Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
XXXXX-XXXXXXXX CORPORATION,
XXXXX-XXXXXXXX ACQUISITION CORP.,
AND OILQUIP RENTALS, INC.,
May 9, 2001
THIS AGREEMENT AND PLAN OF MERGER (this "AGREEMENT") is entered into as
of the 9th day of May, 2001, by and among XXXXX-XXXXXXXX CORPORATION, a Delaware
corporation ("A-C"), XXXXX-XXXXXXXX ACQUISITION CORP., a Delaware corporation
wholly owned by A-C ("Acquisition"), and OILQUIP RENTALS, INC., a Delaware
corporation ("OilQuip").
R E C I T A L S
A. The Board of Directors of each of A-C, OilQuip and Acquisition
believe that it is in the best interests of each company and its respective
stockholders to consummate the reorganization provided for herein, pursuant to
which A-C will directly acquire all of the capital stock of OilQuip (the
"OilQuip Common Stock") through a merger of Acquisition with and into OilQuip,
with OilQuip being the surviving corporation (as hereinafter defined in Section
1.1, the "Merger").
B. Pursuant to the written consent of the holders of all capital stock
of OilQuip and Acquisition made in accordance with Section 228 of the Delaware
General Corporation Law ("DGCL"), the stockholders of OilQuip and Acquisition
have approved the Merger.
C. For federal income tax purposes, it is intended that the Merger
qualify as a reorganization under the provisions of Section 368(a)(1)(A) and 368
(a)(2)(E) of the Internal Revenue Code of 1986, as amended (the "Code").
D. Concurrently with the execution hereof, in order to induce A-C to
enter into this Agreement, certain stockholders of OilQuip are entering into
share transfer restriction agreements (the "Share Transfer Restriction
Agreements") providing for certain restrictions on the transfer of the shares of
A-C Common Stock (as hereinafter defined) received in connection with the
Merger, all upon the terms and conditions specified therein.
A G R E E M E N T
NOW, THEREFORE, in consideration of the covenants, representations and
warranties set forth herein, and for other good and valuable consideration the
receipt and sufficiency of which is hereby acknowledged, the parties agree as
follows:
ARTICLE I
THE MERGER
1.1 The Merger. Upon the terms and subject to the conditions hereof,
and in accordance with the DGCL, at the Effective Time (as defined in Section
1.3 hereof), (a) Acquisition shall be merged with and into OilQuip, (b) the
separate corporate existence of Acquisition shall cease, and (c) OilQuip shall
continue as the surviving corporation (the "Surviving Corporation") in the
Merger under the laws of the State of Delaware under the name OilQuip Rentals,
Inc. (the "Merger").
1.2 Closing and Closing Date. Subject to the terms and conditions of
this Agreement, the closing of the Merger (the "Closing") will take place at the
offices of Xxxxxxx Berlin Shereff Xxxxxxxx, LLP, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000 at 10:00 a.m. local time, on (a) the next business day after the
last to be fulfilled or waived of the conditions set forth in Article VIII shall
be fulfilled or waived in accordance herewith, or (b) at such other time, date
or place as OilQuip and A-C may agree in writing. The date on which the Closing
occurs is referred to herein as the "Closing Date".
1.3 Effective Time of the Merger. On the Closing Date, the parties
hereto shall cause a certificate of merger, or other appropriate documentation,
satisfying the requirements of the DGCL (the "Certificate of Merger") to be
filed with the office of the Secretary of State of the State of Delaware in
accordance with the provisions of the DGCL. When used herein, the term
"Effective Time" shall mean the date and time when the Certificate of Merger has
been accepted for filing by the Secretary of State of the State of Delaware or
such date and time as otherwise specified in the Certificate of Merger.
1.4 Effect of the Merger. The Merger shall, from and after the
Effective Time, have the effects provided in Section 259 of the DGCL. If at any
time after the Effective Time, any further action is deemed necessary or
desirable to carry out the purposes of this Agreement, the parties hereto agree
that the Surviving Corporation and its proper officers and directors shall be
authorized to take, and shall take, any and all such action.
ARTICLE II
THE SURVIVING CORPORATION
2.1 Certificate of Incorporation. The Certificate of Incorporation of
OilQuip shall be the Certificate of Incorporation of the Surviving Corporation
after the Effective Time, until thereafter changed or amended as provided
therein or by applicable law.
2.2 Bylaws. The bylaws of OilQuip as in effect immediately prior to the
Effective Time shall be the bylaws of the Surviving Corporation, until
thereafter changed or amended as provided therein or by applicable law.
2.3 Board of Directors and Officers. The board of directors and
officers of OilQuip immediately prior to the Effective Time shall be the board
of directors and officers, respectively, of the Surviving Corporation, effective
as of the Effective Time, and until the earlier of their respective resignations
or the time that their respective successors are duly elected or appointed and
qualified.
ARTICLE III
CONVERSION OF SHARES
3.1. Merger Consideration. As of the Effective Time, by virtue of the
Merger and without any action on the part of Acquisition, OilQuip, or A-C:
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(a) Each share of OilQuip Common Stock, issued and outstanding
immediately prior to the Effective Time will be converted, without any action on
the part of the holders thereof (the "Shareholders"), into (i) 40 shares of the
common stock, par value $0.15 per share, of A-C ("A-C Common Stock"), and (ii)
the right to receive 960 shares of Common Stock on the Amendment Date (as
defined in Section 7.11); provided that no fractional shares of A-C Common Stock
shall be delivered (and the number of shares of A-C Common Stock to be delivered
to any Shareholder shall be rounded down to the nearest whole number) and the
Shareholders shall not be entitled to cash in lieu of fractional shares;
provided further that no more than an aggregate of 10,000,000 shares of A-C
Common Stock shall be issued or issuable at the Effective Time and on the
Amendment Date pursuant to the Merger. Immediately following the Effective Time,
the Shareholders shall deliver to A-C the certificates representing the OilQuip
Common Stock, and A-C shall cause A-C's transfer agent to deliver to the
Shareholders certificates representing the A-C Common Stock described in (i)
above in accordance with Exhibit A hereto; and immediately following the
Amendment Date, A-C shall cause A-C's transfer agent to deliver to the
Shareholders certificates representing the A-C Common Stock described in clause
(ii) above in accordance with Exhibit A. The A-C Common Stock issued pursuant to
this Section 3.1(a) shall be duly authorized, fully paid and non-assessable. The
Shareholders shall have no right to transfer or assign the right to receive the
A-C Common Stock prior to the issuance thereof.
(b) Each share of Acquisition Common Stock issued and
outstanding immediately prior to the Effective Time will be converted, without
any action on the part of the holder thereof, into one (1) duly and validly
issued, fully paid and non-assessable share of OilQuip Common Stock. All shares
of A-C Common Stock issued in accordance with Section 3.1 shall be deemed to be
in full satisfaction of all rights pertaining to shares of OilQuip Common Stock
held by the Shareholders, and shall be duly authorized, fully paid and
non-assessable.
3.2 No Further Rights. From and after the Effective Time, holders of
certificates theretofore evidencing OilQuip Common Stock shall cease to have any
rights as stockholders of OilQuip, except as provided herein or by applicable
law.
3.3 Tax Consequences. It is intended by the parties hereto that the
Merger shall constitute a reorganization within the meaning of Sections
368(a)(1)(A) and 368(a)(2)(E) of the Code. The parties hereto adopt this
Agreement as a "plan of reorganization" within the meaning of Section 1.368-2(g)
and 1.368-3(a) of the Income Tax Regulations.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF OILQUIP
OilQuip represents and warrants to A-C as follows:
4.1 Organization, etc. OilQuip is a corporation duly organized and
validly existing and in good standing under the laws of the State of Delaware,
and is qualified or licensed to do business and is in good standing as a foreign
corporation in each other jurisdictions in which the conduct of its business or
the ownership of property requires such qualification or licensing, except where
failure to be so qualified or licensed would not have a material adverse effect
on the financial condition or operations of OilQuip and its subsidiary, Mountain
Compressed Air, Inc. ("MCA"), taken as a whole (for OilQuip, a "Material Adverse
Effect"). MCA is duly organized and validly existing and in good standing under
the laws of the State of Texas, and is qualified or licensed to do business and
is in good standing as a foreign corporation in each other jurisdictions in
which the conduct of its business or the ownership of property requires such
qualification or licensing, except where failure to be so qualified or licensed
would have a Material Adverse Effect on OilQuip. Except for MCA, OilQuip does
not own, of record or beneficially, the securities of any other entity.
