Exhibit 10.6
ASSET PURCHASE AGREEMENT
BETWEEN
XXXXXXXX METAL FORMING, INC.
INDUSTRIAL HOLDINGS, INC.
AND
XXXXXXXX FASTENER CORPORATION
DATED AS OF
NOVEMBER 6, 2001
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Table of Contents
(Continued)
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1. ASSETS PURCHASED.................................................................................................. 2
1.1 Equipment............................................................................................... 2
1.2 Inventory............................................................................................... 2
1.3 Receivables............................................................................................. 2
1.4 Goodwill................................................................................................ 2
1.5 Outstanding Customer Purchase Orders.................................................................... 3
1.6 Other Assets............................................................................................ 3
1.7 Contracts............................................................................................... 3
1.8 Licenses and Permits.................................................................................... 3
2. EXCLUDED ASSETS................................................................................................... 3
2.1 Cash and Cash Equivalents............................................................................... 3
2.2 Tax Deposits and Refunds................................................................................ 3
2.3 Corporate Records....................................................................................... 3
2.4 Insurance Policies...................................................................................... 3
2.5 Employee Records........................................................................................ 3
2.6 Employee Plans.......................................................................................... 3
2.7 Computer Equipment...................................................................................... 3
2.8 Assets Related to Excluded Liabilities.................................................................. 4
3. LIABILITIES....................................................................................................... 4
3.1 Liabilities Assumed..................................................................................... 4
3.2 Excluded Liabilities.................................................................................... 4
3.3 Employees............................................................................................... 5
4. PURCHASE PRICE FOR PURCHASED ASSETS............................................................................... 6
4.1 Purchase Price.......................................................................................... 6
4.2 Allocation of Purchase Price............................................................................ 6
4.3 Post-Closing Adjustment of Purchase Price............................................................... 6
5. PRE-CLOSING ACTIONS............................................................................................... 7
5.1 Conduct of Business..................................................................................... 7
5.2 Buyer's Access.......................................................................................... 8
5.3 Accuracy of Representations and Warranties and Satisfaction of Conditions............................... 8
6. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS....................................................................... 8
6.1 Accuracy of Representations and Warranties.............................................................. 8
6.2 Performance of Covenants................................................................................ 8
6.3 No Casualty............................................................................................. 8
6.4 Delivery of Closing Documents and Items................................................................. 8
6.5 No Litigation........................................................................................... 9
6.6 Certificates Regarding Conditions Precedent............................................................. 9
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7. CONDITIONS PRECEDENT TO SELLER PARTIES' OBLIGATIONS............................................................... 9
7.1 Accuracy of Representations and Warranties.............................................................. 9
7.2 Performance of Covenants................................................................................ 9
7.3 Delivery of Closing Documents and Items................................................................. 9
7.4 Certificates Regarding Conditions Precedent............................................................. 9
8. CLOSING MATTERS................................................................................................... 9
8.1 Closing................................................................................................. 9
8.2 Deliveries At Closing................................................................................... 9
8.3 Certain Tax Matters..................................................................................... 11
9. SELLER PARTIES' REPRESENTATIONS AND WARRANTIES.................................................................... 11
9.1 Organization and Standing............................................................................... 11
9.2 Authorization........................................................................................... 11
9.3 Existing Agreements and Other Approvals................................................................ 12
9.4 Permits and Licenses.................................................................................... 12
9.5 Financial Statements.................................................................................... 12
9.6 No Undisclosed Liabilities.............................................................................. 12
9.7 Conduct of Business..................................................................................... 13
9.8 Employees............................................................................................... 13
9.9 Employee Benefit Plans.................................................................................. 13
9.10 Contracts............................................................................................... 14
9.11 Title to Purchased Assets; Liens........................................................................ 14
9.12 Taxes................................................................................................... 15
9.13 Litigation.............................................................................................. 15
9.14 Product Liability....................................................................................... 15
9.15 Brokers................................................................................................. 15
9.16 Intellectual Property................................................................................... 15
9.17 Definition of Knowledge................................................................................. 16
10. BUYER'S REPRESENTATIONS AND WARRANTIES............................................................................ 16
10.1 Organization and Standing............................................................................... 16
10.2 Authorization........................................................................................... 16
10.3 Existing Agreements and Other Approvals................................................................. 16
10.4 Brokers................................................................................................. 17
10.5 Buyer's Knowledge....................................................................................... 17
11. POST-CLOSING COVENANTS............................................................................................ 17
11.1 Post-Closing Receipts................................................................................... 17
11.2 Seller Names............................................................................................ 17
11.3 Further Assurances...................................................................................... 17
11.4 Books and Records....................................................................................... 17
11.5 Waiver.................................................................................................. 17
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12. INDEMNIFICATION................................................................................................... 17
12.1 Survival of Representations and Warranties.............................................................. 18
12.2 Indemnification by the Seller Parties................................................................... 18
12.3 Indemnification by the Buyer............................................................................ 18
12.4 Procedure for Indemnification; Third-Party Claims....................................................... 18
12.5 Procedure for Indemnification; Other than Third-Party Claims............................................ 19
12.6 Limitations on Liability................................................................................ 19
12.7 Remedies................................................................................................ 20
13. EXPENSES.......................................................................................................... 20
14. RISK OF LOSS...................................................................................................... 20
15. TERMINATION....................................................................................................... 20
15.1 Manner of Termination................................................................................... 20
15.2 Effect of Termination................................................................................... 21
16. MISCELLANEOUS PROVISIONS.......................................................................................... 21
16.1 Notices................................................................................................. 21
16.2 Assignment.............................................................................................. 22
16.3 Parties in Interest..................................................................................... 22
16.4 Choice of Law........................................................................................... 22
16.5 Counterparts............................................................................................ 22
16.6 Entire Agreement........................................................................................ 22
16.7 Arbitration............................................................................................. 22
16.8 Public Announcements.................................................................................... 23
16.9 Certificate of No Tax Due............................................................................... 23
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EXHIBITS AND SCHEDULES
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Exhibit A Nonsolicitation Agreement
Exhibit B Transitional Services Agreement
Exhibit C Note
Exhibit D Xxxx of Sale and Assignment
Exhibit E Assignment and Assumption Agreement
Exhibit F Ardmore Lease Agreement
Exhibit G Security Agreement
Schedule 1.1 Equipment
Schedule 1.2 Inventory
Schedule 1.3 Receivables
Schedule 1.5 Outstanding Customer Purchase Orders
Schedule 1.6 Other Assets
Schedule 1.7 Assumed Contracts
Exhibit 2.7 SOFTECH Leases
Schedule 3.1(a) Trade Accounts Payable
Schedule 3.1(b) Other Accrued Payables
Schedule 3.1(c) Outstanding Supplier Purchase Orders
Schedule 3.1(g) Other Leases
Schedule 8.2(a)(iii) Permitted Liens
Schedule 9.3(a) Existing Agreements
Schedule 9.3(b) Other Approvals
Schedule 9.5 Financial Statements
Schedule 9.7 Conduct of Business
Schedule 9.10 Contracts and Commitments
Schedule 9.11 Title to Purchased Assets; Liens
Schedule 9.15 Brokers
Schedule 9.16 Intellectual Property
ASSET PURCHASE AGREEMENT EXECUTION COPY
ASSET PURCHASE AGREEMENT
THIS AGREEMENT (the "Agreement") is made on November 6,
2001, between XXXXXXXX METAL FORMING, INC., a Texas corporation (the "Seller"),
INDUSTRIAL HOLDINGS, INC., a Texas corporation ("IHI") (the Seller and IHI
sometimes collectively referred to herein as the "Seller Parties"), and XXXXXXXX
FASTENER CORPORATION, a Texas corporation (the "Buyer").
BACKGROUND
A. IHI is the owner of all the issued and outstanding capital stock of
the Seller.
B. The Seller manufactures solid, semi-tubular & shoulder rivets,
externally threaded-fasteners and other cold-headed special parts in
diameters from 3/16" to 1/2" (the "Business"):
C. The Seller is the sole remaining entity in IHI's Engineered Products
Group division (the "EPG Division"). Xxx Machinery Movers, Inc. d/b/a
Ideal Products ("Ideal Products"), Philform, Inc. ("Philform"), the
limited partnership OF Acquisition, L.P. d/b/a Orbitform
("Orbitform") and American Rivet Company, Inc. ("American Rivet"),
which recently sold substantially all of their assets, were formerly
part of the EPG Division (the Seller, Ideal Products, Philform,
Orbitform and American Rivet, collectively, the "EPG Division
Members"). As part of the strategic disposition of the assets of the
EPG Division from IHI's core business, Ideal Products, Philform,
Orbitform and American Rivet have sold substantially all of their
assets to purchasers other than the Buyer. However, the acquirers
thereof, as well as the Buyer, are interested in (i) maintaining the
customer and manufactured part-base that the EPG Division Members
have historically enjoyed, without the prospect of the solicitation
of those customers by each other, and (ii) continuing to utilize
certain computer hardware, software and services that they are
currently provided or have access to but that are not included among
the Purchased Assets. Therefore, as a condition precedent to the
Closing (as that term is defined below), the Buyer shall succeed to
Seller's rights and assume Seller's obligations under (i) a customer
and manufactured part-based Nonsolicitation Agreement attached as
EXHIBIT A (the "Nonsolicitation Agreement") and (ii) a transitional
services agreement attached as EXHIBIT B (the "Transitional Services
Agreement").
D. IHI acquired all of the capital stock of the Seller from, among
others, Xxxxxx X. Xxxxxxxx ("Xxxxxxxx"), the President of the Buyer,
in 1992. Since that time, Xxxxxxxx has been involved in the operation
of the Business in a management capacity as either the President of
the Seller or as Chief Technology Officer of the EPG Division. The
parties therefore hereby acknowledge that Xxxxxxxx is in many cases
as knowledgeable as the Seller Parties regarding the Business, the
Purchased Assets (as defined in Section 1 below), and the financial
statements of the Seller.
E. Buyer desires to purchase, and Seller desires to sell to Buyer, the
Purchased Assets on the terms and subject to the conditions of this
Agreement.
