EXHIBIT 10.53
ASSET PURCHASE AGREEMENT
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THIS ASSET PURCHASE AGREEMENT (herein designated "Agreement") is made on
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July 10, 2000 by and among Hanover Compression Inc., a Delaware corporation
("Purchaser"), and Xxxxxxx & Xxxxxxxxx Services, Inc., a Texas corporation
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("S&S"), Xxxxxxx & Xxxxxxxxx Power, Inc., a Delaware corporation ("Power") and
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PAMCO Services International, Inc., a Delaware corporation ("PSI"). S&S, Power
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and PSI together are referred to as Sellers, BUT SHALL BE EFFECTIVE July 1, 2000
(the "Effective Date")
WHEREAS, Purchaser desires to acquire, and Sellers desire to transfer
to Purchaser, certain assets relating to the natural gas compression leasing
business of Sellers upon the terms of this Agreement.
NOW, THEREFORE, the terms of this Agreement are as follows:
ARTICLE 1 GENERAL
Section 1.1 Definitions. Unless otherwise stated in this Agreement,
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the following capitalized terms have the following meanings:
"Assets": is defined in Section 2.1.
"Assumed Liabilities": is defined in Section 2.7.
"Atel Lease": is defined in Section 2.1(k).
"Business": means the natural gas compression
leasing business of Sellers.
"Cash Consideration": is defined in Section 2.2(a).
"Casper Facility": is defined in Section 2.1(d).
"Closing": is defined in Section 2.4.
"COBRA": means the requirements of Part 6 of
Subtitle B of Title I of ERISA and Code
Section 4980B.
"Code": means the Internal Revenue Code of 1986, as
amended.
"Contracts": is defined in Section 3.15.
"Employee Benefit
Plan": means any (a) deferred compensation or
retirement bonus, stock option or similar
plan or arrangement, (b) defined contribution
retirement plan or arrangement which is an
Employee Pension Benefit Plan, (c) defined
benefit retirement plan or arrangement which
is an Employee Pension Benefit Plan, (d)
Multiemployer Plan, (e) Employee Welfare
Benefit Plan or (f) fringe benefit plan or
program.
"Employee Pension
Benefit Plan": has the meaning set forth in ERISA Sec. 3(2),
but excludes a Multiemployer Plan.
"Employee Welfare
Benefit Plan": has the meaning set forth in ERISA Sec. 3(1).
"Environmental, Health
And Safety
Requirements": shall mean all federal, state, local and
foreign statutes, regulations, ordinances and
other provisions having the force or effect
of law, all judicial and administrative
orders and determinations, all contractual
obligations and all common law concerning
public health and safety, worker health and
safety, and pollution or protection of the
environment, including without limitation all
those relating to the presence, use,
production, generation, handling,
transportation, treatment, storage, disposal,
distribution, labeling, testing, processing,
discharge, release, threatened release,
control, or cleanup of any hazardous
materials, substances or wastes, chemical
substances or mixtures, pesticides,
pollutants, contaminants, toxic chemicals,
petroleum products or byproducts, asbestos,
polychlorinated biphenyls, noise or
radiation, each as amended and as now in
effect.
"ERISA": means the Employee Retirement Income Security
Act of 1974, as amended.
"Excluded Assets": is defined in Section 2.6.
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"ERISA Affiliate": means each entity which is treated as a
single employer with a Person for purposes of
Code Section 414.
"Fixed Assets": is defined in Section 2.1(e).
"Governmental Body": means any court or any federal, state,
municipal or other governmental department
commission board, bureau, agency or
instrumentality, domestic or foreign.
"Xxxxxx Agreement": means the Employment Agreement dated March
30, 1998, between PSI and Xxxxxxx Xxxxxx.
"Inventory and
Equipment": is defined in Section 2.1(g).
"IRS": means the Internal Revenue Service.
"Known" or
"Knowledge": Whenever a statement regarding the existence
or absence of facts in this Agreement is
qualified such as "to the Knowledge of" or
"Known by", it is intended by the parties
hereto that the only information to be
attributed to such party is information (i)
in the case of Sellers, actually known to (a)
any current executive officer of PSI
including Xxx Xxxxxx, Xxxx Xxxxxx, and
Xxxxxxxx Xxxxxx, or (b) Xxxxx Pool, Xxxx
Xxxxx or Xxxxxxx Xxxxxx or (ii) in the case
of Purchaser, actually known to any current
executive officer of Purchaser, and unless
otherwise specifically provided in this
Agreement, no party hereto is represented to
have made a separate or special investigation
or inquiry in connection with this Agreement
to determine the existence or absence of
facts in any statement qualified by phrases
such as "Known by" or "to the Knowledge of."
"Lien": collectively means all mortgages, deeds of
trust, liens, security interests, pledges,
leases, conditional sale contracts, claims,
rights of first refusal, options, charges,
liabilities, obligations, agreements,
privileges, reservations, restrictions and
other encumbrances of any kind or nature.
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"Material Adverse
Effect": means a material adverse effect on the
Business or on the Sellers' ability to
consummate the transactions contemplated by
this Agreement.
"Multiemployer
Plan" has the meaning set forth in Section 3(37) of
ERISA.
"Non-Competition
Agreement": means the Non-Competition Agreement to be
delivered by PSI and S&S to Purchaser at the
Closing in the form attached as Exhibit 2.12.
"Order": means any order, writ, injunction, decree,
judgment, or a determination of any court or
other Governmental Body.
"Packaging
Commitment": means the Packaging Commitment to be delivered
by Purchaser to S&S at Closing in the form
attached hereto as Exhibit 2.10.
"Parts Alliance": means the Parts Alliance to be delivered by
Purchaser to S&S at the Closing in the form
attached hereto as Exhibit 2.11.
"PBGC": means the Pension Benefit Guaranty
Corporation.
"Permits": means all permits, authorizations,
certificates, approvals, registrations,
variances, exemptions, franchises, privileges,
immunities, grants, ordinances, licenses,
concessions, and other rights of every kind
and character (i) under any (1) federal, state
or foreign statute, ordinance or regulation,
(2) Order or (3) contract with any
Governmental Body or (ii) granted by any
Governmental Body.
"Person": means any individual, partnership, joint
venture, corporation, limited liability
company, bank, trust, unincorporated
organization, or Governmental Body.
"Promissory Note": is defined in Section 2.2(a).
"PSI-Owned Fleet": is defined in Section 2.1(a).
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"Receivables": is defined in Section 2.1(l).
"Records": means all of the books, records, papers and
instruments of whatever nature and wherever
located that relate to the Assets or the
Business (excluding minute books, accounting
books and records and corporate records of
PSI), including, but not limited to, all
records and files relating to notes and
accounts receivable that are included in the
Assets, contracts, maintenance records,
inventory records, environmental records and
reports and copies of sales and property Tax
records and copies of rental records.
"S&S Owned Fleet": is defined in Section 2.1(c).
"Taxes": means any federal, state, local or foreign
income, sales, excise, real or personal
property or other taxes, assessments, fees,
levies, imposts, duties, or other charges of
any nature whatsoever, including, but not
limited to, interest, additions to tax and
penalties thereon imposed by any law, rule or
regulation.
"Units In-Production": is defined in Section 2.1(b).
ARTICLE 2 PURCHASE AND SALE
Section 2.1 Purchase and Sale. Sellers agree to sell, transfer, convey
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and deliver to Purchaser at the Closing (as defined in Section 2.4 hereof)
except as otherwise provided herein, the following assets (collectively referred
to as "Assets"), free and clear of all Liens:
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(a) PSI Owned Fleet - PSI's owned compressor rental fleet (the "PSI-
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Owned Fleet") consisting of those 160 particular natural gas
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compressor units listed and described in Exhibit 2.1(a) together
with all forms of written information relating to the operation,
performance, maintenance, repair and/or upkeep of such
compressors;
(b) Units In-Production - those compressor packages scheduled for or
in production carried on the books of S&S or PSI as of the
Closing Date as the case may be (the "Units In-Production")
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consisting of those 11 particular natural gas compressor
packages listed and described in Exhibit 2.1(b) together with
all forms of written information relating to the operation,
performance, maintenance, repair and/or upkeep of such
compressors;
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(c) S&S Owned Fleet - those compressor packages owned and operated by
S&S business units other than PSI (the "S&S-Owned Fleet")
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consisting of those 6 particular natural gas compressor packages
listed and described in Exhibit 2.1(c) together with all forms of
written information relating to the operation, performance,
maintenance, repair and/or upkeep of such compressors;
(d) Casper Facility - the PSI facility in Casper, Wyoming ("Casper
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Facility") consisting of real property and all improvements
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thereon located at 0000 Xxxxxx Xxxxxx, Xxxxx, Xxxxxxx 00000 and
described in Exhibit 2.1(d);
(e) Fixed Assets - all furniture, fixtures, displays, equipment,
leasehold improvements, signage, and all other tangible personal
property of Sellers located at the Casper Facility (including all
supplies), all of which are itemized on Exhibit 2.1(e) (herein
collectively designated "Fixed Assets");
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(f) Trade Name - all of Sellers' rights and titles in and to the
following trade name:
"PSI"
(g) Inventory and Equipment - all of Sellers' service and spare parts
inventory and equipment relating to the Business or the Assets,
all of which are itemized on Exhibit 2.1(g) (herein collectively
designated ("Inventory and Equipment");
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(h) Contracts - all equipment leases and other contracts relating to
the Business and the Xxxxxx Agreement all of which are included
in the "Contracts" as defined in Section 3.15 and all of which
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are described on Exhibit 2.1(h) attached hereto;
(i) Records and Files - all original Records;
(j) Vehicles - the rolling stock of PSI which is identified on
Exhibit 2.1(j) attached hereto;
(k) Atel Lease - that certain lease (the "Atel Lease") with Atel
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Finance Corporation ("Atel"), subject to the provisions of
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Section 2.13; and
(l) Notes and Accounts Receivable - all original promissory notes and
accounts receivable on the books of Sellers relating to the
Business or the Assets on the Closing Date (the "Receivables") as
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described on Exhibit 2.1(i).