4.2 Authority. OilQuip has the corporate power and authority to execute
and deliver this Agreement and to perform its obligations hereunder, and such
action has been duly authorized by all necessary action of OilQuip's Board of
Directors and stockholders.
4.3 Enforceability. This Agreement has been duly executed and delivered
by OilQuip and constitutes a legal, valid and binding obligation of OilQuip
enforceable in accordance with its terms, subject to: (i) judicial principles
respecting election of remedies or limiting the availability of specific
performance, injunctive relief, or other equitable remedies; (ii) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect generally relating to or affecting creditors' rights; and (iii) public
policy concerns (including, without limitation, the ability of a court to refuse
to enforce unconscionable covenants, indemnification provisions or similar
provisions).
4.4 No Violation. The execution and the delivery by OilQuip of this
Agreement does not and will not (i) conflict with or result in a breach of the
terms, conditions or provisions of, (ii) constitute a default under, (iii)
result in a violation of, or (iv) require any notice, filing, authorization,
consent or approval not heretofore obtained pursuant to, any binding written or
oral agreement or instrument including, without limitation, any charter, bylaw,
trust instrument, indenture or evidence of indebtedness, lease, contract or
other obligation or commitment (each, a "Contractual Obligation") binding upon
OilQuip or MCA or any of their properties or assets, or any law, rule,
regulation, restriction, order, writ, judgment, award, determination, injunction
or decree of any court or government, or any decision or ruling of any
arbitrator (each, a "Requirement of Law") binding upon or applicable to OilQuip
or MCA or any of their properties or assets.
4.5 Litigation. There are no pending or overtly threatened actions,
claims, investigations, suits or proceedings by or before any governmental
authority, arbitrator, court or administrative agency which would have a
Material Adverse Effect on OilQuip.
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4.6 Capitalization. Exhibit A hereto sets forth the record holders of
all outstanding shares of the OilQuip Common Stock (the "Issued Shares") and the
number of Issued Shares owned by such Shareholder. OilQuip has authorized Ten
Million shares of Common Stock, par value $0.01 per share, and has authorized no
other class of stock. No shares of the OilQuip Common Stock are held in the
treasury of OilQuip. The Issued Shares are duly authorized, validly issued,
outstanding, fully paid and nonassessable. OilQuip owns 100% of the outstanding
Common Stock of MCA. Except as set forth on Schedule 4.6, there do not exist any
other authorized or outstanding securities, options, warrants, calls,
commitments, rights to subscribe or other instruments, agreements or rights of
any character, or any pre-emptive rights, convertible into or exchangeable for,
or requiring or relating to the issuance, transfer or sale of, any shares of
capital stock or other securities of OilQuip or MCA.
4.7 Financial Statements. Attached as Schedule 4.7 hereto are the
following financial statements (the "OilQuip Financial Statements"):
(a) unaudited financial statements of Mountain Air Drilling,
Inc. ("Mountain Air") for the year ended December 31, 2000;
(b) an unaudited compilation Balance Sheet, Statement of
Income and Retained Earnings and Statement of Cash Flows of OilQuip at
and for the year ended December 31, 2000, and
(c) an unaudited "opening" Statement of Financial Condition of
OilQuip as of February 7, 2001.
Except for the financial statements described in (b) which are a
compilation, the OilQuip Financial Statements are internal statements prepared
by management. Each of the OilQuip Financial Statements (a) is complete and
correct and presents fairly in all material respects the consolidated financial
condition of OilQuip MCA and Mountain Air, (b) discloses all liabilities of
OilQuip, Mountain Air and MCA that are required to be reflected or reserved
against under generally accepted accounting principles, whether liquidated or
unliquidated, fixed or contingent, and (c) has been prepared in accordance with
generally accepted accounting principles consistently applied. Since February 7,
2001 there has been no change which would have a Material Adverse Effect on
OilQuip, nor has OilQuip, Mountain Air or MCA mortgaged, pledged, granted a
security interest in or otherwise encumbered any of its assets or properties.
OilQuip has guaranteed certain of MCA's obligations and pledged its shares of
MCA capital stock as securities for such obligations.
4.8 Income Tax Returns. OilQuip has no knowledge of any pending
assessments or adjustments of the income tax payable of OilQuip or MCA (either
itself or as successor to Mountain Drilling) with respect to any year.
4.9 Permits, Franchises. OilQuip or MCA possesses, and will hereafter
possess, all permits, consents, approvals, franchises and licenses required and
rights to all trademarks, trade names, patents, and fictitious names, if any,
necessary to enable them to conduct the business in which they are now engaged
in compliance with applicable law, except where failure to do so would not have
a Material Adverse Effect on OilQuip.
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4.10 ERISA. OilQuip and MCA each is in compliance in all material
respects with all applicable provisions of the Employee Retirement Income
Security Act of 1974, as amended or recodified from time to time ("ERISA");
neither OilQuip nor MCA (either itself or as successor to Mountain Drilling) has
violated, in any material respect, any provision of any defined benefit employee
pension benefit plan (as defined in ERISA) maintained or contributed to by
OilQuip or
MCA (each, a "Plan"); no Reportable Event as defined in ERISA has
occurred and is continuing with respect to any Plan initiated by OilQuip or MCA;
OilQuip and MCA each has met its minimum funding requirements under ERISA with
respect to each Plan; and each Plan will be able to fulfill its benefit
obligations as they come due in accordance with the Plan documents and under
generally accepted accounting principles.
4.11 Other Obligations. Neither OilQuip nor MCA is in default on any
obligation for borrowed money, any purchase money obligation or any other
material lease, commitment, contract, instrument or obligation.
4.12 Environmental Matters. OilQuip and MCA each has been in compliance
in all material respects with all applicable federal or state environmental,
hazardous waste, health and safety statutes, and any rules or regulations
adopted pursuant thereto, which govern or affect any of OilQuip's or MCA's
operations and/or properties, including without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Superfund
Amendments and Reauthorization Act of 1986, the Federal Resource Conservation
and Recovery Act of 1976, and the Federal Toxic Substances Control Act, as any
of the same may be amended, modified or supplemented from time to time
(collectively, "Environmental Laws"). None of the operations of OilQuip or MCA
is the subject of any federal or state investigation evaluating whether any
remedial action involving a material expenditure is needed to respond to a
release of any toxic or hazardous waste or substance into the environment. To
the knowledge of OilQuip, neither OilQuip nor MCA has any material contingent
liability in connection with any release of any toxic or hazardous waste or
substance into the environment. This Section 4.12, together with the
representations and warranties of Mountain Drilling (as defined in Section 4.15
below) in the Purchase Agreement (as defined in Section 4.15 below) shall be the
only representations and warranties of OilQuip and MCA concerning environmental
matters, and no other representation and warranty in this Agreement shall apply
to environmental matters.
4.13 Real Property; Leases. Neither OilQuip nor MCA owns any real
property. Schedule 4.13 sets forth a complete and accurate list of each lease,
sublease or other arrangement pursuant to which either OilQuip or MCA leases or
subleases real property (collectively, the "Leased Premises"). Unless otherwise
noted on Schedule 4.13, OilQuip or MCA is the sole lessee or sublessee under
each of the leases and subleases listed on Schedule 4.13 and each such lease and
sublease is valid and in full force and effect and enforceable in accordance
with its terms and has not been further supplemented, amended or modified.
Unless otherwise noted on Schedule 4.13, there exists no material event of
default or event, occurrence, condition or act, including without limitation,
the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereunder, which constitutes or would constitute (with
notice or lapse of time or both) a material default in any respect under any of
the leases or subleases on Schedule 4.13. Neither OilQuip or MCA has received
any notice of any event of
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default or any event, occurrence, condition or act, including without
limitation, the execution and delivery of this Agreement and the consummation of
the transactions contemplated hereunder, which constitutes or would constitute
(with notice or lapse of time or both) a default in any respect under any of the
leases or subleases on Schedule 4.13.
