EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
FOR XXXXXX MACHINE SHOP ASSETS
THIS ASSET PURCHASE AGREEMENT for Xxxxxx Machine Shop Assets (this "Agreement")
is made and entered into effective as of 11:59 p.m. on the 31st day of May, 2004
(the "Effective Date"), by and between Xxxxxx Pump & Services, Inc., a Louisiana
corporation ("Seller"), T-3 Energy Services, Inc., a Delaware corporation
("Shareholder"), and Xxxxxx Machine Shop, L.L.C., a Louisiana limited liability
company ("Buyer"). Each of Seller, Shareholder, and Buyer are sometimes
hereinafter designated as a "Party" and they are collectively designated as the
"Parties".
RECITALS
A. Seller has an operating division known as "Xxxxxx Machine Shop" (the
"Business") which is engaged in the manufacture and production of
various items, including downhole and completion products and
equipment.
B. Shareholder is the owner of all outstanding stock of Seller.
C. Seller, Shareholder, and Buyer or their respective representatives have
heretofore entered into that certain letter of intent dated on April 8,
2004 and accepted on April 14, 2004 with a hand-written change to ss.2
thereof (the "Letter of Intent"), which confirms the intention of the
parties to enter into this Agreement.
D. Seller and Shareholder desire to sell or license to Buyer, and Buyer
desires to buy or license from Seller and Shareholder, certain
specified assets used in the operation of the Business, which are
described below, on the terms and conditions specified herein below.
E. One of the principals in Buyer, Xxxx Xxxxxxxx, has extensive knowledge
of the Business due to his prior role as a manager of the Business
prior to the time that Shareholder, through its predecessors in
interest, acquired the Business, and due to his current position as
General Manager of the Business.
TERMS AND CONDITIONS
For and in consideration of the mutual representations, warranties, covenants
and agreements hereinafter set forth and other good and valuable consideration,
the sufficiency and receipt of which are hereby acknowledged, and upon the terms
and subject to the conditions hereinafter set forth, and with the intent to be
legally bound hereby, the Parties agree as follows:
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ARTICLE I
CORRECTIONS TO LETTER OF INTENT
1.1 The Parties hereby acknowledge that they are bound by the terms and
conditions of Letter of Intent even though they may not be signatories
thereto.
1.2 The Parties hereby acknowledge that the term "T-3 Corporation", as used
in the Letter of Intent, should read "T-3 Energy Services, Inc." and
that T-3 Energy Services, Inc. is the sole shareholder of Seller and
does not do business in Louisiana, whether under the name of Xxxxxx
Machine Shop or otherwise.
ARTICLE II
DEFINITIONS AND RULES OF INTERPRETATION
2.1. DEFINITIONS.
For the purposes of this Agreement, each of the following terms shall
have the respective meanings ascribed thereto as set forth below:
"ADJUSTMENT ITEMS" means the aggregate net amount of the following with
respect to Seller's Xxxxx'x Machine Shop Division:
(i) accounts receivable,
(ii) Inventories,
(iii) post-closing adjustments and pro rata allocations of expenses
customarily performed for transactions of a similar nature,
including expenses for utilities and other common
out-of-pocket expenditures incurred prior to the Closing Date
but which are not invoiced until after the Closing Date,
LESS:
(iii) accounts payable.
"AFFILIATE" means, with respect to any specified Person, any other
Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such
specified Person.
"AGREEMENT" has the meaning specified in the introductory paragraph of
this Agreement.
"ASSETS" has the meaning specified in Section 3.1 of this Agreement.
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"ASSIGNMENT OF INTANGIBLES (ACCOUNTS RECEIVABLE AND OTHER ASSETS)"
means a document substantially in the form of Exhibit C hereto pursuant
to which Seller will sell, transfer, convey, assign, set over, and
deliver to Buyer all intangible personal property to the extent owned
by Seller, including accounts receivable, the name "Xxxxxx Machine
Shop", and any other trade names, trade marks, service marks, customer
lists, records, and contracts related to the Business.
"ASSUMED LIABILITIES" means the liabilities associated with the
operation of the Business identified in Schedule 3.4 as of April 14,
2004 and April 30, 2004.
"BUSINESS" has the meaning specified in Recital A.
"XXXX OF SALE" means a document substantially in the form of Exhibit B
hereto pursuant to which Seller will sell, transfer, convey, assign,
set over, and deliver to Buyer all tangible personal property owned by
Seller with regard to the Business.
"BUYER" has the meaning specified in the introductory paragraph of this
Agreement.
"CASH SALE" means a document substantially in the form of Exhibit A
hereto pursuant to which Seller will sell, transfer, quitclaim, convey,
set over, abandon, and deliver to Buyer the Real Estate.
"CLOSING" means the closing on the purchase and sale of the Assets, as
contemplated under this Agreement and as described in Article XIII.
"CLOSING DATE" means the date on which the Parties agree that the
Closing shall have been deemed to have occurred which, absent an
agreement in writing to the contrary between the Parties, shall be the
Effective Date.
"ENCUMBRANCE" means any and all options, pledges, vendor's liens,
mortgages, security interest, liens, charges, adverse claims, rights,
restrictions, burdens, and encumbrances whatsoever.
"EQUIPMENT" means the equipment used in the Business and located upon
the Real Estate as described on Exhibit B;
"EQUITABLE EXCEPTIONS" has the meaning given in Section 6.2(b).
"FINAL EXHIBIT ON ACCOUNTS RECEIVABLE" has the meaning specified in
Section 4.4(b).
"GOVERNMENTAL AUTHORITY" means any United States federal, state or
local or any foreign government, governmental, regulatory or
administrative authority, agency or commission or any court, tribunal,
or judicial or arbitral body.
"INTELLECTUAL PROPERTY" means all trademarks (registered and
unregistered), trademark registration applications, trade names
(registered and unregistered), service marks (registered and
unregistered), service xxxx registration applications,
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registered copyrights and copyright registration applications owned or
used by the Seller in connection with the Business.
"INVENTORY" means all stock and raw materials used in the Business and
located upon the Real Estate. The book value of the Inventory as of
April 14, 2004 and April 30, 2004 is set forth in Schedule 3.1(b).
"LETTER OF INTENT" has the meaning specified in Recital C above.
"MATERIAL ADVERSE EFFECT" means any circumstance, change in, or effect
on, the Assets or the Business that, individually or in the aggregate
with any and all other circumstances, changes in, or effects thereon:
(i) is or could reasonably be expected to be materially adverse to the
Assets or to the Business, financial condition (i.e. a financial impact
of $10,000 or more), assets or liabilities (including contingent
liabilities), customer or supplier relationships, prospects, value,
results of operations or the condition (financial or otherwise) of the
Business; or (ii) could reasonably be expected to materially adversely
affect the ability of Buyer to use the Assets or operate the Business
in the manner in which they are currently used or operated by Seller.
"PURCHASE PRICE" has the meaning specified in Section 4.1(a).
"PURCHASE PRICE DETERMINATION DATE" has the meaning specified in
Section 4.2(g).
"REAL ESTATE" means all real property owned by Seller situated on or at
000 Xxxxx Xxxx, Xxxxxxxxx, Xxxxxxxxx, as described in the Cash Sale.
"SELLER" has the meaning specified in the introductory paragraph of
this Agreement.
"SHAREHOLDER" has the meaning specified in the introductory paragraph
of this Agreement.
"TITLE REPORT" means a title search of public records, including a
search of all publicly-filed liens, judgments, and other evidences of
an Encumbrance.
"TRANSITION PERIOD" means the 60-day period following the Closing
during which Shareholder and Seller will provide Buyer with accounting
and information technology support services pursuant to Article V.
2.2 RULES OF INTERPRETATION.
(a) Wherever a representation or warranty in this Agreement is qualified as
having been made by Seller or Shareholder to their knowledge, such
phrase shall be construed as meaning the knowledge and belief of the
officers, directors, and senior managers of Seller and Shareholder
responsible for the operation of the Business or the Assets, but
excluding Xxxx Xxxxxxxx and anybody reporting to him.
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(b) Any reference to any statute shall be deemed to refer to the statute,
as amended, and to all rules and regulations promulgated thereunder, as
amended, unless the context requires otherwise.
(c) The word "include", "included", and "including" shall be construed as
being without limitation.
(d) Terms defined in the singular shall be construed as being defined in
the plural and vice versa.
(e) Any and all Exhibits and Schedules described as being a part of this
Agreement are hereby incorporated into this Agreement by reference and
made a part of this Agreement.
(f) The words "herein", "hereof" and "hereunder" and other words of similar
import refer to this Agreement as a whole and not to any particular
paragraph, subparagraph, Exhibit, Schedule, or other subdivision.
