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EXHIBIT 10.1
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of
May 22, 1997, is entered into by and between Xxxxxx General Corporation, a
California corporation ("Buyer"), and NDE Environmental Corporation, a Delaware
corporation ("Seller").
W I T N E S S E T H:
WHEREAS, Seller owns all of the outstanding capital stock
consisting of 1,000 shares of common stock represented by share certificate no.
3 in the name of Seller (the "Shares") of USTMAN Industries, Inc. ("USTMAN"), a
Delaware corporation with its principal place of business at 00000 X. Xxxxxx
Xxx., Xxxxxxxx, XX 00000; and
WHEREAS, Buyer desires to acquire the Shares from Seller, and
Seller desires to sell the Shares to Buyer, upon the terms and subject to the
conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and of the
respective representations, warranties, covenants, agreements and conditions
contained herein, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
The terms set forth below in this Article I shall have the
meanings ascribed to them below:
Affiliate: with respect to any person, means any person that
directly or indirectly controls, is controlled by or is under common control
with such person.
Applicable Law: means any and all federal, national, state,
regional, local, municipal or foreign laws, statutes, rules, regulations,
guidelines, ordinances, licenses, Permits or judicial or administrative
decisions of any country, or any political subdivision, agency,
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commission, official or court thereof having jurisdiction over Seller or
USTMAN.
best efforts: means a party's efforts in accordance with
reasonable commercial practice and without the incurrence of unreasonable
expense.
Business: means all of the business and operations conducted
by USTMAN.
Code: means the United States Internal Revenue Code of 1986,
as amended, or any amending or superseding Tax laws of the United States.
Environmental Law: means any applicable law (including common
law) regulating or prohibiting Releases into any part of the workplace or the
environment, or pertaining to the protection or improvement of natural
resources or wildlife, the environment or public and employee health and safety
including, without limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act ("CERCLA") (42 U.S.C. Section 9601 et seq.),
the Hazardous Materials Transportation Act (49 U.S.C. Section 1801 et seq.),
the Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.),
the Clean Water Act (33 U.S.C. Section 1251 et seq.), the Clean Air Act (42
U.S.C. Section 7401 et seq.), the Toxic Substances Control Act (15 U.S.C.
Section 7401 et seq.), the Atomic Energy Act of 1954 (42 U.S.C. Section 2014 et
seq.), the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C.
Section 136 et seq.), the Occupational Safety and Health Act (29 U.S.C.
Section 651 et seq.) ("OSHA") and the regulations promulgated pursuant thereto,
and any such applicable state or local statutes, and the regulations
promulgated pursuant thereto, as such laws have been and may be amended or
supplemented.
Excluded Assets: shall mean (a) all cash and cash equivalents
of USTMAN at Closing and (b) amounts owed to USTMAN by other Affiliates of
Seller at Closing.
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Forms 8023-A: means IRS Form 8023-A (including the required
schedules thereto) and any other form required to be filed with any
jurisdiction so that such jurisdiction will recognize the Section 338(h)(10)
Election.
Hazardous Material: means any substance, material or waste
which is regulated pursuant to any Environmental Law by any public or
governmental authority in any jurisdiction in which Seller or USTMAN conducts
business, or the United States, including, without limitation, any material or
substance which is defined as a "hazardous waste," "hazardous material,"
"hazardous substance," "extremely hazardous waste," "restricted hazardous
waste," "contaminant," "toxic waste," "toxic substance," "source material,"
"special nuclear material," "byproduct material," "high-level radioactive
waste," "low-level radioactive waste" or "spent nuclear material" under any
provision of Environmental Law.
IRS: means the United States Internal Revenue Service.
Lien: means any lien, pledge, claim, charge, security
interest, mortgage or other encumbrance, option or other rights of any third
person of any nature whatsoever.
Permit: means any and all federal, national, state, regional,
local, municipal or foreign licenses, permits, variances, waivers, riders,
registrations or any other governmental authorizations or approvals necessary
or appropriate for USTMAN to conduct its Business.
person: means any individual, firm, corporation, partnership,
limited liability company, joint venture, association, trust, unincorporated
organization, government or agency or subdivision thereof or any other entity.
Regulation: means a United States Department of Treasury
regulation issued with respect to the Code.
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Release: means any release, spill, effluent, emission,
leaking, pumping, pouring, emptying, escaping, dumping, injection, deposit,
disposal, discharge, dispersal, leaching or migration into the indoor or
outdoor environment, or into or out of any property currently or formerly
owned, operated or leased by Seller or USTMAN.
Remedial Action: means all actions, including, without
limitation, any capital expenditures, required by a governmental entity or
required under any Environmental Law, or voluntarily undertaken to (a) clean
up, remove, treat, or in any other way ameliorate or address any Hazardous
Materials or other substance in the indoor or outdoor environment; (b) prevent
the Release or threat of Release, or minimize the further Release of any
Hazardous Material so it does not endanger or threaten to endanger the public
or employee health or welfare of the indoor or outdoor environment; (c) perform
pre-remedial studies and investigations or post-remedial monitoring and care
pertaining or relating to a Release; or (d) bring the applicable party into
compliance with any Environmental Law.
Section 338(h)(10) Election: shall have the meaning set forth
at Section 6.13.
Taxes: means all United States federal, state, county and
local, foreign and all other taxes, charges, fees, levies or other assessments,
including, without limitation, all net income, gross income, gross receipts,
sales, use, ad valorem, transfer, franchise, profits, profit share, license,
lease, service, service use, value added, withholding, payroll, employment,
excise, estimated, severance, stamp, occupation, premium, real and personal
property, windfall profits, gains, capital stock, production, business and
occupation, disability, custom duties or other taxes of any kind whatsoever,
together with any interest, penalties, additions to tax, fines or other
additional amounts imposed thereon or related thereto, and the term "Tax" means
any one of the
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foregoing Taxes.
Tax Certificate: shall have the meaning set forth at Section
6.12.
Tax Returns: means all United States federal, local and state
and all foreign returns, declarations, reports, estimates, information returns,
statements and other documents of, relating to, or required to be filed in
respect of, any and all Taxes.
ARTICLE II
PURCHASE AND SALE
Section II.1 The Sale. Upon the terms and subject to the
conditions of this Agreement, at the Closing, as defined below under Article
III, Seller will sell, assign, transfer and deliver the Shares to Buyer
(together with a stock power or powers executed in blank), and Buyer will
purchase and acquire the Shares from Seller.
Section II.2 Purchase Price. The purchase price for all
the Shares (the "Purchase Price") shall be $5,750,000. The Purchase Price
shall be subject to adjustment only pursuant to Section 2.4. The Purchase
Price shall be paid by Buyer at Closing by (i) wire transfer of $5,250,000 in
immediately available funds to an account or accounts designated in writing by
Seller at Closing and (ii) delivery of the Purchase Note to Seller as defined
in Section 2.3.
Section II.3 Note and Subsidiary Guarantees. At the
Closing, Buyer shall deliver to Seller an unsecured senior note validly
executed by Buyer in substantially the form attached hereto as Exhibit A (the
"Purchase Note"). The Purchase Note shall be in the aggregate principal amount
of $500,000 and shall bear interest at a rate of 8.5% per annum. Accrued
interest on the outstanding principal balance of the Purchase Note shall be
payable quarterly on September 1, 1997, December 1, 1997 and March 1, 1998. The
unpaid principal balance of, and
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all accrued and unpaid interest on, the Purchase Note shall be due and payable
in full on June 1, 1998. Immediately following the Closing, Buyer shall cause
USTMAN, Xxxxxx Systems, Inc., a Missouri corporation and a wholly-owned
subsidiary of Buyer, and EnvirAlert, Inc., a Delaware corporation and a
wholly-owned subsidiary of Buyer, to each execute the guaranty (the "Subsidiary
Guaranty") of Buyer's obligations under the Purchase Note in substantially the
form attached hereto as Exhibit B. Seller hereby recognizes and acknowledges
that, in connection with the transactions described herein, Buyer has obtained
certain acquisition financing and that such financing may be secured by some or
all of the assets of Buyer and its subsidiaries at or after Closing.
Section II.4 Post Closing Adjustment.
(a) Within 60 calendar days following the Closing, Buyer
shall prepare and deliver to Seller a balance sheet (the "Balance
Sheet") of USTMAN as of the Closing Date, as defined below under
Article III (prior to the effects of the transactions occurring at the
Closing) and a statement (the "Statement"), reflecting the calculation
of the adjustment, if any, to the Purchase Price pursuant to Section
2.4(b). The Balance Sheet shall be prepared in accordance with
generally accepted accounting principles consistently applied in the
United States and the financial reporting policies and procedures
utilized by Seller prior to the Closing ("GAAP"). Seller shall have a
period of 30 calendar days after delivery of the Balance Sheet and the
Statement to review such documents and make any objections it may have
in writing to Buyer. If written objections are delivered to Buyer by
Seller within such 30-day
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period, then Buyer and Seller shall attempt to resolve the matter or
matters in dispute. If no written objections are made by Seller
within such 30-day period, then the Balance Sheet and the Statement
shall be final and binding on the parties hereto. If disputes with
respect to the Balance Sheet or the Statement cannot be resolved by
Buyer and Seller within 30 calendar days after the delivery of the
objections thereto, then, at the request of Buyer or Seller, the
specific matters in dispute shall be submitted to Xxxxxx Xxxxxxxx &
Co. or such other independent accounting firm as may be approved by
Seller and Buyer (the "Auditors"), which firm shall render its opinion
as to such matters. Based on such opinion, such independent
accounting firm will then send to Seller and Buyer its determination
of the specified matters in dispute, which determination shall be
final and binding on the parties hereto. The fees and expenses of the
Auditors shall be borne one-half by Seller and one-half by Buyer.
(b) The Purchase Price shall be adjusted to reflect the
difference, if any, between the working capital balance of USTMAN as
of the opening of business on the date of Closing after taking into
account the transactions set forth in Section 2.5 (the "Closing
Balance") and $424,271 (representing the working capital balance of
USTMAN as of December 31, 1996); provided that for purposes of this
Section 2.4, working capital balance shall mean the difference between
(i) current assets (excluding cash and cash equivalents) and (ii)
current liabilities (excluding income tax payable and amounts due Xxxx
Xxxx) each as determined in accordance with GAAP. To the extent the
Closing Balance is greater than $424,271, the Purchase Price shall be
adjusted upward by an amount equal to the difference; and to the
extent the Closing Balance is less than $424,271, the Purchase Price
shall be adjusted downward by an amount equal to the difference. If
the adjustment to Purchase Price is upward, then within five days
following
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the final determination thereof, Buyer shall pay Seller by wire
transfer in immediately available funds to the account or accounts
designated by Seller the amount by which the Purchase Price is
adjusted upward. If the aggregate adjustment to Purchase Price is
downward, then within five days following the final determination
thereof, Seller shall pay Buyer by wire transfer in immediately
available funds to the account or accounts designated by Buyer the
amount by which the Purchase Price is adjusted downward. Any amount
otherwise payable as a result of an adjustment to the Purchase Price
pursuant to this Section 2.4 may not be offset against any other
obligation (whether such obligation results from the indemnification
provisions set forth in Article VII hereof, the Purchase Note, the
Subsidiary Guaranty, or otherwise), but shall be paid promptly.
