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EXHIBIT 10.23
ASSET PURCHASE AGREEMENT
BETWEEN
HMT INC.
as Buyer,
ITEQ, INC.
as Parent
and
ITEQ STORAGE SYSTEMS, INC., ITEQ CONSTRUCTION SERVICES, INC. AND
ITEQ TANK SERVICES, INC.
as Sellers
Dated January 28, 2000
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TABLE OF CONTENTS
Page
ARTICLE I THE TRANSACTION.................................................................................1
1.1. Sale and Purchase of Assets.....................................................................1
1.2. Excluded Assets.................................................................................3
1.3. Assumption of Liabilities.......................................................................4
1.4. Purchase Price..................................................................................6
1.5. Net Working Capital Estimate....................................................................6
1.6. Payments........................................................................................6
1.7. Post-Closing Adjustment.........................................................................7
1.8. Closing.........................................................................................9
1.9. Certain Consents................................................................................9
1.10. Deliveries and Proceedings at Closing...........................................................9
ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLER.......................................................11
2.1. Organization; Power and Authority..............................................................11
2.2. Qualification; Location of Business and Assets.................................................12
2.3. Authorization and Enforceability...............................................................12
2.4. Subsidiaries; Ownership........................................................................12
2.5. No Violations..................................................................................12
2.6. Financial Statements...........................................................................13
2.7. Undisclosed Liabilities........................................................................14
2.8. No Changes.....................................................................................14
2.9. Taxes..........................................................................................15
2.10. Accounts Receivable............................................................................16
2.11. Inventory......................................................................................17
2.12. No Pending Litigation or Proceedings...........................................................17
2.13. Contracts; Compliance..........................................................................17
2.14. Compliance with Laws...........................................................................18
2.15. Environmental Matters..........................................................................18
2.16. Assets.........................................................................................20
2.17. Real Estate....................................................................................21
2.18. Condition of the Assets........................................................................23
2.19. Employees......................................................................................23
2.20. Insurance......................................................................................24
2.21. Intellectual Property Rights...................................................................24
2.22. Employee Benefit Plans.........................................................................26
2.23. Brokerage......................................................................................29
2.24. Related Party Transactions.....................................................................29
2.25. Solvency.......................................................................................29
2.26. Bank Approval..................................................................................29
2.27. Disclosure.....................................................................................29
2.28. Disclaimer of Other Representations and Warranties.............................................29
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ARTICLE III REPRESENTATIONS AND WARRANTIES OF BUYER........................................................30
3.1. Organization; Corporate Power and Authority....................................................30
3.2. Authorization and Enforceability...............................................................30
3.3. Brokerage......................................................................................30
3.4. No Violations..................................................................................30
3.5. Buyer's Capital Structure......................................................................31
ARTICLE IV CERTAIN COVENANTS.....................................................................................31
4.1. Interim Conduct of the Business................................................................31
4.2. Buyer's Approval of Certain Transactions.......................................................32
4.3. Consents to Assignment.........................................................................33
4.4. Government Notification........................................................................34
4.5. This Section Intentionally Left Blank..........................................................34
4.6. Access, Information and Documents..............................................................34
4.7. Tax Reporting and Allocation of Consideration..................................................35
4.8. Negotiations...................................................................................35
4.9. Covenant Not to Compete; Nonsolicitation; Confidentiality......................................36
4.10. Fulfillment of Agreements......................................................................37
4.11. Insurance......................................................................................37
4.12. [Bulk Transfers................................................................................38
4.13. Employee Matters...............................................................................38
4.14. Benefit Plans..................................................................................39
4.15. Accounts Receivable............................................................................41
4.16. Real Estate....................................................................................42
4.17. Tax Matters....................................................................................43
4.18. Intercompany Accounts..........................................................................44
4.19 ITEQ Intellectual Properties, Inc..............................................................44
4.20. Use of HMT Name................................................................................44
4.21. Bank Approval Maintenance......................................................................44
4.22. Financing......................................................................................45
4.23. Employment Agreements..........................................................................45
4.24. Product Warranty Claims........................................................................45
4.25. Disclosure Letter..............................................................................45
4.26. Foreign Subsidiary Board Action................................................................46
4.27. Pro Forma Statements...........................................................................46
4.28. Software Licenses..............................................................................46
4.29. Tulsa Litigation...............................................................................46
4.30. Master Lease Agreements........................................................................46
ARTICLE V CONDITIONS TO CLOSING; TERMINATION.............................................................47
5.1. Conditions Precedent to Obligations of Buyer...................................................47
5.2. Conditions Precedent to the Obligations of Sellers.............................................49
5.3. Termination....................................................................................51
ARTICLE VI INDEMNIFICATION................................................................................51
6.1. Indemnification By Sellers and Parent..........................................................51
6.2. Indemnification by Buyer.......................................................................52
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6.3. General Indemnification Procedures.............................................................53
6.4. Termination of Indemnification.................................................................55
6.5. Limitation on Indemnification Obligations of the Seller and the Principals.....................56
6.6. Governing Law..................................................................................56
6.7. Fraud..........................................................................................56
6.8. Indemnification Exclusive Remedy...............................................................56
ARTICLE VII MISCELLANEOUS .......................................................................................57
7.1. Survival.......................................................................................57
7.2. Notices. ......................................................................................57
7.3. Expenses.......................................................................................58
7.4. Entire Agreement...............................................................................58
7.5. Assignment; Binding Effect; Severability.......................................................58
7.6. Governing Law..................................................................................59
7.7. Execution in Counterparts......................................................................59
7.8. Public Announcement............................................................................59
7.9. No Third Party Beneficiaries...................................................................59
7.10. Headings.......................................................................................59
7.11. Further Assurances.............................................................................59
7.12. Amendment and Waiver...........................................................................59
7.13. Gender and Certain References..................................................................60
7.14. Time is of the Essence.........................................................................60
7.15. Parent's Authority.............................................................................60
ARTICLE VIII DEFINITIONS ........................................................................................60
Exhibits
Exhibit A Assumption Agreement
Exhibit B Escrow Agreement
Exhibit C ▇▇▇▇ of Sale
Exhibit D Sellers' Counsel Opinion
Exhibit E Buyer's Counsel Opinion
Exhibit F Transition Services Agreement
Exhibit G 401(k) Opinion Letter
Exhibit H Assignment of Leases
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ASSET PURCHASE AGREEMENT
This is an ASSET PURCHASE AGREEMENT (the "Agreement"), dated
as of January 28, 2000, by and among HMT Inc., a Delaware corporation ("Buyer"),
ITEQ, Inc., a Delaware corporation ("Parent"), ITEQ Storage Systems, Inc., a
Minnesota corporation ("ITEQ Storage"), ITEQ Construction Services, Inc., a
Delaware corporation ("ITEQ Construction"), and ITEQ Tank Services, Inc., a
Delaware corporation ("ITEQ Tank"). As used herein, ITEQ Storage, ITEQ
Construction and ITEQ Tank are hereinafter sometimes referred to individually as
a "Seller" and collectively as the "Sellers".
Background
The Sellers and Australasian HMT Pty. Ltd., an ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, Ltd., a Canadian corporation, HMT Rubbaglas Limited, an
English corporation, HMT Tank Systems B.V., a Netherlands corporation, and HMT
Singapore Pte. Ltd., a Singapore corporation (collectively, the "Foreign
Subsidiaries"), are engaged in the business of above-ground storage tank ("AST")
repair and maintenance, AST tank field service, AST tank inspection and
engineering and the design, manufacture, assembly, sale and installation of AST
tank products (the "Business"). Sellers desire to sell and transfer to Buyer and
Buyer desires to purchase from Sellers substantially all of the assets of
Sellers used in the Business and all of the capital stock of the Foreign
Subsidiaries all upon the terms and subject to the conditions set forth in this
Agreement.
Terms
In consideration of the mutual covenants contained herein and
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
THE TRANSACTION
1.1. Sale and Purchase of Assets. Subject to the terms and conditions
hereof and in reliance upon the representations and warranties contained herein,
on the Closing Date, Parent and Sellers will sell, transfer, convey and assign
to Buyer (and/or, at Buyer's election, to one or more corporations, limited
partnerships or limited liability companies that Buyer controls (the "Buyer
Subsidiaries")), free and clear of all Encumbrances of every kind, nature and
description, except Permitted Encumbrances, and Buyer (and/or, at Buyer's
election, the Buyer Subsidiaries) will purchase from Parent and Sellers, the
Purchased Assets, the Business as a going concern and the goodwill related
thereto for the Purchase Price specified in Section 1.4. For purposes of this
Agreement, "Purchased Assets" shall mean all of Parent's and Sellers' business,
properties, assets, goodwill and rights of every kind, nature and description
existing on the Closing Date, constituting, primarily related to, primarily used
in or otherwise necessary or material to the conduct of the Business as
currently conducted by Sellers, wherever such assets are located and whether
real, personal or mixed, tangible or intangible, and whether or not any of such
assets have any value for accounting purposes or are carried or reflected on or
specifically referred to in Parent's or any Seller's books or financial
statements, except for the Excluded Assets, including,
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without limitation, all of Parent's and Sellers' right, title and interest in
and to the following, as the same may exist on the Closing Date to the extent
constituting, primarily related to, primarily used in or otherwise necessary or
material to the conduct of the Business as currently conducted by Sellers:
(a) all of the Business' cash, cash in banks, certificates of
deposit, cash equivalents, bank and mutual fund accounts, deposits, investments,
securities, advance payments, and other cash equivalents on hand or on deposit
in any financial institution on the Closing Date;
(b) all machinery, equipment, fixtures, tools, supplies,
tooling, dies, spare parts, fixtures and improvements, and similar capital
items, including without limitation the items listed in Section 1.1(b) of the
Disclosure Letter;
(c) all inventory, including without limitation, finished
goods, work-in-process, supplies, raw materials, recycled materials, scrap,
containers, consigned inventory, central, shared or common inventory, parts and
spares, a summary of which and the principal locations of which are set forth in
Section 1.1(c) of the Disclosure Letter;
(d) all other tangible assets, including office furniture,
office equipment and supplies, inventory, computer hardware, leasehold
improvements, motor vehicles and trailers, including without limitation the
items listed in Section 1.1(d) of the Disclosure Letter;
(e) all trade and other notes and accounts receivable of the
Business;
(f) all books and records (except for financial books and
records of Parent or any Seller), manuals, documents, books of account,
correspondence, sales and credit reports, customer lists, subscription lists,
mailing lists, literature, brochures, marketing or promotional material and the
like, including, without limitation, all discs, tapes and other media storing
data and other information and all software and information management systems
(the materials described in this subsection hereinafter being referred to as
"Business Records");
(g) all rights under all contracts, contractual rights,
agreements, leases, warranty rights, distribution and sales representative
agreements and instruments, including those identified in Section 2.13 of the
Disclosure Letter, and including those (i) for the lease of machinery and
equipment, real property, motor vehicles, or furniture and office equipment,
(ii) for the performance of services, (iii) which restrain or restrict any
person from directly or indirectly competing with the Business or from
disclosing confidential or proprietary information, and (iv) any such contracts,
agreements, instruments and leases entered into between the date hereof and the
Closing Date that are consistent with the terms of this Agreement (collectively,
the "Assumed Contracts");
(h) all real property, leaseholds and subleaseholds therein,
together with all fixtures, fittings, buildings, structures and other
improvements erected thereon, and easements, rights, privileges and other
appurtenances thereto, as more particularly described in Section 1.1(h) of the
Disclosure Letter hereto;
(i) all guarantees, warranties, indemnities and similar rights
with respect to any and all of the Purchased Assets and all related claims,
credits, rights of recovery and set off;
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(j) all of Sellers' claims, choses in action, causes of action
and judgments relating to the Purchased Assets or the operation of the Business;
(k) (a) all patents, patent applications, copyrights,
copyright registrations and copyright registration applications and all rights
thereto, (b) all registered and unregistered trademarks, including, but not
limited to, "HMT", trade names, product names, service marks, designs, logotypes
and trade dress, trademark and service ▇▇▇▇ registrations and applications for
trademark and service ▇▇▇▇ registrations, together with all rights related
thereto, (c) all patent, trademark, service ▇▇▇▇, trade name, copyright,
know-how and other intangible or proprietary rights granted to any Seller by
third parties under licensing or other agreements, (d) all know-how, proprietary
information, inventions, technologies, designs, technical data, production
methods, trade and business secrets, engineering data, models, prototypes,
drawings, diagrams, bills of material, manuals and other similar information,
(e) all inventions (whether patentable or unpatentable and whether or not
reduced to practice) and all improvements thereto, (f) all computer hardware and
software whether internally developed, purchased, or licensed, (g) all other
proprietary rights, and (h) all rights of action arising from the items listed
in clauses (a) through (g) above, including but not limited to, all claims by
reason of, and the right to collect damages for, the past, present or future
infringement, dilution or misappropriation thereof ((a) through (h)
collectively, the "Intellectual Property"), including but not limited to, the
Intellectual Property set forth in Section 2.21(a) of the Disclosure Letter.
(l) all franchises, consents, licenses, permits,
certifications, orders, registrations, and approvals granted by any
governmental, quasi-governmental or non-governmental third Person;
(m) all rights of the Sellers to any insurance proceeds
relating to the damage, destruction or impairment of assets or other rights
described in this Section 1.1 which would have been Purchased Assets but for
such damage, destruction or impairment prior to the Closing;
(n) all prepaid and similar items, including without
limitation, all prepaid expenses, deferred charges, advance payments, claims for
refund and other prepaid items;
(o) all of the capital stock held by the Sellers in any of the
Foreign Subsidiaries.
(p) the Lock-Box Account; and
(q) the Holding Company IP.
1.2. Excluded Assets. Notwithstanding any other provision of this
Agreement, the Purchased Assets shall not include the following assets
(collectively, the "Excluded Assets"):
(a) all of the rights, claims or causes of action of the
Sellers against third parties to the extent they relate to the Excluded
Liabilities;
(b) any claim, right or interest of Sellers in and to any
refund of Taxes of any kind relating to any period prior to the Effective Time
and all amounts held in reserve by any
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Seller relating to unpaid Taxes, in each case to the extent not accrued or
reflected on the Closing Statement;
(c) except as specified in Section 4.14 hereof, any assets
attributable or related to any Benefit Plans, including any amounts held in
reserve by any Seller for funding of or payment to any Benefit Plan, in each
case to the extent not accrued or reflected on the Closing Statement;
(d) except as provided in Section 1.1(o), all capital stock
and other ownership interests in any corporation or other business entity;
(e) subject to Section 1.1(m), the Insurance Policies (as
hereinafter defined);
(f) the real property and other assets described in Section
1.2(f) of the Disclosure Letter;
(g) Pre-Closing Tulsa Damages (as defined in Section 4.29
hereof);
(h) except as specifically set forth in Section 1.1(a)-(q)
hereof, any asset of any Seller not constituting, primarily related to,
primarily used in or otherwise necessary or material to the conduct of the
Business;
(i) any financial books and records of Parent or any Seller.
1.3. Assumption of Liabilities.
(a) Assumed Obligations. At the Closing, Buyer (and/or, at
Buyer's election, Buyer Subsidiaries) shall by an appropriate instrument of
assumption to be executed and delivered at Closing and to be substantially in
the form attached as Exhibit A hereto (the "Assumption Agreement"), assume and
agree to perform, pay or discharge, when due, to the extent not theretofore
performed, paid or discharged, except for any Excluded Liabilities, all of (a)
Sellers' obligations and liabilities under the Assumed Contracts arising after
the Effective Time; (b) all liabilities and obligations of Sellers (including
the obligations to make payments) resulting from facts or circumstances first
arising after the Effective Time under all licenses, permits, approvals,
certificates of occupancy and operating rights included in the Purchased Assets;
(c) Buyer's obligations pursuant to Section 7.3 hereof; and (d) any liabilities
and obligations reflected as ordinary course current liabilities on the Closing
Statement pursuant to Section 1.7 hereof (other than any Excluded Liabilities
and the current portion of any long-term liabilities), each to the extent such
liability or obligation is reflected on the Closing Statement. The obligations
and liabilities to be assumed by Buyer (and/or the Buyer Subsidiaries, if
applicable) pursuant to this Section are hereinafter sometimes referred to as
the "Assumed Liabilities." Except with respect to the Assumed Liabilities, Buyer
and, if applicable, the Buyer Subsidiaries do not hereby and shall not assume or
in any way undertake to pay, perform, satisfy or discharge any liabilities or
obligations of Sellers or Parent including, without limitation, the Excluded
Liabilities.
(b) Excluded Liabilities. Other than the Assumed Liabilities,
Sellers shall retain and Buyer and, if applicable, the Buyer Subsidiaries, shall
not assume or be liable for any
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liabilities and obligations of Sellers (all of such liabilities and obligations
not so assumed being herein called the "Excluded Liabilities") including without
limitation, the following:
(i) any liabilities or obligations in respect of
Excluded Assets;
(ii) any obligations of Parent or any Seller for
expenses or fees incident to or arising out of the negotiation, preparation,
approval or authorization of this Agreement or the consummation of the
transactions contemplated hereby, including, without limitation, all attorneys
and accountants fees and all brokers or finders fees or commissions payable by
Sellers;
(iii) any obligation of Parent or any Seller under or
arising out of this Agreement;
(iv) liabilities arising pre-Closing to the extent
that Parent or any Seller is insured or otherwise indemnified or which would
have been covered by insurance (or indemnification) but for a claim by the
insurer (or the indemnitor) that the insured (or the indemnitees) had breached
its obligations under the policy of insurance (or the contract of indemnity) or
had committed fraud in the insurance application;
(v) any liabilities or obligations, the existence of
which constitute a breach of the representations, warranties or covenants of
Sellers or Parent contained in this Agreement;
(vi) any obligations or liabilities of Sellers or
Parent to indemnify their respective officers, directors, employees or agents;
(vii) except as specifically provided in Sections
4.17 and 7.3 hereof, all federal, state, local, foreign and other Taxes imposed
on Sellers or Parent, including (A) any Tax that has been or may be incurred as
a result of the Sellers' operation of the Business or ownership of the Purchased
Assets whether or not assessed or determined on, before or after the Closing
Date, (B) any Tax unrelated to Parent's or Sellers' operation of the Business or
ownership of the Purchased Assets, (C) any Taxes imposed as a result of the
consummation of the transactions contemplated by this Agreement and (D) any
liability for Taxes pursuant to a Tax sharing agreement or Tax indemnity, or as
a transferee or successor, by contract or otherwise;
(viii) subject to Section 4.24, any product warranty,
product liability, service warranty, service liability or liquidated damages
liability of any nature in respect of products of the Business manufactured or
sold or services provided prior to Closing (individually, a "Product Warranty"
and collectively, the "Product Warranties");
(ix) any liabilities or obligations of any Seller
arising out of any capital leases (except as reflected as an ordinary course
current liability on the Closing Balance Sheet of the Business pursuant to
Section 1.7 hereof);
(x) any liabilities or obligations of Parent or any
Seller, contingent or otherwise, for any indebtedness of Parent or such Seller;
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(xi) any liability, claim or expense of Parent or any
Seller specified in Section 4.13(f) hereof;
(xii) any Seller Environmental Liabilities;
(xiii) any liability or obligation of any Seller to
Parent, any other Seller or any other subsidiary of Parent or any Seller;
(xiv) notwithstanding the provisions of any consent
to assignment of an Assumed Contract, any liability or obligation of any Seller
under any Assumed Contract to the extent such liability or obligation relates to
any period prior to the Effective Time, including any liability or obligation
for any breach of or default under any Assumed Contract by any Seller which
liability or obligation relates to any such breach or default occurring prior to
the Effective Time;
(xv) any liability or obligation of Parent or any
Subsidiary pursuant to the Rubbaglas Earnout; and
(xvi) any other liability or obligation of Parent or
any Seller including any liability or obligation directly or indirectly arising
out of or relating to the operation of the Business or ownership of the
Purchased Assets prior to or on the Closing Date, whether contingent or
otherwise, fixed or absolute, known or unknown, matured or unmatured, present,
future or otherwise, except for the Assumed Liabilities.
1.4. Purchase Price. The purchase price payable to Sellers in
consideration of the transfer to Buyer (and/or the Buyer Subsidiaries, if
applicable) of the Purchased Assets shall be Forty Million Dollars
($40,000,000), plus (x) the amount, if any, by which Net Working Capital is
greater than $7,993,190 less (y) the amount, if any, by which Net Working
Capital is less than $7,993,190 (the "Cash Purchase Price"), subject to
adjustment as provided in Section 1.7, plus the assumption by Buyer of the
Assumed Liabilities (collectively, the "Purchase Price").
1.5. Net Working Capital Estimate. No less than five Business Days
prior to the Closing Date, the Sellers shall have delivered to Buyer a good
faith estimate of Net Working Capital ("Estimated Net Working Capital") as of
the end of business on the Closing Date together with (i) a statement of the
calculation of Estimated Net Working Capital and (ii) a certificate signed by
Sellers to the effect that Estimated Net Working Capital was determined in good
faith in accordance with the provisions of this Section 1.5, which calculation
shall be reasonably satisfactory to Buyer. The statement of Estimated Net
Working Capital shall be prepared in accordance with generally accepted
accounting principles ("GAAP") applied on a basis consistent with the Financial
Statements, giving preference to GAAP over consistency; provided, however, that
the concept of materiality shall be disregarded (the "Accounting Principles").
1.6. Payments. On the Closing Date, (i) Buyer shall pay to Parent, or
at the written direction of Parent, to BankBoston, by wire transfer (w)
Thirty-Eight Million Dollars ($38,000,000) plus (x) the amount, if any, by which
Estimated Net Working Capital is greater than $7,993,190 less (y) the amount, if
any, by which Estimated Net Working Capital is less than $7,993,190
(collectively, the "Cash Payment"), and (ii) Buyer shall pay Two Million Dollars
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($2,000,000) (the "Escrow Fund") to the Escrow Agent by wire transfer pursuant
to the Escrow Agreement, substantially in the form of Exhibit B hereto (the
"Escrow Agreement").
1.7. Post-Closing Adjustment.
(a) As promptly as practicable, but no later than 120 days
after the Closing Date, Buyer will deliver to the Parent a statement setting
forth Net Working Capital (the "Closing Statement") as of the close of business
on the Closing Date (such statement shall contain the "Closing Net Working
Capital"). The Closing Statement shall be prepared in accordance with the
Accounting Principles; provided, that in the preparation of the Closing
Statement:
(i) The inventory balance for the Business as of the
Closing Date will be determined based on a physical count of the inventory of
the Business as of the Closing Date by Buyer and Buyer's accountants, in
accordance with the customary practices of the Sellers and their public
accountants as regards the taking of a physical inventory. The physically
counted inventory items will be valued at the lower of cost or market, the cost
thereof being determined on a first-in, first-out basis.
(ii) Net Working Capital shall not include any
Excluded Liabilities.
(iii) Net Working Capital shall not include the value
of any Excluded Assets.
(b) During the thirty (30) day period after the delivery of
the Closing Statement, Buyer shall provide Sellers and Parent, their employees,
agents and consultants with reasonable access during normal business hours to
its books, records, employees, agents and accountants used by Buyer in the
preparation of the Closing Statement. If, within thirty (30) days after the
delivery of the Closing Statement, Parent disputes in good faith that the
Closing Statement has not been prepared in accordance with the Accounting
Principles or that the Closing Statement is not mathematically accurate, Parent
shall deliver to Buyer within such period a written notice (the "Dispute
Notice") specifying in reasonable detail all disputed items and the basis
therefor (collectively, the "Disputed Items"). The failure by Parent to provide
a Dispute Notice within such thirty (30) day period to Buyer will constitute
Parent's acceptance of the Closing Statement. Parent shall be deemed to have
agreed with all items and amounts included in the Closing Statement except such
items that are specifically disputed in the Dispute Notice. If Parent provides
Buyer with a timely Dispute Notice, Buyer and Parent shall, within thirty (30)
days (or such longer period as mutually agreed upon by Buyer and Parent)
following the delivery of such Dispute Notice to Buyer (the "Resolution
Period"), negotiate in good faith to resolve the Disputed Items to their mutual
satisfaction. At the conclusion of the Resolution Period, Parent and Buyer shall
refer all unresolved Disputed Items to an independent public accounting firm
(the "Independent Accountant"). The Independent Accountant shall be a mutually
acceptable "big five" independent public accounting firm; provided, that in the
event Parent and Buyer are not able to mutually agree on an accounting firm, the
Independent Accountant shall be Ernst & Young, Houston, Texas office. The
parties shall cause the Independent Accountant to make a determination with
respect to each unresolved Disputed Item within thirty (30) days after its
engagement by Parent and Buyer to resolve such unresolved
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Disputed Items, which determination shall be made on the sole basis of whether
the Closing Statement has been prepared in accordance with the Accounting
Principles and whether the Closing Statement is mathematically accurate. Buyer
and Parent agree that the determination of the Independent Accountant shall be
final and binding upon the parties and that judgment may be entered upon the
determination of the Independent Accountant in any court having jurisdiction
over the party against which such determination is to be enforced. The
Independent Accountant shall determine, based solely on presentations by the
Buyer and Parent and their respective representatives, and not by independent
review, only those issues in dispute specifically set forth on the Dispute
Notice and shall prepare a revised Closing Statement and render a written report
as to the dispute and the resulting calculation of Closing Net Working Capital
which shall be conclusive and binding upon the parties. In resolving any
disputed item, the Independent Accountant: (w) shall be bound by the principles
set forth in Section 1.7 hereof, (x) shall limit its review to matters
specifically set forth in the Dispute Notice, (y) shall further limit its review
to whether the Closing Statement is mathematically accurate and has been
prepared in accordance with the Accounting Principles in accordance with Section
1.7 and (z) shall not assign a value to any item greater than the greatest value
for such item claimed by either party or less than the smallest value for such
item claimed by either party. The fees, costs, and expenses of the Independent
Accountant (i) shall be borne by the Sellers in the proportion that the
aggregate dollar amount of such disputed items so submitted that are
unsuccessfully disputed by Parent (as finally determined by the Independent
Accountant) bears to the aggregate dollar amount of such disputed items so
submitted and (ii) shall be borne by the Buyer in the proportion that the
aggregate dollar amount of such disputed items so submitted that are
successfully disputed by Parent (as finally determined by the Independent
Accountant) bears to the aggregate dollar amount of such items so submitted.
Whether any dispute is resolved by agreement among the parties or by the
Independent Accountant, changes to the Closing Statement shall be made hereunder
only for items as to which Parent has taken exception in the Dispute Notice. The
fees and expenses of the Buyer's independent accountants incurred in connection
with the issuance of the Closing Statement and review of any Dispute Notice
shall be borne by the Buyer, and the fees and expenses of the Parent's
independent accountants incurred in connection with its review of the Closing
Statement shall be borne by the Parent.
(c) Upon determination of the Closing Net Working Capital:
(i) In the event that Closing Net Working Capital is
greater than the Estimated Net Working Capital, Buyer shall pay Sellers an
aggregate amount equal to such excess in cash within five (5) Business Days
after the determination of Closing Net Working Capital pursuant to this Section
1.7.
(ii) In the event that Closing Net Working Capital is
less than the Estimated Net Working Capital, Sellers shall pay Buyer an
aggregate amount equal to such deficiency (the "Deficiency") in cash within five
(5) Business Days after the determination of Closing Net Working Capital
pursuant to this Section 1.7; provided that the first $500,000 of any Deficiency
shall be funded by a distribution to Buyer from the Escrow Fund out of the cash
otherwise distributable to Sellers pursuant to Section 2.5(a)(i) of the Escrow
Agreement.
(iii) In the event of a payment pursuant to either
1.7(c)(i) or (ii), such payment shall include interest thereon from the Closing
Date to the date of actual payment at a
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variable rate equal to the prime rate (as reported in the Wall Street Journal
"Money Rates") from and including the Closing Date to, but not including, the
date of payment.
1.8. Closing. The closing under this Agreement (the "Closing") will
take place at 10:00 A.M., local time, within three (3) Business Days after
satisfaction or waiver of the conditions set forth in Section 5.1 or 5.2 at the
offices of ▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P., Houston, Texas, or, if required by Buyer's
financing sources, at a location to be designated by such sources in New York,
New York, or if the conditions to Closing set forth in Article V of this
Agreement shall not have been satisfied by such date, as soon as practicable
after such conditions shall have been satisfied, or at such other time, date or
place as the parties shall mutually agree. The date on which Closing occurs is
sometimes referred to herein as the "Closing Date." For accounting and tax
purposes, the Closing shall be effective as of 11:59 p.m. on the Closing Date
(the "Effective Time").
1.9. Certain Consents. Nothing in this Agreement shall be construed as
an agreement to assign any contract, agreement, permit, franchise, right or
claim included in the Purchased Assets which is by its terms or in law
nonassignable, or is not assignable without the consent of the other party or
parties thereto, unless such consent shall have been given, or as to which all
the remedies for the enforcement thereof enjoyed by Sellers would not, as a
matter of law, pass to Buyer as an incident of the assignments provided for by
this Agreement (a "Non-Assignable Contract"). Buyer shall reasonably cooperate
with Sellers in their effort to obtain any such consent, including without
limitation providing its financial statements to the other party to the
applicable contract or agreement subject to a confidentiality agreement and
using its commercially reasonable efforts to obtain surety bonds with respect to
the applicable contract or agreement; provided, that the parties acknowledge
that Buyer may not be able to obtain such bonds until after the Closing. To the
extent that any such consent or approval in respect of, or an novation of, a
Non-Assignable Contract shall not have been obtained on or before the Closing
Date, the parties shall use their commercially reasonable efforts and shall
cooperate in any reasonable arrangement, to the extent permitted by law, to
assure the Buyer the benefits of such Non-Assignable Contract and to allow Buyer
to perform Sellers' obligations under such Non-Assignable Contract to the extent
arising after the Effective Time. To the extent lawful and reasonable under the
circumstances, including the obtaining of any such necessary consent or approval
after the Closing (provided that Sellers and their Affiliates shall not be
required to pay any money or other consideration in excess of nominal amounts to
effect such consent or approval), Sellers, at the request and under the
direction of Buyer, shall take all reasonable actions to assure that the rights
of the Sellers under the Non-Assignable Contracts shall be preserved for the
benefit of and delivered to the Buyer. Nothing in this Section shall in any way
diminish Parent's and Sellers' obligations hereunder to obtain all consents and
approvals (except for the Purchase Order Consents) and to take all such other
actions prior to or at Closing as are necessary to enable Sellers to convey or
assign valid title to all the Purchased Assets to Buyer.
1.10. Deliveries and Proceedings at Closing. At the Closing:
(a) Deliveries by Sellers. Sellers will deliver or cause to be
delivered to Buyer (and/or the Buyer Subsidiaries, if applicable):
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(i) a ▇▇▇▇ of sale and instrument of assignment to
the tangible Purchased Assets, duly executed by each Seller substantially in the
form of Exhibit C hereto (the "▇▇▇▇ of Sale");
(ii) special warranty deeds (the "Deeds") in the
customary and proper form for recording, duly executed and acknowledged, subject
only to Permitted Encumbrances and to all matters of record in the applicable
counties, to the extent valid, subsisting and enforceable and not shown on the
applicable Title Policy (as hereinafter defined), so as to convey to Buyer
(and/or the Buyer Subsidiaries, if applicable) good, marketable (with respect to
any Owned Real Property located outside of Texas) or indefeasible (with respect
to any Owned Real Property located in Texas) and insurable title to the Owned
Real Properties (as defined in Section 2.17 hereof) (the "Deeds");
(iii) an assignment of all licenses, permits and
warranties relating to the Purchased Assets and of any trademarks, trade names,
patents and the like relating to the Purchased Assets, including an assignment
of any patents relating to the Business which are owned by ITEQ IP (the
"Intangibles Assignment");
(iv) title certificates to any motor vehicles and
trailers owned by Sellers and included in the Purchased Assets duly executed by
the applicable Seller (together with any other transfer forms necessary to
transfer title to such vehicles);
(v) powers of attorney to Buyer to endorse all checks
made payable to Parent, any Seller or any of their Affiliates relating to trade
and other notes and accounts receivable of the Business and for the Lock-Box
Account;
(vi) the Escrow Agreement, duly executed by Parent
and each Seller;
(vii) the Assumption Agreement, as executed by each
Seller and the Parent;
(viii) the Bank Releases and Termination Statements;
(ix) an opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P., dated as
of the Closing Date, substantially in the form of Exhibit D hereto (the
"Sellers' Counsel Opinion");
(x) the consents and approvals of third parties
listed in Section 2.5(b) of the Disclosure Letter.
(xi) a certificate from each Seller stating that it
is not a foreign person in accordance with Sections 897 and 1445 of the Code;
(xii) the Assignment of Leases, duly executed by the
Sellers;
(xiii) duly executed transfers of all of the capital
stock of each Foreign Subsidiary, duly executed share certificates with respect
to such stock in the name of Buyer and/or, at Buyer's option, the Buyer
Subsidiaries and the stock record books, if any, for each of
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the Foreign Subsidiaries which such books shall include the cancelled share
certificates of the Sellers;
(xiv) the Resignations;
(xv) evidence of the Board of Directors resolutions
referenced in Section 4.26 hereof.
(xvi) the certificates required by Sections 5.1; and
(xvii) such other instruments of conveyance as shall,
in the reasonable opinion of Buyer and its counsel, be necessary to vest in
Buyer (and/or the Buyer Subsidiaries, if applicable) good, valid and marketable
(or, with respect to Owned Real Property in Texas, indefeasible) title to the
Purchased Assets in accordance with Section 1.1.
(b) Deliveries by Buyer.
(i) At the Closing, Buyer will deliver to Sellers:
(1) the Closing Cash Payment as provided in
Section 1.6;
(2) the Assumption Agreement, duly executed
by Buyer;
(3) the ▇▇▇▇ of Sale, duly executed by
Buyer;
(4) the Intangibles Assignment, duly
executed by Buyer;
(5) the Escrow Agreement, duly executed by
Buyer.