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AGREEMENTS
NOW, THEREFORE, consistent with the Background and in consideration
of the terms and conditions set forth in this Agreement, each of the Seller
Parties and Buyer agree as follows:
1. ASSETS PURCHASED. At the Closing, Seller shall sell, assign, convey,
transfer, set over, and deliver to Buyer all of the assets, rights, and
interests of every conceivable kind or character whatsoever, whether tangible or
intangible, that on the Closing Date (as that term is defined below) are owned
by Seller or in which Seller has an interest of any kind, that are used in the
Business, except (a) for the Excluded Assets (as that term is defined in Section
2 below); and (b) that only Equipment (as that term is defined in Section 1.1
below) physically located on the Seller's premises shall be conveyed to the
Buyer (the assets being so purchased, the "Purchased Assets"). Other than with
respect to warranties of title, Seller shall transfer the Purchased Assets to
Buyer, and Buyer shall accept the Purchased Assets from Seller on an "AS IS,
WHERE IS" basis, with no representations or warranties of any kind or nature,
including without limitation, as to the physical or operational condition of the
Purchased Assets.
The Purchased Assets include, without limitation:
1.1 EQUIPMENT. All machinery, equipment, tools, fixtures,
workstations, computers, office equipment, manufacturing and engineering
drawings, and tangible personal property owned by Seller, and to the extent not
otherwise constituting equipment as defined above, all other items of tangible
personal property, all as physically located on the Premises (including, without
limitation, the items listed on SCHEDULE 1.1) (the "Equipment").
1.2 INVENTORY. All raw materials inventory, work-in-process
inventory, and finished goods inventory owned by Seller (including, without
limitation, the items listed on SCHEDULE 1.2, except to the extent of changes
thereto in the Ordinary Course of Business (as that term is defined below) prior
to the Closing Date) (the "Inventory");
1.3 RECEIVABLES. All accounts, chattel paper, documents, and
instruments (all as defined in the Uniform Commercial Code, as adopted in the
State of Texas (the "UCC")), and any security Seller holds for the payment
thereof (including, without limitation, the items described on SCHEDULE 1.3),
except to the extent of changes thereto in the Ordinary Course of Business prior
to the Closing Date) (the "Receivables"), and all of Seller's general
intangibles (as defined in the UCC) (except as they may pertain to Excluded
Liabilities (as that term is defined below)).
1.4 GOODWILL. The name "Xxxxxxxx Engineering," "Xxxxxxxx Metal
Forming" or any substantial derivation thereof (the "Names"), and any other
assumed name currently used in the Business, and all telephone numbers, fax
numbers, and all Seller's rights and interest in and to inventions, copyrights,
patents, trademarks, designs, prototypes, trade secrets, know-how, technology,
technical literature, advertising literature, confidential information,
intangible property, and all goodwill, going concern value and customer lists,
all financial books and records, and all records pertinent to Seller's
customers, suppliers, advertising, services, and operations of the Seller.
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1.5 OUTSTANDING CUSTOMER PURCHASE ORDERS. The full benefit of any and
all purchase orders placed with and accepted by Seller on or before the Closing
Date that have not been completely performed by Seller before the Closing Date,
covering the purchase from Seller of products to be supplied by Seller, or
covering the rendition by Seller of service on products supplied by Seller
(including, without limitation, those items listed on SCHEDULE 1.5, except to
the extent of changes thereto in the Ordinary Course of Business prior to the
Closing Date) ("Outstanding Customer Purchase Orders").
1.6 OTHER ASSETS. The other assets of the Seller, and other claims
and rights used in, related to, or pertaining to the Business described in
SCHEDULE 1.6, except to the extent of changes thereto in the Ordinary Course of
Business prior to the Closing Date (the "Other Assets").
1.7 CONTRACTS. All of the Seller's right, title and interest in and
to, and claims and rights under, all contracts, leases, and other agreements to
which the Seller is a party on the Closing Date or by which any of the Purchased
Assets are then bound and which are listed on SCHEDULE 1.7 (the "Assumed
Contracts").
1.8 LICENSES AND PERMITS. All of Seller's rights in all permits and
licenses necessary for, used in, related to or pertaining to the operation of
the Business, but only to the extent the same are transferable.
2. EXCLUDED ASSETS. The assets of the Seller that are not being
purchased hereunder are as follows (collectively, the "Excluded Assets"):
2.1 CASH AND CASH EQUIVALENTS. All of the Seller's cash, temporary
cash investments and instruments representing the same and all other cash
equivalents, including checks, automated clearing house deposits or cash
delivered to Comerica Bank-Texas ("Comerica") on the Closing Date or held by
Comerica on the Closing Date.
2.2 TAX DEPOSITS AND REFUNDS. Any Tax (as that term is defined in
Section 9.12(a)) deposits or prepaid Taxes, Tax refunds or Tax claim related to
the Business or the ownership of the Purchased Assets prior to the Closing Date.
2.3 CORPORATE RECORDS. Certificate and Articles of Incorporation and
original minute books and corporate records of the Seller (it being agreed that
a copy of such documents shall be supplied to the Buyer on its request).
2.4 INSURANCE POLICIES. All casualty, liability, life or other
insurance policies owned or obtained on the Seller's behalf and all claims or
rights under any such insurance policies.
2.5 EMPLOYEE RECORDS. All employee records that Seller is required by
law to retain in its possession.
2.6 EMPLOYEE PLANS. All of Seller's rights in connection with, and
all assets of, Employee Plans (as that term is defined in Section 9.9(a)).
2.7 COMPUTER EQUIPMENT. All hardware and computer equipment leased
under the SOFTECH Leases attached as EXHIBIT 2.7 hereto and identified on the
exhibits thereof as being located at the 0000 Xxxxxxx, Xxxxxxx, Xxxxx premises,
all related software access to which is being
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provided under the Transitional Services Agreement, and the following
computer equipment located at 0000 Xxxxxxx, Xxxxxxx, Xxxxx, access to
which is being provided under the Transitional Services Agreement:
Compaq Proliant 5500, Windows NT Server that runs the BAAN
application; Dell Poweredge 6350, Windows Terminal Server that runs
the Citrix Application; Compaq Proliant 3000, a Windows NT Server
that is being used as a file server by Seller and IHI; Cisco 3600
Router that connects Houston to the Frame Relay; and Adtran TSU IQ,
Network Equipment.
2.8 ASSETS RELATED TO EXCLUDED LIABILITIES. All assets directly
related to Excluded Liabilities.
3. LIABILITIES.
3.1 LIABILITIES ASSUMED. The Seller Parties agree that Buyer does not
assume any debts, liabilities or obligations of Seller, whether accrued,
absolute, contingent, known, unknown, or otherwise, except for the following
liabilities as they exist on the Closing Date (the liabilities so assumed, the
"Assumed Liabilities").
(a) TRADE ACCOUNTS PAYABLE. The trade accounts payable of
Seller incurred in the Ordinary Course of Business with
respect to the materials or services used in the conduct of
the Business, as consistently reported by Seller, as
identified on SCHEDULE 3.1(a), except to the extent of
changes thereto in the Ordinary Course of Business prior to
the Closing Date;
(b) OTHER ACCRUED PAYABLES. The other accrued payables that are
related to the Business, as consistently reported by the
Seller, as identified in SCHEDULE 3.1(b), except to the
extent of changes thereto in the Ordinary Course of
Business prior to the Closing Date;
(c) OUTSTANDING CUSTOMER AND SUPPLIER PURCHASE ORDERS. All of
Seller's obligations under the Outstanding Customer
Purchase Orders and Seller's outstanding purchase orders
with its suppliers that are not yet recorded as trade
accounts payable, as identified in SCHEDULE 3.1(c), except
to the extent of changes thereto in the Ordinary Course of
Business prior to the Closing Date;
(d) ASSUMED CONTRACTS. All of Seller's obligations under the
Assumed Contracts;
(e) WARRANTY CLAIMS. All warranty claims (whether made before
or after the Closing Date) for products manufactured by the
Seller;
(f) SCRANTON ACRES LEASE. All of Seller's obligations under the
Lease Agreement with Purchase Option, dated October 26,
1992, between Seller, as tenant, and Scranton Acres, as
Landlord (the "Scranton Acres Lease"); and
(g) OTHER LEASES. All of Seller's obligations under the other
leases listed on SCHEDULE 3.1(g).
3.2 EXCLUDED LIABILITIES. Buyer does not assume and will have no
liability for any debt, liability or obligation of the Seller that is not
expressly identified and assumed in Section 3.1. Without limiting the generality
of the foregoing sentence or Section 3.1 above in any way, listed
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below are certain of the liabilities and obligations that Buyer does not assume
and for which Buyer will not be liable or responsible in any way (collectively,
the "Excluded Liabilities"):
(a) TAXES. Any Tax liability of Seller, including, but not
limited to, any Tax liability: (i) arising as a result of
Seller's operation of the Business or ownership of the
Purchased Assets prior to the Closing Date, except for any
employment, unemployment, withholding taxes or other
payroll-related taxes of Seller related to accrued payroll
assumed by Buyer in Section 3.1(b); or (ii) that will arise
as a result of the sale of the Purchased Assets under this
Agreement.
(b) COMERICA NOTE. All liabilities and obligations of Seller
under the Amended and Restated Credit Agreement, dated June
17, 1999, with Comerica, Comerica Bank, as agent and
individually, Hibernia National Bank and National Bank of
Canada, in the maximum principal amount of $55,000,000;
(c) MGF NOTE. All liabilities and obligations of the Seller
under that Promissory Note, dated August 3, 2001, in the
original principal amount of $657,225.86, made payable
jointly by Seller and American Rivet to the order of MGF
Industries, LLC (the "MGF Note");
(d) OTHER LONG-TERM LIABILITIES. Any other long-term
liabilities of the Seller not included in the Assumed
Liabilities;
(e) ACCRUED INTEREST. All accrued interest related to items
3.2(b) -(d) above;
(f) INTERCOMPANY PAYABLES. All payables included in the line
item titled "Interco rec (payable)" (i) reflected on the
balance sheet of the Seller as of August 31, 2001 included
in SCHEDULE 9.5 hereto, and (ii) recorded in that account
as contained in the financial records of the Seller after
that date in the Ordinary Course of Business;
(g) ACCRUED ACQUISITION EXPENSES. Any and all accrued expenses
recorded by IHI as part of its purchase accounting in
connection with the acquisition of the Seller;
(h) ACCRUED BUSINESS INSURANCE EXPENSES. All accrued business
insurance of the Seller (to the extent accrued on a
consistent basis);
(i) HSO CONSULTING PAYABLE. All liabilities of the Seller under
the $102,836 trade account payable to HSO Consulting; and
(j) OTHER LEASES. All liabilities under any leases except for
the Scranton Acres Lease and those leases described
SCHEDULE 3.1(G).