ARTICLE III
PURCHASE AND SALE OF ASSETS
3.1. PURCHASE AND SALE OF ASSETS.
At the Closing and subject to the terms and conditions set forth in this
Agreement, Seller will sell, convey, transfer, assign and deliver to Buyer, and
the Buyer shall purchase and accept from Seller, the following assets and
properties, free and clear of any and all ("Encumbrances"):
(a) the Real Estate;
(b) the Inventory;
(c) the Equipment;
(d) All computer hardware, books, maps, drawings, files, cabinets, office
materials, office equipment, office furnishings, furniture, fixtures
and equipment of every nature and kind not specifically identified on
Exhibit B and located upon the Real Estate; provided that Seller and
Shareholder shall be entitled to remove at the conclusion of the
Transition Period any Compaq T1010 and T20 thin client devices, the
Cisco 1720 router, and any other computer hardware which Buyer will no
longer require after the Transition Period;
(e) The trade name "Xxxxxx Machine Shop" and the initials "MMS" and any
other trademark to the extent owned by Seller and reasonably necessary
to carry on the Business and described on Schedule 7.4, provided that
Buyer shall not be entitled to use the names Xxxxxx Pump & Services,
Inc., Xxxxxx Pump, Xxxxxx Production
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Service, Xxxxxx Services, or Xxxxxx Pump & Supply, Inc. or any
derivations thereof or the initials "MPS".
(f) All customer lists, information, contacts, and customer and supplier
files and goodwill and other records relating to the Business and the
Assets; and
(g) The accounts receivable described on Exhibit Z [Pre-Closing Schedule of
Inventory, Accounts Receivable, and Accounts Payable]. Exhibit Z shall
be updated by Seller and Buyer post closing in accordance with
Section 4.2.
The items in (a) through (g) hereof hereinafter collectively referred to as the
"Assets".
3.2. TRANSFER AND CONVEYANCE.
Seller shall execute and deliver to the Buyer at the Closing a Cash Sale and
Bills of Sale and Assignment of Intangibles (Accounts Receivable and Other
Assets) in substantially the forms attached hereto as Exhibits A, B and C,
respectively, and all such other assignments, endorsements and instruments of
transfer as shall be necessary or appropriate to carry out the intent of this
Agreement and as shall be sufficient to vest in the Buyer title to all of the
Assets and all right, title and interest of Seller thereto.
3.3. INFORMATION TECHNOLOGY TRANSFERS.
(a) (i) At the Closing, Shareholder will provide Buyer with one or
more CDs or DVDs containing the quality management system
utilized by Seller with respect to the Business as of December
31, 2003. Effective as of the Closing Date, Shareholder grants
to Buyer a royalty-free non-revocable, non-assignable, and
non-exclusive license to use the data, information, and
programming contained on such CDs or DVDs solely upon the Real
Estate and solely for Business-related purposes. Buyer shall
be entitled to make copies of such CDs or DVDs solely for the
licensed purposes.
(ii) Buyer acknowledges that Shareholder has made no
representations or warranties regarding the accuracy,
suitability, or efficacy of such system and that Buyer will
use the CDs or DVDs at its own risk and without any support or
updates from Shareholder. Buyer covenants that it will not
utilize such CDs or DVDs in any fashion not associated with
the Business and that it will not allow any person other than
its employees and agents to utilize the programming, data, or
information contained in such CDs or DVDs.
(iii) Buyer covenants that prior to the conclusion of the Transition
Period, Buyer shall return such CDs or DVDs (including all
copies thereof made by or for Buyer) to Shareholder. Buyer
further covenants that in any successor programs, data, or
documentation based upon such CDs or DVDs, all references to
Seller, Shareholder, or their affiliates, and any trademarks
or trade names of Seller, Shareholder, and their affiliates
will no longer be utilized by Buyer and that such successor
programs, data, or documentation shall be used solely for
purposes authorized under clause (i) above.
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(b) Prior to the Closing, Shareholder will assist Buyer in selecting the
computer hardware and software which Buyer will require to operate a
computer system which will not be networked to any system maintained by
Shareholder or its affiliates. Buyer will be responsible for the costs
of the vendors installing any such system. Shareholder shall also
assist Buyer in converting its information system away from the Visual
manufacturing software currently utilized by Seller, including data
conversions from one system to another.
Buyer covenants that it will have all required hardware and software in
place prior to the conclusion of the Transition Period.
(c) Seller hereby confirms its intention that all software licensed to
Seller related to the machinery and tools to be transferred to Buyer
shall also be included as a part of the transfer to the extent Seller
is entitled to convey any such software to Buyer.
3.4. ASSUMPTION OF SPECIFIC LIABILITIES.
Buyer shall assume only those liabilities of the Business or of the Seller
listed on Schedule 3.4 as the Assumed Liabilities or as otherwise specifically
described in this Agreement, including all accounts payable related to the
Business and open purchase orders related to the Business, as adjusted by
updated Schedule 3.4 furnished in conjunction with the Purchase Price Adjustment
in Section 4.1 and the Post Closing Finalization of Adjustment in Section 4.2.
Seller shall remain responsible for, and shall pay all liabilities and
obligations of Seller and the Business arising prior to the Closing Date except
for the Assumed Liabilities.
ARTICLE IV
PURCHASE PRICE
4.1. INITIAL ESTIMATE OF PURCHASE PRICE.
(a) Pursuant to the Letter of Intent, the Parties agreed that the purchase
price for the transactions contemplated in this Agreement (the
"Purchase Price") shall be $1,000,000, subject to adjustment based upon
any positive or negative change in the aggregated Adjustment Items. As
of April 14, 2004, the date of acceptance of the Letter of Intent, the
temporary books and records of Seller reflected the base case from
which the Purchase Price is to determined while factoring in the impact
of the Adjustment Items on the Purchase Price. As of April 14, 2004,
the amount of the Adjustment Items was $256,989 in accounts receivable,
Inventories were booked at $68,000, and accounts payable were $54,321;
subject to reduction for Seller's portion of 2004 prorated real estate
taxes ($726.56) and 2004 movable property taxes ($4,640.56).
(b) Seller and Buyer have determined that the amount of the Purchase Price
to be paid at Closing while using the methodology set forth in the
"Purchase Price Adjustment" spreadsheet set forth in Exhibit X and in
the underlying supporting documentation and calculations shall be
$969,769.
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(c) Buyer shall pay such estimated Purchase Price at Closing by wire
transfer in immediately available funds to an account to be designated
by Seller.
(d) Notwithstanding the foregoing, in no event shall the Purchase Price
exceed $1,000,000.00. In the event that there is a positive change in
the aggregate Adjustment Items which would otherwise cause the Purchase
Price to exceed $1,000,000.00, the Purchase Price shall nevertheless be
$1,000,000.00, with Seller retaining any net increase in the aggregated
Adjustment Items through retention of accounts receivable in a like
amount. In the event that there is a negative change in the aggregated
Adjustment Items, the Purchase Price shall be reduced in a like amount.
Section 4.2. POST-CLOSING FINALIZATION OF PURCHASE PRICE.
(a) After the Closing, Buyer and Seller shall consult with one another in
order to determine the actual amount of the Adjustment Items and the
corresponding determination of the Purchase Price amount which should
have been paid at Closing while applying the methodology set forth in
Exhibit X [Spreadsheet for Determining Purchase Price Adjustment] which
was utilized to determine the estimated Purchase Price at Closing.
Within fifteen days after Closing, Buyer, with the help and cooperation
of Seller, shall present Seller and Shareholder with its proposed final
Purchase Price with a supporting spreadsheet prepared in accordance
with Exhibit X and with any additional supporting documentation which
Seller and Shareholder reasonably may request.
(b) As a part of such supporting documentation, Buyer shall update the
attached Exhibit Z [Pre-Closing Schedule of Inventory, Accounts
Receivable, and Accounts Payable] based upon the information provided
by Seller and the information in Buyer's books and records. Buyer also
shall provide Seller and Shareholder with an accounting of all
Inventory transferred by Seller as of the Closing Date. Each Party's
representatives shall be authorized to be present if any physical
Inventory counts are conducted as a part of such accountings. Any
differences between the accounting of all Inventory prepared by Seller
and appearing in Exhibit Z and the Inventory accounting prepared by
Buyer shall be reconciled by mutual agreement of the Parties, subject
to each Party's right to have such differences resolved by an
independent accountant, as discussed below.
(c) Seller shall provide such assistance and cooperation to Buyer as Buyer
may request in connection with Buyer's preparation of Buyer's proposed
final Purchase Price adjustment.
(d) If Seller disagrees with the Buyer's proposed final Purchase Price,
Seller shall so notify Buyer in writing within fifteen days after
Seller's receipt of Buyer's determination of its proposed final
Purchase Price. Any such Seller notification shall include in
reasonable detail Seller's preliminary assessment of such disagreement,
including the amounts in dispute and any undisputed amounts, as well as
a request for any information required by Seller in order to be able to
finalize its assessment.
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Seller shall be granted an additional fifteen days to revise its notice
of disagreement upon receipt of the information requested from Buyer
pursuant to the previous sentence.
(e) If Seller does not provide a notice or revised notice of disagreement
within any such fifteen day period, Seller shall be deemed to have
accepted Buyer's final determination of the Purchase Price, which shall
be final, binding and conclusive for all purposes hereunder and which
shall then become the final Purchase Price.
(f) After Seller's delivery of any notice of disagreement pursuant to
clause (d) above, Seller and Buyer shall use their reasonable good
faith efforts for a period of thirty days (or such longer period as
they may mutually agree) to resolve in writing any disagreements with
respect to the calculation of the determination of the final Purchase
Price. If, at the end of such period, they are unable to resolve such
disagreements, then an independent accounting firm mutually agreed upon
by Buyer and Seller shall resolve any remaining disagreements. If Buyer
and Seller are unable to agree upon the independent accounting firm,
then the independent accounting firm shall be Xxxxx Xxxxxxxx LLC.
