ASSET PURCHASE AGREEMENT
EXHIBIT
10.9
THIS
ASSET PURCHASE AGREEMENT, dated as of August 25, 2005 (the “Agreement”),
is by
and among Precision-LOR, Ltd., a Texas limited partnership (the “Partnership”),
Xxxxx
Xxxx, an individual (“SB”),
Xxxxx
Xxxx (“CB”),
Bison
Energy Partners, Ltd., a Texas limited partnership (“Bison”),
and
Turbeco, Inc., a Texas corporation (“Turbeco”).
W I T N E S S E T H:
WHEREAS,
Turbeco desires to purchase substantially all of the assets of the
Partnership;
WHEREAS,
SB, CB and Bison (the “Limited
Partners”)
own
substantially all of the issued and outstanding limited partnership interests
in
the Partnership and thus would derive a substantial benefit from the
consummation of the purchase transaction contemplated herein;
NOW,
THEREFORE, in consideration of the premises and the representations, warranties,
covenants and agreements contained herein, the parties hereto, intending to
be
legally bound, agree as follows:
ARTICLE
I
THE
PURCHASE
Section
1.1. Purchase.
On and
subject to the terms and conditions of this Agreement, at the Closing, Turbeco
will purchase from the Partnership, and the Partnership will sell to Turbeco,
the following assets, rights, properties, and interests of the Partnership
(the
“Acquired
Assets”):
(a) The
machinery, office equipment, tools, shop equipment, computers, office supplies,
vehicles, furnishings and fixtures, and other items of tangible personal
property of the Partnership, including specifically but not limited to the
items
described on Schedule 1.1(a) (the “Tangible
Personal Property”);
(b) The
leasehold rights of the Partnership with respect to the items of personal
property which are described on Schedule 1.1(b) (the “Leased
Assets”);
(c) The
rights of the Partnership under the Operating Agreements (as defined in Section
3.15;
(d) All
of
the customer lists, customer files (including credit applications and reports,
credit histories and applicable terms and conditions) books, records, ledgers,
files, documents, correspondence, plans, studies, and drawings of the
Partnership; and
(e) All
of
the goodwill of the Partnership and all of the rights of the Partnership to
use
the tradename “Precision-LOR” or any similar name (subject to the permitted use
in Section 5.8 below) (the “Tradename”).
Section
1.2. Excluded
Assets.
Notwithstanding the foregoing, the Acquired Assets shall not include the assets
listed on Schedule 1.2.
Section
1.3. Purchase
Price for Acquired Assets.
As
consideration for the sale to it of the Acquired Assets, Turbeco
shall:
(a) Pay
an
aggregate cash payment at Closing in the amount of $3,700,000 (the “Cash
Payment”),
allocated among the Limited Partners as indicated on Schedule 1.3(a);
and
(b) Cause
Flotek Industries, Inc. (“Flotek”)
to
issue to CB, SB, and the owners of Bison, as additional purchase price for
the
Acquired Assets, an aggregate number of shares (the “Flotek
Shares”)
of the
common stock of Flotek, .0001 par value per share (the “Flotek
Common Stock”)
determined by dividing $1,150,000 by the Share Value. The Flotek Shares shall
be
allocated as indicated on Schedule 1.3(b). For purposes herein, the term
“Share
Value”
shall
mean the value of the Flotek Shares based on the average for the twenty business
days that precede the Closing Date (notwithstanding the Effective Time) of
daily
closing trading prices of the Flotek Common Stock on the American Stock
Exchange.
Section
1.4. Assumption
of Liabilities.
Turbeco
has not and will not assume from the Partnership any liability or
obligation.
Section
1.5. Allocation.
The
parties will allocate for all purposes (including, but not limited to, financial
accounting and tax purposes) the purchase price of the Acquired Assets as
indicated on Schedule 1.5.
Section
1.6. Closing.
The
closing (the “Closing”)
of the
transactions contemplated by this Agreement (the “Purchase
Transaction”)
shall
take place at the offices of the attorneys for Turbeco in Houston, Texas as
promptly as practicable (but in any event within five business days) following
the date on which the last of the conditions set forth in Article VIII is
fulfilled or waived, or at such other time and place as Turbeco and the
Partnership shall agree. The date on which the Closing occurs is referred to
in
this Agreement as the “Closing
Date.”
The
Closing will be effective on September 1, 2005 (the “Effective
Time”).
Section
1.7. Transfer
Documents.
At the
Closing, each of the parties hereto will perform such acts and deliver such
documents as are required pursuant to the terms hereof to be delivered at
Closing, including but not limited to:
(a) the
Partnership and the Limited Partners shall:
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(i) execute,
acknowledge and deliver to Turbeco all deeds, bills of sale, endorsements,
assignments, and other good and sufficient instruments of conveyance, sale,
transfer and assignment as shall be required to vest effectively in Turbeco
good
and indefeasible title in and to the Acquired Assets, free and clear of all
liens or encumbrances, including specifically, but not by way of limitation,
an
assignment and xxxx of sale in the form of Exhibit 1.7 (the “Assignment”).
(ii) deliver
or cause to be delivered to Turbeco possession of all of the Acquired Assets
capable of being physically delivered as contemplated in Section
1.10.
(iii) deliver
the executed Agreements Not To Compete and Employment Agreements (as defined
in
Section 5.2).
(b) Turbeco
shall:
(i) deliver
to the Partnership the Cash Payment, in the form of bank checks or wire
transfers;
(ii) execute
and deliver the Assignment; and
(iii) cause
the
Flotek Shares to be issued as provided in Schedule 1.3(b).
Section
1.8. Property
Taxes.
Any
general property tax assessed against or pertaining to the Acquired Assets
for
the taxable period that includes the date of the Closing shall be prorated
between Turbeco and the Partnership.
Section
1.9 Allocation
of Revenue.
