Consideration for Assets. (a) At the Closing, the Purchasers will purchase the Assets from the Seller, upon and subject to the terms and conditions of this Agreement and in reliance upon the representations, warranties, covenants and agreements of the Seller contained herein, and will pay the Seller, as consideration for the Assets, the sum of One Hundred and Thirty Million Dollars ($130,000,000) (the "PURCHASE PRICE"), increased or decreased by the amount of the net asset value adjustment as set forth in SECTION 4.5(a). The allocation of the Purchase Price (and the liabilities to be assumed by the Purchasers at the Closing pursuant to SECTION 4.2(b) hereof) among the Assets shall be agreed upon by the parties. Once the allocation has been determined, the Purchasers and the Seller shall jointly prepare IRS Form 8594 pursuant to Temporary Treasury Regulations Section 1.1060-1T to report the allocation of the Purchase Price. The Seller and the Purchasers each hereby covenant and agree that they will not take a position on any tax return before any Governmental Authority or in any Proceeding that is in any way inconsistent with such allocation and will cooperate with each other in good faith to resolve any disagreement or dispute that may arise between them with respect thereto. (b) As further consideration for the Assets, at the Closing, Enterra Sub will deliver to the Seller a written undertaking in accordance with SECTION 4.4(b) hereof, whereby Enterra Sub will assume the following (collectively, the "ASSUMED LIABILITIES"): (i) all of Seller's liabilities and obligations of the Business on the May Balance Sheet which are also liabilities and obligations described in the example attached as EXHIBIT 2, but only if and to the extent that the same are accrued or reserved for on the May Balance Sheet and have not been paid or discharged prior to or at the Closing (all of which shall be included in the calculation of net asset value pursuant to SECTION 4.5); (ii) all of Seller's liabilities and obligations of the Business that have arisen in the ordinary course of the Business, consistent with past practice, between the Balance Sheet Date and the Closing Date that would be disclosed on a balance sheet prepared in accordance with GAAP and which are also liabilities and obligations of the type described in the example attached as EXHIBIT 2, but only if and to the extent that the same have not been paid or discharged prior to or at the Closing (all of which shall be included in the calculation of net asset value pursuant to SECTION 4.5); (iii) all liabilities and obligations of the Seller in respect of the Contracts, commitments and arrangements, which Contracts, commitments and arrangements are specifically identified in any list called for by paragraphs (b) through (g) of SECTION 2.11 as it may be supplemented or updated by Seller with Contracts, commitments and arrangements entered into in the ordinary course of business prior to the Closing Date consistent with SECTIONS 5.1 or 5.2, or are not required to be identified on any such list because of the term or amount involved or the descriptive limitations set forth in SECTION 2.11, except that the Purchasers shall not assume any: (A) liabilities or obligations of the aforesaid character existing as of the Balance Sheet Date and which under GAAP are or should be accrued or reserved for on a balance sheet or the notes thereto as a liability or obligation, if and to the extent that the same were not accrued or reserved for on the May Balance Sheet; or (B) liabilities or obligations of the character described in paragraphs (b) through (g) of SECTION 2.11 existing at the date of this Agreement, except for those items which are specifically identified on SCHEDULE 2.11(b) through SCHEDULE 2.11(g) as they may be supplemented or updated by Seller with Contracts, commitments or arrangements entered into in the ordinary course of business prior to the Closing Date, consistent with SECTIONS 5.1 and 5.2; or (C) liabilities or obligations arising out of any breach by any Seller of any item of the character referred to in this SECTION 4.2(b)(iii), including, without limitation, liabilities or obligations arising out of any Seller's failure to perform any Contract, commitment or arrangement in accordance with its terms prior to the Closing; or (D) any liabilities or obligations arising out of Seller's credit facility with Texas Commerce Bank; and (iv) liabilities and obligations of the Seller in respect of warranty claims by customers relating to the Business; In determining the liabilities and obligations of the Business to be assumed by Enterra Sub pursuant to SECTION 4.2(b)(i) and (ii) hereof, to the extent that there is a conflict between the methodology set forth in the example attached as EXHIBIT 2 and GAAP, then the methodology set forth in the example attached as EXHIBIT 2 shall control. (c) Other than the Assumed Liabilities, the Purchasers shall not assume or be responsible for any liability of any Seller (collectively, the "EXCLUDED LIABILITIES"). (The parties acknowledge that it is possible that the Purchasers may, in the operation of the Business after the Closing Date, incur liability which may result in a Loss, other than as a result of contractual assumption of liability, and that such Loss, if any, shall be governed in accordance with the terms and provisions of ARTICLE X). The obligations of the Purchasers under SECTION 4.2(b) are subject to whatever rights the Purchasers may have under this Agreement for a breach by any Seller of any representation, warranty, covenant or agreement contained in this Agreement. In addition to the foregoing, in no event shall the Purchasers assume or incur any liability or obligation under SECTION 4.2(b) or otherwise (i) in respect of any Tax payable with respect to the sales, assets or income of the Seller, (ii) based upon Seller's employment of persons at any time except for the reimbursement arrangement set forth in SECTION 11.1(b), or (iii) with respect to each item included as a liability in the Net Asset Value calculation provided for in SECTION 4.5, any liability in excess of the amount relating to such item included in such calculation (and which is not otherwise superseded by SECTION 12.2). (d) The Purchasers shall pay all sales, use, documentary and transfer Taxes, if any, due as a result of the sale of the Assets and other transactions undertaken pursuant to this Agreement.
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Consideration for Assets. (a) At the Closing, the Purchasers will purchase the Assets from the Seller, upon and subject to the terms and conditions of this Agreement and in reliance upon the representations, warranties, covenants and agreements of the Seller contained herein, and will pay the Seller, as consideration for the Assets, the sum of One Hundred and Thirty Million Dollars ($130,000,000) (the "PURCHASE PRICEPurchase Price"), increased or decreased by the amount of the net asset value adjustment as set forth in SECTION Section 4.5(a). The allocation of the Purchase Price (and the liabilities to be assumed by the Purchasers at the Closing pursuant to SECTION Section 4.2(b) hereof) among the Assets shall be agreed upon by the parties. Once the allocation has been determined, the Purchasers and the Seller shall jointly prepare IRS Form 8594 pursuant to Temporary Treasury Regulations Section 1.1060-1T to report the allocation of the Purchase Price. The Seller and the Purchasers each hereby covenant and agree that they will not take a position on any tax return before any Governmental Authority or in any Proceeding that is in any way inconsistent with such allocation and will cooperate with each other in good faith to resolve any disagreement or dispute that may arise between them with respect thereto.
(b) As further consideration for the Assets, at the Closing, Enterra Sub will deliver to the Seller a written undertaking in accordance with SECTION Section 4.4(b) hereof, whereby Enterra Sub will assume the following (collectively, the "ASSUMED LIABILITIESAssumed Liabilities"):
(i) all of Seller's liabilities and obligations of the Business on the May Balance Sheet which are also liabilities and obligations described in the example attached as EXHIBIT Exhibit 2, but only if and to the extent that the same are accrued or reserved for on the May Balance Sheet and have not been paid or discharged prior to or at the Closing (all of which shall be included in the calculation of net asset value pursuant to SECTION Section 4.5);
(ii) all of Seller's liabilities and obligations of the Business that have arisen in the ordinary course of the Business, consistent with past practice, between the Balance Sheet Date and the Closing Date that would be disclosed on a balance sheet prepared in accordance with GAAP and which are also liabilities and obligations of the type described in the example attached as EXHIBIT Exhibit 2, but only if and to the extent that the same have not been paid or discharged prior to or at the Closing (all of which shall be included in the calculation of net asset value pursuant to SECTION Section 4.5);
(iii) all liabilities and obligations of the Seller in respect of the Contracts, commitments and arrangements, which Contracts, commitments and arrangements are specifically identified in any list called for by paragraphs (b) through (g) of SECTION Section 2.11 as it may be supplemented or updated by Seller with Contracts, commitments and arrangements entered into in the ordinary course of business prior to the Closing Date consistent with SECTIONS Sections 5.1 or 5.2, or are not required to be identified on any such list because of the term or amount involved or the descriptive limitations set forth in SECTION Section 2.11, except that the Purchasers shall not assume any:
(A) liabilities or obligations of the aforesaid character existing as of the Balance Sheet Date and which under GAAP are or should be accrued or reserved for on a balance sheet or the notes thereto as a liability or obligation, if and to the extent that the same were not accrued or reserved for on the May Balance Sheet; or
