STOCK PURCHASE AGREEMENT
by
and
between
EMERGING ALPHA CORPORATION,
and
THE STOCKHOLDERS OF GAS XXXX, INC.
Dated as of October 29, 1999
ATTACHMENTS
Appendix I - Definitions
Exhibit A - List of Sellers and Share Ownership
Exhibit B - Form of Escrow Agreement
Exhibit C - Form of Employment Agreement
Disclosure Schedules
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") is made as of October 29,
1999, by and among (i) Emerging Alpha Corporation, a Delaware corporation
("Buyer"), and (ii) each stockholder of Gas Xxxx, Inc., an Oklahoma corporation
(the "Company"), set forth in Exhibit A (individually, "Seller" and
collectively, "Sellers").
RECITALS:
WHEREAS, Sellers own all of the outstanding capital stock of the Company;
and
WHEREAS, Buyer desires to purchase from Sellers all of the Company's
outstanding capital stock, and Sellers desire to sell to Buyer all of the
Company's outstanding capital stock, in accordance with this Agreement's terms
and conditions.
AGREEMENT:
NOW, THEREFORE, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties, and
covenants contained herein, Buyer and each Seller agree as follows:
ARTICLE 1.
PURCHASE AND SALE OF SHARES
1.1 Purchase and Sale of Shares. On and subject to the terms and conditions
of this Agreement, Buyer agrees to purchase from each Seller, and each Seller
agrees to sell to Buyer, all of the Shares such Seller owns for the
consideration specified in Section 1.2.
1.2 Purchase Price. The purchase price for the Shares is $2,700,000 (the
"Purchase Price"). The Purchase Price will be allocated among Sellers in
proportion to their respective holdings of Shares as set forth in Exhibit A.
1.3 The Closing. The closing of the purchase and sale of the Shares (the
"Closing") will take place at the offices of the Company at 0000 XX 0xx Xxxxxx,
Xxxxxxxx Xxxx, Xxxxxxxx, commencing at 9:00 a.m., local time, on the business
day following the satisfaction or waiver of all conditions to the obligations of
the Parties to consummate the purchase and sale of the Shares (other than
conditions with respect to actions the respective Parties will take at the
Closing itself) or such other date as Buyer and the Requisite Sellers may
mutually determine (the "Closing Date").
1.4 Deliveries at the Closing. At the Closing:
(a) Sellers will deliver to Buyer:
(i) certificates representing the Shares, duly endorsed (or
accompanied by duly executed stock powers);
(ii) a certificate, duly executed by or on behalf of each Seller
and the Company, as to whether each condition specified in
Sections 6.1(a)-(h) has been satisfied in all respects;
(iii) except as contemplated by Section 1.4(a)(iv), a copy of each
Organization Document of the Company;
(iv) a certificate of incorporation and good standing/existence
of the Company certified by an appropriate authority of the
Governmental Authority issuing such certificate;
(v) secretary's certificates of each of the Sellers that is not
an individual in a form reasonably acceptable to Buyer;
(vi) opinion of counsel to Sellers in a form reasonably
acceptable to Buyer; and
(vii) the resignation, effective as of the Closing, of Xxxx Xxxx
as director of the Company;
(b) Buyer will deliver to Sellers:
(i) $2,200,000 in cash, via Fedwire transfer, which will be
allocated among Sellers as set forth in Exhibit ------- A;
(ii) $500,000 to be deposited into the escrow account established
in accordance with the Escrow Agreement;
(iii) a certificate, duly executed on behalf of Buyer, as to
whether each condition specified in Section 6.2(a)-(c) has
been satisfied in all respects;
(iv) a certificate of incorporation and good standing/existence
of Buyer certified by an appropriate authority of the
Governmental Authority issuing such certificate; and
(v) the Employment Agreements, duly executed on behalf of Buyer.
(c) The respective parties thereto will execute and deliver the
Employment Agreements (and Sellers will cause the Company to execute and
deliver the Employment Agreements.)
(d) The parties thereto will execute and deliver the Escrow Agreement
(and Sellers and Buyer will use their Best Efforts to cause the Escrow
Agent to execute and deliver the Escrow Agreement).
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ARTICLE 2.
REPRESENTATIONS AND WARRANTIES
CONCERNING THE TRANSACTION
2.1 Representations and Warranties of Sellers. Each Seller hereby severally
and not jointly represents and warrants to Buyer that the statements contained
in this Section 2.1 as to such Seller (but not as to any other Seller) are
correct and complete as of the date of this Agreement and will be correct and
complete as of the Closing Date (as though made then and as though the Closing
Date were substituted for the date of this Agreement throughout this Section
2.1).
(a) Status of Certain Sellers. Each Seller that is an entity is an
entity duly created, formed or organized, validly existing, and in good
standing under the Laws of the jurisdiction of its creation, formation, or
organization. There is no pending or, to each Seller's Knowledge,
Threatened, Action (or Basis therefor) for the dissolution, liquidation,
insolvency, or rehabilitation of any Seller.
(b) Power and Authority; Enforceability. Each Seller that is an entity
has the power and authority to execute and deliver each Transaction
Document to which such Seller is a party, and to perform and consummate the
Transactions. Each Seller that is an individual has the requisite
competence and authority to execute and deliver each Transaction Document
to which it is a party, and to perform and to consummate the Transactions.
Such Seller has taken all actions necessary to authorize the execution and
delivery of each Transaction Document to which it is party, the performance
of such Seller's obligations thereunder, and the consummation of the
Transactions. Each Transaction Document has been duly authorized, executed,
and delivered by, and is Enforceable against, such Seller.
(c) No Violation. The execution and the delivery of the Transaction
Documents by each Seller party thereto and the performance and consummation
of the Transactions by such Seller will not (i) Breach any Law or Order to
which such Seller is subject or, if such Seller is an entity, any provision
of its Organizational Documents, (ii) Breach any Contract, Order, or Permit
to which such Seller is a party or by which such Seller is bound or to
which any of such Seller's assets is subject, or (iii) require any Consent.
(d) Brokers' Fees. Such Seller has no Liability to pay any
compensation to any broker, finder, or agent with respect to the
Transactions for which Buyer or the Company could become directly or
indirectly Liable.
(e) Shares; Seller Information. Such Seller holds of record and owns
beneficially the number of Shares as set forth next to such Seller's name
in Exhibit A, free and clear of any Encumbrances (other than any
restrictions under the Securities Act and state securities Laws). With
respect to such Seller, Exhibit A also sets forth the address, state of
residence and federal tax identification number (or social security number,
as applicable) of such Seller as of the date hereof. Such Seller is not a
party to any Contract that could require such Seller to sell, transfer, or
otherwise dispose of any
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capital stock of the Company (other than this Agreement). Such Seller is
not a party to any Contract with respect to any capital stock of the
Company.
2.2 Representations and Warranties of Buyer. Buyer represents and warrants
to Sellers that the statements contained in this Section 2.2 are correct and
complete as of the date of this Agreement and will be correct and complete as of
the Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this Section 2.2).
(a) Entity Status. Buyer is an entity duly created, formed or
organized, validly existing and in good standing under the Laws of
Delaware. There is no pending or, to Buyer's Knowledge, Threatened, Action
(or Basis therefor) for the dissolution, liquidation, insolvency, or
rehabilitation of Buyer.
(b) Power and Authority; Enforceability. Buyer has the relevant entity
power and authority to execute and deliver each Transaction Document to
which it is party, and to perform and consummate the Transactions. Buyer
has taken all action necessary to authorize the execution and delivery of
each Transaction Document to which it is party. Each Transaction Document
to which Buyer is party has been duly authorized, executed and delivered
by, and is Enforceable against, Buyer.
(c) No Violation. The execution and delivery of the Transaction
Documents to which Buyer is party by Buyer and the performance and
consummation of the Transactions by Buyer will not (a) Beach any Law or
Order to which Buyer is subject or any provision of its Organizational
Documents; (b) Breach any Contract, Order, or Permit to which Buyer is a
party or by which it is bound or to which any of its assets is subject; or
(c) require any Consent.
(d) Brokers' Fees. Buyer has no Liability to pay any compensation to
any broker, finder, or agent with respect to the Transactions for which any
Seller could become Liable.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES
CONCERNING THE COMPANY
Each Seller severally and not jointly represents and warrants to Buyer that
the statements contained in this Article 3 are correct and complete as of the
date of this Agreement and will be correct and complete as of the Closing Date
(as though made then and as though the Closing Date were substituted for the
date of this Agreement throughout this Article 3), except as set forth in the
Disclosure Schedules delivered by Sellers to Buyer on the date hereof (the
"Schedules").
3.1 Corporate Status. The Company is a corporation duly created, formed or
organized, validly existing, and in good standing under the Laws of Oklahoma.
The Company is duly authorized to conduct its business and is in good standing
under the laws of each jurisdiction where such qualification is required. The
Company has the requisite power and authority necessary to own or lease its
properties and to carry on its businesses as currently
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conducted. Schedule 3.1 lists the Company's directors and officers. Sellers have
delivered to Buyer correct and complete copies of the Company's Organizational
Documents, as amended to date. The Company is not in Breach of any provision of
its Organizational Documents. There is no pending or, to any Seller's Knowledge,
Threatened, Action (or Basis therefor) for the dissolution, liquidation,
insolvency, or rehabilitation of the Company.
3.2 Power and Authority; Enforceability. The Company has the relevant
corporate power and authority necessary to execute and deliver each Transaction
Document to which it is a party and to perform and consummate the Transactions.
The Company has taken all action necessary to authorize the execution and
delivery of each Transaction Document to which it is a party, the performance of
the Company's obligations thereunder, and the consummation of the Transactions.
Each Transaction Document to which the Company is Party has been duly
authorized, executed, and delivered by, and is Enforceable against, the Company.
3.3 No Violation. The execution and the delivery of the applicable
Transaction Documents by the Company and the performance of its obligations
hereunder and thereunder, and consummation of the Transactions by the Company
will not (a) Breach any Law or Order to which the Company is subject or any
provision of the Organizational Documents of the Company; (b) Breach any
Contract, Order, or Permit to which the Company is a party or by which it is
bound or to which any of its assets is subject (or result in the imposition of
any Encumbrance upon any of its assets); (c) require any Consent; or (d) cause
the recognition of gain or loss for Tax purposes with respect to the Company or
subject the Company or its assets to any Tax.
3.4 Brokers' Fees. The Company will, at the time of the closing, have no
Liability to pay any compensation to any broker, finder, or agent with respect
to the Transactions.
3.5 Capitalization. The Company's authorized Equity Interests consist of
5,000,000 Shares, of which 2,364,753 Shares are issued, 1,504,319 shares are
issued and outstanding, and 864,434 Shares are held in treasury. All of the
issued and outstanding Shares: (i) have been duly authorized and are validly
issued, fully paid, and nonassessable, (ii) were issued in compliance with all
applicable state and federal securities Laws, (iii) were not issued in Breach of
any Commitments, and (iv) are held of record by the respective Sellers as set
forth in Exhibit A. No Commitments exist with respect to any Equity Interest of
the Company, and no such Commitments will arise in connection with the
Transactions. At the time of the Closing, there will be no Contracts with
respect to the voting or transfer of the Company's Equity Interests, and the
Company will not be obligated to redeem or otherwise acquire any of its
outstanding Equity Interests.
