EXHIBIT 10.4
ASSET PURCHASE AGREEMENT
BY AND AMONG
XXXXXXX & XXXXXXXXX LLC,
AND
CROWN ENERGY TECHNOLOGIES INC.,
CROWN ENERGY TECHNOLOGIES, INC.,
CROWN ENERGY TECHNOLOGIES (OKLAHOMA) INC.,
CROWN ENERGY TECHNOLOGIES (ODESSA) INC.,
CROWN ENERGY TECHNOLOGIES (VICTORIA) INC.,
CROWN ENERGY TECHNOLOGIES (CASPER) INC.,
CROWN ENERGY TECHNOLOGIES (BAKERSFIELD), INC.
XXXXX X. XXXXXX, AND
XXXX X. XXXXXX
DATED FEBRUARY 25, 2007
TABLE OF CONTENTS
PAGE
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1. DEFINITIONS AND USAGE................................................ 1
1.1 DEFINITIONS.................................................... 1
1.2 USAGE.......................................................... 12
2. SALE AND TRANSFER OF ASSETS; CLOSING................................. 13
2.1 ASSETS TO BE SOLD.............................................. 13
2.2 EXCLUDED ASSETS................................................ 15
2.3 CONSIDERATION.................................................. 16
2.4 LIABILITIES.................................................... 17
2.5 PRORATIONS OF CERTAIN TAXES.................................... 19
2.6 SALES AND TRANSFER TAXES....................................... 19
2.7 PURCHASE PRICE ALLOCATION...................................... 20
2.8 CLOSING........................................................ 21
2.9 CLOSING OBLIGATIONS............................................ 22
2.10 EFFECTIVE DATE BALANCE SHEETS.................................. 23
2.11 CLOSING DATE WORKING CAPITAL ADJUSTMENT AMOUNT................. 24
2.12 POST-CLOSING ADJUSTMENT PROCEDURE.............................. 24
3. REPRESENTATIONS AND WARRANTIES OF THE PRINCIPAL SHAREHOLDERS AND
OTHER SELLERS........................................................ 25
3.1 ORGANIZATION AND GOOD STANDING................................. 25
3.2 ENFORCEABILITY; AUTHORITY; NO CONFLICT; NO CONSENTS............ 25
3.3 FINANCIAL STATEMENTS........................................... 26
3.4 BOOKS AND RECORDS.............................................. 27
3.5 CONDITION AND SUFFICIENCY OF ASSETS............................ 27
3.6 DESCRIPTION OF REAL PROPERTY................................... 27
3.7 TITLE TO ASSETS; ENCUMBRANCES.................................. 27
3.8 ACCOUNTS RECEIVABLE............................................ 28
3.9 INVENTORIES.................................................... 28
3.10 NO UNDISCLOSED LIABILITIES; ABSENCE OF CERTAIN CHANGES......... 28
3.11 TAXES.......................................................... 29
3.12 LABOR MATTERS; COMPLIANCE...................................... 30
3.13 EMPLOYEE BENEFITS.............................................. 31
TABLE OF CONTENTS
(continued)
PAGE
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3.14 COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL
AUTHORIZATIONS................................................. 31
3.15 LEGAL PROCEEDINGS; ORDERS...................................... 32
3.16 ABSENCE OF CERTAIN CHANGES AND EVENTS.......................... 33
3.17 CONTRACTS; NO DEFAULTS......................................... 34
3.18 INSURANCE...................................................... 37
3.19 ENVIRONMENTAL MATTERS.......................................... 38
3.20 GUARANTEES; LETTERS OF CREDIT.................................. 38
3.21 PRODUCT WARRANTIES............................................. 38
3.22 PRODUCT LIABILITY CLAIMS....................................... 39
3.23 PRODUCT SAFETY AUTHORITIES..................................... 39
3.24 INTELLECTUAL PROPERTY.......................................... 39
3.25 BROKERS OR FINDERS............................................. 40
3.26 RELATED PARTY TRANSACTIONS..................................... 40
4. REPRESENTATIONS AND WARRANTIES OF BUYER.............................. 40
4.1 ORGANIZATION AND GOOD STANDING................................. 40
4.2 ENFORCEABILITY; AUTHORITY; NO CONFLICT......................... 41
4.3 CERTAIN PROCEEDINGS............................................ 41
4.4 BROKERS OR FINDERS............................................. 41
5. COVENANTS OF BUYER AND SELLERS PRIOR TO CLOSING...................... 42
5.1 REQUIRED APPROVALS............................................. 42
5.2 NOTIFICATION................................................... 42
5.3 COMMERCIALLY REASONABLE EFFORTS................................ 43
5.4 BULK SALES LAWS................................................ 43
5.5 UPDATING; DELIVERY OF MONTHLY FINANCIALS....................... 43
6. COVENANTS OF SELLERS PRIOR TO CLOSING................................ 43
6.1 ACCESS AND INVESTIGATION....................................... 43
6.2 OPERATION OF THE BUSINESSES.................................... 44
6.3 NEGATIVE COVENANT.............................................. 45
7. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE.................. 45
ii
TABLE OF CONTENTS
(continued)
PAGE
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7.1 ACCURACY OF REPRESENTATIONS; SELLERS' PERFORMANCE.............. 45
7.2 HSR ACT........................................................ 46
7.3 CONSENTS....................................................... 46
7.4 ADDITIONAL DOCUMENTS........................................... 46
7.5 NO PROCEEDINGS................................................. 47
7.6 NO CONFLICT.................................................... 47
8. CONDITIONS PRECEDENT TO EACH SELLER'S OBLIGATION TO CLOSE............ 47
8.1 ACCURACY OF REPRESENTATIONS; BUYER'S PERFORMANCE............... 47
8.2 HSR ACT........................................................ 47
8.3 ADDITIONAL DOCUMENTS........................................... 48
8.4 NO PROCEEDINGS................................................. 48
8.5 NO CONFLICT.................................................... 48
9. TERMINATION.......................................................... 48
9.1 TERMINATION EVENTS............................................. 48
9.2 EFFECT OF TERMINATION.......................................... 49
10. ADDITIONAL COVENANTS................................................. 49
10.1 EMPLOYEES AND EMPLOYEE BENEFITS................................ 49
10.2 RETENTION OF AND ACCESS TO RECORDS............................. 51
10.3 FURTHER ASSURANCES............................................. 51
10.4 PROVISIONS RELATING TO CERTAIN ASSETS AND WARRANTY
OBLIGATIONS.................................................... 52
10.5 SUPPORT........................................................ 53
11. INDEMNIFICATION; REMEDIES............................................ 53
11.1 SURVIVAL....................................................... 53
11.2 INDEMNIFICATION AND REIMBURSEMENT BY PRINCIPAL SHAREHOLDERS
AND SELLERS.................................................... 54
11.3 INDEMNIFICATION AND REIMBURSEMENT BY BUYER..................... 54
11.4 LIMITATIONS ON AMOUNT--SELLERS................................. 55
11.5 LIMITATIONS ON AMOUNT--BUYER................................... 56
11.6 TIME LIMITATIONS............................................... 56
11.7 PROCEDURE...................................................... 56
iii
TABLE OF CONTENTS
(continued)
PAGE
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11.8 PAYMENT........................................................ 58
11.9 INSURANCE...................................................... 59
11.10 NO DUPLICATION................................................. 59
11.11 REMEDIES....................................................... 59
11.12 NO SPECIAL DAMAGES............................................. 59
12. CONFIDENTIALITY...................................................... 60
12.1 DEFINITION OF CONFIDENTIAL INFORMATION......................... 60
12.2 RESTRICTED USE OF CONFIDENTIAL INFORMATION..................... 61
12.3 EXCEPTIONS..................................................... 61
12.4 LEGAL PROCEEDINGS.............................................. 61
12.5 RETURN OR DESTRUCTION OF CONFIDENTIAL INFORMATION.............. 62
12.6 ATTORNEY-CLIENT PRIVILEGE...................................... 62
13. GENERAL PROVISIONS................................................... 63
13.1 EXPENSES....................................................... 63
13.2 PUBLIC ANNOUNCEMENTS........................................... 63
13.3 NOTICES........................................................ 63
13.4 DISPUTE RESOLUTION............................................. 64
13.5 ENFORCEMENT OF AGREEMENT....................................... 64
13.6 WAIVER; REMEDIES CUMULATIVE.................................... 65
13.7 ENTIRE AGREEMENT AND MODIFICATION.............................. 65
13.8 ASSIGNMENTS, SUCCESSORS AND NO THIRD PARTY RIGHTS.............. 65
13.9 SEVERABILITY................................................... 66
13.10 CONSTRUCTION................................................... 66
13.11 TIME OF ESSENCE................................................ 66
13.12 GOVERNING LAW.................................................. 66
13.13 EXECUTION OF AGREEMENT......................................... 66
iv
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT ("Agreement") is dated February 25, 2007, by
and among Xxxxxxx & Xxxxxxxxx LLC, a Delaware limited liability company
("Buyer"), Xxxx X. Xxxxxx and Xxxxx X. Xxxxxx (the "Principal Shareholders"),
and Crown Energy Technologies Inc., Crown Energy Technologies, Inc., Crown
Energy Technologies (Oklahoma) Inc., Crown Energy Technologies (Odessa) Inc.,
Crown Energy Technologies (Victoria) Inc., Crown Energy Technologies (Casper)
Inc. and Crown Energy Technologies (Bakersfield), Inc. (each, a "Seller," and
collectively, the "Sellers").
RECITALS
WHEREAS, the Canadian Seller (as hereinafter defined) is engaged, in
Canada, and the US Seller (as hereinafter defined) is engaged, in the United
States, in the business of engineering, manufacturing, selling and distributing
equipment for oil and gas well servicing and well stimulation, and furnishing
related parts and services to customers in the oilfield services industry
(collectively, the "Businesses");
WHEREAS, the Sellers desire to sell, and Buyer desires to purchase, all or
substantially all of the properties and assets owned or leased by Sellers in
connection with the Businesses, upon the terms and subject to the conditions set
forth in this Agreement; and
WHEREAS, Buyer is willing to assume certain obligations of Sellers relating
to the Businesses, on the terms and subject to the conditions set forth in this
Agreement;
NOW, THEREFORE, the parties hereto, intending to be legally bound, agree as
follows:
1. DEFINITIONS AND USAGE
1.1 DEFINITIONS
For purposes of this Agreement, the following terms and variations thereof
have the meanings specified or referred to in this Section 1.1:
"Accounts Receivable"--(a) all trade accounts receivable and other rights
to payment (including progress payments) from customers of Sellers related to
either Business and the full benefit of all security for such accounts or rights
to payment, including all trade accounts receivable representing amounts
receivable in respect of goods shipped or products sold or services rendered to
customers of each Seller; (b) all other accounts or notes receivable of each
Seller related to either Business and the full benefit of all security for such
accounts or notes; and (c) any claim, remedy or other right related to any of
the foregoing.
"Affiliate"--with respect to any Person, any other Person directly or
indirectly controlling, controlled by or under common control with such Person,
and in the case of any natural Person shall include all relatives and immediate
family members of such first Person. For purposes of this definition, a Person
shall be deemed to control another Person if such first Person directly or
indirectly owns or holds fifty percent (50%) or more of the ownership interests
in such other Person.
"Agreed Closing Date Working Capital Amount" --Working Capital of not less
than Sixteen Million Dollars ($16,000,000).
"Allocation Schedule"--as defined in Section 2.7(a).
"Assets"--as defined in Section 2.1.
"Assumed Liabilities"--as defined in Section 2.4(a).
"Bank Operating Loans"--principal amounts plus accrued and unpaid interest
due on the Closing Date by the Sellers for operating lines provided by (i) XX
Xxxxxx Xxxxx Bank in the United States; and (ii) HSBC Bank Canada, and
excluding, for greater certainty, the Bank Term Loans.
"Bank Term Loans" means those term loans listed as due by U.S. Sellers to
X.X. Xxxxxx Chase Bank in Section D.2 of Section 3.17(a) of the Seller
Disclosure Schedules.
"Bids"--as defined in Section 2.1(d).
"Xxxx of Sale, Assignment and Assumption Agreement"--as defined in Section
2.9(a)(i).
"Breach"--any breach of, or any inaccuracy in, any representation or
warranty or any breach of, or failure to perform or comply with, any covenant or
obligation, in or of this Agreement or any Seller Contract.
"Bulk Sales Laws"--as defined in Section 5.4.
"Businesses"--as defined in the recitals of this Agreement.
"Business Day"--any day other than (a) Saturday or Sunday or (b) any other
day on which banks in Calgary, Alberta or Houston, Texas are permitted or
required to be closed.
"Business Records"--as defined in Section 2.1(g).
"Buyer"--as defined in the first paragraph of this Agreement.
"Buyer Contact"--as defined in Section 12.2(a).
"Buyer Disclosure Schedules"--the disclosure schedules prepared by Buyer
and delivered pursuant to this Agreement, as such schedules may be amended from
time to time.
"Buyer Group"--as defined in Section 6.1.
"Buyer Indemnitees"--as defined in Section 11.2.
"Buyer Lease Agreements"--the lease agreements to be entered into by Buyer
(or one or more Affiliates of Buyer to which Buyer has assigned its rights
hereunder in accordance with
2
Section 13.8) as of the Closing Date with Xxxxxxx for each parcel of Xxxxxxx
Real Property described in Section 3.6 of the Seller Disclosure Schedules,
substantially in the form of the relevant lease agreement forming part of
Exhibit A hereto.
"Canadian GAAP"--generally accepted accounting principles for financial
reporting in Canada, applied on a basis consistent with the basis on which the
Latest Balance Sheet of Canadian Seller was prepared.
"Canadian Seller" --Crown Energy Technologies Inc., a corporation organized
under the laws of the Province of Alberta, Canada.
"Canadian Seller Audited Financial Statements"--the audited balance sheets
of Canadian Seller for the periods ended April 30, 2005 and April 30, 2006,
together with the related statements of loss and deficit and cash flows for the
periods then ended, prepared in accordance with Canadian GAAP.
"Capitalized Lease Obligations"--with respect to any Person, for any
applicable period, the obligations of such Person that are required to be
classified and accounted for as capital lease obligations under US GAAP or
Canadian GAAP (as applicable), and the amount of such obligations at any date
shall be the capitalized amount of such obligations at such date determined in
accordance with US GAAP or Canadian GAAP (as applicable).
"Closing"--as defined in Section 2.8.
"Closing Balance Sheets"--as defined in Section 2.12(a).
"Closing Date"--the date on which the Closing takes place.
"Closing Date Excluded Working Capital Assets"--any Accounts Receivable of
any Seller listed on Section 2.2(j) of the Seller Disclosure Schedules and any
other assets of any Seller that are taken into account in determining the
Closing Date Working Capital Amount but which are Excluded Assets.
"Closing Date Non-Assumed Working Capital Liabilities"--any Liabilities of
any Seller (including, without limitation, the Bank Term Loans, any liability
for Taxes or any liability of any Seller under any Seller Benefit Plan or
relating to payroll, sick leave, workers' compensation or unemployment benefits
for any Employee) that are taken into account in determining the Closing Date
Working Capital Amount but which are Retained Liabilities.
"Closing Date Working Capital Adjustment Amount" --as defined in Section
2.11.
"Closing Date Working Capital Amount"--as defined in Section 2.12(a).
"COBRA"--the group health plan continuation coverage requirements of
Section 4980B of the Code or Sections 601-607 of ERISA.
"Code"--the U.S. Internal Revenue Code of 1986, as amended.
3
"Confidential Information"--as defined in Section 12.1(a).
"Confidentiality Agreement"--the Confidentiality Agreement, dated as of
September 18, 2006, between Buyer and Canadian Seller.
"Consent"--any approval, consent, ratification, waiver or other
authorization.
"Contemplated Transactions"--all of the transactions contemplated by this
Agreement or under any other agreement delivered in connection with the Closing.
"Contract"--any agreement, contract, Lease, commitment or other undertaking
or arrangement.
"Current Can$/U.S.$ Exchange Rate" --on any date, the daily noon Can$/U.S.$
exchange rate for such date published by the Bank of Canada.
"Damages"--as defined in Section 11.2.
"Disclosing Party"--as defined in Section 12.1(a).
"Dispute"--as defined in Section 13.4.
"Dollars" or "$"--Canadian dollars, except as otherwise expressly stated.
"Effective Date" --December 31, 2006 or the last day of the most recent
calendar month that precedes the Closing Date by at least twenty (20) calendar
days.
"Effective Date Balance Sheets" --as defined in Section 2.10.
"Effective Date Excluded Working Capital Assets"--any Accounts Receivable
of any Seller listed on Section 2.2(j) of the Seller Disclosure Schedules and
any other assets of any Seller that are taken into account in determining the
Effective Date Working Capital Amount but which are Excluded Assets.
"Effective Date Non-Assumed Working Capital Liabilities"--any Liabilities
of any Seller (including, without limitation, the Bank Term Loans, any liability
for Taxes or any liability of any Seller under any Seller Benefit Plan or
relating to payroll, sick leave, workers' compensation or unemployment benefits
for any Employee) that are taken into account in determining the Effective Date
Working Capital Amount but which are Retained Liabilities.
"Effective Date Working Capital Amount" --as defined in Section 2.10.
"Effective Time"--12:01 a.m. on the Closing Date.
"Election Period"--as defined in Section 11.7(c).
"Employees"--all employees of Sellers employed in connection with either
Business, including persons on vacation, approved leave of absence, sick leave,
family medical leave under the Family and Medical Leave Act (or any similar
foreign law), or short-term disability leave; and
4
excluding persons on long-term disability leave under a long-term disability
plan maintained by any Seller.
"Encumbrance"--any charge, claim, condition, equitable interest, lien,
option, pledge, security interest, mortgage, right of way, easement,
encroachment, servitude, right of first option, right of first refusal or
similar restriction, including any restriction on use, voting (in the case of
any security or equity interest), transfer, receipt of income or exercise of any
other attribute of ownership.
"Environmental Adverse Effect"--shall mean any Environmental Liabilities
that are reasonably expected to exceed $25,000 per occurrence or series of
related occurrences, or $100,000 in the aggregate.
"Environmental Condition"--any pollution, contamination, degradation,
damage or injury caused by, related to, arising from, or in connection with the
generation, handling, use, treatment, storage, transportation, disposal,
discharge, Release, or emission of any Hazardous Materials.
"Environmental Laws"--all applicable laws, regulations, enforceable
requirements that have the effect of law, orders, decrees, judgments, or
injunctions issued, promulgated or entered into by any Governmental Body
pertaining to the protection of human health or the environment, including the
Comprehensive Environmental Response, Compensation, and Liability Act, as
amended by the Superfund Amendments and Reauthorization Act, 42 U.S.C. Section
9601 et seq. ("CERCLA"), the Solid Waste Disposal Act, as amended by the
Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq. ("RCRA"),
the Federal Water Pollution Control Act, as amended by the Clean Water Act, 33
U.S.C. Section 1251 et seq., the Clean Air Act, 42 U.S.C. Section 7401 et seq.,
the Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq., the
Environmental Protection and Enhancement Act, R.S.A. 2000, c. E-12, the Canadian
Environmental Protection Act, 1999, S.C. 1999, c. 33, and any similar U.S.,
Canadian, foreign, state, local, or provincial statutes, in each case where such
laws are in effect on or prior to the Closing Date.
"Environmental Liabilities"--any and all liabilities, responsibilities,
claims, suits, losses, costs (including remedial, removal, response, abatement,
clean-up, investigative, or monitoring costs and any other related costs and
expenses), other causes of action, damages, settlements, expenses, charges,
assessments, liens, penalties, fines, pre-judgment and post-judgment interest,
attorneys' fees and other legal fees: (i) pursuant to any agreement, order,
notice (including notices of violation or noncompliance), or directive
(including directives embodied in Environmental Laws), injunction, judgment, or
similar documents (including settlements), arising out of or in connection with
any Environmental Laws, or (ii) pursuant to any claim pursuant to Environmental
Laws by a Governmental Body or other Person for personal injury, property
damage, damage to natural resources, remediation, or payment or reimbursement of
response costs incurred or expended by the Governmental Body or other Person.
"ERISA"--the U.S. Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate"--any Person that together with a Seller is considered a
single employer within the meaning of Section 414 of the Code or Section 4001 of
ERISA.
5
"Exchange Act"--the Securities Exchange Act of 1934.
"Excluded Assets"--as defined in Section 2.2.
"Final Adjustment"--as defined in Section 2.3(a)(ii).
"Final Consideration"--as defined in Section 2.3(a)(iii).
"Financial Statements"--as defined in Section 3.3.
"Foreign Plan"--means any employee benefit plan, program or arrangement
that is maintained outside of the United States primarily for the benefit of
persons substantially all of whom are nonresident aliens of the United States.
"Governmental Authorization"--any Consent, license (including without
limitation any import or export license), registration or permit issued,
granted, given or otherwise made available by or under the authority of any
Governmental Body or pursuant to any Legal Requirement, which Consent, license,
registration or permit is related to or required for the operation of either
Business.
"Governmental Body"--any:
(a) nation, state, county, province, city, town, borough, village,
district or other jurisdiction;
(b) federal, state, local, provincial, municipal, foreign or other
government;
(c) governmental, quasi-governmental or regulatory authority of any
nature (including any agency, branch, department, board, commission, court,
tribunal or other entity exercising governmental, quasi-governmental or
regulatory powers); or
(d) body exercising, or entitled or purporting to exercise, any
administrative, executive, judicial, legislative, police, regulatory or taxing
authority or power.
"Guaranty"--as defined in Section 2.9(b)(vii).
