EXHIBIT 10.18
STOCK PURCHASE AGREEMENT
BY AND AMONG
XXXX XXXXXXX
XXXXX XXXXXXX
XXXXXXX XXXX
XXXXX XXXXXX
XXXXXXX XXXXXXX
WITH RESPECT TO ALL OF THE ISSUED AND OUTSTANDING
CAPITAL STOCK OF
XXXXXXX COASTAL ELECTRIC MOTORS, INC.
AND
TPS COASTAL ELECTRIC, INC.
DATED DECEMBER 4, 2000
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TABLE OF CONTENTS
Page
----
STOCK PURCHASE AGREEMENT.................................................. 1
RECITALS:................................................................. 1
AGREEMENT:................................................................ 1
1. Agreement to Sell and Purchase. ................................. 1
1.1. Purchase of Shares from Shareholders..................... 1
1.2. Further Assurances....................................... 1
1.3. Closing.................................................. 2
2. Consideration to be Paid by Buyer................................. 2
2.1. Purchase Price for Shares................................ 2
2.2. Payment of Purchase Price................................ 2
2.3. Purchase Price Adjustment................................ 3
2.4. Pre-Closing Distribution of Supply Business.............. 4
3. Representations and Warranties of Sellers. ...................... 5
3.1. Organization and Good Standing........................... 5
3.2. Authorization of Agreement............................... 5
3.3. Ownership of Shares...................................... 5
3.4. Capitalization........................................... 5
3.5. Financial Condition...................................... 6
3.6. Property of the Company.................................. 7
3.7. Agreement Not in Breach of Other Instruments............. 9
3.8. Employment Agreements; and Employee Benefits............. 9
3.9. Labor and Employment Matters............................. 11
3.11. Contracts................................................ 12
3.12. Regulatory Approvals..................................... 13
3.13. Compliance with Law...................................... 13
3.14. Indebtedness from Employees.............................. 14
3.15. Accounts Receivable...................................... 14
3.16. Insurance................................................ 14
3.17. Powers of Attorney and Suretyships....................... 14
3.18. No Undisclosed Liabilities............................... 14
3.19. Environmental Matters.................................... 15
3.20. Conflicts of Interest.................................... 15
3.21. Taxes.................................................... 16
3.22. Other Information........................................ 20
4. Representations and Warranties of Buyer. ........................ 20
4.1. Organization............................................. 20
4.2. Corporate Authority...................................... 20
4.3. Agreement Not in Breach of Other Instruments............. 20
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4.4. Regulatory and Other Approvals........................... 21
5. Certain Understandings and Agreements of the Parties. ........... 21
5.1. Cooperation in Litigation................................ 21
5.2. Tax Matters.............................................. 21
5.3. Employment Agreements.................................... 23
5.4. Agreement with Respect to McAllen Property............... 23
6. Indemnification. ................................................ 25
6.1. Indemnification by Sellers............................... 25
6.2. Indemnification by Buyer................................. 26
6.3. Claims for Indemnification............................... 27
6.4. Defense by Indemnifying Party............................ 28
6.5. Manner of Indemnification................................ 28
6.6. Limitation on Indemnification............................ 28
6.7. Sole Basis for Recovery........................................... 29
6.8. Joint and Several Liability....................................... 29
7. Documents To Be Delivered At Closing. ........................... 29
7.1. Closing Documents Delivered by Sellers................... 29
7.2. Closing Documents Delivered by Buyer. .................. 30
8. Miscellaneous. .................................................. 30
8.1. Notices.................................................. 30
8.2. Assignability and Parties in Interest.................... 32
8.3. Governing Law............................................ 32
8.4. Counterparts............................................. 32
8.5. Indemnification for Brokerage............................ 32
8.6. Publicity................................................ 32
8.7. Complete Agreement....................................... 32
8.8. Interpretation........................................... 33
8.9. Severability............................................. 33
8.10. Knowledge: Due Diligence Investigation................... 33
8.11. Expenses and Transactions................................ 33
8.12. Limit on Interest........................................ 33
8.13. Submission to Jurisdiction............................... 33
8.14. Arbitration.............................................. 33
8.15. Waiver of Punitive Damages............................... 34
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STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of this 4th day of December, 2000 by and among Xxxx Xxxxxxx, Xxxxx
Xxxxxxx, Xxxxxxx Xxxx, Xxxxx Xxxxxx and Xxxxxxx Xxxxxxx (collectively, the
"Sellers"), being all the shareholders of Xxxxxxx Coastal Electric Motors, Inc.,
a Texas corporation (the "Company"), and TPS Coastal Electric, Inc., a Texas
corporation ("Buyer").
RECITALS:
(1) Sellers own all outstanding shares of the common stock, par value
$1.00 per share (the "Shares"), of the Company.
(2) The Company is engaged in the business of repairing, servicing,
marketing and selling electric motors primarily to energy-related businesses.
(3) Sellers desire to sell to Buyer the Shares, and Buyer desires to
acquire the Shares on the terms and conditions hereinafter set forth.
AGREEMENT:
NOW, THEREFORE, in consideration of the premises and the mutual
promises contained herein, the parties hereto covenant and agree as follows:
1. AGREEMENT TO SELL AND PURCHASE.
1.1. PURCHASE OF SHARES FROM SHAREHOLDERS.
On the terms and subject to the conditions set forth herein,
Sellers hereby sell, transfer, convey, assign and deliver to Buyer,
free and clear of all liens, pledges, encumbrances and claims
whatsoever, and Buyer hereby purchases, acquires and accepts from
Sellers all the Shares. Sellers shall deliver to Buyer certificates
representing the Shares, duly endorsed for transfer at the Closing (as
defined in Section 1.3 hereof).
1.2. FURTHER ASSURANCES.
From time to time after the Closing, Sellers and Buyer, and
each of their respective affiliates, will execute and deliver to the
other party such instruments of sale, transfer, conveyance, assignment
and delivery, consents, assurances, powers of attorney and other
instruments as may be reasonably requested by counsel for Buyer or
Sellers in order to vest in Buyer all right, title and interest of
Sellers in and to the Shares and otherwise in order to carry out the
purpose and intent of this Agreement.
1.3. CLOSING.
The closing (the "Closing") of the transactions herein
contemplated shall take place at the offices of Xxxxxx & Xxxxxx,
L.L.P., 000 Xxxxxxxxx, 00xx Xxxxx, Xxxxxxx, Xxxxx 00000 and be
effective as of 12:01 a.m., local time, on the date hereof (the
"Closing Date"). All actions taken and all documents delivered at the
Closing shall be deemed to have occurred simultaneously.
2. CONSIDERATION TO BE PAID BY BUYER.
2.1. PURCHASE PRICE FOR SHARES.
The purchase price for the Shares shall be an amount (the
"Purchase Price") equal to $3,575,000, plus (a) the Company Debt (as
hereinafter defined), plus or minus, (b) any Adjustment Amount (as
defined
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in Section 2.3). The "Company Debt" means an amount equal to all
principal and accrued but unpaid interest as of the date hereof with
respect to the debt obligations of the Company set forth in Schedule
2.1(a). At closing, the Shareholders shall pay or cause to be paid the
indebtedness set forth in Schedule 2.1(b).
2.2. PAYMENT OF PURCHASE PRICE.
2.2.1. CASH TO SELLERS.
At the Closing, Buyer shall pay in immediately
available funds by wire transfer (pursuant to the instructions
set forth on Schedule 2.2.1) to Sellers the Purchase Price,
less the Escrow Amount (as defined in Section 2.2.2), to the
separate accounts of Sellers in the following percentages:
NAME
Xxxx Xxxxxxx 30.0%
Xxxxx Xxxxxxx 17.5%
Xxxxxxx Xxxx 17.5%
Xxxxx Xxxxxx 17.5%
Xxxxxxx Xxxxxxx 17.5%
2.2.2. HOLDBACK. Buyer shall hold back from the
Purchase Price $200,000 (the "Holdback Amount"), which shall
be subject to indemnification claims of Buyer pursuant to
Section 6 and the purchase price adjustment described in
Section 2.3. The Holdback Amount, after taking into account
any claims pursuant to Section 6 and any Adjustment Amount (as
defined in Section 2.3) payable to Buyer to the extent not
paid by Sellers, shall be paid to Sellers with interest of 6%
per annum as follows:
2.2.2.1.Upon the expiration of six months
after the Closing, Buyer shall pay to Sellers, in the
percentages set forth in Section 2.2.1, 50% of the
Holdback Amount, less any amounts claimed pursuant to
Section 6 by Buyer on or prior to such date and any
Adjustment Amount payable to Buyer to the extent not
previously paid by Sellers, plus interest accrued on
any such amount as provided in Section 2.2.3. On the
first anniversary of the Closing, Buyer shall pay to
the Sellers, in the percentages set forth in Section
2.2.1, the remaining Holdback Amount, less any
amounts claimed pursuant to Section 6 by Buyer on or
prior to such date and any Adjustment Amount payable
to Buyer to the extent not previously paid by
Sellers, plus interest accrued on such amount as
provided in Section 2.2.3.
2.2.2.2. Buyer agrees that it will not apply
the Holdback Amount to any indemnification claims of
Buyer pursuant to Section 6 or the purchase price
adjustment described in Section 2.3 unless the
parties hereto have reached a mutual written
agreement with respect to any claim relating to such
matters.
