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EXHIBIT 10.34
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ASSET PURCHASE AGREEMENT
by and among
CENTRAL TEXAS EQUIPMENT CO.
▇. ▇. ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇ AND ▇▇▇▇▇▇ ▇▇▇▇▇▇
and
CRESCENT OPERATING, INC.
April 30, 1998
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TABLE OF CONTENTS
Page
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ASSET PURCHASE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I
TERMS OF THE TRANSACTION . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Assets to be Transferred . . . . . . . . . . . . . . . . . . . . 1
1.2 Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . . 5
1.3 Instruments of Conveyance . . . . . . . . . . . . . . . . . . . 5
1.4 Purchase Price and Payment . . . . . . . . . . . . . . . . . . . 5
1.5 Adjustment of Purchase Price . . . . . . . . . . . . . . . . . . 6
1.6 Allocation of Purchase Price . . . . . . . . . . . . . . . . . . 7
1.7 Liabilities Assumed by Buyer . . . . . . . . . . . . . . . . . . 7
1.8 Liabilities Not Assumed by Buyer . . . . . . . . . . . . . . . . 8
ARTICLE II
CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
SELLER AND THE SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . 9
3.1 Corporate Organization . . . . . . . . . . . . . . . . . . . . 9
3.2 Qualification . . . . . . . . . . . . . . . . . . . . . . . . 9
3.3 Authority Relative to This Agreement . . . . . . . . . . . . . 9
3.4 Noncontravention . . . . . . . . . . . . . . . . . . . . . . . 9
3.5 Governmental Approvals . . . . . . . . . . . . . . . . . . . . 10
3.6 Exclusive Operation of Business . . . . . . . . . . . . . . . 10
3.7 Title to Assets . . . . . . . . . . . . . . . . . . . . . . . 10
3.8 Financial Statements . . . . . . . . . . . . . . . . . . . . . 10
3.9 Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.10 Absence of Certain Changes . . . . . . . . . . . . . . . . . . 11
3.11 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.12 Compliance With Laws . . . . . . . . . . . . . . . . . . . . . 12
3.13 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . 12
3.14 Sufficiency and Condition of Assets . . . . . . . . . . . . . . 12
3.15 Real Property . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.16 Tangible Personal Property . . . . . . . . . . . . . . . . . . 14
3.17 Leased Property . . . . . . . . . . . . . . . . . . . . . . . . 14
3.18 Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.19 Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.20 Intellectual Property . . . . . . . . . . . . . . . . . . . . . 15
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3.21 Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.22 Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.23 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.24 Environmental Matters . . . . . . . . . . . . . . . . . . . . . 16
3.25 Labor Relations . . . . . . . . . . . . . . . . . . . . . . . . 17
3.26 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.27 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.28 Financial Requirements . . . . . . . . . . . . . . . . . . . . 18
3.29 Powers of Attorney . . . . . . . . . . . . . . . . . . . . . . 18
3.30 Books and Records . . . . . . . . . . . . . . . . . . . . . . . 19
3.31 Illegal Payments . . . . . . . . . . . . . . . . . . . . . . . 19
3.32 Investment Intent . . . . . . . . . . . . . . . . . . . . . . . 19
3.33 Investment Experience . . . . . . . . . . . . . . . . . . . . . 19
3.34 Restricted Securities . . . . . . . . . . . . . . . . . . . . . 19
3.35 Legend . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.36 Brokerage Fees . . . . . . . . . . . . . . . . . . . . . . . . 20
3.37 Representations and Warranties on Closing Date . . . . . . . . 20
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER . . . . . . . . . . . . . . . 20
4.1 Corporate Organization . . . . . . . . . . . . . . . . . . . . . 20
4.2 Authority Relative to This Agreement . . . . . . . . . . . . . . 21
4.3 Noncontravention . . . . . . . . . . . . . . . . . . . . . . . . 21
4.4 Governmental Approvals . . . . . . . . . . . . . . . . . . . . . 21
4.5 Buyer Shares . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.6 Brokerage Fees . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.8 Representations and Warranties on Closing Date . . . . . . . . . 22
ARTICLE V
CONDUCT OF BUSINESS PENDING CLOSING . . . . . . . . . . . . . . . . . 22
5.1 Conduct and Preservation of Business . . . . . . . . . . . . . . 22
5.2 Restrictions on Certain Actions . . . . . . . . . . . . . . . . 23
ARTICLE VI
ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . 25
6.1 Access to Information . . . . . . . . . . . . . . . . . . . . . 25
6.2 Third Party Consents . . . . . . . . . . . . . . . . . . . . . . 25
6.3 Employment Agreement . . . . . . . . . . . . . . . . . . . . . . 25
6.4 Noncompetition Agreement . . . . . . . . . . . . . . . . . . . . 25
6.5 Employee and Employee Benefit Plan Matters . . . . . . . . . . . 25
6.6 [Intentionally omitted.] . . . . . . . . . . . . . . . . . . . . 26
6.7 Uncollected Receivables . . . . . . . . . . . . . . . . . . . . 26
6.8 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.9 Public Announcements . . . . . . . . . . . . . . . . . . . . . . 26
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6.10 Notice of Litigation . . . . . . . . . . . . . . . . . . . . . 27
6.11 Change of Corporate Name . . . . . . . . . . . . . . . . . . . 27
6.12 Notification of Certain Matters . . . . . . . . . . . . . . . . 27
6.13 Access to Records After Closing . . . . . . . . . . . . . . . . 27
6.14 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . 28
6.15 Taxes; Other Charges . . . . . . . . . . . . . . . . . . . . . 28
6.16 Agreement Regarding Current Public Information . . . . . . . . 29
6.17 Survival of Covenants . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF SELLER . . . . . . . . . . . . . . . . . 29
7.1 Representations and Warranties True . . . . . . . . . . . . . . 29
7.2 Covenants and Agreements Performed . . . . . . . . . . . . . . . 29
7.3 Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.4 Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . 29
7.5 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . 29
7.6 Other Documents . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF BUYER . . . . . . . . . . . . . . . . . 30
8.1 Representations and Warranties True . . . . . . . . . . . . . 30
8.2 Covenants and Agreements Performed . . . . . . . . . . . . . . 30
8.3 Certificate . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.4 Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . 31
8.5 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . 31
8.6 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
8.7 No Material Adverse Change . . . . . . . . . . . . . . . . . . 31
8.8 Employment Agreement . . . . . . . . . . . . . . . . . . . . . 31
8.9 Due Diligence . . . . . . . . . . . . . . . . . . . . . . . . 31
8.10 Other Documents . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE IX
TERMINATION, AMENDMENT, AND WAIVER . . . . . . . . . . . . . . . . . 32
9.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . 33
9.3 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.4 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.5 Remedies Not Exclusive . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE X
SURVIVAL OF REPRESENTATIONS;INDEMNIFICATION . . . . . . . . . . . . . 33
10.1 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
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10.2 Indemnification by Seller and Shareholder . . . . . . . . . . . 33
10.3 Indemnification by Buyer . . . . . . . . . . . . . . . . . . . 34
10.4 Procedure for Indemnification . . . . . . . . . . . . . . . . . 35
ARTICLE XI
REGISTRATION RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . 35
11.1 Right to Participate in Registration . . . . . . . . . . . . . 35
11.2 Registration Procedures . . . . . . . . . . . . . . . . . . . . 36
11.3 Required Information . . . . . . . . . . . . . . . . . . . . . 37
11.4 Expenses of Registration . . . . . . . . . . . . . . . . . . . 37
11.5 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE XII
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
12.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
12.2 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . 38
12.3 Binding Effect; Assignment; No Third Party Benefit . . . . . 38
12.4 Severability . . . . . . . . . . . . . . . . . . . . . . . . 39
12.5 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . 39
12.6 Further Assurances . . . . . . . . . . . . . . . . . . . . . 39
12.7 Descriptive Headings . . . . . . . . . . . . . . . . . . . . 39
12.8 Gender . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
12.9 References . . . . . . . . . . . . . . . . . . . . . . . . . 39
12.10 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 39
12.11 Joint and Several Liability . . . . . . . . . . . . . . . . . 39
12.12 Injunctive Relief . . . . . . . . . . . . . . . . . . . . . . 40
12.13 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE XIII
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
13.1 Certain Defined Terms . . . . . . . . . . . . . . . . . . . . . 40
13.2 Certain Additional Defined Terms . . . . . . . . . . . . . . . 42
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ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT (this "Agreement"), dated as of April 30, 1998,
by and among Central Texas Equipment Co., a Texas corporation ("Seller"),
Crescent Operating, Inc., a Texas corporation ("Buyer"), ▇.▇. ▇▇▇▇ ("▇▇▇▇"),
▇▇▇▇ ▇▇▇▇▇▇▇ ("▇. ▇▇▇▇▇▇▇"), ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ("▇. ▇▇▇▇▇▇▇"), ▇▇▇▇ ▇▇▇▇▇▇▇ ("▇.
▇▇▇▇▇▇▇"), ▇▇▇ ▇▇▇▇▇▇▇ (▇▇▇▇▇▇▇") and ▇▇▇▇▇▇ ▇▇▇▇▇▇ ("▇▇▇▇▇▇") (▇▇▇▇, ▇.
▇▇▇▇▇▇▇, ▇. ▇▇▇▇▇▇▇, ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ sometimes collectively
referred to as the "Shareholders" and individually, a "Shareholder").
WHEREAS, Seller is engaged in the business of buying, selling,
servicing, and leasing equipment and machinery (the "Business"); and
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to purchase
from Seller, on a going concern basis, substantially all the assets of the
Business, upon the terms and subject to the conditions herein set forth;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, the parties hereto hereby agree as follows:
ARTICLE I
TERMS OF THE TRANSACTION
1.1 Assets to be Transferred. At the Closing, and on the terms and
subject to the conditions set forth in this Agreement, Seller shall sell,
assign, transfer, deliver, and convey (collectively, "transfer"), or cause to
be transferred, to Buyer, and Buyer shall purchase from Seller, all assets and
properties of every kind, character, and description, whether tangible,
intangible, real, personal, or mixed, and wherever located, which are owned by
Seller or in which Seller has any right, title, or interest, and which are used
or held for use by Seller in the conduct of the Business as the same shall
exist on the Closing Date (except for the excluded assets described in Section
1.2 below), including, without limitation, the following assets and properties
of Seller existing on the Closing Date:
(a) Balance Sheet Assets. All assets and properties reflected
on the Latest Balance Sheet, plus all items of a nature customarily
carried as assets in the accounts of the Business which are acquired by
Seller in the ordinary course of the operation of the Business between
the date of the Latest Balance Sheet and the Closing, less any items
which are disposed of or consumed in the ordinary course of the
operation of the Business between the date of the Latest Balance Sheet
and the Closing.
(b) Owned Real Property. All those certain plots, tracts, or
parcels of land located in ▇▇▇▇▇▇ County, Texas and more particularly
described on Schedule 1.1(b) (the "Owned Real Property").
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(c) Fixtures and Improvements. All plants, factories,
warehouses, storage facilities, buildings, works, structures, fixtures,
landings, construction in progress, improvements, betterments,
installations, and additions constructed, erected, or located on or
attached or affixed to the Owned Real Property.
(d) Realty Rights. All tenements, hereditaments, easements,
rights-of-way, rights, licenses, patents, rights of ingress and egress,
reversionary interests, privileges, and appurtenances belonging,
pertaining, or relating to the Owned Real Property, any and all rights
to the present or future use of wastewater, wastewater capacity,
drainage, water, or other utility facilities relating to the Owned Real
Property, including without limitation all reservations of or
commitments or letters covering any such use in the future, whether now
owned or hereafter acquired, and the entire right, title, and interest
of Seller, if any, in, to, and under all streets, ways, alleys,
passages, strips, gores, pipes, pipelines, sewers, sewer rights,
ditches, waters, water courses, water rights and powers, air rights,
railroad sidings, minerals, mineral rights, and mineral interests
adjoining, upon, above, in, under, or pertaining to the Owned Real
Property, all options and rights to purchase or otherwise acquire real
property that is adjacent to or nearby the Owned Real Property, and all
claims or demands whatsoever of Seller, either in law or in equity, with
respect to the Owned Real Property, including without limitation any
unpaid awards to be made relating thereto, including any unpaid awards
or damages payable by reason of damage thereto or by reason of a
widening of any adjoining streets or roads or a changing of the grade
with respect to same. The Owned Real Property is sometimes hereinafter
referred to collectively as the "Real Property".
(e) [Intentionally omitted.]
(f) Vehicles. All the trucks, trailers, and other certificated
vehicles described on Schedule 1.1(f).
(g) Furniture and Equipment. All furniture, equipment,
machinery, materials, vehicles, rolling stock, apparatus, tools, dies,
implements, appliances, spare parts, supplies, and other tangible
personal property of every kind, character, and description (other than
the vehicles referred to in Section 1.1(f) and the inventories referred
to in Section 1.1(h)) owned by Seller and located on, or used at or
primarily in connection with, or in route to, the Real Property, or used
primarily in connection with the Business, as of the Closing;
(h) Inventories. All of Seller's inventories located on, or
used at or primarily in connection with, or in route to, the Real
Property, or used primarily in connection with the Business, as of the
Closing, including without limitation finished goods, work-in-process,
raw materials, supply inventories, and other inventories.
(i) Computers. All of Seller's computer equipment and hardware,
including without limitation all central processing units, terminals,
disk drives, software, tape drives, electronic memory units, printers,
keyboards, screens, peripherals (and other input/output devices), modems
and other communication controllers, and any and all parts and
appurtenances thereto, located on, or used at or primarily in connection
with,
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the Real Property, or used primarily in connection with the Business, as
of the Closing, and specifically including without limitation the
computer equipment and hardware described on Schedule 1.1 (i).
(j) Accounts Receivable. All accounts receivable of Seller and
all other rights of Seller to payment for goods sold or leased or for
services rendered, arising in the ordinary course of the operation of
the Business, including without limitation those which are not evidenced
by instruments or chattel paper, whether or not earned by performance or
written off or reserved against as a bad debt or doubtful account in any
financial statements; together with all instruments and documents of
title representing any of the foregoing, all rights in any merchandise
or goods which any of the same represent, and all rights, title,
security, and guaranties in favor of Seller with respect to any of the
foregoing, including without limitation any right of stoppage in
transit.
(k) Intellectual Property. All of Seller's rights in
Intellectual Property relating to, or used in connection with the
operation of, the Business, including without limitation the
Intellectual Property described on Schedule 1.1(k), and all rights to
recover for infringement thereon.