"Hazardous Material"--any substance, material or waste that is regulated by
any Governmental Body under any Environmental Laws, including any material,
substance or waste which is defined as a "hazardous waste," "hazardous
material," "hazardous substance," "extremely hazardous," "restricted hazardous
waste" or "toxic substance" under any provision of Environmental Law, and
including petroleum, petroleum products, asbestos, friable asbestos-containing
material or asbestos-containing material urea formaldehyde and polychlorinated
biphenyls.
"Holdback Reserve Amount"--as defined in Section 2.3(b).
"Holdback Reserve Escrow Account"--as defined in Section 2.3(b).
"Holdback Reserve Escrow Agreement"--as defined in Section 2.3(b).
6
"HSR Act"--the U.S. Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended.
"Indebtedness"--with respect to any Person, at any date, without
duplication, (a) all obligations of such Person for borrowed money, including,
without limitation, all principal, interest, premiums, fees, expenses,
overdrafts and penalties with respect thereto, (b) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (c)
all obligations of such Person to pay the deferred purchase price of property or
services, except trade payables incurred in the ordinary course of business of
such Person, (d) all obligations of such Person to reimburse any bank or other
Person in respect of amounts paid under a letter of credit or similar
instrument, (e) all Capitalized Lease Obligations of such Person, (f) all other
obligations of a Person which would be required to be shown as indebtedness on a
balance sheet of such Person prepared in accordance with US GAAP or Canadian
GAAP (as applicable), and (g) all indebtedness of any other Person of the type
referred to in clauses (a) to (f) above directly or indirectly guaranteed by
such Person or secured by any assets of such Person.
"Indemnitee"--as defined in Section 11.7(a).
"Indemnitor"--as defined in Section 11.7(a).
"Independent Accountants" --as defined in Section 2.11(c).
"Intellectual Property"--(a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions, and
reexaminations thereof, (b) all trademarks, service marks, trade dress, logos
and trade names, together with all translations, adaptations, derivations, and
combinations thereof and including all goodwill associated therewith, and all
applications, registrations and renewals in connection therewith, (c) all
copyrightable works, all copyrights, and all applications, registrations and
renewals in connection therewith, (d) all mask works and all applications,
registrations and renewals in connection therewith, (e) all trade secrets and
confidential information (including ideas, research and development, know-how,
formulas, compositions, manufacturing and production processes and techniques,
technical data, designs, drawings, specifications, customer and supplier lists,
pricing and cost information, and business and marketing plans and proposals),
(f) all Software (including data and related documentation), (g) all other
proprietary rights, and (h) all copies and tangible embodiments thereof (in
whatever form or medium).
"Intellectual Property Licenses"--as defined in Section 3.24(b).
"Inventories"--all inventories of Sellers related to either Business,
wherever located, including all finished goods, work in process, raw materials,
spare parts and all other materials and supplies to be used or consumed by
Sellers in the production of finished goods for either Business.
"IRS"--the United States Internal Revenue Service and, to the extent
relevant, the United States Department of the Treasury.
"Kearney" --collectively, Xxxxxxx Properties, Inc., a corporation organized
under the laws of the State of Texas, and Xxxxxxx Properties Ltd., a corporation
organized under the laws of the Province of Alberta, Canada.
7
"Xxxxxxx Real Property"--all real property described in Section 3.6 of the
Seller Disclosure Schedules owned by Xxxxxxx and used in either Business,
together with all buildings, facilities, and other structures and improvements
thereon and all privileges, easements and appurtenances appertaining thereto.
"Knowledge"--with respect to Sellers, Sellers will be deemed to have
knowledge of a particular fact or other matter if any individual named in
Section 1.1(B) of the Seller Disclosure Schedules is actually aware of that fact
or matter; and with respect to Buyer, Buyer will be deemed to have knowledge of
a particular fact or other matter if any individual named in Section 1.1(B) of
the Buyer Disclosure Schedules is actually aware of that fact or matter.
"Latest Balance Sheets"--(a) the audited balance sheet of Canadian Seller
for the period ended April 30, 2006 or (b) the audited consolidated balance
sheet of US Seller for the period ended September 30, 2006, as the context may
require.
"Lease"--any Real Property Lease or any lease or rental agreement, license,
right to use or installment and conditional sale agreement to which any Seller
is a party related to either Business and any other Seller Contract related to
either Business pertaining to the leasing or use of any Tangible Personal
Property.
"Legal Requirement"--any U.S. federal, Canadian federal, state, foreign,
provincial or municipal law, ordinance, regulation, statute or treaty,
applicable common law obligation, or other enforceable requirement that has the
effect of law.
"Liability"--with respect to any Person, any liability or obligation of
such Person of any kind, character or description, whether known or unknown,
absolute or contingent, accrued or unaccrued, disputed or undisputed, liquidated
or unliquidated, secured or unsecured, joint or several, due or to become due,
vested or unvested, executory, determined, determinable or otherwise, and
whether or not the same is required to be accrued on the financial statements of
such Person.
"Material Adverse Effect"--a material adverse effect on the business,
assets, liabilities, condition (financial and otherwise), results of operations
or prospects of the Person to which such phrase relates.
"Nabors Contract"--collectively, the Contracts between Nabors Corporate
Services (or certain Affiliates thereof) and Sellers for the sale of equipment
or services, as more fully described in Section 3.17(d) of the Seller Disclosure
Schedules.
"Non-Competition Agreements"--the Non-Competition and Non-Solicitation
Agreements to be entered into as of the Closing Date, between Buyer and Xxxxx X.
Xxxxxx and Xxxx X. Xxxxxx, substantially in the form of Exhibit B hereto.
"Non-Real Estate Encumbrances"--as defined in Section 3.7(a).
"Order"--any order, injunction, judgment, decree, ruling, assessment or
arbitration award of any Governmental Body or arbitrator.
8
"Permitted Encumbrances"--as defined in Section 3.7(a).
"Person"--an individual, partnership, corporation, business trust, limited
liability company, limited liability partnership, joint stock company, trust,
unincorporated association, joint venture or other entity or a Governmental
Body.
"Post-Closing Working Capital Adjustment Amount" --as defined in Section
2.12(d).
"Pre-Closing Property Taxes"--as defined in Section 2.5.
"Preliminary Consideration"--as defined in Section 2.3(a)(i).
"Principal Shareholders"--as defined in the first paragraph of this
Agreement.
"Proceeding"--any action, arbitration, audit, hearing, investigation,
litigation or suit (whether civil, criminal, administrative, judicial or
investigative, whether public or private) commenced, brought, conducted or heard
by or before, or otherwise involving, any Governmental Body or arbitrator.
"Purchase Price"--as defined in Section 2.3(a).
"Real Property Lease"--as defined in Section 3.6.
"Receiving Party"--as defined in Section 12.1(a).
"Record"--information that is inscribed on a tangible medium or that is
stored in an electronic or other medium and is retrievable in perceivable form.
"Related Person"--with respect to a specified Person:
(a) any Person that directly or indirectly controls, is directly or
indirectly controlled by or is directly or indirectly under common control with
such specified Person;
(b) any Person that holds a Material Interest in such specified
Person;
(c) each Person that serves as a director, officer, partner, executor
or trustee of such specified Person (or in a similar capacity);
(d) any Person in which such specified Person holds a Material
Interest; and
(e) any Person with respect to which such specified Person serves as a
general partner or a trustee (or in a similar capacity).
For purposes of this definition, (a) "control" (including "controlling,"
"controlled by," and "under common control with") means the possession, direct
or indirect, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise, and shall be construed as such term is used in the rules
promulgated under the Securities Act; and (b) "Material Interest" means direct
or indirect beneficial ownership (as defined in Rule 13d-3 under the Exchange
Act) of voting securities or
8
other voting interests representing at least ten percent (10%) of the
outstanding voting power of a Person or equity securities or other equity
interests representing at least ten percent (10%) of the outstanding equity
securities or equity interests in a Person.
"Release"--any release, spill, emission, leaking, pumping, pouring,
dumping, emptying, injection, deposit, disposal, discharge, dispersal, leaching
or migration on or into the environment.
"Representative"--with respect to a particular Person, any director,
officer, manager, employee, agent, consultant, advisor, accountant, financial
advisor, legal counsel or other representative of that Person.
"Representative Party"--as defined in Section 9.1(a).
"Restrictive Covenants"--as defined in Section 11.11(a).
"Retained Liabilities"--as defined in Section 2.4(b).
"Securities Act"--the U.S. Securities Act of 1933, as amended.
"Seller" or "Sellers"--as defined in the first paragraph of this Agreement.
"Seller Benefit Plans"--all (i) employee welfare benefit plans or employee
pension benefit plans as defined in sections 3(1) and 3(2) of ERISA, including
plans that provide retirement income or result in deferrals of income by
Employees for periods extending to their termination of employment or beyond,
and plans that provide medical, surgical or hospital care benefits or benefits
in the event of sickness, accident, disability, death or unemployment and (ii)
other employee benefit agreements or arrangements that are not ERISA plans,
including any Foreign Plans and any deferred compensation plans, incentive
plans, bonus plans or arrangements, stock option plans, stock purchase plans,
stock award plans, golden parachute agreements, severance pay plans, dependent
care plans, cafeteria plans, employee assistance programs, scholarship programs,
retention incentive agreements, vacation policies and, or other similar plans,
agreements or arrangements that (a) are maintained by any Seller or any ERISA
Affiliate, (b) have been approved by any Seller or any ERISA Affiliate but are
not yet effective, or (c) were previously maintained by any Seller or any ERISA
Affiliate and with respect to which any Seller or any ERISA Affiliate may have
any liability, contingent or otherwise. However, "Seller Benefit Plans" shall
not include any agreements between any Seller and any Employees pursuant to
which such Seller has agreed to pay Employees additional compensation in
consideration of their services rendered in connection with the sale of the
Assets ("Transaction Bonuses").
"Seller Contact"--as defined in Section 12.2(a).
"Seller Contract"--any Contract related to either Business (a) under which
any Seller has or may acquire any rights or benefits; (b) under which any Seller
has or may become subject to any obligation or liability; or (c) by which any
Seller or any of the Assets may become bound.
"Seller Disclosure Schedules"--the disclosure schedules prepared by Sellers
and delivered pursuant to this Agreement, as such schedules may be amended from
time to time.
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"Seller Indemnitees"--as defined in Section 11.3.
"Software"--all computer software and subsequent versions thereof,
including source code, object, executable or binary code, objects, comments,
screens, user interfaces, report formats, templates, menus, buttons and icons
and all files, data, materials, manuals, design notes and other items and
documentation related thereto or associated therewith.
"Specified Nabors Rigs"--as defined in Section 3.17(d).
"Subsidiary"--with respect to any Person (the "Owner"), any corporation or
other Person of which securities or other interests having the power to elect a
majority of that corporation's or other Person's board of directors or similar
governing body, or otherwise having the power to direct the business and
policies of that corporation or other Person (other than securities or other
interests having such power only upon the happening of a contingency that has
not occurred), are held by the Owner or one or more of its Subsidiaries.
"Survival Period"--as defined in Section 11.6.
"Tangible Personal Property"--all machinery, equipment, tools, furniture,
office equipment, computer hardware, supplies, materials, vehicles and other
items of tangible personal property (other than Inventories) of every kind owned
or leased by any Seller related to either Business, together with any express or
implied warranty by the manufacturers or sellers or lessors of any item or
component part thereof and all maintenance records and other documents relating
thereto.
"Target Closing Balance Sheets" -the closing balance sheets of Canadian
Seller and US Seller, attached as Exhibit C hereto, prepared by Sellers in good
faith applying the same accounting principles, policies and practices that were
used by Sellers in preparing the Latest Balance Sheets, showing the Assets and
Assumed Liabilities (to the extent required to be reflected therein in
accordance with Canadian GAAP or U.S. GAAP, as applicable).
"Tax"--any U.S. federal, Canadian federal, state, foreign, provincial, or
local income, gross receipts, license, payroll, employment, excise, severance,
stamp, occupation, premium, property, environmental, windfall profit, customs,
vehicle, airplane, boat, vessel or other title or registration, capital stock,
franchise, employees' income withholding, withholding, social security,
unemployment, disability, real property, personal property, sales, use,
transfer, value added, Goods and Services Tax ("GST"), alternative, add-on
minimum and other tax, fee, assessment, levy, tariff, charge or duty of any kind
whatsoever and any interest, penalty, addition or additional amount thereon
imposed, assessed or collected by or under the authority of any Governmental
Body or payable under any tax-sharing agreement or any other Contract or other
obligation to indemnify or otherwise assume or succeed to the Tax Liability of
any other Person.
"Tax Return"--any return (including any information return), report,
statement, schedule, notice, form, declaration, claim for refund or other
document or information filed with or submitted to, or required to be filed with
or submitted to, any Governmental Body in connection with the determination,
assessment, collection or payment of any Tax or in connection with the
administration, implementation or enforcement of or compliance with any Legal
Requirement relating to any Tax.
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"Third Party"--a Person that is not a party to this Agreement.
"Third Party Claim"--any claim against any Indemnitee by a Third Party that
could give rise to a right of indemnification under this Agreement.
"Transaction Agreements"--as defined in Section 11.11.
"Transaction Bonuses"--as defined in the last sentence of the definition of
Seller Benefit Plans.
"Transferred Employee"--as defined in Section 10.1(a).
"U.S. GAAP"--generally accepted accounting principles for financial
reporting in the United States, applied on a basis consistent with the basis on
which the Latest Balance Sheet of US Seller was prepared.
"US Seller"--collectively, Crown Energy Technologies, Inc., a corporation
organized under the laws of the State of Delaware, Crown Energy Technologies
(Oklahoma) Inc., a corporation organized under the laws of the State of
Oklahoma, Crown Energy Technologies (Odessa) Inc., a corporation organized under
the laws of the State of Texas, Crown Energy Technologies (Victoria) Inc., a
corporation organized under the laws of the State of Texas, Crown Energy
Technologies (Casper) Inc., a corporation organized under the laws of the State
of Wyoming, and Crown Energy Technologies (Bakersfield), Inc., a corporation
organized under the laws of the State of California.
"US Seller Audited Financial Statements"--the audited consolidated balance
sheets of US Seller for the periods ended September 30, 2005 and September 30,
2006, together with the related consolidated statements of income, changes in
retained earnings and cash flows for the periods then ended, prepared in
accordance with U.S. GAAP.
"Working Capital" - the sum of the working capital of each of the Sellers
as determined in accordance with Canadian GAAP and U.S. GAAP, as applicable, and
expressed in Can$ by converting U.S.$ amounts using the Current Can$/U.S$
Exchange Rate as of the relevant date on which Working Capital is being
determined.
1.2 USAGE
(a) Interpretation. In this Agreement, unless a clear contrary
intention appears:
(i) the singular number includes the plural number and vice
versa;
(ii) reference to any Person includes such Person's successors
and assigns but, if applicable, only if such successors and assigns are not
prohibited by this Agreement, and reference to a Person in a particular
capacity excludes such Person in any other capacity or individually;
(iii) reference to any gender includes each other gender;
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(iv) reference to any agreement, document or instrument means
such agreement, document or instrument as amended or modified and in effect
from time to time in accordance with the terms thereof;
(v) reference to any Legal Requirement means, unless expressly
indicated otherwise, such Legal Requirement as amended, modified, codified,
replaced or reenacted, in whole or in part, and in effect from time to
time, including rules and regulations promulgated thereunder, and reference
to any section or other provision of any Legal Requirement means, unless
expressly indicated otherwise, that provision of such Legal Requirement
from time to time in effect and constituting the substantive amendment,
modification, codification, replacement or reenactment of such section or
other provision;
(vi) "hereunder," "hereof," "hereto," and words of similar import
shall be deemed references to this Agreement as a whole and not to any
particular Article, Section or other provision hereof;
(vii) "including" (and with correlative meaning "include") means
including without limiting the generality of any description preceding such
term;
(viii) "or" is used in the inclusive sense of "and/or";
(ix) with respect to the determination of any period of time,
"from" means "from and including" and "to" means "to but excluding"; and
(x) references to documents, instruments or agreements shall be
deemed to refer as well to all addenda, exhibits, schedules or amendments
thereto.
(b) Accounting Terms and Determinations. Unless otherwise specified
herein, all accounting terms used herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with U.S. GAAP or Canadian
GAAP, as applicable.
(c) Legal Representation of the Parties. This Agreement has been
negotiated by the parties with the benefit of legal representation, and any rule
of construction or interpretation otherwise requiring this Agreement to be
construed or interpreted against any party shall not apply to any construction
or interpretation hereof.
2. SALE AND TRANSFER OF ASSETS; CLOSING
2.1 ASSETS TO BE SOLD
Upon the terms and subject to the conditions set forth in this Agreement,
at the Closing and effective as of the Effective Time, each Seller shall sell,
convey, assign, transfer, and deliver to Buyer, or one or more Affiliates of
Buyer to which Buyer has assigned its rights hereunder in accordance with
Section 13.8, and Buyer (or such assignee) shall purchase and acquire from such
Seller, free and clear of any Encumbrances other than Permitted Encumbrances,
all of such Seller's right, title, and interest in and to all of such Seller's
property and assets, real, personal, or mixed, tangible and intangible, of every
kind and description, wherever located, belonging to such Seller
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and which relate to either Business as well as any goodwill associated
therewith, including the following (but excluding the Excluded Assets):
(a) all Tangible Personal Property, including those items described in
Section 3.5(a) of the Seller Disclosure Schedules, together with all rights of
Sellers against Third Parties relating to such Tangible Personal Property;
(b) all Inventories, together with all rights of Sellers against
suppliers or manufacturers of such Inventories;
(c) all Accounts Receivable (other than any Accounts Receivable due
from any Seller to another Seller or due from any Related Person of any Seller);
(d) (i) all Seller Contracts listed or required to be listed in
Section 3.17(a) of the Seller Disclosure Schedules, (ii) to the extent, but only
to the extent, of the Specified Nabors Rigs, the Nabors Contract, and (iii) all
outstanding offers or solicitations made by or to any Seller to enter into any
Contract related to either Business ("Bids");
(e) all unearned customer deposits;
(f) all Governmental Authorizations related to either Business and all
pending applications therefor or renewals thereof, including those listed or
required to be listed in Section 3.14(b) of the Seller Disclosure Schedules, in
each case to the extent permitted by applicable Legal Requirements and otherwise
transferable to Buyer;
(g) all data and Records related to either Business, including client
and customer lists and Records, referral sources, research and development
reports and Records, production reports and Records, quality control data,
service and warranty Records, equipment logs, operating guides and manuals,
financial and accounting Records, creative materials, advertising materials,
promotional materials, studies, reports, correspondence and other similar
documents and Records and, subject to Legal Requirements, copies of all
personnel Records (the "Business Records");
(h) all of the intangible rights and property of Sellers used in
either Business, including all Intellectual Property and going concern value,
goodwill and rights under Intellectual Property Licenses;
(i) all rights of Sellers relating to deposits and prepaid expenses,
advance payments, security, claims for refunds and rights to offset in respect
thereof, in each case related to either Business, that are not listed in Section
2.2(d) of the Seller Disclosure Schedules and that are not excluded under
Section 2.2(f);
(j) all rights of Sellers pertaining to any counterclaims, set-offs or
defenses it may have with respect to the Assumed Liabilities; and
(k) all other assets, properties, and rights of every kind owned or
held by Sellers or in which Sellers have an interest on the Closing Date, known
or unknown, fixed or
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unfixed, accrued, absolute, contingent or otherwise, whether or not specifically
referred to in this Agreement, that, in each case, relate to either Business.
All of the property and assets to be transferred to Buyer hereunder are
herein referred to collectively as the "Assets."
2.2 EXCLUDED ASSETS
Notwithstanding anything to the contrary contained in Section 2.1 or
elsewhere in this Agreement, the following assets of Sellers (collectively, the
"Excluded Assets") are not part of the sale and purchase contemplated hereunder,
are excluded from the Assets and shall remain the property of Sellers after the
Closing:
(a) all cash, cash equivalents, securities, money on deposit with
banks, certificates of deposit and similar instruments and short-term
investments and any Accounts Receivable due from any Seller to another Seller or
due from any Related Person of any Seller;
(b) the Nabors Contract, except to the extent otherwise provided in
Section 2.1(d)(ii);
(c) all minute books, stock Records and corporate seals;
(d) those rights relating to earned customer deposits and prepaid
expenses and claims for refunds and rights to offset in respect thereof, all to
the extent listed in Section 2.2(d) of the Seller Disclosure Schedules;
(e) all insurance policies and rights thereunder and all insurance
benefits, including rights and proceeds, arising from or relating to the Assets
and the Assumed Liabilities prior to the Effective Time;
(f) all claims for refund or credit of Taxes and other governmental
charges of whatever nature to the extent relating to a period ending prior to
the Closing Date;
(g) all Governmental Authorizations that are not transferable;
(h) all rights of Sellers under this Agreement, the Xxxx of Sale,
Assignment and Assumption Agreement and the other Transaction Agreements;
(i) all claims of any Seller against Third Parties relating to either
Business or the Assets, whether xxxxxx or inchoate, known or unknown, contingent
or noncontingent, including all such claims listed in Section 2.2(i) of the
Seller Disclosure Schedules, except to the extent such claims relate to Assumed
Liabilities;
(j) the Accounts Receivable listed in Section 2.2(j) of the Seller
Disclosure Schedules; and
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(k) artwork which belongs to Xxxxx X. Xxxxxx located at the executive
offices of Canadian Seller in Calgary, Alberta as listed in Section 2.2(k) of
the Seller Disclosure Schedules.
2.3 CONSIDERATION
(a) The consideration for the Assets (the "Purchase Price") will be
the Preliminary Consideration plus or minus the Final Adjustment.
