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Exhibit 2.2
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ASSET PURCHASE AGREEMENT
dated as of October 1, 1998
by and among
WELD-TECH ENGINEERING SERVICES, L.P.,
A Texas Limited Partnership
as Buyer
and
WELD-TECH ENGINEERING, L.P.,
A Texas Limited partnership
as Seller
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THIS ASSET PURCHASE AGREEMENT (this "AGREEMENT") is made as of
October 1, 1998, by WELD-TECH ENGINEERING SERVICES, L.P., a Texas limited
partnership ("BUYER"), and WELD-TECH ENGINEERING, L.P., a Texas Limited
Partnership ("SELLER").
Intending to be legally bound hereby, the parties hereto agree
as follows.
ARTICLE I
DEFINITIONS
For purposes of this Agreement, and in addition to the terms
defined elsewhere in this Agreement, the following terms have the meanings
specified or referred to in this Article I:
"AFFILIATE"--any Person which directly or indirectly controls,
is controlled by or is under common control with another Person. The
term "CONTROL" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of
a Person, whether through the ownership of voting securities, by
contract or otherwise.
"BUSINESS"--the current line of business of Seller, the same
being the provision of engineering and fabrication services to the oil
and gas industry, including weld design, fabrication and repair, as
well as materials engineering, testing services and fabrication problem
solving.
"CASH CONSIDERATION"--$11,260,000 plus or minus the amount by
which the Total Equity as of the Closing Date exceeds or is less than
$1,000,000.
"CLOSING DATE"--the date and time as of which the Closing
actually takes place.
"CLOSING DATE BALANCE SHEET"--the balance sheet of Seller as
of the Closing Date prepared on a basis consistent with the balance
sheets described in Section 3.4 hereof.
"CONSENT"--any approval, consent, ratification, waiver, or
other authorization (including any Governmental Authorization).
"EMPLOYMENT AGREEMENTS"--the employment agreements to be
executed and delivered by Messrs. ▇▇▇▇▇▇ and ▇▇▇▇▇ at the Closing.
"ENCUMBRANCE"--any mortgage, easement, right of way, charge,
claim, community property interest, condition, equitable interest,
lien, option, pledge, security interest, right of first refusal, or
restriction or adverse claim of any kind, including any restriction on
use,
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voting, transfer, receipt of income, or exercise of any other attribute
of ownership, or any other encumbrance or exception to title of any
kind.
"ERISA"--the Employee Retirement Income Security Act of 1974
or any successor law, and regulations and rules issued pursuant to that
Act or any successor law.
"GAAP"--generally accepted United States accounting
principles, applied on a basis consistent with the basis on which the
balance sheets and the other financial statements referred to in
Section 3.4 were prepared.
"GOVERNMENTAL AUTHORIZATION"--any approval, consent, license,
permit, certification, registration, waiver or other authorization
issued, granted, given or otherwise made available by or under the
authority of any Governmental Body or pursuant to any Legal
Requirement.
"GOVERNMENTAL BODY"--
(a) The United States or any state, county, city, town,
village, district or other jurisdiction within the
United States of any nature;
(b) Any United States federal, state, local, municipal,
foreign or other government;
(c) Any governmental or quasi-governmental authority of
any nature (including any governmental agency,
branch, department, official or entity and any court
or other tribunal) of the United States or of any
state, county, city, town, village, district or other
jurisdiction within the United States; or
(d) Any body exercising, or entitled to exercise, any
administrative, executive, judicial, legislative,
police, regulatory or taxing authority or power of
any nature of the United States or of any state,
county, city, town, village, district or other
jurisdiction within the United States.
"INDEMNIFIED PERSONS"--Buyer and its Affiliates and their
respective Representatives.
"IRC"--the Internal Revenue Code of 1986, as amended, and
regulations issued by the IRS pursuant to the Internal Revenue Code or
any successor law.
"IRS"--the United States Internal Revenue Service or any
successor agency, and, to the extent relevant, the United States
Department of the Treasury.
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"KNOWLEDGE"- a Person will be deemed to have "Knowledge" of a
particular fact or other matter if:
(a) with respect to an individual, such individual is
actually aware of such fact or other matter; or
(b) with respect to Seller, any of the Partners or the
shareholders of a Partner is actually aware of such
fact or other matter.
"LEGAL REQUIREMENT"--any United States federal, state, local ,
municipal or other administrative order, constitution, law, ordinance,
principle of common law, court order, consent, decree, regulation,
license, permit, statute or treaty.
"ORDER"---any award, decision, injunction, judgment, order,
ruling, subpoena, or verdict entered, issued, made or rendered by any
court, administrative agency or other Governmental Body or by any
arbitrator.
"ORGANIZATIONAL DOCUMENTS"--(a) the articles or certificate of
incorporation and the bylaws of a corporation; and (b) the limited
partnership agreement and the certificate of limited partnership of a
limited partnership.
"PARTNERS"--the partners of Seller, the same being: ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇ ("▇▇. ▇▇▇▇▇"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("▇▇. ▇▇▇▇▇▇"), 5DB Company and
W.T. Holdings, Inc., and the shareholders of 5DB Company and W.T.
Holdings, Inc.
"PERMITTED ENCUMBRANCES" shall mean (a) all zoning or planning
restrictions, permits and other restrictions or limitations imposed by
Governmental Bodies on the use of real property, or any irregularities
in title thereto disclosed on the title report and acceptable to Buyer,
none of which materially detract from the value of such property or
materially impair the intended use of such property by Buyer in the
intended operation of the Business in a manner consistent with Seller's
historic use thereof, (b) all liens for current taxes, assessments or
governmental charges or levies on property not yet due and payable and
(c) all Encumbrances under the contracts and agreements specifically
identified on the Schedule of Permitted Encumbrances annexed to this
Agreement.
"PERSON"--any individual, corporation (including any
non-profit corporation), general or limited partnership, limited
liability company, joint venture, estate, trust, association,
organization, labor union or other entity or Governmental Body.
"PROCEEDING"--any action, arbitration, audit, hearing,
investigation, litigation or suit (whether civil, criminal,
administrative, investigative or informal) commenced, brought,
conducted or heard by or before, or otherwise involving, any
Governmental Body or arbitrator.
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"PROMISSORY NOTE"--the promissory note or notes evidencing the
indebtedness owing by Seller to Continental Casing Corporation.
"REPRESENTATIVE"- with respect to a particular Person, any
director, officer, employee, agent, consultant, advisor, or other
representative of such Person, including legal counsel, accountants,
and financial advisors.
"TAX"--any tax (including any income tax, capital gains tax,
value-added tax, sales tax, property tax, gift tax, estate tax or
transfer tax), levy, assessment, tariff, duty (including any customs
duty), deficiency or other fee, and any related charge or amount
(including any fine, penalty, interest, or addition to tax), imposed,
assessed or collected by or under the authority of any Governmental
Body or payable pursuant to any tax-sharing agreement or any other
Contract relating to the sharing or payment of any such tax, levy,
assessment, tariff, duty, deficiency, or fee.
"TAX RETURN"--any return (including any information return),
report, statement, schedule, notice, form or other document or
information filed with or submitted to, or required to be filed with or
submitted to, any Governmental Body in connection with the
determination, assessment, collection or payment of any Tax or in
connection with the administration, implementation, or enforcement of
or compliance with any Legal Requirement relating to any Tax.
"TOTAL EQUITY"--as of any date, the total assets of Seller
less the total liabilities of Seller, determined on a basis consistent
with the balance sheets described in Section 3.4 hereof.
ARTICLE 11
SALE AND TRANSFER OF PURCHASED ASSETS; CLOSING
2.1. Agreement to Sell
(a) Purchased Assets. Subject to the terms and conditions of
this Agreement, effective on the Closing Date, Seller shall sell, convey,
assign, transfer and deliver to Buyer, free and clear of all Encumbrances of any
kind except for Permitted Encumbrances, all of the assets, properties, rights
and interests of Seller which comprise the Business (collectively, the
"PURCHASED ASSETS"). The Purchased Assets include without limitation the
following:
(i) All equipment, furniture, vehicles, machinery, supplies
and engineering spares and stores and other tangible personal property
used in connection with the Business, including those items listed or
described on Schedule 2.1(a)(i);
(ii) All of the raw materials, work in process and finished
goods on hand relating to the Business and owned by Seller at the time
of Closing (the "INVENTORY");
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(iii) All of Seller's rights and interests under the
contracts, sales orders, purchase orders, equipment leases and other
agreements relating to the Business and identified in Schedule
2.1(a)(iii) (the "CONTRACTS");
(iv) All of Seller's books, records, files and data
(regardless of the medium in which maintained or stored) relating to
the Purchased Assets or the Business (the "RECORDS");
(v) All of Seller's right, title and interest in intellectual
property, including technology, inventions, trade secrets and
proprietary technical information, which is used by Seller in
connection with the Business or the Purchased Assets, including any
right to, or right to use the name "Weld-Tech Engineering" or any
variant or derivative thereof, and any other company name, trade name,
trademark, service ▇▇▇▇ or logo of Seller;
(vi) All of Seller's cash, checks, securities and other cash
equivalents on hand, in transit or on deposit as of the Closing Date;
(vii) All accounts receivable, notes receivable and chattel
paper due, owing, accrued or payable as of the Closing Date which
relate to the operations of the Business;
(viii) The leasehold estate and all rights as lessee in and to
that certain 21.3442 acre tract of land situate in ▇▇▇▇▇▇ County,
Texas, identified in Schedule 2.1(a)(viii) and the buildings, fixtures
and improvements located thereon;
(ix) All product liability and other insurance policies of the
Business; and
(x) Goodwill and the future prospects of the Business.
