Exhibit 10.1
STOCK PURCHASE AGREEMENT
BY AND AMONG
XXXXX/MO SERVICES, INC.,
XXXXX PRODUCTION SERVICE, INC.,
J. XXXXXXX XXXXX
AND
XXXXXXX X. XXXX
Dated September 1, 1999
TABLE OF CONTENTS
PAGE
INTRODUCTION.........................1
ARTICLE I: PURCHASE AND SALE OF STOCK............1
1.1. Purchase and Sale........................................1
1.2. Consideration............................................1
(a) Purchase Price......................................1
(b) Debt Repayment......................................2
1.3. Adjustment...............................................2
1.4. Closing..................................................3
ARTICLE II: REPRESENTATIONS AND WARRANTIES..........3
2.1. Representations and Warranties by Sellers................3
(a) Title to Shares.....................................3
(b) Organization, Standing and Power....................3
(c) Binding Agreement...................................4
(d) Conflicts; Consents.................................4
(e) Capitalization; Equity Interests....................4
(f) Material Facts......................................4
(g) Extraordinary Distributions.........................5
(h) Absence of Changes..................................5
(i) Tax Matters.........................................5
(j) Assets, Property and Related Matters................5
(k) Patents, Trademarks and Similar Rights..............6
(l) Agreements, etc.....................................6
-i-
(m) Litigation, etc.....................................6
(n) Compliance; Governmental Authorizations.............7
(o) Labor Relations; Employees..........................8
(p) Brokers.............................................9
(q) Financial Statements................................9
(r) No Undisclosed Liabilities.........................10
(s) No Debt............................................10
(t) Subsidiaries and Shareholders......................10
(u) Insurance..........................................10
(v) Year 2000..........................................10
2.2. Representations and Warranties by Buyer.................11
(a) Organization, Standing and Power...................11
(b) Authority; Binding Agreement.......................11
(c) Conflicts; Consents................................11
(d) Investment Representations.........................11
ARTICLE III: ADDITIONAL AGREEMENTS.............11
3.1. Expenses, Sales Taxes...................................11
3.2. Conduct of Business.....................................12
3.3. Further Assurances......................................12
3.4. Access and Information..................................12
3.5. Public Announcements....................................12
3.6. Confidentiality.........................................12
3.7. Employees...............................................12
3.8. Due Diligence...........................................13
3.9. Certain Actions to be Taken Prior to Closing............13
3.10. Guarantees by Sellers...................................13
-ii-
3.11. Accounts Receivable....................................13
3.12. Books of the Company...................................13
ARTICLE IV: CLOSING CONDITIONS...............14
4.1. Conditions of Obligations of Buyer.....................14
(a) Representations and Warranties....................14
(b) Representations and Warranties Certificate........14
(c) Share Certificates and Corporate Records..........14
(d) Consents, Etc.....................................14
(e) Opinion of Counsel................................14
(f) Certificate.......................................14
(g) Organizational Documents..........................14
(h) Resignations and Termination......................14
(i) No Orders or Proceedings..........................15
(j) Unpaid Dividends..................................15
(k) Employment Agreement..............................15
(l) Payoff Letter and Lien Releases...................15
(m) Additional Conditions.............................15
(n) Termination of the Xxxxx Plan.....................15
(o) Other Documents...................................15
4.2. Conditions to Obligations of Sellers...................15
(a) Representations and Warranties....................15
(b) Certificates......................................16
(c) Promissory Notes..................................16
(d) Opinion of Counsel................................16
(e) Secretary's Certificates..........................16
(f) No Orders or Proceedings..........................16
-iii-
(g) Receipt of Cash Purchase Price....................16
(h) Employment Agreement..............................16
(i) Debt Repayment....................................16
(j) Other Documents...................................16
ARTICLE V: INDEMNITY....................17
5.1. General................................................17
5.2. Notices................................................18
5.3. Insurance..............................................19
ARTICLE VI: RESTRICTIONS ON COMPETITION...........19
6.1. Restrictions on Competition............................19
6.2. Non-Solicitation of Customers and Suppliers............19
6.3. Non-Solicitation of Employees..........................19
ARTICLE VII: MISCELLANEOUS.................19
7.1. Entire Agreement.......................................19
7.2. Descriptive Headings; Certain Interpretations..........20
7.3. Notices................................................20
7.4. Counterparts...........................................21
7.5. Survival...............................................22
7.6. Benefits of Agreements.................................22
7.7. Amendments and Waivers.................................22
7.8. Governing Law..........................................22
7.9. Arbitration............................................22
7.10. Severability...........................................23
7.11. Time of Essence........................................23
7.12. Attorney's Fees........................................23
7.13. Consent to Jurisdiction................................23
-iv-
7.14. Service of Process.....................................23
7.15. Venue..................................................24
Exhibits
A. Form of Promissory Note
B. Form of Guaranty and Suretyship Agreement
C. Form of Employment Agreement for Xxxxxxx X. Xxxx
D. Form of Employment Agreement for J. Xxxxxxx Xxxxx
-v-
STOCK PURCHASE AGREEMENT, dated September 1, 1999, by and among XXXXX PRODUCTION
SERVICE, INC., a Louisiana corporation, (the "Company"), J. XXXXXXX XXXXX and
XXXXXXX X. XXXX (each a "Seller" and, collectively, the "Sellers"), and XXXXX/MO
SERVICES, INC., a Texas corporation ("Buyer") (the "Agreement").
INTRODUCTION
------------
Sellers own all of the issued and outstanding shares of capital stock of the
Company (the "Shares").
Subject to the terms and conditions of this Agreement, Sellers desire to sell to
Buyer, and Buyer desires to purchase from Sellers, all of the Shares.
In consideration of the mutual benefits to be derived from this Agreement and of
the representations, warranties, conditions, agreements and promises contained
herein and other good and valuable consideration, intending to be legally bound,
the parties agree as follows:
ARTICLE I
PURCHASE AND SALE OF STOCK
--------------------------
1.1. PURCHASE AND SALE. Subject to the terms and conditions set forth herein, on
the Closing Date (as defined in Section 1.3), Sellers will sell and deliver
to Buyer, and Buyer will purchase from Sellers, the Shares free of any
Claims (as defined in Section 2.1(a) hereof) and together with all rights
attaching thereto on the date of this Agreement.
1.2. CONSIDERATION. In consideration for the Shares, and subject to the terms
and conditions herein, Buyer will pay Sellers the following net amount:
(a) PURCHASE PRICE. On the Closing Date, (i) Buyer will pay to Sellers
$6,570,637.80 by wire transfer in immediately available funds; and
(ii) Buyer will deliver to Sellers Promissory Notes in favor of
Sellers in an aggregate principal amount of $4,380,425.36
substantially in the form of Exhibit A, attached hereto (the
"Promissory Notes"), which will provide that the Buyer shall pay
Sellers an aggregate principal amount of $1,952,399 to Xxxxxxx X. Xxxx
and $2,428,027 to J. Xxxxxxx Xxxxx payable in two equal annual
installments (collectively, the "Cash Purchase Price"). Buyer shall
cause its parent, Xxxxxxx Xxxxx Corporation, to guarantee the
repayment of the Promissory Notes pursuant to a Guaranty Agreement
substantially in the form of Exhibit B. Buyer and Sellers agree that
$2,000,000 of the Cash Purchase Price will be in consideration of the
Sellers making the non-competition provisions contained in Article VI
hereof, and that the Sellers have the right to allocate such amount
between the amounts paid under the Promissory Notes.
-1-
(b) DEBT REPAYMENT. On the Closing Date, Buyer will pay by wire transfer
in immediately available funds all indebtedness of the Company (the
"Debt Repayment") (i) to Bank One, Louisiana, National Association
("Bank") pursuant to a certain Loan Agreement dated as of June 30,
1999 (the "Loan Agreement") between Bank and Company and any other
promissory notes from the Company to the Bank (collectively, the "Bank
Debt"), and (ii) to Xxxxx Xxxxxx (Xxxxx Xxxxxx and the Bank are,
collectively, the "Lenders") pursuant to a certain Promissory Note
dated as of March 1, 1996 (the "Xxxxxx Debt"; the Bank Debt and the
Xxxxxx Debt are, collectively, the "Debt"). In exchange therefor,
Sellers will cause Lenders to acknowledge the full satisfaction of the
Debt, to cancel all promissory notes from Company to Lenders and to
deliver to Buyer documentation to the satisfaction of Buyer and signed
by the applicable Lender to release all liens and mortgages on or
against any of the Company's assets.