Section 2.2 Cash Consideration.
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(a) Purchaser agrees to pay and deliver to Sellers Sixty Million
Dollars ($60,000,000), subject to adjustment as provided herein,
payable (a) $45,000,000 by wire transfer
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of immediately available federal funds at the Closing, and (b)
$15,000,000.00 evidenced by a non-interest bearing promissory
note, payable to Sellers in the form attached hereto as Exhibit
2.2 (the "Promissory Note") (the "Cash Consideration"). Sellers
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shall provide Purchaser with an allocation of the Cash
Consideration prior to Closing.
(b) The parties agree that the Cash Consideration excludes any and
all Transfer Taxes required to be collected by Sellers arising
from the sale of the Assets. For this purpose, "Transfer Taxes"
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means any sales, use, excise, docket, filing, recording and
similar Taxes, but excludes Property Taxes (defined below).
Purchaser shall be responsible for the payment of any and all
Transfer Taxes arising from the contemplated transaction. To the
extent permitted by applicable laws, Purchaser shall remit such
taxes directly to the appropriate taxing authority and shall
provide S&S with evidence of such payment.
(c) The liability ad valorem Taxes, or real or personal property
Taxes and similar obligations attributable to the Assets
("Property Taxes") with respect to the year in which Closing
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occurs shall be apportioned as of the date of Closing between
Sellers and Purchaser. Purchaser shall be responsible for payment
to the appropriate Tax authorities of all Property Taxes relating
to the year in which Closing occurs which are due and payable
after the Closing. At the Closing, Sellers shall pay Purchaser
(or reduce Purchaser's obligation to pay the Cash Consideration
by) an amount equal to the estimate, based on current assessed
value and estimated tax rates, of Sellers' liability for Property
Taxes. Within a reasonable time after payment by Purchaser of
such Property Taxes, Purchaser shall deliver to Sellers a final
accounting for such Property Taxes and Purchaser shall pay to
Sellers, or Sellers shall pay to Purchaser, as the case may be,
the difference between the actual and estimated Property Taxes.
(d) The Promissory Note will be paid without set off monthly on a pro
rata basis by horsepower as the compressor packages comprising
the PSI-Owned Fleet and/or Units In-Production, as the case may
be, that are not under lease on the Closing Date are placed into
service or sold after the Closing Date, with one-half of the
principal amount of the Promissory Note due no later than six (6)
months after the Closing and the other one-half of the principal
amount of the Promissory Note due no later than nine (9) months
after the Closing.
Section 2.3 Adjustments to Cash Consideration.
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(a) To the extent the total rated horsepower at Closing (based on
mutually agreed upon horsepower ratings) of the PSI-Owned Fleet,
the Units In-Production and the S&S-Owned Fleet is more or less
than 103,422 horsepower, the Promissory Note shall be increased
or decreased by an aggregate amount of $550.00 per horsepower.
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(b) The portion of the Cash Consideration paid in cash at Closing will
also be adjusted on a dollar-for-dollar basis to the extent that the
value of the Receivables at Closing is greater or less than
$1,000,000.00.
(c) Sellers and Purchaser acknowledge and agree that the total rated
horsepower of the PSI-Owned Fleet, the Units In-Productions and the
S&S Owned-Fleet may not be readily determinable because of sales and
pending sales by Sellers of units a part of the PSI-Owned Fleet, the
Units In-Production and the S&S Owned-Fleet prior to Closing. Sellers
and Purchaser acknowledge and agree that within forty-five (45) days
after Closing they will mutually agree as to the total number of units
and the aggregate total rated horsepower of the PSI Owned-Fleet, the
Units In-Productions and S&S Owned-Fleet as of the Closing and, if
necessary, adjust the Promissory Note as per the provisions of Section
2.3(a) to reflect the correct Cash Consideration.
Section 2.4 Closing. The closing ("Closing") of the purchase and sale of
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the Assets shall take place at the offices of Sellers at 10:00 a.m. on the later
of (a) July 10, 2000, or (b) the second business day following fulfillment of
all conditions precedent to Closing in Article 5 hereof (herein designated
"Closing Date"), or at such other place, time and date as the parties hereto
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mutually agree.
Section 2.5 Instruments of Transfer and Assumption. At the Closing,
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Sellers shall deliver to Purchaser good and sufficient instruments of transfer,
assignment and conveyance transferring complete, good and marketable title to
the Assets to Purchaser. Such instruments shall be substantially in the form of
Exhibit 2.5 or such other form as is reasonably satisfactory to Purchaser.
Sellers shall assign to Purchaser any existing manufacturers' warranties
relating to the Assets at the Closing including, without limitation, any
relating to the Atel Lease.
Section 2.6 Excluded Assets. Purchaser shall not buy and does not agree
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to pay for any asset of Sellers other than those included in the Assets, such
assets being the "Excluded Assets." It is specifically acknowledged that the
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Assets do not include (i) Sellers' cash on hand or in bank accounts on the
Closing Date, (ii) any asset of Sellers unrelated to the Business, (iii) the
PAMCO trade name or any name that includes "PAMCO", (iv) minute books,
accounting books and records and other corporate records of PSI which do not
constitute Records, and (v) the network server, router, server back-up tapes,
emergency repair disks or nontransferable licensed software.
Section 2.7 Assumption of Certain Specific Liabilities. At the Closing,
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Purchaser shall assume and agree to pay or discharge when due the following
obligations and liabilities of Sellers:
(a) all Sellers' obligations and liabilities arising or accruing on or
after the Closing Date under the Contracts and under the Atel Lease
(subject to the provisions of Sections 2.8 and 2.12); and
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(b) ad valorem taxes for the calendar year in which Closing occurs for the
real and personal property of Sellers included in the Assets (subject
to the proration of such ad valorem taxes at Closing).
Purchaser shall not assume and does not agree to pay or discharge any other
debt, obligation or liability of Sellers. The parties expressly agree that
Sellers shall remain liable for (i) all of the contracts, agreements,
commitments and undertakings of Sellers not included in the Contracts or
otherwise expressly assumed by Purchaser pursuant to this Agreement (ii) all
obligations under the Contracts to the extent such obligations arose or accrued
before Closing, (iii) accounts payable, (iv) notes or other debt instruments,
(v) obligations for goods purchased that have not been paid for, or any other
fixed or contingent obligations. Sellers expressly agree to pay all of their
trade accounts payable, accrued expenses, debt and any other liabilities in the
due course of the Business through the Closing Date.
The debts, liabilities and obligations to be assumed by Purchaser under
this Section 2.7 are herein designated the "Assumed Liabilities." The assumption
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by Purchaser of the Assumed Liabilities shall not enlarge any rights or remedies
of any third parties under any contracts or arrangements with Sellers, except to
the extent the other parties to such contracts become able to enforce such
contracts against Purchaser.
Section 2.8 Employees. Purchaser will hire any or all employees of PSI
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who pass Purchaser's pre-employment test and screening on the Closing Date.
Sellers will pay and, jointly and severally, will remain liable for any
severance benefits and other accrued benefits or obligations owing to any
employee or independent contractor of either Seller including without
limitation, obligations under the Workers Adjustment and Retraining Notification
Act, all payroll obligations, and all unused vacation or sick leave benefits.
Notwithstanding anything herein to the contrary Purchaser shall have no
obligation with respect to the incentive compensation provisions of the
agreement between PSI and Xxxxxxx Xxxxxx relating to the acquisition of
Compression Specialties, Inc. Sellers shall be responsible for providing
continuation coverage as required by COBRA under a group health plan maintained
by Sellers or an affiliates of Sellers, to employees and other qualified
beneficiaries under COBRA with respect to such employees, who have a COBRA
qualifying event (due to termination of employment with Seller or otherwise)
prior to or in connection with the transactions contemplated by this Agreement
(the "Continuees").
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Section 2.9 Packaging Commitment. At the Closing, Purchaser shall
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execute and deliver to S&S the Packaging Commitment.
Section 2.10 Parts Alliance. At the Closing, Purchaser shall execute and
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deliver to S&S the Parts Alliance.
Section 2.11 Non-Competition Agreement. At the Closing PSI and S&S shall
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execute and deliver the Non-Competition Agreement.