(b) Excluded Assets- The parties to this Agreement expressly
acknowledge and agree that there shall be excluded from the assets, rights and
properties to be transferred to Buyer hereunder the assets, rights and
properties described below (hereinafter collectively referred to as the
"EXCLUDED ASSETS"):
(i) Seller's labor contracts and employee benefit and pension
plans or any assets thereof (if any);
(ii) Seller's minute books and tax records, and working papers
relating thereto; and
(iii) Any property, rights or interests listed on Schedule 2.1
(b).
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2.2 Agreement to Purchase; Consideration.
(a) Consideration. Subject to the terms and conditions of this
Agreement, Buyer shall purchase the Purchased Assets pursuant to Section 2.1(a)
and in consideration therefor shall pay to Seller the Cash Consideration.
(b) Closing Date Payment. At the Closing, Buyer shall (i) pay
the sum of (x) $11,260,000 plus (y) the Closing Date Estimated Equity Amount (as
defined in Section 2.2(e) hereof) to Seller and (ii) pay off the Promissory Note
(limited to the amount taken into account at Closing in determining Total
Equity), in each case by wire transfer of immediately available funds to
account(s) designated by Seller.
(c) Post Closing Adjustment. The final determination of the
Cash Consideration shall be made, and any payments resulting therefrom shall be
paid, as follows:
(i) Not later than twenty (20) days after the Closing Date,
Seller shall prepare and deliver to Buyer the Closing Date Balance
Sheet, setting forth inter alia the Total Equity, as of the Closing
Date.
(ii) Promptly following receipt of the Closing Date Balance
Sheet Buyer shall review the same as promptly as practicable. Buyer may
deliver to Seller a certificate setting forth specific details of its
objections thereto, such certificate to be furnished not later than
twenty (20) days after receipt by Buyer of the Closing Date Balance
Sheet. If Buyer does not so object within such 20-day period, the Cash
Consideration determined on the basis of the Total Equity shown on the
Closing Date Balance Sheet shall be final and binding on the parties.
If Buyer so objects within such 20-day period, Buyer and Seller shall
endeavor to resolve by written agreement (the "AGREED ADJUSTMENTS") any
differences and, if Seller and Buyer so resolve such differences, the
Cash Consideration determined on the basis of the Total Equity shown on
the Closing Date Balance Sheet, as adjusted by the Agreed Adjustments,
shall be final and binding on the parties.
(iii) If any objections communicated by Buyer in accordance
with Section 2.2(c)(ii) above are not resolved by Agreed Adjustments
within the 10-day period next following the 10-day period referred to
in Section 2.2(c)(ii) above, then Buyer and Seller shall jointly engage
Price Waterhouse Coopers (the "ACCOUNTING FIRM") and shall direct the
Accounting Firm to conduct, as promptly as practicable, but in any
event not later than 45 days after such direction, such review of the
Closing Date Balance Sheet as the Accounting Firm believes to be
necessary to determine the Total Equity as of the Closing Date, and
such determination shall be final and binding on the parties.
(iv) The parties hereto shall make available to each other
and, if applicable, the Accounting Firm, such books, records and other
information (including work papers) as any of them may reasonably
request to evaluate the Total Equity as of the Closing Date Balance
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Sheet. The fees and expenses of the Accounting Firm, if any, shall be
borne equally by Buyer and Seller.
(v) Within five (5) days after final determination of the Cash
Consideration as of the Closing Date, any adjusting payment required to
be made by Buyer to Seller shall be paid to Seller by wire transfer of
immediately available funds to an account designated by Seller; if
final determination of the Cash Consideration as of the Closing Date
results in the Cash Consideration being less than the sum of (x)
$11,260,000 plus (y) the Closing Date Estimated Equity Amount, then
such difference amount shall be paid to Buyer by wire transfer of
immediately available funds to an account designated by Buyer.
(d) Proration of Expenses. To the extent not otherwise taken
into account in determining the Total Equity as of the Closing Date, the
following items shall be apportioned as of the Closing Date as set forth below:
(i) Real Estate and Personal Property Taxes. Real estate and
personal property Taxes shall be prorated for the calendar year in
which the Closing occurs based upon real estate and personal property
Taxes levied in that year by each taxing body (without regard to the
date of the levy or the fiscal year of the taxing body). If the Closing
occurs before the Tax rate is fixed, the apportionment of Taxes for
purposes of payment at the Closing shall be upon the basis of the Tax
rate for the next preceding year applied to the latest assessed
valuation, and an adjustment shall be paid by Buyer or Seller, as the
case may be, as promptly as practicable after the final Tax amount for
the year is determined.
(ii) Utility Charges. The payment of water, power, telephone,
sewer and any other utility charges will be prorated as of the Closing
Date.
(iii) Leases. Rents shall be prorated as of the Closing Date.
If any item cannot be apportioned under this Section 2.2(d) accurately at or as
of the Closing Date or if it is apportioned incorrectly at the Closing or
subsequent thereto, such item shall be apportioned or reapportioned, as the case
may be, as soon as practicable after the Closing Date, or the date on which the
apportionment error is discovered, as the case may be.
(e) Closing Date Estimated Equity Amount. At least two (2)
days prior to the Closing Date, Seller shall deliver to Buyer a statement
setting forth in reasonable detail its estimate of the amount by which the Total
Equity as of the Closing Date exceeds $1,000,000, and such amount, less
$100,000, shall be and be defined herein as the "Closing Date Estimated Equity
Amount".
2.3 Transfer Taxes and Other Costs. The cost of all real
estate transfer taxes shall be borne equally by Seller and Buyer. Seller shall
be responsible for the cost of preparing deeds.
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2.4 Assumption of Certain Liabilities. As further
consideration for the purchase of the Purchased Assets, Buyer shall by
instruments executed and delivered at the Closing, which instruments shall be
reasonably satisfactory to Seller (the "ASSUMPTION AGREEMENTS") assume the
following liabilities of the Seller (collectively, the "ASSUMED LIABILITIES"):
(a) all liabilities and obligations of Seller to be paid or
performed after the Closing Date under the Contracts included in the Purchased
Assets and identified in Schedule 2.1(a)(iv), but only if and to the extent the
same are agreed by Buyer to be assigned and transferred to Buyer;
(b) all liabilities and obligations of Seller set forth on the
Closing Date Balance Sheet; and
(c) any obligation accruing to Seller for Texas unemployment
compensation resulting from Buyer's failure to hire or employ any of Seller's
employees (other than individual Partners) after the Closing Date or Buyer's
later termination of any such employees, which obligations Buyer expressly
agrees promptly to discharge on behalf of Seller or otherwise reimburse Seller
in respect thereof.
Buyer does not hereby, and will not at any time be required to, assume, pay,
perform or discharge any other obligations, claims, liabilities, costs or
expenses of Seller including, without limitation, the following: (i) any
obligation or liability, direct or indirect, fixed or contingent, known or
unknown, incurred prior to the Closing Date, arising out of, resulting from or
in any way related to the Purchased Assets or the Business of Seller, including
any employment (including accrued payroll expenses) or severance obligations of
Seller (other than as expressly assumed pursuant to Section 2.4(c)); (ii) any
obligation or liability, direct or indirect, fixed or contingent, known or
unknown to Seller, arising out of an event, act, condition or occurrence which
took place or occurred on or prior to the Closing Date other than the Assumed
Liabilities; (iii) any Tax liability of Seller; and (iv) any liability of any
kind, direct or indirect, fixed or contingent, arising out of, resulting from or
relating to actions taken or omitted to be taken by Seller after the Closing.
2.5 The Closing. The consummation of the transactions
contemplated by this Article II shall constitute the Closing (the "CLOSING").
The Closing shall occur on October 1, 1998, or such other date as the parties
shall mutually agree, effective at 10:00 AM (such date and time being the
"CLOSING DATE") at the offices of Buyer at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇-▇▇▇▇.
2.6 Instruments of Conveyance and Transfer of Purchased
Assets. Seller will duly execute and deliver to Buyer at the Closing such deeds,
bills of sale, assignments, endorsements and other good and sufficient
instruments of conveyance and transfer (collectively, the "TRANSFER DOCUMENTS")
satisfactory to Buyer as shall be effective to vest in Buyer all of Seller'
right, title and interest in and to the Purchased Assets, and Buyer will duly
execute and deliver to Seller at the Closing the Transfer Documents and the
Assumption Agreements satisfactory to Seller necessary to evidence Buyer's
assumption of the Assumed Liabilities. Simultaneously with such deliveries,
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Seller will take such reasonable steps as necessary or appropriate, to the
extent practicable, to put Buyer in actual possession and operating control of
the Purchased Assets.
2.7 Further Assurances. After the Closing Seller shall from
time to- time at the request of Buyer and without further cost or expense to
Buyer execute and deliver such other instruments of conveyance and take such
other action as Buyer may reasonably request in order to consummate the
transactions contemplated hereby and to vest in Buyer title to the Purchased
Assets. Likewise, on and after the Closing, Buyer shall from time to time at the
request of Seller and without further cost or expense to Seller execute and
deliver such other instruments of assumption and take such other action as
Seller may reasonably request in order to consummate the transactions
contemplated hereby and to confirm Buyer's assumption of the Assumed
Liabilities.