(l) Corporate Name. All right, title, and interest of Seller in
and to the name "Central Texas Equipment Co." and any derivatives
thereof, together with any goodwill associated with such name.
(m) Permits. All right, title, and interest of Seller in, to,
and under all assignable or transferable Permits relating to, or used in
connection with the operation of, the Business or relating to the
construction, use, operation, or enjoyment of the Assets, including
without limitation the Permits described on Schedule 1.1(m).
(n) Personal Property Leases. All right, title, and interest of
Seller in, to, and under the personal property leases described on
Schedule 1.1(n), and all rights (including rights of refund and offset),
privileges, deposits, claims, causes of action, and options in favor of
Seller relating or pertaining to such leases or any thereof.
(o) Contracts. All right, title, and interest of Seller in, to
and under the contracts and agreements described on Schedule 1.1(o), and
all rights (including rights of refund and offset), privileges,
deposits, claims, causes of action, and options in favor of Seller
relating or pertaining to such contracts and agreements or any thereof.
(p) Prepaid Expenses. All right, title, and interest of Seller
in and to all prepaid rentals and other prepaid expenses arising from
payments made by Seller in the ordinary course of the operation of the
Business prior to the close of business on the Closing Date for goods or
services where such goods or services have not been received by Seller
by the close of business on the Closing Date.
(q) Backlog Orders. All Seller's backlog of orders for products
manufactured or sold by Seller in the ordinary course of the Business,
which are (i) accepted by
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Seller in the ordinary course of the Business prior to the Closing or
(ii) listed in Schedule 1.1(q) and, in each case, not invoiced or
shipped prior to the Closing.
(r) Books and Records. All books, records, papers, and
instruments of Seller of whatever nature and wherever located that
relate to the Assets or the operation of the Business, including without
limitation all financial and accounting records and all books and
records relating to employees, the purchase of materials, supplies, and
services, product research and development, the leasing or sale of
products, and dealings with customers, vendors, and suppliers of the
Business, and including computerized books and records and other
computerized storage media and the software (including documentation and
object and source codes) used in connection therewith, provided that
Seller shall be entitled to retain copies of any such books and records
that are necessary for its tax, accounting, or legal purposes.
(s) Customer and Supplier Data. All customer lists and customer
data, vendor lists and vendor data, supplier lists and supplier data,
and sales and promotional material and other sales-related material
relating to, or used in connection with the operation of, the Business.
(t) Surveys, Maps, and Diagrams. All surveys, maps, and
building and machinery diagrams and plans of Seller relating to the
Assets.
(u) Bonds and Deposits. All right, title, and interest of
Seller in and to all transferable bonds, deposits, and financial
assurance requirements made by Seller or its predecessors in title (or
its or their agents) with any Governmental Entity, utility company, or
other person relating to the construction, use, operation, or enjoyment
of the Assets or the Business.
(v) Other Rights. All rights, claims, and causes of action of
Seller against third parties (including Seller's predecessors in title
to the Assets) in respect of the Business or the Assets, including
without limitation insurance claims, unliquidated rights under
manufacturers' and vendors' warranties, rights of recovery, set offs,
and credits, except to the extent such rights, claims and causes of
action relate to a matter for which Seller is liable under this
Agreement.
(w) Warranty Claims. All rights, claims, and causes of action
of Seller under or pursuant to all warranties, representations,
indemnifications, hold harmless provisions, and guarantees made by
suppliers, licensors, manufacturers, contractors, and others (including
Seller's predecessors in title to the Assets) in respect of the Business
or the Assets, except to the extent such rights, claims and causes of
action relate to a matter for which Seller is liable under this
Agreement.
(x) Goodwill. All goodwill associated with, and the going
concern value of, the Business.
All the assets and properties being transferred to Buyer pursuant to this
Agreement are collectively referred to herein as the "Assets". The global
nature of the descriptions of the
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Assets in Sections 1.1(c), (d), (e), (k), (p), (t), (u), (v) and (w) above does
not imply a representation or warranty that Seller necessarily owns all of the
items included in such global descriptions.
1.2 Excluded Assets. Notwithstanding any provision contained in this
Agreement to the contrary, the following assets and properties of Seller shall
be excluded from the Assets to be transferred to Buyer hereunder:
(a) the assets and properties of Seller described on Schedule
1.2;
(b) all cash and cash equivalents, marketable securities, and
other investments;
(c) any Assets sold or otherwise disposed of by Seller in the
ordinary course of the operation of the Business and not in violation of
the provisions of this Agreement during the period commencing on the
date of this Agreement and ending on the Closing Date;
(d) the articles of incorporation and bylaws of Seller and all
minutes, capital stock ledgers, corporate seals, and other similar
corporate instruments of Seller;
(e) any rights of Seller under or pursuant to contracts and
agreements not assumed by Buyer pursuant to Section 1.7; and
(f) all rights of Seller under or pursuant to this Agreement.
1.3 Instruments of Conveyance. In order to effectuate the transfer of
the Assets contemplated by Section 1.1, at the Closing, Seller shall execute
and deliver, or cause to be executed and delivered, to Buyer, dated the Closing
Date, all such general warranty deeds (in recordable form), bills of sale,
certificates of title, and other documents or instruments of assignment,
transfer, or conveyance as Buyer shall reasonably deem necessary or appropriate
to vest in or confirm to Buyer good and indefeasible title to the Assets, free
and clear of all Encumbrances other than the Permitted Encumbrances.
1.4 Purchase Price and Payment. In consideration of the transfer by
Seller to Buyer of the Assets, in addition to the assumption of the Assumed
Liabilities, and subject to adjustment pursuant to Section 1.5 below, at the
Closing Buyer shall pay to Seller the aggregate purchase price of Five Million
Two Hundred Seventy Thousand Six Hundred Twelve Dollars ($5,270,612.00) (the
"Purchase Price"). The Purchase Price shall be paid by (a) Buyer's payment to
Seller of Two Million Six Hundred Thirty-Five Thousand Three Hundred Six
Dollars ($2,635,306.00) in cash in immediately available funds by confirmed
wire transfer to a bank account to be designated by Seller (such designation to
occur no later than the third business day prior to the Closing Date) (such
payment, the "Cash Portion of the Purchase Price"), and (b) Buyer's delivery to
Seller of shares of Buyer's Common Stock, par value $0.01 per share, the number
of which shares (the "Buyer Shares") to be equal to $2,635,306.00 divided by
the "Current Market Price" of the Common Stock. For purposes of the foregoing,
(i) the "Current Market Price" of the Common Stock shall mean $20.50 per
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share. In the event the foregoing formula would result in the issuance of a
fractional share of Common Stock to Seller, Buyer shall pay Seller cash at the
Closing in lieu of such fractional share.
1.5 Adjustment of Purchase Price.
(a) The Purchase Price to be paid at Closing under Section 1.4
(before adjustment) is based in part on the aggregate balance reported
on Schedule 1.5(a) (the "Pre-Closing Statement") which represents the
net working capital, debt and equipment of Seller for the purposes of
this agreement ("Net Working Capital, Debt and Equipment"). The amounts
reflected in Schedule 1.5(a) are (i) the agreed upon value of equipment
of the Seller as of April 24, 1998; (ii) the agreed upon value of parts
inventory of the Seller as of December 31, 1997; and (iii) Seller's good
faith estimate of the accounts receivable, certain accrued expenses and
liabilities as recorded on the books and records of Seller as of April
30, 1998. The Cash Portion of the Purchase Price will be adjusted
(either up or down) based on the aggregate net change in the Net Working
Capital, Debt and Equipment as of the Closing Date. The Net Working
Capital, Debt and Equipment reflected on the Pre-Closing Statement will
be adjusted as follows:
(x) The amount allocated to equipment will be adjusted by
deducting the value of equipment reflected on the Pre-Closing
statement which is sold or disposed of prior to the Closing Date,
and by adding Seller's cost (including freight) of equipment
acquired prior to the Closing Date.
(y) The accounts receivable, accrued expenses and
liabilities will be adjusted to equal the amount of accounts
receivable and liabilities as of the Closing Date, calculated in
accordance with GAAP.
(z) The amount of parts inventory will not be adjusted
unless Buyer conducts (at Buyer's expense) an inventory of the
parts inventory (in which Seller may participate) and the actual
cost of parts on hand on the Closing date differs from the value
thereof on the Pre-Closing Statement by 15%, or more, in which
case the amount of the actual inventory will be utilized.
If, upon completion of the procedures set forth in Section 1.5(b) below,
it is finally determined that (i) the Net Working Capital, Debt and
Equipment as of the Closing Date is greater than the Net Working
Capital, Debt and Equipment as shown on the Pre-Closing Statement, then
the Cash Portion of the Purchase Price shall be increased by the amount
of such difference in cash, and Buyer shall pay to Seller the amount of
such difference within ten (10) days after such final determination, or
(ii) the Net Working Capital, Debt and Equipment as of the Closing Date
is less than the Net Working Capital, Debt and Equipment as shown on the
Pre-Closing Statement, then the Cash Portion of the Purchase Price shall
be decreased by the amount of such difference, and Seller shall pay to
Buyer the amount of such difference in cash within ten (10) days after
such final determination.
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(b) Within sixty (60) days after the Closing, Buyer will prepare
and deliver to Seller a statement of the Net Working Capital, Debt and
Equipment as of the close of business on the Closing Date (the "Closing
Statement"), which statement shall be prepared in accordance with
Sections 1.5(a)(x), 1.5(a)(y) and 1.5(a)(z). If, within thirty (30)
days following delivery of the Closing Statement to Seller, Seller has
not given Buyer notice of its objection to the Closing Statement (such
notice must contain a detailed statement of the basis of Seller's
objection), then the Net Working Capital, Debt and Equipment reflected
in the Closing Statement will be used in computing the adjustment to the
Cash Portion of the Purchase Price. If Seller gives Buyer such notice
of objection and the parties are unable to resolve the subject of such
objection within fifteen (15) days after such notice, then the issues in
dispute will be submitted to Coopers & ▇▇▇▇▇▇▇, LLP, certified public
accounts (the "Accountants"), for resolution with instructions to the
Accountants to resolve such dispute within forty-five (45) days. If
issues in dispute are submitted to the Accountants for resolution (i)
each party will furnish to the Accountants such work papers and other
documents and information relating to the disputed issues as the
Accountants may request and are available to that party; (ii) the
determination by the Accountants, as set forth in a notice delivered to
both parties by the Accountants, will, in the absence of fraud, be
binding and conclusive on the parties; and (iii) Buyer and Seller will
each bear 50% of the fees and expenses of the Accountants for such
determination. The final determination of the Net Working Capital, Debt
and Equipment as of the close of business on the Closing Date shall
occur on the earliest of (A) thirty (30) days after delivery of the
Closing Statement to Seller without objection, (B) written agreement of
Seller and Buyer to the Closing Statement or any modification thereof,
or (C) written determination by the Accountants.
1.6 Allocation of Purchase Price. The Purchase Price shall be
allocated among the Assets as set forth on Schedule 1.6. Seller and Buyer shall
report the transactions contemplated hereby on all Tax Returns (including
information returns and supplements thereto required to be filed by the parties
under Section 1060 of the Code) in a manner consistent with such allocation.
1.7 Liabilities Assumed by Buyer. As further consideration for the
transfer of the Assets to Buyer, Buyer agrees, upon the terms and subject to
the conditions set forth herein, to assume, at the Closing, and thereafter to
pay, perform, and discharge, the following liabilities and obligations of
Seller (but only such liabilities and obligations):
(a) all liabilities and obligations of Seller set forth on the
Closing Statement to the extent so set forth (excluding liabilities for
income taxes);
(b) all obligations of Seller to pay the principal of and
accrued interest on and to perform the obligations under the
indebtedness of Seller described in the Pre-Closing Statement; and
(c) all obligations of Seller accruing from and after the
Closing Date under the leases, contracts, and agreements described in
Schedules 1.1(e), 1.1(n) 1.1(o) and 1.1(q).
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All the liabilities and obligations being assumed by Buyer pursuant to this
Section are collectively referred to herein as the "Assumed Liabilities".
1.8 Liabilities Not Assumed by Buyer. Buyer shall not assume or take
title to the Assets subject to, or in any way be liable or responsible for, any
liabilities or obligations of Seller (whether or not referred to in any
Schedule or Exhibit hereto), except as specifically provided in Section 1.7, it
being expressly acknowledged that it is the intention of the parties hereto
that all liabilities and obligations that Seller has or may have in the future
(whether accrued, absolute, contingent, unliquidated, or otherwise, whether or
not known to Seller, and whether due or to become due), other than the Assumed
Liabilities, shall be and remain the liabilities and obligations of Seller.
Without limiting the generality of the foregoing, Buyer shall not assume or
take title to the Assets subject to, or in any way be liable or responsible
for: (a) the liabilities and obligations of Seller described on Schedule 1.8;
(b) any liabilities and obligations of Seller in respect of the claims or
Proceedings described on Schedule 1.8; (c) any liabilities and obligations of
Seller relating to the excluded assets described in Section 1.2; (d) any
liability or obligation of Seller in respect of any express or implied
representation, warranty, agreement, or guaranty made (or claimed to have been
made) by Seller, or imposed (or asserted to be imposed) by operation of law, in
respect of any products or equipment leased, produced, distributed, or sold by
Seller in connection with the Business on or prior to the Closing Date; (e) any
liability or obligation of Seller existing at or arising after the Closing Date
under any leases, contracts, agreements, or Permits included in the Assets
which results from the breach, default, or wrongful action or inaction of
Seller prior to the close of business on the Closing Date; (f) any liability or
obligation of Seller resulting from or relating to the employment relationship
between Seller and any of Seller's present or former employees engaged in
connection with the ownership or operation of the Assets or the termination of
any such employment relationship, including without limitation severance pay
and other similar benefits, if any, and any claims filed on or prior to the
Closing Date or which may thereafter be filed by or on behalf of any such
present or former employee relating to the employment or termination of
employment of any such employee by Seller, including without limitation any
claim for wrongful discharge, breach of contract, unfair labor practice,
employment discrimination, unemployment compensation, or workers' compensation;
(g) any liability or obligation of Seller in respect of any agreement, trust,
plan, fund, or other arrangement under which benefits or employment is provided
for any of Seller's present or former employees engaged in connection with the
ownership or operation of the Assets; or (h) any income Tax liabilities or
deficiencies, whether federal, state, or local, and any ad valorem property
Taxes, in each such case to the extent applicable to periods ending on or prior
to the Closing Date, except for ad valorem taxes for the period prior to the
Closing Date included in the Assumed Liabilities. For purposes of this
Section, references to Seller shall include its predecessors in title.