Section II.5 Transactions Prior to Closing.
(a) At or prior to the Closing, Seller shall cause USTMAN
to transfer to Seller all cash and cash equivalents of USTMAN measured
as of the close of business on the day immediately prior to the date
of Closing. In the event that within 60 calendar days following the
Closing either party determines that the amount of such transfer, at
the time made, was not equal to the cash and cash equivalents of
USTMAN immediately prior to Closing, either party shall remit the
difference to the other, as appropriate. If a dispute with respect to
the amount of such transfer cannot be resolved by Buyer and Seller
within 30 calendar days after notice, then, at the request of Buyer or
Seller, the specific matters in dispute shall be submitted to the
Auditors, which firm shall render its opinion as to such matters,
which determination shall be final and binding on the parties. The
fees and expenses of the Auditors shall be borne one-half by Seller
and one-half by Buyer. The
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payment of any amounts following Closing pursuant to this Section
2.5(a) shall not be subject to any set off rights of either party.
Buyer hereby recognizes and acknowledges that such transfer shall not
affect the Purchase Price, the Initial Balance, the calculation of the
Closing Balance or the calculation of the Purchase Price adjustment
provided for pursuant to Section 2.4.
(b) Prior to Closing, Seller shall eliminate or cause its
Affiliates to eliminate all intercompany account balances between
Seller and its Affiliates, on one hand, and USTMAN on the other.
(c) At or prior to Closing, Seller shall execute
assumption agreements reasonably acceptable to Buyer assuming from
USTMAN any and all income Taxes for the period through the Closing
Date.
ARTICLE III
CLOSING
The closing of the transactions contemplated hereby (the
"Closing") shall take place at such time and at such date as are mutually
agreed to by Buyer and Seller at the offices of Xxxxx & Xxxxx, L.L.P., Houston,
Texas, or New York, New York but in no event later than May 22, 1997 except as
otherwise agreed by Seller. The date on which the Closing is held is referred
to in this Agreement as the "Closing Date".
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
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Buyer and Seller acknowledge and agree that Seller has owned
the Shares only since the closing (the "October Closing") on October 25, 1996,
of the acquisition thereof pursuant to the Stock Purchase Agreement dated
October 7, 1996 (the "October Agreement"), between Seller and Tanknology
Environmental, Inc. ("TEI"). Notwithstanding the foregoing, Seller represents
and warrants to Buyer the following:
Section IV.1 Organization and Good Standing of the
Company. Each of Seller and USTMAN is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has full corporate power and authority to own, operate and
lease its assets in the manner currently owned, operated and leased by it and
to carry on its business as now conducted. USTMAN is duly qualified to do
business as a foreign corporation in all jurisdictions in which the nature of
its business requires such qualification and where the failure to do so would
have a material adverse effect on USTMAN. Schedule 4.1 is a complete list of
all jurisdictions in which USTMAN is currently licensed or qualified to
transact business as a foreign entity.
Section IV.2 Corporate Records. Copies of the certificate
of incorporation and by-laws of USTMAN have been delivered to Buyer and are
complete and correct as of the date hereof. The minute book and stock book of
USTMAN have been exhibited to Buyer, and each is a complete and accurate record
of the material corporate actions of the stockholders and directors (and any
committees thereof) of USTMAN through the date hereof and all issuances,
cancellations and transfers of the capital stock thereof.
Section IV.3 Authorization. Seller has full corporate
power and authority under its certificate or articles of incorporation and
by-laws, and all necessary corporate action has been taken to authorize it, to
execute and deliver this Agreement and the exhibits and schedules hereto,
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to consummate the transactions contemplated herein and to take all actions
required to be taken by it pursuant to the provisions hereof, and each of this
Agreement and the exhibits hereto constitutes the valid and binding obligation
of Seller enforceable against Seller in accordance with its terms, except as
such enforcement may be subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights and general principles of equity.
Section IV.4 Non-Contravention. Except as set forth in
Schedule 4.4, neither the execution and delivery of this Agreement or any
documents executed in connection herewith, nor the consummation of the
transactions contemplated herein or therein, does or will violate, conflict
with, result in breach of or require notice or consent under any Applicable
Law, the charter or by-laws of Seller or USTMAN or any provision of any
agreement or instrument to which Seller or USTMAN is a party or result in the
creation of any Lien upon the capital stock, properties or assets of USTMAN.
Except as set forth in Schedule 4.4, no consent, approval, exemption,
authorization or other action of, or notice to or filing with, any third party,
court or administrative or other governmental or regulatory body is required by
Seller or USTMAN to execute, deliver or perform this Agreement and to
consummate the transactions contemplated herein and to take all actions
required to be taken by it pursuant to the provisions hereof.
Section IV.5 Validity. There are no pending or threatened
judicial or administration actions, proceedings or investigations which
question the validity of this Agreement or any action taken or contemplated by
Seller in connection with this Agreement.
Section IV.6 Broker Involvement. Neither Seller nor
USTMAN has hired, retained or dealt with any broker or finder in connection
with the transactions contemplated by this Agreement.
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Section IV.7 Litigation. Except as set forth in Schedule
4.7, there is no investigation, claim or proceeding or litigation of any type
pending or threatened involving Seller or USTMAN or that would have an adverse
effect on USTMAN, and Seller is unaware after reasonable investigation of any
judgment, order, writ, injunction or decree of any court, government,
governmental agency or arbitral tribunal against or involving Seller or USTMAN
or that would have an adverse effect on USTMAN or Buyer.
Section IV.8 Title to Shares. All of the outstanding
Shares were duly authorized for issuance and are validly issued, fully paid and
nonassessable, and none of such Shares are held in treasury. Seller owns, or
will own prior to Closing, the Shares beneficially and of record, free and
clear of all Liens, and such Shares are not, or will not be prior to Closing,
subject to any agreements or understandings with respect to the voting or
transfer of any of the Shares. There are no outstanding subscriptions,
options, convertible securities, warrants or calls of any kind issued or
granted by, or binding upon, Seller to purchase or otherwise acquire or to sell
or otherwise dispose of any security of or equity interest in USTMAN. Seller
has the requisite legal right to sell, assign and transfer the Shares owned by
it to Buyer and will, upon delivery of a certificate or certificates
representing such Shares to Buyer pursuant to the terms hereof, transfer to
Buyer title to such Shares, free and clear of any Liens.
Section IV.9 Contracts and Commitments. Schedule 4.9
lists all agreements, leases, commitments, contracts, undertakings or
understandings, oral or written, to which USTMAN is a party as of the date of
execution of this Agreement, including but not limited to trademark, trade name
or patent license agreements, service agreements, lease, purchase or sale
agreements, supply agreements, distribution or distributor agreements, purchase
orders, customer orders and equipment rental agreements, that are either
material to USTMAN or involve
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consideration with a value of $50,000 or more. USTMAN is not in breach of or
default under any agreement, lease, contract or commitment listed or of a type
required to be listed (without regard to the date thereof) in Schedule 4.9
(collectively, the "Agreements"). Each Agreement is a valid, binding and
enforceable agreement of USTMAN and, to the knowledge of Seller after
reasonable investigation, the other parties thereto, enforceable except as such
enforcement may be subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights and general principles of equity. There has not occurred any
breach or default under any Agreement on the part of the other parties thereto,
and no event has occurred which with the giving of notice or the lapse of time,
or both, would constitute a default under any Agreement. There is no dispute
between the parties to any Agreement as to the interpretation thereof or as to
whether any party is in breach or default thereunder, and no party to any
Agreement has indicated its intention to, or suggested it may evaluate whether
to, terminate any Agreement. USTMAN is not a party to any covenant or
obligation of any nature limiting the freedom of USTMAN to compete in any line
of business after the Closing. No notice has been given under any lease to
extend the term hereof beyond its current term.
Section IV.10 Taxes.
(a) USTMAN and any affiliated, combined or unitary group
of which USTMAN is or was a member has (i) timely (taking into account
any extensions) filed all Tax Returns required to be filed or sent by
or with respect to it in respect of any Taxes, (ii) timely paid all
Taxes (including estimated Taxes) that are due and payable for which
USTMAN may be liable, (iii) established reserves that are adequate for
the payment of all
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Taxes not yet due and payable with respect to the results of
operations of USTMAN through the Closing Date and (iv) complied in all
respects with all applicable laws, rules and regulations relating to
the payment and withholding of Taxes and has in all respects timely
withheld from employee wages and paid over to the proper taxing and
other governmental authorities all amounts required to be so withheld
and paid over, based on the manner in which USTMAN has classified its
employees under the Fair Labor Standards Act and Department of
Transportation regulations.
(b) Schedule 4.10 sets forth any affiliated,
consolidated, combined, unitary or similar group Tax Return in which
USTMAN is or has been a member or is or has joined in the filing.
Except to the extent being contested in good faith, all deficiencies
asserted as a result of such examinations have been paid, fully
settled or adequately provided for in accordance with GAAP as
reflected in Seller's most recent audited financial statements. No
Tax audits or other administrative proceedings or court proceedings
are presently pending with regard to any Taxes for which USTMAN would
be liable, and no deficiency for any such Taxes has been proposed,
asserted or assessed pursuant to such examination against USTMAN by
any taxing authority with respect to any period.
(c) USTMAN has not executed or entered into with the IRS
or any other taxing authority (i) any agreement or other document
extending or having the effect of extending the period for assessments
or collection of any Tax for which USTMAN would be liable or (ii) a
closing agreement pursuant to Section 7121 of the Code that relates to
the assets or operations of USTMAN other than the items noted on
Schedule 4.10. There are no Tax liens upon any assets of USTMAN.
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(d) USTMAN has not made an election under Section 341(f)
of the Code or agreed to have Section 341(f)(2) of the Code apply to
any disposition of a subsection (f) asset (as such term is defined in
Section 341(f)(4) of the Code) owned by USTMAN.
(e) USTMAN is not a party to, is bound by or has any
obligation under any Tax sharing agreement or similar agreement or
arrangement.
Section IV.11 Title to Properties. Except as set forth in
Schedule 4.11 hereto, USTMAN has good and indefeasible title to all of its
assets, free and clear of all Liens.
Section IV.12 Trademarks, Trade Names and Intellectual
Property. Schedule 4.12 contains an accurate and complete list of (a) all
patents, pending patent applications and invention memoranda owned by USTMAN or
relating to the Business of USTMAN, (b) all registered United States and
foreign trademarks, trade names and logos owned or used by USTMAN and all
registrations thereof and (c) all unregistered United States and foreign
trademarks, trade names and logos used by USTMAN. USTMAN has the right to use
all trademarks, trade names, logos, patents, pending patent applications and
invention memoranda referred to herein. Except as expressly set forth in
Schedule 4.7 hereto, there is no pending or threatened action or claim that
would impair any such right. Except as set forth in Schedule 4.12 hereto,
USTMAN is the sole and exclusive owner of, with all right, title and interest
in and to, each item described in Schedule 4.12 and has sole and exclusive
rights to the use thereof or the material covered thereby.