2.8 Allocation of Consideration. The parties hereto
acknowledge and agree that the transactions contemplated hereunder must be
reported in accordance with Section 1060 of the IRC. The parties agree to report
the transactions contemplated hereunder for all Tax purposes (including the
filing of IRC Form 8594) in accordance with the allocation reflected in Schedule
2.8. The parties hereto agree to share information and to cooperate to the
extent necessary to permit the transactions to be properly, timely and
consistently reported in accordance with Section 1060 of the IRC and the
regulations promulgated thereunder.
2.9 Processing of Accounts Receivable. Seller shall promptly
transfer or cause to be transferred to Buyer all amounts that Seller may receive
on and after the Closing in respect of the accounts receivable. Seller shall
refrain from taking any action to encourage an account debtor to dispute a
receivable.
2.10 Risk of Loss. Risk of loss to the Purchased Assets or any
part thereof from the damage or destruction thereof by fire or other casualty
shall remain upon Seller until the later of the Closing or delivery of
possession thereof to Buyer. If, between the date hereof and the Closing, any
portion of the Purchased Assets shall be damaged or destroyed by fire or other
casualty or lost by reason of theft or disappearance which would materially
disrupt the Business, Buyer shall have the option, exercisable by notice to
Seller given prior to the Closing Date to either (i) terminate this Agreement,
and whereupon neither party shall have any further liability to the other
hereunder unless such damage, destruction, casualty or loss is willfully caused
by Seller or (ii) elect to proceed with this Agreement and pay the full Cash
Consideration, less any applicable deductible or uninsured loss, in which case
Seller shall assign to Buyer any insurance proceeds to which Seller may be
entitled as a result of such damage, destruction, casualty or loss. If Buyer
fails to give such written notice, Buyer shall be conclusively deemed to have
chosen option (ii).
2.11 Consent of Third Parties. Notwithstanding anything to the
contrary in this Agreement, this Agreement shall not constitute an agreement to
assign or transfer any permit or approval of any Governmental Body if an
assignment or transfer or an attempt to make such an assignment or transfer
without the Consent of a third party would constitute a breach or violation
thereof or affect adversely the rights of Buyer or Seller thereunder; and any
transfer or assignment
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to Buyer by Seller of any interest under any such permit or approval that
requires the Consent of a third party shall be made subject to such Consent
being obtained. If any such Consent is not obtained on or prior to the Closing
Date, Seller shall continue to use all reasonable efforts to obtain any such
Consent after the Closing Date until such time as such Consent has been
obtained, and Seller will cooperate with Buyer in any lawful and economically
feasible arrangement to provide that Buyer shall receive the interest of Seller,
as the case may be, in the benefits under any such approval or permit or other
agreement or arrangement, including performance by Seller, as agent, if
economically feasible, provided that Buyer shall undertake to pay or satisfy the
corresponding liabilities for the enjoyment of such benefit to the extent Buyer
would have been responsible therefor hereunder if such consent or approval had
been obtained. Seller shall pay and discharge, and shall indemnify and hold
Buyer harmless from and against, any and all out-of-pocket costs of seeking to
obtain or obtaining any such Consent whether before or after the Closing Date.
2.12 Limitation. The Cash Consideration and the value of the
Assumed Liabilities shall not exceed $15,000,000, and if necessary, receivables
shall be excluded (and not paid for) on a dollar-for-dollar basis so as to
comply with such limitation.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer that the following are true and
complete in all material respects:
3.1 Incorporation and Authority. Seller is a limited
partnership duly organized, validly existing and in good standing under the laws
of the State of Texas. Seller has full power and authority to own or lease its
properties and to carry on its Business as and where such properties are now
owned or leased and such Business is now being conducted. Seller has delivered
to Buyer complete and correct copies of its Organizational Documents as amended
and in effect on the date hereof. Seller is not in violation of any requirement
of its Organizational Documents.
3.2 Due Authorization; No Conflict. Seller has the full power
and authority to execute, deliver and consummate this Agreement and the Transfer
Documents to which it is a party and to perform all the terms and conditions
hereof and thereof to be performed by it, and all such action has been duly and
validly authorized by all necessary proceedings on its part. This Agreement
constitutes and, when executed and delivered by Seller, the Transfer Documents
to which Seller is a party will constitute, the legal, valid and binding
obligations of Seller, enforceable against Seller in accordance with their
respective terms, except as the enforceability hereof or thereof may be limited
by bankruptcy, insolvency or other laws of general application relating to or
affecting the enforcement of creditors' rights or by general principles of
equity limiting the availability of equitable remedies. Except as set forth on
Schedule 3.2 hereto, which indicates the Consents to assignment required under
the Contracts, and subject to the obtaining of the approvals of Governmental
Bodies listed in Schedule 3.3, neither the execution and delivery of this
Agreement and the Transfer Documents, the consummation of the transactions
contemplated hereby and thereby
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nor the fulfillment of and compliance with the terms and provisions hereof and
thereof do or will as to Seller (a) violate any Legal Requirement or Order
applicable to Seller, (b) conflict with, result in a breach of or constitute a
default under the organizational Documents of Seller, (c) conflict with, cause
to be void or voidable, result in a breach of, constitute a default (with or
without the giving of notice or the lapse of time or both) under or accelerate
or permit the acceleration of the performance required by, any of the Contracts
or any other material agreement or material instrument to which Seller is a
party or by which Seller or any of its material assets is bound, (d) result in
the creation of any Encumbrance upon any of the Purchased Assets under any such
agreement or instrument or (e) terminate or give any party thereto the right to
terminate any of the Contracts or any such material agreement or instrument.
3.3 Authorizations and Filings. Except as set forth on
Schedule 3.3 hereto, no Consent from any Governmental Body is or will be
necessary in connection with the execution or delivery by Seller of this
Agreement or the Transfer Documents, consummation by Seller of the transactions
herein or therein contemplated or performance of or compliance with the terms
and conditions hereof or thereof by Seller.
3.4 Financial Statements. Seller has delivered to Buyer true,
correct and complete copies of (a) the compiled, unaudited balance sheet of
Seller for the period ended December 31, 1997, and the related compiled,
unaudited statement of income for the year then ended, and (b) the compiled,
unaudited balance sheet of Seller as of August 31, 1998, and the related
compiled statement of income for the eight months then ended. Such financial
statements and notes fairly present the financial condition and the results of
operations, and cash flow of Seller as of the respective dates of and for the
periods referred to in such financial statements, all in accordance with GAAP
except as set forth on Schedule 3.4; the financial statements referred to in
this Section 3.4 reflect the consistent application of such accounting
principles throughout the periods involved.
3.5 Sufficiency of the Purchased Assets. The Purchased Assets
comprise all assets required for the continued conduct by Buyer of the Business
as now being conducted. The Purchased Assets, taken as a whole, constitute all
the properties and assets relating to or used or held for use in connection with
the Business during the past twelve months (except for Inventory sold, Contracts
fully performed, properties or assets replaced by equivalent or superior
properties or assets, in each case in the ordinary course of business, and the
Excluded Assets). Except for Excluded Assets, there are no assets or properties
used in the operation of the Business and owned by any Person other than Seller
that will not be conveyed, leased or licensed to Buyer under valid, current
easements, leases or license arrangements. The Purchased Assets are in all
material respects adequate for the purposes for which such assets are currently
used or are held for use, and are in reasonably good repair and operating
condition (subject to normal wear and tear) and, to the Knowledge of Seller,
there are no facts or conditions affecting the Purchased Assets which could,
individually or in the aggregate, interfere in any material respect with Buyer's
use, occupancy or operation thereof as currently used, occupied or operated by
Seller, or their adequacy for such use.
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3.6 Real Property. Schedule 3.6 identifies all real property
interests which, together with all improvements thereon, easements,
appurtenances, licenses, permits and approvals related thereto, and warranties
associated therewith, are included in the Purchased Assets (collectively, the
"REAL PROPERTY"). Schedule 3.6 further sets forth true and complete copies of
all leases, easements or other instruments in effect on the date hereof which
evidence Seller's interests in Real Property. All such leases, easements and
other instruments are in full force and effect, and to Seller's Knowledge there
is no material default, nor any event which with notice or the lapse of time or
both will become a material default, under any such leases, easements or other
instruments, by Seller or any other party thereto, and no Person is contesting
the rights of Seller thereunder.
3.7 Tangible Personal Property. The property owned by Seller
and identified in Schedule 2.1(a)(i), together with the property leased to
Seller under the equipment leases identified in Schedule 2.1(a)(iii)
(collectively, the "PERSONAL PROPERTY"), constitutes all of the tangible
personal property in the possession or control of Seller as of the date hereof
which relates to the operation of the Business. Except for any Personal Property
which is the subject of a lease, all of the Personal Property is owned by
Seller, free and clear of any and all Encumbrances except Permitted
Encumbrances. With respect to the Personal Property indicated on Schedule
2.1(a)(iii) as being leased by Seller, all such leases are in full force effect
and there is no default, nor any event which with notice or the lapse of time or
both will become a default, under any such lease by Seller or any other parties
thereto.
3.8 Inventory. Except as set forth in Schedule 3.8, (a)all
Inventory being conveyed hereunder is of good, usable and merchantable quality
in all material respects, does not include obsolete or discontinued items and is
of such quality as to meet the quality control standards of Seller and any
applicable governmental quality control standards and (b) all Inventory
consisting of finished goods is salable as current inventory at current prices
in the ordinary course of business. Seller shall convey to Buyer good and
merchantable title to the Inventory free and clear from any lawful Encumbrances
other than Permitted Encumbrances.
