ASSET PURCHASE AGREEMENT
Dated as of June 2, 2000
By and Among
Pacific Logistics, L.P., as Buyer and
P&O Cold Properties H, LLC, as Real Property Buyer,
▇▇▇▇▇▇ Refrigerated Warehouses, Inc., as Seller
and
▇▇▇▇▇▇▇ Properties, LLC, as Real Property Seller
and
Castor Capital Corporation, as Shareholder
TABLE OF CONTENTS
1. Agreement to Sell and Agreement to Purchase..............................................................1
1.1. Assets of Seller to be Conveyed.................................................................1
1.2. Excluded Assets.................................................................................2
1.3. Real Property Provisions........................................................................3
1.3.1. Title Commitment.......................................................................3
1.3.2. Survey.................................................................................3
1.3.3. Owner's Title Policy...................................................................4
1.3.4. Closing Deliveries.....................................................................4
1.3.5. Cooperation with Respect to Like-Kind Exchange.........................................4
1.4. Further Assurances..............................................................................5
2. Consideration to be Paid by Buyer........................................................................6
2.1. Purchase Price for Acquisition Assets...........................................................6
2.2. Warehoused Goods Inventory......................................................................6
2.3. Executory Liabilities Assumed by Buyer..........................................................6
2.4. Seller Liabilities Not Assumed by Buyer.........................................................6
2.5. Allocation of Purchase Price....................................................................8
2.6. Sales Taxes and Pro-Rations.....................................................................8
2.6.1. Sales Taxes............................................................................8
2.6.2. Personal Property and Real Property Taxes..............................................8
2.6.3. Prepaid Items..........................................................................9
3. Representations and Warranties of Seller, Real Property Seller and Shareholder
........................................................................................................9
3.1. Organization and Good Standing..................................................................9
3.2. Authorization of Agreement......................................................................9
3.3. Ownership of Acquisition Assets.................................................................9
3.4. Financial Condition............................................................................10
3.4.1. Financial Statements..................................................................10
3.4.2. Accounting Standards.................................................................10
3.4.3. Absence of Certain Changes............................................................10
3.4.4. Books and Records.....................................................................11
3.4.5. Solvency.......................................................................................11
3.5. Property of Seller.............................................................................12
3.5.1. Real Property.........................................................................12
3.5.2. Tangible Personal Property............................................................13
3.5.3. Intangible Personal Property..........................................................13
3.6. Agreement Not in Breach of Other Instruments...................................................13
3.7. Labor and Employment Matters...................................................................13
3.8. Pension and Employee Benefit Plans.............................................................14
3.8.1. ERISA Welfare Plans...................................................................14
3.8.2. ERISA Pension Plans...................................................................14
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3.8.3. Non-ERISA Plans.......................................................................15
3.8.4. Delivery of Documents.................................................................15
3.9. Litigation and Compliance with Laws............................................................15
3.9.1. Litigation Pending or Threatened......................................................15
3.9.2. Violation of Law......................................................................15
3.9.3. Environmental Matters.................................................................16
3.10. Contracts and Other Instruments................................................................19
3.11. Intentionally Deleted.........................................................................20
3.12. Warehoused Goods Inventory.....................................................................20
3.13. Compensation of and Indebtedness to and from Employees.........................................20
3.14. Powers of Attorney and Suretyships.............................................................21
3.15. Insurance......................................................................................21
3.16. Customers......................................................................................21
3.17. No Undisclosed Liabilities.....................................................................21
3.18. Disclosure.....................................................................................21
3.19. Brokerage......................................................................................22
3.20. Taxes..........................................................................................22
4. Representations and Warranties of Shareholder...........................................................22
4.1. Organization and Good Standing.................................................................22
4.2. Power and Authority............................................................................23
4.3. Agreement Not in Breach of Other Instruments...................................................23
4.4. Disclosure.....................................................................................23
5. Representations and Warranties of Buyer and Real Property Buyer.........................................23
5.1. Organization and Corporate Authority...........................................................23
5.2. Agreement Not in Breach of Other Instruments...................................................24
5.3. Regulatory Approvals...........................................................................24
5.4. Brokerage......................................................................................24
6. Closing.................................................................................................24
7. Certain Understandings and Agreements of the Parties....................................................24
7.1. Access.........................................................................................24
7.1.1. General Diligence Investigation.......................................................24
7.1.2. [Intentionally Deleted]...............................................................24
7.1.3. Preservation of Records...............................................................24
7.2. Conduct of ▇▇▇▇▇▇▇ Business....................................................................25
7.3. Preservation of Organization...................................................................25
7.4. Current Information............................................................................25
7.5. Contracts......................................................................................25
7.6. Insurance......................................................................................25
7.7. Waiver of Compliance with Bulk Sales Laws......................................................26
7.8. Condition to Transfer of Certain Contracts.....................................................26
7.9. Permits, Authorizations or Consents of Governmental Authorities................................26
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7.10. Employees......................................................................................27
7.11. Covenant Not to Compete........................................................................27
7.12. COBRA..........................................................................................27
7.13. Escrow Agreement...............................................................................27
7.14. Public Announcements...........................................................................27
7.15. Exclusivity....................................................................................27
7.16. Confidentiality Agreement......................................................................27
7.17. Continuing Confidentiality Obligations.........................................................27
7.18. Consents.......................................................................................28
7.19. Delivery of Documents at Closing...............................................................28
7.19.1. Secretary's Certificates..............................................................28
7.19.2. Sales Tax Resale Certificate..........................................................28
7.19.3. Use of Computer System................................................................28
8. Conditions to Obligations of Real Property Seller, Seller and Shareholder...............................28
8.1. Correctness of Representations and Warranties..................................................28
8.2. Performance of Covenants and Agreements........................................................29
8.3. No Legal Bar...................................................................................29
8.4. Title Escrow Agreement.........................................................................29
8.5. License........................................................................................29
9. Conditions to Obligations of Buyer and Real Property Buyer..............................................29
9.1. Correctness of Representations and Warranties..................................................29
9.2. Performance of Covenants and Agreements........................................................29
9.3. Opinion of Counsel for Real Property Seller and Seller.........................................30
9.4. No Legal Bar...................................................................................30
9.5. Material Adverse Effect........................................................................30
9.6. Covenant Not to Compete.......................................................................30
9.7. Third-Party Consents and Approvals.............................................................30
9.8. Transfer Documents.............................................................................30
9.9. Escrow Agreement...............................................................................30
9.10. Lien Releases..................................................................................30
9.11. Certificate of Non-Foreign Status..............................................................31
9.12. Permits, Authorizations of Governmental Authorities............................................31
9.13. Owner's Title Policy...........................................................................31
9.14. Title Escrow Agreement.........................................................................31
9.15. License........................................................................................31
10. Indemnification.........................................................................................31
10.1. Indemnification Obligations of Real Property Seller, Seller and Shareholder
..............................................................................................31
10.2. Indemnification Obligations of Buyer...........................................................32
10.3. Indemnification Limitations....................................................................32
10.3.1. Time Limitations......................................................................32
10.3.2. Indemnification Limits................................................................33
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10.4. Claims.........................................................................................33
10.5. Defense by Indemnifying Party..................................................................33
10.6. Notice.........................................................................................34
10.7. Manner of Indemnification......................................................................34
10.8. NEGLIGENCE OF INDEMNIFIED PARTY................................................................34
11. Termination of Agreement................................................................................34
11.1. Events of Termination..........................................................................34
11.1.1. Misrepresentation by Real Property Seller, Seller or Shareholder......................35
11.1.2. Misrepresentations by Buyer and Real Property Buyer...................................35
11.1.3. Expiration of Time....................................................................35
11.2. Events of Termination..........................................................................35
12. Miscellaneous Provisions................................................................................35
12.1. CONSTRUCTION...................................................................................35
12.2. Notices........................................................................................35
12.3. Assignment.....................................................................................36
12.4. No Third Party Beneficiaries...................................................................37
12.5. Amendments and Waivers.........................................................................37
12.6. Survival.......................................................................................37
12.7. Remedies.......................................................................................37
12.8. Binding Nature of Agreement....................................................................37
12.9. Expenses.......................................................................................37
12.10. Entire Agreement...............................................................................38
12.11. Severability...................................................................................38
12.12. Counterparts...................................................................................38
12.13. Section Headings...............................................................................38
12.14. Legal Fees and Expenses........................................................................38
13. Arbitration.............................................................................................38
13.1. Agreement to Arbitrate.........................................................................38
13.2. Notice of Arbitration..........................................................................39
13.3. Selection of Arbitrator........................................................................39
13.4. Award Final....................................................................................39
13.5. Availability of Injunctive Relief..............................................................39
14. Submission to Jurisdiction; Agent for Service...........................................................39
iv
Page
----
Exhibits
--------
Exhibit A Real Property
Exhibit B Form of General Warranty Deed
Exhibit C Title Escrow Agreement
Exhibit D Financial Statements
Exhibit E Covenant Not to Compete
Exhibit F Escrow Agreement
Exhibit G Real Property License
Exhibit H License Agreement
Exhibit I Certification of Non-Foreign Status
Schedules
---------
Schedule 1.1.1 Fixed Assets
Schedule 1.1.3 Assigned Contracts
Schedule 1.1.6 Prepaid Items and Deposits
Schedule 1.2.9 Other Excluded Assets
Schedule 1.3.2 Survey Requirements
Schedule 2.6 Purchase Price Allocation
Schedule 3.1 States Where Qualified to Do ▇▇▇▇▇▇▇ Business
Schedule 3.3 Liens on Tangible Personal Property
Schedule 3.4.3 Changes Since December 31, 1999
Schedule 3.7 Employee Plans and Agreements
Schedule 3.8.1 ERISA Welfare Plans
Schedule 3.8.2 ERISA Pension Plans
Schedule 3.8.3 Non-ERISA Plans
Schedule 3.9.1 Litigation
Schedule 3.9.2 Licenses, Permits and Authorizations
Schedule 3.9.3 Environmental Matters
Schedule 3.10.1 Consents
Schedule 3.10.2 Contracts
Schedule 3.10.3 Outstanding Bids and Disputes
Schedule 3.13.1 Officers and Directors
Schedule 3.13.2 Debt to Insiders
Schedule 3.14 Powers of Attorney
Schedule 3.15 Insurance
Schedule 3.16 Customers
Schedule 3.17 No Undisclosed Liabilities
Schedule 3.19 Brokers
Schedule 3.20 Taxes
Schedule 4.3 Required Shareholder Consents
v
Index of Defined Terms
Term Section
---- -------
AAA Rules 13.1
AAA 13.1
Accounts Receivable 1.1.6
Acquisition Assets 1.1
Agreement Preamble
Annual Financial Statements 3.4.1
Arbitrator 13.1
Arbitration Rules 13.1
Assigned Contracts 1.1.7
Assumed Liabilities 2.4
buyer indemnified parties 10.1
Buyer Preamble
Closing 6
Closing Date 6
Closing Inventory 2.3.1
Closing Statement 2.2.1
COBRA 7.13
Code 3.8.2
Covenant Not to Compete 7.11
Employee Benefit Plans 3.8.3
Environmental Damages 3.9.3(e)(ii)
Environmental Requirements 3.9-3,(e)(iii)
ERISA 3.8.1
ERISA Pension Plan 3.8.2
ERISA Welfare Plans 3.8.1
Escrow Account 2.1.2
Escrow Agent 2.1.2
Escrow Agreement 7.14
Escrow Amount 2.1.1
Estoppel Certificate 7.21
Excluded Assets 1.2
Financial Statements 3.4.1
Fixed Assets 1.1.3
Governmental Authorities 3.6
Hazardous Materials 3.9.3(e)(i)
Indemnification Threshold 10.3.2
Indemnified party 10.4
Indemnifying party 10.4
Initial Payment 2.2
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Intellectual Property 1.1.8
Interim Financial Statements 3.4.1
Inventory 1.1.4
Inventory .1.1.4
▇▇▇▇▇▇▇ Business Recitals
Leases 3.5.1
Liens 3.3
Losses 10.1
Material Adverse Effect 3.4.3
Missing Items Amount 2.3.1
Missing Items Statement 2.3.1
Missing Items- 2.3.1
Mortgage - 2.1.2
Non-ERISA Plans 3.8.3
Note Assumption Amount 2.1.2
Property 3.9.3(e)(iv)
Purchase Price 2.1
Real Property 3.5.1
Rolling Stock 1.1.2
Seller Preamble
Seller indemnified parties 10.2
Shareholder Preamble
Solvent 3.4.5
TGAA 13.1
Taxes 3.19
Tax Returns 3.19.
vii
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of this 2nd day of June, 2000, but effective as of the close of business
on May 3 1, 2000, by and among Pacific Logistics, L.P., a Texas limited
partnership ("Buyer"), P&O Cold Properties H, LLC, a Delaware limited liability
company ("Real Property Buyer"), ▇▇▇▇▇▇ Refrigerated Warehouses, a Texas
corporation ("Seller"), LaPorte Properties, LLC, a Texas limited liability
company (the "Real Property Seller") and Castor Capital Corporation, an Ontario
corporation, the majority shareholder of Seller (the "Shareholder").
RECITALS
1. Seller is engaged in the business of operating public refrigerated
warehouses, including among other locations, a public refrigerated warehouse in
▇▇▇▇▇▇▇, Texas (the "▇▇▇▇▇▇▇ Business").
2. Seller desires to sell the ▇▇▇▇▇▇▇ Business to Buyer, and Buyer
desires to acquire the ▇▇▇▇▇▇▇ Business and the assets associated therewith on
the terms and conditions hereinafter set forth.
