EXHIBIT 10.19
STOCK PURCHASE AGREEMENT
BY AND AMONG
XXXXX X. XXXXX, XX., XXXXX X. XXXXX, XX., XXXX X. XXXXX, XXXXX XXXXX,
AND XXX XXX XXXXX XXXXX
SHAREHOLDERS OF
COR-VAL, INC.
AND
T-3 ENERGY SERVICES, INC.
DATED: FEBRUARY 29, 2000
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TABLE OF CONTENTS
STOCK PURCHASE AGREEMENT................................................... 1
RECITALS:.................................................................. 1
AGREEMENT:................................................................. 1
1. AGREEMENT TO SELL AND AGREEMENT TO PURCHASE............................ 2
1.1. PURCHASE OF SHARES FROM SHAREHOLDERS. ..................... 2
1.2. EXCLUDED ASSETS. .......................................... 2
1.3. ACQUISITION OF NON-PURCHASED SHARES......................... 2
1.4. FURTHER ASSURANCES. ....................................... 3
1.5. CLOSING. .................................................. 4
2. CONSIDERATION TO BE PAID BY BUYER. ................................... 4
2.1. PURCHASE PRICE FOR SHARES. ................................ 3
2.2. PAYMENT OF PURCHASE PRICE. ................................ 4
2.3. PURCHASE PRICE ADJUSTMENT. ................................ 5
3. REPRESENTATIONS AND WARRANTIES OF SELLERS. ........................... 8
3.1. ORGANIZATION AND GOOD STANDING. ........................... 8
3.2. AUTHORIZATION OF AGREEMENT. ............................... 8
3.3. OWNERSHIP OF SHARES. ...................................... 9
3.4. CAPITALIZATION. ........................................... 9
3.5. FINANCIAL CONDITION. ...................................... 9
3.6. PROPERTY OF THE COMPANY. .................................. 10
3.7. AGREEMENT NOT IN BREACH OF OTHER INSTRUMENTS. ............. 13
3.8. EMPLOYMENT AGREEMENTS; EMPLOYEE BENEFITS. ................. 13
3.9. LABOR AND EMPLOYMENT MATTERS. ............................. 17
3.10. LITIGATION. .............................................. 18
3.11. CONTRACTS. ............................................... 19
3.12. REGULATORY APPROVALS. .................................... 20
3.13. COMPLIANCE WITH LAW. ..................................... 21
3.14. INDEBTEDNESS FROM EMPLOYEES. ............................. 21
3.15. ACCOUNTS RECEIVABLE. ..................................... 21
3.16. INSURANCE. ............................................... 21
3.17. POWERS OF ATTORNEY AND SURETYSHIPS. ...................... 22
3.18. NO UNDISCLOSED LIABILITIES. .............................. 22
3.19. ENVIRONMENTAL MATTERS. ................................... 22
3.20. CONFLICT OF INTEREST. .................................... 23
3.21. TAXES. ................................................... 24
3.22. LIENS. ................................................... 30
3.23. OTHER INFORMATION. ....................................... 30
3.24. NO OTHER REPRESENTATIONS. ................................ 30
3.25. NO KNOWN BREACHES. ....................................... 30
4. REPRESENTATIONS AND WARRANTIES OF BUYER. ............................. 30
4.1. ORGANIZATION. ............................................. 30
4.2. CORPORATE AUTHORITY. ...................................... 30
4.3. AGREEMENT NOT IN BREACH OF OTHER INSTRUMENTS. ............. 31
4.4. INVESTMENT INTENT. ........................................ 31
4.5. REGULATORY AND OTHER APPROVALS. ........................... 31
4.6. NO KNOWN BREACHES. ........................................ 32
4.8. GUARANTEES BY SELLERS OF COMPANY DEBT. .................... 32
4.9. NO OTHER REPRESENTATIONS. ................................. 32
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TABLE OF CONTENTS
5. CERTAIN UNDERSTANDINGS AND AGREEMENTS OF THE PARTIES. ................ 32
5.1. COOPERATION IN LITIGATION. ................................ 32
5.2. TAX MATTERS. .............................................. 33
5.3. EMPLOYMENT, CONFIDENTIALITY, AND NON-COMPETE AGREEMENTS. .. 34
5.4. SALE OF PROPERTY TO THE COMPANY. .......................... 35
5.5. MERGER. ................................................... 35
5.6. PHASE I ENVIRONMENTAL ASSESSMENT. ......................... 35
6. INDEMNIFICATION. ..................................................... 36
6.1. INDEMNIFICATION BY SELLERS. ............................... 36
6.2. INDEMNIFICATION BY BUYER. ................................. 37
6.3. CLAIMS FOR INDEMNIFICATION. ............................... 38
6.4. DEFENSE BY INDEMNIFYING PARTY. ............................ 38
6.5. MANNER OF INDEMNIFICATION. ................................ 39
6.6. LIMITATIONS ON INDEMNIFICATION. ........................... 39
6.7. SOLE BASIS FOR RECOVERY. .................................. 40
6.8. LIABILITY OF THE SELLERS. ................................. 40
6.9. RELEASE FROM LIABILITY. ................................... 40
6.10. TAX BENEFIT. ............................................. 41
6.11. INSURANCE. ............................................... 41
6.12. ENVIRONMENTAL MATTERS. ................................... 41
6.13. ATTORNEY'S FEES. ......................................... 41
7. DOCUMENTS TO BE DELIVERED AT CLOSING. ................................ 41
7.1. CLOSING DOCUMENTS DELIVERED BY SELLERS. ................... 41
7.2. CLOSING DOCUMENTS DELIVERED BY BUYER. ..................... 42
8. RELEASE. .................................................... 43
9. MISCELLANEOUS. ....................................................... 44
9.1. NOTICES. .................................................. 44
9.2. ASSIGNABILITY AND PARTIES IN INTEREST. .................... 45
9.3. GOVERNING LAW. ............................................ 44
9.4. COUNTERPARTS. ............................................. 46
9.5. INDEMNIFICATION FOR BROKERAGE. ............................ 46
9.6. PUBLICITY. ................................................ 46
9.7. COMPLETE AGREEMENT. ....................................... 46
9.8. INTERPRETATION. ........................................... 46
9.9. SEVERABILITY. ............................................. 47
9.10. KNOWLEDGE: DUE DILIGENCE INVESTIGATION. ................. 47
9.11. EXPENSES OF TRANSACTIONS. ................................ 47
9.12. LIMIT ON INTEREST. ....................................... 47
9.13. SUBMISSION TO JURISDICTION. .............................. 47
9.14. ARBITRATION. ............................................. 47
9.15. WAIVER OF PUNITIVE DAMAGES. .............................. 48
9.16. REVIEW OF AGREEMENT; REPRESENTATION BY COUNSEL............. 48
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TABLE OF CONTENTS
EXHIBITS
EXHIBIT A ESCROW AGREEMENT
EXHIBIT B STOCKHOLDER AGREEMENT
EXHIBIT 1.2 EXCLUDED ASSETS
EXHIBIT 2.3.1 FORM OF CLOSING BALANCE SHEET
EXHIBIT 5.3.(1) EMPLOYMENT AGREEMENT
EXHIBIT 5.3.(2) NON-COMPETE AGREEMENT
EXHIBIT 5.4 PURCHASE AGREEMENT (ACT OF CASH SALE ATTACHED THERETO AS EXHIBIT B)
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TABLE OF CONTENTS
SCHEDULES
Schedule 1.3.2. Capital Contributions of Shareholders of Buyer
Schedule 2.2.1. Sellers' Wire Transfer Instructions
Schedule 3.1. Louisiana Parishes in which the Company does Business
Schedule 3.4. Shareholders' Agreement
Schedule 3.5.1. Financial Statements
Schedule 3.5.2.(ii)(b) Assets Transferred Other than in the Ordinary Course
of Business
Schedule 3.5.2(iii) Compensation Increases
Schedule 3.6.1. Real Property
Schedule 3.6.1.3 Exceptions to Good Operating Condition of Real Property
Schedule 3.6.2. Inventory
Schedule 3.6.3. Tangible Personal Property
Schedule 3.6.4. Intangible Personal Property
Schedule 3.6.5. Subsidiaries
Schedule 3.7. Consents
Schedule 3.8.1. Employment Agreements
Schedule 3.8.2. Employee Benefit Plans
Schedule 3.9. Labor and Employment Matters
Schedule 3.9.5. Part-time workers and unskilled office assistants
and laborers
Schedule 3.10. Litigation
Schedule 3.11. Contracts
Schedule 3.13. Compliance With Law Exceptions
Schedule 3.14. Employee Indebtedness
Schedule 3.15. Accounts Receivable
Schedule 3.16. Insurance
[Schedule 3.19. Environmental Matters
Schedule 3.20. Conflicts
Schedule 3.21.2. Taxable Years/Examinations (and copy of 1998
audit settlement)
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TABLE OF CONTENTS
Schedule 3.21.3. Tax Returns, etc.
Schedule 3.21.3.7. Tax Affiliates
Schedule 3.21.3.9 263A
Schedule 3.21.3.21. Tax Elections
Schedule 3.21.3.22. Tax Returns Within 60 Days
Schedule 3.21.3.23. State, local, or foreign jurisdictions in which the Company
is or at any time during the past 5 years subject to Tax
Schedule 3.22. Description of Company Indebtedness Guaranteed by Sellers;
Liens on Assets
Schedule 6.1.3. Due Diligence Materials
Schedule 9.5. Brokerage
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STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of this 29th day of February, 2000 by and among XXXXX X. XXXXX, XX.,
XXXXX X. XXXXX, XX., XXXX X. XXXXX, XXXXX XXXXX, and XXX XXX XXXXX XXXXX
(collectively, the "Sellers"), being all the shareholders of COR-VAL, INC., a
Louisiana corporation (Cor-Val, Inc. includes Cor-Val Services, Inc., a
Louisiana corporation and a wholly owned subsidiary of Cor-Val, Inc.
Hereinafter, the word "Company" refers to both entities on a consolidated basis
after June 30, 1999 and together as separate independent companies prior to June
30, 1999), and T-3 ENERGY SERVICES, INC., a Delaware corporation ("Buyer").
RECITALS:
1. Sellers own all outstanding shares of the common stock, par value
$100.00 (the "Shares"), of the Company.
2. The Company is engaged in the business of the following (the
"Business"):
(a) manufacturing and remanufacturing (1) angle body API
monogrammed chokes, (2) linear diaphragm actuators and mechanical
"Stepping" rotary actuators, and (3) global and angle style linear
control valves; and
(b) the repair of (1) valves used to control the flow of media
in the oil, gas, petrochemical and refinery applications and (2)
annular and ram type blowout preventors and handling tools used in the
exploration and production of hydrocarbons and/or petrochemicals.
3. SELLERS DESIRE TO SELL TO BUYER A PORTION OF THE SHARES, AND BUYER
DESIRES TO ACQUIRE A PORTION OF THE SHARES ON THE TERMS AND CONDITIONS
HEREINAFTER SET FORTH.
4. Immediately after Buyer's acquisition of the Purchased Shares (as
hereinafter defined) pursuant to this Agreement, Buyer and the Sellers, except
for Xxxxx X. Xxxxx, Xx. and Xxxxx Xxxxx, shall cause Cor-Val Acquisition Corp.,
a Louisiana corporation and a wholly owned subsidiary of the Buyer, to be merged
into the Company. In consideration of the merger, the Sellers (except Xxxxx X.
Xxxxx, Xx. and Xxxxx Xxxxx) shall each be given common stock in the Buyer in
exchange for that portion of the Shares owned by Sellers (except Xxxxx X. Xxxxx,
Xx. and Xxxxx Xxxxx) not included in the Purchased Shares.
AGREEMENT:
NOW, THEREFORE, in consideration of the premises and the mutual
promises contained herein, the parties hereto covenant and agree as follows:
1. AGREEMENT TO SELL AND AGREEMENT TO PURCHASE.
1.1. PURCHASE OF SHARES FROM SHAREHOLDERS.
On the terms and subject to the conditions set forth herein,
Sellers hereby sell, transfer, convey, assign and deliver to Buyer,
free and clear of all liens, pledges, encumbrances and claims
whatsoever, and Buyer hereby purchases, acquires, accepts, and
acknowledges receipt thereof from Sellers that portion of the Shares
set forth below under the column marked "Purchased Shares" (the
"Purchased Shares"):
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Sellers Purchased Shares Non-Purchased Shares
------- ---------------- --------------------
Xxxxx X. Xxxxx, Xx. 25 shares 0 shares
Xxxxx X. Xxxxx, Xx. 23.51 shares 1.49 shares
Xxxx X. Xxxxx 23.51 shares 1.49 shares
Xxxxx Xxxxx 25 shares 0 shares
Xxx Xxx Xxxxx Xxxxx 23.51 shares 1.49 shares
Sellers shall deliver to Buyer certificates representing the Purchased
Shares, duly endorsed for transfer at the Closing (as defined in
Section 1.3. hereof).
