Exhibit 10.7
STOCK PURCHASE AGREEMENT
BY AND AMONG
INDUSTRIAL HOLDINGS, INC.
AND
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇
DATED AS OF
NOVEMBER 15, 2001
STOCK PURCHASE AGREEMENT EXECUTION COPY
TABLE OF CONTENTS
Page
1. Sale and Purchase of the Stock; Closing................................1
1.1 Sale and Purchase...................................................1
1.2 Purchase Price......................................................1
1.3 Post-Closing Adjustment of Purchase Price...........................2
1.4 Closing.............................................................3
1.5 Deliveries at Closing...............................................3
2. Representations and Warranties of IHI..................................5
2.1 Organization and Good Standing......................................5
2.2 Authorization and Enforceability....................................5
2.3 Capitalization......................................................5
2.4 No Conflicts........................................................6
2.5 Financial Statements................................................6
2.6 Liabilities and Obligations.........................................6
2.7 Furniture, Fixtures, Machinery and Equipment........................7
2.8 Legal Proceedings...................................................7
2.9 Title to Assets; Liens..............................................7
2.10 Subsidiaries, Etc...................................................7
2.11 Material Agreements.................................................7
2.12 Employee Benefit Plans..............................................8
2.13 Tax Matters.........................................................9
2.14 Leased Property.....................................................9
2.15 Intellectual Property Rights........................................9
2.16 Permits and Licenses...............................................10
2.17 Deposit Accounts...................................................10
2.18 Brokers' Fees......................................................10
2.19 Limitation on Representations; Definition of Knowledge.............10
3. Representations and Warranties of Buyer...............................10
3.1 Authorization and Enforceability...................................10
3.2 No Violation of Law, Etc...........................................11
3.3 Legal Proceedings..................................................11
3.4 Brokers' Fees......................................................11
3.5 Buyer's Knowledge..................................................11
4. Pre-Closing Actions...................................................11
4.1 Conduct of Business................................................11
4.2 Notification of Inaccuracy of Representations and Warranties.......11
5. Conditions Precedent to Buyer's Obligations at the Closing............11
5.1 Compliance with this Agreement.....................................12
5.2 Accuracy of Representations and Warranties.........................12
5.3 Satisfaction of Conditions to Merger...............................12
5.4 No Material Adverse Change.........................................12
6. Conditions Precedent to the Obligations of IHI at the Closing.........12
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STOCK PURCHASE AGREEMENT EXECUTION COPY
Table of Contents
(continued)
Page
6.1 Compliance with this Agreement.....................................12
6.2 Accuracy of Representations and Warranties.........................12
6.3 Satisfaction of Conditions to Merger...............................12
6.4 Release from Guaranty..............................................13
7. Noncompetition........................................................13
7.1 Prohibited Activities..............................................13
7.2 Damages............................................................13
7.3 Reasonable Restraint...............................................13
7.4 Severability; Reformation..........................................13
8. Indemnification.......................................................13
8.1 Survival of Representations and Warranties.........................13
8.2 Indemnification by IHI.............................................13
8.3 Indemnification by Buyer...........................................14
8.4 Procedure for Indemnification; Third-Party Claims..................14
8.5 Procedure for Indemnification; Other Than Third-Party Claims.......14
8.6 Special Provisions Regarding Liability.............................15
8.7 Remedies...........................................................16
9. Post-Closing Matters..................................................16
9.1 Reattribution of Loss Carryovers...................................16
9.2 Further Assurances.................................................16
9.3 Books and Records..................................................16
9.4 Tax Matters........................................................16
10. Termination...........................................................17
10.1 Manner of Termination..............................................17
10.2 Effect of Termination..............................................17
11. Miscellaneous.........................................................17
11.1 Entire Agreement...................................................17
11.2 Notices............................................................18
11.3 Amendment and Waivers..............................................19
11.4 Assignment.........................................................19
11.5 Governing Law; Venue...............................................19
11.6 Severability.......................................................19
11.7 Arbitration........................................................19
11.8 Multiple Counterparts..............................................20
11.9 Expenses...........................................................20
11.10 Waiver of Breach...................................................20
11.11 Construction.......................................................20
11.12 Public Announcements...............................................21
11.13 Facsimile signatures...............................................21
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SCHEDULES AND EXHIBITS
EXHIBIT A Form of Promissory Note
EXHIBIT B Form of Security Agreement
SCHEDULE 2.2 Authorization
SCHEDULE 2.5 Financial Statements
SCHEDULE 2.7 Furniture, Fixtures, Machinery and Equipment
SCHEDULE 2.8 Description of Legal Proceedings
SCHEDULE 2.9 Title to Assets; Liens
SCHEDULE 2.11 Material Agreements
SCHEDULE 2.12 Employee Benefit Plans
SCHEDULE 2.14 Leased Real Property
SCHEDULE 2.15 Intellectual Property Rights
SCHEDULE 2.16 Permits and Licenses Used in the Business
SCHEDULE 2.17 Bank and Lockbox Accounts
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made as of November 15,
2001, by and among ▇▇▇▇▇▇ ▇▇▇▇▇▇ ("▇▇▇▇▇▇") AND ▇▇▇▇▇▇ ▇. ▇▇▇▇ ("Cone") and
their permitted assigns (collectively, "Buyer"), and INDUSTRIAL HOLDINGS, INC.,
a Texas corporation ("IHI").
BACKGROUND
IHI owns 100% of the outstanding capital stock (the "Stock") of ▇▇▇▇▇▇
Industries, Inc., a Delaware corporation (the "Company"), and desires to sell
the Stock to Buyer on the terms and subject to the conditions in this Agreement.
In connection with the sale and purchase of the Stock, the Company, IHI and
Buyer will enter into certain related agreements, the forms of which are
attached to this Agreement as exhibits ("Exhibits").
AGREEMENTS
1. SALE AND PURCHASE OF THE STOCK; CLOSING.
1.1 SALE AND PURCHASE. At the Closing, IHI will sell, assign, transfer and
deliver to Buyer, and Buyer will purchase, an aggregate of 1,000 shares
of common stock, $1.00 par value per share, of the Company (the
"Stock").
1.2 PURCHASE PRICE. The purchase price ("Purchase Price") for the Stock
will be $10,000,000 (the "Purchase Price), subject to adjustment
pursuant to Section 1.3 below, to be paid to IHI as follows:
(i) assumption of the residual $3,000,000 amount to be
due and owing as of the Closing under that certain
Lease Financing Agreement (the "Comerica Financing
Agreement") dated as of June 30, 1998, between
Comerica Leasing Corporation, a Michigan corporation
("Comerica Leasing"), collectively as lessor, and the
Company and IHI, collectively as lessee; the amount
owing under the Comerica Financing Agreement to be
reduced to $3,000,000 at or immediately prior to the
Closing by IHI; and
(ii) assumption of the residual $3,000,000 principal
balance to be due and owing as of the Closing under
that certain promissory note (the "Trinity Note") in
the original principal amount of $3,400,000, made by
IHI and payable to the order of Trinity Industries,
Inc. ("Trinity"); the principal balance of the
Trinity Note to be reduced to $3,000,000 at or
immediately prior to the Closing by IHI; with the
Trinity Note, as may be mutually agreeable to the
parties, to be amended and/or restated as of the
Closing to reflect the aforesaid assumption and to be
secured by a security agreement (in form and
substance to be mutually acceptable to Buyer and
Trinity) entered into at the Closing, granting a
second and subordinate security interest in the
Company's assets to Trinity as security for the
Trinity Note (such security interest to be
subordinate to the security interests in the
Company's assets currently held by Comerica Leasing);
and
STOCK PURCHASE AGREEMENT EXECUTION COPY
(iii) a subordinated promissory note in the original
principal amount of $4,000,000, made payable by Buyer
to the order of IHI, in substantially the form
attached as EXHIBIT A (the "Note").
