Exhibit 10.02
ASSET PURCHASE AGREEMENT
ENTERED INTO AND EFFECTIVE
AS OF JANUARY 1, 2001,
BY AND BETWEEN
NATURAL GAS ACQUISITION CORPORATION (THE "BUYER")
AND
GREAT LAKES COMPRESSION, INC. (THE "SELLER")
TABLE OF CONTENTS
Page
----
1. Assets to be Purchased.................................................................................. 1
2. Effective Date and Time of Purchase..................................................................... 2
3. Closing; Termination.................................................................................... 2
4. Purchase Price.......................................................................................... 4
5. Adjustments of Purchase Price........................................................................... 6
6. Acquisition of Rights and Assumptions of Obligations and
Liabilities............................................................................................. 8
7. Conduct of Business in Ordinary Course.................................................................. 8
8. Current Information..................................................................................... 9
9. Seller's Representations and Warranties................................................................. 9
10. Buyer's Representations, Warranties and Disclaimer...................................................... 19
11. Consents and Approvals.................................................................................. 20
12. Completion of Work in Process........................................................................... 21
13. Conditions of Buyer to Closing.......................................................................... 21
14. Conditions of Seller to Closing......................................................................... 23
15. Restrictive Covenants................................................................................... 23
16. Employment of Seller's Personnel........................................................................ 24
17. Covenants of Buyer after the Closing.................................................................... 24
18. Events of Default by Buyer.............................................................................. 31
19. Further Assurances...................................................................................... 34
20. Related Agreements...................................................................................... 34
21. Dispute Resolution...................................................................................... 34
22. Indemnification......................................................................................... 34
i
23. Post-Closing Access to Information...................................................................... 37
24. Miscellaneous Provisions................................................................................ 37
ii
EXHIBITS AND SCHEDULES
Schedule 1(a) Tangible Fixed Assets
Schedule 1(b) Compression Fleet Assets
Schedule 1(c) Compressor Leases
Schedule 1(d) Service Only Contracts - Reciprocating Compressors
Schedule 1(e) Service Only Contracts - Rotary Compressors
Schedule 1(f) Intangible Assets
Exhibit 3(b)(1) Warranty Deed
Exhibit 3(b)(2) Xxxx of Sale
Exhibit 3(b)(3) Assignment of Contract and Contract Rights
Exhibit 3(c)(1) Guaranty by NGSG
Exhibit 3(c)(2) Security Agreement
Exhibit 3(c)(3) Mortgage
Exhibit 3(c)(4) Pledge Agreement
Exhibit 3(c)(5) UCC-1 Statements
Schedule 4 Price Allocation
Schedule 7 Assets Conveyed to Seller's Affiliate
Exhibit 9(e) Certificate of Non-Foreign Status
Schedule 9(i)(3) Retained Compression Business Assets
Schedule 9(1) Seller's Employees
Schedule 9(o)(8) Underground Tanks
Schedule 11 Customers' Consents
Schedule 12 Work in Process
Exhibit 13(d)(1) Compressor Maintenance Agreements
Exhibit 13(d)(2) Commitment Agreement
Exhibit 13(d)(3) Standard Gas Compressor Equipment Master Rental and Servicing Agreement
Exhibit 13(d)(4) Seller's Certificate regarding Closing Consideration
Schedule 16 Employees To Be Offered Positions
iii
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement") is entered into and is
effective as of January 1, 2001, by and between Natural Gas Acquisition
Corporation, a State of Colorado corporation, located at 0000 XXX 0000, Xxxxxxx,
Xxxxx 00000 (the "Buyer") and Great Lakes Compression, Inc., a State of Michigan
corporation, located at 00000 Xxxxxxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000
(the "Seller"). The Buyer and the Seller are referred to herein collectively as
the "Parties" and severally as a "Party."
RECITALS
A. Seller owns, manages and operates a business (the "Compression
Business") engaged (1) in the manufacture, fabrication, sales and leasing of
natural gas compressors and gas compressor equipment that it markets and
distributes regionally to oil and gas producers, and (2) in the providing of
service and maintenance for natural gas compressors sold and leased by it or by
other manufacturers.
B. Buyer desires to purchase from Seller and Seller desires to
sell to Buyer substantially all of the tangible and intangible assets used in,
held for the use in, and held for the benefit of the Compression Business.
C. Buyer and Seller desire to enter into this Agreement to effect
the purchase and sale of such assets, free and clear of all liens and
encumbrances except as created pursuant to this Agreement, pursuant to the terms
and conditions set forth herein.
TERMS OF AGREEMENT
Now therefore, in consideration of the premises and the mutual promises
made in this Agreement, and in consideration of the representations, warranties
and covenants contained herein, the Parties agree as follows:
1. Assets to be Purchased. Subject to the provisions of this Agreement,
Buyer agrees to purchase and Seller agrees to sell all of Seller's right, title
and interest in and to all operating compression related assets of Seller
existing as of the Closing Date (as hereinafter defined) that are necessary to
continue the Compression Business of Seller (the "Acquired Assets"). The
Acquired Assets include the following:
(a) The tangible fixed assets owned or leased by Seller
described on Schedule 1(a), including the equipment, machinery,
furniture, trucks, tractors, trailers, tools, dies, jigs and real
estate;
(b) The compression fleet assets owned or leased by Seller
described on Schedule 1(b), including compressors utilized as Seller's
rental fleet and all of Seller's Compression Business inventory. These
assets shall include manufactured and purchased parts, work in process,
supplies, packaging goods, inventory and back orders;
(c) All leases of compressors by Seller and all leases of
Seller's compressors (including leased compressors) to third parties,
whether such leases are written or verbal, including all rights to
monthly rental and service revenue relating thereto and obligations for
lease expenses associated therewith, all as described on Schedule 1(c);
(d) All service only contracts for reciprocating compressors
owned by Dominion Midwest Energy, Inc., and monthly service revenue
associated therewith as described on Schedule 1(d);
(e) All service only contracts for rotary compressors owned by
Dominion Midwest Energy, Inc., and monthly service revenue associated
therewith as described on Schedule 1(e);
(f) The intangible Compression Business assets owned by
Seller, including but not limited to, the current corporate name (Great
Lakes Compression, Inc.), the assumed name variations associated with
that corporate name and the patents, trademarks, service marks, trade
names, copyrights and applications, all as set forth on Schedule 1(f);
and
(g) Any other item of Seller necessary to ensure continuity in
operation of the Compression Business by Buyer, including but not
limited to back orders and orders under evaluation.
2. Effective Date and Time of Purchase. The effective date of the sale
of the Acquired Assets shall be January 1, 2001, at 12:01 a.m. Eastern Standard
Time (the "Effective Date").
3. Closing; Termination.
(a) The closing of the purchase and sale of the Acquired
Assets (the "Closing") shall occur on March 21, 2001, unless both
Parties agree to extend the date of the Closing to a later date, or the
date of the Closing is extended as further provided in this Agreement.
The date on which the Closing actually takes place is referred to
herein as the "Closing Date." The Closing shall be held at the offices
of Dominion Exploration and Production Inc. ("DEPI"), 0 Xxxxxxxxxxx
Xxxxx, Xxxxx 0000, 00000 Xxxxxxxxxx Xxxxx, Xxxxxxx, Xxxxx 00000.
(b) At the Closing, Seller shall convey the Acquired Assets to
Buyer by the following instruments:
(1) A Warranty Deed, the form of which is attached
hereto as Exhibit 3(b)(1), conveying the real estate described
on Schedule 1(a) attached hereto to Buyer, free and clear of
all liens and encumbrances except as created pursuant to this
Agreement.
(2) A Xxxx of Sale, the form of which is attached
hereto as Exhibit 3(b)(2).
2
(3) An Assignment of Contracts and Contract Rights,
the form of which is attached hereto as Exhibit 3(b)(3).
(4) All other documents reasonably determined by
Buyer and the closing title insurance company to be necessary
to transfer the Acquired Assets to Buyer free and clear of all
liens and encumbrances except as created pursuant to this
Agreement.
(c) At the Closing, Buyer shall execute and deliver, or cause to be
executed and delivered, the following instruments:
(1) A guaranty agreement (the "Guaranty"), the form of which
is attached hereto as Exhibit 3(c)(1), by Natural Gas Services Group,
Inc. ("Guarantor") for the benefit of Seller, guaranteeing all of
Buyer's obligations under this Agreement and the Collateral Documents
(as hereinafter defined).
(2) A security agreement (the "Security Agreement"), the form
of which is attached hereto as Exhibit 3(c)(2), between Buyer and
Seller, pursuant to which Buyer grants to Seller a lien and security
interest in all of the non-real estate Acquired Assets and all of the
equipment, inventory, accounts and other non-real estate assets
(tangible and intangible) Buyer may from time to time own or possess,
to secure Buyer's obligations under this Agreement and the Collateral
Documents.
(3) A mortgage (the "Mortgage"), the form of which is attached
hereto as Exhibit 3(c)(3), between Buyer and Seller,, pursuant to which
Buyer grants to Seller a lien on all real estate Acquired Assets to
secure Buyer's obligations under this Agreement and the Collateral
Documents.
(4) A stock pledge agreement (the "Pledge Agreement"), the
form of which is attached hereto as Exhibit 3(c)(4), by Guarantor,
pursuant to which Guarantor pledges to Seller all of the capital stock
in Buyer to secure Buyer's obligations under this Agreement and the
Collateral Documents.
(5) UCC-1 financing statements, the forms of which are
attached hereto as Exhibit 3(c)(5), with respect to the Collateral (as
hereinafter defined), duly filed in all appropriate offices.
(6) Such other agreements, certificates, documents and
instruments as Seller may reasonably require in order to evidence,
secure or perfect Buyer's obligations with respect to the Deferred
Purchase Price and Seller's liens and security interest in the
Collateral.
(d) If the Closing does not occur on or before March 21, 2001, and the
cause of such non-occurrence is that all conditions of Closing precedent to a
Party's obligation to close, as set forth in Sections 13 or 14 hereof, as
applicable, have not been satisfied or waived by the other Party, then the Party
who is not obligated to close because certain conditions precedent to that
Party's obligation have not been satisfied may elect, at any
3
time after such date and notwithstanding any provision of this
Agreement providing for an extension of the date of the Closing, to
terminate this Agreement without liability to the terminating Party by
giving notice of such termination to the other Party; provided,
however, that the terminating Party is not, at the time of giving such
termination notice, in breach of any of its covenants, warranties or
obligations hereunder.
4. Purchase Price. Subject to such adjustments as may be provided for
herein, Buyer shall pay to Seller, at the Closing, Eight Million Dollars
($8,000,000) (the "Purchase Price") for all of Seller's right, title and
interest in and to the Acquired Assets. The Purchase Price is allocated among
the Acquired Assets as provided on Schedule 4. The Purchase Price shall be paid
by Buyer in the following manner:
(a) Buyer agrees to pay the sum of One Million Dollars
($1,000,000) (the "Down Payment") to Seller on the Closing Date. The
payment shall be made by wire to Seller's account. Wiring instructions
shall be provided by Seller to Buyer not less than 24 hours prior to
the Closing.
(b) Buyer agrees to pay the sum of Seven Million Dollars
($7,000,000), as adjusted in accordance with Sections 5(e) and 5(f),
below, (the "Deferred Purchase Price") to Seller, or order, together
with interest thereon, as follows:
(1) Interest shall accrue on the unpaid balance of
the Deferred Purchase Price from the Effective Date until the
Deferred Purchase Price is paid in full at a rate equal to
nine percent (9%) per annum (the "Interest Rate"). Interest
shall be paid for the actual number of days elapsed based on a
360-day year. Accrued interest shall be payable on the first
business day of each month.
(2) If not sooner paid, the entire amount of Deferred
Purchase Price remaining outstanding shall be due and payable
in full on the date (the "Final Payment Date") that is two (2)
years after the Closing Date. The Deferred Purchase Price may
be prepaid in whole or in part at any time and from time to
time. No partial prepayment shall affect the obligation of
Buyer to make any payment of interest or any portion of the
Deferred Purchase Price on the date due or to pay the entire
balance of the Deferred Purchase Price on the Final Payment
Date. Payments or prepayments with respect to the Deferred
Purchase Price shall be applied first to accrued and unpaid
interest and then to the balance of the Deferred Purchase
Price.
(3) As and when Buyer sells any item included in the
Acquired Assets, Buyer shall, within fifteen (15) days of
receipt by Buyer of the consideration for such sale, prepay to
Seller a portion of the Deferred Purchase Price equal to 0.875
multiplied by the amount of the Purchase Price allocable to
such item according to the allocation of Purchase Price set
forth in Schedule 4.