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Section 2.12 Atel Lease Assignment. If the consent of Atel to Purchaser's
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assumption of the Atel Lease is required and cannot be obtained on terms
acceptable to S&S and Purchaser prior to Closing, then in such event Purchaser
shall enter into a written sublease of the equipment subject to the Atel Lease
at the Closing on terms and conditions identical in all respects to the terms of
the Atel Lease. Furthermore, if S&S cannot obtain Atel's consent to the
assignment at Closing of the Atel Lease to Purchaser on terms reasonably
acceptable to S&S and Purchaser prior to Closing, then Purchaser will execute
instruments and documents necessary to sublease the Atel Compressors from S&S
for the remainder of the Atel Lease term on terms identical to the terms of the
Atel Lease, including any rights to purchase the Atel Compressors at the end of
the Atel Lease. In no event shall Purchaser be obligated to pay any fee,
premium, extraordinary charge or expense attributable to assignment to or
sublease by Purchaser of the Atel Lease.
Section 2.13 Casper Facility.
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(a) Prior to Closing, Sellers shall deliver to Purchaser a commitment for
title insurance ("Title Commitment") for the Casper Facility. At the
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Closing, Sellers shall provide Purchaser an Owner's Policy of Title
Insurance, subject to the standard printed exceptions and all matters
shown of record as of the date hereof. Sellers shall use their good
faith efforts to cure any defects in title identified by Purchaser
from the Title Commitment. Sellers shall provide Purchaser an updated
survey of the Casper Facility, reasonably satisfactory to Purchaser
and the title company providing the Owner's Policy of Title Insurance,
if required by the title company.
(b) At the Closing, Sellers shall (i) deliver to Purchaser a Special
Warranty Deed relating to the Casper Facility executed and
acknowledged by Sellers conveying the Casper Facility to Purchaser,
subject to the terms and provisions therein; (ii) deliver to Purchaser
a FIRPTA Affidavit duly executed by S&S in the form attached hereto as
Exhibit 2.13(b); (iii) deliver to Purchaser such evidence as
Purchaser's counsel may reasonably require authorizing the execution
and delivery of all documents required to be executed by Sellers, and
the consummation of the transactions contemplated herein; (iv) join
with Purchaser in the execution of a Closing Statement relating to the
sale of the Casper Facility; and (v) execute such other necessary
documents to effectuate the sale and transfer of the Casper Facility.
Section 2.14 Bulk Sales Law. The parties acknowledge that this Agreement
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does not require them to comply with or avail themselves of any safe harbor
provided in any bulk transfer provisions of the Uniform Commercial Code (or any
similar law) of any state in which the Assets are located or the Business is
conducted. Sellers jointly and severally agree to and do hereby indemnify and
hold Purchaser harmless from and against all claims, losses, demands, damages,
liabilities, costs and expenses resulting from or relating to non-compliance by
Purchaser or Seller with the bulk transfer provisions of any applicable Uniform
Commercial Code (or any similar law) in connection with the sale and transfer of
the Assets to Purchaser.
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Section 2.15 Operation of Assets During Interim Period. Purchaser and
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Sellers acknowledge and agree that from the Effective Date of this Agreement
through Closing ("Interim Period"), all revenues generated by or associated with
the Assets shall accrue for the benefit of Purchaser less any reasonable,
ordinary and necessary costs associated with the maintenance, operation or
repair of the Assets. Sellers agrees that they will, within forty-five (45) days
of Closing, provide Purchaser with an accounting of all revenues and expenses
associated with the Assets during the Interim Period. To the extent that any
amounts are due and owing to either Sellers or Purchaser as a result of
operations of the Assets during the Interim Period, an appropriate adjustment
will be made to the Promissory Note.
ARTICLE 3 REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLERS
Sellers, jointly and severally, hereby represent, warrant and covenant to
Purchaser as follows, all of which covenants, representations and warranties
shall be true and correct as of the date hereof and as of the Closing Date:
Section 3.1 Incorporation and Good Standing. Each of Sellers is a
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corporation duly organized, validly existing and in good standing under the laws
of the state of its incorporation and has the corporate power and authority to
own, use and operate its properties and to carry on its business and to own and
operate the Assets.
Section 3.2 Ownership. PSI is a wholly-owned subsidiary of S&S.
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Section 3.3 Authorization and Capacity to Enter Agreement. Each of
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Sellers has all requisite power, authority and capacity to enter into and
perform this Agreement and the other contracts or documents contemplated herein,
including without limitation the Non-Competition Agreement, the Packaging
Commitment and the Parts Alliance, (hereinafter designated "Ancillary
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Documents"), and this Agreement and the Ancillary Documents will constitute
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valid and binding legal obligations of Sellers enforceable against each in
accordance with the respective terms thereof, subject to (i) the fact that
equitable remedies, including the remedies of specific performance and
injunction, may only be granted in the discretion of a court, and (ii)
bankruptcy, insolvency, moratorium, reorganization or other laws relating to or
affecting the enforcement of creditors' rights generally.
Section 3.4 Litigation. There are no actions, suits, proceedings,
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arbitrations or investigations pending or, to the Knowledge of Sellers,
threatened, which could have a material adverse effect on the Assets or the
transactions contemplated by this Agreement at law or in equity, before or by
any arbitrator or any Governmental Body nor, to the Knowledge of Sellers, do any
facts exist which might result in any such action, suit, proceeding, arbitration
or investigation.
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Section 3.5 Compliance with Instruments. Entering into and performing
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this Agreement and/or the Ancillary Documents, and the transfer of the Assets:
(a) does not or will not constitute or result in the violation, breach or
default of or under, or is not or will not be contrary to, (1) the terms or
provisions of the certificates of incorporation or bylaws (as amended) of
Sellers, or any currently effective resolution passed by the directors or
stockholders of Sellers, or (2) the terms of any indenture, agreement (written
or oral), instrument, license, Permit, understanding or other obligation or
restriction to which S&S or PSI is a party or by which S&S or PSI or the Assets
is or may be bound; (b) does not or will not trigger, cause or result in the
termination or revocation of any indenture, agreement (written or oral),
instrument, license, Permit or understanding to which S&S or PSI is a party or
by which S&S or PSI is bound; (c) does not or will not release, discharge, limit
or lessen any right of S&S or PSI; or (d) does not or will not result in the
creation of any Lien on any of the Assets.
Section 3.6 Other Obligations. Except as described on Exhibit 3.6,
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neither Seller is under obligation, contractual, legal or otherwise, which has
not been satisfied prior to the date hereof (a) to notify any Person of (i) the
transfer of the Assets, or (ii) the making or performance of this Agreement or
the Ancillary Documents; (b) to observe any waiting period or similar delay
prior to (i) transferring the Assets, or (ii) making or performing this
Agreement or the Ancillary Documents; or (c) to request or obtain the consent of
any Person to (i) transfer the Assets, or (ii) make or perform this Agreement or
the Ancillary Documents.
Section 3.7 No Other Agreements. No Person has any agreement, option,
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understanding or commitment, or any right or privilege (whether by law or
contractual) capable of becoming an agreement, option or commitment for the
purchase, assignment, license or exercise of any of the rights, benefits or use
of any of the Assets. Neither Seller has granted any special or general power of
attorney to any Person that will or could continue in effect after the Closing
Date that might affect the ownership, operation or other aspect of any of the
Assets.
Section 3.8 Taxes. To the Knowledge of the Sellers, there are no
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federal, state or local Tax Liens filed against Sellers and encumbering any of
the Assets, and none of the Sellers is aware of any facts which might result in
the filing of any such Tax Lien.
Section 3.9 Disclosure. To the Knowledge of Sellers, no representation
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or information of Sellers contained in this Agreement, the Ancillary Documents,
the various Exhibits attached hereto or any other information or statements
previously furnished by Sellers pursuant hereto contains or shall contain any
untrue statement of a material fact or omits or shall omit any material fact
necessary to make the information contained therein and herein not misleading.
There is no fact Known to Sellers which has specific application to the Assets
(other than general economic or industry conditions) and which could have a
material adverse effect or, so far as Sellers can reasonably foresee, materially
threaten, the Assets that has not been set forth in this Agreement.
Section 3.10 Broker's or Finder's Fees. All negotiations relative to this
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Agreement, the Ancillary Documents and the transactions contemplated herein
have been carried on by Sellers and
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their counsel directly with Purchaser and its counsel, without the intervention
of any other Person in such manner as to give rise to any valid claim against
any of the parties hereto for a brokerage commission, finder's fee or similar
payment other than Xxxxxxx & Company International. Sellers shall be fully and
solely responsible for payment of any amounts due to Xxxxxxx & Company
International in connection with this Agreement and the transactions
contemplated hereby.
Section 3.11 Title to Properties; Absence of Liens. Sellers have
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complete, good and marketable title to all of the Assets, free and clear of all
Liens. Sellers have a right to use all the Assets without payment to, or
interference from, any other party, and have not received any notice of conflict
with the asserted rights of others and, except with respect to the Atel Lease
and that certain lease from Xxxxxxx & Xxxxxxxxx de las Americas-Colombia, Ltda
to Hocal, such right to so use the Assets is freely transferable to Purchaser.