4.14 No Consent Required. OilQuip's execution, delivery and performance
of this Agreement does not require the consent of approval of any other person
or entity which has not been obtained, including, without limitation, any
regulatory authority or governmental body of the United States of America or any
state thereof or any political subdivision of the United States of America or
any state thereof.
4.15 Limited Operations. OilQuip has not conducted any material
business operations other than: the formation of MCA, the acquisition through
MCA (including the financing of such acquisition) of the assets of Mountain Air
Drilling Service Co., Inc. ("Mountain Drilling"), the lease of its current
office at 0000 Xxxxxxx Xxxx Xxxx, Xxxxx 000, Xxx Xxxxxxx, XX 00000, the
engagement of Xxxxxxx Xxxxxxxxxxxx as Chief Executive Officer, the engagement of
Xxxxxxx Xxxxxxxx as a financial advisor and the negotiation of this Agreement.
Since the acquisition of the assets of Mountain Drilling, such assets have been
operated in the ordinary course of business and there has been no material
change in the business of Mountain Drilling. To the knowledge of OilQuip, after
due inquiry of the officers of MCA, except as set forth on Schedule 4.15 hereto
the representations and warranties of Mountain Drilling set forth in the Asset
Purchase Agreement dated as of February 6, 2001, by and among Mountain
Compressed Air, Inc., a Texas corporation, Mountain Drilling and Xxx Xxxxxx and
Xxxxx Xxxxxx (the "Purchase Agreement"), are true and correct as of the date
hereof (without regard to any knowledge qualification set forth in the Purchase
Agreement), and there has been no material adverse development in the business
of MCA since the date of the Purchase Agreement.
4.16 Brokers. Except for the Xxxxxxxx financial advisor agreement
described in Section 4.15, all negotiations relative to this Agreement and the
transactions contemplated hereby have been carried out by OilQuip directly with
A-C without the intervention of any person on behalf of OilQuip in such manner
as to give rise to any valid claim against A-C or OilQuip for a finder's fee,
brokerage commission or similar payment.
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4.17 Full Disclosure. No representation, warranty, schedule or
certificate of OilQuip made or delivered pursuant to this Agreement contains or
will contain any untrue statement of fact, or omits or will omit to state a
material fact the absence of which makes such representation, warranty or other
statement misleading.
ARTICLE V
ADDITIONAL REPRESENTATION AND WARRANTY RELATING TO THE SHAREHOLDERS
OilQuip hereby represents and warrants to A-C that each Shareholder
owns of record the shares of OilQuip Common Stock indicated opposite such
Shareholder's name on Exhibit A hereto.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF A-C AND ACQUISITION
A-C and Acquisition each represent and warrant to OilQuip as follows:
6.1 Organization, etc. A-C is a corporation, duly organized and validly
existing and in good standing under the laws of the State of Delaware, and is
qualified or licensed to do business and is in good standing as a foreign
corporation in each other jurisdictions in which the conduct of its business or
the ownership of property requires such qualification or licensing, except where
failure to be so qualified or licensed would not have a material adverse effect
on the financial condition or operations of A-C and its Subsidiaries (as defined
below), taken as a whole (for A-C and its Subsidiaries, a "Material Adverse
Effect"). Each company (each, a "Subsidiary") listed on Schedule 6.1 hereof is
duly organized and validly existing and in good standing under the laws of the
jurisdiction of its organization, and is qualified or licensed to do business
and is in good standing as a foreign corporation in each other jurisdiction in
which the conduct of its business or the ownership of property requires such
qualification or licensing, except where failure to be licensed would not have a
Material Adverse Effect on A-C. Except for the Subsidiaries, A-C does not own,
of record or beneficially, the securities of any other entity. A true and
correct copy of the Certificate of Incorporation and Bylaws of A-C, as currently
in effect, is attached as Schedule 6.1 hereto.
6.2 Authority. A-C has the corporate power and authority to execute and
deliver this Agreement and to perform its obligations hereunder, and such action
has been duly authorized by all necessary action of A-C's Board of Directors.
The issuance and sale of the A-C Common Stock to the Shareholders has been duly
authorized and if, as and when delivered to the Shareholders, such shares will
be duly and validly issued and outstanding, fully paid and nonassessable and
will be free of any Encumbrance (as defined below), other than those imposed
pursuant to this Agreement and securities laws of general application. As used
in this Agreement, "Encumbrance" shall mean any claim, lien, pledge, option,
charge, easement, security interest, deed of trust, mortgage, right of way,
encroachment, private building or use restriction, conditional sales agreement,
encumbrance or other right of third parties, whether
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voluntarily incurred or arising by operation of law, and includes, without
limitation, any agreement to give any of the foregoing in the future, and any
contingent sale or other title.
6.3 Enforceability. This Agreement has been duly executed and delivered
by A-C and constitutes a legal, valid and binding agreement and obligation of
A-C and Acquisition enforceable against each in accordance with its terms
subject to: (i) judicial principles respecting election of remedies or limiting
the availability of specific performance, injunctive relief, or other equitable
remedies; (ii) bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect generally relating to or affecting
creditors' rights; and (iii) public policy concerns (including, without
limitation, the ability of a court to refuse to enforce unconscionable
covenants, indemnification provisions or similar provisions).
6.4 No Violation. Except as set forth on Schedule 6.4, the execution
and the delivery by A-C and Acquisition of this Agreement does not and will not
(i) conflict with or result in a breach of the terms, conditions or provisions
of, (ii) constitute a default under, (iii) result in a violation of, or (iv)
require any notice, filing, authorization, consent or approval not heretofore
obtained pursuant to, any Contractual Obligation binding upon A-C or any
Subsidiary or any of their properties or assets, or any Requirement of Law
binding upon or applicable to A-C or any Subsidiary or any of their properties
or assets, except for such conflicts, defaults or violations, filings,
authorizations, consents or approvals which would not have a Material Adverse
Effect on A-C.
6.5 Litigation. Except as set forth on Schedule 6.5, there are no
pending or overtly threatened actions, claims, orders, decrees, investigations,
suits or proceedings by or before any governmental authority, arbitrator, court
or administrative agency which would have a Material Adverse Effect on A-C.
6.6 Capitalization. The authorized capital stock of A-C consists of
2,000,000 shares of A-C Common Stock, 1,588,128 shares of which have been
validly issued as of the date hereof, and such issued shares are fully paid and
nonassessable. A-C owns 100% of the common stock of each of the Subsidiaries.
Except as set forth on Schedule 6.6 hereto, there do not exist any other
authorized or outstanding securities, options, warrants, calls, commitments,
rights to subscribe or other instruments, agreements or rights of any character,
or any pre-emptive rights, convertible into or exchangeable for, or requiring or
relating to the issuance, transfer or sale of, any shares of capital stock or
other securities of A-C or any Subsidiary.
6.7 Annual Report; Financial Statements. A-C's Annual Report on Form
10-K for the year ended December 31, 2000 (the "Report") was filed with the
Securities and Exchange Commission (the "SEC") on April 2, 2001. The Report
complied in all material respects with the rules of the SEC applicable to such
Report on the date filed with the SEC, and the Report did not contain, on the
date of filing with the SEC, any untrue statement of a material fact, or omit to
state any material fact necessary to make the statements therein, in light of
the circumstances in which they were made, not materially misleading. The Report
has not been amended, nor as of the date hereof has A-C filed any Report on Form
8-K since April 2, 2001. All of the consolidated financial statements included
in the Report (the "A-C Financial Statements"): (i) have been prepared from and
on the basis of, and are in accordance with, the books and records of A-C and
with generally accepted accounting principles applied on a basis consistent with
prior
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accounting periods; (ii) fairly and accurately present in all material respects
the consolidated financial condition of A-C as of the date of each such A-C
Financial Statement and the results of its operations for the periods therein
specified; and (iii) are accompanied by the audit (going concern) opinion of
A-C's independent public accountants. Except as set forth in Schedule 6.7 or in
the A-C Financial Statements, as of the date hereof, A-C has no liabilities
other than (i) liabilities which are reflected or reserved against in the A-C
Financial Statements and which remain outstanding and undischarged as of the
date hereof, (ii) liabilities arising in the ordinary course of business of A-C
since December 31, 2000, (iii) liabilities incurred as a result of the
transactions contemplated by this Agreement or (iv) liabilities which were not
required by generally accepted accounting principles to be reflected or reserved
on the A-C Financial Statements. Since the date of filing of the Annual Report,
there has not been any event or change which has or will have a Material Adverse
Effect on A-C and A-C has no knowledge of any event or circumstance that would
reasonably be expected to result in such a Material Adverse Effect.