(a) The
Partnership hereby confirms that it is its practice to (i) generate a delivery
ticket (“Delivery Ticket”) at the time it delivers to its customers any downhole
rental equipment (“Equipment”), (ii) quote on the Delivery Ticket the rental
charge which will be due upon the use of the Equipment by the customer (“Rental
Charges”), and (iii) invoice customers for Rental Charges only after the
customer has used and returned the Equipment to the Partnership.
(b) Subject
to Subsection (c) hereof, Rental Charges with respect to Equipment which (i)
have been invoiced pursuant to the practice described above prior to the Closing
or (ii) Rental Charges on Equipment that has been returned but have not be
invoiced prior to the Closing and which may be invoiced pursuant to the practice
described above, shall be considered revenue attributable to periods prior
to
the Effective Time and shall be owned and be collected by the Partnership.
All
other Rental Charges with respect to the Acquired Assets shall be considered
revenue of Turbeco and shall be owned and collected by Turbeco.
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(c) All
compensation payable by customers for “lost in the hole” or damaged Equipment
shall be payable to Turbeco and not the Partnership. Turbeco shall be solely
responsible for any expense to repair or replace any Equipment which is located
at the premises of a customer at the time of Closing pursuant to a Delivery
Ticket.
(d) To
compensate the Partnership for its agreement pursuant to this Section, Turbeco
shall pay the Partnership at the Closing an amount equal to one-half of the
aggregate Rental Charges quoted on the Delivery Tickets which are outstanding
as
of Closing with respect to the Equipment which is in the possession of customers
as of the time of Closing.
(e) After
Closing, the Partnership and Turbeco shall provide to each other upon request
such accounting and financial information as shall be required to confirm
compliance by the parties with this Section.
(f) Without
limiting in any respect Article IV of this Agreement, prior to the Closing
the
Partnership shall deliver Equipment to customers, accept the return of Equipment
from customers, quote Rental Changes on the Delivery Tickets, and invoice
customers for Rental Charges only in the ordinary course of business consistent
with past practice.
ARTICLE
II
REPRESENTATIONS
AND
WARRANTIES
OF TURBECO
Turbeco
represents and warrants to the Partnership and the Limited Partners as
follows:
Section
2.1. Organization
and Qualification.
Turbeco
is a corporation duly organized, validly existing and in good standing under
the
laws of the State of Texas and has the requisite corporate power and authority
to own, lease and operate its assets and properties and to carry on its business
as it is now being conducted.
Section
2.2. Authority;
Non-Contravention; Approvals.
(a) Turbeco
has full corporate power and authority to execute and deliver this Agreement
to
consummate the transactions contemplated hereby. This Agreement has been
approved by the Board of Directors of Turbeco and Flotek, and no other corporate
proceedings on the part of Turbeco or Flotek are necessary to authorize the
execution and delivery of this Agreement or the consummation by Turbeco of
the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by Turbeco, and, assuming the due authorization, execution and
delivery hereof by the Partnership and the Limited Partners, constitutes a
valid
and legally binding agreement of Turbeco enforceable against it in accordance
with its terms, except that such enforcement may be subject to (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting or
relating to enforcement of creditors' rights generally and (ii) general
equitable principles.
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(b) The
execution and delivery of this Agreement by Turbeco and the consummation by
Turbeco of the transactions contemplated hereby do not and will not violate
or
result in a breach of any provision of, or constitute a default (or an event
which, with notice or lapse of time or both, would constitute a default) under,
or result in the termination of, or accelerate the performance required by,
or
result in a right of termination or acceleration under, or result in the
creation of any lien, security interest, charge or encumbrance upon any of
the
properties or assets of Turbeco under any of the terms, conditions or provisions
of (i) the charter or bylaw of Turbeco, (ii) any statute, law, ordinance, rule,
regulation, judgment, decree, order, injunction, writ, permit or license of
any
court or governmental authority applicable to Turbeco or any of its properties
or assets or (iii) any note, bond, mortgage, indenture, deed of trust, license,
franchise, permit, concession, contract, lease or other instrument, obligation
or agreement of any kind to which Turbeco is now a party or by which Turbeco
or
any of its properties or assets may be bound or affected.
Section
2.3. Flotek
Shares.
The
Flotek Shares have been duly authorized and when issued and delivered in
accordance with the terms of this Agreement, will have been validly issued
and
will be fully paid and non-assessable, and the issuance thereof is not subject
to any preemptive or other similar right. Flotek has previously made available
or delivered to the Partnership and its shareholders copies of the Form 10-KSB
filed by it with the Securities and Exchange Commission (the “SEC”)
with
respect to the year ended December 31, 2004 and its quarterly report filed
with
the SEC on Forms 10-QSB for the periods ending March 31, 2005 and June 30,
2005
(“Flotek
SEC Reports”).
As of
their respective dates, the Flotek SEC Reports did not contain any untrue
statement of a material fact or omit to state any material fact required to
be
stated therein or necessary to make the statements therein, in the light of
the
circumstances under which they were made, not misleading. Flotek has not made
any other representation regarding the Flotek Shares. The Flotek Shares will
be
restricted stock which will not be tradable on the open market under the
applicable securities laws. If the holder of any of the Flotek Shares proposes
to consummate a sale of any of the Flotek Shares which is permitted pursuant
to
SEC Rule 144, then within 15 days of the receipt by Flotek of appropriate
confirmation that the proposed sale will comply with Rule 144, Turbeco agrees
that Flotek shall, provide an opinion letter of counsel to the effect that
the
sale is permitted under Rule 144.
Section
2.4 Brokers
and Finders.
Turbeco
has not entered into any contract, arrangement or understanding with any person
or firm which may result in the obligation of Turbeco to pay any finder's fees,
brokerage or agent commissions or other like payments in connection with the
transactions contemplated hereby. There is no claim for payment by Turbeco
of
any investment banking fees, finder's fees, brokerage or agent commissions
or
other like payments in connection with the negotiations leading to this
Agreement or the consummation of the transactions contemplated
hereby.