(4) On or before the 15th day of each calendar month,
Seller shall endeavor to send to Buyer an invoice with a
calculation of the interest to be due on the first day of the
following month and with wiring instructions for Buyer to
4
make such payment. If Seller has provided wiring instructions
for such payment, Buyer shall make each payment of interest
and any portion of the Deferred Purchase Price then due in
Federal funds to the account identified in Seller's
instructions. The failure of Seller to send such invoice or
wiring instructions shall not relieve Buyer of its obligation
to make the payment when due, and in such case Buyer shall
calculate the interest and shall send the required payment in
accordance with the wiring instructions last provided by
Seller.
(5) If any payment of interest or of the Deferred
Payment Price is not paid when due, then such overdue payment
thereafter shall bear interest until the overdue payment is
made at an annual default rate equal to the Interest Rate plus
five percent (5%) (the "Default Rate"). In addition, Buyer
shall pay to Seller a late charge equal to five percent (5%)
of any amount that is not received within ten (10) days after
its due date. Acceptance by Seller of any late payment without
interest at the Default Rate or without an accompanying late
charge shall not be deemed a waiver of Seller's right to
receive interest at the Default Rate or such late charge with
respect to such payment or any subsequent payment received
more than ten days after its due date.
(6) Buyer agrees to pay all expenses, including court
costs and reasonable attorneys' fees, incurred in collecting
the Deferred Purchase Price and interest thereon, in
preserving or disposing of any collateral given as security
for the payment of the Deferred Purchase Price or in defending
or prosecuting any action relating to the Deferred Purchase
Price.
(7) Buyer and each guarantor of Buyer's obligations
with respect to the Deferred Purchase Price jointly and
severally (i) waive presentment, demand, protest and notice of
dishonor, (ii) waive, to the extent permitted by law, all
exemptions, whether homestead or otherwise, as to the
obligation to pay the Deferred Purchase Price, to pay interest
thereon and to pay all other sums due under this Agreement or
the Collateral Documents with respect to the Deferred Purchase
Price or any collateral therefor (collectively, the "Deferred
Purchase Obligations"), (iii) waive any right which they may
have to require Seller to proceed against any other party or
foreclose on any collateral given to secure the payment of the
Deferred Purchase Obligations, (iv) agree that, without notice
to any party to this Agreement and without affecting any such
party's liability, Seller, at any time or times, may grant
extensions of the time for any payment under this Agreement,
release any such party from its obligation to make payments
with respect to the Deferred Purchase Obligations, permit the
renewal of the Deferred Purchase Obligations or permit the
substitution, exchange or release of any security or
collateral for the Deferred Purchase Obligations, (v) waive
any right they may have to require reinstatement of the
Deferred Purchase Obligations after the occurrence of an Event
of Default (as hereinafter defined) and (vi) waive, to the
extent permitted by law, any right they may have to a trial by
jury in any action or proceeding to enforce or collect the
Deferred Purchase Obligations, whether such action or
proceeding is instituted by Seller, Buyer or any other party.
5
(8) Nothing contained in this Agreement shall require
Buyer to pay interest at a rate exceeding the maximum rate
permitted without penalty by applicable law to be charged by
Seller. If the amount of interest will exceed the maximum
amount permitted without penalty by applicable law to be
charged by Seller, the amount of such interest shall be
automatically reduced to such maximum permissible amount.
(9) Except as provided in Sections 5(e) and 5(f), no
post-closing adjustments to the Purchase Price or
indemnification obligations of the Parties provided for in
this Agreement shall affect the amount of, or Buyer's
obligation to pay, the Deferred Purchase Price. All of the
Deferred Purchase Obligations shall be absolute and
unconditional and independent of any and all of Seller's
obligations and liabilities under this Agreement or under any
other agreement, whether arising before, on or after the
Closing Date, and Buyer shall have no right of offset or
deduction with respect to the Deferred Purchase Obligations.
5. Adjustments of Purchase Price. The Parties acknowledge that accounts
receivable and accounts payable with respect to the Acquired Assets have been
generated and will be generated before, on and after the Effective Date and
before, on and after the Closing. The Purchase Price shall be adjusted with
respect to accounts receivable and accounts payable as follows:
(a) Buyer shall not be responsible for costs and expenses
incurred in the operation of the Compression Business prior to the
Effective Date. All accounts payable by Seller relating to costs and
expenses accruing prior to the Effective Date shall remain the
responsibility of Seller. Except as provided in Section 12, below,
Seller shall not be responsible for costs and expenses incurred in the
operation of the Compression Business after the Effective Date, and all
accounts payable generated by the Compression Business relating to the
costs and expenses accruing after the Effective Date shall be the
responsibility of Buyer. The Purchase Price shall be reduced by the
amount of any account payable for which Seller is responsible that is
paid by Buyer in connection with the post-closing operation of the
Compression Business. The Purchase Price shall be increased by the
amount of any account payable for which Buyer is responsible that is
paid by Seller.
(b) All revenue generated by the Compression Business of
Seller prior to the Effective Date shall belong to Seller. All revenue
generated by the Compression Business after the Effective Date shall
belong to Buyer. Accounts receivable generated by operation of the
Compression Business by Seller prior to the Effective Date shall be
invoiced by Seller and all payments received thereon shall belong to
Seller. Accounts receivable generated by operation of the Compression
Business on and after the Effective Date until the Closing Date shall
be invoiced by Seller unless Buyer notifies Seller that Buyer will
invoice such accounts receivable, and all payments received thereon
shall belong to Buyer. In these regards, Seller shall be entitled to
rentals paid under the compressor leases covering lease periods ending
on the Effective Date and to payment for services rendered under
service and maintenance agreement until the Effective Date. Seller
shall not, however, be entitled to any part of revenue received by
Buyer upon the
6
sale of equipment from the inventory and work in progress included in
the Acquired Assets even though Seller may have accrued costs and
expenses in relation thereto prior to the Effective Date. The Purchase
Price shall be increased to include any account receivable to which
Seller is entitled collected by Buyer in connection with the
post-closing operation of the Compression Business. The Purchase Price
shall be reduced by the amount of any account receivable to which Buyer
is entitled that is collected by Seller.
(c) The responsibility for real and personal property taxes
payable on the real and personal property included in the Acquired
Assets shall not be prorated. Rather, Seller shall be responsible for
all real and personal property taxes for calendar year 2000 and prior
calendar years and Buyer shall be responsible for all real and personal
property taxes for calendar year 2001 and thereafter.
(d) Seller shall pay the cost of the title insurance as
provided in Section 13(e). Seller and Buyer will each pay one-half of
any reasonable and customary closing fee or charge imposed by any
closing agent designated by the closing title insurance company. Seller
will pay all state deed tax regarding the Warranty Deed to be delivered
by Seller hereunder. Seller will pay the cost of recording all
documents necessary to place record title in the condition warranted by
Seller in this Agreement. Buyer will pay the cost of recording all
other documents.
(e) Seller has heretofore prepared and delivered to Buyer, in
accordance with this Agreement and with generally accepted accounting
principles consistently applied, a settlement statement setting forth
Seller's estimate of all forecasted post-closing adjustments pursuant
to the provisions of this Section 5; associated calculations and the
amount to be paid to Seller by Buyer at Closing (the "Preliminary
Settlement Statement"). At the Closing, Buyer and Seller shall sign the
Preliminary Settlement Statement to acknowledge their agreement to the
provisions thereof and the Deferred Purchase Price under Section 4(b)
shall be increased or reduced accordingly, effective as of the
Effective Date.
(f) As soon as reasonable practicable after Closing, but in no
event later than 90 days after Closing, Seller shall prepare and
deliver to Buyer, in accordance with this Agreement and with generally
accepted accounting principles consistently applied, a final settlement
statement setting forth any adjustments or payments pursuant to the
provisions of this Section 5 that were not finally determined as of
Closing, the associated calculations and the resulting amount (the
"Final Settlement Statement"). On or before five business days after
Buyer's receipt of the Final Settlement Statement, Buyer shall deliver
to Seller a written report containing any changes that Buyer proposes
to be made in the Final Settlement Statement. The Parties shall agree
with respect to the changes proposed by Buyer within five business days
after Seller's receipt of Buyer's written report, and the date on which
the final Purchase Price is established, which in no event shall be
later than 105 days after the Closing, shall be called the "Final
Settlement Date". If the Parties cannot agree regarding the Final
Settlement Statement, the dispute shall be resolved as provided in
Section 21. Adjustments pursuant to this Section 5(f) shall
7
increase or decrease the Deferred Purchase Price under Section 4(b)
effective as of the Effective Date.
(g) If, after the Final Settlement Statement, Seller at any
time receives a payment which is payable in whole or in part to Buyer
pursuant to this Section 5, such payment shall be held in trust for
Buyer, and Seller shall pay to Buyer within 10 days of receipt by
Seller the amount of the payment due to Buyer pursuant to this
Agreement. Similarly, if Buyer receives a payment which is payable in
whole or in part to Seller pursuant to this Section 5, Buyer shall hold
such payment in trust for Seller and Buyer shall pay to Seller within
10 days of receipt by Buyer the amount of the payment due Seller
pursuant to this Agreement. If either Party pays an invoice that is an
obligation of the other Party under this Section 5, the Party subject
to the obligation shall refund to the paying Party the amount paid
within 10 days after receiving from the paying Party a copy of the
invoice and proof of payment.
6. Acquisition of Rights and Assumptions of Obligations and
Liabilities.
(a) Upon the Closing and as of the Effective Date, Buyer shall
acquire any and all rights arising from or attributable to the Acquired
Assets.
(b) Upon the Closing and as of the Effective Date, Buyer shall
assume any and all obligations and liabilities arising from or
attributable to the Acquired Assets, including without limitation,
obligations and liabilities relating to any loss, damage, cost,
liability or expense (including without limitation, damage to property,
injury or death to persons, court costs and reasonable attorney fees)
or penalties or fines arising from or attributable to ownership,
management or operation of the Acquired Assets on and after the
Effective Date.
(c) Except for Buyer's assumption, after the Effective Date,
of Seller's obligations arising under leasehold agreements and service
contracts included in the Acquired Assets, Buyer does not assume and
shall have no responsibility for discharging the liabilities of Seller,
whether incurred or accrued prior to or after the Effective Date. No
such assumption shall be implied or construed by operation of law or
otherwise. All indebtedness, obligations, claims and liabilities
(absolute, contingent or otherwise) of whatsoever nature of Seller
arising prior to the Effective Date (including all obligations under
leasehold agreements and service contracts included in the Acquired
Assets) shall be and remain the sole obligation of Seller.
7. Conduct of Business in Ordinary Course. Between November 29, 2000
and the Closing Date, Seller has conducted and shall conduct the Compression
Business and engage in transactions only in the ordinary course of business and
consistent with past operating practices, except as disclosed to and approved by
Buyer in writing. During that period, Seller shall use its best efforts to (i)
preserve its business organization intact, (ii) keep available to itself and to
Buyer the present services of the employees of Seller, and (iii) preserve for
itself and for Buyer the goodwill of the customers of Seller and of others with
whom Seller's business relationships exist. During that time period Seller shall
not, except as otherwise disclosed to and approved by Buyer in writing or as
otherwise permitted by this Agreement, (i) sell or otherwise dispose of or
8
liquidate any of the assets of Seller except those that will be conveyed to
Seller's related entities as disclosed on Schedule 7; (ii) except as may be
otherwise required by regulatory authorities, grant any severance or termination
pay to, or enter into or amend any employment agreement with, any of its
employees, officers or directors, except for such payments pursuant to
agreements between Seller and any employee which are in existence as of the date
hereof and which have been disclosed to Seller or are necessary to retain
employees; (iii) make any capital expenditures for fixed assets other than
pursuant to binding commitments existing on the date hereof and other than
expenditures necessary to maintain existing assets in good repair; (iv) change
its pricing policies or approval policies for equipment sales or leases; (v)
acquire assets other than those necessary in the conduct of its business in the
ordinary course; (vi) sell or otherwise divest itself of assets, except as
provided for in this Agreement or has been customary in the ordinary course of
Seller's business; (vii) negotiate or re-negotiate any long-term contracts
except as required above; (viii) increase any benefits currently offered by
Seller, including but not limited to cash compensation arrangements without the
prior written consent of Buyer, provided however, Seller may allow employees to
enroll in Seller's benefit program for calendar year 2001 and pay out any
short-term incentive awards due to calendar year 2000 performance; or (ix) agree
to do any of the foregoing.
8. Current Information. If for any reason the Closing shall be delayed
for any significant period of time after execution of this Agreement, Seller
will designate one or more representatives to confer with Buyer on a regular
basis until the Closing Date and, upon Buyer's request, to report the general
status of the ongoing Compression Business operations of Seller. Without
limiting the foregoing, Seller shall confer with Buyer regarding any proposed
significant changes to Seller's asset/liability management policy and
objectives. Seller shall promptly notify Buyer of any material change in its
normal course of business or in the operation of the properties of Seller or of
its subsidiaries, and of any governmental complaints, investigations or hearings
or communications that the same may be contemplated, or of the institution or
threat of any litigation involving the Seller or its subsidiaries, and shall
keep Buyer fully informed as to such events.