At the Closing, and as a condition precedent thereto, IHI
shall receive a full written release from any and all
liability and obligations under the Comerica Financing
Agreement from Comerica Leasing and a full written release
from any and all liability and obligations under the Trinity
Note from Trinity.
1.3 POST-CLOSING ADJUSTMENT OF PURCHASE PRICE.
(a) Within 30 calendar days after the Closing, IHI shall prepare
or cause to be prepared and delivered to the Buyer an
unaudited condensed balance sheet of the Company as of the
close of business on the Closing Date (the "Closing Balance
Sheet"). The Closing Balance Sheet shall be prepared in
accordance with generally accepted accounting principles
("GAAP") consistent with those previously applied by the
Company in its financial reporting. If the sum of the
Company's cash and equivalents plus accounts receivable minus
its accounts payable and accrued expenses on the Closing
Balance Sheet ("Closing Value") has decreased by more than 5%
(such excess decrease up to a maximum amount of $500,000, the
"Reduction Amount") from the sum of the Company's cash and
equivalents plus accounts receivable minus its accounts
payable and accrued expenses on the Company's June 30, 2001
unaudited condensed balance sheet ("Interim Value"), then the
Purchase Price shall be reduced by the Reduction Amount, and
the Reduction Amount shall be applied to reduce the
outstanding principal amount of the Note effective as of the
Closing Date (as defined below). If the Closing Value has
increased by more than 5% from the Interim Value (such excess
increase up to a maximum amount of $500,000, the "Addition
Amount"), then the Purchase Price shall be increased by the
Addition Amount, and the Addition Amount shall be added to the
outstanding principal amount of the Note effective as of the
Closing Date and the Buyer shall execute an amended or
replacement promissory note to the Note to reflect such
increase. Notwithstanding the foregoing, intercompany payables
to IHI and intercompany receivables from IHI shall not be
included in calculating the Interim Value or the Closing
Value.
(b) The Buyer shall give IHI and its representatives reasonable
access to the books, records and personnel of the Company for
the purpose of preparing the Closing Balance Sheet. The Buyer
shall have a period of 30 calendar days after the delivery to
it of the Closing Balance Sheet, and during such time the
Buyer shall have access to all workpapers and other relevant
documents, to review the foregoing and to deliver in writing
to IHI any objections to the Closing Balance Sheet that the
Buyer may have. If Buyer does not deliver in writing any
objections to IHI within the 30-day period, the Closing
Balance Sheet shall be deemed to be accepted and approved by
the Buyer. If Buyer delivers within the 30-day period written
objections to IHI, then the Buyer and IHI shall attempt to
resolve the matter or matters in dispute. The Buyer shall
quantify its objections to the extent reasonably practicable
in all written objections delivered to IHI with respect to the
Closing Balance Sheet.
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(c) If such disputes cannot be resolved by the Buyer and IHI
within 20 calendar days after the delivery of the objections
to the Closing Balance Sheet, then the specific matters in
dispute shall be submitted to the Deloitte & Touche, LLP, ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ (the
"Independent Accountants"), which firm shall render its
opinion as to such matters. Based on that opinion, the
Independent Accountants shall then send to the Buyer and to
IHI a written determination of the matters in dispute and a
written determination of the Purchase Price as adjusted based
upon such opinion, whereupon the confirmed or revised Closing
Balance Sheet shall be final and binding upon the Buyer and
IHI, absent manifest error. All costs, fees and expenses
charged or incurred by the Independent Accountants, if any,
shall be borne equally by IHI and the Buyer.
1.4 CLOSING. The purchase and sale and related transactions this Agreement
provides for (the "Closing") will occur at the offices of ▇▇▇▇▇▇▇
▇▇▇▇▇▇, L.L.P., ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
on the earlier to occur of (i) December 31, 2001 or (ii) the date of
the consummation of the proposed merger between IHI and T-3 Energy
Services, Inc. (such entity, "T-3" and the proposed merger, the
"Merger"), or at such other time or place as the parties shall mutually
agree (the "Closing Date"), subject in all cases to the conditions set
forth in Sections 5 and 6.
1.5 DELIVERIES AT CLOSING.
(a) DELIVERIES BY IHI. IHI or the other indicated parties shall
have executed and delivered to Buyer the following:
(i) documentation reasonably satisfactory to the parties to
evidence the portion of the Purchase Price described in
Section 1.2(i) and (ii);
(ii) either (y) UCC-termination statements as are required to
terminate and release all liens on the Company's assets and
equipment (including without limitation the Liens disclosed on
SCHEDULE 2.9), or (z) letters of creditors indicating that
such liens, and that certificates evidencing IHI's ownership
of the Stock, shall be released to IHI on IHI's payment of
identified amounts payable, in each case except for the
permitted liens ("Permitted Liens") listed on SCHEDULE 2.9;
(iii) a Security Agreement granting a lien in favor of IHI on the
assets of the Company, in substantially the form attached as
EXHIBIT B (the "Security Agreement");
(iv) the Company's corporate records, including its Certificate of
Incorporation, Bylaws and corporate minute book;
(v) a certificate executed by IHI representing and warranting to
Buyer that each of IHI's representations and warranties in
this Agreement is accurate in all material respects as of the
Closing Date;
(vi) copies certified by IHI's Secretary of resolutions duly
adopted by the board of directors of IHI authorizing and
approving the execution and delivery of this Agreement,
including the exhibits hereto, and the transactions
contemplated hereby;
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(vii) certificates, dated as of a date no earlier than 10 days
before the Closing Date, duly issued by the appropriate
governmental authority in its state of organization and in any
state in which the Company is authorized to do business,
showing the Company is in good standing and authorized to do
business; and
(viii) such other documents, instruments and certificates necessary
or appropriate in connection with the IHI's sale and transfer
of the Stock, including without limitation, certificates
evidencing IHI's ownership of the Stock, duly endorsed in
blank or accompanied by duly executed stock powers in blank,
in proper form for transfer to Buyer either at Closing or as
soon thereafter as IHI is able to obtain such certificates and
releases of the security interests in the Stock as described
on SCHEDULE 2.2.