The Cash Purchase Price and Debt Repayment are collectively, the "Purchase
Price."
1.3. ADJUSTMENT.
(a) Within 30 days after the Closing Date, Sellers will prepare a balance
sheet of the Company as of the Closing Date in accordance with
generally accepted accounting principles (the "Closing Date Financial
Statements"). Sellers will deliver the Closing Date Financial
Statements to an auditor selected by Buyer and Buyer shall cause such
auditors to audit the Closing Date Financial Statements within 30 days
after receipt thereof (the "Audited Closing Date Financial
Statements"). Sellers shall have 14 days to review the Audited Closing
Date Financial Statements after receipt thereof, and shall notify
Buyer within 14 days of their objections, if any, to the Audited
Closing Date Financial Statements. In the event that any dispute
arises between the parties with respect to the Audited Closing Date
Financial Statements, the parties will attempt in good faith to
resolve such issue; provided, however, that if such issue is not
resolved within 14 days, such dispute will be settled by referring
such matter to a third party independent auditor satisfactory to Buyer
and Sellers to review the Audited Closing Date Financial Statements.
Such third party auditor's audit will be final and accepted by the
Buyer and the Sellers. When the Audited Closing Date Financial
Statements are finally determined, then Buyer or Sellers, as the case
may be, shall pay the Purchase Price Adjustment, as defined below.
The "Purchase Price Adjustment" will be the difference between (i)
$663,891, which is the estimated net book value of the Company as of
the Closing Date (the "Estimated Net Book Value") and (ii) the net
book value of the Company as set forth in the Audited Closing Date
Financial Statements (the "Audited Net Book Value"). If the Audited
Net Book Value is less than the Estimated Net Book Value, then Sellers
will pay Buyer the difference, and if the Audited Net Book Value is
greater than the Estimated Net Book Value, then Buyer will pay Sellers
the difference. The payment of the Purchase Price Adjustment, will be
made by wire transfer on the tenth business day following final
determination of the Audited Closing Date Financial Statements.
-2-
(b) On or before October 31, 2000, (i) the Sellers will pay to Buyer by
wire transfer an amount equal to the accounts receivable of the
Company as of the Closing Date (the "Closing Accounts Receivable")
which remain uncollected as of the first anniversary of this Agreement
together with interest in such amount accruing from the date of the
first anniversary of the Closing Date to the date of payment of such
amount at a rate equal to the prime rate in effect on the Closing Date
as announced by Mellon Bank, N.A., (the "Prime Rate"), and (ii) Buyer
shall assign such Closing Accounts Receivable uncollected as of the
Closing Date to Sellers. Seller shall not be required to pay Buyer for
any Closing Accounts Receivable which Buyer agreed to accept less than
its face value in cash.
1.4. CLOSING. The closing (the "Closing") for the consummation of the
transactions contemplated by this Agreement shall take place at 9:00 a.m.
(Pittsburgh time) on September 1, 1999 at the offices of Xxxx Xxxxx Xxxx &
XxXxxx, LLP or at such other place or on such other date mutually agreed
upon by the parties (such date of the Closing being hereinafter called the
"Closing Date"). The Closing shall be deemed effective as of 12:01 a.m. on
September 1, 1999.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
------------------------------
2.1. REPRESENTATIONS AND WARRANTIES BY SELLERS. For the purposes of this Section
2.1, any representation or warranty made with respect to the Company that
relates to any date on or before (or any period beginning on or before)
December 31, 1998 shall be deemed to include Production Barges, Inc., a
Louisiana corporation, which was merged into the Company effective as of
December 31, 1998 ("Barges"). Sellers represent and warrant to Buyer as
follows:
(a) TITLE TO SHARES. Sellers are the sole registered and beneficial owners
of the Shares, and have, and at the Closing will transfer to Buyer,
good and marketable title to the Shares and will transfer the Shares
free and clear of all security interests, liens, pledges, charges,
escrows, options, rights of first refusal, mortgages, indentures,
security agreements or other encumbrances (each a "Claim" and,
collectively, "Claims"), and with no restriction on the voting rights,
transfer rights and the other incidents of record and beneficial
ownership pertaining to the Shares.
(b) ORGANIZATION, STANDING AND POWER. The Company (i) is a corporation
duly organized, validly existing and in good standing under the laws
of the State of Louisiana and (ii) has all requisite corporate power
and authority to own, lease and operate its properties and to carry
out its business as now being conducted. The Company is not qualified
to do business, and, except as set forth in Schedule 2.1(b), is not
required to be qualified to do business, as a foreign corporation in
any other jurisdiction, except where the failure to be so qualified
does not result in a Material Adverse Effect. The Company has never
adopted bylaws. Lack of bylaws does not and will not impair the
validity of any action heretofore taken by the Company or its
shareholders or taken in connection with the authorization, execution
and delivery of this Agreement and the consummation of the transaction
contemplated hereby.
-3-
As used in this Agreement, a "Material Adverse Effect" means an event,
circumstance or condition which: (i) if quantifiable, would result in
a cost, liability or other expense or diminution in value of more than
$25,000 or (ii) if not quantifiable, would otherwise have a material
adverse effect on the assets, business or financial condition the
Company or ability to perform under this Agreement.
(c) BINDING AGREEMENT. This Agreement has been duly executed and delivered
by Sellers and Company pursuant to all necessary authorization and is
the valid and binding obligation of Sellers and Company, enforceable
against Sellers and Company in accordance with its terms, subject, as
to enforcement, to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and other laws of general applicability
relating to or affecting creditors' rights and to general equity
principles.
(d) CONFLICTS; CONSENTS. Except as set forth on Schedule 2.1(d), neither
the execution and delivery of this Agreement, the consummation of the
transactions contemplated hereby nor compliance by Sellers and the
Company with any of the provisions hereof will (i) conflict with or
result in a breach of the charter, resolutions or other constitutive
documents of the Company, (ii) conflict with or result in a default
(or give rise to any right of termination, cancellation or
acceleration) under any of the provisions of any material agreement
binding upon Sellers or the Company, except for such conflict or
default as to which requisite waivers or consents shall be obtained
before the Closing, or (iii) violate any law, statute, rule or
regulation or order, writ, injunction or decree applicable to Sellers
or the Company or Sellers' or the Company's properties or assets.
Except as set forth on Schedule 2.1(d), no consent or approval by, or
any notification of or filing with, any public body or authority is
required to be obtained or made at or prior to the Closing by Sellers
or the Company, in connection with the execution, delivery and
performance by Sellers or the Company of this Agreement or the
consummation of the transactions contemplated hereby.
(e) CAPITALIZATION; EQUITY INTERESTS. Except for the Shares, there are no
other shares of capital or other equity securities of the Company
issued or outstanding. All of the Shares are validly issued and
outstanding, fully paid and nonassessable. Neither Sellers nor any
other person is entitled to any preemptive or similar rights with
respect to the Shares. There are no rights to acquire or options,
warrants, call agreements, convertible securities or other commitments
to issue, exchange or acquire, directly or indirectly, any unissued or
treasury shares of capital stock or other securities or share capital
of the Company, and no other securities or share capital of the
Company are reserved for issuance for any purpose. There are no
agreements relating to the Shares to which Sellers or the Company is a
party or by which any of them is bound.
(f) MATERIAL FACTS. There is no fact known to Sellers or the Company
relating to the Company (other than general economic or industry
conditions) that is likely to have a Material Adverse Effect on the
business, prospects, financial condition or results of operations of
the Company. No representations or warranties made by Sellers and/or
the Company hereunder omit to state a material fact necessary to make
-4-
the statements contained herein in light of the circumstances in which
they were made, not misleading.
(g) EXTRAORDINARY DISTRIBUTIONS. Except as set forth in Schedule 2.1(g),
since the date of the Year-End Financial Statements (referred to in
Section 2.1(q)) there have been no extraordinary distributions of cash
or benefits, in the form of compensation, bonuses or otherwise, to any
officer, director, employee, agent, subsidiary, affiliate or
stockholder of the Company or any family member thereof.
