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EXHIBIT 10.5
ASSET PURCHASE AGREEMENT
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TABLE OF CONTENTS
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ARTICLE I CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II PURCHASE, SALE AND DELIVERY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2.1 Purchased Assets and Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2.2 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.3 Price Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.4 Allocation Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.5 Accounts Receivable, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.6 Mail Received After Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 2.7 Full Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE III LIABILITIES AND OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3.1 Obligations Assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3.2 Liabilities Not Assumed by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLER PARTIES . . . . . . . . . . . . . . . . . . . . . 12
Section 4.1 Corporate Status and Good Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 4.2 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 4.3 Non-Contravention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 4.4 Validity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 4.5 Broker Involvement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 4.6 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 4.7 Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 4.8 Continuity Prior to Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 4.9 Contracts and Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 4.10 Trademarks, Trade Names and Intellectual Property . . . . . . . . . . . . . . . . . . . . . 16
Section 4.11 All Assets of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 4.12 Financial Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 4.13 Condition of Fixed Assets and Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 4.14 No Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 4.15 Employees and Related Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 4.16 No Material Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 4.17 Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 4.18 Compliance With Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 4.19 WARN Act Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 4.20 Government Licenses, Permits and Related Approvals . . . . . . . . . . . . . . . . . . . . 18
Section 4.21 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 4.22 Backlog . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 4.23 Safety Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
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Section 4.24 Investment Intention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 4.25 Transactions with Certain Persons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 4.26 Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 4.27 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 4.28 Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 4.29 Change in Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 4.30 COBRA Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 4.31 Warranty and Return Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 4.32 Product Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 4.33 Houston Facility; Leases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 4.34 Future Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 4.35 Certificates of Occupancy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 5.1 Corporate Status and Good Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 5.2 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 5.3 Non-Contravention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 5.4 Validity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 5.5 Broker Involvement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE VI COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 6.1 Regular Course of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 6.2 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 6.3 Notices and Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 6.4 Third Party Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 6.5 Further Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 6.6 Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 6.7 Employee Termination; COBRA Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 6.8 Transition Employees, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 6.9 Representation Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 6.10 Necessary Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE VII INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 7.1 Seller's Indemnity Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 7.2 Buyer's Indemnity Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 7.3 Indemnification Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 7.4 Arbitration of Disputes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 7.5 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 7.6 Right of Offset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 7.7 Survival of Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
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ARTICLE VIII CONDITIONS PRECEDENT TO CLOSING: TERMINATION . . . . . . . . . . . . . . . . . . . . . . . 38
Section 8.1 General Conditions Precedent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 8.2 Reasons for Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 8.3 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE IX ACTIONS TO BE TAKEN AT CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 9.1 Actions to be Taken by Seller at the Closing . . . . . . . . . . . . . . . . . . . . . . . 43
Section 9.2 Actions to be Taken by Buyer at the Closing . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 9.3 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE X COVENANTS OF BUYER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE XI GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 11.1 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 11.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 11.3 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 11.4 Waivers and Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 11.5 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 11.6 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 11.7 Compliance with Bulk Sales Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 11.8 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 11.9 Governing Law; Settlement of Disputes. . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 11.10 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 11.11 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 11.12 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
ARTICLE XII COVENANTS NOT TO COMPETE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 12.1 Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 12.2 Relinquishment of Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
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SCHEDULES
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Schedule 2.1(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Schedule 2.1(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Schedule 2.1(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Schedule 2.1(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Schedule 2.1(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Schedule 2.1(g) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Schedule 2.1(h) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Schedule 2.1(i) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Schedule 2.1(j) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Schedule 2.1(l) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Schedule 2.1(o) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Schedule 3.2(r) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Schedule 2.5(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Schedule 3.1(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Schedule 3.3(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Schedule 4.3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Schedule 4.6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Schedule 4.7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Schedule 4.8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Schedule 4.9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Schedule 4.13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Schedule 4.14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Schedule 4.15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Schedule 4.18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Schedule 4.28 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Schedule 4.20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Schedule 4.21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Schedule 4.22 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Schedule 4.23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Schedule 4.25 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Schedule 4.31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Schedule 4.32 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Schedule 6.8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
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EXHIBITS
Exhibit A-1 7-year Subordinated Secured Note and Security Agreement
Exhibit A-2 4-year Subordinated Inventory Note and Security Agreement
Exhibit B Environmental Remediation Agreement
Exhibit C Deed of Trust
Exhibit D Special Warranty Deed
Exhibit E Non-Competition Agreement
Exhibit F Subordination Agreement
Exhibit G Loan Agreement with Texas Commerce Bank
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement ("Agreement") is made this 27th
day of November, 1995 by and among ▇▇▇-▇▇▇ Bolt & Gasket, Inc., a Texas
corporation ("Buyer"), ▇▇▇▇▇▇ Industrial, Inc., a Delaware corporation
("Seller"), ▇▇▇▇▇▇ Industries Canada, a partnership formed under the laws of
Alberta, Canada ("▇▇▇ Can"), and ▇▇▇▇▇▇ Industries, Inc., a Delaware
corporation and the sole shareholder of Seller ("▇▇▇▇▇▇"; ▇▇▇▇▇▇, ▇▇▇ Can and
Seller are collectively called the "Seller Parties").
WHEREAS, Seller is engaged in the business (the "Business") of
assembling, manufacturing, marketing, selling, servicing, and repairing bolts,
flanges, gaskets and related products; and
WHEREAS, Buyer wishes to purchase and assume from Seller, and
Seller wishes to sell, transfer, assign and deliver to Buyer, the Purchased
Assets (hereinafter defined) and the Assumed Liabilities (hereinafter defined);
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants, indemnities and agreements stated
herein, the parties hereto agree as follows:
ARTICLE I
CLOSING
Section 1.1 Closing. The closing of the purchase and
sale provided for herein (the "Closing") shall take place at 9:30 a.m. Houston
time on November 28, 1995 at the offices of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ P.C.,
Houston, Texas, or if the conditions to Closing set forth in Article VIII
hereof shall not have been satisfied or waived by such date, as soon as
practicable after such conditions shall have been satisfied or waived, or such
other date and time as shall be agreed upon in writing by the parties hereto.
The date on which the Closing actually occurs is referred to herein as the
"Closing Date".
ARTICLE II
PURCHASE, SALE AND DELIVERY
Section 2.1 Purchased Assets and Excluded Assets.
Subject to the terms and conditions of this Agreement, and on the basis of the
representations, warranties, covenants, indemnities and agreements hereinafter
set forth, at the Closing, Seller, ▇▇▇▇▇▇, and ▇▇▇ Can shall sell, transfer,
convey, assign and deliver to Buyer, and Buyer shall purchase from Seller and
▇▇▇ Can, the rights of Seller and ▇▇▇ Can in and to the following assets and
properties (collectively, the "Purchased Assets"):
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(a) All inventories of finished products, work in
process, raw materials, supplies and packing and shipping material as
of the Closing Date, provided, in the case of ▇▇▇ Can, such
inventories shall be limited to those located at or exclusively used
in connection with the Edmonton bolt, flange and gasket business of
▇▇▇ Can (collectively, the "Inventory"), a summary of such raw
materials, finished products and work in process as of September 30,
1995 (except with respect to ▇▇▇ Can which would be as of October 31,
1995) is attached as Schedule 2.1(a) which such list shall be updated
as of the Closing Date in accordance with the terms hereof. A
complete list of finished goods, work in process and raw materials as
of the Closing Date will be provided, including a segregated list of
Inventory securing the 4-year Subordinated Inventory Note, hereinafter
defined;
(b) All accounts receivable of Seller and ▇▇▇ Can for the
sale of finished Inventory as to which title has passed to the
purchaser thereof as of the Closing Date (the "Accounts Receivable"),
a listing of which as of September 30, 1995 (except with respect to
▇▇▇ Can which is as of October 31, 1995) is attached as Schedule
2.1(b), which such list shall be updated as of the Closing Date in
accordance with the terms hereof;
(c) All tools, equipment, machinery, dies, patterns,
furniture, fixtures, store equipment, automobiles, trucks, service
equipment, computer equipment and leasehold improvements and such
additional personal property, including, without limitation, equipment
records, racks and forklift maintained at the ▇▇▇▇▇▇ Drive location,
installations, fixtures, leasehold improvements, furniture and
carpeting, but excluding Inventory owned by Seller or owned by ▇▇▇ Can
and located at or exclusively used in connection with the Edmonton
bolt, flange and gasket business of ▇▇▇ Can (collectively, the "Fixed
Assets") with respect to, or for use in connection with, the operation
of the Business or located in or upon the Houston Facility, defined
below, or the manufacturing, warehouse and other facilities used by
Seller or ▇▇▇ Can, located in Houston, Texas, Edmonton, Alberta,
Canada, and Los Angeles, California (the "Other Facilities" together
with the Houston Facility, the "Facilities"), a listing of which as of
September 30, 1995 is attached as Schedule 2.1(c), which such list
shall be updated as of the Closing Date in accordance with the terms
hereof;
(d) All contracts and agreements in existence on the
Closing Date (the "Contracts") relating to the Seller, the Purchased
Assets or the Business (including, without limitation, distribution
contracts, and agreements relating to the confidentiality of
information or limiting employees, former employees or others from
competing in any line of the Business), but excluding Purchase and
Sales Contracts and Leases, a listing of which as of September 30,
1995 is attached as Schedule 2.1(d), which such list shall be updated
as of the Closing Date in accordance with the terms hereof;
(e) Each purchase or sales order or other contract,
agreement or commitment for the purchase or sale of Inventory that was
entered into in the ordinary course of business before the Closing
Date and is unfilled as of the Closing Date ("Purchase and
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Sales Contracts"), a list of which (i) in effect as of the Closing
Date and (ii) involving $1,000 or more in effect as of Closing Date
shall be set forth on Schedule 2.1(e) and provided as of the Closing
Date.
(f) Express or implied warranties, if any, from the
suppliers of Seller or ▇▇▇ Can, manufacturers or others with respect
to the Purchased Assets;
(g) All intellectual property, including patents,
trademarks, trade names, including without limitation the names
▇▇▇-▇▇▇ Corporation and ▇▇▇-▇▇▇ Bolt & Gasket, Inc., copyrights,
blueprints, drawings, proprietary methods and know-how, computer
software and similar items, together with any goodwill associated
therewith and all rights of action on account of past, present, and
future unauthorized use or infringement thereof, provided, in the case
of ▇▇▇ Can, such intellectual property shall be limited to property
rights as are located or exclusively used in connection with the
Edmonton office and the bolt, flange and gasket business of ▇▇▇ Can.
A listing of such patents, trademarks, trade names, registered
copyrights and computer software is attached as Schedule 2.1(g) which
list shall be updated as of the Closing Date in accordance with the
terms hereof;
(h) The leases of real property (the "Leases") necessary
for the use and operation of the Business including leases on certain
of the Facilities, a listing of which is set forth on Schedule 2.1(h);
(i) The manufacturing, warehouse and other facilities of
▇▇▇▇▇▇ located at ▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, including the
real property described in Schedule 2.1(i), together with all
buildings, structures, installations, fixtures and other improvements
appurtenant thereto or situated thereon, and all other rights and
interests of Seller pertaining thereto (the "Houston Facility");
(j) Deposits, ▇▇▇▇▇ cash, and other current and prepaid
assets as they existed on the Closing Date, provided, in the case of
▇▇▇ Can, such items shall be limited to those relating to the bolt,
flange and gasket business of ▇▇▇ Can, a listing of which as of
September 30, 1995 is attached hereto as Schedule 2.1(j) which list
shall be updated as of the Closing Date in accordance with the terms
hereof;
(k) All books, operating and financial records,
correspondence, files, customer and vendor lists and other data
(collectively "Business Records") pertaining primarily to the
Business, except that Buyer shall only be provided copies of all tax
records, the original of which will be maintained by Seller and ▇▇▇
Can; provided, however, for a period of ten years after the Closing
(or such later date as is necessary to finally resolve any claims of
any governmental agency) the Seller shall be given access during
regular business hours to the Business Records and shall have the
right to copy, at the Seller's expense, any such Business Records, and
Buyer shall have access during regular business
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hours to all original tax records. Seller further agrees not to
destroy any such tax records and shall turn such tax records over to
Buyer when no longer needed by Seller;
(l) To the extent transferable, all of Seller's and ▇▇▇
Can's rights in all governmental licenses, permits and authorizations
(and applications for any of the foregoing) necessary for the
operation of the Business, including those listed on Schedule 2.1(l);
(m) All property and other rights incident or
attributable to the foregoing interests, including, without
limitation, all of the Seller's right, title and interest in and to
originals (or, to the extent that originals are not available, copies)
of all books, records, reports, files, contracts, evidence of title,
surveys and similar documents or materials that relate to the
foregoing interests, including, without limitation, the construction,
use, maintenance, operation or administration thereof, or that would
constitute evidence of ownership thereof (collectively, the
"Records").
In addition, ▇▇▇▇▇▇ shall sell, transfer, convey, assign and deliver
to Buyer, and Buyer shall purchase from ▇▇▇▇▇▇, the rights of ▇▇▇▇▇▇ in and to
the Houston Facility and the U.S. Trademark "▇▇▇-▇▇▇" (which shall be deemed a
part of the Purchased Assets).
It is hereby agreed that all items contained in any schedules set
forth in this Article II shall be updated by Seller within fifteen days after
the Closing Date to reflect their status as of the Closing Date.
Notwithstanding the foregoing, the Purchased Assets shall not include,
and Buyer will not purchase, (i) any insurance policies or insurance contracts,
(ii) the outstanding capital stock of ▇▇▇▇▇▇ ▇▇▇▇ & Gasket Ltd. and the
partnership interest of ▇▇▇▇▇▇ ▇▇▇▇ & Gasket Ltd. in ▇▇▇ Can, (iii) any and all
rights to the name "▇▇▇▇▇▇", (iv) the minute books and stock records of Seller,
(v) notes or accounts receivable from employees or shareholders of Seller, (vi)
the assets listed on Schedule 2.1(o), including without limitation, certain of
Seller's assets used by Seller in connection with Seller's operations in the
United Kingdom or assets, the nature of which was not included in preparing the
▇▇▇▇▇▇▇ Memorandum, defined below, and (vii) any rights to or obligation under
the employment/royalty agreements with ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇. ▇▇▇ ▇▇▇▇▇▇▇
(collectively, the "Excluded Assets").
Section 2.2 Purchase Price. The purchase price for the Purchased
Assets (the "Purchase Price") is $17,500,000, subject to adjustment pursuant to
Section 2.3 below. At the Closing, Buyer shall deliver to the Seller Parties:
(i) $8,000,000 (the "Cash Purchase Price") by wire transfer of immediately
available funds to the account designated in writing by Seller and (ii) two
promissory notes of Buyer, payable to Seller (the "Notes"), in substantially
the forms of Exhibits A-1 (the "7-year Subordinated Secured Note") in the
principal amount of $6,000,000 and A-2 (the "4-year Subordinated Inventory
Note"), in the principal amount of $3,500,000.
