Exhibit 10.1
ASSET PURCHASE AGREEMENT
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THIS ASSET PURCHASE AGREEMENT (this "Agreement") is dated as of
November 10, 2006 by and among CETCO Oilfield Services Company, a Delaware
corporation ("Buyer"), and Nitrogen Specialty Company, L.L.C., a Louisiana
limited liability company ("NSC"); Xxxxxxxxxxx X. Abide ("CA"); Xxxxxx X. Xxxxxx
("GB"); Kemberlia X. Xxxxxx ("KD"); Xxxxxx Xxxxxxx Xxxxxxx, individually and as
Independent Administratrix of the Succession of Xxxxx Xxxxxx Xxxxxxx, also known
as Xxxxx Xxxxxx Xxxxxxx, Xx., Xxx X. Xxxxxxx ("RS") and Xxxxx X. Xxxxxxx ("WW")
(CA, GB, KD, Xxxxxx Xxxxxxx Xxxxxxx, individually and as Independent
Administratrix of the Succession of Xxxxx Xxxxxx Xxxxxxx, also known as Xxxxx
Xxxxxx Xxxxxxx, Xx., RS and WW are each referred to herein as a "Member" and
collectively as the "Members").
Capitalized terms used but not defined herein shall have the respective
meanings set forth in the Appendix of Definitions attached hereto and made a
part hereof.
WITNESSETH
WHEREAS, the Members are the owners, beneficially and of record, of one
hundred percent (100%) of the issued and outstanding membership interests of
NSC;
WHEREAS, NSC provides nitrogen pumping, nitrogen delivery and other
related services in the oil and gas pipeline, petrochemical and refining
industries (the "Business"); and
WHEREAS, Buyer desires to acquire substantially all of the assets and
assume certain of the liabilities of NSC and NSC and the Members are desirous of
selling such assets to Buyer, all on the terms and subject to the conditions set
forth herein.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual promises, covenants and agreements hereinafter set forth, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
AGREEMENT
1. Purchased Assets.
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1.1 Purchased Assets. On the terms and subject to the
conditions contained herein, NSC agrees to sell to Buyer (and the Members agree
to cause NSC to sell to Buyer) and Buyer agrees to purchase from NSC at the
Closing (as such term is defined in Section 3 hereof), free and clear of all
liens, claims and encumbrances (except as otherwise disclosed in and permitted
by this Agreement), all of NSC's rights, assets and properties wherever situated
and whether real, personal or mixed, tangible or intangible, in electronic form
or otherwise and whether or not having any value for accounting purposes or
carried or reflected on or specifically referred to in NSC's books or financial
statements, except for those assets and properties specifically excluded by
Section 1.2 hereof (the "Purchased Assets").
The Purchased Assets shall include, but not be limited to, the
following:
1.1.1 Machinery and Equipment. All machinery and
equipment (including spare parts), components, computers
(including data processing hardware and software), vehicles,
fixtures, capital works in process, tools, formers, lasts,
patterns, dies, molds, furniture and similar tangible personal
property employed by NSC in the conduct of the Business as of
the Closing Date (the "Equipment"). However, the Equipment at
minimum shall include the equipment listed on Schedule 1.1.1
hereto, which is a listing of all of such Equipment as of
October 31, 2006.
1.1.2 Inventory. All inventories, consisting of
raw materials, work-in-process, finished goods and supplies
and units located at customer facilities, employed and useable
by NSC in the conduct of the Business as the same may exist at
the Closing.
1.1.3 Receivables. All of NSC's trade receivables,
note receivables and other accounts receivable, including
trade accounts receivable from equipment leased or sold and
services rendered, and the full benefit to all security for
such accounts or rights to payment as the same may exist at
the Closing (all of such receivables being hereinafter
sometimes referred to as the "Receivables").
1.1.4 Certain Cash, Cash Equivalents and
Investments. All of the xxxxx cash, cash on deposit in banks
or other financial institutions, deposits in transit, prepaid
accounts and security deposits of NSC and other cash
equivalents, and funds in payroll accounts of NSC; and all
certificates of deposit, bonds, stock and other securities and
investments of NSC as the same may exist at the Closing.
1.1.5 Contract and Certain Other Rights of NSC.
All rights and interests of NSC in, to and under all contracts
between it and any other party or parties and under contracts
which have been acquired by it by assignment or in any other
manner, whether or not disclosed or required to be disclosed
in Schedule 4.14 hereof, and all other claims, rights and
causes of action of NSC against third parties.
1.1.6 Certain Proprietary Rights. All patents,
trademarks, tradenames, service marks, copyrights, and other
intellectual property or proprietary technology (and all
applications therefor) whether or not registered, data
processing software, licenses, technology, trade secrets,
know-how, customer lists, inventions, and the goodwill
associated therewith and other proprietary information and
rights employed or utilized in the conduct of the Business,
including specifically, but not by way of limitation, the
corporate and trade name "Nitrogen Specialty," and all
telephone numbers of NSC used in the conduct of its Business
(all of such properties being hereinafter referred to as the
"Proprietary Rights").
1.1.7 Leasehold Interests. All leasehold
interests and leasehold improvements used by NSC in the
conduct of the Business;
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1.1.8 Other Assets. Except with respect to the
Excluded Assets, all other assets of NSC whether or not
employed in the conduct of the Business, whether real,
personal, or tangible, intangible or mixed and whether or not
reflected in the Financial Statements or on the books or
records of NSC, including all books, records and files
(excluding all personal files), rights under executory
contracts and purchase and sale orders to be assumed by Buyer
hereunder, deposits under all leases assumed by Buyer and any
prepaid expenses and permits and licenses.
If and to the extent that the Members or any of their
respective Affiliates have any interest in any of the Purchased Assets, then the
Members, for themselves and such Affiliates, do hereby sell, transfer and assign
all such interest to the Buyer for no additional consideration.
1.2 Excluded Assets. Notwithstanding anything to the
contrary contained herein, the assets set forth on Schedule 1.2 (the "Excluded
Assets") shall not be sold to Buyer and all of such Excluded Assets shall be
retained by NSC.
1.3 Names Following the Closing. Immediately following
the Closing, NSC shall amend its articles of organization so as to change its
name to a name which is not, in the judgment of Buyer, confusingly similar to
the name "Nitrogen Specialty Company", and neither NSC nor any of the Members
shall thereafter use such name or other names acquired by Buyer hereunder or
names confusingly similar thereto.
1.4 Documentation. In order to effectuate the sale,
conveyance, transfer and assignment contemplated by Section 1.1 hereof, NSC and
the Members shall execute and deliver on the Closing Date all such warranty
deeds, bills of sale and other documents or instruments of conveyance, transfer
or assignment as shall be reasonably necessary or appropriate to vest or confirm
in Buyer all right, title and interest of NSC in and to all of the Purchased
Assets, all of which documents shall be in form and substance satisfactory to
counsel for Buyer, acting reasonably.
1.5 Assumption of Liabilities. Subject to the conditions
described herein, at the Closing, the Buyer shall assume and agree to perform,
pay or discharge, when due, to the extent not theretofore performed, paid or
discharged, the following obligations of NSC existing on the Closing Date and
only such obligations (collectively, the "Assumed Liabilities"):
(a) All of NSC's trade accounts payable and accrued
liabilities, in each case that are included on Final Purchased Balance
Sheet required to be reflected therein in accordance with US GAAP in
the amounts shown thereon, to the extent that such obligations are not
different in nature or materially different in amount from those
incurred in the ordinary course in accordance with past practice;
(b) All of NSC's orders to NSC's customers in the
ordinary course of business outstanding as of the Closing Date
reflected on NSC's books (other than any liability arising out of or
relating to a breach or nonperformance thereof by NSC prior to the
Closing Date);
(c) All of NSC's checks outstanding on the Closing Date;
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(d) All of NSC's liabilities expressly set forth in the
terms of the Contracts assumed by Buyer (other than any liability under
any such Contract, offer or solicitation arising out of or relating to
a breach or nonperformance thereof by NSC prior to the Closing Date);
(e) Unpaid bonuses and vacation time to the extent
accrued and included on the Final Purchased Balance Sheet;
(f) NSC's liabilities made in the ordinary course for
product warranty arising from express warranties for products shipped
or distributed by, or any services provided by NSC; in any event
Buyer's financial liability for such express warranty claims shall not
exceed $5,000 per claim and shall not include incidental and
consequential damages, although Buyer agrees to perform any valid
warranty work in accordance with Buyer's usual practices even if in
excess of $5,000 per claim, subject to reimbursement by NSC to the
extent of the amount in excess of $5,000 per claim; and
(g) Any and all Liabilities included in the Final
Purchased Balance Sheet in the amount shown thereon.
1.6 Retained Liabilities. Notwithstanding anything else
to the contrary in this Agreement, Buyer does not hereby and shall not assume or
in any way undertake to pay, perform, satisfy or discharge any liabilities of
NSC or the Members existing before, on or after the Closing Date or arising out
of any transactions entered into, or any state of facts existing, before, on or
after the Closing Date, and whether or not related to or arising out of any of
the Purchased Assets, except for the Assumed Liabilities (the "Retained
Liabilities"). Without limiting the foregoing, the term "Retained Liabilities"
shall include, except to the extent specifically listed on the Final Purchased
Balance Sheet, any and all of the following:
(a) Liabilities, including accounts or notes payable, of
NSC (i) to any Affiliate; (ii) for or in connection with any dividends,
distributions, redemptions, or security rights with respect to any
security of NSC; (iii) to indemnify NSC's officers, directors,
employees or agents; (iv) for unpaid bonuses and vacation time to the
extent not accrued on the Final Purchased Balance Sheet; or (v) arising
out of any transaction affecting NSC or obligations incurred by NSC's
officers, directors, employees or agents after the Closing;
(b) Liabilities expressly identified elsewhere in this
Agreement as being the responsibility of NSC or the Members;
(c) Liabilities for any Taxes of NSC, whether or not by
reason of, or in connection with, the transactions contemplated by this
Agreement, including (i) any Taxes arising as a result of NSC's
operation of its Business or ownership of the Purchased Assets prior to
the Closing Date, (ii) any Taxes (other than Transfer Taxes to the
extent such Transfer Taxes are the responsibility of Buyer pursuant to
Section 10(a) of this Agreement) that will arise as a result of the
sale of the Purchased Assets pursuant to this Agreement and (iii) any
deferred Taxes of NSC of any kind;
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(d) Liabilities attributable to the Excluded Assets,
including liabilities (i) that are incurred outside the ordinary course
of business or not consistent with past practice, or (ii) that are
contingent in nature and not both clearly disclosed on the Schedules to
this Agreement and specifically identified in Section 1.5;
(e) Liabilities to, under or with respect to any NSC
benefit plan (other than accrued vacation, personal days, sick leave,
paid time off and similar matters reflected on the Final Purchased
Balance Sheet) and the administration of any NSC benefit plan, or
relating to payroll, workers' compensation liabilities, unemployment
benefits, disability and occupational diseases of or with respect to
employees or former employees of NSC, under any employment, severance,
retention, change of control or termination agreements with any
employee of NSC or any of its Affiliates, or arising out of or relating
to any employee grievance whether or not the affected employees are
hired by Buyer;
(f) Liabilities under any written employment agreement;
(g) Liabilities of NSC for or arising out of any
indebtedness, including indebtedness referred to or disclosed on
Schedule 4.14 and including any Contract giving rise to any
indebtedness or any other Contract not expressly assumed by Buyer;
(h) Liabilities relating to any pending or threatened
legal proceedings that exist prior to the Closing Date, including those
set forth on Schedule 4.17 and any legal proceedings that arise after
the Closing Date that relate to transactions entered into, or any state
of facts existing, prior to the Closing Date;
(i) Liabilities, including penalties, fines, levies and
assessments, arising out of any violation or breach of, or
noncompliance with, any Contracts, Governmental Approvals or legal
requirements by NSC or any other person acting as agent for or on
behalf of NSC;
(j) Liabilities of NSC arising out of or relating to (i)
any violation of or noncompliance with any Environmental Law occurring
prior to the Closing Date by NSC or any other person for whose conduct
NSC is legally responsible, (ii) the ownership or operation of the
facilities by NSC prior to the Closing Date, including the migration of
any such condition after the Closing Date, (iii) the presence of any
Contaminant at the facilities prior to the Closing Date as a result of
NSC's actions or omissions, (iv) any hazardous activity conducted by
NSC or any other person acting as agent for or on behalf of NSC, (v)
any Release by NSC or any other person acting as agent for or on behalf
of any of NSC on any other property, and (vi) any environmental
remedial action required to be taken by NSC;
(k) Liabilities for products liability for all products
leased, sold, shipped, distributed, assembled or manufactured by, or
any services provided by, NSC; and for all express warranties that
exceed $5,000 per claim and implied warranties for all products
shipped, distributed, or assembled by, or any services provided by,
NSC;
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(l) Losses arising from legal liabilities for negligent
acts by NSC on or prior to the Closing Date;
(m) Liabilities based on acts or omissions of NSC
occurring after the Closing Date; and
(n) Liabilities of any of the Members or their
Affiliates.
2. The Purchase Price.
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2.1 Delivery and Review of Preliminary Closing Balance
Sheet and Preliminary Aged Accounts Report. No later than five (5) business days
prior to Closing, NSC shall deliver to Buyer (i) a balance sheet of NSC
estimated as of the Closing Date consisting of the estimated assets and
liabilities of NSC as of the Closing Date in accordance with US GAAP (but
excluding therefrom any Excluded Assets or Retained Liabilities that Buyer will
not be purchasing or assuming according to the terms of this Agreement), setting
forth an estimate of the amount by which the working capital of NSC as of the
Closing Date will exceed $2,200,000 (the "Preliminary Working Capital
Adjustment"), and (ii) a report of the aged accounts receivable of NSC estimated
as of the Closing Date, recorded and aged in categories of 30 days from invoice
date and setting forth a summary of the estimated face amount of the Aged
Accounts as of the Closing Date (the "Estimated Aged Accounts Amount"). NSC
shall endeavor to prepare such estimates in a reasonable manner using reasonable
assumptions so as to accurately reflect the expected results as of the Closing.