ARTICLE II
CLOSING
The closing of the transactions contemplated hereby (the "Closing")
shall take place (i) at the offices of ▇▇▇▇▇, Vine & Perry, P.C. in Austin,
Texas at 9:00 a.m., local time, on April 30, 1998 or (ii) at such other time or
place or on such other date as the parties hereto
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shall agree. The date on which the Closing is required to take place is herein
referred to as the "Closing Date". All Closing transactions shall be deemed to
have occurred simultaneously. The Closing shall be deemed to be effective for
accounting purposes as of the close of business on the Closing Date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
SELLER AND THE SHAREHOLDERS
Seller and each Shareholder jointly and severally represent and warrant
to Buyer that:
3.1 Corporate Organization. Seller is a corporation duly organized,
validly existing, and in good standing under the laws of the jurisdiction of
its incorporation and has all requisite corporate power and corporate authority
to own, lease, and operate the Assets and to carry on the Business as now being
conducted. No actions or proceedings to dissolve Seller are pending.
3.2 Qualification. Seller is duly qualified or licensed to do business
as a foreign corporation and is in good standing in each of the jurisdictions
set forth on Schedule 3.2, which are all the jurisdictions in which it owns,
leases, or operates the Assets or in which such qualification or licensing is
required for the conduct of the Business.
3.3 Authority Relative to This Agreement. Seller and each Shareholder
have full power and corporate authority to execute, deliver, and perform this
Agreement and the Ancillary Documents to which each is a party and to
consummate the transactions contemplated hereby and thereby. The execution,
delivery, and performance by Seller and Each Shareholder of this Agreement and
the Ancillary Documents to which each is a party, and the consummation by each
of them of the transactions contemplated hereby and thereby, have been duly
authorized by all necessary action. This Agreement has been duly executed and
delivered by Seller and each Shareholder and constitutes, and each Ancillary
Document executed or to be executed by them has been, or when executed will be,
duly executed and delivered by Seller and constitutes, or when executed and
delivered will constitute, a valid and legally binding obligation of each such
party, enforceable against such party in accordance with their respective
terms, except that such enforceability may be limited by (i) applicable
bankruptcy, insolvency, reorganization, moratorium, and similar laws affecting
creditors' rights generally and (ii) equitable principles which may limit the
availability of certain equitable remedies (such as specific performance) in
certain instances.
3.4 Noncontravention. The execution, delivery, and performance by
Seller and each Shareholder of this Agreement and the Ancillary Documents to
which each is a party and the consummation by each of them of the transactions
contemplated hereby and thereby do not and will not (i) conflict with or result
in a violation of any provision of the charter or bylaws of Seller, (ii) except
as set forth in Schedule 3.4, conflict with or result in a violation of any
provision of, or constitute (with or without the giving of notice or the
passage of time or both) a default under, or give rise (with or without the
giving of notice or the passage of time or both) to any right of termination,
cancellation, or acceleration under, or require any consent,
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approval, authorization, or waiver of, or notice to, any party to, any bond,
debenture, note, mortgage, indenture, lease, contract, agreement, or other
instrument or obligation to which Seller or any Shareholder is a party or by
which Seller, any Shareholder, the Business, or any of the Assets may be bound
or any Permit held by Seller or the Business, (iii) result in the creation or
imposition of any Encumbrance upon any of the Assets, or (iv) assuming
compliance with the matters referred to in Section 3.5, violate any Applicable
Law binding upon Seller, any Shareholder, the Business, or any of the Assets,
except, in the case of clause (ii) above, for (A) such consents, approvals,
authorizations, and waivers that have been obtained and are unconditional and
in full force and effect and such notices that have been duly given and (B)
such consents, approvals, authorizations, waivers, and notices that are
disclosed on Schedule 3.4. Buyer understands, and accepts the risk that the
manufacturers have the right to elect not to continue to do business with Buyer
after the Closing. Seller will use commercially reasonable efforts to assist
Buyer's efforts to maintain those relationships, but will have no liability if
any of those relationships are terminated after the Closing.
3.5 Governmental Approvals. No consent, approval, order, or
authorization of, or declaration, filing, or registration with, any
Governmental Entity is required to be obtained or made by Seller in connection
with the execution, delivery, or performance by Seller of this Agreement and
the Ancillary Documents to which it is a party or the consummation by it of the
transactions contemplated hereby or thereby, other than (i) as set forth on
Schedule 3.5; and (ii) filings with Governmental Entities to occur in the
ordinary course following the consummation of the transactions contemplated
hereby.
3.6 Exclusive Operation of Business. Seller does not have any direct
or indirect equity or ownership interest in any corporation, partnership, joint
venture, or other entity which is involved, directly or indirectly, in the
conduct of the Business, and the Business is conducted solely and exclusively
by Seller.
3.7 Title to Assets. Except as set forth below, Seller is the owner
of, and has good and indefeasible title to, all the Assets, free and clear of
all Encumbrances other than the Permitted Encumbrances. Upon Seller's transfer
of the Assets to Buyer pursuant to this Agreement, Buyer will have good and
indefeasible title to all the Assets, free and clear of all Encumbrances other
than the Permitted Encumbrances. Except as disclosed on Schedule 3.7, no
financing statement (or other instrument sufficient or effective as a financing
statement) under the Uniform Commercial Code with respect to any of the Assets
has been filed and is effective in any jurisdiction, and Seller has not signed
any such financing statement (or other instrument) or any mortgage or security
agreement authorizing any secured party thereunder to file any such financing
statement (or other instrument). The representations and warranties in this
Section 3.7 are qualified as follows: (a) NationsBank and ▇. ▇. ▇▇▇▇ have liens
on the Owned Real Property to secure indebtedness payable to them; (b)
NationsBank, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ and ▇. ▇. ▇▇▇▇ have security interests in equipment
financed by them; and (c) the items of equipment on the Pre-Closing Statement
marked with an asterisk are subject to lease purchase agreements, and other
items of equipment are subject to rental agreements.
3.8 Financial Statements. Seller has delivered to Buyer accurate and
complete copies of (i) Seller's audited balance sheet as of December 31, 1997
and the related audited statements of income, stockholders' equity, and cash
flows for the year then ended, and the
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notes and schedules thereto, together with the unqualified report thereon
(except as to Seller's employee pension plan) of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co., P.C.,
independent public accountants (the "Audited Financial Statements"), and (ii)
Seller's compiled balance sheet as of February 28, 1998 (the "Latest Balance
Sheet"), and the related compiled statements of income and stockholders' equity
for the two-month period then ended (the "Unaudited Financial Statements"),
certified by Seller's chief financial officer (collectively, the "Financial
Statements"). The Financial Statements (i) represent actual bona fide
transactions, (ii) have been prepared from the books and records of Seller in
conformity with GAAP, except that the Unaudited Financial Statements are not
accompanied by notes or other textual disclosure required by GAAP, and (iii)
accurately, completely, and fairly present Seller's financial position as of
the respective dates thereof and its results of operations and cash flows for
the periods then ended in all material respects. The statements of income
included in the Financial Statements do not contain any items of special or
nonrecurring income, and the balance sheets included in the Financial
Statements do not reflect any write-up or revaluation increasing the book value
of any assets, nor have there been any transactions since [December 31, 1997]
giving rise to special or nonrecurring income or any such write-up or
revaluation.
3.9 Liabilities. Except as otherwise expressly disclosed in this
Agreement or any Schedule hereto, Seller has no liabilities or obligations
(whether accrued, absolute, contingent, unliquidated, or otherwise, whether or
not known to Seller, and whether due or to become due), except (i) liabilities
reflected on the Latest Balance Sheet, (ii) liabilities described in the notes
accompanying the Audited Financial Statements, (iii) liabilities which have
arisen since the date of the Latest Balance Sheet in the ordinary course of
business (none of which is a material liability for breach of contract, breach
of warranty, tort, or infringement), (iv) liabilities arising under executory
contracts entered into in the ordinary course of business (none of which is a
material liability for breach of contract), and (v) liabilities specifically
set forth on Schedule 3.9.
3.10 Absence of Certain Changes. Except as disclosed on Schedule 3.10,
since December 31, 1997 (i) there has not been any material adverse change in,
or any event or condition that might reasonably be expected to result in any
material adverse change in, the business, assets, results of operations,
condition (financial or otherwise), or prospects of the Business or the
ownership or operation of the Assets or any material portion thereof; (ii) the
Business has been conducted only in the ordinary course consistent with past
practice; (iii) Seller has not, in respect of the Business, incurred any
material liability, engaged in any material transaction, or entered into any
material agreement outside the ordinary course of business consistent with past
practice; (iv) Seller has not suffered any material loss, damage, destruction,
or other casualty to any of the Assets (whether or not covered by insurance);
and (v) Seller has not, in respect of the Business, taken any of the actions
set forth in Section 5.2 except as permitted thereunder.
3.11 Tax Matters. Except as disclosed on Schedule 3.11, Seller has
(and as of the Closing Date will have) (i) duly filed all federal, state,
local, and foreign Tax Returns required to be filed by or with respect to it
with the IRS or other applicable Taxing authority, (ii) paid, or adequately
reserved against in the Financial Statements, all Taxes due, or claimed by any
Taxing authority to be due, from or with respect to it, except Taxes that are
being contested in good faith by appropriate legal proceedings and for which
adequate reserves have been set
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aside as disclosed on Schedule 3.11, and (iii) made all deposits required with
respect to Taxes. There is and has been no issue raised or adjustment proposed
(and none is pending) by the IRS or any other Taxing authority in connection
with any Tax Returns relating to the Assets or the operation of the Business.
No waiver or extension of any statute of limitations as to any federal, state,
local, or foreign Tax matter relating to the Assets or the operation of the
Business has been given by or requested from Seller. Seller has not filed a
consent under Section 341(f) of the Code.
3.12 Compliance With Laws. Except as disclosed on Schedule 3.12,
Seller has complied in all material respects with all Applicable Laws relating
to the ownership or operation of the Assets or the operation of the Business
(including without limitation Applicable Laws relating to securities,
properties, business products, advertising and sales practices, employment
practices, terms and conditions of employment, wages and hours, safety,
occupational safety, health, environmental protection, product safety, and
civil rights), and Seller has not received any written notice, which has not
been dismissed or otherwise disposed of, that Seller has not so complied.
Except as disclosed on Schedule 3.12, Seller is not charged or, to the best
knowledge of Seller, threatened with or under investigation with respect to,
any violation of any Applicable Law relating to any aspect of the ownership or
operation of the Assets or the operation of the Business.
3.13 Legal Proceedings. There are no Proceedings pending or, to the
best knowledge of Seller, threatened against or involving Seller relating to
the Assets or the operation of the Business, except (i) as disclosed on
Schedule 3.13, (ii) for any Proceedings that pertain to routine claims by
persons other than Governmental Entities that are covered by insurance (subject
to applicable insurance deductibles), and (iii) for minor product warranty
claims arising in the usual and ordinary course of the Business for repair of
products manufactured or sold by Seller which in the aggregate may be satisfied
at nominal cost to Seller. Except as disclosed on Schedule 3.13, any and all
potential liability of Seller under such Proceedings is adequately covered
(except for standard deductible amounts) by the existing insurance maintained
by Seller described in Section 3.27. No judgment, order, writ, injunction, or
decree of any Governmental Entity has been issued or entered against Seller or
any of its affiliates which continues to be in effect with respect to or
affecting the Assets or the operation of the Business. Neither Seller nor any
of its affiliates is subject to any judgment, order, writ, injunction, or
decree of any Governmental Entity which has had or is reasonably likely to have
a Material Adverse Effect or which is reasonably likely to result in a material
adverse change in the Assumed Liabilities. There are no Proceedings pending
or, to the best knowledge of Seller, threatened seeking to restrain, prohibit,
or obtain damages or other relief in connection with this Agreement or the
transactions contemplated hereby.
3.14 Sufficiency and Condition of Assets. The Assets (i) constitute
all the assets and properties used or held for use in connection with the
operation of the Business and (ii) except for contemplated additions of
inventory in the ordinary course of the Business, constitute all the assets and
properties the use or benefit of which are reasonably necessary for the
operation of the Business as currently conducted and as presently proposed to
be conducted. All the Assets are (i) in the case of tangible assets and
properties, in good operating condition and repair (ordinary wear and tear
excepted) and have been maintained in accordance with standard industry
practice, (ii) suitable for the purposes used, and (iii) adequate and
sufficient for the
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normal operation of the Business, as presently conducted. Seller owns or has a
valid leasehold interest in, or otherwise has a valid right to use, all the
Assets. To the best knowledge of Seller, the Assets and their uses conform to
all Applicable Laws.
3.15 Real Property.
(a) The Real Property is all the real property owned by Seller and used
or held for use in connection with the operation of the Business. There are no
persons (other than Seller) in possession of any portion of the Real Property
as lessees, tenants at sufferance, or trespassers, nor does any person (other
than Seller) have a lease, tenancy, or other right of occupancy or use of any
portion of the Real Property. The Real Property has full and free access to
and from public highways, streets, and roads, and Seller has no knowledge of
any pending or threatened Proceeding or any other fact or condition which would
limit or result in the termination of such access. There exists no Proceeding
or court order, or building code provision, deed restriction, or restrictive
covenant (recorded or otherwise), or other private or, to the best of Seller's
knowledge, public limitation, which might in any way impede or adversely affect
the continued use of the Real Property by Seller in the manner it is currently
used.
(b) All buildings, improvements, and fixtures situated on the Real
Property conform to all Applicable Laws. All the Real Property is zoned for
the various purposes for which such Real Property is being used, and there
exists no pending or, to the best knowledge of Seller, threatened Proceeding
which might adversely affect the validity of such zoning.
(c) The Real Property is connected to and serviced by water, sewage
disposal, gas, telephone, and electric facilities which are adequate for the
current use of the Real Property and, to the best knowledge of Seller, are in
compliance with all Applicable Laws. All public utilities required for the
operation of the Real Property enter the Real Property through adjoining public
streets or, if they pass through adjoining private land, do so in accordance
with valid public easements, and all utility lines and mains located on the
Real Property have been properly dedicated to, and are serviced and maintained
by, the appropriate public or quasi-public entity.
