Agreement and Plan of Merger By And Among Buckeye Ventures, Inc. EK Acquisition Corp. Energy King, Inc. And The Stockholders of Energy King, Inc. Dated as of September 28, 2006
Agreement
and Plan of Merger
By
And Among
EK
Acquisition Corp.
Energy
King, Inc.
And
The
Stockholders of Energy King, Inc.
Dated
as of September 28, 2006
AGREEMENT
AND PLAN OF REORGANIZATION
This
Agreement and Plan of Merger is made as of September 28, 2006, by and among
Buckeye Ventures, Inc., a Michigan corporation (“Buckeye”), EK Acquisition
Corp., a Delaware corporation (the “Acquisition Sub”), Energy King, Inc., a
California corporation (the “Company”), and ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ and
▇▇▇▇▇▇ ▇▇▇▇▇▇ (collectively, the “Stockholders”).
WHEREAS,
the
Acquisition Sub is a wholly-owned subsidiary of Buckeye;
WHEREAS,
the
respective Boards of Directors of the Acquisition Sub and the Company (which
corporations are hereinafter collectively referred to as “Constituent
Corporations”) have deemed it advisable and in the best interests of the
Constituent Corporations and their respective stockholders that the Acquisition
Sub merge with and into the Company pursuant to this Agreement and the
applicable provisions of the laws of the State of Delaware and the State of
California;
NOW,
THEREFORE,
in
consideration of the premises and of the mutual agreements, representations,
warranties, provisions and covenants herein contained, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
ARTICLE
1
DEFINITIONS
1.1 Definitions.
In
addition to capitalized terms defined elsewhere in this Agreement, the following
capitalized terms used in this Agreement have the following meanings for all
purposes of this Agreement:
“1933
Act” means the Securities Act of 1933, as amended.
“1934
Act” means the Securities Exchange Act of 1934, as amended.
“Agreement”
means this Agreement and Plan of Reorganization, including all Exhibits and
Schedules attached hereto, as the same may be supplemented, modified or
otherwise amended from time to time.
“Articles
of Merger” means those Articles or Certificates of Merger with respect to the
Merger in substantially the forms attached as Exhibit
A-1
and
Exhibit
A-2
or with
such other changes therein as may be required by applicable state
laws.
“Buckeye
Stock” means any common stock of Buckeye to be received by the Stockholders
pursuant to or in connection with this Agreement or any of the other agreements
or documents executed and/or delivered in connection with this Agreement,
including without limitation the Promissory Notes and the capital stock of
Buckeye which may be issued in payment of or upon the conversion of any portion
of the Promissory Notes.
“Code”
means the Internal Revenue Code of 1986, as amended.
“Due
Diligence Date” means February 28, 2006.
“Effective
Time of the Merger” means the time as of which the Merger becomes effective
under both the Delaware GCL and the corporate law of the State of
California.
“EPA”
means the Environmental Protection Agency.
“EPA
Action” means the pending enforcement action against the Company by the
Environmental Protection Agency as a result of the activities alleged to occur
at the premises leased by the Company, including the release of certain
refrigerants, proposed to be resolved by the EPA pursuant to the drafts of
a
Stipulation for Final Judgment and Final Judgment received by the Company and
delivered by the Company to Buckeye prior to the Closing, which are attached
as
part of Schedule 4.12 and have been approved by Buckeye (the “Proposed EPA
Settlement Documents”).
“EPA
Penalty” means the amount, not to exceed $100,000, required to be paid to the
EPA to settle and finally resolve the EPA Action (whether in respect of
reimbursement of costs of investigation, civil penalties or
otherwise).
“Expiration
Date” means, (a) with respect to the representations and warranties contained in
Article 4
(other
than Sections 4.3,
4.4, 4.12, 4.20, 4.21, 4.22(b)(v) and 4.30),
and
the confirmations of such representations and warranties on the Closing Date,
the date which is eighteen months from the Closing Date, (b) with respect to
the
representations and warranties contained in Article 6,
and the
confirmations of such representations and warranties on the Closing Date, the
date which is eighteen months from the Closing Date, and (c) with respect to
any
other representations and warranties under this Agreement (including those
in
Sections 4.3,
4.4, 4.12, 4.20, 4.21, 4.22(b)(v) and 4.30
and
those in Article
5),
and
the confirmations of such representations and warranties on the Closing Date,
the date on which a suit against the Company or the Surviving Corporation with
respect to any breach thereof would be barred by the applicable statute of
limitations.
“Former
Stockholder Debt” means the indebtedness owed by the Company pursuant to that
certain Installment Note & Security Agreement dated July 1, 2001 in the
initial principal amount of $300,000 made by the Company in favor of the ▇▇▇▇▇
▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇, as Co-Trustees of the ▇▇▇▇▇▇▇▇ Family Trust, and
which indebtedness was approximately $255,000 on June 30, 2006.
“Hazardous
Materials” means any wastes, substances or materials (whether solids, liquids or
gases) that are deemed hazardous, toxic, pollutants or contaminants, including
substances defined as “hazardous wastes,” “hazardous substances,” “toxic
substances,” “radioactive materials” or other similar designations in, or
otherwise subject to regulation under, any Environmental Laws. “Hazardous
Materials” includes polychlorinated biphenyls (PCBs), asbestos, lead-based
paints and petroleum and petroleum products (including crude oil or any fraction
thereof).
“Merger”
means the merger of the Acquisition Sub with and into the Company pursuant
to
this Agreement and the applicable provisions of the laws of the State of
Delaware and the State of California.
“PBGC”
means the Pension Benefit Guaranty Corporation or its successors.
“Phoenix
Systems” means the heating, ventilating and air conditioning and related
equipment previously sold, installed and serviced by the Company or its
predecessors, based upon an ice storage technology and/or sometimes referred
to
as a Phoenix System, including without limitation any express or implied
warranties provided in connection therewith.
-2-
“Pledge
Agreement” means a Pledge Agreement made by Buckeye in substantially the form
attached as Exhibit
C.
“Promissory
Notes” mean each Promissory Note Secured by Pledge Agreement, in substantially
the form attached as Exhibit
B,
issued
in connection with the Merger.
“Returns”
means any returns, reports or statements (including any information returns)
required to be filed for purposes of a particular Tax.
“Schedule”
means each Schedule attached hereto, which shall reference the relevant sections
of this Agreement, on which parties hereto disclose information as part of
their
respective representations, warranties and covenants.
“SEC”
means the United States Securities and Exchange Commission.
“Specified
Marks” shall mean the trademarks, trade names, logos and other proprietary
rights set forth on Schedule 1.1.
“Surviving
Corporation” means the Company as the surviving corporation in the
Merger.
“Tax”
or
“Taxes” means all federal, state, local or foreign net or gross income, gross
receipts, net proceeds, sales, use, ad valorem, value added, franchise, bank
shares, withholding, payroll, employment, excise, property, deed, stamp,
alternative or add on minimum, or other taxes, assessments, duties, fees, levies
or other governmental charges of any nature whatever, whether disputed or not,
together with any interest, penalties, additions to tax or additional amounts
with respect thereto.
1.2 Other
Definitions.
The
following indicates the location in this Agreement of other terms defined
herein:
|
Defined
Term
|
Location
|
|
Acquisition
Sub
|
Introduction
|
|
Additional
Amount
|
Sec.
10.5
|
|
Additional
Capital
|
Sec.
10.5
|
|
Affiliates
|
Sec.
4.7
|
|
Aggregate
Consideration Amount
|
Schedule
2.4
|
|
Authorizations
|
Sec.
4.11
|
|
Buckeye
|
Introduction
|
|
Charter
Documents
|
Sec.
6.1
|
|
Closing
|
Sec.
3.1
|
|
Closing
Balance Sheet
|
Schedule
2.4
|
|
Closing
Date
|
Sec.
3.1
|
|
Company
|
Introduction
|
|
Company
Charter Documents
|
Sec.
4.1
|
|
Company
Financial Statements
|
Sec.
4.8
|
|
Company
Material Documents
|
Sec.
4.22
|
|
Company
Stock
|
Sec.
2.4
|
|
Constituent
Corporations
|
Recitals
|
|
Debt
|
Schedule
2.4
|
|
Debt
Amount
|
Schedule
2.4
|
|
Dispute
|
Sec.
14.1(a)
|
|
EBIT
|
Sec.
10.3(d)
|
-3-
|
EBIT
Deficit
|
Sec.
10.3(d)
|
|
EBIT
Target
|
Sec.
10.3(d)
|
|
Environmental
Laws
|
Sec.
4.12
|
|
ERISA
|
Sec.
4.18(a)
|
|
Extension
Notice
|
Sec.
10.3(b)
|
|
First
Measurement Period
|
Sec.
10.3(d)
|
|
Indemnified
Party
|
Sec.
11.3(a)
|
|
Indemnifying
Party
|
Sec.
11.3(a)
|
|
Intellectual
Property
|
Sec.
4.28
|
|
Measurement
Period
|
Sec.
10.3(d)
|
|
Minimum
Working Capital Amount
|
Schedule
2.4
|
|
Permitted
Debt
|
Schedule
2.4
|
|
Plans
|
Sec.
4.18(a)
|
|
Purchase
Price Adjustment Amount
|
Sec.
10.3(d)
|
|
Purchase
Price Adjustment Objection Notice
|
Sec.
10.3(b)
|
|
Qualified
Plans
|
Sec.
4.19
|
|
Second
Measurement Period
|
Sec.
10.3(d)
|
|
Section
10.3 Accountant
|
Sec.
10.3(b)
|
|
Stockholders
|
Introduction
|
|
Stockholders’
Representative
|
Sec.
15.18
|
|
Third
Person
|
Sec.
11.3(a)
|
|
Working
Capital
|
Schedule
2.4
|
|
Working
Capital Adjustment Amount
|
Schedule
2.4
|
|
Transfer
Taxes
|
Sec.
15.6
|
1.3 Other
Definitional Provisions.
All
terms defined in this Agreement in the singular shall have comparable meanings
when used in the plural and vice-versa. The words “hereof,” “herein” and
“hereunder” and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement. Underlined references to Articles, Sections, Schedules and Exhibits
shall refer to those portions of this Agreement. The use of the masculine,
feminine or neuter gender herein shall not limit any provision of this
Agreement. The use of the terms “including” or “include” shall in all cases
herein mean “including, without limitation” or “include, without limitation,”
respectively. For purposes of this Agreement, “knowledge” will be deemed to be
present with respect to a corporation, when the matter in question was brought
to the attention of or, if due diligence had been exercised, would have been
brought to the attention of, any officer or manager of such
corporation.
ARTICLE
2
THE
MERGER
2.1 Delivery
and Filing of Articles of Merger.
The
Constituent Corporations will cause the Articles of Merger to be duly executed
and filed with the Secretary of State of the State of Delaware and the Secretary
of State of the State of California on the Closing Date.
2.2 Merger.
Subject
to the terms and conditions of this Agreement, at the Effective Time of the
Merger, the Acquisition Sub shall be merged with and into the Company in
accordance with the Articles of Merger, the separate existence of the
Acquisition Sub shall cease and the Company shall be the surviving party in
the
Merger.
-4-
2.3 Certificate
of Incorporation, By-Laws and Board of Directors of Surviving
Corporation.
At the
Effective Time of the Merger:
(a) the
articles of incorporation of the Company then in effect shall be the articles
of
incorporation of the Surviving Corporation until it shall thereafter be duly
amended;
(b) the
by-laws of the Company then in effect shall be the by-laws of the Surviving
Corporation until they shall thereafter be duly amended;
(c) the
Board
of Directors of the Surviving Corporation shall consist of the persons who
are
on the Board of Directors of the Acquisition Sub immediately prior to the
Effective Time of the Merger; and subsequent to the Effective Time of the
Merger, the members of the Board of Directors of the Surviving Corporation
shall
hold such positions until their respective successors shall have been duly
elected or appointed and qualified or until their earlier death, resignation
or
removal in accordance with the provisions of the corporate law of the State
of
California and of the certificate of incorporation and by-laws of the Surviving
Corporation; and
(d) the
officers of the Surviving Corporation shall consist of the persons who are
identified on Schedule 2.3; and subsequent to the Effective Time of the Merger,
such officers shall serve in such capacities until their respective successors
shall have been duly elected or appointed and qualified or until their earlier
death, resignation or removal in accordance with the provisions of the corporate
law of the State of California and the certificate of incorporation and by-laws
of the Surviving Corporation.
2.4 Manner
of Conversion.
As of
the Effective Time of the Merger, without any action on the part of any holder
of any capital stock of the Company (“Company Stock”):
(a) each
share of Company Stock issued and outstanding immediately prior to the Effective
Time of the Merger, by virtue of the Merger and without any action on the part
of the holder thereof, automatically shall be deemed to represent the right
to
receive a Promissory Note in the initial principal amount determined pursuant
to
Schedule
2.4,
without
interest (except as provided in the Promissory Note after the Merger);
and
(b) all
shares of Company Stock that are held by the Company as treasury stock shall
be
canceled and retired and no shares of capital stock of Buckeye, cash or other
consideration shall be delivered or paid in exchange therefor.
2.5 Acquisition
Sub Capital Stock.
As of
the Effective Time of the Merger, each share of issued and outstanding common
stock of the Acquisition Sub, without any action on the part of the holder
thereof, shall be converted into and become one outstanding share of common
stock of the Surviving Corporation.
2.6 Effect
of Merger.
At the
Effective Time of the Merger, the effect of the Merger shall be as provided
in
the applicable provisions of the Delaware GCL and the applicable provisions
of
the corporate law of the State of California. Except as herein specifically
set
forth, the identity, existence, purposes, powers, objects, franchises,
privileges, rights and immunities of the Company shall continue unaffected
and
unimpaired by the Merger and the corporate franchises, existence and rights
of
the Acquisition Sub shall be merged with and into the Company, and the Company,
as the Surviving Corporation, shall be fully vested therewith. At the Effective
Time of the Merger, the separate existence of the Acquisition Sub shall cease
and, in accordance with the terms of this Agreement, the Delaware GCL and the
corporate law of the State of California, the Surviving Corporation shall
possess all the rights, privileges, immunities and franchises, of a public,
as
well as of a private, nature, and all property, real, personal and mixed, and
all debts due on whatever account, including subscriptions to shares, and all
taxes, including those due and owing and those accrued, and all other choses
in
action, and all and every other interest of or belonging to or due to the
Company and the Acquisition Sub shall be taken and deemed to be transferred
to,
and vested in, the Surviving Corporation without further act or deed; and all
property, rights and privileges, powers and franchises and all and every other
interest shall be thereafter as effectually the property of the Surviving
Corporation as they were of the Company and the Acquisition Sub; and the title
to any real estate, or interest therein, whether by deed or otherwise, vested
in
the Company and the Acquisition Sub, shall not revert or be in any way impaired
by reason of the Merger. Except as otherwise provided herein, the Surviving
Corporation shall thenceforth be responsible and liable for all the liabilities
and obligations of the Company and the Acquisition Sub and any claim existing,
or action or proceeding pending, by or against the Company or the Acquisition
Sub may be prosecuted as if the Merger had not taken place, or the Surviving
Corporation may be substituted in their place.
-5-
ARTICLE
3
CLOSING;
CLOSING DELIVERIES
3.1 Closing.
Subject
to the terms and conditions of this Agreement, the closing of the Merger (the
“Closing”) shall take place on the date on which the last of the conditions set
forth in Article
8
and
Article
9
is
satisfied or, if permissible, waived (the “Closing Date”), at the offices of
Buckeye or the Company, unless another date or place is agreed to in writing
by
the parties hereto, or if elected by Buckeye by the exchange by overnight
courier or facsimile of executed counterpart signature pages and other documents
required to be delivered pursuant to this Agreement at the Closing.
3.2 Closing
Deliveries.
