Exhibit 10.22
STOCK PURCHASE AGREEMENT
BY AND BETWEEN
XXXXX XXXX XXXXXXX, SR., AS TRUSTEE FOR THE XXXXXXX FAMILY TRUST,
XXXXX XXXX XXXXXXX, SR., XXXXXXX XXXXXXX XXXXXXX, XXXXXX X. XXXXXXX,
XXXXXXXXXXX X. XXXXXX, XXXXXX XXXXXX, JR., XXXXXXX X. XXXXXXX, XXXXX X.
XXXXXX, XXXXXXX X. XXXXX, XXXXXX X. XXXXX, XXXXXXXX X. XXXXXXX AND XXXXXX
X. XXXXXXX, AND XXXXXXX XXXXXXX XXXXXXX
SHAREHOLDERS OF
PREFERRED INDUSTRIES, INC.
AND
T-3 ENERGY SERVICES, INC.
DATED: MARCH 1, 2000
EX-229
TABLE OF CONTENTS
PAGE
STOCK PURCHASE AGREEMENT......................................................1
RECITALS:.....................................................................1
AGREEMENT:....................................................................1
1. AGREEMENT TO SELL AND AGREEMENT TO PURCHASE...............................2
1.1. PURCHASE OF SHARES FROM SHAREHOLDERS...........................2
1.2. MERGER.........................................................2
1.3. FURTHER ASSURANCES.............................................2
1.4. CLOSING........................................................3
2. CONSIDERATION TO BE PAID BY BUYER.........................................3
2.1. PURCHASE PRICE FOR SHARES......................................3
2.2. PAYMENT OF PURCHASE PRICE......................................3
2.3. PURCHASE PRICE ADJUSTMENT......................................5
3. REPRESENTATIONS AND WARRANTIES OF SELLERS.................................7
3.1. ORGANIZATION AND GOOD STANDING.................................7
3.2. AUTHORIZATION OF AGREEMENT.....................................7
3.3. OWNERSHIP OF SHARES............................................8
3.4. CAPITALIZATION.................................................8
3.5. FINANCIAL CONDITION............................................8
3.6. PROPERTY OF THE COMPANY........................................9
3.7. AGREEMENT NOT IN BREACH OF OTHER INSTRUMENTS..................12
3.8. EMPLOYMENT AGREEMENTS; EMPLOYEE BENEFITS......................13
3.9. LABOR AND EMPLOYMENT MATTERS..................................16
3.10. LITIGATION...................................................18
3.11. CONTRACTS....................................................18
3.12. REGULATORY APPROVALS.........................................20
3.13. COMPLIANCE WITH LAW..........................................20
3.14. INDEBTEDNESS FROM EMPLOYEES..................................20
3.15. ACCOUNTS RECEIVABLE..........................................20
3.16. INSURANCE....................................................21
3.17. POWERS OF ATTORNEY AND SURETYSHIPS...........................21
3.18. NO UNDISCLOSED LIABILITIES...................................22
3.19. ENVIRONMENTAL MATTERS........................................22
3.20. CONFLICT OF INTEREST.........................................23
3.21. TAXES........................................................23
3.22. LIENS........................................................29
3.23. OTHER INFORMATION............................................29
3.24. NO OTHER REPRESENTATIONS.....................................30
3.25. NO KNOWN BREACHES............................................30
4. REPRESENTATIONS AND WARRANTIES OF BUYER..................................30
4.1. ORGANIZATION..................................................30
4.2. CORPORATE AUTHORITY...........................................30
4.3. AGREEMENT NOT IN BREACH OF OTHER INSTRUMENTS..................30
4.4. INVESTMENT INTENT.............................................31
4.5. REGULATORY AND OTHER APPROVALS................................31
4.6. NO KNOWN BREACHES.............................................31
EX-230
4.7. OTHER INFORMATION.............................................31
4.8. NO OTHER REPRESENTATIONS......................................32
5. CERTAIN UNDERSTANDINGS AND AGREEMENTS OF THE PARTIES.....................32
5.1. COOPERATION IN LITIGATION.....................................32
5.2. TAX MATTERS...................................................32
5.3. EMPLOYMENT AND CONFIDENTIALITY AGREEMENTS.....................34
5.4. MERGER........................................................34
6. INDEMNIFICATION..........................................................35
6.1. INDEMNIFICATION BY SELLERS....................................35
6.2. INDEMNIFICATION BY BUYER......................................37
6.3. CLAIMS FOR INDEMNIFICATION....................................38
6.4. DEFENSE BY INDEMNIFYING PARTY.................................38
6.5. MANNER OF INDEMNIFICATION.....................................39
6.6. LIMITATIONS ON INDEMNIFICATION................................39
6.7. SOLE BASIS FOR RECOVERY.......................................40
6.8. JOINT AND SEVERAL LIABILITY...................................41
7. DOCUMENTS TO BE DELIVERED AT CLOSING.....................................41
7.1. CLOSING DOCUMENTS DELIVERED BY SELLERS........................41
7.2. CLOSING DOCUMENTS DELIVERED BY BUYER..........................42
8. RELEASE..................................................................42
9. MISCELLANEOUS............................................................43
9.1. NOTICES.......................................................43
9.2. ASSIGNABILITY AND PARTIES IN INTEREST.........................45
9.3. GOVERNING LAW.................................................45
9.4. COUNTERPARTS..................................................45
9.5. INDEMNIFICATION FOR BROKERAGE.................................45
9.6. PUBLICITY.....................................................46
9.7. COMPLETE AGREEMENT............................................46
9.8. INTERPRETATION................................................46
9.9. SEVERABILITY..................................................46
9.10. KNOWLEDGE: DUE DILIGENCE INVESTIGATION......................47
9.11. EXPENSES OF TRANSACTIONS.....................................47
9.12. LIMIT ON INTEREST............................................47
9.13. SUBMISSION TO JURISDICTION...................................47
9.14. ARBITRATION..................................................47
9.15. WAIVER OF PUNITIVE DAMAGES...................................48
EX-231
EXHIBITS
EXHIBIT A ESCROW AGREEMENT
EXHIBIT 2.3.1 FORM OF CLOSING BALANCE SHEET
EXHIBIT 5.3.1. EMPLOYMENT AGREEMENT
EXHIBIT 5.3.2. CONFIDENTIALITY AGREEMENT
SCHEDULES
SCHEDULE 2.2.2. SELLERS' WIRE TRANSFER INSTRUCTIONS
SCHEDULE 3.1. LOUISIANA PARISHES IN WHICH THE COMPANY DOES BUSINESS
SCHEDULE 3.5.1. FINANCIAL STATEMENTS
SCHEDULE 3.5.2. ASSETS TRANSFERRED OTHER THAN IN THE ORDINARY COURSE OF
BUSINESS
SCHEDULE 3.6.1. REAL PROPERTY
SCHEDULE 3.6.2. INVENTORY
SCHEDULE 3.6.3. TANGIBLE PERSONAL PROPERTY
SCHEDULE 3.6.4. INTANGIBLE PERSONAL PROPERTY
SCHEDULE 3.6.5. SUBSIDIARIES
SCHEDULE 3.7. CONSENTS
SCHEDULE 3.8.1 LABOR AND EMPLOYMENT MATTERS
SCHEDULE 3.8.2. EMPLOYEE BANEFIT PLANS
SCHEDULE 3.9.1. COLLECTIVE BARGAINING
SCHEDULE 3.9.2. LABOR DISPUTES
SCHEDULE 3.10. LITIGATION
SCHEDULE 3.11. CONTRACTS
SCHEDULE 3.14. EMPLOYEE INDEBTEDNESS
SCHEDULE 3.15. ACCOUNTS RECEIVABLE
SCHEDULE 3.16. INSURANCE
SCHEDULE 3.20. CONFLICTS
SCHEDULE 3.21.2. TAXABLE YEARS/EXAMINATIONS
SCHEDULE 3.21.3. TAX RETURNS, ETC.
SCHEDULE 3.21.3.7. TAX AFFILIATES
SCHEDULE 3.21.3.22. TAX RETURNS WITHIN 60 DAYS
SCHEDULE 3.21.3.23. TAX JURISDICTIONS
SCHEDULE 3.22. DESCRIPTION OF COMPANY INDEBTEDNESS GUARANTEED BY SELLERS;
LIENS ON ASSETS
SCHEDULE 5.3.2. LIST OF EMPLOYEES/SHAREHOLDERS THAT WILL EXECUTE
CONFIDENTIALITY AGREEMENT
SCHEDULE 6.1.8. ENVIRONMENTAL MATTERS
SCHEDULE 9.5. BROKERAGE
EX-232
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of this 1st day of March, 2000 by and among XXXXX XXXX XXXXXXX, SR., AS
TRUSTEE FOR THE XXXXXXX FAMILY TRUST, XXXXX XXXX XXXXXXX, SR., XXXXXXX XXXXXXX
XXXXXXX, XXXXXX X. XXXXXXX, XXXXXXXXXXX X. XXXXXX, XXXXXX XXXXXX, JR., XXXXXXX
X. XXXXXXX, XXXXX X. XXXXXX, XXXXXXX X. XXXXX, XXXXXX X. XXXXX, XXXXXXXX X.
XXXXXXX, XXXXXX X. XXXXXXX AND XXXXXXX XXXXXXX XXXXXXX (collectively, the
"Sellers"), being all the shareholders of PREFERRED INDUSTRIES, INC., a
Louisiana corporation (the "Company"), and T-3 ENERGY SERVICES, INC., a Delaware
corporation ("Buyer").
RECITALS:
1. Sellers own all outstanding shares of the common stock, no par
value (the "Shares"), of the Company.
2. The Company is engaged in the business of manufacture,
remanufacture, and repair of flow control equipment and the manufacture,
remanufacture, and repair of drilling equipment used in the oil and gas
exploration, refining, production and distribution industries.
3. Sellers desire to sell to Buyer the Purchased Shares (as defined
below), and Buyer desires to acquire the Purchased Shares on the terms and
conditions hereinafter set forth.
4. Immediately after Buyer's acquisition of the Purchased Shares (as
hereinafter defined) pursuant to this Agreement, Buyer and Xxxxx Xxxx Xxxxxxx,
Sr. shall cause Preferred Industries Acquisition Corp., which is a wholly owned
subsidiary of the Buyer, to be merged into the Company. In consideration of the
merger, Xxxxx Xxxx Xxxxxxx, Sr. shall be given common stock in the Buyer in
exchange for that portion of the Shares owned by Xxxxx Xxxx Xxxxxxx, Sr. not
included in the Purchased Shares.
AGREEMENT:
NOW, THEREFORE, in consideration of the premises and the mutual
promises contained herein, the parties hereto covenant and agree as follows:
EX-233
1. AGREEMENT TO SELL AND AGREEMENT TO PURCHASE.
1.1. PURCHASE OF SHARES FROM SHAREHOLDERS.
On the terms and subject to the conditions set forth herein, Sellers
hereby sell, transfer, convey, assign and deliver to Buyer, free and clear
of all liens, pledges, encumbrances and claims whatsoever, and Buyer hereby
purchases, acquires and accepts from Sellers all the Purchased Shares.
Sellers shall deliver to Buyer certificates representing the Purchased
Shares, duly endorsed for transfer at the Closing (as defined in Section
1.4 hereof). The Purchased Shares are identified as follows: (i) for all
Sellers except Xxxxx Xxxx Xxxxxxx, Sr., the Purchased Shares include 100%
of the common stock in the Company owned by said Sellers and (ii) for Xxxxx
Xxxx Xxxxxxx, Sr., the Purchased Shares include all common stock in the
Company, less 0.92222 shares. The excluded 0.92222 shares are herein called
the "Non-Purchased Shares."