(d) The buildings, improvements, and fixtures situated on the Real
Property are in good condition and repair (excepting ordinary wear and tear and
minor maintenance and repair problems which would normally be associated with
such assets when used in connection with the operation of the Business), free
of any latent or patent structural defects.
(e) Neither the whole nor any part of the Real Property is subject to
any pending Proceeding for condemnation or other taking by any Governmental
Entity, and, to the best knowledge of Seller, no such condemnation or other
taking is contemplated or threatened.
(f) There are no unpaid charges, debts, liabilities, claims, or
obligations arising from the construction, occupancy, ownership, use, or
operation of the Real Property, or the buildings, improvements, or fixtures
situated thereon, or the business operated thereon, which could give rise to
any mechanic's or materialmen's or other statutory lien against the Real
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Property, or the buildings, improvements, or fixtures situated thereon, or any
part thereof, or for which Seller will be responsible, except for ad valorem
taxes not yet due and payable.
(g) To the best of Seller's knowledge, the Real Property is not within
any area determined by the Department of Housing and Urban Development to be
flood prone under the Federal Flood Disaster Protection Act of 1973, except a
portion of the Real Property is within an area determined by the Department of
Housing and Urban Development to be flood prone under the Federal Flood
Disaster Protection Act, as reflected on the survey of the Real Property by
▇▇▇▇▇ ▇. ▇▇▇▇▇ of ▇▇▇▇▇ ▇▇▇▇▇▇ Surveyors, Inc. dated April 16, 1998.
(h) Seller has delivered or made available to Buyer accurate and
complete copies of all title insurance policies, title reports, other title
documents, surveys, certificates of occupancy, and Permits in the possession of
Seller relating to the Real Property or the buildings, improvements, or
fixtures situated thereon.
(i) Seller is not a "foreign person" within the meaning of Sections
1445 and 7701 of the Code.
3.16 Tangible Personal Property. Set forth on Schedule 3.16 is a list,
as of the dates indicated on such schedule, of all furniture, equipment,
machinery, computer hardware, materials, motor vehicles, rolling stock,
apparatus, tools, implements, appliances, and other tangible personal property
(other than spare parts, supplies, and inventories) owned or leased by Seller
and used or held for use in connection with the operation of the Business,
except for items having a value individually of less than $1,000 which do not,
in the aggregate, have a value exceeding $10,000. Except as set forth on
Schedule 3.16, the motor vehicles and rolling stock owned or leased by Seller
and used in connection with the operation of the Business are utilized solely
for the transportation by Seller, for its own account and not for the account
of others, of inventories, supplies, and other items relating to the operation
of the Business, and such activities do not require the obtainment of any
Permit.
3.17 Leased Property. Set forth on Schedule 3.17 is a list of all
leases under which Seller is the lessee or lessor of real or personal property
used or held for use in connection with the operation of the Business. Seller
has good and valid leasehold interests in all such properties held by it under
lease. Seller has been in peaceable possession (or remedied any claims
relating thereto) of the property covered by each such lease since the
commencement of the original term of such lease where Seller is the lessee. To
the best of Seller's knowledge, with respect to leases where the Seller is the
lessor, the lessee under such lease has been in peaceable possession (or
remedied any claims relating thereto) of the property covered by each such
lease since the commencement of the original term of such lease. No waiver,
indulgence, or postponement of Seller's obligations under any such lease has
been granted by the lessor or the lessee, or of the lessor's or lessee's
obligations thereunder by Seller. Seller is not in breach of or in default
under, nor has any event occurred which (with or without the giving of notice
or the passage of time or both) would constitute a default by Seller under, any
of such leases, and Seller has not received any notice from, or given any
notice to, any lessor or lessee indicating that Seller or such lessor or lessee
is in breach of or in default under any of such leases. To the best knowledge
of Seller, none of the lessors or lessees under any of such leases is in breach
thereof or in default thereunder.
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3.18 Inventory. Except as set forth in Schedule 3.18, all inventory of
equipment, parts and supplies included in the Assets is in good condition and
is merchantable, or suitable and usable for sale in the ordinary course of the
Business as first quality goods at normal ▇▇▇▇-ups. No material part of such
inventory is obsolete, discontinued, returned, damaged, overage, or of below
standard quality or merchantability, except for items that have been written
down to realizable market value. Each item of such inventory is reflected in
Seller's books and records on the basis of a complete physical count and is
valued at the lower of cost, on a first-in, first-out basis, or market in
accordance with GAAP. The present quantity of such inventory is sufficient to
serve adequately the customers of the Business in the ordinary course. Seller
also maintains sufficient inventories of spare and replacement parts to meet
any repair and replacement obligations in the ordinary course of the Business,
under applicable warranties or otherwise. This Section 3.18 is qualified in
its entirety by the matters set forth in Schedule 3.18 hereto.
3.19 Receivables. All receivables of Seller generated by the Business
as reflected on the Latest Balance Sheet or arising since the date thereof are
valid obligations of the respective makers thereof, have arisen in the ordinary
course of the Business for goods or services delivered or rendered, are not
subject to any valid defenses, counterclaims, or set offs, and have been
collected or are collectible in full at their recorded amounts in the ordinary
course of the Business without resort to litigation or other extraordinary
collection efforts, net of all cash discounts and doubtful accounts as
reflected on the Latest Balance Sheet (in the case of receivables so reflected)
or on the books of Seller (in the case of receivables arising since the date
thereof). Seller will not be deemed to be in breach of the foregoing
representations with any receivable to the extent Seller has purchased such
receivable pursuant to Section 6.7 below.
3.20 Intellectual Property. Except for the trademarks, service marks,
and trade names set forth on Schedule 3.20, Seller does not own, hold, use, or
have pending any Intellectual Property in connection with the operation of the
Assets or the Business. Seller owns or has rights to use all trademarks,
service marks, and trade names, free from burdensome restrictions, that are
necessary for the operation of the Assets and the Business as presently
operated. Seller has not received any written notice or claim of any
infringement, violation, misuse, or misappropriation by Seller in connection
with the operation of the Assets or the Business of any Intellectual Property
owned or purported to be owned by any other person.
3.21 Permits. Set forth on Schedule 3.21 is a list of all Permits held
by Seller which relate to the Assets or the Business. Such Permits constitute
all the Permits necessary or required for the ownership and operation of the
Assets and the conduct of the Business. Each of such Permits is in full force
and effect, Seller is in compliance with all its obligations with respect
thereto, and, to the best knowledge of Seller, no event has occurred which
permits, or with or without the giving of notice or the passage of time or both
would permit, the revocation or termination of any thereof. Except as
disclosed on Schedule 3.21, no notice has been issued by any Governmental
Entity and no Proceeding is pending or, to the best knowledge of Seller,
threatened with respect to any alleged failure by Seller to have any Permit.
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3.22 Agreements. All material agreements, arrangements, and
understandings of any nature (written or oral, formal or informal)
(collectively, for purposes of this Section, "agreements") to which Seller is a
party or by which Seller is otherwise bound, regardless of amount or subject
matter, that relate to the Assets or the Business are listed on Schedules
1.1(n), 1.1(o), 1.1(q), and 1.5(a). Seller has delivered or made available to
Buyer accurate and complete copies of the agreements listed on such Schedules.
Each of such agreements is a valid and binding agreement of the parties
thereto, enforceable against them in accordance with its terms. No breach or
default exists with respect to any of such agreements, and no event has
occurred which, after the giving of notice or the passage of time or otherwise,
will result in any such breach or default.
3.23 ERISA. During the past five years, neither Seller nor any of its
affiliates have made or been required to make contributions to any
"multiemployer plan", as defined in Section 3(37) of ERISA. Seller and all the
affiliates of Seller have paid and discharged promptly when due all liabilities
and obligations arising under ERISA or the Code of a character which if unpaid
or unperformed might result in the imposition of a lien against any of the
Assets. For purposes of this Section only, an "affiliate" of any person means
any other person which, together with such person, would be treated as a single
employer under Section 414 of the Code.
3.24 Environmental Matters.
(a) Except as set forth in Schedule 3.24, to the best knowledge of
Seller and the Shareholders, Seller has not violated and is not in violation of
any Applicable Environmental Laws (as defined below) in connection with the
ownership or operation of the Assets or the operation of the Business.
(b) Seller is not subject to any existing, pending, or, to the best
knowledge of Seller and the Shareholders, threatened Proceeding under, or to
any remedial obligations under, any Applicable Environmental Laws in connection
with the ownership or operation of the Assets or the operation of the Business.
(c) To the best knowledge of Seller and the Shareholders, all Permits,
if any, required to be obtained by Seller under any Applicable Environmental
Laws in connection with the ownership or operation of the Assets or the
operation of the Business have been duly obtained and are in full force and
effect, and Seller is in compliance in all respects with the terms and
conditions of all such Permits.
(d) Except as set forth in Schedule 3.24, to the best knowledge of
Seller and the Shareholders, no hazardous materials (as defined below) have
been treated, stored, disposed, or released on, from, or to any of the Assets
under conditions that require remediation under Applicable Environmental Laws.
To the best knowledge of Seller and the Shareholders, no asbestos, material
containing asbestos that is or may become friable, or material containing
asbestos deemed hazardous by Applicable Environmental Laws, has been installed
in any of the Assets, but Seller has made no investigation or test to determine
the presence of absence of asbestos and, given the age of Seller's facilities,
there may be some present.
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(e) Seller has previously disclosed to Buyer all material information
in its possession or known by it relating to any potential loss, damage, or
expense (whether arising under any Applicable Environmental Laws or any actual
or alleged contractual obligations of Seller or based on any actual or alleged
injury to any person, including employees of Seller, or property) that may be
incurred arising from (i) the actual or alleged treatment, production,
manufacture or incorporation into any product, recycling, storage, disposal, or
release into the environment of any hazardous material by or on behalf of
Seller or (ii) the generation, treatment, storage, disposal, release,
transportation, or removal of any hazardous material by Seller.
(f) For purposes of this Agreement, "Applicable Environmental Laws"
means any and all Applicable Laws pertaining to health, safety, or the
environment in effect (currently or hereafter) in any and all jurisdictions in
which the Assets are located or in which Seller has conducted operations of the
Business, including, without limitation, the Clear Air Act, as amended, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
as amended, the Rivers and Harbors Act of 1899, as amended, the Federal Water
Pollution Control Act, as amended, the Occupational Safety and Health Act of
1970, as amended, the Resource Conservation and Recovery Act of 1976, as
amended, the Safe Drinking Water Act, as amended, the Toxic Substances Control
Act, as amended, the Superfund Amendments and Reauthorization Act of 1986, as
amended, the Hazardous Materials Transportation Act, as amended, the Texas
Water Code, the Texas Solid Waste Disposal Act, and other environmental
conservation or protection laws. For purposes of this Agreement, the term
"hazardous material" means (i) any substance which is listed or defined as a
hazardous substance, hazardous constituent, or solid waste pursuant to any
Applicable Environmental Laws and (ii) petroleum (including crude oil and any
fraction thereof), natural gas, and natural gas liquids.
(g) The representations and warranties contained in this Section would
continue to be true and correct following disclosure to the applicable
Governmental Entities of all relevant facts, conditions, and circumstances, if
any, pertaining to the Assets. However, in the absence of any inaccuracy in or
breach of the express representations and warranties contained in this Section
3.24, Seller has no liability to the Buyer Group (defined in Section 10.2) if
any remediation is required to the Real Property (including the improvements
thereon) under Applicable Environmental Laws, or if the Real Property
(including the improvements thereon) does not comply with Applicable
Environmental Laws.
3.25 Labor Relations.
(a) Except as disclosed on Schedule 3.25, (i) there are no collective
bargaining agreements or other labor union contracts applicable to any
employees of the Business to or by which Seller is a party or is bound, no such
agreement or contract has been requested by any employee or group of employees
of the Business, and no discussions have occurred with respect thereto by
management of Seller with any such employees; (ii) no employees of the Business
are represented by any labor organization, collective bargaining
representative, or group of employees; (iii) no labor organization, collective
bargaining representative, or group of employees claims to represent a majority
of the employees of the Business; (iv) Seller is not aware of or involved with
any representational campaign or other organizing activities by any
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union or other organization or group seeking to become the collective
bargaining representative of any of the employees of the Business; (v) Seller
is not obligated to bargain collectively with respect to wages, hours, and
other terms and conditions of employment with any recognized or certified labor
organization, collective bargaining representative, or group of employees
representing employees of the Business; and (vi) Seller is not aware of any
strikes, work stoppages, work slowdowns, or lockouts or any threats thereof by
or with respect to any employees of the Business, and since _________________,
there have been no labor disputes, strikes, work stoppages, work slowdowns,
lockouts, or similar matters involving any such employees.
(b) To the best of Seller's knowledge, Seller is in compliance with all
Applicable Laws pertaining to employment and employment practices and wages,
hours, and other terms and conditions of employment in respect of the employees
of the Business and has no accrued liability for any arrears of wages or any
Taxes or penalties for failure to comply with any thereof. Seller is not, in
respect of the Business or the employees thereof, engaged in any unfair labor
practices or unlawful employment practices. There is no pending or, to the
best knowledge of Seller, threatened Proceeding against or involving Seller by
or before, and Seller is not subject to any judgment, order, writ, injunction,
or decree of or inquiry from, the National Labor Relations Board, the Equal
Employment Opportunity Commission, the Department of Labor, or any other
Governmental Entity in connection with any current, former, or prospective
employee of the Business.
(c) Seller believes that its relations with the employees of the
Business are satisfactory.
3.26 Employees. Set forth on Schedule 3.26 is a list of the name,
social security number, and dates of employment by Seller of each employee of
the Business as of January 1, 1998, together with the position of each such
employee and the total amounts of salary, bonuses, and other compensation paid
or payable by Seller to each such employee for the current fiscal year and the
immediately preceding fiscal year.
3.27 Insurance. Seller maintains with sound and reputable insurers,
and there are currently in full force and effect, policies of insurance with
respect to the Assets and the Business against such casualties and
contingencies of such types and in such amounts as are customary for
corporations of similar size engaged in similar lines of business. All
premiums due and payable with respect to such policies have been timely paid.
No notice of cancellation of, or indication of an intention not to renew, any
such policy has been received by Seller. During the past three years, no
application by Seller for insurance with respect to any of the Assets or
operations of the Business has been denied for any reason.