1.2. EXCLUDED ASSETS.
It is agreed and understood by the parties hereto that the
Company has distributed certain assets to the Sellers. Those assets are
hereinafter called "Excluded Assets" and are listed on Exhibit 1.2.
which is attached hereto and made a part hereof.
1.3. ACQUISITION OF NON-PURCHASED SHARES.
1.3.1. MERGER.
In connection with, and as part of the same transaction as,
Buyer's acquisition of the Purchased Shares pursuant to this Agreement,
Buyer and Sellers shall cause a merger of Cor-Val Acquisition Corp., a
wholly owned Louisiana subsidiary corporation of Buyer, with and into
the Company (the "Merger"). In accordance with the plan of the Merger,
each Seller (other than Xxxxx X. Xxxxx, Xx. and Xxxxx Xxxxx) shall
receive fully-paid, non-assessable shares of the single class of common
stock of Buyer having a value of $200,000 (the "Buyer Shares") in
exchange for their Non-Purchased Shares. Buyer, and its shareholders
and directors, shall cause the Buyer Shares to be entitled to the
rights set forth in the Stockholder Agreement (attached hereto as
Exhibit B) executed as of this date and attached hereto and made a part
hereof. The parties agree and acknowledge that the value of the
Non-Purchased Shares surrendered in the Merger by each Seller (except
Xxxxx X. Xxxxx, Xx. and Xxxxx Xxxxx) is $200,000.
1.3.2. TAX TREATMENT.
It is the intention of the parties that the Merger, together
with the capital contributions of the shareholders of Buyer (other than
Sellers) to Buyer (as set forth on Schedule 1.3.2. hereof), shall be
treated as a transaction described in Section 351 of the Internal
Revenue Code of 1986, as amended (the "Code"). To that end, Buyer
represents and warrants to Sellers that:
(1) the capital contributions to Buyer by the shareholders of
Buyer (other than Sellers) are proportionate in value to the
contribution by certain of the Sellers through the Merger;
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(2) the Sellers (other than Xxxxx X. Xxxxx, Xx. and Xxxxx
Xxxxx) and the shareholders of Buyer making the capital contributions
set forth on Schedule 1.3.2. shall have "control" of Buyer (within the
meaning of Section 368(c) of the Code) immediately after, and as a
result of, the transactions contemplated by this Agreement and the
Merger; and
(3) Buyer shall make all tax filings consistent with the tax
treatment of transactions as intended by the parties.
1.4. FURTHER ASSURANCES.
From time to time after the Closing, Sellers and Buyer, and
each of their respective successors, 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 Buyer or Sellers in order
to vest in Buyer all right, title and interest of Sellers in and to the
Purchased Shares and otherwise in order to carry out the purpose and
intent of this Agreement.
1.5. CLOSING.
The closing (the "Closing") of the transactions herein
contemplated shall take place on or before February 29, 2000, at the
offices of Liskow & Xxxxx located at One Shell Square, 000 Xxxxxxx
Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxx 00000 and be effective as of 10:00 a.m.,
local time, on the date hereof (the "Closing Date"). All actions taken
and all documents delivered at the Closing shall be deemed to have
occurred simultaneously.
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2. CONSIDERATION TO BE PAID BY BUYER.
2.1. PURCHASE PRICE FOR PURCHASED SHARES.
The purchase price for the Purchased Shares shall be an amount
("Purchase Price") equal to $16,121,000.00 plus or less, as the case
may be, any Adjustment Amounts (as defined in Section 2.3.4.).
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 amounts:
Sellers Gross Escrow Net Payable
------- ----- -------- -----------
Xxxxx X. Xxxxx, Xx. $3,344,200 0 $3,344,200
Xxxxx X. Xxxxx, Xx. $3,144,200 $403,025 $2,741,175
Xxxx X. Xxxxx $3,144,200 $403,025 $2,741,175
Xxxxx Xxxxx $3,344,200 $403,025 $2,941,175
Xxx Xxx Xxxxx Xxxxx $3,144,200 $403,025 $2,741,175
Notwithstanding anything herein contained to the contrary it is agreed
and understood by the parties hereto that the Escrow Amount shall be
paid only by the following Sellers in the following percentages:
Xxxxx X. Xxxxx, Xx. 25%
Xxxx X. Xxxxx 25%
Xxxxx Xxxxx 25%
Xxx Xxx Xxxxx Xxxxx 25%
2.2.2. RETENTION OF ESCROW.
Buyer shall place in an interest bearing escrow account (the
"Escrow Account") with Regions Bank through Xxx Xxxxxx (the "Escrow
Agent") $1,612,100.00 of the Purchase Price (the "Escrow Amount"),
which shall be subject to Section 6. and the Adjustment Amounts (as
defined in Section 2.3.4). Distribution of the Escrow Amount shall be
pursuant to an Escrow Agreement in the form of Exhibit A. The Escrow
Amount, after taking into account any claims by Buyer against Sellers
pursuant to Section 6. of this Agreement and any
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Adjustment Amounts payable to Buyer to the extent not paid by Sellers,
shall be paid to Sellers with interest as follows:
2.2.2.1. On September 1, 2000, Buyer shall cause the
Escrow Agent to pay to Sellers, in the percentages set forth
in Section 2.2.1., $806,050.00, less (i) any amount claimed
pursuant to Section 6. by Buyer up to September 1, 2000, and
(ii) any Adjustment Amounts payable to Buyer to the extent not
paid by Sellers, including interest earned on any such amounts
in the Escrow Account.
2.2.2.2. On March 1, 2001, Buyer shall cause the
Escrow Agent to pay to Sellers, in the percentages set forth
in Section 2.2.1., any remaining portion of the Escrow Amount,
less (i) any amount claimed pursuant to Section 6. by Buyer
through March 1, 2001 and (ii) any Adjustment Amounts payable
to Buyer to the extent not paid by Sellers, including interest
earned on any such amounts in the Escrow Account.
2.3. PURCHASE PRICE ADJUSTMENTS.
2.3.1. PURCHASE PRICE. Seller shall prepare or cause to be
prepared and delivered to Buyer at the Closing a good faith preliminary
consolidated balance sheet of the Company as of February 29, 2000,
prepared in accordance with generally accepted accounting principles
consistently applied ("GAAP") on a basis consistent with the Financial
Statements as such term is used in Section 3.5.1. of this Agreement
(the "Closing Balance Sheet"). Upon request, the Sellers shall provide
to the Buyer and its, representatives, accountants, and advisors with
access to copies of all work papers and other relevant documents to
verify the entries contained in the Closing Balance Sheet. The Closing
Balance Sheet must include a calculation of (a) Net Working Capital
(defined as the Company's current assets, excluding obsolete and slow
moving items of Inventory (which have a total agreed value of
$267,000.00 as of December 31, 1999), less the Company's current
liabilities, excluding short-term debt and the current portion of long
term debt) in the amount of $3,118,000.00 and (b) Total Debt (defined
as the Company's combined short-term debt plus current portion of
long-term debt plus long-term debt (treating capital leases as
long-term debt) and shareholder loans) of not more than $1,279,000.00.
The form of Closing Balance Sheet, prepared by Xxxxxx Xxxxxxxx LLP, for
use by Sellers is attached to this Agreement as Exhibit 2.3.1.
2.3.2.
In the event the preliminary determination of Net Working
Capital as set forth on the Closing Balance Sheet is greater (applying
GAAP) than $3,118,000.00, the amount in excess will be paid at Closing
by wire transfer by Buyer to Sellers in the percentages set forth in
Section 2.2.1. Further, in the event the preliminary determination of
Total Debt (applying GAAP) as set forth on the Closing Balance Sheet is
less than $1,279,000.00, the amount of the decrease will
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be paid at Closing by wire transfer by Buyer to Sellers in the
percentages set forth in Section 2.2.1. On the other hand, if the
preliminary determination of Net Working Capital as set forth in the
Closing Balance Sheet is less (applying GAAP) than $3,118,000.00 and/or
the preliminary determination of Total Debt is greater (applying GAAP)
than $1,279,000.00, then the Purchase Price shall be reduced by the Net
Working Capital deficiency amount and/or the Total Debt excess amount,
as the case may be. Notwithstanding the foregoing, no adjustment shall
occur on account of a change in Total Debt to the extent such change
has been compensated through the Net Working Capital adjustment.
Further, notwithstanding anything herein contained to the contrary,
there shall be no purchase price adjustments under Section 2.3. for the
following: (1) capital expenditures for the purchase of fixed assets
that are listed on Schedule 2.3.2. that have been approved by Xxxxxxx
Xxxxxxxxxx on behalf of Buyer; and (2) Buyer and Sellers accept the
Inventory adjustments made as of June 30, 1999 and the Inventory value
as of June 30, 1999, and Buyer and Sellers agree that there will be no
additional step-up in value (beyond the $287,000.00 step-up on July 1,
1999) for the Inventory between June 30, 1999 and the Closing Date
without first obtaining the written consent of Buyer, and no further
Inventory value adjustments will be made by Sellers or Buyer except for
an adjustment based on actual count. Buyer understands and acknowledges
that on or before the Closing, Sellers intend to cause the Company to
distribute to Sellers cash in an amount equal to sum of (i) the net
income of the Company for the taxable period ended December 31, 1999
and (ii) the net income of the Company for the taxable period from
January 1, 2000 through the Closing Date. Sellers and Buyer understand
and acknowledge that the foregoing may reduce the Net Working Capital
of the Company.
2.3.3. On or before 60 days after the Closing Date, the
Company shall cause the accounting firm of Xxxxxx Xxxxxxxx LLP to audit
the Closing Balance Sheet in accordance with GAAP, and deliver the
audited Closing Balance Sheet (the "Audited Closing Balance Sheet") to
Buyer and Sellers in order to determine the "Adjustment Amounts" (as
defined below in Section 2.3.4.). Upon reasonable notice and during
reasonable business hours, Buyer agrees that the Company shall allow
Sellers and Sellers' Accountant access to the persons involved in the
preparation of the Audited Closing Balance Sheet and to all of their
work-papers so as to permit Sellers and Sellers' Accountant to make
copies of such work-papers supporting the amounts included in the
Audited Closing Balance Sheet and to reasonably review the accounting
procedures, tests, methods and approaches utilized by Xxxxxx Xxxxxxxx
LLP.
2.3.4. On or before the 30th day following delivery of the
Audited Closing Balance Sheet pursuant to Section 2.3.3., Sellers shall
notify Buyer in writing of any objections to the Audited Closing
Balance Sheet (and the determination of the Adjustment Amounts) as not
complying with the requirements of Section 2.3., specifying in
reasonable detail any such objections (a "Dispute Notice"). If (i)
Sellers do not deliver a Dispute Notice within the time period
specified above for delivery of a Dispute Notice (the "Notice Period"),
or
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(ii) prior to the expiration of the Notice Period, Sellers indicate in
writing to Buyer that Sellers relinquish their right to object to the
Audited Closing Balance Sheet, or (iii) Buyer and Sellers agree on the
resolution of all such objections or changes at any time subsequent to
the expiration of the Notice Period, the Audited Closing Balance Sheet,
with any such changes as are agreed upon, shall be final and binding on
the parties hereto. If Sellers and Buyer are unable to resolve the
matters addressed in any Dispute Notice, each party shall within
fourteen (14) business days after the delivery of such Dispute Notice,
summarize its position with regard to such dispute in a written
document of ten pages or less and submit such summaries to the New
Orleans, Louisiana office of, KPMG, or such other party as the parties
may mutually select (the "Accounting Arbitrator"), together with the
Dispute Notice and any other documentation either party may desire to
submit. The fees of the Accounting Arbitrator shall be split equally
between Buyer and Sellers. The Accounting Arbitrator shall render a
decision regarding such dispute in accordance with this Agreement,
based on the materials described above and based upon the books and
records of the Company within twenty business days of the submission of
such materials. Any decision rendered by the Accounting Arbitrator
pursuant hereto shall be final and binding between the parties for the
purpose of determining the Adjustment Amounts under this Section 2.3.