(6) an opinion of Dechert Price & ▇▇▇▇▇▇,
dated as of the Closing Date, substantially in the form of Exhibit E hereto
("Buyer's Counsel Opinion");
(7) the Assignment of Leases, duly executed
by Buyer; and
(8) the certificates required by Sections
5.2.
(ii) At the Closing, Buyer will deliver to the Escrow
Agent the Escrow Fund amount.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
As of the date of this Agreement, Parent and each Seller
hereby jointly and severally represent, warrant and covenant to and with Buyer
as follows:
2.1. Organization; Power and Authority. Parent and each Seller and
Foreign Subsidiary are corporations duly organized, validly existing and in good
standing under the laws of their respective jurisdictions of incorporation set
forth in Section 2.1 of the Disclosure Letter.
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Each Seller and Foreign Subsidiary has all requisite power and authority to own,
lease or operate its properties and assets as now owned or leased and to carry
on its businesses as and where now being conducted. Parent and each Seller has
all requisite power and authority to make, execute, deliver and perform this
Agreement, the ▇▇▇▇ of Sale, the Assumption Agreement and all other agreements,
documents and instruments to which Parent or each such Seller is a party and to
effect the transactions contemplated hereby and thereby.
2.2. Qualification; Location of Business and Assets. Each Seller is
duly qualified and in good standing as a foreign corporation and duly authorized
to do business in the jurisdictions set forth in Section 2.2 of the Disclosure
Letter, and such jurisdictions are the only jurisdictions wherein the character
of the Purchased Assets or the conduct of the Business make such qualification
necessary, except where the failure to so qualify would not have a Material
Adverse Effect. Set forth in Section 2.2 of the Disclosure Letter is each
location (specifying state, county and city) where any Seller or Foreign
Subsidiary: (a) has a place of business, (b) owns or leases real property, and
(c) owns or leases any other material tangible property, including equipment,
furniture and fixtures, relating to the Business.
2.3. Authorization and Enforceability. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary action on the
part of Parent and Sellers, including, if necessary, shareholder approval. This
Agreement has been, and at Closing the Ancillary Agreements will have been duly
executed and delivered by Sellers and Parent (to the extent such Seller and
Parent is a party thereto), and this Agreement constitutes, and at Closing the
Ancillary Agreements will constitute, the legal, valid and binding obligations
of Sellers and Parent (to the extent such Seller and Parent is a party thereto),
enforceable against each of them in accordance with their respective terms,
except as such enforcement may be limited by bankruptcy, insolvency, moratorium
or other similar laws affecting creditors' rights generally and general
principles of equity.
2.4. Subsidiaries; Ownership. No Seller or Foreign Subsidiary, directly
or indirectly, owns any stock of, or any other interest in, any other
corporation or business entity other than as set forth in Section 2.4 of the
Disclosure Letter. The outstanding capital stock of each Foreign Subsidiary is
owned beneficially and of record by ITEQ Storage. There are no outstanding
options, warrants, rights, agreements, calls, commitments or demands of any
character relating to the capital stock of any Foreign Subsidiary and no
securities convertible into or exchangeable for any of such capital stock.
2.5. No Violations.
(a) Except as set forth in Section 2.5(a) of the Disclosure
Letter, the execution, delivery and performance by Parent or any Seller of this
Agreement and the Ancillary Agreements to which such Seller or Parent is a party
and the consummation of the transactions contemplated hereby and thereby do not
and will not (a) contravene any provision of Parent's or any Seller's or Foreign
Subsidiary's charter or bylaws; (b) conflict with or result in a breach of or
constitute a default (or an event which might, with the passage of time or the
giving of notice or both, constitute a default) under any provision of, result
in acceleration of any obligation under, or give rise to a right by any party to
terminate or amend its obligations under, any
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indenture, mortgage, loan or credit agreement or any other agreement or
instrument to which Parent or any Seller or Foreign Subsidiary is a party or by
which it or any of its assets may be bound or affected (including the Assumed
Contracts), except as a result of the failure to obtain any Purchase Order
Consent or any judgment or order of any court or governmental department,
commission, board, agency or instrumentality, domestic or foreign, or any
applicable law, rule or regulation, (c) violate any statute, rule, regulation or
ordinance applicable to Parent or any Seller or Subsidiary, (d) result in the
creation or imposition of any lien, charge or encumbrance of any nature
whatsoever upon any of the Purchased Assets or Foreign Subsidiary Assets or give
to any third Person any interest or rights therein, (e) result in the maturation
or acceleration of any liability or obligation of Parent or any Seller or
Foreign Subsidiary (or give to any third Person the right to cause such a
maturation or acceleration), or (f) result in the termination of or loss of any
right (or give to any third Person the right to cause such a termination or
loss) under any agreement or contract to which Parent or any Seller or Foreign
Subsidiary is a party or by which any of them may be bound.
(b) Except for any approvals required by the HSR Act, no
consent, approval, order or authorization of, or registration, declaration or
filing with, any Person is required by Parent or any Seller or Foreign
Subsidiary in connection with the execution and delivery of this Agreement, the
Ancillary Agreements or the consummation of the transactions contemplated hereby
or thereby, except for (i) any Purchase Order Consents or (ii) consents of third
Persons which are required to transfer or assign to Buyer any Purchased Assets
or assign the benefits of or delegate performance with regard thereto, which
consents referred to in this subclause (ii) are disclosed in Section 2.5(b) of
the Disclosure Letter.
2.6. Financial Statements.
(a) The books of account and related records of Sellers and
the Foreign Subsidiaries for the Business fairly reflect in reasonable detail
its assets, liabilities and transactions relating to the Business in accordance
with generally accepted accounting principles for the country in which such
Seller or Foreign Subsidiary is incorporated. Attached to Section 2.6(a) of the
Disclosure Letter are unaudited balance sheets of the Business as of December
31, 1996, December 31, 1997, December 31, 1998 and December 31, 1999 and income
statements for the periods then ended (such financial statements including the
notes thereto being referred to collectively herein as the "Financial
Statements").
(b) The Financial Statements have been compiled from and are
in accordance with the Sellers' and Foreign Subsidiaries' books and records and
fairly present in all material respects the financial condition, assets and
liabilities of the Business as of their respective dates and the results of
operations of the Business for the periods then ended, and have been prepared in
accordance with GAAP, consistently applied; provided that the Financial
Statements lack footnotes, schedules and other presentation items. Since October
31, 1997, there has not been any change in the method of accounting or keeping
of books of account or accounting practices with respect to the Business. All
references in this Agreement to the "Balance Sheet" shall mean the balance
sheets of the Division as of December 31, 1999 included in the Financial
Statements and all references to the "Balance Sheet Date" shall mean December
31, 1999.
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2.7. Undisclosed Liabilities. Neither, Parent nor any Seller or Foreign
Subsidiary has any liability or obligation of any nature, whether due or to
become due, absolute, contingent or otherwise, with respect to the Business,
including liabilities for or in respect of federal, state or local Taxes and any
interest or penalties related thereto, except (a) to the extent reflected as a
liability on the Balance Sheet, (b) incurred in the ordinary course of business
since the Balance Sheet Date and fully reflected as liabilities on Sellers'
books of account, none of which individually or in the aggregate, has had or
could reasonably be expected to have a Material Adverse Effect or (c) as
disclosed on Section 2.7 of the Disclosure Letter.
2.8. No Changes. Except as disclosed in Section 2.8 of the Disclosure
Letter, since the Balance Sheet Date, the Sellers and the Foreign Subsidiaries
have conducted the Business only in the ordinary course and in accordance with
past practices. Without limiting the generality of the foregoing sentence,
except as disclosed in Section 2.8 of the Disclosure Letter, since the Balance
Sheet Date:
(a) there has not been any change (or series of changes) in
the present or prospective condition (financial or otherwise), results of
operations, assets, liabilities, earnings, competitive position or business of
the Business that, individually or in the aggregate, has had or reasonably could
be expected to have a Material Adverse Effect, except as may have occurred as a
result of conditions affecting the industry of the Business generally;
(b) no Seller or Foreign Subsidiary has made or promised to
make any increase in any salaries, rates of pay or other compensation or
benefits of any Employees employed in the Business, except for customary
increases and progressions for employees which increases and progressions were
made in the ordinary course of business or changes in benefits generally
provided to all of such Seller's occupational and/or management employees;
(c) no Seller or Foreign Subsidiary has suffered any damage,
destruction or loss of any tangible assets or properties primarily related to,
primarily used in or otherwise necessary or material to the conduct of the
Business (whether or not covered by insurance) in excess of $50,000;
(d) no Seller or Foreign Subsidiary has suffered any strike or
other material labor trouble, or has entered into any material agreement or
material negotiation with any labor union or other collective bargaining
representative of any Employees;
(e) there has not been any change or any threat of any change
in any of any Seller's or Foreign Subsidiary's relations with, or any loss or
threat of loss of, any of the material suppliers, distributors or customers of
the Business;
(f) there has not been any cancellation or knowing waiver of
any right by Parent, Seller or any Foreign Subsidiary under any contract, lease,
agreement, license or permit which right is or was, prior to such cancellation
or waiver, material to the Business;
(g) there has not been any sale, transfer or other disposition
of, or subjection to any Encumbrance of, any assets, properties or rights
constituting, primarily related to, primarily used in or otherwise necessary or
material to the conduct of the Business, except for
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Permitted Encumbrances, sales of inventory and sales of obsolete or damaged
equipment or retirement of equipment, in each case in the ordinary course of
business;
(h) there has not been any making or authorization of any
capital expenditures in excess of $100,000 in the aggregate;
(i) there has not been any payment, discharge or satisfaction
of any material liability or obligation (whether accrued, absolute, contingent
or otherwise) of the Business, other than the payment, discharge or
satisfaction, in the ordinary course of business, of liabilities or obligations
shown or reflected on the Balance Sheet or incurred in the ordinary course of
business since the Balance Sheet Date;
(j) there have not been any write-offs as uncollectible of any
notes or accounts receivable of any Seller or Foreign Subsidiary with respect to
the Business or write-downs of the value of any assets by any Seller with
respect to the Business other than in immaterial amounts or in the ordinary
course of business consistent with past practice;
(k) there has not been any change by any Seller or Foreign
Subsidiary in any method of accounting or keeping its books of account or
accounting practices with respect to the Business;
(l) there has not been any disposition of or failure to keep
in effect any rights in, to or for the use of any patent, trademark, service
▇▇▇▇, trade name or copyright of the Business, or to the knowledge of Sellers,
any disclosure to any person not an Employee or other disposal of any trade
secret, process or know-how of the Business; or
(m) there has not been any material transaction, agreement or
event relating to the Business to which any Seller or Foreign Subsidiary is a
party or a participant outside the ordinary course of business or inconsistent
with such Seller's or Foreign Subsidiary's past practice relating to the
Business.
2.9. Taxes.
(a) All returns and reports for Taxes, including information
returns, that are required to have been filed in connection with, relating to,
or arising out of, the Business (the "Returns"), have been timely filed and all
such Returns are true, complete and accurate in all material respects. Except as
set forth in Section 2.9 of the Disclosure Letter, all Taxes that are shown to
have come due pursuant to such returns or reports (whether or not reflected on
such returns or reports) have been paid or accrued (and in the case of any such
Taxes of a Foreign Subsidiary, will, to the extent not paid as of the Closing,
be reflected as a Current Liability on the Closing Statement), and all other
Taxes in connection with, relating to, or arising out of, the Business for which
a notice of assessment or demand for payment has been received have been paid.
All such returns or reports have been prepared in accordance in all material
respects with all applicable laws and requirements and accurately reflect the
taxable income (or other measure of Tax) of the applicable Seller, Foreign
Subsidiary or other operator of the Business. Sellers, Parent or the Foreign
Subsidiaries have paid all other Taxes that otherwise have become due and
payable with respect to the Business except as set forth in Section 2.9 of the
Disclosure Letter, and Sellers, Parent or the Foreign Subsidiaries have
adequately provided for, on its books of
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account and related records, liability for all other Taxes relating to the
Business not yet due and payable. Neither Parent, nor any Seller or Foreign
Subsidiary has received any notice of proposed adjustment, deficiency or
underpayment of Taxes relating to the Business, which notice has not been
satisfied by payment or been withdrawn, and there are no claims or proposed
adjustments that have been, or are anticipated to be, asserted or threatened
relating to Taxes with respect to the Business. Neither Parent, nor any Seller
or Foreign Subsidiary is currently the subject of any audit or examination with
respect to Taxes relating to the Business.
(b) There are no liens or Encumbrances with respect to Taxes
upon the Purchased Assets or upon the Foreign Subsidiary Assets, in each case
other than customary liens for current Taxes not yet due and payable.
(c) None of the Purchased Assets or Foreign Subsidiary Assets
(i) is property that is required to be treated as owned by another person
pursuant to the "safe harbor lease" provisions of former Section 168(f)(8) of
the Code; (ii) is "tax-exempt use property" within the meaning of Section 168(h)
of the Code or (iii) directly or indirectly secures any debt the interest of
which is tax-exempt under Section 103(a) of the Code.
(d) Sellers, Parent and the Foreign Subsidiaries have withheld
and paid all Taxes required to be withheld and paid with respect to the Business
including, but not limited to, income, social security and employment Taxes.
(e) There is no ruling issued specifically to Parent or any
Seller or Foreign Subsidiary except rulings of general applicability to all
taxpayers or to the industry of the Business (or closing agreement to which any
Seller or any Affiliate is a party) concerning Taxes which would have continuing
effect on the Buyer or a Foreign Subsidiary after the Closing Date.
(f) None of the Purchased Assets is an entity that is treated
as a partnership for federal income tax purposes.
(g) Neither Parent nor any Seller is a foreign person within
the meaning of Sections 897 and 1445 of the Code.
(h) Neither Parent nor any Seller or Foreign Subsidiary has
waived any statute of limitations with respect to Taxes.
(i) Section 2.9 of the Disclosure Letter reflects each
jurisdiction in which any Seller or Foreign Subsidiary has filed income, sales
and use or payroll Tax returns with respect to the Business. No Seller or
Foreign Subsidiary has received any notice from a taxing authority for a
jurisdiction in which such entity has not filed Tax returns with respect to the
Business for a taxable period asserting that the Business may be subject to Tax
in that jurisdiction for such period.
2.10. Accounts Receivable. All of the trade accounts and notes
receivable of the Business reflected on the Balance Sheet or acquired after the
date thereof represent amounts receivable for merchandise actually delivered or
services actually provided (or, in the case of non-trade accounts or notes,
represent amounts receivable in respect of other bona-fide business
transactions), have arisen in the ordinary course of business, are not subject
to any material
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counterclaims or offsets and have been billed and are generally due within 30
days after such billing. All such receivables are fully collectible in the
normal and ordinary course of business, except as reserved in the Closing
Statement.
2.11. Inventory. All of the inventory of the Sellers and the Foreign
Subsidiaries relating to the Business and reflected in the Balance Sheet, and
all inventories acquired since the Balance Sheet Date, are valued at the lower
of cost or market, the cost thereof being determined on a first-in, first-out
basis. All of the inventory reflected in the Balance Sheet and all inventory
acquired since the Balance Sheet Date consist of items of a quality and quantity
usable and saleable in the ordinary course of business subject to any reserve
for writedown included in the Closing Statement.
2.12. No Pending Litigation or Proceedings. Except as set forth on
Section 2.12 of the Disclosure Letter, there are no actions, suits,
investigations, proceedings or claims pending or, to the best of Sellers'
knowledge, threatened by or against or affecting the Business or the Purchased
Assets, at law or in equity, by or before any court or governmental department,
agency or instrumentality. There are presently no outstanding judgments, decrees
or orders of any court or any governmental or administrative agency to which
Parent, any Seller or any Subsidiary is a party or is bound, that could
adversely affect the Business, the Purchased Assets, or the performance of the
obligations of Parent or any Seller hereunder, and neither Parent, any Seller or
Subsidiary is in default in respect of any such order, decree or ruling.
2.13. Contracts; Compliance. Section 2.13 of the Disclosure Letter
contains a complete and correct list of all outstanding contracts to which
Parent or, any Seller is a party or by which any of them is bound included in
the Purchased Assets or Assumed Liabilities and all outstanding contracts to
which any Foreign Subsidiary is a party or by which any of them is bound: (a)
which have unexpired terms of more than one (1) year and cannot be terminated by
the applicable Seller or Foreign Subsidiary without penalty or payment on thirty
(30) days notice or less; (b) which would require over the full term thereof
payments by or to any Seller or Foreign Subsidiary of more than $50,000; (c)
pursuant to which there were payments by or to any Seller or Foreign Subsidiary
of more than $50,000 for the twelve-month period ended November 30, 1999, (d)
which relate to mortgages, indentures, loan or credit agreements, security
agreements and other agreements relating to the borrowing of money or extension
of credit (other than bona fide trade accounts payable arising from the purchase
of goods or services in the ordinary course of business consistent with past
practice with payment terms not exceeding 90 days), (e) which relate to
employment or severance arrangements, (f) which are license agreements, (g)
which are customer purchase orders, (h) which were entered into out of the
ordinary course of business of the Business, or (i) which are otherwise material
to the Business (collectively the "Material Contracts"); provided that the list
of customer purchase orders included in Section 2.13 of the Disclosure Letter is
accurate as of January 26, 2000 and is subject to change as a result of the
ordinary course of operations of the Business between January 26, 2000 and the
Closing Date. True and correct copies of the contracts listed in Section 2.13 of
the Disclosure Letter (other than Purchase Orders which have unexpired terms of
less than one (1) year or which have unexpired terms of more than one (1) year
but can be terminated by the applicable Seller or Foreign Subsidiary without
penalty or payment in thirty (30) days notice or less) have been delivered to
Buyer. Each of the Material Contracts is valid, binding and enforceable against
the applicable Seller or Foreign Subsidiary, and to the
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knowledge of Sellers, the other parties thereto, in accordance with its terms
and is in full force and effect, except as such enforcement may be limited by
applicable bankruptcy, solvency, moratorium or other similar laws affecting
creditors' rights generally and by general principles of equity. Except as set
forth in Section 2.13 of the Disclosure Letter, the applicable Seller and/or
Foreign Subsidiary, and to the knowledge of Sellers, each of the other parties
thereto, have performed all material obligations required to be performed by
them under, and are not in material default under, any of the Material Contracts
and no event has occurred which, with notice or lapse of time, or both, would
constitute such a default by such Seller and/or Foreign Subsidiary, or to
Sellers' knowledge, the other parties thereto. Except as disclosed on Section
2.13 of the Disclosure Letter, Parent, Sellers and the Foreign Subsidiaries have
not received any written claim from any other party to any Material Contracts
that any Seller or Foreign Subsidiary has breached any obligations to be
performed by it thereunder, or is otherwise in default or delinquent in
performance thereunder. All sales representation and distributor agreements
pertaining to the Business are terminable by the applicable Seller or Foreign
Subsidiary without penalty or payment on ninety (90) days notice or less. There
are no agreements not to compete which adversely affect or restrict the conduct
of the Business or could reasonably be expected to adversely affect or restrict
the conduct of the Business by Buyer after the Closing.
2.14. Compliance with Laws. Section 2.14 of the Disclosure Letter sets
forth a list of all material permits, certificates, licenses, orders,
registrations, franchises, authorizations and other approvals from all federal,
state, local and foreign governmental and regulatory bodies which are required
in connection with the operation of the Business. Sellers and the Foreign
Subsidiaries hold and are in material compliance with all permits, certificates,
licenses, orders, approvals, consents, registrations, franchises and
authorizations required under all laws, rules and regulations in connection with
the Business, and, all of such permits, certificates, licenses, orders,
approvals, consents, registrations, franchises and authorizations are in full
force and effect. Except with respect to Environmental Laws (which are the
subject of Section 2.15 hereof), Sellers and the Foreign Subsidiaries have
conducted the Business in compliance in all material respects with all
applicable statutes, rules, regulations and orders, federal, governmental, state
and municipal. Except with respect to Environmental Laws (which are the subject
of Section 2.15 hereof), no notice, citation, summons or order has been received
by Parent, any Seller or Foreign Subsidiary, or to Sellers' knowledge, issued,
no complaint has been served, or to Sellers' knowledge filed, no proceedings
have been commenced, no penalty has been assessed and no investigation or review
is pending or, to Sellers' knowledge, threatened by any Governmental Authority
or other entity (a) with respect to any alleged violation by any Seller or
Foreign Subsidiary in connection with the conduct of the Business of any law,
ordinance, rule, regulation or order of any Governmental Authority or (b) with
respect to any alleged failure by Parent or any Seller or Foreign Subsidiary to
have or to comply with any permit, certificate, license, consent, approval,
registration or authorization required in connection with the Business or
otherwise applicable to the Business.
2.15. Environmental Matters.
(a) To the extent relating to the Business, except as
disclosed in Section 2.15 of the Disclosure Letter, which disclosed items could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect:
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(i) To the knowledge of Sellers, Sellers and the
Foreign Subsidiaries hold and formerly held, and are and have been, in
compliance in all material respects with, all Environmental Permits, and the
Sellers and Foreign Subsidiaries are and have been, in compliance in all
material respects with all applicable Environmental Laws, and there are no
circumstances known to Sellers or Parent that might prevent or interfere with
such compliance in the future;
(ii) Neither Parent nor any Seller or Foreign
Subsidiary has received any material Environmental Claim, and neither Parent nor
any Seller or Foreign Subsidiary is aware of any threatened material
Environmental Claim or of any circumstances, conditions or events that could
reasonably be expected to give rise to a material Environmental Claim against
Parent, Sellers or the Foreign Subsidiaries arising out of or relating to the
Business;
(iii) Neither Parent nor any Seller or Foreign
Subsidiary has entered into or agreed to any consent decree, order or agreement
under any Environmental Law, and neither Parent nor any Seller or Foreign
Subsidiary is subject to any judgment, determination of any Governmental
Authority, decree, order, notice of any Governmental Authority or, to Sellers'
knowledge, other requirement (except for ordinary day-to-day requirements under
Environmental Laws) relating to its compliance with any Environmental Law or to
its investigation, cleanup, remediation or removal of Hazardous Materials under
any applicable Environmental Law;
(iv) To the knowledge of Sellers, there are no past
or present actions, activities, events, conditions or circumstances, including
without limitation the use, generation, management, Release, threatened Release,
treatment or storage of Hazardous Materials (including, without limitation, with
respect to assets, businesses, properties or facilities currently or formerly
owned, operated, leased or used by Parent or any Seller or Foreign Subsidiary
with respect to the Business or with respect to any off-site location), in
material violation of, or in a manner or location that has or could give rise to
any material liability under, any Environmental Laws in effect on the date
hereof and the Closing Date or any contract or agreement;
(v) No modification, revocation, reissuance,
alteration, transfer, or amendment of the Environmental Permits, or any review
or approval of, any third party of the Environmental Permits is required in
connection with the execution or delivery of this Agreement or the consummation
of the transactions contemplated hereby or the uninterrupted continuation of the
Business following such consummation except for such modifications, revocations,
reissuances, alterations, transfers or amendments which can be obtained without
interruption to the continuation of the Business following such consummation and
which shall not impose any material additional obligations or limitations upon
Buyer after the Closing; and
(vi) There have been no unresolved claims made or, to
the knowledge of Sellers, threatened against the Parent or any Seller or Foreign
Subsidiary alleging that any disposal, release or threatened release of
Hazardous Materials at or from any tank or tank system which was designed,
upgraded, maintained, altered or otherwise serviced by the Business was or is,
in full or in part, a result of the acts, omissions or negligence of Parent or
any Seller or Foreign Subsidiary, or for which Parent or any Seller or Foreign
Subsidiary is or is alleged to be responsible or liable (including without
limitation at any customer's property).
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(b) The Sellers and the Parent have provided the Buyer with
copies of or access to all (i) environmental reports, studies, audits and
analyses; (ii) any material environmental correspondence or notices, and (iii)
and Environmental Permits, in each case with respect to the Business.
(c) For purposes of this Agreement, the following terms shall
have the following meanings:
"Environmental Claim" means any written notice, claim, demand,
action, suit, complaint, proceeding or other communication by any person
alleging liability or potential liability (including without limitation
liability or potential liability for investigatory costs, cleanup costs,
governmental response costs, natural resource damages, property damage, personal
injury, fines or penalties) arising out of, relating to, based on or resulting
from (i) the use, generation, management, Release, threatened Release,
treatment, storage or presence, of any Hazardous Materials at any location, or
(ii) any violation or alleged violation of any Environmental Law or
Environmental Permit or (iii) otherwise relating to obligations or liabilities
under any Environmental Laws.
"Environmental Permits" means all permits, licenses, consents,
registrations and other governmental authorizations required for the Business
and the operations of the Business and otherwise to conduct its business under
Environmental Laws, including without limitation any applicable federal, state,
local or other governmental tank installer certifications required to work on,
repair, alter, remove, upgrade or maintain storage tanks (to the extent the
Business conducts such activities).
"Environmental Laws" means all applicable federal, foreign,
state and local statutes, rules, regulations, ordinances, orders, codes or
practice (only with respect to U.K. law), circulars and guidance notices (only
with respect to U.K. law), decrees and common law relating in any manner to
contamination, pollution or protection of human health or the environment,
including without limitation the Comprehensive Environmental Response,
Compensation and Liability Act, the Solid Waste Disposal Act, the Clean Air Act,
the Clean Water Act, the Toxic Substances Control Act, the Occupational Safety
and Health Act, the Emergency Planning and Community-Right-to-Know Act, the Safe
Drinking Water Act, all as amended, and similar foreign, state and local laws.
"Hazardous Materials" means all hazardous or toxic substances,
wastes, materials or chemicals, petroleum (including crude oil or any fraction
thereof) and petroleum products, asbestos and asbestos-containing materials,
pollutants, contaminants and all other materials and substances, regulated
pursuant to, or that could form the basis of liability under, any Environmental
Law.
"Release" means any release, emission, discharge or disposal.
2.16. Assets. Except as disclosed in Section 2.16 of the Disclosure
Letter, Sellers and the Foreign Subsidiaries have, and upon consummation of the
transactions contemplated by this Agreement, Buyer and the Foreign Subsidiaries
will have good, valid and marketable (or indefeasible, with respect to Owned
Real Property in Texas) title to, or good, valid and
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indefeasible leasehold interest in, all of the Purchased Assets and the Foreign
Subsidiary Assets, whichever applicable, free and clear of any Encumbrance
except for Permitted Encumbrances, and none of the Purchased Assets or Foreign
Subsidiary Assets is owned jointly with any other Person.
2.17. Real Estate.
(a) Sellers and the Foreign Subsidiaries have good, marketable
and insurable, with respect to the real properties located outside of Texas, or
good, indefeasible and insurable, with respect to the real properties located in
Texas, fee simple title (both legal and beneficial) to the real properties
listed on Section 2.17(a) of the Disclosure Letter (the "Owned Real Properties")
which are the only real property owned by the Sellers or the Foreign
Subsidiaries relating to the operation of the Business. Sellers have delivered
to Buyer complete and correct copies of all existing title insurance policies
held by the Parent, Sellers and the Foreign Subsidiaries, and all surveys held
by the Parent, Sellers and the Foreign Subsidiaries with respect to the Owned
Real Properties. The Owned Real Properties are free and clear of all
Encumbrances, except: (a) Encumbrances set forth on Section 2.17(a) of the
Disclosure Letter and (b) Permitted Encumbrances. Each Seller or Foreign
Subsidiary is in actual possession of its respective Owned Real Properties.
(b) (i) Section 2.17(b) of the Disclosure Letter contains an
accurate and complete list of all leases, assignments of leases, subleases or
other rights of occupancy pursuant to which any Seller or Foreign Subsidiary
leases, subleases or otherwise occupies any real property or interest therein
relating to the operation of the Business (collectively, the "Real Property
Leases"). Each Seller or Foreign Subsidiary is, or the respective predecessor by
merger, consolidation or name change is, the named lessee under the applicable
Real Property Lease (with the applicable Seller or Subsidiary identified as such
on Section 2.17(b) of the Disclosure Letter with respect to each Real Property
Lease), and no party other than the Parent, any Subsidiary of Parent, the
Sellers or a Foreign Subsidiary has any right to possession, occupancy or use of
any of the properties demised under the Real Property Leases. A true and correct
copy of each Real Property Lease has been delivered to Buyer, together with all
amendments and modifications thereto, and all subordination, non-disturbance
and/or attornment agreements related thereto, and no changes have been made
thereto since the date of delivery. Each Real Property Lease is valid and in
full force and effect and is binding and enforceable in accordance with its
terms with respect to the applicable Seller or Foreign Subsidiary and, to
Seller's knowledge, the other party thereto, except as such enforcement may be
limited by applicable bankruptcy, insolvency, moratorium or other similar laws
affecting creditors' rights generally and to general principles of equity.
Subject to obtaining the Landlord Consents, no Seller or Foreign Subsidiary is,
and to Sellers' knowledge, no other party is, in material default under any
provision of any of the Real Property Leases, and no event has occurred which
(with or without notice, lapse of time or both) would constitute a material
default thereunder by the applicable Seller or Foreign Subsidiary or, to
Sellers' knowledge, any other party thereto.
(ii) A Seller or Foreign Subsidiary (whichever applicable)
is in actual exclusive possession of the properties demised to such Seller or
Foreign Subsidiary under the Real Property Leases. Each Seller and Foreign
Subsidiary has good, valid and indefeasible title to all the leasehold estates
conveyed to such Seller or Foreign Subsidiary under the Real Property
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Leases (the "Leased Real Estate") free and clear of all Encumbrances except for
Permitted Encumbrances and the terms and provisions of the Real Property Leases,
and are not, with respect to the properties demised under the Real Property
Leases, subject to any rights of way, building use restrictions, exceptions,
variances, reservations or limitations of any nature whatsoever except for
Permitted Encumbrances and the terms and conditions of the Real Property Leases.
(iii) All work required to be performed under the
Real Property Leases by the landlords thereunder or by Parent, the Sellers or
Foreign Subsidiaries has been performed in all material respects, and, to the
extent that Parent or any Seller or Foreign Subsidiary is responsible for
payment of such work, has been fully paid for, whether directly to the
contractor performing such work or to such landlord as reimbursement therefor,
except to the extent payment is being contested in good faith through
appropriate proceedings. The basic rent, all additional rent and all other
amounts due and payable under the Real Property Leases have been paid to date
and not more than one month in advance, except to the extent payment is being
contested in good faith through appropriate proceedings (and if being so
contested, full details are set out in Section 2.18(b) of the Disclosure
Letter). There are no brokerage fees or commissions due from Parent, any Seller
or any Foreign Subsidiary with respect to any of the Real Property Leases.
(iv) There have been no casualties, damages or
destruction which could result in the termination of any Real Property Lease or
the application of any buy-out provisions contained in any Real Property Lease
relative to such damage.
(v) Except as set forth in Section 2.17(b) of the
Disclosure Letter, neither the consent of any of the landlords under any of the
Real Property Leases, nor the consent of any person (collectively, the "Landlord
Consents") claiming by or through such landlord or any such other party, is
required by reason of any of the transactions contemplated by this Agreement,
and none of the rights of the Business will be impaired by the consummation of
the transactions contemplated by this Agreement. Subject to the terms and
provisions of the applicable Real Property Lease and the receipt of the Landlord
Consents, Buyer will be able to enforce all the rights of tenant under the Real
Property Leases after the Closing Date without the consent or agreement of any
other party, including all rights to purchase any of the parcels demised by the
Real Property Leases or to renew any of the Real Property Leases pursuant to
options to purchase or renew contained in any of the Real Property Leases
(collectively, the "Options") Neither the Sellers nor the Foreign Subsidiaries
have exercised any Options with respect to the Real Property Leases, except as
set forth in Section 2.17(b) of the Disclosure Letter.
(c) The Owned Real Properties and the premises demised under
the Real Property Leases constitute all of the real property (the "Real
Property") related to the operation of the Business. Except as set forth in
Section 2.17(c) of the Disclosure Letter, the buildings and other improvements
to the Real Property are operational and in good condition and repair, ordinary
wear and tear excepted. No portion of any of the improvements erected on the
Owned Real Properties encroaches on adjoining property or public streets. The
water, gas, electricity and other utilities serving each parcel of the Real
Property are currently adequate to service the normal operation of the Business
on each parcel of the Real Property as currently conducted.
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The use of each parcel of the Real Property by the applicable Seller or Foreign
Subsidiary is permitted under the zoning classification applicable to such
parcel or is otherwise permitted by relevant planning law or by variance, permit
or as a pre-existing nonconforming use, and none of such uses nor, with respect
to the Owned Real Property, the parcels themselves are otherwise nonconforming.
(d) Neither the Sellers nor the Foreign Subsidiaries have
received written notice of or has any actual knowledge of any (a) pending or
threatened condemnation action, eminent domain proceeding, enforcement
proceedings or other litigation, action or proceeding concerning any of the Real
Property, or (b) any pending or threatened investigation by any governmental
authority which relates to the ownership, maintenance, use or operation of any
of the Real Property.
(e) Parent and Sellers have supplied to Buyer prior to the
date of this Agreement with a true, correct and complete copy of every document
of title relating to the Owned Real Property located in the United Kingdom.
(f) Each Seller maintains a place of business in more than one
state in the United States and each Seller's chief executive office is located
in Texas.
2.18. Condition of the Assets. The Purchased Assets and the Foreign
Subsidiary Assets are suitable for the purposes for which they are presently
used and, except as set forth in Section 2.18 of the Disclosure Letter, there is
no expenditure presently required in order to maintain such condition and state
of repair or replace any such Purchased Asset or Foreign Subsidiary Asset which
individually exceeds $10,000 or in the aggregate exceeds $50,000. The Purchased
Assets, other than the Excluded Assets, and the Foreign Subsidiary Assets
represent all assets and rights that are used by Parent, the Sellers and the
Foreign Subsidiaries in the operation of the Business.