2.3. PURCHASE PRICE ADJUSTMENT.
2.3.1. On or before 45 days after the Closing Date,
Buyer shall prepare and deliver to Sellers, from the Company's
books and records and from a physical inventory conducted
under the supervision of Buyer with the assistance of Sellers
on or about the date hereof (the "Physical Inventory") and on
a basis consistent with the preparation of the July 31, 2000
financial information provided to Buyer by Sellers (as set
forth in Schedule 3.5.1, the "Company's July 31, 2000
Financial Statement"), a balance sheet for the Company as of
the close of business on November 30, 2000 (the "Closing
Financial Statement"), in order to determine the Adjustment
Amount (as defined in Section 2.3.3). Sellers shall review the
Closing Financial Statement to determine if the Closing
Financial Statement has been prepared based upon the books and
records
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of the Company and the Physical Inventory and that the numbers
reflected therein are accounted for using the same method of
accounting used by the Company to prepare the Company's July
31, 2000 Financial Statement. Sellers shall have the right to
assist and consult with Buyer in the preparation of the
Closing Financial Statement.
2.3.2. At Sellers' expense, Xxxxxxx Xxxxx ("Xxxxx")
may assist Sellers in reviewing the Closing Financial
Statement. Upon reasonable notice and during reasonable
business hours, Buyer shall allow Sellers and Xxxxx access to
the persons involved in the preparation of the Closing
Financial Statement and the Company's July 31, 2000 Financial
Statement and to all of their workpapers so as to permit
Sellers and Xxxxx to make copies of such workpapers supporting
the amounts included in the Closing Financial Statement and to
reasonably review the accounting procedures, tests, methods
and approaches utilized by Buyer.
2.3.3. On or before the 15th day following delivery
of the Closing Financial Statement pursuant to Section 2.3.1,
Sellers shall notify Buyer in writing of any objections to the
Closing Financial Statement (and the determination of the
Adjustment Amount) as not complying with the requirements of
Section 2.3.1, specifying in reasonable detail any such
objections (a "Dispute Notice"). If (i) Sellers do not deliver
a Dispute Notice within the time period specified above for
delivery of a Dispute Notice (the "Notice Period"), (ii) prior
to the expiration of the Notice Period, Sellers indicate in
writing to Buyer that Sellers relinquish their right to object
to the Closing Financial Statement, or (iii) Buyer and Sellers
agree on the resolution of all such objections or changes at
any time subsequent to the expiration of the Notice Period,
the Closing Financial Statement, with any such changes as are
agreed upon, shall be final and binding on the parties hereto.
If Sellers and Buyer are unable to resolve the matters
addressed in any Dispute Notice, each party shall within 20
days after the delivery of such Dispute Notice, summarize its
position with regard to such dispute in a written document of
ten pages or less and submit such summaries to the Houston,
Texas office of Xxxxxx Xxxxxxxx LLP, or such other party as
the parties may mutually select (the "Accounting Arbitrator"),
together with the Dispute Notice, the Closing Financial
Statement and any other documentation either party may desire
to submit. The Accounting Arbitrator shall render a decision
regarding such dispute in accordance with this Agreement,
based on the materials described above and to the extent
consistent with the Company's preparation of the July 31, 2000
Financial Statement and based upon the books and records of
the Company and the Physical Inventory within 30 days of the
submission of such materials. Any decision rendered by the
Accounting Arbitrator pursuant hereto shall be final and
binding between the parties for the purpose of determining the
Adjustment Amount under this Section 2.3. Within ten days
after the final determination of the Closing Financial
Statement pursuant to Section 2.3.3, either Buyer or Sellers
shall pay to the other party or parties, in immediately
available funds, by wire transfer, an amount equal to the
Adjustment Amount. If Sellers fail to make such payment then
Buyers are authorized to apply any or all of the Escrow Amount
to such payment. The "Adjustment Amount" shall mean either (i)
the amount by which the Net Working Capital (as defined below)
set forth on the Closing Financial Statement exceeds $359,077,
in which case the amount of such excess shall be paid by Buyer
to Sellers or (ii) the amount by which $359,077 exceeds the
Net Working Capital set forth on the Closing Financial
Statement, in which case the amount of such excess shall be
paid by Sellers to Buyer. For these purposes, the definition
of "Net Working Capital" shall be defined as current asset
minus current liabilities set forth on the Closing Financial
Statement, as finally determined pursuant to this Section
2.3.3.
2.4. PRE-CLOSING DISTRIBUTION OF SUPPLY BUSINESS.
Prior to the Closing, Sellers shall cause the Company
to sell to Xxxxxxx Coastal Electric Motors, Inc. the assets
and assume liabilities set forth in that certain Asset
Purchase Agreement dated the date hereof. Such assets and
liabilities relate solely to the "Supply Business" of the
Company. The assets and liabilities of the Supply Business
will not be taken into account for purposes of calculating the
Adjustment Amount pursuant to Section 2.3. The sale of assets
and assumption of liabilities of the Supply Business shall be
completed in a manner satisfactory to Buyer.
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3. REPRESENTATIONS AND WARRANTIES OF SELLERS.
Sellers jointly and severally represent and warrant to Buyer that:
3.1. ORGANIZATION AND GOOD STANDING. Each of the Company and
the Subsidiaries (as defined in Section 3.6.5) is duly organized,
validly existing and in good standing under the laws of the
jurisdiction in which it was formed, with full power to carry on its
business as it is now and has since its organization been conducted,
and to own, lease or operate its assets. The Company and the
Subsidiaries are duly authorized to do business and are in good
standing in such other jurisdictions in which such authorization is
required.
3.2. AUTHORIZATION OF AGREEMENT.
Sellers have all requisite power and authority to enter into
this Agreement and to consummate the transactions contemplated hereby.
This Agreement and all other agreements and instruments to be executed
by Sellers or their affiliates in connection herewith have been duly
executed and delivered by Sellers or their affiliates, have been
effectively authorized by all necessary action, corporate or otherwise,
and constitute legal, valid and binding obligations of Sellers or their
affiliates, as the case may be.
3.3. OWNERSHIP OF SHARES.
The Shares are owned beneficially and of record by Sellers,
and are being transferred to Buyer free and clear of all liens,
mortgages, pledges, security interests, restrictions, prior
assignments, proxies, encumbrances and claims of any kind or nature
whatsoever. No Shares are subject to any shareholders' agreement or
restriction with respect to their transferability (other than
restrictions on transfer under applicable federal and state securities
laws).
3.4. CAPITALIZATION.
The authorized capital stock of the Company consists solely of
1,500 shares of common stock, par value $1.00 per share, of which 1,190
are issued and outstanding and which are owned by Sellers in the
percentages set forth in Section 2.2.1. All of the Shares have been
duly authorized, validly issued (free of all past, present and future
preemptive rights), and are fully paid and non-assessable. There are no
outstanding or authorized options, warrants, subscriptions, calls,
puts, conversion or other rights, contracts, agreements, commitments or
understandings of any kind obligating the Company to issue, sell,
purchase, return, redeem or pay any distribution or dividend with
respect to any shares of capital stock of the Company or any other
securities convertible into, exchangeable for or evidencing the right
to subscribe for any shares of capital stock of or other ownership
interest in the Company.
3.5. FINANCIAL CONDITION.
3.5.1. FINANCIAL STATEMENTS. Schedule 3.5.1 sets
forth certain financial information concerning the Company as
of July 31, 2000 (the "Company's July 31, 2000 Financial
Statement"), the income statement for the fiscal years ended
June 30, 1997, 1998, and 1999 and for the one-month period
ending July 31, 2000 and the balance sheets for the Company as
of the last day of each such period (collectively, with the
Company's July 31, 2000 Financial Statement, the "Financial
Statements"). The Financial Statements (i) are true, complete
and correct in all material respects and fairly present the
financial position and results of operations for the periods
indicated and (ii) except as set forth in Schedule 3.5, were
prepared in accordance with generally accepted accounting
principles, applied on a consistent basis.
3.5.2. ABSENCE OF CERTAIN CHANGES. Since July 31,
2000 (the "Balance Sheet Date") there has not been (i) any
damage, destruction or loss to any assets or properties of the
Company, whether or not covered by insurance; (ii) any sale or
transfer of any of the assets of the Company except (a) sales
in the ordinary course of the business of inventory or
immaterial amounts of other
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tangible personal property and (b) for the transfers listed on
Schedule 3.5.2; (iii) any increase in, or commitment to
increase, the compensation payable or to become payable to any
of the Company's employees or any bonus payment (other than as
included as an accrued liability on the Company's July 31,
2000 Financial Statement) or similar arrangement made to or
with any of the Company's employees other than routine
increases made in the ordinary course of business not
exceeding the greater of five percent per annum or $2,000 per
annum for any of them individually; (iv) any adoption of a
plan or agreement or amendment to any plan or agreement
providing any new or additional employment or fringe benefits;
(v) any alteration in the manner of keeping the Company's
books, accounts or records, or in the accounting practices
therein reflected; (vi) any material adverse change with
respect to the operations, assets, condition (financial or
otherwise) or prospects of the Company; (vii) any declaration,
setting aside, or payment or any dividend or other
distribution with respect to the capital stock of the Company,
or any direct or indirect redemption, purchase or other
acquisition by the Company of its capital stock; or (viii) any
other event or condition known to Sellers that particularly
pertains to and materially and adversely affects the
operations, assets, business or prospects of the Company,
other than those that impact the economy in general or the
Company's business in particular. Since the Balance Sheet
Date, the Company has not: (a) entered into any material
transaction not in the ordinary course of business; or (b)
materially amended, modified, or terminated any material
Contract (as defined in Section 3.11.1), other than in the
ordinary course of its business.