(i) Each Party shall furnish, at its own expense, the independent
accounting firm and the other Parties with such documents and
information as the independent accountants may request. Each
Party may also furnish to the independent accountant such
other information and documents as it deems relevant with
appropriate copies or notification being given to the other
Parties. The independent accountant may conduct a conference
concerning the disagreement with the Seller and Buyer, at
which conference each Party shall have the right to present
additional documents, materials and other information and to
have present its advisers, counsel, and accountants. In
connection with such process, there shall be no hearings, oral
examinations, testimony, depositions, discovery, or other
similar proceedings conducted by any Party; however, the
independent accountant may request whatever information it
deems relevant to its determination.
(ii) The independent accounting firm shall, as promptly as
practicable, but in any event within thirty days of the date
on which the dispute is referred to the independent accountant
shall:
(A) determine the final amount of the Purchase Price in
accordance with the principles set forth herein; and
(B) deliver a written notice of such determination to
Buyer and Seller.
(C) determine the proportion of its fees and expenses to
be paid by Seller and Buyer based on the degree to
which the independent accounting firm has accepted
the positions of the Parties.
(iii) The determination of the independent accountant shall be
final, conclusive, and binding on all Parties.
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(g) The date on which the Purchase Price is finally determined in
accordance with this Section 4.2 is referred as to the "Purchase Price
Determination Date."
4.3. PAYMENT OF FINAL PURCHASE PRICE.
(a) Subject to 4.1 (d) and clause (b) below, if the final Purchase Price is
higher than the amount paid at Closing, Buyer shall pay to Seller the
incremental amount. If the final Purchase Price is lower than the
amount paid at Closing, Seller shall reimburse Buyer the decremental
amount. Any such payment shall be made within two business days after
the final Purchase Price Determination Date and shall be made by wire
transfer of immediately available funds to the account(s) designated by
the Party receiving the payment.
(b) If the variance between the Purchase Price amount paid at Closing and
the amount determined to be the final Purchase Price is less than
$10,000, no payment or refund shall be required for any Purchase Price
adjustment.
4.4. COLLECTIONS ON ACCOUNTS RECEIVABLE.
(a) Included within Exhibit Z [Pre-Closing Schedule of Inventory, Accounts
Receivable, and Accounts Payable] are Seller's estimates of the
accounts receivable and bad debt associated with the Business as of the
Closing. The Parties shall cooperate, as a part of the determination of
the Adjustment Items to determine the final Purchase Price, in revising
Exhibit Z after the Closing Date to reflect actual conditions as of the
Closing.
(b) Buyer shall, with the exercise of diligent and reasonable efforts,
attempt to collect within 90 days after the Closing Date the accounts
receivable listed on Exhibit Z, as so modified. Within 30 days after
the end of such 90-day period, Buyer shall prepare another revised
Exhibit Z (the "Final Exhibit on Accounts Receivable") .
Notwithstanding its inclusion within Exhibit Z, any account receivable
in the name of "cash sale" shall be deemed to have been fully paid when
making any post-Closing Date revisions required under this Agreement
and will not be reimbursed by Seller. At that time, Buyer shall assign
to Seller the right to collect any accounts receivable (except the
"cash sale" items described above) which were set forth in such revised
Exhibit Z and which have not yet been paid. Seller shall pay to Buyer,
within ten days of receipt of the revised Exhibit Z, the aggregate
amount of all such uncollected accounts receivable.
(c) Buyer shall provide Seller with such assistance as Seller may
reasonably require in collecting the accounts receivable assigned to
Seller pursuant to clause (b) above.
(d) Buyer shall perform any warranty or service work required to facilitate
such collection at Buyer's actual costs. For all other warranty or
service work which may be required by Seller to fulfill any warranty
obligations accruing on or prior to the Effective Date, Buyer shall
provide such work at its actual costs plus a markup of 10%. Buyer shall
seek authorization from Seller before providing any warranty work
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to be paid for by Seller where it reasonably can be anticipated that
any single item of work will cost more than $1,000 or where the
aggregate of all warranty work performed within any twelve-month period
will exceed $10,000.
4.5 ALLOCATION OF PURCHASE PRICE FOR TAX PURPOSES.
Within sixty days after the Closing Date, the Parties shall meet and
confer to allocate the Purchase Price for tax purposes. This allocation
shall include information regarding the purchase and sale of capital
goods and other items which will need to be consistently designated in
Buyer's and Seller's respective tax returns. Buyer and Seller shall
follow and use such allocation in all tax returns, filings or other
related reports made by them to any Governmental Authority. To the
extent that disclosures of this allocation are required to be made by
the Parties to the IRS under the provisions of Section 1060 of the
Internal Revenue Code of 1986, as amended or any regulations
thereunder, Buyer and Seller will disclose and coordinate such reports
(including the Form 8594 to be filed by Shareholder and Buyer) to each
other prior to filing with the IRS. If the Purchase Price is adjusted
after the Closing Date, the Parties shall negotiate in good faith a
corresponding adjustment to the Purchase Price allocation.
ARTICLE V
EMPLOYEES AND TRANSITION SUPPORT
5.1 Buyer may offer employment to Seller's employees currently operating
the Business, however, Buyer is under no obligation to employ any of
Seller's employees. Seller acknowledges and agrees that it is liable
and responsible for any payroll liabilities or amounts owed to Seller's
employees on or before the Closing Date.
5.2 During the Transition Period, Shareholder shall provide support for
Buyer's accounting and information technology functions to the extent
reasonably required to allow for Buyer's personnel to cause Buyer to no
longer be dependent upon Shareholder's accounting and information
technology systems. But in no event shall Shareholder be required to
provide any level of support greater than what it customarily provided
with respect to the Business, nor shall Shareholder personnel be
required to establish any new accounting or computer/information
technology systems for Buyer.
5.3 The Parties acknowledge that certain contractual rights and certain
governmental and industry permits, licenses, and certifications may not
be assigned in a practical manner to Buyer until after the Closing Date
or that such rights might not be assignable by Seller to Buyer without
prior approval. In order to avoid delays in achieving the Closing,
Shareholder agrees to assist Buyer during the Transition Period to
procure, in Buyer's name, all such items, including any governmental
permits required for with respect to storm water discharges, government
permits required in connection with the generation and disposal of
hazardous wastes, any certifications with the American Petroleum
Institute, and any certifications issued by Quality Certification
Bureau, Inc., which grants registrations with the International
Standards Organization.
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5.4 The cost for such Shareholder support during the Transition Period
shall be $00.00 per hour.
5.5 For up to 6 months after the Transition Period, Shareholder may provide
consulting services to Buyer in the accounting and information
technology areas at a cost of $150.00 per hour.
5.6. All third party costs incurred by Shareholder or its affiliates in
providing such support shall be paid for by Buyer directly to the
vendor or supplier thereof or reimbursed by Buyer to Shareholder or its
designated affiliate, at Shareholder's election.
5.7 Except for the accounts assigned back to Seller pursuant to Section
4.4(b) above, in the event that Seller receives payment on any accounts
receivable which have been purchased by Buyer, Seller shall forward
said payment(s) directly to Buyer within three days of receipt.
5.8 Prior to the conclusion of the Transition Period, Buyer shall provide
all issuers of governmental permits or industry certifications with
written notice of Buyer's acquisition of the Business. Buyer shall
provide Seller with copies of all such notices on or prior to the last
day of the Transition Period.
ARTICLE VI
SELLER'S AND SHAREHOLDER'S
GENERAL REPRESENTATIONS AND WARRANTIES
As a material inducement to the Buyer to enter into and perform this Agreement,
Seller represents and warrants to the Buyer:
6.1. DUE ORGANIZATION AND QUALIFICATION.
Seller is a corporation duly organized, validly existing and in good standing
under the laws of the State of Louisiana, and has all requisite corporate power
and authority to own, lease or operate its properties and to carry on its
business as it is presently being operated and in the place where such
properties are owned, leased or operated and such business is conducted.
6.2. CORPORATE POWER AND AUTHORITY.
(a) Seller has full power, authority and legal right to enter into this
Agreement and all other agreements by and among the Parties, and to
consummate the transactions contemplated hereby and thereby. The
execution, delivery and performance of this Agreement by Seller, and
all other agreements by and among the Parties, and the consummation of
the transactions contemplated hereby and thereby, have been duly
authorized by all requisite action and no further action or approval is
required in order to permit Seller to consummate the transactions
contemplated hereby and thereby.
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(b) This Agreement constitutes, and all other agreements by and among the
Parties when executed and delivered in accordance with the terms
thereof, will constitute, the legal, valid and binding obligations of
Seller enforceable against Seller in accordance with their terms,
except that
(i) such enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting
creditors' rights generally and other principles of equity,
and
(ii) the remedy of specific performance and injunctive relief are
subject to certain equitable defenses and to the discretion of
the court before which any proceedings may be brought (the
"Equitable Exceptions").
