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EXHIBIT 10.33
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ASSET PURCHASE AGREEMENT
by and among
PRECO MACHINERY SALES, INC.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇. ▇▇▇▇▇
and
CRESCENT OPERATING, INC.,
December 16, 1997
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TABLE OF CONTENTS
Page
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ASSET PURCHASE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I
TERMS OF THE TRANSACTION . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Assets to be Transferred . . . . . . . . . . . . . . . . . . . . 1
1.2 Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . . 4
1.3 Instruments of Conveyance . . . . . . . . . . . . . . . . . . . 5
1.4 Purchase Price and Payment . . . . . . . . . . . . . . . . . . . 5
1.5 Adjustment of Purchase Price . . . . . . . . . . . . . . . . . 5
1.6 Allocation of Purchase Price . . . . . . . . . . . . . . . . . . 6
1.7 Liabilities Assumed by Buyer . . . . . . . . . . . . . . . . . . 6
1.8 Liabilities Not Assumed by Buyer . . . . . . . . . . . . . . . . 7
ARTICLE II
CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER AND THE SHAREHOLDERS . . . . 8
3.1 Corporate Organization . . . . . . . . . . . . . . . . . . . . . 8
3.2 Qualification . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.3 Authority Relative to This Agreement . . . . . . . . . . . . . . 8
3.4 Noncontravention . . . . . . . . . . . . . . . . . . . . . . . . 8
3.5 Governmental Approvals . . . . . . . . . . . . . . . . . . . . . 9
3.6 Operation of Business . . . . . . . . . . . . . . . . . . . . . 9
3.7 Title to Assets . . . . . . . . . . . . . . . . . . . . . . . . 9
3.8 Financial Statements . . . . . . . . . . . . . . . . . . . . . . 9
3.9 Absence of Certain Changes . . . . . . . . . . . . . . . . . . . 10
3.10 Compliance With Laws . . . . . . . . . . . . . . . . . . . . . 10
3.11 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . 10
3.12 Sufficiency and Condition of Assets . . . . . . . . . . . . . . 10
3.13 Real Property . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.14 Tangible Personal Property . . . . . . . . . . . . . . . . . . 11
3.15 Leased Property . . . . . . . . . . . . . . . . . . . . . . . . 11
3.16 Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.17 Intellectual Property . . . . . . . . . . . . . . . . . . . . . 12
3.18 Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.19 Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.20 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
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3.21 Environmental Matters . . . . . . . . . . . . . . . . . . . . . 13
3.22 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.23 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.24 Financial Requirements . . . . . . . . . . . . . . . . . . . . 14
3.25 Powers of Attorney . . . . . . . . . . . . . . . . . . . . . . 15
3.26 Illegal Payments . . . . . . . . . . . . . . . . . . . . . . . 15
3.27 Investment Intent . . . . . . . . . . . . . . . . . . . . . . . 15
3.28 Investment Experience . . . . . . . . . . . . . . . . . . . . . 15
3.29 Restricted Securities . . . . . . . . . . . . . . . . . . . . . 15
3.30 Legend . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.31 Brokerage Fees . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER . . . . . . . . . . . . . . . 16
4.1 Corporate Organization . . . . . . . . . . . . . . . . . . . . . 16
4.2 Qualification . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.3 Authority Relative to This Agreement . . . . . . . . . . . . . . 16
4.4 Noncontravention . . . . . . . . . . . . . . . . . . . . . . . . 16
4.5 Governmental Approvals . . . . . . . . . . . . . . . . . . . . . 17
4.6 Buyer Shares . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.7 Brokerage Fees . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.8 SEC Documents; Financial Statements . . . . . . . . . . . . . . 17
4.9 Independent Investigation . . . . . . . . . . . . . . . . . . . 18
ARTICLE V
CONDUCT OF BUSINESS PENDING CLOSING . . . . . . . . . . . . . . . . . 18
5.1 Conduct and Preservation of Business . . . . . . . . . . . . . . 18
5.2 Restrictions on Certain Actions . . . . . . . . . . . . . . . . 18
ARTICLE VI
ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . 20
6.1 Access to Information . . . . . . . . . . . . . . . . . . . . . 20
6.2 Third Party Consents . . . . . . . . . . . . . . . . . . . . . . 20
6.3 Employment Agreement and Non-Competition Agreement . . . . . . . 21
6.4 Employee and Employee Benefit Plan Matters . . . . . . . . . . . 21
6.5 Title Insurance and Surveys . . . . . . . . . . . . . . . . . . 21
6.6 Collection of Receivables . . . . . . . . . . . . . . . . . . 23
6.7 Uncollected Receivables . . . . . . . . . . . . . . . . . . . . 23
6.8 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.9 Public Announcements . . . . . . . . . . . . . . . . . . . . . . 24
6.10 Notice of Litigation . . . . . . . . . . . . . . . . . . . . . 24
6.11 Change of Corporate Name . . . . . . . . . . . . . . . . . . . 24
6.12 Notification of Certain Matters . . . . . . . . . . . . . . . . 25
6.13 Access to Records After Closing . . . . . . . . . . . . . . . . 25
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6.14 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . 26
6.15 Taxes; Other Charges . . . . . . . . . . . . . . . . . . . . . 26
6.16 Survival of Covenants . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF SELLER . . . . . . . . . . . . . . . . . 26
7.1 Representations and Warranties True . . . . . . . . . . . . . . 26
7.2 Covenants and Agreements Performed . . . . . . . . . . . . . . . 27
7.3 Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.4 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . 27
7.5 Other Documents . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF BUYER . . . . . . . . . . . . . . . . . 27
8.1 Representations and Warranties True . . . . . . . . . . . . . . 27
8.2 Covenants and Agreements Performed . . . . . . . . . . . . . . 28
8.3 Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.4 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . 28
8.5 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.6 No Material Adverse Change . . . . . . . . . . . . . . . . . . 28
8.7 Employment and Non-Competition Agreements . . . . . . . . . . . 28
8.8 Unacceptable Encumbrances; Title Insurance . . . . . . . . . . 28
8.9 Due Diligence . . . . . . . . . . . . . . . . . . . . . . . . 28
8.10 Other Documents . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE IX
TERMINATION, AMENDMENT, AND WAIVER . . . . . . . . . . . . . . . . . 29
9.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . 29
9.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . 30
9.3 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.4 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.5 Exclusive Remedies . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE X
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION . . . . . . . . . . . . 30
10.1 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.2 Indemnification by Seller and Shareholder . . . . . . . . . . . 31
10.3 Indemnification by Buyer . . . . . . . . . . . . . . . . . . . 31
10.4 Procedure for Indemnification . . . . . . . . . . . . . . . . . 32
10.5 INDEMNIFICATION DESPITE NEGLIGENCE . . . . . . . . . . . . . . 32
10.6 Limitations . . . . . . . . . . . . . . . . . . . . . . . . . 33
10.7 Use of Buyer Shares to Satisfy Indemnification Obligations . . 33
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ARTICLE XI
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
11.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
11.2 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . 34
11.3 Binding Effect; Assignment; No Third Party Benefit . . . . . . 34
11.4 Severability . . . . . . . . . . . . . . . . . . . . . . . . . 34
11.5 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . 34
11.6 Further Assurances . . . . . . . . . . . . . . . . . . . . . . 34
11.7 Descriptive Headings . . . . . . . . . . . . . . . . . . . . . 35
11.8 Gender . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
11.9 References . . . . . . . . . . . . . . . . . . . . . . . . . . 35
11.10 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 35
11.11 Joint and Several Liability . . . . . . . . . . . . . . . . . 35
11.12 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . 35
11.13 Limitation on Representations and Warranties . . . . . . . . 35
ARTICLE XII
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
12.1 Certain Defined Terms . . . . . . . . . . . . . . . . . . . . . 36
12.2 Certain Additional Defined Terms . . . . . . . . . . . . . . . 38
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ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT (this "Agreement"), dated as of December 16,
1997, by and among Preco Machinery Sales, Inc., a Texas corporation ("Seller"),
Crescent Operating, Inc., a Delaware corporation ("Buyer"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
an individual ("▇▇▇▇▇▇▇"), and ▇▇▇▇▇ ▇. ▇▇▇▇▇, an individual ("▇▇▇▇▇"),
(▇▇▇▇▇▇▇ and ▇▇▇▇▇ are sometimes collectively referred to as the "Shareholders"
and individually, a "Shareholder").
WHEREAS, Seller is engaged in the business of buying, selling,
servicing, and leasing equipment and machinery (the "Business"); and
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to purchase
from Seller, on a going concern basis, substantially all the assets of the
Business, upon the terms and subject to the conditions herein set forth;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, the parties hereto hereby agree as follows:
ARTICLE I
TERMS OF THE TRANSACTION
1.1 Assets to be Transferred. At the Closing, and on the terms and
subject to the conditions set forth in this Agreement, Seller shall sell,
assign, transfer, deliver, and convey (collectively, "transfer"), or cause to
be transferred, to Buyer, and Buyer shall purchase from Seller, the following
described assets and properties (but excluding the "Excluded Assets" referred
to in Section 1.2 below) as existing on the Closing Date:
(a) Owned Real Property. All those certain plots, tracts, or
parcels of land located in ▇▇▇▇▇▇ County, Texas and more particularly
described on Schedule 1.1(a) (the "Owned Real Property").
(b) Fixtures and Improvements. All plants, factories,
warehouses, storage facilities, buildings, works, structures, fixtures,
landings, construction in progress, improvements, betterments,
installations, and additions constructed, erected, or located on or
attached or affixed to the Owned Real Property.
(c) Realty Rights. All tenements, hereditaments, easements,
rights-of-way, rights, licenses, patents, rights of ingress and egress,
reversionary interests, privileges, and appurtenances belonging,
pertaining, or relating to the Owned Real Property, any and all rights
to the present or future use of wastewater, wastewater capacity,
drainage, water, or other utility facilities relating to the Owned Real
Property, including without limitation all reservations of or
commitments or letters covering any such use in the future, whether now
owned or hereafter acquired, and the entire right, title, and interest
of Seller, if any, in, to, and under all streets, ways, alleys,
passages, strips, gores, pipes, pipelines, sewers,
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sewer rights, ditches, waters, water courses, water rights and powers,
air rights, railroad sidings, minerals, mineral rights, and mineral
interests adjoining, upon, above, in, under, or pertaining to the Owned
Real Property, all options and rights to purchase or otherwise acquire
real property that is adjacent to or nearby the Owned Real Property, and
all claims or demands whatsoever of Seller, either in law or in equity,
with respect to the Owned Real Property, including without limitation
any unpaid awards to be made relating thereto, including any unpaid
awards or damages payable by reason of damage thereto or by reason of a
widening of any adjoining streets or roads or a changing of the grade
with respect to same.
(d) Leased Real Property. The leases described on Schedule
1.1(d) covering those certain plots, tracts, or parcels of land located
in Nueces, Jefferson and Bexar Counties, Texas and more particularly
described on Schedule 1.1(d) (the "Leased Real Property"), and all
rights (including rights of refund and offset), privileges, deposits,
claims, causes of action, and options in favor of Seller relating or
pertaining to such leasehold estates. The Owned Real Property and the
Leased Real Property are hereinafter referred to collectively as the
"Real Property".
(e) Vehicles. All the trucks, trailers, and other certificated
vehicles described on Schedule 1.1(e).
(f) Furniture and Equipment. All furniture, equipment,
machinery, materials, vehicles, rolling stock, apparatus, tools, dies,
implements, appliances, spare parts, supplies, and other tangible
personal property of every kind, character, and description (other than
the vehicles referred to in Section 1.1(e) and the inventories referred
to in Section 1.1(g)) owned by Seller and located on, or used primarily
in connection with, the Real Property, or used primarily in connection
with the Business, as of the Closing;
(g) Inventories. All of Seller's inventories located on, or
used primarily in connection with, the Real Property, or used primarily
in connection with the Business, as of the Closing, including without
limitation finished goods, work-in-process, raw materials, supply
inventories, and other inventories.
(h) Computers. All of Seller's computer equipment and hardware,
including without limitation all central processing units, terminals,
disk drives, software, tape drives, electronic memory units, printers,
keyboards, screens, peripherals (and other input/output devices), modems
and other communication controllers, and any and all parts and
appurtenances thereto, located on, or used primarily in connection with,
the Real Property, or used primarily in connection with the Business, as
of the Closing, and specifically including without limitation the
computer equipment and hardware described on Schedule 1.1 (h).
(i) Accounts Receivable and Certain Cash. (A) All accounts
receivable of Seller and all other rights of Seller to payment for goods
sold or leased or for services rendered, arising in the ordinary course
of the operation of the Business listed in Schedule 1.1(i), together
with all accounts receivable arising in the ordinary course of Business
since the date of Schedule 1.1(i), including without limitation those
which are not evidenced by
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instruments or chattel paper; together with all instruments and
documents of title representing any of the foregoing, all rights in any
merchandise or goods which any of the same represent, and all rights,
title, security, and guaranties in favor of Seller with respect to any
of the foregoing, including without limitation any right of stoppage in
transit, and (B) all cash collected or received by Seller after November
30, 1997 (i) in payment of any accounts receivable of the Business, or
(ii) in connection with the sale of any equipment of the Business (other
than cash received in connection with the sale of equipment for which
the Purchase Price is adjusted pursuant to Section 1.5 below).