3. Real Property Seller is the owner of the Real Property (as
hereinafter defined), and desires to sell, and Real Property Buyer desires to
buy, the Real Property.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and agreements contained herein, the parties hereto agree as
follows:
1. Agreement to Sell and Agreement to Purchase.
1.1. Assets of Seller to be Conveyed. On the Closing Date (as
hereinafter defined) Seller and the Real Property Seller, with respect to the
Real Property, shall convey, transfer, assign, grant, sell and deliver, free and
clear of any and all Liens (as hereinafter defined), other than the Permitted
Exceptions (as hereinafter defined) to Buyer and, with respect to the Real
Property, Real Property Buyer, and Buyer and, with respect to the Real Property,
Real Property Buyer, shall acquire, accept and purchase, free and clear of any
and all Liens, other than the Permitted Exceptions, the Real Property and all of
the assets, properties and rights of Seller of every kind, character and
description, whether tangible or intangible, relating to or used in the ▇▇▇▇▇▇▇
Business, including, without limitation, those assets described in Sections
1.1.1 - 1.1.9 of this Section 1.1, but excluding those assets described in
Section 1.2 (hereinafter collectively referred to as the "Acquisition Assets"):
1.1.1. All of Seller's machinery, equipment, tools,
furniture and fixtures (collectively, the "Fixed Assets") used in or relating to
the ▇▇▇▇▇▇▇ Business, including but not limited to the Fixed Assets listed in
Schedule 1.1.1 attached hereto;
1
1.1.2. All office supplies, drums, containers, tote
bins and other packaging material, spare parts, safety equipment, maintenance
supplies and other similar items of Seller used in the ▇▇▇▇▇▇▇ Business which
exist on the Closing Date, whether or not reflected in Seller's books and
records;
1.1.3. Subject to Section 7.8 hereof, all of Seller's
right, title and interest in and to each real property lease, equipment or other
lease, license, contract, agreement, purchase or sales order, indenture or
commitment, written or oral, with respect to the ▇▇▇▇▇▇▇ Business, (i) to which
Seller is a party on the Closing Date or by which any of the Acquisition Assets
is then bound and (ii) which is listed on Schedule 1.1.3 (collectively, the
"Assigned Contracts");
1.1.4. Customer lists and records, sales brochures,
books, records and accounts, correspondence, production records, employment
records and any confidential information relating to or arising out of the
▇▇▇▇▇▇▇ Business;
1.1.5. All rights of Seller under express or implied
warranties from the suppliers to the ▇▇▇▇▇▇▇ Business with respect to the
Acquisition Assets;
1.1.6. All prepaid items and deposits of Seller
relating to the ▇▇▇▇▇▇▇ Business set forth in Schedule 1.1.6 (which shall be
delivered at Closing and shall be reasonably acceptable to Buyer);
1.1.7. The licenses, permits, certificates of occu-
pancy or use and other governmental approvals relating to the Acquisition Assets
or the operation of the ▇▇▇▇▇▇▇ Business to the extent assignable to the Buyer;
1.1.8. The real property located in ▇▇▇▇▇▇▇, Texas
and more particularly described on Exhibit A attached hereto (the "Real
Property"); and
1.1.9. All goodwill associated with the ▇▇▇▇▇▇▇
Business.
1.2. Excluded Assets. Notwithstanding Section 1.1 hereof,
Seller is not selling, and Buyer is not purchasing, pursuant to this Agreement,
any of the following (the "Excluded Assets"), all of which shall be retained by
Seller:
1.2.1. Seller's income tax returns and any income
tax refunds in respect thereof;
1.2.2. Cash, cash equivalents and bank accounts of
Seller;
1.2.3. All insurance policies of Seller;
1.2.4. All employee benefit plans, employment
contracts, collective bargaining agreements and the assets of such employee
benefit plans;
2
1.2.5. Seller's corporate minute books and stock
records;
1.2.6. Any and all Contracts (as hereinafter
defined), other than the Assigned Contracts;
1.2.7. All prepaid items and deposits of Seller not
listed on Schedule 1.1.6,
1.2.8. All assets of Seller not used in the ▇▇▇▇▇▇▇
Business;
1.2.9. Seller's accounts receivable; and
1.2.10. Items listed on Schedule 1.2.10.
1.3. Real Property Provisions.
1.3.1. Title Commitment. On or before ten (10) days
after the date hereof, Real Property Seller, at Real Property Seller's sole cost
and expense, shall deliver to Real Property Buyer a Commitment for Title
Insurance or a Commitment to Insure (the "Commitment") dated not earlier than
the date of this Agreement, issued by Republic Title (the "Title Company"),
showing Real Property Seller's title to the Real Property to be good and
indefeasible, together with true, correct and legible copies of all items and
documents referred to therein. Real Property Buyer shall have ten (10) days
after receipt of said items (and the Survey hereinafter referred to) to examine
the condition of title and approve or disapprove the same. Those items listed in
the Commitment and not disapproved of by Real Property Buyer shall be referred
to as the "Permitted Exceptions." In the event that Real Property Buyer
disapproves of all or any item referred to in the Commitment, Real Property
Seller shall have a period of ten (10) days within which it shall use its
commercially reasonable efforts (including an obligation to spend up to
$150,000.00 in such efforts to cure objections which can be cured by a
liquidated sum of money) to cure or remove such exceptions. In the event Real
Property Seller fails to cure all of such items within such ten (10) day cure
period, or in the event that Real Property Seller notifies Real Property Buyer
(the "Cure Notice") of which items Real Property Seller will cure (the "Cure
Items") and which items Real Property Seller will not be able to cure, Real
Property Buyer shall have the right, exercisable within five (5) days after the
earlier of (i) the expiration of said ten (10) day cure period or (ii) receipt
of Real Property Seller's Cure Notice indicating that Real Property Seller will
not cure all of Buyer's objections, to terminate this Agreement, whereupon Real
Property Buyer shall be entitled to a claim under Section 11.2 hereunder. If
Real Property Buyer shall not so terminate, Real Property Seller shall cure all
Cure Items and shall deliver the title in its existing condition with the Cure
Items having been cured and Real Property Buyer shall, by acceptance of such
title, waive any objections to such title which have not been cured except as to
any uncured Cure Item and warranties contained in the documents of conveyance.
1.3.2. Survey. Contemporaneously with the execution
and delivery of this Agreement, Real Property Seller shall furnish at its
expense to Real Property Buyer a new as-built survey (the "Survey") of the Real
Property, prepared by a duly licensed land surveyor in the State of Texas,
sufficient to enable the Title Company to delete the survey exception from the
Owner's
3
Title Policy. In addition, the surveyor's certificate shall be substantially
similar to Schedule 1.3.2 attached hereto.
1.3.3. Owner's Title Policy. Real Property Seller
shall famish Real Property Buyer with an Owner's Policy of Title Insurance (the
"Owner's Title Policy") at Closing, in the amount of $8,560,000 (the "Real
Property Purchase Price"), wherein the Title Company shall insure that fee
simple title to the Real Property is vested in Real Property Buyer, containing
no exception to such title other than the Permitted Exceptions (hereinafter
defined) and the standard printed exceptions (provided that the area and
boundaries exceptions shall, at Real Property Buyer's election and sole cost and
expense, be amended to except only to "Shortages in Area," the exception for
restrictive covenants shall be endorsed "Deleted" or shall list only those
restrictive covenants as may be Permitted Exceptions, and the exception for
standby fees, taxes and assessments shall be limited to standby fees, taxes and
assessments for the year in which Closing occurs and subsequent years, and
subsequent assessments for prior years due to change in land usage or
ownership), any exception for parties in possession of the Real Property shall
be limited to rights of tenants in possession; as tenants only, pursuant to
unrecorded written leases, and there shall be no exception for visible and
apparent easements, roads and highways or any other matters which would be
disclosed by a current survey of the Real Property. Real Property Seller shall
pay the cost of the Owner's Title Policy, excluding any premium for amendment of
the survey exception.
1.3.4. Closing Deliveries. At the Closing or at
such time as is provided in Section 1.3.6 hereof, Real Property Seller shall
cause to be delivered to Real Property Buyer the items specified herein and the
following documents and instruments duly executed and acknowledged, in
recordable form:
(a) A general warranty deed with vendor's lien
reserved for any lender making a loan to Real Property Buyer to enable the
acquisition of the Real Property (the "Deed") dated as of the Closing Date, in
the form of Exhibit B attached hereto and made a part hereof by reference for
all purposes, in favor of Real Property Buyer or its permitted assignee;
(b) All keys to all locks on the Real Property
and all documents in the possession of the Real Property Seller or Seller
pertaining to the Real Property; and
(c) To the extent not previously delivered to
Real Property Buyer, current tax statements, if available.
1.3.5. Cooperation with Respect to Like-Kind
Exchange. Seller and Real Property Seller agree that Real Property Buyer may, at
its election prior to the Closing Date, direct that all or a portion of the Real
Property Purchase Price be paid by a "qualified intermediary" (as defined in
Treasury Regulation Section 1.1031(k)-(g)(4)) as to enable Real Property Buyer's
purchase of the Real Property to qualify as part of a like-kind exchange of
property covered by Section 1031 of the Internal Revenue Code of 1986, as
amended (the "Code"). If Real Property Buyer so elects, Seller and Real Property
Seller shall use reasonable efforts to cooperate with Real Property Buyer (but
without being required to incur any out-of- pocket costs in the course thereof)
in connection with Real Property Buyer's efforts to effect such
4
like-kind exchange, which cooperation shall include taking such actions as Real
Property Buyer reasonably requests, but at no cost to Seller or Real Property
Seller, in order to enable Real Property Buyer to qualify such transfer as part
of a like-kind exchange of property covered by Section 1031 of the Code
(including any actions required to facilitate the use of a "qualified
intermediary"), and Seller and Real Property Seller agree that Real Property
Buyer may assign all or part of its rights and delegate all or part of its
obligations under this Agreement to a person acting as a qualified intermediary,
but only to the extent necessary, to qualify the transfer of the Real Property
as part of a like-kind exchange of property covered by Section 1031 of the Code;
provided that no assignment or delegation shall relieve Real Property Buyer of
its obligations under this Agreement. Seller, Real Property Seller and Real
Property Buyer agree in good faith to use reasonable efforts to 'Coordinate the
transactions contemplated by this Agreement with any other transactions engaged
in by the Real Property Buyer with respect to such Re-kind exchange.
1.3.6. Delayed Transfer of Real Property. In the
event the holder of the Note and Mortgage (as hereinafter defined) has not
consented to the assignment of the Note and Mortgage to Real Property Buyer or
its designee, at Closing, Buyer shall pay the Purchase Price less the Note
Assumption Amount as set forth in Section 2.1. The Deed shall be executed but
undated and shall be placed in escrow with the Title Agent in accordance with a
Title Escrow Agreement substantially in the form attached hereto as Exhibit C
(the "Title Escrow Agreement"). On the earlier of the holder of the Mortgage
approving assignment of the Mortgage to Real Property Buyer, receipt by the
Title Agent of written instructions from Real Property Buyer following the
rejection by the holder of the Mortgage for an application for assumption, or
the sixtieth (60th) day after the Closing, the Title Company shall cause the
Deed to be recorded in the appropriate county deed records in the State of
Texas. Unless Buyer or Real Property Buyer are in material default of their
obligations under Section 2 of the License Agreement (as hereinafter defined),
Seller, Real Property Seller and Shareholder shall be jointly and severally
liable for any Losses (as hereinafter defined) incurred by any buyer indemnified
parties (as hereinafter defined) as a result of the transactions contemplated
hereunder, including without limitation, such recording of the Deed, being a
default under the Mortgage. In the event any such default under the Mortgage
results in the Note Assumption Amount being accelerated, Real Property Buyer or
its assignee shall pay to the holder of the Mortgage, on behalf of Real Property
Seller, the Note Assumption Amount. In the event the Mortgage is in default as a
result of the material default of Buyer and Real Property Buyer of their
obligations under Section 2 of the License Agreement, in addition to the Note
Assumption Amount, Buyer and Real Property Buyer shall be responsible and liable
for any other amounts due as a result of acceleration of the Mortgage.
1.4. Further Assurances. From time to time after the Closing
(as hereinafter defined), (a) Seller and Real Property Seller shall execute and
deliver to Buyer and Real Property Buyer such instruments of sale, transfer,
conveyance, assignment and delivery, consents, assurances, powers of attorney
and other instruments as may be reasonably requested by Buyer and Real Property
Buyer in order to vest in Buyer and Real Property Buyer all right, title and
interest of Seller and Real Property Seller in and to the Acquisition Assets,
and otherwise in order to carry out the purpose and intent of this Agreement;
and (b) Seller, the Real Property Seller, Buyer and Real Property Buyer will
cooperate in order to ensure an orderly transition of benefit and other
administrative matters.
5
2. Consideration to be Paid by Buyer.
2.1. Purchase Price for Acquisition Assets. The aggregate
purchase price (the "Purchase Price") to be paid to Seller and Real Property
Seller for the Acquisition Assets shall be $9,295,000.00; provided, however that
the Purchase Price shall be subject to adjustment under Section 2.2 after the
Closing and shall be paid as follows:
2.1.1. Buyer shall pay $250,000 (the "Escrow Amount")
by wire transfer at the Closing to an account (the "Escrow Account") designated
in writing by Chase Bank of Texas, National Association (the "Escrow Agent").
2.1.2. In accordance with and subject to Section
1.3.6 hereof, Buyer or Real Property Buyer shall assume the obligation secured
by the Mortgage, Deed of Trust and Security Agreement, dated as of February 6,
1998 (the "Mortgage'), made by Real Property Seller originally in favor of
Amresco Capital, L.P., a Delaware limited partnership, in the principal amount
of $5,264,358.78, which shall be deemed to be a payment of $5,264,358.78 of the
Real Property Purchase Price (the "Note Assumption Amount").
2.1.3. Buyer or Real Property Buyer shall pay the
Real Property Purchase Price to Real Property Seller in cash by wire transfer to
an account designated in writing by Real Property Seller.
2.1.4. Buyer shall pay the Purchase Price less (i)
the Real Property Purchase Price, (ii) the Note Assumption Amount; and (iii) the
Escrow Amount to Seller, in cash by wire transfer to an account designated in
writing by Seller.
2.2. Warehoused Goods Inventory. At Closing, Seller shall
deliver to Buyer a listing of all Warehoused Goods as of the Closing Date.
2.3. Executory Liabilities Assumed by Buyer. As further
consideration for consummation of the transactions contemplated hereby, subject
to Section 2.4 hereof, at the Closing Buyer shall assume and agree to thereafter
pay and discharge and indemnify Seller and hold Seller harmless with respect to
the executory liabilities and obligations of Seller to be performed on and after
the Closing Date under each Assigned Contract in effect on the Closing Date and
conveyed pursuant to Section 1.1.3 (the "Assumed Liabilities").