(B) liabilities or obligations of the character described in paragraphs (b) through (g) of SECTION Section 2.11 existing at the date of this Agreement, except for those items which are specifically identified on SCHEDULE Schedule 2.11(b) through SCHEDULE Schedule 2.11(g) as they may be supplemented or updated by Seller with Contracts, commitments or arrangements entered into in the ordinary course of business prior to the Closing Date, consistent with SECTIONS Sections 5.1 and 5.2; or
(C) liabilities or obligations arising out of any breach by any Seller of any item of the character referred to in this SECTION Section 4.2(b)(iii), including, without limitation, liabilities or obligations arising out of any Seller's failure to perform any Contract, commitment or arrangement in accordance with its terms prior to the Closing; or
(D) any liabilities or obligations arising out of Seller's credit facility with Texas Commerce Bank; and
(iv) liabilities and obligations of the Seller in respect of warranty claims by customers relating to the Business; In determining the liabilities and obligations of the Business to be assumed by Enterra Sub pursuant to SECTION Section 4.2(b)(i) and (ii) hereof, to the extent that there is a conflict between the methodology set forth in the example attached as EXHIBIT Exhibit 2 and GAAP, then the methodology set forth in the example attached as EXHIBIT Exhibit 2 shall control.
(c) Other than the Assumed Liabilities, the Purchasers shall not assume or be responsible for any liability of any Seller (collectively, the "EXCLUDED LIABILITIESExcluded Liabilities"). (The parties acknowledge that it is possible that the Purchasers may, in the operation of the Business after the Closing Date, incur liability which may result in a Loss, other than as a result of contractual assumption of liability, and that such Loss, if any, shall be governed in accordance with the terms and provisions of ARTICLE Article X). The obligations of the Purchasers under SECTION Section 4.2(b) are subject to whatever rights the Purchasers may have under this Agreement for a breach by any Seller of any representation, warranty, covenant or agreement contained in this Agreement. In addition to the foregoing, in no event shall the Purchasers assume or incur any liability or obligation under SECTION Section 4.2(b) or otherwise (i) in respect of any Tax payable with respect to the sales, assets or income of the Seller, (ii) based upon Seller's employment of persons at any time except for the reimbursement arrangement set forth in SECTION Section 11.1(b), or (iii) with respect to each item included as a liability in the Net Asset Value calculation provided for in SECTION Section 4.5, any liability in excess of the amount relating to such item included in such calculation (and which is not otherwise superseded by SECTION Section 12.2).
(d) The Purchasers shall pay all sales, use, documentary and transfer Taxes, if any, due as a result of the sale of the Assets and other transactions undertaken pursuant to this Agreement.
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Consideration for Assets. (a) At the Closing, the Purchasers will purchase the Assets from the Seller, upon and subject Subject to the terms and conditions of this Agreement and in reliance upon on the representations, warranties, warranties and covenants and agreements of the Seller contained herein, and will pay the Seller, as full consideration for the Assets, the sum of One Hundred and Thirty Million Dollars ($130,000,000) (the Purchaser hereby agrees to pay to ▇▇▇▇▇▇ "PURCHASE PRICE"), increased or decreased by the amount book value" of the Assets net asset value of Assumed Liabilities (as defined in Section 1.5) and certain reserves identified on Schedule 1.4 attached hereto, subject to adjustment as set forth in SECTION 4.5(a)below. The allocation of parties acknowledge that Schedule 1.4 shall serve to illustrate how the parties calculated the Preliminary Purchase Price (and defined below), which is subject to post-Closing adjustments. Specifically, Purchaser hereby (i) pays to ▇▇▇▇▇▇ the liabilities to be assumed by sum of $1,525,562 (the Purchasers at the Closing pursuant to SECTION 4.2(b) hereof) among the Assets shall be agreed upon by the parties. Once the allocation has been determined, the Purchasers and the Seller shall jointly prepare IRS Form 8594 pursuant to Temporary Treasury Regulations Section 1.1060-1T to report the allocation of the "Preliminary Purchase Price. The Seller and the Purchasers each hereby covenant and agree that they will not take a position on any tax return before any Governmental Authority or in any Proceeding that "), of which $1,005,854 is in any way inconsistent with such allocation and will cooperate with each other in good faith being paid to resolve any disagreement or dispute that may arise between them with respect thereto.