Section IV.13 Financial Records; Budget. The unaudited
financial statements of USTMAN as of and for the year ended December 31, 1996
as set forth on Schedule 4.13 (the "Financial Statements") are each accurate,
complete, true and correct in all material respects, were prepared in
accordance with GAAP (except as set forth therein), and fairly present in all
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material respects the financial condition and results of operations of USTMAN.
Section IV.14 Condition of Assets and Inventory. All the
assets of USTMAN are in good, serviceable condition and fit for the particular
purposes for which they are used in the business of the owner thereof, subject
only to normal maintenance requirements and normal wear and tear reasonably
expected in the ordinary course of business. All items of inventory of USTMAN
are merchantable or (in the case of raw materials, supplies and work in
process) suitable and useable for the production or completion of merchantable
products, for sale in the ordinary course of business as first quality goods at
xxxx-ups consistent with past practice, none of such items is below standard
quality, obsolete or obsolescent, and each item is reflected in the Financial
Statements on the basis of a physical count and is valued at the lower of cost
or market in accordance with GAAP (including any required reduction for
impaired value or slow-moving inventory). Such inventory includes a sufficient
but not an excess quantity of each type of such inventory to meet the normal
requirements of USTMAN.
Section IV.15 Liabilities. Except as set forth in Schedule
4.15 or in the financial statements and notes thereto referred to in Section
4.13, there is no existing, contingent or, to Seller's knowledge after
reasonable investigation, material threatened liability, obligation, lien or
claim of any nature (absolute, accrued, contingent or otherwise) that relates
to or has been or may be asserted against USTMAN.
Section IV.16 Employees and Related Matters.
(a) Set forth on Schedule 4.16 is a complete list of all
employees of USTMAN, listing the title or position held, base salary,
any commissions or other compensation paid or payable in 1996 as
reflected on such Schedule, all employee benefits received by such
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employees and any other terms of any oral or written agreement between
any such employee and USTMAN. Seller has heretofore delivered to
Buyer true and correct copies of each management or employment
contract or contract for personal services and a complete description
of any other understanding or commitment between USTMAN (or Seller on
behalf of USTMAN) and any officer, consultant, director, employee,
independent contractor or other person or entity.
(b) USTMAN is not a party to any collective bargaining
agreement or labor contract.
(c) Based on the assumption that Buyer intends to retain
all of the current employees of USTMAN, USTMAN has taken all necessary
actions to comply with the Worker Adjustment and Retraining
Notification Act (the "WARN Act") through the Closing Date, to the
extent it is subject to such act, and Buyer shall not have any
disclosure or announcement obligations under the WARN Act as a result
of the transaction contemplated by this Agreement.
Section IV.17 No Material Change. There has been no
material adverse change in the business, results of operations, assets or
financial position of USTMAN from December 31, 1996 to and including the
Closing Date, and no event has occurred which could be expected to lead to or
cause such a material adverse change.
Section IV.18 Compliance With Law. USTMAN is not in
violation of any provision of Applicable Law, including any Environmental Law,
and USTMAN has not received any notice of any alleged violation of such
Applicable Law, which in either case would result in a material adverse effect
on USTMAN.
Section IV.19 Tangible Personal Property. Except for the
Excluded Assets, all of
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the fixtures, machinery and equipment reflected in the Financial Statements
and/or used in connection with the Business of USTMAN are in the possession and
under the operating control of USTMAN ("Tangible Personal Property"). Except
as set forth in Schedule 4.19 hereto, no item of Tangible Personal Property
requires repairs in excess of $2,500 to be in good, serviceable condition and
fit for the particular purpose for which it is currently used, subject only to
normal maintenance requirements and normal wear and tear reasonably expected in
the ordinary course of business.
Section IV.20 Insurance. Schedule 4.20 contains a list of
all insurance policies of Seller or USTMAN or relating to the conduct of the
Business and the status of prepayments. Seller has heretofore delivered to
Buyer a copy of all such policies. Such policies are in full force and effect,
and Seller and USTMAN are not in default under any of them.
Section IV.21 Government Licenses, Permits and Related
Approvals. Schedule 4.21 sets forth a list of all Permits required for the
conduct of Business by USTMAN, all of which are in full force and effect and
are not being violated in any manner which would have a material adverse effect
on USTMAN.
Section IV.22 Distributed Products. Schedule 4.22 sets
forth a complete listing of all products (a) distributed by USTMAN (and the
manufacturer thereof and the person, if different, for whom USTMAN distributes
such product) or (b) manufactured or sold by USTMAN and distributed by others
(and the name of such distributor). Such Schedule also sets forth the terms of
each such distribution arrangement. USTMAN has full right to distribute all
products referred to in clause (a) of this Section.
Section IV.23 Safety Reports. Schedule 4.23 sets forth a
complete listing of all insurance loss runs, worker's compensation reports and
claims, safety citations and reports,
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OSHA reports and all documents respecting USTMAN and relating to any of the
foregoing since July 1, 1993.
Section IV.24 Transactions with Certain Persons. Except as
set forth in Schedule 4.24, since October 25, 1996, USTMAN has not, directly or
indirectly, purchased, leased or otherwise acquired any property or obtained
any services from, or sold, leased or otherwise disposed of any property or
furnished any services to, or otherwise dealt with (except with respect to
remuneration for services rendered as a director, officer or employee of
USTMAN), in the ordinary course of business or otherwise, with a value of or in
a transaction or series of transactions with a value of $60,000 or more, (a)
any officer, director or shareholder of Seller or any Affiliate thereof other
than USTMAN or (b) any person, firm or corporation which, directly or
indirectly, alone or together with others, controls, is controlled by or is
under common control with Seller or any shareholder thereof. Except as set
forth in Schedule 4.24, USTMAN does not owe any amount to, or have any contract
with or commitment to, any of its shareholders, directors, officers, employees
or consultants (other than compensation for current services not yet due and
payable and reimbursement of expenses arising in the ordinary course of
business not in excess of $1,000 in the aggregate), and none of such persons
owes any amount to USTMAN.
Section IV.25 Accounts Receivable. All the accounts
receivable of USTMAN are valid, genuine and subsisting, arise out of bona fide
sales and deliveries of goods, performance of services or other business
transactions in the ordinary course of business, are owned free and clear and
not subject to any Lien, and are current and collectible net of any reserves
shown on the Financial Statements as of December 31, 1996 (which reserves are
adequate and were calculated consistently with past practice).
Section IV.26 Studies, Etc. Schedule 4.26 sets forth a
complete list of all studies,
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reports, plans, analyses or similar documents of a material nature (whether
prepared by employees of Seller or USTMAN or others) in the possession or
control of Seller or USTMAN thereof relating to safety, the environment,
Hazardous Material, intellectual property, markets, competitors, strategic
planning, product liability, warranties or otherwise relating directly to
USTMAN.
Section IV.27 Disclosure. All schedules to this Agreement
are complete and accurate in all material respects or will be on the Closing
Date. No representation or warranty by Seller in this Agreement or in any
schedule or exhibit to this Agreement, or in any statement or certificate or
other document furnished to Buyer by Seller or any representative of Seller,
contains or will contain any untrue statement of a material fact or omits or
will omit a material fact necessary to make the statements therein not
misleading. The information concerning Seller in Seller's filings, reports and
submissions under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), does not contain any untrue statement of a material fact or
omit a material fact necessary to make the statements therein not misleading.
Section IV.28 Employee Benefits.
(a) For purposes of Section 4.28, all references to
Seller shall be deemed to refer to Seller, USTMAN and any trade or
business, whether or not incorporated, that together with Seller or
USTMAN would be deemed or treated as a "single employer" within the
meaning of Section 4001 of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA") or Code Section 414.
The term "Seller Plan" shall mean any stock purchase, stock
option, pension, profit-sharing, retirement, bonus, deferred
compensation, incentive compensation,
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commission, severance or termination pay, hospitalization, medical,
dental, disability, life or other insurance, or supplemental
unemployment benefits plan or agreement or policy or contract or other
arrangement that is or ever has been maintained or contributed to by
Seller for the purpose of providing employment-related compensation or
benefits to any current or former officer, consultant, director,
annuitant, employee, retiree or independent contractor of Seller or
members of their respective families (other than directors' and
officers' liability policies), whether or not insured, including
without limitation "employee benefit plans" as defined in ERISA and
the rules and regulations thereunder.
The term "USTMAN Plan" shall mean any Seller Plan that
formerly provided, provides or is intended to provide compensation or
benefits to any person or member of a person's family as a consequence
of that person's current or former relationship to USTMAN.
(b) As of the Closing Date, no Seller Plan is or has been
(i) covered by Title IV of ERISA, (ii) subject to the minimum funding
requirements of Section 412 of the Code, (iii) a "multi-employer plan"
as defined in Section 3(37) of ERISA, (iv) subject to Section 4063 or
4064 of ERISA, or (v) a voluntary employees' beneficiary association
within the meaning of Code Section 501(c)(9).
(c) Seller has no commitment or obligation to establish
or adopt any new or additional plans or other arrangements that would
constitute an USTMAN Plan if adopted, or to increase materially the
benefits under any existing USTMAN Plan. Schedule 4.28 sets forth
true and correct copies of the following:
(i) each written USTMAN Plan and all amendments
thereto as of the date hereof;
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(ii) a complete written description of each other
USTMAN Plan;
(iii) all current summary plan descriptions
provided to employees regarding the USTMAN Plans;
(iv) each trust agreement and annuity contract (or
any other funding instruments), and each insurance contract,
pertaining to any of the USTMAN Plans, including all
amendments to such documents to the date hereof;
(v) the most recent IRS Form 5500 for any USTMAN
Plan and schedules thereto; and
(vi) the most recent determination letter issued
by the IRS with respect to any USTMAN Plan qualified under
Section 401(a) of the Code.
(d) Each USTMAN Plan is in compliance with the provisions
of all applicable laws, rules and regulations, including, without
limitation, ERISA and the Code. No person has engaged in any
prohibited transaction (within the meaning of Section 4975 of the Code
or Section 406 of ERISA) that could subject USTMAN to a liability.
(e) All contributions and premiums required of USTMAN (or
of Seller on behalf of USTMAN) by any legal requirement or by the
terms of any Seller Plan or any contract relating thereto have been
timely made (without regard to any waivers granted with respect
thereto) or accrued. All obligations of USTMAN (and of Seller on
behalf of USTMAN) with respect to each Seller Plan have been paid or
performed.
(f) Except as provided in Schedule 4.28, no Seller Plan
nor USTMAN Plan provides for medical, life insurance or health
benefits or death benefits after an employee's
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termination of employment (including retirement) except for
continuation coverage required pursuant to Section 4980B of the Code
and Part 6 of Title I of ERISA and the regulations thereunder.
(g) USTMAN has no obligation to make any payments that
would be "excess parachute payments" under Section 280G of the Code.
