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EXHIBIT 2.2
CLOSING SUPPLEMENT TO STOCK PURCHASE AGREEMENT
This Closing Supplement to Stock Purchase Agreement (this
"Supplement") is dated as of the 26th day of February, 1996, by and among
Vibroplant plc, a company incorporated under the laws of England and Wales (the
"Parent"), Vibroplant Investments, Ltd., a company incorporated under the laws
of England and Wales and a wholly-owned subsidiary of Parent (the "Company"),
and Primeco Inc., a Texas corporation ("Buyer"). Collectively, Parent and
Company are referred to herein as "Seller."
R E C I T A L S
WHEREAS, Buyer and Seller have entered into a Stock Purchase
Agreement, dated as of January 9, 1996 (the "Stock Purchase Agreement");
WHEREAS, in connection with consummating the transactions contemplated
by the Stock Purchase Agreement, Buyer and Seller desire to enter into certain
supplemental agreements in connection with the Stock Purchase Agreement.
A G R E E M E N T
NOW, THEREFORE, in consideration of the above recitals and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Buyer and Seller agree as follows:
1. Definitions. Capitalized terms not defined herein shall have the
meanings given them in the Stock Purchase Agreement.
2. Payment of Xxx X. Xxxxxx. In addition to the portions of the
Purchase Price to be disbursed by Buyer in Section 2.3 of the Stock Purchase
Agreement, Buyer shall remit from the Purchase Price to Xxx X. Xxxxxx $400,000
(the "Xxxxxx Settlement Amount"), representing the amount to be paid to Xxx X.
Xxxxxx under the Settlement Agreement, on behalf of Seller in immediately
available funds by wire transfer or other means acceptable to Xxx X. Xxxxxx,
and the portion of the Purchase Price remitted to Seller pursuant to such
Section 2.3 of the Stock Purchase Agreement shall be reduced by the Xxxxxx
Settlement Amount, in addition to the other disbursements listed in Section 2.3
of the Stock Purchase Agreement.
3. Completion Bonuses. Seller shall promptly pay to Subsidiary, upon
receipt of notice from Buyer or Subsidiary that such payments are due and
payable, 50% of the following completion bonuses:
Xxxxx Xxxxxx 2 months base salary
Xxx Xxxxxx 2 months base salary
Ben Fort 2 months base salary
Xxxx XxXxxxxxx 2 months base salary
Xxx Xxxxx 2 months base salary
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4. Fleet Pre-Closing Audit Adjustment. The amount set forth on the
Fleet Audit Schedule representing Missing Rental Equipment does not exceed
$50,000, and consequently there is no Fleet Pre-Closing Audit Adjustment, and
the Purchase Price shall not be reduced thereby.
5. Pre-Closing Tax Refund. The Purchase Price shall not be adjusted
at Closing for the Pre-Closing Refund Amount, and as of the Closing the
Pre-Closing Refund Amount is zero. This Section 5 shall not affect the ability
of Seller to receive tax refunds and applicable interest to which Seller is
entitled under Section 5.5 of the Stock Purchase Agreement.
6. Payments to Seller. Payments to Seller pursuant to Section 2.3 of
the Stock Purchase Agreement shall be made to the Company on behalf of the
Seller, and Buyer shall have no responsibility for the distribution or
allocation, if any, of such payments between Parent and Company.
7. Xxxx Burnie Property. Seller shall provide to Buyer within 10
business days of the date of this Supplement a Special Warranty Deed in
recordable form acceptable to Southwest Land Title Company's Maryland counsel
transferring record title to the Glen Burnie, Maryland property more
particularly described in Exhibit A attached hereto to Vibroplant U.S., Inc., a
Florida corporation and its successors and assigns.
8. Management Fee; Dividend.
(a) Withholding; Holdback. Payment of the Intercompany Account by
the Subsidiary pursuant to Section 2.5 of the Stock Purchase Agreement shall be
less (i) withholding tax of $50,000 on $1,000,000 of the Management Fee, and
(ii) a $25,500 holdback (the "Holdback") in respect of the other $500,000 of
the Management Fee. Buyer shall, or shall cause the Subsidiary to, hold the
Holdback in an interest bearing deposit account until distributed pursuant to
Section 8(b) of this Supplement.