3.6. PROPERTY OF THE COMPANY.
3.6.1. REAL PROPERTY. There is listed in Schedule
3.6.1 a description of each parcel of real property owned by
or leased to the Company, or owned by or leased to Sellers for
use by the Company. Except as indicated in Schedule 3.6.1:
3.6.1.1.Each of the leases described in
Schedule 3.6.1 is a valid and binding obligation of
the Company and each of the other parties thereto;
3.6.1.2.The Company is not, and Sellers do
not have any knowledge that any other party to any
such lease is, in default with respect to any
material term or condition thereof, and Sellers do
not have any knowledge that any event has occurred
which through the passage of time or the giving of
notice, or both, would constitute a default
thereunder or would cause the acceleration of any
obligation of any party thereto or the creation of a
lien or encumbrance upon any asset of the Company;
3.6.1.3.All of the buildings, fixtures and
other improvements located on the real property
described in Schedule 3.6.1 are in good operating
condition and repair, and, if applicable, the Company
holds valid and effective certificates of occupancy,
certificates relating to electrical work, building,
safety, fire and health approvals and all other
permits and licenses required by applicable law
relating to the operation of such real properties and
leaseholds. Neither the Company nor Sellers have
received notice that the Company's operations at the
real property listed in Schedule 3.6.1 as presently
conducted is in violation of any applicable building
code, zoning ordinance or other law or regulation;
3.6.1.4.Neither the Company nor Sellers, as
the case may be, have experienced during the two
years preceding the date hereof any material
interruption in the delivery of adequate quantities
of any utilities (including, without limitation,
electricity, natural gas, potable water, water for
cooling or similar purposes and fuel oil) or other
public services (including, without limitation,
sanitary and industrial sewer service) required by
the Company during such period.
3.6.2. INVENTORY. There is listed in Schedule 3.6.2 a
description of all inventories of (i) raw materials, work in
progress, finished goods, containers, tote bins, and other
packaging materials, spare parts and maintenance supplies; and
(ii) other similar inventory items of the
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Company (the "Inventory"). Except for the Inventory which is
carried as second quality or slow moving material in the July
31, 2000 Financial Statement, the Inventory of the Company is
good and merchantable and is saleable in the ordinary course
of business. The Inventory is carried on the books of the
Company at the lower of cost or market.
3.6.3. OTHER TANGIBLE PERSONAL PROPERTY. There is
listed in Schedule 3.6.3: (i) a description and the location
of each item of tangible personal property (other than
Inventory) owned by the Company or in the possession of the
Company having on the date hereof a depreciated book value per
unit in excess of $5,000; (ii) an identification of the owner
of, and any agreement relating to the use of, each item of
tangible personal property under leases or other similar
agreements which provide for rental payments at a rate in
excess of $250 per month; and (iii) an identification of the
owner of, and any agreement relating to the use of, each motor
vehicle not owned by the Company, the rights to which are to
be transferred to Buyer pursuant hereto. Except as set forth
in Schedule 3.6.3, the tangible personal property of the
Company is in good operating condition, normal wear and tear
excepted;
3.6.4. INTANGIBLE PERSONAL PROPERTY. There is listed
in Schedule 3.6.4: an identification of all (i) foreign and
United States federal or state patents, patent applications,
invention disclosures, copyrights, copyright registrations,
trademarks, trademark registrations, service marks, service
xxxx registrations, trade names, trade name registrations and
applications for any of the foregoing, owned or used by the
Company; (ii) common law claims to trademarks, service marks
and trade names; (iii) claims of copyright that exist although
no registrations have been issued with respect thereto; and
(iv) fictitious business name filings with any state or local
governmental authority ("intangible personal property").
Schedule 3.6.4 also sets forth a true and complete list of all
licenses or similar agreements or arrangements to which the
Company is a party either as licensee or licensor for each
such item of intangible personal property. Except as indicated
in Schedule 3.6.4:
3.6.4.1.There have not been any regulatory
actions or other judicial or adversary proceedings
involving the Company concerning any of such items of
intangible personal property, nor is any such action
or proceeding, to the knowledge of Sellers,
threatened;
3.6.4.2.The Company has the right and
authority to use said items of intangible personal
property in connection with the conduct of its
business in the manner presently conducted and,
subject to the receipt of those consents listed on
Schedule 3.7, to convey such right and authority to
Buyer, and such use does not conflict with, infringe
upon or violate any patent, trademark, servicemark,
trade name, registration or similar rights of any
other person, firm or corporation;
3.6.4.3.There are no outstanding, or, to the
knowledge of Sellers, threatened, disputes or
disagreements with respect to any licenses or similar
agreements or arrangements described in Schedule
3.6.4; and
3.6.4.4. The conduct of its business by the
Company does not conflict with any patents,
trademarks, trade secrets, trade names or similar
rights of others.
3.6.5. SUBSIDIARIES. The Company owns no interest in
any other company, joint venture or other entity of any nature
(a "Subsidiary").
3.6.6. TITLE TO AND QUIET POSITION OF ASSETS. The
Company has good and indefeasible title to all of its assets
and interests in assets, whether real, personal, mixed,
tangible or intangible, that are disclosed herein, are
reflected in the Financial Statements, or that are acquired
after July 31, 2000, except for inventory items sold or
consumed in the ordinary course of business after such date,
or as otherwise specifically contemplated herein. All such
assets are free and clear of all Encumbrances other than
Permitted Encumbrances. For the purposes hereof, (i)
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"Encumbrance" means any mortgage, pledge, hypothecation,
claim, security interest, lease, sublease, license, occupancy
agreement, adverse claim or interest, easement, covenant,
encroachment, burden, title defect, title retention agreement,
charge or other restriction or limitation of any nature
whatsoever, and (ii) "Permitted Encumbrances" means inchoate
common law, statutory or constitutional liens, and liens for
taxes and assessments which are not due or are being contested
in good faith, and such encumbrances set forth on Schedule
3.6.6 hereto.
3.7. AGREEMENT NOT IN BREACH OF OTHER INSTRUMENTS.
The execution and delivery of this Agreement by Sellers and
the consummation of the transactions contemplated hereby will not
result in a breach of any of the terms and provisions of, or constitute
a default under, or conflict with: (i) any Contract or any other
agreement, indenture or other instrument to which Sellers or the
Company is a party or by which any of them is bound, subject to the
receipt of those consents listed on Schedule 3.7 which have been
obtained and provided to Buyer, (ii) the Articles of Incorporation and
Bylaws of the Company and each of the subsidiaries, (iii) any judgment,
decree, order or award of any court, governmental body or arbitrator,
or (iv) any law, rule or regulation applicable to Sellers or the
Company.
3.8. EMPLOYMENT AGREEMENTS; AND EMPLOYEE BENEFITS.
3.8.1. Except as set forth on Schedule 3.8.1, there
are no employment, consulting, severance pay, continuation
pay, termination pay or indemnification agreements or other
similar agreements of any nature whatsoever (collectively,
"Employment Agreements") between the Company or a Subsidiary,
on the one hand, and any current or former stockholder,
officer, director, employee, consultant, or agent of the
Company or a Subsidiary, on the other hand, that are currently
in effect or under which the Company or a Subsidiary is
otherwise a party or is bound as an obligator. Except as set
forth on Schedule 3.8.1 there are no Employment Agreements or
any other similar agreements to which the Company or any of
its Subsidiaries is a party under which the transactions
contemplated by this Agreement (i) will require any payment by
the Company, a Subsidiary or Buyer, or any consent or waiver
from any stockholder, officer, director, employee, consultant
or agent of the Company, a Subsidiary or Buyer, or (ii) will
result in any change in the nature of any rights of any
stockholder, officer, director, employee, consultant or agent
of the Company or a Subsidiary under any such Employment
Agreement or other similar agreement.
3.8.2. The Company has delivered to, or upon request
will deliver to, Buyer copies of the health and life insurance
plans, bonus, deferred compensation, pension, profit sharing
and retirement plans and all other employee benefit plans,
programs or arrangements providing benefits for employees (or
former employees) of the Company (the "Benefit Plans"); a copy
of the most recent favorable determination letter received
with respect to a Benefit Plan from the Internal Revenue
Service (if the plan is a tax-qualified plan under the Code);
the most recent annual report (Form 5500) filed with the
Internal Revenue Service with respect to each Benefit Plan (if
any such report was required); and the most recent summary
plan description for each Benefit Plan for which a summary
plan description is required. Each of the Benefit Plans has
been administered and maintained in compliance with the
requirements of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), and, if applicable, the Internal
Revenue Code of 1986, as amended (the "Code") and all other
applicable laws. There is no "accumulated funding deficiency"
(as such term is defined in Section 302 of ERISA or Section
412 of the Code) with respect to a Benefit Plan that is an
"employee pension benefit plan" (as defined in Section 3(2) of
ERISA, and there has been no application for a waiver of the
minimum funding standards imposed by Code Section 412 with
respect to any such plan. There are no pending or, to the
knowledge of Sellers, threatened claims by or on behalf of the
Benefit Plans, the United States Department of Labor, the
Internal Revenue Service, or by any current or former employee
of the Company or beneficiary of such current or former
employee alleging a breach of any fiduciary duties or a
violation of applicable state or federal law which could
result in a material liability on the part of the Company or a
Benefit Plan under ERISA or any other law (other than benefit
claims and
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funding obligations in the ordinary course of business). The
Company is not a party to any such Multiemployer Pension Plan.
With respect to any multiemployer plan (within the meaning of
Section 3(37) of ERISA) to which the Company or any ERISA
Affiliate contributes (or has at any time contributed or had
an obligation to contribute), the Company and each ERISA
Affiliate has or will have, as of the Closing Date, made all
contributions to each multiemployer plan required by the terms
of such multiemployer plan or any collective bargaining
agreement. Neither the Company or any ERISA Affiliate has
incurred any withdrawal liability (within the meaning of Part
I of Subtitle E of Title IV of ERISA) to any multiemployer
plan. Neither the Company or any ERISA Affiliate has been
notified by the sponsor of a multiemployer plan that such
mutiemployer plan is in reorganization or has been terminated,
within the meaning of Title IV of ERISA.