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES
OF
THE PARTNERSHIP AND THE LIMITED PARTNERS
The
Partnership and the Limited Partners jointly and severally represent and warrant
to Turbeco that:
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Section
3.1. Organization
and Qualification.
The
Partnership is a limited partnership duly organized, validly existing and in
good standing under the laws of the State of Texas and has the requisite power
and authority to own, lease and operate its assets and properties and to carry
on its business as it is now being conducted. The Partnership is duly qualified
to do business and is in good standing in each jurisdiction in which the
properties owned, leased, or operated by it or the nature of the business
conducted by it makes such qualification necessary. True, accurate and complete
copies of the Partnership’s organizational documents, as in effect on the date
hereof, including all amendments thereto, have heretofore been delivered to
Turbeco.
Section
3.2. The
General and Limited Partners.
The
sole general partner of the Partnership is Precision-LOR Management GP, L.L.C.,
a Texas limited liability company (the “General
Partner”).
The
General Partner is a limited liability company duly organized, validly existing
and in good standing under the laws of the State of Texas and has the power
and
authority to own, lease and operate its assets and properties and to carry
on
its business as it is now being conducted. The General Partner and the Limited
Partners are all of the partners in the Partnership. No other person holds
any
ownership interest with respect to the Partnership.
Section
3.3. Other
Entities.
The
Partnership does not own stock or other ownership interests in any other
entity.
Section
3.4. Authority;
Non-Contravention; Approvals.
(a) The
Partnership has full corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. This Agreement
has been approved by the General Partner and the Limited Partners in their
capacity as partners of the Partnership, and no other actions on the part of
the
Partnership are necessary to authorize the execution and delivery of this
Agreement or the consummation by the Partnership of the transactions
contemplated hereby. This Agreement has been duly executed and delivered by
the
Partnership and the Limited Partners, and, assuming the due authorization,
execution and delivery hereof by Turbeco, constitutes a valid and legally
binding agreement of the Partnership and the Limited Partners, enforceable
against the Partnership and the Limited Partners in accordance with its terms,
except that such enforcement may be subject to (a) bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting or relating to
enforcement of creditors' rights generally and (b) general equitable
principles.
(b) Except
as
set forth in the disclosure schedule attached to this Agreement (the
“Disclosure
Schedule”),
the
execution and delivery of this Agreement by the Partnership and the Limited
Partners and the consummation by the Partnership and the Limited Partners of
the
transactions contemplated hereby do not and will not violate or result in a
breach of any provision of, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) under, or result
in
the termination of, or accelerate the performance required by, or result in
a
right of termination or acceleration under, or result in the creation of any
lien, security interest, charge or encumbrance upon any of the properties or
assets of the Partnership under any of the terms, conditions or provisions
of
(i) the organizational documents of the Partnership, (ii) any statute, law,
ordinance, rule, regulation, judgment, decree, order, injunction, writ, permit
or license of any court or governmental authority applicable to the Partnership
or any of its properties or assets, or (iii) any note, bond, mortgage,
indenture, deed of trust, license, franchise, permit, concession, or any
Operating Agreement to which the Partnership is now a party or by which the
Partnership or any of its properties or assets may be bound or
affected.
-6-
Section
3.5. Financial
Statements.
The
Partnership has furnished Turbeco with a balance sheet of the Partnership as
of
December 31, 2003 and December 31, 2004, and the related statement of income
for
the calendar years then ended (including the notes thereto) and a balance sheet
of the Partnership as of July 31, 2005, and the related statement of income
for
the seven month period then ended (collectively, the "Financial
Statements").
The
Financial Statements have been prepared in accordance with generally accepted
accounting principles, consistently applied, and are accurate and complete
and
fairly present the financial condition and result of operations of the
Partnership.
Section
3.6. Absence
of Undisclosed Liabilities.
Except
as disclosed in the Disclosure Schedule, the Partnership has not incurred any
liabilities or obligations (whether absolute, accrued, contingent or otherwise)
of any nature, except liabilities or obligations (a) which are provided for
in
the Financial Statements or reflected in the notes thereto, (b) which were
incurred after July 31, 2005, and were incurred in the ordinary course of
business and consistent with past practices, or (c) liabilities or obligations
under this Agreement.
Section
3.7. Absence
of Certain Changes or Events.
Except
as disclosed in the Disclosure Schedule, since July 31, 2005, the business
of
the Partnership has been conducted in the ordinary course of business consistent
with past practices, and there has not been any event, occurrence, development
or state of circumstances or facts which has had, or could reasonably be
anticipated to have, individually or in the aggregate, a Material Adverse
Effect. Specifically, but not by way of limitation, since July 31, 2005, the
Partnership has not engaged in or been subject to any of the actions described
in Section 4.1. "Material
Adverse Effect"
means
any event, occurrence, fact, condition, change, development or effect that
is or
could reasonably be anticipated to be materially adverse to the business, assets
(including intangible assets), liabilities, financial condition, results of
operations, properties (including intangible properties) or business prospects
of the Partnership, as applicable, taken as a whole.
Section
3.8. Tangible
Assets.
The
Tangible Personal Property and the Leased Assets constitute all of the tangible
property necessary for the conduct by the Partnership of its business as now
conducted. The Partnership has good and indefeasible title to the Tangible
Personal Property, free and clear of all mortgages, liens, pledges, charges,
or
encumbrance of any nature whatsoever, except as indicated on the Disclosure
Schedule. All of the Tangible Personal Property and the Leased Assets are in
good, serviceable condition and fit for the particular purposes for which they
are used in the business of the Partnership, subject only to normal maintenance
requirements and wear and tear reasonably expected in the ordinary course of
business.
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Section
3.9. Employee
Benefits.