3.6 Records. The copies of the Company's Organizational Documents that were
provided to Buyer are accurate and complete and reflect all amendments made
through the date of this Agreement. The Company's minute books and other records
made available to Buyer for review were correct and complete as of the date of
such review, no further entries have been made through the date of this
Agreement that have not been made known to Buyer, such minute books and records
contain the true signatures of the persons purporting to have signed them, and
such minute books and records contain an accurate record of all actions of the
shareholders and directors of the Company taken by written consent, at a
meeting, or otherwise since formation.
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3.7 Subsidiaries. The Company has no Subsidiaries.
3.8 Financial Statements. Set forth on Schedule 3.8 are the following
financial statements (collectively the "Financial Statements"):
(a) audited balance sheets and statements of income, changes in
stockholders' equity, and cash flow as of and for the fiscal years ended
December 31, 1993, 1994, 1995, 1996 and 1997 as of and for the fiscal year
ended December 31, 1998 (the "Most Recent Year End") for the Company; and
(b) unaudited balance sheet and statement of income and cash flow (the
"Interim Financial Statements") as of and for the nine months ended
September 30, 1999 (the "Balance Sheet Date") for the Company.
The Financial Statements have been prepared in accordance with GAAP applied on a
consistent basis throughout the periods covered thereby, present fairly the
financial condition of the Company as of such dates and the results of
operations of the Company for such periods, are correct and complete, and are
consistent with the books and records of the Company; provided, however, that
the Interim Financial Statements are subject to normal year-end adjustments
(which will not be material individually or in the aggregate) and do not contain
footnotes and other presentation items.
3.9 Subsequent Events. Except as set forth in Schedule 3.9 and 3.18, since
the Balance Sheet Date there has not been any Material Adverse Change with
respect to the Company. In addition, since that date, except as set forth in
Schedules 3.9 and 3.18, none of the following has occurred to the date of this
Agreement and, except in the Ordinary Course of Business, none will occur to the
date of the closing, without the approval of Buyer.
(a) the Company has not sold, leased, transferred, or assigned any
assets other than for a fair consideration in the Ordinary Course of
Business;
(b) the Company has not entered into any Contract (or series of
related Contracts) either involving more than $10,000 or outside the
Ordinary Course of Business;
(c) no Seller that is party to any Contract to which the Company is a
party or by which it is bound or any of its assets is subject has Breached
any such Contract;
(d) no Encumbrance has been imposed upon any of the assets of the
Company;
(e) the Company has not made any capital expenditure (or series of
related capital expenditures) either involving more than $10,000 or outside
the Ordinary Course of Business;
(f) the Company has not made any capital investment in, any loan to,
or any acquisition of the securities or assets of, any other Person (or
series of related capital
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investments, loans, and acquisitions) either involving more than $10,000 or
outside the Ordinary Course of Business;
(g) the Company has not issued any note, bond, or other debt security
or created, incurred, assumed, or guaranteed any Liability for borrowed
money or capitalized lease Contract either involving more than $10,000
individually or in the aggregate;
(h) the Company has not delayed or postponed the payment of accounts
payable or other Liabilities outside the Ordinary Course of Business;
(i) the Company has not canceled, compromised, waived, or released any
Action (or series of related Actions) either involving more than $10,000 or
outside the Ordinary Course of Business;
(j) the Company has not granted any Contracts or any rights under or
with respect to any Intellectual Property; other than in connection with
the sale or lease of the goods or services in the Ordinary Course of
Business;
(k) there has been no change made or authorized to the Organizational
Documents of the Company;
(l) the Company has not issued, sold, or otherwise disposed of any of
its Equity Interests;
(m) the Company has not declared, set aside, or paid any dividend or
made any distribution with respect to its Equity Interests (whether in cash
or in kind) or redeemed, purchased, or otherwise acquired any of its Equity
Interests;
(n) the Company has not experienced any damage, destruction, or loss
(whether or not covered by insurance) to its properties;
(o) the Company has not made any loan to, or entered into any
transaction outside the normal course of employment with, any of its
directors, officers, or employees;
(p) the Company has not entered into any employment, collective
bargaining, or similar Contract or modified the terms of any existing such
Contract;
(q) the Company has not committed to pay any bonus or granted any
increase in the base compensation (i) of any director, officer, or employee
thereof that is a Seller or an Affiliate thereof, or (ii) outside of the
Ordinary Course of Business, of any of its other directors, officers, or
employees;
(r) the Company has not adopted, amended, modified, or terminated any
bonus, profit-sharing, incentive, severance, or similar Contract for the
benefit of any of its directors, officers, or employees (or taken any such
action with respect to any other Employee Benefit Plan);
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(s) the Company has not made any other change in employment terms for
(i) any officer or employee thereof that is a Seller or an Affiliate
thereof, or (ii) outside of the Ordinary Course of Business, any of its
other directors, officers, or employees;
(t) the Company has not made or pledged to make any charitable or
other capital contribution either involving more than $5,000 (individually
or in the aggregate) or outside the Ordinary Course of Business;
(u) there has not been any other occurrence, event, incident, action,
failure to act, or transaction with respect to the Company either involving
more than $10,000 (individually or in the aggregate) or outside the
Ordinary Course of Business; and
(v) the Company has not committed to do any of the foregoing.
3.10 Liabilities. The Company has no Liability (and there is no Basis for
any present or future Action or Order against any of them giving rise to any
Liability), except for (a) Liabilities reflected in the Interim Financial
Statements and not heretofore paid or discharged, (b) Liabilities which have
arisen after the Balance Sheet Date in the Ordinary Course of Business which,
individually or in the aggregate, are not material and are of the same character
and nature as the Liabilities reflected in the Interim Financial Statements none
of which results from or relates to any Breach of Contract, Breach of warranty,
tort, infringement, or Breach of Law or arose out of any Action or Order; (c)
Liabilities under the items disclosed in Schedules 3.9, 3.14(b), 3.18, 3.21 and
3.26; and (d) product warranty obligations and liabilities arising in the
Ordinary Course of Business.
3.11 Legal Compliance. The Company and its respective predecessors and
Affiliates has complied with all applicable Laws, and no Action is pending or,
to the Knowledge of any Seller Party, Threatened (and there is no Basis
therefor) against it alleging any failure to so comply.
3.12 Tax Matters. Except as set forth on Schedule 3.12, the Company is not
is subject to any Liabilities for Taxes, including Taxes relating to prior
periods, other than those set forth or adequately reserved against in the
Interim Financial Statements or those incurred since the Balance Sheet Date in
the Ordinary Course of Business. The Company has duly filed when due all Tax
reports and returns in connection with and in respect of its business, assets
and employees, and has timely paid and discharged all amounts shown as due
thereon. The Company has made available to Buyer accurate and complete copies of
all of its Tax reports and returns for all periods, except those periods for
which returns are not yet due. The Company has not received any notice of any
Tax deficiency outstanding, proposed or assessed against or allocable to it, and
has not executed any waiver of any statute of limitations on the assessment or
collection of any Tax or executed or filed with any Governmental Authority any
Contract now in effect extending the period for assessment or collection of any
Taxes against it. There are no Encumbrances for Taxes upon, pending against or
Threatened against, any asset of the Company. The Company is not subject to any
Tax allocation or sharing Contract.
3.13 Title to Assets. The Company has good, marketable, and indefeasible
title to, or a valid leasehold interest in, the properties and assets they use,
located on their premises, or
8
shown on the Interim Financial Statements or acquired after the date thereof,
free and clear of all Encumbrances, except for properties and assets disposed of
in the Ordinary Course of Business since the date of the Interim Financial
Statements.
3.14 Real Property.
(a) The Company does not own any interests in real property, other
than leases listed on Schedule 3.14(b).
(b) Schedule 3.14(b) lists and describes briefly all real property
leased or subleased to the Company. Sellers have delivered to Buyer correct
and complete copies of the lease and sublease Contracts (as amended to
date) listed in Schedule 3.14(b). With respect to each lease and sublease
Contract required to be listed in Schedule 3.14(b) and to the extent
necessary to ensure that the Company will not suffer any material damage,
loss or diminution of enjoyment in respect of the real property leased or
subleased:
(i) the Contract is Enforceable;
(ii) the Contract will continue to be Enforceable on identical
terms following the consummation of the Transactions;
(iii) no party to the Contract is in Breach, and no event has
occurred which, with notice or lapse of time, would
constitute a Breach thereunder;
(iv) no party to the Contract has repudiated any provision
thereof;
(v) there are no Actions, Orders, or forbearances in effect as
to the Contract;
(vi) with respect to each sublease Contract, the representations
and warranties set forth in Sections 3.14(b)(i) through (v)
are true and correct with respect to the underlying lease
Contract;.
(vii) the Company has not granted or suffered to exist any
Encumbrance in the leasehold or subleasehold Contract;
(viii) all facilities leased or subleased under the Contract have
received all Permits required in connection with the
operation thereof and have been operated and maintained in
accordance with applicable Laws; and
(ix) all facilities leased or subleased under the Contract are
supplied with utilities and other services necessary for the
operation of said facilities.
3.15 Intellectual Property. Except as set forth in Schedule 3.15, the
Company owns, or possesses adequate rights to use, all Intellectual Property
used in its business as currently, or
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as currently proposed to be, conducted. No Consent of any Person is required for
the Company's interest in the Intellectual Property to continue to be
Enforceable by the Company following the Transactions. The Company's use of the
Intellectual Property in its business as currently conducted does not and the
use of the Intellectual Property by the Company after Closing will not, infringe
upon any rights any other Person owns or holds.
3.16 Tangible Assets. The Company owns or leases all buildings, machinery,
equipment, and other tangible assets necessary for the conduct of its businesses
as currently conducted. Each such tangible asset is free from defects (patent
and latent), has been maintained in accordance with normal industry practice, is
in good operating condition and repair (subject to normal wear and tear), and is
suitable for the purposes for which it currently is used.
3.17 Inventory. The Company' inventory, whether reflected on the Financial
Statements or not, consists of raw materials and supplies, manufactured and
processed parts, goods in process, and finished goods, all of which is
merchantable and fit for the purpose for which it was procured or manufactured,
and, except as has been written down or reserved against on the Interim
Financial Statements, none of which is obsolete, damaged, or defective. Any
inventory that has been written down or reserved against on the Interim
Financial Statements has either been written off. written down or reserved
against to its net realizable value. The quantities of any kind of inventory are
reasonable in the current (and the currently foreseeable) circumstances of the
Company.