1.2. MERGER.
Following Buyer's acquisition of the Purchased Shares, Buyer ad
Xxxxx Xxxx Xxxxxxx, Sr. shall cause a merger of Preferred Industries
Acquisition Corp., which is a wholly owned subsidiary of the Buyer into the
Company. The merger shall be treated as a Section 351 reorganization under
the Internal Revenue Code. As part of the merger, Xxxxx Xxxxxxx shall
transfer to Buyer the Non-Purchased Shares, and Buyer shall issue and
transfer to Xxxxx Xxxx Xxxxxxx, Sr. common stock of the Buyer having a
value of $200,000.00. The parties agree and acknowledge that the value of
the value of the Non-Purchased Shares in $200,000.00.
1.3. FURTHER ASSURANCES.
From time to time after the Closing, Sellers and Buyer, and each of
their respective affiliates, will execute and deliver to the other party
such instruments of sale, transfer, conveyance, assignment and delivery,
consents, assurances, powers of attorney and other instruments as may be
reasonably requested by counsel for Buyer or Sellers in order to vest in
Buyer all right, title and interest of Sellers in and to the Shares and
otherwise in order to carry out the purpose and intent of this Agreement.
EX-234
1.4. CLOSING.
The closing (the "Closing") of the transactions herein contemplated
shall take place at the offices of Liskow & Xxxxx located at One Shell
Square, 000 Xxxxxxx Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxx 00000 and be effective
as of 10:00 a.m., local time, on the date hereof (the "Closing Date"). All
actions taken and all documents delivered at the Closing shall be deemed to
have occurred simultaneously.
2. CONSIDERATION TO BE PAID BY BUYER.
2.1. PURCHASE PRICE FOR SHARES.
The purchase price for the Purchased Shares shall be an amount
("Purchase Price") equal to $17,800,000.00 plus or less, as the case may
be, any Adjustment Amounts (as defined in Section 2.3.).
2.2. PAYMENT OF PURCHASE PRICE.
2.2.1. ASSUMPTION OF DEBT
A portion of the Purchase Price will consist of Buyer's
assumption at Closing of the Company's Total Debt. The term "Total
Debt" is herein defined as the amount equal to the Company's
short-term debt, current portion of long-term debt, long-term debt
and shareholders loans. To the extent the Company has capital lease
or sale lease back obligations, such obligations will be treated as
a component of Total Debt assumed by Buyer for the purposes of
calculating the cash portion of the Purchase Price. The Total Debt
assumed by Buyer shall be treated as a dollar-for-dollar credit to
the Purchase Price.
2.2.2. CASH TO SELLERS
At the Closing, Buyer shall pay in immediately available
funds by wire transfer (pursuant to the instructions set forth on
Schedule 2.2.2.) to Sellers the cash portion of the Purchase Price,
less the Escrow Amount (as defined in Section 2.2.3.), to the
separate accounts of Sellers in the following percentages:
Xxxxx Xxxx Xxxxxxx, Sr., 32.530120%
as Trustee for the Xxxxxxx
Family Trust
Xxxxx Xxxx Xxxxxxx, Sr. 24.096386%
Xxxxxxx Xxxxxxx 6.024096%
Xxxxxxx
EX-235
Xxxxxx X. Xxxxxxx 6.024096%
Xxxxxxxxxxx X. Xxxxxx 6.024096%
Xxxxxx Xxxxxx, Jr. 1.204819%
Xxxxxxx X. Xxxxxxx 6.024096%
Xxxxx X. Xxxxxx 6.024096%
Xxxxxxx X. Xxxxx 1.204819%
Xxxxxx X. Xxxxx 1.204819%
Xxxxxxxx X. Xxxxxxx 6.024096%
Xxxxxx X. Xxxxxxx and Xxxxxxx 3.614458%
Xxxxxxx Xxxxxxx
2.2.3. RETENTION OF ESCROW.
Buyer shall place in an interest bearing escrow account with
Hibernia National Bank $1,780,000.00 of the Purchase Price (the
"Escrow Amount"), which shall be subject to Section 6. and the
Adjustment Amounts (as defined in Section 2.3.4.) Distribution of
the Escrow Amount shall be pursuant to an Escrow Agreement in the
form of Exhibit A. The Escrow Amount, after taking into account any
claims by Buyer against Sellers pursuant to Section 6. of this
Agreement and any Adjustment Amounts payable to Buyer to the extent
not paid by Sellers, shall be paid to Sellers with interest as
follows:
EX-236
2.2.3.1. On September 1, 2000, Buyer shall
pay to Sellers, in the percentages set forth in
Section 2.2.2., $890,000.00, less any amounts
claimed pursuant to Section 6. by Buyer up to
September 1, 2000 and any Adjustment Amounts payable
to Buyer to the extent not paid by Sellers,
including interest accrued on any such amounts.
2.2.3.2. On April 30, 2001 or seven (7) days
after Buyers receipt of the Company's audited
financial statements for calendar year 2000,
whichever is later, (the "Release Date") Buyer shall
pay to Sellers, in the percentages set forth in
Section 2.2.2., any remaining portion of the Escrow
Amount, less any amounts claimed pursuant to Section
6. by Buyer up to the Release Date and any
Adjustment Amounts payable to Buyer to the extent
not paid by Sellers, including interest accrued on
any such amounts.
2.3. PURCHASE PRICE ADJUSTMENTS.
2.3.1. Seller shall prepare or cause to be prepared and
delivered to Buyer at the Closing a preliminary combined balance
sheet of the Company as of February 29, 2000, prepared in accordance
with generally accepted accounting principles consistently applied
("GAAP") on a basis consistent with the Financial Statements as such
term is used in Section 3.5.1. of this Agreement (the "Closing
Balance Sheet"), which Closing Balance Sheet must be reasonably
acceptable to Buyer. Upon request, the Sellers shall provide to the
Buyer and its, representatives, accountants, and advisors with
access to copies of all work papers and other relevant documents to
verify the entries contained in the Closing Balance Sheet. The
Closing Balance Sheet must include a calculation of (a) Net Working
Capital (defined as the Company's current assets, excluding obsolete
and slow moving items of Inventory, minus (i) proceeds from the
Company's sale of assets listed on its June 30, 1999 balance sheet
(other than items of Inventory sold in the ordinary course of
business) and (ii) the Company's current liabilities, excluding
short-term debt and the current portion of long-term debt) in the
amount of $2,424,000.00 and (b) Total Debt (as defined in Section
2.2.1. above). The parties agree that for the purposes of
calculating Net Working Capital, the maximum allowance for a step-up
in Inventory value is $350,000.00, and that there will be no further
adjustments to Inventory except for variances in count resulting
from a physical count of the Inventory at Closing. The form of
Closing Balance Sheet, prepared by Xxxxxx Xxxxxxxx LLP, for use by
Sellers is attached to this Agreement as Exhibit 2.3.1.
2.3.2. In the event the preliminary determination of Net
Working Capital as set forth on the Closing Balance Sheet is greater
(applying GAAP) than $2,424,000.00, the amount in excess will be
paid at Closing by wire transfer by Buyer to Sellers in the
percentages set forth in Section 2.2.2. On the other hand, if the
preliminary determination of Net Working Capital as set
EX-237
forth in the Closing Balance Sheet is less (applying GAAP) than
$2,424,000.00, then the Purchase Price shall be reduced by the Net
Working Capital excess amount.
2.3.3. On or before 60 days after the Closing Date, the
Company shall cause the accounting firm of Xxxxxx Xxxxxxxx LLP to
audit the Closing Balance Sheet in accordance with GAAP, and deliver
the audited Closing Balance Sheet (the "Audited Closing Balance
Sheet") to Buyer and Sellers in order to determine the "Adjustment
Amounts" (as defined below in Section 2.3.4.). Upon reasonable
notice and during reasonable business hours, Buyer agrees that the
Company shall allow Sellers and Sellers' Accountant access to the
persons involved in the preparation of the Audited Closing Balance
Sheet and to all of their work-papers so as to permit Sellers and
Sellers' Accountant to make copies of such work-papers supporting
the amounts included in the Audited Closing Balance Sheet and to
reasonably review the accounting procedures, tests, methods and
approaches utilized by Xxxxxx Xxxxxxxx LLP.
2.3.4. On or before the 55th day following delivery of the
Audited Closing Balance Sheet pursuant to Section 2.3.3., Sellers
shall notify Buyer in writing of any objections to the Audited
Closing Balance Sheet (and the determination of the Adjustment
Amounts) as not complying with the requirements of Section 2.3.,
specifying in reasonable detail any such objections (a "Dispute
Notice"). If (i) Sellers do not deliver a Dispute Notice within the
time period specified above for delivery of a Dispute Notice (the
"Notice Period"), or (ii) prior to the expiration of the Notice
Period, Sellers indicate in writing to Buyer that Sellers relinquish
their right to object to the Audited Closing Balance Sheet, or (iii)
Buyer and Sellers agree on the resolution of all such objections or
changes at any time subsequent to the expiration of the Notice
Period, the Audited Closing Balance Sheet, with any such changes as
are agreed upon, shall be final and binding on the parties hereto.
If Sellers and Buyer are unable to resolve the matters addressed in
any Dispute Notice, each party shall within fourteen (14) business
days after the delivery of such Dispute Notice, summarize its
position with regard to such dispute in a written document of ten
pages or less and submit such summaries to the Houston, Texas office
of, PriceWaterhouseCoopers, LLP, or such other party as the parties
may mutually select (the "Accounting Arbitrator"), together with the
Dispute Notice and any other documentation either party may desire
to submit. The Accounting Arbitrator shall render a decision
regarding such dispute in accordance with this Agreement, based on
the materials described above and based upon the books and records
of the Company within twenty business days of the submission of such
materials. Any decision rendered by the Accounting Arbitrator
pursuant hereto shall be final and binding between the parties for
the purpose of determining the Adjustment Amounts under this Section
2.3. Within ten days after the final determination of the Audited
Closing Balance Sheet pursuant to this Section 2.3.4., the following
adjustments to the Purchase Price shall occur: (i) to the extent
that the Net
EX-238
Working Capital balance on the Audited Closing Balance Sheet
(applying GAAP) is different from the Net Working Capital balance
set forth on the Closing Balance Sheet, then (a) any excess amount
shall be paid by Buyer to Sellers or (b) any shortfall or deficiency
amount shall be paid by Sellers to Buyer; and (ii) to the extent
that the Total Debt amount set forth on the Audited Closing Balance
Sheet (applying GAAP) is different from the Total Debt amount set
forth on the Closing Balance Sheet, then (x) the amount of any
decrease shall be paid by Buyer to Sellers or (y) the amount of any
increase shall be paid by Sellers to Buyer. Notwithstanding the
foregoing, no adjustment shall occur on account of a change in Total
Debt to the extent such change has been compensated through the Net
Working Capital adjustment. Payments under this Section 2.3.4. shall
be in immediately available funds by wire transfer, and all such
payments to Sellers shall be in the percentages set forth in Section
2.2.2. above. If Sellers fail to make any payment to Buyer required
by this Section 2.3.4., then Buyer is authorized but not required to
apply any or all of the Escrow Amount to such payment. The term
"Adjustment Amounts" as used in this Section 2.3. shall mean any
payments, as adjusted, and/or reductions to the Purchase Price made
by Buyer to Sellers or by Sellers to Buyer pursuant to Sections
2.3.2. and 2.3.4. of this Agreement.
3. REPRESENTATIONS AND WARRANTIES OF SELLERS.
Sellers jointly and severally, and insolido, except as provided in Section
6.8. below, represent and warrant to Buyer that:
3.1. ORGANIZATION AND GOOD STANDING.
Each of the Company and the Subsidiaries (as defined in Section
3.6.5) is duly organized, validly existing and in good standing under the
laws of the jurisdiction in which it was formed, with full power to carry
on its business as it is now and has since its organization been conducted,
and to own, lease or operate its assets. Either the Company or one of the
Subsidiaries is duly authorized to do business and is in good standing in
such other jurisdictions in which the failure to so qualify could have a
material and adverse effect on the results of operations, properties,
assets, condition (financial or otherwise), or prospects of the Company (a
"Material Adverse Effect"). Schedule 3.1. is a listing of the Louisiana
parishes in which the Company does business and the Louisiana parishes
adjacent to offshore waters in which the Company does business.