(iii) The making and performance of this Agreement and all other
agreements by and among the Parties, and the consummation of
the transactions contemplated hereby and thereby in accordance
with the terms hereof and thereof will not conflict with the
Articles of Incorporation or the Bylaws of Seller or result in
the violation of any provisions of law applicable to Seller,
the violation of which could have a Material Adverse Effect
upon the Assets or the Business.
(c) To Seller's knowledge, the making and performance of this Agreement and
all other agreements by and among the Parties, and the consummation of
the transactions contemplated hereby and thereby in accordance with the
terms hereof and thereof will not
(i) result in any breach or termination of, or constitute a
default under, or constitute an event that with notice or
lapse of time, or both, would become a default under, or
result in the creation of any Encumbrance upon any of the
Assets under, or create any rights of termination,
cancellation or acceleration in any person under, any existing
contract, agreement or other arrangement material to the
Business entered into by Seller in the course of its business,
provided that Buyer takes all actions required to cause Buyer
to receive by assignment any contractual rights which are not
assignable to Buyer until after the Closing, or operations, or
violate any order, writ, injunction or decree to which Seller
is a party, by which any of the Assets or Business may be
bound or affected or under which any of the Assets or business
or operations of Seller receive benefits, except with respect
to loan documents that will be satisfied at the Closing,
(ii) result in the loss or adverse modification of any license,
certificate, franchise, permit, or other authorization granted
to or otherwise held by Seller and related to the Business,
provided that Buyer takes all actions required to cause Buyer
to obtain all such items in its own name, including any
governmental permits required for with respect to storm water
discharges, the generation and disposal of hazardous wastes,
any certification with the American Petroleum Institute, and
any certifications issued by Quality
Page 13 of 13
Certification Bureau, Inc., which grants registrations with
the International Standards Organization.
6.3. TRUE, CORRECT AND COMPLETE INFORMATION.
To Seller's knowledge, all written agreements, lists, schedules, instruments,
exhibits, documents, certificates, reports, books, records, statements and other
writings furnished to the Buyer pursuant hereto or in connection with this
Agreement or the transactions contemplated hereby are and will be complete and
accurate in all material respects and have been maintained by Seller
substantially in accordance with all applicable laws and regulations except
where the failure to do so would not have a Material Adverse Effect. No
representation or warranty by Seller contained in this Agreement, in the
schedules attached hereto or in any certificate furnished or to be furnished by
Seller to the Buyer in connection herewith or pursuant hereto contains or will
contain any untrue statement of a material fact or omits or will omit to state
any material fact necessary in order to make any statement contained herein or
therein not misleading.
ARTICLE VII
SELLER'S AND SHAREHOLDER'S REPRESENTATIONS AND WARRANTIES
WITH RESPECT TO THE BUSINESS, ASSETS AND THE ASSUMED LIABILITIES
As a material inducement to the Buyer to enter into and perform this Agreement,
Seller and Shareholder represent and warrant to the Buyer in connection with the
Business and the Assets as follows to the best of their knowledge:
7.1. AVAILABILITY OF DOCUMENTS.
Seller has made available for inspection by the Buyer at the offices of Seller
true, correct and complete copies of all material agreements, contracts, books
and records affecting the Business or attributable to any of the Assets,
arrangements, commitments and documents referred to herein or in any schedule
referred to herein, in each case together with all amendments and supplements
thereto.
7.2 TITLE; USE OF ASSETS.
(a) Seller has, and upon conveyance of the Assets to the Buyer by Seller at
the Closing, the Buyer will acquire and hold, marketable and valid
title to all of the Assets, free and clear of any and all Encumbrances
(except as set forth on Schedule 7.2 with respect to any Encumbrances
which are to be paid off at Closing from Seller's proceeds). Seller
shall convey the Real Estate to Buyer in accordance with the Cash Sale,
subject to taxes for current year, zoning ordinances, mineral
reservations and or oil, gas and mineral leases, usual restrictive
covenants and easements common to acreage where the Real Estate is
located and other matters appearing in a Title Report, such acceptance
to be conclusively presumed by Buyer's payment of the Purchase Price at
Closing without any reservation or offset for any specific matter.
Page 14 of 14
To Seller's and Shareholder's knowledge, the update to the Phase I
Environmental Assessment dated April 27, 2004 and delivered to Xx. Xxxx
Xxxxxxxx prior to the execution and delivery of this Agreement is true
and correct in all material respects.
(b) Buyer shall be responsible for all costs, fees, and expenses incurred
for abstracting, researching, reviewing, surveying and insuring title
to the Property.
(c) Buyer agrees to notify Seller, in writing, of any defects to title to
the Real Estate which materially affect marketability and which are not
acceptable to Buyer. The notice shall specify those defects to title
which are not acceptable to Buyer and shall be given by Buyer to Seller
at least five days prior to Closing. Seller will use its reasonable
best efforts to cure such unacceptable items to Buyer's reasonable
satisfaction. In the event that Seller receives written notice of any
defects to title of the Real Estate which materially affects
marketability, Seller shall have thirty days after receipt of notice to
cure the defects. In the event said thirty day period to cure extends
beyond the anticipated Closing Date, said Closing Date shall be
extended to allow Seller the complete thirty days to cure title
defects. A policy of title insurance in the amount of $320,000 from a
company qualified to do business in the State of Louisiana, purchased
at Seller's expense and providing coverage for the alleged defect,
shall satisfy any objection to title based on said defect. If, at the
expiration of said thirty-day period Seller has been unable to cure the
defect or obtain a waiver of the same from Buyer, this Agreement shall
be terminated without any further obligation on behalf of any of the
Parties.
7.3. CONDITION OF INVENTORY, EQUIPMENT AND ASSETS.
The Equipment is in good operating condition, ordinary wear and tear excepted.
The accounts receivable listed on Exhibit Z [Pre-Closing Schedule of Inventory,
Accounts Receivable, and Accounts Payable], reflect Seller's good faith
determination thereof. The Inventory is in good condition, ordinary wear and
tear excepted.
7.4. INTELLECTUAL PROPERTY.
Schedule 7.4 contains a true and complete list of all common law Intellectual
Property owned or used by the Seller in connection with the Business.
7.5. ASSUMED LIABILITIES.
Schedule 3.4, as adjusted by updated Schedule 3.4 furnished in conjunction with
the Purchase Price Adjustment in Section 4.1 and the Post Closing Finalization
of Adjustment in Section 4.2, contains a true, correct, and complete list of all
Assumed Liabilities that Buyers is assuming herein and there are no other
liabilities of a material nature that affect any of the Assets being acquired
herein by Buyer. Buyer, Seller and Shareholder acknowledge and agree that Buyer
shall not be responsible or liable for any liabilities and/or amounts related to
the Business and the Assets not expressly stated on said Schedule 3.4.
Page 15 of 15
7.6 PERMITS.
Seller holds all governmental licenses, certificates, permits and other
governmental authorizations, including permits, titles, licenses, and
certificates owned or held by Seller, the absence of any of which could
reasonably be expected to have a material adverse effect on the Assets or the
Business and, since December 31, 2003, there has been no event or condition of
any character (whether actual, or to the knowledge of Seller, threatened or
contemplated) that has had or can be reasonably anticipated to have a Material
Adverse Effect on the financial condition, results of operations or prospects of
the Assets or Business except as disclosed on Schedule 7.6.
7.7. COMPLIANCE WITH LAWS.
Seller (i) has complied with all laws, regulations, licensing requirements and
orders applicable to the Business or its personnel, the noncompliance with which
could reasonably be expected to have a Material Adverse Effect, and (ii) has
filed with the proper authorities all statements and reports required by the
laws, regulations, licensing requirements and orders to which it or any of its
employees (because of their activities on behalf of their employer) is subject,
the failure of which to file could reasonably be expected to have a Material
Adverse Effect. All reports and returns required to be filed by Seller with any
governmental authority have been filed, and were accurate and complete when
filed. Without limiting the generality of the foregoing: (i) the operation of
Seller's business as it is now or heretofore has been conducted does not, nor
does any condition exist as to, give rise to or constitute the grounds for a
meritorious suit, action, claim or demand by any person or persons seeking
compensation or damages or seeking to restrain, enjoin or otherwise prohibit any
aspect of the conduct of such business or the manner in which it is now
conducted; and (ii) Seller has made all required payments with the appropriate
governmental departments of the state, local and federal governments. Seller has
not been investigated, charged, fined, sanctioned or audited by any federal,
state or local regulatory authority for alleged violations of laws and
regulations.
7.8 LITIGATION.
Set forth on Schedule 7.8 is a list of all assessments, actions, suits,
proceedings, investigations, arbitrations, audits or grievances pending against
Seller or, to the best knowledge of Seller threatened against Seller, Seller's
business or any property or rights of Seller, at law or in equity or before or
by any Governmental Authority. None of the actions, suits, proceedings,
arbitrations, audits or investigations listed on Schedule 7.8 either (i) has or
would, if adversely determined, have a Material Adverse Effect or (ii) affects
or would, if adversely determined, affect the right or ability of Seller to
carry on the Business substantially as now conducted. Seller is not subject to
any continuing order, writ, injunction or decree by any Governmental Authority
applicable specifically to the Assets, the Business operations of Seller or
employees of Seller, or in default with respect to any order, writ, injunction
or decree of any Governmental Authority with respect to the Assets, its
business, operations or employees. Neither Seller nor its officers or directors
or employee management knows or have grounds to know of any basis for any
proceedings, investigations or inquiries against Seller except as disclosed on
Schedule 7.8.