Within ten days after the final determination of the Audited Closing
Balance Sheet pursuant to this Section 2.3.4., the following
adjustments to the Purchase Price shall occur: (i) to the extent that
the Net Working Capital balance on the Audited Closing Balance Sheet
(applying GAAP) is different from the Net Working Capital balance set
forth on the Closing Balance Sheet, then (a) any excess amount shall be
paid by Buyer to Sellers or (b) any shortfall or deficiency amount
shall be paid by Sellers to Buyer; and (ii) to the extent that the
Total Debt amount set forth on the Audited Closing Balance Sheet
(applying GAAP) is different from the Total Debt amount set forth on
the Closing Balance Sheet, then (x) the amount of any decrease shall be
paid by Buyer to Sellers or (y) the amount of any increase shall be
paid by Sellers to Buyer. Notwithstanding the foregoing, no adjustment
shall occur on account of a change in Total Debt to the extent such
change has been compensated through the Net Working Capital adjustment.
Payments under this Section 2.3.4. shall be in immediately available
funds by wire transfer, and all such payments to Sellers shall be in
the percentages set forth in Section 2.2.1. above. If Sellers fail to
make any payment to Buyer required by this Section 2.3.4., then Buyer
is authorized but not required to apply any or all of the Escrow Amount
to such payment. The term "Adjustment Amounts" as used in this Section
2.3. shall mean any payments, as adjusted, and/or reductions to the
Purchase Price made by Buyer to Sellers or by Sellers to Buyer pursuant
to Sections 2.3.2. and 2.3.4. of this Agreement.
3. REPRESENTATIONS AND WARRANTIES OF SELLERS.
With the exception of the representations and warranties contained in
Sections 3.1., 3.2., 3.3., 3.4. and 3.21., all of the representations and
warranties in this Section 3. are made solely on Sellers' knowledge and any and
all liability for indemnification under Section 6. for a breach of a
representation and warranty or any misrepresentation contained in any Schedule,
certificate or other documents furnished by Sellers pursuant Section 7.1. of
this Agreement shall be limited to
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the failure by Sellers to disclose the cause of such breach or misrepresentation
of which Sellers have knowledge. Sellers represent and warrant to Buyer that:
3.1. ORGANIZATION AND GOOD STANDING.
Each of the Company and the Subsidiaries (as defined in
Section 3.6.5.) is duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it was formed,
with full power to carry on its business as it is now and has since its
organization been conducted, and to own, lease or operate its assets.
Either the Company or one of the Subsidiaries is duly authorized to do
business and is in good standing in such other jurisdictions in which
the failure to so qualify could have a material and adverse effect on
the results of operations, properties, assets, condition (financial or
otherwise), or prospects of the Company (a "Material Adverse Effect").
Schedule 3.1. is a listing of the Louisiana parishes in which the
Company does business and the Louisiana parishes adjacent to offshore
waters in which the Company does business.
3.2. AUTHORIZATION OF AGREEMENT.
Sellers have all requisite power and authority to enter into
this Agreement and to consummate the transactions contemplated hereby.
This Agreement and all other agreements and instruments to be executed
by Sellers in connection herewith have been duly executed and delivered
by Sellers, have been effectively authorized by all necessary action,
corporate or otherwise, and constitute legal, valid and binding
obligations of Sellers.
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3.3. OWNERSHIP OF SHARES.
The Shares are owned beneficially and of record by Sellers,
and are being transferred to Buyer free and clear of all liens,
mortgages, charges, option rights, pledges, security interests,
restrictions, prior assignments, encumbrances and claims of any kind or
nature whatsoever. No Shares are subject to any restriction with
respect to their transferability (other than restrictions on transfer
under applicable Federal and state securities laws).
3.4. CAPITALIZATION.
The authorized capital stock of the Company consists of 1,000
shares of common stock, par value $100.00, of which 125 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. Other than as disclosed on Schedule
3.4., there are no outstanding or authorized options, warrants,
subscriptions, calls, puts, conversion or other rights, contracts,
agreements, commitments or understandings of any kind obligating the
Company to issue, sell, purchase, return, redeem or pay any
distribution or dividend with respect to any shares of capital stock of
the Company or any other securities convertible into, exchangeable for
or evidencing the right to subscribe for any shares of capital stock of
or other ownership interest in the Company.
3.5. FINANCIAL CONDITION.
3.5.1.
Financial Statements. Schedule 3.5.1. sets forth the
following financial information: (i) the balance sheet of
Cor-Val, Inc. as of June 30, 1999, March 31, 1999, March 31,
1998, and March 31, 1997, and the related statements of
operations for the three months ended June 30, 1999 and each
of the three years in the period ended March 31, 1999, and
(ii) the balance sheet of Cor-Val Services, Inc. as of June
30, 1999, December 31, 1998 and December 31, 1997, and the
related statements of operations for the six months ended June
30, 1999 and each of the two years in the period ended
December 31, 1998 (collectively, the "Financial Statements").
The Financial Statements of Cor-Val, Inc. as of and for the
year ended March 31, 1999 and the three months ended June 30,
1999 and of Cor-Val Services, Inc. as of and for the year
ended December 31, 1998 and the six months ended June 30, 1999
were prepared in accordance with GAAP.
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3.5.2.
Absence of Certain Changes. Since June 30, 1999 (the
"Balance Sheet Date") there has not been (i) any damage,
destruction or loss, whether or not covered by insurance,
which, if not covered by insurance, could be a Material
Adverse Effect on the Company or its Subsidiaries; (ii) any
sale or transfer of any of the assets of the Company except
(a) sales in the ordinary course of the business of inventory
or immaterial amounts of other tangible personal property and
(b) for the transfers listed on Schedule 3.5.2.(ii)(b); (iii)
except as discussed on Schedule 3.5.2. (iii)any increase in,
or commitment to increase, the compensation payable or to
become payable to any of the Company's employees or any bonus
payment (other than as included as an accrued liability on the
Company's June 30, 1999 Financial Statement) or similar
arrangement made to or with any of the Company's employees
other than routine increases made in the ordinary course of
business not exceeding the greater of five percent per annum
or Two Thousand Dollars ($2,000) per annum for any of them
individually; (iv) any adoption of a plan or agreement or
amendment to any plan or agreement providing any new or
additional fringe benefits; or (v) except for adjustments due
to the acquisition of stock of Cor-Val Services, Inc., any
material alteration in the manner of keeping the Company's
books, accounts or records, or in the accounting practices
therein reflected. Since the Balance Sheet Date, the Company
has not (except with the prior written consent of Buyer): (a)
entered into any material transaction not in the ordinary
course of business; or (b) materially amended, modified, or
terminated any material Contract (as defined in Section
3.11.1.) other than in the ordinary course of its business.
3.6. PROPERTY OF THE COMPANY.
3.6.1.
Real Property. There is listed in Schedule 3.6.1. a
description of each parcel of real or immovable property owned
by or leased to the Company, or owned by or leased to Sellers
for use by the Company. Except as indicated in Schedule
0.0.0.:
3.6.1.1. Each of the leases described in
Schedule 3.6.1. is a valid and binding obligation of
the Company or Sellers, as the case may be, and
Sellers do not have any knowledge that any of said
leases is not a valid and binding obligation of each
of the other parties thereto;
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3.6.1.2. the Company and Sellers are not,
and Sellers do not have any knowledge that any other
party to any such lease is, in default with respect
to any material term or condition thereof, and
Sellers do not have any knowledge that any event has
occurred which through the passage of time or the
giving of notice, or both, would constitute a default
thereunder or would cause the acceleration of any
obligation of any party thereto or the creation of a
lien or encumbrance upon any asset of the Company;
3.6.1.3. Except as disclosed on Schedule
3.6.1.3., all of the buildings, fixtures and other
improvements located on the real or immovable
property described in Schedule 3.6.1. are in good
operating condition and repair, and the Company or
Sellers, as the case may be, holds a valid and
effective occupational license and all other permits
and licenses required by applicable law relating to
the operation of such real properties and leaseholds.
Neither the Company nor Sellers have received notice
that the Company's operations at the real or
immovable property listed in Schedule 3.6.1. as
presently conducted is in violation of any applicable
building code, zoning ordinance or other law or
regulation;
3.6.1.4. Neither the Company nor Sellers, as
the case may be, have experienced during the two
years preceding the date hereof any material
interruption in the delivery of adequate quantities
of any utilities (including, without limitation,
electricity, natural gas, potable water, water for
cooling or similar purposes and fuel oil) or other
public services (including, without limitation,
sanitary and industrial sewer service) required by
the Company during such period.
3.6.2.
Inventory. There is listed in Schedule 3.6.2. a
description of all inventories of (i) valves, chokes,
actuators, manifolds, blow out preventers, and miscellaneous
pressure control and drilling products; (ii) raw material,
work in progress, finished goods, containers, tote bins, and
other packaging material, spare parts, maintenance supplies;
and (iii) other similar items of the Company (the
"Inventory"). Except for items of Inventory that are obsolete
and/or slow moving for sale or rental purposes and steel
casting, the Inventory of the Company is good and merchantable
and is salable 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 0.0.0.: (i) a description and the location of each
item of tangible personal property (other than Inventory)
owned by the Company or in the possession of the Company
having on the date hereof a depreciated book value per unit in
excess of Five Thousand Dollars ($5,000); (ii) an
identification of the owner of, and any agreement relating to
the use of, each item of tangible personal property under
leases or other similar agreements which provide for rental
payments at a rate in excess of Two Hundred Fifty Dollars
($250) per month; and (iii) an identification of the owner of,
and any agreement relating to the use of, each motor vehicle
not owned by the Company, the rights to which are to be
transferred to Buyer pursuant hereto;
3.6.4.
Intangible Personal Property. There is listed in
Schedule 0.0.0.: an identification of all (i) foreign and
United States Federal or state patents, patent applications,
invention disclosures, copyrights, copyright registrations,
trademarks, trademark registrations, service marks, service
xxxx registrations, trade names, trade name registrations and
applications for any of the foregoing, owned or used by the
Company; (ii) claims of copyright that exist although no
registrations have been issued with respect thereto; and (iii)
fictitious or assumed
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business name filings with any state or local governmental
authority ("intangible personal property"). Schedule 3.6.4.
also sets forth a true and complete list of all licenses or
similar agreements or arrangements to which the Company is a
party either as licensee or licensor for each such item of
intangible personal property. Except as indicated in Schedule
0.0.0.:
3.6.4.1. In the past two (2) year(s), there have not been any regulatory
actions or other judicial or adversary proceedings involving the Company
concerning any of such items of intangible personal property, nor is any
such action or proceeding threatened;
3.6.4.2. The Company has the right and authority to use said items of
intangible personal property in connection with the conduct of its
business in the manner presently conducted and, subject to the receipt of
those consents listed on Schedule 3.7., to convey such right and
authority to Buyer, and such use does not conflict with, infringe upon or
violate any patent, trademark, servicemark, trade name, registration or
similar rights of any other person, firm or corporation;
3.6.4.3. There are no outstanding, or threatened, disputes or
disagreements with respect to any licenses or similar agreements or
arrangements described in Schedule 3.6.4.; and
3.6.4.4.
The conduct of its business by the Company
does not conflict with any patents, trademarks, trade
secrets, trade names or similar rights of others.
3.6.5. SUBSIDIARIES
The Company owns one hundred percent (100%) of the
issued and outstanding stock of Cor-Val Services, Inc., a
Louisiana corporation. Set forth on Schedule 3.6.5 is (i) a
list of all other entities in which the Company holds a 50% or
greater interest (the "Subsidiaries"), (ii) a list of all
other entities in which the Company owns or holds any
interest, and (iii) the percentage ownership of the Company in
each such entity. There are no options, warrants, convertible
debt or other similar instruments entitling anyone to acquire
any capital stock or other equity interest of any of the
Subsidiaries.
3.7. AGREEMENT NOT IN BREACH OF OTHER INSTRUMENTS.
With the exception of master services agreements, the
execution and delivery of this Agreement by Sellers and the
consummation of the transactions contemplated hereby will not result in
a breach of any of the terms and provisions of, or constitute a default
under, or conflict with: (i) any Contract or any other material
agreement, indenture or other instrument to which Sellers or the
Company is a party or by which any of them is bound, subject to the
receipt of those consents listed on Schedule 3.7. which have been
obtained and provided to Buyer, (ii) the Articles of Incorporation and
Bylaws of the Company and each of the Subsidiaries, (iii) any judgment,
decree, order or award of any court, governmental body or arbitrator,
or (iv) any law, rule or regulation applicable to Sellers or the
Company.