3.18 Contracts. Except as otherwise disclosed in Schedules 3.9, 3.10,
3.14(b), 3.15, 3.21 and 3.26, Schedule 3.18 lists the following Contracts to
which the Company is a party as at the date of this Agreement (but not
thereafter):
(a) any Contract (or group of related Contracts) for the lease of
personal property to or from any Person providing for lease payments in
excess of $10,000 per annum;
(b) any Contract (or group of related Contracts) for the purchase or
sale of raw materials, commodities, supplies, products, or other personal
property, or for the furnishing or receipt of services, the performance of
which will extend over a period of more than one year, result in a loss to
the Company, or involve consideration in excess of $10,000;
(c) any Contract concerning a limited liability company, partnership,
joint venture or similar arrangement;
(d) any Contract (or group of related Contracts) under which it has
created, incurred, assumed, or guaranteed any Liability for borrowed money
or any capitalized lease in excess of $10,000, or under which it has
imposed or suffered to exist an Encumbrance on any of its assets;
(e) any Contract concerning confidentiality or noncompetition, except
a confidentiality agreement with Xxxxxx Xxxx Xxxxxx;
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(f) any Contract with any Seller or any of their Affiliates (other
than the Company);
(g) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other similar Contract
for the benefit of its current or former directors, officers, and
employees;
(h) any collective bargaining Contract;
(i) any Contract for the employment of any individual on a full-time,
part-time, consulting, or other basis providing annual compensation in
excess of $10,000 or providing severance benefits;
(j) any Contract under which it has advanced or loaned any amount to
any of its directors or officers or any Seller or, outside the Ordinary
Course of Business, to its employees that are not Sellers.
(k) any other Contract (or group of related Contracts) the performance
of which involves consideration in excess of $10,000.
Sellers have delivered to Buyer a correct and complete copy of each written
Contract (as amended to date) listed in Schedule 3.18. With respect to each such
Contract to the extent necessary to ensure that the Company will not suffer any
material damage, loss or diminution of enjoyment in respect of the subject
matter of such Contract.
(a) the Contract is Enforceable;
(b) the Contract will continue to be Enforceable on identical terms
following the consummation of the Transactions;
(c) no party is in Breach, and no event has occurred which, with
notice or lapse of time, would constitute a Breach under the Contract; and
(d) no party has repudiated any provision of the Contract.
3.19 Receivables. All of the Receivables are Enforceable, represent bona
fide transactions, and arose in the Ordinary Course of Business of the Company,
and are reflected properly in its books and records. All of the Receivables are
good and collectible receivables, are current, and will be collected in
accordance with past practice and the terms of such receivables (and in any
event within six months following the Closing Date), without set off or
counterclaims, subject only to the reserve for bad debts reflected in the
Interim Financial Statements.
3.20 Powers of Attorney. The only outstanding power of attorney executed on
behalf of the Company is to the third-party payroll processing vendor for the
sole purpose of filing payroll tax returns.
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3.21 Insurance. Schedule 3.21 sets forth the following information with
respect to each insurance policy Contract (including policies providing
property, casualty, liability, and workers' compensation coverage and bond and
surety arrangements) to which the Company has been a party, a named insured, or
otherwise the beneficiary of coverage at July 31, 1999:
(a) the name of the insurer, the name of the policyholder, and the
name of each covered insured,
(b) the policy number and the period of coverage;
(c) the scope (including an indication of whether the coverage was on
a claims made, occurrence, or other basis) and amount of coverage; and
(d) a description of any retroactive premium adjustments or other
loss-sharing arrangements.
With respect to each insurance policy Contract and subject to the policy and
expiration dates and any other termination rights of the insurer thereunder:
(a) the Contract is Enforceable;
(b) the Contract will continue to be Enforceable on identical terms
following the consummation of the Transactions;
(c) neither the Company nor any other party to the Contract is in
Breach (including with respect to the payment of premiums or the giving of
notices), and no event has occurred which, with notice or the lapse of
time, would constitute such a Breach under the Contract; and
(d) no party to the Contract has repudiated any provision thereof.
The Company has been covered during the past nine years by insurance in
scope and amount customary and reasonable for the businesses in which it has
engaged during the aforementioned period.
3.22 Litigation. The Company (a) is not subject to any outstanding Order
and (b) is not a party or, to any Seller's Knowledge, is Threatened to be made a
party to any Action.
3.23 Product Warranty. Each product manufactured, sold, leased, or
delivered by the Company has been in conformity with all applicable Law,
Contracts, and all express and implied warranties, and the Company has not any
Liability (and there is no Basis for any present or future Action against any of
them giving rise to any Liability) for replacement or repair thereof or other
Damages in connection therewith, subject only to the reserve for product
warranty claims set forth on the face of the Interim Financial Statements
(rather than in any notes thereto) as adjusted for the passage of time through
the Closing Date in accordance with the Company' past custom and practice. No
product designed, manufactured, sold, leased, or delivered by the Company is
subject to any guaranty, warranty, or other indemnity or similar Liability
beyond the applicable standard terms and conditions of sale or lease. Schedule
3.23 includes copies of the
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standard terms and conditions of sale or lease for the Company (containing
applicable guaranty, warranty, and similar Liability indemnity provisions).
3.24 Product Liability. The Company has no Liability (and there is no Basis
for any present or future Action against any of them giving rise to any
Liability) arising out of any injury to individuals or property as a result of
the ownership, possession, or use of any product designed, manufactured, sold,
leased, or delivered by the Company.
3.25 Labor; Employees. To each Seller's Knowledge, no executive, key
employee, or group of employees has any plans to terminate employment with the
Company. The Company is not a party to or bound by any collective bargaining
Contract, nor has any of them experienced any strikes, grievances, claims of
unfair labor practices, or other collective bargaining disputes. The Company has
not committed any unfair labor practice. No Seller has any Knowledge of any
organizational effort currently being made or Threatened by or on behalf of any
labor union with respect to employees of the Company.
3.26 Employee Benefits. Schedule 3.26 lists each Employee Benefit Plan that
the Company maintains or to which it contributes. With respect to any employee
benefit plan, within the meaning of Section 3(3) of ERISA, which is subject to
ERISA and which is sponsored, maintained or contributed to, or has been
sponsored, maintained or contributed to within six years prior to the Closing
Date, by the Company or any member of the Controlled Group of Corporations of
which the Company is part, (a) no withdrawal Liability, within the meaning of
Section 4201 of ERISA, has been incurred, which withdrawal Liability has not
been satisfied, (b) no Liability to the PBGC has been incurred by the Company or
any member of the Controlled Group of Corporations of which the Company is part,
which Liability has not been satisfied, (c) no accumulated funding deficiency,
whether or not waived, within the meaning of Section 302 of ERISA or Section 412
of the Code has been incurred, and (d) all contributions (including
installments) to such plan required by Section 302 of ERISA and Section 412 of
the Code have been timely made. With respect to any kind of employee benefit
plan, such plan has been funded and maintained in compliance with all Laws
applicable thereto and the requirements of such plan's governing documents.
3.27 Environmental, Health, and Safety Matters.
(a) The Company has complied and is in compliance with all
Environmental, Health, and Safety Requirements in all material respects.
(b) Without limiting Section 3.29, the Company has obtained, has
complied in all material respects with, and is in compliance with all
Permits that are required pursuant to Environmental, Health, and Safety
Requirements for the occupation of its facilities and the operation of its
business. Except as set forth in Schedule 3.27(b), such Permits are in full
force and effect, free from Breach, and will not be adversely affected by
the Transactions.
(c) The Company has not received any written or oral notice, report or
other information regarding any actual or alleged violation of
Environmental, Health, and Safety Requirements or any Liabilities,
including any investigatory, remedial or
13
corrective Liabilities, relating to any of them or its facilities arising
under Environmental, Health, and Safety Requirements.
(d) Except as listed on Schedule 3.27(d), none of the following exists
at any property or facility owned or operated by the Company: (i) under or
above-ground storage tanks, (ii) asbestos containing material in any form
or condition, (iii) materials or equipment containing polychlorinated
biphenyls, or (iv) landfills, surface impoundments, or disposal areas.
(e) The Company has not treated, stored, disposed of, arranged for or
permitted the disposal of, transported, handled, or Released any substance,
including any hazardous substance, or owned or operated any property or
facility (and no such property or facility is contaminated by any such
substance) in a manner that has given or would give rise to any Damages,
including any Damages for response costs, corrective action costs, personal
injury, property damage or natural resources damages, pursuant to the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, the Solid Waste Disposal Act, as amended, or any other
Environmental, Health, and Safety Requirements.
(f) The Transactions will not result in any Liabilities for site
investigation or cleanup, or require the Consent of any Person, pursuant to
any of the so-called "transaction-triggered" or "responsible property
transfer" Environmental, Health, and Safety Requirements.
(g) The Company has not, either expressly or by operation of Law,
assumed or undertaken any Liability, including any obligation for
corrective or remedial action, of any other Person relating to
Environmental, Health, and Safety Requirements.
(h) No facts, events or conditions relating to the past or present
facilities, properties or operations of the Company will prevent, hinder or
limit continued compliance with Environmental, Health, and Safety
Requirements, give rise to any Damages pursuant to Environmental, Health,
and Safety Requirements, or give rise to any other Liabilities pursuant to
Environmental, Health, and Safety Requirements.
3.28 Customers and Suppliers. Schedule 3.28 lists the Company's (a)
ten largest customers in terms of sales during (i) the twelve month period
ended as of the Most Recent Year End and (ii) the eight-month period ended
as of the Balance Sheet Date and states the approximate total sales by the
Company to each such customer during such periods, respectively and (b) the
ten largest suppliers during the 12 month period ended as of the Most
Recent Year End and the eight-month period ended as of the Balance Sheet
Date. Except as set forth in Schedule 3.28, no Seller has received or has
Knowledge of any notice of termination or an intention to terminate the
relationship with the Company from any such customer or supplier.
3.29 Permits. The Company possesses all Permits required to be
obtained for its business and operations. Except as set forth in Schedule
3.29, such Permits are in full force and effect, free from Breach, and the
Transactions will not adversely affect them.
14
3.30 Foreign Practices Act Compliance. No Seller Party has, directly
or indirectly, in connection with the Company's business, made or agreed to
make any payment to any Person connected with or related to any
Governmental Authority, except payments or contributions required or
allowed by applicable Law. The internal accounting controls and procedures
of the Company are sufficient to cause the Company to comply with the
Foreign Corrupt Practices Act.
3.31 Year 2000 Compliant. The Company has undertaken the program to
become Year 2000 Compliant described in Schedule 3.31.
3.32 Certain Business Relationships with the Company. Except as
disclosed in Schedule 3.18, none of Sellers and their Affiliates has been
involved in any business arrangement or relationship with the Company
within the past 12 months, except that the Company has sold or leased
certain compressor units to Art Xxxxxxx. The sales and lease revenue from
Art Xxxxxxx were $97,000 in 1998 and $87,000 in 1997. The rates charged to
Art Xxxxxxx were, and are, the same as the rates for customers that are not
Affiliates of the Company. None of Sellers and their Affiliates owns any
asset that is used in the Company's business.
3.33 Accuracy of Information Furnished. No representation, statement,
or information contained in this Agreement (including the Schedules) or any
Contract or document executed in connection herewith or delivered pursuant
hereto or thereto or made or furnished to Buyer or its representatives by
any Seller contains or will contain any untrue statement of a material fact
or omits or will omit any material fact necessary to make the information
contained therein not misleading. The Sellers have provided Buyer with
correct and complete copies of all documents listed or described in the
Schedules.