▇▇▇▇▇▇ (b) As further consideration for the Assetsor, at the Closingrequest of ▇▇▇▇▇▇, Enterra Sub will deliver to IBJ Whitehall Business Credit Corporation on ▇▇▇▇▇▇'▇ behalf) by wire transfer of immediately available funds, and the Seller a written undertaking in accordance with SECTION 4.4(b) hereof, whereby Enterra Sub will assume the following (collectively, the "ASSUMED LIABILITIES"):
(i) all of Seller's liabilities and obligations of the Business on the May Balance Sheet which are also liabilities and obligations described in the example attached as EXHIBIT 2, but only if and to the extent that the same are accrued or reserved for on the May Balance Sheet and have not been paid or discharged prior to or at the Closing (all remaining $519,708 of which shall be included paid pursuant to the terms of a subordinated promissory note of Newco (the "Note") substantially in the calculation form of net asset value pursuant to SECTION 4.5);
(ii) all of Seller's liabilities and obligations of the Business that have arisen in the ordinary course of the BusinessExhibit C attached hereto, consistent with past practice, between the Balance Sheet Date and the Closing Date that would be disclosed on a balance sheet prepared in accordance with GAAP and which are also liabilities and obligations of the type described in the example attached as EXHIBIT 2, but only if and to the extent that the same have not been paid or discharged prior to or at the Closing (all of which shall be included in the calculation of net asset value pursuant to SECTION 4.5);
(iii) all liabilities and obligations of the Seller in respect of the Contracts, commitments and arrangements, which Contracts, commitments and arrangements are specifically identified in any list called for by paragraphs (b) through (g) of SECTION 2.11 as it may be supplemented or updated by Seller with Contracts, commitments and arrangements entered into in the ordinary course of business prior to the Closing Date consistent with SECTIONS 5.1 or 5.2, or are not required to be identified on any such list because of the term or amount involved or the descriptive limitations set forth in SECTION 2.11, except that the Purchasers shall not assume any:
(A) liabilities or obligations of the aforesaid character existing as of the Balance Sheet Date and which under GAAP are or should be accrued or reserved for on a balance sheet or the notes thereto as a liability or obligation, if and to the extent that the same were not accrued or reserved for on the May Balance Sheet; or
(B) liabilities or obligations of the character described in paragraphs (b) through (g) of SECTION 2.11 existing at the date of this Agreement, except for those items which are specifically identified on SCHEDULE 2.11(b) through SCHEDULE 2.11(g) as they may be supplemented or updated by Seller with Contracts, commitments or arrangements entered into in the ordinary course of business prior to the Closing Date, consistent with SECTIONS 5.1 and 5.2; or
(C) liabilities or obligations arising out of any breach by any Seller of any item of the character referred to in this SECTION 4.2(b)(iii), including, without limitation, liabilities or obligations arising out of any Seller's failure to perform any Contract, commitment or arrangement in accordance with its terms prior to the Closing; or
(D) any liabilities or obligations arising out of Seller's credit facility with Texas Commerce Bank; and
(iv) liabilities and obligations of the Seller in respect of warranty claims by customers relating to the Business; In determining the liabilities and obligations of the Business to be assumed by Enterra Sub pursuant to SECTION 4.2(b)(i) and (ii) hereof, to the extent that there is a conflict between the methodology set forth in the example attached as EXHIBIT 2 and GAAP, then the methodology set forth in the example attached as EXHIBIT 2 shall control.
(c) Other than assumes the Assumed LiabilitiesLiabilities (as defined in Section 1.5). Except as specifically provided in Section 1.5, the Purchasers Purchaser shall not assume or be responsible for any liability liabilities or obligations of Seller of any Seller nature whatsoever. The debt evidenced by the Note shall be secured pursuant to the Subordinated Security Agreement (collectivelythe "Security Agreement") substantially in the form of Exhibit D attached hereto. The Preliminary Purchase Price shall be subject to post-Closing adjustment as set forth below in this Section 1.4.
