EXECUTION COPY
ASSET PURCHASE AGREEMENT
BY AND AMONG
XXXXXXXXX MOBILE FUELING, INC.
(PARENT),
SMF SERVICES, INC.
(BUYER),
SHANK C & E INVESTMENTS, L.L.C.
(THE COMPANY)
AND
XXXXX X. XXXXXXXX AND XXXXXXXXX XXXXXXXX
(MEMBERS)
JANUARY 25, 2005
TABLE OF CONTENTS
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ARTICLE I DEFINITIONS....................................................1
1.1 Certain Definitions............................................1
1.2 Other Definitions..............................................5
ARTICLE II PURCHASE AND SALE; CLOSING.....................................6
2.1 Purchase and Sale..............................................6
2.2 Title to the Purchased Assets; Documents of Conveyance.........8
2.3 Assumed Liabilities............................................8
2.4 Purchase Price................................................10
2.5 The Closing...................................................11
2.6 Purchase Price Adjustment.....................................11
2.7 Sales Taxes...................................................13
2.8 Allocation....................................................13
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND
THE MEMBERS...................................................13
3.1 Organization and Capitalization of the Company................13
3.2 Authorization of Transaction..................................14
3.3 No Restrictions Against Transfer..............................14
3.4 Subsidiaries..................................................14
3.5 Brokers' Fees.................................................14
3.6 Financial Statements..........................................15
3.7 Subsequent Events.............................................15
3.8 Absence of Undisclosed Liabilities............................16
3.9 Creditors; Bankruptcy.........................................16
3.10 Legal Compliance..............................................16
3.11 Licenses and Permits..........................................16
3.12 Title to Assets...............................................16
3.13 Inventory.....................................................17
3.14 Tax Matters...................................................17
3.15 Intellectual Property.........................................18
3.16 Contracts.....................................................19
3.17 Accounts and Notes Receivable.................................19
3.18 Accounts and Notes Payable....................................20
3.19 Insurance.....................................................20
3.20 Claims and Proceedings........................................20
3.21 Employees.....................................................20
3.22 Employee Benefits.............................................21
3.23 Business Relations............................................22
3.24 Environmental, Health, and Safety Matters.....................22
3.25 Warranties....................................................23
3.26 Insider Interests.............................................23
3.27 Disclosure....................................................23
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ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER.......................24
4.1 Organization of Buyer.........................................24
4.2 Authorization of Transaction..................................24
4.3 No Restrictions Against Transaction...........................24
4.4 Brokers.......................................................24
4.5 SEC Filings...................................................25
4.6 Solvency......................................................25
4.7 No Business Activities........................................25
ARTICLE V Pre-Closing Covenants.........................................25
5.1 General.......................................................25
5.2 Notices and Consents..........................................25
5.3 Operation of Business.........................................25
5.4 Full Access...................................................27
5.5 Notice of Developments........................................27
5.6 Restrictions on Transfer......................................27
ARTICLE VI Post-Closing Covenants........................................27
6.1 General.......................................................27
6.2 Transition....................................................27
6.3 Unpaid Payables...............................................27
6.4 Confidentiality...............................................28
6.5 Non-Compete; Non-Solicitation.................................28
6.6 Broker's Fees.................................................29
6.7 Replacement Property..........................................29
6.8 Employment Offers.............................................29
6.9 Change of Name................................................29
6.10 Buyer's Business Operations...................................29
ARTICLE VII Conditions to Obligation to Close.............................30
7.1 Conditions to Obligation of Buyer and Parent..................30
7.2 Conditions to Obligation of the Company and the Members.......32
ARTICLE VIII Survival of Representations and Warranties....................32
8.1 Survival......................................................32
ARTICLE IX INDEMNIFICATION...............................................33
9.1 Indemnity.....................................................33
9.2 Limitation on Indemnification.................................33
9.3 Indemnification Procedures....................................34
9.4 Right of Set-Off..............................................36
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ARTICLE X Termination...................................................36
10.1 Termination of Agreement......................................36
10.2 Effect of Termination.........................................36
ARTICLE XI Miscellaneous.................................................37
11.1 Parent Guarantee..............................................37
11.2 No Third-Party Beneficiaries..................................37
11.3 Entire Agreement..............................................37
11.4 Succession and Assignment.....................................37
11.5 Counterparts..................................................37
11.6 Headings......................................................37
11.7 Notices.......................................................37
11.8 Governing Law.................................................38
11.9 Amendments and Waivers........................................39
11.10 Severability..................................................39
11.11 Expenses......................................................39
11.12 Construction..................................................39
11.13 Incorporation of Exhibits and Disclosure Schedules............39
11.14 Specific Performance..........................................39
11.15 Arbitration...................................................39
SCHEDULES
Schedule 1.1 Prepaid Expenses
Schedule 2.1(b)(i) Vehicles
Schedule 2.1(b)(ii) Tangible Personal Property
Schedule 2.1(b)(vi) Assumed Personal Property Leases
Schedule 2.1(b)(viii) Assumed Real Property Leases
Schedule 2.1(d)(ii) Stolen Vehicles
Schedule 2.1(d)(v) Excluded Contracts
Schedule 3.1 Organization and Capitalization
Schedule 3.3 No Restrictions Against Transfer
Schedule 3.7 Subsequent Events
Schedule 3.11 Licenses and Permits
Schedule 3.12(a) Title to Assets
Schedule 3.12(b) Condition of Assets
Schedule 3.12(c) Location of Assets
Schedule 3.12(e) Leased Property
Schedule 3.14 Tax Matters
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Schedule 3.15(a) Intellectual Property
Schedule 3.15(d) Intellectual Property Agreements
Schedule 3.16(a) Contracts
Schedule 3.16(b) Enforceability of Contracts
Schedule 3.18 Accounts and Notes Payable
Schedule 3.19 Insurance
Schedule 3.20 Claims and Proceedings
Schedule 3.21(a) Employees
Schedule 3.21(b) Employment Payments
Schedule 3.22(a) Employee Benefit Plans
Schedule 3.22(b) Administration and Compliance of the Plans
Schedule 3.23 Business Relations
Schedule 3.24 Environmental, Health, and Safety Matters
Schedule 3.26 Insider Interests
Schedule 7.1 Conditions to Leased Property
EXHIBITS
A Direct Operating Expenses
B Form of Xxxx of Sale, Assignment and Assumption Agreement
C Form of Promissory Note
D Financial Statements
E Form of Legal Opinion of Company Counsel
F Form of Employment Agreement
G Form of Consulting Agreement
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement") is entered into as of
January 25, 2005, by and among XXXXXXXXX MOBILE FUELING, INC., a Florida
corporation ("Parent"), SMF SERVICES, INC., a Delaware corporation and wholly
owned subsidiary of Parent ("Buyer"), SHANK C & E INVESTMENTS, L.L.C. a Delaware
limited liability company (the "Company") and XXXXX X. XXXXXXXX and XXXXXXXXX
XXXXXXXX (collectively the "Members"). Parent, Buyer, the Company and the
Members are referred to collectively herein as the "Parties."
RECITALS
A. The Company, which operates under the name "Shank Services" and
occasionally uses the names "Xxxxxxx Oil Company" or "Xxxxxxx Oil," is engaged
in commercial fuel, oil and lubricant distribution and sales and heavy haul
services (collectively, the "Business").
B. The Members own one hundred percent (100%) of the outstanding limited
liability company interests of the Company.
C. Buyer desires to acquire from the Company and the Company desires to
sell, assign and transfer to Buyer certain assets of the Company, on the terms
and subject to the conditions set forth in this Agreement.
AGREEMENT
Now, therefore, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, the Parties agree as follows.
ARTICLE I
DEFINITIONS
1.1 Certain Definitions. In addition to the definitions set forth
elsewhere in this Agreement, as used herein, the following terms (whether used
in singular or plural forms) will have the following meanings:
"Adverse Consequences" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid
in settlement, Liabilities, obligations, Taxes, liens, losses, expenses, and
fees, including court costs and reasonable attorneys' fees and expenses.
"Affiliate" means, with respect to any Person, as applicable, any of (a) a
manager, director, officer, member or stockholder or equity holder of such
Person, (b) a spouse, parent, sibling or descendant of such Person (or a spouse,
parent, sibling or descendant of any director or officer of such Person) and (c)
any other Person that, directly or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
another Person. The term "control" includes, without limitation, the possession,
directly or indirectly, of the power to direct the management and policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise.
"Assumed Contracts" means all of the Company's contracts and licenses,
including those listed on Schedule 3.16, but excluding the Excluded Contracts.
"Bad Debt Amount" means the aggregate amount owing on all customer
accounts of Buyer that Parent is required by GAAP and SEC rules to report on its
financial statements as bad debt. The Bad Debt Reserve as defined in Section
2.4(d) shall be included in the GAAP valuation allowance determination for the
purposes of calculating the Bad Debt Amount.
"Closing Date Inventory List" means a list of the Company's Inventory as
of the Closing Date listed by category of item, and indicating, for each such
category, the value of such Inventory as agreed by the Company and Buyer.
"Closing Date Prepaid Expenses List" means the list of the Company's
Prepaid Expenses as of the Closing Date.
"Code" means the Internal Revenue Code of 1986, as amended.
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"Direct Operating Expenses" means those costs and expenses incurred which
are directly related to and charged against operations (excluding sales, general
or administrative expenses) and are customarily categorized as operating
expenses, as set forth on Exhibit A attached hereto.
"Environmental, Health, and Safety Requirements" will mean all federal,
state, local and foreign statutes, regulations, ordinances and other provisions
having the force or effect of law, all judicial and administrative orders and
determinations, all contractual obligations and all common law concerning public
health and safety, worker health and safety, aboveground storage tanks, fuel
delivery, equipment transportation and pollution or protection of the
environment, including without limitation all those relating to the presence,
use, production, generation, handling, transportation, treatment, storage,
disposal, distribution, labeling, testing, processing, discharge, release,
threatened release, control, or cleanup of any hazardous materials, substances
or wastes, chemical substances or mixtures, pesticides, pollutants,
contaminants, toxic chemicals, petroleum products or byproducts, asbestos,
polychlorinated biphenyls, noise or radiation, each as amended and as now or
hereafter in effect.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means each entity which is treated as a single employer
with the Company or the Members for purposes of Code Section 414.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Excluded Contracts" means all of the Contracts listed on Schedule 2.1(d).
"Excluded Inventory List" means the list of obsolete, unusable or
unsaleable items excluded from the definition of Inventory at the Closing Date,
to be agreed upon by Buyer and the Company.
"GAAP" means United States generally accepted accounting principles as in
effect from time to time.
"Governmental Entity" means any court, administrative agency or commission
or other governmental authority or instrumentality, domestic or foreign,
federal, state, county or local.
"Intellectual Property" means (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, (c) all copyrightable works, all copyrights, and all applications,
registrations, and renewals in connection therewith, (d) all mask works and all
applications, registrations, and renewals in connection therewith, (e) 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), (f) all computer software, software licenses,
computer systems and operating systems (including data and related documentation
and licenses), (g) all other proprietary rights, and (h) all copies and tangible
embodiments thereof (in whatever form or medium).
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"Inventory" means the product inventories, raw materials, work-in-process,
parts, packaging materials and other accessories related thereto of the Company,
as the same may be augmented or depleted in the Ordinary Course of Business
prior to the Closing Date, and all warranties and licenses issued to the Company
in connection with the foregoing; provided, however, that "Inventory" will not
include any items listed on the Excluded Inventory List.
"Liability" means any liability (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including but not limited to any liability for Taxes and any incurred but
not yet reported claims under the Company's self-funded health insurance
program.
"Liens" means any security interest, pledge, bailment (in the nature of a
pledge or for purposes of security), mortgage, deed of trust, the grant of a
power to confess judgment, conditional sale and title retention agreement
(including any lease in the nature thereof), charge, encumbrance, easement,
reservation, restriction, cloud, right of first refusal or first offer, option,
or other similar arrangement or interest in real or personal property.
"Material Adverse Effect" means, with respect to any Person, a material
adverse effect on the business, operations, assets, condition (financial or
otherwise), operating results, liabilities, customer, supplier or employee
relations or business prospects of such Person.
"Net Operating Income" means gross margin determined in accordance with
GAAP plus other income from operations (excluding gains from insurance proceeds,
sales of equipment or other capital assets, forgiveness of debt and other
one-time occurrences) minus Direct Operating Expenses. For purposes of
calculating Buyer's Net Operating Income after the Closing Date, (a) the Net
Operating Income of Parent's Houston and Dallas/Ft. Worth-based fueling
operations will be included in Buyer's Net Operating Income. and (b) any
Ineligible Collections Rebates paid to the Company will be excluded from Buyer's
Net Operating Income.
"Non-Compete Period" means the period beginning with the Closing Date and
ending on the later of (i) the second anniversary of the Closing Date or (ii)
for Members employed by Buyer or any of Buyer's Affiliates following the
Closing, the later of the second anniversary of the Closing Date or one year
following the termination of employment with Buyer, Parent or any of Buyer's or
Parent's Affiliates.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"Outstanding Receivables List" means the list of the Company's Receivables
outstanding as of the Closing Date, which list shall include a description, date
and amount of each Receivable.
"Parent Common Stock" means the common stock, par value $0.01 per share,
of Parent.
"Performance Earnings Period" means that period beginning on July 1, 2004
and ending on December 31, 2005.
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"Permitted Lien" means (i) Liens for Taxes not yet due and payable or
being contested in good faith by appropriate proceedings and for which there are
adequate reserves on the books, (ii) workers or unemployment compensation Liens
arising in the Ordinary Course of Business; (iii) mechanic's, materialman's,
supplier's, vendor's or similar Liens arising in the Ordinary Course of Business
securing amounts that are not delinquent, and (iv) zoning ordinances, easements
and other restrictions of legal record affecting real property which would be
revealed by a survey and would not, individually or in the aggregate, materially
interfere with the usefulness of such real property to the Business; provided,
however for subparagraphs (i), (ii) and (iii), the definition of "Permitted
Liens" should include only those Liens attributable to obligations incurred by,
arising out of, or relating to, the operations of the Company prior to the
Closing Date that have been paid in full at or before the Closing Date.
"Person" will be construed broadly and will include an individual, a
partnership, a corporation, a limited liability company, an association, a joint
stock company, a trust, a joint venture, an unincorporated organization, or a
Governmental Entity (or any department, agency, or political subdivision
thereof).
"Prepaid Expenses" means all prepaid expenses of the Company except for
those prepaid expenses listed on Schedule 1.1.
"SEC" means the United States Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Subsidiary" means any corporation with respect to which a specified
Person (or a Subsidiary thereof) owns a majority of the common stock or has the
power to vote or direct the voting of sufficient securities to elect a majority
of the directors.
"Target Net Operating Income" means $6,542,000.
"Tax" or "Taxes" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code Section
59A), customs duties, capital stock, franchise, profits, withholding, social
security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated, or other tax of any kind whatsoever, including any interest,
penalty, or addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any disclosure
schedule or attachment thereto, and including any amendment thereof.
8
1.2 Other Definitions. The following terms are defined in the Sections
indicated:
TERM SECTION
Adjustment Amount 2.6(b)
Assignment 2.2
Assumed Liabilities 2.3(a)
Assumed Real Property Leases 2.1(b)
Authorizations 3.11
Bad Debt Reserve 2.4(d)
Business Recitals
Buyer Preface
Buyer Indemnified Parties 9.1(a)
Buyer Note 2.4(b)
Closing 2.5
Closing Date 2.5
Company Preface
Company Indemnified Parties 9.1(b)
Consulting Agreements 7.1(n)
Employment Agreements 7.1(n)
Excluded Assets 2.1(d)
Final Financial Statements 2.6(a)
Financial Statements 3.6
Guaranteed Obligations 11.1
Indemnified Party 9.3(a)
Indemnifying Party 9.3(a)
Ineligible Collections Rebates 2.4(d)
Ineligible Receivables 2.4(d)
Intellectual Property Agreements 3.15(a)
Inventory/Prepaids Payment 2.4(c)
Latest Balance Sheet 3.6
Leased Property 3.12(e)
Losses 9.1(a)
Members Preface
Parent Preface
Parties Preface
Personal Property Leases 2.1(b)
Plans 3.22
Purchase Price 2.4(a)
Purchased Assets 2.1(a)
Receivables 2.1(b)(iv)
Receivables Opt-Out 2.4(d)
Receivables Payment 2.4(d)
Replacement Property 6.7
Restricted Territory 6.5(a)
Standstill Period 5.3
Stolen Vehicles 2.1(d)
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TERM SECTION
Sublease 7.1(n)
Tangible Personal Property 2.1(b)
Third Party Claim 9.3(b)
Unpaid Payables 2.3(b)
Vehicles 2.1(b)
Wachovia 2.4(d)
ARTICLE II
PURCHASE AND SALE; CLOSING
2.1 Purchase and Sale.
(a) Upon the basis of the representations and warranties, for the
consideration, and on and subject to the terms and conditions of this Agreement,
Buyer agrees to purchase and accept from the Company, and the Company agrees to
sell, convey, assign, transfer and deliver to Buyer at Closing, free and clear
of any and all liabilities, obligations, Liens and claims except for Permitted
Liens, all of the Company's right, title and interest in and to all of the
assets of any kind and description (other than Excluded Assets as defined below)
that are used or held for use in the operation of the Business as of the Closing
Date (collectively, the "Purchased Assets"). The Company hereby agrees that all
Liens, other than Permitted Liens, will be paid in full and released prior to or
at Closing.
(b) The Purchased Assets will include, without limitation, all
right, title and interest of the Company, free and clear of any and all
Liabilities, obligations, Liens and claims, to and under:
(i) all motor vehicles, trailers and direct attachments
thereto that are owned or leased by the Company and set forth on Schedule
2.1(b)(i) (collectively, the "Vehicles"), and all intangible property related
thereto;
(ii) all equipment, portable customer tanks, furniture,
computer hardware, fixtures, improvements, supplies, machinery, tools, and other
tangible personal property of the Company and set forth on Schedule 2.1(b)(ii)
(collectively, the "Tangible Personal Property") and all intangible property
related thereto;
(iii) the Inventory;
(iv) unless there is a Receivables Opt-Out, all accounts
receivable, notes receivable and other receivables of the Company outstanding as
of the Closing Date (the "Receivables");
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(v) the Company's customer and supplier lists, Intellectual
Property and other intangible personal property of the Company, including the
names "Shank Services," "Xxxxxxx Oil Company" and "Xxxxxxx Oil";
(vi) all leases or subleases of tangible personal property as
to which the Company is the lessor, sublessor, lessee or sublessee, together
with any options to purchase the underlying personal property (collectively, the
"Personal Property Leases") as set forth on Schedule 2.1(b)(vi);
(vii) all Assumed Contracts; provided, however that to the
extent any Assumed Contract is not assignable without the consent of another
party thereto, this Agreement shall not constitute an assignment or an attempted
assignment thereof if such assignment or attempted assignment would constitute a
breach thereof; and provided, further, that the failure to deliver an effective
assignment of any such Assumed Contract at Closing may be deemed to be a breach
of the Company's obligations under Article VII;
(viii) the leases and subleases of real property as set forth
on Schedule 2.1(b)(viii) as to which the Company is the lessee or sublessee,
together with leasehold improvements thereon and any options to purchase the
underlying property, and in each case all other rights, subleases, licenses and
permits appurtenant to or related to such leases and subleases (the "Assumed
Real Property Leases");
(ix) all books, records, data and files relating to the
Purchased Assets or used or held for use exclusively in, and necessary for the
continued conduct of, the Company's Business;
(x) the Prepaid Expenses;
(xi) all security deposits deposited by or on behalf of the
Company as lessee or sublessee under the Assumed Real Property Leases or the
Personal Property Leases;
(xii) all warranty rights and associated claims of the Company
under manufacturers' warranties covering the applicable Vehicles and Tangible
Personal Property; and
(xiii) all rights, claims (including, without limitation,
claims for past infringement of Intellectual Property and warranty claims) and
causes of action, if any, of the Company against other Persons (whether or not
such claims and causes of action have been asserted by the Company), and, except
for the rights of the Company that are retained under Section 2.1(d)(ii), all
rights of indemnity, warranty rights, rights of contribution, rights to refunds,
rights of reimbursement and other rights of recovery possessed by the Company,
regardless of whether such rights are currently exercisable.