2.4. Seller Liabilities Not Assumed by Buyer. Except for
the Assumed Liabilities. Buyer shall not assume or be deemed by anything
contained in this Agreement to have assumed, and Seller hereby agrees to fully
pay and perform in a prompt and timely manner and to indemnify Buyer and hold
Buyer harmless with respect to (collectively, the "Excluded Liabilities"):
2.4.1. Any liability of Seller to any person or
entity the existence of which constitutes a breach of any covenant, agreement,
representation or warranty of Seller contained in this Agreement;
6
2.4.2. Any indebtedness of Seller, including any
principal, interest, penalty, charge or other amount owing in respect of any
such indebtedness;
2.4.3. Any liability of Seller for any United States,
state, local or foreign income, franchise or payroll taxes, state or local
sales, use or property taxes or other taxes of any kind or description;
2.4.4. Any accrued, contingent or other liability or
obligation to or with respect to any current or former employee relating in
whole or in part to service prior to the Closing; any accrued, contingent or
other liability or obligation under any plan, contract, policy or agreement of
the type described in Sections 3.7.1 or Section 3.8 with respect to any of
Seller's employees, past or present; any liability under any plan, program, law,
regulation or insurance policy relating to workers' compensation claims arising
or which may arise as a result of occurrences prior to the Closing Date; and any
severance payments or other payments due any employees or officers of the Seller
as a result of transactions contemplated by this Agreement;
2.4.5. Any liability or obligation (contingent or
otherwise) of Seller arising out of any threatened or pending litigation,
charge, arbitration or grievance, whether or not set forth in Schedule 3.9.1, or
arising out of any claim (including a workers' compensation claim) or dispute
under any Contract presently or heretofore in effect, whether or not set forth
in Schedule 3.10.3, or arising out of any violation of law, rule or regulation,
or any other event, occurrence, condition, act or omission which was incurred,
took place or in effect, in whole or in part, prior to Closing;
2.4.6. Any liabilities or obligations arising from
products sold, services provided, or equipment, including Rental Equipment,
leased, rented or sold by Seller prior to the Closing Date, including without
limitation all liabilities and obligations for property damage, personal injury
or death, whether arising under products liability laws, tort laws, contract or
warranty or otherwise, whether relating to design, manufacture, inspection,
testing, packaging, warnings or instructions, transportation or otherwise, and
whether arising as a result of negligence, strict liability, breach of express
or implied warranties, failure to warn, misrepresentation, negligence per se,
res ipsa loquitor, gross negligence, conspiracy, fraud, intentional infliction
of emotional distress, loss of consortium, wrongful death, punitive or exemplary
damages, survival damages, prejudgment interest or otherwise;
2.4.7. Any liabilities or obligations, whether
arising before or after the Closing, arising under warranties relating to
products invoiced by the Seller prior to the Closing and all additional
obligations and commitments to replace, repair or exchange, or provide
replacements, refunds or credits, or provide service, product support or other
goods and services, with respect to any products previously shipped by the
▇▇▇▇▇▇▇ Business to any customer, whether arising by law, contract, warranty,
industry custom, course of dealing or otherwise;
2.4.8. Any liabilities or obligations of Seller under
any Contract which are required to be paid or performed prior to the Closing
Date;
7
2.4.9. Any liabilities or obligations for any
accounts payable of Seller or trade payables incurred by the Seller, whether or
not listed on the Financial Statements (as hereinafter defined) or any other
financial statements of Seller, and whether or not incurred on, prior to or
after the Closing Date;
2.4.10. Any negative cash balances, bank overdrafts
(including uncleared checks as of the date of Closing), held checks or similar
liabilities of Seller;
2.4.11. Any liabilities for contribution obligations
to any Employee Benefit Plans (as hereinafter defined) or multiernployer pension
plans; and
2.4.12. Any liabilities or obligations of Seller or
Real Property Seller of any nature whatsoever, whether due or to become due,
whether absolute, accrued, contingent or otherwise and whether or not known by
Seller or Real Property Seller on the Closing Date, unless specifically assumed
by Buyer under Section 2.4.
2.5. Allocation of Purchase Price. The Purchase Price shall be
allocated by Buyer and Real Property Buyer among the Acquisition Assets, and
such allocation shall be delivered to Seller within 45 days after Closing.
Except as provided in Treasury Regulation 1103 1 (d)- I T, Buyer and Real
Property Buyer shall complete and deliver to Seller a Form 8594 with respect to
such allocation prior to the date Seller is required to file a federal income
tax return containing such form. Buyer, Real Property Buyer, Seller and Real
Property Seller shall separately file such Form 8594 with their respective
federal income tax returns for the tax year in which the Closing Date occurs in
accordance with such allocation, and none of Buyer, Real Property Buyer, Seller
or Real Property Seller shall take a position on any income, transfer or gains
tax return, or before any governmental agency charged with the collection of any
such tax or in any judicial proceeding, that is in any manner inconsistent with
the terms of any such allocation without written consent of the other in each
instance.
2.6. Sales Taxes and Pro-Rations.
2.6.1. Sales Taxes. Seller shall be responsible for
preparing and filing any sales tax returns and paying any sales, transfer or
similar tax arising as a result of the transactions contemplated by this
Agreement. The provisions of this Section 2.6.1 shall in no way modify the
obligation of Seller to collect and remit all sales and similar taxes relating
to operation of the ▇▇▇▇▇▇▇ Business prior to Closing.
2.6.2. Personal Property and Real Property Taxes.
At Closing, (i) 2000 personal property taxes upon the Acquisition Assets shall
be pro-rated between Real Property Buyer and Real Property Seller, and (ii) 2000
real property taxes for the Real Property shall be pro-rated between Real
Property Buyer and Real Property Seller. For such taxes, amounts due for periods
prior to the Closing shall be for the account of Real Property Seller and
Seller, and amounts due for periods on and after Closing shall be for the
account of Real Property Buyer and Buyer. To the extent any pro-ration is made
using an estimated tax amount, the pro-ration shall be adjusted, if necessary,
promptly after the actual tax amount is known. .
8
2.6.3. Prepaid Items. At Closing, Buyer shall
reimburse Seller for the prepaid items fisted on Schedule 1.1.6, to the extent
Buyer can take an assignment of such items. In the event such an assignment is
not possible, Seller shall be responsible for obtaining a refund of such items,
and Buyer shall bear no responsibility or liability in respect thereof.
3. Representations and Warranties of Seller, Real Property Seller
and Shareholder. Seller, Real Property Seller and Shareholder jointly and
severally represent and warrant to Buyer and Real Property Buyer as follows:
3.1. Organization and Good Standing. Seller is duly organized,
validly existing and in good standing under the laws of the State of Texas, with
full power to carry on its business as it is now and has since its organization
been conducted and to own, lease or operate the Acquisition Assets which are
owned, leased or operated by it. Except as set forth in Schedule 3.1, there is
no other jurisdiction in which the nature or conduct of the ▇▇▇▇▇▇▇ Business or
the character of Seller's properties related to the ▇▇▇▇▇▇▇ Business makes
qualification to do business by Seller in such jurisdiction necessary. Real
Property Seller is a duly organized, validly existing limited liability company
in good standing under the laws of the State of Texas, with full power to carry
on its business as it is now and has since its organization been conducted and
to own, lease or operate the assets which are owned, leased or operated by it.
Except asset forth in Schedule 3.1, there is no other jurisdiction in which the
nature or conduct of the Real Property Seller's business or the character of the
Real Property Seller's properties makes qualification to do business by Real
Property Seller in such jurisdiction necessary.
3.2. Authorization of Agreement. Each of Seller and Real
Property Seller has all requisite power and authority to enter into this
Agreement and to consummate the transactions contemplated hereby. This Agreement
and all other agreements and instruments to be executed by Seller and Real
Property Seller in connection herewith have been (or upon execution will have
been) duty executed and delivered by Seller and Real Property Seller, have been
effectively authorized by all necessary action (corporate or otherwise) and
constitute (or upon execution will constitute) legal, valid and binding
obligations of Seller and Real Property Seller, enforceable against each of
Seller and Real Property Seller in accordance with their respective terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally, and subject, as
to enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity).
3.3. Ownership of Acquisition Assets. Seller is the lawful
owner of, or in the case of leased assets, has the right to use and transfer to
Buyer, each of the Acquisition Assets, other than the Real Property. Real
Property Seller is the lawful owner of the Real Property. The Acquisition Assets
are free and clear of all liens, mortgages, pledges, security interests,
restrictions, prior assignments, encumbrances, options or claims of any kind or
nature whatsoever (collectively, "Liens"), other than (i) the Liens listed on
Schedule 3.3, which Seller and Real Property Seller shall cause to be released
at or before Closing, and (ii) the Permitted Exceptions. The delivery to Buyer
of the instruments of transfer of ownership contemplated by this Agreement will
vest good and marketable title, or good and indefeasible title, as the case may
be, to the Acquisition Assets in Buyer, free and clear of all Liens. The
Acquisition Assets include all assets,
9
rights and interests used in the ▇▇▇▇▇▇▇ Business (whether or not owned by
Seller) other than the Excluded Assets and other than assets, rights and
interests which Seller has the right to use under the Assigned Contracts, and
which Buyer shall have the right to use after the Closing Date pursuant to the
Assigned Contracts.
3.4. Financial Condition.
3.4.1. Financial Statements. Attached as Exhibit D
are the following: the income statement of the Business at and for the year
ended December 31, 1999 (collectively, the "Annual Financial Statements"), and
(b) an income statement at and for the 4 months ended April 30, 2000 (the
"Interim Financial Statements," together with the Annual Financial Statements,
the "Financial Statements").
3.4.2. Accounting Standards. The Financial
Statements: (i) have been prepared in accordance with the books and records of
Seller; (ii) have been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods covered except for (A)
the omission of notes to the Interim Financial Statements, and (B) the lack of
standard immaterial year-end adjustments in the Interim Financial Statements;
(iii) provide adequate reserves in respect of all liabilities of Seller,
including without limitation all contingent liabilities or reserves against
assets, as of their respective dates; (iv) present fairly the financial position
and results of operations of Seller at and for the fiscal periods indicated
therein; and (v) with respect to contracts and commitments for the sale or
rental of goods or the provision of services, contain and reflect adequate
reserves for all reasonably anticipated losses and costs and expenses in excess
of expected receipts.
3.4.3. Absence of Certain Changes. Except as set
forth on Schedule 3.4.3. since December 31, 1999 there has not been:
(a) any sale, distribution, transfer or
subjection to any Lien of any Acquisition Assets;
(b) any increase in the salary, benefits or
other compensation payable or to become payable to or with respect to any
current or former officer, director or employee of Seller working in the ▇▇▇▇▇▇▇
Business, or the declaration, payment, commitment or obligation of any kind for
the payment of a bonus or other additional salary, compensation or benefit for
such officers, directors or employees;
(c) any transaction by Seller in the ▇▇▇▇▇▇▇
Business not in the ordinary and usual course of business consistent with past
practice;
(d) any Material Adverse Effect (as defined
below in this Section 1.4.3);
(e) any damage, destruction or loss, whether or
not covered by insurance, which has had or is expected to have a Material
Adverse Effect;
10
(f) any alteration in the manner in which Seller
keeps its books, accounts or records or in the accounting practices therein.
reflected;
(g) the incurrence by Seller of any indebtedness
for borrowed money or any commitment by Seller to borrow money or any guaranty,
direct or indirect, of indebtedness of others, or any prepayment by the Seller
of any indebtedness;
(h) a termination, or a threatened termination,
or material modification of any Contract or the relationship of Seller with any
material customer or supplier or the occurrence of any adverse event affecting
any business practice, product or process used by or in the ▇▇▇▇▇▇▇ Business;
(i) except as provided elsewhere herein, any
acquisitions, dispositions or leases of or commitments to acquire, dispose of,
or lease any real property, or any other assets in excess of $5,000 in the
aggregate;
(J) any change in the operations, business or
manner of conducting the ▇▇▇▇▇▇▇ Business, other than changes in the ordinary
and usual course of business consistent with past practice, none of which,
individually or in the aggregate, has had or is expected to have a Material
Adverse Effect; or
(k) any declaration or payment of a dividend or
any distribution of assets of any kind whatsoever by Seller, including any
distribution in redemption of, or as the purchase price for, any capital stock,
or in discharge or cancellation, in whole or in part, of any indebtedness,
whether in payment of principal, interest or otherwise, owing to Shareholder,
and whether or not characterized as a "management fee" or other similar fee.
As used in this Agreement, "Material Adverse Effect" means any change
in or effect on the Seller or ▇▇▇▇▇▇▇ Business that has had or is reasonably
likely to have a material adverse effect on the business, operations,
properties, condition (fmancial or otherwise), assets, liabilities or prospects
of the ▇▇▇▇▇▇▇ Business in excess of $50,000.
3.4.4. Books and Records. With respect to the
▇▇▇▇▇▇▇ Business, Seller (i) keeps books, records and accounts that, in
reasonable detail, accurately and fairly reflect the transactions and
dispositions of assets and (ii) maintains a system of internal accounting
controls sufficient to provide reasonable assurance that (A) transactions are
executed in accordance with management's general or specific authorization, (B)
transactions are recorded as necessary to permit preparation of financial
statements to maintain accountability for assets, (C) access to assets is
permitted only in accordance with management's general or specific
authorization, and (D) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
3.4.5. Solvency. Each of Seller and Real Property Seller is,
both before and after giving effect to the transactions contemplated by this
Agreement, Solvent (as hereinafter defined). Neither Seller nor Real Property
Seller has any intention of delaying, hindering or defrauding its
11
creditors. "Solvent" shall mean, with respect to any person (including without
limitation the Seller) as of the date of any determination, that on such date
(i) the assets of such person at a fair valuation is greater than the total
amount of liabilities, including, without limitation, contingent liabilities, of
such person, (ii) the present fair salable value of the assets of such person is
not less than the amount that will be required to pay the probable liability of
such person on its debts as they become absolute and matured, (iii) such person
is able to realize upon its assets and pay its debts and other liabilities,
contingent obligations and other commitments as they mature in the normal course
of business, (iv) such person has not incurred, does not intend to incur, and
does not believe that it will incur debts or liabilities beyond such person's
ability to pay such debts and liabilities as they become due or mature, and (v)
such person is not engaged in business or a transaction, and is not about to
engage in business or a transaction, for which such person's property would
constitute unreasonably small capital after giving due consideration to current
and anticipated future capital requirements and current and anticipated future
business conduct and the prevailing practice in the industry in which such
person is engaged. In computing the amount of contingent liabilities at any
time, such liabilities shall be computed at the amount which, in light of the
facts and circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability.