At the
Closing, the Stockholders, who immediately prior to the Merger shall be the
holders beneficially and of record of all of the outstanding shares of Company
Stock, shall deliver to Buckeye all of the certificates formerly representing
Company Stock, all of which shall be registered in the name of the Stockholders
and be duly endorsed in blank by each respective Stockholder, or accompanied
by
duly executed stock powers in blank, and with all necessary transfer tax and
other revenue stamps, acquired at such Stockholder’s expense, affixed; and, in
exchange therefor, each Stockholder shall receive a
Promissory Note in the applicable principal amount into which the Stockholder’s
shares of Company Stock were converted as a result of the Merger.
ARTICLE
4
REPRESENTATIONS
AND WARRANTIES OF
THE
COMPANY AND THE STOCKHOLDERS
The
Company and each Stockholder, jointly and severally, represent and warrant
as
follows:
4.1 Due
Organization.
The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of California, and has the requisite corporate
power
and authority to carry on its business as it is now being conducted. The Company
is duly qualified to do business and is in good standing in each jurisdiction
in
which the nature of its business or the ownership or leasing of its properties
makes such qualification necessary. Schedule
4.1
sets
forth the jurisdiction in which the Company is incorporated and lists all
jurisdictions in which the Company is qualified to do business. True, complete
and correct copies of the certificate or articles of incorporation (including
amendments thereto) and by-laws (including amendments thereto) of the Company
(collectively, the “Company Charter Documents”) have been delivered to Buckeye
prior to the date of this Agreement. The minutes (including actions by written
consent without meetings) of the Board of Directors, committees of the Board
of
Directors and the stockholders of the Company which have been delivered to
Buckeye are all of the minutes (and actions by written consent) of the Board
of
Directors, committees of the Board of Directors and the stockholders of the
Company and correct and complete copies thereof in all respects.
-6-
4.2 Authorization;
Execution; Enforceability.
The
Company has the full legal right, power and authority to enter into this
Agreement, to perform its obligations under this Agreement and to consummate
the
transactions contemplated herein. The execution and delivery of this Agreement
by the Company, the performance by the Company of its obligations herein and
the
consummation of the transactions contemplated herein have been duly authorized
by all necessary corporate action on the part of the Company, including all
necessary approvals by stockholders. This Agreement has been duly executed
and
delivered by the Company and constitutes a legal, valid and binding obligation
of the Company, enforceable against the Company in accordance with its
terms.
4.3 Capital
Stock of the Company.
The
authorized, issued and outstanding capital stock of the Company is as set forth
on Schedule
4.3.
No
shares of capital stock of the Company are held in treasury by the Company.
All
of the issued and outstanding shares of the capital stock of the Company are
owned beneficially and of record by the Stockholders in the amounts set forth
in
Schedule
4.3
and
further, except as set forth on Schedule
4.3
(all of
which with respect to the Company Stock shall be terminated and released at
or
prior to the Closing), are owned free and clear of all liens, security
interests, charges, voting trusts, restrictions, encumbrances and claims of
every kind. All of the issued and outstanding shares of the capital stock of
the
Company have been duly authorized and validly issued, are fully paid and
nonassessable and were offered, issued, sold and delivered by the Company in
compliance with all applicable state and federal laws concerning the issuance
of
securities. Further, none of such shares were issued in violation of any
preemptive or similar rights of any past or present stockholder or other person
or entity.
4.4 Transactions
in Equity Securities.
Except
as set forth on Schedule
4.4,
(a) no
subscription, option, warrant, call, conversion right or commitment of any
kind
exists which obligates the Company to issue any of its authorized but unissued
equity securities or transfer any of the shares held by the Company in treasury,
(b) the Company does not have any obligation (contingent or otherwise) to
purchase, redeem or otherwise acquire any of its equity securities or any
interests therein or to pay any dividend or make any distribution in respect
thereof, and (c) neither the voting stock structure of the Company nor the
relative ownership of shares among any of its stockholders has been altered
or
changed in contemplation of the Merger.
4.5 Subsidiaries.
The
Company has no subsidiaries. The Company does not own, of record or
beneficially, or control, directly or indirectly, any capital stock, securities
convertible into capital stock or any other equity interest in any corporation,
association or business entity nor is the Company, directly or indirectly,
a
participant in any joint venture, partnership or other non-corporate
entity.
4.6 Predecessor
Status; Etc.
Set
forth on Schedule
4.6
is a
listing of all prior corporate names of the Company, and all names of all
predecessor companies of the Company, including the names of any entities
acquired by the Company (by stock purchase, merger or otherwise) or owned by
the
Company or from whom the Company previously acquired material assets. Except
as
disclosed on Schedule
4.6,
the
Company has not been a subsidiary or division of another
corporation.
-7-
4.7 Spin-Off
by the Company.
Except
as set forth on Schedule
4.7,
there
has not been any sale, spin-off or split-up of assets of the Company or any
other person or entity that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
the Company (as used herein with respect to the Company, or with respect to
any
other person or entity, “Affiliates”) since January 1, 1996.
4.8 Financial
Statements.
Copies
of the financial statements of the Company listed on Schedule
4.8
have
been delivered to Buckeye prior to the date of this Agreement (collectively,
together with the financial statements to be delivered pursuant to Schedule
2.4
and
Section
7.8,
the
“Company Financial Statements”). To the knowledge of the Company and the
Stockholders, the Company Financial Statements have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis
(except as noted on Schedule
4.8).
To the
knowledge of the Company and the Stockholders, except as set forth on
Schedule
4.8,
each
balance sheet presents fairly in all material respects the financial position
of
the Company as of the date indicated thereon, and each statement of income,
shareholders’ equity and cash flows presents fairly in all material respects the
results of operations of the Company for the periods indicated
thereon.
There
has been no net adverse change in the Company from August 31, 2006 to the
Closing Date and if financial statements for the Company were prepared for
the
period to and as of the Closing Date, there would be no net adverse change
reflected in such financial statements from the Company Financial Statements
prepared as of August 31, 2006, when all changes, both positive and negative,
are considered in the aggregate.
4.9 Liabilities
and Obligations.
Schedule
4.9
sets
forth, as of the Due Diligence Date, (a) all liabilities of the Company (if
any)
which are not reflected on the balance sheet of the Company at the Due Diligence
Date, and (b) all loan agreements, financing agreements, reimbursement
agreements for bonds, surety arrangements, letters of credit or indebtedness
for
borrowed money, indemnity agreements, guaranty agreements, bonds, promissory
notes, mortgages, indentures, pledge agreements, security agreements or similar
agreements to which the Company is a party or by which the Company is bound
or
its property is subject. Except as set forth on Schedule
4.9,
since
the Due Diligence Date the Company has not incurred any liabilities of any
kind,
character and description, whether accrued, absolute, secured or unsecured,
contingent or otherwise, other than liabilities incurred in the ordinary course
of business consistent with past practice (none of which is for breach of
contract, breach of warranty, tort, infringement or violation of law). In the
case of those contingent liabilities related to pending or threatened
litigation, or other liabilities which are not fixed or otherwise accrued,
Schedule
4.9
sets
forth a good faith and reasonable estimate of the maximum amount which the
Company reasonably expects will be payable. If no estimate is provided on
Schedule
4.9,
the
estimate shall for purposes of this Agreement be deemed to be zero.
Except
for interest which has accrued in the ordinary course of business on the
existing Debt of the Company, there has been no increase in any Debt of the
Company from August 31, 2006 to the Closing Date.
4.10 Accounts
and Notes Receivable.
Schedule
4.10
lists
all of the accounts, notes and other receivables of the Company, including
any
which are not reflected in the Company Financial Statements, and including
receivables from and advances to directors, officers, employees and agents
of
the Company, any Stockholder, relatives of any Stockholder and Affiliates of
the
Company or any Stockholder; provided,
however,
that
such listing shall not be required to include those receivables of the Company
arising after the date set forth as the date of such list on Schedule 4.10
as a
result of sales in the ordinary course of business to persons or entities who
are not Affiliates or otherwise affiliated with any of the Stockholders or
the
Company. To the knowledge of the Company and the Stockholders, except to the
extent of the reserve for bad debt expense reflected on Schedule
4.10,
all
accounts, notes and other receivables of the Company are and will be collectible
within 90 days of the date created in the amounts shown on Schedule
4.10
(or in
the case of receivables not required to be so listed on Schedule
4.10
in their
face amount), in the ordinary course of business.
-8-
4.11 Authorizations.
The
Company holds all licenses, franchises, permits and other governmental
authorizations and approvals (collectively, the “Authorizations”) necessary to
operate its business in the manner in which it is conducted. Schedule
4.11
lists
all such Authorizations (it being understood and agreed that a list of all
environmental Authorizations is set forth on Schedule
4.12).
The
Authorizations listed on Schedule
4.11
and
Schedule
4.12
are
valid, and neither the Company nor any Stockholder has received any notice
that
any governmental authority intends to cancel, terminate or not renew any such
Authorization. The Company has conducted and is conducting its business in
compliance with the requirements, standards, criteria and conditions set forth
in the Authorizations listed on Schedule
4.11
and
Schedule
4.12
and is
not in violation of any of the foregoing.
4.12 Environmental
Matters.
Except
as set forth on Schedule
4.12:
(a) the
Company has complied with and is in compliance with all federal, state and
local
laws, statutes, ordinances, regulations, rules, orders, writs, injunctions
and
decrees relating to environmental protection (collectively “Environmental Laws”)
binding or applicable to the Company or the Company’s properties, including
Environmental Laws relating to air, water, land and the generation, storage,
use, handling, transportation, treatment or disposal of Hazardous
Materials;
(b) the
Company has obtained and adhered to all Authorizations necessary to treat,
transport, store, dispose of and otherwise handle Hazardous Materials, a list of
which Authorizations are set forth on Schedule
4.12,
and has
reported to the appropriate authorities, to the extent required by all
Environmental Laws, all past and present sites owned and operated by the Company
where Hazardous Materials have been treated, stored, disposed of or otherwise
handled;
(c) there
have been no releases or threats of releases (as defined in Environmental Laws)
at, from, in or on any property owned or operated by the Company which were,
or
which were required to be, reported under any Environmental Law, and the Company
has no contingent liabilities in connection with any release of any Hazardous
Material into the environment; and
(d) neither
the Company nor any Stockholder knows of any on-site or off-site location to
which the Company has transported or disposed of Hazardous Materials or arranged
for the transportation of Hazardous Materials at a site which is the subject
of
any federal, state or local enforcement action or any other investigation which
may lead to any claim against the Company, or as a result of the transactions
contemplated in this Agreement, against Buckeye or the Acquisition Sub, for
any
clean-up cost, fines, remedial work, recovery for damage to natural resources,
property damage or personal injury, including, but not limited to, any claim
under the Comprehensive Environmental Response, Compensation and Liability
Act
of 1980, as amended.
(e) The
Stockholders and the Company are in the process of negotiating a settlement
of
the EPA Action and true, correct and complete copies of the Proposed EPA
Settlement Documents have been delivered to Buckeye. The Company and the
Stockholders have fully responded to all requests and provided all documents
and
other information requested in connection with the investigation of the EPA
Action, have not been notified and are not aware of any further responses,
documents or information that have been requested or are requested to be
provided, currently are not in violation of the provisions of the laws, statutes
or regulations alleged to be violated in the EPA Action and currently are in
compliance with all applicable Environmental Laws. Apart from obligations set
forth in the Proposed EPA Settlement Documents or such more favorable
obligations as may be negotiated by the Stockholders and the Company in the
final settlement documents, the Company shall have no further liability or
obligations to any Person, and there is no basis for any further claims against
the Company and the Company shall not incur or be required to incur any further
costs or expenses, with respect to the EPA Action or the matters which formed
or
which were alleged to form the basis of the EPA Action.
-9-
4.13 Personal
Property; Inventory.
(a) Schedule
4.13
lists,
in reasonable detail, all vehicles owned or leased by the Company, regardless
of
value, and all other personal property owned by the Company with an individual
book value or market value in excess of $10,000, all leased personal property
and all leases in respect of personal property, and further indicates which
such
assets, if any, are currently owned, or were formerly owned, by any Stockholder,
relatives of any Stockholder or Affiliates of the Company or any Stockholder.
Except as set forth on Schedule
4.13:
(i) the
Company has good and marketable title (except for property leased by the Company
pursuant to a lease or agreement set forth on Schedule
4.13)
to all
personal property, whether tangible or intangible (including its rights in
its
leases and agreements with respect to any leased property), used by the Company
in its business, free and clear of all liens, security interests, charges and
other encumbrances of any kind;
(ii) all
of
the tangible personal property (other than inventory) owned by the Company
or
leased by the Company pursuant to any lease listed on Schedule
4.13
is in
good working order and condition, ordinary wear and tear excepted, and in the
case of leased property is in the condition required by the applicable lease;
and
(iii) all
leases included on Schedule
4.13
are in
full force and effect and constitute legal, valid and binding agreements of
the
parties (and their successors) thereto in accordance with their respective
terms.
(b) All
inventory of the Company is saleable or useable in the ordinary course of
business consistent with past practice and all damaged, obsolete or slow moving
inventory or inventory in excess of the amount reasonably required for the
operation of its business has been written off or down to its net realizable
value on the Company Financial Statements and the books and records of the
Company.
4.14 Significant
Customers; Material Contracts and Commitments.
(a) Schedule
4.14(a)
lists
all significant customers of the Company, it being understood and agreed that
a
“significant customer,” for purposes of this Section
4.14,
means a
customer (or person or entity) the sales to which represented 5% or more of
the
Company’s revenues for the consecutive twelve month period ending on the Due
Diligence Date. Except to the extent set forth on Schedule
4.14(a),
none of
the Company’s significant customers have canceled or reduced by more than five
percent (5%) or, to the knowledge of the Company or any Stockholder, are
currently attempting or threatening to cancel or reduce by more than five
percent (5%) their utilization of the products or services provided by the
Company. Buckeye and Acquisition Sub understand and agree that the Company
bids
for work on a project by project basis and that no warranty can be provided
as
to the likelihood for successful bids in the future.
-10-
(b) Schedule
4.14(b)
lists
all material agreements, contracts, instruments or commitments to which the
Company is a party or by which it or any of its properties are bound (including
contracts with significant customers, joint venture or partnership agreements,
contracts with any labor organizations, strategic alliances and options to
purchase land), other than agreements listed on Schedule
4.9, 4.13
or
4.15.
4.15 Real
Property.
The
Company does not own any real property. Schedule
4.15
lists
all real property leased, subleased, used or otherwise occupied by the Company
in the conduct of its business and all leases or other agreements in respect
of
such real property, and further indicates which such properties, if any, are
currently owned, or were formerly owned, by any Stockholder, relatives of any
Stockholder or Affiliates of the Company or any Stockholder and the annual
rentals and other amounts paid under each such lease or other agreement during
each of the last three years. Except as set forth on Schedule
4.15,
(a) the
Company’s rights in such leases and other agreements are free and clear of all
liens, security interests, charges and other encumbrances of any kind, (b)
all
leased property is in the condition required by the applicable lease and (c)
all
leases and other agreements included on Schedule
4.15
are in
full force and effect and constitute legal, valid and binding agreements of
the
parties (and their successors) thereto in accordance with their respective
terms.
4.16 Insurance.
The
Company has delivered to Buckeye as of a recent date an accurate list of all
insurance loss runs or workers’ compensation claims received by it for the past
three policy years, and true, complete and correct copies of all insurance
policies currently in effect. The Company maintains, and since January 1,
1996 has maintained, insurance (a) written by insurance companies reasonably
believed by the Company to be financially sound and reputable, (b) that is
sufficient for compliance by the Company with all of its contracts, agreements,
instruments and other commitments and with all applicable laws, and (c) that
insures against risks of the kind customarily insured against and in amounts
customarily carried by companies similarly situated and provides adequate
insurance coverage for the business and assets of the Company. Schedule
4.16
lists
and summarizes the property and casualty and liability insurance programs
maintained by the Company. To the extent that the Company has a policy of
maintaining self-insurance coverage of any kind, such policy is described on
Schedule
4.16,
the
Company has maintained reserves which are reasonable and adequate for the risks
so self-insured and all such reserves are reflected in the Company Financial
Statements. Except as set forth on Schedule
4.16,
since
January 1, 1996, (x) no insurance maintained by the Company or with respect
to the business conducted by the Company has been canceled by the insurer nor
has the Company applied for and been refused coverage by any insurer, (y) the
Company has not received any notice of any pending or threatened termination
of
any policies of insurance, nor has any insurer suggested any alteration of
any
tangible asset, the purchase of additional assets or modification of any methods
of doing business, and (z) all insurance maintained by or for the benefit of
the
Company can be terminated by the Company without the need for any additional
payments of any kind from the Company or any other person or entity on account
of the policies.
