EXHIBIT B
CONFORMED AND RESTATED
AGREEMENT AND PLAN OF MERGER, AS AMENDED
AMONG
INDUSTRIAL HOLDINGS, INC.,
T-3 ENERGY SERVICES, INC., AND
FIRST RESERVE FUND VIII, LIMITED PARTNERSHIP
DATED AS OF MAY 7, 2001
Page 13 of 65
TABLE OF CONTENTS
ARTICLE 1. DEFINED TERMS........................................... 1
Section 1.1 Definitions......................................... 1
ARTICLE 2. THE CLOSING; THE MERGER; EFFECTS OF THE MERGER.......... 4
Section 2.1 Closing............................................. 4
Section 2.2 The Merger.......................................... 5
Section 2.3 Effects of the Merger............................... 5
ARTICLE 3. MERGER CONSIDERATION; CONVERSION OF SHARES.............. 6
Section 3.1 Conversion of Shares................................ 6
Section 3.2 Treatment of T-3 Stock Options...................... 7
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF T-3................... 7
Section 4.1 Organization; Qualification......................... 7
Section 4.2 Capital Stock; Subsidiaries......................... 7
Section 4.3 Corporate Authorization; Enforceability............. 7
Section 4.4 No Conflict......................................... 8
Section 4.5 Consents............................................ 8
Section 4.6 T-3 Financial Statements; Undisclosed
Liabilities................................................... 8
Section 4.7 Absence of Certain Changes.......................... 8
Section 4.8 Material Contracts.................................. 8
Section 4.9 Real Property....................................... 8
Section 4.10 Real Property Leases................................ 9
Section 4.11 Personal Property................................... 9
Section 4.12 Compliance with Laws................................ 9
Section 4.13 Permits............................................. 9
Section 4.14 Litigation.......................................... 9
Section 4.15 Environmental Compliance............................ 9
Section 4.16 ERISA and Related Matters........................... 10
Section 4.17 Taxes............................................... 11
Section 4.18 Customers and Suppliers............................. 12
Section 4.19 Insurance........................................... 12
Section 4.20 Safety and Health................................... 12
Section 4.21 Labor Matters....................................... 12
Section 4.22 Transactions with Certain Persons................... 13
Section 4.23 Propriety of Past Payments.......................... 13
Section 4.24 Intellectual Property............................... 13
Section 4.25 Director and Officer Indemnification................ 13
Section 4.26 Brokers' and Finders' Fee........................... 13
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF IHI................... 13
Section 5.1 Organization; Qualification......................... 13
Section 5.2 Capital Stock; Subsidiaries......................... 13
Section 5.3 Corporate Authorization; Enforceability............. 14
Section 5.4 No Conflict......................................... 14
Section 5.5 Consents............................................ 14
Section 5.6 IHI Financial Statements; Undisclosed
Liabilities................................................... 14
Section 5.7 Absence of Certain Changes.......................... 14
Section 5.8 Material Contracts.................................. 14
Section 5.9 Real Property....................................... 15
Section 5.10 Real Property Leases................................ 15
Section 5.11 Personal Property................................... 15
Section 5.12 Compliance with Laws................................ 15
Section 5.13 Permits............................................. 15
Section 5.14 Litigation.......................................... 15
Section 5.15 Environmental Compliance............................ 16
Section 5.16 ERISA and Related Matters........................... 16
Section 5.17 Taxes............................................... 17
Section 5.18 Customers and Suppliers............................. 18
Section 5.19 Insurance........................................... 18
Section 5.20 Safety and Health................................... 18
Section 5.21 Labor Matters....................................... 19
Section 5.22 Transactions with Certain Persons................... 19
Section 5.23 Propriety of Past Payments.......................... 19
Section 5.24 Intellectual Property............................... 19
Section 5.25 Director and Officer Indemnification................ 19
Section 5.26 Brokers' and Finders' Fee........................... 19
Section 5.27 SEC Filings; Financial Statements................... 19
Page 14 of 65
ARTICLE 6. COVENANTS............................................... 19
Section 6.1 Legal Requirements.................................. 19
Section 6.2 Stockholder Approvals............................... 20
Section 6.3 Joint Proxy Statement............................... 20
Section 6.4 Registration of Certain T-3 Control Person
Shares........................................................ 20
Section 6.5 Equity Investments in T-3........................... 20
Section 6.6 Financing........................................... 20
Section 6.7 Repayment of Certain Indebtedness................... 20
Section 6.8 Xxxx-Xxxxx-Xxxxxx................................... 20
Section 6.9 Access to Properties and Records.................... 21
Section 6.10 Consultation and Reporting.......................... 21
Section 6.11 Conduct of Business By Both Parties Prior to
the Closing Date.............................................. 21
Section 6.12 Public Statements................................... 22
Section 6.13 No Solicitation..................................... 22
Section 6.14 Update Information.................................. 23
Section 6.15 Maintenance of Policies............................. 23
Section 6.16 Director's and Officer's Indemnification and
Insurance..................................................... 23
Section 6.17 Nasdaq Filing....................................... 23
Section 6.18 IHI Employee Benefits............................... 23
Section 6.19 Agreements with Respect to IHI
Dispositions.................................................. 23
Section 6.20 Resignations........................................ 24
ARTICLE 7. CLOSING CONDITIONS...................................... 24
Section 7.1 Conditions Applicable to all Parties................ 24
Section 7.2 Conditions to Obligations of IHI.................... 24
Section 7.3 Conditions to Obligations of T-3.................... 24
Section 7.4 Additional Closing Condition........................ 25
ARTICLE 8. TERMINATION AND AMENDMENT............................... 25
Section 8.1 Termination......................................... 25
Section 8.2 Effect of Termination............................... 26
ARTICLE 9. MISCELLANEOUS........................................... 26
Section 9.1 Notices............................................. 26
Section 9.2 Non-Survival of Representations and
Warranties.................................................... 26
Section 9.3 Headings; Gender.................................... 26
Section 9.4 Entire Agreement; No Third Party
Beneficiaries................................................. 26
Section 9.5 Governing Law....................................... 27
Section 9.6 Assignment.......................................... 27
Section 9.7 Severability........................................ 27
Section 9.8 Counterparts........................................ 27
Section 9.9 Amendment........................................... 27
Section 9.10 Extension; Waiver................................... 27
Section 9.11 Expenses............................................ 27
Section 9.12 Joint Drafting...................................... 27
Exhibits
A -- IHI Disclosure Schedules
B -- T-3 Disclosure Schedules
C -- IHI Affiliate Letter
D -- Form of Opinion of Xxxxxx & Xxxxxx, L.L.P.
E -- Form of Opinion of LeBeouf Lamb Xxxxxx & XxxXxx LLP
F -- Environmental Disclosure Letter
G -- Form of Merger Warrant
Appendices
I Reincorporation Merger Agreement
II Amended and Restated Articles of Incorporation
III Amended and Restated Bylaws
IV Registration Rights Agreement
Page 15 of 65
AGREEMENT AND PLAN OF MERGER
This
Agreement and Plan of Merger, dated as of May 7, 2001 is by and among
Industrial Holdings, Inc., a Texas corporation ("IHI"), T-3 Energy Services,
Inc., a
Delaware corporation ("T-3"), and First Reserve Fund VIII, Limited
Partnership, a
Delaware limited partnership (the "Fund").
WITNESSETH:
WHEREAS, the Board of Directors of T-3 and the Board of Directors of IHI
have determined it to be desirable to enter into a business combination to be
effected by a merger of T-3 into IHI as a result of which the separate existence
of T-3 shall cease and IHI shall be the surviving corporation, on the terms and
subject to the conditions set forth herein (the "Merger");
WHEREAS, for federal income tax purposes, the Merger is intended to qualify
as a tax-free reorganization described in Section 368(a)(1)(A) of the Code (as
defined below);
WHEREAS, immediately subsequent to the consummation of the Merger, IHI will
merge into a
Delaware corporation which is a wholly-owned subsidiary of IHI
("IHI
Delaware"), on the terms set forth in Appendix I hereto (the
"Reincorporation"); and
WHEREAS, as of the date hereof, pursuant to a stock purchase agreement, T-3
has acquired all of the capital stock of A&B Bolt & Supply, Inc., a subsidiary
of IHI.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements herein contained, the parties hereto agree as follows:
ARTICLE 1.
DEFINED TERMS
Section 1.1 Definitions. In addition to the other defined terms used herein,
as used in this Agreement, the following terms when capitalized have the
meanings indicated.
"Affiliate" shall have the meaning ascribed by Rule 12b-2 promulgated under
the Exchange Act.
"Agreed TRO" shall mean the Agreed Temporary Injunction entered April 12,
2001, as modified on May 4, 2001, in Cause No. 2001-1950 styled EnSerCo, LLC vs.
Industrial Holdings, Inc., in the 295th Judicial District of Xxxxxx County,
Texas.
"Agreement" shall mean this
Agreement and Plan of Merger, as amended or
otherwise modified from time to time.
"Applicable Law" shall mean any statute, law, rule or regulation or any
judgment, order, writ, injunction or decree of any Governmental Entity to which
a specified Person or its property is subject.
"Business Day" shall mean a day other than a Saturday, a Sunday or a day on
which national banks in New York are closed.
"Certificate of Merger" shall have the meaning ascribed to it in Section
2.1(b) hereof.
"Closing" shall have the meaning ascribed to it in Section 2.1(a) hereof.
"Closing Date" shall have the meaning ascribed to it in Section 2.1(a)
hereof.
"Code" shall mean the Internal Revenue Code of 1986, as amended, or any
substitute or successor statute thereto.
"Discretionary Equity Investment" shall have the meaning ascribed to it in
Section 6.5 hereof.
"Disposition Agreements" shall have the meaning ascribed to it in Section
6.19(b) hereof.
"DGCL" shall mean the
Delaware General Corporation Law.
"Effective Date" and "Effective Time" shall have the meanings ascribed to
them in Section 2.1(b) hereof.
"Environmental Laws" shall mean all Applicable Laws relating to the
protection of air, groundwater, surface water, soil or other environmental media
of any nature.
"Equity Investment" shall have the meaning ascribed to it in Section 6.5
hereof.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder.
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"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Exchange Factor" means 90.846.
"Extended Coverage Policy" shall have the meaning ascribed to it in Section
6.16(b) hereof.
"Financing" shall have the meaning ascribed to it in Section 6.6(a) hereof.
"GAAP" means U.S. generally accepted accounting principles.
"Governmental Entity" shall mean any court or tribunal in any jurisdiction
or any public, governmental or regulatory body, agency, department, commission,
board, bureau or other authority or instrumentality.
"Hazardous Substances" or "Hazardous Waste" shall means materials defined as
"hazardous substances," "hazardous wastes," or "hazardous constituents" in (i)
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, 42 U.S.C. Sections 9601-9675, as amended by the Superfund Amendments and
Reauthorization Act of 1986, and any amendments thereto and regulations
thereunder; (ii) the Resource Conservation and Recovery Act of 1976, 42 U.S.C.
Sections 6901-6992, as amended by the Hazardous and Solid Waste Amendments of
1984, and any amendments thereto and regulations thereunder; (iii) the Oil
Pollution Act of 1990, 33 U.S.C. Sections 2701-2761, and any amendments thereto
and regulations thereunder; and (iv) any other applicable Environmental Law.
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended.
"HSR Form" shall mean the notification and report form required to be filed
under the HSR Act.
"IHI Annual Financial Statements" shall mean the audited consolidated
balance sheet and related audited consolidated statements of operations,
stockholders' equity and cash flows, and the related notes thereto of IHI and
its Subsidiaries as of and for the fiscal years ended December 31, 1999 and
2000.
"IHI Meeting" shall have the meaning ascribed to it in Section 6.2(a)
hereof.
"IHI Benefit Program or Agreement" shall have the meaning ascribed to it in
Section 5.16(a) hereof.
"IHI Common Stock" shall mean the shares of common stock, $.01 par value per
share, of IHI.
"IHI Disclosure Schedules" shall mean the disclosure schedules and other
documents attached to such schedules prepared by IHI in connection with this
Agreement and attached hereto as Exhibit A.
"IHI Dispositions" means the sale by IHI of the companies described in
Section 6.19 of the IHI Disclosure Schedules, which is described in Section 6.19
hereof.
"IHI Financial Statements" shall mean the IHI Annual Financial Statements
and the IHI Interim Financial Statements, collectively.
"IHI Interim Financial Statements" shall mean the unaudited consolidated
balance sheet and the related unaudited consolidated statement of operations of
IHI and its Subsidiaries as of and for the three-month period ended March 31,
2001.
"IHI Leased Properties" shall have the meaning ascribed to it in Section
5.10(a) hereof.
"IHI Owned Properties" shall have the meaning ascribed to it in Section 5.9
hereof.
"IHI Policies" shall have the meaning ascribed to it in Section 5.19(a)
hereof.
"IHI SEC Filings" shall have the meaning ascribed to it in Section 5.27
hereof.
"IHI Senior Secured Credit Facility" shall mean the credit facility
evidenced by that certain Amended and Restated Credit Agreement dated as of June
17, 1999 between IHI and Comerica Bank -- Texas, both individually and as agent,
and the other banks which, from time to time are a party thereto.
"IHI Stockholders" shall mean the holders of IHI Common Stock.
"Joint Proxy Statement" shall have the meaning ascribed to it in Section 6.3
hereof.
"Knowledge" of any Person means the actual knowledge of such Person's
executive and financial officers in each case after reasonable inquiry of such
other officers of such Person with direct responsibility for the Person's
business relating to such knowledge.
"Leases" shall mean any executory lease having future rental payments of
more than $200,000 in the aggregate.
"Liens" shall mean pledges, liens, defects, leases, licenses, conditional
sales contracts, charges, claims, encumbrances, security interests, easements,
restrictions, chattel mortgages, mortgages or deeds of trust, of any kind or
nature whatsoever.
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"Material Adverse Effect" means with respect to a Person, any fact,
circumstance, event or condition that has or would be reasonably likely to have,
with the passage of time, a material adverse effect on the business, operations,
assets or financial condition of such Person and its Subsidiaries, taken as a
whole, or on such Person's ability to carry out the transactions contemplated
hereby; including, but not limited to, with respect to IHI, the environmental
condition described in Exhibit F being a material cause of IHI's inability to
obtain the Financing. Notwithstanding the foregoing, "Material Adverse Effects"
shall not include changes affecting the United States economy or the energy
industry generally in which such person operates.
"Material Contract" shall mean any executory contract, agreement or other
understanding, whether or not reduced to writing, to which a IHI, T-3, their
respective Subsidiaries or their respective property is subject, which (i)
provides for future payments by such party of more than $200,000 in the
aggregate and is not subject to cancellation upon notice of 30 days or less
(without penalty), or (ii) relates to the issuance of any security or the
registration thereof with the SEC.
"Merger Shares" shall mean the shares of IHI Common Stock to be issued by
IHI to the T-3 Stockholders in connection with the Merger as contemplated in
Section 3.1(b) hereof.
"Merger Warrant" means a warrant to purchase one share of common stock of
the Surviving Corporation for $1.28 in substantially the form attached hereto as
"Exhibit G."
"Multiemployer Plan" shall mean a plan or arrangement as defined in Section
4001(a)(3) and 3(37) of ERISA.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"Nasdaq" shall mean The Nasdaq Stock Market, Inc.
"Permitted Liens" shall mean (a) Liens other than for borrowed money that do
not materially reduce the value or materially interfere with the present use by
the applicable Person of the property subject thereto or affected thereby, (b)
Liens for Taxes, assessments or similar governmental charges, which in each case
constitute a Lien not yet due and payable or which are being contested in good
faith and by appropriate proceedings if adequate reserves with respect thereto
are maintained by the applicable party on their books in accordance with GAAP,
and (c) mechanic's, workmen's, landlord's, materialmen's, maritime or other
similar Liens with respect to amounts not yet due and payable or which are being
contested in good faith by appropriate proceedings with adequate reserves with
respect thereto maintained on the applicable Person's books in accordance with
GAAP.
"Person" shall mean an individual, firm, corporation, general or limited
partnership, limited liability company, limited liability partnership, joint
venture, trust, governmental authority or body, association, unincorporated
organization or other entity.
"Personal Property" shall mean all machinery, equipment, furniture, fixtures
and other tangible or intangible personal property used by T-3 or IHI, as the
case may be, to carry on its business as presently conducted.
"Pre-Closing Periods" shall mean all Tax periods ending on or before the
Closing Date and, with respect to any Tax period that includes but does not end
on the Closing Date, the portion of such period that ends on and includes the
Closing Date.
"Proceedings" shall mean any suit, action, proceeding, dispute or claim
before or investigation by any Governmental Entity.
"Returns" shall mean any returns, declarations, reports, estimates,
declarations and statements of any nature required to be filed in respect of
Taxes for any Pre-Closing Period, and any claims for refund of Taxes to a
Governmental Entity, including any amendments or supplements to any of the
foregoing.
"Reincorporated Corporation" means the surviving corporation in the
Reincorporation.
"Reincorporation Merger Agreement" means the
Agreement and Plan of Merger
attached to this Agreement as Appendix I.
"Sale of Assets" means a sale, lease or exchange of all or substantially all
of the assets of an entity which is subject to the IHI Dispositions.
