ASSET PURCHASE AGREEMENT BY AND AMONG HAMMONDS TECHNOLOGIES, LLC AND HAMMONDS INDUSTRIES, INC. April 16, 2009
BY
AND AMONG
▇▇▇▇▇▇▇▇
TECHNOLOGIES, LLC
AND
▇▇▇▇▇▇▇▇
INDUSTRIES, INC.
April
16, 2009
Exhibits
Exhibit
A Glossary
Exhibit
B Forms
of Release
THIS
ASSET PURCHASE AGREEMENT, dated as of April 16, 2009 (this “Agreement”), is by
and among ▇▇▇▇▇▇▇▇ Technologies, LLC, a Texas limited liability company (the
“Purchaser”),
and ▇▇▇▇▇▇▇▇ Industries, Inc., a Nevada corporation (including its
organizational predecessors, the “Seller”). The
Purchaser, on the one hand, and the Seller, on the other hand, are each a “Party” and,
collectively, they are sometimes referred to as the “Parties.”
W
I T N E S S E T H:
WHEREAS,
the Seller owns all of the issued and outstanding capital stock of each of the
following Subsidiary entities (collectively, the “Equity Interests”):
(i) ▇▇▇▇▇▇▇▇ Fuel Additives, Inc., a Texas corporation (“▇▇▇▇▇▇▇▇ Fuel”), (ii)
▇▇▇▇▇▇▇▇ Technical Services, Inc., a Texas corporation (“▇▇▇▇▇▇▇▇ Technical”),
(iii) ▇▇▇▇▇▇▇▇ Water Treatment Systems, Inc., a Texas corporation (“▇▇▇▇▇▇▇▇ Water
Treatment”) and (iv) ▇▇▇▇▇▇▇▇ ODV, Inc., a Texas corporation (“▇▇▇▇▇▇▇▇ ODV,”
together with ▇▇▇▇▇▇▇▇ Fuel, ▇▇▇▇▇▇▇▇ Technical and ▇▇▇▇▇▇▇▇ Water Treatment,
the “Acquired
Entities”); and
WHEREAS,
the Purchaser desires to purchase from the Seller, and the Seller desires to
sell, transfer, assign and deliver to the Purchaser, all of the assets and
contract rights used by the Seller in connection with the operation of its
Business, including without limitation the Equity Interests, on the terms and
subject to the conditions set forth herein; and
WHEREAS,
the Seller is making certain representations, warranties, covenants and
indemnities herein as an inducement to Purchaser to enter into this
Agreement.
NOW,
THEREFORE, in consideration of the premises and the representations, warranties,
covenants and agreements stated herein, the receipt and sufficiency of which are
hereby acknowledged, the Parties, intending to be legally bound, covenant and
agree as follows:
ARTICLE
I
DEFINITIONS
Section
1.1 Accounting
Terms. All accounting terms not specifically defined herein
shall be construed in accordance with GAAP.
Section
1.2 Defined Terms. As
used in this Agreement, certain words and terms have the meanings ascribed to
them in the Glossary attached hereto as Exhibit A. Other
capitalized terms have the meanings ascribed to them elsewhere in this
Agreement.
ARTICLE
II
PURCHASE,
SALE AND DELIVERY
Section
2.1 Acquisition
Assets. Subject to the terms and conditions of this Agreement,
and on the basis of the representations and warranties hereinafter set forth, at
the Closing (as hereinafter defined), the Seller shall sell, transfer, convey,
assign and deliver to the Purchaser, and the Purchaser shall acquire and
purchase from the Seller, all of the assets, properties and rights of the
Seller, including without limitation all of the Seller’s right, title and
interest in and to the following:
(a) all
right, title and interest in, to and under all real property leases set forth on
Schedule 2.1(a)
(the “Assigned
Leases”), and all leasehold improvements and fixtures located on the
Leased Premises (the premises leased pursuant to the Assigned Leases
referred to herein as the “Leased
Premises”);
(b) all of
the machinery, equipment, trade fixtures, tools, furniture, computers,
appliances, implements, spare parts, supplies, leasehold improvements,
construction in progress and all other tangible personal property owned by the
Seller, or of which the Seller has the current possession and use, on the
Closing Date, including without limitation those listed on Schedule 2.1(b)
hereto;
(c) all motor
vehicles and rolling stock owned by the Seller on the Closing Date, including
without limitation those listed on Schedule 2.1(c)
hereto;
(d) all
supplies, spare parts, safety equipment, maintenance supplies, other supplies
used or consumed in the Business and other similar items which exist on the
Closing Date, including those shown on the books and records of the Seller and
the Acquired Entities, located on the Leased Premises or otherwise
(collectively, the “Supplies”);
(e) all
right, title and interest in, to and under all contracts (including, without
limitation, all of the fee for service, operating, customer supply and other
contracts of Seller), personalty leases, agreements, equipment or other lease
licenses, contract awards, management agreements and building service agreements
to which the Seller is a party on the Closing Date or by which any of the
Acquisition Assets (as hereinafter defined) are then bound which are listed on
Schedule 2.1(e)
hereto (collectively, the “Assigned
Contracts”);
(f) all
goodwill and going concern value;
(g) all
right, title and interest in all licenses, permits, applications, registrations,
exemptions, notices of intent, franchises, consents, waivers, variances,
authorizations, approvals and orders issued by any federal, state, municipal or
other Governmental Authority (collectively, the “Assigned Permits”)
relating to the Acquisition Assets or the Business, including without limitation
those listed on Schedule 2.1(g)
hereto;
(h) all
prepaid items, deposits and other similar assets of the Seller which exist at
the Closing Date, including those shown on the books and records of the Seller
and the Acquired Entities;
(i) all
rights and interest in, to and under the Intellectual Property, together with
any goodwill associated therewith and all rights of action on account of past,
present and future unauthorized use or infringement thereof;
(j) the right
to use the names “▇▇▇▇▇▇▇▇ Industries”, “▇▇▇▇▇▇▇▇ Fuel Additives”, “▇▇▇▇▇▇▇▇
Technical Services” and “▇▇▇▇▇▇▇▇ ODV” and all derivations thereof;
(k) all
rights under express or implied warranties from the suppliers of Seller with
respect to the Acquisition Assets and the Business;
(l) all of
the Books and Records of the Seller and the Acquired Entities (the “Assigned Books and
Records”), excluding any Books and Records of the Seller that relate
exclusively to (i) organizational or governance proceedings of the Seller, (ii)
the Excluded Assets or (iii) the Excluded Liabilities;
(m) all
personnel files and other materials relating to employees of the Seller who are
to be offered employment by the Purchaser as contemplated by Section 7.7
hereof;
(n) all
records of compliance and noncompliance with the laws, regulations, ordinances
and orders applicable to the Acquisition Assets or the Business;
(o) all
right, title and interest in, to and under all rights, privileges, claims,
causes of action, and options relating or pertaining to the Acquisition Assets
or the Business;
(p) all
insurance policies relating to the Acquisition Assets, the Business and any
underlying property on which the Business is or has been conducted and rights to
make claims under any such current or prior insurance policies;
(q) all
accounts receivable of the Seller, including, without limitation, all trade
accounts receivable, notes receivable, and all rights of the Seller to payment
for services rendered prior to the Closing Date, whether or not they have been
earned by performance or have been written off or reserved against as a bad debt
or doubtful account in any financial statements;
(r) all of
the issued and outstanding Equity Interests, free and clear of all Encumbrances;
and
(s) subject
to the exclusions set forth in Section 2.2 hereof,
all other or additional privileges, rights, interests, properties and assets of
every kind and description and wherever located that are used or intended for
use in connection with, or that are necessary to the continued conduct of, the
Business as presently conducted.
Subject to Section 2.2 hereof,
all of the assets referenced in this Section 2.1 are
collectively referred to as the “Acquisition
Assets”.
Section
2.2 Excluded
Assets. Notwithstanding Section 2.1 hereof,
the Seller is not selling and the Purchaser is not purchasing pursuant to this
Agreement any of the following, all of which shall be retained by the Seller
(collectively, the “Excluded
Assets”):
(a) all cash
and cash equivalents of the Seller which exist at the Closing Date;
(b) all
employee benefit plans (as defined in ERISA) and all other similar benefit
plans, programs, arrangements and commitments (whether written or oral) of the
Seller;
(c) any
employment agreements between the Seller and its employees including, but not
limited to, (i) the Employment Agreement, dated November 1, 2007, between
▇▇▇▇▇▇▇▇ Technical and ▇▇▇▇▇▇ ▇▇▇▇, (ii) the Employment Agreement, dated April
26, 2005, between ▇▇▇▇▇▇▇▇ Technical and ▇▇▇▇ ▇▇▇▇▇▇▇▇, and (iii) the Service
Agreement, dated September 1, 2007, between the Seller and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇;
and
(d) any
Subsidiaries other than the Acquired Entities.
Section
2.3 Purchase Price. The
aggregate consideration for the purchase of the Business and the Acquisition
Assets and the representations, warranties, covenants and agreements referenced
herein and the certificates and instruments delivered at Closing (the “Purchase Price”)
shall be an amount equal to the sum of the aggregate Indebtedness owed by the
Seller that is specifically described on Schedule 2.3 hereto,
including but not limited to that certain Senior Promissory Note by and between
the Seller and Vision Opportunity Master Fund, Ltd., dated September 23, 2008 in
the principal amount of $250,000. The Purchase Price shall be paid by
the Purchaser directly to the parties listed on Schedule 2.3 hereto
on the Closing Date, in cash or other immediately available funds to such
account designated by such parties.
