NON-EMPLOYEE-SHAREHOLDERS
STOCK PURCHASE AND SALE AGREEMENT
This STOCK PURCHASE AND SALE AGREEMENT (this "Agreement") made on this
26th day of May, 2004, by and among OMNI Energy Services Corp., a Louisiana
corporation (the "Buyer"), Trussco, Inc., a Louisiana corporation and Trussco
Properties, LLC, a Louisiana liability company (collectively the "Company"), and
the undersigned holders of 50% of the outstanding common stock of the Company
(the "Shareholders").
WHEREAS, the Shareholders own in the aggregate 50% of the outstanding
shares of common stock, $.00 par value per share, of and equity interests in the
Company ("Company Common Stock") and wish to sell and transfer to Buyer, which
wishes to purchase and acquire from the Shareholders, 50% of the outstanding
shares of Company Common Stock (the "Company Shares") in return for certain cash
consideration as provided herein;
NOW, THEREFORE, in consideration of the premises and the representations,
warranties and agreements herein contained, the parties hereto agree as follows:
ARTICLE 1
PURCHASE AND SALE
1.1 BASIC TRANSACTION. Subject to the terms and conditions of this
Agreement, the Buyer agrees to purchase from each of the Shareholders, and each
of the Shareholder(s) agree(s) to sell and convey to the Buyer, all of the
Company Shares owned by such Shareholder, for the consideration specified in
Section 1.2.
1.2 PURCHASE PRICE. On the date of the closing of the transactions
contemplated by this Agreement, and in consideration for the delivery of the
Company Shares, the Buyer agrees to pay and deliver or cause to be paid and
delivered to the Shareholders and certain of their affiliates, an aggregate of
SIX MILLION THREE HUNDRED THOUSAND AND NO/100 DOLLARS ($6,300,000.00), (the
"Purchase Price"), in accordance with the following:
a. On the Closing Date, Buyer shall pay or cause to be paid and
deliver to or for the benefit of Shareholders Three Million and No/100
($3,000,000.00) Dollars payable in cash, by wire transfer or other
delivery of immediately available funds (the "Closing Cash Payment"). The
Closing Cash Payment shall be allocated among the Shareholders in the
manner set forth on Exhibit 1.2(a) hereto.
b. On the Closing Date, as part of the Purchase Price, Buyer
shall issue and deliver to the Shareholders a promissory note made by
Buyer in the original principal amount of One Million Five Hundred
Thousand and No/100 ($1,500,000.00) Dollars which shall bear interest at a
rate of five (5%) percent per annum and shall have a term of thirty-six
(36) months from the Closing Date ("Seller Note Number Three"). Interest
only shall be payable on the first of each month with no principal being
due until the maturity date, unless there is a Change in Control of Buyer
in which event all unpaid principal and accrued interest shall be due and
payable on the date of the Change in Control of Buyer. A "Change in
Control of Buyer" shall mean the occurrence of any of
the following (i) any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act), other than any current shareholder, a trustee
or other fiduciary holding securities under an employee benefit plan of
the Buyer or a corporation owned directly or indirectly by the
stockholders of the Buyer in substantially the same proportions as their
ownership of stock of the Buyer, becomes the "beneficial owner" (as
defined in Rule 13d-3 promulgated by the SEC under the Exchange Act),
directly or indirectly, of securities of the Buyer representing eighty
percent (80%) or more of the total voting power represented by the Buyer's
then outstanding voting securities, (ii) during any period of two (2)
consecutive years, individuals who, at the beginning of such period,
constitute the Board (and any new director whose election by the Board, or
nomination for election by the Buyer's stockholders, was approved by a
vote of at least two-thirds (2/3) of the directors then still in office
who either were directors at the beginning of the period or whose election
or nomination for election was previously so approved) cease for any
reason to constitute a majority thereof or (iii) the stockholders of the
Buyer approve (a) a merger or consolidation of the Buyer with any other
corporation or legal entity, other than a merger or consolidation which
would result in the voting securities of the Buyer outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or
by being converted into voting securities of the surviving entity) at
least fifty-one percent (51%) of the total voting power represented by the
voting securities of the Buyer or of such surviving entity outstanding
immediately after such merger or consolidation, (b) a plan of complete
liquidation of the Buyer or (c) an agreement for the sale or disposition
by the Buyer (in one transaction or a series of transactions) of all or
substantially all the Buyer's assets. Seller Note Number One shall provide
that the principal may be prepaid in part or in full at any time by Buyer
with no penalty or premium. Seller Note Number Three shall also provide
that it may be converted into Buyer's $.01 par value Common Stock ("Buyer
Common Stock") at a rate of $9.40 per share.
c. On the Closing Date, the Buyer will in essence be assuming any
debt of the Company outstanding at such time (the "Closing Assumption of
Debt"), 50% of which is attributable to the interest of the Shareholders.
On the Closing Date, the Company may only have the following types (as
referenced on the December 31, 2003 balance sheet) of debt outstanding,
which debt shall not exceed Three Million Six Hundred Thousand and No/100
($3,600,000.00) Dollars: (i) A/R - Whitney Bank Line; (ii) Term Loan -
Whitney Bank (short-term); (iii) Notes Payable - Equipment (short term);
(iv) Notes Payable - Equipment (long-term); and (v) Notes Payable to -
Stockholders, provided that such notes shall be governed by terms and
condition that are mutually agreeable to Buyer and Shareholders.
1.3 CLOSING. The closing of the transactions contemplated by this
Agreement ("Closing") shall occur on or before JUNE 30, 2004 (the "Closing
Date").
a. The execution and delivery of all documents necessary to enter
into the transactions contemplated by this Agreement shall take place at
the offices of Gordon, Arata, XxXxxxxx Xxxxxxxxx & Xxxxx, L.L.P., 000 Xxxx
Xxxxxxx Xxxxxx Xxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxxxx 00000, or such other
place as the parties may mutually agree on the Closing Date.
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b. At the Closing: (i) the Shareholders will deliver the various
certificates, instruments, and documents referred to in Section 4.1 below,
(ii) Buyer will deliver the various certificates, instruments, and
documents referred to in Section 4.2 below, (iii) the Buyer shall deliver
to the Shareholders the Purchase Price as described in Sections 1.2(a),
1.2(b) and 1.2 (d) and (v) each Shareholder will deliver the certificates
representing such Shareholder's shares of Company Common Stock together
with completed stock powers transferring the shares to Buyer duly executed
by such Shareholder (collectively, the "Stock Certificates").
1.4 NO ASSIGNMENTS. No assignment, transfer or other disposition of
record or beneficial ownership of any shares of Company Common Stock may be made
on or after the date hereof prior to Closing or termination of this Agreement.
1.5 PAYMENT IN FULL SATISFACTION OF ALL RIGHTS. The delivery of the
Purchase Price consisting of the Closing Cash Payment, the Seller Note Number
Three and the Closing Assumption of Debt shall be deemed to be payment in full
satisfaction of all rights pertaining to the outstanding Company Common Stock.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
2.1 REPRESENTATIONS AND WARRANTIES BY THE SHAREHOLDERS. Each of the
Shareholders represents and warrants, severally but not jointly, to the Buyer
that the statements contained in this Section 2.1 are correct as to himself as
of the date of this Agreement and will be correct as to himself as of the
Closing Date and (as though made then), except as set forth in the disclosure
schedule delivered by the Shareholders to the Buyer on the date hereof, as
supplemented or amended in accordance with Section 3.4 of this Agreement (such
schedule, as so supplemented or amended, the "Shareholders Disclosure
Schedule"). The Shareholders Disclosure Schedule is arranged in sections and
paragraphs corresponding to the lettered and numbered sections and paragraphs
contained in this Section 2.1. References in Section 2.1 to a numbered schedule
mean the section of the Shareholders Disclosure Schedule that corresponds with
that number; for example, references to "Schedule 2.1(d)" mean Section 2.1(d) of
the Shareholders Disclosure Schedule. Notwithstanding anything herein to the
contrary, each matter disclosed in either the Shareholders Disclosure Schedule
or the Company Disclosure Schedule shall be deemed responsive to all other
Sections of the Agreement to which disclosure is required by the Shareholders
and/or the Company; provided, however, that the responsiveness of such a
disclosure matter to another Section of the Agreement and/or disclosure schedule
is obvious.
a. Qualification. Such Shareholder has the legal power and
authority to own his or her properties and assets.
b. Authority Relative to Agreement. Such Shareholder has the full
right, power and legal authority to execute and deliver this Agreement.
Such Shareholder has the full right, power and legal authority to perform
this Agreement and to consummate the transactions contemplated on his or
her part hereby. No proceeding on the part of such Shareholder, and no
notice, consent, authorization, order or approval of, filing or
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registration with, any governmental commission, board or other regulatory
body or any bank, bonding company, lender, surety, customer, supplier, or
any other person or entity whatsoever is required for or in connection
with the execution and delivery of this Agreement by such Shareholder. No
proceeding on the part of such Shareholder, and no notice, consent,
authorization, order or approval of, filing or registration with, any
governmental commission, board or other regulatory body or any bank,
bonding company, lender, surety, customer, supplier, or any other person
or entity whatsoever is required for or in connection with the performance
by such Shareholder of this Agreement and the consummation by such
Shareholder of the transactions contemplated hereby. This Agreement has
been duly executed and delivered by such Shareholder and is a valid and
binding agreement of such Shareholder, enforceable against such
Shareholder in accordance with its terms, except as such enforcement is
subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws relating to or affecting creditors' rights.
c. Non-Contravention. The execution, delivery and performance of
this Agreement by such Shareholder does not, and the consummation by such
Shareholder of the transactions contemplated hereby will not, conflict
with, or result in any violation of, or default (with or without notice or
lapse of time, or both) under, or give rise to a right of termination,
cancellation, or acceleration of any obligation or to the loss of a
material benefit under, or result in the creation or imposition of any
material lien, charge, pledge, security interest or other encumbrance upon
any of the property or assets of such Shareholder pursuant to any
provision of, any mortgage, lien, lease, agreement, license, instrument,
law, ordinance, regulation, order, arbitration award, judgment or decree
to which such Shareholder is a party or by which any of such Shareholder's
assets are bound. The execution, delivery and performance of this
Agreement by such Shareholder does not and the consummation by such
Shareholder of the transactions contemplated hereby will not violate or
conflict with any other restriction of any kind or character to which such
Shareholder is subject or by which any of such Shareholder's assets may be
bound.
d. Ownership of Company Common Stock. Such Shareholder holds of
record and owns beneficially the number of and percentage of shares of
Company Common Stock set forth next to his or her name in Schedule 2.1(d).
Such Shareholder is, and as of the Closing Date, will be the sole and
exclusive lawful owner of such shares of Company Common Stock free and
clear of all liens, claims, encumbrances and rights of others of any
nature whatsoever, with full power to vote all such shares on any matter
that may properly come before shareholders of the Company, and such
Shareholder may exercise such voting power on any matter without violation
of the rights of any person. There are no rights, warrants or options
outstanding with respect to such common stock, and such Shareholder has no
obligation to deliver common stock of the Company or any of its
Subsidiaries (as defined below) to any person as of the date hereof, at
any time on or prior to either of the Closing Date, thereafter or as a
result thereof or in connection therewith except as provided in this
Agreement.
2.2 REPRESENTATIONS AND WARRANTIES BY THE SHAREHOLDERS AND THE COMPANY.
The Shareholders, in the aggregate, represent and warrant, solidarily, to the
Buyer that the
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statements contained in this Section 2.2 are correct as of the date of this
Agreement and will be correct as of the Closing Date (as though made then),
except as otherwise set forth in the disclosure schedule delivered by the
Shareholders and the Company to the Buyer on the date hereof, as supplemented or
amended in accordance with Section 3.4 of this Agreement (such schedule, as so
amended or supplemented, the "Company Disclosure Schedule"). The Company
Disclosure Schedule is arranged in sections and paragraphs corresponding to the
lettered and numbered sections and paragraphs contained in this Section 2.2.
References in Section 2.2 to a numbered schedule mean the section of the Company
Disclosure Schedule that corresponds with that number; for example, references
to "Schedule 2.2(a)" mean Section 2.2(a) of the Company Disclosure Schedule.
Notwithstanding anything herein to the contrary, each matter disclosed in either
the Shareholders Disclosure Schedule or the Company Disclosure Schedule shall be
deemed responsive to all other Sections of the Agreement to which disclosure is
required by the Shareholders and/or the Company; provided, however, that the
responsiveness of such a disclosure matter to another Section of the Agreement
and/or disclosure schedule is obvious.
a. Organization and Qualification, etc. The Company is a
corporation (or limited liability company) duly organized, validly
existing and in good standing under the laws of the State of Louisiana,
has the full right, power and legal authority and all licenses, permits,
titles and authorizations necessary to own all of its properties and
assets and to carry on its business as it is now being conducted. The
copies of the Company's Articles of Incorporation, Articles of
Organization, Bylaws and Operating Agreement, as amended to date, which
have been delivered to Buyer are complete and correct, and such
instruments, as so amended, are in full force and effect. The Company is
duly qualified to do business and is in good standing in each jurisdiction
where the failure to be so qualified would have a material adverse effect
on the Company, which foreign jurisdictions are listed in Schedule 2.2(a).
b. Common Stock. The authorized common stock of the Company
consists of 324 shares of Company Common Stock, of which 324 shares of
Company Common Stock are validly issued and outstanding, fully paid and
non-assessable, and all of which are held of record and beneficially by
the Shareholders, Xxxxxx X. XxXxxxx, Xxxxx Xxxxxxxx and Xxxx Xxxxxxx. The
Company will not issue any additional shares of Company Common Stock
between the date hereof through the Closing Date. No shares of the common
stock of the Company have been issued in violation of the preemptive
rights of any past or present shareholder. No shares of the common stock
of the Company are in the treasury of the Company. As of Closing, there
shall be no outstanding subscriptions, shares of common stock, calls,
warrants, options, contracts, commitments, or demands relating to the
common stock or the equity interest of the Company or other agreements of
any character under which the Company would be obligated to issue or
purchase shares of its common stock. As of Closing, there shall be no
outstanding stock appreciation, phantom stock, profit participation or
similar rights with respect to the Company. As of Closing, there is no
voting agreement, voting trust, proxy, or other agreement or understanding
with respect to the voting of the common stock of the Company. The Company
has no commitments to issue or sell any securities or obligations
convertible into or exchangeable for, or giving any person any right to
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subscribe for or acquire from the Company, any shares of its common stock
and no securities or obligations evidencing any such rights are
outstanding.
c. Subsidiaries. The Company does not, directly or indirectly,
own or control more than fifty percent (50%) of the voting securities, or
serve as manager or general partner, of any corporation, firm,
partnership, joint venture or other business entity ("Subsidiary").