3.3 EMPLOYEES. As of the Closing, the Buyer shall make offers of
employment to all of those persons who are Seller's employees immediately before
the Closing (except for Xxxx Xxxxxxx and Xxxx Xxxxxxx, who shall remain
employees of the Seller) at salaries or wage rates, as applicable, comparable to
those provided by the Seller before the Closing Date, and shall become the
employer of all of such employees who accept such employment offers; provided,
however, that Buyer shall offer to the Employees such employee and fringe
benefits as Buyer determines in its sole discretion.
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4. PURCHASE PRICE FOR PURCHASED ASSETS.
4.1 PURCHASE PRICE. At the Closing, Buyer shall pay to Seller as
consideration for the Purchased Assets the amount of $2,250,000 and shall assume
the Assumed Liabilities (together, the "Purchase Price"), as follows:
(i) $1,900,000 in cash (the "Cash Purchase Price") by
wire transfer in immediately available funds;
(ii) a promissory note in the original principal
amount of $350,000.00 made payable by Buyer to
Seller in substantially the form of EXHIBIT C,
and containing subordination terms reasonably
satisfactory to Seller and Buyer's senior secured
lender(s) (the "Note"); and
(iii) the balance of the Purchase Price by execution
and delivery of the Assignment and Assumption
Agreement.
4.2 ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be
allocated among the Purchased Assets (the "Allocation") based on Buyer's and
Seller's good faith and reasonable determination thereof, and in accordance with
Section 1060 of the Internal Revenue Code of 1986, as amended (the "Code") and
the regulations promulgated thereunder. Such proposed allocation shall be made
in writing by Buyer and delivered to Seller within 60 days after the date
hereof. If the Seller does not agree with such Allocation, the items in dispute
shall be submitted in writing to Deloitte & Touche, LLP, 000 Xxxx Xxxxxx, Xxxxx
0000, Xxxxxxx, Xxxxx 00000 (the "Independent Accountants"), which firm shall
render its advice on such items to the Buyer and Seller. The Buyer and Seller
shall make the Allocation in accordance with such advice. Buyer and Seller agree
to prepare and file all Tax returns (including but not limited to such reports
and information returns as required under section 1060 of the Code, and the
regulations thereunder and any corresponding or comparable provisions of
applicable state and local Tax laws) in a manner consistent with the Allocation.
In the event the Allocation is disputed by any taxing authority, the party
hereto receiving notice of such dispute shall promptly notify the other party
hereto and the parties hereto shall consult and cooperate with each other
regarding the resolution of the dispute.
4.3 POST-CLOSING ADJUSTMENT OF PURCHASE PRICE.
(a) Within 30 calendar days following the Closing Date, the
Seller Parties shall cause to be prepared and delivered to
the Buyer a Statement of Net Working Capital (as that term
is defined in subparagraph (c) below) of the Seller as of
the Closing Date (such statement, the "Closing Date
Statement"). The Closing Date Statement shall be prepared
in accordance with generally accepted accounting
principles, consistently applied ("GAAP") and shall set
forth the information required to calculate Net Working
Capital. The Buyer shall give the Seller Parties and their
representatives reasonable access to the books, records and
personnel of the Business for the purpose of preparing and
auditing the Closing Date Statement. The Buyer shall have a
period of 30 calendar days after the delivery to it of the
Closing Date Statement, and during such time the Buyer
shall have access to all workpapers and other relevant
documents, to review the foregoing and to deliver in
writing to the Seller Parties any
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objections to the Closing Date Statement that the Buyer may
have. If Buyer does not deliver in writing any objections
to the Seller Parties within the 30-day period, the Closing
Date Statement shall be deemed to be accepted and approved
by the Buyer. If Buyer delivers within the 30-day period
written objections to the Seller Parties, then the Buyer
and Seller Parties shall attempt to resolve the matter or
matters in dispute. The Buyer shall quantify its objections
to the extent reasonably practicable in all written
objections delivered to the Seller Parties with respect to
the Closing Date Statement.
(b) If such disputes cannot be resolved by the Buyer and Seller
Parties within 20 calendar days after the delivery of the
objections to the Closing Date Statement, then the specific
matters in dispute shall be submitted to the Independent
Accountants, which firm shall render its opinion as to such
matters. Based on that opinion, the Independent Accountants
shall then send to the Buyer and to each of the Seller
Parties a written determination of the matters in dispute
and a written determination of the Purchase Price as
adjusted based upon such opinion, whereupon the confirmed
or revised Closing Date Statement shall be final and
binding upon the Buyer and each of the Seller Parties,
absent manifest error. All costs, fees and expenses charged
or incurred by the Independent Accountants, if any, shall
be borne equally by (i) the Seller Parties, jointly, and
(ii) the Buyer.
(c) For purposes hereof, "Net Working Capital" means, as of the
date of the Closing Date Statement and based thereon, an
amount equal to Seller's Receivables and Inventory minus
Seller's trade and other current accrued payables
(excluding accrued vacations) that the Buyer will assume at
the Closing under Section 3.1(a) and (b). The Inventory
shall be valued at the Seller's standard cost without
regard to any reserve for obsolescence or other
adjustments. The Purchase Price shall be increased by the
amount by which the Net Working Capital contained in the
Closing Date Statement is greater than $694,000, and shall
be decreased by the amount by which the Net Working Capital
contained in the Closing Date Statement is less than
$694,000 (whether an increase to or decrease from the
Purchase Price, the "Purchase Price Adjustment"). The
Purchase Price Adjustment shall be paid by the Seller
Parties to Buyer, or Buyer to the Seller Parties, as the
case may be, within 5 days of the determination of the
Purchase Price Adjustment. If Seller Parties are obligated
to pay the Purchase Price Adjustment to Buyer and if
payment is not made within 5 days of the determination of
the Purchase Price Adjustment, Buyer shall have the option
(but not the obligation) to set off the Purchase Price
Adjustment against obligations under the Note.
5. PRE-CLOSING ACTIONS. From the date of this Agreement to the Closing
Date:
5.1 CONDUCT OF BUSINESS. Seller shall carry on and conduct the
Business only in the Ordinary Course of Business (as defined below) including
the collection of its accounts receivable, payment of trade account and
other-payables, and maintenance of inventory levels, without any change in the
policies, practices, and methods that Seller pursued before the date of this
Agreement. Seller shall use its reasonable commercial efforts to preserve the
Business organization intact; to preserve the relationships with Seller's
customers, suppliers, and others having business dealings
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with Seller. "Ordinary Course of Business" means actions of the Seller that are:
(a) consistent with past practices taken in the course of its usual day-to-day
operations; (b) not required to be authorized by resolution of the Seller's
board of directors; and (c) similar in nature and magnitude to actions
customarily taken, without authorization by the boards of directors in the
ordinary course of usual day-to-day operations of other companies of similar
size in the same line of business.
5.2 BUYER'S ACCESS. Seller Parties shall permit Buyer and its
representatives to make a full business, financial, accounting, and legal
investigation of Seller, the Business, the Purchased Assets, and the Assumed
Liabilities. Seller Parties shall take all reasonable steps necessary to
cooperate with Buyer in undertaking any investigation which it deems necessary.
5.3 ACCURACY OF REPRESENTATIONS AND WARRANTIES AND SATISFACTION OF
CONDITIONS. Seller Parties will promptly advise Buyer in writing if (a) any of
Seller Parties' representations or warranties are untrue or incorrect in any
material respect or (b) Seller Parties become aware of the occurrence of any
event or of any state of facts that results in any of the representations and
warranties of Seller Parties being untrue or incorrect in any material respect
as if Seller Parties were then making them. Seller Parties will use their
reasonable commercial efforts to cause all conditions within their control that
are set forth in Section 5 to be satisfied as promptly as practicable under the
circumstances.
6. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS. Buyer's obligation to
consummate the transactions contemplated by this Agreement is subject to the
fulfillment (or waiver by Buyer) before or at the Closing of each of the
following conditions:
6.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES.
(a) Except as provided in Section 6.1(b), the representations
and warranties of Seller Parties contained in this
Agreement and all related documents shall be true and
correct at and as of the Closing Date as though such
representations and warranties were made on that date.
(b) The Seller Parties shall have delivered any necessary
updates, amendments of and changes to the schedules
provided for in Section 9 of this Agreement, as are
necessary for Seller Parties' representations and
warranties to be true and correct as of the Closing Date
with each such update, amendment and change having been
reviewed and approved by the Buyer.
6.2 PERFORMANCE OF COVENANTS. The Seller Parties shall have in all
respects performed and complied with all covenants, agreements, and conditions
that this Agreement and all related documents require to be performed or
complied with before or on the Closing Date.
6.3 NO CASUALTY. Seller shall not have incurred, or be threatened
with, a material liability or casualty not covered by insurance that would
materially impair the value of the Purchased Assets.
6.4 DELIVERY OF CLOSING DOCUMENTS AND ITEMS. Seller shall have
delivered or caused to have been delivered to Buyer the documents and general
instruments of transfer enumerated in Section 8.2(a) of this Agreement.
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6.5 NO LITIGATION. No action, suit, proceeding, or investigation
shall have been instituted before any court or governmental body, or instituted
by any governmental agency, (a) to restrain or prevent the carrying out of the
transactions contemplated by this Agreement, or (b) that might affect Buyer's
right to own, operate, and control the Purchased Assets after the Closing Date
6.6 CERTIFICATES REGARDING CONDITIONS PRECEDENT. The Seller Parties
shall have delivered to Buyer certificates of the Seller Parties certifying that
as of the Closing Date all of the conditions set forth in this Section 6 have
been satisfied.
7. CONDITIONS PRECEDENT TO SELLER PARTIES' OBLIGATIONS. Seller
Parties' obligations to consummate the transactions contemplated by this
Agreement are subject to the fulfillment of each of the following conditions
before or at the Closing Date:
7.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. Buyer's
representations and warranties contained in this Agreement and all related
documents shall be true and correct at and as of the Closing Date as though such
representations and warranties were made on that date.
7.2 PERFORMANCE OF COVENANTS. Buyer shall have in all respects
performed and complied with its obligations under all the covenants, agreements,
and conditions that this Agreement and all related documents require.
7.3 DELIVERY OF CLOSING DOCUMENTS AND ITEMS. Buyer shall have
delivered or caused to have been delivered to Seller the Purchase Price and the
documents and general instruments of transfer enumerated in Section 8.2(b) of
this Agreement.