Section
2.4 Allocation
Reporting. Unless otherwise agreed in writing by Purchaser and
Seller, (i) Schedule
2.4 hereto sets forth the allocations established by Purchaser and Seller
of the Purchase Price (and any other items constituting consideration paid by
Purchaser or received by Seller in connection with the disposition of the
Acquisition Assets) among the Acquisition Assets; (ii) the allocations set forth
on Schedule 2.4
hereto will be used by Purchaser and Seller as the basis for reporting asset
values and other items for purposes of all required Tax Returns (including any
Tax Returns required to be filed under Section 1060(b) of the Code and the
Treasury Regulations thereunder); and (iii) Purchaser and Seller shall not
assert, in connection with any audit or other proceeding with respect to Taxes,
any asset values or other items inconsistent with the allocations set forth on
Schedule 2.4
hereto.
Section
2.5 Closing. The
closing (the “Closing”) of the
Transactions shall take place at the offices of ▇▇▇▇▇ Lord Bissell & Liddell
LLP, ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇, contemporaneously with the
execution hereof (the “Closing Date”) and
shall be effective at 11:59 p.m. (Houston, Texas time) on the Closing
Date.
Section
2.6 Closing
Deliveries.
(a) At the
Closing, the Seller shall deliver to the Purchaser:
(i) the
Acquisition Assets;
(ii) such
bills of sale and other instruments of sale, transfer, conveyance, assignment
and delivery covering the Acquisition Assets or any part thereof, executed by
the Seller or other appropriate parties, as the Purchaser may reasonably require
to assure the full and effective sale, transfer, conveyance, assignment and
delivery to the Purchaser of the Acquisition Assets free and clear of any
Encumbrances and rights and claims of third parties including, but not limited
to, the following:
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(1)
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a
▇▇▇▇ of sale, general assignment and conveyance by the Seller transferring
to the Purchaser good and marketable title to all of the Acquisition
Assets in a form satisfactory to the
Purchaser;
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(2)
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all
documents, agreements and instruments necessary to effectuate the
assignment of Equity Interests, in form and substance satisfactory to the
Purchaser (the “Equity Assignment
Documents”);
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(3)
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all
documents in a form satisfactory to the Purchaser required for the
assignment of the Seller’s rights under all registrations, Assigned
Permits and licenses (to the extent permitted by law), equipment or motor
vehicle leasing agreements, motor vehicle and rolling stock titles, rights
under sales and/or purchase orders and of the Seller’s rights under all
other Assigned Contracts;
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(4)
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originals
of all of the Assigned Leases, Assigned Contracts, and Assigned Permits;
and
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(5)
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such
other instruments of transfer and assignment in respect of the Acquisition
Assets as the Purchaser shall reasonably require and as shall be
consistent with the terms and provisions of this
Agreement.
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(iii) all
waivers, consents, orders, permit transfers and approvals required in connection
with (i) the execution, delivery and performance of this Agreement and (ii) the
assignment and transfer of the Acquisition Assets, including the Assigned
Contracts, the Assigned Leases and the Assigned Permits, financial assurances
and any other rights and benefits in connection with the Transactions, or
necessary for the consummation of the Transactions, and all other agreements
necessary for the Purchaser to conduct the Business as it is currently being
conducted by the Seller, including without limitation those consents listed on
Schedule 5.3
hereto in form satisfactory to the Purchaser;
(iv) documentary
evidence that all Encumbrances on the Acquisition Assets have been
released;
(v) evidence
of termination of (1) that certain Employment Agreement, dated April 26, 2005,
between ▇▇▇▇▇▇▇▇ Technical and ▇▇▇▇ ▇▇▇▇▇▇▇▇ and (2) that certain Employment
Agreement, dated November 1, 2007, between ▇▇▇▇▇▇▇▇ Technical and ▇▇▇▇▇▇
▇▇▇▇;
(vi) Releases
by and between (1) the Purchaser and the Acquired Entities on the one hand, and
each of ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇, the Dror Family Trust, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇ 1976
Trust, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇ Trust of 1998, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ III, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, American International Industries,
Inc., Vision Capital Advisors, LLC and Vision Opportunity Master Fund, Ltd., on
the other hand, and (2) ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, and ▇▇▇▇ ▇▇▇▇▇ III on
the one hand, and each of ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇, the Dror Family Trust,
▇▇▇▇▇▇ ▇▇▇▇ ▇▇ 1976 Trust, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇ Trust of 1998, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, American International Industries, Inc., Vision Capital
Advisors, LLC and Vision Opportunity Master Fund, Ltd., on the other hand, each
in the forms attached as Exhibit B
hereto.
(vii) Landlord
Estoppel Certificate for the Lease Agreement between ▇▇▇▇▇▇▇▇ Technical and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇;
(viii) all the
Assigned Books and Records and other data relating to the Acquisition Assets and
the Business;
(ix) certificates
representing the capital stock of each of the Acquired Entities, duly endorsed
for transfer to the Purchaser or accompanied by duly executed assignment
documents, which shall transfer to the Purchaser good and valid title to the
capital stock, free and clear of all Encumbrances;
(x) an
assignment and assumption of the Leased Premises, executed by Seller and any
other appropriate parties, as the Purchaser may reasonably require to assure the
full and effective assignment to the Purchaser of the Leased Premises free and
clear of all Encumbrances;
(xi) a
certificate from an officer of the Seller, in a form mutually acceptable to the
Parties hereto, certifying (i) the bylaws of the Seller, (ii) the resolutions of
the directors and stockholders of the Seller authorizing and approving the
execution and delivery of this Agreement, including the exhibits and schedules
hereto, and the consummation of the Transactions and (iii) the incumbency and
signatures of the officers of the Seller executing the applicable transaction
documents;
(xii) certified
copy of the Articles of Incorporation/Certificate of Formation (as applicable)
and Certificates of Existence/Good Standing issued by the state of or
organization for each of the Seller and the Acquired Entities, dated no more
than five (5) days prior to the Closing Date, reflecting that the Seller and the
Acquired Entities are duly organized, validly existing and in good
standing;
(xiii) the
resignations of all of the officers and directors of the Acquired
Entities;
(xiv) such
other separate instruments of sale, assignment or transfer reasonably required
by Purchaser; and
(xv) such
other documents, certificates and instruments reasonably necessary to consummate
the Transactions.
(b) At the
Closing, the Purchaser shall deliver:
(i) to the
parties listed on Schedule 2.3, the
Purchase Price set forth in Section
2.3;
(ii) to the
Seller, such other documents, certificates and instruments reasonably necessary
to consummate the Transactions.
ARTICLE
III
LIABILITIES
AND OBLIGATIONS
Section
3.1 Liabilities not Assumed by
Purchaser. Subject to Section 3.2 hereof,
the Purchaser does not assume or agree to pay, perform or discharge, and shall
not be responsible for, any commitments, contracts, agreements or obligations or
claims against, or liabilities of, the Seller whatsoever (and the Seller will at
all times indemnify and hold the Purchaser harmless from and against any claim
therefore or liability arising therefrom), including without
limitation, the following (collectively, the “Excluded
Liabilities”):
(a) any Taxes
which may become payable by reason of the sale and transfer of the Acquisition
Assets under federal law or under the laws of any state, or may be imposed upon
the Seller by reason of receipt of the Purchase Price or relief from any
liability pursuant to this Agreement;
(b) any of
the costs, expenses and Liabilities incurred in connection with the future
operations of Seller, and the costs and expenses of the Seller incurred in
negotiating, entering into and carrying out their obligations pursuant to this
Agreement;
(c) except as
set forth in Schedule
2.3, any Indebtedness of the Seller (including without limitation any
prepayment penalties or other Liabilities relating to retiring or extinguishing
any Indebtedness);
(d) any
commitments arising prior to the Closing Date pursuant to the Assigned Contracts
or Assigned Leases;
(e) any Taxes
for which the Seller or any stockholder is liable (taking into account the
provisions of Section
7.8(a) hereof);
(f) any
liabilities arising out of or in connection with periods or activity prior to
the Closing Date related to OSHA, EEOC, EPA or any other Governmental Authority,
or the violation of any Legal Requirement;
(g) any
liability or obligation (contingent or otherwise) of the Seller arising out of
any claim, litigation, or proceeding threatened or pending on or before the
Closing Date or any claim, litigation, or proceeding threatened or initiated
after the Closing Date to the extent based on an act or omission of the Seller
or any current or former officer, director, employee, agent or representative of
the Seller, or the operation of the Business and/or Acquisition Assets occurring
before the Closing Date, whether or not set forth on Schedule
5.8;
(h) any
Environmental Claim and any claims, violations or alleged violations of
Environmental Law, or conditions that could give rise to or relate to liability
under Environmental Laws or similar Legal Requirements attributable or relating
to the Acquisition Assets (including without limitation the
operation thereof), the Business, or the Seller, including any
liability (including without limitation strict liability) or obligation arising
under or relating to Environmental Laws with respect to the Leased Premises
arising after the Closing Date resulting from, caused by or related to any act
or omission of third party or the Seller or any current or former officer,
director, employee, agent, representative, tenant or invitee of the Seller which
occurred on or prior to the Closing Date, or the continuation of practices or
operations with respect to the Acquisition Assets or the Leased Premises, that
were occurring or in effect on or prior to the Closing Date;
(i) any
commitments arising prior to the Closing Date pursuant to any Assigned Contract
or Assigned Lease;
(j) any
liability arising out of or in connection with the Seller’s defective
performance of any Assigned Contract or Assigned Lease, or any express or
implied warranty with respect to performance of any Assigned Contract or
Assigned Lease prior to the Closing Date;
(k) any
liability or obligation arising out of any employee benefit plan (as defined in
ERISA) and all other similar benefit plans, programs, arrangements or
commitments (whether written or oral) of the Seller;
(l) any
contingent or unknown liability of the Seller;
(m) any
amounts owed by the Seller or its Subsidiaries to American International
Industries, Inc. including, but not limited to, the $250,000 bridge loan from
the Seller in favor of American International Industries, Inc.;
(n) any
employment agreements between the Seller and its employees including, but not
limited to, (i) the Employment Agreement, dated November 1, 2007, between
▇▇▇▇▇▇▇▇ Technical and ▇▇▇▇▇▇ ▇▇▇▇, (ii) the Employment Agreement, dated April
26, 2005, between ▇▇▇▇▇▇▇▇ Technical and ▇▇▇▇ ▇▇▇▇▇▇▇▇, and (iii) the Service
Agreement, dated September 1, 2007, between the Seller and ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇;
(o) any
liability or obligation under or in connection with or related to the Excluded
Assets, the Acquisition Assets or the Business; and
(p) any
accounts payable, accrued liabilities and any other liabilities of the Seller
incurred by the Seller as of the Closing Date.