Page 16 of 16
7.9 CONSENTS.
Except as disclosed in Schedule 7.9, no consent, approval, authorization or
order of any Governmental Authority or any other person is required in order to
permit Seller to execute and deliver this Agreement and to consummate the
transactions contemplated by this Agreement.
7.10. INSURANCE.
Seller has been and is insured with responsible insurers in respect of its
properties against business risks normally insured against by companies in
similar lines of business. Seller has not, during the past three fiscal years,
been denied or had revoked any policy of insurance.
7.11. TAXES.
(a) Seller has duly filed all federal, state, county, local and other
excise, franchise, property, payroll, income, capital stock, sales and
use and other tax returns that are required to be filed by it and such
returns are true, correct and complete in all material respects. Seller
has paid all taxes which have become due or have been assessed against
it or the Assets and all taxes, penalties and interest which any taxing
authority has proposed or asserted to be owed.
(b) All tax liabilities to which the properties of Seller may have been
subjected have been discharged, except for taxes assessed but not yet
payable but which taxes have been pro rated between the Parties as of
the Closing Date as follows:
(i) Seller's prorated portion of 2004 real estate taxes: $726.56
(Assessment No. 00062001R) and
(ii) Seller's prorated portion of 2004 movable property taxes:
$4,640.56 (Assessment No. 00097034M).
Buyer and Seller have prorated said taxes as of the Closing Date by
reduction of the proceeds payable to Seller by an amount equal to
Seller's prorated portion of said taxes, with Buyer acknowledging
receipt from Seller of the same and Buyer assuming and agreeing to pay
to the respective taxing authorities the full amount of real estate
taxes (Assessment No. 000620001R) for the year 2004 which are assessed
against the Real Estate; and the full amount of the 2004 movable
property taxes (Assessment No. 00097034M) which are assessed against
the movable property located at the Real Estate.
7.12. BUSINESS CUSTOMERS.
Schedule 7.12 contains an accurate list of all significant customers of the
Business (i.e., those customers representing 5% or more of Seller's revenues for
the twelve (12) months ended April 30, 2004) and all customers with projects in
progress at the time of Closing.
Page 17 of 17
7.13. BROKER'S AND FINDER'S FEES.
Seller has not made any agreement with any person, nor taken any action which
would cause any person, to become entitled to an agent's, brokers or finder's
fee or commission in connection with the transactions contemplated by this
Agreement.
7.14. RESTRICTIVE DOCUMENTS OR LAWS
With the exception of the matters listed in Schedule 7.2 or in any Title Report,
Seller is not a party to or bound by any mortgage, lien, lease, agreement,
contract, instrument, law, order, judgment or decree, or any similar restriction
not of general application which has a Material Adverse Effect, or reasonably
could be expected to so affect, (a) the continued operation or use by the Buyer
of the Assets after the Closing on substantially the same basis as the Assets
are currently operated or (b) the consummation of the transactions contemplated
by this Agreement.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to Seller and Shareholder as follows:
8.1 ORGANIZATION AND AUTHORITY.
(a) The Buyer is a Louisiana limited company duly organized, validly
existing and in good standing under the laws of the State of Louisiana,
and has all requisite power and authority to own its property and to
carry on its business.
(b) The Buyer has full power, authority and legal right to enter into this
Agreement and all other agreements by and among the parties and to
consummate the transactions contemplated hereby and thereby.
(c) The execution, delivery and performance of this Agreement by the Buyer,
and all other agreements by and among the parties, and the consummation
by it of the transactions contemplated hereby and thereby, have been or
will be duly authorized by all requisite action.
(d) This Agreement constitutes, and all other agreements by and among the
parties, when executed and delivered in accordance with the terms
thereof, will constitute the legal, valid and binding obligations of
the Buyer, enforceable against the Buyer in accordance with their
terms, subject to the Equitable Exceptions. The making and performance
of this Agreement, and all other agreements by and among the parties,
and the consummation of the transactions contemplated hereby and
thereby in accordance with the terms hereof and thereof will not
conflict with the Articles of Organization or Operating Agreement of
the Buyer.
Page 18 of 18
8.2 CONSENTS.
No consent, approval, authorization or order of any Governmental Authority or
any other person is required in order to permit the Buyer to consummate the
transactions contemplated by this Agreement.
8.3 BROKER'S AND FINDER'S FEES.
The Buyer has not made any agreement with any person, or taken any action which
would cause any person, to become entitled to an agent's, brokers or finder's
fee or commission in connection with the transactions contemplated by this
Agreement.
8.4 LITIGATION.
There is no pending or, to the knowledge of the Buyer, threatened litigation in
or any proceeding before any Governmental Authority in which it is sought to
restrain, prohibit, invalidate or obtain damages in respect of the consummation
of the purchase and sale of the Assets or the other transactions contemplated
hereby.
8.5 NO KNOWLEDGE OF INACCURATE REPRESENTATION.
Buyer has no knowledge of any fact or circumstance which would render any
representation or warranty made by Seller or Shareholder hereunder to be untrue
or incorrect in any material respect.
ARTICLE IX
COVENANTS OF SELLER WITH RESPECT TO THE BUSINESS
Seller and Shareholder covenant and agree with the Buyer with respect to the
Business as follows:
9.1. AFFIRMATIVE COVENANTS.
Prior to the Closing Date, Seller will operate the Business only in the usual,
regular and ordinary course of business consistent with good business practices,
and will use its reasonable best efforts to: (i) preserve intact its business
organization and the Assets; (ii) maintain its level of Inventory at levels
consistent with good business practices; (iii) continue all existing policies of
insurance (or comparable insurance) in full force and effect up to and including
the Closing Date (and will not cancel any such insurance or take (or fail to
take) any action that would enable the insurers under such policies to avoid
liability for claims arising out of any occurrence prior to the Closing Date
without the prior written consent of the Buyer; (iv) preserve its present
relationships with suppliers and customers; and (v) maintain its books, accounts
and records in the usual, regular and ordinary manner on a basis consistently
applied. Seller will notify the Buyer in writing within five (5) business days
of learning of any facts, event or circumstance that is reasonably likely to
have a Material Adverse Effect.
Page 19 of 19
9.2. NEGATIVE COVENANTS.
Prior to the Closing Date, Seller will not, without the prior written consent of
the Buyer: (i) make any material change in the character of the Business; (ii)
incur any voluntary obligation or liability (fixed or contingent) with regard to
the Business except in the ordinary course of business consistent with good
business practices; (iii) discharge or satisfy any Encumbrance or pay any
obligation or liability (fixed or contingent) with regard to the Business other
than in the ordinary course of business consistent with good business practices
or as otherwise required hereunder; (iv) mortgage, pledge, transfer or otherwise
dispose of, or subject to any Encumbrance, any of the Assets other than in the
ordinary course of business; (v) acquire any assets or properties with regard to
the Business, except in the ordinary course of business consistent with good
business practices; (vi) cancel or compromise any material debt or claim with
regard to the Business; (vii) waive or release any rights of material value with
regard to the Business; (viii) undertake any material borrowing of any nature
whatsoever with regard to the Business; (ix) make any loans or extensions of
credit (other than ordinary trade credit) with regard to the Business; or (x)
make or become obligated to make any capital expenditures or enter into
commitments therefore with regard to the Business exceeding $10,000.00 in the
aggregate.
9.3 ACCESS TO INFORMATION AND RECORDS.
Seller will keep the Buyer advised of all material developments relevant to the
consummation of the transactions contemplated hereby and will cooperate fully in
permitting the Buyer to make a full investigation of the Business. Seller will,
during regular business hours and upon reasonable notice, afford to the Buyer
and its representatives full access all records and information concerning the
Assets and the Business. Seller will furnish to the Buyer all such further
information concerning the business and affairs of Seller as the Buyer may
reasonably request. No investigation pursuant to this Section shall affect any
representations or warranties or the conditions to the obligations of the Buyer
to consummate the transactions contemplated hereby.
9.4 EMPLOYEES OF SELLER.
(a) Seller shall pay all salaries and wages to all employees of Seller
associated with the Business due on or before the Closing Date and,
effective on the Closing Date shall terminate those employees who
devote their full-time attention to the Business that Buyer determines
to employ as of the Closing Date. Buyer shall inform Seller as to the
identity of such employees five days prior to the Closing Date.
(b) If Buyer does not have a health care insurance program in place for the
employees of Seller who accept employment with Seller, Buyer shall pay
to Shareholder, on behalf of Seller's former employees, any payments
required to maintain such employees' health care insurance benefits
under the federal Consolidated Omnibus Budget Reconciliation Act of
1986, as amended. Buyer further agrees to have a health care insurance
program in place within thirty days after the Closing Date, at which
time Buyer shall not be required to make any further payments to
Shareholder as required under the previous sentence.
