EXHIBIT 10.43
ASSET PURCHASE AGREEMENT
BY AND AMONG
W. T. ENTERPRISES, INC. D/B/A LONE STAR AIR SERVICE,
XXXXXXX X. XXXXX
AND
AIRCOMP L.L.C.
DATED JULY 11, 2005
TABLE OF CONTENTS
1. DEFINITIONS AND USAGE.......................................................................................1
1.1 Definitions ....................................................................................1-8
1.2 Usage ............................................................................................8
2. SALE AND TRANSFER OF ASSETS; CLOSING........................................................................9
2.1 Assets to Be Sold ................................................................................9
2.2 Excluded Assets .................................................................................10
2.3 Consideration ...................................................................................11
2.4 Liabilities .....................................................................................11
2.5 Allocation ......................................................................................12
2.6 Closing .........................................................................................13
2.7 Closing Obligations .............................................................................13
2.8 Consents ........................................................................................14
3. REPRESENTATIONS AND WARRANTIES OF SELLER AND SHAREHOLDER...................................................14
3.1 Organization and Good Standing ..................................................................14
3.2 Enforceability; Authority; No Conflict ..........................................................15
3.3 Capitalization ..................................................................................16
3.4 Financial Statements ............................................................................16
3.5 Books and Records ...............................................................................16
3.6 Sufficiency of Assets ...........................................................................17
3.7 [Intentionally Left Blank] ......................................................................17
3.8 Leased Real Property ............................................................................17
3.9 Title to Assets; Encumbrances ...................................................................17
3.10 Condition of Assets..............................................................................17
3.11 [Intentionally Left Blank].......................................................................17
3.12 [Intentionally Left Blank].......................................................................17
3.13 [Intentionally Left Blank].......................................................................17
3.14 Taxes ...........................................................................................17
3.15 No Material Adverse Change ......................................................................18
3.16 Employee Benefits ...............................................................................18
3.17 Compliance with Legal Requirements; Governmental Authorizations .................................18
3.18 Legal Proceedings; Orders .......................................................................19
3.19 Absence of Certain Changes and Events ...........................................................19
3.20 [Intentionally Left Blank] ......................................................................20
3.21 Insurance .......................................................................................20
3.22 Environmental Matters ...........................................................................20
3.23 Employees .......................................................................................21
3.24 [Intentionally Left Blank].......................................................................21
3.25 [Intentionally Left Blank] ......................................................................21
3.26 [Intentionally Left Blank] ......................................................................21
3.27 [Intentionally Left Blank] ......................................................................21
3.28 [Intentionally Left Blank] ......................................................................21
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3.29 [Intentionally Left Blank].......................................................................21
3.30 Brokers or Finders ..............................................................................21
3.31 [Intentionally Left Blank] ......................................................................21
3.32 Solvency ........................................................................................22
3.33 Disclosure ......................................................................................22
4. REPRESENTATIONS AND WARRANTIES OF BUYER....................................................................22
4.1 Organization and Good Standing ..................................................................22
4.2 Authority; No Conflict ..........................................................................22
4.3 Certain Proceedings .............................................................................23
4.4 Brokers or Finders ..............................................................................23
5. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE........................................................23
5.1 Accuracy of Representations .....................................................................24
5.2 Seller's Performance ............................................................................24
5.3 [Intentionally Left Blank].......................................................................24
5.4 Additional Documents ............................................................................24
5.5 No Proceedings ..................................................................................25
5.6 No Conflict .....................................................................................25
6. CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE.......................................................25
6.1 Accuracy of Representations .....................................................................25
6.2 Buyer's Performance .............................................................................25
6.3 No Injunction ...................................................................................25
7. ADDITIONAL COVENANTS.......................................................................................26
7.1 Employees and Employee Benefits .................................................................26
7.2 Payment of All Taxes Resulting from Sale of Assets by Seller ....................................27
7.3 Payment of Other Retained Liabilities ...........................................................27
7.4 Assistance in Proceedings .......................................................................27
7.5 Non-Competition, Nonsolicitation and Nondisparagement ...........................................28
7.6 Customer and Other Business Relationships .......................................................29
7.7 Retention of and Access to Records ..............................................................29
7.8 Further Assurances ..............................................................................29
8. INDEMNIFICATION; REMEDIES..................................................................................29
8.1 Survival ........................................................................................29
8.2 Indemnification and Reimbursement by Seller and Shareholder .....................................30
8.3 Indemnification and Reimbursement by Buyer ......................................................31
8.4 Limitations on Amount--Seller and Shareholder ...................................................31
8.5 Limitations on Amount--Buyer ....................................................................31
8.6 Time Limitations ................................................................................32
8.7 Third-Party Claims ..............................................................................32
8.8 Other Claims ....................................................................................34
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9. CONFIDENTIALITY............................................................................................34
9.1 Definition of Confidential Information ..........................................................34
9.2 Restricted Use of Confidential Information ......................................................35
9.3 Exceptions ......................................................................................35
9.4 Legal Proceedings ...............................................................................35
9.5 Return or Destruction of Confidential Information ...............................................36
9.6 Attorney-Client Privilege .......................................................................36
10. GENERAL PROVISIONS.........................................................................................37
10.1 Expenses ........................................................................................37
10.2 Public Announcements ............................................................................37
10.3 Notices .........................................................................................37
10.4 Enforcement of Agreement ........................................................................38
10.5 Waiver; Remedies Cumulative .....................................................................39
10.6 Entire Agreement and Modification ...............................................................39
10.7 Disclosure Letter ...............................................................................39
10.8 Assignments, Successors and No Third-Party Rights ...............................................39
10.9 Severability ....................................................................................40
10.10 Construction ....................................................................................40
10.11 Time of Essence .................................................................................40
10.12 Governing Law ...................................................................................40
10.13 Execution of Agreement ..........................................................................40
10.14 Shareholder Obligations .........................................................................40
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement ("Agreement") is dated July 11, 2005,
between AIRCOMP L. L. C., a Delaware limited liability company ("Buyer"), W. T.
ENTERPRISES, INC., a Texas corporation d/b/a Lone Star Air Service ("Seller")
and XXXXXXX X. XXXXX, an individual, whose address is 0000 Xxxxxx Xxxxx, Xxxxx,
Xxxxx 00000 ("Shareholder").
RECITALS
Shareholder owns One Hundred (100) shares of the common stock, par
value ten dollars ($10.00) per share, of Seller, which constitute one hundred
percent (100%) of the issued and outstanding shares of capital stock of Seller.
Seller and Shareholder desire to sell, and Buyer desires to purchase, the Assets
of Seller and the personal goodwill of Shareholder for the consideration and on
the terms set forth in this Agreement.
The parties, intending to be legally bound, agree as follows:
1. DEFINITIONS AND USAGE
---------------------
1.1 DEFINITIONS
For purposes of this Agreement, the following terms and variations
thereof have the meanings specified or referred to in this Section 1.1:
"Accounts Receivable"--(a) all trade accounts receivable and other
rights to payment from customers of Seller and the full benefit of all security
for such accounts or rights to payment, including all trade accounts receivable
representing amounts receivable in respect of goods shipped or products sold or
services rendered to customers of Seller, (b) all other accounts or notes
receivable of Seller and the full benefit of all security for such accounts or
notes and (c) any claim, remedy or other right related to any of the foregoing.
"Assets"--as defined in Section 2.1.
"Assumed Liabilities"--as defined in Section 2.4(a).
"Balance Sheet"--as defined in Section 3.4.
"Best Efforts"--the efforts that a prudent Person desirous of achieving
a result would use in similar circumstances to achieve that result as
expeditiously as possible, provided, however, that a Person required to use Best
Efforts under this Agreement will not be thereby required to take actions that
would result in a material adverse change in the benefits to such Person of this
Agreement and the Contemplated Transactions or to dispose of or make any change
to its business, expend any material funds or incur any other material burden.
"Xxxx of Sale"--as defined in Section 2.7(a)(i).
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"Breach"--any breach of, or any inaccuracy in, any representation or
warranty or any breach of, or failure to perform or comply with, any covenant or
obligation, in or of this Agreement or any other Contract, or any event which
with the passing of time or the giving of notice, or both, would constitute such
a breach, inaccuracy or failure.
"Business Day"--any day other than (a) Saturday or Sunday or (b) any
other day on which banks in Texas are permitted or required to be closed.
"Buyer"--as defined in the first paragraph of this Agreement.
"Buyer Indemnified Persons"--as defined in Section 11.2.
"Closing"--as defined in Section 2.6.
"Closing Date"--the date on which the Closing actually takes place.
"Code"--the Internal Revenue Code of 1986.
"Confidential Information"--as defined in Section 12.1.
"Consent"--any approval, consent, ratification, waiver or other
authorization.
"Contemplated Transactions"--all of the transactions contemplated by
this Agreement.
"Contract"--any agreement, contract, Lease, consensual obligation,
promise or undertaking (whether written or oral and whether express or implied),
whether or not legally binding.
"Damages"--as defined in Section 11.2.
"Disclosure Letter"--the disclosure letter delivered by Seller and
Shareholder to Buyer concurrently with the execution and delivery of this
Agreement.
"Effective Time"--shall be 12:00 a.m. on July 11, 2005 CDT.
"Employment Agreement"--as defined in Section 2.7(a)(vi).
"Encumbrance"--any charge, claim, community or other marital property
interest, condition, equitable interest, lien, option, pledge, security
interest, mortgage, right of way, easement, encroachment, servitude, right of
first option, right of first refusal or similar restriction, including any
restriction on use, voting (in the case of any security or equity interest),
transfer, receipt of income or exercise of any other attribute of ownership.
"Environment"--soil, land surface or subsurface strata, surface waters
(including navigable waters and ocean waters), groundwaters, drinking water
supply, stream sediments, ambient air (including indoor air), plant and animal
life and any other environmental medium or natural resource.
"Environmental, Health and Safety Liabilities"--any cost, damages,
expense, liability, obligation or other responsibility arising from or under any
Environmental Law or Occupational Safety and Health Law, including those
consisting of or relating to:
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(a) any environmental, health or safety matter or condition (including
on-site or off-site contamination, occupational safety and health and regulation
of any chemical substance or product);
(b) any fine, penalty, judgment, award, settlement, legal or
administrative proceeding, damages, loss, claim, demand or response, remedial or
inspection cost or expense arising under any Environmental Law or Occupational
Safety and Health Law;
(c) financial responsibility under any Environmental Law or
Occupational Safety and Health Law for cleanup costs or corrective action,
including any cleanup, removal, containment or other remediation or response
actions ("Cleanup") required by any Environmental Law or Occupational Safety and
Health Law (whether or not such Cleanup has been required or requested by any
Governmental Body or any other Person) and for any natural resource damages; or
(d) any other compliance, corrective or remedial measure required under
any Environmental Law or Occupational Safety and Health Law.
The terms "removal," "remedial" and "response action" include the types of
activities covered by the United States Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (CERCLA).
"Environmental Law"-- Legal Requirement designed to minimize, prevent,
punish or remedy the consequences of actions that damage or threaten the
Environment or public health and safety.
"ERISA"--the Employee Retirement Income Security Act of 1974.
"Exchange Act"--the Securities Exchange Act of 1934.
"Excluded Assets"--as defined in Section 2.2.
"GAAP"--generally accepted accounting principles for financial
reporting in the United States, applied on a basis consistent with the basis on
which the Balance Sheet and the other financial statements referred to in
Section 3.4 were prepared.