The
Disclosure Schedule contains a complete list of “employee welfare plans” (as
that term is defined in Section 3(1) of the Employee Retirement Income Security
Act of 1974 (“ERISA”))
currently maintained by the Partnership or any person or trade or business
under
common control with the Partnership, or in which active or former employees
of
the Partnership (collectively, the “Affected
Employees”)
currently participate (which plans are hereinafter referred to as “Welfare
Plans”).
The
Disclosure Schedule also contains a complete list of “employee pension benefit
plans” as that term is defined in Section 3(2) of ERISA maintained by the
Partnership or any person or trade or business under common control with the
Partnership, or in which any such entity currently contributes or is required
to
contribute or in which Affected Employees currently participate (which plans
are
hereinafter referred to as “Pension
Plans”).
Neither the Partnership nor any of the Affected Employees participate or ever
participated in any “multiemployer plan” (as that term is defined in Section
3(37) of ERISA). The Welfare Plans and Pension Plans, and any other plans of
the
type described in the first two sentences of this Section previously applicable
at any time to the Partnership, are collectively referred to as the
“Partnership
Plans”.
Each
Partnership Plan is or was in compliance with the provisions of all applicable
laws, rules and regulations, including, without limitation, ERISA and the Code.
None of the Pension Plans has incurred any “accumulated funding deficiency” (as
defined in Section 412(a) of the Code). The Partnership has not incurred any
liability to the Pension Benefit Guaranty Corporation under Section 4062, 4063
or 4064 of ERISA, or any withdrawal liability under Title IV of ERISA with
respect to any multiemployer plan. The Disclosure Schedule describes all bonuses
and other compensation which will be payable to any of the employees of the
Partnership as a result of the consummation of the Purchase Transaction, and
any
obligation to pay severance payments.
Section
3.10. Litigation.
Except
as described in the Disclosure Schedule, there are no claims, suits, actions,
or
proceedings pending or, to the Knowledge of the Partnership, threatened against
or relating to the Partnership, before any court, governmental department,
commission, agency, instrumentality or authority, or any arbitrator. Except
as
described in the Disclosure Schedule, the Partnership is not subject to any
judgment, decree, injunction, rule or order of any court, governmental
department, commission, agency, instrumentality or authority, or any arbitrator.
For purposes of this Agreement, "Knowledge"
means
the actual knowledge after reasonable inquiry of officers of the
Partnership.
Section
3.11. No
Violation of Law.
The
Partnership is not in violation of or has been given notice or been charged
with
any violation of, any law, statute, order, rule, regulation, ordinance or
judgment (including, without limitation, any applicable Environmental Law)
of
any governmental or regulatory body or authority. Except as disclosed in the
Disclosure Schedule, as of the date of this Agreement, to the Knowledge of
the
Partnership, no investigation or review by any governmental or regulatory body
or authority is pending or threatened, nor has any governmental or regulatory
body or authority indicated an intention to conduct the same. The governmental
permits or licenses of the Partnership (the “Permits”)
are
sufficient for the Partnership to conduct its business in the manner currently
conducted, and the Partnership is not in violation of the terms thereof. The
Partnership is not in violation of the terms of any of its Permits and is not
required to possess any other permit, license, franchise, variance, exemption,
order or other governmental authorization, consent or approval.
-8-
Section
3.12. Labor
Matters.
The
Disclosure Schedule sets forth a list of each of the employees of the
Partnership, and a description of the salaries and other compensation payable
to
such individuals. Except as set forth in the Disclosure Schedule, (a) there
are
no material controversies pending or, to the Knowledge of the Partnership,
threatened between the Partnership on the one hand and any of its employees
on
the other, (b) the Partnership is not a party to a collective bargaining
agreement of other labor union contract applicable to persons employed by the
Partnership, nor does the Partnership have any Knowledge of any activities
or
proceedings of any labor union to organize any such employees, (c) the
Partnership is not a party to any written agreement, memorandum, or
understanding with respect to the employment of any individual, and (d) neither
the Partnership or the Limited Partners are aware of any intention of any
employee to terminate his or her employment with the Partnership, either as
a
result of the Purchase Transaction or otherwise.
Section
3.13. Customer
Relationships.
The
Disclosure Schedule lists all of the material customers of the Partnership.
Except as set forth in the Disclosure Schedule, there has not been (a) any
adverse change in the business relationship of the Partnership with any
customer; or (b) any change in any term (including credit terms) of the
agreements with any such customer. The Partnership has not received any customer
complaints concerning its products and services.
Section
3.14. Environmental
Matters.
Except
as set forth in the Disclosure Schedule:
(a) no
notice, demand, request for information, citation, summons or order has been
received, no complaint has been served, no penalty has been assessed, and no
investigation, action, claim, suit, proceeding or review is pending or, to
the
Knowledge of the Partnership, is threatened by any governmental entity or other
person relating to or arising out of any environmental law;
(b) the
Partnership is and has been in compliance with all Environmental Laws and
environmental permits; and
(c) there
are
no liabilities of or relating to the Partnership of any kind whatsoever, whether
accrued, contingent, absolute, determined, determinable or otherwise, arising
under or relating to any environmental law and there are no facts, conditions,
situations or set of circumstances which could reasonable be expected to result
in or be the basis for any such liability.
Section
3.15. Material
Contracts.
The
Disclosure Schedule lists all agreements, leases, commitments, contracts,
undertakings or understandings, to which the Partnership is a party, including
but not limited to service agreements, manufacturing agreements, purchase or
sale agreements, supply agreements, distribution or distributor agreements,
real
estate leases, purchase orders, license agreements, customer orders and
equipment rental agreements (the "Operating
Agreements").
Each
Operating Agreement is a valid, binding and enforceable agreement of the
Partnership and, to the Knowledge of the Partnership, the other parties thereto.
There has not occurred any breach or default under any Operating Agreement
on
the part of the Partnership or, to the Knowledge of the Partnership, any other
parties thereto. No event has occurred which with the giving of notice or the
lapse of time, or both, would constitute a default under any Operating Agreement
on the part of the Partnership, or, to the Knowledge of the Partnership, any
of
the other parties thereto. There is no dispute between the parties to any
Operating Agreement as to the interpretation thereof or as to whether any party
is in breach or default thereunder, and no party to any Operating Agreement
has
indicated its intention to, or suggested it may evaluate whether to, terminate
any Operating Agreement.
