EXHIBIT A
ASSET PURCHASE AGREEMENT
by and between
AIRGAS CARBONIC RESERVES, INC. ("Purchaser")
and
CARBONIC RESERVES ("Seller")
and
THE ▇▇▇▇▇ COMPANY and ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. ("Shareholders")
TABLE OF CONTENTS PAGE
ARTICLE 1
SUMMARY OF TRANSACTIONS; DEFINITIONS
1.1 Assets Purchased
1.2 Excluded Assets
1.3 Assumption of Liabilities
1.4 Employment Agreement
1.5 Non-Competition and Confidentiality Agreements
1.6 Assignment of Patents and Trademarks
1.7 US Airgas Guaranty
1.8 Certain Definitions
ARTICLE 2
PURCHASE PRICE
2.1 Purchase Price
2.2 Purchase Price Allocation.
2.3 Payment of Purchase Price
2.3.1 Assumed Liabilities
2.3.2 Closing Payment
2.3.3 Holdback Payment
ARTICLE 3
ASSUMPTION OF LIABILITIES
3.1 Assumption of Certain Liabilities
3.2 Limitation of Purchaser's Liabilities
3.3 Discharge of Liabilities Not Assumed by Purchaser
3.4 Bulk Sales Law
3.5 Release of Guarantees
ARTICLE 4
CONDUCT OF SELLER'S BUSINESS
4.1 Conduct of Business Prior to Closing
4.2 Access and Information
4.3 Compliance with Laws, etc
ARTICLE 5
REPRESENTATIONS, WARRANTIES AND AGREEMENTS
5.1 Representations, Warranties and Agreements of Seller and
Shareholders
5.1.1 Organization and Good Standing
5.1.2 No Violation; Consents
5.1.3 Validity of Agreement
5.1.4 Capitalization
5.1.5 Assets
5.1.6 Inventories
5.1.7 Accounts Receivable
5.1.8 Taxes
5.1.9 Litigation
5.1.10 Compliance with Laws; Environmental
5.1.11 Contracts
5.1.12 Employee Benefit Plans
5.1.13 Customers and Suppliers
5.1.14 Financial Information
5.1.15 Absence of Undisclosed Liabilities
5.1.16 Books of Account, Returns and Reports
5.1.17 Transactions with Affiliates
5.1.18 Franchises, Permits and Licenses
5.1.19 Employees
5.1.20 Insurance
5.1.21 Patents
5.1.22 Conditions Affecting Seller
5.1.23 Disclosure
5.1.24 Knowledge
5.2 Representations, Warranties and Agreements of Purchaser
5.2.1 Organization and Good Standing
5.2.2 No Violation; No Consents
5.2.3 Validity of Agreement
ARTICLE 6
SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION
6.1 Survival of Representations and Warranties
6.2 Indemnification
6.2.1 Seller's and Shareholders' Indemnity
6.2.2 Purchaser's Indemnity
6.2.3 Notice and Defense of Indemnity Claims
6.2.4 Manner of Indemnification
6.2.5 Brokers
6.2.6 Limitation
6.3 Purchaser's Right of Setoff
ARTICLE 7
CONDITIONS PRECEDENT TO THE CLOSING
7.1 Conditions To Purchaser's Performance
7.1.1 Representations and Warranties True
7.1.2 Covenants Performed
7.1.3 Litigation
7.1.4 Other Agreements
7.1.5 Consents
7.1.6 Opinion of Counsel
7.1.7 Audits and Inspections
7.1.8 Environmental Studies
7.1.9 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act
7.1.10 Purchaser Board Approval
7.2 Conditions to Seller's Performance
7.2.1 Representations and Warranties True
7.2.2 Covenants Performed
7.2.3 Litigation
7.2.4 Other Agreements
7.2.5 Environmental Studies
7.2.6 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act
7.2.8 Opinion of Counsel
ARTICLE 8
THE CLOSING
8.1 Closing Date
8.2 Seller's Deliveries at Closing
8.3 Purchaser's Deliveries at Closing
ARTICLE 9
EXPENSES
9.1 Expenses
ARTICLE 10
CONSTRUCTION
10.1 Choice of Laws
10.2 Headings
10.3 Invalid Provisions
ARTICLE 11
ASSIGNABILITY
11.1 Binding Agreement
11.2 Assignability
ARTICLE 12
NOTICES
12.1 Written Notices
12.2 Notice to Purchaser
12.3 Notice to Seller
ARTICLE 13
FURTHER ASSURANCES AND MISCELLANEOUS
13.1 Seller's Name
13.2 Employee Contracts
13.3 Further Agreements and Cooperation
13.4 Audited Business
13.5 Entire Agreement, No Oral Change
13.6 Risk of Loss
ASSET PURCHASE AGREEMENT
The parties to this Asset Purchase Agreement ("Agreement") dated the
________ day of July, 1997, are AIRGAS CARBONIC RESERVES, INC.
("Purchaser"), a Delaware corporation and subsidiary of AIRGAS CARBONIC
INDUSTRIES, INC.; CARBONIC RESERVES ("Seller"), a Nevada corporation; and
THE ▇▇▇▇▇ COMPANY ("▇▇▇▇▇"), an Oklahoma corporation and the majority
shareholder of Seller and ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. ("▇▇▇▇▇▇"), an individual
residing at ▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ and the minority
shareholder of Seller (▇▇▇▇▇ and ▇▇▇▇▇▇ collectively "Shareholders").
Seller desires to sell and Purchaser desires to buy all the assets of
Seller used or useful in the dry ice manufacturing and distribution
business of Seller (the "Business"), except those expressly excluded herein
(such assets, except those expressly excluded, the "Assets"), on the terms
and conditions of this Agreement.
In consideration of the mutual representations, warranties, covenants
and agreements hereinafter contained, the parties hereto, each intending to
be legally bound hereby, agree as follows:
ARTICLE 1
SUMMARY OF TRANSACTIONS; DEFINITIONS
1.1 Assets Purchased. Purchaser hereby agrees to purchase from
Seller and Seller hereby agrees to sell to Purchaser all of the Assets.
The Assets include, but are not limited to, the following:
(a) the tangible assets of Seller, all of Seller's accounts
receivable, notes receivable, deposits, prepaid expenses, inventories,
fixed assets, real property and intangible properties;
(b) all contract rights, causes of action, claims, refunds and
demands of whatever nature, including rights to returned or repossessed
goods and rights as unpaid vendor arising out of the Business;
(c) all books and records relating to the Business and Seller
(except minute books and stock record books);
(d) all rights of Seller in and to all of Seller's trademarks
and trade names, including without limitation, the name "Carbonic
Reserves," and all variants thereof, and all intellectual property and
proprietary information of Seller; and
(e) all of Seller's intangibles and goodwill.
At Closing, Seller shall deliver to Purchaser a ▇▇▇▇ of sale for
the Assets, substantially in the form of Exhibit 1.1 (the "General
Assignment and ▇▇▇▇ of Sale"), and special warranty deeds for the Real
Property identified in Section 5.1.5(b) and Schedule 5.1.5(c) as being
owned by Seller, substantially in the form of Exhibits 1.1.1, 1.1.2, 1.1.3
and 1.1.4 (the "Deeds").
1.2 Excluded Assets. Purchaser and Seller agree that the following
assets are expressly excluded from the purchase and sale hereunder: cash
and cash equivalents, notes receivable from ▇▇▇▇▇ or any other Related
Party and identified on Schedule 1.2, and any tax refunds relating to
periods prior to the Closing Date.
1.3 Assumption of Liabilities. At Closing (as defined herein),
Purchaser shall enter into an assignment and assumption agreement,
substantially in the form of Exhibit 1.3 (the "Assignment and Assumption
Agreement") providing for Purchaser to assume those liabilities of Seller
described in Section 3.1 hereof. Except as expressly provided in this
Agreement, Purchaser is not assuming any liabilities of Seller.
1.4 Employment Agreement. At Closing, ▇▇▇▇▇▇ shall enter into an
employment agreement with Purchaser, substantially in the form of Exhibit
1.4 (the "Employment Agreement").
1.5 Non-Competition and Confidentiality Agreements. At Closing,
Seller, ▇▇▇▇▇ and ▇▇▇▇▇▇ shall enter into separate non-competition and
confidentiality agreements with Purchaser, substantially in the form of
Exhibits 1.5(a), (b) and (c) (the "Non-Competition and Confidentiality
Agreements"). At Closing, Purchaser shall pay ▇▇▇▇▇▇ Five Hundred Thousand
Dollars ($500,000) in consideration for his execution of the
Non-Competition and Confidentiality Agreement.
1.6 Assignment of Patents and Trademarks. At Closing, Seller shall
execute and deliver to Purchaser Assignment of Patents and Assignment of
Trademarks forms, assigning Seller's rights in and to the patents and
trademarks described in Section 5.1.21, substantially in the form of
Exhibits 1.6(a), (b) and (c) (the "Patent and Trademark Assignments").