Except as set forth on Schedule 4.24, consummation of the transactions
contemplated by this Agreement will not (A) entitle any current or
former employee of USTMAN to severance pay, employment compensation or
any other payment, benefit or award (whether under an USTMAN Plan or
otherwise) or (B) accelerate the time of payment or vesting, or
increase the amount of any benefit, award (including stock options,
restricted stock and similar awards) or compensation due any such
employee or former employee.
(h) There are no pending, threatened or anticipated
claims or proceedings against any USTMAN Plan, the assets of any
USTMAN Plan or USTMAN, or the plan administrator or fiduciary of any
USTMAN Plan with respect to the operation of any such plan (other than
routine, uncontested benefit claims), and there are no facts or
circumstances that could form the basis for any such claim or
proceeding.
Section IV.29 Environmental Matters.
(a) The operations of USTMAN have been and, as of the
Closing Date, will be, in compliance with all Environmental Laws in
all material respects;
(b) USTMAN has obtained and will, as of the Closing Date,
maintain all Permits and has made and will, as of the Closing Date,
make all material filings, reports and notices required under
applicable Environmental Law in connection with the
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operations of their respective businesses;
(c) As of the date hereof, USTMAN is not subject to any
outstanding written orders, contracts or agreements with any
governmental entity or other person respecting (i) Environmental Law,
(ii) Remedial Action, (iii) any Release or threatened Release of
Hazardous Material or (iv) an assumption of responsibility for
environmental claims of another entity;
(d) USTMAN has not received any written communication
alleging, with respect to any such party, a material violation of or
material liability under any Environmental Law or requesting, with
respect to any such party, information with respect to an
investigation pursuant to CERCLA or any other Environmental Law;
(e) USTMAN has no material contingent liability in
connection with the Release of any Hazardous Material into the indoor
or outdoor environment (whether on-site or off-site) or employee or
third-party exposure to Hazardous Materials;
(f) The operations of USTMAN involving the generation,
transportation, treatment, storage or disposal of hazardous waste, as
defined and regulated under 40 C.F.R. parts 260-270 or any state
equivalent, are in compliance with applicable Environmental Laws in
all material respects; and
(g) Except as described on Schedule 4.29, there is not
now, nor, to the best knowledge of Seller as of the date hereof, or
has there ever been, on or in any property owned, operated, leased or
under option by, USTMAN or for which USTMAN has assumed responsibility
for material environmental claims, any of the following: (i) any
underground storage tanks or surface impoundments, (ii) any on-site
disposal of solid
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waste or Hazardous Materials, (iii) any asbestos-containing materials
or (iv) any polychlorinated biphenyls.
Section IV.30 Knowledge of Seller. Notwithstanding (but
without limiting) the other representations and warranties of Seller set forth
in this Agreement, except for the liabilities of USTMAN to Xxxx Xxxx, Seller
has no actual knowledge of any error, inaccuracy, breach or misrepresentation
of any representation or warranty relating to USTMAN contained in the October
Agreement.
Section IV.31 Conduct of the Business. Since December 31,
1996, USTMAN has complied with the provisions set forth below:
(a) USTMAN has operated its Business in the ordinary
course;
(b) Except as set forth in Schedule 4.31, neither Seller
nor USTMAN has (i) granted or agreed to grant any bonuses to any
employee, officer, director, representative or agent of USTMAN, (ii)
granted any general increase in the rates of salaries or compensation
of employees, officers, directors, representatives or agents of USTMAN
or any material specific increase to any employee, officer, director,
representative or agent of USTMAN, (iii) provided for any new pension,
retirement or other employment benefits to any employee, officer,
director, representative or agent of any of USTMAN or any increase in
any existing benefits, (iv) terminated or amended in any material
respect or provide for any material increase in benefits under any
Seller Plan or (v) executed any employment agreement, severance
arrangement, consulting arrangement, sales agency agreement,
representation agreement or distribution agreement with any employee,
officer, director, representative or agent of USTMAN;
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(c) USTMAN has not amended its certificate of
incorporation or by-laws and neither Seller nor USTMAN has entered
into any merger or consolidation agreement involving USTMAN or its
assets;
(d) Neither Seller nor USTMAN has authorized for
issuance, issued, sold, delivered or agreed or commited to issue, sell
or deliver (whether through the issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase or otherwise)
any capital stock of any class or any other securities or equity
equivalents of USTMAN or amended any of the terms of any such
securities or agreements;
(e) USTMAN has not sold, assigned or disposed of any of
its material assets or properties, tangible or intangible, or incured
or assumed any liabilities or entered into any sale/leaseback or
similar transaction, except for sales and dispositions made, or
liabilities incurred, in the ordinary course of business consistent
with past practices;
(f) Seller has used its best efforts to (i) maintain and
preserve the Business, (ii) retain USTMAN's employees and (iii)
maintain USTMAN's relationships with customers, suppliers and others;
(g) USTMAN has not assumed, guaranteed, endorsed or
otherwise become liable or responsible (whether directly, contingently
or otherwise) for the obligations of any other person or made any
loans, advances or capital contributions to or investments in any
other person, with the exception of certain purchase orders and
related cash deposits with Xxxxxxxx Systems; and
(h) Seller and USTMAN have not implemented or adopted (i)
any change in its accounting methods or principles or the application
thereof (including depreciation lives)
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or (ii) any material change in its tax methods or principles or the
application thereof (including depreciation lives).
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller the following:
Section V.1 Corporate Status and Good Standing. Buyer is
a corporation duly organized, validly existing and in good standing under the
laws of California, with full corporate power and authority under its articles
certificate of incorporation and by-laws to conduct its business as the same
exists on the date hereof and on the Closing Date.
Section V.2 Authorization. Buyer has full corporate
power and authority under its articles of incorporation and by-laws, and all
necessary corporate action has been taken to authorize it, to execute and
deliver this Agreement, the Purchase Note and the exhibits and schedules
hereto, to consummate the transactions contemplated herein and to take all
actions required to be taken by it pursuant to the provisions hereof or
thereof, and each of this Agreement and the exhibits hereto constitutes the
valid and binding obligation of Buyer enforceable against Buyer in accordance
with its terms, except as such enforcement may be subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter
in effect relating to creditors' rights and general principles of equity.
Section V.3 Non-Contravention. Neither the execution and
delivery of this Agreement and the schedules and exhibits hereto, nor the
consummation of the transactions contemplated herein or therein, does or will
violate, conflict with or result in breach of or require notice or consent
under any Applicable Law, the charter or by-laws of Buyer or any provision of
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any agreement or instrument to which Buyer is a party or result in the creation
of any Lien upon the capital stock, property or assets of Buyer, such that
there would be a material adverse effect on any benefit to Seller hereunder.
Except as set forth in Schedule 5.3, no consent, approval, exemption,
authorization or other action of, or notice to or filing with, any third party,
court or administrative or other governmental or regulatory body is required by
Buyer to execute, deliver or perform this Agreement and to consummate the
transactions contemplated herein and to take all actions required to be taken
by it pursuant to the provisions hereof.
Section V.4 Validity. There are no pending or threatened
judicial or administrative actions, proceedings or investigations which
question the validity of this Agreement or any action taken or contemplated by
Buyer in connection with this Agreement.
Section V.5 Broker Involvement. Buyer has not hired,
retained or dealt with any broker or finder in connection with the transactions
contemplated by this Agreement.
Section V.6 Litigation. There is no investigation, claim
or proceeding or litigation of any type pending or threatened involving Buyer
and Buyer is unaware of any judgment, order, writ, injunction or decree of any
court, government or governmental agency or arbitral tribunal against or
involving Buyer, that would have a material adverse effect on any benefit to
Seller hereunder.
Section V.7 Investment Intention. The Shares are being
purchased by Buyer for investment purposes, and not with a view to, or for
resale in connection with, the distribution or other disposition thereof.
Section V.8 Disclosure of Information. Buyer agrees and
acknowledges that it and its employees, officers and agents have been permitted
full and complete access to the books and records, plants, facilities,
equipment, tax returns, contracts, inventories and other assets and
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information of USTMAN which it and its employees, officers and agents have
desired to review. Buyer further acknowledges that it has conducted such
investigation of USTMAN, its assets, liabilities, operations and financial
conditions, as it has deemed necessary and advisable for purposes of
determining to enter into this Agreement. Except to the extent of the express
representations, warranties and agreements contained in this Agreement, Buyer
is purchasing the Shares in reliance upon its own investigation of USTMAN.
Buyer agrees and acknowledges that it is experienced in the statistical
inventory reconciliation business and has the knowledge and ability to conduct
a full investigation of USTMAN and to evaluate USTMAN's business, operations,
financial conditions, assets and liabilities. Buyer expressly represents and
warrants that it has not relied on any projections or representations (oral or
written) except as set out herein, which Buyer has obtained from Seller or
USTMAN and/or any of their respective directors, officers, employees or agents.
Section V.9 Financial Condition. At Closing, Buyer's
financial condition will be adequate to bear the economic risks of this
acquisition. Except as set forth on Schedule 5.9, at Closing Buyer will be in
compliance with all financial and other covenants related to all of its
outstanding credit agreements including the facilities being utilized to
consummate this transaction and will not be in default on any credit agreement
or facility.
Section V.10 Restricted Securities. Buyer understands
that the Shares are characterized as "restricted securities" under the United
States federal securities laws and that under such laws and applicable rules
and regulations promulgated thereunder the Shares may be resold without
registration under the Securities Act of 1933, as amended (the "Act") only in
certain circumstances. Buyer understands that the certificates evidencing the
Shares may contain a legend restricting transfer as provided under the Act and
applicable rules and regulations
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promulgated thereunder.
ARTICLE VI
ADDITIONAL AGREEMENTS AND COVENANTS
Section VI.1 Other Offers. From and after the date hereof
until Closing, Seller and each of its officers, directors, stockholders,
employees, affiliates, representatives or agents shall not, directly or
indirectly, (a) solicit, enter into or conduct discussions relating to,
initiate or knowingly encourage any offer or proposal for, or any indication of
interest in, directly or indirectly, a merger or business combination involving
USTMAN or the acquisition of an equity interest in, or a substantial portion of
the assets of, USTMAN or (b) unless required by law, regulation or judicial
compulsion, disclose any nonpublic information relating to USTMAN or the
Business of USTMAN, or afford access to the properties, books or records of
USTMAN, to any person.
Section VI.2 Public Announcements. Prior to Closing,
neither party shall make any public announcement, issue any press release,
mention the transaction provided for herein to any analyst or any stockholder
who is not also an officer or director of either party, or otherwise reveal the
existence of this Agreement or the transaction provided for herein without the
prior written consent of the other party, unless, on written advice of counsel,
management of the releasing entity determines the release is required to comply
with applicable federal securities laws. In the event of a required release,
the releasing party shall deliver a copy of the written advice of counsel and
the proposed release to the other party two business days prior to an intended
release.