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Section 2.3 Price Adjustment. Following the Closing, the
Purchase Price shall be adjusted (the "Post-Closing Adjustment") if the Net
Assets as of the Closing Date, exclusive of changes in accumulated
depreciation and amortization, differs upwards or downwards, from $26,054,000,
which represents the Net Assets as of August 31, 1995, as set forth in the
revised Memorandum (the "▇▇▇▇▇▇▇ Memorandum") prepared by ▇▇▇▇▇▇▇ & Company
(the "Benchmark Calculation"). In determining the Closing Date Balance Sheet,
any orders from ▇▇▇▇▇▇ or any of its affiliates constituting any portion of the
backlog would be repriced to reflect prices agreed to herein for each
particular contract constituting such portion of the backlog. Additionally,
Seller agrees to cause a reserve to be included in Accrued Liabilities on the
Closing Date Balance Sheet to (i) increase the profitability of Aramco Order
No. 242144 by $33,000 and (ii) provide for the repairs (the "Repairs") in the
aggregate amount of $79,246 (reduced by any amounts paid prior to the Closing
Date to complete the Repairs) in accordance with Schedule 3.2(r). "Net Assets"
is the Purchased Assets, less the Assumed Liabilities. The Post-Closing
Adjustment to the Purchase Price shall be effected as follows:
(a) As soon as practicable, but not later than 60
business days after the Closing Date, at Buyer's expense, Buyer (with
Seller having the right to participate at its expense) shall prepare a
balance sheet (the "Closing Date Balance Sheet") setting forth the Net
Assets as of the Closing Date, prepared consistently with principles
and practices used by Seller prior to Closing and used by Seller in
preparing the ▇▇▇▇▇▇▇ Memorandum which such principles and practices
shall be, except for valuation of inventory, in accordance with
generally accepted accounting principles consistently applied on a
going concern basis. The accrued personal property and real estate
taxes reflected on the Closing Date Balance Sheet for taxes to be paid
by Buyer will be based on a pro rata share of actual taxes for the
year. Buyer may, after Closing, conduct (with Seller having the right
to participate) a physical inventory as of the Closing Date of the
Inventory (or any part thereof) or any other Purchased Asset for this
purpose. Within 30 days following the delivery of the Closing Date
Balance Sheet, Seller shall notify Buyer whether it agrees or
disagrees with the determination set forth therein. If Seller
disagrees with such determination set forth therein and Buyer and
Seller do not resolve such disagreement within 30 days after Seller
notifies Buyer of its disagreement, either Buyer or Seller may cause
the Closing Date Balance Sheet to be audited, and the Net Assets as of
the Closing Date to be determined, by the Houston, Texas office of the
accounting firm of Ernst & Young or such other firm of independent
public accountants of national reputation mutually acceptable to Buyer
and Seller (the "Independent Accounting Firm"). Buyer and Seller
agree to cooperate with each other and each other's authorized
representatives and with the Independent Accounting Firm pursuant to
this Section 2.3(a) in order that any and all matters in dispute shall
be resolved as soon as practicable. The determination by such
Independent Accounting Firm shall be final and binding on Buyer and
Seller, and shall not be appealable to any court or otherwise, and the
fees and expenses of such accounting firm shall be borne equally by
Seller and Buyer. If the Net Assets as of the Closing Date, as
finally determined by this Section 2.3 is greater than $26,054,000,
(i) to the extent such excess is attributable to employee-related
expenses, such excess shall be paid in cash by Buyer to Seller; and
(ii)
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to the extent such excess is due to any other factor, then such excess
amount shall increase the principal due under the 7-year Subordinated
Secured Note. If the Net Assets as of the Closing Date, as finally
determined by this Section 2.3 is less than $26,054,000, then such
deficiency amount shall be refunded by Seller to Buyer in cash. In any
case when the principal amount on the 7-year Subordinated Secured Note
is adjusted pursuant to this Section 2.3(a), then the interest on such
7-year Subordinated Secured Note shall be calculated from the Closing
Date on the adjusted note amount. Any adjustment in the principal
amount of the 7-year Secured Subordinated Note or refunded in cash
contemplated by this Section 2.3 shall be made on or before the fifth
business day following the final determination of Net Assets as of the
Closing Date. If the principal amount of the 7-year Secured
Subordinated Note is increased, Buyer shall deliver to Seller a new
7-year Secured Subordinated Note in the increased principal amount in
exchange for the old 7-year Secured Subordinated Note, the principal
amount of which has been increased.
(b) Any payment required to be made by Seller or Buyer
pursuant to Section 2.3(a) hereof shall bear interest from the Closing
Date through the date of payment at the publicly announced prime
interest rate of Texas Commerce Bank in effect from time to time from
the Closing Date to the date of such payment.
(c) Buyer and Seller agree that the sole purpose of
preparing the Closing Date Balance Sheet shall be to implement the
adjustment contemplated in this Section 2.3, and neither the existence
of any liability or obligation reflected in the Closing Date Balance
Sheet nor any decline in the amount of Net Assets from that reflected
on the Benchmark Calculation shall in and of itself constitute a
breach by Seller of any of the representations and warranties
contained in Article IV. If any claim under any Section of Article IV
hereof arises and an adjustment to the Cash Purchase Price under this
Section 2.3 relating to or arising out of such claim has previously
been made with respect to such claim, then to the extent of such
adjustment, neither Buyer nor Seller shall be entitled to
indemnification under any of such Sections.
Section 2.4 Allocation Reporting. As soon as practicable after
the Closing, Buyer shall prepare or cause to be prepared a written statement
setting forth the allocation of the consideration (including the Cash Purchase
Price and any adjustments thereto and the principal amount of the Promissory
Notes) deemed to have been paid for federal income tax purposes by Buyer to
Seller pursuant to this Agreement. The Parties shall undertake in good faith
to agree on such allocation as soon as practicable; provided, that, in the
event Seller and Buyer shall be unable to agree on such allocation within 30
days after it is first submitted to Seller, the parties shall jointly engage
the Independent Accounting Firm to make its independent determination with
respect to the issues in dispute and the amounts related thereto. Each of
Seller and Buyer shall bear and pay one-half of the fees and other costs
charged therefor by the Independent Accounting Firm. For federal income tax
purposes (including Buyer's and Seller's compliance with the reporting
requirements of Section 1060 of the Internal Revenue Code), each of Seller and
Buyer hereby agree to use the allocation as so agreed to by them and to
cooperate in good
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faith with each other in connection with the preparation and filing of any
information required to be furnished to the Internal Revenue Service under
Section 1060 of the Internal Revenue Code and any applicable regulations
thereunder.
Section 2.5 Accounts Receivable, etc.
(a) Seller and ▇▇▇ Can agree that on and after the Closing
Date, Buyer shall have the right and authority to collect all Accounts
Receivable, and, if necessary, to endorse with the name of Seller and
▇▇▇ Can any checks received on account of any such receivables or
other items. Seller and ▇▇▇ Can will transfer to Buyer any cash or
other property which they may receive in respect of such Accounts
Receivable.
(b) On or subsequent to 90 days from the Closing Date,
Buyer shall give Seller and ▇▇▇ Can written notice of those Accounts
Receivable previously transferred to Buyer pursuant to this Agreement
which have not been collected by Buyer or for which the obligor has
not made arrangements reasonably satisfactory to Buyer for payment in
full. The notice shall identify the account and the amount
outstanding for such account. Seller and ▇▇▇ Can agree to pay to
Buyer, within 30 days of its receipt of such notice, an amount equal
to the aggregate amount of such identified accounts sold by Seller and
▇▇▇ Can, respectively to Buyer, net of any reserves included in the
Closing Date Balance Sheet. Upon receipt of such payment Buyer shall
assign and transfer such accounts to Seller, or ▇▇▇ Can, as the case
may be, by instruments or documents reasonably satisfactory to Seller
and ▇▇▇ Can, as the case may be. Any amounts thereafter received by
Buyer with respect to such transferred accounts shall be delivered to
Seller and ▇▇▇ Can. Buyer agrees to use its reasonable efforts,
consistent with its own collection practices, to collect the Accounts
Receivable transferred to Buyer pursuant to this Agreement, and will
not write off any Accounts Receivable against the reserve set forth on
the Closing Date Balance Sheet during the first 90 days from the
Closing Date. Payments by the obligors of such receivables shall
first be applied to the oldest outstanding receivables of such
obligor, unless any such receivables are being disputed by such
obligors. In the event any Accounts Receivable are resold to Seller
or ▇▇▇ Can pursuant to this provision, Buyer shall provide monthly
certificates to Seller and ▇▇▇ Can with respect to amounts collected
by Buyer during the preceding calendar month from the obligors on any
such Accounts Receivable, together with an amount in cash equal to
such amounts so collected until such time as the full amount of any
such Account Receivable so returned to Seller and ▇▇▇ Can shall have
been satisfied in full. Seller shall have such rights to inspect
Buyer's books and accounts as may be necessary to ensure that Buyer
has complied with the provisions of this Agreement.
(c) From and after the Closing, Buyer shall be paid all
amounts received at any and all lockboxes of Seller at the banks
listed on Schedule 2.5(c) ("Lockbox Banks"). Seller shall instruct
each Lockbox Bank to pay all such receipts to Buyer and to give
control over such lockbox to Buyer, provided that the amounts
attributable to Accounts Receivable repurchased by Seller shall be
remitted by Buyer to Seller.
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Section 2.6 Mail Received After Closing. Following the Closing,
Buyer may receive and open all mail addressed to Seller and, to the extent that
such mail and the contents thereof relate to the Business or the Purchased
Assets, deal with the contents thereof at its discretion. Buyer shall promptly
notify Seller of (and provide Seller complete copies of) any mail that on its
face obliges any Seller Party to take any action or indicates that action may
be taken against any of them and will promptly forward to Seller any mail
applicable solely to Seller or the Excluded Assets.
Section 2.7 Full Access. From and after the date hereof and
until the Closing or the termination of this Agreement, (1) Buyer and its
authorized representatives shall have full access during normal business hours
to all properties, personnel, books, records, contracts, and documents of the
Seller, and Seller and ▇▇▇▇▇▇ shall furnish or cause to be furnished to Buyer
and its authorized representatives all information with respect to the affairs
and business of the Seller as Buyer may reasonably request, and (2) the Seller
shall provide Buyer with an office at the Seller's Houston Facility. Until
Closing, Buyer agrees it will not direct the operations of the Business.
ARTICLE III
LIABILITIES AND OBLIGATIONS
Section 3.1 Obligations Assumed. As part of the consideration
for the Purchased Assets from and after the Closing Date, Buyer shall assume,
fully perform, and timely discharge (i) all debts, obligations and liabilities
of Seller or ▇▇▇ Can under the trade accounts payable listed on the Closing
Date Balance Sheet (the "Accounts Payable"), (ii) the accrued liabilities
listed on the Closing Date Balance Sheet and of the same nature as the accrued
liabilities at August 31, 1995, as set forth on Schedule 3.1(a) hereto
including performance of the Repairs (the "Accrued Liabilities"), (iii) all
debts, obligations and liabilities of Seller or ▇▇▇ Can that accrue or are
otherwise attributable to periods after the Closing Date under the Contracts
listed in Schedule 2.1(d) (as updated through the Closing Date), pursuant to
Purchase and Sales Contracts listed on Schedule 2.1(e), and under Leases listed
on Schedule 2.1(h), (iv) except with respect to products that have been
manufactured, assembled and tested prior to the Closing Date, all liabilities,
damages or obligations relating to any litigation, claim, suit or proceedings
with respect to the Business for product liability and product warranties, in
each case for products sold by the Business on or after the Closing Date (the
"Assumed Liabilities"), (v) any and all liabilities arising out of any
governmental compliance, enforcement or regulatory action, suit or claim or any
claim by any person or entity arising out of the operation of the Business or
the Purchased Assets on or after the Closing Date, and (vi) any liability under
agreements relating to Seller's employment of temporary employees, but only to
the extent such liability arises as a result of Buyer's employment of such
temporary employees..
Section 3.2 Liabilities Not Assumed by Buyer. Except for the
Assumed Liabilities, Seller shall pay and discharge in due course all of its
liabilities, debts and obligations, whether
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known or unknown, whether or not listed on any Schedule to this Agreement, now
existing or hereafter arising, contingent or liquidated (the "Retained
Liabilities"), and neither Buyer nor any of its Affiliates shall assume, or in
any way be liable or responsible for any of the Retained Liabilities. Without
limiting the generality of the foregoing, the Retained Liabilities shall
include the following:
(a) except to the extent included in Accrued Liabilities
on the Closing Date Balance Sheet, any liability or obligation for any
and all Taxes of, or pertaining or attributable to, (i) Seller or (ii)
the Business or the Purchased Assets for any period or portion thereof
that ends on or before the Closing Date for which liability is or may
be sought to be imposed on Buyer under any successor liability,
transferee liability or similar provision of any applicable federal,
foreign, state or local law;
(b) any and all liabilities arising from or under any
Environmental Laws, as hereafter defined, arising from events,
conditions, circumstances, acts or omissions: (i) on or prior to the
Closing Date with respect to the Purchased Assets or any Facility; and
(ii) on, prior to, or after the Closing Date with respect to the
Excluded Assets or any other assets or business of Seller;
(c) Any liability or claim with respect to accidents or
occurrences arising in connection with the operation of the Business
on or before the Closing Date.
(d) Any product liability claims relating to products
manufactured or sold in the Business on or before the Closing Date.
(e) Any claims (including severance claims) relating to
the termination of employment of any employee of Seller on or prior to
the Closing Date (including any such termination deemed to have
occurred upon the transfer of any such employee from Seller to Buyer.)
(f) Any claims made by any employee or former employee of
Seller who is not employed on or after the Closing Date by Buyer or
any Affiliate of Buyer.
(g) Except to the extent included in Accounts Payable or
Accrued Liabilities on the Closing Date Balance Sheet, the following
claims relating to employees or former employees of Seller:
(i) All liabilities incurred on or prior to the
Closing Date (including medical expenses) resulting from
workers' compensation claims brought by employees or former
employees of Seller, whether or not such employee or former
employee is later employed by Buyer;
(ii) all liabilities incurred on or prior to the
Closing Date to pay hospitalization, medical or dental
expenses of employees or former employees of
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Seller for services performed on or prior to the Closing Date
(whether or not such employee or former employee is later
employed by Buyer);
(iii) All liabilities relating to li):
to the Closing Date;
(iv) all liabilities incurred on or prior to the
Closing Date relating to any employee or former employee who
is certified on or prior to the Closing Date as being eligible
for long-term disability;
(v) liabilities and obligations of Seller as of
the Closing Date relating to employee compensation (whether or
not an employee or former employee is later employed by
Buyer), including any accrued but unearned vacation, and,
therefore, not paid by Seller on the Closing Date;
(vi) all liabilities resulting from
employment-related claims brought by employees or former
employees of Seller (whether or not such employee or former
employee is later employed by Buyer) if such
employment-related claims arise from occurrences or omissions
transpiring on or prior to the Closing Date, including,
without limitation, claims alleging violations of the
following: (1) employment discrimination law; (2) labor law;
(3) affirmative action, government contract or contract
compliance law; (4) occupational safety or health, safe work
place or employee right-to-know law; (5) unemployment
compensation law; (6) workers' compensation law; (7) laws
(including statutory and case law) prohibiting wrongful
discharge of employees, whether based on express or implied
contracts, public policy, bad faith, tort, illegal retaliation
or other theories; (8) laws governing wage and hour matters;
(9) immigration law; (10) common law employment-related tort
claims, including, without limitation, defamation, invasion of
privacy, intentional infliction of emotional distress, fraud
and misrepresentation and negligent hiring; (11) plant closing
and mass lay-off laws; (12) laws relating to an employee's
right to continued coverage under a group health insurance
plan; and (13) ERISA (as hereinafter defined);
(vii) post-retirement benefits provided under
Seller's benefit plans; and
(viii) all liabilities of Seller as of the Closing
Date related to the payroll and unemployment compensation
taxes of Seller.