3.8. EMPLOYMENT AGREEMENTS AND EMPLOYEE BENEFITS.
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
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hand, and any current or former stockholder, officer,
director, employee, consultant, or agent of the Company or a
Subsidiary, on the other hand, that are currently in effect.
Except as set forth on Schedule 3.8.1. there are no Employment
Agreements or any other similar agreements to which the
Company or any of its Subsidiaries is a party under which the
transactions contemplated by this Agreement (i) will require
any payment by the Company, a Subsidiary or Buyer, or any
consent or waiver from any stockholder, officer, director,
employee, consultant or agent of the Company, a Subsidiary or
Buyer, or (ii) will result in any change in the nature of any
rights of any stockholder, officer, director, employee,
consultant or agent of the Company or a Subsidiary under any
such Employment Agreement or other similar agreement.
3.8.2.
Schedule 3.8.2. sets forth Employee Benefit Plans of
the Company and its Subsidiaries. The Company has made true
and correct copies of all governing instruments and related
agreements pertaining to such benefit plans available to
Buyer.
3.8.3.
Neither the Company, any Subsidiary nor any of their
ERISA Affiliates sponsors or has ever sponsored, maintained,
contributed to, or incurred an obligation to contribute to,
any Employee Pension Benefit Plan.
3.8.4.
No individual shall accrue or receive additional
benefits, service or accelerated rights to payments of
benefits under any Employee Benefit Plan, including the right
to receive any parachute payment, as defined in Section 280G
of the Code, or become entitled to severance, termination
allowance or similar payments as a direct result of the
transactions contemplated by this Agreement.
3.8.5.
No Employee Benefit Plan has participated in, engaged
in or been a party to any non-exempt Prohibited Transaction,
and neither the Company, a Subsidiary nor any of their ERISA
Affiliates has had asserted against it any claim for taxes
under Chapter 43 of Subtitle A of the Code and Sections 5,000
of the Code , or for penalties under ERISA Section 502(c), (i)
or (l), with respect to any Employee Benefit Plan nor, to the
knowledge of the Shareholders, is there a basis for any such
claim. No officer, director or employee of the Company or a
Subsidiary of the Company has committed a material breach of
any responsibility or obligation imposed upon fiduciaries by
Title I of ERISA with respect to any Employee Benefit Plan.
3.8.6.
Other than routine claims for benefits, there is no
claim pending or to the knowledge of the Company and
Shareholders threatened, involving any Employee Benefit Plan
by any Person against such plan or the Company, any Subsidiary
or
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any ERISA Affiliate. There is no pending or to the knowledge
of the Company and Shareholders threatened proceeding
involving any Employee Benefit Plan before the IRS, the U.S.
Department of Labor or any other governmental authority.
3.8.7.
There is no violation of any reporting or disclosure
requirement imposed by ERISA or the Code with respect to any
Employee Benefit Plan.
3.8.8.
Each Employee Benefit Plan has at all times prior
hereto been maintained in all material respects, by its terms
and in operation, in accordance with ERISA and the Code. The
Company, each Subsidiary and their ERISA Affiliates have made
full and timely payment of all amounts required to be
contributed under the terms of each Employee Benefit Plan and
applicable law or required to be paid as expenses under such
Employee Benefit Plan, and the Company, each such Subsidiary
and their ERISA Affiliates shall continue to do so through the
Closing. Each Employer Benefit Plan intended to be qualified
under Code Section 401(a) has received a determination letter
to that effect from the Internal Revenue Service and no event
has occurred and no amendment has been made that would
adversely affect such qualified status.
3.8.9.
With respect to any group health plans maintained by
the Company, any Subsidiary or their ERISA Affiliates, whether
or not for the benefit of the Company's or such Subsidiary's
employees, the Company and its ERISA Affiliate have complied
in all material respects with the provisions of Part 6 of
Title I of ERISA and 4980B of the Code. Neither the Company
nor any Subsidiary is obligated to provide health care
benefits of any kind to its retired employees pursuant to any
Employee Benefit Plan, including without limitation any group
health plan, or pursuant to any agreement or understanding.
3.8.10.
The Company has made available to the Buyer a copy of
(i) the three (3) most recently filed Federal Form 5500 series
and accountant's opinion, if applicable, for each Employee
Benefit Plan and all applicable Internal Revenue Service
determination letters.
3.8.11.
For purposes of this Section 3.8., the following
definitions shall apply:
3.8.11.1.
"Benefit Arrangement" means any material
benefit arrangement that is not an Employee Benefit
Plan, including, without limitation, (i) each
employment or consulting agreement, (ii) each
arrangement providing for insurance coverage or
workers' compensation benefits,
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(iii) each incentive bonus or deferred bonus
arrangement, (iv) each arrangement providing
termination allowance, severance or similar benefits,
(v) each equity compensation plan, (vi) each deferred
compensation plan and (vii) each compensation policy
and practice maintained by the Company or any ERISA
Affiliate covering the employees, former employees,
directors and former directors of the Company, and
the beneficiaries of any of them.
3.8.11.2.
"COBRA" means the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended, as set
forth in Section 4980B of the Code and Part 6 of
Title I of ERISA.
3.8.11.3.
"Code" means the Internal Revenue Code of
1986, as amended.
3.8.11.4.
"Employee Benefit Plan" means any employee
benefit plan, as defined in Section 3(3) of ERISA,
that is sponsored or contributed to by the Company or
any ERISA Affiliate covering employees or former
employees of the Company.
3.8.11.5.
"Employee Pension Benefit Plan" means any
employee pension benefit plan, as defined in Section
3(2) of ERISA, that is subject to Title IV of ERISA.
3.8.11.6.
"ERISA" means the Employee Retirement Income
Security Act of 1974, as amended.
3.8.11.7.
"ERISA Affiliate" of any person means any
other person that, together with such person as of
the relevant measuring date under ERISA, was or is
required to be treated as a single employer under
Section 414 of the Code.
3.8.11.8.
"Prohibited Transaction" means a transaction
that is prohibited under Section 4975 of the Code or
Section 406 of ERISA and not exempt under Section
4975 of the Code or Section 408 of ERISA,
respectively.
3.9. LABOR AND EMPLOYMENT MATTERS.
3.9.1.
Except as set forth on Schedule 3.9.1., no collective
bargaining agreement exists that is binding on the Company or
any Subsidiary and, except as described
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on Schedule 3.9.1., no petition has been filed or proceedings
instituted by an employee or group of employees with any labor
relations board seeking recognition of a bargaining
representative. Schedule 3.9.1. describes any organizational
effort currently being made or threatened by or on behalf of
any labor union to organize any employees of the Company or
any Subsidiary.
3.9.2.
Except as set forth on Schedule 3.9.2., (i) there is
not now, and never has been, any labor strike, dispute, slow
down or stoppage pending or, to the Shareholders' knowledge,
threatened, against or directly affecting the Company or any
Subsidiary, (ii) no grievance or arbitration proceeding
arising out of or under any collective bargaining agreement is
pending, and no claims therefor exist; and (iii) neither the
Company, any Subsidiary nor any Shareholder has received any
notice or has any knowledge of any threatened labor or civil
rights dispute, controversy or grievance or any other unfair
labor practice proceeding or breach of contract claim or
action with respect to claims of, or obligations to, any
employee or group of employees of the Company or any
Subsidiary.
3.9.3.
If required under the Workers Adjustment and
Retraining Notification Act or other applicable state law
regulating plant closing or mass layoffs, the Company and its
Subsidiaries have timely caused there to be filed or
distributed, as appropriate, all required filings and notices
with respect to employment losses occurring through the
Closing Date.
3.9.4.
The Company and its Subsidiaries have complied and
are currently complying, in respect of all employees of the
Company and its Subsidiaries with all applicable laws
respecting employment and employment practices and the
protection of the health and safety of employees, from
whatever source such law may be derived, including, without
limitation, statutes, ordinances, laws, rules, regulations,
policies, standards, judicial or administrative precedents,
judgments, orders, decrees, awards, citations, licenses,
official interpretations and guidelines , except for such
instances which are not, in the aggregate, material.
3.9.5.
Other than part-time and unskilled office assistants
and laborers, all individuals who are performing or have
performed services for the Company, any Subsidiary and are or
were classified by the Company or any Subsidiary as
"independent contractors" qualify for such classification
under Section 530 of the Revenue Act of 1978 or Section 1706
of the Tax Reform Act of 1986, as applicable, except for such
instances which are not, in the aggregate, material. Part-time
workers and unskilled office assistants and laborers of the
Company are not on the Company's payroll and have been issued
1099 forms by the Company.
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The said part-time workers and unskilled office assistants and
laborers are identified on Schedule 3.9.5.
3.9.6. The Company and its Subsidiaries have complied
and are currently complying with the Americans With
Disabilities Act, 42 U.S.C.ss.12101, et seq., and all
applicable state laws prohibiting discrimination against
qualified individuals with disabilities and requiring access
accommodations.
3.10. LITIGATION.
3.10.1.
Except for (i) claims listed in Schedule 3.10. and
(ii) claims for the collection of accounts arising out of the
sale or purchase of goods or services in the ordinary course
of business involving less than $10,000 individually or
$100,000 in the aggregate, there are no claims, disputes,
actions, proceedings or investigations of any nature pending
or threatened against the Company, or any of the officers,
partners, shareholders, affiliates or employees of the
Company.
3.10.2.
No claim, action, suit, investigation, or other
proceeding is pending or threatened before any court or
governmental agency which presents a risk of the restraint or
prohibition of the transactions contemplated by this Agreement
or the obtaining of indemnification or other relief in
connection therewith.
3.11. CONTRACTS.
3.11.1.
Schedule 3.11. sets forth a true and correct list of
each contract to which the Company is a party, including but
not limited to any and all master service contracts, or to
which any Seller is a party and which relates to the business
of the Company ("Contracts"), except:
3.11.1.1.
Agreements for the purchase by the Company of goods,
materials or services in the ordinary course of business
involving less than $10,000 in consideration in each such
case;
3.11.1.2.
Agreements for the sale, rental or service by the
Company of goods or services in the ordinary course of
business in which the payment to be received pursuant to each
such agreement is less than $10,000 for each such non-listed
agreement;
3.11.1.3.
Agreements which are terminable at will by the
Company upon no more than 60 days notice without penalty,
default or liability and involving an amount less than
$10,000; and
3.11.1.4.
Agreements continuing for a period of six months or
less involving an amount less than $10,000 for each such
nonlisted agreement.
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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 material default
under any Contract on the part of the Company or on
the part of the other parties thereto; and there has
not occurred any event which with the giving of
notice or the lapse of time, or both, would
constitute any material default under any of the
Contracts; and
3.11.2.4.
Except as provided in the Contracts, the
Company is not, outside the ordinary course of
business, under any liability or obligation with
respect to the return of inventory or products sold,
rented or serviced by it which are in the possession
of distributors, wholesalers, retailers or other
customers.
3.11.2.5. Except as set forth in Schedule
3.11, the Company has not committed a past breach of
any of its master service contracts.
3.12. REGULATORY APPROVALS.
All material consents, approvals, authorizations and other
requirements prescribed by any law, rule or regulation which must be
obtained or satisfied by the Company or Sellers and which are necessary
for the execution and delivery by Sellers of this Agreement and the
documents to be executed and delivered by Sellers in connection
herewith have been obtained and satisfied.
3.13. COMPLIANCE WITH LAW.
Except as disclosed on Schedule 3.13., the Company has not,
and its business as presently conducted does not, violate, in any
respect any Federal, state, local or foreign laws, regulations or
orders (including, but not limited to, any of the foregoing relating to
employment discrimination, occupational safety, the Americans With
Disabilities Act, environmental protection, conservation, or corrupt
practices), the enforcement of which
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would have a Material Adverse Effect, and the Company has not received
any notice of any such violation. Sellers have obtained all permits,
approvals, and consents of all governmental bodies or agencies
necessary or appropriate so that consummation of the transactions
contemplated by this Agreement will be in compliance with applicable
laws.