9. Seller's Representations and Warranties. Seller represents and
warrants that:
(a) Existence. Seller is a corporation, duly organized and
validly existing and in good standing under the laws of the State of
Michigan.
(b) Power. Seller has the requisite power and authority to
enter into and to perform this Agreement and the transactions
contemplated hereby. The execution, delivery and performance of this
Agreement by Seller, and the transactions contemplated hereby will not
violate any provision of Seller's certificate, articles of
incorporation, bylaws or other governing documents, and to the best
knowledge and belief of Seller, will not (i) conflict with, result in a
breach of or constitute a default (or an event that with a lapse of
time or notice, or both, would constitute a default) under any
agreement or instrument to which Seller is a party or by which Seller
is bound, (ii) violate any judgment, order, ruling or decree applicable
to Seller and entered or delivered in a proceeding in which Seller was
or is a named party, or (iii) violate any applicable law, rule or
regulation applicable to Seller.
9
(c) Authorization. The execution, delivery and performance of
this Agreement and the transactions contemplated hereby have been duly
and validly authorized by all requisite action on the part of the
Seller. This Agreement has been duly executed and delivered on behalf
of Seller, and all documents and instruments required hereunder to be
executed and delivered by Seller at the Closing shall be duly executed
and delivered. This Agreement and such documents and instruments shall
constitute legal, valid and binding obligations of Seller, enforceable
in accordance with their terms, subject to applicable bankruptcy,
reorganization, insolvency, moratorium and other rights affecting
creditors' rights generally from time to time in effect and to general
equitable principles.
(d) Brokers. Seller has not incurred any obligation or
liability, contingent or otherwise, for brokers or finders fees in
respect to the matters provided for in this Agreement that would be the
responsibility of Buyer, and any such liability or obligation that
might exist shall be the sole obligation of Seller.
(e) Foreign Person. Seller is not a "foreign person" within
the meaning of Section 1445(f) of the United States Internal Revenue
Code of 1986, as amended. Seller shall execute the Certificate of
Non-Foreign Status that is attached hereto as Exhibit 9(e).
(f) Litigation. No lawsuit, action or other proceeding of
which Seller has been notified affects any of the Acquired Assets,
whether pending or threatened in writing.
(g) Condition of Contracts. To the best of Seller's knowledge,
Seller's compressor leases and service contracts are in full force and
effect, as of the Effective Date, in accordance with their stated terms
and conditions and subject to any unexercised rights of termination set
forth therein. Seller has granted Buyer access to all of Seller's files
relating to such contracts; however, Seller has advised Buyer that some
of such contracts are verbal only and may be terminated by the other
party thereto at any time.
(h) Prepayments. Seller has received no prepayments from its
customers for works in progress or inventory included in the Acquired
Assets, or under compressor leases for lease periods after the
Effective Date or under service and maintenance agreements for service
and maintenance to be performed after the Effective Date.
(i) Title to and Other Matters Pertaining to Real Property and
Acquired Assets.
(1) Seller has good, valid and marketable fee simple
title to the real property described in Schedule 1(a) (the
"Real Property") free and clear of all mortgages, liens,
security interests, hypothecations, rights of others, leases,
subleases, occupancy agreements, adverse claims or interests,
easements, covenants, title retention agreements, burdens,
title defects, encroachments or other encumbrances of any kind
or nature (collectively, "Liens") except as created pursuant
to this Agreement, except easements and rights of way
identified in that Commitment for Title Insurance dated
February 20, 2001 by First American Title
10
Insurance Company; provided however, Seller does not own the
oil, gas, coal and mineral rights in and under the Real
Property. The Real Property was last surveyed on September 28,
1995 by Xxxxxx X. Xxxxxxx, Xxxxxxxx Xx. 00000, a copy of which
survey has been provided by Seller to Buyer. Seller has no
reason to believe that such survey is not accurate in any
respect. Seller has not granted any easements over the Real
Property. There are no outstanding contracts, options or
rights of first refusal to purchase the Real Property or any
portion thereof or interest therein. The Real Property has
access to public roads and to utilities, including
electricity, natural gas and other utilities, used in the
operation of the Compression Business at that location.
(2) Seller owns good and marketable title to the
Acquired Assets other than the Real Property (see paragraph
(1) above) free and clear of all Liens.
(3) Schedules 1(a), (b), (c), (d), (e) and (f) set
forth a description of all the Acquired Assets now owned or
leased and used by Seller in the Compression Business, except
as described in Schedule 9(i)(3).
(4) To the best of Seller's knowledge, Seller is not
in violation of any applicable zoning ordinance or other law,
regulation or requirement relating to the operation of the
Real Property or the Acquired Assets and Seller has not
received any notice of any such violation, or the existence of
any condemnation proceeding with respect to the Real Property.
(5) To the best of Seller's knowledge, there are no
improvements made or contemplated to be made by any public or
private authority, the costs of which are to be assessed as
special Taxes or charges against any of the Real Property, and
there are no present assessments.
(6) Seller has received no notice of actual or
threatened reduction or curtailment of any utility service now
supplied to the Real Property.
(7) Seller has received no notice of actual or
threatened cancellation or suspension of any certificates of
occupancy for any portion of the Real Property.
(8) To the best of Seller's knowledge, Seller is not
in default concerning any of its obligations or liabilities
regarding the Real Property.
(9) To the best of Seller's knowledge, the buildings,
structures and improvements included within the Real Property
are structurally sound and in reasonably good repair and all
mechanical, electrical, heating, air conditioning, drainage,
sewer, water and plumbing systems are in working order.
(j) Tax Matters.
(1) Seller has, or by the Closing will have, duly and
timely filed all returns, reports, declarations, forms,
statements, claims for refunds, schedules and other documents
relating to Taxes (collectively, "Tax Returns") in connection
11
with the Compression Business that are required to be filed on
or before the Closing Date and Seller has duly and timely paid
all Taxes required to be paid on or before the Closing Date.
(2) For purposes of this Agreement, the term "Taxes"
means all taxes, charges, fees, levies, or other assessments,
including, without limitation, all net income, gross income,
gross receipts, sales, use, ad valorem, transfer, franchise,
profits, license, withholding, payroll, employment, social
security, unemployment, excise, estimated, severance, stamp,
value added, occupation, property, or other taxes, customs
duties, fees, levies, assessments, or charges of any kind
whatsoever, including, without limitation, all interest and
penalties thereon, and additions to taxes or additional
amounts imposed by any taxing authority, domestic or foreign,
upon Seller or the Acquired Assets.
(k) Intellectual Property Rights.
(1) Schedule 1(f) describes all rights in (i)
patents, trademarks, service marks, trade names, corporate
names and copyrights, and applications filed in connection
with any of the foregoing, (ii) MIS assets and (iii) mask
works, trade secrets or other intellectual property rights
owned by, licensed to or otherwise controlled by Seller and
used in or developed for use in the Compression Business
(collectively, the "Intellectual Property Rights"). Seller
owns and possesses all right, title and interest, or holds a
valid license, in and to the Intellectual Property Rights set
forth in Schedule 1(f). Schedule 1(f) describes all
Intellectual Property Rights which have been licensed to third
parties and those Intellectual Property Rights which are
licensed from third parties. All of the Intellectual Property
Rights will be assigned to Buyer at the Closing, without the
requirement that any consent to assignment be obtained or any
payment be made.
(2) Seller has not received any notice of, nor are
there any facts known to Seller, which indicate a likelihood
of, any infringement or misappropriation by, or conflict from,
any third party with respect to the Intellectual Property
Rights. No claim by any third party contesting the validity of
any Intellectual Property Rights has been made, is currently
outstanding or, to Seller's best knowledge, is threatened.
Seller has not been notified of any claim that Seller has, and
to the best of Seller's knowledge, Seller has not, infringed,
misappropriated or otherwise violated any intellectual
property rights of others.
(l) Employees. Schedule 9(1) hereto sets forth a complete and
accurate list of all employees that work in the Compression Business.
No employee working in the Compression Business on the Closing Date has
notified Seller of any plans to terminate his or her employment. To the
best of Seller's knowledge, Seller has complied with all laws relating
to the employment of labor, including provisions thereof relating to
wages, hours, equal opportunity, collective bargaining and the payment
of overtime, social security and other Taxes, and has no material labor
relations problem pending and its labor relations are satisfactory.
Notwithstanding the foregoing or any disclosure set forth in Schedule
9(1), Buyer shall not be responsible for and shall not assume any
obligation
12
of Seller or its Affiliates pursuant to any written or oral employment
agreement between Seller or its Affiliates and the employees,
consultants, or representatives of Seller or its Affiliates. Seller is
not aware of any event prior to the Closing Date that would result in
any liability for which Buyer will be responsible to any such employee,
consultant or representative of Seller or its Affiliates.
(m) Employee Benefit Plans.
(1) To the extent required (either as a matter of law
or to obtain the intended tax treatment and tax benefits), all
qualified employee benefit plans, as defined in Section 3(3)
of the Employee Retirement Income Security Act of 1974
("ERISA") which Seller does maintain or to which it does
contribute (collectively, the "Plans") comply, in all material
respects, with the requirements of ERISA and the Code. With
respect to the Plans, (i) all required contributions which are
due have been made and a proper accrual has been made for all
contributions due in the current fiscal year; (ii) there are
no actions, suits or claims pending, other than routine
uncontested claims for benefits; and (iii) there have been no
prohibited transactions (as defined in Section 406 of ERISA or
Section 4975 of the Code).
(2) Seller does not contribute (and has not ever
contributed) to any multi-employer plan, as defined in Section
3(37) of ERISA. Seller has no actual or potential liabilities
under Section 4201 of ERISA for any complete or partial
withdrawal from a multi-employer plan. Seller has no actual or
potential liability for death or medical benefits after
separation from employment, other than (i) death benefits
under the employee benefit plans or programs (whether or not
subject to ERISA) and (ii) health care continuation benefits
described in Section 4980B of the Code.
(3) To the best of Seller's knowledge, neither Seller
nor any of its directors, officers, employees or other
"fiduciaries," as such term is defined in Section 3(21) of
ERISA, has committed any breach of fiduciary responsibility
imposed by ERISA or any other applicable law with respect to
the Plans which would subject Buyer, Buyer's subsidiaries or
any of their respective directors, officers, employees or
affiliates to any liability under ERISA or any applicable law.
(4) To the best of Seller's knowledge, Seller has not
incurred any liability for any tax or civil penalty or any
disqualification of any employee benefit plan (as defined in
Section 3(3) of ERISA) imposed by Sections 4980E and 4975 or
Part 6 of Title I of the Code or Section 502(i) or 502(1) of
ERISA or the health care coverage continuation requirements of
any applicable state law which have not been settled in full
with no continuing liability or obligation of Seller
applicable to the Compression Business.
13
(5) Seller or an Affiliate of Seller shall be liable
for providing continuation of group health plan coverage as
required by Section 4980B of the Code and applicable
regulations ("COBRA") for all M&A Qualified Beneficiaries (as
that term is defined in Prop. Treas. Reg. Section 54.4980B-9
Q/A 4) to employees of Seller whose employment has been
terminated by Seller; provided however, that liability shall
terminate on March 22, 2001 as to any former employee of
Seller that is hired by Buyer as provided in Section 26, below
and Buyer shall assume any such liability as to that employee
that arises on or after that date.
(n) Compliance with Laws; Permits.
(1) To the best of Seller's knowledge, Seller and its
officers, directors, agents and employees have complied with
all applicable federal, state, local and foreign laws,
ordinances, rules, regulations and other requirements
(collectively, "Laws") pertaining to consumer products safety,
equal employment opportunity, employee retirement, affirmative
action and other hiring practices, occupational safety and
health, workers' compensation, unemployment and building and
zoning codes, which affect the Compression Business or the
Acquired Assets and to which Seller may be subject, and no
claims have been filed against Seller alleging a violation of
any such laws, regulations or other requirements. Seller has
no knowledge of any action, pending or threatened, to change
the zoning or building ordinances or any other laws, rules,
regulations or ordinances affecting the Compression Business
or the Acquired Assets or Real Property. Seller is not relying
on any exemption from or deferral of any such zoning or
building ordinance or any such law, rule, regulation or other
requirement that, to the best of Seller's knowledge, would not
be available to Buyer after it acquires the Acquired Assets.
(2) To the best of Seller's knowledge, Seller has, in
full force and effect, all licenses, permits and certificates
from Governmental Entities necessary to conduct the
Compression Business and own and operate the Acquired Assets
(other than Environmental Permits) (collectively, the
"Permits") and has conducted the Compression Business in
compliance, in all material respects, with all terms and
conditions of the Permits.