4.17 Compensation;
Employment Agreements; Organized Labor Matters.
(a) Schedule
4.17(a)
sets
forth the names and titles of all directors, officers and other salaried
employees of the Company, listing all employment agreements with such directors,
officers and other salaried employees and the rate of compensation (and the
portions thereof attributable to salary, bonus and other compensation,
respectively) of each such person as of the date hereof. Since the Due Diligence
Date, there have been no increases in the compensation payable or any bonuses
to
any director, officer or other salaried employee, except ordinary salary
increases implemented on a basis consistent with past practices.
-11-
(b) Except
as
set forth on Schedule
4.17(b),
during
the past three years (i) the Company has not been and is not currently bound
by
or subject to (and none of its assets or properties is bound by or subject
to)
any arrangement or agreement with any labor union, (ii) no employees of the
Company have been or are currently represented by any labor union or covered
by
any collective bargaining agreement, (iii) to the knowledge of the Company
and
each Stockholder, no campaign to establish such representation has been
commenced or is currently in progress, and (iv) there has not been nor is there
currently any pending or, to the knowledge of the Company or any Stockholder,
threatened labor dispute involving the Company and any group of its employees
nor has the Company experienced any labor interruptions. The Company believes
its relationship with employees to be good.
4.18 Employee
Plans.
(a) Schedule
4.18
lists
all employee benefit plans of the Company (the “Plans”), including all
employment agreements and other agreements or arrangements containing “golden
parachute” (as defined under Section 280G of the Code) or other similar
provisions, and deferred compensation agreements. True, complete and correct
copies of the Plans, agreements and any trusts related thereto, and
classifications of employees covered thereby have been delivered to Buckeye.
Except for the Plans described on Schedule
4.18,
the
Company does not sponsor, maintain or contribute to any plan, program, fund
or
arrangement that constitutes an “employee pension benefit plan,” nor has the
Company any obligation to contribute to or accrue or pay any benefits under
any
deferred compensation or retirement funding arrangement on behalf of any
employee or employees (such as, for example, and without limitation, any
individual retirement account or annuity, any “excess benefit plan” (within the
meaning of Section 3(36) of the Employee Retirement Income Security Act of
1974,
as amended (“ERISA”)) or any non-qualified deferred compensation arrangement).
For the purposes of this Agreement, the term “employee pension benefit plan”
shall have the same meaning as is given that term in Section 3(2) of ERISA.
The
Company has not sponsored, maintained or contributed to any employee pension
benefit plan other than the Plans set forth on Schedule
4.18,
nor is
the Company required to contribute to any retirement plan pursuant to the
provisions of any collective bargaining agreement establishing the terms and
conditions or employment of any of the Company’s employees.
(b) The
Company is not now, nor can as a result of its past activities become, liable
to
the PBGC or to any multiemployer employee pension benefit plan under the
provisions of Title IV of ERISA.
(c) All
employee benefit plans listed on Schedule
4.18
and the
administration thereof are in compliance with their terms and all applicable
provisions of ERISA and the regulations issued thereunder, as well as with
all
other applicable federal, state and local statutes, ordinances and
regulations.
(d) All
accrued contribution obligations of the Company with respect to any Plan listed
on Schedule
4.18
have
either been fulfilled in their entirety or are fully reflected on the most
recent balance sheet of the Company included in the Company Financial
Statements.
-12-
4.19 Compliance
with ERISA.
All of
the Plans listed on Schedule
4.18
that are
intended to qualify under Section 401(a) of the Code (the “Qualified Plans”)
are, and have been so qualified and have been determined by the Internal Revenue
Service to be so qualified, and true, correct and complete copies of such
determination letters have been delivered to Buckeye. Except as disclosed on
Schedule
4.19,
all
reports and other documents required to be filed with any governmental agency
or
distributed to plan participants or beneficiaries (including, but not limited
to, actuarial reports, audits or tax returns) have been timely filed or
distributed, and true, correct and complete copies thereof have been delivered
to Buckeye. Neither any Stockholder, any Plan listed in Schedule
4.18
nor the
Company has engaged in any transaction prohibited under the provisions of
Section 4975 of the Code or Section 406 of ERISA. No Plan listed in Schedule
4.18
has
incurred an accumulated funding deficiency, as defined in Section 412(a) of
the
Code and Section 302(1) of ERISA; and the Company has not incurred and does
not
have any liability for excise tax or penalty due to the Internal Revenue Service
nor any liability to the PBGC. In addition:
(a) there
have been no terminations, partial terminations or discontinuance of
contributions to any such Qualified Plan intended to qualify under Section
401(a) of the Code without notice to and approval by the Internal Revenue
Service;
(b) no
Plan
listed in Schedule
4.18
subject
to the provisions of Title IV of ERISA has been terminated;
(c) there
have been no “reportable events” (as that phrase is defined in Section 4043 of
ERISA) with respect to any Plan listed in Schedule
4.18;
(d) the
Company has not incurred and does not have any liability under Section 4062
of
ERISA; and
(e) no
circumstances exist pursuant to which the Company could have any direct or
indirect liability whatsoever (including, but not limited to, any liability
to
any multiemployer plan or the PBGC under Title IV of ERISA or to the Internal
Revenue Service for any excise tax or penalty, or being subject to any statutory
lien to secure payment of any such liability) with respect to any plan now
or
heretofore maintained or contributed to by any entity other than the Company
that is, or at any time was, a member of a “controlled group” (as defined in
Section 412(n)(6)(B) of the Code) that includes the Company.
4.20 Litigation;
Compliance with Law.
Except
to the extent set forth on Schedule
4.20,
there
are no actions, suits or proceedings (or, to the knowledge of the Company or
any
Stockholder, investigations or claims) pending or, to the knowledge of the
Company or any Stockholder, threatened against or affecting, the Company, the
Merger or the other transactions contemplated in this Agreement, at law or
in
equity, or before or by any arbitrator, court or any governmental department,
commission, board, bureau, agency or instrumentality, and no notice of any
such
claim, action, suit, proceeding or investigation, whether pending or threatened,
has been received by the Company or any Stockholder. The Company has conducted
and is conducting its business in compliance with the requirements, standards,
criteria and conditions set forth in all laws, statutes, ordinances,
regulations, rules, judgments, orders, writs, injunctions and decrees binding
upon or applicable to the Company and its property and is not in violation
of
any of the foregoing.
-13-
4.21 Taxes.
The
Company has timely filed all requisite federal, state and other Returns for
all
fiscal periods ended on or before the date of this Agreement on or before the
date such Returns are required to be filed (or the date to which such filing
date may have been properly extended); and except as set forth on Schedule
4.21,
to the
knowledge of the Company and the Stockholders there are no examinations in
progress or claims against the Company for Taxes (including penalties and
interest) for any period or periods and no notice of any claim for Taxes,
whether pending or threatened, has been received. All Taxes, including interest
and penalties (whether or not shown on any Return), owed by the Company or
any
member of an affiliated or consolidated group which includes or included the
Company have been paid, including any estimated tax payments. The amounts shown
as accruals for Taxes on the most recent balance sheet included in the Company
Financial Statements which is other than the Closing Balance Sheet are
sufficient for the payment of all Taxes (including penalties and interest)
for
all fiscal periods ended on or before the date of such balance sheet. The
amounts shown as accruals for Taxes on the Closing Balance Sheet are sufficient
for the payment of all Taxes (including penalties and interest) for all fiscal
periods ended on or before the Closing Date. True, correct and complete copies
of all (a) tax examinations, (b) extensions of statutory limitations, and (c)
the federal, state and local income tax returns and franchise tax returns of
the
Company for its last three (3) fiscal years, or such shorter period of time
as
the Company shall have existed, have been delivered to Buckeye prior to the
date
of this Agreement. Except as set forth on Schedule
4.21,
the
Company has a taxable year ended December 31 and has not made an election to
retain a fiscal year other than December 31 under Section 444 of the Code.
The
Company’s methods of accounting have not changed in the past six years. The
Company is not an investment company as defined in Section 368(a)(2)(F) of
the
Code.
4.22 No
Violations.
(a) Except
as
set forth in Schedule
4.22(a),
neither
the Company nor, to the knowledge of the Company or any Stockholder, any other
party thereto, is in material default under any Authorization, lease, agreement,
contract or commitment or other document set forth on Schedule
4.9, 4.11, 4.12, 4.13, 4.14(b)
or
4.15
to which
the Company is a party or by which the Company or its properties are bound
(collectively, the “Company Material Documents”).
(b) Except
as
set forth on Schedule
4.22(b),
the
execution and delivery of this Agreement by the Company, the performance by
the
Company of its obligations hereunder and the consummation of the transactions
contemplated hereby (i) do not and will not conflict with or violate any
provision of the Company Charter Documents, (ii) do not and will not result
in
any violation or breach of, constitute a default or give rise to any right
to
terminate, cancel or accelerate or loss of any right or benefit under, or result
in the imposition of any security interest, lien or other encumbrance on any
property of the Company under, any of the terms or provisions of any
Authorization, any Company Material Document or any other agreement, contract,
instrument or commitment to which the Company is a party or by which it or
any
of its properties are bound, (iii) do not and will not conflict with or violate
any law, statute, ordinance, regulation, rule, judgment, order, writ, injunction
or decree binding upon or applicable to the Company or any of its properties,
(iv) do not and will not require any consent, waiver, authorization or
declaration of, filing or registration with or other action by any governmental
department, commission, board, bureau, agency or instrumentality or any other
third party (other than the filings referred to in Section
2.1),
and
(v) do not and will not trigger any right of first refusal on the part of any
other person to acquire any shares of Company Stock or any assets of the
Company.
(c) Except
as
set forth on Schedule
4.22(c),
no
Company Material Document and no other agreement, contract, instrument or
commitment to which the Company is a party or by which the Company or its
properties are bound (i) prohibits the use or publication by the Company,
Buckeye, the Surviving Corporation or the Acquisition Sub of the name of any
other party to such Company Material Document, agreement, contract, instrument
or commitment, (ii) prohibits or restricts the Company from freely providing
goods and services to any person or entity, or (iii) restricts the types of
businesses or the geographical territory in which any businesses may be engaged
by the Company, Buckeye, the Surviving Corporation or the Acquisition
Sub.
-14-
4.23 Government
Contracts.
Except
as set forth on Schedule
4.23,
the
Company is not a party to or otherwise bound by any agreement, contract,
instrument or commitment with any governmental department, commission, board,
bureau, agency or instrumentality.
4.24 Absence
of Changes.
Since
the Due Diligence Date, except as set forth on Schedule
4.24,
there
has not been with respect to the Company:
(a) any
material adverse change in the business, operations, properties, assets,
prospects or condition (financial or otherwise) of the Company;
(b) any
damage, destruction or loss (whether or not covered by insurance) materially
and
adversely affecting the properties or business of the Company;
(c) any
change in the authorized capital of the Company or its outstanding securities
or
any change in its ownership interests or any grant of any subscriptions,
options, warrants, calls, conversion rights or commitments;
(d) any
declaration or payment of any dividend or distribution in respect of the
Company’s capital stock or any direct or indirect purchase, or redemption or
other acquisition or retirement of any of the capital stock of the
Company;
(e) any
increase in the compensation, bonus, sales commissions or fees payable or to
become payable by the Company to any of its directors, officers, employees,
consultants or agents or to any Stockholder, except for ordinary and customary
bonuses and salary increases for employees (which are other than officers,
directors, consultants or agents) in accordance with past practice;
(f) any
work
interruptions, labor grievances or claims filed;
(g) any
sale
or transfer, or any agreement to sell or transfer, any material assets, property
or rights of the Company to any person or entity, including any Stockholder,
relatives of any Stockholder or Affiliates of the Company or any Stockholder
(other than the sales of inventory in the ordinary course of
business);
(h) any
cancellation, or agreement to cancel, any indebtedness or other obligation
owing
to the Company, including any indebtedness or obligation of any Stockholder,
relatives of any Stockholder or Affiliates of the Company or any Stockholder,
other than the negotiation and adjustment of bills made by the Company in the
course of good faith disputes with customers in the ordinary course of business
and in a manner consistent with past practice;
(i) any
plan,
agreement or arrangement granting any preferential rights to purchase or acquire
any interest in any of the assets, property or rights of the Company or
requiring consent of any party to the transfer and assignment of any such
assets, property or rights;
-15-
(j) any
purchase or acquisition of, or agreement, plan or arrangement to purchase or
acquire, any property, rights or assets outside of the ordinary course of the
Company’s business;
(k) any
waiver of any material rights or claims of the Company, other than the
negotiation and adjustment of bills, client invoices, accounts payable and
accounts receivable in the ordinary course of business and in a manner
consistent with past practice;
(l) any
amendment or termination of any material contract, agreement, license, permit
or
other right to which the Company is a party, except in the ordinary course
of
business;
(m) any
transaction by the Company outside the ordinary course of its
business;
(n) any
cancellation or termination of a material contract with a customer or client
prior to the scheduled termination date; or
(o) any
other
distribution of property or assets by the Company other than in the ordinary
course of business.
4.25 Deposit
Accounts; Powers of Attorney.
Set
forth on Schedule
4.25
with
respect to the Company is (a) the name of each financial institution in which
the Company has accounts or safe deposit boxes, (b) the names in which the
accounts or boxes are held, (c) the type of account and account number, and
(d)
the name of each person or entity authorized to draw thereon or have access
thereto. Schedule
4.25
also
sets forth the name of each person or entity holding a general or special power
of attorney from or otherwise binding upon the Company and a description of
the
terms of such power.
4.26 Relations
with Governments.
The
Company has not made, offered or agreed to offer anything of value to any
governmental official, political party or candidate for government office in
violation of any law, statute, ordinance, rule or regulation, nor has the
Company otherwise taken any action which would cause the Company to be in
violation of the Foreign Corrupt Practices Act of 1977, as amended, or any
law
of similar effect.
4.27 Prohibited
Activities.
Except
as set forth on Schedule
4.27,
the
Company has not, since the Due Diligence Date, taken any of the actions set
forth in Section
7.3.
4.28 Intellectual
Property.
Except
as set forth on Schedule
4.28,
the
Company owns or possesses valid and binding licenses or other rights to use
all
intangible and intellectual property used in or related to the business
conducted by the Company (collectively, the “Intellectual Property”), including
all patents, trademarks, service marks, trade names, trade styles, copyrights,
logos, trade secrets and proprietary information and all registrations and
applications for any of the foregoing and all pricing manuals and other manuals
and policies. Schedule
4.28
sets
forth (a) all trademarks, service marks, trade names, trade styles, copyrights
and all registrations or applications therefor, (b) all patents, inventions
and
all registrations or applications therefor, and (c) all licenses, sublicenses
and other agreements to which the Company is a party or otherwise bound, either
as licensee or licensor or otherwise, related to any of the Intellectual
Property. To the knowledge of the Company and the Stockholders, the Company
has
not engaged in any conduct or omitted to perform any necessary act, the result
of which would invalidate, abandon or otherwise render the Company’s rights to
any Intellectual Property unenforceable. To the best knowledge of the Company
and the Stockholders, the Company and the Company’s Intellectual Property,
including the ▇▇▇▇ ENERGY KING and certain derivatives of the ENERGY ▇▇▇▇ ▇▇▇▇,
do not infringe, misappropriate or violate any trade name, trademark or other
intellectual property or proprietary rights of any other Person and no claim
has
been made or threatened concerning the invalidity, unenforceability or
infringement, misappropriation or violation by the Company or the Company’s
Intellectual Property of any trade name, trademark or other intellectual
property or proprietary rights of any other Person. Trademark applications
for
the trademark ENERGY KING and certain derivatives of the ENERGY ▇▇▇▇ ▇▇▇▇ have
been filed with the United States Patent and Trademark Office. Schedule 4.28
sets forth the status of each such application. The Company is not required
to
pay any royalty, license, fee or other similar compensation with respect to
the
Intellectual Property in connection with the current or prior conduct of the
business conducted by the Company. To the knowledge of the Company and each
Stockholder, no person or entity is engaged in any activity which would
constitute infringement of the Company’s rights in the Intellectual Property.