3.14. INDEBTEDNESS FROM EMPLOYEES.
Except as set forth in Schedule 3.14. no employee of the
Company are indebted to the Company, except for advances made to any
employees in the ordinary course of business to meet reimbursable
business expenses anticipated to be incurred by such employee.
3.15. ACCOUNTS RECEIVABLE.
Except as set forth in Schedule 3.15. or unless the customer
files or is forced into bankruptcy, the accounts, accounts receivable,
notes and notes receivable of the Company existing on September 30,
1999 arose out of the sales of inventory or services in the ordinary
course of business and are collectible in full, net of the reserve set
forth in the Company's June 30, 1999 Financial Statement included in
Schedule 3.5.1., which reserves are reasonable and were calculated
consistent with past practices. Further, as set forth in Schedule
3.15., a reserve has been established in the amount of $45,117.00 for
certain accounts. In the event the Company and/or Buyer collects any
payments attributable to said reserve, all such payments shall be
promptly paid to Sellers.
3.16. INSURANCE.
Schedule 3.16. sets forth a true and correct list of all
insurance policies either maintained by the Company or maintained by
any other person which relate to the Company in any manner whatsoever
at the date hereof. There are no outstanding requirements or
recommendations by any insurance company that issued any such policy or
by any Board of Fire Underwriters or other similar body exercising
similar functions or by any governmental authority exercising similar
functions which requires or recommends any changes in the conduct of
the business of, or any repairs or other work to be done on or with
respect to any of the properties or assets of, the Company. The Company
has not received any notice or other communication from any such
insurance company within the three (3) years preceding the date hereof
canceling or materially amending or materially increasing the annual or
other premiums payable under any of said insurance policies, and no
such cancellation, amendment or increase of premiums is threatened.
Further, the Company has an "occurrence" product liability insurance
policy.
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.
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3.18. NO UNDISCLOSED LIABILITIES.
Except as and to the extent specifically reflected or reserved
against in the Company's June 30, 1999 Financial Statement or otherwise
disclosed herein, the Company has no liabilities or obligations of any
nature, whether absolute, accrued, contingent or otherwise, and whether
due or to become due (including, without limitation, any liability for
taxes and interest, penalties and other charges payable with respect to
any such liability or obligation) in accordance with GAAP which in the
aggregate would constitute a Material Adverse Effect.
3.19. ENVIRONMENTAL MATTERS.
Except as disclosed on Schedule 3.19., 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,
and guidelines, except to the extent any such failure would not have a
Material Adverse Effect; (b) the real or immovable property owned,
leased, or operated by either (i) Sellers relating to the Company, or
(ii) the Company is not listed on the National Priorities List,
CERCLIS, RCRIS, or any comparable state listing which identifies sites
for removal, remedial, clean-up or investigatory actions; (c) no
amounts, which require remediation or reporting under applicable law,
of asbestos, PCB's, ureaformaldehyde, hazardous and solid wastes,
hazardous or toxic substances, petroleum products, pollutants or
contaminates, and no above or underground storage tanks, have become
located on the real or immovable property owned, leased, or currently
operated by the Company, except to the extent the existence or
remediation of such substances would not result in a Material Adverse
Effect; and (d) the real or immovable property owned, leased, or
operated by the Company has not been contaminated, tainted or polluted
in any manner whatsoever (including, without limitation, any
contamination of or injury or damage to soils, groundwater waters,
biota, and wildlife located on, in, under or originating from such
premises) with pollutants, contaminants or other substances or
materials so as to give rise to a removal, remediation, clean-up, or
investigatory obligation or action, and Sellers do not now have
knowledge of any removal, remediation, investigatory or clean-up
obligation or action which the Company has with respect thereto under
any law, rule, regulation, guideline, ordinance, whether domestic or
foreign, Federal, state, or local, or the common law, except to the
extent any failure to comply with any such obligation would not result
in a Material Adverse Effect. Notwithstanding anything in this
Agreement to the contrary, Sellers do not warrant the environmental
condition of the immovable property to be sold to the Company as set
forth in Section 5.4. below, and assume no liability for environmental
indemnification other than for the failure to disclose an environmental
violation of which they have actual knowledge.
3.20. CONFLICT OF INTEREST.
Except as disclosed in Schedule 3.20., no officer, director or
shareholders of the Company or any affiliate of any such person now has
or within the last three (3) years had, either directly or indirectly:
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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; or
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,
declarations, reports, statements and other documents required
to be filed in respect of Taxes; and the term "Return" means
any one of the foregoing Returns.
3.21.2.
Schedule 3.21.2. sets forth: (i) the taxable years of
the Company and Tax Affiliates (as defined in Section 3.21.3.)
as to which the respective statutes of limitations on the
assessment of United States Federal income and any applicable
state, local or foreign income or franchise Taxes have not
expired, and (ii) with respect to such taxable years sets
forth those years for which examinations by the IRS or the
state, local or foreign taxing authority have been completed,
those
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years for which examinations by such agencies are presently
being conducted, those years for which notice of pending or
threatened examination or adjustment has been received, those
years for which examinations by such agencies have not been
initiated, and those years for which required Returns for such
Taxes have not yet been filed. Except to the extent indicated
in Schedule 3.21.2., all deficiencies asserted or assessments
made as a result of any examinations by the IRS or state,
local or foreign Tax authority have been fully paid, or are
fully reflected as a liability in the Company's June 30, 1999
Financial Statement, or are fully described in Schedule
3.21.2., are being contested in good faith and an adequate
reserve therefor has been established and is fully reflected
in the Company's June 30, 1999 Financial Statement to the
extent required by GAAP. In addition to the foregoing, the
Sellers specifically state and Buyer acknowledges that the
Company's Return for fiscal years 1992, 1993 and 1994 Taxes
has been audited by the IRS, and that such audit concluded in
a written settlement agreement between the IRS and the
Company, a true and correct copy of which has been provided to
the Buyer and is attached to Schedule 3.21.2. Except as
described in Schedule 3.21.2., there are no Returns that are
presently under examination with respect to Taxes, there are
no proposed (whether oral or written) or final adjustments,
assessments or deficiencies with respect to Taxes currently
pending, and there are no outstanding notices of proposed or
actual audit, examination or investigation with respect to
Taxes.
3.21.3.
Sellers represent and warrant to Buyer that, except
as described in Schedule 0.00.0.:
3.21.3.1.
the Company, and every other person for
whose Taxes the Company is or could be held liable
(whether by reason of being a member of a
consolidated, combined, unitary, or other similar
group for Tax purposes, by reason of being a
successor, by agreement or otherwise (for the taxable
period(s) or portions thereof with respect to which
the Company is or could be held for such other
Person's Taxes) (all such persons collectively
referred to herein as "Tax Affiliates"), have filed
on a timely basis all Returns required to have been
filed by it and have paid on a timely basis all Taxes
shown thereon as due. All such Returns are true,
complete and correct in all material respects. The
provisions for Taxes in the Company's June 30, 1999
Financial Statement sets forth the maximum liability
of the Company and Tax Affiliates for Taxes as of the
date thereof. No liability for Taxes has been
incurred by the Company or any Tax Affiliate since
June 30, 1999 other than in the ordinary course of
their business. No director, officer or employee of
the Company or any Tax Affiliate having
responsibility for Tax matters is in discussions with
Tax authorities or has reason to believe that any Tax
authority has valid grounds to claim or assess any
additional Tax with respect to the Company or any Tax
Affiliate in excess of the amounts shown on the
Company's June 30, 1999 Financial Statement for the
period ending on such date;
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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 such date by the Company and Tax
Affiliates to Tax authorities or others have been
paid or accrued;
3.21.3.3.
none of the Returns required to be filed by
the Company or any Tax Affiliate contains, or were
required to contain (in order to avoid the imposition
of a penalty), a disclosure statement under Section
6662 (or any predecessor provision) of the Code, or
any similar provision of state, local or foreign law;
3.21.3.4.
all amounts that were required to be
collected or withheld by the Company or any Tax
Affiliate have been duly collected or withheld in all
material respects, and all such amounts that were
required to be remitted to any Tax authority have
been duly remitted in all material respects;
3.21.3.5.
the Company and Tax Affiliates have not
requested an extension of time to file any Return not
yet filed, and have not granted any waiver of any
statute of limitations with respect to, or any
extension of a period for the assessment of, any Tax.
No power of attorney granted by the Company or any
Tax Affiliate with respect to Taxes is in force;
3.21.3.6.
Sellers, the Company and Tax Affiliates have
not taken any action not in accordance with past
practice that would have the effect of deferring any
material Tax liability of the Company or any Tax
Affiliate from any taxable period or portion thereof
ending on or before or including the Closing to any
subsequent taxable period;
3.21.3.7.
Schedule 3.21.3.7. sets forth all Tax
Affiliates during all periods with respect to which
the applicable statue of limitations on the
assessment of Taxes remains open;
3.21.3.8.
there are no actual or deemed elections
under Section 338 of the Code, protective carryover
basis elections, offset prohibition elections or
similar elections applicable to the Company or any
Tax Affiliate excluding
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any such elections as may be made by Buyer in
connection with the transactions contemplated by this
Agreement;
3.21.3.9.
except as disclosed on Schedule 3.21.3.9.
pertaining to 263A, neither the Company nor any Tax
Affiliate is required to include in income any
adjustment pursuant to Sections 481 or 263A of the
Code (or similar provisions of other law or
regulations) by reason of a change in accounting
method or otherwise, following the Closing, and
Sellers have no knowledge that the IRS (or other Tax
authority) has proposed, or is considering, any such
change in accounting method or other adjustment;
3.21.3.10.
there are no liens for Taxes (other than for
current Taxes not yet due and payable) upon the
assets of the Company;
3.21.3.11.
the Company is not party to any agreement,
contract, arrangement or plan that has resulted or
would result, separately or in the aggregate, in the
payment of any "excess parachute payments" within the
meaning of Section 280G of the Code, whether by
reason of the Closing or otherwise;
3.21.3.12.
the Company is not, and has not been, a
United States real property holding corporation (as
defined in Section 897(c)(2) of the Code) during the
applicable period specified in Section
897(c)(1)(A)(ii) of the Code (or any corresponding
provision of state, local or foreign Tax law);
3.21.3.13.
neither the Company nor any Tax Affiliate
has or has had a permanent establishment in any
foreign country, as defined in any applicable Tax
treaty or convention between the United States of
America and such foreign country and the Company has
not engaged in a trade or business within any foreign
country;
3.21.3.14.
neither the Company nor any Tax Affiliate is
a party to any joint venture, partnership, or other
arrangement or contract which could be treated as a
partnership for Federal income tax purposes;
3.21.3.15.
neither the Company nor any Tax Affiliate is
or has been a member of an "affiliated group" as such
term is defined in Section 1504 of the Code (and any
predecessor provision) of the Code, or any similar
group for state, local or foreign Tax purposes;
3.21.3.16.
neither the Company nor any Tax Affiliate
has filed a consent pursuant to the collapsible
corporation provisions of Section 341(f) of the
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Code (or any corresponding provision of state, local
or foreign income Tax law) or agreed to have Section
341(f)(2) of the Code (or any corresponding provision
of state, local or foreign income Tax law) apply to
any disposition of any asset owned by any of them;
3.21.3.17.
neither the Company nor any Tax Affiliate
has participated in an international boycott within
the meaning of Section 999 of the Code;
3.21.3.18.
the Company is not a party to or bound by
any Tax sharing agreement, and has no current or
contingent contractual obligation to indemnify any
other person with respect to Taxes, other than
obligations to indemnify a lessor for property Taxes,
sales/use Taxes or gross receipts Taxes (but not
income or franchise Taxes) imposed on lease payments
arising from terms that are customary for leases of
similar property;
3.21.3.19.
the Company is not a party to or bound by
any closing agreement or offer in compromise with any
Tax authority;
3.21.3.20.
none of the assets of the Company is
property that the Company is required to treat as
being owned by any other person pursuant to the
so-called "safe harbor lease" provisions of former
Section 168(f)(8) of the Internal Revenue Code of
1954, as amended; none of the assets of the Company
directly or indirectly secures any debt the interest
on which is tax exempt under Section 103(a) of the
Code; none of the assets of the Company is
"tax-exempt use property" within the meaning of
Section 168(h) of the Code;
3.21.3.21.
Schedule 3.21.3.21. sets forth all material
elections with respect to Taxes of the Company and
Tax Affiliates made since January 1, 1997;
3.21.3.22.