(b) DELIVERIES BY BUYER. Buyer or the other indicated parties
shall have executed and delivered to IHI the following:
(i) documentation reasonably satisfactory to the parties to
evidence the portion of the Purchase Price described in
Section 1.2(i) and (ii);
(ii) the Note;
(iii) the Security Agreement;
(iv) a certificate executed by Buyer representing and warranting to
IHI that each of Buyer's representations and warranties in
this Agreement is accurate in all material respects as of the
Closing Date (except that if before the Closing, Buyer assigns
all of its rights to and obligations under this Agreement to a
permitted assignee pursuant to Section 11.4 (such assignee,
the "Buyer Permitted Assignee"), then such representations and
warranties shall be made as to the Buyer Permitted Assignee,
and if the Buyer Permitted Assignee is other than a natural
person, then an additional representation as to such buyer's
due organization and qualification shall be made, and such
buyer shall also make representations that its execution,
delivery and performance of this Agreement, the Related
Agreements and the Note does not (a) conflict with, violate or
constitute a breach of or a default under, or (b) result in
the creation or imposition of any lien upon any of the assets
or properties of such buyer under such buyer's Organizational
Documents;
(v) if there is a Buyer Permitted Assignee that is other than a
natural person, copies certified by its secretary (or the
holder of a similar office) of resolutions duly adopted by its
board of directors authorizing and approving the execution and
delivery of this Agreement, including the exhibits hereto, and
the transactions contemplated hereby;
(vi) if there is a Buyer Permitted Assignee that is other than a
natural person, certificates dated as of a date no earlier
than 10 days before the Closing Date, duly issued by the
appropriate governmental authority in the state of its
organization and in any state in which such Buyer is
authorized to do business, showing such Buyer is in good
standing and authorized to do business; and
(vii) such other documents, instruments and certificates necessary
or appropriate in connection with the Buyer's purchase of the
Stock.
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2. REPRESENTATIONS AND WARRANTIES OF IHI. IHI represents and warrants to
Buyer that the statements in this Section 2 are true and correct as of
the date of this Agreement and will be true and correct on the Closing
Date as if made on the Closing Date (except to the extent any
representation or warranty is made as of another date, which is hereby
made as of such other date).
2.1 ORGANIZATION AND GOOD STANDING. The Company is a corporation duly
incorporated, validly existing and in good standing under the laws of
the State of Delaware. The Company is duly qualified and in good
standing in every jurisdiction in which it is required by the nature of
its business or lease of its properties to so qualify, except where the
failure to so qualify does not or is not reasonably expected to have a
material adverse effect on the Company or its operations.
2.2 AUTHORIZATION AND ENFORCEABILITY. IHI has full legal capacity and
authority to execute and deliver this Agreement and all other
agreements to be executed and delivered by it in connection with this
Agreement that are identified in Section 1.5(a) of this Agreement (such
other agreements, collectively, the "Related Agreements"), and to
perform its obligations under this Agreement and the Related
Agreements. IHI has duly executed and delivered this Agreement, and it
is IHI's legal, valid and binding obligation, enforceable against it in
accordance with its terms, except as its enforcement may be limited by
bankruptcy, insolvency moratorium, or similar laws relating to the
enforcement of creditors' rights and by general principals of equity
(regardless of whether such enforceability is considered in a
proceeding at law or in equity) (collectively, the "Exceptions"). When
IHI executes and delivers the Related Agreements, the Related
Agreements will be IHI's legal, valid and binding obligations,
enforceable against it in accordance with their respective terms,
except as the enforcement thereof may be limited by the Exceptions.
Except as disclosed on SCHEDULE 2.2, IHI is not required to obtain any
consent, approval or authorization of, or registration, declaration or
filing with any Governmental Authority or third party to authorize its
execution, delivery or performance of its obligations under this
Agreement or the Related Agreements.
"Governmental Authority" means any foreign governmental authority, the
United States of America, any state of the United States, and any
political subdivision of any of the foregoing, and any agency,
department, commission, board, bureau or court of any of the foregoing
having jurisdiction over the respective party or their assets.
2.3 CAPITALIZATION. The Company's authorized equity securities consist of
1,000 shares of common stock, $1.00 par value per share, of which all
1,000 shares are issued and outstanding and constitute the Stock. IHI
owns all of the Stock, free and clear of all liens, claims,
encumbrances, equities, voting trusts and agreements, and proxies. The
Stock is all of the outstanding capital stock of the Company. Each
outstanding share of the Stock has been duly authorized and validly
issued and is fully paid and non-assessable. There are no options,
warrants, subscriptions, or other rights to purchase, or securities
convertible into or exchangeable for, any of the Company's authorized
or outstanding securities. None of the Stock has been issued or
disposed of in violation of the preemptive rights of any of the
Company's present or former stockholders. In addition, IHI hereby
waives any preemptive or other right to acquire shares of capital stock
of the Company that it has or may have had.
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STOCK PURCHASE AGREEMENT EXECUTION COPY
2.4 NO CONFLICTS. Except as disclosed on SCHEDULE 2.2, IHI's execution,
delivery and performance of this Agreement and the Related Agreements
does not:
(a) conflict with, violate or constitute a material breach of or a
material default under; or
(b) result in the creation or imposition of any lien upon any of
the property or assets of IHI or the Company under the terms
of:
(i) the Organizational Documents (as defined below) of
IHI; or
(ii) any material credit or loan agreement, mortgage,
indenture, promissory note or any other material
agreement or instrument to which IHI or the Company
is a party or by which either of them or any of their
properties may be bound or affected.
"Organizational Documents" means, as applicable, Articles of
Incorporation and Bylaws of the Company or IHI, each as amended and in
effect on the date of this Agreement or the applicable formation and
organization of documents of the Buyer Permitted Assignee.
2.5 FINANCIAL STATEMENTS. Attached as SCHEDULE 2.5 are copies of the
Company's:
(a) unaudited Condensed Balance Sheet as of December 31, 2000, and
related unaudited Condensed Income Statement (the December 31,
2000 Balance Sheet and Income Statement referred to as the
"2000 Financial Statements"); and
(b) unaudited Condensed Balance Sheet as of September 30, 2001
(the "Interim Balance Sheet") and related unaudited Condensed
Income Statement for the nine months then ended (collectively,
the "Interim Financial Statements").
The 2000 Financial Statements and the Interim Financial Statements are
referred to collectively as the "Financial Statements." The Financial
Statements have been prepared from the Company's books and records in
conformity with GAAP, subject to normal recurring year-end adjustments
(the effect of which will not, individually or in the aggregate, be
materially adverse) and the absence of notes to the Financial
Statements. The Financial Statements present fairly in all material
respects the Company's financial position at the dates indicated and
the results of its operations for the periods then ended. For purposes
of this Agreement, December 31, 2000 is referred to as the "2000
Financial Statement Date" and September 30, 2001 is referred to as the
"Interim Financial Statement Date."
2.6 LIABILITIES AND OBLIGATIONS. Except as and to the extent disclosed and
adequately provided for on the Interim Balance Sheet, and except for
liabilities and obligations that have arisen since the Interim
Financial Statement Date in the Ordinary Course of Business (as that
term is defined below), the Company has not incurred any material
liabilities of a type required by GAAP to be reflected on a balance
sheet.
"Ordinary Course of Business" means actions of the Company that are:
(a) consistent with past practices taken in the course of its
usual day-to-day operations;
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STOCK PURCHASE AGREEMENT EXECUTION COPY
(b) not required to be authorized by resolution of the Company's
board of directors; and
(c) similar in nature and magnitude to actions customarily taken,
without authorization by the boards of directors in the
ordinary course of usual day-to-day operations of other
companies of similar size in the same line of business.