(b) Initial post-Closing adjustment:
(i) Within forty-five (45) days after the Closing, the "EXCLUDED LIABILITIES"). (The parties acknowledge that it is possible that Purchaser shall prepare and deliver to the Purchasers may, in the operation Seller a draft Revised Net Book Value of the Business after Assets as of the Closing Date, incur liability which may result in a Loss, other than as a result along with backup materials and work papers. The Purchaser will prepare the draft Revised Net Book Value of contractual assumption of liability, and that such Loss, if any, shall be governed the Assets in accordance with GAAP (except as noted in Section 2.5 herein) applied on a basis consistent with the terms and provisions preparation of ARTICLE Xthe ▇▇▇▇▇▇ Financial Statements (defined hereinafter), except that for purposes of computing the Net Book Value, an amount of $650,000 will be substituted for Seller's reserve to make the cost to market value adjustment for this initial post-closing adjustment. In preparing the draft Revised Net Book Value of the Assets, the Purchaser shall use the same valuation methodologies used in calculating the Preliminary Purchase Price as reflected in Schedule 1.4 hereof.
(ii) If the Seller has any objections to the draft Revised Net Book Value of the Assets, Seller will deliver a detailed statement describing its objections to the Purchaser within thirty (30) days after receiving the draft Revised Net Book Value of the Assets. The obligations Purchaser and Seller shall use commercially reasonable efforts to resolve any such objections themselves. The Purchaser shall revise the draft Revised Net Book Value of the Purchasers under SECTION 4.2(b) are subject Assets as appropriate to whatever rights reflect the Purchasers may have under this Agreement for a breach by any Seller resolution of any representationobjections thereto pursuant to this Section 1.4(b)(ii).
(iii) If the parties hereto do not obtain a final resolution of the Revised Net Book Value of the Assets within thirty (30) days after the Purchaser has received the statement of objections, warranty, covenant or agreement contained in this Agreementthe parties hereto shall select an accounting firm mutually acceptable to them to resolve any remaining objections. In addition to resolving any remaining objections, the foregoingaccounting firm shall use the same valuation methodologies used in calculating the Preliminary Purchase Price as
(A) if the accounting firm resolves all of the remaining objections in favor of the Purchaser, the Seller shall be responsible for all of the fees and expenses of the accounting firm; (B) if the accounting firm resolves all of the remaining objections in no event shall the Purchasers assume or incur any liability or obligation under SECTION 4.2(b) or otherwise (i) in respect of any Tax payable with respect to the sales, assets or income favor of the Seller, the Purchaser shall be responsible for all of the fees and expenses of the accounting firm; and (C) if the accounting firm resolves some of the remaining objections in favor of the Purchaser and the rest of the remaining objections in favor of the Seller, then the Purchaser and Seller shall split equally the fees and expenses of the accounting firm.
(iv) The Purchaser will make the work papers and back-up materials used in preparing the draft Revised Net Book Value of the Assets available to the Seller and their accountants and other representatives at reasonable times and upon reasonable notice at any time during the preparing by the Purchaser of the draft Net Book Value of the Assets, the review by the Seller of the draft Net Book Value of the Assets, or the resolution by the parties of any objections thereto.
(v) Once all the objections to the draft Net Book Value of the Assets have been resolved pursuant to Section 1.4(b)(ii) or (b)(iii), the Purchaser shall revise the draft Net Book Value of the Assets as appropriate to reflect the resolution of the objections and such revised calculation shall be the Final Net Book Value of the Assets. The Preliminary Purchase Price shall be adjusted as follows: (A) if the Final Net Book Value of the Assets exceeds the Preliminary Purchase Price, then Purchaser shall execute and deliver to ▇▇▇▇▇▇ a revised Promissory Note in the amount of the original Note plus the amount the Final Net Book Value of the Assets exceeds the Preliminary Purchase Price. The Purchaser shall execute and deliver this revised Promissory Note simultaneously upon receiving the original Note as canceled by ▇▇▇▇▇▇; (B) if the Final Net Book Value of the Assets is less than the Preliminary Purchase Price, then Purchaser shall be permitted to execute and deliver to ▇▇▇▇▇▇ a revised Promissory Note in the amount of the original Note minus the amount the Final Net Book Value of the Assets is less than the Preliminary Purchase Price. In this case, ▇▇▇▇▇▇ shall cancel the original Note and return the same to the Purchaser, and simultaneously the Purchaser shall execute and deliver to ▇▇▇▇▇▇ the revised Promissory Note in the lesser amount.