Section
3.2 Assumed
Liabilities. The Purchaser assumes and agrees to pay, perform
and discharge when due solely the following debts, liabilities, obligations and
contracts of the Seller (collectively, the “Assumed
Liabilities”):
(a) liabilities
of the Seller that (i) initially occur and are attributable solely to the period
after Closing in respect of the Assigned Contracts, Assigned Leases and Assigned
Permits transferred and assigned to Purchaser hereunder in conformity with the
provisions of such Assigned Contracts, Assigned Leases or Assigned Permits and
(ii) do not relate to or arise out of any breach of any representation of the
Seller hereunder or any breach or failure to perform by the Seller under such
Assigned Contracts, Assigned Leases or Assigned Permits; and
(b) the
accounts payable of the Acquired Entities specifically listed on Schedule 3.2(b) but
only to the extent such accounts payable are proper and enforceable
obligations. The Purchaser shall have the right to apply any agreed
offsets, credits or otherwise compromise such accounts payable. This
Section 3.2(b)
shall not inure to the specific benefit of any creditor.
ARTICLE
IV
REPRESENTATIONS
AND
WARRANTIES
OF PURCHASER
Except as
expressly set forth in the corresponding section or subsection of the Disclosure
Schedule attached hereto (the “Disclosure
Schedule”), the Purchaser represents and warrants to the Seller that the
statements contained in this Article IV are true
and correct as of the Closing Date:
Section
4.1 Organization and
Qualification. The Purchaser is a limited liability company
duly organized, validly existing and in good standing under the laws of Texas
and has full organizational power and authority to own, lease and operate its
assets and properties and to carry on its business as it is now being
conducted.
Section
4.2 Authority; Binding
Agreement. The Purchaser has full power and authority to
execute and deliver this Agreement and to consummate the
Transactions. This Agreement has been duly executed and delivered by
the Purchaser and, assuming the due authorization, execution and delivery hereof
by the Seller, constitutes a valid and legally binding agreement of the
Purchaser and is enforceable against the Purchaser in accordance with its terms,
except that such enforcement may be subject to bankruptcy, insolvency,
reorganization or other similar laws affecting or relating to enforcement of
creditors’ rights generally.
ARTICLE
V
REPRESENTATIONS
AND WARRANTIES OF THE SELLER
Except as
expressly set forth in the corresponding section or subsection of the Disclosure
Schedule, the Seller represents and warrants to Purchaser the statements
contained in this Article V are true
and correct as of the Closing Date:
Section
5.1 Organization and
Qualification.
(a) The
Seller is a corporation duly organized, validly existing and in good standing
under the laws of the State of Nevada and has the requisite corporate power and
authority to own, lease and operate the Acquisition Assets and to carry on its
business as it is now being conducted. The Seller is duly qualified
to do business as a foreign corporation and is in good standing in each
jurisdiction in which the properties owned, leased, or operated by it or the
nature of the business conducted by it makes such qualification necessary. True,
accurate and complete copies of the Seller’s Organizational Documents as in
effect on the date hereof, including all amendments thereto, have heretofore
been delivered to the Purchaser.
(b) Each of
the Seller’s Subsidiaries is a corporation duly organized, valid existing and in
good standing under the laws of the State of Texas and has the requisite
corporate power and authority to own, lease and operate its assets and to carry
on its respective business as it is now being conducted. Each of the
Seller’s Subsidiaries is duly qualified to do business as a foreign corporation
and is in good standing in each jurisdiction in which the properties owned,
leased, or operated by it or the nature of the business conducted by such entity
makes such qualification necessary. True, accurate and complete copies of each
of the Organizational Documents of the Seller’s Subsidiaries, in each case as in
effect on the date hereof, including all amendments thereto, have heretofore
been delivered to the Purchaser.
Section
5.2 Capitalization.
(a) The
authorized capital stock of the Seller consists of (i) 195,000,000 shares of
common stock and (ii) 5,000,000 shares of preferred stock. There are
(i) 50,223,664 shares
of common stock, (ii) 8,333,333 shares of Series A Convertible Preferred Stock,
(iii) 8,333,333 shares of Series B Convertible Preferred Stock and (iv)
2,102,960 shares of Series C Convertible Preferred Stock issued and outstanding,
and no other shares of capital stock of the Seller are issued and
outstanding. All of the issued and outstanding shares of common stock
and preferred stock were validly issued and are fully paid, nonassessable and
free of preemptive rights and are owned beneficially and of record by the
Seller’s stockholders free and clear of any adverse claim of any other Person,
including without limitation, any Encumbrances (except for Encumbrances arising
under federal and state securities laws). All dividends and other
distributions declared with respect to the issued and outstanding shares of the
capital stock or other equity interests of the Seller have been paid or
distributed.
(b) Schedule 5.2(b) sets
forth the authorized, issued and outstanding capital stock of the each of the
Seller’s Subsidiaries. Except as set forth on Schedule 5.2(b), no
other shares of capital stock of the Seller’s Subsidiaries are issued and
outstanding. All of the issued and outstanding shares of capital
stock of the Seller’s Subsidiaries were validly issued and are fully paid,
nonassessable and free of preemptive rights and are owned beneficially and of
record by the Seller free and clear of any adverse claim of any other Person,
including without limitation, any Encumbrances (except for Encumbrances arising
under federal and state securities laws). All dividends and other
distributions declared with respect to the issued and outstanding shares of the
capital stock or other equity interests of each of the Seller’s Subsidiaries
have been paid or distributed.
(c) Except as
set forth on Schedule
5.2(c), there are no outstanding (i) subscriptions, options, calls,
contracts, commitments, understandings, restrictions, arrangements, rights or
warrants, including any right of conversion or exchange under any outstanding
security, debenture, instrument or other agreement obligating the Seller or any
Subsidiary to issue, deliver or sell, or cause to be issued, delivered or sold,
additional shares of the capital stock or other equity interests of the Seller
or its Subsidiaries or obligating the Seller or its Subsidiaries to grant,
extend or enter into any such agreement or commitment or (ii) obligations of the
Seller or its Subsidiaries to repurchase, redeem or otherwise acquire any
securities referred to in clause (i) above. There are no voting
trusts, proxies or other agreements or understandings to which the Seller, its
Subsidiaries or any stockholder of the Seller is a party or is bound with
respect to the voting of any ownership interest of the Seller or its
Subsidiaries.
Section
5.3 Authority; Non-Contravention;
Approvals.
(a) The
Seller has full corporate power and authority to execute and deliver this
Agreement and the other documents delivered by the Seller at Closing and to
consummate the Transactions. This Agreement and the certificates,
instruments and other documents delivered in connection with this Agreement have
been approved by the board of directors of the Seller, and except for the
required approval and adoption of this Agreement and the Transactions by the
stockholders, no additional approvals or proceedings on the part of the Seller
are necessary to authorize the execution and delivery of this Agreement or the
consummation by the Seller of the Transactions. This Agreement has
been, and the certificates, instruments and other documents delivered in
connection with this Agreement at Closing will be duly executed and delivered by
the Seller, and, assuming the due authorization, execution and delivery hereof
by the Purchaser, constitute a valid and legally binding agreement of the
Seller, enforceable against the Seller in accordance with its
terms.
(b) The
execution and delivery of this Agreement and the other documents delivered by
the Seller at Closing, and the consummation by the Seller of the transactions
contemplated hereby and thereby, do not and will not violate or result in a
breach of any provision of, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) under, or result in
the termination of, or accelerate the performance required by, or result in a
right of termination or acceleration under, or result in the creation of any
Encumbrance upon any of the properties or assets of the Seller or its
Subsidiaries under any of the terms, conditions or provisions of (i) the
Organizational Documents of the Seller or its Subsidiaries, (ii) any Legal
Requirement applicable to the Seller, its Subsidiaries, any of their respective
property or assets or any of the Acquisition Assets, or (iii) any note, bond,
mortgage, indenture, deed of trust, license, franchise, permit, concession,
contract, lease or other instrument, obligation or agreement of any kind to
which the Seller or its Subsidiaries is now a party or by which the Seller, its
Subsidiaries or any of Acquisition Assets may be bound or affected.
(c) No
declaration, filing or registration with, or notice to, or authorization,
consent or approval of, any Governmental Authority is necessary for the
execution and delivery of this Agreement by the Seller or the consummation by
the Seller of the Transactions.