(c) Related Party Assets. To the extent any member, manager,
employee, or Affiliate of the Company currently has title or other rights to any
assets that would constitute the Purchased Assets if such assets were owned by
the Company, the Company will cause an assignment of any such title or rights to
the Company prior to Closing.
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(d) Excluded Assets. Notwithstanding anything in this Agreement to
the contrary, all of the following assets of the Company will be excluded from
and will not constitute Purchased Assets (all such assets being referred to
collectively as the "Excluded Assets"):
(i) cash and cash equivalents, bank, brokerage and similar
deposit or investment accounts of the Company;
(ii) all insurance proceeds or claims based upon the motor
vehicles, trailers and direct attachments thereto owned by the Company that have
been lost or stolen listed on Schedule 2.1(d)(ii) (the "Stolen Vehicles");
(iii) the consideration delivered by Buyer pursuant to this
Agreement, the Note or any other document contemplated by this Agreement;
(iv) the leases and subleases of real property located at 0000
Xxxxxx Xxxx, Xxxxxxx, Xxxxx 00000 as to which the Company is the lessee or
sublessee, together with leasehold improvements thereon (including the bulk
storage facility) and any options to purchase the underlying property, and in
each case all other rights, subleases, licenses and permits appurtenant to or
related to such leases and subleases; and
(v) the Excluded Contracts.
2.2 Title to the Purchased Assets; Documents of Conveyance. To evidence
the transfer and conveyance of the Purchased Assets contemplated by this
Agreement, the Company and Buyer will execute and deliver at Closing a Xxxx of
Sale, Assignment and Assumption Agreement substantially in the form of Exhibit B
attached hereto (the "Assignment").
2.3 Assumed Liabilities.
(a) In connection with the sale of the Purchased Assets pursuant to
this Agreement, at Closing, Buyer will assume, and agree to pay, perform and
discharge when due, the following, and only the following, Liabilities of the
Company (the "Assumed Liabilities"):
(i) all Liabilities and obligations arising out of ownership,
use and operation of the Purchased Assets by Buyer after the Closing Date; and
(ii) all performance obligations of the Company arising after
the Closing Date under any of the Assumed Contracts, but not including any
obligation or liability arising out of or in connection with any breach of any
Contract occurring prior to the Closing Date.
(b) Notwithstanding the foregoing, and notwithstanding anything to
the contrary contained in this Agreement, the Assumed Liabilities will not
include, and Buyer will not be required to assume or to perform or discharge any
other Liabilities of the Company, including, but not limited to, the following
all of which will be retained by the Company following the Closing:
(i) the accounts payable and notes payable of the Company
(collectively, the "Unpaid Payables");
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(ii) any Liability of, or to, any Member or any other
Affiliate of the Company;
(iii) any Liability of the Company arising out of or relating
to the execution, delivery or performance of this Agreement and all agreements
or documents contemplated by this Agreement;
(iv) any Liability of the Company for any fees, costs or
expenses of the type referred to in Section 11.10 of this Agreement;
(v) any Liability of the Company arising from or relating to
any action taken by the Company at any time after the Closing Date;
(vi) any Liability of Company arising from or relating to (x)
any services performed by the Company for any customer prior to the Closing
Date; (y) any product produced, licensed or sold by the Company prior to the
Closing Date, or product Liability related thereto; or (z) any claim or
Proceeding against the Company arising out of acts or events occurring prior to
the Closing Date;
(vii) any Liability of the Company for the payment of any Tax
(other than Taxes accruing and attributable to the ownership, use or operation
of the Purchased Assets by Buyer after the Closing Date);
(viii) any Liability of the Company (x) to any employee or
former employee of the Company under or with respect to any Plan, including but
not limited to the Company's self-funded health insurance program and 401(k)
plan, or for severance pay; (y) under any Plan, including, without limitation,
all contributions and insurance premiums relating thereto and any Liability
under Title IV of ERISA or foreign equivalent; or (z) arising from any
employee's employment with the Company prior to the Closing Date;
(ix) any Liability under the Assumed Contracts, if the Company
will not have obtained, prior to the Closing Date, any Consent required to be
obtained from any Person with respect to the assignment or delegation to Buyer
of any rights or obligations under such Assumed Contracts;
(x) any Liability that is inconsistent with or constitutes an
inaccuracy in, or that arises or exists by virtue of any breach of, (x) any
representation or warranty made by the Company or any Member in this Agreement
or any document or instrument executed in consummation of the transactions
contemplated by this Agreement; or (y) any covenant or obligation of the Company
or any Member contained in this Agreement or any document or instrument executed
in consummation of the transactions contemplated by this Agreement; or
(xi) any other Liability that is not referred to specifically
in Section 2.3(a).
2.4 Purchase Price. As full consideration for the sale, transfer,
assignment and delivery of the Purchased Assets to Buyer:
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(a) The purchase price is $5,216,000 (the "Purchase Price").
(b) Buyer agrees to pay to the Company at the Closing the Purchase
Price, as adjusted in accordance with Section 2.6, by delivery of (i) 63.34% of
the Purchase Price in cash payable by wire transfer, and (ii) 36.66% of the
Purchase Price in a deferred payment promissory note in the form of Exhibit C
attached hereto (the "Buyer Note"). The Buyer Note is subject to the Adjustment
Amount, if any, as set forth in Section 2.6.
(c) Buyer agrees to pay to the Company at the Closing cash for the
Company's Inventory in the amount set forth on the Closing Date Inventory List
and agreed upon by Buyer and the Company and the Company's Prepaid Expenses in
the amount set forth on the Closing Date Prepaid Expenses List and agreed upon
by Buyer and the Company (collectively, the "Inventory/Prepaids Payment").
(d) Buyer agrees to pay to the Company at the Closing cash for the
Receivables in an amount to be calculated at Closing (the "Receivables Payment")
as follows: the aggregate amount of the Receivables as of the Closing Date minus
Receivables that are determined by Wachovia Bank, National Association,
successor by merger to Congress Financial Corporation (Florida) ("Wachovia"), to
be ineligible for inclusion in Buyer's borrowing base ("Ineligible
Receivables"), times eighty five percent (85%), minus $500,000 (the "Bad Debt
Reserve"), provided, however, that if at Closing either the Company or Buyer is
dissatisfied with Wachovia's determination of which Receivables are Ineligible
Receivables, then such dissatisfied party may elect not to purchase or sell, as
the case may be, the Receivables at Closing (a "Receivables Opt-Out") and no
Receivables Payment will be made at Closing. In the absence of a Receivables
Opt-Out, Buyer will make additional payments (the "Ineligible Collections
Rebates") to the Company no later than thirty (30) days after such time as Buyer
collects any portion of the Ineligible Receivables in an amount equal to fifty
percent (50%) of the amounts so collected, provided, however, that Buyer's
obligation to pay Ineligible Collections Rebates to the Company shall not apply
to any collections of Ineligible Receivables made after December 31, 2005. As
noted in Section 1.1, amounts paid as Ineligible Collections Rebates will not be
included in Buyer's Net Operating Income after the Closing Date.
(e) The Company agrees to pay to Buyer at the Closing $455,000 for
the Stolen Vehicles; provided, however, that if the Company, with Buyer's prior
written approval, has replaced some or all of the Stolen Vehicles by the Closing
Date, such amount shall be reduced by an amount to be agreed upon by Buyer and
the Company.
(f) Buyer will assume the Assumed Liabilities.
2.5 The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") will take place at the offices of Buyer in Fort
Lauderdale, Florida, at such time and on such date as Buyer and the Members may
otherwise mutually determine that is as soon as practicable following the
satisfaction or waiver of all conditions to the obligations of the Parties to
consummate the transactions contemplated hereby (other than conditions with
respect to actions the respective Parties will take at the Closing itself) (the
"Closing Date"). The Closing may, with the consent of all parties, take place by
facsimile signatures with originally executed documents to follow by overnight
delivery.
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2.6 Purchase Price Adjustment.
(a) On or after January 1, 2006 but no later than March 1, 2006,
Buyer will prepare and deliver to the Company (i) an unaudited statement of
operations of Buyer for the Performance Earnings Period which shall reflect the
Net Operating Income of Buyer (and the Company for the period prior to the
Closing) for such period (the "Final Financial Statements") and (ii) Buyer's
calculation of the Adjustment Amount.
(b) The "Adjustment Amount" will be calculated as follows:
(i) If (A) the Net Operating Income shown on the Final
Financial Statements minus the Bad Debt Amount as of December 31, 2005 is
greater than or equal to (B) the Target Net Operating Income; then the
"Adjustment Amount" will be zero.
(ii) If (A) the Net Operating Income shown on the Final
Financial Statements minus the Bad Debt Amount as of December 31, 2005 is less
than (B) the Target Net Operating Income; then the "Adjustment Amount" will be
calculated as follows:
[Target Net Operating Income minus (Net Operating Income shown
on the Final Financial Statements minus the Bad Debt Amount as
of December 31, 2005)] times 4.0.
(c) The Parties understand and agree that Company and/or Buyer
personnel may be used to prepare the Final Financial Statements. The Final
Financial Statements will be prepared from the books and records of Buyer, such
that they fairly and consistently present in all material respects the
calculation of Net Operating Income; all accruals necessary to record all
contingent and accrued liabilities applicable to the Performance Earnings
Period; and fair and appropriate allocation of Direct Operating Expenses. To the
extent that, after the Closing Date, Buyer, Parent or their Affiliates jointly
contract or do business with vendors or service providers or share other
expenses, the costs and expenses incurred in so doing shall be fairly allocated
between or among such entities, with the result that each such entity bears its
fair share of all such costs and expenses. To the extent that Buyer, Parent or
their Affiliates contract or do business with vendors or service providers where
the goods or services are wholly or partially for the benefit of the other, then
the costs incurred in so doing shall be fairly allocated to the entity for whose
benefit the goods or services are provided, with the result that each such
entity bears its fair share of all such costs.
(d) If the Company disagrees with any of the information or
calculations provided by Buyer pursuant to Sections 2.6(a) or 2.6(b), then the
Company may, within ten (10) business days after receiving such information or
calculations, deliver a notice to Buyer stating the existence and nature of such
disagreement. Any such notice of disagreement will specify those items or
amounts as to which the Company disagrees. If such notice of disagreement is
delivered to Buyer, then the Parties will use their best efforts to reach
agreement on the disputed items or amounts within ten (10) business days after
receipt by Buyer of such notice. If the Parties have not reached agreement by
the later of March 31, 2006 or twenty (20) days following the delivery to the
Company of the calculations under Section 2.6(a) or (b) above, the Company may
submit the matter to a regionally recognized accounting firm, other than the
firm that regularly represents or formerly represented Buyer, the Company or any
Member, for review and resolution, with instructions to complete the review as
promptly as practicable. The resolution by such accounting firm will be
conclusive and binding on the Parties hereto. Buyer will be responsible for the
cost of such review and resolution if Buyer's determination of the Adjustment
Amount is reduced by more than five percent (5%) and the Company will be
responsible for the cost of such review and resolution if Buyer's determination
of the Adjustment Amount is reduced by five percent (5%) or less.
15
(e) If the Adjustment Amount causes the Purchase Price to be reduced
by five percent (5%) or less, the Company will be entitled to receive, at the
election of the Company, payment in full of the Buyer Note (including interest
accrued thereon) in cash, shares of Parent Common Stock, or in a combination of
cash and shares of Parent Common Stock, as specified by written notice from the
Company to Buyer; provided, however, that the payment by Buyer of shares of
Parent Common Stock may be limited at the election of Buyer to fifty percent
(50%) of the total amount owing on the Buyer Note, including interest accrued
thereon, as further described in the Buyer Note; and provided, further, that
that the payment by Buyer of shares of Parent Common Stock may be further
limited to the number of shares of Parent Common Stock that, when taken together
with the number of shares of Parent Common Stock issuable upon conversion of the
warrants issued in connection with Parent's offering of its 10% Senior Secured
Notes due 2010, is less than 20% of the number of shares of Parent Common Stock
outstanding on the Closing Date as calculated pursuant to Nasdaq Stock Market
Rule 4350(i)(I)(C) or any successor rule.
(f) If the Adjustment Amount causes the Purchase Price to be reduced
by more than five percent (5%), the amount of unpaid principal owing on the
Buyer Note will be reduced by the Adjustment Amount and the Company will be
entitled to receive, at the election of Buyer, payment in full of the Buyer Note
as adjusted in accordance with this paragraph (including interest accrued
thereon) in cash, shares of Parent Common Stock, or in a combination of cash and
shares of Parent Common Stock, as specified by written notice from the Company
to Buyer; provided, however, that the payment by Buyer of shares of Parent
Common Stock may be limited at the election of the Company to fifty percent
(50%) of the adjusted total amount owing on the Buyer Note, including interest
accrued thereon, as further described in the Buyer Note; and provided, further,
that that the payment by Buyer of shares of Parent Common Stock may be further
limited to the number of shares of Parent Common Stock that, when taken together
with the number of shares of Parent Common Stock issuable upon conversion of the
warrants issued in connection with Parent's offering of its 10% Senior Secured
Notes due 2010, is less than 20% of the number of shares of Parent Common Stock
outstanding on the Closing Date as calculated pursuant to Nasdaq Stock Market
Rule 4350(i)(I)(C) or any successor rule.
(g) Notwithstanding anything to the contrary contained in this
Agreement or any agreement delivered in connection with this Agreement, neither
the Company nor any Member shall have any liability for the Adjustment Amount to
the extent it exceeds the amount of the Buyer Note; and provided, further, that
notwithstanding anything to the contrary contained in this Agreement or any
agreement delivered in connection with this Agreement, the Adjustment Amount
shall not limit any claims that Buyer or Parent may have against the Company or
the Members under this Agreement or any related agreement for indemnification or
otherwise.
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(h) During the Performance Earnings Period, Buyer will provide to
the Company annual financial statements within one hundred and five (105) days
of the end of the each fiscal year and quarterly financial statements within
fifty (50) days of the end of each fiscal quarter other than the fiscal quarter
reflected in the annual financial statements, that reflect the Net Operating
Income of Buyer for the fiscal quarter covered by such financial statements.
2.7 Sales Taxes. The Company will bear and pay all sales, use and transfer
taxes that may become payable in connection with the sale of the Purchased
Assets to Buyer. The Company will reimburse Buyer and Buyer's Affiliates for
their payment of any such taxes.
2.8 Allocation. The Purchase Price will be allocated for tax purposes
among the Purchased Assets in the amounts to be mutually agreed upon by Buyer
and the Seller on or before the Closing Date unless the parties otherwise agree.
The Company and Buyer agree to report such allocation of the Purchase Price to
the Internal Revenue Service in accordance with the Code. The Company and Buyer
will not, in connection with the filing of any returns, make any allocation of
the Purchase Price, which is contrary to the agreed-upon allocation. Neither the
Company nor Buyer will take or agree to any position that is inconsistent with
the allocation in connection with any tax audit, controversy or litigation which
would adversely affect the taxes of the other party to any material extent
without the prior written consent of the other party, which consent will not be
unreasonably withheld.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE MEMBERS
As a material inducement to Buyer and Parent to enter into and perform its
obligations under this Agreement, the Company and each of the Members jointly
and severally represent and warrant to Buyer and Parent as set forth below:
3.1 Organization and Capitalization of the Company. The Company is a
limited liability company duly organized, validly existing and in good standing
under the laws of the State of Delaware, and is qualified to do business in
every jurisdiction in which the failure to so qualify could have a Material
Adverse Effect. Schedule 3.1 lists all of the jurisdictions in which the Company
is qualified to do business as a foreign limited liability company. Schedule 3.1
sets forth all names under which the Company has conducted the Business. The
Members own directly all of the limited liability company interests of the
Company. No other Person has any right to or interest in the outstanding limited
liability company interests in the Company and there are no issued and
outstanding, or otherwise committed, options, warrants, or other rights,
contingent or otherwise, to purchase, acquire or own, directly or indirectly,
any limited liability company interests or any other equity interest in the
Company.
3.2 Authorization of Transaction. The Company has all requisite power and
authority to own and operate the Business and to carry on the Business as now
conducted. Each Member and the Company have all requisite power and authority to
execute and deliver this Agreement and any and all documents or instruments
necessary or appropriate in order to effectuate fully the terms and conditions
of this Agreement and all related transactions and to perform his, her or its
obligations under this Agreement. This Agreement and the transactions
contemplated by this Agreement have been duly and validly authorized by all
necessary action (limited liability company or otherwise) on the part of the
Members and/or the Company, and this Agreement has been duly executed and
delivered by such Member and/or the Company, and constitutes the valid and
legally binding obligation of such Member and/or the Company, enforceable
against such Member and/or the Company in accordance with its terms and
conditions.
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3.3 No Restrictions Against Transfer. Except as set forth on Schedule 3.3,
the execution, delivery and performance of this Agreement and each other
agreement to be entered into by the Company and the Members in connection with
the consummation by the Company or the Members of the transactions contemplated
hereby, and the consummation of the transactions contemplated by this Agreement
by the Members or the Company, will not (a) violate any law to which the Members
or the Company or the Business is subject, (b) violate any provision of the
Certificate of Organization or Operating Agreement of the Company, (c) 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 contract, agreement, instrument or
other document to which any Member or the Company is a party or (d) result in
the imposition of any Lien upon any of the assets of the Business. Except as set
forth on Schedule 3.3, neither the Members nor the Company is required to give
any notice to, make any filing with, or obtain any authorization, consent, or
approval of any Governmental Entity or any consent or approval of any other
Person in order for the Members or the Company to consummate the transactions
contemplated by this Agreement or in order for Buyer to conduct the Business in
the ordinary course following the Closing Date.