Schedule 3.21.3.22. sets forth all Returns
with respect to the Company and Tax Affiliates the
due dates for which (including any valid extensions
thereof) are sixty or fewer days following the
Closing, and the Taxes for which estimated or final
payments may, based on the current operations of the
Company and Tax Affiliates, become due in sixty or
fewer days following the Closing;
3.21.3.23.
Schedule 3.21.3.23. sets forth all state,
local or foreign jurisdictions in which the Company
is or at any time during the past five years has been
subject to Tax;
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3.21.3.24.
the Company has made a valid Qualified
Subchapter S Subsidiary election for Cor-Val
Services, Inc., and the Company has had in effect at
all times since April 1, 1999 through the date
immediately preceding the date of the Closing a valid
election under Section 1361 of the Code (and any
predecessor provision and any similar provision of
applicable state, local or other Tax law). The
Company has not incurred any liability for Taxes
pursuant to Section 1374 or 1375 of the Code (and any
predecessor provision and any similar provision
applicable state, local or other Tax law); and
3.21.3.25.
all outstanding options to acquire equity of
the Company that purport to or were otherwise
intended (when issued) to be treated as "incentive
stock options" ("ISOs") within the meaning of Section
422 of the Code (and any predecessor provision and
any similar provision applicable state, local or
other Tax law) were issued in compliance with such
section. All such outstanding options currently
qualify for treatment as ISOs, and are held by
persons who are employees of the Company.
3.22. LIENS.
Except as disclosed on Schedule 3.22., none of the properties
and assets owned, leased, and/or used by the Company or its
Subsidiaries is subject to any lien, charge, mortgage, pledge, security
interest, or other encumbrance of any kind. Schedule 3.22 also sets
forth a description of any indebtedness owed by the Company which is
guaranteed in writing by any of the Sellers and/or secured by
collateral granted by any of the Sellers.
3.23. OTHER INFORMATION.
The information provided by Sellers to Buyer in this Agreement
or in the Schedules does not contain any untrue statement of a material
fact or omit to state a material fact required to be stated herein or
therein or necessary to make the statements and facts contained herein
or therein, in light of the circumstances in which they are made, not
false or misleading. Copies of all documents heretofore delivered or
made available to Buyer were complete and accurate records of such
documents in all respects.
3.24. NO OTHER REPRESENTATIONS.
Sellers are not making any representation or warranty, express
or implied, of any nature whatsoever, except as specifically set forth
in this Agreement and the other documents executed in connection
herewith.
3.25. NO KNOWN BREACHES.
Sellers have no actual knowledge that Buyer's representations
and warranties in this Agreement are untrue and Sellers shall not be
entitled to make any indemnity claims pursuant to Section 6. hereof
with respect to any matters constituting a breach of this Section 3.25.
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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.
4.3. AGREEMENT NOT IN BREACH OF OTHER INSTRUMENTS.
The execution and delivery of this Agreement, the consummation
of the transactions contemplated hereby and the fulfillment of the
terms hereof will not result in a breach of any of the terms or
provisions of, or constitute a default under, or conflict with, any
material agreement, indenture or other instrument to which Buyer is a
party or by which it is bound, Buyer's Certificate of Incorporation or
Bylaws, any judgment, decree, order or award of any court, governmental
body or arbitrator, or any law, rule or regulation applicable to Buyer.
4.4. INVESTMENT INTENT.
Buyer is acquiring the Shares with the intention as of the
date hereof of holding the Shares for purposes of investment, and Buyer
has no intention as of the date hereof of selling the Shares in a
public distribution in violation of Federal securities laws or any
applicable state securities laws.
4.5. REGULATORY AND OTHER APPROVALS.
All consents, approvals, authorizations and other requirements
prescribed by any law, rule or regulation, including any third party
consents, which must be obtained or satisfied by Buyer and which are
necessary for the execution and delivery of this Agreement and the
consummation of the transactions contemplated by this Agreement have
been obtained and satisfied.
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4.6. NO KNOWN BREACHES.
Buyer has no actual knowledge that Sellers' representations
and warranties in this Agreement are untrue, and Buyer shall not be
able to make any indemnity claims pursuant to Section 6. hereof with
respect to any matters constituting a breach of this Section 4.6.
4.7. OTHER INFORMATION.
The information provided by Buyer to Sellers in this Agreement
or in the Schedules does not contain any untrue statement of a material
fact or omit to state a material fact required to be stated herein or
therein or necessary to make the statements and facts contained herein
or therein, in light of the circumstances in which they are made, not
false or misleading.
4.8. GUARANTEES BY SELLERS OF COMPANY DEBT.
Buyer agrees to pay at Closing that portion of the
indebtedness of the Company which is guaranteed in writing by any of
the Sellers and/or secured by collateral granted by any of the Sellers,
which indebtedness is described in Schedule 3.22. To the extent
necessary, the Buyer will also request full releases of any such
guarantees.
4.9. NO OTHER REPRESENTATIONS.
Buyer is not making any representation or warranty, express or
implied, of any nature whatsoever, except as specifically set forth in
this Agreement and the other documents executed in connection herewith.
5. CERTAIN UNDERSTANDINGS AND AGREEMENTS OF THE PARTIES.
5.1. COOPERATION IN LITIGATION.
Each party will fully cooperate with the other in the defense or
prosecution of any litigation or proceeding already instituted or which
may be instituted hereafter against or by such party relating to or
arising out of the conduct of the Company prior to or after the Closing
Date (other than litigation arising out of the transactions contemplated
by this Agreement). The party requesting such cooperation shall pay
reasonable the out-of-pocket expenses (including reasonable 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
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paid, and shall indemnify and hold Buyer and the Company
harmless against, all Taxes to which such Returns relate;
provided, however, that to the extent such Taxes are included
in and specifically identified on the Audited Closing Balance
Sheet (as finally determined) or an attachment or schedule
thereto, Buyer shall reimburse Sellers for such Taxes within
ten business days following the later of: (i) the receipt by
Buyer of written evidence of actual payment of such Taxes by
Sellers or (ii) the date the Audited Closing Balance Sheet
becomes final and binding.
5.2.2. OVERLAP PERIOD RETURNS
Other than Returns to be prepared by Sellers pursuant
to Section 5.2.1., Buyer will prepare or cause to be prepared
all Returns of the Company for any and all taxable periods
which include and end after the Closing (the "Overlap
Period"), and any taxable period beginning after the Closing.
Sellers will be responsible for and will indemnify and hold
harmless Buyer, and the Company with respect to all Taxes for
the Overlap Period in an amount equal to the liability for
Taxes that would have resulted had the Overlap Period ended at
the Closing (utilizing, if applicable, the actual tax rate
imposed on a particular category of income by the applicable
taxing jurisdiction), except to the extent such Taxes are
included in and specifically identified on the Audited Closing
Balance Sheet (as finally determined) or an attachment or
schedule thereto. Any amount so payable by Sellers will be
remitted to Buyer at least ten business days prior to the due
date of the respective Returns pursuant to written notice by
the Buyer of such due date; provided that Sellers approve of
the amount (such approval not to be unreasonably withheld).
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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. TAX INFORMATION.
After the Closing, Sellers, on the one hand, and
Buyer and the Company, on the other hand, will make available
to the other, as reasonably requested, all information,
records or documents relating to liabilities for Taxes for all
periods prior to or including the Closing and will preserve
such information, records or documents until the expiration of
any applicable statute of limitations or extensions thereof.
5.2.6. TAX SHARING AGREEMENTS.
Any and all tax sharing, tax indemnity, or tax
allocation agreements with respect to which the Company was a
party at any time prior to the Closing shall terminate upon
the Closing. No further amounts shall be payable by the
Company under such agreements following the Closing.
5.2.7. CERTAIN TAXES.
All sales, value added, use, transfer, registration,
stamp and similar Taxes imposed in connection with the sale of
the Purchased Shares shall be borne by the party upon which it
is imposed.
5.3. EMPLOYMENT, CONFIDENTIALITY, AND NON-COMPETE AGREEMENTS.
At the Closing, Buyer shall enter into separately negotiated
employment agreements with Xxxxx X. Xxxxx, Xx., Xxxx X. Xxxxx, and
Xxxxxx Xxxxx in substantially the form attached hereto as Exhibit
5.2.6.1.(1), which employment agreements shall contain confidentiality
provisions and two-year non-compete provisions commencing upon
termination of employment. In addition, at the Closing Xxxxx X. Xxxxx,
Xx. and Xxxxx Xxxxx shall enter into a two-year non-compete agreement
with the Company, which agreements will be in substantially the form
attached hereto as Exhibit 5.3(2).
5.4. SALE OF PROPERTY TO THE COMPANY.
At the Closing, Corte Enterprises, L.L.C., as seller, and the
Buyer (or the Company as Buyer's designee), as buyer, shall execute an
act of cash sale
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affecting the immovable property located at 000 Xxxxxxx Xxxxxxxxx in
Houma, Louisiana and certain movable property. Also at the Closing,
Xxxxxxx Xxxx Corte and Xxxxx X. Xxxxx, Xx., as seller, and the Buyer
(or the Company as Buyer's designee), shall execute an act of cash sale
affecting the immovable property located at 000 Xxxxxxx Xxxxxxxxx in
Houma, Louisiana and certain movable property. The terms and conditions
of the said sales and the forms of the acts of cash sale are set forth
in the Purchase Agreement by and between Corte Enterprises, L.L.C.
Xxxxxxx Xxxx Corte, Xxxxx X. Xxxxx, Xx., and Buyer, a copy of which is
attached to this Agreement as Exhibit 5.4.
5.5. MERGER.
Immediately after the Closing, the Sellers (except Xxxxx X.
Xxxxx, Xx. and Xxxxx Xxxxx) and Buyer agree to merge Cor-Val
Acquisition Corp. into the Company. Further, the Sellers (except Xxxxx
X. Xxxxx, Xx. and Xxxxx Xxxxx) agree to transfer the Non-Purchased
Shares to Buyer and Buyer agrees to issue and transfer stock to Sellers
(except Xxxxx X. Xxxxx, Xx. and Xxxxx Xxxxx.), as set forth in Section
1.3. above.
5.6. PHASE I AND PHASE II ENVIRONMENTAL ASSESSMENT.
Prior to Closing, a Phase I and Phase II environmental
assessment was performed by Buyer, at Buyer's expense. The parties
agree and understand that upon execution of this Agreement and the
transactions contemplated hereby, that Sellers' indemnity liability for
environmental matters shall not apply to any environmental matter
disclosed in the Phase I and Phase II environmental assessment. The
Sellers do hereby unconditionally waive any right of action or claim
that any of them may have against the Company with respect to
environmental matters except for those set forth in the Phase I and
Phase II environmental assessment.
6. INDEMNIFICATION.
6.1. INDEMNIFICATION BY SELLERS.
Subject to the limitations set forth in the opening paragraph
of Section 3., Sellers shall indemnify and hold harmless Buyer and the
Company (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 defending any 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 the date of
final judgment or date of settlement for Losses payable by the Buyer
Group to third parties or from the date of the Buyer Group's notice of
a claim to Sellers for all other Losses, until paid by Sellers, in
connection with each and all of the following:
6.1.1.
any material breach of any representation or warranty
made by Sellers in this Agreement;
6.1.2.
the breach of any covenant, agreement or obligation
of Sellers contained in this Agreement or any other instrument
delivered at the Closing;
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6.1.3.
any misrepresentation contained in any Schedule,
certificate or other documents furnished by Sellers pursuant
to Section 7.1. of this Agreement, or in the due diligence
materials furnished by Sellers to Buyer, a copy of which are
contaned in Schedule 6.1.3.; or
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, or (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.
6.2. INDEMNIFICATION BY BUYER.
Buyer shall indemnify and hold harmless Sellers (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 the
date of final judgment or date of settlement for Losses payable by the
Seller Group to third parties or from the date of the Seller Group's
notice of a claim to Buyer for all other Losses, until paid by Buyer,
in connection with each and all of the following:
6.2.1.
any material breach of any representation or warranty
made by Buyer in this Agreement.
6.2.2.
the 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.
the operation of the Company after the Closing Date;
6.2.5.
any claim, demand or cause of action (including
warranty claims and claims relating to physical injury, death
or property damage) relating to or approximately caused by
either (i) products manufactured by the Company after the
Closing Date or (ii) any products sold or leased by the
Company after the Closing Date;
6.2.6.
the violation of any Federal, state, local or foreign
laws, regulations, orders, requirements or ordinances,
including those dealing with environmental
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matters, on or after the Closing Date by Buyer and its
affiliates, agents or assigns in relation to the Company; an
6.2.7.
any Environmental Condition relating to the Company
which result from the operations of the Company on or after
the Closing Date or which came into existence on or after the
Closing Date (including, but not limited to, Environmental
Costs to the extent they directly arise from such violations),
plus any items contained in environmental assessments
performed prior to the Closing which were not remediated by
Sellers.