Section 3.12 Bankruptcy or Insolvency. Neither Seller has committed an
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act of bankruptcy, is insolvent, has proposed a compromise or arrangement to its
creditors generally, has had any petition or receiving order in bankruptcy filed
against it, has made a voluntary assignment in bankruptcy, has taken any
proceeding with respect to a compromise or arrangement with creditors, has taken
any proceeding to have itself declared bankrupt or to be wound up, has taken any
proceeding to have a receiver appointed for any part of its assets, has had any
creditor take possession of its assets, nor has had any execution, charging
order, levy or distress warrant become enforceable or become levied upon any of
its assets.
Section 3.13 Health, Safety or Environmental Matters. Except as set forth
---------------------------------------
on Exhibit 3.13:
(a) Each of the Sellers has complied and is in compliance in all
material respects with all Environmental, Health, and Safety
Requirements in connection with the Assets and the Business.
(b) Without limiting the generality of the foregoing, each of
the Sellers has obtained and complied with, and is in
compliance with, all material permits, licenses and other
authorizations that are required pursuant to Environmental,
Health, and Safety Requirements for the occupation of its
facilities used in connection with the Assets or the
Business and the operation of the Business.
(c) None of the Sellers has received any written or oral notice,
report or other information regarding any actual or alleged
violation of Environmental, Health, and Safety Requirements,
or any liabilities or potential liabilities (whether
accrued, absolute, contingent, unliquidated or otherwise),
including any investigatory, remedial or corrective
obligations, relating to any of them in connection with the
Business and the Assets or facilities used
-13-
or useful in connection with the Business arising under
Environmental, Health, and Safety Requirements.
(d) None of the following exists at the Casper Facility (1)
underground storage tanks, (2) asbestos-containing material
in any form or condition, (3) materials or equipment
containing polychlorinated biphenyls, or (4) landfills,
surface impoundments, or disposal areas.
(e) None of the Sellers has treated, stored, disposed of,
arranged for or permitted the disposal of, transported,
handled, or released any substance, including without
limitation any hazardous substance, or owned or operated any
property or facility used or useful in connection with the
Business in a manner that has given or would give rise to
liabilities, including any liability for response costs,
corrective action costs, personal injury, property damage,
natural resources damages or attorney fees, pursuant to the
Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"), the Solid
Waste Disposal Act, as amended ("SWDA") or any other
Environmental, Health, and Safety Requirements.
(f) None of the Sellers has, either expressly or by operation of
law, assumed or undertaken any liability, including without
limitation any obligation for corrective or remedial action,
of any other Person relating to Environmental, Health, and
Safety Requirements in connection with the Business or the
Assets.
Section 3.14 Employees. Attached hereto as Exhibit 3.14 is a list of the
---------
names and annual or hourly rates of compensation of each full or part time
employee of PSI and any employee of S&S whose work relates primarily to the
Business as of ________________, 2000, and all bonuses paid or payable to such
employees for the calendar year ended December 31, 1999, and for the period from
January 1, 2000, to the date hereof. Sellers are in compliance with all
applicable Federal and state laws relating to employment and wages and hours
with respect to such employees and are not engaged in any unfair labor practice
with respect to any such employees. Sellers are not a party to or bound by any
collective bargaining agreement with respect to such employees, and have not
experienced any strikes, grievances, claims of unfair labor practices, or other
collective bargaining disputes. Sellers have not committed any unfair labor
practices. Sellers have no Knowledge of any organizational effort presently
being made or threatened by or on behalf of any labor union with respect to
employees of Sellers whose work relates to the Business.
Section 3.15 Contracts. Exhibit 2.1(h) includes all material or
---------
significant contracts to which S&S or PSI is a party which relate to the Assets,
including, without limitation, compressor leases and the Atel Lease (herein
designated "Contracts"). There are no Liens which might affect
---------
-14-
title to, or exclusive possession and use of, or any other right of Sellers to
the benefit of, any or all of Sellers' contractual rights or benefits with
regard to the Contracts. Neither S&S nor PSI is in default or breach of any
obligation under the Contracts, and neither Seller has any Knowledge of any
facts which, after notice or lapse of time, or both, would constitute such a
default or breach. Each of the Contracts is valid, enforceable and in good
standing and in full force and effect without amendment thereto (except for
written amendments referenced in Exhibit 2.1(h) attached hereto), and Sellers
are, and Purchaser will be, after the Closing, entitled to all benefits
thereunder. None of the Sellers has any Knowledge of any party to any of the
Contracts having an intention to terminate, whether by notice or breach, any of
the Contracts. None of the Sellers has any Knowledge that any party to any of
the Contracts is in default or breach of any of such party's obligations
thereunder.
Section 3.16 Compliance with Laws. The Business is not in violation of
--------------------
or in default with respect to, or in alleged violation of or alleged default
with respect to, any applicable law or any applicable rule, regulation, permit
or order of any governmental body, or any ordinances in any material respect.
Sellers are in full legal compliance in all material respects with any and all
legal requirements pertinent to the Assets or operation of the Business. Sellers
are not delinquent with respect to any report required to be filed with any
Governmental Body relating to the Business or the Assets. Sellers hold all
material licenses and permits as are necessary to carry on the Business as
currently conducted, and such licenses and permits are in full force and effect
and have been and are being fully complied with by Sellers in all material
respects.
Section 3.17 Assets Comprise Entire Business. The Assets comprise all of
-------------------------------
the material assets used in the Business, except the Excluded Assets.
Section 3.18 Material Adverse Change. Since May 22, 2000, there has been
-----------------------
no Material Adverse Change in the Business. Since May 22, 2000, Sellers have:
(a) conducted the operations of the Business in the ordinary course;
(b) not entered into any material transaction or contract relating to the
Business, or amended or terminated any material transaction or
contract, except normal transactions or contracts consistent in nature
and scope with prior practices and entered into in the ordinary course
of business of the Business;
(c) not mortgaged, sold, transferred, distributed or otherwise disposed of
any of the Assets, except in the ordinary course of business;
(d) not experienced any damage, destruction or loss to any of the Assets
except in the ordinary course of business and except to the extent
that any such Assets damaged, destroyed or losses have been repaired
or replaced;
-15-
(e) not made or agreed to make any capital expenditures for additions to
property or equipment relating to the Business; and
(f) not granted credit to any customer relating to the Business on terms
materially more favorable than terms on which credit has been extended
to such customer in the past nor materially changed the terms of any
credit previously extended relating to the Business.
Section 3.19 Condition of Assets. S&S and PSI do not make and hereby
-------------------
expressly disclaim any and all express or implied warranties as to the condition
of the Assets or regarding whether the Assets are fit for a particular purpose
or free from defects.
Section 3.20 Employee Benefits.
-----------------
(a) Exhibit 3.20 lists each Employee Benefit Plan that PSI or an ERISA
Affiliate maintains, participates in, or contributes to for the
benefit of any of the employees who are listed on Exhibit 3.14.
(i) Each such Employee Benefit Plan (and each related trust,
insurance contract, other employee benefit provider contract
or fund) complies in form and in operation in all respects
with the applicable requirements of ERISA, the Code, other
applicable laws (including regulations and rulings
thereunder) and with its terms.
(ii) All required reports and notices or descriptions required by
ERISA, the Code or any other applicable laws, have been
timely filed or timely distributed to plan participants with
respect to each such Employee Benefit Plan.
(iii) Except as set forth on Exhibit 3.20 all contributions
(including all employer contributions, employee
contributions and employee salary reduction contributions)
which are due have been timely paid to each such Employee
Benefit Plan which is an Employee Pension Benefit Plan and
all contributions for any period ending on or before the
Closing Date which are not yet due have been paid to each
such Employee Pension Benefit Plan or they are disclosed on
Exhibit 3.20. All premiums or other payments for all periods
ending on or before the Closing Date have been timely paid
with respect to each such Employee Benefit Plan which is an
Employee Welfare Benefit Plan, or they are disclosed on
Exhibit 3.20.
(iv) Each such Employee Benefit Plan which is an Employee Pension
Benefit Plan and intended to be qualified under the Code has
received a determination letter from the IRS to the effect
that it meets the requirements
-16-
of Code Section 401(a) as amended by the Tax Reform Act of
1986 and subsequent legislation for which the remedial
amendment period (as defined by regulations and rulings of
the IRS) has expired.
(b) With respect to each Employee Benefit Plan that PSI or an ERISA
Affiliate maintains or has ever maintained or to which it contributes
or has ever contributed or has ever been required to contribute:
(i) PSI or an ERISA Affiliate has no liability (known or
unknown, asserted or unasserted) for breach of fiduciary
duty or any other failure to act or comply in connection
with the administration or investment of the assets of any
such Employee Benefit Plan. No action, suit, proceeding,
hearing, or investigation with respect to the administration
or the investment of the assets of any such Employee Benefit
Plan (other than routine claims for benefits) is pending or
threatened. Sellers have no knowledge of any basis for any
such action, suit, proceeding, hearing or investigation.