(ix) Any liability under any employee benefit plan
maintained or contributed to by Seller.
(h) Any liability of Seller for income taxes, franchise
taxes or other liabilities for taxes.
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(i) Any cause of action or judicial or administrative
action, suit, proceeding or investigation arising out of the Business
and relating to periods prior to the Closing Date.
(j) Any and all liability arising out of any governmental
compliance, enforcement or regulatory action, suit or claim or any
claim by any person or entity arising out of the operation of the
Business or the Purchased Assets on or prior to the Closing Date.
(k) Any infringement of the rights of any other person or
entity arising out of the use of any of the Purchased Assets on or
prior to the Closing Date.
(l) Any liability or obligation arising out of Seller's
breach, nonperformance or defective performance of the Contracts on or
prior to the Closing Date.
(m) Except to the extent included in Accounts Payable or
Accrued Liabilities on the Closing Date Balance Sheet, bank overdrafts
and other liabilities to banks for money borrowed.
(n) Any amounts due to Messrs. ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ for
royalties, non-compete provisions, employment or consulting contracts,
etc.
(o) Any liability or obligation arising out of any Seller
Party's failure to obtain any certificate of occupancy relating to any
Facility.
(p) Any liability arising out of agreements relating to
Seller's employment of temporary employees, provided, however, that
Seller shall not be liable for any amounts arising as a result of
Buyer's employment of such temporary employees.
(q) Except to the extent included in Accrued Liabilities
on the Closing Date Balance Sheet, any liability for commissions,
whether accrued or to be paid, arising out transactions by Seller
prior to the Closing Date and commissions relating to sales to Aramco
Services in connection with purchase orders in process at the Closing
Date and shipped thereafter.
Section 3.3 Warranty and Interim Period Benefit Plans.
(a) Seller represents that in the past, in addition to its
written policy concerning warranties, it has provided warranty work on
a case-by-case basis, using its business judgment in determining
whether such warranty work should be provided, including, without
limitation, evaluating the customer involved, the type and cause of
warranty work, and the effect of providing or not providing such
warranty work upon the Business. For the period during which the
existing warranty obligations of Seller are in effect, whether as a
result of written policies or Seller's past business practices, if any
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customer of Seller is entitled to, and does, seek warranty work,
pursuant to such obligations on any item sold by Seller prior to the
Closing Date, Buyer shall provide such warranty work on such item for
Seller's account. Buyer shall use its business judgment in determining
whether to provide such warranty work, utilizing similar considerations
as it would with respect to Inventory manufactured and sold by Buyer
after the Closing, as Seller utilized prior to the Closing Date,
provided that Buyer shall give written notice prior to performing any
such warranty work where the amount to be paid by Seller to Buyer for
such work is expected to exceed $5,000. Seller shall pay Buyer for
such work an amount equal to the actual out-of-pocket cost (the
calculation of which Seller shall have the right to review), including
salaries of employees actually performing work, of such work.
(b) For the period commencing on the Closing Date and
terminating at 12:01 A.M. on January 1, 1996 (the "Interim Period"),
Seller, and ▇▇▇ Can shall make available to all of Buyer's employees
who were employed by Seller or ▇▇▇ Can, as the case may be, prior to
the Closing, coverage pursuant to the health, life insurance, dental,
major medical and any and all other plans of Seller or ▇▇▇ Can, as the
case may be related to an employee's health benefits (a schedule of
which is set forth on Schedule 3.3(b)). Buyer shall reimburse Seller
or ▇▇▇ Can, as the case may be, for the costs of such benefits within
20 business days after receipt of Seller's or ▇▇▇ Can's invoice for
costs incurred in maintaining such benefits for such employees during
the Interim Period.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER PARTIES
The Seller Parties represent and warrant to Buyer the
following:
Section 4.1 Corporate Status and Good Standing. Each of the
Seller and ▇▇▇▇▇▇ is a corporation duly organized, validly existing and in good
standing under the laws of the state of its incorporation, with full corporate
power and authority under its charter and by-laws to own and lease its
properties and to conduct business as the same exists. ▇▇▇ Can is validly
existing as a partnership under the laws of the Province of Alberta with power
and authority (partnership and other) to own and lease its properties and to
conduct business as the same exists. Seller is duly qualified to do business
as a foreign corporation in all states in which the nature of the Business
requires such qualification and the failure to do so would have a material
adverse effect on the Purchased Assets.
Section 4.2 Authorization. Each of the Seller Parties has full
corporate or partnership power and authority under its charter and by-laws, or
partnership agreement and its board of directors and shareholders (to the
extent required), or, in the case of ▇▇▇ Can, its partners have taken all
necessary action to authorize it, to execute and deliver this Agreement and the
exhibits
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and schedules hereto, to consummate the transactions contemplated herein, and to
take all actions required to be taken pursuant to the provisions hereof. This
Agreement constitutes the valid and binding obligation of each of the Seller
Parties enforceable in accordance with its terms, except as enforceability may
be limited by applicable bankruptcy, moratorium, reorganization or similar laws
affecting the rights of creditors generally.
Section 4.3 Non-Contravention. Except as set forth on Schedule
4.3, neither the execution and delivery of this Agreement or any documents
executed in connection herewith, nor the consummation of the transactions
contemplated herein, does or will violate or result in a breach of, or require
notice or consent under, any law, the charter or by-laws of any Seller Party or
any provision of any agreement or instrument to which any Seller Party is a
party.
Section 4.4 Validity. There are no pending or threatened
judicial or administrative actions, proceedings or investigations which
question the validity of this Agreement, or any action taken or contemplated by
any Seller Party in connection with this Agreement.
Section 4.5 Broker Involvement. Except for ▇▇▇▇▇▇▇ & Company,
whose fees will be paid solely by Seller, no Seller Party has hired, retained
or dealt with any broker or finder in connection with the transactions
contemplated by this Agreement.
Section 4.6 Litigation. Except as set forth on Schedule 4.6,
there is no investigation, claim or proceeding or litigation of any type
pending or, to the best knowledge of the Seller Parties, threatened against the
Seller Parties involving any Purchased Asset or that might have a material
adverse effect on Seller, ▇▇▇ Can or Buyer as the owner of any Purchased Asset,
and there is no judgment, order, writ, injunction or decree of any court,
government or governmental agency, or arbitral tribunal against Seller, ▇▇▇ Can
or that might have a material adverse effect on Seller, ▇▇▇ Can or Buyer as the
owner of any Purchased Asset.
Section 4.7 Title. Except as set forth on Schedule 4.7, and for
Permitted Liens (as defined below), Seller, ▇▇▇▇▇▇ or ▇▇▇ Can is the true and
lawful owner of the Purchased Assets, free and clear of any and all liens,
encumbrances, mortgages, options, security interests, restrictions,
liabilities, pledges and assignments of any kind, and have the full right to
sell and transfer to Buyer good and indefeasible title to the Purchased Assets,
free and clear of any and all liens and encumbrances of any nature or
description. Except as set forth on Schedule 4.7 and for Permitted Liens, or
liens or encumbrances granted or effected by Buyer, the delivery to Buyer of
the instruments of transfer of ownership contemplated by this Agreement will
vest good and indefeasible title to the Purchased Assets in Buyer, free and
clear of all liens and encumbrances of any nature or description.
Buyer has heretofore obtained a commitment (the "Title Commitment")
for an Owner's Policy of Title Insurance in the form promulgated by the State
of Texas covering the Houston Facility, such Title Commitment issued by Chicago
Title Insurance Company, ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ (Attention:
▇▇▇▇▇ ▇▇▇▇, 695-1411) together with legible copies of all instruments
constituting exceptions and referenced in Schedule B and C of the Title
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Commitment. After the Survey (hereinafter defined) has been obtained, Seller
shall cause said Title Commitment to be revised to reflect matters shown on the
Survey to evidence the insurer's willingness to delete or limit to the
satisfaction of Buyer the standard exception for accuracy of Survey and to
commit to insure all easements benefitting the parcels. Seller shall pay the
costs for such title insurance commitment, as well as the costs of the Owner's
Policy of Title Insurance to be issued on the Closing Date, including the
additional premium associated with insuring the accuracy of the Survey.
Seller shall, at its expense, furnish Buyer at least two (2) days
prior to the Closing Date a current, accurate survey (the "Survey") of the
Houston Facility, which Survey shall have been prepared and certified by ▇▇▇▇▇
& Assoc. Land Surveyors, Inc. as complying with the requirements for Category
1A, Condition II Land Title Survey showing access, the location and dimension
of all easements, buildings, improvements, encroachments, if any, together with
the legal descriptions of said real estate, certified to Buyer, Seller and
Lenders designated by Buyer, and to the title insurance company, and which
Survey shall otherwise be reasonably acceptable to Buyer and to the title
insurance company in form and substance.
Unless otherwise agreed by Seller and Buyer, the metes and bounds
description contained in the Survey shall be the legal description contained in
the Title Commitment and the documents employed to convey the Houston Facility
from Seller to Buyer.
Buyer shall have the period from the date on which the Survey is
furnished to it until (i) the Closing Date (as the same may be extended from
time to time), or (ii) two days thereafter, whichever is the earliest, within
which to notify Seller in writing of any objections which Buyer has to any
matters shown on Schedule B to the Title Commitment (as the same may be revised
following receipt of the Survey) or the Survey. Buyer shall not be required to
object to any matters shown on Schedule C to the Title Commitment, it being
understood that Buyer has objected to such matters set forth on said Schedule
C. In the event that Seller fails, by the Closing Date (as the same may be
extended), to cure any objections raised by Buyer, then Buyer shall be
permitted, at its option, to (i) waive such objections, (ii) extend the Closing
Date and/or extend the time in which Seller may cure such exceptions; provided,
however, that in no event shall Seller be required to cure such objections,
(iii) cure such objections and deduct the reasonable cost of doing so from the
Cash Purchase Price, up to but not to exceed $25,000, or (iv) terminate this
Agreement. Any objections waived by Buyer, as well as the standard exceptions,
and any matters shown on Schedule B to the Title Commitment which are not
objected to by Buyer, are herein collectively called the "Permitted
Encumbrances".
Section 4.8 Continuity Prior to Closing Date. Except as set
forth on Schedule 4.8 or as contemplated by this Agreement, from March 30, 1995
to and including the date hereof, the Seller has not, and as of the Closing
Date will not have, conducted the Business otherwise than in the usual and
customary manner and in the ordinary course of business, consistent with its
past practice, and there has not been:
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(a) except for liens or security interests arising
pursuant to after-acquired property provisions of existing loan or
security agreements, deeds of trust or mortgages, all of which will be
released as of the Closing Date, any sale, lease, distribution,
transfer, mortgage, pledge or subjection to lien of Seller's assets,
except sales of inventory and obsolete or surplus equipment in the
ordinary and usual course of business and the creation of liens for
taxes not yet due and payable, materialmen's, mechanic's, workmen's,
repairmen's or other like liens ("Permitted Liens") arising against
Seller, ▇▇▇ Can or the Purchased Assets in the ordinary course of
business, in each case with respect to obligations or claims which are
either not delinquent, except in the case of accounts payable, or are
being contested in good faith and by appropriate proceedings conducted
with due diligence;
(b) any material transaction by Seller not in the
ordinary and usual course of business;
(c) any damage, destruction or loss to any of the
Purchased Assets used in the Business, having a fair market value of
$1,000 per item or $25,000 in the aggregate whether or not covered by
insurance;
(d) a termination, or a threatened termination, or
material modification by any third party, in each case not in the
ordinary course of business, of the relationship of Seller with any
customer or supplier, who accounted for in excess of $25,000 of sales
or purchases during Seller's last full fiscal year;
(e) any change by Seller in accounting methods or
principles or the application thereof or any change in Seller's
policies or practices with respect to items affecting working capital;
(f) any acceleration of shipments, sales or orders or
other similar action or any intercompany transaction not in the
ordinary course of business consistent with past practice;
(g) any bonus payments, salary increases, commission
increases or modifications, the execution of any employment agreement,
severance arrangement, consulting arrangement or similar document or
agreement, or other changes in employee benefits or other
compensation;
(h) any waiver by Seller of any rights that, singly or in
the aggregate, are material to the Business, the Purchased Assets or
the financial condition or results of operations of Seller;
(i) any labor strikes, union organizational activities or
other similar occurrence; or
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(j) any agreement or commitment by Seller to do or cause
to be done any of the foregoing.
Section 4.9 Contracts and Commitments. Schedule 4.9 lists all
agreements, commitments, contracts, undertakings or understandings not listed
on Schedules 2.1(d), 2.1(e) or 2.1(h) to which Seller is a party and which
relate to the Purchased Assets, including but not limited to trademark, trade
name or patent license agreements, service agreements, lease, purchase or sale
agreements, supply agreements, distribution or distributor agreements, purchase
orders, customer orders and equipment rental agreements. Seller is not in
breach of or default under any agreement, lease, contract or commitment listed
in Schedule 2.1(d), 2.1(e), 2.1(h) or 4.9 (collectively, the "Agreements").
Each Agreement is a valid, binding and enforceable agreement of Seller or ▇▇▇
Can and, to the knowledge of the Seller Parties, except as set forth on
Schedule 4.9 or as would not have a material adverse effect on the Purchased
Assets or the Business, there has not occurred any breach or default under any
Agreement on the part of the other parties thereto, and no event has occurred
which with the giving of notice or the lapse of time, or both, would constitute
a default under any Agreement. Except as set forth on Schedule 4.9 or as would
not have a material adverse effect on the Purchased Assets or the Business,
there is no dispute between the parties to any Agreement as to the
interpretation thereof or as to whether any party is in breach or default
thereunder, and no party to any Agreement has indicated its intention to, or
suggested it may evaluate whether to, terminate any Agreement. Seller is not a
party to any covenant or obligation of any nature limiting the freedom of
Seller to compete in any line of business that would be binding on Buyer after
the Closing.