(j) Intellectual Property. All Intellectual Property relating
to, or used in connection with the operation of, the Business as
described on Schedule 1.1(j), and all rights to recover for infringement
thereon.
(k) Corporate Name. All right, title, and interest of Seller in
and to the names "Preco" and "Preco Machinery Sales", and any
derivatives thereof, together with any goodwill associated with such
names.
(l) Permits. To the extent assignable, all right, title, and
interest of Seller in, to, and under all Permits relating to, or used in
connection with the operation of, the Business or relating to the
construction, use, operation, or enjoyment of the Assets, as described
on Schedule 1.1(l).
(m) Personal Property Leases. All right, title, and interest of
Seller in, to, and under the personal property leases described on
Schedule 1.1(m), and all rights (including rights of refund and offset),
privileges, deposits, claims, causes of action, and options in favor of
Seller relating or pertaining to such leases or any thereof.
(n) Contracts. All right, title, and interest of Seller in, to
and under the contracts and agreements described on Schedule 1.1(n), and
all rights (including rights of refund and offset), privileges,
deposits, claims, causes of action, and options in favor of Seller
relating or pertaining to such contracts and agreements or any thereof.
(o) Prepaid Expenses. All right, title, and interest of Seller
in and to all prepaid rentals and other prepaid expenses arising from
payments made by Seller in the ordinary course of the operation of the
Business prior to the close of business on the Closing Date for goods or
services where such goods or services have not been received by Seller
by the close of business on the Closing Date.
(p) Backlog Orders. All Seller's backlog of orders for products
or services sold by Seller in the ordinary course of the Business, which
are (i) accepted by Seller in the ordinary course of the Business prior
to the Closing or (ii) listed in Schedule 1.1(p) and, in each case, not
invoiced or shipped prior to the Closing.
(q) Books and Records. All books, records, papers, and
instruments of Seller of whatever nature and wherever located that
relate to the Assets or the operation of the Business, including without
limitation all financial and accounting records and all books and
records relating to employees, the purchase of materials, supplies, and
services,
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product research and development, the leasing or sale of products, and
dealings with customers, vendors, and suppliers of the Business, and
including computerized books and records and other computerized storage
media and the software (including documentation and object and source
codes) used in connection therewith, provided that Seller shall be
entitled to retain copies of any such books and records that are
necessary for its tax, accounting, or legal purposes.
(r) Customer and Supplier Data. All customer lists and customer
data, vendor lists and vendor data, supplier lists and supplier data,
and sales and promotional material and other sales-related material
relating to, or used in connection with the operation of, the Business.
(s) Surveys, Maps, and Diagrams. All surveys, maps, and
building and machinery diagrams and plans of Seller relating to the
Assets.
(t) Bonds and Deposits. All right, title, and interest of
Seller in and to all transferable bonds, deposits, and financial
assurance requirements made by Seller with any Governmental Entity,
utility company, or other person relating to the construction, use,
operation, or enjoyment of the Assets or the Business.
(u) Warranty Claims. All rights, claims, and causes of action
of Seller under or pursuant to all warranties, representations,
indemnifications, hold harmless provisions, and guarantees made by
suppliers, licensors, manufacturers, contractors, and others in respect
of the Business or the Assets.
(v) Goodwill. All goodwill associated with, and the going
concern value of, the Business.
All the assets and properties being transferred to Buyer pursuant to this
Agreement are collectively referred to herein as the "Assets".
1.2 Excluded Assets. Notwithstanding any provision contained in this
Agreement to the contrary, the following assets and properties of Seller (the
"Excluded Assets") shall be excluded from the Assets to be transferred to Buyer
hereunder:
(a) the assets and properties of Seller described on Schedule
1.2;
(b) all cash and cash equivalents, marketable securities, and
other investments (other than cash collected or received by Seller after
November 30, 1997 (i) in payment of any accounts receivable of the
Business as listed in Schedule 1.1(i) or arising in the ordinary course
after November 30, 1992, or (ii) in connection with the sale of any
equipment of the Business (other than cash received in connection with
the sale of equipment for which the Purchase Price is adjusted pursuant
to Section 1.5 below));
(c) any Assets sold or otherwise disposed of by Seller in the
ordinary course of the operation of the Business and not in violation of
the provisions of this Agreement
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during the period commencing on the date of this Agreement and ending on
the Closing Date;
(d) the articles of incorporation and bylaws of Seller and all
minutes, capital stock ledgers, corporate seals, and other similar
corporate instruments of Seller;
(e) any rights of Seller under or pursuant to contracts and
agreements not assumed by Buyer pursuant to Section 1.7; and
(f) all rights of Seller under or pursuant to this Agreement.
1.3 Instruments of Conveyance. In order to effectuate the transfer of
the Assets contemplated by Section 1.1, at the Closing, Seller shall execute
and deliver, or cause to be executed and delivered, to Buyer, dated the Closing
Date, all such general warranty deeds (in recordable form), bills of sale,
certificates of title, and other documents or instruments of assignment,
transfer, or conveyance as Buyer shall reasonably deem necessary or appropriate
to vest in or confirm to Buyer good and indefeasible title to the Assets, free
and clear of all Encumbrances other than the Permitted Encumbrances.
1.4 Purchase Price and Payment. In consideration of the transfer by
Seller to Buyer of the Assets, in addition to the assumption of the Assumed
Liabilities, and subject to adjustment pursuant to Section 1.5 below, at the
Closing Buyer shall pay to Seller the aggregate purchase price of Four Million
One Hundred Seventeen Thousand Six Hundred Sixty-One Dollars ($4,117,661.00)
(the "Purchase Price"). The Purchase Price shall be paid by (a) Buyer's
payment to Seller of One Million Seven Hundred Seventy-Seven Thousand Six
Hundred Sixty-One Dollars ($1,777,661.00) in cash in immediately available
funds by confirmed wire transfer to a bank account to be designated by Seller
(such designation to occur no later than the third business day prior to the
Closing Date) (such payment, the "Cash Portion of the Purchase Price"), and (b)
Buyer's delivery to Seller of One Hundred Thirty Thousand (130,000) shares of
Buyer's Common Stock, par value $0.01 per share (the "Buyer Shares"), which
shares are agreed by the parties to have a market value of Two Million Three
Hundred Forty Thousand Dollars ($2,340,000). The parties agree that,
notwithstanding anything to the contrary contained herein, Buyer will deliver
the Buyer Shares to Seller no later than December 19, 1997.
1.5 Adjustment of Purchase Price.
(a) The Cash Portion of the Purchase Price will be adjusted
(either up or down) based on the aggregate net change in the amounts of
asset and liability accounts of the Company as estimated on Schedule
1.5(a) hereto, which accounts constitute a portion of the Assets and
Assumed Liabilities purchased by Buyer on the Closing Date (the
aggregate balance of such accounts, the "Net Working Capital plus
Equipment"), as compared to the actual Net Working Capital plus
Equipment of the Company as of the close of business on November 30,
1997. If, upon completion of the procedures set forth in Section 1.5(b)
below, it is finally determined that (i) the Net Working Capital plus
Equipment as of the close of business on November 30, 1997 is greater
than the estimated Net Working Capital plus Equipment as shown on
Schedule 1.5(a), then the Cash Portion of the Purchase Price shall be
increased by the amount of such difference, and Buyer shall
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pay to Seller the amount of such difference in cash within ten (10) days
after such final determination, or (ii) the Net Working Capital plus
Equipment as of the close of business on November 30, 1997 is less than
the estimated Net Working Capital plus Equipment as shown on Schedule
1.5(a), then the Cash Portion of the Purchase Price shall be decreased
by the amount of such difference, and Seller shall pay to Buyer the
amount of such difference in cash within ten (10) days after such final
determination.
(b) Within sixty (60) days after the Closing, Buyer will prepare
and deliver to Seller a statement of the Net Working Capital plus
Equipment as of the close of business on November 30, 1997 (the "Closing
Statement"), which statement shall be prepared in accordance with GAAP
and the instructions provided in Schedule 1.5(a) hereto. If, within
thirty (30) days following delivery of the Closing Statement to Seller,
Seller has not given Buyer notice of its objection to the Closing
Statement (such notice must contain a detailed statement of the basis of
Seller's objection), then the Net Working Capital plus Equipment
reflected in the Closing Statement will be used in computing the
adjustment to the Cash Portion of the Purchase Price pursuant to Section
1.5(a) above. If Seller gives Buyer such notice of objection and the
parties are unable to resolve the subject of such objection within
fifteen (15) days after such notice, then the issues in dispute will be
submitted to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, LLP, certified public accountants (the
"Accountants"), for resolution with instructions to the Accountants to
resolve such dispute within forty-five (45) days. If issues in dispute
are submitted to the Accountants for resolution (i) each party will
furnish to the Accountants such work papers and other documents and
information relating to the disputed issues as the Accountants may
request and are available to that party; (ii) the determination by the
Accountants, as set forth in a notice delivered to both parties by the
Accountants, will be binding and conclusive on the parties; and (iii)
Buyer and Seller will each bear 50% of the fees and expenses of the
Accountants for such determination. The final determination of the Net
Working Capital plus Equipment as of the close of business on November
30, 1997 shall occur on the earliest of (A) thirty (30) days after
delivery of the Closing Statement to Seller without objection, (B)
written agreement of Seller and Buyer to the Closing Statement or any
modification thereof, or (C) written determination by the Accountants.
1.6 Allocation of Purchase Price. The Purchase Price shall be
allocated among the Assets as set forth on Schedule 1.6. Seller and Buyer shall
report the transactions contemplated hereby on all Tax Returns (including
information returns and supplements thereto required to be filed by the parties
under Section 1060 of the Code) in a manner consistent with such allocation.
1.7 Liabilities Assumed by Buyer. As further consideration for the
transfer of the Assets to Buyer, Buyer agrees, upon the terms and subject to
the conditions set forth herein, to assume, at the Closing, and thereafter to
pay, perform, and discharge, the following liabilities and obligations of
Seller (but only such liabilities and obligations):
(a) all liabilities and obligations of Seller set forth on the
Closing Date Balance Sheet to the extent so set forth (excluding
liabilities for income taxes);
(b) all obligations of Seller to pay the principal of and
accrued interest on and to perform the obligations under the
indebtedness of Seller described in Schedule 1.7;
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(c) all obligations of Seller accruing from and after the
Closing Date under the leases, contracts, and agreements described in
Schedules 1.1(d), 1.1(m) and 1.1(n); and
(d) all contractual obligations of Seller (including contractual
warranty obligations) in respect of any repair or replacement of
equipment or products leased, distributed or held by Seller in
connection with the Business prior to the Closing Date.
All the liabilities and obligations being assumed by Buyer pursuant to this
Section are collectively referred to herein as the "Assumed Liabilities".
1.8 Liabilities Not Assumed by Buyer. Buyer shall not assume or take
title to the Assets subject to, or in any way be liable or responsible for, any
liabilities or obligations of Seller (whether or not referred to in any
Schedule or Exhibit hereto), except as specifically provided in Section 1.7.
Without limiting the generality of the foregoing, Buyer shall not assume or
take title to the Assets subject to, or in any way be liable or responsible
for: (a) the liabilities and obligations of Seller described on Schedule 1.8;
(b) any liabilities and obligations of Seller in respect of the claims or
Proceedings described on Schedule 1.8; (c) any liabilities and obligations of
Seller relating to the excluded assets described in Section 1.2; (d) any
liability or obligation of Seller in respect of any express or implied
representation, warranty, agreement, or guaranty made (or claimed to have been
made) by Seller (other than the contractual obligations included in the Assumed
Liabilities referred to in Section 1.7(d) above), or imposed (or asserted to be
imposed) by operation of law, in respect of any products or equipment leased,
produced, distributed, or sold by Seller in connection with the Business on or
prior to the Closing Date; (e) any liability or obligation of Seller existing
at or arising after the Closing Date under any leases, contracts, agreements,
or Permits included in the Assets which results from the breach, default, or
wrongful action or inaction of Seller prior to the close of business on the
Closing Date; (f) any liability or obligation of Seller resulting from or
relating to the employment relationship between Seller and any of Seller's
present or former employees engaged in connection with the ownership or
operation of the Assets or the termination of any such employment relationship,
including without limitation severance pay and other similar benefits, if any,
and any claims filed on or prior to the Closing Date or which may thereafter be
filed by or on behalf of any such present or former employee relating to the
employment or termination of employment of any such employee by Seller,
including without limitation any claim for wrongful discharge, breach of
contract, unfair labor practice, employment discrimination, unemployment
compensation, or workers' compensation; (g) any liability or obligation of
Seller in respect of any agreement, trust, plan, fund, or other arrangement
under which benefits or employment is provided for any of Seller's present or
former employees engaged in connection with the ownership or operation of the
Assets; or (h) any income Tax liabilities or deficiencies, whether federal,
state, or local, and any ad valorem property Taxes, in each such case to the
extent applicable to periods ending on or prior to the Closing Date.