(i) The "Preliminary Consideration" shall be equal to Seventy
Seven Million Dollars ($77,000,000), plus or minus the Closing Date Working
Capital Adjustment Amount, and minus the Holdback Reserve Amount. In
accordance with Section 2.9(b), at the Closing, the Preliminary
Consideration, shall be delivered by Buyer to Sellers by wire transfer of
immediately available funds to one or more accounts specified by Sellers at
least three (3) Business Days prior to the Closing Date.
(ii) The "Final Adjustment" shall be equal to the Final
Consideration less the Preliminary Consideration. If the Final Adjustment
is a positive amount, Buyer will remit that amount to Sellers. If the Final
Adjustment is a negative amount, then Sellers will remit the absolute
amount to Buyer. The Final Adjustment shall be paid in five (5) Business
Days after such calculation becomes conclusive and binding on the parties
pursuant to Section 2.12.
(iii) The "Final Consideration" shall be equal to Seventy Seven
Million Dollars ($77,000,000), plus or minus the Post-Closing Working
Capital Adjustment Amount.
(b) At Closing, Buyer shall hold back Two Million Five Hundred
Thousand Dollars ($2,500,000) from the cash portion of the Purchase Price (the
"Holdback Reserve Amount"), which Holdback Reserve Amount shall be placed in an
escrow account established by Buyer (the "Holdback Reserve Escrow Account"),
pursuant to an escrow agreement (the "Holdback Reserve Escrow Agreement")
substantially in the form of Exhibit F hereto. The Holdback Reserve Amount shall
be applied against the payment of any Post-Closing Working Capital Adjustment
Amount required from Sellers as determined under Section 2.12, and any remaining
balance shall be paid to Sellers.
(c) Buyer agrees that it will remit to Canadian Sellers, as agent for
Sellers, any proceeds of the Accounts Receivable listed in Section 2.2(j) of the
Seller Disclosure Schedules that it collects after the Effective Time until such
time as an amount equal to the Bank Operating Loans and Bank Term Loans has been
received by Canadian Sellers. Buyer shall be entitled to retain any proceeds of
such Accounts Receivable in excess of such amount. Notwithstanding any other
provision contained herein, if it is determined that the aggregate amount of the
Bank Term Loans and Bank Operating Loans was, at the Effective Time, greater
than the aggregate amount of the Accounts Receivable listed in Section 2.2(j) of
the Sellers Disclosure Schedules, then the Buyer shall pay to the Seller an
amount equal to such deficiency, on a dollar for dollar basis, within five (5)
Business Days after it is determined such deficiency exists.
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2.4 LIABILITIES
(a) Assumed Liabilities. On the Closing Date, but effective as of the
Effective Time, Buyer shall assume and agree to discharge the following
Liabilities of Sellers (the "Assumed Liabilities"):
(i) any trade account payable (other than a trade account payable
to a Related Person of any Seller) reflected as a current liability on the
Closing Balance Sheets that remains unpaid as of the Effective Time;
(ii) any other current Liability of any Seller reflected on the
Closing Balance Sheets (but excluding the Closing Date Non-Assumed Working
Capital Liabilities) and any long-term Liability of any Seller (but only to
the extent, and in the amount, reflected as a long-term liability on the
Target Balance Sheets), that remains unpaid as of the Effective Time;
(iii) any Liability of any Seller (other than a Liability to a
Related Person of any Seller) to any of Sellers' customers or suppliers
incurred in the ordinary course of either Business under Contracts not
required to be listed in Section 3.17(a) of the Seller Disclosure Schedules
for orders for goods or services to be delivered or performed (A) from and
after the Effective Time and (B) prior to the Effective Time to the extent
such Liability for any period prior to the Effective Time is reflected in
the Closing Balance Sheets and taken into account in determining the
Closing Date Working Capital Amount;
(iv) any Liability to any of Sellers' customers under warranties
implied by law and any warranty agreements and indemnities given by any
Seller for goods or services to be delivered or performed (A) from and
after the Effective Time and (B) prior to the Effective Time to the extent
such Liabilities for any period prior to the Effective Time does not exceed
the amount of the warranty reserve set forth in the Closing Balance Sheets
and taken into account in determining the Closing Date Working Capital
Amount;
(v) any Liability under any Seller Contract entered into (A)
prior to the date of this Agreement and listed in Section 3.17(a) of the
Seller Disclosure Schedules or (B) after the date hereof in accordance with
Section 6.2, other than liabilities or obligations thereunder to be
performed prior to the Effective Time or that relate to a Breach by any
Seller of any such Seller Contract prior to the Effective Time;
(vi) any Liability arising out of or relating to products of
either Business engineered, manufactured, distributed, delivered or sold or
services performed (A) from and after the Effective Time and (B) prior to
the Effective Time to the extent such Liability for any period prior to the
Effective Time does not exceed the amount of the product liabilities
reserve set forth in the Closing Balance Sheets;
(vii) any Liability arising under the Nabors Contract with
respect to the Specified Nabors Rigs other than liabilities or obligations
with respect thereto to be performed prior to the Effective Time or that
relate to a breach by any Seller of any of the terms and conditions of the
Nabors Contract prior to the Effective Time; and
17
(viii) any Liability of any Seller relating to vacation for any
Employee.
(b) Retained Liabilities. The Retained Liabilities shall remain the
sole responsibility of and shall be retained, paid, performed and discharged
solely by Sellers. "Retained Liabilities" shall mean every Liability of Sellers
other than the Assumed Liabilities, including:
(i) any Liability for Taxes arising as a result of any Seller's
operation of either Business or ownership of the Assets (except as provided
in Section 2.4(a)(viii) or Section 2.5) prior to the Effective Time;
(ii) any Liability under any Contract not expressly assumed by
Buyer under Section 2.4(a);
(iii) except as provided in Section 2.4(a), any Liability arising
out of or relating to (A) products of either Business engineered,
manufactured, distributed, delivered or sold or services performed by or on
behalf of any Seller prior to the Effective Time or (B) either Business or
any action or inaction thereof or related thereto or to the Assets prior to
the Effective Time, including any Liability arising out of any Proceeding
(including the obligation to handle such Proceeding) relating thereto;
(iv) any Liability of any Seller under the Seller Benefit Plans
or relating to payroll, sick leave, workers' compensation or unemployment
benefits for any Employee;
(v) any Environmental Liabilities relating to Sellers' operation
of either Business prior to the Effective Time;
(vi) any Liability relating to any Employee that arises out of a
violation or breach occurring on or before the Closing of any labor or
employment law or any agreement, including without limitation the U.S.
Worker Adjustment and Retraining Notification Act;
(vii) any Liability of any Seller to any Related Person of such
Seller;
(viii) any Liability to indemnify, reimburse or advance amounts
to any officer, director or Employee of any Seller;
(ix) any Liability arising out of any claim that any Seller
infringed any intellectual property rights of any other Person;
(x) any Liability of any Seller to the extent attributable to any
of the Excluded Assets, including any Liability relating to, or based in
whole or in part on, events or conditions happening or existing in
connection with or arising out of any Excluded Assets;
(xi) except as provided in Section 2.4(a)(iii), any Liability for
goods and services acquired by Sellers prior to the Effective Time, to the
extent not reflected in a Seller Contract being assumed by Buyer under
Section 2.4(a);
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(xii) any Liability of any Seller under this Agreement or any
other document executed in connection with the Contemplated Transactions;
(xiii) any Liability of any Seller caused by such Seller's acts
or omissions occurring after the Effective Time; and
(xiv) any Liability of any Seller relating to the Bank Operating
Loans and the Bank Term Loans.
2.5 PRORATIONS OF CERTAIN TAXES
Any general personal property Tax assessed against or pertaining to the
Assets for the Tax period that includes the Closing Date shall be prorated
between Buyer and Sellers as of the Closing Date in accordance with this Section
2.5. To determine Sellers' liability for any personal property Taxes for the
period ending as of the Closing Date (the "Pre-Closing Property Taxes"), the
total amount of such Taxes allocable to Sellers shall be the product of (i) such
Tax for the entirety of the Tax period including the Closing Date, multiplied by
(ii) a fraction, the numerator of which is the number of days in such Tax period
prior to the Closing Date, and the denominator of which is the total number of
days in the Tax period, and the balance of such Taxes shall be allocable to
Buyer. For purposes of the Target Balance Sheets, an estimate of the Pre-Closing
Property Taxes shall be based on the immediately preceding Tax period
assessment. When the actual amount of personal property Taxes estimated under
this Section 2.5 is known, Buyer shall promptly advise Sellers of the
proportionate share of actual personal property Taxes which constitute
Pre-Closing Property Taxes and furnish Sellers with reasonably supporting
documents evidencing the actual amount of such Taxes. If the estimate of
Pre-Closing Property Taxes made pursuant to this Section 2.5 was less than the
actual Pre-Closing Property Taxes, Sellers shall pay in cash to Buyer such
deficiency within thirty (30) days of receipt of such notice and reasonably
supporting documents, and if such estimate was more than the actual Pre-Closing
Property Taxes, Buyer shall, at the time such notice is given (which shall be no
later than thirty (30) days from Buyer's receipt of documentation evidencing the
actual amount of personal property Taxes for the Tax period including the
Closing Date), refund such excess in cash to Sellers. Any disputes related to
the allocation of personal property Taxes under this Section 2.5 shall be
resolved by the Independent Accountants (as such term is defined in Section
2.12(c)), in accordance with the procedure prescribed for disputes relating to
the calculation of the Closing Date Working Capital Amount under Section 2.12.
2.6 SALES AND TRANSFER TAXES
All sales and use, motor vehicle sales and use, transfer and documentary
Taxes, if any, payable in connection with the sale, conveyances, assignments,
transfers and deliveries to be made to Buyer hereunder shall be borne by Buyer.
Buyer shall promptly pay any such Taxes directly to the Governmental Body
assessing them and Sellers shall, to the extent necessary, join in the execution
of any necessary Tax Returns. Sellers shall provide sales and use, bulk sales,
clearance or other appropriate certificates for each jurisdiction necessary in
order to avoid the imposition of successor liability on Buyer. Sellers and Buyer
shall execute and cooperate in the filing of any Tax Return or other statement
required by the applicable taxing authority to avoid the imposition of successor
liability on Buyer. In the event that either Buyer or any Seller is audited in
connection
19
with such Taxes, the party being audited will notify the other parties of such
audit and will not object to the other parties' appearance in the audit.
Buyer and Canadian Seller will use their commercially reasonable efforts in
good faith to minimize (or eliminate) any taxes payable under the Excise Tax Act
(Canada) in respect of the Closing by, among other things, making such elections
and taking such steps as may be provided for under that Act (including, for
greater certainty, making a joint election in a timely manner under Section 167
of that Act) as may reasonably be requested by Buyer in connection with the
Closing. Except to the extent reduced by Xxxxxxx 000 xx xxx Xxxxxx Xxx Xxx
(Xxxxxx), Buyer shall pay all Goods and Services Taxes due on the sale of the
Assets at Closing. Seller shall remit to the Canadian Revenue Agency all such
Taxes paid.
Buyer and Canadian Seller agree to elect jointly in the prescribed form
under Section 22 of the Income Tax Act (Canada) as to the sale of the Accounts
Receivable and to designate in such election an amount equal to the portion of
the Purchase Price allocated to the Accounts Receivable pursuant to Section 2.7.
2.7 PURCHASE PRICE ALLOCATION
(a) Sellers and Buyer agree that the Purchase Price, including the
assumption of the Assumed Liabilities, will be allocated to the Assets of the
Canadian Seller and to the Assets of the US Seller in accordance with Exhibit G
(the "Allocation Schedule"), subject only to the Closing Date Working Capital
Adjustment Amount and the Post-Closing Working Capital Adjustment Amount as
provided for in Sections 2.11 and 2.12(d), respectively.
(b) Sellers and Buyer agree to further allocate the allocations of the
Purchase Price made in the Allocation Schedule to various sub-categories of
assets of the Sellers within each Seller asset category listed in the Allocation
Schedule in accordance with the fair market value thereof at the Closing Date.
For certainty, however, there will be no change in the allocations of Purchase
Price amongst asset categories as listed in the Allocation Schedule. Buyer
shall, within thirty (30) days after the Post-Closing Working Capital Adjustment
Amount has been accepted by the Sellers in accordance with Section 2.12(d),
prepare and deliver to Sellers for their review a Post-Closing Allocation
schedule allocating to Seller asset sub-categories the allocations of Purchase
Price made in the Allocation Schedule in accordance with this Section 2.7.
Sellers shall review the Post-Closing Allocation Schedule and provide any
objections to Buyer within thirty (30) days after the receipt thereof. In the
event Sellers do not object in writing to the Post-Closing Allocation Schedule
within thirty (30) days after their receipt of the Post-Closing Allocation
Schedule, then the allocation therein shall be the final allocation (the "Final
Allocation") and shall be binding and conclusive on Buyer and Sellers. To the
extent that Sellers do not approve of the Post-Closing Allocation Schedule, then
(i) Sellers shall raise any objections to the Post-Closing Allocation Schedule
in writing and in reasonable detail within thirty (30) days of their receipt
thereof and (ii) Buyer and Sellers will negotiate in good faith to resolve such
objections. If Buyer and Sellers are unable to agree on the allocation within
thirty (30) days after Sellers raise such objections or such longer period as
may be mutually agreed to by the parties, then the remaining disputed items in
the Post-Closing Allocation Schedule shall be submitted for resolution to the
Independent Accountants. The fees and expenses of the Independent Accountants
shall be borne equally by Sellers and Buyer. The Independent Accounts shall
determine only those matters
20
in dispute based solely on presentations of Buyer and Sellers and not by
independent review. Promptly, but not later than thirty (30) days after its
acceptance of appointment hereunder, the Independent Accountants shall render a
report as to the disputed matters. The Final Allocation shall be based on the
determinations made in the Independent Accountants' report and, to the extent
not inconsistent with such report, the Post-Closing Allocation Schedule, as
amended by any differing resolution of disputed items by Buyer and Sellers.
(c) The Closing Date Working Capital Adjustment Amount and
Post-Closing Working Capital Adjustment Amount shall be allocated to the Working
Capital of the Canadian Seller and to the Working Capital of the US Seller pro
rata to the Closing Date Working Capital Amount of each Seller stated in the
Closing Balance Sheets.
(d) Sellers and Buyer agree (1) to report the U.S. federal, Canadian
federal, state, provincial, and local income and other Tax consequences of the
Contemplated Transactions in a manner consistent with the Allocation Schedule
and to timely and properly prepare, execute, file and deliver all such
documents, forms, and other information as either Buyer or Sellers may
reasonably request and (2) not to take any position (whether in audits, Tax
Returns, refund claims, litigation or otherwise) that is inconsistent with the
Allocation Schedule unless required to do so by any applicable Legal
Requirement.
(e) Sellers and Buyer confirm that the allocations of the Purchase
Price in the Allocation Schedule are intended to be the fair market value of the
particular Assets immediately prior to the Closing Date and that they have made
reasonable efforts to estimate the fair market value of the particular Assets
immediately prior to the Closing Date. In the event that any tax authority
having jurisdiction should make a final determination which is not contested by
the parties or should a Court of final instance determine, at any time
hereafter, that the fair market value of any particular Asset as of the Closing
Date is less than or greater than the applicable allocation of Purchase Price
stipulated in the Allocation Schedule, the allocations of the Purchase Price
stipulated in the Allocation Schedule shall be automatically adjusted nunc pro
tunc to conform with such fair market value as finally determined and all
necessary or desirable adjustments shall be made. The allocations of the
Purchase Price as so adjusted will be deemed to be and always to have been the
allocations of the Purchase Price for the Assets.
2.8 CLOSING
Unless this Agreement shall have been terminated pursuant to Section 9.1,
the purchase and sale provided for in this Agreement (the "Closing") shall take
place as promptly as practical following the satisfaction or waiver (subject to
applicable Legal Requirement) of all conditions (other than those conditions
which by their nature are to be satisfied at Closing, but subject to the
fulfillment or waiver of those conditions) set forth in Articles 7 and 8 (and,
in any event not more than five (5) Business Days following the satisfaction or
waiver of all such conditions), at the offices of the Buyer's counsel at 000
Xxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx, unless Buyer and Sellers otherwise agree.
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2.9 CLOSING OBLIGATIONS
In addition to any other documents to be delivered under other provisions
of this Agreement, at the Closing:
(a) Sellers shall deliver to Buyer:
(i) a xxxx of sale, assignment and assumption agreement with
respect to the assignment of the Assets to Buyer and the assumption of the
Assumed Liabilities by Buyer in the form of Exhibit E (the "Xxxx of Sale,
Assignment and Assumption Agreement") executed by Sellers;
(ii) the Buyer Lease Agreements executed by Xxxxxxx and Xxxxx X.
Xxxxxx;
(iii) the Business Records of Sellers;
(iv) such other bills of sale, assignments, documents and other
instruments of transfer and conveyance as may reasonably be requested by
Buyer, each in form and substance reasonably satisfactory to Buyer and its
legal counsel and executed by the applicable Seller;
(v) the Non-Competition Agreements executed by Xxxxx X. Xxxxxx
and Xxxx X. Xxxxxx;
(vi) the Holdback Reserve Escrow Agreement executed by Sellers;
(vii) the certificate required by Section 7.1;
(viii) a certificate of the Secretary of each Seller certifying,
as complete and accurate as of the Closing, attached copies of the articles
of incorporation or other governing documents of each Seller as in effect
on the date thereof, certifying and attaching all requisite resolutions or
actions of such Seller's board of directors (or other governing body) and
shareholders approving the execution and delivery of this Agreement and
each other document relating to the Contemplated Transactions and the
consummation of the Contemplated Transactions and certifying to the
incumbency and signatures of the officers of such Seller executing this
Agreement and any other document relating to the Contemplated Transactions;
and
(ix) the bulk sales, clearance or other applicable certificates
referred to in Section 2.6, each in form and substance reasonably
satisfactory to Buyer and its legal counsel.
(b) Buyer shall deliver to Sellers:
(i) the cash portion of the Purchase Price (as adjusted in
accordance with Section 2.11) by wire transfer of immediately available
funds to one or more
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accounts specified by Sellers in writing delivered to Buyer at least three
(3) Business Days prior to the Closing Date;
(ii) the Xxxx of Sale, Assignment and Assumption Agreement
executed by Buyer;
(iii) the Buyer Lease Agreements executed by Buyer;
(iv) the Non-Competition Agreements executed by Buyer;
(v) the Holdback Reserve Escrow Agreement executed by Buyer;
(vi) the certificate required by Section 8.1; and
(vii) a certificate of the Secretary of Buyer certifying, as
complete and accurate as of the Closing, attached copies of the governing
documents of Buyer as in effect on the date thereof and certifying and
attaching all requisite resolutions or actions of Buyer's board of
directors approving the execution and delivery of this Agreement and each
other document relating to the Contemplated Transactions and the
consummation of the Contemplated Transactions and certifying to the
incumbency and signatures of the officers of Buyer executing this Agreement
and any other document relating to the Contemplated Transactions.
2.10 EFFECTIVE DATE BALANCE SHEETS
Sellers shall prepare "Effective Date Balance Sheets" as of the Effective
Date on the same basis and applying the same accounting principles, policies and
practices that were used by Sellers in preparing the Latest Balance Sheets.
Sellers shall then determine the Working Capital reflected on the Effective Date
Balance Sheets (the "Effective Date Working Capital Amount"). Sellers shall
deliver the Effective Date Balance Sheets and their determination of the
Effective Date Working Capital Amount to Buyer not less than three Business Days
prior to the Closing Date.
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2.11 CLOSING DATE WORKING CAPITAL ADJUSTMENT AMOUNT
The "Closing Date Working Capital Adjustment Amount" will be based on the
following: (A) if the Effective Date Working Capital Amount exceeds the Agreed
Closing Date Working Capital, the sum of (x) 50% of the excess of the Effective
Date Working Capital Amount over the Agreed Closing Date Working Capital Amount
and (y) the amount of any Effective Date Non-Assumed Working Capital Liabilities
less the amount of the Effective Date Excluded Working Capital Assets; or (B) if
the Effective Date Working Capital Amount is less than the Agreed Closing Date
Working Capital, the sum of (x) 100% of the excess of the Agreed Closing Date
Working Capital Amount over the Effective Date Working Capital Amount and (y)
the amount of any Effective Date Non-Assumed Working Capital Liabilities less
the amount of the Effective Date Excluded Working Capital Assets.
2.12 POST-CLOSING ADJUSTMENT PROCEDURE
(a) Buyer shall prepare Closing Balance Sheets showing the Assets and
the Assumed Liabilities as such Assets and Assumed Liabilities would be shown in
accordance with U.S. GAAP or Canadian GAAP (as applicable) (the "Closing Balance
Sheets") as of the Effective Time on the same basis and applying the same
accounting principles, policies and practices that were used by Sellers in
preparing the Latest Balance Sheets. Buyer shall then determine the Working
Capital reflected on the Closing Balance Sheets (the "Closing Date Working
Capital Amount"). Buyer shall deliver the Closing Balance Sheets and its
determination of the Closing Date Working Capital Amount to Sellers within sixty
(60) days following the Closing Date. Sellers and their independent auditors and
other Representatives shall have the right to review and verify the Closing
Balance Sheets and determination of the Closing Date Working Capital Amount when
received and Buyer shall provide Sellers with access to all related working
papers and relevant accounting records.
(b) If, within thirty (30) days following delivery of the Closing
Balance Sheets and the Closing Date Working Capital Amount calculation, Sellers
have not given Buyer written notice of their objection as to the Closing Date
Working Capital Amount calculation (which notice shall state the basis of
Sellers' objection), then the Closing Date Working Capital Amount calculated by
Buyer shall be binding and conclusive on the parties.