"Governing Documents"--with respect to any particular entity, (a) if a
corporation, the articles or certificate of incorporation and the bylaws; (b) if
a general partnership, the partnership agreement and any statement of
partnership; (c) if a limited partnership, the limited partnership agreement and
the certificate of limited partnership; (d) if a limited liability company, the
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articles of organization and operating agreement; (e) if another type of Person,
any other charter or similar document adopted or filed in connection with the
creation, formation or organization of the Person; (f) all equityholders'
agreements, voting agreements, voting trust agreements, joint venture
agreements, registration rights agreements or other agreements or documents
relating to the organization, management or operation of any Person or relating
to the rights, duties and obligations of the equityholders of any Person; and
(g) any amendment or supplement to any of the foregoing.
"Governmental Authorization"--any Consent, license, registration or
permit issued, granted, given or otherwise made available by or under the
authority of any Governmental Body or pursuant to any Legal Requirement.
"Governmental Body"--any:
(a) nation, state, county, city, town, borough, village, district or
other jurisdiction;
(b) federal, state, local, municipal, foreign or other government;
(c) governmental or quasi-governmental authority of any nature
(including any agency, branch, department, board, commission, court, tribunal or
other entity exercising governmental or quasi-governmental powers);
(d) multinational organization or body;
(e) body exercising, or entitled or purporting to exercise, any
administrative, executive, judicial, legislative, police, regulatory or taxing
authority or power; or
(f) official of any of the foregoing.
"Indemnified Person"--as defined in Section 11.9.
"Indemnifying Person"--as defined in Section 11.9.
"Interim Balance Sheet"--as defined in Section 3.4.
"IRS"--the United States Internal Revenue Service and, to the extent
relevant, the United States Department of the Treasury.
"Knowledge"--an individual will be deemed to have Knowledge of a
particular fact or other matter if:
(a) that individual is actually aware of that fact or matter; or
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(b) a prudent individual could be expected to discover or otherwise
become aware of that fact or matter in the course of conducting a reasonable
investigation regarding the accuracy of any representation or warranty contained
in this Agreement.
A Person (other than an individual) will be deemed to have Knowledge of a
particular fact or other matter if any individual who is serving, or who has at
any time served, as a director, officer, partner, executor or trustee of that
Person (or in any similar capacity) has or had Knowledge of that fact or other
matter during his service as a director, officer, partner, executor or trustee
(as set forth in (a) and (b) above), and any such individual (and any individual
party to this Agreement) will be deemed to have conducted a reasonable
investigation regarding the accuracy of the representations and warranties made
herein by that Person or individual.
"Leased Property"--the real property and buildings currently leased by Seller
on a month-to-month lease which lease will be terminated by Seller on the
Effective Time.
"Legal Requirement"--any federal, state, local, municipal, foreign,
international, multinational or other constitution, law, ordinance, principle of
common law, code, regulation, statute or treaty.
"Liability"--with respect to any Person, any liability or obligation of
such Person of any kind, character or description, whether known or unknown,
absolute or contingent, accrued or unaccrued, disputed or undisputed, liquidated
or unliquidated, secured or unsecured, joint or several, due or to become due,
vested or unvested, executory, determined, determinable or otherwise, and
whether or not the same is required to be accrued on the financial statements of
such Person.
"Occupational Safety and Health Law"--any Legal Requirement designed to
provide safe and healthful working conditions and to reduce occupational safety
and health hazards, including the Occupational Safety and Health Act, and any
program, whether governmental or private (such as those promulgated or sponsored
by industry associations and insurance companies), designed to provide safe and
healthful working conditions.
"Order"--any order, injunction, judgment, decree, ruling, assessment or
arbitration award of any Governmental Body or arbitrator.
"Ordinary Course of Business"--an action taken by a Person will be
deemed to have been taken in the Ordinary Course of Business only if that
action:
(a) is consistent in nature, scope and magnitude with the past
practices of such Person and is taken in the ordinary course of the normal,
day-to-day operations of such Person;
(b) does not require authorization by the board of directors or
Shareholder of such Person (or by any Person or group of Persons exercising
similar authority) and does not require any other separate or special
authorization of any nature; and
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(c) is similar in nature, scope and magnitude to actions customarily
taken, without any separate or special authorization, in the ordinary course of
the normal, day-to-day operations of other Persons that are in the same line of
business as such Person.
"Part"--a part or section of the Disclosure Letter.
"Person"--an individual, partnership, corporation, business trust,
limited liability company, limited liability partnership, joint stock company,
trust, unincorporated association, joint venture or other entity or a
Governmental Body.
"Proceeding"--any action, arbitration, audit, hearing, investigation,
litigation or suit (whether civil, criminal, administrative, judicial or
investigative, whether formal or informal, whether public or private) commenced,
brought, conducted or heard by or before, or otherwise involving, any
Governmental Body or arbitrator.
"Purchase Price"--as defined in Section 2.3.
"Record"--information that is inscribed on a tangible medium or that is
stored in an electronic or other medium and is retrievable in perceivable form.
"Related Person"-- With respect to a particular individual:
(a) each other member of such individual's Family;
(b) any Person that is directly or indirectly controlled by any one or
more members of such individual's Family;
(c) any Person in which members of such individual's Family hold
(individually or in the aggregate) a Material Interest; and
(d) any Person with respect to which one or more members of such
individual's Family serves as a director, officer, partner, executor or trustee
(or in a similar capacity).
With respect to a specified Person other than an individual:
(a) any Person that directly or indirectly controls, is directly or
indirectly controlled by or is directly or indirectly under common control with
such specified Person;
(b) any Person that holds a Material Interest in such specified Person;
(c) each Person that serves as a director, officer, partner, executor
or trustee of such specified Person (or in a similar capacity);
(d) any Person in which such specified Person holds a Material
Interest; and
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(e) any Person with respect to which such specified Person serves as a
general partner or a trustee (or in a similar capacity).
For purposes of this definition, (a) "control" (including "controlling,"
"controlled by," and "under common control with") means the possession, direct
or indirect, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise, and shall be construed as such term is used in the rules
promulgated under the Securities Act; (b) the "Family" of an individual includes
(i) the individual, (ii) the individual's spouse, (iii) any other natural person
who is related to the individual or the individual's spouse within the second
degree and (iv) any other natural person who resides with such individual; and
(c) "Material Interest" means direct or indirect beneficial ownership (as
defined in Rule 13d-3 under the Exchange Act) of voting securities or other
voting interests representing at least ten percent (10%) of the outstanding
voting power of a Person or equity securities or other equity interests
representing at least ten percent (10%) of the outstanding equity securities or
equity interests in a Person.
"Release"--any release, spill, emission, leaking, pumping, pouring,
dumping, emptying, injection, deposit, disposal, discharge, dispersal, leaching
or migration on or into the Environment or into or out of any property.
"Remedial Action"--all actions, including any capital expenditures,
required or voluntarily undertaken (a) to clean up, remove, treat or in any
other way address any Hazardous Material or other substance; (b) to prevent the
Release or Threat of Release or to minimize the further Release of any Hazardous
Material or other substance so it does not migrate or endanger or threaten to
endanger public health or welfare or the Environment; (c) to perform
pre-remedial studies and investigations or post-remedial monitoring and care; or
(d) to bring all Facilities and the operations conducted thereon into compliance
with Environmental Laws and environmental Governmental Authorizations.
"Representative"--with respect to a particular Person, any director,
officer, manager, employee, agent, consultant, advisor, accountant, financial
advisor, legal counsel or other representative of that Person.
"Retained Liabilities"--as defined in Section 2.4(b).
"Seller"--as defined in the first paragraph of this Agreement.
"Seller Contract"--any Contract (a) under which Seller has or may
acquire any rights or benefits; (b) under which Seller has or may become subject
to any obligation or liability; or (c) by which Seller or any of the assets
owned or used by Seller is or may become bound.
"Shareholder"--as defined in the first paragraph of this Agreement.
"Subsidiary"--with respect to any Person (the "Owner"), any corporation
or other Person of which securities or other interests having the power to elect
a majority of that corporation's or other Person's board of directors or similar
governing body, or otherwise having the power to direct the business and
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policies of that corporation or other Person (other than securities or other
interests having such power only upon the happening of a contingency that has
not occurred), are held by the Owner or one or more of its Subsidiaries.
"Tangible Personal Property"--all machinery, equipment, tools,
furniture, office equipment, computer hardware, supplies, materials, vehicles
and other items of tangible personal property (other than Inventories) of every
kind owned or leased by Seller (wherever located and whether or not carried on
Seller's books), together with any express or implied warranty by the
manufacturers or sellers or lessors of any item or component part thereof and
all maintenance records and other documents relating thereto.
"Tax"--any income, gross receipts, license, payroll, employment,
excise, severance, stamp, occupation, premium, property, environmental, windfall
profit, customs, vehicle, airplane, boat, vessel or other title or registration,
capital stock, franchise, employees' income withholding, foreign or domestic
withholding, social security, unemployment, disability, real property, personal
property, sales, use, transfer, value added, alternative, add-on minimum and
other tax, fee, assessment, levy, tariff, charge or duty of any kind whatsoever
and any interest, penalty, addition or additional amount thereon imposed,
assessed or collected by or under the authority of any Governmental Body or
payable under any tax-sharing agreement or any other Contract.
"Tax Return"--any return (including any information return), report,
statement, schedule, notice, form, declaration, claim for refund or other
document or information filed with or submitted to, or required to be filed with
or submitted to, any Governmental Body in connection with the determination,
assessment, collection or payment of any Tax or in connection with the
administration, implementation or enforcement of or compliance with any Legal
Requirement relating to any Tax.
"Third Party"--a Person that is not a party to this Agreement.
"Third-Party Claim"--any claim against any Indemnified Person by a
Third Party, whether or not involving a Proceeding.
"Threat of Release"--a reasonable likelihood of a Release that may
require action in order to prevent or mitigate damage to the Environment that
may result from such Release.
1.2 USAGE
(a) Interpretation. In this Agreement, unless a clear contrary
intention appears:
(i) the singular number includes the plural number and vice
versa;
(ii) reference to any Person includes such Person's successors
and assigns but, if applicable, only if such successors and assigns are
not prohibited by this Agreement, and reference to a Person in a
particular capacity excludes such Person in any other capacity or
individually;
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(iii) reference to any gender includes each other gender;
(iv) reference to any agreement, document or instrument means
such agreement, document or instrument as amended or modified and in
effect from time to time in accordance with the terms thereof;
(v) reference to any Legal Requirement means such Legal
Requirement as amended, modified, codified, replaced or reenacted, in
whole or in part, and in effect from time to time, including rules and
regulations promulgated thereunder, and reference to any section or
other provision of any Legal Requirement means that provision of such
Legal Requirement from time to time in effect and constituting the
substantive amendment, modification, codification, replacement or
reenactment of such section or other provision;
(vi) "hereunder," "hereof," "hereto," and words of similar
import shall be deemed references to this Agreement as a whole and not
to any particular Article, Section or other provision hereof;
(vii) "including" (and with correlative meaning "include")
means including without limiting the generality of any description
preceding such term;
(viii) "or" is used in the inclusive sense of "and/or";
(ix) with respect to the determination of any period of time,
"from" means "from and including" and "to" means "to but excluding";
and
(x) references to documents, instruments or agreements shall
be deemed to refer as well to all addenda, exhibits, schedules or
amendments thereto.
(b) Accounting Terms and Determinations. Unless otherwise specified
herein, all accounting terms used herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with GAAP.
(c) Legal Representation of the Parties. This Agreement was negotiated
by the parties with the benefit of legal representation, and any rule of
construction or interpretation otherwise requiring this Agreement to be
construed or interpreted against any party shall not apply to any construction
or interpretation hereof.