NSC shall review such estimates with Buyer prior to Closing in such detail as
Buyer may reasonably request, and NSC shall provide such supporting detail and
other cooperation as Buyer may reasonably request to support Buyer's review and
analysis of such estimates prior to Closing. Subject to mutual agreement, the
parties may update the estimates for changes occurring during the five (5)
business days preceding the Closing.
2.2 Purchase Price. The aggregate purchase price for the
Purchased Assets shall be the amount of Thirty Three Million Dollars
($33,000,000), subject to adjustment as set forth in Section 2.3 below (the
"Purchase Price"). Such Purchase Price shall be payable as follows and as set
forth in Section 2.3.
(a) At Closing, Buyer shall deliver a sum equal to Thirty
Three Million Dollars ($33,000,000) less the amounts to be escrowed
under subsections (b) and (c) of this Section 2.2 below, to NSC in
immediately available funds by wire transfer to the bank account
designated in writing by NSC.
(b) At Closing, Buyer shall deposit with the Escrow Agent
the sum of Three Million Three Hundred Thousand Dollars ($3,300,000)
(the "Indemnification Escrow Deposit") to be held by the Escrow Agent
pursuant to Section 8.6 and the terms of the Escrow Agreement.
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(c) At Closing, Buyer shall deposit with the Escrow
Agent, a sum equal to the Estimated Aged Accounts Amount (the "Aged
Accounts Escrow Deposit") to be held by the Escrow Agent pursuant to
the terms of this Section 2.2(c) and the terms of the Escrow Agreement.
During the Escrow Period, the Buyer shall use its commercially
reasonable efforts in the ordinary course of business and consistent
with Buyer's past practices to collect the Aged Accounts. NSC shall
forward to Buyer on a weekly basis during the Escrow Period all
payments that it receives on the Aged Accounts or any other accounts
receivable of the Business, together with an accounting therefor.
Within twenty-five (25) days after the end of each calendar quarter
during the Escrow Period, Buyer shall deliver to NSC a report setting
forth a summary of the Aged Accounts that were collected by Buyer
during such preceding calendar quarter or portion thereof, and Buyer
and NSC shall jointly direct Escrow Agent to pay such amount, together
with interest earned thereon, to NSC from the Aged Accounts Escrow
Deposit. Buyer shall apply all payments received from customers on and
after the Closing Date to the respective customer's oldest accounts
first, unless a debtor indicates the specific account or invoice it is
paying in which event payment shall be applied to that account or
invoice. Buyer and NSC agree that they will not willfully influence
account specification pursuant to the preceding sentence (although
Buyer may contact an account debtor to inquire or confirm whether a
particular payment is intended for a particular invoice if not
otherwise indicated from the payment). Buyer and NSC shall cooperate
with each other in communicating and making sure that payments on the
accounts receivable of the Business are allocated to the correct
invoice and any payments thereon received by NSC are forwarded to
Buyer. Buyer's management, including CA, shall have authority to
settle, compromise and collect the Aged Accounts in such manner as they
determine during the Escrow Period utilizing commercially reasonable
standards. Within twenty-five (25) days after the end of the Escrow
Period, Buyer shall deliver to NSC a final summary of the Aged Accounts
that were collected or settled by Buyer during the Escrow Period (the
"Aged Accounts Report"). Upon receipt of the Aged Accounts Report, NSC
shall have a period of up to thirty (30) days to review the Aged
Accounts Report. If NSC approves the Aged Accounts Report or does not
notify Buyer in writing during such thirty (30) day period that it
disputes the Aged Accounts Report, the Aged Accounts Report shall
become the Final Aged Accounts Report. If NSC notifies Buyer in writing
within such thirty (30) day period that it disputes the Aged Account
Report, indicating the items it disputes, the disputed items shall be
resolved by the Arbitrator in accordance with the procedures set forth
in Section 2.3.4, and upon resolution, the Aged Accounts Report, as
modified, if at all, by arbitration, shall become the Final Aged
Accounts Report. Any Aged Accounts that remain outstanding as of the
end of the Escrow Period, as shown on the Final Aged Accounts Report,
are referred to herein as the "Uncollected Aged Accounts." Within five
(5) business days of the determination of the Final Aged Accounts
Report, NSC and Buyer shall direct the Escrow Agent to pay out of the
Escrow Deposit (i) an amount equal to the face amount of the
Uncollected Aged Accounts (plus interest accrued thereon) to Buyer, and
(ii) an amount equal to the remaining amount of the Aged Accounts
Escrow Deposit (plus interest accrued thereon) to NSC. Upon such
payments, Buyer shall assign to NSC, without recourse or warranty, the
Uncollected Aged Accounts, if any. Notwithstanding anything to the
contrary in this Agreement, neither NSC or its Members or any of their
respective affiliates shall take any action or file any lawsuits to
collect or enforce any of the Uncollected Aged Accounts, nor shall NSC
sell or transfer any of the Uncollected Aged Accounts, except as
otherwise expressly permitted by Section 12(e) hereof. Buyer shall
promptly remit to NSC any amounts subsequently received by Buyer with
respect to the Uncollected Aged Accounts assigned to NSC hereunder. The
parties agree that in no event will Buyer or NSC be entitled to receive
any portion of the Aged Accounts Receivable Amount under this Agreement
except as specifically set forth in this Section 2.2(c).
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2.3 Adjustment of Purchase Price. The Purchase Price
shall be subject to adjustment for the amount by which the Closing Working
Capital Amount reflected in the Final Closing Statements exceeds (or is less
than) Two Million Two Hundred Thousand Dollars ($2,200,000), such adjustment to
be payable as and determined in the manner described below.
2.3.1 Payment of Preliminary Working Capital
Adjustment at Closing. At Closing, in addition to the payments
set forth in Section 2.2, Buyer shall deliver to NSC a sum
equal to the Preliminary Working Capital Adjustment in
immediately available funds by wire transfer to the bank
account designated in writing by NSC.
2.3.2 Initial Closing Statements. As soon as
reasonably practicable after the Closing Date and in any event
no later than sixty (60) days after the Closing Date, NSC will
prepare and present to Buyer the Initial Closing Statements,
which shall consist of the following statements reflecting the
respective values as at 11:59 P.M. on the day preceding the
Closing:
(i) a balance sheet of NSC consisting of the
assets and liabilities of NSC, prepared in accordance with US
GAAP, except that all known adjustments will be made without
regard to materiality (the "Initial Closing Balance Sheet");
(ii) a schedule adjusting the Initial Closing
Balance Sheet for any Excluded Assets or Retained Liabilities
recorded therein which Buyer is not purchasing or assuming
according to the terms of this Agreement (the "Purchased
Balance Sheet");
(iii) a report of accounts receivable included in
the Purchased Balance Sheet that shows, by invoice by
customer, the amount of receivables recorded and aged in
categories of 30 day increments from invoice date (the
"Closing Aged Receivables Report"), and setting forth therein
a listing of the Aged Accounts and a summary of the Aged
Accounts Amount; and
(iv) a calculation of the amount of closing
working capital (the "Closing Working Capital Amount"), which
shall be the current assets less current liabilities as
defined in accordance with US GAAP contained in the Purchased
Balance Sheet less Two Million Two Hundred Thousand Dollars
($2,200,000).
2.3.3 Final Closing Statements. Upon receipt of
the Initial Closing Statements, Buyer and its independent
accountants ("Buyer's Accountants") shall be permitted during
the succeeding sixty (60) day period to examine the books and
records of NSC and the work papers prepared by NSC or NSC's
accountants. If Buyer agrees to the Initial Closing
Statements, they shall become the Final Closing Statements. If
Buyer does not agree to the Initial Closing Statements it
shall within sixty (60) calendar days after delivery of the
Initial Closing Statements by NSC, prepare and deliver to NSC
a list of disputed adjustments (the "Disputed Adjustments")
Buyer believes should have been recorded on the Initial
Closing Statements. Buyer and NSC shall use their commercially
reasonable best efforts to resolve the Disputed Adjustments.
If Buyer and NSC are able to reach an agreement on the
Disputed Adjustments, the Initial Closing Statements shall be
amended to reflect such agreement and shall become the Final
Closing Statements.
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If Buyer and NSC are unable to reach an agreement on
the Disputed Adjustments within thirty (30) calendar days
after receipt by NSC of the Disputed Adjustments, then the
matter will be resolved by the Arbitrator in accordance with
the provisions of Section 2.3.4 below.
The Final Closing Statements shall be deemed to be
and shall be conclusive and binding on the parties to this
Agreement for purposes of determining any adjustment of the
Purchase Price pursuant to this Section 2.3.
2.3.4 Disputes. For purposes of this dispute
resolution provision, NSC and the Members hereby appoint CA as
the "NSC Representative" and authorize him to act on its and
their behalf. NSC shall have thirty (30) days after receipt of
the Disputed Adjustments to dispute any calculations or
amounts reflected therein. If the NSC Representative does not
give Buyer written notice of such a dispute, specifying the
grounds therefor, within such thirty (30) day period, the
Disputed Adjustments shall be deemed to have been accepted by
NSC and the Members in the form in which it was delivered by
Buyer. In the event that the NSC Representative gives such
written notice to Buyer within such thirty (30) day period,
the NSC Representative and Buyer shall, within twenty (20)
days after the giving thereof, attempt to resolve the dispute
and agree in writing upon the final content of the Disputed
Adjustments. In the event that the NSC Representative and
Buyer are unable to resolve any such dispute within such
twenty (20) day period, then a nationally recognized
accounting firm mutually acceptable to the NSC Representative
and Buyer shall be employed as arbitrator (the "Arbitrator")
hereunder to settle such dispute as soon as practicable. The
Arbitrator shall have access to all documents and facilities
necessary to perform its function as arbitrator. The
Arbitrator's determination with respect to any such dispute
shall be final and binding upon the parties hereto. NSC and
Buyer shall each pay one half (1/2) of the fees and expenses
of the Arbitrator for such services.
2.3.5 Payment of Adjustment to Closing Working
Capital Amount. Within ten (10) calendar days after the Final
Closing Statements are determined and become final, either (i)
if the Preliminary Working Capital Adjustment is greater than
the Closing Working Capital Amount reflected in the Final
Closing Statements, NSC shall be responsible to pay Buyer in
immediately available funds the amount of such difference, or
(ii) if the Preliminary Working Capital Adjustment is less
than the Closing Working Capital Amount reflected in the Final
Closing Statements, Buyer shall pay to NSC in immediately
available funds the amount of such difference. If monies are
owing from NSC to Buyer under this subsection 2.3.5, then such
amounts, together with interest earned thereon, shall be paid
to Buyer from the Indemnification Escrow Deposit in accordance
with the terms of the Escrow Agreement; provided, however, in
the event and to the extent that such amounts are not paid to
Buyer from the Indemnification Escrow Deposit for any reason
within ten (10) days of when due and owing, NSC shall pay such
amounts to Buyer upon written demand therefor.
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3. Closing.
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3.1 Time. The consummation of the transactions
contemplated by this Agreement (the "Closing") shall take place at 10:00 A.M.
Chicago time on the date hereof (the "Closing Date"). On the Closing Date, NSC
shall sell, transfer, assign, convey and deliver to Buyer the Purchased Assets,
Buyer shall pay the Purchase Price as described in Section 2 and the parties
shall deliver the agreements, certificates and other documents required to be
delivered pursuant to the terms of this Agreement. Upon the occurrence of the
Closing, the Purchased Assets and the Assumed Liabilities shall be deemed to
have been transferred effective as of 12:01 A.M. on the Closing Date.
3.2 Further Assurances. If at any time after the Closing
Date, Buyer shall consider or be advised that any further deeds, assignments or
other instruments, documents or assurances or any other acts are reasonably
necessary, desirable or proper to (a) vest, perfect or confirm, of record or
otherwise, in Buyer, the title to the Purchased Assets, or (b) otherwise carry
out the purposes of this Agreement, NSC and the Members agree to execute and
deliver all such deeds, assignments, instruments, documents, make such
assurances and do all acts reasonably necessary, desirable or proper to vest,
perfect and confirm title to such Purchased Assets in Buyer, and otherwise to
carry out the purposes of this Agreement. Without limiting the foregoing, the
parties agree that NSC's bank accounts shall be transferred to Buyer at Closing,
and that the parties shall take such actions with the applicable depository
banks as are necessary or desirable to effectuate or evidence such transfer at
or reasonably promptly after the Closing.
4. Representations and Warranties of NSC. NSC represents and
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warrants to Buyer as follows:
4.1 Status; Authority, Binding Agreement. NSC has all
requisite power and authority, corporate or otherwise, to enter into this
Agreement and to carry out its obligations hereunder. This Agreement has been
duly executed and delivered by NSC and this Agreement constitutes, and all other
agreements, documents and instruments to be executed and delivered by NSC
pursuant hereto will constitute, the legal, valid and binding obligations of
NSC, enforceable against NSC in accordance with their terms (subject, as to the
enforcement of remedies, to general principles of equity and to bankruptcy,
insolvency and similar laws affecting creditors' rights generally).
4.2 [Intentionally Omitted].