6.8 Release by Pension Benefit Guaranty Corporation. Subject to the
execution of the PBGC Letter, the Merger will be deemed to constitute a "Release
Event" as such is defined under that certain agreement dated February 28, 1999,
entered into by and between the Pension Benefit Guaranty Corporation ("PBGC")
and A-C, and will be effective to terminate and fully release A-C and the
Subsidiaries from any and all further obligation under those certain pension
funding liabilities carried on the books and records of A-C prior to the Closing
having an aggregate principal obligation as of December 31, 2000 of
approximately $66.9 million.
6.9 Income Tax Returns. A-C and the Subsidiaries have filed all federal
and state income tax returns which are required to be filed, and have paid, or
made provision for the payment of, all taxes which have become due pursuant to
said returns or pursuant to any assessment received by A-C or any Subsidiary,
except such taxes, if any, as are being contested in good faith and as to which
adequate reserves have been provided. A-C has no knowledge of any pending
assessments or adjustments of the income tax payable of A-C or its Subsidiaries
with respect to any year.
6.10 Permits, Compliance With Law. A-C and each Subsidiary possesses,
and will hereafter possess, all permits, consents, approvals, franchises and
licenses required and rights to all trademarks, trade names, patents, and
fictitious names, if any, necessary to enable them to conduct the business in
which it is now engaged in compliance with applicable law, except where failure
to do so would not have a Material Adverse Effect on A-C. A-C and each
Subsidiary are in compliance with all Requirements of Law in the conduct of its
business and corporate affairs, except where failure to comply, singly or in the
aggregate, would not have a
Material Adverse Effect on A-C.
6.11 ERISA. Except as set forth on Schedule 6.11, A-C and each
Subsidiary is in compliance in all material respects with all applicable
provisions of ERISA; A-C and each Subsidiary has not violated any provision of
any Plan maintained or contributed to by it; no Reportable Event as defined in
ERISA has occurred and is continuing with respect to any Plan initiated by A-C
or any Subsidiary; A-C and each Subsidiary has met its minimum funding
requirements under ERISA with respect to each Plan; and each Plan will be able
to fulfill its
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benefit obligations as they come due in accordance with the Plan documents and
under generally accepted accounting principles. Schedule 6.11 describes each
Plan maintained by A-C and each of its Subsidiaries.
6.12 Contracts. Schedule 6.12 sets forth a description of each
agreement, contract lease, license evidence of indebtedness, mortgage,
indenture, security agreement, or other instrument, whether written or oral
(collectively, "Contracts"), which provides for payments to or by A-C or any
Subsidiary in excess of $25,000, or is otherwise material to the operations of
A-C or any Subsidiary. Neither A-C nor any Subsidiary is in default on any
Contract, except for such defaults which would not have a Material Adverse
Effect on A-C.
6.13 Environmental Matters. Except as set forth on Schedule 6.13, since
January 1, 1989, A-C and its subsidiaries (including the Subsidiaries) have at
all times been in compliance in all material respects with all applicable
Environmental Laws. Except as set forth on Schedule 6.13, none of the operations
of A-C or any Subsidiary is the subject of any federal or state investigation
evaluating whether any remedial action involving a material expenditure is
needed to respond to a release of any toxic or hazardous waste or substance into
the environment. To A-C's knowledge, except as set forth on Schedule 6.13,
neither A-C nor any Subsidiary has received notice of any actual or threatened
claim, investigation, proceeding, order or decree in connection with any release
of any toxic or hazardous waste or substance into the environment. This Section
6.13 shall be the sole representation and warranty of A-C concerning
environmental matters, and no other representation and warranty in this
Agreement shall apply to environmental matters.
6.14 Trademarks, etc. A-C and the Subsidiaries own, have sufficient
title to, or have the right to use (or can obtain the right to use on reasonable
commercial terms), all patents, trademarks, service marks, trade names,
copyrights, licenses, trade secrets or other proprietary rights (collectively,
the "Proprietary Rights") necessary to their business as now conducted without
infringing upon the right of any person. Except for employee confidentiality
agreements with employees and consultants, there are no outstanding material
options, licenses or agreements relating to intellectual property rights of A-C
or any Subsidiary necessary to their business as now conducted, nor is A-C or
any Subsidiary bound by or a party to any material options, licenses or
agreements with respect to the Proprietary Rights of any other person or entity.
Neither A-C nor any Subsidiary has received any communications alleging that A-C
has violated or, by conducting its business as proposed, would violate, any of
the Proprietary Rights of any other person or entity. A-C and the Subsidiaries
are not aware of any material violation by a third party of any of their
Proprietary Rights necessary to their business as now conducted.
6.15 Real Property. Schedule 6.15 sets forth all of the real property
which is owned and/or leased by each of A-C and the Subsidiaries (collectively,
the "Real Property"). The Real Property constitutes all of the real property now
used in and necessary for the conduct of the business of A-C and the
Subsidiaries as presently conducted. A-C has delivered to OilQuip true and
complete copies of all leases relating to such properties (the "Leases"). The
Leases are in full force and effect and are valid, binding, and enforceable in
accordance with their terms, and no event of default has occurred which (whether
with or without notice, lapse of time or both or the happening or occurrence of
any other event) would constitute a default on the part of any party.
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Except as set forth in Schedule 6.15, all real property, buildings and
structures owned or used by A-C and the Subsidiaries are in good condition and
suitable for the purpose or purposes for which it is being used, reasonable wear
and tear excepted, and is in such condition and repair as to permit the
continued operation of said businesses. None of the Real Property, buildings or
structures is in need of material maintenance or repairs except for ordinary,
routine maintenance and repairs.
6.16 Employees. Except as set forth on Schedule 6.16, all employees of
A-C and each Subsidiary are employed "at will" and may be terminated without
payment of severance or incurrence of any other liability of A-C or the
Subsidiaries; no employee of A-C is in violation of any term of any material
employment contract, confidentiality agreement or any other material contract or
agreement relating to the right of any such employee to be employed by A-C or
any Subsidiary; and neither A-C nor any Subsidiary has any employee severance
agreement covering any of its employees. There are no labor disputes or union
organization activities pending or threatened between A-C or the Subsidiaries
and their employees. A-C and the Subsidiaries require each employee and
consultant to execute an employee inventions and proprietary rights assignment
and confidentiality agreement, and copies of such agreements have been made
available to OilQuip.
6.17 Insurance. A-C and the Subsidiaries currently maintain, in full
force and effect, all insurance policies that are reasonably required to be
maintained for the conduct of its business or the ownership of its properties
(both real and personal) (collectively, the "Insurance Policies"). True and
complete copies of all Insurance Policies have been made available to OilQuip.
A-C (a) is not in default regarding the provisions of any Insurance Policy; (b)
has paid all premiums due thereunder; and (c) has not failed to present any
notice or material claim thereunder in a due and timely fashion. The coverage
provided by the Insurance Policies, with respect to any insured act or event
occurring on or prior the Effective Date, will not in any way be affected by or
terminate or lapse by reason of the transactions contemplated hereby. Schedule
6.17 sets forth a listing of all policies maintained by A-C and a listing, by
policy, of all outstanding claims and the amount thereof made by A-C under each
such policy.
6.18 Bank Accounts. Schedule 6.18 sets forth the names and locations of
all banks, trust companies, savings and loan associations, stock brokerages and
other financial institutions at which A-C and Acquisition maintain accounts of
any nature, or safe deposit boxes, and the name of all persons authorized to
draw thereon or make withdrawals therefrom.