1.7 US Airgas Guaranty. Concurrently with the execution hereof,
Purchaser is causing US Airgas, Inc., a subsidiary of Airgas, Inc., to
execute and deliver to Seller and Shareholders a guaranty of Purchaser's
obligations hereunder, substantially in the form of Exhibit 1.7 (the "US
Airgas Guaranty").
1.8 Certain Definitions. The following terms used in this Agreement
shall have the meanings set forth below:
"Affiliate" means any person, firm, corporation, partnership or
association controlling, controlled by, or under common control with
another person, firm, corporation, partnership or association;
"Airgas Plans" shall have the meaning given to such term in
Section 13.2 hereof;
"Assets" shall have the meaning given to such term in the preamble of
this Agreement and in Section 1.1 hereof;
"Assumed Liabilities" shall have the meaning given to such term in
Section 3.1 hereof;
"Business" shall have the meaning given to such term in the preamble
of this Agreement;
"Closing" shall have the meaning given to such term in Section 8.1
hereof;
"Closing Date" shall have the meaning given to such term in
Section 8.1 hereof;
"Closing Date Balance Sheet" means a balance sheet as of the Closing
Date and a related statement of income, stockholders' equity, and cash
flows for the period between the last day of Seller's last full fiscal year
and the Closing Date, prepared by Purchaser, subject to Seller's approval,
within sixty (60) days after the Closing Date in accordance with generally
accepted accounting principles, consistently applied in accordance with the
past practices of Seller;
"Code" shall mean the Internal Revenue Code of 1986, as amended;
"Employee Plans" shall have the meaning given to such term in
Section 5.1.12 hereof;
"Environmental Laws" shall mean all Legal Requirements relating to the
generation, storage, handling, release, discharge, emission,
transportation, treatment or disposal of solid wastes, hazardous wastes,
and hazardous, toxic or dangerous materials or substances, including, but
not limited to, the Comprehensive Environmental Response, Compensation and
Liability Act, the Superfund Amendments and Reauthorization Act of 1986,
the Resource Conservation and Recovery Act, the Clean Water Act, the Clean
Air Act (as amended), the Federal Water Pollution Control Act, the Safe
Drinking Water Act, the Toxic Substances Control Act, and the Hazardous
Materials Transportation Act;
"Environmental Liability" shall mean any obligation or liability
imposed against an owner or operator of property pursuant to the provisions
of any Environmental Laws or pursuant to common law, and shall include all
response costs, costs of remediation, attorneys' fees and expert witness
fees to investigate and defend such claims, personal injuries and any dam-
ages to natural resources and other property. The term "Environmental
Liability" shall include all theories of liability for environmental
contamination of property, including theories arising under statute, com-
mon law or tort, and contribution;
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended;
"Financial Statements" shall have the meaning given to such term in
Section 5.1.14 hereof;
"Hazardous Substances" shall have the meaning given to such term in
Section 5.1.10 hereof;
"Holdback" shall have the meaning given to such term in Section 2.3.3
hereof;
"Immaterial Contracts" shall have the meaning given to such term in
Section 5.1.11 hereof.
"Indemnity Claims" shall have the meaning given to such term in
Sections 6.2.1 and 6.2.2 hereof;
"Legal Requirements" shall mean all judgments, decrees, injunctions,
orders, writs, rulings, laws, ordinances, statutes, rules, regulations,
codes and other requirements of all federal, state and local governmental,
administrative and judicial bodies and authorities;
"Permitted Contracts" shall have the meaning given to such term in
Section 3.1 hereof.
"Personal Property Leases" shall have the meaning given to such term
in Section 5.1.5(a) hereof;
"Purchaser" shall have the meaning given to such term in the preamble
of this Agreement;
"Purchase Price" shall have the meaning given to such term in
Section 2.1 hereof;
"Real Property" shall have the meaning given to such term in
Section 5.1.5(b) hereof;
"Real Property Leases" shall have the meaning given to such term in
Section 5.1.5(b) hereof;
"Related Party" shall mean ▇▇▇▇▇▇ and any member of Collen's immediate
family, any Affiliate of Seller, any Affiliate of ▇▇▇▇▇, and any employee,
director, officer or shareholder of any of the foregoing.
"Scheduled Contracts" shall have the meaning given to such term in
Section 5.1.11 hereof;
"Seller" shall have the meaning given to such term in the preamble of
this Agreement;
"Wastes" shall have the meaning given to such term in Section 5.1.10
hereof;
Financial terms not defined in this Agreement shall have the meanings
of such terms under generally accepted accounting principles.
ARTICLE 2
PURCHASE PRICE
2.1 Purchase Price. The purchase price for the Assets and Business
of Seller is Nineteen Million Five Hundred Twenty Thousand Dollars
($19,520,000), plus the amount of liabilities to be assumed by Purchaser
hereunder (the "Purchase Price"), subject to any setoff provided in Section
2.3.3 and payable in the manner provided in Section 2.3.
2.2 Purchase Price Allocation. The Purchase Price shall be allocated
in accordance with Section 1060 of the Code, based on the actual results of
operations of Seller through the Closing Date as shown on the Closing Date
Balance Sheet, consistent with the valuation techniques and practices of US
Airgas, Inc. and, if Purchaser elects, on the basis of an independent third
party appraisal made at Purchaser's expense. The parties agree (i) that
they shall allocate to accounts receivable consideration paid and received
equal to the face value of such receivables as of the Closing Date as
reflected on the Closing Date Balance Sheet; (ii) that they shall allocate
to inventory consideration paid and received equal to the lower of cost or
market value as of the Closing Date as reflected on the Closing Date
Balance Sheet; (iii) that they should allocate to fixed assets
consideration paid and received equal to the fair market value of those
assets as of the Closing Date as determined by appraisals prepared by
independent third parties or valued in a manner consistent with past
valuation techniques and practices of the US Airgas, Inc., as Purchaser
shall elect; and (iv), that the parties shall adopt and abide by the
allocations provided for herein in all federal and state tax filings, and
shall take no position inconsistent therewith.
2.3 Payment of Purchase Price.
2.3.1 Assumed Liabilities. At the Closing, Purchaser shall
assume the Assumed Liabilities described in Sections 3.1.
2.3.2 Closing Payment. On the Closing Date, or the first
business day thereafter if the Closing Date is a Saturday, Sunday or legal
holiday, Purchaser shall pay Seller Eighteen Million Five Hundred Thousand
Dollars ($18,500,000) by wire transfer or other immediately-available
funds.
2.3.3 Holdback Payment. No later than 150 days after the
Closing Date, Purchaser shall pay Seller the sum of One Million Dollars
($1,000,000) (the "Holdback") by wire transfer or other immediately
available funds. The Holdback shall be subject to setoff for (i) any
accounts receivable of Seller in existence as of the Closing that are not
collected within 120 days of the Closing (to the extent such uncollected
accounts receivable exceed in amount the Doubtful Accounts Allowance
provided for in Section 5.1.7); (ii) the amount, if any, by which notes
payable to third parties included in the Assumed Liabilities, as reflected
on the Closing Date Balance Sheet, exceed the amount of such notes payable
as reflected on Seller's December 31, 1996 Financial Statements to the
extent such excess is greater than the increase in the value of the fixed
assets included in the Assets, as reflected on the Closing Date Balance
Sheet, above the value of such fixed assets as reflected on Seller's
December 31, 1996 Financial Statements; and (iii) any other Indemnity
Claims (as defined herein) under this Agreement which arise during said 150
day period. Any accounts receivable as to which Purchaser exercises its
right of setoff shall be reassigned to Seller. Purchaser shall give Seller
a written notice specifying any setoffs made or to be made against the
Holdback. If Seller disputes any of such setoffs, it shall so notify
Purchaser prior to that date which is 30 days after its receipt of
Purchaser's Notice. If Seller and Purchaser cannot resolve any of such
disputes within thirty (30) days after the date of Purchaser's receipt of
Seller's notice, Seller shall be free to submit such unresolved disputes to
arbitration as provided in Section 6.2.4 hereof.
ARTICLE 3
ASSUMPTION OF LIABILITIES
3.1 Assumption of Certain Liabilities. As consideration for the
transfer of the Assets and Business to Purchaser, Purchaser agrees to
assume at the Closing: (a) the trade accounts payable and accrued expenses
incurred in the ordinary course of Seller's business (as provided in
Article 4) existing on the Closing Date, excluding any federal or state
income tax liability relating to the operations of Seller prior to the
Closing Date, employee-related liabilities and indebtedness to ▇▇▇▇▇ or any
Related Party; (b) the notes payable to third parties as reflected on
Seller's December 31, 1996 balance sheet together with those entered into
in the ordinary course of business in a manner consistent with past
practice after December 31, 1996 and prior to the Closing Date; and (c) the
obligations of future performance of Seller under the Scheduled Contracts
shown as being assumed by Purchaser, under the Immaterial Contracts, and
under comparable contracts of Seller entered into in the ordinary course of
business after the date hereof and prior to the Closing Date (such
comparable contracts the "Permitted Contracts"). The liabilities described
above are referred to herein as the "Assumed Liabilities."