ARTICLE II
CLOSING
2.1 Closing. The closing of the transactions contemplated hereby (the
"Closing") shall take place (i) at the offices of ▇▇▇▇▇▇▇ & ▇▇▇▇▇ L.L.P. in
Houston, Texas at 9:00 a.m., local
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time, on December 17, 1997 or (ii) at such other time or place or on such other
date as the parties hereto shall agree. The date on which the Closing is
required to take place is herein referred to as the "Closing Date". All
Closing transactions shall be deemed to have occurred simultaneously. The
Closing shall be deemed to be effective for accounting purposes as of the close
of business on the Closing Date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
SELLER AND THE SHAREHOLDERS
Seller and each Shareholder jointly and severally represent and warrant
to Buyer that:
3.1 Corporate Organization. Seller is a corporation duly organized,
validly existing, and in good standing under the laws of the jurisdiction of
its incorporation and has all requisite corporate power and corporate authority
to own, lease, and operate the Assets and to carry on the Business as now being
conducted. No actions or proceedings to dissolve Seller are pending.
3.2 Qualification. Seller is duly qualified or licensed to do business
as a foreign corporation and is in good standing in all the jurisdictions in
which such qualification or licensing is required for the conduct of the
Business.
3.3 Authority Relative to This Agreement. Seller and each Shareholder
have full power and corporate authority to execute, deliver, and perform this
Agreement and the Ancillary Documents to which each is a party and to
consummate the transactions contemplated hereby and thereby. The execution,
delivery, and performance by Seller and Each Shareholder of this Agreement and
the Ancillary Documents to which each is a party, and the consummation by each
of them of the transactions contemplated hereby and thereby, have been duly
authorized by all necessary action. This Agreement has been duly executed and
delivered by Seller and each Shareholder and constitutes, and each Ancillary
Document executed or to be executed by them has been, or when executed will be,
duly executed and delivered by Seller and constitutes, or when executed and
delivered will constitute, a valid and legally binding obligation of each such
party, enforceable against such party in accordance with their respective
terms, except that such enforceability may be limited by (i) applicable
bankruptcy, insolvency, reorganization, moratorium, and similar laws affecting
creditors' rights generally and (ii) equitable principles which may limit the
availability of certain equitable remedies (such as specific performance) in
certain instances.
3.4 Noncontravention. The execution, delivery, and performance by
Seller and each Shareholder of this Agreement and the Ancillary Documents to
which each is a party and the consummation by each of them of the transactions
contemplated hereby and thereby do not and will not (i) conflict with or result
in a violation of any provision of the charter or bylaws of Seller, (ii)
conflict with or result in a material violation of any provision of, or
constitute (with or without the giving of notice or the passage of time or
both) a material default under, or give rise (with or without the giving of
notice or the passage of time or both) to any right of termination,
cancellation, or acceleration under, or require any consent, approval,
authorization, or waiver of,
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or notice to, any party to, any bond, debenture, note, mortgage, indenture,
lease, contract, agreement, or other instrument or obligation to which Seller
or any Shareholder is a party or by which Seller, any Shareholder, the
Business, or any of the Assets may be bound or any Permit held by Seller or the
Business, (iii) result in the creation or imposition of any Encumbrance upon
any of the Assets, or (iv) assuming compliance with the matters referred to in
Section 3.5, violate any Applicable Law binding upon Seller, any Shareholder,
the Business, or any of the Assets, except, in the case of clause (ii) above,
for (A) such consents, approvals, authorizations, and waivers that have been
obtained and are unconditional and in full force and effect and such notices
that have been duly given, (B) such consents, approvals, authorizations,
waivers, and notices that are disclosed on Schedule 3.4 and (C) such consents,
approvals, authorizations, waivers and notices, the failure to obtain which
would not have a material adverse effect on the Business or the Assets.
3.5 Governmental Approvals. No consent, approval, order, or
authorization of, or declaration, filing, or registration with, any
Governmental Entity is required to be obtained or made by Seller in connection
with the execution, delivery, or performance by Seller of this Agreement and
the Ancillary Documents to which it is a party or the consummation by it of the
transactions contemplated hereby or thereby, other than (i) as set forth on
Schedule 3.5; and (ii) filings with Governmental Entities to occur in the
ordinary course following the consummation of the transactions contemplated
hereby.
3.6 Operation of Business. Except as set forth in Schedule 3.6, Seller
does not have any direct or indirect equity or ownership interest in any
corporation, partnership, joint venture, or other entity.
3.7 Title to Assets. Seller is the owner of, and has good and
indefeasible title to, all the Assets, free and clear of all Encumbrances other
than the Permitted Encumbrances. Upon Seller's transfer of the Assets to Buyer
pursuant to this Agreement, Buyer will have good and indefeasible title to all
the Assets, free and clear of all Encumbrances other than the Permitted
Encumbrances.
3.8 Financial Statements. Seller has delivered to Buyer accurate and
complete copies of (i) Seller's audited consolidated balance sheet as of
December 31, 1996 and the related audited consolidated statements of income,
stockholders' equity, and cash flows for the year then ended, and the notes and
schedules thereto, together with the unqualified report thereon of Ernst &
Young, LLP, independent public accountants (the "Audited Financial
Statements"), and (ii) Seller's unaudited balance sheet of the Business as of
August 31, 1997 (the "Latest Balance Sheet"), and the related unaudited
statements of income and stockholders' equity for the eight-month period then
ended (the "Unaudited Financial Statements"), certified by Seller's chief
financial officer (collectively, the "Financial Statements"). The Financial
Statements (i) have been prepared from the books and records of Seller in
conformity with GAAP, except that the Unaudited Financial Statements are not
accompanied by notes or other textual disclosure required by GAAP, and (ii)
accurately, completely, and fairly present Seller's financial position as of
the respective dates thereof and its results of operations and cash flows for
the periods then ended.
3.9 Absence of Certain Changes. Since August 31, 1997 (i) there has
not been any material adverse change in, or any event or condition that might
reasonably be expected to result in any material adverse change in, the
business, assets, results of operations, or condition
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(financial or otherwise) of the Business or the ownership or operation of the
Assets or any material portion thereof; (ii) the Business has been conducted
only in the ordinary course consistent with past practice; (iii) Seller has
not, in respect of the Business, incurred any material liability, engaged in
any material transaction, or entered into any material agreement outside the
ordinary course of business consistent with past practice; (iv) Seller has not
suffered any material loss, damage, destruction, or other casualty to any of
the Assets (whether or not covered by insurance); and (v) Seller has not, in
respect of the Business, taken any of the actions set forth in Section 5.2
except as permitted thereunder.
3.10 Compliance With Laws. To the best knowledge of Seller, Seller has
complied with all Applicable Laws relating to the ownership or operation of the
Assets or the operation of the Business (including without limitation
Applicable Laws relating to securities, properties, business products,
advertising and sales practices, employment practices, terms and conditions of
employment, wages and hours, safety, occupational safety, health, environmental
protection, product safety, and civil rights), and Seller has not received any
written notice, which has not been dismissed or otherwise disposed of, that
Seller has not so complied. Seller is not charged or, to the best knowledge of
Seller, threatened with or under investigation with respect to, any violation
of any Applicable Law relating to any aspect of the ownership or operation of
the Assets or the operation of the Business.
3.11 Legal Proceedings. There are no Proceedings pending or, to the
best knowledge of Seller, threatened against or involving Seller relating to
the Assets or the operation of the Business, except (i) as disclosed on
Schedule 3.11, (ii) for any Proceedings that pertain to routine claims by
persons other than Governmental Entities that are adequately covered by
insurance (subject to applicable insurance deductibles) and (iii) for product
warranty claims arising in the usual and ordinary course of the Business for
repair of products manufactured or sold by Seller which in the aggregate may be
satisfied at nominal cost to Seller. No judgment, order, writ, injunction, or
decree of any Governmental Entity has been issued or entered against Seller or
any of its affiliates which continues to be in effect with respect to or
affecting the Assets or the operation of the Business. Neither Seller nor any
of its affiliates is subject to any judgment, order, writ, injunction, or
decree of any Governmental Entity which has had or is reasonably likely to have
a material adverse effect on the Assets or the Business, or which is reasonably
likely to result in a material adverse change in the Assumed Liabilities.
There are no Proceedings pending or, to the best knowledge of Seller,
threatened seeking to restrain, prohibit, or obtain damages or other relief in
connection with this Agreement or the transactions contemplated hereby.
3.12 Sufficiency and Condition of Assets. The Assets (i) constitute
all the assets and properties used or held for use in connection with the
operation of the Business and (ii) except for additions of inventory in the
ordinary course of the Business, constitute all the assets and properties the
use or benefit of which are reasonably necessary for the operation of the
Business as currently conducted and as presently proposed to be conducted. All
the tangible Assets (i) have been maintained in accordance with standard
industry practice, (ii) are suitable for the purposes used, and (iii) are
adequate and sufficient for the normal operation of the Business, as presently
conducted. Seller owns or has a valid leasehold interest in, or otherwise has
a valid right to use, all the Assets.
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3.13 Real Property.
(a) The Real Property is all the real property owned or leased
by Seller and used or held for use in connection with the operation of
the Business. Set forth on Schedules 1.1(a) and 1.1(d) are lists or
descriptions of the Real Property. There are no persons (other than
Seller) in possession of any portion of the Real Property as lessees,
tenants at sufferance, or trespassers, nor does any person (other than
Seller) have a lease, tenancy, or other right of occupancy or use of any
portion of the Real Property.
(b) Neither the whole nor any part of the Real Property is
subject to any pending Proceeding for condemnation or other taking by
any Governmental Entity, and, to the best knowledge of Seller, no such
condemnation or other taking is contemplated or threatened.
(c) There are no unpaid charges, debts, liabilities, claims, or
obligations arising from the construction, occupancy, ownership, use, or
operation of the Real Property, or the buildings, improvements, or
fixtures situated thereon, or the business operated thereon, which could
give rise to any mechanic's or materialmen's or other statutory lien
against the Real Property, or the buildings, improvements, or fixtures
situated thereon, or any part thereof, or for which Seller will be
responsible.
(d) Seller has delivered to Buyer accurate and complete copies
of all title insurance policies, title reports, other title documents,
surveys, certificates of occupancy, and Permits in the possession of
Seller relating to the Real Property or the buildings, improvements, or
fixtures situated thereon.
(e) Seller is not a "foreign person" within the meaning of
Sections 1445 and 7701 of the Code.
3.14 Tangible Personal Property. Set forth on Schedules 1.1(h) and
1.1(m) are lists or descriptions, as of November 30, 1997, of all computer
hardware and motor vehicles (other than spare parts, supplies, and inventories)
owned or leased by Seller and used or held for use in connection with the
operation of the Business, except for items having a value individually of less
than $2,500 which do not, in the aggregate, have a value exceeding $50,000.
The motor vehicles and rolling stock owned or leased by Seller and used in
connection with the operation of the Business are utilized solely for the
transportation by Seller, for its own account and not for the account of
others, of inventories, supplies, and other items relating to the operation of
the Business.
3.15 Leased Property. Set forth on Schedules 1.1(d) and 1.1(m) are
lists of all leases under which Seller is the lessee or lessor of real or
personal property used or held for use in connection with the operation of the
Business (other than equipment rented by Seller in the ordinary course of
business). Seller has good and valid leasehold interests in all such
properties held by it under lease. Seller has been in peaceable possession (or
remedied any claims relating thereto) of the property covered by each such
lease since the commencement of the original term of such lease where Seller is
the lessee. To the best of Seller's knowledge, with respect to leases where
the Seller is the lessor, the lessee under such lease has been in peaceable
possession (or remedied any claims relating thereto) of the property covered by
each such lease since the
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commencement of the original term of such lease. No waiver, indulgence, or
postponement of Seller's obligations under any such lease has been granted by
the lessor or the lessee, or of the lessor's or lessee's obligations thereunder
by Seller. Seller is not in breach of or in material default under, nor has
any event occurred which (with or without the giving of notice or the passage
of time or both) would constitute a material default by Seller under, any of
such leases, and Seller has not received any notice from, or given any notice
to, any lessor or lessee indicating that Seller or such lessor or lessee is in
breach of or in default under any of such leases. To the best knowledge of
Seller, none of the lessors or lessees under any of such leases is in breach
thereof or in default thereunder.
3.16 Inventory. All inventory (which consists of new equipment
inventory and parts inventory held for sale) included in the Assets is suitable
and usable for sale in the ordinary course of the Business at normal ▇▇▇▇-ups.
Except as reflected in the Financial Statements, none of such inventory is
obsolete or of below standard quality or merchantability, except for items that
have been written down to realizable market value. Each item of such inventory
is reflected in Seller's books and records on the basis of a complete physical
count and is valued at the lower of cost, on a first-in, first-out basis, or
market in accordance with GAAP. To Seller's knowledge, Seller also maintains
sufficient inventories of spare and replacement parts to meet any repair and
replacement obligations in the ordinary course of the Business, under
applicable warranties or otherwise.
3.17 Intellectual Property. Seller does not own, hold, use, or have
pending any Intellectual Property in connection with the operation of the
Assets or the Business. Seller owns or has rights to use all trademarks,
service marks, and trade names, free from burdensome restrictions, that are
necessary for the operation of the Assets and the Business as presently
operated. Seller has not received any written notice or claim of any
infringement, violation, misuse, or misappropriation by Seller in connection
with the operation of the Assets or the Business of any Intellectual Property
owned or purported to be owned by any other person.