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Section
3.16. Brokers
and Finders.
The
Partnership has not entered into any contract, arrangement or understanding
with
any person or firm which may result in the obligation of the Partnership or
the
Limited Partners to pay any finder's fees, brokerage or agent commissions or
other like payments in connection with the transactions contemplated hereby.
There is no claim for payment by the Partnership or the Limited Partners of
any
investment banking fees, finder's fees, brokerage or agent commissions or other
like payments in connection with the negotiations leading to this Agreement
or
the consummation of the transactions contemplated hereby.
Section
3.17. Disclosure.
No
representation or warranty of the Partnership or the Limited Partners set forth
hereunder or in the schedules attached hereto or in any certificate delivered
pursuant to Section 6.3(a) contains any untrue statement of the material fact
or
omits to state a material fact necessary in order to make the statements
contained herein or therein not misleading.
ARTICLE
IV
CONDUCT
OF BUSINESS PENDING THE CLOSING
Section
4.1. Conduct
of Business of the Partnership.
Prior
to the Effective Time, the Partnership shall operate its business in, and only
in, the usual, regular and ordinary course of business in substantially the
same
manner as operated on the date of this Agreement. Each Limited Partner will
assure that the Partnership complies with the requirements of this Section.
Without limiting the generality of the foregoing, during the period from the
date of this Agreement to the Effective Time, the Partnership will
not:
(a) Sell,
lease or otherwise dispose of, or agree to sell, lease or otherwise dispose
of,
any of its assets other than inventory in the ordinary course of business
consistent with past practice;
(b) Adopt,
amend or terminate any Partnership Plan;
(c) Amend
or
terminate any Operating Agreement;
(d) Enter
into or modify any employment or severance agreement with any director, officer,
or employee, or agree to increase the compensation of any officer, director
or
employee; and/or
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(e) Incur
any
indebtedness other than indebtedness incurred in the ordinary course of
business.
Section
4.2. Business
Organization.
Prior
to the Effective Time, the Partnership and the Limited Partners shall use their
respective best efforts to (a) preserve intact the business organization of
the
Partnership, (b) keep available the services of the officers and employees
of
the Partnership, (c) preserve the goodwill of the Partnership, (d) maintain
and
keep the properties and assets of the Partnership in as good a repair and
condition as presently exists, and (e) maintain in full force and effect its
insurance coverage of the Partnership.
ARTICLE
V
ADDITIONAL
AGREEMENTS
Section
5.1. Cooperation.
The
Partnership shall afford to Turbeco and its accountants, counsel, financial
advisors and other representatives reasonable access during normal business
hours throughout the period prior to the Effective Time to all of its
properties, books, contracts, personnel, representatives of or contacts with
governmental or regulatory authorities, agencies or bodies, commitments, and
records (including, but not limited to, tax returns and any and all records
or
documents which are within the possession of governmental or regulatory
authorities, agencies or bodies, and the disclosure of which the Partnership
can
facilitate or control) and, such parties as its representatives may reasonably
request. Any investigation pursuant to this Section shall be conducted in such
manner as not to interfere unreasonably with the conduct of the business of
the
Partnership or with the performance of any of the employees of the Partnership.
No investigation pursuant to this Section shall affect any representation or
warranty made by any party. Each of the parties hereto shall use all reasonable
efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated
by
this Agreement,
Section
5.2. Other
Agreements.
At the
Closing, (a) each Limited Partner shall execute and deliver agreements not
to
compete substantially identical to the form attached hereto as Exhibit 5.2(a)
(the “Agreements
Not To Compete”)
(which, with respect to Bison, shall also be executed by X.X. Xxxxxxx, Xx.,
and
Xxxxx X. Xxxxxxxx, its limited partners), and (b) SB and CB shall execute and
deliver to Turbeco employment agreements in the form attached hereto as Exhibit
5.2(b) (the “Employment
Agreements”).
Section
5.3. Further
Assurances.
The
Limited Partners and the Partnership shall execute, acknowledge and deliver
or
cause to be executed, acknowledged and delivered to Turbeco such assignments
or
other instruments of transfer, assignment and conveyance, in form and substance
satisfactory to counsel of Turbeco, as shall be necessary to vest in Turbeco
all
of the right, title and interest in and to the assets of the Partnership, in
each case free and clear of all liens, charges, encumbrances, rights of others,
mortgages, pledges or security interests, and any other document reasonably
requested by Turbeco in connection with this Agreement.
-11-
Section
5.4. Expenses
and Fees.
All
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expenses, regardless of whether the Closing occurs.
Section
5.5. Public
Statements.
The
parties shall consult with each other prior to issuing any press release or
any
written public statement with respect to this Agreement or the transactions
contemplated hereby and shall not issue any such press release or written public
statement prior to such consultation.
Section
5.6. Notification
of Certain Matters.
Each of
the parties agrees to give prompt notice to each other of, and to use their
respective reasonable best efforts to prevent or promptly remedy, (a) the
occurrence or failure to occur or the impending or threatened occurrence or
failure to occur, of any event which occurrence or failure to occur would be
likely to cause any of its representations or warranties in this Agreement
to be
untrue or inaccurate in any material respect (or in all respects in the case
of
any representation or warranty containing any materiality qualification) at
any
time from the date hereof to the Effective Time and (b) any material failure
(or
any failure in the case of any covenant, condition or agreement containing
any
materiality qualification) on its part to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it
hereunder.
Section
5.7. Employee
Matters.