2.7 FURNITURE, FIXTURES, MACHINERY AND EQUIPMENT. SCHEDULE 2.7 is a list of
all of the material items of the Company's furniture, fixtures,
machinery and equipment, which constitutes substantially all the
fixtures, machinery and equipment used in the conduct of the Company's
business. SCHEDULE 2.7 also identifies any such equipment that is
leased.
2.8 LEGAL PROCEEDINGS. Except as disclosed on SCHEDULE 2.8, there are no
actions, suits or proceedings pending, or known to be threatened,
against the Company or any of its properties, at law or in equity, or
before or by any Governmental Authority.
2.9 TITLE TO ASSETS; LIENS. The Company has good and marketable title to
its assets and properties (not taking into account personal property
the Company leases). Such assets are not subject to any liens, claims,
demands, equity interests, pledges or security interests ("Liens"),
except as disclosed on SCHEDULE 2.9 and except for: (a) liens for taxes
not yet due and payable or being contested in good faith by appropriate
proceedings; and (b) statutory liens not yet due and payable.
2.10 SUBSIDIARIES, ETC. The Company (a) has no subsidiaries; (b) is not a
co-venturer in any joint venture or a partner in any partnership; and
(c) owns no interest in any other corporation, business enterprise or
other entity.
2.11 MATERIAL AGREEMENTS. SCHEDULE 2.11 is a list of the material contracts,
notes receivables, loans, leases and other agreements (collectively,
the "Material Agreements") imposing any obligation on the Company or to
which the Company's properties are subject, except for:
(a) contracts terminable without penalty solely at the Company's
option upon 30 days notice or less;
(b) purchase and sales orders, electric, gas and water utility
contracts or similar agreements entered into by the Company in
the Ordinary Course of Business and not involving expenditures
of $25,000 or more; and
(c) contracts otherwise disclosed in this Agreement.
The Company is not a party to or bound by any material contract or
agreement except those disclosed on SCHEDULE 2.11. Except as otherwise
disclosed on SCHEDULE 2.11, the Material Agreements are valid, binding
and in full force and effect in accordance with their terms and
conditions. The Company is not in breach of or in default under any
Material Agreement and neither IHI nor the Company is aware that any
other party is in breach or default under any Material Agreement, or of
any conditions that, with the passage of time or the giving of notice,
or both, will constitute such a breach or default.
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2.12 EMPLOYEE BENEFIT PLANS.
(a) SCHEDULE 2.12 discloses all pension, profit-sharing, bonus,
incentive, deferred compensation, stock purchase, stock, stock
appreciation right, group insurance, severance pay, retirement
and other employee benefit plans, agreements or arrangements
of the Company or to which it is required to contribute.
Except as disclosed on SCHEDULE 2.12, the Company neither
sponsors, maintains nor contributes to any plan, program, fund
or arrangement that constitutes an employee pension benefit
plan and it has no obligation to contribute to or accrue or
pay any benefits under any deferred compensation or retirement
funding arrangement on behalf of any employee or employees
(such as, for example, and without limitation, any individual
retirement account or annuity, any "excess benefit plan"
(within the meaning of Section 3(36) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"))
or any non-qualified deferred compensation arrangement. For
the purposes of this SECTION 2.12, the term "employee pension
benefit plan" has the same meaning given that term in Section
3(2) of ERISA.
(b) No employee benefit plan listed on SCHEDULE 2.12 is either (i)
a "multiemployer plan" (as defined in Section 3 (37) of ERISA)
or (ii) a defined benefit pension plan subject to Title IV of
ERISA.
(c) All employee benefit plans listed on SCHEDULE 2.12 that are
intended to qualify ("Qualified Plans") under Section 401(a)
of the Internal Revenue Code of 1986, as amended, (the "Code")
have been so qualified. All reports and other documents
required to be filed with any governmental agency or
distributed to plan participants or beneficiaries (including,
but not limited to, actuarial reports, audits or tax returns)
have been timely filed or distributed, and copies of the most
recent annual reports for such plans are included as part of
SCHEDULE 2.12. Neither IHI, any plan listed in SCHEDULE 2.12,
nor the Company has engaged in any transaction prohibited and
not exempted under Section 4975 of the Code or Sections 406
and 408 of ERISA; no plan listed in SCHEDULE 2.12 has incurred
an accumulated funding deficiency, as defined in Section
412(a) of the Code and Section 302(1) of ERISA; and the
Company has not incurred any liability for excise tax or
penalty due to the Internal Revenue Service or any liability
to the Pension Benefit Guaranty Corporation ("PBGC").
(d) There have been no terminations, partial terminations or
discontinuance of contributions to any such Qualified Plan
intended to qualify under Section 401(a) of the Code without
notice to and approval by the Internal Revenue Service; no
plan listed in SCHEDULE 2.12 subject to the provisions of
Title IV of ERISA has been terminated; there have been no
"reportable events" (as that term is defined in Section 4043
of ERISA) with respect to any such plan listed in SCHEDULE
2.12; the Company has not incurred liability under Section
4062 of ERISA; and no circumstances exist under which the
Company could have any direct or indirect liability whatsoever
(including, but not limited to, any liability to any
multiemployer plan or the PBGC under Title IV of ERISA or to
the Internal Revenue Service for any excise tax or penalty, or
being subject to any statutory lien to secure payment of any
such liability) with respect to any plan now or previously
maintained or contributed to by any entity
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other than the Company that is, or at any time was, along with
the Company, considered a single employer under Sections
414(b), (c), (m) or (o) of the Code.
(e) With respect to any employee benefit plan that is subject to
the continuation requirements of Sections 601-608 of ERISA and
Section 4980B of the Code or the continuation requirements of
any applicable state or local law, the Company has complied
with all such applicable laws and regulatory requirements.
2.13 TAX MATTERS.
(a) "Tax" or "Taxes" shall mean all of the Company's federal,
state, county, local, and other taxes relating to all periods
before the Closing Date (including, without limitation, income
taxes; premium taxes; single-business taxes; excise taxes;
sales taxes; use taxes; value-added taxes; gross receipts
taxes; franchise taxes; ad valorem taxes; real estate taxes;
severance taxes; capital levy taxes; transfer taxes; stamp
taxes; employment, unemployment, and payroll-related taxes;
withholding taxes; and governmental charges and assessments;
but excluding all transfer taxes), and include interest,
additions to tax, and penalties.
(b) The Company has duly and timely filed all Tax returns and
reports it is required to file by any Governmental Authority.
The Company has paid or established adequate reserves for all
Taxes (including penalties and interest) that have or may
become due under such returns and any assessments that have
been received by it or otherwise. All such Tax returns or
reports fairly reflect the Taxes of the Company for the
periods covered thereby.
(c) The Company is not delinquent in the payment of any Tax
assessment or governmental charge and there are no Tax
deficiencies or delinquencies asserted against the Company. No
Internal Revenue Service audit of the Company is pending or
threatened, and the results of any completed audits are
properly reflected in the Financial Statements. The Company
has not granted to any taxing authority any extension of the
limitation period during which any Tax liability may be
asserted. All amounts of money the Company is required to
withhold from employees or collect from customers for Taxes,
social security and unemployment insurance, and the portion of
any such Taxes the Company is required to pay to any
Governmental Authority, have been collected or withheld and
either paid to the respective Governmental Authority or set
aside in accounts for such purpose, or such monies have been
reserved against and entered on the Company books.