Section 4.10 Trademarks, Trade Names and Intellectual Property.
Except for the Excluded Assets, Schedule 2.1(g) contains an accurate and
complete list of (i) all patents, pending patent applications and invention
memoranda of Seller relating to the Business or Purchased Assets, (ii) all
registered United States and foreign trademarks, trade names and logos owned or
used by Seller in connection with its Business or Purchased Assets, and all
registrations thereof, and (iii) all unregistered United States and foreign
trademarks, trade names and logos used by Seller in connection with its
business or Purchased Assets. Seller has the right to use all trademarks,
trade names, logos, patents, pending patent applications and invention
memoranda referred to herein. There is no pending or, to the knowledge of the
Seller Parties, threatened action or claim that would impair any such right of
Seller.
Section 4.11 All Assets of Business. The Purchased Assets
constitute all assets owned by Seller or used in Seller's Business (other than
the Excluded Assets) and are all of the assets needed to operate the Business.
All assets and items located on Seller's premises or used in Seller's Business
(other than those leased pursuant to the Contracts) are owned by Seller and
(other than the Excluded Assets) are being sold pursuant hereto.
Section 4.12 Financial Records. The financial statements of
Seller as of and for the year ended September 30, 1994, and the financial
statements for the year ended September 30, 1995 (such 1995 financial
statements being referred to herein as the "Financial Statements") were, except
for valuation of Inventory, prepared in accordance with generally accepted
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accounting principles applied on a consistent basis and fairly present the
financial condition and results of operations of Seller.
Section 4.13 Condition of Fixed Assets and Inventory. Except for
the Repairs, each of the Fixed Assets has been maintained in a manner
consistent with the prior three year's past practices, is in good operating
condition and repair, subject only to normal maintenance requirements and
normal wear and tear reasonably expected in the ordinary course of business.
Except as set forth on Schedule 4.13, items of Inventory are marketable or in
the case of raw materials, supplies and work in process suitable and useable
for the production or completion of marketable products, for sale in the
ordinary course of business at normal ▇▇▇▇-ups, none of such items is below
standard quality, each item is reflected in the Financial Statements and such
Inventory is valued at the lower of cost or market in accordance with generally
accepted accounting principles. Schedule 4.13 sets forth a list of certain
inventory (the "Scheduled Inventory"). Seller represents that product classes
representing at least $3,000,000 of such Scheduled Inventory has had sales
since October 1, 1993, and can be sold in the ordinary course of business for
at least the aggregate of the lowest sales price for those products received by
Seller during the twelve months ending on the Closing Date (provided, however,
if there has not been a sale of a particular product in such twelve-month
period, it will be the lowest sales prices for such product since October 1,
1993) except for unforeseen price reductions originating with third parties in
the market place, and that the remaining Scheduled Inventory can be sold for at
least $500,000.
Section 4.14 No Undisclosed Liabilities. Except as set forth on
Schedule 4.14, Seller has no material liabilities of any nature, either direct
or indirect, matured or unmatured, absolute or contingent, or otherwise,
except:
(a) those liabilities set forth in the Financial
Statements (or set forth in the footnotes thereto) and not heretofore
paid or discharged;
(b) liabilities arising in the ordinary course of
business under any agreement, contract, lease or plan specifically
disclosed on any other Schedule or Exhibit or not required to be
disclosed hereunder; and
(c) those liabilities incurred, consistent with past
business practice, in or as a result of the normal and ordinary course
of business since September 30, 1995.
For purposes of this Section 4.14, the term "liabilities" shall
include, without limitation, any direct or indirect indebtedness, guaranty,
claim, loss, damage, deficiency, cost, expense, obligation or responsibility,
fixed or unfixed, liquidated or unliquidated, secured or unsecured.
Section 4.15 Employees and Related Matters. Schedule 4.15 is a
complete list of all employees of Seller and employees of ▇▇▇ Can working out
of the Edmonton office and employed in the bolt, gasket and flange business of
▇▇▇ Can, in each case, listing the title or position held, base salary, most
recent salary increase (showing date and amount), any
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commissions or other compensation paid or payable during the fiscal year ended
September 30, 1995, and any terms of any oral or written agreement with any
Seller Party or any Affiliate thereof. Also set forth on Schedule 4.15 is a
list of contract employees of Seller and ▇▇▇ Can as of the date hereof.
Section 4.16 No Material Change. Except to the extent reflected
in the Closing Date Balance Sheet, there has been no material adverse change in
the Purchased Assets or their value from August 31, 1995 to and including the
Closing Date, and no event has occurred of which Seller has knowledge which
could be expected to lead to or cause such a material adverse change.
Section 4.17 Ownership. ▇▇▇▇▇▇ owns all the issued and
outstanding capital stock of Seller. Seller has outstanding no options or
convertible securities or other rights or instruments evidencing, exchangeable
for or entitling the holder thereof to acquire any equity interest in Seller.
Section 4.18 Compliance With Law. Except as set forth in Schedule
4.18 or Schedule 4.28 and except to the extent any noncompliance or violation
would not have a material adverse effect on Seller or the Purchased Assets:
(i) Seller is not in violation of any provision of any law (including any
Environmental Law), decree, order, regulation, license, permit, consent,
approval, authorization or qualification, including, without limitation, those
relating to health, the environment or Hazardous Substances, and Seller has
received no notice of any alleged violation of such law, decree, order,
regulation, license, permit, consent, approval, authorization or qualification,
and (ii) the location, construction, occupancy, operation and use of the
Houston Facility and each other Facility does not violate any provision of any
law, decree, order, regulation, license, permit, consent, approval,
authorization or qualification, or any board of fire underwriters (or other
body exercising similar functions), or any restrictive covenant or deed
restriction (recorded or otherwise) affecting the Houston Facility and each
other Facility including, without limitation, those relating to zoning
ordinances, building codes, flood disaster laws, the environment or Hazardous
Substances, and Seller has not received any notice of any alleged violation of
such law, decree, order, regulation, license, permit, consent, approval,
authorization or qualification.
Section 4.19 WARN Act Notices. Any notice required under the
Federal Workers Adjustment and Retraining Notification Act ("WARN Act") that
is, has been, or will be, required of Seller to its employees or former
employees by reason of its obligations under the WARN Act resulting from the
transactions contemplated by this Agreement or other circumstances existing on
or prior to the Closing Date, has been or will be given by Seller.
Section 4.20 Government Licenses, Permits and Related Approvals.
Schedule 4.20 hereto sets forth a list of all licenses, permits, consents,
approvals, authorizations, qualifications, certificates of occupancy and orders
of governmental authorities (other than Environmental Permits) required for the
conduct of the Business by Seller or the ownership of any Facility, all of
which are either in full force and effect or have been applied for.
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Section 4.21 Taxes. Except as set forth on Schedule 4.21, Seller
has caused to be timely filed with appropriate federal, state, local and other
governmental authorities all tax returns, information returns or statements and
reports ("Tax Returns") required to be filed with respect to the Purchased
Assets, Seller's operations, or the conduct of the Business, and has paid or
caused to be paid all taxes due with respect thereto, except for taxes which
Seller is contesting in good faith. Seller has neither received nor has
knowledge of any notice of deficiency or assessment or proposed deficiency or
assessment with respect to any of the Purchased Assets, Seller's operations, or
the conduct of the Business from any taxing authority, and there are no
outstanding agreements or waivers that extend any statutory period of
limitations applicable to any federal, state or local income or franchise Tax
Returns that include or reflect the use and operation of the Purchased Assets,
Seller's operations, or the conduct of the Business. There are no assessments
against, or to the best knowledge of the Seller Parties, threatened audits of,
Seller with respect to taxes that may be asserted against Seller. Seller is
not a party to any action or proceeding by any governmental authority for the
collection or assessment of taxes. The transactions contemplated hereby
qualify as an "occasional sale" under Section 151.304 of the Texas Tax Code.
Section 4.22 Backlog. Schedule 4.22 sets forth a complete listing
of all sales backlog of the Business as of September 30, 1995, including
customers, ordered amounts and values of products and projected shipping dates.
Section 4.23 Safety Reports. Schedule 4.23 sets forth a complete
listing of all injury reports, worker's compensation reports and claims, safety
citations and reports by any governmental agency, OSHA reports and all
documents relating to any of the foregoing relating to the Business since
January 1, 1994.
Section 4.24 Investment Intention. The Seller Parties are
acquiring the Notes hereunder for investment, solely for their own account and
not with a view to, or for resale in connection with, the distribution or other
disposition thereof.
Section 4.25 Transactions with Certain Persons. Except as set
forth on Schedule 4.25, during the period from August 31, 1995 through November
20, 1995, Seller has not, directly or indirectly, purchased, leased or
otherwise acquired any property or obtained any services from, or sold, leased
or otherwise disposed of any property or furnished any services to (except with
respect to remuneration for services rendered as a director, officer or
employee of Seller), in the ordinary course of business or otherwise, any
Affiliate, hereinafter defined. At the Closing, Seller shall provide a revised
Schedule 4.25 for the period from November 20, 1995 through the Closing Date.
Seller does not owe any amount to, or have any contract with or commitment to,
any of its shareholders, directors, officers, employees or consultants (other
than compensation for current services not yet due and payable and
reimbursement of expenses (including travel advances) arising in the ordinary
course of business not in excess of $5,000 for any single individual), and none
of such persons owes any amount to Seller. The term "Affiliate" means, with
respect to any natural person, the spouse of such person, the children of such
person or such person's spouse, either parent of such person or of such
person's spouse,
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and any sibling of such person or such person's spouse, and with respect
to any corporation or other legal entity means any director or officer of such
corporation or other legal entity, and any other person, corporation or other
legal entity directly or indirectly controlling, controlled by, or under common
control with, such corporation or other legal entity. For the purpose of this
definition, "control" (including, with correlative meanings, the terms
"controlling," "controlled by" and "under common control with"), as used with
respect to any person, corporation or other legal entity shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such person, corporation or other
legal entity whether through the ownership of voting securities or by contract
or otherwise.
Section 4.26 Accounts Receivable. The Accounts Receivable of
Seller and ▇▇▇ Can purchased by Buyer are valid and genuine, arise out of bona
fide sales and deliveries of goods, performance of services or other business
transactions in the ordinary course of business, are owned free and clear and
not subject to any lien or encumbrance, and, except to the extent an allowance
has been provided for in the Closing Date Balance Sheet, are collectible.
Section 4.27 Disclosure. All schedules to this Agreement are
complete and accurate. No representation or warranty by any Seller Party in
this Agreement or in any Schedule or Exhibit to this Agreement, or in any
certificate or other document furnished to Buyer by any Seller Party pursuant
hereto, contains or will contain any untrue statement of a material fact or
omits or will omit a material fact necessary to make the statements therein not
misleading.
Section 4.28 Environmental Laws.
(a) Without limiting the scope of Section 4.18 above,
except as set forth on Schedule 4.28, which Schedule incorporates by
reference the matters disclosed in the Phase I Environmental Site
Assessment, Phase II Environmental Site Assessment, and Groundwater
Sampling Report prepared by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Inc. ("Environmental
Assessments") and except for matters that would not have a material
adverse effect on Seller or the Purchased Assets, neither the
Purchased Assets nor the Houston Facility are currently in violation
of or subject to (i) any existing, pending or, to the knowledge of
Seller, threatened investigation or inquiry by any governmental
authority or (ii) any remedial obligations under any Environmental
Law and this representation and warranty shall continue to be true and
correct following disclosure to the applicable governmental
authorities of all relevant facts, conditions and circumstances, if
any, known by Seller pertaining to the Houston Facility. Without
limiting the generality of the preceding sentence and subject to the
same qualifications, (i) Seller has obtained and is in compliance
with all of the terms and conditions of all Environmental Permits
required with respect to the Purchased Assets and (ii) all of the
Purchased Assets and the Houston Facility are free of asbestos, PCB's,
methylene chloride, trichloroethylene, 1,2-trans-dichloroethylene,
dioxins, and dibenzofurans.
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(b) Except as set forth on Schedule 4.28 (which Schedule
incorporates the matters disclosed in the Environmental Assessments),
and except for matters that would not have a material adverse effect
on Seller or the Purchased Assets:
(i) There are not present in, on or under any of
the Facilities any Hazardous Substances in such form or
quantities as to create any liability or obligation under any
Environmental Law, or any other liability for either Buyer or
Seller.
(ii) None of the Facilities is being used, or has
ever been used, in connection with the business of
manufacturing, storing, transporting, handling, disposing or
treating Hazardous Substances, except in compliance with
Environmental Law.
(iii) There are no unresolved requests, claims,
notices, investigations, demands, administrative proceedings,
hearings, or litigation, relating in any way to Seller or any
of the Facilities, alleging liability under, violation of, or
noncompliance with, any Environmental Law or any license,
permit or other authorization issued pursuant thereto, nor, to
the knowledge of any Seller Party, is any such matter
threatened or impending.
(iv) There are no judgments, orders, decrees,
stipulations, settlement agreements, liens or injunctions,
relating in any way to Seller or the Facilities and based in
whole or in part on any Environmental Law, which have not been
wholly and completely satisfied, complied with, and
discharged.
(v) All Environmental Permits necessary for the
lawful operation of Seller's Business at any of the Facilities
are in Seller's possession and are in full force and effect.
(vi) Seller is not aware of any threatened or
impending expiration, withdrawal, termination, revocation or
material change or limitation in any of the Environmental
Permits described in paragraph (v) above.
(vii) All reports, filings, applications and
requests required by any Environmental Law with respect to the
Facilities have been duly made.
(viii) There are not now, nor, to Seller's
knowledge, have there ever been in the past, any underground
or above-ground storage tanks on the Facilities which contain
or did contain any Hazardous Substances.
(ix) None of the Facilities is or, to the
knowledge of Seller, ever has been listed on the National
Priorities List, the Comprehensive Environmental
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Response, Compensation and Liability Information System
(CERCLIS), or any similar federal, state or local list,
schedule, log, inventory or database.
(x) Seller has made available to Buyer for
Buyer's inspection and review all reports, licenses, permits,
authorizations, disclosures and other documents which
describe the status of any of the Facilities with respect to
any Environmental Law.
As used in this Agreement, "Environmental Law" means any federal,
state, foreign, or local law, statute, ordinance, regulation or rule of common
law pertaining to human health, or environmental conditions, including, without
limitation (i) the Resource Conservation and Recovery Act, as amended by the
Hazardous and Solid Waste Amendments of 1984, ("RCRA") (42 U.S.C. Section 6901
et seq.), (ii) the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended by the SuperFund Amendments and
Reauthorization Act of 1986 ("CERCLA") (42 U.S.C. Section 9601 et seq.), (iii)
the Clean Water Act (33 U.S.C. Section 1251 et seq.), (iv) the Toxic Substance
and Control Act (15 U.S.C. Section 2601 et seq.), (v) the Clean Air Act (42
U.S.C. Section 7401 et seq.), (vi) the Texas Solid Waste Disposal Act (V.T.C.A.