2.19. Employees.
(a) The relations of Sellers and the Foreign Subsidiaries with
the Business Employees are good. Except as disclosed in Section 2.19(a) of the
Disclosure Letter: (i) no Business Employee is represented by any union,
collective bargaining or similar labor agreement, (ii) there is no unfair labor
practice charge pending, or to Sellers' knowledge, threatened against any Seller
or Foreign Subsidiary relating to any of the Business Employees; (iii) there is
no labor strike or stoppage relating to any of the Business Employees actually
pending or, to Sellers' knowledge, threatened against or involving any Seller or
Foreign Subsidiary; (iv) no labor grievance relating to any of the Business
Employees is pending or, to the knowledge of Sellers, threatened; (v) no Seller
or Foreign Subsidiary has in the past three years experienced any work stoppage
relating to any of the Business Employees; (vi) there is no labor grievance
pending or, to the knowledge of Sellers, threatened in relation to any of the
Business Employees; (vii) no Seller or Foreign Subsidiary has any labor
negotiations in process with any labor union or other labor organization
relating to the Business; and (viii) there are no efforts in process by unions
to organize any Business Employees who are not now represented by recognized
collective bargaining agents.
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(b) Except as disclosed in Section 2.19(b) of the Disclosure
Letter, no severance payment or benefit will become due to any Business Employee
upon the execution of this Agreement, upon the Closing or upon the consummation
of the transactions contemplated hereby.
2.20. Insurance. Section 2.20 of the Disclosure Letter contains a
complete and correct list of all policies of insurance covering any of the
Purchased Assets or the Business (the "Insurance Policies), true, correct and
complete copies of which have been delivered or made available to Buyer,
indicating for each policy the carrier, the insured, type of coverage, the
amounts of coverage, deductible, premium rate, cash value if any, expiration
date and any pending claims thereunder. All such policies are in full force and
effect. The coverages provided by such policies are reasonable, in both scope
and amount, in light of the risks attendant to the Business. All premiums due on
such policies have been paid in full. There is no default with respect to any
provision contained in any such policy which could have an adverse affect upon
the ability of the insured to collect insurance proceeds under such policy, nor
has there been any failure by the insured to give any notice or present any
claim under any such policy in a timely fashion or in the manner or detail
required by the policy. Except as set forth in Section 2.20 of the Disclosure
Letter, there are no outstanding unpaid claims under such policies. No notice of
cancellation or non-renewal with respect to, or disallowance of any claim under,
any such policy has been received by any Seller or Foreign Subsidiary. Except as
set forth in Section 2.20 of the Disclosure Letter, no Seller or Foreign
Subsidiary has been refused any insurance with respect to the Business, nor has
its coverage been limited by any insurance carrier to which it has applied for
insurance with respect to the Business or with which it has carried insurance
with respect to the Business during the last three years. Except as set forth on
Section 2.20 of the Disclosure Letter, all liability policies maintained by or
for the benefit of each Seller or Foreign Subsidiary during the last five years
with respect to the Business have been "occurrence" policies and not "claims
made" policies.
2.21. Intellectual Property Rights.
(a) Section 2.21(a) of the Disclosure Letter contains a
complete and accurate list of all patents and patent applications, copyright
registrations, trademarks, service marks, trade names, and registrations and
applications for registration of trademarks, service marks, trade names and
trade dress used by the Sellers, the Foreign Subsidiaries or ITEQ IP in the
conduct of the Business or otherwise constituting any portion of the Purchased
Assets (the "Intellectual Property Rights") specifying as to each such item, as
applicable: (i) the owner of the item; (ii) the jurisdictions in which the item
is issued or registered or in which any application for issuance or registration
has been filed, including the respective issuance, registration, or application
number; (iii) the date of application and issuance or registration of trademarks
or service marks and the class or classes of goods or services on which each
such trademark or service ▇▇▇▇ is or is intended to be used.
(b) Section 2.21(b) of the Disclosure Letter contains a
complete and accurate list of all material licenses, sublicenses, consents and
other agreements (i) pertaining to any patents, trademarks, service marks, trade
names, trade dress, copyrights, trade secrets, computer software programs, or
other intellectual property used in the conduct of the Business or (ii) by which
any Seller or Foreign Subsidiary licenses or otherwise authorizes a third Person
to use
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such intellectual property. No Seller or Foreign Subsidiary is in breach of or
default under any such license or other agreement in any material respect and
each such license or other agreement is now in full force and effect.
(c) Except as set forth in Section 2.21(c) of the Disclosure
Letter, (i) Sellers, the Foreign Subsidiaries, and ITEQ IP own or license or
otherwise have the exclusive right to use, and (except with respect to
commercially available computer software) have the right to bring actions for
the infringement of, all patents, trademarks, service marks, trade names, trade
dress, copyrights, inventions, trade secrets, confidential and proprietary
information, computer software programs, and other intellectual property
necessary for the operations of the Business as it is currently conducted and
(ii) except for the Excluded Assets, no other computer software or other
electronic data transmission is required for the Sellers or Foreign Subsidiaries
to operate the Business as presently conducted. The computer hardware and
software are adequate for the conduct of the Business and the Purchased Assets
as currently conducted. All computer software is capable of consistently and
accurately processing, managing and manipulating date/time data from, into, and
between the twentieth and twenty-first centuries, and the years 1999, 2000 and
leap year calculations, including, without limitation, date/time data
recognition, calculations which involve same century and multi-century formulas
and date values, and date/time-related user interface functionalities and data
fields which reflect the century.
(d) To Sellers' knowledge, the operation of the Business does
not infringe on the patents, trademarks, service marks, trade names, trade
dress, copyrights, trade secrets or other intellectual property rights of any
third Person, and no claim has been made, notice given, or dispute arisen to
that effect.
(e) Except as set forth in Section 2.21(e) of the Disclosure
Letter, none of Parent, any Seller, any Foreign Subsidiary or ITEQ IP has any
pending claims that a third Person has violated or infringed any of Parent's,
such Seller's, such Foreign Subsidiary's or ITEQ IP's patents, trademarks,
service marks, trade names, trade dress, copyrights, trade secrets or other
proprietary rights relating to the Business and neither Parent, any Seller, any
Foreign Subsidiary or ITEQ IP has given any indemnification to any third Person
against infringement of such intellectual property rights.
(f) All of the trademarks, service marks and trade names shown
in Section 2.21(a) of the Disclosure Letter are currently being used by the
Sellers and Foreign Subsidiaries in the Business.
(g) Except as explicitly indicated in Section 2.21(g) of the
Disclosure Letter, all of the patents, trademark and service ▇▇▇▇ registrations,
and copyright registrations indicated in Section 2.21(a) of the Disclosure
Letter are valid and in full force, are held of record in Sellers' or ITEQ IP's
name free and clear of all Encumbrances (except for the security interest of
BankBoston pursuant to the Credit Agreement) and are not the subject of any
cancellation or reexamination proceeding or any other proceeding challenging
their extent or validity. Except as set forth in Section 2.21(b) of the
Disclosure Letter, either a Seller or ITEQ IP is the applicant of record in all
patent applications, and applications for trademark, service ▇▇▇▇, trade dress,
industrial design, and copyright registration indicated in Section 2.21(a) of
the Disclosure Letter,
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and no opposition, extension of time to oppose, interference, rejection, or
refusal to register has been received in connection with any such application.
(h) No order, holding, decision or judgment has been rendered
by any Governmental Authority against Parent, ITEQ IP or any Seller or Foreign
Subsidiary, and no agreement, consent or stipulation exists to which Parent,
ITEQ IP or any Seller or Foreign Subsidiary is a party, which would limit
Parent's, ITEQ IP's or any Seller's or Foreign Subsidiary's use of any
intellectual property or any of any Seller's or Foreign Subsidiary's advertising
or promotional claim or campaign relating to the Business.
(i) Sellers have supplied Buyer with copies of all material
documents listed in Section 2.21(a) of the Disclosure Letter and documents
evidencing all material rights listed on Section 2.21(a) of the Disclosure
Letter.
(j) Except as set forth in Section 2.22(j) of the Disclosure
Letter, the Intellectual Property Rights constitute all of the intellectual
property used by Parent, Sellers and the Foreign Subsidiaries in the operation
of the Business.
2.22. Employee Benefit Plans.
(a) Set forth on Section 2.22(a) of the Disclosure Letter is a
true and complete list of each (i) "employee benefit plan," as defined in
Section 3(3) of ERISA (excluding any "multiemployer plan" as defined in Section
3(37) of ERISA), (ii) all other pension, retirement, supplemental retirement,
deferred compensation, excess benefit, profit sharing, bonus, incentive, stock
purchase, stock ownership, stock option, stock appreciation right, severance,
salary continuation, termination, change-of-control, health, life, disability,
group insurance, vacation, holiday and fringe benefit plan, program, contract,
or arrangement (whether written or unwritten, qualified or nonqualified, funded
or unfunded and including any that have been frozen) maintained, contributed to,
or required to be contributed to, by Parent or any Seller, Subsidiary or ERISA
Affiliate for the benefit of any Business Employee or Former Business Employee,
or under which Parent or any Seller, Subsidiary or ERISA Affiliate has any
liability with respect to any Business Employee or Former Business Employee,
other than the Foreign Plans (as defined below) (the "Benefit Plans"). Section
2.22(a) of the Disclosure Letter also contains a complete and correct list of
all "multiemployer plans" as defined in Section 3(37) of ERISA contributed to,
or required to be contributed to by Parent or any Seller, Subsidiary or ERISA
Affiliate for the benefit of any Business Employee or Former Business Employee
or under which Parent or any Seller, Subsidiary or ERISA Affiliate has any
liability with respect to any Business Employee or Former Business Employee (the
"Multiemployer Plans").
(b) As applicable with respect to each Benefit Plan, Sellers
have delivered to Buyer, true and complete copies of (i) each Benefit Plan,
including all amendments thereto, and in the case of an unwritten Benefit Plan,
a written description thereof, (ii) the current summary plan description and
each summary of material modifications thereto, (iii) the three most recent
annual reports (Form 5500 and all schedules thereto) filed with the Internal
Revenue Service ("IRS"), (iv) the most recent IRS determination letter, and (v)
all records, notices and filings concerning IRS or Department of Labor audits or
investigations, "prohibited transactions" within
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the meaning of Section 406 of ERISA or Section 4975 of the Code and "reportable
events" within the meaning of Section 4043 of ERISA.
(c) Except as otherwise disclosed with particularity on
Section 2.22(c) of the Disclosure Letter:
(i) Sellers, Parent, each Subsidiary and each ERISA
Affiliate are in compliance in all material respects with the provisions of
applicable law, including ERISA and the Code, applicable to the Benefit Plans
and the Multiemployer Plans. Each Benefit Plan and to the knowledge of Sellers
each Multiemployer Plan has been maintained, operated and administered in
compliance in all material respects with its terms and any related documents or
agreements and the provisions of applicable law, including ERISA and the Code.
(ii) No Benefit Plan is now or at any time has been
subject to Part 3, Subtitle B of Title I of ERISA or Title IV of ERISA.
(iii) There are no pending audits or investigations
by any governmental agency involving the Benefit Plans or to the knowledge of
Sellers the Multiemployer Plans and no pending or, to the knowledge of Sellers,
threatened claims (except for individual claims for benefits payable in the
normal operation of the Benefit Plans), suits or proceedings involving any
Benefit Plan, any fiduciary thereof or service provider thereto.
(iv) No Seller, Parent, Subsidiary or ERISA
Affiliate, and to the knowledge of Sellers, no fiduciary, trustee or
administrator of any Benefit Plan or Multiemployer Plan, has engaged in or, in
connection with the transactions contemplated by this Agreement, will engage in
any transaction with respect to any Benefit Plan or Multiemployer Plan which
would subject any such Benefit Plan, Multiemployer Plan, Seller, ERISA Affiliate
or Buyer to a tax, penalty or liability for a "prohibited transaction" under
Section 406 of ERISA or Section 4975 of the Code. None of the assets of any
Benefit Plan is invested in any property constituting "employer real property"
or an "employer security" within the meaning of Section 407 of ERISA.
(v) Any insurance premium under any insurance policy
related to a Benefit Plan for any period up to and including the Closing Date
shall have been paid, or accrued and booked on or before the Closing Date, and,
with respect to any such insurance policy or premium payment obligation, neither
Sellers, Parent, any Subsidiary, any ERISA Affiliate or Buyer shall be subject
to a retroactive rate adjustment, loss sharing arrangement or other actual or
contingent liability.
(vi) With respect to each Benefit Plan that is a
"group health plan" within the meaning of Section 607 of ERISA and that is
subject to Section 4980B of the Code, the Sellers, Parent, each Subsidiary and
each ERISA Affiliate comply in all respects with the continuation coverage
requirements of the Code and ERISA.
(vii) No Benefit Plan provides benefits, including,
without limitation, death or medical benefits, beyond termination of service or
retirement other than (A) coverage mandated by law, or (B) death or retirement
benefits under a Benefit Plan qualified under Section 401(a) of the Code.
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(viii) The execution of and performance of the
transactions contemplated by this Agreement will not constitute an event under
any Benefit Plan that will result in any payment (whether as severance pay or
otherwise), acceleration, vesting or increase in benefits with respect to any
Business Employee or Former Business Employee. No Benefit Plan provides for
"parachute payments" within the meaning of Section 280G of the Code.
(ix) All contributions to the Multiemployer Plans
which are required to be made before the Closing Date have been or will be
timely made. No Seller, Parent, Subsidiary or ERISA Affiliate has any liability
(contingent or otherwise) relating to the withdrawal or partial withdrawal from
a Multiemployer Plan that has not been fully satisfied. Except as set forth in
Section 2.22(c) of the Disclosure Letter, neither Parent nor any Seller,
Subsidiary or ERISA Affiliate would have any liability relating to a
Multiemployer Plan if such entity withdrew (in either a complete or partial
withdrawal) from such Multiemployer Plan on the Closing Date.
(d) Set forth on Section 2.22(d) of the Disclosure Letter is a
true and complete list of all pension, retirement, supplemental retirement,
deferred compensation, excess benefit, profit sharing, bonus, incentive, stock
purchase, stock ownership, stock option, stock appreciation right, severance,
salary continuation, termination, change-of-control, health, life, disability,
group insurance, vacation, holiday and fringe benefit plan, program, contract or
arrangement (whether written or unwritten, qualified or nonqualified, funded or
unfunded and including any that have been frozen) maintained, contributed to, or
required to be contributed by Parent or any Seller, Subsidiary or Affiliate for
the benefit of any Business Employee or Former Business Employee, or under which
any Seller, Parent, any Subsidiary or any Affiliate has any liability with
respect to any Business Employee or Former Business Employee outside the
jurisdiction of the United States ("Foreign Plans").
(e) As applicable with respect to each Foreign Plan, Sellers
have delivered to Buyer, true and complete copies of (i) each Foreign Plan,
including all amendments thereto, and in the case of an unwritten Foreign Plan,
a written description thereof, (ii) the current employee communication materials
and any modifications thereto, (iii) the three most recent annual governmental
filings, and (iv) all notices or filings concerning any governmental audits or
investigations.
(f) Except as otherwise disclosed with particularity on
Section 2.22(f) of the Disclosure Letter:
(i) Each of the Foreign Plans is in compliance in all
material respects with the applicable laws of each jurisdiction in which any of
the Foreign Plans is maintained.
(ii) All contributions to and payments from, the
Foreign Plans (other than payments to be made from a trust, insurance contract
or other funding medium) which are required to be made before the Closing Date
in accordance with the terms of any such Foreign Plan or any applicable law of
the jurisdiction in which such Foreign Plan is maintained, have been or will be
timely made.
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2.23. Brokerage. Neither Parent nor any of its subsidiaries (including
any Seller or Foreign Subsidiary) have made any agreement or taken any other
action which might cause anyone to become entitled to a broker's fee or
commission as a result of the transaction contemplated hereunder for which Buyer
could be liable.
2.24. Related Party Transactions. Except as disclosed in Section 2.24
of the Disclosure Letter, no Related Party, as of the date hereof: (i) has any
material contractual or other claim, express or implied, or of any kind
whatsoever relating to the Business or any of the Purchased Assets or the
Foreign Subsidiary Assets; (ii) has any interest in any of the Purchased Assets
or the Foreign Subsidiary Assets; or (iii) is engaged in any other transaction
with any Seller with respect to the Business or with any Foreign Subsidiary. As
used herein, "Related Party" means Parent, any Subsidiary, any officer or
director of Parent or any such Subsidiary, or any of their respective officers
or directors, any relative (whether by blood, adoption or marriage) or any
Affiliate of the foregoing.
2.25. Solvency. (i) The fair value of the assets of each of the Parent
(on a consolidated basis), each Seller and the Foreign Subsidiaries, at a fair
valuation, exceeds their respective debts and liabilities, subordinated,
contingent or otherwise; (ii) the present fair saleable value of the property of
the Parent, Sellers and Foreign Subsidiaries is greater than the amount that
will be required to pay the probable liability of their respective debts and
other liabilities, subordinated, contingent or otherwise, as such debts and
other liabilities become absolute and matured; (iii) assuming Parent is able to
refinance its debt under the Credit Agreement on or before the maturity or
acceleration of such debt, the Parent, Sellers and Foreign Subsidiaries are able
to pay their respective debts and liabilities, subordinated, contingent or
otherwise, as such debts and liabilities become absolute and matured; and (iv)
assuming Parent is able to refinance its debt under the Credit Agreement on or
before the maturity or acceleration of such debt, the Parent, Sellers and
Foreign Subsidiaries do not have unreasonably small capital with which to
conduct the business in which they are engaged as such business is now conducted
and is proposed to be conducted.
2.26. Bank Approval. Parent has provided to Buyer a true and correct
copy of the agreement of BankBoston and the other lenders under the Credit
Agreement consenting and approving of the execution of this Agreement and the
consummation of the transactions contemplated hereby (the "Bank Approval").
2.27. Disclosure. No representation or warranty by Sellers or Parent in
this Agreement, the Disclosure Letter or certificate delivered by Sellers or
Parent to Buyer at Closing 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 or facts contained herein or therein not
misleading in light of the express language of the applicable statement being
made.
2.28. Disclaimer of Other Representations and Warranties. EXCEPT AS
EXPRESSLY SET FORTH IN THIS AGREEMENT OR IN ANY DOCUMENT OR AGREEMENT DELIVERED
PURSUANT HERETO, THE SELLERS AND PARENT MAKE NO REPRESENTATION OR WARRANTY,
EXPRESS OR IMPLIED, AT LAW OR IN EQUITY, IN RESPECT OF ANY OF THEIR RESPECTIVE
BUSINESS OR ASSETS (INCLUDING, WITHOUT LIMITATION, THE BUSINESS AND PURCHASED
ASSETS),
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LIABILITIES OR OPERATIONS, INCLUDING, WITHOUT LIMITATION, WITH RESPECT TO
MERCHANTABILITY, FITNESS FOR ANY PARTICULAR PURPOSE, CONFORMITY TO SAMPLES OR
MODELS AND CONDITION AND ANY SUCH OTHER REPRESENTATIONS OR WARRANTIES ARE HEREBY
EXPRESSLY DISCLAIMED. The parties agree that the foregoing disclaimers of
warranty are "CONSPICUOUS" disclaimers for purposes of any applicable law, rule,
regulation or order. Buyer hereby acknowledges and agrees that, except to the
extent specifically set forth in this Agreement or in any document or agreement
delivered pursuant hereto, the Buyer is purchasing the Purchased Assets on an
"as-is", where-is" basis. Without limiting the generality of the foregoing,
except as set forth in this Agreement or in any document or agreement delivered
pursuant hereto, the Sellers and Parent make no representation or warranty
regarding any assets other than the Purchased Assets or any liabilities other
than the Assumed Liabilities, and none shall be implied at law or in equity.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
As of the date of the Agreement, Buyer represents and warrants
to Sellers and Parent as follows:
3.1. Organization; Corporate Power and Authority. Buyer is a Delaware
corporation duly incorporated, validly existing and in good standing under the
laws of Delaware. Buyer has all requisite corporate power and authority to make,
execute, deliver and perform this Agreement, the Assumption Agreement and all
other agreements, documents and instruments to which it is a party or is
otherwise obligated which are executed, delivered or performed pursuant to this
Agreement.
3.2. Authorization and Enforceability. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of Buyer. This Agreement has been, and at Closing the Assumption
Agreement shall have been, duly executed and delivered by Buyer, and this
Agreement constitutes, and at the Closing, the Ancillary Agreements to which
Buyer is a party will constitute, the legal, valid and binding obligations of
Buyer, enforceable against it in accordance with their respective terms, except
as such enforcement may be limited by bankruptcy, insolvency, moratorium or
other similar laws affecting creditors' rights generally and general principles
of equity.
3.3. Brokerage. Buyer has not made any agreement or taken any other
action which might cause anyone to become entitled to a broker's fee or
commission as a result of the transactions contemplated hereunder for which
Parent or Sellers could be liable.
3.4. No Violations. The execution, delivery and performance of this
Agreement and the Ancillary Agreements by Buyer and the consummation of the
transactions contemplated hereby and thereby do not and will not (a) contravene
any provision of Buyer's charter or bylaws; (b) conflict with or result in a
breach of or constitute a default (or an event which might, with the passage of
time or the giving of notice or both, constitute a default) under any provision
of, result in acceleration of any obligation under, or give rise to a right by
any party to terminate
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or amend its obligations under, any indenture, mortgage, loan or credit
agreement or any other agreement or instrument to which Buyer is a party or by
which it or any of its assets may be bound or affected, or any judgment or order
of any court or governmental department, commission, board, agency or
instrumentality, domestic or foreign, or any applicable law, rule or regulation,
(c) violate any statute, rule, regulation or ordinance applicable to Buyer,
which, in the case of clauses (b) and (c), such conflict, breach, default,
acceleration or violation would adversely affect Buyer's ability to consummate
the transaction contemplated hereby.
3.5. Buyer's Capital Structure. Buyer does not, as of the date of this
Agreement, presently expect that an HSR Filing will be required pursuant to the
HSR Act in order to consummate the transactions contemplated by this Agreement.
Buyer shall promptly notify Parent in the event that, between the date hereof
and the Closing, Buyer's expectation should change such that Buyer expects that
an HSR Filing will be required pursuant to the HSR Act in order to consummate
the transactions contemplated herein. If Buyer does not so notify Parent, Buyer
shall make the following representation to Parent and Sellers on and as of the
Closing Date:
"Neither Buyer nor any Person which, directly or indirectly,
owns beneficially or of record 50% or more of the outstanding
voting securities of Buyer, or has the present right or power
to designate or elect 50% or more of the directors
constituting the board of directors of Buyer, whether by
ownership of voting or other securities of Buyer, by contract
or otherwise has, in the aggregate, total assets or net annual
sales in excess of $10,000,000, as calculated pursuant to 16
C.F.R. Section 801.11."
Nothing contained in this Section 3.5 shall in any way diminish the obligations
of the parties contained in Section 4.4 hereof.
ARTICLE IV
CERTAIN COVENANTS
4.1. Interim Conduct of the Business Sellers and Parent hereby jointly
and severally covenant to Buyer that, from the date hereof to the Closing,
Sellers will, and Parent will cause Sellers to, and ITEQ Storage and Parent will
cause the Foreign Subsidiaries to, conduct the Business only in the ordinary
course and consistent with past practice, subject to Buyer's approval of certain
transactions pursuant to Section 4.2 hereof below. Without limiting the
generality of the foregoing, Sellers and Parent hereby jointly and severally
covenant to Buyer that, solely insofar as the Business is concerned, Sellers
will, Parent will cause Sellers to, and ITEQ Storage and Parent will cause the
Foreign Subsidiaries to, use their commercially reasonable efforts to:
(a) preserve the business organization of Parent, the Sellers
and the Foreign Subsidiaries intact, keep available the services of the present
officers and directors of the Sellers and the Foreign Subsidiaries, and preserve
intact their relationships with their respective
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suppliers, customers, employees, creditors and others having business dealings
with the Business;
(b) maintain their respective books of account and records in
its usual, regular and ordinary manner, consistent with its past practice;
(c) maintain all Intellectual Property to be included as part
of the Purchased Assets in the same standing as exists on the date hereof and
continue the prosecution of all applications therefor;
(d) timely perform and comply with, in all material respects,
the provisions of all contracts, commitments or other obligations relating to or
affecting the Purchased Assets or the Business;
(e) maintain and keep the Purchased Assets and the Foreign
Subsidiary Assets in at least as good condition and repair, reasonable wear and
tear excepted, as the condition and repair of the Purchased Assets as of the
date hereof;
(f) pay when due all Taxes imposed on it or its income, profit
or assets or otherwise required to be paid by it, and pay when due any liability
or charge which, if unpaid, might become a lien or charge upon any of the
Purchased Assets or Foreign Subsidiary Assets, except to the extent any such
Tax, liability or charge is being contested in good faith through appropriate
proceedings; and
(g) maintain in full force and effect and comply with, in all
material respects, all permits, certificates, licenses, approvals and
authorizations required under all laws in connection with the Business, and
comply with all laws, rules and regulations applicable to the Business.
4.2. Buyer's Consent to Certain Transactions. Sellers and Parent hereby
covenant to Buyer that, from the date hereof to the Closing, solely insofar as
the Business is concerned, Sellers will, Parent will cause Sellers to, and
Parent and ITEQ Storage will cause the Foreign Subsidiaries to, not do any of
the following without the prior written consent of Buyer, which consent shall
not be unreasonably withheld:
(a) incur any obligation or other liability which would
constitute an Assumed Liability or a liability of a Foreign Subsidiary, except
in the ordinary course of business and consistent with past practice;
(b) purchase, sell, pledge, mortgage or dispose of any Real
Property or real property interest to be included as part of the Purchased
Assets or comprising an asset of any Foreign Subsidiary;
(c) enter into any lease of real or personal property
constituting Purchased Assets or comprising an asset of any Foreign Subsidiary,
or any renewals thereof, involving a rental obligation exceeding $5,000 per
annum in the aggregate;
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(d) except for normal merit or cost-of-living increases in
accordance with the past practices of Sellers and increases provided for in
collective bargaining agreements, increase the rate of compensation or the
benefits for any Employees or otherwise enter into or alter any employment,
consulting or managerial services agreement affecting the Business;
(e) except as provided for in collective bargaining
agreements, commence, enter into or alter any pension, retirement,
profit-sharing, employee stock option or stock purchase, bonus, deferred
compensation, incentive compensation, group insurance, severance pay, life
insurance, health insurance, fringe benefit or other employee benefit plan or
arrangement primarily affecting Employees;
(f) make any new commitment or increase any previous
commitment for capital expenditures relating to the Business in amounts
exceeding in the aggregate $100,000;
(g) accelerate or delay the sale of products of the Business
except as may be necessary in the ordinary course of business and consistent
with past practice;
(h) enter into any transaction, contract or commitment outside
of the ordinary course of business, modify any contract, knowingly waive or
knowingly permit the loss of any right of substantial value, cancel any debt or
claim except in the ordinary course of business consistent with past practice or
voluntarily suffer any extraordinary loss;
(i) sell, assign, transfer, license or convey any of the
Intellectual Property to be included as part of the Purchased Assets or any
Intellectual Property of any Foreign Subsidiary.
(j) take any action or omit to take any action that will
result in a material violation of any applicable law or that would result in a
breach or inaccuracy of any of its representations or warranties in any material
respect at, or as of any time prior to, the Closing;
(k) sell, pledge, mortgage or otherwise dispose of any of the
Purchased Assets or Foreign Subsidiary Assets, except for sales of inventory in
the ordinary course of business and consistent with past practice;
(l) incur, create, assume or suffer to exist any Encumbrance
on any of the Purchased Assets or Foreign Subsidiary Assets, except Permitted
Encumbrances;
(m) guarantee or become a co-maker or otherwise become or
remain contingently liable in connection with any liability or obligation of any
other Person; or
(n) change or issue any securities of, or rights or options to
acquire any capital stock in (A) any Seller in such a way which could adversely
affect or delay shareholder approval for the consummation of the transactions
contemplated hereby or (B) any Foreign Subsidiary.
4.3. Consents to Assignment. Sellers and Parent covenant to Buyer that,
between the date hereof and the Closing, Sellers and Parent will, and will cause
the Foreign Subsidiaries to, use commercially reasonable efforts to obtain the
Landlord Consents and any other consents or approvals (or effective waivers
thereof) of all Persons whose consents or approvals are required
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to enable Sellers, Parent or the Foreign Subsidiaries, as the case may be, to
effect the transactions contemplated hereby and required for the assignment of
the rights of Sellers, Parent and the Foreign Subsidiaries under contracts,
non-real estate leases, licenses, permits, approvals and other items
constituting part of the Purchased Assets (provided, that Sellers and Parent
shall not be obligated to obtain consents to the assignment of any purchase
orders entered into by Sellers or the Foreign Subsidiaries in the ordinary
course of business consistent with their past practice from the customers who
are a party to such purchase orders (such consent being referred to herein as
"Purchase Order Consents")).
4.4. Government Notification. Sellers and Parent hereby covenant to
Buyer, and Buyer hereby covenants to Sellers and Parent, that the parties will
proceed promptly with the preparation and filing of any required notification
and documentation under (i) Title II of the HSR Act and the rules of the Federal
Trade Commission ("FTC") thereunder ("▇▇▇ "▇▇▇ ▇▇▇▇▇▇"). From the date hereof to
the Closing, the parties will cooperate in attempting to secure the expiration
of the waiting period prescribed under the HSR Act at the earliest practicable
date. Each of Sellers, Parent and Buyer will use its reasonable efforts to
obtain any clearance required under the HSR Act for the purchase and sale of the
Purchased Assets in accordance with the terms and conditions hereof. The filing
fee required under the HSR Act and the rules of the FTC will be paid by Buyer.
Notwithstanding the foregoing, nothing contained in this Agreement will require
or obligate Buyer or its Affiliates (i) to initiate, pursue or defend any
litigation (or threatened litigation) to which any Governmental Authority
(including the Antitrust Division of the Justice Department or the FTC) is a
party; (ii) to agree or otherwise become subject to any material limitations on
(A) the right of Buyer or its Affiliates effectively to control or operate the
Business after the Closing or the business or operations of Buyer or any
Affiliate of Buyer, (B) the right of Buyer or its Affiliates to acquire or hold
the Business, or (C) the right of Buyer to exercise full rights of ownership of
the Business or all or any material portion of the Purchased Assets; or (iii) to
agree or otherwise be required to sell or otherwise dispose of, hold separate
(through the establishment of a trust or otherwise), or divest itself of all or
any portion of the business, assets or operations of Buyer, any Affiliate of
Buyer or the Business. Sellers and Parent agree that no representation, warranty
or covenant of Buyer in this Agreement shall be breached or deemed breached as a
result of the failure by Buyer to take any of the actions specified in the
preceding sentence.
4.5. [This Section intentionally left blank]
4.6. Access, Information and Documents. During the period ended five
(5) years after the Closing Date, upon reasonable advance notice, Sellers and
Parent will give to Buyer and to Buyer's counsel, accountants and other
representatives reasonable access during normal business hours to such of the
Sellers' and Parent's books, tax returns, contracts, commitments, records,
employees, officers and accountants relating to the Business or the Purchased
Assets and will furnish to Buyer access to or copies of such documents
(certified to be true copies if requested) and all information with respect to
the Business or the Purchased Assets, as Buyer may reasonably request, all at
Sellers' and Parent's expense except that Buyer shall reimburse Sellers and
Parent for reasonable out of pocket expenses incurred by them with respect to
such access. During the period ended five (5) years after the Closing Date, upon
reasonable advance notice, Buyer will give to Parent, Sellers and their
respective counsel, accountants and other representatives reasonable access
during normal business hours to such of Buyer's books, tax
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returns, contracts, commitments, records, employees, officers and accountants
relating to the Business, Foreign Subsidiaries or the Purchased Assets and will
furnish to Parent and Sellers access to or copies of such documents (certified
to be true copies if requested) and all information with respect to the
Business, Foreign Subsidiaries or the Purchased Assets, as Parent or Sellers may
reasonably request, all at Buyer's expense except that Sellers and Parent shall
reimburse Buyer for reasonable out of pocket expenses incurred by it with
respect to such access. Buyer, on the one hand, and Parent and Sellers, on the
other hand, shall provide the other party reasonable advance notice before
destroying or disposing of any books, records or information relating to the
Business, Foreign Subsidiaries or Purchased Assets and allow such other party to
take possession of or copy, at such other party's sole expense, any of such
books, records or information.
4.7. Tax Reporting and Allocation of Consideration. Buyer, Parent and
Sellers agree that the sale of the Purchased Assets hereunder is a fully taxable
sale for income tax purposes. Buyer, Parent and Sellers recognize their mutual
obligations pursuant to Section 1060 of the Code to timely file IRS Form 8594
(the "Asset Acquisition Statement") with each of their respective federal income
tax returns. Accordingly, Buyer, Parent and Sellers agree to cooperate in the
preparation of the Asset Acquisition Statement for timely filing in each of
their respective federal income tax returns in accordance with a written
statement (the "Statement of Allocation") setting forth an allocation of the
consideration paid for the Purchased Assets among such Purchased Assets in
accordance with the provisions of Section 1060 of the Code and the Treasury
Regulations thereunder. The Statement of Allocation shall be prepared by Buyer.
Buyer shall deliver an estimated Statement of Allocation to Parent at the
Closing. Buyer shall deliver to Parent a final Statement of Allocation (the
"Final Statement of Allocation") as promptly as practicable following the final
determination of the Closing Statement pursuant to Section 1.7 hereof, which
shall be subject to Parent's review and written approval, which approval shall
not be unreasonably withheld. Unless otherwise prohibited by law, all Returns of
Buyer, Parent and Sellers shall be filed consistently with the allocations made
pursuant to the Final Statement of Allocation. Sellers, Parent and Buyer
acknowledge and agree that (i) Sellers and Parent will be responsible for and
perform all Tax withholding, payment and reporting duties with respect to any
wages and other compensation paid by Sellers to any Employee in connection with
the operation of the Business prior to or on the Closing Date; and (ii) Buyer
will be responsible for and perform all Tax withholding, payment and reporting
duties with respect to any wages and other compensation paid by Buyer to any
employee, including Transferred Employees, in connection with the operation of
the Business after the Closing Date. Sellers, Parent and Buyer agree to follow
the Standard Procedure specified in Rev. Proc. 96-60, 1996-2 C.B. 399, whereby,
among other things, each will be responsible for the reporting duties with
respect to its own wages and compensation to employees in connection with the
operation of the business.