3.2 Limitation of Purchaser's Liabilities. The parties agree that
Purchaser will not assume or pay any debts, liabilities, or obligations not
expressly described in Section 3.1 and, without limiting the generality of
the foregoing, agree that, anything in Section 3.1 to the contrary
notwithstanding, the Assumed Liabilities shall not include and Purchaser
will not assume or pay any of the following:
(a) any obligations or liabilities to employees of Seller,
including without limitation any obligation or liability under any
collective bargaining agreement, or any pension, profit-sharing or other
employee benefit plan affecting any employee or former employee of Seller;
(b) any Environmental Liabilities;
(c) any contingent liabilities based on Seller's sale or lease
of defective products or equipment, Seller's failure to adequately warn any
purchaser or user of its products and equipment or Seller's breach of any
express or implied warranty made in connection with the sale or lease of
any products or equipment;
(d) any tax liabilities (including penalties and interest) of
Seller or Shareholders (including, without limitation, any sales or use
taxes arising out of the transfer of the Assets to Purchaser, which Seller
shall pay except where payment by the Seller, or reimbursement of Purchaser
by Seller, is prohibited, or payment by Purchaser without reimbursement by
Seller is required by law);
(e) any liabilities or obligations incurred by Seller after the
Closing Date;
(f) any liabilities or obligations incurred by Seller or
Shareholders in connection with this Agreement and the transactions
provided for herein, including without limitation, counsel and accounting
fees;
(g) any liabilities or obligations of Seller under any contract,
lease or other agreement which is not one of the Scheduled Contracts shown
on Schedule 5.1.11 as being assumed by Purchaser; or
(h) any liabilities or obligations of Seller to the extent the
same is (i) not disclosed or reserved against on Seller's December 31, 1996
balance sheet or in this Agreement (or in a schedule attached hereto), or
if such liability or obligation is so disclosed or reserved, the amount by
which such liability or obligation as finally determined exceeds the amount
thereof so disclosed or reserved, or (ii) not incurred in the ordinary
course of business (as provided in Article 4) after December 31, 1996 and
prior to the Closing Date.
3.3 Discharge of Liabilities Not Assumed by Purchaser. Except for
those liabilities set forth in Section 3.1 hereof, Seller agrees to pay or
discharge any and all liabilities of Seller when due.
3.4 Bulk Sales Law. Purchaser hereby waives compliance by Seller
with the provisions of the Bulk Sales Law of any state, if applicable to
the transactions contemplated hereby; provided, however, that Seller agrees
to indemnify Purchaser for claims of creditors of Seller with respect to
liabilities not being assumed by Purchaser pursuant to the express terms of
this Agreement.
3.5 Release of Guarantees. Purchaser agrees to use its best efforts
to cause ▇▇▇▇▇ to be released from all written guarantees of Seller's
obligations. If Purchaser is unable to obtain the release of ▇▇▇▇▇ from
any such guaranty (an "Unreleased Guaranty"), Purchaser hereby agrees to
indemnify and defend ▇▇▇▇▇ and hold it harmless, from and against any and
all damages, claims, deficiencies, losses, liabilities, obligations and
expenses (including reasonable attorneys' fees) of every kind and
description arising from or relating to such Unreleased Guaranty.
ARTICLE 4
CONDUCT OF SELLER'S BUSINESS
4.1 Conduct of Business Prior to Closing. From and after December
31, 1996 and pending the Closing, Seller and Shareholders covenant and
agree that except as set forth in Schedule 4.1 or with the prior written
consent of Purchaser:
(a) Seller's Business has been and will be conducted only in the
ordinary and usual course, including normal commitments for the purchase of
supplies and the sale of goods and services;
(b) no material contract has been or will be entered into by or
on behalf of Seller, other than in the ordinary course of business;
(c) Seller has not made and will not make any bonuses or salary
or wage increases nor any contributions to any profit-sharing or pension
plan;
(d) Seller and Shareholders have used and will use their best
efforts to preserve Seller's business organization intact, and their
commercially reasonable efforts to keep available the services of present
employees and to preserve Seller's reputation and goodwill and the goodwill
of Seller's suppliers, customers, and others having business relations with
Seller;
(e) no reorganization, declaration, setting aside or payment of
any dividend or other distribution in respect of any of Seller's capital
stock, or any direct or indirect redemption, purchase, or other acquisition
of any such stock has been or will be effected by Seller;
(f) Seller has not paid, loaned or advanced and will not pay,
loan or advance, any amounts to any Shareholder or any member of a
Shareholder's family, except salary and expense reimbursement payments made
to ▇▇▇▇▇▇ in the ordinary course of business and except as disclosed in
this Agreement or a schedule attached hereto; provided, however, Seller may
make payments to ▇▇▇▇▇ for Seller's prorated share of corporate insurance
and employee benefit costs and expenses properly attributable to Seller as
of the Closing Date. Seller shall provide details of such payments to
Purchaser prior to Closing;
(g) Seller has not entered into and will not enter into any
agreement or arrangement with any Shareholder or any member of a
Shareholder's family, except as disclosed in this Agreement or a schedule
attached hereto;
(h) Seller has not sold or leased and will not sell or lease any
of its assets or properties, tangible or intangible, except in the ordinary
course of its business;
(i) Seller has not and will not grant a security interest in or
otherwise encumber in any manner any of its assets or properties;
(j) Seller has not incurred and will not incur any indebtedness
for borrowed money except in the ordinary course of business pursuant to a
credit agreement listed in Schedule 5.1.11;
(k) Seller has maintained and will maintain the Assets in good
condition and repair, normal wear and tear excepted, and adequately
insured; and
(l) Other than those described in Schedule 4.1, Seller has not
made and will not make any capital additions in excess of $10,000.Nothing
in this Section 4.1 shall require Seller to reduce indebtedness for
borrowed money owed to third parties other than such reductions as are
required by the instruments evidencing such indebtedness; provided,
however, that any proceeds from the sale of fixed assets in the ordinary
course of business shall be applied to reduce such indebtedness over and
above the normal required reductions referred to above.
4.2 Access and Information. Seller will give to Purchaser and to
Purchaser's officers, employees, counsel, accountants, auditors, and other
independent contractors, representatives and designees full and unlimited
access, during normal business hours throughout the period after the
signing hereof and prior to Closing, to Seller's offices, plants,
properties, documents, contracts, commitments, title reports, surveys, tax
returns, books and records, files and employees, related to Seller or the
Business, will furnish Purchaser with copies of any such documents and will
allow Purchaser (and its said representatives and designees) to inspect the
accounting work papers and other records of Seller's independent auditors
relating to the Business, all in order that Purchaser and its designees may
have full opportunity to make such legal, financial, tax, technical,
accounting and other reviews and investigations of the Assets and the
Business as Purchaser shall desire to make. Purchaser's review and
investigation hereunder shall in no way be deemed to relieve Seller or
Shareholders from any of the representations, warranties and agreements
made herein.
4.3 Compliance with Laws, etc. Seller shall comply with all laws
applicable to it and to the conduct of the Business and Seller and
Shareholders shall cause the Business to be conducted in such a manner that
on the Closing Date the representations and warranties contained in this
Agreement shall be as though such representations and warranties were made
on and as of such date, except as otherwise indicated.
ARTICLE 5
REPRESENTATIONS, WARRANTIES AND AGREEMENTS
5.1 Representations, Warranties and Agreements of Seller and
Shareholders. Seller and Shareholders, with respect to Seller, the Assets
and the Business, jointly and severally represent, warrant and agree, as of
the date hereof, that:
5.1.1 Organization and Good Standing. Seller is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Nevada, with full corporate power and authority to
conduct its business as such business is now being conducted, and has all
requisite corporate power and authority to execute and perform this
Agreement and the transactions contemplated hereby. Seller is qualified to
do business in all states where the failure to be so qualified would have a
material adverse effect on the Business or the Assets.
5.1.2 No Violation; Consents. Seller and Shareholders have
taken or will take prior to Closing all necessary or appropriate action to
enable them to enter into, execute, deliver and perform this Agreement and
the transactions contemplated hereby. Subject to Seller's obtaining the
third-party consents described in Schedule 5.1.2, the execution and the
performance of this Agreement, and the consummation of the transactions
contemplated hereby, will not: (i) violate any provision of the Articles
or Certificate of Incorporation or By-Laws of Seller or ▇▇▇▇▇; (ii) violate
or result in the breach of any term or provision of or constitute a default
or accelerate maturities under any loan or any other similar agreement,
instrument, indenture, mortgage, deed of trust, or other restriction to
which Seller or ▇▇▇▇▇ is a party or by which any of the properties of
Seller is bound; (iii) violate or result in a breach of any term or
provision of or constitute a default or accelerate the terms of any right
of first refusal agreement or any other similar agreement or other
restriction to which Seller or ▇▇▇▇▇ is a party or by which any of the
Assets is bound; or (iv) cause or permit any third party to cause any
material contract of Seller to be cancelled or otherwise modified.