Health and Safety Code, Section 361.001 et seq.), and Texas Water Code
(V.T.C.A. Water Code Section 26.001 et seq.), (vii) all regulations
promulgated under any of the foregoing, and (viii) any other federal, state,
local or foreign law (including any common law), statute, regulation, or
ordinance regulating, prohibiting, or otherwise restricting the placement,
discharge, release, threatened release, generation, treatment, or disposal upon
or into any environmental media of any substance, pollutant, or waste which is
now or hereafter classified or considered to be hazardous or toxic to human
heath or the environment. "Environmental Law" does not include the
Occupational Safety and Health Act or any other federal, state, foreign or
local law, statute, ordinance, regulation or rules of common law governing
worker safety or work place conditions.
As used in this Agreement, "Hazardous Substance" means any hazardous
or toxic chemical, waste, by-product, pollutant, contaminant, compound, product
or substance, the generation, storage, disposal, handling, recycling, release
(or threatened release), treatment, discharge, or emission of which is
regulated, prohibited or limited under any Environmental Law and shall also
include, without limitation, (i) gasoline, diesel fuel, fuel oil, motor oil,
waste oil, and any other petroleum hydrocarbon, including any additives or
other by-products associated therewith, (ii) asbestos and asbestos containing
materials in any form, (iii) polychlorinated biphenyls, (iv) any substance the
presence of which on real property (A) requires reporting or remediation under
any Environmental Law, (B) causes or threatens to cause a nuisance or poses or
threatens to cause a hazard to the health or safety of persons on the property
on which such Hazardous Substance is located or on property adjacent thereto or
(C) which, if it migrated from the property on which it is located, could
constitute a health or safety hazard to persons on adjacent property, (v)
radon, and (vi) urea formaldehyde foam insulation.
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Section 4.29 Change in Use. During each of the five (5) preceding
calendar years, the Houston Facility has not received the benefit of, nor been
subject to, any special assessments, valuations or tax rates resulting in a
reduction in ad valorem taxes that may be subject to recoupment following a
change in use or ownership of the Houston Facility.
Section 4.30 COBRA Notices. Seller has performed or will perform
all notice obligations which are COBRA Liabilities and which are required to be
performed prior to the Closing Date.
Section 4.31 Warranty and Return Obligations. Schedule 4.31 is a
true and complete description of Seller's warranty obligations, practices and
policies for items sold by Seller prior to Closing and Seller's obligations to
take returns of items sold by Seller prior to Closing. Seller has complied
with such obligations in all material respects for the past three years.
Section 4.32 Product Liability. Except as set forth on Schedule
4.32, Seller has no knowledge of any liability, or any basis for any present or
future action, suit, proceeding, hearing, investigation, charge, complaint,
claim, or demand against Seller giving rise to any liability arising out of any
injury to individuals or property damage as a result of the ownership,
possession, or use of any product manufactured, sold, leased, or delivered by
the Seller.
Section 4.33 Houston Facility; Leases.
(a) Schedule 2.1 (i) gives a legal description of the Houston
Facility. With respect to the Houston Facility:
(i) subject to the Permitted Encumbrances, ▇▇▇▇▇▇
has good and indefeasible title to the Houston Facility, free
and clear of any Lien (hereinafter defined), except for
Permitted Liens, easements, covenants, and other restrictions
which do not impair the current use, occupancy, or value, or
the marketability of title, of the property subject thereto;
(ii) there are no pending or threatened
condemnation proceedings, lawsuits, or administrative actions
relating to the Houston Facility or other matters affecting
adversely the current use, occupancy, or value thereof;
(iii) the legal descriptions for the parcels
contained in the deeds thereof describe the Houston Facility
fully and adequately, the buildings and improvements are
located within the boundary lines of the described parcels of
land, are not in violation of applicable setback requirements,
ordinances, or deed restrictions (and none of the properties
or buildings or improvements thereon are subject to "permitted
non-conforming use" or "permitted non-conforming structure"
classifications), and do not encroach on any easement which
may burden the land, and the land does not serve any adjoining
property for any purpose inconsistent with the use of the
land, and the property is not located
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within any flood plane or subject to any similar type
restriction for which any permits or licenses necessary
to the use thereof have not been obtained;
(iv) except as otherwise provided in Schedule 4.18
or Schedule 4.28, all facilities have received all approvals
of governmental authorities (including licenses and permits)
required in connection with the ownership or operation thereof
and have been operated and maintained in accordance with
applicable laws, rules, and regulations;
(v) there are no undisclosed leases, subleases,
licenses, concessions, or other similar agreements, written or
oral, granting to any party or parties the right of use or
occupancy of any portion of the Houston Facility;
(vi) there are no outstanding options or rights of
first refusal to purchase the Houston Facility, or any portion
thereof or interest therein;
(vii) there are no parties (other than the Seller
and its Affiliates) in possession of the Houston Facility;
(viii) all facilities located on the Houston
Facility are supplied with utilities and other services
necessary for the operation of such facilities, including gas,
electricity, water, telephone, sanitary sewer, and storm
sewer, all of which services are adequate in accordance with
all applicable laws, ordinances, rules, and regulations and
are provided via public roads or via permanent, irrevocable,
appurtenant easements benefitting the Houston Facility; and
(ix) each parcel of real property constituting the
Houston Facility abuts on and has direct vehicular access to a
public road, or has access to a public road via a permanent,
irrevocable, appurtenant easement benefitting the parcel of
real property, and access to the property is provided by
public right-of-way.
(b) Schedule 2.1(h) lists and describes briefly all real
property leased or subleased to any of the Seller and its Affiliates
necessary in the use and operation of the Business. The Seller has
delivered to the Buyer correct and complete copies of the leases and
subleases listed in Schedule 2.1 (h) (as amended to date). With
respect to each lease and sublease listed in Schedule 2.1(h):
(i) the lease or sublease is legal, valid,
binding, enforceable, and in full force and effect;
(ii) the lease or sublease will continue to be
legal, valid, binding, enforceable, and in full force and
effect on identical terms following the consummation of the
transactions contemplated hereby;
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(iii) no party to the lease or sublease is in
breach or default, and no event has occurred which, with
notice or lapse of time, would constitute a breach or default
or permit termination, modification, or acceleration
thereunder;
(iv) no party to the lease or sublease has
repudiated any provision thereof;
(v) there are no disputes, oral agreements, or
forbearance programs in effect as to the lease or sublease;
(vi) with respect to each sublease, the
representations and warranties set forth in subsections (i)
through (v) above are true and correct with respect to the
underlying lease;
(vii) none of the Seller and its Affiliates has
assigned, transferred, conveyed, mortgaged, deeded in trust,
or encumbered any interest in the leasehold or subleasehold;
(viii) all facilities leased or subleased thereunder
have received all approvals of governmental authorities
(including licenses and permits) required in connection with
the operation thereof and have been operated and maintained in
accordance with applicable laws, rules, and regulations;
(ix) all facilities leased or subleased thereunder
are supplied with utilities and other services necessary for
the operation of said facilities;
(x) except as set forth on Schedules 4.7 and
4.14, the owner of the facility leased or subleased has good
and indefeasible title to the parcel of real property, free
and clear of any Lien, except for installments of special
easements not yet delinquent and recorded easements,
covenants, and other restrictions which do not impair the
current use, occupancy, or value, or the marketability of
title, of the property subject thereto; and
(xi) prior to the Closing Date Seller will obtain
from each lessor of each leased Facility, (i) the written
consent of such lessor to assign each such lease to Buyer or
Buyer's designated affiliate, and (ii) the written statement
of each such lessor that the lease of which it is lessor is in
full force and effect, and that the applicable Seller Party is
not in default under such lease.
As used in this Section, "Lien" means any lien, mortgage,
pledge, assignment, security interest, charge, claim, or encumbrance of any
kind (including any conditional sale or other title retention agreement to give
any security interest) and any option, trust or other preferential arrangement
having the practical effect of the foregoing.
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Section 4.34 Future Business. Seller and ▇▇▇▇▇▇ agree that for a
period of four years subsequent to the Closing they will use their reasonable
efforts to purchase, and to require any affiliate of either to acquire, any
products required by any such person, that are sold by Buyer as of the Closing
Date, at the lowest price offered by Buyer to others.
Section 4.35 Certificates of Occupancy. Seller has applied, or
will apply prior to the Closing, for all certificates of occupancy relating to
each Facility.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
The Buyer represents and warrants to each Seller Party the
following:
Section 5.1 Corporate Status and Good Standing. The Buyer is a
corporation duly organized, validly existing and in good standing under the
laws of Texas, with full corporate power and authority under its Charter and
by-laws to conduct its business as the same exists on the date hereof and on
the Closing Date.
Section 5.2 Authorization. The Buyer has full corporate power
and authority under its Charter and by-laws, and its board of directors has
taken all necessary action to authorize the Buyer, to execute and deliver this
Agreement, and the Notes, the Deed of Trust, the Security Agreements, the
Subordination Agreement (herein collectively the "Note Documents") and the
other exhibits and schedules hereto, to consummate the transactions
contemplated herein and to take all actions required to be taken by the Buyer
pursuant to the provisions hereof and thereof, and this Agreement, the Notes,
the Deed of Trust, the Security Agreements, and the Subordination Agreement,
when executed and delivered will constitute the valid and binding obligation of
the Buyer enforceable in accordance with their terms, except as enforceability
may be limited by applicable bankruptcy, moratorium, reorganization or similar
laws affecting the rights of creditors generally.
Section 5.3 Non-Contravention. Neither the execution, delivery
and performance of this Agreement, the Note Documents or any documents executed
in connection herewith or therewith, nor the consummation of the transactions
contemplated herein or therein, does or will violate, or result in breach of or
require notice or consent under any law, the charter or bylaws of the Buyer, or
any provision of any agreement or instrument to which the Buyer is a party.
Section 5.4 Validity. There are no pending or threatened
judicial or administrative actions, proceedings or investigations which
question the validity of this Agreement or the Note Documents or any action
taken or contemplated by the Buyer in connection with this Agreement.
Section 5.5 Broker Involvement. No investment banker, broker or
finder has acted directly or indirectly for Buyer or any Affiliate of Buyer in
connection with this Agreement or
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the transactions contemplated hereby. No investment banker, broker, finder or
other person is entitled to any brokerage or finder's fee or similar commission
in respect thereof based in any way on agreements, arrangements or
understandings made by or on behalf of Buyer or any of its Affiliates. Buyer
agrees to indemnify and hold Seller and its Affiliates harmless from and
against any and all claims, liabilities and obligations with respect to all
fees, commissions or expenses asserted by any person on the basis of any act,
statement, agreement or commitment alleged to have been made by Buyer or any of
its Affiliates with respect to any such fee, expense or commission.
ARTICLE VI
COVENANTS
Section 6.1 Regular Course of Business. From and after the date
hereof and until the occurrence of the Closing or the termination of this
Agreement, the Seller shall, subject to the terms of this Agreement, carry on
its business diligently and substantially in the same manner as it has been
carried on for the last twelve months and shall not make or institute any
unusual or material change in its methods of manufacture, purchase, sale,
management, marketing, accounting, investment of funds, or operations without
the prior written consent of Buyer which consent shall not be unreasonably
withheld. Unless otherwise consented to in writing by Buyer, which consent
shall not be unreasonably withheld, or except as contemplated by this
Agreement, the Seller shall:
(a) Continue its normal maintenance procedures with
respect to its assets;
(b) Maintain insurance upon the assets of the Seller with
respect to the conduct of the Business in amounts and kinds comparable
to that in effect on the date hereof;
(c) Use its reasonable efforts to preserve the present
business organization of the Seller intact, to keep available the
services of the present officers and employees, and to preserve the
present relationships of the Seller with customers, suppliers and
employees thereof;
(d) Maintain the books, accounts, and records of the
Seller in the usual, regular, and ordinary manner, on a basis
consistent with prior years, endeavor to comply with all laws, rules,
and regulations applicable to the Seller and to the conduct of its
business, and perform all of the obligations of the Seller without
default;
(e) Not make any amendment to the Articles of
Incorporation or Bylaws of the Seller, enter into any merger or
consolidation with any person or entity, or make any sale of the
assets of the Seller (except Inventory in the ordinary course of
business);
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(f) Not make any change in the number of shares of the
capital stock of the Seller issued and outstanding; not grant or issue
any option, warrant, call, right, or commitment with respect to such
stock; not issue any equity security of any kind; not enter into any
agreement of any kind obligating the Seller to issue any shares of its
capital stock; and not issue any other securities or evidences of
indebtedness convertible into capital stock of the Seller;
(g) Not declare, pay, or make any dividend or other
distribution or payment in respect of the shares of capital stock of
the Seller or redeem any of the shares of its capital stock;
(h) Except as required pursuant to existing or proposed
contracts or agreements described on Schedule 2.1(d), (i) not make any
increase in the compensation payable or to become payable by the
Seller to any director, officer, or employee of the Seller, (ii) not
make any amendment of any employee benefit plan of the Seller, except
as required by law, and (iii) not enter into any employment agreements
or other contracts or arrangements with respect to the performance of
personal services;
(i) Not make any investment of a capital nature outside
of the normal and ordinary course of business of the Seller as
presently conducted or consistent with past practices;
(j) Not enter into any contract or commitment or engage
in any transaction which is not in the normal and ordinary course of
business of the Seller as presently conducted or consistent with past
practices;
(k) Use its reasonable efforts not to permit any event to
occur which would result in any of the representations or warranties
contained in this Agreement not to be true and correct;
(l) Not make any material change in any of the Contracts
of the Seller except in the normal and ordinary course of business of
the Seller as presently conducted or consistent with past practices;
(m) Substantially perform all of the obligations of the
Seller required to be performed during such period under each of the
Contracts and commitments of the Seller;
(n) Not borrow any money, incur any liability or
indebtedness, or make any payment, except in the normal and ordinary
course of business of the Seller as presently conducted or consistent
with past practices;
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(o) Not dispose of or contract to dispose of any property
of the Seller except in the normal and ordinary course of business of
the Seller as presently conducted or consistent with past practices;
(p) Not enter into any lease or contract for the purchase
or lease of real estate;
(q) Not form or cause to be formed any subsidiary of the
Seller;
(r) Not issue, sell, or purchase any shares of stock,
bonds, notes, or other securities;
(s) Except in the normal and ordinary course of business
of the Seller as presently conducted or consistent with past
practices, not pay any obligation or liability other than current
liabilities, not waive or compromise any right or claim, and not
cancel, without full payment, any note, loan, or other obligation
owing to the Seller, or enter into any agreement or commitment to do
any of the foregoing; and
(t) Not offer, directly or indirectly, the Purchased
Assets for sale to any person other than Buyer nor enter into
negotiation with any other party for the disposition of the Purchased
Assets.