ARTICLE 4.
PRE-CLOSING COVENANTS
The Parties agree as follows with respect to the period between the
execution of this Agreement and the Closing:
4.1 General. Each Party will use its Best Efforts to take all actions and
to do all things necessary, proper, or advisable to consummate, make effective,
and comply with all of the terms of this Agreement and the Transactions
(including satisfaction, but not waiver, of the Closing conditions set forth in
Article 6).
4.2 Notices and Consents. Each Seller will give any notices to third
parties, and will use its Best Efforts to obtain any third party Consents, that
Buyer reasonably may request in connection with the matters referred to in
Sections 2.1(c) and 3.3.
4.3 Operation of Business. The Company will not engage in any practice,
take any action, or enter into any transaction outside the Ordinary Course of
Business or engage in any practice, take any action, or enter into any
transaction of the sort described in Section 3.9, outside the Ordinary Course of
Business without prior written approval of Buyer. Subject to compliance with
applicable Law, from the date hereof until the earlier to occur of Closing or
the Termination Date, the Seller Parties will confer on a regular and frequent
basis with one or more representatives of Buyer to report on operational matters
and the general status of the Company'
15
ongoing business, operations and finances and will promptly provide to Buyer or
its representatives copies of all filings they make with any Governmental
Authority during such period.
4.4 Preservation of Business. The Company will use its Best Efforts to keep
its business and properties substantially intact, including its present
operations, physical facilities, working conditions, and relationships with
lessors, licensors, suppliers, customers, and employees.
4.5 Full Access. The Company will permit representatives of Buyer
(including financing providers) to have full access at all reasonable times, and
in a manner so as not to interfere with the normal business operations of the
Company, to all premises, properties, personnel, books, records, Contracts, and
documents pertaining to the Company and will furnish copies of all such books,
records, Contracts and documents and all financial, operating and other data and
information as Buyer may reasonably request; provided, however, that no
investigation pursuant to this Section 4.5 will affect any representations or
warranties made herein or the conditions to the obligations of the Parties to
consummate the Transactions.
4.6 Notice of Developments. Sellers will give prompt written notice to
Buyer of any development occurring after the date of this Agreement which causes
or reasonably could be expected to cause a Breach of any of the representations
and warranties in Section 2.1 or Article 3. Buyer will give prompt written
notice to Sellers of any development occurring after the date of this Agreement
which causes or reasonably could be expected to cause a Breach of any of the
representations and warranties in Section 2.2. No disclosure by any Party
pursuant to this Section 4.6 shall be deemed to amend or supplement the
Schedules or to prevent or cure any misrepresentation or Breach of warranty or
covenant.
4.7 Affiliated Transactions. The Sellers will cause all Contracts and
transactions by and between Sellers and any Affiliate of Sellers, on the one
hand, and the Company, on the other hand (other than those referred to in
Section 3.32), to be terminated effective as of the Closing, without any cost or
continuing obligation to the Company, and will deliver to Buyer evidence of such
terminations that is reasonably acceptable to Buyer.
4.8 Charges, Fees. Sellers will, prior to the Closing, take such steps as
are necessary to ensure that no sums are owed or payable by the Company to any
Person in the nature of a transfer charge or processing fee with respect to any
Contracts of the Company
4.9 Site Inspections. Subject to compliance with applicable Law and
applicable Environmental, Health, and Safety Requirements, from the date hereof
until the earlier to occur of the Closing or the Termination Date, Buyer may
undertake (at Buyer's sole cost and expense) an environmental assessment or
assessments of the operations, business and/or properties of the Company. Such
assessment may include a review of Permits, files and records, as well as visual
and physical inspections and testing and, if testing is involved, will be
performed pursuant to a separate agreement to be entered into containing normal
terms as to liability for damage to property or persons and use of the test
results. The Sellers will cooperate in good faith with Buyer's effort to conduct
such an assessment.
16
ARTICLE 5.
POST-CLOSING COVENANTS
The Parties agree as follows with respect to the period following the
Closing:
5.1 General. In case at any time after the Closing any further action is
necessary or desirable to carry out the purposes of this Agreement, each Party
will take such further action (including the execution and delivery of such
further instruments and documents) as any other Party reasonably may request to
carry out the purpose of this Agreement, all at the requesting Party's sole cost
and expense (unless the requesting Party is entitled to indemnification therefor
under Article 8). Sellers acknowledge and agree that after the Closing Buyer
will be entitled to possession of all documents, books, records, agreements, and
financial data of the Company.
5.2 Litigation Support. So long as any Party actively is contesting or
defending against any Action in connection with (a) the Transactions or (b) any
fact, situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or prior
to the Closing Date involving the Company, each other Party will cooperate with
such Party and such Party's counsel in the contest or defense, make available
their personnel, and provide such testimony and access to their books and
records as shall be necessary in connection with the contest or defense, at the
sole cost and expense of the contesting or defending Party (unless the
contesting or defending Party is entitled to indemnification therefor under
Article 8).
5.3 Transition. No Seller will take any action that is designed or intended
to have the effect of discouraging any lessor, licensor, customer, supplier, or
other business associate of any of the Company from maintaining the same
business relationships with the Company after the Closing as it maintained with
the Company prior to the Closing. Each Seller will refer all customer inquiries
relating to the Company to Buyer from and after the Closing.
5.4 Confidentiality. Each Seller will treat and hold as such all of the
Confidential Information, refrain from using any of the Confidential Information
except in connection with this Agreement, and deliver promptly to Buyer or
destroy, at the request and option of Buyer, all tangible embodiments (and all
copies) of the Confidential Information which are in Seller's possession. If any
Seller is requested or required (by oral question or request for information or
documents in any Action) to disclose any Confidential Information, that Seller
will notify Buyer promptly of the request or requirement so that Buyer may seek
an appropriate protective Order or waive compliance with this Section 5.4. If,
in the absence of a protective Order or the receipt of a waiver hereunder, any
Seller that is, on the written advice of counsel, compelled to disclose any
Confidential Information to any Governmental Authority, arbitrator, or mediator
or else stand Liable for contempt, that Seller may disclose the Confidential
Information to the Governmental Authority, arbitrator, or mediator; provided,
however; that the disclosing Seller shall use its Best Efforts to obtain, at the
request of Buyer, an Order or other assurance that confidential treatment will
be accorded to such portion of the Confidential Information required to be
disclosed as Buyer shall designate.
5.5 Restrictive Covenants. To assure that Buyer and the Company will
realize the benefits of the Transactions, each Seller hereby agrees not to:
17
(a) From the Closing Date until the later of (i) three years after the
Closing Date, and (ii) if Seller is an individual, two years after he is no
longer employed by Buyer, the Company, or any of their Affiliates, directly
or indirectly, alone or as a partner, joint venturer, officer, director,
member, employee, consultant, agent, independent contractor or Equity
Interest holder of, or lender to, any Person or business, engage in the
kind of business currently conducted by the Company or conducted by the
Company on the Closing Date (the "Relevant Business") in Oklahoma, Texas or
any state that borders Oklahoma or Texas.
(b) From the Closing Date until the later of (i) three years after the
Closing Date, and (ii) if Seller is an individual, two years after he is no
longer employed by Buyer, the Company, or any of their Affiliates, directly
or indirectly, alone or as a partner, joint venturer, officer, director,
member, employee, consultant, agent, independent contractor or Equity
Interest holder of, or lender to, any Person or business, engage in the
Relevant Business anywhere within a 200-mile radius of any location where
Buyer, the Company, or any of their Affiliates engage in the Relevant
Business.
(c) From the Closing Date until the later of (i) three years after the
Closing Date, and (ii) if Seller is an individual, two years after he is no
longer employed by Buyer, the Company or any of their Affiliates, directly
or indirectly, alone or as a partner, joint venturer, officer, director,
member, employee, consultant, agent, independent contractor or Equity
Interest holder of, or lender to, any Person or business, engage in any
business that is in competition with any business in which Buyer, the
Company or any of their Affiliates engage, and that is within a 50-mile
radius of any location at which Buyer, the Company, or any of their
Affiliates engages in such business at the time such Seller commences to
engage in such competitive activity.
(d) From the Closing Date until the later of (i) three years after the
Closing Date, and (ii) if Seller is an individual, two years after he is no
longer employed by Buyer, the Company or any of their Affiliates, directly
or indirectly (A) induce any Person which is a customer of Buyer, the
Company, or any of their Affiliates to patronize any business directly or
indirectly in competition with the Relevant Business conducted by Buyer,
the Company, or any of their Affiliates; (B) canvass, solicit, or accept
from any Person who is a customer of Buyer, the Company, or any of their
Affiliates, any such competitive business; or (C) request or advise any
Person who is a customer or vendor of Buyer, the Company or any of their
Affiliates, to withdraw, curtail, or cancel any such customer's or vendor's
business with such Person.
(e) From the Closing Date until the later of (i) six months after the
Closing Date, and (ii) if Seller is an individual, six months after he is
no longer employed by Buyer, the Company, or any of their Affiliates,
directly or indirectly employ or knowingly permit such Seller to employ any
person who was employed by Buyer, the Company, or any of their Affiliates
within the prior six months.
(f) From the Closing Date until the later of (i) three years after the
Closing Date, and (ii) if Seller is an individual, two years after he is no
longer employed by Buyer, the Company, or any of their Affiliates, directly
or indirectly, (A) solicit for
18
employment by any such Seller or anyone else, any employee or then
currently active independent contractor of Buyer, the Company, or any of
their Affiliates, or any person who was an employee or then currently
active independent contractor of Buyer, the Company, or any of their
Affiliates, within the six-month period immediately preceding such
solicitation of employment, other than such person (1) whose employment or
independent contractor relationship was terminated by the applicable
Person, or (2) who independently responded to a general solicitation for
employment by such Seller; or (B) induce or attempt to induce, any employee
or independent contractor of Buyer, the Company, or any of their
Affiliates, to terminate such employee's employment or independent
contractor's active contractual relationship with such Person.
(g) Call on any Acquisition Candidate with the Knowledge of such
Acquisition Candidate's status as such, for the purpose of acquiring, or
arranging the acquisition of, that Acquisition Candidate by any Person
other than Buyer, the Company or any of their Affiliates.