Page 20 of 20
9.5 APPROVALS OF THIRD PARTIES.
As soon as practicable after the date hereof, Seller will use its reasonable
best efforts to secure all necessary consents, approvals and clearances of third
parties and Governmental Authorities that shall be required for Seller to
consummate the transactions contemplated hereby and will otherwise use its
reasonable best efforts to cause the consummation of such transactions in
accordance with the terms and conditions of this Agreement.
9.6 RELEASE OF ENCUMBRANCES.
Seller shall obtain and deliver to Buyer at Closing cancellations, releases,
and/or termination statements in recordable form approved by or executed by any
parties holding a security interest or other Encumbrance with respect to the
Assets.
9.7 NON-SOLICITATION OF EMPLOYEES.
(a) Each Party and its respective affiliates covenant and agree that, for a
period of two years following the Closing Date, it shall not, without
the prior written consent of the other Parties, solicit or endeavor to
entice away, or offer to employ or to hire any employee of the other
Parties (excluding Seller's employees described in Section 9.4 above)
or their respective affiliates, provided that the foregoing
restrictions shall not apply with respect to any such employee who,
without solicitation or enticement by any Party or any of its
affiliates, had voluntarily offered his or her services to the other
Party or any of its affiliates in response to a bona fide "help wanted"
advertisement placed in a general or trade publication, has voluntarily
left the employ of a Party without first receiving such solicitation,
or has been terminated involuntarily by a Party.
(b) The Parties acknowledge and agree that the covenants contained in this
Section are reasonable and necessary for the protection and continued
viability of the Business and of their respective operations and that a
breach of such covenants would cause the non-breaching Parties serious
loss and damage. The Parties agree that, in the event of an actual or
threatened breach of such covenants, the non-breaching Parties shall be
entitled to obtain an injunction against the breaching Party
restraining it or any of its affiliates from violating or continuing to
violate such covenants. Nothing herein shall be construed to prohibit
any non-breaching Party from pursuing such other remedies as may be
available to it for such breach, including the recovery of damages.
Page 21 of 21
ARTICLE X
COVENANTS OF THE BUYER
As soon as practicable after the date hereof, the Buyer will use its reasonable
best efforts to secure all necessary consents, approvals and clearances of third
parties and Governmental Authorities that shall be required for the Buyer to
consummate the transactions contemplated hereby and will otherwise use its
reasonable best efforts to cause the consummation of such transactions in
accordance with the terms and conditions of this Agreement.
ARTICLE XI
CONDITIONS TO OBLIGATIONS OF THE BUYER
The obligations of the Buyer to purchase the Assets and to consummate the other
transactions contemplated hereby at Closing shall be subject to the satisfaction
on or prior to the Closing Date of all of the following conditions, except such
conditions as the Buyer may waive in writing:
11.1. REPRESENTATIONS AND WARRANTIES OF SELLER.
All of the representations and warranties of Seller contained in this Agreement
and in any Schedule or other disclosure in writing from Seller shall have been
true and correct in all material respects when made, and shall be true and
correct in all material respects on and as of the Closing Date with the same
force and effect as though such representations and warranties had been made on
and as of the Closing Date.
11.2. COVENANTS OF SELLER.
All of the covenants and agreements herein on the part of Seller to be complied
with or performed on or before the Closing Date shall have been fully complied
with and performed.
11.3. NONCOMPETITION/INDEPENDENT CONTRACTOR AGREEMENTS.
[This section has been deleted].
11.4. NO CASUALTY LOSSES.
The Assets shall not have suffered any destruction or damage by fire, explosion
or other casualty which has, in the sole discretion of Buyer, materially
impaired the operation of the Assets or otherwise had a Material Adverse Effect.
Page 22 of 22
11.5 CERTIFIED RESOLUTIONS.
Seller shall have furnished to the Buyer a copy, certified by the secretary of
Seller, of resolutions duly adopted by the Board of Directors and of all
shareholders of Seller duly authorizing the transactions contemplated in this
Agreement.
11.6 LITIGATION.
At the Closing Date, there shall not be pending or threatened any litigation in
any court or any proceeding before any Governmental Authority which is not
already described in this Agreement (i) in which it is sought to restrain,
invalidate, set aside or obtain damages in respect of the consummation of the
purchase and sale of the Assets or the other transactions contemplated hereby,
(ii) that could, if adversely determined, result in any Material Adverse Effect,
or (iii) as a result of which, in the reasonable judgment of the Buyer, the
Buyer would be deprived of the material benefits of its ownership of the Assets.
11.7 NO MATERIAL ADVERSE EFFECT.
There shall not have occurred any Material Adverse Effect.
11.8 CONSENTS.
Seller shall have obtained all necessary orders, approvals, estoppel
certificates or consents of third parties and Governmental Authorities,
including any orders, approvals, certificates or consents deemed necessary by
counsel to the Buyer that shall be required for Seller to consummate the
transactions contemplated hereby.
11.9 FURTHER ASSURANCES.
Seller shall take all such further action as may be reasonably requested by
Buyer in order to effectuate the consummation of the transactions contemplated
by this Agreement. If Buyer shall reasonably determine that any further
conveyance, assignment or other document or any further action is necessary to
vest in it full title to the Assets, Seller shall use its reasonable best
efforts to cause the appropriate officers to execute and deliver all such
instruments and take all such action as the Buyer may reasonably determine to be
necessary.
ARTICLE XII
CONDITIONS TO OBLIGATIONS OF SELLER
The obligations of Seller to sell the Assets and to consummate the other
transactions contemplated hereby at Closing shall be subject to the satisfaction
on or prior to the Closing Date of all of the following conditions, except such
conditions as Seller may waive in writing:
12.1 REPRESENTATIONS AND WARRANTIES OF THE BUYER.
Page 23 of 23
All of the representations and warranties of the Buyer contained in this
Agreement and in any Schedule or other disclosure in writing from the Buyer
shall have been true and correct in all material respects when made, and shall
be true and correct in all material respects on and as of the Closing Date with
the same force and effect as though such representations and warranties had been
made on and as of the Closing Date.
12.2 COVENANTS OF THE BUYER.
All of the covenants and agreements herein on the part of the Buyer to be
complied with or performed on or before the Closing Date shall have been fully
complied with and performed.
12.3 LITIGATION.
At the Closing Date, there shall not be pending or threatened any litigation in
any court or any proceeding before any Governmental Authority in which it is
sought to restrain, invalidate, set aside or obtain damages in respect of the
consummation of the purchase and sale of the Assets or the other transactions
contemplated hereby.
12.4 WORKERS COMPENSATION INSURANCE COVERAGE.
At the Closing, Buyer shall provide Seller with evidence reasonably satisfactory
to Seller that Buyer has a program of workers compensation insurance coverage in
place for all of its employees.
12.5 CERTIFICATE.
Seller shall receive a certificate from Buyer, dated as of the Closing Date and
in form and substance satisfactory to Seller, as to the fulfillment of the
conditions set forth in this Article XII.
ARTICLE XIII
CLOSING
13.1 DATE AND PLACE OF CLOSING.
The Closing shall take place at 2:00 p.m. on May 28, 2004 unless the Parties
mutually agree to extend such date or unless the terms of this Agreement
requires an extension to such date. Notwithstanding the date and time of
closing, the Closing Date shall not be deemed to have occurred until 12:01:01
a.m. on June 1, 2004 or such other later date as may be agreed to by the Parties
in writing. Except as otherwise provided in this Agreement, failure to
consummate the purchase and sale provided for in this Agreement on the
anticipated Closing Date will not result in the termination of this Agreement
and will not relieve any Party of any obligation under this Agreement. All
accounts receivable, Inventory, and accounts payable of Seller generated prior
to the Closing Date shall be transferred to Buyer subject to the calculation of
the Adjustment Items required under Section 4.1 and Section 4.2. and Seller's
obligations to purchase back certain uncollected accounts receivable
Page 24 of 24
pursuant to Section 4.4(c). Buyer and Seller shall cooperate with one another to
ensure that all payments on accounts receivable received after the Closing are
properly paid to Buyer. At the Closing, Seller shall execute and deliver to
Buyer a letter prepared by Buyer and to be sent to all accounts receivable
customers, informing all customers to forward all payments to Buyer.
13.2 SELLER'S PERFORMANCE.
At the Closing, concurrently with performance by the Buyer of its obligations to
be performed at the Closing:
(a) Conveyances.
Seller shall execute and deliver to the Buyer, (i) The Cash Sale (Real
Estate - Exhibit A), the Xxxx of Sale (Inventory, Equipment - Exhibit
B) and the Assignment of Intangibles (Accounts Receivable and Other
Assets - Exhibit C) in substantially the forms attached hereto,
conveying to the Buyer the Assets, and (ii) all other assignments,
endorsements and instruments of transfer as shall be necessary or
appropriate to carry out the intent of this Agreement and as shall be
sufficient to vest in the Buyer title to all of the Assets and all
right, title and interest of Seller thereto. If requested by the Buyer,
such documents shall be in a form suitable for recording.
(b) Records.
Seller shall deliver to the Buyer all documents, agreements, reports,
books and records pertaining specifically to the Assets that are in
Seller's possession.
(c) Certificates.
Seller shall execute and deliver to the Buyer the "No Material Adverse
Affect" certificate referred to in Section 11.7.
(d) Noncompetition. [This section has been deleted].
(e) Certified Resolutions.