Neither the Company nor any Subsidiary owns or has any right or obligation
to acquire any class of securities (including, without limitation, debt
securities) issued by any person or entity and neither the Company nor any
Subsidiary is a party to or bound to any partnership, joint venture,
voluntary association, or other agreement with any person or entity for
the conduct of any business.
d. Authority Relative to Agreement. The Company has the full
right, power, and legal authority to execute and deliver this Agreement.
The Company has the full right, power, and legal authority to perform this
Agreement and to consummate the transactions contemplated on the part of
the Company hereby. The execution and delivery by the Company of this
Agreement and the consummation by the Company of the transactions
contemplated on its part hereby have been duly authorized by its Board of
Directors and the Shareholders in their capacity as the holders of all of
the common stock of and equity interests in Company. No proceeding on the
part of the Company, and, no notice, consent, authorization, order or
approval of, filing or registration with, any governmental commission,
board or other regulatory body, or any bank, bonding company, lender,
surety, customer, supplier, or any other person or entity whatsoever is
required for or in connection with the Company's execution and delivery of
this Agreement. This Agreement has been duly executed and delivered by the
Company and is a valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms, except as such
enforcement is subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws relating to or affecting
creditors' rights.
e. Non-Contravention. The execution, delivery, and performance of
this Agreement by the Company does not and the consummation by the Company
of the transactions contemplated hereby will not (1) violate any
constitution, statute, regulation, rule, injunction, judgment, order,
decree, ruling, charge, or other restriction of any government, government
agency, or court to which the Company or any of its assets is subject, (2)
violate any provision of the Articles of Incorporation or Bylaws of the
Company, or (3) violate or result in, with the giving of notice or the
lapse of time or both, the violation of any provision of, or result in the
acceleration of or entitle any party to accelerate (whether after the
giving of notice or lapse of time or both) any obligation under, or result
in the creation or imposition of any lien, charge, pledge, security
interest or other encumbrance upon any of the property of the Company
pursuant to any provision of any mortgage, lien, lease, contract,
agreement, license, or instrument to which the Company is a party or by
which any of its assets are bound. The execution, delivery and performance
of this Agreement by the Company does not, and will not, violate or
conflict with any other restriction of any kind or character to which the
Company is subject or by which any of its assets may be bound, and the
same does not, and will not, constitute an
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event permitting termination of any such mortgage, lien, lease, agreement,
license or instrument to which the Company is a party or by which any of
its assets are bound.
f. Financial Information. The Shareholders have previously
furnished Buyer with true and complete copies of the balance sheets of the
Company and its Subsidiaries, as applicable, as of December 31, 2003, and
the related statements of income, retained earnings and cash flows for the
twelve (12) months then ending. These financial statements were audited by
Broussard, Poche, Xxxxx & Xxxxxx LLP, certified public accountants. Such
financial statements have been prepared in conformity with GAAP
consistently applied. Such financial statements present fairly the
financial position and results of operations of the Company and its
consolidated Subsidiaries as of and for the respective periods then ended.
The Company and its Subsidiaries do not have any liabilities or
obligations of a type which should be included in or reflected as such in
financial statements prepared in accordance with GAAP, whether related to
tax or non-tax matters, accrued or contingent, due or not yet due,
liquidated or unliquidated, or otherwise, except as and to the extent
disclosed or reflected in such financial statements. Collectively, the
financial statements [including the certificates described in this Section
2.2(f)] are the "Company Financial Statements."
g. Absence of Certain Changes or Events. Since December 31, 2003,
except to the extent described in Schedule 2.2(g) of the
Company Disclosure Schedule, and except as expressly permitted by this
Agreement or in connection with the transactions contemplated hereby:
(1) the Company has not sold, leased, transferred, or
assigned any of its assets, tangible or intangible, other than for a
fair consideration in the ordinary course of business;
(2) the Company has not entered into any agreement,
contract, lease, permit or license (or series of related agreements,
contracts, leases, permits and licenses) either involving more than
$10,000 or outside the ordinary course of business;
(3) no party (including the Company) has breached,
accelerated, terminated, modified, or canceled any agreement,
contract, lease, permit or license (or series of related agreements,
contracts, leases, permits and licenses) involving more than $10,000
to which the Company is a party or by which it is bound ("Company
Contracts");
(4) the Company has not imposed or allowed any lien,
encumbrance or security interest to be placed upon any of its
assets, tangible or intangible (other than the Permitted Exceptions,
as defined below);
(5) the Company has not made any capital expenditure (or
series of related capital expenditures) either involving more than
$10,000 or outside the ordinary course of business;
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(6) the Company has not made any capital investment in, any
loan to, or any acquisition of the securities or assets of, any
other corporation, partnership, limited liability company or other
person (or series of related capital investments, loans, and
acquisitions) either involving more than $10,000 or outside the
ordinary course of business;
(7) the Company has not issued any note, bond, or other debt
security or created, incurred, assumed, or guaranteed any
indebtedness for borrowed money or capitalized lease obligation
either involving more than $10,000;
(8) the Company has not delayed or postponed the payment of
accounts payable and other liabilities outside the ordinary course
of business;
(9) the Company has not canceled, compromised, satisfied,
settled, waived, or released any right or claim (or series of
related rights and claims) either involving more than $10,000 or
outside the ordinary course of business;
(10) the Company has not granted any license or sub-license
of any rights under or with respect to any Intellectual Property (as
defined in Section 2.2(l) below);
(11) there has been no change made or authorized in the
Articles of Incorporation, Bylaws, Articles of Organization or
Operating Agreement of the Company;
(12) the Company has not issued, sold, or otherwise disposed
of any of its equity or common stock, or granted any options,
warrants, rights of first refusal, or other rights to purchase or
obtain (including upon conversion, exchange, or exercise) any of its
equity or common stock;
(13) the Company has not declared, set aside, or paid any
dividend or made any distribution with respect to its equity
interests or common stock (whether in cash or in kind) or redeemed,
purchased, or otherwise acquired any of its equity interests or
common stock;
(14) the Company has not experienced any damage, destruction,
or loss to its property in excess of $10,000 which is not covered by
insurance;
(15) the Company has not made any loan to, or entered into
any other transaction with, any of its directors, officers,
managers, Shareholders and employees outside the ordinary course of
business;
(16) the Company has not entered into any employment contract
or collective bargaining agreement, written or oral, or modified the
terms of any existing such contract or agreement;
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(17) the Company has not granted any increase in compensation
to any of its directors, officers, managers, Shareholders,
employees, consultants or agents in excess of five percent of such
person's base compensation;
(18) the Company has not adopted, amended, modified, or
terminated any bonus, stock option, profit-sharing, incentive,
severance, or other benefit plan, contract, or commitment for the
benefit of any of its directors, officers, mangers, Shareholders and
employees (or taken any such action with respect to any other
employee benefit plan);
(19) the Company has not made any other change in employment
terms for any of its directors, officers, mangers and employees
outside the ordinary course of business;
(20) the Company has not made or pledged to make any material
charitable or other contribution outside the ordinary course of
business;
(21) there has not been any other occurrence, event,
incident, action, failure to act, or transaction outside the
ordinary course of business involving the Company which could have a
material adverse effect on its assets or its business;
(22) there has not been any material adverse change in the
business, financial condition, operation, results of operation, or
future prospects of the Company;
(23) there have not been any work interruptions, or labor
grievances or employee claims filed against the Company, within the
last five (5) years;
(24) there has not been any merger or consolidation or
agreement to merge or consolidate with or into any other
corporations or entity;
(25) there has not been any material devaluation of inventory
due to obsolescence, deterioration, or pilferage. All inventory on
hand and held for resale is good and saleable merchandise except as
disclosed on Section 2.2(g);
(26) there has not been any transfer to Shareholder or other
third party of any tangible or intangible property, which is not
disclosed in the Financial Statements.
(27) the Company has good and merchantable title to all
inventory in the actual or constructive possession of the Company
and is valued on the books and records of the Company at an amount
not greater than the lower of its cost or market value;
(28) the Company has not experienced any products liability
claims in the past three (3) years;
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(29) other than activities in accordance with normal industry
business practices, including but not limited to, by way of example,
gifts of minimal value, entertainment, meals and social invitations,
neither the Company nor any Shareholder, has, directly or indirectly
(a) made any contribution, gift, bribe, rebate, payoff, influence
payment, kickback, or other payment to any person, private or
public, regardless of form, whether in money, property, or services:
(i) to obtain favorable treatment for business secured; (ii) to pay
for favorable treatment for business secured; (iii) to obtain
special concessions or for special concessions already obtained, for
or in respect of the Company or any Affiliate of the Company; or
(iv) in violation of any Applicable Law; or (b) established or
maintained any fund or asset that has not been recorded in the books
and records of the Company; and
(30) the Company has not committed, orally or in writing, to
do any of the foregoing.
"Permitted Exceptions" shall mean (i) liens, mortgages, pledges,
security interests or other encumbrances securing indebtedness of the
Company, with respect to which no default (or event which with notice or
lapse of time or both would constitute a default) exists, a correct and
complete list of which is set forth on Schedule 2.2(g)(i) of the Company
Disclosure Schedule; (ii) liens for taxes and assessments not yet due and
payable; (iii) liens for taxes, assessments and charges and other claims,
the validity of which the Company or the Shareholders are contesting in
good faith, by appropriate proceedings, a correct and complete list of
which is set forth on Schedule 2.2(g)(iii); and (iv) minor imperfections
of title, none of which, individually or in the aggregate, adversely
affects the operation, value, use or enjoyment of the affected asset or
property.
h. Undisclosed Liabilities. Except as set forth on Schedule
2.2(h), the Company has no liabilities (and there is no known basis for
any present or future action, suit, proceeding, hearing, investigation,
charge, complaint, claim, or demand against the Company or its
Subsidiaries giving rise to any liability), except for (i) liabilities set
forth on the face of the Company Financial Statements (including the notes
thereto) and (ii) liabilities which have arisen after December 31, 2003,
in the ordinary course of business (none of which results from, arises out
of, relates to, is in the nature of, or was caused by any breach of
contract, breach of warranty, tort, infringement, or violation of law).
i. Permits and Legal Compliance. The Company has all permits,
licenses, orders, qualifications, and approvals of all governmental and
regulatory authorities material to the conduct of their business, a
correct and complete list of which is set forth in Schedule 2.2(i). All
such permits, licenses, orders and approvals are in full force and effect,
and no suspension or cancellation of any of them is pending or threatened.
None of such permits, licenses, orders or approvals, and no application
for any of such permits, licenses, orders or approvals, will be adversely
affected by the consummation of the transactions contemplated by this
Agreement. To the best of the Shareholders' and Company's knowledge,
information and belief after due inquiry, the Company has complied with
all Applicable Laws (including rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings, and charges thereunder)
of federal, state,
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local, and foreign governments (and all agencies thereof), and no action,
suit, proceeding, hearing, investigation, charge, complaint, claim,
demand, or notice has been filed or commenced against the Company alleging
any failure so to comply.
j. Title to Properties; Absence of Liens and Encumbrances, etc.
The Company has good and marketable title to all of the real, tangible
personal and mixed properties and assets owned by it and used in its
business, free and clear of any liens, charges, pledges, mortgages,
conditional sales contracts, security interests or other encumbrances
(other than Permitted Exceptions). A correct and complete list of all such
properties and assets (other than properties and assets described in
Sections 2.2(k), 2.2(l) and 2.2(m)) with a historical cost in excess of
$5,000 is set forth on Schedule 2.2(j). The properties and assets of the
Company are free and clear of any liens, charges, pledges, mortgages,
conditional sales contracts, security interests or other encumbrances
(other than Permitted Exceptions).
k. Software. Schedule 2.2(k) contains a list or description by
type of all operating and applications computer programs and data bases
("Software") which the Company uses or has available for use and plans to
use, and such Software constitutes all the Software which is used to
operate the business of the Company as currently conducted. All such
Software is owned outright by the Company except as indicated on Schedule
2.2(k). As to any Software which Schedule 2.2(k) indicates is not owned by
the Company, the owner of such Software is identified on Schedule 2.2(k),
and the Company has the right to use the same pursuant to valid leases or
licenses therefor. None of the Software used by or available to the
Company, and no use thereof, infringes upon or violates any patent,
copyright, trade secret or other proprietary right of anyone else and no
claim with respect to any such infringement or violation is known to be
threatened.
l. Patent, Trademark, etc. Claims. The Company is the owner or
licensee of all patents, patent licenses, trademarks/service marks/trade
names, trademark/service xxxx/trade name registrations, copyrights, and
copyright registrations or any other intellectual property ("Intellectual
Property") used in the operation of the Company's business as presently
conducted and purported to be owned or licensed by it; and a correct and
complete list of such Intellectual Property is set forth in Schedule
2.2(l) of the Company Disclosure Schedule. Each item of Intellectual
Property owned or used by the Company immediately prior to the Closing
will be owned or available for use by the Company on the same terms and
conditions immediately after the Closing. The Company owns or has the
right to use all such Intellectual Property. The Company has not
infringed, and is not now infringing, on any trade name, trademark,
service xxxx, or copyright belonging to any other person, firm or
corporation and has not received any notice of such infringement. The
Company is not a party to any license, sub-license, agreement or
arrangement pursuant to which the Company uses Intellectual Property
except as shown in Schedule 2.2(l). With respect to each such license,
sub-license, agreement or arrangement set forth in Schedule 2.2(l):
(1) the license, sub-license, agreement or arrangement
covering the item is legal, valid, binding, enforceable, and in full
force and effect;
11
(2) the license, sub-license, agreement or arrangement will
continue to be legal, valid, binding, enforceable, and in full force
and effect on identical terms immediately following the Closing;
(3) no party to such license, sub-license, agreement or
arrangement is in breach or default, and no event has occurred which
with notice or lapse of time would constitute a breach or default or
permit termination, modification or acceleration thereunder; and
(4) no party to the license, sub-license, agreement or
arrangement has repudiated any provision thereof.