3.9 Intellectual Property. Schedule 3.9 contains a current
list of all trademarks applications, trade names, copyrights, patents and patent
applications relating to the Business and owned by Seller, all registered names
relating to the Business under which Seller is doing business and all licenses,
agreements or other arrangements relating to the Business under which Seller has
the right to use any of the foregoing. All such patents, trademarks, copyrights
and applications owned by Seller have been duly registered in, filed in or
issued by the United States Patent and Trademark Office, the United States
Registrar of Copyrights or the corresponding offices of other countries, and
have been properly maintained and renewed in accordance with applicable Legal
Requirements. Seller owns (or possesses adequate licenses or other rights to
use, evidence of which has been delivered to Buyer), and the Purchased Assets
will include, all trademarks, trade names, copyrights and patents and all
inventions, processes and other technical know-how and other proprietary and
property rights used in the conduct of the Business and the Purchased Assets,
free and clear of any and all Encumbrances except Permitted Encumbrances. Except
as described in Schedule 3.9, no notice of conflict with any asserted rights of
others with respect to the foregoing
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has been received by Seller, and to the best Knowledge of Seller, there is no
basis for any contention that as relates to the Business: (a) any of the
patents, trademarks, trade names, copyrights or applications therefor of Seller
are invalid or subject to claim of patent abuse; (b) Seller is infringing in any
material respect any patents, trademarks, trade names or copyrights of others;
(c) Seller is violating any technology or secrecy rights of any Person; or (d)
any patents, trademarks, trade names, copyrights, technology or secrecy rights
are being used contrary to the provisions of any licensing or other agreement.
Seller is taking appropriate steps to ascertain the extent of the business and
financial risks facing Seller as a result of the Year 2000 Risk (that is the
risk that computer applications used by Seller and/or by its suppliers, vendors
and customers may be unable to recognize and perform without error
date-sensitive functions involving certain dates prior to and any date after
December 31, 1999).
3.10 The Contracts; other Agreements. Except for the Contracts
included in the Purchased Assets and identified in Schedule 2.1(a)(iii), Seller,
with respect to its ownership and operation of the Business and the Purchased
Assets, is not a party to or subject to any material contract, agreement, plans
or commitments. True and complete copies of all of the Contracts, agreements,
plans and commitments relating to the Purchased Assets, the Business represented
by the Purchased Assets and the Assumed Liabilities (together with any
amendments and modifications thereto) have been delivered to Buyer. Except as
set forth in Schedule 3.10, (a) each of the Contracts remains in full force and
effect in accordance with the terms thereof, (b) no default, and no event which
with the passage of time or the giving of notice or both could become a default,
by Seller or, to Seller's Knowledge, any other party thereto has occurred and is
continuing under any of the Contracts, (c) Seller has not received any notice
nor is otherwise aware that its performance under any of the Contracts to date
is unsatisfactory to any other parties thereto and (d) no claims for damages or
assertions of nonperformance have been made against Seller under any of the
Contracts. Seller is not aware of any fact or circumstance relating to the
Contracts which would make it unlikely that Buyer would realize the benefits of
the Contracts.
3.11 Suppliers; Raw Materials. Schedule 3.11 sets forth (a)
the names and addresses of all suppliers (including without limitation Seller
and any Affiliates thereof) from which the Business ordered raw materials,
supplies, merchandise and other goods and services with an aggregate purchase
price for each such supplier of $10,000 or more during the twelve-month period
ended August 31, 1998 and (b) the amount for which each such supplier invoiced
the Business during such period. Seller has not received any notice or has any
reason to believe that there has been any material adverse change in the price
of such raw materials, supplies, merchandise or other goods or services, or that
any such supplier will not sell raw materials, supplies, merchandise and other
goods to Buyer at any time after the Closing Date on terms and conditions
similar to those used in its current sales to the Business, subject to general
and customary price increases. To the best Knowledge of Seller, no supplier of
the Business described in clause (a) of the first sentence of this Section has
otherwise threatened to take any action described in the preceding sentence as a
result of the consummation of the transactions contemplated by this Agreement.
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3.12 Litigation. Except as set forth on Schedule 3.12, there
is no action, claim, demand, suit, proceeding, arbitration, grievance, citation,
summons, subpoena, inquiry or investigation of any nature, civil, criminal,
regulatory or otherwise, in law or in equity, pending or to Seller's Knowledge
threatened against or relating to Seller in connection with the Purchased Assets
or the Business or against or relating to the transactions contemplated by this
Agreement, and Seller does not know and has no reason to be aware of any basis
for the same.
3.13 Product Warranties. Except as set forth in Schedule 3.13,
(a) there are no warranties express or implied, written or oral, with respect to
the products of the Business other than warranties under applicable Legal
Requirements, (b) there are no pending or threatened claims with respect to any
such warranty, including warranties under applicable Legal Requirements, and
Seller has no liability with respect to any such warranty, whether known or
unknown, absolute, accrued, contingent or otherwise and whether due or to become
due.
3.14 Insurance. Schedule 3.14 contains a complete and correct
list and summary description of (a) all insurance policies maintained by Seller
for the benefit of or in connection with the Purchased Assets or the Business
and (b) all claims made by Seller under any policy of insurance during the past
two years with respect to the Purchased Assets or the Business. Seller has
delivered to Buyer complete and correct copies of all such policies together
with all riders and amendments thereto. Such policies are in full force and
effect, all premiums due thereon have been paid (except for the liability
reflected on the Closing Date Balance Sheet for insurance premiums payable
expected by Seller as a result of the annual audit of Seller's workers
compensation insurance policy) and Seller has complied in all material respects
with the terms and provisions of such policies. The insurance coverages and
limits provided by such policies are adequate and customary for the Business.
3.15 Taxes. Except for Permitted Encumbrances, there are no
Encumbrances, either ▇▇▇▇▇▇ or inchoate, or other Encumbrances of any nature
whatsoever for any Taxes, or interest or penalty thereon, with respect to the
Business or any of the Purchased Assets.
3.16 Absence of Material Changes. Except as disclosed on
Schedule 3.16, since January 1, 1998 Seller has conducted the Business only in
the ordinary course consistent with prior practice, and with respect to its
operation of the Business and the Purchased Assets, Seller has not:
(a) experienced any material labor dispute by any of its
employees; had any actual or threatened employee strikes, work stoppages,
slowdowns or lockouts, encountered any labor union organizing activity, or had
any material change in its relations with its employees, agents, customers or
suppliers;
(b) made any increase in the rate of compensation, commission,
bonus or other direct or indirect remuneration payable, or paid or agreed or
orally promised to pay, conditionally or otherwise, any bonus, incentive,
retention or other compensation, retirement, welfare, fringe or
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severance benefit or vacation pay, to or in respect of any employee, salesman,
distributor or agent of Seller relating to the Business;
(c) made any pension, retirement, profit-sharing, bonus or
other employee welfare or benefit payment, except for payments required by Plans
listed and described on Schedule 3.19;
(d) except for sales of Inventory in the lawful and ordinary
course of business, sold, transferred, leased to others or otherwise disposed
of, or mortgaged, pledged or subjected to any Encumbrance, any of its property
or assets used in the Business, tangible or intangible; or canceled or
compromised any debt or claim, or waived or released any right of substantial
value relating to the Business or such property or assets;
(e) made any change in the operations or the manner of
conducting the Business other than changes in the lawful and ordinary course of
business none of which has, and which in the aggregate have not had, a material
adverse effect on the Business;
(f) suffered any damage, destruction or loss (whether or not
covered by insurance) materially and adversely affecting any of the properties
or assets used in Business or the operations thereof;
(g) sold, assigned, transferred, granted any rights under or
permitted to lapse any patent, trademark, trade name, patent application,
copyright, trade secret, customer list, manufacturing or secret process or
formula, entered into any settlement regarding the breach or infringement
thereof, or modified any existing rights with respect thereto; or suffered any
material adverse change in its rights with respect to any thereof;
(h) except in the lawful and ordinary course of business,
terminated or amended or suffered the termination or amendment of or failed to
perform all its material obligations or suffered or permitted any default to
exist under any material contract, lease, agreement or license;
(i) entered into any transaction, contract or agreement other
than in the lawful and ordinary course of business except transactions disclosed
pursuant to and permitted by this Agreement;
(j) incurred any obligation or liability, absolute, accrued,
contingent or otherwise, whether due or to become due, except current
liabilities for trade or business obligations incurred in connection with the
purchase of goods or services in the ordinary course of business consistent with
prior practice, none of which liabilities, in any case or in the aggregate,
could have a material adverse effect on the Business or the Purchased Assets;
(k) failed to replenish the Business's Inventories and
supplies in a normal and customary manner consistent with its prior practice and
prudent business practices prevailing in the industry, or made any purchase
commitment in excess of the normal, ordinary and usual
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requirements of its business or at any price in excess of the then current
market price or upon terms and conditions more onerous than those usual and
customary in the industry, or made any change in its selling, pricing,
advertising or personnel practices inconsistent with its prior practice and
prudent business practices prevailing in the industry;
(1) instituted, settled or agreed to settle any litigation,
action or proceeding before any court or governmental body relating to the
Business or the Purchased Assets other than in the ordinary course of business
consistent with past practices but not in any case involving amounts in excess
of $10,000;
(m) suffered any change in the condition (financial or
otherwise) or in the assets, liabilities (absolute or contingent), business or
prospects of the Business, except changes in the lawful and ordinary course of
business, none of which has, and which in the aggregate have not, materially and
adversely affected the business, prospects, assets, liabilities or condition of
the Business, nor has any event or condition of any character occurred which
materially and adversely affects the business, prospects, assets, liabilities or
condition of the Business; or
(n) taken any action or omitted to take any action that would
result in the occurrence of any of the foregoing.