6.19 Title to Properties. The assets owned or leased by A-C and its
Subsidiaries are all of the assets necessary to conduct the business of A-C and
its Subsidiaries as currently being conducted. A-C and its Subsidiaries have
good and marketable title to substantially all of the assets they own, real and
personal, movable and immovable, tangible and intangible, free and clear of all
Encumbrances, except for: (a) liens for taxes not yet due and payable, (b)
Encumbrances described on Schedule 4.19 hereto, or (c) minor imperfections of
title and encumbrances, if any, which (i) are not substantial in amount, (ii) do
not detract from the value of the property subject thereto, impair the
operations of the business of A-C, or the use or license of certain of the
assets of A-C, and (iii) have arisen in the ordinary course of business
consistent with past practice.
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6.20 Related Party Transactions. Except for those contracts described
on Schedule 6.20 hereto, no existing contract of A-C or its Subsidiaries is with
or for the direct benefit of (i) any party owning, or formerly owning,
beneficially or of record, directly or indirectly, in excess of five percent of
the outstanding capital stock of A-C, (ii) any director, officer or similar
representative of A-C, (iii) any natural person related by blood, adoption or
marriage to any party described in (i) or (ii), or (iv) any entity in which any
of the foregoing parties has, directly or indirectly, at least a five percent
beneficial interest (a "Related Party"). Without limiting the generality of the
foregoing, no Related Party, directly or indirectly, owns or controls any
material assets or material properties which are used in A-C's business and to
the knowledge of A-C, no Related Party, directly or indirectly, engages in or
has any significant interest in or connection with any business which is, or has
been within the last two years, a competitor, customer or supplier of A-C or has
done business with A-C or which currently sells or provides products or services
which are similar or related to the products or services sold or provided in
connection with the Business.
6.21 Brokers. The transactions contemplated hereby have been carried
out by A-C directly with OilQuip and the Shareholders without the intervention
of any person on behalf of A-C in such manner as to give rise to any valid claim
against A-C or OilQuip for a finder's fee, brokerage commission or similar
payment.
6.22 Securities Law Matters. To the best of its knowledge and except
for A-C's failure to hold annual meetings of its stockholders, since January 1,
1999 A-C has filed all reports, registration statements, proxy statements and
other materials, together with any amendments required to be made with respect
thereto, that were required to be filed with (i) the SEC under the Securities
Act or the Exchange Act of 1934, as amended (all such reports and statements are
collectively referred to herein as the "Securities Filings"), and (ii) any
applicable state securities authorities. To the knowledge of A-C, no such
Securities Filing, as of the date it was filed, contained any untrue statement
of a material fact or omitted to state a material fact necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. Subject to the accuracy of the representations set forth
in the Shareholder Representation Letters attached as Exhibit B hereto, the
offer and sale of the Shares to the Shareholders will be exempt from the
Securities Act.
6.23 Full Disclosure. No representation, warranty, schedule or
certificate of A-C made or delivered pursuant to this Agreement contains or will
contain any untrue statement of fact, or omits or will omit to state a material
fact the absence of which makes such representation, warranty or other statement
misleading.
ARTICLE VII
COVENANTS OF THE PARTIES
7.1 Access Pending Closing; Exclusivity.
(a) Access to A-C. A-C shall (i) give to OilQuip and its
counsel, accountants and other representatives reasonable access, during normal
business hours, throughout the period prior to the Effective Date to all of the
books, contracts, commitments and other records of A-C and shall furnish OilQuip
during such period with all information concerning A-C that OilQuip
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may reasonably request; and (ii) afford to OilQuip and its representatives,
agents, employees and independent contractors reasonable access, during normal
business hours, to the properties of A-C, in order to conduct inspections at
their expense to determine that A-C is operating in compliance with all
applicable federal, state, local and foreign statutes, rules and regulations,
and all material building, fire and zoning laws or regulations and that the
assets of A-C are substantially in the condition and of the capacities
represented and warranted in this Agreement; provided, however, that in every
instance described in (i) and (ii), OilQuip shall make arrangements with A-C
reasonably in advance and shall use their reasonable best efforts to avoid
interruption and to minimize interference with the normal business and
operations of A-C. Any such investigation or inspection by OilQuip shall not be
deemed a waiver of, or otherwise limit, the representations, warranties or
covenants of A-C contained herein.
(b) Exclusivity to OilQuip. Until either the Agreement is
terminated or consummated, A-C agrees not to solicit any other inquiries,
proposals or offers to purchase or otherwise acquire, in a merger transaction or
another type of transaction, the business of A-C or the shares of capital stock
of A-C. A-C further agrees to advise OilQuip promptly of any such inquiry or
offer.
(c) Access to OilQuip. OilQuip shall (i) give to A-C and to
A-C's counsel, accountants and other representatives reasonable access, during
normal business hours, throughout the period prior to the Effective Date, to all
of the books, contracts, commitments and other records of OilQuip and shall
furnish A-C during such period with all information concerning OilQuip that A-C
may reasonably request; and (ii) afford to A-C and to A-C's representatives,
agents, employees and independent contractors reasonable access, during normal
business hours, to the properties of OilQuip in order to conduct inspections at
A-C's expense to determine that OilQuip is operating in compliance with all
applicable federal, state, local and foreign statutes, rules and regulations,
and all material building, fire and zoning laws or regulations and that the
assets of OilQuip are substantially in the condition and of the capacities
represented and warranted in this Agreement; provided, however, that in every
instance described in (i) and (ii), A-C shall make arrangements with OilQuip
reasonably in advance and shall use its reasonable best efforts to avoid
interruption and to minimize interference with the normal business and
operations of OilQuip. Any such investigation or inspection by A-C shall not be
deemed a waiver of, or otherwise limit, the representations, warranties or
covenants of OilQuip contained herein.
(d) Exclusivity to A-C. Until either this Agreement is
terminated or consummated, OilQuip agrees not to make, directly or indirectly,
any other inquiries, proposals or offers to purchase or otherwise acquire, in a
merger transaction or another type of transaction, the business or the shares of
capital stock of any other company. OilQuip furthers agree to advise A-C
promptly of any such inquiry or offer.
7.2 Operation of the Business. Between the date of this Agreement and
the Effective Date, each of A-C and OilQuip will conduct its business only in
the ordinary course of business, and will:
(a) except as set forth in Section 7.11, not amend its charter
or bylaws;
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(b) not increase the compensation or benefits (including,
without limitation, salary, bonus and commission schedules) of any personnel,
except for non-key management personnel in the ordinary course of business;
(c) use its reasonable best efforts to preserve intact its
current business organization, keep available the services of its personnel, and
maintain the relations and good will with suppliers, customers, landlords,
creditors, employees, agents, and others having business relationships with it
consistent with its sound business judgment and past practices;
(d) not issue or sell any debt or equity securities,
(including upon the exercise of currently outstanding options, warrants and
other rights) declare, set aside or pay any dividend or distribution in respect
of its securities, or directly or indirectly redeem or repurchase any
outstanding securities;
(e) not sell, assign, transfer, convey, lease or otherwise
dispose of or subject to any Encumbrance any of its assets, except for sales of
inventory and used equipment, in each case in the ordinary course of business
consistent with past practice
(f) not acquire by merger or consolidation with, or merge or
consolidate with, or purchase substantially all of the assets of, or otherwise
acquire any material assets or business of any person;
(g) not make any loans or advances to any person, except in
the ordinary course of business nor discharge any debt prior to the scheduled
maturity thereof;
(h) not make any payment or enter into any agreement or other
transaction with any officer or director of such party, or MCA or any
Subsidiary, other than employment compensation and benefits on the terms
currently in effect;
(i) not fail to comply in any material respect with all
Requirements of Law applicable to its business;
(j) not make any operational changes or developments of a
material nature; and
(k) not enter into, amend or terminate any Contract which is
or would be required to be disclosed in Schedule 6.12 hereto.
7.3 Reasonable Best Efforts. Each of the parties hereto shall use its
reasonable best efforts to take promptly, or cause to be taken, all actions,
necessary, proper or advisable to consummate the transactions contemplated
hereby (including obtaining all necessary waivers, consents and approvals) on or
before May 9, 2001 or as soon as practicable thereafter. Without limiting the
generality of the foregoing, A-C shall use its reasonable best efforts to
fulfill the conditions set forth in Section 8.2 and OilQuip shall use its
reasonable best efforts to fulfill the conditions set forth in Section 8.1.