3.18 Permits. Set forth on Schedule 1.1(l) is a list of all material
Permits held by Seller which relate to the Assets or the Business. Such
Permits constitute all the material Permits necessary or required for the
ownership and operation of the Assets and the conduct of the Business. Each of
such Permits is in full force and effect, Seller is in compliance with all its
obligations with respect thereto, and, to the best knowledge of Seller, no
event has occurred which permits, or with or without the giving of notice or
the passage of time or both would permit, the revocation or termination of any
thereof. No notice has been issued by any Governmental Entity and no
Proceeding is pending or, to the best knowledge of Seller, threatened with
respect to any alleged failure by Seller to have any Permit.
3.19 Agreements.
(a) All material agreements, arrangements, and understandings of
any nature (written or oral, formal or informal) (collectively, for
purposes of this Section, "agreements") to which Seller is a party or by
which Seller is otherwise bound that relate to the Assets or the
Business are listed on Schedule 1.1(n).
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(b) Seller has made available or delivered to Buyer accurate and
complete copies of the agreements listed on Schedule 1.1(n). Each of
such agreements is a valid and binding agreement of the parties thereto,
enforceable against them in accordance with its terms. No breach or
default exists with respect to any of such agreements, and no event has
occurred which, after the giving of notice or the passage of time or
otherwise, will result in any such breach or default, except for any
breach, default or event which would not have a material adverse effect
on the Business or the Assets.
3.20 ERISA. During the past five years, neither Seller nor any of its
affiliates have made or been required to make contributions to any
"multiemployer plan", as defined in Section 3(37) of ERISA. Seller and all the
affiliates of Seller have paid and discharged promptly when due all liabilities
and obligations arising under ERISA or the Code of a character which if unpaid
or unperformed might result in the imposition of a lien against any of the
Assets. For purposes of this Section only, an "affiliate" of any person means
any other person which, together with such person, would be treated as a single
employer under Section 414 of the Code.
3.21 Environmental Matters.
(a) To the best knowledge of Seller, Seller has not violated and
is not in violation of any Applicable Environmental Laws (as defined
below) in connection with the ownership or operation of the Assets or
the operation of the Business.
(b) Seller is not subject to any existing, pending, or, to the
best knowledge of Seller, threatened Proceeding under, or to any
remedial obligations under, any Applicable Environmental Laws in
connection with the ownership or operation of the Assets or the
operation of the Business.
(c) To the best knowledge of Seller, (i) all Permits, if any,
required to be obtained by Seller under any Applicable Environmental
Laws in connection with the ownership or operation of the Assets or the
operation of the Business have been duly obtained and are in full force
and effect, and (ii) Seller is in compliance in all respects with the
terms and conditions of all such Permits.
(d) To the best knowledge of Seller, except as set forth on
Schedule 3.21 no hazardous materials (as defined below) have been
treated, stored, disposed, or released on, from, or to any of the Assets
under conditions that require remediation under Applicable Environmental
Laws. To the best knowledge of Seller, no asbestos, material containing
asbestos that is or may become friable, or material containing asbestos
deemed hazardous by Applicable Environmental Laws, has been installed in
any of the Assets.
(e) Seller has previously disclosed to Buyer all material
information in its possession or known by it relating to any potential
loss, damage, or expense (whether arising under any Applicable
Environmental Laws or any actual or alleged contractual obligations of
Seller or based on any actual or alleged injury to any person, including
employees of Seller, or property) that may be incurred arising from (i)
the actual or alleged treatment, production, manufacture or
incorporation into any product, recycling, storage, disposal, or release
into the environment of any hazardous material by or on
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behalf of Seller or (ii) the generation, treatment, storage, disposal,
release, transportation, or removal of any hazardous material by Seller.
(f) For purposes of this Agreement, "Applicable Environmental
Laws" means any and all Applicable Laws pertaining to health, safety, or
the environment in currently in effect in any and all jurisdictions in
which the Assets are located or in which Seller has conducted operations
of the Business, including, without limitation, the Clear Air Act, as
amended, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, the Rivers and Harbors Act of 1899,
as amended, the Federal Water Pollution Control Act, as amended, the
Occupational Safety and Health Act of 1970, as amended, the Resource
Conservation and Recovery Act of 1976, as amended, the Safe Drinking
Water Act, as amended, the Toxic Substances Control Act, as amended, the
Superfund Amendments and Reauthorization Act of 1986, as amended, the
Hazardous Materials Transportation Act, as amended, the Texas Water
Code, the Texas Solid Waste Disposal Act, and other environmental
conservation or protection laws. For purposes of this Agreement, the
term "hazardous material" means (i) any substance which is listed or
defined as a hazardous substance, hazardous constituent, or solid waste
pursuant to any Applicable Environmental Laws and (ii) petroleum
(including crude oil and any fraction thereof), natural gas, and natural
gas liquids.
3.22 Employees. Set forth on Schedule 3.22 is a list of the name,
social security number, and dates of employment by Seller of each employee of
the Business as of October 31, 1997, together with the position of each such
employee and the total amounts of salary, bonuses, and other compensation paid
or payable by Seller to each such employee for the current fiscal year and the
immediately preceding fiscal year.
3.23 Insurance. Set forth on Schedule 3.23 is a list of all insurance
maintained by Seller with respect to the Assets or the Business. All premiums
due and payable with respect to such policies have been timely paid. No notice
of cancellation of, or indication of an intention not to renew, any such policy
has been received by Seller. During the past three years, no application by
Seller for insurance with respect to any of the Assets or operations of the
Business has been denied for any reason.
3.24 Financial Requirements. Set forth on Schedule 3.24 is a list and
summary description of all bonds, deposits, financial assurance requirements,
and insurance coverage required to be submitted to Governmental Entities for
the continued ownership and operation of the Assets and the operation of the
Business.
3.25 Powers of Attorney. Except as disclosed on Schedule 3.25, Seller
has not granted to any person, and there is not currently existing, any power
of attorney of any type pertaining to the Assets or the Business.
3.26 Illegal Payments. To the best knowledge of Seller, none of Seller
or any director, officer, employee, or agent of Seller has, directly or
indirectly, paid or delivered any fee, commission, or other sum of money or
item of property however characterized to any broker, finder, agent, government
official, or other person, in the United States or any other country, in
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any manner related to the Assets or the Business, which Seller or any such
director, officer, employee, or agent knows or has reason to believe to have
been illegal under any Applicable Law.
3.27 Investment Intent. Seller is acquiring the Buyer Shares for its
own account for investment and not with a view to, or for sale or other
disposition in connection with, any distribution of all or any part thereof,
except (i) in an offering covered by a registration statement filed with the
Securities and Exchange Commission under the Securities Act covering the Buyer
Shares or (ii) pursuant to an applicable exemption under the Securities Act.
In acquiring the Buyer Shares, Seller is not offering or selling, and will not
offer or sell, for Buyer in connection with any distribution of the Buyer
Shares, and Seller does not have a participation and will not participate in
any such undertaking or in any underwriting of such an undertaking except in
compliance with applicable federal and state securities laws.
3.28 Investment Experience. Seller acknowledges that it is able to
fend for itself, can bear the economic risk of its investment in the Buyer
Shares, and has such knowledge and experience in financial and business matters
that it is capable of evaluating the merits and risks of an investment in the
Buyer Shares. Seller represents that it has not been organized for the purpose
of acquiring the Buyer Shares.
3.29 Restricted Securities. Seller understands that the Buyer Shares
will not have been registered pursuant to the Securities Act or any applicable
state securities laws, that the Buyer Shares will be characterized as
"restricted securities" under federal securities laws, and that under such laws
and applicable regulations the Buyer Shares cannot be sold or otherwise
disposed of without registration under the Securities Act or an exemption
therefrom. In this connection, Seller represents that it is familiar with Rule
144 promulgated under the Securities Act, as currently in effect, and
understands the resale limitations imposed thereby and by the Securities Act.
Stop transfer instructions may be issued to the transfer agent for securities
of Buyer (or a notation may be made in the appropriate records of Buyer) in
connection with the Buyer Shares.
3.30 Legend. It is agreed and understood by Seller that the
certificates representing the Buyer Shares shall each conspicuously set forth
on the face or back thereof, in addition to any legends required by Applicable
Law or other agreement, a legend in substantially the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS. SUCH SHARES MAY NOT BE SOLD OR OTHERWISE TRANSFERRED
UNLESS THEY ARE FIRST REGISTERED PURSUANT TO THAT ACT AND APPLICABLE
STATE SECURITIES LAWS OR UNLESS THE CORPORATION RECEIVES A WRITTEN
OPINION OF COUNSEL, WHICH OPINION AND COUNSEL ARE SATISFACTORY TO THE
CORPORATION, TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED.
3.31 Brokerage Fees. Neither Seller nor any of its affiliates has
retained any financial advisor, broker, agent, or finder or paid or agreed to
pay any financial advisor, broker, agent, or finder on account of this
Agreement or any transaction contemplated hereby.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller that:
4.1 Corporate Organization. Buyer is a corporation duly organized,
validly existing, and in good standing under the laws of the jurisdiction of
its incorporation and has all requisite corporate power and corporate authority
to own, lease, and operate its properties and to carry on its business as now
being conducted. No actions or proceedings to dissolve Buyer are pending.
4.2 Qualification. Buyer is duly qualified or licensed to do business
as a foreign corporation and is in all the jurisdictions in which such
qualification or licensing is required for the conduct of its business.
4.3 Authority Relative to This Agreement. Buyer has full corporate
power and corporate authority to execute, deliver, and perform this Agreement
and the Ancillary Documents to which it is a party and to consummate the
transactions contemplated hereby and thereby. The execution, delivery, and
performance by Buyer of this Agreement and the Ancillary Documents to which it
is a party, and the consummation by it of the transactions contemplated hereby
and thereby, have been duly authorized by all necessary corporate action of
Buyer. This Agreement has been duly executed and delivered by Buyer and
constitutes, and each Ancillary Document executed or to be executed by Buyer
has been, or when executed will be, duly executed and delivered by Buyer and
constitutes, or when executed and delivered will constitute, a valid and
legally binding obligation of Buyer, enforceable against Buyer in accordance
with their respective terms, except that such enforceability may be limited by
(i) applicable bankruptcy, insolvency, reorganization, moratorium, and similar
laws affecting creditors' rights generally and (ii) equitable principles which
may limit the availability of certain equitable remedies (such as specific
performance) in certain instances and (iii) public policy considerations with
respect to the enforceability of rights of indemnification.
4.4 Noncontravention. The execution, delivery, and performance by
Buyer of this Agreement and the Ancillary Documents to which it is a party and
the consummation by it of the transactions contemplated hereby and thereby do
not and will not (i) conflict with or result in a violation of any provision of
the charter or bylaws of Buyer, (ii) conflict with or result in a violation of
any provision of, or constitute (with or without the giving of notice or the
passage of time or both) a default under, or give rise (with or without the
giving of notice or the passage of time or both) to any right of termination,
cancellation, or acceleration under, or require any consent, approval,
authorization, or waiver of any party to, any bond, debenture, note, mortgage,
indenture, lease, contract, agreement, or other instrument or obligation to
which Buyer is a party or by which Buyer or any of its properties may be bound
or any Permit held by Buyer, (iii) result in the creation or imposition of any
Encumbrance upon the properties of Buyer, or (iv) assuming compliance with the
matters referred to in Section 4.4, violate any Applicable Law binding upon
Buyer.
4.5 Governmental Approvals. No consent, approval, order, or
authorization of, or declaration, filing, or registration with, any
Governmental Entity is required to be obtained or
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made by Buyer in connection with the execution, delivery, or performance by
Buyer of this Agreement and the Ancillary Documents to which it is a party or
the consummation by it of the transactions contemplated hereby or thereby,
other than (i) compliance with any applicable requirements of the Securities
Act; (ii) compliance with any applicable requirements of the Exchange Act;
(iii) compliance with any applicable state securities laws; (iv) as set forth
on Schedule 4.5; and (v) filings with Governmental Entities to occur in the
ordinary course following the consummation of the transactions contemplated
hereby.
4.6 Buyer Shares. The Buyer Shares to be issued by Buyer at the
Closing have been duly authorized for such issuance and, when issued and
delivered by Buyer in accordance with the provisions of this Agreement, will be
validly issued, fully paid, and nonassessable, and free and clear of all
Encumbrances, except for Encumbrances expressly provided herein or arising by,
though or under Seller. The issuance of the Buyer Shares under this Agreement
is not subject to any preemptive or similar rights.
4.7 Brokerage Fees. Neither Buyer nor any of its affiliates has
retained any financial advisor, broker, agent, or finder or paid or agreed to
pay any financial advisor, broker, agent, or finder on account of this
Agreement or any transaction contemplated hereby. Buyer shall indemnify and
hold harmless Seller from and against any and all losses, claims, damages, and
liabilities (including legal and other expenses reasonably incurred in
connection with investigating or defending any claims or actions) with respect
to any finder's fee, brokerage commission, or similar payment in connection
with any transaction contemplated hereby asserted by any person on the basis of
any act or statement made or alleged to have been made by Buyer or any of its
affiliates.