3.5. Property of Seller.
3.5.1. Real Property.
(a) Except for the Real Property and the
buildings, fixtures and other improvements located thereon as set forth in
Schedule 3.5. 1, there is no parcel of real property, building or other
structure presently owned or leased by Seller or Real Property Seller for use in
the ▇▇▇▇▇▇▇ Business;
(b) There are no conditional use permits to
which Seller or the Real Property are bound which would interfere with or
prohibit Buyer's using the Real Property in the same manner as it is now being
used by Seller;
(c) All of the buildings, fixtures and other
improvements located on the Real Property are in good operating condition and
are fit for their intended use. The operation of such buildings, fixtures and
other improvements as presently conducted is not in violation of any applicable
building code, zoning ordinance or other law or regulation;
(d) Seller holds valid and effective
certificates of occupancy, underwriters' certificates relating to electrical
work, zoning, building, housing, safety, fire and health approvals and all other
permits and licenses required by applicable law relating to the operation of the
Real Property;
(e) Seller has not experienced during the three
years preceding the date hereof any material interruption in the delivery of
adequate quantities of any utilities (including, without limitation,
electricity, natural gas, potable water, water for cooling or similar purposes
and fuel oil) or other public services (including, without limitation, sanitary
and industrial sewer service) required by Seller in the operation of the ▇▇▇▇▇▇▇
Business during such period; and
12
(f) There is no pending or, to Seller's best
knowledge, threatened condemnation or eminent domain proceeding with respect to
or that could affect the Real Property.
3.5.2. Tangible Personal Property. There is listed
in Schedule 1.1.1 and Schedule 1.1.3(i) each depreciable item (whether or not
fully depreciated) of tangible personal property owned by Seller which is to be
transferred to Buyer pursuant hereto; and (ii) an identification of the owner
of, and any agreement relating to the use of, each such item of tangible
personal property, the rights to which are to be transferred to Buyer pursuant
hereto under leases or other similar agreements included in the Assigned
Contracts. Each item of such tangible personal property listed in such Schedules
is located on the Real Property, is in good operating condition and repair,
subject to normal wear and tear, and is fit for its intended use.
3.5.3. Intangible Personal Property. The conduct of
the ▇▇▇▇▇▇▇ Business does not conflict with or infringe upon any patent,
copyright, trademark, trade secret, trade name or other intellectual property
rights of others.
3.6. Agreement Not in Breach of Other Instruments. The
execution, delivery and performance of this Agreement by Seller and Real
Property Seller and the consummation of the transactions contemplated hereby
will not result in a breach of any of the terms and provisions of, or constitute
a default under, or conflict with any Contract or any other agreement, indenture
or other instrument to which either of Seller or Real Property Seller is a party
or by which either of them is bound, the charter documents of either of Seller
or Real Property Seller, or any judgment, decree, order, award, law, rule or
regulation of any United States, state, local, or other goveniunental entity or
municipality or subdivision thereof or any authority, department, commission,
agency, board, bureau, court or other instrumentality thereof (collectively,
"Governmental Authorities").
3.7. Labor and Employment Matters.
3.7.1. Except as set forth in Schedule 3.7 attached
hereto, with respect to the ▇▇▇▇▇▇▇ Business, there is no (a) collective
bargaining agreement or other labor agreement to which Seller is a party or by
which it is bound; (b) employment, plant closing, change of control, performance
pay, pension, disability, health, life insurance, multiernployer, loan or loan
guaranty, profit sharing, deferred'compensation, bonus, stock option, stock
purchase, stock appreciation, phantom stock, or other equity-based compensation,
retainer, consulting, retirement, welfare, incentive or severance plan, policy,
contract or agreement to which Seller is a party or by which it is bound; or (c)
plan or agreement under which "fringe benefits" (including, but not limited to,
vacation plans or programs, sick leave plans or programs and related benefits)
are afforded any of the employees of the ▇▇▇▇▇▇▇ Business.
3.7.2. All such agreements, policies, plans and
contracts are in full force and effect, and no party to any such agreement,
plan, policy or contract is in default with respect to any term or condition
thereof, nor has any event occurred which through the passage of time
13
or the giving of notice, or both, would constitute a default thereunder or would
cause the acceleration of any obligation of any party thereto.
3.7.3. Seller has complied with all applicable laws,
rules and regulations relating to the employment of labor, including those
related to wages, hours, immigration, health, safety, discrimination, benefits,
collective bargaining and the payment and withholding of taxes and other sums as
required by appropriate Governmental Authorities and has withheld and paid to
the appropriate Governmental Authorities or is holding for payment not yet due
to such authorities, all amounts required to be withheld from such employees of
the ▇▇▇▇▇▇▇ Business and is not liable for any arrears of wages, taxes,
penalties or other sums for failure to comply with any of the foregoing. With
respect to the ▇▇▇▇▇▇▇ Business, there is no (a) unfair labor practice complaint
against Seller pending before the National Labor Relations Board or any state or
local agency or any basis for any such complaint; (b) pending or, to the best
knowledge of Seller, threatened labor strike or other material labor trouble
affecting the ▇▇▇▇▇▇▇ Business; (c) labor grievance pending or, to the best
knowledge of Seller, threatened against Seller or any basis for any such
grievance; (d) pending or, to the best knowledge of Seller, threatened
representation question respecting the employees of the ▇▇▇▇▇▇▇ Business; (e)
pending or, to the best knowledge of Seller, threatened arbitration proceedings
arising out of or under any collective bargaining agreement to which Seller is a
party; (f) basis for which a claim may be made under any collective bargaining
agreement to which Seller is a party; or (g) any pending or, to the best
knowledge of Seller, threatened, claim, charge, investigation, or proceeding
against Seller regarding the hiring, employment, promotion, discipline,
compensation, discharge or dismissal of any employee of Seller and there is no
basis for any such claim. All reasonably anticipated obligations of Seller with
respect to the ▇▇▇▇▇▇▇ Business (whether arising by operation of law, by
contract, by past custom or otherwise) for salaries, vacation and holiday pay,
sick pay, bonuses and other forms of compensation and benefits payable to or
with respect to the current or former officers, directors or employees of Seller
in respect of the services rendered by any of them have been paid or adequate
accruals therefor have been made in the ordinary course of business in the
Interim Financial Statements for obligations accrued through the date thereof,
and in the books and records of Seller for obligations accruing thereafter.
3.8. Pension and Employee Benefit Plans.
3.8.1. ERISA Welfare Plans. With respect to the
▇▇▇▇▇▇▇ Business, all employee welfare benefit plans, as defined in Section 3(l)
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
currently maintained by or on behalf of Seller, or with respect to which Seller
is required to contribute, or may have any liability or obligation, are listed
on Schedule 3.8.1 (the "ERISA Welfare Plans"). Except as described on Schedule
3.8.1, no ERISA Welfare Plans provide for any retiree medical coverage.
3.8.2. ERISA Pension Plans. Except as set forth on
Schedule 3.8.2 attached hereto, there are and for the last six years have been
no employee pension benefit plans, as defined in Section 3(2) of ERISA
(including, without limitation, any defined benefit plan, defined contribution
plan, simplified employee pension plan, annuity plan, multiple employer plan, or
multiernployer plan, as defined in ERISA and the Code, currently maintained by
or on
14
behalf of Seller, or with respect to which Seller is required to contribute, or
may have any liability or obligation, or is otherwise bound (the "ERISA Pension
Plans"). Each ERISA Pension Plan that is intended to be tax qualified is so
qualified, has been so qualified since its inception, has received one or more
United States Internal Revenue Service determination letters to such effect
covering such Plan from inception to date, and nothing has occurred that would
adversely affect or jeopardize such Plan's tax qualification.
3.8.3. Non-ERISA Plans. Except as set forth on
Schedule 3.8.3 there are no bonus, deferred compensation, executive
compensation, fringe benefit, incentive, severance, stock option, performance
pay, loan or loan guarantee, plant closing, change of control, or other
non-ERISA plans that Seller currently maintains, or with respect to which Seller
has any liability or obligation (the "Non-ERISA Plans," and collectively with
the ERISA Welfare Plans and the ERISA Pension Plans, the "Employee Benefit
Plans").
3.8.4. Delivery of Documents. Seller has made
available to Buyer for its review correct and complete copies of- (a) each
Employee Benefit Plan, including all amendments to such plan, and all summary
plan descriptions and other summaries of such plan, (b) each trust agreement,
annuity or insurance contract, or other funding instrument pertaining to each
Employee Benefit Plan, (c) the most recent annual report (IRS Form 5500 Series),
including all schedules to such report, if applicable, filed with respect to
each Employee Benefit Plan for which such a report is required to be filed, (d)
the most recent plan audit, financial statement, and accountant's opinion (with
footnotes), if applicable, for each Employee Benefit Plan for which same is
required to be prepared, and (e) the most recent of all relevant schedules and
reports concerning the administrative costs, benefit payments, employee and
employer contributions, claims experience, financial information, and insurance
premiums for each Employee Benefit Plan, to the extent any of same have been
prepared by, or are in the possession of, Seller.
3.9. Litigation and Compliance with Laws.
3.9.1. Litigation Pending or Threatened. Except as
set forth in Schedule 3.9.1, there is no action, suit, arbitration, proceeding,
grievance or investigation, pending or, to the best knowledge of Seller,
threatened, before any court, tribunal, arbitration, panel, master or
governmental agency, authority or body in which Seller or Real Property Seller
is a party or to which Seller, Real Property Seller or the Acquisition Assets
are subject, nor is Seller or Real Property Seller or any officer or employee of
either of them enjoined from any action or subject to any continuing restriction
which may adversely affect Seller, Real Property Seller or the ▇▇▇▇▇▇▇ Business
including, without limitation, litigation with customers or with contractors or
suppliers who have performed work on or supplied equipment or materials to the
▇▇▇▇▇▇▇ Business or the properties of Seller or Real Property Seller relating to
the ▇▇▇▇▇▇▇ Business. None of the matters listed on Schedule 3.9.1 can
reasonably be expected to (i) result in a Material Adverse Effect or (ii) result
in any material adverse effect on the Acquisition Assets or Buyer's ability to
freely use the Acquisition Assets in the ▇▇▇▇▇▇▇ Business.
3.9.2. Violation of Law. Seller is not in violation
of any provision of any law, decree, order or regulation (including, without
limitation, those relating to antitrust or
15
prohibiting other anti-competitive business practices, those relating to
employment practices, such as discrimination, health and safety, and those
relating to minority business enterprises). Seller has all federal, state and
local licenses, permits and other governmental authorizations required in the
conduct of the ▇▇▇▇▇▇▇ Business and the operation of its properties. Such
licenses, permits and other governmental authorizations, including those
obtained under applicable present Environmental Requirements (as hereinafter
defined), are fisted in Schedule 3.9.2. No notice to, filing with, or approval
or consent of, any governmental agency'or body issuing any of the permits,
licenses or other governmental authorizations, or otherwise having jurisdiction
over Seller or the ▇▇▇▇▇▇▇ Business or the operations or properties of the
▇▇▇▇▇▇▇ Business, is required in 'order to pennit the execution, delivery or
performance of this Agreement, the consummation of the transactions contemplated
hereby or the sale, transfer and delivery of the Acquisition Assets or the
continuation of the ▇▇▇▇▇▇▇ Business after the Closing. Seller is not a party to
any consent decree issued by any Governmental Authority relating to the ▇▇▇▇▇▇▇
Business. Seller has obtained valid resale certificates from all customers who
have purchased goods or services from Seller without paying sales or use taxes,
and Seller has otherwise complied with all applicable sales and use tax laws.
3.9.3. Environmental Matters. Except as set forth
in Schedule 3.9.3 attached hereto, to the best knowledge of Seller and Real
Property Seller:
(a) Hazardous Materials. No Hazardous Materials
(as hereinafter defined) are presently deposited, stored or otherwise located
on, under or in the Property (as hereinafter defined); no Hazardous Materials
have migrated or threaten to migrate from other properties to (whether upon or
beneath) the Property; no Hazardous Materials have migrated or threaten to
migrate from the Property to (whether upon or beneath) any other property; no
activity on or condition of the Property has constituted or constitutes a
nuisance or has constituted or constitutes a tortious condition with respect to
any third party; and no Hazardous Materials generated from the ▇▇▇▇▇▇▇ Business
or located under, in or about the Property in the past have been transported to
any waste disposal facility or other site in violation of any present or then
applicable Environmental Requirements, and such generation or transport has not
and shall not result in any Environmental Damages (as hereinafter defined).
(b) Environmental Requirements. The conduct of
the ▇▇▇▇▇▇▇ Business and the Property and Seller's existing and prior uses and
activities and, to the best of Seller's knowledge, prior uses and activities of
other parties, thereon, comply and have at all times complied with all present
or then applicable Environmental Requirements.
(c) Notice of Violations. Neither Seller nor, to
the best knowledge of Seller, any other owner, tenant, occupant or user of the
Property has received any notice or other communication concerning any alleged
or actual violation of Environmental Requirements, or notice or other
communication concerning alleged or actual liability for Environmental Damages
in connection with the Property, and there is no (i) writ, injunction, decree,
order or judgment outstanding, nor any lawsuit, claim, proceeding, citation,
directive, summons or investigation, pending or, to the best knowledge of
Seller, threatened, relating to the ownership,. use, maintenance or operation of
the Property by any person or concern, (ii) alleged violation of
16
Environmental Requirements, (iii) suspected presence of any Hazardous Material
thereon, or (iv) alleged disposal of Hazardous Material therefrom. Seller has
not been ordered or requested by any Governmental Authority to take any steps to
remedy any condition on the Property not constituting a violation of
Environmental Requirements.
(d) Underground Inspection and Storage Tanks. No
(i) underground improvement, including without limitation any treatment or
storage tank or water, gas or oil well or (ii) above-ground storage tank, is or,
to the best knowledge of Seller, ever has been located on any Property.