(c) Final post-Closing Adjustment:
(i) Purchaser agrees to evaluate the adequacy of the $650,000.00 general reserve for the Inventories (the "Inventories General Reserve"). Consequently, within forty-five (45) days after the first anniversary of the Closing, the Purchaser shall prepare and deliver to the Seller its assessment of the adequacy of the Inventories General Reserve (the "Adequacy Assessment") along with backup materials and work papers.
(ii) based upon SellerIf the Seller has any objections to the Purchaser's employment Adequacy Assessment, Seller will deliver a detailed statement describing its objections to the Purchaser within thirty (30) days after receiving the Adequacy Assessment. The Purchaser and Seller shall use commercially reasonable efforts to resolve any such objections themselves. The Purchaser shall revise the Adequacy Assessment as appropriate to reflect the resolution of persons at any time except for the reimbursement arrangement set forth in SECTION 11.1(b), or (iii) with respect objections thereto pursuant to each item included as a liability in the Net Asset Value calculation provided for in SECTION 4.5, any liability in excess of the amount relating to such item included in such calculation (and which is not otherwise superseded by SECTION 12.2this Section 1.4(c)(ii).
(diii) If the parties hereto do not obtain a final resolution of the Adequacy Assessment within thirty (30) days after the Purchaser has received the statement of objections, the parties hereto shall select an accounting firm mutually acceptable to them to resolve any remaining objections. If the Purchaser and the Seller are unable to agree on the choice of an accounting firm, they will select a nationally-recognized accounting firm by lot (after excluding their respective regular outside accounting firms). The determination of any accounting firm so selected will be set forth in writing and will be conclusive and binding upon the parties hereto. In the event the parties submit any unresolved objections to an accounting firm for resolution as provided in this Section 1.4 (c)(iii), the Purchaser and the Seller shall share responsibility for the fees and expenses of the accounting firm as follows:
(A) if the accounting firm resolves all of the remaining objections in favor of the Purchaser, the Seller shall be responsible for all of the fees and expenses of the accounting firm; (B) if the accounting firm resolves all of the remaining objections in favor of the Seller, the Purchaser shall be responsible for all of the fees and expenses of the accounting firm; and (C) if the accounting firm resolves some of the remaining objections in favor of the Purchaser and the rest of the remaining objections in favor of the Seller, then the Purchaser and Seller shall split equally the fees and expenses of the accounting firm.
(iv) The Purchasers shall pay all salesPurchaser will make the Inventories, use, documentary work papers and transfer Taxes, if any, due as a result back-up materials used in preparing the Adequacy Assessment available to the Seller and their accountants and other representatives at reasonable times and upon reasonable notice at any time during the preparing by the Purchaser of the sale Adequacy Assessment, the review by the Seller of the Assets and other transactions undertaken Adequacy Assessment, or the resolution by the parties of any objections thereto.
(v) Once all the objections to the Adequacy Assessment have been resolved pursuant to Section 1.4(c)(ii) or (c)(iii), the Purchaser shall revise the Adequacy Assessment as appropriate to reflect the resolution of the objections and such revised calculation shall be the Final Adequacy Assessment. If the Final Adequacy Assessment is less than the original $650,000.00 Inventories General Reserve, then Purchaser shall execute and deliver to ▇▇▇▇▇▇ a revised Note in the amount of the original Note plus the amount the original $650,000.00 Inventories General Reserve exceeds the Final Adequacy Assessment. The Purchaser shall execute and deliver this Agreementrevised Note simultaneously upon receiving the original Note as canceled by ▇▇▇▇▇▇. There shall be no post-Closing adjustment if the Final Adequacy Assessment exceeds the original $650,000.00 Inventories General Reserve.
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