6.3. CLAIMS FOR INDEMNIFICATION.
Whenever any claim shall arise for indemnification hereunder,
the party entitled to indemnification (the "indemnified party") shall
promptly notify the other party (the "indemnifying party") of the claim
and, when known, the facts constituting the basis for such claim. In
the event of any claim for indemnification hereunder resulting from or
in connection with any claim or legal proceedings by a third party, the
notice to the indemnifying party shall specify, if known, the amount or
an estimate of the amount of the liability potentially arising
therefrom. The indemnified party shall not settle or compromise any
claim by a third party for which it is entitled to indemnification
hereunder, without the prior written consent of the indemnifying party;
provided, however, that if such consent is not granted the amount of
indemnity provided by the indemnifying party shall not be limited by
Section 6.4. or 6.6. and, if Buyer is the indemnified party, at the
election of Buyer, only the portion of any loss equal to the refused
settlement shall be deducted or payable from the Escrow Account, all
other amounts shall be paid directly to Buyer by wire transfer by
Sellers or the distributees of the assets of the Sellers.
6.4. DEFENSE BY INDEMNIFYING PARTY.
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
Indemnifying Party, however, shall not settle any such claim or legal
proceeding in a manner that imposes obligations or duties on the
indemnified party without the prior written consent of the indemnified
party, which consent will not be unreasonably withheld. 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
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control) the defense of such action, with its counsel and at its own
expense. If the indemnifying party thereafter seeks to question the
manner in which the indemnified party defended such third party claim
or the amount or nature of any such settlement, the indemnifying party
shall have the burden to prove by a preponderance of the evidence that
the indemnified party did not defend or settle such third party claim
in a reasonably prudent manner as a prudent businessman would if his
own funds were subject to such suit.
6.5. MANNER OF INDEMNIFICATION.
All indemnification by either party hereunder shall be
effected by payment of cash or delivery of a certified or official bank
check in immediately available funds in the amount of the
indemnification liability.
6.6. LIMITATIONS ON INDEMNIFICATION.
Subject to any limitations contained therein, all
representations and warranties made by the parties herein or in any
instrument or document furnished in connection herewith shall survive
the Closing and any investigation at any time made by or on behalf of
the parties hereto and shall expire twenty-four months after the
Closing Date, except (i) as to any matter as to which a claim is
submitted in writing to the indemnifying party prior to the applicable
expiration date and identified as a claim for indemnification pursuant
to this Agreement; (ii) as to any representation or warranty relating
to ownership or title to the Shares or the Company's assets, including
real or immovable property, which shall not expire; (iii) as to any
matter which is based upon willful fraud by the indemnifying party,
with respect to which the representations and warranties set forth in
this Agreement shall expire only upon expiration of the applicable
statute of limitations plus 60 days; (iv) as to any representation or
warranty concerning tax or environmental matters, which shall expire
only upon the expiration of the applicable statute of limitations plus
45 days; and (v) as to any representation or warranty concerning the
authority to execute this Agreement or any of the other documents
contemplated hereby, which shall not expire. No claim or action for
indemnity pursuant to Sections 6.1. or 6.2. hereof for breach of any
representation or warranty shall be asserted or maintained by any party
hereto after the expiration of such representation or warranty pursuant
to the preceding sentence except for claims made in writing prior to
such expiration and actions (whether instituted before or after such
expiration) based on any claim made in writing prior to such
expiration. Notwithstanding any other provisions contained in this
Agreement, (i) neither Buyer nor Sellers shall be entitled to receive
any amount under this Section 6. which exceeds $12,000,000.00; (ii)
Buyer shall not be entitled to payment under this Section 6. for a
breach of any representation or warranty by Sellers contained in this
Agreement except for the amount by which the aggregate of all breach of
warranty or representation claims hereunder which have not theretofore
been reimbursed to Buyer exceeds the sum of $180,000.00, and (iii)
Sellers shall not be entitled to payment under this Section 6. except
for the amount by which the aggregate of all claims hereunder which
have not theretofore been reimbursed to Sellers, exceeds $180,000.00.
In the event the $180,000.00 threshold mentioned in clause (ii) or
(iii) of the preceding sentence is exceeded, Buyer or Sellers, as the
case may be, shall then have the right to seek reimbursement of said
threshold amount from Sellers or Buyer, as the case may be, under this
Section 6. Notwithstanding anything contained in this Section 6.6., the
limits on
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indemnification contained in the preceding sentence shall exclude any
obligations specifically assumed by any party in this Agreement,
including without limitation, the obligations relating to Taxes and
brokers as described in Sections 3.21., 5.2., and 9.5. respectively .
6.7. SOLE BASIS FOR RECOVERY.
Unless specifically provided for elsewhere in this Agreement,
the parties intend Section 6. to be the exclusive method for
compensating each other for, or indemnifying each other against, claims
relating to the Company and the transactions contemplated by this
Agreement.
6.8. LIABILITY OF THE SELLERS.
The liability of Sellers under this Section 6. shall be in
accordance with the following percentages:
Xxxxx X. Xxxxx, Xx. 25%
Xxxx X. Xxxxx 25%
Xxxxx Xxxxx 25%
Xxx Xxx Xxxxx Xxxxx 25%
Buyer shall not have any obligation to xxxxxxxx its claims
hereunder to minimize the obligations of any of the Sellers.
6.9. RELEASE FROM LIABILITY.
Notwithstanding anything contained anywhere in this Agreement
to the contrary, notwithstanding, all parties hereto specifically agree
that subject to Xxxxx X. Xxxxx, Xx.'s execution of the non-compete
agreement discussed in Section 5.3. above, Xxxxx X. Xxxxx, Xx. is and
shall be and remain free from any liability or responsibility of any
nature whatsoever, for any claim demand or cause of action based upon
or related to any provision of this Agreement (including, but without
limitation, the provisions of Section 3. and Section 6., except any
claim, demand or cause of action based upon the provisions of Section
3.3. hereof; and Buyer and all remaining Sellers do hereby release,
discharge and agree to hold Xxxxx X. Xxxxx, Xx. harmless from any such
claim, demand or cause of action described herein except those based on
the provisions of Section 3.3.
6.10. TAX BENEFIT.
If the amount with respect to which any claim is made under
this Section 6. gives rise to a realizable Tax benefit to the
indemnified party, the indemnity payment shall be reduced by the amount
of the Tax benefit realizable by the party making the claim. The
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amount of any claim for which indemnification is provided shall also be
(A) increased to take account of any net tax cost incurred by the
indemnified party arising from the receipt of indemnity payments
hereunder (grossed up for such increase) and (B) reduced to take
account of any net tax benefit realized by the indemnified party
arising from the incurrence or payment of any such Loss. In computing
the amount of any such tax cost or tax benefit, the indemnified party
shall be deemed to recognize all other items of income, gain, loss,
deduction or credit before recognizing any item arising from the
receipt of any indemnity payment hereunder or the incurrence or payment
of any indemnified Loss. Any indemnification payment hereunder shall
initially be made without regard to this paragraph and shall be
increased or reduced to reflect any such net tax cost (including
gross-up) or net tax benefit only after the indemnified party has
Actually Realized such cost or benefit. For purposes of this Agreement,
an indemnified party shall be deemed to have "Actually Realized" a net
tax cost or a net tax benefit to the extent that, and at such time as,
the amount of Taxes payable by such indemnified party is increased
above or reduced below, as the case may be, the amount of Taxes that
such indemnified party would be required to pay but for the receipt of
the indemnity payment or the incurrence or payment of such Loss, as the
case may be. The amount of any increase or reduction hereunder shall be
adjusted to reflect any final determination (which shall include the
execution of Form 870-AD or successor form) with respect to the
indemnified party's liability for taxes, and payments among the parties
to reflect such adjustment shall be made if necessary. In the event
subsequent facts result in a reduction of a tax benefit (due, for
instance, to a carryback of losses), the amount of such tax benefit
shall be repaid to the indemnified party by the indemnifying party. In
the event the parties dispute the amount of any tax benefit to which a
party claims it is entitled under this Section 6.10., such dispute
shall not delay the payment of the underlying indemnification amount,
and the amount of such tax benefit that did not reduce the
indemnification payment due to a dispute shall, to the extent it is
ultimately determined to be due, shall be paid at the time such dispute
is resolved. Notwithstanding anything contained herein, the parties
agree that any payments made to each other pursuant to the provisions
of Section 6 shall be reported for Federal and State income tax
purposes as an adjustment to the purchase price.
6.11. INSURANCE.
After the Closing, Buyer shall cause the Company to maintain
commercially reasonable third party insurance consistent with the
insurance maintained by the Company prior to the Closing. The amount
any indemnifying party is or may be required to pay to any indemnified
party pursuant to this Section 6. shall be reduced by any insurance
proceeds or other amounts actually recovered by or on behalf of the
indemnified party.
6.12. ENVIRONMENTAL MATTERS.
Notwithstanding any of the foregoing, for purposes of
indemnity claims under this Section 6. which involve the breach of a
representation or warranty with respect to environmental matters, such
indemnified party shall not be entitled to indemnity to the
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extent: (1) investigation, cleanup, removal, remedial, corrective or
response acitons for soil or ground water are not reasonably necessary
to comply with environmental laws; or (2) that is due to the
environmental conditions caused by the operations of the Company after
the Closing or by an subsequent owner or occupant of the property.
6.13. ATTORNEY'S FEES.
If any legal action, arbitration or other proceeding is
brought for the enforcement of this Agreement, or because of any
alleged dispute, breach, default or misrepresentation in connection
with this Agreement and that party is unsuccessful or does not prevail,
the other party shall be entitled to recover such reasonable attorneys'
fees and other costs it incurred in that action or proceeding, in
addition to any other relief to which it may be entitled.
7. DOCUMENTS TO BE DELIVERED AT CLOSING.
7.1. CLOSING DOCUMENTS DELIVERED BY SELLERS.
Buyer shall have received at the Closing the following
documents, dated as of the Closing date:
7.1.1. The Employment Agreements and the non-compete
agreements referred to in Section 5.3. above, duly executed by
each of the Sellers.
7.1.2. Stock certificates representing the Purchased
Shares, duly endorsed for transfer.
7.1.3. An opinion of counsel to Sellers in a form
acceptable to counsel to Buyer regarding the ownership of the
Shares and the authority of each of the Sellers to enter into
this Agreement and to consummate the transactions contemplated
hereby.
7.1.4. Any other documents, certificates, or
instruments contemplated by this Agreement to be delivered by
Sellers to Buyer, including but not limited to the Consents
listed in Schedule 3.7.
7.1.5. A fully executed certification of non-foreign
status described in Treasury Regulation Section 1.1445-2(a)(2)
(and applicable provisions of state law), in form and
substance reasonably satisfactory to counsel to Buyer, from
each Seller.
7.1.6. Act of cash sale executed by Corte
Enterprises, L.L.C., as seller, and act of cash sale by
Xxxxxxx Xxxx Corte and Xxxxx X. Xxxxx, Xx., as seller, all as
described in Section 5.4. above.
7.1.7. Executed letters of resignation by each
officer and director of the Company.
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.
7.2.2. An opinion of counsel to Buyer in a form
acceptable to Sellers and their counsel regarding the
authority of the Buyer to enter into this Agreement and to
consummate the transactions contemplated hereby.
7.2.3. The following executed documents: Stockholder
Agreement; Stock Option Agreement; 2000 Stock Option Plan; and
Notice of Stock Option Grant.