4.8. Negotiations. Between the date of this Agreement and the Closing
Date, Sellers and Parent shall not, and shall cause their respective officers,
directors, employees, agents, Affiliates or advisors not to (all such persons
and entities, together with Sellers and Parent, the "Company Group"), initiate,
solicit, encourage, entertain, negotiate, accept or discuss, directly or
indirectly, any proposal or offer (an "Acquisition Proposal") to acquire,
directly or indirectly, all or any significant part of the business and
properties, capital stock or capital stock equivalents of the Business or the
Sellers (including by means of a sale of all or a portion of ITEQ Storage but
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excluding any such acquisition not involving any Purchased Assets), whether by
merger, purchase of stock, purchase of assets or otherwise (a "Third Party
Acquisition"), or provide any non-public information to any third party in
connection with an Acquisition Proposal or enter into any agreement, arrangement
or understanding requiring it to abandon, terminate or fail to consummate the
transaction proposed hereby. Parent agrees to immediately notify Buyer if any
member of the Company Group receives any indications of interest, requests for
information or offers in respect of an Acquisition Proposal and the material
terms of and the identity of the Person making such indication, request or
offer.
4.9. Covenant Not to Compete; Nonsolicitation; Confidentiality.
(a) For a period of three years from and after the Closing
Date, neither Parent, Sellers, nor any Affiliate of any Seller (other than
officers or directors of Parent, any Seller or any Affiliate of any Seller or
shareholders of Parent) shall, unless acting as an officer or employee of, or
consultant to, Buyer, directly or indirectly, (i) own, manage, operate, join,
control or participate in the ownership, management, operation or control of, or
be connected as an officer, director, employee, stockholder, partner or
otherwise with, any Competing Business (as hereinafter defined), or (ii)
solicit, employ, retain as a consultant, adversely interfere with or attempt to
entice away from Buyer or its Affiliates, any Protected Employee (as hereinafter
defined), or (iii) solicit (except with respect to the solicitation of customers
solely in connection with the Retained Business assuming compliance with Section
4.9(a)(i) hereof), adversely interfere with or attempt to entice away from Buyer
or its Affiliates, any person, firm or corporation which has been during the
two-year period ending on the Closing Date or is a customer of Buyer or Sellers
in connection with the Business. Ownership of not more than 2% of the
outstanding stock of any publicly traded company shall not be a violation of
this Section 4.9 so long as Sellers and their Affiliates do not participate in
the management of such company.
(b) As used herein, "Competing Business" shall mean any
business or other enterprise which engages in or competes with the Business
within the Territory; "Territory" shall mean worldwide; "Protected Employee"
shall mean any current or former employee of the Business or Buyer during the
period in which the covenants set forth in this Section 4.9 are in effect, but
excluding persons who have not been employed by the Business or Buyer during the
six-month period preceding the date on which a determination is made regarding
whether a person is a Protected Employee and excluding persons employed by Buyer
not in connection with the Business; and "Retained Business" shall mean any
business of Parent, Subsidiaries or Sellers other than the Business.
(c) The length of time for which this covenant not to compete
shall be in force shall not include any period of violation (as determined by a
court, arbitrator or as otherwise agreed to by the parties) or, provided that
Buyer is the prevailing party in such litigation or arbitration, any other
period required for litigation or arbitration during which Buyer seeks to
enforce this Section 4.9. In the event that the covenants contained in this
Section 4.9 shall be determined by any court of competent jurisdiction to be
unenforceable by reason of its extending for too long a period of time or over
too large a geographical area or by reason of its being too extensive in any
other respect, it shall be interpreted to extend only over the longest period of
time for which it may be enforceable, and/or over the largest geographical area
as to which it may be enforceable and/or to the maximum extent (not to exceed
the extent specified herein) in
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all other aspects as to which it may be enforceable, all as determined by such
court in such action.
(d) Confidentiality. From and after the Closing, Sellers and
Parent shall, and shall cause their Affiliates and representatives to, keep
confidential and not disclose to any other Person, use for their own benefit in
a manner competitive with or otherwise detrimental to Buyer or the Business, or,
except for any security interest granted to Sellers' lenders pursuant to the
Credit Agreement or a refinancing thereof, sell, assign, pledge or otherwise
transfer to any other Person any trade secrets or other confidential or
proprietary information in their possession or control regarding the Business
and its operations. The obligation of Sellers and Parent under this Section
4.9(d) shall not apply to information which (i) is or becomes generally
available to the public without breach of the commitment provided for in this
Section; or (ii) is required to be disclosed by law, order or regulation of a
court or tribunal or governmental authority; provided, however, that, in any
such case, Sellers and Parent shall notify Buyer as early as reasonably
practicable prior to disclosure to allow Buyer to take appropriate measures to
preserve the confidentiality of such information.
(e) Injunctive Relief. The restrictive covenants contained in
this Section 4.9 are each covenants independent of any other provision of this
Agreement, and the existence of any claim which Parent or any Seller may allege
against any other party to this Agreement, whether based on this Agreement or
otherwise, shall not prevent the enforcement of these covenants. Sellers and
Parent acknowledge that Buyer is purchasing the goodwill of the Business, that
the covenants contained in this Section 4.9 are essential to the protection of
Buyer's investment in the Purchased Assets and the Business and that Buyer would
not purchase the Purchased Assets and the Business but for these covenants.
Sellers and Parent agree that a breach by any of the covenants of this Section
4.9 shall cause irreparable harm to Buyer and the Business and that Buyer's
remedies at law for any breach or threat of breach of the provisions of this
Section 4.9 shall be inadequate, and that Buyer shall be entitled to an
injunction or injunctions to prevent breaches of this Section 4.9 and to enforce
specifically the terms and provisions hereof, in addition to any other remedy to
which Buyer may be entitled at law or in equity.
4.10. Fulfillment of Agreements. Sellers and Parent shall use their
respective commercially reasonable efforts to cause all of the conditions to the
obligations of the Buyer under Section 5.1 of this Agreement to be satisfied on
or prior to the Closing. Buyer shall use its commercially reasonable efforts to
cause all of the conditions to the obligations of the Sellers under Section 5.2
of this Agreement to be satisfied on or prior to the Closing. Sellers and Parent
will promptly notify Buyer in writing of any event or fact which represents or
is likely to cause a breach of any of their representations, warranties,
covenants or agreements. Sellers and Parent shall promptly advise Buyer in
writing of the occurrence of any condition or development (exclusive of general
economic factors affecting business in general) of a nature that is or may have
a Material Adverse Effect.
4.11. Insurance. Sellers and/or Parent shall maintain in full force and
effect the policies of insurance listed in Section 2.20 of the Disclosure Letter
in effect as of the date hereof, subject only to variations required by the
ordinary operations of its business, or else will obtain, prior to the lapse of
any such policy, substantially similar coverage with insurers of recognized
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standing. Sellers shall promptly advise the Buyer in writing of any change of
insurer or type of coverage in respect of the policies listed in Section 2.20 of
the Disclosure Letter.
4.12. Bulk Transfers. The parties hereto waive compliance with the
requirements of the Bulk Sales law of any jurisdiction in connection with the
sale of the Purchased Assets to Buyer.
4.13. Employee Matters.
(a) On the date which is ten (10) Business Days prior to the
Closing, the Sellers shall provide Buyer with a list of the names, job title and
assigned location of each Employee compensated on a salary or hourly basis and
whose terms and conditions of employment are not established pursuant to a
collective bargaining agreement (the "Non-Union Employees"). Not less than five
(5) Business Days prior to Closing, Buyer shall provide Parent with a list of
all Non-Union Employees who will [not] receive offers of employment from Buyer.
Effective as of the Closing Date, Buyer will offer employment to such Non-Union
Employees as it shall determine. All Non-Union Employees who receive and accept
an offer of employment from Buyer are herein referred to as the "Transferred
Non-Union Employees."
(b) At the Closing, Sellers shall provide Buyer with a list
(which shall be current as of a date no more than five days prior to Closing) of
the names, job title, seniority, and assigned location of each Employee whose
terms and conditions of employment are established pursuant to a collective
bargaining agreement (the "Union Employees"). Subject to Section 4.13(f) below,
effective as of the Closing Date, Buyer shall assume all of Seller's
post-closing obligations under the relevant collective bargaining agreements.
All Union Employees who become employed by Buyer are herein referred to as the
"Transferred Union Employees." Transferred Non-Union Employees and Transferred
Union Employees are collectively referred to herein as the "Transferred
Employees."
(c) Sellers shall be responsible for the payment of any
severance payment or benefits that become due to any Business Employee or Former
Business Employee as a result of the termination of such Business Employee or
Former Business Employee by any Seller or its Affiliates. Buyer and its
Affiliates shall not be obligated to continue or assume any employee benefit
plan or program of any Seller or its Affiliates (including, but not limited to
the Benefit Plans) or responsible for any obligation or liability thereunder,
except as otherwise required by applicable law, rule, regulation or order.
(d) Nothing contained in this Agreement shall confer upon any
Transferred Non-Union Employee any right with respect to employment by Buyer or
its Affiliates, nor shall anything herein interfere with the right of Buyer or
its Affiliates, following any employment of any Transferred Non-Union Employee,
to terminate the employment of any such Transferred Non-Union Employee at any
time, with or without cause, or restrict Buyer or its Affiliates in the exercise
of their independent business judgment in modifying any of the terms and
conditions of the employment of any such Transferred Non-Union Employee.
(e) No provision of this Agreement shall create any third
party beneficiary rights in any Transferred Employee, any Beneficiary or
dependents thereof with respect to the
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compensation, terms and conditions of employment and benefits that may be
provided to any Transferred Employee by Buyer or under any benefit plan which
Buyer may maintain.
(f) Sellers shall be solely responsible for any liability,
claim or expense with respect to employment, termination of employment,
compensation or employee benefits of any nature (including, but not limited to
the benefits to be provided under the Benefit Plans, Multiemployer Plans or
Foreign Plans) owed to any Business Employee or Former Business Employee of any
Seller or Foreign Subsidiary (or the Beneficiary of any such Business Employee
or Former Business Employee) whether or not such Employee or Former Business
Employee becomes a Transferred Employee, that arises out of or relates to the
employment relationship between any Seller or Foreign Subsidiary and any such
Business Employee or Former Business Employee or the termination of such
relationship and which such liability, claim or expense relates to any period on
or prior to the Closing Date (other than accrued vacation pay to the extent
reflected on the Closing Statement and other than with respect to the payment of
account balances transferred to Buyer's 401(k) Plan pursuant to Section 4.14).
(g) Buyer shall be solely responsible for any liability, claim
or expense with respect to employment, termination of employment, compensation
or employee benefits of any nature owed to any Transferred Employee that arises
out of or relates to the employment relationship between Buyer and any such
Transferred Employee or the termination of such relationship and which such
liability, claim or expense relates to any period on or after to the Closing
Date.
4.14. Benefit Plans.
(a) Effective as of the Closing Date, active participation of
Transferred Non-Union Employees in the ITEQ, Inc. 401(k) Plan (the "Seller's
401(k) Plan") shall cease and their account balances shall become 100 percent
vested.
(b) Effective as of the Closing Date, Buyer shall establish a
defined contribution retirement plan qualified under Section 401(a) of the Code
for the benefit of all Transferred Non-Union Employees (the "Buyer's 401(k)
Plan");
(c) Within sixty (60) days after the Closing Date, (i) Parent
will have corrected the qualification failures disclosed in Section 2.22(c) of
the Disclosure Letter (the "Qualification Failures") pursuant to the
Administrative Policy Regarding Self Correction ("APRSC") under the Employee
Plans Compliance Resolution System (as described in Revenue Procedure 98-22)
("EPCRS") and provided Buyer with the Correction Opinion, or (ii) Parent will
have submitted (or cause to be submitted) the Qualification Failures to the IRS
under the appropriate EPCRS program and hereby agrees to pay all applicable
sanctions and take all corrective action required by the IRS with respect to
such submission. Parent within five (5) Business Days will notify Buyer upon the
receipt of a finalized compliance statement or other appropriate closing
agreement with respect to such submission under the EPCRS. In the event that
Parent has elected to submit the Qualification Failures to the IRS in accordance
with item (ii) above, but has not received a finalized compliance statement or
other appropriate closing agreement within 180 days of the Closing Date, then at
the request of Buyer, Parent shall cause the Seller's 401(k) Plan to provide
each of the Transferred Employees (within 30 days of such
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request) an opportunity to receive a distribution of their account balances
under Seller's 401(k) Plan.
(d) If Buyer has not requested a distribution to the
Transferred Employees in accordance with Section 4.14(c), then within thirty
(30) days after receipt of the opinion of counsel or the compliance statement or
other appropriate closing agreement described in Section 4.14(c) hereof, Buyer
shall provide Parent with opinion letters of counsel acceptable to Parent that
the Buyer's 401(k) Plan satisfies the requirements for qualification under
Section 401(a) of the Code or deliver to Parent a favorable determination letter
issued by the IRS that the Buyer's 401(k) Plan satisfies the requirements for
qualification under Section 401(a) of the Code.
(e) As soon as practicable after the latest of (i) the
expiration of 60 days following the filing of Forms 5310 with the IRS, if
required and (ii) the receipt by Parent of the opinions or determination letters
prescribed in paragraph (d) above, Parent shall cause the trustee of the
Seller's 401(k) Plan to transfer to the trust forming a part of the Buyer's
401(k) Plan cash (including participant notes) equal to the aggregate vested
account balance (including loan balances) of the Transferred Non-Union Employees
as of such transfer date.
(f) Transferred Employee's active participation in the Benefit
Plans that are "employee welfare benefit plans" (as defined in Section 3(1) of
ERISA) sponsored by the Parent, any Seller or any Subsidiary of Parent (the
"Seller's Welfare Plans") shall cease as of the Closing Date or as otherwise
provided under the terms of such Benefit Plan. Notwithstanding the preceding
sentence, Seller's Welfare Plans shall retain liability for all claims incurred
by the Transferred Employees and their dependents prior to the Closing Date
including claims which are not submitted until after the Closing Date. Buyer's
Welfare Plan (as defined below) shall be responsible for all claims incurred on
or after the Closing Date. A claim shall be deemed incurred (i) on the date of
the occurrence of death or dismemberment in the case of claims under life
insurance and accidental death and dismemberment plans and (ii) on the date on
which the service or treatment is provided in the case of claims under medical,
hospital, dental and similar plans.
(g) Effective as of the Closing Date, Buyer shall establish a
group health plan or plans (the "Buyer's Welfare Plan") that will provide
medical, dental and life insurance benefits for Transferred Non-Union Employees
and their dependents.
(h) For purposes of any employee benefit plan, program or
arrangement of the Buyer for which a Transferred Non-Union Employee otherwise
become eligible, such Transferred Non-Union Employee shall be given credit under
such plan for purposes of eligibility and vesting for all service prior to the
Closing with the Sellers.
(i) At the Closing, Sellers shall provide Buyer with a list of
each Transferred Employee that has an amount credited to his or her account
under the Seller's Flex Spending Program and the amount of such credit (the
"Flex Plan Amount"). Within five (5) Business Days after the Closing Date, the
Flex Plan Amount shall be transferred by Parent to Buyer as of Closing.
Effective as of the Closing Date, Buyer shall establish a flexible spending
account plan and will credit each of the Transferred Employees with his or her
applicable portion of the Flex
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Plan Amount. Any claims incurred by any Transferred Employee on or after the
Closing Date shall not be eligible for payment or reimbursement under the
Seller's Flex Spending Program.
4.15. Accounts Receivable. Buyer shall use commercially reasonable
efforts to collect all accounts receivable transferred to Buyer (including the
accounts receivable of the Foreign Subsidiaries) on the Closing Date (the
"Accounts Receivable") but in no event will Buyer be required to apply efforts
which are greater than the efforts applied by Sellers and the Foreign
Subsidiaries in the collection of the accounts receivable of the Business and in
no event shall Buyer be required to file a claim or pursue litigation or
arbitration against any account debtor of the Business. Upon delivery of the
Closing Statement, Buyer will deliver to Parent a statement (the "Uncollected
A/R Statement") setting forth the amount of any Accounts Receivable that remain
uncollected by Buyer as of the A/R Payment Date (the "Uncollected Accounts
Receivable") together with reasonable documentation in support thereof. The
Uncollected A/R Statement shall be prepared in accordance with the Accounting
Principles. For a period of thirty (30) days after delivery of the Uncollected
A/R Statement, Buyer shall provide Parent with reasonable access during normal
business hours to the books, records, employees and agents of Buyer related to
the Uncollected Accounts Receivable and the preparation of the Uncollected A/R
Statement. If, within thirty (30) days after the delivery of the Uncollected A/R
Statement, Parent disputes in good faith the amount of any Uncollected Account
Receivable, Parent shall deliver to Buyer within such period a written notice
(the "A/R Dispute Notice") specifying in reasonable detail all disputed items
and the basis therefor (collectively, the "A/R Disputed Items"). The failure by
Parent to provide an A/R Dispute Notice within such thirty (30) day period to
Buyer will constitute Parent's acceptance of the Uncollected A/R Statement.
Parent shall be deemed to have agreed with the amount of all Uncollected
Accounts Receivable included in the Uncollected A/R Statement except such
amounts that are specifically disputed in the A/R Dispute Notice. If Parent
provides Buyer with a timely A/R Dispute Notice, Buyer and Parent shall, within
thirty (30) days (or such longer period as mutually agreed upon by Buyer and
Parent) following the delivery of such A/R Dispute Notice to Buyer (the "A/R
Resolution Period"), negotiate in good faith to resolve the A/R Disputed Items
to their satisfaction. At the conclusion of the A/R Resolution Period, Buyer and
Parent shall refer all unresolved A/R Disputed Items to the Independent
Accountant in accordance with the provisions of Section 1.7(b) hereof. Within
five (5) Business Days after the final determination of the amount of
Uncollected Accounts Receivable, (i) Sellers shall pay to Buyer an amount equal
to the excess, if any, of the Uncollected Accounts Receivable over the allowance
for doubtful accounts shown on the Closing Statement and (ii) Buyer shall
transfer, convey and assign to Sellers the Uncollected Accounts Receivable
relating to such excess, along with any documents related to the collection of
such accounts as may be reasonably requested by Sellers. Buyer, at its election,
may decide to not transfer to Sellers any specific uncollected account and the
amount payable to Buyer by Sellers pursuant to the preceding sentence shall be
accordingly reduced. Sellers may collect the Uncollected Accounts Receivable
transferred to them in a manner consistent with the manner the Sellers have used
to collect accounts receivable in the ordinary course of business consistent
with past practice with respect to the Business. As used herein, the "A/R
Payment Date" shall mean the date which is ninety (90) days after the Closing
Date.
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4.16. Real Estate.
(a) On or prior to the Closing, Sellers shall cause lessors to
execute and deliver to Buyer estoppel certificates in connection with each of
the leases listed in Section 2.18(b) of the Disclosure Letter in a form
reasonably satisfactory to Buyer.
(b) On or prior to the Closing, Sellers shall deliver to Buyer
originals (if in their possession, otherwise copies) of all certificates of
occupancy and certificates of zoning compliance for the Owned Real Properties.
(c) Except with respect to the U.K. Site, on or prior to
Closing, Sellers shall deliver, at Buyer's sole expense, good and valid,
irrevocable ALTA or TLTA (as applicable) title insurance binders or commitments,
as appropriate (collectively, the "Title Commitments" and each a "Title
Commitment"), in final form, from Chicago Title Insurance Company's national
office in San Antonio, Texas (the "Title Company"), irrevocably committing the
Title Company (subject only to the satisfaction of any industry standard
requirements contained in the Title Commitment and reasonably acceptable to
Buyer) to issue ALTA form 1970 (amended 1984) title insurance policies (or
standard commercial TLTA policies with respect to any Owned Real Property
located in Texas) without creditors' rights exclusions and arbitration
conditions, and insuring good, valid and indefeasible fee simple title to each
parcel of the Owned Real Property located in Texas and good, valid, marketable
and indefeasible fee simple to each parcel of Owned Real Property located
outside of Texas, subject to no Encumbrances or exceptions to title other than
the Permitted Encumbrances (collectively, the "Title Policies"). Notwithstanding
the foregoing, Sellers shall either cause to be removed from a Title Policy, or
pay the premium for any and all endorsements required to address, any
Encumbrance except Permitted Encumbrances (for purposes of this sentence,
"Permitted Encumbrances" does not include Predecessor Encumbrances) that would
render title not to be good, valid or indefeasible (with respect to each parcel
of Owned Real Property located in Texas) and not to be good, valid, marketable
or indefeasible (with respect to each parcel of Owned Real Property located
outside of Texas) and with respect to any charges above customary rates (a
"Title Defect"); provided that the aggregate Cure Costs (as hereinafter defined)
shall not exceed $100,000; and provided that after Sellers have incurred
aggregate Cure Costs in excess of $100,000 and Sellers elect not to cure any
Title Defect, Buyer may terminate this Agreement. Each of the Title Commitments
shall be effective as of a date occurring not earlier than the date of this
Agreement and the effective dates of each of them shall be brought down to the
time of Closing. Each such Title Commitment shall include such endorsements
thereto as may reasonably be requested by Buyer, including, without limitation,
a form 3.1 zoning endorsement (with loading docks and parking coverages) if
available. On or prior to the Closing Date, the Sellers shall execute and
deliver, or cause to be executed and delivered, to the Title Company any
affidavits reasonably requested by the Title Company or Buyer in connection with
the issuance of the Title Commitments or the Title Policies in form and
substance as required hereunder.
(d) Except with respect to the U.K. Site, Buyer may, at
Buyer's expense, obtain prior to the Closing, a current, as-built survey of each
parcel of Owned Real Property (the "Surveys") prepared by a surveyor registered
in the applicable state, in accordance with the 1992 minimum detail requirements
for ALTA/ACSM Land Title surveys, Class A or B or Urban, and dated as of a date
after December 31, 1999 showing the applicable Owned Real Estate, all known
easements and rights granted by license thereon which can be depicted on the
Survey, all improvements (including fences and driveways), and access to and
from a dedicated and
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accepted public right-of-way, together with all rail lines serving the
applicable real estate. Each such Survey shall (i) be certified to Buyer and its
assigns, its mortgage lender, if any, the Title Insurer insuring title to that
portion of the Owned Real Property subject to such Survey, and any other person
reasonably requested by Buyer, and (ii) comply with any requirements imposed by
the Title Insurer and a condition to the removal of any survey exception from
the general exceptions in the Title Policy for the applicable real estate. In
the event that any Survey shows (i) lack of access to and from a dedicated and
accepted public right-of-way, or (ii) a matter which materially interferes with
the current use of the applicable Owned Real Property (collectively "Survey
Defects"), then Buyer shall notify Sellers and Parent of such Survey Defect
promptly upon receiving knowledge thereof, and Sellers and/or Parent shall, at
their expense, prior to the Closing, remove or correct such Survey Defect to the
reasonable satisfaction of Buyer, provided that the aggregate cost incurred by
Parent and Seller to cure all Title Defects and Survey Defects ("Cure Costs")
shall not exceed the sum of $100,000. In the event and to the extent the
aggregate Cure Costs incurred by Parent and Sellers exceed $100,000, Parent or
Sellers may (i) remove or correct such Survey Defects, (ii) cause such Survey
Defects to be insured over by the Title Insurer to Buyer's reasonable
satisfaction, or (iii) otherwise address such Survey Defects in a manner
reasonably satisfactory to Buyer; provided that if Parent and Sellers elect not
to take any action specified in clauses (i) - (iii) of this sentence, Buyer may
terminate this Agreement.
4.17. Tax Matters.
(a) Buyer and Parent shall reasonably cooperate with each
other in connection with the preparation of Tax Returns related to the Business,
the Purchased Assets, Sellers and the Foreign Subsidiaries and shall preserve,
and provide each other, upon reasonable advance notice, with reasonable access
during normal business hours, all information, returns, books, records and
documents relating to any liabilities for Taxes with respect to a taxable period
until the later of the expiration of all applicable statutes of limitation and
extensions thereof, or a final determination with respect to Taxes for such
period and shall not destroy or otherwise dispose of any record without first
providing the other Party with a reasonable opportunity to review and copy the
same.
(b) Any Foreign Subsidiary Taxes for a period of time
including both a pre-Closing period and a post-Closing period shall be
apportioned between such pre-Closing period and the post-Closing period based,
in the case of real and personal property Taxes, on a per diem basis and in the
case of other Taxes, on the actual activities, taxable income or taxable loss of
the appropriate Foreign Subsidiary during such pre-Closing period and
post-Closing period determined as if the books of the Foreign Subsidiary were
closed on the Closing Date.
(c) Sellers shall be liable for and shall pay when due a
portion of all Taxes on the value of taxable real or personal property
constituting a part of the Purchased Assets that may be levied or imposed
against Buyer or such Purchased Assets prorated for the period before the
Effective Time, and Buyer shall be liable for the prorated portion of such Taxes
for the period at and after the Effective Time. Whichever Party is liable
hereunder for the payment of a Tax shall prepare any necessary forms and
returns, and shall bear all costs incident to the determination and payment
thereof. Such Party shall further have all available rights to contest the Tax,
but shall protect, defend, indemnify and hold harmless the other Party from any
Damages in accordance with the provisions of Article VI.
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(d) If any Party receives an invoice for any Tax or other
expense which is allocable to another Party in part or in full hereunder, the
recipient shall forward a copy of the invoice promptly to the other Party. If
the other Party is fully liable for such invoice, it shall pay it in full
promptly; provided, however, that such Party may contest any tax or other
expense in good faith through appropriate proceedings to the extent that such
Tax does not result in a Lien upon any of the Purchased Assets. If any Party
receives an invoice for Taxes or other expenses that are allocable partly to it
and partly to another Party, then the Party receiving such notice shall promptly
advise the other Party that such invoice has been received and shall request the
appropriate reimbursement from that Party. The Party owing such reimbursement
shall pay such reimbursement within five (5) Business Days after receipt of an
invoice for the reimbursable amount. Notwithstanding the foregoing, whenever
time permits, each Party will make every reasonable effort to determine each
Party's appropriate allocable share of any Tax due and to pay the allocable
share to the Party responsible under this paragraph for paying the Tax in a
timely fashion in order to avoid any late payment penalty.
4.18. Intercompany Accounts. Sellers and Parent shall cause the
cancellation and/or settlement of all intercompany and intracompany accounts
involving the Business on the one hand, and Parent, any Seller or any Subsidiary
(other than the Foreign Business) on the other hand.
4.19. ITEQ Intellectual Properties, Inc. At the Closing, Parent shall
cause ITEQ Intellectual Properties, Inc., a Delaware corporation ("ITEQ IP"), to
convey, assign and transfer to Buyer (and/or, at Buyer's election, to one or
more corporations, limited partnerships or limited liability companies
controlled by Buyer) all Intellectual Property which is owned by ITEQ IP and
which constitutes, primarily relates to, is primarily used in or otherwise
necessary or material to the conduct of the Business, including the Intellectual
Property which is set forth in Section 2.21(a) of the Disclosure Letter (the
"Holding Company IP").
4.20. Use of HMT Name. Within thirty (30) days after the Closing Date,
Sellers and Parent agree to cease, and Sellers and Parent agree to cause their
respective subsidiaries or predecessors to cease use of the "HMT" name or any
name which includes reference to the "HMT" name, including by amending or
terminating any foreign state qualifications, doing-business-as filings and
state licenses under the name of "HMT" or any name which includes reference to
the "HMT" name so as to remove reference to the name "HMT" in such
qualifications, filings or licenses, except to the extent such foreign
qualification has been revoked, rescinded or suspended and such revocation,
rescission or suspension does not impair in any way Buyer's ability to use the
"HMT" name or any name which includes reference to the "HMT" name with respect
to its foreign state qualifications, doing-business-as filings and state license
applications. Parent and Sellers hereby agree to reasonably cooperate with Buyer
with respect to Buyer's efforts to file foreign state qualifications,
doing-business-as filings or state license applications under names
incorporating the "HMT" name, including executing and filing consent-to-use
forms with any state governmental authority to allow Buyer to use the "HMT"
name.
4.21. Bank Approval Maintenance. Parent shall not, and shall cause its
subsidiaries not to, agree to any amendment, modification, withdraw, revocation
or termination of the Bank Approval or the Approval Letter (as hereinafter
defined), if received, without the prior written
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consent of Buyer; provided that the parties acknowledge that the Bank Approval
(and the delivery of the Bank Releases and Financing Statements at Closing) is
subject to withdrawal by BankBoston to the extent certain conditions described
in the Bank Approval are not satisfied. Parent and Sellers agree to use their
respective reasonable commercial efforts to ensure that the conditions set forth
in the Bank Approval and Approval Letter are satisfied at and prior to Closing
Date. Within two weeks following the date hereof, Parent will use its reasonable
efforts to deliver to Buyer a letter from BankBoston that specifically approves
the terms and conditions of this Agreement (including without limitation, the
Purchase Price, the amount of the Escrow Fund, and the Termination Date), the
Disclosure Letter and the Exhibits hereto, and the consummation of the
transactions contemplated hereby, subject to the same conditions set forth in
the Bank Approval (the "Approval Letter"); provided, that in the event Parent is
unable to deliver to Buyer the Approval Letter within such two-week period,
Buyer shall have the right to terminate this Agreement within two (2) Business
Days after the expiration of such two-week period.
4.22. Financing. Buyer shall use commercially reasonable efforts to
obtain the financing described in Section 5.1(l) hereof.
4.23. Employment Agreements. Prior to the Closing Date, Parent and
Sellers shall reasonably cooperate with Buyer with respect to Buyer's efforts to
employ J. ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ after the
Closing Date on terms and conditions acceptable to Buyer in its sole discretion.
4.24. Product Warranty Claims. During the period following the Closing,
Buyer agrees that, with respect to the determination of whether a Product
Warranty claim by a customer is a valid claim pursuant to the terms of the
applicable product warranty, Buyer shall handle such claim in a manner that is
in all material respects consistent with the manner in which the applicable
Seller or Foreign Subsidiary handled such type of claims in the ordinary course
of the Business consistent with past practice. With respect any work performed
by Buyer relating to a Product Warranty claim, the appropriate Seller shall
promptly reimburse Buyer for such work in an amount equal to Buyer's costs
incurred in connection with such Product Warranty work plus a premium to Buyer
based upon the lowest premium then charged by Buyer to its customers for such
work; provided that no Seller shall be obligated to reimburse Buyer until the
aggregate amount of all such work performed by Buyer, as determined in
accordance with this Section 4.24, exceeds the amount of the reserve for Product
Warranty Claims set forth in the Closing Statement.
With respect to Product Warranty damage claims relating to products of
the Business manufactured and sold by any Seller or Foreign Subsidiary, the
Buyer will keep Parent advised from time to time upon the reasonable request of
Parent regarding the administration of such claims, including but not limited
to, the amount and proposed settlement with respect to such claims, the general
nature of the claims made and other material information with respect thereto,
and will consult with Parent on a reasonable basis prior to satisfying or
settling any such individual claim exceeding $10,000.
4.25. Disclosure Letter. The parties acknowledge and agree that the
Disclosure Letter is divided into Sections corresponding to the Sections of this
Agreement that reference the Disclosure Letter. While the Sellers and Parent
have attempted to list each exception or item of
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supplemental information in each Section of the Disclosure Letter for which such
exception or item is relevant, the parties agree that inclusion of such item or
exception in any one Section of the Disclosure Letter shall be deemed
incorporated into any other Section of the Disclosure Letter where the relevance
of such incorporation is reasonably apparent.
4.26. Foreign Subsidiary Board Action. Prior to Closing, Parent and
Sellers shall cause the Board of Directors of each Foreign Subsidiary to hold a
duly organized meeting (or, if allowed by applicable law, to execute written
consents) to resolve and approve of the following: (a) the Resignations; (b)
subject to any due stamping of the transfers of the shares of such Foreign
Subsidiary, the transfers of all of the shares of such Foreign Subsidiary in
favor of Buyer pursuant to the terms of this Agreement; and (c) the issuance and
delivery of new share certificates in respect of all of the shares of such
Foreign Subsidiary in the name of Buyer.
4.27. Pro Forma Statements. No later than three (3) Business Days prior
to Closing, Parent shall deliver to Buyer pro forma balance sheet as of the
Closing Date and pro forma income statements for 2000 and 2001 (the "Pro Forma
Statements") of Parent (on a consolidated basis) and each Seller, as adjusted to
reflect the pro forma operations of Parent (on a consolidated basis) and each
Seller following the Closing.
4.28. Software Licenses. Between the date hereof and the Closing,
Sellers shall obtain licenses for the Business for the number of employees set
forth in Section 4.28 of the Disclosure Letter for the software packages
described therein to the extent Sellers do not currently possess such licenses.
4.29. Tulsa Litigation. The parties hereto agree that Parent and
Sellers shall have the right to pursue any causes of action or claims for
losses, damages, costs and expenses incurred by the Business prior to Closing
relating to or arising from the Tulsa Matter (including the right to pursue
injunctive relief) ("Pre-Closing Tulsa Damages") and Sellers shall have the
right to any recoveries related thereto. The parties hereto agree that Buyer
shall have the right to pursue any causes of action or claims for losses,
damages, costs and expenses incurred by Buyer or the Business following the
Closing (including the right to pursue injunctive relief) and Buyer shall have
the right to any recoveries related thereto. As used herein, "Tulsa Matter"
shall mean the facts and circumstances relating to that certain lawsuit styled,
ITEQ, Inc. and ITEQ Storage Systems, Inc. v. Cust-O-Fab Tank Services, L.L.C.,
Case No. 1:99 CV-601, In the United States District Court for the Eastern
District of Texas, Beaumont Division, whether or not such facts and
circumstances have been alleged in said lawsuit.