(h) ABSENCE OF CHANGES. Since the date of the Year-End Financial
Statements and except as set forth in Schedules 2.1(g) and 2.1(h),
there has been no change, or event having, or which may reasonably be
expected to have, a Material Adverse Effect on the prospects,
consolidated business operations, financial condition or assets of the
Company.
(i) TAX MATTERS. (i) All federal, state, local and foreign tax returns and
tax reports required to be filed on or prior to the Closing Date by or
with respect to the Company have been filed, or an extension has been
filed with respect thereto, on a timely basis (including any
extensions) with the appropriate governmental agencies in all
jurisdictions in which such returns and reports are required to be
filed; (ii) all such returns and reports are true, correct and
complete in all material respects; and (iii) all income, profits,
franchise, sales, use, occupation, property, excise, employment and
other taxes (including interest, penalties and withholdings payable in
respect of such taxes) (collectively, "Taxes") due from and payable by
or with respect to the Company prior to the Closing Date have been
fully paid on a timely basis or properly protested. The books and
records maintained by the Company properly reflect, and the Year-End
Financial Statements and the Interim Financial Statements (referred to
in Section 2.1(q)) reflect as of the date thereof and subject to
normal year-end adjustments consistent with past practice, accrued
liabilities for all taxes which are not yet due and payable. The
Company is not and has never been a member of a consolidated group for
tax purposes.
(j) ASSETS, PROPERTY AND RELATED MATTERS. The Company has good title to,
or a valid leasehold interest in, as applicable, all of the assets
reflected on the Interim Balance Sheet (referred to in Section 2.1(q))
free and clear of all material liens, claims or encumbrances, except
as set forth on Schedule 2.1(j)-1. The Company does not own any real
property. Schedule 2.1(j)-2 sets forth a list of all real property
leased by the Company. With respect to property leased by the Company
in connection with its business as indicated on Schedule 2.1(j)- 2,
(i) the Company is the owner and holder of all the leasehold interests
and estates purported to be granted by such leases and has not
received any notice from any landlord under any such lease that it is
in default or breach thereof and (ii) all such leases are in full
force and effect and constitute valid and binding obligations of the
Company, and of the other parties thereto, enforceable in accordance
with their terms. The use, occupancy and leasing by the Company of any
buildings, structures or other improvements located at any real
property leased by the Company does not violate any zoning ordinances
or any other codes or regulations. All of the buildings, structures,
improvements and assets reflected on the Interim Balance Sheet are in
good operating condition and repair (except for ordinary wear and tear
and routine maintenance requirements) and are adequate for the uses to
-5-
which they are being put. No such real property is subject to any
pending or threatened condemnation proceeding by any public or
quasi-public agency or other authority.
(k) PATENTS, TRADEMARKS AND SIMILAR RIGHTS. Schedule 2.1(k) contains a
complete and accurate list and summary description of all Intellectual
Property (as defined below) owned, used or licensed by the Company.
All such Intellectual Property owned by the Company are free and clear
of all Claims and restrictions. No Intellectual Property owned, used
or licensed by the Company infringes any rights owned or held by any
other person or entity, other than infringements which would not have
a Material Adverse Effect. No person is infringing the rights of the
Company in any Intellectual Property. No product or service sold by
the Company violates or infringes any intellectual property right
owned or held by any other person or entity, other than infringements
which would not have a Material Adverse Effect.
An "Intellectual Property" means any trademark, service xxxx, service
name, trade name, design right, patent or copyright, in each case
whether registered or unregistered, and any trade secret, invention,
process, formula, technology, know-how, design, utility model,
computer software (including documentation and object and source code
listings), drawing, proprietary data, research and development data
and other intangible property, or any other similar type of
proprietary intellectual property right (including any registrations
or applications for registration of any of the foregoing and whether
or not capable of protection by patent or by registration).
(l) AGREEMENTS, ETC. Schedule 2.1(l) contains a true and complete list of
all contracts, agreements and other instruments to which the Company
is a party or which is binding on the Company relating to: (i)
commitments to pay in excess of $5,000 in any one calendar year, (ii)
any restriction on the ability of the Company to engage in any
business or to do business in any geographic area, (iii) any joint
venture or partnership agreement or similar arrangement, (iv) any
arrangement with any officer, director, employee or agent of the
Company or any affiliate thereof or a member of any such person's
immediate family, (v) any contract or arrangement pursuant to which
the Company expects to receive in excess of $5,000 in any one calendar
year, (vi) any license referred to in Section 2.1(k), (vii) any lease
referred to in Section 2.1(j), (viii) any guaranty or similar
undertaking with respect to payment or performance by a third party,
(ix) any power of attorney, or (x) any business to be transacted
outside the United States or with any non-United States party in
excess of $5,000 in any one calendar year. The Company is not in
default under any such contract, agreement or instrument to which it
is a party where such default would, individually or in the aggregate
with defaults under other agreements or instruments, have a Material
Adverse Effect and all such contracts, agreements and instruments are
in full force and effect.
(m) LITIGATION, ETC. Except as listed on Schedule 2.1(m), there are no
lawsuits, actions, claims, investigations or legal or administrative
or arbitration proceedings in respect of the Company pending or
threatened, whether at law or in equity, or before or by any federal,
state, local, foreign or other governmental department, commission,
board, bureau, agency or instrumentality, (i) individually or in the
-6-
aggregate which, if adversely determined, could have a Material
Adverse Effect or (ii) which questions the validity of this Agreement
or any action taken or to be taken by Sellers or the Company in
connection herewith.
(n) COMPLIANCE; GOVERNMENTAL AUTHORIZATIONS. At all times up to and
including the Closing Date,
(i) the Company has complied with and is in compliance with all
federal, state, local and foreign laws, ordinances, regulations,
interpretations and orders, applicable to the Company, as the
case may be, the failure to comply with which would have a
Material Adverse Effect. The Company has all federal, state,
local and foreign governmental licenses and permits necessary to
conduct its business as presently being conducted, except where
the failure to obtain such licenses or permits would not have a
Material Adverse Effect, and all such licenses and permits are in
full force and effect.
(ii) The Company has held and holds all permits, licenses,
certificates and authorizations ("Environmental Permits")
required under all applicable laws, ordinances, regulations,
rules, requirements, orders and judgments and relating to use,
treatment, storage, handling or disposal of materials or the
discharge of chemicals, gases or other substances or materials
into the environment (the "Environmental Laws"), and all such
Environmental Permits are in full force and effect. The Company
has not violated nor is in violation of any requirements of any
Environmental Laws in connection with the conduct of its business
or in connection with the use, maintenance or operation of any
real property now or previously owned, used, leased or operated
by it or any appurtenances thereto or improvements thereon, other
than violations which would not have a Material Adverse Effect.
There are no present or past conditions relating to the Company
or relating to any real property now or previously owned, used or
operated by it or improvements thereon or real property
previously owned, used or operated by the Company or any of its
present or past affiliates that could lead to any liability of
the Company for violation of the Environmental Laws, other than
liabilities which would not have a Material Adverse Effect. The
Company has not received notice from any authority charged with
the enforcement of Environmental Laws of a violation of any
requirements of any Environmental Laws, no proceeding is pending
to revoke or limit any Environmental Permit held by the Company
and there is no basis for any such proceeding.
(iii) There has been no release of any hazardous or toxic materials,
pollutants or contaminants in, on or affecting any properties now
or previously owned, leased or operated by the Company. No
underground storage tanks are located at any property now or
previously owned or leased by the Company. All above-ground
storage tanks located on any property now or previously owned,
leased or operated by the Company have been used and maintained
in compliance with all applicable legal requirements, and no
leakage or spillage has occurred with respect to any such storage
tank which would have a Material Adverse Effect.
(iv) The Company has not received any notice that any property now or
previously owned, operated or leased by the Company is listed or
is proposed for listing on the National Priorities List pursuant
to the Comprehensive Environmental Response, Compensation and
Liability Act, as amended ("CERCLA"), or the Comprehensive
-7-
Environmental Response, Compensation and Liability Information
System List ("CERCLIS") or on any similar state or foreign list
of sites requiring investigation or cleanup; and no lien has been
filed against either the personal or real property of the Company
under any Environmental Law, regulation promulgated thereunder or
order issued with respect thereto.