"Sale of Stock" means (i) any sale in a single transaction or in a series of
related and substantially contemporaneous transactions of shares of all of the
capital stock of any entity which is subject to the IHI Dispositions, or (ii)
any merger, consolidation or reorganization of an entity which is subject to the
IHI Dispositions, as a result of which all of the capital stock of such entity
is sold, transferred or exchanged pursuant to such merger, consolidation or
reorganization.
"Sale Transaction" shall mean with respect to IHI and T-3 (for purposes of
this definition, each an "issuer") (a) the acquisition (by direct issuance from
the issuer, from existing security holders or otherwise), by any Person or group
of Persons deemed a "person" under Section 13(a)(3) of the Exchange Act, of
beneficial ownership of securities representing a majority of the combined
voting power of the outstanding capital stock of the applicable issuer,
generally or as a separate class or series or together with one or more class or
series of shares or stock, in the election of directors of such issuer, the
result of which would give such Person or Persons (or group) the ability to
elect a majority of the Board of Directors of such issuer, (b) a reorganization,
recapitalization, merger, consolidation or similar business combination or
transaction involving the applicable issuer (unless the holders of the
outstanding securities of such issuer entitled to vote in the election of
directors prior to such transaction continue to own securities of the entity
resulting from or surviving such transaction (a "Surviving Entity") entitled to
vote in the election of directors sufficient to allow such holders to elect a
majority of the board of directors of the Surviving Entity upon the completion
of
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such transaction) or (c) a sale or other disposition (in a single transaction or
a series of related transactions) of assets with an asset value in excess of 25%
of the market value of the assets of the applicable issuer and its Subsidiaries
as a whole; provided, however, such term shall not include the Equity Investment
or the transactions contemplated by this Agreement, including without
limitation, the IHI Dispositions.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Subsidiary" means, with respect to a Person, any corporation, partnership,
joint venture or other legal entity that is consolidated with the Person in the
Person's financial statements prepared using GAAP; provided, however, A&B Bolt &
Supply, Inc., a Louisiana corporation, shall not be considered a Subsidiary of
T-3 for purposes of any representation or warranty by T-3 contained in Article
4.
"Superior Proposal" shall have the meaning ascribed to it in Section 6.13
hereof.
"Surviving Corporation" shall have the meaning ascribed to it in Section 2.2
hereof.
"T-3 Annual Financial Statements" shall mean the audited consolidated
balance sheet and related audited consolidated statements of income,
stockholders equity and cash flows, and the related notes thereto of T-3 and its
Subsidiaries as of and for the fiscal years ended December 31, 2000.
"T-3 Benefit Program or Agreement" shall have the meaning ascribed to it in
Section 4.16(a) hereof.
"T-3 Common Stock" shall mean the shares of common stock of T-3, $.001 par
value per share.
"T-3 Disclosure Schedules" shall mean the disclosure schedules and other
documents attached to such schedules prepared by T-3 in connection with this
Agreement and attached hereto as Exhibit B.
"T-3 Financial Statements" shall mean the T-3 Annual Financial Statements
and the T-3 Interim Financial Statements, collectively.
"T-3 Interim Financial Statements" shall mean the unaudited consolidated
balance sheet and the related unaudited consolidated statements of income of T-3
and its Subsidiaries as of and for the three-month period ended March 31, 2001.
"T-3 Leased Properties" shall have the meaning ascribed to it in Section
4.10(a) hereof.
"T-3 Options" shall have the meaning ascribed to such term in Section 3.2
hereof.
"T-3 Outside Board Designee" shall mean an individual designated by T-3 on
or before the effective date of the Registration Statement, which individual
shall be an "outside director" under Treasury Regulation Section 1.162-27 under
the Code, "independent directors" under Rule 4200(a)(14) of Nasdaq and a
"non-employee director" under Rule 16b-3 promulgated under the Exchange Act.
"T-3 Outstanding Shares" shall mean the outstanding shares of common stock
of T-3 as disclosed on Section 3.1 of the T-3 Disclosure Schedules, as such
Disclosure Schedules shall be amended from time to time.
"T-3 Owned Properties" shall have the meaning ascribed to it in Section
4.9(a) hereof.
"T-3 Policies" shall have the meaning ascribed to it in Section 4.19(a)
hereof.
"T-3 Stockholders" shall mean the holders of T-3 Common Stock.
"Taxes" shall mean any federal, state, local, foreign or other taxes
(including, without limitation, income, corporation, alternative minimum, gross
receipts, profits, capital stock, franchise, property, sales, use, lease,
excise, severance, premium, windfall profits, payroll, wage, employment or
withholding taxes, estimated or other similar tax), fees, duties, assessments,
withholdings or governmental charges of any kind whatsoever in the nature of or
in lieu of any tax (including interest, penalties and additions to tax) and any
liability in respect of any tax as a result of being a member of any affiliated,
consolidated, combined, unitary or similar group.
"TBCA" means the Texas Business Corporation Act.
ARTICLE 2.
THE CLOSING; THE MERGER; EFFECTS OF THE MERGER
Section 2.1 Closing.
(a) The closing of the transactions contemplated herein (the "Closing") will
take place, assuming satisfaction or waiver of each of the conditions set forth
in Article 7 hereof, at the offices of Xxxxxx & Xxxxxx, L.L.P., 000 Xxxxxxxxx,
Xxxxxxx, Xxxxx 00000, at 10:00 A.M. (local time) on such date as may be mutually
agreed upon between the parties following satisfaction or permitted waiver of
the last to occur of the conditions set forth in Section 7.1 (other than
conditions that will be satisfied or permissively waived at the Closing), or if
no date has been agreed to, on any date specified by one party to the others
upon three days' notice following satisfaction or permitted waiver of such
conditions,
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provided, in each case, that the other conditions set forth in Article 7 shall
have been satisfied or waived as provided in Article 7 at or prior to the
Closing (the date of the Closing being referred to herein as the "Closing
Date").
(b) At the Closing, the parties shall (i) deliver the documents,
certificates and opinions required to be delivered by Article 7 hereof, (ii)
provide written evidence, if applicable, of the satisfaction or permitted waiver
of each of the conditions to the other party's obligations set forth in Article
7 hereof, (iii) cause the appropriate officers of each party to execute and
deliver articles or a certificate of merger in accordance with the provisions of
the DGCL and the TBCA (each, the "Certificate of Merger"), and (iv) consummate
the Merger by causing to be filed such properly executed Certificate of Merger
with the Secretary of State of the State of
Delaware and the Secretary of State
of the State of Texas in accordance with the provisions of the DGCL and the
TBCA, respectively. The Merger shall be effective as of the date and time set
forth in the Certificates of Merger (such date and time being hereinafter
referred to respectively as the "Effective Date" and the "Effective Time").
Section 2.2 The Merger. Subject to the terms and conditions of this
Agreement, T-3 shall be merged with and into IHI at the Effective Time.
Following the Merger, the separate corporate existence of T-3 shall cease, and
IHI shall be the surviving corporation in accordance with the provisions of the
TBCA (the "Surviving Corporation").
Section 2.3 Effects of the Merger.
(a) At the Effective Time and except as provided in this Section 2.3, the
identity, existence, purposes, powers, objects, franchises, rights, and
immunities of IHI, the surviving corporation of the Merger, shall continue
unaffected and unimpaired by the Merger, and the corporate identity, existence,
purposes, powers, objects, franchises, rights, and immunities of T-3 shall be
wholly merged into IHI, and IHI shall be fully vested therewith. Accordingly, at
the Effective Time, the separate existence of T-3, except insofar as continued
by statute, shall cease.
(b) With respect to the conversion of shares of T-3 Common Stock, the Merger
is intended to qualify as a tax-free reorganization described in Section
368(a)(1)(A) of the Code.
(c) The laws of the State of Texas shall continue to govern the Surviving
Corporation. From and after the Effective Time, the articles of incorporation of
IHI, the Surviving Corporation, shall be amended and restated in the form
attached hereto as Appendix II (the "Restated Articles"), until further amended
in the manner provided by the Restated Articles and Applicable Law.
(d) From and after the Effective Time, the bylaws of IHI, the Surviving
Corporation, shall be amended and restated in the form attached hereto as
Appendix III (the "Restated Bylaws"), until altered, amended, or repealed, or
until new bylaws shall be adopted in accordance with the provisions therein, the
Restated Articles and Applicable Law.
(e) The directors who shall constitute the board of directors of the
Surviving Corporation from and after the Effective Time shall be as follows:
CLASS I
Xxxxxx X. Xxxx
Xxxxxx X. Xxxxxx
CLASS II
Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxx
T-3 Outside Board Designee
CLASS III
Xxx X. Xxxxx
Xxxxxxx X. Xxxxxxxxxx
Xxxxxx X. Xxxxxxx
until their successors are duly elected and qualified in accordance with the
Restated Articles, the Restated Bylaws and Applicable Law. If before the
Effective Time, any one or more of such directors dies or refuses or becomes
unable to serve as a director of the Surviving Corporation, then the remaining
named directors shall be the directors of the Surviving Corporation from and
after the Effective Time until their successors are duly elected and qualified
in accordance with the restated Articles, the Restated Bylaws and Applicable
Law.
(f) On or after the Effective Time, if a vacancy shall exist for any reason
in the board of directors of the Surviving Corporation, such vacancy shall be
filled in the manner provided in the Articles and/or the Restated Bylaws of the
Surviving Corporation.
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(g) From and after the Effective Time, the members of the committees of the
Board of Directors of the Surviving Corporation shall be as set forth below:
Audit Committee
Xxxxxx X. Xxxxxxx (Chairman)
Xxxxx X.. Xxxxxxx
Xxxxxx X. Xxxxxx
Compensation Committee
Xxx X. Xxxxx (Chairman)
Xxxxxx X. Xxxxxxx
(h) From and after the Effective Time, the officers of the Surviving
Corporation shall be as set forth below:
TITLE NAME
----------------------------------------------------- ----------------------
President and Chief Executive Officer................ Xxxxxxx X. Xxxxxxxxxx
Chief Financial Officer, Treasurer and Secretary..... Xxxxxxx X. Xxxx
Assistant Secretary.................................. Xxxxx X. Xxxx
All other officers of the Surviving Corporation shall be as elected by the
Board of Directors from time to time following the Effective Time in accordance
with the Restated Bylaws. From and after the Effective Time, the officers of the
Surviving Corporation shall hold office subject to the provisions of the
Restated Bylaws and Applicable Law.
(i) The authorized number of shares of capital stock of the Surviving
Corporation, and the par value, designations, preferences, rights, and
limitations thereof, and the express terms thereof, shall be as set forth in the
Restated Articles.
ARTICLE 3.
MERGER CONSIDERATION; CONVERSION OF SHARES
Section 3.1 Conversion of Shares.
(a) The manner and basis of converting the issued and outstanding shares of
T-3 Common Stock into shares of IHI Common Stock shall be as hereinafter set
forth in this Section 3.1.
(b) At the Effective Time, each share of T-3 Common Stock issued and
outstanding immediately prior to the Effective Time (other than shares held by a
holder that properly exercises dissenters' rights in strict compliance with the
DGCL), without any action on the part of the holder thereof, shall automatically
become and be converted into (i) the right to receive certificates evidencing a
number of shares of IHI Common Stock equal to the Exchange Factor plus (ii)
3.9074 Merger Warrants upon surrender, in accordance with Subsection 3.1(c)
hereof, of certificates theretofore evidencing shares of T-3 Common Stock.
Section 3.1 of the T-3 Disclosure Schedules lists all T-3 Stockholders and the
number of shares of T-3 Common Stock owned by each such stockholder as of the
date hereof (including shares issuable upon conversion of debt held by the
Fund).
(c) Commencing on the Effective Date, each holder of an outstanding
certificate or certificates theretofore representing shares of T-3 Common Stock
may surrender the same to an exchange agent designated by IHI, and such holder
shall be entitled upon such surrender to receive in exchange therefor a
certificate or certificates representing the number of whole IHI Shares into
which the shares of T-3 Common Stock theretofore represented by the certificate
or certificates so surrendered shall have been converted. However, before
surrender, each outstanding certificate representing issued and outstanding T-3
Common Stock shall be deemed, for all purposes, only to evidence ownership of
the number of whole Merger Shares into which such shares have been so converted.
Unless and until such outstanding certificates formerly representing T-3 Common
Stock are so surrendered, no dividend payable to holders of record of IHI Common
Stock as of any date after the Effective Date shall be paid to the holders of
such outstanding certificates. Upon surrender of such outstanding certificates,
however, there shall be paid to the holders of the certificates of Merger Shares
the amount of dividends, if any, which theretofore (but after the Effective
Date) became payable with respect to such full Merger Shares. No interest shall
be payable with respect to the payment of such dividends on surrender of
outstanding certificates. The holder of fractional share interests, as such,
shall not be entitled to any dividends or to any distribution in the event of
liquidation or to any voting or other privileges of a stockholder of IHI.
(d) No certificates for fractional share interests of IHI Common Stock will
be issued, but, in lieu thereof, IHI will settle all such fractional share
interests in cash on the basis of the closing price for IHI Common Stock on the
Nasdaq on the last trading day before the Effective Date.
(e) Upon the Effective Date, the stock transfer books of T-3 shall be deemed
closed, and no transfer of any certificates theretofore representing shares of
T-3 shall thereafter be made or consummated.
(f) The assets and liabilities of IHI and T-3 shall be taken up on the books
of the Surviving Corporation in accordance with GAAP, and the capital surplus
and retained earnings accounts of the Surviving Corporation shall be determined,
in accordance with GAAP, by the board of directors of the Surviving Corporation.
Nothing herein shall prevent the board of directors of the Surviving Corporation
from making any future changes in its accounts in accordance with law.
(g) Subject to any contrary provision of Applicable Law, all consideration
deposited with the exchange agent or held by IHI for the payment of the
consideration into which the outstanding shares of T-3 Common Stock shall have
been converted, and remaining unclaimed for one year after the Effective Date,
shall be paid or delivered to the Surviving Corporation; and the holder of any
unexchanged certificate or certificates which before the Effective Date
represented shares of T-3 Common Stock shall thereafter look only to the
Surviving Corporation for exchange or payment thereof upon surrender of such
certificate or certificates to Surviving Corporation.
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(h) IHI agrees that, if the merger contemplated hereby becomes effective, it
will promptly pay to any dissenting stockholder of T-3 the amount, if any, to
which such holder is entitled under the provisions of Section 262 of the DGCL,
provided such dissenter acts in strict compliance with such provisions.
(i) Each share of IHI Common Stock outstanding immediately prior to the
Effective Time shall remain one validly issued and outstanding share of common
stock of the Surviving Corporation following the Effective Time.
Section 3.2 Treatment of T-3 Stock Options. On the Effective Date, each of
the then outstanding options to purchase T-3 Common Stock (collectively, the
"T-3 Options") (which includes all outstanding options granted under T-3's stock
option plans (the "T-3 Option Plans")) will and without any further action on
the part of any holder thereof (herein, an "optionholder"), be converted into an
option to purchase that number of shares of IHI Common Stock determined by
multiplying the number of shares of T-3 Common Stock subject to such T-3 Option
at the Effective Date by the Exchange Factor (as may be adjusted pursuant to the
terms hereof), at an exercise price per share of IHI Common Stock (rounded up to
the nearest whole cent) equal to the exercise price per share of such T-3 Option
divided by the Exchange Factor. If the foregoing calculation results in an
exchanged T-3 Option being exercisable for a fraction of a share of IHI Common
Stock, then the number of shares of IHI Common Stock subject to such option will
be rounded down to the nearest whole number of shares, and the total exercise
price for the option will be reduced by the exercise price of the fractional
share. The term, exercisability, vesting schedule, and all other terms and
conditions of the T-3 Options will otherwise be unchanged by the provisions of
this Section 3.2 and shall operate in accordance with their terms. All shares of
IHI Common Stock issued upon exercise of the exchanged T-3 Options shall be
registered under an effective Form S-8 Registration Statement (or other
comparable form) filed with the SEC.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF T-3
T-3 represents and warrants to IHI as follows (each of the representations
and warranties made with respect to T-3, unless the context requires the
contrary, includes all of T-3's Subsidiaries) with respect to the matters set
forth below.
Section 4.1 Organization; Qualification. T-3 is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has the requisite corporate power and authority to own its property
and to carry on its business as it is now being conducted. No actions or
proceedings to dissolve T-3 are pending. Section 4.1 of the T-3 Disclosure
Schedules sets forth the jurisdictions in which T-3 is qualified to do business
as a foreign corporation. Copies of the certificate of incorporation and by-
laws of T-3, with all amendments to the date hereof, have been furnished to IHI
or its representatives, and such copies are accurate and complete as of the date
hereof. T-3 has made available to IHI accurate and complete copies of the
minutes of all meetings of its boards of directors, any committees of such
boards and stockholders (and all consents in lieu of such meetings). Such
records, minutes and consents accurately reflect in all material respects all
actions taken by its board of directors, committees and stockholders as of the
date hereof. T-3 is not in violation of any provision of its certificate of
incorporation or its by-laws other than such violations, that in the aggregate,
would not have a Material Adverse Effect on T-3.