4.30. Master Lease Agreements. With respect to any Master Lease
Agreement (as defined below), Parent and Sellers shall cause any individual
asset leased pursuant to such Master Lease Agreement which is not a leased asset
set forth on Schedule 2.13 (an "Excluded Lease") to be removed from such
agreement at or prior to Closing such that Buyer will have no liabilities or
obligations with respect to such Excluded Lease. As used herein, "Master Lease
Agreement" means the Master Lease agreements with Toshiba, ElectroRent, PHH,
Houston Cellular and the pager agreement set forth on Section 2.13 to the
Disclosure Letter.
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ARTICLE V
CONDITIONS TO CLOSING; TERMINATION
5.1. Conditions Precedent to Obligations of Buyer. The obligations of
Buyer to proceed with the Closing under this Agreement are subject to the
fulfillment prior to or at Closing of the following conditions (any one or more
of which may be waived in whole or in part by Buyer at Buyer's option):
(a) Bringdown of Representations and Warranties. The
representations and warranties of Sellers and Parent contained in this Agreement
that are qualified by materiality shall be true and correct and the
representations and warranties of Sellers and Parent contained in this Agreement
that are not qualified by materiality shall be true and correct in all material
respects on and as of the Closing Date, with the same force and effect as though
such representations and warranties had been made on and as of the Closing Date,
and Buyer shall have received a certificate to such effect signed by Parent and
each Seller in form and substance reasonably acceptable to Buyer.
(b) Performance and Compliance. Sellers and Parent shall have
performed in all material respects all of the covenants and complied in all
material respects with all of the provisions required by this Agreement to be
performed or complied with by each of them on or before the Closing and Buyer
shall have received a certificate to such effect signed by Parent and each
Seller in form and substance reasonably acceptable to Buyer.
(c) Opinion of Counsel. Buyer shall have received the Sellers'
Counsel Opinion.
(d) Satisfactory Instruments of Transfer. All instruments and
documents required on the Sellers' and Parent's part to effectuate and
consummate the transactions contemplated hereby, including those specified in
Section 1.10(a), shall be delivered to Buyer and shall be in form and substance
reasonably satisfactory to Buyer and its counsel.
(e) Required Consents. All statutory and regulatory consents
and approvals which are required under the laws or regulations of the United
States or any other Governmental Authority, including the HSR Act and the rules
and regulations thereunder, for the transactions contemplated hereby shall have
been obtained; and all necessary consents and approvals of third parties to the
transactions contemplated hereby (other than Purchase Order Consents) shall have
been obtained.
(f) Litigation. No order of any court or administrative agency
shall be in effect which restrains or prohibits the transactions contemplated
hereby or which would materially limit or adversely affect Buyer's ownership or
control of any of the Purchased Assets or the operation of the Business, and
there shall not have been threatened, nor shall there be pending, any action or
proceeding by or before any court or Governmental Authority or other regulatory
or administrative agency or commission challenging any of the transactions
contemplated by this Agreement or seeking monetary relief by reason of the
consummation of such transactions or which might have a Material Adverse Effect.
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(g) Debt. Buyer shall have received evidence of the
cancellation and release of all Liens in respect of the Purchased Assets and the
stock of the Foreign Subsidiaries created pursuant to the BankBoston Loan
Documents and releasing the Foreign Subsidiaries of any and all obligations
(including any guaranties) under the BankBoston Loan Documents (collectively,
the "Bank Releases"), along with evidence of the termination of any UCC-1
financing statements related thereto (the "Termination Statements"), such
evidence of cancellation and release to be acceptable to Buyer in its reasonable
discretion. As used herein, the "BankBoston Loan Documents" means the Credit
Agreement and any security, collateral or similar document securing amounts
payable thereunder.
(h) Secretary's Certificate of Seller. Each Seller shall have
delivered to Buyer a certificate, dated as of the Closing Date, in form and
substance reasonably satisfactory to Buyer, of the Secretary or an Assistant
Secretary of such Seller certifying (i) that attached thereto is a complete and
correct copy of the articles of incorporation of such Seller, as amended to
date, (ii) that attached thereto is a complete and correct copy of the Bylaws of
such Seller, as amended to date, (iii) that attached thereto is a complete and
correct copy of resolutions adopted by the board of directors and the
stockholders of such Seller, authorizing the execution, delivery and performance
of this Agreement and all other agreements executed in connection herewith by
such Seller and the transfer of the Purchased Assets to Buyer hereunder, and
that such resolutions, approvals and consents have not been amended or modified
in any respect and remain in full force and effect as of the date thereof, and
(iv) that the persons named therein are duly elected, qualified and acting
officers of such Seller and that set forth therein is a genuine signature or
true facsimile thereof for each such officer.
(i) Good Standing Certificate of Seller. Each Seller shall
have delivered to Buyer a certificate of good standing dated not more than ten
days before the Closing Date, certifying that such Seller is a corporation in
good standing in each jurisdiction set forth in Section 2.2 of the Disclosure
Letter.
(j) Escrow Agreement. Sellers and Buyer shall have entered
into the Escrow Agreement.
(k) Real Estate. (A) Seller shall have delivered Landlord
Consents and estoppel certificates with respect to each of the Real Property
Leases. (B) Buyer, in its reasonable discretion, shall have reviewed and
approved all Encumbrances except Permitted Encumbrances (for purposes of this
Section 5.1(k), Permitted Encumbrance shall not include a Predecessor
Encumbrance) listed on Schedule B to each of the Title Commitments and
determined that there are no Encumbrances which render title unmarketable (only
with respect to Owned Real Property located outside of Texas), indefeasible
(only with respect to Owned Real Property located in Texas), uninsurable at
customary rates, or which have a material adverse effect on the use or value of
the applicable Owned Real Property.
(l) Financing Contingency. Buyer shall have received the
proceeds of all financing necessary to consummate the transactions contemplated
hereby and provide for the ongoing working capital needs of Buyer on terms and
conditions satisfactory to Buyer in an amount not less than $42,500,000 plus (A)
the amount of Net Working Capital in excess of $7,993,190 and (B) a $5,000,000
credit revolver commitment.
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(m) Material Adverse Effect. Between the date hereof and the
Closing, there shall have occurred no event, circumstances or development that
would have a Material Adverse Effect.
(n) FIRPTA Affidavit. Buyer shall have received a certificate
from the Sellers, made under penalties of perjury, stating that none of the
Sellers is a foreign corporation, foreign partnership, foreign trust or foreign
estate and listing both the U.S. Employer Identification Number and principal
business office address of each of the Sellers.
(o) Tax Clearance Certificates. Sellers shall have received
and delivered to Buyer state tax clearance certificates from each state listed
on Section 5.1(o) of the Disclosure Letter, sufficient to establish that Buyer
shall have no obligation to withhold any consideration payable to Sellers
hereunder.
(p) Pro Forma Statements. Parent shall have delivered to Buyer
the Pro Forma Statements in accordance with Section 4.27 hereof, which such
statements shall demonstrate to Buyer to its reasonable satisfaction that Parent
and each Seller is solvent.
(q) Transition Services Agreement. Parent, ▇▇▇▇▇▇▇▇, Inc.,
ITEQ Storage and G.L.M. Tanks & Equipment Ltd. shall have duly executed and
delivered to Buyer a Transition Services Agreement substantially in the form of
Exhibit F hereto (the "Transition Services Agreement").
(r) U.K. Opinion. Buyer shall have received an opinion from
▇▇▇▇▇ ▇▇▇▇, reasonably satisfactory to Buyer.
(s) Minnesota Counsel Opinion. Buyer shall have received an
opinion of ▇▇▇▇▇▇▇, Street & Deinard reasonably satisfactory to Buyer.
5.2. Conditions Precedent to the Obligations of Sellers. The
obligations of Sellers to proceed with the Closing hereunder are subject to the
fulfillment prior to or at Closing of the following conditions (any one or more
of which may be waived in whole or in part by Sellers at Sellers' option):
(a) Bringdown of Representations and Warranties. The
representations and warranties of Buyer contained in this Agreement (subject to
the provisions of Section 3.5 hereof) shall be true and correct in all material
respects on and as of the Closing Date, with the same force and effect as though
such representations and warranties had been made on, as of and with reference
to Closing Date and Buyer shall have delivered to Parent a certificate, to such
effect signed by Buyer in form and substance reasonably acceptable to Sellers.
(b) Performance and Compliance. Buyer shall have performed all
of the covenants and complied with all the provisions required by this Agreement
to be performed or complied with by it on or before the Closing in all material
respects and Buyer shall have delivered to Sellers a certificate to such effect
in form and substance reasonably acceptable to Sellers.
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(c) Opinion of Counsel. Parent shall have received the Buyer's
Counsel Opinion.
(d) Satisfactory Instruments. All instruments and documents
required on the Buyer's part to effectuate and consummate the transactions
contemplated hereby, including those specified in Section 1.10(b), shall be
delivered by Buyer and shall be in form and substance reasonably satisfactory to
Parent and its counsel.
(e) Litigation. No order of any court or administrative agency
shall be in effect which restrains or prohibits the transactions contemplated
hereby and there shall not have been threatened, nor shall there be pending, any
action or proceeding by or before any court or Governmental Authority or other
regulatory or administrative agency or commission, challenging any of the
transactions contemplated by this Agreement or seeking monetary relief by reason
of the consummation of such transactions.
(f) Required Consents. All statutory and regulatory consents
and approvals which are required under the laws or regulations of the United
States or any other Governmental Authority, including the HSR Act and the rules
and regulations thereunder, for the transactions contemplated hereby and all
necessary consents and approvals by the lenders under the Credit Agreement shall
have been obtained and not withdrawn.
(g) Secretary's Certificate of Buyer. Buyer shall have
delivered to the Sellers a certificate, dated as of the Closing Date, in form
and substance satisfactory to Sellers, of the Secretary or an Assistant
Secretary of Buyer certifying (i) that attached thereto is a complete and
correct copy of the articles of incorporation of Buyer, as amended to date, (ii)
that attached thereto is a complete and correct copy of the Bylaws of Buyer, as
amended to date, (iii) that attached thereto is a complete and correct copy of
resolutions adopted by the board of directors and, if necessary, the
stockholders of Buyer, authorizing the execution, delivery and performance of
this Agreement and all other agreements executed in connection herewith by
Buyer, and that such resolutions, approvals and consents have not been amended
or modified in any respect and remain in full force and effect as of the date
thereof, and (iv) that the persons named therein are duly elected, qualified and
acting officers of Buyer and that set forth therein is a genuine signature or
true facsimile thereof for each such officer.
(h) Good Standing Certificate of Buyer. Buyer shall have
delivered to Sellers a certificate of the Secretary of State of the State of
Delaware dated not more than ten days before the Closing Date, certifying that
Buyer is a corporation in good standing in such state.
(i) Inventory Resale Certificates. Buyer shall have received
inventory resale certificates for each of the states listed on Section 5.2(i) of
the Disclosure Letter sufficient to establish that no sales or other transfer
tax will be due as a result of the sale to Buyer of any Seller's inventory in
such state.
(j) Transition Services Agreement. Buyer shall have executed
and delivered to Sellers the Transition Services Agreement.
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5.3. Termination.
(a) When Agreement May Be Terminated. This Agreement may be
terminated at any time prior to Closing:
(i) By mutual consent of Buyer, Parent and Sellers;
(ii) By Buyer if there has been a material breach by
Parent or any Seller of any of their respective representations, warranties or
covenants, or if any of the conditions specified in Section 5.1 hereof shall not
have been fulfilled by the time required and shall not have been waived by
Buyer;
(iii) By Parent and Sellers if there has been a
material breach by Buyer of any of its warranties or covenants, or if any of the
conditions specified in Section 5.2 hereof shall not have been fulfilled by the
time required and shall not have been waived by Parent;
(iv) By Buyer, on the one hand, or Parent and Sellers
on the other hand, if Closing shall not have occurred prior to March 13, 2000
(the "Termination Date"), provided, that Buyer or Parent may terminate this
Agreement pursuant to this subparagraph (iv) only if Closing shall not have
occurred by such date for a reason other than a breach by such party of any of
the provisions hereunder.
(b) Effect of Termination. In the event of termination of this
Agreement by Sellers or Buyer, as provided above, this Agreement shall forthwith
terminate and there shall be no liability on the part of Parent, Sellers or
Buyer or their respective officers or directors, except for liabilities arising
from a breach of this Agreement prior to such termination; provided, however,
that the obligations of the parties set forth in Sections 5.3(b), 4.9(d) and
(e), and Articles VI and VII hereof shall survive such termination.
ARTICLE VI
INDEMNIFICATION
6.1. Indemnification By Sellers and Parent. The Sellers and Parent,
jointly and severally, agree to indemnify, defend and hold harmless Buyer and
its officers, directors, employees, agents, stockholders and affiliates
(collectively, "Buyer Indemnitees") from and against and to reimburse such Buyer
Indemnitees with respect to any and all Damages arising out of or resulting from
any one or more of the following:
(a) any breach of representation or warranty of Parent or any
Seller contained in this Agreement, the Disclosure Letter or in any exhibit
hereto, or in any other statement, certificate or document furnished or to be
furnished to Buyer pursuant hereto or in connection with the transactions
contemplated hereby (it being understood and agreed that under this Article VI,
for purposes of determining whether there has been any breach of any
representation or warranty and for purposes of calculating the amount of Damages
arising therefrom, the representations and warranties of Parent and any Seller
shall be deemed not to be qualified by any concept of "material," "materiality,"
"Material Adverse Effect" or similar qualification);
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(b) any breach of any covenant or obligation of Sellers or
Parent in this Agreement;
(c) any liabilities or obligations (except those relating to
Environmental Claims, Environmental Laws or Hazardous Substances, which are the
subject of Section 6.1(e)) of Sellers, Parent or the Foreign Subsidiaries of any
nature, whether due or to become due, whether accrued, absolute, contingent or
otherwise, existing on the Closing Date, or arising out of any transactions
entered into or any state of facts existing, or the use, ownership, possession
or operation of the Purchased Assets or the conduct of the Business, on or prior
to the Closing Date, including the Excluded Liabilities, excepting only the
Assumed Liabilities;
(d) subject to the assumption by the Buyer of the Assumed
Liabilities, the failure of the Sellers to comply with applicable bulk sales
laws (in consideration of which indemnification obligation Buyer hereby waives
compliance by the Sellers with any applicable bulk sales laws);
(e) (whether or not arising out of third-party claims and
including all amounts paid in investigation, defense or settlement of the
foregoing): (i) Environmental Claims relating to activities, facts or
circumstances first existing prior to the Closing Date; (ii) the off-site
transportation, storage, treatment, recycling or disposal of Hazardous
Substances generated by the Parent, any Subsidiary or any of their predecessors
in interest relating to the Business or in connection with their businesses
prior to Closing at any property now or previously owned, operated or leased by
the Parent, any Subsidiaries or any of their predecessors ; (iii) any violation
of any applicable Environmental Law by the Parent, any Subsidiaries or any of
their predecessors in interest relating to the Business prior to Closing ; or
(iv) for those matters identified in Section 2.15 of the Disclosure Letter (the
environmental disclosure); provided, however, that Sellers and Parent shall not
be obligated to indemnify Buyer or any Buyer Indemnitees for any Damages to the
extent related to any condition exacerbated by Buyer, any Buyer Subsidiary,
their respective Affiliates or any successors thereto.
Any reimbursement obligation arising out of the foregoing indemnity shall be
paid as and when it becomes an obligation of the Indemnitor pursuant to Section
6.3 hereof. Buyer may withhold any amounts due to Sellers or Parent under this
Agreement or any other agreement between Buyer and Sellers, whether now or
hereafter existing, including the Escrow Fund or otherwise, to satisfy any
amounts due from any Seller or Parent to any of the Buyer Indemnitees pursuant
to the provisions of this Section 6.1.
6.2. Indemnification by Buyer. Buyer agrees to indemnify, defend and
hold Sellers, Parent and their respective officers, directors, employees, agents
and Affiliates (collectively, the "Seller Indemnitees") harmless from and
against and to reimburse Seller Indemnitees for any and all Damages arising out
of or resulting from any one or more of the following:
(a) any breach of representation or warranty of Buyer
contained in this Agreement, the Disclosure Letter or in any exhibit hereto, or
in any other statement, certificate or document furnished or to be furnished to
Sellers pursuant hereto or in connection with the transactions contemplated
hereby (it being understood and agreed that under this Article VI, for purposes
of determining whether there has been any breach of any representation or
warranty
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and for purposes of calculating the amount of Damages arising therefrom, the
representations and warranties of Buyer shall be deemed not to be qualified by
any concept of "material," "materiality," "Material Adverse Effect" or similar
qualification);
(b) any breach of any covenant or obligation of Buyer in this
Agreement;
(c) the Assumed Liabilities;
(d) any and all liabilities or obligations (except those
relating to Environmental Claims, Environmental Laws or Hazardous Substances,
which are the subject of Section 6.2(e)) of Buyer, any Buyer Subsidiary or their
respective successors of any nature, whether due or to become due, whether
accrued, absolute, contingent or otherwise, to the extent arising out of any
transactions entered into, or the use, ownership, possession or operation of the
Purchased Assets or the conduct of the Business by Buyer, any Buyer Subsidiary
or any successor thereto, after the Closing Date;
(e) (whether or not arising out of third-party claims and
including all amounts paid in investigation, defense or settlement of the
foregoing) (i) Environmental Claims relating to activities, facts or
circumstances first existing after the Closing Date; (ii) the off-site
transportation, storage, treatment, recycling or disposal of Hazardous
Substances generated after Closing by Buyer or any Buyer Subsidiary related to
the Business or in connection with their businesses after the Closing at any
property owned, operated or leased after the Closing by Buyer or any Buyer
Subsidiary relating to the Business or in connection with their businesses;
(iii) any violation of any applicable Environmental Law by Buyer or any Buyer
Subsidiary relating to the Business after Closing (except for violations for
which Buyer Indemnitees are entitled under Section 6.1(e) for such time period
as it reasonably takes to correct after Closing); and (iv) any Damages relating
to Environmental Claims arising out of any condition, fact or circumstance
existing on or prior to the Closing Date to the extent such condition, fact or
circumstance was exacerbated by any act or negligent omission by the Buyer, any
Buyer Subsidiary, or their respective Affiliates.
(f) any and all Damages related to or arising from (A)
personal injuries to Buyer's officers, directors, employees or agents arising
from such Persons' inspection of or presence at the Business' facilities or (B)
damage or destruction to any tangible personal property of Parent or any Seller
arising from any of Buyer's officers, directors, employees or agents inspection
of or presence at any of the Business' facilities, except, with respect to
clauses (A) and (B), to the extent related to or arising from the negligence or
misconduct of Parent, Sellers, the Subsidiaries or any of their respective
officers, directors, employees or agents.
Any reimbursement obligation arising out of the foregoing
indemnity shall be paid as and when it becomes an obligation of the Indemnitor
pursuant to Section 6.3(a). Parent or any Seller may withhold any amounts due to
Buyer under this Agreement or any other agreement between Buyer and Parent or
such Seller, whether now or hereafter existing, to satisfy any amounts due from
Buyer to Parent or any Seller Indemnitee pursuant to the provisions of this
Section 6.2.
6.3. General Indemnification Procedures.
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(a) In the event that any Buyer Indemnitee or Seller
Indemnitee incurs or suffers any Damages with respect to which indemnification
may be sought by such Buyer Indemnitee or Seller Indemnitee pursuant to this
Article VI, the party seeking indemnification (the "Indemnitee") must assert the
claim by giving written notice (a "Claim Notice") to the party from whom
indemnification is sought (the "Indemnitor"). The Claim Notice must state the
nature and basis of the claim in reasonable detail based on the information
available to the Indemnitee and, if the Claim Notice is being given with respect
to a third Person claim, must be accompanied by a copy of any written notice
received by the Indemnitee from the third Person claimant. If the Claim Notice
is being given by reason of any third Person claim, it shall be given within 30
days after the filing or other written assertion of any such claim against the
Indemnitee, but the failure of the Indemnitee to give the Claim Notice with
respect to any claim other than a third person claim, or to give the Claim
Notice within such time period with respect to a third Person claim, shall not
relieve the Indemnitor of any liability for indemnification under this Article
VI, except to the extent that the Indemnitor is actually prejudiced thereby.
Each Indemnitor to whom a Claim Notice is given shall respond to any Indemnitee
that has given a Claim Notice (a "Claim Response") within 10 Business Days (the
"Response Period") after the date that the Claim Notice is given. Any Claim
Response shall specify whether or not the Indemnitor given the Claim Response
disputes the claim described in the Claim Notice. If any Indemnitor fails to
give a Claim Response within the Response Period, such Indemnitor shall be
deemed not to dispute the claim described in the related Claim Notice. If any
Indemnitor elects not to dispute a claim described in a Claim Notice, whether by
failing to give a timely Claim Response or otherwise, then the amount of such
claim shall be conclusively deemed to be an obligation of such Indemnitor. If
any Indemnitor shall be obligated to indemnify an Indemnitee hereunder, such
Indemnitor shall pay to such Indemnitee within 30 days after (i) the last day of
the applicable Response Period the amount to which such Indemnitee shall be
entitled or, or (ii) if the Claim Notice relates to Damages that have not been
liquidated as of the date of the Claim Notice, the date on which all or any part
of such damages become liquidated and determined (but only with respect to the
portion that has become liquidated and determined).
(b) If there shall be a dispute as to the amount or manner of
indemnification under this Agreement, the Indemnitor and the Indemnitee shall
seek to resolve such dispute through negotiations and, if such dispute is not
resolved within 20 days, the Indemnitee may pursue whatever legal remedies may
be available for the recovery of the Damages claimed from any Indemnitor. If any
Indemnitor fails to pay all or any part of any indemnification obligation on or
before the later to occur of (x) 30 days after the last day of the applicable
Response Period, and (y) if the Claim Notice relates to Damages that have not
been liquidated as of the date of the Claim Notice, 30 days after the date on
which all or any part of such Damages shall have become liquidated and
determined (but only with respect to the portion that has become liquidated and
determined), then the Indemnitor shall also be obligated to pay to the
Indemnitee interest on the unpaid amount for each day during which the
obligation remains unpaid at an annual rate of ten percent.
(c) The Indemnitee shall provide to the Indemnitor on request
all information and documentation reasonably necessary to support and verify any
Damages that the Indemnitee believes give rise to the claim for indemnification
hereunder and shall give the Indemnitor reasonable access to all books, records
and personnel in the possession or under the control of the Indemnitee that
would have bearing on such claim.
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(d) Except as hereinafter provided, in the case of third
Person claims for which indemnification is sought, the Indemnitor shall have the
option: (i) to conduct any proceedings or negotiations in connection therewith,
(ii) to take all other steps to settle or defend any such claim (provided that
the Indemnitor shall not settle any such claim without the consent of the
Indemnitee (which consent shall not be unreasonably withheld, it being
understood that it shall not be unreasonable for the Indemnitee to withhold its
consent from any settlement which (1) commits the Indemnitee to take, or to
forbear to take, any action, or (2) does not provide for a complete release of
the Indemnitee by such third Person)), and (iii) to employ counsel to contest
any such claim or liability in the name of the Indemnitee or otherwise. In any
event, the Indemnitee shall be entitled to participate at its own expense and by
its own counsel (a "Voluntary Participation") in any proceedings relating to any
third Person claim. The Indemnitor shall, within 45 days of receipt of the Claim
Notice, notify the Indemnitee of its intention to assume the defense of the
claim (a "Defense Notice"). Until the Indemnitee has received the Defense
Notice, the Indemnitee shall take reasonable steps to defend (but may not
settle) the claim. If the Indemnitor declines to assume the defense of any such
claim or fails to give a Defense Notice within 45 days after receipt of the
Claim Notice, the Indemnitee shall defend against the claim but shall not settle
such claim without the consent of the Indemnitor (which consent shall not be
unreasonably withheld). The expenses of all proceedings, contests or lawsuits
(other than those incurred in a Voluntary Participation) with respect to claims
as to which a party is entitled to indemnification under this Article VI shall
represent indemnifiable Damages under this Agreement. If the Indemnitor assumes
the defense of a third Person claim, the Indemnitor shall not be liable to any
Indemnitees for any legal expenses of other counsel or any other expenses
subsequently incurred by such Indemnitees in connection with the defense
thereof, except that if the Indemnitor elects not to assume such defense, or
counsel for the Indemnitees advises that there are bona fide issues that raise
conflicts of interest between the Indemnitor and Indemnitees, the Indemnitees
may retain one counsel satisfactory to them, and Indemnitor shall pay all
reasonable fees and expenses of such counsel for the Indemnitees promptly as
statements therefor are received. If such indemnity is not available with
respect to any Indemnitee, then the Indemnitor and the Indemnitee shall
contribute to the amount payable in such proportion as is appropriate to reflect
relative faults. So long as the Indemnitor is defending in good faith such third
party Damage, the Indemnitee shall not settle or compromise such third party
claim without the Indemnitor's prior written consent (which consent shall not be
unreasonably withheld). Regardless of which party shall assume the defense of
the claim, the parties shall cooperate fully with one another in connection
therewith. Notwithstanding the foregoing, the Indemnitor shall not be entitled
(except with the consent of the Indemnitee) to take any of the actions referred
to in clauses (i), (ii) or (iii) of the first sentence of this subparagraph
unless: (x) the third Person claim involves solely monetary damages; (y) the
Indemnitor shall have expressly agreed in writing that, as between the
Indemnitor and the Indemnitee, the Indemnitor shall be solely obligated to
satisfy and discharge such third Person claim; and (z) if reasonably requested
to do so by the Indemnitee, the Indemnitor shall have made reasonably adequate
provision to ensure the Indemnitee of the financial ability of the Indemnitor to
satisfy the full amount of any adverse monetary judgment that may result from
such third Person claim.
6.4. Termination of Indemnification. The obligations to indemnify and
hold harmless an Indemnified Party (i) pursuant to Sections 6.1(a) and 6.2(a)
shall terminate on April 30, 2001 (the "General Survival Period"), provided,
however, that (x) the obligations to indemnify and hold harmless an Indemnified
Party for Damages relating to a breach of a representations
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contained in Sections 2.1, 2.2, 2.3, 2.4, 2.17, 3.1 and 3.2 shall survive
indefinitely, (y) the obligations to indemnify and hold harmless an Indemnified
Party for Damages relating to a breach of the representations contained in
Sections 2.9, 2.22 and 3.5 may be asserted until 60 days after the running of
the applicable statute of limitations with respect to the matters the subject of
such claims and (z) such obligations to indemnify and hold harmless shall not
terminate with respect to any item as to which the Indemnified Party shall have,
before the expiration of the applicable period, previously made a claim by
delivering a Claim Notice to the Indemnifying Party, and (ii) pursuant to the
other clauses of Sections 6.1 and 6.2 shall not terminate.
6.5. Limitation on Indemnification Obligations of the Sellers, Parent
and Buyer. Subject to the terms of this Agreement, Sellers and Parent shall not
be liable to the Buyer Indemnitees under Section 6.1(a) for Damages unless the
cumulative total of Damages under Section 6.1(a) exceeds an aggregate of
$400,000 whereupon, the Buyer Indemnitees shall be entitled to receive, subject
to the following sentence, all amounts without regard to this dollar limitation.
Notwithstanding anything to the contrary contained herein, the aggregate
liability of the Sellers and Parent under Section 6.1(a) shall be limited to
$4,000,000. Subject to the terms of this Agreement, Buyer shall not be liable to
the Seller Indemnitees under Section 6.2(a) for Damages unless the cumulative
total of Damages under Section 6.2(a) exceeds an aggregate of $400,000
whereupon, the Seller Indemnitees shall be entitled to receive, subject to the
following sentence, all amounts without regard to this dollar limitation.
Notwithstanding anything to the contrary contained herein, the aggregate
liability of the Buyer under Section 6.2(a) shall be limited to $4,000,000.
6.6. No Indemnitor shall have indemnification obligations for Damages
incurred by an Indemnitee pursuant to Sections 6.1 or 6.2:
(a) to the extent of any tax savings actually realized by such
Indemnitee with respect to such Damages (net of the effect of any tax upon the
receipt by such Indemnitee of any amounts from the Indemnitor pursuant to this
Article VI); or
(b) for punitive damages, except to the extent that any of
such damages have been recovered by a third Person against such Indemnitee.
(c) for consequential damages, except to the extent that any
of such damages have been recovered by a third Person against such Indemnitee;
provided that this Section 6.6(c) shall not prohibit Buyer from recovering as
Damages pursuant to this Article VI any consequential damages arising from or
relating to any breach by Parent and Seller of any covenant contained in this
Agreement.
6.7. Fraud. Notwithstanding the foregoing, the limitations of liability
set forth in Sections 6.4, 6.5, 6.6 and 6.8 shall not apply to any claim for
fraud or intentional or knowing breach of any representation or warranty of
Parent, any Seller or Buyer or to any claim relating to the gross negligence or
willful misconduct of Parent, any Seller or Buyer.
6.8. Indemnification Exclusive Remedy. Indemnification pursuant to the
provisions of this Agreement (including the rights of Buyer pursuant to the
Escrow Agreement) shall be the
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exclusive remedy of the parties for any breach of this Agreement or any closing
document executed and delivered pursuant to the provisions hereof or pursuant to
this Agreement and for any Damage arising out of the transactions contemplated
hereby; provided, however, that nothing stated in this Section 6.8 shall in any
way limit or foreclose the availability to the parties of specific performance
or other equitable remedies.
ARTICLE VII
MISCELLANEOUS
7.1. Survival. The representations, warranties, covenants and
agreements of Buyer, Parent and Sellers contained in this Agreement or any
exhibit or the Disclosure Letter or any certificate or other document delivered
pursuant to this Agreement shall survive the Closing and shall remain in full
force and effect in accordance with Section 6.4, regardless of any investigation
made or information or knowledge obtained by or on behalf of Buyer, Parent and
Sellers, as applicable, at any time.
7.2. Notices. All notices and other communications hereunder shall be
in writing and shall be mailed by certified or registered mail, return receipt
requested, (ii) sent by Federal Express or other nationally recognized overnight
express carrier, if sent for overnight delivery with fee prepaid, (iii) if sent
via facsimile with transmission confirmed, or (iv) upon receipt if delivered
personally, addressed as follows:
If to Parent or Sellers, to:
ITEQ, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Fax No.: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: T. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Fax No.: ▇▇▇-▇▇▇-▇▇▇▇
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If to Buyer, to:
HMT Inc.
c/o Nassau Point Investors L.L.C.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Member
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Fax No. ▇▇▇-▇▇▇-▇▇▇▇
With a copy to:
Dechert Price & ▇▇▇▇▇▇
4000 ▇▇▇▇ Atlantic Tower
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Fax No.: ▇▇▇-▇▇▇-▇▇▇▇
Any notice, request, demand, claim, or other communication
hereunder sent to the intended recipient at the address set forth above shall be
deemed given when received, provided that notice shall be deemed to have been
duly given if delivery of the notice is refused or if the notice is properly
addressed and delivery is attempted but unable to be made. Any party may change
the address to which notices, requests, demands, claims or other communications
hereunder are to be delivered by giving the other party notice in the manner
herein set forth.
7.3. Expenses. Except as otherwise provided in this Agreement, each
party to this Agreement will bear all the fees, costs and expenses which are
incurred by it in connection with the transactions contemplated hereby, whether
or not such transactions are consummated, and Sellers and Parent joint and
severally on the one hand and Buyer on the other hand shall split equally all
Taxes (including any stamp duties or similar transfer takes with respect to the
transfer of the shares of any Foreign Subsidiary), recording and filing fees
that may be imposed by reason of the sale, transfer, assignment or delivery of
the Purchased Assets.
7.4. Entire Agreement. The agreement of the parties, which is comprised
of this Agreement and the Disclosure Letter and the documents referred to
herein, sets forth the entire agreement and understanding between the parties
and supersedes any prior agreement or understanding, written or oral, relating
to the subject matter of this Agreement.
7.5. Assignment; Binding Effect; Severability. This Agreement may not
be assigned by any party hereto without the written consent of the other party,
except that no consent of Sellers or Parent shall be required for any assignment
by Buyer to any of its Affiliates, provided that notwithstanding such
assignment, Buyer shall remain fully liable for all of its obligations hereunder
and Buyer shall guarantee the timely, full and complete performance by such
Affiliates of any liabilities or obligations so assigned to such Affiliates.
This Agreement shall be binding upon and inure to the benefit of and be
enforceable by the successors, legal representatives and permitted assigns of
each party hereto. The provisions of this Agreement are severable, and in the
event that any one or more provisions are deemed illegal or unenforceable the
remaining provisions shall remain in full force and effect unless the deletion
of such provision shall cause this Agreement to be materially adverse to any
party, in which event the parties shall use commercially reasonable efforts to
arrive at an accommodation which best preserves for the parties the benefits and
obligations of the offending provision.
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7.6. Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the internal laws (as opposed to the conflicts
of laws provisions) of the State of New York.
7.7. Execution in Counterparts. This Agreement may be executed in any
number of counterparts with the same effect as if the signatures thereto were
upon one instrument.
7.8. Public Announcement. No party hereto shall, without the approval
of the other parties hereto, make any press release or other public announcement
concerning the terms of the transactions contemplated by this Agreement, except
as and to the extent that any such party shall be so obligated by law or
regulatory process, in which case the other parties shall be advised and the
parties shall use their commercially reasonable efforts to cause a mutually
agreeable release or announcement to be issued; provided that the foregoing
shall not preclude communications or disclosures necessary to implement the
provisions of this Agreement.