2. SALE AND TRANSFER OF ASSETS AND GOODWILL; CLOSING
-------------------------------------------------
2.1 ASSETS TO BE SOLD
Upon the terms and subject to the conditions set forth in this
Agreement, at the Closing, Seller shall sell, convey, assign, transfer and
deliver to Buyer, and Buyer shall purchase and acquire from Seller, free and
clear of any Encumbrances, all of Seller's right, title and interest in and to
the Tangible Personal Property of Seller and assets, personal and tangible
listed below (but excluding the Excluded Assets):
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(i) the Tangible Personal Property described in Part 2.1;
(ii) all data and Records related to client and customer lists, service
and warranty Records, equipment logs, equipment maintenance records, operating
guides and manuals, and copies of all personnel Records; and
(iii) copies of the financial and accounting records of Seller for
fiscal years 2003, 2004 and the period from January 1, 2005 through the Closing
Date.
In addition, upon the terms and subject to the conditions set forth in
this Agreement, at the Closing, Shareholder shall sell and transfer to Buyer and
Buyer shall purchase and acquire from Shareholder the personal goodwill of
Shareholder.
All of the property and assets to be transferred to Buyer as described
in this Section 2.1(i)-(iii) are herein referred to collectively as the
"Assets."
Notwithstanding the foregoing, the transfer of the Assets pursuant to
this Agreement shall not include the assumption of any Liability related to the
Seller or Shareholder.
2.2 EXCLUDED ASSETS
Notwithstanding anything to the contrary contained in Section 2.1 or
elsewhere in this Agreement, the following assets of Seller (collectively, the
"Excluded Assets") are not part of the sale and purchase contemplated hereunder,
are excluded from the Assets and shall remain the property of Seller after the
Closing:
(a) all cash, cash equivalents and short-term investments;
(b) all minute books, stock Records and corporate seals;
(c) the shares of capital stock of Seller held in treasury;
(d) all insurance policies and rights thereunder;
(e) all of the Seller Contracts;
(f) all personnel Records and other Records that Seller is
required by law to retain in its possession;
(g) all claims for refund of Taxes and other governmental charges
of whatever nature;
(h) all rights of Seller under this Agreement and the Xxxx of
Sale;
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(i) the property and assets expressly described in Exhibit 2.2
which is attached hereto and incorporated herein for all
purposes;
(j) all Accounts Receivable;
(k) all claims of Seller against Third Parties relating to the
Assets, whether xxxxxx or in xxxxxx, known or unknown,
contingent or noncontigent; and
(l) all rights of Seller relating to deposits and prepaid
expenses, claims for refunds and rights to offset in respect
thereof.
2.3 CONSIDERATION
The consideration for the Assets will be $4,390,000. The consideration
for the personal goodwill of Shareholder will be $1,610,000. The total amount
paid to Seller and Shareholder pursuant to this Agreement shall be the Purchase
Price. In accordance with Section 2.7(b), at the Closing, the Purchase Price, in
the amounts as allocated in this Section 2.3, shall be delivered by Buyer to
Seller and Shareholder via wire transfer to separate accounts as may be
designated by Seller and Shareholder.
2.4 LIABILITIES
(a) ASSUMED LIABILITIES. BUYER SHALL NOT ASSUME OR AGREE TO DISCHARGE
ANY LIABILITIES OF SELLER.
(b) Retained Liabilities. The Retained Liabilities shall remain the
sole responsibility of and shall be retained by Seller and shall not be assumed
by Buyer. "Retained Liabilities" shall mean every Liability of Seller arising
prior to the Effective Time including but not limited to:
(i) any Liability of Seller arising out of or relating to the
operation of Seller's business;
(ii) any Liability of Seller under any Contract;
(iii) any Liability of Seller or Shareholder for Taxes due
from Seller or Shareholder, including (A) any Taxes arising as a result
of Seller's operation of its business or ownership of the Assets prior
to the Effective Time, (B) any Taxes due from Seller that will arise as
a result of the sale of the Assets pursuant to this Agreement and (C)
any deferred Taxes resulting from Seller's operation of its business or
ownership of the Assets prior to the Effective Time of any nature;
(iv) any Liability of Seller arising out of or relating to
Seller's credit facilities or any security interest related thereto;
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(v) any Environmental, Health and Safety Liabilities of Seller
arising out of or relating to the operation of Seller's business or
Seller's leasing, ownership or operation of real property;
(vi) any Liability of Seller under the Employee Plans, if any,
or relating to payroll, vacation, sick leave, workers' compensation,
unemployment benefits, pension benefits, employee stock option or
profit-sharing plans, health care plans or benefits or any other
employee plans or benefits of any kind for Seller's employees or former
employees or both;
(vii) any Liability of Seller under any employment, severance,
retention or termination agreement with any employee of Seller or any
of its Related Persons;
(vii) any Liability of Seller arising out of or relating to
any employee grievance arising prior to the Effective Time whether or
not the affected employees are hired by Buyer;
(viii) any Liability of Seller to any Shareholder or Related
Person of Seller or any Shareholder;
(ix) any Liability of Seller to indemnify, reimburse or
advance amounts to any officer, director, employee or agent of Seller;
(x) any Liability of Seller to distribute to any of Seller's
shareholders or otherwise apply all or any part of the consideration
received hereunder;
(xi) any Liability of Seller arising out of any Proceeding;
(xii) any Liability of Seller arising out of any Proceeding
commenced after the Effective Time and arising out of or relating to
any occurrence or event happening prior to the Effective Time;
(xiii) any Liability of Seller arising out of or resulting
from Seller's compliance or noncompliance with any Legal Requirement or
Order of any Governmental Body;
(xiv) any Liability of Seller under this Agreement or any
other document executed in connection with the Contemplated
Transactions; and
(xv) any Liability of Seller based upon Seller's acts or
omissions.
2.5 ALLOCATION
The Purchase Price shall be allocated as follows: Assets - $4,390,000;
and the personal goodwill of Shareholder - $1,610,000. After the Closing, the
parties shall make consistent use of the allocation, fair market value and
useful lives for all Tax purposes and in all filings, declarations and reports
with the IRS in respect thereof, including the reports required to be filed
12
under Section 1060 of the Code. Buyer shall prepare and deliver IRS Form 8594 to
Seller and Shareholder reflecting the allocation of the Purchase Price as
provided herein within forty-five (45) days after the Closing Date to be filed
with the IRS. In any Proceeding related to the determination of any Tax, neither
Buyer, Seller nor Shareholder shall contend or represent that such allocation is
not a correct allocation.
2.6 CLOSING
The purchase and sale provided for in this Agreement (the "Closing")
will take place at the offices of Buyer at 0000 Xxxxxxxxxx, Xxxxx 000, Xxxxxxx,
Xxxxx 00000, commencing at 10:00 a.m. (local time) on July 11, 2005, unless
Buyer and Seller otherwise agree.
2.7 CLOSING OBLIGATIONS
In addition to any other documents to be delivered under other
provisions of this Agreement, at the Closing:
(a) Seller and Shareholder, as the case may be, shall deliver to Buyer:
(i) a xxxx of sale for all of the Assets that are Tangible
Personal Property in the form of Exhibit 2.7(a)(i) (the "Xxxx of Sale")
executed by Seller;
(ii) such other bills of sale, assignments, certificates of
title, documents and other instruments of transfer and conveyance as
may reasonably be requested by Buyer, each in form and substance
satisfactory to Buyer and its legal counsel and executed by Seller (in
the event that certificates of title to vehicles are not available at
Closing, Seller and Buyer agree that Seller may obtain appropriate
vehicle title transfer documents within 45 days after Closing);
(iii) an employment agreement in the form of Exhibit
2.7(a)(iii), executed by the Shareholder (the "Employment Agreement");
(iv) non-competition agreement in the form of Exhibit
2.7(a)(iv), executed by the Shareholder (the "Non-Competition
Agreement");
(v) a certificate executed by Seller and the Shareholder as to
the accuracy of their representations and warranties as of the Closing
in accordance with Section 5.1 and as to their compliance with and
performance of their covenants and obligations to be performed or
complied with at or before the Closing in accordance with Section 5.2;
and
(vi) a certificate of the Secretary of Seller certifying, as
complete and accurate as of the Closing certifying and attaching all
requisite resolutions or actions of Seller's board of directors and
Shareholder approving the execution and delivery of this Agreement and
the consummation of the Contemplated Transactions and certifying to the
incumbency and signatures of the officers of Seller executing this
Agreement and any other document relating to the Contemplated
Transactions.
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(b) Buyer shall deliver to Seller and Shareholder, as the case may be:
(i) Four Million Three Hundred Ninety Thousand Dollars
($4,390,000)] by wire transfer to an account specified by Seller in
writing and delivered to Buyer;
(ii) One Million Six Hundred Ten Thousand Dollars
($1,610,000)] by wire transfer to an account specified by Shareholder
in writing and delivered to Buyer.
(iii) the Employment Agreement executed by Buyer;
(iv) the Non-Competition Agreement executed by Buyer;
(v) a certificate executed by Buyer as to the accuracy of its
representations and warranties as of the date of the Closing in
accordance with Section 6.1 and as to its compliance with and
performance of its covenants and obligations to be performed or
complied with at or before the Closing in accordance with Section 6.2;
and
(vi) a certificate of the Secretary of Buyer, certifying and
attaching all requisite resolutions or actions of Buyer's management
committee approving the execution and delivery of this Agreement and
the consummation of the Contemplated Transactions and certifying to the
incumbency and signatures of the officers of Buyer executing this
Agreement and any other document relating to the Contemplated
Transactions.
2.8 CONSENTS
If there are any Material Consents that have not yet been obtained (or
otherwise are not in full force and effect) as of the Closing, in the case of
each Seller Contract as to which such Material Consents were not obtained (or
otherwise are not in full force and effect) (the "Restricted Material
Contracts"), Buyer may waive the closing conditions as to any such Material
Consent.
3. REPRESENTATIONS AND WARRANTIES OF SELLER AND SHAREHOLDER
--------------------------------------------------------
Seller and the Shareholder represent and warrant, jointly and
severally, to Buyer as follows:
3.1 ORGANIZATION AND GOOD STANDING
(a) Seller is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation, with full
corporate power and authority to conduct its business as it is now being
conducted, to own or use the properties and assets that it purports to own or
use, and to perform all its obligations under this Agreement. Seller does not
have a Subsidiary.
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3.2 ENFORCEABILITY; AUTHORITY; NO CONFLICT
(a) This Agreement constitutes the legal, valid and binding obligation
of Seller and the Shareholder, enforceable against each of them in accordance
with its terms. Upon the execution and delivery by Seller and Shareholder of the
Employment Agreement, the Non-Competition Agreement and each other agreement to
be executed or delivered by any or all of Seller and Shareholder at the Closing
(collectively, the "Seller's Closing Documents"), each of Seller's Closing
Documents will constitute the legal, valid and binding obligation of each of
Seller and the Shareholder, enforceable against each of them in accordance with
its terms. Seller has the absolute and unrestricted right, power and authority
to execute and deliver this Agreement and the Seller's Closing Documents to
which it is a party and to perform its obligations under this Agreement and the
Seller's Closing Documents, and such action has been duly authorized by all
necessary action by Seller's shareholders and board of directors. The
Shareholder has all necessary legal capacity to enter into this Agreement and
the Seller's Closing Documents to which the Shareholder is a party and to
perform his obligations hereunder and thereunder.