Section 4.2 Capital Stock; Subsidiaries. As of the date of this Agreement,
the authorized capital stock of T-3 consists of 500,000 shares of T-3 Common
Stock, of which 218,337 shares are issued and outstanding, and 500,000 shares of
preferred stock, par value $.01 per share, no shares of which are issued and
outstanding, and no shares of capital stock are held in its treasury. All issued
and outstanding shares of T-3 Common Stock have been duly authorized and are
validly issued, fully paid and non-assessable. All outstanding shares of T-3
Common Stock are held of record and beneficially by the Persons set forth in
Section 3.1 of the T-3 Disclosure Schedules, as it may be amended as of the
Closing Date in accordance with Section 6.6.
(a) Except as set forth in Section 4.2 of the T-3 Disclosure Schedules,
there are no outstanding stock options, warrants or other rights to acquire of
have delivered any shares of the capital stock of T-3 or any security
convertible into T-3 Common Stock, and except as set forth in Section 4.2 of the
T-3 Disclosure Schedules, T-3 has no obligation or other commitment to issue,
sell or deliver any of the foregoing or any shares of its capital stock. Neither
the execution of this Agreement nor any other document contemplated to be
executed hereby nor the consummation of the Merger nor any other transaction
contemplated hereby or thereby will result in the triggering of any
"anti-dilution" provisions of any option, warrant or other instrument granting
others the right to acquire any securities of T-3. All issued and outstanding
shares of T-3 Common Stock have been issued in compliance with all legal
requirements and without violation of any preemptive or similar rights.
(b) All issued and outstanding shares of common stock of T-3's Subsidiaries
have been duly authorized and are validly issued, fully paid and non-assessable.
Except as set forth in Section 4.2 of the T-3 Disclosure Schedules, all
outstanding capital stock of T-3 Subsidiaries are held of record and
beneficially by T-3.
(c) Section 4.2 of the T-3 Disclosure Schedules contains a list of all of
T-3's Subsidiaries. Except for its Subsidiaries, T-3 does not directly or
indirectly have any legal or beneficial ownership interest in any Person.
Section 4.3 Corporate Authorization; Enforceability.
(a) The execution, delivery and performance of this Agreement by T-3 has
been duly authorized by the board of directors of T-3. Upon an affirmative vote
or consent of the holders of a majority of the outstanding T-3 Common Stock, no
further vote or consent of stockholders or directors of T-3 and no further
corporate acts or other corporate proceedings are required of T-3 for the due
and valid authorization, execution, delivery and performance of this Agreement
or the consummation of the Merger.
(b) This Agreement is the legal, valid and binding obligation of T-3
enforceable against it in accordance with its terms, except that enforcement may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium and
other similar laws affecting creditors' rights generally and equitable
principles which may limit the availability of certain equitable remedies in
certain instances.
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Section 4.4 No Conflict. Except as set forth in Section 4.4 of the T-3
Disclosure Schedules, neither the execution, delivery or performance of this
Agreement by T-3 nor the consummation of the transactions contemplated hereby
will (a) if the requisite T-3 Stockholder approval is obtained, conflict with or
result in any breach of the provisions of the certificate of incorporation or
by-laws of T-3, (b) result in the violation or breach of, or constitute (with or
without due notice or the lapse of time or both) a default (or give rise to any
right of termination, cancellation or acceleration) under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, or any material
license, contract, agreement or other instrument or obligation to which either
of T-3 is a party or by which it or its properties or assets may be bound,
except for such violations, breaches or defaults that would not, individually or
in the aggregate, have a Material Adverse Effect on T-3, or (c) violate any
order, writ, injunction, decree, statute, rule or regulation applicable to T-3
or its properties or assets, except for such violations, that in the aggregate,
would not have a Material Adverse Effect on T-3.
Section 4.5 Consents. No consent, approval, order or authorization of, or
declaration, filing or registration with, any Governmental Entity or other
Person is required to be obtained or made by T-3 in connection with the
execution, delivery or performance by T-3 of this Agreement or the consummation
by T-3 of the transactions contemplated hereby except for (a) those required by
the HSR Act, if any, (b) as set forth in Section 4.5 of the T-3 Disclosure
Schedules, (c) the requisite T-3 Stockholder approval and action set forth in
Section 4.3(a) hereof and (d) such other consents, approvals, orders,
authorizations, declarations, filings, or registrations, the failure of which to
obtain or make would not have, in the aggregate, a Material Adverse Effect on
T-3.
Section 4.6 T-3 Financial Statements; Undisclosed Liabilities.
(a) The T-3 Annual Financial Statements have been audited by Xxxxxx
Xxxxxxxx, LLP, independent public accountants, in accordance with generally
accepted auditing standards, have been prepared in accordance with GAAP, and
present fairly in all material respects the financial position of T-3 and its
Subsidiaries at such dates and the results of operations and cash flows for the
periods then ended.
(b) The T-3 Interim Financial Statements have been prepared in accordance
with GAAP on a basis consistent with the prior year end and reflect all
adjustments, consisting only of normal, recurring adjustments, that are
necessary for a fair statement in all material respects of the results for the
interim period presented therein. Except as disclosed in Section 4.6 of the T-3
Disclosure Schedules, none of T-3, its Subsidiaries, nor any of their respective
assets, is subject to any liability, commitment, debt or obligation that would
be required to be disclosed in financial statements prepared in accordance with
GAAP, except (i) as and to the extent reflected on the T-3 Interim Financial
Statements, or (ii) as may have been incurred or may have arisen since the date
of the T-3 Interim Financial Statements in the ordinary course of business and
that are permitted by this Agreement, or, in the aggregate, would not have a
Material Adverse Effect on T-3.
Section 4.7 Absence of Certain Changes. Since March 31, 2001, T-3 has
operated in the ordinary course of business consistent with past practice and
there has been no event or condition of any character that has had, or can
reasonably be expected to have, a Material Adverse Effect on T-3.
Section 4.8 Material Contracts.
(a) Section 4.8 of the T-3 Disclosure Schedules contains a list and brief
description (including the names of the parties and the date and nature of the
agreement) of each Material Contract to which T-3 or any of its Subsidiaries is
a party, or to which any of their respective properties is subject. IHI has been
provided a complete and accurate copy of each Material Contract listed on
Section 4.8 of the T-3 Disclosure Schedules. Except as set forth in Section 4.8
of the T-3 Disclosure Schedules, each such Material Contract is a legal, valid,
binding and enforceable obligation of T-3 or any of its Subsidiaries, as the
case may be, except to the extent that enforcement may be limited by (i)
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the enforcement of creditors' rights generally and (ii)
general equitable principles.
(b) Except as set forth in Section 4.8 of the T-3 Disclosure Schedules, T-3
is not in material breach of or default (and, to the Knowledge of T-3, no event
has occurred which, with due notice or lapse of time or both, would constitute
such a breach or default) under any Material Contract, except where any such
breaches or defaults, in the aggregate, would not have a Material Adverse Effect
on T-3, and no party to any Material Contract has given T-3 written notice of or
made a claim in writing with respect to any breach or default under any such
Material Contract.
Section 4.9 Real Property.
(a) Section 4.9 of the T-3 Disclosure Schedules sets forth a true and
complete list of all real property owned in fee simple title by T-3
(collectively, the "T-3 Owned Properties"). Except as set forth in Section 4.9
of the T-3 Disclosure Schedules, T-3 has good and indefeasible title to all T-3
Owned Properties. Except as disclosed in Section 4.9 of the T-3 Disclosure
Schedules, none of the T-3 Owned Properties is subject to any Liens, except for
(i) Liens that collateralize indebtedness that is reflected in the T-3 Interim
Financial Statements and (ii) Permitted Liens.
(b) Except as set forth in Section 4.9 of the T-3 Disclosure Schedules, all
improvements on the T-3 Owned Properties and the operations therein conducted
conform in all material respects to all applicable health, fire, safety, zoning
and building laws, ordinances and administrative regulations, except for
possible nonconforming uses or violations which do not materially interfere with
the present use, operation or maintenance thereof or access thereto by T-3, and,
individually or in the aggregate, would not otherwise have a Material Adverse
Effect on T-3. The operating condition and state of repair of all buildings,
structures, improvements and fixtures on the T-3 Owned Properties are sufficient
to permit the use and operation of all such buildings, structures, improvements
and fixtures as now used or operated by T-3 except where the failure to be in
such condition would not have a Material Adverse Effect on T-3.
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Section 4.10 Real Property Leases.
(a) Section 4.10 of the T-3 Disclosure Schedules sets forth a list of all
Leases with respect to all real properties in which T-3 has a leasehold,
subleasehold, or other occupancy interest (the "T-3 Leased Properties").
Complete and accurate copies of all such Leases and all amendments thereto have
been provided to IHI. All of the Leases for the T-3 Leased Properties are valid
and effective against T-3 in accordance with their respective terms, except that
the enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting or relating to
enforcement of creditors' rights generally and (ii) general equitable
principles.
(b) T-3 has not received written notice that it is in material breach of or
default (and, to the Knowledge of T-3, no event has occurred, that, with due
notice or lapse of time or both, would constitute such a breach or default)
under any Lease.
(c) Except as set forth in Section 4.10 of the T-3 Disclosure Schedules, no
T-3 Leased Property is subject to any material sublease, license or other
agreement granting to any Person any right to the use, occupancy or enjoyment of
T-3 Leased Property or any portion thereof through T-3.
Section 4.11 Personal Property.
(a) Except as set forth in Section 4.11 of the T-3 Disclosure Schedules, T-3
has good and indefeasible title to all Personal Property owned by T-3, free and
clear of all Liens other than (i) Liens that collateralize indebtedness that is
reflected in the T-3 Interim Financial Statements and (ii) Permitted Liens.
(b) Except as set forth in Section 4.11 of the T-3 Disclosure Schedules, T-3
holds valid leaseholds in all of the Personal Property leased by it, which
leases are enforceable against T-3 in accordance with their respective terms,
except that the enforcement thereof may be subject to (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting or
relating to enforcement of creditors' rights generally, and (ii) general
equitable principles.
(c) Except as set forth in Section 4.11 of the T-3 Disclosure Schedules, T-3
is not in breach of or default (and, to the Knowledge of T-3, no event has
occurred that, with due notice or lapse of time or both, would constitute such a
lapse or default) under any lease of any item of Personal Property leased by
T-3, except for any such breach or default that would not, individually or in
the aggregate, have a Material Adverse Effect on T-3.
(d) Except as set forth in Section 4.11 of the T-3 Disclosure Schedules, the
Personal Property now owned, leased or used by T-3 is sufficient and adequate to
carry on its business as presently conducted and the operating condition and the
state of repair thereof is sufficient to permit T-3 to carry on its business as
presently conducted except where the failure to be in such condition would not
have a Material Adverse Effect on T-3.
Section 4.12 Compliance with Laws. Except as set forth in Sections 4.12,
4.15, 4.16, 4.20 or 4.21 of the T-3 Disclosure Schedules, T-3 is not in
violation of any Applicable Law, nor is it in default with respect to any order,
writ, judgment, award, injunction or other decree of any Governmental Entity
applicable to it or any of its respective assets, properties or operations
except such violations or defaults that, in the aggregate, would not have a
Material Adverse Effect on T-3.
Section 4.13 Permits. Except as set forth in Sections 4.13 or 4.15 of the
T-3 Disclosure Schedules, T-3 has all permits, licenses and governmental
authorizations that are required for the lease, ownership, occupancy or
operation of its properties and assets and the carrying on of its business
except where the failure to have any such permits, licenses or authorizations
would not, in the aggregate, have a Material Adverse Effect on T-3.
Section 4.14 Litigation.
(a) Except as set forth in Section 4.14 of the T-3 Disclosure Schedules,
there are no Proceedings pending or, to the Knowledge of T-3, threatened,
against T-3 (i) for which an indemnification claim has been asserted, (ii) that
could reasonably be expected to have a Material Adverse Effect on T-3 or (iii)
that seeks to prohibit or restrict consummation of the transactions contemplated
by this Agreement.
(b) Except as set forth in Section 4.14 of the T-3 Disclosure Schedules,
T-3, nor any of their respective assets or properties is subject to any material
order, writ, judgment, award, injunction or decree of any Governmental Entity.
Section 4.15 Environmental Compliance.
(a) Except as set forth in Section 4.15 of the T-3 Disclosure Schedules, T-3
possesses all material licenses, permits and other approvals and authorizations
that are required under, and is and has been in compliance with, all
Environmental Laws, including all Environmental Laws governing the generation,
use, collection, treatment, storage, transportation, recovery, removal,
discharge or disposal of Hazardous Substances or Wastes, and all Environmental
Laws imposing record-keeping, maintenance, testing, inspection, notification and
reporting requirements with respect to Hazardous Substances or Wastes, except
where noncompliance would not, individually or in the aggregate, have a Material
Adverse Effect on T-3, and, to the Knowledge of T-3, except as set forth in
Section 4.15 of the T-3 Disclosure Schedules, there is no condition that would
materially interfere with such compliance in the future.
(b) Except as set forth in Section 4.15 of the T-3 Disclosure Schedules, T-3
is not subject to any Proceeding pursuant to, or has received any notice of any
violation of, or claim alleging liability under, any Environmental Laws. To the
Knowledge of T-3, no facts or circumstances exist that would reasonably be
likely to result in a claim, citation or allegation against T-3 for a violation
of, or alleging liability under any Environmental Laws, except such violations
or liabilities that would not, individually or in the aggregate, have a Material
Adverse Effect on T-3.
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(c) Except as set forth in Section 4.15 of the T-3 Disclosure Schedules, to
the Knowledge of T-3, there are no underground tanks of any type (including
tanks storing gasoline, diesel fuel, oil or other petroleum products) or
disposal sites for hazardous substances, hazardous wastes or any other regulated
waste, located on or under the T-3 Owned Properties or T-3 Leased Properties.
(d) Except as set forth in Section 4.15 of the T-3 Disclosure Schedules, to
the Knowledge of T-3, except in the ordinary course of business, and in all
cases in material compliance with all Environmental Laws, T-3 has not engaged
any third party to handle, transport or dispose of hazardous substances or
wastes (including for this purpose, gasoline, diesel fuel, oil or other
petroleum products, or bilge waste) on its behalf.
Section 4.16 ERISA and Related Matters.
(a) Section 4.16 of the T-3 Disclosure Schedules provides a list of each of
the following which T-3 or any Subsidiary thereof maintains or contributes to,
for the benefit of its current or former employees, officers or directors, or
with respect to which T-3 or any Subsidiary thereof has or may have any
liability (the "T-3 Employee Plans") as of the Closing Date:
(i) each employee benefit plan (as defined in Section 3(3) of ERISA);
and
(ii) each written or material unwritten fringe benefit, change in
control, stock purchase, personnel, stock option, collective bargaining,
bonus, incentive, vacation, severance pay, deferred compensation, executive
compensation or supplemental retirement, consulting, employment or other
written or unwritten employee benefit plan, agreement, arrangement, program,
practice or understanding that is not described in Section 4.16(a)(i).
True and complete copies of each of the written T-3 Employee Plans and
descriptions of material unwritten T-3 Employee Plans, current summary plan
descriptions, related trusts or other funding arrangements, if applicable, and
all amendments thereto, have been or on request will be furnished to IHI.
Further, a copy of the most recent determination letter, if applicable, and, for
the three most recent years, the Form 5500 and attached schedules, audited
financial statements and actuarial valuation reports, if applicable, for each
T-3 Employee Plan, and all material communications received from or sent to the
Internal Revenue Service or the Department of Labor in the last two years
regarding any T-3 Employee Plan will be provided to IHI upon request.
(b) Benefits under any T-3 Employee Plan are as represented in said
documents and have not been increased or modified (whether written or not
written) subsequent to the dates of such documents. T-3 has not communicated to
any employee or former employee any intention or commitment to modify any T-3
Employee Plan or to establish or implement any other employee or retiree benefit
or compensation arrangement.
(c) Neither T-3 nor any trade or business under common control with T-3
within the meaning of Section 414(b) or (c) of the Code prior to the Closing
Date maintains or has ever maintained or become obligated to contribute to any
employee benefit plan (i) that is subject to Title IV of ERISA, (ii) to which
Section 412 of the Code applies, (iii) that is a Multiemployer Plan, or (iv) in
connection with any trust described in Section 501(c)(9) of the Code. T-3 has
not within the last five years engaged in, and is not a successor corporation to
an entity that has engaged in, a transaction described in Section 4069 of ERISA.
(d) Except as otherwise set forth in Section 4.16 of the T-3 Disclosure
Schedules:
(i) each T-3 Employee Plan has been administered, maintained and
operated in all material respects in accordance with the terms thereof and
in compliance with its governing documents and Applicable Law (including
where applicable, ERISA and the Code);
(ii) each of the T-3 Employee Plans intended to be qualified under
section 401 of the Code (A) satisfies in form the requirements of such
section except to the extent amendments are not required by law to be made
until a date after the Closing Date, (B) has received or will file for a
favorable determination letter from the Internal Revenue Service regarding
such qualified status, (C) has not, since receipt of the most recent
favorable determination letter, been amended, and (D) has not been operated
in a way that would adversely affect its qualified status;
(iii) no act, omission or transaction has occurred which would result in
the imposition on T-3 of a breach of fiduciary duty liability or damages
under Section 409 of ERISA, a civil penalty assessed pursuant to Subsections
(c), (i) or (l) of Section 502 of ERISA or a Tax imposed pursuant to Chapter
43 of Subtitle D of the Code;
(iv) neither T-3 nor any of its directors, officers or employees has
engaged in any transaction with respect to a T-3 Employee Plan that could
subject T-3 to a Tax, penalty or liability for a prohibited transaction, as
defined in Section 406 of ERISA or Section 4975 of the Code, and none of the
assets of any T-3 Employee Plan are invested in employer securities or
employer real property;
(v) full payment has been made of all amounts which T-3 is or has been
required to have paid as contributions to or benefits due under any T-3
Employee Plan under Applicable Law or under the terms of any such plan or
any arrangement and there are no accrued but unpaid contribution or benefit
obligations that are not reflected on the T-3 Financial Statements; and
(vi) there is no Proceeding or other dispute pending or, to the
Knowledge of T-3, threatened, and there is no administrative investigation,
audit or other administrative proceeding by the Department of Labor, the
Pension Benefit Guaranty Corporation, the Internal Revenue Service or other
Governmental Entity pending, in progress or, to the Knowledge of T-3,
threatened that involves any T-3 Employee Plan that could reasonably be
expected to result in a material liability to T-3.