4.3 Capitalization. Schedule 4.3 to this Agreement sets
forth the name and address of the Members and their interest in NSC. There are
no outstanding options, warrants or other rights or agreements to purchase or
subscribe to become a member or own any interest in NSC. All of the currently
issued and outstanding membership interests of NSC have been duly authorized and
are validly issued, fully paid and nonassessable and have not been issued in
violation of any applicable law, NSC's Articles of Organization and Operating
Agreement or the terms of any other agreement to which the Members or NSC are
bound. The interests represent one hundred percent (100%) of the fully diluted
membership interest of NSC.
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4.4 Organization, Power and Qualification. NSC is a
limited liability company duly organized, validly existing and in good standing
under the laws of the State of Louisiana, and has all requisite corporate power
and authority to own or hold under lease its properties and assets and to carry
on its business as now conducted. NSC is duly qualified to do business and is in
good standing as a foreign limited liability company in the jurisdictions listed
on Schedule 4.4. NSC is duly qualified to do business and is in good standing as
a foreign corporation in all of the jurisdictions in which the failure to be so
qualified would have a material adverse affect on the ability of NSC to carry
out its business as now being conducted.
4.5 No Violation. Except as set forth on Schedule 4.5
hereto, neither the execution and delivery of this Agreement, nor the
consummation of the transactions contemplated hereby will constitute a violation
of, or be in conflict with, or result in a cancellation of, or constitute a
default under, or create (or cause the acceleration of the maturity of) any
debt, obligation or liability affecting, or result in the creation or imposition
of any security interest, lien, or other encumbrance upon any of NSC's assets
under: (a) any term or provision of the certificate of organization or operating
agreement (or other organic document) of NSC; (b) any judgment, decree, order,
regulation or rule of any court or governmental authority; (c) any statute, law
or regulation; (d) any contract, agreement, indenture, lease or other commitment
to which either NSC or any of the Members are a party or by which they or the
Purchased Assets are bound; or (e) cause any change in the rights or obligations
of any party under any such contract, agreement, indenture, lease or commitment.
4.6 Consents. Except as set forth on Schedule 4.6 hereto,
no consent of, or notice to, any federal, state or local authority, or any
private person or entity, is required to be obtained or given by NSC or the
Members in connection with the execution, delivery or performance of this
Agreement or any other agreement or document to be executed, delivered or
performed hereunder by NSC or the Members or to enable Buyer to continue to
conduct the Business after the Closing in the manner in which it is currently
conducted.
4.7 Investments. NSC does not own, directly or
indirectly, any stocks, bonds or securities or any equity or other proprietary
interest in any corporation, partnership, joint venture, business enterprise or
other entity of any nature whatsoever.
4.8 Financial Statements. Schedule 4.8 hereto contains
true and correct copies of the following financial statements (the "Financial
Statements"): (a) the balance sheets of NSC as of August 31, 2006 and December
31, 2005; and (b) the income statements of NSC for the eight (8) month period
ended August 31, 2006 and for the twelve (12) month period ended December 31,
2005. As disclosed in Schedule 4.8, each of the balance sheets included in the
Financial Statements fairly present the assets, liabilities and financial
condition of NSC as at the dates thereof in all material respects, and such
statements of operations included in the Financial Statements fairly present the
results of operations for the periods therein referred to, all in accordance
with the accounting policies used by NSC, consistently applied. Generally, NSC
recognized revenue upon the completion of its services and recognized expenses
as they were incurred. NSC has not used estimates to determine assets,
liabilities, contingencies, revenues and expenses. Property and equipment are
carried at cost and NSC depreciates property and equipment using tax
depreciation methods and depreciable lives of 5 to 7 years. Maintenance and
repairs are charged to expense as incurred and expenditures for major
improvements are capitalized.
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4.9 Undisclosed Liabilities. Except as set forth on
Schedule 4.9, NSC does not have any indebtedness, liabilities or obligations
(direct or indirect, contingent or absolute, matured or immatured) of any nature
whatsoever, whether arising out of contract, tort, statute or otherwise which
are not reflected, reserved against or given effect to in the Financial
Statements, except liabilities and obligations incurred in the ordinary course
of business since the date of the Financial Statements which are the same nature
as those set forth on the Financial Statements, and there is no basis for
assertion against NSC of any liabilities or obligations not adequately
reflected, reserved against or given effect to in the Financial Statements. The
parties agree that to the extent that another representation or warranty given
by NSC in this Section 4 relates more specifically to a particular type of
liability or obligation, that such other representation or warranty shall
supersede the more general representation and warranty of this Section 4.9 with
respect thereto.
4.10 Absence of Certain Changes. Except as disclosed in
Schedule 4.10, since December 31, 2005, there has not been: (a) any adverse
change in the condition (financial or otherwise) of the properties, assets,
liabilities, results of operation or prospects of NSC's business; (b) any
damage, destruction or loss (whether or not covered by insurance) affecting the
properties, assets, liabilities, financial condition, results of operations or
prospects of the Business; (c) any direct or indirect redemption, retirement,
purchase or other acquisition of any interest of NSC; (d) any increase in the
compensation, commissions or perquisites payable or to become payable by NSC to
any director, officer, employee, or agent thereof, or any payment of any bonus,
profit sharing or other extraordinary compensation to any NSC employee (other
than any such increase or payment paid or to become payable in the ordinary
course of business consistent with past practices); (e) any change in any of the
accounting methods or practices followed by NSC or any change in depreciation or
amortization policies or rates theretofore adopted; (f) any cancellation of any
debts owed to or claims held by or on behalf of NSC; (g) any actual or
threatened termination of any business relationships or material agreements
between NSC and any of its customers and suppliers; (h) any incurrence of any
obligation or liability (absolute or contingent) for indebtedness; (i) any
acceleration or other prepayment of indebtedness, or (j) any sale, lease,
abandonment or other disposition of any real property, or, other than in the
ordinary course of business, of any machinery, equipment or other properties, or
any intangible assets utilized in the Business.
4.11 Taxes. NSC has filed on a timely basis all Tax
returns that are or were required to be filed by it under applicable Law. All
such Tax returns were correct and complete in all respects and have been
prepared in accordance with applicable legal requirements. NSC has paid all
Taxes that have or may have become due for all periods covered by the Tax
returns or otherwise, or pursuant to any assessment received by NSC. NSC has
withheld and paid all Taxes required under applicable Law to have been withheld
and paid in connection with any amounts paid, owing, or applicable to any
employee, independent contractor, creditor, member or other person, and all
Internal Revenue Service Forms W-2 and 1099 required with respect thereto have
been properly and timely filed. NSC has not received any written notice from a
taxing authority of a jurisdiction where NSC does not file Tax returns claiming
that it is or may be subject to taxation by that jurisdiction. There are no
liens for Taxes on any of the Purchased Assets that arose in connection with any
failure (or alleged failure) to pay any Tax, and, there is no basis for
assertion of any claims attributable to Taxes which, if adversely determined,
would result in any such liens. There is no pending, or to NSC's and the
Members' knowledge, threatened or anticipated assessment of any additional Tax
against NSC for any taxable period for which Tax returns have been filed which
may cause the Purchased Assets to be subject to an encumbrance.
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4.12 Title to and Condition of Assets. NSC is the owner
of and has good title to all of the Purchased Assets, including those assets and
properties reflected in the Financial Statements (other than those properties
and assets disposed of since August 31, 2006, in the ordinary course of
business), and to all properties and assets acquired by NSC after such date,
free and clear of all mortgages, liens, pledges, charges, security interests,
encumbrances or other third party interests of any nature whatsoever. To the
Knowledge of NSC, the Purchased Assets are in reasonable operating condition and
repair, ordinary wear and tear excepted.
The Purchased Assets constitute all of the rights, properties
and assets, tangible and intangible, real, personal and mixed, in electronic
form or otherwise, utilized by NSC in the conduct of its Business. None of the
Purchased Assets are owned or controlled by any of the Members or their
Affiliates.
4.13 Real Estate and Leases. NSC does not own any real
property. There is disclosed in Schedule 4.13 a description of all real estate
(including buildings and improvements) leased by NSC or any of the Members and
used in the Business according to the character of the property and the location
thereof. There is disclosed in Schedule 4.13 a brief description (including in
each case the annual rental payable, the expiration date, a brief description of
the property covered and the name of the lessor) of every lease or agreement
(written or oral) under which NSC is lessee of, or holds or operates, any real
property. Each of such leases and agreements is in full force and effect and
constitutes a legal, valid and binding obligation of NSC and, to the Knowledge
of NSC, the other respective parties thereto. Neither NSC, nor to the Knowledge
of NSC, any other party thereto is in default in any respect under any such
lease or agreement nor has any event occurred which with the passage of time or
giving of notice or both would constitute such a default. To the Knowledge of
NSC, the real property and the buildings thereon utilized by NSC in the conduct
of the Business do not violate any building, zoning or other laws or ordinances,
or any agreements, applicable thereto, and no notice of any such violation or
claimed violation has been received by NSC or any of the Members.
Except as set forth on Schedule 4.13, NSC's right, title and
interest in and to each of the real property leases shall continue after the
completion of the transactions contemplated by this Agreement, without the
consent, waiver or approval of any party and such transactions will not give any
party thereto the right to terminate the lease.
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4.14 Contracts. Except as set forth in Schedule 4.14, NSC
is not a party to, or bound by, any oral or written contracts, agreements,
commitments or understandings ("Contracts"): (a) for the employment of any
officer or employee; (b) for the purchase or sale of membership interests of
NSC; (c) for any indebtedness; (d) for leasing personal property (including,
without limitation, leases for machinery and office equipment, furniture,
fixtures, vehicles, tools and dies); (e) involving the payment of money or other
property in connection with machinery and equipment or inventory in excess of
Five Thousand Dollars ($5,000) per contract or in connection with any other
contract in excess of Five Thousand Dollars ($5,000) per contract by NSC or the
term of which at any time exceeded one year (including, without limitation,
vendor supply contracts or customer "blanket" purchase orders); (f) providing
for the services of dealers, distributors, sales representatives or similar
representatives; (g) relating to the ownership, use or licensing of any patents,
trademarks, trade names, brand names, copyrights, inventions, processes,
know-how, formulae, trade secrets or other proprietary rights; (h) relating to
oral or written and currently effective warranties or representations expressly
or impliedly made by NSC, in respect of any products manufactured or sold or
services provided by NSC, and any other liability or obligation of NSC to
service, repair, maintain, take back or otherwise do or not do anything in
respect to any products, inventory or services that has been delivered by NSC
outside the normal course of business or inconsistent with past practices; (i)
any covenants by or binding NSC not to compete or to abide by any
confidentiality agreement; (j) any other contract that is material to the
Business; or (k) for any transaction between NSC and the Members or their
Affiliates.
All of the Contracts constitute legal, valid and binding
obligations of NSC and, to the Knowledge of NSC, the other respective parties
thereto, are in full force and effect, and neither NSC nor, to the Knowledge of
NSC, any other party thereto has violated any provision of, or committed or
failed to perform any act which with notice, lapse of time or both would
constitute a default under the provisions of any Contract. Correct and complete
copies or descriptions of all Contracts disclosed on Schedule 4.14 have been
made available to Buyer.
4.15 Receivables. All of the accounts receivable shown on
the Financial Statements, and any such receivables which arose since the
respective dates thereof ("Receivables"), arose from transactions made in the
ordinary course of business, represent legal and valid obligations to NSC and,
are not subject to any set-off or counterclaim, except for adjustments
reflecting returns and allowances in the ordinary course of business. All of the
Receivables are enforceable and are current and collectible in the ordinary
course of business, net of reserves for doubtful accounts, and in accordance
with their terms. Except as set forth on Schedule 4.15, no customer has notified
NSC that such customer disputes or has a claim against any of the Receivables.
4.16 Inventory. Except as reserved in the Financial
Statements, all inventory of the rental and sale products included in the
Purchased Assets are in usable condition. All rental products are labeled to
identify NSC as the owner of the units. Except as reserved in the Financial
Statements, none of NSC's inventory is obsolete, has been consigned to others or
is on consignment from or is owned by others.
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4.17 No Default, Violation or Litigation. NSC is not in
violation of any law, regulation or order of any court or federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality (including, without limitation, laws, regulations, orders,
restrictions and compliance schedules applicable to environmental standards and
controls, wages and hours, civil rights and occupational health and safety) and
NSC has not received any notice of claimed noncompliance. Except as disclosed in
Schedule 4.17, (i) there are no lawsuits, proceedings, claims or governmental
investigations pending or, to the Knowledge of NSC, threatened against or
involving NSC or against or involving any of NSC's assets, or against or
involving any officers or directors of NSC; and (ii) there are no judgments,
consents, decrees, injunctions, or any other judicial or administrative mandates
outstanding against NSC or the Members.
4.18 Insurance. Schedule 4.18 contains a list of all
insurance policies (specifying (a) the insurer, (b) the amount of the coverage,
(c) the type of insurance, (d) the policy number and (e) any currently pending
claims thereunder or any claims asserted thereunder or under similar policies
maintained by or on behalf of NSC, its properties, assets, business or
personnel. All such policies are (and pending Closing will continue to be) in
full force and effect, and NSC is not in default with respect to any provision
contained in any insurance policies. NSC has not failed to give any notice or
present any claim thereunder in due and timely fashion, which could adversely
affect the coverage under such policy or be grounds for termination of such
policy.
To the Knowledge of NSC, all such insurance is in amounts and
against such risks as are usual and customary and reasonably adequate to protect
NSC's Business and assets. At no time has NSC been denied any insurance or
indemnity bond coverage which it has requested, or received any written notice
from or on behalf of any insurance carrier presently providing insurance
relating to it (i) that insurance rates may or will be substantially increased,
(ii) that there will be no renewal of policies presently in effect, or (iii)
that material alterations to any of the properties or business operations of NSC
are necessary or required by such carrier.