7.4 CERTIFICATES REGARDING CONDITIONS PRECEDENT. The Buyer shall have
delivered to the Seller Parties a certificate of the Buyer certifying that as of
the Closing Date all of the conditions set forth in this Section 7 have been
satisfied.
8. CLOSING MATTERS.
8.1 CLOSING. The closing of the transactions contemplated in this
Agreement (the "Closing") shall take place at the offices of Xxxxxxx Xxxxxx
L.L.P. at 10:00 a.m. on or before November 15, 2001, or at such other place
and/or on such other date as the parties may agree on (the "Closing Date").
8.2 DELIVERIES AT CLOSING.
(a) DELIVERIES BY THE SELLER. At the Closing, the Seller or
the other indicated parties shall execute and deliver or
provide to Buyer:
(i) the Xxxx of Sale and Assignment conveying the Purchased
Assets, in substantially the form attached as EXHIBIT D;
(ii) the Assignment and Assumption Agreement, in substantially
the form attached as EXHIBIT E;
(iii) either (y) UCC-3 termination statements as are required to
terminate and release all liens on the Purchased Assets
(including without limitation the
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Liens disclosed on SCHEDULE 9.11), or (z) letters of
creditors indicating that such Liens shall be released and
discharged on the Seller's payment of identified amounts
payable, in each case except for the permitted liens
("Permitted Liens") listed on SCHEDULE 8.2(A)(III);
(iv) Assignment, Assumption and Landlord Consent assigning
Seller's leasehold interest in and its obligations under
the Scranton Acres Lease;
(v) certificates, dated as of a date no earlier than 15 days
before the Closing Date, duly issued by the appropriate
governmental authority in the State of Texas, reflecting
that Seller is in existence and in good standing in such
state;
(vi) a premises lease with The Xxx Group, Inc., as Landlord,
and the Buyer, as Tenant, with respect to the facility in
Houston, Texas currently leased by the Seller, in
substantially the form attached as EXHIBIT F (the "Ardmore
Lease Agreement");
(vii) the Security Agreement granting a lien in favor of the
Seller on the Purchased Assets that is subordinate to the
Buyer's primary secured lender, in substantially the form
attached as EXHIBIT G (the "Security Agreement");
(viii) a Termination Agreement with Xxxxxx X. Xxxxxxxx
("Xxxxxxxx") under which the Seller and Xxxxxxxx agree to
the termination of that certain Employment Agreement, that
certain Non-Competition Agreement between them, each dated
as of October 26, 1992, and any other agreements between
Xxxxxxxx and the Seller, and release each other in
connection therewith (the "Termination Agreement"); and
(ix) such other documents, instruments and certificates
necessary or appropriate in connection with the Seller's
sale and transfer of the Purchased Assets and transfer and
assignment of the Assumed Liabilities.
(b) DELIVERIES BY THE BUYER. At the Closing, Buyer shall execute and
deliver, as applicable, to the Seller:
(i) the Cash Purchase Price and the Note;
(ii) the Assignment and Assumption Agreement;
(iii) the Assignment, Assumption and Landlord Consent with
respect to the Scranton Acres Lease, under which, among
other things, the Seller shall be fully released from any
liability or obligation thereunder;
(iv) the Ardmore Lease Agreement;
(v) the Security Agreement;
(vi) Xxxxxxxx'x written resignation from any and all offices
and employment positions with Seller;
(vii) the Termination Agreement; and
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(viii) such other documents, instruments and certificates
necessary or appropriate in connection with the
Buyer's purchase of the Purchased Assets and
assumption of the Assumed Liabilities.
8.3 CERTAIN TAX MATTERS.
(a) TRANSFER TAXES. Seller Parties shall be jointly and
severally liable for and shall pay all federal, state, and
local sales, use, excise, documentary and similar transfer
Taxes payable in connection with the consummation of the
transactions contemplated by this Agreement ("Transfer
Taxes"), and the parties hereto acknowledge and agree that
the Purchase Price includes and is inclusive of any and all
such Transfer Taxes.
(b) AD VALOREM TAXES FOR 2001. The Seller Parties shall be
jointly and severally liable for and shall pay any and all
ad valorem and similar Taxes imposed on the Purchased
Assets related to all periods up to and including the
Closing Date, and the Buyer shall pay all ad valorem taxes
imposed on the Purchased Assets related to all periods
after the Closing Date.
(c) SURVIVAL OF COVENANTS. Notwithstanding anything contained
in this Agreement to the contrary, the covenants contained
in this Section 8.3 shall survive the Closing without
limitation and shall not be subject to any of the
limitations on the Seller Parties' indemnification
obligations contained in Section 12 of this Agreement.
9. SELLER PARTIES' REPRESENTATIONS AND WARRANTIES. Each of the Seller
Parties, jointly and severally, represents and warrants to Buyer that, as of the
date hereof (except to the extent any representation or warranty is made as of
another date expressly stated, which are in such case made as of such other date
so stated):
9.1 ORGANIZATION AND STANDING. The Seller is a corporation duly
incorporated, validly existing, and in good standing under the laws of the State
of Texas. Seller has all requisite power and authority to own its properties and
conduct the Business as it is now being conducted. Seller is duly qualified and
in good standing in every jurisdiction in which it is required by the nature of
its business or the ownership or lease of its properties to so qualify, except
where the failure to so qualify does not or is not reasonably expected to have a
material adverse effect on the Seller or the Business.
9.2 AUTHORIZATION. Seller has all requisite corporate power and
authority, and Seller Parties have all requisite legal capacity (a) to execute,
deliver, and perform this Agreement and all other agreements and instruments
that will be delivered at the Closing under Section 8.2(a) (all such other
agreements and instruments, the "Related Agreements") to which each is a party
and (b) to consummate the transactions contemplated under this Agreement and the
Related Agreements. Seller has taken all necessary corporate action (including
the approval of its board of directors and shareholder), as the case may be, to
approve the execution, delivery, and performance of this Agreement and the
Related Agreements and the consummation of the transactions contemplated in this
Agreement and in the Related Agreements. Each of the Seller Parties has duly
executed and delivered this Agreement. This Agreement is, and each Related
Agreement, when executed and delivered by the parties to them will be, the
legal, valid, and binding obligation of each Seller Party that is a party to it,
enforceable against each Seller Party in accordance with this its respective
terms,
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except as such enforcement may be limited by bankruptcy, insolvency, moratorium,
or similar laws relating to the enforcement of creditors' rights and by general
principles of equity (regardless of whether such enforceability is considered in
a proceeding at law or in equity).
9.3 EXISTING AGREEMENTS AND OTHER APPROVALS.
(a) Except as set forth on SCHEDULE 9.3(A), the execution,
delivery, and performance of this Agreement and the Related
Agreements, and the consummation of the transactions
contemplated by them: (i) do not and will not violate any
provisions of law applicable to the Seller, the Business or
the Purchased Assets; (ii) do not and will not conflict
with, result in the breach or termination of any provision
of, or constitute a default under (in each case whether
with or without the giving of notice or the lapse of time
or both) Seller's Articles of Incorporation or Bylaws, or
any indenture, mortgage, lease, deed of trust, or other
instrument, contract, or agreement that is material to the
Business, or any order, judgment, arbitration award, or
decree to which the Seller is a party or by which it is
bound (including, without limitation, the Purchased Assets)
that is material to the Business; and (iii) do not and will
not result in the creation of any lien or encumbrance on
any of the Purchased Assets.
(b) Except as set forth on SCHEDULE 9.3(B), no approval,
authority, or consent of, or filing by the Seller with, or
notification to, any federal, state, or local court,
authority, or governmental or regulatory body or agency or
any other corporation, partnership, individual, or other
entity is necessary (i) to authorize the execution and
delivery of this Agreement or any of the Related Agreements
by either of the Seller Parties, (ii) to authorize the
consummation of the transactions contemplated by this
Agreement or any of the Related Agreements by either of the
Seller Parties, or (iii) to continue Buyer's use and
operation of the Purchased Assets after the Closing Date.
9.4 PERMITS AND LICENSES. The Seller has, to its actual knowledge,
all necessary permits, certificates, licenses, approvals, consents, and other
authorizations required to carry on and conduct the Business as presently
conducted and to own, lease, use, and operate the Purchased Assets at the places
and in the manner in which the Business is presently conducted, all of which, to
the extent transferable, shall be transferred or assigned to Buyer at the
Closing, without expense to Buyer.
9.5 FINANCIAL STATEMENTS. Attached as SCHEDULE 9.5 are copies of the
Seller's balance sheet as of and statement of operations for the nine-month
period ended September 30, 2001 (the "Financial Statements"). The Financial
Statements have been prepared in accordance with GAAP, subject to normal
recurring year-end adjustments and the absence of notes, and fairly present in
all material respects Seller's financial position as of the dates indicated and
the results of its operations for the periods covered thereby. Seller's books
and records have been maintained on an accrual basis in accordance with GAAP;
and accurately reflect the basis for the financial condition and the results of
its operations that are set forth in the Financial Statements.
9.6 NO UNDISCLOSED LIABILITIES. Except as otherwise disclosed in the
Financial Statements, Seller has no liabilities or obligations, whether accrued,
absolute, contingent, or otherwise, and to Seller's knowledge, there exists no
fact or circumstance that could give rise to any such liabilities or obligations
in the future, and which requires disclosure on the Financial Statements in
accordance with GAAP.
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9.7 CONDUCT OF BUSINESS. Except as otherwise disclosed on attached
SCHEDULE 9.7, since September 30, 2001, Seller has not:
(a) altered or amended its Articles of Incorporation or Bylaws;
(b) entered into, materially amended, or terminated any
contract, license, lease, commitment, or permit, except in
the Ordinary Course of Business;
(c) experienced any labor disturbance;
(d) incurred or become subject to any obligation or liability
(absolute, accrued, contingent, or otherwise), except (i)
in the Ordinary Course of Business and (ii) in connection
with the performance of this Agreement;
(e) paid or satisfied any obligation or liability (absolute,
accrued, contingent, or otherwise) other than (i)
liabilities shown or reflected in Seller's balance sheet as
of September 30, 2001, or (ii) liabilities incurred since
the date of the Seller's balance sheet as of September 30,
2001, in each case only in the Ordinary Course of Business
and in accordance with the express terms of such obligation
or liability;
(f) sold, transferred, or agreed to sell or transfer any asset,
property, or business; cancelled or agreed to cancel any
debt or claim; or waived any right, except in the Ordinary
Course of Business;
(g) disposed of or permitted to lapse any Intellectual
Property;
(h) instituted or settled any litigation, action, or proceeding
before any court or governmental body relating to the
Purchased Assets or the Business;
(i) made any change in any method of accounting or any
accounting practice or suffered any deterioration in
accounting controls;
(j) entered into any other transaction other than in the
Ordinary Course of Business; or
(k) agreed or committed to do any of the foregoing.