Notwithstanding the foregoing, the beneficial ownership of less than 1% of
the Equity Interests of any Person having a class of Equity Interest
actively traded on a national securities exchange or over-the-counter
market shall not be deemed, in and of itself, to Breach the prohibitions of
this Section 5.5. Each Seller agrees and acknowledges that the restrictions
in this Section 5.5 are reasonable in scope and duration and are necessary
to protect Buyer and the Company after the Closing. If any Seller is found
to have Breached this Section, then, in addition to all other remedies that
may be available to Buyer, an amount of time equal to the period such
Seller was found to be in Breach of this Section shall be added to the time
periods contemplated by this Section. If any provision of this Section 5.5,
as applied to any Party or to any circumstance, is adjudged by a
Governmental Authority, arbitrator, or mediator not to be enforceable in
accordance with its terms, the same will in no way affect any other
circumstance or the enforceability of the remainder of this Agreement. If
any such provision, or any part thereof, is held not to be enforceable in
accordance with its terms because of the duration of such provision, the
area covered thereby, or the scope of the activities covered, the Parties
agree that the Governmental Authority, arbitrator, or mediator making such
determination shall have the power to reduce the duration, area, and/or
scope of activities of such provision, and/or to delete specific words or
phrases, and in its reduced form, such provision shall then be Enforceable
and shall be enforced. The Parties agree and acknowledge that the Breach of
this Section 5.5 will cause irreparable Damage to Buyer and the Company and
upon breach of any provision of this Section 5.5, Buyer and/or the Company
shall be entitled to injunctive relief, specific performance, or other
equitable relief without bond or other security; provided, however, that
the foregoing remedies shall in no way limit any other remedies which Buyer
and/or the Company may have. Further, each Seller agrees to the
jurisdiction of an appropriate Governmental Authority, arbitrator and
mediator in Oklahoma City, Oklahoma, for the enforcement of this Section.
19
ARTICLE 6.
CLOSING CONDITIONS
6.1 Conditions Precedent to Obligation of Buyer. Buyer's obligation to
consummate the Transactions contemplated to occur in connection with the Closing
and thereafter is subject to the satisfaction of each condition precedent listed
below. Unless expressly waived pursuant to this Agreement, no representation,
warranty, covenant, right or remedy available to Buyer in connection with the
Transactions will be deemed waived by any of the following actions or inactions
by or on behalf of Buyer (regardless of whether any Seller is given notice of
any such matter): (i) consummation by Buyer of the Transactions, (ii) any
inspection or investigation, if any, of the Company or any Seller, (iii) the
awareness of any fact or matter acquired (or capable or reasonably capable of
being acquired) with respect to the Company or Sellers, or (iv) any other
action, in each case at any time, whether before, on, or after the Closing Date;
provided, however, that Buyer does not at the date of this Agreement have actual
knowledge that any of Sellers' representations or warranties hereunder are
inaccurate.
(a) Accuracy of Representations and Warranties. Each representation
and warranty set forth in Section 2.1 and Article 3 must have been accurate
and complete as of the date of this Agreement, and must be accurate and
complete as of the Closing Date, as if made on the Closing Date, without
giving effect to any supplements to the Schedules.
(b) Compliance with Obligations. Each Seller must have performed and
complied with all of its covenants to be performed or complied with at or
prior to Closing (singularly and in the aggregate).
(c) No Material Adverse Change or Destruction of Property. Since the
date of this Agreement there must have been no event, series of events or
the lack of occurrence thereof which, singularly or in the aggregate, could
reasonably be expected to have a Material Adverse Effect on the Company
since the date of this Agreement, in particular, (i) there must have been
no Material Adverse Change to any of the Company or their assets, (ii)
there must not have been any action or inaction by a Governmental
Authority, arbitrator or mediator which could reasonably be expected to
cause a Material Adverse Change to the Company, and (iii) there must not
have been any fire, flood, casualty, act of God or the public enemy or
other cause (regardless of insurance coverage for such damage) which event
could reasonably be expected to have a Material Adverse Effect on the
Company.
(d) Consents. The Seller and Buyer must have received Consents to the
Transactions and waivers of rights to terminate or modify any rights or
obligations of any Seller from any Person from whom such Consent is
required, including under any Contract listed or required to be listed in
Schedule 3.14(b), 3.15, 3.18, 3.21 and 3.26 or Law, or who as a result of
the Transactions, would have such rights to terminate or modify such
Contracts, either by their terms or as a matter of Law.
(e) No Adverse Litigation. There must not be pending or Threatened any
Action by or before any Governmental Authority, arbitrator, or mediator
which shall seek
20
to restrain, prohibit, invalidate, or collect Damages arising out of, the
Transactions, or which, in the reasonable judgment of Buyer, makes it
inadvisable to proceed with the Transactions.
(f) Liabilities. Prior to the Closing, the Sellers must have obtained
and delivered to Buyer full satisfactions or releases of all Liabilities
due to or from the Company which are due to be satisfied or released under
this Agreement to or on behalf of (i) any Affiliate of the Company or (ii)
Sellers or any Affiliate of Sellers, except the Liabilities of Art Xxxxxxx
referred to in Section 3.32.
(g) Reimbursement of Financial Advisory Fees. Prior to the Closing,
Sellers shall have reimbursed the Company for all fees and expenses paid to
Xxxxxxxx Xxxxxx Refsnes, Inc. in connection with such firm's financial
advisory services to the Company in connection with the Transactions or
otherwise.
(h) Receivables from Sellers. Prior to the Closing, Sellers shall have
repaid all outstanding indebtedness of Sellers to the Company, together
with accrued and unpaid interest, to the Company.
6.2 Conditions Precedent to Sellers' Obligation. Each Seller's obligation
to consummate the Transactions contemplated to occur in connection with the
Closing and thereafter is subject to the satisfaction of each condition
precedent listed below. Unless expressly waived pursuant to this Agreement, no
representation, warranty, covenant, right, or remedy available to any Seller in
connection with the Transactions will be deemed waived by any of the following
actions or inactions by or on behalf of any Seller (regardless of whether Buyer
is given notice of any such matter): (i) consummation by Sellers of the
Transactions, (ii) any inspection or investigation, if any, of Buyer, (iii) the
awareness of any fact or matter acquired (or capable or reasonably capable of
being acquired) with respect to Buyer, or (iv) any other action, in each case at
any time, whether before, on, or after the Closing Date; provided, however, that
none of the Sellers has, at the date of this Agreement, actual knowledge that
any of Buyer's representations or warranties are inaccurate.
(a) Accuracy of Representations and Warranties. Each representation
and warranty set forth in Section 2.2 must have been accurate and complete
as of the date of this Agreement, and must be accurate and complete as of
the Closing Date, as if made on the Closing Date;
(b) Compliance with Obligations. Buyer must have performed and
complied with all its covenants and obligations required by this Agreement
to be performed or complied with at or prior to Closing (singularly and in
the aggregate);
(c) No Order or Injunction. There must not be issued and in effect any
Order restraining or prohibiting the Transactions.
(d) No Adverse Litigation. There must not be pending or threatened any
action by or before any Governmental Authority, arbitrator, or mediator
which shall seek to restrain, prohibit, or invalidate, or collect Damages
arising out of, the Transactions, or
21
which in the reasonable judgment of Sellers, makes it inadvisable to
proceed with the Transactions.
ARTICLE 7.
TERMINATION
7.1 Termination of Agreement. The Parties may terminate this Agreement as
provided below:
(a) Buyer and the Requisite Sellers may terminate this Agreement as to
all Parties by mutual written consent at any time prior to the Closing;
(b) Buyer or the Requisite Sellers may terminate this Agreement upon
delivery of notice if the Closing has not occurred prior to December 31,
1999, provided that the party delivering such notice shall not have caused
such failure to close;
(c) Buyer may terminate this Agreement by giving written notice to the
Sellers at any time prior to the Closing if any Seller has Breached any
representation, warranty, or covenant contained in this Agreement in any
material respect (except with respect to materiality for any provisions
including the word "material" or words of similar import and Section 4.8,
in which case such termination rights will arise upon any Breach); and
(d) The Sellers may terminate this Agreement by giving notice to Buyer
at any time prior to the Closing if Buyer has Breached any representation,
warranty, or covenant contained in this Agreement in any material respect
(except with respect to materiality for any provisions including the word
"material" or words of similar import, in which case such termination
rights will arise upon any Breach).
7.2 Effect of Termination.
(a) Each Party's termination right under this Agreement is in addition
to any other rights it may have under this Agreement or otherwise, and the
exercise of a termination right will not be an election of remedies. Except
for the obligations under this Article 7 and Article 9, if this Agreement
is terminated under Section 7.1, then, except as provided in this Section
7.2 all further obligations of the Parties under this Agreement will
terminate.
(b) If Buyer or the Sellers terminate this Agreement pursuant to
Section 7.1(c) or (d), as the case may be, then the rights of the
non-breaching Party(ies) to pursue all legal remedies for Damages such
Party(ies) suffer will survive such termination unimpaired.
22
ARTICLE 8.
INDEMNIFICATION
8.1 Survival of Representations and Warranties.
(a) Each representation and warranty of Sellers contained in Section
2.1 (a "Seller's Personal Representation") and any certificate related to
such representations and warranties will survive the Closing and will
continue in full force and effect forever. Each representation and warranty
of the Sellers contained in Article 3 (a "Seller's Company Representation")
and any certificate related to such representations and warranties will
survive the Closing and continue in full force and effect through December
31, 2000, except the representations and warranties set forth in Sections
3.1, 3.2, and 3.5 which will survive the Closing and will continue in full
force and effect forever.
(b) Each representation and warranty of Buyer contained in Section 2.2
and any certificate directly related to such representations and warranties
will survive the Closing and continue in full force and effect forever.
8.2 Indemnification Provisions for Buyer's Benefit. Subject to Sections 8.5
and 8.6, each Seller, severally and not jointly, will indemnify and hold the
Seller Indemnitees harmless from and pay any and all Damages, directly or
indirectly, resulting from, relating to, arising out of, or attributable to any
of the following:
(a) any Breach of any representation or warranty such Seller has made
in this Agreement, as if such representation or warranty was made on and as
of the date of this Agreement (without giving effect to any supplement to
the Schedules), or any other certificate or document such Seller or the
Company has delivered pursuant to this Agreement;
(b) any Breach of any representation or warranty such Seller has made
in this Agreement as if such representation or warranty were made on and as
of the Closing Date (without giving effect to any supplement to the
Schedules), other than any such Breach that is disclosed in a supplement to
the Schedules delivered under Article 3, as having caused a condition
specified in Section 6.1 not to be satisfied; and
(c) any Breach by such Seller of any covenant or obligation of such
Seller in this Agreement.
8.3 Indemnification Provisions for Sellers' Benefit. Buyer will indemnify
and hold the Buyer Indemnitees harmless from and pay any and all Damages,
directly or indirectly, resulting from, relating to, arising out of, or
attributable to any of the following:
(a) any Breach of any representation or warranty Buyer has made in
this Agreement or any other certificate Buyer has delivered to Sellers
pursuant to this Agreement; and
23
(b) any Breach by Buyer of any covenant or obligation of Buyer in this
Agreement.
8.4 Indemnification Claim Procedures.
(a) If any Action is commenced in which any Indemnitee is a party
which may give rise to a claim for indemnification against any Indemnitor
then such Indemnitee shall promptly give notice to the Indemnitor. Failure
to notify the Indemnitor will not relieve the Indemnitor of any Liability
that it may have to the Indemnitee, except to the extent the defense of
such Action is materially and irrevocably prejudiced by the Indemnitee's
failure to give such notice.