7.4 Notification of Certain Matters. A-C, Acquisition, and OilQuip
shall each give prompt notice to the other parties of the occurrence or
non-occurrence of any event, the
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occurrence or non-occurrence of which is likely to cause any conditions set
forth in Article VIII not to be satisfied; provided, however, that the delivery
of any notice pursuant to this Section 7.4 shall not limit or otherwise affect
any remedies available to the party receiving such notice and no disclosure
pursuant to this Section 7.4 shall be deemed to amend or supplement any written
disclosure previously made by one party thereafter, or prevent or cure any
misrepresentations, breach of warranty or breach of covenant, unless the
recipient party shall agree in writing to accept the disclosures set forth in
any such notice.
7.5 Additional Documents and Further Assurances. Each party hereto, at
the request of another party hereto, shall execute and deliver such other
instruments and do and perform such other acts and things as may be necessary or
desirable for effecting completely the consummation of this Agreement, the
Merger and the transactions contemplated hereby.
7.6 Registration of the A-C Common Stock.
(a) Following the Effective Time, A-C shall evaluate the
feasibility of listing the A-C Common Stock on an exchange. Moreover, A-C shall
use its reasonable efforts to cause (i) the A-C Common Stock to be eligible for
listing on a national securities exchange or the Nasdaq Market System, and (ii)
the A-C Common Stock to be approved for listing on such exchange, as soon as
practicable after the Effective Date. The obligations of A-C under Section 7.6
shall be conditioned upon such listing, and the date of such listing is referred
to herein as the "Listing Date".
(b) Following the Listing Date and until the second
anniversary of the Listing Date, the Shareholders shall have the right to
require A-C to file with the SEC, at A-C's sole cost and expense, on no more
than one occasion, a registration statement on Form S-3 (or such other form as
the SEC may from time to time prescribe for such purposes) covering as many of
the Shares as the Shareholders elect to include therein (the "Shareholders
Registration Statement") and to cause the Shareholders Registration Statement to
be declared effective by the SEC within 90 days thereafter and to maintain the
effectiveness of the Shareholders Registration Statement until the earlier of
(i) the completion of the offering covered by the Shareholders Registration
Statement, (ii) the first anniversary of the effectiveness of the Shareholders
Registration Statement and (iii) the date the Shareholders shall become entitled
to sell the Shares pursuant to subsection (k) of Rule 144; in the event A-C
proposes to register an underwritten offering of its Common Stock for its own
account under the Act, it shall have the right to delay or suspend the filing or
effectiveness of the Shareholders Registration Statement for up to an aggregate
of 120 days in any 12-month period to facilitate such registration. If the
Shareholders propose to effect an underwritten offering, A-C shall enter into an
Underwriting Agreement in customary form with the managing underwriter selected
by the Shareholders.
Notwithstanding the foregoing, in the event of a material development
in the business of A-C, A-C shall advise the Shareholders of such event and the
Shareholders shall cease using the prospectus included in the Shareholders
Registration Statement until forty-eight (48) hours following the public
disclosure of such event. A-C shall promptly disclose all such material
developments, provided that it shall be entitled to delay such disclosure for a
reasonable period of time for valid business purposes, not to exceed five (5)
business days without the consent of the Shareholders, which consent shall not
be unreasonably withheld.
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(c) If, at any time or from time to time, A-C determines to
register any of its securities for its own account or the account of any other
shareholder, other than a registration relating to employee benefit plans (or
the resale of securities acquired pursuant thereto) or a transaction pursuant to
Rule 145 of the SEC, A-C shall include in such registration such number of the
Shares as the Shareholders shall request in writing within ten (10) business
days following receipt of notice of such registration, provided that, if such
registration is underwritten, it shall be a condition that the Shareholders
participate in such underwriting and enter into an underwriting agreement in
customary form with the managing underwriter selected by A-C. If the managing
underwriter determines that market forces require limitation of the number of
shares to be underwritten, the number of Shares owned by the Shareholders to be
included in the registration may be limited or eliminated, provided that the
Shareholders shall be treated on at least a pari passu basis with all other
shareholders participating in such registration (other than those shareholders
exercising demand registration rights).
(d) All registration expenses (including legal fees) in
connection with the registrations contemplated by this Section 7.6 shall be
borne by A-C, but all selling expenses of the Shareholders (including broker
fees, underwriting commissions and the cost of any special legal counsel
representing the Shareholders) shall be borne by the Shareholders. In connection
with any such registration statement, the Shareholders shall promptly furnish
A-C with such written representations, information and consents regarding the
Shareholders, the Shares and the intended method of distribution of the Shares
as shall be necessary for inclusion in the Registration Statement.
(e) A-C shall enter into customary agreements (including
indemnification agreements) and do such other things as OilQuip shall reasonably
request in connection with the registration of the A-C Common Stock pursuant to
this Section.
7.7 Rights Offering. Within one year following the Effective Date, A-C
shall file a registration statement on Form S-3 with respect to a rights
offering (the "Rights Offering") pursuant to which it shall offer holders of A-C
Common Stock (other than the holders of the A-C Common Stock issued pursuant to
this Agreement) the right to acquire in the aggregate 1,000,000 shares of Common
Stock at a purchase price not in excess of $2.00 per share (equitably adjusted
for any reverse stock split or other recapitalization), and A-C shall thereafter
take all steps necessary to (a) cause the SEC to declare such registration
statement effective, (b) maintain the effectiveness of the registration
statement until the Rights Offering is completed, and (c) complete the Rights
Offering. Notwithstanding the foregoing, A-C's obligation to effect the Rights
Offering shall be tolled during any period during which the fair market value of
the A-C Common Stock is less than $2.00 (equitably adjusted for any reverse
stock split or other recapitalization and shall be cancelled if the fair market
value of the A-C Common Stock remains less than $2.00 (equitable adjusted for a
reverse stock split or other recapitalization) for more than 18 months following
the Effective Date. As used herein, the fair market value of the A-C Common
Stock shall be equal to the average price of the A-C Common Stock during the 30
trading days ending on the 2nd trading day preceding the date of evaluation. The
price of the A-C Common Stock on any trading day shall mean the mean between the
closing bid and ask price for the A-C Common Stock, as quoted by NASDAQ or any
exchange on which the A-C Common Stock is then traded.
17
7.8 Expenses. Each party shall bear its own costs and expenses in
connections with the negotiation and consummation of this Agreement.
7.9 Public Disclosures. A-C and OilQuip shall consult with each other
before issuing any press release or otherwise making any public statements with
respect to this Agreement or the Merger or the transactions contemplated hereby
or thereby and shall not issue any such press release or make any such public
statement prior to such consultation, except as may be required by law.
7.10 Tax Treatment. OilQuip and A-C shall each report the Merger as a
tax free reorganization and shall not take, and shall use commercially
reasonable efforts to prevent any of their respective subsidiaries or affiliates
from taking, any actions that could prevent the Merger from qualifying, as a tax
free reorganization under the provisions of Section 368(a) of the Code.
18
7.11 Charter Amendment. A-C shall use its best efforts to amend its
certificate of incorporation as set forth on Exhibit C hereto as soon as
practicable following the Effective Date, and shall take all actions reasonably
requested by the Shareholders to effect such amendment.
7.12 Independent Committee.
(a) Following the Effective Date, A-C shall use reasonable
efforts to identify and cause to be appointed to the Board of Directors of A-C
one or more persons who are independent of the Shareholders and who shall be
delegated authority to review and approve A-C's performance of its obligations
and the enforcements of its rights hereunder, including the rights offering
described in Section 7.7 (the "Independent Committee").
(b) The Independent Committee shall be authorized and
empowered to (i) compromise on behalf of A-C with OilQuip and the Shareholders
any claims asserted under this Agreement, and (ii) to take such further actions
related to the rights and obligations of A-C set forth in this Article VII. For
purposes hereof, a person shall be deemed to be an "independent director" if he
or she (A) has never been an executive officer or employee of, or consultant to,
Oil Quip or its subsidiaries and affiliates and does not serve as an executive
officer or employee of, or consultant to, A-C, following the Effective Date, (B)
is not a Shareholder, (C) is not a family member (i.e., parent, sibling,
grandparent, mother-in-law, father-in-law, spouse, former spouse, child,
stepchild, grandchild or any other blood or legal relative) of any executive
officer or any employee or consultant described in clause (A) above or of any
Shareholder, and (D) is free from any other relationship that, in the good faith
opinion of the Board of Directors of A-C, would interfere with the exercise of
independent judgment in carrying out the responsibilities of an independent
director under this Section 7.12.