Each of the Company and its Subsidiaries owns, or holds adequate licenses
or other rights to use, its trade names in the business as now conducted
by it, and such use does not, and will not, conflict with, infringe on, or
otherwise violate any rights of others. The Shareholders have delivered to
Buyer correct and complete copies of all such licenses, sub-licenses
agreements and arrangements (as amended to date) disclosed on Schedule
2.2(l).
m. List of Properties, Contracts and Other Data. The Company owns
or leases all property and tangible or intangible assets used in the
conduct of its business as presently conducted. Except as reflected in
such Schedule 2.2(m), all of the property of the Company is in existence
and is in good condition and repair, except for reasonable wear and tear,
sufficient to conduct the business of the Company as it is presently being
conducted, and in conformity in all material respects with all restrictive
covenants, building, zoning, OSHA, safety, or other applicable ordinances,
restrictions, regulations, or laws. Except for the warranties expressly
set forth in this Section 2.2(m), the Company and the Shareholders make no
other representations concerning the condition of said movable property.
Schedule 2.2(m) contains a list setting forth, with respect to the Company
as of the date hereof, the following:
(1) Schedule 2.2(m)(1) of the Company Disclosure Schedule
lists and describes briefly all real property owned by the Company
and all real property leased or subleased by or to the Company
(whether as lessor or as lessee). The Shareholders have delivered to
the Buyer correct and complete copies of the leases and subleases
listed in Schedule 2.2(m)(1) (as amended to date). With respect to
each lease and sublease listed in Schedule 2.2(m)(1);
(i) the lease or sublease is legal, valid, binding,
enforceable, and in full force and effect;
(ii) the lease or sublease will continue to be legal,
valid, binding, enforceable, and in full force and
effect on identical terms immediately following the
consummation of the transactions contemplated hereby;
(iii) no party to the lease or sublease is in breach or
default of any material term or provision, and no event
has occurred which,
12
with notice or lapse of time, or both, would constitute
a breach or default or permit termination, modification,
or acceleration thereunder;
(iv) no party to the lease or sublease has repudiated
any provision thereof;
(v) except as described on Schedule 2.2(m)(1), there
are no disputes, oral agreements, or forbearance
programs in effect as to the lease or sublease;
(vi) to the best of Shareholders' and Company's
knowledge, information and belief after due inquiry,
with respect to each sublease, the representations and
warranties set forth in subsections (i) through (v)
above are correct and complete with respect to the
underlying lease;
(vii) the Company has not assigned, transferred,
conveyed, mortgaged, deeded in trust, or encumbered any
interest in the leasehold or subleasehold;
(viii) neither the Shareholders nor the Company has
received any notices from any governmental authority as
to any violations or alleged violations of any
applicable laws, rules and regulations with respect to
facilities leased or subleased by the Company or as to
any unfulfilled legal requirements in connection with
the operation thereof and, such facilities have been
operated and maintained in all material respects in
accordance with applicable laws, rules and regulations;
and
(ix) all facilities leased or subleased thereunder are
supplied with utilities and other services necessary for
the operation of the Company at such facilities.
(2) Schedule 2.2(m)(2) of the Company Disclosure Schedule
lists and describes briefly all contracts and commitments
(including, without limitation, mortgages, indentures and loan
agreements) to which the Company is a party, or to which it or any
of its assets or properties are subject and which are not
specifically referred to elsewhere in Section 2.2, provided that
there need not be listed in the Company Disclosure Schedule (unless
required pursuant to the preceding subsections of this Section
2.2(m)) any contract or commitment incurred in the ordinary course
of business which requires payments to or by the Company during its
remaining life aggregating less than $25,000 or which is terminable
by the Company within thirty days without payment of a premium or
penalty.
Correct and complete copies of all documents, and descriptions
complete in all material respects of all oral agreements or commitments
(if any), referred to in this
13
Section 2.2(m) have been provided to Buyer or its counsel. None of the
Company and the Shareholders has been notified of any claim that any
contract listed in Schedule 2.2(m)(2) of the Company Disclosure Schedule
is not valid and enforceable in accordance with its terms for the periods
stated therein, or that there is under any such contract any existing
material default or event of default or event which with notice or lapse
of time or both would constitute such a default.
n. Use of Real Property. None of the Shareholders and the Company
has received notice of violation of any applicable restrictive covenant,
zoning or building regulation, ordinance or other law, order, regulation,
restriction or requirement relating to the operations of the Company, or
any notice of default under any material lease, contract, commitment,
license or permit, relating to the use and operation of the owned or
leased real property listed in the Company Disclosure Schedule. None of
the Shareholders and the Company has received notice that any plant,
facility or other building which is owned or covered by a lease set forth
in the Company Disclosure Schedule does not substantially conform in all
material respects with all applicable ordinances, codes, regulations and
requirements, and none of the Shareholders and the Company has received
notice that any restriction, law or regulation presently in effect or
condition precludes or restricts continuation of the present use of such
properties.
o. Environmental Laws. The Company, including, without
limitation, its businesses, facilities, property, and equipment has been
and is currently in compliance, in all material respects, with all
applicable federal, state, and local laws, rules, and regulations of all
authorities, including without limitation, applicable Environmental Laws
(as hereinafter defined). The Company has, and is and has been in
compliance with, all permits, certificates, licenses and other
authorizations required to operate its business, facilities, property, and
equipment in compliance with applicable Environmental Laws ("Environmental
Permits"), if any, including, without limitation, any relating to the
generation, processing, treatment, discharge, storage, transport,
disposal, or other management of Hazardous Substances (as hereinafter
defined) and those relating to the protection of environmentally sensitive
areas and has timely filed all applications for renewal of the same. The
Company is not now, and will not be in the future, as a result of the
operation or condition of the business of the Company on or prior to the
date of Closing, subject to any: (a) liability in connection with any
release or threatened release of any Hazardous Substance into the
environment whether on or off any of its businesses, facilities, premises,
properties, or equipment; (b) reclamation, decontamination, removal,
investigation, remediation or monitoring requirements under Environmental
Laws, or any reporting requirements related thereto; or (c) consent order,
compliance order or administrative order relating to or issued under any
Environmental Law. There are no, nor have there been any, claims, demands,
actions, judgments, notices, proceedings, liens, or liabilities brought,
pending or threatened against the Company, or any of its businesses,
facilities, properties, premises or equipment relating in any manner to
actual or alleged non-compliance with Environmental Laws, harm to the
environment, or the release, threatened release, disposal, presence,
handling, discharge or storage of or exposure to or damage caused by
Hazardous Substances ("Environmental Claims") as of the Closing Date. To
the knowledge of the Shareholders, no requirement of Environmental Laws
will require future compliance costs on the part of the Company
14
in excess of Ten Thousand Dollars ($10,000) above costs currently expended
in the ordinary course of business. There are no obligations, undertakings
or liabilities of any other person or entity, including without
limitation, any predecessor-in-interest, arising out of or relating to
Environmental Laws, which the Company has agreed to, assumed or retained,
by contract or otherwise, except as set forth in Schedule 2.2(o).
"Environmental Laws" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, the Resource Conservation and
Recovery Act of 1976, the Clean Air Act, the Clean Water Act, and the
Occupational Safety and Health Act of 1970, each as amended, together with
all other laws (including rules, regulations, codes, plans, injunctions,
judgments, orders, decrees, rulings, and charges thereunder) of federal,
state, local, and foreign governments (and all agencies thereof)
concerning pollution, the environment, public or worker health and safety
or a community's right to know including laws relating to emissions,
discharges, releases, or threatened releases of pollutants, contaminants,
hazardous substances, hazardous materials, hazardous wastes, solid wastes,
toxic substances, extremely hazardous substance, hazardous chemical, oil,
or petroleum (or any fraction or constituent thereof) (as each of the
foregoing items is defined, listed or regulated under Environmental Laws)
and such other materials, wastes or substances that are or become
classified or regulated as hazardous or toxic under Environmental Laws
(collectively, "Hazardous Substances") in ambient or indoor air, surface
water, ground water, or lands or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport, or
handling of Hazardous Substances.
p. Litigation. Except as provided on Schedule 2.2(p), the Company
has not been served with notice with respect to any actions, suits,
audits, investigations, unfair labor practices charges, complaints,
claims, grievances or proceedings or, any audits or investigations with
respect to the Company pending against the Company at law or in equity, or
before or by any federal, state, municipal, foreign or other governmental
department, commission, board, bureau, agency or instrumentality, nor are
there any such actions, suits, audits, investigations, unfair labor
practices charges, complaints, claims, grievances or proceedings that are
known to be threatened against the Company.
q. Labor and Employment Matters. Schedule 2.2(q) of the Company
Disclosure Schedule sets forth all collective bargaining agreements,
employment and consulting agreements (other than consulting agreements
terminable by the Company within sixty (60) calendar days without payment
of a premium or a penalty), executive compensation plans, bonus plans,
deferred compensation agreements, employee pension plans or retirement
plans, employee profit sharing plans, employee stock purchase and stock
option plans, group life insurance, hospitalization insurance or other
plans or arrangements providing for benefits to employees of the Company.
(1) Neither the Company nor any of the Shareholders has
received notice of any controversies between the Company and any
employees or any unresolved labor union grievances or unfair labor
practice or labor arbitration proceedings pending or threatened,
related to the Company, and there are not any organizational efforts
presently being made or threatened in an organized fashion involving
any of the employees of the Company.
15
(2) None of the Shareholders and the Company has received
notice of any claim that it has not complied with any laws relating
to the employment of labor, including any provisions thereof
relating to wages, hours, collective bargaining, the payment of
social security and similar taxes, equal employment opportunity,
employment discrimination and employment safety, or that it is
liable for any arrears of wages or any taxes or penalties for
failure to comply with any of the foregoing.
(3) Schedule 2.2(q)(4) of the Company Disclosure Schedule
sets forth the current annual compensation (or basis thereof) of all
employees of the Company (by position or by department) as of April
15, 2004.
r. Accounts Receivable. All notes and accounts receivable of the
Company are reflected properly on its books and records, are valid
receivables subject to no setoffs or counterclaims (except as clearly
indicated in the Company Financial Statements or as set forth in Schedule
2.2(r)). All of such notes and accounts receivable are current and
collectible as of the date hereof, and each of such notes and accounts
receivable will be collected at their recorded amounts, subject to normal
adjustments, none of which are material in amount. Schedule 2.2(r) sets
forth a complete and accurate list of all notes and accounts receivable as
of April 30, 2004, which list indicates the aging of such notes and
accounts receivable.
s. Insurance. Schedule 2.2(s) sets forth the following
information with respect to each insurance policy (including policies
providing property, casualty, liability, and workers' compensation
coverage, bond and surety arrangements and Directors and Officers
liability) to which the Company has been a party, a named insured, or
otherwise the beneficiary of coverage at any time within the past year
(except as to insurance policies owned by third party vendors, contractors
and clients of the Company which have contractually named the Company as
insured or provided other benefits of coverage as a result of contractual
liability coverage, which policies need not be listed on Schedule 2.2(s)
but shall be made available for inspection by Buyer's representatives):
(1) the name, address, and telephone number of the agent;
(2) the name of the insurer, the name of the policyholder,
and the name of each covered insured;
(3) the policy number and the period of coverage;
(4) the scope (including an indication of whether the
coverage was on a claims made, occurrence, or other basis) and
amount (including a description of deductibles and ceilings of
coverage); and
(5) a description of any retroactive or "swing" premium
adjustments or other loss-sharing arrangements.
With respect to each such insurance policy owned by the Company: (A) the
policy is legal, valid, binding, enforceable, and in full force and effect
with respect to the periods
16
and risks which such policy purports to insure; (B) the policy will
continue to be legal, valid, binding, enforceable, and in full force and
effect in accordance with its terms on the same terms immediately
following the consummation of the transactions contemplated hereby; (C)
the Company is not in breach or default (including with respect to the
payment of premiums or the giving of notices), and no event has occurred
which, with notice or the lapse of time, would constitute such a breach or
default, or permit termination, modification, or acceleration, under the
policy; and (D) no party to the policy has repudiated any provision
thereof. The Company has been covered during the past five years by
insurance in scope and amount customary and reasonable for the businesses
in which it has engaged during such period. Schedule 2.2(s) of the Company
Disclosure Schedule describes any self-insurance arrangements affecting
the Company. "Self insurance arrangements" means any arrangement by which
the Company has assumed risks in scope and amount customarily insured by
businesses in the Company's industry and geographic region.
t. Employee Benefits.