(e) Definitions. For the purposes of this
Agreement:
(i) "Hazardous Materials" means any
substance: (A) the presence of which requires investigation or remediation under
any applicable federal, state or local statute, rule, regulation, ordinance,
order, action or policy or common law; (B) that is defined as a "hazardous
waste" or "hazardous substance" under any applicable federal, state or local
statute, rule, regulation or ordinance, including without limitation any statute
referred to in Section 3.9.3(e)(iii) hereof-, (C) that is toxic, explosive,
corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic or
otherwise hazardous and is regulated by any applicable Governmental Authority;
(D) the presence of which on the Property causes or threatens to cause a
nuisance upon the Property or to adjacent properties or poses or threatens to
pose a hazard to the health or safety of persons on or about the Property; (E)
the presence of which on adjacent properties could constitute a trespass by
Seller, or by Buyer after the Closing; (F) that contains gasoline, diesel fuel
or other petroleum hydrocarbons in any unconfined manner; or (G) that contains
PCBs, asbestos, or urea formaldehyde foam insulation.
(ii) "Environmental Damages" shall mean
all claims, judgments, damages, losses, costs, penalties, fines, liabilities
(including strict liability), encumbrances, liens, costs and expenses of
investigation and defense of any claim, whether or not such claim is ultimately
defeated, and of any settlement or judgment, of whatever kind or nature,
contingent or otherwise, matured or unmatured, foreseeable or unforeseeable,
including without limitation reasonable attorneys' fees and disbursements and
consultants' fees, any of which are incurred at any time as a result of the
existence prior to the Closing Date of Hazardous Material upon or beneath the
Property or migrating or threatening to migrate to or from the Property, the
transport or disposal of any Hazardous Materials to or from the Property, or the
existence of a violation of Environmental Requirements pertaining to the
Property or ▇▇▇▇▇▇▇ Business, regardless of whether the existence of such
Hazardous Material, such disposal or transport, or such violation of
Environmental Requirements arose prior to the present ownership or operation of
the Property, and including without limitation:
(A) damages for personal injury, or injury to property or
natural resources occurring on or off the Property,
including, without limitation, lost profits,
consequential damages, the cost of demolition and
rebuilding of any improvements on Property, interest
17
and penalties including but not limited to claims
brought by or on behalf of employees of the ▇▇▇▇▇▇▇
Business;
(B) reasonable fees incurred for the services of attorneys,
consultants, contractors, experts, laboratories and all
other costs, including without limitation costs for
material and equipment, incurred in connection with the
investigation or remediation of such Hazardous
Materials or violation of Environmental Requirements
including, but not liniited to, the preparation of any
feasibility studies or reports or the performance of
any cleanup, remedial, removal, response, abatement,
containment, closure, restoration, reclamation or
monitoring work required by any federal, state or local
governmental agency or political subdivision, or
reasonably necessary to make full economic use of the
Property or any other property or otherwise expended in
connection with such conditions, and including without
limitation any attorneys' fees, costs and expenses
incurred in enforcing this Agreement or collecting any
sums due hereunder;
(C) liability to any third person or governmental agency to
indemnify such person or agency for costs expended in
connection with the items referenced in subparagraph
(B) herein; and
(D) diminution in the value of the leasehold interest of
Buyer in the Property and damages for the restriction
on the use of or adverse impact on the usable space or
of any amenity of the Property.
(iii) "Environmental Requirements" shall
mean all applicable present or future statutes, regulations, rules, ordinances,
codes, licenses, permits, orders, approvals, plans, authorizations and similar
items, of all governmental agencies, departments, commissions, boards, bureaus
or instrumentalities of the United States, the states and political subdivisions
thereof and all applicable judicial and administrative and regulatory decrees,
judgments and orders relating to the protection of human health or the
environment, including, without limitation: all requirements pertaining to
emissions, discharges, releases or threatened releases of any Hazardous
Materials into the air, surface water, groundwater or land, or relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of any Hazardous Materials; all requirements pertaining to
the protection of the health and safety of employees or the public (including,
without limitation, all requirements under the Occupational Safety and Health
Act and all rules and regulations promulgated thereunder); all
18
requirements pertaining to the reclamation or restoration of land; and all
requirements pertaining to underground storage tanks.
(iv) "Property" means the Real Property.
3.10. Contracts and Other Instruments.
3.10.1. Seller is not a party to any contract
involving more than $1,500 to supply goods or services, whether or not in the
ordinary, and usual course of business, the remaining cost of performance of
which (including overhead) is expected to exceed the remaining revenues
therefrom other than to the extent provided for in the Interim Financial
Statements. Each Contract is a valid, binding and enforceable agreement of
Seller and, to the best knowledge of Seller, the other parties thereto. There
has not occurred any default under any Contract on the part of Seller or, to the
best knowledge of Seller, on the part of the other parties thereto, and no event
has occurred which, with the giving of notice or the lapse of time, or both,
would constitute any default under any Contract. Seller is not aware of any fact
which is reasonably likely in the future to cause Seller or Buyer to be in
default under any Contract. Except asset forth in Schedule 3.10.1, no consent of
any party to any Contract is required in order to permit the execution, delivery
or performance of this Agreement, the consummation of the transactions
contemplated hereby, or the sale, transfer or delivery of the Acquisition Assets
or the assumption of the liabilities to be assumed by Buyer under Section 2.4.
3.10.2. Schedule 3.10.2 attached hereto lists each
contract, agreement, purchase order, lease, license, indenture or comm itment,
written or oral, to which Seller is a party or by which any of its assets are
bound and which relates to the ▇▇▇▇▇▇▇ Business, except: (A) agreements for the
purchase by Seller of goods, materials, supplies or services in the ordinary and
usual course of the ▇▇▇▇▇▇▇ Business consistent with past practice involving
less than $1,500 in consideration in each such case or $5,000 in the aggregate;
and (B) agreements for the sale of goods or services (other than the rental or
lease of Rental Equipment) in the ordinary and usual course of the ▇▇▇▇▇▇▇
Business consistent with past practice by Seller in which the sales price of the
goods to be sold and the services to be rendered pursuant to each such agreement
is less than $1,500 for each such agreement or $5,000 in the aggregate
(collectively, the "Contracts"). True and complete copies of such Contracts, or
where they are oral, true and complete written summaries thereof, have been
delivered to Buyer by Seller.
3.10.3. Schedule 3.10.3 attached hereto lists (i)
each binding outstanding bid or proposal for a contract (A) under which the
value of services to be performed or goods to be provided by the ▇▇▇▇▇▇▇
Business or the cost of goods to be sold or rented by the ▇▇▇▇▇▇▇ Business is
expected to exceed $1,500 or (B) under which Seller expects to have a gross
margin loss, and a description of and projected dollar value of each such bid or
proposal; and (ii) the aggregate dollar amount of all outstanding or threatened
claims or disputes involving more than $1,500 individually under each Contract
presently or heretofore in effect (including, without limitation, claims for
back charges, rebates, price reductions or settlements or for breaches of
product or service warranties or for product or service liability for products
leased, rented or
19
sold). True and complete copies of each of such bids and proposals have been
delivered to Buyer by Seller.
3.11. Intentionally Deleted.
3.12. Warehoused Goods Inventory. The warehoused goods from
Seller's customers stored by Seller on the Real Property (the "Warehoused
Goods") are in good condition, are ▇▇▇▇▇▇.▇▇ accordance with the orders of
Seller's customers, and are fit to be distributed in accordance with orders of
customer. There are not any current or, to Seller's knowledge, pending claims
against Seller in respect of any consigned inventory.
3.13. Compensation of and Indebtedness to and from
Employees.
3.13.1. Schedule 3.13.1 attached hereto sets forth a
true and complete list of the names of and offices and positions held by the
employees of the Seller in the ▇▇▇▇▇▇▇ Business, and the current compensation
from Seller of each such employee (including salary, bonus, other incentive
compensation, profit sharing, and deferred compensation). No loans or loan
agreements exist between Seller and any current or former employees or
independent contractors or the ▇▇▇▇▇▇▇ Business, and Seller has not directly or
indirectly guaranteed or otherwise obligated itself with respect to any
indebtedness of any such employee or independent contractor.
3.13.2. Except as set forth on Schedule 3.13.2
attached hereto, Seller has no financial obligation and is not otherwise
indebted to any person who is an employee of the Seller in the ▇▇▇▇▇▇▇ Business,
or to any relative of any such person or to any entity controlled directly or
indirectly by, or otherwise affiliated with, such person, in any amount
whatsoever other than for compensation for services rendered since the start of
the current
20
pay period of the ▇▇▇▇▇▇▇ Business generally utilized for its employees and for
business expenses.
3.14. Powers of Attorney and Suretyships. Seller has no
general or special powers of attorney outstanding (whether as grantor or grantee
thereof) and has no obligation or liability (whether actual, accrued, accruing,
contingent or otherwise) as guarantor, surety, co- signer, endorser, co-maker,
indemnitor or otherwise in respect of the obligation of any person.
3.15. Insurance. Schedule 3.15 sets forth a true and correct
list of all insurance policies of any nature whatsoever maintained by Seller for
the ▇▇▇▇▇▇▇ Business at any time during the three years prior to the date of
this Agreement and the annual or other premiums payable thereunder. Except as
set forth in Schedule 3.15, all such insurance is on an occurrence basis and
will continue to provide coverage after the Closing Date for occurrences prior
to the Closing Date. There are no outstanding requirements or recommendations by
any insurance company that issued any such policy or by any Board of Fire
Underwriters or other similar body exercising similar functions or by any
governmental authority exercising similar functions which requires or recommends
any changes in the conduct of, or any repairs or other work to be done on or
with respect to any of the properties or assets of, the ▇▇▇▇▇▇▇ Business. Seller
has not received any notice or other communication from any such insurance
company within the three years preceding the date hereof canceling or materially
amending or materially increasing the annual or other premiums payable under any
of said insurance policies, and to the best knowledge of Seller, no such
cancellation,, amendment or increase of premiums is threatened.
3.16. Customers. Except as set forth on Schedule 3.16,
during the year ended December 31, 1999, not more than $50,000 (on an annualized
basis) of the revenues of the ▇▇▇▇▇▇▇ Business was attributable to any single
customer or to any group of affiliated customers.
3.17. No Undisclosed Liabilities. Except as set forth on
Schedule 3.17 attached hereto and to the extent specifically reflected or
reserved against in the Interim Financial Statements, and except for accounts
payable to suppliers and accrued expenses incurred after April 30, 2000, in the
ordinary and usual course of business consistent in nature and amounts to the
accounts payable and accrued expenses reflected in the Financial Statements for
comparable periods, Seller has no liability or obligation of any nature, whether
absolute, accrued, contingent or otherwise, and whether due or to become due
(including, without limitation, any liability for taxes and interest, penalties
and other charges payable with respect to any such liability or obligation) with
respect to the ▇▇▇▇▇▇▇ Business.
3.18. Disclosure. Seller has disclosed to Buyer all facts
known to it material to the ▇▇▇▇▇▇▇ Business and the businesses, properties,
operations, prospects and financial condition of the ▇▇▇▇▇▇▇ Business. No
representation of or warranty by Seller in this Agreement or any document,
written statement, certificate, Schedule or Exhibit furnished or made available,
or to be furnished or made available, to Buyer by or on behalf of Seller
pursuant hereto, considered as a whole, contains any untrue statement of a
material fact or omits to state a material fact necessary to make the statements
of facts contained therein not misleading.
21
3.19. Brokerage. Except as set forth on Schedule 3.19, Seller
is not obligated to make any payment to any finder, broker, investment banker or
financial advisor in connection with any of the transactions contemplated by
this Agreement or the negotiations looking toward the consummation of such
transactions. Seller acknowledges that Buyer has no obligation to pay any such
finder, broker, investment banker or financial advisors, whether or not listed
on Schedule 3.19.
3.20. Taxes. Within the times and in the manner prescribed by
law, each of Seller and Real Property Seller has correctly and completely
prepared and filed or caused to be filed all tax returns, declarations, reports,
claims for refi ' md, or information returns, including any attachments and/or
amendments thereof, (collectively, "Tax Returns") for income, franchise, gross
receipts, sales, use, real property, personal property, payroll, and other
taxes, including, without limitation, those relating to the ▇▇▇▇▇▇▇ Business
required to be filed by it with any Governmental Authority, and has paid in full
all taxes ( and any other associated assessments, judgments, costs, interest and
penalties) owing to or assessed by each such Governmental Authority, whether or
not reported on such Tax Returns (collectively, "Taxes"). Except as set forth in
Schedule 3.20, (a) neither Seller nor Real Property Seller is currently the
beneficiary of any extension of time within which to file any Tax Returns, (b)
no claim has been made by any Governmental Authority in any jurisdiction in
which either Seller or Real Property Seller do not file Tax Returns claiming
that neither Seller nor Real Property Seller is or may be subject to any Taxes
within that jurisdiction, (c) no ongoing audits are being conducted against
Seller or Real Property Seller by any Governmental Authority, nor has Seller
received any notice from any Governmental Authority that any such audit will be
conducted, (d) neither Seller nor Real Property Seller has waived any statute of
limitations or agreed to any extension of time with respect to the review of any
Tax Returns or Taxes thereby imposed, (e) no security interests have been filed,
perfected or otherwise claimed on any of the assets of Seller or Real Property
Seller in connection with the failure to pay any Taxes, (f) Seller and Real
Property Seller have withheld and paid all Taxes required to have been withheld
and paid in connection with amounts paid for or owing to any employee,
independent contractor, creditor, stockholder, or other third party, (g) neither
Seller nor Real Property Seller is required to include in income any adjustment
pursuant to Section 481 of the Code (or similar provisions of other law or
regulation) by reason of a change in accounting; and (h) neither Seller nor Real
Property Seller is a party to any tax allocation or sharing agreement with any
third party and has not assumed the liability of any other person under
contract. Seller has never filed and will not file on or before the Closing Date
any consent under Section 341(f) of the Code.
4. Representations and Warranties of Shareholder.
Shareholder represents and warrants to and for the benefit of Buyer as
follows:
4.1. Organization and Good Standing. Shareholder is a
corporation duly organized, validly existing and in good standing under the laws
of Ontario, with full power to carry on its business as it is now and has since
its organization been conducted and to own, lease or operate the assets which
are owned, leased or operated by it.
22
4.2. Power and Authority. Shareholder has fall power and
authority to make and perform this Agreement, and to perform the transactions
contemplated by this Agreement. This Agreement and all other agreements and
instruments executed and delivered by Shareholder in connection herewith have
been duly executed and delivered by Shareholder. This Agreement and the
transactions and other agreements and instruments contemplated by this Agreement
constitute a legal, valid and binding obligation of Shareholder, enforceable
against Shareholder in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally, and subject, as to enforceability, to
general principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity).