Section VI.3 Further Assurances. Seller and Buyer each
shall execute,
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acknowledge and deliver or cause to be executed, acknowledged and delivered to
Buyer or Seller, as the case may be, such assignments or other instruments of
transfer, assignment and conveyance, in form and substance reasonably
satisfactory to Buyer or Seller, as the case may be, on advice of their
respective counsel, as shall be necessary to vest in Buyer all of the right,
title and interest in and to the Shares free and clear of all liens, charges,
encumbrances, rights of others, mortgages, pledges or security interests, and
any other document reasonably requested by Buyer in connection with this
Agreement. Seller and Buyer each agree that, from time to time, whether
before, at or after the Closing Date, it will execute and deliver such further
instruments and take such other action as may be reasonably necessary to carry
out the purposes and intent of this Agreement.
Section VI.4 Covenant Against Competition.
(a) As an essential consideration for the obligations of
the parties under this Agreement, Buyer and Seller hereby agree and
covenant, subject to Section 6.4(c) below, as follows:
(i) for a period of five years following the
Closing Date, in the United States, Seller and/or its
Affiliates shall not develop or license software that provides
Statistical Inventory Reconciliation certified pursuant to
protocols of the United States Environmental Protection Agency
("Certified SIR"), nor will it enter into joint ventures,
affiliations or other agreements with third parties to
develop, market or sell Certified SIR; provided, that this
provision shall not restrict Seller and/or its Affiliates from
(A) developing, marketing or distributing automatic tank
gauges, tank level monitors or other equipment based at an
underground storage
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tank site that offers a Certified SIR product as an integral
component ("Imbedded SIR"), (B) becoming affiliated or
entering into joint ventures with any other person selling
and/or distributing products with Imbedded SIR, (C) remotely
monitoring products with Imbedded SIR or (D) developing
products for inventory purposes not associated with Certified
SIR. In the event Seller and/or its Affiliates develops any
products pursuant to (A) above, Seller will give Buyer the
first right of refusal to license the Certified SIR system to
be imbedded in such products and/or for any statistical
evaluation services in connection therewith.
(ii) For a period of five years after the Closing
Date, in the United States, Buyer and/or its Affiliates shall
not own or operate vehicles for servicing underground storage
tank sites ("Site Services"), other than for the limited
purpose of installing or marketing in-tank gauges which are
manufactured or distributed by Buyer; provided that this
provisions shall not restrict Buyer and/or its Affiliates from
(A) marketing or distributing any Site Services of any person
other than Buyer or an
Affiliate of Buyer, (B) becoming affiliated or entering into joint ventures
with any other person which owns or operates vehicles for Site Services or (C)
operating remote monitoring systems and utilizing any other person's Site
Services for responses.
(b) If either party believes the other party or any
Affiliate of the other party has violated the provisions of Section
6.4(a), such party shall have the right to seek relief from any court
of competent jurisdiction. The parties acknowledge that money damages
alone will not provide adequate compensation in the event of a breach
of the covenants of this
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Section. Therefore, the parties agree that in addition to all
remedies available at law, in equity or under this Agreement, the
non-breaching party shall be entitled to injunctive relief for the
enforcement of this covenant. The parties agree that the covenants in
this Section are reasonable with respect to their duration, scope and
geographical area. If, at the time of enforcement of this Section, a
court should hold that the restrictions herein are unreasonable under
the circumstances then existing or otherwise, the parties agree that
the maximum duration, scope or geographical area legally permissible
under such circumstances will be substituted for the duration, scope
or area stated herein.
(c) Notwithstanding Section 6.4(a)(ii):
(i) For a period of twelve months after the
Closing Date, Toxguard Systems, Inc. a Nevada corporation and
a majority-owned subsidiary of Buyer ("Toxguard"), shall not
be prohibited by the terms of this Agreement from conducting
its business as conducted at the Closing Date, provided that
Toxguard shall not own or operate any vehicles for the
provision of Site Services not owned and operated at the
Closing Date except as specifically permitted pursuant to
Section 6.4(a)(ii).
(ii) Seller hereby recognizes and acknowledges
that Buyer is considering the acquisition of the business (the
"Target Business") of the person set forth on Schedule 6.4
("Target"), either through the purchase of substantially all
of the assets or all of the issued and outstanding stock of
Target, and that certain activities in connection with the
Target Business would be in violation of Section 6.4(a)(ii) if
such activities were conducted by Buyer or an Affiliate of
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Buyer. Seller hereby consents to the acquisition by Buyer of
the Target Business and agrees that the provisions of Section
6.4(a)(ii) shall not restrict Buyer or Target from conducting
the Target Business as conducted at the date of the
acquisition of the Target Business by Buyer (the "Target
Acquisition Date") for a period of 3 years from the Target
Acquisition Date; provided that neither Buyer nor Target shall
(A) enter into any contracts (not including any renewals or
extensions of existing contracts) for the provision of Site
Services after the Target Acquisition Date, (B) provide Site
Services in any geographical area not served prior to the date
of Closing or (C) own or operate any vehicles for the
provision of Site Services in addition to the number of
vehicles so owned and operated at the date of Closing, in any
case whether in connection with the Target Business or
otherwise.
Section VI.5 Governmental Filings. As promptly as
practicable after the execution of this Agreement, each party shall, in
cooperation with the other, file any reports or notifications that may be
required to be filed by it under applicable law and shall furnish to the other
all such information in its possession as may be necessary for the completion
of the reports or notifications to be filed by the other.
Section VI.6 Access to Information. Prior to Closing,
Buyer may make such investigation of the business and properties of USTMAN as
Buyer may desire and, upon reasonable notice, Seller and USTMAN shall give to
Buyer and its counsel, accountants and other representatives reasonable access,
during normal business hours throughout the period prior to the Closing, to the
property, books, commitments, agreements, records, files and personnel of
Seller and USTMAN related to USTMAN, and Seller shall furnish to Buyer during
that period all
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copies of documents and information concerning the Business of USTMAN as Buyer
may reasonably request, subject to applicable law. Buyer shall hold, and shall
cause its counsel, accountants and other agents and representatives to hold,
all such information and documents in confidence. Seller will cooperate with
Buyer's transition planning for the acquisition by providing access to key
executives of Seller and USTMAN.
Section VI.7 Use of Name. Prior to or at Closing, Seller
shall eliminate, and cease and desist from, any use of any designation
indicating an affiliation with USTMAN, and immediately following Closing, Buyer
shall cause USTMAN to eliminate, and cease and desist from, any use of any
designation indicating an affiliation with Seller.
Section VI.8 Other Action. Each of the parties shall use
its best efforts to cause the fulfillment at the earliest practicable date but,
in any event, prior to the Closing Date of all conditions to their respective
obligations to consummate the transactions under this Agreement.
Section VI.9 Employee Benefit Matters. Effective as of the
Closing Date, Seller shall amend all USTMAN Plans except stock options plans of
Seller to terminate the participation of USTMAN therein, and shall further
amend Seller's defined contribution USTMAN Plans except stock option plans of
Seller to provide for full vesting of the accounts of all current and former
employees of USTMAN participating therein.
Section VI.10 Cooperation with Financings and Financial
Reporting. Seller acknowledges and understands that in the event Buyer
conducts certain offerings of its securities or is subject to reporting
requirements under the Exchange Act, Buyer may be required to obtain certain
information relating to Seller, USTMAN or the Business, including, but not
limited to, audited or unaudited financial statements of USTMAN, and disclose
such information in registration statements and other documents filed with the
Securities and Exchange Commission
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under the federal securities laws or in disclosure documents given investors in
certain securities offerings. Seller agrees to use its best efforts to
cooperate fully and promptly, and shall cause its Affiliates, accountants,
counsel and other agents and representatives to cooperate fully and promptly,
with Buyer in connection therewith.
Section VI.11 Consents. Each party will cooperate with the
other and proceed, as promptly as is practicable, to seek to obtain all
necessary consents and approvals set forth in Schedule 4.4 or Schedule 5.3, and
to endeavor to comply with all other legal or contractual requirements for or
preconditions to the execution and consummation of this Agreement.
Section VI.12 Tax Certificate. On or before the Closing
Date, Seller will provide to Buyer a certificate ("Tax Certificate") that sets
forth the following information as of the date for each particular item of
information which is as close to the Closing Date as is reasonably practicable:
(a) The following information shall be provided in
accordance with the reporting of such information on the most recently
filed Tax Return for each such Tax:
(i) The adjusted basis for Tax purposes of the
assets of USTMAN, and
(ii) The amounts of the net operating loss, net
capital loss, foreign Tax credit and Tax credit carry
forwards, the overall foreign losses and the foreign Taxes
paid or accrued in excess of the applicable foreign Tax credit
limitations of or allocable to USTMAN;
(b) All current consents and elections with respect to
Taxes of or with respect to USTMAN that have been filed with any
taxing authority;
(c) All taxable periods for which the income and
franchise Tax Returns of or
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with respect to USTMAN are open; and
(d) All Tax partnerships in which USTMAN is a member.
Section VI.13 Certain Tax Elections. Buyer and Seller
shall make a timely and effective joint election (the "Section 338(h)(10)
Election") under Section 338(h)(10) of the Code for USTMAN with respect to the
purchase of the Shares. Moreover, Buyer shall prepare completed Forms 8023-A
for USTMAN providing for the Section 338(h)(10) Elections. If Buyer and Seller
disagree as to any information (including but not limited to the valuation of
any asset) required to be provided on any Form 8023-A (including any schedule
attached thereto), the specific matters in dispute shall be submitted to the
Auditors, which firm shall render its opinion as to such matters. Based on
such opinion, such independent accounting firm will then send to Seller and
Buyer its determination of the specified matters in dispute, which
determination shall be final and binding on the parties hereto. The parties
agree to represent such information on Form 8023-A consistent with such
Auditors' opinion. The fees and expenses of the Auditors shall be borne
one-half by Seller and one-half by Buyer. At the Closing Date or as soon as
practicable thereafter, Seller and Buyer will jointly execute such Forms
8023-A, and thereafter Buyer, on behalf of Buyer and Seller, will timely file
such Forms 8023-A with the relevant taxing authority and will provide proof of
such filing to Seller.
Section VI.14 Liability for Taxes.
(a) Seller shall be liable for, and shall defend,
indemnify and hold Buyer harmless against, (i) any Taxes incurred by
USTMAN for any taxable period ending on or before the Closing Date,
(ii) any income Taxes caused by, or arising from, the Section
338(h)(10) Election, (iii) any transfer or sales Taxes arising from
the transactions
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contemplated in this Agreement, other than transfer or sales Taxes
that are imposed because of the Section 338(h)(10) Election if such
Taxes are in excess of the transfer or sales Taxes that would have
been imposed if the Section 338(h)(10) Election had not been made,
(iv) any Taxes imposed with respect to any payment from Seller under
this sentence and (v) any Taxes for a Consolidated Group with Seller
of which USTMAN is determined to be a part. Any Tax refunds received
by Buyer relating to the Tax liability of USTMAN for a period ending
on or before the Closing Date shall be the property of Seller other
than Tax refunds generated because of a Buyer tax attribute. Seller
will ensure that with respect to any Tax partnership listed on the Tax
Certificate, the appropriate party has made or will make a valid
election under Section 754 of the Code with respect to each such Tax
partnership in the time and in the manner provided in Regulation
Section 1.754-1(b) such that each such election is in effect for the
taxable year of each such Tax partnership that includes the Closing
Date.