(e) Except as set forth in Section 4.16 of the T-3 Disclosure Schedules, in
connection with the consummation of the transactions contemplated in this
Agreement, no employee or former employee of T-3 will become entitled to any
bonus, retirement, severance, job security,
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change in control or similar benefit or enhanced benefit (including acceleration
of an award, vesting or exercise of an incentive award) or any fee or payment of
any kind as a result of any of the transactions contemplated hereby, and no such
disclosed payment will constitute a parachute payment described in Section 280G
of the Code.
(f) All group health plans of T-3 have at all times fully complied in all
material respects with all applicable notification and continuation coverage
requirements of Section 4980B(f) of the Code and Section 601 of ERISA. T-3 has
no current or projected liability in respect of post-retirement or post-
employment welfare benefits for retired, current or former employees, or for any
stockholder or director who is not an employee, former employee or beneficiary
thereof, except to the extent otherwise required by the continuation
requirements of Section 4980B(f) of the Code and Section 601 of ERISA.
(g) All group health plans (within the meaning of Section 5000(b)(1) of the
Code) of T-3 have at all times fully complied in all material respects with, and
have been maintained and operated in all material respects in accordance with
(i) the health care requirements relating to portability, access, and
renewability of Sections 9801 through 9803 of the Code and Part 7 of Title I,
Subtitle B of ERISA, (ii) the health care requirements relating to the benefits
for mothers and newborns under Section 9811 of the Code and Section 711 of
ERISA, and (iii) the health care requirements relating to the parity provisions
applicable to mental health benefits under Section 9812 of the Code and Section
712 of ERISA, and neither T-3 nor any Subsidiary thereof has contributed to a
nonconforming group health plan (as defined in Code Section 5000(c)).
(h) Except as set forth in Section 4.16 of the T-3 Disclosure Schedules, no
employee or former employee, officer or director of T-3 is or will become
entitled to receive any award under T-3's discretionary or other bonus plans
except for amounts reflected on the T-3 Financial Statements.
Section 4.17 Taxes.
(a) Except as set forth in Section 4.17 of the T-3 Disclosure Schedules, all
Returns required to be filed by or on behalf of T-3 have been duly filed and
such Returns (including all attached statements and schedules) are true,
complete and correct in all material respects and all amounts of Taxes shown as
due thereon have been paid on a timely basis.
(b) Except as set forth in Section 4.17 of the T-3 Disclosure Schedules, T-3
has withheld and paid over all Taxes required to have been withheld and paid
over (including any estimated taxes and Taxes pursuant to Section 1441 or 1442
of the Code or similar provisions under any foreign laws), and has complied in
all material respects with all information reporting and backup withholding
requirements, including maintenance of required records with respect thereto, in
connection with amounts paid or owing to any employee, creditor, independent
contractor, shareholder or other third party.
(c) Except as set forth in Section 4.17 of the T-3 Disclosure Schedules,
there are no Liens on any of the assets of T-3 with respect to Taxes, other than
Permitted Liens.
(d) T-3 has furnished or made available to IHI true and complete copies of:
(i) all federal and state income and franchise tax returns of T-3 for all
periods beginning on or after January 1, 1996 if any and (ii) all material tax
audit reports, work papers, statements of deficiencies, closing or other
agreements received by T-3 or on its behalf relating to Taxes for all periods
beginning on or after January 1, 1996.
(e) Except as disclosed in Section 4.17 of the T-3 Disclosure Schedules:
(i) The Returns of T-3 have never been audited by a Governmental Entity,
nor is there any pending or, to the Knowledge of T-3, threatened (formally
or informally) actions or proceedings for the assessment, collection or
refund of Taxes with respect to T-3.
(ii) No adjustment relating to such Returns has been proposed formally
or informally by any Governmental Entity and, to the Knowledge of T-3, no
basis exists for any such adjustment;
(iii) Except as reflected in the Returns, no waiver or extension of any
statute of limitations is in effect with respect to Taxes or Returns of T-3.
(iv) There are no requests for rulings, subpoenas or requests for
information pending with respect to Taxes or Returns of T-3.
(v) No power of attorney has been granted by T-3 with respect to any
matter relating to Taxes.
(vi) The amount of the current liability accruals for Taxes (excluding
reserves for deferred taxes) reflected on the consolidated balance sheet of
T-3 as of March 31, 2000 are, and such accruals reflected on the
consolidated balance sheet of T-3 as of the Closing Date will be, reasonable
and sufficient based on T-3's books and records as of the time of the
calculation of such accruals.
(f) Except as disclosed in Section 4.17 of the T-3 Disclosure Schedules:
(i) T-3 has not issued or assumed any indebtedness that is subject to
section 279(b) of the Code.
(ii) T-3 has not entered into any compensatory agreements with respect
to the performance of services which payment thereunder would result in a
nondeductible expense pursuant to Section 280G or 162(m) of the Code or an
excise tax to the recipient of such payment pursuant to Section 4999 of the
Code.
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(iii) No election has been made under Section 338 of the Code with
respect to T-3 and no action has been taken that would result in any income
tax liability to either T-3 as a result of deemed election within the
meaning of Section 338 of the Code.
(iv) No consent under Section 341(f) of the Code has been filed with
respect to T-3.
(v) T-3 has not agreed, nor is it required as of the date hereof, to
make any adjustment under Code Section 481(a) by reason of a change in
accounting method or otherwise.
(vi) T-3 is not a party to any tax sharing or allocation agreement nor
does either T-3 owe any amount under any tax sharing or allocation
agreement.
(vii) T-3 has no liability for any Taxes of any person other than T-3
((A) under Treasury Regulation Section 1.1502-6 (or any similar provision of
state, local or foreign law), (B) as a transferee or successor, (C) by
contract or (D) otherwise.
(g) T-3 is not an investment company. For purposes of this representation,
the term "investment company" means a regulated investment company, a real
estate investment trust, or a corporation 50% or more of the value of whose
total assets are stock and securities and 80% or more of the value of whose
total assets are assets held for investment. In making the 50% and the 80%
determinations under the preceding sentence, stock and securities in any
subsidiary corporation will be disregarded and the parent corporation will be
deemed to own its ratable share of the subsidiary's assets.
(h) T-3 is not under the jurisdiction of a court in a Title 11 or similar
case within the meaning of Section 368(a)(3)(A) of the Code.
Section 4.18 Customers and Suppliers. Section 4.18 of the T-3 Disclosure
Schedules sets forth a complete and correct list of all customers whose
purchases exceeded 5% of the aggregate net sales of T-3 for the fiscal year
ended December 31, 2000.
Section 4.19 Insurance.
(a) Section 4.19 of the T-3 Disclosure Schedules sets forth a true and
complete list of all policies of protection and indemnity, title insurance,
liability and casualty insurance, property insurance, auto insurance, business
interruption insurance, tenant's insurance, workers' compensation, life
insurance, disability insurance, excess or umbrella insurance, directors' and
officers' liability insurance and any other type of insurance insuring the
properties, assets, employees or operations of T-3 (collectively the "T-3
Policies"). T-3 has made available to IHI a true, complete and accurate copy of
all T-3 Policies.
(b) All T-3 Policies are in full force and effect except where failures to
have any T-3 Policies in full force and effect would not, in the aggregate, have
a Material Adverse Effect on T-3.
(c) There is no claim by T-3 or any other Person pending under any of the
T-3 Policies as to which, to the Knowledge of T-3, coverage has been denied or
disputed by the underwriters or issuers of such T-3 Policies. T-3 has not
received any notice of default, and T-3 is not in default, under any provision
of the T-3 Policies where any such defaults, in the aggregate, would have a
Material Adverse Effect on T-3.
(d) T-3 has not since January 1, 2001 received any written notice from or on
behalf of any insurance carrier or other issuer issuing such T-3 Policies that
insurance rates or other annual premiums or fees in effect as of the date hereof
will hereafter be materially increased, that there will be a non-renewal,
cancellation or increase in a deductible (or a material increase in premiums in
order to maintain an existing deductible) of any of the T-3 Policies in effect
as of the date hereof, or that material alteration of any equipment or any
improvements of the T-3 Owned Properties or the T-3 Leased Properties, purchase
of additional material equipment, or material modification of any of the methods
of doing business of T-3 will be required after the date hereof.
Section 4.20 Safety and Health. Except as set forth in Section 4.20 of the
T-3 Disclosure Schedules, the property and assets of T-3 have been and are being
operated in compliance in all respects with all Applicable Laws designed to
protect safety or health, or both, including without limitation, the
Occupational Safety and Health Act, and the regulations promulgated pursuant
thereto, except for any violations or deficiency that would not have a Material
Adverse Effect on T-3. T-3 has not received any written notice of any
violations, deficiency, investigation or inquiry from any Governmental Entity,
employer or third party under any such law and, to the Knowledge of T-3, no such
investigation or inquiry is planned or threatened, which, if adversely
determined would, individually or in the aggregate, have a Material Adverse
Effect on T-3.
Section 4.21 Labor Matters.
(a) Set forth in Section 4.21 of the T-3 Disclosure Schedules is a list of
all: (i) outstanding employment, consulting or management agreements or
contracts with officers, directors or employees of T-3 (other than those that
are terminable on no more than 30 days notice) that provide for the payment of
any bonus or commission; (ii) agreements, policies or practices that require T-3
to pay termination or severance pay to salaried, non-exempt or hourly employees
in excess of 30 days' salary and benefits to any employee upon termination of
such employee's employment (other than as required by law); and (iii) collective
bargaining agreements or other labor union contracts applicable to persons
employed by T-3. T-3 has made available to IHI complete and correct copies of
all such employment and labor agreements. Except as set forth in Section 4.21 of
the T-3 Disclosure Schedules, T-3 has not breached or otherwise failed to comply
in any material respect with any provisions of any employment or labor
agreement, and there are no grievances outstanding thereunder.
(b) Except as set forth in Section 4.21 of the T-3 Disclosure Schedules: (i)
T-3 is in compliance in all material respects with all Applicable Laws relating
to employment and employment practices, wages, hours, and terms and conditions
of employment; (ii) there is no unfair labor practice charge or complaint
against T-3 pending before any Governmental Entity; (iii) there is no labor
strike, material slowdown or material
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work stoppage or lockout actually pending or, to the Knowledge of T-3,
threatened, against or affecting T-3; (iv) there is no representation claim or
petition pending before any Governmental Entity; (v) there are no charges with
respect to or relating to T-3 pending before any Governmental Entity responsible
for the prevention of unlawful employment practices; and (vi) T-3 has not had
formal notice from any Governmental Entity responsible for the enforcement of
labor or employment laws of an intention to conduct an investigation of T-3 and,
to the Knowledge of T-3, no such investigation is in progress.
Section 4.22 Transactions with Certain Persons. Except as set forth in
Section 4.22 of the T-3 Disclosure Schedules, no director, officer or employee
of either T-3 or any of its respective Affiliates is presently a party to any
transaction with T-3, including any contract, agreement or other arrangement
providing for the furnishing of services by or the rental of real or personal
property from any such Person or from any of its Affiliates.
Section 4.23 Propriety of Past Payments. Neither T-3 nor any director,
officer, employee or agent of T-3 has (a) used any funds for unlawful
contributions, gifts, entertainment or other unlawful payments or expenses
relating to political activity or (b) made any bribe, rebate, payoff, influence
payment, kick-back or other unlawful payment that is in violation of Applicable
Law.
Section 4.24 Intellectual Property. T-3 either owns or has valid licenses to
use all patents, copyrights, trademarks, software, databases, and other
technical information used in its business as presently conducted, subject to
limitations contained in the agreements governing the use of same, which
limitations are customary for companies engaged in businesses similar to T-3.
T-3 is in compliance with all such licenses and agreements except where any
noncompliance would not, in the aggregate, have a Material Adverse Effect on
T-3, and there are no pending or, to the Knowledge of T-3, threatened
Proceedings challenging or questioning the validity or effectiveness of any
license or agreement relating to such property or the right of T-3 to use, copy,
modify or distribute the same.
Section 4.25 Director and Officer Indemnification. The directors, officers
and employees of T-3 are not entitled to indemnification by T-3, except to the
extent that indemnification rights are provided for generally by Applicable Law
or such corporation's charter, by-laws or directors' and officers' liability
insurance policies described in Section 4.19 of the T-3 Disclosure Schedules or
in employment agreements described in Section 4.21 of the T-3 Disclosure
Schedules, and there are no pending claims for indemnification by any such
director, officer or employee.
Section 4.26 Brokers' and Finders' Fee. No agent, broker, person or firm
acting on behalf of T-3 or the Fund is or will be entitled to any commission or
brokers' or finders' fees payable by T-3 in connection with any of the
transactions contemplated herein.
ARTICLE 5.
REPRESENTATIONS AND WARRANTIES OF IHI
IHI represents and warrants to T-3 and the Fund as follows (each of the
representations and warranties made with respect to IHI, unless the context
requires the contrary, includes all of IHI's Subsidiaries).
Section 5.1 Organization; Qualification. IHI is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Texas and has the requisite corporate power and authority to own its property
and to carry on its business as it is now being conducted. No actions or
proceedings to dissolve IHI are pending. Section 5.1 of the IHI Disclosure
Schedules sets forth the jurisdictions in which IHI is qualified to do business
as a foreign corporation. Copies of the articles of incorporation and by-laws of
IHI with all amendments to the date hereof, have been furnished to T-3 or its
representatives, and such copies are accurate and complete as of the date
hereof. IHI has made available to T-3 accurate copies of the minutes of all
meetings of its board of directors, any committees of such board and
stockholders (and all consents in lieu of such meetings). Such records, minutes
and consents accurately reflect in all material respects all actions taken by
the board of directors, committees and stockholders as of the date hereof. IHI
is not in violation of any provision of its articles of incorporation or bylaws
other than any such violations that, in the aggregate, would not have a Material
Adverse Effect on IHI.
Section 5.2 Capital Stock; Subsidiaries.
(a) As of the date of this Agreement, the authorized capital stock of IHI
consists of 50,000,000 shares of IHI Common Stock, of which 13,690,165 shares of
IHI Common Stock are issued and outstanding and 1,586,265 shares are held in its
treasury, and 7,500,000 shares of preferred stock, $.01 par value per share,
none of which are issued and outstanding and none are held in its treasury. All
issued and outstanding shares of IHI Common Stock have been duly authorized and
are validly issued, fully paid and non-assessable.
(b) Except as set forth in Section 5.2 of the IHI Disclosure Schedules,
there are no outstanding options, warrants or other rights to acquire or have
delivered any shares of IHI Common Stock or any security convertible into IHI
Common Stock and except as set forth in Section 5.2 of the IHI Disclosure
Schedules, IHI has no obligation or other commitment to issue, sell or deliver
any of the foregoing or any shares of its capital stock. Except as set forth in
Section 5.2 of the IHI Disclosure Schedules, neither the execution of this
Agreement nor any other documents contemplated to be executed hereby nor the
consummation of the Merger nor any other transaction contemplated hereby or
thereby will result in the triggering of any "anti-dilution" provisions of any
option, warrant or other instrument granting others the right to acquire any
securities of IHI. Except as set forth in Section 5.2 of the IHI Disclosure
Schedules, no Person has any registration rights with respect to any of IHI's
capital stock. All of the issued and outstanding shares of IHI Common Stock have
been issued in compliance with all Legal Requirements and without violation of
any preemptive or similar rights.
(c) All issued and outstanding shares of common stock of IHI's Subsidiaries
have been duly authorized and are validly issued, fully paid and non-assessable.
Except as set forth in Section 5.2 of the IHI Disclosure Schedules, all
outstanding capital stock of IHI's Subsidiaries are held of record and
beneficially by IHI.
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(d) All shares of IHI Common Stock to be issued pursuant to this Agreement
will be, when issued in exchange for shares of T-3 Common Stock upon
consummation of the Merger, duly authorized, validly issued, fully paid and
non-assessable.
(e) Section 5.2 of the IHI Disclosure Schedules contains a list of all of
IHI's Subsidiaries. Except for its Subsidiaries, or as set forth in Section 5.2
of the IHI Disclosure Schedules, IHI does not directly or indirectly have any
legal or beneficial ownership interest in any other Person.
Section 5.3 Corporate Authorization; Enforceability.