2.14 LEASED PROPERTY. Disclosed on SCHEDULE 2.14 is a list by legal
description of all real property that the Company leases in its
business (the "Leased Property"). All of the Leased Property is leased
by the Company from the City of Shreveport, Louisiana under the
Shreveport Lease (SCHEDULE 2.11, Item No. 11).
2.15 INTELLECTUAL PROPERTY RIGHTS. To IHI's knowledge, no patents,
processes, inventions, trademarks, trade names, copyrights, licenses,
information and proprietary rights (collectively, "Intellectual
Property Rights") being used by the Company in the conduct of its
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STOCK PURCHASE AGREEMENT EXECUTION COPY
business infringe upon or are in conflict with the rights of others.
SCHEDULE 2.15 is a summary of all Intellectual Property Rights.
2.16 PERMITS AND LICENSES. SCHEDULE 2.16 is a list and description of each
permit, license or similar authorization from a Governmental Authority
with respect to the Company's operations, together with the expiration
date of each, and each association of which the Company is a member and
each association or governmental agency by which the Company is
accredited. IHI and the Company have provided to Buyer copies of the
permits, licenses or similar authorizations that are disclosed on
SCHEDULE 2.16.
2.17 DEPOSIT ACCOUNTS. SCHEDULE 2.17 is a list of:
(a) the name of the financial institution in which the Company has
accounts or safe deposit boxes;
(b) the names in which the accounts or boxes are held;
(c) the type of account and account number; and
(d) the name of the person authorized to draw thereon or have
access thereto.
2.18 BROKERS' FEES. Neither the Company nor IHI is obligated (contingently
or otherwise) under any contract or other agreement, and there are no
outstanding claims against any of them for the payment of any broker's
or finder's fee or agent's commission or other similar payment in
connection with the origin, negotiation, execution or performance of
this Agreement or the Related Agreements.
2.19 LIMITATION ON REPRESENTATIONS; DEFINITION OF KNOWLEDGE. All
representations and warranties of IHI in this Section 2 are being made
to its "knowledge" (as that term is defined below) except for those
representations and warranties made in Sections 2.2 and 2.3. When any
representation or warranty in this Section 2 is qualified to IHI's
"knowledge," it means the actual knowledge of its executive officers
other than ▇▇▇▇▇▇ ▇. ▇▇▇▇.
3. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents and warrants
to IHI that the statements in this Section 3 are true and correct as of
the date of this Agreement and will be true and correct on the Closing
Date as if made on the Closing Date (except to the extent any
representation or warranty is made as of another date, which are hereby
made as of such other date):
3.1 AUTHORIZATION AND ENFORCEABILITY. Buyer has full power and authority to
execute and deliver this Agreement, all other agreements to be executed
and delivered by it under this Agreement, the Related Agreements and
the Note, and to perform its obligations hereunder and thereunder.
Buyer has duly authorized the execution, delivery and performance of
this Agreement, and it is Buyer's legal, valid and binding obligation,
enforceable against it in accordance with its terms, except for the
Exceptions. When Buyer executes and delivers the Related Agreements and
the Note, they will have been duly executed and delivered by Buyer and
will constitute their legal, valid and binding obligations, except as
the enforcement thereof may be limited by the Exceptions. Buyer is not
required to obtain any consent, approval or authorization of, or
registration, declaration or filing with any Governmental
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STOCK PURCHASE AGREEMENT EXECUTION COPY
Authority or third party to authorize the execution and delivery of,
the performance of their obligations under this Agreement, the Related
Agreements, or the Note.
3.2 NO VIOLATION OF LAW, ETC. Buyer's execution, delivery and performance
of this Agreement, the Related Agreements and the Note does not
conflict with, violate or constitute a breach of or a default under, or
result in the creation or imposition of any lien upon any of the assets
or properties of Buyer under the terms of, any credit or any loan
agreement, mortgage, indenture, promissory note or other agreement or
instrument to which Buyer is a party or by which either of them or any
of their properties may be bound or affected.
3.3 LEGAL PROCEEDINGS. There are no actions, suits or proceedings pending
or known to be threatened against Buyer or any of their properties, at
law or in equity, or before or by any Governmental Authority.
3.4 BROKERS' FEES. The Buyer is not obligated (contingently or otherwise)
under any contract or other agreement, and there are no outstanding
claims against either of them for the payment of any broker's or
finder's fee or agent's commission or other similar payment in
connection with the origin, negotiation, execution or performance of
this Agreement, the Related Agreements or the Note.
3.5 BUYER'S KNOWLEDGE. Buyer has no knowledge of any facts or circumstances
that would indicate that any of the representations or warranties of
IHI are inaccurate or untrue in any material respects as of the date
made or as of the Closing Date. For purposes of this Agreement, ▇▇▇▇▇▇
▇. ▇▇▇▇'▇ knowledge of a fact or circumstance shall in all cases be
attributed to the Buyer.
4. PRE-CLOSING ACTIONS. From the date of this Agreement to the Closing
Date:
4.1 CONDUCT OF BUSINESS. IHI shall cause the Company to carry on and
conduct its operations only in the Ordinary Course of Business
including the collection of its accounts receivable, payment of trade
account and other payables, and maintenance of inventory levels,
without any change in the policies, practices, and methods that the
Company pursued before the date of this Agreement. IHI will use its
reasonable commercial efforts to preserve the business organizations of
the Company intact, to preserve the relationships with Company's
customers, suppliers, and others having business dealings with the
Company.
4.2 NOTIFICATION OF INACCURACY OF REPRESENTATIONS AND WARRANTIES. IHI will
promptly advise Buyer in writing if (a) any of its representations or
warranties are untrue or incorrect in any material respect or (b) IHI
becomes aware of the occurrence of any event or of any state of facts
that results in any of the representations and warranties of IHI being
untrue or incorrect in any material respect as if IHI were then making
them.
5. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS AT THE CLOSING. Buyer's
obligation to purchase the Stock on the Closing Date is subject to the
satisfaction, by the Closing Date, of the conditions of this Section 5.
If any such condition is not satisfied or waived, then Buyer shall have
no obligation to purchase the Stock.
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5.1 COMPLIANCE WITH THIS AGREEMENT. By the Closing Date, IHI and the
Company shall have performed, and complied with all agreements and
conditions contained in this Agreement that they are required to
perform or comply with.
5.2 ACCURACY OF REPRESENTATIONS AND WARRANTIES.
(a) All of the representations and warranties of IHI in this
Agreement (considered collectively), and each of these
representations and warranties (considered individually), must
have been accurate, in light of the circumstance under which
they were made, in all material respects as of the date of
this Agreement, and must be accurate in all material respects
as of the Closing Date as if made on the Closing Date.
(b) Buyer must not have discovered any material error,
misstatement or omission in the representations and warranties
made by IHI in this Agreement, the Financial Statements, or in
any Exhibit, schedule or other disclosure made hereunder.
5.3 SATISFACTION OF CONDITIONS TO MERGER. All of the conditions precedent
to the Merger shall have been satisfied and performed.
5.4 NO MATERIAL ADVERSE CHANGE. Between the date of this Agreement and the
Closing Date, there must not have occurred any material adverse change
in the Company's financial condition or results of operations.
6. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF IHI AT THE CLOSING. IHI's
obligation to sell the Stock to Buyer on the Closing Date is subject to
the satisfaction, by the Closing Date, of the conditions set forth in
this Section 6. If any such condition is not satisfied or waived, then
IHI shall have no obligation to sell the Stock to Buyer.
6.1 COMPLIANCE WITH THIS AGREEMENT. By the Closing Date, Buyer shall have
performed and complied with all agreements and conditions contained in
this Agreement that it is required to perform or comply with.
6.2 ACCURACY OF REPRESENTATIONS AND WARRANTIES.
(a) All of Buyer's representations and warranties in this
Agreement (considered collectively), and each of its
representations and warranties in this Agreement (considered
individually), must have been accurate, in light of the
circumstance under which they were made, in all material
respects as of the date of this Agreement and must be accurate
in all material respects as of the Closing Date as if made on
the Closing Date.
(b) IHI must not have discovered any material error, misstatement
or omission in the representations and warranties Buyer made
in this Agreement or in any Exhibit, schedule or other
disclosure hereunder.
6.3 SATISFACTION OF CONDITIONS TO MERGER. All of the conditions precedent
to the Merger shall have been satisfied and performed.
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6.4 RELEASE FROM GUARANTY. The City of Shreveport, Louisiana, as landlord
under the Company's lease with respect to its facility in Shreveport
(the "Shreveport Lease"), shall have released IHI from its Guaranty of
the Shreveport Lease.
7. NONCOMPETITION.
7.1 PROHIBITED ACTIVITIES. IHI will not, for a period of two years after
the Closing Date, directly or indirectly, for itself or on behalf of or
in conjunction with any other person, persons, company, partnership,
corporation or business of whatever nature:
(a) engage in the design, manufacture, or assembly of (i)
refinery, petrochemical, pulp and paper vessels with special
fittings, (ii) industrial silencers, (iii) evaporators and
desalination equipment, or (iv) contract fabrication and
machining of magnetic resonance imaging components and gas
turbine bodies and steam and wind-powered generator components
(the "▇▇▇▇▇▇ Business");
(b) contact or solicit any person or entity which is, at that
time, or which has been, within one year before the Closing
Date, a customer of the Company (a "Protected Customer"), in
order to divert the Protected Customer to any other company or
entity in the ▇▇▇▇▇▇ Business.
Notwithstanding the above, the foregoing covenants shall not prohibit
IHI from (i) continuing to engage in the design, manufacture,
fabrication, assembly or sale of any equipment, parts or component
parts in which IHI or T-3 or any of their subsidiaries or affiliates
(including specifically Belleli Energy S.r.L. ("Belleli")) currently
engages, or (iii) acquiring as an investment no more than 1% of the
capital stock of a competing business whose stock is traded on a
national securities exchange or in the over-the-counter market.
7.2 DAMAGES. Because of the difficulty of measuring economic losses to
Buyer as a result of a breach of any of the foregoing covenants, and
because of the immediate and irreparable damage that will result to
Buyer for which it would have no other adequate remedy, IHI agrees that
the foregoing covenant may be enforced by Buyer if there is a breach by
IHI, by injunctive relief, restraining orders, or other extraordinary
relief to be cumulative to, but not in limitation of, any other
remedies to which Buyer may be entitled.
7.3 REASONABLE RESTRAINT. The parties agree that the covenants in this
Section 7 impose a reasonable restraint on IHI in light of the
activities and business of the Company as of the date of this
Agreement.
7.4 SEVERABILITY; REFORMATION. The covenants in this Section 7 are
severable and separate, and the unenforceability of any specific
covenant shall not affect the provisions of any other covenant. If any
court of competent jurisdiction determines that the scope, time or
territorial restrictions are unreasonable, the parties intend that such
restrictions be enforced to the fullest extent the court deems
reasonable, and the Agreement shall thereby be reformed.
8. INDEMNIFICATION.
8.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The parties'
representations, warranties, covenants, agreements and indemnities in
this Agreement shall survive the Closing, the
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STOCK PURCHASE AGREEMENT EXECUTION COPY
consummation of the transactions evidenced by this Agreement, and any
investigation with respect thereto for a period of one year after the
Closing Date (the "Expiration Date"). Notwithstanding the foregoing,
any representation, warranty, covenant, agreement or indemnity in
respect to which indemnity may be sought, shall survive the time at
which it would otherwise terminate if notice of the inaccuracy or
breach thereof shall have been given to the party against whom such
indemnity may be sought before such time. The parties' covenants and
agreements contained herein to be performed or observed at or before
the Closing shall expire at the Closing, along with all rights and
remedies for any breach thereof.
8.2 INDEMNIFICATION BY IHI.
(a) Subject to the provisions of this Section 8, IHI agrees to
protect, indemnify and hold harmless Buyer and its
stockholders, officers, directors, agents and attorneys, (the
"Buyer Indemnitees"), from and against any demand, claim,
action, cause of action, suit, proceeding, investigation,
liability, obligation, judgment, loss, damage, cost or expense
(excluding in all cases consequential and punitive damages,
but including reasonable attorneys' fees) (collectively,
"Damages") as they are incurred or suffered by any of them and
caused by or arising out of:
(i) IHI's or the Company's breach or default in the
performance of any covenant or agreement in this
Agreement or in any Related Agreement; and
(ii) IHI's breach of or inaccurate or erroneous
representation or warranty made in this Agreement.
(b) IHI shall not be obligated to indemnify the Buyer with respect
to any matter to the extent Cone or ▇▇▇▇▇▇ had actual
knowledge of such matter prior to the Closing and did not
disclose such matter to IHI.
8.3 INDEMNIFICATION BY BUYER. Subject to the provisions of this Section 8,
Buyer agrees to protect, indemnify and hold harmless IHI and its
stockholders, officers, directors, agents, attorneys and assigns (the
"IHI Indemnitees") from and against any Damages as they are incurred or
suffered by any of them and caused by or arising out of:
(a) Buyer's breach or default in the performance of any covenant
or agreement in this Agreement or in any Related Agreement;
and
(b) Buyer's breach of or inaccurate or erroneous representation or
warranty made in this Agreement.
8.4 PROCEDURE FOR INDEMNIFICATION; THIRD-PARTY CLAIMS.
(a) Within 15 days after receipt of notice of commencement of any
action by any third party evidenced by service of process or
other legal pleading, or with reasonable promptness after the
assertion in writing of any claim by a third party, the party
entitled to indemnification hereunder ("Indemnified Person")
shall give the party obligated to provide indemnification
under Section 8.2 or 8.3 hereof (the "Indemnifying Person")
written notice thereof, together with a copy of such claim,
process or other legal pleading. The failure to so notify the
Indemnifying Person
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within the above time frame will not relieve the Indemnifying
Person of any liability it may have to the Indemnified Person,
except to the extent the Indemnifying Person demonstrates that
the defense of such action is unduly prejudiced by the
Indemnified Person's failure to give such notice, or except if
such notice is not delivered before the Expiration Date. The
Indemnifying Person shall have the right to undertake the
defense, settlement, compromise or other disposition thereof
at its own expense and through a legal representative of its
own choosing. The Indemnified Person and its counsel shall
have the right to be present at the negotiation, defense and
settlement of such action or claim, and any settlement or
compromise of any such action or claim shall be subject to the
approval of the Indemnified Person, which approval shall not
be unreasonably withheld.