(ii) PSI or an ERISA Affiliate has not contributed or nor has it
been required to contribute to any Multiemployer Plan and it
has no direct or indirect liability under any Multiemployer
Plan nor has it incurred or reasonably expects to incur any
direct or indirect liability under or by operation of Title
IV of ERISA. Neither PSI nor any ERISA Affiliate has ever
maintained, contributed to or been required to contribute to
any Employee Pension Benefit Plan which is or was subject to
Title IV of ERISA or Section 412 of the Code.
(iii) PSI or an ERISA Affiliate does not provide or have an
obligation to provide post-employment medical, life or other
welfare benefits to any employees or former employees,
exclusive of any obligations imposed by COBRA.
Section 3.21 Receivables. Except to the extent and in the amounts
-----------
specifically set forth on Exhibit 3.21 the Receivables, whether current or
noncurrent, are derived from bona fide sales or leases of products or provision
of services.
Section 3.22 Labor Matters. With respect to the Business, Sellers are
-------------
in compliance in all respects with all applicable foreign, federal, state,
provincial and local laws, rules or regulations relating to the employment of
labor, including those relating to salaries, wages, hours, collective
bargaining, affirmative action and the payment and withholding of Taxes. With
respect to the Business, Sellers have no common law employees (as defined by the
Code and its related regulations) who have been treated or labeled as
"independent contractors."
Section 3.23 Insurance. Exhibit 3.23 attached hereto contains a list of
---------
all policies of insurance maintained as of the date of this Agreement by Sellers
with respect to any of the Assets.
-17-
The insurance policies described in Exhibit 3.23 provide adequate coverage (less
deductibles) against the risk involved in the operation of the Businesses. The
Sellers have received no notice from any insurance carrier of the intention of
such carrier to discontinue any such insurance coverage.
Section 3.24 Customers. Exhibit 3.24 attached hereto sets forth a correct
---------
list of the names and last known addresses, and most telephone numbers of all
the Persons who rented natural gas compressors from a Seller during the fiscal
year ended December 31, 1999 and during the period from January 1, 2000 through
the date hereof, and also shows the number of units and horsepower of the
equipment rented to each such customer as of the Closing Date. Except to the
extent set forth in Exhibit 3.24, since May 22, 2000 there has not been any
Material Adverse Change in the business relationship of the Sellers with any
Person named in Exhibit 3.24.
Section 3.25 Intellectual Property. No Seller has any Knowledge of any
---------------------
claim or has any reason to believe that any Seller is or may be infringing upon
or otherwise acting adversely to the rights of any Person under or in respect of
any patents, copyright, trade name, trademark or similar intangible right used
or useful in connection with the Business or the Assets. None of the Sellers is
obligated or under any liability whatever to make any payments by way of
royalties, fees or otherwise to any owner or licensee of, or any other claimant
to, any such patent, copyright, trade name, trademark or similar intangible
right. All copyrights, patents, trade names and trademarks of the Sellers
relating to the Business or the Assets are listed on Exhibit 3.25.
Section 3.26 Casper Facility
---------------
With respect to the Casper Facility:
(a) S&S is not a "foreign person" as defined in Section 1445(f)(3) of the
Internal Revenue Code.
(b) S&S is the sole legal and equitable owner of good, marketable, and
insurable fee simple title to the Casper Facility and will convey such
fee simple title to Purchaser at Closing free and clear of all
options, rights, covenants, easements, liens, encumbrances, and other
rights in favor of third parties.
(c) S&S or PSI is the sole owner of good title to all fixtures and
personalty associated with the Casper Facility, free and clear of all
liens, security interests, financing statements, encumbrances, and
rights in favor of third parties.
(d) The Casper Facility is not subject to any outstanding agreements of
sale, or any options, liens, or other rights of third parties to
acquire any interest therein. The Casper Facility is not subject to
any ground lease or other lease.
(e) To the Knowledge of the Sellers, there are no public plans or
proposals for changes in road grade, access, or other governmental or
private improvements which would
-18-
affect the Casper Facility or result in any assessment against the
Casper Facility; to the Knowledge of the Sellers, no ordinance
authorizing improvements, the cost of which might be assessed against
Purchaser or the Casper Facility, is in effect or under consideration;
to the Knowledge of Sellers, there is no tax proceeding pending for
the reduction or increase of the assessed tax valuation of the Casper
Facility or any portion thereof.
(f) There are no unpaid assessments for public improvements against the
Casper Facility; the Casper Facility is not subject to assessments for
any street paving or curbing heretofore installed; sewer, water, gas,
telephone and electric lines adequate to service the Casper Facility
are located on, or in dedicated easements immediately adjacent to, the
Casper Facility; and there are no unpaid assessments or charges for
the installation of such utilities or for making connection thereto.
(g) There are no unpaid claims against any portion of the Casper Facility
for or on account of work done, materials furnished, or utilities
supplied to the Casper Facility. There are no contracts or agreements
for the performance of work or the furnishing of materials to any
portion of the Casper Facility which have not been fully performed and
paid for, and releases of all liens therefor recorded. There are no
unpaid pay-back agreements, utility debt service expenses, or other
charges or expenses applicable to the Casper Facility.
(h) No condemnation proceedings, eminent domain proceedings, or similar
actions or proceedings are now pending or, to the Knowledge of the
Sellers, threatened against the Casper Facility.
(i) To the Knowledge of the Sellers, the Casper Facility was built in
conformity with all applicable building and zoning laws, rules, codes,
and regulations and none of such laws, rules, codes, or regulations
are violated by the current condition, use, or operation of the Casper
Facility. The certificate of occupancy of the Casper Facility is not
violated by the current structure or use of the Casper Facility.
(j) To its Knowledge, PSI has obtained all permits, certificates,
authorizations, approvals, consents, waivers, and variances that are
required to use, own, occupy, maintain, and operate the Casper
Facility. Sellers have not received any notice, nor are Sellers aware,
of the violation of any applicable building, zoning, or other
government or governmental agency, or any private restrictions, with
respect to the use, ownership, occupancy, maintenance, operation, or
condition of the Casper Facility or any portion thereof, or requiring
any repairs or alterations to the Property or any portion thereof.
-19-
(k) Except as set forth in Exhibit 3.26, no underground improvements,
including, but not limited to, treatment or storage tanks, sumps, or
water, gas, or oil xxxxx located on the Casper Facility.
(l) To the Knowledge of the Sellers, there is not constructed, place,
deposited, stored, disposed of, nor located on the Casper Facility any
polychlorinated biphenyls (PCBs) nor transformers, capacitors,
ballasts, or other equipment which contains dielectric fluid
containing PCBs.
(m) To the Knowledge of the Sellers, there is not constructed, place,
deposited, stored, disposed of, nor located on the Casper Facility any
insulating material containing urea formaldehyde.
ARTICLE 4 REPRESENTATIONS, WARRANTIES AND COVENANTS OF PURCHASER
Purchaser hereby represents, warrants and covenants to Sellers as follows,
all of which covenants, representations and warranties shall be true and correct
as of the date hereof and as of the Closing Date:
Section 4.1 Authorization and Capacity to Enter Agreement. Purchaser has
---------------------------------------------
all requisite power, authority and capacity to enter into and perform this
Agreement and the Ancillary Documents, and this Agreement and Ancillary
Documents will constitute valid and binding legal obligations of Purchaser
enforceable against Purchaser in accordance with the respective terms thereof,
subject to (a) the fact that equitable remedies, including the remedies of
specific performance and injunction, may only be granted in the discretion of a
court, and (b) bankruptcy, insolvency, moratorium, reorganization or other laws
relating to or affecting the enforcement of creditors' rights generally.
Section 4.2 Litigation. There are no actions, suits, proceedings,
----------
arbitrations or investigations pending or, to the Knowledge of Purchaser,
threatened which could have a material adverse effect on the transactions
contemplated by this Agreement or on Purchaser such that they may cause
Purchaser to be unable to consummate the transactions contemplated herein, at
law or in equity, before any arbitrator or any Governmental Body nor, to the
Knowledge of Purchaser, do any facts exist which might result in any such
action, suit, proceeding, arbitration or investigation.
Section 4.3 Compliance with Instruments. Entering into and performing
---------------------------
this Agreement and the Ancillary Documents, and the purchase of the Assets does
not or will not constitute or result in the violation, breach or default of or
under, or is not or will not be contrary to, (a) the terms or provisions of the
certificate of incorporation or bylaws of Purchaser or any currently effective
resolution passed by the directors or stockholders of Purchaser, or (b) the
terms
-20-
of any indenture, agreement (written or oral), instrument, license, Permit,
understanding or other obligation or restriction to which Purchaser is a party
by which Purchaser is bound.
Section 4.4 Other Obligations. Other than as described on Exhibit 4.4,
-----------------
Purchaser is not under any obligation, contractual or otherwise, which has not
been satisfied prior to the date hereof, (a) to notify any Person of (i)
Purchaser's purchase of the Assets, or (ii) Purchaser making or performing this
Agreement or the Ancillary Documents; (b) to observe any waiting period or
similar delay prior to (i) the transfer of the Assets to Purchaser, or (ii)
making or performing this Agreement or the Ancillary Documents; or (c) to
request or obtain the consent of any Person to (i) the transfer of the Assets to
Purchaser, or (ii) the making or performing this Agreement or the Ancillary
Documents.