Seller shall deliver to Buyer the certified resolutions referred to in
Section 11.5. Buyer shall deliver to Seller an original Membership
Consent executed by all the members of Buyer, duly authorizing the
transactions contemplated in this Agreement.
(f) Consents.
Seller shall deliver to the Buyer the consents and approvals required
by Section 11.8.
Page 25 of 25
(g) Other Actions.
Seller shall take all such other steps as may be necessary or
appropriate to put the Buyer in actual and complete ownership and
possession of the Assets.
13.3. BUYER'S PERFORMANCE.
At the Closing, concurrently with the performance by Seller of its obligations
to be performed at the Closing, the Buyer shall deliver to Seller the Purchase
Price calculated in accordance with this Agreement.
13.4. OTHER INSTRUMENTS.
In addition to the foregoing, at any time and from time to time, at or after the
Closing, upon request of Buyer, Seller shall do, execute, acknowledge and
deliver or shall cause to be done, executed, acknowledged and delivered all such
further acts, deeds, assignments, transfers, conveyances, powers of attorney and
assurances as may reasonably be required in order to evidence, vest in and
confirm to the Buyer full and complete title to, possession of, and the right to
use and enjoy, the Assets.
ARTICLE XIV
INDEMNIFICATION AND POST-CLOSING MATTERS
14.1. INDEMNIFICATION BY SELLER.
Seller and Shareholder agree to indemnify and hold harmless Buyer, Buyer's
members, and their respective officers, employees, representatives, agents and
attorneys from, against, for and in respect of any and all damages (including
amounts paid in settlement), penalties, fines, interest and monetary sanctions,
losses, obligations, debts, liabilities, claims, deficiencies, costs and
expenses, including, reasonable attorneys' fees and other costs and expenses
incident to any suit, action, investigation, claim or proceeding suffered,
sustained, incurred or required to be paid by any of them (hereinafter referred
to collectively as "Buyer Losses") by reason of (i) any representation or
warranty made by Seller and/or Shareholder in or pursuant to this Agreement
being untrue or incorrect in any respect as of the Closing Date; (ii) except for
the Assumed Liabilities, any liability of Seller arising from or with respect to
the Assets or the Business prior to the Closing Date, or any liability of Seller
except for the Assumed Liabilities arising out of or related to operation of the
Business prior to the Closing Date (with the exception of the Assumed
Liabilities specifically assumed by Buyer herein); or (iii) any failure by
Seller to observe or perform its covenants and agreements set forth in this
Agreement.
14.2. INDEMNIFICATION BY BUYER.
Buyer agrees to indemnify and hold harmless Seller and Shareholder, and their
respective shareholders, directors, officers, employees, representatives, agents
and attorneys from, against, for and in respect of any and all damages
(including amounts paid in settlement), penalties, fines, interest and monetary
sanctions, losses, obligations, debts, liabilities,
Page 26 of 26
claims, deficiencies, costs and expenses, including reasonable attorneys' fees
and other costs and expenses incident to any suit, action, investigation, claim
or proceeding suffered, sustained, incurred or required to be paid by any of
them (hereinafter referred to collectively as "Seller Losses") by reason of (i)
any representation or warranty made by Buyer in or pursuant to this Agreement
being untrue or incorrect in any respect as of the Closing Date; (ii) any
liability of Buyer arising from or with respect to the Assets, the Business or
the Assumed Liabilities on or after the Closing Date, or any liability of the
Buyer arising out of or related to operation of the Business on or after the
Closing Date; or (iii) any failure by Buyer to observe or perform its covenants
and agreements set forth in this Agreement.
14.3. PAYMENT.
Claims for indemnification involving the payment of money shall be paid within
10 days of notification thereof; claims for indemnification involving amounts
due to third parties shall be promptly paid to the third party.
14.4. COOPERATION.
Each of the parties to this Agreement and each of their affiliates, successors
and assigns shall cooperate with each other in the defense of any suit, action,
investigation, proceeding or claim by a third party and, during normal business
hours, shall afford each other access to their books and records and employees
relating to such suit, action, investigation, proceeding or claim and shall
furnish each other all such further information that they have the right and
power to furnish as may reasonably be necessary to defend such suit, action,
investigation, proceeding or claim.
14.5. SURVIVAL OF REPRESENTATIONS AND COVENANTS.
The representations, warranties, covenants, and obligations of Seller and
Shareholder shall survive the Closing Date for a period of two years.
14.6. NON-EXCLUSIVITY OF INDEMNIFICATION REMEDIES.
The indemnification remedies and other remedies provided in this Article XIV
shall not be deemed to be exclusive. Accordingly, the exercise by any Party of
any of its rights under this Article XIV shall not be deemed to be an election
of remedies and shall not be deemed to prejudice, or to constitute or operate as
a waiver of, any other right or remedy that Party may be entitled to exercise
(whether under this Agreement, under any other agreement, under any statute,
rule or other legal requirement, at common law, in equity or otherwise).
14.7 INTEREST.
Interest shall accrue on the amount of the indemnity award at the legal rate of
interest in Louisiana from the date indemnity was requested until the date of
payment.
Page 27 of 27
ARTICLE XV
LIMITATIONS ON LIABILITY
15.1 In no event shall any Party be liable under or with respect to matters
related to this Agreement to any other Party for lost profits or other
incidental, special, punitive, or consequential damages.
15.2 In no event shall Seller or Shareholder be liable to Buyer for any
damages, losses, liability, or injunctive or other relief suffered due
to or resulting from any environmental, health, or safety practices
associated with the Business prior to April 3, 1998 or which were
approved or implemented by Xxxx Xxxxxxxx during his tenure as an
employee of Seller.
15.3 In no event shall Seller or Shareholder be liable to Buyer for any
damages arising from any breach of this Agreement in excess of the
Purchase Price.
15.4 In no event, whether or not the Closing occurs, shall any Party be
liable to any other Party for its costs or expenses associated with
negotiating or preparing this Agreement, conducting due diligence
activities, or in performing any other activities contemplated under or
with respect to this Agreement.
ARTICLE XVI
TERMINATION
16.1 TERMINATION.
This Agreement may be terminated and abandoned at any time on or prior to the
Closing Date:
(a) By the consent in writing of all the Parties.
(b) By the Buyer, if any of the material conditions to the obligations of
the Buyer contained herein shall not have been satisfied or, if
unsatisfied, waived by the Buyer as of the Closing Date;
(c) By Seller, if any of the material conditions to the obligations of
Seller contained herein shall not have been satisfied or, if
unsatisfied, waived by Seller as of the Closing Date;
(d) By any Party, in the event of a breach by the Seller or Shareholder, on
the one hand, or Buyer (i) of any covenant or agreement contained
herein if such breach results in a material increase in the cost of the
non-breaching Party's performance of this Agreement or (ii) of any
representation or warranty herein if the facts constituting such breach
reflect a material and adverse change in the financial condition,
results of operations, business, or prospects taken as a whole, of the
breaching Party, which cannot be or is not cured within thirty days
after written notice of such breach is given to the Party committing
such breach;
Page 28 of 28
(e) By the Buyer, upon the occurrence of any Material Adverse Effect.
16.2. NO FURTHER FORCE OR EFFECT.
In the event of termination and abandonment of this Agreement pursuant to the
provisions of Section 16.1 (a) or (e), this Agreement shall be of no further
force or effect and the parties shall have no further obligation, liability or
debt to each other hereunder.
ARTICLE XVII
MISCELLANEOUS
17.1. EXPENSES.
Each Party hereto shall bear all expenses incurred by it in connection with this
Agreement and the transactions contemplated hereby, including the fees,
disbursements and expenses of its legal counsel and auditors.
17.2. ENTIRE AGREEMENT.
This Agreement (including the exhibits and schedules hereto) constitute the
entire agreement and supersedes all prior agreements and understandings, both
written and oral, between the Parties hereto with respect to the subject matter
hereof, including the Letter Agreement, and no Party shall be liable or bound to
the other in any manner by any representations or warranties not set forth
herein.
17.3. PUBLICITY.
No party hereto shall issue any press release or make any public statement, in
either case relating to or in connection with or arising out of this Agreement
or the matters contained herein, without obtaining the prior written approval of
the other parties hereto to the content and manner of presentation and
publication thereof, which consent shall not be unreasonably withheld or
delayed; provided, however, that the parties shall be entitled, following
reasonable prior written notice to the other party, to issue such press releases
and make such public statements as are, in the opinion of its legal counsel,
required by applicable law or the rules of a stock exchange.
17.4. SUCCESSORS AND ASSIGNS.
This Agreement and the rights of the parties hereunder may not be assigned by
either party hereto without the prior written consent of the other party hereto,
which shall be given or withheld in such party's sole discretion, and the terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the respective successors and assigns of the parties hereto. Nothing in
this Agreement, express or implied, is intended to confer upon any party, other
than the parties and their respective affiliates and the successors and assigns
of the parties and their respective affiliates, any rights, remedies,
obligations or liabilities under or by reason of such agreements.
Page 29 of 29
17.5. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of which shall
for all purposes be deemed to be an original and all of which shall constitute
the same instrument.