4.8 SEC Documents; Financial Statements.
(a) The Company has filed all required reports, forms and other
documents with the SEC since September 30, 1997 (the "Company SEC
Documents"). As of its date, each Company SEC Document complied in all
material respects with the requirements of the Securities Act of 1933,
as amended (the "Securities Act"), or the Exchange Act, as the case may
be, and the rules and regulations of the SEC promulgated thereunder
applicable to such Company SEC Documents. None of the Company SEC
Documents contains any untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances
under which they were made, not misleading, except to the extent that
such statements have been modified or superseded by a later filed
Company SEC Documents.
(b) The consolidated financial statements of the Company
included in the Company SEC Documents comply as to form in all material
respects with applicable accounting requirements and the published rules
and regulations of the SEC with respect thereto, have been prepared in
accordance with generally accepted accounting principles (except, in the
case of unaudited statements, as permitted by Form 10-Q of the SEC)
applied on a consistent basis during the periods indicated (except as
may be indicated in the notes thereto) and fairly present the
consolidated financial position of the Company as of the dates thereof
and the consolidated results of its operations and cash flows for the
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respective periods indicated therein (subject, in the case of unaudited
statements, to normal year-end audit adjustments).
4.9 Independent Investigation. Buyer hereby acknowledges and affirms
that it has completed its own independent investigation, analysis, and
evaluation of Seller, the Assets, and the Business, that it has made all such
reviews and inspections of the Assets and the Business as it has deemed
necessary or appropriate, and that in making its decision to enter into this
Agreement and to consummate the transactions contemplated hereby it has relied
solely on (i) its own independent investigation, analysis, and evaluation of
Seller, the Assets, and the Business and (ii) the representations, warranties
and agreements of Seller and the Shareholders contained herein.
ARTICLE V
CONDUCT OF BUSINESS PENDING CLOSING
Seller hereby covenants and agrees with Buyer as follows:
5.1 Conduct and Preservation of Business. Except as expressly provided
in this Agreement, during the period from the date hereof to the Closing,
Seller (i) shall conduct the Business only in the ordinary course consistent
with past practice and in compliance with all Applicable Laws; (ii) shall use
its reasonable best efforts to preserve, maintain, and protect the Assets; and
(iii) shall use its reasonable best efforts to preserve intact the business
organization of the Business, to keep available the services of the employees
of the Business, and to maintain existing relationships with licensors,
licensees, suppliers, contractors, distributors, customers, and others having
business relationships with the Business.
5.2 Restrictions on Certain Actions. Without limiting the generality
of the foregoing, and except as otherwise expressly provided in this Agreement,
prior to the Closing, Seller shall not, without the prior written consent of
Buyer:
(a) make any material change in the ongoing operations of the
Assets or the Business;
(b) except in the ordinary course of the Business consistent
with past practice, create, incur, guarantee, or assume any indebtedness
for borrowed money in respect of the Business;
(c) mortgage or pledge any of the Assets or create or suffer to
exist any Encumbrance thereupon, other than (i) contractual security
interests created in the ordinary course of business that secure
indebtedness of Seller, which shall be released immediately prior to or
concurrently with the Closing, or (ii) Permitted Encumbrances;
(d) sell, lease, transfer, or otherwise dispose of, directly or
indirectly, any of the Assets, other than inventories sold in the
ordinary course of the Business consistent with past practice;
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(e) make any capital expenditure or expenditures relating to the
Business which, individually, is in excess of $300,000 or, in the
aggregate, are in excess of $2,000,000;
(f) pay, discharge, or satisfy any claims, liabilities, or
obligations relating to the Business (whether accrued, absolute,
contingent, unliquidated, or otherwise, and whether asserted or
unasserted), other than the payment, discharge, or satisfaction in the
ordinary course of the Business consistent with past practice, or in
accordance with their terms, of liabilities reflected or reserved
against in the Latest Balance Sheet or incurred since the date thereof
in the ordinary course of the Business consistent with past practice;
(g) enter into any lease, contract, agreement, commitment,
arrangement, or transaction relating to the Business, except in the
ordinary course of the Business consistent with past practice;
(h) amend, modify, or change any existing lease, contract, or
agreement relating to the Business, other than in the ordinary course of
the Business consistent with past practice;
(i) waive, release, grant, or transfer any rights of value
relating to the Business, other than in the ordinary course of the
Business consistent with past practice;
(j) lay off any employees of the Business;
(k) accelerate collection of any notes or accounts receivable
generated by the Business;
(l) delay payment of any account payable or other liability of
Seller relating to the Business beyond its due date or the date when
such liability would have been paid in the ordinary course of the
Business consistent with past practice;
(m) allow the levels of the inventory of the Business to vary in
any material respect from the levels customarily maintained by Seller in
the ordinary course of the Business consistent with past practice;
(n) permit any current insurance or reinsurance policies to be
canceled or terminated or any of the coverages thereunder to lapse if
such policy covers Assets or insures risks, contingencies, or
liabilities of the Business, unless simultaneously with such
cancellation, termination, or lapse, replacement policies providing
coverage equal to or greater than the coverage canceled, terminated, or
lapsed are in full force and effect and written copies thereof have been
provided to Buyer;
(o) change any of the accounting principles or practices used by
it relating to the Business;
(p) intentionally take any action which would or might make any
of the representations or warranties of Seller contained in this
Agreement untrue or inaccurate as
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of any time from the date of this Agreement to the Closing or would or
might result in any of the conditions set forth in this Agreement not
being satisfied; or
(q) authorize or propose, or agree in writing or otherwise to
take, any of the actions described in this Section.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Access to Information. Between the date hereof and the Closing,
Seller (i) shall give Buyer and its authorized representatives reasonable
access to all employees, all plants, offices, warehouses, and other facilities,
and all books and records, including work papers and other materials prepared
by Seller's independent public accountants, of Seller relating to the Assets or
the Business, (ii) shall permit Buyer and its authorized representatives to
make such inspections as they may reasonably require, and (iii) shall cause
Seller's officers to furnish Buyer and its authorized representatives with such
financial and operating data and other information with respect to the Assets
and the Business as Buyer may from time to time reasonably request; provided,
however, that no investigation pursuant to this Section shall affect any
representation or warranty of Seller contained in this Agreement or in any
agreement, instrument, or document delivered pursuant hereto or in connection
herewith; and provided further that Seller shall have the right to have a
representative present at all times of any such inspections, interviews, and
examinations conducted at or on the offices or other facilities or properties
of Seller or its affiliates or representatives.
6.2 Third Party Consents. Seller shall use its reasonable best efforts
to obtain all consents, approvals, orders, authorizations, and waivers of, and
to effect all declarations, filings, and registrations with, all third parties
(including Governmental Entities) that are necessary, required, or deemed by
Buyer to be desirable to enable Seller to transfer the Assets to Buyer as
contemplated by this Agreement and to otherwise consummate the transactions
contemplated hereby. With respect to the transfer of any agreement or contract
between Seller and any of its lessee customers to Buyer hereunder, if such
transfer requires the consent of any party thereto other than Seller, then this
Agreement shall not constitute an agreement to assign the same, and such item
shall not be assigned to or assumed by Buyer, if an actual or attempted
assignment thereof would constitute a breach thereof or default thereunder. In
such case, Seller shall use its reasonable best efforts to obtain such consents
to the extent required of such other parties. If any such consent cannot be
obtained, Seller shall cooperate in any reasonable arrangement designed to
obtain for Buyer all benefits and privileges of the applicable agreement or
contract while protecting Seller from continuing liabilities or obligations
thereunder.
6.3 Employment Agreement and Non-Competition Agreement. ▇▇▇▇▇ and Buyer
shall enter into (a) an employment agreement (the "Employment Agreement") at
(and subject to the occurrence of) the Closing pursuant to which Buyer shall
agree to employ ▇▇▇▇▇ for the period and on the terms set forth therein, and
(b) a non-competition agreement (the "Non-Competition Agreement") at (and
subject to the occurrence of) the Closing pursuant to which ▇▇▇▇▇ shall agree
not to compete with Seller for the period and on the terms set forth therein
The
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Employment Agreement and the Non-Competition Agreement shall be in
substantially the forms set forth as Exhibit 6.3A and Exhibit 6.3B,
respectively.
6.4 Employee and Employee Benefit Plan Matters.
(a) Seller shall terminate the employment of all employees of the
Business effective as of the Closing Date. Buyer may, but is not in any way
obligated to, offer employment to some or all of the terminated employees upon
such terms and conditions as Buyer shall in its sole discretion determine.
Buyer agrees to give each of Seller's employees who are employed by Buyer
credit for vacation accruals earned but unused for the current year. Buyer
agrees to notify Seller in writing as soon as possible after the execution
hereof and in any event at least two days prior to the Closing, (i) of any
employees of the Business which Buyer does not intend to offer employment and
(ii) whether employees of the Business engaged by Buyer will be provided with
group health and medical coverage on terms at least as good as those made
available by Seller commencing on the date of employment with Buyer.
(b) Buyer is not hereby, and at no time hereafter will be, adopting,
accepting, or assuming any employee benefit plan or collective bargaining
agreement of Seller relating to any of its employees or any other agreement,
trust, plan, fund, or other arrangement of Seller that provides for employee
benefits or perquisites (collectively, "Employment Arrangements"), and Buyer
shall have no liability or obligation whatsoever under any Employment
Arrangement to Seller or to any employees of Seller, whether or not any of such
employees are offered employment by or become employees of Buyer. Buyer is not
obligated to replace any of the Employment Arrangements for any employees of
Seller who become employees of Buyer, nor is Buyer obligated to provide such
persons with any similar agreements, plans, or arrangements.
(c) Seller will comply after the Closing Date with the requirements
of Sections 601 through 608 of ERISA and Section 4980B of the Code with respect
to any employee or former employee of Seller (and any dependent or former
dependent thereof) whose employment with Seller terminates in connection with
Buyer's purchase of the Business.
6.5 Title Insurance and Surveys.
(a) Seller shall obtain and furnish to Buyer at the Closing an
owner's policy of title insurance ("Title Insurance") from ▇▇▇▇▇▇▇ Title
or one or more other title insurance companies reasonably acceptable to
Buyer (the "Title Company") relating to each parcel of owned Real
Property described on Schedule 1.1(a), which Title Insurance shall
insure at regular rates, in an amount reasonably determined sufficient
by Buyer (or as otherwise required by Applicable Laws), Buyer's title to
such Real Property, free and clear of all Encumbrances except for the
Permitted Encumbrances, and providing by way of appropriate endorsements
and supplemental coverages, insurance which is available under the title
insurance regulations of the State of Texas for other estates, rights,
privileges, and risks which may be ancillary or appurtenant to or affect
or burden such Real Property or which may be necessary or convenient for
its use, enjoyment, or protection, including without limitation
affirmative coverage of all material rights-of-way, easements, access
rights, and other servient estates and against all restrictions,
restrictive covenants, and
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dominant estates, including affirmative coverage against loss of use or
reversion in the event of a violation of restrictions, restrictive
covenants, or easements if available.
(b) Within ten (10) days after the execution and delivery of
this Agreement, Seller shall obtain and furnish to Buyer a commitment
for Title Insurance from the Title Company with respect to each parcel
of owned Real Property described on Schedule 1.1(a) ("Title Binders")
showing fee title to such Real Property in Seller, as appropriate, and
committing to issue the Title Insurance with respect to such Real
Property, such Title Binders to show all Encumbrances with respect to
such Real Property, and shall also deliver to Buyer legible copies of
all documents referred to as exceptions to title in the Title Binders.
(c) Within ten (10) days after the execution and delivery of
this Agreement, Seller shall deliver to Buyer currently dated surveys
(the "Surveys") of each parcel of owned Real Property described on
Schedule 1.(a), each of which Surveys shall be prepared by a licensed
professional engineer or surveyor acceptable to Buyer and to the Title
Company. The Surveys (including specifically the certificate of the
engineer or surveyor forming a part thereof) shall be in form and
substance acceptable to Buyer and to the Title Company. The parties
agree that in order for the Surveys to be acceptable to Buyer they shall
(i) locate all existing improvements, easements and rights-of-way (which
shall show applicable recording data where possible), encroachments,
conflicts, and protrusions affecting the Real Property, and water,
sewer, gas, and electric lines and the size and capacity thereof, shall
set forth the outside perimeters of the Real Property, shall contain a
metes and bounds description of the Real Property, and shall set forth
the acres included within the Real Property, (ii) contain a statement on
the face thereof certifying that no part of the Real Property lies
within a flood plain or flood prone area or a flood way of any body of
water, and (iii) show the zoning classifications of the Real Property
under local zoning ordinances, and with the Surveys Seller shall deliver
to Buyer copies of the provisions of the local zoning ordinances which
govern the use of property so classified.