3.9. LABOR AND EMPLOYMENT MATTERS.
3.9.1. No collective bargaining agreement exists that
is binding on the Company or any Subsidiary and no petition
has been filed or proceedings instituted by an employee or
group of employees with any labor relations board seeking
recognition of a bargaining representative. There are no
organizational effort currently being made or, to the
knowledge of Sellers, threatened by or on behalf of any labor
union to organize any employees of the Company or any
Subsidiary.
3.9.2. (i) There is not now, and to the Sellers'
knowledge, never has been, any labor strike, dispute, slow
down or stoppage pending or, to the Sellers' knowledge,
threatened, against or directly affecting the Company or any
Subsidiary, (ii) no grievance or arbitration proceeding
arising out of or under any collective bargaining agreement is
pending, and no claims therefor exist; and (iii) neither the
Company, any Subsidiary nor any Seller has received any notice
or has any knowledge of any threatened labor or civil rights
dispute, controversy or grievance or any other unfair labor
practice proceeding or breach of contract claim or action with
respect to claims of, or obligations to, any employee or group
of employees of the Company or any Subsidiary.
3.9.3. If required under the Workers Adjustment and
Retraining Notification Act or other applicable state law
regulating plant closing or mass layoffs, the Company and its
Subsidiaries have timely caused there to be filed or
distributed, as appropriate, all required filings and notices
with respect to employment losses occurring through the
Closing Date.
3.9.4. The Company and its Subsidiaries have complied
and are currently complying, in respect of all employees of
the Company and its Subsidiaries with all applicable laws
respecting employment and employment practices and the
protection of the health and safety of employees, from
whatever source such law may be derived, including, without
limitation, statutes, ordinances, laws, rules, regulations,
policies, standards, judicial or administrative precedents,
judgments, orders, decrees, awards, citations, licenses,
official interpretations and guidelines.
3.9.5. All individuals who are performing or have
performed services for the Company, any Subsidiary and are or
were classified by the Company or any Subsidiary as
"independent contractors" qualify for such classification
under Section 530 of the Revenue Act of 1978 or Section 1706
of the Tax Reform Act of 1986, as applicable.
3.10. LITIGATION.
3.10.1. Except for (i) claims as listed in Schedule
3.10 and (ii) claims for the collection of accounts arising
out of the sale or purchase of goods or services in the
ordinary course of business involving less than $1,000
individually or $10,000 in the aggregate, there are no claims,
disputes, actions, lawsuits, proceedings or investigations of
any nature pending or, to the knowledge of Sellers, threatened
against the Company, or any of the officers, directors,
shareholders, affiliates or employees of the Company.
3.10.2. No claim, action, suit, investigation, or
other proceeding is pending or, to the knowledge of Sellers,
threatened before any court or governmental agency which
presents a risk of
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the restraint or prohibition of the transactions contemplated
by this Agreement or the obtaining of indemnification or other
relief in connection therewith.
3.11. CONTRACTS.
3.11.1. Schedule 3.11 sets forth a true and correct list
of each contract, agreement or other arrangement to which the
Company is a party, or to which any Seller is a party and
which relates to the business of the Company (collectively,
"Contracts"), except:
3.11.1.1. Agreements for the purchase by the Company
of goods, materials or services in the ordinary course of
business involving less than $10,000 in consideration in each
such case;
3.11.1.2. Agreements for the sale, rental or service
by the Company of goods or services in the ordinary course of
business in which the payment to be received pursuant to each
such agreement is less than $10,000 for each such non-listed
agreement;
3.11.1.3. Agreements which are terminable at will by
the Company upon no more than 60 days notice without penalty,
default or liability and involving an amount less than
$10,000; and
3.11.1.4. Agreements continuing for a period of six
months or less involving an amount less than $10,000 for each
such non-listed agreement.
3.11.2. Except as set forth in Schedule 3.11,
3.11.2.1. Each Contract is a valid and
binding agreement of the Company and, to the
knowledge of Sellers, of the other parties thereto,
subject to the effect of bankruptcy and creditors'
rights generally;
3.11.2.2. The Company has fulfilled all
material obligations required pursuant to each
Contract to have been performed by it or on its part
prior to the date hereof, and Sellers believe that,
assuming Buyer continues to operate the Company in
the same manner as Sellers, the Company will be able
to fulfill, when due, all of its obligations under
the Contracts which remain to be performed after the
date hereof;
3.11.2.3. There has not occurred any default
under any Contract on the part of the Company or on
the part of the other parties thereto; and there has
not occurred any event which with the giving of
notice or the lapse of time, or both, would
constitute any default under any of the Contracts;
and
3.11.2.4. Except as provided in the
Contracts, the Company is not, outside the ordinary
course of business, under any liability or obligation
with respect to the return of inventory or products
sold, rented or serviced by it which are in the
possession of distributors, wholesalers, retailers or
other customers.
3.12. REGULATORY APPROVALS.
All consents, approvals, authorizations and other requirements
prescribed by any law, rule or regulation which must be obtained or
satisfied by the Company or Sellers and which are necessary for the
consummation of this Agreement and the documents to be executed and
delivered by Sellers in connection herewith have been obtained and
satisfied.
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3.13. COMPLIANCE WITH LAW.
The Company has not, and its business as presently conducted
does not, violate, in any respect any federal, state, local or foreign
laws, regulations or orders (including, but not limited to, any of the
foregoing relating to employment discrimination, occupational safety,
environmental protection, conservation, or corrupt practices), and the
Company has not received any notice of any such violation. Sellers have
obtained all permits, approvals, and consents of all governmental
bodies or agencies necessary or appropriate so that consummation of the
transactions contemplated by this Agreement will be in compliance with
applicable laws.
3.14. INDEBTEDNESS FROM EMPLOYEES.
Except as set forth in Schedule 3.14, no employees of the
Company are indebted to the Company, except for advances made to any
employees in the ordinary course of business to meet reimbursable
business expenses anticipated to be incurred by such employee.
3.15. ACCOUNTS RECEIVABLE.
The accounts, accounts receivable, notes and notes receivable
of the Company existing on the Closing Date arose out of the sales of
inventory or services in the ordinary course of business and are
collectible in full, net of the reserve set forth in the Company's July
31, 2000 Financial Statements included in Schedule 3.5.1, which
reserves are reasonable and were calculated consistent with past
practices.
3.16. INSURANCE.
Schedule 3.16 sets forth a true and correct list of all
insurance policies either maintained by the Company or maintained by
any other person which relate to the Company in any manner whatsoever
at the date hereof. There are no outstanding requirements or
recommendations by any insurance company that issued any such policy or
by any Board of Fire Underwriters or other similar body exercising
similar functions or by any governmental authority exercising similar
functions which requires or recommends any changes in the conduct of
the business of, or any repairs or other work to be done on or with
respect to any of the properties or assets of the Company. The Company
has not received any notice or other communication from any such
insurance company within the three years preceding the date hereof
canceling or materially amending or materially increasing the annual or
other premiums payable under any of said insurance policies, and no
such cancellation, amendment or increase of premiums is threatened.
3.17. POWERS OF ATTORNEY AND SURETYSHIPS.
The Company has no general or special powers of attorney
outstanding (whether as grantor or grantee thereof) and has no
obligation or liability (whether actual, accrued, accruing, contingent
or otherwise) as guarantor, surety, co-signer, endorser, co-maker,
indemnitor or otherwise in respect of the obligation of any person,
corporation, partnership, joint venture, association, organization or
other entity, except as endorser or maker of checks or letters of
credit, respectively, endorsed or made in the ordinary course of
business.
3.18. NO UNDISCLOSED LIABILITIES.
Except as and to the extent specifically reflected or reserved
against in the Company's July 31, 2000 Financial Statement, incurred in
the ordinary course of business subsequent to July 31, 2000, the
Company has no liabilities or obligations of any nature, whether
absolute, accrued, contingent or otherwise, and whether due or to
become due (including, without limitation, any liability for taxes and
interest, penalties and other charges payable with respect to any such
liability or obligation).
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3.19. ENVIRONMENTAL MATTERS.
As of the date hereof, (a) the Company has generated,
utilized, stored, delivered for disposal, disposed of, treated,
transported, and otherwise managed all materials, substances, and
wastes, whether toxic, hazardous or otherwise, in compliance with all
laws, rules, regulations, ordinances, guidelines, and the common law;
(b) the real property owned, leased, or operated or previously owned,
leased or operated by either (i) Sellers relating to the Company, or
(ii) the Company is not listed on the National Priorities List,
CERCLIS, RCRIS, or any comparable state listing which identifies sites
for removal, remedial, clean-up or investigatory actions; (c) no
amounts, which require remediation or reporting under applicable law,
of asbestos, PCB's, ureaformaldehyde, hazardous and solid wastes,
hazardous or toxic substances, petroleum products, pollutants or
contaminates, and no above or underground storage tanks, have been or
are located on the real property currently or previously owned, leased,
or operated by the Company; and (d) the real property currently or
previously owned, leased, or operated by the Company has not been
contaminated, tainted or polluted in any manner whatsoever (including,
without limitation, any contamination of or injury or damage to soils,
groundwater waters, biota, and wildlife located on, in, under or
originating from such premises) with pollutants, contaminants or other
substances or materials so as to give rise to a removal, remediation,
clean-up, or investigatory obligation or action, on the part of the
Company under any law, rule, regulation, guideline, ordinance, whether
domestic or foreign, federal, state, or local, or the common law. Buyer
acknowledges receipt of the environmental audits listed on Schedule
3.19.
3.20. CONFLICTS OF INTEREST.
Except as disclosed in Schedule 3.20 or as expressly disclosed
in the Company's July 31, 2000 Financial Statement, no officer,
director or shareholder of the Company or any affiliate of any such
person now has or within the last three years had, either directly or
indirectly:
3.20.1. any equity or debt interest in any
corporation, partnership, joint venture, association,
organization or other person or entity which furnishes or
sells or during such period furnished or sold services or
products to the Company, or purchases or during such period
purchased from the Company any goods or services, or otherwise
does or during such period did business with the Company; or
3.20.2. a beneficial interest in any contract,
commitment or agreement, formal or informal, to which the
Company is or was a party or under which it was obligated or
bound or to which its properties may be or may have been
subject, other than stock options and other contracts,
commitments or agreements between the Company and such persons
in their capacities as employees, officers or directors of the
Company.