4.3. Agreement Not in Breach of Other Instruments. The
execution, delivery and performance of this Agreement by Shareholder and the
consummation of the transactions contemplated hereby will not result in a breach
of any of the terms and provisions of, or constitute a default under, or
conflict with, or, except as set forth on Schedule 4.3 attached hereto, require
the consent of any party under, any agreement, indenture or other instrument to
which Shareholder is a party or by which Shareholder is bound (except where such
consent has already been obtained), or any judgment, decree, order, award, law,
rule or regulation of any Governmental Authority.
4.4. Disclosure. No representation or warranty made by
Shareholder contained in this Agreement or in any other writing fin-nished
pursuant hereto contains or will contain an untrue statement of a material fact
or omits or will omit to state a material fact necessary to make the statements
and facts contained herein or therein, in light of the circumstances in which
they were or are made, not false or misleading.
5. Representations and Warranties of Buyer and Real Property
Buyer.
Buyer and Real Property Buyer jointly and severally represent and
warrant to the Shareholder, Real Property Seller and Seller that:
5.1. Organization and Corporate Authority. Buyer is a duly
organized, validly existing limited partnership in good standing under the laws
of Texas. Real Property Buyer is a duly organized, validly existing limited
liability company in good standing under the laws of the State of Texas. Each of
Real Property Buyer and Buyer has all requisite power and authority to enter
into this Agreement and to consummate the transactions contemplated hereby. This
Agreement and all other agreements herein contemplated to be executed in
connection herewith have been (or upon execution will have been) duly executed
and delivered by each of Real Property Buyer and Buyer, have been effectively
authorized by all necessary action, corporate or otherwise, and constitute (or
upon execution will constitute) legal, valid and binding obligations of each of
Real Property Buyer and Buyer, enforceable against each of Real Property Buyer
and Buyer in accordance with their respective terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally, and subject, as to enforceability, to
general principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity).
23
5.2. Agreement Not in Breach of Other Instruments. The
execution, delivery and performance of this Agreement by each of Real Property
Buyer and Buyer and the consummation of the transactions contemplated hereby
will not result in a breach of any of the terms or provisions of, or constitute
a default under, or conflict with, any material agreement, indenture or other
instrument to which each of Real Property Buyer and Buyer is a party or by which
it is bound, each of Real Property Buyees and Buyees charter documents, any
judgment, decree, order, award, law, rule or regulation of any Governmental
Authority applicable to Real Property Buyer or Buyer.
5.3. Regulatory Approvals. All consents, approvals,
authorizations and other requirements prescribed by any law, rule or regulation
which must be obtained or satisfied by each of Real Property Buyer and Buyer and
which are necessary for the consummation of the transactions contemplated by
this Agreement have been obtained and satisfied.
5.4. Brokerage. Neither Real Property Buyer nor Buyer has
dealt with, or is obligated to make any payment to, any finder, broker or
investment banker or financial advisor in connection with any of the
transactions contemplated by this Agreement or the negotiations looking toward
the consummation of such transactions.
6. Closing.
The closing of the transactions herein contemplated (the "Closing")
shall, unless another date, time or place is agreed to in writing by the parties
hereto, take place at 10: 00 a.m., local time, on June 2, 2000 (the "Closing
Date"), at the offices of ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇.
7. Certain Understandings and Agreements of the Parties.
7.1. Access.
7.1.1. General Diligence Investigation. Until the
Closing Date, (a) authorized representatives of Buyer shall have reasonable
access during normal business hours to all properties, books, records,
contracts, and documents of Seller relating to the ▇▇▇▇▇▇▇ Business, (b) Seller
shall furnish to Buyer all information with respect to the ▇▇▇▇▇▇▇ Business that
Buyer may reasonably request, and (c) Buyer shall have the right to discuss the
affairs and ▇▇▇▇▇▇▇ Business of Seller with the employees of the ▇▇▇▇▇▇▇
Business. Between the date hereof and the Closing, Buyer shall be able to
contact customers of the ▇▇▇▇▇▇▇ Business for diligence purposes and to
facilitate Closing.
7.1.2. [Intentionally Deleted]
7.1.3. Preservation of Records. For a period of
five years after the Closing, Buyer shall preserve all files and records
relating to the ▇▇▇▇▇▇▇ Business and shall allow representatives of Seller
access to such files and records and the right to make copies and extracts
therefrom during normal business hours, provided that at any time after the
Closing Buyer may give Seller written notice of its intention to dispose of any
specified part of such files and records,
24
in which case Seller may notify Buyer within 60 days of receipt of such notice
of Seller's desire to retain one or more of the items to be disposed of and
Buyer shall thereupon deliver such items to Seller at Seller's expense.
7.2. Conduct of ▇▇▇▇▇▇▇ Business. The ▇▇▇▇▇▇▇ Business shall
be conducted from the date hereof through the Closing Date in the ordinary and
usual course of the ▇▇▇▇▇▇▇ Business consistent with past practice, and without
limiting the generality of the foregoing Seller shall not (except with the prior
written consent of Buyer) do or cause or permit to occur any act, event or other
occurrence which is represented or warranted not to have occurred since December
31, 1999 in Section 3.4.3 hereof.
7.3. Preservation of Organization. Seller shall use its
commercially reasonable efforts to preserve the ▇▇▇▇▇▇▇ Business and the
organization of the ▇▇▇▇▇▇▇ Business, to keep available to Buyer the services of
the present employees of the ▇▇▇▇▇▇▇ Business, and to preserve for Buyer the
favorable business relationships of the ▇▇▇▇▇▇▇ Business with its suppliers,
customers and others with whom business relationships exist.
7.4. Current Information. Seller and Real Property Seller
will advise Buyer in writing immediately, but in any event prior to the Closing,
of-
7.4.1. the occurrence of any event which renders any
of the representations or warranties set forth herein inaccurate in any material
respect or the awareness of Seller or Real Property Seller that any
representation or warranty set forth herein was not accurate in all material
respects when made; and
7.4.2. the failure of any of Seller or Real Property
Seller to comply with or accomplish any of the covenants or agreements set forth
herein in any material respect. Seller will also provide to Buyer, promptly on
becoming available, copies of all operating and financial reports prepared by,
or in the normal conduct of business of, Seller in connection with the ▇▇▇▇▇▇▇
Business.
7.5. Contracts. Between the date hereof and the Closing Date,
Seller shall not, without the prior written consent of Buyer, (a) amend in any
material respect or terminate any contract, agreement, right, instrument,
purchase order, lease, license, warranty, indenture, bid, proposal or
commitment, whether written or oral, relating to the ▇▇▇▇▇▇▇ Business to which
Seller is a party, or (b) enter into or become a party to or submit any bid or
proposal for any contract, agreement, instrument, arrangement, purchase order or
commitment with any customer of the ▇▇▇▇▇▇▇ Business under which (i) the value
of services to be performed by the ▇▇▇▇▇▇▇ Busmiess or the cost of goods to be
sold by the ▇▇▇▇▇▇▇ Business will exceed $5,000 individually or $20,000 in the
aggregate; or (ii) the reasonably anticipated costs and expenses of the ▇▇▇▇▇▇▇
Business will exceed its anticipated receipts.
7.6. Insurance. Between the date hereof and the Closing
Date, Seller shall continue in force existing insurance policies relating to the
▇▇▇▇▇▇▇ Business or substantially equivalent replacement policies without gaps
in coverage.
25
7.7. Waiver of Compliance with Bulk Sales Laws. Subject to
Section 10.1.7 hereof, Buyer and Seller hereby waive compliance with the
requirements of the applicable bulk sales laws of any jurisdiction.
7.8. Condition to Transfer of Certain Contracts.
7.8.1. Seller and Real Property Seller shall use
their commercially reasonable efforts to procure. all consents, approvals or
waivers which must be obtained by Seller and Real Property Seller and which are
necessary for completion of the transactions described herein, including all
required consents from third parties under the Assigned Contracts or otherwise
and all required consents of any governmental agency or body issuing any
permits, licenses or other governmental authorizations affecting Real Property
Seller or Seller or its businesses or properties so that the ▇▇▇▇▇▇▇ Business
may continue to be operated by Buyer without interruption or any adverse effect
following the Closing.
7.8.2. At the Closing Buyer and Real Property Buyer
may elect to close the transactions contemplated hereby notwithstanding the fact
that Seller or Real Property Seller may have failed to obtain consents to the
transfer of one or more Assigned Contracts which by their terms require the
consent of any other contracting party thereto to the assignment thereof to
Buyer or Real Property Buyer - The terms of this Section 7.8.2 shall govern the
transfer of the benefits of each such Assigned Contract. Notwithstanding
anything herein to the contrary, the parties hereto acknowledge and agree that
at the Closing Seller will not assign to Buyer or Real Property Buyer any such
Assigned Contract which by its terms requires the consent of any other
contracting party thereto unless each such consent has been obtained prior to
the Closing Date. With respect to each such unassigned Assigned Contract, after
the Closing Date Seller or Real Property Seller, as the case may be, shall
continue to deal with the other contracting party(ies) to such Assigned Contract
as the prime contracting party and shall use its commercially reasonable efforts
to obtain the consent of all required parties to the assignment of such Assigned
Contract, but Buyer or Real Property Buyer, as the case may be, shall be
entitled to the benefits of such Assigned Contract accruing after the Closing
Date to the extent that Seller or Real Property Seller, as the case may be, may
provide Buyer or Real Property Buyer, as the case may be, with such benefits
without violating the terms of such Assigned Contract; Buyer or Real Property
Buyer, as the case may be, agrees to perform the obligations of Seller or Real
Property Seller, as the case may be, to be performed under any such Assigned
Contract to the extent that Buyer or Real Property Buyer receives the benefits
provided under such Assigned Contract after the Closing Date.
7.9. Permits, Authorizations or Consents of Governmental
Authorities. On or prior to the Closing Date, the parties hereto shall obtain
all permits, authorizations or consents of any governmental authorities and
third parties required prior to consummation of the transactions contemplated
hereby. The parties hereto shall comply with the requirements of the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, if applicable, and shall
obtain any necessary government approvals or consents required thereunder.
26
7.10. Employees. Seller shall be responsible for all costs,
obligations and liabilities (including severance and accrued vacation pay or
other claims by any of Seller's employees) which may result from the termination
by Seller of the employment of any employee of the ▇▇▇▇▇▇▇ Business on or before
the Closing Date.
7.11. Covenant Not to Compete. At the Closing, Seller, Real
Property Seller and the Shareholder shall enter into a Covenant Not to Compete
and Confidentiality Agreement substantially in the form attached hereto as
Exhibit E (the "Covenant Not to Compete.")
7.12. COBRA. Buyer does not assume, and Seller agrees to be
solely responsible for and indemnify and hold Buyer harmless from, any and all
liabilities relating to health care continuation coverage under the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"), with respect to
(i) qualifying events'that occur on or prior to the Closing Date; (ii) any
coverage elections made under or which relate to any Seller health plan; (iii)
any employee or qualified beneficiary whose COBRA coverage rights relate to his
employment or relationship with Seller; or (iv) events arising out of or in
connection with the events contemplated by this Agreement.
7.13. Escrow Agreement. At the Closing, Seller, Real
Property Seller, Shareholder, Buyer and Real Property Buyer shall enter into an
Escrow Agreement substantially in the form attached hereto as Exhibit E (the
"Escrow Agreement").
7.14. Public Announcements. Prior to the Closing Date, Buyer,
on the one hand, and Seller and Real Property Seller, on the other hand, will
consult with each other before issuing any press release or otherwise making any
public statements with respect to this Agreement or the transactions
contemplated hereby and shall not issue any such press release or make any such
public statement to which the other party shall reasonably object, except as may
be required by law or any rule or regulation or listing agreement with a
securities exchange.
7.15. Exclusivity. Until the first to occur of the Closing
Date or termination of this Agreement in accordance with its terms, neither the
Seller nor Real Property Seller nor any of their respective affiliates,
shareholders, directors, officers, representatives, or agents shall, directly or
indirectly, knowingly encourage, solicit, initiate or participate in any way in
discussions or negotiations with, or knowingly provide any confidential
information to, any corporation, partnership, person or other entity or group
(other than Buyer and its officers, employees and representatives) concerning
any acquisition or purchase of all or a material amount of the Acquisition
Assets, including without limitation the Real Property.
7.16. Confidentiality Agreement. As of the Closing, any
prior confidentiality agreements between Buyer and Seller shall be of no
fin-ther force or effect.
7.17. Continuing Confidentiality Obligations. Unless otherwise
required by applicable law, no party hereto shall make any public or other
announcement without the prior consent of the other parties hereto, which
consent shall not be unreasonably withheld or delayed, regarding the terms and
conditions (including without limitation the Purchase Price) of this
27
Agreement. Nothing in this Section 7.17 shall prevent any of the parties hereto
from announcing after the Closing the fact that a transaction has occurred,
including the names of the parties, without disclosing the specific terms and
conditions of this Agreement.
7.18. Consents. Seller and Real Property Seller shall use
commercially reasonable efforts to obtain the third party consents listed on
Schedule 3.10.1 and those consents not listed on Schedule 3.10.1 but
subsequently identified by Buyer as material prior to the Closing Date.
7.19. Delivery of Documents at Closing. In addition to any
other instruments, documents or payments to be made or delivered at Closing
pursuant to the terms and conditions of this Agreement:
7.19.1. Secretary's Certificates. Each of Buyer,
Real Property Buyer, Seller and Real Property Seller shall provide duly executed
Secretary's Certificates certifying to their respective Charter documents, the
incumbency of their respective officers, and the resolutions of their respective
boards of directors, members, shareholders, or partners, as the case may be,
authorizing and approving this Agreement and the transactions, documents and
instruments contemplated thereby.
7.19.2. Sales Tax Resale Certificate. Buyer shall
deliver to Seller a duly executed sales tax resale certificate.
7.19.3. Use of Computer System. For a period of 60
days after the Closing, Seller shall make available to Buyer, for an agreed
consideration, access to Seller's computer hardware and its ▇▇▇▇▇ International
Public Warehousing software to facilitate the transition to Buyer's own
software.
7.20. In the event the holder of the Mortgage has not
consented to the assignment of the Mortgage to Real Property Buyer, Real
Property Seller and Real Property Buyer shall enter into the License Agreement
substantially in the- form attached hereto as Exhibit G (the "License
Agreement!).