(1) Schedule 2.2(t) of the Company Disclosure Schedule
lists, with respect to Company, any subsidiary of Company and any
trade or business (whether or not incorporated) which is treated as
a single employer with Company (an "ERISA Affiliate") within the
meaning of Sections 414(b), (c), (m) or (o) of the Code, (i) all
employee benefit plans (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) and
subject to ERISA, (ii) each loan to a non-officer employee, loans to
officers and directors and any stock option, stock purchase, phantom
stock, stock appreciation right, (iii) all supplemental retirement,
severance, sabbatical, medical, dental, vision care, disability,
employee relocation, cafeteria benefit (Code Section 125) or
dependent care (Code Section 129), life insurance or accident
insurance, bonus, pension, profit sharing, savings, deferred
compensation or incentive plans, programs or arrangements which are
not employee benefit plans as otherwise covered under clause (i)
above, (iv) other fringe or employee benefit plans, programs or
arrangements that apply to senior management of Company and that do
not generally apply to all employees and (v) any current or former
employment or executive compensation or severance agreements,
written or otherwise, as to which unsatisfied obligations of Company
remain for the benefit of, or relating to, any present or former
employee, consultant or director of Company (together, the "Company
Employee Plans").
(2) Company has furnished to Buyer a copy of each of the
Company Employee Plans and related plan documents (including trust
documents, insurance policies or contracts, employee booklets,
summary plan descriptions and other authorizing documents, and, to
the extent still in its possession, any material employee
communications relating thereto) and has, with respect to each
Company Employee Plan which is subject to ERISA and/or Code
reporting requirements, provided copies of the Form 5500 reports
filed for the last three plan years. Except as described in Schedule
2.2(t)(2), any Company Employee Plan intended to be qualified under
Section 401(a) of the Code has either obtained
17
from the Internal Revenue Service a favorable determination letter
as to its qualified status under the Code, including all amendments
to the Code effected by the Tax Reform Act of 1986 and subsequent
legislation, or has applied to the Internal Revenue Service for such
a determination letter prior to the expiration of the requisite
period under applicable Treasury Regulations or Internal Revenue
Service pronouncements in which to apply for such determination
letter and to make any amendments necessary to obtain a favorable
determination. Company has also furnished Buyer with the most recent
Internal Revenue Service determination letter issued with respect to
each such Company Employee Plan, nothing has occurred since the
issuance of each such letter which could reasonably be expected to
cause the loss of the tax-qualified status of any Company Employee
Plan subject to Code Section 401(a).
(3) Other than continued health care coverage required under
the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended ("COBRA"), none of the Company Employee Plans promises or
provides retiree medical or other retiree welfare benefits to any
person, and each Company Employee Plan may be amended or terminated
at any time without any liability to Company or any of its
subsidiaries or affiliates and each such plan provides the
administrator with the discretion to interpret and construe the
terms of the plan; (ii) there has been no "prohibited transaction,"
as such term is defined in Section 406 of ERISA and Section 4975 of
the Code, with respect to any Company Employee Plan; (iii) each
Company Employee Plan is in compliance with the requirements
prescribed by any and all statutes, rules and regulations (including
but not limited to ERISA and the Code) and has been administered in
accordance with its terms and in compliance with the requirements
prescribed by any and all statutes, rules and regulations (including
ERISA and the Code), and Company and each subsidiary or ERISA
Affiliate has performed all obligations required to be performed by
them thereunder, are not in any respect in default under or
violation of, and have no knowledge of any default or violation by
any other party to, any of the Company Employee Plans; (iv) neither
Company nor any subsidiary or ERISA Affiliate is subject to any
liability or penalty under Sections 4976 through 4980 of the Code or
Title I of ERISA with respect to any of the Company Employee Plans;
(v) all contributions required to be made by Company or any
subsidiary or ERISA Affiliate to any Company Employee Plan have been
made on or before their due dates, and a reasonable amount has been
accrued for contributions to each Company Employee Plan for the
current plan years; (vi) with respect to each Company Employee Plan,
no "reportable event" within the meaning of Section 4043 of ERISA
(excluding any such event for which the 30 day notice requirement
has been waived under the regulations to Section 4043 of ERISA) nor
any event described in Sections 4062, 4063 or 4041 of ERISA has
occurred; and (vii) no Company Employee Plan is covered by, and
neither Company nor any subsidiary or ERISA Affiliate has incurred
or could incur any liability under, Title IV of ERISA or Section 412
of the Code. With respect to each Company Employee Plan subject to
ERISA as either an employee pension plan within the meaning of
Section 3(2) of ERISA or an employee welfare benefit plan within the
meaning of Section 3(1) of ERISA, Company has prepared in
18
good faith and timely filed all requisite governmental reports
(which were true and correct as of the date filed), and Company has
properly and timely filed and distributed or posted all notices and
reports to employees required to be filed, distributed or posted
with respect to each such Company Employee Plan. No suit,
administrative proceeding, action or other litigation has been
brought, or to the knowledge of Company, is threatened, against or
with respect to any such Company Employee Plan, including, without
limitation, any audit or inquiry by the Internal Revenue Service of
Department of Labor. Neither Company nor any of its subsidiaries or
other ERISA Affiliate is a party to, or has made any contribution to
or otherwise incurred any obligation under, any "multiemployer
plan," as defined in Section 3(37) of ERISA, and no event (other
than routine claims for benefits) has occurred and no set of
circumstances have occurred in connection with any Company Employee
Plan for which Company or any of its affiliates or subsidiaries
could be subject to any liability. No Company Employee Plan is
funded through a 'welfare benefit fund' as such term is defined in
Code Section 419(e).
(4) With respect to each Company Employee Plan, Company and
each of its subsidiaries have complied with (i) the applicable
health care continuation coverage and notice provisions of COBRA and
the proposed regulations thereunder, (ii) ERISA Section 609, if
applicable, and (iii) the applicable requirements of the Family and
Medical Leave Act of 1993 and the regulations thereunder.
(5) The consummation of the transactions contemplated by
this Agreement will not (i) entitle any current or former employee
of other service provider of Company, any Company subsidiary or any
other ERISA Affiliate to severance benefits or any other payment,
(ii) accelerate the time of payment or vesting, or increase the
amount of compensation due any such employee or service provider; or
(iii) require payments or any amount that could be received (whether
in cash or property or the vesting of property) by any employee,
officer or director of Company or any of its affiliates or
subsidiaries who is a 'disqualified individual' (as such term is
defined in Proposed Treasury Regulation Section 1.280G-1) under any
employment, severance or termination agreement, or other
compensation arrangement or Company Employee Plan currently in
effect to be characterized as a 'excess parachute payment' as such
term is defined in Section 280G(b)(1) of the Code.
(6) Since January 1, 2003, there has been no amendment to,
written interpretation or announcement (whether or not written) by
Company, any Company subsidiary or other ERISA Affiliate relating
to, or change in participation or coverage under, any Company
Employee Plan which would increase the expense of maintaining such
Plan by an amount equal to $5,000 above the level of expense
incurred with respect to that Plan for the most recent fiscal year
included in Company's financial statements.
19
(7) Under the Company Stock Option Plans, if applicable,
Company has the right to terminate the right of each optionee with
respect to vested options granted pursuant thereto by paying such
optionee a consideration equal to the amount of the difference
between the purchase consideration and the exercise price thereof,
or if otherwise, such difference should be disclosed on Disclosure
Schedule 2.2(t)(7).
(8) All voluntary employee benefit associations related to
the Company Employee Plans, if any, have been submitted to and
approved as exempt from federal income tax under Section 501(c)(9)
of the Code by the Internal Revenue Service and have not been
amended or operated in a manner which would adversely affect such
exempt status.
(9) Each of the guaranteed investment contracts and other
funding contracts with any insurance company that are held by any
Company Employee Plan and any annuity contracts purchased by any
such plan was issued by an insurance company which carried the
highest rating from each of Xxxx & Bradstreet, Standard & Poor's,
Best and Xxxxx'x Investor Service, Inc., as of the date such
contract was issued, the date hereof and the Closing Date.
(10) Except as completely and accurately disclosed on
Schedule 2.2(t), no Company Employee Plan covers persons employed
outside the United States and no such Plan is subject to the laws of
a foreign jurisdiction.
(11) Schedule 2.2(t) of the Company Disclosure Schedule sets
forth, on a plan by plan basis, the present value of benefits
payable presently or in the future to present or former employees of
Company or any of its subsidiaries or affiliates under each unfunded
Company Employee Plan.
(12) With respect to each Company Employee Plan, all
insurance premiums required to be paid with respect to said plans as
of the Effective Time have been or will be paid prior to the
Effective Time and adequate reserves have been provided for on
Company's balance sheet for any premiums (or portions thereof)
attributable to service on or prior to the Effective Time.
u. Tax Matters.
(1) All federal, state, local and foreign tax returns
required to be filed by the Company and its Subsidiaries prior to
the date hereof have been filed on a timely basis with the
appropriate governmental authorities in all jurisdictions in which
such tax returns are required to be filed (except for such tax
returns subject to a valid extension), and all such returns are
correct and complete. Shareholders have delivered to Buyer correct
and complete copies of all federal income tax returns, examination
reports, and statements of deficiencies asserted against or agreed
to by the Company or any Subsidiary since January 1, 1999. To the
knowledge of the Shareholders and the Company, neither the Company
nor its Subsidiaries are currently the subject of any audit,
examination or any similar
20
investigation by any governmental authority. Schedule 2.2(u)(1) of
the Company Disclosure Schedule sets forth all audits, examinations
or similar investigations of the Company and its Subsidiaries by any
governmental authority since January 1, 1998.
(2) All federal, state, local and foreign income, franchise,
sales, use, property, and all other taxes, fees, assessments, or
other governmental charges (including withholding taxes), and all
interest and penalties thereon (all of the foregoing collectively,
"Taxes") due from or properly accruable by the Company and its
Subsidiaries have been fully and timely paid or, in the cases of
Taxes for which payment is not yet required, properly and fully
accrued for on the Company Financial Statements or in Schedule
2.2(u)(2) with respect to all taxable periods ending on or prior to
the date of this Agreement and interim periods through the date of
this Agreement.
(3) None of the Company and its Subsidiaries has filed a
consent under Section 341(f) of the Code concerning collapsible
corporations. None of the Shareholders, the Company or any
Subsidiary is a party to any agreement, contract or arrangement that
would, by reason of the consummation of any of the transactions
contemplated by this Agreement, individually or in the aggregate,
result in the payment of any "excess parachute payment" within the
meaning of Section 280G of the Code. None of the assets of the
Company or any Subsidiary is required to be treated as being owned
by any other person pursuant to the "safe harbor" leasing provisions
of Section 168 of the Internal Revenue Code of 1954, as in effect
prior to the repeal of said leasing provisions.
(4) None of the Company and its Subsidiaries is a party to
any Tax allocation or sharing agreement. None of the Company and its
Subsidiaries (A) has been a member of an affiliated group filing a
consolidated federal income tax return (other than a group the
common Buyer of which was the Company or a Related Company) or (B)
has any liability for the taxes of any person (other than any of the
Company or a Related Company and their respective Subsidiaries)
under Treas. Reg. Section 1.1502-6 (or any similar provision of
state, local, or foreign law), as a transferee or successor, by
contract, or otherwise.
(5) Schedule 2.2(u)(5) sets forth the following information
with respect to each of the Company and its Subsidiaries as of the
most recent practicable date: (A) the basis of the Company or
Subsidiary in its assets as set forth on its last filed federal
income tax return; (B) the amount of any net operating loss, net
capital loss, unused investment or other credit, unused foreign tax,
or excess charitable contribution allocable to the Company or
Subsidiary; and (C) the amount of any deferred gain or loss
allocable to the Company or Subsidiary arising out of any Deferred
Intercompany Transaction (as defined in Treas. Reg. Section
1.1502-13).
(6) The Company will not be liable for any Taxes under
Section 1374 of the Code in connection with the deemed sale of the
Company's assets
21
(including the assets of any qualified subchapter S subsidiary)
caused by an election under Section 338(h)(10) of the Code. Neither
the Company nor any qualified subchapter S subsidiary of the Company
has, in the past ten (10) years, (A) acquired assets from another
corporation in a transaction in which the Company's Tax basis for
the acquired assets was determined, in whole or in part, by
reference to the Tax basis of the acquired assets (or any other
property) in the hands of the transferor or (B) acquired the stock
of any corporation which is a qualified subchapter S subsidiary.
(7) There will be no transfer, documentary, sales, use,
stamp, registration and other such Taxes and fees (including any
penalties and interest) incurred or imposed by the State of Texas or
any political subdivision thereof, in connection with the sale of
the Company Common Stock by the Shareholders pursuant to this
Agreement (including any corporate-level gains tax triggered by the
sale of the Company Common Stock). However, Shareholders and the
Company give no warranty, representation or right of reimbursement
concerning the tax treatment in any other state or political
subdivision thereof.
v. Disclosures.
(1) No representation or warranty of the Shareholders
contained herein, and no statement contained in any document or
instrument heretofore delivered to the Buyer in connection with this
Agreement or the transactions contemplated herein, contains any
untrue statement of a material fact or fails to state a material
fact necessary to make the statements herein or therein not
misleading.
(2) There is no fact known to any of the Shareholders that
has any specific application to the Company (other than general
economic or industry conditions) and that materially adversely
affects the assets, business, prospects, financial condition, or
results of operations of the Company that has not been set forth in
this Agreement, Schedule 2.2(v) or in the Company Disclosure
Schedule.
w. Brokers. All brokerage contracts with respect to this
Agreement and the transactions contemplated hereby, written or oral, are
as set forth on Schedule 2.2(w).
x. Xxxxxx of Attorney. There are no outstanding powers of
attorney executed on behalf of the Company.
y. Investment Company. The Company is not an "investment company"
or a company "controlled" by an "investment company" within the meaning of
the Investment Company Act of 1940, as amended, or a "holding company", a
"subsidiary company" of a "holding company" or an "affiliate" of a
"holding company" or a "public utility" within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
z. Shareholder Contracts. No Shareholder is a party to any
contract or agreement with Company except as disclosed in Schedule 2.2(z).