(b) Seller shall prepare, or cause USTMAN to prepare, and
submit to Buyer all Tax Returns of USTMAN (and any Tax partnerships in
which (i) USTMAN owns an interest and (ii) Seller or USTMAN has
responsibility for preparing and filing partnership Tax Returns) for
Taxes for any taxable period ending on or before the Closing Date and
for which the due date of any such Tax Return is subsequent to the
Closing Date. Any such Tax Return shall be prepared on a basis
consistent with Tax Returns prepared with respect to USTMAN for prior
taxable periods, unless otherwise required by law, and shall be
submitted to Buyer not later than (i) in the case of any United States
federal income Tax Return, 60 days before the due date of such Tax
Return, and (ii) in the case of any
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other Tax Return, 30 days before the due date of such Tax Return.
Seller is responsible for filing any such Tax Return and for preparing
and filing any other Tax Return of USTMAN for Taxes for any taxable
period ending on or before the Closing Date.
(c) Buyer and its Affiliates, including USTMAN, are
responsible for preparing and filing with the appropriate taxing
authorities all Tax Returns which relate to the Taxes of USTMAN other
than those described in Section 6.14(c), except that Tax Returns which
relate to a Post-Closing Period shall be completed by Buyer. Seller
shall cooperate with Buyer and shall make available all necessary
records and timely take all action necessary to allow Buyer to file,
or prepare and file, as the case may be, the Tax Returns described in
this paragraph (including, without limitation, providing or causing to
be provided to Buyer any powers of attorney which Buyer shall request
for purposes of filing any such Tax Returns). Such Tax Returns shall
be prepared on a basis consistent with those prepared with respect to
USTMAN for taxable periods ending on or before the Closing Date,
unless otherwise required by law.
Section VI.15 Cooperation and Exchange of Information. The
parties will provide each other with such cooperation and information as they
may reasonably request of each other in preparing or filing any Tax Return,
amended Tax Return or claim for refund, in determining a liability or a right
to refund or in conducting any audit or other proceeding, in respect of Taxes
imposed on the parties or their respective Affiliates. USTMAN and each party
will preserve and retain all Tax Returns, schedules, work papers and other
documents relating to any such Tax Returns, claims, audits or other proceedings
until the expiration of the statutory period of limitations (including
extensions) of the taxable periods to which such documents relate and until the
final determination of any payments which may be required with respect to such
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periods under this Agreement and shall make such documents available to
representatives of Seller upon reasonable notice and at reasonable times, it
being understood that such representatives shall be entitled to make copies of
any such books and records as they shall deem necessary. Any information
obtained pursuant to this Section 6.15 shall be kept confidential, except as
may be otherwise necessary in connection with the filing of Tax Returns or
claims for refund or in conducting any audit or other proceeding.
Section VI.16 Conflict. In the event of a conflict between
the provisions of Sections 6.12, 6.13, 6.14 or 6.15 and any other provision of
this Agreement, the provisions of this Article VI shall control.
Section VI.17 Insurance. Buyer agrees to procure and
maintain for three years after the Closing Date commercial general liability
insurance and environmental liability insurance covering contractors' legal
liability and professional errors and omissions liability with no pollution
exclusion with policy terms, conditions, exclusions, limits and deductibles not
materially less favorable than such insurance maintained by Seller, as
described in Schedule 4.20, and shall name Seller as an additional insured.
ARTICLE VII
EXTENT AND SURVIVAL OF REPRESENTATIONS,
WARRANTIES, COVENANTS AND AGREEMENTS; INDEMNIFICATION
Section VII.1 Indemnification of Buyer.
(a) Subject to and to the extent provided in Section
7.1(b), Seller agrees to defend, indemnify and hold harmless Buyer
(including its officers, directors, employees
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and agents and Affiliates) from and against, any and all claims,
actions, causes of action, arbitrations, proceedings, losses, damages,
liabilities, judgments and expenses (including, without limitation,
reasonable attorneys' fees) ("Claim") incurred by Buyer, any Affiliate
of Buyer, Seller or USTMAN, net of the amount of insurance coverage
required pursuant to Section 6.18 (regardless of whether Buyer
maintains such Insurance), as a result of (i) any error, inaccuracy,
breach or misrepresentation in any of the representations and
warranties made by or on behalf of Seller in this Agreement or in any
certificate or other instrument delivered by or on behalf of Seller in
connection with this Agreement (including the Schedules hereto), (ii)
any violation or breach by Seller of or default by Seller under the
terms of this Agreement, (iii) any act or omission occurring, or
condition or circumstances existing, prior to the Closing, or any
condition or circumstances caused by any act or omission occurring
prior to the Closing, by Seller or USTMAN or otherwise with respect to
Seller or USTMAN, (iv) the past or present presence, release,
remediation or clean-up of, or exposure to, Hazardous Material
relating to or located on, within or under any assets owned, leased or
used by Seller or USTMAN, or (v) any product liability, strict
liability or other claims concerning (A) products sold or services
provided by Seller or USTMAN prior to the Closing or (B) inventory
owned by Seller or USTMAN at the Closing.
(b) The maximum amount of all liability of Seller to
Buyer pursuant to Section 7.1(a), other than any liability arising
from any fraudulent acts of Seller or in respect of Taxes, shall be as
follows:
(i) In the event of any Claim pursuant to Section
7.1(a)(i) where
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Seller, at the time of Closing, had actual knowledge of, and
did not disclose to Buyer, the error, inaccuracy, breach or
misrepresentation giving rise to such Claim, Seller's
obligation to indemnify Buyer shall be unlimited as to amount.
(ii) In the event of one or more Claims pursuant
to (A) Section 7.1(a)(i) where the error, inaccuracy, breach
or misrepresentation giving rise to such Claim or Claims
existed at the time of the October Closing (other than a Claim
described in Section 7.1(b)(i) above), (B) Section 7.1(a)(iii)
where the act or omission giving rise to the Claim or Claims
occurred, or the condition or circumstances existed, at or
prior to the October Closing, (C) Section 7.1(a)(iv) where the
presence, release, remediation or clean-up of, or exposure to,
Hazardous Material giving rise to the Claim or Claims occurred
or existed at or prior to the October Closing or (D) Section
7.1(a)(v) where the liability giving rise to the Claim or
Claims relates to products sold or services provided by USTMAN
prior to the October Closing (any Claims described in (A) -
(D) of this Section 7.1(b)(ii) being referred to as "Prior
Period Claims"), then Seller shall be obligated to proceed
against TEI in accordance with the procedures set forth in
Section 7.5 and Seller shall pay to Buyer any and all amounts
recovered from TEI in connection with such Prior Period Claim.
In the event that the amount of the any Prior Period Claim is
determined in accordance with the procedures set forth in the
October Agreement to be subject to indemnification by TEI
thereunder and the amount thereof is in excess of the
indemnification obligations of TEI under the October
Agreement, then Seller shall be liable for the amount of such
excess up to
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a maximum aggregate amount, for all Prior Period Claims, of
$1,000,000.
(iii) The maximum amount of liability of Seller to
Buyer for any Claim not covered by Section 7.1(b)(i) or (ii),
shall be limited to the aggregate amount of $5,750,000.
Section VII.2 Indemnification of Seller. Buyer agrees to
defend, indemnify and hold harmless Seller (including its officers, directors,
employees and agents and Affiliates) from and against, any and all Claims
incurred by Seller, any Affiliate of Seller, Buyer or USTMAN as a result of (a)
any error, inaccuracy, breach or misrepresentation in any of the
representations and warranties made by or on behalf of Buyer in this Agreement
or in any certificate or other instrument delivered by or on behalf of Buyer in
connection with this Agreement (including the Schedules hereto), (b) any
violation or breach by Buyer of or default by Buyer under the terms of this
Agreement, (c) any act or omission occurring, or condition or circumstances
existing, after the Closing, or any condition or circumstances caused by any
act or omission occurring after the Closing, by Buyer or USTMAN or otherwise
with respect to Buyer or USTMAN, (d) the post-Closing presence, release,
remediation or clean-up of, or exposure to, Hazardous Material relating to or
located on, within or under any assets owned, leased or used by Buyer or
USTMAN, or (e) any product liability, strict liability or other claims
concerning (i) products sold or services provided by Buyer or USTMAN after the
Closing or (ii) inventory owned by Buyer or USTMAN after the Closing. Seller
shall be entitled to recover its reasonable and necessary attorneys' fees and
litigation expenses incurred in connection with successful enforcement of its
rights under this Section. Buyer's obligation to indemnify Seller pursuant to
this Section 7.2 shall be unlimited as to time or amount.
Section VII.3 Survival.
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(a) The representations, warranties and covenants of
Seller in this Agreement and in any certificate or instrument
delivered in connection herewith shall be continuing and shall survive
the Closing until two years after the Closing Date (the period during
which the representations and warranties shall survive being referred
to herein with respect to such representations and warranties as the
"Survival Period"), but shall thereafter terminate and be of no
further force and effect unless a written notice asserting a claim
shall have been made pursuant to this Article VII within the Survival
Period with respect to such matter. Any claim for indemnification of
a Claim of the type set forth in Section 7.1(a)(i)-(iv) of this
Agreement made during the Survival Period shall remain in effect for
purposes of such indemnification notwithstanding such Claim may not be
resolved within the Survival Period.
(b) Any claim for indemnification of Buyer for a Claim of
the type set forth in Section 7.1(a)(v) of this Agreement must be made
no later than three years after the Closing Date. Any such Claim
shall remain in effect for purposes of such indemnification even if
the Claim is not resolved within three years after the Closing Date.
Section VII.4 Indemnification Procedures. Subject to
Section 7.5, all claims for indemnification under this Agreement shall be
asserted and resolved as follows:
(a) A party claiming indemnification under this Agreement
(an "Indemnified Party") shall with reasonable promptness (i) notify
the party from whom indemnification is sought (the "Indemnifying
Party") of any third-party claim or claims asserted against the
Indemnified Party ("Third Party Claim") for which indemnification is
sought and (ii) transmit to the Indemnifying Party a copy of all
papers served with respect to such claim
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(if any) and a written notice ("Claim Notice") containing a
description in reasonable detail of the nature of the Third Party
Claim, an estimate of the amount of damages attributable to the Third
Party Claim to the extent feasible (which estimate shall not be
conclusive of the final amount of such claim) and the basis of the
Indemnified Party's request for indemnification under this Agreement.
Within 15 days after receipt of any Claim Notice (the
"Election Period"), the Indemnifying Party shall notify the
Indemnified Party whether the Indemnifying Party disputes its
potential liability to the Indemnified Party with respect to such
Third Party Claim and, if the Indemnifying Party does not dispute its
potential liability to the Indemnified Party with respect to such
Third Party Claim, whether the Indemnifying Party elects to defend the
Indemnified Party with respect to such Third Party Claim.