3.28 Financial Requirements. Set forth on Schedule 3.28 is a list and
summary description of all bonds, deposits, financial assurance requirements,
and insurance coverage required to be submitted to Governmental Entities for
the continued ownership and operation of the Assets and the operation of the
Business.
3.29 Powers of Attorney. Except as disclosed on Schedule 3.29, Seller
has not granted to any person, and there is not currently existing, any power
of attorney of any type pertaining to the Assets or the Business.
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3.30 Books and Records. All the books and records of Seller relating
to the Assets or the Business, including all personnel files, employee data,
and other materials relating to employees of the Business, are substantially
complete and correct in all material respects, have been in all material
respects maintained in accordance with good business practice and all
Applicable Laws, and, in the case of the books of account, have been prepared
and maintained in accordance with GAAP consistently applied, except that
Seller's interim financial statements do not reflect accruals for vacation,
sick leave and employment benefit plan contributions. Such books and records
accurately and fairly reflect, in reasonable detail, all material transactions,
revenues, expenses, assets, and liabilities of Seller with respect to the
Business.
3.31 Illegal Payments. To the best knowledge of Seller, none of Seller
or any director, officer, employee, or agent of Seller has, directly or
indirectly, paid or delivered any fee, commission, or other sum of money or
item of property however characterized to any broker, finder, agent, government
official, or other person, in the United States or any other country, in any
manner related to the Assets or the Business, which Seller or any such
director, officer, employee, or agent knows or has reason to believe to have
been illegal under any Applicable Law.
3.32 Investment Intent. Subject to the provisions of Section 3.34,
Seller is acquiring the Buyer Shares for its own account for investment and not
with a view to, or for sale or other disposition in connection with, any
distribution of all or any part thereof, except (i) in an offering covered by a
registration statement filed with the Securities and Exchange Commission under
the Securities Act covering the Buyer Shares or (ii) pursuant to an applicable
exemption under the Securities Act. In acquiring the Buyer Shares Seller is
not offering or selling, and will not offer or sell, for Buyer in connection
with any distribution of the Buyer Shares, and Seller does not have a
participation and will not participate in any such undertaking or in any
underwriting of such an undertaking except in compliance with applicable
federal and state securities laws.
3.33 Investment Experience. Seller acknowledges that it is able to
fend for itself, can bear the economic risk of its investment in the Buyer
Shares, and has such knowledge and experience in financial and business matters
that it is capable of evaluating the merits and risks of an investment in the
Buyer Shares. Seller represents that it has not been organized for the purpose
of acquiring the Buyer Shares. Seller is an "accredited investor" as such term
is defined in Regulation D under the Securities Act. Nothing in this Section
3.33 relieves Buyer from liability with respect to the Buyer's representations
and warranties, including, without limitation, those contained in Section 4.7
below.
3.34 Restricted Securities. Seller understands that the Buyer Shares
will not have been registered pursuant to the Securities Act or any applicable
state securities laws, that the Buyer Shares will be characterized as
"restricted securities" under federal securities laws, and that under such laws
and applicable regulations the Buyer Shares cannot be sold or otherwise
disposed of without registration under the Securities Act or an exemption
therefrom. In this connection, Seller represents that it is familiar with Rule
144 promulgated under the Securities Act, as currently in effect, and
understands the resale limitations imposed thereby and by the Securities Act.
Stop transfer instructions may be issued to the transfer agent for securities
of Buyer (or a notation may be made in the appropriate records of Buyer) in
connection with the
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Buyer Shares. However, Seller contemplates that it will, prior to December 31,
1998 liquidate and distribute its assets, including the Buyer Shares, to the
Shareholders. Subject to compliance with applicable securities laws, Buyer
agrees to honor a transfer of the Buyer Shares to the Shareholders when the
certificates representing the Buyer Shares are presented to Buyer, properly
endorsed for transfer to the Shareholders. Shareholders understand that,
notwithstanding any such transfer, the Buyer Shares will remain restricted
securities under Rule 144 for the period of time provided in that rule, and
that their certificates will contain the legend set forth in Section 3.35.
3.35 Legend. It is agreed and understood by Seller that the
certificates representing the Buyer Shares shall each conspicuously set forth
on the face or back thereof, in addition to any legends required by Applicable
Law or other agreement, a legend in substantially the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS. SUCH SHARES MAY NOT BE SOLD OR OTHERWISE TRANSFERRED
UNLESS THEY ARE FIRST REGISTERED PURSUANT TO THAT ACT AND APPLICABLE
STATE SECURITIES LAWS OR UNLESS THE CORPORATION RECEIVES A WRITTEN
OPINION OF COUNSEL, WHICH OPINION AND COUNSEL ARE SATISFACTORY TO THE
CORPORATION, TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED.
3.36 Brokerage Fees. Neither Seller nor any of its affiliates has
retained any financial advisor, broker, agent, or finder or paid or agreed to
pay any financial advisor, broker, agent, or finder on account of this
Agreement or any transaction contemplated hereby.
3.37 Representations and Warranties on Closing Date. The
representations and warranties made in this Article III will be true and
correct on and as of the Closing Date with the same force and effect as if such
representations and warranties had been made on and as of the Closing Date,
except that any such representations and warranties which expressly relate only
to an earlier date shall be true and correct on the Closing Date as of such
earlier date.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller that:
4.1 Corporate Organization. Buyer is a corporation duly organized,
validly existing, and in good standing under the laws of the jurisdiction of
its incorporation and has all requisite corporate power and corporate authority
to own, lease, and operate its properties and to carry on its business as now
being conducted. No actions or proceedings to dissolve Buyer are pending.
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4.2 Authority Relative to This Agreement. Buyer has full corporate
power and corporate authority to execute, deliver, and perform this Agreement
and the Ancillary Documents to which it is a party and to consummate the
transactions contemplated hereby and thereby. The execution, delivery, and
performance by Buyer of this Agreement and the Ancillary Documents to which it
is a party, and the consummation by it of the transactions contemplated hereby
and thereby, have been duly authorized by all necessary corporate action of
Buyer. This Agreement has been duly executed and delivered by Buyer and
constitutes, and each Ancillary Document executed or to be executed by Buyer
has been, or when executed will be, duly executed and delivered by Buyer and
constitutes, or when executed and delivered will constitute, a valid and
legally binding obligation of Buyer, enforceable against Buyer in accordance
with their respective terms, except that such enforceability may be limited by
(i) applicable bankruptcy, insolvency, reorganization, moratorium, and similar
laws affecting creditors' rights generally and (ii) equitable principles which
may limit the availability of certain equitable remedies (such as specific
performance) in certain instances and (iii) public policy considerations with
respect to the enforceability of rights of indemnification.
4.3 Noncontravention. The execution, delivery, and performance by
Buyer of this Agreement and the Ancillary Documents to which it is a party and
the consummation by it of the transactions contemplated hereby and thereby do
not and will not (i) conflict with or result in a violation of any provision of
the charter or bylaws of Buyer, (ii) conflict with or result in a violation of
any provision of, or constitute (with or without the giving of notice or the
passage of time or both) a default under, or give rise (with or without the
giving of notice or the passage of time or both) to any right of termination,
cancellation, or acceleration under, or require any consent, approval,
authorization, or waiver of any party to, any bond, debenture, note, mortgage,
indenture, lease, contract, agreement, or other instrument or obligation to
which Buyer is a party or by which Buyer or any of its properties may be bound
or any Permit held by Buyer, (iii) result in the creation or imposition of any
Encumbrance upon the properties of Buyer, or (iv) assuming compliance with the
matters referred to in Section 4.4, violate any Applicable Law binding upon
Buyer.
4.4 Governmental Approvals. No consent, approval, order, or
authorization of, or declaration, filing, or registration with, any
Governmental Entity is required to be obtained or made by Buyer in connection
with the execution, delivery, or performance by Buyer of this Agreement and the
Ancillary Documents to which it is a party or the consummation by it of the
transactions contemplated hereby or thereby, other than (i) compliance with any
applicable requirements of the Securities Act; (ii) compliance with any
applicable requirements of the Exchange Act; (iii) compliance with any
applicable state securities laws; (iv) as set forth on Schedule 4.4; and (v)
filings with Governmental Entities to occur in the ordinary course following
the consummation of the transactions contemplated hereby.
4.5 Buyer Shares. The Buyer Shares to be issued by Buyer at the
Closing have been duly authorized for such issuance and, when issued and
delivered by Buyer in accordance with the provisions of this Agreement, will be
validly issued, fully paid, and nonassessable. The issuance of the Buyer
Shares under this Agreement is not subject to any preemptive or similar rights.
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4.6 Brokerage Fees. Neither Buyer nor any of its affiliates has
retained any financial advisor, broker, agent, or finder or paid or agreed to
pay any financial advisor, broker, agent, or finder on account of this
Agreement or any transaction contemplated hereby. Buyer shall indemnify and
hold harmless Seller from and against any and all losses, claims, damages, and
liabilities (including legal and other expenses reasonably incurred in
connection with investigating or defending any claims or actions) with respect
to any finder's fee, brokerage commission, or similar payment in connection
with any transaction contemplated hereby asserted by any person on the basis of
any act or statement made or alleged to have been made by Buyer or any of its
affiliates.
4.7 SEC Documents. Buyer has delivered to Seller a true and
complete copy of each report, schedule, registration statement and definitive
proxy statement filed by Purchaser with the SEC since December 31, 1997 (as
such documents have since the time of their filing been amended, the "Buyer SEC
Documents") which are all the documents that Buyer was required to file with
the SEC since such date. As of their respective dates, the Buyer SEC Documents
complied in all material respects with the requirements of the Securities Act
of 1933, as amended (the "Securities Act"), or the Exchange Act, as the case
may be, and the rules and regulations of the SEC thereunder applicable to such
Buyer SEC Documents, and none of the Buyer SEC Documents contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of Buyer included in the Buyer SEC Documents comply as to form in
all material respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto, have been
prepared from and are in accordance with the books and records of Buyer and
fairly present the consolidated financial position of Buyer and its
consolidated subsidiaries as at the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended, in each case in
conformity with generally accepted accounting principles applied on a
consistent basis during such periods.
4.8 Representations and Warranties on Closing Date. The
representations and warranties made in this Article IV will be true and correct
on and as of the Closing Date with the same force and effect as if such
representations and warranties had been made on and as of the Closing Date,
except that any such representations and warranties which expressly relate only
to an earlier date shall be true and correct on the Closing Date as of such
earlier date.
ARTICLE V
CONDUCT OF BUSINESS PENDING CLOSING
Seller and the Shareholders hereby covenant and agree with Buyer as
follows:
5.1 Conduct and Preservation of Business. Except as expressly provided
in this Agreement, during the period from the date hereof to the Closing,
Seller (i) shall conduct the Business only in the ordinary course consistent
with past practice and in compliance with all Applicable Laws; (ii) shall use
its reasonable best efforts to preserve, maintain, and protect the Assets; and
(iii) shall use its reasonable best efforts to preserve intact the business
organization of the Business, to keep available the services of the employees
of the Business, and to
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maintain existing relationships with licensors, licensees, suppliers,
contractors, distributors, customers, and others having business relationships
with the Business.
5.2 Restrictions on Certain Actions. Without limiting the generality
of the foregoing, and except as otherwise expressly provided in this Agreement,
prior to the Closing, Seller shall not, without the prior written consent of
Buyer:
(a) make any material change in the ongoing operations of the
Assets or the Business;
(b) except in the ordinary course of the Business consistent
with past practice, create, incur, guarantee, or assume any indebtedness
for borrowed money in respect of the Business;
(c) mortgage or pledge any of the Assets or create or suffer to
exist any Encumbrance thereupon, other than the Permitted Encumbrances;
(d) (i) enter into, adopt, or (except as may be required by law)
amend or terminate any bonus, profit sharing, compensation, severance,
termination, stock option, stock appreciation right, restricted stock,
performance unit, stock equivalent, stock purchase, pension, retirement,
deferred compensation, employment, severance, or other employee benefit
agreement, trust, plan, fund, or other arrangement for the benefit or
welfare of any employee of the Business; (ii) except for normal
increases in the ordinary course of the Business consistent with past
practice that, in the aggregate, do not result in a material increase in
benefits or compensation expense to Seller, increase in any manner the
compensation or fringe benefits of any employee of the Business; or
(iii) pay to any employee of the Business any benefit not required by
any employee benefit agreement, trust, plan, fund, or other arrangement
as in effect on the date hereof;
(e) sell, lease, transfer, or otherwise dispose of, directly or
indirectly, any of the Assets, other than inventories of finished goods
sold, rented or leased in the ordinary course of the Business consistent
with past practice;
(f) make any capital expenditure or expenditures relating to the
Business which, individually, is in excess of $100,000 or, in the
aggregate, are in excess of $1,000,000;
(g) pay, discharge, or satisfy any claims, liabilities, or
obligations relating to the Business (whether accrued, absolute,
contingent, unliquidated, or otherwise, and whether asserted or
unasserted), other than the payment, discharge, or satisfaction in the
ordinary course of the Business consistent with past practice, or in
accordance with their terms, of liabilities reflected or reserved
against in the Latest Balance Sheet or incurred since the date thereof
in the ordinary course of the Business consistent with past practice;
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(h) enter into any lease, contract, agreement, commitment,
arrangement, or transaction relating to the Business, except in the
ordinary course of the Business consistent with past practice;
(i) amend, modify, or change any existing lease, contract, or
agreement relating to the Business, other than in the ordinary course of
the Business consistent with past practice;
(j) waive, release, grant, or transfer any rights of value
relating to the Business, other than in the ordinary course of the
Business consistent with past practice;
(k) lay off any employees of the Business;
(l) accelerate collection of any notes or accounts receivable
generated by the Business;
(m) delay payment of any account payable or other liability of
Seller relating to the Business beyond its due date or the date when
such liability would have been paid in the ordinary course of the
Business consistent with past practice;
(n) allow the levels of raw materials, work-in-process, finished
goods, supplies, and other materials included in the inventory of the
Business to vary in any material respect from the levels customarily
maintained by Seller in the ordinary course of the Business consistent
with past practice;
(o) permit any current insurance or reinsurance policies to be
canceled or terminated or any of the coverages thereunder to lapse if
such policy covers Assets or insures risks, contingencies, or
liabilities of the Business, unless simultaneously with such
cancellation, termination, or lapse, replacement policies providing
coverage equal to or greater than the coverage canceled, terminated, or
lapsed are in full force and effect and written copies thereof have been
provided to Buyer;
(p) change any of the accounting principles or practices used by
it relating to the Business;
(q) take any action which would or might make any of the
representations or warranties of Seller contained in this Agreement
untrue or inaccurate as of any time from the date of this Agreement to
the Closing or would or might result in any of the conditions set forth
in this Agreement not being satisfied; or
(r) authorize or propose, or agree in writing or otherwise to
take, any of the actions described in this Section.