22
2.3 REPRESENTATIONS AND WARRANTIES BY THE BUYER. The Buyer represents
and warrants to the Shareholders and the Company that the statements contained
in this Section 2.3 are correct as of the date of this Agreement and will be
correct as of the Closing Date (as though made then), except as set forth in the
disclosure schedule delivered by the Buyer to the Shareholders and the Company
on the date hereof, as supplemented or amended in accordance with Section 3.4 of
this Agreement (such schedule, as so supplemented or amended, the "Buyer
Disclosure Schedule"). The Buyer Disclosure Schedule will be arranged in
sections and paragraphs corresponding to the lettered and numbered sections and
paragraphs contained in this Section 2.3. Notwithstanding anything herein to the
contrary, each matter disclosed in either the Buyer Disclosure Schedule shall be
deemed responsive to all other Sections of the Agreement to which disclosure is
required by the Buyer; provided, however, that the responsiveness of such a
disclosure matter to another Section of the Agreement and/or disclosure schedule
is facially apparent.
a. Organization and Qualification, etc. The Buyer is a
corporation duly organized, validly existing and in good standing under
the laws of the State of Louisiana, has corporate power and authority to
own all of its properties and assets and to carry on its business as it is
now being conducted, and is duly qualified to do business and is in good
standing in each other jurisdiction where, to the reasonable belief of
Buyer, such qualification is necessary or appropriate. The copies of the
Buyer's Articles of Incorporation and Bylaws, as amended to date, which
have been delivered to the Shareholders are complete and correct, and such
instruments, as so amended, are in full force and effect.
b. Subsidiaries, etc. Except as set forth in Schedule 2.3(b), the
Buyer does not own of record or beneficially, directly or indirectly, any
shares of outstanding common stock or securities convertible into common
stock of any other corporation or any participating interest in any
partnership, joint venture or other non-corporate business enterprise. Any
corporate or non-corporate business entity listed in Schedule 2.3(b) are
collectively called the "Subsidiaries."
c. Authority Relative to Agreement. Buyer has the corporate power
and authority to execute, deliver and perform this Agreement, and all
agreements and instruments to be executed and delivered by Buyer in
accordance with this Agreement and to consummate the transactions
contemplated on the part of Buyer hereby and thereby. The execution and
delivery by Buyer of this Agreement, and all agreements and instruments to
be executed and delivered by Buyer in accordance with this Agreement and
the consummation by Buyer of the transactions contemplated on its part
hereby and thereby have been duly authorized by its Board of Directors. No
other corporate proceedings on the part of Buyer are necessary to
authorize the execution and delivery of this Agreement and all agreements
and instruments to be executed and delivered by Buyer in accordance with
this Agreement. No other corporate proceedings on the part of Buyer are
necessary to authorize the performance of this Agreement, and all
agreements and instruments to be executed and delivered by Buyer in
accordance with this Agreement or the consummation by Buyer of the
transactions contemplated hereby. This Agreement has been duly executed
and delivered by Buyer and is enforceable against Buyer in accordance with
its respective terms, except as such enforcement is subject to
23
the effect of any applicable bankruptcy, insolvency, reorganization or
similar laws relating to or affecting creditors' rights.
d. Non-Contravention. The execution, delivery and performance of
this Agreement and all agreements and instruments to be executed and
delivered by Buyer in accordance with this Agreement do not and the
consummation by Buyer of the transactions contemplated hereby and thereby
will not (1) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling change, or other restriction
of any government, government agency, or court to which Buyer is subject,
(2) violate any provision of the Certificate of Incorporation or Bylaws of
Buyer, or (3) violate or result in, with the giving of notice or the lapse
of time or both, the violation of any provision of, or result in the
acceleration of or entitle any party to accelerate (whether after the
giving of notice or lapse of time or both) any obligation under, or result
in the creation or imposition of any lien, charge, pledge, security
interest or other encumbrance upon any of the property of Buyer pursuant
to, any provision of any mortgage, lien, lease, agreement, contract,
license, or instrument to which Buyer is a party or by which any of its
assets are bound. The execution, delivery and performance of this
Agreement and all agreements and instruments to be executed and delivered
by Buyer in accordance with this Agreement do not and will not violate or
conflict with any other restriction of any kind or character to which
Buyer is subject or by which any of its assets may be bound, and the same
does not and will not constitute an event permitting termination of any
such mortgage, lien, lease, agreement, license or instrument to which
Buyer is a party or by which any of its assets is bound.
e. Approvals. Except as set forth in Schedule 2.3(e), no consent,
authorization, order or approval of, or filing or registration with, any
governmental commission, board or other regulatory body or any other
person is required for the execution and delivery of this Agreement and
any amendments thereto and the consummation by Buyer of the transactions
contemplated hereby and thereby.
f. Litigation. Except as set forth in Schedule 2.3(f), there are
no actions, suits, audits, investigations, unfair labor practices charges,
complaints, claims, grievances or proceedings with respect to the Buyer or
any of its Subsidiaries pending against the Buyer or any of its
Subsidiaries at law or in equity, or before or by any federal, state,
municipal, foreign or other governmental department, commission, board,
bureau, agency or instrumentality, nor are there any such actions, suits,
audits, investigations, unfair labor practice charges, complaints,
grievances or proceedings that are known to be threatened against the
Buyer or any of its Subsidiaries.
g. Brokers. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried out by Buyer directly
with Shareholders and the Company, without the intervention of any person
on behalf of Buyer in such manner as to give rise to any valid claim by
any person against Shareholders or the Company for a finder's fee,
brokerage commission, or similar payment.
24
h. Investment Intent.
(1) Buyer is acquiring the Company Common Stock solely for
the purpose of investment, for its own account, and not with a view
to or for sale in connection with any distribution thereof within
the meaning of Section 2(11) of the Securities Act. Buyer
acknowledges that the Company Common Stock is being sold to Buyer by
each of the Shareholders in reliance upon one or more exemptions
from registration contained in the Securities Act and applicable
state securities laws. The reliance by Shareholders upon such
exemptions is based in part upon the representations set forth in
this Section 2.3(h).
(2) Buyer understands that the Company Common Stock has not
been registered under the Securities Act, that there is no
established market for the Company Common Stock, and that the
Company Common Stock must be held indefinitely and cannot be
transferred unless it is subsequently registered under the
Securities Act or an exemption from such registration is available
with respect to such transfer.
(3) Buyer has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and
risks of an investment in the Company Common Stock and of making an
informed investment decision.
(4) Buyer is able to bear the economic risk of its
investment in the Company Common Stock, to hold the Company Common
Stock for an indefinite period of time and to afford a complete loss
of its investment in the Company Common Stock.
(5) Buyer and its representatives, including such counsel,
have been given the opportunity to ask questions of, and receive
answers from, the officers of the Company and the Shareholders
concerning the terms of the transactions contemplated by this
Agreement and the affairs and the business and financial condition
of the Company.
ARTICLE 3
ADDITIONAL COVENANTS AND AGREEMENTS
3.1 CONDUCT OF BUSINESS. During the period from the date hereof to the
Closing Date, except as otherwise expressly contemplated by this Agreement, the
Shareholders shall cause the Company to, and the Company shall, conduct its
operations according to its ordinary and usual course of business, and shall use
its best efforts to preserve intact its business organization, keep available
the services of its officers and employees, and maintain its present
relationships with licensors, suppliers, distributors, customers and others
having significant business relationships with it. Representatives of the
Company will on request confer during such period with representatives of Buyer
to keep it informed with respect to the general status of the on-going
operations of the business of the Company. Without limiting the generality of
the foregoing and except as otherwise affected by matters expressly contemplated
by this
25
Agreement or in connection with the transactions contemplated by this Agreement,
the Shareholders will cause the Company during such period to:
a. carry on the business in substantially the same manner as
heretofore carried on and not introduce any material new method of
operation or accounting, nor provide discounted services outside the
ordinary course of business consistent with the Company's prior practices;
b. maintain its properties, facilities, equipment and other
assets, including those held under leases, in good working order,
condition and repair, ordinary wear and tear excepted;
c. perform all of its obligations under all debt and lease
instruments and other agreements relating to or affecting its business,
assets, properties, equipment and rights, and pay all vendors, suppliers,
and other third parties (including mechanics and materialmen) within sixty
(60) calendar days of receipt, except to the extent that such payments may
be subject to undisputed claims of offset or reimbursement in favor of the
Company, and pay in full all payroll obligations when due;
d. maintain its present debt and lease instruments (unless same
are otherwise mature) and refrain from entering into new or amended debt
or lease instruments without prior written notice to Buyer and in the case
of new term debt, the consent of Buyer;
e. not incur any indebtedness other than ordinary trade accounts
payable in the ordinary course of business;
f. keep in full force and effect its present insurance policies
or other comparable insurance coverage;
g. use its best efforts to maintain and preserve its business
organization intact, retain its present employees and maintain its
relationship with suppliers, customers and others having business
relations with the Company;
h. refrain from effecting any change in the articles of
incorporation, bylaws or capital structure of the Company and refrain from
entering into or agreeing to enter into any merger or consolidation by the
Company with or into, and refrain from acquiring all or substantially all
of the assets, common stock or business of any person, corporation,
partnership, association or other business organization or division of any
thereof;
i. refrain from incurring any expenditures outside the normal
course of business, including any capital expenditures without prior
written notification to and concurrence of Buyer;
j. refrain from starting or acquiring any new businesses without
the prior written notification to Buyer;
k. maintain its present salaries and commission levels for all
officers, directors, employees or agents, except for raises that may be
awarded to employees at or
26
below the level of supervisor in keeping with past practices of the
Company in the ordinary course of its business, refrain from entering into
employment agreements and refrain from entering into any collective
bargaining agreement without the prior written consent of Buyer;
l. refrain from declaring or paying any fees, commissions or
loans outside the ordinary course of business, and refrain from declaring
or paying any bonuses without the prior written consent of Buyer; and
m. refrain from declaring or paying any dividends, payments or
distributions to Shareholders or their affiliates without the prior
written consent of Buyer;
n. promptly notify Buyer of any claim or litigation threatened or
instituted, or any other material adverse event or occurrence involving or
affecting the Company or any of its assets, properties, operations,
businesses or employees;
o. comply with and cause to be complied with all applicable laws,
rules, regulations and orders of all federal, state and local governments
or governmental agencies affecting or relating to the Company or its
assets, properties, operations, businesses or employees, including the
timely payment of all tax liabilities which may come due;
p. other than in the ordinary course of business, refrain from
any sale, disposition, distribution or encumbrance of any of its
properties or assets and refrain from entering into any agreement or
commitment with respect to any such sale, disposition, distribution or
encumbrance (other than the sale or use of inventories in the ordinary
course of business) without the prior written consent of Buyer;
q. refrain from any purchase or redemption of any common stock or
other voting interest of the Company and refrain from issuing any common
stock or other voting interest;
r. refrain from entering into any long-term contracts for the
provision of services or the purchase of supplies or inventory without the
prior written consent of Buyer which consent shall not be unreasonably
withheld;
s. refrain from making any change in any accounting principle,
classification, policy or practice, except as required by GAAP; and
t. manage working capital in the ordinary course of business and
consistent with past practice.
3.2 ACCESS TO INFORMATION BY BUYER. Until the Closing Date or
termination of this Agreement, Shareholders will furnish Buyer with the
Unaudited Monthly Financial Statements for each month following December 2003,
promptly as available. Buyer may, prior to the Closing have access to the
business and properties of the Company and information concerning its financial
and legal condition as Buyer reasonably deems necessary or advisable in
connection with the consummation of the transactions contemplated hereby,
provided that such
27
access shall not interfere with normal operations of the Company. The
Shareholders and the Company agree to permit Buyer and its authorized
representatives, including but not limited to Buyer's lending sources, or cause
them to be permitted, to have, after the date hereof and until the Closing Date
or termination of this Agreement, full access to the premises, books and records
of the Company during normal business hours, and the officers and key employees
of the Company will furnish Buyer with such financial and operating data and
other information with respect to the business and properties of the Company as
Buyer shall from time to time reasonably request. No investigation by Buyer
heretofore or hereafter made shall affect the requirement of accurate
representations and warranties of the Shareholders and the Company, and each
such representation and warranty shall survive any such investigation. No
information gained by the Buyer through its own investigation and due diligence
shall be a waiver of the need for written disclosures by the Shareholders and
the Company.
3.3 ACCESS TO INFORMATION BY THE SHAREHOLDERS. Until the Closing Date or
the termination of this Agreement, the Shareholders shall have access to the
books, records, operating data, and any other information concerning the
financial and legal condition of the Buyer as the Shareholders deem necessary or
advisable in connection with the transactions contemplated hereby. All requests
by the Shareholders for information pursuant to this Section 3.3 shall be
directed to the Buyer. No investigation by the Shareholders heretofore or
hereafter made shall affect the representations and warranties of Buyer, and
each such representation and warranty shall survive any such investigation.