(b) If the Indemnifying Person, by the 30th day after receipt of
notice of any such claim (or, if earlier, by the 10th day
immediately preceding the day on which an answer or other
pleading must be served in order to prevent judgment by
default in favor of the person asserting such claim), has not
notified the Indemnified Person of its election to defend
against such claim, the Indemnified Person shall have the
right to undertake the defense, compromise or settlement of
such claim through counsel of its choice on behalf of and for
the account and risk of the Indemnifying Person, at the cost
and expense of the Indemnifying Person. In such event, the
Indemnifying Party and its counsel shall have the right to be
present at the negotiation, defense and settlement of such
action or claim, and any settlement or compromise of any such
action or claim shall be subject to the approval of the
Indemnifying Person, which approval shall not be unreasonably
withheld.
8.5 PROCEDURE FOR INDEMNIFICATION; OTHER THAN THIRD-PARTY CLAIMS. Any claim
for indemnification for any matter not involving a third-party claim
shall be asserted by written notice, which specifies in reasonable
detail the factual basis of such claim, delivered to the Indemnifying
Person on or before the Expiration Date.
8.6 SPECIAL PROVISIONS REGARDING LIABILITY.
(a) No claim for indemnification shall be made hereunder unless
asserted by a written notice given to the Indemnifying Person,
on or before the Expiration Date.
(b) Buyer and IHI shall have no liability or obligation on a claim
for indemnification hereunder with respect to any matter
unless and until the total amount of Damages incurred by the
other parties Indemnitees exceeds $100,000 in the aggregate
("Minimum Damages"), and then only for the amount by which
such Damages exceeds Minimum Damages. In no event shall either
Buyer's or IHI's aggregate liability for a claim or claims for
indemnification for Damages hereunder exceed $6,000,000
("Maximum Damages").
(c) The Indemnified Person shall act in good faith and in a
commercially reasonable manner to mitigate any Damages for
which it may seek indemnification under this Section 8.
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(d) An indemnity payment for Damages otherwise due and payable
under this Section 8 shall be decreased to the extent of any
(i) net reduction of tax liability the Indemnified Party
actually realizes as a result of such indemnifiable loss, and
(ii) insurance proceeds the Indemnified Party actually
collects in connection with the indemnifiable loss.
8.7 REMEDIES. The remedies of the Buyer and the Buyer Indemnitees set forth
in this Section 8 shall be the exclusive post-Closing remedies
available to them with respect to the actual or alleged breach by IHI
of any provision of this Agreement (other than for an actual or alleged
breach under Section 7 hereof) or the Related Agreements.
9. POST-CLOSING MATTERS.
9.1 REATTRIBUTION OF LOSS CARRYOVERS. IHI and Buyer agree that IHI will
make an election under Treasury Regulation Section 1.1502-20(g)
promulgated under the Code or any corresponding provisions of any Tax
law to reattribute to itself any portion of the net operating loss
carryovers and net capital loss carryovers attributable to the Company
or any subsidiary or affiliate. Buyer agrees to cooperate with IHI in
connection with Tax matters relating to the Company including, without
limitation, the preparation and filing of the election to be made
pursuant to Treasury Regulation Section 1.1502-20(g) and to file its
Tax returns and reports in a manner consistent with such election made
by IHI.
9.2 FURTHER ASSURANCES. From time to time after the Closing Date, each
party hereto will, at any other party's request, execute, acknowledge
and deliver to such requesting party such other instruments and take
such other actions and deliver such other documents as may be
reasonably required to carry out the intent of this Agreement and the
Related Agreements.
9.3 BOOKS AND RECORDS. Insofar as IHI determines that any books and records
may be needed or useful in connection with federal, state or local
regulatory or tax matters, resolution of third party disputes or
contract compliance issues, or other bona fide business purposes, for a
period of seven years after the Closing Date, Buyer and the Company
will use their best efforts to preserve and make available to IHI, at
the location of such books and records in Buyer's and the Company's
organization, access to and the right to copy such of the books and
records as such they may then have in their possession or to which it
may have access.
9.4 TAX MATTERS.
(a) IHI shall prepare or cause to be prepared and file or cause to
be filed any required Tax Returns for Tax periods ending on or
before the Closing Date, and shall pay all Taxes of the
Company for Tax periods ending on or before the Closing Date.
(b) The Buyer shall cooperate fully, as and to the extent
reasonably requested by IHI in connection with the filing of
Tax Returns pursuant to this Section 9.4 and any audit,
litigation, or other proceeding with respect to Taxes. Such
cooperation shall include the retention and (upon IHI's
request) the provision of records and information which are
reasonably relevant to any such audit, litigation or other
proceeding and making employees available on a mutually
convenient basis to provide additional information and
explanation of any material provided hereunder. Buyer agrees
(i) to retain all books and records with respect to Tax
matters pertinent to the Company
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relating to any Tax period beginning before the Closing Date
until the expiration of any applicable statutes of limitations
(including, to the extent notified by IHI) of the respective
Tax periods, and to abide by all record retention agreements
entered into with any Tax authority, and (ii) to give IHI
reasonable written notice prior to transferring, destroying,
or discarding any such books and records and, if IHI shall
request, the Buyer shall allow IHI to take possession of such
books and records. Should any audit, litigation or other
proceeding with respect to Taxes potentially give rise to a
payment obligation by IHI or the Company, Buyer will allow IHI
and its counsel to review and comment on written responses
provided to the IRS or Tax authority, if it so elects, at its
own expense in the defense of such audit, litigation, or other
proceeding, upon written request of IHI during normal business
hours.
10. TERMINATION.
10.1 MANNER OF TERMINATION. This Agreement may be terminated at any time
before the Closing Date as follows:
(a) By Buyer and IHI in a written instrument signed by each of
them.
(b) By Buyer or IHI if the Closing does not occur on or before
December 31, 2001 (the "Termination Date").
(c) By Buyer or IHI if there has been a material breach of any of
the representations or warranties set forth in this Agreement
on the part of the other, and this breach by its nature cannot
be cured before the Termination Date.
(d) By Buyer or IHI if there has been a material breach of any of
the covenants or agreements set forth in this Agreement on the
part of the other, and this breach is not cured by the
Termination Date.
10.2 EFFECT OF TERMINATION. If terminated as provided in Section 10.1, this
Agreement shall forthwith become void and have no effect, except for
Section 11.9 and Section 11.12, and except that no party shall be
relieved or released from any liabilities or damages arising out of the
party's breach of any provision of this Agreement.
11. MISCELLANEOUS.
11.1 ENTIRE AGREEMENT. This Agreement, including the Exhibits and schedules
hereto, constitutes the entire agreement between the parties with
respect to the subject matter hereof and no party shall be liable or
bound to any other party in any manner by any warranties,
representations or covenants except as specifically set forth herein or
therein. This Agreement supersedes all letters, memoranda and term
sheets previously prepared in connection with the negotiations
surrounding the subject matter hereof. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the
parties' respective successors and permitted assigns. Nothing in this
Agreement, express or implied, is intended to confer upon any third
party any rights, remedies, obligations or liabilities under or by
reason of this Agreement, except as expressly provided in this
Agreement.