The Company is not a party to or otherwise bound by any agreement to indemnify
any other person or entity against any charge of infringement of any proprietary
right.
-16-
4.29 Related
Party Agreements.
Except
as set forth on Schedule
4.29,
the
Company is not a party to or otherwise bound by any agreement with any
Stockholder or any relative or Affiliate of any Stockholder.
4.30 Warranty
and Sales Return Claims.
Schedule
4.30
accurately describes all warranty, sales return or allowance and similar
policies related to the business conducted by the Company. No failure on the
part of the Company to perform any work in accordance with all plans and
specifications and in a good and ▇▇▇▇▇▇▇-like fashion, individually or in the
aggregate, will result in losses, damages, liabilities, costs or expenses which
are not either fully covered by insurance or the reserves shown on Schedule
4.30
(and
which reserves will be reflected on the Closing Balance Sheet). Except as set
forth on Schedule 4.30,
neither
the Company nor any Stockholder has received any notice or are otherwise aware
of, and there is no basis for any claim by any customer or any other person
or
entity against the Company based in any way on or related to any theory of
product liability or any material defect or problem with respect to any of
goods
or services provided by the Company at any time during the past three years.
Each such matter set forth on Schedule 4.30
is
(except as otherwise expressly indicated on Schedule
4.30)
adequately covered by insurance. No warranty adjustments, sales returns or
allowances or warranty services will be required with respect to goods or
services provided by the Company prior to the Closing in excess of the reserves
shown on Schedule 4.30,
which
reserves will be reflected on the Closing Balance Sheet.
The
Company has no liabilities or obligations to any Person, there is no basis
for
any claim against the Company and the Company shall not incur or be required
to
incur any further costs or expenses with respect to or alleged to be with
respect to Phoenix Systems, including without limitation any liabilities or
obligations with respect to any express or implied warranties provided with
respect thereto (except any costs and expenses covered by the Company’s
occurrence based insurance policies), and all express and implied warranties
with respect to the Phoenix Systems have expired.
4.31 Names.
No
person or entity has been granted the right to use the name “Energy King” or any
variation of either thereof by the Company or any of the Stockholders. To the
knowledge of the Company and the Stockholders, no Person has the right to use
or
uses the name or ▇▇▇▇ ENERGY KING, except as set forth in Schedule
4.31.
4.32 Disclosure.
No
representation or warranty of any Stockholder or the Company in this Agreement
contains an untrue statement of a material fact with respect to any Stockholder
or the Company or omits to state a material fact necessary to make the
statements therein with respect to any Stockholder or the Company, in light
of
the circumstances under which they were made, not misleading. True, correct
and
complete copies of each document or agreement listed or described on any
Schedule have been delivered to Buckeye and the Acquisition Sub and there are
no
amendments or modifications thereto, except as expressly noted in the Schedule
on which such agreement or document is referenced.
-17-
ARTICLE
5
REPRESENTATIONS
AND WARRANTIES OF THE STOCKHOLDERS
Each
Stockholder, jointly and severally, represents and warrants as
follows:
5.1 Authority;
Enforceability; Ownership.
Each
Stockholder has the full legal capacity, right, power and authority to enter
into this Agreement, to perform his obligations under this Agreement and to
consummate the transactions contemplated herein. This Agreement has been duly
executed and delivered by each Stockholder and constitutes a legal, valid and
binding obligation of such Stockholder, enforceable against such Stockholder
in
accordance with its terms. Each Stockholder owns beneficially and of record
all
of the shares of capital stock of the Company identified on Schedule
4.3
as being
owned by such Stockholder, and, except as set forth on Schedule
4.3
(all of
which with respect to the Company Stock shall be terminated or released at
or
prior to the Closing), such capital stock is owned free and clear of all liens,
security interests, charges, voting trusts, restrictions, encumbrances and
claims of every kind.
5.2 No
Violation.
The
execution and delivery of this Agreement by each Stockholder, the performance
by
each Stockholder of his obligations hereunder and the consummation of the
transactions contemplated hereby (a) do not and will not result in any violation
or breach of, constitute a default or give rise to any right to termination,
cancellation or acceleration or loss of any right or benefit under, or result
in
the imposition of any security interest, lien or other encumbrance on any stock
owned by such Stockholder under, any of the terms or provisions of any
agreement, contract, instrument or commitment to which such Stockholder is
a
party or by which such Stockholder or his property is bound, (b) do not and
will
not conflict with or violate any applicable law, statute, ordinance, regulation,
rule, judgment, order, writ, injunction or decree binding upon or applicable
to
such Stockholder or his property, (c) except as set forth on Schedule
5.2,
do not
require any consent, waiver, authorization, or declaration of, filing or
registration with or other action by any governmental department, commission,
board, bureau, agency or instrumentality or any other third party (other than
the filings referred to in Section
2.1),
and
(d) do not and will not trigger any right of first refusal on the part of any
other person to acquire any shares of Company Stock or any assets of the
Company.
5.3 Preemptive
Rights.
No
Stockholder has, and each Stockholder hereby waives, any preemptive or other
right to acquire shares of capital stock of the Company, the Acquisition Sub
or
Buckeye that such Stockholder has or may have had, other than the rights of
the
Stockholders to acquire the Buckeye Stock pursuant to or in connection with
the
Promissory Notes.
5.4 No
Intention to Dispose of Buckeye Stock.
No
Stockholder is under any binding agreement or commitment or has any present
plan, intention or arrangement to sell, exchange or otherwise dispose of any
shares of Buckeye Stock that may be received pursuant to or in connection with
this Agreement or any of the other agreements or documents executed and/or
delivered in connection with this Agreement (including without limitation any
of
the Promissory Notes) or the transactions contemplated hereby or
thereby.
-18-
ARTICLE
6
REPRESENTATIONS
OF BUCKEYE AND THE ACQUISITION SUB
Buckeye
and the Acquisition Sub, jointly and severally, represent and warrant as
follows:
6.1 Organization.
Buckeye
and the Acquisition Sub are each corporations duly organized, validly existing
and in good standing under the laws of the State of Delaware, and each has
the
requisite corporate power and authority to carry on its business as it is now
being conducted. Buckeye and the Acquisition Sub are each qualified to do
business and in good standing in each jurisdiction in which the nature of its
business or the ownership or leasing of its properties makes such qualification
necessary, except where the failure to be so qualified would not have a material
adverse effect on the business, properties or financial condition of Buckeye
and
its subsidiaries, taken as a whole. True, complete and correct copies of the
certificate of incorporation (including amendments thereto) and by-laws
(including amendments thereto) of Buckeye and the Acquisition Sub (collectively,
the “Charter Documents”) as in effect on the date hereof have been delivered to
the Stockholders prior to the date of this Agreement.
6.2 Authorization.
Buckeye
and the Acquisition Sub have the full legal right, power and authority to enter
into this Agreement, to perform their respective obligations under this
Agreement and to consummate the transactions contemplated herein. The execution
and delivery of this Agreement by Buckeye and the Acquisition Sub, the
performance by Buckeye and the Acquisition Sub of their respective obligations
herein and the consummation of the transactions contemplated herein have been
duly authorized by all necessary corporate action on the part of Buckeye and
the
Acquisition Sub. This Agreement has been duly executed and delivered by Buckeye
and the Acquisition Sub and constitutes a legal, valid and binding obligation
of
Buckeye and the Acquisition Sub, enforceable against each such corporation
in
accordance with its terms.
6.3 No
Violations.
The
execution and delivery of this Agreement by Buckeye and the Acquisition Sub,
the
performance by Buckeye and the Acquisition Sub of their respective obligations
hereunder and the consummation of the transactions contemplated hereby (a)
do
not and will not conflict with or violate any provision of the Charter
Documents, (b) do not and will not result in any violation or breach of,
constitute a default or give rise to any right to termination, cancellation
or
acceleration or loss of any right or benefit under, any of the terms or
provisions of any Authorization, or any agreement, contract, instrument or
commitment to which Buckeye or the Acquisition Sub is a party or by which
Buckeye or the Acquisition Sub or their properties are bound which would,
individually or in the aggregate, have a material adverse effect on the
business, properties or financial condition of Buckeye and its subsidiaries,
taken as a whole, (c) do not and will not conflict with or violate any law,
statute, ordinance, regulation, rule, judgment, order, writ, injunction or
decree binding upon or applicable to Buckeye or the Acquisition Sub or any
of
their respective properties which would, individually or in the aggregate,
have
a material adverse effect on the business, properties or financial condition
of
Buckeye and its subsidiaries, taken as a whole, and (d) do not and will not
require any consent, waiver, authorization or declaration of, filing or
registration with or other action by any governmental department, commission,
board, bureau, agency or instrumentality or any other third party (other than
the filings referred to in Section
2.1
and
filings of notices required by any applicable securities laws).
6.4 Buckeye
Stock.
Upon
the issuance thereof pursuant to the terms of the Promissory Notes, the Buckeye
Stock to be delivered to the Stockholders pursuant to or in connection with
the
Promissory Notes will be duly authorized and validly issued and fully paid
and
nonassessable. The shares of Buckeye Stock to be issued to the Stockholders
pursuant to this Agreement will not have been registered under the 1933
Act.
-19-
6.5 Securities
Law Compliance.
For the
sole purpose of demonstrating compliance with applicable securities laws and
without affecting in any respect any representations or warranties made by
any
Stockholder or the Company in this Agreement, Buckeye and the Acquisition Sub
represent that they have had an adequate opportunity to review the properties,
books and records of the Company and ask questions and receive answers from
the
officers of the Company concerning all matters relating to the Company,
including the background and experience of the current officers of the Company,
and all such questions have been answered to their satisfaction.
ARTICLE
7
COVENANTS
PRIOR TO CLOSING
7.1 Access
and Cooperation; Due Diligence; Confidentiality.
(a) Between
the date of this Agreement and the Closing Date, the Company will, and the
Stockholders will and will cause the Company to, afford to the officers and
authorized representatives of Buckeye and the Acquisition Sub access to all
of
the Company’s sites, properties, books and records upon reasonable notice and
during normal business hours and will furnish Buckeye and the Acquisition Sub
with such additional financial and operating data and other information as
to
the business and properties of the Company as Buckeye or the Acquisition Sub
may
from time to time reasonably request. The Company and the Stockholders will
cooperate with Buckeye and the Acquisition Sub, and their respective
representatives, auditors and counsel, in the preparation of any documents
or
other material which may be required in connection with any documents or
materials required by this Agreement.
(b) Between
the date of this Agreement and the Closing Date, Buckeye will afford to the
officers and authorized representatives of the Company and the Stockholders
access to all of Buckeye’s and the Acquisition Sub’s sites, properties, books
and records upon reasonable notice and during normal business hours and will
furnish the Company and the Stockholders with such additional financial and
operating data and other information as to the business and properties of
Buckeye and the Acquisition Sub as the Company or any Stockholder may from
time
to time reasonably request. Buckeye and the Acquisition Sub will cooperate
with
the Company and the Stockholders, and their representatives, auditors and
counsel, in the preparation of any documents or other material which may be
required in connection with any documents or materials required by this
Agreement.
(c) All
information obtained by any of the parties hereto from any of the other parties
hereto under this Agreement (including pursuant to this Section
7.1
or
Section
10.1(c))
or
otherwise in connection with the transactions contemplated hereby will be held
in strict confidence by the receiving party, and the receiving party will not
use such information or disclose it to others (other than counsel, accountants
and other representatives of the receiving party engaged in connection with
this
transaction, who will be subject to the provisions of this Section
7.1(c)),
except
with written permission of the disclosing party; provided that the foregoing
restrictions will not apply to any information (i) that is or becomes in the
public domain by publication or otherwise through no action of the receiving
party or any of its representatives, (ii) that was known to the receiving party
prior to the time of disclosure by the disclosing party, (iii) that is
rightfully obtained by the receiving party from a third party that has the
legal
right to disclose such information, or (iv) that the receiving party is required
by law or any legal process or proceeding to disclose. The restrictions in
this
Section
7.1(c)
shall
cease to apply to Buckeye or the Acquisition Sub from and after the Closing
Date
with respect to information received from the Stockholders or the
Company.
-20-
7.2 Conduct
of Business Pending Closing.
Between
the date of this Agreement and the Closing Date, the Company will, except as
set
forth on Schedule
7.2:
(a) carry
on
its business in substantially the same manner as it has heretofore and not
introduce any material new method of management, operation or
accounting;
(b) maintain
its properties and facilities, including those held under leases, in as good
working order and condition as at present, ordinary wear and tear
excepted;
(c) perform
in all material respects all of its obligations under agreements relating to
or
affecting its assets, properties or rights;
(d) keep
in
full force and effect present insurance policies or other comparable insurance
coverage;
(e) use
its
reasonable efforts to maintain and preserve its business organization intact,
retain its present salaried employees and maintain its relationships with
suppliers, customers and others having business relations with the
Company;
(f) comply
with all permits, laws, statutes, ordinances, regulations and rules, and
judgments, orders and decrees of any court or other governmental department,
commission, board, bureau, agency or instrumentality having jurisdiction over
it; and
(g) maintain
and comply with the terms of its present debt and lease instruments and not
enter into any amendments thereto or any new debt or lease instruments, without
the prior written consent of Buckeye (which consent shall not be unreasonably
withheld).
7.3 Prohibited
Activities.
Except
as set forth in Schedule
7.3,
between
the date hereof and the Closing Date, the Company will not, without prior
written consent of Buckeye:
(a) make
any
change in the Company Charter Documents;
(b) issue
any
securities, subscriptions, options, warrants, calls, conversion rights or
commitments relating to its securities of any kind;
(c) declare
or pay any dividend, or make any distribution in respect of its capital stock
or
directly or indirectly purchase, redeem or otherwise acquire or retire for
value
any shares of its capital stock;
(d) enter
into any contract or commitment (including without limitation any vehicle lease)
or incur or agree to incur any liability or make any capital expenditures,
except if it is in the normal course of business consistent with past practice,
does not involve the purchase or lease of additional vehicles, and involves
an
amount not in excess of $25,000;
(e) create,
assume or permit to exist any mortgage, pledge or other lien or encumbrance
upon
any of its assets or properties whether now owned or hereafter acquired, except
(i) liens for taxes either not yet due or being contested in good faith and
by
appropriate proceedings (and for which contested taxes adequate reserves have
been established and are being maintained), or materialmen’s, mechanics’,
workers’, repairmen’s or other like liens arising by operation of law and
securing amounts not yet due or being contested in good faith by appropriate
proceedings (and for which contested amounts adequate reserves have been
established and are being maintained) in the ordinary course of business, or
(ii) liens set forth on Schedule
4.13;
-21-
(f) sell,
assign, lease or otherwise transfer or dispose of any property or equipment
except in the normal course of business;
(g) negotiate
or enter into any agreement for the acquisition of any business or the start-up
of any new business (except with Buckeye and its Affiliates);
(h) merge
or
consolidate or agree to merge or consolidate with or into any other corporation
or other entity (except as contemplated by this Agreement);
(i) waive
any
material rights or claims of the Company, provided that the Company may
negotiate and adjust bills, client invoices, accounts payable and accounts
receivable in the ordinary course of business and in a manner consistent with
past practice;
(j) increase
present salaries and commission levels for any officer, director, employee
or
agent except for ordinary and customary salary increases for employees (but
not
officers, directors or agents) in accordance with past practices;
(k) make
any
loans or advances to, or capital contributions or investments in, any person
or
entity;
(l) commit
a
material breach or amend or terminate any material agreement or instrument,
Authorization or other right of the Company;
(m) enter
into any agreement with any Stockholder or any relative or Affiliate of any
Stockholder; or
(n) enter
into any other transaction outside the ordinary course of its business or
prohibited hereunder.