(c) If Sellers duly give Buyer such notice of objection, and if
Sellers and Buyer fail to resolve the issues outstanding with respect to the
Closing Balance Sheets and the calculation of the Closing Date Working Capital
Amount within thirty (30) days of Buyer's receipt of Sellers' objection notice,
Sellers and Buyer shall submit the issues remaining in dispute to an independent
accounting firm mutually agreed to by Buyer and Sellers (the "Independent
Accountants"), for resolution applying the principles, policies and practices
referred to in Section 2.12(a). If issues are submitted to the Independent
Accountants for resolution, (i) Sellers and Buyer shall furnish or cause to be
furnished to the Independent Accountants such work papers and other documents
and information relating to the disputed issues as the Independent Accountants
may request and are available to that party or its agents and shall be afforded
the opportunity to present to the Independent Accountants any material relating
to the disputed issues and to discuss the issues with the Independent
Accountants; (ii) the determination by the Independent Accountants, as set forth
in a notice to be delivered to both Sellers and Buyer within forty-five (45)
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days of the submission to the Independent Accountants of the issues remaining in
dispute, shall be final, binding and conclusive on the parties and shall be used
in the calculation of the Closing Date Working Capital Amount; and (iii) Sellers
and Buyer will each bear fifty percent (50%) of the fees and costs of the
Independent Accountants for such determination.
(d) The "Post-Closing Working Capital Adjustment Amount" will be based
on the following: (A) if the Closing Date Working Capital Amount exceeds the
Agreed Closing Date Working Capital, the sum of (x) 50% of the excess of the
Closing Date Working Capital Amount over the Agreed Closing Date Working Capital
Amount and (y) the amount of any Closing Date Non-Assumed Working Capital
Liabilities less the amount of the Closing Date Excluded Working Capital Assets;
or (B) if the Closing Date Working Capital Amount is less than the Agreed
Closing Date Working Capital, the sum of (x) 100% of the excess of the Agreed
Closing Date Working Capital Amount over the Closing Date Working Capital Amount
and (y) the amount of any Closing Date Non-Assumed Working Capital Liabilities
less the amount of the Closing Date Excluded Working Capital Assets.
3. REPRESENTATIONS AND WARRANTIES OF THE PRINCIPAL SHAREHOLDERS AND OTHER
SELLERS
The Principal Shareholders and the Sellers, jointly and severally,
represent and warrant to Buyer as of the date hereof and as of the Closing Date,
as follows:
3.1 ORGANIZATION AND GOOD STANDING
Each Seller is duly organized, validly existing and in good standing under
the laws of its jurisdiction of organization, and each Seller has full power and
authority to own, operate and lease their respective properties and assets and
to carry on their respective businesses in the places and in the manner
currently conducted. Each Seller is duly qualified to do business as a foreign
entity and is in good standing under the laws of each state or other
jurisdiction in which either the ownership or use of the properties owned or
used by it, or the nature of the activities conducted by it, requires such
qualification, except where the failure to do so would not have a Material
Adverse Effect on such Seller or either Business.
3.2 ENFORCEABILITY; AUTHORITY; NO CONFLICT; NO CONSENTS
(a) Each Seller has all requisite power and authority to enter into
this Agreement and the documents to be delivered by such Seller at the Closing
and to perform its obligations hereunder and thereunder, including the
Contemplated Transactions. This Agreement has been duly executed and delivered
by each Seller and constitutes a legal, valid and binding obligation of each
Seller, enforceable against each Seller in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws from time to time in effect that
affect creditors' rights generally and by legal and equitable limitations on the
availability of specific remedies. This Agreement and the Contemplated
Transactions have been duly authorized by all necessary action by each Seller's
board of directors and shareholders. No further action is necessary on the part
of Sellers to execute and deliver this Agreement or to consummate the
Contemplated Transactions.
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(b) Except as set forth in Section 3.2(b) of the Seller Disclosure
Schedules, neither the execution and delivery of this Agreement nor the
consummation or performance of any of the Contemplated Transactions by Sellers
will, directly or indirectly (with or without notice or lapse of time):
(i) Conflict with or violate the articles of incorporation or
other governing documents of any Seller;
(ii) Conflict with, result in a breach, violation or termination
of any provision of, constitute a default under or give rise to any right
of termination, cancellation or acceleration, or loss of any right or
benefit or both, under any Seller Contract;
(iii) Result in an acceleration or increase of any Indebtedness
with respect to either Business or the Assets;
(iv) Result in the imposition or creation of any Encumbrance
(other than a Permitted Encumbrance) upon or with respect to any of the
Assets; or
(v) Contravene, conflict with or result in a violation or breach
of any Governmental Authorization, Legal Requirement or Order applicable to
Sellers, either Business or any of the Assets or to which Sellers may be
subject.
(c) Except as set forth in Section 3.2(c) of the Seller Disclosure
Schedules, no Seller is required to give any notice to or obtain any Consent or
Governmental Authorization from any Person in connection with the execution and
delivery of this Agreement or the consummation or performance of any of the
Contemplated Transactions.
3.3 FINANCIAL STATEMENTS
(a) Sellers have delivered to Buyer (i) the Canadian Seller Audited
Financial Statements, (ii) the US Seller Audited Financial Statements, and (iii)
unaudited balance sheets of Canadian Seller and US Seller as of December 31,
2006 and related unaudited statements of income of Canadian Seller and US Seller
for the period then ended (the "Interim Unaudited Financial Statements", and
together with the Canadian Seller Audited Financial Statements and the US Seller
Audited Financial Statements, collectively, the "Financial Statements"). The
Financial Statements fairly present in all material respects the financial
condition and results of operations of either Business as of and for the periods
indicated, in accordance with Canadian GAAP or U.S. GAAP (as applicable), except
as may be indicated in the notes thereto and except that the Interim Unaudited
Financial Statements do not include normal year-end adjustments or accruals or
notes thereto. The Financial Statements have been prepared from and are in
accordance with the accounting Records of Sellers.
(b) All contingencies, including but not limited to contingencies
related to or arising out of the performance of the Xxxxxx Contract to the
extent and in respect of the Specified Xxxxxx Rigs, are properly and
sufficiently reserved for in accordance with U.S. GAAP and Canadian GAAP (as
applicable).
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3.4 BOOKS AND RECORDS
The Business Records of Sellers, all of which have been made available to
Buyer, are complete and correct in all material respects and represent actual,
bona fide transactions and have been maintained in accordance with sound
business practices.
3.5 CONDITION AND SUFFICIENCY OF ASSETS
(a) Section 3.5(a) of the Seller Disclosure Schedules lists all Assets
consisting of machinery, equipment, vehicles, furniture or other Tangible
Personal Property (including leasehold improvements) owned by any Seller having
an original cost in excess of $10,000 and the location thereof as well as all
locations where any Assets (including any Inventory) are located, regardless of
their original cost.
(b) Section 3.5(b) of the Seller Disclosure Schedules lists all Assets
consisting of property and assets (other than real property) used in either
Business that are leased by any Seller and that involve payments by such Seller
in excess of $2,500 per month.
(c) Except as specifically enumerated in Section 3.5(c) of the Seller
Disclosure Schedules, the Assets constitute all of the assets, tangible and
intangible, of any nature whatsoever, necessary to operate either Business
immediately after the Closing in substantially the same manner in which it is
presently operated by Sellers. Other than Xxxxxxx with respect to the Xxxxxxx
Real Property, no Affiliate of any Seller (including without limitation Crown
Manufacturing, Inc.) owns or leases any assets, tangible or intangible, of any
nature whatsoever, necessary to operate either Business in substantially the
same manner in which it is presently operated by Sellers.
(d) All equipment, vehicles, furniture and other Tangible Personal
Property owned or leased by Sellers are in good operating condition and repair
(subject to normal wear and tear) and adequate for the operation of either
Business, and none of such assets are in need of maintenance or repairs except
for ordinary, routine maintenance and repairs consistent with past practice.
3.6 DESCRIPTION OF REAL PROPERTY
Section 3.6 of the Seller Disclosure Schedules sets forth a complete list
of all real property and interests in real property leased by any Seller and
that are used in either Business (including any Xxxxxxx Real Property)
(individually, a "Real Property Lease"). Such Real Property Leases constitute
all interests in real property currently used or currently held for use in
connection with either Business. Sellers have delivered or otherwise made
available to Buyer true, correct and complete copies of (i) all deeds, title
reports and surveys for the Xxxxxxx Real Property and (ii) all Real Property
Leases, together with all amendments, modifications or supplements, if any,
thereto. None of the Sellers owns any real property or interests in real
property that are used in either Business.
3.7 TITLE TO ASSETS; ENCUMBRANCES
(a) Sellers own good and transferable title to all of the Tangible
Personal Property free and clear of any Encumbrances other than those described
in Section 3.7(a) of the
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Seller Disclosure Schedules ("Non-Real Estate Encumbrances"). At Closing, all
such Tangible Personal Property shall be free and clear of all Non-Real Estate
Encumbrances other than as stated in Section 3.7(a) of the Seller Disclosure
Schedules and other than Encumbrances or other rights of Governmental Bodies or
other Persons in respect of property or assets delivered by any Seller for
repair, maintenance, or other improvements (none of which, individually or in
the aggregate, materially and adversely affect the operation of either Business
as currently conducted) ("Permitted Encumbrances"). Notwithstanding anything
else herein contained, Buyer acknowledges that certain overhead, jib and free
standing cranes located on the real property subject to the Buyer Lease
Agreements belong to Xxxxxxx and do not form part of the Tangible Personal
Property or other Assets being transferred to Buyer hereunder, it being
understood that such assets are included in and leased to Buyer pursuant to the
Buyer Lease Agreements and are subject to Buyer's purchase option under the
Buyer Lease Agreements.
(b) Each Seller has a valid and subsisting leasehold interest in the
real estate in the Real Property Leases described in Section 3.6 of the Seller
Disclosure Schedules. Except as set forth in Section 3.7(b) of the Seller
Disclosure Schedules, no Seller is in default of any obligations to be performed
by such Seller under the Real Property Leases.
3.8 ACCOUNTS RECEIVABLE
All Accounts Receivable that are reflected on the Latest Balance Sheets or
that will be reflected on the Closing Balance Sheets represent or will represent
valid obligations arising from sales actually made or services actually
performed by Sellers in the ordinary course of either Business consistent with
past practices, and Section 3.8 of the Seller Disclosure Schedules contains a
complete and accurate list thereof as of January 31, 2007, which list sets forth
the aging of each such Account Receivable. There is no contest, claim, defense
or right of setoff, other than those in the ordinary course of either Business
consistent with past practices, under any Seller Contract with any account
debtor of an Account Receivable relating to the amount or validity of such
Account Receivable. All Accounts Receivable relate solely to the sale of goods
or services to customers of Sellers, none of which, except as set forth in
Section 3.8 of the Seller Disclosure Schedules, are Related Persons of any
Seller.
3.9 INVENTORIES
Except as set forth in Section 3.9 of the Seller Disclosure Schedules, all
items included in the Inventories consist of a quality and quantity consistent
in all material respects with past practices, except for obsolete items, slow
moving items and items of below-standard quality, all of which have been written
off or written down to net realizable value in the Latest Balance Sheets
consistent with past practice. Inventories on hand that were purchased after the
date of the Latest Balance Sheets were purchased in the ordinary course of
either Business consistent with past practices at a cost generally not exceeding
market prices prevailing at the time of purchase.
3.10 NO UNDISCLOSED LIABILITIES; ABSENCE OF CERTAIN CHANGES
(a) Except as set forth in Section 3.10(a) of the Seller Disclosure
Schedules, no Seller has any Liability related to either Business or affecting
the Assets except to the extent of the Liabilities disclosed in the Seller
Disclosure Schedules, Liabilities reflected,
28
reserved against or otherwise described in the Latest Balance Sheets and current
liabilities incurred in the ordinary course of either Business consistent with
past practices, in each case since the date of the applicable Latest Balance
Sheet.
(b) Except as set forth Section 3.10(b) of the Seller Disclosure
Schedules, since the dates of the applicable Latest Balance Sheet, there has not
been any event, occurrence, development, circumstances or state of facts which
has had or which could reasonably be expected to have a Material Adverse Effect
on Canadian Seller or US Seller. Since the dates of the applicable Latest
Balance Sheet, there has not occurred any damage, destruction or casualty loss
(whether or not covered by insurance) with respect to any of the Assets.
3.11 TAXES
(a) Each of the Sellers has filed or will file when due all Tax
Returns required to be filed with respect to each Business or the Assets. All
such Tax Returns were, or will be, correct and complete in all material
respects. All Taxes owed by each of the Sellers (whether or not shown on any Tax
Return) with respect to each Business and the Assets have been, or will be when
due, fully paid.
(b) Each of the Sellers has withheld and paid all Taxes required to
have been withheld and paid in connection with amounts paid or owing to any
Employee, independent contractor, creditor or other third party, and all IRS
Form W-2s and Form 1099s and any analogous Tax Returns under state, local or
non-US law required with respect thereto have been properly completed and timely
filed.
(c) There is no action, dispute, proceeding, audit, claim, assessment
or reassessment pending or, to the Knowledge of any Seller, proposed in respect
of Taxes of any Seller, either Business or the Assets or in respect of any Tax
Return of any Seller, and Sellers know of no valid basis for any such action,
dispute, proceeding, audit, claim, assessment or reassessment.
(d) No Seller has waived any statute of limitations in respect of
Taxes or agreed to any extension of time with respect to a Tax assessment or
deficiency.
(e) There are no Encumbrances on any of the Assets that arose in
connection with any failure (or alleged failure) to pay any Tax. No deficiency
or adjustment in respect of any Tax that might result in an Encumbrance on any
of the Assets remains unpaid and no Proceeding is pending or, to any of the
Sellers' Knowledge, threatened with respect to any Taxes whose assessment might
result in an Encumbrance on any of the Assets.
(f) There is no Tax sharing agreement, Tax allocation agreement, tax
indemnity obligation or similar written or unwritten agreement, arrangement,
understanding or practice with respect to Taxes (including any advance pricing
agreement, closing agreement or other arrangement relating to Taxes) that will
require any payment by any Seller as a result of the sale of either Business.
(g) The Canadian Seller is a registrant for the purposes of the Tax
imposed under Part IX of the Excise Tax Act (Canada).
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3.12 LABOR MATTERS; COMPLIANCE
(a) Except as set forth in Section 3.12(a) of the Seller Disclosure
Schedules:
(i) no Seller is a party to or bound by any collective bargaining
agreement with regard to the Employees or any other Contract with any labor
union or other employee representative of a group of employees relating to
wages, hours or other conditions of employment;
(ii) each Seller and its Related Persons are in substantial
compliance with all Legal Requirements applicable to the Employees with
regard to employment and employment practices, terms and conditions of
employment, wages, pay equity and occupational safety and health; and are
not engaged in any unfair labor or unfair employment practices;
(iii) there is no unfair labor practice charge or complaint
against any Seller or any of its Related Persons involving or related to
Employees pending (with service of process having been made, or written
notice of investigation or inquiry having been served, on such Seller or
any of its Related Persons), or to Sellers' Knowledge, threatened before
the National Labor Relations Board, Alberta Labour Relations Board or any
analogous state, provincial, local or foreign agency or any court and no
charge, complaint or grievance is pending or, to Sellers' Knowledge,
threatened to be filed;
(iv) for the past five years, no Seller has experienced any labor
strike or other material labor dispute, slowdown, stoppage or lockout;
(v) there is no labor strike or other material dispute, slowdown,
stoppage or lock-out pending, or to Sellers' Knowledge, threatened against
any Seller involving the Employees; and
(vi) no union is currently certified with respect to Employees of
any Seller and no certification or decertification petition has been filed
(with service of process having been made on any Seller or any of its
Related Persons), or to Sellers' Knowledge, threatened, that relates to
Employees and no union authorization campaign has been conducted, in each
case, within the past 12 months.
(b) Sellers have delivered to Buyer a list of all Employees, their
age, years of service, the rate of all compensation payable to each such
employee in any and all capacities, including any compensation that will be
payable to each such employee in any and all capacities other than the then
current accrual of regular payroll compensation, including any Transaction
Bonuses. Any of the Employees can be dismissed immediately for any reason or no
reason without notice and without further liability, subject to applicable laws,
rules and regulations relating to employment discrimination and, in Canada,
other than such as results from Legal Requirements for an Employee without an
agreement as to notice or severance. To Sellers' Knowledge, none of the
Employees intend to terminate their employment relationship with either
Business.
30
(c) There are no outstanding assessments, penalties, fines, liens,
charges, surcharges, or other amounts due or owing pursuant to any workplace
safety and insurance legislation in respect of either Business and Sellers have
not been reassessed in any material respect under such legislation during the
past three (3) years and, to the Knowledge of Sellers, no audit of either
Business is currently being performed pursuant to any applicable workplace
safety and insurance legislation. There are no claims or, to Sellers' Knowledge,
potential claims which may materially adversely affect Sellers' accident cost
experience in respect of either Business.
(d) Sellers have provided to Buyer all orders and inspection reports
under applicable Occupational Health and Safety legislation ("OHSA") relating to
either Business together with the minutes of Sellers' joint health and safety
committee meetings for the past three (3) years. There are no charges pending
under OHSA in respect of either Business. Sellers have complied in all material
respects with any orders issued under OHSA in respect of either Business and
there are no appeals of any orders under OHSA currently outstanding.
3.13 EMPLOYEE BENEFITS
(a) Section 3.13(a) of the Seller Disclosure Schedules contains a list
of all Seller Benefit Plans. Sellers have made available for review by Buyer
copies of all Seller Benefit Plans (including all related trusts and insurance
contracts or other funding vehicles).
(b) Each Seller Benefit Plan has been maintained and operated in all
material respects in accordance with its terms and applicable Legal
Requirements, and no event or circumstance has occurred or exists with respect
to any Seller Benefit Plan that could result in Liability to Buyer or any of its
Affiliates.
(c) None of the Seller Benefit Plans is a pension plan within the
meaning of Section 3(2) of ERISA that is subject to the funding requirements of
Section 412 of the Code or Section 302 of ERISA or is subject to the provisions
of Title IV of ERISA.
(d) Subject to Legal Requirements, no provision of any Seller Benefit
Plan or of any agreement, and no act or omission of any Seller, in any way
limits, impairs, modifies or otherwise affects the right of Sellers or, after
the Effective Time, Buyer to unilaterally amend or terminate any Seller Benefit
Plan, and no commitments to improve or otherwise amend any Seller Benefit Plan
have been made.
3.14 COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL AUTHORIZATIONS
(a) Except as set forth in 3.14(a) of the Seller Disclosure Schedules:
(i) Sellers have complied in all material respects with all Legal
Requirements applicable to the conduct and operation of each Business and
the ownership or use of any of the Assets;
(ii) with regard to each Business and the Assets, no event has
occurred or circumstance exists that (with or without notice or lapse of
time) would be reasonably expected to constitute or result in a violation
by any Seller of, or a failure on the part of
31
any Seller to comply with, any Legal Requirement in any material respect
relating to either Business or the Assets; and
(iii) no Seller has received any notice from any Governmental
Body regarding any actual, alleged or potential violation of, or failure to
comply with, any Legal Requirement with respect to either Business or any
of the Assets.
(b) Section 3.14(b) of the Seller Disclosure Schedules contains a list
of each Governmental Authorization that is held by any Seller relating to or
used in the operation of either Business or the Assets. Each Governmental
Authorization listed in Section 3.14(b) of the Seller Disclosure Schedules is in
full force and effect. Except as set forth in Section 3.14(b) of the Seller
Disclosure Schedules:
(i) Each Seller is in compliance in all material respects with
each Governmental Authorization identified in Section 3.14(b) of the Seller
Disclosure Schedules;
(ii) no event has occurred or circumstance exists that will (with
or without notice or lapse of time) (A) constitute or result directly or
indirectly in a violation of or a failure to comply in any material respect
with any Governmental Authorization listed or required to be listed in
Section 3.14(b) of the Seller Disclosure Schedules or (B) result directly
or indirectly in the revocation, withdrawal, suspension, cancellation or
termination of, or any modification to, any Governmental Authorization
listed or required to be listed in Section 3.14(b) of the Seller Disclosure
Schedules;
(iii) no Seller has received any notice from any Governmental
Body regarding (A) any actual, alleged, possible or potential violation of
or failure to comply with any term or requirement of any Governmental
Authorization or (B) any actual, proposed, possible or potential
revocation, withdrawal, suspension, cancellation, termination of or
modification to any Governmental Authorization; and
(iv) all applications required to have been filed for the renewal
of the Governmental Authorizations listed in Section 3.14(b) of the Seller
Disclosure Schedules have been duly filed on a timely basis with the
appropriate Governmental Bodies, and all other filings required to have
been made with respect to such Governmental Authorizations have been duly
made on a timely basis with the appropriate Governmental Bodies.
(c) The Governmental Authorizations listed in Section 3.14(b) of the
Seller Disclosure Schedules collectively constitute all of the Governmental
Authorizations necessary to permit each Seller to lawfully conduct and operate
each Business in the manner in which it currently conducts and operates such
Business and to permit each Seller to own and use the Assets in the manner in
which it currently owns and uses such Assets.
3.15 LEGAL PROCEEDINGS; ORDERS
(a) Except as set forth in Section 3.15(a) of the Seller Disclosure
Schedules, there is no pending or, to Sellers' Knowledge, threatened Proceeding:
32
(i) by or against any Seller that relates to or would reasonably
be expected to affect either Business or the Assets in an adverse manner;
or
(ii) that challenges, or that may have the effect of preventing,
delaying, making illegal or otherwise interfering with, any of the
Contemplated Transactions.