4.19 Employment, Labor and Other Relations. Schedule 4.19
sets forth the name, job classification, total annual compensation (base salary,
bonus and other benefits) and whether any employee is on leave (and if so, what
type of leave the employee is on) of each of NSC's officers, employees, sales
representatives and consultants as of the Closing Date.
Except as disclosed in Schedule 4.19, NSC is not a party to or
is otherwise bound by any contract, agreement or collective bargaining agreement
with any labor union or organization or other commitment respecting employment
or compensation of any of its officers, directors, agents, consultants or
employees, and no employees of NSC are represented by any labor union or similar
organization. To the Knowledge of NSC, there is no existing or threatened labor
disturbance by NSC's employees or of any of NSC's principal suppliers,
contractors or customers.
Except as set forth in Schedule 4.19, there are no charges or
complaints involving any federal, state or local civil rights enforcement agency
or court; complaints or citations under the Occupational Safety and Health Act
or any state or local occupational safety act or regulation; unfair labor
practice charges or complaints with the National Labor Relations Board; or other
claims, charges, actions or controversies pending, or, to the best Knowledge of
NSC, threatened or proposed, involving NSC and any employee, former employee or
any labor union or other organization representing or claiming to represent such
employees' interests.
15
NSC is and has heretofore been in compliance with all laws,
rules and regulations respecting employment and employment practices, terms and
conditions of employment and wages and hours, the sponsorship, maintenance,
administration and operation of (or the participation of its employees in)
employee benefit plans and arrangements and occupational safety and health
programs, and NSC is not engaged in any violation of any law, rule or regulation
related to employment, including unfair labor practices or acts of employment
discrimination.
NSC has not had a plant closing or mass lay-off (as those
terms are defined in the Worker Adjustment and Retraining Notification Act of
1988) affecting in whole or in part any facility, operating unit or employee of
NSC.
4.20 Employee Benefits.
(a) Benefit Plans. Schedule 4.20 discloses all written
and unwritten Benefit Plans, whether or not funded and whether or not
terminated, (i) maintained or sponsored by NSC, (ii) with respect to
which NSC has or may have liability or is obligated to contribute,
(iii) that otherwise cover any of the current or former employees of
NSC or their beneficiaries, or (iv) as to which any current or former
employees of NSC or their beneficiaries participated or were entitled
to participate or accrue or have accrued any rights, other than a
Multiemployer Plan (each, a "NSC Benefit Plan").
(b) NSC Group Matters; Funding. Neither NSC, nor any
corporation or other trade or business that may be aggregated with NSC
under Sections 414(b), (c), (m) or (o) of the Internal Revenue Code
(the "NSC Group"), has any obligation to contribute to, or any direct
or indirect Liability with respect to, any Benefit Plan of the type
described in Sections 4063 and 4064 of ERISA or Section 414(c) of the
Internal Revenue Code (the "IRC"). NSC does not have, and, after the
Closing, Buyer will not have, any liability with respect to any Benefit
Plan of any other member of the NSC Group that is not a NSC Benefit
Plan, whether as a result of delinquent contributions, distress
terminations, fraudulent transfers, failure to pay premiums to the
Pension Benefit Guaranty Corporation (the "PBGC"), withdrawal liability
or otherwise.
(c) Compliance. All NSC Benefit Plans and all related
trusts, insurance contracts and funds have been created, maintained,
funded and administered in compliance with all applicable Law and in
compliance with the underlying or applicable plan document, trust
agreement, insurance policy or other writing. No NSC Benefit Plan is,
to the Knowledge of NSC, under audit or investigation. No completed
audit of any NSC Benefit Plan has resulted in the imposition of any
Tax, fine or penalty. There are no actions or proceedings (other than
routine claims for benefits) pending, or to the Knowledge of NSC,
threatened or anticipated with respect to NSC Benefit Plans.
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(d) Qualified Plans. Schedule 4.20 separately discloses
each NSC Benefit Plan that purports or is intended to be a qualified
plan under Section 401(a) of the IRC and exempt from United States
federal income Tax under Section 501(a) of the IRC (a "Qualified
Plan"). A determination letter (or opinion or notification letter, if
applicable) has been received from the IRS that each Qualified Plan is
qualified under Section 401(a) of the IRC and the trust funding such
Qualified Plan is exempt from federal income Tax under Section 501(a)
of the IRC. No Qualified Plan has been amended since the date of the
most recent IRS letter. No member of the NSC Group, fiduciary of any
Qualified Plan, or agent of any of the foregoing, has done or failed to
do anything that would adversely affect the qualified status of a
Qualified Plan or the qualified status of any related trust.
(e) Defined Benefit Plans. Schedule 4.20 separately
discloses each NSC Benefit Plan that is a defined benefit plan as
defined in Section 3(35) of ERISA (a "Defined Benefit Plan"). The
present value of vested and nonvested accrued benefits under each
Defined Benefit Plan does not exceed the present fair market value of
the assets of such plan, based on the actuarial assumptions and
methodology used for funding purposes (i) as set forth in such plan's
most recent actuarial report; (ii) as required by the PBGC on a
termination basis; and (iii) as set forth in FASB 87. No reportable
event under Section 4043 of ERISA has occurred with respect to any
Defined Benefit Plan. No event has occurred and no condition has
existed that could constitute grounds under Section 4042 of ERISA for
termination of or appointment of a trustee to administer any Defined
Benefit Plan. No accumulated funding deficiency (as defined in Section
402 of ERISA or Section 412 of the IRC) exists nor has any funding
waiver from the IRS been received or requested with respect to any
Defined Benefit Plan. No excise or other Tax is due or owing because of
any failure to comply with the minimum funding standards of the IRC or
ERISA with respect to any Defined Benefit Plan.
(f) Multiemployer Plans. No NSC Benefit Plan is a
multiemployer plan within the meaning of Section 3(37) or Section
4001(a)(4) of ERISA (a "Multiemployer Plan"). No member of the NSC
Group has withdrawn from any Multiemployer Plan or incurred any
withdrawal liability to or under any Multiemployer Plan. No NSC Benefit
Plan covers any employees of any member of the NSC Group in any foreign
country or territory.
(g) Prohibited Transactions; Fiduciary Duties;
Post-Retirement Benefits. No prohibited transaction (within the meaning
of Section 406 of ERISA and Section 4975 of the IRC) with respect to
any NSC Benefit Plan exists or has occurred that could subject NSC to
any liability or Tax under Part 5 of Title I of ERISA or Section 4975
of the IRC. No member of the NSC Group, nor any administrator or
fiduciary of any NSC Benefit Plan, nor any agent of any of the
foregoing, has engaged in any transaction or acted or failed to act in
a manner that will subject NSC to any liability for a breach of
fiduciary or other duty under ERISA or any other applicable Law. With
the exception of the requirements of Section 4980B of the IRC, no
post-retirement benefits are provided under any NSC Benefit Plan that
is a welfare benefit plan as described in Section 3(1) of ERISA.
17
(h) Other Matters. NSC has no liability arising out of or
attaching as a result of NSC being a member of a controlled group or
affiliated group or combined group of corporations of which NSC, its
Affiliates or any other person are or were a part on or prior to the
Closing Date, including those liabilities imposed by Chapter 6 of
Subtitle A of the IRC (Consolidated Returns), ERISA Section 4201(a)
(Multiemployer Withdrawal Liability), ERISA Section 4062(a) (Single
Employer Termination Liability), IRC Section 412(c)(11) and ERISA
Section 302(c)(11) (Funding Liability), ERISA Section 4971(e) (Funding
Excise Taxes) and ERISA Section 4007(e) (PBGC Premiums).
4.21 Intellectual Property. Schedule 4.21 discloses all
registered trademarks and service marks and pending applications therefor,
registered copyrights and pending applications therefor, and patents and pending
applications therefor owned by NSC. Schedule 4.14 discloses all written
Contracts pursuant to which NSC is granted the license to use and transfer any
patents, trademarks, service marks, and software and other copyrighted materials
used by NSC in the conduct of the Business. Schedule 4.21 also discloses all
domain names owned by NSC. NSC has the entire right, title and interest in and
to, or has the right to use and transfer in accordance with the licenses
identified on Schedule 4.14 or not required to be identified therein, the
intellectual property rights disclosed in Schedule 4.21 (all of the foregoing,
collectively, "Intellectual Property"). To the best of NSC's Knowledge, no
person has infringed upon, or is infringing upon, nor has any person
misappropriated, any Intellectual Property.
All of the registered trademarks, registered copyrights and
patents identified on Schedule 4.21 as owned by NSC and not abandoned have had
all filing and maintenance fees due to date paid all post-registration filings
of affidavits of use and renewal applications made in a timely manner or within
the applicable grace periods. NSC has taken necessary precautions to protect the
secrecy, confidentiality, and value of any and all trade secrets of the
Business. Except as disclosed in Schedule 4.21, NSC does not own and is not
licensed to use any patents, trademarks, trade names, service marks, copyrights,
mask works or other such intellectual property rights. Neither NSC nor, to the
Knowledge of NSC, any of its officers or employees has any patents issued or
patent applications pending for any device, process, method, design or invention
of any kind now used or needed by NSC in the furtherance of the Business
operations as currently being conducted or as currently proposed to be conducted
by NSC, which patents or applications have not been assigned to NSC with such
assignment duly recorded in the United States Patent Office or with the
applicable foreign Government Entity. The operation of the Business, as
presently being conducted, does not infringe on any intellectual property rights
of any third party.
4.22 Approvals. NSC possesses or has applied for all
governmental and other permits, licenses, consents, certificates, orders,
authorizations and approvals (the "Approvals") required to be obtained by NSC,
to own or hold under lease and operate its properties and assets and to carry on
the Business as now conducted. NSC has not received any notice of proceedings
relating to the revocation or modification of any such Approvals. The Approvals
are identified in Schedule 4.22. NSC is operating in compliance with the
provisions, terms and conditions of the Approvals.
4.23 Compliance with Laws. The Business has been and
continues to be conducted in accordance in all material respects with all Laws
and Governmental Orders applicable to the Business, and NSC is not in violation
in any material respect of any such Law or Governmental Order.
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4.24 Environmental Matters.
(a) Governmental Authorizations. Schedule 4.24(a)
identifies all Government Approvals that are required by, or issued
under, any applicable Environmental Law for the use or operation of the
Real Property and Purchased Assets and the operation of the Business.
(b) Compliance. Except as set forth on Schedule 4.24(b),
NSC is in compliance in all material respects with all Environmental
Laws relating to or otherwise affecting the Business and the ownership
or operation of the Real Property and Purchased Assets. NSC has been in
consistent compliance in all material respects with all Environmental
Laws relating to or otherwise affecting the Business and the ownership
or operation of the Real Property and Purchased Assets. The Real
Property and Purchased Assets are either (i) capable of consistent and
continuous compliance with any existing Environmental Law and any new
Environmental Law that is scheduled to become effective with respect to
the Business, the Real Property or Purchased Assets on a date
ascertainable at Closing, or (ii) undergoing modification to enable
them to so comply, and the full capital cost of any such modifications
is reflected in the capital budget for the Business. To the best
Knowledge of NSC, there are no pending or proposed new Environmental
Laws that might adversely affect the Business, Real Property or
Purchased Assets either before or after Closing.
(c) Environmental Liability. Except as set forth on
Schedule 4.24(b), NSC is not subject to any liability relating to any
Environmental Claim, and Buyer will not after the Closing suffer or
incur any liability relating to any Environmental Claim, based on any
facts, circumstances or conditions existing on or prior to the Closing
Date. Without limiting the foregoing, except as set forth on Schedule
4.24(b), NSC is not subject to any liability, and Buyer will not after
Closing suffer or incur any liability, based on any facts,
circumstances or conditions existing prior to the Closing Date, as a
result of the action or inaction of any person, including: (i) the
violation or noncompliance with any Environmental Law by NSC, any
predecessor or any other person for whose conduct NSC is or may be held
responsible; (ii) the ownership or operation of, or any condition at,
the Real Property or Purchased Assets, (iii) the Release, threatened
Release or presence of any Contaminant at, on or under any Real
Property; (iv) any hazardous activity conducted by NSC, any predecessor
or by any other person for whose conduct NSC is or may be held
responsible; (v) any Release by NSC, any predecessor or any other
person acting as agent for or on behalf of NSC or any predecessor on
any other property; (vi) any environmental remedial action required to
be taken by NSC or any predecessor; (vii) the treatment, storage,
transportation or disposal of any Contaminant at any facility or the
arrangement for treatment, storage, transportation or disposal of any
Contaminant at any facility from which there is a Release or threatened
Release of Contaminant; and (viii) any of the foregoing occurring after
the Closing Date that are based on any facts, circumstances or
conditions existing on or prior to the Closing Date, including
liabilities created or aggravated due to the migration after the
Closing Date of Contaminant that was Released into the environment on
or prior to the Closing Date.
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(d) Treatment, Disposal & Releases. Except as set forth
on Schedule 4.24(b), (i) NSC has not treated, stored, recycled or
disposed of any Contaminant on any Real Property or any part of the
facilities in violation of any Environmental Law or in a manner that
could result in any liability, (ii) there is and has been no Release or
threat of Release of any Contaminant at, on or under or related to any
Real Property or facility in violation of any Environmental Law or that
could give rise to any liability, and (iii) there is no Contaminant
present in the environment at, on or under any Real Property in
violation of any Environmental Law or that could reasonably be expected
to give rise to any liability.
(e) Sites Used for Contaminant; Transactions with Listed
Hazardous Sites. NSC has not arranged for the treatment or disposal of
any Contaminant generated at the facilities or Purchased Assets or
related to the Business, or arranged for the transportation of any such
Contaminant for treatment or disposal, at any listed hazardous site.