(a) Effective
immediately following the Closing, Turbeco shall offer employment to all of
the
employees of the Partnership, each of which who accepts a position shall
hereinafter be referred to as a “Affected
Employee”
and
shall become an employee of Turbeco, terminable at will. In order to facilitate
the foregoing, the Partnership shall, effective immediately following the
Closing, terminate the employment of all employees of the Partnership and take
all appropriate steps necessary to comply with applicable law in connection
with
the termination of such employees.
(b) Notwithstanding
anything to the contrary contained in this Section, the parties acknowledge
and
agree that they do not intend to create any third-party beneficiary rights
respecting any employee of the Partnership as a result of the provisions hereof
and specifically hereby negate any intention to so create any third-party
beneficiary rights.
(c) With
respect to employees, who accept employment with Turbeco, the Partnership will
remain responsible for medical expenses covered under their plans actually
incurred prior to the Effective Time and Turbeco will be responsible for all
other medical expenses incurred on or after the Closing to the extent covered
under their plans without the application of any waiting period for coverage
generally applicable to newly hired employees. The Partnership shall make
available, at such Affected Employee’s expense, medical coverage under the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, to the
Affected Employees to the extent required by applicable law. The Partnership
and
Turbeco shall cooperate and coordinate with each other to provide continuity
of
health, hospitalization, life, travel and accident insurance coverage for the
Affected Employees. The cost of insurance coverage for the Affected Employees
from and after the Effective Time shall be borne by Turbeco.
-12-
(d) Turbeco
and the Partnership shall complete and furnish to each other any other employee
data as shall be reasonably required from time to time for each party to perform
and fulfill its obligations under this Section 5.7.
(e) The
Partnership agrees that it shall be solely responsible for all liability, costs
and expenses (including attorneys’ fees) for all employment claims
(collectively, the “Employment Claims”)
by any
employee or former employee of the Partnership which accrued prior to the
Effective Time relating to arbitrations, unfair labor practice charges,
employment discrimination charges, wrongful termination claims, workers’
compensation claims, any employment-related tort claim or other claims or
charges of or by employees of the Partnership. Turbeco agrees that it shall
be
responsible for all Employment Claims by any Affected Employee who accepts
employment with Turbeco which accrued after the Effective Time relating to
arbitrations, unfair labor practice charges, employment discrimination charges,
wrongful termination claims, workers’ compensation claims, any
employment-related tort claim or other claims or charges of or by the Affected
Employees. The Disclosure Schedule sets forth a brief description of any known
Employment Claims that have been filed or may be filed after the date hereof
arising out of conditions, actions or events that occurred before the Effective
Time.
Section
5.8 The
Tradename.
The Partnership will not use the Tradename after the Closing other than to
collect receivables attributable to periods prior to Closing, or to file tax
returns required to be filed under that name by any governmental entity. The
Partnership will change its name to a name dissimilar to the Tradename within
90
days of Closing.
Section
5.9 Customer
Approval.
The
Partnership shall use its best efforts to obtain prior to Closing any customer
consents required with respect to the Closing pursuant to any Operating
Agreements.
ARTICLE
VI
CONDITIONS
TO CLOSING
Section
6.1. Conditions
to Obligation of the Partnership to Effect the Purchase
Transaction.
Unless
waived by the Partnership, the obligation of the Partnership to effect the
Purchase Transaction shall be subject to the fulfillment at or prior to the
Effective Time of the following additional condition:
(a) Turbeco
shall have performed in all material respects (or in all respects in the case
of
any agreement containing any materiality qualification) its agreements contained
in this Agreement required to be performed on or prior to the Closing Date
and
the representations and warranties of Turbeco contained in this Agreement shall
be true and correct in all material respects (or in all respects in the case
of
any representation or warranty containing any materiality qualification) on
and
as of the date made and on and as of the Closing Date as if made at and as
of
such date, and the Partnership shall have received a certificate executed on
behalf of Turbeco by the President or a Vice President of Turbeco and on behalf
of Turbeco by the Chief Executive Officer of Turbeco to that effect;
and
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Section
6.2. Conditions
to Obligations of Turbeco to Effect the Purchase Transaction.
Unless
waived by Turbeco, the obligations of Turbeco to effect the Purchase Transaction
shall be subject to the fulfillment at or prior to the Effective Time of the
following additional conditions:
(a) the
Partnership and the Limited Partners shall have performed in all material
respects (or in all respects in the case of any agreement containing any
materiality qualification) their respective agreements contained in this
Agreement required to be performed on or prior to the Closing Date and the
representations and warranties of the Partnership and the Limited Partners
contained in this Agreement shall be true and correct in all material respects
(or in all respects in the case of any representation or warranty containing
any
materiality qualification) on and as of the date made and on and as of the
Closing Date as if made at and as of such date, and Turbeco shall have received
a certificate executed on behalf of the Partnership by the President and Chief
Executive Officer of the Partnership to that effect;
(b) since
July 31, 2005, there shall have been no changes that constitute, and no event
or
events shall have occurred which have resulted in or constitute, a Material
Adverse Effect;
(c) Turbeco
shall have received the amount of debt and equity financing reasonably required
to consummate the Purchase Transaction, from parties and pursuant to terms
acceptable to Turbeco, in its sole and absolute discretion; and
(d) SB
and CB
shall have agreed to be employed by Turbeco subsequent to the Closing, pursuant
to terms acceptable to Turbeco, in its absolute discretion.
ARTICLE
VII
INDEMNIFICATION
Section
7.1. Indemnification
of Turbeco.
The
Limited Partners and the Partnership shall jointly and severally indemnify
Turbeco and its officers, directors, employees and agents against, and hold
each
of them harmless from and against, any and all claims, actions, causes of
action, arbitrations, proceedings, losses, damages, liabilities, judgments
and
expenses (including, without limitation, reasonable attorneys' fees)
("Indemnified
Amounts")
incurred by the indemnified party as a result of (a) any error, inaccuracy,
breach or misrepresentation in any of the representations and warranties made
by
or on behalf of the Partnership or the Limited Partners in this Agreement,
(b)
any violation or breach by the Partnership or the Limited Partners of or default
by the Partnership or the Limited Partners under the terms of this Agreement,
and/or (c) any event or occurrence relating to the business of the Partnership
occurring prior to the Effective Time. The indemnified party shall be entitled
to recover its reasonable and necessary attorneys' fees and litigation expenses
incurred in connection with successful enforcement of its rights under this
Section.