Except as set forth in Section 3.15(a) of the Seller Disclosure Schedules,
to Sellers' Knowledge, no event has occurred or circumstance exists that is
reasonably likely to give rise to or serve as a basis for the commencement of
any such Proceeding. Sellers have made available to Buyer copies of all
pleadings, correspondence and other documents relating to each Proceeding listed
in Section 3.15(a) of the Seller Disclosure Schedules.
(b) Except as set forth in Section 3.15(b) of the Seller Disclosure
Schedules:
(i) there is no Order to which either Business or any of the
Assets is subject; and
(ii) to Sellers' Knowledge, no agent or employee of any Seller is
subject to any Order that prohibits such agent or employee from engaging in
or continuing any conduct, activity or practice relating to either
Business.
(c) Except as set forth in Section 3.15(c) of the Seller Disclosure
Schedules:
(i) each Seller is in compliance in all material respects with
each Order to which it or any of the Assets is or has been subject;
(ii) no event has occurred or circumstance exists that is
reasonably likely to constitute or result in (with or without notice or
lapse of time) a violation of or failure to comply in any material respect
with any Order to which any Seller or any of the Assets is subject; and
(iii) no Seller has received any notice from any Governmental
Body regarding any actual, alleged or potential violation of, or failure to
comply with, any term or requirement of any Order to which such Seller or
any of the Assets is or has been subject.
3.16 ABSENCE OF CERTAIN CHANGES AND EVENTS
Except as set forth in Section 3.16 of the Seller Disclosure Schedules or
as otherwise permitted by this Agreement, since the date of the Latest Balance
Sheets, each Seller has conducted each Business only in the ordinary course of
such Business consistent with past practices and there has not been any:
(a) payment (except in the ordinary course of such Business consistent
with past practices) or increase by any Seller of any bonuses, salaries or other
compensation to any Employee or entry into any employment, severance or similar
Seller Contract with any Employee;
33
(b) damage, destruction, theft or loss affecting the Assets, whether
or not covered by insurance;
(c) entry into, termination of or receipt of notice of termination of
(i) any license, distributorship, dealer, sales representative, joint venture,
credit or similar Seller Contract to which any Seller is a party, or (ii) any
Seller Contract described in Section 3.17(a), in each case other than in the
ordinary course of business;
(d) sale, lease or other disposition of any Asset or property of any
Seller (including the Intellectual Property Assets) or the creation of any
Encumbrance (other than a Permitted Encumbrance) on any Asset, in each case
other than in the ordinary course of business;
(e) cancellation or waiver of any claims or rights relating to either
Business or the Assets having an aggregate value in excess of $50,000;
(f) notification by any significant customer or supplier of either
Business of an intention to discontinue or materially change the terms of its
relationship with such Business;
(g) change in the accounting methods used by any Seller which relates
to either Business or the Assets;
(h) act or omission on the part of any Seller that if done or omitted
after the date hereof would result in a breach of Sellers' covenants set forth
in Section 6.2; or
(i) Contract entered into by any Seller to do any of the
foregoing.
3.17 CONTRACTS; NO DEFAULTS
(a) No Seller Contract that is in effect as of the date of this
Agreement or on the Closing Date and is described in clauses (i)-(xiv) of the
following sentence contains obligations that, if performed by Sellers, would
result in a Material Adverse Effect on the Canadian Seller or the US Seller. As
of the date of this Agreement, Section 3.17(a) of the Seller Disclosure
Schedules contains, and as of the Closing Date Section 3.17(a) of the Seller
Disclosure Schedules will contain, an accurate and complete (except for the
Nabors Contract, which is separately the subject of Section 3.17(d)) list, and
Sellers will have made available to Buyer accurate and complete copies, of:
(i) each Seller Contract that involves performance of services or
delivery of goods or materials by any Seller of an amount or value in
excess of $50,000 or has a remaining term of more than one (1) year;
(ii) each Seller Contract that involves performance of services
or delivery of goods or materials to any Seller of an amount or value in
excess of $25,000 or has a remaining term of more than one (1) year;
(iii) each Seller Contract that was not entered into in the
ordinary course of either Business consistent with past practices and that
(A) involves expenditures or
34
receipts of any Seller in excess of $25,000 or (B) has a remaining term of
more than one (1) year, and is not subject to termination without penalty;
(iv) each Seller Contract affecting the ownership of, leasing of,
title to, use of or any leasehold or other interest in any personal
property (except personal property leases and installment and conditional
sales agreements having a value per item or aggregate payments of less than
$25,000 and with a term of less than one year);
(v) each Seller Contract involving sales agency, sales
representation, distributorship or franchise arrangements;
(vi) each Seller Contract (however named) involving a sharing of
profits, losses, costs or liabilities by any Seller with any other Person;
(vii) each Seller Contract containing covenants that restrict any
Seller's business activity or limit the freedom of such Seller to engage in
any line of business or to compete with any Person;
(viii) each Seller Contract providing for payments to or by any
Person based on sales, purchases or profits, other than direct payments for
goods or services;
(ix) each power of attorney of any Seller relating to either
Business or the Assets that is currently effective and outstanding;
(x) each Seller Contract for capital expenditures in excess of
$25,000;
(xi) each Seller Contract not denominated in U.S. or Canadian
dollars;
(xii) each written warranty, guaranty and/or other similar
undertaking with respect to contractual performance extended by any Seller
with respect to either Business other than in the ordinary course of such
Business consistent with past practices;
(xiii) each Bid that involves the performance of services or
delivery of goods or materials by any Seller of an amount of value in
excess of $50,000; and
(xiv) each amendment, supplement and modification (whether oral
or written) in respect of any of the foregoing.
(b) Except as set forth in Section 3.17(b) of the Seller Disclosure
Schedules:
(i) each Seller Contract or Bid identified or required to be
identified in Section 3.17(a) of the Seller Disclosure Schedules or which
is to be assumed by Buyer under this Agreement is in full force and effect
and is valid and enforceable in accordance with its terms;
(ii) each Seller Contract or Bid identified or required to be
identified in Section 3.17(a) of the Seller Disclosure Schedules or which
is being assumed by Buyer
35
under this Agreement is assignable by the applicable Seller to Buyer
without the Consent of any other Person, except as disclosed in or pursuant
to Section 3.2(c); and
(iii) each Seller Contract or Bid identified or required to be
identified in Section 3.17(a) of the Seller Disclosure Schedules or which
is being assumed by Buyer under this Agreement is expected to produce a
positive profit margin for Sellers, unless otherwise indicated in Section
3.17(a) of the Seller Disclosure Schedules.
(c) Except as set forth in Section 3.17(c) of the Seller Disclosure
Schedules:
(i) each Seller is in compliance with all applicable terms and
requirements of each Seller Contract which is being assumed by Buyer;
(ii) no Seller has released any of its rights under a Seller
Contract which is being assumed by Buyer;
(iii) to Sellers' Knowledge, each other Person that has or had
any obligation or liability under any Seller Contract which is being
assumed by Buyer is in compliance with all applicable terms and
requirements of such Seller Contract;
(iv) to Sellers' Knowledge, no event has occurred or circumstance
exists that (with or without notice or lapse of time) would reasonably be
expected to contravene, conflict with or result in a Breach of, or give any
Seller or other Person the right to declare a default or exercise any
remedy under, or to accelerate the maturity or performance of, or payment
under, or to cancel, terminate or modify, any Seller Contract that is being
assigned to or assumed by Buyer;
(v) no event has occurred or circumstance exists under or by
virtue of any Seller Contract that (with or without notice or lapse of
time) would cause the creation of any Encumbrance (other than a Permitted
Encumbrance) affecting any of the Assets; and
(vi) there is no Seller Contract listed in Section 3.17(a) of the
Seller Disclosure Schedules to be assumed by Buyer on which Sellers are
behind schedule with respect to the timely delivery of any products or
services.
(d) Section 3.17(d) of the Seller Disclosure Schedules sets forth,
with respect to the Nabors Contract, a complete and accurate list of (i) all
agreements, documents and instruments comprising the Nabors Contract (including
without limitation all change orders issued or otherwise agreed to by Sellers),
(ii) all products and services of each Business to be delivered or performed by
Sellers under the Nabors Contract, (iii) the price for each of the 20 rigs
delivered or to be delivered under the Nabors Contract (other than the optional,
additional 40 rigs which are indicated in the "Purchase Order Detail" listed in
Section 3.17(d) of the Seller Disclosure Schedules) (the "Specified Nabors
Rigs"), (iv) the delivery date of each of the Specified Nabors Rigs delivered or
to be delivered under the Nabors Contract, (v) all payments received from Nabors
Corporate Services (or any Affiliate thereof) in respect of each of the
Specified Nabors Rigs delivered or to be delivered under the Nabors Contract
(including any customer deposits and
36
prepayments), and (vi) Sellers' actual or anticipated production costs with
respect to each of the Specified Nabors Rigs.
3.18 INSURANCE
(a) Section 3.18(a) of the Seller Disclosure Schedules sets forth a
list of all policies of fire, casualty, liability, burglary, fidelity, workers'
compensation and other forms of insurance held by each Seller that are related
to either Business and material details regarding each, including limits of
liability, deductibles and self insurance retentions.
(b) All premiums due and payable for the insurance listed in Section
3.18(a) of the Seller Disclosure Schedules have been duly paid, and such
policies or extensions or renewals thereof in such amounts will be outstanding
and duly in full force without interruption until the Closing Date.
(c) Section 3.18(c) of the Seller Disclosure Schedules describes, with
respect to either Business or the Assets, (i) any self-insurance arrangement by
or affecting any Seller, including any reserves established thereunder, and (ii)
all obligations of any Seller to provide insurance coverage to Third Parties
(for example, under Leases or service agreements) and identifies the policy
under which such coverage is provided.
(d) Section 3.18(d) of the Seller Disclosure Schedules sets forth as
of the date of this Agreement, by year, for the current policy year and each of
the two (2) preceding policy years with respect to either Business or the
Assets:
(i) a summary of the loss experience under each policy of
insurance;
(ii) a statement describing each claim under a policy of
insurance for an amount in excess of $10,000, which sets forth:
(A) the name of the claimant;
(B) a description of the policy by insurer, type of
insurance and period of coverage; and
(C) the amount and a brief description of the claim; and
(iii) a statement describing the loss experience for all claims
that were self-insured, including the number and aggregate cost of such
claims.
(e) Notwithstanding anything else herein contained, Buyer acknowledges
that the insurance policies listed in Section 3.18(a) of the Seller Disclosure
Schedules are not being transferred or assigned to Buyer and that it is Buyer's
sole responsibility to arrange for insurance for either Business and the Assets
after the Effective Time.
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3.19 ENVIRONMENTAL MATTERS
(a) Except as set forth in Section 3.19 of the Seller Disclosure
Schedules or except as would not have an Environmental Adverse Effect, each
Seller is in compliance with all applicable limitations, restrictions,
conditions, standards, prohibitions, requirements and obligations of
Environmental Laws.
(b) Except as set forth in Section 3.19 of the Seller Disclosure
Schedules or except as would not have an Environmental Adverse Effect, there are
no Environmental Liabilities pending or, to Sellers' Knowledge, threatened
against any Seller relating to the operation of either Business that pertain or
relate to (i) any obligations of any Seller under any applicable Environmental
Law, (ii) violations by any Seller of any Environmental Law, (iii) personal
injury or property damage claims relating to a Release of Hazardous Materials,
or (iv) response, removal, or remedial costs under CERCLA, RCRA or any similar
state or foreign laws, and Sellers have no Knowledge of any Environmental
Conditions on, at, or underlying the Xxxxxxx Real Property other than such
Environmental Conditions that do not require remediation under Environmental
Laws.
(c) Except as set forth in Section 3.19 of the Seller Disclosure
Schedules or except as would not have an Environmental Adverse Effect, all
environmental permits required under Environmental Laws in connection with the
ownership or operation of either Business by any Seller have been obtained and
are in full force and effect and no Seller has Knowledge of any basis for
revocation or suspension of any such permits.
3.20 GUARANTEES; LETTERS OF CREDIT
Section 3.20 of the Seller Disclosure Schedules sets forth all guarantees,
letters of credit or other similar performance assurances furnished by any
Seller for the benefit of customers or suppliers of either Business. Except as
set forth in Section 3.20 of the Seller Disclosure Schedules, no Seller is a
guarantor, indemnitor, surety or accommodation party or otherwise liable in
connection with either Business for any Indebtedness of any other Person.
3.21 PRODUCT WARRANTIES
Set forth in Section 3.21 of the Seller Disclosure Schedules are the
standard forms of product warranties and guarantees used by Sellers in
connection with either Business and copies of all other product warranties and
guarantees given or made in connection with either Business. No oral product
warranties or guarantees have been made containing terms less favorable to any
Seller than the terms of the forms of product warranties and guarantees set
forth in Section 3.21 of the Seller Disclosure Schedules. Except as specifically
described in Section 3.21 of the Seller Disclosure Schedules, since the date of
the applicable Latest Balance Sheet, no product warranty or similar claims have
been made against any Seller in connection with either Business. The aggregate
loss and expense (including out-of-pocket expenses) attributable to all product
warranty and similar claims now pending or hereafter asserted in connection with
the Businesses with respect to products manufactured on or prior to the
Effective Time will not exceed the amount of the warranty reserve set forth on
the Closing Balance Sheets. No person or party (including, but not limited to,
Governmental Bodies of any kind) has any valid claim, or valid basis for any
action
38
or proceeding, against any Seller under any Legal Requirements relating to
unfair competition, false advertising or other similar claims arising out of
product warranties, guarantees, specifications, manuals or brochures or other
advertising materials used by any Seller in connection with either Business.
3.22 PRODUCT LIABILITY CLAIMS
Except as described in Section 3.22 of the Seller Disclosure Schedules,
since the date of the applicable Latest Balance Sheet, no Seller has received
notice or information as to any claim or allegation of personal injury, death,
or property or economic damages, any claim for punitive or exemplary damages,
any claim for contribution or indemnification, or any claim for injunctive
relief in connection with any product manufactured, sold or distributed by, or
in connection with any service provided by, any Seller in connection with either
Business. Section 3.22 of the Seller Disclosure Schedules accurately and
completely describes all such claims since the date of the applicable Latest
Balance Sheet, together in each case with the date such claim was made, the
amount claimed, the disposition or status of such claim (including settlement or
judgment amount), and the amount of attorney's fees incurred in connection with
such claim. Sellers have had at all times and currently have in full force and
effect insurance of the type and amount adequate to cover all claims of the sort
described in this Section. The aggregate loss and expense (including
out-of-pocket expenses) attributable to all product liability and similar claims
now pending or hereafter asserted in connection with the Businesses with respect
to products manufactured, sold or distributed on or prior to the Effective Time
will not exceed the amount of the product liability reserve set forth on the
Closing Balance Sheets.
3.23 PRODUCT SAFETY AUTHORITIES
Sellers have not been required to file any notification or other report
with or provide written information or oral presentations to any Governmental
Body or product safety standards group concerning actual or potential defects or
hazards with respect to any product manufactured, sold or distributed by any
Seller in connection with either Business, and, to Sellers' Knowledge, there
exist no valid grounds for the recall of any such product.
3.24 INTELLECTUAL PROPERTY
(a) The Sellers are the sole legal owner of the entire right, title
and interest in and to the Intellectual Property used in the operation of the
business (excluding Intellectual Property of a Third Party that is licensed to
Sellers) free and clear of all Encumbrances, restrictions or claims. The
Intellectual Property owned by or licensed to each Seller and related to or used
in the operation of either Business comprise all of the Intellectual Property
that is necessary for the operation of the Businesses as currently conducted.
(b) Section 3.24(b) of the Seller Disclosure Schedules sets forth,
with respect to either Business, a complete list of all licenses (i) pursuant to
which the use by any Person of Intellectual Property is permitted by any Seller,
or (ii) pursuant to which the use by any Seller of the Intellectual Property of
a Third Party is permitted by any Person (other than commercial software)
(collectively, the "Intellectual Property Licenses"). The Intellectual Property
Licenses are in full force and effect.
39
(c) Except as set forth in Section 3.24(c) of the Seller Disclosure
Schedules, there are no claims of infringement, misappropriation or other
violation of the Intellectual Property rights of a Third Party that are pending
or, to Sellers' Knowledge, threatened, or that will occur as a result of the
continued production of products of either Business as presently conducted which
are currently in production as at the Effective Time.
(d) To Sellers' Knowledge, no Intellectual Property owned by any
Seller and no Intellectual Property that is subject to any Intellectual Property
License is being infringed by Third Parties. There is no claim or demand of any
Third Party, or any Proceeding which is pending (with service of process having
been served on any Seller) or, to Sellers' Knowledge, threatened, that (i)
challenges the ownership or other rights of any Seller in respect of any
Intellectual Property relating to either Business, or (ii) claims that any
default exists under any Intellectual Property License.
3.25 BROKERS OR FINDERS
No Seller has used any broker or finder in connection with the transactions
described in this Agreement other than Xxxxxxx Xxxxx Ltd., and neither Buyer nor
any of its Related Persons shall have any liability or otherwise suffer or incur
any loss or expense as a result of or in connection with any brokerage or
finder's fee or other commission of any Person retained by any Seller or any of
its Related Persons in connection with the Contemplated Transactions.
3.26 RELATED PARTY TRANSACTIONS
Except as set forth in Section 3.26 of the Seller Disclosure Schedules, no
Seller or any of its Related Persons, nor, to Sellers' Knowledge, any current
director, officer or employee of any Seller or any of its Related Persons (a)
has any direct or indirect interest (other than owning two percent (2%) or less
of the equity interests of a publicly traded entity without any control of
management) (i) in, or is a director, officer or employee of, any Person that is
a client, customer, supplier, lessor, lessee, debtor, creditor or competitor of
either Business, or (ii) in any material property, asset or right which is owned
or used by any Seller in the conduct of either Business, or (b) is a party to
any agreement or transaction with any Seller relating to either Business.
4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers as of the date hereof and as of
the Closing Date, as follows:
4.1 ORGANIZATION AND GOOD STANDING
Buyer is a limited liability company duly organized, validly existing and
in good standing under the laws of the State of Delaware, with full corporate
power and authority to own, operate and lease its properties and assets and to
carry on its business in the places and in the manner currently conducted.
40
4.2 ENFORCEABILITY; AUTHORITY; NO CONFLICT
(a) Buyer has all requisite power and authority to enter into this
Agreement and the documents to be delivered by Buyer at the Closing and to
perform its obligations hereunder and thereunder, including the Contemplated
Transactions. This Agreement has been duly executed and delivered by Buyer and
constitutes a legal, valid and binding obligation of Buyer, enforceable against
Buyer in accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
from time to time in effect that affect creditors' rights generally and by legal
and equitable limitations on the availability of specific remedies. This
Agreement and the Contemplated Transactions have been duly authorized by all
necessary action by Buyer's board of directors. No further action is necessary
on the part of Buyer to execute and deliver this Agreement or to consummate the
Contemplated Transactions.
(b) Except as set forth in Section 4.2(b) of the Buyer Disclosure
Schedules, neither the execution and delivery of this Agreement nor the
consummation or performance of any of the Contemplated Transactions will,
directly or indirectly (with or without notice or lapse of time):
(i) Conflict with or violate the governing documents of Buyer;
(ii) Conflict with, constitute a breach, violation or termination
of any provision of, or give rise to any right of termination, cancellation
or acceleration, or loss of any right or benefit or both, under any
material Contract to which Buyer is a party or to which Buyer is bound; or
(iii) To Buyer's Knowledge, contravene, conflict with or result
in a violation or breach of any Governmental Authorization, Legal
Requirement or Order applicable to Buyer or to which Buyer may be subject.
(c) Except as set forth in Section 4.2(c) of the Buyer Disclosure
Schedules, Buyer is not required to give any notice to or obtain any Consent or
Governmental Authorization from any Person in connection with the execution and
delivery of this Agreement or the consummation or performance of any of the
Contemplated Transactions.
4.3 CERTAIN PROCEEDINGS
There is no pending or, to Buyer's Knowledge, threatened Proceeding that
challenges, or that may have the effect of preventing, delaying, making illegal
or otherwise interfering with, any of the Contemplated Transactions. To Buyer's
Knowledge, no event has occurred or circumstance exists that is reasonably
likely to give rise to or serve as a basis for the commencement of any such
Proceeding.
4.4 BROKERS OR FINDERS
Buyer has not used any broker or finder in connection with the transactions
described in this Agreement, and neither Seller nor any of its Related Persons
shall have any liability or otherwise suffer or incur any loss or expense as a
result of or in connection with any brokerage or finder's fee
41
or other commission of any Person retained by Buyer or any of its Related
Persons in connection with the Contemplated Transactions.
5. COVENANTS OF BUYER AND SELLERS PRIOR TO CLOSING
5.1 REQUIRED APPROVALS
(a) Subject to the terms and conditions of this Agreement, the parties
hereto agree to use all reasonable efforts to take, or cause to be taken, all
action and to do, or cause to be done, all things necessary, proper or advisable
under Legal Requirements to consummate and make effective the Contemplated
Transactions, including cooperating fully with the other parties, including by
provision of information and making of all necessary filings in connection with,
among other things, the HSR Act. The parties hereto shall use all reasonable
efforts in connection with the filing with the Federal Trade Commission and the
Department of Justice of the notification and report form required under the HSR
Act for the Contemplated Transactions, and shall use reasonable efforts to
provide any supplemental information that may be reasonably requested in
connection with such filing (it being understood that the filing fee and other
out-of-pocket costs incurred in connection with such filing shall be borne by
Buyer). Based on the financial information that Sellers and Buyer have provided
to each other, including the Financial Statements and Sellers' understanding
that Buyer and its Affiliates do not have any assets or derive any revenues from
Canada, Buyer and Seller confirm their agreement that no filing or approval is
required under the Competition Act (Canada) in respect of the Contemplated
Transactions and that the only filing required under the Investment Canada Act
in respect of the Contemplated Transactions is by Buyer post-closing of
notification of its acquisition of the Businesses.