(o) Environmental Matters.
(1) As used in this Agreement, the following terms
shall have the following meanings:
(i) "Clean-up" shall mean removal and/or
remediation of, or other response to (including,
without limitation, testing, monitoring, sampling or
investigating of any kind) any Release of Hazardous
Materials or Contamination, to the satisfaction of
all applicable governmental agencies, in compliance
with Environmental Laws and in compliance with good
commercial practice.
14
(ii) "Contamination" shall mean the presence
of, or Release on, under, from or to the Real
Property of any Hazardous Material, except the
routine storage and use of Hazardous Materials from
time to time in the ordinary course of business, in
compliance with Environmental Laws and in compliance
with good commercial practice.
(iii) "EPA" shall mean the Environmental
Protection Agency.
(iv) "Environmental Document" shall mean any
document, correspondence, pleading, report,
assessment, analytical result, governmental notice,
license, permit or approval or other record
concerning a Hazardous Material, compliance with
Environmental Law, a Regulatory Action or Third Party
Environmental Claim or other environmental subject.
(v) "Environmental Law(s)" shall mean any
and all federal, state and local laws, statutes,
codes, ordinances, regulations, rules, consent
decrees, judicial orders, administrative orders or
other requirements relating to the environment or to
human health or safety associated with the
environment, all as amended or modified from time to
time. Environmental Laws shall include, but are not
limited to, the following statutes and all rules and
regulations relating thereto, all as amended or
modified from time to time:
(A) The Comprehensive Environmental
Response, Compensation and Liability Act
("CERCLA"), as amended by the Superfund
Amendments and Reauthorization Act of 1986
("XXXX") 42 U.S.C.Section 9601-9675; the
Resource Conservation and Recovery Act of
1976 ("RCRA") 42 U.S.C.Section 6901-6991;
the Clean Water Act 33 U.S.C.Section 1321 et
seq; the Clean Air Act 42 U.S.C. Section
7401 et seq; the Federal Insecticide,
Fungicide and Rodenticide Act ("FIFRA") 7
U.S.C.Section 136 et seq; the Toxic
Substances Control Act ("TSCA") 15 U.S.C.
Section 2601-2671; the Hazardous Materials
Transportation Act; and the Occupational
Safety and Health Act of 1970, and
(B) All Michigan statutes and
regulations relating to the environment or
to human health or safety associated with
the environment.
(vi) "Hazardous Material(s)" shall mean (A)
any substance, the presence of which requires
investigation or remediation under any Environmental
Law or under common law; (B) any toxic, explosive,
corrosive, flammable, infectious, radioactive,
carcinogenic, mutagenic or other hazardous substance
which is regulated by any Environmental Law; (C) any
substance, the presence of which causes or threatens
to cause a nuisance or trespass upon the Real
Property or to adjacent properties or
15
poses or threatens to pose a hazard to the health or
safety of persons on or about the Real Property or
properties adjacent to the Real Property; and (D)
formaldehyde, urea-formaldehyde, polychlorinated
biphenyls, asbestos or asbestos-containing materials,
radon, petroleum and petroleum related products.
(vii) "Regulatory Action(s)" shall mean any
claim, demand, action or proceeding brought or
instigated by any governmental agency in connection
with any Environmental Law (including, without
limitation, civil, criminal and/or administrative
proceedings), whether or not seeking costs, damages,
penalties or expenses.
(viii) "Release" shall mean the spilling,
leaking, disposing, discharging, emitting,
depositing, injecting, leaching, escaping, or any
other release or threatened release, however defined,
and whether intentional or unintentional, of any
Hazardous Material.
(ix) "Third Party Environmental Claim(s)"
shall mean any claim, demand, suit, proceeding, cause
of action, penalty, cost, injunction or demand for
payment or compensation, asserted by any Person or
entity, whether or not involving any injury or
threatened injury to human health, the environment or
natural resources, based on any Release or threatened
Release of Hazardous Materials or Contamination, or
based on any action in negligence, trespass, strict
liability, nuisance, toxic tort or other
Environmental Law or common law.
(2) To the best of Seller's knowledge, the Seller,
Compression Business and the Real Property are currently in
compliance in all material respects with all applicable
Environmental Laws. No notice of violation or any alleged
violation has been issued by any governmental entity and there
are no pending investigations of which Seller has been
notified involving the Seller, Compression Business or the
Real Property.
(3) To the best of Seller's knowledge, Seller and the
Compression Business have (i) obtained and maintained in full
force and effect, or applied for, all environmental permits,
licenses, certificates of compliance, approvals, renewals and
other authorizations necessary to conduct the activities and
business of the Seller, as currently conducted, and to own or
operate the Real Property (collectively the "Environmental
Permits"), (ii) conducted their activities and business in
compliance with all terms and conditions of any Environmental
Permits, and (iii) have filed all reports and notifications
required to be filed under applicable Environmental Laws. The
Seller has no reason to believe that permits applied for the
operation of the Seller and the Compression Business will not
be granted or extended in the ordinary course or that any
grant or extension would cause the Seller to limit future
operations in a manner that would have a material adverse
effect on the business of the Seller.
16
(4) No Third Party Environmental Claims or Regulatory
Actions have been asserted or assessed against the Seller, the
Compression Business or the Real Property and, to the best of
the Seller's knowledge, no Third Party Environmental Claims or
Regulatory Actions are pending or threatened arising out of or
due to, or allegedly arising out of or due to, (i) the Release
on, under or from the Real Property of any Hazardous
Materials; (ii) any Contamination of the Real Property,
including without limitation, the presence of any Hazardous
Material which has come to be located on or under the Real
Property from another location; (iii) any violation or alleged
violation of any Environmental Law with respect to the Real
Property or the activities of the Seller or the Compression
Business; (iv) any injury to human health or safety or to the
environment by reason of the past or present condition of, or
past or present activities on or under the Real Property; or
(v) the generation, manufacture, storage, treatment, handling,
transportation or other use, however defined, of any Hazardous
Material by or for the Seller or the Compression Business on
or off the Real Property.
(5) To the best of Seller's knowledge, neither Seller
nor any other Person has caused any Release, threatened
Release, or disposal of any Hazardous Material in any material
quantity on, in, at, under, or from the Real Property, and the
Real Property is not adversely affected by any Release,
threatened Release, or disposal of a Hazardous Material
originating or emanating from any other property, except any
of the foregoing permitted by, and made in accordance with,
applicable Environmental Laws.
(6) To the best of Seller's knowledge, Seller's files
made available to Buyer for examination prior to Closing
contain complete copies of any and all Environmental Documents
of which Seller is aware.
(7) To the best of Seller's knowledge, neither the
Seller or the Compression Business have transported or
arranged for the transportation for storage, treatment or
disposal of any Hazardous Materials to any location which is:
(i) listed on the EPA's National Priorities List ("NPL") of
Hazardous Waste Sites; (ii) listed on the Comprehensive
Environmental Response, Compensation, Liability Information
System ("CERCLIS") or on any similar state list; or (iii) the
subject of any Regulatory Action which may lead to claims
against the Seller for damages to natural resources, personal
injury, Clean-up costs or Clean-up work, including, but not
limited to, claims under CERCLA.
(8) To the best of Seller's knowledge, none of the
Real Property is listed or nominated for inclusion on the NPL
or any other list, schedule, log, inventory or record, however
defined, maintained by any federal, state or local
governmental agency with respect to sites from which there is
or has been a Release or threatened Release of any Hazardous
Material or any Contamination. No part of the Real Property
was ever used by Seller, nor is it now being used by Seller,
or to the best of Seller's knowledge, by any other person, as
a (i) storage, treatment or disposal facility for hazardous
waste materials which requires a permit under RCRA or any
other Environmental Laws; (ii) solid waste dump or
17
landfill; (iii) mine; or (iv) gasoline service station. Except
as disclosed on Schedule 9(o)(8), there are no underground
storage tanks on the Real Property.
(9) To the best of Seller's knowledge, (i) Seller and
the Compression Business have no material liability for
response of corrective action, natural resource damage or
other harm pursuant to CERCLA, RCRA or any comparable state
law; (ii) Seller and the Compression Business are not subject
to and Seller has received no notice of any Third Party
Environmental Claim involving the Seller or the Compression
Business; and (iii) there are no conditions or occurrences at
the Real Property which could reasonably be anticipated to
form the basis for a Third Party Environmental Claim against
the Seller or the Compression Business.
(10) To the best of Seller's knowledge, the Real
Property is not subject to any imminent restriction on the
ownership, occupancy, use or transferability of the Real
Property in connection with any Environmental Law.
(11) To the best of Seller's knowledge, there are no
liens against the Real Property arising under any
Environmental Law, or based upon a Regulatory Action or Third
Party Environmental Claim.
(12) To the best of Seller's knowledge, no material
expenditure will be required in order for the Buyer to comply
with Environmental Laws in effect on the Closing Date in
connection with the operation or continued operation of the
activities of the Seller or the Compression Business.
(p) Disclosure. To the best of Seller's knowledge, this
Agreement, the exhibits hereto, the documents delivered by Seller at
Closing, the Schedules attached hereto, and the Financial Statements,
taken together as a whole, do not (i) contain any untrue statement of a
material fact regarding the Acquired Assets or the Compression Business
or any of the other matters dealt with in this Section 9 relating to
the Acquired Assets or the Compression Business or the transactions
contemplated by this Agreement, or (ii) omit any material fact with the
intention of making the statements contained herein or therein, in
light of the circumstances in which they were made, misleading.
(q) Limitation and Disclaimer of Seller's Representations and
Warranties. THE EXPRESS REPRESENTATIONS AND WARRANTIES OF SELLER
CONTAINED IN THIS AGREEMENT ARE EXCLUSIVE AND ARE IN LIEU OF ALL OTHER
REPRESENTATIONS AND WARRANTIES, EXPRESS, IMPLIED, STATUTORY OR
OTHERWISE. SELLER DISCLAIMS ANY WARRANTY OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE THAT MIGHT APPLY TO THE ACQUIRED ASSETS AND
BUYER HEREBY AGREES TO ACCEPT THE TANGIBLE FIXED ASSETS, BUILDINGS AND
COMPRESSOR FLEET ASSETS IN AN "AS IS" CONDITION WITH ALL FAULTS.
18
(r) Seller's Knowledge. As used in this Agreement, the term
"Seller's knowledge" and the term "knowledge of Seller" and any similar
phrase referring to Seller's knowledge mean the actual knowledge on the
Closing Date of Seller's officers and directors.
10. Buyer's Representations, Warranties and Disclaimer. Buyer
represents and warrants to Seller that:
(a) Existence. Buyer is a corporation, duly organized and
validly existing and in good standing under the laws of the State of
Colorado. Buyer is duly qualified as a foreign corporation, licensed
and in good standing in the State of Michigan and in each other
jurisdiction where qualification or licensing is required, or after the
Closing will be required, by the nature of its business or the
character and location of its property, business or customers and in
which the failure to so qualify or be licensed, as the case may be, in
the aggregate, could have a material adverse effect on the business,
financial position, results of operations, properties or prospects of
Buyer after the Closing Date.
(b) Power. Buyer has the requisite power and authority to
enter into and perform this Agreement, the Collateral Documents (as
hereinafter defined) and the other agreements and documents to be
entered into as of the Closing Date (collectively, the "Transaction
Documents") and the transactions contemplated hereby and thereby. As
used in this Agreement, the term "Collateral Documents" shall mean the
Mortgage, the Security Agreement, the financing statements and all
other documents to be entered into in order to evidence or secure the
Deferred Purchase Obligations, as the same may be amended or
supplemented from time to time. The execution, delivery and performance
of this Agreement by Buyer, and the transactions contemplated hereby,
will not violate any provision of Buyer's certificate, articles of
incorporation, or organization, as the case may be, bylaws or other
governing documents, and to the best knowledge and belief of Buyer,
will not (i) conflict with, result in a breach of, constitute a default
(or an event that with a lapse of time or notice, or both, would
constitute a default) under any agreement or instrument to which Buyer
is a party or by which Buyer is bound, (ii) violate any judgment,
order, ruling or decree applicable to Buyer and entered or delivered in
a proceeding in which Buyer was or is a named party, or (iii) violate
any applicable law, rule or regulation applicable to Buyer.
(c) Authorization. The execution, delivery and performance of
this Agreement and the transactions contemplated hereby have been duly
and validly authorized by all requisite action on the part of Buyer.
This Agreement has been duly executed and delivered on behalf of Buyer,
and at the closing all documents and instruments required hereunder to
be executed and delivered by Buyer shall be duly executed and
delivered. This Agreement and such documents and instruments shall
constitute legal, valid and binding obligations of Buyer, enforceable
in accordance with their terms, subject to applicable bankruptcy,
reorganization, insolvency, moratorium and other rights affecting
creditors' rights generally from time to time in effect and to general
equitable principles.