(b) Except as set forth in Part 3.2(b), neither the execution and
delivery of this Agreement nor the consummation or performance of any of the
Contemplated Transactions will, directly or indirectly (with or without notice
or lapse of time):
(i) Breach (A) any provision of any of the Governing Documents
of Seller or (B) any resolution adopted by the board of directors or
the Shareholder of Seller;
(ii) Breach or give any Governmental Body or other Person the
right to challenge any of the Contemplated Transactions or to exercise
any remedy or obtain any relief under any Legal Requirement or any
Order to which Seller or the Shareholder, or any of the Assets, may be
subject;
(iii) contravene, conflict with or result in a violation or
breach of any of the terms or requirements of, or give any Governmental
Body the right to revoke, withdraw, suspend, cancel, terminate or
modify, any Governmental Authorization that is held by Seller or that
otherwise relates to the Assets or to the business of Seller;
(iv) Breach any provision of, or give any Person the right to
declare a default or exercise any remedy under, or to accelerate the
maturity or performance of, or payment under, or to cancel, terminate
or modify, any Seller Contract;
(v) result in the imposition or creation of any Encumbrance
upon or with respect to any of the Assets; or
(vi) result in any shareholder of the Seller having the right
to exercise dissenters' appraisal rights.
(c) Except as set forth in Part 3.2(c), neither Seller nor Shareholder
is required to give any notice to or obtain any Consent from any Person in
connection with the execution and delivery of this Agreement or the consummation
or performance of any of the Contemplated Transactions.
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3.3 CAPITALIZATION
The authorized equity securities of Seller consist of one hundred (100)
shares of common stock, par value ten dollars ($10.00) per share, of which one
hundred (100) shares are issued and outstanding, all of which are owned by the
Shareholder. Shareholder is and will be on the Closing Date the record and
beneficial owner and holder of the Shares owned by him, free and clear of all
Encumbrances. There are no Contracts relating to the issuance, sale or transfer
of any equity securities or other securities of Seller. None of the outstanding
equity securities of Seller was issued in violation of the Securities Act of
1933, as amended (the "Securities Act"), or any other Legal Requirement.
3.4 FINANCIAL STATEMENTS
Seller has delivered to Buyer: (a) an audited balance sheet of Seller
as at December 31, 2004 (including the notes thereto, the "Balance Sheet"), and
the related audited statements of income, changes in stockholder's equity and
cash flows for the fiscal year then ended, including in each case the notes
thereto, together with the report thereon of Accounting and Consulting Group,
LLP, independent certified public accountants; (b) audited balance sheets of
Seller as of December 31 in fiscal year 2003, and the related audited statements
of income, changes in stockholder's equity and cash flows for the fiscal year
then ended, including the notes thereto; and (c) an unaudited balance sheet of
Seller as at May 31, 2005 (the "Interim Balance Sheet") and the related
unaudited statements of income, changes in stockholder's equity, and cash flows
for the five (5) months then ended, including in each case the notes thereto
certified by Seller's chief financial officer. Such financial statements fairly
present (and the financial statements delivered pursuant to Section 5.8 will
fairly present) the financial condition and the results of operations, changes
in stockholder's equity and cash flows of Seller as at the respective dates of
and for the periods referred to in such financial statements, all in accordance
with GAAP. The financial statements referred to in this Section 3.4 and
delivered pursuant to Section 5.8 reflect and will reflect the consistent
application of such accounting principles throughout the periods involved,
except as disclosed in the notes to such financial statements. The financial
statements have been and will be prepared from and are in accordance with the
accounting Records of Seller. Seller has also delivered to Buyer copies of all
letters from Seller's auditors to Seller's board of directors or the audit
committee thereof during the thirty-six (36) months preceding the execution of
this Agreement, together with copies of all responses thereto. The rental
expense for all operating leases under the Balance Sheet totaled $912,594 for
the year ended December 31, 2004.
3.5 BOOKS AND RECORDS
The books of account and other financial Records of Seller, all of
which have been made available to Buyer, are complete and correct and represent
actual, bona fide transactions and have been maintained in accordance with sound
business practices including the maintenance of an adequate system of internal
controls. The minute books of Seller, all of which have been made available to
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Buyer, contain accurate and complete Records of all meetings held of, and
corporate action taken by, the Shareholder, the board of directors and
committees of the board of directors of Seller, and no meeting of any such
Shareholder, board of directors or committee has been held for which minutes
have not been prepared or are not contained in such minute books.
3.6 SUFFICIENCY OF ASSETS
The Assets include substantially all of the operating assets of Seller.
3.7 [INTENTIONALLY LEFT BLANK]
3.8 LEASED PROPERTY
The Leased Property as described in Part 3.8 is subject to a
month-to-month lease which will be terminated by Seller and the lessor of such
Leased Property as of the Effective Time.
3.9 TITLE TO ASSETS; ENCUMBRANCES
Seller owns good and transferable title to all of the Assets free and
clear of any Encumbrances. Seller warrants to Buyer that, at the Effective Time,
all Assets shall be free and clear of all Encumbrances.
3.10 CONDITION OF ASSETS
Each item of Tangible Personal Property being sold hereunder is being
transferred "where is, as is" with all faults, however, to Seller's Knowledge
the Tangible Personal Property is in operating condition as of the Effective
Time. Seller makes no warranty of merchantability or fitness for a particular
purpose with respect to the Assets.
3.11 [INTENTIONALLY LEFT BLANK]
3.12 [INTENTIONALLY LEFT BLANK]
3.13 [INTENTIONALLY LEFT BLANK]
3.14 TAXES
Seller has filed or caused to be filed on a timely basis all tax
Returns and all reports with respect to Taxes that are or were required to be
filed pursuant to applicable Legal Requirements. Seller has paid, or made
provisions for the payment of, all Taxes that have or may become due for all
periods covered by the Tax Returns or otherwise, or pursuant to any assessment
received by Seller, except such Taxes, if any, as are listed in Part 3.14 and
being contested in good faith and as to which adequate reserves have been
provided. No claim has ever been made or is expected to be made by any
Governmental Body in a jurisdiction where Seller does not file Tax Returns that
it is or may be subject to taxation by that jurisdiction. All Taxes that Seller
is or was required by Legal Requirement to withhold, deduct or collect have been
duly withheld, deducted or collected and to the extent required, have been paid
17
to the Governmental Body or other Person. There are no Encumbrances on any of
the Assets that arose in connection with any failure (or alleged failure) to pay
any Tax, and Seller has no Knowledge of any basis for assertion of any claims
attributable to Taxes which, if adversely determined, would result in any such
Encumbrance.
3.15 NO MATERIAL ADVERSE CHANGE
Since the date of the Balance Sheet, there has not been any material
adverse change in the business, operations, prospects, assets, results of
operations or condition (financial or other) of Seller, and no event has
occurred or circumstance exists that may result in such a material adverse
change.
3.16 EMPLOYEE BENEFITS
(a) Seller has no "employee benefit plans" as defined by Section 3(3)
of ERISA, specified fringe benefit plans as defined in Section 6039D of the
Code, or any other bonus, incentive compensation, deferred compensation, profit
sharing, stock option, stock appreciation right, stock bonus, stock purchase,
employee stock ownership, savings, severance, change-in-control, supplemental
unemployment, layoff, salary continuation, retirement, pension, health, life
insurance, disability, accident, group insurance, vacation, holiday, sick leave,
fringe benefit or welfare plan, or any other employee compensation or benefit
plan, agreement, policy, practice, commitment, contract or understanding
(whether qualified or nonqualified, currently effective or terminated, written
or unwritten) or any trust, escrow or other agreement related thereto that is
maintained or contributed to by Seller or any other corporation or trade or
business controlled by, controlling or under common control with Seller (within
the meaning of Section 414 of the Code or Section 4001(a)(14) or 4001(b) of
ERISA) ("ERISA Affiliate") or has been maintained or contributed to in the last
six (6) years by Seller or any ERISA Affiliate.
(b) Seller has no obligations or potential liability for benefits to
employees, former employees or their respective dependents following termination
of employment or retirement under any employee benefit plans.
3.17 COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL
AUTHORIZATIONS
(a) Except as set forth in Part 3.17(a):
Seller has not received, at any time since January 1, 2005,
any notice or other communication (whether oral or written) from any
Governmental Body or any other Person regarding (A) any actual, alleged,
possible or potential violation of, or failure to comply with, any Legal
Requirement or (B) any actual, alleged, possible or potential obligation on the
part of Seller to undertake, or to bear all or any portion of the cost of, any
Remedial Action of any nature.
(b) Except as set forth in Part 3.17(b):
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Seller has not received, at any time since January 1, 2005,
any notice or other communication (whether oral or written) from any
Governmental Body or any other Person regarding (A) any actual, alleged,
possible or potential violation of or failure to comply with any term or
requirement of any Governmental Authorization or (B) any actual, proposed,
possible or potential revocation, withdrawal, suspension, cancellation,
termination of or modification to any Governmental Authorization.
3.18 LEGAL PROCEEDINGS; ORDERS
(a) Except as set forth in Part 3.18(a), there is no pending or, to
Seller's Knowledge, threatened Proceeding:
(i) by or against Seller or that otherwise relates to or may
affect the Assets; or
(ii) that challenges, or that may have the effect of
preventing, delaying, making illegal or otherwise interfering with, any
of the Contemplated Transactions.
To the Knowledge of Seller, no event has occurred or circumstance exists that is
reasonably likely to give rise to or serve as a basis for the commencement of
any such Proceeding. Seller has delivered to Buyer copies of all pleadings,
correspondence and other documents relating to each Proceeding listed in Part
3.18(a). There are no Proceedings listed or required to be listed in Part
3.18(a) that could have a material adverse effect on the business, operations,
assets, condition or prospects of Seller or upon the Assets.
(b) Except as set forth in Part 3.18(b):
(i) there is no Order to which Seller, its business or any of
the Assets is subject; and
(ii) to the Knowledge of Seller, no officer, director, agent
or employee of Seller is subject to any Order that prohibits such
officer, director, agent or employee from engaging in or continuing any
conduct, activity or practice relating to the business of Seller.
3.19 ABSENCE OF CERTAIN CHANGES AND EVENTS
Except as set forth in Part 3.19, since the date of the Balance Sheet,
Seller has conducted its business only in the Ordinary Course of Business and
there has not been any:
(a) damage to or destruction or loss of any Asset, whether or not
covered by insurance, except for normal wear and tear;
(b) indication by any customer or supplier of an intention to
discontinue or change the terms of its relationship with Seller; or
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(c) material change in the accounting methods used by Seller.
3.20 [INTENTIONALLY LEFT BLANK]
3.21 INSURANCE
(a) Seller has delivered to Buyer:
(i) accurate and complete copies of all policies of insurance
(and correspondence relating to coverage thereunder) to which Seller is
a party or under which Seller is or has been covered at any time since
January 1, 2005, a list of which is included in Part 3.21(a); and
(ii) accurate and complete copies of all pending applications
by Seller for policies of insurance.
(b) Part 3.21(c) sets forth, by year, for the current policy year and
the previous two years.
(i) a summary of the loss experience under each policy of
insurance; and
(ii) a statement describing each claim under a policy of
insurance for an amount in excess of Ten Thousand Dollars ($10,000).
3.22 ENVIRONMENTAL MATTERS
Except as disclosed in Part 3.22:
(a) Neither Seller nor Shareholder has any basis to expect, nor has any
of them or any other Person for whose conduct they are or may be held to be
responsible received, any actual or threatened order, notice or other
communication from (i) any Governmental body or private citizen acting in the
public interest or (ii) the current or prior owner or operator of the Leased
Property, of any actual or potential violation or failure to comply with any
Environmental Law, or of any actual or threatened obligation to undertake or
bear the cost of any Environmental, Health and Safety Liabilities with respect
to the Leased Property.
(b) There are no pending or, to the Knowledge of Seller, threatened
claims, Encumbrances, or other restrictions of any nature resulting from any
Environmental, Health and Safety Liabilities or arising under or pursuant to any
Environmental Law with respect to or affecting the Leased Property.
