Party to this
Agreement.
9.6 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the
representations, warranties, covenants and agreements contained in this
Agreement shall survive the Closing of the transaction contemplated herein and
the execution and delivery of the documents, instruments and agreements executed
or delivered at Closing, notwithstanding any investigation made by or on behalf
of Sellers or Purchaser.
ARTICLE X
MISCELLANEOUS
10.1 CONFIDENTIALITY. Unless and until Closing has occurred, or such
information is or becomes public through no fault of the disclosing Party, each
Party hereby agrees that he or it will not disclose any information of a
confidential or proprietary nature concerning the other Parties or their
respective businesses or operations to any third parties, except for the
following, each of whom shall be informed of the confidential nature of such
information and the necessity to retain it in confidence: (A) Purchaser's and
Sellers' officers, directors, and employees, (B) a limited number of outside
legal, accounting and other professional consultants or key agents, (C) the bank
lenders of the Company and the Purchaser, (D) Purchaser's underwriters, and
their respective attorneys and advisors, and (E) such other parties to whom such
Party is required to disclose such information under applicable law, pursuant to
the advice of legal counsel for such Party, in which event the disclosing Party
shall (i) give prior written notice to the other Parties of the disclosing
Party's legal obligation to disclose such information, including the person(s)
to whom such information is legally required to be disclosed, and (ii) disclose
only the portion of such information which the disclosing Party reasonably
believes, on the advice of legal counsel, is legally required to be disclosed.
Each Party agrees that prior to Closing, he or it and all of his or its
Affiliates will use information obtained in connection with the transactions
contemplated in this Agreement solely for the purpose of evaluating such
transactions, and in no event shall any Party use any of such confidential or
proprietary information for his or its own benefit or to
42
the detriment of the other Parties. In the event that Closing does not occur
each Party shall, promptly upon request, return all of such confidential or
proprietary information to the appropriate Party, including any and all copies
thereof.
10.2 ANNOUNCEMENTS. Except as contemplated in SECTION 10.1, no public or
private announcement or disclosure shall be made by the Company or the Sellers
of the transactions contemplated herein without the prior written consent of the
Purchaser. None of the Parties nor their respective Affiliates shall publicly
disclose (whether by press release or filing of a report or disclosure with any
securities exchange or governmental authority) the matters contemplated hereby,
except as expressly contemplated herein, unless and until the Party proposing
such announcement or disclosure shall have supplied the proposed text of such
announcement or disclosure to the other Parties for review and comment at least
twenty-four (24) hours prior to release; provided however, that if in the good
faith opinion of legal counsel to the announcing or disclosing Party, such
announcement or disclosure is required under applicable federal or state law to
be made sooner, a copy of such announcement or disclosure shall be made
available to all other Parties as soon as possible, but in any event prior to
release.
10.3 IPO HOLDBACK. Each Seller hereby agrees that he or she will not
dispose of any of Invatec's common stock for a period of two years following the
date on which Invatec first receives payment for the shares of its common stock
which it sells to the underwriter in the IPO.
10.4 BROKERAGE COMMISSIONS AND OTHER FEES. Sellers hereby represent and
warrant that neither the Sellers nor the Company has incurred any liability for,
nor knows of any person or entity entitled to, any commission or finder's fee in
connection with this Agreement or the transactions contemplated herein.
Purchaser hereby represents and warrants that Purchaser has not incurred any
liability for, and does not know of any person or entity entitled to, any
commission or finder's fee in connection with this Agreement or the transactions
contemplated herein. Each Party shall be responsible for all costs, fees and
expenses (including attorney and accountant fees and expenses) paid or incurred
by such Party, and Sellers shall be responsible for all costs, fees and expenses
paid or incurred by the Sellers or the Company, in connection with the
preparation, negotiation, execution, delivery and performance of this Agreement,
or otherwise in connection with the transactions contemplated hereby.
10.5 ATTORNEYS' FEES. If any legal action or other proceeding is brought
for the enforcement of this Agreement, or because of an alleged dispute, breach,
default or misrepresentation in connection with any of the provisions of this
Agreement, the successful or prevailing Party shall be entitled to recover
reasonable attorneys' fees and other costs incurred in that action or proceeding
in addition to any other remedies to which it may be entitled at law or equity
10.6 MODIFICATION OF AGREEMENT. This Agreement may be amended or
modified only in writing signed by all of the Parties.