9.8 EMPLOYEES. There is not now, nor has there been at any time
during the past five years, any strike, lockout, grievance, claim for unfair
labor practices, discrimination claim based on race, religion, age of otherwise,
other labor dispute, or trouble of any nature pending or threatened against
Seller or that in any manner affects Seller.
9.9 EMPLOYEE BENEFIT PLANS.
(a) No employee benefit plan, program or arrangement of
whatever nature, whether or not subject to any provisions
of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), bonus, stock, or other employee pay
practice, consulting, retainer, employment, retirement,
welfare, fringe benefit, insurance, incentive, vacation,
holiday, sickness, leave of absence, or any other plan,
policy, program, agreement or other arrangement that the
Seller sponsors, maintains or contributes to with respect
to Seller's or IHI's current or former employees
(individually and collectively, "Employee Plan"), shall by
its terms or applicable law,
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become binding upon or an obligation, liability or
responsibility of Buyer in any way, financial or otherwise.
The Seller has not engaged in any action or omission which
may result in Buyer being a party to, or bound by, any
Employee Plan. No Employee Plan provides for payment of
termination, change of control or retiree benefits in any
manner such that Buyer would become liable to provide such
benefits.
(b) With respect to any Employee Plan that is subject to the
continuation requirements of Sections 601-608 of ERISA and
Section 4980B of the Code, or the continuation requirements
of any applicable state or local law, the Seller's
sponsoring, maintaining or contributing to such Employee
Plans has complied with all such applicable laws and
regulatory requirements with respect to the Seller's
current or former employees.
(c) No Employee Plan is either (i) a "multiemployer plan" (as
defined in Section 3(37) of ERISA) or (ii) a defined
benefit pension plan subject to Title IV of ERISA.
(d) During the five years preceding the Closing Date, (i) no
under-funded pension plan subject to Section 412 of the
Code has been transferred out of the Seller and (ii) Seller
has not participated in or contributed to, nor had an
obligation to contribute to, any multiemployer plan (as
defined in ERISA Section 3(37)) and Seller does not have
any withdrawal liability with respect to any multiemployer
plan.
9.10 CONTRACTS. Except for (i) the contracts and commitments listed
on SCHEDULE 9.10 ("Contracts and Commitments"), (ii) contracts and commitments
specifying payment by the Seller or to the Seller of $25,000 or less over the
term of such contract or commitment; or (iii) the Outstanding Customer Purchase
Orders, the Seller is not a party to nor bound by any agreement or commitment
that materially affects the Business, the Purchased Assets, or the Assumed
Liabilities. All Contracts and Commitments are valid and binding obligations of
the Seller in accordance with their respective terms. No material default or
alleged material default exists on the part of the Seller or, to either Seller
Party's knowledge, on the part of any other party, under any of the Contracts
and Commitments. True and complete copies of all Contracts and Commitments have
been delivered to Buyer.
9.11 TITLE TO PURCHASED ASSETS; LIENS.
(a) Seller is the owner of and has good title to all of the
Purchased Assets, free and clear of all liens, claims,
demands, charges, options, equity interests, leases,
pledges and security interests ("Liens"), except (i) as
described on SCHEDULE 9.11 and (ii) except for liens for
personal property taxes that are not yet due and payable.
When Buyer pays to the applicable creditor, at Seller's
direction, the amounts identified in the letters that will
be delivered to Buyer at the Closing pursuant to Section
8.2(a)(iii), Seller shall obtain a release of all Liens
except those described in Items Xx. 00 xxx 00 xx XXXXXXXX
0.00 .
(x) SCHEDULE 9.11 lists or describes all property used in the
conduct of the Business that is owned by or an interest in
which is claimed by any other person (whether a customer,
supplier, or other person) and for which Seller is
responsible, together with copies of all related
agreements.
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9.12 TAXES.
(a) "Tax" or "Taxes" shall mean any and all of the Seller's
foreign, federal, state, county, local, and other taxes
(including, without limitation, income taxes; premium
taxes; single-business taxes; excise taxes; sales taxes;
use taxes; value-added taxes; gross receipts taxes;
franchise taxes; ad valorem taxes; real estate taxes;
severance taxes; capital levy taxes; transfer taxes; stamp
taxes; employment, unemployment, and payroll-related taxes;
withholding taxes; and governmental charges and
assessments; and all transfer taxes and like charges
payable on and in connection with Seller's conveyance and
transfer of the Purchased Assets to Buyer), together with
interest, additions to tax, and penalties with respect
thereto.
(b) Seller has filed on a timely basis all Tax returns it is
required to file under foreign, federal, state, or local
law, and has paid or established an adequate reserve with
respect to all Taxes for the periods covered by such
returns. No agreements have been made by or on behalf of
Seller for any waiver or for the extension of any statute
of limitations governing the time of assessment or
collection of any Taxes. Seller and its officers have not
received any notice of any pending or threatened audit by
the IRS or any state or local agency related to its Tax
returns or Tax liability for any period, and a claim for
assessment or collection of Taxes has not been asserted
against Seller. There are no foreign, federal, state, or
local Tax liens outstanding against any of Seller's assets
(including, without limitation, the Purchased Assets) or
the Business.
(c) The Seller's sale of the Purchased Assets to the Buyer
pursuant to this Agreement will not result in the
imposition of, or liability of the Buyer for, any Transfer
Taxes.
9.13 LITIGATION. There are no claims, disputes, actions, suits,
proceedings, or investigations pending or, to Seller's knowledge, threatened,
against or affecting the Seller, the Business, or the Purchased Assets.
9.14 PRODUCT LIABILITY. There are no known defects or deficiencies
existing in any of the products manufactured or sold by the Seller, or in any
finished Inventory of the Seller, that could give rise to any liabilities or
claims for product liability.
9.15 BROKERS. Seller has not engaged, and is not responsible for any
payment to, any finder, broker, or consultant in connection with the
transactions contemplated by this Agreement, except as set forth on SCHEDULE
9.15.
9.16 INTELLECTUAL PROPERTY. SCHEDULE 9.16 lists all patents,
processes, trademarks, trade names, copyrights, service marks, logos, trade
secrets and all applications and registrations therefor that are used in the
Business, and licenses thereof under which the Seller has any right to the use
or benefit of, or other rights with respect to, any of the foregoing
("Intellectual Property"). Except as set forth in SCHEDULE 9.16, the Seller is
the sole and exclusive owner of the Intellectual Property, free and clear of all
Liens. To the Seller Parties' knowledge, none of the Seller's Intellectual
Property infringes on any other person's intellectual property, and, to the
Seller Parties' knowledge, no activity of any other person infringes on any of
the Intellectual Property. To the Seller Parties' knowledge, the Seller has been
and is now conducting the Business in a manner that has not been
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and is not now in violation of any other person's intellectual property, and
Seller does not require a license or other proprietary right to so operate the
Business.
9.17 DEFINITION OF KNOWLEDGE. When any representation or warranty in
this Agreement is qualified to Seller Parties' knowledge, it means the actual
knowledge of such Seller Party's executive officers, except in the case of the
Seller, it means the actual knowledge of its executive officers other than
Xxxxxxxx.
10. BUYER'S REPRESENTATIONS AND WARRANTIES. Buyer represents and
warrants to each Seller Party that, as of the date hereof (except to the extent
any representation or warranty is made as of another date, which is in such case
made as of such other date):
10.1 ORGANIZATION AND STANDING. Buyer is a corporation validly
existing under the laws of the State of Texas, and Buyer has all the requisite
corporate power and authority to own its properties and to conduct its business
as it is now being conducted.
10.2 AUTHORIZATION. Buyer has all requisite power and authority (a)
to execute, deliver and perform this Agreement and the Related Agreements to
which it is or will be a party, and (b) to consummate the transactions
contemplated under this Agreement and the Related Agreements. Buyer has taken
all necessary action (a) to duly approve the execution, delivery, and
performance of this Agreement and (b) to consummate any related transactions.
Buyer has taken all necessary corporate action to approve the execution,
delivery and performance of this Agreement and the Related Agreements, and the
consummation of the transactions contemplated by this Agreement and the Related
Agreements. Buyer has duly executed and delivered this Agreement, and this
Agreement is its legal, valid, and binding obligation, enforceable against Buyer
in accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, moratorium, or similar laws relating to the enforcement
of creditor's rights and by general principles of equity (regardless of whether
such enforceability is considered in a proceeding at law or in equity).
10.3 EXISTING AGREEMENTS AND OTHER APPROVALS.
(a) The execution, delivery, and performance of this Agreement
and the consummation of the transactions contemplated by
them: (i) do not and will not violate any provisions of the
law applicable to Buyer; (ii) do not and will not conflict
with, result in the breach or termination of any provision
of, or constitute a default under (in each case whether
with or without the giving of notice or the lapse of time,
or both) Buyer's Articles of Organization, or any
indenture, mortgage, lease, deed of trust, or other
instrument, contract, or agreement or any order, judgment,
arbitration award, or decree to which Buyer is a party or
by which it or any of its assets and properties are bound;
and (iii) do not and will not result in the creation of any
lien or encumbrance on any of the Buyer's properties,
assets, or business.
(b) No approval, authority, or consent of, or filing by Buyer
with, or notification to, any federal, state, or local
court, authority, or governmental or regulatory body or
agency or any other corporation, partnership, individual,
or other entity is necessary (i) to authorize Buyer's
execution and delivery of this Agreement or (ii) to
authorize Buyer's consummation of the transactions
contemplated by this Agreement.
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10.4 BROKERS. Buyer has not engaged, and is not responsible for any
payment to, any finder, broker, or consultant in connection with the
transactions contemplated by this Agreement.
10.5 BUYER'S KNOWLEDGE. Xxxxxxxx has no actual knowledge (and the
knowledge of other persons, including individuals and corporations or other
entities, shall not be imputed to Xxxxxxxx) of any facts or circumstances that
would indicate that any of the representations or warranties of Sellers Parties
are inaccurate or untrue in any material respects as of the date made. For
purposes of this Agreement, Xxxxxxxx'x knowledge of a fact or circumstance shall
in all cases be attributed to the Buyer.