(f) Status of Real Property. To the Knowledge of NSC,
none of the Real Property is listed or proposed for listing on (i) the
National Priorities List under the Comprehensive Environmental
Response, Compensation, and Liability Act ("CERCLA"), (ii) the
Comprehensive Environmental Response, Compensation and Liability
Information System ("CERCLIS") or (iii) any list established by a
Governmental Body of sites potentially requiring environmental remedial
action.
(g) Existing Claims; Certain Regulated Materials. NSC has
not received any written request, and to the best of NSC's Knowledge no
unwritten request, for information, notice of claim, demand or other
notification or communication that NSC is or may be potentially
responsible with respect to any environmental liability, environmental
remedial action or any threatened or actual Release of any Contaminant.
There has been no past, and there is no pending, or to the best
Knowledge of NSC contemplated, claim by or against NSC under any
Environmental Law. NSC has not entered into any agreement with any
person regarding any Environmental Law, environmental remedial action
or other environmental liability or expense.
(h) Storage Tanks. Except as disclosed in
Schedule 4.24(h), to the best Knowledge of NSC, there are no storage
tanks located on the Real Property, whether underground or aboveground.
(i) PCBs and Asbestos Containing Materials. To the
Knowledge of NSC, there is no PCB equipment at the Real Property. To
the Knowledge of NSC, there is no regulated asbestos containing
material at the Real Property.
(j) Sublease Matter. Neither NSC nor any third party
has stored any radioactive material of any kind on the Lake Xxxxxxx
property leased by NSC during the time that NSC has leased such
property.
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4.25 Product Liability; Warranty Liability. NSC has no
outstanding products liability claims asserted in writing relating to any
product rented, distributed or sold by NSC. Schedule 4.25 identifies a claims
history for products liability claims asserted against NSC during the past five
years. Schedule 4.25 discloses the terms of all of NSC's outstanding product and
service warranties for products rented, sold or serviced prior to the Closing
Date. Schedule 4.25 discloses all currently outstanding product or service
warranty claims with respect to which NSC has received written notice from the
customer that such claim has not been resolved to the customer's complete
satisfaction. During the past five years, NSC has not satisfied any products
warranty or service claims by its customers in a manner materially in excess of
the stated express warranties.
4.26 Transactions With Affiliates. Except as set forth in
Schedule 4.26, there are no contracts or arrangements (formal or informal,
written or oral), directly or indirectly, between NSC, on the one hand, the
Members and any family members or Affiliates of the Members or any persons
controlling, under common control with or controlled by NSC, on the other hand.
4.27 Principal Customers and Suppliers. Schedule 4.27 sets
forth a separate list of the ten (10) largest customers and suppliers of NSC
(excluding therefrom consulting services provided to NSC by Xxxxx Abide and
Xxxxxxx Xxxxxxx) in terms of purchases and sales during the fiscal year ended
December 31, 2005 and for the eight (8) month period ended August 31, 2006,
showing in each case the approximate total purchases and sales by or from each
such customer or supplier during such period. To the Knowledge of NSC, there has
not been any adverse change in the business relationship of NSC with any such
named customer or supplier, or any Material Adverse Change in the business
relationship of NSC with any other material customer or supplier.
4.28 Certain Payments. Neither NSC, the Members nor any
director, officer, agent, or employee of NSC, or any other person associated
with or acting for or on behalf of NSC, has directly or indirectly (a) made any
contribution, gift, bribe, rebate, payoff, influence payment, kickback, or other
payment to any person, private or public, regardless of form, whether in money,
property, or services that would be in violation of any Law or Government Order
(i) to obtain favorable treatment in securing business, (ii) to pay for
favorable treatment for business secured, or (iii) to obtain special
concessions, or for special concessions already obtained, for or in respect of
NSC or any Affiliate of NSC, or (b) established or maintained any fund or asset
that has not been recorded in the books and records of NSC. To the best of its
Knowledge, NSC has at all times been in compliance with all Laws relating to
export control and trade embargoes.
4.29 Distributions. Except as set forth on Schedule 4.29,
no distributions, whether cash or any other kind, have been made by NSC to the
Members from August 31, 2006 through and including the Closing Date.
4.30 Disclosure. Except as expressly set forth in this
Agreement and the Schedules, NSC has no knowledge of any facts which will or may
reasonably be expected to have any adverse effect on the value of the Purchased
Assets or the Business.
5. Representations and Warranties of the Members. Each Member
---------------------------------------------
hereby severally, and not jointly, represents and warrants to Buyer only with
respect to himself, herself or itself, and not with respect to any other Member
that the statements contained in this Article V are true and correct.
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5.1 Status; Authority, Binding Agreement. The Member has
all requisite power and authority, corporate or otherwise, to enter into this
Agreement and to carry out his, her or its obligations hereunder. This Agreement
has been duly executed and delivered by the Member and this Agreement
constitutes, and all other agreements, documents and instruments to be executed
and delivered by the Member pursuant hereto will constitute, the legal, valid
and binding obligations of the Member, enforceable against the Member in
accordance with their terms (subject, as to the enforcement of remedies, to
general principles of equity and to bankruptcy, insolvency and similar laws
affecting creditors' rights generally).
5.2 Interest Ownership. The Member is the lawful
beneficial and record owner of, and has good and valid title to, the membership
interests in NSC as set forth on Schedule 4.3, free and clear of all mortgages,
liens, pledges, charges, security interests, encumbrances or other third party
interests of any nature whatsoever.
5.3 No Violation. Neither the execution and delivery of
this Agreement by the Member, nor the consummation by the Member of the
transactions contemplated hereby will constitute a violation of, or be in
conflict with (a) any judgment, decree, order, regulation or rule of any court
or governmental authority; (b) any statute, law or regulation; or (c) any
contract, agreement, indenture, lease or other commitment to which the Members
is a party.
5.4 Consents. No consent of, or notice to, any federal,
state or local authority, or any private person or entity, is required to be
obtained or given by the Member in connection with the execution, delivery or
performance of this Agreement or any other agreement or document to be executed,
delivered or performed hereunder by the Member.
6. Representations and Warranties of Buyer. Buyer represents and
---------------------------------------
warrants to NSC and the Members as follows:
6.1 Organization; Good Standing; Ownership. Buyer is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, and has all requisite corporate power and authority to
carry on its business as now conducted.
6.2 Authorization. Buyer has all requisite power and
authority to enter into this Agreement, to consummate the transactions
contemplated hereby and otherwise to carry out its obligations hereunder. The
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Buyer. Buyer has authorized Xxxx XxXxxxxxxx,
Xxxxx Xxxxx or any other officer of Buyer, to execute this Agreement on its
behalf. This Agreement constitutes, and all other agreements and documents to be
executed and delivered by Buyer pursuant hereto will constitute the valid and
binding agreements of Buyer, enforceable against it in accordance with their
terms (subject, as to the enforcement of remedies, to general principles of
equity and to bankruptcy, insolvency and similar laws affecting creditors'
rights generally).
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6.3 No Violation. Neither the execution and delivery of
this Agreement, nor the consummation of the transactions contemplated hereby
will constitute a violation of, or be in conflict with, or result in a
cancellation of, or constitute a default under, or create (or cause the
acceleration of the maturity of) any debt, obligation or liability affecting, or
result in the creation or imposition of any security interest, lien, or other
encumbrance upon any of the Buyer's assets under: (a) any term or provision of
the certificate of incorporation or by-laws (or other organic document) of
Buyer; (b) any judgment, decree, order, regulation or rule of any court or
governmental authority; (c) any statute, law or regulation; (d) any contract,
agreement, indenture, lease or other commitment to which Buyer is a party or by
which it is bound; or (e) cause any material change in the rights or obligations
of any party under any such contract, agreement, indenture, lease or commitment.
6.4 Consents. No consent of, or notice to, any federal,
state or local authority, or any private person or entity, is required to be
obtained or given by Buyer in connection with the execution, delivery or
performance of this Agreement or any other agreement or document to be executed,
delivered or performed hereunder by Buyer or to enable Buyer to continue to
conduct the Business after the Closing in the manner in which it is currently
conducted.
7. Conditions to Closing.
---------------------
7.1 Mutual Conditions. The obligations of each party to
consummate the transactions contemplated by this Agreement shall be subject to
the fulfillment at or prior to Closing of each of the following conditions:
7.1.1 No Suit. No suit, action or other proceeding
or investigation shall to the best knowledge of any party
hereto be threatened or pending before or by any governmental
agency or by any third party questioning the legality of this
Agreement or the consummation of the transactions contemplated
hereby in whole or in part.
7.2 Conditions to Buyer's Obligations. The obligations
of Buyer to consummate the transactions contemplated by this Agreement shall be
subject to the fulfillment at or prior to Closing of each of the following
conditions:
7.2.1 Representations and Warranties. All
representations and warranties made by NSC and the Members
contained in this Agreement shall be true and correct as of
the Closing Date, and NSC and the Members shall have duly
performed or complied with all of the obligations to be
performed or complied with by them under the terms of this
Agreement on or prior to Closing.
7.2.2 Consents and Approvals. All authorizations,
consents, waivers, approvals or other action required in
connection with the execution, delivery and performance of
this Agreement by Buyer, NSC and the Members, and the
consummation by such parties of the transactions contemplated
hereby, shall have been obtained, and NSC and the Members
shall have obtained any authorizations, consents, waivers,
approvals or other action required in connection with the
execution, delivery and performance of this Agreement to
prevent a material breach or default by NSC under any contract
to which NSC is a party and for the continuation of any
agreement to which NSC is a party and which relates to the
business of NSC. Without limiting the foregoing, NSC shall
have obtained landlord consent and estoppel agreements in form
and substance satisfactory to Buyer for the following leased
locations: (i) Harvey, Louisiana, (ii) Lake Charles,
Louisiana., and (iii) Oakhurst Mobile Estates located in Lake
Charles, Louisiana. Further, Buyer shall have received
evidence that NSC and the landlord of the Harvey, Louisiana
property have agreed in writing to the manner in which
concrete repairs at the site will be addressed, in form and
substance satisfactory to Buyer.
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7.2.3 Instruments of Assignment, Transfer and
Conveyance. NSC and the Members shall have delivered to Buyer
all instruments of assignment, transfer and conveyance
(including, but not limited to, written consents to assignment
in form and substance satisfactory to Buyer from the landlords
of the leases listed on Schedule 4.13), and such other Closing
documents as shall have been reasonably requested by Buyer,
all in form and substance reasonably acceptable to Buyer's
counsel.
7.2.4 No Material Change. There shall have
occurred no Material Adverse Change (whether or not covered by
insurance) in the assets, financial condition or prospects of
the Business.
7.2.5 Good Standing Certificates. Buyer shall have
received certificates of legal existence and good standing
dated on or within thirty (30) days prior to the Closing for
NSC from the State of Louisiana and from Secretaries of State
of the jurisdictions set forth on Schedule 4.4.
7.2.6 Vehicle Titles. NSC shall have delivered
title certificates to any motor vehicles included in the
Purchased Assets, duly executed by NSC (together with any
other transfer forms necessary to transfer title to such
vehicles).
7.2.7 Required Consents. NSC shall provide copies
of any required Consents for Contracts identified on Schedule
4.14 with and evidence of satisfaction of all Legal Approvals
required to consummate the contemplated transactions, and all
Governmental Authorizations required to operate the Business,
unless waived by Buyer.
7.2.8 Lien Releases. NSC shall provide evidence
directly from Capital One Bank (f/k/a/ Hibernia National Bank)
and from all other creditors that hold the liens identified on
Schedule 4.12 as to full payment by NSC of all of its
indebtedness to such lenders and releases of all liens held by
such lenders on any of the Purchased Assets or, alternatively,
pay-off letters from such lenders specifying pay-off amounts
as of the scheduled Closing Date (with a per diem rate) and
written instruction from NSC authorizing Buyer to make payment
of such portion of the Purchase Price equal to the amounts
specified in such letters directly to such lender in
accordance with the terms of the pay-off letters.
7.2.9 Charter Amendment. NSC shall deliver an
executed certificate of amendment to NSC's Articles of
Organization changing its name to one that does not include
the words "Nitrogen Specialty".
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7.2.10 Retention Agreements. Each of CA, Xxxxxxx
Xxxxxx and Xxxxx Xxxxxxxx shall have executed and delivered to
Buyer retention agreements in form and substance satisfactory
to Buyer (the "Retention Agreements").
7.2.11 Opinions. Buyer shall have received from
Franklin, Xxxxxxxx & Xxxxx , counsel to NSC, an opinion of
such counsel, dated as of the Closing Date, in form and
substance satisfactory to Buyer and Buyer's counsel; and Buyer
shall have received from McCranie, Sistrunk, Anzelmo, Hardy,
Xxxxxxx & XxXxxxxx, PC, counsel to Xxxxxx Xxxxxxx Xxxxxxx,
individually and as Independent Administratrix of the
Succession of Xxxxx Xxxxxx Xxxxxxx, also known as Xxxxx Xxxxxx
Xxxxxxx, Xx., an opinion of such counsel, dated as of the
Closing Date, opining favorably on the authority of such party
to approve and enter into and perform this Agreement and the
other documents and agreements entered into in connection
herewith by such party by and on behalf Xxxxx Xxxxxxx and the
enforceability of this Agreement and such other documents and
agreements against such party, in form and substance
satisfactory to Buyer and Buyer's counsel.
7.2.12 Escrow Agreement. NSC, the Members and the
Escrow Agent shall have delivered the Escrow Agreement.