3.20.3. loaned money to or borrowed money from the
Company.
3.21. TAXES.
3.21.1. For purposes of this Agreement: (i) the term
"Taxes" means (A) all Federal, state, local, foreign and other
net income, gross income, gross receipts, sales, use, ad
valorem, value added, intangible, unitary, capital gain,
transfer, franchise, profits, license, lease, service, service
use, withholding, backup withholding, payroll, employment,
estimated, excise, severance, stamp, occupation, premium,
property, prohibited transactions, windfall or excess profits,
customs, duties or other taxes, fees, assessments or charges
of any kind whatsoever, together with any interest and any
penalties, additions to tax or additional amounts with respect
thereto, (B) any liability for payment of amounts described in
clause (A) whether as a result of transferee liability, of
being a member of an affiliated, consolidated, combined,
unitary or other similar group for any period, or otherwise
through operation of law and (C) any liability for the payment
of amounts described in clauses (A) or (B) as a result of any
tax sharing, tax indemnity or tax allocation agreement or any
other express or implied agreement to indemnify any other
Person; and the term "Tax" means any one of the foregoing
Taxes; and (ii) the term "Returns" means all returns,
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declarations, reports, statements and other documents required
to be filed in respect of Taxes; and the term "Return" means
any one of the foregoing Returns.
3.21.2. The Tax Returns of the Company and its Tax
Affiliates have never been audited, and there are no pending
or threatened audits, examinations or adjustments with respect
to such Tax Returns. All deficiencies asserted or assessments
made as a result of any examinations by the IRS or state,
local or foreign Tax authority have been fully paid. An amount
equal to the tax due for the one month ended July 31, 2000,
has been booked as an expense and a corresponding liability
using current tax law. SFAS No. 109 has not been applied to
these financial statements. There are no Returns that are
presently under examination with respect to Taxes, there are
no proposed (whether oral or written) or final adjustments,
assessments or deficiencies with respect to Taxes currently
pending, and there are no outstanding notices of proposed or
actual audit, examination or investigation with respect to
Taxes.
3.21.3. Sellers represent and warrant to Buyer that:
3.21.3.1. the Company, and every other
person for whose Taxes the Company is or could be
held liable (whether by reason of being a member of a
consolidated, combined, unitary, or other similar
group for Tax purposes, by reason of being a
successor, by agreement or otherwise (for the taxable
period(s) or portions thereof with respect to which
the Company is or could be held for such other
Person's Taxes) (all such persons collectively
referred to herein as "Tax Affiliates"), have filed
on a timely basis all Returns required to have been
filed by it and have paid on a timely basis all Taxes
shown thereon as due. All such Returns are true,
complete and correct in all material respects. The
provisions for taxes in the Company's July 31, 2000
Financial Statement sets forth the maximum liability
of the Company and Tax Affiliates for Taxes as of the
date thereof. No liability for Taxes has been
incurred by the Company or any Tax Affiliate since
July 31, 2000 other than in the ordinary course of
their business. No director, officer or employee of
the Company or any Tax Affiliate having
responsibility for Tax matters is in discussions with
Tax authorities or has reason to believe that any Tax
authority has valid grounds to claim or assess any
additional Tax with respect to the Company or any Tax
Affiliate in excess of the amounts shown on the
Company's July 31, 2000 Financial Statement for the
period ending on such date;
3.21.3.2. with respect to all amounts in
respect of Taxes imposed upon the Company or Tax
Affiliates, or for which the Company is or could be
liable, whether to taxing authorities (as, for
example, under law) or to other persons or entities
(as, for example, under tax allocation agreements),
and with respect to all taxable periods or portions
of periods ending on or before the Closing, all
applicable Tax laws and agreements have been fully
complied with in all material respects, and all such
amounts required to be paid by the Company and Tax
Affiliates to Tax authorities or others have been
paid;
3.21.3.3. none of the Returns required to be
filed by the Company or any Tax Affiliate contains,
or were required to contain (in order to avoid the
imposition of a penalty), a disclosure statement
under Section 6662 (or any predecessor provision) of
the Code, or any similar provision of state, local or
foreign law;
3.21.3.4. all amounts that were required to
be collected or withheld by the Company or any Tax
Affiliate have been duly collected or withheld in all
material respects, and all such amounts that were
required to be remitted to any Tax authority have
been duly remitted in all material respects;
3.21.3.5. the Company and Tax Affiliates
have not requested an extension of time to file any
Return not yet filed, and have not granted any waiver
of any statute of limitations with respect to, or any
extension of a period for the assessment of, any Tax.
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No power of attorney granted by the Company or any
Tax Affiliate with respect to Taxes is in force;
3.21.3.6. Sellers, the Company and Tax
Affiliates have not taken any action not in
accordance with past practice that would have the
effect of deferring any material Tax liability of the
Company or any Tax Affiliate from any taxable period
or portion thereof ending on or before or including
the Closing to any subsequent taxable period;
3.21.3.7. there are no actual or deemed
elections under Section 338 of the Code, protective
carryover basis elections, offset prohibition
elections or similar elections applicable to the
Company or any Tax Affiliate;
3.21.3.8. neither the Company nor any Tax
Affiliate is required to include in income any
adjustment pursuant to Sections 481 or 263A of the
Code (or similar provisions of other law or
regulations) by reason of a change in accounting
method or otherwise, following the Closing, and
Sellers have no knowledge that the IRS (or other Tax
authority) has proposed, or is considering, any such
change in accounting method or other adjustment;
3.21.3.9. there are no liens for Taxes
(other than for current Taxes not yet due and
payable) upon the assets of the Company;
3.21.3.10. the Company is not party to any
agreement, contract, arrangement or plan that has
resulted or would result, separately or in the
aggregate, in the payment of any "excess parachute
payments" within the meaning of Section 280G of the
Code, whether by reason of the Closing or otherwise;
3.21.3.11. the Company is not, and has not
been, a United States real property holding
corporation (as defined in Section 897(c)(2) of the
Code) during the applicable period specified in
Section 897(c)(1)(A)(ii) of the Code (or any
corresponding provision of state, local or foreign
Tax law);
3.21.3.12. neither the Company nor any Tax
Affiliate has or has had a permanent establishment in
any foreign country, as defined in any applicable Tax
treaty or convention between the United States of
America and such foreign country and the Company has
not engaged in a trade or business within any foreign
country;
3.21.3.13. neither the Company nor any Tax
Affiliate is a party to any joint venture,
partnership, or other arrangement or contract which
could be treated as a partnership for Federal income
tax purposes;
3.21.3.14. neither the Company nor any Tax
Affiliate is or has been a member of an "affiliated
group" as such term is defined in Section 1504 of the
Code (and any predecessor provision) of the Code, or
any similar group for state, local or foreign Tax
purposes;
3.21.3.15. neither the Company nor any Tax
Affiliate has filed a consent pursuant to the
collapsible corporation provisions of Section 341(f)
of the Code (or any corresponding provision of state,
local or foreign income Tax law) or agreed to have
Section 341(f)(2) of the Code (or any corresponding
provision of state, local or foreign income Tax law)
apply to any disposition of any asset owned by any of
them;
3.21.3.16. neither the Company nor any Tax
Affiliate has participated in an international
boycott within the meaning of Section 999 of the
Code;
3.21.3.17. the Company is not a party to or
bound by any Tax sharing agreement, and has no
current or contingent contractual obligation to
indemnify any other
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person with respect to Taxes, other than obligations
to indemnify a lessor for property Taxes, sales/use
Taxes or gross receipts Taxes (but not income or
franchise Taxes) imposed on lease payments arising
from terms that are customary for leases of similar
property;
3.21.3.18. the Company is not a party to or
bound by any closing agreement or offer in compromise
with any Tax authority;
3.21.3.19. none of the assets of the Company
is property that the Company is required to treat as
being owned by any other person pursuant to the
so-called "safe harbor lease" provisions of former
Section 168(f)(8) of the Internal Revenue Code of
1954, as amended; none of the assets of the Company
directly or indirectly secures any debt the interest
on which is tax exempt under Section 103(a) of the
Code; none of the assets of the Company is
"tax-exempt use property" within the meaning of
Section 168(h) of the Code;
3.21.3.20. No material election with respect
to Taxes of the Company or Tax Affiliates has been
made from and after the date of this Agreement;
3.21.3.21. Schedule 3.21.3.21 sets forth all
state, local or foreign jurisdictions in which the
Company is or at any time during the past five years
has been subject to Tax.
3.21.3.22. all outstanding options to
acquire equity of the Company that purport to or were
otherwise intended (when issued) to be treated as
"incentive stock options" ("ISOs") within the meaning
of Section 422 of the Code (and any predecessor
provision and any similar provision applicable state,
local or other Tax law) were issued in compliance
with such section. All such outstanding options
currently qualify for treatment as ISOs, and are held
by persons who are employees of the Company.
3.22. OTHER INFORMATION.
The information provided by Sellers to Buyer in this Agreement
or in the Schedules does not contain any untrue statement of a material
fact or omit to state a material fact required to be stated herein or
therein or necessary to make the statements and facts contained herein
or therein, in light of the circumstances in which they are made, not
false or misleading. Copies of all documents heretofore delivered or
made available to Buyer were complete and accurate records of such
documents in all respects.
4. REPRESENTATIONS AND WARRANTIES OF BUYER.
Buyer represents and warrants to Sellers that:
4.1. ORGANIZATION.
Buyer is duly organized, validly existing and in good standing
under the laws of the State of Delaware and has all requisite corporate
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby.