3.4 AMENDMENT TO SCHEDULES. Each party hereto agrees that, with respect
to the representations and warranties of such party contained in this Agreement,
such party shall have the right and continuing obligation until the Closing Date
to supplement or amend promptly the Shareholders Disclosure Schedule, the
Company Disclosure Schedule or the Buyer Disclosure Schedule (collectively,
referred to as the "Disclosure Schedules") with respect to any matter that would
have been or would be required to be set forth or described in the Disclosure
Schedules in order to not materially breach any representation, warranty or
covenant of such party contained herein. Each amendment or supplement to any
Disclosure Schedule shall be clearly marked so as to indicate the amending or
supplemental information contained therein, which shall be presented in
appropriate detail, and shall be delivered prior to the Closing Date and in the
manner provided in Section 8.3. In the event that the Company or Shareholders
amend or supplement the Disclosure Schedules pursuant to this Section 3.4 and
such amendment or supplement constitutes or reflects, individually or in the
aggregate, a material adverse change to the business, assets or prospects of the
Company or the Shareholders (all determined in good faith by the Buyer) then
Buyer may, by notice to the Company and the Shareholders given not less than one
(1) business day prior to the scheduled Closing Date, terminate this Agreement
and no party shall have any further obligation hereunder except as specified in
Section 5.2.
3.5 CONFIDENTIALITY. The provisions of this Section 3.5 shall supersede
and replace all prior agreements and understandings of the parties with respect
to the subject matter hereof.
a. Confidential Information. Until the Closing Date all
Confidential Information, as hereinafter defined, acquired by Buyer with
respect to the Shareholders or the Company, or by the Shareholders or the
Company with respect to Buyer, shall be (i)
28
maintained in strict confidence, (ii) used only for the purpose of and in
connection with evaluating the transactions contemplated herein, and (iii)
disclosed only (A) to employees and duly authorized agents and
representatives who have been informed of the obligations of the parties
under this Agreement with respect to such Confidential Information, who
have a need to know the information in connection with consummating the
transactions contemplated herein, and who agree to keep such information
confidential, or (B) as required by legal process (of which the other
parties shall be given prompt notice). Buyer, the Shareholders and the
Company shall be responsible for any breach of this Section 3.5(a) by any
of their respective representatives and each agrees to take all reasonable
measures to restrain its representatives from prohibited or unauthorized
disclosure of the Confidential Information. For the purpose of this
Agreement, the term "Confidential Information" shall mean all information
acquired by any party from another party hereto or its representatives
pursuant to Section 3.2 or 3.3 hereof or otherwise with respect to the
business or operations of such other party, other than (A) information
generally available to the public which has not become available as a
result of disclosure in violation of this Section 3.5(a) and (B)
information which becomes available on a nonconfidential basis from a
source other than a party to this Agreement or its representatives,
provided that such source is not known by the party to this Agreement
receiving such information to be bound by a confidentiality agreement or
other obligation of secrecy to another party to this Agreement or its
representatives. If the transactions contemplated herein are not
consummated, all Confidential Information in written or printed or other
tangible form (whether copies or originals) shall be returned to the party
of origin, and all documents, memoranda, notes and other writings
whatsoever prepared by any party or its representatives based on
Confidential Information shall be destroyed; and each party and its
representatives will thereafter hold all Confidential Information
concerning the other parties hereto or the Shareholders in strict
confidence.
b. Public Announcements. No press release, public announcement,
confirmation or other information regarding this Agreement or the contents
hereof shall be made by Buyer, the Shareholders or the Company without
prior consultation between the parties, except as may be necessary, in the
opinion of counsel, to any party to meet the requirements of any
applicable law or regulations, the determination of any court, or the
requirements of any stock exchange on which the securities of such party
may be listed. Notwithstanding the foregoing, Buyer may disclose pertinent
information regarding the transaction contemplated hereby to its existing
and prospective investors, lenders or investment bankers or financial
advisors for the purposes of obtaining financing. Buyer may also make
appropriate disclosures of the general nature of the transaction
contemplated hereby and the identity, nature and scope of the Company's
operations to prospective acquisition candidates in its efforts to attract
additional acquisitions for Buyer. Buyer may also make appropriate
disclosure as required in connection with any registration statement or
confidential information memorandum prepared by Buyer, but in that event
will give the Shareholders prompt notice thereof. Prior to the Closing,
the Buyer and the Company shall jointly approve the contents of any press
releases, written employee presentations, or other comparable materials of
potentially wide distribution that disclose or refer to the transaction
contemplated hereby, except for such press releases or other
communications required by law. If the
29
transactions contemplated herein are not consummated, neither the Buyer
nor the Shareholders shall disclose to any third party or publicly
announce the proposed transaction contemplated hereby, except as otherwise
permitted hereinabove and except as agreed in advance, in writing, by the
parties or otherwise required by law, in which case the party so compelled
will give reasonable written notice in advance to the other parties.
3.6 EXCLUSIVITY. After the signing of this Agreement until the earlier
of the Closing Date or the termination of this Agreement, neither the Company
nor any Shareholder shall (i) solicit, initiate, or encourage the submission of
any proposal or offer from any person or entity relating to the acquisition of
any common stock or other voting securities of, or any substantial portion of
the assets of, the Company (including any acquisition structured as a merger,
consolidation, or share exchange) or (ii) participate in any negotiations or
discussions regarding, furnish any information with respect to, assist or
participate in, or facilitate in any other manner any effort or attempt by any
person or entity in favor of such acquisition (including any acquisition
structured as a merger, consolidation, or share exchange). Neither the
Shareholders or the Company shall furnish to any other person any information
with respect to the Company that could be used for the purposes described above.
Shareholders shall promptly notify Buyer of any acquisition proposal received by
Shareholders and shall provide Buyer a copy (to the extent written) or
description (to the extent oral) of such acquisition proposal.
3.7 THE SHAREHOLDERS' RELEASE OF CLAIMS. Effective as of the Closing
Date, each Shareholder hereby (i) releases, acquits and forever discharges the
Company and its Subsidiaries from any and all liabilities, obligations,
indebtedness, claims, demands, actions or causes of action arising from or
relating to any event, occurrence, act, omission or condition occurring or
existing on or prior to the Closing Date, including, without limitation, any
claim for indemnity or contribution from the Company or any of its Subsidiaries,
except for (A) salary and expense reimbursement payable to the Shareholders as
an officer, director or employee in the ordinary course of business, (B) all
benefits (including interests in benefit plans) and fringe benefits to which the
Shareholders are entitled and (C) all indemnity obligations of the Company in
favor of any Shareholders in their capacity as such or in their capacity as an
officer or director of the Company, which indemnity obligations are set forth in
the Articles of Incorporation and Bylaws of the Company (provided that this
shall in no way limit the Buyer's ability to amend such provisions after the
Closing with respect to incidents or occurrences subsequent to the Closing), and
(D) obligations arising under notes payable to Shareholder pursuant to Sections
1.2(c)(v), and (ii) waives any and all preemptive or other rights to acquire any
shares of common stock of the Company and releases any and all claims arising in
connection with any prior default, violation or failure to comply with or
satisfy any such preemptive or other rights.
3.8 REAL ESTATE MATTERS. The Buyer, with the full cooperation and
assistance of the Shareholders and the Company, will cause an environmental
investigation to be performed by environmental engineers or consultants with
respect to all of the real estate owned and leased by the Company listed on
Schedule 2.2(m)(1) of the Company Disclosure Schedule (the "Environmental
Assessment Property"). The Buyer will pay the expenses incurred in obtaining
such environmental investigations. During the period prior to Closing, the
Shareholders and the
30
Company shall afford Buyer and its representatives the continuing right to
inspect, during the Company's normal business hours, the Environmental
Assessment Property and all books, records, contacts, documents and other data
pertaining to the use, ownership, operation, or maintenance of the Environmental
Assessment Property. If after completion of such environmental investigations,
it is determined, at the Buyer's reasonable discretion, that information
acquired by Buyer establishes that the Company's owned or leased real estate
constitutes a material environmental liability to the Company, Buyer shall have
the right to terminate this Agreement, upon five (5) calendar days written
notice to Shareholders and Company, and no party hereunder shall have any
continuing obligations hereunder except as set forth in Section 5.2 hereof.
3.9 CERTAIN TAX MATTERS.
a. Mutual Consent for Section 338(h)(10) Election. The Buyer and
Shareholders shall cooperate fully and work together towards determining
whether an election will be made under Section 338(h)(10) of the Code (and
any corresponding election under state, local, and foreign tax law) with
respect to the purchase and sale of the stock of the Company pursuant to
this Agreement. Any such election (a "Section 338(h)(10) Election") shall
be made only pursuant to the mutual consent of the Buyer and Shareholders.
In the event of mutual consent regarding the election of Section
338(h)(10), the Buyer and Shareholders shall cooperate fully to ensure
that all returns, documents, statements, and other forms that are required
to be submitted to any federal, state, county, or other local taxing
authority in connection with a Section 338(h)(10) Election are submitted
in compliance with applicable filing deadlines.
b. Tax Periods Ending on or before the Closing Date. Buyer shall
prepare or cause to be prepared and file or cause to be filed all Tax
Returns for the Company and its Subsidiaries for all periods ending on or
prior to the Closing Date which are filed after the Closing Date. Buyer
shall permit Shareholders to review and comment on each such Tax Return
described in the preceding sentence prior to filing. Shareholders
acknowledge that upon Closing their election to be taxed as a Subchapter S
Corporation will terminate and that Shareholders will be responsible for
all taxes due up to the day of Closing.
c. Cooperation on Tax Matters.
(i) Buyer, the Company and its Subsidiaries and Shareholders
shall cooperate fully, as and to the extent reasonably requested by
the other party, in connection with the filing of Tax Returns
pursuant to this Section 3.9 and any audit, litigation or other
proceeding with respect to Taxes. Such cooperation shall include the
retention and (upon the other party's request) the provision of
records and information which are reasonably relevant to any such
audit, litigation or other proceeding and making employees available
on a mutually convenient basis to provide additional information and
explanation of any material provided hereunder. The Company and its
Subsidiaries agree (A) to retain all books and records with respect
to Tax matters pertinent to The Company and its Subsidiaries
relating to any taxable period beginning before the Closing Date
until the
31
expiration of the statute of limitations (and, to the extent
notified by Buyer or Shareholders, any extensions thereof) of the
respective taxable periods, and to abide by all record retention
agreements entered into with any taxing authority, and (B) to give
the other party reasonable written notice prior to transferring,
destroying or discarding any such books and records and, if the
other party so requests, The Company and its Subsidiaries or
Shareholders, as the case may be, shall allow the other party to
take possession of such books and records.
(ii) Buyer and Shareholders further agree, upon request, to
use their best efforts to obtain any certificate or other document
from any governmental authority or any other Person as may be
necessary to mitigate, reduce or eliminate any Tax that could be
imposed (including, but not limited to, with respect to the
transactions contemplated hereby).
d. Tax Sharing Agreements. All tax sharing agreements or similar
agreements, if any, with respect to or involving the Company and its
Subsidiaries shall be terminated as of the Closing Date and, after the
Closing Date, the Company and its Subsidiaries shall not be bound thereby
or have any liability thereunder.
e. Certificate of No Tax Due. On or before ninety days after the
Closing Date, the Shareholders shall deliver to Buyer its Texas
Certificate of No Tax Due, which will show no franchise or state sales and
use tax due in respect of the Company as of the Closing Date.
f. Sub Chapter S Status. Through the Closing Date, the Company
and Shareholders will not revoke the Company's election to be taxed as an
S corporation within the meaning of Sections 1361 and 1362 of the Code.
The Company and Shareholders will not take or allow any action, other than
the sale of the Company's stock pursuant to this Agreement, that would
result in the termination of the Company's status as a validly electing S
corporation within the meaning of Sections 1361 and 1362 of the Code.
3.10 SATISFACTION OF CONDITIONS BY THE COMPANY AND SHAREHOLDERS. The
Company and the Shareholders shall (i) use their reasonable efforts to obtain,
as soon as possible, all governmental approvals required to be obtained by the
Company and make, as soon as possible, all filings with any governmental
authority required on the part of the Company to consummate the transactions
contemplated hereby, (ii) use their reasonable efforts to obtain, as soon as
possible, all other consents to and approvals required to be obtained by the
Company to consummate the transactions contemplated hereby, and (iii) otherwise
use their reasonable efforts to satisfy the conditions set forth in Article 4 of
this Agreement to the extent that such satisfaction is within their control.
3.11 SATISFACTION OF CONDITIONS BY BUYER. Buyer shall (i) use its
reasonable efforts to obtain, as soon as possible, all governmental approvals
required to be obtained by the Buyer and make, as soon as possible, all filings
with any governmental authority required on the part of the Buyer to consummate
the transactions contemplated hereby, (ii) use its reasonable efforts to obtain,
as soon as possible, all of the consents to and approvals required to be
obtained by the
32
Buyer to consummate the transactions contemplated hereby, and (iii) otherwise
use its reasonable efforts to satisfy the conditions set forth in Article 4 of
this Agreement to the extent that such satisfaction is within its control.
3.12 BENEFIT PLANS. Neither Buyer nor, following the Closing, the Company
shall terminate any health or medical insurance, life insurance, 401(k) plan or
other benefit plan in effect with respect to the Company until such time as
Buyer replaces such plan. Any such replacement plan shall give the officers and
employees of the Company full credit for the period of time each has been
employed by the Company prior to the Closing and for the period of time each is
employed by the Company after the Closing. Any new health insurance plan shall
provide for coverage for pre-existing conditions.
3.13 SHAREHOLDER AND AFFILIATE INDEBTEDNESS AND RECEIVABLES. As of the
Closing, ______________,________________ and ________________ and their
Affiliates shall cause to be paid in full in cash all accounts payable, notes
payable and advances payable owed by them or their Affiliates to the Company (or
any Subsidiary), and the Company (or any Subsidiary) shall pay in full in cash
all accounts payable, notes payable and advances payable by the Company (or any
Subsidiary) to either of them or their Affiliates, unless otherwise agreed to by
Buyer.