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10.7 NOTICES. All notices, consents, demands or other communications
required or permitted to be given pursuant to this Agreement shall be deemed
sufficiently given when delivered personally or telefaxed during regular
business hours during a business day to the appropriate location described in
the preamble to this Agreement, or three (3) business days after posting thereof
by United States first-class, registered or certified mail, return receipt
requested, with postage and fees prepaid and addressed the appropriate Party's
address set forth in the preamble to this Agreement, with a copy to legal
counsel for such Party, at the address set forth on the letterhead on which such
counsel's legal opinion was delivered. Any Party may designate a different
address for subsequent notices or communications by furnishing notice to the
other Parties in the manner described above.
10.8 ADDITIONAL REMEDIES. All rights and remedies of each Party
hereunder are cumulative of every other right or remedy that such Party may
otherwise have at law or in equity or under this Agreement or any other
document, instrument or agreement. The exercise of one or more rights or
remedies shall not prejudice or impair the concurrent or subsequent exercise of
other rights or remedies.
10.9 JOINT AND SEVERAL LIABILITY. All of Sellers' liabilities and
obligations hereunder shall be joint and several.
10.10 NON-WAIVER. Failure on the part of a Party in any one or more
instances to enforce any of such Party's rights which arise in connection with
this Agreement, or to insist upon the strict performance of any of the terms,
conditions or covenants of this Agreement, shall not be construed as a waiver or
relinquishment for the future of any such rights, terms, conditions or
covenants. No waiver of any condition of this Agreement shall be valid unless it
is in writing, and executed by the Party against whom such waiver is sought to
be enforced. Any valid waiver shall be effective only for the purposes expressly
set forth therein.
10.11 GOVERNING LAW; JURISDICTION; VENUE; SERVICE OF PROCESS. This
Agreement shall be construed and enforced in accordance with and governed by the
laws of the State of Texas, without regard to conflicts of law principles, and
the laws of the United States applicable in Texas. Venue for any litigation
between or among the Parties with respect to the subject matter of this
Agreement shall be Xxxxxx County, Texas or Calcasieu Parish Louisiana. Each
Party hereby irrevocably submits to personal jurisdiction in Texas and
Louisiana, and irrevocably waives all objections to personal jurisdiction in
Texas and Louisiana and venue in Xxxxxx County or Calcasieu Parish Louisiana for
purposes of such litigation. Process in any action or proceeding referred to in
this section may be served on any Party anywhere in the world.
10.12 CONSTRUCTION. The Parties and their respective legal counsel have
participated extensively in the preparation, negotiation and drafting of this
Agreement. Accordingly, no presumption will apply in favor of either Sellers or
Purchaser in the interpretation of this Agreement or in the resolution of the
ambiguity of any provision hereof. All words used herein shall be construed to
be of such gender or number as the circumstances require. As used herein the
term "this Agreement" shall mean this Agreement as a whole and as the same may,
from time to time hereafter,
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be amended, supplemented or modified. The words "herein," "hereof," "hereto,"
"hereunder," "hereinafter," "hereinabove," and "hereinbelow," and other words of
similar import, refer to this Agreement as a whole and not to any particular
article, section, paragraph, clause or other subdivision hereof, unless
otherwise specifically noted. As used herein, the words "include" or "including"
shall mean "including without limitation."
10.13 HEADINGS. The headings and subheadings of the Articles and
Sections contained herein or on any Schedule or Exhibit attached hereto are for
convenience of reference only and shall not affect the meaning or interpretation
of this Agreement or any provisions hereof. Any reference herein to an Article
or Section shall be deemed to be a reference to the corresponding Article or
Section of this Agreement unless otherwise stated herein.
10.14 SEVERABILITY. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective, valid and enforceable
under applicable law, but if any provision of this Agreement shall be prohibited
by, or invalid or unenforceable under, applicable law, then (i) the Parties
agree that they will amend such provisions by the minimal amount necessary to
bring such provisions within the ambit of enforceability, and (ii) any court of
competent jurisdiction may, at the request of either Party, revise, reform or
reconstruct such provisions in a manner sufficient to cause them to be
enforceable. In no event shall any prohibition against, or the invalidity or
unenforceability of, any provision hereof affect the validity or enforceability
of any other provision hereof.
10.15 SCHEDULES AND EXHIBITS. All schedules and exhibits attached to
this Agreement are hereby incorporated into and made a part of this Agreement.
10.16 FURTHER ASSURANCES. Each of the Parties shall perform such actions
and deliver or cause to be delivered any and all such documents, instruments and
agreements as the other Party may reasonably request for the purpose of fully
and effectively carrying out this Agreement and the transactions contemplated
hereby.
10.17 SUCCESSORS AND ASSIGNS. None of the Parties may assign their
rights, duties or obligations under this Agreement to any third party without
the written consent of the other Parties; provided, however, that Purchaser may
assign any or all of its rights, duties and obligations under this Agreement to
any corporation, whether now existing or formed hereafter, that is wholly owned
by Purchaser, for the purpose of reincorporating or reorganizing Purchaser in
contemplation of the IPO. This Agreement shall inure to the benefit of and be
binding upon the Parties and their respective successors and assigns.