4.2. CORPORATE AUTHORITY.
This Agreement and all other agreements herein contemplated to
be executed in connection herewith have been duly executed and
delivered by Buyer, have been effectively authorized by all necessary
action, corporate or otherwise, and constitute legal, valid and binding
obligations of Buyer.
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4.3. AGREEMENT NOT IN BREACH OF OTHER INSTRUMENTS.
The execution and delivery of this Agreement, the consummation
of the transactions contemplated hereby and the fulfillment of the
terms hereof will not result in a breach of any of the terms or
provisions of, or constitute a default under, or conflict with, any
material agreement, indenture or other instrument to which Buyer is a
party or by which it is bound, Buyer's Certificate of Incorporation or
Bylaws, any judgment, decree, order or award of any court, governmental
body or arbitrator, or any law, rule or regulation applicable to Buyer.
4.4. REGULATORY AND OTHER APPROVALS.
All consents, approvals, authorizations and other requirements
prescribed by any law, rule or regulation, including any third party
consents, which must be obtained or satisfied by Buyer and which are
necessary for the execution and delivery of this Agreement and the
consummation of the transactions contemplated by this Agreement have
been obtained and satisfied.
5. CERTAIN UNDERSTANDINGS AND AGREEMENTS OF THE PARTIES.
5.1. COOPERATION IN LITIGATION.
Each party will fully cooperate with the other in the defense
or prosecution of any litigation or proceeding already instituted or
which may be instituted hereafter against or by such party relating to
or arising out of the conduct of the Company prior to or after the
Closing Date (other than litigation arising out of the transactions
contemplated by this Agreement). The party requesting such cooperation
shall pay the out-of-pocket expenses (including legal fees and
disbursements) of the party providing such cooperation and of its
officers, directors, employees and agents reasonably incurred in
connection with providing such cooperation, but shall not be
responsible to reimburse the party providing such cooperation for such
party's time spent in such cooperation or the salaries or costs of
fringe benefits or other similar expenses paid by the party providing
such cooperation to its officers, directors, employees and agents while
assisting in the defense or prosecution of any such litigation or
proceeding.
5.2. TAX MATTERS.
5.2.1. PRE-CLOSING RETURNS. Sellers will be
responsible for and will cause to be prepared and duly filed
all Returns in which the Company is includable for all taxable
periods ending on or before the Closing. All such Returns
shall be prepared in a manner consistent with prior periods.
All such Returns filed after the Closing shall be submitted to
Buyer no later than thirty days prior to the due date and
filing thereof, and Buyer shall have the right to review and
comment thereon (without reduction of Sellers' obligations to
indemnify under this Agreement). Sellers will pay or cause to
be paid, and shall indemnify and hold Buyer and the Company
harmless against, all Taxes to which such Returns relate;
provided, however, that to the extent such Taxes are included
in and specifically identified on the Closing Financial
Statement (as finally determined) or an attachment or schedule
thereto, Buyer shall reimburse Sellers for such Taxes within
ten business days following the later of: (i) the receipt by
Buyer of written evidence of actual payment of such Taxes by
Sellers or (ii) the date the Closing Financial Statement
becomes final and binding.
5.2.2. OVERLAP PERIOD RETURNS. Other than Returns to
be prepared by Sellers pursuant to Section 5.2.1, Buyer will
prepare or cause to be prepared all Returns of the Company for
any and all taxable periods which include and end after the
Closing (the "Overlap Period"), and any taxable period
beginning after the Closing. Sellers will be responsible for
and will indemnify and hold harmless Buyer, and the Company
with respect to all Taxes based upon or related to income or
receipts for the Overlap Period in an amount equal to the
liability for Taxes that would have resulted had the Overlap
Period ended at the Closing (utilizing, if applicable, the
actual tax rate imposed on a particular category of income by
the applicable taxing jurisdiction), except to the extent such
Taxes are included in and specifically identified on the
Closing Financial
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Statement (as finally determined) or an attachment or schedule
thereto. In the case of any Taxes for the Overlap Period,
other than Taxes based upon or related to income or receipts,
the portion of such Taxes that relates to the portion of the
Overlap Period ending on the day of Closing shall be deemed to
be the amount of such Tax for the entire taxable period
multiplied by a fraction the numerator of which is the number
of days in the taxable period ending on the day of Closing and
the denominator of which is the number of days in the entire
taxable period. Any amount so payable by Sellers will be
remitted to Buyer at least ten business days prior to the due
date of the respective Returns pursuant to written notice by
the Buyer of such due date; provided that Sellers approve of
the amount (such approval not to be unreasonably withheld).
5.2.3. AMENDED RETURNS. From and after the date
hereof, Sellers and their affiliates shall not file or cause
to be filed any amended Return with respect to the Company,
and Sellers and their affiliates shall not file a claim for
refund of Taxes paid by or on behalf of the Company.
5.2.4. MATERIAL ELECTIONS. Neither Sellers nor the
Company shall make any material election with respect to Taxes
of the Company or any Tax Affiliate following the date hereof
without the prior written approval of Buyer (such approval not
to be unreasonably withheld).
5.2.5. COOPERATION OF TAX MATTERS.
5.2.5.1.Buyer and Sellers shall cooperate
fully, as and to the extent reasonably requested by
the other party, in connection with the filing of
Returns pursuant to this Section 5.2 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 that 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.
Sellers agree (A) to retain all books and records
with respect to Tax matters relating to any taxable
period beginning before the Closing until the
expiration of the statute of limitations (and, to the
extent notified by Buyer or Sellers, 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
Sellers shall allow Buyer to take possession of such
books and records.
5.2.5.2.Buyer and Sellers 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).
5.2.5.3.Buyer and Sellers further agree,
upon request, to provide the other party with all
information that either party may be required to
report pursuant to Section 6043 of the Code and the
Treasury Regulations promulgated thereunder.
5.2.6. TAX SHARING AGREEMENTS. Any and all tax
sharing, tax indemnity, or tax allocation agreements with
respect to which the Company was a party at any time prior to
the Closing shall terminate upon the Closing. No further
amounts shall be payable by the Company under such agreements
following the Closing.
5.2.7. CERTAIN TAXES. All transfer, documentary,
sales, use, stamp, registration and other such Taxes and fees
(including any penalties and interest) incurred in connection
with this Agreement, shall be paid by Sellers when due, and
Sellers will, at their own expense, file all necessary Returns
and other documentation with respect to all such transfer,
documentary, sales, use, stamp, registration and other Taxes
and fees, and, if required by applicable law, Buyer will, and
will cause its affiliates to, join in the execution of any
such Returns and other documentation.
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5.3. EMPLOYMENT AGREEMENTS.
5.3.1. At the Closing, Buyer shall enter into an
employment agreement with Xxxxxxx X. Xxxxxx in the form attached hereto
as Exhibit 5.3.1.
5.4. AGREEMENT WITH RESPECT TO MCALLEN PROPERTY.
(a) The Sellers are the record owners of the real
property located at Lots 5 and 6, Block 5, Xxxx'x Addition, an
addition to the City of McAllen, Xxxxxxx County, Texas,
according to the map recorded in Volume 4, Page 6, Map Records
in the Office of the County Clerk of Xxxxxxx County, Texas,
(the "Property"). The Property is subject to a Deed of Trust,
Security Agreement - Financing Statement dated April 1, 1999,
wherein the Sellers, as grantors, granted a first lien in
favor of F and V Enterprises, Inc. (the "Lien Holder") to
secure the payment of a Real Estate Note dated April 1, 1999,
in the original principal amount of $120,000 (the "Note"). On
the date hereof, the outstanding principal balance of the Note
is $91,132.27. There is no past due interest payable under the
Note.
(b) The parties hereto acknowledge that the Lien
Holder has refused to accept prepayment of the Note. The
parties further acknowledge that the Company has been paying
the Note as the beneficial owner of the Property. On the date
hereof, the Sellers have delivered to the Company to hold in
escrow a warranty deed (the "Deed") with respect to the
conveyance of the Property to the Company.
(c) The Sellers agree that after the date hereof, the
Company shall be entitled to occupy and utilize the Property
for all lawful purposes, in exchange for Buyer's agreement to
cause the Company to pay when due the amounts due under the
Note and the other agreements of Buyer contained in this
section. Buyer agrees to cause the Company to make all
required payments under the Note and to indemnify the Sellers
for all liabilities with respect to the Note or the use of the
Property after the Closing, so long as the Sellers are in
compliance with this section. The Sellers agree to indemnify
and hold Buyer and the Company harmless from any damages or
liabilities of any nature incurred by such parties after the
date hereof which relate to any action taken by the Sellers
with respect to the Property or contrary to the terms of this
section.
(d) Notwithstanding anything contained herein, the
Sellers shall have no rights or remedies against the Company
or Buyer with respect to its occupancy, use or any other
matter relating to the Property, so long as the Company is
occupying the Property in compliance with applicable law. The
Sellers shall not encumber, transfer any interest in, or
permit any other restriction of any nature to be filed or
become effective against the Property.
(e) Buyer shall cause the Company to (i) comply in
all material respects with all governmental rules,
regulations, ordinances, statutes and laws, (ii) pay all
utilities of any nature attributable to the Property including
water, gas, heat, electricity, power, and all other services
or utilities used in, upon or about the Property and (iii) pay
before delinquency all ad valorem taxes, fees, impositions and
assessments of whatever kind or nature, levied against the
Property. The Company shall be responsible for all of the
structural elements and maintenance on the Property. The
Company shall at its own expense secure and maintain insurance
on the Property in an amount it deems advisable.
(f) A memorandum of this section may be recorded or
filed for record in any public records or governmental office.