3.2. AUTHORIZATION OF AGREEMENT.
Sellers have all requisite power and authority to enter into this
Agreement and to consummate the transactions contemplated hereby. This
Agreement and all other agreements and instruments to be executed by
Sellers or their affiliates in connection herewith have been duly executed
and delivered by Sellers or their affiliates, have been effectively
authorized by all necessary action, corporate or otherwise, and constitute
legal, valid and binding obligations of Sellers or their affiliates, as the
case may be.
EX-239
3.3. OWNERSHIP OF SHARES.
The Shares are owned beneficially and of record by Sellers, and are
being transferred to Buyer free and clear of all liens, mortgages, charges,
option rights, pledges, security interests, restrictions, prior
assignments, encumbrances and claims of any kind or nature whatsoever. No
Shares are subject to any restriction with respect to their transferability
(other than restrictions on transfer under applicable Federal and state
securities laws).
3.4. CAPITALIZATION.
The authorized capital stock of the Company consists solely of 1,000
shares of common stock, no par value, of which 83 are issued and
outstanding and which are owned by Sellers in the percentages set forth in
Section 2.2.2. All of the Shares have been duly authorized, validly issued
(free of all past, present and future preemptive rights), and are fully
paid and non-assessable. There are no outstanding or authorized options,
warrants, subscriptions, calls, puts, conversion or other rights,
contracts, agreements, commitments or understandings of any kind obligating
the Company to issue, sell, purchase, return, redeem or pay any
distribution or dividend with respect to any shares of capital stock of the
Company or any other securities convertible into, exchangeable for or
evidencing the right to subscribe for any shares of capital stock of or
other ownership interest in the Company.
3.5. FINANCIAL CONDITION.
3.5.1.
Financial Statements. Schedule 3.5.1. sets forth the
following financial information of the Company: the balance sheet as
of June 30, 1999, December 31, 1998, December 31, 1997, and December
31, 1996, and the related statements of income for the six months
ended June 30, 1999 and each of the three years in the period ended
December 31, 1998 (collectively, the "Financial Statements"). The
Financial Statements for any periods in 1998 and 1999 were prepared,
after adjustments, in accordance with generally accepted accounting
principles, applied on a consistent basis.
EX-240
3.5.2.
Absence of Certain Changes. Since June 30, 1999 (the
"Balance Sheet Date") there has not been (i) any damage, destruction
or loss, whether or not covered by insurance, which, if not covered
by insurance, could be a Material Adverse Effect; (ii) any sale or
transfer of any of the assets of the Company except (a) sales in the
ordinary course of the business of inventory or immaterial amounts
of other tangible personal property and (b) for the transfers listed
on Schedule 3.5.2.; (iii) any increase in, or commitment to
increase, the compensation payable or to become payable to any of
the Company's employees or any bonus payment (other than as included
as an accrued liability on the Company's June 30, 1999 Financial
Statement) or similar arrangement made to or with any of the
Company's employees other than routine increases made in the
ordinary course of business not exceeding the greater of five
percent per annum or Two Thousand Dollars ($2,000) per annum for any
of them individually; (iv) any adoption of a plan or agreement or
amendment to any plan or agreement providing any new or additional
fringe benefits; or (v) any material alteration in the manner of
keeping the Company's books, accounts or records, or in the
accounting practices therein reflected. Since the Balance Sheet
Date, the Company has not (except with the prior written consent of
Buyer): (a) entered into any material transaction not in the
ordinary course of business; or (b) materially amended, modified, or
terminated any material Contract (as defined in Section 3.11.1.)
other than in the ordinary course of its business.
3.6. PROPERTY OF THE COMPANY.
3.6.1.
Real Property. There is listed in Schedule 3.6.1. a
description of each parcel of real or immovable property owned by or
leased to the Company, or owned by or leased to Sellers for use by
the Company. Except as indicated in Schedule 0.0.0.:
3.6.1.1.
Each of the leases described in Schedule
3.6.1. is a valid and binding obligation of the
Company or Sellers, as the case may be, and Sellers
do not have any knowledge that any of said leases is
not a valid and binding obligation of each of the
other parties thereto;
EX-241
3.6.1.2.
the Company and Sellers are not, and Sellers
do not have any knowledge that any other party to
any such lease is, in default with respect to any
material term or condition thereof, and Sellers do
not have any knowledge that any event has occurred
which through the passage of time or the giving of
notice, or both, would constitute a default
thereunder or would cause the acceleration of any
obligation of any party thereto or the creation of a
lien or encumbrance upon any asset of the Company;
3.6.1.3.
All of the buildings, fixtures and other
improvements located on the real or immovable
property described in Schedule 3.6.1. are in good
operating condition and repair, and the Company or
Sellers, as the case may be, holds valid and
effective certificates of occupancy, underwriters'
certificates relating to electrical work, building,
safety, fire and health approvals and all other
permits and licenses required by applicable law
relating to the operation of such real properties
and leaseholds. Neither the Company nor Sellers have
received notice that the Company's operations at the
real or immovable property listed in Schedule 3.6.1.
as presently conducted is in violation of any
applicable building code, zoning ordinance or other
law or regulation;
3.6.1.4.
Neither the Company nor Sellers, as the case
may be, have experienced during the two years
preceding the date hereof any material interruption
in the delivery of adequate quantities of any
utilities (including, without limitation,
electricity, natural gas, potable water, water for
cooling or similar purposes and fuel oil) or other
public services (including, without limitation,
sanitary and industrial sewer service) required by
the Company during such period.
3.6.2.
Inventory. There is listed in Schedule 3.6.2. a description
of all inventories of (i) valves, chokes, actuators, manifolds,
drilling spools, flanges, tees, blowout preventers, and
miscellaneous pressure control and drilling products; (ii) raw
material, work in progress, finished goods, containers, tote bins,
and other packaging material, spare parts, maintenance supplies; and
(iii) other similar items of the Company (the "Inventory"). Also
separately listed on Schedule 3.6.2 is a description of all items of
Inventory that are obsolete and/or slow moving for sale or rental
purposes. Except for the Inventory which is carried as second
quality or slow moving material in the Company's June 30, 1999
Financial Statement, the Inventory of the Company is good and
merchantable and is salable in the ordinary course of business.
EX-242
The Inventory is carried on the books of the Company at the lower of
cost or market.
3.6.3.
Other Tangible Personal Property. There is listed in
Schedule 0.0.0.: (i) a description and the location of each item of
tangible personal property (other than Inventory) owned by the
Company or in the possession of the Company having on the date
hereof a depreciated book value per unit in excess of Five Thousand
Dollars ($5,000); (ii) an identification of the owner of, and any
agreement relating to the use of, each item of tangible personal
property under leases or other similar agreements which provide for
rental payments at a rate in excess of Two Hundred Fifty Dollars
($250) per month; and (iii) an identification of the owner of, and
any agreement relating to the use of, each motor vehicle not owned
by the Company, the rights to which are to be transferred to Buyer
pursuant hereto;
3.6.4.
Intangible Personal Property. There is listed in Schedule
0.0.0.: an identification of all (i) foreign and United States
Federal or state patents, patent applications, invention
disclosures, copyrights, copyright registrations, trademarks,
trademark registrations, service marks, service xxxx registrations,
trade names, trade name registrations and applications for any of
the foregoing, owned or used by the Company; (ii) common law claims
to trademarks, service marks and tradenames; (iii) claims of
copyright that exist although no registrations have been issued with
respect thereto; and (iv) fictitious or assumed business name
filings with any state or local governmental authority ("intangible
personal property"). Schedule 3.6.4. also sets forth a true and
complete list of all licenses or similar agreements or arrangements
to which the Company is a party either as licensee or licensor for
each such item of intangible personal property. Except as indicated
in Schedule 0.0.0.:
3.6.4.1.
There have not been any regulatory actions
or other judicial or adversary proceedings involving
the Company concerning any of such items of
intangible personal property, nor is any such action
or proceeding threatened;
EX-243
3.6.4.2.
the Company has the right and authority to
use said items of intangible personal property in
connection with the conduct of its business in the
manner presently conducted and, subject to the
receipt of those consents listed on Schedule 3.7.,
to convey such right and authority to Buyer, and
such use does not conflict with, infringe upon or
violate any patent, trademark, servicemark, trade
name, registration or similar rights of any other
person, firm or corporation;
3.6.4.3.
There are no outstanding, or threatened,
disputes or disagreements with respect to any
licenses or similar agreements or arrangements
described in Schedule 3.6.4.; and
3.6.4.4.
The conduct of its business by the Company
does not conflict with any patents, trademarks,
trade secrets, trade names or similar rights of
others.
3.6.5. SUBSIDIARIES
Set forth on Schedule 3.6.5 is a list of all entities in
which the Company holds a 5% or greater interest (the
"Subsidiaries") and the percentage ownership of the Company in each
such entity. There are no options, warrants, convertible debt or
other similar instruments entitling anyone to acquire any capital
stock or other equity interest of any of the Subsidiaries.
3.7. AGREEMENT NOT IN BREACH OF OTHER INSTRUMENTS.
The execution and delivery of this Agreement by Sellers and the
consummation of the transactions contemplated hereby will not result in a
breach of any of the terms and provisions of, or constitute a default
under, or conflict with: (i) any Contract or any other material agreement,
indenture or other instrument to which Sellers or the Company is a party or
by which any of them is bound, subject to the receipt of those consents
listed on Schedule 3.7. which have been obtained and provided to Buyer,
(ii) the Articles of Incorporation and Bylaws of the Company and each of
the Subsidiaries, (iii) any judgment, decree, order or award of any court,
governmental body or arbitrator, or (iv) any law, rule or regulation
applicable to Sellers or the Company.
3.8. EMPLOYMENT AGREEMENTS; AND EMPLOYEE BENEFITS.
EX-244
3.8.1.
Except as set forth on Schedule 3.8.1., there are no
employment, consulting, severance pay, continuation pay, termination
pay or indemnification agreements or other similar agreements of any
nature whatsoever (collectively, "Employment Agreements") between
the Company or a Subsidiary, on the one hand, and any current or
former stockholder, officer, director, employee, consultant, or
agent of the Company or a Subsidiary, on the other hand, that are
currently in effect. Except as set forth on Schedule 3.8.1. there
are no Employment Agreements or any other similar agreements to
which the Company or any of its Subsidiaries is a party under which
the transactions contemplated by this Agreement (i) will require any
payment by the Company, a Subsidiary or Buyer, or any consent or
waiver from any stockholder, officer, director, employee, consultant
or agent of the Company, a Subsidiary or Buyer, or (ii) will result
in any change in the nature of any rights of any stockholder,
officer, director, employee, consultant or agent of the Company or a
Subsidiary under any such Employment Agreement or other similar
agreement.
3.8.2.
Schedule 3.8.2. sets forth Employee Benefit Plans of the
Company and its Subsidiaries. The Company has made true and correct
copies of all governing instruments and related agreements
pertaining to such benefit plans available to Buyer.
3.8.3.
Neither the Company, any Subsidiary nor any of their ERISA
Affiliates sponsors or has ever sponsored, maintained, contributed
to, or incurred an obligation to contribute to, any Employee Pension
Benefit Plan.
3.8.4.
No individual shall accrue or receive additional benefits,
service or accelerated rights to payments of benefits under any
Employee Benefit Plan, including the right to receive any parachute
payment, as defined in Section 280G of the Code, or become entitled
to severance, termination allowance or similar payments as a direct
result of the transactions contemplated by this Agreement.
3.8.5.