(b) Buyer and Sellers shall make as promptly as practicable following
the date of this Agreement the other notifications required in connection with
this Agreement and the Contemplated Transactions, and shall use commercially
reasonable efforts to obtain the Consents of all Third Parties required in
connection with the consummation of the Contemplated Transactions. Subject to
Legal Requirements, Buyer and Sellers shall coordinate and cooperate in
exchanging information and assistance in connection with obtaining Consents of
Third Parties and making all filings or notifications necessary to transfer any
Governmental Authorizations to Buyer, or in connection with any applications for
new Governmental Authorizations relating to or used in the operation of either
Business.
5.2 NOTIFICATION
Between the date of this Agreement and the Closing, Buyer shall give prompt
notice to Sellers, and Sellers shall give prompt notice to Buyer, of (i) the
occurrence, or non-occurrence, of any event the occurrence, or non-occurrence,
of which would be reasonably likely to cause (x) any representation or warranty
of such party contained in this Agreement to be, if qualified by materiality,
untrue or incorrect, or if not so qualified, untrue or incorrect in any material
respect (without in either such case giving effect to any supplement to the
Seller Disclosure Schedules not approved in writing by Buyer) or (y) any
covenant, condition or agreement of such party contained in this Agreement not
to be complied with or satisfied in any material respect; or (ii) the failure by
it to comply with or satisfy in any material respect any covenant, condition or
agreement to be complied with or satisfied by it under this Agreement; provided,
however, that the delivery of any
42
notice pursuant to this Section 5.2 shall not have any effect for the purpose of
determining the satisfaction of the conditions set forth in this Agreement or
otherwise limit or affect the remedies available hereunder to any party.
5.3 COMMERCIALLY REASONABLE EFFORTS
Buyer and Sellers shall use their commercially reasonable efforts to cause
the conditions in Articles 7 and 8 to be satisfied.
5.4 BULK SALES LAWS
Buyer and Sellers hereby waive compliance with the bulk-transfer provisions
of the Uniform Commercial Code (or any similar U.S. or Canadian law), but not
with any bulk sales or similar provision relating to Taxes ("Bulk Sales Laws"),
in connection with the Contemplated Transactions.
5.5 UPDATING; DELIVERY OF MONTHLY FINANCIALS
Sellers may from time to time notify Buyer of any changes or additions to
the Seller Disclosure Schedules and Buyer may from time to time notify Sellers
of any changes or additions to the Buyer Disclosure Schedules by the delivery of
amendments or supplements thereto, if any, as of a reasonably current date prior
to the Closing, but each party shall in any event at least once not earlier than
ten (10) Business Days or later than three (3) Business Days prior thereto so
notify the other party; provided, however, that such delivery shall not affect
any rights of a party under this Agreement, unless the updated disclosure would
cause a party to have the right of termination under Section 9.1(b) and such
party does not exercise such right of termination under Section 9.1(b) and the
Closing occurs, in which case any such amendment or supplement shall be deemed
to become a part of the Seller Disclosure Schedules or the Buyer Disclosure
Schedules, as the case may be, as of the date of this Agreement; and provided
further, that Sellers shall prepare and deliver to Buyer unaudited balance
sheets, and related statements of income of Canadian Seller and each US Seller
promptly after the 20th day in a month for the immediately preceding fiscal
month.
6. COVENANTS OF SELLERS PRIOR TO CLOSING
6.1 ACCESS AND INVESTIGATION
Between the date of this Agreement and the Closing Date, and upon
reasonable advance notice received from Buyer, each Seller shall (a) afford
Buyer and its Representatives (collectively, "Buyer Group") access, during
regular business hours, to Sellers' personnel, properties, Contracts,
Governmental Authorizations, books and Records and other documents and data
related to each Business and the Assets, such rights of access to be exercised
in a manner that does not unreasonably interfere with the operations of Sellers
and provided that Buyer shall not contact any of Sellers' personnel without
first receiving the approval of Sellers' Representative Party; (b) furnish Buyer
Group with copies of all such Contracts, Governmental Authorizations, books and
Records and other existing documents and data related to each Business and the
Assets as Buyer may reasonably request; (c) furnish Buyer Group with such
additional financial, operating and other relevant data and information
regarding each Business and the Assets as Buyer may reasonably request; and (d)
otherwise cooperate and assist, to the extent reasonably requested by
43
Buyer, with Buyer's investigation of the properties, assets and financial
condition related to each Business and the Assets. In addition, Buyer shall have
the right to have the Xxxxxxx Real Property and Tangible Personal Property
inspected by Buyer Group, at Buyer's sole cost and expense, for purposes of
determining the physical condition and legal characteristics of the Xxxxxxx Real
Property and Tangible Personal Property. Upon notice to Sellers, Buyer shall
have the right to conduct an environmental assessment of the Assets and of the
Xxxxxxx Real Property; provided that such environmental assessment shall not
unreasonably interfere with normal operation of the Assets. Buyer shall not,
however, be permitted to conduct any sampling, boring, drilling or other
invasive investigative activity with respect to the Assets or the Xxxxxxx Real
Property. Each Seller shall have the right to be present during any such
environmental assessment. Buyer shall maintain, and shall cause its officers,
employees, Representatives, consultants and advisors to maintain, all
information obtained by Buyer pursuant to any environmental assessment or other
due diligence activity as strictly confidential, unless disclosure of any facts
discovered through such environmental assessment is required under any
Environmental Laws. In the event that any necessary disclosures under applicable
Environmental Laws are required with respect to matters discovered by any
environmental assessment conducted by, for or on behalf of Buyer, Buyer agrees
that Sellers shall be the responsible parties for disclosing such matters to the
appropriate Governmental Bodies, unless Buyer is required by Legal Requirement
to make such disclosure, in which case Buyer shall so notify Sellers and allow
Sellers a reasonable time to prepare such disclosure.
6.2 OPERATION OF THE BUSINESSES
Between the date of this Agreement and the Closing, with respect to each
Business and the Assets, unless Buyer otherwise consents in writing, each Seller
shall:
(a) conduct each Business only in the ordinary course of business
consistent with past practices;
(b) without making any commitment on Buyer's behalf, use its
commercially reasonable efforts to, in all material respects, preserve intact
the current organization of each Business, keep available the services of its
employees and agents and maintain its relations and goodwill with suppliers,
customers, landlords, creditors, employees, agents and others having business
relationships with it;
(c) except for cause, make no material changes in management personnel
of Sellers;
(d) not hire any management personnel of either Business, make any
changes to any Seller Benefit Plan affecting the Employees, or increase the
wages, salaries or benefits of any Employee, other than in the ordinary course
of business;
(e) maintain the Assets in a state of repair and condition that
complies with Legal Requirements, is consistent with the requirements and normal
conduct of each Business and consistent with the recent normal and routine
maintenance schedule performed by Sellers;
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(f) use its commercially reasonable efforts to keep in full force and
effect, without amendment, all material rights relating to each Business;
(g) comply with all Legal Requirements and use its commercially
reasonable efforts to comply in all material respects with all contractual
obligations applicable to the operations of each Business;
(h) continue in full force and effect the insurance coverage under the
policies set forth in Section 3.18(a) of the Seller Disclosure Schedules or
substantially equivalent policies;
(i) not sell, lease or otherwise dispose of any material asset or
property;
(j) not incur, refinance, assume or guarantee any Indebtedness;
(k) not create or assume any Encumbrance on any Assets, other than a
Permitted Encumbrance;
(l) not amend or supplement any Seller Contract listed or required to
be listed in Section 3.17(a) of the Seller Disclosure Schedules;
(m) not enter into any Seller Contract or Bid described in Section
3.17(a) or relating to the Intellectual Property other than in the ordinary
course of business;
(n) not dispose of or permit to lapse any rights to the use of any
Intellectual Property or permit any Governmental Authorization to expire; and
(o) maintain all books and Records of Sellers relating to each
Business in the ordinary course of business consistent with past practices.
6.3 NEGATIVE COVENANT
Except as otherwise expressly permitted herein, between the date of this
Agreement and the Closing Date, each Seller shall not, without the prior written
Consent of Buyer, (a) take any affirmative action, or fail to take any
reasonable action within its control, as a result of which any of the changes or
events listed in Section 3.16 would be reasonably likely to occur; or (b) make
any modification to any Governmental Authorization.
7. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
Buyer's obligation to purchase the Assets and to take the other actions
required to be taken by Buyer at the Closing is subject to the satisfaction, at
or prior to the Closing, of each of the following conditions (any of which may
be waived by Buyer, in whole or in part):
7.1 ACCURACY OF REPRESENTATIONS; SELLERS' PERFORMANCE
The representations and warranties of each Seller set forth in this
Agreement will be, if qualified by materiality, true and correct in all
respects, and if not so qualified, shall be true and
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correct in all material respects (without giving effect to any supplement to the
Seller Disclosure Schedules not approved in writing by Buyer), as of the Closing
Date as though made on and as of the Closing Date (except to the extent such
representations and warranties speak as of an earlier date). Each of the
agreements and covenants of Sellers to be performed and complied with by Sellers
pursuant to this Agreement prior to or as of the Closing Date will have been
duly performed and complied with in all material respects. Each Seller shall
have delivered to Buyer a certificate signed by one of its duly authorized
officers, dated the Closing Date, certifying, as of such date, (i) that all
representations and warranties (individually and collectively) of Sellers in
Article 3 are, if qualified by materiality, true and correct in all respects,
and if not so qualified, true and correct in all material respects and (ii) that
Sellers have performed and complied in all material respects with all covenants
and agreements (individually and collectively) contained in this Agreement
required to be performed and complied with by them at or prior to the Closing
Date.
7.2 HSR ACT
The waiting period under the HSR Act shall have expired or been terminated.
7.3 CONSENTS
Each of the Consents identified in Exhibit D shall have been obtained and
shall be in full force and effect.
7.4 ADDITIONAL DOCUMENTS
Each Seller shall have caused the documents and instruments required by
Section 2.9(a) and the following documents to be delivered (or tendered subject
only to Closing) to Buyer:
(a) Releases of all Encumbrances on the Assets, other than as stated
in Section 3.7(a) of the Seller Disclosure Schedules and Permitted Encumbrances;
(b) A certificate of non foreign status in the form prescribed by
United States Treasury Regulation Section 1.1445-2(b)(2)(iv) with respect to US
Seller; and
(c) Such other documents as Buyer may reasonably request for the
purpose of:
(i) evidencing the accuracy of any of Sellers' representations
and warranties;
(ii) evidencing the performance by any Seller of, or the
compliance by any Seller with, any covenant or obligation required to be
performed or complied with by such Seller; or
(iii) evidencing the satisfaction of any condition referred to in
this Article 7.
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7.5 NO PROCEEDINGS
There shall not be any Proceeding pending or threatened against any Seller
(other than by or at the direction of Buyer or any of its Affiliates) or Buyer
or against any Related Person of any such party (a) involving any challenge to,
or seeking Damages or other relief in connection with, any of the Contemplated
Transactions or (b) that may have the effect of preventing, delaying, making
illegal, imposing limitations or conditions on or otherwise interfering with any
of the Contemplated Transactions.
7.6 NO CONFLICT
Neither the consummation nor the performance of any of the Contemplated
Transactions will, directly or indirectly (with or without notice or lapse of
time), contravene or conflict with or result in a violation of or cause Buyer or
any Related Person of Buyer to suffer any material adverse consequence under (a)
any applicable Legal Requirement or Order or (b) any Legal Requirement or Order
that has been published, introduced or otherwise proposed by or before any
Governmental Body, excluding Bulk Sales Laws.
8. CONDITIONS PRECEDENT TO EACH SELLER'S OBLIGATION TO CLOSE
Each Seller's obligation to sell the Assets and to take the other actions
required to be taken by such Seller at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by such Seller in whole or in part):
8.1 ACCURACY OF REPRESENTATIONS; BUYER'S PERFORMANCE
The representations and warranties of Buyer set forth in this Agreement
will be, if qualified by materiality, true and correct in all respects, and if
not so qualified, shall be true and correct in all material respects (without
giving effect to any supplement to the Buyer Disclosure Schedules not approved
in writing by Sellers), as of the Closing Date as though made on and as of the
Closing Date (except to the extent such representations and warranties speak as
of an earlier date). Each of the agreements and covenants of Buyer to be
performed and complied with by Buyer pursuant to this Agreement prior to or as
of the Closing Date will have been duly performed and complied with in all
material respects. Buyer shall have delivered to Sellers a certificate signed by
one of its duly authorized officers, dated the Closing Date, certifying, as of
such date (i) that all representations and warranties (individually and
collectively) of Buyer are, if qualified by materiality, true and correct in all
respects, and if not so qualified, true and correct in all material respects and
(ii) Buyer has performed and complied in all material respects with all
covenants and agreements (individually and collectively) contained in this
Agreement required to be performed and complied with by it at or prior to the
Closing Date.
8.2 HSR ACT
The waiting period under the HSR Act shall have expired or been terminated.
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8.3 ADDITIONAL DOCUMENTS
Buyer shall have caused to be delivered (or tendered subject only to
Closing) to each Seller the documents and instruments required by Section 2.9(b)
and such other documents as Sellers may reasonably request for the purposes of:
(a) Evidencing the accuracy of any of Buyer's representations and
warranties;
(b) Evidencing the performance by Buyer of, or the compliance by Buyer
with, any covenant or obligation required to be performed or complied with by
Buyer; or
(c) Evidencing the satisfaction of any condition referred to in this
Article 8.
8.4 NO PROCEEDINGS
There shall not be any Proceeding pending or threatened against any Seller
(other than by or at the direction of Sellers and their Affiliates) or against
any Related Person of such Seller (a) involving any challenge to, or seeking
Damages or other relief in connection with, any of the Contemplated Transactions
or (b) that may have the effect of preventing, delaying, making illegal,
imposing limitations or conditions on or otherwise interfering with any of the
Contemplated Transactions.
8.5 NO CONFLICT
Neither the consummation nor the performance of any of the Contemplated
Transactions will, directly or indirectly (with or without notice or lapse of
time), contravene or conflict with or result in a violation of or cause any
Seller or any Related Person of such Seller to suffer any material adverse
consequence under (a) any applicable Legal Requirement or Order or (b) any Legal
Requirement or Order that has been published, introduced or otherwise proposed
by or before any Governmental Body, excluding Bulk Sales Laws.
9. TERMINATION
9.1 TERMINATION EVENTS
By notice given prior to or at the Closing, subject to Section 9.2, this
Agreement may be terminated as follows:
(a) by mutual written agreement of Buyer and Xxxxx X. Xxxxxx (each, a
"Representative Party");
(b) by either Representative Party (provided that neither the
terminating Representative Party nor any of its Affiliates is then in material
breach of any representation, warranty, covenant, or other agreement contained
in this Agreement) in the event of a material breach by the other Representative
Party or a party Affiliated with the other Representative Party of any
representation or warranty contained in this Agreement which cannot be or has
not been cured
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within thirty (30) days after the giving of written notice to other
Representative Party of such breach and which breach is reasonably likely, in
the opinion of the terminating Representative Party, to permit such
Representative Party to refuse to consummate the transactions contemplated by
this Agreement in accordance with the terms hereof;
(c) by either Representative Party (provided that neither the
terminating Representative Party nor any of its Affiliates is then in material
breach of any representation, warranty, covenant, or other agreement contained
in this Agreement) in the event of a material breach by the other Representative
Party or a party Affiliated with the other Representative Party of any covenant
or agreement contained in this Agreement which cannot be or has not been cured
within ten (10) days the giving of written notice to other Representative Party
of such breach and which breach is reasonably likely, in the opinion of the
terminating Representative Party, to permit such Representative Party to refuse
to consummate the transactions contemplated by this Agreement in accordance with
the terms hereof;
(d) by either Representative Party in the event (i) any consent of any
Governmental Body required for consummation of the transactions contemplated
hereby shall have been denied by final nonappealable action of such authority or
if any action taken by such authority is not appealed within the time limit for
appeal or (ii) the consummation of such transactions shall have been permanently
and restrained, enjoined or otherwise prohibited by force of law; or
(e) by either Representative Party in the event that the Closing shall
not have been consummated by March 15, 2007, if the failure to consummate the
transactions contemplated hereby on or before such date is not caused by any
breach of this Agreement by the Representative Party electing to terminate
pursuant to this Section 9.1(e) or an Affiliate of such Representative Party.
9.2 EFFECT OF TERMINATION
Each party's right of termination under Section 9.1 is in addition to any
other rights it may have under this Agreement or otherwise, and the exercise of
such right of termination will not be an election of remedies. If this Agreement
is terminated pursuant to Section 9.1, all obligations of the parties under this
Agreement will terminate, except that the obligations of the parties in this
Section 9.2 and Articles 11, 12 and 13 (except for those in Section 13.5) will
survive, provided, however, that, if this Agreement is terminated because of a
Breach of this Agreement by the nonterminating party or because one or more of
the conditions to the terminating party's obligations under this Agreement is
not satisfied as a result of the nonterminating party's failure to comply with
its obligations under this Agreement, the terminating party's right to pursue
all legal remedies will survive such termination unimpaired.
10. ADDITIONAL COVENANTS
10.1 EMPLOYEES AND EMPLOYEE BENEFITS
(a) As soon as practicable after the date of this Agreement, Sellers
shall advise the Employees of the acquisition of the Businesses by Buyer and
Buyer shall offer employment, effective as of the Effective Time, to all persons
who are full-time Employees on the
49
date of this Agreement and as to whom Buyer has received the information
required under Section 3.12(b) on such date (except as provided below with
respect to any Employee who is on short-term disability leave as of the Closing
Date). Each Employee who accepts any such offer of employment shall be referred
to in this Agreement as a "Transferred Employee". The offers of employment,
including wages, salaries and benefits, shall be, in the aggregate,
substantially comparable (but excluding for this purpose any Transaction
Bonuses) with the terms and conditions under which the Transferred Employees
were employed on the date of this Agreement. Seller shall not in any manner
attempt to discourage Employees from accepting offers of employment made by
Buyer. Any Employee who is on short-term disability leave as of the Closing Date
shall remain employed by Sellers through the Employee's short-term disability
leave; provided, however, that if he or she recovers from his or her disability
within the period of his or her short-term disability leave or the six-month
period following the Closing Date (whichever is shorter), Buyer shall at that
time make an offer of employment to him or her on the same employment terms and
conditions as are applicable to similarly situated Transferred Employees,
subject to the proviso above.
(b) Sellers shall be responsible for (i) all termination and severance
payments, damages for wrongful dismissal and all related costs in respect of the
termination by Sellers of the employment of any Employees prior to or on the
Closing Date; (ii) all liabilities for salary, wages, bonuses, commissions,
vacation pay and other remuneration due or accruing to Employees through the
Effective Time; and (iii) all liabilities for claims for injury, disability,
death or workers' compensation arising from or related to employment with
Sellers prior to the Closing Date.
(c) Sellers shall be liable for any claims made by Employees and their
beneficiaries under the Seller Benefit Plans in all such cases, for benefits
accruing prior to the Effective Time.
(d) As of the Effective Time, Buyer will assume sponsorship of the
Seller Benefit Plans; provided, however, that in the case of any Seller Benefit
Plan that is described in Section 401(k) of the Code, such Seller Benefit Plan
can be maintained by Buyer without loss of qualification under Section 401(a) of
the Code. Sellers shall be solely responsible for any continuation coverage
required by COBRA (or by any similar Canadian benefits laws) for those Employees
of Sellers who are not Transferred Employees. Buyer shall waive all pre-existing
conditions, limitations or exclusions and waiting periods for the Transferred
Employees under all fringe benefits programs of Buyer, including vacation, bonus
and other incentive programs.
(e) Sellers shall retain all assets in the pension and retirement
funds of Sellers, and shall distribute pension and retirement benefits that the
Transferred Employees shall become entitled to receive from Sellers in
accordance with the applicable plan document and the Transferred Employees'
elections, as applicable.
(f) With respect to events following the Closing, Buyer shall be
responsible for sending timely and appropriate notices to all Transferred
Employees required under all applicable Legal Requirements relating to plant or
facility closings or otherwise regulating the termination of employees. To the
extent that any liability is incurred under any such Legal Requirements based on
Buyer's failure to comply with Section 10.1(a) or Buyer's actions after the
50
Closing, Buyer will be solely and exclusively responsible for all obligations
and liabilities incurred under such Legal Requirements relating to the
Contemplated Transactions.
(g) Sellers shall make available to Buyer records which provide
information regarding employees' names, Social Security or Social Insurance
numbers, dates of hire by Sellers, date of birth, number of hours worked each
calendar year, attendance and salary histories for all Transferred Employees.
Sellers shall not provide records to the extent prohibited by any applicable
Legal Requirement, including the Health Insurance Portability and Accountability
Act of 1996 and applicable privacy laws.
(h) Nothing contained in this Agreement will confer upon any
Transferred Employee, or any legal representative thereof, any rights or
remedies, including, without limitation, any right to employment for any
specified period, of any nature or kind whatsoever, under or by reason of this
Agreement or the Contemplated Transactions. Notwithstanding anything to the
contrary contained in this Agreement, neither Buyer nor any Affiliate of Buyer
will be required to continue any particular Seller Benefit Plan after the
Closing Date for the Transferred Employees, and any such Seller Benefit Plan may
be amended or terminated in accordance with its terms and any applicable Legal
Requirements.