(o) LABOR RELATIONS; EMPLOYEES.
(i) The Company has delivered to Buyer true and complete copies of
each contract or other agreement between the Company and any
labor union, trade union or other association representing any
employees of the Company and any such contract or agreement to
which the Company is subject. (A) There is no labor dispute or
work stoppage pending or threatened against the Company, (B)
there is no unfair labor practice charge or complaint or other
action against the Company pending or threatened before the
National Labor Relations Board or any other U.S. or similar
foreign governmental authority or agency, (C) during the past
three years, there has been no labor strike or work stoppage
actually pending or threatened against or affecting the Company,
(D) no question concerning representation is pending or
threatened respecting employees of the Company, and (E) no
written grievance is pending. The Company has complied with all
material legal requirements relating to employment, equal
employment opportunity, nondiscrimination, immigration, wages,
hours, benefits, collective bargaining, the payment of social
security and similar taxes, occupational safety and health, and
plant closing.
(ii) Company has delivered to Buyer: (A) true and complete copies of
each pension, retirement, savings, deferred compensation, and
profit-sharing plan and each stock option, stock appreciation,
stock purchase, performance share, bonus or other incentive plan,
severance plan, health, group insurance or other welfare plan,
vacation policies, holiday pay policies, severance pay policies,
sick or personal pay policies, incentive bonus programs, company
car policies and service award policies, or other similar plans
or arrangements and any "employee benefit plan" within the
meaning of Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), under which the
Company has any current or future obligation or liability or
under which any employee or former employee (or beneficiary of
any employee or former employee) of the Company has or may have
any current or future right to benefits (the term "plan" shall
include any contract, agreement, policy or understanding, each
such plan being hereinafter referred to individually as a
"Plan"); (B) any correspondence from or to the Internal Revenue
Service ("IRS"), Department of Labor ("DOL"), or any other
governmental entity during the last three (3) years relating to
such Plan(s); and (C) a list of all such Plan(s) and arrangements
as set forth on the attached Schedule 2.1(o)(ii)(C).
(iii) Each Plan which is an "employee pension benefit plan" within the
meaning of Section 3(2) of ERISA and related trust is qualified,
both as to form and operation, under Sections 401(a) and 501(a)
of the Code and has been determined to be qualified as to form by
the IRS, and, no amendment to, or failure to amend, any such Plan
adversely affects its tax qualified status, and with respect to
each such Plan: (A) no transaction prohibited by ERISA section
406 has occurred; (B) the Company has no liability to the IRS
with respect to any such Plan, including any excise tax liability
imposed by Chapter 43 of the Code; (C) the Company has no
-8-
liability to pay any civil penalty under ERISA sections 502 or
4071; and (D) the Company has timely filed all required reports
(including, but not limited to, Form 5500 Annual Reports), and
all notices and disclosures have been timely provided to affected
Plan participants, as required by ERISA and the Code.
(iv) Each such Plan which is an "employee welfare benefit plan" within
the meaning of ERISA section 3(1) has been operated in accordance
with ERISA, the Code, and all other applicable laws, including,
but not limited to, the requirements of ERISA section 601 and
Code section 4980B.
(v) The Company (A) does not maintain, and has not previously
maintained, a "multi-employer plan" or a "multiple employer
welfare arrangement" as those terms are defined in ERISA sections
3(37) and 3(40), or a "voluntary employees' beneficiary
association" as that term is defined in Code section 501(c)(9);
(B) does not have any contract, plan or commitment to create any
additional Plans or to materially modify any existing Plan; (C)
except to the extent required by ERISA section 601 and Code
section 4980B, has not agreed to provide health or welfare
benefits to any retired or former employees and is not obligated
to provide health or welfare benefits to any active employee
following such employee's retirement or termination of
employment; (D) has not agreed to make any payment that is owed
or may become due to any individual that will be non-deductible
to the Company or Subsidiary, or is subject to tax under Code
sections 280G or 4999, or "gross up" or otherwise compensate any
such individual because of the imposition of any excise tax on a
payment to such individual; or (E) does not have any unfunded or
accrued liabilities under any Plan.
(vi) There are no lawsuits, actions, claims, investigations or legal
or administrative or arbitration proceedings (other than routine
claims for benefits) pending or threatened, with respect to any
Plan or the assets of any Plan. With respect to each Plan, all
contributions (including employee salary reduction contributions)
and all material insurance premiums that have become due have
been paid, and any such expense accrued but not yet due has been
properly reflected in the Year-End Financial Statements or the
Interim Financial Statements. Except as reflected in the Year-End
Financial Statements and the Interim Financial Statements, there
is no liability relating to any Plan that would have a Material
Adverse Effect.
(p) BROKERS. No agent, broker, investment banker or other Person acting on
behalf of the Sellers or the Company or under the authority of the
Sellers or the Company is or will be entitled to any broker's or
finder's fee or any other commission or similar fee directly or
indirectly from any of the parties hereto in connection with any of
the transactions contemplated hereby.
(q) FINANCIAL STATEMENTS. The Company has delivered to Buyer: (a) reviewed
balance sheets of the Company as at December 31, 1998 (including notes
thereto, collectively the "Year-End Balance Sheet"), and the related
reviewed statements of income, changes in stockholders' equity or
shareholders' shareholdings, as the case may be, and cash flow for the
fiscal year then ended (collectively, the "Year-End Financial
Statements"), and (b) unaudited balance sheets of the Company as at
July 31, 1999 (collectively, the "Interim Balance Sheet") and the
-9-
related unaudited statements of income, changes in stockholders'
equity or shareholders' shareholdings, as the case may be, and cash
flow for the seven months then ended, including in each case any notes
thereto (collectively, the "Interim Financial Statements"). Such
financial statements and notes fairly and accurately present a true
and fair view of the assets, liabilities and the state of business
affairs of the Company and the financial condition and the results of
operations, changes in stockholders' equity, and cash flow of the
Company as at the respective dates of and for the periods referred to
in such financial statements, all in accordance with applicable
generally accepted accounting principles (except, in the case of the
Interim Financial Statements, for the omission of certain footnotes
and other presentation items required by generally accepted accounting
principles with respect to annual financial statements and subject to
other normal year-end adjustments).
(r) NO UNDISCLOSED LIABILITIES. The Company does not have any liabilities
or obligations of any nature (whether known or unknown and whether
absolute, accrued, contingent, or otherwise) except (i) liabilities or
obligations reflected or reserved against in the Year-End Balance
Sheet or the Interim Balance Sheet, or (ii) current liabilities
incurred in the ordinary course of business since the respective dates
thereof.
(s) NO DEBT. Upon Closing, after giving effect to Section 1.2(b), the
Company will have no indebtedness other than (i) ordinary course trade
payables, wages, salaries and employee expense reimbursements accrued
in the ordinary course of business consistent with past practices and
(ii) the obligations of the Company to J. Xxxxxxx Xxxxx under that
certain Amended and Restated Promissory Note dated as of the date
hereof for a principal amount of $472,906 (the "Xxxxx Note"). Except
as indicated on Schedule 2.1(s), all liens and mortgages on the
Company's assets shall be released as of the Closing Date.
(t) SUBSIDIARIES AND SHAREHOLDERS. The Company has no subsidiaries or
equity investments, whether such equity investments are marketable or
nonmarketable. The Company has no shareholders other than those listed
on Schedule 2.1(a) attached hereto.
(u) INSURANCE. Schedule 2.1(u) lists all insurance contracts to which the
Company is a party or a third party beneficiary. The insurance
contracts listed in Schedule 2.1(u) are in full force and valid and
have not been terminated and all premiums owed thereunder have been
paid by the Company when due. No notice of cancellation or termination
has been received by the Company with respect to any insurance
contract listed in Schedule 2.1(u).
(v) YEAR 2000. The Company has conducted a comprehensive internal review
and assessment and determined that its computer systems and
applications are year 2000 compliant and as such will calculate and
perform prior to, during and after the year 2000. For purposes of this
Agreement, year 2000 compliant is defined as accurately processing
date-related data from, into and between the year 1999 and the year
2000, including leap year calculations, and specifically including any
error relating to, or the product of, date data or date information
that represents or references different centuries or more than one
century. Based on the foregoing review, assessment and inquiry,
Sellers reasonably believe that any problem related to year 2000
compliance will not result in a Material Adverse Effect.