3.17 Compliance with Legal Requirements. Except as set forth
on Schedule 3.17, since January 1, 1998 the operations of Seller affecting the
Business and the Purchased Assets have in all material respects been conducted
in compliance with all applicable Legal Requests and Orders of each Governmental
Body having jurisdiction over Seller, the Business and the Purchased Assets, and
Seller has not received any notice of any Governmental Body alleging any
violation with respect to the foregoing.
3.18 Governmental Licenses and Permits. Schedule 3.18 contains
a complete, current and correct list of all material Governmental
Authorizations, to Seller's Knowledge, necessary for the present conduct of the
Business. Seller possesses all such Governmental Authorizations. Except as set
forth on Schedule 3.18, to the Knowledge of Seller, Seller is not in default or
non-compliance under any such Governmental Authorization. To Seller's Knowledge,
each of such Governmental Authorizations is in full force and effect, and there
are no pending or, to the Knowledge of Seller, threatened claims or Proceedings
challenging the validity or seeking to revoke or discontinue any of the
Governmental Authorizations.
3.19 Employee Plans. Schedule 3.19 sets forth each bonus,
deferred compensation, incentive compensation, pension, profit-sharing,
retirement, stock bonus, stock purchase, stock option, hospitalization or
medical expense reimbursement or insurance, or any other fringe benefit plan,
arrangement or practice, whether formal or informal and whether legally binding
or not, that Seller maintains or contributes to on behalf of its employees
(collectively, the "PLANS"). Except as set forth on Schedule 3.19, none of the
Plans will remain in effect after the Closing Date with respect to any employees
of Seller who may become employees of Buyer, and Buyer will have no liability
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under, with respect to or in connection with such Plans. Sellers have made
available to Buyer true and correct copies of the Plans. Except as set forth on
Schedule 3.19, Seller has never been obligated to participate in or contribute
to any "multiemployer plan" (as defined in ERISA), nor has Seller ever been a
member of a "controlled group" (as defined in ERISA) which has been obligated to
participate in or contribute to any multiemployer plan.
3.20 Employee Agreements and Relations. Seller has not been
and is not currently a party to any collective bargaining or other labor
Contract. There has not been, there is not presently pending or existing, and to
the Knowledge of Seller there is not threatened, (a) any strike, slowdown,
picketing, work stoppage or employee grievance process, (b) any Proceeding
against or affecting the Business relating to the alleged violation of any Legal
Requirement pertaining to labor relations or employment matters, including any
charge or complaint filed by an employee or union with the National Labor
Relations Board, the Equal Employment Opportunity Commission, or any comparable
Governmental Body, organizational activity, or other labor or employment dispute
against or affecting the Business or (c) any application for certification of a
collective bargaining agent. To the Knowledge of Seller, no event has occurred
or circumstance exists that could provide the basis for any work stoppage or
other labor dispute. There is no lockout of any employees by Seller, and no such
action is contemplated by Seller. Seller has complied in all respects with all
Legal Requirements relating to employment, equal employment opportunity,
nondiscrimination, immigration, wages, hours, benefits, collective bargaining,
the payment of social security and similar taxes, occupational safety and
health, and plant closing. Seller is not liable for the payment of any
compensation, damages, Taxes, fines, penalties, or other amounts, however
designated, for failure to comply with any of the foregoing Legal Requirements.
3.21 Employee Claims. other than (a) retrospective charges
that may be imposed under the Texas unemployment compensation program and (b)
the liability reflected on Schedule 3.19 for accrued vacation pay and included
in the Assumed Liabilities, Buyer will have no liability including, without
limitation, liability for severance, separation pay, unemployment compensation
or any other employment-related obligations (including accrued payroll expenses)
or obligations arising under any of the Plans, with respect to persons employed
by Seller on or prior to the Closing Date.
3.22 Environmental Matters. Except as set forth in Schedule
3.22, Seller is in compliance with all applicable Legal Requirements relating to
discharges to the air, discharges to the water, discharges to the soil, solid
waste management and Hazardous Substances as they relate to the protection of
health and the environment (collectively, the "ENVIRONMENTAL LAWS"). There are
no Proceedings pending or, to the Knowledge of Seller, threatened, against or
involving Seller under any of the Environmental Laws (whether by reason of any
failure to comply with any of the Environmental Laws or otherwise). No Order
under any of the Environmental Laws has been entered against Seller. To the
Knowledge of Seller, there has not been a Release on any property owned or
leased by Seller of any Hazardous Substance and Seller has not received any
written notification from any Governmental Body that as to any property owned or
leased by it or any business and activities conducted on any such property,
there exists or has occurred a violation of
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applicable Environmental Laws for Release of Hazardous Substances. For purposes
of this Section 3.20, "HAZARDOUS SUBSTANCE" shall mean a hazardous or toxic
substance (as defined under the Comprehensive Environmental Response,
Compensation and Liability Act, as amended) and petroleum, including crude oil
or any fraction thereof, and "RELEASE" shall mean any spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, dumping or other disposal in any amount into or onto the air, ground
or surface water, land or other parts of the environment, however caused.
3.23 Liability for Finder's Fee. No liability for brokerage
fees, finder's fees, agent's commissions or other similar forms of compensation
in connection with this Agreement or any transaction contemplated hereby has
been incurred by Seller.
3.24 Disclosure. No representation or warranty by Seller
contained in this Agreement nor any statement or certificate furnished or to be
furnished by or on behalf of Seller to Buyer or its Representatives in
connection herewith or pursuant hereto contains or will contain any untrue
statement of a material fact, or omits or will omit to state any material fact
required to make the statements contained herein or therein not misleading.
There is no fact (other than matters of a general economic or political nature
which do not affect the Business uniquely) known to Seller that has not been
disclosed by Seller to Buyer that might reasonably be expected to have or result
in a material adverse effect on the Purchased Assets or the Business.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
4.1 Incorporation and Authority. Buyer is a limited
partnership duly organized, validly existing and in good standing under the laws
of Texas. Buyer has full corporate power and authority to own and operate the
Purchased Assets and the Business and to assume and perform the Assumed
Liabilities.
4.2 Due Authorization; No Conflict. Buyer has full corporate
power and authority to execute, deliver and consummate this Agreement and the
Transfer Documents to which it is a party, the Employment Agreements and the
Assumption Agreements and to perform all the terms and conditions hereof and
thereof to be performed by it, and all such action has been duly and validly
authorized by all necessary corporate proceedings on its part. This Agreement
constitutes and, when executed and delivered by Buyer, the Transfer Documents to
which Buyer is a party, the Employment Agreements and the Assumption Agreements
will constitute, the legal, valid and binding obligations of Buyer, enforceable
against Buyer, in accordance with their respective terms, except as the
enforceability hereof or thereof may be limited by bankruptcy, insolvency or
other laws of general application relating to or affecting the enforcement of
creditors' rights or by general principles of equity limiting the availability
of equitable remedies. Neither the execution and delivery of this Agreement and
the Transfer Documents, the Employment Agreements and the
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Assumption Agreements, the consummation of the transactions contemplated hereby
and thereby nor the fulfillment of and compliance with the terms and provisions
hereof and thereof do or will as to Buyer (a) violate any Legal Requirement or
Order of any Governmental Body applicable to Buyer or (b) conflict with, result
in a breach of or constitute a default under the Organizational Documents of
Buyer or any agreement or instrument to which Buyer is a party or by which Buyer
or any of its assets is bound.
4.3 Authorization and Filings. Except as set forth in Schedule
4.3 and for permits, licenses and qualifications which may be required to be
obtained by Buyer in connection with its operation of the Business following the
Closing, no Consent of any Governmental Body is or will be necessary or
advisable in connection with the execution or delivery by Buyer of this
Agreement or the Transfer Documents, consummation by Buyer of the transactions
herein or therein contemplated or performance of or compliance with the terms
and conditions hereof or thereof by Buyer.
4.4 Liability for Finder's Fees. No liability for brokerage
fees, finder's fees, agent's commissions or other similar forms of compensation
in connection with this Agreement or any transaction contemplated hereby has
been incurred by Buyer.
4.5 Financial Capacity. Buyer has available cash and credit
facilities sufficient to pay the entire Cash Consideration, pay off the
Promissory Note as required hereunder and discharge the Assumed Liabilities as
they come due.
ARTICLE V
COVENANT OF SELLERS
5.1 Conduct of Business. From the date hereof to the Closing
Date, except as expressly permitted or required by this Agreement or as
otherwise consented to by Buyer in writing, Seller will:
(a) carry on the Business in, and only in, the ordinary
course, in substantially the same manner as heretofore conducted, and use all
reasonable efforts to preserve intact its present business organization,
maintain its properties in good operating condition and repair, keep available
the services of its present officers and significant employees, and preserve its
relationship with customers, suppliers and others having business dealings with
it, to the end that the Business shall be in all material respects unimpaired
following the Closing;
(b) pay accounts payable and other obligations of the Business
when they become due and payable in the ordinary course of business consistent
with prior practice;
(c) perform in all material respects all of its obligations
under all Contracts and other agreements and instruments relating to or
affecting the Business or the Purchased Assets, and
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comply in all material respects with all Legal Requirements applicable to it,
the Purchased Assets or the business;
(d) except for new customer contracts and related material
acquisitions, not enter into or assume any material agreement, contract or
instrument relating to the Business, or enter into or permit any material
amendment, supplement, waiver or other modification in respect thereof;
(e) except for employees whose annual review date falls before
Closing, not grant (or commit to grant) any increase in the compensation
(including incentive or bonus compensation) of any employee employed in the
operation of the Business or institute, adopt or amend (or commit to institute,
adopt or amend) any compensation or benefit plan, policy, program or arrangement
or collective bargaining agreement applicable to any such employee;
(f) not take any action or omit to take any action, which
action or omission would result in a breach of any of the representations and
warranties set forth in Section 3.16.