19
(d) Binding Obligations. This Agreement constitutes a valid
and binding agreement of Buyer, and the other Transaction Documents,
when executed and delivered in accordance with this Agreement, will
constitute valid and binding obligations of Buyer, in each case
enforceable against Buyer in accordance with its terms, except as (i)
the enforceability hereof and thereof may be limited by bankruptcy,
insolvency or similar laws affecting creditors' rights generally and
(ii) rights of acceleration and the availability of equitable remedies
may be limited by equitable principles of general applicability.
(e) Governmental Filings. All actions by or in respect of, and
all filing with, any governmental authority required in connection with
the execution, delivery and performance of this Agreement and the other
Transaction Documents, or necessary for the validity or enforceability
thereof or for the protection or perfection of the rights and interests
of Seller thereunder, will, prior to the date of delivery thereof, have
been duly taken or made, as the case may be, and will at all times
thereafter remain in full force and effect.
(f) Brokers. Buyer has not incurred any obligation or
liability, contingent or otherwise, for brokers or finders fees in
respect to the matters provided for in this Agreement, which will be
the responsibility of Seller, and any such obligation, or liability
incurred by Buyer that might exist shall be the sole obligation of
Buyer.
(g) Due Diligence. Buyer represents, warrants and covenants
that it has performed, prior to Buyer's execution of this Agreement,
sufficient review and due diligence, including review of file data and
inspections, to evaluate the Acquired Assets to Buyer's complete
satisfaction as a prudent and knowledgeable Buyer.
(h) Sophisticated Buyer. Buyer is a sophisticated buyer
engaged in the gas compression business and knowledgeable and
experienced in the evaluation and acquisition of the Acquired Assets
transferred hereby and in the Compression Business relating thereto.
Buyer has evaluated the benefits and risks associated with the Acquired
Assets to be purchased from Seller pursuant to this Agreement and
determined whether to acquire the Acquired Assets pursuant to the terms
hereof based solely on Buyer's knowledge and experience, and not upon
any opinion or predictions by Seller or any entity controlling or under
common control with Seller.
(i) Solicitation. At no time was Buyer presented with or
solicited by or through any public promotion or other form of
advertising.
(j) Limitation and Disclaimer of Buyer's Representations and
Warranties. THE EXPRESS REPRESENTATIONS AND WARRANTIES OF BUYER
CONTAINED IN THIS AGREEMENT ARE EXCLUSIVE AND ARE IN LIEU OF ALL OTHER
REPRESENTATIONS AND WARRANTIES, EXPRESS, IMPLIED, STATUTORY OR
OTHERWISE.
11. Consents and Approvals. At the request of Buyer, Seller shall
attempt to obtain the consent of the customers (the "Customers") identified on
Schedule 11 to the assignment by
20
Seller to Buyer of the compressor leases and service contracts that such
Customers have with Seller. The receipt of written consents to the assignment
from the Customers shall not constitute a condition of Closing and the failure
to receive such consents shall not cause an adjustment to the Purchase Price. If
such consent(s) are not received before the Closing Date from a Customer or
Customers, then the affected leases and service contracts shall be excluded from
this Agreement and the Parties shall execute such other agreements (e.g.
subcontracts or assignments of rental proceeds) that, to the extent possible,
have the same financial impact as would assignments of such leases and service
contracts.
12. Completion of Work in Process. Included in Seller's work in process
are Compressor Units identified in Schedule 12 that it is fabricating for its
own use. These compressor units are included among the Acquired Assets. Seller
shall attempt to complete such compressor units, prior to the Closing Date and
at its sole expense. If such compressor units are not completed prior to the
Closing Date, Buyer shall complete the fabrication of such units for the account
of Seller on a time and material basis equal to the actual costs incurred by
Buyer, including a charge to cover administrative overhead incurred by Buyer
equal to 3% until Closing and 8% after Closing of Buyer's actual costs. Buyer
shall complete the fabrication of such units with all reasonable diligence for
delivery to Seller for lease or purchase as soon as reasonably possible after
the Closing Date.
13. Conditions of Buyer to Closing. The obligations of Buyer to
consummate the transactions contemplated by this Agreement are subject, at the
option of Buyer, to satisfaction on or prior to the Closing of each of the
following precedent conditions:
(a) Representations and Warranties. The representations and
warranties of Seller set forth herein shall be true and correct in all
materials respects at and as of the Closing Date as though then made.
(b) Performance. Seller shall have performed and observed, in
all material respects, all covenants and agreements, including
obtaining of the written consents as required by Section 11, to be
performed or observed by it under this Agreement prior to or on the
date of Closing.
(c) Pending Litigation. No suit, action or other proceeding by
a third party (including any governmental body) seeking to restrain,
enjoin or otherwise prohibit the consummation of the transactions
contemplated by this Agreement or that would have a Material Adverse
Effect on the Compression Business shall be pending before any
governmental body or court of law.
(d) Delivery of Documents. Seller shall have delivered to
Buyer duly executed counterparts of the documents attached hereto as
Exhibits 3(b)(1), 3(b)(2) and 3(b)(3), together with the following
documents:
(1) Both Compressor Maintenance Agreements attached
hereto as Exhibit 13(d)(1).
(2) The Commitment Agreement attached hereto as
Exhibit 13(d)(2).
21
(3) The Standard Gas Compressor Equipment Master
Rental and Servicing Agreement attached hereto as Exhibit
13(d)(3).
(4) Certificate of Seller's Vice President
substantially in the form set forth in Exhibit 13(d)(4) dated
the Closing date, stating that the conditions precedent set
forth in this Section 13 have been satisfied.
(e) Title Insurance. Within not less than 2 days before the
Closing Date, the Seller shall, at Seller's expense, obtain and deliver
to Buyer a commitment issued in an amount of $940,000 by a reputable
title insurance company and dated after the date hereof for the
issuance of an ALTA owner's policy of title insurance covering the Real
Property and indicating that Seller has good and marketable title to
said lands, subject only to standard and general exceptions of the
title insurance company that are deleted only on submission of a
survey. After the Closing and the recording of the deed, Seller shall
cause the title insurance company to deliver to Buyer, at Seller's
expense, the title policy issued pursuant to the commitment.
(f) Access and Inspection. Seller will have allowed Buyer and
Buyer's agents, access to the Real Property without charge and at all
reasonable times for the purpose of Buyer's investigation and testing
the same. Seller shall make available to Buyer and Buyer's agents
without charge all plans and specifications, records; inventories,
permits and correspondence in Seller's possession relating to Hazardous
Materials affecting the Real Property; and the right to interview
employees of. Seller who may have knowledge of such matters. Buyer
shall pay all costs and expenses of such investigation and testing,
shall restore the Real Property, and shall hold Seller and the Real
Property harmless from all costs and liabilities relating to Buyer's
activities. Buyer shall have been satisfied with the results of all
tests and investigations performed by it or on its behalf.
(g) Opinion Letter. Buyer shall receive the favorable opinion
of Mika, Meyers, Xxxxxxx & Xxxxx, counsel for Seller, dated the Closing
Date, addressed to Buyer and satisfactory to Buyer's counsel in form
and substance, to the effect that Seller is a corporation duly
organized and existing in good standing under the laws of the State of
Michigan; that the execution, delivery and performance of this
Agreement and the transactions contemplated hereby have been duly and
validly authorized by all requisite action on the part of Seller; that
this Agreement and all documents and instruments required hereunder to
be executed and delivered at the Closing by Seller have been duly
executed and delivered on behalf of Seller; and that this Agreement and
such documents and instruments constitute legal, valid and binding
obligations of Seller, enforceable in accordance with their terms,
subject to applicable bankruptcy, reorganization, insolvency,
moratorium and other laws affecting creditors' rights generally from
time to time in effect and to general equitable principles.
(h) No Material Adverse Changes. Buyer shall not have been
informed that in the reasonable opinion of its advisers there is, at
any time prior to the Closing Date, any material adverse change in the
condition (financial or otherwise), affairs, business, assets or
prospects of the Compression Business or the Acquired Assets. If Buyer
is so notified,
22
Buyer shall have the option not to close. However, Buyer recognizes
that the business of Seller is fluid and not static, and that Buyer and
Seller must work together to adjust the inventory of compressors and
related equipment up to and including the Closing Date.
14. Conditions of Seller to Closing. The obligations of Seller to
consummate the transactions contemplated by this Agreement are subject, at the
option of Seller, to satisfaction on or prior to Closing of each of the
following precedent conditions.
(a) Performance. Buyer shall have performed and observed, in
all material respects, all covenants and agreements to be performed or
observed by it under this Agreement prior to or on the date of Closing.
(b) Pending Litigation. No suit, action or other proceeding by
a third party (including any governmental body) seeking to restrain,
enjoin or otherwise prohibit the consummation of the transactions
contemplated by this Agreement shall be pending before any governmental
body or court of law.
(c) Opinion Letter. Seller shall receive the favorable opinion
of Xxxxxx & Whitney, LLP, counsel for Buyer, dated the Closing Date,
addressed to Buyer and satisfactory to Buyer's counsel in form and
substance, to the effect that Buyer is a corporation duly organized and
existing in good standing under the laws of the State of Colorado
qualified to do business in the State of Michigan; that the execution,
delivery and performance of this Agreement and the transactions
contemplated hereby have been duly and validly authorized by all
requisite action on the part of Buyer; that this Agreement and all
documents and instruments required hereunder to be executed and
delivered at the Closing by Buyer have been duly executed and delivered
on behalf of Buyer; and that this Agreement and such documents and
instruments constitute legal, valid and binding obligations of Buyer,
enforceable in accordance with their terms, subject to applicable
bankruptcy, reorganization, insolvency, moratorium and other laws
affecting creditors' rights generally from time to time in effect and
to general equitable principles.
15. Restrictive Covenants.
(a) Non-Competition. Seller shall not, for a period of two
years from the Effective Date, either directly or indirectly, engage in
the business of manufacturing or fabricating gas compressors, or in the
business of selling, leasing and maintaining gas compressors anywhere
within the areas within the United States where Seller has heretofore
sold or leased natural gas compressors; provided, however, that this
covenant (i) shall not prohibit Seller from selling or leasing
compressors fabricated for it by Buyer pursuant to the Commitment
Agreement should Seller have excess compression capacity and not have
sufficient need for the compression capacity that it is required
thereby to buy or lease from Buyer, (ii) shall not prohibit Seller from
selling or leasing any compressor that it currently owns, and (iii)
shall not apply to Seller after the occurrence of an Event of Default
(as hereinafter defined).
23
(b) Name Change. Seller shall change its name after the
Closing Date to a name, which will not include the names "Great Lakes",
"Compression" or "Great Lakes Compression" either alone or in any
combination, or any variation thereof, and Seller shall not reassume
any name including the names "Great Lakes", "Compression" and "Great
Lakes Compression" either alone or in any combination, or any variation
thereof, at any time hereafter; provided, however, Seller may use a
name that includes the word "Great" or the word "Lakes" provided that
both words are not used in that name.
(c) Enforceability. The Parties believe that the restrictive
covenants contained in this paragraph 15 are reasonable. However, if
any court of competent jurisdiction subsequently holds these
restrictive covenants to be unenforceable or unreasonable, whether as
to scope, territory or period of time specified herein, said scope,
territory or period of time shall be deemed to be that declared or
determined to be reasonable by that court in light of the Parties
intent as evidenced in such restriction.
(d) Injunctive Relief. Seller recognizes that Buyer will
suffer irreparable harm if the terms of this Section 15 are violated,
and that it will be difficult, if not impossible, to compute Buyer's
actual damages resulting from such unauthorized competition. The
Parties, therefore, agree that any party may apply to a court of
competent jurisdiction to enjoin any threatened or actual breach of the
covenants contained herein.
16. Employment of Seller's Personnel. Buyer presently intends to retain
substantially all of the salaried and hourly employees that are employed in the
Compression Business and expects to offer to the employees listed on Schedule 16
continued employment on terms and conditions generally comparable to the terms
and conditions upon which such employees were employed by Seller before the
Closing Date. Seller shall not attempt to discourage such employees from
accepting Buyer's offer of employment on those terms. However, a review will be
made of the employees that are listed on Schedule 16 and the scope of their
responsibilities, and additional consideration will be given as to employees to
be retained after the acquisition in light of the staffing needs of Buyer and
Buyer's conclusions regarding the qualifications of each employee. Neither this
Agreement nor the negotiations leading to this Agreement, nor any other actions
by Buyer and Seller, other than the execution and delivery of a written
employment agreement by Buyer, will create in any of such employees any rights,
explicit or implied, to continued employment. Seller, or its Affiliates, shall
retain all liability for payment of vacation pay accrued, and disability pay and
other claims incurred, before the Closing Date by the employees of the
Compression Business whose employment has been terminated by Seller, or its
Affiliates.