ARTICLE VIII
CONDITIONS TO THE MERGER
8.1 Conditions to Obligations of A-C and Acquisition. The obligations
each of A-C and Acquisition to consummate and effect the Merger and the other
transactions contemplated hereby shall be subject to the satisfaction at or
prior to the Effective Date of each of the following conditions, any of which
may be waived, in writing, exclusively by A-C:
(a) No Injunctions or Restraints; Illegality. No temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the Merger shall be in effect, nor shall any
proceeding brought by an administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign, seeking any of
the foregoing be pending; nor shall there by any action taken, or any statute,
rule, regulation, injunction order or decree enacted, entered, enforced,
promulgated, issued or deemed applicable to the Merger which makes the
consummation of the Merger illegal.
(b) Legal Opinion. A-C shall have received the opinion of
Xxxxxx Xxxxxxxxx Xxxxx & Xxxxxxxx LLP, counsel to OilQuip, in the form attached
hereto as Exhibit D hereto.
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(c) Representations and Warranties. The representations and
warranties of OilQuip in this Agreement shall be true and correct in all
respects on and as of the Effective Date as though such representations and
warranties were made on and as of such time, except for those representations
and warranties which address matters only as of a particular date (which shall
be true and correct only as of such date), and for such inaccuracies as
individually or in the aggregate would not have a Material Adverse Effect on
OilQuip.
(d) Covenants. OilQuip shall have performed and complied in
all material respects with all covenants and obligations of this Agreement
required to be performed and complied with by OilQuip as of the Effective Date.
(e) Tender of Shares of OilQuip Common Stock. All shares of
QilQuip Common Stock shall have been delivered to A-C for exchange into shares
of A-C Common Stock.
(f) Certificate of OilQuip. A-C shall have been provided with a certificate
executed on behalf of OilQuip by its Chief Executive Officer to the effect that,
as of the Effective Date, the conditions set forth in Sections 8.1(c) and 8.1(d)
have been met with respect to OilQuip.
(g) Shareholder Representation Letters. A-C shall have
received the Shareholder Representation Letters in the form of Exhibit B hereto.
8.2 Conditions to the Obligations of OilQuip. The obligations of
OilQuip to consummate and effect the Merger and the other transactions
contemplated hereby shall be subject to the satisfaction at or prior to the
Effective Date of each of the following conditions, any of which may be waived,
in writing, exclusively by OilQuip:
(a) No Injunctions or Restraints; Illegality. No temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the Merger shall be in effect, nor shall any
proceeding brought by an administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign, seeking any of
the foregoing be pending; nor shall there by any action taken, or any statute,
rule, regulation, injunction order or decree enacted, entered, enforced,
promulgated, issued or deemed applicable to the Merger which makes the
consummation of the Merger illegal.
(b) Legal Opinion. OilQuip shall have received the opinion of
Xxxxxxx Berlin Shereff Xxxxxxxx, LLP, counsel to A-C, in the form attached
hereto as Exhibit E hereto.
(c) Representations and Warranties. The representations and
warranties of A-C and Acquisition in this Agreement shall be true and correct in
all respects and as of the Effective Date as though such representations and
warranties were made on and as of the Effective Date, except for those
representations and warranties which address matters only as of a particular
date (which shall be true and correct only as of such date), and for such
inaccuracies as individually or in the aggregate would not have a Material
Adverse Effect on A-C or Acquisition.
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(d) Covenants. A-C and Acquisition shall have performed and
complied in all material respects with all covenants and obligations of this
Agreement required to be performed and complied with by them as of the Effective
Date.
(e) A-C Board of Directors. A-C shall have caused such
resignations and appointments as are necessary to establish those officers and
directors identified in Exhibit F. hereto as the officers and directors of A-C
and the Subsidiaries.
(g) Trustee's Letter. On or prior to the Closing, A-C shall
have received a letter from the trustee of the Xxxxx-Xxxxxxxx Corp.
Reorganization Trust in the form of Exhibit G hereto and shall have entered into
a Service Agreement in the form of Exhibit H hereto.
(g) PBGC. A-C shall have received a letter and a Termination
Agreement , each in the form of Exhibit I hereto, executed by all parties.
(h) Agreement and Proxy. The PBGC and AL-CH, L.P. shall have
executed and delivered to the Shareholders an Agreement and Proxy in the form of
Exhibit J hereto.
(i) Certificate of A-C. OilQuip and each Shareholder shall
have been provided with a certificate executed on behalf of each of A-C and
Acquisition by its President or Chief Executive Officer, as of the Effective
Date, certifying that the conditions set forth in Sections 8.2(c) and 8.2(d)
have been met.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
9.1 Termination Events. This Agreement may, by notice given prior to
or at the Closing, be terminated and the Merger abandoned at any time prior to
the Effective Time:
(a) by A-C if a material breach of any provision of this
Agreement has been committed by OilQuip, and such breach has not been waived and
such breach (if curable) is not cured within 10 days after notice thereof, or if
any of the conditions in Section 8.1 has not been satisfied on May 31, 2001 (or
other date specified in this Agreement with respect to any such condition) or if
satisfaction of such a condition is or becomes impossible (other than through
the failure of A-C to comply with its obligations under this Agreement) and A-C
has not waived such condition on or before the Effective Date.
(b) by OilQuip if a material breach of any provision of this
Agreement has been committed by A-C, and such breach has not been waived
and such breach (if curable) is not cured within 10 days after notice thereof,
or if any of the conditions in Section 8.2 has not been satisfied on May 31,
2001 (or other date specified in this Agreement with respect to any such
condition) or if satisfaction of such a condition is or becomes impossible
(other than through the failure of OilQuip to comply with its obligations under
this Agreement) and OilQuip has not waived such condition on or before the
Effective Date.
(c) by mutual consent of OilQuip and A-C.
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(d) by any party if the Closing has not occurred (other than
through the failure of any party seeking to terminate this Agreement to comply
fully with its obligations under this Agreement) on or before the later of May
31, 2001, or such later date as the parties may agree upon.
9.2 Effect of Termination Prior to the Effective Date, termination
shall be the parties' exclusive remedy for a breach of any representation,
warranty or covenant.
ARTICLE X
GENERAL PROVISIONS
10.1 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally or by commercial
messenger or courier service, or mailed by registered or certified (return
receipt requested) or overnight mail or sent via facsimile (with acknowledgment
of complete transmission) to the parties at the following addresses (or at such
other address for a party as shall be specified by like notice); provided,
however, that notices sent by mail will not be deemed given until received:
(a) if to OilQuip: OilQuip Rentals, Inc.
0000 Xxxxxxx Xxxx Xxxx, Xxxxx 000
Xxx Xxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxxxxxxxxx
Fax: (000) 000-0000
with a copy to: Xxxxxx Xxxxxxxxx Xxxxx & Xxxxxxxx LLP
0000 00xx Xxxxxx, Xxxxx 0000 Xxxxx
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxxx
Fax: (000) 000-0000
(b) if to A-C or Acquisition: Xxxxx-Xxxxxxxx Corporation
c/o Xxxxxxx Vital
0000 Xxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Fax: (000) 000-0000
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Xxxxx-Xxxxxxxx Corporation
0000 Xxxxxx Xxxx
Xxxxx 000X
Xxxx Xxxxx, XX 00000
Attn: Xxxx Xxxxxxx/Xxx Xxxxxxxx
Fax: (000) 000-0000
and Xxxxx-Xxxxxxxx Corporation
c/o Houston Dynamic Service, Inc.
0000 Xxxxxxxx
Xxxxxxx, XX 00000
Attn: Xxxxx Xxxxxxxx
Fax: (000) 000-0000
with a copy to: Xxxxxxx Berlin Shereff Xxxxxxxx, LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx X. Xxx
Fax: (000) 000-0000
10.2 Interpretation. The words "include," "includes" and "including"
when used herein shall be deemed in each case to be followed by the words
"without limitation." The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
10.3 Counterparts; Facsimile Signatures. This Agreement may be executed
in one or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other party, it being
understood that all parties need not sign the same counterpart. This Agreement
may be executed by facsimile, and a facsimile signature shall have the same
force and affect as an original signature on this Agreement.