7.9. No Third Party Beneficiaries. Nothing in this Agreement, express
or implied, is intended to or shall (i) confer on any Person other than the
parties hereto and their respective successors or permitted assigns any rights
(including third party beneficiary rights), remedies, obligations or liabilities
under or by reason of this Agreement, or (ii) constitute the parties hereto as
partners or as participants in a joint venture. This Agreement shall not provide
third parties with any remedy, claim, liability, reimbursement, cause of action
or other right in excess of those existing without reference to the terms of
this Agreement. The obligations and liabilities of the parties hereunder shall
be without recourse to any shareholder, director, officer or employee of such
party (unless such person is a party hereto) and no such person shall be deemed
to have made any representation, warranty or covenant under or pursuant to this
Agreement (unless such person is a party hereto).
7.10. Headings. The headings preceding the text of the sections and
subsections hereof are inserted solely for convenience of reference, and shall
not constitute a part of this Agreement, nor shall they affect its meaning,
construction or effect.
7.11. Further Assurances. Each Party shall cooperate and take such
action as may be reasonably requested by other Party in order to carry out the
provisions and purposes of this Agreement and the transactions contemplated
hereby. Buyer shall deliver to Parent any amounts received in the Lock Box
Account after the Closing which do not relate to the Business or the Purchased
Assets promptly after identifying that such amounts do not relate to the
Business or the Purchased Assets. Parent shall deliver to Buyer any amounts
received by Parent or its Subsidiaries after the Closing which relate to the
Business or the Purchased Assets.
7.12. Amendment and Waiver. The Parties may by mutual agreement amend
this Agreement in any respect, and any Party, as to such Party, may (a) extend
the time for the performance of any of the obligations of any other party, (b)
waive any inaccuracies in representations by any other Party, (c) waive
compliance by any other Party with any of the agreements contained herein and
performance of any obligations by such other Party, and (d) waive the
fulfillment of any condition that is precedent to the performance by such Party
of any of its obligations under this Agreement. To be effective, any such
amendment or waiver must be in writing and be signed by the Party against whom
enforcement of the same is sought.
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7.13. Gender and Certain References. Unless otherwise specified, all
references herein to days, weeks, months or years shall be calendar days, weeks,
months or years. Whenever the context requires, the gender of all words used
herein shall include the masculine, feminine and neuter, and the number of all
words shall include the singular and plural. References to Articles or Sections
shall be to Articles and Sections of this Agreement unless otherwise specified.
The words "hereof", "herein" or "hereunder" shall refer to this Agreement as a
whole and not to any particular Article, Section or Paragraph. The words
"including" or "include" are used herein in an illustrative sense and not to
limit a more general statement. When computing time periods described by a
number of days before or after a stated date or event, the stated date or date
on which the specified event occurs shall not be counted and the last day of the
period shall be counted. Unless otherwise specified herein any obligation
otherwise due on a non-Business Day shall not be due until the next Business
Day.
7.14. Time is of the Essence. Time is of the essence in the performance
of this Agreement.
7.15. Parent's Authority. Notwithstanding any provision herein to the
contrary, the parties acknowledge and agree that Parent may act on behalf of the
Sellers for all purposes and with respect to all matters under this Agreement.
ARTICLE VIII
DEFINITIONS
"1960 Facility" means the Sellers location at FM 1960 West in
Houston, Texas.
"Affiliate" of a Person means any Person controlling,
controlled by, or under common control with, such Person; provided that an
Affiliate of Parent shall not include the shareholders of Parent. For purposes
of this definition, "control" means the power to direct the management and
policies of a Person, whether through the ownership of voting securities, by
agreement or otherwise.
"Agreement" shall have the meaning set forth in the
Introduction.
"Ancillary Agreements" means the ▇▇▇▇ of Sale, the Assumption
Agreement, the Escrow Agreement, the Deeds, the Intangibles Assignment and the
Other Instruments.
"Asset Acquisition Statement" shall have the meaning set forth
in Section 4.7.
"Assignment of Leases" shall mean the Assignment of Leases
between Sellers and Buyer, dated as of the Closing Date, substantially in the
form of Exhibit H hereto.
"Assumed Contracts" means the contracts assumed by Buyer
pursuant to Section 1.1(g).
"Assumed Liabilities" means the liabilities and obligations of
Sellers assumed by Buyer pursuant to the Assumption Agreement and Section
1.3(a).
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"Assumption Agreement" shall have the meaning set forth in
Section 1.3(a).
"BankBoston" means BankBoston, N.A.
"Beneficiary" shall mean the person(s) or entity designated by
an Employee, Former Employee, by operation of law or otherwise as the party
entitled to compensation, benefits, insurance coverage, payments,
indemnification or any other goods or services as a result of any liability or
claim under any Benefit Plan or under any other employee benefit plan, program
or policy.
"Benefit Plan" shall have the meaning set forth in Section
2.22.
"▇▇▇▇ of Sale" shall have the meaning set forth in Section
1.10(a)(i).
"Business Days" shall mean any day other than a Saturday,
Sunday or any other day on which the commercial banks in Houston, Texas are
authorized or required to close.
"Business Employees" shall mean the Non-Union Employees and
the Union Employees.
"Business Records" shall have the meaning set forth in Section
1.1(f).
"Buyer" shall have the meaning set forth in the Introduction.
"Buyer Environmental Liabilities" means any loss, liability,
claim, obligation, damage or deficiency arising out of, resulting from or
pertaining to environmental conditions or violations (including violations of
Environmental Laws) first occurring, existing, or arising after the Closing,
including, without limitation, (i) the presence, release, or threat of release
of Hazardous Materials at, on, about, under or from the Real Estate included in
the Purchased Assets or any other property currently or hereafter owned,
operated or leased by the Buyer, any Buyer Subsidiary, any of their respective
Affiliates or any successors thereof (on- or off-site); (ii) arising from the
off-site management, recycling, transportation, release or threat of release of
Hazardous Materials generated by or on behalf of the Buyer, any Buyer
Subsidiary, any of their respective Affiliates or any successors thereof; or
(iii) the violation by Buyer, any Buyer Subsidiary, any of their Affiliates or
any successors thereto of any Environmental Law any common law liability with
respect to the foregoing.
"Cash Purchase Price" shall have the meaning set forth in
Section 1.4.
"Claim Notice" shall have the meaning set forth in Section
6.3(a).
"Claim Response" shall have the meaning set forth in Section
6.3(a).
"Closing" means the closing of the transaction under this
Agreement.
"Closing Date" means the date of the Closing as determined
pursuant to Section 1.8.
"Closing Net Working Capital" shall have the meaning set forth
in Section 1.7.
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"Closing Statement" shall have the meaning set forth in
Section 1.7.
"Code" means the Internal Revenue Code of 1986, as amended.
"commercially reasonable efforts" shall mean diligently,
promptly and in good faith taking all actions which are reasonable, necessary
and appropriate to accomplish the objective requiring the use of commercially
reasonable efforts, but shall not include any obligation (a) to make any
payment, incur any costs, commit available resources, or forego the receipt of
any payment, which in any case is material in amount in light of the required
objective, (b) to initiate any lawsuit or other proceeding to achieve the
required objective, or (c) to take any action which is unlawful.
"Correction Opinion" shall mean an opinion as to the matters
set forth on Exhibit G hereto with such reasonable assumptions, qualifications
and exclusions as Buyer and Parent may reasonably agree.
"Credit Agreement" means that certain Revolving Credit
Agreement, dated as of October 28, 1997, among Parent, the guarantors named
therein, the lending institutions party thereto, Deutsche Bank AG, as
Documentation Agent, and BankBoston, as Agent, as amended.
"Current Assets" means assets of the character that would be
reflected as current assets on a balance sheet prepared on a basis consistent
with the Accounting Principles.
"Current Liabilities" means liabilities of the character that
would be reflected as current liabilities on a balance sheet prepared on a basis
consistent with the Accounting Principles, excluding the current portion of any
long-term liabilities.
"Damages" mean any and all losses, liabilities, damages,
penalties, obligations, awards, fines, deficiencies, interest, claims (including
third Person claims, whether or not meritorious), causes of action, suits,
proceedings, costs and expenses whatsoever (including reasonable attorneys',
consultants' and other professional fees and disbursements of every kind, nature
and description) resulting from, arising out of or incident to (x) any matter
for which indemnification is provided under this Agreement, or (y) the
enforcement by an indemnified party of its rights to indemnification under this
Agreement.
"Defense Notice" shall have the meaning set forth in Section
6.3(d).
"Disclosure Letter" means the disclosure letter delivered by
Parent and Sellers to Buyer on the date of this Agreement pursuant to the terms
of this Agreement.
"Disputed Items" shall have the meaning set forth in Section
1.7.
"Dispute Notice" shall have the meaning set forth in Section
1.7.
"EEOC" means the Equal Employment Opportunity Commission.
"Employees" shall mean all salaried and hourly paid
individuals with whom any Seller or any Foreign Subsidiary maintains on the
specified date an employer-employee
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relationship whose primary responsibility relate to the Business or who are
employed in the conduct of the Business.
"Encumbrance" shall mean any encumbrance of any kind
whatsoever and includes any security interest, mortgage, deed of trust, lien,
judgment, tax lien, sewer rent, assessment, mechanics or materialmens liens,
hypothecation, pledge, assignment, easement, servitude, right of way,
restriction, tenancy, right of first refusal, encroachment or burden or any
other right or claim of others affecting the Purchased Assets and any
restrictive covenant or other agreement, restriction or limitation on the use of
the Purchased Assets.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" shall mean (i) any corporation included with
Sellers in a controlled group of corporations within the meaning of Section
414(b) of the Code; (ii) any trade or business (whether or not incorporated)
which is under common control with Sellers within the meaning of Section 414(c)
of the Code; (iii) any member of an affiliated service group of which any Seller
is a member within the meaning of Section 414(m) of the Code; or (iv) any other
person or entity treated as an affiliate of any Seller under Section 414(o) of
the Code.
"Escrow Agent" shall mean the person appointed as escrow agent
pursuant to the Escrow Agreement, which such escrow agent shall be reasonably
acceptable to Buyer and Parent.
"Escrow Fund" shall have the meaning set forth in Section 1.6.
"Estimated Net Working Capital" shall have the meaning set
forth in Section 1.5.
"Excluded Assets" means the properties and assets of the
Sellers expressly excluded from the Purchased Assets by Section 1.2.
"Excluded Liabilities" means the liabilities and obligations
of the Sellers which are not assumed expressly by Buyer as provided in Section
1.3(b).
"Financial Statements" shall have the meaning set forth in
Section 2.6.
"Foreign Subsidiary Assets" means all of the assets and
properties of the Foreign Subsidiaries.
"Foreign Subsidiaries" shall mean Australasian HMT Pty. Ltd.,
an ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, Ltd., a Canadian corporation, HMT
Rubbaglas, Ltd., HMT Tank Systems B.V., a Netherlands corporation, and English
corporation and HMT Singapore Pte. Ltd., a Singapore corporation.
"Former Employees" shall mean all salaried and hourly paid
individuals previously employed by Sellers or any of their Affiliates but who
are no longer so employed on the Closing Date, including any such individuals on
long-term disability.
"GAAP" means United States generally accepted accounting
principles.
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"Governmental Authority" means the government of the United
States or any other country or any state, municipality, local or other political
or administrative subdivision thereof or therein, or any court, tribunal,
agency, department, board, instrumentality, authority or commission (including
regulatory and administrative bodies) of any of the foregoing.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements
Act of 1976, as amended.
"HSR Filing" shall have the meaning set forth in Section 4.4
hereof.
"including" or any variation thereof means "including without
limitation" and the term "including" or any variation thereof shall not be
construed to limit any general statement which it follows to the specific or
similar items or matters immediately following it.
"Indemnitee" shall have the meaning set forth in Section
6.3(a).
"Indemnitor" shall have the meaning set forth in Section
6.3(a).
"Independent Accountant" shall have the meaning set forth in
Section 1.7(b).
"IRS" means the U.S. Internal Revenue Service.
"knowledge of Sellers," "to Seller's knowledge" and similar
phrases means the knowledge of ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇-▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇, after reasonable investigation.
"Lock-Box Account" means the lock-box account of HMT, Inc. at
Bank One Texas, N.A., account
number 1560184788.
"Manage" or "Managed", when used with respect to Hazardous
Materials, has the meaning set forth in Section 2.15.
"Material Adverse Effect" means any change or effect (or
series of related changes or effects) which has or is reasonably likely to have
a material adverse change in or effect upon the condition (financial or
otherwise), results of operations, liabilities, assets, earnings, competitive or
financial position, business of any Seller, any Foreign Subsidiary, the Business
or the use of the Purchased Assets.
"Net Working Capital" means all Current Assets included in the
Purchased Assets (including all Current Assets of the Foreign Subsidiaries) as
of the Closing Date, less all Current Liabilities included in the Assumed
Liabilities (including all Current Liabilities of the Foreign Subsidiaries) as
of the Closing Date, calculated in accordance with the Accounting Principles.
"Non-Union Employees" shall have the meaning set forth in
Section 4.13(b).
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"November 1999 Net Working Capital Statement" means a
statement of the calculation of Net Working Capital as of the end of business of
November 30, 1999, as prepared by Parent, which such statement is included in
Section 1.5 of the Disclosure Letter.
"Owned Real Properties" shall have the meaning set forth in
Section 2.17(a).
"Party" shall mean Sellers and Parent on the one hand and
Buyer on the other hand; and "Parties" shall mean Parent, each Seller and Buyer
collectively.
"Permitted Encumbrances" means (i) any liens for taxes and
assessments not yet delinquent; (ii) any obligations or duties to any
municipality or public authority not yet due and payable with respect to any
franchise, grant, certificate, license or permit, and all applicable laws,
rules, regulations and orders; (iii) any easements, rights of way, servitudes,
permits and other similar rights for pipelines, power lines, water and sewer
lines, telephone lines, streets, roadways, passage ways, alleys and other
similar easements, rights of way and encroachments on, over or in respect of the
Real Property which do not materially adversely affect the use or value (in
respect of its current use) of any of the Owned Real Property or take priority
over the possessory rights under the Real Property Leases or otherwise
materially adversely affect the use or value (in respect of its current use) of
any Real Property Lease; (iv) materialmens, mechanics, repairmens, employees,
contractors, operators, tax and other similar statutory liens or charges arising
in the ordinary course of business incidental to construction, maintenance or
operation of any facilities of any Seller on the Real Property (A) if they have
not been filed pursuant to applicable law, (B) if filed, if they have not yet
become due and payable or payment is being withheld as provided by law [or (C)
if their validity is being contested in good faith in the ordinary course of
business by appropriate action]; (v) any other liens, charges, encumbrances,
contracts, agreements, instruments, obligations, defects or irregularities of
any kind whatsoever affecting the Real Property that individually or in the
aggregate are not such as to materially adversely affect the use or value (in
respect of its current use) of any of the Owned Real Properties or Leased Real
Properties; (vi) the terms and conditions of all conveyance documents executed
pursuant hereto at Closing and all leases relating to the Leased Real Property;
(vii) all liens, charges, encumbrances, contracts, agreements, instruments,
obligations, defects and irregularities of any kind whatsoever affecting the
Real Property and arising out of the acts of any predecessors in title to any
Seller who are unrelated to any Seller or any Affiliate of any Seller; and
(viii) the matters described in Section 2.17 of the Disclosure Letter.
"Person" means and includes any individual, corporation,
partnership, firm, association, joint venture, joint stock company, trust or
other entity, or any government or regulatory administrative or political
subdivision or agency, department or instrumentality thereof.
"Predecessor Encumbrances" means any matter described in
clause (vii) of the definition of "Permitted Encumbrances."
"Purchase Orders" shall mean purchase orders entered into by
any Seller in the ordinary course of business consistent with the past practice
of the Business.
"Purchase Order Consent" means the consent of the appropriate
customer with respect to the assignment of a Purchase Order to Buyer.
"Purchase Price" shall have the meaning set forth in Section
1.4.
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"Purchased Assets" shall have the meaning set forth in Section
1.1.
"Release" shall have the meaning set forth in Section 2.15.
"Remediation" means investigation, cleanup, remedial action or
other response action.
"Resignations" means any resignations of officers and
directors of Foreign Subsidiaries requested by Buyer prior to Closing.
"Resolution Period" shall have the meaning set forth in
Section 1.7(b).
"Response Period" shall have the meaning set forth in Section
6.3(a).
"Returns" means all returns, declarations, reports, claims for
refunds, information returns or statements and other documents required under a
Tax Law either (A) to be filed with a Governmental Authority in respect of Taxes
or (B) to be provided to a person other than a Governmental Authority (and
"Return" means any one of the foregoing Returns).
"Rubbaglas Earnout" shall mean any earn-out amounts payable to
the Former Shareholders of HMT Rubbaglas, Ltd., pursuant to the Sale and
Purchase Agreement, dated November 19, 1993, among ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and HTM,
Inc.
"Seller Environmental Liabilities" means whether or not
disclosed in any environmental reports or identified in connection with Buyer's
due diligence any loss, liability, claim, obligation, damage or deficiency
arising out of, resulting from or pertaining to environmental conditions or
violations (including violations of Environmental Laws) first occurring,
existing, or arising prior to the Closing, including, without limitation, (i)
the presence, Release, or threat of Release of Hazardous Materials at, on,
about, under or from any property now or previously owned, operated or leased by
the Business or in connection with its businesses of Sellers or the Foreign
Subsidiaries (on- or off-site); (ii) arising from the off-site management,
recycling, transportation, Release or threat of Release of Hazardous Materials
generated by or on behalf of the Sellers or Foreign Subsidiaries; (iii) the
violation of any Environmental Law and any common law liability with respect to
the foregoing; or (iv) relating to the wastewater lagoon located at the Kelton,
Pennsylvania facility of Sellers.
"Sellers" shall have the meanings set forth in the
Introduction.
"Solvent" means, with respect to Parent and each Seller: (i)
The fair value of the assets of each of the Parent (on a consolidated basis),
each Seller and the Foreign Subsidiaries, at a fair valuation, exceeds their
respective debts and liabilities, subordinated, contingent or otherwise; (ii)
the present fair saleable value of the property of the Parent, Sellers and
Foreign Subsidiaries is greater than the amount that will be required to pay the
probable liability of their respective debts and other liabilities,
subordinated, contingent or otherwise, as such debts and other liabilities
become absolute and matured; (iii) assuming Parent is able to refinance its debt
under the Credit Agreement on or before the maturity or acceleration of such
debt, the Parent, Sellers and Foreign Subsidiaries are able to pay their
respective debts and liabilities,
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subordinated, contingent or otherwise, as such debts and liabilities become
absolute and matured; and (iv) assuming Parent is able to refinance its debt
under the Credit Agreement on or before the maturity or acceleration of such
debt, the Parent, Sellers and Foreign Subsidiaries do not have unreasonably
small capital with which to conduct the business in which they are engaged as
such business is now conducted and is proposed to be conducted.
"Statement of Allocation" shall have the meaning set forth in
Section 4.7.
"Subsidiary" means any subsidiary of Parent, including Sellers
and the Foreign Subsidiaries.
"subsidiary" means as to any Person, a corporation or other
entity of which shares of stock or other equity ownership interests having
ordinary voting power to elect a majority of the board of directors or other
managers of such corporation or other entity are at the time owned, directly or
indirectly, through one or more intermediaries, or both, by such Person.
"Taxes" means all federal, state, local, foreign and other net
income, gross income, gross receipts, sales, use, bulk sales, ad valorem,
transfer, franchise, profits, license, lease, service, add on or alternative
minimum tax, occupancy, withholding, social security, payroll, employment,
excise, severance, stamp, value added, occupation, premium, property (including,
without limitation, real property taxes and any assessments, special or
otherwise), windfall profits, capital stock, customs, duties or other taxes,
fees, assessments or charges of any kind whatever, together with any interest
and any penalties, additions to tax or additional amounts with respect thereto
(and "Tax" means any one of the foregoing Taxes).
"Tax Law" means a statute, regulation, administrative rule,
judicial opinion or similar authority addressing or related to Taxes.
"Title Commitments" as defined in Section 4.16(c).
"Title Company" as defined in Section 4.16(c).
"Title Policies" as defined in Section 4.16(c).
"Transaction Documents" shall mean this Agreement, the Escrow
Agreement, the ▇▇▇▇ of Sale, the Assumption Agreement, the Assignment of Leases,
the Intangibles Assignment and the Deeds.
"Transferred Employees" shall have the meaning set forth in
Section 4.13(b).
"Transferred Non-Union Employees" shall have the meaning set
forth in Section 4.13.
"Transferred Union Employees" shall have meaning set forth in
Section 4.13(b).
"U.K. Site" means the real property owned by HMT Rubbaglas,
Ltd., located on Consort Rd, London, England.
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"Uncollected A/R Statement" shall have the meaning set forth
in Section 4.15.
"Union Employees" shall have the meaning set forth in Section
4.13(b).
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IN WITNESS WHEREOF, Buyer, Parent and each Seller has caused
this Agreement to be duly executed on its behalf by its duly authorized officer
as of the day and year first written above.
HMT INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President
ITEQ, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
President
ITEQ STORAGE SYSTEMS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
President
ITEQ CONSTRUCTION SERVICES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
President
ITEQ TANK SERVICES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
President
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EXHIBIT A
ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (the "Agreement"), dated as of
_________, 2000, is by and between HMT Inc., a Delaware corporation ("Buyer"),
and ITEQ, Inc., a Delaware corporation, ITEQ Storage Systems, Inc., a Minnesota
corporation, ITEQ Construction Services, Inc., a Delaware corporation, and ITEQ
Tank Services, Inc., a Delaware corporation ("Sellers").
W I T N E S S E T H
WHEREAS, Buyer, Sellers and ITEQ, Inc. have entered into a certain
Asset Purchase Agreement (the "Asset Purchase Agreement") dated as of
_____________, 2000.
WHEREAS, the Asset Purchase Agreement provides for Sellers to transfer
and sell certain assets and rights of Sellers, all as more fully described in
the Asset Purchase Agreement and as defined therein as the "Purchased Assets,"
for the consideration and upon the terms and conditions set forth in the Asset
Purchase Agreement; and
WHEREAS, the Asset Purchase Agreement further provides for the
assumption by Buyer of certain liabilities and obligations of Sellers, all as
more fully described in the Asset Purchase Agreement and as defined therein as
the "Assumed Liabilities," for the consideration and upon the terms and
conditions set forth in the Asset Purchase Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto promise and
agree as follows:
1. Sellers hereby sell, assign, convey, transfer and deliver to Buyer
all of Sellers' rights, title and interest in and to the Purchased Assets,
including without limitation, the Assumed Contracts.
2. The Buyer hereby accepts the foregoing assignment and assumes and
agrees to perform, pay or discharge, when due, all of the Assumed Liabilities
specifically excluding the Excluded Liabilities.
3. Each party hereby covenants from time to time after delivery of this
instrument to do, execute, authorize and deliver or to cause to be done,
executed and delivered such further acts, instruments, notices, documents and
assurances as the other party may deem reasonably necessary for the effective
confirmation and consummation of the assignment of the Assumed Contracts and the
assumption of the Assumed Liabilities.
75
4. This Agreement shall be binding upon and inure to the benefit of
Buyer and Sellers and their respective successors and assigns.
5. This Agreement may be executed in any number of counterparts with
the same effect as if the signatures thereto were upon one instrument.
6. None of the provisions in this Agreement may be waived, changed or
altered except in a writing signed by all of the parties hereto.
7. This Agreement shall be governed by and construed and enforced in
accordance with the internal laws (as opposed to the conflicts of laws
provisions) of the State of New York.
8. Capitalized terms used herein without definition shall have the
respective meanings set forth in the Asset Purchase Agreement.
9. EXCEPT AS EXPRESSLY SET FORTH IN THE ASSET PURCHASE AGREEMENT OR IN
ANY OTHER DOCUMENT OR AGREEMENT DELIVERED PURSUANT THERETO, THE SELLERS MAKE NO
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AT LAW OR IN EQUITY, IN RESPECT
OF ANY OF THE PURCHASED ASSETS, INCLUDING, WITHOUT LIMITATION, WITH RESPECT TO
MERCHANTABILITY, FITNESS FOR ANY PARTICULAR PURPOSE, CONFORMITY TO SAMPLES OR
MODELS AND CONDITION AND ANY SUCH OTHER REPRESENTATIONS OR WARRANTIES ARE HEREBY
EXPRESSLY DISCLAIMED. Except as expressly set forth in the Asset Purchase
Agreement or in any other document or agreement delivered pursuant thereto, any
covenants or warranties implied by the use of the word "convey" or words of
similar import are hereby expressly waived, disclaimed and negated. The parties
agree that the foregoing disclaimers of warranty are "CONSPICUOUS" disclaimers
for purposes of any applicable law, rule, regulation or order. Buyer hereby
acknowledges and agrees that, except to the extent specifically set forth in the
Asset Purchase Agreement or in any other document or agreement delivered
pursuant thereto, the Purchased Assets are hereby conveyed on an "as-is,"
"where-is" basis.
10. In the event of a conflict between the terms and conditions of this
Agreement and the terms and conditions of the Asset Purchase Agreement, the
terms and conditions of the Asset Purchase Agreement shall govern, supersede and
prevail.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day, month and year first above written.
HMT INC.
---------------------------------------
Name:
Title:
ITEQ, INC.
---------------------------------------
Name:
Title:
ITEQ STORAGE SYSTEMS, INC.
---------------------------------------
Name:
Title:
ITEQ CONSTRUCTION SERVICES, INC.
---------------------------------------
Name:
Title:
ITEQ TANK SERVICES, INC.
---------------------------------------
Name:
Title:
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EXHIBIT B
ESCROW AGREEMENT
THIS ESCROW AGREEMENT ("Escrow Agreement") is made as of this 17th day
of March, 2000 by and among by and among HMT Inc., a Delaware corporation
("Buyer"), ITEQ Storage Systems, Inc., a Minnesota corporation ("ITEQ Storage"),
ITEQ Construction Services, Inc., a Delaware corporation ("ITEQ Construction"),
ITEQ Tank Services, Inc., a Delaware corporation ("ITEQ Tank"), and Compass
Bank, a bank organized under the laws of the State of Alabama ("Escrow Agent").
As used herein, ITEQ Storage, ITEQ Construction and ITEQ Tank are hereinafter
sometimes referred to individually as a "Seller" and collectively as the
"Sellers".
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, it is hereby agreed that:
ARTICLE I
DEFINITIONS
Capitalized terms not otherwise defined herein shall be defined as in
the Asset Purchase Agreement, dated as of January 28, 2000 (as the same may be
amended from time to time in accordance with the terms thereof, together with
the Exhibits attached thereto and the Disclosure Letter described therein, the
"Asset Purchase Agreement") by and among Buyer, Sellers and ITEQ, Inc.
ARTICLE II
THE ESCROW
2.1. Background and Intention of Parties. Pursuant to Article VI of
the Asset Purchase Agreement, the Sellers have agreed to indemnify Buyer and its
officers, directors, employees, agents, stockholders and affiliates (the
"Indemnitees") against certain Damages arising out of or resulting from events
or states of facts specified in Article VI of the Asset Purchase Agreement
("Indemnity Matters"). The purpose of this Escrow Agreement is to provide for
the deposit with the Escrow Agent of funds that will be held and disbursed, as
hereinafter provided, to make payments with respect to Indemnity Matters and
other matters and (to the extent of any remaining funds) to make payments to the
Sellers. Sellers acknowledge and agree that ITEQ, Inc. has authority to act on
behalf of the Sellers on all matters under this Escrow Agreement.
2.2. Establishment of Escrow.
(a) Buyer hereby agrees to deposit with the Escrow Agent in
accordance with Section 1.6(ii) of the Asset Purchase Agreement $2,000,000 in
immediately available funds (such amount, together with any interest, dividends
and other income earned thereon being, the "Escrow Funds"). The Escrow Funds
shall not be subject to lien or attachment by any creditor of any party hereto
(except to the extent and at such time as delivery of any Escrow Funds to
Sellers is required hereunder and the amount of such funds are ultimately
determined pursuant hereto) and shall be used solely for the purposes set forth
in this Escrow Agreement.
(b) Escrow Agent hereby acknowledges receipt of the Escrow Funds,
as trustee on behalf of the Indemnitees and Sellers, as their interests may
appear in accordance with the terms and conditions hereinafter set forth, and
agrees to hold and delivery the Escrow Funds
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in accordance with the terms and provisions hereof. The Escrow Funds shall be
held by the Escrow Agent in a separate account (the "Escrow Account") for the
benefit of the Indemnitees and the Sellers as provided in this Escrow Agreement.
2.3. Claim Procedure.
(a) In the event and to the extent any Indemnitee determines that
it is entitled to indemnification pursuant to Article VI of the Asset Purchase
Agreement, such Indemnitee may issue, or cause to be issued, a notice (an
"Indemnity Claim Notice") to Escrow Agent, with a copy to Sellers, which sets
forth: (i) the fact that an Indemnity Matter has occurred; (ii) the fact that
Indemnified Damages (as defined below) have been incurred or are expected to be
incurred; (iii) a specification of the amount of the Indemnified Damages; (iv) a
brief description of the facts, to the extent known, which gave rise to the
Indemnity Matter; and (v) a request that the Escrow Agent deliver to such
Indemnitee from the Escrow Funds an Indemnity Payment (as hereinafter defined)
equal to the amount of the Indemnified Damages. For the purpose of this Escrow
Agreement, "Indemnity Damages" shall mean Damages for which an Indemnitee is
entitled to indemnification as a result of an Indemnity Matter, in accordance
with Article VI of the Asset Purchase Agreement; and "Indemnity Payment" shall
mean a payment out of the Escrow Funds in respect of any Indemnified Damages.
(b) On the date which is fifteen (15) calendar days after Sellers
and the Escrow Agent have received an Indemnity Claim Notice, the Escrow Agent
shall deliver to the applicable Indemnitee that portion of the Escrow Funds
described in, and in accordance with the terms of, the Indemnity Claim Notice
delivered by such party, unless within the 15-calendar day period after Escrow
Agent has received the Indemnity Claim Notice, the Escrow Agent and the
applicable Indemnitee have received an Objection Notice (as defined below). An
"Objection Notice" shall mean a notice from the Sellers to the Escrow Agent and
the applicable Indemnitee that sets forth: (i) an objection to delivery of all
or any portion of the Escrow Funds in accordance with the terms of an Indemnity
Claim Notice; and (ii) a brief description of the facts which constitute the
basis for the objection. Upon receipt of an Objection Notice in accordance with
this Section 2.3(b), the Escrow Agent shall not make the delivery of that
portion of a requested Indemnity Payment objected to therein except in
accordance with either: (x) a notice from, and executed by, Buyer and Sellers to
the Escrow Agent (a "Joint Direction") or (y) an order, judgment or decree of a
court of competent jurisdiction directing the Escrow Agent to make such
delivery.
(c) The parties hereto agree that all distributions of Escrow
Funds to the Indemnitees hereunder shall be treated as adjustments to the cash
consideration to be paid pursuant to the Asset Purchase Agreement, that are
neither deductible by the Sellers nor includable in the Indemnitees' income for
any federal, state, local or foreign income or franchise tax purpose.
2.4. Joint Direction. Notwithstanding any other provision of this
Escrow Agreement, the Escrow Agent shall promptly deliver all or any part of the
Escrow Funds in accordance with the terms of a Joint Direction, unless an order
of a court of competent jurisdiction prohibits the Escrow Agent from complying
with the terms thereof.
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2.5. Termination of Escrow.
(a) The Escrow Funds shall be distributed to the Sellers as
follows:
(i) On the Purchase Price Adjustment Date (as defined
below), a Joint Direction will be given to the Escrow Agent who shall be
instructed to distribute (A) to Buyer any amount due Buyer pursuant to Section
1.7(c)(ii) and (iii) of the Asset Purchase Agreement (the "Working Capital
Payment") and (B) to the Sellers in accordance with the allocation percentages
set forth on Schedule A (the "Allocations") an amount equal to $500,000 less the
amount of any Working Capital Payment made to Buyer. In the event that the
Working Capital Payment due to Buyer equals or exceeds $500,000, then no
distribution shall be made to Sellers pursuant to this Section 2.5(a)(i) and
Buyer may, at its option, make an Indemnity Claim Notice with respect to such
excess as to any remaining Escrow Funds.
(ii) On April 30, 2001, a Joint Direction will be given to
the Escrow Agent who shall be instructed to distribute to the Sellers in
accordance with the Allocations a specified amount such that the remaining
Escrow Funds after such distribution shall equal the lesser of (A) the sum of
all Pending Claim Amounts or (B) the amount of the remaining Escrow Funds prior
to such distribution.
(b) On the Termination Date (as defined below), this Escrow
Agreement shall terminate and a Joint Direction shall be given to the Escrow
Agent instructing it to distribute to the Sellers in accordance with the
Allocations the then remaining balance, if any, of the Escrow Funds. For
purposes of this Escrow Agreement, "Termination Date" shall mean the earlier of:
(i) the first day on which there are no Escrow Funds remaining in the Escrow
Account or (ii) the later of: (x) April 30, 2001, or (y) if any portion of the
Escrow Funds is the subject of one or more pending Indemnity Claim Notices, the
subsequent date on which there has been a final disposition of all such
Indemnity Claim Notices pursuant to Sections 2.3 or 2.4 of this Escrow
Agreement.
(c) As used herein, "Purchase Price Adjustment Date" means the
date upon which the Closing Net Working Capital is finally determined pursuant
to Section 1.7 of the Asset Purchase Agreement; and "Pending Claim Amounts"
means the aggregate dollar amount of the Escrow Funds, if any, which is the
subject of one or more pending Indemnity Claim Notices.