Section
5.4 Affiliates.
(a) Except as
set forth in Schedule
5.2(b), the Seller does not have any Subsidiaries, nor does the Seller
hold any equity interest in or control (directly or indirectly, through the
ownership of securities, by contract, by proxy, alone or in combination with
others, or otherwise) any corporation, limited liability company, partnership,
business organization or other Person.
(b) Except as
set forth on Schedule
5.4(b), no Affiliate or employee of the Seller or its Subsidiaries has,
directly or indirectly, engaged in any business dealings or transactions with
the Seller or its Subsidiaries except business dealings or transactions inherent
in the capacities of director, officer, employee or stockholder during the past
three years.
Section
5.5 SEC Reports; Financial Statements;
Undisclosed Liabilities.
(a) The
Seller has filed with the SEC all forms, reports, statements, schedules and
other documents required to be filed by it since January 1, 2006 (as amended to
date, the “SEC
Reports”). The Seller has delivered or made available to the
Purchaser copies of all such SEC Reports. As of their respective
dates, or, if amended, as of the date of the last such amendment, the SEC
Reports complied as to form in all material respects in accordance with the
then-applicable requirements of the Securities Act or the Exchange Act, as the
case may be, in each case, the rules and regulations promulgated
thereunder. None of the SEC Reports, at the time they were filed, or,
if amended, as of the date of such amendment, contained any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. No
Subsidiary is required to file any form, report or other document with the
SEC. As of the date hereof, there are no material unresolved comments
issued by the staff of the SEC with respect to any of the SEC
Reports.
(b) Each of
the consolidated financial statements (collectively, and including, in each
case, any notes and schedules thereto, the “Seller Financial
Statements”) contained in the SEC Reports, fairly presents in all
material respects the consolidated financial position of the Seller and its
consolidated Subsidiaries as at the respective dates thereof and their
consolidated results of operations and consolidated cash flows for the
respective periods then ended (subject, in the case of the unaudited statements,
to normal year-end audit adjustments and to any other adjustments described
therein including the notes thereto, which are not expected to be significant)
in conformity with GAAP (except, in the case of the unaudited statements, as
permitted by Form 10-Q or Form 8-K or any successor forms under the Exchange
Act) applied on a consistent basis during the periods involved (except as may be
indicated therein or in the notes thereto).
(c) Except as
set forth on Schedule
5.5(c), neither the Seller nor any of its Subsidiaries is indebted to any
director or officer of the Seller or any of its Subsidiaries (except for amounts
due as normal salaries and bonuses or in reimbursement of ordinary business
expenses and directors’ fees), and no such person is indebted to the Seller or
any of its Subsidiaries, and there have been no other transactions of the type
required to be disclosed pursuant to Items 402 or 404 of Regulation S-K
promulgated by the SEC.
Section
5.6 Absence of Undisclosed
Liabilities. Except as disclosed on Schedule 5.6, neither
the Seller nor its Subsidiaries has incurred any liabilities or obligations
(whether absolute, accrued, contingent or otherwise) of any nature, except
liabilities, obligations or contingencies (i) which are accrued on or reserved
against the Seller Financial Statements or fully reflected in the notes thereto,
or (ii) which were incurred after February 28, 2009 (the “Balance Sheet Date”)
and were incurred in the ordinary course of business and consistent with past
practices. Except as set forth on Schedule 5.6, the
Seller and its Subsidiaries have no Indebtedness.
Section
5.7 Absence of Certain Changes or
Events. Except as provided on Schedule 5.7, since
the Balance Sheet Date, there has not been any change, event or development
which, individually or together with other such changes, events or developments,
has had or could reasonably be expected to have a Material Adverse Effect on the
Seller, the Business or the Acquisition Assets. Without limiting the
foregoing, except as set forth on Schedule 5.7, since
the Balance Sheet Date:
(a) neither
the Seller nor any Subsidiary has declared or set aside or paid any dividend or
made any other distribution with respect to its outstanding securities or the
Acquisition Assets, or, directly or indirectly, purchased, redeemed or otherwise
acquired any of its securities;
(b) neither
the Seller nor any Subsidiary has granted any increase in the compensation of
its officers, directors or employees (including any increase pursuant to any
bonus, pension, profit-sharing or other plan or commitment) or paid any bonuses
to any officers, directors or employees;
(c) the
Seller and its Subsidiaries have not adopted, entered into or amended any bonus,
profit sharing, compensation, stock option, pension, retirement, deferred
compensation, health care, employment or other employee benefit plan, agreement,
trust fund or arrangement for the benefit or welfare of any employee or retiree,
except as required to comply with changes in applicable law;
(d) the
Seller and its Subsidiaries have not made any amendment to their Organizational
Documents or changed the character of their respective businesses in any
manner;
(e) the
business of the Seller and its Subsidiaries has been conducted in the ordinary
course of business consistent with past practices;
(f) there has
not been any physical damage, destruction or other casualty loss (whether or not
covered by insurance) affecting any of the Acquisition Assets in an amount
exceeding $10,000 individually or $25,000 in the aggregate;
(g) there has
not been any entering into, or material amendment, modification, termination
(partial or complete) or granting of a waiver under or giving any consent with
respect to any Assigned Contract, Assigned Lease or Assigned
Permit;
(h) there has
not been any event, occurrence, development or state of circumstances or facts
which has had, or could reasonably be anticipated to have, individually or in
the aggregate, a Material Adverse Effect;
(i) neither
the Seller nor any Subsidiary has issued, reserved for issuance, granted, sold
or authorized the issuance of any shares of its capital stock or subscriptions,
options, warrants, calls, rights or commitments of any kind relating to the
issuance or sale of or conversion into shares of its capital stock or authorized
a stock split or otherwise changed its capitalization in any
manner;
(j) the
Seller and its Subsidiaries have not permitted or allowed any of its assets to
be subjected to any Encumbrance;
(k) there has
not been any other transaction involving or development affecting the
Acquisition Assets outside the ordinary course of business consistent with past
practice; and
(l) the
Seller and its Subsidiaries have not entered into a contract or commitment to do
or engage in any of the foregoing.
Section
5.8 Litigation. Except
as described on Schedule 5.8, there
are no claims, suits, actions, Environmental Claims, inspections, investigations
or proceedings pending or, to the Knowledge of the Seller or any Subsidiary,
threatened against, relating to or affecting the Seller or any Subsidiary before
any Governmental Authority, or any mediator or arbitrator and there is no basis
for the same. Except as described in Schedule 5.8, neither
the Seller nor any Subsidiary is subject to any Order.
Section
5.9 Accounts Receivable;
Inventory.
(a) All
accounts receivable reflected on the Seller Financial Statements represent sales
actually made in the ordinary course of business and are collectible within 90
days after the applicable billing date. The allowances for doubtful
accounts reflected in the Seller Financial Statements are adequate and have been
determined in accordance with GAAP.
(b) All
inventory of the Seller, whether or not reflected in the Seller Financial
Statements, consists of a quality and quantity usable and salable in the
ordinary course of business, except for obsolete items and items of
below-standard quality, all of which have been written off or written down to
net realizable value in the Seller Financial Statements or on the accounting
records of the Seller as of the Closing Date. All inventories not
written off have been priced at the lower of cost or market
value. The quantities of each item of inventory (whether raw
materials, work-in-process or finished goods) are not excessive, but are
reasonable in the present circumstances of the Seller.
Section
5.10 No Violation of Law; Compliance with
Agreements.
(a) The
Seller and its Subsidiaries are not in violation of and have not been given
notice or been charged with any violation of, any Legal Requirement (including,
without limitation, any applicable Environmental Law). No
investigation or review by any Governmental Authority is pending or threatened,
nor has any Governmental Authority indicated an intention to conduct the
same. Set forth on Schedule 5.10 are all
of the Governmental Authorizations held by the Seller and its Subsidiaries on
the date hereof, which constitute all of the Governmental Authorizations
necessary to permit the Seller and its Subsidiaries to own, operate, use, and
maintain the assets of the Seller and its Subsidiaries in compliance with all
applicable Legal Requirements. All required filings with respect to
such Governmental Authorizations have been timely made and all required
applications for renewal thereof have been timely filed. All such
Governmental Authorizations are in full force and effect and there are no
proceedings pending or threatened that seek the revocation, cancellation,
suspension, or adverse modification thereof.
(b) Neither
the Seller nor any Subsidiary is in breach or violation of or in default in the
performance or observance of any term or provision of, and no event has occurred
which, with lapse of time or action by a third party, could result in a default
under, (a) the Organizational Documents of the Seller or its Subsidiaries or (b)
any contract, commitment, agreement, indenture, mortgage, loan agreement, note,
lease, bond, license, approval or other instrument to which the Seller or any
Subsidiary is a party or by which such entity is bound or to which any of its
property is subject.
Section
5.11 Insurance. Schedule 5.11 sets
forth a list of all insurance policies owned by the Seller and its Subsidiaries
or by which the Seller, any Subsidiary or any of their respective properties or
assets is covered against present losses, all of which are now in full force and
effect. All policies to which the Seller and its Subsidiaries is a
party (i) taken together, provide adequate insurance coverage for the assets and
the operations of the Seller and its Subsidiaries for all risks normally insured
against by a Person carrying on the same business or businesses as the Seller
and its Subsidiaries, (ii) are sufficient for compliance with all Legal
Requirements and Material Agreements (as defined in Section 5.18), and
(iii) will continue in full force and effect following the consummation of the
Transactions. A summary of the loss experience under each policy for
the past three (3) years has been made available to the Purchaser. No
insurance has been refused with respect to any operations, properties or assets
of the Seller or its Subsidiaries nor has coverage of any insurance been limited
by any insurance carrier that has carried, or received any application for, any
such insurance during the last three(3) years. No insurance carrier
has denied any claims made against any of the policies listed on Schedule
5.11.