(d) Within ten (10) days after the receipt of the Title Binders
and copies of all exceptions shown therein and of the Surveys and copies
of all applicable provisions of the local zoning ordinances, Buyer shall
deliver to Seller a notice (the "Objection Notice") if it reasonably
believes that Seller's title to any Real Property is not as represented
herein or that any of the Encumbrances reflected in the Title Binders or
Surveys are not Permitted Encumbrances and the reasons for such belief
(any such Encumbrances specified in the Objection Notice being referred
to herein as "Unacceptable Encumbrances"). Seller may, but shall not be
obligated to, take such steps as shall be necessary to eliminate or
modify the Unacceptable Encumbrances in a manner reasonably acceptable
to Buyer. Seller shall notify Buyer within five (5) days after its
receipt of the Objection Notice whether it intends to so eliminate or
modify the Unacceptable Encumbrances. In the event Buyer shall not
deliver an Objection Notice within such time period, all Encumbrances
reflected in the Title Binders and Surveys shall be deemed to be
Permitted Encumbrances. Any and all matters disclosed in the Title
Binders or the Surveys as to which Buyer objects by timely delivery of
the Objection Notice which are thereafter cured to the satisfaction of
Buyer or waived by Buyer in writing shall also be deemed to be Permitted
Encumbrances.
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(e) Within ten (10) days after the execution and delivery of
this Agreement, Seller shall deliver or make available to Buyer all
maps, surveys, drawings, and plot plans in the possession of Seller
depicting the Real Property or any portion thereof.
(f) The cost of obtaining Title Binders, Title Insurance, and
Surveys shall be borne by Seller.
6.6 Collection of Receivables. After the Closing Date, the parties
hereto shall cooperate with each other in the collection of the accounts
receivable of the Business as conducted by Seller before, and by Buyer from and
after, the Closing Date. In the event that Seller receives a payment after the
Closing Date from a customer or any other party that constitutes payment of a
receivable transferred to Buyer hereunder as part of the Assets, Seller shall
immediately transmit (and endorse, if necessary or appropriate) such payment to
Buyer.
6.7 Uncollected Receivables. If, on or prior to the date which is 180
days following the Closing Date, Buyer has been unable to collect the account
receivables purchased by Buyer hereunder in full, Buyer shall have the option
to sell and, upon exercise of such option by Buyer, Seller shall have the
obligation to buy, such uncollected receivables, for cash, at the aggregate
face value thereof. Seller shall be obligated to consummate such repurchase
within ten days after written notice from Buyer of Buyer's election to require
such repurchase.
6.8 Insurance.
(a) As of the Closing, Seller shall cease to be covered with
respect to any occurrence after the Closing under the insurance policies
obtained and maintained by Seller covering the business, property, and
employees of Seller. All such occurrences prior to the Closing which
are insured under such policies shall continue to be so insured, and
Buyer shall be entitled to the benefits thereof to the limited extent
necessary to hold Buyer harmless from such occurrences and any remaining
benefits thereof shall be paid to the benefit of Seller. At Buyer's
request, Seller shall make copies of such policies available to Buyer
for inspection and shall assist Buyer in determining whether any claim
or loss is covered by such policies of insurance. Following the
Closing, Buyer shall give to Seller prompt notice of the assertion by
any person of any claim against Seller which might be subject to the
insurance coverage described in this Section. Buyer shall cooperate
with Seller and any applicable insurance carrier in any investigation by
Seller or any applicable insurance carrier of any such claim and shall
give to Seller and any applicable insurance carrier reasonable access to
the books, records, and personnel formerly of Seller to the extent
reasonably necessary to enable Seller and any applicable insurance
carrier to investigate such claim.
(b) As of the Closing and until December 31, 1999, Buyer shall
cause Seller and Peidmont Corporation, Production Capital Co., Merit
Company, and Compact Equipment Company to be covered with as additional
named insureds with respect to any occurrence after the Closing under
the insurance policies obtained and maintained by Buyer covering the
Business. At Seller's request, Buyer shall make copies of such policies
available to Seller for inspection and shall assist Seller in
determining whether any claim or loss is covered by such policies of
insurance. Following the Closing, Seller shall give to Buyer
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prompt notice of the assertion by any person of any claim against Seller
which might be subject to the insurance coverage described in this
Section. Seller shall cooperate with Buyer and any applicable insurance
carrier in any investigation by Buyer or any applicable insurance
carrier of any such claim and shall give to Buyer and any applicable
insurance carrier reasonable access to the books, records, and personnel
formerly of Seller to the extent reasonably necessary to enable Buyer
and any applicable insurance carrier to investigate such claim.
6.9 Public Announcements. Except as may be required by Applicable Law
or the National Association of Securities Dealers, Inc., neither Buyer nor
Seller shall issue any press release or otherwise make any public statement
with respect to this Agreement or the transactions contemplated hereby without
the prior written consent of the other party (which consent shall not be
unreasonably withheld). Any such press release or public statement required by
Applicable Law or by the National Association of Securities Dealers, Inc. shall
only be made after reasonable notice to the other party.
6.10 Notice of Litigation. Until the Closing, (i) Buyer, upon learning
of the same, shall promptly notify Seller of any Proceeding which is commenced
or threatened against Buyer and which affects this Agreement or the
transactions contemplated hereby and (ii) Seller, upon learning of the same,
shall promptly notify Buyer of any Proceeding which is commenced or threatened
against Seller and which affects this Agreement or the transactions
contemplated hereby and any Proceeding which is commenced or threatened against
Seller which relates to or affects the Assets or the Business, or the ability
of Seller to consummate the transactions contemplated hereby.
6.11 Change of Corporate Name. Within ten (10) days following the
Closing, Seller shall change its corporate name so that it does not contain the
words "Preco", "Preco Machinery Sales", or any derivatives thereof, and shall
take all appropriate action to make the names "Preco" and "Preco Machinery
Sales" available to Buyer for purposes of qualifying to do business in those
jurisdictions in which the Business is conducted. Neither Seller nor any
corporation, partnership, venture, or other entity controlled directly or
indirectly by Seller shall have any name containing the initials the words
"Preco", "Preco Machinery Sales", or any derivatives thereof after such change
has been made. Seller shall provide Buyer with evidence of the change in
Seller's corporate name required by this Section within ten (10) days after
such change has been made.
6.12 Notification of Certain Matters. Seller shall give prompt notice
to Buyer of (i) the occurrence or nonoccurrence of any event the occurrence or
nonoccurrence of which would be likely to cause any representation or warranty
contained in Article III to be untrue or inaccurate at or prior to the Closing,
(ii) any failure of Seller to comply with or satisfy any covenant, condition,
or agreement to be complied with or satisfied by Seller hereunder, and (iii)
any notice or other communication from any person alleging that the consent or
approval of such person is or may be required in connection with the
transactions contemplated by this Agreement (other than those consents and
approvals indicated as required on Schedule 3.4). Buyer shall give prompt
notice to Seller of (i) the occurrence or nonoccurrence of any event the
occurrence or nonoccurrence of which would be likely to cause any
representation or warranty contained in Article IV to be untrue or inaccurate
at or prior to the Closing and (ii) any failure of Buyer to comply with or
satisfy any covenant, condition, or agreement to be complied with or satisfied
by Buyer
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hereunder. The delivery of any notice pursuant to this Section shall not be
deemed to (i) modify the representations or warranties hereunder of the party
delivering such notice, (ii) modify the conditions set forth in Articles VII
and VIII, or (iii) limit or otherwise affect the remedies available hereunder
to the party receiving such notice.
6.13 Access to Records After Closing.
(a) For a period of six (6) years from and after the Closing
Date, Seller and its representatives shall have reasonable access to
inspect and copy all books and records relating to the Assets or the
Business transferred to Buyer hereunder to the extent that such access
may reasonably be required by Seller in connection with matters relating
to or affected by the operation of the Assets or the Business prior to
the Closing Date. Such access shall be afforded by Buyer upon receipt
of reasonable advance notice and during normal business hours. If Buyer
shall desire to dispose of any of such books and records prior to the
expiration of such six-year period, Buyer shall, prior to such
disposition, give Seller a reasonable opportunity, at Seller's expense,
to segregate and remove such books and records as Seller may select.
Seller shall be solely responsible for any costs or expenses incurred by
it pursuant to this Section.
(b) For a period of six (6) years from and after the Closing
Date, Buyer and its representatives shall have reasonable access to
inspect and copy all books and records relating to the Assets or the
Business which Seller or any of its affiliates may retain after the
Closing Date. Such access shall be afforded by Seller and its
affiliates upon receipt of reasonable advance notice and during normal
business hours. If Seller or any of its affiliates shall desire to
dispose of any of such books and records prior to the expiration of such
six-year period, Seller shall, prior to such disposition, give Buyer a
reasonable opportunity, at Buyer's expense, to segregate and remove such
books and records as Buyer may select. Buyer shall be solely
responsible for any costs and expenses incurred by it pursuant to this
Section.
(c) Nothing contained in this Section shall require Buyer or
Seller to retain any books or records longer than such books or records
would otherwise have been retained in the ordinary course of business
but for the transactions contemplated by this Agreement.
6.14 Fees and Expenses. Except as otherwise expressly provided in this
Agreement, all fees and expenses, including fees and expenses of counsel,
financial advisors, and accountants, incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such fee or expense, whether or not the Closing shall have occurred.
6.15 Taxes; Other Charges.
(a) All sales and use Taxes resulting from the consummation of
the transactions contemplated hereby shall be borne by Seller, and the
parties shall cooperate in obtaining all exemptions from such Taxes.
All other registration, transfer, recording, and deed and stamp Taxes
and fees incurred in connection with the consummation of the
transactions contemplated hereby shall be borne by Buyer. The party
designated for the
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payment of the foregoing Taxes shall file all necessary documentation
with respect to, and make all payments of, such Taxes and fees on a
timely basis.
(b) All 1997 real and personal property Taxes imposed on or
with respect to the Assets shall be prorated as between Seller and Buyer
based on the number of days in 1997 before and after the Closing Date.
Seller shall be liable for such Taxes prorated for the period up to and
including the Closing Date, and Buyer shall be liable for such Taxes
prorated for the period subsequent to the Closing Date. Seller shall be
responsible for the actual payment of such Taxes to the appropriate
Governmental Entity that become due and payable prior to the Closing
Date. Buyer shall likewise be responsible for the actual payment of
such Taxes becoming due and payable subsequent to the Closing Date. The
parties shall file all necessary documentation with respect to, and make
all payments of, such Taxes on a timely basis.
(c) All utility and other service charges and prepaid rentals
relating to the Assets shall be prorated as between Seller and Buyer as
of the Closing Date.
6.16 Survival of Covenants. Except for any covenant or agreement which
by its terms expressly terminates as of a specific date, the covenants and
agreements of the parties hereto contained in this Agreement shall survive the
Closing without contractual limitation.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF SELLER
The obligations of Seller to consummate the transactions contemplated by
this Agreement shall be subject to the fulfillment on or prior to the Closing
Date of each of the following conditions:
7.1 Representations and Warranties True. All the representations and
warranties of Buyer contained in this Agreement, and in any agreement,
instrument, or document delivered pursuant hereto or in connection herewith on
or prior to the Closing Date, shall be true and correct as of the date made and
(having been deemed to have been made again on and as of the Closing Date in
the same language) shall be true and correct on and as of the Closing Date,
except to the extent that any such representation or warranty shall have been
true and correct as of such specified date.
7.2 Covenants and Agreements Performed. Buyer shall have performed and
complied with all covenants and agreements required by this Agreement to be
performed or complied with by it on or prior to the Closing Date.
7.3 Certificate. Seller shall have received a certificate executed by
the president or any vice president-finance of Buyer, dated the Closing Date,
representing and certifying, in such detail as Seller may reasonably request,
that the conditions set forth in this Article VII have been fulfilled.
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7.4 Legal Proceedings. No Proceeding shall, on the Closing Date, be
pending or threatened seeking to restrain, prohibit, or obtain damages or other
relief in connection with this Agreement or the consummation of the
transactions contemplated hereby.
7.5 Other Documents. Seller shall have received the certificates,
instruments, documents and other items listed below:
(a) the Cash Portion of the Purchase Price in accordance with
Section 1.4 above.
(b) A stock certificate in definitive form representing the
Buyer Shares to be delivered to Seller pursuant to Section 1.4,
registered in the name of Seller and duly executed by Buyer.
(c) Such other certificates, instruments, and documents as may
be reasonably requested by Seller prior to the Closing Date to carry out
the intent and purposes of this Agreement.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF BUYER
The obligations of Buyer to consummate the transactions contemplated by
this Agreement shall be subject to the fulfillment on or prior to the Closing
Date of each of the following conditions:
8.1 Representations and Warranties True. All the representations and
warranties of Seller contained in this Agreement, and in any agreement,
instrument, or document delivered pursuant hereto or in connection herewith on
or prior to the Closing Date, shall be true and correct as of the date made and
(having been deemed to have been made again on and as of the Closing Date in
the same language) shall be true and correct on and as of the Closing Date,
except to the extent that any such representation or warranty is made as of a
specified date, in which case such representation or warranty shall have been
true and correct as of such specified date.
8.2 Covenants and Agreements Performed. Seller shall have performed
and complied with all covenants and agreements required by this Agreement to be
performed or complied with by it on or prior to the Closing Date.
8.3 Certificate. Buyer shall have received a certificate executed by
the chairman or president of Seller, dated the Closing Date, representing and
certifying, in such detail as Buyer may reasonably request, that the conditions
set forth in this Article VIII have been fulfilled.