10.18 ENTIRE AGREEMENT. This Agreement and all of the documents and
agreements executed in connection herewith set forth the entire agreement
between and among the Parties with respect to the subject matter hereof, and
supersede all prior or contemporaneous oral agreements or understandings, and
all prior written agreements, with respect thereto. There are no oral agreements
between or among the Parties.
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10.19 MULTIPLE COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall have the force and effect of an original, and
all of which together shall constitute but one and the same agreement
EXECUTED AND DELIVERED EFFECTIVE as of the date first written above.
PURCHASER:
THE SAFE SEAL COMPANY, INC.
a Texas corporation
By:____________________________
XXXXXXX X. XXXXXX,
President & CEO
SELLERS:
___________________________________ __________________________________
XXXXX X. XXXXXX, Individually XXXXXX X. XXXXXX, Individually
___________________________________ __________________________________
XXXXXXX XXXXXX XXXXXXX Individually XXXXX X. XXXXXX, III, Individually
___________________________________ __________________________________
XXXXXX XXXX XXXXXX, Individually XXXXX XXX XXXXXX, Individually
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The undersigned, the spouses of each of Xx. Xxxxxxx, Xx. Xxxxxx III, Xx.
Xxxxxx and Xx. Xxxxxx, are fully aware of, understand, and fully consent and
agree to the provisions of this Stock and Real Estate Purchase Agreement, and
its binding effect upon any community or other property interests that they may
own, and their awareness, understanding, consent and agreement are evidenced by
their execution hereof. The undersigned spouses of each of Xx. Xxxxxxx, Xx.
Xxxxxx III, Xx. Xxxxxx and Xx. Xxxxxx additionally join in the execution hereof
in order to sell, assign and transfer unto Purchaser all of their respective
rights, titles and interests, legal or beneficial, if any, in the Subject
Shares.
______________________________________
NAME:________________________________,
SPOUSE OF XXXXXXX XXXXXX XXXXXXX
______________________________________
NAME:________________________________,
SPOUSE OF XXXXX X. XXXXXX III
______________________________________
NAME:________________________________,
SPOUSE OF XXXXXX XXXX XXXXXX
______________________________________
NAME:________________________________,
SPOUSE OF XXXXX XXX XXXXXX
THE COMPANY:
PLANT SPECIALTIES, INC.
a Louisiana corporation
By:___________________________________
Xxxxx X. Xxxxxx, President
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Schedule 1.5 - Assets
Schedule 2.2 - Sellers' Respective Ownership Interests
Schedule 3.3 - (A) Sellers' Consents and Approvals
Schedule 3.3 - (B) Sellers' Breaches and Defaults
Schedule 3.5 - Options, etc.
Schedule 3.7 - Exceptions to Title to Assets
Schedule 3.8 - Exceptions to Title to Xxxxxx Real Property
Schedule 3.9 - Leased Assets (Personal Property)
Schedule 3.10 - Condition of Assets and Leased Assets
Schedule 3.11 - Contracts
Schedule 3.12 - Other Contracts
Schedule 3.13 - Exceptions to Title to Equipment
Schedule 3.16 - Licenses
Schedule 3.17 - Intellectual Property
Schedule 3.18 - (A) Real Property Owned
Schedule 3.18 - (B) Real Property Leased
Schedule 3.19 - Subsidiaries
Schedule 3.20 - Insurance
Schedule 3.21 - Banking
Schedule 3.22 - Powers of Attorney
Schedule 3.23 - Personnel
Schedule 3.24 - Employee Benefits
Schedule 3.25 - Employment Agreements
Schedule 3.27 - Additional Liabilities
Schedule 3.28 - Litigation
Schedule 3.29 - Tax Returns
Schedule 3.31 - Environmental, Health and Safety
Schedule 3.33 - Certain Changes or Events
Schedule 3.34 - Customers
Schedule 3.35 - Interests in Customers, Supplies and Competitors
Schedule 4.3 - Purchaser's Consents
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Exhibit A - Legal Description of Xxxxxx Real Property
Exhibit B - Form of Convertible Note
Exhibit C - Form of Confidentiality and Noncompetition Agreement
Exhibit D - Mortgage Note
Exhibit E - Form of Sellers' Investor Representation Letters
Exhibit F - Form of Employment Agreement
Exhibit G - Registration Rights Agreement
Exhibit H - Act of Sale and Vendor's Lien
Exhibit I - Lender Subordination Agreement
Exhibit J - Allwaste Guaranty
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