Section 4.5 Broker's or Finder's Fees. All negotiations relative to
-------------------------
this Agreement, the Ancillary Documents and transactions contemplated hereby
have been carried on by Purchaser and its counsel directly with Sellers and
their counsel, without the intervention of any Person in any such manner as to
give rise to any valid claim against any of the parties hereto for a brokerage
commission, finder's fee or similar payment.
ARTICLE 5 ACTIONS AND MATTERS IN CONTEMPLATION OF CLOSING
Section 5.1 Conditions Precedent to Obligations of Sellers. Unless
----------------------------------------------
waived (in whole or in part) in writing by Sellers, the obligations of Sellers
hereunder are subject to the fulfillment, prior to or on the Closing Date, of
each of the following conditions precedent by Purchaser:
Section 5.1.1 No Errors. The representations and warranties of
---------
Purchaser in Article 4 hereof shall be deemed to have been made again on
the Closing Date and must be then true and correct in all material
respects; provided that those representation and warranties that are
qualified by materiality shall be true and correct in all respects.
Section 5.1.2 Compliance With Agreement. All of the terms and conditions
-------------------------
of this Agreement to be complied with and performed by Purchaser on or
before the Closing Date shall have been complied with and performed.
Section 5.1.3 Litigation. There shall not have been instituted or
----------
threatened any legal proceeding by any third party seeking to prohibit the
consummation of the transactions contemplated hereby or to obtain damages
from Sellers with respect thereto, or to otherwise void this Agreement or
any of the Ancillary Documents or any of such transactions. None of the
parties hereto shall be prohibited by any Order from consummating the
transactions contemplated hereby, and no action or proceeding shall then be
pending which questions the validity of this Agreement, any of the
Ancillary Documents, the transactions contemplated hereby, or any action
which has been taken by
-21-
any of the parties in connection herewith or in connection with the
transactions contemplated hereby.
Section 5.1.4 Delivery of Documents. Purchaser shall have made, executed
---------------------
and delivered any and all documents or instruments as Sellers may
reasonably request in form and substance satisfactory to Sellers and their
legal counsel (including, but not limited to, certificate of resolutions
and incumbency, etc.).
Section 5.1.5 Approval of Legal Matters by Sellers' Counsel. The validity
---------------------------------------------
or legality of all actions, proceedings, instruments and documents required
to carry out this Agreement or which are incidental thereto, and all other
related legal matters, shall have been approved by Sellers' legal counsel,
and there shall have been furnished to such counsel by Purchaser
resolutions of the directors of Purchaser approving the transaction
contemplated by this Agreement.
Section 5.1.6 Xxxx-Xxxxx Xxxxxx. The Closing is conditioned upon expiration
-----------------
of the waiting period pursuant to the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended ("HSR Act"), without any action by any
-------
Governmental Body to prevent the consummation of the Closing, and other
governmental approval, as required.
Section 5.1.7 Delivery of Ancillary Agreements. Purchaser shall have
--------------------------------
executed and delivered the Parts Alliance and the Packaging Commitment.
Section 5.1.8 Approvals. S&S's board of directors shall have approved the
---------
consummation of the transactions contemplated hereby.
Section 5.2 Conditions Precedent to Obligations of Purchaser. Unless
------------------------------------------------
waived, in whole or in part, in writing by Purchaser, the obligations of
Purchaser hereunder are subject to the fulfillment, prior to or at the Closing
of each of the following conditions precedent by Sellers:
Section 5.2.1 No Material Errors or Breach of Covenants. The
-----------------------------------------
representations and warranties of Sellers in Article 3 hereof shall be
deemed to have been made again on the Closing Date and must then be true
and correct in all material respects, subject to any changes contemplated
by this Agreement; provided that those representation and warranties that
are qualified by materiality shall be true and correct in all respects.
Section 5.2.2 Compliance With Agreement. All of the terms and conditions of
-------------------------
this Agreement to be complied with and performed by Sellers on or before
the Closing Date shall have been complied with and performed.
Section 5.2.3 Approval of Legal Matters by Purchaser's Counsel. The
------------------------------------------------
validity or legality of all actions, proceedings, instruments and documents
required to carry out this Agreement or which are incidental thereto, and
all other related legal matters, shall have
-22-
been approved by Purchaser's legal counsel, and there shall have been
furnished to such counsel by Sellers a certified copy of Sellers'
certificates of incorporation and bylaws, each as amended; resolutions of
the directors of Sellers approving the transaction contemplated by this
Agreement; and resolutions of the shareholder of PSI approving the
transaction contemplated by this Agreement.
Section 5.2.4 Delivery of Documents. Sellers shall have made, executed and
---------------------
delivered the following documents in form and substance satisfactory to
Purchaser and Purchaser's legal counsel: instruments of transfer in
accordance with Section 2.5, attached hereto, certificates of incumbency
for officers of Sellers and of the directors of Sellers and estoppel
certificates from Sellers' lessees, landlords or others as requested by
Purchaser, and any other documents or instruments as Purchaser may
reasonably request.
Section 5.2.5 Litigation. There shall not have been instituted or
----------
threatened by any third party any legal proceeding seeking to prohibit the
consummation of the transactions contemplated hereby or to obtain damages
from Purchaser with respect to such transactions or to otherwise void this
Agreement or any of the Ancillary Documents or any of such transactions.
Purchaser shall not be prohibited by any Order from consummating the
transactions contemplated hereby, and no action or proceeding shall then be
pending against Purchaser which questions the validity of this Agreement,
any of the Ancillary Documents, the transactions contemplated hereby, or
any action which has been taken by any of the parties in connection
herewith or in connection with the transactions contemplated hereby.
Section 5.2.6 Lien Searches. On or before June 15, 2000 Purchaser shall
-------------
have obtained copies of searches of the Secretary of State offices and each
county where the Assets are located with respect to UCC financing
statements, deeds of trust or any other liens or encumbrances on file. All
such liens and encumbrances shall have been released prior to Closing.
Section 5.2.7 Xxxx-Xxxxx Xxxxxx. The Closing is conditioned upon expiration
-----------------
of the waiting period pursuant to the HSR Act without any action by any
governmental Body to prevent the consummation of the Closing, and other
governmental approval, as required.
Section 5.2.8 Delivery of Ancillary Agreements. Sellers shall have executed
--------------------------------
and delivered the NonCompetition Agreement.
Section 5.2.9 Approvals. The approvals described on Exhibit 5.2.9 shall
---------
have been obtained.
Section 5.3 Best Efforts to Satisfy Conditions. Sellers shall use its
----------------------------------
best efforts to cause the conditions precedent to the obligations of Purchaser
contained in Section 5.2 to be satisfied to the extent that satisfaction of such
conditions is in the control of Sellers and Purchaser shall use
-23-
its best efforts to cause the conditions precedent to the obligations of Sellers
contained in Section 5.1 to be satisfied to the extent that the satisfaction of
such conditions is in the control of Purchaser.
ARTICLE 6 CLOSING AND POST-CLOSING MATTERS
Section 6.1 Nature and Survival of Representations and Warranties. All
-----------------------------------------------------
representations and warranties made in this Agreement shall be deemed to be
material, and shall be deemed to have been relied upon by the party to whom such
warranties or representations are given or made, as a material inducement to
enter into and close this Agreement and to consummate the transfer of the
Assets, notwithstanding any inspection made by such party. All representations
and warranties of the parties made in this Agreement shall survive the Closing
and all inspections, examinations or audits on behalf of the parties.
Section 6.2 Indemnification. (a) Purchaser, on the one hand, and Sellers,
---------------
jointly and severally, on the other hand, (herein designated "Indemnifying
------------
Party") each hereby agrees to indemnify, defend and hold harmless the other
-----
(hereinafter severally designated "Indemnified Party") against and in respect of
-----------------
any and all Indemnified Damages that result to Indemnified Party from (i) any
breach of any representation or warranty made by or on behalf of the
Indemnifying Party in or pursuant to this Agreement or any of the Ancillary
Documents, and/or (ii) any breach or default in the performance by the
Indemnifying Party of any of the obligations to be performed by the Indemnifying
Party hereunder, with respect to Purchaser, any liabilities or obligations
relating to the Assets and arising out of or relating to the time after the
Closing. The term "Indemnified Damages" means any and all claims, actions,
-------------------
demands, losses, costs, expenses, liabilities, penalties, and other damages,
including without limitation, reasonable attorneys' fees and other costs and
expenses reasonably incurred in investigating or attempting to avoid same, in
opposing the imposition of the same, and/or in enforcing the indemnities
hereunder. The Indemnifying Party shall obtain the prior written consent of the
Indemnified Party, which shall not be unreasonably withheld, conditioned or
delayed before ceasing to defend against such claim or entering into any
settlement, adjustment, or compromise of such claim unless such settlement,
adjustment, or compromise involves only the payment of monetary consideration by
the Indemnifying Party and does not involve any admission of fact or require any
agreement that might have an adverse effect on the future business or operations
of the Indemnified Party or which might reasonably prejudice the Indemnified
Party in subsequent or other litigation. The Indemnifying Party shall reimburse
the Indemnified Party on demand for any payment made or damages sustained by the
Indemnified Party at any time after the Closing Date, whether based upon the
judgment of any court of competent jurisdiction, pursuant to a bona fide
compromise or settlement of claims, demands or actions, or otherwise in respect
of any Indemnified Damages. The Indemnified Party agrees that promptly upon
receipt by the Indemnified Party of notice of any demand, assertion, claim,
action, or proceeding, judicial or otherwise, with respect to any matter as to
which the Indemnifying Party has agreed to indemnify the Indemnified Party, the
Indemnified Party will give prompt written notice thereof to the Indemnifying
Party, together, in each instance,
-24-
with a statement of such information respecting such demand, assertion, claim,
action, or proceeding as the Indemnified Party shall then possess.