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ARTICLE III
THE ESCROW AGENT
3.1. Liability of Agent. The Escrow Agent shall be obligated to
perform only the duties described in this Escrow Agreement. The Escrow Agent may
rely on any instrument or signature believed by it to be genuine and to have
been signed or presented by the proper party or parties duly authorized to do
so. The Escrow Agent shall not be liable for any action taken or omitted by it
in good faith and believed by it to be authorized, nor for any action taken or
omitted by it in accordance with advice of counsel, and shall not be liable for
any mistake of fact or error of judgment or for any acts or omissions of any
kind unless caused by its willful misconduct or gross negligence. Each party
agrees to indemnify the Escrow Agent and to hold it harmless against any and all
liabilities, including reasonable attorneys' fees, incurred by it as a
consequence of that party's action, and the parties agree jointly to indemnify
the Escrow Agent and to hold it harmless against any and all liabilities,
including reasonable attorneys' fees, incurred by it which are not a consequence
of any party's action, except in either case for the Escrow Agent's own willful
misconduct or gross negligence.
3.2. Advice of Counsel. The Escrow Agent shall be entitled to consult
with competent and responsible counsel of its choice with respect to the
interpretation of the provisions hereof, and any other legal matters relating
hereto, and shall be fully protected in taking any action or omitting to take
any action in good faith in accordance with the advice of such counsel.
3.3. Fees of Escrow Agent. The Escrow Agent shall serve hereunder in
consideration of the fees described on Schedule B attached hereto (the "Escrow
Agent Fees"), which is hereby incorporated herein, and the reimbursement of any
expenses and other charges reasonably incurred by the Escrow Agent in
connection with the performance of its duties hereunder (the "Escrow Agent
Expenses"). All Escrow Agent Fees and Escrow Agent Expenses shall be split
equally between the Buyer, on the one hand, and Sellers, on the other hand.
Escrow Agent shall send on an annual basis a ▇▇▇▇ to the Buyer and Sellers
specifying such party's portion of the Escrow Agent Fees and Escrow Agent
Expenses for such period. In the event that the Escrow Agent is not paid the
invoiced amount within 30 days of receipt of such ▇▇▇▇, the Escrow Agent may
deduct such amounts from the Escrow Funds upon 10 days' advance notice to the
Buyer and Sellers; provided, that any such deduction shall not relieve any
party of its reimbursement obligation under this Section 3.3.
3.4. Investment of Escrow Funds.
(a) Upon the receipt of a Joint Instruction, Escrow Agent shall,
pending disbursement, invest the Escrow Funds in accordance with such
instructions but only in the Permitted Investments (as hereinafter defined). All
interest and other income earned on the Escrow Funds shall be invested in
Permitted Investments. For purposes of this Escrow Agreement, "Permitted
Investments" shall mean (i) marketable direct obligations issued or
unconditionally guaranteed by the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States of
America; (ii) marketable direct obligations issued by any state of the United
States of America or any political subdivision of any such state or any public
instrumentality thereof, having the first and second highest rating obtainable
from either Standard & Poor's Corporation ("S&P") or ▇▇▇▇▇'▇ Investors Service,
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Inc. ("Moody's"); (iii) commercial paper having, at the time of acquisition, a
rating of A-1 or P-1 or better from either S&P or Moody's; (iv) certificates of
deposit or bankers' acceptances issued by any commercial bank organized under
the laws of the United States of America or any state thereof or the District of
Columbia having combined capital and surplus of not less than $50,000,000,
provided that if such commercial bank is not organized under the laws of the
United States of America, it must be a member of the Federal Deposit Insurance
Corporation; and (v) money market mutual funds registered under the Investment
Company Act of 1940 that invest exclusively in investments described in clauses
(i), (ii) and (iii) above. Any such investments shall be held by or under the
control of Escrow Agent and shall be deemed at all times a part of the Escrow
Funds, and the interest accruing thereon and any profit realized from such
investment shall be credited to and held in and any loss shall be charged to the
Escrow Funds. In the event that Escrow Agent shall not have received a direction
for investment for any of the Escrow Funds, Escrow Agent may deposit such moneys
into a money market fund, substantially all of which is invested in the
foregoing investment categories, including a money market fund managed by the
Escrow Agent or any of its affiliates; provided that all such investments shall
mature, and the funds invested immediately available, on each one month
anniversary of the date of each such deposit.
(b) As and when any amount is needed for a payment under this
Escrow Agreement, the Escrow Agent shall cause a sufficient amount of the
Permitted Investments to be converted into cash. Buyer and Sellers shall be
consulted to select the investments or types of investments to be converted.
Neither the Escrow Agent nor any party hereto shall be liable for any loss of
principal or income due to the choice of Permitted Investments sold or converted
pursuant to this Section 3.4(b).
3.5. Statements. The Escrow Agent shall mail to Buyer and Sellers a
written accounting of all transactions relating to the Escrow Funds not less
frequently than quarterly.
3.6. Successor. The Escrow Agent may resign at any time or be removed
without cause, pursuant to a Joint Direction, in either case, upon 30 days
written notice to each of the parties hereto. If the Escrow Agent at any time
resigns, refuses to act or is removed pursuant to a Joint Direction, then a
successor Escrow Agent shall be jointly selected by Buyer and Sellers, or if
Buyer and Sellers cannot agree, the successor Escrow Agent shall be selected by
the existing Escrow Agent. Any successor Escrow Agent shall be a national
banking association with its principal place of business located in the State of
New York.
3.7. Sellers Directions. Escrow Agent agrees that, upon written
instructions from the appropriate Seller, Escrow Agent will pay any Escrow Funds
payable to such Seller pursuant to this Agreement to Bank Boston, N.A., as agent
for the various lenders under the Credit Agreement (as defined in the Asset
Purchase Agreement).
ARTICLE IV
TAXES AND REPORTS
4.1. By Sellers. All obligations imposed now or hereafter by any
applicable tax law with respect to any payments from the Escrow Funds to the
Sellers under this Escrow Agreement
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shall be governed by the terms of the Asset Purchase Agreement, and undertake to
instruct the Escrow Agent in writing with respect to the Escrow Agent's
responsibility for withholding and other taxes, assessments or other
governmental charges, certifications and governmental reporting in connection
with any such payments. The Escrow Agent shall be under no obligation to take
any action with respect to the matters set forth in this Section 4.1 except as
instructed by Buyer and the Sellers in accordance with the preceding sentence.
4.2. By Indemnitees. All obligations imposed now or hereafter by any
applicable tax law with respect to any payments from the Escrow Funds to such
Indemnitee, under this Escrow Agreement, shall be governed by the terms of the
Asset Purchase Agreement, and Buyer undertakes, and shall cause each other
Indemnitee to undertake, to instruct the Escrow Agent in writing with respect to
the Escrow Agent's responsibility for withholding and any other taxes,
assessments or other governmental charges, certifications and governmental
reporting in connection with any such payments. The Escrow Agent shall be under
no obligation to take any action with respect to the matters set forth in this
Section 4.2 except as instructed by an Indemnitee in accordance with the
preceding sentence.
4.3. Taxation of Earnings/Distributions of Earnings. Solely for tax
purposes, to the extent allowed by applicable law, the Escrow Funds shall be the
property of Buyer and all interest, dividends and other income earned on the
Escrow Funds shall be the property of Buyer, and all parties hereto shall file
all tax returns consistent with such treatment. On the April 30, 2001
distribution under Section 2.5(a)(ii) a Joint Instruction shall be given to the
Escrow Agent to distribute to Buyer an amount equal to any taxes paid by Buyer
on the interest, dividends or other income earned on the Escrow Funds.
ARTICLE V
MISCELLANEOUS
5.1. Assignability; Successors. None of the rights and liabilities of
the Indemnitees, the Parent or the Sellers under this Escrow Agreement are
assignable or delegable, in whole or in part, without the prior written consent
of the Buyer and the Sellers; except that no consent of Sellers shall be
required for any assignment by Buyer to any of its Affiliates, provided that
notwithstanding such assignment, Buyer shall remain fully liable for all of its
obligations hereunder and Buyer shall guarantee the timely, full and complete
payment and performance by such Affiliates of any liabilities or obligations so
assigned to such Affiliates.
5.2. Survival. All agreements, representations and warranties made in
this Escrow Agreement or in any document delivered pursuant to this Escrow
Agreement shall survive the execution and delivery of this Escrow Agreement and
the delivery of any such documents; provided that such agreements,
representations and warranties (other than those agreements, representations and
warranties contained in Articles III, IV and V) shall terminate on the
Termination Date.
5.3. Governing Law. This Escrow Agreement and the documents issued
pursuant hereto shall be construed in accordance with and governed by the laws
of the State of New York.
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5.4. Counterparts; Headings. This Escrow Agreement may be executed in
one or more counterparts, each of which shall be deemed an original, but such
counterparts shall together constitute but one and the same agreement. The
Article and Section headings in this Escrow Agreement are inserted for
convenience of reference only and shall not constitute a part of this Escrow
Agreement.
5.5. Entire Agreement. This Escrow Agreement, the Asset Purchase
Agreement and the Disclosure Letter and documents referred to herein and therein
contain the entire understanding of the parties with respect to the subject
matter hereof and supersede all prior negotiations, agreements and undertakings
among the parties with respect to such subject matter. There are no
restrictions, promises, warranties, covenants or undertakings other than those
expressly set forth herein and therein.
5.6. Notices. Any notice, request, instruction, or other document to
be given by any party hereto to any other party shall be in writing and shall be
given (and will be deemed to have been duly given upon receipt; provided that
notice shall be deemed to have been given if delivery of the notice is refused
or, if such notice is properly addressed, delivery is attempted but unable to be
made) by delivery in person, by electronic facsimile transmission, or other
standard forms of written telecommunications, by overnight courier or by
registered or certified mail, postage prepaid,
If to Sellers, to:
ITEQ Storage Systems, Inc., ITEQ Construction Services,
Inc. and ITEQ Tank Services, Inc.
▇/▇ ▇▇▇▇, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: ▇▇▇-▇▇▇-▇▇▇▇
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With a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: T. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Fax No.: ▇▇▇-▇▇▇-▇▇▇▇
If to Buyer, to:
HMT Inc.
▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Dechert Price & ▇▇▇▇▇▇
4000 ▇▇▇▇ Atlantic Tower
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Fax No.: ▇▇▇-▇▇▇-▇▇▇▇
If to the Escrow Agent:
Compass Bank
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
or at such other address for a party as shall be specified by like notice.
5.7. Amendment. No amendment of this Escrow Agreement shall be
effective unless in writing and signed by Buyer and Sellers.
5.8. Severability. Any provision of this Escrow Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of this Escrow Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.
-8-
85
5.9. Interpretation. Unless the context requires otherwise, all words
used in this Escrow Agreement in the singular number shall extend to and include
the plural number, all words in the plural number shall extend to and include
the singular number and all words in any gender shall extend to and include all
genders.
5.10. Waiver of Offset Rights. The Escrow Agent hereby waives any and
all rights to offset that it may have against the Escrow Funds including,
without limitation, claims arising as a result of any claims, amounts,
liabilities, costs, expenses, damages or other losses that the Escrow Agent may
be otherwise entitled to collect from any party to this Escrow Agreement, except
as expressly set forth in Section 3.4 hereof.
5.11. Time is of the Essence. Time is of the essence in the performance
of this Agreement.
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86
IN WITNESS WHEREOF, the parties have executed this Escrow Agreement as
of the day and year first above written.
HMT INC.
By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Title: President & Chief Executive Officer
ITEQ, INC.
By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: President and Chief Executive Officer
ITEQ STORAGE SYSTEMS, INC.
By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: President
ITEQ CONSTRUCTION SERVICES, INC.
By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: President
ITEQ TANK SERVICES, INC.
By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Chief Executive Officer
-10-
87
COMPASS BANK
------------------------------
By:
---------------------------
Title:
------------------------
-11-
88
SCHEDULE A
Allocations
-12-
89
SCHEDULE B
Escrow Agent Fees
[$ ] per year
-13-
90
Exhibit C
▇▇▇▇ OF SALE
This ▇▇▇▇ OF SALE dated as of ______, 2000 (the "▇▇▇▇ of
Sale") is entered into by ITEQ Storage Systems, Inc., a Minnesota corporation,
ITEQ Construction Services, Inc., a Delaware corporation, and ITEQ Tank
Services, Inc., a Delaware corporation ("Sellers"), in favor of HMT Inc., a
Delaware corporation ("Buyer").
WHEREAS, the Buyer, the Sellers and ITEQ, Inc. have entered
into an Asset Purchase Agreement dated as of ___________, 2000 (the "Agreement")
pursuant to which the Sellers have agreed to sell, transfer, convey and assign
to Buyer, and Buyer has agreed to purchase from Sellers all right, title and
interest of the Sellers in, to and under the Purchased Assets. Capitalized terms
used herein without definition shall have the respective meanings set forth in
the Agreement.
NOW, THEREFORE, in consideration of the foregoing and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound, the Sellers agree as
follows:
1. Subject to the terms of the Agreement, Sellers hereby sell,
transfer, convey and assign to Buyer all of Sellers' rights, title and interest
in and to all of the Purchased Assets, free and clear of all Encumbrances of
every kind, nature and description, except Permitted Encumbrances, to have and
to hold unto [Buyer and/or Buyer Subsidiaries], its successors and assigns, to
and for its use forever. Sellers agree to execute and deliver all such further
transfers, assignments and conveyances and assurances as may reasonably be
requested by the Buyer in order to effect the full assignment and transfer of
the Purchased Assets to the Buyer and to fully vest in the Buyer title to the
Purchased Assets as contemplated in the Agreement and herein.
2. This ▇▇▇▇ of Sale shall inure to the benefit of the parties
hereto and their respective successors and assigns.
3. This ▇▇▇▇ of Sale shall be governed by and construed and
enforced in accordance with the internal laws (as opposed to the conflicts of
laws provisions) of the State of New York.
4. None of the provisions of this ▇▇▇▇ of Sale may be waived,
changed or altered except in a signed writing by the party against whom
enforcement of the same is sought.
5. In the event of a conflict between the terms and conditions
of this ▇▇▇▇ of Sale and the terms and conditions of the Agreement, the terms
and conditions of the Agreement shall govern, supersede and prevail.
Notwithstanding anything to the contrary, nothing herein is
91
intended to, nor shall it, extend, amplify or otherwise alter the
representations, warranties, covenants and obligations of the parties contained
in the Agreement or the survival thereof.
6. This ▇▇▇▇ of Sale may be executed in any number of
counterparts with the same effect as if the signatures thereto were upon one
instrument.
7. EXCEPT AS EXPRESSLY SET FORTH IN THE ASSET PURCHASE
AGREEMENT OR IN ANY OTHER DOCUMENT OR AGREEMENT DELIVERED PURSUANT THERETO, THE
SELLERS MAKE NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AT LAW OR IN
EQUITY, IN RESPECT OF ANY OF THE PURCHASED ASSETS, INCLUDING, WITHOUT
LIMITATION, WITH RESPECT TO MERCHANTABILITY, FITNESS FOR ANY PARTICULAR PURPOSE,
CONFORMITY TO SAMPLES OR MODELS AND CONDITION AND ANY SUCH OTHER REPRESENTATIONS
OR WARRANTIES ARE HEREBY EXPRESSLY DISCLAIMED. Except as expressly set forth in
the Asset Purchase Agreement or in any other document or agreement delivered
pursuant thereto, any covenants or warranties implied by the use of the word
"convey" or words of similar import are hereby expressly waived, disclaimed and
negated. The parties agree that the foregoing disclaimers of warranty are
"CONSPICUOUS" disclaimers for purposes of any applicable law, rule, regulation
or order. Buyer hereby acknowledges and agrees that, except to the extent
specifically set forth in the Asset Purchase Agreement or in any other document
or agreement delivered pursuant thereto, the Purchased Assets are hereby
conveyed on an "as-is," "where-is" basis.
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92
IN WITNESS WHEREOF, Sellers have caused, and Buyer has
acknowledged, this ▇▇▇▇ of Sale to be executed as of the day and year first
written above.
ITEQ STORAGE SYSTEMS,INC.
-------------------------------
Name:
Title:
ITEQ CONSTRUCTION SERVICES, INC.
-------------------------------
Name:
Title:
ITEQ TANK SERVICES, INC.
-------------------------------
Name:
Title:
HMT INC.
-------------------------------
Name:
Title:
-3-
93
[▇▇▇▇▇▇ & ▇▇▇▇▇▇ LETTERHEAD]
Exhibit D
January __, 2000
HMT Inc.
------------------
------------------
------------------
Re: Asset Purchase Agreement, dated January __, 2000, among HMT
Inc., ITEQ, Inc. ("Parent"), ITEQ Storage Systems, Inc.
("ISS"), ITEQ Construction Services, Inc. ("ICS") and ITEQ
Tank Services, Inc. ("ITS") (the "Asset Purchase Agreement").
Ladies and Gentlemen:
In connection with the Asset Purchase Agreement, we have acted as
counsel to Parent, ISS, ICS and ITS (ISS, ICS and ITS collectively, the
"Sellers"). This opinion letter is being delivered to you pursuant to Section
1.10(a)(ix) of the Asset Purchase Agreement. Except for terms expressly defined
in this opinion letter, or unless otherwise designated, all capitalized terms
used in this opinion letter have the meanings given to them in the Asset
Purchase Agreement.
In arriving at the opinions expressed below we have examined executed
originals (or copies certified or otherwise identified to our satisfaction) of
each of the following (except for the Asset Purchase Agreement, each dated as of
__________, 2000 (collectively, the "TRANSACTION AGREEMENTS")):
A. The Asset Purchase Agreement.
B. The ▇▇▇▇ of Sale.
C. The Assumption Agreement.
D. The Assignment of Leases.
E. The Escrow Agreement.
F. The Deeds.
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HMT Inc.
___________, 2000
Page 2
G. The Intangibles Assignment.
We have examined the Certificate of Incorporation and Bylaws of Parent,
ICS and ISS, and such certificates of public officials and certificates of
representatives of each of Parent, ICS and ISS, as we have deemed necessary for
purposes of this opinion, and have made no further inquiry.
Our opinions set forth herein are based on our consideration of only
those statutes, rules, regulations and judicial decisions which, in our
experience, are normally applicable to or normally relevant in connection with a
transaction of the type contemplated in the Transaction Agreements. In rendering
our opinions with respect to Parent and each Seller, we have not conducted an
investigation into the specific types of business and activities in which Parent
or any Seller engages or the manner in which each conducts its business as would
enable us to render an opinion (and, accordingly, we express no opinion) as to
the applicability of any law or regulation of the United States or the State of
Texas not of general applicability to business corporations.
As used in this opinion letter, the phrase "to our knowledge" means
that nothing to the contrary has come to the attention of the attorneys of our
firm who have worked on the transactions contemplated by the Transaction
Agreements, but that we have not conducted any independent investigation with
respect to the opinion given.
Based upon and subject to the foregoing and to the qualifications,
assumptions, and exceptions hereinafter contained, we are of the opinion that:
1. Parent, ICS and ITS are corporations duly organized, validly
existing and in good standing under the laws of their respective jurisdictions
of incorporation, which jurisdictions are set forth in Section 2.1 of the
Disclosure Letter.
2. Parent, ICS and ITS have all requisite corporate power and corporate
authority to execute, deliver and perform the Transaction Agreements.
3. The execution, delivery and performance of the Transaction
Agreements and the consummation of the transactions contemplated thereby have
been duly authorized by all necessary corporate action on the part of Parent,
ICS and ITS (including shareholder approval, if necessary); and the Transaction
Agreements have been duly executed and delivered by Sellers and Parent, and
constitute the legal, valid and binding obligations of Sellers and Parent (to
the extent such Seller or Parent is a party thereto), enforceable against each
of them in accordance with their respective terms.
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HMT Inc.
___________, 2000
Page 3
4. Except as set forth in Section 2.5(a) of the Disclosure Letter, the
execution, delivery and performance of the Transaction Agreements by Parent or
any Seller and the sale of the Purchased Assets contemplated thereby do not and
will not (a) contravene any provision of Parent's or any Seller's charter or
bylaws; (b) conflict with or result in a breach of or constitute a default (or
an event which might, with the passage of time or the giving of notice or both,
constitute a default) under any provision of, result in acceleration of any
obligation under, or give rise to a right by any party to terminate or amend its
obligations under, any loan, credit or other similar agreement to which Parent
or any Seller is a party or by which it or any of its assets may be bound and
which is known to us, or any judgment or order known to us of any court or
governmental department, commission, board, agency or instrumentality, and
which, in any such event, would materially affect the ability of Parent or any
Seller to consummate the transaction contemplated thereby, (c) violate any
statute, rule, regulation or ordinance applicable to Parent or any Seller and
which, in any such event, would materially affect the ability of Parent or any
Seller, to consummate the transaction contemplated thereby, or (d) result in the
creation or imposition of any lien, charge or encumbrance upon any of the
Purchased Assets under any such loan, credit or other similar agreement.
5. To our knowledge, except for the consents disclosed in Section
2.5(b) of the Disclosure Letter, no consent, approval, or authorization of, any
Person is required by Parent or any Seller in connection with the execution and
delivery of the Transaction Agreements or the sale of the Purchased Assets
contemplated thereby.
6. To our knowledge, except as set forth in Section 2.12 of the
Disclosure Letter, there are no actions, suits, investigations, proceedings or
claims pending or threatened by or against or affecting the Business or the
Purchased Assets, at law or in equity, by or before any court or governmental
department, agency or instrumentality.
The foregoing opinions are predicated upon, and qualified in their
entirety by, the following:
(a) We express no opinion as to (i) the enforceability of any
indemnification or contribution provision of any Transaction Document as these
provisions may not be enforceable under applicable securities laws or because
Texas is an express negligence state, (ii) the enforceability, validity or
effect of any provision of the Transaction Agreements purporting to (1)
establish any evidentiary standard, (2) waive the effect of applicable laws or
fundamental rights (such as the right to trial by jury), which provisions may be
unenforceable or limited by federal or state laws or public policy, (3) waive
either illegality as a defense to the performance of contract obligations or any
other defense to such performance which cannot, as a matter of law, be
effectively waived, or (4) provide or imply the granting or waiver of subject
matter jurisdiction (as compared with personal jurisdiction) to any court over
any issue, matter or dispute, since the subject matter jurisdiction of any court
is governed by applicable law and may not be created, imposed or conferred
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HMT Inc.
___________, 2000
Page 4
by stipulation or other agreement among parties, (iii) the availability of
specific performance or other equitable remedies for noncompliance with any
other provisions contained in the Transaction Agreements, (iv) the
enforceability of the governing law provision, (v) the enforceability, validity
or effect of Section 4.9(a) of the Asset Purchase Agreement or (vi) whether the
transactions contemplated by the Transaction Agreements require compliance with
the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended, or
regulations promulgated thereunder. To the extent our opinion in paragraph 4(a)
above relates to ISS, we have reviewed the articles of incorporation and bylaws,
as amended to date, of ISS, but we are not licensed to practice law in the State
of Minnesota, and no opinion is expressed or implied with respect to Minnesota
law.
(b) We have assumed with your permission, without independent
investigation or inquiry, (i) the authenticity of all documents submitted to us
as originals, (ii) the genuineness of all signatures on all documents that we
examined (except those of Parent and Sellers), (iii) the conformity to authentic
originals of documents submitted to us as certificated, conformed or photostatic
copies, (iv) the due authorization, execution, and delivery of all documents by
all parties (other than Parent, ICS and ITS) and the validity and binding effect
thereof, (v) the corporate power and authority and the legal right of all
Persons (other than Parent, ICS and ITS) to execute, deliver and perform the
Transaction Agreements to which they are parties, (vi) the legal capacity of all
individuals to execute all documents in their individual capacities, (vii) the
correctness and accuracy of all facts set forth in all certificates, reports and
discussions identified in this opinion, (viii) there has not been any mutual
mistake or fact or misunderstanding, fraud, duress, or undue influence, (ix) the
parties to the Transaction Agreements (other than Parent and Sellers) will act
in accordance with, and will refrain from taking any action that is forbidden
by, the terms and conditions of the Transaction Agreements, and (x) the conduct
of the parties to the Transaction Agreements (other than Parent and Sellers) has
complied with any requirement of good faith, fair dealing and conscionability.
(c) We have not been requested to render and, with your
permission, we express no opinion as to the applicability to the obligations of
the Parent and Sellers of any statute or common law doctrine relating to
fraudulent transfers.
(d) The opinion expressed in paragraph 3 of this opinion
letter is qualified to the extent the validity, binding nature and
enforceability of the Transaction Agreements are limited or otherwise affected
by:
(A) general principles of equity (regardless of
whether enforceability is considered in a proceeding in equity or at
law), including, without limitation, the availability of specific
performance, the appointment of a receiver, concepts of materiality,
reasonableness, good faith and fair dealing or any other equitable
remedy; and
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HMT Inc.
___________, 2000
Page 5
(B) bankruptcy, insolvency, reorganization,
rearrangement, moratorium, fraudulent or other conveyance laws, and
similar laws generally affecting creditors' rights at the time in
effect.
(e) As to factual matters, we have relied upon certificates
of, discussions with and representations of officers and representatives of the
Parent and Sellers.
We are members of the bar of the State of Texas, and we express no
opinion as to the laws of any jurisdiction other than the laws of the State of
Texas, the General Corporation Law of the State of Delaware and the federal law
of the United States of America. With respect to Transaction Agreements which
purport to be governed by the laws of any jurisdiction other than the State of
Texas, we have assumed, for purposes of this opinion, that the laws of that
other jurisdiction are the same as the laws of the State of Texas. This opinion
is dated and effective as of the date hereof, and we undertake no responsibility
to modify or update the opinion with respect to any change of law or other event
which occurs after the date hereof.
This opinion is for your sole benefit and is not to be quoted in whole
or in part or otherwise referred to or relied upon, nor is it to be filed with
or disclosed to any governmental agency or other person without our prior
written consent.
Very truly yours,
▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P.
98
[DECHERT PRICE & ▇▇▇▇▇▇ LETTERHEAD]
_____________, 2000
ITEQ, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Re: Asset Purchase Agreement dated as of January __, 2000
(the "Purchase Agreement") by and among HMT Inc.
("HMT"), ITEQ, Inc. ("Parent"), ITEQ Storage Systems,
Inc. ("ITEQ Storage"), ITEQ Construction Services,
Inc. ("ITEQ Construction") and ITEQ Tank Services,
Inc. ("ITEQ Tank")
Ladies and Gentlemen:
We have acted as special counsel to HMT Inc., a
Delaware corporation ("HMT"), in connection with the negotiation, preparation,
authorization, execution and delivery of, and the consummation of the
transactions contemplated by, the Purchase Agreement, the Assumption Agreement
dated as of the date hereof (the "Assumption Agreement") by and among HMT,
Parent, ITEQ Storage, ITEQ Construction and ITEQ Tank, and the Escrow Agreement
dated as of the date hereof (the "Escrow Agreement") by and among HMT, Parent,
ITEQ Storage, ITEQ Construction, ITEQ Tank and ______________, as escrow agent.
The Purchase Agreement, the Assumption Agreement and the Escrow Agreement are
referred to herein as the "Transaction Agreements." Please be advised that we
act as counsel to HMT only on select matters and do not act as general counsel
to HMT or its affiliates. Capitalized terms used herein which are not otherwise
defined herein shall have the meanings ascribed to them in the Purchase
Agreement. This opinion is delivered to you pursuant to Section 5.2(c) of the
Purchase Agreement solely for the purposes contemplated thereby.
In connection with the delivery of this opinion we
have examined originals or copies of (i) the organizational documents of HMT and
(ii) such records, agreements, instruments, certificates and other documents of
public officials, HMT and its representatives and have made such inquiries of
HMT and its representatives, as we have deemed necessary or
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ITEQ, Inc.
_____________, 2000
Page 2
appropriate in connection with the opinions set forth herein. In making such
examination and rendering the opinions set forth below, we have assumed without
verification the genuineness of all signatures, the authenticity of all
documents submitted to us as originals, the authenticity of the originals of
such documents submitted to us as certified copies, the conformity to originals
of all documents submitted to us as copies, the authenticity of the originals of
such latter documents, and that all documents submitted to us as certified
copies are true and correct copies of such originals.
In rendering the opinions set forth below, we have
also assumed that (a) each of the corporate parties to the Transaction
Agreements, other than HMT, is duly incorporated, validly existing and in good
standing under the laws of the jurisdiction of its organization and has the
requisite corporate power and corporate authority and has taken the corporate
action necessary to execute and deliver each of the Transaction Agreements and
to consummate the transactions contemplated thereby; and (b) each of the
Transaction Agreements constitutes the legal, valid and binding obligation of
each party thereto other than HMT, enforceable against such other party in
accordance with their respective terms.
As to matters of fact material to our opinions, we
have relied upon representations of HMT in the Transaction Agreements, and on
certificates of officers of HMT and of public officials, and we have made no
independent inquiry into the accuracy of such representations.
Our opinions set forth herein are based on our
consideration of only those statutes, rules, regulations and judicial decisions
which, in our experience, are normally applicable to or normally relevant in
connection with a transaction of the type contemplated in the Transaction
Agreements. In rendering our opinions with respect to HMT, we have not conducted
an investigation into the specific types of business and activities in which HMT
engages or the manner in which it conducts its business as would enable us to
render an opinion (and, accordingly, we express no opinion) as to the
applicability of any law or regulation of the United States or the State of New
York not of general applicability to business corporations. Whenever our opinion
with respect to the existence or absence of facts is indicated to be based on
our knowledge or awareness, we are referring to the current actual knowledge of
the Dechert Price & ▇▇▇▇▇▇ attorneys who have rendered legal services to HMT in
connection with the transactions contemplated by the Transaction Agreements,
which knowledge has been obtained by such attorneys in their capacity as such.
Except as expressly set forth herein, we have not undertaken any independent
investigation to determine the existence or absence of such facts and no
inference as to our knowledge concerning such facts should be drawn from the
fact that such representation has been undertaken by us.
Based on the foregoing and subject to the assumptions
and qualifications set forth above and herein, we are of the opinion that:
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ITEQ, Inc.
_____________, 2000
Page 3
1. HMT is a corporation, validly existing and in good standing
under the laws of the State of Delaware, and has all requisite corporate power
and corporate authority to execute, deliver and perform the Transaction
Agreements.
2. The execution, delivery and performance of the Transaction
Agreements and the consummation of the transactions contemplated thereby have
been duly authorized by all necessary corporate action on the part of HMT; and
the Transaction Agreements have been duly executed and delivered by HMT, and
constitute the legal, valid and binding obligations of HMT, enforceable against
it in accordance with their respective terms.
3. The execution, delivery and performance of the Transaction
Agreements by HMT and the consummation of the transactions contemplated thereby
do not and will not (a) contravene any provision of HMT's charter or bylaws; (b)
conflict with or result in a breach of or constitute a default (or an event
which might, with the passage of time or the giving of notice or both,
constitute a default) under any provision of, result in acceleration of any
obligation under, or give rise to a right by any party to terminate or amend its
obligations under, any indenture, mortgage, loan or credit agreement or any
other material agreement or instrument to which HMT presently is a party or by
which it or any of its assets is bound or affected and which is known to us, or
any judgment or order of any court or governmental department, commission,
board, agency or instrumentality, domestic or foreign, binding upon HMT which is
known to us, which would materially adversely affect HMT's ability to consummate
the transactions contemplated thereby; or (c) violate any statute, rule,
regulation or ordinance applicable to HMT which would materially adversely
affect HMT's ability to consummate the transactions contemplated thereby.
The foregoing opinions are subject to the following additional
qualifications:
(a) The opinions expressed herein do not reflect the effect of
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other laws or decisions now or hereafter in effect relating to or affecting
debtors' obligations or creditors' rights generally and general equitable
principles.
(b) Without limiting the generality of the foregoing, we
express no opinion with respect to: (i) the availability of specific performance
or other equitable remedies for noncompliance with any other provisions
contained in the Transactions Agreements; (ii) the enforceability of provisions
in the Transaction Agreements relating to the effects of laws which may be
enacted in the future; (iii) the enforceability of provisions in the Transaction
Agreements purporting to waive the effect of applicable laws, which provisions
may be unenforceable or limited by federal or state laws or public policy, or
(iv) the enforceability of the governing law provisions in the Transaction
Agreements.
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ITEQ, Inc.
_____________, 2000
Page 4
The opinions expressed herein are limited to the federal laws
of the United States of America and the laws of the State of New York, and we
express no opinion concerning the laws of any other jurisdiction.
This opinion speaks only as of the date hereof. We have no
obligation to advise you (or any other third party) of any changes in the law or
facts that may occur after the date of this opinion.
Our opinions expressed herein are solely for the benefit of
ITEQ, Inc., and, without our express written consent, neither our opinions nor
this opinion letter may be provided to or relied upon by any other person.
Very truly yours
102
EXHIBIT F
This TRANSITION SERVICES AGREEMENT (this "Agreement") entered into as
of _______, 2000 by and between HMT Inc., a Delaware corporation ("HMT"), HMT
Canada, Ltd., a Canadian Corporation ("HMT Canada"), ITEQ, Inc., a Delaware
corporation ("ITEQ"), ITEQ Storage Systems, Inc., a Minnesota corporation
("ISS") and _____________, a _____________ ("GLM").
RECITALS:
A. HMT, ISS, ITEQ and certain of its subsidiaries entered into an
Asset Purchase Agreement dated as of January ______, 2000 (the "Purchase
Agreement") providing for the acquisition by HMT of substantially all of the
assets of the Business (as defined in the Purchase Agreement); and
B. ISS is interested in purchasing certain administrative services
related to the Retained Business (as defined in the Purchase Agreement) from
HMT, and HMT is willing to provide such services during a transition period
after the date hereof. HMT, Canada, Ltd., a subsidiary of HMT, is interested in
purchasing certain administrative services from GLM Canada ___________ ("GLM"),
and GLM is willing to provide such services during a transition period after the
date hereof.
C. ITEQ is interested in causing [GLM] to provide certain
administrative services to HMT Canada and HMT Canada is interested in receiving
such services during a transition period from the date hereof.