5.1.3 Validity of Agreement. This Agreement and the
transactions contemplated hereby have been, or shall have been prior to
Closing, duly authorized and approved by the Board of Directors and
Shareholders of Seller and the Board of Directors and shareholders of
▇▇▇▇▇, and this Agreement has been duly executed and delivered by Seller
and Shareholders and is the legal, valid and binding obligation,
enforceable in accordance with its terms, of Seller and Shareholders,
except as the enforcement of Seller's and Shareholders' post-Closing
obligations may be limited by bankruptcy, insolvency and general principles
of equity. Except for the Board and shareholder approvals described above,
no other proceedings are necessary to authorize this Agreement and the
transactions contemplated hereby, or the performance or compliance by
Seller and Shareholders with any of the terms, provisions or conditions
hereof.
5.1.4 Capitalization. Seller's authorized capital stock
consists solely of 1,000,000 shares of common stock, of which 160,000
shares of common stock are issued and outstanding and 15,400 shares of
preferred stock, of which 14,859 shares of preferred stock are issued and
outstanding. The record and beneficial owners of all of the outstanding
shares of Seller, and their shareholdings are as follows:
Shares
Name Shares of Common Stock of Preferred Stock
▇▇▇▇▇ 136,000 14,859
▇▇▇▇▇▇ 24,000 -0-
All of Seller's issued and outstanding shares have been validly issued and
are fully paid and non-assessable. Except for the outstanding shares
described above, no person or entity has, or has any right or interest in,
or claim to or by reason of, any equity securities of Seller, and there are
no outstanding options, warrants, agreements, subscriptions or rights of
any kind obligating Seller to issue any equity securities or any securities
or debt obligations convertible into or exchangeable for any equity
securities of Seller. Schedule 5.1.4 contains true and correct copies of
Seller's currently effective Articles of Incorporation and By-Laws, each as
amended to date. Seller does not own or control directly or indirectly,
any stock or other securities of, nor in any manner control, any
corporation, association, or business organization.
5.1.5 Assets. (a) Seller has good and marketable title to
all the Assets. All of the machinery, equipment, vehicles and other
tangible personal property owned or used in the Business are listed in
Schedule 5.1.5(A) with an indication of whether each is owned by Seller or
leased from a third party. All such personal property is in good working
order and operating condition and is free and clear of all liens, security
interests, mortgages, deeds of trust, pledges, conditional sales contracts,
charges, leases, claims, administrative orders or decrees or encumbrances
whatsoever (except as disclosed in Schedule 5.1.5(B)). All the Assets are
in compliance with all applicable laws and governmental regulations. All
of the Assets are in the possession of Seller or its customers and, if in
the possession of customers, are held pursuant to binding agreements
obligating the customer to return or reimburse Seller for such property.
All leases covering personal property not owned by Seller are listed on
Schedule 5.1.11 (the "Personal Property Leases").
(b) All real property owned by, leased to or otherwise occupied
by Seller for use in the conduct of the Business (the "Real Property") is
listed on Schedule 5.1.5(C) with an indication of whether each is owned by
Seller or leased from a third party. The present use of each parcel of
Real Property is in compliance with all applicable zoning ordinances (or
variances therefrom) and other applicable government regulations, and there
does not exist any notice of any uncorrected violation of any housing,
building, safety, fire or other ordinance or applicable governmental
regulation. Except for assessments not yet due and payable, Seller is not
liable for any unpaid assessments for any public improvements, whether as
owner or lessee of any Real Property, nor has Seller received any notice
from any appropriate governmental authority of intention to make any public
improvement for which Seller may be assessed directly or by reason of a
leasehold interest or otherwise. The Real Property owned by Seller is free
and clear of all liens and free and clear of all easements, restrictions,
building encroachments or other encumbrances and other matters disclosed by
an accurate survey of the premises except as disclosed on Schedule
5.1.5(C), which would have a material adverse effect on the value of any of
such properties or the use of any such property in the manner that it is
currently being used. All leases for any of the Real Property subject to a
lease (the "Real Property Leases") are listed in Schedule 5.1.11.
5.1.6 Inventories. Except as disclosed on Schedule 5.1.6,
all inventories of Seller are useable in the ordinary course, have been
recorded in amounts not in excess of the lower of cost paid by Seller for
such items or the market value thereof, and are good and merchantable and
readily saleable in the ordinary course of Seller's business.
5.1.7 Accounts Receivable. All of Seller's accounts
receivable existing as of the Closing Date shall have arisen in the
ordinary course of business and, subject to an allowance for doubtful
accounts of $33,000 (the "Doubtful Accounts Allowance"), shall be good and
collectable within 120 days of the Closing Date, and such accounts
receivable are not subject to any counterclaims or setoffs. During the
120-day period following the Closing Date, Purchaser shall use commercially
reasonable efforts (but without resort to litigation) to collect all such
accounts receivable. Purchaser agrees to cooperate in the collection of
accounts receivable reassigned to Seller hereunder.
5.1.8 Taxes. Within the times and in the manner prescribed
by law, Seller has filed all federal, state and local tax returns and
reports required by law to have been filed by it, and has paid all taxes,
assessments, and penalties due and payable by it. There are no federal,
state or local tax liens (other than a lien for property taxes not
delinquent) against any of the Assets, nor are there any overdue federal,
state or local taxes with respect to the Business or any of the Assets. At
Closing, all taxes and other assessments and levies which Seller is
required by law to withhold or collect, shall have been duly withheld and
collected, and if due, shall be paid over to or deposited with the proper
governmental authorities. Seller has furnished to Purchaser true and
correct copies of all real estate and personal property tax bills and tax
returns of Seller for the most recent full fiscal year and period for which
Seller has filed such tax returns or received such tax bills. Seller is
not presently under nor has it received any notice of, any contemplated
investigation or audit by the Internal Revenue Service or any state or
local government or governmental agency concerning Seller's taxes.
5.1.9 Litigation. Except as disclosed in Schedule 5.1.9,
neither Seller, any employees or officers of Seller nor any Shareholder is
a party to any pending or, to the best of Seller's knowledge, threatened
litigation or administrative investigation or proceeding relating to the
Assets or Business, nor, to the best of Seller's knowledge , is there any
reasonable basis therefor. To the best of Seller's knowledge no complaints
or charges of unlawful conduct have been made against Seller, any employees
or officers of Seller, or any Shareholder that relate in any way to the
Assets or Business. Purchaser is not assuming any liability with respect
to any pending or threatened litigation or administrative investigation or
proceeding or with respect to any such complaints or charges of unlawful
conduct.
5.1.10 Compliance with Laws; Environmental. To the best of
Seller's knowledge, the Assets and Business are in compliance in all
material respects with all Legal Requirements. There is no outstanding
notice of any uncorrected violation of any such Legal Requirements. All
Real Property, and the use and occupancy thereof, are in compliance with
all Legal Requirements and all applicable leases and insurance
requirements. The Real Property has not been used for the generation,
manufacture, storage or disposal of, and there has not been transported to
or from the Real Property, any Hazardous Substances or Wastes (as
those terms are hereinafter defined); there are no Hazardous Substances or
Wastes present on the Real Property; there has been no use of the Real
Property that may, under any federal, state or local law or regulation,
require any closure or cessation of the use of the Real Property or impose
upon Seller, its successors or assigns any monetary obligations; neither
Seller nor any Shareholder has been identified by any governmental agency
or individual in any pending or threatened action, litigation, proceeding
or investigation as a responsible party or potentially responsible party
for any liability for disposal or releases of any Hazardous Substances or
Wastes; no lien or superlien has been recorded, asserted or threatened
against the Real Property for any liability in connection with any
environmental contamination; the Real Property has not been listed on
either the National Priorities List, as defined in CERCLA, or any state
listing of hazardous sites; and the Real Property is in compliance with all
Environmental Laws. No underground tanks currently or formerly used for
the storage of any gas or petroleum products are present at the Real
Property and if any such tanks previously existed and were removed, they
were removed in accordance with all Legal Requirements. For the purposes
hereof, "Hazardous Substances" shall mean any flammables, explosives,
radioactive materials, asbestos, ureaformaldehyde, hazardous wastes, toxic
substances or any other elements or compounds designated as a "hazardous
substance", "pollutant" or "contaminant" in the Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C. Section 9601
et seq., or in the Resource Conservation and Recovery Act, 42 U.S.C.
Section 6991 et seq., or any other applicable federal, state or local law
or regulation; and "Wastes" shall mean any hazardous wastes, residual
wastes, solid wastes or other wastes as those terms are defined in the
applicable federal, state or local laws or regulations.