7.4 No
Shop.
Neither
any Stockholder, the Company, nor any agent, employee, officer, director,
trustee or any representative of any of the foregoing will, during the period
commencing on the date of this Agreement and ending with the earlier to occur
of
the Closing Date or the termination of this Agreement in accordance with its
terms, directly or indirectly, solicit or initiate the submission of proposals
or offers from any person or entity for, participate in any discussions
pertaining to, or furnish any information to any person or entity other than
Buckeye, the Acquisition Sub or their authorized agents relating to, any
acquisition or purchase of all or a material amount of the assets of, or any
equity interest in, the Company or any merger, consolidation or business
combination of or involving the Company.
7.5 Agreements
to be Terminated.
The
Stockholders and the Company shall terminate, on or prior to the Closing Date
(a) any stockholders agreements, voting agreements, voting trusts,
subscriptions, options, warrants, calls, conversion rights or commitments of
any
kind which obligate the Company to issue any securities or purchase, redeem
or
otherwise acquire any securities or any interests therein and all employment
agreements between the Company and any employee (but not any non-competition,
non-solicitation or non-disclosure provisions contained therein), and (b) any
existing agreement between the Company and any Stockholder or any of its
Affiliates (except as set forth on Schedule
9.11).
The
Company and the Stockholders shall provide Buckeye with proof of the
terminations required pursuant to this Section 7.5.
-22-
7.6 Notification
of Certain Matters.
From
and after the date of this Agreement until the Closing, each party hereto shall
promptly notify the other parties hereto of (a) any representation or warranty
made by it in connection with this Agreement was untrue or inaccurate when
made,
(b) the occurrence or non-occurrence of any event the occurrence or
non-occurrence of which would be likely to cause any condition to the
obligations of any party to effect the Merger or the other transactions
contemplated by this Agreement not to be satisfied, or (c) the failure of the
Company or the Stockholders, on the one hand, or Buckeye or the Acquisition
Sub,
on the other hand, as the case may be, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it pursuant to this
Agreement which would be likely to result in any condition to the obligations
of
any party to effect the Merger or the other transactions contemplated by this
Agreement not to be satisfied.
7.7 Interim
Financial Statements.
The
Stockholders shall cause the Company to, and the Company shall, not later than
ten days after the last day of each month which ends following the execution
of
this Agreement and in any event sufficiently in advance of the Closing Date
to
enable Buckeye sufficient time for review, provide to Buckeye the unaudited
balance sheets of the Company as of the end of such month and the unaudited
statements of income, shareholders’ equity and cash flows of the Company for
such month and for the period from the beginning of the fiscal year of the
Company to the end of such month. The Stockholders and the Company covenant
that
such financial statements shall be prepared in accordance with generally
accepted accounting principles applied on a consistent basis and such financial
statements will in the case of balance sheets present fairly in all material
respects the financial position of the Company as of the dates indicated and
in
the case of statements present fairly in all material respects the results
of
operations of the Company for the periods indicated therein.
7.8 Further
Assurances.
The
parties hereto agree to execute and deliver, or cause to be executed and
delivered, such further instruments or documents or take such other action
as
may be reasonably necessary or convenient to carry out the transactions
contemplated hereby.
ARTICLE
8
CONDITIONS
PRECEDENT TO OBLIGATIONS OF
THE
STOCKHOLDERS AND THE COMPANY
The
obligations of the Stockholders and the Company with respect to actions to
be
taken on the Closing Date are subject to the satisfaction or waiver on or prior
to the Closing Date of all of the following conditions. If, as of the Closing
Date, any of such conditions has not been satisfied, the Stockholders and the
Company shall have the right to terminate this Agreement or, in the alternative,
waive any condition not so satisfied. Notwithstanding the foregoing, the
consummation of the Merger shall constitute a waiver of any conditions not
so
satisfied. However, no such waiver shall be deemed to affect the survival of
the
representations and warranties of Buckeye and the Acquisition Sub contained
in
Article
6.
8.1 Representations
and Warranties; Performance of Obligations.
All
representations and warranties of Buckeye and the Acquisition Sub contained
in
Article 6
shall be
true and correct as of the date of this Agreement and, if the Closing Date
is
other than the date of this Agreement, shall be true and correct in all material
respects as of the Closing Date as though such representations and warranties
had been made on and as of that date, except that those representations and
warranties which address matters only as of a particular date only shall be
required to be true and correct as of such date; all of the terms, covenants
and
conditions of this Agreement to be complied with and performed by Buckeye and
the Acquisition Sub on or before the Closing Date shall have been duly complied
with and performed in all material respects; and certificates to the foregoing
effect dated the Closing Date and signed by an officer of Buckeye and the
Acquisition Sub shall have been delivered to the Stockholders.
-23-
8.2 No
Litigation.
No
action or proceeding before a court or any other governmental agency or body
shall have been instituted or threatened which seeks to restrain or prohibit
the
Merger or which seeks to recover substantial damages relating to the Merger,
and
no governmental agency or body shall have taken any other action or made any
request of the Company relating to the Merger or the other transactions
contemplated by this Agreement as a result of which the Company deems it
inadvisable to proceed with the transactions hereunder.
8.3 Consents
and Approvals.
All
necessary consents of and filings with any governmental authority or agency
relating to the consummation of the transaction contemplated herein shall have
been obtained and made.
8.4 No
Material Adverse Change.
No
event or circumstance shall have occurred with respect to Buckeye or any of
its
subsidiaries which would constitute a material adverse effect on the business,
properties or financial condition of Buckeye and its subsidiaries, taken as
a
whole.
8.5 Certificates
of Incorporation; Good Standing Certificates.
Buckeye
and the Acquisition Sub each shall have delivered to the Company copies of
their
respective certificates of incorporation (including amendments thereto),
certified as of a recent date by the Secretary of State of Delaware, and a
certificate, dated as of a recent date, duly issued by the Secretary of State
of
Delaware and the Secretary of State (or other appropriate governmental
authority) in each other state in which the Acquisition Sub is authorized to
do
business, showing that each of Buckeye and the Acquisition Sub is in good
standing and authorized to do business in such jurisdiction.
8.6 Secretary’s
Certificate.
The
Company shall have received a certificate or certificates, dated the Closing
Date and signed by the Secretary or an Assistant Secretary of Buckeye and of
the
Acquisition Sub, certifying as to the completeness and correctness of attached
copies of Buckeye’s and the Acquisition Sub’s respective articles or
certificates of incorporation (including amendments thereto), by-laws (including
amendments thereto), and resolutions of the Boards of Directors and, if
required, the stockholders of Buckeye and the Acquisition Sub approving
Buckeye’s and the Acquisition Sub’s entering into this Agreement and the
consummation of the transactions contemplated hereby.
8.7 Pledge
Agreement.
The
Stockholders shall have received a counterpart of the Pledge Agreement executed
by Buckeye (the “Pledge Agreement”) and the stock certificate evidencing the
stock of the Company being pledged pursuant to the Pledge
Agreement.
8.8 [Intentionally
Omitted]
8.9 Employment
Agreements.
Each of
the persons listed on Schedule
8.9
shall
have been afforded the opportunity to enter into an employment agreement in
substantially the form attached as Exhibit
D.
8.10 [Intentionally
Omitted]
-24-
8.11 EPA
Action and Former Stockholder Debt.
The
Proposed EPA Settlement Documents shall be in a form, and the state of the
negotiations with the EPA shall be at such a point, where the Company and the
Stockholders believe the EPA Action can be settled in a manner and upon terms
that are acceptable to the Company and the Stockholders. Buckeye and the obligor
under and the holder of the Former Stockholder Debt shall have agreed upon
the
manner in which the Former Shareholder Debt will be repaid by Buckeye and
Buckeye shall make or cause the Company to make any initial payment that may
be
required to be made pursuant to such payoff arrangement at the time of the
Closing.
8.12 Closing
Deliveries.
The
Stockholders shall have received the deliveries required to be made by Buckeye
pursuant to Section 3.2.
8.13 Satisfaction.
All
actions, proceedings, instruments and documents required to carry out the
transactions contemplated by this Agreement or incidental hereto and all other
related legal matters shall be reasonably satisfactory to the Company and its
counsel.
ARTICLE
9
CONDITIONS
PRECEDENT TO OBLIGATIONS OF
BUCKEYE
AND THE ACQUISITION SUB
The
obligations of Buckeye and the Acquisition Sub with respect to actions to be
taken on the Closing Date are subject to the satisfaction or waiver on or prior
to the Closing Date of all of the following conditions. If, as of the Closing
Date, any of such conditions has not been satisfied, Buckeye and the Acquisition
Sub shall have the right to terminate this Agreement or, in the alternative,
waive any condition not so satisfied. Notwithstanding the foregoing, the
consummation of the Merger shall constitute a waiver of any conditions not
so
satisfied. However, no such waiver shall be deemed to affect the survival of
the
representations and warranties of the Company or the Stockholders contained
in
this Agreement.
9.1 Representations
and Warranties; Performance of Obligations.
All the
representations and warranties of the Stockholders and the Company contained
in
this Agreement shall be true and correct as of the date of this Agreement and,
if the Closing Date is other than the date of this Agreement, shall be true
and
correct in all material respects as of the Closing Date as though such
representations and warranties had been made on and as of such date, except
that
those representations and warranties which address matters only as of a
particular date only shall be required to be true and correct as of such date;
all of the terms, covenants and conditions of this Agreement to be complied
with
or performed by the Stockholders and the Company on or before the Closing Date
shall have been duly performed or complied with in all material respects; and
certificates to the foregoing effect dated the Closing Date and signed by the
Stockholders and by the President of the Company shall have been delivered
to
Buckeye.
9.2 No
Litigation.
No
action or proceeding before a court or any other governmental agency or body
shall have been instituted or threatened which seeks to restrain or prohibit
the
Merger or which seeks to recover substantial damages relating to the Merger,
and
no governmental agency or body shall have taken any other action or made any
request of Buckeye or the Acquisition Sub relating to the Merger or the other
transactions contemplated by this Agreement as a result of which Buckeye or
the
Acquisition Sub deems it inadvisable to proceed with the transactions
hereunder.
9.3 Consents
and Approvals.
All
necessary consents of and filings with any governmental authority or agency
relating to the consummation of the transactions contemplated herein shall
have
been obtained and made, and all consents and approvals of third parties listed
on Schedule
4.22(b)
and
Schedule
5.2
shall
have been obtained.
-25-
9.4 No
Material Adverse Effect.
No
event or circumstance shall have occurred with respect to the Company which
would constitute a material adverse effect on the business, properties,
operations, condition (financial or otherwise) or prospects of the Company,
and
the Company shall not have suffered any material change, loss or damage to
any
of its properties or assets, whether or not covered by insurance, which change,
loss or damage materially affects or impairs the ability of the Company to
conduct its business.
9.5 Charters
and Good Standing Certificates.
The
Company shall have delivered to Buckeye copies of its certificate or articles
of
incorporation (including amendments thereto) certified as of a recent date
by
the appropriate governmental authority in the Company’s state of incorporation,
and a certificate, dated as of a recent date, duly issued by the appropriate
governmental authority in the Company’s state of incorporation and in each state
in which the Company is authorized to do business, showing the Company is in
good standing and authorized to do business in such jurisdiction.
9.6 Secretary’s
Certificate.
Buckeye
shall have received a certificate, dated the Closing Date and signed by the
Secretary or an Assistant Secretary of the Company, certifying as to the
completeness and correctness of attached copies of the Company’s certificate or
articles of incorporation (including amendments thereto), by-laws (including
amendments thereto), and resolutions of the Board of Directors and the
Stockholders approving the Company’s entering into this Agreement and the
consummation of the transactions contemplated hereby.
9.7 [Intentionally
Omitted]
9.8 Pledge
Agreement.
Buckeye
shall have received a counterpart of the Pledge Agreement dated as of the
Closing Date executed by each of the other parties thereto.
9.9 Employment
Agreements.
Each of
the persons listed on Schedule
9.9
shall
have entered into an employment agreement in substantially the form attached
as
Exhibit D.
9.10 Stockholders’
Release.
Each
Stockholder shall have delivered to Buckeye an instrument, in form and substance
satisfactory to Buckeye, dated the Closing Date, releasing the Company, Buckeye,
the Acquisition Sub and the Surviving Corporation from any and all claims of
such Stockholder against the Company, and any and all obligations of the Company
to such Stockholder.
9.11 Termination
of Related Party and Other Agreements.
Except
for the agreements set forth on Schedule
9.11,
Buckeye
shall have received satisfactory evidence (a) that all existing agreements
between the Company and any Stockholder, any relative of any Stockholder and
any
Affiliates of any Stockholder shall have been canceled effective prior to or
as
of the Closing Date, and (b) that the terminations required by Section
7.6
shall
have been obtained.
9.12 Debt.
The
terms of the payoff arrangements for the Former Stockholder Debt and the
repayment and other terms of the other Debt of the Company shall be, or shall
have been amended and modified to be, acceptable to Buckeye and will not be
able
to be accelerated as a result of the Merger or the other transactions
contemplated to occur in connection with this Agreement. Except as set forth
in
Schedule
9.12,
each
Stockholder shall have repaid or caused to have been repaid, or shall repay
or
cause to be repaid at the Closing, all indebtedness of such Stockholder or
his
Affiliates owing to the Company, whether or not then due or
matured.
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9.13 [Intentionally
Omitted]
9.14 Non-Competition
and Confidentiality Agreement.
Buckeye
shall have received the Non-Competition and Confidentiality Agreement executed
by each Stockholder in substantially the form attached as Exhibit
E.
9.15 Transfer
Restriction Agreement.
Buckeye
shall have received a Transfer Restriction Agreement executed by each
Stockholder in the form provided to the Stockholders by Buckeye.
9.16 EPA
Action.
The
Proposed EPA Settlement Documents shall be in a form, and the state of the
negotiations with the EPA shall be at such a point, where Buckeye and the
Acquisition Sub believes the EPA Action can be settled in a manner and upon
terms that are acceptable to Buckeye and the Acquisition Sub.
9.17 Closing
Deliveries.
Buckeye
shall have received the deliveries required to be made by the Stockholders
and
the Company pursuant to Schedule
2.4
and
Section
3.2.
9.18 Due
Diligence Review.
Buckeye
shall be satisfied with the results of its due diligence investigation and
review of the Company with respect to, among other matters, the business,
operations, assets, contracts, legal compliance, non-recurring expenses and
future prospects of the Company.
9.19 Approval
of the Stockholders.
Each
Stockholder shall have voted all of his shares of Company Stock in favor of
the
Merger and Buckeye shall have been provided with a copy of a unanimous written
consent to such effect executed by all of the Stockholders.
9.20 Lien
Search Reports.
Buckeye
shall have received Uniform Commercial Code lien search reports and such other
lien search reports as it may require and such search reports shall not disclose
any unpermitted liens which are not terminated on or before the
Closing.
9.21 Satisfaction.
All
actions, proceedings, instruments and documents required to carry out the
transactions contemplated by this Agreement or incidental hereto and all other
related legal matters shall have been approved by counsel to
Buckeye.
ARTICLE
10
COVENANTS
OF BUCKEYE AND THE STOCKHOLDERS
AFTER
CLOSING
10.1 Preparation
and Filing of Tax Returns.
(a) Buckeye
shall, if possible, file or cause the Company to be filed all separate Returns
(other than Returns for income Taxes) of the Company for all taxable periods
that end on or after September 1, 2006 (and which are not required to be
filed prior to the Closing Date) and shall pay or cause to be paid all Tax
liabilities shown by such Returns to be due, provided that such payment shall
not affect in any manner any rights that Buckeye, the Acquisition Sub or the
Surviving Corporation may have to indemnification as provided in Article
11.