If the Indemnifying Party does not dispute its potential
liability to the Indemnified Party within the Election Period and
notifies the Indemnified Party that it elects to defend such Third
Party Claim, the Indemnified Party shall control negotiations toward
resolution of such claim without the necessity of litigation, and if
litigation ensues, to defend the same with counsel reasonably
acceptable to both parties, at the Indemnifying Party's expense, and
the Indemnified Party shall extend reasonable cooperation in
connection with such defense. The Indemnified Party shall be entitled
to elect to participate in, but not to control, the defense of any
Third Party Claim resulting in litigation, at its own cost and
expense; provided, however, that if the parties to any suit or
proceeding shall include the Indemnifying Party as well as the
Indemnified Party and the Indemnified Party shall have been advised by
counsel that one or more legal defenses may be available to it that
may
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not be available to the Indemnifying Party, then the Indemnified Party
shall be entitled to elect to control such suit or proceeding, but the
Indemnifying Party shall be obligated to bear the fees and expenses of
counsel of the Indemnified Party, which shall be selected by the
Indemnified Party in its complete and sole discretion. If the
Indemnifying Party does not dispute its potential liability to the
Indemnified Party within the Election Period and the Indemnified Party
fails to assume control of the negotiations prior to litigation or to
defend such action within a reasonable time, the Indemnifying Party
shall be entitled, but not obligated, to assume control of such
negotiations or defense of such action, and the Indemnifying Party
shall be liable to the Indemnified Party for its expenses reasonably
incurred or amounts paid in connection therewith. If the Indemnifying
Party disputes its potential liability to the Indemnified Party within
the Election Period or does not elect to defend such Third Party
Claim, then the Indemnified Party shall be entitled to assume control
of such negotiations or defense of action and the liability for the
expense thereof, as well as any liability with respect to such Third
Party Claim, shall be determined as provided in Section 7.6 below.
If the Indemnifying Party fails to notify the Indemnified
Party within the Election Period that the Indemnifying Party elects to
defend the Indemnified Party pursuant to the preceding paragraph, or
if the Indemnifying Party elects to defend the Indemnified Party but
fails to prosecute or settle the Third Party Claim as herein provided,
then the Indemnified Party shall have the right to defend, at the sole
cost and expense of the Indemnifying Party (if the Indemnified Party
is entitled to indemnification hereunder), the Third Party Claim by
all appropriate proceedings, which proceedings shall be promptly
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and vigorously prosecuted by the Indemnified Party to a final
conclusion or settled. The Indemnified Party shall have full control
of such defense and proceedings. Notwithstanding the foregoing, if
the Indemnifying Party has delivered a written notice to the
Indemnified Party to the effect that the Indemnifying Party disputes
its potential liability to the Indemnified Party under this Article
VII and if such dispute is resolved in favor of the Indemnifying
Party, the Indemnifying Party shall not be required to bear the costs
and expenses of the Indemnified Party's defense pursuant to this
Section or of the Indemnifying Party's participation therein at the
Indemnified Party's request, and the Indemnified Party shall reimburse
the Indemnifying Party in full for all costs and expenses of such
litigation. The Indemnifying Party may participate in, but not
control, any defense or settlement controlled by the Indemnified Party
pursuant to this Section, and the Indemnifying Party shall bear its
own costs and expenses with respect to such participation.
Neither the Indemnifying Party nor the Indemnified Party shall
settle, compromise, or make any other disposition of any Third Party
Claim which would or might result in any liability to the Indemnified
Party or the Indemnifying Party under this Article VII without the
written consent of such other party.
(b) In the event any Indemnified Party should have a
claim against any Indemnifying Party hereunder that does not involve a
Third Party Claim, the Indemnified Party shall transmit to the
Indemnifying Party a written notice (the "Indemnity Notice")
describing in reasonable detail the nature of the claim, an estimate
of the amount of damages attributable to such claim to the extent
feasible (which estimate shall not be
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conclusive of the final amount of such claim) and the basis of the
Indemnified Party's request for indemnification under this Agreement.
If the Indemnifying Party does not notify the Indemnified Party within
15 days from its receipt of the Indemnity Notice that the Indemnifying
Party disputes such claim, the claim specified by the Indemnified
Party in the Indemnity Notice shall be deemed a liability of the
Indemnifying Party hereunder.
Section VII.5 Indemnification Procedures for Prior Period
Claims. Any claim by Buyer for indemnification in connection with any Prior
Period Claim shall be asserted and resolved as follows:
(a) Buyer shall deliver to Seller a Claim Notice or
Indemnity Notice as set forth in Section 7.4.
(b) Within 15 days after receipt of such notice, Seller
shall notify Buyer of Seller's determination that such claim for
indemnification is based on a Prior Period Claim. Unless Buyer
objects to Seller's determination within 10 business days after
Seller's notice to Buyer, the claim for indemnification shall be
deemed to be based on a Prior Period Claim. If Buyer objects to
Seller's determination, Seller and Buyer agree to promptly negotiate
in good faith to determine whether such claim for indemnification is
based on a Prior Period Claim. If the parties have failed to agree
within 15 days after the date of Buyer's objection to Seller's
determination, such dispute shall be submitted to arbitration in
accordance with Section 7.6. The decision of the arbitrator regarding
the classification of the claim as a Prior Period Claim shall be
binding on the parties.
(c) Once the parties have determined that a claim for
indemnification is based on a Prior Period Claim, Seller shall
promptly notify TEI of the Prior Period Claim in
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accordance with the provisions of Section 7.3 of the October
Agreement. Seller covenants and agrees that it shall exercise its
rights under the October Agreement as directed by Buyer and at Buyer's
expense and shall extend reasonable cooperation in connection
therewith. With the exception of the liability of Seller for amounts
in excess of the limitations on liability of TEI under the October
Agreement as described in Section 7.1(b)(ii), Seller shall have no
other obligation with respect to any Prior Period Claim. Seller shall
have the right, but not the obligation, to engage Seller's own counsel
at Seller's own expense to participate in the prosecution of any Prior
Period Claims against TEI or to participate in the defense of any
Third Party Claim against Buyer based on a Prior Period Claim.
(d) Following any recovery from TEI pursuant to this
Section 7.5, Seller shall be obligated to pay an amount equal to the
amount of any funds received from TEI to Buyer promptly after receipt
thereof, together with any additional amounts as required by Section
7.1(b)(ii).
Section VII.6 Arbitration of Disputes. If the Indemnifying
Party disputes, either as to the amount or liability, that any claim described
in a Claim Notice or an Indemnity Notice, as the case may be, is covered by
such Indemnifying Party's covenant to indemnify contained in this Article VII,
then the Indemnifying Party and the Indemnified Party agree to promptly
negotiate in good faith to resolve their differences and to mutually agree upon
an amount, if any, owed to Indemnified Party by the Indemnifying Party
hereunder. If Indemnifying Party and Indemnified Party fail to agree within 30
days thereafter, the dispute shall be resolved by binding and final arbitration
of a single arbitrator mutually agreed to by Buyer and Seller conducted in
Houston, Texas in accordance with the rules of commercial arbitration of the
American Arbitration
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Association. The prevailing party in any such arbitration proceeding shall be
entitled to attorneys' fees and other out-of-pocket expenses reasonably and
necessarily incurred in connection with such proceeding, the amounts of which
shall be contained in the award of the arbitrator. After a final arbitration
decision with respect to a Claim by Buyer against Seller, Buyer shall have a
limited right of set off against the Purchase Note.
Section VII.7 General. THE COVENANTS AND AGREEMENTS
ENTERED INTO PURSUANT TO THIS AGREEMENT TO BE PERFORMED AFTER THE CLOSING SHALL
SURVIVE THE CLOSING WITHOUT LIMITATION. THE INDEMNIFICATION OBLIGATIONS UNDER
THIS ARTICLE VII SHALL APPLY REGARDLESS OF WHETHER ANY CLAIM RESULTS SOLELY OR
IN PART FROM THE ACTIVE, PASSIVE OR CONCURRENT NEGLIGENCE OF THE INDEMNIFIED
PARTY PRIOR TO THE CLOSING DATE. THE PARTIES AGREE THAT THIS ARTICLE VII DOES
NOT ENTITLE EITHER PARTY TO INDEMNIFICATION FOR EITHER PARTY'S ACT OR OMISSION
AFTER THE CLOSING DATE. ALL REPRESENTATIONS, WARRANTIES AND COVENANTS AND
AGREEMENTS MADE BY THE PARTIES SHALL NOT BE DEEMED MERGED INTO ANY INSTRUMENTS
OR AGREEMENTS DELIVERED IN CONNECTION WITH THE CLOSING OR OTHERWISE IN
CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREBY.
ARTICLE VIII
CONDITIONS TO CLOSING
Section VIII.1 Conditions Precedent to Obligations of Buyer.
The obligation of Buyer to consummate the purchase under this Agreement is
subject to the fulfillment, prior to or at the Closing, of each of the
following conditions (any or all of which may be waived by Buyer):
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(a) all representations and warranties of Seller
contained in this Agreement including all Schedules to this Agreement
shall be true and correct in all respects at and as of the time of the
Closing with the same effect as though made again at, and as of, that
time, except such as will not have a material adverse effect and
except such as would not reasonably be expected to have a material
adverse effect on Seller's ability to perform its obligations under
this Agreement;
(b) Seller shall have performed and complied in all
material respects with all obligations and covenants required by this
Agreement to be performed or complied with by Seller prior to or at
the Closing;
(c) Buyer shall have been furnished with a certificate,
dated the Closing Date, executed by an officer of Seller certifying to
the fulfillment of the conditions specified in Sections 8.1(a) and
8.1(b) hereof;
(d) no provision of any Applicable Law shall prohibit,
and there shall not be in effect any injunction, restraining order or
decree issued by a court of competent jurisdiction or any governmental
body that shall prohibit the consummation of this Agreement and there
shall be no action or proceeding pending or threatened seeking any
such injunction, order or decree;
(e) Seller shall have received all consents, approvals
and Permits to execute this Agreement and to consummate the
transactions contemplated hereby; and
(f) Buyer shall be furnished with an opinion of counsel
to Seller and USTMAN, as to the due execution and delivery of this
Agreement and the documents delivered by Seller at Closing and
substantially as to the matters set forth in Sections 4.1,
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4.3, 4.4, 4.7 and 4.8 hereof (qualified appropriately as to knowledge)
and such other matters as Buyer may reasonably request.
Section VIII.2 Conditions Precedent to Obligations of
Seller. The obligation of Seller to consummate the sale under this Agreement
is subject to the fulfillment, prior to or at the Closing, of each of the
following conditions (any or all of which may be waived by Seller):
(a) all representations and warranties of Buyer contained
in this Agreement, including all Schedules to this Agreement, shall be
true and correct in all respects at and as of the time of the Closing
with the same effect as though made again at, and as of, that time,
except such as will not have a material adverse effect and except such
as would not reasonably be expected to have a material adverse effect
on Buyer's ability to perform its obligations under this Agreement;
(b) Buyer shall have performed and complied in all
material respects with all obligations and covenants required by this
Agreement to be performed or complied with by Buyer prior to or at the
Closing;
(c) Seller shall have been furnished with a certificate,
dated the Closing Date, executed by an officer of Buyer certifying to
the fulfillment of the conditions specified in Sections 8.2(a) and
8.2(b) hereof; and
(d) no provision of any Applicable Law shall prohibit,
and there shall not be in effect any injunction or restraining order
issued by a court of competent jurisdiction in any action or
proceeding against, the consummation of this Agreement.