No Employee Benefit Plan has participated in, engaged in or
been a party to any non-exempt Prohibited Transaction, and neither
the Company, a Subsidiary nor any of their ERISA Affiliates has had
asserted against it any claim for taxes under Chapter 43 of Subtitle
A of the Code and Sections 5,000 of the Code , or for penalties
under ERISA Section 502(c), (i) or (l), with respect to any Employee
Benefit Plan nor, to the knowledge of the
EX-245
Shareholders, is there a basis for any such claim. No officer,
director or employee of the Company or a Subsidiary of the Company
has committed a material breach of any responsibility or obligation
imposed upon fiduciaries by Title I of ERISA with respect to any
Employee Benefit Plan.
3.8.6.
Other than routine claims for benefits, there is no claim
pending or to the knowledge of the Company and Shareholders
threatened, involving any Employee Benefit Plan by any Person
against such plan or the Company, any Subsidiary or any ERISA
Affiliate. There is no pending or to the knowledge of the Company
and Shareholders threatened proceeding involving any Employee
Benefit Plan before the IRS, the U.S. Department of Labor or any
other governmental authority.
3.8.7.
There is no violation of any reporting or disclosure
requirement imposed by ERISA or the Code with respect to any
Employee Benefit Plan.
3.8.8.
Each Employee Benefit Plan has at all times prior hereto
been maintained in all material respects, by its terms and in
operation, in accordance with ERISA and the Code. The Company, each
Subsidiary and their ERISA Affiliates have made full and timely
payment of all amounts required to be contributed under the terms of
each Employee Benefit Plan and applicable law or required to be paid
as expenses under such Employee Benefit Plan, and the Company, each
such Subsidiary and their ERISA Affiliates shall continue to do so
through the Closing. Each Employer Benefit Plan intended to be
qualified under Code Section 401(a) has received a determination
letter to that effect from the Internal Revenue Service and no event
has occurred and no amendment has been made that would adversely
affect such qualified status.
3.8.9.
With respect to any group health plans maintained by the
Company, any Subsidiary or their ERISA Affiliates, whether or not
for the benefit of the Company's or such Subsidiary's employees, the
Company and its ERISA Affiliate have complied in all material
respects with the provisions of Part 6 of Title I of ERISA and 4980B
of the Code. Neither the Company nor any Subsidiary is obligated to
provide health care benefits of any kind to its retired employees
pursuant to any Employee Benefit Plan, including without limitation
any group health plan, or pursuant to any agreement or
understanding.
3.8.10.
The Company has made available to the Buyer a copy of (i)
the three (3) most recently filed Federal Form 5500 series and
accountant's opinion, if applicable, for each Employee Benefit Plan
and all applicable Internal Revenue Service determination letters.
EX-246
3.8.11.
For purposes of this Section 3.8., the following definitions
shall apply:
3.8.11.1.
"Benefit Arrangement" means any material
benefit arrangement that is not an Employee Benefit
Plan, including, without limitation, (i) each
employment or consulting agreement, (ii) each
arrangement providing for insurance coverage or
workers' compensation benefits, (iii) each incentive
bonus or deferred bonus arrangement, (iv) each
arrangement providing termination allowance,
severance or similar benefits, (v) each equity
compensation plan, (vi) each deferred compensation
plan and (vii) each compensation policy and practice
maintained by the Company or any ERISA Affiliate
covering the employees, former employees, directors
and former directors of the Company, and the
beneficiaries of any of them.
3.8.11.2.
"COBRA" means the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended, as
set forth in Section 4980B of the Code and Part 6 of
Title I of ERISA.
EX-247
3.8.11.3.
"Code" means the Internal Revenue Code of
1986, as amended.
3.8.11.4.
"Employee Benefit Plan" means any employee
benefit plan, as defined in Section 3(3) of ERISA,
that is sponsored or contributed to by the Company
or any ERISA Affiliate covering employees or former
employees of the Company.
3.8.11.5.
"Employee Pension Benefit Plan" means any
employee pension benefit plan, as defined in Section
3(2) of ERISA, that is subject to Title IV of ERISA.
3.8.11.6.
"ERISA" means the Employee Retirement Income
Security Act of 1974, as amended.
3.8.11.7.
"ERISA Affiliate" of any person means any
other person that, together with such person as of
the relevant measuring date under ERISA, was or is
required to be treated as a single employer under
Section 414 of the Code.
3.8.11.8.
"Prohibited Transaction" means a transaction
that is prohibited under Section 4975 of the Code or
Section 406 of ERISA and not exempt under Section
4975 of the Code or Section 408 of ERISA,
respectively.
3.9. LABOR AND EMPLOYMENT MATTERS.
3.9.1.
Except as set forth on Schedule 3.9.1., no collective
bargaining agreement exists that is binding on the Company or any
Subsidiary and, except as described on Schedule 3.9.1., no petition
has been filed or proceedings instituted by an employee or group of
employees with any labor relations board seeking recognition of a
bargaining representative. Schedule 3.9.1. describes any
organizational effort currently being made or threatened by or on
behalf of any labor union to organize any employees of the Company
or any Subsidiary.
EX-248
3.9.2.
Except as set forth on Schedule 3.9.2., (i) there is not
now, and to the Shareholders' knowledge, never has been, any labor
strike, dispute, slow down or stoppage pending or, to the
Shareholders' knowledge, threatened, against or directly affecting
the Company or any Subsidiary, (ii) no grievance or arbitration
proceeding arising out of or under any collective bargaining
agreement is pending, and no claims therefor exist; and (iii)
neither the Company, any Subsidiary nor any Shareholder has received
any notice or has any knowledge of any threatened labor or civil
rights dispute, controversy or grievance or any other unfair labor
practice proceeding or breach of contract claim or action with
respect to claims of, or obligations to, any employee or group of
employees of the Company or any Subsidiary.
3.9.3.
If required under the Workers Adjustment and Retraining
Notification Act or other applicable state law regulating plant
closing or mass layoffs, the Company and its Subsidiaries have
timely caused there to be filed or distributed, as appropriate, all
required filings and notices with respect to employment losses
occurring through the Closing Date.
3.9.4.
The Company and its Subsidiaries have complied and are
currently complying, in respect of all employees of the Company and
its Subsidiaries with all applicable laws respecting employment and
employment practices and the protection of the health and safety of
employees, from whatever source such law may be derived, including,
without limitation, statutes, ordinances, laws, rules, regulations,
policies, standards, judicial or administrative precedents,
judgments, orders, decrees, awards, citations, licenses, official
interpretations and guidelines , except for such instances which are
not, in the aggregate, material.
3.9.5.
All individuals who are performing or have performed
services for the Company, any Subsidiary and are or were classified
by the Company or any Subsidiary as "independent contractors"
qualify for such classification under Section 530 of the Revenue Act
of 1978 or Section 1706 of the Tax Reform Act of 1986, as
applicable, except for such instances which are not, in the
aggregate, material.
3.9.6. The Company and its Subsidiaries have substantially
complied and are currently complying with the Americans With
Disabilities Act, 42 U.S.C.ss.12101, et seq., and all applicable
state laws prohibiting discrimination against qualified individuals
with disabilities and requiring access accommodations.
EX-249
3.10. LITIGATION.
3.10.1.
Except for (i) claims listed in Schedule 3.10. and (ii)
claims for the collection of accounts arising out of the sale or
purchase of goods or services in the ordinary course of business
involving less than $10,000 individually or $50,000 in the
aggregate, there are no claims, disputes, actions, proceedings or
investigations of any nature pending or, to the knowledge of
Sellers, threatened against the Company, or any of the officers,
partners, shareholders, affiliates or employees of the Company.
3.10.2.
No claim, action, suit, investigation, or other proceeding
is pending or threatened before any court or governmental agency
which presents a risk of the restraint or prohibition of the
transactions contemplated by this Agreement or the obtaining of
indemnification or other relief in connection therewith.
3.11. CONTRACTS.
3.11.1.
Schedule 3.11. sets forth a true and correct list of each
contract to which the Company is a party, including but not limited
to any and all master service contracts, or to which any Seller is a
party and which relates to the business of the Company
("Contracts"), except:
3.11.1.1.
Agreements for the purchase by the Company
of goods, materials or services in the ordinary
course of business involving less than $10,000 in
consideration in each such case;
3.11.1.2.
Agreements for the sale, rental or service
by the Company of goods or services in the ordinary
course of business in which the payment to be
received pursuant to each such agreement is less
than $10,000 for each such non-listed agreement;
3.11.1.3.
Agreements which are terminable at will by
the Company upon no more than 60 days notice without
penalty, default or liability and involving an
amount less than $10,000; and
3.11.1.4.
Agreements continuing for a period of six
months or less involving an amount less than $10,000
for each such nonlisted agreement.
3.11.2.
Except as set forth in Schedule 3.11.
EX-250
3.11.2.1.
Each Contract is a valid and binding
agreement of the Company and, to the knowledge of
Sellers, of the other parties thereto, subject to
the effect of bankruptcy and creditors' rights
generally;
3.11.2.2.
The Company has fulfilled all material
obligations required pursuant to each Contract to
have been performed by it or on its part prior to
the date hereof, and Sellers believe that, assuming
Buyer continues to operate the Company in the same
manner as Sellers, the Company will be able to
fulfill, when due, all of its obligations under the
Contracts which remain to be performed after the
date hereof;
3.11.2.3.
There has not occurred any material default
under any Contract on the part of the Company or on
the part of the other parties thereto; and there has
not occurred any event which with the giving of
notice or the lapse of time, or both, would
constitute any material default under any of the
Contracts; and
3.11.2.4.
Except as provided in the Contracts, the
Company is not, outside the ordinary course of
business, under any liability or obligation with
respect to the return of inventory or products sold,
rented or serviced by it which are in the possession
of distributors, wholesalers, retailers or other
customers.
3.11.2.5. Except as set forth in Schedule
3.11, the Company has not committed a past breach of
any of its master service contracts.
3.12. REGULATORY APPROVALS.
All material consents, approvals, authorizations and other
requirements prescribed by any law, rule or regulation which must be
obtained or satisfied by the Company or Sellers and which are necessary for
the execution and delivery by Sellers of this Agreement and the documents
to be executed and delivered by Sellers in connection herewith have been
obtained and satisfied.
3.13. COMPLIANCE WITH LAW.
The Company has not, and its business as presently conducted does
not, violate, in any respect any Federal, state, local or foreign laws,
regulations or orders (including, but not limited to, any of the foregoing
relating to employment discrimination, occupational safety, the Americans
With Disabilities Act, environmental protection, conservation, or corrupt
practices), the enforcement of which would have a Material Adverse Effect,
and the Company has not received any notice of any such violation. Sellers
have obtained all permits, approvals, and consents of all governmental
bodies or agencies necessary or appropriate so that
EX-251
consummation of the transactions contemplated by this Agreement will be in
compliance with applicable laws.
3.14. INDEBTEDNESS FROM EMPLOYEES.
Except as set forth in Schedule 3.14. no employee of the Company are
indebted to the Company, except for advances made to any employees in the
ordinary course of business to meet reimbursable business expenses
anticipated to be incurred by such employee.
3.15. ACCOUNTS RECEIVABLE.
Except as set forth in Schedule 3.15., the accounts, accounts
receivable, notes and notes receivable of the Company existing on June 30,
1999 arose out of the sales of inventory or services in the ordinary course
of business and are collectible in full, net of the reserve set forth in
the Company's June 30, 1999 Financial Statement included in Schedule
3.5.1., which reserves are reasonable and were calculated consistent with
past practices.
3.16. INSURANCE.
Schedule 3.16. sets forth a true and correct list of all insurance
policies either maintained by the Company or maintained by any other person
which relate to the Company in any manner whatsoever at the date hereof.
There are no outstanding requirements or recommendations by any insurance
company that issued any such policy or by any Board of Fire Underwriters or
other similar body exercising similar functions or by any governmental
authority exercising similar functions which requires or recommends any
changes in the conduct of the business of, or any repairs or other work to
be done on or with respect to any of the properties or assets of, the
Company. The Company has not received any notice or other communication
from any such insurance company within the three (3) years preceding the
date hereof canceling or materially amending or materially increasing the
annual or other premiums payable under any of said insurance policies, and
no such cancellation, amendment or increase of premiums is threatened. The
life insurance policies owned by the Company will, with Buyer's consent, be
surrendered for the cash surrender value prior to Closing, and the cash
received will be distributed.