Section
5.12 Taxes.
(a) Except as
set forth on Schedule
5.12,
(i) the
Seller and its Subsidiaries have (x) duly and timely filed (or there has been
filed on such entity’s behalf) with the appropriate taxing authorities all Tax
Returns (as hereinafter defined) required to be filed by such entity on or prior
to the date hereof, and (y) duly and timely paid in full or made adequate
provision therefor on the Seller Financial Statements in accordance with GAAP
(or there has been paid or adequate provision has been made on such entity’s
behalf) for the payment of all Taxes (as hereinafter defined) for all periods
ending through the date hereof (whether or not shown on any Tax
Return);
(ii) all such
Tax Returns filed by or on behalf of the Seller and its Subsidiaries are true,
correct and complete in all respects and were prepared in substantial compliance
with all applicable Legal Requirements;
(iii) the
Seller and its Subsidiaries are not the beneficiary of any extension of time
within which to file any Tax Return;
(iv) no claim
has ever been made by any authority in a jurisdiction where the Seller or its
Subsidiaries does not file Tax Returns that it is or may be subject to taxation
by that jurisdiction;
(v) the
Liabilities and reserves for Taxes reflected in the most recent balance sheet
included in the Seller Financial Statements to cover all Taxes for all periods
ending at or prior to the date of such balance sheet have been determined in
accordance with GAAP, and there is no Liability for Taxes for any period
beginning after such date other than Taxes arising in the ordinary course of
business;
(vi) there are
no Encumbrances for Taxes upon any property or assets of the Seller or its
Subsidiaries, except for Encumbrances for Taxes not yet due and
payable;
(vii) the
Seller and its Subsidiaries will not be required to include any item of income
in, or exclude any item of deduction from, taxable income for any taxable period
(or portion thereof) ending after the Closing Date as a result of (x) any change
in accounting methods for a taxable period ending on or prior to the Closing
Date, (y) intercompany transactions or any excess loss account described in
Treasury Regulations promulgated under Section 1502 of the Code (or any
corresponding or similar provision of state, local or foreign income Tax law),
or (z) installment sale or open transaction disposition made on or prior to the
Closing Date;
(viii) the
Seller and its Subsidiaries have not received a ruling from any taxing authority
or signed an agreement with any taxing authority;
(ix) the
Seller and its Subsidiaries have complied in all respects with all applicable
laws, rules and regulations relating to the payment and withholding of Taxes
(including, without limitation, withholding of Taxes pursuant to Sections 1441
and 1442 of the Code, as amended or similar provisions under any foreign laws)
and have, within the time and the manner prescribed by applicable Legal
Requirements, withheld and paid over to the appropriate taxing authority all
amounts required to be so withheld and paid over under all applicable laws in
connection with amounts paid or owing to any employee, independent contractor,
creditor, stockholder or other third party;
(x) no
federal, state, local or foreign audits or other administrative proceedings or
court proceedings are presently pending with regard to any Taxes or Tax Returns
of the Seller or its Subsidiaries, and as of the date of this Agreement neither
the Seller nor any Subsidiary has received a written notice of any pending
audits or proceedings;
(xi) no
stockholder or director or officer (or employee responsible for Tax matters) of
the Seller or its Subsidiaries expects any authority to assess any additional
Taxes for any period for which Tax Returns have been filed;
(xii) the
federal income Tax Returns of the Seller and its Subsidiaries have been examined
by the Internal Revenue Service ("IRS") (which
examination has been completed) or the statute of limitations for the assessment
of federal income Taxes of the Seller and its Subsidiaries has expired, for all
periods through and including December 31, 2008, and no deficiencies were
asserted as a result of such examinations which have not been resolved and fully
paid;
(xiii) no
adjustments or deficiencies relating to Tax Returns of the Seller and its
Subsidiaries have been proposed, asserted or assessed by any taxing authority,
except for such adjustments or deficiencies which have been fully paid or
finally settled; and
(xiv) the
Seller and its Subsidiaries have delivered to the Purchaser true, correct and
complete copies of all federal income Tax Returns, examination reports, and
statements of deficiencies assessed against or agreed to by the Seller and its
Subsidiaries since December 31, 2007.
(b) Except as
set forth on Schedule
5.12, (i) there are no outstanding requests, agreements, consents or
waivers to extend the statute of limitations applicable to the assessment of any
Taxes or deficiencies against the Seller or its Subsidiaries, and no power of
attorney granted by the Seller or its Subsidiaries with respect to any Taxes is
currently in force, (ii) to the best of the Seller’s Knowledge, the Seller and
its Subsidiaries have disclosed on their respective federal income Tax Returns
all positions taken therein that could give rise to a substantial understatement
of federal income Tax within the meaning of Section 6662 of the Code, and (iii)
the Seller and its Subsidiaries are not a party to any Tax allocation or sharing
agreement.
(c) Except as
set forth on Schedule
5.12, (i) each affiliated group has filed all income Tax Returns that it
was required to file for each taxable period during which the Seller or any
Subsidiary was a member of the group, (ii) all such Tax Returns were true,
correct and complete in all respects, (iii) all income Taxes owed by any
affiliated group (whether or not shown on any Tax Return) have been paid for
each taxable period during which the Seller or any Subsidiary was a member of
the group, (iv) there is no dispute or claim concerning any income Tax Liability
of any affiliated group for any taxable period during which the Seller or any
Subsidiary was a member of any group either (a) claimed or raised by any
authority in writing or (b) as to which the directors and officers (and
employees responsible for Tax matters) of the Seller and its Subsidiaries has
Knowledge based upon personal contact with any agent of such authority, and (v)
no affiliated group has waived any statute of limitations in respect of any
income Taxes or agreed to any extension of time with respect to an income Tax
assessment or deficiency for any taxable period during which the Seller or any
Subsidiary was a member of the group.
(d) Except as
set forth on Schedule
5.12, neither the Seller nor any of its Subsidiaries has any Liability
for the Taxes of any Person other than the Seller and its Subsidiaries (i) under
Treasury Regulation §1.1502-6 (or any similar provision of state, local or
non-U.S. laws), (ii) as a transferer or successor, (iii) by contract or (iv)
otherwise.
(e) Neither
the Seller nor any of its Subsidiaries is or has been a party to any “reportable
transaction,” as defined in Section 6707A(c)(1) of the Code and Treasury
Regulation §1.6011-4(b).
Section
5.13 Employee Benefit
Plans.
(a) Each Plan
and each Benefit Program (as such terms are defined herein) is listed on Schedule 5.13
hereto. No Plan or Benefit Program is or has ever been (i) covered by
Title IV of ERISA, (ii) subject to the minimum funding requirements of Section 412 of the
Code or (iii) a “multiemployer plan”
as defined in Section
3(37) of ERISA, nor has the Seller, its Subsidiaries, or any entity which
together with the Seller or its Subsidiaries is under common control as
described in Section 414 of the Code contributed to, or ever had any obligation
to contribute to, any multi-employer plan. Each Plan and Benefit
Program intended to be qualified under Section 401(a) of the
Code is designated as a tax qualified plan on Schedule 5.13 is so
qualified. No Plan or Benefit Program provides for any retiree health
benefits for any employees or dependents of the Seller or any Subsidiary other
than as required by COBRA (as hereinafter defined). There are no
claims pending with respect to, or under, any Plan or any Benefit Program, other
than routine claims for benefits, and there are no disputes or litigation
pending or, to the Knowledge of the Seller or any Subsidiary, threatened, with
respect to any such Plans or Benefit Programs.
(b) The
Seller has heretofore delivered to Purchaser true and correct copies of the
following, if any:
(i) each Plan
and each Benefit Program listed on Schedule 5.13, all
amendments thereto as of the date hereof and all current summary plan
descriptions provided to employees regarding the Plans and Benefit
Programs;
(ii) each
trust agreement and annuity contract (or any other funding instruments)
pertaining to any of the Plans or Benefit Programs, including all amendments to
such documents to the date hereof;
(iii) each
management or employment contract or contract for personal services and a
complete description of any understanding or commitment between the Seller or
any Subsidiary on one hand, and any officer, consultant, director, employee or
independent contractor of the Seller or any Subsidiary on the other
hand.
(c) Each Plan
and Benefit Program has been maintained and administered in compliance with its
terms and in accordance with all applicable Legal Requirements. The Seller and
its Subsidiaries have no commitment or obligation to establish or adopt any new
or additional Plans or Benefit Programs or to increase the benefits under any
existing Plan or Benefit Program.
(d) Except as
set forth on Schedule
5.13, neither the execution and delivery of this Agreement, nor the
consummation of the Transactions will (i) result in any payment to be made by
the Seller or its Subsidiaries, including without limitation, severance,
unemployment compensation, golden parachute (defined in Section 280G of the
Code) or otherwise, becoming due to any employee of the Seller or any
Subsidiary, or (ii) increase any benefits otherwise payable under any Plan or
any Benefit Program.
Section
5.14 Employee and Labor
Matters.