8.4 Legal Proceedings. No Proceeding shall, on the Closing Date, be
pending or threatened seeking to restrain, prohibit, or obtain damages or other
relief in connection with this Agreement or the consummation of the
transactions contemplated hereby.
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8.5 Consents. All consents and approvals of all persons necessary for
the consummation of the transactions contemplated hereby under the agreements
listed in Schedule 8.5 have been obtained.
8.6 No Material Adverse Change. Since August 31, 1997, there shall not
have been any material adverse change in the business, assets, results of
operations, condition (financial or otherwise), or prospects of the Business or
the ownership or operation of the Assets or any material portion thereof.
8.7 Employment and Non-Competition Agreements. ▇▇▇▇▇ shall have
entered into the Employment Agreement and Non-Competition Agreement with Buyer.
8.8 Unacceptable Encumbrances; Title Insurance.
(a) Buyer shall not have delivered to Seller within the time
period specified in Section 6.5 an Objection Notice describing an
Unacceptable Encumbrance, or if it has so delivered an Objection Notice
describing an Unacceptable Encumbrance, such Unacceptable Encumbrance
shall have been eliminated or modified to the reasonable satisfaction of
Buyer.
(b) Buyer shall have received the Title Insurance described in Section
6.5.
8.9 Due Diligence. The due diligence conducted by Buyer and its
representatives in connection with the proposed transactions contemplated
hereby shall not have caused Buyer or its representatives to become aware of
any facts relating to the business, assets, results of operations, condition
(financial or otherwise), or prospects of the Business or the Assets which, in
the good faith judgment of Buyer, make it inadvisable for Buyer to proceed with
the consummation of the transactions contemplated hereby.
8.10 Other Documents. Buyer shall have received the certificates,
instruments, documents and other items listed below:
(a) The instruments of conveyance contemplated by Section 1.3,
in form and substance reasonably satisfactory to Buyer.
(b) Executed copies of all consents and approvals of third
parties required to be obtained by or on the part of Seller for the
consummation of the transactions contemplated hereby.
(c) All books and records of Seller relating to the Assets or
the operation of the Business.
(d) A copy of the resolutions of the Board of Directors of
Seller authorizing the execution, delivery, and performance by Seller of
this Agreement, certified by the secretary or an assistant secretary of
Seller.
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(e) Such other certificates, instruments, and documents as may
be reasonably requested by Buyer to carry out the intent and purposes of
this Agreement.
ARTICLE IX
TERMINATION, AMENDMENT, AND WAIVER
9.1 Termination. This Agreement may be terminated and the transactions
contemplated hereby abandoned at any time prior to the Closing in the following
manner:
(a) by mutual written consent of Seller and Buyer; or
(b) by either Seller or Buyer, if:
(i) the Closing shall not have occurred on or before
December 15, 1997, unless such failure to close shall be due to a
breach of this Agreement by the party seeking to terminate this
Agreement pursuant to this clause (i); or
(ii) there shall be any statute, rule, or regulation
that makes consummation of the transactions contemplated hereby
illegal or otherwise prohibited or a Governmental Entity shall
have issued an order, decree, or ruling or taken any other action
permanently restraining, enjoining, or otherwise prohibiting the
consummation of the transactions contemplated hereby, and such
order, decree, ruling, or other action shall have become final
and nonappealable; or
(c) by Seller, if (i) any of the representations and warranties
of Buyer contained in this Agreement shall not be true and correct in
any material respect, or (ii) Buyer shall have failed to fulfill in any
material respect any of its obligations under this Agreement, and, in
the case of each of clauses (i) and (ii), such misrepresentation, breach
of warranty, or failure (provided it can be cured) has not been cured
within thirty (30) days of actual knowledge thereof by Buyer; or
(d) by Buyer, if (i) any of the representations and warranties
of Seller contained in this Agreement shall not be true and correct in
any material respect, when made or at any time prior to the Closing as
if made at and as of such time, or (ii) Seller shall have failed to
fulfill in any material respect any of its obligations under this
Agreement, and, in the case of each of clauses (i) and (ii), such
misrepresentation, breach of warranty, or failure (provided it can be
cured) has not been cured within thirty (30) days of actual knowledge
thereof by Seller.
9.2 Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 9.1 by Seller or Buyer, written notice thereof
shall forthwith be given to the other party specifying the provision hereof
pursuant to which such termination is made, and this Agreement shall become
void and have no effect, except that the agreements contained in this Section
and in Article X and Sections 6.10, 6.15, 11.1, 11.4 and 11.5 shall survive the
termination hereof. Nothing contained in this Section shall relieve any party
from liability for damages actually incurred as a result of any breach of this
Agreement.
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9.3 Amendment. This Agreement may not be amended except by an
instrument in writing signed by or on behalf of all the parties hereto.
9.4 Waiver. Each of Seller and Buyer may (i) waive any inaccuracies in
the representations and warranties of the other contained herein or in any
document, certificate, or writing delivered pursuant hereto or (ii) waive
compliance by the other with any of the other's agreements or fulfillment of
any conditions to its own obligations contained herein. Any agreement on the
part of a party hereto to any such waiver shall be valid only if set forth in
an instrument in writing signed by or on behalf of such party. No failure or
delay by a party hereto in exercising any right, power, or privilege hereunder
shall operate as a waiver thereof nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of any
other right, power, or privilege.
9.5 Exclusive Remedies. The rights and remedies of the parties hereto
shall be the sole and exclusive remedies of the parties in the event of any
inaccuracy in or breach of any representation, warranty, covenant or agreement
contained in this Agreement.
ARTICLE X
SURVIVAL OF REPRESENTATIONS;
INDEMNIFICATION
10.1 Survival. The representations and warranties of the parties
hereto contained in this Agreement or in any certificate, instrument, or
document delivered pursuant hereto shall survive the Closing for a period
ending on (and including) the first anniversary of the Closing Date (the
"Survival Date"), regardless of any investigation made by or on behalf of any
party. No party hereto shall have any indemnification obligation pursuant to
this Article X in respect of any representation or warranty referred to herein
unless before the Survival Date it shall have received from the party seeking
indemnification written notice of the existence of the claim for or in respect
of which indemnification in respect of such representation or warranty is
sought. Such notice shall set forth with reasonable specificity (i) the basis
under this Agreement, and the facts that otherwise form the basis, of such
claim, (ii) an estimate of the amount of such claim (which estimate shall not
be conclusive of the final amount of such claim) and an explanation of the
calculation of such estimate, including a statement of any significant
assumptions employed therein, and (iii) the date on and manner in which the
party delivering such notice became aware of the existence of such claim;
provided, however, that any notice which the party seeking indemnification
delivers to the indemnifying party prior to the Survival Date which notifies
the indemnifying party of the existence of a claim and, notwithstanding the
failure of such notice to meet the requirements set forth in clauses (i), (ii),
and (iii) above, does not materially prejudice the indemnifying party's ability
to defend such claim, shall be deemed to have met the requirement of delivery
of notice prior to the Survival Date for the purpose of preserving the
indemnified party's right to indemnification pursuant to this Article X. The
provisions of this Section shall have no effect upon any other obligation of
the parties hereto under this Agreement, whether to be performed before, at, or
after the Closing.
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10.2 Indemnification by Seller and Shareholder. Subject to the terms
and conditions of this Article X, Seller and Shareholder each jointly and
severally shall indemnify, defend, and hold harmless Buyer, the subsidiaries
and parent corporations of Buyer, each director, officer, employee, and agent
of Buyer or any of its subsidiaries or parent corporations, and each affiliate
of Buyer and its subsidiaries and parent corporations, and their respective
heirs, legal representatives, successors, and assigns (collectively, the "Buyer
Group"), from and against any and all claims, actions, causes of action,
demands, assessments, losses, damages, liabilities, judgments, settlements,
penalties, costs, and expenses (including reasonable attorneys' fees and
expenses) (collectively, "Damages"), asserted against, resulting to, imposed
upon, or incurred by any member of the Buyer Group, directly or indirectly, by
reason of or resulting from any of the following:
(a) any inaccuracy in or breach of any representation or
warranty of Seller or Shareholder contained in this Agreement or in any
certificate delivered pursuant hereto;
(b) any breach by Seller or Shareholder of any of its or his
covenants or agreements contained in this Agreement or in any
certificate delivered pursuant hereto;
(c) any liability or obligation of Seller or its affiliates
(whether accrued, absolute, contingent, unliquidated, or otherwise,
whether or not known to Seller, and whether due or to become due), other
than the Assumed Liabilities;
(d) the ownership, management, or use of the Assets or the
Business prior to the Closing Date; or
(e) any products or equipment distributed, sold or leased by
Seller in connection with the Business on or prior to the Closing Date
(other than the Assumed Liabilities).
10.3 Indemnification by Buyer. Subject to the terms and conditions of
this Article X, Buyer shall indemnify, defend, and hold harmless Shareholder,
Seller, each director, officer, employee, and agent of Seller, and each
affiliate of Seller, and their respective heirs, legal representatives,
successors, and assigns (collectively, the "Seller Group"), from and against
any and all Damages asserted against, resulting to, imposed upon, or incurred
by any member of the Seller Group, directly or indirectly, by reason of or
resulting from any of the following:
(a) any inaccuracy in or breach of any representation or
warranty of Buyer contained in this Agreement or in any certificate
delivered pursuant hereto;
(b) any breach by Buyer of any of its covenants or agreements
contained in this Agreement or in any certificate delivered pursuant
hereto;
(c) the Assumed Liabilities;
(d) the ownership, management, or use by Buyer of the Assets
from and after the Closing Date, except to the extent Buyer is
indemnified by Seller with respect to such matters pursuant to Section
10.2; and
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(e) any products or equipment leased, distributed or sold by
Buyer from and after the Closing Date, except to the extent Buyer is
indemnified by Seller with respect to such matters pursuant to Section
10.2.
10.4 Procedure for Indemnification. Promptly after receipt by an
indemnified party under Section 10.2 or 10.3 of notice of the commencement of
any action, such indemnified party shall, if a claim in respect thereof is to
be made against an indemnifying party under such Section, give written notice
to the indemnifying party of the commencement thereof, but the failure so to
notify the indemnifying party shall not relieve it of any liability that it may
have to any indemnified party except to the extent the indemnifying party
demonstrates that the defense of such action is prejudiced thereby. In case
any such action shall be brought against an indemnified party and it shall give
written notice to the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate therein and, to the extent
that it may wish, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party. If the indemnifying party elects to
assume the defense of such action, the indemnified party shall have the right
to employ separate counsel at its own expense and to participate in the defense
thereof. If the indemnifying party elects not to assume (or fails to assume)
the defense of such action, the indemnified party shall be entitled to assume
the defense of such action with counsel of its own choice, at the expense of
the indemnifying party. If the action is asserted against both the
indemnifying party and the indemnified party and there is a conflict of
interests which renders it inappropriate for the same counsel to represent both
the indemnifying party and the indemnified party, the indemnifying party shall
be responsible for paying for separate counsel for the indemnified party;
provided, however, that if there is more than one indemnified party, the
indemnifying party shall not be responsible for paying for more than one
separate firm of attorneys to represent the indemnified parties, regardless of
the number of indemnified parties. If the indemnifying party elects to assume
the defense of such action, (a) no compromise or settlement thereof may be
effected by the indemnifying party without the indemnified party's written
consent (which shall not be unreasonably withheld) unless the sole relief
provided is monetary damages that are paid in full by the indemnifying party
and (b) the indemnifying party shall have no liability with respect to any
compromise or settlement thereof effected without its written consent (which
shall not be unreasonably withheld).
10.5 INDEMNIFICATION DESPITE NEGLIGENCE. IT IS THE EXPRESS INTENTION
OF THE PARTIES HERETO THAT EACH PERSON TO BE INDEMNIFIED PURSUANT TO THIS
ARTICLE X SHALL BE INDEMNIFIED AND HELD HARMLESS FROM AND AGAINST ALL DAMAGES
AS TO WHICH INDEMNITY IS PROVIDED FOR UNDER THIS ARTICLE X NOTWITHSTANDING THAT
ANY SUCH DAMAGES ARISE OUT OF OR RESULT FROM THE ORDINARY, STRICT, SOLE, OR
CONTRIBUTORY NEGLIGENCE OF SUCH PERSON AND REGARDLESS OF WHETHER ANY OTHER
PERSON (INCLUDING THE OTHER PARTIES TO THIS AGREEMENT) IS OR IS NOT ALSO
NEGLIGENT.
10.6 Limitations. The obligations of the parties hereto to provide any
indemnification under this Article X shall be subject to the following
limitations:
(a) Buyer shall not be entitled to indemnification from Seller
or Shareholders under this Article X unless the aggregate damages
incurred by Buyer are in excess of
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$100,000, and then only to the extent of such excess, and the aggregate
liability of Seller and the Shareholders to indemnify Buyer hereunder
shall not exceed the Purchase Price;
(b) Seller and Shareholders shall not be entitled to
indemnification from Buyer under this Article X unless the aggregate
damages incurred by Seller and Shareholders are in excess of $100,000,
and then only to the extent of such excess, and the aggregate liability
of Buyer to indemnify Seller and the Shareholders hereunder shall not
exceed the Purchase Price; and
(c) No party hereto shall have any liability, in any
circumstance, for lost business opportunities, loss of revenue,
speculative or prospective profits, or any other special incidental,
consequential, exemplary, punitive or indirect damages.