(b) Sellers will have no liability for indemnification or otherwise
hereunder unless on or before the date one (1) year following the Closing Date,
Purchaser notifies Sellers of a claim specifying the factual basis of such claim
in reasonable detail to the extent then known by Purchaser.
(c) Sellers will have no liability for indemnification or otherwise
hereunder until the total amount of all Indemnified Damages with respect to such
matters exceeds $300,000, subsequent to which Purchaser shall be entitled to
full indemnification for all Indemnified Damages in excess of the first $300,000
incurred. Notwithstanding anything to the contrary herein, the maximum liability
of Sellers hereunder shall not exceed $15,000,000, except (i) to the extent of
any Indemnified Damages arising out of the breach of Section 3.13 or the breach
of any other covenant, representation or warranty in this Agreement relating to
health, safety, or environmental matters, the maximum liability of the Sellers
hereunder shall be increased to $25,000,000, and (ii) to the extent of any
Indemnified Damages arising out of the breach of Section 3.11, the maximum
liability of the Sellers shall be increased to $56,882,100.
Section 6.3 Termination of Agreement. This Agreement may, by written notice
------------------------
given at or prior to Closing in the manner hereinafter provided, be terminated
or abandoned:
(a) by either party if the Closing does not occur on or before September
30, 2000;
(b) by Purchaser if a material default or breach (which remains uncured
for 30 days after receipt of written notice thereof) is made by
Sellers with respect to the due and timely performance of Sellers'
covenants, representations, warranties, and agreements contained
herein; or
(c) by Sellers if a material default or breach (which remains uncured for
30 days after receipt of written notice thereof) is made by Purchaser
with respect to the due and timely performance of any of Purchaser's
covenants, representations, warranties and agreements contained
herein; or
(d) by mutual consent of the parties.
In the event this Agreement is terminated pursuant to Section 6.3(b) or
(c), after such termination the non-breaching party shall continue to have any
and all rights to which it would otherwise be entitled in law or equity with
respect to the default or breach of the other party giving rise to such
termination.
Section 6.4 Environmental Matters. Sellers shall provide to Purchaser a
---------------------
title commitment and a Phase II environmental survey on the Casper Facility. If
the title commitment
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reveals a defect which would prohibit Sellers from transferring good and
marketable title to the Casper Facility to Purchaser, Sellers shall have a right
until Closing Date to cure said defect, or agree to an amendment to this
Agreement to reduce the Cash Consideration. With respect to the Phase II
environmental inspection, Sellers shall employ a regionally known third party
firm and shall reasonably instruct such firm upon the method of such inspection
for the Casper Facility. If required by law, Sellers shall promptly remediate
each such matter of environmental concern. Sellers, jointly and severally, shall
each indemnify and do hereby hold harmless Purchaser, its shareholders,
officers, directors, employees and agents from and against any Indemnified
Damages arising out of or relating to such matters of environmental concern.
Such indemnity shall not relate to any damage to the environment caused by the
Assets after the Closing Date. This indemnity shall be governed by Section 6.2
hereof.
Section 6.5 Obligations After Closing.
-------------------------
(a) Purchaser shall use its good faith efforts as soon as practicable
after Closing to obtain leases for any compressors in the PSI-Owned
Fleet or Units In-Production that are not under lease on the Closing
Date.
(b) For the purposes of the adjustment of the Cash Consideration in
Section 2.3, S&S or its affiliates shall be obligated to complete and
deliver to Purchaser the Units In-Production in the normal course of
business as soon as reasonably practicable after the Closing Date
without additional consideration except for the cost of any changes
directed by Purchaser.
(c) After the Closing, without further consideration, Sellers and
Purchaser shall each execute and deliver such further instruments and
documents as either party shall reasonably request to consummate the
transactions contemplated by this Agreement and the Ancillary
Agreements and to perfect Purchaser's title to the Assets.
Section 6.7 Collection of Receivables. Purchaser shall use reasonable
-------------------------
efforts to collect the Receivables after Closing. Purchaser may in its
discretion by written notice to Sellers given at least 120 and not more than 180
days following Closing assign to Sellers any Receivables and related Records
which remain uncollected at such time. The next payment on the Promissory Note
due after such notice shall be reduced by the uncollected amount so assigned.
Purchaser agrees to cooperate with Sellers' efforts to collect such assigned
Receivables.
ARTICLE 7 INTERIM OPERATIONS
Section 7.1 Interim Operations of the Business. During the period from the
----------------------------------
date of this Agreement to the Closing Date or the earlier termination of this
Agreement, Sellers will conduct the Business only in the ordinary and normal
course consistent with past practice, will make no material changes in the
operations of the Business and will not, unless Purchaser gives its prior
written approval: (a) sell, pledge, dispose of, hypothecate or encumber, or
agree to sell,
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pledge, dispose of, hypothecate or encumber, any of the Assets of the Business,
or negotiate with or solicit any interest from any third party with respect to
same, except in the ordinary course of business, or authorize or make any
capital expenditures relating to the Business; (b) acquire (by merger,
consolidation, or acquisition of stock or assets) any corporation, partnership
or other business organization or division thereof which is engaged in the
Business; (c) permit to lapse or expire without renewal any present policies of
insurance relating to the Assets; (d) enter into any contract or agreement
relating to the Assets, without Purchaser's prior consent, such consent not to
be unreasonably withheld, maintain or cause or permit to be maintained any of
the Assets in a manner below industry standards or permit any of the Assets to
remain in a state of repair that is below industry standards, (f) agree or
commit to any of the foregoing; or (g) take any action which would cause any of
the representations and warranties of Sellers contained herein not to be true
and correct at any time. Furthermore, during the period from the date of this
Agreement to the Closing Date or the earlier termination of this Agreement, PSI
shall conduct its business in the ordinary and usual course, and will not (a)
acquire any material additional assets other than parts and components necessary
to complete the Units In-Production, without Purchaser's prior consent, or (b)
increase the compensation of any employee or hire additional employees except in
the ordinary course of business in accordance with past practice. Further, S&S
and PSI will use reasonable efforts in the ordinary course the Business to
preserve and keep intact the employee work force relating to the Business, and
to preserve for Purchaser the goodwill of the customers having business
relations with PSI.
Section 7.2 Confidentiality and Non-Solicitation. No public disclosure
------------------------------------
or publicity concerning the transactions contemplated hereby will be made
without the prior approval of Purchaser and S&S, except that a party, after
prior consultation with the other, may make any public disclosure that it in
good faith believes is required by law. Furthermore, PSI and S&S acknowledge
that Purchaser will expend a significant amount of time and money in its pursuit
of this transaction. In consideration thereof, PSI and S&S hereby agree that
from the date of the execution of this Agreement through the Closing or any
termination of this Agreement, PSI, S&S and their respective affiliates,
employees and representatives will deal exclusively with Purchaser in connection
with the sale of PSI, such that neither PSI, S&S nor their respective
affiliates, employees and representatives will, directly or indirectly, without
Purchaser's prior written consent, solicit, encourage or initiate any offer or
proposal from, or engage in any discussions with, or provide any information to,
any corporation, partnership, person or other entity or group, other than
Purchaser and its affiliates, employees and representatives, concerning any
transaction involving the sale of any stock, debt or assets of PSI (other than
sales of product in the ordinary course of business) or a merger, consolidation,
liquidation, recapitalization, refinancing, investment or similar transaction
involving PSI (all such transactions being referred to herein as "Acquisition
Transactions"), nor shall PSI or S&S accept any proposal with respect to any
Acquisition Transaction. If PSI or S&S receive any proposal with respect to any
Acquisition Transaction, it shall immediately communicate to Purchaser the terms
of such proposal (including a copy thereof). The Confidentiality Agreement dated
on or about December 3, 1999 between S&S and Purchaser shall continue to be in
full force and effect.
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Section 7.3 Appropriate Action; Consents; Filings.