3.14 OTHER LIABILITIES. As of the Closing, the Company (or any
Subsidiary) shall pay in full in cash all liabilities outside the ordinary
course of business other than the liabilities comprising the Closing Assumption
of Debt. As of the Closing, the only liabilities remaining of the Company shall
be those listed on Schedule 3.14.
ARTICLE 4
CONDITIONS PRECEDENT
4.1 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE BUYER. The
obligations of the Buyer to consummate the Closing under this Agreement are
subject to the satisfaction in all material respects of each of the following
conditions, unless waived by the Buyer:
a. Accuracy of Representations and Warranties. Except for such
changes as are permitted pursuant to Section 3.4 of this Agreement, the
representations and warranties of the Shareholders and the Company
contained in this Agreement, in the Shareholders Disclosure Schedule, the
Company Disclosure Schedule and in each closing certificate and document
delivered to Buyer by the Company or the Shareholders pursuant hereto
shall be correct in all material respects at and as of the Closing Date as
though made at and as of the Closing Date, other than such representations
and warranties as are specifically made as of another date which shall be
correct at and as of such other date; and the Shareholders and the Company
shall each have delivered to Buyer a certificate to that effect.
b. Performance of Covenants. The Shareholders and the Company
shall have performed and complied with all covenants of this Agreement to
be performed or complied with by them at or prior to the Closing Date, and
the Shareholders and the Company shall each have delivered to Buyer a
certificate to that effect.
33
c. Legal Actions or Proceedings. No legal action or proceeding
shall have been instituted after the date hereof against the Shareholders
or the Company, or against Buyer, arising by reason of the acquisition of
the Company pursuant to this Agreement, which is reasonably likely (i) to
restrain, prohibit or invalidate the consummation of the transactions
contemplated by this Agreement, (ii) to have a material adverse effect on
the Company or (iii) to have a material adverse effect on the results of
operations or financial condition of Buyer and its subsidiaries, taken as
a whole, after giving effect to the consummation of the transactions
contemplated by this Agreement.
d. Approvals. The Company and the Shareholders shall have
procured all of the consents, approvals and waivers specified in Sections
2.1(b) and 2.2(d), and the Shareholders and the Company shall each have
delivered the same to Buyer, including but not limited to waiver of any
and all rights under and the termination of the Buy/Sell Agreement dated
_____________________, executed by and between the Shareholders.
e. Employment and Non-Compete Agreements. Xxxxxx X. XxXxxxx,
Xxxxx Xxxxxxxx, and Xxxx Xxxxxxx and Company shall have executed and
delivered Employment and Non-Compete Agreements with the Company on
mutually agreeable terms.
f. Opinion of Counsel for the Company and the Shareholders. Buyer
shall have received the favorable opinion of Jeasonne & Xxxxxxxx LLC,
counsel for the Company and the Shareholders, dated the Closing Date, in a
form acceptable to Buyer's counsel.
g. The Shareholders Release of the Company; Corporate Records.
The Shareholders shall have delivered to the Buyer (i) a release that
effectuates Section 3.7 of this Agreement, and (ii) the original corporate
records and books of Company, including the minute book, the stock
transfer books, and the corporate seal of the Company (of any of which the
Shareholders may retain copies for any proper purpose).
h. Due Diligence Satisfactory. The Buyer's due diligence
investigation of the Company as contemplated by Section 3.2 and Section
3.8 hereof shall be completed to the satisfaction of Buyer and Buyer's
lending sources.
i. All Proceedings to be Satisfactory. All necessary director and
shareholder resolutions, waivers and consents and all other actions to be
taken by the Shareholders and the Company in connection with the
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the
transactions contemplated hereby shall be satisfactory in form and
substance to Buyer and its counsel.
j. Financing. Buyer shall have, as of the Closing Date,
sufficient financing arrangements in place in order to have immediately
available funds to enable it to pay the cash portion of the Purchase Price
to the Shareholders at the Closing.
k. Provisions for Federal and State Income Tax. The Company shall
have sufficient cash on hand as of the Closing Date to cover the estimates
(which estimates
34
shall be satisfactory to Buyer) of the federal and state income taxes on
taxable income of the Company through the Closing Date.
l. Working Capital. In addition to the amount for the federal and
state tax estimates discussed above, the Company shall have working
capital on hand as of the Closing Date sufficient to allow the Company to
continue to operate in the ordinary course of business consistent with
past practices without the injection of any cash from the Buyer. The
sufficiency of the amount of such working capital shall be determined by
Buyer, but in no event shall it be less than $1.75 Million Dollars. Any
amounts in excess of $1.75 Million Dollars may be used to satisfy broker
fees allegedly due by Shareholders of up to $300,000.
m. 100% Commitment. The Shareholders together with, Xxxxxx X.
XxXxxxx, Xxxxx Xxxxxxxx and Xxxx Xxxxxxx, collectively the owners of 100%
of the outstanding shares of common stock of the Company, their respective
spouses, the Company and Buyer have executed and delivered this Agreement
or an agreement substantially similar to this Agreement.
4.2 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE SHAREHOLDERS AND THE
COMPANY. The obligations of the Shareholders and the Company to consummate the
Closing under this Agreement are subject to the satisfaction in all material
respects or waiver by the Shareholders of each of the following conditions:
a. Accuracy of Representations and Warranties. Except for such
changes as are permitted pursuant to Section 3.4 of this Agreement, the
representations and warranties of Buyer contained in this Agreement, in
the Buyer Disclosure Schedule and in each closing certificate and document
delivered by the Buyer to the Shareholders or the Company pursuant hereto
shall be correct in all material respects at and as of the Closing Date,
as though made at and as the Closing Date, other than such representations
and warranties as are specifically made as of another date which shall be
correct at and as of such other date; and Buyer shall have delivered to
the Shareholders and the Company a certificate to that effect.
b. Performance of Covenants. Buyer shall have performed and
complied with all covenants of this Agreement to be performed or complied
with by them at or prior to the Closing Date, and Buyer shall each have
delivered to the Shareholders and the Company a certificate to such
effect.
c. Approvals. Buyer shall have procured all of the consents,
approvals and waivers specified in Section 2.3(f), and Buyer shall deliver
the same to the Shareholders and the Company.
d. All Proceedings to be Satisfactory. All certificates,
opinions, instruments, and other documents required to effect the
transactions contemplated hereby shall be satisfactory in form and
substance to Shareholders, the Company and their counsel.
e. Opinion of Counsel for the Buyer. The Shareholders and the
Company shall have received the favorable opinion of Xxxxxx, Arata,
McCollam, Xxxxxxxxx &
35
Xxxxx, L.L.P., counsel for Buyer, dated the Closing Date, in a form
acceptable to Shareholders' and Company's counsel.
f. Legal Actions or Proceedings. No legal action or proceeding
shall have been instituted after the date hereof against the Buyer, or
against the Shareholders or the Company, arising by reason of the
acquisition of the Company pursuant to this Agreement, which is reasonably
likely (1) to restrain, prohibit or invalidate the consummation of the
transactions contemplated by this Agreement, (2) to have a material
adverse effect on the Company or (3) to have a material adverse effect on
the results of operations or financial condition of Buyer and its
subsidiaries, taken as a whole, after giving effect to the consummation of
the transactions contemplated by this Agreement.
g. Acceptable Private Placement Memorandum. Buyer's Private
Placement Memorandum shall be acceptable to the Shareholders in their sole
discretion.
ARTICLE 5
TERMINATION
5.1 TERMINATION OF AGREEMENT. The Parties may terminate this Agreement
as provided below:
a. Mutual Consent. The Buyer and the Shareholders may terminate
this Agreement by mutual written consent of Buyer and Shareholders at any
time prior to the Closing Date;
b. Termination by Buyer. The Buyer may terminate this Agreement
by giving written notice to the Shareholders at any time prior to the
Closing Date in the event of a material change in the financial position
of the Company, or if the Shareholders or the Company has breached any
material representation, warranty, or covenant contained in this Agreement
in any material respect, or if Xxxxxx X. XxXxxxx, Xxxxx Xxxxxxxx or Xxxx
Xxxxxxx has breached any material representation, warranty or covenant
contained in his agreement with Buyer in any material respect, if the
Buyer has notified the Shareholders of the breach and the breach has
continued without cure until ten (10) calendar days after the notice of
such breach;
c. Termination by the Shareholders. The Shareholders may
terminate this Agreement by giving written notice to the Buyer at any time
prior to the Closing Date in the event the Buyer has breached any material
representation, warranty, or covenant contained in this Agreement in any
material respect, the Shareholders have notified the Buyer of the breach
and the breach has continued without cure until ten (10) calendar days
after the notice of such breach;
d. Termination by Either the Shareholders or the Buyer. Either
the Buyer or the Shareholders may terminate this Agreement by giving
written notice to the other parties (i) if the Closing shall not have
occurred by June 30, 2004; provided, however, that the right to terminate
this Agreement under this Section 5.1 (d)(i) shall not be available to any
party whose failure to fulfill any obligation under this Agreement shall
have been the cause of, or shall have resulted in, the failure of the
Closing to occur on or
36
prior to such date; or (b) in the event that any governmental authority
shall have issued an order, decree or ruling or taken any other action
restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement and such order, decree, ruling or other
action shall have become final and nonappealable.
5.2 EFFECT OF TERMINATION. In the event of termination of this Agreement
as provided in Section 5.1, this Agreement shall forthwith become void and there
shall be no liability on the part of any party hereto, except that (1) Section
3.5, Section 8.1, Section 8.6, Section 8.7, Section 8.8, and Section 8.10 hereof
shall survive such termination and (2) nothing herein shall relieve any party
from liability for any willful breach of any such surviving Section hereof.
ARTICLE 6
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
6.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Subject to the
limitations of Section 6.4, the respective representations and warranties of the
parties contained in this Agreement shall survive the Closing Date, regardless
of any investigation made by or on behalf of any party.
6.2 INDEMNIFICATION BY THE SHAREHOLDERS. Subject to the limitations of
Section 6.5 and the provisions of Section 3.8, the Shareholders, solidarily,
jointly and severally, hereby agree to indemnify and hold harmless Buyer and its
affiliates including the Buyer and its officers and directors, in respect of any
losses, claims, damages, liabilities or related expenses (including, but not
limited to, all litigation costs but net of all available proceeds of insurance)
(collectively, "Losses") which Buyer (but without duplication) incurs as a
result of the breach of:
a. any of the representations or warranties made by the
Shareholders in or pursuant to this Agreement, or
b. any of the covenants made by the Shareholders in or pursuant
to this Agreement which are to be performed at or after the Closing Date.
The indemnification obligations of the Shareholders under Section 6.2
shall survive the Closing Date and will terminate at the time specified in
Section 6.5.
6.3 INDEMNIFICATION BY BUYER. Buyer agrees to indemnify and hold
harmless the Shareholders in respect of any losses, claims, damages, liabilities
or related expenses (including, but not limited to, all litigation costs) which
the Shareholders incur as a result of the breach of:
a. any of the representations or warranties made by Buyer in or
pursuant to this Agreement, or
b. any of the covenants made by Buyer in or pursuant to this
Agreement which are to be performed at or after the Closing Date. The
indemnification obligations of Buyer under this Section 6.3 shall survive
the Closing Date and will terminate at the time specified in Section 6.5.
37
6.4 NOTICE. Promptly after any party hereto (in Article 6, the
"Indemnified Party") has received notice or has knowledge of the occurrence of
any event which the Indemnified Party asserts is an indemnifiable event or after
the threat or commencement of any action, claim or proceeding commenced against
the Indemnified Party by a third party that might result in any claim for
indemnity pursuant to this Agreement (a "Third Party Claim"), the Indemnified
Party shall provide the party obligated to provide indemnification hereunder (in
Article 6, the "Indemnifying Party") written notice of such claim or the threat
of commencement of such action or proceeding. Promptly after receipt by an
Indemnifying Party of any such notice, the Indemnifying Party shall, within ten
business days of receipt of such notice, either: (i) acknowledge the debt,
liability or obligation for which indemnity is sought as a valid claim and
forthwith pay the Indemnified Party an amount sufficient to discharge such debt,
liability or obligation; (ii) in the event of a Third Party Claim which is not
acknowledged by the Indemnifying Party to be owing, notify the Indemnified Party
whether the Indemnifying Party elects to undertake the defense thereof and, if
so, thereupon promptly assume and diligently contest such Third Party Claim with
counsel reasonably satisfactory to the Indemnified Party; or (iii) in the event
of a claim by the Indemnified Party for indemnity hereunder which is challenged
by the Indemnifying Party, notify the Indemnified Party of such challenge.
Failure to respond within the appropriate time period following the receipt of a
notice hereunder shall be deemed to constitute a challenge by the Indemnifying
Party of the claims to indemnification by the Indemnified Party. In the event of
such a challenge, the Indemnified Party shall, if the claim is a Third Party
Claim, defend against such claim subject to such Party's right to be indemnified
for all litigation costs to the extent it is ultimately determined that the
Indemnifying Party was obligated (after applying the limitations of Section 6.5)
to provide indemnification with respect to such Third Party Claim. The
Indemnified Party shall not compromise a Third Party Claim without the prior
written consent of the Indemnifying Party (which consent may not be unreasonably
withheld or delayed if the Indemnifying Party has challenged the claim to
indemnification by the Indemnified Party). The Indemnifying Party shall not
compromise a Third Party Claim unless the compromise includes a complete release
of the Indemnified Party and does not create any obligations of the Indemnified
Party.