(a) The execution, delivery and performance of this Agreement by IHI has
been duly authorized by the board of directors of IHI. Upon an affirmative vote
of the holders of 66 2/3% of the outstanding shares of IHI Common Stock present
or represented at a meeting of the IHI Stockholders approving this Agreement and
the transactions contemplated hereby, no further vote or consent of shareholders
or directors of IHI and no further corporate acts or other corporate proceedings
are required of IHI for the due and valid authorization, execution, delivery and
performance of this Agreement or the consummation of the Merger.
(b) This Agreement is the legal, valid and binding obligations of IHI
enforceable against it in accordance with its terms, except that enforcement may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium and
other similar laws affecting creditors' rights generally and equitable
principles which may limit the availability of certain equitable remedies in
certain instances.
Section 5.4 No Conflict. Except as set forth in Section 5.4 of the IHI
Disclosure Schedules, neither the execution, delivery or performance of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(a) if the requisite IHI stockholder approval set forth in Section 5.3(a) is
obtained, conflict with or result in any breach of the provisions of the
articles of incorporation or by-laws of IHI, (b) result in the violation or
breach of, or constitute (with or without due notice or the lapse of time or
both) a default (or give rise to any right of termination, cancellation or
acceleration) under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, or any material license, contract, agreement or other
instrument or obligation to which IHI is a party or by which its properties or
assets may be bound, except for such violations, breaches or defaults that would
not, individually or in the aggregate, have a Material Adverse Effect on IHI, or
(c) violate any order, writ, injunction, decree, statute, rule or regulation
applicable to IHI or any of its respective properties or assets, except for such
violations that, in the aggregate, would not have a Material Adverse Effect on
IHI.
Section 5.5 Consents. Except as set forth in Section 5.5 of the IHI
Disclosure Schedules, no consent, approval, order or authorization of, or
declaration, filing or registration with, any Governmental Entity or other
Person is required to be obtained or made by IHI in connection with the
execution, delivery or performance by IHI of this Agreement or the consummation
by IHI of the transactions contemplated hereby except for (a) those required by
the HSR Act, if any, and (b) any filings required to be made under the
Securities Act in connection with the Agreement, (c) the requisite IHI
stockholder approval set forth in Section 5.3(a) and (d) such other consents,
approvals, orders, authorizations, declarations, filings or registrations, the
failure of which to obtain or make would not have, in the aggregate, a Material
Adverse Effect on IHI.
Section 5.6 IHI Financial Statements; Undisclosed Liabilities.
(a) The IHI Annual Financial Statements have been audited by Deloitte &
Touche, LLP, independent public accountants, in accordance with generally
accepted auditing standards, have been prepared in accordance with GAAP applied
on a basis consistent with prior periods, and present fairly in all material
respects the financial position of IHI at such dates and the results of
operations and cash flows for the periods then ended.
(b) The IHI Interim Financial Statements have been prepared in accordance
with GAAP on a basis consistent with the prior periods and reflect all
adjustments, consisting only of normal, recurring adjustments, that are
necessary for a fair statement in all material respects of the results for the
interim period presented therein. Neither IHI nor any of its assets are subject
to any liability, commitment, debt or obligation that would be required to be
disclosed in financial statements prepared in accordance with GAAP, except (i)
as and to the extent reflected on the IHI Interim Financial Statements, or (ii)
as may have been incurred or may have arisen since the date of the IHI Interim
Financial Statements in the ordinary course of business and that are permitted
by this Agreement, or, in the aggregate, would not have a Material Adverse
Effect on IHI.
Section 5.7 Absence of Certain Changes. Except as set forth in Section 5.7
of the IHI Disclosure Schedules, since March 31, 2001, IHI has operated in the
ordinary course of business consistent with past practice and there has been no
event or condition of any character that has had, or can reasonably be expected
to have, a Material Adverse Effect on IHI.
Section 5.8 Material Contracts.
(a) Section 5.8 of the IHI Disclosure Schedules contains a list and brief
description (including the names of the parties and the date and nature of the
agreement) of each Material Contract to which IHI is a party or to which any of
its properties is subject. T-3 has been provided a complete and accurate copy of
each Material Contract listed on Section 5.8 of the IHI Disclosure Schedules.
Each such Material Contract is a legal, valid, binding and enforceable
obligation of IHI except to the extent that enforcement may be limited by (i)
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the enforcement of creditors' rights generally and (ii)
general equitable principles.
(b) Except as set forth in Section 5.8 of the IHI Disclosure Schedules, IHI
is not in material breach of or default (and, to the Knowledge of IHI, no event
has occurred which, with due notice or lapse of time or both, would constitute
such a breach or default) under any Material Contract, except where any such
breaches or defaults, in the aggregate, would not have a Material Adverse Effect
on IHI, and no party to any Material Contract has given IHI written notice of or
made a claim in writing with respect to any breach or default under any such
Material Contract.
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Section 5.9 Real Property.
(a) Section 5.9 of the IHI Disclosure Schedules sets forth a true and
complete list of all real property owned in fee simple title by IHI
(collectively, the "IHI Owned Properties"). IHI has good and indefeasible title
to all IHI Owned Properties. None of the IHI Owned Properties is subject to any
Liens, except for (i) Liens that collateralize indebtedness that is reflected in
the IHI Interim Financial Statements and (ii) Permitted Liens.
(b) Except as set forth in Section 5.9 of the IHI Disclosure Schedules, all
improvements on the IHI Owned Properties and the operations therein conducted
conform in all material respects to all applicable health, fire, safety, zoning
and building laws, ordinances and administrative regulations, except for
possible nonconforming uses or violations which do not materially interfere with
the present use, operation or maintenance thereof or access thereto by IHI, and,
individually or in the aggregate, would not otherwise have a Material Adverse
Effect on IHI. The operating condition and state of repair of all buildings,
structures, improvements and fixtures on the IHI Owned Properties are sufficient
to permit the use and operation of all such buildings, structures, improvements
and fixtures as now used or operated by IHI except where the failure to be in
such condition would not have a Material Adverse Effect on IHI.
Section 5.10 Real Property Leases.
(a) Section 5.10 of the IHI Disclosure Schedules sets forth a list of all
Leases with respect to all real properties in which IHI has a leasehold,
subleasehold, or other occupancy interest (the "IHI Leased Properties").
Complete and accurate copies of all such Leases and all amendments thereto have
been provided to T-3. Except as set forth in Section 5.10 of the IHI Disclosure
Schedules, all of the Leases for the IHI Leased Properties are valid and
effective against IHI in accordance with their respective terms, except that the
enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting or relating to
enforcement of creditors' rights generally and (ii) general equitable
principles.
(b) IHI has not received written notice that it is in material breach of or
default (and, to IHI's Knowledge, no event has occurred, that, with due notice
or lapse of time or both, would constitute such a breach or default) under any
Lease.
(c) Except as set forth in Section 5.10 of the IHI Disclosure Schedules, no
IHI Leased Property is subject to any material sublease, license or other
agreement granting to any Person any right to the use, occupancy or enjoyment of
Leased Property or any portion thereof through IHI.
Section 5.11 Personal Property.
(a) Except as set forth in Section 5.11 of the IHI Disclosure Schedules, IHI
has good and indefeasible title to all Personal Property owned by IHI, free and
clear of all Liens other than (i) Liens that collateralize indebtedness that is
reflected in the IHI Interim Financial Statements and (ii) Permitted Liens.
(b) Except as set forth in Section 5.11 of the IHI Disclosure Schedules, IHI
holds valid leaseholds in all of the Personal Property leased by it, which
leases are enforceable against IHI in accordance with their respective terms,
except that the enforcement thereof may be subject to (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting or
relating to enforcement of creditors' rights generally, and (ii) general
equitable principles.
(c) Except as set forth in Section 5.11 of the IHI Disclosure Schedules, IHI
is not in breach of or default (and no event has occurred that, with due notice
or lapse of time or both, would constitute such a lapse or default) under any
lease of any item of Personal Property leased by it, except for any such breach
or default that would not, individually or in the aggregate, have a Material
Adverse Effect on IHI.
(d) Except as set forth in Section 5.11 of the IHI Disclosure Schedules, the
Personal Property now owned, leased or used by IHI is sufficient and adequate to
carry on its business as presently conducted and the operating condition and the
state of repair thereof is sufficient to permit IHI to carry on its business as
presently conducted except where the failure to be in such condition would not
have a Material Adverse Effect on IHI.
Section 5.12 Compliance with Laws. Except as set forth in Sections 5.12,
5.15, 5.16, 5.20 or 5.21 of the IHI Disclosure Schedules, IHI is not in
violation of any Applicable Law, nor is it in default with respect to any order,
writ, judgment, award, injunction or other decree of any Governmental Entity
applicable to it or any of its respective assets, properties or operations
except such violations or defaults that, in the aggregate, would not have a
Material Adverse Effect on IHI.
Section 5.13 Permits. Except as set forth in Sections 5.13 or 5.15 of the
IHI Disclosure Schedules, IHI has all permits, licenses and governmental
authorizations that are required for the lease, ownership, occupancy or
operation of its properties and assets and the carrying on of its business,
except where the failure to have any such permits, licenses or authorizations
would not, in the aggregate, have a Material Adverse Effect on IHI.
Section 5.14 Litigation.
(a) Except as set forth in Section 5.14 of the IHI Disclosure Schedules,
there are no Proceedings pending or, to the Knowledge of the IHI, threatened,
against IHI (i) for which an indemnification claim has been asserted, (ii) that
could reasonably be expected to have a Material Adverse Effect on IHI or (iii)
that seeks to prohibit or restrict consummation of the transactions contemplated
by this Agreement.
(b) Except as set forth in Section 5.14 of the IHI Disclosure Schedules,
neither IHI nor any of its assets or properties is subject to any material
order, writ, judgment, award, injunction or decree of any Governmental Entity.
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Section 5.15 Environmental Compliance.
(a) Except as set forth in Section 5.15 of the IHI Disclosure Schedules, IHI
possesses all material licenses, permits and other approvals and authorizations
that are required under, and is and has been in compliance with, all
Environmental Laws, including all Environmental Laws governing the generation,
use, collection, treatment, storage, transportation, recover, removal, discharge
or disposal of hazardous substances or wastes and all Environmental Laws
imposing record-keeping, maintenance, testing, inspection, notification and
reporting requirements with respect to hazardous substances or wastes except
where noncompliance would not, individually or in the aggregate, have a Material
Adverse Effect on IHI, and, except as set forth in Section 5.15 of the IHI
Disclosure Schedules, to the Knowledge of IHI, there is no condition that would
materially interfere with compliance in the future.
(b) Except as set forth in Section 5.15 of the IHI Disclosure Schedules, is
not subject to any Proceeding pursuant to, nor has it received any notice of any
violation of, or claim alleging liability under, any Environmental Laws. To the
Knowledge of IHI, no facts or circumstances exist that would reasonably be
likely to result in a claim, citation or allegation against IHI for a violation
of, or alleging liability under any Environmental Laws, except such violations
or liabilities that would not, individually or in the aggregate, have a Material
Adverse Effect on IHI.
(c) Except as set forth in Section 5.15 of the IHI Disclosure Schedules, to
the Knowledge of IHI, there are no underground tanks of any type (including
tanks storing gasoline, diesel fuel, oil or other petroleum products) or
disposal sites for hazardous substances, hazardous wastes or any other regulated
waste, located on or under the IHI Owned Properties or IHI Leased Properties.
(d) Except as set forth in Section 5.15 of the IHI Disclosure Schedules, to
the Knowledge of IHI, except in the ordinary course of business, and in all
cases in material compliance with all Environmental Laws, IHI has not engaged
any third party to handle, transport or dispose of hazardous substances or
wastes (including for this purpose, gasoline, diesel fuel, oil or other
petroleum products, or bilge waste) on its behalf.
Section 5.16 ERISA and Related Matters.
(a) Section 5.16 of the IHI Disclosure Schedules provides a list of each of
the following which IHI or any Subsidiary thereof maintains or contributes to,
for the benefit of its current or former employees, officers or directors, or
with respect to which IHI or any Subsidiary thereof has or may have any
liability (the "IHI Employee Plans") as of the Closing Date:
(i) each employee benefit plan (as defined in Section 3(3) of ERISA);
and
(ii) each written or material unwritten fringe benefit, change in
control, stock purchase, personnel, stock option, collective bargaining,
bonus, incentive, vacation, severance pay, deferred compensation, executive
compensation or supplemental retirement, consulting, employment or other
written or unwritten employee benefit plan, agreement, arrangement, program,
practice or understanding that is not described in Section 5.16(a)(i).
True and complete copies of each of the written IHI Employee Plans and
descriptions of material unwritten IHI Employee Plans, current summary plan
descriptions, related trusts or other funding arrangements, if applicable, and
all amendments thereto, have been or on request will be furnished to T-3.
Further, a copy of the most recent determination letter, if applicable, and, for
the three most recent years, the Form 5500 and attached schedules, audited
financial statements and actuarial valuation reports, if applicable, for each
IHI Employee Plan, and all material communications received from or sent to the
Internal Revenue Service or the Department of Labor in the last two years
regarding any IHI Employee Plan will be provided to T-3 upon request.
(b) Except as disclosed in Section 5.16 of the IHI Disclosure Schedules,
benefits under any IHI Employee Plan are as represented in said documents and
have not been increased or modified (whether written or not written) subsequent
to the dates of such documents. IHI has not communicated to any employee or
former employee any intention or commitment to modify any IHI Employee Plan or
to establish or implement any other employee or retiree benefit or compensation
arrangement.
(c) Except as disclosed in Section 5.16 of the IHI Disclosure Schedules,
neither IHI nor any trade or business under common control with IHI within the
meaning of Section 414(b) or (c) of the Code prior to the Closing Date maintains
or has ever maintained or become obligated to contribute to any employee benefit
plan (i) that is subject to Title IV of ERISA, (ii) to which Section 412 of the
Code applies, (iii) that is a Multiemployer Plan, or (iv) in connection with any
trust described in Section 501(c)(9) of the Code. IHI has not within the last
five years engaged in, and is not a successor corporation to an entity that has
engaged in, a transaction described in Section 4069 of ERISA.
(d) Except as otherwise set forth in Section 5.16 of the IHI Disclosure
Schedules:
(i) each IHI Employee Plan has been administered, maintained and
operated in all material respects in accordance with the terms thereof and
in compliance with its governing documents and Applicable Law (including
where applicable, ERISA and the Code);
(ii) each of the IHI Employee Plans intended to be qualified under
section 401 of the Code (A) satisfies in form the requirements of such
section except to the extent amendments are not required by law to be made
until a date after the Closing Date, (B) has received a favorable
determination letter from the Internal Revenue Service regarding such
qualified status, (C) has not, since receipt of the most recent favorable
determination letter, been amended, and (D) has not been operated in a way
that would adversely affect its qualified status;
(iii) no act, omission or transaction has occurred which would result in
the imposition on IHI of a breach of fiduciary duty liability or damages
under Section 409 of ERISA, a civil penalty assessed pursuant to Subsections
(c), (i) or (l) of Section 502 of ERISA or a Tax imposed pursuant to Chapter
43 of Subtitle D of the Code;
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(iv) neither IHI nor any of its directors, officers or employees has
engaged in any transaction with respect to an IHI Employee Plan that could
subject IHI to a Tax, penalty or liability for a prohibited transaction, as
defined in Section 406 of ERISA or Section 4975 of the Code, and none of the
assets of any IHI Employee Plan are invested in employer securities or
employer real property;
(v) full payment has been made of all amounts which IHI is or has been
required to have paid as contributions to or benefits due under any IHI
Employee Plan under Applicable Law or under the terms of any such plan or
any arrangement and there are no accrued but unpaid contribution or benefit
obligations that are not reflected on the IHI Financial Statements; and
(vi) there is no Proceeding or other dispute pending or, to the
Knowledge of IHI, threatened, and there is no administrative investigation,
audit or other administrative proceeding by the Department of Labor, the
Pension Benefit Guaranty Corporation, the Internal Revenue Service or other
Governmental Entity pending, in progress or, to the Knowledge of IHI,
threatened that involves any IHI Employee Plan that could reasonably be
expected to result in a material liability to IHI.
(e) Except as set forth in Section 5.16 of the IHI Disclosure Schedules, in
connection with the consummation of the transactions contemplated in this
Agreement, no employee or former employee of IHI will become entitled to any
bonus, retirement, severance, job security, change in control or similar benefit
or enhanced benefit (including acceleration of an award, vesting or exercise of
an incentive award) or any fee or payment of any kind as a result of any of the
transactions contemplated hereby, and no such disclosed payment will constitute
a parachute payment described in Section 280G of the Code.
(f) All group health plans of IHI have at all times fully complied in all
material respects with all applicable notification and continuation coverage
requirements of Section 4980B(f) of the Code and Section 601 of ERISA. IHI has
no current or projected liability in respect of post-retirement or post-
employment welfare benefits for retired, current or former employees, or for any
stockholder or director who is not an employee, former employee or beneficiary
thereof, except to the extent otherwise required by the continuation
requirements of Section 4980B(f) of the Code and Section 601 of ERISA.