3.4 Subsidiaries. The Company does not own, directly or indirectly, any
stock, partnership interest or joint venture interest in, or any security issued
by, any other Person.
3.5 Brokers' Fees. The Company and the Members do not have any Liability
or obligation to pay any fees or commissions to any broker, finder, or agent
with respect to the transactions contemplated by this Agreement, except for The
Xxxxxx Xxxx Company.
3.6 Financial Statements. Exhibit D contains the unaudited balance sheet
of the Company at November 30, 2004 (the "Latest Balance Sheet") and the related
unaudited statement of operations and cash flows of the Company for the eleven
(11) months ended November 30, 2004 that reflect both the continuing and
discontinued business operations of the Company through such date (collectively,
the "Financial Statements"). The Financial Statements (including any notes
thereto) present fairly the financial condition of the Company as of such date
and the results of operations of the Company for such period, are correct and
complete, and are consistent with the books and records of the Company. Since
November 30, 2004, except as required by applicable law, there has been no
change in any accounting principle, procedure or practice followed by the
Company or in the method of applying any such principle, procedure or practice.
3.7 Subsequent Events. Except as set forth on Schedule 3.7, since November
30, 2004, the Company has operated its business in the Ordinary Course of
Business, and the Company has not suffered any Material Adverse Effect. Since
that date, except as set forth on Schedule 3.7:
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(a) the Company has not sold, leased, transferred, or assigned any
of its assets, tangible or intangible, other than for a fair consideration in
the Ordinary Course of Business;
(b) the Company has not entered into any agreement, contract, lease,
or license (or series of related agreements, contracts, leases, and licenses)
outside the Ordinary Course of Business or that is otherwise material to the
Company;
(c) no party (including the Company) has accelerated, terminated,
modified, or canceled any agreement, contract, lease, or license (or series of
related agreements, contracts, leases, and licenses) involving more than $10,000
to which the Company is a party or by which any of them is bound;
(d) the Company has not imposed any Lien upon any of its assets,
tangible or intangible;
(e) the Company has not made any capital expenditure (or series of
related capital expenditures) outside the Ordinary Course of Business;
(f) the Company has not made any capital investment in, any loan to,
or any acquisition of the securities or assets of, any other Person (or series
of related capital investments, loans, and acquisitions) outside the Ordinary
Course of Business;
(g) the Company has not issued any note, bond, or other debt
security or created, incurred, assumed, or guaranteed any indebtedness for
borrowed money or capitalized lease obligation involving more than $10,000 in
the aggregate;
(h) there has been no change made or authorized in the Certificate
of Organization or Operating Agreement of the Company;
(i) the Company has not issued, sold, or otherwise disposed of any
of its capital stock, or granted any options, warrants, or other rights to
purchase or obtain (including upon conversion, exchange, or exercise) any of its
limited liability company interests;
(j) the Company has not declared, set aside, or paid any dividend or
made any distribution with respect to its limited liability company interests
(whether in cash or in kind) or redeemed, purchased, or otherwise acquired any
of its limited liability company interests;
(k) the Company has not made any loan to, or entered into any other
transaction with, any of its members, managers, directors, officers, and
employees outside the Ordinary Course of Business;
(l) the Company has not increased the compensation or benefits
payable to its members, managers, directors, officers, and employees other than
scheduled increases in the Ordinary Course of Business or with prior written
authorization from Buyer;
(m) the Company has not made any change in its accounting,
collection or payment practices; and
19
(n) neither the Company nor any Member has committed or agreed to
any of the foregoing.
3.8 Absence of Undisclosed Liabilities. The Company has no Liabilities,
except for (a) Liabilities reflected in the liabilities section of the Latest
Balance Sheet, (b) Liabilities under any agreements, contracts, commitments,
licenses or leases listed on Schedule 3.16, and (c) Liabilities which have
arisen since the date of the Latest Balance Sheet in the Ordinary Course of
Business.
3.9 Creditors; Bankruptcy. Neither any Member nor the Company is involved
in any proceeding by or against any Member or the Company as a debtor in any
court under Title 11 of the United States Bankruptcy Code or any other
insolvency or debtors' relief act, whether state or federal, or for the
appointment of a trustee, receiver, liquidator, assignee, sequestrator or other
similar official of any Member or the Company.
3.10 Legal Compliance. The Company has complied in all material respects
with all applicable laws (including rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings, and charges thereunder) of
federal, state, local, and foreign governments (and all agencies thereof), and
no action, suit, proceeding, hearing, investigation, charge, complaint, claim,
demand, or notice has been filed or commenced, or to the Company's knowledge,
threatened against it alleging any failure so to comply.
3.11 Licenses and Permits. Schedule 3.11 contains a list of all federal,
state, county, and local governmental licenses, certificates, registrations,
authorizations and permits (collectively, "Authorizations") held or applied for
by the Company. The Company has complied in all material respects with the terms
and conditions of all such Authorizations. No material violation of any such
Authorization or the laws or rules governing the issuance or continued validity
thereof has occurred and all of such Authorizations are in full force and
effect, except as would not have a Material Adverse Effect. No additional
Authorization is required from any federal, state, county, or local government
agency or body thereof in connection with the conduct of the business of the
Company.
3.12 Title to Assets.
(a) Except as set forth on Schedule 3.12(a), the Company owns or has
a valid interest in all of the Purchased Assets, free and clear of Liens (except
for Permitted Liens). Schedule 3.12(a) identifies all of the Company's assets
that are being leased or licensed to the Company. The Purchased Assets will
collectively constitute, as of the Closing Date, all of the assets, properties
and interests in properties necessary to enable Buyer to operate the Business in
the manner in which the Business is currently being operated by the Company.
(b) Except as set forth on Schedule 3.12(b), the tangible Purchased
Assets are in good condition and repair (subject to routine maintenance and
repair for similar assets of like age), fit for their particular purpose, and
are usable in the Ordinary Course of Business. No Member or employee of the
Company owns or licenses any assets used in or related to the Business.
(c) Schedule 3.12(c) lists and specifies the locations of the
tangible Purchased Assets. At all times during which the Company owned the
tangible Purchased Assets, none of the Purchased Assets was located (or, in the
case of the vehicles, garaged) at any place other than the places set forth on
Schedule 3.12(c), except for (i) periods in which such Purchased Assets were in
transit to the Company in the Ordinary Course of Business and (ii) periods in
which such Purchased Assets were being repaired off premises in the Ordinary
Course of Business.
20
(d) The Company does not own, and has never owned since its
organization, any real property.
(e) Schedule 3.12(e) contains a brief description of all real
property leased by the Company (the "Leased Property") and the lease governing
such Leased Property, including the name of the lessor. The Leased Property
constitutes all real properties used or occupied by the Company in connection
with the Business. With respect to the Leased Property, the Company is the owner
and holder of all of the leasehold estates purported to be granted by such lease
and each lease is in full force and effect and constitutes a valid and binding
obligation of the Company. The Company has delivered to Buyer true and complete
copies of all of the Assumed Real Property Leases. Except as set forth on
Schedule 3.12(e), with respect to the Leased Property, (i) no portion thereof is
subject to any pending condemnation Proceeding and there is no threatened
condemnation Proceeding with respect thereto; (ii) no notice of any increase in
the assessed valuation of the Leased Property and no notice of any contemplated
special assessment has been received by the Company, and (iii) the physical
condition of the Leased Property is sufficient to permit the continued conduct
of the Business as presently conducted subject to the provision of usual and
customary maintenance and repair performed in the Ordinary Course of Business
with respect to similar properties of like age and construction.
3.13 Inventory. The inventory of the Company includes fuel, lubricants,
tires, tools, supplies and purchased parts, as set forth on the Latest Balance
Sheet and the changes thereto reflected on the books and records of the Company
since the date of the Latest Balance Sheet in the Ordinary Course of Business.
The inventory of the Company is all merchantable.
3.14 Tax Matters. Except as set forth on Schedule 3.14, the Members and
the Company (A) have timely paid all Taxes required to be paid by the Company
through the date hereof (including any Taxes shown as due on any Tax Return) and
(B) have filed or caused to be filed in a timely manner (within any applicable
extension periods) all Tax Returns required to be filed by the Company with the
appropriate Governmental Entities in all jurisdictions in which such Tax Returns
are required to be filed, and all such Tax Returns are true and complete. Except
as set forth in Schedule 3.14, (i) no Liens have been filed and neither the
Members nor the Company has been notified by the Internal Revenue Service or any
other taxing authority that any issues have been raised (and are currently
pending) by the Internal Revenue Service or any other taxing authority in
connection with any Tax Return of the Company, and no waivers of statutes of
limitations have been given or requested with respect to the Company or Members;
(ii) there are no pending audits of any Tax Returns of the Company or Members;
(iii) no unresolved deficiencies or additions to Taxes have been proposed,
asserted or assessed against the Company or Members; (iv) the Company has made
full and adequate provision (x) on the Latest Balance Sheet for all Taxes
payable by it for all periods prior to the date of the Latest Balance Sheet and
(y) on its books for all Taxes payable by it for all periods beginning on or
after the date of the Latest Balance Sheet; (v) the Company has not nor will it
incur any Tax Liability from and after the date of the Latest Balance Sheet
other than Taxes incurred in the Ordinary Course of Business; (vi) both the
Members and the Company have complied in all respects with all applicable laws
relating to the collection or withholding of Taxes (such as sales Taxes or
withholding of Taxes from the wages of employees) and the Company is not liable
for any Taxes for failure to comply with such laws; (vii) the Company is not now
nor has it been a party to any Tax sharing agreement; (viii) the Company has not
agreed to and is not required to make any adjustments pursuant to Section 481 of
the Code, and the Internal Revenue Service has not proposed any such adjustments
or changes in the accounting methods of the Company; (ix) the Company has no
liability for the Taxes of any Person (other than itself) under any provision of
applicable law or regulation, by contract, as transferee or successor, or
otherwise; and (x) upon consummation of the transactions contemplated by this
Agreement, none of the assets of the Business will be subject to the
"anti-churning" rules of Code Section 197(f)(9).
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3.15 Intellectual Property.
(a) Schedule 3.15(a) contains a complete list of all of the
Company's Intellectual Property and their designation (e.g., trademark,
copyright, patent, license, etc.) owned or used by the Company, together with
all federal and state registration numbers and pending application numbers.
(b) The Company owns or has the right to use pursuant to license,
sublicense, agreement, or permission all Intellectual Property necessary for the
operation of the business of the Company as presently conducted. Each item of
Intellectual Property to be owned or used by Buyer immediately prior to the
Closing hereunder will be owned or available for use by Buyer on identical terms
and conditions immediately subsequent to the Closing hereunder. The Company has
taken all necessary action to maintain and protect each item of Intellectual
Property that it owns or uses.
(c) The Company has not interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any Intellectual Property
rights of third parties, and none of the Members have ever received any charge,
complaint, claim, demand, or notice alleging any such interference,
infringement, misappropriation, or violation (including any claim that the
Company must license or refrain from using any Intellectual Property rights of
any third party). To the knowledge of any of the Members, no third party has
interfered with, infringed upon, misappropriated, or otherwise come into
conflict with any Intellectual Property rights of the Company.
(d) Schedule 3.15(d) lists all agreements regarding the Intellectual
Property (the "Intellectual Property Agreements") and the Company has provided
Buyer with copies of the Intellectual Property Agreements. Except as set forth
in Schedule 3.15(d), the Intellectual Property Agreements will be assumed by,
and will become valid agreements of Buyer without the requirement that any
consent to assignment be obtained.
(e) There is no item of Intellectual Property that any third party
owns and that the Company uses pursuant to license, sublicense, agreement or
permission.
3.16 Contracts.
22
(a) Schedule 3.16 contains a list of all written or oral contracts,
commitments, leases and other agreements (including, without limitation,
promissory notes, loan agreements, and other evidences of indebtedness,
guarantees, agreements with distributors, suppliers, dealers, franchisors and
customers, service agreements and vendor contracts) to which the Company is a
party or by which the Company or its properties are bound, together with any
personal guarantees of the foregoing made by the shareholders or either of them.
The Members have delivered to Buyer a correct and complete copy of each of the
contracts listed on Schedule 3.16, together with all amendments, waivers or
other changes thereto, and a written summary setting forth the terms and
conditions of each oral agreement referred to in Schedule 3.16.
(b) Each agreement, lease, license, contract or commitment disclosed
on Schedule 3.16 is valid and enforceable against the Company and the other
parties thereto, except as limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors' rights, and laws relating to the availability of
specific performance, injunctive relief or other equitable remedies. Except as
specifically disclosed in Schedule 3.16, the Company has performed in all
material respects all obligations required to be performed by it and is not in
default under or in breach of or in receipt of any claim of default or breach
under any such agreement, lease, license, contract or commitment to which it is
a party; and no event has occurred which with the passage of time or the giving
of notice or both would result in a default or breach under any such document.
No other party to any agreement, lease, license, contract, or commitment to
which the Company is a party is in default under or in breach of such document
and no event has occurred which with the passage of time or giving of notice or
both would result in a default or breach under any such document.
3.17 Accounts and Notes Receivable. The accounts and notes receivable
reflected on the Latest Balance Sheet and the Company's books and records (net
of allowances for doubtful accounts as reflected thereon) were generated in the
Ordinary Course of Business from actual business transactions, were and are
valid receivables, and have been collected or are current and collectible in the
Ordinary Course of Business, subject to no valid counterclaims or set-offs, at
the aggregate recorded net amount thereof as shown on the Latest Balance Sheet
or the Company's books and records, as applicable.
3.18 Accounts and Notes Payable. Except as set forth on Schedule 3.18,
there are no accounts or notes payable or other accrued liabilities of the
Company that are past due (i.e., more than 60 days). All accounts payable, notes
payable and accrued liabilities of the Company to third parties arose in the
Ordinary Course of Business.
3.19 Insurance. Schedule 3.19 lists and briefly describes each insurance
policy, self insurance arrangement and bonding arrangement maintained by the
Company with respect to its properties, assets and business (including, without
limitation, any bonding arrangement required under any contract or applicable
law), and all currently pending claims thereunder. All of such insurance
policies and bonding arrangements are in full force and effect, and the Company
is not in default with respect to its obligations under any of such insurance
policies or bonding arrangements and the Company has not received any
notification of cancellation or modification of any of such insurance policies
or bonding arrangements nor is any claim outstanding which could be expected to
cause a material increase in the Company's insurance rates. There are no facts
or circumstances which exist that might relieve any insurer under such insurance
policies or bonding arrangements of its obligations to satisfy in full claims
thereunder. The Company maintains insurance coverage of a type and amount
customary for entities of similar size engaged in similar lines of business.
23
3.20 Claims and Proceedings. Except as set forth on Schedule 3.20, the
Company (a) is not subject to any outstanding injunction, judgment, order,
decree, ruling, or charge and (b) is not a party or, to the knowledge of any of
the Members, is not threatened to be made a party to any action, suit,
proceeding, hearing, or investigation of, in, or before any court or
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator. None of the Members have any reason to
believe that any such action, suit, proceeding, hearing, or investigation may be
brought or threatened against the Company.
3.21 Employees.
(a) Schedule 3.21(a) lists all current employees of the Company,
their permanent classifications (if applicable), their hourly rates of
compensation or base salaries (as applicable), and the commencement date of
their employment. The Company has complied in all material respects with all
laws relating to the hiring of employees and the employment of labor, including
provisions thereof relating to immigration and citizenship (including proper
completion and processing of Forms I-9 for all employees), wages, hours, equal
opportunity, collective bargaining and the payment of social security and other
Taxes. To the knowledge of the Company, there are no labor relations problems
with respect to the Company (including, without limitation, any union
organization activities, threatened or actual strikes or work stoppages or
material grievances). There is no criminal activity or the prior conviction,
indictment, guilty plea or plea of nolo contendere on the part of the Company's
employees or any other actual or alleged activity or actions of any such
employees that could reasonably be expected to disqualify any such employee, the
Company or Buyer from providing services to any current or potential customers.
(b) Except as set forth on Schedule 3.21(b), (i) the Company is not
delinquent in payments to any of the employees for any wages, salaries,
commissions, bonuses or other direct compensation for any services performed by
them to date or amounts required to be reimbursed to such employees and, upon
termination of the employment of any such employees, neither the Buyer nor the
Company will by reason of anything done prior to the Closing, including by oral
or written contract or agreement, practice or statement in an employee handbook,
be liable to any of such employees for severance pay or any other payments, (ii)
there is no unfair labor practice complaint against the Company pending before
the National Labor Relations Board or any other Governmental Entity, (iii) there
is no labor strike, material dispute, slowdown or stoppage actually pending or
threatened against or involving the Company, (iv) no labor union currently
represents the employees of the Company, (v) no labor union has taken any action
with respect to organizing the employees of the Company, and (vi) neither any
grievance that might result in a Material Adverse Effect nor any arbitration
proceeding arising out of or under collective bargaining agreements is pending
and no claim thereto has been asserted against the Company.
3.22 Employee Benefits.
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(a) Employee Benefit Plans. Schedule 3.22(a) sets forth a true and
complete list of all employee benefit plans (the "Plans") (i) that cover any
present or former employees of the Company (A) that are or ever were maintained,
sponsored or contributed to by the Company or (B) with respect to which the
Company is or ever was obligated to contribute or has any Liability or potential
Liability, whether direct or indirect or (ii) with respect to which the Company
has any Liability or potential Liability on account of the maintenance or
sponsorship thereof or contribution thereto by any present or former ERISA
Affiliate of the Company.
(b) Administration and Compliance of the Plans. Except as set forth
on Schedule 3.22(b), with respect to each Plan:
(i) all required, declared or discretionary (in accordance
with past practices) payments, premiums, contributions, reimbursements or
accruals for all periods ending prior to or as of the Closing Date have been
made or properly accrued on the Latest Balance Sheet or, with respect to
accruals properly made after the date of the Latest Balance Sheet, on the books
and records of the Company;
(ii) the Company has timely deposited all amounts withheld
from employees for pension, welfare or other benefits into the appropriate
trusts or accounts;
(iii) except as may be required under laws of general
application, the Plan does not obligate the Company to provide any employee or
former employee, or their spouses, family members or beneficiaries, any
post-employment or post-retirement health or life insurance, accident or other
"welfare-type" benefits;
(iv) if the Plan is a "group health plan" within the meaning
of Section 5000 of the Code, the Plan has been maintained in compliance with
Section 4980B of the Code and Title I, Subtitle B, Part 6 of ERISA and no tax
payable on account of Section 4980B of the Code has been or is expected to be
incurred;
(v) the Company has provided Buyer with true and complete
copies, to the extent applicable, of all documents pursuant to which such Plan
is maintained and administered, the two most recent annual reports (Form 5500
and attachments) and financial statements therefore, all governmental rulings,
determinations, and opinions (and pending requests therefore), and if such Plan
provides post-retirement or post-employment health and life insurance, accident,
or other "welfare-type" benefits, the most recent valuation of the present and
future obligations under such Plan. The foregoing documents accurately reflect
all material terms of such Plan.