11. POST-CLOSING COVENANTS.
11.1 POST-CLOSING RECEIPTS. From and after the Closing Date, Seller
Parties will promptly notify and transfer to Buyer any payments or other
receipts they receive with respect to any of the Purchased Assets. Pending any
such transfer, Seller Parties will segregate any such payments from their other
assets and will clearly xxxx or designate them as the property of Buyer.
11.2 SELLER NAMES. Seller agrees that it will not use the Names
either directly or indirectly, alone or in combination with one or more other
words, in, or in connection with, any business, activities, or operations that
Seller directly or indirectly carries on or conducts.
11.3 FURTHER ASSURANCES. From time to time after the Closing Date,
each party hereto will, at any other party's request, execute, acknowledge and
deliver to such requesting party such other instruments and take such other
actions and deliver such other documents as may be reasonably required to carry
out the intent of this Agreement and the Related Agreements.
11.4 BOOKS AND RECORDS. Insofar as the Seller determines that any
books and records may be needed or useful in connection with federal, state or
local regulatory or tax matters, resolution of third-party disputes or contract
compliance issues, or other bona fide business purposes, for a period of seven
years after the Closing Date, Buyer will use its best efforts to preserve and
make available to the Seller, at the location of such books and records in the
Buyer's organization, access to and the right to copy such of the books and
records as such Buyer may then have in its possession or to which it may have
access upon written request of the Seller during normal business hours. The
Buyer agrees to make such of its employees and of the books and records as the
Seller may reasonably request, available at the Buyer's cost to assist in the
preparation of financial reports and tax returns for the Seller's fiscal year
ending in 2001.
11.5 WAIVER. The Buyer hereby waives, releases, relinquishes and
acquits each of IHI, T-3 Energy Services, Inc., First Reserve Fund VIII, L.P.,
and Comerica, as agent and individually, Hibernia National Bank and National
Bank of Canada, and their directors, officers, stockholders, agent, successors,
from and against all claims, counterclaims, demands, suits, rights, actions and
causes of action of any nature whatsoever, as a result of or in connection with
the sale by IHI or the EPG Division Members (other than Seller) of the assets or
capital stock of such EPG Division Members to persons other than the Buyer.
12. INDEMNIFICATION.
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12.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The parties'
representations, warranties, post-Closing covenants, agreements and indemnities
(except (i) those pursuant to the Assignment and Assumption Agreement, which
shall survive until all Assumed Liabilities have been satisfied, (ii) those of
the Seller Parties relating in any way to the Excluded Liabilities, which shall
survive until all of the Excluded Liabilities have been satisfied and (iii)
those of the Seller Parties contained in Section 8.3 which shall survive the
Closing without limitation) shall survive the Closing, the consummation of the
transactions under this Agreement and any investigation provided for with
respect thereto for a period of one year beginning on the Closing Date. The
parties' covenants and agreements contained herein to be performed or observed
at or prior to the Closing shall expire at the Closing, along with all rights
and remedies for any breach thereof. The date on which an applicable survival
period expires under the first sentence of this Section 12.1 is referred to
hereafter as the "Expiration Date."
12.2 INDEMNIFICATION BY THE SELLER PARTIES.
(a) Subject to Section 12.3(b) below, the Seller Parties,
jointly and severally, shall defend, indemnify, and hold
harmless Buyer and its directors, officers, shareholders,
successors, and assigns (the "Buyer Indemnitees") from and
against any and all costs, losses, claims, suits, actions,
assessments, diminution in value, liabilities, fines,
penalties, damages (including in all cases consequential
and punitive damages) and expenses (including reasonable
legal fees) (collectively, "Damages") in connection with or
resulting from:
(i) All debts, liabilities, and obligations of Seller
Parties, whether accrued, absolute, contingent,
known, unknown, or otherwise, but excluding any
Assumed Liabilities.
(ii) Any inaccuracy in any representation or breach of
any warranty of Seller Parties contained in this
Agreement or any Related Agreement.
(iii) Any failure by Seller Parties to perform or
observe in full, or to have performed or observed
in full, any post-Closing covenant, agreement, or
condition to be performed or observed by the
Seller Parties under this Agreement or any
Related Agreement.
12.3 INDEMNIFICATION BY THE BUYER. Subject to Section 12.2(a)(ii)
above, the Buyer shall indemnify and hold harmless the Seller Parties and their
directors, officers, shareholder, agents, successors and assigns (the "Seller
Indemnitees") from and against any Damages as they are incurred or suffered by
any of them and caused by or arising out of:
(a) The Buyer's breach of or default in the performance of any
covenant or agreement in this Agreement or in any Related
Agreement; and
(b) The Buyer's breach of any representation or warranty in
this Agreement.
12.4 PROCEDURE FOR INDEMNIFICATION; THIRD-PARTY CLAIMS.
(a) Any party claiming indemnification under this Section 12 is
referred to in this Agreement as an "Indemnified Person"
and any party against whom such claims are
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asserted under this Section 12 is referred to in this
Agreement as an "Indemnifying Person."
(b) Within 15 days after receipt of notice of commencement of
any action by any third party evidenced by service of
process or other legal pleading, or with reasonable
promptness after the assertion in writing of any claim by a
third party, the Indemnified Person shall give the
Indemnifying Person written notice thereof, together with a
copy of such claim, process or other legal pleading. The
failure to so notify the Indemnifying Person within the
above time frame will not relieve the Indemnifying Person
of any liability it may have to the Indemnified Person,
except to the extent the Indemnifying Person demonstrates
that the defense of such action is unduly prejudiced by the
Indemnified Person's failure to give such notice, or except
if such notice is not delivered before the Expiration Date.
The Indemnifying Person shall have the right to undertake
and control the defense, settlement, compromise or other
disposition thereof at its own expense and through a legal
representative of its own choosing. The Indemnified Person
and its counsel shall have the right to be present at the
negotiation, defense and settlement of such action or
claim, and any settlement or compromise of any such action
or claim shall be subject to the approval of the
Indemnified Person, which approval shall not be
unreasonably withheld.
(c) If the Indemnifying Person, by the earlier to occur of the
30th day after receipt of notice of any such claim or, by
the 10th day immediately preceding the day on which an
answer or other pleading must be served in order to prevent
judgment by default in favor of the person asserting such
claim, has not notified the Indemnified Person of its
election to defend against such claim, the Indemnified
Person shall have the right to undertake the defense,
compromise or settlement of such claim through counsel of
its choice on behalf of and for the account and risk of the
Indemnifying Person, at the cost and expense of the
Indemnifying Person. In such event, the Indemnifying Party
and its counsel shall have the right to be present at the
negotiation, defense and settlement of such action or
claim, and any settlement or compromise of any such action
or claim shall be subject to the approval of the
Indemnifying Party, which approval shall not be
unreasonably withheld.
12.5 PROCEDURE FOR INDEMNIFICATION; OTHER THAN THIRD-PARTY CLAIMS.
Any claim for indemnification for a matter not involving a third-party claim
shall be asserted by written notice, which specifies in reasonable detail the
factual basis of such claim, and delivered to the party or parties from which
indemnification is sought.
12.6 LIMITATIONS ON LIABILITY.
(a) No claim for indemnification shall be made hereunder unless
asserted by a written notice given to the Indemnifying
Party on or before the Expiration Date.
(b) No claim for indemnification shall be made hereunder with
respect to any matter (i) unless and until the total amount
of Damages exceeds $25,000 in the aggregate ("Minimum
Damages"), and then only for the amount by which such
Damages exceeds Minimum Damages; and (ii) to the extent
that the total amount of Damages exceeds $1,900,000. The
Minimum Damages threshold shall not apply to any claim
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by the Seller Indemnitees related to the Assumed
Liabilities or to any claim by the Buyer Indemnitees for
Excluded Liabilities.
(c) The Indemnified Person shall act in good faith and in a
commercially reasonable manner to mitigate any Damages for
which it may seek indemnification under this Section 12.
(d) An indemnity payment for claims or Damages otherwise due
and payable under this Section 12 shall be decreased to the
extent of any (i) net reduction of tax liability the
Indemnified Party or any affiliated party thereof actually
realizes as a result of such indemnifiable loss, and (ii)
insurance proceeds the Indemnified Party or any affiliated
party thereof actually collects in connection with the
indemnifiable loss.
(e) The Seller Parties shall not have any liability under
Section 12.2, and the Buyer shall not have any liability
under Section 12.3, unless the notices required under
Sections 12.4 and 12.5 are delivered on or before the
Expiration Date.
12.7 REMEDIES. The remedies of the Buyer and the Buyer Indemnitees
set forth in this Section 12 shall be the exclusive post-Closing remedies
available to them with respect to the actual or alleged breach by either Seller
Party of any provision of this Agreement or the Related Agreements (other than
the Nonsolicitation Agreement and the Transitional Services Agreement).
13. EXPENSES. Each of the parties shall pay all of the costs that it incurs
incident to the preparation, execution, and delivery of this Agreement and the
performance of any related obligations, whether or not the transactions
contemplated by this Agreement shall be consummated.
14. RISK OF LOSS. The risk of loss of or damage to the Purchased Assets from
fire or other casualty or cause shall be on Seller at all times up to the
Closing, and it shall be the responsibility of Seller to repair, or cause to be
repaired, and to restore the property to the condition it was before the loss or
damage.
15. TERMINATION.
15.1 MANNER OF TERMINATION. This Agreement may be terminated at any
time before the Closing Date as follows:
(a) By Buyer and Seller Parties in a written instrument signed
by each of them.
(b) By Buyer or Seller Parties if the Closing does not occur on
or before November 30, 2001 (the "Termination Date").
(c) By Buyer or Seller Parties if there has been a material
breach of any of the representations or warranties set
forth in this Agreement on the part of the other, and such
breach by its nature cannot be cured before the Termination
Date.
(d) By Buyer or Seller Parties if there has been a material
breach of any of the covenants or agreements set forth in
this Agreement on the part of the other, and such breach is
not cured by the Termination Date.
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15.2 EFFECT OF TERMINATION. If terminated as provided in Section
15.1, this Agreement shall forthwith become void and have no effect, except for
Section 13, Section 16.7 and Section 16.8, and except that a party shall not be
relieved or released from any liabilities or damages arising out of the party's
breach of any provision of this Agreement.