10.2 RETENTION OF AND ACCESS TO RECORDS
For the greater of five years from the Closing Date and any period as may
be required by any statute, regulation or Governmental Body or any then pending
litigation, Buyer shall maintain in the same manner that it currently maintains
its business records and files the business records and files of Sellers that
are transferred to Buyer in connection herewith, and in anticipation of, or
preparation for, existing or future Proceedings or any Tax audit in which
Sellers or any of their Affiliates are involved and which is related to either
Business or the Assets, permit Sellers and their Representatives reasonable
access to such records and files during regular business hours and upon
reasonable notice at Buyer's principal places of business or at any location
where the records are stored; provided, however, that (i) any access shall be
had or done in a manner so as not to interfere with the normal conduct of either
Business and (ii) Buyer shall not be required to provide access to any
confidential record or records, the disclosure of which would violate any Legal
Requirement or applicable confidentiality agreement with any Person. Buyer shall
notify Sellers in writing at least ten days prior to any destruction of such
transferred records and files prior to the end of the period referenced in the
preceding sentence, and at Sellers' option, deliver such records and files to
Sellers.
10.3 FURTHER ASSURANCES
The parties shall cooperate reasonably with each other and with their
respective Representatives in connection with any steps required to be taken as
part of their respective obligations under this Agreement, and shall (a) furnish
upon request to the others such further information; (b) execute and deliver to
each other such other documents; and (c) do such other acts and things, all as
another party may reasonably request for the purpose of carrying out the intent
of this Agreement and the Contemplated Transactions. The Principal Shareholders
and Sellers agree jointly and severally to indemnify, defend and hold harmless
the Buyer Indemnitees and to promptly reimburse the Buyer Indemnitees for any
Damages arising from or in connection with the
51
inability of Sellers to obtain all requisite approvals, consents or waivers as
of the Closing necessary to convey to Buyer (i) the Real Property Lease between
Canadian Seller and Global Ocean Properties Limited described in Section 3.17(b)
of the Seller Disclosure Schedules and (ii) the Seller Contracts with Parametric
Technology Corporation, Made2Manage Systems, Inc. and Anston Business Solutions
USA, Inc.listed in Section 3.17(b) of the Seller Disclosure Schedules, provided
that the foregoing indemnity shall not be subject to the limitations set forth
in Section 11.4.
10.4 PROVISIONS RELATING TO CERTAIN ASSETS AND WARRANTY OBLIGATIONS
(a) To the extent that a Seller Contract, Governmental Authorization
or other Asset is not capable of being sold, assigned, transferred,
subcontracted or conveyed without the approval, consent or waiver of the issuer
thereof or the other party thereto, or any Third Party (including a Governmental
Body), and such approval, consent or waiver has not been obtained prior to the
Closing, or if such sale, assignment, transfer or conveyance or attempted sale,
assignment, transfer or conveyance would constitute a breach thereof or a
violation of any Legal Requirement, neither this Agreement nor any other
Transaction Agreement shall constitute a sale, assignment, transfer or
conveyance thereof, or an attempted sale, assignment, transfer or conveyance
thereof.
(b) Anything in this Agreement to the contrary notwithstanding, a
Seller is not obligated to sell, assign, transfer or convey to Buyer any of its
rights or obligations in or to any of the Seller Contracts or Governmental
Authorizations without first obtaining all necessary approvals, consents or
waivers; provided, however, that the foregoing shall not limit Sellers'
liability for a breach of Section 3.14 and Section 5.1. Each Seller shall
cooperate with Buyer to obtain all approvals, consents or waivers necessary to
convey to Buyer each such Seller Contract or Governmental Authorization as soon
as practicable; provided, however, that neither such Seller nor Buyer shall be
obligated to offer or pay any consideration or concession therefor to the Third
Party from whom such approval, consent or waiver is requested. Other than the
Consents set forth on Exhibit D, the failure by any Seller to obtain any such
approval, consent or waiver necessary to convey any Seller Contract or
Governmental Authorization to Buyer shall not affect the obligations of the
parties to close hereunder; provided that such Seller agrees to use commercially
reasonable efforts to cause the economic benefit of each Seller Contract or
Governmental Authorization to be furnished to Buyer.
(c) To the extent any of the approvals, consents or waivers necessary
to convey any Seller Contract or Governmental Authorization to Buyer have not
been obtained by any Seller as of the Closing or to the extent any Seller
Contract or Governmental Authorization cannot be transferred to Buyer by the
Closing, the Principal Shareholders and such Seller shall, during the remaining
term of such Seller Contract, use commercially reasonable efforts, to (i) at the
request of Buyer, cooperate with the Buyer to obtain the consent of any such
Third Party; provided, however, that neither such Seller nor Buyer shall be
obligated to offer or pay any consideration to any Person, (ii) at the request
of Buyer, cooperate with Buyer in any reasonable and lawful arrangements
designed to provide the benefits of such Seller Contract or Governmental
Authorization to Buyer, (iii) as it pertains to Seller Contracts, enforce, at
the request of Buyer and at the expense and for the account of Buyer, any rights
of such Seller arising from any such Seller
52
Contract against the issuer thereof or the other party or parties thereto
(including the rights to elect to terminate any such Seller Contract in
accordance with the terms thereof upon the request of Buyer), and (iv) as it
pertains to Governmental Authorizations, at the request and expense of Buyer,
apply for any necessary renewals or extensions thereof. To the extent that any
Seller enters into lawful arrangements reasonably satisfactory to Buyer designed
to provide the benefits of any such Seller Contract or Governmental
Authorizations to Buyer as set forth in clauses (i) through (iv) above, such
Seller Contract or Governmental Authorization shall be deemed to have been
conveyed to Buyer for the purposes of this Agreement.
(d) To the extent that, notwithstanding Sellers' representation set
forth in Section 3.21, the aggregate loss and expense (including out-of-pocket
expenses) attributable to warranty and similar claims asserted in respect of
warranties implied by law and any warranty agreement and indemnities given by
any Seller for goods or services delivered by any Seller prior to the Effective
Time exceeds the amount of the warranty reserve set forth in the Closing Balance
Sheets, and Buyer determines, in its sole discretion, to perform work under any
such warranty, then Sellers shall promptly reimburse Buyer for all such loss and
expense incurred by Buyer in excess of the amount of such reserve; provided,
that such reimbursement shall not be subject to the limitations set forth in
Section 11.4.
10.5 SUPPORT
From and after the Closing, in the event and for so long as any Seller
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand in connection with
(i) any transaction contemplated under this Agreement or (ii) any fact,
situation, circumstances, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction relating to
either Business (including during any period prior to Closing), Buyer will
cooperate reasonably with Sellers and Sellers' counsel in the contest or
defense, make available their personnel, and provide such testimony and access
to their books and records as shall be reasonably requested in connection with
the contest or defense, all at the reasonable out-of-pocket expense of the
Sellers (unless the Sellers are entitled to indemnification therefor hereunder).
This Section 10.5 is not intended to alter applicable discovery procedures in
connection with any litigation between or among the parties hereto.
11. INDEMNIFICATION; REMEDIES
11.1 SURVIVAL
All representations, warranties, covenants and obligations in this
Agreement, the Seller Disclosure Schedules, the supplements to the Seller
Disclosure Schedules, the Buyer Disclosure Schedules, the certificates delivered
pursuant to Section 2.9 and any other certificate or document delivered pursuant
to this Agreement shall survive the Closing and the consummation of the
Contemplated Transactions, subject to Section 11.6. The waiver of any condition
based upon the accuracy of any representation or warranty, or on the performance
of or compliance with any covenant or obligation, will not affect the right to
indemnification, reimbursement or other remedy based upon such representations,
warranties, covenants and obligations.
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11.2 INDEMNIFICATION AND REIMBURSEMENT BY PRINCIPAL SHAREHOLDERS AND
SELLERS
The Principal Shareholders and Sellers will jointly and severally
indemnify, defend and hold harmless Buyer, and its Representatives,
shareholders, subsidiaries and Related Persons (collectively, the "Buyer
Indemnitees"), and will reimburse Buyer Indemnitees for any loss, Liability,
claim, damage, expense (including costs of investigation and defense and
reasonable attorneys' fees and expenses), whether or not involving a Third Party
Claim (collectively, "Damages"), arising from or in connection with:
(a) any Breach of any representation or warranty made by the Principal
Shareholders or Sellers in (i) this Agreement, (ii) the Seller Disclosure
Schedules, (iii) the amendments or supplements to the Seller Disclosure
Schedules, (iv) the certificate delivered pursuant to Section 2.9(a), (v) any
transfer instrument or (vi) any other certificate, document, writing or
instrument delivered by the Principal Shareholders or Sellers pursuant to this
Agreement;
(b) any Breach of any covenant or obligation of the Principal
Shareholders or Sellers in this Agreement or in any other certificate, document,
writing or instrument delivered by them pursuant to this Agreement;
(c) if the Closing occurs, any Liability arising out of the ownership
or operation of the Assets prior to the Effective Time, except to the extent
such Liability arises out of or relates to an Assumed Liability;
(d) if the Closing occurs, any brokerage or finder's fees or
commissions or similar payments based upon any agreement or understanding made,
or alleged to have been made, by any Person with any Seller (or any Person
acting on any Seller's behalf) in connection with any of the Contemplated
Transactions;
(e) if the Closing occurs, any Seller Benefit Plan;
(f) if the Closing occurs, any Retained Liabilities; or
(g) if the Closing occurs, any Environmental Liabilities that may be
imposed upon or incurred by Buyer arising out of or relating to: (i) any Release
of Hazardous Materials on, at, or underlying the Xxxxxxx Real Property by
Sellers or any prior owner or operator of the Xxxxxxx Real Property on or prior
to the Effective Time; (ii) any violations of Environmental Law relating to the
operation of either Business on or prior to the Effective Time; or (iii) the
acts or omissions of Sellers in connection with their ownership or operation of
either Business or the Xxxxxxx Real Property on or prior to the Effective Time.
11.3 INDEMNIFICATION AND REIMBURSEMENT BY BUYER
Buyer will indemnify, defend and hold harmless Sellers, and their
Representatives, shareholders, subsidiaries and Related Persons (collectively,
the "Seller Indemnitees"), and will reimburse Seller Indemnitees for any Damages
arising from or in connection with:
54
(a) any Breach of any representation or warranty made by Buyer in (i)
this Agreement, (ii) the Buyer Disclosure Schedules, (iii) the amendments or
supplements to the Buyer Disclosure Schedules, (iv) the certificate delivered
pursuant to Section 2.9(a), (v) any transfer instrument or (vi) any other
certificate, document, writing or instrument delivered by Buyer pursuant to in
this Agreement;
(b) any Breach of any covenant or obligation of Buyer in this
Agreement or in any other certificate, document, writing or instrument delivered
by Buyer pursuant to this Agreement;
(c) if the Closing occurs, any Liability arising out of the ownership
or operation of either Business or the Assets following the Effective Time;
(d) if the Closing occurs, any brokerage or finder's fees or
commissions or similar payments based upon any agreement or understanding made,
or alleged to have been made, by any Person with Buyer (or any Person acting on
Buyer's behalf) in connection with any of the Contemplated Transactions;
(e) if the Closing occurs, any Assumed Liabilities;
(f) if the Closing occurs, any Environmental Liabilities that may be
imposed upon or incurred by Sellers arising out of or relating to: (i) any
Release of Hazardous Materials on, at, or underlying the Xxxxxxx Real Property
by Buyer or its Affiliates or any subsequent owner or operator of the Xxxxxxx
Real Property after the Effective Time; (ii) any violations of Environmental Law
relating to the operation of either Business after the Effective Time; or (iii)
the acts or omissions of Buyer in connection with the ownership or operation of
either Business or the Xxxxxxx Real Property after the Effective Time;
(g) if the Closing occurs, except with respect to any Proceeding
arising out of or relating to the Liabilities retained pursuant to Section
2.4(b)(iii), any Liability arising out of any Proceeding (including the
obligation to handle such Proceeding) commenced after the Effective Time and
arising out of or relating to any occurrence or event happening at or after the
Effective Time; or
(h) if the Closing occurs, any Liability of Sellers as a result of
letters of credit issued by HSBC Bank Canada being called on due to Buyer's
failure to perform warranty obligations in respect of which such letters of
credit have been issued provided such warranty obligations are Assumed
Liabilities.
11.4 LIMITATIONS ON AMOUNT--SELLERS
From and after the Closing, the Principal Shareholders and Sellers shall
have no liability (for indemnification or otherwise) with respect to claims
under Section 11.2(a) or (g) until the total of all Damages with respect to such
matters exceeds $250,000 in the aggregate and then only for the amount by which
such Damages exceed $250,000; provided, however, that in no event shall Sellers'
aggregate liability (for indemnification or otherwise) with respect to claims
under Section 11.2(a) or (g) exceed an amount equal to one-half of the cash
portion of the Purchase Price. Notwithstanding anything to the contrary herein,
the limitations set forth in this Section 11.4 will
55
not apply to a breach of any representation or warranty set forth in Section
3.1, 3.2, 3.7, 3.11 or 3.25.
11.5 LIMITATIONS ON AMOUNT--BUYER
From and after the Closing, Buyer shall have no liability (for
indemnification or otherwise) with respect to claims under Section 11.3(a) until
the total of all Damages with respect to such matters exceeds $250,000 in the
aggregate and then only for the amount by which such Damages exceed $250,000;
provided, however, that in no event shall Buyer's liability (for indemnification
or otherwise) with respect to claims under Section 11.3(a) exceed an amount
equal to one-half of the cash portion of the Purchase Price. Notwithstanding
anything to the contrary herein, the limitations set forth in this Section 11.5
will not apply to a breach of any representation and warranty set forth in
Section 4.1, 4.2 or 4.4
11.6 TIME LIMITATIONS
The several representations and warranties of the parties to this Agreement
shall survive the Closing Date for a period of two (2) years from the Closing
Date; provided, that (a) the representations and warranties set forth in (a)
Sections 3.1, 3.2, 3.25, 4.1, 4.2 and 4.4 shall survive the Closing Date without
limitation, (b) Sections 3.11 and 3.13 shall survive for 30 days following the
expiration of any statutes of limitation or reassessment periods, including
extensions, under applicable law and (c) Section 3.19 shall survive for three
years from the Closing Date (the period during which the representations and
warranties shall survive being referred to herein with respect to such
representations and warranties as the "Survival Period"), and shall be effective
with respect to any inaccuracy therein or breach thereof (and a claim for
indemnification under Article 11 hereof may be made thereon) if a written notice
asserting the claim and specifying the factual basis of the claim in reasonable
detail to the extent then known by the notifying party shall have been given
within the Survival Period with respect to such matter. Any claim for
indemnification made during the Survival Period shall be valid and the
representations and warranties relating thereto shall remain in effect for
purposes of such indemnification notwithstanding such claim may not be resolved
within the Survival Period. The agreements and covenants set forth herein shall
survive without limitation.
11.7 PROCEDURE
All claims for indemnification under this Article 11 shall be asserted and
resolved as follows:
(a) A Person entitled to indemnification under Section 11.2 or 11.3
(an "Indemnitee"), promptly after it becomes aware of facts giving rise to a
right of indemnification under this Agreement, shall give written notice thereof
to the Person obligated to indemnify under such section (an "Indemnitor"),
stating the amount of the Damages, if known, and method of computation thereof,
all with reasonable particularity, and stating with particularity the nature of
the matter and basis of the claim for indemnity under this Agreement. For
purposes of this Section 11.7(a), receipt by a party of written notice of any
demand, assertion, claim, action or proceeding (judicial, administrative or
otherwise) by or from any Person other than a party to this Agreement that
gives rise to Damages on behalf of the party shall constitute the awareness of
facts giving rise
56
to a right of indemnification by it under this Agreement and shall require
prompt notice of the receipt of such matter as provided in the first sentence of
this Section 11.7(a). Failure to provide the notice shall not affect the right
of the Indemnitee to indemnification except to the extent the Indemnitor is
materially prejudiced by the Indemnitee's failure to give such notice.
(b) If an Indemnitee should have Damages against any Indemnitor
hereunder that does not involve a Third Party Claim, the Indemnitee shall
provide the Indemnitor a written notice with respect to the Damages. If the
Indemnitor does not notify the Indemnitee within 30 calendar days from its
receipt of the written notice of Damages that the Indemnitor disputes the
Damages, the Damages specified by the Indemnitee in the claim notice shall be
deemed a liability of the Indemnitor hereunder. If the Indemnitor has timely
disputed the Damages as provided above, such dispute shall be resolved subject
to the provisions of this Agreement.
(c) If an Indemnitee shall have a Third Party Claim asserted against
it, the Indemnitee shall provide the Indemnitor written notice of the Damages
relating to the Third Party Claim (a "Third Party Claim Notice"). Within 15
Business Days following receipt by an Indemnitor of a Third Party Claim Notice
(the "Election Period"), the Indemnitor shall advise the Indemnitee in writing
(i) whether the Indemnitor disputes its potential liability to the Indemnitee
under this Article 11 with respect to the Third Party Claim and (ii) whether the
Indemnitor elects, at its sole cost and expense, to defend the Indemnitee
against such Third Party Claim.
(d) If the Indemnitor notifies the Indemnitee within the Election
Period of its election to assume the defense of the Third Party Claim in
accordance with Section 11.7(c) above, the Indemnitor shall have the obligation
to defend, at its sole cost and expense, the Third Party Claim by all
appropriate proceedings, which proceedings shall be prosecuted diligently by the
Indemnitor to a final conclusion or settled at the discretion of the Indemnitor
in accordance with this Section 11.7(d); provided, that the Indemnitor shall not
settle or compromise any such Third Party Claim without the prior consent of the
Indemnitee (which consent shall not be unreasonably withheld, conditioned or
delayed) unless (i) the terms of such compromise or settlement require no more
than the payment of money (i.e. such settlement or compromise shall not require
the admission of wrongdoing by the Indemnitee, impose any obligations upon the
Indemnitee or deprive the Indemnitee of any rights), (ii) the full amount of
such monetary settlement or compromise will be paid by the Indemnitor, and (iii)
the Indemnitee receives as part of such settlement or compromise a legal,
binding and enforceable unconditional satisfaction and/or release from any and
all further actions or liabilities relating to the subject matter of the Third
Party Claim. The Indemnitor shall have full control of such defense and
proceedings, including, subject to the preceding sentence, any compromise or
settlement thereof. The Indemnitee is hereby authorized to file, during the
Election Period, any motion, answer or other pleadings that the Indemnitee
shall, in good faith, deem necessary or appropriate to protect its interest or
those of the Indemnitor and not prejudicial to the Indemnitor (it being
understood and agreed that if the Indemnitee takes any such action that is
prejudicial and conclusively causes a final adjudication adverse to the
Indemnitor, the Indemnitor shall be relieved of its obligations hereunder with
respect to the Third Party Claim to the extent so adjudicated). If requested by
the Indemnitor, the Indemnitee agrees, at the sole cost and expense of the
Indemnitor, to cooperate with the Indemnitor and its counsel in contesting any
Third Party Claims, including by making of any related counterclaim against the
Person asserting the Third Party Claim or any cross-complaint against any
Person. The Indemnitee shall have the right to participate in, but not control,
any defense or settlement of any Third Party Claim
57
controlled by the Indemnitor pursuant to this Section 11.7(d), and shall bear
its own costs and expenses with respect to any such participation.
(e) If an Indemnitor fails to notify an Indemnitee within the Election
Period that the Indemnitor elects to defend the Indemnitee pursuant to Section
11.7(c) or if the Indemnitor fails to diligently defend or settle the Third
Party Claim or to prosecute any appropriate counterclaim against the Person
making the Third Party Claim or any cross-complaint or counterclaim against any
Person, or if the Indemnitee reasonably objects to such election on the grounds
that counsel for such Indemnitee cannot represent both the Indemnitor and the
Indemnitee because such representation would be reasonably likely to result in a
conflict of interest, then the Indemnitee shall have the right but not the
obligation to defend, at the sole cost and expense of the Indemnitor (but only
if the Indemnitee actually is entitled to indemnification hereunder), the Third
Party Claim by such proceedings deemed reasonably appropriate by the Indemnitee
and its counsel. The Indemnitee shall have full control of such defense and
proceedings, including any compromise or settlement of the Third Party Claim;
provided, that the Indemnitee shall not enter into any compromise or settlement
of such Third Party Claim without the Indemnitor's consent, which shall not be
unreasonably withheld, conditioned or delayed. If requested by the Indemnitee,
the Indemnitor shall, at the sole cost and expense of the Indemnitor, cooperate
with the Indemnitee and its counsel in contesting any Third Party Claim that the
Indemnitee is contesting, or, if appropriate and related to the Third Party
Claim in question, in making any counterclaim against the Person asserting the
Third Party Claim or any cross-complaint or counterclaim against any Person.
Notwithstanding the foregoing in this Section 11.7(e), if the Indemnitor has
delivered a written notice to the Indemnitee to the effect that the Indemnitor
disputes its potential liability to the Indemnitee under this Article 11 and if
such dispute is resolved in favor of the Indemnitor, the Indemnitor shall not be
required to bear the costs and expenses of the Indemnitee's defense pursuant to
this Article 11 or of the Indemnitor's participation therein at the Indemnitee's
request, and the Indemnitee shall reimburse the Indemnitor in full for all
reasonable costs and expenses of the Indemnitor in connection with the Third
Party Claim, excluding, however, any litigation with respect to its indemnity
obligation hereunder. The Indemnitor shall have the right to participate in, but
not control, any defense or settlement controlled by the Indemnitee pursuant to
this Section 11.7(e), and the Indemnitor shall bear its own costs and expenses
with respect to any such participation.