3.23 Business Relations. The Members neither know nor have any reason to
believe that any customer or supplier of the Company will cease to do business
with Buyer after the consummation of the transactions contemplated hereby in the
same manner and at the same levels as previously conducted with the Company.
Schedule 3.23 sets forth a listing of the twenty (20) largest customers and
suppliers of the Company for each of the calendar years 2002 and 2003 and to
date in calendar year 2004 and each of the suppliers holding or requiring a
letter of credit from the Company or the Members.
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3.24 Environmental, Health, and Safety Matters. Except as set forth on
Schedule 3.24:
(a) The Company and its predecessors and Affiliates have complied
and are in compliance with all Environmental, Health, and Safety Requirements.
(b) Without limiting the generality of the foregoing, the Company
and its Affiliates have obtained and complied with, and are in compliance with,
all permits, licenses and other authorizations that are required pursuant to
Environmental, Health, and Safety Requirements for the occupation of its
facilities and the operation of its business; a list of all such permits,
licenses and other authorizations is set forth on Schedule 3.24.
(c) The Company has not received any written or oral notice, report
or other information regarding any actual or alleged violation of Environmental,
Health, and Safety Requirements, or any liabilities or potential liabilities
(whether accrued, absolute, contingent, unliquidated or otherwise), including
any investigatory, remedial or corrective obligations, relating to any of them
or its facilities arising under Environmental, Health, and Safety Requirements.
(d) To the knowledge of the Company, none of the following exists at
any property or facility owned or operated by the Company: (i) underground
storage tanks, (ii) asbestos-containing material in any form or condition, (iii)
materials or equipment containing polychlorinated biphenyls, or (iv) landfills,
surface impoundments, or disposal areas.
(e) The Company has not treated, stored, disposed of, arranged for
or permitted the disposal of, transported, handled, or released any substance,
including without limitation any hazardous substance, or owned or operated any
property or facility (and no such property or facility is contaminated by any
such substance) in a manner that has given or would give rise to liabilities,
including any liability for response costs, corrective action costs, personal
injury, property damage, natural resources damages or attorney fees, pursuant to
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, the Solid Waste Disposal Act, as amended or any other
Environmental, Health, and Safety Requirements.
(f) Neither this Agreement nor the consummation of any transaction
that is a subject of this Agreement or a prerequisite to the consummation of
such transaction will result in any obligations for site investigation or
cleanup, or notification to or consent of government agencies or third parties,
pursuant to any of the so-called "transaction-triggered" or "responsible
property transfer" Environmental, Health, and Safety Requirements.
(g) The Company and its Affiliates have not, either expressly or by
operation of law, assumed or undertaken any liability, including without
limitation any obligation for corrective or remedial action, of any other Person
relating to Environmental, Health, and Safety Requirements.
(h) No facts, events or conditions relating to the past or present
facilities, properties or operations of the Company or its Affiliates will
prevent, hinder or limit continued compliance with Environmental, Health, and
Safety Requirements, give rise to any investigatory, remedial or corrective
obligations pursuant to Environmental, Health, and Safety Requirements, or give
rise to any other liabilities (whether accrued, absolute, contingent,
unliquidated or otherwise) pursuant to Environmental, Health, and Safety
Requirements, including without limitation any relating to onsite or offsite
releases or threatened releases of hazardous materials, substances or wastes,
personal injury, property damage or natural resources damage.
26
3.25 Warranties. Except for warranty claims that are immaterial and in the
Ordinary Course of Business of the Company, there is no outstanding claim
against the Company for breach of product or service warranty to any customer.
No state of facts exists, and no event has occurred, which may form the basis of
any present claim against the Company for liability on account of any express or
implied warranty to any third party in connection with products sold or services
rendered by the Company.
3.26 Insider Interests. Except as set forth on Schedule 3.26, and except
for compensation to regular employees of the Company, no current or former
Affiliate of the Company (i) has any direct or indirect interest of any nature
in any of the Purchased Assets, (ii) has entered into, or has had any direct or
indirect financial interest in, any contract, transaction or business dealing of
any nature involving the Company, (iii) is competing, or has competed, directly
or indirectly, with the Company, and (iv) has an claim or right against the
Company.
3.27 Disclosure.
(a) No representation or warranty of the Company or the Members in
this Agreement (including the disclosure schedules attached hereto) misstates a
material fact, or omits to state a material fact necessary to make the
statements herein or therein, in light of the circumstances in which they were
made, not misleading.
(b) There is no fact known to the Company or the Members that has
specific application to the Company or the Business (other than general economic
or industry conditions) that materially adversely affects or, as far as the
Company or the Members can reasonably foresee, materially threatens, the assets,
business, prospects, financial condition, or results of operations of the
Company or the Business that has not been set forth in this Agreement, including
the disclosure schedules attached hereto.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
As a material inducement to the Company and the Members to enter into and
perform their obligations under this Agreement, Buyer and Parent, jointly and
severally, represent and warrant to the Company and the Members as follows:
4.1 Organization of Buyer. Parent is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Florida. Buyer is
a corporation duly organized, validly existing, and in good standing under the
laws of the State of Delaware.
4.2 Authorization of Transaction. Each of Parent and Buyer has all
requisite power and authority to execute and deliver this Agreement (including,
with respect to Buyer, the Buyer Note) and any and all documents and instruments
to which it is a party necessary or appropriate in order to effectuate fully the
terms and conditions of this Agreement and all related transactions and to
perform its obligations under this Agreement. This Agreement has been duly
authorized by all necessary corporate action on the part of Buyer and Parent and
has been duly executed and delivered by Buyer and Parent and constitutes the
valid and legally binding obligation of Buyer and Parent, enforceable against
each of Buyer and Parent in accordance with its terms and conditions, except as
limited by applicable bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting enforcement of creditors' rights,
and laws relating to the availability of specific performance, injunctive relief
or other equitable remedies.
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4.3 No Restrictions Against Transaction. The execution, delivery and
performance of this Agreement, the Buyer Note and each other agreement to be
entered into by Buyer or Parent in connection with the consummation by Buyer and
Parent of the transactions contemplated hereby, or compliance by Buyer or Parent
with any of the provisions thereof, will not (i) violate, conflict with, or
result in a material breach of any provision of, or constitute a default (or an
event which, with notice or lapse of time or both, would constitute a default)
under any of the terms, conditions or provisions of the Articles or Certificate
of Incorporation or Bylaws of Buyer or Parent, or under any note, bond,
mortgage, indenture, deed of trust, or other agreement to which Buyer or Parent
is bound, or by which Buyer, Parent or any of its or their properties or assets
may be bound or affected, or (ii) violate any law applicable to Buyer or Parent
or any of its or their properties or assets. No consent or approval by, notice
to, or registration with, any Governmental Entity or any consent or approval of
any other Person is required on the part of Buyer or Parent in connection with
the execution and delivery of this Agreement, the Buyer Note or any other
agreement to be entered into by Buyer or Parent in connection with the
consummation by Buyer or Parent of the transactions contemplated by this
Agreement.
4.4 Brokers. Except for the fees being paid by Parent to Philadelphia
Brokerage Corporation for placement agent, investment banker and financial
advisor services relating to the proposed financing of the transactions
contemplated by this Agreement, neither Parent nor Buyer has any Liability or
obligation to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement.
4.5 SEC Filings. Parent has since January 1, 2003 timely filed all forms,
proxy statements, schedules, reports and other documents required to be filed by
it with the SEC pursuant to the Securities Act or the Exchange Act, and every
document filed by Parent with the SEC since January 1, 2003 complied, as of the
date of filing, in all material respects with the requirements of the Securities
Act or the Exchange Act, as the case may be.
4.6 Solvency. On and immediately after the Closing Date, each of Parent
and Buyer will be "Solvent." As used in this paragraph, the term "Solvent"
means, with respect to a particular date and a particular person, that on such
date (i) the fair market value of such person's assets exceed such person's
liabilities; (ii) such person is able to realize upon its assets and pay its
debts and other liabilities when due in the normal course of business; and (iii)
such person has not incurred debts or liabilities beyond its ability to pay such
debts and liabilities as they mature.
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4.7 No Business Activities. Buyer is not a party to any material
agreements and has not conducted any activities other than in connection with
the organization of Buyer, the negotiation and execution of this Agreement and
the consummation of the transactions contemplated hereby.
ARTICLE V
PRE-CLOSING COVENANTS
The Parties agree as follows with respect to the period between the
execution of this Agreement and the Closing.
5.1 General. Each of the Parties will use its reasonable best efforts to
take all action and to do all things necessary, proper, or advisable in order to
consummate and make effective the transactions contemplated by this Agreement
(including satisfaction or, to the extent permitted by the party benefiting from
any condition, waiver, of the closing conditions set forth in Article VII
below).
5.2 Notices and Consents. Each of the Parties will give any notices to
third parties, and will use its reasonable best efforts to obtain any third
party consents, that the other party may request in connection with the matters
referred to in Sections 3.3 and 4.3. 5.3 Operation of Business. For the period
ending on February 28, 2005 (the "Standstill Period"), the Members will cause
the Company to preserve substantially intact its business organization and
present relationships with its customers, suppliers and employees and to
maintain all of its insurance currently in effect. The Members will not cause or
permit the Company to take any action that could reasonably be expected to have
an adverse effect on the Company or the transactions contemplated by this
Agreement. Without the prior written consent of Buyer, which consent will not be
unreasonably withheld, the Company will not engage in any practice, take any
action, or enter into any transaction outside the Ordinary Course of Business.
Without limiting the generality of the foregoing during the Standstill Period:
(a) the Company will not sell, lease, transfer, or assign any
assets, tangible or intangible, other than for a fair consideration in the
Ordinary Course of Business;
(b) the Company will not enter into any agreement, contract, lease,
or license (or series of related agreements, contracts, leases, and licenses)
outside the Ordinary Course of Business or that is otherwise material to the
Company;
(c) the Company will not accelerate, terminate or cancel any
agreement, contract, lease, or license (or series of related agreements,
contracts, leases, and licenses) involving more than $10,000 to which the
Company is a party or by which it is bound;
(d) the Company will not impose any Lien upon any of its assets,
tangible or intangible;
(e) the Company will not make any capital expenditure (or series of
related capital expenditures) outside the Ordinary Course of Business;
29
(f) the Company will not make any capital investment in, any loan
to, or any acquisition of the securities or assets of, any other Person (or
series of related capital investments, loans, and acquisitions) outside the
Ordinary Course of Business;
(g) the Company will not issue any note, bond, or other debt
security or create, incur, assume, or guarantee any indebtedness for borrowed
money or capitalized lease obligation involving more than $10,000 in the
aggregate;
(h) the Company will not merge with any other company, consolidate
or sell or consent to the sale of any of the material assets of the Company or
acquire any material assets outside the Ordinary Course of Business;
(i) the Company will not authorize or effect any change in its
Certificate of Organization or Operating Agreement;
(j) the Company will not issue, sell or otherwise dispose of any of
its capital stock, or grant any option, warrant or other right to purchase or
obtain (including upon conversion, exchange or exercise) of any of its limited
liability company interests;
(k) the Company will not declare, set aside, or pay any dividend or
make any distribution with respect to its limited liability company interests
(whether in cash or in kind) or redeem, purchase, or otherwise acquire any of
its limited liability company interests;
(l) the Company will not make any loan to, or enter into any other
transaction with, any of its directors, officers and employees outside the
Ordinary Course of Business;
(m) the Company will not increase the compensation or benefits
payable to its employees other than scheduled increases in the Ordinary Course
of Business;
(n) the Company will not make any change in its accounting,
collection or payment practices; and
(o) neither the Company nor any Member will not commit or agree to
any of the foregoing.
5.4 Full Access. Each of the Members will permit, and the Members will
cause the Company to permit, representatives of Buyer to have full access at all
reasonable times, and in a manner so as not to interfere with the normal
business operations of the Company, to all premises, properties, personnel,
books, records (including Tax records), contracts, and documents of or
pertaining to the Company.
5.5 Notice of Developments. The Company will give prompt written notice to
Buyer of any adverse development in its business, operations, financial
condition or results of operation. The Members will give prompt written notice
to Buyer of any adverse development causing a breach of any of the Members'
representations and warranties contained herein. No disclosure by any Party
pursuant to this Section 5.5 will be deemed to amend or supplement disclosure
schedules hereto or to prevent or cure any misrepresentation, breach of
warranty, or breach of covenant nor will a decision to close the transactions
contemplated hereby be considered a waiver in respect of any such matter.
30
5.6 Restrictions on Transfer. During the Standstill Period, the Members
will not sell, transfer, pledge or xxxxx x Xxxx in, or otherwise dispose or
encumber, any of the limited liability company interests in the Company or any
ownership interest in the Company without the prior written consent of Buyer.
ARTICLE VI
POST-CLOSING COVENANTS
The Parties agree as follows with respect to the period following the
Closing:
6.1 General. In case at any time after the Closing any further action is
necessary or desirable to carry out the purposes of this Agreement, each of the
Parties will take such further action (including the execution and delivery of
such further instruments and documents) as any other Party reasonably may
request, all at the sole cost and expense of the requesting Party (unless the
requesting Party is entitled to indemnification therefor under Article IX).
6.2 Transition. None of the Members will take any action that is designed
or intended to have the effect of discouraging any lessor, licensor, customer,
supplier, or other business associate of the Company from maintaining the same
business relationships with Buyer after the Closing as it maintained with the
Company prior to the Closing. Each of the Members will refer all customer
inquiries relating to the business of the Company to Buyer from and after the
Closing.
6.3 Unpaid Payables. After the Closing Date, Buyer will provide notice to
the Company that Buyer intends to pay one or more specific Unpaid Payables. If
within ten (10) days of receiving such notice, the Company does not provide
written notice to Buyer that the Company has paid or disputes the specific
Unpaid Payables, Buyer will be authorized to pay such Unpaid Payables and to set
off and deduct the amount of such payment from any amounts payable to the
Company or the Members by Buyer or Parent pursuant to this Agreement or all
other agreements contemplated herein, including but not limited to any
Ineligible Collections Rebates, provided, however, that the provisions of
Section 9.4 shall govern any proposed set-off against the Buyer Note. Neither
the exercise of nor the failure to exercise such right of set-off will
constitute and election of remedies or limit Buyer in any manner in the
enforcement of any other remedies that may be available to it.
6.4 Confidentiality. The Company and the Members will ensure that, on and
at all times after the Closing Date: (a) no press release or other publicity
concerning any of the transactions contemplated by this Agreement is issued or
otherwise disseminated by or on behalf of the Company or the Members without
Buyer's prior written consent; (b) the Company and the Members continue to keep
the terms of this Agreement and the transactions and other documents
contemplated by this Agreement strictly confidential (except to the extent such
information becomes publicly available from a source other than the Company or
the Members and except for any disclosures required by any applicable law, rule
or regulation); and (c) the Company and the Members will keep strictly
confidential, and the Company and the Members will not use or disclose to any
other Person, any non-public document or other information that relates directly
or indirectly to the business of the Company.
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6.5 Non-Compete; Non-Solicitation.
(a) During the Non-Compete Period, the Members and the Company will
not and will cause their Affiliates not to, without the prior written consent of
Buyer, directly or indirectly, (i) hinder the business of Buyer or its
Affiliates or (ii) own, manage, control, participate in, consult with, render
services for, or in any manner engage in or represent any business within any
Restricted Territory that is competitive with the business of the Company, Buyer
or Parent or any or its or their Affiliates as such business is conducted by
such entities at the Closing Date. As used in this Agreement, "Restricted
Territory" means the areas in the United States in which the Company, Buyer or
Parent or any of its or their Affiliates are doing business at the Closing Date
and, with respect to Members employed by the Company or Buyer following the
Closing Date, during the period of employment and on the date of termination of
employment. Nothing herein will prohibit the Company or any Member from being a
passive owner, in the aggregate with the other Members, of not more than 2% of
the outstanding stock of any class of a corporation which is publicly traded, so
long as the Company and the Members have no active participation in the business
of such corporation.
(b) During the Non-Compete Period, the Company and the Members will
not directly or indirectly through another Person (i) induce or attempt to
induce any employee of Buyer or Parent to leave the employ of Buyer or Parent,
or in any way interfere with the relationship between Buyer or Parent and any
employee or consultant thereof, (ii) hire or engage as a consultant or otherwise
any person who is or was an employee or consultant of Buyer or Parent until six
months after such individual's employment relationship with Buyer or Parent has
been terminated or (iii) induce or attempt to induce any customer, supplier,
subcontractor, licensee or other business relation of Buyer or Parent to cease
doing business with Buyer or Parent, or in any way interfere with the
relationship between any such customer, supplier, subcontractor, licensee or
business relation, on the one hand, and Buyer or Parent, on the other hand.
(c) To the extent that any court concludes that any provision of
Section 6.4(a) or (b) is void or voidable, the court will reform such
provision(s) to render the provision(s) enforceable, but only to the extent
necessary to render the provision(s) enforceable and only in view of the
Parties' express desire that Buyer and Parent be protected to the greatest
extent possible under applicable law from improper competition and/or the misuse
or disclosure of trade secrets and/or confidential information.
6.6 Broker's Fees. Each of the Parties will be responsible for, and will
hold each of the other Parties harmless against, any fees or commissions for
which such Party is liable to any broker, finder or agent with respect to the
transactions contemplated by this Agreement. For avoidance of doubt, the Company
and the Members shall be responsible for all fees or commissions due to The
Xxxxxx Xxxx Company with respect to the transactions contemplated by this
Agreement and Buyer and Parent shall be responsible for all fees or commissions
due to Philadelphia Brokerage Corporation for placement agent, investment banker
and financial advisor services.
32
6.7 Replacement Property. Within ninety (90) days after the Closing Date,
the Company will make commercially reasonable efforts to purchase or lease real
property in Houston, Texas that has, among other things, adequate bulk storage,
improved office and warehouse space, paved parking, adequate security and
environmental improvements, to facilitate Buyer's post-closing operations (the
"Replacement Property"), such Replacement Property to be satisfactory to Buyer.
Immediately after the Company's purchase or lease of the Replacement Property,
the Company will lease or sublease to Buyer, on commercially reasonable terms,
the Replacement Property to serve as Buyer's principal place of business in
Houston, Texas, such terms to include a commercially standard indemnity from
Buyer in favor of the Company in respect of liabilities directly related to
Buyer's lease or sublease of the Replacement Property to be agreed prior to
occupation of the Replacement Property.
6.8 Employment Offers. Commencing on the Closing Date, Buyer will make
offers of employment to, or consulting arrangements with, those persons employed
by the Company immediately prior to Closing on terms consistent with the past
practice of Buyer and its Affiliates.
6.9 Change of Name. Immediately after the Closing, the Company will change
its name to a name that does not include the word "Shank" or any variation
thereof and that is satisfactory to Buyer.