The
Stockholders shall prepare and file or cause to be prepared and filed (at the
Stockholders’ expense) all federal, state and local Tax Returns for the Company
for all taxable periods that end on or before September 1, 2006 and all federal
state and local income Tax Returns for the Company for all taxable periods
that
end on or before the Closing Date (including any stub period Tax Returns for
the
period ending on the Closing Date). All such Returns shall be prepared on a
basis that is consistent with past practice and shall be reasonably acceptable
to Buckeye. At least twenty business days before filing any such Return, the
Stockholders’ Representative shall submit the Return to Buckeye for review and
approval (which approval shall not be unreasonably withheld and such Returns
shall be deemed to have been approved unless Buckeye notifies the Stockholders’
Representative that Buckeye objects to the Return within ten business days
of
Buckeye’s receipt of the Return). Buckeye shall pay or cause to be paid all Tax
liabilities (in excess of all amounts already paid with respect thereto) that
are shown to be due on such Returns, provided that any such payments shall
not
affect in any manner any rights that Buckeye, the Acquisition Sub or the
Surviving Corporation may have to indemnification as provided in Article
11.
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(b) Buckeye
shall file or cause to be filed all separate Returns of, or that include, the
Surviving Corporation for all taxable periods ending after the Closing
Date.
(c) Each
party hereto shall, and shall cause its subsidiaries and Affiliates to, provide
to each of the other parties hereto such cooperation and information as any
of
them reasonably may request in filing any Return, amended Return or claim for
refund, determining a liability for Taxes or a right to refund of Taxes or
in
conducting any audit or other proceeding in respect of Taxes. Such cooperation
and information shall include providing copies of all relevant portions of
relevant Returns, together with relevant accompanying schedules and relevant
work papers, relevant documents relating to rulings or other determinations
by
taxing authorities and relevant records concerning the ownership and Tax basis
of property, which such party may possess. Each party shall make its employees
reasonably available on a mutually convenient basis at its cost to provide
explanation of any documents or information so provided. Subject to the
preceding sentence, each party required to file Returns pursuant to this
Agreement shall bear all costs of filing such Returns.
10.2 Preservation
of Employee Benefit Plans.
Following the Closing Date, Buckeye shall not terminate any health insurance
or
401(k) plan in effect at the Company immediately prior to the Merger until
such
time as Buckeye is able to replace such plan with a plan that is applicable
to
the Surviving Corporation, provided that Buckeye shall have no obligation to
provide replacement plans that have the same terms and provisions as the
existing plans.
10.3 Purchase
Price Adjustment.
(a) On
or
prior to April 30, 2008, and if the Stockholder’s Representative elects to have
the Purchase Price Adjustment Amount calculated based only upon the Second
Measurement Period as provided in this Section, on or prior to April 30, 2009,
Buckeye may deliver to the Stockholders' Representative a written notice setting
forth the Purchase Price Adjustment Amount. If Buckeye fails to deliver a notice
of the Purchase Price Adjustment Amount on or prior to April 30, 2008 or, in
the
event the Stockholder’s Representative elects to have the Purchase Price
Adjustment Amount measured based upon the Second Measurement Period, on or
prior
to April 30, 2009 the Purchase Price Adjustment Amount shall be deemed to be
zero.
(b) If
Buckeye delivers a notice pursuant to Section 10.3(a), the Stockholders'
Representative shall have thirty (30) days from the date such notice is given
to
give written notice to Buckeye stating that (i) the Stockholders object to
Buckeye's determination of the Purchase Price Adjustment Amount and specifying
in detail the basis for such objection (a "Purchase Price Adjustment Objection
Notice") or (ii) in the case of the notice given on or prior to April 30, 2008,
the Stockholders elect to extend the extend the “Maturity Date” as defined in
the Promissory Notes from September 30, 2008 to September 30, 2009 and
to have the Purchase Price Adjustment Amount calculated based only upon the
Second Measurement Period (rather than the First Measurement Period) (an
“Extension Notice”). If the Stockholders' Representative fails to give a
Purchase Price Adjustment Objection Notice or, if permitted, an Extension Notice
within such thirty (30) day period, the final determination of the Purchase
Price Adjustment Amount shall be as stated in the notice given by Buckeye
barring manifest error. If the Stockholders' Representative gives an Extension
Notice the Purchase Price Adjustment Amount shall be calculated based upon
the
Second Measurement Period (and not the First Measurement Period) and the
Maturity Date of each Promissory Note shall be extended automatically to
September 30, 2009 (from September 30, 2008). If the Stockholders'
Representative gives a Purchase Price Adjustment Objection Notice within such
thirty (30) day period and the Stockholders' Representative and Buckeye are
unable to resolve and finally determine such disputed items within a period
of
fifteen (15) days after delivery of the Purchase Price Adjustment Objection
Notice, an independent certified public accountant selected by Buckeye and
reasonably acceptable to the Stockholders' Representative (the "Section 10.3
Accountant") will review the computation and shall make a determination as
to
the Purchase Price Adjustment Amount as promptly as practical and shall endeavor
to make such determination within thirty (30) days of the submission of the
dispute to the Section 10.3 Accountant. The determination of the Section 10.3
Accountant shall be in lieu of arbitration pursuant to Article 14 and will
be
conclusive and binding upon the parties. The costs of the Section 10.3
Accountant will be paid fifty percent (50%) by the Stockholders (jointly and
severally) and fifty percent (50%) by Buckeye.
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(c) Within
five (5) days after the final determination of the Purchase Price Adjustment
Amount, the amount of the Purchase Price Adjustment Amount shall be applied
to
reduce the unpaid principal amounts of the Promissory Notes and any unpaid
and
accrued interest on the Promissory Notes. The total Purchase Price Adjustment
Amount shall not exceed the aggregate initial principal amount of the Promissory
Notes that is not permitted to be converted at the election of the holders
into
Buckeye Stock pursuant to the terms of the Promissory Notes. The Stockholders
acknowledge that, since any Purchase Price Adjustment is to be deducted from
and
offset against the Promissory Notes, any payments otherwise due under the
Promissory Notes may be withheld pending the resolution of any disputed items
with respect to the Purchase Price Adjustment Amount. If a Purchase Price
Adjustment Amount is required to be paid, then the interest accruing on the
Promissory Notes since the date they were issued shall be recalculated as if
the
Purchase Price Adjustment Amount was never part of the principal amount of
the
Promissory Notes and the amount of the Purchase Price Adjustment Amount and
any
such excess interest that was paid to the holders of the Promissory Notes may
be
set off and offset by Buckeye against either the principal amount of the
Promissory Notes or any future payments of interest due and payable on the
Promissory Notes; provided, however, that if any such set off or offset is
made
or proposed to be made for the Purchase Price Adjustment Amount prior to the
time the Purchase Price Adjustment Amount has been agreed upon or finally
determined pursuant to this Section, the amount set off or offset by Buckeye
shall be limited to the estimated amount of the Purchase Price Adjustment
Amount, and shall not include any such excess interest until the earliest of
the
date the Purchase Price Adjustment Amount is agreed to by the parties or finally
determined pursuant to his Section or the date the Promissory Notes
mature.
(d) As
used
in this Agreement, the following terms shall have the following
meanings:
(i) "EBIT"
shall mean an amount equal to:
(A) the
net
income of the Surviving Corporation during the applicable Measurement Period
(excluding interest income and any extraordinary gains or gains from the sale
of
assets (other than inventory sold in the ordinary course of business));
plus
(B) any
amount subtracted in determining the Surviving Corporation’s net income for such
period for interest and taxes;
calculated
in each case in accordance with generally accepted accounting principles, but
allocating to the Surviving Corporation in a manner reasonably determined by
Buckeye in accordance with Buckeye’s standard practices on a non-discriminatory
basis the Surviving Corporation’s share of expenses incurred or paid by Buckeye
or its affiliates which benefit or are for the benefit of the Surviving
Corporation, which relate to or are otherwise incurred as a result of the
existence, activities or operations of the Surviving Corporation (including
without limitation any such expenses for insurance, employee benefits,
accounting services and legal services for the Surviving Corporation) or which
are otherwise specifically allocable to the Surviving Corporation (but not
any
general overhead or other expenses which do not relate to and are not incurred
as a result of the existence, activities or operations of the Surviving
Corporation). In calculating EBIT for purposes of Section 10.3, the amount
up to
$100,000 that Buckeye is required to be pay or cause to be paid as the EPA
Penalty pursuant to the Proposed EPA Settlement Documents and the interest
and
principal paid by Buckeye or the Surviving Corporation on the Former Shareholder
Debt shall not be included as expenses.
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(ii) “EBIT
Deficit” shall mean (A) $0, if EBIT equals or exceeds the EBIT Target or if the
EBIT Target exceeds EBIT by $35,000 or less, or (B) an amount equal to the
EBIT
Target minus EBIT, if the EBIT Target exceeds EBIT by more than
$35,000.
(iii) "EBIT
Target" shall mean $700,000, provided that in the event that the operations
of
any other business are combined with those of the Surviving Corporation (whether
the result of an acquisition or otherwise) prior to the end of the applicable
Measurement Period, such amount shall be increased by an amount equal to the
projected EBIT for the business operations to be combined with those of the
Surviving Corporation (prorated on a reasonable basis to reflect the projected
increased EBIT through the end of each applicable Measurement Period), as
mutually agreed upon by the Stockholders and Buckeye in good faith ; provided,
however, that the no such operations shall be combined with those of the
Surviving Corporation prior to the end of the applicable Measurement Period
unless the Stockholders and the Buckeye have agreed upon the amount of the
adjustment, if any, to be made to the EBIT Target as a result of such
combination.
(iv) “Measurement
Period” means the period from January 1, 2007 to December 31, 2007 (the “First
Measurement Period”) or the period from January 1, 2008 to December 31, 2008
(the “Second Measurement Period”), as applicable.
(v) “Purchase
Price Adjustment Amount” shall mean an amount equal to the product of the EBIT
Deficit for the First Measurement Period or the Second Measurement Period,
as
the case may be, multiplied by five (5); provided, however, that the Purchase
Price Adjustment Amount shall not exceed the aggregate initial principal amount
of the Promissory Notes that is not permitted to be converted at the election
of
the holders into Buckeye Stock pursuant to the terms of the Promissory
Notes.
The
Stockholders acknowledge and agree that Buckeye may, but is not required to,
provide the Surviving Company with any Additional Capital during the Measurement
Period, whether or not requested by the Stockholders, and Buckeye shall not
be
required to adjust the EBIT Target or the EBIT of the Surviving Corporation
if
Buckeye elects not to provide any Additional Capital to the Surviving
Corporation, whether or not requested by the Stockholders.
10.4 EPA
Action Settlement.
The
Stockholders shall use their best efforts to cause the EPA Action to be promptly
and finally settled and resolved on terms not less favorable to the Company
and
the Stockholders than are currently set forth in the Proposed EPA Settlement
Documents and to cause the termination of any ongoing or continuing covenants
applicable to the Company under the final EPA settlement documents (other than
the obligation to pay any unpaid installments or payments of up to the EPA
Penalty) as a result of the closing of the transactions contemplated by this
Agreement. Buckeye shall pay, or cause the Company to pay, the installments
required to be paid under the final EPA settlement documents as the EPA Penalty
up to, but not exceeding $100,000 in the aggregate. The Stockholders jointly
and
severally agree to pay or reimburse Buckeye or the Surviving Corporation
immediately upon demand for any and all other amounts, including without
limitation any investigation costs, civil penalties, attorneys’ fees, compliance
costs or other fees, costs, expenses and amounts, that may be required to be
paid by the Company or the Stockholders in connection with the EPA Action or
the
activities alleged to have occurred in the EPA Action in excess of such $100,000
aggregate amount and shall indemnify, defend, protect and hold harmless Buckeye
and the Surviving Corporation from any such costs, penalties, attorneys’ fees,
compliance costs or other fees, expenses, costs or amounts in excess of such
$100,000 aggregate amount and any other obligations, liabilities, losses,
damages, liabilities actions, suits proceedings, demands, assessments,
adjustments, costs and expenses (including reasonable attorneys’ fees and costs
of investigation) resulting or arising from the EPA Action or the activities
alleged to have occurred in the EPA Action, including without limitation any
enhanced penalties that may result from the failure to obtain the termination
of
the ongoing covenants of the Company under the final settlement documents or
the
failure of the Stockholders to settle the EPA Action on terms not less favorable
to the Company than those contemplated above.
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10.5 Payment
for Additional Working Capital.
The
Stockholders acknowledge that Buckeye has agreed to utilize a reduced Minimum
Working Capital Amount for purposes of calculating, pursuant to Schedule
2.4,
the
consideration to be paid to the Stockholders upon the Merger and that the use of
a larger Minimum Working Capital Amount would have reduced the consideration
that would have been paid to the Stockholders. Buckeye may (but shall not be
obligated to) provide further or additional funds or working capital to the
Surviving Corporation, whether on a temporary or permanent basis, whether
through advances, capital contributions, the incurrence of additional
indebtedness from Buckeye or third parties or otherwise (“Additional Capital”),
and, if Buckeye elects in its discretion to provide the Surviving Corporation
with or permit the Surviving Corporation to obtain any Additional Capital,
Buckeye shall determine the manner in which any such Additional Capital will
be
provided; it being acknowledged that such funds may be provided in the form
of
interest bearing debt. The Stockholders jointly and severally agree that in
the
event the Surviving Corporation obtains any Additional Capital prior to the
end
of the applicable Measurement Period and there exists at the end of the
applicable Measurement Period more than $50,000 of such Additional Capital
(the
aggregate amount above $50,000 being referred to as the “Additional Amount”)
that has not been repaid with funds generated through the ordinary business
operations of the Surviving Corporation, then within thirty (30) days after
the
end of the applicable Measurement Period and notification from Buckeye of any
Additional Amount, the Stockholders jointly and severally shall pay such
Additional Amount to Buckeye by reducing the principal amount of the Promissory
Notes that is not permitted to be converted at the election of the holders
into
Buckeye Stock pursuant to the terms of the Promissory Notes (or if such
Promissory Notes have been paid, by paying cash up to the amounts actually
received pursuant to the Promissory Notes with respect to the portion of the
principal amount thereof that was not permitted to be converted into Buckeye
Stock by the holders). Notwithstanding the foregoing, in the event that
following a request by the Stockholders’ Representative for Additional Capital
for the Surviving Corporation the Stockholders’ Representative and Buckeye,
after considering the financial condition, cash flow and expected sources and
uses of cash of the Surviving Corporation, mutually agree that Additional
Capital is necessary to enable the Surviving Corporation to meet its then
current obligations during the applicable Measurement Period during which EBIT
is to be measured pursuant to Section 10.3, Buckeye shall use reasonable efforts
to provide or cause to be provided to the Surviving Corporation the Additional
Capital required within 60 days of such mutual agreement, either in the form
of
debt or additional equity as determined by Buckeye; provided, however, that
in
no event shall Buckeye be required to provide such Additional Capital or cause
such Additional Capital to be provided if and to the extent, after giving effect
thereto, the aggregate amount of Additional Capital provided or caused to be
provided to the Surviving Corporation and not repaid or returned would exceed
$50,000 in the aggregate.