7.3 Conditions to NSC's and the Members' Obligations. The
obligations of NSC and the Members to consummate the transactions contemplated
by this Agreement shall be subject to the fulfillment at or prior to the Closing
of each of the following conditions:
7.3.1 Representations and Warranties. The
representations and warranties of Buyer contained in this
Agreement shall be true and correct as of the Closing Date,
and Buyer shall have duly performed or complied with all of
the obligations to be performed or complied with by it under
the terms of this Agreement on or prior to Closing.
7.3.2 Consents and Approvals. All authorizations
or approvals or other action required in connection with the
execution, delivery and performance of this Agreement by
Buyer, and the consummation by Buyer of the transactions
contemplated hereby, shall have been obtained.
7.3.3 Retention Agreements. Buyer shall have
delivered the executed Retention Agreements to each of the
respective employees specified in Section 7.2.10.
7.3.4 Instruments of Assignment, Transfer and
Conveyance. Buyer shall have delivered to NSC and the Members
all Closing documents as shall have been reasonably requested
by NSC and the Members, all in form and substance reasonably
acceptable to NSC's counsel.
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7.3.5 Opinion. NSC shall have received from Lord,
Bissell & Brook LLP, counsel to Buyer, an opinion of such
counsel, dated as of the Closing Date, in form and substance
satisfactory to NSC.
7.3.6 Escrow Agreement. Buyer and the Escrow
Agent shall have delivered the Escrow Agreement.
8. Indemnification. From and after the Closing, Buyer, NSC and
---------------
the Members shall be indemnified as set forth below.
8.1 By NSC and the Members. NSC and the Members agree to
jointly and severally indemnify and hold harmless Buyer and its Affiliates,
against any loss, damage or expense (including court costs and reasonable
attorneys' fees) suffered by Buyer or its Affiliates, as a result of:
(a) any breach by NSC or any Member in the performance of
its obligations under this Agreement and the agreements or other
matters provided for herein;
(b) any inaccuracy in or breach of any representations or
warranties made by NSC or the Members in this Agreement or any
document, certificate, or Exhibit delivered by NSC or the Members in
accordance with the provisions of this Agreement;
(c) any liability of Buyer or its Affiliates for
liabilities and obligations of NSC or the Members which are not
included in the Assumed Liabilities;
(d) any liabilities, damages or expenses, other than
Assumed Liabilities, arising by reason of the ownership or operation by
NSC of (i) the Excluded Assets before or after the Closing, or (ii) the
Purchased Assets before the Closing;
(e) any fees, expenses or other payments incurred or
owed by NSC or any Member to any broker or similar party retained or
employed by it in connection with the transactions contemplated by this
Agreement; or
(f) any claim made by a third party alleging facts which,
if true, would entitle Buyer to indemnification pursuant to Sections
8.1(a), (b), (c), (d) or (e).
8.2 By Buyer. Buyer agrees to indemnify and hold harmless
NSC and the Members against any loss, damage or expense (including court costs
and reasonable attorneys' fees) suffered by NSC or the Members as a result of:
(a) any breach by Buyer in the performance of its
obligations under this Agreement and the separate agreements provided
for herein;
(b) any inaccuracy in or breach of any representations or
warranties made by Buyer in this Agreement or any document,
certificate, or Exhibit delivered by Buyer in accordance with the
provisions of this Agreement;
(c) any Assumed Liability;
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(d) any liabilities, damages or expenses arising by
reason of the ownership or operation by Buyer of the Purchased Assets
after the Closing;
(e) any fees, expenses or other payments incurred or
owned by Buyer to any broker or similar party retained or employed by
Buyer in connection with the transactions contemplated by this
Agreement; or
(f) any claim made by a third party alleging facts which,
if true, would entitle NSC or the Members to indemnification pursuant
to Sections 8.2(a), (b), (c), (d) or (e).
8.3 Method of Asserting Claims. The party claiming
indemnification hereunder (the "Indemnitee") will give prompt written notice
("Notice of Claim") to the party from whom such indemnification is sought (the
"Indemnitor") of any claim ("Claim") which it discovers or of which it receives
notice after the Closing and which might give rise to a Claim by it against the
Indemnitor under Section 8 hereof, stating the nature, basis and (to the extent
known or reasonably estimated) amount thereof; provided that failure to give
prompt notice shall not jeopardize the right of any Indemnitee to
indemnification unless such failure shall have materially prejudiced the ability
of the Indemnitor to defend or minimize the amount of such Claim.
In the case of any Claim or suit by a third party or by any
governmental body, or any legal, administrative or arbitration proceeding with
respect to which Indemnitor may have liability under this Section 8, Indemnitor
shall be entitled to participate therein, and to the extent desired by it or him
to assume the defense thereof, if Indemnitor gives written notice of its
election to assume the defense thereof within sixty (60) days of its receipt of
the Notice of Claim. If Indemnitor gives such notice to Indemnitee of the
election to assume the defense thereof, the Indemnitor will not be liable to the
Indemnitee for any legal or other expenses incurred by the Indemnitee in
connection with the defense thereof, following the receipt of such notice
provided for above, unless Indemnitor does not actually assume the defense
thereof following notice of such election. The parties will render to each other
such assistance as may reasonably be required of each other at Indemnitor's
expense, in order to insure proper and adequate defense of any such suit, Claim
or proceeding. If Indemnitor actually assumes the defense of the Indemnitee, the
Indemnitor shall have sole control of the defense and negotiations for the
settlement or compromise of such Claim, the Indemnitee will not make any
settlement of any Claim which might give rise to liability of any of the
Indemnitor under the indemnity agreements contained in this Section without the
written consent of Indemnitor, and the Indemnitor shall not agree to make any
settlement of any Claim which would not include the unconditional release of the
Indemnitee without the written consent of Indemnitee, which consent shall not be
unreasonably withheld, delayed or conditioned.
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8.4 Nature and Survival of Representations. The
representations and warranties made by NSC under this Agreement in Section 4.11
(Taxes) and the right of Buyer and its Affiliates to seek indemnification
therefor under Section 8.1(b) of this Agreement shall survive the Closing for
the applicable statute of limitations. The representations and warranties made
by NSC under this Agreement in Section 4.24 (Environmental Matters) shall
survive the Closing until the fourth (4th) anniversary of the Closing Date, and
the right of any party to seek indemnification under Section 8.1(b) for claims
arising by reason of the inaccuracy of any such representations and warranties
shall continue until such time, and, with respect to any such claims for
indemnification that have been asserted in writing against NSC on or before the
fourth (4th) anniversary of the Closing Date, shall survive until such time as
such claims are resolved. All other representations and warranties made by NSC,
the Members and the Buyer under this Agreement shall survive the Closing until
the second (2nd) annual anniversary of the Closing Date, and the right of any
party to seek indemnification under Sections 8.1(b) and 8.2(b) for claims
arising by reason of the inaccuracy of any such representations and warranties
shall continue until such time, and, with respect to any such claims for
indemnification that have been asserted in writing against the other party on or
before the second (2nd) annual anniversary of the Closing Date, shall survive
until such time as such claims are resolved. All statements made herein or in
the Schedules by or on behalf of NSC and the Members, on the one hand, and the
Buyer on the other hand, or in any other document, instrument, certificate,
schedule or list delivered to any party hereunder shall be deemed
representations and warranties of the party making such statement relied upon by
the receiving party regardless of any investigation made by or on behalf of the
receiving party, and shall not be affected in any respect by such investigation.
8.5 Limitation on Indemnification. Except for Claims
arising by reason of fraud, willful misconduct or intentional misrepresentation,
no indemnification payment by the Members with respect to any Claims otherwise
payable under this Article 8 and arising out of or resulting from the causes
enumerated in Section 8.1(b) shall be payable until such time as all such Claims
shall aggregate to more than One Hundred Twenty-Five Thousand Dollars ($125,000)
(without giving effect for purposes of such determination to any "Material
Adverse Effect" or other materiality qualification set forth in any
representation or warranty), after which time NSC and the Members shall be
liable in full for all such Claims; provided that this Section 8.5 shall not
apply to the obligations of NSC and the Members (i) pursuant to Section 4.11 of
this Agreement (provided, however, that if Buyer is reimbursed for any claim
under Section 4.15 that a Receivable (other than an Aged Account) is not
collectable, then Buyer shall re-assign such Receivable to NSC and NSC shall be
entitled to enforce such Receivable as it may elect); and (ii) to deliver the
Purchased Assets to Buyer free and clear of all security interests, encumbrances
and charges or restrictions of any kind, except those specifically agreed to by
Buyer. Except for Claims arising by reason of fraud, willful misconduct or
intentional misrepresentation, in no event shall the obligation of NSC and/or
the Members to indemnify Buyer or its Affiliates for claims under Section 8.1(b)
of this Agreement exceed Five Million Dollars ($5,000,000) in the aggregate. In
addition, in no event shall the individual indemnification obligations of a
Member exceed an amount equal to (i) such Member's percentage interest in NSC as
set forth on Schedule 4.3, multiplied by (ii) the Purchase Price.
8.6 Escrow Deposit. Upon the Closing, Buyer, as an
allocation from the Purchase Price, shall deposit by wire transfer of
immediately available funds an amount equal to the Indemnification Escrow
Deposit plus the amount of the Aged Accounts Escrow Deposit in an escrow account
with the Escrow Agent in accordance with the Escrow Agreement by and among
Buyer, NSC, the Members and the Escrow Agent. Buyer agrees to collect any claims
for indemnification from the Indemnification Escrow Deposit, if any, held by the
Escrow Agent pursuant to the Escrow Agreement before collecting any such claims
from the Members; provided, however, that the foregoing shall not limit or
restrict Buyer from joining NSC or any Member in any action or proceeding
seeking indemnification or enforcement of Buyer's indemnification rights
hereunder or obtaining any judgments against NSC or any Member with respect
thereto.
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8.7 Reduction of Indemnified Amounts.
8.7.1 Notwithstanding any provision of this
Article 8 to the contrary, Claims owed by the Members to Buyer
shall be reduced by the amount of any mitigating recovery
Buyer shall have received with respect thereto from any
recovery by Buyer under any insurance policies, to the extent
such recovery is received by Buyer at the time the Claim is
made, without regard to whether the Buyer or another person
paid the premiums therefor. If such a recovery is received by
Buyer after it receives payment or other credit under this
Agreement with respect to indemnified Claims, then a refund
equal to the aggregate amount of such recovery shall be made
promptly to the Members. Buyer shall use commercially
reasonable efforts to recover any such amount to which it is
entitled under any insurance policy, provided that Buyer shall
not be required to initiate or maintain any litigation to
recover any such amount.
8.7.2 Notwithstanding any provision of this
Article 8 to the contrary, Claims owed by Buyer to the Members
or NSC shall be reduced by the amount of any mitigating
recovery the Members or NSC shall have received with respect
thereto from any recovery by the Members or NSC under any
insurance policies, to the extent such recovery is received by
the Members or NSC at the time the Claim is made, without
regard to whether the Members or NSC or another person paid
the premiums therefor. If such a recovery is received by the
Members or NSC after they receive payment or other credit
under this Agreement with respect to indemnified Claims, then
a refund equal to the aggregate amount of such recovery shall
be made promptly to Buyer. The Members and NSC shall use
commercially reasonable efforts to recover any such amount to
which it or they are entitled under any insurance policy,
provided that neither the Members nor NSC shall be required to
initiate or maintain any litigation to recover any such
amount.
8.8 Exclusive Rights and Remedies. The provisions of this
Article 8 shall be the exclusive basis of the parties to this Agreement for (i)
any breach of a representation or warranty herein and (ii) any failure of a
party to comply with any obligation, covenant, agreement or condition herein.
9. Noncompete; Confidentiality; Nonsolicitation. Except as
--------------------------------------------
expressly set forth in that certain Retention Agreement dated as of even date
herewith between Xxxxxxxxxxx X. Abide and Buyer, in connection with the
acquisition of substantially all of the assets of NSC and all of the goodwill of
NSC by Buyer, for a period ending three (3) years after the Closing Date,
neither NSC, the Members nor their respective family members or Affiliates shall
engage in a business which competes with the business of NSC as conducted on the
Closing Date, directly or indirectly, personally or as an employee, owner,
consultant, manager, associate, partner, agent or otherwise, or by means of any
corporate or other device within the onshore and offshore markets of the states
of Louisiana (and the parishes thereof as listed on Schedule 9 hereof),
Mississippi, Alabama and Texas (such geographic area is hereafter referred to as
the "Territory"); nor shall the Members or their family members or Affiliates
for such period and in the Territory solicit orders, directly or indirectly from
any customer of Buyer or NSC, for any product or service substantially similar
to those sold, manufactured or distributed by NSC as conducted on the Closing
Date, personally or as an employee, owner, consultant, manager, associate,
partner, agent or otherwise, or by means of any corporate or other device; nor
shall the Members or their Affiliates for such period and in the Territory
solicit for employment any employee of NSC who continued employment after the
Closing Date.
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The Members further acknowledges that by reason of their
affiliation with NSC, they have had access to confidential information of NSC.
The Members covenant and agree that the Members shall not use for their own
benefit or divulge to any third party any confidential information or trade
secrets of Buyer or NSC. As used herein, confidential information shall consist
of all information, knowledge or data relating to the business of NSC (including
without limit all information relating to inventions, production methods,
customer and prospective customer lists, prices and trade practices) which is
not in the public domain or otherwise published or publicly available.
This Section 9 shall not be construed to prohibit the
ownership by the Members of not more than five percent (5%) of the capital stock
of any corporation having a class of securities registered pursuant to the
Exchange Act of 1934.
The Members acknowledge that the restrictions contained in
this Section 9 are reasonable and necessary to protect the legitimate interests
of Buyer in connection with its purchase of all of the goodwill of NSC, do not
cause the Members undue hardship, and that any violations of any provision of
this Section 9 will result in irreparable injury to Buyer and that, therefore,
Buyer shall be entitled to preliminary and permanent injunctive relief, without
having to post any bond, in any court of competent jurisdiction and to an
equitable accounting of all earnings, profits and other benefits arising from
such violation, which rights shall be cumulative and in addition to any other
rights or remedies to which Buyer may be entitled.