6.10 Buyer's Business Operations. During the Performance Earnings Period
after the Closing Date, (a) neither Buyer nor Parent will cause or permit Buyer
to acquire, assume, establish or operate any additional lines of business,
business locations or operating assets unless the Board of Directors of Parent
has determined, in its reasonable business judgment, that such acquisition or
otherwise would not adversely affect the Net Operating Income of Buyer during
the Performance Earnings Period; (b) Buyer will manage the business of Buyer in
good faith and with a view to maximize its profitability as a business; and (c)
under no circumstances will Buyer or Parent take any such action for the purpose
of adversely affecting the Net Operating Income of Buyer; provided, however,
that nothing in this Section 6.10 shall limit Buyer's ability to engage in or
acquire any business or assets when, at the time such business or assets are
commenced or acquired, Parent and Buyer have no intent to adversely affect
Buyer's Net Operating Income and in fact have a reasonable expectation that such
business or assets will ultimately be beneficial to Buyer, the Company and the
Members.
ARTICLE VII
CONDITIONS TO OBLIGATION TO CLOSE
7.1 Conditions to Obligation of Buyer and Parent. The obligation of Buyer
and Parent to consummate the transactions to be performed by them in connection
with the Closing is subject to satisfaction of the following conditions:
(a) the representations and warranties of the Company and the
Members set forth in Article III will be true and correct at and as of the
Closing Date;
33
(b) the Company and the Members will have performed and complied
with all of their covenants hereunder in all material respects through the
Closing;
(c) all statutory requirements for the valid consummation by the
Company and the Members of the transactions contemplated by this Agreement will
have been fulfilled and all authorizations, consents and approvals, including
all of the third-party consents specified in Section 5.2 will have been obtained
in form and substance reasonably satisfactory to Buyer;
(d) all approvals of the Members and managers necessary for the
consummation of this Agreement and the transactions contemplated hereby will
have been obtained;
(e) no action, suit, or proceeding will be pending or threatened
before any court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction or before any arbitrator wherein an
unfavorable injunction, judgment, order, decree, ruling, or charge would (i)
prevent consummation of any of the transactions contemplated by this Agreement,
(ii) cause any of the transactions contemplated by this Agreement to be
rescinded following consummation, (iii) affect adversely the right of Buyer to
purchase or own the Purchased Assets, or (iv) affect adversely the right of
Buyer to operate its businesses (and no such injunction, judgment, order,
decree, ruling, or charge will be in effect);
(f) the Company and the Members will have delivered to Buyer a
certificate to the effect that each of the conditions specified above in Section
7.1(a)-(e) is satisfied in all respects;
(g) the Company and the Members will have delivered to Buyer (i) a
copy of the Certificate of Organization of the Company certified by an
appropriate authority of the State of Delaware, (ii) a copy of the Limited
Liability Company Agreement of the Company certified by the Company's Manager,
(iii) a copy of the resolutions of the Managers and Members of the Company,
approving the transactions contemplated by this Agreement certified by the
Company's Manager, and (iv) a certificate of good standing of the Company
certified by the Secretary of State of the State of Delaware;
(h) Buyer will have received from counsel to the Company and the
Members an opinion in form and substance as set forth in Exhibit E attached
hereto, addressed to Buyer, and dated as of the Closing Date;
(i) Buyer will be satisfied in all material respects with the
accuracy of the Schedules to this Agreement;
(j) Buyer will be satisfied with the physical condition of the
Company's Leased Property, including, but not limited to those criteria listed
on Schedule 7.1;
(k) The Company will have delivered the Closing Date Inventory List,
the Excluded Inventory List, the Closing Date Prepaid Expenses List and the
Outstanding Receivables List to Buyer;
34
(l) Parent and Buyer will have obtained on terms and conditions
satisfactory to them the consent of lender on Parent's senior credit facility to
consummate the transactions contemplated hereby;
(m) The Members will have caused the Company to make arrangements
satisfactory to Buyer in its sole discretion to terminate the Company's employee
benefit plans and provide for the necessary funding of any and all liabilities
associated with such employee benefit plans; and
(n) The following additional documents will be delivered at the
Closing:
(i) The Company and the Members will have executed and
delivered the Assignment;
(ii) The persons designated by Buyer at or prior to Closing
will have executed and delivered Employment Agreements in substantially the form
attached as Exhibit F hereto (the "Employment Agreements"), which will contain
non-compete and non-solicitation provisions satisfactory to Buyer;
(iii) Each of Xxxxx Xxxxxxxx and Xxxxxx Xxxxxxxx will have
executed and delivered Consulting Agreements in substantially the form attached
as Exhibit G hereto (the "Consulting Agreements"), which will contain
non-compete and non-solicitation provisions satisfactory to Buyer; and
(iv) The Company will have executed and delivered a sublease
in a form to be agreed upon and executed by the parties at or prior to the
Closing (the "Sublease"), which will provide for the month-to-month sublease by
Buyer of the facilities located at 0000 Xxxxxx Xxxx, Xxxxxxx, Xxxxx 00000 which
are currently leased by the Company until such time as the Company obtains a
Replacement Property for Buyer's operations in accordance with Section 6.7.
Buyer may waive any condition specified in this Section 7.1 if it executes a
writing so stating at or prior to the Closing. A Receivables Opt-Out by the
Company does not excuse either party from Closing on the remainder of the
transactions contemplated by this Agreement.
7.2 Conditions to Obligation of the Company and the Members. The
obligation of the Company and the Members to consummate the transactions to be
performed by them in connection with the Closing is subject to satisfaction of
the following conditions:
(a) the representations and warranties of Buyer set forth in Article
IV will be true and correct at and as of the Closing Date;
(b) Buyer will have performed and complied with all of its covenants
hereunder in all material respects through the Closing;
(c) no action, suit, or proceeding will be pending or threatened
before any court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction or before any arbitrator wherein an
unfavorable injunction, judgment, order, decree, ruling, or charge would (i)
prevent consummation of any of the transactions contemplated by this Agreement
or (ii) cause any of the transactions contemplated by this Agreement to be
rescinded following consummation (and no such injunction, judgment, order,
decree, ruling, or charge will be in effect);
35
(d) Buyer will have delivered to the Company a certificate to the
effect that each of the conditions specified above in Section 7.2(a)-(c) is
satisfied in all respects;
(e) the following additional deliveries will be made at the Closing
by Buyer:
(i) the Purchase Price, in accordance with Section 2.4;
(ii) the Inventory/Prepaids Payment and, in the absence of a
Receivables Opt-Out, the Receivables Payment, in accordance with Section 2.4;
and
(iii) Buyer will have duly executed and delivered to the
Company, the Buyer Note, the Assignment, the Employment Agreements, the
Consulting Agreements and the Sublease.
The Company may waive any condition specified in this Section 7.2 if it executes
a writing so stating at or prior to the Closing. A Receivables Opt-Out by Buyer
does not excuse either party from Closing on the remainder of the transactions
contemplated by this Agreement.
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
8.1 Survival. Each statement, representation, warranty, indemnity,
covenant and agreement made by the Members in this Agreement and in any
document, disclosure schedule, certificate or other instrument or writing
delivered by or on behalf of the Members or the Company pursuant to this
Agreement or in connection herewith will be deemed the joint and several
statement, representation, warranty, indemnity, covenant and agreement of the
Members. Each Member agrees that, notwithstanding any examination made by or on
behalf of Buyer, the knowledge of Buyer or any of the respective officers,
directors, shareholders, employees or agents of Buyer, or the acceptance by any
party of any certificate or opinion, in each case with respect to the Company,
all statements, representations, warranties, indemnities, covenants and
agreements made by the Members will survive the consummation of the transactions
contemplated hereby for a period of twenty-four (24) months following the date
of the Buyer Note, except that the representations and warranties made in
Section 3.14 hereof regarding Taxes and Section 3.22 regarding Employee Benefits
matters will survive until the expiration of the application of statutes of
limitations, and that the representations and warranties made in Section 3.24
hereof regarding Environmental Matters will survive for a period of six (6)
years following the Closing Date. Any Party's right to commence a claim for
indemnification under Article IX for a breach of any representation or warranty
will be made on or prior to the date, if any, on which the survival period for
such representation or warranty expires.
36
ARTICLE IX
INDEMNIFICATION
9.1 Indemnity.
(a) Subject to the terms and conditions of this Article IX, the
Company and each Member will indemnify and hold harmless Parent, Buyer and each
officer, director, and Affiliate of Parent and Buyer, including without
limitation, the Company or any successor of Parent or Buyer (collectively, the
"Buyer Indemnified Parties") from and against all demands, claims, causes of
action, assessments, including any federal or state tax audits, losses, damages,
liabilities and costs and expenses, including, without limitation, reasonable
attorneys' fees and any expenses incident to the investigation or enforcement of
this Article IX, but excluding punitive, consequential, lost profits, special or
indirect losses or damages (collectively, "Losses"), that the Buyer Indemnified
Parties may suffer, sustain or become subject to by reason of or arising out of
(i) any breach of any covenant or agreement of the Company or the Members
contained in this Agreement, (ii) any inaccuracy in any representation or
warranty of the Members contained in this Agreement and in any document,
disclosure schedule, certificate or other instrument or writing delivered by or
on behalf of the Members pursuant to this Agreement or in connection herewith,
and (iii) the failure by the Company to make the necessary provisions and fund
any liabilities relating to the Company's employee benefit plans as provided in
Section 7.1(m).
(b) Subject to the terms and conditions of this Article IX, Buyer
and Parent will indemnify and hold harmless the Company and the Members
(collectively, the "Company Indemnified Parties") from and against all Losses,
that the Company Indemnified Parties may suffer, sustain or become subject to by
reason of or arising out of (i) any breach of any covenant or agreement of Buyer
or Parent contained in this Agreement, and (ii) any inaccuracy in any
representation or warranty of Buyer or Parent contained in this Agreement.
9.2 Limitation on Indemnification. Neither the Company and the Members, on
the one hand, nor Buyer and Parent, on the other hand, will have aggregate
liability (for indemnification or otherwise) to the other arising under this
Agreement in excess of the Purchase Price, as adjusted, and no Party will have
any liability hereunder until the aggregate claims under this Agreement against
such Party exceed $52,160, at which point the breaching Party shall be liable
for all of such Party's Losses; provided, however, that the threshold described
herein shall not apply to (a) any claims by Buyer or Parent against the Company
or the Members for Losses relating to Unpaid Payables, or (b) the calculation
and application of the Adjustment Amount to the Buyer Note, if any, as provided
in Section 2.6 of this Agreement and the Buyer Note.
9.3 Indemnification Procedures.
(a) For purposes of this Section 9.3, "Indemnified Party" will mean
(i) each Buyer Indemnified Party when being indemnified by the Members and the
Company pursuant to Section 9.1(a), and (ii) each Company Indemnified Party when
being indemnified by Buyer pursuant to Section 9.1(b), and "Indemnifying Party"
will mean (x) the Members and the Company when indemnifying any Buyer
Indemnified Party pursuant to Section 9.1(a), and (y) Buyer when indemnifying
any Company Indemnified Party pursuant to Section 9.1(b).
37
(b) The obligations and Liabilities of an Indemnifying Party under
this Article IX with respect to Adverse Consequences arising from claims of any
third party which are subject to the indemnification provided for under Section
9.1 ("Third Party Claims") will be governed by and contingent upon the following
terms and conditions: if an Indemnified Party will receive notice of any Third
Party Claim, the Indemnified Party will notify each Indemnifying Party promptly
of such Third Party Claim; provided, however, that the delay or failure to
provide such notice will not release the Indemnifying Party from any of its
obligations under this Article IX unless (and then solely to the extent) the
Indemnifying Party is prejudiced by the delay or failure. Any Indemnifying Party
will have the right to defend the Indemnified Party against the Third Party
Claim with counsel of its choice reasonably satisfactory to the Indemnified
Party so long as (i) the Indemnifying Party notifies the Indemnified Party in
writing within fifteen (15) days after the Indemnified Party has given notice of
the Third Party Claim that the Indemnifying Party will undertake the defense of
such claim and (ii) the Indemnifying Party conducts the defense of the Third
Party Claim actively and diligently. The Indemnified Party may participate in
the defense of such claim with co-counsel of its choice; provided, however, that
the fees and expenses of the Indemnified Party's counsel will be at the expense
of the Indemnified Party unless (A) the Indemnifying Party has agreed in writing
to pay such fees and expenses, (B) the Indemnifying Party has failed to assume
the defense and employ counsel as provided herein or (C) a claim will have been
brought or asserted against the Indemnifying Party as well as the Indemnified
Party, and counsel to the Indemnifying Party has advised in writing that there
may be one or more factual or legal defenses available to the Indemnified Party
to it that are in conflict with those available to the Indemnifying Party, in
which case such co-counsel will be at the expense of the Indemnifying Party;
provided, however, that the Indemnifying Party will not be required to pay the
fees and expenses of more than one separate principal counsel (and one
appropriate local counsel) for all Indemnified Parties. If, within such 15-day
period, the Indemnifying Party does not assume the defense of such matter or
fails to defend the matter in the manner set forth above, the Indemnified Party
may defend against the matter in any manner that it reasonably may deem
appropriate and the Indemnifying Party will reimburse the Indemnified Party
promptly and periodically for the costs of defending against such claim
(including reasonable attorneys' fees and expenses) and the Indemnifying Party
will remain responsible for the Liability the Indemnified Party may suffer
resulting from, arising out of, relating to, in the nature of, or caused by the
claim to the fullest extent provided herein, provided, however, that the
Indemnified Party may not consent to the entry of any judgment with respect to
the matter or enter into any settlement with respect to such matter without the
consent of the Indemnifying Party, which consent may not be unreasonably
withheld. In the event the Indemnifying Party exercises the right to undertake
any defense against any a Third Party Claim as provided above, the Indemnified
Party will cooperate with the Indemnifying Party in such defense and make
available to the Indemnifying Party at the Indemnifying Party's expense, all
witnesses, pertinent records, materials and information in the Indemnified
Party's possession or under the Indemnified Party's control relating thereto as
is reasonably required by the Indemnifying Party. Similarly, in the event the
Indemnified Party is, directly or indirectly, conducting the defense against any
such Third Party Claim, the Indemnifying Party will cooperate with the
Indemnified Party in such defense and make available to the Indemnified Party,
at the Indemnifying Party's expense, all such witnesses, records, materials and
information in the Indemnifying Party's possession or under the Indemnifying
Party's control relating thereto as is reasonably required by the Indemnified
Party.
38
(c) An Indemnified Party will give each Indemnifying Party notice of
any matter (other than a Third Party Claim) which an Indemnified Party has
determined has given or would reasonably be expected to give rise to a right of
indemnification under Section 9.3, within sixty (60) days of such determination,
stating the amount of the Adverse Consequences, if known, and method of
computation thereof, a brief description of the facts upon which such claim is
based and containing a reference to the provisions of this Agreement in respect
of which such right of indemnification is claimed or arises; provided, however,
that the delay or failure to provide such notice will not release the
Indemnifying Party from any of its obligations under this Article IX unless (and
then solely to the extent) the Indemnifying Party is prejudiced by the delay or
failure.
(d) If, after the amount of the claim is specified by the
Indemnified Party, the Indemnifying Party objects to any such claim, it may give
written notice to the Indemnified Party within thirty (30) days of the later of
receipt of the Indemnified Party's notice of claim or the specification by the
Indemnified Party of the amount of the claim, advising the Indemnified Party of
its objection. If no such notice is timely received from the Indemnifying Party
by the Indemnified Party, the Indemnified Party will be entitled to payment from
the Indemnifying Party in the amount of the Adverse Consequences arising out of
the claim specified in its notice of claim. If the Indemnifying Party advises
the Indemnified Party within such thirty (30) day period that it objects to such
claim, the Indemnified Party and the Indemnifying Party will promptly meet and
use their best efforts to settle the dispute in writing. If the Indemnified
Party and the Indemnifying Party are unable to reach agreement within sixty (60)
days after the Indemnifying Party objects to the claim, then the disputed
portion of the claim will be submitted to arbitration in accordance with Section
10.15. If it is determined that the Indemnified Party is entitled to
indemnification with respect to the dispute submitted, the Indemnified Party
will be entitled to obtain payment from the Indemnifying Party within thirty
(30) days in the amount determined by the court of law.
(e) The Parties hereby agree that the foregoing provisions of this
Article IX will be the sole and exclusive means of recovery of a Party hereto or
any other Person entitled to indemnification under this Article IX, and will
preclude the exercise of any other rights or remedies available to a Party
hereto or any other Person hereunder at law or in equity; provided, however, the
Parties agree that any limitations on damages set forth in this Agreement and
any applicable statutes of limitation will apply to all remedies and means of
recovery, except for claims involving fraud or willful misconduct.
9.4 Right of Set-Off. After final adjudication of any claim by Buyer under
this Agreement, Buyer may set off any amount to which it is entitled, including
but not limited to any amount to which it is entitled under this Article IX,
against amounts otherwise payable under the Buyer Note. Neither the exercise of
nor the failure to exercise such right of set-off will constitute and election
of remedies or limit Buyer in any manner in the enforcement of any other
remedies that may be available to it.
39
ARTICLE X
TERMINATION
10.1 Termination of Agreement. Certain of the Parties may terminate this
Agreement as provided below:
(a) Parent, Buyer, the Members and the Company may terminate this
Agreement by mutual written consent at any time prior to the Closing;
(b) Buyer or Parent may terminate this Agreement by giving written
notice to the Company at any time up and until Closing if Buyer is not satisfied
with the results of its continuing business, legal, environmental, and
accounting due diligence regarding the Company and the Purchased Assets;
(c) Buyer may terminate this Agreement by giving written notice to
the Company at any time prior to the Closing (i) in the event the Company or any
of the Members has breached any material representation, warranty, or covenant
contained in this Agreement in any material respect, Buyer has notified the
Company of the breach, and the breach has continued without cure for a period of
fifteen (15) days after the notice of breach or (ii) if the Closing will not
have occurred on or before February 28, 2005 (unless the failure to close is
primarily caused by Buyer's wrongful refusal to close or by Buyer's breach of
any representation, warranty, or covenant contained in this Agreement); and
(d) the Company may terminate this Agreement by giving written
notice to Buyer at any time prior to the Closing (i) in the event Buyer has
breached any material representation, warranty, or covenant contained in this
Agreement in any material respect, the Company has notified Buyer of the breach,
and the breach has continued without cure for a period of fifteen (15) days
after the notice of breach or (ii) if the Closing will not have occurred on or
before February 28, 2005 (unless the failure to close is primarily caused by the
Company's wrongful refusal to close or by the Company's breach of any
representation, warranty, or covenant contained in this Agreement).
10.2 Effect of Termination. If any Party terminates this Agreement
pursuant to Section 10.1 above, all rights and obligations of the Parties
hereunder will terminate without any Liability of any Party to any other Party
(except for any Liability of any Party then in breach).