(a) Set forth
on Schedule
5.14(a)(i) is a true and complete list dated as of January 31, 2009 of
all employees of the Seller and its Subsidiaries listing the title or position
held, base salary or wage rate and any bonuses, commissions, profit sharing, the
Seller’s and its Subsidiaries’ vehicles, club memberships or other compensation
or perquisites payable, all employee benefits received by such employees and any
other material terms of any written or oral agreement with the Seller or its
Subsidiaries. Set forth on Schedule 5.14(a)(ii)
is a detailed description of all health, dental, life and disability insurance
plans of the Seller and its Subsidiaries and a description of the cost per
employee under each such plan for individual coverage as well as for coverage of
such employee’s dependents.
(b) Except as
set forth on Schedule
5.14(b), neither the Seller nor its Subsidiaries is a party to or bound
by any written employment agreements or commitments, other than on an at-will
basis. The Seller and its Subsidiaries are in compliance with all applicable
Legal Requirements respecting the employment and employment practices, terms and
conditions of employment and wages and hours of its employees and are not
engaged in any unfair labor practice. All employees of the Seller and
its Subsidiaries who work in the United States are lawfully authorized to work
in the United States according to federal immigration laws. There is no labor
strike or labor disturbance pending or, to the Knowledge of the Seller or its
Subsidiaries, threatened against the Seller or its Subsidiaries with respect to
the Business and, during the past three years, neither the Seller nor any
Subsidiary has experienced a work stoppage.
(c) Except as
set forth on Schedule
5.14(c), (i) neither the Seller nor its Subsidiaries is a party to or
bound by the terms of any collective bargaining agreement or other union
contract applicable to any employee of the Seller or its Subsidiaries and no
such agreement or contract has been requested by any employee or group of
employees of the Seller or any Subsidiary, nor has there been any discussion
with respect thereto by management of the Seller or its Subsidiaries with any
employees of the Seller or its Subsidiaries, (ii) neither the Seller nor any
Subsidiary is aware of any union organizing activities or proceedings involving,
or any pending petitions for recognition of, a labor union or association as the
exclusive bargaining agent for, or where the purpose is to organize, any group
or groups of employees of the Seller or its Subsidiaries, or (iii) there is not
currently pending, with regard to any of its facilities, any proceeding before
the National Labor Relations Board, wherein any labor organization is seeking
representation of any employees of the Seller or its Subsidiaries.
Section
5.15 Environmental
Matters. Without in any manner limiting any other
representations and warranties set forth in this Agreement:
(a) Neither
the Seller, its Subsidiaries, nor any Business Facility is in violation of, has
violated, or has been or is in non-compliance with, any Environmental Laws,
including but not limited to the conduct of the business of the Seller or its
Subsidiaries or the ownership, use, maintenance or operation of any Business
Facilities. There are no pending or currently proposed changes to any
Environmental Laws and regulations which, when implemented or effective may
affect the operations of the Business. A list of all of the Business
Facilities is set forth on Schedule
5.15(a).
(b) Without
in any manner limiting the generality of (a) above:
(i) Except in
compliance with Environmental Laws (including, without limitation, by obtaining
necessary Environmental Permits), no Materials of Environmental Concern have
been used, generated, extracted, mined, beneficiated, manufactured, stored,
treated, or disposed of, or in any other way released (and no release is
threatened), on, under or about any Business Facility or transferred or
transported to or from any Business Facility, and no Materials of Environmental
Concern have been generated, manufactured, stored or treated or disposed of, or
in any other way released (and no release is threatened), on, under, about or
from any property adjacent to any current Business Facility;
(ii) The
Seller and its Subsidiaries are not now, and will not be in the future, as a
result of the operation of the business of the Seller or its Subsidiaries or the
condition of the Acquisition Assets or the Business Facilities as of the date of
Closing, subject to any: (a) contingent Liability in connection with
any release or threatened release of any Materials of Environmental Concern into
the environment whether on or off any Business Facility; (b) reclamation,
decontamination or Remediation (as defined in Exhibit A)
requirements under Environmental Laws, or any reporting requirements related
thereto; or (c) consent order, compliance order or administrative order relating
to or issued under any Environmental Law;
(iii) There are
no Environmental Claims known, pending or threatened against the Seller, its
Subsidiaries or any Business Facilities, and there is no basis for the
same;
(iv) The
Seller and its Subsidiaries have, and all Business Facilities have, all
Environmental Permits necessary to comply with all Environmental Laws applicable
to the operations of the business of the Seller and its Subsidiaries as
presently conducted, and the Seller, its Subsidiaries and the Business
Facilities are in compliance with all terms and conditions of such Environmental
Permits. The Seller and its Subsidiaries have timely filed
applications for renewal of all Environmental Permits. The Seller
further represents and warrants that it and all of the Business Facilities have
all environmental and pollution control equipment necessary to comply with all
Environmental Laws (including without limitation to comply with all applicable
Environmental Permits) applicable to the operation of the business of the Seller
and its Subsidiaries as presently conducted. Schedule 5.15(b)
lists each such permit, license or other authorization in the possession of the
Business. There are no other such permits, licenses or other
authorizations which are required by any Environmental Laws and regulations to
be obtained after the Closing;
(v) Regarding
all Environmental Permits for which renewal, amendment, or modification is
sought or pending, no material expenditures, capital improvements, or changes in
operation will be necessary as a condition or as a result of such renewal,
amendment, or modification;
(vi) The
Seller and its Subsidiaries have received no notice and have no Knowledge that
any occupant or tenant of any current Business Facility (a) is in violation of
any Environmental Law; (b) is the subject of any Environmental Claims; or (c)
does not have or has not renewed any Environmental Permits applicable to its
assets or operations;
(vii) There are
no, nor have there ever been any, storage tanks or solid waste management units
located on or under any Business Facility, and there are no Materials of
Environmental Concern on any Business Facility exceeding any standard or
limitation established, published or promulgated pursuant to Environmental Laws,
or which would require reporting to any Governmental Authority or Remediation to
comply with the Requirements of Environmental Laws;
(viii) None of
the off-site locations where Materials of Environmental Concern generated from
any Business Facility or for which the Seller or its Subsidiaries have arranged
for their disposal, treatment or application has been nominated or identified as
a facility which is subject to an existing or potential claim under
Environmental Laws;
(ix) Neither
the Seller nor any Subsidiary has been named as a potentially responsible party
under, and no Business Facility has been nominated or identified as a facility
which is subject to an existing or potential claim under CERCLA or comparable
Environmental Laws, and no Business Facility is subject to any Encumbrance
arising under Environmental Laws;
(x) Neither
the Seller nor any Subsidiary has received any notice of any release or
threatened release of Materials of Environmental Concern, or of any violation
of, noncompliance with, or remedial obligation under, Environmental Laws or
Environmental Permits, relating to the ownership, use, maintenance, operation of
any Business Facility or in connection with the business of the Seller or its
Subsidiaries, nor is there any basis for any of the foregoing, nor have the
Seller or any Subsidiary voluntarily undertaken Remediation or other
decontamination or cleanup of any facility or site or entered into any agreement
for the payment of costs associated with such activity;
(xi) There are
no Requirements of Environmental Laws that will require future compliance costs
on the part of the Seller or its Subsidiaries in excess of $10,000 above costs
currently expended in the ordinary course of business;
(xii) There are
no present or past events, conditions, circumstances, activities, practices,
incidents, actions or plans which may interfere with or prevent continued
compliance by the Seller or its Subsidiaries with Environmental Laws or which
may give rise to any common law or statutory Liability under Environmental Laws
or form the basis of an Environmental Claim against the Seller or its
Subsidiaries relating to the ownership, use, maintenance or operation of any
Business Facility by the Seller or its Subsidiaries or in connection with the
conduct of the business of the Seller or its Subsidiaries;
(xiii) There are
no obligations, undertakings or liabilities arising out of or relating to
Environmental Laws which the Seller or its Subsidiaries have agreed to, assumed
or retained, by contract or otherwise;
(xiv) The
Seller and its Subsidiaries have filed all notices, notifications, financial
security, waste managements plans, or applications which are required to be
obtained or filed by the Seller or its Subsidiaries for the operation of their
respective businesses or the use or operation of any Business
Facility;
(xv) The
Seller, its Subsidiaries and all Business Facilities are in compliance with all
other applicable limitations, restrictions, conditions, schedules and timetables
contained in Environmental Laws or contained in any plan, order, decree,
judgment, notice or demand letter issued, entered, promulgated or approved
thereunder; and
(xvi) No
current Business Facility (or equipment thereon) contains any asbestos
containing materials or polychlorinated biphenyls in any form nor any wetland
areas or other land subject to restricted development under Environmental
Laws.
For
purposes of this Section, the “Seller” shall include
any entity which is, in whole or in part, a predecessor of the Seller and all of
its present and former Subsidiaries and their predecessors.
Section
5.16 Non-Competition
Agreements. Neither the Seller nor its Subsidiaries is a party
to any agreement which purports to restrict or prohibit any such entity from,
directly or indirectly, engaging in any business. None of the
Seller’s or its Subsidiaries’ stockholders, officers, directors, or key
employees is a party to any agreement which, by virtue of such person’s
relationship with the Seller or its Subsidiaries, restricts the Seller or any
Subsidiary of the Seller from, directly or indirectly, engaging in any
business.
Section
5.17 Title to
Assets. The Seller and its Subsidiaries have good and
marketable title to all their respective assets and valid leasehold interests in
their respective leased assets and properties, as reflected in the most recent
balance sheet included in the Seller Financial Statements, except for properties
and assets that have been disposed of in the ordinary course of business since
the date of the latest balance sheet included therein, free and clear of all
Encumbrances, except (i) Encumbrances with respect to current taxes, payments of
which are not yet delinquent and (ii) any Encumbrance securing any debt or
obligation described on Schedule 5.17 which
is expressly referenced as being secured.