10.4 Entire Agreement. This Agreement and the documents, Schedules and
instruments referred to herein and to be delivered pursuant hereto constitute
the entire agreement between the parties pertaining to the subject matter
hereof, and supersede all other prior contemporaneous agreements and
understandings, both written and oral, among the parties, or any of them, with
respect to the subject matter hereof, except for the Confidentiality Letter
Agreement between A-C and OilQuip dated as of February 12, 2001. There are no
other representations or warranties, whether written or oral, between the
parties in connection with the subject matter hereof, except as expressly set
forth herein.
10.5 Assignments; Parties in Interest. Neither this Agreement nor any
of the rights, interests or obligations hereunder may be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto, and nothing herein, express or
implied, is intended to or shall confer upon any person not a party hereto any
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right, benefit or remedy of any nature whatsoever under or by reason hereof,
except as otherwise provided herein.
10.6 Severability. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal, void
or unenforceable, the remainder of this Agreement will continue in full force
and effect and the application of such provision to other persons or
circumstances will be interpreted so as reasonably to effect the intent of the
parties hereto. The parties further agree to replace such void or unenforceable
provision of this Agreement with a valid and enforceable provision that will
achieve, to the extent possible, the economic, business and other purposes of
such void or unenforceable provision.
10.7 Other Remedies. Except as otherwise provided herein, any and all
remedies herein expressly conferred upon a party will be deemed cumulative with
and not exclusive of any other remedy conferred hereby, or by law or equity upon
such party, and the exercise by a party of any one remedy will not preclude the
exercise of any other remedy.
10.8 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware, regardless of the laws
that might otherwise govern under applicable principles of conflicts of laws
thereof.
10.9 Rights of Construction. The parties hereto agree that they have
been represented by counsel during the negotiation and execution of this
Agreement, and therefor, waive the application of any law, regulation, holding
or rule of construction providing that ambiguities in an agreement or other
document will be construed against the party drafting such agreement or
document.
10.10 Third Party Beneficiaries. The Shareholders are direct
third-party beneficiaries of the obligations of A-C hereunder.
10.11 Specific Performance. The parties hereto agree that irreparable
damage could occur in the event any provision of this Agreement, including
Article III hereof, was not performed in accordance with the terms hereof.
Without limiting the generality of the foregoing, A-C hereby acknowledges that
(i) the obligation of A-C to issue shares of A-C Common Stock to the
Shareholders is fundamental and required for the protection of the Shareholders
and to preserve for the Shareholder the benefits of the Merger, (ii) the A-C
Common Shares are of a unique character, and (iii) a breach of such obligation
will result in irreparable harm and damages to the Shareholders which cannot be
adequately compensated by a monetary award. Accordingly, A-C hereby expressly
agrees that, should the Merger be consummated, in addition to all other remedies
available to law or in equity, the Shareholders shall be entitled to the
immediate remedy of specific performance, a temporary and/or permanent
restraining order, preliminary injunction or such other form of injunctive or
equitable relief as may used by the court to competent jurisdiction to restrain
or enjoin any of the parties hereto from breaching any representations,
warranties, covenants or restrictions set forth in Article III of this
Agreement, or to specifically enforce the terms and provisions of Article III
hereof. A-C further agrees that neither the Shareholders nor any other Person
shall be required to obtain, furnish or post any bond or similar instrument in
connection with or as a condition to obtaining any remedy referred to in Section
10.11, and A-C irrevocably waives any right it may have to require the
obtaining,
24
furnishing or posting of any such bond or similar instrument. If any legal
action or other legal proceeding relating to this Agreement or the enforcement
of any provision of this Agreement is brought by a party hereto, the prevailing
party shall be entitled to recover reasonable attorneys' fees, costs and
disbursements (in addition to any other relief to which the prevailing party nay
be entitled). The foregoing rights shall be in addition to any other right or
remedy any person hereto may have at law or in equity.
10.12 Arbitration.
(a) Rules of Arbitration. All disputes arising in connection
with this Agreement, other than matters pertaining to equitable relief, shall be
finally settled by arbitration by the American Arbitration Association ("AAA")
in Los Angeles, California, in accordance with the rules of the AAA; except
that, to the extent necessary to render the decision of the Arbitrator
enforceable in the courts of the State of California, the arbitration rules set
forth in the California Code of Civil Procedure, Section 1280 et seq. (the
"Rules of Arbitration") and the provisions of Section 1283.05 of the Rules of
Arbitration concerning rights of discovery shall govern. Judgment on the award
rendered by the arbitration panel (the "Arbitration Panel") may be entered in
any court of competent jurisdiction.
(b) Initiation of Arbitration. Any party which desires to
initiate arbitration proceedings may do so by delivering written notice to the
other party (the "Arbitration Notice") specifying (x) the nature of the dispute
or controversy to be arbitrated; (y) the name and address of the arbitrator
appointed by the party initiating such arbitration; and (z) such other matters
as may be required by the Rules of Arbitration. The party who receives an
Arbitration Notice shall appoint an arbitrator and notify the initiating party
of such arbitrator's name and address within 30 days after delivery of the
Arbitration Notice; otherwise, a second arbitrator shall be appointed at the
request of the party who delivered the Arbitration Notice. The two arbitrators
so appointed shall appoint a third arbitrator who shall be chairman of the
Arbitration Panel and the "neutral arbitrator" for purposes of the Rules of
Arbitration.
(c) Decisions Final. All decisions of the Arbitration Panel
shall be final, conclusive and binding on all parties and shall not be subject
to judicial review except to the extent set forth in the California Code of
Civil Procedure, ss.1285 et seq.
(d) Injunctive Relief. Any proceeding for injunctive relief
(including temporary restraining orders, preliminary injunctions and permanent
injunctions) may be brought in any court of competent jurisdiction, and the
parties consent to the jurisdiction of the California courts for such purpose.
10.13 Knowledge Defined. As used herein, "knowledge" shall mean
knowledge of a particular fact or other matter, provided that (a) A-C shall be
deemed to have "knowledge" of all facts actually known to Xxxx Xxxxxxx and Xxx
Xxxxxxxx, as well as all facts in A-C's corporate records and files which
reasonably would have been discovered by or known to a person making a prudent
review of such files to determine the accuracy of any representation or warranty
made by A-C in this Agreement or compliance by A-C with any of the covenants in
this Agreement, and (b) OilQuip shall be deemed to have "knowledge" of all facts
known to Munawar
25
Hidayatallah, as well as all facts in OilQuip's corporate records and files (but
not including corporate records and files of Mountain Drilling it being agreed
and acknowledged that OilQuip's and Xxxxxxx Xxxxxxxxxxxx'x knowledge regarding
the business purchased from Mountain Air Drilling Service Co., Inc. is limited
to the representations, warranties and schedules delivered to OilQuip in
connection with the purchase of the assets of Mountain Drilling and his due
inquiry of the officers of MCA) which would have been discovered by or known to
a person making a prudent review of such files to determine the accuracy of any
representation or warranty made by OilQuip in this Agreement or compliance by
A-C with any of the covenants in this Agreement.
IN WITNESS WHEREOF, A-C, OilQuip and Acquisition have caused this
Agreement to be signed and delivered by their respective duly authorized
officers has signed and delivered this Agreement, all as of the date first
written above.
Xxxxx-Xxxxxxxx Corporation
By: /s/ Xxxx X. Xxxxxxx, Xx.
-------------------------------
Xxxx X. Xxxxxxx, Xx.
Chief Financial Officer
Xxxxx-Xxxxxxxx Acquisition Corp.
By: /s/ Xxxxxx X. Xxxxxxxxxxx
-------------------------------
Xxxxxx X. Xxxxxxxxxxx
President
OilQuip Rentals, Inc.
By: /s/ Xxxxxxx Xxxxxxxxxxxx
--------------------------------
Xxxxxxx Xxxxxxxxxxxx
President
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