D. HMT, ITEQ, and ISS are interested in providing to each other
certain rights of occupancy with respect to certain of their respective
facilities during a transition period from the date hereof. Except as otherwise
defined in this Agreement, all terms, the first letters of which are capitalized
and are not otherwise defined herein, shall have the meanings assigned to them
in the Purchase Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements, covenants and representations contained herein, the Parties,
intending to be legally bound, agree as follows:
ARTICLE 1
PROVISION OF SERVICES
Group A
1.1 Provision of Services. HMT shall provide to ISS the Group A
Services (as defined below) in exchange for the Group A fee (the "Monthly Fee")
set forth for such Service on Exhibit A attached hereto. As used herein, the
"Group A Services" shall mean the services described on Exhibit A hereto. All of
the Group A Services shall be provided, in each case, in accordance with the
respective terms, limitations and conditions set forth herein and on Exhibit A.
103
1.2 Access. ISS shall make available on a timely basis to HMT all
information and materials reasonably requested by HMT to enable it to provide
Group A Services. During regular business hours and at such other times as are
reasonably required, ISS shall give HMT reasonable access, for the purposes of
providing Group A Services, to the premises on which ISS conducts the business
that relates to the Services.
1.3 Services to be Provided.
(a) Unless otherwise agreed by the parties hereto, the Group A
Services shall be performed by HMT for ISS in substantially the same manner as
such Group A Services were generally performed for ISS's Retained Business by
the Named Employees (as defined below) during 1999 (during which period such
Named Employees were employees of ISS) and ISS shall use such Group A Services
for substantially the same purposes and in substantially the same manner as ISS
had used such Group A Services prior to the date hereof. As used herein, the
"Named Employees" shall mean ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇.
(b) HMT shall not be obligated to perform any Group A Services
(A) in a volume or quantity which exceeds the historical volumes or quantities
of services performed for ISS's Retained Business by the Named Employees during
1999 (during which period the Named Employees were employees of ISS), (B) if to
do so would unreasonably interfere with the conduct of HMT's other businesses or
operations, or (C) if to do so would be in violation or cause a breach of any
law, rule or regulation to which HMT is subject or any agreement to which HMT is
a party. In the event of such non-performance, the parties agree to work
together in good faith to arrange for an alternative means by which ISS may
obtain, at ISS's sole cost, the Group A Services so affected.
1.4 Term for Services. The provision of Group A Services shall
commence on the date hereof (the "Closing Date" and, with respect to each Group
A Service, shall terminate on the date which is thirty (30) days following the
Closing Date (the "Initial Term"); provided that ISS may, at its option, extend
the Initial Term for one additional period of thirty (30) days by providing five
(5) days advance written notice to HMT (the "Renewal Term") .
1.5 Payment for Services. ISS and/or ITEQ shall pay to HMT on the
first Business Day following the Closing Date the Monthly Fee (as defined on
Exhibit A hereto). ISS and/or ITEQ shall pay to HMT on the first Business Day of
the Renewal Period, if any, the Monthly Fee.
1.6 Independent Contractor. Without limiting the provisions of this
Agreement, it is expressly understood that HMT and its employees and agents
shall be deemed to be independent contractors with respect to the provision of
Group A Services or other duties hereunder, and that neither HMT nor its
employees or agents shall be
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considered employees of ISS or any of its Subsidiaries. Neither HMT nor any of
its employees or agents shall have, nor shall HMT represent that it, has, and
HMT shall cause its employees and agents not to represent that they have or HMT
has, any authority to commit ISS or ITEQ or any other subsidiaries of ITEQ, by
negotiation or otherwise, to any contract, agreement or other legal commitment
in the name or otherwise binding on ISS, ITEQ or any such other subsidiary or to
pledge or extend any credit on their behalf.
ARTICLE 2
PROVISION OF GROUP B SERVICES
1.1 Provision of Services. HMT shall provide to ISS the Group A
Services (as defined below) in exchange for the Group A fee (the "Monthly Fee")
set forth for such Service on Exhibit A attached hereto. As used herein, the
"Group A Services" shall mean the services described on Exhibit A hereto. All of
the Group A Services shall be provided, in each case, in accordance with the
respective terms, limitations and conditions set forth herein and on Exhibit A.
1.2 Access. ISS shall make available on a timely basis to HMT all
information and materials reasonably requested by HMT to enable it to provide
Group A Services. During regular business hours and at such other times as are
reasonably required, ISS shall give HMT reasonable access, for the purposes of
providing Group A Services, to the premises on which ISS conducts business.
1.3 Services to be Provided.
(a) Unless otherwise agreed by the parties hereto, the Group A
Services shall be performed by HMT for ISS in substantially the same manner as
such Group A Services were generally performed for ISS's Retained Business by
the Named Employees (as defined below) during 1999 (during which period such
Named Employees were employees of ISS) and ISS shall use such Group A Services
for substantially the same purposes and in substantially the same manner as ISS
had used such Group A Services prior to the date hereof. As used herein, the
"Named Employees" shall mean ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇.
(b) HMT shall not be obligated to perform any Group A Services
(A) in a volume or quantity which exceeds the historical volumes or quantities
of services performed for ISS's Retained Business by the Named Employees during
1999 (during which period the Named Employees were employees of ISS), (B) if to
do so would unreasonably interfere with the conduct of HMT's other businesses or
operations, or (C) if to do so would be in violation or cause a breach of any
law, rule or regulation to which HMT is subject or any agreement to which HMT is
a party. In the event of such non-performance, the parties agree to work
together in good faith to arrange for an alternative means by which ISS may
obtain, at ISS's sole cost, the Group A Services so affected.
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1.4 Term for Services. The provision of Group A Services shall
commence on the date hereof and, with respect to each Group A Service, shall
terminate on the date which is thirty (30) days following the Closing Date (the
"Initial Term"); provided that ISS may, at its option, extend the Initial Term
for one additional period of thirty (30) days by providing five (5) days advance
written notice to HMT (the "Renewal Term") .
1.5 Payment for Services. ISS and/or ITEQ shall pay to HMT on the
first Business Day following the Closing Date the Monthly Fee. ISS and/or ITEQ
shall pay to HMT on the first Business Day of the Renewal Period, if any, the
Monthly Fee.
1.6 Independent Contractor. Without limiting the provisions of this
Agreement, it is expressly understood that HMT and its employees and agents
shall be deemed to be independent contractors with respect to the provision of
Group A Services or other duties hereunder, and that neither HMT nor its
employees or agents shall be considered employees of ISS or any of its
Subsidiaries.
ARTICLE 2
SHARED ASSETS
2.1 Shared Facilities. ITEQ, ISS and HMT agree as follows:
(a) Clinton Drive. For the period beginning on the Closing Date
and ending on ▇▇▇▇▇ ▇, ▇▇▇▇, ▇▇▇ will provide to HMT a right to occupy certain
[office and storage] space (the "Clinton Space") at [_______'] leased [office]
space at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ("Clinton Facility"). The Clinton
Space shall be the same or substantially equivalent in size and accommodations
as the space that the Business (as operated by ISS) currently occupies at the
Clinton Facility and HMT shall be permitted to perform the same or substantially
the same activities and operations at the Clinton Facility as ISS has performed
at such facility during the past 12 months with respect to the Business. In
consideration of the rights provided to HMT in this Section 4.5(a), HMT shall
pay to ISS $5,200 per month (as prorated for any partial month) in advance on or
before the first day of each calendar month during HMT's occupancy of the
Clinton Space. ITEQ and ISS hereby represent and warrant to HMT that [______'s]
lease agreement for the Clinton Facility with [▇▇▇▇▇ & Root] (the "Clinton
Lease") does not expire prior to March 1, 2000.
(b) St. ▇▇▇▇▇▇▇. For the period beginning on the Closing Date and
ending on April 30, 2000, [ITEQ shall cause ▇▇▇▇▇▇▇▇, Inc. ("Ohmstede") to]
provide to HMT a right to occupy certain [office] space (the "St. ▇▇▇▇▇▇▇
Space") at Ohmestede's owned [office] space at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇, ▇▇. ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ (the "St. ▇▇▇▇▇▇▇ Facility"). The St. ▇▇▇▇▇▇▇ Space shall be the same
or substantially equivalent in size and accommodations to the space that
Ohmstede currently occupies at the St. ▇▇▇▇▇▇▇ Facility and HMT shall be
permitted to perform the same or substantially the same activities and
operations at the St. ▇▇▇▇▇▇▇ Facility as Ohmstede has performed at such
facility during
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the past twelve (12) months with respect to the Business. There will be no
separate monthly charge to HMT for the rights provided to HMT pursuant to this
Section 2.1(b). The parties acknowledge and agree that the value of the rights
provided in this subsection shall be part of and included with the 1960 Net
Amount (as defined below). [ITEQ and ISS hereby represent and warrant that is
owned by Ohmstede.
(c) Corpus Christi. For the period beginning on the Closing Date
and ending on April 30, 2000, [ITEQ will cause Ohmstede to] provided to HMT a
right to occupy certain [office] space (the "Corpus Christi Space") at [____ 's]
[owned/leased] [office] space at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ (the
"Corpus Christi Facility"). The Christi Space shall be the same or substantially
equivalent in size and accommodations to the space that Ohmstede currently
occupies at the Corpus Christi Facility and HMT shall be permitted to perform
the same or substantially the same activities and operations at the Corpus
Christi Facility as [ISS] has performed at such facility during the past twelve
(12) months with respect to the Business. There will be no separate monthly
charge to HMT for the rights provided to HMT pursuant to this Section 4.5(c).
The parties acknowledge and agree that the value of the rights provided to HMT
in this subsection shall be part of and included with the 1960 Net Amount (as
defined below). [ITEQ and ISS hereby represent and warrant that the Corpus
Christi Facility is owned by Ohmstede
(d) 1960 West. During the period beginning on the Closing Date
and ending April 30, 2000, HMT shall provide to ISS a right to occupy certain
office space (the "1960 Space") at the HMT's leased facility at ▇▇▇▇ ▇▇ ▇▇▇▇
▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ (the "1960 Space"). The 1960 Space will contain
office space for up to nine (9) ISS employees performing accounting and
information technology work for ISS (the "ISS Employees"). The 1960 Space shall
be the same or substantially equivalent in size and accommodations to the space
that the ISS Employees currently occupy at the 1960 Facility, and the ISS
Employees shall be permitted to perform the same or substantially the same
activities and operations at the 1960 Facility as they performed at such
facility during the past twelve (12) months with respect to the Retained
Business. In addition, for a period of thirty (30) days following Closing, HMT
shall permit ISS to retain its property in the fourth floor storage space which
is leased by the Business at ▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇; provided that
ISS shall remove such property from said storage space within thirty (30) days
after the Closing Date. ISS shall remove all of its property from such storage
space on or before the date which is thirty (30) days Following Closing. In
consideration for the rights granted to ISS in this Section 2.1(d) and the
rights granted to HMT in Sections 2.1(b) and 2.1(c) hereof, ISS and/or ITEQ
shall pay to HMT an amount equal to $3,850 per month (the "1960 Net Amount"),
payable in advance. The 1960 Net Amount has been calculated by the parties to
include (within the $3,850 monthly amount) a credit for the value of the rights
granted to HMT pursuant to Sections 2.1(b) and 2.1(c) above. The parties agree
that there shall be no adjustments made to the 1960 Net Amount as a result of
either ISS or HMT vacating any of the spaces referenced in Sections 2.1(b)-(d)
in advance of April 30, 2000. HMT's obligations to grant to ISS the rights
specified in this subsection (d) are conditioned on ITEQ and ISS
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obtaining prior to Closing (i) any applicable landlord consent required to
assign the lease agreement for the 1960 Facility (the 1960 Lease") to HMT and
(ii) any consent of the landlord required pursuant to the 1960 Lease in order
for HMT to grant to ISS the rights described in this Section 2.1(d).
(e) The parties hereto acknowledge that (i) HMT is not assuming
any liabilities or obligations under or pursuant to the Clinton Lease as a
result of it being provided the rights described in Sections 2.1(a) and (ii) ISS
is not assuming any liabilities or obligations under or pursuant to the 1960
Lease as a result of it being provided the rights described in Section 2.1(d).
The parties further acknowledge that the Clinton Fee and the 1960 Net Amount are
gross payments which include allocations for utilities and other costs and
expenses with respect to the facilities.
(f) The rights of occupancy referred to in this Section 2.1 (the
"Occupancy Rights") shall include the right of undisturbed, uninterrupted
possession of the applicable space. Each Facility Provider (as defined below)
hereby agrees to pay all rent, utilities, and other expenses relating to the
property on a timely basis. Each Facility Provider shall, at such Facility
Provider's expense, obtain and keep in force during the time periods referred to
in Sections 2.1(a)-(d) policies of insurance covering loss or damage to the
applicable space and general liability insurance covering loss, damage or injury
arising out of the ownership, use, occupancy or maintenance of the applicable
space and all areas appurtenant thereto. Each facility User (as hereinafter
defined), at such Facility User's expense, obtain and keep in force during the
time periods referred to in Sections 2.1(a) - (d) policies of general liability
insurance covering losses, damages and injuries for which such Facility User is
obligated in indemnify the applicable Facility Provider pursuant to Section
__________ hereof. All such policies of insurance shall be of such types in such
coverage amounts as are customary in the Business' industry. The insuring party
shall, upon obtaining the policies of insurance required hereunder, give notice
to the insurance carrier or carriers that the foregoing mutual waiver of
subrogation is contained in this Agreement. As used herein, "Facility Provider"
means [ISS], with respect to Sections 2.1(a)-(c), and HMT, with respect to
Section 2.1(d); and "Facility User" means HMT, with respect to Sections
2.1(a)-(c), and ISS, with respect to 2.1(d). Each of HMT and ISS (each a
"Responsible Party") will use their respective best efforts to effect a
separation of the other party's software, files and other information contained
on the Responsible Party's computer servers and related computer equipment
located at the 1960 Facility within 30 days after the Closing Date. The
separation shall be accomplished substantially in accordance with the steps and
procedures set forth on Exhibit _________ hereto.
2.2 Information Technology.
2.3 ▇▇▇▇▇▇▇ ▇▇ Software. HMT shall sublicense to ISS the right to use
the software provided to HMT pursuant to the [Solomon License Agreement] (the
"Solomon Software") for use by up to ten (10) employees of ISS for a period of
one (1) year following the date hereof. In exchange for the provision of the
Solomon Software to ISS,
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ISS shall reimburse HMT for the cost of such software sublicensed to ISS in
accordance with the [Fee] payable by HMT for such software pursuant to the
Solomon License Agreement, in other words, in the event that [give example of
fee calculation]. ISS shall reimburse HMT for such amount on a monthly basis [is
fee payable in advance or arrears under the Agreement] within five (5) business
days of receipt of a ▇▇▇▇ from HMT. ISS shall comply with the terms of the
Solomon License Agreement with respect to its use of the Solomon Software.
ARTICLE 3
FORCE MAJEURE
No Party shall be liable for any interruption of Service, delay or
failure to perform under this Agreement when such interruption, delay or failure
results from causes beyond its reasonable control, including but not limited to
any strikes, lock-outs or other labor difficulties, acts of any government,
riot, insurrection or other hostilities, embargo, fuel or energy shortage, fire,
flood, acts of God, wrecks or transportation delays, or inability to obtain
necessary labor, materials or utilities (each a "Force Majeure Event"). Such
Party will promptly notify the other Party, either orally or in writing, upon
learning of the occurrence of any Force Majeure Event. Upon the cessation of
such Force Majeure Event, such party will use its good faith efforts to resume
its performance pursuant to this Agreement.
ARTICLE 4
LIABILITIES
4.1 Disclaimer of Warranty and Condition of Property. ANY SERVICES
AND GOODS TO BE PROVIDED AND PURCHASED UNDER THIS AGREEMENT ARE FURNISHED AS IS,
WHERE IS, WITH ALL FAULTS AND WITHOUT WARRANTY OF ANY KIND, EXPRESS OR IMPLIED,
INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR ANY PARTICULAR PURPOSE,
OR CONFORMITY TO MODELS. The parties agree that the foregoing waivers are
"CONSPICUOUS" waivers for purposes of applicable law. ISS, with respect to the
Clinton Facility, the St. ▇▇▇▇▇▇▇ Facility and the Corpus Christi Facility, and
HMT, with respect to the 1960 Space, each hereby disclaims any representation or
warranty, whether express, implied, statutory, at common law or otherwise, as to
the condition or habitability of such property or any buildings, fixtures or
improvements thereon or attached thereto.
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4.2 Consequential and Other Damages. No Service Provider shall be
liable, whether in contract, in tort (including negligence and strict
liability), or otherwise, for any special, indirect, incidental or consequential
damages whatsoever, which in any way arise out of, relate to, or are a
consequence of, its performance or nonperformance hereunder, or the provision of
or failure to provide any Service hereunder, including but not limited to, loss
of profits, business interruptions and claims of customers.
4.3 Release. Subject tot he indemnity provisions of Section ________,
With respect to the provision of any Service, no Service Provider, Facility
Provider, nor any their respective employees, agents, officers and directors
(collectively, the "Service Provider Group", and individually, each being a
"member of the Service Provider Group"), shall be liable to the party receiving
the applicable service (the "Recipient") or their respective Affiliates (or any
of their respective employees, agents, officers and directors) (collectively,
the "Recipient Group") for, and the applicable Recipient releases and discharges
(and such Recipient will cause each other member of the Recipient Group to so
release and discharge), each member of the applicable Service Provider Group
from, any and all claims (including, without limitation, wages, benefits, all
health, dental, life, disability and other insurance claims (and all similar
benefit claims, workers' compensation claims, discrimination claims, and claims
under the Occupational Safety and Health Act and the Fair Labor Standards Act,
and the Employee Retirement Income Security Act of 1974, as amended), losses,
damages, liabilities, actions, suits, proceedings, judgments, orders, fines,
penalties, injuries, direct or liquidated damages, costs (including costs of
defense and investigation) and expenses, including special, incidental
consequential, exemplary, indirect or punitive damages (collectively, "Losses"),
to, or suffered by, or incurred by, any member of the Recipient Group arising
out of or connected with (i) any act or omission, negligent or otherwise, of any
member of the Service Provider Group with respect to the applicable Services,
including the termination the applicable Services pursuant to the terms of this
Agreement (ii) the receipt, delivery, use, possession, consumption, supply or
performance of the applicable Services, (iii) the supply of the applicable
Service by any third party not related to any member of the Service Provider
Group, or (iv) any failure of any member of applicable Service Provider Group to
supply or perform the applicable Services to the extent such failure is
permitted by the terms of this Agreement; provided, however, the foregoing
release and discharge shall not apply to any Losses to the extent caused by the
Service Provider Group's willful misconduct or actions in bad faith with respect
to this Agreement. It is the express intention of the parties hereto that the
release provided for in this subsection is to include, but not be limited to, a
release by the applicable Recipient Group of each member of the applicable
Service Provider Group from the consequences of any member of such Service
Provider Group's own negligence, to the extent that such negligence is either
the sole, concurring or joint cause of the Losses. For purposes of this Section
4.3 and Section 4.4, the term "Services" shall include the rights granted
pursuant to Section 2.1 hereof; "Service Provider" means HMT with respect to the
services provided by it pursuant to Section 1.1, or GLM, with respect to the
services provided by it pursuant to Section ________________; and "Facility
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Provider" means the applicable provider of (defined above) occupancy rights
pursuant to Section 2.1.
4.4 Indemnities. HMT shall protect, defend, indemnify and hold
harmless ISS and Ohmstede and their respective officers, directors,
shareholders, agents and employees form and Damages, related to injury to any
person or damage to any property, arising out of or in any way attributable to
HMT's use of, presence at or occupancy of the Clinton Space, the St. ▇▇▇▇▇▇▇
Space or the Corpus Christi Space after the Closing Date. ISS shall protect,
defend, indemnify and hold harmless HMT and its officers, directors,
shareholders, agents and employees from any Damages, related to injury to any
person or damage to any property, arising out of or in any way attributable to
ISS's use of, presence at or occupancy of the 1960 Space after the Closing Date.
Notwithstanding any provision herein to the contrary, no indemnifying party
shall have any indemnity obligation to any indemnified party under this
Agreement to the extent that any Damage arises out of or relates to the
negligence, gross negligence or willful misconduct of such indemnified party.
ARTICLE 5
TERMINATION
5.1 Termination. This Agreement shall terminate on the date on which
the provision of all Services and Occupancy Rights have terminated pursuant to
Section 2.
5.2 Effect of Termination. Sections 1.4, 1.6, 2.1, 2.2, 4.1-4.4, 5.2
and Article 6 shall survive any termination of this Agreement.
ARTICLE 6
MISCELLANEOUS
6.1 Licensed Software and Other Services. ISS understands that
performance by HMT of certain computer Services hereunder may require that ISS
obtain from third parties a license or additional authorization for use of
certain software or hardware. HMT will assist ISS in obtaining such license or
additional authorization, but in each case ISS, at its sole expense, shall be
responsible for timely securing the license or appropriate authorization from
each such third party. Under no circumstances will HMT be required to perform
the Services hereunder using software or hardware owned by third parties or
provide any Services which infringe on the rights of third parties without a
license or written authorization from the owner or licensor thereof.
6.2 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed to have been duly given (i) three Business Days
after mailing if mailed by certified or registered mail, return receipt
requested, (ii) one Business Day after delivery to Federal Express or other
nationally recognized overnight express carrier, if sent for overnight delivery
with fee prepaid, (iii) upon receipt if sent via facsimile with transmission
confirmed, or (iv) upon receipt if delivered personally,
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addressed as follows or to such other address or addresses of which the
respective party shall have notified the other:
If to ITEQ or ISS, to:
-----------------------------
-----------------------------
-----------------------------
Attention: [______]
Telephone:
Fax No.:_______________
With a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: T. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Fax No.: ▇▇▇-▇▇▇-▇▇▇▇
If to HMT, to:
HMT Inc.
-----------------------------
-----------------------------
-----------------------------
Attention: President
Fax No.:_______________
With a copy to:
Dechert Price & ▇▇▇▇▇▇
4000 ▇▇▇▇ Atlantic Tower
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Fax No.: ▇▇▇-▇▇▇-▇▇▇▇
Any party may change the address to which notices, requests,
demands, claims or other communications hereunder are to be delivered by giving
the other party notice in the manner herein set forth.
6.3 Headings. The headings contained in this Agreement are for
purposes of convenience only and shall not affect the meaning or interpretation
of this Agreement.
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6.4 Entire Agreement. This Agreement (together with all Exhibits and
Schedules attached hereto) constitutes the entire agreement and supersedes all
prior agreements and understandings, both written and oral, between the parties
with respect to the subject matter hereof.
6.5 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original and all of which shall
together constitute one and the same instrument.
6.6 Applicable Law. This Agreement and the legal relations among the
parties hereto will be governed by and construed in accordance with the
substantive laws of the State of New York, without giving effect to the
principles of conflict of laws thereof.
6.7 Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective heirs, successors and
permitted assigns.
6.8 Assignment and Delegation. Except as otherwise provided in this
Section, and without limiting the terms of Section 6.9 below, this Agreement
shall not be assignable, conveyed or otherwise transferred by either party
hereto without the prior written consent of the other party hereto, which shall
not be unreasonably withheld or delayed; provided that HMT may assign this
agreement to any of its Affiliates without the consent of ISS, provided that
notwithstanding such assignment, HMT shall remain fully liable for its
obligations hereunder and HMT shall guarantee the timely, full and complete
performance by such Affiliates of any liabilities or obligations so assigned to
such Affiliates. Notwithstanding the foregoing, nothing herein shall prohibit
HMT from utilizing the services of any third parties customarily utilized in
connection with the provisions of the Services or otherwise used by HMT in the
ordinary course of business for performance of similar functions. In the event
of such utilization by HMT, neither HMT nor any other service provider shall be
responsible or liable for the provisions of the Services by such third parties
except to the extent of liabilities and damages caused by HMT's or any other
service provider's willful misconduct or actions in bad faith with respect to
this Agreement. In addition, notwithstanding the first sentence of this Section
6.8, each other service provider, and their respective successors and permitted
assigns, shall be entitled to enforce the rights and remedies of HMT under this
Agreement.
6.9 No Third Party Beneficiaries. Except as expressly contemplated in
Section 6.8 above, no Person other than ISS and HMT and each such party's
respective successors and permitted assigns shall have any rights under this
Agreement.
6.10 Amendment; Waivers, etc. No amendment, modification or discharge
of this Agreement, and no waiver hereunder, shall be of any force or effect
unless in writing and executed by each of the parties hereto. Any such waiver
shall constitute a waiver only with respect to the specific matter described in
such writing and shall in no
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way impair the rights of the party granting such waiver in any other respect or
at any other time.
6.11 Severability. In the event any portion of this Agreement shall be
found by a court of competent jurisdiction to be unenforceable, that portion of
this Agreement will be null and void, but the remainder of this Agreement will
be binding on the parties as if the unenforceable provisions had never been
contained herein.
6.12 Title to Data; Confidentiality.
(a) Each of the parties acknowledges that any information of the
other Party received in the course of performance under this Agreement shall be
kept confidential by such Party and such Party shall not use any such
information except to the extent necessary to perform its obligations hereunder.
The obligation of the parties hereto under this Section 6.12(a) shall not apply
to information which (i) is or becomes generally available to the public without
breach of the commitment provided for in this Section; or (ii) is required to be
disclosed by law, order or regulation of a court or tribunal or governmental
authority; provided, however, that, in any such case, the party disclosing such
information shall notify the other party hereto as early as reasonably
practicable prior to disclosure to allow such party to take appropriate measures
to preserve the confidentiality of such information.
(b) ISS acknowledges that it will acquire no right, title or
interest (including any license rights or rights of use) in any software, and
the licenses therefor which are owned by HMT, by reason of HMT's provision of
the Services provided hereunder.
6.13 Definitions. Capitalized terms used but not otherwise defined
herein shall the meanings ascribed to such terms in the Purchase Agreement.
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first above written.
HMT Inc.
---------------------------
By:
Title:
ITEQ Storage Systems, Inc.
---------------------------
By:
Title:
ITEQ, Inc.
---------------------------
By:
Title:
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Exhibit A
Group A Services
Payroll, benefits and other administrative services and other administrative
services provided by named Empl; routinely provided [Other administrative
services] - [need to describe]
routinely provided for ISS's Retained Business by the Named Employees during
1999 (during which period the Named Employees were employees of ISS) (the "1999
Services"). The Services shall be comparable in volume and quality to the 1999
Services. On a monthly basis, the amount of time which the Named Employees will
spend upon the Services will be no more than the amount of time spent by the
Named Employees in performing the Former Services during 1999.
Monthly Fee
The Monthly Fee for the Services shall be the $32,000 multiplied by the Employee
Factor (as defined below). The "Employee Factor" shall equal the number of
employees of ISS divided by the sum of (i) the number of employees of HMT and
(ii) the number of employees of ISS. For purposes of calculating the Fee payable
for the Initial Term, the calculation of the Employee Factor will be made as of
the Closing Date. For purposes of calculating the Monthly Fee payable for the
Renewal Term, if any, the calculation of the Employee Factor will be made on the
first Business Day of the Renewal Term. For example, if ISS and HMT have 200 and
300 employees respectively as of the Closing Date, then the Monthly Fee payable
for the Initial Term shall equal $12,800 (which is $32,000 multiplied by 200
divided by 500). For avoidance of any doubt, there will not be any adjustments
made to the Monthly Fee payable for the Initial Term or the Renewal Term due to
the fact that the number of employees at ISS or HMT change during the course of
any applicable term in relation to the numbers calculated on the first Business
Days of such terms.
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EXHIBIT G
Based upon our examination and review of (i) the ITEQ, Inc. 401(k) Plan
document, (ii) the terms and conditions required of a plan sponsor to avail
itself of the APRSC under the EPCRS and (iii) the evidence and documentation
presented to us by the Seller, it is our opinion that the Seller is permitted to
correct the Qualification Failures under the APRSC and the EPCRS and has taken
all of the actions necessary to do so.
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EXHIBIT H
ASSIGNMENT AND ASSUMPTION OF LEASES
THIS ASSIGNMENT AND ASSUMPTION OF LEASES (this "Assignment"), dated as of
______________, 2000, is by and between HMT Inc., a Delaware corporation
("Assignee"), and ITEQ Storage Systems, Inc., a Minnesota corporation, ITEQ
Construction Services, Inc., a Delaware corporation, and ITEQ Tank Services,
Inc., a Delaware corporation (collectively, "Assignor").
W I T N E S S E T H
WHEREAS, Assignee, Assignor and ITEQ, Inc. have entered into a certain
Asset Purchase Agreement (the "Asset Purchase Agreement") dated as of January
___, 2000.
WHEREAS, the Asset Purchase Agreement provides for Assignor to transfer and
sell certain assets and rights of Assignor, all as more fully described in the
Asset Purchase Agreement and as defined therein as "Purchased Assets," which
includes, without limitation, all of the Assignor's right, title and interest as
lessee to the real property leases described on Exhibit A attached hereto (the
"Assigned Leases"), for the consideration and upon the terms and conditions set
forth in the Asset Purchase Agreement; and
WHEREAS, the Asset Purchase Agreement further provides for the assumption
by Assignee of certain liabilities and obligations of Assignor, all as more
fully described in the Asset Purchase Agreement and as defined therein as the
"Assumed Liabilities," which includes, without limitation, all of Assignor's
liabilities and obligations as lessee under the Assigned Leases, for the
consideration and upon the terms and conditions set forth in the Asset Purchase
Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto promise and
agree as follows:
1. Assignor hereby sells, assigns, conveys, transfers, delivers and sets
over to Assignee all of Assignor's right, title and interest as lessee in, to
and under the Assigned Leases, all with the representations, warranties and
covenants provided for under the Asset Purchase Agreement, from and after the
date hereof.
2. Assignee hereby accepts the foregoing assignment and hereby assumes the
Assigned Leases and the rights, duties and liabilities of Assignor as lessee
arising thereunder from and after the date hereof.
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3. Assignee and Assignor hereby covenant from time to time after delivery
of this instrument to do, execute, authorize and deliver or to cause to be done,
executed and delivered such further acts, instruments, notices, documents and
assurances as the other party may deem reasonably necessary for the effective
confirmation and consummation of the assignment and assumption of the Assigned
Leases.
4. This Assignment shall be binding upon and inure to the benefit of
Assignee and Assignor and their respective successors and assigns.
5. This Assignment may be executed in any number of counterparts with the
same effect as if the signatures thereto were upon one instrument.
6. None of the provisions in this Assignment may be waived, changed or
altered except in a writing signed by all of the parties hereto.
7. This Assignment shall be governed by and construed and enforced in
accordance with the internal laws (as opposed to the conflicts of laws
provisions) of the State of New York.
8. Capitalized terms used herein without definition shall have the
respective meanings set forth in the Asset Purchase Agreement.
9. In the event of a conflict between the terms and conditions of this
Assignment and the terms and conditions of the Asset Purchase Agreement, the
terms and conditions of the Asset Purchase Agreement shall govern, supersede and
prevail.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
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119
IN WITNESS WHEREOF, the parties have caused this Assignment to be duly
executed as of the day, month and year first above written.
HMT INC.
---------------------------------------
Name:
Title:
ITEQ STORAGE SYSTEMS, INC.
---------------------------------------
Name:
Title:
ITEQ CONSTRUCTION SERVICES, INC.
---------------------------------------
Name:
Title:
ITEQ TANK SERVICES, INC.
---------------------------------------
Name:
Title:
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EXHIBIT A
Assigned Leases
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LESSOR'S CONSENT TO ASSIGNMENT OF LEASE
The undersigned, ________________________, a/an _______________________
("Lessor"), the lessor under that certain Lease, dated _______________ (the
"Lease"), between Lessor and [ITEQ Storage Systems, Inc., a Minnesota
corporation / ITEQ Construction Services, Inc., a Delaware corporation / ITEQ
Tank Services, Inc., a Delaware corporation] ("Lessee"), as lessee, with respect
to certain [office / warehouse / manufacturing / assembly] space located in that
certain building having an address of __________________________________ (the
"Premises"), hereby consents to the assignment by Lessee of all of Lessee's
right, title and interest in, to and under the Lease to HMT Inc., a Delaware
corporation ("Assignee").
Notwithstanding anything contained in the Lease or otherwise to the
contrary, Lessor hereby acknowledges and agrees that Lessee shall be
automatically released and discharged from any and all liabilities and
obligations under the Lease arising after the date of the assignment of the
Lease to Assignee (except to the extent the liabilities result from Seller's
actions prior to the assignment and assumption) and the assumption by Assignee
of Lessee's rights, duties and liabilities thereunder arising after the date of
such assignment.
LESSOR:
[LESSOR]
By:
----------------------------------
Name:
Title:
Date:
-----------------------
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LENDER'S CONSENT TO ASSIGNMENT OF LEASE
________________________, a/an _______________________ ("Lessor"), as
lessor and [ITEQ Storage Systems, Inc., a Minnesota corporation / ITEQ
Construction Services, Inc., a Delaware corporation / ITEQ Tank Services, Inc.,
a Delaware corporation] ("Lessee"), as lessee, entered into that certain Lease,
dated ______________ (the "Lease"), with respect to certain [office / warehouse
/ manufacturing / assembly] space located in that certain building having an
address of __________________________________ (the "Premises")
The undersigned, __________________________ ("Lender"), made a loan to
Lessor that is secured by a Mortgage or Deed of Trust on the above-referenced
property of which the Premises is a part. [Pursuant to that certain letter
("Letter") dated ________________ from Lessee to Lender, Lessee certified
certain matters to Lender in regard to the Lease.] Lender hereby consents to the
assignment by Lessee of all of Lessee's right, title and interest in, to and
under the Lease to HMT Inc., a Delaware corporation ("Assignee").
Notwithstanding anything contained in the Lease, [the Letter,] or otherwise
to the contrary, Lender hereby acknowledges and agrees that Lessee shall be
automatically released and discharged from any and all liabilities and
obligations under the Lease arising after the date of the assignment of the
Lease to Assignee (except to the extent the liabilities result from Seller's
actions prior to the assignment and assumption) and the assumption by Assignee
of Lessee's rights, duties and liabilities thereunder arising after the date of
such assignment.
LENDER:
[LENDER]
By:
----------------------------------
Name:
Title:
Date:
---------------------------------
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