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11.2 NOTICES. Any notices permitted or required to be given under the terms
of this Agreement shall be in writing and shall be deemed given if
delivered to the party to be notified at the address specified below,
by first class mail, overnight courier or fax with hard copy being sent
by first class mail or overnight courier. Such notice shall be deemed
received 24 hours after it is sent via fax (with receipt confirmed) or
overnight courier. Any notice given in any other manner shall be
effective only if and when received.
(a) if to Buyer, at:
▇▇▇▇▇▇ ▇. ▇▇▇▇
c/o Beaird Industries, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇
c/o Beaird Industries, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy (which shall not constitute notice) to:
▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to IHI, at:
Industrial Holdings, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telephone No. (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy (which shall not constitute notice) to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ L.L.P.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone No. (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
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or at such other address or facsimile number that the parties may
designate in writing.
11.3 AMENDMENT AND WAIVERS. This Agreement may be amended, modified or
supplemented only by a written instrument designated as an "amendment"
to this Agreement and signed by the parties hereto. The observance of
any term of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively) only by
a written instrument signed by the person specifically waiving such
observance.
11.4 ASSIGNMENT. This Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective legal representatives,
successors and permitted assigns; provided, however, that no party may
assign this Agreement without the prior written consent of the other
party, which consent shall not be unreasonably withheld, except that
Buyer may, on having given prior written notice to IHI but without
IHI's prior written consent, assign its rights and obligations under
this Agreement to an entity to be formed and wholly-owned by ▇▇▇▇▇▇ and
Cone, which entity thereafter shall become the Buyer hereunder at the
Closing.
11.5 GOVERNING LAW; VENUE. This Agreement shall be governed by, construed
under, enforced and interpreted in accordance with the internal
substantive laws of the State of Texas that apply to agreements to be
made and performed solely within such state, without giving effect to
any conflicts or choice of laws principles that might otherwise apply.
The parties hereto agree that any dispute arising in connection with
this Agreement shall be resolved by arbitration in accordance with
Section 11.7 of this Agreement; provided, however to the extent a party
exercises his or its rights under Section 7 of this Agreement; venue
shall lie with a court of competent jurisdiction in ▇▇▇▇▇▇ County,
Texas.
11.6 SEVERABILITY. If any provision of this Agreement is declared
unenforceable by any court of competent jurisdiction, such provision
shall be enforced to the greatest extent permitted by law, and such
declaration shall not affect the validity of any other provision of
this Agreement.
11.7 ARBITRATION.
(a) Any dispute, controversy, or claim arising out of or relating
to this Agreement or relating to the breach, termination, or
invalidity of this Agreement, whether arising in contract,
tort, or otherwise, shall at the request of any party be
resolved in binding arbitration. Any arbitration shall proceed
in accordance with Title 9 of the United States Code, as it
may be amended or recodified from time to time ("Title 9"),
and the current Commercial Arbitration Rules (the "Arbitration
Rules") of the American Arbitration Association ("AAA") to the
extent that Title 9 and the Arbitration Rules do not conflict
with any provision of this Section 11.7.
(b) No provision of or the exercise of any rights under this
Section 11.7 shall limit the right of any party to seek and
obtain provisional or ancillary remedies (such as injunctive
relief, attachment, or the appointment of a receiver) from any
court having jurisdiction before, during, or after the
pendency of an arbitration proceeding under this Section. The
institution and maintenance of any such action or proceeding
shall not constitute a waiver of the right of any party
(including the party taking the action
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or instituting the proceeding) to submit a dispute,
controversy, or claim to arbitration under this Section.
(c) Any award, order, or judgment made pursuant to arbitration
shall be deemed final and may be entered in any court having
jurisdiction over the enforcement of the award, order, or
judgment. Each party agrees to submit to the jurisdiction of
any court for purposes of the enforcement of the award, order,
or judgment.
(d) The arbitration shall be held before one neutral,
disinterested arbitrator knowledgeable in the general subject
matter of the dispute, controversy, or claim and selected by
AAA in accordance with the Arbitration Rules, except that any
arbitration in which the disputed, controverted, or claimed
amount (as reflected on the demand for arbitration, as the
same may be amended) exceeds $1,000,000.00 shall be held
before three arbitrators, one arbitrator being selected by
Buyer, one by the Seller Parties, and the third by the other
two from a panel of persons identified by AAA who are
knowledgeable in the general subject matter of the dispute,
controversy, or claim.
(e) The arbitration shall be held at the office of AAA located in
▇▇▇▇▇▇ County, Texas (as the same may be from time to time
relocated), or at another place the parties agree on.
(f) In any arbitration proceeding under this Section 11.7, subject
to the award of the arbitrator(s), each party shall pay all
its own expenses, an equal share of the fees and expenses of
the arbitrator, and, if applicable, the fees and expenses of
its own appointed arbitrator. The arbitrator(s) shall have the
power to award recovery of costs and fees (including
reasonable attorney fees, administrative and AAA fees, and
arbitrators' fees) among the parties as the arbitrators
determine to be equitable under the circumstances.
(g) The interpretation and construction of this Section 11.7,
including, but not limited to, its validity and
enforceability, shall be governed by Title 9 of the U.S. Code,
notwithstanding the choice of law set forth in Section 11.4 of
this Agreement.
11.8 MULTIPLE COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original but all of
which shall constitute one instrument.
11.9 EXPENSES. IHI and Buyer are each solely responsible for and will bear
all of their own respective expenses, including, without limitation,
expenses of legal counsel, investment bankers, brokers, consultants,
accountants and other advisors, incurred at any time in connection with
this Agreement, the Related Agreements, the Note, and the transactions
contemplated hereby and thereby, and no such expenses shall be borne by
the Company.
11.10 WAIVER OF BREACH. No waiver of any provision of this Agreement shall
constitute a waiver of any other provision of this Agreement, nor shall
such waiver constitute a waiver of any subsequent breach of such
provision.
11.11 CONSTRUCTION. The headings contained in this Agreement are for
reference purposes only and shall not affect this Agreement in any
manner whatsoever. Wherever required by the
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context, any gender shall include any other gender, the singular shall
include the plural, and the plural shall include the singular.
11.12 PUBLIC ANNOUNCEMENTS. The parties agree to advise and confer with each
other prior to the issuance of any public reports, statements or press
releases pertaining to this Agreement and the transactions contemplated
hereby. Each party will use its best efforts to maintain in strict
confidence the existence and terms of this Agreement and the
transactions contemplated hereby. Unless otherwise required by law or
as set forth above, no party shall make any public announcement or
disclosure concerning this Agreement, except as mutually agreed. The
financial terms of the Agreement are to be kept confidential, except to
the extent that the disclosure is required under law. Nothing in the
foregoing is intended to prevent IHI from making any filings required
with the Securities and Exchange Commission.
11.13 FACSIMILE SIGNATURES. The parties acknowledge that signatures on this
Agreement may be delivered by facsimile in lieu of an original
signature and the parties agree to treat such signatures as original
signatures and shall be bound thereby.
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The parties have executed this Agreement on the date set forth on the
first page of this Agreement.
INDUSTRIAL HOLDINGS, INC.
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Executive Vice President
BUYER
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇
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