8. Conditions to Obligations of Real Property Seller, Seller and
Shareholder.
The obligations of Real Property Seller, Seller and Shareholder to
consummate the transactions contemplated by this Agreement shall, in addition to
the conditions set forth elsewhere herein, be subject to satisfactory completion
on or prior to the Closing Date of each of the following conditions, any of
which may be waived by Real Property Seller, Seller. and Shareholder:
8.1. Correctness of Representations and Warranties. All of
the representations and warranties of Buyer and Real Property Buyer contained in
this Agreement shall have been true and complete on the date hereof and shall be
true and complete on the Closing Date
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with the same effect as if made on the Closing Date, and Buyer and Real Property
Buyer shall have executed and delivered to Seller at Closing a certificate to
such effect.
8.2. Performance of Covenants and Agreements. All of the
covenants and agreements of Buyer and Real Property Buyer contained in this
Agreement and required to be performed by Buyer and Real Property Buyer on or
before the Closing Date shall have been performed in all material respects, and
Buyer and Real Property Buyer shall have executed and delivered to Seller at
Closing a certificate to such effect.
8.3. No Legal Bar.
8.3.1. There shall not have been instituted or
threatened any legal proceeding seeking to prohibit the consummation of the
transactions contemplated by this Agreement or to obtain damages with respect
thereto.
8.3.2. None of the parties hereto shall be
prohibited by any order, writ, injunction or decree of any governmental body of
competent jurisdiction from consummating the transactions contemplated by this
Agreement, and no action or proceeding shall then be pending which questions the
validity of this Agreement, any of the transactions contemplated hereby or any
action which has been taken by any of the parties or any corporate entity, in
connection herewith, or in connection with any of the transactions contemplated
hereby.
8.4. Title Escrow Agreement. Real Property Buyer shall
have executed and delivered the Title Escrow Agreement.
8.5. License. Each of Buyer and Real Property Buyer shall
have executed and delivered a License Agreement substantially in the form
attached hereto as Exhibit H (the "License Agreement").
9. Conditions to Obligations of Buyer and Real Property Buyer.
The obligations of Buyer and Real Property Buyer to consummate the
transactions contemplated by this Agreement shall, in addition to conditions set
forth elsewhere herein, be subject to the satisfactory completion on or prior to
the Closing Date of each of the following conditions, any of which may be waived
by Buyer and Real Property Buyer:
9.1. Correctness of Representations and Warranties. All
representations and warranties of Real Property Seller, Seller and Shareholder
contained in this Agreement shall have been true and complete on the date hereof
and shall be true and complete on the Closing Date with the same effect as if
made on the Closing Date, and each of Real Property Seller, Seller and
Shareholder shall have executed and delivered to Buyer at Closing a certificate
to that effect.
9.2. Performance of Covenants and Agreements. All of the
covenants and agreements of Real Property Seller, Seller and Shareholder
contained in this Agreement and required to be performed on or before the
Closing Date shall have been performed in all material
29
respects, and each of Real Property Seller, Seller and Shareholder shall have
delivered to Buyer at Closing a certificate to that effect.
9.3. Opinion of Counsel for Real Property Seller and Seller.
Buyer shall have received an opinion of Jenkens & ▇▇▇▇▇▇▇▇▇, counsel for Real
Property Seller, Seller and Shareholder, in form and substance reasonably
satisfactory to and addressed to Buyer and Real Property Buyer, and dated the
Closing Date.
9.4. No Legal Bar.
9.4.1. There shall not have been instituted or
threatened any legal proceeding seeking to prohibit the consummation of the
transactions contemplated by this Agreement or to obtain damages with respect
thereto.
9.4.2. None of the parties hereto shall be
prohibited by any order, writ, injunction or decree of any governmental body of
competent jurisdiction from consummating the transactions contemplated by this
Agreement and no action or proceeding shall then be pending which questions the
validity of this Agreement, any of the transactions contemplated hereby or any
action which has been taken by any of the parties in connection herewith or in
connection with any of the transactions contemplated hereby.
9.5. Material Adverse Effect. Neither the ▇▇▇▇▇▇▇ Business
nor Seller shall have experienced a Material Adverse Effect since December 31,
1999.
9.6. Covenant Not to Compete. The Seller, Real Property
Seller and Shareholder shall have executed and delivered the Covenant Not to
Compete.
9.7. Third-Party Consents and Approvals. Seller and Real
Property Seller shall have obtained all consents and approvals of third parties
required under the Contracts or otherwise in connection with the consummation of
the transactions contemplated hereby, including but not limited to those listed
on Schedule 3.10.1, which consents and approvals shall be in forms reasonably
satisfactory to Buyer.
9.8. Transfer Documents. Seller and Real Property Seller shall
have executed and delivered to Buyer and Real Property Buyer such deeds, bills
of sale and other instruments of sale, transfer, conveyance, assignment and
delivery covering the Acquisition Assets or any part thereof as Buyer and Real
Property Buyer may reasonably require to assure the full and effective sale,
transfer, conveyance, assignment and delivery to Buyer of the Acquisition
Assets, free and clear of any Liens other than the Permitted Exceptions.
9.9. Escrow Agreement. Each of Real Property Seller,
Seller and Shareholder shall have executed and delivered the Escrow Agreement.
9.10. Lien Releases. Seller and Real Property Seller shall
have delivered to Buyer valid termination statements or releases with respect to
any and all Liens affecting the
30
Acquisition Assets, other than the Permitted Exceptions, or other evidence in
form and substance satisfactory to Buyer and its counsel, in their sole
discretion, from each creditor or Lien-holder of Seller, that the liability or
indebtedness, including any accrued and unpaid interest on such indebtedness,
represented by any such Lien has been paid or satisfied as of the Closing Date.
9.11. Certificate of Non-Foreign Status. Each of the Seller,
Real Property Seller and Shareholder shall have delivered to Buyer a
Certification of Non-Foreign Status substantially in the form attached hereto as
Exhibit I.
9.12. Permits, Authorizations of Governmental Authorities.
The parties hereto shall have complied with the requirements of Section 7.9
hereof.
9.13. Owner's Title Policy. Buyer shall have received the
duly issued Owner's Title Policy.
9.14. Title Escrow Agreement. Real Property Seller shall
have executed and delivered the Title Escrow Agreement.
9.15. License. Each of Seller and Real Property Seller
shall have executed and delivered the License Agreement.
10. Indemnification.
10.1. Indemnification Obligations of Real Property Seller,
Seller and Shareholder. Subject to the limitations set forth in Section 10.3,
Real Property Seller, Seller and Shareholder shall jointly and severally
indemnify and hold harmless Buyer, Real Property Buyer and their respective
agents, directors, officers, employees, representatives, subsidiary and parent
entities, affiliates, successors and assigns (collectively with Buyer, the
"buyer indemnified parties") in respect of any and all claims, actions, causes
of action, arbitrations, proceedings, losses, damages, liabilities and expenses
whether or not currently due and payable (including, without limitation,
settlement costs, reasonable attorneys' fees and any other expenses of
investigating or defending any actions or threatened actions) incurred by Buyer
or any other buyer indemnified party, in connection with each and all of the
following (collectively, the "Losses"):
10.1.1. Any breach of any representation or warranty of either
of Real Property Seller, Seller or Shareholder contained herein or in any
instrument delivered at the Closing by either of Real Property Seller, Seller or
Shareholder;
10.1.2. The breach of any covenant, agreement or obligation of
either of Real Property Seller, Seller or Shareholder contained in this
Agreement or any other instrument (including the Covenants Not to Compete)
contemplated by this Agreement;
10.1.3. Any misrepresentation contained in any written
document ftu-nished to Buyer by either of Real Property Seller, Seller or
Shareholder;
31
10.1.4. Any obligations or liabilities of the ▇▇▇▇▇▇▇
Business, Seller or Real Property Seller not specifically assumed by Buyer
pursuant to Section 2.4 hereof, including without limitation each liability or
obligation described in Section 2.5;
10.1.5. Any obligations or liabilities relating to the conduct
of the ▇▇▇▇▇▇▇ Business prior to the Closing Date, including any liability or
obligation arising from any act, occurrence or event which occurs prior to the
Closing Date, including without limitation any liability arising from goods or
services sold by the ▇▇▇▇▇▇▇ Business prior to the Closing Date or included in
Inventory on the Closing Date; and
10.1.6. Any failure or alleged failure to comply with the laws
of any jurisdiction relating to so called bulk sales, bulk transfers or similar
laws which may be applicable to the transfer of the Acquisition Assets to Buyer
and Real Property Buyer.
10.2. Indemnification Obligations of Buyer. Subject to the
limitations set forth in Section 10.3, Buyer and Real Property Buyer shall
jointly and severally indemnify and hold harmless Seller, Real Property Seller
and Shareholder and their respective agents, employees, representatives,
subsidiary and parent entities, affiliates, successors and assigns
(collectively, the "seller indemnified parties") in respect of any and all
Losses incurred by Seller or any other seller indemnified party, in connection
with each and all of the following:
10.2.1. Any breach of any representation or warranty
of Buyer or Real Property Buyer contained herein or in any instrument delivered
at the Closing by Buyer or Real Property Buyer;
10.2.2. The breach of any covenant, agreement or
obligation of Buyer or Real Property Buyer contained in this Agreement or any
other instrument contemplated by this Agreement;
10.2.3. Any misrepresentation contained in any
written document fin- nished to Seller, Real Property Seller and Shareholder by
Buyer or Real Property Buyer; and
10.2.4. Any obligations or liabilities of the ▇▇▇▇▇▇▇
Business or Seller expressly assumed by Buyer pursuant to Section 2.4 hereof.
10.3. Indemnification Limitations.
10.3.1. Time Limitations. Claims for indemnification
made under this Agreement for breach of representation or warranty under this
Agreement may be made only during the. period from the Closing Date until 3 6
months after the Closing Date; provided, however, that: (a) claims made for
breach of any representation or warranty set forth in Section 3.9.3 or any
matter set forth on Schedule 3.9.3 may be made at any time after the Closing
Date until the fourth anniversary of the Closing Date; (b) claims based upon a
willful, fraudulent or intentional misrepresentation of either of the
Shareholder or Seller contained in this Agreement or any other document, list,
exhibit or instrument ftumished in connection herewith may be made
32
at any time after the Closing Date and shall not expire; (c) claims made with
respect to the representations and warranties in Section 3.3 may be made any
time after the Closing Date and shall not expire; and (d) claims made with
respect to the representations and warranties in Section 3.20 may be made from
the Closing Date until the expiration of the applicable statutes of limitations.
10.3.2. Indemnification Limits.
(a) Expiration of Shareholder Obligation. Notwithstanding any
other provision of this Agreement, the obligation of Shareholder hereunder to
indemnify any buyer indemnified parties shall expire on the second anniversary
hereof; provided, however, that Shareholder's indemnity obligation with respect
to claims for indemnification made prior to such expiration shall continue and
shall not expire.
(b) Maximum Liability for Breaches of Representations and
Warranties. The joint and several liability of Seller, Real Property Seller and
Shareholder to the buyer indemnified parties with respect to indemnification
claims of the type described in Sections 10.1.1 and 10.1.3 shall not exceed
$2,000,000.
10.4. Claims. Whenever any claim shall arise for
indemnification, the party seeking indemnification hereunder (the "indemnified
party") shall notify the party or parties from whom indemnification is sought
(collectively, the "indemnifying party") of the claim pursuant to Section 10.6
hereunder and, when known, the facts constituting the basis for such claim and
the amount or estimate of the amount of the liability arising from such claim.
The indemnified party shall not settle or compromise any claim by a third party
for which the indemnified party is entitled to indemnification hereunder without
the prior written consent of the indemnifying party (which shall not be
unreasonably withheld or delayed) unless (i) suit shall have been instituted
against the indemnified party and (ii) the indemnifying party shall not have
taken c ontrol of such suit as provided in Section 10.5 within 25 days after
notification thereof.
10.5. Defense by Indemnifying Party. In connection with any
claim giving rise to indemnity hereunder resulting from or arising out of any
claim or legal proceeding by a third party, the indemnifying party, at its sole
cost and expense, may, upon written notice to the indemnified party, assume the
defense of any such claim or legal proceeding, provided that the indemnifying
party acknowledges its obligation to inderrinify the indemnified party in
respect of the claims asserted therein. If the indemnifying party assumes the
defense of any such claim or legal proceeding, the indemnifying party shall
select counsel reasonably acceptable to the indemnified party to conduct the
defense of such claims or legal proceedings and at the indemnifying party's sole
cost and expense shall take all steps necessary in the defense or settlement
thereof. The indemnifying party shall not consent to a settlement of, or the
entry of any judgment arising from, any such claim or legal proceeding, without
the prior written consent of the indemnified party, unless (a) the indemnifying
party admits in writing its liability to hold the indemnified party harmless
from and against any losses, damages, expenses and liabilities arising out of
such settlement, (b) concurrently with such settlement the indemnifying party
pays into court the full amount of all losses, damages, expenses and liabilities
to be paid by the
33
indemnifying party in connection with such settlement and obtains a full release
of any liability of the indemnified party which is not conditioned upon any
further payment and (c) such settlement would not otherwise have a material
adverse effect on the indemnified party. The indemnified party shall be entitled
to participate in (but not control) the defense of any such action, with its own
counsel and at its own expense. If the indemnifying party does not assume the
defense of any such claim or litigation resulting therefrom in accordance with
the terms hereof, the indemnified party may defend against such claim or
litigation in such manner as it may deem appropriate including, but not limited
to, settling such claim or litigation, after giving notice of the same to the
indemnifying party, on such terms as the indemnified party may deem appropriate.
The indemnifying party shall be entitled to participate in the defense of any
action by the indemnified party, which participation shall be limited to
contributing information to the defense and being advised of its status. In any
action by the indemnified party seeking indemnification from the indemnifying
party in accordance with the provisions of this Section, the indemnifying party
shall not be entitled to question the manner in which the indemnified party
defended such claim or litigation or the amount or nature of any such
settlement.
10.6. Notice. In the event of any occurrence which may give
rise to a claim by an indemnified party against an indemnifying party hereunder,
the indemnified party will give notice thereof to the indemnifying party;
provided, however, that failure of the indemnified party to timely give the
notice provided in this Section 10.6 shall not be a defense to the liability of
an indemnifying party for such claim, but such indemnifying party may recover
from the indemnified party any actual damages arising from the indemnified
party's failure to give such timely notice.