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ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Access to Information. Between the date hereof and the Closing,
Seller (i) shall give Buyer and its authorized representatives reasonable
access to all employees, all plants, offices, warehouses, and other facilities,
and all books and records, including work papers and other materials prepared
by Seller's independent public accountants, of Seller relating to the Assets or
the Business, (ii) shall permit Buyer and its authorized representatives to
make such inspections as they may reasonably require, and (iii) shall cause
Seller's officers to furnish Buyer and its authorized representatives with such
financial and operating data and other information with respect to the Assets
and the Business as Buyer may from time to time reasonably request; provided,
however, that no investigation pursuant to this Section shall affect any
representation or warranty of Seller contained in this Agreement or in any
agreement, instrument, or document delivered pursuant hereto or in connection
herewith; and provided further that Seller shall have the right to have a
representative present at all times of any such inspections, interviews, and
examinations conducted at or on the offices or other facilities or properties
of Seller or its affiliates or representatives.
6.2 Third Party Consents. Seller shall use its reasonable best efforts
to obtain all consents, approvals, orders, authorizations, and waivers of, and
to effect all declarations, filings, and registrations with, all third parties
(including Governmental Entities) that are necessary, required, or deemed by
Buyer to be desirable to enable Seller to transfer the Assets to Buyer as
contemplated by this Agreement and to otherwise consummate the transactions
contemplated hereby.
6.3 Employment Agreement. ▇▇▇▇ ▇▇▇▇▇▇ ("▇▇▇▇▇▇") and Buyer shall enter
into an employment agreement (the "Employment Agreement") at (and subject to
the occurrence of) the Closing pursuant to which Buyer shall agree to employ
▇▇▇▇▇▇ for the period and on the terms set forth therein. The Employment
Agreement shall be in substantially the form set forth as Exhibit 6.3.
6.4 Noncompetition Agreement. Seller and ▇▇▇▇ shall enter into a
noncompetition agreement (the "Noncompetition Agreement") at Closing pursuant
to which ▇▇▇▇ and Seller shall agree to not compete with Buyer for the period
and on the terms set forth therein. The Noncompetition Agreement shall be in
substantially the form set forth as Exhibit 6.4.
6.5 Employee and Employee Benefit Plan Matters.
(a) Seller shall terminate the employment of all employees of the
Business effective as of the Closing Date. Buyer may, but is not in any way
obligated to, offer employment to some or all of the terminated employees upon
such terms and conditions as Buyer shall in its sole discretion determine.
(b) Buyer is not hereby, and at no time hereafter will be, adopting,
accepting, or assuming any employee benefit plan or collective bargaining
agreement of Seller relating to any of its employees or any other agreement,
trust, plan, fund, or other arrangement of Seller that provides for employee
benefits or perquisites (collectively, "Employment Arrangements"), and Buyer
shall have no liability or obligation whatsoever under any Employment
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Arrangement to Seller or to any employees of Seller, whether or not any of such
employees are offered employment by or become employees of Buyer. Buyer is not
obligated to replace any of the Employment Arrangements for any employees of
Seller who become employees of Buyer, nor is Buyer obligated to provide such
persons with any similar agreements, plans, or arrangements.
(c) Seller will comply after the Closing Date with the requirements of
Sections 601 through 608 of ERISA and Section 4980B of the Code with respect to
any employee or former employee of Seller (and any dependent or former
dependent thereof) whose employment with Seller terminates in connection with
Buyer's purchase of the Business and who are not are hired by Buyer immediately
following the Closing.
6.6 [Intentionally omitted.]
6.7 Uncollected Receivables. If by September 30, 1998, Buyer has been
unable (despite using commercially reasonable collection efforts) to collect
the account receivables purchased by Buyer hereunder in full, if any, subject
to the allowance for doubtful accounts as reflected on the Latest Balance
Sheet, Buyer shall have the option to sell and, upon exercise of such option by
Buyer, Seller shall have the obligation to buy, such uncollected receivables,
for cash, at the aggregate face value thereof less an amount equal to the
allowance for doubtful accounts as reflected on the Latest Balance Sheet.
Seller shall be obligated to consummate such repurchase within ten days after
written notice from Buyer of Buyer's election to require such repurchase.
6.8 Insurance. As of the Closing, Seller shall cease to be covered
with respect to any occurrence after the Closing under the insurance policies
obtained and maintained by Seller covering the business, property, and
employees of Seller. All such occurrences prior to the Closing which are
insured under such policies shall continue to be so insured, and Buyer shall be
entitled to the benefits thereof to the limited extent necessary to hold Buyer
harmless from such occurrences and any remaining benefits thereof shall be paid
to the benefit of Seller. At Buyer's request, Seller shall make copies of such
policies available to Buyer for inspection and shall assist Buyer in
determining whether any claim or loss is covered by such policies of insurance.
Following the Closing, Buyer shall give to Seller prompt notice of the
assertion by any person of any claim against Seller which might be subject to
the insurance coverage described in this Section. Buyer shall cooperate with
Seller and any applicable insurance carrier in any investigation by Seller or
any applicable insurance carrier of any such claim and shall give to Seller and
any applicable insurance carrier reasonable access to the books, records, and
personnel formerly of Seller to the extent reasonably necessary to enable
Seller and any applicable insurance carrier to investigate such claim.
6.9 Public Announcements. Except as may be required by Applicable Law
or the National Association of Securities Dealers, Inc., neither Buyer nor
Seller shall issue any press release or otherwise make any public statement
with respect to this Agreement or the transactions contemplated hereby without
the prior written consent of the other party (which consent shall not be
unreasonably withheld). Any such press release or public statement required by
Applicable Law or by the National Association of Securities Dealers, Inc. shall
only be made after reasonable notice to the other party.
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6.10 Notice of Litigation. Until the Closing, (i) Buyer, upon learning
of the same, shall promptly notify Seller of any Proceeding which is commenced
or threatened against Buyer and which affects this Agreement or the
transactions contemplated hereby and (ii) Seller, upon learning of the same,
shall promptly notify Buyer of any Proceeding which is commenced or threatened
against Seller and which affects this Agreement or the transactions
contemplated hereby and any Proceeding which is commenced or threatened against
Seller or which relates to or affects the Assets or the Business.
6.11 Change of Corporate Name. Within ten (10) days following the
Closing, Seller shall change its corporate name so that it does not contain the
words "Central Texas Equipment Co." or any derivatives thereof. Neither Seller
nor any corporation, partnership, venture, or other entity controlled directly
or indirectly by Seller shall have any name containing the initials the words
"Central Texas Equipment Co." or any derivatives thereof after such change has
been made. Seller shall provide Buyer with evidence of the change in Seller's
corporate name required by this Section within ten (10) days after such change
has been made.
6.12 Notification of Certain Matters. Seller shall give prompt notice
to Buyer of (i) the occurrence or nonoccurrence of any event the occurrence or
nonoccurrence of which would be likely to cause any representation or warranty
contained in Article III to be untrue or inaccurate at or prior to the Closing,
(ii) any failure of Seller to comply with or satisfy any covenant, condition,
or agreement to be complied with or satisfied by Seller hereunder, and (iii)
any notice or other communication from any person alleging that the consent or
approval of such person is or may be required in connection with the
transactions contemplated by this Agreement (other than those consents and
approvals indicated as required on Schedule 3.4). Buyer shall give prompt
notice to Seller of (i) the occurrence or nonoccurrence of any event the
occurrence or nonoccurrence of which would be likely to cause any
representation or warranty contained in Article IV to be untrue or inaccurate
at or prior to the Closing and (ii) any failure of Buyer to comply with or
satisfy any covenant, condition, or agreement to be complied with or satisfied
by Buyer hereunder. The delivery of any notice pursuant to this Section shall
not be deemed to (i) modify the representations or warranties hereunder of the
party delivering such notice, (ii) modify the conditions set forth in Articles
VII and VIII, or (iii) limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
6.13 Access to Records After Closing.
(a) For a period of six (6) years from and after the Closing Date,
Seller and its representatives shall have reasonable access to inspect and copy
all books and records relating to the Assets or the Business transferred to
Buyer hereunder to the extent that such access may reasonably be required by
Seller in connection with matters relating to or affected by the operation of
the Assets or the Business prior to the Closing Date. Such access shall be
afforded by Buyer upon receipt of reasonable advance notice and during normal
business hours. If Buyer shall desire to dispose of any of such books and
records prior to the expiration of such six-year period, Buyer shall, prior to
such disposition, give Seller a reasonable opportunity, at Seller's expense, to
segregate and remove such books and records as Seller
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may select. Seller shall be solely responsible for any costs or expenses
incurred by it pursuant to this Section.
(b) For a period of six (6) years from and after the Closing Date,
Buyer and its representatives shall have reasonable access to inspect and copy
all books and records relating to the Assets or the Business which Seller or
any of its affiliates may retain after the Closing Date. Such access shall be
afforded by Seller and its affiliates upon receipt of reasonable advance notice
and during normal business hours. If Seller or any of its affiliates shall
desire to dispose of any of such books and records prior to the expiration of
such six-year period, Seller shall, prior to such disposition, give Buyer a
reasonable opportunity, at Buyer's expense, to segregate and remove such books
and records as Buyer may select. Buyer shall be solely responsible for any
costs and expenses incurred by it pursuant to this Section.
(c) Nothing contained in this Section shall require Buyer or Seller to
retain any books or records longer than such books or records would otherwise
have been retained in the ordinary course of business but for the transactions
contemplated by this Agreement.
6.14 Fees and Expenses. Except as otherwise expressly provided in this
Agreement, all fees and expenses, including fees and expenses of counsel,
financial advisors, and accountants, incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such fee or expense, whether or not the Closing shall have occurred.
6.15 Taxes; Other Charges.
(a) All sales and use Taxes resulting from the consummation of the
transactions contemplated hereby shall be borne by Seller, and the parties
shall cooperate in obtaining all exemptions from such Taxes. All other
registration, transfer, recording, and deed and stamp Taxes and fees incurred
in connection with the consummation of the transactions contemplated hereby
shall be borne by Buyer. The party designated for the payment of the foregoing
Taxes shall file all necessary documentation with respect to, and make all
payments of, such Taxes and fees on a timely basis.
(b) The Closing Statement will include amounts of accrued real and
personal property ad valorum taxes on the Assets as of the Closing Date, which
(together with ad valorum taxes accruing after the Closing Date) are assumed by
Buyer and Buyer agrees to pay before the same become delinquent. There will be
no subsequent adjustment if the amount of ad valorum taxes actually levied for
1998 is different form the amount in the Closing Statement as finally
determined under Section 1.5(b).
(c) All utility and other service charges and prepaid rentals relating
to the Assets shall be prorated as between Seller and Buyer as of the Closing
Date.
6.16 Agreement Regarding Current Public Information. During the one
year period immediately following the Closing Date, Buyer agrees to comply with
the current public information requirement of Rule 144(e) promulgated under the
Securities Act.
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6.17 Survival of Covenants. Except for any covenant or agreement which
by its terms expressly terminates as of a specific date, the covenants and
agreements of the parties hereto contained in this Agreement shall survive the
Closing without contractual limitation, subject to the provisions of Section
10.1.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF SELLER
The obligations of Seller to consummate the transactions contemplated by
this Agreement shall be subject to the fulfillment on or prior to the Closing
Date of each of the following conditions:
7.1 Representations and Warranties True. All the representations and
warranties of Buyer contained in this Agreement, and in any agreement,
instrument, or document delivered pursuant hereto or in connection herewith on
or prior to the Closing Date, shall be true and correct as of the date made and
(having been deemed to have been made again on and as of the Closing Date in
the same language) shall be true and correct on and as of the Closing Date,
except to the extent that any such representation or warranty shall have been
true and correct as of such specified date.
7.2 Covenants and Agreements Performed. Buyer shall have performed and
complied with all covenants and agreements required by this Agreement to be
performed or complied with by it on or prior to the Closing Date.
7.3 Certificate. Seller shall have received a certificate executed by
the president or any vice president-finance of Buyer, dated the Closing Date,
representing and certifying, in such detail as Seller may reasonably request,
that the conditions set forth in this Article VII have been fulfilled.
7.4 Opinion of Counsel. Seller shall have received an opinion of
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C., legal counsel to Buyer, dated the Closing Date, with
respect to such matters as may be reasonably requested by Seller.
7.5 Legal Proceedings. No Proceeding shall, on the Closing Date, be
pending or threatened seeking to restrain, prohibit, or obtain damages or other
relief in connection with this Agreement or the consummation of the
transactions contemplated hereby.
7.6 Other Documents. Seller shall have received the certificates,
instruments, documents and other items listed below:
(a) the Cash Portion of the Purchase Price in accordance with
Section 1.4 above.
(b) Stock certificates in definitive form representing the Buyer
Shares to be delivered to Seller pursuant to Section 1.4, registered in
the name of Seller and duly executed by Buyer, as follows: (i) one
certificate representing 52.104% of the Buyer
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Shares, (ii) three certificates, each representing 8.234% of the Buyer
Shares, and (iii) two certificates, each representing 11.597% of the
Buyer Shares. Seller agrees that Buyer may deliver of the foregoing
certificates after the Closing, but no later than May 15, 1998, and in
the event Seller fails to deliver such certificates, Seller shall be
entitled to cash in an amount equal to $2,635,306 in lieu of such
certificates as payment of the balance of the Purchase Price payable
hereunder.
(c) Such other certificates, instruments, and documents as may
be reasonably requested by Seller prior to the Closing Date to carry out
the intent and purposes of this Agreement.