17. Covenants of Buyer after the Closing. As of and after the Closing
and for so long as any of the Deferred Purchase Obligations remain outstanding,
Buyer shall comply with and perform the following covenants, terms and
conditions:
(a) Definitions. As used in this Agreement, the following
terms shall have the meanings set forth below:
24
"Affiliate" means, with respect to any Person, any
other Person directly or indirectly controlling, controlled by
or under direct or indirect common control with such Person.
For purposes of this definition, the term "control" when used
with respect to a Person means the possession, directly or
indirectly, of the power to direct or cause the direction of
the management and policies of such Person, whether through
the ownership of voting securities, partnership interests, by
contract or otherwise.
"Approved Auditor" shall mean independent public
accountants reasonably acceptable to Seller. For purposes of
the foregoing, XXXX + ASSOCIATES, LLP shall be deemed to be
acceptable to Seller.
"Collateral" means all of the property which is
subject or is to be subject to the Liens granted by the
Collateral Documents.
"Consolidated Subsidiary" means at any date any
Subsidiary or other entity the accounts of which would be
consolidated with those of the Guarantor in its consolidated
financial statements of such date.
"Debt" of any Person means at any date, without
duplication, (i) all obligations of such Person for borrowed
money, (ii) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (iii) all
obligations of such Person to pay the deferred purchase price
of property or services (other than trade accounts payable
arising in the ordinary course of business), (iv) all
obligations of such Person as lessee under Capital Leases, (v)
all obligations of such Person to purchase securities or other
property which arise out of or in connection with the sale of
the same or substantially similar securities or property, (vi)
all non-contingent obligations of such Person to reimburse any
bank or other person in respect of amounts paid under a letter
of credit or similar instrument, (vii) all obligations of
others secured by a Lien on any asset of such Person, whether
or not such obligation is assumed by such Person and (viii)
all obligations of others guaranteed by such Person. For
purposes of the foregoing, "Capital Lease" means a lease that
should be capitalized on the balance sheet of the lessee
prepared in accordance with GAAP.
"Default" means any event or circumstance that, with
the lapse of time, the giving of notice or both, would
constitute an Event of Default.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended.
"Event of Default" has the meaning set forth in
Section 18.
"GAAP" means generally accepted accounting principles
in the United States.
"Lien" means, with respect to any asset, any
mortgage, lien, pledge, charge, security interest or
encumbrance of any kind in respect of such asset. For
25
the purposes of this Agreement, Buyer shall be deemed to own
subject to a Lien any asset which it has acquired or holds
subject to the interest of a vendor or lessor under any
conditional sale agreement, Capital Lease or other title
retention agreement relating to such asset.
"Person" means an individual, a corporation, a
partnership, a limited liability company, an association, a
trust or any other entity or organization, including a
government or political subdivision or an agency or
instrumentality thereof.
"Subsidiary" means any corporation or other entity of
which securities or other ownership interests having ordinary
voting power to elect a majority of the board of directors or
other persons performing similar functions, or otherwise
having the power to direct the management of such corporation
or entity, are at the time directly or indirectly owned by the
Guarantor.
(b) Information. Buyer shall deliver or cause to be delivered
to Seller the following:
(1) as soon as available and in any event within 120
days after the end of each fiscal year of Buyer, a balance
sheet of Buyer as of the end of such fiscal year and the
related statements of income and expenses for such fiscal
year, setting forth in each case in comparative form the
figures for the previous fiscal year, all in reasonable detail
and accompanied by an opinion thereon by an Approved Auditor,
which opinion shall state that such financial statements
present fairly the financial position of Buyer as of the date
of such financial statements and the results of its operations
for the period covered by such financial statements in
conformity with GAAP applied on a consistent basis (except for
changes in the application of which such accountants concur)
and shall not contain any "going concern" or like
qualification or exception or qualifications arising out of
the scope of the audit;
(2) as soon as available and in any event within
98 days after the end of each fiscal year of Buyer, a
supplemental schedule of all of Buyer's Compressor Units
(whether or not leased) as of the end of such fiscal year, as
certified by an Approved Auditor;
(3) as soon as available and in any event within 45
days after the end of each of the first three quarters of each
fiscal year of Buyer, a balance sheet of Buyer and the related
statements of income and expenses for such quarter and for the
portion of Buyer's fiscal year ended at the end of such
quarter, setting forth in each case in comparative form for
the corresponding quarter and the corresponding portion of
Buyer's previous fiscal year, all certified (subject to normal
year-end audit adjustments) as complete and correct by the
chief financial officer or chief accounting officer of Buyer;
26
(4) simultaneously with the delivery of each set of
financial statements referred to in clauses (1), (2) and (3)
above, a certificate of the chief financial officer or chief
accounting officer of Buyer, (A) setting forth in reasonable
detail the calculations required to establish whether Buyer
was in compliance with the requirements of this Agreement,
including, without limitation, the requirement to pay a
portion of the Deferred Purchase as an item of the Acquired
Assets is sold, on the date of such financial statements, (B)
stating whether there exists on the date of such certificate
any Event of Default or any event that, with the lapse of
time, the giving of notice, or both, would constitute an Event
of Default (a "Default") and, if any Event of Default or any
Default then exists, setting forth the details thereof and the
action which Buyer is taking or proposes to take with respect
thereto and (C) stating whether, since the date of the most
recent previous delivery of financial statements pursuant to
clause (1), (2) or (3) of this Section, there has been any
material adverse change in the business, financial position,
results of operations or prospects of Buyer, and, if so, the
nature of such material adverse change;
(5) simultaneously with the delivery of each set of
financial statements referred to in clause (1) and (2) above,
a statement of the firm of independent public accountants that
reported on such statements (A) stating that their audit
examination has included a review of this Agreement as it
relates to financial or accounting matters, (B) whether
anything has come to their attention to cause them to believe
that there existed on the date of such statements any Default
or Event of Default, and (C) confirming the calculations set
forth in the officer's certificate delivered simultaneously
therewith pursuant to clause (4) above;
(6) as soon as reasonably practicable after obtaining
knowledge of the commencement of, or of a material threat of
the commencement of, an action, suit or proceeding against
Buyer which could materially adversely affect the business,
properties, financial position, results of operations or
prospects of Buyer or which in any manner questions the
validity of this Agreement, any Collateral Document or any of
the other transactions contemplated hereby or thereby, the
nature of such pending or threatened action, suit or
proceeding and such additional information as may be
reasonably requested by Seller; and
(7) from time to time such additional information
regarding the financial position, results of operations or
business of Buyer as Seller may reasonably request.
Seller shall maintain the confidentiality of all such information
disclosed thereby except as Seller may deemed necessary or appropriate
in enforcing its rights under this Agreement, the Collateral Documents
and all other agreements and documents evidencing, guaranteeing,
securing or otherwise related to the Deferred Purchase Obligations
(collectively and as may be amended or supplemented from time to time,
the "Purchase Money Documents") and except as Seller may be required to
disclose by law, including any subpoena or court order.
27
(c) Payment of Obligations. Buyer will pay and discharge, as
the same shall become due and payable, (i) all its obligations and
liabilities, including all claims or demands of materialmen, mechanics,
carriers, warehousemen, landlords and other like persons which, in any
such case, if unpaid, might by law give rise to a Lien upon any of its
property or assets, and (ii) all lawful Taxes, assessments and charges
or levies made upon it or its property or assets, by any governmental
authority, except where any of the items in clause (i) or (ii) above
may be diligently contested in good faith by appropriate proceedings,
and Buyer shall have set aside on its books, if required under GAAP,
appropriate reserves for the accrual of any such items.
(d) Maintenance of Property; Insurance. Buyer will keep the
Collateral in such condition and will maintain in effect such insurance
on the Collateral as is required by the terms of the Collateral
Documents.
(e) Conduct of Business and Maintenance of Existence. Buyer
will continue to engage in business of the same general type as now
conducted by Seller with respect to the Acquired Assets and will
operate the Compression Business in at least as sound and prudent
manner as it has been heretofore operated by Seller. Buyer will
preserve, renew and keep in full force and effect its corporate
existence and its rights, privileges and franchises necessary or
desirable in the normal conduct of business.
(f) Sale of Assets. Buyer may sell any item included in the
Acquired Assets if, and only if, Buyer pays to Seller the sum due with
respect to each item in accordance with Section 4(b)(3) of this
Agreement; provided however, that Buyer may not sell any of the Real
Property included in the Acquired Assets or, except as permitted in the
Security Agreement, any machinery or equipment used in the operation of
Buyer's business at such Real Property. As to all other Collateral,
Buyer will not sell, transfer or assign any of its assets without the
prior approval of Seller, other than inventory and assets sold in the
ordinary course of business or as otherwise expressly provided in the
Collateral Documents.
(g) Compliance with Laws. Buyer will comply with all
applicable laws, ordinances, rules, regulations, and requirements of
governmental authorities [(including, without limitation, ERISA and the
rules and regulations thereunder)] except where the necessity of
compliance therewith is contested in good faith by appropriate
proceedings.
(h) Accounting; Inspection of Property, Books and Records.
Buyer will keep proper books of record and account in which full, true
and correct entries in conformity with GAAP shall be made of all
dealings and transactions in relation to its business and activities,
will maintain its fiscal reporting periods on the present basis and
will permit representatives of Seller to visit and inspect any of its
properties, to examine and make abstracts from any of its books and
records and to discuss its affairs, finances and accounts with its
officers, employees and independent public accountants, all at such
reasonable times and as often as may reasonably be desired. Seller
shall maintain the confidentiality of all such books and records and
information disclosed thereby except as Seller may deemed necessary or
appropriate in enforcing its rights under the Purchase
28
Money Documents and except as Seller may be required to disclose by
law, including any subpoena or court order.
(i) Debt. Buyer will not incur or at any time be liable with
respect to any Debt except (i) Debt outstanding under this Agreement
and (ii) Debt secured by a Lien permitted under Section 17(j) of this
Agreement.
(j) Restriction on Liens. Buyer will not at any time create,
assume or suffer to exist any Lien on any property or asset now owned
or hereafter acquired by it or assign or subordinate any present or
future right to receive assets except:
(1) any Liens created by the Collateral Documents;
(2) any purchase money security interest on any
capital asset of Buyer if such purchase money security
interest attaches to such capital asset concurrently with the
acquisition thereof; provided, that the aggregate amount of
Debt secured by all such purchase money security interests
does not exceed $100,000 in the aggregate at any one time
outstanding and provided, that no such purchase money security
interest shall extend to or cover any of the Acquired Assets
or any other property or asset of Buyer other than the capital
asset so purchased;
(3) Liens securing Taxes, assessments or governmental
charges or levies or the claims or demands of materialmen,
mechanics, carriers, warehousemen, landlords and other like
persons; provided (A) with respect to Liens securing state and
local Taxes, such Taxes are not yet payable, (B) with respect
to Liens securing claims or demands of materialmen, mechanics,
carriers, warehousemen, landlords and the like, such Liens are
unfiled and no other action has been taken to enforce the
same, or such claims or demands are paid within thirty (30)
days after such Liens are filed, or (C) with respect to Taxes,
assessments or governmental charges or levies or claims or
demands secured by such Liens, payment of which is not at the
time required by Section 17(b);
(4) Liens not securing Debt which are incurred in the
ordinary course of business in connection with workmen's
compensation, unemployment insurance, social security and
other like laws;
(5) any Lien arising pursuant to any order of
attachment, distraint or similar legal process arising in
connection with court proceedings so long as the execution or
other enforcement thereof is effectively stayed and the claims
secured thereby are being contested in good faith by
appropriate proceedings;
(6) zoning restrictions, easements, licenses,
reservations, covenants, conditions, waivers, restrictions on
the use of property or other minor encumbrances or
irregularities of title which affected the Real Property on
the Closing Date, or which do not materially impair the use of
any property used in the operation or business of Buyer or the
value of such property for the purpose of such business.
29
(k) Consolidations, Mergers and Sales of Assets. Buyer will
not (i) consolidate or merge with or into any other Person or (ii)
sell, lease or otherwise transfer all or, except in the ordinary course
of business, any substantial part of its assets to any other Person.
(l) Transactions with Affiliates. Buyer will not directly or
indirectly, pay any funds to or for the account of, make any investment
in, engage in any transaction with or effect any transaction in
connection with any joint enterprise or other joint arrangement with,
any Affiliate of Buyer, except that Buyer may make payment or provide
compensation (including without limitation the establishment of
customary employee benefit plans) for personal services rendered by
employees and other Persons on terms fair and reasonable in light of
the circumstances under which such services were or are to be rendered.