(b) An Indemnitor will have the right to defend against an
Indemnification Claim with counsel of its choice reasonably satisfactory to
the Indemnitee if (i) within 15 days following the receipt of notice of the
Indemnification Claim the Indemnitor notifies the Indemnitee in writing
that the Indemnitor will indemnify the Indemnitee subject to the provisions
of this Article 8, (ii) the Indemnitor provides the Indemnitee with
evidence reasonably acceptable to the Indemnitee that the Indemnitor will
have the financial resources to defend against the Indemnification Claim
and satisfy its indemnification obligations under this Article 8, and,
subject to the provisions of this Article 8, pay, in cash, all Damages the
Indemnitee may suffer resulting from, relating to, arising out of, or
attributable to the Indemnification Claim, and (iii) the Indemnitor
continuously conducts the defense of the Indemnification Claim actively and
diligently.
(c) So long as the Indemnitor is conducting the defense of the
Indemnification Claim in accordance with Section 8.4(b), (i) the Indemnitee
may retain separate co-counsel at its sole cost and expense and participate
in the defense of the Indemnification Claim, (ii) the Indemnitee will not
consent to the entry of any Order with respect to the Indemnification Claim
without the prior written consent of the Indemnitor (not to be withheld
unreasonably), and (iii) the Indemnitor will not consent to the entry of
any Order with respect to the Indemnification Claim without the prior
written consent of the Indemnitee (not to be withheld unreasonably,
provided that it will not be deemed to be unreasonable for an Indemnitee to
withhold its consent with respect to any finding of or admission (1) of any
violation of any Law, Order or Permit, or (2) which Indemnitee believes
could have a material adverse effect on any other Actions to which the
Indemnitee or its Affiliates are party or to which Indemnitee has a good
faith belief they may become party).
(d) In connection with any Indemnification Claim for Taxes, or if any
condition in Section 8.4(b) is or becomes unsatisfied, (i) the Indemnitee
may defend against, and with the consent of the Indemnitor, which will not
be unreasonably withheld, consent to the entry of any Order with respect to
an Indemnification Claim (ii) each Indemnitor will reimburse the Indemnitee
promptly and periodically for the Damages relating to defending against the
Indemnification Claim, and (iii) each Indemnitor will remain Liable for any
Damages the Indemnitee may suffer relating to the Indemnification Claim, in
all the foregoing cases, to the fullest extent and subject to the
limitations provided in this Article 8.
24
(e) In connection with third-party claims, each Party hereby consents
to the non-exclusive jurisdiction of any Governmental Authority in which an
Action is brought against any Indemnitee for purposes of any
Indemnification Claim that an Indemnitee may have under this Agreement with
respect to such Action or the matters alleged therein, and agrees that
process may be served on such Party with respect to such claim anywhere in
the world.
8.5 Limitations on Indemnification Liability. Claims for indemnification
under this Article 8 will not be made for the first $10,000 of Damages. Each
Seller's aggregate liability for indemnification under this Article 8 will not
exceed an amount equal to the portion of the Purchase Price allocable to the
Shares sold by such Seller (calculated based on the percentage of ownership of
the Company of such Seller set forth on Exhibit A hereto); provided, however,
that each Seller's aggregate Liability for Breaches of such Seller's Company
Representations will not exceed such Seller's allocable portion of $500,000
(calculated based on the percentage of ownership of the Company of such Seller
set forth on Exhibit A hereto).
8.6 Escrow; Set Off Rights. Indemnification obligations of any Seller may
be satisfied by setting off all or any part of any Damages Buyer suffers if the
Requisite Sellers in the case of Breaches of Seller's Company Representations,
or such Seller in the case of Breaches of Seller's Personal Representations, and
Buyer jointly instruct the Escrow Agent under the Escrow Agreement to pay over
to Buyer a corresponding amount from the escrowed funds in the Escrow Account
credited to the account of such Seller.
ARTICLE 9.
MISCELLANEOUS
9.1 Schedules.
(a) The disclosures in the Schedules, and those in any supplement
thereto, relate only to the representations and warranties in the Section
or paragraph of the Agreement to which they expressly relate and not to any
other representation or warranty in this Agreement.
(b) Nothing in the Schedules will be deemed adequate to disclose an
exception to a representation or warranty made herein, unless the Schedules
identify the exception with reasonable particularity.
9.2 Entire Agreement. This Agreement, together with the Exhibits and
Schedules hereto and the certificates, documents, instruments and writings that
are delivered pursuant hereto, constitutes the entire agreement and
understanding of the Parties in respect of its subject matters and supersedes
all prior understandings, agreements, or representations by or among the
Parties, written or oral, to the extent they relate in any way to the subject
matter hereof or the Transactions.
9.3 Successors. All of the terms, agreements, covenants, representations,
warranties, and conditions of this Agreement are binding upon, and inure to the
benefit of and are enforceable by, the Parties and their respective successors.
If a Seller is an entity and if the principal business, operations or a majority
or substantial portion of the assets of such Seller are
25
assigned, conveyed, allocated or otherwise transferred, including, by sale,
merger, consolidation, amalgamation, conversion or similar transactions, such
receiving Person or Persons shall automatically become bound by and subject to
the provisions of this Agreement, and such Seller shall cause the receiving
Person or Persons to expressly assume its obligations hereunder.
9.4 Assignments. No Party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of Buyer and Sellers'; provided, however, that Buyer may (a) assign any or all
of its rights and interests hereunder to one or more of its Affiliates and (b)
designate one or more of its Affiliates to perform its obligations hereunder (in
any or all of which cases Buyer nonetheless shall remain responsible for the
performance of all of its obligations hereunder).
9.5 Notices. All notices, requests, demands, claims and other
communications hereunder will be in writing. Any notice, request, demand, claim
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
If to Buyer and after Closing to the Company:
Emerging Alpha Corporation
00000 Xxx Xxx Xxxxx
Xxxxxxx, Xxxxx 00000
Attn: Xxxxx X. Xxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
Copy to (which shall not constitute notice):
Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.
000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attn: Xxxxxxx X. Xxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
If to Sellers and before Closing to the Company
Gas Xxxx, Inc.
0000 XX 0xx Xxxxxx
Xxxxxxxx Xxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
26
For Discovery partnerships:
Rockefeller & Co., Inc.
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
For Citicap:
0 Xxxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxx, XX 00000
Attn: Xxxx Xxxx, Ph.D
For Art X. Xxxxxxx and Estate of Ran Xxxxx:
c/x Xxxxx Exploration Inc.
3000 Oklahoma Tower
000 Xxxx Xxxxxx
Xxxxxxxx Xxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
For X.X. Xxxxxxx:
c/o Waldrop's Engine Service
X.X. Xxx 000
Xxxxxxxx, Xxxxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
For Xxxxxxx X. Xxxxxxxxx:
0000 XX 0xx Xxxxxx
Xxxxxxxx Xxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
27
For Xxxxxx X. Xxxxxx:
0000 XX 0xx Xxxxxx
Xxxxxxxx Xxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Parties
notice in the manner herein set forth.
9.6 Specific Performance. Each Party acknowledges and agrees that the other
Parties would be damaged irreparably if any provision of this Agreement is not
performed in accordance with its specific terms or is otherwise Breached.
Accordingly, each Party agrees that the other Parties will be entitled to an
injunction or injunctions to prevent Beaches of the provisions of this Agreement
and to enforce specifically this Agreement and its terms and provisions in any
Action instituted in any court of the United States or any state thereof having
jurisdiction over the Parties and the matter, in addition to any other remedy to
which they may be entitled, at Law or in equity.
9.7 Time. Time is of the essence in the performance of this Agreement.
9.8 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
9.9 Headings. The article and section headings contained in this Agreement
are inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
9.10 Governing Law. This Agreement and the performance of the Transactions
and obligations of the Parties hereunder will be governed by and construed in
accordance with the laws of the State of Delaware.
9.11 Amendments and Waivers. No amendment, modification, replacement,
termination or cancellation of any provision of this Agreement will be valid,
unless the same shall be in writing and signed by Buyer and the Requisite
Sellers. No waiver by any Party of any default, misrepresentation, or breach of
warranty or covenant hereunder, whether intentional or not, may be deemed to
extend to any prior or subsequent default, misrepresentation, or Breach of
warranty or covenant hereunder or affect in any way any rights arising because
of any prior or subsequent such occurrence.
28
9.12 Expenses. Except as otherwise expressly provided in this Agreement,
each Party will bear its own costs and expenses incurred in connection with the
preparation, execution and performance of this Agreement and the Transactions
including all fees and expenses of agents, representatives, financial advisors,
legal counsel and accountants. Sellers agree that the Company has not borne or
will bear any out-of-pocket costs and expenses (including any legal fees and
expenses of any Seller Party) in connection with this Agreement or any of the
Transactions.
9.13 Construction. The Parties have participated jointly in the negotiation
and drafting of this Agreement. If an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the Parties and no presumption or burden of proof shall arise favoring or
disfavoring any Party because of the authorship of any provision of this
Agreement. Any reference to any federal, state, local, or foreign Law shall be
deemed also to refer to Law as amended and all rules and regulations promulgated
thereunder, unless the context requires otherwise. The word "including" means
"including without limitation." The Parties intend that each representation,
warranty, and covenant contained herein shall have independent significance. If
any Party has breached any representation, warranty, or covenant contained
herein in any respect, the fact that there exists another representation,
warranty or covenant relating to the same subject matter (regardless of the
relative levels of specificity) which the Party has not breached shall not
detract from or mitigate the fact that the Party is in breach of the first
representation, warranty, or covenant.
9.14 Incorporation of Exhibits, Annexes, and Schedules. The Exhibits,
Annexes, and Schedules identified in this Agreement are incorporated herein by
reference and made a part hereof.
9.15 Dispute Resolution.
(a) If the Parties (for purposes of this Section, Sellers shall be
considered one Party and Buyer shall be considered one Party) are unable to
resolve any controversy, dispute, claim or other matter in question arising
out of, or relating to, this Agreement, any provision hereof, the alleged
breach hereof, or in any way relating to the subject matter of this
Agreement, or the relationship between the parties created by this
Agreement, including questions concerning the scope and applicability of
this Section 9.15, whether sounding in contract, tort or otherwise, at law
or in equity, under State or federal law, whether provided by statute or
common law, for damages or any other relief (any such controversy, dispute,
claim or other matter in question, a "Dispute"), on or before the 30th day
following the receipt by Sellers or Buyer, as the case may be, of written
notice of such Dispute from the other Party, which notice describes in
reasonable detail the nature of the Dispute and the facts and circumstances
relating thereto, Sellers or Buyer may, by delivery of written notice to
the other Party), require that a representative of Sellers and of Buyer
meet at a mutually agreeable time and place with an independent mediator in
an attempt to resolve such Dispute. Such meeting shall take place on or
before the 10th day following the date of the notice requiring such
meeting, and if the Dispute has not been resolved within 10 days following
such meeting, Sellers or Buyer may cause such Dispute to be resolved by
binding arbitration in Oklahoma City, Oklahoma, by submitting such Dispute
for arbitration within 10 days following the
29
expiration of such 10-day period. This agreement to arbitrate shall be
specifically enforceable against the Parties.