Section 6.2 Employees. At the Closing, Seller will pay its
employees all amounts due them (including, without limitation, on account of
vacation pay and severance), and shall pay all health claims incurred on or
before the Closing for such employees when and as the same become due. The
provisions of this Agreement are for the benefit of the Buyer only, and no
employee of any Seller Party or any other person shall have any rights
hereunder.
Section 6.3 Notices and Consents. The Seller will give any
notices to third parties, and the Seller will use reasonable efforts to obtain
any third party consents, that the Buyer may request in connection with the
matters referred to in this Agreement. Each of the parties will give any
notices to, make any filings with, and use reasonable efforts to obtain any
authorizations, consents, and approvals of governments and governmental
agencies in connection with the matters referred to in this Agreement.
Section 6.4 Third Party Consents. Seller and Buyer shall use
their reasonable efforts to obtain the consents of third parties as are
necessary for the assignment of the Purchased Assets to Buyer. To the extent
that any of the Purchased Assets are not assignable by the terms thereof or
consents to the assignment thereof cannot be obtained, such assets shall be
held by Seller in trust for Buyer and all benefits and obligations derived
thereunder shall be for the account of Buyer; provided that where entitlement
of Buyer to those Purchased Assets is not recognized by any third party, Seller
shall, at the request of Buyer, enforce in a reasonable manner, for the account
of Buyer, any and all rights of Seller against the third party.
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Section 6.5 Further Assistance. Seller shall execute and deliver
to Buyer, at Closing or thereafter, any other instrument which may be requested
by Buyer and which is reasonably appropriate to perfect or evidence any of the
sales, assignments, transfers or conveyances contemplated by this Agreement or
to transfer any Purchased Assets identified after Closing.
Section 6.6 Tax Returns. Seller shall duly file all tax returns
related to taxes of any nature with respect to the Business or the Purchased
Assets for all periods ending on or prior to the Closing Date and pay all taxes
due with respect to such periods. Seller shall remain responsible for, and pay
to Buyer upon receipt of invoice therefor, its pro-rata share of the personal
property and real estate taxes shown thereon for 1995 (other than any thereof
that are Accrued Liabilities). The parties agree to file an election under
Section 167 of the Excise Tax Act (Canada) such that no Goods and Services Tax
("GST") will be payable upon the transfer of the Canadian assets from ▇▇▇ Can
to Purchaser.
Section 6.7 Employee Termination; COBRA Matters. On or prior to
January 1, 1996, Buyer agrees to secure, for the benefit of employees of Seller
and ▇▇▇ Can who become employees of Buyer on or after the Closing Date, health,
life insurance, dental and major medical plans that provide substantially
similar benefits as those provided by the Seller's and ▇▇▇ Can's plans referred
to in Section 3.3(b) hereof, which plans of Buyer shall have no exclusion or
minimum qualification period for pre-existing conditions. Buyer further agrees
to forward copies of such plans or specimen plan documents to Seller on or
prior to January 1, 1996. From the Closing Date to January 1, 1996, Buyer will
not terminate any of its employees who were employed by Seller or ▇▇▇ Can
immediately prior to the Closing, except for cause and upon prior written
notice to Seller.
Section 6.8 Transition Employees, etc. For a period of two
months following the Closing Date, Seller shall make available to Buyer, at
Seller's expense, the services of the employees of Seller listed on Schedule
6.8 hereto (provided that they continue to be employees of Seller or ▇▇▇▇▇▇)
during regular business hours, including physical visits by such persons to the
Houston Facilities, up to a maximum of 16 hours per week per individual. For a
three month period following the Closing Date, Seller agrees to cooperate with
Buyer with respect to providing information not included in the Purchased
Assets that is required by Buyer to operate the Purchased Assets; provided,
however, that any information or assistance requested by Buyer shall be
provided by Seller or its employees at Seller's reasonable convenience and
shall in no way unreasonably disrupt the ongoing operations of Seller or ▇▇▇▇▇▇
or the day-to-day duties of their employees. Buyer shall be entitled to use
the assistance of employees and systems of Seller's computer services in Canada
for a period not to exceed six months following the Closing Date and will pay
in cash to Seller a mutually acceptable fee for such services. In addition,
until August 15, 1996, Buyer will be entitled to store Inventory at Seller's
leased facility on ▇▇▇▇▇▇ Drive, Houston, Texas, at no charge.
Section 6.9 Representation Agreements. Seller agrees that on or
before the Closing Date, it will give written notice of cancellation of all
agency and other representation agreements
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to which it is a party or otherwise bound with respect to sales of its
Inventory, except for the agreement relating to the representation of the
Seller's products with Mr. ▇▇▇▇ ▇▇▇▇▇ of ▇▇▇▇▇ Co.
Section 6.10 Necessary Certificates. Seller shall be responsible
for the costs of obtaining any necessary permit, consent, approval,
authorization, qualification, or certificate of occupancy, required for the
conduct of the Business by Seller or its ownership or operation of the Business
at any Facility.
ARTICLE VII
INDEMNIFICATION
Section 7.1 Seller's Indemnity Obligations.
(a) General. Each Seller Party, jointly and severally,
shall indemnify and hold Buyer (including its affiliates, controlling
persons, officers, directors, shareholders, employees and agents, and
their respective heirs, legal representatives, successors and assigns)
from and against any and all claims, actions, causes of action,
arbitrations, proceedings, losses, damages, liabilities, judgments and
expenses (including, without limitation, reasonable attorneys' fees)
("Indemnified Amounts") incurred by Buyer as a result of (1) any
error, inaccuracy, breach or misrepresentation in any of the
representations and warranties made by any Seller Party in this
Agreement, (2) any violation, breach or default by any Seller Party of
or under any covenant made or undertaken under the terms of this
Agreement, (3) any Retained Liability, (4) any product liability
claims with respect to (i) products sold by Seller prior to the
Closing Date or (ii) Inventory that has been manufactured, assembled
and tested as of the Closing, and (5) any debts, liabilities or
obligations of Seller, direct or indirect, fixed, contingent or
otherwise, that are not expressly assumed by Buyer in this Agreement;
provided, that the Seller Parties, collectively, shall not have any
obligation to indemnify Buyer from and against any Indemnified Amounts
for matters set forth in clauses (1), (2), (4) or (5) above until
Buyer has suffered losses by reason of (i) any such matter in excess
of $5,000 or (ii) all such matters in excess of $30,000 (after either
of which point the Seller Parties will be obligated to provide
indemnification from and against the full amount of Indemnified
Amounts).
(b) Environmental. The sole indemnity obligation of the
Seller Parties with respect to any Environmental Claim or any other
matter arising under or related to any Environmental Law is set forth
in this Section 7.1(b).
(i) Subject to paragraph (iii) below, the Seller
Parties, jointly and severally, shall protect, defend,
indemnify, and hold harmless Buyer (including its officers,
directors, shareholders, agents and employees and their
respective heirs, legal representatives, successors and
assigns. Buyer and all such other persons and entities being
referred to herein individually as an "Indemnitee" and
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collectively as "Indemnitees") from and against all Costs,
which at any time may be imposed upon any Facility, the
Indemnitees, or any of them, arising out of or in connection
with (1) any failure to comply with Requirements of
Environmental Law; (2) Environmental Claims; (3) the failure of
the Seller Parties, to obtain, maintain, or comply with any
Environmental Permit required for operation of any
Facility; (4) the failure of the Seller Parties to comply with
the terms and provisions of the Environmental Remediation
Agreement, in substantially the form attached hereto as Exhibit
"B"; and/or (5) any error, inaccuracy, breach or
misrepresentation in any of the representations and warranties
made by any Seller Party in Section 4.28 of this Agreement.
(ii) Without limiting the obligations of the
Seller Parties in subparagraph (i), in the event that any
investigation, site monitoring, containment, cleanup, removal,
restoration or other remedial work of any kind or nature (the
"Remedial Work") is necessary or desirable as defined in this
Agreement, the Seller Parties shall commence and complete, at
the sole cost and expense of Seller Parties, all such Remedial
Work in a reasonable, timely and professional manner,
consistent with standard industry practices and in compliance
with applicable Requirements of Environmental Law. All
Remedial Work shall be performed by one or more contractors,
approved in advance in writing by Buyer, which approval shall
not be withheld unreasonably. Any Indemnitee, at its own cost
and expense, shall have the right to monitor or review such
Remedial Work. In the event the Seller Parties shall fail to
commence, or cause to be commenced, or fail to diligently
complete, such Remedial Work, Buyer may, but shall not be
required to, cause such Remedial Work to be performed and all
Costs shall become an Environmental Claim hereunder. As used
herein, Remedial Work shall be deemed "necessary or desirable"
if contamination of the soil, groundwater or other affected
media by a Hazardous Substance exceeds the concentration or
level of such Hazardous Substance which is permitted to remain
in the affected media under Risk Reduction Standard Number 2
as promulgated by the Texas Natural Resource Conservation
Commission ("TNRCC") (30 Tex. Admin. Code Sections 335.555
through 335.566 and other applicable provisions) as such
standard may be modified from time to time unless a different
or more stringent standard is imposed by the TNRCC or other
governmental authority having jurisdiction over the Remedial
Work. However, the use of Risk Reduction Standard Number 2 as
a standard under this Agreement for determining that Remedial
Work is "necessary or desirable" does not preclude the use of
either Risk Reduction Standard Number 1 or Risk Reduction
Standard Number 3 for purposes of completing the Remedial
Work, provided that Seller Parties shall remain responsible
for any and all post closure care, monitoring or engineering
controls required by the TNRCC in connection with a Risk
Reduction Standard Number 3 closure.
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(iii) Notwithstanding anything to the contrary set
forth in this Agreement, the liability of the Seller Parties
under this Agreement shall arise only from the matters
described in (i) above which occur or are in existence on or
prior to the Closing Date or which constitute a failure of the
Seller Parties to comply with the terms and provisions of the
Environmental Remediation Agreement.
(iv) This Indemnification, and all rights and
obligations hereunder shall survive (1) the Closing; (2)
acquisition of any Facility by Buyer; and (3) transfer of all
of Buyer's rights in any Facility.
(v) Nothing contained in this Agreement shall
prevent or in any way diminish or interfere with any rights or
remedies, including, without limitation, the right to
contribution, which any Indemnitee may have against the Seller
Parties or any other party under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980
(codified at Title 42 U.S.C. Section 9601, et seq.), as it
may be amended from time to time, or any other applicable
federal, state, foreign or local laws, or the common law, all
such rights being hereby expressly reserved.
(vi) The obligation of the Seller Parties to
indemnify Buyer or any other Indemnitee for environmental
matters shall be limited to Costs arising out of or in
connection with (a) matters discovered by Buyer in connection
with the normal and customary operations of the Business
(including without limitation any expansion thereof), (b)
matters discovered as a result of environmental assessment
activities required by a third party, including any lender of
Buyer or (c) a claim or demand by a governmental authority or
third party, which claim or demand does not originate or
result from the actions of Buyer except as otherwise provided
in subsection (a) or (b) hereof.
(c) Binding Effect This Indemnification shall run with
each of the Facilities and constitute the binding obligation of all
parties having a legal ownership interest in any of the Facilities (as
distinguished from only an equitable or mortgage interest or any
interest of a secured creditor including as an owner). All such
parties shall be deemed a Seller under this Agreement. This Agreement
or a memorandum thereof, at Indemnitee's option, may be placed of
record against any of the Facilities to impart notice of this
Agreement to all parties in ownership of any of the Facilities.
(d) Liability of Seller. The liability of the Seller
Parties under this Agreement shall in no way be limited or impaired by
the provisions of any other documents executed in connection with this
transaction. In addition, the liability of the Seller Parties under
this Agreement shall in no way be limited or impaired by any sale,
assignment, or transfer of all or any part of any of the Facilities or
any interest therein.
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(e) Waiver. The Seller Parties agree that any payments
required to be made hereunder shall become due on demand. The Seller
Parties expressly waive and relinquish all rights and remedies
accorded by applicable law to indemnitors or guarantors, except any
rights of subrogation that the Seller Parties may have, provided that
the indemnity provided for hereunder shall neither be contingent upon
the existence of any such rights of subrogation nor subject to any
claims or defenses whatsoever that may be asserted in connection with
the enforcement or attempted enforcement of such subrogation
rights, including, without limitation, any claim that such subrogation
rights were abrogated by any acts or omissions of Buyer.
(f) Definitions. For purposes of this Indemnification,
the following terms shall have the following meanings:
(i) "Environmental Claim" shall mean a claim,
demand, action, cause of action, suit, loss, cost, damage,
fine, penalty, expense, liability, judgment, proceeding, or
injury asserted or incurred for (1) the presence of Hazardous
Substances at, on, under or within any Facility on the Closing
Date; (2) any Hazardous Substances at, on, under or within any
Facility as of the Closing Date which migrate from any
Facility after the Closing Date; (3) the removal, remediation
or containment of Hazardous Substances existing on the Closing
Date at, on or under or within any Facility or any property
located adjacent thereto onto which such Hazardous Substances
have migrated from the Facility; and (4) a third party claim
for personal injury or property damage arising from or related
to the use, release or disposal of Hazardous Substances at any
Facility or at an offsite disposal site occurring prior to the
Closing Date.
(ii) "Environmental Permit" means any permit,
license, approval, or other authorization with respect to any
activities, operations, or businesses conducted by Seller on
or in relation to the Facility under any applicable
Environmental Law.
(iii) Except as provided in the Environmental
Remediation Agreement in substantially the form attached as
Exhibit "B", "Costs" shall mean all liabilities, losses,
costs, damages, expenses, claims, attorneys' fees, experts'
fees, consultants' fees and disbursements of any kind or of
any nature whatsoever. For the purposes of this definition,
such losses, costs and damages shall include, without
limitation, remedial, removal, response, abatement, cleanup,
legal, investigative and monitoring costs and related costs,
expenses, losses, damages, penalties, fines, obligations,
defenses, judgments, suits, proceedings and disbursements.
(iv) "Requirements of Environmental Law" means all
requirements imposed under Environmental Law.
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Section 7.2 Buyer's Indemnity Obligations. Buyer shall indemnify
and hold each Seller Party (including their affiliates, controlling persons,
officers, directors, employees or agents) harmless from and against any and all
Indemnified Amounts incurred by such Seller Party as a result of (a) any error,
inaccuracy, breach or misrepresentation in any of the representations or
warranties made by Buyer in this Agreement, the Notes, the Security Agreements
or the Deed of Trust, (b) any violation, breach or default by Buyer of or under
any covenant made or undertaken by it under the terms of this Agreement, the
Notes, the Security Agreements or the Deed of Trust, (c) the presence,
remediation or clean-up of, or exposure to, Hazardous Substances relating to or
located at, on, within or under the Purchased Assets or any Facility or any
failure to comply with Requirements of Environmental Law to the extent that the
same is based upon any act or omission of any party except Seller Parties or
their contractors or agents occurring after the Closing Date, (d) any Assumed
Liabilities or (e) the operation of the Business or the Purchased Assets
following the Closing (except to the extent such claim or liability constitutes
a Retained Liability or is subject to indemnification by Seller hereunder);
provided, that Buyer shall not have any obligation to indemnify the Seller
Parties from and against any Indemnified Amounts for matters set forth in clause
(a), (b), (c) or (e) above until the Seller Parties shall have, collectively,
suffered losses by reason of (i) any such matter in excess of $5,000, or (ii)
all such matters in excess of $30,000 (after either of which point the Buyer
will be obligated to provide indemnification from and against the full amount of
Indemnified Amounts.)