(c) Neither Seller nor Shareholder has any Knowledge of or any basis to
expect, nor has any of them, or any other Person for whose conduct they are or
may be held responsible, received, any citation, directive, inquiry, notice,
Order, summons, warning or other communication that relates to Hazardous
Activity, Hazardous Materials, or any alleged, actual, or potential violation or
failure to comply with any Environmental Law, or of any alleged, actual, or
potential obligation to undertake or bear the cost of any Environmental, Health
and Safety Liabilities with respect to the Leased Property or Assets.
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(d) To the Knowledge of Seller, neither Seller nor any other Person for
whose conduct it is or maybe held responsible has any Environmental, Health and
Safety Liabilities with respect to the Leased Property or Assets.
(e) There are no Hazardous Materials attached to or part of the Assets
including any Hazardous Materials contained in barrels, aboveground or
underground storage tanks, dumps, equipment, or other containers, either
temporary or permanent.
(f) There has been no Release, of any, Hazardous Materials to the
Knowledge of Seller and Shareholder, at or from the Leased Property or from any
asset in which Seller has or had an interest.
3.23 EMPLOYEES
Part 3.23(a) contains a complete and accurate list of the following
information for each employee, independent contractor, consultant and agent of
Seller, including each employee on leave of absence or layoff status: employer;
name; job title; date of hiring or engagement; date of commencement of
employment or engagement; current compensation paid or payable and any change in
compensation since January 1, 2005, sick and vacation leave that is accrued but
unused.
3.24 [INTENTIONALLY LEFT BLANK]
3.25 [INTENTIONALLY LEFT BLANK]
3.26 [INTENTIONALLY LEFT BLANK]
3.27 [INTENTIONALLY LEFT BLANK]
3.28 [INTENTIONALLY LEFT BLANK]
3.29 [INTENTIONALLY LEFT BLANK]
3.30 BROKERS OR FINDERS
Neither Seller nor any of its Representatives have incurred any
obligation or liability, contingent or otherwise, for brokerage or finders' fees
or agents' commissions or other similar payments in connection with the sale of
Seller's business or the Assets or the Contemplated Transactions.
3.31 [INTENTIONALLY LEFT BLANK]
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3.32 SOLVENCY
(a) Seller is not now insolvent and will not be rendered insolvent by
any of the Contemplated Transactions. As used in this section, "insolvent" means
that the sum of the debts and other probable Liabilities of Seller exceeds the
present fair saleable value of Seller's assets.
(b) Immediately after giving effect to the consummation of the
Contemplated Transactions: (i) Seller will be able to pay its Liabilities as
they become due in the usual course of its business; (ii) Seller will not have
unreasonably small capital with which to conduct its present or proposed
business; (iii) Seller will have assets (calculated at fair market value) that
exceed its Liabilities; and (iv) taking into account all pending and threatened
litigation, final judgments against Seller in actions for money damages are not
reasonably anticipated to be rendered at a time when, or in amounts such that,
Seller will be unable to satisfy any such judgments promptly in accordance with
their terms (taking into account the maximum probable amount of such judgments
in any such actions and the earliest reasonable time at which such judgments
might be rendered) as well as all other obligations of Seller. The cash
available to Seller, after taking into account all other anticipated uses of the
cash, will be sufficient to pay all such debts and judgments promptly in
accordance with their terms.
3.33 DISCLOSURE
(a) No representation or warranty or other statement made by Seller or
the Shareholder in this Agreement, the Disclosure Letter, or the certificates
delivered pursuant to Section 2.7(a) contains any untrue statement or omits to
state a material fact necessary to make any of them, in light of the
circumstances in which it was made, not misleading.
(b) Seller does not have Knowledge of any fact that has specific
application to Seller (other than general economic or industry conditions) and
that may materially adversely affect the Assets that has not been set forth in
this Agreement or the Disclosure Letter.
4. REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
Buyer represents and warrants to Seller and Shareholder as follows:
4.1 ORGANIZATION AND GOOD STANDING
Buyer is a limited liability company duly organized, validly existing
and in good standing under the laws of the State of Delaware, with full power
and authority to conduct its business as it is now conducted.
4.2 AUTHORITY; NO CONFLICT
(a) This Agreement constitutes the legal, valid and binding obligation
of Buyer, enforceable against Buyer in accordance with its terms. Upon the
execution and delivery by Buyer of the Employment Agreement, the Non-Competition
Agreement and each other agreement to be executed or delivered by Buyer at
Closing (collectively, the "Buyer's Closing Documents"), each of the Buyer's
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Closing Documents will constitute the legal, valid and binding obligation of
Buyer, enforceable against Buyer in accordance with its respective terms. Buyer
has the absolute and unrestricted right, power and authority to execute and
deliver this Agreement and the Buyer's Closing Documents and to perform its
obligations under this Agreement and the Buyer's Closing Documents, and such
action has been duly authorized by all necessary corporate action.
(b) Neither the execution and delivery of this Agreement by Buyer nor
the consummation or performance of any of the Contemplated Transactions by Buyer
will give any Person the right to prevent, delay or otherwise interfere with any
of the Contemplated Transactions pursuant to:
(i) any provision of Buyer's Governing Documents;
(ii) any resolution adopted by management committee of Buyer;
(iii) any Legal Requirement or Order to which Buyer may be
subject; or
(iv) any Contract to which Buyer is a party or by which Buyer
may be bound.
Buyer is not and will not be required to obtain any Consent from any Person in
connection with the execution and delivery of this Agreement or the consummation
or performance of any of the Contemplated Transactions.
4.3 CERTAIN PROCEEDINGS
There is no pending Proceeding that has been commenced against Buyer
and that challenges, or may have the effect of preventing, delaying, making
illegal or otherwise interfering with, any of the Contemplated Transactions. To
Buyer's Knowledge, no such Proceeding has been threatened.
4.4 BROKERS OR FINDERS
Neither Buyer nor any of its Representatives have incurred any
obligation or liability, contingent or otherwise, for brokerage or finders' fees
or agents' commissions or other similar payment in connection with the
Contemplated Transactions.
5. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
---------------------------------------------------
Buyer's obligation to purchase the Assets and to take the other actions
required to be taken by Buyer at the Closing is subject to the satisfaction, at
or prior to the Closing, of each of the following conditions (any of which may
be waived by Buyer, in whole or in part):
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5.1 ACCURACY OF REPRESENTATIONS
(a) All of Seller's and Shareholder's representations and warranties in
this Agreement (considered collectively), and each of these representations and
warranties (considered individually), shall have been accurate in all material
respects as of the date of this Agreement.
(b) Each of the representations and warranties in Sections 3.2(a) and
3.4, and each of the representations and warranties in this Agreement that
contains an express materiality qualification, shall have been accurate in all
respects as of the date of this Agreement.
5.2 SELLER'S PERFORMANCE
All of the covenants and obligations that Seller and Shareholder are
required to perform or to comply with pursuant to this Agreement at or prior to
the Closing (considered collectively), and each of these covenants and
obligations (considered individually), shall have been duly performed and
complied with in all material respects.
5.3 [INTENTIONALLY LEFT BLANK]
5.4 ADDITIONAL DOCUMENTS
Seller and Shareholder shall have caused the documents and instruments
required by Section 2.7(a) and the following documents to be delivered to Buyer:
(a) An opinion of Wagstaff, Alvis, Stubbeman, Xxxxxxxx & Xxxxxxxx,
L.L.P, dated the Closing Date, in the form of Exhibit 5.4(a);
(b) Releases of all Encumbrances on the Assets;
(c) Certificates dated as of a date not earlier than the third business
day prior to the Closing as to the good standing of Seller and payment of all
applicable state Taxes by Seller, executed by the appropriate officials of the
State of Texas; and
(d) Such other documents as Buyer may reasonably request for the
purpose of:
(i) evidencing the accuracy of any of Seller's representations
and warranties;
(ii) evidencing the performance by Seller or either
Shareholder of, or the compliance by Seller or either Shareholder with,
any covenant or obligation required to be performed or complied with by
Seller or such Shareholder;
(iii) evidencing the satisfaction of any condition referred to
in this Article 5; or
(iv) otherwise facilitating the consummation or performance of
any of the Contemplated Transactions.
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5.5 NO PROCEEDINGS
Since the date of this Agreement, there shall not have been commenced
or threatened against Buyer, or against any Related Person of Buyer, any
Proceeding (a) involving any challenge to, or seeking Damages or other relief in
connection with, any of the Contemplated Transactions or (b) that may have the
effect of preventing, delaying, making illegal, imposing limitations or
conditions on or otherwise interfering with any of the Contemplated
Transactions.
5.6 NO CONFLICT
Neither the consummation nor the performance of any of the Contemplated
Transactions will, directly or indirectly (with or without notice or lapse of
time), contravene or conflict with or result in a violation of or cause Buyer or
any Related Person of Buyer to suffer any adverse consequence under (a) any
applicable Legal Requirement or Order or (b) any Legal Requirement or Order that
has been published, introduced or otherwise proposed by or before any
Governmental Body, excluding Bulk Sales Laws.
6. CONDITIONS PRECEDENT TO SELLER'S AND SHAREHOLDER'S OBLIGATION TO CLOSE
----------------------------------------------------------------------
Seller's obligation to sell the Assets and Shareholder's obligation to
sell the personal goodwill of Shareholder and to take the other actions required
to be taken by Seller and Shareholder at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by Seller in whole or in part):
6.1 ACCURACY OF REPRESENTATIONS
All of Buyer's representations and warranties in this Agreement
(considered collectively), and each of these representations and warranties
(considered individually), shall have been accurate in all material respects as
of the date of this Agreement.
6.2 BUYER'S PERFORMANCE
All of the covenants and obligations that Buyer is required to perform
or to comply with pursuant to this Agreement at or prior to the Closing
(considered collectively), and each of these covenants and obligations
(considered individually), shall have been performed and complied with in all
material respects.
6.3 NO INJUNCTION
There shall not be in effect any Legal Requirement or any injunction or
other Order that (a) prohibits the consummation of the Contemplated Transactions
and (b) has been adopted or issued, or has otherwise become effective, since the
date of this Agreement.
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7. ADDITIONAL COVENANTS
--------------------
7.1 EMPLOYEES AND EMPLOYEE BENEFITS
(a) Information on Active Employees. For the purpose of this Agreement,
the term "Active Employees" shall mean all employees employed on the Closing
Date by Seller for its business who are employed exclusively in Seller's
business as currently conducted, including employees on temporary leave of
absence, including family medical leave, military leave, temporary disability or
sick leave, but excluding employees on long-term disability leave. The term
"Active Employees" shall not include members of Shareholder's family.
(b) Employment of Active Employees by Buyer.
(i) Buyer shall hire all Active Employees of Seller. Seller
will terminate the employment of all of its Active Employees. Buyer
will allow such employees to participate in such life insurance,
hospitalization, major medical, and other employee benefit plans as
employees of similar pay grade and seniority of Buyer are currently
permitted to participate in. Any and all period of service performed
with Seller prior to the Effective Time will be taken into account
under any employee benefit plan maintained by Buyer. Buyer shall allow
the Active Employees to maintain their existing accrued vacation,
however, Buyer will not pay to or be liable to any Active Employees any
vacation pay for accrued but unused vacation benefits.
(ii) Neither Seller nor the Shareholder nor their Related
Persons shall solicit the continued employment of any Active Employee.
(iii) It is understood and agreed that the employment offered
by Buyer is "at will" and may be terminated by Buyer or by an employee
at any time for any reason (subject to any written commitments to the
contrary made by Buyer or an employee and Legal Requirements). Nothing
in this Agreement shall be deemed to prevent or restrict in any way the
right of Buyer to terminate, reassign, promote or demote any of the
Active Employees after the Closing or to change adversely or favorably
the title, powers, duties, responsibilities, functions, locations,
salaries, other compensation or terms or conditions of employment of
such employees.
(c) Salaries and Benefits.