5.1.11 Contracts. Schedule 5.1.11 is a complete list of each
material contract, agreement, lease, mortgage, note, written purchase
order, or any other obligation or commitment of Seller or of any
Shareholder pertaining to Seller, the Assets or Business which, except in
the case of leases, mortgages, or notes, meets the following criteria (the
"Contract Delivery Criteria"):
(a) is a requirements contract with a vendor; or
(b) has a remaining noncancellable term of one (1) year or more
and involves the purchase or sale of goods or services the value of which
aggregates or is reasonably expected to aggregate Seventy-Five Thousand
Dollars ($75,000) or more per year.
The contracts, agreements, leases, mortgages, notes, written purchase
orders and other obligations or commitments listed on Schedule 5.1.11,
together with those that would be listed but for their failure to meet the
criteria set forth in (a) or (b) above (such unlisted contracts
hereinafter the "Immaterial Contracts") are referred to herein as the
"Scheduled Contracts." Schedule 5.1.11 indicates as to each Scheduled
Contract whether or not such Scheduled Contract is being assumed by
Purchaser hereunder. True and correct copies of each of the Scheduled
Contracts and Immaterial Contracts have been made available for inspection
by Purchaser and true and correct copies of each of the Permitted Contracts
will be made available for inspection by Purchaser prior to the Closing.
Each of the Scheduled Contracts and Immaterial Contracts contains and each
of the Permitted Contracts will contain the entire agreement of the parties
thereto, with respect to the subject matter thereof, is, or, in the case of
Permitted Contracts, will be, in full force and effect, is, or, in the case
of Permitted Contracts, will be, valid and enforceable in accordance with
its terms, is, or, in the case of Permitted Contracts, will be, adequate to
accomplish the purposes for which it is intended and contains, or, in the
case of Permitted Contracts, will contain, only terms normal and reasonable
for the conduct of the Business. Seller is not in default under any
Scheduled Contract which is being assumed by Purchaser or under any
Immaterial Contract which is being assumed by Purchaser nor, to the best of
Seller's knowledge, is any other party in default under any such Scheduled
Contract or Immaterial Contract nor has any event occurred which, after the
giving of notice or the passage of time or both, would constitute a default
under any such Scheduled Contract or Immaterial Contract. Except as noted
on Schedule 5.1.11, all of the Scheduled Contracts shown as being assigned
to Purchaser, all of the Immaterial Contracts, and all of the Permitted
Contracts to be assigned to Purchaser are or will be assignable to
Purchaser without the consent or approval of other parties or, if such
approval is required Seller will obtain such approval prior to Closing
unless Schedule 5.1.11 states that the assignment of such contract is not
material to the continued operation of the Business. As of the Closing
Date, Seller will not be in default under any of the Scheduled Contracts,
any of the Immaterial Contracts, or any of the Permitted Contracts.
5.1.12 Employee Benefit Plans. Except as described in
Schedule 5.1.12, Seller has no bonus, pension, profit sharing, or
retirement income, stock purchase, stock option, hospitalization insurance
or similar agreements, plans or practices, formal or informal, covering any
of the employees employed in the Business, or under which Seller has any
present or future obligation or liability or under which any current or
former employee of Seller has any present or future rights to benefits
("Employee Plans"). With respect to each Employee Plan which is an
employee pension benefit plan, as defined in Section 3.2 of ERISA, and is
intended to be qualified within the meaning of Section 401(a) of the Code
(a "Pension Plan"), a copy of the latest available summary plan
description, determination letter, and Form 5500 for the most recent plan
year have been made available to Purchaser. Each Pension Plan has been
determined by the Internal Revenue Service to be qualified. Each Employee
Plan has been operated and administered in accordance with the requirements
of ERISA and the Code. No Employee Plan or any trustee or administrator
thereof has engaged in a "prohibited transaction" (as defined in
Section 406 of ERISA or in Section 4975 of the Code) which would subject
Seller, any Employee Plan, any trust created thereunder, any trustee or
administrator thereof, or any party dealing with any Employee Plan to the
liability set forth in Section 409(a) of ERISA or to the tax or penalty on
prohibited transactions imposed by Section 502 of ERISA or Section 4975 of
the Code. Seller is not and has never been a party to a Multi-Employer
Plan and has no current or due "withdrawal liability" with respect to any
such Multi-Employer Plan. Purchaser is not assuming any liability of
Seller to any of Seller's employees or by reason of any Employee Plans.
Seller is not a party to any collective bargaining agreements or other
labor union or similar agreements, and Seller is not the subject of or
threatened by any strike or other labor disturbance by any group of
employees, and no attempt or plan to organize Seller's employees is
threatened or contemplated. Except as disclosed in Schedule 5.1.9, there
are no claims, nor, to the best knowledge of Seller or Shareholders, has
any event occurred which could be the basis for any claim under workmen's
compensation, occupational safety and health, ERISA or similar laws and
regulations.
5.1.13 Customers and Suppliers. Seller has furnished to
Purchaser a complete list of all of Seller's customers with whom Seller has
done business within the past twelve months. Except as listed on Schedule
5.1.13(a), none of Seller's customers accounted for more than 5% of
Seller's revenues during such period. Except as listed on Schedule
5.1.13(a), no customer or supplier of Seller that during the 12-month
period prior to the date hereof accounted for more than $75,000 of gross
revenues to Seller (in the case of customer) or $50,000 in gross payments
by Seller (in the case of a supplier), has indicated that it intends to
terminate or modify its relationship with Seller and Seller agrees to
immediately notify Purchaser of any change or prospective change in any
such relationship occurring prior to or after the Closing. Except as
listed on Schedule 5.1.13(b), Seller has not engaged in any forward selling
or granted any unusual sales or terms of sale to any customer. There are
no customer prepayments or deposits, except to the extent disclosed in
Schedule 5.1.13(b) hereto.
5.1.14 Financial Information. Attached as Schedule 5.1.14 are
balance sheets and related statements of income, changes in stockholders'
equity, and cash flow of Seller for the fiscal years ending December 31,
1996, 1995 and 1994 (the "Financial Statements"). The Financial
Statements have been prepared in accordance with generally accepted
accounting principles, consistently applied, are true and correct in all
material respects, contain no untrue statements of a material fact, do not
omit any material fact necessary in order to make such Financial Statements
not misleading, and are a true and accurate reflection of the operations of
Seller for the periods described therein in accordance with generally
accepted accounting principles consistently applied. Since December 31,
1996, there has not been, and as of the Closing Date there will not have
been, any material adverse change in the Assets, the Business or Seller's
earnings, financial or other condition, or business prospects of Seller
(whether or not in the ordinary course of business), nor has there been any
damage, destruction or loss adversely affecting the Assets or Business; nor
has there been any other event or condition of any nature which reasonably
could be expected to have a material and adverse effect on the Assets or
Business.
5.1.15 Absence of Undisclosed Liabilities. There are no
liabilities of Seller which have not been disclosed in the Financial
Statements or this Agreement or the schedules attached hereto which could
reasonably be expected to materially and adversely affect the Assets or
Business. There is no basis for the assertion against Seller of any
liability of any nature or in any amount which is not fully reflected or
reserved against in the Financial Statements, except liabilities incurred
in the ordinary course of business since the date of the most recent
Financial Statements.
5.1.16 Books of Account, Returns and Reports. Seller's books
of account reflect all material items of income and expense, and all of
Seller's material assets, liabilities and accruals.
5.1.17 Transactions with Affiliates. Except as disclosed in
this Agreement or on Schedule 5.1.17 attached hereto, neither Seller nor
any Shareholder, officer or director of Seller, nor any member of the
immediate family of ▇▇▇▇▇▇ or any of Seller's officers or directors has a
material direct or indirect interest in any person, firm, corporation or
entity which has a material business relationship (as creditor, lessor, or
otherwise) with Seller.
5.1.18 Franchises, Permits and Licenses. Schedule 5.1.18
contains a complete and correct list or summary description of all material
franchises, permits, licenses, approvals and other authorizations from
federal, state and local governmental authorities held by Seller in
connection with the conduct of the Business or the Real Property as
presently conducted. No claim is pending or threatened to revoke any of
said franchises, permits, licenses, approvals, and other authorizations or
to declare them invalid in any respect. There are no additional material
franchises, permits, licenses, approvals or authorizations necessary for
the conduct of the Business or the Real Property as presently conducted.
5.1.19 Employees. Schedule 5.1.19 is a complete list of all
the employees of Seller employed in the business and, for each such
employee, his or her current title, exempt or non-exempt status, salary or
wage, date of hire, and bonuses and salary increases within the past year.
There are no employment contracts with any of the employees that require
Seller to employ an employee for a fixed term or restrict the right of
Seller to terminate such employee. Except as listed on Schedule 5.1.19,
to the best of Seller's knowledge, no former employee of Seller who was
employed by Seller at any time within the 12-month period prior to the date
hereof is currently engaged, directly or indirectly, in competition with
Seller.