10.6 Specified
Marks. Subject
to the provisions of this Section, the parties hereby acknowledge and agree
that
as a result of the transactions contemplated by this Agreement and certain
transfers contemplated to occur thereafter, the Specified Marks may be
transferred and owned after the Closing by Buckeye or an affiliate of Buckeye
and Buckeye or such affiliate shall have all rights of ownership with respect
thereto, including the right to use, license and sublicense the use of the
Specified Marks throughout the United States. In the event that through the
exercise of the Stockholders’ rights under the Pledge Agreement, the
Stockholders become the owners of the Surviving Corporation, Buckeye shall
license on a perpetual and royalty free basis the rights to use the Specified
Marks in Sacramento, Placer, Eldorado, Yolo, ▇▇▇▇▇▇, Yuba, and San ▇▇▇▇▇▇▇
counties in California (the “Sacramento Area”) to the Surviving Corporation
pursuant to a mutually acceptable license agreement and Buckeye and its
affiliates shall retain all rights with respect to the Specified Marks in all
other parts of the United States. Notwithstanding the foregoing, in the event
the Stockholders become the owners of the Surviving Corporation as a result
of
the exercise of their rights under the Pledge Agreement, the Stockholders also
may elect simultaneously to reacquire or have the Surviving Corporation
reacquire all rights in the Specified Marks acquired by Buckeye in connection
with the transactions contemplated by this Agreement provided that the
Stockholders return all of the Buckeye Stock, if any, issued pursuant to this
Agreement and/or any of the agreements or documents executed and/or delivered
in
connection with this Agreement (including without limitation the Promissory
Notes) or the transactions contemplated hereby or thereby; provided, however,
that in the event the Stockholders or the Surviving Corporation reacquire the
Specified Marks, the Stockholders or the Surviving Corporation, as applicable,
shall simultaneously enter into (i) a mutually acceptable license agreement
for
Buckeye and its affiliates to continue using the Specified Marks in territories
which are other than the Sacramento Area and providing for the payment of
certain mutually agreed upon reasonable royalties for such license or (ii)
if
the parties are unable to agree upon a license agreement, a license agreement
for a transitional term of three (3) years which shall permit Buckeye and its
affiliates to continue to use such marks in the general areas in which they
then
are being used on an exclusive and royalty-free basis while Buckeye and its
affiliates transition to other marks.
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10.7 Release
from Guarantees; Indemnity.
A list
of certain personal guaranties of Company obligations made by the Stockholders
is set forth on Schedule
10.7
and the
Stockholders shall notify Buckeye and the Surviving Company of any other similar
personal guaranties of Company obligations made by the Stockholders prior to
the
Closing. The Stockholders, Buckeye and the Surviving Corporation shall cooperate
and use commercially reasonable efforts to have the Stockholders released from
any and all of Company obligations that the Stockholders so personally
guaranteed. In the event Buckeye and the Surviving Company are unable to obtain
the release of such guaranties, Buckeye and the Surviving Company shall
indemnify, defend, protect and hold harmless the Stockholders from and against
any and all losses, damages, liabilities, actions, suits, claims, proceedings,
demands, assessments, adjustments, costs and expenses, including reasonable
attorneys' fees, incurred by the Stockholders as a result of, arising from
or
connected with the failure to obtain the release of the aforesaid personal
guarantees.
ARTICLE
11
INDEMNIFICATION
The
Stockholders, Buckeye and the Acquisition Sub each make the following covenants
that are applicable to them, respectively:
11.1 Indemnification
by the Stockholders.
Each
Stockholder, jointly and severally, covenants and agrees that he will indemnify,
defend, protect and hold harmless Buckeye, the Acquisition Sub and the Surviving
Corporation from and against all losses, damages, liabilities, actions, suits,
proceedings, demands, assessments, adjustments, costs and expenses (including
reasonable attorneys’ fees and expenses of investigation) incurred by Buckeye,
the Acquisition Sub or the Surviving Corporation as a result of or arising
from
(a) any breach of the representations and warranties of any of the Stockholders
or the Company set forth in this Agreement or in any certificates delivered
in
connection herewith, or (b) any breach of any covenant or agreement on the
part
of any of the Stockholders or the Company under this Agreement, or (c) any
matters identified on Schedule
4.20.
The
obligation to indemnify Buckeye, the Acquisition Sub and the Surviving
Corporation pursuant to this Section
11.1
shall
apply only to the extent that notice of the claim for indemnification pursuant
to this Section
11.1
is given
in good faith to the Stockholders on or prior to the applicable Expiration
Date.
11.2 Indemnification
by Buckeye.
Each of
Buckeye and the Acquisition Sub, jointly and severally, covenants and agrees
that it will indemnify, defend, protect and hold harmless the Stockholders
from
and against all losses, damages, liabilities, actions, suits, proceedings,
demands, assessments, adjustments, costs and expenses (including reasonable
attorneys’ fees and expenses of investigation) incurred by the Stockholders as a
result of or arising from (a) any breach of the representations and warranties
of Buckeye or the Acquisition Sub set forth in this Agreement or in any
certificates delivered in connection herewith or (b) any breach of any covenant
or agreement on the part of Buckeye or the Acquisition Sub under this Agreement.
The obligation to indemnify the Stockholders pursuant to this Section
11.2
shall
apply only to the extent that notice of the claim for indemnification pursuant
to this Section
11.2
is given
in good faith to Buckeye on or prior to the applicable Expiration
Date.
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11.3 Third
Person Claims.
(a) Promptly
after any party hereto (the “Indemnified Party”) receives notice of or has
knowledge of any claim by a person or entity not a party to this Agreement
(“Third Person”), or the commencement of any action or proceeding by a Third
Person, for which the Indemnified Party intends to make a claim against any
party obligated to provide indemnification pursuant to Section
11.1
or
Section
11.2
(the
“Indemnifying Party”), the Indemnified Party shall give the Indemnifying Party
written notice of such claim or the commencement of such action or proceeding,
provided that the failure to give such prompt notice shall not affect the
Indemnifying Party’s obligation to indemnify absent a showing of actual
prejudice to the Indemnifying Party. Such notice shall state the nature and
the
basis of such claim and, to the extent determinable, a reasonable estimate
of
the amount thereof.
(b) The
Indemnifying Party shall have the right to defend and settle, at its own expense
and by its own counsel, any such matter so long as the Indemnifying Party
pursues the same in good faith and diligently, provided that the Indemnifying
Party shall not settle any criminal matter, without the written consent of
the
Indemnified Party, or any other matter, without the written consent of the
Indemnified Party which in the case of matters which are not criminal matters
will not be unreasonably withheld or delayed. If the Indemnifying Party
undertakes to defend or settle, it shall promptly notify the Indemnified Party
of its intention to do so, and the Indemnified Party shall cooperate with the
Indemnifying Party and its counsel in the defense thereof and, subject to the
preceding sentence, in any settlement thereof. Such cooperation shall include,
but shall not be limited to, furnishing the Indemnifying Party with any books,
records or information reasonably requested by the Indemnifying Party that
are
in the Indemnified Party’s possession or control. In the event that counsel to
the Indemnifying Party shall have a conflict of interest that prevents counsel
for the Indemnifying Party from representing the Indemnified Party, or in the
event that the Indemnified Party is not reasonably satisfied with the counsel
selected by the Indemnifying Party, the Indemnified Party shall have the right
to participate in such matter through counsel of its own choosing and the
Indemnifying Party will reimburse the Indemnified Party for the reasonable
expenses of its counsel. After the Indemnifying Party has notified the
Indemnified Party of its intention to undertake to defend or settle any such
asserted liability, and for so long as the Indemnifying Party diligently pursues
such defense, the Indemnifying Party shall not be liable for any additional
legal expenses incurred by the Indemnified Party in connection with any defense
or settlement of such asserted liability, except (i) as set forth in the
preceding sentence, and (ii) to the extent such participation is requested
by
the Indemnifying Party, in which event the Indemnified Party shall be reimbursed
by the Indemnifying Party for reasonable additional legal expenses and
out-of-pocket expenses. If the Indemnifying Party notifies the Indemnified
Party
of its intention to undertake to defend any claim by a Third Person, the
Indemnifying Party shall be conclusively presumed to have agreed to indemnify
and hold the Indemnified Party harmless with respect thereto and, subject only
to the limitations set forth in Section
11.5,
the
Indemnified Party shall be entitled to be indemnified for all losses, damages,
liabilities, actions, suits, proceedings, demands, assessments, adjustments,
costs and expenses (including without limitation reasonable attorneys fees
and
expenses of investigation) with respect to such claim.
(c) If
the
Indemnifying Party does not undertake to defend such matter to which the
Indemnified Party is entitled to indemnification hereunder, or fails diligently
to pursue such defense, the Indemnified Party may undertake such defense through
counsel of its choice, at the cost and expense of the Indemnifying Party, and
the Indemnified Party may settle such matter, and the Indemnifying Party shall
reimburse the Indemnified Party for the amount paid in such settlement and
any
other liabilities or expenses incurred by the Indemnified Party in connection
therewith; provided,
however,
that
under no circumstances shall the Indemnified Party settle any such matter
without the written consent of the Indemnifying Party, which consent shall
not
be unreasonably withheld or delayed.
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11.4 Exclusive
Remedy.
The
indemnification provided for in this Article
11
shall
(except as prohibited by law) be the exclusive remedy in any action seeking
damages or any other form of monetary relief brought by any party to this
Agreement against another party for any breach or violation of any
representation or warranty in this Agreement or any covenant or agreement to
be
performed pursuant to this Agreement on or before the Closing; provided,
however,
that
nothing herein shall be construed to limit the right of a party, in a proper
case, to seek specific performance or other injunctive relief for any such
breach.
11.5 Limitations
on Indemnification.
(a) Buckeye,
the Acquisition Sub and the Surviving Corporation shall not assert any claim
for
indemnification hereunder against any Stockholder with respect to any breach
or
violation of any representation or warranty in this Agreement or any covenant
or
agreement to be performed on or before the Closing until such time as the
aggregate amount of all claims which such parties may have against the
Stockholders, whether individually or collectively, shall exceed $50,000, at
which point Buckeye, the Acquisition Sub and the Surviving Corporation may
assert a claim for indemnification for all claims in excess of the initial
$50,000; provided,
however,
that the
foregoing limitation shall not apply to any claims with respect to the
representations and warranties contained in Section
4.9,
Section
4.10,
Section
4.21,
Section
4.22(b)(v),
or
Article
5
or any
confirmation thereof, or matters relating or alleged to relate to the EPA Action
(other than amounts up to the $100,000 aggregate amount to be paid by or to
be
caused to be paid by Buckeye as the EPA Penalty, but including any amounts
required to be paid in connection with the EPA Action in excess of the $100,000
aggregate amount to be paid or to be caused to be paid by Buckeye as the EPA
Penalty) or warranty claims with respect to the Phoenix Systems (which are
not
claims for damage to other property or personal injury). No Stockholder shall
assert any claim for indemnification hereunder against Buckeye or the
Acquisition Sub with respect to any breach or violation of any representation
or
warranty in this Agreement or any covenant or agreement to be performed on
or
before the Closing until such time as the aggregate of all claims which the
Stockholders may have against Buckeye and/or the Acquisition Sub, whether
individually or collectively, shall exceed $50,000, at which point the
Stockholders may assert a claim for indemnification for all claims in excess
of
the initial $50,000.
(b) No
Stockholder shall be entitled to indemnification under this Article
11
if and
to the extent that such Stockholder’s claim for indemnification is directly or
indirectly related to a breach by the Company or any Stockholder of any
representation, warranty, covenant or other agreement set forth in this
Agreement. None of Buckeye, the Acquisition Sub or the Surviving Corporation
shall be entitled to indemnification under this Article
11
if and
to the extent that such party’s claim for indemnification is directly or
indirectly related to a breach by Buckeye or the Acquisition Sub of any
representation, warranty, covenant or other agreement set forth in this
Agreement.
(c) Notwithstanding
any other term of this Agreement, the Stockholders (collectively) shall not
be
liable under this Article
11
with
respect to any breach or violation of any representation or warranty in this
Agreement or covenant or agreement to be performed pursuant to this Agreement
on
or before the Closing for an amount which exceeds the Aggregate Consideration
Amount.
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(d) It
is
hereby understood and agreed that if a Stockholder has converted a portion
of
its Promissory Note into Buckeye Stock such Stockholder may, but is not required
to, satisfy an indemnification obligation under Section 11.1 for a breach of
a
representation or warranty through payment of a combination of Buckeye Stock
and
cash; provided,
however,
that if
any Stockholder elects to do so, such Stockholder will provide Buckeye Stock
and
cash such that the portion provided in Buckeye Stock is not greater than the
percentage of the principal amount of the Promissory Note of such Stockholder
that has been converted into Buckeye Stock, with any shares of Buckeye Stock
so
surrendered to satisfy any such indemnification obligation to be valued at
their
Fair Market Value.
ARTICLE
12
TERMINATION
OF AGREEMENT
12.1 Termination.
This
Agreement may be terminated at any time prior to the Closing Date
solely:
(a) by
mutual
consent of Buckeye, the Stockholders and the Company;
(b) by
the
Stockholders or the Company, on the one hand, or by Buckeye, on the other hand,
if the transactions contemplated by this Agreement to take place at the Closing
shall not have been consummated by September 30, 2006; provided,
however,
that (i)
none of the Stockholders nor the Company shall be entitled to terminate this
Agreement pursuant to this Section
12.1(b)
if the
failure of such transactions to be consummated is due to the willful failure
of
the Company or any Stockholder to perform any of their respective obligations
under this Agreement required to be performed by any of them prior to or on
the
Closing Date and (ii) Buckeye shall not be entitled to terminate this Agreement
pursuant to this Section
12.1(b)
if the
failure of such transactions to be consummated is due to the willful failure
of
the Acquisition Sub or Buckeye to perform any of their respective obligations
under this Agreement required to be performed by them prior to or on the Closing
Date;
(c) by
the
Stockholders or the Company, on the one hand, or by Buckeye or the Acquisition
Sub, on the other hand, if a material breach or default shall be made by the
other parties in the observance or in the due and timely performance of any
of
the covenants or agreements contained herein, and the curing of such breach
or
default shall not have been made before the earlier of (i) ten business days
after receipt of notice specifying the breach and requesting that such breach
be
cured and (ii) the Closing Date; or by the Stockholders or the Company, if
the
conditions set forth in Article
8
have not
been satisfied or waived as of the Closing Date; or by Buckeye, if the
conditions set forth in Article
9
have not
been satisfied or waived as of the Closing Date.
12.2 Liabilities
in Event of Termination.
The
termination of this Agreement 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.
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ARTICLE
13
SECURITIES
LAWS REPRESENTATIONS AND COVENANTS
13.1 Compliance
with Law.
Each
Stockholder acknowledges that the shares of Buckeye Stock to be delivered to
such Stockholder pursuant to or in connection with this Agreement or any of
the
agreements or documents executed and/or delivered in connection with this
Agreement (including without limitation any Promissory Notes) or the
transactions contemplated hereby or thereby have not been and will not be
registered under the 1933 Act or any state securities laws and may not be resold
without compliance with the 1933 Act and any applicable state securities laws.
Each Stockholder further represents, warrants and covenants that (a) the shares
of Buckeye Stock to be acquired by such Stockholder pursuant to or in connection
with this Agreement or any of the agreements or documents executed and/or
delivered in connection with this Agreement (including without limitation any
Promissory Notes) or the transactions contemplated hereby or thereby are being
acquired solely for his own account, for investment purposes only, and with
no
present intention of distributing, selling or otherwise disposing of it in
connection with a distribution, and (b) none of the shares of Buckeye Stock
issued to such Stockholder will be offered, sold, assigned, pledged,
hypothecated, transferred or otherwise disposed of except after full compliance
with all of the applicable provisions of the 1933 Act and the rules and
regulations of the SEC and after full compliance with any applicable state
securities laws. Each Stockholder acknowledges that all the Buckeye Stock shall
bear the following legend:
THE
SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF
1933, AS AMENDED (THE “1933 ACT”), OR UNDER ANY STATE SECURITIES LAWS, AND MAY
ONLY BE SOLD OR OTHERWISE TRANSFERRED IF THE HOLDER HEREOF COMPLIES WITH THE
1933 ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
13.2 Economic
Risk; Sophistication.