Section 7.3 Indemnification Procedures. All claims for
indemnification under this Agreement shall be asserted and resolved as follows:
(a) A party claiming indemnification under this Agreement
(an "Indemnified Party") shall with reasonable promptness (i) notify
the party from whom indemnification is sought (the "Indemnifying
Party") of any third-party claim or claims asserted against the
Indemnified Party ("Third Party Claim") for which indemnification is
sought and (ii) transmit to the Indemnifying Party a copy of all
papers served with respect to such claim (if any) and a written notice
("Claim Notice") containing a description in reasonable detail of the
nature of the Third Party Claim, and the basis of the Indemnified
Party's request for indemnification under this Agreement.
Within 20 days after receipt of any Claim Notice (the
"Election Period"), the Indemnifying Party shall notify the
Indemnified Party whether the Indemnifying Party disputes its
potential liability to the Indemnified Party with respect to such
Third Party Claim.
If the Indemnifying Party does not dispute its potential
liability to the Indemnified Party within the Election Period, the
Indemnified Party shall give the Indemnifying Party an opportunity to
control negotiations toward resolution of such claim without the
necessity of litigation, and if litigation ensues, to defend the same
with counsel reasonably acceptable to the Indemnified Party, at the
Indemnifying Party's expense, and the Indemnified Party shall extend
reasonable cooperation in connection with such
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defense. The Indemnified Party shall be entitled to participate in,
but not to control, the defense of any Third Party Claim resulting in
litigation, at its own cost and expense; provided, however, that if the
parties to any suit or proceeding shall include the Indemnifying
Party as well as the Indemnified Party and the Indemnified Party shall
have been advised by counsel that one or more legal defenses may be
available to it that may not be available to the Indemnifying Party
resulting in a conflict of interest, then the Indemnified Party shall
be entitled to participate in the defense of such suit or proceeding
along with the Indemnifying Party, but the Indemnifying Party shall be
obligated to bear the reasonable fees and expenses of one counsel of
the Indemnified Party, which shall be selected by the Indemnified
Party and reasonably acceptable to the Indemnifying Party. If the
Indemnifying Party does not dispute its potential liability to the
Indemnified Party within the Election Period and the Indemnifying Party
fails to assume control of the negotiations prior to litigation or to
defend such action within a reasonable time, the Indemnified Party
shall be entitled, but not obligated, to assume control of such
negotiations or defense of such action, and the Indemnifying Party
shall be liable to the Indemnified Party for its expenses reasonably
incurred or amounts paid in connection therewith. If the Indemnifying
Party disputes its potential liability to the Indemnified Party within
the Election Period, then the Indemnified Party shall be entitled to
assume control of such negotiations or defense of action and the
liability for the expense thereof, as well as any liability with
respect to such Third Party Claim, shall be determined as provided in
Section 7.4 below. Neither the Indemnifying Party nor the Indemnified
Party shall settle, compromise, or make any other disposition of any
Third Party Claim which would or might result in any liability to the
other party under this Article VII without the written consent of such
other party.
(b) In the event any Indemnified Party should have a
claim against any Indemnifying Party hereunder that does not involve a
Third Party Claim, the Indemnified Party shall transmit to the
Indemnifying Party a written notice (the "Indemnity Notice")
describing in reasonable detail the nature of the claim, an estimate
of the amount of damages attributable to such claim to the extent
feasible (which estimate shall not be conclusive of the final amount
of such claim) and the basis of the Indemnified Party's request for
indemnification under this Agreement. If the Indemnifying Party does
not notify the Indemnified Party within 30 days from its receipt of
the Indemnity Notice that the Indemnifying Party disputes such claim,
the claim specified by the Indemnified Party in the Indemnity Notice
shall be deemed a liability of the Indemnifying Party hereunder.
Section 7.4 Arbitration of Disputes. If the Indemnifying Party
disputes, either as to the amount or liability, that any claim described in a
Claim Notice or an Indemnity Notice, as the case may be, is covered by such
Indemnifying Party's covenant to indemnify contained in this Article VII, then
the Indemnifying Party and the Indemnified Party agree to promptly negotiate in
good faith to resolve their differences and to mutually agree upon an amount
(an "Agreed Amount"), if any, owed to Indemnified Party by the Indemnifying
Party hereunder. If Indemnifying Party and Indemnified Party fail to agree
within 30 days thereafter, the dispute shall be resolved (a "Final
Determination") by binding and final arbitration conducted in
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Houston, Texas by three arbitrators in accordance with the rules of commercial
arbitration of the American Arbitration Association. Subject to the foregoing,
either Party may give notice of arbitration, which notice shall name an
arbitrator. Within ten days after the receipt of such notice, the other Party
shall name the second arbitrator, or failing to do so, the arbitrator named in
such notice shall name the second. The two arbitrators so appointed shall name
the third. Notwithstanding the foregoing, if the Parties mutually agree, any
dispute subject to arbitration hereunder may be heard and determined by a single
arbitrator selected by the Parties. Each arbitrator selected to act hereunder
shall be qualified by education and experience to pass on the particular
question in dispute. The arbitrators shall promptly hear and determine (after
due notice of hearing and giving the Parties a reasonable opportunity to be
heard) the question submitted and shall render their decision within 45 days
after appointment of the third arbitrator. If within such period a decision is
not rendered by the arbitrators, or a majority thereof, new arbitrators may be
named and shall act hereunder at the election of either Party. The decision of
the arbitrators, or a majority thereof, made in writing, shall be final and
binding upon the Parties hereto as to the questions submitted, and the Parties
hereto agree to abide by and comply with such decision. Any amount which is
described in a Claim Notice which is not disputed by the Indemnifying Party
shall be paid promptly (in cash or by offset, if applicable) upon receipt of the
Claim Notice by the Indemnifying Party.
Section 7.5 General. The rights of the parties to
indemnification under this Article VII shall not be limited due to any
investigations heretofore or hereafter made by such parties or their
representatives.
Section 7.6 Right of Offset. Each of the Notes is subject to
offset in whole or in part by any amounts due from any Seller Party to Buyer,
based on any Final Determination or any non-disputed Claim Notice, in
accordance with the terms of this Agreement. Any sale or assignment or other
transfer of either of the Notes shall be expressly subject to Buyer's rights of
offset, each of such Notes shall bear an appropriate legend referencing Buyer's
rights of offset pursuant hereto, and any such buyer, assignee or other
transferee of either of the Notes shall execute an agreement satisfactory to
Buyer in the exercise of its reasonable judgment agreeing to Buyer's continued
right of offset.
Section 7.7 Survival of Representations.
(a) The representations and warranties of the Seller
Parties in Sections 4.1, 4.3, 4.4, 4.6, 4.8, 4.10, 4.11, 4.12, 4.14,
4.15, 4.16, 4.19, 4.20, 4.21, 4.23, 4.24, 4.26, 4.27, 4.30, 4.31,
4.32, and 4.35 shall expire upon the second anniversary of the Closing
Date. All other representations and warranties shall survive for the
maximum period permitted by applicable law, provided that if a claim
has been made with respect to a breach of a representation or warranty
prior to the expiration thereof, and such claim has not been finally
resolved as of the expiration thereof, such representation or warranty
shall survive until the final resolution of such claim.
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(b) The representations and warranties of the Buyer in
Sections 5.1, 5.3 and 5.4, shall survive Closing and will expire upon
the second anniversary of the Closing Date. All other representations
and warranties shall survive for the maximum period permitted by
applicable law, provided that if a claim has been made with respect to
a breach of a representation or warranty prior to the expiration
thereof, and such claim has not been finally resolved as of the
expiration thereof, such representation or warranty shall survive
until the final resolution of such claim.
ARTICLE VIII
CONDITIONS PRECEDENT TO CLOSING: TERMINATION
Section 8.1 General Conditions Precedent.
(a) Conditions to Obligation of Buyer to Close. The
obligation of Buyer to effect the closing of the transactions
contemplated by this Agreement is subject to the satisfaction prior to
or at the Closing of the following conditions:
(i) Representations and Warranties. The
representations and warranties of each Seller Party under this
Agreement shall be true and correct in all material respects
as of the Closing Date with the same effect as though made on
and as of the Closing Date.
(ii) Observance and Performance. Each Seller
Party shall have performed and complied in all material
respects with all covenants and agreements required by this
Agreement to be performed and complied with by either of them
prior to or as of the Closing Date.
(iii) No Adverse Change. There shall have occurred
no material adverse change in the Purchased Assets as a whole
or in the Business, financial condition, prospects, operations
of the Business or results of operations since September 30,
1995.
(iv) Officers' Certificate. Each Seller Party
shall have delivered to Buyer a certificate, dated the Closing
Date, executed by the President and the senior financial
officer of Seller and certifying to the satisfaction of the
conditions specified in Sections 8.1(a) (i), (ii), and (iii).
(v) Consents of Third Parties. Buyer shall have
received duly executed copies of all material consents and
agreements necessary to effect the transfer of the Purchased
Assets to Buyer. Buyer hereby agrees to use reasonable
efforts to assist Seller in obtaining such consents and
agreements.
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(vi) Legal Opinion. Buyer shall have received an
opinion, dated the Closing Date, from ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, counsel
to the Seller, to the effect that:
(1) Each of the Seller and ▇▇▇▇▇▇ is
duly organized, validly existing, and in good
standing under the laws of the state of their
respective incorporation and each has all corporate
power to own all of its properties and assets and to
carry on its business as it is now being conducted;
(2) This Agreement has been duly
authorized, executed, and delivered by the Seller and
▇▇▇▇▇▇ and constitutes the valid and binding
obligation of Seller and ▇▇▇▇▇▇, subject to
applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium, and similar
laws affecting creditors' rights generally, and the
effect of general principles of equity, whether
applied by a court of law or equity;
(3) To his best knowledge, no order,
authorization, consent, or approval of, or
registration, declaration, or filing with, any
governmental authority is required in connection with
the consummation by the Seller, ▇▇▇▇▇▇ of the
transactions contemplated by this Agreement;
(4) The execution, delivery, and
performance of this Agreement by the Seller and
▇▇▇▇▇▇ and the consummation of the transactions
contemplated hereby will not constitute a breach or
violation of or default under the Articles of
Incorporation or Bylaws of such parties;
(5) Upon consummation of the
transactions which are the subject of this Agreement
in accordance with its terms, Buyer will be vested
with good and indefeasible title to all of the
Purchased Assets, except the Houston Facility, free
and clear of any claims, liens, charges, or
encumbrances whatsoever, except such liens created by
Buyer as a result of the transactions set forth
herein and Permitted Liens; and
(6) Such counsel knows of no suit or
proceeding pending or threatened against the Seller
other than those listed on Schedule 4.6 which would
materially and adversely affect the financial
condition, business, or operations of the Seller
taken as a whole.
(vii) Copies of Documents. Buyer shall have
received, to the extent reasonably requested by Buyer, copies
of all documents and instruments listed in any of the Exhibits
or Schedules to this Agreement.
(viii) Closing Documents. Buyer shall have received
such bills of sale, assignments and other documents of
transfer reasonably required to transfer to
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Buyer the interests of Seller in the Purchased Assets and the
Business consistent with the terms of this Agreement.
(ix) No Legal Actions. No court or governmental
authority of competent jurisdiction shall have issued an
order, not subsequently vacated, restraining, enjoining or
otherwise prohibiting the consummation of the transactions
contemplated by this Agreement, and no action or proceeding
shall have been instituted, which shall not have been
subsequently dismissed, seeking to restrain, enjoin or
prohibit the consummation of the transactions contemplated by
this Agreement or seeking damages in respect thereof.
(x) Proceedings and Documents. All corporate and
other proceedings and actions taken, and all certificates,
opinions, agreements, instruments and documents to be
delivered, in connection with the transactions contemplated
hereby shall be reasonably satisfactory in form and substance
to Buyer and its counsel.
(xi) Real Property Matters. The Buyer shall have
received the Title Commitment described in Section 4.7, copies
of all instruments referred to in the Title Commitment, and
shall have been satisfied that the issuer of the Title
Commitment has been paid by Seller to issue, and is
irrevocably committed to issue, on the policy of Chicago Title
Insurance Company, a Texas Standard Form Owner's Title
Insurance Policy, dated as of the Closing Date, subject only
to the Permitted Encumbrances and taxes for 1995.
(xii) Termination of Financing Statements. If
requested by Buyer, Seller shall have received properly
executed terminations of all financing statements filed by any
person as secured party against Seller as debtor.
(xiii) Remediation Agreement. Seller and Buyer
shall have entered into an Environmental Remediation Agreement
in substantially the form attached hereto as Exhibit "B".
(xiv) Governmental Approvals. Each party shall
have obtained and made all governmental or other
authorizations, approvals, consents, waivers and filings, the
lack of which prior to the Closing, under any applicable law,
rule or regulation (i) would render legally impermissible the
purchase hereunder by Buyer, or the sale hereunder by Seller,
of the Purchased Assets or (ii) have a material adverse effect
on the Purchased Assets or Buyer.
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(b) Conditions to Obligation of Seller to Close.
(i) Representations and Warranties. The
representations and warranties of Buyer under this Agreement
shall be true and correct as of the Closing Date with the same
effect as though made on and as of the Closing Date.
(ii) Observance and Performance. Buyer shall have
performed and complied with all covenants and agreements
required by this Agreement to be performed and complied with
by it prior to or as of the Closing Date.
(iii) Officers' Certificate. Buyer shall have
delivered to Seller a certificate, dated the Closing Date,
executed by the President and the senior financial officer of
Buyer and certifying to the satisfaction of the conditions
specified in Sections 8(b)(i) and (ii) hereof.