-10-
2.2. REPRESENTATIONS AND WARRANTIES BY BUYER. Buyer represents and warrants to
Sellers as follows:
(a) ORGANIZATION, STANDING AND POWER. Buyer (i) is a corporation duly
organized and validly existing and is in good standing under the laws
of its jurisdiction of incorporation and (ii) has all requisite
corporate power and authority to own, lease and operate its properties
and to carry on its business in all material respects as now being
conducted.
(b) AUTHORITY; BINDING AGREEMENT. Buyer has all requisite corporate power
and authority to execute and deliver this Agreement and to perform its
obligations hereunder. This Agreement has been duly executed and
delivered by Buyer pursuant to all necessary corporate authorization
and is the valid and binding obligation of Buyer, enforceable against
Buyer in accordance with its terms, subject, as to enforcement, to
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and other laws of general applicability relating to or
affecting creditors' rights and to general equity principles.
(c) CONFLICTS; CONSENTS. Neither the execution and delivery of this
Agreement, the consummation of the transactions contemplated hereby
nor compliance by Buyer with any of the provisions hereof will (i)
conflict with or result in a breach of the charter or other
constitutive documents of Buyer, (ii) conflict with or result in a
default (or give rise to any right of termination, cancellation or
acceleration) under any of the provisions of any material agreement
binding upon Buyer, except for such conflict, breach or default as to
which requisite waivers or consents shall be obtained before the
Closing, or (iii) violate any law, statute, rule or regulation or
order, writ, injunction or decree applicable to Buyer or its
respective properties or assets. No consent or approval by, or any
notification of or filing with, any public body or authority is
required to be obtained at or prior to the Closing by Buyer in
connection with the execution, delivery and performance by Buyer of
this Agreement or the consummation of the transactions contemplated
hereby.
(d) INVESTMENT REPRESENTATIONS. Buyer is acquiring the Shares for its own
account for investment and not with a view to or for sale in
connection with the distribution thereof in violation of applicable
securities laws. Sellers may place a legend on the certificates
representing the Shares to this effect.
ARTICLE III
ADDITIONAL AGREEMENTS
---------------------
3.1. EXPENSES, SALES TAXES. Sellers and Buyer shall each bear its own costs and
expenses incurred in connection with the transactions contemplated hereby,
including any fees or commissions of any broker engaged by such party, and
the cost of all income, single business, sales, transfer, use, gross
receipts, registration, stamp and similar taxes arising out of or in
connection with the transactions contemplated by this Agreement. Sellers
will cause the Company not to incur any out-of-pocket expenses in
connection with this Agreement unless such expenses are properly recorded
on the Interim Balance Sheet.
-11-
3.2. CONDUCT OF BUSINESS. From the date hereof until the Closing Date, except as
otherwise consented to by Buyer in writing, Sellers shall cause the Company
to, and the Company shall, operate only in the ordinary course of business.
3.3. FURTHER ASSURANCES. Each of the parties hereto agrees to use all
commercially reasonable efforts to take, or cause to be taken, all action,
and to do, or cause to be done, all things necessary, proper or advisable
under applicable laws and regulations, to consummate and make effective the
transactions contemplated by this Agreement as expeditiously as practicable
and to ensure that the conditions set forth in Article IV hereof are
satisfied, insofar as such matters are within the control of any of them.
In case at any time after the Closing Date any further action is necessary
or desirable to carry out the purposes of this Agreement, each of the
parties to this Agreement shall take or cause to be taken all such
necessary action, including the execution and delivery of such further
instruments and documents, as may be reasonably requested by any other
party for such purposes or otherwise to complete or perfect the
transactions contemplated hereby.
3.4. ACCESS AND INFORMATION. The Company shall permit Buyer and its
representatives and agents to have access to the Company and its officers,
counsel, auditors, books and records, and the opportunity to investigate
the Company's title to property and the condition and nature of its assets,
business and liabilities, in each case upon reasonable notice and during
normal business hours. All information furnished by Sellers or the Company
pursuant to this Section 3.4 or otherwise, shall be subject to the terms of
Section 3.6. In the event the transactions contemplated hereunder are not
consummated, Buyer will return all such written information promptly to
Sellers or the Company, as applicable.
3.5. PUBLIC ANNOUNCEMENTS. The parties shall consult with each other before
issuing, and provide each other the opportunity to review and comment upon,
any press release or other public statements with respect to this Agreement
or the transactions contemplated hereby and, except as may be required by
applicable law or any listing agreement with any national securities
exchange, will not issue any such release or make any such public statement
prior to such consultation.
3.6. CONFIDENTIALITY. All Confidential Information (as defined in the
Non-Disclosure Agreement by and among Sellers and Xxxxxxx Xxxxx Corporation
dated as of ____________ (the "Non-Disclosure Agreement")) exchanged shall
be subject to and protected by the Non-Disclosure Agreement.
3.7. EMPLOYEES. Buyer will be responsible for severance and any other costs
associated with the termination of any Company employees terminated by
Buyer after the Closing. Sellers shall be responsible for severance and any
other costs associated with the terminations of any Company employees
terminated prior to or at the Closing. Before the Closing, Sellers agree to
take all necessary corporate action to terminate the Company 401(k) Plan
(the "Xxxxx Plan") effective as of the Closing Date and take all necessary
corporate action to vest all Company employees participating in the Xxxxx
Plan as of the Closing Date. Thereafter, Buyer shall take or cause to be
-12-
taken any and all steps necessary and proper to complete the administration
of the termination of the Xxxxx Plan, including filing the same with the
Internal Revenue Service to obtain a favorable determination that the
termination does not adversely effect the prior qualified status of the
Plan.
3.8. DUE DILIGENCE. Buyer is, with the assistance of its attorneys and
accountants, conducting an independent review of the Company, and the
business, operations, assets, liabilities and financial condition of the
Company, based, in part, on the information provided to Buyer, its
attorneys and accountants by Sellers and the Company. Notwithstanding such
review, Sellers agree that Buyer shall not be prevented from claiming or
recovering against Sellers for Sellers' breach of a representation,
warranty or covenant contained herein as provided herein or under
applicable law.
3.9. CERTAIN ACTIONS TO BE TAKEN PRIOR TO CLOSING. Sellers shall cause the
Company to take the following actions to the satisfaction of Buyer on or
before the Closing Date: (a) to cancel or otherwise cause the Company to be
released from the leases for automobiles identified on Schedule 3.9, (b) to
cause J. Xxxxxxx Xxxxx to release any and all liens on or against the
Company's assets, including the Barge EBX-4; and (c) cancel any accounts or
return to Company any assets held in the Company name but used by Sellers'
wives or family members or to which Sellers' wives or family members have
access, including any cellular phones, credit cards or other accounts.
3.10.GUARANTEES BY SELLERS. Sellers have from time to time guaranteed the
repayment of certain of the Company's obligations under certain trade
accounts and under the Loan Agreement. Before the Closing Date, Sellers
shall use their reasonable best efforts to identify each Company obligation
that they individually or collectively have agreed to guarantee. Buyer and
Sellers will cooperate to remove Sellers as guarantors of such Company
obligations as of the Closing Date or as soon as is reasonably practicable
thereafter.
3.11.ACCOUNTS RECEIVABLE. Buyer will use reasonable best efforts to diligently
collect the Closing Accounts Receivable for their face value in cash. All
payments from a customer will be credited first to the account balance
which has been outstanding for the longest period of time, unless the
customer has a bona fide dispute with the Company involving a specific
invoice.
3.12.BOOKS OF THE COMPANY. Buyer shall keep all of the books of accounts and
records of the Company existing as of the Closing Date for a period of five
years from the Closing Date. Buyer will permit the Sellers or Seller's
agents, at Sellers' expense, to examine such books at such reasonable times
and to request copies of such books as may be reasonably requested by
Sellers or Seller's agents.
-13-
ARTICLE IV
CLOSING CONDITIONS
------------------
4.1. CONDITIONS TO OBLIGATIONS OF BUYER. The obligations of Buyer to perform
this Agreement are subject to the satisfaction, at or prior to the Closing,
of the following conditions, unless waived by Buyer:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties of
Sellers contained herein shall be true and correct in all material
respects as of the date hereof and as of the Closing Date as if made
on and as of the Closing Date, and Sellers shall have performed and
complied with all covenants and agreements required to be performed or
complied with by them on or prior to the Closing Date.