5.1.20 Insurance. Seller has in full force and effect the
insurance coverages listed in Schedule 5.1.20. Said insurance is in
compliance with all the leases and contracts of Seller and will adequately
insure the Assets and Business of Seller through the Closing. Except as
disclosed in Schedule 5.1.20, there are no outstanding written requirements
or recommendations by any insurer or underwriter with respect to the
Assets, the Business or the Real Property which require or recommend
changes in the conduct of the Business or work to be performed with respect
to any of the Assets or the Real Property.
5.1.21 Patents. Seller has no patents, trademarks, trade
names, copyrights or applications therefor, nor any licenses, assignments
or agreements with others relating thereto, except as set forth in Schedule
5.1.21. To the best of Seller's knowledge, except as disclosed on Schedule
5.1.21, there is no reasonable basis for any third party claim that Seller
is infringing on any patent, trademark, trade name or copyright in the
conduct of the Business as presently conducted. To the best of Seller's
knowledge, Seller has the full right to use its corporate name and all
trade names currently in use in all places where it now does business and
to convey such right to Purchaser as part of the Assets.
5.1.22 Conditions Affecting Seller. There are no conditions
existing with respect to Seller's markets, products, facilities, personnel
or raw material supplies which might reasonably be expected to materially
adversely affect the Assets, the Business or business prospects of Seller,
other than such conditions as may affect the industry in which Seller
participates as a whole.
5.1.23 Disclosure. No representation or warranty by Seller or
Shareholders herein or in any certificate or schedule furnished or to be
furnished by Seller or Shareholders to Purchaser pursuant hereto contains
or will contain any untrue statement of a material fact, or omits or will
omit to state a material fact necessary to make the statements contained
herein or therein not misleading.
5.1.24 Knowledge. For purposes of this Section 5.1, the
phrase "to the best of Seller's knowledge," and phrases of similar import
shall mean all matters that are known or in the exercise of reasonable
business judgement should be known, by ▇▇▇▇▇▇, the management of Seller,
the management of ▇▇▇▇▇ or any one or more of any of the foregoing and the
knowledge of each shall be imputed to the others.
5.2 Representations, Warranties and Agreements of Purchaser.
Purchaser hereby represents, warrants and agrees, as of the date hereof,
that:
5.2.1 Organization and Good Standing. Purchaser is a
corporation duly organized, validly existing and in good standing under the
laws of Delaware, with full corporate power and authority to conduct its
business as such business is now being conducted, and has requisite
corporate power and authority to execute and perform this Agreement and the
transactions contemplated hereby.
5.2.2 No Violation; No Consents. Purchaser has taken or will
take prior to Closing all necessary or appropriate action to enable
Purchaser to enter into, execute, deliver and perform this Agreement and
the transactions contemplated hereby. The execution and the performance of
this Agreement, and the consummation of the transactions contemplated
hereby, will not: (i) violate any provision of the Articles or Certificate
of Incorporation or By-Laws of Purchaser; (ii) violate or result in the
breach of any term or provision of or constitute a default or accelerate
maturities under any loan or any other similar agreement, instrument,
indenture, mortgage, deed of trust, or other restriction to which Purchaser
is a party or by which any of the properties of Purchaser is bound; (iii)
violate or result in a breach of any term or provision of or constitute a
default or accelerate the term of any right of first refusal agreement or
any other similar agreement or other restriction to which Purchaser is a
party; or (iv) cause or permit any third party to cause any material
contract of Purchaser to be cancelled or otherwise modified.
5.2.3 Validity of Agreement. This Agreement and the
transactions contemplated hereby have been, or shall have been prior to
Closing, duly authorized and approved by the Board of Directors of
Purchaser, and this Agreement has been duly executed and delivered by
Purchaser and is the legal, valid and binding obligation, enforceable in
accordance with its terms, of Purchaser, except as the enforcement of
Purchaser's post-Closing obligations may be limited by bankruptcy,
insolvency and general principles of equity. Except for the Board approval
described above, no other proceedings are necessary to authorize this
Agreement and the transactions contemplated hereby, or the performance or
compliance by Purchaser with any of the terms, provisions or conditions
hereof.
ARTICLE 6
SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION
6.1 Survival of Representations and Warranties. The representations
and warranties of the parties contained in this Agreement or in any
schedule or exhibit or other writing delivered pursuant to the provisions
of this Agreement or in connection with the transactions contemplated
hereby, shall survive the Closing for a period of fifteen (15) months
after the Closing Date except for representations and warranties with
respect to taxes and title, which shall survive for the applicable statute
of limitations, and representations and warranties with respect to
environmental matters, which shall survive indefinitely. Liability for
intentional misrepresentation shall survive without regard to the foregoing
limitation.
6.2 Indemnification. The parties agree to indemnify each other as
follows:
6.2.1 Seller's and Shareholders' Indemnity. Subject to the
limitation set forth in Section 6.2.6, Seller and Shareholders, jointly and
severally, agree to indemnify and defend Purchaser, and its successors and
assigns, and to hold them harmless from and against any and all damages,
claims, deficiencies, losses, liabilities, obligations, and expenses
(including reasonable attorneys' fees) of every kind and description
arising from or relating to: (i) the operation of the Business prior to the
Closing; (ii) any misrepresentation or breach of warranty hereunder by
Seller or Shareholders; (iii) any nonfulfillment of any of Seller's or
Shareholders' obligations under this Agreement; (iv) any federal, state or
local taxes which may become payable after the Closing Date to the extent
such payment is attributable to periods prior to the Closing Date; or (v)
any environmental remediation required at the Real Property arising out of
any pre-Closing refining, processing, generating, storing, recycling,
transporting, disposing of or releasing into the environment of any
Hazardous Substances or Wastes ("Indemnity Claims").
6.2.2 Purchaser's Indemnity. Purchaser agrees to indemnify
and defend Seller, and its successors and assigns, and Shareholders, and to
hold them harmless from and against any and all damages, claims,
deficiencies, losses, liabilities, obligations, and expenses (including
reasonable attorneys' fees) of every kind and description arising from or
relating to: the operation of the Business by Purchaser subsequent to the
Closing; any misrepresentation or breach of warranty hereunder by
Purchaser; other nonfulfillment of any of Purchaser's obligations under
this Agreement; or any environmental remediation required at the Real
Property arising out of any post-Closing refining, processing, generating,
storing, recycling, transportation, disposing of or releasing into the
environment of any Hazardous Substances or Wastes by Purchaser or its
agents ("Indemnity Claims").
6.2.3 Notice and Defense of Indemnity Claims. A party hereto
agreeing to be responsible for or to indemnify against any matter pursuant
to this Agreement is referred to herein as the "Indemnifying Party" and a
party entitled to indemnification hereunder is referred to as the
"Indemnified Party." An Indemnified Party under this Agreement shall give
written notice to the Indemnifying Party hereunder with respect to any
assertion by the Indemnified Party or by a third party of any liability
which the Indemnified Party has reason to believe might give rise to an
Indemnity Claim under this Agreement. Such notice shall set forth in
reasonable detail the nature of such action or claim, and include copies of
any written complaint, summons, correspondence or other communication from
the party asserting the claim or initiating the action. As to any such
Indemnity Claim which involves a third party, the Indemnifying Party shall
assume and thereafter control the defense of such Indemnity Claim. The
Indemnified Party shall be entitled, together with the Indemnifying Party,
to participate in the defense, compromise or settlement of any such matter
through the Indemnified Party's own attorneys and at its own expense, but
the Indemnifying Party shall have control thereof. The Indemnified Party
shall provide such cooperation and such access to its books, records and
properties as the Indemnifying Party shall reasonably request with respect
to such matters and the parties hereto agree to render each other such
assistance as they may reasonably require of each other in order to ensure
the proper and adequate defense thereof. An Indemnifying Party shall not
make any settlement of any Indemnity Claims, other than Indemnity Claims
strictly for monetary damages as to which the Indemnifying Party agrees to
be responsible, without the written consent of the Indemnified Party, which
consent shall not be unreasonably withheld. Without limiting the
generality of the foregoing, it shall not be deemed unreasonable to
withhold consent to a settlement involving injunctive or other equitable
relief against the Indemnified Party or its assets, employees or business.
6.2.4 Manner of Indemnification. Any Indemnity Claims that
the parties are unable to amicably resolve may be submitted to arbitration
by any party in accordance with this Section 6.2.4. The arbitration shall
be conducted by a single arbitrator in San Antonio, Texas and, except as
otherwise expressly provided herein, shall be conducted in accordance with
the rules of the American Arbitration Association. Within thirty (30) days
of the hearing, the arbitrator shall render a decision concerning all
contested issues considered during the arbitration and the arbitrator shall
notify the parties in writing of their decision, setting forth the dollar
amount, if any, awarded. The arbitrator's decision shall be final and
binding on the parties, and notice of award, if any, shall be given to the
parties not later than thirty (30) days after the date set for the hearing.