(e) Seller shall be furnished with an opinion of counsel
to Buyer, as to the due execution and delivery of this Agreement and
the documents delivered by Buyer at
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Closing and substantially as to the matters set forth in Sections 5.1,
5.2, 5.3 and 5.6 hereof (qualified appropriately as to knowledge) and
such other matters as Seller may reasonably request, including without
limitation the authorization, due execution, delivery and
enforceability of the Purchase Note and the Subsidiary Guarantees.
ARTICLE IX
ACTIONS TO BE TAKEN AT CLOSING
Section IX.1 Actions to be Taken by Seller at the Closing.
Seller shall take the following actions at the Closing:
(a) Seller shall deliver to Buyer copies certified by its
Secretary of resolutions duly adopted by the board of directors of
Seller authorizing and approving the execution and delivery of this
Agreement, including the exhibits and schedules hereto, and the
consummation of the transactions contemplated herein;
(b) Seller shall endorse and deliver to Buyer a stock
certificate representing the Shares;
(c) Seller shall deliver the officer's certificate
referred to in Section 8.1(c);
(d) Buyer shall have been furnished with a legal opinion
as provided in Section 8.1(f) hereof; and
(e) Seller shall have delivered to Buyer a letter of
resignation from each noncontinuing officer and director of USTMAN.
Section IX.2 Actions to be Taken by Buyer at the Closing.
Buyer shall take the following actions at the Closing:
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(a) Buyer shall deliver to Seller a copy certified by its
Secretary of resolutions duly adopted by the board of directors of
Buyer authorizing and approving the execution and delivery of this
Agreement, including the exhibits and schedules hereto, and the
consummation of the transactions contemplated herein;
(b) Buyer shall make the payment of funds specified for
payment at Closing under Section 2.2;
(c) Buyer shall deliver the Purchase Note and the
Subsidiary Guaranty to Seller as set forth in Section 2.3;
(d) Buyer shall deliver the officer's certificate
referred to in Section 8.2(c); and
(e) Seller shall have been furnished with a legal opinion
as provided in Section 8.2(e).
ARTICLE X
GENERAL PROVISIONS
Section X.1 Termination.
(a) This Agreement may be terminated at any time prior to
the Closing:
(i) by mutual written agreement executed by
Seller and Buyer; or
(ii) if the Board of Directors of Seller in the
exercise of its fiduciary duties under applicable laws as
advised in writing by counsel withdraws or modifies its
approval or recommendation of the proposed acquisition of
Shares by Buyer on the terms and conditions set forth herein
in any manner adverse to Buyer and recommends or approves a
Competing Transaction, or resolves to do the
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foregoing. For purposes of this Agreement, "Competing
Transaction" shall mean any merger, consolidation, share
exchange, business combination or similar transaction
involving USTMAN, or the acquisition in any manner, directly
or indirectly, of a material interest in any voting securities
of, or a material interest in a substantial portion of the
assets of, USTMAN, other than the transactions contemplated by
this Agreement.
(b) Upon termination of this Agreement, neither of the
parties nor any other person shall have any liability or further
obligation arising out of this Agreement except for any liability
resulting from its breach of this Agreement prior to termination and
as stated in Section 10.1(c) hereof, except that the provisions of
Sections 10.2, 10.3, 10.9 and 10.11 shall continue to apply.
(c) In the event Seller terminates this Agreement
pursuant to Section 10.1(a)(ii) hereof and enters into a Competing
Transaction, Seller shall reimburse Buyer for its reasonable costs
related to Buyer's proposed acquisition of the Shares, not to exceed
$250,000.
Section X.2 Confidentiality; Publicity; Books and
Records.
(a) Neither party nor any Affiliate thereof will,
directly or indirectly, disclose or provide to any other person any
non- public information of a confidential nature concerning the other
party or their business or operations, and neither Seller nor any
Affiliate thereof will directly or indirectly, disclose or provide to
any other person any non-public information of a confidential nature
concerning USTMAN or its business or operations, except as is required
in governmental filings or judicial, administrative or
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arbitration proceedings. In the event that a party or its Affiliate
becomes legally required to disclose any such information in any
governmental filings or judicial, administrative or arbitration
proceedings, that party shall, and shall cause such Affiliate to,
provide the other party with prompt notice of such requirement so that
the other party may seek a protective order or other appropriate
remedy. In the event that such protective order or other remedy is
not obtained, the disclosing party shall, and shall cause such
Affiliate to, furnish only that portion of the information that the
disclosing party or such Affiliate, as the case may be, is advised by
its counsel is legally required and such disclosure shall not result
in any liability hereunder unless such disclosure was caused by or
resulted from a previous disclosure by the other party which was not
permitted by this Agreement, by that certain Confidentiality Agreement
between the parties dated as of November 19, 1996. Subject to
applicable securities law or stock exchange requirements, the parties
hereto will promptly advise, and obtain the approval of, the other
parties before issuing any press release with respect to this
Agreement or the transactions contemplated hereby.
(b) If the parties fail to close the acquisition of
Shares contemplated in this Agreement, each party shall, and shall
cause its officers, directors, employees, representatives and agents
(the "Representatives") to return all copies of the other party's
confidential non-public information in its possession or in the
possession of its Representatives, and destroy all copies of any
analyses, compilations, studies or other documents prepared by that
party or its Representatives or for its use containing or reflecting
any such information.
For purposes of this Agreement, non-public information of a
confidential nature
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shall not include any information which (i) at the time of disclosure
or thereafter is generally available to and known by the public (other
than as a result of a disclosure directly or indirectly by a party,
its Affiliate or its Representatives), (ii) was available to a party
on a nonconfidential basis from a source other than the other party,
its Affiliate or Representatives, provided that such source is not and
was not directly or indirectly bound by a confidentiality agreement
with the nondisclosing party, its Affiliate or Representatives with
respect to that information or (iii) has been independently acquired
or developed by the other party, its Affiliate or Representatives,
without violating any obligations under this agreement, that certain
Confidentiality Agreement between the parties dated as of November 19,
1996.
(c) For a period of five years after the Closing Date,
Buyer will preserve and retain the books and records of USTMAN and
make such books and records available at the then current
administrative headquarters of Buyer to Seller and its officers,
employees and agents, upon reasonable notice and at reasonable times,
at Seller's cost and expense, it being understood that Seller shall be
entitled to make copies of any such books and records as shall be
reasonably necessary.
Section X.3 Expenses. Buyer and Seller shall pay their
own respective expenses, including the fees and disbursements of their
respective counsel in connection with the negotiation, preparation and
execution of this Agreement and the consummation of the transactions
contemplated herein.
Section X.4 Entire Agreement. This Agreement, including
all schedules and exhibits hereto, constitutes the entire agreement of the
parties and supersedes any prior oral or written agreements with respect to the
subject matter hereof, and may not be modified, amended
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or terminated except by a written instrument specifically referring to this
Agreement signed by all the parties hereto.
Section X.5 Waivers and Consents. All waivers and
consents given hereunder shall be in writing. No waiver by any party hereto of
any breach or anticipated breach of any provision hereof by any other party
shall be deemed a waiver of any other contemporaneous, preceding or succeeding
breach or anticipated breach, whether or not similar.
Section X.6 Notices. All notices and other
communications hereunder shall be in writing and shall be deemed to have been
received only if and when (a) personally delivered (b) if mailed, on the third
day after mailing, by United States mail, first class, postage prepaid, by
certified mail, return receipt requested, addressed in each case as follows (or
to such other address as may be specified by like notice) or (c) delivered by
overnight courier or facsimile:
(i) if to Buyer, to:
Xxxxxx General Corporation
00-X Xxxxxxx
Xxxxxx, Xxxxxxxxxx 00000
Facsimile: 000-000-0000
Attention: President
(ii) if to Seller, to:
NDE Environmental Corporation
0000 Xxxxx Xxxxx Xxxx.
Xxxx. 000
Xxxxxx, Xxxxx 00000
X.X. Xxx 000000
Xxxxxx, Xxxxx 00000
Facsimile: 000-000-0000
Attention: President
Section X.7 Successors and Assigns. This Agreement shall
be binding upon and shall inure to the benefit of the parties hereto and their
respective successors, legal representatives
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and assigns. No third party shall have any rights hereunder.
Section X.8 Performance. Seller agrees to cause USTMAN
to perform all its obligations and agreements under this Agreement and hereby
guarantees performance by USTMAN of all such obligations and agreements.
Section X.9 Choice of Law; Section Headings; Table of
Contents. This Agreement shall be governed by the internal laws of the State
of Texas (without regard to the choice of law provisions thereof). The section
headings and any table of contents contained in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Agreement.
Section X.10 Counterparts. This Agreement may be
executed in any number of counterparts, each of which shall be deemed to be an
original and all of which together shall be deemed to be one and the same
instrument.
Section X.11 Jurisdiction and Venue. Seller and Buyer
hereby consent to personal jurisdiction in any action brought with respect to
this Agreement and the transactions contemplated hereunder in any federal or
state court in Xxxxxx County, Texas and agree that service of process may be
accomplished pursuant to Section 10.6 above.
Section X.12 Severability. The invalidity or
unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement which shall
remain in full force and effect.
Section X.13 Assignment. This Agreement and each
party's rights hereunder may not be assigned without the prior written consent
of the other parties; provided that no such consent shall be required by Buyer
or Seller to assign all or part of its rights to USTMAN or Affiliate but no
such assignment shall relieve the assigning party of any of its obligations
under
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this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the date first above written.
XXXXXX GENERAL CORPORATION
By: /s/ XXXXXX X. XXXXX
-------------------------------------
Xxxxxx X. Xxxxx
President and Chief Executive Officer
NDE ENVIRONMENTAL CORPORATION
By: /s/ XXX XXXXX XXXXXXX
-------------------------------------
Xxx Xxxxx Xxxxxxx
Chairman of the Board of Directors
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SCHEDULES
Schedule 4.1 Foreign Qualifications
Schedule 4.4 Seller Non-Contravention
Schedule 4.7 Seller Litigation
Schedule 4.9 Contracts and Commitments
Schedule 4.10 Taxes
Schedule 4.11 Title to Properties
Schedule 4.12 Trademarks, Trade Names and Intellectual Property
Schedule 4.13 Financial Statements
Schedule 4.15 Liabilities
Schedule 4.16 Employees
Schedule 4.19 Tangible Personal Property
Schedule 4.20 Insurance Policies
Schedule 4.21 Permits
Schedule 4.22 Distributed Products
Schedule 4.23 Safety Reports
Schedule 4.24 Transactions with Certain Persons
Schedule 4.26 Studies
Schedule 4.28 Employee Benefit Plans
Schedule 4.29 Environmental Matters
Schedule 4.31 Changes to Employee Benefits
Schedule 5.3 Buyer Non-Contravention
Schedule 5.9 Financial Condition
Schedule 6.4 Noncompetition