16. MISCELLANEOUS PROVISIONS.
16.1 NOTICES. All notices, demands, and requests required or
permitted to be given under the provisions of this Agreement shall be in writing
and shall be deemed given (a) when personally delivered or sent by facsimile
transmission to the party to be given the notice or other communication or (b)
on the business day following the day such notice or other communication is sent
by overnight courier to the following:
IF TO SELLER PARTIES:
Xxxxxx X. Xxxx
Industrial Holdings, Inc.
0000 Xxxxxxx
Xxxxxxx, Xxxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
With a copy to:
Xxxxxxx Xxxxxx L.L.P.
0000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attn: Xxxxxxx X. XxXxxx
Telephone: 000-000-0000
Facsimile: 713-752-4221
IF TO BUYER:
Xxxxxx X. Xxxxxxxx
7135 Ardmore
Xxxxxxx, Xxxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
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With a copy to:
Fulbright & Xxxxxxxx, LLP
0000 XxXxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attn: Xxxxxx X. Xxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
or to such other address or facsimile number that the parties may
designate in writing.
16.2 ASSIGNMENT. Except as set forth herein, neither Seller Parties
nor Buyer shall assign this Agreement, or any interest in it, without the prior
written consent of the other.
16.3 PARTIES IN INTEREST. This Agreement shall inure to the benefit
of, and be binding on, the named parties and their respective successors and
permitted assigns, but not any other person.
16.4 CHOICE OF LAW. This Agreement shall be governed by, construed,
and enforced in accordance with, the laws of the State of Texas.
16.5 COUNTERPARTS. This Agreement may be signed in any number of
counterparts with the same effect as if the signature on each counterpart were
on the same instrument.
16.6 ENTIRE AGREEMENT. This Agreement and all related documents,
schedules, exhibits, or certificates represent the entire understanding and
agreement between the parties with respect to the subject matter and supersede
all prior agreements or negotiations between the parties. This Agreement may be
amended, supplemented, or changed only by an agreement in writing that makes
specific reference to this Agreement or the agreement delivered pursuant to it
and that is signed by the party against whom enforcement of any such amendment,
supplement, or modification is sought.
16.7 ARBITRATION.
(a) Any dispute, controversy, or claim arising out of or
relating to this Agreement or relating to the breach,
termination, or invalidity of this Agreement, whether
arising in contract, tort, or otherwise, shall at the
request of any party be resolved in binding arbitration.
Any arbitration shall proceed in accordance with Title 9 of
the United States Code, as it may be amended or recodified
from time to time ("Title 9"), and the current Commercial
Arbitration Rules (the "Arbitration Rules") of the American
Arbitration Association ("AAA") to the extent that Title 9
and the Arbitration Rules do not conflict with any
provision of this Section 16.7.
(b) No provision of or the exercise of any rights under this
Section 16.7 shall limit the right of any party to seek and
obtain provisional or ancillary remedies (such as
injunctive relief, attachment, or the appointment of a
receiver) from any court having jurisdiction before,
during, or after the pendency of an arbitration proceeding
under this Section. The institution and maintenance of any
such action or proceeding shall not constitute a waiver of
the right of any party (including the party taking the
action or instituting the proceeding) to submit a dispute,
controversy, or claim to arbitration under this Section.
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(c) Any award, order, or judgment made pursuant to arbitration
shall be deemed final and may be entered in any court
having jurisdiction over the enforcement of the award,
order, or judgment. Each party agrees to submit to the
jurisdiction of any court for purposes of the enforcement
of the award, order, or judgment.
(d) The arbitration shall be held before one neutral,
disinterested arbitrator knowledgeable in the general
subject matter of the dispute, controversy, or claim and
selected by AAA in accordance with the Arbitration Rules,
except that any arbitration in which the disputed,
controverted, or claimed amount (as reflected on the demand
for arbitration, as the same may be amended) exceeds
$1,000,000.00 shall be held before three arbitrators, one
arbitrator being selected by Buyer, one by the Seller
Parties, and the third by the other two from a panel of
persons identified by AAA who are knowledgeable in the
general subject matter of the dispute, controversy, or
claim.
(e) The arbitration shall be held at the office of AAA located
in Xxxxxx County, Texas (as the same may be from time to
time relocated), or at another place the parties agree on.
(f) In any arbitration proceeding under this Section 16.7,
subject to the award of the arbitrator(s), each party shall
pay all its own expenses, an equal share of the fees and
expenses of the arbitrator, and, if applicable, the fees
and expenses of its own appointed arbitrator. The
arbitrator(s) shall have the power to award recovery of
costs and fees (including reasonable attorney fees,
administrative and AAA fees, and arbitrators' fees) among
the parties as the arbitrators determine to be equitable
under the circumstances.
(g) The interpretation and construction of this Section 16.7,
including, but not limited to, its validity and
enforceability, shall be governed by Title 9 of the U.S.
Code, notwithstanding the choice of law set forth in
Section 16.4 of this Agreement.
16.8 PUBLIC ANNOUNCEMENTS. The parties agree to advise and confer
with each other prior to the issuance of any public reports, statements or press
releases pertaining to this Agreement and the transactions contemplated hereby.
Each party will use its best efforts to maintain in strict confidence the
existence and terms of this Agreement and the transactions contemplated hereby.
Unless otherwise required by law or as set forth above, no party shall make any
public announcement or disclosure concerning this Agreement, except as mutually
agreed. The financial terms of the Agreement are to be kept confidential, except
to the extent that the disclosure is required under law. Nothing in the
foregoing is intended to prevent IHI from making any filings required with the
Securities and Exchange Commission.
16.9 CERTIFICATE OF NO TAX DUE. Seller ordered on November 2, 2001, a
Certificate of No Tax Due (under Section 111.020 of the Texas Tax Code) from the
Comptroller of Public Accounts of the State of Texas with respect to each Tax
under Title 2 of the Texas Tax Code with respect to which Seller is or has been
liable or filed Tax returns (including, but not limited to, Texas franchise
Taxes and Texas sales and use Taxes). Seller covenants to deliver such
Certificate of No Tax due to Buyer as promptly as practicable after receipt of
such certificate.
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The parties have executed this Agreement on the date set
forth on the first page of this Agreement.
SELLER PARTIES:
XXXXXXXX METAL FORMING, INC.
By: /s/ XXXXXXXXX X. XXXXX
-------------------------------------
Xxxxxxxxx X. Xxxxx, Vice President
INDUSTRIAL HOLDINGS, INC.
By: /s/ XXXXXXXXX X. XXXXX
-------------------------------------
Xxxxxxxxx X. Xxxxx
Executive Vice President
XXXXXXXX FASTENER CORPORATION
By: /s/ XXXXXX X. XXXXXXXX
-------------------------------------
Xxxxxx X. Xxxxxxxx, President
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FIRST AMENDMENT TO ASSET PURCHASE AGREEMENT
THIS FIRST AMENDMENT TO ASSET PURCHASE AGREEMENT (the "First
Amendment") is dated as of November 15, 2001, between XXXXXXXX METAL FORMING,
INC., a Texas corporation (the "Seller"), INDUSTRIAL HOLDINGS, INC., a Texas
corporation ("IHI") (the Seller and IHI sometimes collectively referred to
herein as the "Seller Parties"), and XXXXXXXX FASTENER CORPORATION, a Texas
corporation (the "Buyer").
BACKGROUND
A. The Seller Parties and the Buyer have entered into that certain Asset
Purchase Agreement (the "Agreement") dated as of November 6, 2001.
B. The Seller Parties and the Buyer now desire to amend the Agreement as
herein set forth.
NOW, THEREFORE, consistent with the Background and in consideration of
the terms and conditions set forth in this First Amendment and the Agreement,
each of the Seller Parties and Buyer agree as follows:
AMENDMENTS
1. DEFINITIONS. Capitalized terms used in this First Amendment, to the extent
not otherwise defined herein, shall have the meanings as in the Agreement.
2. AMENDMENT TO SECTION 8.1. Section 8.1 "Closing" is hereby amended to read in
its entirety as follows:
8.1 CLOSING. The closing of the transactions contemplated in
this Agreement (the "Closing") shall take place at the offices
of Xxxxxxx Xxxxxx L.L.P. at 10:00 a.m. on or before November
30, 2001, or at such other place and/or on such other date as
the parties may agree on (the "Closing Date").
3. RATIFICATION. The terms and provisions set forth in this First Amendment
shall modify and supersede all inconsistent terms and provisions set forth in
the Agreement and except as expressly modified and superseded by this First
Amendment, the terms and provisions of the Agreement are ratified and confirmed
and shall continue in full force and effect.
4. COUNTERPARTS. This First Amendment may be signed in any number of
counterparts with the same effect as if the signature on each counterpart were
on the same instrument.
[Balance of page intentionally left blank.]
The parties have executed this First Amendment on the date set forth on
the first page of this Agreement.
SELLER PARTIES:
XXXXXXXX METAL FORMING, INC.
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
INDUSTRIAL HOLDINGS, INC.
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
BUYER:
XXXXXXXX FASTENER CORPORATION
By:
--------------------------------------
Xxxxxx X. Xxxxxxxx, President
2
SECOND AMENDMENT TO ASSET PURCHASE AGREEMENT
THIS SECOND AMENDMENT TO ASSET PURCHASE AGREEMENT (the "Second
Amendment") is dated as of November 30, 2001, between XXXXXXXX METAL FORMING,
INC., a Texas corporation (the "Seller"), INDUSTRIAL HOLDINGS, INC., a Texas
corporation ("IHI") (the Seller and IHI sometimes collectively referred to
herein as the "Seller Parties"), and XXXXXXXX FASTENER CORPORATION, a Texas
corporation (the "Buyer").
BACKGROUND
A. The Seller Parties and the Buyer have entered into that certain Asset
Purchase Agreement (the "Agreement") dated as of November 6, 2001, and that
certain First Amendment to Asset Purchase Agreement dated as of November 15,
2001.
B. The Seller Parties and the Buyer now desire to further amend the Agreement as
herein set forth.
NOW, THEREFORE, in consideration of the terms and conditions set forth
in this Second Amendment and the Agreement, as amended, each of the Seller
Parties and Buyer agree as follows:
AMENDMENTS
1. DEFINITIONS. Capitalized terms used in this Second Amendment, to the extent
not otherwise defined herein, shall have the meanings as in the Agreement.