In the event that there shall be more than one dispute to be arbitrated,
the parties agree that all pending disputes shall be consolidated to the
extent feasible. In the event of an arbitration decision in favor of the
Indemnified Party, the amount of the dollar award, if any, plus all
reasonable attorneys' fees of the prevailing party, shall be paid in cash
by the Indemnifying Party to the Indemnified Party, within ten (10) days
following the date of such award. In the event that payment is not made
within the time period provided herein, the prevailing party shall have the
right to commence an action, at law or in equity, in any state or federal
court in the State of Texas to have the decision of the arbitrator
enforced. In the event such an action is filed, the costs of such action
(including reasonable attorneys' fees) shall be borne by the party against
whom such performance is sought.
6.2.5 Brokers. Each party hereto agrees to indemnify the
other and agrees to hold the other harmless against any claim or claims for
brokerage or other commission relative to the transactions contemplated
herein due to any acts or things done by its employees, agents or
consultants.
6.2.6 Limitation. No Indemnified Party under Section 6.2.1
shall assert an Indemnity Claim based on the breach of representation or
warranty by Seller or either Shareholder unless and until the aggregate
amount of such Indemnity Claims exceeds $200,000 whereupon the Indemnified
Party shall be entitled to full indemnification without deduction. The
threshold provided for in the preceding sentence shall not apply to claims
based on Seller's accounts receivable or to Indemnity Claims brought under
Section 6.2.1(iv). The maximum liability of Seller and Shareholders herein
shall be $22,600,000.
6.3 Purchaser's Right of Setoff. In the event of (i) an undisputed
Indemnity Claim against Seller and/or Shareholders, or (ii) an Indemnity
Claim against Seller and/or Shareholders after judgment or award or in any
way adverse to Seller and/or Shareholders as provided above, which remains
uncured or unsettled for 60 days or more after notice of the Indemnity
Claim is given by Purchaser to Seller and/or Shareholders, Purchaser and/or
its Affiliates shall have the right, but not the obligation, to set off the
amount of the Indemnity Claim against any then remaining obligation of
Purchaser and/or its Affiliates to Seller and/or either of the
Shareholders, regardless of the source of such obligation.
ARTICLE 7
CONDITIONS PRECEDENT TO THE CLOSING
7.1 Conditions To Purchaser's Performance. Purchaser's obligations
to purchase and pay the Purchase Price for the Assets are subject to the
following express conditions:
7.1.1 Representations and Warranties True. The
representations and warranties of Seller and Shareholders contained in this
Agreement shall be true and correct in all material respects (should such
representations and warranties prove not to be true and correct, the phrase
"in all material respects" shall not limit Purchaser's right to
indemnification under Article 6 hereof) on and as of the Closing Date (as
if made on the Closing Date), and Seller shall have delivered to Purchaser
a certificate to such effect, dated as of the Closing Date and signed by
its President and Shareholders, which certificate shall be in form and
substance reasonably satisfactory to Purchaser.
7.1.2 Covenants Performed. All of the covenants of Seller
and Shareholders set forth herein and which were to be performed at or
prior to the Closing Date shall have been duly performed in all material
respects (should such covenants prove not to have been duly performed, the
phrase "in all material respects" shall not limit Purchaser's rights to
indemnification under Article 6 hereof), and Seller and Shareholders shall
certify to such effect in the certificate provided for in Section 7.1.1
hereof.
7.1.3 Litigation. There shall not have been instituted or
threatened, on or before the Closing Date, any action or proceeding before
any court or governmental agency or body or by a public authority with
respect to the acquisition of the Assets or Business as contemplated
hereby.
7.1.4 Other Agreements. All agreements between Purchaser and
any other party hereto shall have been fully executed and delivered.
Seller shall have executed and delivered the General Assignment and ▇▇▇▇ of
Sale, the Deeds, and other instruments provided for herein, and such other
documents, reasonably satisfactory to Purchaser's counsel, as shall be
necessary or appropriate to the transfer of the Assets and Business to
Purchaser.
7.1.5 Consents. Seller shall have obtained all required
consents or approvals in writing of all parties whose consent or approval
is necessary for the assignment of Scheduled Contracts and Permitted
Contracts to be assigned to Purchaser hereunder as provided in
Section 5.1.11, and for the assignment of the Personal Property Leases and
the Real Property Leases.
7.1.6 Opinion of Counsel. Counsel for Seller shall have
delivered to Purchaser a favorable opinion, dated as of the Closing Date
and in form and substance reasonably satisfactory to Purchaser, with
respect to the following matters:
(a) Seller is a corporation duly incorporated, validly existing,
and in good standing under the laws of the State of Nevada; and is duly
qualified to do business and is in good standing in every jurisdiction
where the conduct of its business requires such qualification.
(b) Seller has full corporate power and authority to enter into
this Agreement and to perform all of Seller's covenants and agreements
herein set forth. ▇▇▇▇▇ has the full legal right, power and authority to
enter into and perform all of the covenants and agreements provided for
herein.
(c) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will: contravene any
provision of Seller's Articles of Incorporation or By-Laws; violate, be in
conflict with, cause a default under, or otherwise impair the good
standing, validity, or effectiveness of any agreement, contract, indenture,
note, mortgage, lease, or other obligation or instrument to which Seller or
▇▇▇▇▇ is a party or to which any of the Assets is subject and which is
listed on any exhibit on any documents filed by ▇▇▇▇▇ with the Securities
and Exchange Commission; or violate any provision of law, rule, or
regulation to which Seller or the Assets or Business is subject.
(d) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of the Seller and
▇▇▇▇▇; and the agreements entered into pursuant to this Agreement are the
valid and binding obligations of Seller and ▇▇▇▇▇, enforceable in
accordance with their terms (subject, as to enforcement of remedies, to
applicable bankruptcy, insolvency and other laws affecting the rights of
creditors generally).
7.1.7 Audits and Inspections. Seller shall have permitted
Purchaser to make such audits and inspections as Purchaser deems reasonably
appropriate as provided for in Article 4 hereof and the results of such
audits and inspections and any other due diligence conducted by Purchaser
shall have been satisfactory to Purchaser in the exercise of its reasonable
discretion. Such audits and inspections by Purchaser shall not affect any
of the representations and warranties made by Seller and Shareholders in
this Agreement and shall not, under any circumstances constitute a waiver
of Purchaser's indemnification rights under Article 6 hereof, or otherwise
relieve Seller or Shareholders of any liability thereunder.
7.1.8 Environmental Studies. Purchaser, at its sole cost and
expense, shall have obtained Phase I environmental reports which to the
satisfaction of Purchaser do not contain any results that would raise a
substantial likelihood of an Indemnity Claim by Purchaser based on such
matters disclosed in the reports.
7.1.9 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act. All
applicable waiting periods imposed under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1978, as amended, shall have expired and neither party
shall have received any formal protest from the Department of Justice of
the Federal Trade Commission with respect to the transactions contemplated
by this Agreement.
7.1.10 Purchaser Board Approval. This Agreement and the
transactions provided for herein shall have been approved by the Board of
Directors of Purchaser, US Airgas, Inc., Airgas Carbonic Industries, Inc.
and Airgas, Inc.
7.2 Conditions to Seller's Performance. Seller's obligations
pursuant to this Agreement are subject to the following conditions:
7.2.1 Representations and Warranties True. The
representations and warranties of Purchaser contained in this Agreement
shall be true and correct in all material respects (should such
representations and warranties prove not to be true and correct, the phrase
"in all material respects" shall not limit Purchaser's right to
indemnification) on and as of the Closing Date (as if made on the Closing
Date), and Purchaser shall have delivered to Seller a certificate to such
effect, dated as of the date of Closing and signed by its President or a
Vice President, which certificate shall be in form and substance reasonably
satisfactory to Seller.
7.2.2 Covenants Performed. All of the covenants of Purchaser
set forth herein and which were to be performed at or prior to the Closing
Date shall have been duly performed in all material respects (should such
covenants, prove not to have been performed, the phrase "in all material
respects" shall not limit Seller's and Shareholders' rights to
indemnification under Article 6 hereof), and Purchaser shall certify to
such effect in the certificate provided for in Section 7.2.1 hereof.
7.2.3 Litigation. There shall not have been instituted or
threatened, on or before the Closing Date, any action or proceeding before
any court or governmental agency or body or by a public authority with
respect to the acquisition of the Assets or Business as contemplated
hereby.
7.2.4 Other Agreements. All agreements described in Article
1 between Purchaser and any other party hereto shall have been fully
executed and delivered.
7.2.5 Environmental Studies. Purchaser shall have delivered
to Seller any Phase I environmental reports obtained by Purchaser prior to
the Closing Date. Seller need not proceed to Closing if the results of any
such Phase I study raise a substantial likelihood of an Indemnity Claim by
Purchaser based on matters disclosed in such reports.
7.2.6 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act. All
applicable waiting periods imposed under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1978, as amended, shall have expired and neither party
shall have received any formal protest from the Department of Justice or
the Federal Trade Commission with respect to the transactions contemplated
by this Agreement.