ARTICLE XI
MISCELLANEOUS
11.1 Parent Guarantee. Parent hereby unconditionally guarantees to the
Members and the Company the full and timely performance of all of the
obligations and agreements of Buyer in accordance with the terms of this
Agreement, the Buyer Note and any document executed or delivered in connection
herewith or contemplated hereby. The foregoing guarantee shall include the
guarantee of the payment of all Losses of the Company or any Member which might
become recoverable as a result of the nonperformance of any of the obligations
or agreements so guaranteed, including failure to pay the Buyer Note
(collectively, the "Guaranteed Obligations"). Each of the Company and either
Member may, at their option, proceed against Parent for the performance of any
Guaranteed Obligation, or for Losses for default in the performance thereof,
without first proceeding against Buyer or against any of Buyer's properties.
Parent further agrees that its guarantee shall be an irrevocable guarantee and a
continuing guarantee that will not be discharged until payment in full of all of
the Guaranteed Obligations and until such time shall continue in effect
notwithstanding any extension or modification of any Guaranteed Obligation, any
assumption of any such Guaranteed Obligation by any other party, or any other
act or thing which might otherwise operate as a legal or equitable discharge of
a guarantor and Parent hereby waives all special suretyship defenses and notice
requirements.
40
11.2 No Third-Party Beneficiaries. This Agreement will not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
11.3 Entire Agreement. This Agreement (including the documents referred to
herein) constitutes the entire agreement among the Parties and supersedes any
prior understandings, agreements, or representations by or among the Parties,
written or oral, to the extent they related in any way to the subject matter
hereof.
11.4 Succession and Assignment. This Agreement will be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of Buyer and the Members; provided, however, that Buyer may (i) assign any or
all of its rights and interests hereunder to one or more of its Affiliates and
(ii) designate one or more of its Affiliates to perform its obligations
hereunder (in any or all of which cases Buyer nonetheless will remain
responsible for the performance of all of its obligations hereunder).
11.5 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original but all of which together
will constitute one and the same instrument.
11.6 Headings. The section headings contained in this Agreement are
inserted for convenience only and will not affect in any way the meaning or
interpretation of this Agreement.
11.7 Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder will be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
If to the Company: Shank C&E Investments, LLC
c/o Xxxxx X. Xxxxxxxx
0000 Xxxxxxxx
Xxxxxx, Xxxxx 00000
Facsimile No.: (000) 000-0000
If to the Members: Xxxxx X. Xxxxxxxx
Xxxxxxxxx Xxxxxxxx
0000 Xxxxxxxx
Xxxxxx, Xxxxx 00000
Facsimile No.: (000) 000-0000
41
Copy to: Xxxxxx and Xxxxx, LLP
0000 XxXxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attn: Xxxxxxx X. Xxxxxx
Facsimile No.: (000) 000-0000
If to Buyer or Parent: Xxxxxxxxx Mobile Fueling, Inc.
000 Xxxx Xxxxxxx Xxxxx Xxxx, Xxxxx 000
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Attn: Xxxxxxx Xxxxxxxxx
Facsimile No.: (000) 000-0000
Copy to: Xxxxx Xxxxxx & Xxxxxx LLP
0000 Xxxxxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attn: S. Xxx Xxxxx, Jr.
Facsimile No.: (000) 000-0000
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
facsimile, ordinary mail, or electronic mail), but no such notice, request,
demand, claim, or other communication will be deemed to have been duly given
unless and until it actually is received by the intended recipient. Any Party
may change the address to which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the other Parties notice
in the manner herein set forth.
11.8 Governing Law. This Agreement will be governed by and construed in
accordance with the domestic laws of the State of Florida without giving effect
to any choice or conflict of law provision or rule that would cause the
application of the laws of any jurisdiction other than the State of Florida.
11.9 Amendments and Waivers. No amendment of any provision of this
Agreement will be valid unless the same will be in writing and signed by Buyer
and the Members. No waiver by any Party of any default, misrepresentation, or
breach of warranty or covenant hereunder, whether intentional or not, will be
deemed to extend to any prior or subsequent default, misrepresentation, or
breach of warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence.
11.10 Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction will not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
42
11.11 Expenses. Each of the Parties will bear its own costs and expenses
(including legal fees and expenses) incurred in connection with this Agreement
and the transactions contemplated hereby.
11.12 Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement will be construed as
if drafted jointly by the Parties and no presumption or burden of proof will
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law will be deemed also to refer to all rules and regulations
promulgated thereunder, unless the context requires otherwise. The word
"including" will mean including without limitation. The Parties intend that each
representation, warranty, and covenant contained herein will have independent
significance. If any Party has breached any representation, warranty, or
covenant contained herein in any respect, the fact that there exists another
representation, warranty, or covenant relating to the same subject matter
(regardless of the relative levels of specificity) which the Party has not
breached will not detract from or mitigate the fact that the Party is in breach
of the first representation, warranty, or covenant.
11.13 Incorporation of Exhibits and Disclosure Schedules. The exhibits and
disclosure schedules identified in this Agreement are incorporated herein by
reference and made a part hereof.
11.14 Specific Performance. Each of the Parties acknowledges and agrees
that the other Parties would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each of the Parties agrees that
the other Parties will be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions hereof in any action instituted in any
court of the United States or any state thereof having jurisdiction over the
Parties and the matter (subject to the provisions set forth in Section 11.15),
in addition to any other remedy to which they may be entitled, at law or in
equity.
11.15 Arbitration.
(a) Any dispute between the Parties shall be resolved by binding
arbitration in Broward County, Florida or Xxxxxx County, Texas in accordance
with the following provisions; provided, however, that either Party may seek
injunctive relief to preserve the status quo pending arbitration.
(a) Any Party may submit any dispute to arbitration by giving
written notice to the other Parties to such dispute. Within twenty (20) business
days after receipt of such notice, the Parties shall mutually select an
arbitrator. If the Parties shall fail to reach agreement on an arbitrator,
either Party may request the American Arbitration Association to appoint the
arbitrator (the agreed upon or appointed arbitrator, the "Arbitrator"). The
Arbitrator shall be experienced in corporate and financial matters and shall be
impartial and unrelated, directly or indirectly, so far as employment of
services is concerned to either of the Parties or any of their respective
affiliates; provided that, to the extent the dispute concerns matters of
environmental law and/or environmental science, then the Arbitrator must be
trained and knowledgeable in such matters.
43
(b) The Arbitrator shall investigate the facts and shall hold
hearings at which the parties may conduct limited discovery (excluding
depositions), present evidence and arguments, be represented by counsel and
conduct cross examination. The arbitration process and proceedings shall be
governed by Federal Rules of Evidence. The Arbitrator shall render a written
decision on the matter presented to him or her as soon as practicable after his
or her appointment and in any event not more than forty-five (45) days after
such appointment. The decision of the Arbitrator, which may include equitable
relief, shall be final and binding on the Parties hereto, and judgment upon the
decision may be entered in any court having jurisdiction thereof. If the
Arbitrator shall fail to render a decision within such forty-five (45) day
period, either Party may institute such action or proceeding in such court as
shall be appropriate in the circumstances and upon the institution of such
action, the arbitration proceeding shall be terminated and shall be of no
further force and effect. The prevailing party (in the arbitration or in the
court proceeding, as applicable) shall be awarded reasonable attorneys' fees,
expert and nonexpert witness costs and expenses, and other costs and expenses
incurred in connection with the arbitration, and the fees and costs of the
Arbitrator shall be borne by the nonprevailing party unless, in either case, the
Arbitrator or the court, as the case may be for good cause determine otherwise.
In resolving any dispute, the Arbitrator shall apply the provisions of this
Agreement, without varying therefrom in any respect. The Arbitrator shall not
have the power to add to, modify or change any of the provisions of this
Agreement.
*****
[Signature page follows.]
44
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the date first above written.
PARENT:
XXXXXXXXX MOBILE FUELING, INC.
By:/s/Xxxxxxx X. Xxxxxxxxx
-----------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: President and Chief Executive Officer
BUYER:
SMF SERVICES, INC.
By:/s/Xxxxxxx X. Xxxxxxxxx
-----------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: President and Chief Executive Officer
MEMBERS:
/s/Xxxxx X. Xxxxxxxx
--------------------------
XXXXX X. XXXXXXXX
/s/Xxxxxxxxx Xxxxxxxx
XXXXXXXXX XXXXXXXX
THE COMPANY:
SHANK C & E INVESTMENTS, L.L.C.
By:/s/Xxxxx X. Xxxxxxxx
--------------------------
Xxxxx X. Xxxxxxxx, Manager
45
Exhibit A
DIRECT OPERATING EXPENSES
--------------------------------------------------------------------------------
Contract Labor
Operations Employee Education
Drivers Salaries & Wages
EEOC Injury Reimbursement
Operations Salaries & Wages
Operations Overtime Wages
Operations Payroll Taxes
Operations Employee Insurance
Operations Employee Benefits
Travel & Transportation - Ops
Meals/Entertainment - Ops
Equipment Rental - Ops
Equipment Lease - Ops
Communications Expense - Ops
Supplies Expense - Ops
Employee Physicals
Uniforms
Safety & Security
Licensing Expense
Environmental Expense
Product Testing
Repairs & Maint - Trucks
Truck Licenses/Inspections
Truck Insurance
Gen Liab & Umbr Insurance
Cargo Insurance
Truck Fuel & Oil
Truck Tires & Batteries
Repairs & Maint - Accidents
Repairs & Maint - Tanks/Other
Tolls & EZ Tags - Operations
Tank Misc Accessories
Tank Hoses
Tank Pumps
Tank Nozzles
Tank Meters
--------------------------------------------------------------------------------
46
Exhibit B
XXXX OF SALE, ASSIGNMENT
AND ASSUMPTION AGREEMENT
This Xxxx of Sale, Assignment and Assumption Agreement is entered into as
of the __ day of _________, 2005, by and between Shank C&E Investments, L.L.C.,
a Delaware limited liability company ("Seller"), and SMF Services, Inc., a
Delaware corporation ("Buyer").
RECITALS
By an Asset Purchase Agreement dated as of January __, 2005, (the
"Agreement") by and between Seller, Xxxxx X. Xxxxxxxx, Xxxxxxxxx Xxxxxxxx, Buyer
and Xxxxxxxxx Mobile Fueling, Inc., a Florida corporation, Seller agreed to sell
to Buyer, and Buyer agreed to purchase from Seller, certain assets of Seller in
consideration for the payment from Buyer to Seller of the Purchase Price.
AGREEMENT
NOW, THEREFORE, in consideration of, and to complete the actions
contemplated by the Agreement, Seller and Buyer hereby undertake and agree as
follows:
1. Capitalized Terms. The capitalized terms used but not defined herein
shall have the meanings ascribed to them in the Agreement.
2. Transfer of Assets. For good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, hereby sells, conveys, grants,
assigns, transfers and delivers to Buyer and its successors and assigns, free
and clear of all liabilities, obligations, Liens (other than Permitted Liens)
and claims, all of its right, title and interest in and to the following assets
(the "Purchased Assets"):
(i) all motor vehicles, trailers and direct attachments
thereto that are owned or leased by the Company and set forth on Schedule A, and
all intangible property related thereto;
(ii) all equipment, portable customer tanks, furniture,
computer hardware, fixtures, improvements, supplies, machinery, tools, and other
tangible personal property of the Company and set forth on Schedule B and all
intangibles property related thereto;
(iii) the Inventory as set forth on Schedule C;
(iv) the Receivables as set forth on Schedule D;
(v) the Company's customer and supplier lists, Intellectual
Property and other intangible personal property of the Company, including the
names "Shank Services," "Xxxxxxx Oil Company" and "Xxxxxxx Oil"; and
47
(vi) all leases or subleases of tangible personal property as
to which the Company is the lessor, sublessor, lessee or sublessee, together
with any options to purchase the underlying personal property as set forth on
Schedule E;
(vii) the Assumed Contracts as set forth on Schedule F;
(viii) the leases and subleases of real property as set forth
on Schedule G as to which the Company is the lessee or sublessee, together with
leasehold improvements thereon and any options to purchase the underlying
property, and in each case all other rights, subleases, licenses and permits
appurtenant to or related to such leases and subleases;
(ix) all books, records, data and files relating to the
Purchased Assets or used or held for use exclusively in, and necessary for the
continued conduct of, the Company's Business;
(x) the Prepaid Expenses as set forth on Schedule H;
(xi) all security deposits deposited by or on behalf of the
Company as lessee or sublessee under the Assumed Real Property Leases or the
Personal Property Leases;
(xii) all warranty rights and associated claims of the Company
with respect to all manufacturers' warranties covering the applicable Vehicles
and Tangible Personal Property; and
(xiii) all rights, claims (including, without limitation,
claims for past infringement of Intellectual Property and warranty claims) and
causes of actions of the Company against other Persons (whether or not such
claims and causes of action have been asserted by the Company), and, except for
the rights of the Company that are retained under Section 2.1(d)(ii) of the
Agreement, all rights of indemnity, warranty rights, rights of contribution,
rights to refunds, rights of reimbursement and other rights of recovery
possessed by the Company, regardless of whether such rights are currently
exercisable.
3. Assumption of Liabilities. Subject to the terms of the Agreement,
Seller hereby assigns and delegates to Buyer, and Buyer hereby assumes and
agrees to perform (a) all Liabilities and obligations arising out of ownership,
use and operation of the Purchased Assets by Buyer after the Closing Date, and
(b) all performance obligations of Seller arising after the Closing Date under
any of the Assumed Contracts, but not including any obligation or liability
arising out of or in connection with any breach of any Contract occurring prior
to the Closing Date (collectively, the "Assumed Liabilities"). Except for the
Assumed Liabilities, Buyer does not hereby assume any other obligations of
Seller, all of which shall remain the sole liability and responsibility of
Seller.
4. Excluded Assets/Liabilities. Notwithstanding anything in this Agreement
to the contrary, neither the Purchased Assets nor the Assumed Liabilities shall
include the excluded Liabilities described in Section 2.3(b) of the Agreement or
the Excluded Assets.
5. Further Assurances. Seller hereby further agrees that it will, upon the
reasonable request of Buyer, do, execute, acknowledge and deliver, or cause to
be done, executed, acknowledged and delivered, all such further acts and
documents as may be reasonably requested by Buyer for the purpose of, or in
connection with, completing and confirming all transfers made hereunder.
48
6. No Waiver. Neither the making nor the acceptance of this instrument
shall enlarge, restrict or otherwise modify the terms of the Agreement or
constitute a waiver or release by Buyer or Seller of any liabilities, duties or
obligations, imposed upon either of them by the terms of the Agreement,
including, without limitation, the representations and warranties and other
provisions that the Agreement provides shall survive the date thereof.
7. No Third Party Beneficiaries. The sole purpose hereof is to transfer
and convey to Buyer the Purchased Assets and the Assumed Liabilities and to
evidence the assumption by Buyer of the Assumed Liabilities and not to create
third party beneficiary rights.
8. Counterparts. This Xxxx of Sale, Assignment and Assumption Agreement
may be executed by the parties hereto in separate counterparts, each of which
when so executed and delivered shall be an original, and all such counterparts
shall together constitute one and the same instrument.
49
IN WITNESS WHEREOF, the parties hereto have executed, or caused their
respective duly authorized representatives to execute, this Xxxx of Sale,
Assignment and Assumption Agreement as of the day and year first above written.
SELLER:
SHANK C&E INVESTMENTS, L.L.C.
By:
---------------------------------------
Xxxxx X. Xxxxxxxx, Manager
BUYER
SMF SERVICES, INC.
By:
--------------------------------------
Name:
Title:
50
Exhibit C
THIS NOTE IS SUBJECT TO THE TERMS OF A SUBORDINATION AGREEMENT IN FAVOR OF
WACHOVIA BANK, NATIONAL ASSOCIATION. NOTWITHSTANDING ANY CONTRARY STATEMENT
CONTAINED IN THE WITHIN DOCUMENT, NO PAYMENT ON ACCOUNT OF ANY OBLIGATION
ARISING FROM OR IN CONNECTION WITH THE WITHIN INSTRUMENT OR ANY RELATED
AGREEMENT (WHETHER OF PRINCIPAL, INTEREST OR OTHERWISE) SHALL BE MADE, PAID,
RECEIVED OR ACCEPTED EXCEPT IN ACCORDANCE WITH THE TERMS OF THE SUBORDINATION
AGREEMENT. THE PAYMENT OF PRINCIPAL AND INTEREST ON THIS NOTE IS SUBJECT TO
CERTAIN SET-OFF PROVISIONS SET FORTH IN THE AGREEMENT (DEFINED BELOW). THIS NOTE
WAS ORIGINALLY ISSUED ON __________, 2005 AND HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED.
PROMISSORY NOTE
$1,912,185.60 Ft. Lauderdale, Florida
______________, 2005
SECTION 1. General. SMF SERVICES, INC., a Delaware corporation (the
"Company"), having an address at 000 Xxxx Xxxxxxx Xxxxx Xxxx, Xxxxx 000, Xxxx
Xxxxxxxxxx, Xxxxxxx 00000, for value received, hereby promises to pay to SHANK
C&E INVESTMENTS, LLC, a Delaware limited liability company, and its permitted
successors or assigns (the "Holder"), having an address at c/o Xxxxx X.
Xxxxxxxx, 9611 Xxxxxxxx, Xxxxxx, Xxxxx 00000 the principal sum of ONE MILLION
NINE HUNDRED TWELVE THOUSAND ONE HUNDRED EIGHTY FIVE DOLLARS AND SIXTY CENTS
($1,912,185.60), plus accrued interest thereon as hereinafter provided, as
subject to adjustment in accordance with Section 2.6 of the Agreement (as
defined below).
This Unsecured Deferred Payment Promissory Note (this "Note") has been
executed and delivered pursuant to and in accordance with the terms and
conditions of the Asset Purchase Agreement, dated January 25, 2005, by and among
the Company, Xxxxxxxxx Mobile Fueling, Inc., a Florida corporation
("Xxxxxxxxx"), Xxxxx C & E Investments, L.L.C., a Delaware limited liability
company, Xxxxx X. Xxxxxxxx and Xxxxxxxxx Xxxxxxxx (the "Agreement"), and is
subject to the terms and conditions of the Agreement, which are, by this
reference, incorporated herein and made a part hereof. Capitalized terms used in
this Note without definition shall have the respective meanings set forth in the
Agreement.
SECTION 2. Interest. Interest shall accrue on the unpaid principal balance
of this Note at a fixed rate of interest equal to four and 3/5 percent (4.6%)
per annum (the "Interest Rate"). If all or a portion of (i) the principal amount
of this Note or (ii) any interest payable hereon shall not be paid when due
(whether at the stated maturity, by acceleration or otherwise), such overdue
amount shall bear interest at a rate of ten percent (10%) per annum.
Notwithstanding anything to the contrary contained herein or in the Agreement in
no event shall the amount payable by the Company as interest or other charges on
this Note exceed the highest lawful rate permissible under any law applicable
hereto.