(i) Seller shall be responsible for the payment of all wages
and other remuneration due to Active Employees with respect to their
services as employees of Seller through the close of business on the
Closing Date.
(ii) Seller shall be liable for any claims made or incurred by
Active Employees and their beneficiaries through the Closing Date under
the Employee Plans, if any. For purposes of the immediately preceding
sentence, a charge will be deemed incurred, in the case of hospital,
medical or dental benefits, when the services that are the subject of
the charge are performed and, in the case of other benefits (such as
disability or life insurance), when an event has occurred or when a
condition has been diagnosed that entitles the employee to the benefit.
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(d) General Employee Provisions.
(i) Seller and Buyer shall give any notices required by Legal
Requirements and take whatever other actions with respect to the plans,
programs and policies described in this Section 7.1 as may be necessary
to carry out the arrangements described in this Section 7.1.
(ii) Seller and Buyer shall provide each other with such
employee data or other information as may be reasonably required to
carry out the arrangements described in this Section 7.1.
(iii) If any of the arrangements described in this Section 7.1
are determined by the IRS or other Governmental Body to be prohibited
by law, Seller and Buyer shall modify such arrangements to as closely
as possible reflect their expressed intent and retain the allocation of
economic benefits and burdens to the parties contemplated herein in a
manner that is not prohibited by law.
(iv) Seller shall provide Buyer with completed I-9 forms and
attachments with respect to all Active Employees, except for such
employees as Seller certifies in writing to Buyer are exempt from such
requirement.
7.2 PAYMENT OF TAXES RESULTING FROM SALE AND PURCHASE OF ASSETS
AND GOODWILL
Seller shall pay in a timely manner all Taxes due from Seller resulting
from or payable in connection with the sale and purchase of the Assets pursuant
to this Agreement. Shareholder shall pay in a timely manner all Taxes due from
Shareholder resulting from or payable in connection with the sale and purchase
of the goodwill pursuant to this Agreement. Buyer will be responsible for sales
taxes due, if any, in connection with the purchase of the Assets.
7.3 PAYMENT OF OTHER RETAINED LIABILITIES
In addition to payment of Taxes pursuant to Section 7.2, Seller shall
pay, or make adequate provision for the payment, of the Retained Liabilities of
Seller under this Agreement. If any such Liabilities are not so provided for, or
if Buyer reasonably determines that failure to make any payments will impair
Buyer's use or enjoyment of the Assets or conduct of the business previously
conducted by Seller with the Assets, Buyer may, at any time after the Closing
Date, elect to make all such payments directly (but shall have no obligation to
do so).
7.4 ASSISTANCE IN PROCEEDINGS
Seller will cooperate with Buyer and its counsel in the contest or
defense of, and make available its personnel and provide any testimony and
access to its books and Records in connection with, any Proceeding involving or
relating to (a) any Contemplated Transaction or (b) any action, activity,
27
circumstance, condition, conduct, event, fact, failure to act, incident,
occurrence, plan, practice, situation, status or transaction on or before the
Closing Date involving Seller or its business or Shareholder.
7.5 NON-COMPETITION, NON-SOLICITATION AND
NON-DISPARAGEMENT
(a) Non-Competition. For a period of five (5) years after the Closing
Date, Seller shall not, anywhere in Texas, Oklahoma, New Mexico or Colorado,
directly or indirectly invest in, own, manage, operate, finance, control,
advise, render services to or guarantee the obligations of any Person engaged in
or planning to become engaged in the compressed air drilling business
("Competing Business"), provided, however, that Seller may purchase or otherwise
acquire up to (but not more than) five percent (5%) of any class of the
securities of any Person (but may not otherwise participate in the activities of
such Person) if such securities are listed on any national or regional
securities exchange or have been registered under Section 12(g) of the Exchange
Act.
(b) Non-solicitation. For a period of five (5) years after the Closing
Date, Seller shall not, directly or indirectly:
(i) solicit the business of any Person who is a customer of
Buyer;
(ii) cause, induce or attempt to cause or induce any customer,
supplier, licensee, licensor, franchisee, employee, consultant or other
business relation of Buyer to cease doing business with Buyer, to deal
with any competitor of Buyer or in any way interfere with its
relationship with Buyer;
(iii) cause, induce or attempt to cause or induce any
customer, supplier, licensee, licensor, franchisee, employee,
consultant or other business relation of Seller on the Closing Date or
within the year preceding the Closing Date to cease doing business with
Buyer, to deal with any competitor of Buyer or in any way interfere
with its relationship with Buyer; or
(iv) hire, retain or attempt to hire or retain any employee or
independent contractor of Buyer or in any way interfere with the
relationship between Buyer and any of its employees or independent
contractors.
(c) Non-disparagement. After the Closing Date, Seller will not
disparage Buyer or any of Buyer's Shareholder, directors, officers, employees or
agents.
(d) Modification of Covenant. If a final judgment of a court or
tribunal of competent jurisdiction determines that any term or provision
contained in Section 7.8(a) through (c) is invalid or unenforceable, then the
parties agree that the court or tribunal will have the power to reduce the
scope, duration or geographic area of the term or provision, to delete specific
words or phrases or to replace any invalid or unenforceable term or provision
with a term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision. This
28
Section 7.8 will be enforceable as so modified after the expiration of the time
within which the judgment may be appealed. This Section 7.8 is reasonable and
necessary to protect and preserve Buyer's legitimate business interests and the
value of the Assets and to prevent any unfair advantage conferred on Seller.
7.6 CUSTOMER AND OTHER BUSINESS RELATIONSHIPS
After the Closing, Seller will cooperate with Buyer in its efforts to
continue and maintain for the benefit of Buyer those business relationships of
Seller existing prior to the Closing and relating to the business to be operated
by Buyer after the Closing, including relationships with lessors, employees,
regulatory authorities, licensors, customers, suppliers and others. Seller will
refer to Buyer all inquiries relating to such business. Neither Seller nor any
of its officers, employees, agents or Shareholder shall take any action that
would tend to diminish the value of the Assets after the Closing or that would
interfere with the business of Buyer to be engaged in after the Closing,
including disparaging the name or business of Buyer.
7.7 RETENTION OF AND ACCESS TO RECORDS
After the Closing Date, Buyer shall retain for a period consistent with
Buyer's record-retention policies and practices those Records of Seller
delivered to Buyer. Buyer also shall provide Seller and Shareholder and their
Representatives reasonable access thereto, during normal business hours and on
at least three (3) days' prior written notice, to enable them to prepare
financial statements or tax returns or deal with tax audits. After the Closing
Date, Seller shall provide Buyer and its Representatives reasonable access to
Records that are Excluded Assets, during normal business hours and on at least
three (3) days' prior written notice, for any reasonable business purpose
specified by Buyer in such notice.
7.8 FURTHER ASSURANCES
The parties shall cooperate reasonably with each other and with their
respective Representatives in connection with any steps required to be taken as
part of their respective obligations under this Agreement, and shall (a) furnish
upon request to each other such further information; (b) execute and deliver to
each other such other documents; and (c) do such other acts and things, all as
the other party may reasonably request for the purpose of carrying out the
intent of this Agreement and the Contemplated Transactions.
8. INDEMNIFICATION; REMEDIES
-------------------------
8.1 SURVIVAL
All representations, warranties, covenants and obligations in this
Agreement, the Disclosure Letter, the certificates delivered pursuant to Section
2.7 and any other certificate or document delivered pursuant to this Agreement
shall survive the Closing and the consummation of the Contemplated Transactions,
subject to Section 8.6. The right to indemnification, reimbursement or other
remedy based upon such representations, warranties, covenants and obligations
shall not be affected by any investigation (including any environmental
investigation or assessment) conducted with respect to, or any Knowledge
29
acquired (or capable of being acquired) at any time, whether before or after the
execution and delivery of this Agreement or the Closing Date, with respect to
the accuracy or inaccuracy of or compliance with any such representation,
warranty, covenant or obligation. The waiver of any condition based upon the
accuracy of any representation or warranty, or on the performance of or
compliance with any covenant or obligation, will not affect the right to
indemnification, reimbursement or other remedy based upon such representations,
warranties, covenants and obligations.
8.2 INDEMNIFICATION AND REIMBURSEMENT BY SELLER AND SHAREHOLDER
Seller and the Shareholder, jointly and severally, will indemnify and
hold harmless Buyer, and its Representatives, stockholders, subsidiaries and
Related Persons (collectively, the "Buyer Indemnified Persons"), and will
reimburse the Buyer Indemnified Persons for any loss, liability, claim, damage,
or expense (including costs of defense and reasonable attorneys' fees and
expenses), whether or not involving a Third-Party Claim (collectively,
"Damages"), to the extent arising from or in connection with:
(a) any Breach of any representation or warranty made by Seller or the
Shareholder in this Agreement or the Disclosure Letter;
(b) any Breach of any covenant or obligation of Seller or the
Shareholder in this Agreement;
(c) any Liability arising out of the ownership or operation of the
Assets prior to the Closing Date;
(d) any brokerage or finder's fees or commissions or similar payments
based upon any agreement or understanding made, or alleged to have been made, by
any Person with Seller or the Shareholder (or any Person acting on their behalf)
in connection with any of the Contemplated Transactions;
(e) any services provided by Seller prior to the Closing Date;
(f) any noncompliance by Seller with any fraudulent transfer law in
respect of the Contemplated Transactions;
(g) any Retained Liabilities; or
(h) any violation of or Liability under any Environmental Law by Seller
or Shareholder prior to the date hereof.
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8.3 INDEMNIFICATION AND REIMBURSEMENT BY BUYER
Buyer will indemnify and hold harmless Seller and Shareholder and their
respective Representatives and Related Persons (collectively, the "Seller
Indemnified Persons"), and will reimburse the Seller Indemnified Persons, for
any Damages arising from or in connection with:
(a) any Breach of any representation or warranty made by Buyer in this
Agreement;
(b) any Breach of any covenant or obligation of Buyer in this
Agreement;
(c) any Liability arising out of the ownership or operation of the
Assets on or after the Closing Date;
(d) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or understanding
alleged to have been made by any Person with Buyer (or any Person acting on
Buyer's behalf) in connection with any of the Contemplated Transactions; or
(e) any services provided by Buyer on or after the Closing Date.
8.4 LIMITATIONS ON AMOUNT--SELLER AND SHAREHOLDER
Seller and the Shareholder shall have no liability (for indemnification
or otherwise) with respect to claims under Section 8.2(a) until the total of all
Damages with respect to such matters exceeds Twenty-Five Thousand Dollars
($25,000), but then for the Damages as provided therein. However, this Section
8.4 will not apply to claims under Section 8.2(b) through (h) or to matters
arising in respect of Sections 3.9, 3.14, 3.22, 3.30 or 3.32 or to any Breach of
any of Seller's and Shareholder's representations and warranties of which the
Seller had Knowledge at any time prior to the date on which such representation
and warranty is made or any intentional Breach by Seller or the Shareholder of
any covenant or obligation, and Seller and the Shareholder will be jointly and
severally liable for all Damages with respect to such Breaches.
8.5 LIMITATIONS ON AMOUNT--BUYER
Buyer will have no liability (for indemnification or otherwise) with
respect to claims under Section 8.3(a) until the total of all Damages with
respect to such matters exceeds Twenty-Five Thousand Dollars ($25,000) and but
then for the Damages as provided therein. However, this Section 8.5 will not
apply to claims under Section 8.3(b) through (e) or matters arising in respect
of Section 4.4 or to any Breach of any of Buyer's representations and warranties
of which Buyer had Knowledge at any time prior to the date on which such
representation and warranty is made or any intentional Breach by Buyer of any
covenant or obligation, and Buyer will be liable for all Damages with respect to
such Breaches.