3.17. POWERS OF ATTORNEY AND SURETYSHIPS.
Except for guarantees by the Company of the indebtedness owed by O&M
Equipment, Inc. to Whitney National Bank, the Company has no general or
special powers of attorney outstanding (whether as grantor or grantee
thereof) and has no obligation or liability (whether actual, accrued,
accruing, contingent or otherwise) as guarantor, surety, co-signer,
endorser, co-maker, indemnitor or otherwise in respect of the obligation of
any person, corporation, partnership, joint venture, association,
organization or other entity, except as endorser or maker of checks or
letters of credit, respectively, endorsed or made in the ordinary course of
business.
EX-252
3.18. NO UNDISCLOSED LIABILITIES.
Except as and to the extent specifically reflected or reserved
against in the Company's June 30, 1999 Financial Statement or otherwise
disclosed herein, the Company has no liabilities or obligations of any
nature, whether absolute, accrued, contingent or otherwise, and whether due
or to become due (including, without limitation, any liability for taxes
and interest, penalties and other charges payable with respect to any such
liability or obligation) in accordance with GAAP which in the aggregate
would constitute a Material Adverse Effect.
3.19. ENVIRONMENTAL MATTERS.
As of the date hereof, (a) the Company has generated, utilized,
stored, delivered for disposal, disposed of, treated, transported, and
otherwise managed all materials, substances, and wastes, whether toxic,
hazardous or otherwise, in compliance with all laws, rules, regulations,
ordinances, guidelines, and the common law, except to the extent any such
failure would not have a Material Adverse Effect; (b) the real or immovable
property owned, leased, or operated by either (i) Sellers relating to the
Company, or (ii) the Company is not listed on the National Priorities List,
CERCLIS, RCRIS, or any comparable state listing which identifies sites for
removal, remedial, clean-up or investigatory actions; (c) no amounts, which
require remediation or reporting under applicable law, of asbestos, PCB's,
ureaformaldehyde, hazardous and solid wastes, hazardous or toxic
substances, petroleum products, pollutants or contaminates, and no above or
underground storage tanks, have become located on the real or immovable
property owned, leased, or currently operated by the Company, except to the
extent the existence or remediation of such substances would not result in
a Material Adverse Effect; and (d) the real or immovable property owned,
leased, or operated by the Company has not been contaminated, tainted or
polluted in any manner whatsoever (including, without limitation, any
contamination of or injury or damage to soils, groundwater waters, biota,
and wildlife located on, in, under or originating from such premises) with
pollutants, contaminants or other substances or materials so as to give
rise to a removal, remediation, clean-up, or investigatory obligation or
action, and Sellers do not now have knowledge of any removal, remediation,
investigatory or clean-up obligation or action which the Company has with
respect thereto under any law, rule, regulation, guideline, ordinance,
whether domestic or foreign, Federal, state, or local, or the common law,
except to the extent any failure to comply with any such obligation would
not result in a Material Adverse Effect.
EX-253
3.20. CONFLICT OF INTEREST.
Except for the interests of Sellers in O&M Equipment, Inc. and as
otherwise disclosed in Schedule 3.20., no officer, director or shareholders
of the Company or any affiliate of any such person now has or within the
last three (3) years had, either directly or indirectly:
3.20.1.
any equity or debt interest in any corporation, partnership,
joint venture, association, organization or other person or entity
which furnishes or sells or during such period furnished or sold
services or products to the Company, or purchases or during such
period purchased from the Company any goods or services, or
otherwise does or during such period did business with the Company;
or
3.20.2.
a beneficial interest in any contract, commitment or
agreement, formal or informal, to which the Company is or was a
party or under which it was obligated or bound or to which its
properties may be or may have been subject, other than stock options
and other contracts, commitments or agreements between the Company
and such persons in their capacities as employees, officers or
directors of the Company.
3.20.3.
loaned money to or borrowed money from the Company.
3.21. TAXES.
3.21.1.
For purposes of this Agreement: (i) the term "Taxes" means
(A) all Federal, state, local, foreign and other net income, gross
income, gross receipts, sales, use, ad valorem, value added,
intangible, unitary, capital gain, transfer, franchise, profits,
license, lease, service, service use, withholding, backup
withholding, payroll, employment, estimated, excise, severance,
stamp, occupation, premium, property, prohibited transactions,
windfall or excess profits, customs, duties or other taxes, fees,
assessments or charges of any kind whatsoever, together with any
interest and any penalties, additions to tax or additional amounts
with respect thereto, (B) any liability for payment of amounts
described in clause (A) whether as a result of transferee liability,
of being a member of an affiliated, consolidated, combined, unitary
or other similar group for any period, or otherwise through
operation of law and (C) any liability for the payment of amounts
described in clauses (A) or (B) as a result of any tax sharing, tax
indemnity or tax allocation agreement or any other express or
implied agreement to indemnify any other Person;
EX-254
and the term "Tax" means any one of the foregoing Taxes; and (ii)
the term "Returns" means all returns, declarations, reports,
statements and other documents required to be filed in respect of
Taxes; and the term "Return" means any one of the foregoing Returns.
3.21.2.
Schedule 3.21.2. sets forth: (i) the taxable years of the
Company and Tax Affiliates (as defined in Section 3.21.3.) as to
which the respective statutes of limitations on the assessment of
United States Federal income and any applicable state, local or
foreign income or franchise Taxes have not expired, and (ii) with
respect to such taxable years sets forth those years for which
examinations by the IRS or the state, local or foreign taxing
authority have been completed, those years for which examinations by
such agencies are presently being conducted, those years for which
notice of pending or threatened examination or adjustment has been
received, those years for which examinations by such agencies have
not been initiated, and those years for which required Returns for
such Taxes have not yet been filed. Except to the extent indicated
in Schedule 3.21.2., all deficiencies asserted or assessments made
as a result of any examinations by the IRS or state, local or
foreign Tax authority have been fully paid, or are fully reflected
as a liability in the Company's June 30, 1999 Financial Statement,
or are fully described in Schedule 3.21.2., are being contested in
good faith and an adequate reserve therefor has been established and
is fully reflected in the Company's June 30, 1999 Financial
Statement to the extent required by GAAP. Except as described in
Schedule 3.21.2., there are no Returns that are presently under
examination with respect to Taxes, there are no proposed (whether
oral or written) or final adjustments, assessments or deficiencies
with respect to Taxes currently pending, and there are no
outstanding notices of proposed or actual audit, examination or
investigation with respect to Taxes.
3.21.3.
Sellers represent and warrant to Buyer that, except as
described in Schedule 0.00.0.:
3.21.3.1.
the Company, and every other person for
whose Taxes the Company is or could be held liable
(whether by reason of being a member of a
consolidated, combined, unitary, or other similar
group for Tax purposes, by reason of being a
successor, by agreement or otherwise (for the
taxable period(s) or portions thereof with respect
to which the Company is or could be held for such
other Person's Taxes) (all such persons collectively
referred to herein as "Tax Affiliates"), have filed
on a timely basis all Returns required to have been
filed by it and have paid on a timely basis all
Taxes shown thereon as due. All
EX-255
such Returns are true, complete and correct in all
material respects. The provisions for Taxes in the
Company's June 30, 1999 Financial Statement sets
forth the maximum liability of the Company and Tax
Affiliates for Taxes as of the date thereof. No
liability for Taxes has been incurred by the Company
or any Tax Affiliate since June 30, 1999 other than
in the ordinary course of their business. No
director, officer or employee of the Company or any
Tax Affiliate having responsibility for Tax matters
is in discussions with Tax authorities or has reason
to believe that any Tax authority has valid grounds
to claim or assess any additional Tax with respect
to the Company or any Tax Affiliate in excess of the
amounts shown on the Company's June 30, 1999
Financial Statement for the period ending on such
date;
3.21.3.2.
with respect to all amounts in respect of
Taxes imposed upon the Company or Tax Affiliates, or
for which the Company is or could be liable, whether
to taxing authorities (as, for example, under law)
or to other persons or entities (as, for example,
under tax allocation agreements), and with respect
to all taxable periods or portions of periods ending
on or before the Closing, all applicable Tax laws
and agreements have been fully complied with in all
material respects, and all such amounts required to
be paid by the Company and Tax Affiliates to Tax
authorities or others have been paid;
3.21.3.3.
none of the Returns required to be filed by
the Company or any Tax Affiliate contains, or were
required to contain (in order to avoid the
imposition of a penalty), a disclosure statement
under Section 6662 (or any predecessor provision) of
the Code, or any similar provision of state, local
or foreign law;
3.21.3.4.
all amounts that were required to be
collected or withheld by the Company or any Tax
Affiliate have been duly collected or withheld in
all material respects, and all such amounts that
were required to be remitted to any Tax authority
have been duly remitted in all material respects;
3.21.3.5.
the Company and Tax Affiliates have not
requested an extension of time to file any Return
not yet filed, and have not granted any waiver of
any statute of limitations with respect to, or any
extension of a period for the assessment of, any
Tax. No power of attorney granted by the Company or
any Tax Affiliate with respect to Taxes is in force;
EX-256
3.21.3.6.
Sellers, the Company and Tax Affiliates have
not taken any action not in accordance with past
practice that would have the effect of deferring any
material Tax liability of the Company or any Tax
Affiliate from any taxable period or portion thereof
ending on or before or including the Closing to any
subsequent taxable period;
3.21.3.7.
Schedule 3.21.3.7. sets forth all Tax
Affiliates during all periods with respect to which
the applicable statue of limitations on the
assessment of Taxes remains open;
3.21.3.8.
there are no actual or deemed elections
under Section 338 of the Code, protective carryover
basis elections, offset prohibition elections or
similar elections applicable to the Company or any
Tax Affiliate;
3.21.3.9.
neither the Company nor any Tax Affiliate is
required to include in income any adjustment
pursuant to Sections 481 or 263A of the Code (or
similar provisions of other law or regulations) by
reason of a change in accounting method or
otherwise, following the Closing, and Sellers have
no knowledge that the IRS (or other Tax authority)
has proposed, or is considering, any such change in
accounting method or other adjustment;
3.21.3.10.
there are no liens for Taxes (other than for
current Taxes not yet due and payable) upon the
assets of the Company;
3.21.3.11.
the Company is not party to any agreement,
contract, arrangement or plan that has resulted or
would result, separately or in the aggregate, in the
payment of any "excess parachute payments" within
the meaning of Section 280G of the Code, whether by
reason of the Closing or otherwise;
3.21.3.12.
the Company is not, and has not been, a
United States real property holding corporation (as
defined in Section 897(c)(2) of the Code) during the
applicable period specified in Section
897(c)(1)(A)(ii) of the Code (or any corresponding
provision of state, local or foreign Tax law);
EX-257
3.21.3.13.
neither the Company nor any Tax Affiliate
has or has had a permanent establishment in any
foreign country, as defined in any applicable Tax
treaty or convention between the United States of
America and such foreign country and the Company has
not engaged in a trade or business within any
foreign country;
3.21.3.14.
neither the Company nor any Tax Affiliate is
a party to any joint venture, partnership, or other
arrangement or contract which could be treated as a
partnership for Federal income tax purposes;
3.21.3.15.
neither the Company nor any Tax Affiliate is
or has been a member of an "affiliated group" as
such term is defined in Section 1504 of the Code
(and any predecessor provision) of the Code, or any
similar group for state, local or foreign Tax
purposes;
3.21.3.16.
neither the Company nor any Tax Affiliate
has filed a consent pursuant to the collapsible
corporation provisions of Section 341(f) of the Code
(or any corresponding provision of state, local or
foreign income Tax law) or agreed to have Section
341(f)(2) of the Code (or any corresponding
provision of state, local or foreign income Tax law)
apply to any disposition of any asset owned by any
of them;
3.21.3.17.
neither the Company nor any Tax Affiliate
has participated in an international boycott within
the meaning of Section 999 of the Code;
3.21.3.18.
the Company is not a party to or bound by
any Tax sharing agreement, and has no current or
contingent contractual obligation to indemnify any
other person with respect to Taxes, other than
obligations to indemnify a lessor for property
Taxes, sales/use Taxes or gross receipts Taxes (but
not income or franchise Taxes) imposed on lease
payments arising from terms that are customary for
leases of similar property;
3.21.3.19.
the Company is not a party to or bound by
any closing agreement or offer in compromise with
any Tax authority;
3.21.3.20.
none of the assets of the Company is
property that the Company is required to treat as
being owned by any other person pursuant to the
so-called "safe harbor lease" provisions of former
Section 168(f)(8) of
EX-258
the Internal Revenue Code of 1954, as amended; none
of the assets of the Company directly or indirectly
secures any debt the interest on which is tax exempt
under Section 103(a) of the Code; none of the assets
of the Company is "tax-exempt use property" within
the meaning of Section 168(h) of the Code;
3.21.3.21.
no material election with respect to Taxes
of the Company or Tax Affiliates has been made from
and after the date of this Agreement;
3.21.3.22.