(b) It is the intention of the Parties that the arbitration shall be
governed by and conducted pursuant to the Federal Arbitration Act, as such
Act is modified by this Section 9.15. If it is determined the Federal
Arbitration Act is not applicable to this Agreement (e.g., this Agreement
does not evidence a transaction involving interstate commerce), this
agreement to arbitrate shall nevertheless be enforceable pursuant to
applicable State law. While the arbitrators may refer to the Commercial
Arbitration Rules of the American Arbitration Association (the "Rules") for
guidance with respect to procedural matters, the arbitration proceeding
shall not be administered by the American Arbitration Association but
instead shall be self-administered by the Parties until the arbitrators are
selected and then the proceeding shall be administered by the arbitrators.
(c) The validity, construction, and interpretation of this agreement
to arbitrate, and all procedural aspects of the arbitration conducted
pursuant to this agreement to arbitrate, including but not limited to, the
determination of the issues that are subject to arbitration (i.e.,
arbitrability), the scope of the arbitrable issues, allegations of "fraud
in the inducement" to enter into this Agreement or this arbitration
provision, allegations of waiver, laches, delay or other defenses to
arbitrability, and the rules governing the conduct of the arbitration
(including the time for filing an answer, the time for the filing of
counterclaims, the times for amending the pleadings, the specificity of the
pleadings, the extent and scope of discovery, the issuance of subpoenas,
the times for the designation of experts, whether the arbitration is to be
stayed pending resolution of related litigation involving third parties not
bound by this arbitration agreement, the receipt of evidence, and the
like), shall be decided by the arbitrators.
(d) The rules of arbitration of the Federal Arbitration Act, as
modified by this Agreement, shall govern procedural aspects of the
arbitration; to the extent the Federal Arbitration Act as modified by this
Agreement does not address a procedural issue, the arbitrators may refer
for guidance to the Commercial Arbitration Rules then in effect with the
American Arbitration Association. The arbitrators may refer for guidance to
the Federal Rules of Civil Procedure, the Federal Rules of Civil Evidence,
and the federal law with respect to the discovery process, applicable legal
privileges, and admissible evidence. In deciding the substance of the
Parties' Dispute, the arbitrators shall refer to the substantive laws of
the State of Delaware for guidance (excluding Delaware's conflict-of-law
rules or principles that might call for the application of the law of
another jurisdiction). The arbitrators shall have the authority to assess
the costs and expenses of the arbitration proceeding (including the
arbitrators' fees and expenses) against either or both parties. However,
each party shall bear its own attorneys fees and the arbitrators shall have
no authority to award attorneys fees.
(e) When a Dispute has been submitted for arbitration, within 15 days
of such submission, Sellers will choose an arbitrator, and Buyer will
choose an arbitrator. While the third arbitrator shall be neutral, the two
party-appointed arbitrators are not required to be neutral and it shall not
be grounds for removal of either of the two party-appointed arbitrators or
for vacating the arbitrators' award that either of such arbitrators has
past or
30
present minimal relationships with the Party that appointed such
arbitrator. Evident partiality on the part of an arbitrator exists only
where the circumstances are such that a reasonable person would have to
conclude there in fact existed actual bias and a mere appearance or
impression of bias will not constitute evident partiality or otherwise
disqualify an arbitrator. Minimal or trivial past or present relationships
between the neutral arbitrator and the party selecting such arbitrator or
any of the other arbitrators, or the failure to disclose such minimal or
trivial past or present relationships, will not by themselves constitute
evident partiality or otherwise disqualify any arbitrator. Upon selection
of the third arbitrator, each of the three arbitrators shall agree in
writing to abide faithfully by the terms of this agreement to arbitrate.
The three arbitrators shall make all of their decisions by majority vote.
If one of the party-appointed arbitrators refuses to participate in the
proceedings or refuses to vote, the decision of the other two arbitrators
shall be binding. If an arbitrator dies or becomes physically incapacitated
and is unable to fulfill his or her duties as an arbitrator, the
arbitration proceeding shall continue with a substitute arbitrator selected
as follows: if the incapacitated arbitrator is a party-appointed
arbitrator, the party shall promptly select a new arbitrator, and if the
incapacitated arbitrator is the neutral arbitrator, the two-party appointed
arbitrators shall select a substitute neutral arbitrator.
(f) The final hearing shall be conducted within 60 days of the
selection of the third arbitrator. The final hearing shall not exceed ten
working days, with each party to be granted one-half of the allocated time
to present its case to the arbitrators. There shall be a transcript of the
hearing before the arbitrators. The arbitrators shall render their ultimate
decision within 20 days of the completion of the final hearing completely
resolving all of the Disputes between the parties that are the subject of
the arbitration proceeding. The arbitrators' ultimate decision after final
hearing shall be in writing, but shall be as brief as possible, and the
arbitrators shall assign their reasons for their ultimate decision. In case
the arbitrators award any monetary Damages in favor of either party, the
arbitrators shall certify in their award that they have not included any
Damages prohibited by Article 8.
(g) The arbitrators' award shall, as between the Parties to this
Agreement and those in privity with them, be final and entitled to all of
the protections and benefits of a final judgment, e.g., res judicata (claim
preclusion) and collateral estoppel (issue preclusion), as to all Disputes,
including compulsory counterclaims, that were or could have been presented
to the arbitrators. The arbitrators' award shall not be reviewable by or
appealable to any court, except to the extent permitted by the Federal
Arbitration Act.
(h) It is the intent of the parties that the arbitration proceeding
shall be conducted expeditiously, without initial recourse to the courts
and without interlocutory appeals of the arbitrators' decisions to the
courts. However, if a party refuses to honor its obligations under this
agreement to arbitrate, the other Party may obtain appropriate relief
compelling arbitration in any court having jurisdiction over the Parties;
the order compelling arbitration shall require that the arbitration
proceedings take place in Oklahoma City, Oklahoma, as specified above. The
Parties may apply to any court for orders requiring witnesses to obey
subpoenas issued by the arbitrators. Moreover, any and all of the
arbitrators' orders and decisions may be enforced if necessary by any
court.
31
The arbitrators' award may be confirmed in, and judgment upon the award
entered by, any federal or State court having jurisdiction over the
Parties.
(i) To the fullest extent permitted by law, this arbitration
proceeding and the arbitrators award shall be maintained in confidence by
the parties. However, a violation of this covenant shall not affect the
enforceability of this arbitration agreement or of the arbitrators' award.
(j) A Party's breach of this Agreement shall not affect this agreement
to arbitrate. Moreover, the parties' obligations under this arbitration
provision are enforceable even after this Agreement has terminated. The
invalidity or unenforceability of any provision of this arbitration
agreement shall not affect the validity or enforceability of the Parties'
obligation to submit their Disputes to binding arbitration or the other
provisions of this agreement to arbitrate.
32
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first above written.
Buyer
Emerging Alpha Corporation
By: /S/ XXXXX X. XXXXXXX
-----------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Chief Financial Officer
Sellers
Ran Xxxxx, Jr. 1981 Revocable Trust, Xxx X.
Xxxxxxxx and Art X. Xxxxxxx, Co-Trustees
By: /S/ ART X. XXXXXXX
-----------------------------------
Art X. Xxxxxxx
Co-Trustee
By: /S/ ART X. XXXXXXX
-----------------------------------
Art X. Xxxxxxx
Attorney-in-Fact for Xxx X. Xxxxxxxx,
Co-Trustee
/S/ ART X. XXXXXXX
-----------------------------------
Art X. Xxxxxxx
/S/ X. X. XXXXXXX
-----------------------------------
X. X. Xxxxxxx
/S/ XXXXXXX X. XXXXXXXXX
-----------------------------------
Xxxxxxx X. Xxxxxxxxx
/S/ XXXXXX X. XXXXXX
-----------------------------------
Xxxxxx X. Xxxxxx
S-1
DISCOVERY FUND I-90
LIMITED PARTNERSHIP
DISCOVERY FUND II-90
LIMITED PARTNERSHIP
DISCOVERY FUND III-90
LIMITED PARTNERSHIP
By: Discovery Associates 90, L.P.
as General Partner
By: Rockefeller & Co., Inc.
as Managing Partner
By: /S/ XXXX X. XXXXXX
-----------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President - Treasurer
CITICAP, INC.
By: /S/ XXXX XXXX
-----------------------------------
Name: Xxxx Xxxx
Title: President
S-2
APPENDIX I
DEFINITIONS
"Action" means any action, appeal, petition, plea, charge, complaint,
claim, suit, demand, litigation, arbitration, mediation, hearing, inquiry,
investigation or similar event, occurrence, or proceeding.
"Acquisition Candidate" means (i) any Person engaged in the Relevant
Business, or (ii) any project with respect to the Relevant Business, and in
either case (A) which was called on by Buyer, any Seller Party, or any of their
Affiliates, in connection with the possible acquisition by Buyer, the Company,
or any of their Affiliates of that Person or project, or (B) with respect which
Buyer, any Seller Party, or any of their Affiliates has made an acquisition
analysis.
"Affiliate" with respect to any specified Person, means a Person that,
directly or indirectly, through one or more intermediaries, controls or is
controlled by, or is under common control with, such specified Person.
"Ancillary Agreements" means the Escrow Agreement, the Employment
Agreements and any other agreements or instruments entered into in connection
with the Transactions.
"Balance Sheet Date" is defined in Section 3.8.
"Basis" means any past or current fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident, action,
failure to act, or transaction about which the relevant Person has Knowledge
that forms or could form the basis for any specified consequence.
"Best Efforts" means the efforts, time, and costs that a prudent Person
desirous of achieving a result would use, expend, or incur in similar
circumstances to ensure that such result is achieved as expeditiously as
possible; provided, however, that no such use, expenditure, or incurrence will
be required if it would have a Material Adverse Effect on such Person.
"Breach" means any breach, inaccuracy, failure to perform, failure to
comply, conflict with, default, violation, acceleration, termination,
cancellation, modification, or required notification.
"Buyer" is defined in the preamble to this Agreement.
"Buyer Indemnitees" means Sellers and their respective officers, directors,
employees, agents, representatives, controlling Persons, stockholders, and
Affiliates.
"Closing" is defined in Section 1.3.
"Closing Date" is defined in Section 1.3.
"Commitment" with respect to any Person means (a) options, warrants,
convertible securities, exchangeable securities, subscription rights, conversion
rights, exchange rights, or
1
other Contracts that could require such Person to issue any of its Equity
Interests, or any other securities convertible into, exchangeable or exercisable
for, or representing the right to subscribe for any Equity Interest of such
Person; (b) statutory pre-emptive rights or pre-emptive rights granted under the
applicable Person's Organizational Documents; and (c) stock appreciation rights,
phantom stock, profit participation, or other similar rights with respect to
such Person.
"Company" is defined in the preamble to this Agreement.
"Confidential Information" means any non-public and proprietary information
concerning the businesses and affairs of Buyer or the Company that, if disclosed
to third parties, could cause Damage to Buyer or the Company.
"Consent" means any consent, approval, notification, waiver, or other
similar action that is necessary or convenient.