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8.6 TIME LIMITATIONS
(a) Seller and the Shareholder will have liability (for indemnification
or otherwise) with respect to any Breach of (i) a covenant or obligation to be
performed or complied with prior to the Closing Date (other than those in
Sections 2.1 and 2.4(b) and Articles 7 and 9, as to which a claim may be made at
any time) or (ii) a representation or warranty (other than those in Sections
3.9, 3.14, 3.16, 3.22, 3.30 and 3.32, as to which a claim may be made at any
time), only if on or before June 30, 2006, Buyer notifies Seller or the
Shareholder of a claim specifying the factual basis of the claim in reasonable
detail to the extent then known by Buyer.
(b) Buyer will have liability (for indemnification or otherwise) with
respect to any Breach of (i) a covenant or obligation to be performed or
complied with prior to the Closing Date, or (ii) a representation or warranty
(other than that set forth in Section 4.4, as to which a claim may be made at
any time), only if on or before June 30, 2007, Seller or the Shareholder notify
Buyer of a claim specifying the factual basis of the claim in reasonable detail
to the extent then known by Seller or the Shareholder.
8.7 THIRD-PARTY CLAIMS
(a) Promptly after receipt by a Person entitled to indemnity under
Section 8.2 or 8.3 (an "Indemnified Person") of notice of the assertion of a
Third-Party Claim against it, such Indemnified Person shall give notice to the
Person obligated to indemnify under such Section (an "Indemnifying Person") of
the assertion of such Third-Party Claim, provided that the failure to notify the
Indemnifying Person will not relieve the Indemnifying Person of any liability
that it may have to any Indemnified Person, except to the extent that the
Indemnifying Person demonstrates that the defense of such Third-Party Claim is
prejudiced by the Indemnified Person's failure to give such notice.
(b) If an Indemnified Person gives notice to the Indemnifying Person
pursuant to Section 8.7(a) of the assertion of a Third-Party Claim, the
Indemnifying Person shall be entitled to participate in the defense of such
Third-Party Claim and, to the extent that it wishes (unless (i) the Indemnifying
Person is also a Person against whom the Third-Party Claim is made and the
Indemnified Person determines in good faith that joint representation would be
inappropriate or (ii) the Indemnifying Person fails to provide reasonable
assurance to the Indemnified Person of its financial capacity to defend such
Third-Party Claim and provide indemnification with respect to such Third-Party
Claim), to assume the defense of such Third-Party Claim with counsel
satisfactory to the Indemnified Person. After notice from the Indemnifying
Person to the Indemnified Person of its election to assume the defense of such
Third-Party Claim, the Indemnifying Person shall not, so long as it diligently
conducts such defense, be liable to the Indemnified Person under this Article 8
for any fees of other counsel or any other expenses with respect to the defense
of such Third-Party Claim, in each case subsequently incurred by the Indemnified
Person in connection with the defense of such Third-Party Claim, other than
reasonable costs of investigation. If the Indemnifying Person assumes the
defense of a Third-Party Claim, (i) such assumption will conclusively establish
for purposes of this Agreement that the claims made in that Third-Party Claim
are within the scope of and subject to indemnification, and (ii) no compromise
32
or settlement of such Third-Party Claims may be effected by the Indemnifying
Person without the Indemnified Person's Consent unless (A) there is no finding
or admission of any violation of Legal Requirement or any violation of the
rights of any Person; and (B) the Indemnified Person shall have no liability
with respect to any compromise or settlement of such Third-Party Claims effected
without its Consent. If notice is given to an Indemnifying Person of the
assertion of any Third-Party Claim and the Indemnifying Person does not, within
ten (10) days after the Indemnified Person's notice is given, give notice to the
Indemnified Person of its election to assume the defense of such Third-Party
Claim, the Indemnifying Person will be bound by any determination made in such
Third-Party Claim or any compromise or settlement effected by the Indemnified
Person.
(c) Notwithstanding the foregoing, if an Indemnified Person determines
in good faith that there is a reasonable probability that a Third-Party Claim
may adversely affect it or its Related Persons other than as a result of
monetary damages for which it would be entitled to indemnification under this
Agreement, the Indemnified Person may, by notice to the Indemnifying Person,
assume the exclusive right to defend, compromise or settle such Third-Party
Claim, but the Indemnifying Person will not be bound by any determination of any
Third-Party Claim so defended for the purposes of this Agreement or any
compromise or settlement effected without its Consent (which may not be
unreasonably withheld).
(d) Seller and the Shareholder hereby consent to the nonexclusive
jurisdiction of any court in which a Proceeding in respect of a Third-Party
Claim is brought against any Buyer Indemnified Person for purposes of any claim
that a Buyer Indemnified Person may have under this Agreement with respect to
such Proceeding or the matters alleged therein and agree that process may be
served on Seller and the Shareholder with respect to such a claim anywhere in
the world.
e) With respect to any Third-Party Claim subject to indemnification
under this Article 8: (i) both the Indemnified Person and the Indemnifying
Person, as the case may be, shall keep the other Person fully informed of the
status of such Third-Party Claim and any related Proceedings at all stages
thereof where such Person is not represented by its own counsel, and (ii) the
parties agree (each at its own expense) to render to each other such assistance
as they may reasonably require of each other and to cooperate in good faith with
each other in order to ensure the proper and adequate defense of any Third-Party
Claim.
(f) With respect to any Third-Party Claim subject to indemnification
under this Article 8, the parties agree to cooperate in such a manner as to
preserve in full (to the extent reasonably possible) the confidentiality of all
Confidential Information and the attorney-client and work-product privileges. In
connection therewith, each party agrees that: (i) it will use its Best Efforts,
in respect of any Third-Party Claim in which it has assumed or participated in
the defense, to avoid production of Confidential Information (consistent with
applicable law and rules of procedure), and (ii) all communications between any
party hereto and counsel responsible for or participating in the defense of any
Third-Party Claim shall, to the extent reasonably possible, be made so as to
preserve any applicable attorney-client or work-product privilege.
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8.8 OTHER CLAIMS
A claim for indemnification for any matter not involving a Third-Party
Claim may be asserted by notice to the party from whom indemnification is
sought.
9. CONFIDENTIALITY
---------------
9.1 DEFINITION OF CONFIDENTIAL INFORMATION
(a) As used in this Article 9, the term "Confidential Information"
includes any and all of the following information of Seller, Buyer or the
Shareholder that has been or may hereafter be disclosed in any form, whether in
writing, orally, electronically or otherwise, or otherwise made available by
observation, inspection or otherwise by either party (Buyer on the one hand or
Seller and the Shareholder, collectively, on the other hand) or its
Representatives (collectively, a "Disclosing Party") to the other party or its
Representatives (collectively, a "Receiving Party"):
(i) all information that is a trade secret under applicable
trade secret or other law;
(ii) all information concerning product specifications, data,
customer lists, current and anticipated customer requirements, price
lists, market studies and business plans;
(iii) all information concerning the business and affairs of
the Disclosing Party (which includes historical and current financial
statements, financial projections and budgets, tax returns and
accountants' materials, historical, current and projected sales,
capital spending budgets and plans, business plans, strategic plans,
marketing and advertising plans, publications, client and customer
lists and files, contracts, the names and backgrounds of key personnel
and personnel training techniques and materials, however documented),
and all information obtained from review of the Disclosing Party's
documents or property or discussions with the Disclosing Party
regardless of the form of the communication; and
(iv) all notes, analyses, compilations, studies, summaries and
other material prepared by the Receiving Party to the extent containing
or based, in whole or in part, upon any information included in the
foregoing.
(b) Any trade secrets of a Disclosing Party shall also be entitled to
all of the protections and benefits under applicable trade secret law and any
other applicable law. If any information that a Disclosing Party deems to be a
trade secret is found by a court of competent jurisdiction not to be a trade
secret for purposes of this Article 9, such information shall still be
considered Confidential Information of that Disclosing Party for purposes of
this Article 9 to the extent included within the definition. In the case of
trade secrets, each of Buyer, Seller and Shareholder hereby waives any
requirement that the other party submit proof of the economic value of any trade
secret or post a bond or other security.
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9.2 RESTRICTED USE OF CONFIDENTIAL INFORMATION
(a) Each Receiving Party acknowledges the confidential and proprietary
nature of the Confidential Information of the Disclosing Party and agrees that
such Confidential Information (i) shall be kept confidential by the Receiving
Party; (ii) shall not be used for any reason or purpose other than to evaluate
and consummate the Contemplated Transactions; and (iii) without limiting the
foregoing, shall not be disclosed by the Receiving Party to any Person, except
in each case as otherwise expressly permitted by the terms of this Agreement or
with the prior written consent of an authorized representative of Seller with
respect to Confidential Information of Seller or the Shareholder (each, a
"Seller Contact") or an authorized representative of Buyer with respect to
Confidential Information of Buyer (each, a "Buyer Contact"). Each of Buyer and
Seller and the Shareholder shall disclose the Confidential Information of the
other party only to its Representatives who require such material for the
purpose of evaluating the Contemplated Transactions and are informed by Buyer,
Seller or Shareholder, as the case may be, of the obligations of this Article 9
with respect to such information. Each of Buyer, Seller and Shareholder shall
(iv) enforce the terms of this Article 9 as to its respective Representatives;
(v) take such action to the extent necessary to cause its Representatives to
comply with the terms and conditions of this Article 9; and (vi) be responsible
and liable for any breach of the provisions of this Article 9 by it or its
Representatives.
(b) Unless and until this Agreement is terminated, Seller and the
Shareholder shall maintain as confidential any Confidential Information
(including for this purpose any information of Seller or Shareholder of the type
referred to in Sections 9.1(a)(i), (ii) and (iii), whether or not disclosed to
Buyer) of the Seller or Shareholder relating to any of the Assets.
(c) From and after the Closing, the provisions of Section 9(a) above
shall not apply to or restrict in any manner Buyer's use of any Confidential
Information of the Seller or the Shareholder relating to any of the Assets.
9.3 EXCEPTIONS
Sections 9.2(a) and (b) do not apply to that part of the Confidential
Information of a Disclosing Party that a Receiving Party demonstrates (a) was,
is or becomes generally available to the public other than as a result of a
breach of this Article 9 or the Confidentiality Agreement by the Receiving Party
or its Representatives; (b) was or is developed by the Receiving Party
independently of and without reference to any Confidential Information of the
Disclosing Party; or (c) was, is or becomes available to the Receiving Party on
a nonconfidential basis from a Third Party not bound by a confidentiality
agreement or any legal, fiduciary or other obligation restricting disclosure.
Neither Seller nor either Shareholder shall disclose any Confidential
Information of Seller or Shareholder relating to any of the Assets in reliance
on the exceptions in clauses (b) or (c) above.
9.4 LEGAL PROCEEDINGS
If a Receiving Party becomes compelled in any Proceeding or is
requested by a Governmental Body having regulatory jurisdiction over the
Contemplated Transactions to make any disclosure that is prohibited or otherwise
constrained by this Article 9, that Receiving Party shall provide the Disclosing
35
Party with prompt notice of such compulsion or request so that it may seek an
appropriate protective order or other appropriate remedy or waive compliance
with the provisions of this Article 9. In the absence of a protective order or
other remedy, the Receiving Party may disclose that portion (and only that
portion) of the Confidential Information of the Disclosing Party that, based
upon advice of the Receiving Party's counsel, the Receiving Party is legally
compelled to disclose or that has been requested by such Governmental Body,
provided, however, that the Receiving Party shall use reasonable efforts to
obtain reliable assurance that confidential treatment will be accorded by any
Person to whom any Confidential Information is so disclosed. The provisions of
this Section 9.4 do not apply to any Proceedings between the parties to this
Agreement.