2. AMENDMENT TO SECTION 8.1. Section 8.1 is hereby amended to read in its
entirety as follows:
"8.1 CLOSING. The closing of the transactions contemplated in
this Agreement (the "Closing") shall take place at the offices
of Xxxxxxx Xxxxxx L.L.P. at 10:00 a.m. on or before December
10, 2001, or at such other place and/or on such other date as
the parties may agree on (the "Closing Date"). For financial
and accounting purposes (including without limitation
preparation of the Closing Date Statement pursuant to Section
4.3), the Closing shall be deemed to have occurred as of the
close of business on the Closing Date."
3. AMENDMENT TO SECTION 4.3(c). Section 4.3(c) is hereby amended by adding the
following provisions after the third sentence:
"Though ad valorem taxes would not otherwise be taken into
account in the calculation of Net Working Capital, there shall
be charged against the Buyer and credited to the Seller an
amount equal to the ad valorem taxes imposed on the Purchased
Assets related to all periods after the Closing Date, such
charge to be calculated by multiplying the number of days
after the Closing Date remaining in the 2001 tax year ending
December 31, 2001 by the per diem figure of $379 per day."
4. AMENDMENT TO SECTION 15.1(b). Section 15.1(b) is hereby amended to read in
its entirety as follows:
(b) By Buyer or Seller Parties if the Closing does not occur
on or before December 31, 2001 (the "Termination Date").
5. RATIFICATION. The terms and provisions set forth in this Second Amendment
shall modify and supersede all inconsistent terms and provisions set forth in
the Agreement and except as expressly modified and superseded by this Second
Amendment, the terms and provisions of the Agreement are ratified and confirmed
and shall continue in full force and effect.
6. COUNTERPARTS. This Second Amendment may be signed in any number of
counterparts with the same effect as if the signature on each counterpart were
on the same instrument.
The parties have executed this Second Amendment on the date set forth on the
first page of this Agreement.
SELLER PARTIES:
XXXXXXXX METAL FORMING, INC.
By:
--------------------------------------
Xxxxxxxxx X. Xxxxx,
Vice President
INDUSTRIAL HOLDINGS, INC.
By:
--------------------------------------
Xxxxxxxxx X. Xxxxx,
Executive Vice President
BUYER:
XXXXXXXX FASTENER CORPORATION
By:
--------------------------------------
Xxxxxx X. Xxxxxxxx, President
2
THIRD AMENDMENT TO ASSET PURCHASE AGREEMENT
THIS THIRD AMENDMENT TO ASSET PURCHASE AGREEMENT (the "Third
Amendment") is dated as of December 10, 2001, between XXXXXXXX METAL FORMING,
INC., a Texas corporation (the "Seller"), INDUSTRIAL HOLDINGS, INC., a Texas
corporation ("IHI") (the Seller and IHI sometimes collectively referred to
herein as the "Seller Parties"), and XXXXXXXX FASTENER CORPORATION, a Texas
corporation (the "Buyer").
BACKGROUND
A. The Seller Parties and the Buyer have entered into that certain Asset
Purchase Agreement dated as of November 6, 2001, that certain First Amendment to
Asset Purchase Agreement dated as of November 15, 2001, and that certain Second
Amendment to Asset Purchase Agreement dated as of November 30, 2001 (the Asset
Purchase Agreement, as amended, the "Agreement").
B. The Seller Parties and the Buyer now desire to further amend the Agreement as
herein set forth.
NOW, THEREFORE, in consideration of the terms and conditions set forth
in this Third Amendment and the Agreement each of the Seller Parties and Buyer
agree as follows:
AMENDMENTS
1. DEFINITIONS. Capitalized terms used in this Third Amendment, to the extent
not otherwise defined herein, shall have the meanings as in the Agreement.
2. AMENDMENT TO SECTION 8.1. Section 8.1 is hereby amended to read in its
entirety as follows:
"8.1 CLOSING. The closing of the transactions contemplated in
this Agreement (the "Closing") shall take place at the offices
of Xxxxxxx Xxxxxx L.L.P. at 10:00 a.m. on the later to occur
of (i) December 12, 2001 or (ii) the date of the consummation
of the proposed merger between IHI and T-3 Energy Services,
Inc., or at such other place and/or on such other date as the
parties may agree on (the "Closing Date"). For financial and
accounting purposes (including without limitation preparation
of the Closing Date Statement pursuant to Section 4.3), the
Closing shall be deemed to have occurred as of the close of
business on the Closing Date."
3. RATIFICATION. The terms and provisions set forth in this Third Amendment
shall modify and supersede all inconsistent terms and provisions set forth in
the Agreement and except as expressly modified and superseded by this Third
Amendment, the terms and provisions of the Agreement are ratified and confirmed
and shall continue in full force and effect.
4. COUNTERPARTS. This Third Amendment may be signed in any number of
counterparts with the same effect as if the signature on each counterpart were
on the same instrument.
The parties have executed this Third Amendment on the date set forth on the
first page.
SELLER PARTIES:
XXXXXXXX METAL FORMING, INC.
By:
-------------------------------------
Xxxxxxxxx X. Xxxxx,
Vice President
INDUSTRIAL HOLDINGS, INC.
By:
-------------------------------------
Xxxxxxxxx X. Xxxxx,
Executive Vice President
BUYER:
XXXXXXXX FASTENER CORPORATION
By:
-------------------------------------
Xxxxxx X. Xxxxxxxx, President
2
FOURTH AMENDMENT TO ASSET PURCHASE AGREEMENT
THIS FOURTH AMENDMENT TO ASSET PURCHASE AGREEMENT (the "Fourth
Amendment") is dated as of December 17, 2001, between XXXXXXXX METAL FORMING,
INC., a Texas corporation (the "Seller"), INDUSTRIAL HOLDINGS, INC., a Texas
corporation ("IHI") (the Seller and IHI sometimes collectively referred to
herein as the "Seller Parties"), and XXXXXXXX FASTENER CORPORATION, a Texas
corporation (the "Buyer").
BACKGROUND
A. The Seller Parties and the Buyer have entered into that certain Asset
Purchase Agreement dated as of November 6, 2001, that certain First Amendment to
Asset Purchase Agreement dated as of November 15, 2001, that certain Second
Amendment to Asset Purchase Agreement dated as of November 30, 2001, and that
Third Amendment to Asset Purchase Agreement, dated as of December 10, 2001 (the
Asset Purchase Agreement, as amended, the "Agreement").
B. The Seller Parties and the Buyer now desire to further amend the Agreement as
herein set forth.
NOW, THEREFORE, in consideration of the terms and conditions set forth
in this Fourth Amendment and the Agreement each of the Seller Parties and Buyer
agree as follows:
AMENDMENTS
1. DEFINITIONS. Capitalized terms used in this Fourth Amendment, to the extent
not otherwise defined herein, shall have the meanings as in the Agreement.
2. AMENDMENT TO SECTION 4.1. Section 4.1 is hereby amended to read in its
entirety as follows:
"4.1 Purchase Price. On the date hereof, the Closing Date,
Buyer shall pay to Seller Parties as consideration for the
Purchased Assets the amount of $2,250,000 and shall assume the
Assumed Liabilities (together, the "Purchase Price"), as
follows:
(i) $1,180,750 in cash (the "Cash Purchase Price") by wire
transfer in immediately available funds;
(ii) that certain subordinated promissory note, dated as of
the Closing Date, in the original principal amount of
$350,000.00, executed by Buyer and made payable to Seller (the
"Seller Note");
(iii) that certain subordinated promissory note, dated as of
the Closing Date, in the original principal amount of
$719,250.00, executed by Buyer and made payable to IHI (the
"IHI Note"); and
(iv) the balance of the Purchase Price by execution and
delivery of the Assignment and Assumption Agreement."
3. AMENDMENT TO SECTION 4.3(c). Section 4.3(c) is hereby amended by adding the
following provision at the end of the fourth sentence, which had been added by
the Second Amendment to the Agreement:
"provided, however, that such charge against the Buyer and
credit to the Seller shall only apply after the Seller has
paid the ad valorem taxes on the Purchased Assets for the tax
year ending December 31, 2001."
4. AMENDMENT TO SECTION 8.2(a). Section 8.2(a) is hereby amended as follows:
1. Subsection (vii) shall be restated to read in its entirety
as follows:
"(vii) that certain Security Agreement, dated as of the
Closing Date, executed by the Buyer in favor of the Seller
(the "Seller Security Agreement");"
2. The addition of the following new subsections:
"(x) that certain Security Agreement, dated as of the
Closing Date, executed by the Buyer in favor of IHI (the
"IHI Security Agreement");
(xi) that certain letter agreement, dated as of the Closing
Date, between Xxxxxxxx and IHI; and
(xii) that certain letter agreement, dated as of the
Closing Date, between Buyer and IHI."
5. AMENDMENT TO SECTION 8.2(b). Section 8.2(b) is hereby amended as follows:
1. Subsection (i) shall be restated to read in its entirety as
follows:
"(i) the Cash Purchase Price, the Seller Note and the IHI
Note;"
2. Subsection (v) shall be restated to read in its entirety as
follows:
"(v) the Seller Security Agreement;"
3. The addition of the following new subsections:
"(ix) the IHI Security Agreement;
(x) that certain letter agreement, dated as of the Closing
Date, between Xxxxxxxx and IHI; and
(xii) that certain letter agreement, dated as of the
Closing Date, between Buyer and IHI."
2
6. RATIFICATION. The terms and provisions set forth in this Fourth Amendment
shall modify and supersede all inconsistent terms and provisions set forth in
the Agreement and except as expressly modified and superseded by this Fourth
Amendment, the terms and provisions of the Agreement are ratified and confirmed
and shall continue in full force and effect.
7. COUNTERPARTS. This Fourth Amendment may be signed in any number of
counterparts with the same effect as if the signature on each counterpart were
on the same instrument.
The parties have executed this Fourth Amendment on the date set forth on the
first page.
SELLER PARTIES:
XXXXXXXX METAL FORMING, INC.
By: /s/ XXXXXXXXX X. XXXXX
-------------------------------------
Xxxxxxxxx X. Xxxxx,
Vice President
INDUSTRIAL HOLDINGS, INC.
By: /s/ XXXXXXXXX X. XXXXX
-------------------------------------
Xxxxxxxxx X. Xxxxx,
Executive Vice President
BUYER:
XXXXXXXX FASTENER CORPORATION
By: /s/ XXXXXX X. XXXXXXXX
-------------------------------------
Xxxxxx X. Xxxxxxxx, President
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