5.2 Access and Information.
(a) From the date hereof until the Closing, Seller will (and
will cause each of its Affiliates and their respective Representatives to) give
Buyer, Buyer's prospective lenders, and their respective Representatives full
access during normal business hours to, and furnish them with all documents,
records, work papers and information with respect to, all properties, assets,
books, contracts, commitments, reports and records relating to the Business or
the Purchased Assets, as Buyer shall from time to time reasonably request. In
addition, Seller will permit Buyer, Buyer's prospective lenders, and their
respective Representatives, reasonable access to such personnel of Seller's
during normal business hours as may be necessary or useful to Buyer in its
review of the properties, assets and business affairs of the Business and the
Purchased Assets and the above-mentioned documents, records and information.
(b) After the Closing, Seller shall provide Buyer with similar
access to books and records relating to the Business and the Purchased Assets
which cannot be segregated from Seller's business other than the Business as may
be reasonably requested by Buyer. Seller will retain all books and records
relating to the Business in accordance with applicable Legal Requirements and
Seller's record retention policies as presently in effect. During the two-year
period beginning on the Closing Date, Seller shall not dispose of or permit the
disposal of any such books and records not required to be retained under such
policies without first giving 60 days' prior written notice to Buyer offering to
surrender the same to Buyer at Buyer's expense.
5.3 Further Actions. Seller agrees to use all reasonable good
faith efforts to take all actions and to do all things necessary, proper or
advisable to consummate the transactions contemplated hereby as promptly as may
be practicable. Without limitation, Seller will, as promptly as practicable, (a)
file or supply, or cause to be filed or supplied, all applications,
notifications and
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information required by applicable Legal Requirements to be filed or supplied by
it to any Governmental Body in connection with this Agreement and the
consummation of the transactions contemplated hereby and (b) use all reasonable
efforts to obtain, or cause to be obtained, all Consents (including, without
limitation, all approvals required from any Governmental Body and any Consents
required under any Contract) necessary to be obtained by Seller in order to
consummate the sale and transfer of the Purchased Assets and the consummation of
the other transactions contemplated thereby. Seller will, and will cause each of
its Affiliates and Representatives to, coordinate and cooperate with Buyer in
exchanging such information and supplying such assistance as may be reasonably
requested by Buyer in connection with the filings and other actions contemplated
by Section 6.2. At all times prior to the Closing, Seller shall promptly notify
Buyer in writing of any fact, condition, event or occurrence that will or may
result in the failure of any of the conditions contained in Article VII to be
satisfied, promptly upon becoming aware of the same.
5.4 Notification. Between the date of this Agreement and the
Closing Date, Seller will promptly notify Buyer in writing if Seller becomes
aware of any fact or condition that causes or constitutes a breach of any of
Seller's representations and warranties as of the date of this Agreement, or if
Seller becomes aware of the occurrence after the date of this Agreement of any
fact or condition that would (except as expressly contemplated by this
Agreement) cause or constitute a breach of any such representation or warranty
had such representation or warranty been made as of the time of occurrence or
discovery of such fact or condition.
5.5 No Negotiation. Until such time, if any, as this Agreement
is terminated pursuant to Article VIII, Seller will not, and will cause its
Representatives not to, directly or indirectly solicit, initiate or encourage
any inquiries or proposals from, discuss or negotiate with, provide any
non-public information to, or consider the merits of any unsolicited inquiries
or proposals from, any Person (other than Buyer) relating to any transaction
involving the sale of the business or assets (other than in the ordinary course
of business) of Seller, or any merger, consolidation, business combination, or
similar transaction involving Seller.
ARTICLE VI
COVENANTS OF BUYER PRIOR TO CLOSING DATE
6.1 Approvals of Governmental Bodies. As promptly as
practicable after the date of this Agreement, Buyer will make all filings
required by Legal Requirements to be made by it to consummate the transactions
contemplated by this Agreement. Between the date of this Agreement and the
Closing Date, Buyer will (a) cooperate with Seller with respect to all filings
that Seller is required by Legal Requirements to make in connection with the
transactions contemplated by this Agreement, and (b) cooperate with Seller in
obtaining all consents identified in Schedule 3.2; provided that this Agreement
will not require Buyer to dispose of or make any change in any portion of its
business or to incur any other burden to obtain a Governmental Authorization.
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6.2 Efforts. Buyer agrees to use all reasonable good faith
efforts to take all actions and to do all things necessary, proper or advisable
to consummate the transactions contemplated hereby as promptly as may be
practicable. Without limitation, Buyer will, as promptly as practicable, (a)
file or supply, or cause to be filed or supplied , all applications,
notifications and information required by applicable Legal Requirements to be
filed or supplied by it to any Governmental Body in connection with this
Agreement and the consummation of the transactions contemplated hereby and (b)
use all reasonable efforts to obtain, or cause to be obtained, all Consents
(including, without limitation, all approvals required from any Governmental
Body and any Consents required under any Contract) necessary to be obtained by
Buyer in order to consummate the sale and transfer of the Purchased Assets and
the consummation of the other transactions contemplated thereby. Buyer will, and
will cause each of its Affiliates and Representatives to , coordinate and
cooperate with Buyer in exchanging such information and supplying such
assistance as may be reasonably required by Seller in connection with the
filings and other actions contemplated by Section 5.3. At all times prior to the
Closing, Buyer shall promptly notify Seller in writing of any fact, condition,
event or occurrence that will or may result in the failure of any of the
conditions contained in Article VII to be satisfied, promptly upon becoming
aware of the same.
6.3 Employees. On the Closing Date, Buyer shall offer to
employ each of Seller's employees (other than the Individual partners) on the
same terms and conditions as they are presently employed by Seller. Each of such
Persons shall be considered to be an "employee at will" and nothing in this
Agreement shall be construed to limit the ability of Buyer to terminate the
employment of any such Person at any time with or without cause, or to change
his or her terms or conditions of employment.
ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions to Obligations of Buyer and Seller. The
respective obligations of each party under this Agreement shall be subject to
the satisfaction prior to the Closing Date of the following conditions:
(a) Approvals. All Governmental Authorizations requisite to
the transactions contemplated hereby shall have been filed, occurred or been
obtained, as the case may be.
(b) No Injunctions or Restraints. No Order preventing the
consummation of the transactions contemplated by this Agreement shall be in
effect; provided, however, that prior to invoking this condition, each party
shall use all commercially reasonable efforts to have any such Order vacated.
7.2 Conditions of Obligations of Buyer. The obligations of
Buyer to effect the transactions contemplated by this Agreement are subject to
the satisfaction of the following conditions (which are for the exclusive
benefit of Buyer), any or all of which may be waived in
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whole or in part by Buyer (provided that such waiver, to be binding upon Buyer,
must be in a writing duly executed by Buyer);
(a) Representations and Warranties. The representations and
warranties of Seller set forth in this Agreement shall be true and correct as of
the date of this Agreement and (except to the extent such representations and
warranties speak as of an earlier date) as of the Closing Date as though made on
and as of the Closing Date, except as otherwise contemplated by this Agreement,
and Buyer shall have received a certificate of Seller certifying to such effect.
(b) Performance of Obligations. Seller shall have performed in
all material respects all obligations required to be performed by it under this
Agreement at or prior to the Closing Date, and Buyer shall have received a
certificate of Seller certifying to such effect.
(c) No Material Adverse Change. Since the date of this
Agreement, there shall have been no change, occurrence or circumstance resulting
in, or which could reasonably likely result in, individually or in the
aggregate, a material adverse affect on the business, operations, properties,
prospects, assets or conditions of the Business.
(d) Employment Agreements. Each of Messrs. ▇▇▇▇▇▇ and ▇▇▇▇▇
shall have executed the Employment Agreements.
(e) Due Diligence. Buyer shall have completed its due
diligence investigation of the Purchased Assets and the Business and all matters
in connection therewith shall be reasonably satisfactory to it.
7.3 Conditions of Obligations of Seller. The obligations of
Seller to effect the transactions contemplated by this Agreement are subject to
the satisfaction of the following conditions (which are for the exclusive
benefit of Seller), any or all of which may be waived in whole or in part by
Seller (provided that such waiver, to be binding upon Seller, must be in a
writing duly executed by Seller):
(a) Representations and Warranties. The representations and
warranties of Buyer set forth in this Agreement shall be true and correct as of
the date of this Agreement and (except to the extent such representations and
warranties speak as of an earlier date) as of the Closing Date as though made on
and as of the Closing Date, except as otherwise contemplated by this Agreement,
and Seller shall have received a certificate of Buyer certifying to such effect.
(b) Performance of Obligations. Buyer shall have performed in
all material respects all obligations required to be performed by it under this
Agreement at or prior to the Closing Date, and shall have delivered to Seller a
certificate certifying to such effect.
(c) Employment Agreements. Each of the Employment Agreements
shall have been duly executed and delivered by Buyer or an Affiliate of Buyer.