10. Certain Tax Matters.
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(a) Payment of Taxes on the Sale of the Purchased Assets.
All sales, recording, title transfer and registration and other
transfer Taxes payable by reason of the sale or transfer of the
Purchased Assets (collectively, "Transfer Taxes") shall be paid by the
Responsible Party, as herein defined; provided, however, that
notwithstanding the foregoing, Buyer shall pay any transfer fees or
sales taxes for any titled vehicles included in the Purchased Assets.
As used herein, the Responsible Party shall be Buyer, except with
respect to Transfer Taxes which are solely the responsibility of the
seller of assets as a matter of law, in which case the Responsible
Party shall be NSC. To the extent that a party other than the
Responsible Party is required to file tax returns relating to Transfer
Taxes (the "Filing Party"), the Filing Party shall prepare such tax
returns and provide copies thereof to the Responsible Party prior to
filing such tax returns. Upon filing such tax returns relating to
Transfer Taxes, the Filing Party shall make payment of such Transfer
Taxes, whereupon the Responsible Party shall reimburse the Filing Party
for the amount so paid, provided that the Responsible Party may elect
to make payment directly to the applicable Governmental Body, in which
case the parties shall cooperate to coordinate the filing of the
applicable tax returns and payment of the corresponding Transfer Taxes.
To the extent that any Governmental Body seeks to collect Transfer
Taxes from any party other than the Responsible Party, the Responsible
Party shall pay, or reimburse such other party for payment of, such
Transfer Taxes, provided that such other party shall give prompt notice
to the Responsible Party of any such collection efforts and shall
permit the Responsible Party to control any proceedings contesting any
such Transfer Taxes. Each party agrees to cooperate with the other to
qualify for any exemptions for Transfer Taxes, and to execute any and
all resale certificates or other documents or other forms reasonably
necessary to qualify for any such exemptions.
30
(b) Mutual Cooperation. Buyer and NSC shall each assist
the other as may reasonably be requested by either of them with the
preparation of any Tax Return, any Tax audit, or any judicial or
administrative proceedings relating to any Tax. In addition, each party
shall retain and provide the other with any records or information that
may be relevant to such Tax Return, Tax audit, proceeding or
determination. The party requesting assistance under this Section shall
reimburse the party providing assistance for direct out-of-pocket
expenses incurred in providing such assistance.
11. Publicity. Neither party shall issue any press release or
---------
otherwise make any announcements to the public regarding this Agreement or the
contemplated transactions, including the amount of the Purchase Price, without
the prior written consent of the other party, except as required by any
applicable legal requirements; provided, however, unless legally required, the
parties shall use commercially reasonable efforts to keep the Members unnamed in
any press release concerning the transactions contemplated by this Agreement.
Each party shall keep this Agreement and its contents strictly confidential,
except as required by any applicable legal requirements; provided, however, that
notwithstanding anything to the contrary in this Section 11, this Agreement
shall not be deemed to limit or restrict Buyer or its affiliates in any manner
from filing a Form 8-K concerning this Agreement and the transactions
contemplated hereby with the U.S. Securities and Exchange Commission and
attaching a full copy of this Agreement to such filing to the extent determined
by Buyer or its affiliates to be necessary or desirable in connection with the
conduct of its business. Prior to the Closing, the parties shall consult
concerning the means by which the employees, customers, and suppliers and others
having dealings with NSC will be informed of the contemplated transactions.
12. Certain Transitional Matters.
----------------------------
(a) Endorsement of Checks. Buyer shall have the right and
authority to retain and endorse without recourse the name of NSC on any
check or any other evidences of Indebtedness received by Buyer on
account of the Business and arising from the Purchased Assets. To the
extent that Buyer comes into the possession of any check or any other
evidences of Indebtedness received by Buyer and relating to the
Excluded Assets, Buyer shall promptly deliver the same to NSC.
(b) Remit Funds. After the Closing, NSC shall promptly
transfer and deliver to Buyer any cash or other property, if any, that
is included in the Purchased Assets received by NSC. After the Closing,
Buyer shall promptly transfer and deliver to NSC any cash or other
property, if any, that is included in the Excluded Assets and is
received by Buyer.
31
(c) Assumed Liabilities Controlled by Buyer. Buyer shall
have complete control over the payment, settlement or other disposition
of, or any dispute involving, any Assumed Liability, and Buyer shall
have the right to conduct and control all negotiations and proceedings
with respect thereto. NSC and the Members shall notify Buyer promptly
of any claim made against NSC or any Member with respect to any Assumed
Liability.
(d) Assistance. NSC and the Members shall cooperate with
and assist Buyer and its authorized representatives in order to
provide, to the extent reasonably requested by Buyer, an efficient
transfer of control of the Purchased Assets and to avoid any undue
interruption in the activities and operations of the Business.
(e) Retained Liabilities Controlled by NSC. NSC shall
have complete control over the payment, settlement or other disposition
of, or any dispute involving, any Retained Liability, and NSC shall
have the right to conduct and control all negotiations and proceedings
with respect thereto; provided, however, that in no event shall NSC or
the Members or any of their respective Affiliates file any suit or
institute or maintain any collection or enforcement actions against any
current or former customer of the Business without in each case the
prior written consent of the Buyer, except that NSC may enforce and
collect any Uncollected Aged Account reassigned to NSC under the terms
of Section 2.2(c) after the end of the Escrow Period if the account
debtor thereon (i) is subject to a bankruptcy or insolvency proceeding
at the time, or (ii) is an account debtor specified on Schedule 12(e)
for which Buyer has separately agreed prior to Closing that it will not
object to collection actions by NSC. Buyer shall notify NSC promptly of
any claim made against Buyer with respect to any Retained Liability.
(f) Change of Seller's Name. Within one (1) business day
after the Closing, Seller shall file appropriate documents with the
Secretary of State of Louisiana and those other jurisdictions listed on
Schedule 4.4 in which NSC is qualified to do business to change the
corporate name of NSC and to transfer its interests in the trade names
and coordinate with Buyer to allow Buyer to simultaneously file such
corporate documents as may be reasonably necessary for Buyer to acquire
the rights to each corporate name should it so desire.
(g) Insurance. Buyer shall be obligated to procure its
own insurance on the Business commencing on the Closing Date. NSC shall
be solely responsible for receiving a refund of any insurance premium
payments that have been prepaid.
(h) Ad Valorem Taxes. With regard to ad valorem Taxes on
the Purchased Assets for the 2006 tax year, NSC and Buyer agree that
such Taxes shall be prorated between NSC and Buyer as of the Closing
Date such that NSC shall be responsible for (and shall pay to Buyer or
accrue on the preliminary closing balance sheet delivered under Section
2.1 and on the Final Closing Statements an amount equal to) all ad
valorem Taxes attributable to or incurred with respect to the Purchased
Assets prior to the Closing Date and Buyer shall be responsible for and
shall pay to the appropriate Governmental Authorities all ad valorem
Taxes attributable to or incurred with respect to the Purchased Assets
on or after the Closing Date. On or prior to the due date, Buyer shall
pay to the appropriate authorities all amounts of ad valorem taxes on
the Purchased Assets due and owing to the appropriate Government
Authorities including but not limited to the amounts paid to Buyer by
NSC for NSC's pro rata share of such ad valorem Taxes.
32
(i) Assignment of Contracts. To the extent that the
assignment of any Contract shall require the consent of a governmental
authority or third party, and Buyer shall have waived the obtaining of
such consent prior to Closing, this Agreement shall not constitute a
contract to assign the same until such consent is obtained. NSC and
Buyer shall use their commercially reasonable efforts after Closing to
obtain any consent necessary to any such assignment. If any such
consent is not obtained, (i) this Agreement shall not constitute or be
deemed to be a contract to assign the same if an attempted assignment
without such consent, approval or waiver would constitute a breach of
such Contracts or create in any party thereto the right or power to
cancel or terminate such Contracts; and (ii) NSC and Members will
cooperate with Buyer, at Buyer's expense, in any reasonable arrangement
requested by Buyer and designed to provide to Buyer the benefit,
monetary or otherwise, of NSC's rights under such Contracts, including
enforcement of any and all rights of NSC and Members against the other
party thereto arising out of a breach or cancellation thereof by such
other party, and to the extent Buyer is afforded the benefits
thereunder, Buyer shall perform NSC's obligations thereunder.
13. Severance, Change of Control and Termination Payments.
-----------------------------------------------------
NSC shall (a) pay, perform and discharge any and all severance payments and
other Liabilities with respect to employees of NSC that result from the transfer
of the Purchased Assets hereunder and the employment by Buyer of those
employees, whether or not described as a "change of control", "termination" or
similar term, and (b) indemnify and hold harmless Buyer and its directors,
officers, and Affiliates from and against any and all Damages, that any of the
aforesaid may suffer or incur by reason of or relating to any Liabilities
referred to in clause (a) above.
14. Certain Employment Matters. Buyer shall offer employment to
--------------------------
all or substantially all of the employees of NSC (all of such employees
accepting employment with Buyer as of the Closing (including CA), the
"Transferring Employees"). Buyer's offer of employment will be made subject to
Buyer's standard employment practices and the satisfactory completion of Buyer's
employment process, including, without limitation, completion of a background
check and drug screen for each employee. The salaries offered to the
Transferring Employees at Closing will be generally similar to the salaries paid
by NSC, and the benefits offered to the Transferring Employees will be
consistent with the benefits generally provided to Buyer's other employees;
provided, however, that the employment terms offered to CA, Xxxxxxx Xxxxxx and
Xxxxx Xxxxxxxx shall be the terms set forth in their respective offer letters
and/or Retention Agreements, as applicable. NSC and the Members shall cooperate
with Buyer in the dissemination of such offers of employment together with any
appropriate related documentation such as applications for employment, tax and
benefit forms and the like and provide Buyer with reasonable assistance in the
collection thereof. Buyer shall treat the prior service of Transferring
Employees with NSC as service rendered to Buyer for purposes of eligibility and
vesting thereunder, except where such service crediting would violate applicable
laws or require Buyer, under applicable laws, to increase benefits for its other
employees; provided, however, that such prior service shall not be credited for
purposes of benefit accrual under any defined benefit pension plan of Buyer.
33
15. Benefit Plan Matters. As of the Closing Date, each of the
--------------------
Transferring Employees who has an account balance in any defined contribution
plan, savings or retirement plan (the "Defined Contribution Plans") maintained
by NSC shall be deemed fully vested in, and entitled to receive a distribution
of, his or her entire account balance following the Closing Date. As of the
Closing Date, the Transferring Employees shall cease to be eligible to make or
receive contributions under the Defined Contribution Plans of NSC; provided,
however, that any contribution required to be made with respect to the
participation of the Transferring Employees in such Defined Contribution Plans
on or immediately prior to the Closing Date shall be made by NSC in accordance
with NSC's standard administrative practice for such Defined Contribution Plans.
Similarly, as of the Closing Date, each of the Transferring Employees who has an
accrued benefit in any defined benefit retirement plan maintained by NSC (the
"Defined Benefit Plans") shall be deemed fully vested in, and entitled to
receive a distribution of, his or her entire accrued benefit in accordance with
the terms of the Defined Benefit Plans. As of the Closing Date, the Transferring
Employees shall cease to be eligible to participate in the Defined Benefit Plans
of NSC; provided, however, that any contribution required to be made with
respect to the participation of the Transferring Employees in such Defined
Benefit Plans on or immediately prior to the Closing Date shall be made by NSC
in accordance with NSC's standard administrative practice for such Defined
Benefit Plans. NSC shall retain all liability for any and all Benefit Plans of
NSC (all of which are intended to be included in Retained Liabilities),
including plans, programs and arrangements which provide medical and dental
coverage and life and accident insurance, disability insurance for the
Transferring Employees (or their eligible dependents) with respect to claims
incurred prior to the Closing Date and Buyer shall be responsible for all
liability for any and all welfare benefit plans of Buyer with respect to claims
incurred on or after the Closing Date. For the foregoing purposes, a claim shall
be deemed to be incurred on the date on which medical or other treatment or
service was rendered and not the date of inception of an illness or injury or
the date on which a claim for treatment or service is submitted. At or prior to
Closing, NSC shall pay all bonuses, whether or not accrued on the Closing
Balance Sheet, but payable to any Transferring Employees who are eligible for
any such payment pursuant to NSC's bonus plan as of the Closing. No severance
payment or other benefit will be due to the Transferring Employee solely as a
result of the sale of the Business as contemplated by this Agreement.
16. Product Liability and Product Warranties.
----------------------------------------
(a) Products Liability. NSC shall be liable for all
express and implied products liability for all products shipped,
distributed, assembled or sold by, or any services provided by, NSC
prior to the Closing Date. Buyer shall liable for all express and
implied products liability for all products shipped, distributed,
assembled or sold by, or any services provided by, Buyer on or after
the Closing Date.