Schedule 3.21.3.22. sets forth all Returns
with respect to the Company and Tax Affiliates the
due dates for which (including any valid extensions
thereof) are sixty or fewer days following the
Closing, and the Taxes for which estimated or final
payments may, based on the current operations of the
Company and Tax Affiliates, become due in sixty or
fewer days following the Closing;
3.21.3.23.
Schedule 3.21.3.23. sets forth all state,
local or foreign jurisdictions in which the Company
is or at any time during the past five years has
been subject to Tax;
3.21.3.24.
the Company has not incurred any liability
for Taxes pursuant to Section 1374 or 1375 of the
Code (and any predecessor provision and any similar
provision applicable state, local or other Tax law);
and
3.21.3.25.
all outstanding options to acquire equity of
the Company that purport to or were otherwise
intended (when issued) to be treated as "incentive
stock options" ("ISOs") within the meaning of
Section 422 of the Code (and any predecessor
provision and any similar provision applicable
state, local or other Tax law) were issued in
compliance with such section. All such outstanding
options currently qualify for treatment as ISOs, and
are held by persons who are employees of the
Company.
3.22. LIENS.
Except as disclosed on Schedule 3.22., none of the properties and
assets owned, leased, and/or used by the Company or its Subsidiaries is
subject to any lien, charge, mortgage, pledge, security interest, or other
encumbrance of any kind. Schedule 3.22 also sets forth a description of any
indebtedness owed by the Company which is guaranteed in writing by any of
the Sellers and/or secured by collateral granted by any of the Sellers.
EX-259
3.23. OTHER INFORMATION.
The information provided by Sellers to Buyer in this Agreement or in
the Schedules does not contain any untrue statement of a material fact or
omit to state a material fact required to be stated herein or therein or
necessary to make the statements and facts contained herein or therein, in
light of the circumstances in which they are made, not false or misleading.
Copies of all documents heretofore delivered or made available to Buyer
were complete and accurate records of such documents in all respects.
3.24. NO OTHER REPRESENTATIONS.
Sellers are not making any representation or warranty, express or
implied, of any nature whatsoever, except as specifically set forth in this
Agreement and the other documents executed in connection herewith.
3.25. NO KNOWN BREACHES.
Sellers have no actual knowledge that Buyer's representations and
warranties in this Agreement are untrue and Sellers shall not be entitled
to make any indemnity claims pursuant to Section 6. hereof with respect to
any matters constituting a breach of this Section 3.25.
4. REPRESENTATIONS AND WARRANTIES OF BUYER.
Buyer represents and warrants to Sellers that:
4.1. ORGANIZATION.
Buyer is duly organized, validly existing and in good standing under
the laws of the State of Delaware and has all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby.
4.2. CORPORATE AUTHORITY.
This Agreement and all other agreements herein contemplated to be
executed in connection herewith have been duly executed and delivered by
Buyer, have been effectively authorized by all necessary action, corporate
or otherwise, and constitute legal, valid and binding obligations of Buyer.
EX-260
4.3. AGREEMENT NOT IN BREACH OF OTHER INSTRUMENTS.
The execution and delivery of this Agreement, the consummation of
the transactions contemplated hereby and the fulfillment of the terms
hereof will not result in a breach of any of the terms or provisions of, or
constitute a default under, or conflict with, any material agreement,
indenture or other instrument to which Buyer is a party or by which it is
bound, Buyer's Certificate of Incorporation or Bylaws, any judgment,
decree, order or award of any court, governmental body or arbitrator, or
any law, rule or regulation applicable to Buyer.
4.4. INVESTMENT INTENT.
Buyer is acquiring the Shares with the intention as of the date
hereof of holding the Shares for purposes of investment, and Buyer has no
intention as of the date hereof of selling the Shares in a public
distribution in violation of Federal securities laws or any applicable
state securities laws.
4.5. REGULATORY AND OTHER APPROVALS.
All consents, approvals, authorizations and other requirements
prescribed by any law, rule or regulation, including any third party
consents, which must be obtained or satisfied by Buyer and which are
necessary for the execution and delivery of this Agreement and the
consummation of the transactions contemplated by this Agreement have been
obtained and satisfied.
4.6. NO KNOWN BREACHES.
Buyer has no actual knowledge that Sellers' representations and
warranties in this Agreement are untrue, and Buyer shall not be able to
make any indemnity claims pursuant to Section 6. hereof with respect to any
matters constituting a breach of this Section 4.6.
4.7. OTHER INFORMATION.
The information provided by Buyer to Sellers in this Agreement or in
the Schedules does not contain any untrue statement of a material fact or
omit to state a material fact required to be stated herein or therein or
necessary to make the statements and facts contained herein or therein, in
light of the circumstances in which they are made, not false or misleading.
EX-261
4.8. NO OTHER REPRESENTATIONS.
Buyer is not making any representation or warranty, express or
implied, of any nature whatsoever, except as specifically set forth in this
Agreement and the other documents executed in connection herewith.
5. CERTAIN UNDERSTANDINGS AND AGREEMENTS OF THE PARTIES.
5.1. COOPERATION IN LITIGATION.
Each party will fully cooperate with the other in the defense or
prosecution of any litigation or proceeding already instituted or which may
be instituted hereafter against or by such party relating to or arising out
of the conduct of the Company prior to or after the Closing Date (other
than litigation arising out of the transactions contemplated by this
Agreement). The party requesting such cooperation shall pay the
out-of-pocket expenses (including legal fees and disbursements) of the
party providing such cooperation and of its officers, directors, employees
and agents reasonably incurred in connection with providing such
cooperation, but shall not be responsible to reimburse the party providing
such cooperation for such party's time spent in such cooperation or the
salaries or costs of fringe benefits or other similar expenses paid by the
party providing such cooperation to its officers, directors, employees and
agents while assisting in the defense or prosecution of any such litigation
or proceeding.
5.2. TAX MATTERS.
5.2.1. PRE-CLOSING RETURNS.
Sellers will be responsible for and will cause to be
prepared and duly filed all Returns in which the Company is
includable for all taxable periods ending on or before the Closing.
All such Returns shall be prepared in a manner consistent with prior
periods. All such Returns filed after the Closing shall be submitted
to Buyer no later than thirty days prior to the due date and filing
thereof, and Buyer shall have the right to review and comment
thereon (without reduction of Sellers' obligations to indemnify
under this Agreement). Sellers will pay or cause to be paid, and
shall indemnify and hold Buyer and the Company harmless against, all
Taxes to which such Returns relate; provided, however, that to the
extent such Taxes are included in and specifically identified on the
Audited Closing Balance Sheet (as finally determined) or an
attachment or schedule thereto, Buyer shall reimburse Sellers for
such Taxes within ten business days following the later of: (i) the
receipt by Buyer of written evidence of actual payment of such Taxes
by
EX-262
Sellers or (ii) the date the Audited Closing Balance Sheet becomes
final and binding.
5.2.2. OVERLAP PERIOD RETURNS
Other than Returns to be prepared by Sellers pursuant to
Section 5.2.1., Buyer will prepare or cause to be prepared all
Returns of the Company for any and all taxable periods which include
and end after the Closing (the "Overlap Period"), and any taxable
period beginning after the Closing. Sellers will be responsible for
and will indemnify and hold harmless Buyer, and the Company with
respect to all Taxes for the Overlap Period in an amount equal to
the liability for Taxes that would have resulted had the Overlap
Period ended at the Closing (utilizing, if applicable, the actual
tax rate imposed on a particular category of income by the
applicable taxing jurisdiction), except to the extent such Taxes are
included in and specifically identified on the Audited Closing
Balance Sheet (as finally determined) or an attachment or schedule
thereto. Any amount so payable by Sellers will be remitted to Buyer
at least ten business days prior to the due date of the respective
Returns pursuant to written notice by the Buyer of such due date;
provided that Sellers approve of the amount (such approval not to be
unreasonably withheld).
5.2.3. AMENDED RETURNS.
From and after the date hereof, Sellers and their affiliates
shall not file or cause to be filed any amended Return with respect
to the Company, and Sellers and their affiliates shall not file a
claim for refund of Taxes paid by or on behalf of the Company.
5.2.4. MATERIAL ELECTIONS.
Neither Sellers nor the Company shall make any material
election with respect to Taxes of the Company or any Tax Affiliate
following the date hereof without the prior written approval of
Buyer (such approval not to be unreasonably withheld).
EX-263
5.2.5. TAX INFORMATION.
After the Closing, Sellers, on the one hand, and Buyer and
the Company, on the other hand, will make available to the other, as
reasonably requested, all information, records or documents relating
to liabilities for Taxes for all periods prior to or including the
Closing and will preserve such information, records or documents
until the expiration of any applicable statute of limitations or
extensions thereof.
5.2.6. TAX SHARING AGREEMENTS.
Any and all tax sharing, tax indemnity, or tax allocation
agreements with respect to which the Company was a party at any time
prior to the Closing shall terminate upon the Closing. No further
amounts shall be payable by the Company under such agreements
following the Closing.
5.2.7. CERTAIN TAXES.
All sales, value added, use, transfer, registration, stamp
and similar Taxes imposed in connection with the sale of the Shares
shall be borne by Sellers.
5.3. EMPLOYMENT AND CONFIDENTIALITY AGREEMENTS.
5.3.1. At the Closing, Buyer shall enter into an employment
agreement with Xxxxx X. Xxxxxxx, Xx. in substantially the form
attached hereto as Exhibit 5.3.1., which employment agreement shall
contain confidentiality provisions and two-year non-compete
provisions commencing upon termination of employment. In addition,
Buyer may enter into employment agreements with other Xxxxxxx family
members as recommended by Xxxxx X. Xxxxxxx, Xx. and approved by
Buyer. Any such employment agreement will be in substantially the
form attached hereto as Exhibit 5.3.1., and shall contain
confidentiality provisions and two-year non-compete provisions
commencing upon termination of employment.
5.3.2. At the Closing, Buyer shall enter into
confidentiality agreements with the employees and/or shareholders of
the Company listed in Schedule 5.3.2. in substantially the form
attached hereto as Exhibit 5.3.2.; provided, however, it is agreed
and understood that the Sellers who own less than a 2% interest in
the Company are not required to execute the said confidentiality
agreement.
5.4. MERGER.
Immediately after the Closing, Xxxxx Xxxx Xxxxxxx, Sr. and Buyer
agree to merge Prepared Industries Acquisition Corp. into the Company.
Further, Xxxxx Xxxx Xxxxxxx, Sr. agrees to transfer the Non-Purchased
Shares to Buyer and Buyer agrees to issue and transfer stock to Xxxxx Xxxx
Xxxxxxx, Sr. as set forth in Section 1.2. above.