(g) Upon payment in full of the Note, the parties
acknowledge that the Company will file the Deed of record in
Xxxxxxx County.
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(h) Nothing contained in this section shall affect
the other terms and provisions hereof, including but not
limited, to the representations and warranties of the Sellers.
6. INDEMNIFICATION.
6.1. INDEMNIFICATION BY SELLERS.
Sellers shall jointly and severally indemnify and hold
harmless Buyer, the Company, and their respective directors, officers,
employees, agents, attorneys and shareholders (collectively, the "Buyer
Group") in respect of any and all claims, losses, damages, liabilities
and expenses (including, without limitation, settlement costs and any
reasonable legal, accounting and other expenses for investigating or
defending any actions or threatened actions) incurred (collectively,
"Losses") by the Buyer Group, together with interest on cash
disbursements in connection therewith at the base rate for prime
commercial lenders of Buyer's primary bank as announced from time to
time, plus 1 percent per annum (the "Reference Rate") from 60 days
after the date such Losses were incurred by the Buyer Group until paid
by Sellers, in connection with each and all of the following:
6.1.1. any breach of any representation or warranty
made by Sellers in this Agreement;
6.1.2. the breach of any covenant, agreement or
obligation of Sellers contained in this Agreement or any other
instrument delivered at the Closing;
6.1.3. any misrepresentation contained in any
Schedule, certificate or other documents furnished by Sellers
pursuant to this Agreement;
6.1.4. the failure to pay when due any and all
liabilities for Taxes (as defined in Section 3.21.1) that (i)
accrued with respect to any taxable periods of the Company
ending on or before the Closing Date, (ii) accrued with
respect to the assets, operations or business of the Company
during all periods up to and including the Closing whether or
not such periods are taxable periods, or (iii) are incurred
and become payable by the Company or Buyer as a result of the
transactions contemplated by this Agreement;
6.1.5. any claim, demand or cause of action asserted
or brought by any person for breach of warranty, or similar
claims in connection with sales of products sold or leased by
the Company at any time prior to the Closing Date or which
comprised any part of the Inventory existing on the Closing
Date and which was sold by Buyer within 90 days after the
Closing Date;
6.1.6. any claim, demand or cause of action asserted
or brought by any person for physical injury to, death of, or
property damage suffered by such person or any other person
which was proximately caused by any products sold or leased by
the Company at any time prior to the Closing Date;
6.1.7. the violation of any federal, state, local or
foreign laws, regulations, orders, requirements or ordinances,
including those dealing with environmental matters, prior to
the Closing Date by Sellers, the Company or any of their
affiliates, agents or assigns;
6.1.8. (a) conditions existing at, or caused by
events prior to the Closing Date which are violations of any
federal, state or local environmental statute, regulation,
requirement or ordinance prior to the Closing Date with
respect to the Company or any of its assets, and (b) any other
environmental conditions in existence as of the Closing Date
on the real property currently or previously owned, leased or
used by the Company, whether or not described in Section
3.19((a) and (b) being collectively referred to herein as
"Environmental Conditions"), which as of the Closing, or will
in the future as a result of the operation of the Company
prior to Closing, require remediation, removal, or other
corrective actions. With respect to each and every
Environmental Condition, Sellers' obligation to indemnify the
Buyer Group from any Losses shall include but not be limited
to: (i) fines, penalties, assessments and judgments (whether
related to current or past
EX-75
activities); (ii) costs associated with obtaining any
necessary permits, certificates or other governmental approval
or complying with environmental reporting or record keeping
requirements, including (A) remediation costs, (B) removal
costs, (C) costs of implementing monitoring equipment which
are necessary to obtain such permits, certificates or
approvals, and (D) late fees and filing fees; and (iii) any
costs which Buyer deems reasonably necessary in connection
with the foregoing, including without limitation costs of
environmental audits, surveys, reports, waste
characterizations, monitoring xxxxx, soil borings, tests and
samples, provided that such costs incurred by Buyer pursuant
to this Section 6.1.8 (iii) must be approved by Sellers in
advance, which consent will be timely given and not
unreasonably withheld, collectively, "Environmental Costs";
and
6.1.9. any liability, obligation or other amount
payable with respect to the Supply Business, whether incurred
prior to or after the date hereof.
6.2. INDEMNIFICATION BY BUYER.
Buyer shall indemnify and hold harmless Sellers and their
respective officers, employees, agents, and shareholders, if any
(collectively, the "Seller Group"), in respect of any and all Losses
(as defined above) reasonably incurred by Sellers, together with
interest on cash disbursements in connection therewith at the Reference
Rate from 60 days after the date that such Losses were incurred by the
Seller Group until paid by Buyer, in connection with each and all of
the following:
6.2.1. any breach of any representation or warranty
made by Buyer in this Agreement.
6.2.2. the breach of any covenant, agreement or
obligation of Buyer contained in this Agreement or any other
instrument delivered at the Closing;
6.2.3. any misrepresentation contained in any
Schedule, certificate or any other document furnished by Buyer
pursuant to this Agreement;
6.2.4. any claim, demand or cause of action
(including warranty claims and claims relating to physical
injury, death or property damage) relating to or proximately
caused by either (i) products manufactured by the Company
after the Closing Date or (ii) any products sold or leased by
the Company more than 90 days after the Closing Date;
6.2.5. the violation of any federal, state, local or
foreign laws, regulations, orders, requirements or ordinances,
including those dealing with environmental matters, on or
after the Closing Date by Buyer and its affiliates, agents or
assigns in relation to the Company, except with regard to
existing practices of the Company; and
6.2.6. any Environmental Condition relating to the
Company which, except with regard to existing practices of the
Company, result from the operations of the Company after the
Closing Date or which came into existence after the Closing
Date (including, but not limited to, Environmental Costs to
the extent they directly arise from such violations).
6.3. CLAIMS FOR INDEMNIFICATION.
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Whenever any claim shall arise for indemnification hereunder,
the party entitled to indemnification (the "indemnified party") shall
promptly notify the other party (the "indemnifying party") of the claim
and, when known, the facts constituting the basis for such claim. In
the event of any claim for indemnification hereunder resulting from or
in connection with any claim or legal proceedings by a third party, the
notice to the indemnifying party shall specify, if known, the amount or
an estimate of the amount of the liability potentially arising
therefrom. The indemnified party shall not settle or compromise any
claim by a third party for which it is entitled to indemnification
hereunder, without the prior written consent of the indemnifying party;
provided, however, that if such consent is not granted the amount of
indemnity provided by the Indemnitor shall not be limited by Section
6.4 or 6.6 and, at the election of Buyer, only the portion of any loss
equal to the refused settlement shall be deducted or payable from the
Escrow Account, all other amounts shall be paid directly to Buyer by
wire transfer by Sellers or the distributees of the assets of the
Sellers.
6.4. DEFENSE BY INDEMNIFYING PARTY.
In connection with any claim giving rise to indemnity
hereunder resulting from or arising out of any claim or legal
proceeding by a person who is not a party to this Agreement, the
indemnifying party at its sole cost and expense may, upon written
notice to the indemnified party given within 30 days after delivery of
the written notice referred to in Section 6.3 hereof, assume the
defense of any such claim or legal proceeding if it acknowledges to the
indemnified party in writing its obligations to indemnify the
indemnified party with respect to all elements of such claim. The
indemnified party shall be entitled to participate in (but not control)
the defense of any such action, with its own counsel and at its own
expense. If the indemnifying party does not assume the defense of any
such claim or litigation resulting therefrom, (a) the indemnified party
may defend against such claim or litigation, in such manner as it may
deem appropriate, including, but not limited to, settling such claim or
litigation, after giving notice of the same to the indemnifying party,
on such terms as the indemnified party may deem appropriate, and (b)
the indemnifying party shall be entitled to participate in (but not
control) the defense of such action, with its counsel and at its own
expense. If the indemnifying party thereafter seeks to question the
manner in which the indemnified party defended such third party claim
or the amount or nature of any such settlement, the indemnifying party
shall have the burden to prove by a preponderance of the evidence that
the indemnified party did not defend or settle such third party claim
in a reasonably prudent manner as a prudent businessman would if his
own funds were subject to such suit.
6.5. MANNER OF INDEMNIFICATION.
All indemnification by either party hereunder shall be
effected by payment of cash or delivery of a certified or official bank
check in immediately available funds in the amount of the
indemnification liability.
6.6. LIMITATION ON INDEMNIFICATION.
Subject to any limitations contained therein, all
representations and warranties made by the parties herein or in any
instrument or document furnished in connection herewith shall survive
the Closing and any investigation at any time made by or on behalf of
the parties hereto and shall expire twenty-four months after the
Closing Date, except (i) as to any matter as to which a claim is
submitted in writing to the indemnifying party prior to the applicable
expiration date and identified as a claim for indemnification pursuant
to this Agreement; (ii) as to any representation or warranty relating
to ownership or title to the Shares or the Company's assets, including
real property, which shall not expire; (iii) as to any matter which is
based upon willful fraud by the indemnifying party, with respect to
which the representations and warranties set forth in this Agreement
shall expire only upon expiration of the applicable statute of
limitations plus one year; (iv) as to any representation or warranty
concerning tax or environmental matters, which shall expire only upon
the expiration of the applicable statute of limitations plus one year;
and (v) as to any representation or warranty concerning the authority
to execute this Agreement or any of the other documents contemplated
hereby, which shall not expire. No claim or action for indemnity
pursuant to Sections 6.1 or 6.2 hereof for breach of any representation
or warranty shall be asserted or maintained by any party hereto after
the expiration of such representation or warranty pursuant to the
preceding sentence
EX-77
except for claims made in writing prior to such expiration and actions
(whether instituted before or after such expiration) based on any claim
made in writing prior to such expiration. Notwithstanding any other
provisions contained in this Agreement, (i) neither Buyer nor Sellers
shall be entitled to receive any amount under this Section 6 which
exceeds Purchase Price; (ii) Buyer shall not be entitled to payment
with respect to breaches of representations and warranties by Sellers
(excluding those related to title to the Shares or the Company's
assets) except if the aggregate of all Losses with respect thereto
exceed the sum of $50,000, and in such event, Buyer shall be entitled
to indemnification for all such Losses; and (iii) Sellers shall not be
entitled to payment with respect to breaches of representations and
warranties by Buyer except if the aggregate of all Losses with respect
thereto exceed the sum of $50,000, and in such event, Sellers shall be
entitled to indemnification for all such Losses.