Nothing in this Section 17(1) shall prohibit Buyer from making sales to
or purchases from any Affiliate and, in connection therewith, extending
credit or making payments, or from making payments for services
rendered by any Affiliate, if such sales or purchases are made or such
services are rendered in the ordinary course of business and on terms
and conditions at least as favorable to Buyer as the terms and
conditions which would apply in a similar transaction with a Person not
an Affiliate, or prohibit Buyer from participating in, or effecting any
transaction in connection with, any joint enterprise or other joint
arrangement with any Affiliate if Buyer participates in the ordinary
course of its business and on a basis no less advantageous than on the
basis on which such Affiliate participates.
(m) Restricted Payments. Buyer will not (i) declare or pay any
dividend or other distribution on any shares of Buyer's capital stock,
(ii) make any payment on account of the purchase, redemption,
retirement or acquisition of (A) any shares of Buyer's capital stock
(except shares acquired upon the conversion thereof into other shares
of its capital stock) or (B) any option, warrant or other right to
acquire shares of Buyer's capital stock, (iii) make any payments or
loans to directors, officers or shareholders of Buyer other than
reasonable salaries and benefits to officers employed on a full time
basis by Buyer, or (iv) return or distribute any capital to
shareholders of Buyer.
(n) Investments. Buyer will not make or acquire any investment
in any Person (whether by share purchase, capital contribution, loan,
time deposit or otherwise) other than (i) in direct obligations of the
United States or any agency thereof, or obligations guaranteed by the
United States or any agency thereof, (ii) in commercial paper rated in
the highest grade by a nationally recognized credit rating agency,
(iii) in time deposits with, including certificates of deposit issued
by Western National Bank or any office located in the United States of
any bank or trust company which is organized under the laws of the
United States or any state thereof and has capital, surplus and
undivided profits aggregating at least $200,000,000, provided in each
case that such investment matures within one year from the date of
acquisition thereof by Buyer and (iv) loans and advances to employees
for travel in the ordinary course of business and in an amount
consistent with past practice.
30
(o) Transactions with Other Persons. Buyer shall not enter
into any agreement with any Person whereby any of them shall agree to
any restriction on Buyer's right to amend or waive any of the
provisions of this Agreement or the Collateral Documents.
(p) Capital Expenditures. Buyer will not directly (by the way
of the acquisition of securities of a Person or otherwise) make or
commit to make any expenditures in respect of the purchase or other
acquisition of fixed or capital assets (excluding normal replacements
and maintenance which are properly charged to current operations),
except for expenditures in the ordinary course of business.
(q) Independence of Covenants. All covenants contained herein
shall be given independent effect so that if a particular action or
condition is not permitted by any of such covenants, the fact that such
action or condition would be permitted by an exception to, or otherwise
be within the limitations of another covenant shall not avoid the
occurrence of a default if such action is taken or condition exists.
18. Events of Default by Buyer.
(a) The occurrence on or after the Closing of any one or more
of the following events shall constitute an "Event of Default" under
this Agreement:
(1) Buyer shall fail to pay when due any portion of
the Deferred Purchase Price or interest on the Deferred
Purchase Price, and such failure shall continue for five (5)
days after the due date;
(2) Buyer shall fail to pay any other sum due under
this Agreement or the Collateral Documents (other than as
described in clause (1) above), and such failure continues for
ten (10) days after notice by Seller to Buyer;
(3) Buyer shall fail to observe or perform any
covenant contained in Section 17(f), (i), (j), (k), (1), (m),
(n), (o) or (p) or the Guarantor shall fail to observe or
perform any covenant contained in Xxxxxxx 00(x), (x), (x),
(x), (x), (0), (x), (x) or (p) of the Guaranty;
(4) Buyer shall fail to observe or perform any
covenant or agreement contained in this Agreement or in the
other Purchase Money Documents (other than those covered by
clauses (1), (2) or (3) above), or Guarantor or any Subsidiary
shall fail to observe or perform any covenant or agreement
contained in the Guaranty or any of the other Purchase Money
Documents, in either case for 30 days after written notice
thereof has been given to Buyer by Seller;
(5) any representation, warranty, certification or
statement made by Buyer in this Agreement or any other
Purchase Money Document to which it is a party or by the
Guarantor or any Subsidiary in the Guaranty or any other
Purchase Money Document, or in any certificate, financial
statement or other document delivered pursuant hereto or
thereto, shall prove to have been incorrect in any material
respect when made;
31
(6) Buyer, and Subsidiary, or Guarantor shall fail to
make any payment in respect of any Debt when due or within any
applicable grace period;
(7) any event or condition shall occur which results
in the acceleration of the maturity of any Debt of Buyer, any
Subsidiary or Guarantor or enables (or, with the giving of
notice or lapse of time or both, would enable) the holder of
such Debt or any Person acting on such holder's behalf to
accelerate the maturity thereof;
(8) Buyer, any Subsidiary or Guarantor shall commence
a voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or its
debts under any bankruptcy, insolvency or other similar law
now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar
official of it or any substantial part of its property, or
shall consent to any such relief or to the appointment of or
taking possession by any such official in an involuntary case
or other proceeding commenced against it, or shall make a
general assignment for the benefit of creditors, or shall fail
generally to pay its debts as they become due, or shall take
any corporate action to authorize any of the foregoing;
(9) an involuntary case or other proceeding shall be
commenced against Buyer, any Subsidiary or Guarantor seeking
liquidation, reorganization or other relief with respect to it
or its debts under any bankruptcy, insolvency or other similar
law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar
official of it or any substantial part of its property, and
such involuntary case or other proceeding shall remain
undismissed and unstayed for a period of 60 days; or an order
for relief shall be entered against Buyer, any Subsidiary or
Guarantor under the federal bankruptcy laws as now or
hereafter in effect;
(10) one or more judgments or orders for the payment
of money in excess of $100,000 shall be rendered against
Buyer, any Subsidiary or Guarantor and such judgment or order
shall continue unsatisfied for a period of 21 days during
which execution shall not be effectively stayed;
(11) (A) any Collateral Document shall cease for any
reason to be in full force and effect or shall cease to be
effective to grant a perfected security interest in the
Collateral with the priority stated to be created thereby or
shall cease to be in full force and effect or shall be
declared null and void, or the validity or enforceability
thereof shall be contested by Buyer, any Subsidiary or
Guarantor, or Buyer, any Subsidiary or Guarantor shall deny
that it has any further liability or obligation under a
Purchase Money Document to which it is a party, or (B) any
creditor of Buyer, any Subsidiary or Guarantor shall obtain
possession of any of the Collateral by any means, including,
without limitation, levy, distraint, replevin or self-help, or
any such creditor shall establish or obtain any right in the
Collateral which is equal to or senior to the security
interests of Buyer in such Collateral;
32
(12) the Guaranty shall at any time and for any
reason cease to be in full force and effect or shall be
declared null and void, or the validity or enforceability
thereof shall be contested by Guarantor, or Guarantor shall
deny that it has any further liability or obligation under or
shall fail to perform its obligations under the Guaranty;
(13) any event shall occur which, under the terms of
any of the Collateral Documents, would entitle Seller to
accelerate the maturity of the Deferred Purchase Price;
(14) any substantial (in excess of $25,000) uninsured
loss, theft, damage or destruction of the Collateral; or
(15) Seller's good faith determination that a
material adverse change in financial condition of Buyer or
Guarantor has occurred since the Closing Date.
(b) Seller's Remedies upon Event of Default. Upon the
occurrence and continuance of an Event of Default, Seller may, at its
option, (i) declare the Deferred Purchase Price to be, and the Deferred
Purchase Price and all accrued and unpaid interest thereon shall
thereupon become, immediately due and payable without presentment,
demand, protest or other notice of any kind, all of which are hereby
waived by Buyer, (ii) realize on any or all of the Collateral pursuant
to the Collateral Documents, (iii) demand and collect all sums due
under the Guaranty, and (iv) exercise such other rights and remedies as
may be available under this Agreement, the other Purchase Money
Documents or at law or in equity.
(c) No Waivers. No failure or delay by Seller in exercising
any right, power or privilege hereunder or under any of the Purchase
Money Documents shall operate as a waiver thereof, nor shall any single
or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The
rights and remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided by law.
(d) Expenses. Buyer shall pay (i) all out-of-pocket expenses
of Seller, including the reasonable fees and disbursements of special
counsel for Seller, in connection with any waiver or consent hereunder
or any amendment hereof or any Default hereunder and (ii) if an Event
of Default occurs, all out-of-pocket expenses incurred by Seller,
including reasonable fees and disbursements of counsel, in connection
with such Event of Default and collection and other enforcement
proceedings resulting therefrom. Except as provided in paragraph 5(d)
of this Agreement, Buyer shall indemnify Seller against any transfer
taxes, documentary taxes, assessments or charges made by any
governmental authority by reason of the execution and delivery of this
Agreement or the Collateral Documents.
(e) Right of Set-Off. Upon the occurrence and during the
continuance of any Event of Default, Seller or any of its Affiliates is
hereby authorized at any time and from time to time, to the fullest
extent permitted by law, to set off and apply any and all
33
amounts at any time owed to Buyer or its Affiliates and other
indebtedness at any time owing by Seller or its Affiliates to or for
the credit or the account of Buyer or its Affiliates against any and
all of the obligations now or hereafter existing under this Agreement
or any other Purchase Money Document for its account, irrespective of
whether Seller shall have made any demand hereunder and although such
obligation may be unmatured.
19. Further Assurances. After Closing, Seller and Buyer agree to take
such further actions and to execute, acknowledge and deliver such further
documents that are necessary or useful in carrying out the purposes of this
Agreement or of any document delivered pursuant hereto. The Parties shall
cooperate at all times after Closing to execute and record correction
instruments to correct scrivener's errors in the preparation of the Closing
documents.
20. Related Agreements. Buyer and Seller have heretofore entered into
that certain Non-Disclosure Agreement dated October 12, 2000, the terms of which
are incorporated herein by reference.
21. Dispute Resolution. Except as provided in Section 15(d) of this
Agreement, any disagreement between Buyer and Seller hereunder or under the
transactions contemplated hereby shall be referred for decision to the
Presidents of each party hereto or their designees. In the event that the
referred matter is not then resolved within ten (10) days following the
referral, and unless this period is extended by mutual agreement, such matter
shall be submitted and settled by arbitration in Traverse City, Michigan,
pursuant to the then-prevailing rules of the American Arbitration Association.
The arbitrators shall consist of one person selected by Buyer, one person
selected by Seller and one person selected by the two arbitrators so selected.
At least one of the arbitrators shall be a lawyer having at least ten years of
experience in the oil and gas service industry. In the event that the
arbitrators selected by Buyer and Seller are unable jointly to select a third
arbitrator, Buyer and Seller (or the arbitrators selected by them) shall request
that the American Arbitration Association in Washington, D.C. designate such
third person. The decision of arbitrators pursuant to this Section 21 shall be
final and binding upon Buyer and Seller, and judgment upon any such decision may
be entered in any court that would ordinarily have jurisdiction over Seller or
Buyer, as the case may be, and the subject matter of such arbitration. The fees
and expenses of the arbitrators incurred in connection with the review and
determination of any disputed matter shall be borne equally between the Seller
and the Buyer unless otherwise directed by the arbitrators. Each Party shall be
solely responsible for the fees and expenses incurred by it in connection with
the arbitration. Notwithstanding anything in this Agreement to the contrary, the
dispute resolution procedures of this Section 21 shall not apply to the Deferred
Purchase Obligations unless the Parties mutually agree otherwise in writing.
22. Indemnification.
(a) Seller agrees to indemnify in full Buyer and its officers,
directors, employees, agents and stockholders (collectively, the "Buyer
Indemnified Parties") and hold them harmless against any loss,
liability, deficiency, damage, expense or cost (including reasonable
legal expenses), whether or not actually incurred or paid prior to the
Effective Date (collectively, "Losses"), which Buyer Indemnified
Parties may suffer, sustain or become subject to, as a result of (i)
any misrepresentation in any of the
34
representations and warranties of Seller contained in this Agreement or
in any exhibits, schedules, certificates or other documents delivered
or to be delivered by or on behalf of Seller or Buyer pursuant to the
terns of this Agreement or otherwise referenced or incorporated in this
Agreement (collectively, the "Related Documents"), (ii) any breach of,
or failure to perform, any agreement of Seller contained in this
Agreement or any of the Related Documents, (iii) any "Claims" (as
defined in Section 22(e)(1) hereof) or threatened Claims against Buyer
arising out of the action or inactions of Seller with respect to the
Acquired Assets or the Compression Business prior to the Closing, or
(iv) Clean-up reasonably required as a result of a Release of Hazardous
Materials by Seller on, under or from the Real Property prior to the
Closing Date; provided however, Seller shall be entitled at its option,
to effectuate the Clean-up caused by the Release using it own tools or
by hiring an independent contractor to work under its direction
(collectively, "Buyer Losses").