EX-264
6. INDEMNIFICATION.
6.1. INDEMNIFICATION BY SELLERS.
Sellers shall indemnify and hold harmless Buyer, the Company, and
their respective officers (including without limitation Xxxxxxx X.
Xxxxxxxxxx and Xxxxxxx X. Xxxx), employees, agents, attorneys (including
without limitation Liskow & Xxxxx and Xxxxxx, Xxxx & Xxxxxxxx, L.L.P. and
their respective shareholders, partners, associates and other employees)
and shareholders (collectively, the "Buyer Group") in respect of any and
all claims, losses, damages, liabilities and expenses (including, without
limitation, settlement costs and any reasonable legal, accounting and other
expenses for investigating or defending any actions or threatened actions)
incurred (collectively, "Losses") by the Buyer Group, together with
interest on cash disbursements in connection therewith at the base rate for
prime commercial lenders of Buyer's primary bank as announced from time to
time, plus 1 percent per annum (the "Reference Rate") from 60 days after
the date such Losses were incurred by the Buyer Group until paid by
Sellers, in connection with each and all of the following:
6.1.1.
any material breach of any representation or warranty made
by Sellers in this Agreement;
6.1.2.
the material breach of any covenant, agreement or obligation
of Sellers contained in this Agreement or any other instrument
delivered at the Closing;
6.1.3.
any material misrepresentation contained in any Schedule,
certificate or other documents furnished by Sellers pursuant to this
Agreement;
6.1.4.
the failure to pay when due any and all liabilities for
Taxes (as defined in Section 3.21.1.) that (i) accrued with respect
to any taxable periods of the Company ending on or before the
Closing Date, (ii) accrued with respect to the assets, operations or
business of the Company during all periods up to and including the
Closing whether or not such periods are taxable periods, or (iii)
are incurred and become payable by the Company or Buyer as a result
of the transactions contemplated by this Agreement;
6.1.5.
any material claim, demand or cause of action asserted or
brought by any person for breach of warranty, or similar claims in
connection with sales of products sold or leased by the Company at
any time prior to the Closing Date or which comprised any part of
the Inventory existing on the Closing Date and which was sold by
Buyer within 90 days after the Closing Date;
EX-265
6.1.6.
any material claim, demand or cause of action asserted or
brought by any person for physical injury to, death of, or property
damage suffered by such person or any other person which was
approximately caused by any products sold or leased by the Company
at any time prior to the Closing Date;
6.1.7.
the material violation of any Federal, state, local or
foreign laws, regulations, orders, requirements or ordinances,
including those dealing with environmental matters, prior to the
Closing Date by Sellers, the Company or any of their affiliates,
agents or assigns; and
6.1.8.
(a) conditions existing at, or caused by events prior to the
Closing Date which are violations of any Federal, state or local
environmental statute, regulation, requirement or ordinance prior to
the Closing Date with respect to the Company or any of its assets,
and (b) any other environmental conditions in existence as of the
Closing Date on the real or immovable property owned, leased or used
by the Company, whether or not described in Schedule 3.6.1((a) and
(b) being collectively referred to herein as "Environmental
Conditions"), which as of the Closing, or will in the future as a
result of the operation of the Company prior to Closing, require
remediation, removal, or other corrective actions, including without
limitation the Environmental Conditions listed in Schedule 6.1.8.
With respect to each and every Environmental Condition, Sellers'
obligation to indemnify the Buyer Group from any Losses shall
include but not be limited to: (i) fines, penalties, assessments and
judgments (whether related to current or past activities); (ii)
costs associated with obtaining any necessary permits, certificates
or other governmental approval or complying with environmental
reporting or record keeping requirements, including (A) remediation
costs, (B) removal costs, (C) costs of implementing monitoring
equipment which are necessary to obtain such permits, certificates
or approvals, and (D) late fees and filing fees; and (iii) any costs
which Buyer deems reasonably necessary in connection with the
foregoing, including without limitation costs of environmental
audits, surveys, reports, waste characterizations, monitoring xxxxx,
soil borings, tests and samples, provided that such costs incurred
by Buyer pursuant to this Section 6.1.8. must be approved by Sellers
in advance, which consent will be timely given and not unreasonably
withheld, collectively, "Environmental Costs").
6.2. INDEMNIFICATION BY BUYER.
Buyer shall indemnify and hold harmless Sellers and their respective
officers, employees, agents, and shareholders, if any (collectively, the
"Seller Group"), in
EX-266
respect of any and all Losses (as defined above) reasonably incurred by
Sellers, together with interest on cash disbursements in connection
therewith at the Reference Rate from 60 days after the date that such
Losses were incurred by the Seller Group until paid by Buyer, in connection
with each and all of the following:
6.2.1.
any material breach of any representation or warranty made
by Buyer in this Agreement.
6.2.2.
the material breach of any covenant, agreement or obligation
of Buyer contained in this Agreement or any other instrument
delivered at the Closing;
6.2.3.
any material misrepresentation contained in any Schedule,
certificate or any other document furnished by Buyer pursuant to
this Agreement;
EX-267
6.2.4.
the operation of the Company after the Closing Date;
6.2.5.
any material claim, demand or cause of action (including
warranty claims and claims relating to physical injury, death or
property damage) relating to or approximately caused by either (i)
products manufactured by the Company after the Closing Date or (ii)
any products sold or leased by the Company more than 90 days after
the Closing Date;
6.2.6.
the material violation of any Federal, state, local or
foreign laws, regulations, orders, requirements or ordinances,
including those dealing with environmental matters, on or after the
Closing Date by Buyer and its affiliates, agents or assigns in
relation to the Company, except with regard to existing practices of
the Company; and
6.2.7.
any Environmental Condition relating to the Company which,
except with regard to the existing practices of the Company, result
from the operations of the Company on or after the Closing Date or
which came into existence on or after the Closing Date (including,
but not limited to, Environmental Costs to the extent they directly
arise from such violations).
6.3. CLAIMS FOR INDEMNIFICATION.
Whenever any claim shall arise for indemnification hereunder, the
party entitled to indemnification (the "indemnified party") shall promptly
notify the other party (the "indemnifying party") of the claim and, when
known, the facts constituting the basis for such claim. In the event of any
claim for indemnification hereunder resulting from or in connection with
any claim or legal proceedings by a third party, the notice to the
indemnifying party shall specify, if known, the amount or an estimate of
the amount of the liability potentially arising therefrom. The indemnified
party shall not settle or compromise any claim by a third party for which
it is entitled to indemnification hereunder, without the prior written
consent of the indemnifying party; provided, however, that if such consent
is not granted the amount of indemnity provided by the indemnifying party
shall not be limited by Section 6.4. or 6.6. and, if Buyer is the
indemnified party, at the election of Buyer, only the portion of any loss
equal to the refused settlement shall be deducted or payable from the
Escrow Account, all other amounts shall be paid directly to Buyer by wire
transfer by Sellers or the distributees of the assets of the Sellers.
6.4. DEFENSE BY INDEMNIFYING PARTY.
EX-268
In connection with any claim giving rise to indemnity hereunder
resulting from or arising out of any claim or legal proceeding by a person
who is not a party to this Agreement, the indemnifying party at its sole
cost and expense may, upon written notice to the indemnified party given
within 30 days after delivery of the written notice referred to in Section
6.3. hereof, assume the defense of any such claim or legal proceeding if it
acknowledges to the indemnified party in writing its obligations to
indemnify the indemnified party with respect to all elements of such claim.
The indemnified party shall be entitled to participate in (but not control)
the defense of any such action, with its own counsel and at its own
expense. If the indemnifying party does not assume the defense of any such
claim or litigation resulting therefrom, (a) the indemnified party may
defend against such claim or litigation, in such manner as it may deem
appropriate, including, but not limited to, settling such claim or
litigation, after giving notice of the same to the indemnifying party, on
such terms as the indemnified party may deem appropriate, and (b) the
indemnifying party shall be entitled to participate in (but not control)
the defense of such action, with its counsel and at its own expense. If the
indemnifying party thereafter seeks to question the manner in which the
indemnified party defended such third party claim or the amount or nature
of any such settlement, the indemnifying party shall have the burden to
prove by a preponderance of the evidence that the indemnified party did not
defend or settle such third party claim in a reasonably prudent manner as a
prudent businessman would if his own funds were subject to such suit.
6.5. MANNER OF INDEMNIFICATION.
All indemnification by either party hereunder shall be effected by
payment of cash or delivery of a certified or official bank check in
immediately available funds in the amount of the indemnification liability.
6.6. LIMITATIONS ON INDEMNIFICATION.
Subject to any limitations contained therein, all representations
and warranties made by the parties herein or in any instrument or document
furnished in connection herewith shall survive the Closing and any
investigation at any time made by or on behalf of the parties hereto and
shall expire twenty-four months after the Closing Date, except (i) as to
any matter as to which a claim is submitted in writing to the indemnifying
party prior to the applicable expiration date and identified as a claim for
indemnification pursuant to this Agreement; (ii) as to any representation
or warranty relating to ownership or title to the Shares or the Company's
assets, including real or immovable property, which shall not expire; (iii)
as to any matter which is based upon willful fraud by the indemnifying
party, with respect to which the representations and warranties set forth
in this Agreement shall expire only upon expiration of the applicable
statute of limitations plus 60 days; (iv) as to any representation or
warranty concerning tax or environmental matters, which shall expire only
upon the expiration of the applicable statute of limitations plus 45 days;
and (v) as to any representation or warranty concerning the authority to
execute this Agreement or any of the other
EX-269
documents contemplated hereby, which shall not expire. No claim or action
for indemnity pursuant to Sections 6.1. or 6.2. hereof for breach of any
representation or warranty shall be asserted or maintained by any party
hereto after the expiration of such representation or warranty pursuant to
the preceding sentence except for claims made in writing prior to such
expiration and actions (whether instituted before or after such expiration)
based on any claim made in writing prior to such expiration.
Notwithstanding any other provisions contained in this Agreement, (i)
neither Buyer nor Sellers shall be entitled to receive any amount under
this Section 6. which exceeds the Purchase Price; (ii) Buyer shall not be
entitled to payment under this Section 6. for a breach of any
representation or warranty by Sellers contained in this Agreement except
for the amount by which the aggregate of all breach of warranty or
representation claims hereunder which have not theretofore been reimbursed
to Buyer exceeds the sum of $180,000.00, and (iii) Sellers shall not be
entitled to payment under this Section 6. except for the amount by which
the aggregate of all claims hereunder which have not theretofore been
reimbursed to Sellers, exceeds $180,000.00. In the event the $180,000.00
threshold mentioned in clause (ii) or (iii) of the preceding sentence is
exceeded, Buyer or Sellers, as the case may be, shall then have the right
to seek reimbursement of said threshold amount from Sellers or Buyer, as
the case may be, under this Section 6. Notwithstanding anything contained
in this Section 6.6., the limits on indemnification contained in the
preceding sentence shall exclude any obligations specifically assumed by
any party in this Agreement, including without limitation, the obligations
relating to Taxes and brokers as described in Sections 3.2.1., 5.2., and
9.5. respectively.
6.7. SOLE BASIS FOR RECOVERY.
Unless specifically provided for elsewhere in this Agreement, the
parties intend Section 6. to be the exclusive method for compensating each
other for, or indemnifying each other against, claims relating to the
Company and the transactions contemplated by this Agreement.
EX-270
6.8. JOINT AND SEVERAL LIABILITY.
The liability of Xxxxxx X. Xxxxx, Xxxxxx Xxxxxx, Jr. and Xxxxxxx X.
Xxxxx under this Section 6. shall be limited to their respective percentage
interests in the Company as set forth in Section 2.2.2. above. The
liability of all other Sellers under this Section 6. shall be joint and
several, and in solido. Buyer shall not have any obligation to marshal its
claims hereunder to minimize the obligations of any of the Sellers.