7.2.7 Seller and ▇▇▇▇▇ Board and Shareholder Approval. This
Agreement and the transactions provided for herein shall, to the extent
required by law, have been approved by the Board of Directors and
Shareholders of Seller and by the Board of Directors and shareholders of
▇▇▇▇▇.
7.2.8 Opinion of Counsel. Counsel for Purchaser shall have
delivered to Seller a favorable opinion, dated as of the Closing Date, in
form and substance reasonably satisfactory to Seller.
ARTICLE 8
THE CLOSING
8.1 Closing Date. Subject to the terms and conditions herein
contained, the parties agree to close this transaction (the "Closing") at
the offices of McAfee & ▇▇▇▇ in Oklahoma City, Oklahoma, on August 28,
1997 or on such other date and at such other place as the parties may agree
upon in writing, with all transactions being deemed effective as of 12:01
a.m. on September 1, 1997 (the "Closing Date"). Seller and Purchaser may
agree to extend the Closing for a reasonable period of time not to exceed
thirty (30) days, such agreement not to be unreasonably withheld.
8.2 Seller's Deliveries at Closing. Seller shall deliver or cause to
be delivered to Purchaser at the Closing the following:
8.2.1 Duly executed copies of the General Assignment and ▇▇▇▇
of Sale and the Deeds, together with appropriate certificates of title or
other evidences of Seller's ownership of the Assets, and duly executed
copies of all instruments and agreements among or between Purchaser, Seller
and Shareholders provided for herein.
8.2.2 Certified copies of resolutions of the Board of
Directors of Seller and its shareholders, authorizing the making,
execution, and delivery of this Agreement and the consummation of the
transactions contemplated hereby.
8.2.3 Certified copies of resolutions of the Board of
Directors of ▇▇▇▇▇ and its shareholders, authorizing the making, execution,
and delivery of this Agreement and the consummation of the transactions
contemplated hereby.
8.2.4 A certificate of good standing from the Secretary of
State of Nevada and the Secretary of State of each other state where
Seller is doing business and is qualified to do business.
8.2.5 The opinion of counsel described in Section 7.1.6
hereof.
8.2.6 The certificate described in Section 7.1.1 hereof.
8.3 Purchaser's Deliveries at Closing. Purchaser shall deliver or
cause to be delivered to Seller and Majority Shareholder at Closing the
following:
8.3.1 A certified check or wire transfer payable to the order
of Seller in the amounts set forth in Section 2.3 hereof.
8.3.2 Duly executed copies of all instruments and agreements
among or between Purchaser, Seller and Shareholders provided for herein.
8.3.3 Certified copies of resolutions of the Board of
Directors of Purchaser authorizing the making, execution and delivery of
this Agreement and the consummation of the transactions contemplated
hereby.
8.3.4 A Certificate of good standing from the Secretary of
State of the State of Delaware for Purchaser.
8.3.5 The opinion of counsel described in Section 7.2.8
hereof.
8.3.6 The certificate described in Section 7.2.1 hereof.
ARTICLE 9
EXPENSES
9.1 Expenses. Whether or not the transactions contemplated by this
Agreement are consummated, each of the parties hereto shall pay the fees
and expenses of such party's respective counsel, accountants, other experts
and any other expenses incurred by such party incident to the negotiation,
preparation and execution of this Agreement. All sales and transfer taxes,
including but not limited to deed recording costs and vehicle sales and
transfer taxes, arising by reason of the transactions contemplated by this
Agreement shall be borne by Seller, except as set forth in Schedule 9.1.
ARTICLE 10
CONSTRUCTION
10.1 Choice of Laws. This Agreement and the agreements appended
hereto and delivered herewith shall be governed by and construed and
enforced in accordance with the laws of the State of Texas.
10.2 Headings. All headings contained in this Agreement are for
reference only and shall not affect the meaning or interpretation of this
Agreement in any manner.
10.3 Invalid Provisions. Should any part of this Agreement for any
reason be declared invalid, such decision shall not affect the validity of
any other portion, which remaining portion shall remain in force and effect
as if this Agreement had been executed with the invalid provisions thereof
eliminated, and it is the declared intention of the parties hereto that
they would have executed the remaining portion of the Agreement without
including therein any such part or portion which may be declared invalid.
ARTICLE 11
ASSIGNABILITY
11.1 Binding Agreement. This Agreement shall be binding upon and
inure to the benefit of each of the parties hereto, their successors and
permitted assigns pursuant to Section 11.2 hereof.
11.2 Assignability. This Agreement shall not be assignable in whole
or in part by either party except with the consent in writing of the other
party, which consent shall not be unreasonably withheld. Any purported
assignment without such consent shall be void. Notwithstanding the
foregoing, Purchaser may assign its rights and obligations hereunder to an
Affiliate of Purchaser without the necessity of obtaining such consent,
provided such assignment shall not affect the continuing applicability of
the US Airgas Guaranty.
ARTICLE 12
NOTICES
12.1 Written Notices. All notices pursuant to this Agreement shall be
in writing.
12.2 Notice to Purchaser. A notice to Purchaser shall be sufficient
in all respects if delivered, or mailed by first class registered or
certified mail, postage and fees prepaid, or if sent by a nationally
recognized overnight courier providing proof of delivery, or if sent by fax
followed by a hard copy sent by first class mail, addressed to the
following or such other address as provided by written notice made pursuant
to this Article:
▇/▇ ▇▇ ▇▇▇▇▇▇, ▇▇▇.
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇-▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇▇▇ ▇. Close
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy thereof to its Counsel:
▇▇▇▇▇▇▇▇▇▇, Keen & ▇▇▇▇▇▇▇
Radnor Court, Suite 100
▇▇▇ ▇▇▇▇▇▇-▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
12.3 Notice to Seller. A notice to Seller or Shareholders shall be
sufficient in all respects if delivered, or mailed by first class
registered or certified mail, postage and fees prepaid, or if sent by a
nationally recognized overnight courier providing proof of delivery, or if
sent by fax followed by a hard copy sent by first class mail, addressed to
the following or such other address provided by written notice made
pursuant to this Article:
The ▇▇▇▇▇ Company
▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇, ▇▇.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Fax: ________________________
and with a copy thereof to their counsel:
McAfee & ▇▇▇▇
10th Floor, Two Leadership Square
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
ARTICLE 13
FURTHER ASSURANCES AND MISCELLANEOUS
13.1 Seller's Name. At Closing Seller shall promptly amend its
Articles of Incorporation to adopt a name dissimilar to "Carbonic Reserves"
and all variants thereof.
13.2 Employee Contracts. Seller and Shareholders agree to use their
best efforts to assist Purchaser in retaining desired key employees of
Seller (as Purchaser shall determine with Seller's assistance) and to
obtain one-year employment contracts between such key employees of
Purchaser, providing for present salary levels, with ordinary course of
business bonuses and raises, and with standard US Airgas employee benefits
including health and life insurance and 401(k) Plan ("Airgas Plans").
Prior to being hired by Purchaser, employees of Seller will be required to
pass a standard drug test which is administered to all new employees of
Purchaser. All employees of Seller hired by Purchaser immediately after
Closing shall be eligible for participation in Airgas Plans (subject to the
amendment, modification or termination of any such Airgas Plans) and shall
be credited with their years of service with Seller for purposes of their
participation in the Airgas Plans.
13.3 Further Agreements and Cooperation. Each party hereto agrees to
execute such further papers or agreements and to take such other actions as
may be necessary to effect the purposes of this Agreement and carry out its
provisions, including without limitation such documents and actions as
shall ensure the orderly transfer of the customers of the Business to
Purchaser.
13.4 Audited Business. Audited financial statements of Seller for the
Business may be required for Purchaser's parent, Airgas, Inc., to comply
with the requirements of Rule 3-05 and Article 11 of Regulation S-X and
Form 8-K of the Securities and Exchange Commission. Seller will cooperate
with Purchaser to allow completion (no later than 60 days following the
Closing Date) of audited financial statements of the Business to be
prepared by Purchaser's auditors at Purchaser's expense. Seller's
cooperation shall include execution of a mutually agreeable "letter of
representation" by Seller's management.
13.5 Entire Agreement, No Oral Change. This Agreement, together with
the schedules and exhibits hereto, embodies the entire agreement between
the parties hereto and supersedes any and all prior agreements and
understandings between the parties hereto. This Agreement may only be
changed by written instrument signed by the party to be charged.
13.6 Risk of Loss. Pending Closing, Seller shall bear the risk of
loss of or damage to the Assets. Seller shall promptly notify Purchaser of
any such loss.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
AIRGAS CARBONIC RESERVES, INC.
By:_______________________________
CARBONIC RESERVES
By:_______________________________
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., President
THE ▇▇▇▇▇ COMPANY
By:______________________________
▇▇▇▇ ▇▇▇, ▇▇., President
_________________________________
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.