6.7. SOLE BASIS FOR RECOVERY.
Unless specifically provided for elsewhere in this Agreement,
the parties intend Section 6. to be the exclusive method for
compensating each other for, or indemnifying each other against, claims
relating to the Company and the transactions contemplated by this
Agreement.
6.8. JOINT AND SEVERAL LIABILITY. The liability of Sellers
under this Section 6. shall be joint and several. Buyer shall not have
any obligation to xxxxxxxx its claims hereunder to minimize the
obligations of any of the Sellers.
7. DOCUMENTS TO BE DELIVERED AT CLOSING.
7.1. CLOSING DOCUMENTS DELIVERED BY SELLERS. Buyer shall have
received at the Closing the following documents, dated as of the
Closing Date:
7.1.1. RESIGNATIONS. Each of the Shareholders shall
resign his employment with the Company on terms regarding
confidentiality and noncompetition acceptable to Buyer, and,
upon the request of Buyer, the officers and directors of the
Company shall resign.
7.1.2. Stock certificates representing the Shares,
duly endorsed for transfer.
7.1.3. An opinion of counsel to Sellers in a form
acceptable to counsel to Buyer.
7.1.4. Certificates of good standing and existence
with respect to the Company.
7.1.5. All third party consents and approvals
required or necessary in connection with the consummation of
this Agreement.
7.1.6. Releases from the Sellers of any claims
against the Company in a form satisfactory to Buyer's counsel.
7.1.7. Non-competition agreements from each Seller in
a form satisfactory to Buyer's counsel.
7.1.8. Any other documents, certificates, or
instruments contemplated by this Agreement to be delivered by
Sellers to Buyer.
7.2. CLOSING DOCUMENTS DELIVERED BY BUYER. Sellers shall have
received at the Closing the following documents, dated as of the
Closing date:
7.2.1. Any documents, certificates, or instruments
contemplated by this Agreement to be delivered by Buyer to
Sellers.
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8. MISCELLANEOUS.
8.1. NOTICES.
All notices, requests, demands, and other communications
hereunder shall be in writing and shall be deemed given if delivered
personally or sent by fax during normal business hours of the
recipient, the next business day if sent by a national overnight
delivery service, charges prepaid, or three (3) days after mailed by
certified or registered mail, postage prepaid, return receipt
requested, to the parties, their successors in interest or their
assignees at the following addresses, or at such other addresses as the
parties may designate by written notice in the manner aforesaid:
If to Buyer:
TPS Coastal Electric, Inc.
000 Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xx. Xxxxxxx X. Xxxxxxxxxx
With a copy to:
First Reserve Corporation
0000 Xxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Fax No.: (000) 000-0000
and
Xxxxxx & Xxxxxx, L.L.P.
000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xx. Xxxxxxx X. Xxxxx
Fax No.: (000) 000-0000
If to Sellers:
Xxxx Xxxxxxx
000 Xxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxx 00000
Xxxxx Xxxxxxx
0000 Xxxxxxx Xxxx
Xxx Xxxx, Xxxxx 00000
Xxxxxxx Xxxx
0000 Xxxxxxx Xxxx
Xxx Xxxx, Xxxxx 00000
Xxxxx Xxxxxx
0000 Xxxxxxx
Xxxxxxxx, Xxxxx 00000
Xxxxxxx Xxxxxxx
0000X Xxxxxxx Xxxx
Xxx Xxxx, Xxxxx 00000
With copies to:
B. Xxxxx Xxxxxx
0000 Xxxxxxx Xxxxxx
XX-00
Xxx Xxxx, Xxxxx 00000
Fax No. (000) 000-0000
8.2. ASSIGNABILITY AND PARTIES IN INTEREST.
This Agreement shall inure to the benefit of and be binding
upon Buyer and Sellers and their respective successors and assigns,
provided, Sellers may not assign their rights and obligations without
the consent of Buyer.
8.3. GOVERNING LAW.
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE
APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN THAT
STATE.
8.4. COUNTERPARTS.
This Agreement may be executed simultaneously in one or more
counterparts, each of which shall be deemed an original, but all of
which shall constitute but one and the same instrument.
8.5. INDEMNIFICATION FOR BROKERAGE.
Buyer and Sellers each represent and warrant that no
broker or finder has acted on its behalf in connection with this Agreement or
the transactions contemplated hereby. In addition to the indemnification
obligations contained in Section 6, each party hereto agrees to indemnify and
hold harmless the others from any claim or demand for commissions or other
compensation by any broker, finder or similar agent who is or claims to have
been employed by or on behalf of such party.
8.6. PUBLICITY.
Sellers and Buyer agree that press releases and other
announcements to be made by any of them with respect to the
transactions contemplated hereby shall be subject to mutual agreement.
Notwithstanding the foregoing, Sellers and Buyer may respond to
inquiries relating to this Agreement and the transactions contemplated
hereby by the press, securities analysts, employees, or customers
without any notice or further consent of the other parties hereto.
8.7. COMPLETE AGREEMENT.
This Agreement, the Exhibits hereto, the Schedules and the
documents delivered pursuant to this Agreement contain or will contain
the entire agreement between the parties hereto with respect to the
subject matter hereof and shall supersede all previous oral and written
and all contemporaneous oral negotiations, commitments, and
understandings.
8.8. INTERPRETATION.
The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
8.9. SEVERABILITY.
Any provision of this Agreement which is invalid, illegal, or
unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity, illegality, or
unenforceability, without affecting in any way the remaining provisions
hereof in such jurisdiction or rendering that or any other provision of
this Agreement invalid, illegal, or unenforceable in any other
jurisdiction.
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8.10. KNOWLEDGE: DUE DILIGENCE INVESTIGATION.
All representations and warranties contained herein which are
made to the knowledge of Sellers or Buyer shall mean to the knowledge
of Sellers and/or Buyer based on, and assuming they had conducted, a
reasonable investigation of such matters.
8.11. EXPENSES AND TRANSACTIONS.
All fees, costs and expenses incurred by Buyer or Sellers in
connection with the transactions contemplated by this Agreement shall
be borne by the party incurring the same.
8.12. LIMIT ON INTEREST.
Notwithstanding anything in this Agreement to the contrary,
neither party hereto shall be obligated to pay interest at a rate
higher than the maximum rate permitted by applicable law.
8.13. SUBMISSION TO JURISDICTION.
Each of the parties hereto irrevocably consents that any legal
action or proceeding against it or any of its property with respect to
this Agreement or any other agreement executed in connection herewith
may be brought in a District Court of Xxxxxx County, Texas, any Federal
court of the United States of America located in Xxxxxx County, Texas,
or both, and by the execution and delivery of this Agreement each party
hereto hereby accepts with regard to any such action or proceeding for
itself and in respect of its property, generally and unconditionally,
the jurisdiction of the aforesaid courts.
8.14. ARBITRATION.
Any controversy, dispute, or claim arising out of, in
connection with, or in relation to, the interpretation, performance or
breach of this Agreement, including, without limitation, the validity,
scope, and enforceability of this Section 8.14, may at the election of
Buyer or Sellers be solely and finally settled by arbitration conducted
in Texas, by and in accordance with the then existing rules for
commercial arbitration of the American Arbitration Association, or any
successor organization; provided however, that this Section 8.14 shall
not apply nor be interpreted to affect the resolution of a Dispute
Notice through the arbitration procedures set forth in Section 2.3.3 of
this Agreement. Judgment upon any award rendered by the arbitrator(s)
may be entered by the state or Federal Court having jurisdiction
thereof. Any of the parties may demand arbitration by written notice to
the other and to the American Arbitration Association ("Demand for
Arbitration"). Any Demand for Arbitration pursuant to this Section 8.14
shall be made within 180 days from the date that the dispute upon which
the demand is based arose or the other parties shall have the option to
have such dispute adjudicated in a court of competent jurisdiction
pursuant to Section 8.13. The Arbitrators shall conduct the arbitration
in a manner in accordance with the laws of the State of Delaware and
the rules of the American Arbitration Association. The arbitrators may
only award compensatory damages and are specifically not empowered to
award punitive damages. The parties hereby expressly waive any right
any of them may have to punitive damages. The parties intend that this
agreement to arbitrate be valid, enforceable and irrevocable.
8.15. WAIVER OF PUNITIVE DAMAGES. The parties hereby expressly
waive any right any of them may have to punitive damages.
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IN WITNESS WHEREOF, the undersigned duly execute this Agreement as of
the date first written above.
SELLERS:
/s/ XXXX XXXXXXX
-----------------------------------------
Xxxx Xxxxxxx
/s/ XXXXX XXXXXXX
-----------------------------------------
Xxxxx Xxxxxxx
/s/ XXXXXXX XXXX
-----------------------------------------
Xxxxxxx Xxxx
/s/ XXXXX XXXXXX
-----------------------------------------
Xxxxx Xxxxxx
/s/ XXXXXXX XXXXXXX
-----------------------------------------
Xxxxxxx Xxxxxxx
BUYER:
TPS COASTAL ELECTRIC, INC.
By: /s/ XXXXXXX X. XXXXXXXXXX
--------------------------------------
Xxxxxxx X. Xxxxxxxxxx
President
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