"Contract" means any contract, agreement, arrangement, commitment, letter
of intent, memorandum of understanding, heads of agreement, promise, obligation,
right, instrument, document, or other similar understanding, whether written or
oral.
"Damages" means all damages (including incidental and consequential
damages), losses (including any diminution in value), Liabilities, payments,
amounts paid in settlement, obligations, fines, penalties, costs, expenses
(including reasonable fees and expenses of outside attorneys, accountants and
other professional advisors and of expert witnesses and other costs of
investigation, preparation and litigation in connection with any Action or
Threatened Action) of any kind or nature whatsoever; provided, however, Damages
shall not include lost profits, expectancy, or consequential, punitive or
exemplary damages unless such items are incurred by an Indemnitee or Indemnitees
in connection with a third-party claim for Damages.
"Employee Benefit Plan" means any (a) nonqualified deferred compensation or
retirement plan or arrangement that is an Employee Pension Benefit Plan, (b)
qualified defined contribution retirement plan or arrangement that is an
Employee Pension Benefit Plan, (c) qualified defined benefit retirement plan or
arrangement that is an Employee Pension Benefit Plan (including any
Multiemployer Plan), or (d) Employee Welfare Benefit Plan or material fringe
benefit plan or program.
"Employee Pension Benefit Plan" is defined in ERISA Section 3(2).
"Employee Welfare Benefit Plan" is defined in ERISA Section 3(1).
"Employment Agreements" means the employment Contracts between the Company
and each of Xxxxxxx X. Xxxxxxxxx and Xxxxxx X. Xxxxxx, in substantially the form
of Exhibit C.
"Encumbrance" means any Order, Security Interest, Contract, easement,
covenant, community property interest, equitable interest, right of first
refusal, or restriction of any kind, including any restriction on use, voting,
transfer, receipt of income, or exercise of any other attribute of ownership.
2
"Enforceable" - a Contract is "Enforceable" if it is the legal, valid, and
binding obligation of the applicable Person enforceable against such Person in
accordance with its terms, except as such enforceability may be subject to the
effects of bankruptcy, insolvency, reorganization, moratorium, or other Laws
relating to or affecting the rights of creditors, and general principles of
equity.
"Environment" means soil, land surface or subsurface strata, waters
(including, navigable ocean, stream, pond, reservoirs, drainage, basins,
wetland, ground, and drinking), sediments, ambient air (including indoor),
noise, plant life, animal life, and all other environmental media or natural
resources.
"Environmental, Health, and Safety Requirements" means all Orders,
Contracts, Laws, and programs (including those promulgated or sponsored by
industry associations, insurance companies, and risk management companies)
concerning or relating to public health and safety, worker/occupational health
and safety, and pollution or protection of the Environment, including those
relating to the presence, use, manufacturing, refining, production, generation,
handling, transportation, treatment, transfer, storage, disposal, distribution,
importing, labeling, testing, processing, discharge, Release, Threatened
Release, control, or other action or failure to act involving cleanup of any
hazardous materials, substances or wastes, chemical substances or mixtures,
pesticides, pollutants, contaminants, toxic chemicals, petroleum products or
byproducts, asbestos, polychlorinated biphenyls, noise, or radiation, each as
amended and as now in effect and in effect at Closing.
"Equity Interest" means (a) with respect to a corporation, any and all
shares of capital stock and any Commitments with respect thereto, (b) with
respect to a partnership, limited liability company, trust or similar Person,
any and all units, interests or other partnership/limited liability company
interests, and any Commitments with respect thereto, and (c) any other direct or
indirect equity ownership or participation in a Person.
"ERISA" means the Employee Retirement Income Security Act of 1974.
"Escrow Agent" means The Chase Manhattan Bank or its Affiliate.
"Escrow Agreement" means the escrow agreement between Buyer, Sellers, and
Escrow Agent, in substantially the form of Exhibit B.
"Fiduciary" is defined in ERISA Section 3(21).
"Financial Statements" is defined in Section 3.8.
"Foreign Corrupt Practices Act" means the Foreign Corrupt Practices Act of
1977.
"GAAP" means United States generally accepted accounting principles as in
effect from time to time.
"Governmental Authority" means any legislature, agency, bureau, branch,
department, division, commission, court, tribunal, magistrate, justice,
multi-national organization, quasi-
3
governmental body, or other similar recognized organization or body of any
federal, state, county, municipal, local, or foreign government or other similar
recognized organization or body exercising similar powers or authority.
"Indemnification Claim" means any claim for indemnification by an
Indemnitee against an Indemnitor under this Agreement.
"Indemnitees" means, individually and as a group, the Buyer Indemnitees and
the Seller Indemnitees.
"Indemnitor" means any Person having any Liability to any Indemnitee under
this Agreement.
"Intellectual Property" means all (a) inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions, and
reexaminations relating thereto, (b) trademarks, service marks, trade dress,
logos, trade names, and corporate names, and all goodwill associated therewith,
together with all translations, adaptations, derivations, and combinations,
applications, registrations, and renewals relating thereto, (c) copyrightable
works, all copyrights, and all applications, registrations, and renewals
relating thereto, (d) trade secrets and confidential business information
(including ideas, research and development, know-how, formulas, compositions,
manufacturing and production processes and techniques, technical data, designs,
drawings, specifications, customer and supplier lists, pricing and cost
information, and business and marketing plans and proposals), (e) computer
software (including all data and related documentation), (f) other proprietary
rights, and (g) copies and tangible embodiments of the foregoing (in whatever
form or medium).
"Interim Balance Sheet" means the balance sheet contained within the
Interim Financial Statements.
"Interim Financial Statements" is defined in Section 3.8.
"Knowledge" - an individual will be deemed to have "Knowledge" of a
particular fact or other matter if (a) such individual is actually aware of such
fact or other matter; or (b) such individual would be aware of such fact or
matter if he had inquired of the appropriate officers or employees of the
Company. A Person other than an individual will be deemed to have "Knowledge" of
a particular fact or other matter if (i) any individual who is serving as a
director, officer, partner, member, executor, or trustee of such Person (or in
any similar capacity) had actual Knowledge of such matter, or (ii) any employee
of such Person who is charged with responsibility for a particular area of such
Person's operations (e.g., an employee in charge of environmental matters with
respect to knowledge of environmental matters), has, or at any time had,
Knowledge of such fact or other matter.
"Law" means any law (statutory, common, or otherwise), constitution,
treaty, convention, ordinance, equitable principle, code, rule, regulation,
executive order, or other similar authority
4
enacted, adopted, promulgated, or applied by any Governmental Authority, each as
amended and now in effect or in effect at Closing.
"Liability" means any liability or obligation, whether known or unknown,
asserted or unasserted, absolute or contingent, matured or unmatured,
conditional or unconditional, latent or patent, accrued or unaccrued, liquidated
or unliquidated, or due or to become due.
"Material Adverse Change (or Effect)" means a change (or effect) in the
condition (financial or otherwise), properties, assets, Liabilities, rights,
obligations, operations, business, or prospects which change (or effect),
individually or in the aggregate, could reasonably be expected to be materially
adverse to such condition, properties, assets, Liabilities, rights, obligations,
operations, business, or prospects.
"Most Recent Year End" is defined in Section 3.8.
"Multiemployer Plan" is defined in ERISA Section 3(37).
"Order" means any order, ruling, decision, verdict, decree, writ, subpoena,
mandate, precept, command, directive, consent, approval, award, judgment,
injunction, or other similar determination or finding by, before, or under the
supervision of any Governmental Authority, arbitrator, or mediator.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity,
quality and frequency) of the Company or other relevant Person, as the case may
be.
"Organizational Documents" means the articles of incorporation, certificate
of incorporation, charter, bylaws, articles of formation, regulations, operating
agreement, certificate of limited partnership, partnership agreement, and all
other similar documents, instruments or certificates executed, adopted, or filed
in connection with the creation, formation, or organization of a Person,
including any amendments thereto.
"Parties" is defined in the preamble to this Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permit" means any permit, license, certificate, approval, consent, notice,
waiver, franchise, registration, filing, accreditation, or other similar
authorization required by any Law or Governmental Authority.
"Person" means any individual, partnership, limited liability company,
corporation, association, joint stock company, trust, joint venture, labor
organization, unincorporated organization, or Governmental Authority.
"Prohibited Transactions" is defined in ERISA Section 406 and Code Section
4975.
"Purchase Price" is defined in Section 1.2.
5
"Receivables" means all receivables of the Company, including all Contracts
in transit, manufacturers warranty receivables, notes, accounts receivable,
trade account receivables, and insurance proceeds receivable.
"Release" means any spilling, leaking, emitting, discharging, depositing,
escaping, leaching, dumping, or other release into the Environment.
"Relevant Business" is defined in Section 5.5(a).
"Reportable Event" is defined in ERISA Section 4043.
"Requisite Sellers" means Sellers holding at least a majority in interest
of the Shares as set forth in Exhibit A.
"Schedules" is defined in the preamble to Article 3.
"Seller" and "Sellers" are defined in the preamble to this Agreement.
"Seller's Company Representation" is defined in Section 8.1(a).
"Seller Indemnitees" means (i) Buyer and its officers, directors,
employees, agents, representatives, controlling Persons, stockholders and (ii)
if the Closing occurs, the Company and any Person who was an officer, director
or employee of the Company if such Person at and after the date hereof and the
time of Closing is not a Seller or an Affiliate thereof.
"Sellers' Personal Representation" is defined in Section 8.1(a).
"Share" means any share of the Common Stock, par value $0.10 per share, of
the Company.
"Subsidiary" is defined in the preamble to this Agreement.
"Tax" means any federal, state, local, or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including taxes under Code Section 59A),
customs, duties, capital stock, franchise, profits, withholding, social
security, unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes required to be filed with any
Governmental Authority, including any schedule or attachment thereto, and
including any amendment thereof.
"Threatened" means a demand or statement has been made (orally or in
writing) or a notice has been given (orally or in writing), or any other event
has occurred or any other circumstances exist that would lead a prudent Person
to conclude that a cause of Action or other matter is likely to be asserted,
commenced, taken, or otherwise pursued in the future.
6
"Threatened Release" means any event that has occurred or other
circumstances that exist that could lead a prudent Person to conclude that any
Release whether intentional or unintentional, is likely to occur now or in the
future.
"Threshold Amount" is defined in Section 8.5(c).
"Transactions" means all of the transactions contemplated by this
Agreement, including: (a) the sale of the Shares by Sellers to Buyer and Buyer's
delivery of the Purchase Price therefor; (b) the execution, delivery, and
performance of all of the documents, instruments and agreements to be executed,
delivered, and performed in connection herewith, including each Ancillary
Agreement; and (c) the performance by Buyer and Sellers of their respective
covenants and obligations (pre- and post-Closing) under this Agreement.
"Transaction Documents" means this Agreement and the Ancillary Agreements.
"Year 2000 Compliant" means all computer programs, information systems and
microchip and microprocessor technologies (imbedded or otherwise) owned, used,
under Contract, or relied upon by a Person will accurately process information
or other data before, as of, and after December 31, 1999.