(g) All group health plans (within the meaning of Section 5000(b)(1) of the
Code) of IHI have at all times fully complied in all material respects with, and
have been maintained and operated in all material respects in accordance with
(i) the health care requirements relating to portability, access, and
renewability of Sections 9801 through 9803 of the Code and Part 7 of Title I,
Subtitle B of ERISA, (ii) the health care requirements relating to the benefits
for mothers and newborns under Section 9811 of the Code and Section 711 of
ERISA, and (iii) the health care requirements relating to the parity provisions
applicable to mental health benefits under Section 9812 of the Code and Section
712 of ERISA, and neither IHI nor any Subsidiary thereof has contributed to a
nonconforming group health plan (as defined in Code Section 5000(c)).
(h) Except as set forth in Section 5.16 of the IHI Disclosure Schedules, no
employee or former employee, officer or director of IHI is or will become
entitled to receive any award under IHI's discretionary or other bonus plans
except for amounts reflected on the IHI Financial Statements.
Section 5.17 Taxes.
(a) Except as set forth in Section 5.17 of the IHI Disclosure Schedules, all
Returns required to be filed by or on behalf of IHI have been duly filed and
such Returns (including all attached statements and schedules) are true,
complete and correct in all material respects and all amounts of Taxes shown as
due thereon have been paid on a timely basis.
(b) Except as set forth in Section 5.17 of the IHI Disclosure Schedules, IHI
has withheld and paid over all Taxes required to have been withheld and paid
over (including any estimated taxes and Taxes pursuant to Section 1441 or 1442
of the Code or similar provisions under any foreign law), and has complied in
all material respects with all information reporting and backup withholding
requirements, including maintenance of required records with respect thereto, in
connection with amounts paid or owing to any employee, creditor, independent
contractor, shareholder or other third party.
(c) Except as set forth in Section 5.17 of the IHI Disclosure Schedules,
there are no Liens on any of the assets of IHI with respect to Taxes, other than
Permitted Liens.
(d) IHI has furnished or made available to T-3 true and complete copies of:
(i) all federal and state income and franchise tax returns of IHI for all
periods beginning on or after January 1, 1996, and (ii) all material tax audit
reports, work papers, statements of deficiencies, closing or other agreements
received by IHI or on its behalf relating to Taxes for all periods beginning on
or after January 1, 1996.
(e) Except as disclosed in Section 5.17 of the IHI Disclosure Schedules:
(i) The Returns of IHI have never been audited by a Governmental Entity,
nor is there any pending or, to the Knowledge of the IHI, threatened
(formally or informally) actions or proceedings for the assessment,
collection or refund of Taxes with respect to IHI.
(ii) No adjustment relating to such Returns has been proposed formally
or informally by any Governmental Entity and, to the Knowledge of IHI, no
basis exists for any such adjustment.
(iii) Except as reflected in the Returns, no waiver or extension of any
statute of limitations is in effect with respect to Taxes or Returns of IHI.
(iv) There are no requests for rulings, subpoenas or requests for
information pending with respect to Taxes or Returns of IHI.
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(v) No power of attorney has been granted by IHI with respect to any
matter relating to Taxes.
(vi) The amount of current liability accruals for Taxes (excluding
reserves for deferred taxes), as such accruals are reflected on the
consolidated balance sheet of IHI as of March 31, 2001 are, and such
accruals reflected on the consolidated balance sheet of IHI as of the
Closing Date will be, reasonable and sufficient based on IHI's books and
records as of the time of the calculation of such accruals.
(f) Except as disclosed in Section 5.17 of the IHI Disclosure Schedules:
(i) IHI has not issued or assumed any indebtedness that is subject to
section 279(b) of the Code.
(ii) IHI has not entered into any compensatory agreements with respect
to the performance of services which payment thereunder would result in a
nondeductible expense pursuant to Section 280G or 162(m) of the Code or an
excise tax to the recipient of such payment pursuant to Section 4999 of the
Code.
(iii) No election has been made under Section 338 of the Code with
respect to IHI and no action has been taken that would result in any income
tax liability to either IHI as a result of deemed election within the
meaning of Section 338 of the Code.
(iv) No consent under Section 341(f) of the Code has been filed with
respect to IHI.
(v) IHI has not agreed, nor is it required as of the date hereof, to
make any adjustment under Code Section 481(a) by reason of a change in
accounting method or otherwise.
(vi) IHI is not a party to any tax sharing or allocation agreement nor
does IHI owe any amount under any tax sharing or allocation agreement.
(vii) IHI has no liability for any Taxes of any person other than IHI
((A) under Treasury Regulation Section 1.1502-6 (or any similar provision of
state, local or foreign law), (B) as a transferee or successor, (C) by
contract or (D) otherwise.
(g) IHI is not an investment company. For purposes of this representation,
the term "investment company" means a regulated investment company, a real
estate investment trust, or a corporation 50% or more of the value of whose
total assets are stock and securities and 80% or more of the value of whose
total assets are assets held for investment. In making the 50% and the 80%
determinations under the preceding sentence, stock and securities in any
subsidiary corporation will be disregarded and the parent corporation will be
deemed to own its ratable share of the subsidiary's assets.
(h) IHI is not under the jurisdiction of a court in a Title 11 or similar
case within the meaning of Section 368(a)(3)(A) of the Code.
Section 5.18 Customers and Suppliers. Section 5.18 of the IHI Disclosure
Schedules sets forth a complete and correct list of all customers whose
purchases exceeded 5% of the aggregate net sales of IHI for the fiscal year
ended December 31, 2000.
Section 5.19 Insurance.
(a) Section 5.19 of the IHI Disclosure Schedules sets forth a true and
complete list of all policies of protection and indemnity, title insurance,
liability and casualty insurance, property insurance, auto insurance, business
interruption insurance, tenant's insurance, workers' compensation, life
insurance, disability insurance, excess or umbrella insurance, directors' and
officers' liability insurance and any other type of insurance insuring the
properties, assets, employees or operations of IHI (collectively the "IHI
Policies"). IHI has made available to T-3 a true, complete and accurate copy of
all IHI Policies.
(b) All IHI Policies are in full force and effect except where failures to
have any IHI Policies in full force and effect would not in the aggregate, have
a Material Adverse Effect on IHI.
(c) There is no claim by IHI or any other Person pending under any of the
IHI Policies as to which coverage has been denied or disputed by the
underwriters or issuers of such IHI Policies. IHI has not received any notice of
default, and is not in default, under any provision of the IHI Policies.
(d) IHI has not since January 1, 2001 received any written notice from or on
behalf of any insurance carrier or other issuer issuing such IHI Policies that
insurance rates or other annual premiums or fees in effect as of the date hereof
will hereafter be materially increased, that there will be a non-renewal,
cancellation or increase in a deductible (or a material increase in premiums in
order to maintain an existing deductible) of any of the IHI Policies in effect
as of the date hereof, or that material alteration of any equipment to the IHI
Owned Properties or the IHI Leased Properties, purchase of additional material
equipment, or material modification of any of the methods of doing business of
IHI will be required after the date hereof.
Section 5.20 Safety and Health. The property and assets of IHI have been and
are being operated in compliance in all respects with all Applicable Laws
designed to protect safety or health, or both, including without limitation, the
Occupational Safety and Health Act, and the regulations promulgated pursuant
thereto, except for any violations or deficiency that would not have a Material
Adverse Effect on IHI. IHI has not received any written notice of any
violations, deficiency, investigation or inquiry from any Governmental Entity,
employer or third party under any such law and, to the Knowledge of IHI, no such
investigation or inquiry is planned or threatened, which, if adversely
determined would, individually or in the aggregate, have a Material Adverse
Effect on IHI.
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Section 5.21 Labor Matters.
(a) Set forth in Section 5.21 of the IHI Disclosure Schedules is a list of
all: (i) outstanding employment, consulting or management agreements or
contracts with officers, directors or employees of IHI (other than those that
are terminable on no more than 30 days notice) that provide for the payment of
any bonus or commission; (ii) agreements, policies or practices that require IHI
to pay termination or severance pay to salaried, non-exempt or hourly employees
in excess of 30 days' salary and benefits to any employee upon termination of
such employee's employment (other than as required by law); and (iii) collective
bargaining agreements or other labor union contracts applicable to persons
employed by IHI. IHI has made available to T-3 complete and correct copies of
all such employment and labor agreements. Except as set forth in Section 5.21 of
the IHI Disclosure Schedules, IHI has not breached or otherwise failed to comply
in any material respect with any provisions of any employment or labor
agreement, and there are no grievances outstanding thereunder.
(b) Except as set forth in Section 5.21 of the IHI Disclosure Schedules: (i)
IHI is in compliance in all material respects with all Applicable Laws relating
to employment and employment practices, wages, hours, and terms and conditions
of employment; (ii) there is no unfair labor practice charge or complaint
against IHI pending before any Governmental Entity; (iii) there is no labor
strike, material slowdown or material work stoppage or lockout actually pending
or, to the Knowledge of IHI threatened, against or affecting IHI; (iv) there is
no representation claim or petition pending before any Governmental Entity; (v)
there are no charges with respect to or relating to IHI pending before any
Governmental Entity responsible for the prevention of unlawful employment
practices; and (vi) IHI has not had formal notice from any Governmental Entity
responsible for the enforcement of labor or employment laws of an intention to
conduct an investigation of IHI and, to the Knowledge of IHI, no such
investigation is in progress.
Section 5.22 Transactions with Certain Persons. Except as set forth in
Section 5.22 of the Disclosure Schedules, no director, officer or employee of
IHI or any of its respective Affiliates is presently a party to any transaction
with IHI, including any contract, agreement or other arrangement providing for
the furnishing of services by or the rental of real or personal property from
any such Person or from any of its Affiliates.
Section 5.23 Propriety of Past Payments. Neither IHI or any of its
Subsidiaries nor any director, officer, employee or agent of IHI or any of its
Subsidiaries has (a) used any funds for unlawful contributions, gifts,
entertainment or other unlawful payments or expenses relating to political
activity or (b) made any bribe, rebate, payoff, influence payment, kick-back or
other unlawful payment that is in violation of Applicable Law.
Section 5.24 Intellectual Property. IHI either owns or has valid licenses to
use all patents, copyrights, trademarks, software, databases, and other
technical information used in its business as presently conducted, subject to
limitations contained in the agreements governing the use of same, which
limitations are customary for companies engaged in businesses similar to IHI.
IHI is in compliance with all such licenses and agreements except where any
noncompliance would not, in the aggregate, have a Material Adverse Effect on IHI
and there are no pending or, to the Knowledge of IHI, threatened Proceedings
challenging or questioning the validity or effectiveness of any license or
agreement relating to such property or the right of IHI to use, copy, modify or
distribute the same.
Section 5.25 Director and Officer Indemnification. The directors, officers
and employees of IHI are not entitled to indemnification by IHI except to the
extent that indemnification rights are provided for generally by Applicable Law
or IHI's charter, by-laws or directors' and officers' liability insurance
policies as described in Section 5.19 of the IHI Disclosure Schedules or in
employment agreements described in Section 5.21 of the IHI Disclosure Schedules,
and there are no pending claims for indemnification by any such director,
officer or employee.
Section 5.26 Brokers' and Finders' Fee. Except for as set forth in Section
5.27 of the IHI Disclosure Schedule, no agent, broker, person or firm acting on
behalf of IHI is or will be entitled to any commission or brokers' or finders'
fees payable by IHI in connection with any of the transactions contemplated
herein.
Section 5.27 SEC Filings; Financial Statements. Except as set forth in
Section 5.27 of the IHI Disclosure Schedule, since January 1, 1999, IHI has
timely filed all reports, registration statements and other filings, together
with any amendments required to be made with respect thereto, that it has been
required to file with the SEC under the Securities Act and the Exchange Act. All
reports, registration statements and other filings (including all notes,
exhibits and schedules thereto and documents incorporated by reference therein)
filed by IHI with the SEC since January 1, 1999 through the date of this
Agreement, together with any amendments thereto, are sometimes collectively
referred to as the "IHI SEC Filings." As of the respective dates of their filing
with the SEC, the IHI SEC Filings complied in all material respects with the
Securities Act or the Exchange Act, as applicable, and the rules and regulations
of the SEC thereunder, and did not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements made therein, in light of the circumstances under which
they were made, not misleading.
ARTICLE 6.
COVENANTS
Section 6.1 Legal Requirements. Subject to the conditions set forth in
Section 7 and to the other terms and provisions of this Agreement, each of the
parties to this Agreement agrees to take, or cause to be taken, all reasonable
actions necessary to comply promptly with all legal requirements applicable to
it with respect to the transactions contemplated by this Agreement and will
promptly cooperate with and furnish information to each other in connection with
any such requirements imposed upon any of them. Without limiting the preceding
sentence, each of IHI, T-3 and the Fund agrees to take all reasonable actions
necessary to obtain, and cooperate with each other in obtaining, any consent,
authorization, order or approval of, or any exemption by, any Governmental
Entity or other public or private party, required to be obtained or made by it
or the taking of any action contemplated by this Agreement. In addition IHI
hereby agrees and covenants to take all commercially reasonable actions
necessary to maintain its listing of the IHI Common Stock on The Nasdaq National
Market, and, if requested by IHI, T-3 hereby agrees and covenants to reasonably
cooperate and participate in such effort.
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Section 6.2 Stockholder Approvals.
(a) As soon as practicable following the date of this Agreement, IHI shall
convene a meeting of its shareholders (the "IHI Meeting") for the purposes of:
(i) approving this Agreement, including the plan of merger for the Merger, and
(ii) approving the Reincorporation of the Surviving Corporation, including the
plan of merger for the Reincorporation. Subject to the terms and conditions of
Section 6.13, the Board of Directors of IHI shall (i) recommend at the IHI
Meeting that the shareholders of IHI adopt and approve all such matters; (ii)
use its reasonable efforts to solicit from the shareholders of IHI proxies in
favor of such adoption and approval; and (iii) take all other actions reasonably
necessary to secure a vote of its shareholders in favor of adoption and approval
of all such other matters.
(b) As soon as practicable after the date of this Agreement, T-3 shall
submit this Agreement for approval by the T-3 Stockholders at a special meeting
of stockholders. Subject to the terms and conditions of Section 6.13 hereof, the
Board of Directors of T-3 shall recommend that the T-3 Stockholders approve the
adoption of this Agreement and take all other actions reasonably necessary to
secure a vote of the T-3 Stockholders in favor of adoption of this Agreement.
(c) In connection with the stockholder approvals provided for herein, each
party agrees to cooperate with the other and take all actions reasonably
necessary or appropriate to obtain such approvals.
Section 6.3 Joint Proxy Statement. As promptly as reasonably practicable
after the date hereof, IHI will prepare and file with the SEC in accordance with
the Exchange Act, a joint proxy statement (the "Joint Proxy Statement"),
relating to approval and adoption of this Agreement and the transactions
contemplated hereby by the stockholders of IHI and T-3. The parties will take
such actions as may be reasonably required to cause the Joint Proxy Statement to
be cleared by the SEC for mailing to the IHI stockholders as promptly as
practicable after such filing and to cause the shares of IHI Common Stock
issuable in connection with the Merger to be exempt from registration under
applicable federal and state securities laws. Each of the parties hereto shall
furnish all information concerning itself which is required or customary for
inclusion in the Joint Proxy Statement. As soon as reasonably practicable after
the Joint Proxy Statement has been cleared by the SEC, IHI and T-3 shall
promptly mail the Joint Proxy Statement to each of their respective
stockholders.
Section 6.4 Registration Rights. Upon the Closing, IHI and each of the
former T-3 stockholders will enter into a registration rights agreement (the
"Registration Rights Agreement") in the form attached hereto as Appendix IV.
Section 6.5 Equity Investments in T-3. Immediately prior to the closing of
the Merger, the parties agree that the Fund shall make an additional equity
investment in the amount of $46,800,000 to acquire additional shares of T-3
Common Stock at a price per share of $116.28 (the "Equity Investment").
Section 6.6 Financing.
(a) Prior to the Closing, IHI shall use its commercially reasonable efforts
to obtain a new credit facility, which shall be in a form reasonably
satisfactory to T-3 and the Fund, containing usual and customary covenants, and
on terms that are mutually agreed upon by IHI and T-3, in a principal amount
(the "Financing") equal to at least $80 million, and in any case, an amount that
together with the Equity Investment, will produce proceeds sufficient to repay
or refinance the IHI Senior Secured Credit Facility and the EnSerCo Loan.
(b) T-3 agrees to provide, and will cause their respective officers,
employees and advisors to provide, all reasonable cooperation in connection with
the arrangement of Financing, including (i) providing prompt assistance in the
preparation of any offering or information memorandum and other offering
materials for the Financing, (ii) providing all information reasonably deemed
necessary by any syndication agent to complete the Financing, (iii) assisting
the providers of the Financing in connection with their confirmation of the
accuracy and completeness of the materials and information referenced in clauses
(i) and (ii) above, and (iii) causing T-3's senior management to participate in
meetings and conference calls with potential participants in the Financing at
such times and places as any syndication agent for the Financing may reasonably
request.
(c) Notwithstanding any other term or provision hereof, in the event IHI is
unable to obtain the Financing prior to the Closing Date, the Fund agrees to
provide a bridge loan at Closing in an amount sufficient to repay or refinance
the indebtedness referred to in Section 6.7 hereof. The bridge financing will be
on terms substantially similar to those available in the credit markets
generally for similar financings, but in any event will be on terms no less
favorable. Such bridge financing, if required, must be on terms reasonably
satisfactory to IHI, T-3 and the Fund.