10.7. Manner of Indemnification. All claims by buyer
indemnified parties for indemnification shall be recovered initially from the
Escrow Account until such time as the Escrow Account has been terminated or the
funds therein fully utilized. Subject to Section 10.3.2(b), Real Property
Seller, Seller and Shareholder shall remain liable under this Section 10
notwithstanding the expiration or termination'of the Escrow Account or full
utilization of the funds therein.
10.8. NEGLIGENCE OF INDEMNIFIED PARTY. THE INDEMNIFICATION
PROVIDED FOR IN THIS AGREEMENT SHALL BE APPLICABLE WHETHER OR NOT THE NEGLIGENCE
OF THE INDEMNIFIED PARTY IS ALLEGED OR PROVEN; PROVIDED, HOWEVER, THAT RECOVERY
OF AN INDEMNIFIEDPARTY HEREUNDER FOR A PARTICULAR CLAIM SHALL BE ADJUSTED TO THE
EXTENT OF THE NEGLIGENCE OF SUCH INDEMNIFIED PARTY IN RESPECT OF SUCH CLAIM.
11. Termination of Agreement.
11.1. Events of Termination. This Agreement (except as to
Section 13 hereof) shall terminate prior to the Closing Date and be of no
further force or effect between the parties hereto, except as to liability
arising out of a breach of this Agreement, upon the occurrence of any of the
following:
34
11.1.1. Misrepresentation by Real Property Seller,
Seller or Shareholder. By Buyer at its election immediately upon the expiration
of ten days from the date that Buyer has given notice to Real Property Seller,
Seller or Shareholder of any material misrepresentation or material breach of or
material failure to satisfy timely on any of their parts any condition,
warranty, representation or agreement contained herein, unless Seller, Real
Property Seller or Shareholder shall have cured such misrepresentation, breach
or failure within such ten day period.
11.1.2. Misrepresentations by Buyer and Real
Property Buyer. By Real Property Seller, Seller and Shareholder at their
election immediately upon the expiration of ten days from the date that Real
Property Seller, Seller and Shareholder have given notice to Buyer and Real
Property Buyer of any material misrepresentation or material breach of or
material failure to satisfy timely any condition, warranty, representation or
agreement on the part of Buyer and Real Property Buyer contained herein, unless
Buyer and Real Property Buyer shall have cured such misrepresentation, breach or
failure within such ten day period.
11.1.3. Expiration of Time. By either Real Property
Seller, Seller and Shareholder on the one hand, or Buyer and Real Property
Buyer, on the other hand, immediately if the Closing shall not have taken place
by the later of [May 31], 2000 or the expiration of the applicable ten day
period set forth in Sections 11.1.1 and 11.1.2 herein, other than due to the
failure of the party seeking to terminate this Agreement to comply fully with
its material obligations under this Agreement.
11.2. Events of Termination. The termination of this Agrepment
will in no way limit any obligation or liability of any party based on or
arising from a breach or default by such party with respect to any of its
representations, warranties, covenants or agreements contained in this Agreement
including, but not limited to, legal and audit costs and out of pocket expenses.
12. Miscellaneous Provisions.
12.1. CONSTRUCTION.. THIS AGREEMENT SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF
TEXAS, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF THAT WOULD
RESULT IN THE APPLICATION OF ANY OTHER LAW.
12.2. Notices. All notices, requests, demands and other
communications called for or contemplated hereunder shall be in writing and
shall be deemed to have been duly given when sent to the party to whom addressed
by registered or certified mail, return receipt requested, postage prepaid, by
overnight courier, with the fees therefore prepaid or billed to the sender, or
by telecopy, telegram, telex or wire (if promptly confirmed by mail or overnight
courier as provided above) to the parties, their successors in interest, or
their assignees at the following addresses, or at such other addresses as the
parties may designate by written notice in the manner aforesaid:
35
If to Buyer and Real Property Buyer:
Pacific Logistics, L.P.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: C. ▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
With copies to: ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
One ▇▇▇▇▇▇▇▇▇▇ Street
Telesis Tower, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Real Property Seller, Seller or Shareholder:
▇▇▇▇▇▇ Refrigerated Warehouses, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
With copies to: Castor Capital Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇
Facsimile No.:__________________
With copies to: Jenkens & ▇▇▇▇▇▇▇▇▇, P.C.
1400 Frost Bank Tower
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: J. ▇▇▇▇▇ ▇▇▇▇, Esq.
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
12.3. Assignment. Neither this Agreement nor any right,
remedy, obligation or liability arising hereunder or by reason hereof nor any of
the documents executed in connection herewith may be assigned by any party
without the consent of the other parties; provided, however, that Buyer and Real
Property Buyer shall have the right to assign all of its rights and obligations
under this Agreement to any direct or indirect affiliate of Buyer, provided that
such affiliate agrees to assume all Buyees obligations under this Agreement, and
provided that such transfer shall not discharge Buyer from its obligation
hereunder unless Real Property Seller and Seller consent to such discharge; and
provided, further, that Buyer and Real Property Buyer may assign its rights
hereunder for security purposes to any financing institution extending credit to
36
Buyer and Real Property Buyer or any of their affiliates. Real Property Buyer
may assign all or part of its rights or delegate all or part of its duties under
this Agreement, without the prior written consent of Seller or Real Property
Seller, to a qualified intermediary chosen by the Real Property Buyer to
structure all or part of the transactions contemplated hereby as a like-kind
exchange of property covered by Section 1031 of the Code (provided that no such
assignment by the Real Property Buyer shall in any way operate to enlarge, alter
or change any obligations due to Seller or Real Property Seller, or relieve the
Real Property Buyer of its obligations hereunder if such qualified intermediary
fails to perform such obligations, with the understanding that the Real Property
Buyer and Buyer shall be jointly and severally liable with such qualified
intermediary for any nonperformance of the Real Property Buyer's obligations
hereunder.
12.4. No Third Party Beneficiaries. Except as set forth in
Section 10 hereto, nothing contained herein, express or implied, is intended to
confer upon any person or entity other than the parties hereto and their
successors in interest and permitted assignees any rights or remedies under or
by reason of this Agreement unless so stated herein to the contrary.
12.5. Amendments and Waivers. This Agreement and all Exhibits
and Schedules hereto may be modified only by a written instrument duly executed
by each party. No condition to any party's obligations and no breach of any
covenant, agreement, warranty or representation shall be deemed waived unless
expressly waived in writing by the party whose obligations are subject to such
condition or who might assert such breach. No waiver of any right hereunder
shall operate as a waiver of any other right or of the same or a similar right
on another occasion.
12.6. Survival. The covenants, agreements, warranties and
representations entered into or made pursuant to this Agreement, irrespective of
any investigation made by or on behalf of any party, shall be continuing and
shall survive the Closing, subject to Section 10.3.
12.7. Remedies. No remedy conferred by any of the specific
provisions of this Agreement is intended to be exclusive of any other remedy.
Each and every remedy shall be cumulative and shall be in addition to every
other remedy given hereunder now or hereafter existing at law or in equity or by
statute or otherwise, and the election by a party of one or more remedies shall
not constitute a waiver of the party's right to pursue any other available
remedies.
12.8. Binding Nature of Agreement. The Agreement includes each
of the Schedules and Exhibits which are referred to herein or attached hereto,
all of which are incorporated by reference herein. All the terms and provisions
of this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective executors, heirs, legal representatives, successors
and permitted assigns.
12.9. Expenses. Except as otherwise set forth herein, the
costs and expenses of Real Property Seller, Seller and Shareholder shall be home
by Real Property Seller, Seller and Shareholder. Except as otherwise set forth
herein, the costs and expenses of Buyer and Real Property Buyer shall be borne
by Buyer and Real Property Buyer.
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12.10. Entire Agreement. This Agreement contains the
entire understanding of the parties and supersedes all prior agreements and
understandings relating to the subject matter hereof.
12.11. Severability. Any provision of this Agreement which is
invalid, illegal or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability, without affecting in any way the remaining provisions hereof
in such jurisdiction or rendering that or any other provision of this Agreement
invalid, illegal or unenforceable in any other jurisdiction.
12.12. Counterparts. This Agreement may be executed by the
parties in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute but
one and the same instrument.
12.13. Section Headings. The headings of each Section,
subsection or other subdivision of this Agreement are for reference only and
shall not limit or control the meaning thereof.
12.14. Legal Fees and Expenses.. If any legal action or any
arbitration or other proceeding is brought for the enforcement of this
Agreement, or because of an alleged dispute, breach, default, or
misrepresentation in connection with any of the provisions of this Agreement,
the prevailing party or parties shall be entitled to recover actual and
reasonable attorneys' fees and other costs incurred in that action or
proceeding, in addition to any other relief to which it or they may be entitled.
"Prevailing party" within the meaning of this Section 12.14 includes, without
limitation, the party who agrees to dismiss an action upon the other party's
payment of all or a portion of the sums allegedly due or performance of the
covenants allegedly breached, or who obtains substantially the relief sought by
it.
13. Arbitration.
13.1. Agreement to Arbitrate. Except as expressly provided
herein, all disputes between Buyer and Real Property Buyer, on the one hand, and
Seller, Real Property Seller and Shareholder, on the other hand, arising out of
or in connection with the execution, interpretation and performance of this
Agreement (including the validity, scope and enforceability of this Section 13
shall, to the fullest extent permitted by law, be solely and finally settled by
a sole arbitrator, as set forth below (the "Arbitrator"). THE ARBITRATION
PROCEEDINGS SHALL BE HELD IN DALLAS, TEXAS9 AND EXCEPT AS OTHERWISE MAY BE
PROVIDED IN THIS SECTION 13, THE ARBITRATION PROCEEDINGS SHALL BE CONDUCTED
PURSUANT TO AND IN ACCORDANCE WITH THE TEXAS GENERAL ARBITRATION ACT, TEX. CIV.
PRAC. & REM. CODE ss. 171.000 ET SEQ. (▇▇▇▇▇▇ 1996) ("TGAA") AND THE COMMERCIAL
ARBITRATION RULES (THE "AAA RULES") OF THE AMERICAN ARBITRATION ASSOCIATION (THE
"AAA"), TO THE EXTENT THE AAA RULES ARE NOT INCONSISTENT WITH THE TGAA (THE TGAA
AND THE AAA RULES ARE COLLECTIVELY REFERRED TO AS THE "ARBITRATION RULES").
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13.2. Notice of Arbitration. If Buyer or Real Property Buyer,
on the one hand, or Seller, Real Property Seller or Shareholder, on the other
hand, determines to submit a dispute to arbitration pursuant to this Section 13
such party shall furnish the AAA and the other party(s) with a dated, written
statement indicating (i) such party's intent to commence arbitration proceedings
pursuant to this Section 13, (ii) the name and address of such party and a
designated officer or agent thereof, (iii) the nature, with reasonable detail,
of the dispute, (iv) the remedy such party will seek and (v) any other
information required under the Arbitration Rules.
13.3. Selection of Arbitrator. The Arbitrator, who shall be
selected in accordance with the procedures of the AAA, shall be a retired or
former judge of any Federal court appointed under Article III of the United
States Constitution who presided in a court located in the State in which the
arbitration is conducted.
13.4. Award Final. To the extent permissible under applicable
law, the parties hereto agree that the award of the Arbitrators shall be final
and shall not be subject to judicial review, except as permitted by Texas law.
Judgment on the arbitration award may be entered and enforced. in any court
having jurisdiction over the parties or their assets. It is the intent of the
parties that the arbitration provisions hereof be enforced to the fullest extent
permitted by applicable law.
13.5. Availability of Injunctive Relief. Any party hereto may
request a court of competent jurisdiction to grant provisional injunctive relief
to such party solely for the purpose of maintaining the status quo until an
arbitrator can render an award on the matter in question and such award can be
confirmed by a court having jurisdiction thereof
14. Submission to Jurisdiction; Agent for Service.
EACH OF THE PARTIES HERETO CONSENTS TO THE JURISDICTION OF ANY STATE OR
FEDERAL COURT LOCATED WITHIN THE COUNTY OF ▇▇▇▇▇▇, STATE OF TEXAS, AND
IRREVOCABLY AGREES THAT ALL ACTIONS OR PROCEEDINGS RELATING TO THIS AGREEMENT OR
ANY AGREEMENT OR INSTRUMENT EXECUTED HEREUNDER, OTHER THAN ANY ACTION OR
PROCEEDING REQUIRED BY SECTION 13 TO BE SUBMITTED TO ARBITRATION, SHALL BE
LITIGATED IN SUCH COURTS, AND EACH OF THE PARTIES WAIVES ANY OBJECTION WHICH IT
MAY HAVE BASED ON PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON COIVVENIENS
TO THE CONDUCT OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT AND WAIVES
PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT, AND CONSENTS TO ALL SUCH
SERVICE OF PROCESS MADE IN THE MANNER SET FORTH IN SECTION 12.2.
Nothing contained in this Section 14 shall affect the right of any party to
serve legal process on any other party in any other manner permitted by law.
Nothing contained in this Section 14 shall affect the obligations of the parties
with respect to the arbitration of disputes under Section 13.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first above written.
PACIFIC LOGISTICS, L.P.
By: Pacific CS Management, Inc., as General
Partner
By: ___________________________________
Name: _________________________________
Title: ________________________________
P&O COLD PROPERTIES II, LLC
By:___________________________________
Name: ________________________________
Title: _______________________________
▇▇▇▇▇▇ REFRIGERATED WAREHOUSES, INC.
By: _________________________________
Name: _______________________________
Title: ______________________________
▇▇▇▇▇▇▇ PROPERTIES, LLC
By: ________________________________
Name: ______________________________
Title: _____________________________
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CASTOR CAPITAL CORPORATION
By: _______________________________
Name: _____________________________
Title: ____________________________
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IN WfINESS WHEREOF, the parties hereto have executed this Agreement on
the date first above written.
PACIFIC LOGISTICS, L.P.
By: Pacific CS Management, Inc., as General
Partner
By: ___________________________________
Name: _________________________________
Title: ________________________________
P&O COLD PROPERTIES II, LLC
By: __________________________________
Name: ________________________________
Title: _______________________________
▇▇▇▇▇▇ REFRIGERATED WAREHOUSES, INC.
By: _________________________________
Name: _______________________________
Title: ______________________________
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