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ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 Termination. This Agreement may be terminated at any time
prior to the Closing:
(a) by mutual written consent of Seller and Buyer;
(b) by (i) either (A) Seller, if there has been a material
breach of any representation, warranty, covenant or agreement on the part of
Buyer or (B) Buyer, if there has been a material breach of any representation,
warranty, covenant or agreement on the part of Seller, in each case, which
breach has not been cured within five business days following receipt by the
breaching party of notice of such breach (or, if such breach is not curable
within five (5) business days but is curable within a reasonable period
thereafter, a cure of such breach has not been diligently pursued), or (ii)
either Seller or Buyer, if any permanent injunction or other Order of a court or
other competent authority preventing the consummation of the transactions
contemplated by this Agreement shall have become final and nonappealable;
(c) by either Seller or Buyer, so long as Seller, on the one
hand, and Buyer, on the other hand, has not breached its respective obligations
hereunder, if the Closing shall not have occurred on or before October 31, 1998.
Notwithstanding the foregoing, the right to terminate this Agreement under this
Section 8.1(c) shall not be available to (x) Buyer if Buyer has breached any of
its representations, warranties or covenants hereunder in any material respect
and such breach has been the cause of or resulted in the failure of the Closing
to occur on or before such date or (y) Seller if it has breached any of its
representations, warranties or covenants hereunder in any material respect and
such breach has been the cause of or resulted in the failure of the Closing to
occur on or before such date.
8.2 Effect of Termination. In the event of termination of this
Agreement by either Seller or Buyer as provided in Section 8.1, this Agreement
shall forthwith become void and there shall be no liability or obligation on the
part of Buyer or Seller except (a) with respect to Section 10.8, (b) for any
obligations under the Confidentiality Agreement previously entered into by
Seller and RMI Titanium Company and (c) to the extent that such termination
results from the willful breach by a party hereto of any of its representations
or warranties, of any of its covenants or agreements, in each case, as set forth
in this Agreement.
8.3 Amendment. This Agreement may be amended, modified or
supplemented only by written agreement of Buyer and Seller at any time prior to
the Closing Date with respect to any of the terms contained herein.
8.4 Extension; Waiver. At any time prior to the Closing Date,
Seller and Buyer may: (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto; (b) waive any
inaccuracies in the representations and warranties contained herein or
24.
26
in any document delivered pursuant hereto; and (c) waive compliance with any of
the agreements or conditions contained herein. Any agreement to any such
extension or waiver shall be valid only if set forth in a written instrument
signed by the parties against whom the enforcement of such extension or waiver
is sought. The failure of any party hereto to assert any of its rights hereunder
shall not constitute a waiver of such rights.
ARTICLE IX
INDEMNIFICATION
9.1 Survival; Right to Indemnification Not Affected by
Knowledge. All representations, warranties, covenants and obligations in this
Agreement, any schedule and any other certificate or document delivered pursuant
to this Agreement, will survive the Closing. The right to indemnification,
payment of Damages (as hereinafter defined) or other remedy based on such
representations, warranties, covenants and obligations will not be affected by
any investigation conducted with respect to, or any knowledge acquired (or
capable of being acquired) at any time, whether before or after the execution
and delivery of this Agreement or the Closing Date, with respect to the accuracy
or inaccuracy of or compliance with, any such representation, warranty, covenant
or obligation.
9.2 Indemnification by Owner. Each of Seller and the Partners
(an "INDEMNITOR"), jointly and severally, will indemnify, defend and hold
harmless the Indemnified Persons for, and will pay to the Indemnified Persons
the amount of, any loss, liability, claim, damage, Tax, expense (including costs
of investigation and defense and reasonable attorneys' fees), settlement or
diminution of value, whether or not involving a third-party claim (collectively,
"DAMAGES"), arising, directly or indirectly, from or in connection with:
(a) any breach of the representations and warranties made by
Seller herein or in any Transfer Document;
(b) the failure of Seller to perform any of the covenants or
obligations to be performed by it hereunder or under any Transfer Document;
(c) any failure of Seller to comply with any applicable bulk
sales laws in connection with the transfer of the Purchased Assets hereunder (in
consideration of which Buyer hereby waives compliance by Seller with any
applicable bulk sales laws);
(d) except for the Assumed Liabilities, any claims or
liabilities (whether or not covered by any of the other subsections of this
Section) relating to Seller, the Business, the Purchased Assets or the Assumed
Liabilities, arising from any event or occurrence on or prior to the Closing
Date including, without limitation, any such claim or liability in connection
with any finished goods manufactured or sold by Seller on or prior to the
Closing Date;
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27
(e) any liability incurred by Seller for brokerage fees,
finder's fees, agent's commissions or other similar forms of compensation in
connection with this Agreement or any transaction contemplated hereby;
(f) any tax liability of Seller or any member of any
consolidated group of which Seller has ever been a member;
(g) any liability including, without limitation, withdrawal
liability, relating to periods ending on or prior to the Closing Date with
respect to any multiemployer plan in which Seller or any controlled group member
has been obligated to participate or to which Seller or any controlled group
member has been obligated to contribute, and any withdrawal liability which may
arise or be incurred by any party as a result of the consummation of the
transactions contemplated by this Agreement;
(h) except for the Assumed Liabilities, any liability
including, without limitation, liability for severance, separation pay or any
other employment related obligations or obligations arising under any of the
Plans, with respect to persons employed by Seller on or prior to the Closing
Date including obligations arising under Worker Adjustment and Retraining
Notification Act, 29 U.S.C. Section 2101 et seq. or any applicable state or
local plant closing law; and
(i) any claims of any nature asserted by any Partners or,
except for the Assumed Liabilities, any creditor of Seller, including, without
limitation, any claims arising out of, related to or in connection with the
transactions contemplated by this Agreement, the subsequent actions or
operations of Seller or otherwise.
Subject to other provisions of this Article 9, the remedies provided for in this
Article 9 shall constitute the sole and exclusive remedy for any Warranty Claims
(as defined in Section 9.3(b)) or any claims made in connection with any
covenant of Seller hereunder to be performed on or before the Closing Date.
Buyer acknowledges and agrees that, except for the express representations and
warranties made by Seller and the Partners in this Agreement, there are no
representations and warranties made by Seller and the Partners, either express
or implied, with respect to the Business, the Purchased Assets or any of the
transactions contemplated by this Agreement.
9.3 Limits on Rights to Indemnification. An Indemnified
Person's right to indemnification under this Article IX shall be limited as
follows:
(a) The Indemnified Person shall use its reasonable efforts to
make insurance claims relating to any claim for which it is seeking
indemnification pursuant to this Article IX; provided that the Indemnified
Person shall not be obligated to make such an insurance claim if the Indemnified
Person in its reasonable judgment believes that the cost of pursuing such an
insurance claim together with any corresponding increase in insurance premiums
or other chargebacks to the Indemnified Person, as the case may be, would exceed
the value of the claim for which the Indemnified Person is seeking
indemnification.
26.
28
(b) Any claim for indemnification pursuant to Section 9.2(a)
hereof to the extent based on any breach of the representations and warranties
made by Seller herein or in any Transfer Document (a "WARRANTY CLAIM") shall be
further limited as follows:
(i) An Indemnified Person shall not be entitled to
indemnification in respect of a Warranty Claim unless the notice of
claim in respect thereof shall have been given to an Indemnitor on or
before the last day of the 24th full month following the Closing Date;
provided, a claim with respect to Tax or title matters may be made at
any time; and
(ii) The Indemnitors will have no liability (for
indemnification or otherwise) with respect to Warranty Claims until the
total of all Damages with respect to such Warranty Claims exceeds
$50,000, and then only for the amount by which such Damages exceed
$50,000, and the total liabilities of the Indemnitors with respect to
Damages for Warranty Claims shall not exceed the aggregate of the Cash
Consideration and the amount of the Promissory Note paid off by Buyer
hereunder; provided however, that indemnification payments made in
respect of the following shall not be subject to such limitations nor
shall any such payments be taken into consideration in determining
whether such limitations are met: (A) any claim with respect to Tax or
title matters, (B) any Warranty Claim relating to a factual matter of
which an Indemnitor had Knowledge at any time prior to the date on
which the subject representation and warranty was made, (C) any
intentional breach by an Indemnitor and (D) Damages based on claims of
fraud; and the Indemnitors will be liable for all Damages with respect
to such matters.
9.4 Procedures for Indemnification -- Third Party Claims. (a)
Promptly after receipt by an Indemnified Person under Section 9.2 of notice of
the commencement of any proceeding against it, such Indemnified Person will, if
a claim is to be made against an Indemnitor under such Section, give notice to
the Indemnitor of the commencement of such claim, but the failure to notify the
Indemnitor will not relieve the Indemnitor of any liability that it may have to
any Indemnified Person, except to the extent that the Indemnitor demonstrates
that the defense of such action is prejudiced by the failure to give such
notice. The Indemnified Person shall take all commercially reasonable steps to
mitigate all Damages, including availing itself of any reasonable and prudent
defenses, limitations, rights of contribution and claims against third parties
and other rights at law, and shall provide such evidence and documentation of
the nature and extent of any Damages as may reasonably be requested by the
indemnifying party.
(b) If any proceeding referred to in Section 9.5(a) is brought
against an Indemnified Person and it gives notice to an Indemnitor of the
commencement of such proceeding, the Indemnitor will be entitled to participate
in such proceeding and, to the extent that it wishes (unless (i) the Indemnitor
is also a party to such proceeding and the Indemnified Person determines in good
faith that joint representation would be inappropriate or (ii) the Indemnitor
fails to provide reasonable assurance to the Indemnified Person of its financial
capacity to defend such proceeding and provide indemnification with respect to
such proceeding), to assume the defense of such proceeding with counsel
satisfactory to the Indemnified Person and, after notice from the Indemnitor
27.