Section
5.18 Contracts, Agreements, Plans and
Commitments.
(a) Schedule 5.18 sets
forth a complete list of all material written and oral contracts, agreements,
plans and commitments to which the Seller or any Subsidiary is a party or by
which the Seller, any Subsidiary or any of the Acquisition Assets are bound,
including without limitation the following (collectively, the “Material
Agreements”):
(i) each
contract, agreement, or commitment, whether in the ordinary course of business
or not, and specifically including management agreements, which involves
performance of services by or for the delivery of goods by or to, or capital
expenditures by the Seller;
(ii) any
indenture, loan agreement or note under which the Seller or any Subsidiary has
outstanding Indebtedness, obligations or liabilities for borrowed
money;
(iii) any lease
or sublease for the use or occupancy of real property;
(iv) any
agreement that restricts the right of the Seller or its Subsidiaries to engage
in any type of business or compete with any Person or prohibiting or limiting
the ability of any Person to compete with such Seller or
Subsidiary;
(v) any
guarantee, direct or indirect, by any person of any contract, lease or agreement
entered into by the Seller or any Subsidiary;
(vi) any
partnership, joint venture or construction and operation agreement;
(vii) any
agreement of surety, guarantee or indemnification with respect to which the
Seller or any Subsidiary is the obligor, outside of the ordinary course of
business;
(viii) any
contract that requires the Seller or its Subsidiaries to pay for goods or
services substantially in excess of its estimated needs for such items or the
fair market value of such items;
(ix) any
contract or agreement between the Seller or any Subsidiary, on one hand, and any
Affiliate of the Seller or any Subsidiary on the other hand;
(x) any
contract, agreement, agreed order or consent agreement that requires the Seller
or any Subsidiary to take any actions or incur expenses to remedy non-compliance
with any Environmental Law; and
(xi) any other
contract material to the Seller, its Subsidiaries or their respective
businesses.
(b) True,
correct and complete copies of each of the Material Agreements have been
delivered to or made available for inspection by Purchaser. All such Material
Agreements (i) were duly and validly executed and delivered by the Seller or its
Subsidiaries, as the case may be, and the other parties thereto, (ii) are valid
and in full force and effect and (iii) are enforceable against the Seller or
Subsidiary that is a party thereto and the other parties to such Material
Agreements in accordance with their terms. The Seller and its
Subsidiaries have fulfilled all material obligations required of such party
under each Material Agreement to have been performed by it prior to the date
hereof, including timely paying all interest on its debt as such interest has
become due and payable. Except as set forth on Schedule 5.18, no
event of default or event that, but for the giving of notice or the lapse of
time or both, would constitute an event of default exists or, upon the
consummation by the Seller of the Transactions, will exist under any contract,
indenture, mortgage, loan agreement, note or other agreement or instrument for
borrowed money, any guarantee of any agreement or instrument for borrowed money
or any lease, contractual license or other agreement or instrument to which the
Seller or its Subsidiaries is a party or by which the Seller or its Subsidiaries
is bound or to which any of the properties, assets or operations of the Seller
or its Subsidiaries is subject.
(c) There are
no renegotiations of, or attempts to renegotiate, or outstanding rights to
renegotiate, any material amounts paid or payable to the Seller or its
Subsidiaries under current or completed contracts, agreements, or commitments
with any person or entity having the contractual or statutory right to demand or
require such renegotiation. No such person or entity has made written
demand for such renegotiation.
(d) The
consummation of the Transactions and the assignment of the Assigned Contracts
will vest in the Purchaser all rights and benefits under the contracts,
commitments, plans and agreements and the right to operate the Seller’s and its
Subsidiaries’ businesses and assets under the terms of the contracts,
commitments, plans and agreements in the manner currently operated and used by
the Seller and its Subsidiaries.
Section
5.19 Leased
Properties.
(a) Schedule 5.19 hereto
sets forth a list and summary description (including property location, parties
and annual rental payments) of all leases, subleases, management agreements and
other agreements as part of or related to the Business under which the Seller or
any Subsidiary is a lessor or lessee of, or uses or occupies or allows the use
or occupancy of, any real property, including but not limited to the Assigned
Leases. All such leases, subleases and other agreements are valid and
subsisting and in full force and effect, enforceable against each Seller or
Subsidiary that is a party thereto in accordance with their
terms. True, correct and complete copies of all of the Assigned
Leases, and all amendments thereto and assignments thereof have been delivered
to the Purchaser and are in good standing, valid and effective in accordance
with their respective terms, and there is not, under any of such leases,
amendments or assignments, any existing default or event which with notice or
lapse of time or both would become a default by or on behalf of the Seller or
any Subsidiary, or by or on behalf of any third party. Each of the
Assigned Leases constitute the entire agreement between Seller or its
Subsidiary, as the case may be, and the respective landlord thereunder with
respect to the Leased Premises covered thereby. No deposits or
prepayments have been made by the Seller or any Subsidiary in connection with
any Assigned Lease.
(b) The
leased property listed on Schedule 5.19,
including the leased property under the Assigned Leases (i) has full and free
access to and from highways, streets and roads and there is no proceeding
pending or, to the Knowledge of the Seller or any Subsidiary, threatened that
could result in the termination of or material limitations on such access (ii)
is connected to and serviced by utilities and public services all of which are
adequate for the use of the real property listed thereon as the Business is
currently, and proposed to be, conducted and (iii) is zoned, platted and
permitted for use in the manner in which it is currently being and proposed to
be used. There are no pending or, to the Knowledge of the Seller or
any Subsidiary, threatened, condemnation proceedings, lawsuits or administrative
actions relating to the Leased Premises covered by the Assigned
Leases. The buildings and improvements located on the Leased Premises
and any uses thereof are not in violation of applicable Legal Requirements,
setback requirements, zoning laws and ordinances or deed restrictions, and do
not encroach on any easement that may burden the Leased Premises. The
Seller and its Subsidiaries have not experienced during the two years preceding
the date hereof any material interruption in the delivery of adequate quantities
of any utilities (including without limitation electricity, natural gas, potable
water, water for cooling or similar purposes and fuel oil) or other public
services (including without limitation sanitary and industrial sewer service)
required in the operation of the Business during such period and no such
material interruption is, to the Knowledge of the Seller or any Subsidiary,
threatened. All leases under which the Seller or its Subsidiaries lease any real
property have been delivered to Purchaser and are in good standing, valid and
effective in accordance with their respective terms, and there is not, under any
of such leases, any existing default or event which with notice or lapse of time
or both would become a default by or on behalf of the Seller or its
Subsidiaries, or by or on behalf of any third party.
Section
5.20 Supplies. The
Supplies of the Seller and its Subsidiaries are of a quantity and quality that
have been normal for the Seller and its Subsidiaries in the ordinary course of
business of the Seller and its Subsidiaries and are owned by the Seller and its
Subsidiaries free and clear of any Encumbrances.
Section
5.21 Brokers and
Finders. Neither the Seller nor its Subsidiaries have entered
into any contract, arrangement or understanding with any person or firm which
may result in the obligation of the Seller or its Subsidiaries to pay any
finder’s fees, brokerage or agent commissions or other like payments in
connection with the Transactions. There is no claim for payment by
the Seller or its Subsidiaries of any investment banking fees, finder’s fees,
brokerage or agent commissions or other like payments in connection with the
negotiations leading to this Agreement or the consummation of the
Transactions.
Section
5.22 Intellectual
Property. Set forth on Schedule 5.22 is a
complete list of all registered patents, trademarks, service marks, trade names
and copyrights, and applications for and licenses (to or from the Seller or its
Subsidiaries) with respect to any of the foregoing (collectively, “Registered Intellectual
Property”), owned by the Seller or its Subsidiaries or with respect to
which the Seller or its Subsidiaries has any rights. The Seller or its
Subsidiaries have rights to use, whether through ownership, licensing or
otherwise, all Registered Intellectual Property and other
Intellectual Property used by the Seller or its Subsidiaries or necessary in
connection with the operation of the Seller’s or its Subsidiaries’ respective
businesses, without infringing on or otherwise acting adversely to the rights or
claimed rights of any Person, and neither the Seller nor any Subsidiary is
obligated to pay any royalty or other consideration to any Person in connection
with the use of any such Intellectual Property. No other Person is
infringing the rights of the Seller or its Subsidiaries in any of its
Intellectual Property. Nether the Seller nor its Subsidiaries have
entered into any agreement to indemnify any other party against any charge of
infringement of the Intellectual Property. The Seller and its
Subsidiaries have not and do not violate or infringe any intellectual property
rights of any other Person with respect to the Intellectual Property or
otherwise, and the Seller and its Subsidiaries have not received any
communication alleging that the Seller or any Subsidiary violates or infringes
and intellectual property rights of any other Person. Neither the
Seller nor any Subsidiary have been sued for infringing any intellectual
property rights of any other Person. There is no claim or demand of
any Person pertaining to, or any proceeding which is pending or, to the
Knowledge of the Seller or any Subsidiary, threatened, that challenges the
rights of the Seller or its Subsidiaries with respect to any Intellectual
Property, or that claims that any default exists with respect to any
Intellectual Property. None of the Intellectual Property is subject
to any outstanding Order.
Section
5.23 Relationships. Since
June 30, 2008, neither the Seller nor its Subsidiaries have received notice from
any customer, supplier or any party to any Contract (each a “Contract Party”) that
such customer, supplier or Contract Party intends to discontinue doing business
with the Seller or any Subsidiary, and, since such date, no customer, supplier
or Contract Party has indicated any intention (a) to terminate its existing
business relationship with the Seller or any Subsidiary, (b) not to continue its
business relationship with the Seller or any Subsidiary or (c) materially
decrease the rate of business done with the Seller or its Subsidiaries, whether
as a result of the Transactions or otherwise. The Seller and
its Subsidiaries have not entered into or participated in any related party
transaction during the past three years.