(b) Seller shall be liable to Buyer Indemnified Parties for
any Buyer Losses (i) only if Buyer or another Buyer Indemnified Party
delivers to Seller written notice, setting forth in reasonable detail
the identity, nature and amount of Buyer Losses related to such claim
or claims prior to the second anniversary of the Closing Date and (ii)
only if the aggregate amount of all Buyer Losses exceeds $25,000 (the
"Basket Amount"), in which case Seller shall be obligated to indemnify
the Buyer Indemnified Parties only for the excess of the aggregate
amount of all such Buyer Losses over the Basket Amount. A Buyer
Indemnified Party's failure to provide the detail required by clause
(i) in the preceding sentence shall not constitute either breach of
this Agreement lay the Buyer Indemnified Party or any basis for Seller
to assert that the Buyer Indemnified Party did not comply with the
terms of this Section 22 sufficient to cause the Buyer Indemnified
Party to have waived its rights under this Section 22 unless Seller
demonstrates that its ability to defend against any Claims with respect
thereto has been materially adversely affected.
(c) Subject to the limitations of Section 22(d), Buyer agrees
to indemnify in full the Seller, and its officers, directors,
employees, agents and stockholders (collectively, the "Seller
Indemnified Parties") and hold them harmless against any Losses which
any of the Seller Indemnified Parties may suffer, sustain or become
subject to as a result of (i) any misrepresentation in any of the
representations and warranties of Buyer contained in this Agreement or
in any of the Related Documents, (ii) any breach of, or failure to
perform, any agreement of Buyer contained in this Agreement or any of
the Related Documents, or (iii) any Claims or threatened Claims against
Seller arising out of the actions or inactions of Buyer with respect to
the Assets or the Compression Business after the Closing (collectively,
"Seller Losses").
(d) Buyer shall be liable to the Seller Indemnified Parties
for any Seller Losses (i) only if Seller or another Seller Indemnified
Party delivers to Buyer written notice, setting forth in reasonable
detail the identity, nature and amount of Seller Losses related to such
claim or claims prior to the second anniversary of the Closing Date,
except to the extent that such Losses relate to Claims described in
Section 22(c)(iii) above, and (ii) only if the aggregate amount of all
Sellers' Losses exceeds the Basket Amount, in which case Buyer shall be
obligated to indemnify the Seller Indemnified
35
Parties only for the excess of the aggregate amount of all such Seller
Losses over the Basket Amount. A Seller Indemnified Party's failure to
provide the detail required by clause (i) in the preceding sentence
shall not constitute either a breach of this Agreement by the Seller
Indemnified Party or any basis for Buyer to assert that the Seller
Indemnified Party did not comply with the terms of this Section 22
sufficient to cause the Seller Indemnified Party to have waived its
rights under this Section 22 unless Buyer demonstrates that its ability
to defend against any Claims with respect thereto has been materially
adversely affected.
(e) As used herein, an "Indemnified Party" shall refer to a
"Buyer Indemnified Party" or "Seller Indemnified Party," as applicable,
the "Notifying Party" shall refer to the party hereto whose Indemnified
Parties are entitled to indemnification hereunder, and the
"Indemnifying Party" shall refer to the party hereto obligated to
indemnify such Notifying Party's Indemnified Parties.
(1) In the event that any of the Indemnified Parties
is made a defendant in or party to any action or proceeding,
judicial or administrative, instituted by any third party for
the liability or the costs or expenses of which are Losses
(any such third party action or proceeding being referred to
as a "Claim"), the Notifying Party shall give the Indemnifying
Party prompt notice thereof. The failure to give such notice
shall not affect any Indemnified Party's ability to seek
reimbursement unless such failure has materially and adversely
affected the Indemnifying Party's ability to defend
successfully a Claim. The Indemnifying Party shall be entitled
to contest and defend such Claim; provided, that the
Indemnifying Party (i) has a reasonable basis for concluding
that such defense may be successful and (ii) diligently
contests and defends such Claim. Notice of the intention so to
contest and defend shall be given by the Indemnifying Party to
the Notifying Party within 20 business days after the
Notifying Party's notice of such Claim (but, in all events, at
least five business days prior to the date that an answer to
such Claim is due to be filed). Such contest and defense shall
be conducted by reputable attorneys employed by the
Indemnifying Party. The Notifying Party shall be entitled at
any time, at its own cost and expense (which expense shall not
constitute a Loss unless the Notifying Party reasonably
determines that the Indemnifying Party is not adequately
representing or, because of a conflict of interest, may not
adequately represent, any interests of the Indemnified
Parties, and only to the extent that such expenses are
reasonable), to participate in such contest and defense and to
be represented by attorneys of its or their own choosing. If
the Notifying Party elects to participate in such defense, the
Notifying Party will cooperate with the Indemnifying Party in
the conduct of such defense. Neither the Notifying Party nor
the Indemnifying Party may concede, settle or compromise any
Claim without the consent of the other party, which consents
will not be unreasonably withheld. Notwithstanding the
foregoing, (i) if a Claim seeks equitable relief or (ii) if
the subject matter of a Claim relates to the ongoing business
of any of the Indemnified Parties, which Claim, if decided
against any of the Indemnified Parties, would materially
adversely affect the ongoing business or reputation of any of
the Indemnified Parties, then in each such case, the
Indemnified Parties alone shall be entitled to
36
contest, defend, or settle such claims in the first instance
and, if the Indemnified Parties do not contest, defend or
settle such claim, the Indemnifying Party shall then have the
right to contest and defend (but not settle) such Claim.
(2) In the event any Indemnified Party should have a
claim against any Indemnifying Party that does not involve a
Claim, the Notifying party shall deliver a notice of such
claim with reasonable promptness to the Indemnifying Party. If
the Indemnifying Party notifies the Notifying Party that it
does not dispute the claim described in such notice or fail to
notify the Notifying Party within 30 days after delivery of
such notice by the Notifying Party whether the Indemnifying
Party disputes the claim described in such notice, the Loss in
the amount specified in the Notifying Party's notice will be
conclusively deemed a liability of the Indemnifying Party and
the Indemnifying Party shall pay the amount of such Loss to
the Indemnified Party on demand. If the Indemnifying Party has
timely disputed its Liability with respect to such claim, the
dispute shall be reached pursuant to Section 21 of this
Agreement.
(3) After the Closing, the rights set forth in this
Section 22 shall be each Party's sole and exclusive remedies
against the other party hereto for misrepresentations or
breaches of covenants contained in this Agreement and the
Related Documents. Notwithstanding the foregoing, nothing
herein shall prevent any of the Indemnified Parties from
bringing an action based upon allegations of fraud or other
intentional breach of any obligation of or with respect to
either Party in connection with this Agreement and the Related
Documents. In the event such action is brought, the prevailing
Party's attorneys' fees and costs shall be paid by the non
prevailing Party.
23. Post-Closing Access to Information. Buyer shall be entitled to
access to the books and records of Seller at reasonable times and places for a
period of 180 days after the Closing Date for the purpose of auditing the
operations of the Compression Business by Seller during the years 1998 through
2001.
24. Miscellaneous Provisions.
(a) Governing Law and Jurisdiction of Disputes. This Agreement
and all instruments executed in accordance herewith shall be governed
by and interpreted in accordance with the laws of the State of
Michigan, without regard to conflict of law rules that would direct the
application of the laws of another jurisdiction. The exclusive venue
for any proceeding in a court of law relating to this Agreement shall
be a court of competent jurisdiction located in Grand Traverse County,
Michigan.
(b) Entire Agreement. This Agreement and the attached exhibits
constitute the entire agreement between the Parties and supersede all
prior agreements, understandings, negotiations and discussions, whether
oral or written, of the Parties; provided, however, this provision
shall not apply to paragraphs 10(b) and 12 of that letter of intent
dated November 29, 2000, between the Parties, which paragraphs remain
in full force and effect as written. No supplement, amendment,
alteration, modification, waiver
37
or termination of this Agreement shall be binding unless executed in
writing by the Parties.
(c) Waiver. No waiver of any provision of this Agreement shall
be deemed or shall constitute a waiver of any other provision hereof
(whether or not similar) nor shall such waiver constitute a continuing
waiver unless other expressly provided.
(d) Captions. The captions in this Agreement are for
convenience only and shall not be considered a part of or affect the
construction or interpretation of any provision of this Agreement.
(e) Assignment. Neither Party shall assign this Agreement, or
any of its rights or obligations hereunder, without the prior written
consent of the other Party, which consent may be withheld in such other
Party's sole discretion. Except as otherwise provided herein, this
Agreement shall be binding upon and inure to the benefit of the Parties
and their respective permitted successors and assigns. However, in any
event Buyer and Seller shall remain responsible and liable for the
performance of their obligations under this Agreement, in addition to
their respective successors and assigns. All conveyances of all or any
portion of the Acquired Assets shall expressly recognized and
perpetuate the rights and obligations set forth in this Agreement.
(f) Notices. Any notice provided or permitted to be given or
permitted to be given under this Agreement shall be in writing, and may
be served by personal delivery or by registered or certified U.S. mail,
addressed to the Party to be notified, postage prepaid, return receipt
requested. Notice deposited in the mail in any manner herein above
described shall be deemed to have been given and received on the date
of the delivery as shown on the return receipt. Notice serviced in any
other manner (including by facsimile delivery) shall be deemed to have
been given and received only if and when actually received by the
addressee. For the purposes of notice, the addresses of the Parties
shall be as follows:
SELLER:
Great Lakes Compression, Inc.
00000 Xxxxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xx. X. X. Xxxx Xx.
Telephone: (000) 000-0000
Fax: (000) 000-0000
38
BUYER:
Natural Gas Acquisition Corporation
0000 XXX 0000
Xxxxxxx, Xxxxx 00000
Attention: Xx. Xxxxxxx X. Xxxxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
Each Party shall have the right, upon giving three days prior notice to
the other in the manner herein above provided, to change its address
for the purposes of notice to any other street address.
(g) Expenses. Each Party shall be solely responsible for all
expenses incurred by it in connection with this transaction (including,
without limitation, fees and expenses of its own legal counsel and
accountants).
(h) Severability. The invalidity of any one or more provisions
of this Agreement shall not affect the validity of this Agreement as a
whole, and in the case of any such invalidity, this Agreement shall be
construed as if the invalid provision had not been included herein.
(i) Damages. The Parties waive any rights to special,
indirect, punitive, exemplary or consequential damages resulting from a
breach of this Agreement.
(j) No Third Party Beneficiary. This Agreement is not intended
to create, nor shall it be construed to create, any rights in any third
party under doctrines concerning third party beneficiaries.
(k) Survival. All representations and warranties on the part
of Buyer and Seller in this Agreement or in any document delivered
pursuant to this Agreement, including the closing documents, shall
survive the Closing and shall terminate and become unenforceable on the
second anniversary of the Closing Date. Buyer's obligation to pay the
Deferred Purchase Price shall continue until the Deferred Purchase
Price is fully paid as herein provided.
(l) Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
(m) Not Construed Against Drafter. Buyer and Seller
acknowledge that they have read this Agreement, have had the
opportunity to review it with an attorney of their respective choice,
and have agreed to all of its terms. Under these circumstances, Buyer
and Seller agree that the rule of construction that a contract be
construed against the drafter shall not be applied in interpreting this
Agreement, and that in the event of any ambiguity in any of the terms
or conditions of this Agreement, including any exhibits
39
hereto, and whether or not placed of record, such ambiguity shall not
be construed for or against either Party on the basis that such Party
did or did not author the same.
(n) Publicity. Seller and Buyer shall consult with each other
with regard to all publicity and other releases and disclosures to be
made prior to, at or after closing concerning this Agreement and the
transactions contemplated hereby, which are not otherwise expressly
permitted by any confidentiality agreement executed by the Parties and,
except as required by applicable law or the applicable rules or
regulations of any governmental body or stock exchange, neither Party
shall make any disclosure or issue any publicity or release without the
prior written consent of the other Party, which consent shall not be
unreasonably withheld or delayed.
(o) Time of Performance. Time is of the essence in the
performance of all covenants and obligations under this Agreement.
(p) No Partnership Created. It is not the purpose or intent of
this Agreement to create (and it shall not be construed as creating) a
joint venture, partnership or any type of association, and the Parties
are not authorized to act as agent or principal for each other with
respect to any matter related hereto.
(q) Execution by Facsimile. The Parties may execute and
exchange counterparts of this Agreement and the other instruments and
documents that they are required to deliver hereunder using telephonic
facsimile with like effect as if executed originals were delivered;
provided however, the executed originals of the faxed counterparts
shall be exchanged between to the Parties with a five (5) business day
of the Closing Date.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
day and year first above written.
BUYER:
NATURAL GAS ACQUISITION CORPORATION
By:/s/ Xxxxxxx X. Xxxxxxxx
-----------------------------------
Xxxxxxx X. Xxxxxxxx
Its: President
SELLER:
GREAT LAKES COMPRESSION, INC.
By:/s/
Its:
40