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to the Indemnified Person of its election to assume the defense of such
proceeding, the Indemnitor will not, as long as it diligently conducts such
defense, be liable to the Indemnified Person under this Article 9 for any fees
of other counsel or any other expenses with respect to the defense of such
proceeding, in each case subsequently incurred by the Indemnified Person in
connection with the defense of such proceeding; other than reasonable costs of
investigation. If the Indemnitor assumes the defense of a proceeding, (A) it
will be conclusively established for purposes of this Agreement that the claims
made in that proceeding are within the scope of and subject to indemnification;
(B) no compromise or settlement of such claims may be effected by the Indemnitor
without the Indemnified Person's consent (which may not be unreasonably
withheld) unless (1) there is no finding or admission of any violation of Legal
Requirements or any violation of the rights of any Person and no effect on any
other claims that may be made against the Indemnified Person and (2) the sole
relief provided is monetary damages that are paid in full by the Indemnitor; and
(C) the Indemnified Person will have no liability with respect to any compromise
or settlement of such claims effected without its consent. If notice is given to
an Indemnitor of the commencement of any proceeding and the Indemnitor does not,
within twenty (20) days after the Indemnified Person's notice is given, give
notice to the Indemnified Person of its election to assume the defense of such
proceeding, the Indemnitor will be bound by any determination made in such
proceeding or any compromise or settlement effected by the Indemnified Person.
(c) Notwithstanding the foregoing, if an Indemnified Person
determines in good faith that there is a reasonable probability that a
proceeding may adversely affect it or its Affiliates or Representatives other
than as a result of monetary damages for which it would be entitled to
indemnification under this Agreement, the Indemnified Person may, by notice to
the Indemnitor, assume the exclusive right to defend, compromise, or settle such
proceeding, but the Indemnitor will not be bound by any determination of a
proceeding so defended or any compromise or settlement effected without its
consent (which may not be unreasonably withheld).
(d) The Indemnitors and the Indemnified Persons shall make
available to each other, their counsel and accountants, all information and
documents reasonably available to them which relate to any claim subject to
indemnity hereunder and to render to each other such assistance as may
reasonably be required in order to ensure the proper and adequate defense of any
such claim.
(e) If required for joinder purposes, the Indemnitors and the
Indemnified Persons hereby consent to the non-exclusive jurisdiction in which a
proceeding is brought against any Indemnified Person for purposes of any claim
that an Indemnified Person may have under this Agreement with respect to such
proceeding or the matters alleged therein, and agree that process may be served
on the Indemnitors and the Indemnified Persons with respect to such claim
anywhere in the world.
9.5 Procedure for Indemnification -- Other Claims. A claim for
indemnification for any matter not involving a third-party claim may be asserted
by notice to the party from whom indemnification is sought.
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ARTICLE X
GENERAL PROVISIONS
10.1 Notices. Any notice or communication required or
permitted hereunder shall be in writing and either delivered personally or sent
by facsimile transmission or by overnight courier, or by certified or registered
mail, postage prepaid, and shall be deemed to be given, dated and received when
so delivered personally or by courier or by facsimile transmission, or, if
mailed, five business days after the date of mailing to the following address or
facsimile number, or to such other address or addresses as such person may
subsequently designate by notice given hereunder:
(a) if to Buyer, to:
RMI Titanium Company
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: Executive Vice President & Chief Financial Officer
and Vice President & General Counsel
(b) if to Seller prior to Closing, to:
Weld-Tech Engineering, L.P.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
With copies to:
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chamberlain, Hrdlicka, White, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(c) if to Seller after Closing to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
and
W.T. Holdings, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇▇
and
5DB Holding Corporation
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇
With copies to:
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chamberlain, Hrdlicka, White, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
and
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▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
The parties hereto shall have the right from time to time to change their
respective addresses and facsimile numbers and each shall have the right to
specify as their address and/or facsimile number for purposes of this Section
10.1 any address and/or facsimile number by at least five (5) days' notice to
the other parties hereto in accordance with this Section 10.1.
10.2 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be considered an original and all of
which shall be considered one and the same agreement and shall become effective
when two or more counterparts have been signed by each of the parties and
delivered to the other parties, it being understood that all parties need not
sign the same counterpart.
10.3 Entire Agreement; No Third Party Beneficiaries; Rights of
Ownership. This Agreement (together with the Transfer Documents, the Employment
Agreements, the Confidentiality Agreement, and any other documents and
instruments referred to herein) constitutes the entire agreement and supersedes
all prior consummation of the transactions contemplated hereby and thereby,
shall be paid by the party incurring such costs and expenses.
10.9 Arbitration. Any controversy, dispute or claim arising
out of or relating to this Agreement or the breach hereof which cannot be
settled by mutual agreement (except for actions seeking equitable, injunctive or
other relief) shall be finally settled by arbitration as follows: Any party who
is aggrieved shall deliver a notice to other party setting forth the specific
points in dispute. Any points remaining in dispute twenty (20) days after the
giving of such notice shall be submitted to arbitration in Cleveland, Ohio,
before a single arbitrator appointed in accordance with the Rules of the
American Arbitration Association, modified only as herein expressly provided.
The arbitrator may enter a default decision against any party who fails to
participate in the arbitration proceedings. The decision of the arbitrator on
the points in dispute will be final, unappealable and binding and judgment on
the award may be entered in any court having jurisdiction thereof. The
arbitrator will be authorized to apportion its fees and expenses and the
reasonable attorney's fees and expenses of the parties as the arbitrator deems
appropriate. In the absence of any such apportionment, the fees and expense of
the arbitrator will be borne equally by each party, and each party will bear the
fees and expenses of its own attorney. The parties agree that this clause has
been included to rapidly and inexpensively resolve any disputes between them
with respect to this Agreement, and that this clause shall be grounds for
dismissal of any court action commenced by either party with respect to this
Agreement, other than post-arbitration actions seeking to enforce an arbitration
award. The parties shall keep confidential, and shall not disclose to any
Person, except as may be required by Legal Requirements, the existence of any
controversy hereunder, the referral of any such controversy to arbitration or
the status or resolution thereof.
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10.10 Noncompetition.
(a) Each of Seller and the Partners covenants and agrees that
such Person shall not, anywhere in the United States during the three (3) year
period commencing on the Closing Date hereunder, engage, directly or indirectly,
in any capacity whatsoever (whether as proprietor, partner, investor,
shareholder, director, officer, employer, employee, consultant, independent
contractor, co-venturer, financier, agent, representative or otherwise), in any
Competing Business (the foregoing shall not prohibit such Person from owning up
to 1% of the outstanding capital stock of a public or non-public company that is
a Competing Business). As used herein, "Competing Business" shall mean an
enterprise which provides engineering and fabrication services to the oil and
gas industry, including weld design, fabrication and repair, as well as
materials engineering, testing services and fabrication problem solving;
provided, however, that any line of business currently engaged in by Seller or a
Partner shall not be deemed to be a Competing Business.
(b) Each of Seller and the Partners covenants and agrees that,
for a period of three (3) years commencing on the Closing Date, such Person
shall not encourage, counsel or induce any employee to leave the employ of the
Business, or solicit for employment, employ or engage the services of any
employee of the Business, or assist any Person in any such conduct.
(c) In the event of a breach of this Section 10.10 Buyer shall
be entitled, if it shall so elect, to institute legal proceedings to obtain
damages for any such breach, or to enforce the specific performance of such
terms by the breaching Person and to enjoin such breaching Person from any
further violation and to exercise such remedies cumulatively or in conjunction
with all other rights and remedies provided by law. Each of Seller and the
Partners acknowledges, however, that the remedies at law for any breach by any
such Person of the provisions of this Section 10.10 may be inadequate and that
Buyer shall be entitled to injunctive relief against such breaching Person in
the event of any breach.
(d) It is the understanding of the parties that the scope of
the covenants contained in this Section 10.10 including as to time, geographic
area and activities covered, are necessary to protect the reasonable
expectations of Buyer in connection with its acquisition of the Business and the
reasonable expectations of Buyer with respect to the maintenance of trade
secrets. It is the parties' intention that these covenants be enforced to the
greatest extent in time, area, and activities covered as is permitted by law.
The parties intend that the unenforceability or invalidity of any term or
provision of this covenant shall not render any other term or provision
contained herein unenforceable or invalid. If the business activities, period of
time or geographical area covered by this covenant shall be deemed too
extensive, then the parties intend that this covenant be construed to cover the
maximum scope of business activities, period of time and geographical area (not
exceeding those specifically set forth herein) as may be permissible under
applicable law.
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IN WITNESS WHEREOF, the parties have executed and delivered
this Agreement as of the date first written above.
WELD-TECH ENGINEERING SERVICES, L.P. WELD-TECH ENGINEERING, L.P.
By: Weld-Tech GP, Inc., General Partner By: W-T Holdings, Inc., General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------ ------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------- ----------------------------------
Title: Officer Title: President
--------------------------------- ---------------------------------
The undersigned Partners hereby join in this Asset Purchase Agreement
for purposes of binding themselves to the indemnification obligations of Article
IX and the provisions of Section 10.10 hereof.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
5DB Company W.T. Holdings, Inc.
By: /s/ ▇▇▇▇ ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇▇▇▇▇ Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: President Title: President
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By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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33.