8. RELEASE.
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(a) As of the Closing Date and, except as may be set forth in Section
6.2. of this Agreement, each of the Sellers does hereby for himself and his
successors and assigns remise, release, acquit and forever discharge the Buyer,
the Company, and their respective affiliates, and their successors and assigns,
of and from any and all claims, demands, liabilities, responsibilities,
disputes, causes of action and obligations of every nature whatsoever,
liquidated or unliquidated, known or unknown, matured or unmatured, fixed or
contingent, that such Seller or its affiliates now has, owns or holds or has at
any time previously had, owned or held against such parties, including without
limitation all liabilities created as a result of the negligence, gross
negligence and willful acts of the Company and its employees and agents, or
under a theory of strict liability, existing as of the Closing Date or relating
to any action, omission or event occurring on or prior to the Closing Date;
provided, however, that any claims, liabilities, debts or causes of action that
may arise in connection with the failure of any of the parties hereto to perform
any of their obligations hereunder or under any other agreement relating to the
transactions contemplated hereby or from any breaches by any of them of any
representations or warranties herein or in connection with any of such other
agreements shall not be released or discharged pursuant to this Agreement.
(b) Each of the Sellers represents and warrants that, he has not
previously assigned or transferred, or purported to assign or transfer, to any
person or entity whatsoever all or any part of the claims, demands, liabilities,
responsibilities, disputes, causes of action or obligations released herein.
Each of the Sellers covenants and agrees that such Seller will not assign or
transfer to any person or entity whatsoever all or any part of the claims,
demands, liabilities, responsibilities, disputes, causes of action or
obligations to be released herein. Each of the Sellers represents and warrants
that such Seller has read and understands all of the provisions of this Section
8. and that he has been represented by legal counsel of his own choosing in
connection with the negotiation, execution and delivery of this Agreement.
(c) The release provided by the Sellers pursuant to this Section 8.
shall apply notwithstanding that the matter for which release is provided may
relate to the ordinary, sole or contributory negligence, gross negligence,
willful misconduct or violation of law by a released party, including the Buyer
and the Company and their respective officers, directors, employees and agents,
and for liabilities based on theories of strict liability, and shall be
applicable whether or not negligence of the released party is alleged or proven,
it being the intention of the parties to release the released party from and
against its ordinary, sole and contributory negligence and gross negligence as
well as liabilities based on the willful actions or omissions of the released
party and liabilities based on theories of strict liability.
9. MISCELLANEOUS.
9.1. NOTICES.
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:
T-3 ENERGY SERVICES, INC.
000 Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xx. Xxxxxxx X. Xxxxxxxxxx
Fax No.: 0-000-000-0000
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With a copy to:
First Reserve Corporation
0000 Xxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Fax No.: 0-000-000-0000
And
Liskow & Xxxxx
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxx, Esq.
Fax No.: (000)-000-0000
If to Sellers:
Xxxxx X. Xxxxx, Xx.
000 Xxxxxxxx Xxxxx
Xxxxx, XX 00000
Fax No.: (504) _________
With copies to:
Xxxxxxx & Xxxxxx, L.L.C.
0000 Xxxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx. Esq.
Fax No.: (000) 000-0000
9.2. ASSIGNABILITY AND PARTIES IN INTEREST.
Sellers may, with the written consent of Buyer (which will not
be unreasonably withheld if such assignee has the financial capacity to
assume and honor the indemnity obligations hereunder), assign the
rights and obligations under this Agreement among their affiliates or
in connection with a sale of their business. Any such assignee must
expressly assume all indemnity obligations hereunder. This Agreement
shall inure to the benefit of and be binding upon Buyer and Sellers and
their respective permitted successors and assigns.
9.3. GOVERNING LAW.
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE
APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN THAT
STATE; PROVIDED, HOWEVER, THAT WITH
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RESPECT TO MATTERS RELATED TO THE EFFECTIVENESS OR VALIDITY OF THE SALE
AND TRANSFER OF THE SHARES, THE SALE OF REAL OR IMMOVABLE PROPERTY, THE
VALIDITY AND ENFORCEABILITY OF THE EMPLOYMENT AGREEMENTS AND THE
NON-COMPETITION PROVISIONS THEREIN CONTAINED, THE LAWS OF THE STATE OF
LOUISIANA SHALL GOVERN, EXCEPTING THOSE LAWS PROVIDING FOR PUNITIVE,
EXEMPLARY OR MULTIPLE DAMAGES WHICH ARE HEREBY UNCONDITIONALLY WAIVED
BY THE SELLERS AND THE BUYER.
9.4. COUNTERPARTS.
This Agreement may be executed simultaneously in one or more
counterparts, each of which shall be deemed an original, but all of
which shall constitute but one and the same instrument.
9.5. INDEMNIFICATION FOR BROKERAGE.
Buyer and Sellers each represent and warrant that, except as
set forth in Schedule 9.5., no broker or finder has acted on its behalf
in connection with this Agreement or the transactions contemplated
hereby. In addition to the indemnification obligations contained in
Section 6., each party hereto agrees to indemnify and hold harmless the
others from any claim or demand for commissions or other compensation
by any broker, finder or similar agent who is or claims to have been
employed by or on behalf of such party.
9.6. PUBLICITY.
Sellers and Buyer agree that press releases and other
announcements to be made by any of them with respect to the
transactions contemplated hereby shall be subject to mutual agreement.
Notwithstanding the foregoing, Sellers and Buyer may respond to
inquiries relating to this Agreement and the transactions contemplated
hereby by the press, securities analysts, employees, or customers
without any notice or further consent of the other parties hereto.
9.7. COMPLETE AGREEMENT.
This Agreement, the Exhibits hereto, the Schedules and the
documents delivered pursuant to this Agreement contain or will contain
the entire agreement between the parties hereto with respect to the
transactions contemplated herein and shall supersede all previous oral
and written and all contemporaneous oral negotiations, commitments, and
understandings.
9.8. INTERPRETATION.
The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
9.9. SEVERABILITY.
Any provision of this Agreement which is invalid, illegal, or
unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity, illegality, or
unenforceability, without affecting in any way the remaining provisions
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hereof in such jurisdiction or rendering that or any other provision of
this Agreement invalid, illegal, or unenforceable in any other
jurisdiction.
9.10. KNOWLEDGE: DUE DILIGENCE INVESTIGATION.
All representations and warranties contained herein which are
made to the knowledge of Sellers shall mean to the actual knowledge of
any of the Sellers. It is understood, however, that the foregoing
reference to the actual knowledge of any of the Sellers shall include
Xxxxx X. Xxxxx, Xx.'s actual knowledge.
9.11. EXPENSES OF TRANSACTIONS.
All fees, costs and expenses incurred by Buyer or Sellers in
connection with the transactions contemplated by this Agreement shall
be borne by the party incurring the same.
9.12. LIMIT ON INTEREST.
Notwithstanding anything in this Agreement to the contrary,
neither party hereto shall be obligated to pay interest at a rate
higher than the maximum rate permitted by applicable law.
9.13. SUBMISSION TO JURISDICTION.
Each of the parties hereto irrevocably consents that any legal
action or proceeding against it or any of its property with respect to
this Agreement or any other agreement executed in connection herewith
may be brought in any court in Orleans Parish, Louisiana, any Federal
court of the United States of America located in Louisiana, and by the
execution and delivery of this Agreement each party hereto hereby
accepts with regard to any such action or proceeding for itself and in
respect of its property, generally and unconditionally, the
jurisdiction of the aforesaid courts.
9.14. ARBITRATION.
Any controversy, dispute, or claim arising out of, in
connection with, or in relation to, the interpretation, performance or
breach of this Agreement, including, without limitation, the validity,
scope, and enforceability of this Section 9.14., may at the election of
Buyer or Sellers be solely and finally settled by arbitration conducted
in New Orleans, Louisiana. The arbitration shall be governed by the
Louisiana Arbitration Law. The arbitration shall be conducted before a
panel of three arbitrators who shall be selected as follows: Within ten
days following the notice of arbitration having been given, each party
shall select one arbitrator and shall notify the other party of the
appointment of said arbitrator. Within ten days following the
appointment of those two arbitrators, the two arbitrators so appointed
shall meet and shall jointly appoint a third arbitrator who shall be
mutually agreeable to the two of them. In the event that the first two
arbitrators are unable to reach agreement on a third arbitrator, then
they shall immediately so advise the parties and, upon petition of
either party, the third arbitrator shall be appointed by the senior
judge of the First Circuit Court of Appeals, State of Louisiana.
Notwithstanding the foregoing, should the need arise, the parties may
seek temporary injunctive relief from the Civil District Court for the
Parish of Orleans, Louisiana prior to or during the pendency of any
arbitration. Buyer and Sellers consent to jurisdiction of and venue in
such court for such purposes. The third arbitrator shall act as
chairman of the arbitration panel for the purposes of scheduling the
presentation of the
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dispute and the administration of the matter. The arbitrators shall
render their award within thirty days following completion of the
submission of the dispute and evidence by the parties. The award
rendered by a majority of the three arbitrators shall be a final and
binding award and judgment may be entered recognizing, confirming and
enforcing said award in any court having jurisdiction thereof. Each
party shall pay the fees and expenses of the arbitrator selected by
that party. The fees and expenses of the third arbitrator shall be paid
equally by the two parties. However, as part of the award, the
arbitrators are authorized to reallocate the arbitrators' fees and
costs between the parties as the arbitrators deem appropriate. The
arbitrators shall not be allowed to award punitive, exemplary or
multiple damages. The arbitrators may only award compensatory damages.
The parties hereby expressly waive any right any of them may have to
punitive, exemplary or multiple damages. The parties intend that this
agreement to arbitrate be valid, enforceable and irrevocable.
Notwithstanding the foregoing, this Section 9.14. shall not apply nor
be interpreted to affect the resolution of a Dispute Notice through the
arbitration procedures set forth in Section 2.3.4. of this Agreement.
9.15. WAIVER OF PUNITIVE, EXEMPLARY AND MULTIPLE DAMAGES.
The parties hereby expressly waive any right any of them may
have to punitive, exemplary or multiple damages.
9.16. REVIEW OF AGREEMENT; REPRESENTATION BY COUNSEL.
Each of the Sellers acknowledges that he or she has read this
Agreement, the data contained in the Schedules attached to this
Agreement, and each of the Exhibits to this Agreement to which he or
she is a party, and that he or she understands the terms thereof and
the consequences arising from a breach of this Agreement or any of the
Exhibits to this Agreement to which he or she is a party. Further, the
Sellers and the Buyer have been represented by counsel in the
negotiation and drafting of this Agreement and the Exhibits to this
Agreement, and have executed and accepted the terms and provisions
thereof after receiving advice of their counsel.
[The remainder of this page was intentionally left blank]
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IN WITNESS WHEREOF, the undersigned duly execute this Agreement as of
the date first written above.
SELLERS:
/s/ XXXXX X. XXXXX, XX.
-----------------------------------------
XXXXX X. XXXXX, XX.
/s/ XXXXX X. XXXXX, XX.
-----------------------------------------
XXXXX X. XXXXX, XX.
/s/ XXXXX XXXXX
-----------------------------------------
XXXXX XXXXX
/s/ XXXX X. XXXXX
-----------------------------------------
XXXX X. XXXXX
/s/ XXX XXX XXXXX XXXXX
-----------------------------------------
XXX XXX XXXXX XXXXX
BUYER:
T-3 ENERGY SERVICES,
INC., a Delaware corporation
By: /s/ XXXXXXX X. XXXXXXXXXX
--------------------------------------
Xxxxxxx X. Xxxxxxxxxx
Title: President
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SPOUSAL ACKNOWLEDGMENT
The undersigned are the spouses of the Sellers that are married. The
undersigned, except Xxxxxxx Xxxx Corte, do hereby acknowledge and agree that the
Shares, as such term is defined in the foregoing Stock Purchase Agreement, are,
in fact, the separate property of their respective spouses. Xxxxxxx Xxxx Corte
hereby acknowledges that the Stock owned by her spouse, Xxxxx X. Xxxxx, Xx., is
community property. Xxxxxxx Xxxx Corte acknowledges and consents to the terms of
the foregoing Stock Purchase Agreement, and consents to the transfer of said
Stock by her spouse as set forth therein. The undersigned understand and agree
that T-3 Energy Services, Inc. may rely on this acknowledgement. Dated and
effective as of the 29th day of February, 2000.
/s/ XXXXXXX XXXX CORTE
-----------------------------------------
Xxxxxxx Xxxx Corte
/s/ XXXXXXXX XXXXXXX CORTE
-----------------------------------------
Xxxxxxxx Xxxxxxx Corte
/s/ XXXXX XXXXXX CORTE
-----------------------------------------
Xxxxx Xxxxxx Corte
/s/ XXXXXX XXXXXXX CORTE
-----------------------------------------
Xxxxxx Xxxxxxx Corte
/s/ XXXXXX XXXXX
-----------------------------------------
Xxxxxx Xxxxx
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