(b) Documentation of Management Fee. Within 45 days after the
Closing Date, Seller shall provide to Buyer documentation of activities or
expenses incurred by Seller that Seller believes support the Subsidiary's
deduction, for federal income tax purposes, of $500,000 of the Management Fee
as a management fee (in addition to any other management fees paid by
Subsidiary to Seller in prior years). Upon delivery of such documentation to
Buyer, Buyer shall have 10 business days to consider such documentation. At
the end of such 10 business day period, if in the exercise of Buyer's
reasonable discretion Buyer concludes that such documentation does not support
treating all or a portion of such $500,000 as a management fee that is
deductible for tax purposes, Buyer shall so notify Seller, and Seller,
Subsidiary and Buyer shall to that extent treat all or a portion of such
$500,000 as a dividend to Seller. Seller shall be liable for withholding tax
and any applicable interest and penalties in respect of such dividend. The
portion of the Holdback representing applicable withholding tax plus applicable
interest and penalties on such portion of the $500,000 treated as a dividend
shall be paid to the United States Internal Revenue Service, with any balance
remaining of the Holdback being promptly remitted to the Company for the
benefit of Seller. To the extent such withholding tax, interest and penalties
exceeds the Holdback, Seller shall promptly remit such excess to Buyer.
9. Settlement Agreement. In connection with the payments to be made
under the Settlement Agreement and Release, dated as of February 23, 1996 (the
"Executive Settlement Agreement"), by and among the Subsidiary, the Parent,
Xxxxxxx Xxxxxx, Xxxxxx Xxxxxxx, Xxxxx
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Xxxxx, Xxxxxxxx Xxxx, Xxxxxx Xxxxxxx, Xxxxx Fix, Xxxxxx Xxxx and Xxxxx
Xxxxxxxxx (collectively, the "Management") Buyer and Seller agree as follows:
(a) Divestiture Bonus Payments. Seller shall be liable for all
Divestiture Bonus Payments (as defined in the Executive Settlement Agreement)
set forth in Section 1 of the Executive Settlement Agreement and any and all
other payments due a member of Management or other employee of the Subsidiary
as a result of the consummation of the transactions contemplated by the Stock
Purchase Agreement ("Other Divestiture Bonus Payments"), except that liability
for the completion bonuses set forth in Section 3 hereof shall be as set forth
therein. The amount of $1,024,500 (the "Divestiture Bonus Amount"),
representing the aggregate amount of the Divestiture Bonus Payments set forth
in Section 1 of the Executive Settlement Agreement, shall be withheld from the
payment of the Purchase Price, and shall constitute the "Divestiture Bonus
Amount" to be withheld from the Purchase Price pursuant to Section 2.3 of the
Stock Purchase Agreement. Of such Divestiture Bonus Amount withheld from the
Purchase Price, Buyer shall pay $602,500 at Closing as follows:
Xxxxxxx Xxxxxx $256,000
Xxxxx Xxxxx $115,500
Xxxxxxxx Xxxx $115,500
Xxxxxx Xxxxxxx $115,500
Buyer shall deposit the remaining $422,000 of the Divestiture Bonus Amount (the
"Bonus Escrow Amount") in the Bonus Escrow Account pursuant to Section 10 of
this Supplement.
(b) Short-Term Bonuses. The Subsidiary shall be liable for all
short-term bonuses set forth in Section 2 of the Executive Settlement
Agreement.
(c) Earned Vacation. The Subsidiary shall be liable for the
amounts of earned vacation set forth in Section 3 of the Executive Settlement
Agreement.
(d) Severance Payments. Seller shall be liable for $121,835 of
the severance amounts listed in Section 4(a) of the Executive Settlement
Agreement, as allocated to Seller in accordance with Section 2.11 of the Stock
Purchase Agreement. Of the $121,835, $98,750 shall be withheld from the
Purchase Price at the Closing as Seller's portion of the Severance Amounts due
to Messrs. Xxxxxx, Glick, Goss, and Xxxxxxx. The Seller shall pay the
Subsidiary the remaining $23,085 promptly upon receipt of notice from the Buyer
or Subsidiary that such amount is due and payable to Xxxxxx Xxxxxxx.
(e) Other Benefits. Subsidiary shall be liable for the other
benefits to be provided pursuant to Sections 4(c), (d), (e) and (f) of the
Executive Settlement Agreement.