10.7 Use of Buyer Shares to Satisfy Indemnification Obligations. Seller
shall have the right to use its Buyer Shares (to the extent of such shares) to
pay its indemnification obligations hereunder, if any, by returning to Buyer
the number of Buyer Shares with a value equal to the indemnification
obligation(s) that Seller elects to pay with Buyer Shares, which value per
share shall be deemed to be equal to the greater of (i) the Current Market
Value per share as of the Closing Date, or (ii) the market value per share as
of the date such indemnification obligation becomes due and payable determined
using the formula for Current Market Value applied to the ten consecutive
trading days immediately preceding the day such indemnification obligation is
payable.
ARTICLE XI
MISCELLANEOUS
11.1 Notices. All notices, requests, demands, and other communications
required or permitted to be given or made hereunder by any party hereto shall
be in writing and shall be deemed to have been duly given or made if delivered
personally, or transmitted by first class registered or certified mail, postage
prepaid, return receipt requested, or sent by prepaid overnight delivery
service, or sent by cable, telegram, or telefax, to the parties at the
following addresses (or at such other addresses as shall be specified by the
parties by like notice):
If to Buyer: Crescent Operating, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telefax: 817.339.1001
If to Seller and
the Shareholders: c/o ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telefax: 713.864.3658
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11.2 Entire Agreement. This Agreement, together with the Schedules,
Exhibits and other writings referred to herein or delivered pursuant hereto,
constitute the entire agreement between the parties hereto with respect to the
subject matter hereof and supersede all prior agreements and understandings,
both written and oral, between the parties with respect to the subject matter
hereof.
11.3 Binding Effect; Assignment; No Third Party Benefit. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns. Except as otherwise
expressly provided in this Agreement, neither this Agreement nor any of the
rights, interests, or obligations hereunder shall be assigned by either of the
parties hereto without the prior written consent of the other party, except
that Buyer may assign to any wholly owned subsidiary of Buyer any of Buyer's
rights, interests, or obligations hereunder, upon notice to Seller, provided
that no such assignment shall relieve Buyer of its obligations hereunder.
Except as provided in Article X, nothing in this Agreement, express or implied,
is intended to or shall confer upon any person other than the parties hereto,
and their respective successors and permitted assigns, any rights, benefits, or
remedies of any nature whatsoever under or by reason of this Agreement.
11.4 Severability. If any provision of this Agreement is held to be
unenforceable, this Agreement shall be considered divisible and such provision
shall be deemed inoperative to the extent it is deemed unenforceable, and in
all other respects this Agreement shall remain in full force and effect;
provided, however, that if any such provision may be made enforceable by
limitation thereof, then such provision shall be deemed to be so limited and
shall be enforceable to the maximum extent permitted by Applicable Law.
11.5 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT REGARD
TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF.
11.6 Further Assurances. From time to time following the Closing, at
the request of either party hereto and without further consideration, the other
party hereto shall execute and deliver to such requesting party such
instruments and documents and take such other action (but without incurring any
material financial obligation) as such requesting party may reasonably request
in order to consummate more fully and effectively the transactions contemplated
hereby.
11.7 Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only, do not constitute a part of this
Agreement, and shall not affect in any manner the meaning or interpretation of
this Agreement.
11.8 Gender. Pronouns in masculine, feminine, and neuter genders shall
be construed to include any other gender, and words in the singular form shall
be construed to include the plural and vice versa, unless the context otherwise
requires.
11.9 References. All references in this Agreement to Articles,
Sections, and other subdivisions refer to the Articles, Sections, and other
subdivisions of this Agreement unless expressly provided otherwise. The words
"this Agreement", "herein", "hereof ", "hereby",
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"hereunder", and words of similar import refer to this Agreement as a whole and
not to any particular subdivision unless expressly so limited. Whenever the
words "include", "includes", and "including" are used in this Agreement, such
words shall be deemed to be followed by the words "without limitation". Each
reference herein to a Schedule, Exhibit, or Annex refers to the item identified
separately in writing by the parties hereto as the described Schedule, Exhibit,
or Annex to this Agreement. All Schedules, Exhibits, and Annexes are hereby
incorporated in and made a part of this Agreement as if set forth in full
herein.
11.10 Counterparts. This Agreement may be executed by the parties
hereto in any number of counterparts, each of which shall be deemed an
original, but all of which shall constitute one and the same agreement. Each
counterpart may consist of a number of copies hereof each signed by less than
all, but together signed by all, the parties hereto.
11.11 Joint and Several Liability. Each of Seller and the Shareholders
agree that they are jointly and severally liable for all representations,
warranties, covenants, agreements, and indemnities of Seller contained in this
Agreement.
11.12 Disclosure. The disclosures in the Schedules to this Agreement,
and those in any supplements thereto, shall relate only to the representations
and warranties in the Section of this Agreement to which they expressly relate
and to no other representation or warranty in this Agreement. In the event of
any inconsistency between the statements in the body of this Agreement and
those in the Schedules (other than an exception expressly set forth as such in
the Schedules in relation to a specifically identified representation or
warranty), those in this Agreement shall control.
11.13 Limitation on Representations and Warranties.
(a) Except as and to the extent expressly set forth in this
Agreement, or included on any Schedule hereto or certificate delivered
in connection herewith, Seller and the Shareholders make no other
representation or warranty and disclaim all liability and responsibility
for any other representation, warranty, statement or information
(financial or otherwise) made or communicated (orally or in writing) to
Buyer or any of its affiliates, employees, agents, consultants or
representatives (including, without limitation, any opinion,
information, projection, financial statement or advice that may have
been provided to Buyer by any officer, director, employee, agent,
consultant or representative of Seller or of any affiliate thereof).
(b) WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, AND
WITHOUT DIMINISHING IN ANY MANNER THE SCOPE OF THE REPRESENTATIONS AND
WARRANTIES SET FORTH IN ARTICLE III, EXCEPT TO THE EXTENT EXPRESSLY SET
FORTH IN ARTICLE III, SELLER AND THE SHAREHOLDERS MAKE NO
REPRESENTATIONS OR WARRANTY, EXPRESS OR IMPLIED, AS TO ANY MATTERS,
INCLUDING WITHOUT LIMITATION, THE FOLLOWING MATTERS: THE MAINTENANCE,
REPAIR, CONDITION, QUALITY, SUITABILITY, DESIGN OR MARKETABILITY OF ANY
OF THE ASSETS, INCLUDING, WITHOUT LIMITATION, ANY REPRESENTATION OR
WARRANTY AS TO MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR
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PURPOSE OF ANY OF THE ASSETS, IT BEING EXPRESSLY UNDERSTOOD AND AGREED
BY THE PARTIES THAT BUYER IS ACQUIRING THE ASSETS AND BUSINESS "AS IS",
"WHERE IS" AND "WITH ALL FAULTS."
(c) Seller and the Shareholders furthermore make no
representation or warranty to Buyer regarding the probable success or
future profitability of the Business or of any of the Assets.
ARTICLE XII
DEFINITIONS
12.1 Certain Defined Terms. As used in this Agreement, each of the
following terms has the meaning given it below:
"affiliate" means, with respect to any person, any other person
that, directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, such
person. For the purposes of this definition, "control", when used with
respect to any person, means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and
policies of such person, whether through the ownership of voting
securities, by contract, or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Ancillary Documents" means each agreement, instrument, and
document (other than this Agreement) executed or to be executed by
Seller, any Shareholder or Buyer in connection with the transactions
contemplated by this Agreement.
"Applicable Law" means any statute, law, rule, or regulation or
any judgment, order, writ, injunction, or decree of any Governmental
Entity to which a specified person or property is subject.
"Code" means the Internal Revenue Code of 1986, as amended and in
effect on the Closing Date.
"Encumbrances" means liens, charges, pledges, options, mortgages,
deeds of trust, security interests, claims, restrictions, easements, and
other encumbrances of every type and description, whether imposed by
law, agreement, understanding, or otherwise.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"GAAP" means generally accepted accounting principles in the
United States of America applied on a basis consistent with preceding
years throughout the periods involved.
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"Governmental Entity" means any court or tribunal in any
jurisdiction (domestic or foreign) or any federal, state, municipal, or
other governmental body, agency, authority, department, commission,
board, bureau, or instrumentality (domestic or foreign).
"Intellectual Property" means patents, trademarks, service marks,
trade names, service names, brand names, copyrights, trade secrets,
know-how, inventions, computer software (including documentation and
object and source codes), and similar rights, and all registrations,
applications, licenses, and rights with respect to any of the foregoing.
"IRS" means the Internal Revenue Service.
"Permits" means licenses, permits, franchises, consents,
approvals, variances, exemptions, and other authorizations of or from
Governmental Entities.
"Permitted Encumbrances" means (a) Encumbrances created by Buyer,
(b) contractual Encumbrances securing any Assumed Liabilities, (c) liens
for Taxes not yet due and payable or, if due and payable, the validity
of which is being contested in good faith by appropriate legal
proceedings and for which adequate reserves have been set aside, (d)
statutory liens (including materialmen's, mechanic's, repairmen's,
landlord's, and other similar liens) arising in connection with the
ordinary course of the Business securing payments not yet due and
payable or, if due and payable, the validity of which is being contested
in good faith by appropriate legal proceedings and for which adequate
reserves have been set aside, (e) such imperfections or irregularities
of title, if any, as (A) are not substantial in character, amount, or
extent and do not materially detract from the value of the property
subject thereto, (B) do not materially interfere with either the present
or intended use of such property, and (C) do not, individually or in the
aggregate, materially interfere with the conduct of the normal
operations of the Business; provided, however, that at the Closing
"Permitted Encumbrances" shall not include any liens for Taxes or
statutory liens filed of record against the Assets, and (f) contractual
security interests covering equipment arising in the ordinary course of
business that secure contracts being assumed by Buyer as part of the
Assets.
"person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, enterprise,
unincorporated organization, or Governmental Entity.
"Proceedings" means all proceedings, actions, claims, suits,
investigations, and inquiries by or before any arbitrator or
Governmental Entity.
"reasonable best efforts" means a party's reasonable commercial
efforts in accordance with reasonable commercial practice and without
the incurrence of unreasonable expense.
"Securities Act" means the Securities Act of 1933, as amended.
"Taxes" means any income taxes or similar assessments or any
sales, excise, occupation, use, ad valorem, property, production,
severance, transportation,
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employment, payroll, franchise, or other tax imposed by any United
States federal, state, or local (or any foreign or provincial) taxing
authority, including any interest, penalties, or additions attributable
thereto.
"Tax Return" means any return or report, including any related or
supporting information, with respect to Taxes.
"to the best knowledge" of a specified person (or similar
references to a person's knowledge) means that the only information to
be attributed to such person is information actually known to (a) such
person in the case of an individual or (b) in the case of a corporation
or other entity, a current officer; provided, that each of the
Shareholders as officers of Seller will conduct a reasonable inquiry of
other officers and key employees with respect to the matters covered by
the representations and warranties contained herein.
12.2 Certain Additional Defined Terms. In addition to such terms as
are defined in the opening paragraph of and the recitals to this Agreement and
in Section 12.1, the following terms are used in this Agreement as defined in
the Sections, Articles or other references set forth opposite such terms:
Defined Term Reference
------------ ---------
Accountants Section 1.5
Agreement Preamble
Applicable Environmental Laws Section 3.23
Assets Section 1.1
Assumed Liabilities Section 1.7
Audited Financial Statements Section 3.8
Business Preamble
Buyer Preamble
Buyer Group Section 10.2
Buyer Shares Section 1.4
Cash Portion of Purchase Price Section 1.4
Closing Article II
Closing Date Article II
closing price Section 1.4
Closing Statement Section 1.5
Company SEC Documents Section 4.7
Consent Required Contract Section 6.6
▇▇▇▇▇ Preamble
Current Marker Price Section 1.4
Damages Section 10.2
Employment Agreement Section 6.3
Employment Arrangements Section 6.4
Excluded Assets Section 1.2
Financial Statements Section 3.8
▇▇▇▇▇▇▇ Preamble
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hazardous material Section 3.23
Latest Balance Sheet Section 3.8
Leased Real Property Section 1.1
Net Working Capital Plus Equipment Section 1.5
Non-Competition Agreement Section 6.3
Objection Notice Section 6.5
Owned Real Property Section 1.1
Purchase Price Section 1.4
Real Property Section 1.1
Securities Act Section 4.7
Seller Preamble
Seller Group Section 10.3
Shareholder Preamble
Surveys Section 6.5
Survival Date Section 10.1
Title Binders Section 6.5
Title Company Section 6.5
Title Insurance Section 6.5
transfer Section 1.1
Unacceptable Encumbrances Section 6.5
Unaudited Financial Statements Section 3.8
[Signature page to follow]
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IN WITNESS WHEREOF, the parties have executed this Agreement, or caused
this Agreement to be executed by their duly authorized representatives, all as
of the day and year first above written.
Preco Machinery Sales, Inc.
By:
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Name:
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Title:
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇
Crescent Operating, Inc.
By:
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Name:
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Title:
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