Section 6.7 Repayment of Certain Indebtedness. At Closing, IHI shall repay
in full by wire transfer of immediately available funds the outstanding
indebtedness balance under the IHI Senior Secured Credit Facility and all
amounts owed to EnSerCo, LLC under the Loan Agreement dated June 30, 1998 (the
"EnSerCo Loan"). T-3 and the Fund acknowledge that in connection with the
consent of EnSerCo, LLC to the transactions, IHI has paid EnSerCo, LLC the fees
set forth in Section 6.7 of the IHI Disclosure Schedule. Subject to IHI's
obtaining the Financing pursuant to Section 6.6(a) or the bridge financing by
the Fund pursuant to Section 6.6(c) at or prior to Closing, IHI shall also repay
at Closing all other outstanding indebtedness (together with any applicable
premium) of IHI specified in Section 6.7 of the IHI Disclosure Schedules,
together with all accrued and unpaid interest thereon, with the proceeds of such
financings.
Section 6.8 Xxxx-Xxxxx-Xxxxxx.
(a) T-3, the Fund and IHI shall cooperate in good faith and take all actions
reasonably necessary or appropriate to file, and expeditiously and diligently
prosecute to a favorable conclusion, the HSR Forms required, if any, to be filed
by each of them in connection herewith with the Federal Trade Commission and the
Department of Justice pursuant to the HSR Act.
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(b) T-3, the Fund and IHI agree that from the date of this Agreement through
the Effective Time, neither party nor any of its subsidiaries or Affiliates
shall enter into any transaction with a third party or take any other action
that would have the effect of impeding the ability to obtain HSR Act clearance,
if required, for the transactions contemplated by this Agreement.
Section 6.9 Access to Properties and Records. Until the Closing Date, each
of IHI and T-3 shall, and shall cause each of its Subsidiaries to, allow the
other party and its authorized representatives full access, during normal
business hours and on reasonable notice, to all of its properties, offices,
vehicles, equipment, inventory and other assets, documents, files, books and
records, in order to allow the other party a full opportunity to make such
investigation and inspection as the other party desires of its business and
assets. Each of IHI and T-3 shall, and shall cause each of its Subsidiaries to,
(a) use its reasonable best efforts to cause its employees, counsel and
independent certified public accountants to be available upon reasonable notice
to answer questions of the other party's representatives concerning its business
and affairs and (b) use its reasonable best efforts to cause them to make
available all relevant books and records in connection with such inspection and
examination, including without limitation work papers for all audits and reviews
of its financial statements.
Section 6.10 Consultation and Reporting. During the period from the date of
this Agreement to the Closing Date, each of T-3 and IHI will, subject to any
applicable legal or contractual restrictions, confer on a regular and frequent
basis with the other to report material operational matters and to report on the
general status of ongoing operations. Each of T-3 and IHI will notify the other
of any unexpected emergency or other change in the normal course of its business
or in the operation of its properties and of any governmental complaints,
investigations, adjudicatory proceedings or hearings (or communications
indicating that the same may be contemplated) and will keep the other fully
informed of such events and permit its representatives prompt access to all
materials prepared by or on behalf of such party or served on them, in
connection therewith.
Section 6.11 Conduct of Business By Both Parties Prior to the Closing Date.
During the period from the date of this Agreement to Closing Date, T-3 and IHI
shall each use its reasonable best efforts to preserve the goodwill of
suppliers, customers and others having business relations with it and its
Subsidiaries and to do nothing knowingly to impair its ability to keep and
preserve its business as it exists on the date of this Agreement. Without
limiting the generality of the foregoing, except as otherwise specifically
provided in this Agreement or as set forth in Section 6.11 of the IHI Disclosure
Schedule, during the period from the date of this Agreement to the Closing Date
neither IHI (and IHI shall cause its Subsidiaries not to) nor T-3 shall (and T-3
shall cause its Subsidiaries not to), without the prior written consent of the
other:
(a) declare, set aside, increase or pay any dividend (including any
stock dividends), or declare or make any distribution on, or directly or
indirectly combine, redeem, reclassify, purchase, or otherwise acquire, any
shares of its capital stock;
(b) amend its certificate or articles of incorporation or by-laws, or
adopt or amend any resolution or agreement concerning indemnification of its
directors, officers, employees or agents;
(c) commit any act which act would cause any representation or warranty
contained in this Agreement to become untrue in any material respect, as if
each such representation and warranty were continuously made from and after
the date hereof;
(d) violate any Applicable Law that would have a Material Adverse Effect
on such party;
(e) fail to maintain its books, accounts and records in the usual manner
on a basis consistent with that previously employed in all material
respects;
(f) fail to pay, or to make adequate provision in all material respects
for the payment of, all Taxes, interest payments and penalties due and
payable (for all periods up to the Closing Date) to any city, parish, state,
the United States, foreign or any other taxing authority, except those being
contested in good faith by appropriate proceedings and for which sufficient
reserves have been established, or make any elections with respect to Taxes;
(g) make any material change in the conduct of its businesses and
operations or enter into any transaction other than in the ordinary course
of business consistent with past practices;
(h) except for the Equity Investment, the Discretionary Equity
Investment, the extension of options to purchase IHI common stock held by
employees of A&B Bolt, and the acceleration of options to purchase IHI
common stock upon a change of control as provided in the IHI's existing
stock option plan, issue any additional shares of capital stock or equity
securities or grant any option, warrant or right to acquire any capital
stock or equity securities; issue any security convertible into or
exchangeable for its capital stock; alter any material term of any of its
outstanding securities or make any change in its outstanding shares of
capital stock or other ownership interests or its capitalization, whether by
reason of exchange or readjustment of shares, stock dividend or otherwise;
provided, however, that IHI may issue shares of IHI Common Stock pursuant to
the obligations set forth in Section 5.2 of the IHI Disclosure Schedules,
and T-3 may issue shares of T-3 Common Stock pursuant to obligations set
forth in Section 4.2 of the T-3 Disclosure Schedules;
(i) except for the Financing and as otherwise provided herein, incur,
assume or guarantee any indebtedness for borrowed money or any other
obligation of any other Person, issue any notes, bonds, debentures or other
corporate debt securities or grant any option, warrant or right to purchase
any thereof other than for working capital under an existing line of credit
and to fund capital expenditures disclosed in such party's Disclosure
Schedules;
(j) make any sale, assignment, transfer, abandonment or other conveyance
of any of its material assets or any part thereof, except for the IHI
Dispositions and transactions pursuant to existing contracts set forth in
such party's Disclosure Schedules and dispositions of worn-out or obsolete
equipment for fair or reasonable value in the ordinary course of business
consistent with past practices;
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(k) subject any of its assets or properties to a Lien other than a
Permitted Lien;
(l) make or commit to make capital expenditures that in the aggregate
are in excess of $150,000 except as described in the capital budget set
forth in Section 6.11 of either party's Disclosure Schedules;
(m) except as described in Section 6.12 of either party's Disclosure
Schedules, otherwise provided herein, make any loan, advance or capital
contribution to or investment in, or sell, transfer or lease any properties
or assets to, or enter into any agreement or arrangement with, any of its
Affiliates other than in the ordinary course of business and for fair value;
(n) make any change in any method of accounting or accounting principle,
method, estimate or practice except for any such change required by reason
of a concurrent change required by generally accepted accounting principles;
(o) enter into or modify any employee benefit plans any employment,
change in control, severance or similar agreement or arrangement with any
director, officer or employee, or grant any increase in the rate of wages,
salaries, bonuses or other compensation or benefits of any director, officer
or employee other than increases in wages, salaries, bonuses, compensation
or benefits (i) required by contracts, agreements, policies or collective
bargaining agreements set forth in Sections 4.16 and 4.21 of the T-3
Disclosure Schedules with respect to T-3, and Sections 5.16 and 5.21 of the
IHI Disclosure Schedules with respect to IHI, or (ii) to employees below the
management level made in the ordinary course of business;
(p) enter into any new line of business;
(q) make any Tax election that is inconsistent with any corresponding
election made on a prior Return or settle or compromise any Tax liability
for an amount in excess of the liability therefor that is reflected on the
T-3 Financial Statements or the IHI Financial Statements, as the case may
be; or
(r) authorize any of, or agree or commit to do any of, the foregoing
actions.
Section 6.12 Public Statements. Prior to the Closing Date, none of the
parties to this Agreement shall (and each party shall use its reasonable best
efforts so that none of its advisors, officers, directors or employees shall)
except with the prior consent of the other parties, which consent shall not be
unreasonably withheld, publicize, announce or describe to any third person
(except their respective advisors and employees) the execution or terms of this
Agreement, the parties hereto or the transactions contemplated hereby, except
that IHI may make such disclosures and announcements as may be necessary or
advisable under applicable securities laws after giving reasonable prior notice,
if practicable, to T-3 of any such disclosure or announcement and allowing T-3
to comment on the same.
Section 6.13 No Solicitation.
(a) None of IHI and its Subsidiaries, or T-3 and its Subsidiaries will (nor
will they permit any of their respective Affiliates, officers, directors,
representatives, or agents to), prior to the earlier of the Closing Date or the
termination of this Agreement pursuant to Section 8.1, directly or indirectly,
(i) solicit, initiate or encourage the submission of any proposal for a Sale
Transaction, (ii) enter into any agreement with respect to any Sale Transaction
or give any approval with respect to any Sale Transaction, or (iii) participate
in any discussions or negotiations regarding, or furnish to any Person any
information with respect to or take any other action to facilitate any inquiries
or the making of any proposal that constitutes, or may reasonably be expected to
lead to, any Sale Transaction or any proposal for a Sale Transaction.
Notwithstanding the preceding sentence, if at any time the Board of Directors of
IHI or T-3 determines in good faith, (i) based on the advice of outside counsel,
that it is advisable to do so in order to comply with its fiduciary duties to
its stockholders under Applicable Law and (ii) after consultation with its
financial advisors, that the Sales Transaction, if completed, would result in a
transaction superior to the transaction contemplated by this Agreement, taking
into account, among other things, the long term interests of IHI or T-3, as
applicable, and their stockholders (a "Superior Proposal"), IHI or T-3 (and
their respective officers, directors, representatives or agents) may in response
to a written proposal for a Sale Transaction not solicited on or after the date
hereof, subject to compliance with Section 6.13(c), (A) furnish information with
respect to itself or a Subsidiary pursuant to a customary confidentiality
agreement to any Person making such proposal, and (B) participate in
negotiations regarding such proposal. Without limiting the foregoing, it is
understood that any violations of the restrictions set forth in this Section
6.13(a) by any of a party's officers, directors, representatives, agents,
Affiliates or Subsidiaries, whether or not such Person is purporting to act on
behalf of such party or any of its Subsidiaries or otherwise, shall be deemed to
be a breach of this Section 6.13(a) by such party.
(b) Neither of the Boards of Directors of IHI or T-3 shall (i) withdraw or
modify, or propose to withdraw or modify, in a manner adverse to the approval
(including, without limitation, the Board of Directors' resolution providing for
such approval) of this Agreement or the transactions contemplated hereby or (ii)
approve or recommend, or propose to approve or recommend, any Sale Transaction,
except in the event the Board of Directors of a party determines in good faith,
(x) based on the advice of outside counsel, that it is advisable to do so in
order to comply with its fiduciary duties to its stockholders under Applicable
Law and (y) after consultation with its financial advisors, that the Sale
Transaction is a Superior Proposal, and then only at or after the termination of
this Agreement pursuant to Section 8.1(f) or 8.1(g).
(c) In addition to the obligations set forth in subsections (a) and (b) of
this Section 6.13, each party promptly shall advise the others orally and in
writing of any request for information or of any proposed Sale Transaction or
any inquiry with respect to or which could reasonably be expected to lead to any
proposed Sale Transaction, the identity of the Person making any such request,
proposed Sale Transaction or inquiry and the terms and conditions thereof. Each
party will keep the others fully informed of the status and details (including
amendments or proposed amendments) of any such request, proposed Sale
Transaction or inquiry, and each party shall keep confidential such information
provided to it by another party pursuant to this Section 6.13(c), subject to any
judicial or other legal order, directions or obligations to disclose such
information.
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(d) Nothing contained in this Section 6.13 shall prohibit IHI from taking
and disclosing to its stockholders a position contemplated by Rule 14d-9 or Rule
14e-2 promulgated under the Exchange Act.
Section 6.14 Update Information. After the date hereof, each party hereto
will promptly disclose to the other any event or occurrence which causes, or
with notice or the passage of time would cause, its representations and
warranties to be incomplete or no longer correct; provided, however, that except
as contemplated by Section 6.5, relative to Section 3.1 of the T-3 Disclosure
Schedules, none of such disclosures will be deemed to modify, amend, or
supplement the representations and warranties of such party, unless the other
party consents to such modification, amendment, or supplement in writing. Each
party shall promptly advise the other party orally and in writing of any change
or event having or which insofar as reasonably can be foreseen would have, a
Material Adverse Effect on the party providing such notification.
Section 6.15 Maintenance of Policies. IHI and T-3 shall maintain the
coverage under the IHI Policies and the T-3 Policies respectively, in full force
and effect until the Closing Date.
Section 6.16 Director's and Officer's Indemnification and Insurance.
(a) For four years after the Effective Time, IHI shall indemnify and hold
harmless the present and former officers and directors of T-3 and IHI in respect
of acts or omissions prior to the Effective Time to the fullest extent provided
under T-3's Certificate of Incorporation and IHI's articles of incorporation, as
applicable, in effect on the date hereof and pursuant to any agreements set
forth in Section 4.21 of the Disclosure Schedule and Section 5.21 of the IHI
Disclosure Schedule; provided that such indemnification shall be subject to any
limitation imposed from time to time under Applicable Law.
(b) The Surviving Corporation shall pay the insurance premiums required for
any extension of T-3's and IHI's officers' and directors' liability insurance
policies that are in force at the date hereof following the Closing Date for a
"discovery" period elected under such insurance policy covering the officers and
directors of T-3 (the "Extended Coverage Policy") for a period of four years or
shall provide substantially similar coverage for the same period under IHI's
directors' and officers' insurance policy for all directors and officers of T-3
and IHI.
Section 6.17 Nasdaq Application. IHI shall apply for initial listing of the
common stock of the Reincorporated Corporation on the Nasdaq National Market and
IHI shall remit the fees required to be paid in connection therewith. IHI and
T-3 shall use their commercially reasonable efforts to obtain approval for the
initial listing of the common stock of the Reincorporated Corporation on the
Nasdaq National Market.
Section 6.18 IHI Employee Benefits. As soon as practicable after the
Effective Time, employees of the Surviving Corporation and its Subsidiaries
shall be entitled to participate in all employee benefit plans of the Surviving
Corporation, which shall be the employee benefit plans maintained by T-3 as of
the Effective Time, including without limitation, the T-3 401(k) plan, in
respect of their service after the Effective Time to the same extent that
employees of T-3 or IHI who are employed in comparable positions are entitled to
participate. To the extent permitted under Applicable Law as determined by legal
counsel for the Surviving Corporation, the 401(k) plan maintained by IHI as of
the Effective Time shall be merged into the 401(k) plan maintained by T-3, with
the T-3 401(k) plan being the surviving plan. IHI and T-3 further agree that any
such employees shall be credited for their service with IHI, T-3 and their
Subsidiaries, as the case may be, for purposes of eligibility, benefit
entitlement and vesting in the employee benefit plans provided by the Surviving
Corporation, but not for purposes of any executive compensation plan or program.
No benefits of any employee under the Surviving Corporation's medical benefit
plan shall be subject to any exclusions for any pre-existing conditions (to the
extent such exclusions did not apply under to such employee under IHI's, T-3's
or their Subsidiaries' existing medical benefit plan, as applicable), and credit
shall be received for any deductibles or out-of-pocket amounts previously paid
during the year. Nothing herein shall be construed to limit in any way the right
of the Surviving Corporation to amend or terminate any employee benefit plan or
other benefit program at any time in its discretion.
Section 6.19 Agreements with Respect to IHI Dispositions.
(a) IHI and/or one or more of its Affiliates shall have entered into
definitive agreements (the "Disposition Agreements") with respect to each of
the IHI Dispositions not later than November 15, 2001. The IHI Dispositions
are set forth on Schedule 6.19 of the IHI Disclosure Schedules.
(b) The Disposition Agreements may take the form of a merger, sale of
stock or sale of assets or such other form as may be reasonably acceptable
to T-3 and IHI. No Disposition Agreement shall be entered into without the
written consent of T-3, which consent shall not be unreasonably withheld;
however, T-3 shall have no obligation to consent unless the Disposition
Agreements provide for an aggregate Net Proceeds of at least $33.3 million,
of which not greater than $6.1 million shall be represented by seller
financing or other deferred payment obligations to IHI or its Subsidiaries
with respect to non-competition agreements, consulting arrangements, earnout
payments or other similar arrangements. Notwithstanding the foregoing, T-3
has consented to two of the Disposition Agreements as indicated in Section
6.19 of the IHI Disclosure Schedules. IHI agrees to keep T-3 informed
regarding the status of all negotiations relating to the IHI Dispositions
and allow T-3 to participate (with such legal or other advisors as it deems
appropriate), at its expense, in discussions and negotiations with the
proposed purchasers. Notwithstanding the foregoing, IHI shall remain solely
responsible for the IHI Dispositions, and T-3 shall have no authority to
negotiate such transactions or enter into any agreements on IHI's part.