Each
Stockholder represents and warrants that such Stockholder (a) is an “accredited
investor” as such term is defined in Regulation D promulgated under the
1933 Act, (b) is able to bear the economic risk of an investment in the Buckeye
Stock to be acquired pursuant to or in connection with this Agreement or any
of
the agreements or documents executed and/or delivered in connection with this
Agreement (including without limitation any Promissory Notes) or the
transactions contemplated hereby or thereby, (c) can afford to sustain a total
loss of such investment, and (d) has such knowledge and experience in financial
and business matters that he is capable of evaluating the merits and risks
of
the proposed investment in the Buckeye Stock. Each Stockholder further
represents and warrants that such Stockholder has been supplied with, or had
access to, information to which a reasonable investor would attach significance
in making investment decisions and, without limiting the generality of the
foregoing, has had an adequate opportunity to ask questions and receive answers
from the officers of Buckeye and its subsidiaries concerning any and all matters
relating to Buckeye and its subsidiaries and the transactions described herein,
including the background and experience of the current and proposed officers
and
directors of Buckeye and its subsidiaries, the plans for the operations of
the
business of Buckeye and its subsidiaries, and any plans for additional
acquisitions and the like. Each Stockholder represents and warrants that such
Stockholder has asked any and all questions in the nature described in the
preceding sentence and all questions have been answered to his satisfaction
and
further that such Stockholder is aware that Buckeye has a very limited operating
history.
13.3 Tax
Matters.
EACH
PARTY ACKNOWLEDGES AND AGREES THAT THE TRANSACTION CONTEMPLATED BY THIS
AGREEMENT IS EXPECTED TO BE A TAXABLE TRANSACTION AND THAT NONE OF THE PARTIES
HERETO HAVE MADE ANY REPRESENTATION OR WARRANTY WITH RESPECT TO THE POTENTIAL
OR
ACTUAL FEDERAL, STATE AND LOCAL TAX CONSEQUENCES OF THIS TRANSACTION AND EACH
PARTY HAS CONSULTED AND RELIED SOLEY UPON THEIR OWN TAX ADVISORS WITH SUCH
MATTERS AND ASSUMED ALL RISKS RELATED THERETO.
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ARTICLE
14
ARBITRATION
14.1 Dispute.
Any
dispute, controversy or claim arising out of or relating to this Agreement
or
its breach, interpretation, termination or validity, including any question
whether a matter is subject to arbitration hereunder, is referred to herein
as a
“Dispute.”
14.2 Arbitration.
If the
parties fail to settle any Dispute within thirty (30) days after any party
has
given notice to the other parties hereto of the claimed existence of a Dispute,
the Dispute shall be resolved by a confidential, binding arbitration. All such
Disputes shall be arbitrated pursuant to the Comprehensive Arbitration Rules
and
Procedures of J.A.M.S. Endispute before an arbitrator or arbitrators selected
in
the manner provided in such rules and procedures, except that (a) the number
of
calendar days referred to in the second sentence of Rule 6(a) shall be
twenty-one (21) instead of fourteen (14), (b) the number of calendar days
referred to throughout Rule 9 shall be twenty-one (21) instead of fourteen
(14),
and (c) the “Final Offer (or Baseball)” Arbitration Option shall not be used
unless otherwise agreed in writing.
14.3 Arbitration
Procedures.
Judgment upon any award rendered by the arbitrators may be entered in any court
having jurisdiction, and each party hereto consents and submits to the
jurisdiction of such court for purposes of such action. The statute of
limitations, estoppel, waiver, laches and similar doctrines, which would
otherwise be applicable in any action brought by a party, shall be applicable
in
any arbitration proceeding, and the commencement of an arbitration proceeding
shall be deemed the commencement of an action for those purposes. The Federal
Arbitration Act shall apply to the construction, interpretation and enforcement
of this arbitration provision. Each party shall bear its own expenses (including
without limitation the fees and expenses of legal counsel and accountants)
in
connection with such arbitration and Buckeye and the Stockholders shall each
bear one-half of the arbitrators’ fees and expenses, provided that the arbitral
award shall allocate such fees and expenses of counsel, accountants, other
advisors and the arbitrators according to the relative success of the contesting
parties in the arbitration, as determined by the arbitrators. The arbitrators
shall award an amount equal to the actual monetary damages suffered by each
contesting party, which may include interest costs incurred by such party and,
in the case of the Surviving Corporation, actual reductions in earnings before
interest, taxes, depreciation and amortization for the period in which they
occur, but the arbitrators shall not have the authority to award punitive
damages.
ARTICLE
15
GENERAL
15.1 Cooperation.
On and
after the Closing Date, each Stockholder, Buckeye and the Acquisition Sub shall
each deliver or cause to be delivered to the other parties hereto such
additional documents, releases, assignments and instruments as the others may
reasonably request for the purpose of carrying out the purposes of this
Agreement. The Stockholders will cooperate and use their reasonable efforts
to
have the present officers, directors and employees of the Company cooperate
with
Buckeye and the Surviving Corporation on and after the Closing Date in
furnishing information, evidence, testimony and other assistance in connection
with any Return filing obligations, actions, proceedings, arrangements or
disputes of any nature with respect to matters pertaining to all periods prior
to the Closing Date.
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15.2 Successors
and Assigns.
This
Agreement and the rights and obligations of the parties hereunder may not be
assigned (except by operation of law) without the prior written consent of
the
other parties hereto and shall be binding upon and shall inure to the benefit
of
the parties hereto, the successors of Buckeye, the Acquisition Sub and the
Company, the heirs and legal representatives of each Stockholder and any
permitted assigns of the parties.
15.3 Entire
Agreement.
This
Agreement (including the Schedules and Exhibits attached hereto) and the
documents delivered pursuant hereto constitute the entire agreement and
understanding among the Stockholders, the Company, the Acquisition Sub and
Buckeye, and supersede any and all prior agreements and understandings, relating
to the subject matter of this Agreement.
15.4 Counterparts.
This
Agreement may be executed simultaneously in two or more counterparts, each
of
which shall be deemed an original and all of which together shall constitute
but
one and the same instrument.
15.5 Brokers
and Agents.
Each
party represents and warrants that, except as set forth on Schedule
15.5,
it
employed no broker or agent in connection with this transaction, and agrees
to
indemnify the other parties hereto against all loss, cost, damages or expense
arising out of claims for fees or commission of brokers employed or alleged
to
have been employed by such indemnifying party.
15.6 Expenses;
Taxes.
Whether
or not the transactions herein contemplated shall be consummated (except as
otherwise provided in Section
12.2),
(a)
each of Buckeye and the Acquisition Sub will pay their respective fees, expenses
and disbursements (including without limitation attorneys’ fees) incurred in
connection with the subject matter of this Agreement, including all costs and
expenses incurred in the performance and compliance with all conditions to
be
performed by such corporation under this Agreement and (b) the Stockholders
will
pay the fees, expenses and disbursements (including without limitation
attorneys’ fees) incurred by any of them or the Company in connection with the
subject matter of this Agreement, including all costs and expenses incurred
in
the performance and compliance with all conditions to be performed by the
Stockholders and the Company under this Agreement (i.e.,
the
Company will not bear any fees, expenses or disbursements incurred by the
Stockholders or the Company in connection with the subject matter of this
Agreement) ; provided, however, that if the Company has already paid, or Buckeye
permits the Surviving Corporation to pay, any such fees, expenses or
disbursements required to be paid by the Stockholders pursuant to this Section,
the obligation of the Stockholders to reimburse the Company may be recorded
as,
and shall be, a receivable evidencing a joint and several obligation of the
Stockholders to be paid upon demand of Buckeye or Surviving Corporation or,
at
the election of Buckeye, offset or deducted against any amounts owed to any
of
the Stockholders. The Stockholders shall pay all sales, use, transfer, real
property transfer, recording, gains, stock transfer and other similar taxes
and
fees (“Transfer Taxes”) imposed in connection with the Merger. Each Stockholder
shall file, or cause to be filed, all necessary documentation and Returns with
respect to such Transfer Taxes. In addition, each Stockholder acknowledges
that
he, and not the Company, Buckeye or the Acquisition Sub, will pay all taxes
due
upon receipt of the consideration payable pursuant to Section
2.4,
and
will assume all tax risks and liabilities in connection with the transactions
contemplated hereby.
15.7 Notices.
All
notices required or permitted hereunder shall be in writing and shall be deemed
to have been duly given (a) as of the date delivered if delivered personally,
by
courier or by courier service, (b) on the date of telephone or electronic
confirmation of receipt if sent by telex, telecopier, facsimile or other
electronic transmission, or (c) three business days after deposit in the United
States mail, registered or certified mail, postage prepaid, return receipt
requested, to the parties at the following addresses:
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(a) If
to
Buckeye, the Acquisition Sub or the Surviving Corporation, addressed as
follows:
▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇
▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier
No.: (▇▇▇) ▇▇▇-▇▇▇▇
Confirm
No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: President
(b) If
to the
Company, addressed as follows prior to the Merger and addressed to the address
set forth for Buckeye after the Merger:
Energy
King, Inc.
▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Telecopier
No.: (▇▇▇) ▇▇▇-▇▇▇▇
Confirm
No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: President
(c) If
to any
Stockholder, addressed to him at the address set forth in Schedule
15.7,
or
to
such other address or number as any party hereto shall specify for itself by
notice given pursuant to this Section
15.7
from
time to time; provided,
however,
that
notices of any change in an address or number shall not be effective until
receipt.
15.8 GOVERNING
LAW.
THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL
LAWS (AND NOT THE CONFLICTS OF LAW PROVISIONS) OF THE STATE OF
DELAWARE.
15.9 VENUE.
EACH OF
THE PARTIES HERETO AGREES THAT ANY DISPUTE ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS AGREEMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING
STATEMENTS OR ACTIONS RELATING TO THIS AGREEMENT THAT IS NOT SUBJECT ARBITRATION
AS PROVIDED IN ARTICLE 14 OF THIS AGREEMENT SHALL BE LITIGATED ONLY IN THE
FEDERAL OR STATE COURTS LOCATED IN SACRAMENTO COUNTY, CALIFORNIA (AND IN THE
CASE OF APPEALS IN THE COURTS IN WHICH APPEALS FROM SUCH COURTS ARE TO BE
HEARD). EACH OF THE PARTIES HERETO IRREVOCABLY SUBMITS TO THE PERSONAL
JURISDICTION OF SUCH COURTS, AND WAIVES ANY OBJECTION THEY MAY HAVE CONCERNING
THE VENUE OR CONVENIENCE OF SUCH FORUM. NOTWITHSTANDING THE FOREGOING, HOWEVER,
ANY PARTY MAY COMMENCE ANY ACTION OR PROCEEDING TO ENFORCE ANY JUDGMENT OBTAINED
AGAINST ANOTHER PARTY IN COMPLIANCE WITH THE FOREGOING PROVISIONS IN ANY
APPROPRIATE JURISDICTION OR COURT.
-39-
15.10 Interpretation.
The
representations, warranties, covenants and agreements of the parties made herein
and at the time of the Closing or in writing delivered pursuant to the
provisions of this Agreement shall survive the consummation of the transactions
contemplated hereby until the applicable Expiration Date. Consummation of the
transactions contemplated herein shall not be deemed a waiver of a breach of
or
inaccuracy in any representation, warranty, covenant or agreement or of any
party’s rights and remedies with regard thereto. No specific representation,
warranty, covenant or agreement contained herein shall limit the applicability
of a more general representation, warranty, covenant or agreement contained
herein. A breach of or inaccuracy in any representation, warranty, covenant
or
agreement shall not be affected by the fact that any more general or less
general representation, warranty, covenant or agreement was not also breached
or
inaccurate. In any case where the concept of materiality is applied more than
once to qualify any provision of this Agreement (whether by cross-referencing
or
incorporation or otherwise), such provision shall be interpreted as if only
one
such materiality qualification applied to it.
15.11 Exercise
of Rights and Remedies.
Except
as otherwise provided herein, no delay of or omission in the exercise of any
right, power or remedy accruing to any party as a result of any breach or
default by any other party under this Agreement shall impair any such right,
power or remedy, nor shall it be construed as a waiver of or acquiescence in
any
such breach or default, or of any similar breach or default occurring later;
nor
shall any waiver of any single breach or default be deemed a waiver of any
other
breach or default occurring before or after that waiver.
15.12 Reformation
and Severability.
In case
any provision of this Agreement shall be invalid, illegal or unenforceable,
it
shall, to the extent possible, be modified in such manner as to be valid, legal
and enforceable but so as to most nearly retain the intent of the parties,
and
if such modification is not possible, such provision shall be severed from
this
Agreement, and in either case the validity, legality and enforceability of
the
remaining provisions of this Agreement shall not in any way be affected or
impaired thereby.
15.13 Remedies
Cumulative.
No
right, remedy or election given by any term of this Agreement shall be deemed
exclusive but each shall be cumulative with all other rights, remedies and
elections available at law or in equity.
15.14 Effect
of Investigation.
Any due
diligence review, audit or other investigation or inquiry undertaken or
performed by or on behalf of any of the parties hereto shall not limit, qualify,
modify or amend the representations, warranties or covenants or agreements
of,
or indemnities by, made or undertaken pursuant to this Agreement, irrespective
of the knowledge and information received (or which should have been received)
therefrom by such party.
15.15 Captions.
The
headings of this Agreement are inserted for convenience only, shall not
constitute a part of this Agreement or be used to construe or interpret any
provision hereof.
15.16 Amendments
and Waivers.
Except
as expressly provided in this Agreement, this Agreement may be amended, modified
or supplemented but only in writing signed by each of the parties hereto. Any
term of this Agreement may be waived only with the written consent of the party
sought to be bound.
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15.18 Stockholders’
Representative.
Each
Stockholder constitutes and appoints ▇▇▇▇▇ ▇▇▇▇▇▇, with full power of
substitution, as its true and lawful agent, attorney-in-fact and representative
(the “Stockholders’ Representative”), with full power and authority in his or
her name, place and ▇▇▇▇▇ to take any and all actions on behalf of such
Stockholder, including without limitation to amend this Agreement, to act on
his
or her behalf and to execute and deliver all notices and other instruments
which
may be provided under this Agreement or in connection with the transactions
contemplated by this Agreement and otherwise act as the Stockholders’
Representative as required under this Agreement. ▇▇▇▇▇ ▇▇▇▇▇▇ hereby accepts
such appointment as the Stockholders’ Representative. Each Stockholder agrees to
be bound by any and all actions taken by the Stockholders’ Representative. Any
action by the Stockholders’ Representative shall be deemed to be authorized and
approved by the Stockholders and neither Buckeye, the Acquisition Sub, the
Surviving Corporation, the Company nor any other person shall be required to
inquire as to whether any such action has been approved by the Stockholders
or
to deal with any of the Stockholders (except as expressly provided herein).
The
foregoing power of attorney is hereby declared to be irrevocable and a power
coupled with an interest, in recognition of the fact that each Stockholder,
Buckeye, the Acquisition Sub, the Surviving Corporation and the Company will
be
relying upon the power of such Stockholders’ Representative to act as
contemplated by this Section
15.18,
and it
shall survive and not be affected by the subsequent incapacity of any
Stockholder or the Merger or any other transactions contemplated hereby or
the
transfer of all or any portion of any Stockholder’s Buckeye Stock and shall
extend to each Stockholder’s heirs, successors, assigns and personal
representatives. In the case of the resignation, death or inability of the
Stockholders’ Representative to serve as such, a successor Stockholders’
Representative shall be designated by the Stockholders. Any such designation
shall be evidenced by a writing signed by the Stockholders and shall take effect
when an executed copy thereof has been delivered to Buckeye, the Acquisition
Sub
and the Company on or prior to the Merger, or to Buckeye and the Surviving
Corporation after the Merger, together with an acceptance by such
successor.
-41-
IN
WITNESS WHEREOF,
the
parties hereto have executed this Agreement as of the day and year first above
written.
|
By:_____________________________________
▇▇▇▇ ▇. ▇▇▇▇▇
President
|
EK
ACQUISITION CORP.
By:_____________________________________
▇▇▇▇ ▇. ▇▇▇▇▇
President
|
|
ENERGY
KING, INC.
By:_____________________________________
▇▇▇▇▇ ▇▇▇▇▇▇
President
|
THE
STOCKHOLDERS:
_____________________________________
▇▇▇▇
▇▇▇▇▇▇▇▇
_____________________________________
▇▇▇▇▇
▇▇▇▇▇▇
_____________________________________
▇▇▇▇▇▇
▇▇▇▇▇▇
|
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