(b) REPRESENTATIONS AND WARRANTIES CERTIFICATE. Buyer shall have received
a certificate of Sellers and an authorized officer of the Company,
confirming the matters set forth in Section 4.1(a), in form and
substance reasonably satisfactory to Buyer.
(c) SHARE CERTIFICATES AND CORPORATE RECORDS. Buyer shall have received:
(i) the share certificates representing the Shares; (ii) the corporate
seal of the Company; (iii) the minute books, share register and share
transfer records of the Company; and (iv) evidence satisfactory to
Buyer of the release or satisfaction of any liens or encumbrances with
respect to the Shares.
(d) CONSENTS, ETC. Buyer shall have received copies of all duly executed
and delivered waivers, consents, terminations and approvals
contemplated by Section 2.1(d) and Schedule 2.1(d), all in form and
substance reasonably satisfactory to Buyer.
(e) OPINION OF COUNSEL. Buyer shall have received the opinion, dated the
Closing Date, of Xxxxx Xxxxxx, counsel to Sellers and the Company.
(f) CERTIFICATE. Buyer shall have received a certificate of the Secretary
or an Assistant Secretary of the Company, dated the Closing Date,
setting forth the resolutions of the Board of Directors of the Company
authorizing the execution, delivery and performance of this Agreement
by the Company and certifying that such resolutions were duly adopted
and have not been rescinded or amended as of the Closing Date.
(g) ORGANIZATIONAL DOCUMENTS. Buyer shall have received (i) a copy,
certified by the Secretary of the State of Louisiana, of the Articles
of Incorporation of the Company, and (ii) good standing certificates
of the Company in the State of Louisiana.
(h) RESIGNATIONS AND TERMINATION. Buyer shall have received executed
resignations or terminations from all Directors of the Company and any
corporate officers, as requested by Buyer.
-14-
(i) NO ORDERS OR PROCEEDINGS. There shall be in effect no order, decree or
injunction of a court of competent jurisdiction which either enjoins
or prohibits the consummation of any of the transactions contemplated
by this Agreement, and no proceeding with respect thereto shall be
pending or threatened.
(j) UNPAID DIVIDENDS. Sellers shall have delivered to Buyer a waiver and
release, in form and substance satisfactory to Buyer, of all unpaid
dividends with respect to the Shares.
(k) EMPLOYMENT AGREEMENT. Buyer shall have received an executed Employment
Agreement from Xxxxxxx X. Xxxx in substantially the form of Exhibit C,
attached hereto, and an executed Employment Agreement from J. Xxxxxxx
Xxxxx in substantially the form of Exhibit D, attached hereto.
(l) PAYOFF LETTER AND LIEN RELEASES. Lender and Xxxxx Xxxxxx shall have
delivered to Buyer pay-off letters acknowledging the repayment in full
of the Bank Debt and the Xxxxx Xxxxxx Note and waiving and releasing
any further rights or claims each may have against the Company's
assets. Sellers shall, and Sellers shall cause Lenders to acknowledge
the full satisfaction of the Debt, to cancel all promissory notes from
Company to Lenders and to deliver to Buyer documentation to the
satisfaction of Buyer and signed by the applicable Lender to release
all liens and mortgages on or against any of the Company's assets.
Except as set forth in Section 2.1(s) or disclosed in Schedule 2.1(s),
all liens and mortgages on the Company's properties, including but not
limited to any liens or mortgages held by the Lenders, shall have been
released by the secured parties and appropriate releases and
satisfaction pieces, in form and substance satisfactory to Buyer,
shall have been properly filed or recorded in all appropriate filing
offices or delivered to Buyer.
(m) ADDITIONAL CONDITIONS. Buyer shall have received evidence to its sole
satisfaction that the requirements set forth in Section 3.9 have been
met.
(n) TERMINATION OF THE XXXXX PLAN. Seller shall have provided evidence
satisfactory to Buyer that all shareholder and board action required
to be taken in Section 3.7 has been taken.
(o) OTHER DOCUMENTS. Buyer shall have received such other certificates,
documents or other information in connection with the transactions
contemplated hereby as Buyer may reasonably request.
4.2. CONDITIONS TO OBLIGATIONS OF SELLERS. The obligations of Sellers to perform
this Agreement are subject to the satisfaction, at or prior to the Closing,
of the following conditions, unless waived by Sellers:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties of
Buyer contained herein shall be true and correct in all material
respects as of the date hereof and as of the Closing Date as if made
-15-
on and as of the Closing Date, and Buyer shall have performed and
complied with all covenants and agreements required to be performed or
complied with by it on or prior to the Closing Date.
(b) CERTIFICATES. Sellers shall have received a certificate of an
authorized officer of Buyer confirming the matters set forth in
Section 4.2(a), in form and substance reasonably satisfactory to
Sellers.
(c) PROMISSORY NOTES. Sellers shall have received executed Promissory
Notes from Buyer in substantially the Form of Exhibit A, attached
hereto and an executed Guaranty and Suretyship Agreement from Xxxxxxx
Xxxxx Corporation in substantially the Form of Exhibit B, attached
hereto.
(d) OPINION OF COUNSEL. Sellers shall have received the opinion, dated the
Closing Date, of Xxxx Xxxxx Xxxx & XxXxxx LLP, counsel to Buyer.
(e) SECRETARY'S CERTIFICATES. Sellers shall have received a certificate of
the Secretary or an Assistant Secretary of Buyer, dated the Closing
Date, setting forth the resolutions of the Board of Directors of Buyer
authorizing the execution, delivery and performance of this Agreement
by Buyer and certifying that such resolutions were duly adopted and
have not been rescinded or amended as of the Closing Date.
(f) NO ORDERS OR PROCEEDINGS. There shall be in effect no order, decree or
injunction of a court of competent jurisdiction which either enjoins
or prohibits the consummation of any of the transactions contemplated
by this Agreement, and no proceeding with respect thereto shall be
pending or, to the knowledge of Buyer, threatened.
(g) RECEIPT OF CASH PURCHASE PRICE. Sellers' and Escrow Agent's receipt of
the Cash Purchase Price as set forth in Section 1.2(a).
(h) EMPLOYMENT AGREEMENT. Xxxxxxx X. Xxxx shall have received an executed
Employment Agreement from Buyer in substantially the form of Exhibit
C, attached hereto, and J. Xxxxxxx Xxxxx shall have received an
executed Employment Agreement from Buyer in substantially the form of
Exhibit D, attached hereto.
(i) DEBT REPAYMENT. Sellers shall have received evidence to their
reasonable satisfaction that the Debt has been paid by Buyer under
Section 1.2(b).
(j) OTHER DOCUMENTS. Sellers shall have received such other certificates,
documents or other information in connection with the transactions
contemplated hereby as Sellers may reasonably request.
-16-
ARTICLE V
INDEMNITY
---------
5.1. GENERAL.
(a) Sellers shall jointly and severally release, indemnify and hold
harmless Buyer and Buyer's parents, subsidiaries and its affiliates
and its former, present and future directors, officers, employees,
shareholders and other agents and representatives and the Company from
and against any and all liabilities, judgments, claims, settlements,
losses, damages, fees, liens, taxes, penalties, obligations and
expenses (including reasonable attorney's fees and disbursements)
(collectively, "Damages") incurred or suffered by any such person or
entity arising from or by reason of (i) any misrepresentation or
breach of any representation or warranty of Sellers contained in this
Agreement, (ii) any breach of any covenant of Sellers contained in
this Agreement, (iii) any event, act or occurrence relating to the
Company prior to the Closing, (iv) any claim or liability arising out
of or relating to Company's merger with Barges, (v) any environmental
remediation required in connection with any property now or previously
owned, used, leased or operated by the Company or Barges to the extent
not attributable to operations by Buyer at such property, (vi) any
self-insurance medical costs of Company incurred on or before the
Closing Date, (vii) any liability for Taxes payable by, assessed
against or relating to (x) the Company for periods prior and including
the Closing Date, (y) Barges, and (z) Sellers, (viii) any event, act
or occurrence or any claim or liability arising out of or relating to
the sponsorship, funding, maintenance, operation, administration of
the Xxxxx Plan prior to the Closing Date, or (ix) any Damages to the
Company or Buyer resulting from the failure of Sellers to have all
requisite authorizations, licenses or approvals to use in connection
with the software installed on the Company's computer hardware or
otherwise used by the Company up to and including the Closing Date.