7. DOCUMENTS TO BE DELIVERED AT CLOSING.
7.1. CLOSING DOCUMENTS DELIVERED BY SELLERS.
Buyer shall have received at the Closing the following documents,
dated as of the Closing date:
7.1.1. The Employment Agreement(s) referred to in Section
5.3.1. above, duly executed by Xxxxx Xxxx Xxxxxxx, Sr. and each
other member of the Xxxxxxx family recommended by Xxxxx Xxxx
Xxxxxxx, Sr. and approved by Buyer.
7.1.2. The Confidentiality Agreements referred to in Section
5.3.2. above, duly executed by the individuals listed in Schedule
5.3.2.
7.1.3. Stock certificates representing the Purchased Shares,
duly endorsed for transfer.
7.1.4. An opinion of counsel to Sellers in a form acceptable
to counsel to Buyer regarding the ownership of the Shares and the
authority of each of the Sellers to enter into this Agreement and to
consummate the transactions contemplated hereby.
7.1.5. Any other documents, certificates, or instruments
contemplated by this Agreement to be delivered by Sellers to Buyer,
including but not limited to the Consents listed in Schedule 3.7.
7.1.6. A fully executed certification of non-foreign status
described in Treasury Regulation Section 1.1445-2(a)(2) (and
applicable provisions of state law), in form and substance
reasonably satisfactory to counsel to Buyer, from each Seller.
7.1.7. Executed letters of resignation by each officer and
director of the Company.
EX-271
7.2 CLOSING DOCUMENTS DELIVERED BY BUYER.
Sellers shall have received at the Closing the following documents,
dated as of the Closing date:
7.2.1. Any documents, certificates, or instruments
contemplated by this Agreement to be delivered by Buyer to Sellers.
8. RELEASE.
(a) As of the Closing Date and, except as may be set forth in Section
6.2. of this Agreement, each of the Sellers does hereby for himself and his
successors and assigns remise, release, acquit and forever discharge the Buyer,
the Company, and their respective affiliates, and their successors and assigns,
of and from any and all claims, demands, liabilities, responsibilities,
disputes, causes of action and obligations of every nature whatsoever,
liquidated or unliquidated, known or unknown, matured or unmatured, fixed or
contingent, that such Seller or its affiliates now has, owns or holds or has at
any time previously had, owned or held against such parties, including without
limitation all liabilities created as a result of the negligence, gross
negligence and willful acts of the Company and its employees and agents, or
under a theory of strict liability, existing as of the Closing Date or relating
to any action, omission or event occurring on or prior to the Closing Date;
provided, however, that any claims, liabilities, debts or causes of action that
may arise in connection with the failure of any of the parties hereto to perform
any of their obligations hereunder or under any other agreement relating to the
transactions contemplated hereby or from any breaches by any of them of any
representations or warranties herein or in connection with any of such other
agreements shall not be released or discharged pursuant to this Agreement.
(b) Each of the Sellers represents and warrants that, he has not
previously assigned or transferred, or purported to assign or transfer, to any
person or entity whatsoever all or any part of the claims, demands, liabilities,
responsibilities, disputes, causes of action or obligations released herein.
Each of the Sellers covenants and agrees that such Seller will not assign or
transfer to any person or entity whatsoever all or any part of the claims,
demands, liabilities, responsibilities, disputes, causes of action or
obligations to be released herein. Each of the Sellers represents and warrants
that such Seller has read and understands all of the provisions of this Section
8. and that he has been represented by legal counsel of his own choosing in
connection with the negotiation, execution and delivery of this Agreement.
(c) The release provided by the Sellers pursuant to this Section 8.
shall apply notwithstanding that the matter for which release is provided may
relate to the ordinary, sole or contributory negligence, gross negligence,
willful misconduct or violation of law by a released party, including the Buyer
and the Company and their respective officers, directors, employees and agents,
and for liabilities based on theories of strict liability, and shall be
applicable whether or not negligence of the released party is alleged or proven,
it being the intention of the parties to release the released party from and
against its ordinary, sole and contributory negligence and gross negligence as
well as liabilities based on the willful actions or omissions of the released
party and liabilities based on theories of strict liability.
9. MISCELLANEOUS.
9.1. NOTICES.
EX-272
All notices, requests, demands, and other communications hereunder
shall be in writing and shall be deemed given if delivered personally or
sent by fax during normal business hours of the recipient, the next
business day if sent by a national overnight delivery service, charges
prepaid, or three (3) days after mailed by certified or registered mail,
postage prepaid, return receipt requested, to the parties, their successors
in interest or their assignees at the following addresses, or at such other
addresses as the parties may designate by written notice in the manner
aforesaid:
EX-273
If to Buyer:
T-3 Energy Services, Inc.
000 Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xx. Xxxxxxx X. Xxxxxxxxxx
With a copy to:
First Reserve Corporation
0000 Xxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
and
Liskow & Xxxxx
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxx, Esq.
If to Sellers:
Xxxxx Xxxx Xxxxxxx, Sr.
0000 Xxxxxxx 00
Xxxxx, Xxxxxxxxx 00000
With copies to:
Duvall, Funderburk, Sundberg, Lovell, & Xxxxxxx
000 Xxxxxx Xxxxxx
Xxxxx, XX 00000
Attention: Berwick Xxxxxx, Esq.
EX-274
9.2. ASSIGNABILITY AND PARTIES IN INTEREST.
Buyer may freely assign the rights and obligations under this
Agreement. Sellers may, with the written consent of Buyer (which will not
be unreasonably withheld if such assignee has the financial capacity to
assume and honor the indemnity obligations hereunder), assign the rights
and obligations under this Agreement among their affiliates or in
connection with a sale of their business. In either case, any such assignee
must expressly assume all indemnity obligations hereunder. This Agreement
shall inure to the benefit of and be binding upon Buyer and Sellers and
their respective permitted successors and assigns.
9.3. GOVERNING LAW.
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO CONTRACTS
MADE AND TO BE PERFORMED ENTIRELY WITHIN THAT STATE.
9.4. COUNTERPARTS.
This Agreement may be executed simultaneously in one or more
counterparts, each of which shall be deemed an original, but all of which
shall constitute but one and the same instrument.
9.5. INDEMNIFICATION FOR BROKERAGE.
Buyer and Sellers each represent and warrant that, except as set
forth in Schedule 9.5, no broker or finder has acted on its behalf in
connection with this Agreement or the transactions contemplated hereby. In
addition to the indemnification obligations contained in Section 6., each
party hereto agrees to indemnify and hold harmless the others from any
claim or demand for commissions or other compensation by any broker, finder
or similar agent who is or claims to have been employed by or on behalf of
such party.
EX-275
9.6. PUBLICITY.
Sellers and Buyer agree that press releases and other announcements
to be made by any of them with respect to the transactions contemplated
hereby shall be subject to mutual agreement. Notwithstanding the foregoing,
Sellers and Buyer may respond to inquiries relating to this Agreement and
the transactions contemplated hereby by the press, securities analysts,
employees, or customers without any notice or further consent of the other
parties hereto.
9.7. COMPLETE AGREEMENT.
This Agreement, the Exhibits hereto, the Schedules and the documents
delivered pursuant to this Agreement contain or will contain the entire
agreement between the parties hereto with respect to the transactions
contemplated herein and shall supersede all previous oral and written and
all contemporaneous oral negotiations, commitments, and understandings.
9.8. INTERPRETATION.
The headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.
9.9. SEVERABILITY.
Any provision of this Agreement which is invalid, illegal, or
unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity, illegality, or
unenforceability, without affecting in any way the remaining provisions
hereof in such jurisdiction or rendering that or any other provision of
this Agreement invalid, illegal, or unenforceable in any other
jurisdiction.
EX-276
9.10. KNOWLEDGE: DUE DILIGENCE INVESTIGATION.
All representations and warranties contained herein which are made
to the knowledge of Sellers shall mean to the knowledge of Sellers based
on, and assuming they had conducted, a reasonable investigation of such
matters.
9.11. EXPENSES OF TRANSACTIONS.
All fees, costs and expenses incurred by Buyer or Sellers in
connection with the transactions contemplated by this Agreement shall be
borne by the party incurring the same.
9.12. LIMIT ON INTEREST.
Notwithstanding anything in this Agreement to the contrary, neither
party hereto shall be obligated to pay interest at a rate higher than the
maximum rate permitted by applicable law.
9.13. SUBMISSION TO JURISDICTION.
Each of the parties hereto irrevocably consents that any legal
action or proceeding against it or any of its property with respect to this
Agreement or any other agreement executed in connection herewith may be
brought in any court of the State of Louisiana, any Federal court of the
United States of America located in Louisiana, and by the execution and
delivery of this Agreement each party hereto hereby accepts with regard to
any such action or proceeding for itself and in respect of its property,
generally and unconditionally, the jurisdiction of the aforesaid courts.
9.14. ARBITRATION.
Any controversy, dispute, or claim arising out of, in connection
with, or in relation to, the interpretation, performance or breach of this
Agreement, including, without limitation, the validity, scope, and
enforceability of this Section 9.14., may at the election of Buyer or
Sellers be solely and finally settled by confidential arbitration conducted
in New Orleans, Louisiana. The arbitration shall be governed by the Federal
Arbitration Act, 9 U.S.C. ss.1 et seq., and administereD by the American
Arbitration Association in accordance with its Commercial Arbitration
Rules. The arbitrators shall not be allowed to award punitive, exemplary or
multiple damages. The arbitrators may only award compensatory damages. The
parties hereby expressly waive any right any of them may have to punitive,
exemplary or multiple damages.
EX-277
The parties intend that this agreement to arbitrate be valid, enforceable
and irrevocable. Notwithstanding the foregoing, this Section 9.14. shall
not apply nor be interpreted to affect the resolution of a Dispute Notice
through the arbitration procedures set forth in Section 2.3.4. of this
Agreement.
9.15. WAIVER OF PUNITIVE, EXEMPLARY AND MULTIPLE DAMAGES.
The parties hereby expressly waive any right any of them may have to
punitive, exemplary or multiple damages.
IN WITNESS WHEREOF, the undersigned duly execute this Agreement as
of the date first written above.
SELLERS:
XXXXX XXXX XXXXXXX, SR.,
AS TRUSTEE FOR THE
XXXXXXX FAMILY TRUST
By: /s/ XXXXX XXXX XXXXXXX, SR.
-------------------------------------
Xxxxx Xxxx Xxxxxxx, Sr., as
Trustee
/s/ XXXXX XXXX XXXXXXX, SR.
------------------------------
XXXXX XXXX XXXXXXX, SR.
/s/ XXXXXXX XXXXXXX XXXXXXX
------------------------------
XXXXXXX XXXXXXX XXXXXXX
EX-278
/s/ XXXXXX X. XXXXXXX
------------------------------
XXXXXX X. XXXXXXX
/s/ XXXXXXXXXXX X. XXXXXX
------------------------------
XXXXXXXXXXX X. XXXXXX
/s/ XXXXXX XXXXXX, JR.
------------------------------
XXXXXX XXXXXX, JR.
/s/ XXXXXXX X. XXXXXXX
------------------------------
XXXXXXX X. XXXXXXX
/s/ XXXXX X. XXXXXX
------------------------------
XXXXX X. XXXXXX
/s/ XXXXXXX X. XXXXX
------------------------------
XXXXXXX X. XXXXX
/s/ XXXXXX X. XXXXX
------------------------------
XXXXXX X. XXXXX
/s/ XXXXXXXX X. XXXXXXX
------------------------------
XXXXXXXX X. XXXXXXX
/s/ XXXXXX X. XXXXXXX
------------------------------
XXXXXX X. XXXXXXX
/s/ XXXXXXX XXXXXXX XXXXXXX
------------------------------
XXXXXXX XXXXXXX XXXXXXX
EX-279
BUYER:
T-3 ENERGY SERVICES,
INC., a Delaware corporation
By: /s/ XXXXXXX X. XXXXXXXXXX
-------------------------------------
Xxxxxxx X. Xxxxxxxxxx
Title: President
EX-280