10. Bonus Escrow Provisions.
(a) Bonus Escrow Amount. At Closing Buyer shall pay the Bonus
Escrow Amount into an escrow account (the "Bonus Escrow Account") established
pursuant to the terms and provisions of the escrow agreement attached hereto as
Exhibit "A" (the "Bonus Escrow Agreement"). The Bonus Escrow Agreement
attached as Exhibit "A" hereto shall supersede and replace the bonus escrow
agreement attached as Exhibit "B" to the Stock Purchase Agreement.
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(b) Disbursement from Escrow Account. Seller shall remain
liable for all Divestiture Bonus Payments or Other Divestiture Bonus Payments
(except that liability for the completion bonuses set forth in Section 3 hereof
shall be as set forth therein), but to the extent funds are available in the
Bonus Escrow Account to make such payments, such payments shall be made from
the Bonus Escrow Account.
(c) Other Payments. In the event the aggregate amount of the
Divestiture Bonus Payments and any Other Divestiture Bonus Payments exceeds the
Divestiture Bonus Amount, the Seller shall promptly remit such excess to the
Subsidiary or to the parties specified pursuant to Section 6(a) of the Bonus
Escrow Agreement.
11. Indemnification.
(a) Indemnity. Seller hereby agrees to indemnify, defend and
hold harmless the Buyer Group for any Losses arising from or in connection with
(i) the Executive Settlement Agreement, including without limitation any
amounts payable for indemnification of Management arising out of or in
connection with a breach of any provision of the Executive Settlement Agreement
and any action to enforce any provision of the Executive Settlement Agreement
arising out of such breach, except (A) for any breach of the Executive
Settlement Agreement by the Subsidiary not caused by Seller, (B) for amounts
for which Buyer or the Subsidiary is liable under this Supplement and (C) to
the extent of Seller's indemnification rights under the Stock Purchase
Agreement, as supplemented, modified and amended by this Supplement, (ii)
payment of Divestiture Bonus Payments or Other Divestiture Bonus Payments, or
(iii) payment of any Severance Amounts, except to the extent Buyer has agreed
to pay such amounts pursuant to Section 2.11 of the Stock Purchase Agreement.
(b) Procedure for Indemnification. Claims for indemnification
under this Section 11 in respect of Third Party Claims shall be governed by the
provisions of Section 9.3 of the Stock Purchase Agreement.
(c) Covenants and Agreements. The respective covenants and
agreements of Buyer and Seller in this Supplement shall constitute covenants
and agreements of Buyer and Seller respectively under the Stock Purchase
Agreement, and each of Buyer and Seller shall have their respective
indemnification obligations set forth in Article IX of the Stock Purchase
Agreement in respect of any breach or non-fulfillment of any such covenants or
agreements.
12. Benefit of Deduction. In connection with the Subsidiary's
payment of all amounts due under the Executive Settlement Agreement to
Management, for purposes of determining Seller's liability for Taxes as set
forth in Section 5.5(a)(i) of the Stock Purchase Agreement, Taxes for any Tax
period or deemed Tax period shall be determined without permitting Subsidiary a
deduction for the amounts paid under the Executive Settlement Agreement to
Management (the "Deduction"); provided, that Subsidiary shall be permitted a
deduction for the Divestiture Bonus Payments of $1,024,500 and Seller's portion
of Severance Amounts as allocated pursuant to Section 2.11 of the Stock
Purchase Agreement. Buyer shall be entitled to any refund of Taxes of
Subsidiary or any of its former subsidiaries to the extent attributable to the
Deduction, except to the extent attributable to the Divestiture Bonus Payments
or Seller's portion of the Severance Amounts.
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13. Supplement Controls. In the event of a conflict between the
terms of this Supplement and the terms of the Stock Purchase Agreement, this
Supplement shall control.
14. GOVERNING LAW. THIS SUPPLEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, REGARDLESS OF THE
LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES OF CONFLICT OF
LAWS THEREOF.
15. Counterparts. This Supplement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but each of
which together shall constitute one and the same documents.
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IN WITNESS WHEREOF, Buyer and Seller have caused this Supplement to be
executed as of the day and year first written above.
VIBROPLANT PLC
By: /s/ Xxxx Xxxxxxx
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Name: Xxxx Xxxxxxx
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Title: Director
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VIBROPLANT INVESTMENTS, LTD
By: /s/ Xxxxx Xxxxxxx
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Name: Xxxx Xxxxxxx
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Title: Director
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PRIMECO INC.
By: /s/ Xxxxx X. Xxxxxxxx
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Name: Xxxxx X. Xxxxxxxx
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Title: Executive Vice President
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