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Section
7.2. Indemnification
of the General Partner, the Limited Partners and the Partnership.
Turbeco
shall indemnify the General Partner, the Limited Partners and the Partnership
against, and hold each of them harmless from and against, any and all
Indemnified Amounts incurred by the Limited Partners or the Partnership as
a
result of (a) any error, inaccuracy, breach or misrepresentation in any of
the
representations and warranties made by or on behalf of Turbeco in this
Agreement, and/or (b) any violation or breach by Turbeco of or default by
Turbeco under the terms of this Agreement. The indemnified party shall be
entitled to recover its reasonable and necessary attorneys' fees and litigation
expenses incurred in connection with successful enforcement of his rights under
this Section.
Section
7.3. Procedure.
The
defense of any claim, action, suit, proceeding or investigation subject to
indemnification under this Article shall be conducted by the indemnifying party.
If the indemnifying party fails to conduct such defense, the indemnified parties
may retain counsel satisfactory to them and the indemnifying party shall pay
all
reasonable fees and expenses of such counsel for the indemnified parties
promptly as statements therefor are received. The party not conducting the
defense will use reasonable efforts to assist in the vigorous defense of any
such matter, provided that such party shall not be liable for any settlement
of
any claim effected without its written consent, which consent, however, shall
not be unreasonably withheld. Any indemnified party wishing to claim
indemnification under this Article VII, upon learning of any such claim, action,
suit, proceeding or investigation, shall notify the indemnifying party (but
the
failure so to notify a party shall not relieve such party from any liability
which it may have under this Article VII except to the extent such failure
materially prejudices such party). If the indemnifying party is responsible
for
the attorneys’ fees of the indemnified parties, then the indemnified parties as
a group may retain only one law firm to represent them with respect to each
such
matter unless there is, under applicable standards of professional conduct,
a
conflict on any significant issue between the positions of any two or more
indemnified parties.
Section
7.4. Express
Negligence Rule.
The
indemnification obligations under this Article VII shall apply regardless of
whether any suit or action results solely or in part from the active, passive
or
concurrent negligence of the indemnified party.
The
rights of the parties to indemnification under this Article VII shall not be
limited due to any investigations heretofore or hereafter made by such parties
or their representatives, regardless of negligence in the conduct of any such
investigations.
ARTICLE
VIII
MISCELLANEOUS
Section
8.1. Termination.
This
Agreement may be terminated at any time prior to the Effective Time, as
follows:
(a) the
Partnership shall have the right to terminate this Agreement:
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(i) if
the
representations and warranties of Turbeco shall fail to be true and correct
in
all material respects (or in all respects in the case of any representation
or
warranty containing any materiality qualification) on and as of the date made
or, except in the case of any such representations and warranties made as of
a
specified date, on and as of any subsequent date as if made at and as of the
subsequent date and such failure shall not have been cured in all material
respects (or in all respects in the case of any representation or warranty
containing any materiality qualification) within 30 days after written notice
of
such failure is given to Turbeco by the Partnership;
(ii) if
the
Purchase Transaction is not completed by December 31, 2005 (provided that the
right to terminate this Agreement under this Section 8.1(a)(ii) shall not be
available to the Partnership if the failure of the Partnership to fulfill any
obligation to Turbeco under or in connection with this Agreement has been the
cause of or resulted in the failure of the Purchase Transaction to occur on
or
before such date); or
(iii) if
Turbeco (A) fails to perform in any material respects any of its covenants
(or
in all respects in the case of any covenant containing any materiality
qualification) in this Agreement and (B) does not cure such default in all
material respects (or in all respects in the case of any covenant containing
any
materiality qualification) within 30 days after written notice of such default
is given to Turbeco by the Partnership.
(b) Turbeco
shall have the right to terminate this Agreement:
(i) if
the
representations and warranties of the Partnership shall fail to be true and
correct in all material respects (or in all respects in the case of any
representation or warranty containing any materiality qualification) on and
as
of the date made or, except in the case of any such representations and
warranties made as of a specified date, on and as of any subsequent date as
if
made at and as of such subsequent date and such failure shall not have been
cured in all material respects (or in all respects in the case of any
representation or warranty containing any materiality qualification) within
30
days after written notice of such failure is given to the Partnership by
Turbeco;
(ii) if
the
Purchase Transaction is not completed by December 31, 2005 (provided that the
right to terminate this Agreement under this Section 8.1(b)(ii) shall not be
available to Turbeco if the failure of Turbeco to fulfill any obligation to
the
Partnership under or in connection with this Agreement has been the cause of
or
resulted in the failure of the Purchase Transaction to occur on or before such
date); or
(iii) if
the
Partnership or the Limited Partners (A) fails to perform in any material respect
(or in all respects in the case of any covenant containing any materiality
qualification) any of their covenants in this Agreement and (B) do not cure
such
default in all material respects (or in all respects in the case of any covenant
containing any materiality qualification) within 30 days after notice of such
default is given to the Partnership by Turbeco.
-16-
Section
8.2. Effect
of Termination.
In the
event of termination of this Agreement by either Turbeco or the Partnership
pursuant to the provisions of Section 8.1, this Agreement shall forthwith become
void and there shall be no further obligations on the part of the Partnership,
Turbeco, or its respective officers or directors, or the Limited Partners to
perform any covenant or provision of this Agreement which otherwise would be
required to be performed after the date of termination (except as set forth
in
this Section 8.2 and in Sections 5.4 and 8.9, all of which shall survive the
termination). Nothing in this Section 8.2 shall relieve any party from liability
for any breach of this Agreement.