9.5 RETURN OR DESTRUCTION OF CONFIDENTIAL INFORMATION
If this Agreement is terminated, each Receiving Party shall (a) destroy
all Confidential Information of the Disclosing Party prepared or generated by
the Receiving Party without retaining a copy of any such material; (b) promptly
deliver to the Disclosing Party all other Confidential Information of the
Disclosing Party, together with all copies thereof, in the possession, custody
or control of the Receiving Party or, alternatively, with the written consent of
a Seller Contact or a Buyer Contact (whichever represents the Disclosing Party)
destroy all such Confidential Information; and (c) certify all such destruction
in writing to the Disclosing Party, provided, however, that the Receiving Party
may retain a list that contains general descriptions of the information it has
returned or destroyed to facilitate the resolution of any controversies after
the Disclosing Party's Confidential Information is returned.
9.6 ATTORNEY-CLIENT PRIVILEGE
The Disclosing Party is not waiving, and will not be deemed to have
waived or diminished, any of its attorney work product protections,
attorney-client privileges or similar protections and privileges as a result of
disclosing its Confidential Information (including Confidential Information
related to pending or threatened litigation) to the Receiving Party, regardless
of whether the Disclosing Party has asserted, or is or may be entitled to
assert, such privileges and protections. The parties (a) share a common legal
and commercial interest in all of the Disclosing Party's Confidential
Information that is subject to such privileges and protections; (b) are or may
become joint defendants in Proceedings to which the Disclosing Party's
Confidential Information covered by such protections and privileges relates; (c)
intend that such privileges and protections remain intact should either party
become subject to any actual or threatened Proceeding to which the Disclosing
Party's Confidential Information covered by such protections and privileges
relates; and (d) intend that after the Closing the Receiving Party shall have
the right to assert such protections and privileges. No Receiving Party shall
admit, claim or contend, in Proceedings involving either party or otherwise,
that any Disclosing Party waived any of its attorney work-product protections,
attorney-client privileges or similar protections and privileges with respect to
any information, documents or other material not disclosed to a Receiving Party
due to the Disclosing Party disclosing its Confidential Information (including
Confidential Information related to pending or threatened litigation) to the
Receiving Party.
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10. GENERAL PROVISIONS
------------------
10.1 EXPENSES
Except as otherwise provided in this Agreement, each party to this
Agreement will bear its respective fees and expenses incurred in connection with
the preparation, negotiation, execution and performance of this Agreement and
the Contemplated Transactions, including all fees and expense of its
Representatives. If this Agreement is terminated, the obligation of each party
to pay its own fees and expenses will be subject to any rights of such party
arising from a Breach of this Agreement by another party.
10.2 PUBLIC ANNOUNCEMENTS
Any public announcement, press release or similar publicity with
respect to this Agreement or the Contemplated Transactions will be issued, if at
all, at such time and in such manner as Buyer determines. Except with the prior
consent of Buyer or as permitted by this Agreement, neither Seller, the
Shareholder nor any of their Representatives shall disclose to any Person (a)
the fact that any Confidential Information of Seller or the Shareholder has been
disclosed to Buyer or its Representatives, that Buyer or its Representatives
have inspected any portion of the Confidential Information of Seller or the
Shareholder, that any Confidential Information of Buyer has been disclosed to
Seller, the Shareholder or their Representatives or that Seller, the Shareholder
or their Representatives have inspected any portion of the Confidential
Information of Buyer or (b) any information about the Contemplated Transactions,
including the status of such discussions or negotiations, the execution of any
documents (including this Agreement) or any of the terms of the Contemplated
Transactions or the related documents (including this Agreement). Seller and
Buyer will consult with each other concerning the means by which Seller's
employees, customers, suppliers and others having dealings with Seller will be
informed of the Contemplated Transactions, and Buyer will have the right to be
present for any such communication.
10.3 NOTICES
All notices, Consents, waivers and other communications required or
permitted by this Agreement shall be in writing and shall be deemed given to a
party when (a) delivered to the appropriate address by hand or by nationally
recognized overnight courier service (costs prepaid); (b) sent by facsimile or
e-mail with confirmation of transmission by the transmitting equipment; or (c)
received or rejected by the addressee, if sent by certified mail, return receipt
requested, in each case to the following addresses, facsimile numbers or e-mail
addresses and marked to the attention of the person (by name or title)
designated below (or to such other address, facsimile number, e-mail address or
person as a party may designate by notice to the other parties):
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SELLER: W. T. Enterprises, Inc. d/b/a Lone Star Service
Attention: Xxxxxxx X. Xxxxx
Address: 000 Xxxxx XX 000, Xxxxxx, Xxxxx 00000
Fax no.: (000) 000-0000
E-mail address: XxxxXxxx@xxx.xxx
WITH A COPY TO: Wagstaff, Alvis, Stubbeman, Xxxxxxxx & Xxxxxxxx, LLP
Attention: Xxxxxxx X. Xxxxx
Address: 000 Xxxxx, Xxxxxxx, Xxxxx 00000
Fax no.: (000) 000-0000
E-mail address: xxxxxxx@xxxxxxxxxxx.xxx
SHAREHOLDER: X. X. Xxxxx
Address: 0000 Xxxxxx Xxxxx, Xxxxx, Xxxxx 00000
Fax no.: (000) 000-0000
E-mail address: XxxxXxxx@xxx.xxx
WITH A COPY TO: Wagstaff, Alvis, Stubbeman, Xxxxxxxx & Xxxxxxxx, LLP
Attention: Xxxxxxx X. Xxxxx
Address: 000 Xxxxx, Xxxxxxx, Xxxxx 00000
Fax no.: (000) 000-0000
E-mail address: xxxxxxx@xxxxxxxxxxx.xxx
BUYER: AirComp L.L.C.
Attention: Xxxxx Xxxxx, President
0000 Xxxxxxxx Xxxx Xxxxx
Xxxxxxx, XX 00000
Fax no.: (000) 000-0000
E-mail address: xxxxxx@xxxxxxxxxx.xxx
WITH A COPY TO: Xxxxx-Xxxxxxxx Energy Inc.
Attention: Xxxxxxxx X. Pound III,
General Counsel and Secretary
0000 Xxxxxxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Fax no.: (000) 000-0000
E-mail address: xxxxxx@xxxxxxxxxx.xxx
10.4 ENFORCEMENT OF AGREEMENT
Seller and the Shareholder acknowledge and agree that Buyer would be
irreparably damaged if any of the provisions of this Agreement are not performed
in accordance with their specific terms and that any Breach of this Agreement by
Seller or the Shareholder could not be adequately compensated in all cases by
monetary damages alone. Accordingly, in addition to any other right or remedy to
which Buyer may be entitled, at law or in equity, it shall be entitled to
enforce any provision of this Agreement by a decree of specific performance and
to temporary, preliminary and permanent injunctive relief to prevent Breaches or
threatened Breaches of any of the provisions of this Agreement, without posting
any bond or other undertaking.
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10.5 WAIVER; REMEDIES CUMULATIVE
The rights and remedies of the parties to this Agreement are cumulative
and not alternative. Neither any failure nor any delay by any party in
exercising any right, power or privilege under this Agreement or any of the
documents referred to in this Agreement will operate as a waiver of such right,
power or privilege, and no single or partial exercise of any such right, power
or privilege will preclude any other or further exercise of such right, power or
privilege or the exercise of any other right, power or privilege. To the maximum
extent permitted by applicable law, (a) no claim or right arising out of this
Agreement or any of the documents referred to in this Agreement can be
discharged by one party, in whole or in part, by a waiver or renunciation of the
claim or right unless in writing signed by the other party; (b) no waiver that
may be given by a party will be applicable except in the specific instance for
which it is given; and (c) no notice to or demand on one party will be deemed to
be a waiver of any obligation of that party or of the right of the party giving
such notice or demand to take further action without notice or demand as
provided in this Agreement or the documents referred to in this Agreement.
10.6 ENTIRE AGREEMENT AND MODIFICATION
This Agreement supersedes all prior agreements, whether written or
oral, between the parties with respect to its subject matter (including any
letter of intent and any confidentiality agreement between Buyer and Seller) and
constitutes (along with the Disclosure Letter, Exhibits and other documents
delivered pursuant to this Agreement) a complete and exclusive statement of the
terms of the agreement between the parties with respect to its subject matter.
This Agreement may not be amended, supplemented, or otherwise modified except by
a written agreement executed by the party to be charged with the amendment.
10.7 DISCLOSURE LETTER
(a) The information in the Disclosure Letter constitutes (i) exceptions
to particular representations, warranties, covenants and obligations of Seller
and the Shareholder as set forth in this Agreement and (ii) descriptions or
lists of assets and liabilities and other items referred to in this Agreement.
If there is any inconsistency between the statements in this Agreement and those
in the Disclosure Letter (other than an exception expressly set forth as such in
the Disclosure Letter with respect to a specifically identified representation
or warranty), the statements in this Agreement will control.
10.8 ASSIGNMENTS, SUCCESSORS AND NO THIRD-PARTY RIGHTS
No party may assign any of its rights or delegate any of its
obligations under this Agreement without the prior written consent of the other
parties, except Buyer may collaterally assign its rights hereunder to any
financial institution providing financing in connection with the Contemplated
Transactions. Subject to the preceding sentence, this Agreement will apply to,
be binding in all respects upon and inure to the benefit of the successors and
permitted assigns of the parties. Nothing expressed or referred to in this
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Agreement will be construed to give any Person other than the parties to this
Agreement any legal or equitable right, remedy or claim under or with respect to
this Agreement or any provision of this Agreement, except such rights as shall
inure to a successor or permitted assignee pursuant to this Section 10.9.
10.9 SEVERABILITY
If any provision of this Agreement is held invalid or unenforceable by
any court of competent jurisdiction, the other provisions of this Agreement will
remain in full force and effect. Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.
10.10 CONSTRUCTION
The headings of Articles and Sections in this Agreement are provided
for convenience only and will not affect its construction or interpretation. All
references to "Articles," "Sections" and "Parts" refer to the corresponding
Articles, Sections and Parts of this Agreement and the Disclosure Letter.
10.11 TIME OF ESSENCE
With regard to all dates and time periods set forth or referred to in
this Agreement, time is of the essence.
10.12 GOVERNING LAW
This Agreement will be governed by and construed under the laws of the
State of Texas without regard to conflicts-of-laws principles that would require
the application of any other law.
10.13 EXECUTION OF AGREEMENT
This Agreement may be executed in one or more counterparts, each of
which will be deemed to be an original copy of this Agreement and all of which,
when taken together, will be deemed to constitute one and the same agreement.
The exchange of copies of this Agreement and of signature pages by facsimile
transmission shall constitute effective execution and delivery of this Agreement
as to the parties and may be used in lieu of the original Agreement for all
purposes. Signatures of the parties transmitted by facsimile shall be deemed to
be their original signatures for all purposes.
10.14 SHAREHOLDER OBLIGATIONS
The liability of the Shareholder hereunder shall be joint and several
with Seller. Where in this Agreement provision is made for any action to be
taken or not taken by Seller, the Shareholder shall undertake to cause Seller to
take or not take such action, as the case may be. Without limiting the
generality of the foregoing, the Shareholder shall be jointly and severally
liable with Seller for the indemnities set forth in Article 8.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
BUYER: AIRCOMP L.L.C.
/s/ Xxxxxxxx X. Xxxxx
----------------------------
Xxxxxxxx X. Xxxxx, President
SELLER: W. T. ENTERPRISES, INC.
D/B/A LONE STAR AIR SERVICE
/s/ Xxxxxxx X. Xxxxx
----------------------------
Xxxxxxx X. Xxxxx
President
SHAREHOLDER:
/s/ Xxxxxxx X. Xxxxx
----------------------------
Xxxxxxx X. Xxxxx
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