(b) Buyer shall release, indemnify and hold harmless Sellers from and
against any and all Damages incurred or suffered by Sellers arising
from or by reason of (i) any misrepresentation or breach of any
representation or warranty of Buyer contained in this Agreement, (ii)
any breach of any covenant of Buyer contained in this Agreement, (iii)
any claim arising out of the operations of the Company as conducted by
Buyer after the Closing Date unless such claim arises out of a breach
by Sellers of this Agreement or the transactions contemplated hereby
or (iv) any actions taken by Company after Closing with respect to the
Buyer's obligations under Section 3.7, PROVIDED, HOWEVER, that this
shall not limit in any respect the Damages for which Buyer shall be
indemnified under Section 5.1(a)(viii).
(c) If a claim by a third party is made against an Indemnified Party (as
defined in Section 5.2), an Indemnifying Party (as defined in Section
5.2) under this Section 5.1 shall be entitled to participate in and,
if (i) in the judgment of the Indemnified Party such claim can
properly be resolved by money damages alone and the Indemnifying Party
has the financial resources to pay such damages and (ii) the
Indemnifying Party admits that this indemnity fully covers the claim
or litigation, the Indemnifying Party shall be entitled to direct the
defense of any claim at its expense, but such defense shall be
conducted by legal counsel reasonably satisfactory to the Indemnified
Party. The party undertaking the defense in connection with such a
claim, shall not make any settlement of any claim or litigation under
-17-
this Section 5.1 without the written consent of the other party, which
consent shall not be unreasonably withheld.
(d) Notwithstanding any other provision herein to the contrary, Buyer will
be entitled, to the fullest extent permitted by law, to set-off the
amount of any indemnity obligations of Sellers under this Section 5.1
or Section 1.3, as well as any other amount of any other obligations
or liabilities of Sellers to Buyer, against the Promissory Notes up to
an aggregate amount of $2,000,000. If at any time that a payment is
otherwise due from Buyer to Sellers under the Promissory Notes, Buyer
in good faith believes it has a claim or a potential claim for
indemnification, the Buyer will be entitled to withhold such payment
(or such lesser portion as Buyer deems appropriate) pending resolution
of such claim. If an indemnity obligation actually arises as a result
of such claim, then Buyer will be entitled to apply the amount of any
withheld payment to the satisfaction of such indemnity obligation. The
remaining balance, if any, will be paid to Sellers with interest at
the Prime Rate plus 1.0% from the date the withheld payment was
originally due.
(e) From time to time, either party (a "providing party") may give notice
(a "Notice") to the other party (the "receiving party") specifying in
reasonable detail the nature and dollar amount of any claim (a
"Claim") it may have hereunder; either party may make more than one
claim with respect to any underlying state of facts. If the receiving
party gives Notice to the providing party disputing any Claim (a
"Counter Notice") within 30 days following receipt of the Notice
regarding such Claim, such Claim shall be resolved as provided in
Section 7.9. If no Counter Notice is received within such 30-day
period, then the dollar amount of damages claimed by the providing
party as set forth in its Notice shall be deemed established and, at
the end of such 30-day period, the receiving party shall pay to the
providing party the dollar amount claimed in the Notice.
(f) No Indemnified Party will seek indemnification under Section 5.1(a)(i)
or Section 5.1(b)(i), as the case may be, until the date on which all
unreimbursed claims by parties entitled to indemnification under
Section 5.1(a)(i) or (b)(i), as the case may be, exceed $25,000 in the
aggregate, in which case the Indemnified Party shall be entitled to
indemnity for the full amount of its claims, including the first
$25,000. Notwithstanding the foregoing sentence, Buyer may immediately
seek reimbursement for claims arising out of misrepresentation or
breach of Section 2.1(s) without regard to the $25,000 basket. The
aggregate liability of either Buyer or Sellers under this Article V
shall not exceed the aggregate of the consideration paid pursuant to
Article I hereof.
5.2. NOTICES. In case any claim or litigation which might give rise to any
obligation of a party under this Article V (each an "Indemnifying Party")
shall come to the attention of the party seeking indemnification hereunder
(the "Indemnified Party"), the Indemnified Party shall promptly notify the
Indemnifying Party in writing of the existence and amount thereof, but the
failure to notify the Indemnifying Party will not relieve the Indemnifying
Party of any liability that it may have to any Indemnified Party, except to
the extent that the Indemnifying Party demonstrates that the defense of
such action is prejudiced by the Indemnifying Party's failure to give such
notice.
-18-
5.3. INSURANCE. The amount of any claim by an Indemnified Party for
indemnification pursuant to this Article V shall be computed net of
insurance proceeds (less any deductibles, adjustments or costs or any
proceeds from Buyer's or Buyer's affiliates self-insurance program)
received by such Indemnified Party on account of such claim.
ARTICLE VI
RESTRICTIONS ON COMPETITION
---------------------------
6.1. RESTRICTIONS ON COMPETITION. Sellers covenant and agree that for a period
of two (2) years commencing on the Closing Date, Sellers shall not,
anywhere in the United States, engage, directly or indirectly, whether as
principal or as agent, officer, director, employee, consultant,
shareholder, or otherwise, alone or in association with any other person,
corporation or other entity, in any Competing Business. For purposes of
this Agreement, the term "Competing Business" shall mean: any person,
corporation or other entity engaged in the business of providing or
attempting to provide operation or maintenance services to oil or gas
production facilities or any other business in which the Company is engaged
as of the second anniversary of the Closing Date. A "Competing Business"
shall not include a publicly-held entity with respect to which a Seller's
only connection is the ownership of less than 5% of its outstanding
publicly held equity interests.
6.2. NON-SOLICITATION OF CUSTOMERS AND SUPPLIERS. Sellers agree that Sellers
shall not, on behalf of any Competing Business, directly or indirectly,
solicit the trade of, or trade with, any customers or suppliers, or
prospective customers or suppliers, of Buyer, its subsidiaries or
affiliates.
6.3. NON-SOLICITATION OF EMPLOYEES. Sellers agree that for a period of two (2)
years commencing on the Closing Date, Sellers shall not, directly or
indirectly, solicit or induce, or attempt to solicit or induce, any
employee of Buyer, its subsidiaries or affiliates to leave Buyer, its
subsidiaries or affiliates for any reason whatsoever, or hire any employee
of Buyer, its subsidiaries or affiliates.
ARTICLE VII
MISCELLANEOUS
-------------
7.1. ENTIRE AGREEMENT. This Agreement and the Schedules and Exhibits contain the
entire agreement among the parties with respect to the transactions
contemplated by this Agreement and supersede all prior agreements or
understandings among the parties.
-19-
7.2. DESCRIPTIVE HEADINGS; CERTAIN INTERPRETATIONS.
(a) Descriptive headings are for convenience only and shall not control or
affect the meaning or construction of any provision of this Agreement.
(b) Except as otherwise expressly provided in this Agreement, the
following rules of interpretation apply to this Agreement: (i) the
singular includes the plural and the plural includes the singular;
(ii) "or" and "either" are not exclusive and "include" and "including"
are not limiting; (iii) a reference to any agreement or other contract
includes schedules and exhibits thereto and permitted supplements and
amendments thereof; (iv) a reference to a law includes any amendment
or modification to such law and any rules or regulations issued
thereunder; (v) a reference to a Person includes its permitted
successors and assigns; (vi) "Person" means any individual,
corporation, partnership, limited liability company, joint venture,
estate, trust, association, organization, labor union, or other entity
or governmental body or authority; and (ix) a reference in this
Agreement to an Article, Section, Exhibit or Schedule is to the
Article, Section, Exhibit or Schedule of this Agreement. Disclosure of
a specific item in any one Schedule will be deemed to be a disclosure
of the same item in each other Schedule to which such item may relate.