Section
8.3. Remedies.
If any
legal action or other proceeding is brought for the enforcement of this
Agreement, or because of an alleged dispute, breach, default or
misrepresentation in connection with any of the provisions of this Agreement,
the successful or prevailing party or parties shall be entitled to recover
reasonable attorneys' fees and other costs incurred in that action or proceeding
in addition to any other relief to which it or he may be entitled at law or
equity.
Section
8.4. Notices.
All
notices, consents, demands or other communications required or permitted to
be
given pursuant to this Agreement shall be deemed sufficiently given: (i) when
delivered personally during a business day to the appropriate location described
below or telefaxed to the telefax number indicated below, or (ii) five (5)
business days after the posting thereof by United States first class, registered
or certified mail, return receipt requested, with postage fee prepaid and
addressed:
|
If
to Turbeco:
|
0000
Xxxxxx Xxxxxxx Xxxxx
|
|
Xxxxxxx,
Xxxxx 00000
|
|
|
Telefax
No. (000) 000-0000
|
|
|
With
a copy to:
|
Xxxxx
X. Xxxxxxx
|
|
Xxxxxxx
& Xxxxxxx LLP
|
|
|
0000
Xx. Xxxxx Xxxxx, Xxxxx 000
|
|
|
Xxxxxxx,
Xxxxx 00000
|
|
|
Telefax
No. (000) 000-0000
|
|
|
If
to the Partnership or
|
Attention:
X.X. Xxxxxxx, Xx.
|
|
the
Limited Partners:
|
00000
Xxxxx Xxxxxxx
|
|
Xxxxx
000
|
|
|
Xxxxxxx
Xxxxx 00000
|
|
|
Telefax
No: 000-000-0000
|
|
|
With
a copy to:
|
Xxxxx
X. Xxxxxx
|
|
Pollicoff,
Smith & Remels, LLP
|
|
|
0000
Xxxxx Xxxxxx
|
|
|
Xxxxxxx,
Xxxxx 00000
|
|
|
Telefax
No. 000-000-0000
|
-17-
Section
8.5. Successors.
This
Agreement shall be binding upon each of the parties upon their execution, and
inure to the benefit of the parties hereto and their successors and assigns.
Section
8.6. Severability.
In the
event that any one or more of the provisions contained in this Agreement or
in
any other instrument referred to herein, shall, for any reason, be held to
be
invalid, illegal, or unenforceable in any respect, such invalidity, illegality,
or unenforceability shall not affect any other provision of this Agreement
or
any such other instrument.
Section
8.7. Section
Headings.
The
section headings used herein are descriptive only and shall have no legal force
or effect whatsoever. Except to the extent the context specifically indicates
otherwise, all references to articles and sections refer to articles and
sections of this Agreement, and all references to the exhibits and schedules
refer to exhibits and schedules attached hereto, each of which is made a part
hereof for all purposes.
Section
8.8. Gender.
Whenever the context so requires, the masculine shall include the feminine
and
neuter, and the singular shall include the plural and conversely.
Section
8.9. Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of Texas, U.S.A., applicable to agreements and contracts executed and
to
be wholly performed there, without giving effect to the conflicts of law
principles thereof.
Section
8.10. Multiple
Counterparts.
This
Agreement may be executed in multiple counterparts, each of which shall be
deemed an original.
Section
8.11. Waiver.
Any
waiver by either party to be enforceable must be in writing and no waiver by
either party shall constitute a continuing waiver.
Section
8.12. Entire
Agreement.
This
Agreement and the other agreements referred to herein set forth the entire
understanding of the parties hereto relating to the subject matter hereof and
thereof and supersede all prior agreements and understandings among or between
any of the parties relating to the subject matter hereof and
thereof.
-18-
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date and
year first set forth above.
| THE PARTNERSHIP: | ||
| PRECISION-LOR, LTD., a Texas limited partnership | ||
| |
|
|
| By: |
Precision-LOR
Management GP, LLC
a
Texas limited liability company General
Partner of Precision-LOR, Ltd.
|
|
| By: |
Bison Energy Partners, Ltd.
a
Texas limited partnership (in
its capacity as Sole Member of Precision-LOR
Management GP, L.L.C.)
|
|
| By: |
Bison Energy Partners GP, LLC
a
Nevada limited liability company General
Partner of Bison Energy Partners,
Ltd.
|
|
| By: | /s/ X. X. Xxxxxxx, Xx. | |
|
X. X. Xxxxxxx, Xx.
Member
and Manager of Bison
Energy Partners GP, LLC
|
||
| By: | /s/ Xxxxx X. Xxxxxxxx | |
|
Xxxxx X. Xxxxxxxx
Member
and Manager of Bison
Energy Partners GP, LLC
|
||
-19-
| TURBECO: | ||
| TURBECO, INC., a Texas corporation | ||
| |
|
|
| By: | /s/ Xxxxx X. Xxxxx, Xx. | |
|
Xxxxx X. Xxxxx, Xx., President |
||
| THE LIMITED PARTNERS: | ||
| |
|
|
| By: | /s/ Xxxxx Xxxx | |
|
Xxxxx Xxxx |
||
| By: | /s/ Xxxxx Xxxx | |
|
Xxxxx Xxxx |
||
|
BISON ENERGY PARTNERS, LTD.
a
Texas Limited Partnership (in
its capacity as a limited partner of Precision-LOR,
Ltd.)
|
||
| |
|
|
| By: | Bison Energy Partners GP, LLC a Nevada limited liability company General Partner of Bison Energy Partners, Ltd. | |
| By: | /s/X. X. Xxxxxxx, Xx. | |
|
X. X. Xxxxxxx, Xx. Member
and Manager of Bison Energy
Partners GP, LLC
|
||
| /s/ Xxxxx X. Xxxxxxxx | ||
|
Xxxxx X. Xxxxxxxx
Member
and Manager of Bison Energy
Partners GP, LLC
|
||
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