6.5 LIMITATIONS ON INDEMNIFICATION. No Indemnified Party shall be
entitled to indemnification pursuant to Article 6 unless and until the aggregate
of all Losses for which indemnification would (but for the limitation of this
sentence) be required to be paid by the Indemnifying Party under Article 6 of
this Agreement (collectively, "Indemnity Obligations") exceeds $10,000 (the
"Loss Threshold"), provided that if the aggregate Losses for which
indemnification is required to be paid shall exceed such sum then only those
Losses in excess thereof shall be payable. If an Indemnifying Party pays
indemnification (including without limitation, the cost of defending a Third
Party Claim) that was not required to be paid due to any limitation set forth in
this Section 6.5, then the Indemnified Party shall, promptly after demand by the
Indemnifying Party, reimburse the latter for such payments without interest.
Losses for which indemnification is required to be paid under Article 6 by
reason of any breach of the representations and warranties of Section 2.1
("Section 2.1 Losses") shall not be subject to the Loss Threshold, but the
amount of Section 2.1 Losses shall not be counted toward meeting that threshold
with respect to other indemnification claims. Absent a finding of fraud by a
court having jurisdiction, the maximum aggregate liability of the Shareholders
with respect to Shareholder Indemnity Obligations shall not exceed Six Million
Three Hundred Thousand and No/100 Dollars ($6,300,000.00) in the aggregate (the
"Aggregate Limitation"). A
38
Shareholder shall have no further obligations with respect to Shareholder
Indemnity Obligations at the earlier of the time when all Shareholders have paid
and/or are obligated to pay Shareholder Indemnity Obligations equal in the
aggregate to the Aggregate Limitation.
a. An Indemnified Party shall not be entitled to make any claim
for indemnification under this Article 6 unless notice of such claim
describing such claim with particularity is given prior to the date that
is thirty-six (36) months after the Closing Date, or, with respect to the
warranties and representations in Section 2.2(u) ("Tax Matters"), the date
that is not later than the expiration of the applicable statute of
limitations for a claim by a taxing authority for any taxes, penalties or
interest.
b. Notwithstanding anything to the contrary set forth above in
this Article 6, the liability of an individual Shareholder under this
Article shall be limited to one-half of $6,300,000.00.
ARTICLE 7
FURTHER ASSURANCES
7.1 FURTHER ASSURANCES. At any time and from time to time on and after
the Closing Date (a) at the request and expense of Buyer, the Shareholders shall
deliver to Buyer (but may retain copies for any proper purpose) any records,
documents and data possessed by the Shareholders and not previously delivered to
Buyer to which Buyer is entitled and shall execute and deliver or cause to be
executed and delivered all such deeds, assignments, consents, documents and
further instruments of transfer and conveyance, and take or cause to be taken
all such other actions, as Buyer may reasonably deem necessary or desirable in
order to fully and effectively vest in Buyer, or to confirm its title to and
possession of, the Company Common Stock or to assist Buyer in exercising rights
with respect thereto which Buyer is entitled to exercise pursuant to the terms
of this Agreement; and (b) Buyer shall execute and deliver or cause to be
executed and delivered such further instruments and take or cause to be taken
such further actions as the Shareholders may reasonably deem necessary or
desirable to carry out the terms and provisions of this Agreement.
7.2 BOOKS AND RECORDS. Buyer agrees that it shall preserve and keep all
books and records relating to the Company in Buyer's possession until the later
of December 31, 2007, or six months following the expiration of the statute of
limitations (including extensions thereof) applicable to the tax returns filed
by or with respect to the Company for taxable periods ending prior to or on the
Closing Date to which such books or records are relevant. After such time,
before Buyer shall dispose of any of such books and records, at least 90
calendar days' prior written notice to such effect shall be given by Buyer to
the Shareholders, and the Shareholders shall be given an opportunity, at Buyer's
cost and expense, to remove all or any part of such books and records as the
Shareholders may select, and the Shareholders may retain copies thereof. Duly
authorized representatives of the Shareholders shall, upon reasonable notice,
have access at any time to such books and records during normal business hours
to examine, inspect and copy such books and records.
a. In any instance in which any Shareholder or Buyer, as the case
may be, is required to prepare or file (or cause to be filed) tax returns
which cover a period that
39
includes the Closing Date or to respond to an audit by the Internal
Revenue Service or other governmental agency with respect to a period
prior to the Closing Date, each Shareholder or Buyer, as the case may be,
will furnish all information and records reasonably available to it and
reasonably requested of him, her or it and necessary or appropriate for
use in preparing such returns or responding to such audit. The Buyer shall
at Buyer's expense prepare and file, subject to giving Shareholders a
reasonable opportunity to comment on, tax returns covering periods ending
on the Closing Date.
b. Buyer, the Company and the Shareholders shall cooperate fully,
as and to the extent reasonably requested by the other party, in
connection with the filing of tax returns and any audit, litigation or
other proceeding with respect to taxes. Such cooperation shall include the
provision of records and information which are reasonably relevant to any
such audit, litigation or other proceeding and making employees available
on a mutually convenient basis to provide additional information and
explanation of any material provided hereunder.
ARTICLE 8
MISCELLANEOUS
8.1 EXPENSES, ETC. Whether or not the transactions contemplated by this
Agreement are consummated, none of the parties hereto shall have any obligation
to pay any of the fees and expenses of the other parties incident to the
negotiation, preparation and execution of this Agreement, including the fees and
expenses of counsel, accountants and other experts; provided, however, that, in
the event a party has breached any representation, warranty or covenant
contained in this Agreement, after its execution, in any material respect, and
such breach has not been cured ten (10) calendar days after the giving of notice
of such breach, the breaching party shall pay the first $100,000 of the
non-breaching party's reasonable expenses incurred as a result of such breach,
including but not limited to the non-defaulting party's attorney's fees incurred
in connection with the negotiation, execution and efforts toward consummation of
this Agreement, including but not limited to the costs and expenses of due
diligence reviews and financial audits. For purposes of this Section 8.1, all
fees and expenses incident to the negotiation, preparation and execution of this
Agreement incurred by either or both Company and Shareholders and which have
been incurred prior to Closing shall be deemed and paid as costs and obligations
of the Shareholders' alone. The Shareholders, on the one hand, and the Company
and Buyer, on the other hand, will indemnify the other parties, and hold them
harmless from and against any claims for finders' fees or brokerage commissions
in relation to or in connection with such transactions as a result of any
agreement or understanding between such indemnifying party and any third party.
8.2 EXECUTION IN COUNTERPARTS. For the convenience of the parties, this
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
8.3 NOTICES. All notices which are required or may be given pursuant to
the terms of this Agreement shall be in writing and shall be sufficient in all
respects if given in writing and delivered or mailed as follows:
40
IF TO THE SHAREHOLDERS OR, PRIOR
TO THE CLOSING, TO THE COMPANY:
Trussco, Inc
Post Office Box 80338 (70598-0338)
0000 Xxxxxxxxxx Xxxxxxx Xxxx.
Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000-0000
Facsimile: (000) 000-0000
WITH A COPY TO:
X. X. Xxxxxxxxx, Xx.
0000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Xxxxx Xxxxxxxxx
0000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Xxxxx Xxxxxx
000 Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
IF TO BUYER OR, FOLLOWING THE CLOSING,
TO THE COMPANY, TO:
OMNI Energy Services Corp.
Xxxx Xxxxxx Xxx 0000
Xxxxxxxxx, Xxxxxxxxx 00000
Attn: Xx. Xxxxx Xxxx
Facsimile: (000) 000-0000
WITH A COPY TO:
Xxxxxx X. Xxxxx
Xxxxxx, Arata, McCollam,
Xxxxxxxxx & Xxxxx, L.L.P.
000 X. Xxxxxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000
Facsimile: (000) 000-0000
or such other address or addresses as any party hereto shall have designated by
notice in writing to the other parties hereto. Any notice or other communication
pursuant to this Agreement shall be deemed to have been duly given or made and
to have become effective upon the earliest of (a) when delivered in hand to the
party to which directed, or (b) if sent by first-class mail postage,
41
prepaid and properly addressed as set forth above, three (3) calendar days after
deposit in the United States Mail, or (c) with respect to delivery by certified
mail, return receipt requested, properly addressed as set forth above, when
delivery thereof is made by the U.S. Postal Service (or the date of refusal of
delivery), or (d) when delivered (or the date of refusal of delivery) if sent by
overnight delivery service, or (e) the date sent, if sent by facsimile
transmission with proper electronic confirmation.
8.4 WAIVERS. Any party hereto (as to itself, but not as to other parties
without their consent) may, by written notice to the other parties hereto, (a)
extend the time for the performance of any of the obligations or other actions
of the other parties under this Agreement; (b) waive any inaccuracies in the
representations or warranties of another party contained in this Agreement or in
any document delivered pursuant to this Agreement; (c) waive compliance with any
of the conditions or covenants of another party contained in this Agreement; or
(d) waive performance of any of the obligations of another party under this
Agreement. Except as otherwise provided in the preceding sentence, no action
taken pursuant to this Agreement, including without limitation any investigation
by or on behalf of any party, shall be deemed to constitute a waiver by the
party taking such action of compliance with any representation, warranty,
covenant or agreement contained in this Agreement. The waiver by any party
hereto of a breach of any provision of this Agreement shall not operate or be
construed a waiver of any subsequent breach.
8.5 AMENDMENTS, SUPPLEMENTS, SCHEDULES, ETC. At any time this Agreement
may be amended or supplemented by such additional agreements, articles or
certificates, as may be determined by the parties hereto to be necessary,
desirable or expedient to further the purposes of the Agreement, or to clarify
the intention of the parties hereto, or to add to or modify the covenants, terms
or conditions hereof or to effect or facilitate any governmental approval or
acceptance of this Agreement or to effect or facilitate the filing or recording
of this Agreement or the consummation of any of the transactions contemplated
hereby. Any such additional agreement, article, or certificate must be in
writing and signed by all parties.
8.6 ENTIRE AGREEMENT. This Agreement, its Exhibits and Disclosure
Schedules and the documents executed on the Closing Date in connection herewith,
constitute the entire agreement between the parties hereto with respect to the
subject matter hereof and supersede all prior agreements and understandings,
oral and written, between the parties hereto with respect to the subject matter
hereof. No representation, warranty, promise, inducement or statement of
intention has been made by any party hereto which is not embodied in this
Agreement or such other documents, and no party hereto shall be bound by, or be
liable for, any alleged representation, warranty, promise, inducement or
statement of intention not embodied herein or therein.
42
8.7 CHOICE OF FORUM; CONSENT TO JURISDICTION. This Agreement shall be
governed by and construed in accordance with the laws of the State of Louisiana.
Any suit, action or proceeding arising with respect to the validity,
construction, enforcement or interpretation of this Agreement, and all issues
relating in any matter hereto, shall be brought in the United States District
Court for the Western District of Louisiana, or in the event that federal
jurisdiction does not pertain, in the state courts of the State of Louisiana in
Lafayette Parish. Each of the parties hereto hereby submits and consents to the
jurisdiction of such courts for the purpose of any such suit, action or
proceeding and hereby irrevocably waives (a) any objection which any of them may
now or hereafter have to the laying of venue in such courts, and (b) any claim
that any such suit, action or proceeding brought in any such court has been
brought in an inconvenient forum.
8.8 BINDING EFFECT, BENEFITS. This Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective successors,
assigns, heirs and legatees. Nothing in this Agreement, expressed or implied, is
intended to confer on any person other than the parties hereto or their
respective successors and assigns, and third parties who are expressly given
rights hereunder, any rights, remedies, obligations or liabilities under or by
reason of this Agreement.
8.9 ASSIGNABILITY. Neither this Agreement nor any of the parties' rights
hereunder shall be assignable by any party hereto without the prior written
consent of the other parties hereto; provided, however, that the Buyer may
assign its rights under this Agreement to an affiliate without the prior written
consent of any party hereto, provided that Buyer shall remain, jointly and
severally, bound with its assignee with respect to all obligations undertaken by
it.
8.10 INVALID PROVISIONS. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under any present or future law, rule or
regulation, such provision shall be fully severable and this Agreement shall be
construed and enforced as if such illegal, invalid or unenforceable provision
had never comprised a part hereof. The remaining provisions of this Agreement
shall remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance herefrom. Furthermore, in
lieu of such illegal, invalid or unenforceable provision, there shall be added
automatically as a part of this Agreement a legal, valid and enforceable
provision as similar in terms to such illegal, invalid or unenforceable
provision as may be possible.
43
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed effective as of the date first above written.
BUYER:
OMNI ENERGY SERVICES CORP.
a Louisiana corporation
/s/ Xxxxx Xxxx
----------------------------------------
Xxxxx Xxxx
Chief Financial Officer
SHAREHOLDERS:
/s/ X. X. Xxxxxxxxx
----------------------------------------
X.X. Xxxxxxxxx, Xx.
/s/ Xxxxx X. Xxxxxxxxx
----------------------------------------
Xxxxx X. Xxxxxxxxx
/s/Larry_Becker
----------------------------------------
Xxxxx Xxxxxx
SHAREHOLDER SPOUSES:
/s/ Xxxx Xxxxx Xxxxxxxxx
----------------------------------------
Xxxx Xxxxx Xxxxxxxxx
/s/ Xxxxxxxxx Xxxxxxxxx Xxxxxxxxx
----------------------------------------
Xxxxxxxxx Xxxxxxxxx Xxxxxxxxx
/s/ Xxxxxxxxx Xxxxxxxxx Xxxxxx
----------------------------------------
Xxxxxxxxx Xxxxxxxxx Xxxxxx
44
THE COMPANY:
TRUSSCO, INC.
a Louisiana corporation
By: /s/ Xxxxxx X. XxXxxxx
-------------------------------------
Name: Xxxxxx X. XxXxxxx
Title: President/CEO
TRUSSCO PROPERTIES LLC
By: /s/ Xxxxxx X. XxXxxxx
-------------------------------------
Name: Xxxxxx X. XxXxxxx
Title: President/CEO
45