(c) All proceeds from the IHI Dispositions shall be used (i) first to
repay any capitalized leases that are owed by the entity being sold, or
borrowed money indebtedness secured by the assets of the entity being sold
in order of priority of their secured position and (ii) second to repay a
portion of IHI's Senior Secured Credit Facility satisfactory to IHI's senior
secured lenders.
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(d) The "Net Proceeds" from the IHI Dispositions shall be determined as
follows:
(i) If the IHI Disposition results from the Sale of Stock, the amount of
the consideration received by IHI or its Subsidiaries from such sale, less
all expenses incurred or estimated to be incurred by IHI or its Subsidiaries
in connection with the Sale of Stock, including all Taxes resulting
therefrom, fees of counsel, accountants and other consultants, fees of any
investment banking firm acting as financial advisor to IHI or its
Subsidiaries, and any brokerage or finder's fee payable in connection with
the Sale of Stock.
(ii) If the IHI Disposition results from the Sale of Assets, the amount
of the consideration received by IHI or its Subsidiaries for the assets sold
by it in the Sale of Assets (exclusive of any IHI or Subsidiary liabilities
assumed by the purchaser of such assets), less all expenses incurred or
estimated to be incurred by IHI or its Subsidiaries in connection with the
Sale of Assets, including all Taxes resulting therefrom, fees of counsel,
accountants and other consultants, fees of any investment banking firm
acting as financial advisor to IHI or its Subsidiaries, and any brokerage or
finder's fee payable in connection with the Sale of Assets.
Section 6.20 Resignations. All of the directors of IHI shall provide IHI
with written resignations with respect to their director positions at IHI to be
effective immediately prior to the Effective Time.
ARTICLE 7.
CLOSING CONDITIONS
Section 7.1 Conditions Applicable to all Parties. The respective obligations
of each party to consummate the transactions contemplated by this Agreement
shall be subject to the satisfaction or, where permissible, waiver by such party
of the following conditions at or prior to the Closing Date:
(a) Other than the Agreed TRO, no statute, rule, regulation, executive
order, decree, preliminary or permanent injunction or restraining order
shall have been enacted, entered, promulgated or enforced by any court of
competent jurisdiction or other Governmental Entity which prohibits or
restricts the consummation of the transactions contemplated by this
Agreement, and no Proceeding shall have been commenced and be pending which
seeks to prohibit or restrict the consummation of the transactions
contemplated by this Agreement.
(b) The IHI Stockholders shall have met and approved this Agreement,
including the plan of merger for the Merger, and the Reincorporation Merger
Agreement.
(c) The T-3 Stockholders shall have approved this Agreement.
(d) The waiting period applicable to the consummation of the Merger
under the HSR Act, if any, shall have expired or been terminated.
(e) All consents and approvals of third parties necessary for
consummation of the transactions contemplated by this Agreement shall have
been obtained.
(f) The IHI Dispositions shall have been completed in accordance with
Section 6.19 hereof.
(g) The Reincorporated Company shall meet the initial listing
requirements (on a pro forma basis) for the shares of its common stock to be
approved for quotation on the Nasdaq National Market based on the average
closing price of IHI common stock on the Nasdaq Stock Market for the ten
trading days immediately prior to the Closing Date or the shares of common
stock of the Reincorporated Company shall have been conditionally approved
for listing on the Nasdaq National Market subject to the requirement of
meeting the $5 minimum bid price requirement.
Section 7.2 Conditions to Obligations of IHI. The obligations of IHI to
consummate the transactions contemplated by this Agreement are subject to the
satisfaction of the following conditions unless waived by IHI:
(a) Each of the representations and warranties of T-3 set forth in this
Agreement, without regard to qualifications for materiality or Material
Adverse Effect, shall be true and correct in all material respects, as of
the date of this Agreement and as of the Closing Date (except to the extent
any such representation or warranty expressly speaks as of an earlier date,
which representations and warranties shall be true and correct in all
material respects as of such earlier date) as though made on and as of the
Closing Date. T-3 and the Fund shall have performed in all material respects
all obligations required to be performed by them under this Agreement at or
prior to the Closing Date.
(b) IHI shall have received an opinion of Xxxxxx & Xxxxxx, L.L.P.,
counsel for T-3, substantially in the form attached hereto as Exhibit D.
(c) Eligible holders of shares of not more than 2.5% of the outstanding
T-3 Common Stock shall have delivered a written demand for appraisal of such
shares in the manner provided in the DGCL.
(d) IHI shall have received a favorable opinion from Xxxxxxx Xxxxx for
inclusion in the Joint Proxy Statement as to the fairness, from a financial
point of view, to the IHI Stockholders of the consideration paid to the T-3
Stockholders, which opinion shall not have been withdrawn at the Effective
Date.
(e) there shall have occurred no Material Adverse Effect with respect to
T-3 since the date of this Agreement.
Section 7.3 Conditions to Obligations of T-3. The obligations of T-3 to
consummate the transactions contemplated by this Agreement are subject to the
satisfaction for the following conditions, unless waived by T-3:
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(a) Each of the representations and warranties of IHI set forth in this
Agreement, without regard to qualifications or materiality or Material
Adverse Effect, shall be true and correct in all material respects as of the
date of this Agreement and as of the Closing Date (except to the extent any
such representation or warranty expressly speaks of an earlier date, which
representations and warranties shall be true and correct in all material
respects as of such earlier date) as though made on and as of the Closing
Date. IHI shall have performed in all material respects all obligations
required to be performed by it under this Agreement on or prior to the
Closing Date.
(b) T-3 shall have received the legal opinions of LeBoeuf, Lamb, Xxxxxx
& XxxXxx, L.L.P., counsel for IHI, set forth in Exhibit E hereto in a form
reasonably acceptable to T-3.
(c) T-3 shall have received an opinion from Xxxxxx & Xxxxxx, L.L.P.,
counsel for T-3, to the effect that (i) the merger of T-3 into IHI as
provided in this Agreement will constitute a reorganization within the
meaning of Section 368(a)(1)(A) of the Code, and T-3 and IHI will be parties
to the reorganization; and (ii) no gain or loss will be recognized as a
consequence of the Merger to any T-3 Stockholder who exchanges all of their
T-3 Common Stock for IHI Common Stock, except to the extent of any cash
received in lieu of fractional share interests.
(d) IHI or its Subsidiaries shall have entered in employment agreements
in a form reasonable satisfactory to T-3 with the persons listed in Section
7.3 of the T-3 Disclosure Schedules.
(e) Each member of the board of directors of IHI shall have resigned
effective immediately preceding the Effective Time.
(f) All agreements among the IHI Stockholders regarding the election of
directors and/or the voting of shares of IHI Common Stock shall have been
terminated.
(g) there shall have occurred no Material Adverse Effect with respect to
IHI since the date of this Agreement.
Section 7.4 Additional Closing Condition. No Merger shall occur, unless all
principal, interest, fees and other amounts due under the IHI Senior Secured
Credit Facility and the EnSerCo Loan shall be paid in full. IHI and T-3 agree
that as of March 31, 2001, the principal amount due under the EnSerCo Loan is
$15 million, the interest due and payable under the EnSerCo Loan is
$3,473,753.42, and that interest continues to accrue under the EnSerCo Loan at
the rate of 18% per annum (as calculated under the terms of the EnSerCo Loan).
ARTICLE 8.
TERMINATION AND AMENDMENT
Section 8.1 Termination. This Agreement may be terminated and abandoned at
any time prior to the Closing Date:
(a) by mutual consent of IHI and T-3;
(b) by IHI, if there shall have been a breach of any representation,
warranty, covenant or agreement on the part of T-3 such that the condition
set forth in Section 7.2(a) would not be satisfied and such breach shall not
have been cured prior to the earlier of (i) 30 days following notice of such
breach and (ii) December 31, 2001; provided, however, the right to terminate
this Agreement pursuant to this Section 8.1(b) shall not be available to IHI
if it, at such time is in material breach of any representation, warranty,
covenant or agreement set forth in this Agreement such that the condition
set forth in Section 7.3 (a) would not be satisfied;
(c) by T-3, if there shall have been a breach of any representation,
warranty, covenant or agreement on the part of IHI such that the condition
set forth in Section 7.3(a) would not be satisfied and such breach shall not
have been cured prior to the earlier of (i) 30 days following notice of such
breach and (ii) December 31, 2001; provided, however, the right to terminate
this Agreement pursuant to this Section 8.1(c) shall not be available to T-3
if it, at such time is in material breach of any representation, warranty,
covenant or agreement set forth in this Agreement such that the condition
set forth in Section 7.2(a) would not be satisfied;
(d) by either IHI on the one hand, or T-3 on the other hand, if any
injunction other than the Agreed TRO or other order of a court or other
competent Governmental Entity preventing the transactions contemplated by
this agreement shall be pending;
(e) by either IHI on the one hand, or T-3 on the other hand, if the
transactions contemplated by this Agreement shall not have been consummated
on or before December 31, 2001; provided, that the right to terminate this
Agreement under this Section 8.1(e) shall not be available to any party
whose breach of its representations and warranties in this Agreement or
whose failure to perform any of its covenants and agreements under this
Agreement has resulted in the failure of the transactions contemplated by
this agreement to occur on or before such date;
(f) by IHI, if (i) the Board of Directors of T-3 withdraws, modifies or
changes its recommendation of this Agreement or the Merger or shall have
resolved to do any of the foregoing or the Board of Directors of T-3 shall
have recommended to the stockholders of T-3 any proposed Sale Transaction or
resolved to do so; (ii) a tender offer or exchange offer for 30% or more of
the outstanding shares of T-3 Common Stock is commenced and the Board of
Directors of T-3, within 10 Business Days after such tender offer or
exchange offer is so commenced, either fails to recommend against acceptance
of such tender or exchange offer by its stockholders or takes no position
with respect to the acceptance of such tender or exchange offer by its
stockholders; or (iii) except as contemplated by this Agreement, any person
shall have acquired beneficial ownership or the right to acquire beneficial
ownership of, or any "group" (as such term is defined under Section 13(d) of
the Exchange Act and the regulations promulgated thereunder), shall have
been formed which beneficially owns, or has the right to acquire beneficial
ownership of, 30% or more of the then outstanding shares of T-3 Common
Stock;
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(g) by T-3 if (i) the Board of Directors of IHI withdraws, modifies or
changes its recommendation of this Agreement or the Merger or shall have
resolved to do any of the foregoing or the Board of Directors of IHI shall
have recommended to the stockholders of IHI any proposed Sale Transaction or
resolved to do so; (ii) a tender offer or exchange offer for 30% or more of
the outstanding shares of IHI Common Stock is commenced and the Board of
Directors of IHI, within 10 Business Days after such tender offer or
exchange offer is so commenced, either fails to recommend against acceptance
of such tender or exchange offer by its stockholders or takes no position
with respect to the acceptance or such tender or exchange offer by its
stockholders; or (iii) as contemplated by this Agreement, any person shall
have acquired beneficial ownership or the right to acquire beneficial
ownership of, or any "group" (as such term is defined under Section 13(d) of
the Exchange Act and the regulations promulgated thereunder), shall have
been formed which beneficially owns, or has the right to acquire beneficial
ownership of, 30% or more of the then outstanding shares of IHI Common
Stock;
(h) by either IHI on the one hand, or T-3 on the other hand, if
(i) T-3 accepts a proposed Sale Transaction, which shall have been
approved by T-3's Board of Directors in accordance with Section 6.13(b);
(ii) IHI accepts a proposed Sale Transaction, which shall have been
approved by IHI's Board of Directors in accordance with Section 6.13(b);
(iii) if the required approval of the stockholders of IHI of this
Agreement is not received at the IHI Meeting; or
(iv) if the required approval of the T-3 stockholders of this Agreement
is not obtained.
(i) notwithstanding Section 8.1(c) hereof, by T-3, if IHI and/or one or
more of its Affiliates has not entered into definitive Disposition
Agreements by November 15, 2001 with respect to each of the IHI Dispositions
in accordance with Section 6.19.
Section 8.2 Effect of Termination.
(a) Except as provided in this Section 8.2, in the event of a termination of
this Agreement as provided in Section 8.1, this Agreement shall forthwith become
void, the representations and warranties shall not survive, and there shall be
no further liability or obligation under any provisions hereof on the part of
the parties hereto or their respective officers, directors or stockholders.
(b) To the extent that a termination of this Agreement pursuant to Section
8.1(b) or (c) results from a willful breach of any of a party's representations,
warranties, covenants or agreements set forth in this Agreement, the injured
party shall have a right to recover its damages caused thereby, provided,
however, that such injured party, shall not be entitled to consequential or
punitive damages.
(c) In the event of a termination of this Agreement pursuant to Sections
8.1(b), 8.1(f) or 8.1(h)(iv), then T-3 shall pay to IHI a termination fee equal
to $850,000 within two days of the first to occur of any such event.
(d) In the event of a termination of this Agreement pursuant to Sections
8.1(c), 8.1(g) or 8.1(h)(iii), then IHI shall pay to T-3 a termination fee equal
to $850,000 within two days of the first to occur of any such event.
(e) In the event of a termination of this Agreement pursuant to Section
8.1(h)(i) or (ii) hereof, then the party who has accepted a proposed Sale
Transaction shall pay to the other immediately a termination fee equal to
$850,000.
(f) Notwithstanding the foregoing, any termination fee that becomes payable
by T-3 pursuant to this Section shall be paid to EnSerCo, LLC on behalf of IHI
to reduce the principal and interest on the EnSerCo Loan.
ARTICLE 9.
MISCELLANEOUS
Section 9.1 Notices. Any notice or other communication required or permitted
hereunder shall be in writing or by telex, telephone or facsimile transmission
with subsequent written confirmation, and may be personally served or sent by
United States mail and shall be deemed to have been given upon receipt by the
party notified. For purposes hereof, the addresses of the parties hereto (until
notice of a change thereof is delivered as provided in this Section 9.1) shall
be as set forth opposite each party's name on the signature page hereof.
Section 9.2 Non-Survival of Representations and Warranties. The
representations and warranties of the parties shall not survive the Closing.
Section 9.3 Headings; Gender. When a reference is made in this Agreement to
a section, exhibit or schedule, such reference shall be to a section, exhibit or
schedule of this Agreement unless otherwise indicated. The table of contents and
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. All
personal pronouns used in this Agreement shall include the other genders,
whether used in the masculine, feminine or neuter gender, and the singular shall
include the plural and vice versa, whenever and as often as may be appropriate.
Section 9.4 Entire Agreement; No Third Party Beneficiaries. This Agreement
(including the documents, exhibits and instruments referred to herein) and the
Confidentially Agreement between IHI and T-3 dated January 11, 2001 (a)
constitute the entire agreement and supersedes all
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prior agreements, and understandings and communications, both written and oral,
among the parties with respect to the subject matter hereof, and (b) except as
provided in Sections 6.4 and 6.16 hereof, are not intended to confer upon any
person other than the parties hereto any rights or remedies hereunder.
Section 9.5 Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of
Delaware without regard to any
applicable principles of conflicts of law.
Section 9.6 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties.
Section 9.7 Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by reason of any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any adverse
manner to either party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that the transactions contemplated hereby are fulfilled to the extent possible,
and in any case such term or provision shall be deemed amended to the extent
necessary to make it no longer invalid, illegal or unenforceable.
Section 9.8 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all of which taken
together shall constitute one and the same document.
Section 9.9 Amendment. This Agreement may not be amended except by an
instrument in writing signed by each of the parties hereto.
Section 9.10 Extension; Waiver. At any time prior to the Closing Date, the
parties hereto may, in their respective sole discretion and to the extent
legally allowed, (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto; (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant thereto; and (c) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth in a
written instrument signed by or on behalf of such party.
Section 9.11 Expenses. Except as provided in Section 8.2, whether or not the
transactions contemplated herein are consummated, payment for all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be made by the party incurring such costs and
expenses.
Section 9.12 Joint Drafting. This Agreement and its Exhibits and Appendices
have been jointly drafted by the parties hereto and their respective counsel.
Neither this Agreement nor any of its Exhibits and Appendices shall be construed
against any party thereto based on its authorship.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed themselves or by their respective duly authorized officers as of the date
first written above.
Address: INDUSTRIAL HOLDINGS, INC.
0000 Xxxxxxx
Xxxxxxx, Xxxxx 00000
Attn: Xxxxxx Xxxx By: /s/ XXXXXX XXXX
Fax: (000) 000-0000 ------------------------------
Xxxxxx Xxxx
President
Address: T-3 ENERGY SERVICES, INC.
000 Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attn: Xxxxxxx X. Xxxxxxxxxx By: /s/ XXXXXXX X. XXXXXXXXXX
Fax: (000) 000-0000 ------------------------------
Xxxxxxx X. Xxxxxxxxxx
President and CEO
Address: FIRST RESERVE FUND VIII,
LIMITED PARTNERSHIP
000 Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000 By: First Reserve GP VIII, L.P.,
Attn: Xxx X. Xxxxx its General Partner
Fax: 000-000-0000
By: First Reserve Corporation,
its General Partner
By: /s/ XXXXXX X. XXXXXXX
------------------------------
Xxxxxx X. Xxxxxxx
Vice President
28
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