7.7 Release of Seller and Shareholders and Payment of Notes. Buyer
shall pay the notes payable to ▇▇▇▇ and ▇.▇. ▇▇▇▇, ▇▇. in full; provided,
however, Buyer shall have the right to assume the notes payable to ▇▇▇▇, in
which event Buyer shall have the option to prepay, and ▇▇▇▇ shall have the
right to require Buyer to prepay, such notes upon 30 days prior notice to the
other. Seller and Shareholders must have been released from any personal or
corporate liability under any of the promissory notes assumed by Buyer within
30 days after the Closing Date.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF BUYER
The obligations of Buyer to consummate the transactions contemplated by
this Agreement shall be subject to the fulfillment on or prior to the Closing
Date of each of the following conditions:
8.1 Representations and Warranties True. All the representations and
warranties of Seller and the Shareholders contained in this Agreement, and in
any agreement, instrument, or document delivered pursuant hereto or in
connection herewith on or prior to the Closing Date, shall be true and correct
as of the date made and (having been deemed to have been made again on and as
of the Closing Date in the same language) shall be true and correct on and as
of the Closing Date, except to the extent that any such representation or
warranty is made as of a specified date, in which case such representation or
warranty shall have been true and correct as of such specified date.
8.2 Covenants and Agreements Performed. Seller and the Shareholders
shall have performed and complied with all covenants and agreements required by
this Agreement to be performed or complied with by it on or prior to the
Closing Date.
8.3 Certificate. Buyer shall have received a certificate executed by
the president or any vice president-finance of Seller, dated the Closing Date,
representing and certifying, in such detail as Buyer may reasonably request,
that the conditions set forth in this Article VIII have been fulfilled.
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8.4 Opinion of Counsel. Buyer shall have received an opinion of ▇▇▇▇▇,
Vine & Perry, legal counsel to Seller, dated the Closing Date, with respect to
such matters as may be reasonably requested by Buyer.
8.5 Legal Proceedings. No Proceeding shall, on the Closing Date, be
pending or threatened seeking to restrain, prohibit, or obtain damages or other
relief in connection with this Agreement or the consummation of the
transactions contemplated hereby.
8.6 Consents. All consents and approvals of all persons necessary for
the consummation of the transactions contemplated hereby under any lease,
contract, agreement, or other instrument or obligation of Seller, or any
Applicable Law shall have been received and delivered to Buyer.
8.7 No Material Adverse Change. Since the date of the Latest Balance
Sheet, there shall not have been any material adverse change in the business,
assets, results of operations, condition (financial or otherwise), or prospects
of the Business or the ownership or operation of the Assets or any material
portion thereof.
8.8 Employment Agreement. ▇▇▇▇▇▇ shall have entered into the
Employment Agreement with Buyer.
8.9 Due Diligence. The due diligence conducted by Buyer and its
representatives in connection with the proposed transactions contemplated
hereby shall not have caused Buyer or its representatives to become aware of
any facts relating to the business, assets, results of operations, condition
(financial or otherwise), or prospects of the Business or the Assets which, in
the good faith judgment of Buyer, make it inadvisable for Buyer to proceed with
the consummation of the transactions contemplated hereby.
8.10 Other Documents. Buyer shall have received the certificates,
instruments, documents and other items listed below:
(a) The instruments of conveyance contemplated by Section 1.3,
in form and substance reasonably satisfactory to Buyer.
(b) Executed copies of all consents and approvals of third
parties required to be obtained by or on the part of Seller for the
consummation of the transactions contemplated hereby.
(c) All books and records of Seller relating to the Assets or
the operation of the Business.
(d) A copy of the resolutions of the Board of Directors of
Seller authorizing the execution, delivery, and performance by Seller of
this Agreement, certified by the secretary or an assistant secretary of
Seller.
(e) At Buyer's expense, lien search reports, each dated not more
than ten (10) days prior to the Closing Date, showing that no financing
statements or other liens (or
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notices with respect to liens) affecting the Assets or any thereof
naming Seller, any of its subsidiaries, or the Business as debtor are on
file in the Uniform Commercial Code or other relevant records of the
office of the Secretary of State of Texas or the county clerk's office
of ▇▇▇▇▇▇ County, Texas.
(f) Such other certificates, instruments, and documents as may
be reasonably requested by Buyer to carry out the intent and purposes of
this Agreement.
ARTICLE IX
TERMINATION, AMENDMENT, AND WAIVER
9.1 Termination. This Agreement may be terminated and the transactions
contemplated hereby abandoned at any time prior to the Closing in the following
manner:
(a) by mutual written consent of Seller and Buyer; or
(b) by either Seller or Buyer, if:
(i) the Closing shall not have occurred on or before May
15, 1998, unless such failure to close shall be due to a breach
of this Agreement by the party seeking to terminate this
Agreement pursuant to this clause (i); or
(ii) there shall be any statute, rule, or regulation that
makes consummation of the transactions contemplated hereby
illegal or otherwise prohibited or a Governmental Entity shall
have issued an order, decree, or ruling or taken any other action
permanently restraining, enjoining, or otherwise prohibiting the
consummation of the transactions contemplated hereby, and such
order, decree, ruling, or other action shall have become final
and nonappealable; or
(c) by Seller, if (i) any of the representations and warranties
of Buyer contained in this Agreement shall not be true and correct in
any respect, or (ii) Buyer shall have failed to fulfill in any of its
obligations under this Agreement, and, in the case of each of clauses
(i) and (ii), such misrepresentation, breach of warranty, or failure
(provided it can be cured) has not been cured within thirty (30) days of
actual knowledge thereof by Buyer; or
(d) by Buyer, if (i) any of the representations and warranties
of Seller or the Shareholders contained in this Agreement shall not be
true and correct in any respect, when made or at any time prior to the
Closing as if made at and as of such time, or (ii) Seller or any
Shareholders shall have failed to fulfill in any respect any of its
obligations under this Agreement, and, in the case of each of clauses
(i) and (ii), such misrepresentation, breach of warranty, or failure
(provided it can be cured) has not been cured within thirty (30) days of
actual knowledge thereof by Seller or any Shareholder.
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9.2 Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 9.1 by Seller or Buyer, written notice thereof
shall forthwith be given to the other party specifying the provision hereof
pursuant to which such termination is made, and this Agreement shall become
void and have no effect, except that the agreements contained in this Section
and in Article X and Sections 6.9, 6.14, 12.1, 12.4 and 12.5 shall survive the
termination hereof. Nothing contained in this Section shall relieve any party
from liability for damages actually incurred as a result of any breach of this
Agreement.
9.3 Amendment. This Agreement may not be amended except by an
instrument in writing signed by or on behalf of all the parties hereto.
9.4 Waiver. Each of Seller and Buyer may (i) waive any inaccuracies in
the representations and warranties of the other contained herein or in any
document, certificate, or writing delivered pursuant hereto or (ii) waive
compliance by the other with any of the other's agreements or fulfillment of
any conditions to its own obligations contained herein. Any agreement on the
part of a party hereto to any such waiver shall be valid only if set forth in
an instrument in writing signed by or on behalf of such party. No failure or
delay by a party hereto in exercising any right, power, or privilege hereunder
shall operate as a waiver thereof nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of any
other right, power, or privilege.
9.5 Remedies Not Exclusive. The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies provided by
law. The rights and remedies of any party based upon, arising out of, or
otherwise in respect of any inaccuracy in or breach of any representation,
warranty, covenant, or agreement contained in this Agreement shall in no way be
limited by the fact that the act, omission, occurrence, or other state of facts
upon which any claim of any such inaccuracy or breach is based may also be the
subject matter of any other representation, warranty, covenant, or agreement
contained in this Agreement (or in any other agreement between the parties) as
to which there is no inaccuracy or breach.
ARTICLE X
SURVIVAL OF REPRESENTATIONS;
INDEMNIFICATION
10.1 Survival. The representations and warranties of the parties
hereto contained in this Agreement or in any certificate, instrument, or
document delivered pursuant hereto and the related indemnity provisions shall
survive the Closing and for the two year period thereafter, regardless of any
investigation made by or on behalf of any party.
10.2 Indemnification by Seller and Shareholder. Subject to the terms
and conditions of this Article X, Seller and the Shareholders each jointly and
severally shall indemnify, defend, and hold harmless Buyer, the subsidiaries
and parent corporations of Buyer, each director, officer, employee, and agent
of Buyer or any of its subsidiaries or parent corporations, and each affiliate
of Buyer and its subsidiaries and parent corporations, and their respective
heirs, legal representatives, successors, and assigns (collectively, the "Buyer
Group"), from and against any and all claims, actions, causes of action,
demands,
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assessments, losses, damages, liabilities, judgments, settlements, penalties,
costs, and expenses (including reasonable attorneys' fees and expenses), of any
nature whatsoever, whether actual or consequential (collectively, "Damages"),
asserted against, resulting to, imposed upon, or incurred by any member of the
Buyer Group, directly or indirectly, by reason of or resulting from any of the
following:
(a) any inaccuracy in or breach of any representation or
warranty of Seller or any Shareholder contained in this Agreement or in
any certificate, instrument, or document delivered pursuant hereto;
(b) any breach by Seller or any Shareholder of any of its or his
covenants or agreements contained in this Agreement or in any
certificate, instrument, or document delivered pursuant hereto;
(c) except as set forth in Section 3.24(g), any liability or
obligation of Seller or its affiliates (whether accrued, absolute,
contingent, unliquidated, or otherwise, whether or not known to Seller
or any Shareholder, and whether due or to become due), other than the
Assumed Liabilities;
(d) except as set forth in Section 3.24(g), the ownership,
management, or use of the Assets or the Business prior to the Closing
Date; or
(e) any products or equipment distributed, sold or leased by
Seller in connection with the Business on or prior to the Closing Date.
10.3 Indemnification by Buyer. Subject to the terms and conditions of
this Article X, Buyer shall indemnify, defend, and hold harmless each
Shareholder, Seller, each director, officer, employee, and agent of Seller, and
each affiliate of Seller, and their respective heirs, legal representatives,
successors, and assigns (collectively, the "Seller Group"), from and against
any and all Damages asserted against, resulting to, imposed upon, or incurred
by any member of the Seller Group, directly or indirectly, by reason of or
resulting from any of the following:
(a) any inaccuracy in or breach of any representation or
warranty of Buyer contained in this Agreement or in any certificate,
instrument, or document delivered pursuant hereto;
(b) any breach by Buyer of any of its covenants or agreements
contained in this Agreement or in any certificate, instrument, or
document delivered pursuant hereto;
(c) the Assumed Liabilities;
(d) the ownership, management, or use by Buyer of the Assets
from and after the Closing Date, except to the extent Buyer is
indemnified by Seller with respect to such matters pursuant to Section
10.2; and
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(e) any products or equipment leased, distributed or sold by
Buyer from and after the Closing Date, except to the extent Buyer is
indemnified by Seller with respect to such matters pursuant to Section
10.2.
10.4 Procedure for Indemnification. Promptly after receipt by an
indemnified party under Section 10.2 or 10.3 of notice of the commencement of
any action, such indemnified party shall, if a claim in respect thereof is to
be made against an indemnifying party under such Section, give written notice
to the indemnifying party of the commencement thereof, but the failure so to
notify the indemnifying party shall not relieve it of any liability that it may
have to any indemnified party except to the extent the indemnifying party
demonstrates that the defense of such action is prejudiced thereby. In case
any such action shall be brought against an indemnified party and it shall give
written notice to the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate therein and, to the extent
that it may wish, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party. If the indemnifying party elects to
assume the defense of such action, the indemnified party shall have the right
to employ separate counsel at its own expense and to participate in the defense
thereof. If the indemnifying party elects not to assume (or fails to assume)
the defense of such action, the indemnified party shall be entitled to assume
the defense of such action with counsel of its own choice, at the expense of
the indemnifying party. If the action is asserted against both the
indemnifying party and the indemnified party and there is a conflict of
interests which renders it inappropriate for the same counsel to represent both
the indemnifying party and the indemnified party, the indemnifying party shall
be responsible for paying for separate counsel for the indemnified party;
provided, however, that if there is more than one indemnified party, the
indemnifying party shall not be responsible for paying for more than one
separate firm of attorneys to represent the indemnified parties, regardless of
the number of indemnified parties. If the indemnifying party elects to assume
the defense of such action, (a) no compromise or settlement thereof may be
effected by the indemnifying party without the indemnified party's written
consent (which shall not be unreasonably withheld) unless the sole relief
provided is monetary damages that are paid in full by the indemnifying party
and (b) the indemnifying party shall have no liability with respect to any
compromise or settlement thereof effected without its written consent (which
shall not be unreasonably withheld).
10.5 Basket. Notwithstanding the foregoing, neither party is liable
to the other party for a breach of a representation or warranty until the
amount of the indemnified party's Damages exceeds $25,000, but if such Damages
exceed $25,000, then the indemnifying party is liable for all of the Damages.
ARTICLE XI
REGISTRATION RIGHTS
11.1 Right to Participate in Registration. If, at any time prior to the
first anniversary date of the Closing date, Buyer proposes to register shares
of Common Stock under the Securities Act, on Form ▇-▇, ▇-▇, or S-3 (or any form
which replaces or is substantially similar to such form), the Company shall
give notice of such proposed registration to Seller. Subject to the terms and
provisions of this Article XI, upon the request of Seller made within
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20 days after the giving of such notice by Buyer, Buyer shall use its best
efforts to cause all shares of Buyer Shares that have been acquired by Seller
or the Shareholders pursuant hereto, which shares Seller shall have requested
to be included in the proposed registration ("Registrable Shares"), to be
included in such registration to the extent requisite to permit the sale or
other disposition by Seller or the Shareholders of such Registrable Shares. In
the event the offering to be conducted pursuant to the proposed registration is
to be an underwritten public offering, the registration rights provided in this
Article XI shall be subject to the approval of the managing underwriter or
underwriters of such offering, who shall determine the number of Registrable
Shares, if any, that may be included in such registration without adversely
affecting such offering; provided, however, Buyer agrees to use commercially
reasonable efforts to cause all Registrable Shares that the Seller or the
Shareholders desire to register to be included in such offering.