11.8 PAYMENT
Payments of all amounts owing by an Indemnitor as a result of a Third Party
Claim shall be made within five Business Days after the earlier of (i) the
settlement of the Third Party Claim and (ii) the expiration of the period of
appeal of a final adjudication of the Third Party Claim. Payments of all amounts
owing by an Indemnitor other than as a result of a Third Party Claim shall be
made within five Business Days after the later of (i) 30 days after the
expiration of the Election Period or (ii) if contested through dispute
resolution proceedings, the expiration of the period for appeal of a final
adjudication of the Indemnitor's liability to the Indemnitee under this
Agreement. Notwithstanding the foregoing, if the Indemnitor has not contested
its indemnity obligations hereunder and has not elected to assume the defense of
a Third Party Claim, the Indemnitor shall reimburse (promptly after the receipt
of each invoice therefor) the Indemnitee for the reasonable and documented
out-of-pocket costs and expenses incurred by the Indemnitee in contesting the
Third Party Claim.
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11.9 INSURANCE
The Indemnitor shall be subrogated to the rights of the Indemnitee in
respect of any insurance relating to Damages to the extent of any
indemnification payments made hereunder for such Damages.
11.10 NO DUPLICATION
Any Liability for indemnification hereunder shall be determined without
duplication of recovery by reason of the state of facts giving rise to such
Liability constituting a Breach of more than one representation, warranty,
covenant or agreement.
11.11 REMEDIES
(a) The parties agree that, except as provided in Section 13.5, the
sole and exclusive remedy of any party hereto or their respective Affiliates
with respect to this Agreement or any other agreement delivered by any Seller or
Buyer in connection with the Contemplated Transactions (collectively, the
"Transaction Agreements"), or any other claims relating to either Business, the
events giving rise to this Agreement and the other Transaction Agreements and
the Contemplated Transactions shall be limited to the indemnification provisions
set forth in this Article 11, provided that this limitation shall not apply in
the event of fraud; and provided further that if an Indemnitor shall Breach or
threaten to commit a Breach of any of its restrictive covenants set forth in
this Agreement or any other Transaction Agreement (the "Restrictive Covenants"),
any Indemnitee shall have the right in addition to, and not in lieu of, any
other rights and remedies available to such Indemnitee, under law or in equity,
to have the Restrictive Covenants specifically enforced by any court, including
the right to seek entry against such Indemnitor, any of its Affiliates and any
shareholder, officer, director, employee of each of the foregoing of restraining
orders and injunctions (preliminary, mandatory, temporary and permanent) against
violations, threatened or actual, and whether or not then continuing, of the
Restrictive Covenants, it being acknowledged and agreed that money damages will
not provide such Indemnitee an adequate remedy.
(b) The parties hereto intend that, even though indemnification and
other obligations appear in various sections and articles of this Agreement, the
indemnification procedures and limitations contained in this Article 11 shall
apply to all indemnity and other obligations of the parties under this
Agreement, except to the extent expressly excluded in this Article 11.
11.12 NO SPECIAL DAMAGES
IN NO EVENT SHALL ANY PARTY BE LIABLE UNDER THIS ARTICLE 11 OR OTHERWISE IN
RESPECT OF THIS AGREEMENT OR THE OTHER TRANSACTION AGREEMENTS FOR EXEMPLARY,
SPECIAL, PUNITIVE, INDIRECT, REMOTE, SPECULATIVE OR CONSEQUENTIAL DAMAGES EXCEPT
TO THE EXTENT ANY SUCH PARTY SUFFERS SUCH DAMAGES TO AN UNAFFILIATED THIRD PARTY
IN CONNECTION WITH A THIRD PARTY CLAIM, IN WHICH EVENT SUCH DAMAGES SHALL BE
RECOVERABLE.
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12. CONFIDENTIALITY
12.1 DEFINITION OF CONFIDENTIAL INFORMATION
(a) As used in this Article 12, the term "Confidential Information"
includes any and all of the following information of any Seller or Buyer that
has been or may hereafter be disclosed in any form, whether in writing, orally,
electronically or otherwise, or otherwise made available by observation,
inspection or otherwise by either party (Buyer on the one hand or Sellers on the
other hand) or its Representatives (collectively, a "Disclosing Party") to the
other party or its Representatives (collectively, a "Receiving Party"):
(i) all information that is a trade secret under applicable trade
secret or other law;
(ii) all information concerning product specifications, data,
know-how, formulae, compositions, processes, designs, sketches,
photographs, graphs, drawings, samples, inventions and ideas, past, current
and planned research and development, current and planned manufacturing or
distribution methods and processes, customer lists, current and anticipated
customer requirements, price lists, market studies, business plans,
computer hardware, Software and database technologies, systems, structures
and architectures;
(iii) all information concerning the business and affairs of the
Disclosing Party (which includes historical and current financial
statements, financial projections and budgets, tax returns and accountants'
materials, historical, current and projected sales, capital spending
budgets and plans, business plans, strategic plans, marketing and
advertising plans, publications, client and customer lists and files,
contracts, the names and backgrounds of key personnel and personnel
training techniques and materials, however documented), and all information
obtained from review of the Disclosing Party's documents or property or
discussions with the Disclosing Party regardless of the form of the
communication; and
(iv) all notes, analyses, compilations, studies, summaries and
other material prepared by the Receiving Party to the extent containing or
based, in whole or in part, upon any information included in the foregoing.
(b) Any trade secrets of a Disclosing Party shall also be entitled to
all of the protections and benefits under applicable trade secret law and any
other applicable law. If any information that a Disclosing Party deems to be a
trade secret is found by a court of competent jurisdiction not to be a trade
secret for purposes of this Article 12, such information shall still be
considered Confidential Information of that Disclosing Party for purposes of
this Article 12 to the extent included within the definition. In the case of
trade secrets, each Disclosing Party, hereby waives any requirement that the
other party submit proof of the economic value of any trade secret or post a
bond or other security.
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12.2 RESTRICTED USE OF CONFIDENTIAL INFORMATION
(a) Each Receiving Party acknowledges the confidential and proprietary
nature of the Confidential Information of the Disclosing Party and agrees that
such Confidential Information (i) shall be kept confidential by the Receiving
Party; (ii) shall not be used for any reason or purpose other than to evaluate
and consummate the Contemplated Transactions; and (iii) without limiting the
foregoing, shall not be disclosed by the Receiving Party to any Person, except
in each case as otherwise expressly permitted by the terms of this Agreement or
with the prior written consent of an authorized Representative of Sellers with
respect to Confidential Information of Sellers (each, a "Seller Contact") or an
authorized Representative of Buyer with respect to Confidential Information of
Buyer (each, a "Buyer Contact"). Each of Buyer and Sellers shall disclose the
Confidential Information of the other party only to its Representatives who
require such material for the purpose of evaluating the Contemplated
Transactions and are informed by Buyer or Sellers, as the case may be, of the
obligations of this Article 12 with respect to such information. Each of Buyer
and Sellers shall (A) enforce the terms of this Article 12 as to its respective
Representatives; (B) take such action to the extent necessary to cause its
Representatives to comply with the terms and conditions of this Article 12; and
(C) be responsible and liable for any breach of the provisions of this Article
12 by it or its Representatives.
(b) Unless and until this Agreement is terminated, Sellers shall
maintain as confidential any Confidential Information (including for this
purpose any information of Sellers of the type referred to in Sections
12.1(a)(i), (ii) and (iii), whether or not disclosed to Buyer) of Sellers
relating to any of the Assets or the Assumed Liabilities. Notwithstanding the
preceding sentence, Sellers may use any Confidential Information of Sellers
before the Closing in the ordinary course of either Business consistent with
past practices.
(c) From and after the Closing, the provisions of Section 12.2(a)
above shall not apply to or restrict in any manner Buyer's use of any
Confidential Information of Sellers relating solely to any of the Assets or the
Assumed Liabilities.
12.3 EXCEPTIONS
Sections 12.2(a) and (b) do not apply to that part of the Confidential
Information of a Disclosing Party that a Receiving Party demonstrates (a) was,
is or becomes generally available to the public other than as a result of a
breach of this Article 12 or the Confidentiality Agreement by the Receiving
Party or its Representatives; (b) was or is developed by the Receiving Party
independently of and without reference to any Confidential Information of the
Disclosing Party; or (c) was, is or becomes available to the Receiving Party on
a nonconfidential basis from a Third Party not bound by a confidentiality
agreement or any legal, fiduciary or other obligation restricting disclosure.
Sellers shall not disclose any Confidential Information of Sellers relating to
any of the Assets or the Assumed Liabilities in reliance on the exceptions in
clauses (b) or (c) above.
12.4 LEGAL PROCEEDINGS
If a Receiving Party becomes compelled in any Proceeding or is requested by
a Governmental Body having regulatory jurisdiction over the Contemplated
Transactions to make any disclosure that is prohibited or otherwise constrained
by this Article 12, that Receiving Party
61
shall provide the Disclosing Party with prompt notice of such compulsion or
request so that it may seek an appropriate protective order or other appropriate
remedy or waive compliance with the provisions of this Article 12. In the
absence of a protective order or other remedy, the Receiving Party may disclose
that portion (and only that portion) of the Confidential Information of the
Disclosing Party that, based upon advice of the Receiving Party's counsel, the
Receiving Party is legally compelled to disclose or that has been requested by
such Governmental Body, provided, however, that the Receiving Party shall use
reasonable efforts to obtain reliable assurance that confidential treatment will
be accorded by any Person to whom any Confidential Information is so disclosed.
The provisions of this Section 12.4 do not apply to any Proceedings between the
parties to this Agreement. Notwithstanding anything to the contrary in this
Article 12 or elsewhere in this Agreement, any Seller may disclose any
Confidential Information to the extent it reasonably believes such disclosure is
required to comply with the requirements of any applicable Legal Requirement.
12.5 RETURN OR DESTRUCTION OF CONFIDENTIAL INFORMATION
If this Agreement is terminated, each Receiving Party shall (a) destroy all
Confidential Information of the Disclosing Party prepared or generated by the
Receiving Party without retaining a copy of any such material; (b) promptly
deliver to the Disclosing Party all other Confidential Information of the
Disclosing Party, together with all copies thereof, in the possession, custody
or control of the Receiving Party or, alternatively, with the written consent of
a Seller Contact or a Buyer Contact (whichever represents the Disclosing Party)
destroy all such Confidential Information; and (c) certify all such destruction
in writing to the Disclosing Party, provided, however, that the Receiving Party
may retain a list that contains general descriptions of the information it has
returned or destroyed to facilitate the resolution of any controversies after
the Disclosing Party's Confidential Information is returned.
12.6 ATTORNEY-CLIENT PRIVILEGE
The Disclosing Party is not waiving, and will not be deemed to have waived
or diminished, any of its attorney work product protections, attorney-client
privileges or similar protections and privileges as a result of disclosing its
Confidential Information (including Confidential Information related to pending
or threatened litigation) to the Receiving Party, regardless of whether the
Disclosing Party has asserted, or is or may be entitled to assert, such
privileges and protections. The parties (a) share a common legal and commercial
interest in all of the Disclosing Party's Confidential Information that is
subject to such privileges and protections; (b) are or may become joint
defendants in Proceedings to which the Disclosing Party's Confidential
Information covered by such protections and privileges relates; (c) intend that
such privileges and protections remain intact should either party become subject
to any actual or threatened Proceeding to which the Disclosing Party's
Confidential Information covered by such protections and privileges relates; and
(d) intend that after the Closing the Receiving Party shall have the right to
assert such protections and privileges. No Receiving Party shall admit, claim or
contend, in Proceedings involving either party or otherwise, that any Disclosing
Party waived any of its attorney work-product protections, attorney-client
privileges or similar protections and privileges with respect to any
information, documents or other material not disclosed to a Receiving Party due
to the Disclosing Party disclosing its Confidential Information (including
Confidential Information related to pending or threatened litigation) to the
Receiving Party.
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13. GENERAL PROVISIONS
13.1 EXPENSES
Except as otherwise provided in this Agreement, each party to this
Agreement will bear its respective fees and expenses incurred in connection with
the preparation, negotiation, execution and performance of this Agreement and
the Contemplated Transactions, including all fees and expenses of its
Representatives. Buyer will pay all filing fees and other out-of-pocket costs
relating to filings made under the HSR Act or comparable Canadian statute. If
this Agreement is terminated, the obligation of each party to pay its own fees
and expenses will be subject to any rights of such party arising from a Breach
of this Agreement by another party.
13.2 PUBLIC ANNOUNCEMENTS
Except as may be required to comply with the requirements of any applicable
Legal Requirement or the rules and regulations of any stock exchange or national
market system upon which the securities of any Seller or Buyer are listed, no
party will issue any press release or other public announcement relating to the
subject matter of this Agreement or the Contemplated Transactions without the
prior approval (which approval will not be unreasonably withheld or delayed) of
the other party; provided, however, that, after the Closing, any Seller or Buyer
will be entitled to issue any such press release or make any such other public
announcement without obtaining such prior approval if it has previously provided
a copy of the press release or other public announcement to the other party for
a reasonable period of time for review and comment.
13.3 NOTICES
All notices, Consents, waivers and other communications required or
permitted by this Agreement shall be in writing and shall be deemed given to a
party when (a) delivered to the appropriate address by hand or by nationally
recognized overnight courier service (costs prepaid); (b) sent by facsimile with
confirmation of transmission by the transmitting equipment; or (c) received or
rejected by the addressee, if sent by certified mail, return receipt requested,
in each case to the following addresses, facsimile numbers and marked to the
attention of the person (by name or title) designated below (or to such other
address or facsimile number or person as a party may designate by notice to the
other parties):
Sellers: Crown Energy Technologies Inc.
0000 Xxxxxxx Xxxxx X.X.
Xxxxxxx, Xxxxxxx
X0X 0X0
Xxxxxx
Attention: Xxxxx X. Xxxxxx
President and Chief
Executive Officer
Facsimile: (000) 000-0000
Confirm: (000) 000-0000
63
with a mandatory copy to: XxXxxxxx Xxxxxxxx LLP
Suite 3300, 000 - 0xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx
X0X 0X0
Xxxxxx
Attention: Xxxx X. Xxxxxxx
Facsimile: (000) 000-0000
Confirm: (000) 000-0000
Buyer: Xxxxxxx & Xxxxxxxxx LLC
Attention: Xxxx Xxxxxxx
Facsimile: (000) 000-0000
Confirm: (000) 000-0000
with a mandatory copy to: Xxxxx Day
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxx XX
Facsimile: (000) 000-0000
Confirm: (000) 000-0000
13.4 DISPUTE RESOLUTION
(a) For the purposes of all legal proceedings, the courts of the
Province of Alberta will have exclusive jurisdiction to entertain any action
arising under this Agreement. Buyer and each Seller hereby attorns to the
jurisdiction of the courts of the Province of Alberta. Notwithstanding the
foregoing, in the event of any dispute or controversy (except for any dispute or
controversy arising out of the calculation of the Closing Date Working Capital
Amount that is to be resolved in accordance with Section 2.12) arising out of or
relating to this Agreement, or any matter relating hereto or the Contemplated
Transactions (the "Dispute"), the parties shall first try to resolve the Dispute
by mutual agreement. If the parties are unable to resolve the Dispute by
entering into a written settlement agreement within 30 days following a party's
delivery of a written notice of a Dispute, setting forth in reasonable detail
the circumstances and basis for the Dispute, either Buyer or any one or more
Sellers shall be free to initiate legal proceedings against the other with
respect to the Dispute in the courts of the Province of Alberta.
(b) Each party hereby waives trial by jury in any judicial proceeding
involving, directly or indirectly, any matter in any way arising out of, related
to, or connected with this Agreement or the Contemplated Transactions, whether
based on contract, tort or otherwise.
13.5 ENFORCEMENT OF AGREEMENT
Each party acknowledges and agrees that the other parties would be
irreparably damaged if any of the provisions of this Agreement are not performed
in accordance with their specific terms and that any Breach of this Agreement by
a party could not be adequately compensated in all cases
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by monetary damages alone. Accordingly, in addition to any other right or remedy
to which a party may be entitled, at law or in equity, it shall be entitled to
enforce any provision of this Agreement by a decree of specific performance and
to temporary, preliminary and permanent injunctive relief to prevent Breaches or
threatened Breaches of any of the provisions of this Agreement, without posting
any bond or other undertaking.
13.6 WAIVER; REMEDIES CUMULATIVE
The rights and remedies of the parties to this Agreement are cumulative and
not alternative. Neither any failure nor any delay by any party in exercising
any right, power or privilege under this Agreement or any of the documents
referred to in this Agreement will operate as a waiver of such right, power or
privilege, and no single or partial exercise of any such right, power or
privilege will preclude any other or further exercise of such right, power or
privilege or the exercise of any other right, power or privilege. To the maximum
extent permitted by applicable law, (a) no claim or right arising out of this
Agreement or any of the documents referred to in this Agreement can be
discharged by one party, in whole or in part, by a waiver or renunciation of the
claim or right unless in writing signed by the other parties; (b) no waiver that
may be given by a party will be applicable except in the specific instance for
which it is given; and (c) no notice to or demand on one party will be deemed to
be a waiver of any obligation of that party or of the right of the party giving
such notice or demand to take further action without notice or demand as
provided in this Agreement or the documents referred to in this Agreement.
13.7 ENTIRE AGREEMENT AND MODIFICATION
This Agreement supersedes all prior agreements, whether written or oral,
between the parties with respect to its subject matter (including any letter of
intent and the Confidentiality Agreement) and constitutes (along with the Seller
Disclosure Schedules, the Buyer Disclosure Schedules, the Exhibits and other
documents delivered pursuant to this Agreement) a complete and exclusive
statement of the terms of the agreement between the parties with respect to its
subject matter. This Agreement may not be amended, supplemented, or otherwise
modified except by a written agreement executed by the party to be charged with
the amendment.
13.8 ASSIGNMENTS, SUCCESSORS AND NO THIRD PARTY RIGHTS
No party may assign any of its rights or delegate any of its obligations
under this Agreement without the prior written consent of the other parties;
provided, however, that Buyer may assign its rights or delegate its obligations
hereunder to any Person that is directly or indirectly controlled by Buyer that
enters into a written agreement with Sellers and the Principal Shareholders to
be bound by the provisions of this Agreement in all respects and to the same
extent as Buyer is bound, and upon the later of any such assignment or the
payment by Buyer of the cash portion of the Purchase Price (including any
Closing Date Working Capital Adjustment Amount owed by Buyer), Buyer shall be
released from all obligations under this Agreement. Subject to the preceding
sentence, this Agreement will apply to, be binding in all respects upon and
enure to the benefit of the successors and permitted assigns of the parties.
Except for such rights as shall enure to a successor or permitted assignee
pursuant to this Section 13.8, nothing expressed or referred to in this
Agreement will be construed to give any Person other than the parties to this
Agreement any legal or equitable right, remedy or claim under or with respect to
this Agreement or any provision
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of this Agreement, including, with respect to any Transferred Employee or legal
representative thereof, any right to employment for any specified period or of
any nature or kind whatsoever.
13.9 SEVERABILITY
If any provision of this Agreement is held invalid or unenforceable by any
court of competent jurisdiction, the other provisions of this Agreement will
remain in full force and effect. Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.
13.10 CONSTRUCTION
The headings of Articles and Sections in this Agreement are provided for
convenience only and will not affect its construction or interpretation. All
references to "Articles," and "Sections" refer to the corresponding Articles and
Sections of this Agreement, the Seller Disclosure Schedules and the Buyer
Disclosure Schedules.
13.11 TIME OF ESSENCE
With regard to all dates and time periods set forth or referred to in this
Agreement, time is of the essence.
13.12 GOVERNING LAW
This Agreement will be governed by and construed under, and any Dispute
determined in accordance with, the laws of the Province of Alberta, Canada
without regard to conflicts-of-laws principles that would require the
application of any other law.
13.13 EXECUTION OF AGREEMENT
This Agreement may be executed in one or more counterparts, each of which
will be deemed to be an original copy of this Agreement and all of which, when
taken together, will be deemed to constitute one and the same agreement. The
exchange of copies of this Agreement and of signature pages by facsimile
transmission shall constitute effective execution and delivery of this Agreement
as to the parties and may be used in lieu of the original Agreement for all
purposes. Signatures of the parties transmitted by facsimile shall be deemed to
be their original signatures for all purposes.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
XXXXXXX & XXXXXXXXX LLC
By /s/ Xxxxxxx Xxxxxx
-------------------------------------
Name: Xxxxxxx Xxxxxx
----------------------------------
Title: Chairman
---------------------------------
CROWN ENERGY TECHNOLOGIES INC.
By /s/ Xxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxx
----------------------------------
Title: President
---------------------------------
CROWN ENERGY TECHNOLOGIES, INC.
By /s/ Xxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxx
----------------------------------
Title: President
---------------------------------
CROWN ENERGY TECHNOLOGIES
(OKLAHOMA) INC.
By /s/ Xxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxx
----------------------------------
Title: President
---------------------------------
CROWN ENERGY TECHNOLOGIES (ODESSA) INC.
By /s/ Xxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxx
----------------------------------
Title: President
---------------------------------
67
CROWN ENERGY TECHNOLOGIES
(VICTORIA) INC.
By /s/ Xxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxx
----------------------------------
Title: President
---------------------------------
CROWN ENERGY TECHNOLOGIES (CASPER) INC.
By /s/ Xxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxx
----------------------------------
Title: President
---------------------------------
CROWN ENERGY TECHNOLOGIES
(BAKERSFIELD), INC.
By /s/ Xxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxx
----------------------------------
Title: President
---------------------------------
/s/ Xxx Xxxxxxxxx /s/ Xxxxx X. Xxxxxx
------------------------------------- ----------------------------------------
Witness XXXXX X. XXXXXX
/s/ Xxx Xxxxxxxxx /s/ Xxxx X. Xxxxxx
------------------------------------- ----------------------------------------
Witness XXXX X. XXXXXX
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