-------------------------------------
(a) The parties hereto shall use all reasonable efforts to (i) take, or
cause to be taken, all appropriate action, and do, or cause to be
done, all things necessary, proper or advisable under applicable laws
or otherwise to consummate and make effective the transactions
contemplated by this Agreement as promptly as practicable, (ii) obtain
from any Governmental Body any consents, licenses, permits, waivers,
approvals, authorizations or orders required to be obtained or made in
connection with the authorization, execution and delivery of this
Agreement and the consummation of the transactions, contemplated
herein, and (iii) make all necessary filings, and thereafter make any
other required submissions, with respect to this Agreement required
under (A) the Securities Act of 1933, as amended, and the Securities
Exchange Act of 1934, as amended, and any other applicable U.S.
federal, provincial or state securities laws, (B) the HSR Act and
shall share equally all filing fees required in connection with the
HSR Act filing, and (C) any other applicable law; provided, however,
that the parties shall cooperate with each other in connection with
the making of all such filings, including providing copies of all such
documents to the non-filing party and its advisors prior to filing
and, if requested, to accept all reasonable additions, deletions or
changes suggested in connection therewith. The parties shall furnish
to each other all information required for any application or other
filing to be made pursuant to the rules and regulations of any
applicable law in connection with the transactions contemplated by
this Agreement. Purchaser and S&S agree diligently to prepare and file
all information requested or required.
(b) The parties shall give (or shall cause their respective affiliates to
give) any notices to third parties, and use, all reasonable efforts to
obtain any third party consents, (i) necessary to consummate the
transactions contemplated in this Agreement, or (ii) required under
agreements to which the parties are a party or to which they are
bound.
Section 7.4 Update Disclosure; Breaches. From and after the date of this
---------------------------
Agreement until the Closing, the Sellers on the one hand, and Purchaser on the
other hand, shall promptly notify the other by written update to the Exhibits of
(i) the occurrence or non-occurrence of any event the occurrence or non-
occurrence of which would be likely to cause any condition to the obligations of
any party to effect the transactions contemplated by this Agreement not to be
satisfied, or (ii) the failure of a party to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it pursuant
to this Agreement which would be likely to result in any condition to the
obligations of any party to effect the transactions contemplated by this
Agreement not to be satisfied; provided, however, that the delivery of any
notice pursuant to this Section 7.4 shall not be deemed to cure any breach of
any representation or warranty requiring disclosure of such matter prior to the
date of this Agreement, or otherwise limit or affect the remedies available
hereunder to the party receiving such notice.
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ARTICLE 8 MISCELLANEOUS
Section 8.1 Amendment. This Agreement may not be amended or modified
---------
orally. This Agreement may be amended or modified at any time and in all
respects by an instrument in writing executed by the parties hereto.
Section 8.2 Assignment. Neither this Agreement nor any right created
----------
hereby shall be assignable, nor shall any or all of the obligations created
hereby be delegable, provided, however, that Purchaser may assign any or al of
its rights hereunder to a wholly-owned subsidiary.
Section 8.3 Notices. Whenever any notice ("Notice") is required or
------- ------
provided to be given pursuant to the provisions of this Agreement, such Notice
must be in writing. If the Notice is sent by telecopier, it must be properly
addressed, reflecting the telecopier telephone number of the addressee(s), and
must be transmitted by a telecopier which produces a dated message completed
confirmation. If the Notice is sent by other than telecopier, the Notice must be
enclosed in a sealed wrapper, properly addressed, and either (i) delivered to
and receipted for by a messenger service, with instructions for delivery on the
same day or the next day which is not a Saturday, Sunday, or legal holiday, or
(ii) deposited with the domestic mail service of the United States Postal
Service at a post office or official depository under the care and custody of
the United States Postal Service with sufficient postage prepaid, sent by United
States registered or certified first class mail, return receipt requested. The
addresses and telecopier telephone numbers to which any Notice is to be sent are
as follows:
if to Sellers to: Xx. Xxxxx Pool, Jr.
Xxxxxxx & Xxxxxxxxx Services, Inc.
0000 Xxxxxxxxxx
Xxxxxxx, Xxxxx 00000
Telephone number: 000.000.0000
Telecopier number: 713.923.0319
with a copy to: Legal Department
Xxxxxxx & Xxxxxxxxx Services, Inc.
0000 Xxxxx Xxxx Xxxx
Xxxxxxx, Xxxxx 00000
Telephone number: 000.000.0000
Telecopier number: 713.868.7692
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if to Purchaser, to: Hanover Compressor Company
00000 X. Xxxxxxx Xxxxxxx
Xxxxxxx, Xxxxx 00000
Telephone number: 000.000.0000
Telecopier number: 713.447.8781
Attention: Xxxxxxx X. XxXxxx
with a copy to: Xxxxx X. Xxxxxxxxxx, Xx.
Xxxxxxxxxx & Xxxxxxxx
0000 Xxxx Xxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Telephone number: 000.000.0000
Telecopier number: 713.629.9606
or to such other telecopier telephone number or address within the continental
United States as any addressee(s) shall specify in writing, which change of
telecopier telephone number or address, in order to be effective, must actually
have been received not fewer than ten (10) days prior to the giving of any such
Notice. Any Notice sent by telecopier shall be timely given if transmitted by
telecopier on or before 11:59 p.m. of the date the Notice is to be given; any
Notice sent by messenger service shall be timely given if receipted for by such
messenger service on or before 11:59 p.m., on the date the Notice is to be
given; any Notice sent by mail shall be timely given if deposited with the
domestic mail service of the United States Postal Service on or before 11:59
p.m., two (2) days prior to the date the Notice is to be given. Any Notice sent
in accordance with the preceding sentence shall be deemed to have been received
on the next day after the sending of the Notice by telecopier; on the next day
after the receipt for the Notice by a messenger service; or on the date of the
first attempted delivery of the mailed Notice, as shown on the United States
Postal Service's return receipt. Notwithstanding any other provision of this
Section 8.3 to the contrary, any Notice shall be effective from and after the
date actually received by an addressee, however addressed or delivered.
Section 8.4 Headings. Headings contained in this Agreement are for
--------
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 8.5 Counterpart Execution. This Agreement may be executed in two
---------------------
or more counterparts or originals, each of which shall be deemed an original of
one and the same document, but all of which together shall constitute but one
and the same instrument.
Section 8.6 Parties in Interest. All the terms and provisions of this
-------------------
Agreement shall be binding upon, inure to the benefit of, and be enforceable by
the parties hereto as well as their respective successors and permitted assigns.
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Section 8.7 Integrated Agreement. This Agreement constitutes the entire
--------------------
agreement between the parties hereto, and there are no agreements,
understandings, restrictions, warranties or representations between the parties
other than those set forth herein or herein provided for.
Section 8.8 Choice of Law. It is the intention of the parties that the
-------------
laws of Texas (other than the choice of law provisions thereof) should govern
the validity of this Agreement, the construction of its terms, and the
interpretation of the rights and duties of the parties.
Section 8.9 Attorneys' Fees to Prevailing Party. If any action at law or
-----------------------------------
in equity is necessary to enforce the provisions of this Agreement, the
prevailing party shall be reimbursed by the other party for all reasonable
attorneys' fees, costs, and necessary disbursements incurred by the prevailing
party in enforcing this Agreement, in addition to any and all other relief to
which such prevailing party may be entitled.
Section 8.10 Exhibits. Each of the Exhibits referenced in this Agreement
--------
have been attached to this Agreement and are hereby incorporated herein for all
purposes as though fully set forth.
Section 8.11 Expenses of Transaction. Sellers and Purchaser, each having
-----------------------
been represented by their own respective legal counsel, shall pay the fees and
expenses of the legal counsel and any broker who represented them or it in
negotiating and preparing this Agreement and the Ancillary Documents and in
closing the transaction contemplated hereby.
Section 8.12 Risk of Loss. Pending the Closing, Sellers shall bear all
------------
risk of loss, theft, damage, destruction of, or any other harm whatsoever that
may occur to the Assets.
IN WITNESS WHEREOF, the parties have executed this Agreement the day and
year first written above.
PAMCO SERVICES INTERNATIONAL, INC.
By:_________________________________
Name: ______________________________
Title: _____________________________
XXXXXXX & XXXXXXXXX POWER, INC.
By: ________________________________
Name: ______________________________
Title: _____________________________
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XXXXXXX & XXXXXXXXX SERVICES, INC.
By:_________________________________
Name: ______________________________
Title: _____________________________
HANOVER COMPRESSION INC.
By:_________________________________
Name: ______________________________
Title: _____________________________
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Index to Exhibits
Exhibit
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2.1(a) PSI owned Fleet
2.1(b) Units-in-Production
2.1(c) S&S Owned Fleet
2.1(d) Casper Facility
2.1(e) Fixed Assets (Casper Facility)
2.1(g) Inventory and Equipment
2.1(h) Contracts
2.1(j) Vehicles
2.1(i) Notes and Accounts Receivable
2.2 Form of Promissory Note
2.5 Form of Instruments of Transfer and Assumption and Assignment of
Warranties
2.10 Form of Packaging Commitment
2.11 Form of Parts Alliance
2.12 Form of Non-Competition Agreement
2.13(b) FIRPTA Affidavit
3.6 Sellers' Other Obligations
3.13 Health, Safety or Environmental Matters
3.14 Employees and Compensation
3.20 Employee Benefits
3.21 Exceptions to Receivables Representation
3.23 Insurance
3.24 Customers
3.25 Intellectual Property
3.26 Disclosures - Casper Facility
4.4 Purchaser's Other Obligations
5.2.9 Approvals