11.2 Registration Procedures. If and whenever Buyer is required by the
provisions of this Article XI to use its best efforts to cause Registrable
Shares to be included in the registration of securities of Buyer under the
Securities Act, Buyer will, as expeditiously as possible:
(a) prepare and file with the Securities and Exchange Commission
(the "Commission") a registration statement (the "Registration
Statement") covering such Registrable Shares and use its best efforts to
cause the Registration Statement to become effective and to remain
effective for so long as may reasonably be necessary to complete the
sale or other disposition of such Registrable Shares, provided that the
Company shall not in any event be required to use its best efforts to
maintain the effectiveness of the Registration Statement for a period in
excess of [90] days;
(b) prepare and file with the Commission such amendments and
supplements to the Registration Statement and the prospectus contained
therein as may be necessary to keep the Registration Statement
effective, and comply with the provisions of the Securities Act, with
respect to the sale or other disposition of the Registrable Shares
whenever Seller or the Shareholders desire to sell or otherwise dispose
of the same but only to the extent provided in this Section 11.2;
(c) furnish to Seller or the Shareholders such numbers of copies
of the Registration Statement, the prospectus contained therein
(including each preliminary prospectus), and each amendment and
supplement to the Registration Statement and such prospectus, in
conformity with the requirements of the Securities Act, and such other
documents, as Seller or the Shareholders may reasonably request in order
to facilitate the sale or other disposition of the Registrable Shares;
(d) use reasonable efforts to register or qualify the
Registrable Shares for sale under the securities or blue sky laws of
such jurisdictions as the Seller or the Shareholders may reasonably
request, and do any and all other acts and things that may be necessary
under such securities or blue sky laws to enable Seller to consummate
the sale or other disposition of the Registrable Shares in such
jurisdictions, provided that Buyer shall not in any event be required to
register or qualify the Registrable Shares for sale under the securities
or blue sky laws of more than the number of states in which
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Buyer is registering its own shares, and provided further, that Buyer
shall not in any event be required to keep any such registration or
qualification in effect after the expiration of the period during which
Buyer maintains the effectiveness of the Registration Statement and
shall not for any such purpose be required to qualify to do business as
a foreign corporation in any jurisdiction wherein it is not so qualified
or to subject itself to taxation in any such jurisdiction; and
(e) before filing the Registration Statement, any prospectus to
be used in connection with the offering to be conducted pursuant to such
registration, or any amendments or supplements to the Registration
Statement or such prospectus with the Commission, furnish counsel to
Seller or the Shareholders with copies of all such documents proposed to
be filed.
11.3 Required Information. Buyer shall not be required to use its best
efforts to include any Registrable Shares in a proposed registration of its
securities under the Securities Act unless and until (i) Seller and the
Shareholders furnish to Buyer such information regarding Seller, the
Shareholders and such Registrable Shares and the intended method of disposition
of such Registrable Shares as Seller shall reasonably request in order to
satisfy the requirements applicable to such registration, and (ii) in the event
the offering to be conducted pursuant to such registration is to be an
underwritten public offering, such Seller or the Shareholders agree to the
terms of the underwriting agreed to between Buyer and the underwriter or
underwriters of such offering and executes all documents reasonably required to
effect such offering.
11.4 Expenses of Registration. In the event of the inclusion pursuant
to the provisions of this Article XI of Registrable Shares in a registration by
Buyer of its securities under the Securities Act, Seller or the Shareholders'
shall pay any federal and blue sky filing and registration or qualification
fees solely attributable to Seller's or the Shareholders' Registrable Shares,
any brokerage and underwriting discounts and commissions payable in respect of
Registrable Shares sold on Seller's or the Shareholders' behalf, all fees and
expenses of any attorneys and accountants employed by Seller, and any other
costs directly incurred by Seller.
11.5 Indemnification. In connection with any registration of
Registrable Shares pursuant to the provisions of this Article XI, Buyer shall
indemnify and hold harmless Seller and the Shareholders to the extent that
companies generally indemnify and hold harmless underwriters in connection with
public offerings under the Securities Act, and Seller and each Shareholder
shall jointly and severally indemnify and hold harmless Buyer, each director
and officer of Buyer, and each person who controls Buyer within the meaning of
the Securities Act to the extent that selling shareholders generally indemnify
and hold harmless issuers of securities in connection with public offerings
under the Securities Act with respect to the written information provided by
Seller for use by Buyer in the preparation of the Registration Statement.
However, the liability of Seller and the Shareholders will not be joint and
several, but will be pro rata based on the number of Registrable Shares
included in the offering.
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ARTICLE XII
MISCELLANEOUS
12.1 Notices. All notices, requests, demands, and other communications
required or permitted to be given or made hereunder by any party hereto shall
be in writing and shall be deemed to have been duly given or made if delivered
personally, or transmitted by first class registered or certified mail, postage
prepaid, return receipt requested, or sent by prepaid overnight delivery
service, or sent by cable, telegram, or telefax, to the parties at the
following addresses (or at such other addresses as shall be specified by the
parties by like notice):
If to Buyer: Crescent Operating, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telefax: 817.339.1001
If to Seller and ▇.▇. ▇▇▇▇
the Shareholders: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telefax: 512.442.3051
With a copy to ▇▇▇▇▇, Vine & Perry, P.C.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telefax: 512.476.1825
Attention: ▇▇▇ ▇▇▇▇▇
12.2 Entire Agreement. This Agreement, together with the Schedules,
Exhibits and other writings referred to herein or delivered pursuant hereto,
constitute the entire agreement between the parties hereto with respect to the
subject matter hereof and supersede all prior agreements and understandings,
both written and oral, between the parties with respect to the subject matter
hereof.
12.3 Binding Effect; Assignment; No Third Party Benefit. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns. Except as otherwise
expressly provided in this Agreement, neither this Agreement nor any of the
rights, interests, or obligations hereunder shall be assigned by either of the
parties hereto without the prior written consent of the other party, except
that Buyer may assign to any wholly owned subsidiary of Buyer any of Buyer's
rights, interests, or obligations hereunder, upon notice to Seller, provided
that no such assignment shall relieve Buyer of its obligations hereunder, and
Seller may transfer to Shares to the Shareholders. Except as provided in
Article X, nothing in this Agreement, express or implied, is intended to or
shall confer upon any person other than the parties hereto, and their
respective successors and permitted assigns, any rights, benefits, or remedies
of any nature whatsoever under or by reason of this Agreement.
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12.4 Severability. If any provision of this Agreement is held to be
unenforceable, this Agreement shall be considered divisible and such provision
shall be deemed inoperative to the extent it is deemed unenforceable, and in
all other respects this Agreement shall remain in full force and effect;
provided, however, that if any such provision may be made enforceable by
limitation thereof, then such provision shall be deemed to be so limited and
shall be enforceable to the maximum extent permitted by Applicable Law.
12.5 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT REGARD
TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF.
12.6 Further Assurances. From time to time following the Closing, at
the request of either party hereto and without further consideration, the other
party hereto shall execute and deliver to such requesting party such
instruments and documents and take such other action (but without incurring any
material financial obligation) as such requesting party may reasonably request
in order to consummate more fully and effectively the transactions contemplated
hereby.
12.7 Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only, do not constitute a part of this
Agreement, and shall not affect in any manner the meaning or interpretation of
this Agreement.
12.8 Gender. Pronouns in masculine, feminine, and neuter genders shall
be construed to include any other gender, and words in the singular form shall
be construed to include the plural and vice versa, unless the context otherwise
requires.
12.9 References. All references in this Agreement to Articles,
Sections, and other subdivisions refer to the Articles, Sections, and other
subdivisions of this Agreement unless expressly provided otherwise. The words
"this Agreement", "herein", "hereof", "hereby", "hereunder", and words of
similar import refer to this Agreement as a whole and not to any particular
subdivision unless expressly so limited. Whenever the words "include",
"includes", and "including" are used in this Agreement, such words shall be
deemed to be followed by the words "without limitation". Each reference herein
to a Schedule, Exhibit, or Annex refers to the item identified separately in
writing by the parties hereto as the described Schedule, Exhibit, or Annex to
this Agreement. All Schedules, Exhibits, and Annexes are hereby incorporated
in and made a part of this Agreement as if set forth in full herein.
12.10 Counterparts. This Agreement may be executed by the parties
hereto in any number of counterparts, each of which shall be deemed an
original, but all of which shall constitute one and the same agreement. Each
counterpart may consist of a number of copies hereof each signed by less than
all, but together signed by all, the parties hereto.
12.11 Joint and Several Liability. Each of Seller and the Shareholders
agree that they are jointly and severally liable for all representations,
warranties, covenants, agreements, and indemnities of Seller and the
Shareholders contained in this Agreement.
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12.12 Injunctive Relief. The parties hereto acknowledge and agree that
irreparable damage would occur in the event any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of the provisions
of this Agreement, and shall be entitled to enforce specifically the provisions
of this Agreement, in any court of the United States or any state thereof
having jurisdiction, in addition to any other remedy to which the parties may
be entitled under this Agreement or at law or in equity.
12.13 Disclosure. Any information expressly disclosed in any of the
attached schedules is deemed disclosed on any other applicable schedule if and
only to the extent that the express disclosure constitutes adequate disclosure
for purposes of such other applicable schedule or schedules. In the event of
any inconsistency between the statements in the body of this Agreement and
those in the Schedules (other than an exception expressly set forth as such in
the Schedules in relation to a specifically identified representation or
warranty), those in this Agreement shall control.
ARTICLE XIII
DEFINITIONS
13.1 Certain Defined Terms. As used in this Agreement, each of the
following terms has the meaning given it below:
"affiliate" means, with respect to any person, any other person
that, directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, such
person. For the purposes of this definition, "control", when used with
respect to any person, means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and
policies of such person, whether through the ownership of voting
securities, by contract, or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Ancillary Documents" means each agreement, instrument, and
document (other than this Agreement) executed or to be executed by
Seller, any Shareholder or Buyer in connection with the transactions
contemplated by this Agreement.
"Applicable Law" means any statute, law, rule, or regulation or
any judgment, order, writ, injunction, or decree of any Governmental
Entity to which a specified person or property is subject.
"Code" means the Internal Revenue Code of 1986, as amended and in
effect on the Closing Date.
"Encumbrances" means liens, charges, pledges, options, mortgages,
deeds of trust, security interests, claims, restrictions, easements, and
other encumbrances of every type and description, whether imposed by
law, agreement, understanding, or otherwise.
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"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"GAAP" means generally accepted accounting principles in the
United States of America applied on a basis consistent with preceding
years throughout the periods involved.
"Governmental Entity" means any court or tribunal in any
jurisdiction (domestic or foreign) or any federal, state, municipal, or
other governmental body, agency, authority, department, commission,
board, bureau, or instrumentality (domestic or foreign).
"Intellectual Property" means patents, trademarks, service marks,
trade names, service names, brand names, copyrights, trade secrets,
know-how, inventions, computer software (including documentation and
object and source codes), and similar rights, and all registrations,
applications, licenses, and rights with respect to any of the foregoing.
"IRS" means the Internal Revenue Service.
"Permits" means licenses, permits, franchises, consents,
approvals, variances, exemptions, and other authorizations of or from
Governmental Entities.
"Permitted Encumbrances" means (a) Encumbrances created by Buyer,
(b) the Encumbrances set forth on Schedule 13.1, (c) liens for Taxes not
yet due and payable or, if due and payable, the validity of which is
being contested in good faith by appropriate legal proceedings and for
which adequate reserves have been set aside, (d) statutory liens
(including materialmen's, mechanic's, repairmen's, landlord's, and other
similar liens) arising in connection with the ordinary course of the
Business securing payments not yet due and payable or, if due and
payable, the validity of which is being contested in good faith by
appropriate legal proceedings and for which adequate reserves have been
set aside, (e) such imperfections or irregularities of title, if any, as
(A) are not substantial in character, amount, or extent and do not
materially detract from the value of the property subject thereto, (B)
do not materially interfere with either the present or intended use of
such property, and (C) do not, individually or in the aggregate,
materially interfere with the conduct of the normal operations of the
Business; provided, however, that at the Closing "Permitted
Encumbrances" shall not include any liens for Taxes or statutory liens
filed of record against the Assets, and (f) any leases and rental
agreements which Buyer assumes under Section 1.7.
"person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, enterprise,
unincorporated organization, or Governmental Entity.
"Proceedings" means all proceedings, actions, claims, suits,
investigations, and inquiries by or before any arbitrator or
Governmental Entity.
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"reasonable best efforts", "commercially reasonable efforts" or
words of similar import, mean a party's reasonable best efforts in
accordance with reasonable commercial practice and without the
incurrence of unreasonable expense.
"Securities Act" means the Securities Act of 1933, as amended.
"Taxes" means any income taxes or similar assessments or any
sales, excise, occupation, use, ad valorem, property, production,
severance, transportation, employment, payroll, franchise, or other tax
imposed by any United States federal, state, or local (or any foreign or
provincial) taxing authority, including any interest, penalties, or
additions attributable thereto.
"Tax Return" means any return or report, including any related or
supporting information, with respect to Taxes.
"to the best knowledge" of a specified person (or similar
references to a person's knowledge) means that the only information to
be attributed to such person is information actually known to such
person in the case of an individual or (b) in the case of a corporation
or other entity, a current officer.
13.2 Certain Additional Defined Terms. In addition to such terms as
are defined in the opening paragraph of and the recitals to this Agreement and
in Section 13.1, the following terms are used in this Agreement as defined in
the Sections, Articles or other references set forth opposite such terms:
Defined Term Reference
------------ ---------
Accountants Section 1.5
Agreement Preamble
Applicable Environmental Laws Section 3.23
Assets Section 1.1
Assumed Liabilities Section 1.7
Audited Financial Statements Section 3.8
▇▇▇▇ Preamble
Business Preamble
Buyer Preamble
Buyer Group Section 10.2
Buyer Shares Section 1.4
Cash Portion of Purchase Price Section 1.4
Closing Article II
Closing Date Article II
Closing Statement Section 1.5
Commission Section 11.2
Current Market Price Section 1.4
Damages Section 10.2
Employment Agreement Section 6.3
Employment Arrangements Section 6.4
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Financial Statements Section 3.8
hazardous material Section 3.23
Latest Balance Sheet Section 3.8
Leased Real Property Section 1.1
Net Working Capital, Debt and Equipment Section 1.5
Noncompetition Agreement Section 6.4
Owned Real Property Section 1.1
Purchase Price Section 1.4
Real Property Section 1.1
Registrable Shares Section 11.1
Registration Statement Section 11.2
Seller Preamble
Seller Group Section 10.3
Shareholder Preamble
▇▇▇▇▇▇ Section 6.3
transfer Section 1.1
Unaudited Financial Statements Section 3.8
[Signature Page To Follow]
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IN WITNESS WHEREOF, the parties have executed this Agreement, or caused
this Agreement to be executed by their duly authorized representatives, all as
of the day and year first above written.
Central Texas Equipment Co.
By:
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Name:
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Title:
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▇. ▇. ▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇▇
Crescent Operating, Inc.
By:
---------------------------------
Name:
-------------------------------
Title:
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