17.6. HEADINGS.
The headings of the sections and subsections of this Agreement are inserted for
convenience of reference only and shall not be deemed to constitute part of this
Agreement or to affect the construction hereof.
17.7. MODIFICATION AND WAIVER.
Any of the terms or conditions of this Agreement may be waived in writing at any
time by the party which is entitled to the benefits thereof, and this Agreement
may be modified or amended by a written instrument executed by the parties
hereto. No supplement, modification or amendment of this Agreement shall be
binding unless executed in writing by all of the parties hereto. No waiver of
any of the provisions of this Agreement shall be deemed or shall constitute a
waiver of any other provision hereof (whether or not similar) nor shall such
waiver constitute a continuing waiver.
17.8. NOTICES.
All notices, consents, waivers, and other communications under this Agreement
must be in writing and will be deemed to have been duly given when (a) delivered
by hand (with written confirmation of receipt), (b) sent by telecopy (with
written confirmation of receipt), provided that a copy is sent by a nationally
recognized overnight delivery service (receipt requested), or (c) when received
by the addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and telecopy
numbers set forth below (or to such other addresses and telecopy numbers as a
party may designate by notice to the other parties):
If to Seller/Shareholder:
Xxxxxx Pump & Services, Inc.
T-3 Energy Services, Inc.
00000 Xxxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attn: President
Telephone: 000-000-0000
Facsimile: 000-000-0000
With a copy to:
Law Offices of Xxxxxxx X. Xxxxxxx
Page 30 of 30
00 X. Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, Xxxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
If to Buyer:
Xxxxxx Machine Shop, L.L.C.
000 Xxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attn: Xxxx Xxxxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
With a copy to:
Xxxxx X. Xxxx
Xxxxxxx Law Firm
000 Xxxxxxxxxx Xxxx., Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
Or at such other address or counsel as any party hereto shall specify pursuant
to this Section from time to time.
17.9. GOVERNING LAW.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF LOUISIANA WITHOUT GIVING EFFECT TO ANY PROVISIONS OF LAW WHICH
REQUIRE THE APPLICATION OF THE LAW OF ANOTHER JURISDICTION.
17.10. REFORMATION AND SEVERABILITY.
In case any provision of this Agreement shall be invalid, illegal or
unenforceable, it shall, to the extent possible, be modified in such manner as
to be valid, legal and enforceable but so as to most nearly retain the intent of
the parties, and if such modification is not possible, such provision shall be
severed from this Agreement, and in either case the validity, legality and
enforceability of the remaining provisions of this Agreement shall not in any
way be affected or impaired thereby.
Page 31 of 31
17.11. REMEDIES CUMULATIVE.
No right, remedy or election given by any term of this Agreement shall be deemed
exclusive but each shall be cumulative with all other rights, remedies and
elections available at law or in equity.
Each of the Parties has caused this Agreement to be signed in counterparts
effective as of the date first above written.
SELLER: WITNESSES:
Xxxxxx Pump & Services, Inc.
By: /s/ Xxxxxxx X. Xxxx /s/ Xxxxx X. Xxxxxx
Printed Name: Xxxxxxx X. Xxxx
Title: Vice President /s/ Xxxxxx Xxxxxxxxx
SHAREHOLDER:
T-3 Energy Services, Inc.
By: /s/ Xxxxxxx X. Xxxx /s/ Xxxxx X. Xxxxxx
Printed Name: Xxxxxxx X. Xxxx
Title: Vice President /s/ Xxxxxx Xxxxxxxxx
BUYER:
Xxxxxx Machine Shop, L.L.C.
By: /s/ Xxxx X. Xxxxxxxx /s/ Xxxxxx Xxxxxxxxx
Printed Name: Xxxx X. Xxxxxxxx
Title: Member /s/ Xxxxxxxx X. Xxxxxxx
Page 32 of 32
LIST OF SCHEDULES
[numbering of schedules and exhibits needs to be updated]
Schedule Description
3.4 List of Assumed Liabilities
7.2 List of Encumbrances and/or creditors to be paid off at Closing
7.4 List of Intellectual Property
7.6 List of Material Adverse Effects since December 31, 2003
7.8 List of any Litigation, Claims or Assessments against Seller
7.9 List of Consents needed for Seller
7.12 List of Seller's Significant Customers
Page 33 of 33
LIST OF EXHIBITS
Exhibit Description
A Cash Sale (Real Estate)
B Xxxx of Sale (Inventory and Equipment)
C Assignment of Intangibles (Accounts Receivable and other Assets)
X Purchase Price Adjustment Spreadsheet
Z Pre-Closing Schedule of Inventory, Accounts Receivable, and Accounts Payable
Page 34 of 34
Schedule 3.4
ASSUMED LIABILITIES
1. Any and all obligations to complete and deliver any goods or services
which have already been ordered by customers of the Business.
2. Any and all obligations under any leases or other contracts of which
Buyer or its representatives (including Xxxx Xxxxxxxx) had knowledge
prior to the Closing Date.
3. Any and all open purchase orders related to the Business.
4. SEE THE PORTION OF EXHIBIT Z DEALING WITH ACCOUNTS PAYABLE AS OF
05/18/04.
Page 35 of 35
Schedule 7.2
GOOD TITLE TO ASSETS; ENCUMBRANCES TO BE PAID OFF AT CLOSING
GOOD TITLE TO ASSETS; ENCUMBRANCES TO BE CANCELLED AND/OR PAID OFF AT CLOSING
1. XXXXX FARGO BANK
Mortgage, Assignment of Leases and Rents, and Security Agreement
File No. 01-54298, Lafayette Parish, Louisiana
The following financing statements on equipment leases are also of record. It
appears that SDI Capital Resources, Inc. may no longer be in business. Seller
represents that it is not required to make any payments under these leases and
that no additional amounts are due or owing with respect thereto.
2. SDI CAPITAL RESOURCES, INC.
UCC Security Xxxxxxxx Xxxx Xx. 00-000000 Xxxxx Xxxxxx, XX
Master Lease - New Kingston CL-38B CNC Flat Bed Lathe, etc.
3. SDI CAPITAL RESOURCES, INC.
UCC Security Xxxxxxxx Xxxx Xx. 00-000000 Xxxxx Xxxxxx, XX
Master Lease - New Kingston CL-38B CNC Flat Bed Lathe, etc.
The following financing statements are also of record. Seller represents that no
additional amounts are due or owing with respect thereto.
4. Associates Commercial Corp.
UCC Security Interest File No. 09-985119 Caddo Parish
One (1) Might Comet VMC-1500PXT Vertical Machining Center
with Mitsubishi M530 Control 10" Xxxxx and Tailstock
S/N 904703008; One Daewoo PUMA 250LB Turning Center
5. Intech Funding Corp.
UCC Security Interest File No. 09-986266 Caddo Parish
1 - Kingston Model HB-29120 High Speed Gap Bed Precision Lathe with 3
and 4 Jaw chucks, Aloris DA tool post and all standard equipment.
Page 36 of 36
Schedule 7.4 Intellectual Property
The common law rights to the trade names, trade marks, and service marks used by
Seller using the words "Xxxxxx Machine", "Xxxxxx Machine Shop" and "MMS" and any
derivations thereof to the extent owned by Seller.
Page 37 of 37
Schedule 7.6
PERMIT EXCEPTIONS / MATERIAL ADVERSE EFFECT
None
Page 38 of 38
Schedule 7.8
Litigation/Claims/Assessments
1. Xxxxxxx v. T-3 Energy Services, Inc. as successor to Xxxxx'x Pump &
Supply, Inc. 15th Judicial District Court, Lafayette Parish, Louisiana
#20034833
Plaintiffs allege unpaid compensation, including vacation and safety
bonus. The claims aggregate approximately $14,000.
2. Portalis v. Exxon et al. (including Xxxxxx Pump & Services, Inc.)
XX Xxxxxxxx Xxxxx, Xxxxxxx Xxxxxxxx of Louisiana, No 04-0333,
Section D, Mag. 3.
Plaintiff alleges a broken jaw and other injuries while working with a
crane and crane operator provided by Xxxxxx. The complaint alleges
damages in excess of $1,500,000.
On May 27, 2004, Xxxxxx received verbal confirmation that its insurance
carrier had accepted the tender of the defense in this action and that
it had selected the law firm to handle the defense: Xxxxxx, Xxxxxxx and
Xxxxxxxxx (New Orleans).
Page 39 of 39
Schedule 7.9
Required Consents
None
Page 40 of 40
Schedule 7.12
Significant Customers
Xxxxxxxxxxxx
XX Services Company USA
Halliburton
Schlumberger Seaco Inc.
Xxxxx/MO Services, Inc.
Schlumberger Technology
FMC Corporation
Page 41 of 41
Exhibit A
Cash Sale (Real Estate)
Page 42 of 42
Exhibit B
XXXX OF SALE (Inventory and Equipment)
Page 43 of 43
Exhibit C
ASSIGNMENT(Receivables, name Xxxxxx Machine Shop, trade names, trade marks,
service marks, customer lists, records, contracts and goodwill)
Page 44 of 44
Exhibit X
Purchase Price Adjustment Spreadsheet
Page 45 of 45
Exhibit Z
Pre-Closing Schedule of Inventory, Receivables, and Payables
Page 46 of 46