(iv) Legal Opinion. Seller shall have received an
opinion, dated the Closing Date, from ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇ P.C., counsel to Buyer, to the effect that:
(1) Buyer is duly organized, validly
existing, and in good standing under the laws of the
State of Texas and has all corporate power to own its
properties and to conduct its business as it is now
being conducted;
(2) This Agreement, the Notes, the
Security Agreements, the Deed of Trust and the
Subordination Agreement (the "Purchase Documents")
have been duly authorized, executed and delivered by
Buyer and constitute the valid and binding obligation
of Buyer, enforceable against Buyer in accordance
with their terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors'
rights generally, and the effect of general
principles of equity, whether applied by a court of
law or equity;
(3) To such counsel's knowledge, no
order, authorization, consent or approval of, or
registration, declaration or filing with, any
governmental authority is required in connection with
the consummation by Buyer of the transactions
contemplated by this Agreement;
(4) The execution, delivery and
performance by Buyer of the Purchase Documents, the
borrowings by Buyer pursuant thereto and the granting
of the Liens contemplated thereby, do not violate,
result in a breach of, or constitute a default under,
the Articles of Incorporation or
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by-laws of Buyer or, to such counsel's knowledge,
any agreement to which Buyer is a party;
(5) The Security Agreements grant the
Seller Parties a valid security interest in the
"Collateral" (as defined therein). The filing of
Buyer's financing statements in the Office of the
Secretary of State of Texas perfects the security
interest of the Seller Parties in the Collateral that
consists of accounts, general intangibles, inventory,
mobile goods and equipment, excluding certificated
motor vehicles (as each term is defined in Section
9.105 of the Texas Business and Commerce Code) on the
date of the filing of such financing statements;
(6) Such counsel knows of no suit or
proceeding pending or threatened against or affecting
the Buyer which would materially and adversely
affect the financial condition, business, or
operations of Buyer upon completion of the
transactions contemplated by this Agreement.
(v) No Legal Actions. No court or governmental
authority of competent jurisdiction shall have issued an
order, not subsequently vacated, restraining, enjoining or
otherwise prohibiting the consummation of the transactions
contemplated by this Agreement, and no action or proceeding
shall have been instituted, which shall not have been
subsequently dismissed, seeking to restrain, enjoin or
prohibit the consummation of the transactions contemplated by
this Agreement or seeking damages in respect thereof.
(vi) Governmental Approvals. Each party shall
have obtained and made all governmental or other
authorizations, approvals, consents, waivers and filings, the
lack of which prior to the Closing, under any applicable law,
rule or regulation (i) would render legally impermissible the
purchase hereunder by Buyer, or the sale hereunder by Seller,
of the Purchased Assets or (ii) have a material adverse effect
on the Purchased Assets or Seller.
(vii) Other Documents and Instruments. Buyer and
the other parties thereto shall have executed and delivered to
Seller the Notes and the Security Agreements, in substantially
the form of each of which is set forth in Exhibit "A" hereto,
the Deed of Trust, in substantially the form of which is set
forth in Exhibit "C" hereto, the Subordination Agreement in
substantially the form of which is set forth in Exhibit "F"
hereto and such other financial statements and security
documents as may be, in Seller's reasonable opinion, necessary
or advisable to effect and perfect Seller's security interest
in the Purchased Assets.
(viii) Proceedings and Documents. All corporate and
other proceedings and actions taken in connection with the
transactions contemplated hereby and all certificates,
opinions, agreements, instruments and documents mentioned
herein
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or incident to any such transaction shall be reasonably
satisfactory in form and substance to Seller and its counsel.
(ix) Credit Agreements. Buyer and its bank lender
shall have entered into a Loan Agreement, in substantially the
form set forth in Exhibit "G" hereto.
Section 8.2 Reasons for Termination. This Agreement may be
terminated and abandoned upon prompt notice to the other party or parties:
(a) By mutual written consent of the parties hereto at
any time prior to the Closing;
(b) By the Buyer if any of the conditions precedent to
Buyer's obligations hereunder as provided in Section 8.1(a) hereof
have not been satisfied and have not been waived in writing by Buyer,
upon written notice of such termination to the Seller;
(c) By Seller if any of the conditions precedent to the
obligations of the Seller as provided in Section 8.1(b) hereof have
not been satisfied on or prior to the Closing Date and have not been
waived in writing by Seller, upon written notice of such termination
to Buyer.
(d) By either Buyer or Seller if the Closing has not
occurred on or before December 10, 1995, provided, however, that no
party hereto can so terminate this Agreement if the Closing has failed
to occur because of a material default hereunder by such party, or if
the parties have not received any required governmental approval.
.
(e) By either Buyer or any Seller Party if any court or
governmental agency shall have issued an order, judgment or decree or
taken any other action materially challenging, delaying, restraining,
enjoining, prohibiting or invalidating the consummation of any of the
transactions contemplated herein.
Section 8.3 Effect of Termination. In the event this Agreement
is terminated pursuant to Section 8.2, all further obligations of the parties
hereunder shall terminate, except that the obligations set forth in Section
11.1 and this Article VIII shall survive; provided, however, that if this
Agreement is so terminated by one party pursuant to Section 8.2(b) or 8.2(c)
because one or more of the conditions to such party's obligations hereunder is
not satisfied as a result of the other party's failure to comply with its
obligations under any provision of this Agreement, it is expressly agreed and
understood that an aggrieved party's right to pursue all legal remedies for
breach of contract or otherwise, including, without limitation, damages
relating thereto, shall also survive such termination unimpaired. The remedies
specifically provided in this Article VIII shall constitute the exclusive
remedies under this Agreement or otherwise for any failure to close or for any
termination of this Agreement.
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ARTICLE IX
ACTIONS TO BE TAKEN AT CLOSING
Section 9.1 Actions to be Taken by Seller at the Closing. Seller
shall take the following actions and shall deliver to Buyer at the Closing:
(a) copies certified by its Secretary of resolutions duly
adopted by the boards of directors of each of the Seller and ▇▇▇▇▇▇
and the partners of ▇▇▇ Can, and where required, by the shareholders
of Seller, authorizing and approving the execution and delivery of
this Agreement, including the Exhibits and Schedules hereto, and the
consummation of the transactions contemplated herein.
(b) bills of sale, in form and substance satisfactory to
Buyer, for all personal property constituting a part of the Purchased
Assets;
(c) assignments, in form and substance satisfactory to
Buyer, of all intangibles constituting a part of the Purchased Assets
and all contracts, licenses, appurtenances and other rights of Seller
relating to the Facilities;
(d) with respect to the Houston Facility, a special
warranty deed, a form of which is included as Exhibit "D", subject
only to the Permitted Encumbrances hereto;
(e) with respect to the Houston Facility, a title policy
obtained at Seller's sole cost and expense and in Buyer's name, in the
form described in Section 4.7 hereof, dated the Closing Date, in the
amount reasonably allocable to such parcel (as determined by Buyer),
showing Buyer to be the owner in fee simple subject only to Permitted
Encumbrances and other exceptions acceptable to Buyer in Buyer's sole
discretion, together with any certificate or affidavits required by
the title company issuing the title policy, including, without
limiting the foregoing, a certificate of non-foreign status and Seller
shall deliver such instruments, documents, payments, indemnities,
releases and agreements as the title company shall reasonably require
in order to issue said policies and endorsements;
(f) such other instrument or instruments of transfer as
shall be necessary or appropriate to vest in Buyer good and
indefeasible title to the Purchased Assets;
(g) such keys, lock and safe combinations, back-up
computer files, and other similar items as Buyer shall require to
obtain full occupation, possession and control of the Houston Facility
and the Purchased Assets;
(h) an assignment of Leases covering certain of the
Facilities, as set forth on Schedule 2.1(h);
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(i) estoppel certificates and consents in form and
substance reasonably satisfactory to Buyer executed by the landlords
under each of the Leases and by the other parties to the Contracts to
the extent received as of the Closing Date; and
(j) Pursuant to Article XII hereof, Seller and ▇▇▇▇▇▇
shall execute and deliver a Non-Competition Agreement
("Non-Competition Agreement") with Buyer in form mutually satisfactory
to Buyer and Seller.
Section 9.2 Actions to be Taken by Buyer at the Closing. The
Buyer shall take the following actions at the Closing:
(a) The Buyer shall deliver to Seller a copy certified by its
Secretary of resolutions duly adopted by its boards of directors
authorizing and approving the execution and delivery of this
Agreement, the Note Documents and the other exhibits and schedules
hereto, the issuance of the Notes, and the consummation of the
transactions contemplated herein.
(b) Buyer shall make the payment of funds specified for
payment at Closing under Section 2.2 above.
(c) Buyer shall execute and deliver to Seller the Notes,
the Security Agreements, the Deed of Trust, the Subordination
Agreement and such other financing statements and security documents
as may be, in Seller's reasonable opinion, necessary or advisable to
effect and perfect Seller's security interest in the Purchased Assets.
Section 9.3 Further Assurances. At and after the Closing, at the
request of Buyer, Seller shall deliver such further instruments of transfer and
take all commercially reasonable action as may be necessary or appropriate (i)
to vest in Buyer good and indefeasible title to the Purchased Assets, and (ii)
to transfer to Buyer all licenses, agreements and permits necessary for the
operation of the Business, and (iii) to aid and assist Buyer in collecting and
reducing to possession any or all of the Purchased Assets (including Accounts
Receivable).
ARTICLE X
COVENANTS OF BUYER
The parties hereto acknowledge that, in connection with the
transactions contemplated by this Agreement, Buyer will enter into a loan
agreement (the "Loan Agreement") and promissory note, security agreement, deed
of trust, and subordination agreement in favor of Texas Commerce Bank National
Association. Buyer agrees with the Seller Parties that it will fully comply
with all covenants and agreements undertaken by Buyer in the Loan Agreement and
related agreements, as any of such may be amended, modified, waived or
otherwise enforced hereinafter.
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ARTICLE XI
GENERAL PROVISIONS
Section 11.1 Confidentiality. After the Closing, Seller will not,
directly or indirectly, disclose or provide to any other person any non-public
information of a confidential nature concerning the Business or the Purchased
Assets, except as is required in governmental filings or judicial,
administrative or arbitration proceedings; provided that Seller may disclose or
provide such information to its agents, accountants and attorneys who need to
know such information; and provided, further, that Seller shall be liable for
any breach of such confidentiality obligations by any such agent, accountant or
attorney.
Section 11.2 Expenses. Except as otherwise provided herein, the
Buyer and Seller shall pay their own respective expenses, including the fees
and disbursements of their respective counsel in connection with the
negotiation, preparation and execution of this Agreement and the consummation
of the transactions contemplated herein. Buyer shall pay for all filing fees
in connection with the transactions contemplated herein.
Section 11.3 Entire Agreement. This Agreement, including all
schedules and exhibits hereto, constitutes the entire agreement of the parties
with respect to the subject matter hereof, and may not be modified, amended or
terminated except by a written instrument specifically referring to this
Agreement signed by all the parties hereto.
Section 11.4 Waivers and Consents. All waivers and consents given
hereunder shall be in writing. No waiver by any party hereto of any breach or
anticipated breach of any provision hereof by any other party shall be deemed a
waiver of any other contemporaneous, preceding or succeeding breach or
anticipated breach, whether or not similar.
Section 11.5 Notices. Any notice or communication required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given upon delivery, if delivered in person or by any expedited delivery
service which provides proof of delivery, upon telecopy, facsimile or similar
telecommunication or on the third business day after mailing, if mailed by
certified or registered mail, postage prepaid, return receipt requested,
addressed as follows, or in such other manner or to such other address as any
party shall hereafter designate by notice in writing to the other parties
hereto, viz:
(a) If to Buyer to: ▇▇▇-▇▇▇ Bolt & Gasket, Inc.
▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
and
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▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
With copies to: (i) ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ P.C.
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
(ii) CCG Venture Partners, LLC
14450 ▇.▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
(b) If to any Seller
Party, to: ▇▇▇▇▇▇ Industries, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: W.A. ▇▇▇▇▇▇▇ III
With a copy to: ▇▇▇▇▇▇ Industries, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Section 11.6 Successors and Assigns. No party to this agreement
may assign or delegate any of its rights or obligations under this Agreement or
any part hereof without the prior written consent of the non-assigning party.
Any assignment or delegation without any consent contemplated by this Section
11.6 shall be void. This Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective permitted successors,
legal representatives and assigns. No third party shall have any rights under
any provision hereof.
Section 11.7 Compliance with Bulk Sales Laws. Buyer and Seller
waive compliance with the requirements of any applicable bulk sales laws of any
jurisdiction. Each Seller Party shall indemnify Buyer against any and all
liabilities or expenses Buyer may incur as a result of any noncompliance by
Seller with any bulk sales laws as they relate to this transaction. Buyer will
discharge the liabilities it assumes hereunder.
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Section 11.8 Captions. The captions in this Agreement are for
convenience only and shall not be considered a part of or affect the
construction or interpretation of any provision of this Agreement.
Section 11.9 Governing Law; Settlement of Disputes. This
Agreement and the other documents delivered pursuant hereto and the legal
actions between the parties shall be governed and construed in accordance with
the laws of the State of Texas, without giving effect to principles of
conflicts of laws. All disputes arising out of this Agreement shall be
resolved in accordance with the procedure set forth in Section 7.4 hereof.
Section 11.10 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party hereto. Upon such determination that any term
or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties hereto as closely as possible in an
acceptable manner to the end that the transactions contemplated hereby are
fulfilled to the extent possible.
Section 11.11 Further Assurances. Each party agrees to execute
such further instruments or documents as any other party may from time to time
reasonably request in order to confirm or carry out the transactions
contemplated by this Agreement.
Section 11.12 Counterparts. This Agreement may be executed in any
number of counterparts, each of which, when so executed, shall be deemed an
original but all of which together shall constitute one and the same
instrument.
ARTICLE XII
COVENANTS NOT TO COMPETE
Section 12.1 Agreements.
(a) Seller and ▇▇▇▇▇▇ shall each enter into a
Non-Competition Agreement in the form attached as Exhibit "E" hereto.
(b) ▇▇. ▇▇▇ ▇▇▇▇▇▇▇ shall not compete with Buyer for as
long as ▇▇▇▇▇▇▇ is an employee or consultant with or for any of the
Seller Parties or their Affiliates.
Section 12.2 Relinquishment of Name. From the Closing, the Seller
Parties each agree to forever forego conducting business operations under the
name of "▇▇▇▇▇▇ Industrial, Inc." and "▇▇▇▇▇▇ ▇▇▇▇ & Gasket, Inc." The Seller
Parties also agree that Buyer shall be entitled to
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provide general, and specific notification, that it has acquired certain assets
related to the Business of ▇▇▇▇▇▇ Industrial, Inc., ▇▇▇▇▇▇ ▇▇▇▇ & Gasket, Inc.,
and the bolt, flange and gasket business of ▇▇▇▇▇▇ ▇▇▇▇ & Gasket Ltd. and ▇▇▇▇▇▇
Industries Canada.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first above written.
▇▇▇-▇▇▇ BOLT & GASKET, INC.
By: ______________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: President
▇▇▇▇▇▇ INDUSTRIES, INC.
By: ______________________________
Name: W. A. ▇▇▇▇▇▇▇, III
Title: President
▇▇▇▇▇▇ INDUSTRIAL, INC.
By: ______________________________
Name: ▇. ▇. ▇▇▇▇▇▇▇▇, III
Title: Vice President
▇▇▇▇▇▇ INDUSTRIES CANADA
By: ▇▇▇▇▇▇ ▇▇▇▇ & Gasket, Ltd.
▇▇▇▇▇▇ Flow Products, Ltd.
Partners
By: ____________________________________
Name: W. A. ▇▇▇▇▇▇▇, III
Authorized Signatory
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