-2-
SECTION 3. Payments.
(a) Principal and Interest. The principal amount of this Note and
all accrued and unpaid interest thereon shall be due and payable on
_____________, 2007 (the "Maturity Date"). The amount of principal and accrued
interest due and owing on this Note is subject to adjustment in accordance with
Section 2.6 of the Agreement.
(b) Manner of Payment.
(xiv) If the Adjustment Amount would have caused the Purchase
Price to be reduced by five percent (5%) or less, then the manner in which
payments of principal and accrued interest are to be made under this Note shall
be at the election of the Holder in accordance with Section 3(b)(iii) below, as
specified by written notice from the Company to Holder; provided, however, that
the payment by the Company of shares of Streicher's common stock, $0.01 par
value ("Common Stock") may be limited at the election of the Company to fifty
percent (50%) of the total amount owing on this Note, including interest accrued
hereon; and provided, further, that that the payment by the Company of shares of
Common Stock may be further limited to the number of shares of Common Stock
that, when taken together with the number of shares of Common Stock issuable
upon conversion of the warrants issued in connection with Streicher's offering
of its 10% Senior Secured Notes due 2010, is less than 20% of the number of
shares of Common Stock outstanding on the Closing Date as calculated pursuant to
Nasdaq Stock Market Rule 4350(i)(I)(C) or any successor rule.
(xv) If the Adjustment Amount causes the Purchase Price to be
reduced by more than five percent (5%), then the manner in which payments of
principal and accrued interest are to be made under this Note shall be at the
election of the Company in accordance with Section 3(b)(iii) below; provided,
however, that the payment by the Company of shares of Common Stock may be
limited at the election of the Company to fifty percent (50%) of the adjusted
total amount owing on this Note, including interest accrued hereon; and
provided, further, that that the payment by the Company of shares of Common
Stock may be further limited to the number of shares of Common Stock that, when
taken together with the number of shares of Common Stock issuable upon
conversion of the warrants issued in connection with Streicher's offering of its
10% Senior Secured Notes due 2010, is less than 20% of the number of shares of
Common Stock outstanding on the Closing Date as calculated pursuant to Nasdaq
Stock Market Rule 4350(i)(I)(C) or any successor rule.
(xvi) At the election of either the Holder or the Company in
accordance with Sections 3(b)(i) and (ii) above, payments of principal and
accrued interest under this Note shall be made on the Maturity Date as follows:
(i) in cash by certified check at the Holder's address
designated above or at such other place as the Holder shall have notified the
Company in writing, or by wire transfer of immediately available funds to an
account designated by the Holder in writing, for the entire amount of principal
and accrued interest owing under this Note; or
-3-
(ii) in such number of shares of Common Stock, as determined
in accordance with Section 3(c) below, for the amount of principal and accrued
interest owing under this Note that is specified to be paid in Common Stock in
accordance with Section 3(b)(i) or (ii), as applicable, with the remaining
balance of principal and accrued interest to be paid in cash by certified check
at the Holder's address designated above or at such other place as the Holder
shall have notified the Company in writing or by wire transfer of immediately
available funds to an account designated by the Holder in writing.
The Company shall not deliver any fractional shares in satisfying its
obligations under this Note and the number of shares issued to Holder shall be
rounded to the nearest whole number. If any payment under this Note shall be
specified to be made on a day which is not a business day, it shall be made on
the next succeeding day which is a business day. For purposes of this Note, a
"business day" shall mean any day other than Saturday, Sunday or other day in
which banks are authorized to close in the State of Florida.
(c) Computation of Shares Issued. The number of shares of Common
Stock issued shall be determined by dividing the amount of the principal and
accrued interest outstanding to be paid in Common Stock as provided in Section
3(b) by the most recent Market Value of the Common Stock as of the Closing Date.
For purposes of this Note, "Market Value" means (i) the closing bid price of the
Common Stock on Nasdaq on the Closing Date, or (ii) one hundred twenty five
percent (125%) of the average closing bid price of the Common Stock for the ten
(10) trading days before the Closing Date, whichever is higher; provided,
however, that under no circumstances shall such price be less than the fair
market value of the Common Stock on the Closing Date as determined by Nasdaq
Stock Market Rule 4350(i)(I)(D)(i) or any successor rule.
(d) Mechanics of Shares Issuance. The Company shall deliver to the
Holder a certificate (or, upon the written order of the Holder, certificates)
for the number of shares of Common Stock to which the Holder is entitled on the
Maturity Date. The Company covenants that all such shares issued to the Holder
will, upon issuance, be fully paid and non-assessable and free from all taxes,
liens and charges caused or created by the Company or Xxxxxxxxx with respect to
the issuance.
(e) Set-off. After adjustment of the outstanding principal and
accrued interest due on this Note, if any, the Company shall have a right to
withhold and set-off against any amount due hereunder the amount of any claim
for damages for breach of the Agreement to which the Company may be entitled
under the Agreement, including but not limited to claims for indemnification
pursuant to Article IX of the Agreement.
SECTION 4. Subordination. The Holder acknowledges that the payment of
principal and accrued interest on this Note are expressly subordinated to (i)
the rights and interests of Wachovia Bank, National Association, successor by
merger to Congress Financial Corporation (Florida) ("Wachovia"), to the extent
of the existing and future amounts owed by the Company and Xxxxxxxxx to Wachovia
under the line of credit facility between Wachovia, the Company and Xxxxxxxxx or
to any replacement line of credit facility into which the Company may
subsequently enter requiring that the lender rank in a senior position to
unsecured debt of the Company and (ii) the rights and interests of lenders
financing the Company's truck fleet, tanks, equipment and other tangible assets
and having security interests in those assets. The Company and the Holder
acknowledge that this Note is expressly subject the terms and conditions of that
certain Subordination Agreement executed effective as of _________________,
2005, by, between and among the Holder, Wachovia, the Company and Xxxxxxxxx (the
"Subordination Agreement"). Upon request, the Holder agrees to execute and
deliver such other documents and instruments as Wachovia or any senior or
commercial lender may reasonably request to acknowledge and effect the foregoing
subordination.
-4-
SECTION 5. Events of Default. The existence of any of the following
conditions shall constitute an event of default hereunder (an "Event of
Default"):
(a) The failure by the Company to pay when due any payment of
principal or interest on this Note, and such failure continues for thirty (30)
days after the Holder notifies the Company thereof in writing; provided,
however, that the exercise of the Company in good faith of its right of set-off
pursuant to Section 3(e) above, whether or not ultimately determined to be
justified, shall not constitute an Event of Default;
(b) If the Company (i) shall commence any case or proceeding under
any bankruptcy, insolvency or other similar law or seek reorganization,
arrangement, readjustment of its debts, dissolution, liquidation, winding-up,
composition or any other relief under any bankruptcy, insolvency,
reorganization, liquidation, dissolution, arrangement, composition, readjustment
of debt or any other similar act or law, of any jurisdiction, domestic or
foreign, now or hereafter existing; (ii) shall admit the material allegations of
any petition or pleading in connection with any such case or proceeding; (iii)
makes an application for, or consents or acquiesces to, the appointment of a
receiver, conservator, trustee or similar officer for the Company or for all or
a substantial part of the Company's property; or (iv) makes a general assignment
for the benefit of the Company's creditors; or
(c) The (i) commencement of any case or proceeding against the
Company under any, bankruptcy, insolvency, or other similar law or seeking
reorganization, arrangement, readjustment of its debts, liquidation,
dissolution, winding-up, composition or any other relief under any bankruptcy,
insolvency, reorganization, liquidation, dissolution, arrangement, composition,
readjustment of debt or any other similar act or law of any jurisdiction,
domestic or foreign, now or hereafter existing, (ii) appointment of a receiver,
trustee or similar officer for the Company or for all or a substantial part of
the Company's property, or (iii) issuance of a warrant of attachment, execution
or similar process against any substantial part of the property of the Company,
and such case, proceeding, receiver, trustee, officer, warrant, execution or
process shall not be dismissed, bonded or discharged, as applicable, within one
hundred twenty (120) days of the commencement, appointment or issuance thereof.
SECTION 6. Rights and Remedies. In the event that one or more Events of
Default shall have occurred and be continuing, the Holder may at its option
(subject to the subordination provisions of Section 4 hereof and any
subordination agreements relating thereto) by written notice to the Company
declare any principal of and the accrued and unpaid interest on this Note to be
immediately due and payable, and thereupon the same shall become so due and
payable, without presentment, demand, protest or further notice, all of which
are hereby waived by the Company. The Company agrees to pay all reasonable costs
and expenses incurred by the Holder arising out of, or relating to, the
enforcement or collection of the indebtedness evidenced by this Note, including
reasonable attorneys' fees.
-5-
SECTION 7. Waiver. The rights and remedies of the Holder under this Note
shall be cumulative and not alternative. No waiver by the Holder of any right or
remedy under this Note shall be effective unless in a writing signed by the
Holder. No course of dealing or delay on the part of the Holder in exercising
any right shall operate as a waiver thereof or otherwise prejudice the right of
the Holder. Subject as aforesaid, no remedy conferred hereby shall be exclusive
of any other remedy referred to herein or now or hereafter available at law, in
equity, by statute, other agreement or instrument, or otherwise.
SECTION 8. Assignment; Parties in Interest. This Note shall bind the
Company and its successors and assigns. This Note may not be sold, offered for
sale, pledged, hypothecated or otherwise encumbered, transferred or disposed of
by the Holder without the prior written consent of the Company, provided,
however, that such consent shall not be required for a transfer to Holder's
members or affiliates so long as such transfer, in the Company's reasonable
judgment, complies with applicable securities laws and the transferee agrees to
be bound by the terms of the Subordination Agreement..
SECTION 9. Severability. If any provision of this Note is held invalid or
unenforceable by an court of competent jurisdiction, the other provisions of
this Note will remain in full force and effect. Any provision of this Note held
invalid or unenforceable only in party or degree will remain in full force and
effect to the extent not held invalid or unenforceable.
SECTION 10. Notices. All notices, requests, communications, consents and
demands shall be made in writing and shall be (i) sent by registered or
certified mail, first class, postage prepaid, return receipt requested or (ii)
delivered by hand, facsimile transmission or messenger to the Company or to the
Holder hereof, as the case may be, at their respective addresses set forth at
the beginning of this Note, or at such other respective addresses as may be
furnished in writing to each other. All such notices, requests communications,
consents and demands shall be deemed given if mailed, five business days after
mailing, and if personally delivered, the day so delivered.
SECTION 11. Governing Law. This Note shall be governed by, and construed
and interpreted in accordance with, the laws of the State of Florida without
regard to conflicts of laws principles.
SECTION 12. Submission to Jurisdiction. Each of the Company and the Holder
submits to the jurisdiction of any state or federal court sitting in Broward
County, Florida or Xxxxxx County, Texas, in any action or proceeding arising out
of or relating to this Note and agrees that all claims in respect of the action
or proceeding may be heard and determined in any such court. Each of the Company
and the Holder waives any defense of inconvenient forum to the maintenance of
any action or proceeding so brought and waives any bond, surety, or other
security that might be required of the other party with respect thereto.
SECTION 13. WAIVERS OF JURY TRIAL. EACH OF THE COMPANY AND THE HOLDER
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION
OR PROCEEDING RELATING TO THIS NOTE AND FOR ANY COUNTERCLAIM THEREIN.
[Signature page follows.]
-6-
IN WITNESS WHEREOF, this Note has been executed and delivered on the date set
forth at the beginning of this Note by a duly authorized representative of the
Company.
SMF SERVICES, INC.
By:
---------------------------------------
Name:
Title:
-7-
Exhibit D
FINANCIAL STATEMENTS
To be supplied at Closing
-8-
Exhibit E
1. The Company is a limited liability company validly existing and in good
standing under the laws of the State of Delaware. The Company is duly authorized
to conduct business under the laws of the State of Delaware and is qualified as
a foreign entity to do business in each jurisdiction where such qualification is
required. The Company has full limited liability company power and authority
necessary to carry on the business in which it is engaged and to own and use the
properties owned and used by it.
2. The Company has the requisite limited liability company power and
authority to execute, deliver and perform its obligations under the Purchase
Agreement and the other Transaction Documents to be executed and delivered by it
in connection with the transactions contemplated by the Purchase Agreement.
3. The Members have the requisite capacity to execute, deliver and perform
his or her respective obligations under the Purchase Agreement and the other
Transaction Documents to be executed and delivered by him or her in connection
with the transactions contemplated by the Purchase Agreement.
4. The execution, delivery and performance of the Purchase Agreement and
the other Transaction Documents and the consummation of the transactions
contemplated thereby have been duly authorized by all necessary limited
liability company action of the Company. The Purchase Agreement and each of the
other Transaction Documents has been duly executed and delivered by the Company
and the Members (to the extent that he or she is a party thereto) and each is a
legal, valid and binding obligation of each of the Company and the Members,
enforceable against each of the Company and the Members in accordance with its
terms.
5. The execution and delivery of the Purchase Agreement and the other
Transaction Documents and the consummation of the transactions contemplated
thereby and compliance with the provisions thereof will not: (i) require any
authorization, approval, consent, order, license, or other action by, and no
notice or filing with any governmental authority or agency under any applicable
law or regulation or under any judgment, decree or order of any court or
governmental or regulatory authority applicable to the Company; (ii) violate,
conflict with, result in a breach of any provision of, constitute a default (or
an event which, with notice or lapse of time or both, would constitute a
default) under, result in the termination of, accelerate the performance
required by, or result in a creation of any security interest in or upon any of
the assets of the Company being transferred to Buyer under the Purchase
Agreement under any of the terms, conditions or provisions of (a) the
Certificate of Formation or Operating Agreement of the Company or (b) any
material contract, agreement, indenture, mortgage, lease or other obligation
binding on, or affecting the assets of, the Company; or (iii) violate (x) any
federal or state law, rule or regulation or (y) any judgment, order or
injunction of any court or other governmental, regulatory or administrative
agency or governmental entity to which the Company, or their respective assets,
properties or businesses, including the equity ownership in the Company, are
subject.
6. There are no outstanding judgments, orders or injunctions of any court
or any federal, state, county or local government or any other governmental,
regulatory or administrative agency or authority or arbitral tribunal against
the Company. Except as set forth in the Purchase Agreement or the schedules
thereto, the Company is not a party to, or threatened with, any litigation or
judicial, governmental, regulatory, administrative or arbitration proceeding.
-9-
7. The Members are the owners of all of the issued and outstanding limited
liability company interests of the Company, free and clear of any lien or
encumbrance. The Company has not issued, and has no obligation (contingent or
otherwise) to issue, any subscription, warrant, option, convertible security or
other right (contingent or otherwise) to purchase or acquire any limited
liability company interest of the Company, and the Company has no obligation
(contingent or otherwise) to purchase, redeem or otherwise acquire any limited
liability company interest of the Company or any interest therein or to pay any
dividend or make any other distribution in respect thereof.
-10-
Exhibit F
SMF SERVICES, INC.
EMPLOYMENT, CONFIDENTIALITY, NON-SOLICITATION
AND NON-COMPETE AGREEMENT
This Employment, Confidentiality, Non-Solicitation and Non-Compete
Agreement (this "Agreement") is effective , by and between SMF Services, Inc.
("Employer"), a Delaware corporation with its principal office at ______________
Houston, Texas being a wholly owned subsidiary of Xxxxxxxxx Mobile Fueling, Inc,
a Florida corporation ("Xxxxxxxxx"), (Employer together with Xxxxxxxxx and each
of their related and affiliated entities, collectively the "Company"), and , a
resident of Texas ("Employee"); Employer and Employee sometimes referred to as a
("Party" or the "Parties").
WHEREAS, the Company is in the business of providing mobile on-site
fueling, commercial fueling, heavy haul services, petroleum distribution and
sales and related services (the "Company's Business") in several states and
metropolitan areas; and
WHEREAS, Employer desires to hire Employee, and Employee desires to be
employed by Employer; and
WHEREAS, Employer will not employ Employee unless Employee agrees to the
terms and conditions hereof and commits to be legally bound hereby; now,
THEREFORE, in consideration of, and as a condition to, Employer's offer of
employment to Employee, and other good and valuable consideration, the receipt
and sufficiency of which Employee hereby acknowledges, and in order to protect
the Company's legitimate business interests, the Parties, INTENDING TO BE
LEGALLY BOUND, hereby contract and agree as follows:
1. EMPLOYMENT. Employer shall employ Employee, and Employee accepts
employment with Employer, upon the terms and conditions set forth in this
Agreement. The term of Employee's employment under this Agreement will be
______ year(s), beginning on the date of this Agreement and ending on the
_____ anniversary of the date of this Agreement, unless earlier
terminated, with or without cause or good reason, by either Employee or
Employer upon fourteen (14) days written notice to the other party (the
"Employment Period").
2. POSITION AND DUTIES. During the Employment Period, Employee shall serve as
______________ of Employer and shall have the usual and customary duties,
responsibilities and authority of a ___________. Employee shall devote his
or her best efforts and all of his or her business time and attention to
the business and affairs of the Company. Employee shall perform his duties
and responsibilities to the best of his or her abilities in a diligent and
professional manner. During the Employment Period, Employee shall not
engage in any other business activity, whether or not such activity is
pursued for gain, profit or other pecuniary advantage.
-11-
3. BASE SALARY AND BENEFITS. During the Employment Period, Employee's base
salary shall be __________ dollars ($______) per annum, or such other rate
as the President of the Company may designate from time to time (the "Base
Salary"). The Base Salary shall be payable in regular installments in
accordance with the Company's general payroll practices and subject to
withholding and other payroll taxes. In addition, during the Employment
Period, Employee shall be entitled to participate in all employee benefit
programs for which employees of the Company are generally eligible.
4. CONFIDENTIAL INFORMATION. Employee acknowledges that the Company possesses
certain information that Employer considers confidential and would not
normally disclose, which may be revealed to or learned by Employee during
his employment, and which is not generally known to competitors of
Company's Business and which the Company has a legitimate business
interest to protect. Employee specifically acknowledges that the term
"Confidential Information" includes all information that has or could have
commercial value or other utility in the Company's Business, or the
unauthorized disclosure of which could be detrimental to the interests of
the Company, whether or not such information is specifically identified as
Confidential Information by the Company (all such information,
collectively, the "Confidential -------------- Information"). By way of
example and without limitation, Confidential Information includes any and
all ----------- information and data in whatever medium or form maintained
concerning the Company's marketing plans, business plans, strategies,
methods of operation, forecasts, unpublished financial statements, budgets
and projections; personnel information; customer and supplier transactions
histories, lists, data, identities, characteristics, pricing arrangements
and agreements, forms and documents; and information regarding
promotional, operational, sales and marketing materials, computer hardware
and software systems, intellectual property, and research and development
techniques and methods.