7.3. NOTICES. All notices, requests and other communications to any party
hereunder shall be in writing and sufficient if delivered personally
or sent by telecopy (with confirmation of receipt) or by registered or
certified mail, postage prepaid, return receipt requested, addressed
as follows:
If to Buyer, to:
00000 Xxxx Xxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Telecopy: 000-000-0000
Attention: Xxxxxx X. Xxxxxxx, Xx.
-20-
with a copy to:
Xxxxx Energy, Inc.
Xxxxxxx Xxxxxx Xxxx
Xxxxxxxx #0
000 Xxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Telecopy: 000-000-0000
Attention: H. Xxxxx XxXxxxxx, Esq.
Xxxx Xxxxx Xxxx & XxXxxx LLP
000 Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Telecopy: 000-000-0000
Attention: Xxxxx X. XxXxxxx
If to Sellers to:
J. Xxxxxxx Xxxxx
0000 X. Xxxxx Xxxx.
Xxxxxxxxx, Xx. 00000
Xxxxxxx X. Xxxx
000 Xxxxxxx Xx.
Xxxxxxxxxxx, Xx. 00000
and with a copy to:
Xxxxx X. Xxxxxx
0000-X Xxxxxxxx Xxxxxxxxx
Xxxxxxxxx, Xx. 00000
or to such other address or telecopy number as the party to whom notice is to be
given may have furnished to the other parties in writing in accordance herewith.
Each such notice, request or communication shall be effective when delivered.
7.4. COUNTERPARTS. This Agreement may be executed in any number of counterparts
(including executed counterparts delivered and exchanged by facsimile
transmission), and each such counterpart hereof shall be deemed to be an
original instrument, but all such counterparts together shall constitute
but one agreement.
-21-
7.5. SURVIVAL. All covenants and obligations of the parties in this Agreement
shall survive the Closing. The representations and warranties made by the
Sellers or the Company pursuant to Section 2.1(i) hereof shall survive for
a period equal to the applicable statute of limitations with respect to any
taxes referred to therein, and the representations made by the Sellers
pursuant to Sections 2.1(a), 2.1(j) and 2.1(k) hereof shall survive
indefinitely without expiration. The representations and warranties made by
Company and Sellers pursuant to Sections 2.1(n) and 2.1(o) shall survive
for a period of five years following the Closing Date. All other
representations and warranties contained in this Agreement shall survive
for a period of two years following the Closing Date.
7.6. BENEFITS OF AGREEMENT. All of the terms and provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and assigns. This Agreement is for the sole
benefit of the parties hereto and not for the benefit of any third party.
7.7. AMENDMENTS AND WAIVERS. No modification, amendment or waiver, of any
provision of, or consent required by, this Agreement, nor any consent to
any departure herefrom, shall be effective unless it is in writing and
signed by the parties hereto. Such modification, amendment, waiver or
consent shall be effective only in the specific instance and for the
purpose for which given.
7.8. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas without regard to conflicts
of laws principles.
7.9. ARBITRATION. Any dispute, controversy or claim arising out of, relating to,
or in connection with, this Agreement shall be finally settled by binding
arbitration. However, notwithstanding anything herein to the contrary, a
party may bring an action for injunctive or equitable relief at any time in
a court of competent jurisdiction. In addition, nothing contained in this
Section 7.9 shall be construed to limit or preclude a party from bringing
any action in any court of competent jurisdiction for injunctive or other
provisional relief to compel another party to comply with its obligations
under this Agreement during the pendency of the arbitration proceedings. No
party, however, shall demand a jury trial. Arbitration shall be conducted
in accordance with the Commercial Arbitration Rules of the American
Arbitration Association ("AAA") in effect at the time of the arbitration,
except as they may be modified in this Section 7.9 or by mutual agreement
of Sellers and Buyer. Exclusive venue for such arbitration shall be in
Houston, Texas and such arbitration shall be conducted in the English
language.
The arbitration shall be conducted by three arbitrators. A party giving
notice of any dispute relating to this Agreement (the "Claimant") shall
appoint an arbitrator in such notice. A party receiving any such notice
(the "Respondent") shall appoint an arbitrator within 30 days of receiving
such notice and shall notify the Claimant of such arbitrator's identity in
writing. If the Respondent fails to appoint an arbitrator within such
30-day period, the arbitrator for the Respondent shall be appointed by the
Chairman of the AAA. The two arbitrators appointed by or for the parties
shall appoint a third arbitrator within 30 days after the Respondent's
arbitrator is appointed. If the two arbitrators appointed by or for the
-22-
parties fail so to appoint a third arbitrator, then the appointment of the
third arbitrator shall be made by the Chairman of the AAA. The third
arbitrator shall act as Chairman of the panel.
The arbitrators shall apply the laws of the State of Texas (without regard
to conflict of law rules) in determining the substance of the dispute,
controversy or claim and shall decide the same in accordance with
applicable usages and terms of trade. The arbitrators shall permit such
discovery as they determine is appropriate in the circumstances, taking
into account the needs of the parties and the desirability of making
discovery expeditious and cost effective. Any such discovery shall be
limited to information directly related to the controversy or claim in
arbitration and shall be concluded within 30 days after appointment of the
arbitration panel. The arbitrators' award shall be in writing, shall set
forth the findings and conclusions upon which the arbitrators based the
award, and shall be final and binding on the parties. The arbitrators shall
have the authority to grant any equitable and legal remedies that would be
available in any judicial proceeding instituted to resolve a dispute,
controversy or claim hereunder. Each party will bear its own costs and
expenses in connection with any arbitration including the compensation to
be paid to the arbitrator selected by it. In addition, each party will pay
50% of the compensation to be paid to the neutral arbitrator in any such
arbitration. The cost of transcript will be paid by the party requesting
the same. Judgment upon the award may be entered in any federal or state
court sitting or located in the Houston, Texas, or in any other court
having jurisdiction thereof or having jurisdiction over the parties or
their assets.
7.10.SEVERABILITY. If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions
of this Agreement will remain in full force and effect. Any provision of
this Agreement held invalid or unenforceable only in part will remain in
full force and effect to the extent not held invalid or unenforceable.
7.11.TIME OF ESSENCE. With regard to all dates and time periods set forth or
referred to in this Agreement, time is of the essence.
0.00.XXXXXXXX'S FEES. In the event any party hereto seeks legal enforcement of
the terms of this Agreement, the prevailing party shall be paid by the
nonprevailing party, all reasonable attorneys' and legal assistants' fees
and costs incurred by the prevailing party, whether for arbitration,
negotiation, trial or appeal.
7.13.CONSENT TO JURISDICTION. Sellers hereby irrevocably submit to the personal
jurisdiction of any federal or state court located in Houston, Texas in any
action or proceeding arising out of or relating to this Agreement, and
Sellers hereby irrevocably agree that all claims in respect of any such
action or proceeding may be heard and determined in any such court.
7.14.SERVICE OF PROCESS. Sellers hereby irrevocably consent to the service of
any summons and complaint and any other process which may be served in any
action or proceeding arising out of or related to this Agreement brought in
any federal or state court located in Houston, Texas by the mailing by
certified or registered mail of copies of such process to such party at its
or his address as set forth on the signature page hereof.
-23-
7.15.VENUE. Sellers hereby irrevocably waive any objection which it or he now
or hereafter may have to the laying of venue of any action or proceeding
arising out of or relating to this Agreement brought in any federal or
state court located in Houston, Texas and any objection on the ground that
any such action or proceeding in any of such Courts has been brought in an
inconvenient forum. Nothing in this Section 7.15 shall affect the right of
the Buyer to bring any action or proceeding against Sellers or the Company
in the courts of other jurisdictions where such parties may be found or
served with process.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be duly
executed and delivered as of the day and year first above written.
XXXXX/MO SERVICES, INC.
By: /s/ XXXXXX X. XXXXXXX, XX.
--------------------------
Xxxxxx X. Xxxxxxx, Xx.
President
XXXXX PRODUCTION SERVICE, INC.
By: /s/ J. XXXXXXX XXXXX
--------------------
Name: J. Xxxxxxx Xxxxx
Title: President
/s/ J. XXXXXXX XXXXX
--------------------
J. XXXXXXX XXXXX
/s/ XXXXXXX X. XXXX
--------------------
XXXXXXX X. XXXX
-24-