34
(b) Products and Service Warranties. Except as set forth
in the last sentence of this Section, Buyer shall, subject to
reimbursement by NSC upon invoicing therefor as provided in this
Section, be responsible for all express product and services warranty
obligations made by NSC prior to Closing. Buyer agrees to notify NSC
promptly of any notice or claims for warranty work respecting products
sold or services rendered by NSC which Buyer receives following the
Closing and to perform such warranty work only if commercially
reasonable in accordance with CETCO's practices. Buyer shall invoice
NSC at Buyer's cost for parts and materials used, in satisfying such
product warranty obligations provided that Buyer shall not invoice NSC
for any such parts, materials or services unless at such time the
aggregate amount owing by NSC to Buyer in respect of such parts,
materials or services equals or exceeds $5,000. Upon receipt by NSC
from Buyer of any invoice in respect of parts, materials and services
furnished in accordance with the immediately preceding sentence, NSC
shall be responsible to pay to Buyer the amount of such invoice. If
monies are owing from NSC to Buyer under the terms of this Section
16(b), then such amounts shall be paid to Buyer from the
Indemnification Escrow Deposit in accordance with the terms of the
Escrow Agreement; provided, however, in the event and to the extent
that such amounts are not paid to Buyer from the Indemnification Escrow
Deposit for any reason within ten (10) days of when due and owing, NSC
shall pay such amounts to Buyer upon written demand therefor. Buyer
shall, at its own cost and expense, be responsible for all express
product and service warranty obligations made by NSC prior to Closing
if such warranty obligations result directly from any product assembled
or manufactured by, or any service provided by, Buyer.
17. General Provisions. NSC, the Members and Buyer further
------------------
covenant and agree as follows:
17.1 Waiver of Terms. Any of the terms or conditions of
this Agreement may be waived at any time by the party or parties entitled to the
benefit thereof but only by a written instrument signed by the party or parties
waiving such terms or conditions.
17.2 Amendment of Agreement. This Agreement may be
amended, supplemented or interpreted at any time only by written instrument duly
executed by each party hereto.
17.3 Payment of Expenses. Regardless of whether the
Closing shall occur, NSC and the Members shall pay all expenses incurred by or
on behalf of NSC and the Members, and Buyer shall pay all expenses incurred by
or on behalf of Buyer in connection with the preparation, execution and delivery
of this Agreement and the other agreements and documents referred to herein and
the consummation of the transactions contemplated hereby and thereby.
17.4 Contents of Agreement; Binding Nature. This Agreement
and the other agreements and documents to be delivered by the parties as
provided herein set forth the entire understanding of the parties with respect
to the subject matter hereof. Any previous agreements or understanding between
the parties regarding such subject matter are merged into and superseded by this
Agreement. All representations, warranties, covenants, terms and conditions of
this Agreement shall be binding upon and inure to the benefit of and be
enforceable by the successors and assigns of the parties hereto.
17.5 Notices. All notices, requests, demands and other
communications required or permitted to be given hereunder shall be by hand
delivery; certified or registered mail, return receipt requested; telecopier; or
air courier; to the parties set forth below. Such notices shall be deemed given:
at the time personally delivered, if delivered by hand or by courier; at the
time received if sent certified or registered mail; and when receipt
acknowledged by receiving telecopy equipment, if telecopied.
35
If to Buyer: CETCO Oilfield Services Company
0000 X. Xxxxx
Xxxxxxxxx Xxxxxxx, Xxxxxxxx 00000
Attn: President
Telephone No.: 000.000.0000
Telecopier No.: 847.506.6150
With a copy to: Lord, Bissell & Brook LLP
000 X. Xxxxxx Xx.
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxxx, Xx.
Telephone No.: 000.000.0000
Telecopier No.: 312.443.0336
If to NSC or the Members: c/o Xxxxxxxxxxx X. Abide
Nitrogen Specialty Company, L.L.C.
P. O. Xxx 0000
Xxxxxx, Xxxxxxxxx 00000
Telephone No.: 000-000-0000
Telecopier No.: 000-000-0000
With a copy to: Kemberlia X. Xxxxxx
000 Xxxxxxxx Xxxx
Xxxxx 000
Xxxxxxxx, Xxxxxxxxx 00000
Telephone No.: 000.000.0000
Telecopier No.: 504.833.7787
With a copy to: Franklin, Xxxxxxxx & Xxxxx, P.C.
0000 XxXxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxx 00000
Attn: J. Xxxxxxxx Xxxxx
Telephone No.: 000.000.0000
Telecopier No. : 713.227.5657
17.6 Severability. In the event that any one or more of
the provisions contained in this Agreement shall be invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions of this Agreement shall not be in any way impaired.
36
17.7 Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
17.8 Headings. The headings of the Sections and the
subsections of this Agreement are inserted for convenience of reference only and
shall not constitute a part hereof.
17.9 Governing Law and Venue. This Agreement shall be
governed, construed and enforced in accordance with the internal laws of the
State of Delaware, excluding any choice of law rules that may direct the
application of the laws of another jurisdiction. The parties hereby irrevocably
consent to the exclusive jurisdiction of the Texas State Courts or the Federal
Courts sitting in Houston, Xxxxxx County, Texas over any suit, action or
proceeding which arises out of or relates in any way to this Agreement and
consent to the service of process by registered mail, return receipt requested
or by other means provided by applicable law. The parties hereby waive the right
to contest the jurisdiction or venue of said courts located in Houston, Xxxxxx
County, Texas.
17.10 Instruments of Further Assurance. Each of the parties
hereto agrees, upon the request of any of the other parties hereto, from time to
time to execute and deliver to such other party or parties all such instruments
and documents of further assurance or otherwise as shall be reasonable under the
circumstances, and to do any and all such acts and things as may reasonably be
required to carry out the obligations of such requested party hereunder.
17.11 Brokers or Finders. Except as set forth on Schedule
17.11, each of Buyer, NSC and the Members represents, as to itself and its
Affiliates, that no agent, broker, investment banker, financial advisor or other
firm or person is or will be entitled to any broker's or finder's fee or any
other commission or similar fee in connection with any of the transactions
contemplated by this Agreement. Each of Buyer, NSC and the Members agrees to
indemnify and hold the other harmless from and against any and all claims,
liabilities or obligations with respect to any other fees, commissions or
expenses asserted by any person on the basis of any act or statement alleged to
have been made by such party or its Affiliate.
17.12 No Third Party Beneficiaries. Nothing in this
Agreement is intended nor shall it be construed to give any person, firm,
corporation or other entity, other than the parties hereto and their successors
and assigns, any right, remedy or claim under or in respect of this Agreement or
any provisions hereof.
[Signature Page Follows]
37
[Signature Page to Asset Purchase Agreement]
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto as of the day and year first above written.
CETCO OILFIELD SERVICES COMPANY,
a Delaware corporation
By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: President
NITROGEN SPECIALTY COMPANY, L.L.C., a
Louisiana limited liability company
By: /s/ Xxxxxxxxxxx X. Abide
-------------------------------
Xxxxxxxxxxx X. Abide, President
THE MEMBERS:
/s/ Xxxxxxxxxxx X. Abide
-------------------------------
XXXXXXXXXXX X. ABIDE
/s/ Xxxxxx X. Xxxxxx
-------------------------------
XXXXXX X. XXXXXX
/s/ Kemberlia X. Xxxxxx
-------------------------------
KEMBERLIA X. XXXXXX
/s/ Xxxxxx Xxxxxxx Xxxxxxx
-------------------------------
XXXXXX XXXXXXX XXXXXXX,
INDIVIDUALLY AND AS
INDEPENDENT ADMINISTRATRIX
OF THE SUCCESSION OF XXXXX
XXXXXX XXXXXXX, ALSO KNOWN
AS XXXXX XXXXXX XXXXXXX, XX.
/s/ Xxx X. Xxxxxxx
-------------------------------
XXX X. XXXXXXX
/s/ Xxxxx X. Xxxxxxx
-------------------------------
XXXXX X. XXXXXXX
38
APPENDIX OF DEFINITIONS
-----------------------
The following definitions shall be applicable for purposes of the
Agreement except as otherwise specifically provided to the contrary in the text
of the Agreement.
"Affiliates" of a person shall mean any person or entity controlling,
controlled by or under common control with that person or any family members of
such person. "Control" for this purpose shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a person, whether through the ownership of voting securities or
interests, by contract, or otherwise.
"Aged Accounts" shall mean those recivables of NSC aged greater than 90
days past invoice date as of the Closing Date, excluding in any event therefrom
any receivable arising other than in the ordinary course of NSC's business, any
receivable for which a customer is disputing all or portion of the invoiced
amount, any receivable for which a customer has claimed a right of offset or
asserted a counterclaim against the invoiced amount, and any receivable from a
customer that is insolvent or subject to bankruptcy or receivership proceedings.
"Aged Accounts Amount" shall mean the amount, as of Closing, of the
Aged Accounts, less the amount therefor reserved in the Final Purchased Balance
Sheet.
"Business" shall have the meaning given in the second Recital to this
Agreement.
"Contaminant" shall mean material or substance which is or may be
hazardous or toxic, or which could otherwise pose a risk to health, safety or
the environment or which is regulated, prohibited or controlled pursuant to or
the subject of any Environmental Laws, including any hazardous substance as
defined in 42 U.S.C. Section 9601(14), solid waste as defined in 42 U.S.C.
Section 6903(27), pollutant or contaminant as defined in 42 U.S.C. Section
9601(33), or any other waste, pollutant, hazardous waste (as defined in 42
U.S.C. Section 6903(5), petroleum (as defined in 42 U.S.C. Sections 6911(2)(B),
petroleum-based substance, by-product, breakdown product or waste, oil (as
defined in 33 U.S.C. Section 2701(23), special waste, sludge (as defined in 42
U.S.C. Section 6903(26A), or any constituent of any such substance or waste and
specifically including polychlorinated biphenyls, asbestos, asbestos-containing
material, urea formaldehyde or radioactive material.
"Environment" shall mean surface waters, groundwaters, surface water
sediment, soil, subsurface strata, ambient air and other environmental medium.
"Environmental Claims" shall mean any and all actions, suits, demands,
demand letters, claims, liens, notices of noncompliance or violation, notices of
liability or potential liability, investigations, proceedings, consent orders or
consent agreements relating in any way to any Environmental Law or any
Contaminant or arising from any alleged injury to threat of injury to health,
safety or the Environment.
"Environmental Law" shall mean any Law, rule or regulation, now or
hereafter in effect and as amended, and any judicial or administrative
interpretation thereof, including any judicial or administrative order, consent
decree or judgment, relating to pollution or protection of the Environment,
health, safety or natural resources or to the use, handling, transportation,
treatment, storage, disposal, release or discharge of Contaminants.
39
"Environmental Permit" shall mean any permit, Approval, identification
number, license, or other authorization required to operate the Business under
any applicable Environmental Law.
"Escrow Agent" shall mean Xxxxx Fargo Bank, National Association.
"Escrow Agreement" shall mean the Escrow Agreement by and between NSC,
the Members, Buyer and the Escrow Agent dated as of even date herewith.
"Escrow Period" shall mean a period of time commencing as of the
Closing Date and continuing until the one (1) year anniversary date of the
Closing Date.
"Final Purchased Balance Sheet" shall mean the balance sheet of NSC, as
adjusted for any Excluded Assets or Retained Liabilities recorded therein for
which Buyer is not purchasing or assuming pursuant to the terms of this
Agreement and excluding therefrom insurance prepayments, as included in the
Final Closing Statements.
"Financial Statements" as used herein shall include the financial
statements described in Section 4.8 hereto.
"Governmental Approvals" shall mean other permits, licenses, consents,
certificates, orders, authorizations and approvals issued by any governmental
authority required to operate the Business.
"Governmental Authority" means any United States federal, state or
local or any non-U.S. government, governmental, regulatory or administrative
authority, state enterprise, agency or commission or any court, tribunal, or
judicial or arbitral body.
"Governmental Order" means any order, writ judgment, injunction,
decree, stipulation, determination or award entered by or with any Governmental
Authority.
"Knowledge" The phrase "to the Knowledge of", "to the best Knowledge
of", "to the best of its Knowledge", "to the best of NSC's Knowledge" or similar
phrases mean those facts and circumstances known to any of the Members, Xxxxx
Xxxxxxxx, Xxxxxxx Xxxxxx and Xxxxxxx Xxxxxxxx (and, in addition, with respect to
the representations and warranties set forth in Section 4.12, facts and
circumstances known to any of such individuals or to any of Xxxxx Xxxxxxx, Xxxx
Xxxxxx and Xxxxxxx Xxxxx), or facts which should have reasonably been known by
said individuals given their positions with NSC, in each case after due inquiry
by such persons to those employees of NSC who in the ordinary course of their
duties would be reasonably likely to have knowledge of the facts or
circumstances in question.
"Law" means any federal, state, local or non-U.S. statute, law,
ordinance, regulation, rule, code, order, other requirement or rule of law.
"Material Adverse Change" or "Material Adverse Effect" or other similar
phrase including the word "material" with respect to the condition (financial or
otherwise), assets, liabilities, Business, operations or prospects of NSC shall
mean any adverse change or effect or potential adverse change or effect, or any
series thereof, involving more than Fifty Thousand Dollars ($50,000) in the
aggregate.
40
"Net Sales" shall have the meaning as commonly defined in US GAAP.
"Release" shall mean disposing, discharging, injecting, spilling,
leaking, leaching, dumping, emitting, escaping, emptying, seeping, placing, and
the like into or upon any land or water or air or otherwise into the
Environment.
A "Tax" or, collectively, "Taxes," means any and all federal, state,
local or foreign taxes of any country or governmental body, assessments and
other governmental charges, duties, impositions and liabilities, including taxes
based upon or measured by gross receipts, income, profits, sales, use and
occupation, and value added, ad valorem, transfer, franchise, withholding,
payroll, recapture, employment, excise, property taxes and all other taxes and
assessments of whatever nature, together with all interest, penalties and
additions imposed with respect to such amounts and related thereto and any
obligations under any agreements or arrangements with any other person with
respect to such amounts and including any liability for taxes of a predecessor
entity.
"US GAAP" means accepted accounting principles generally accepted in
the United States as promulgated by the Financial Accounting Standards Board,
Securities and Exchange Commission and other similar bodies.
41