Employee acknowledges that all Confidential Information of which he or
she may become aware is essential to the Company's Business, and is
owned and shall continue to be owned solely by the Company. Under no
circumstances will Employee remove from the Company's place of business
any of the Company's confidential Information, or other property,
without the written permission of Employer, which the Company may in
its absolute discretion withhold. Under no circumstances will Employee
make any copies of such Confidential Information or other property
except as necessary in the performance of Employee's duties on behalf
of the Company and if specifically authorized in writing by the
Company. Employee agrees that at the termination of his employment,
whether or not that termination is voluntary, he or she will return to
the Company immediately any and all of Employer's Confidential
Information and other property in Employee's possession, custody or
control.
During the term of Employee's employment with Employer and thereafter,
Employee will not, directly or indirectly, without the express written
consent of Employer, use or disclose to anyone, or authorize disclosure
of, any of the Confidential Information which may be revealed to or
learned by Employee during the course of his or her employment.
-12-
5. DIVERSION OF BUSINESS OPPORTUNITIES AND ACTIONS ADVERSELY AFFECTING THE
COMPANY'S BUSINESS AND Goodwill. During the Employment Period, Employee
shall not, either directly or indirectly, for himself or herself, or
through, on behalf of, or in conjunction with any person, persons or legal
entity, (a) divert or attempt to divert any customer or prospective
customer of the Company to any competitor or potential competitor,
including any supplier of any product or service which is a substitute for
or alternative to the Company's Business, or (b) otherwise do or perform
any other act that would adversely affect the business or goodwill of the
Company's Business.
6. COVENANT NOT TO COMPETE. Employee shall not, during the term of his or her
employment, engage, directly or indirectly, in any business which is
competitive with the business of the Company or accept employment or
render service (whether as an officer, agent, employee, consultant,
partner or otherwise) to a competitor or take any action inconsistent with
the fiduciary relationship of an employee to his or her corporate
employer. For a period of one year following termination of his or her
employment with Employer, Employee will not, directly or indirectly own,
manage, operate, finance, join, control or participate in the ownership,
management, operation, financing or control of, or be connected as an
officer, employee, partner, principal, agent, representative, consultant
or otherwise with any business that is competitive with the Company's
Business.
7. NON-SOLICITATION OF CUSTOMERS OR EMPLOYEES. During his or her employment
and for a period of one year after the termination of his or her
employment with Employer, Employee shall not, directly or indirectly, for
his or her own benefit or for the benefit of any person, partnership,
association, corporation or other entity other than the Company, solicit
or take away, or attempt to solicit or take away, any of the customers or
employees of the Company.
8. TRADE SECRETS, PROPRIETARY, AND CONFIDENTIAL INFORMATION. Employee agrees
with Employer that any and all inventions, discoveries, knowledge,
information, improvements, designs, methods, systems, developments, "know
how", ideas, suggestions, devices, trade secrets, and processes,
proprietary and confidential information, whether patentable or not, which
are discovered, designed, disclosed to or otherwise obtained by Employee
during his or her employment by Employer are confidential, proprietary
information and are, or shall become, the sole and absolute property of
Employer.
9. CONSTRUCTION AND ENFORCEABILITY. If any provision of this Agreement shall
be invalid or unenforceable, in whole or in part, then such provision
shall be deemed to be modified or restricted to the extent and in the
manner necessary to render the same valid and enforceable, or shall be
deemed excised from this Agreement, as the case may require, and this
Agreement shall be construed and enforced to the maximum extent permitted
by law, as if such provision had been originally incorporated herein as so
modified or restricted, or as if such provision had not been originally
incorporated herein, as the case may be.
10. INJUNCTIVE RELIEF. Employee acknowledges and agrees that the restrictions
contained in this Agreement are, in view of the nature of the business of
the Company, reasonable and necessary to protect the legitimate interests
of the Company and that any violation of any provisions of this Agreement
will result in irreparable injury to the Company. The Employee
acknowledges and agrees that Employer shall be entitled to temporary and
permanent injunctive relief, without the necessity of proving actual
damages or providing a bond or other surety, and to an equitable
accounting of all earnings, profits and other benefits arising from any
such violation, which rights shall be cumulative and in addition to any
other rights or remedies to which the Employer may be entitled. In the
event of any such violation, Employer shall be entitled to commence an
action for temporary and permanent injunctive relief and other equitable
relief in any court of competent jurisdiction, including specifically,
without limitation, the state of Florida.
-13-
11. EMPLOYEE REPRESENTATIONS. Employee represents to Employer, as an
inducement to Employer to continue to employ Employee, that:
A. Before accepting Employer's employment, he or she possessed
skills and knowledge sufficient to permit Employee to earn a
reasonable living in businesses or industries that do not
compete with and which are not a substitute for or alternative
to the Company's Business and that Employee continues to
possess such skills and knowledge;
B. Employee can earn a reasonable living while fully complying
with all of the terms of this Agreement and that the
restrictions and provisions contained in this Agreement,
including without limitation, those of confidentiality,
solicitation and competition contained in this Agreement are
reasonable and necessary to protect the Company's legitimate
business interests in its Confidential Information, Business,
goodwill and customer relationships; and
C. Employee is not subject to any agreement, understanding or
restriction which would in any way limit his or her lawful
right to conduct the responsibilities for which he or she is
employed by Employer, and that such employment does not
violate any agreement to which Employee is a party or to which
Employee is otherwise bound.
12. ENTIRE AGREEMENT. This Agreement constitutes the entire understanding and
agreement of the Employee and Employer with respect to the subject matter
of this Agreement, and supersedes all prior and contemporaneous agreements
of understandings, inducements or conditions, express or implied, written
or oral, between the Employer and Employee.
13. AMENDMENT; NO WAIVER. This Agreement may only be amended, or any provision
waived, by a writing signed by the Employee and Employer. The failure of
Employer to enforce any of the provisions in this Agreement shall not be
construed to be a waiver of the right of Employer to enforce such
provision thereafter. No remedy set forth in this Agreement is intended to
be exclusive of any other remedy, and each and every such remedy shall be
cumulative and in addition to any other remedy given hereunder or now or
hereafter existing at law or in equity.
14. SURVIVAL. Notwithstanding termination of Employee's employment by either
party for any or no reason whatsoever, Employee shall nonetheless continue
to be bound by all of the provisions of this Agreement.
-14-
15. SUCCESSION AND ASSIGNMENT. This Agreement shall inure to the benefit of
any successors, affiliates, or assigns of the Parties.
16. GOVERNING LAW. The laws of the state of Florida, without regard to the
application of conflicts of law principles, shall govern this Agreement.
17. INDEPENDENT COUNSEL. Employee acknowledges and represents that he or she
has carefully read this Agreement and understands it, and has been
represented by, or has had the opportunity to consult with and be
represented by, independent counsel and other persons of his or her own
choosing prior to entering into this Agreement.
-15-
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
SMF SERVICES, INC.
By:
--------------------------------------------------
Title:
-----------------------------------------------
Date:
------------------------------------------------
EMPLOYEE:
Print Name:
-----------------------------------------
Address:
--------------------------------------------
-----------------------------------------------------
SSN/EIN#:
-------------------------------------------
Date:
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-16-
Exhibit G
XXXXXXXXX MOBILE FUELING, INC.
CONFIDENTIALITY, NON-SOLICITATION AND
NON-COMPETE AGREEMENT (CONTRACTORS)
This Confidentiality, Non-Solicitation and Non-Compete Agreement
("Agreement") is effective , 200__ by and between Xxxxxxxxx Mobile Fueling, Inc.
("Xxxxxxxxx"), a Florida corporation with its principal office at 000 Xxxx
Xxxxxxx Xxxxx Xxxx, Xxxxx 000, Xxxx Xxxxxxxxxx, Xxxxxxx 00000 (Xxxxxxxxx
together with its related and affiliated entities including SMF Services, Inc.,
a Delaware corporation and wholly owned subsidiary of Xxxxxxxxx, collectively
the "Company"), and the undersigned Contractor ("Contractor"); Xxxxxxxxx and
Contractor sometimes referred to as a ("Party" or the "Parties").
WHEREAS, the Company is in the business of providing mobile on-site
fueling, commercial fueling, heavy haul services, petroleum distribution and
sales and related services ("Company's Business") in several states and
metropolitan areas; and
WHEREAS, Xxxxxxxxx desires to hire Contractor as an independent Contractor
to do work and/or provide services or products to the Company, and Contractor
desires to be hired by Xxxxxxxxx; and
WHEREAS, Xxxxxxxxx will not engage Contractor unless Contractor agrees to
the terms and conditions hereof and commits to be legally bound hereby; now,
THEREFORE, in consideration of, and as a condition to, Streicher's
offering to contract with and engage Contractor, and other good and valuable
consideration, the receipt and sufficiency of which Contractor hereby
acknowledges, and in order to protect the Company's legitimate business
interests, Contractor, INTENDING TO BE LEGALLY BOUND, hereby contracts and
agrees as follows:
1. NO CONTRACT FOR EMPLOYMENT. This Agreement is not an employment contract.
Contractor shall at all times be an independent contractor.
2. SERVICES. Contractor will perform for the Company those consulting
services set forth in Exhibit A attached hereto and made a part hereof
(the "Services"). Any additional services to be performed by Contractor
for the Company shall be done pursuant to addenda to Exhibit A to be
attached hereto and made a part hereof.
3. CONSULTING FEES. In consideration for Contractor providing services to the
Company and performing the obligations hereunder, Xxxxxxxxx shall pay
Contractor a consulting fee as set forth in Exhibit A attached hereto for
services rendered by Contractor. Contractor shall submit monthly invoices
to the Chief Financial Officer of Xxxxxxxxx or such other officer as may
be designated by Xxxxxxxxx. Xxxxxxxxx shall make payment of consulting
fees no later than the last business day of the month following the month
when Xxxxxxxxx received Contractor's invoice. Contractor shall be solely
responsible for all taxes and similar payments arising out of any
activities contemplated by this Agreement, including without limitation,
federal, state, and local income tax, social security tax (FICA), self
employment taxes, unemployment insurance taxes and all other taxes, fees
and withholding.
-17-
4. CONFIDENTIAL INFORMATION. Contractor acknowledges that the Company
possesses certain information that the Company considers confidential and
would not normally disclose, which may be revealed to or learned by
Contractor during his providing services to the Company and which is not
generally known to competitors of Company's Business and which the Company
has a legitimate business interest to protect. Contractor specifically
acknowledges that the term "Confidential Information" includes all
information that has or could have commercial value or other utility in
Company's Business, or the unauthorized disclosure of which could be
detrimental to the interests of the Company, whether or not such
information is specifically identified as Confidential Information by the
Company (all such information, collectively, the "Confidential
Information"). By way of example and without limitation, Confidential
Information includes any and all information and data in whatever medium
or form maintained concerning the Company's marketing plans, business
plans, strategies, methods of operation, forecasts, unpublished financial
statements, budgets and projections; personnel information; customer and
supplier transactions histories, lists, data, identities, characteristics,
pricing arrangements and agreements, forms and documents; and information
regarding promotional, operational, sales and marketing materials,
computer hardware and software systems, intellectual property, and
research and development techniques and methods.
Contractor acknowledges that all Confidential Information of which
Contractor may become aware is essential to Company's Business, and is
owned and shall continue to be owned solely by the Company. Under no
circumstances will Contractor remove from the Company's place of
business any of the Company's Confidential Information, or other
property, without the specific written permission of the Company, which
the Company may in its absolute discretion withhold. Under no
circumstances will Contractor make any copies of such Confidential
Information or other property except as necessary in the performance of
Contractor's duties on behalf of the Company and if specifically
authorized in writing by the Company. Contractor agrees that at the
termination of any contract or agreement between the Parties, whether
or not that termination is voluntary, Contractor will return to the
Company immediately any and all of the Company's Confidential
Information and other property in Contractor's possession, custody or
control.
During the term of Contractor's engagement and/or contractual
relationship with the Company and thereafter, Contractor shall not,
directly or indirectly, without the express written consent of the
Company, use or disclose to anyone, or authorize disclosure of, any of
the Confidential Information which may be revealed to or learned by
Contractor during the course of Contractor's engagement or contractual
relationship with the Company.
-18-
5. DIVERSION OF BUSINESS OPPORTUNITIES AND ACTIONS ADVERSELY AFFECTING
COMPANY'S BUSINESS AND GOODWILL. During Contractor's engagement or
contractual relationship with the Company, Contractor shall not, either
directly or indirectly, for Contractor, or through, on behalf of, or in
conjunction with any person, persons or legal entity, (a) divert or
attempt to divert any customer or prospective customer of the Company to
any competitor or potential competitor, including any supplier of any
product or service which is a substitute for or alternative to Company's
Business, or (b) otherwise do or perform any other act that would
adversely affect the business or goodwill of Company's Business.
6. COVENANT NOT TO COMPETE. Contractor shall not, during the term of
Contractor's contractual relationship with the Company, engage in,
directly or indirectly, or own an interest in any business which is
competitive with the business of the Company or take any action
inconsistent with the fiduciary relationship of an employee to a corporate
employer. For a period of one year following termination of Contractor's
contractual relationship with the Company, Contractor shall not, directly
or indirectly own, manage, operate, finance, join, control or participate
in the ownership, management, operation, financing or control of, or be
connected as an officer, contractor, partner, principal, agent,
representative, Contractor or otherwise with any business that is
competitive with Company's Business.
7. NON-SOLICITATION OF CUSTOMERS OR EMPLOYEES. During Contractor's
contractual relationship with the Company and for a period of one year
after the termination of Contractor's contractual relationship with the
Company, Contractor shall not, directly or indirectly, for Contractor's
own benefit or for the benefit of any person, partnership, association,
corporation or other entity other than the Company, solicit or take away,
or attempt to solicit or take away, any of the customers or employees of
the Company.
8. TRADE SECRETS, PROPRIETARY, AND CONFIDENTIAL INFORMATION. Contractor
agrees with Xxxxxxxxx that any and all inventions, discoveries, knowledge,
information, improvements, designs, methods, systems, developments, "know
how", ideas, suggestions, devices, trade secrets, and processes,
proprietary and confidential information, whether patentable or not, which
are discovered, designed, disclosed to or otherwise obtained by Contractor
as a result (directly or indirectly) of contractual relationships with the
Company are confidential, proprietary information and are, or shall
become, the sole and absolute property of the Company.
9. INDEMNIFICATION. Contractor shall indemnify and hold the Company, its
officers, directors, employees, and agents from any and all claims,
actions, or causes of action, relating to, resulting from or arising out
of (a) any taxes, insurance costs, and benefit costs, arising from claims
that Contractor is an employee of the Company; or (b) any act, statement,
or omission by Consultant arising out of this Agreement or any Services
performed hereunder and resulting in any claim, actions, causes of action,
or proceedings against the Company.
10. CONSTRUCTION AND ENFORCEABILITY. If any provision of this Agreement shall
be invalid or unenforceable, in whole or in part, then such provision
shall be deemed to be modified or restricted to the extent and in the
manner necessary to render the same valid and enforceable, or shall be
deemed excised from this Agreement, as the case may require, and this
Agreement shall be construed and enforced to the maximum extent permitted
by law, as if such provision had been originally incorporated herein as so
modified or restricted, or as if such provision had not been originally
incorporated herein, as the case may be.
-19-
11. INJUNCTIVE RELIEF. Contractor acknowledges and agrees that the
restrictions contained in this Agreement are, in view of the nature of the
business of the Company, reasonable and necessary to protect the
legitimate interests of the Company and that any violation of any
provisions of this Agreement will result in irreparable injury to the
Company. The Contractor acknowledges and agrees that the Company shall be
entitled to temporary and permanent injunctive relief, without the
necessity of proving actual damages or providing a bond or other surety,
and to an equitable accounting of all earnings, profits and other benefits
arising from any such violation, which rights shall be cumulative and in
addition to any other rights or remedies to which Xxxxxxxxx may be
entitled. In the event of any such violation, Xxxxxxxxx shall be entitled
to commence an action for temporary and permanent injunctive relief and
other equitable relief in any court of competent jurisdiction, including
specifically, without limitation, the state of Florida.
12. CONTRACTOR REPRESENTATIONS. Contractor represents to Xxxxxxxxx, as an
inducement to Xxxxxxxxx to contract or continue to contract with
Contractor, that:
A. Contractor is duly authorized to enter into this Agreement and
that Contractor possesses the skills, licenses, training and
knowledge necessary to perform and/or deliver the goods and
services contemplated by Xxxxxxxxx and Contractor;
B. The terms of this Agreement and that the restrictions and
provisions contained in this Agreement, including without
limitation, those of confidentiality, solicitation and
competition contained in this Agreement are reasonable and
necessary to protect the Company's legitimate business
interests in its Confidential Information, business, goodwill
and customer relationships; and
C. Contractor is not subject to any agreement, understanding or
restriction which would in any way limit Contractor's right to
conduct the Services and responsibilities for which Xxxxxxxxx
contemplates entering into a contractual relationship with
Contractor, and that such contractual relationship will not
violate any agreement to which Contractor is a party or to
which Contractor is otherwise bound.
13. ENTIRE AGREEMENT. This Agreement constitutes the entire understanding and
agreement of Contractor and Xxxxxxxxx with respect to the subject matter
of this Agreement, and supersedes all prior and contemporaneous agreements
of understandings, inducements or conditions, express or implied, written
or oral, between Xxxxxxxxx and Contractor.
14. AMENDMENT; NO WAIVER. This Agreement may only be amended, or any provision
waived, by a writing signed by Contractor and Xxxxxxxxx. The failure of
Xxxxxxxxx to enforce any of the provisions in this Agreement shall not be
construed to be a waiver of the right of Xxxxxxxxx to enforce such
provision thereafter. No remedy set forth in this Agreement is intended to
be exclusive of any other remedy, and each and every such remedy shall be
cumulative and in addition to any other remedy given hereunder or now or
hereafter existing at law or in equity.
-20-
15. SURVIVAL. Notwithstanding termination of Contractor's contractual
relationship with Xxxxxxxxx for any or no reason whatsoever, Contractor
shall nonetheless continue to be bound by all of the provisions of this
Agreement.
16. SUCCESSION AND ASSIGNMENT. This Agreement shall not be assigned except
with the written consent of all Parties and shall inure to the benefit of
any successors, affiliates, or permitted assigns of the Parties.
17. GOVERNING LAW. The laws of the state of Florida, without regard to the
application of conflicts of law principles, shall govern this Agreement.
18. INDEPENDENT COUNSEL. Contractor acknowledges and represents that
Contractor has carefully read this Agreement and understands it, and has
been represented by, or has had the opportunity to consult with and be
represented by, independent counsel and other persons of Contractor own
choosing prior to entering into this Agreement.
-21-
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
XXXXXXXXX MOBILE FUELING, INC.
By:
--------------------------------------------------
Title:
-----------------------------------------------
Date:
------------------------------------------------
CONTRACTOR:
-----------------------------------------------------
Print Name:
-----------------------------------------
Address:
--------------------------------------------
-----------------------------------------------------
SSN/EIN#:
-------------------------------------------
Date:
-----------------------------------------------
-22-