Section
5.24 Certain
Payments. Neither the Seller, its Subsidiaries nor any
stockholder, officer, director or employee of the Seller or any Subsidiary has
paid or received or caused to be paid or received, directly or indirectly, in
connection with the business of the Seller or its Subsidiaries (a) any bribe,
kickback or other similar payment to or from any domestic or foreign government
or agency thereof or any other person or (b) any contribution to any domestic or
foreign political party or candidate (other than from personal funds of such
stockholder, officer, director or employee not reimbursed by the Seller or its
Subsidiaries or as permitted by applicable Legal Requirements).
Section
5.25 Books and
Records. The Books and Records of the Seller and its
Subsidiaries are correct and complete in all material respects and the
signatures appearing on all documents contained therein are the true signatures
of the person purporting to have signed the same. All actions
reflected in said Books and Records were duly and validly taken in compliance
with the Legal Requirements of the applicable jurisdiction and no meeting of the
board of directors or stockholders of the Seller, its Subsidiaries or any
committee thereof has been held for which minutes have not been prepared and are
not contained in the minute books. To the extent that they exist, all Books and
Records and all other records of every type and description that relate to the
Business have been prepared and maintained in accordance with good business
practices and, where applicable, in conformity with GAAP and applicable Legal
Requirements. All such books and records are located in the offices
of the Seller or its Subsidiaries.
Section
5.26 Condition and Sufficiency of
Assets. All buildings, improvements, equipment and Acquisition
Assets owned or leased by the Seller or its Subsidiaries are structurally sound,
in good operating condition and repair (subject to normal wear and tear) and
adequate for the uses to which they are being put, and none of the buildings,
improvements, equipment or Acquisition Assets owned or leased by the Seller or
its Subsidiaries is in need of maintenance or repairs except for ordinary,
routine maintenance and repairs consistent with past practice. The
Acquisition Assets, taken as a whole, are sufficient to conduct the Business
after the Closing Date in the same manner as presently conducted and as
reflected in the Seller Financial Statements.
Section
5.27 Board
Approval; State; Vote Required.
(a) The
Seller’s board of directors, by resolutions duly adopted at a meeting duly
called and held, has duly (i) approved this Agreement and the Transactions, (ii)
determined that the Purchase Price is fair to the Seller, (iii) recommended that
the stockholders of the Seller adopt this Agreement, and (iv) directed that this
Agreement be submitted for consideration by the Seller’s stockholders at the
Seller Stockholders’ Meeting (collectively, the “Seller Board
Recommendation”).
(b) The only
vote of the holders of any class or series of capital stock or other securities
of the Seller necessary to approve this Agreement and the Transactions is the
affirmative vote of the holders of a majority of the outstanding shares of
Seller common stock in favor of the adoption of this Agreement (the “Stockholder
Approval”). The holders of the Series A Convertible Preferred
Stock and Series B Convertible Preferred Stock have approved this Agreement and
the Transactions.
Section
5.28 Opinion of Financial
Advisor. The board of directors of the Seller shall receive a
written opinion from ▇▇▇▇▇▇ Financial and Economic Advisory Services dated as of
the date of this Agreement and addressed to the board of directors of the Seller
to the effect that, as of the date thereof and based upon and subject to the
limitations, qualifications and assumptions set forth therein, that, from a
financial point of view, the Purchase Price to be offered to the Seller is fair
to the Seller. An executed copy of the opinion has been delivered to
the Purchaser for informational purposes only.
Section
5.29 Information
Supplied.
(a) Each
document required to be filed by the Seller with the SEC in connection with the
Transactions, including without limitation, the proxy or information statement
of the Seller containing information required by Regulation 14A under the
Exchange Act, and, if applicable, Rule 13e-3 and Schedule 13E-3 under the
Exchange Act (together with all amendments and supplements thereto, the “Proxy Statement”), to
be filed with the SEC in connection with the Transactions, will, when filed,
comply as to form in all material respects with the applicable requirements of
the Exchange Act.
(b) None of
the information included or incorporated by reference in the Proxy Statement
will, at the date it is first mailed to the Seller’s stockholders or at the time
of the Seller Stockholders’ Meeting or at the time of any amendment or
supplement thereof, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading.
Section
5.30 Disclosure. There
is no fact known to the Seller or its Subsidiaries (other than general economic
conditions) that would have a Material Adverse Effect that has not been set
forth in this Agreement or in the schedules attached hereto or to be delivered
in connection with this Agreement.
ARTICLE
VI
[Intentionally
Deleted]
ARTICLE
VII
CERTAIN
UNDERSTANDINGS AND AGREEMENTS OF THE PARTIES
Section
7.1 Confidentiality. Each
Party agrees to maintain in confidence and not disclose to any other Person the
terms of the Transactions and the information obtained in confidence from the
other Party in connection with the Transactions, other than (i) disclosures
required to obtain the approvals for the Transactions; (ii) disclosures to those
professionals and advisors who have a need to know; (iii) disclosures of
information already available to the public or (iv) any other disclosures
required by an applicable Legal Requirement. In the event that a
Party is at any time requested or required (by oral questions, interrogatories,
request for information or documents, subpoena or other similar process) to
disclose any information supplied to it in connection with the Transactions,
such Party agrees to provide the other Party prompt notice of such request so
that an appropriate protective order may be sought and/or such other party may
waive the first Party’s compliance with the terms of this Section
7.1.
Section
7.2 Further
Assurances. The Parties shall execute and deliver to the
other, at the Closing Date or thereafter, any other instrument which may be
reasonably requested by the other and which is reasonably appropriate to perfect
or evidence any of the sales, assignments, transfers or conveyances contemplated
by this Agreement, or to transfer any Acquisition Assets identified after the
Closing, or to obtain any consents, licenses or permits necessary for Purchaser
to operate the Business in the manner operated by the Seller prior to the
Closing Date and to do all such further acts and things as may be reasonably
necessary to effect completely the intent of this Agreement.
Section
7.3 Agreement to
Cooperate. Subject to the terms and conditions herein
provided, the Parties hereto shall use all reasonable efforts to take, or cause
to be taken, all action and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to consummate and make
effective the Transactions, including using all reasonable efforts to obtain (i)
all necessary, proper or advisable waivers, consents and approvals under
applicable laws and regulations to consummate and make effective the
Transactions, and (ii) all necessary or appropriate waivers, consents or
approvals of third parties required in order to preserve material contractual
relationships of the Seller.
Section
7.4 Public
Statements. Except as required by law, no Party shall issue
any press release or written public statement with respect to this Agreement or
the Transactions without the prior written consent of the other Party, which
will not be unreasonably withheld.
Section
7.5 Notification of Certain
Matters. Each Party agrees to give prompt notice to the other
Party of, and to use reasonable best efforts to prevent or promptly remedy, any
material failure (or any failure in the case of any covenant, condition or
agreement containing any materiality qualification) on its part to comply with
or satisfy any covenant, condition or agreement to be complied with or satisfied
by it hereunder; provided,
however, that the delivery of any notice pursuant to this Section shall
not limit or otherwise affect the remedies available hereunder to the Party
receiving such notice.
Section
7.6 Employees.
(a) The
Purchaser may, but shall not be obligated to, offer employment to any of the
employees of the Seller. The Seller and its Subsidiaries will not
solicit, or endeavor to solicit, after the Closing Date any employee or
discourage any such person from accepting such employment with the
Purchaser. Neither the Seller nor its Subsidiaries have made any
representations or promises, oral or written, to employees of the Seller or its
Subsidiaries concerning employment by the Purchaser.
(b) The
Purchaser shall not be responsible for any costs, obligations or liabilities
which may result from the termination of employment by the Seller of any
employee of the Business not hired by the Purchaser as of the first payroll date
after the Closing; provided, however, the Purchaser shall
be responsible for and shall assume any and all costs, obligations or
liabilities directly related to the termination by Purchaser of any employee of
the Business who is hired by the Purchaser on or after the Closing Date solely
to the extent that such costs, obligations or liabilities relate directly to the
period beginning with the hiring of such employee by the Purchaser and ending
with such termination by the Purchaser. The Purchaser makes no
representation with respect to the comparability of the Purchaser’s employee
benefits to those offered by the Seller. The Purchaser specifically
disclaims any obligation to remunerate employees of the Seller who, following
the Closing Date, will be employed by the Purchaser, at levels comparable to the
aggregate remuneration provided to such employees while employed by the
Seller. Prior to the Closing Date, the Seller shall have taken all
necessary actions to comply with the Worker Adjustment and Retraining
Notification Act (the “WARN Act”) to the
extent it is subject to the WARN Act, and the Purchaser shall not have any
disclosure or announcement obligations or any other responsibilities under the
WARN Act as a result of the Transactions.
(c) The
Seller shall take such actions as it deems appropriate to terminate, modify,
alter or amend the existing Plans or Benefit Programs with respect to employees
of the Business due to the Transactions. The Purchaser does not and
shall not assume any of such Plans or Benefit Programs, including, without
limitation, any severance plans of the Seller.
(d) The
Seller shall be solely responsible for and shall pay in full to all of the
Seller’s employees all compensation, bonuses and other payments, and all sick
pay, vacation pay, and any other benefits otherwise payable under the Benefit
Programs, accrued to the Closing for which the Seller is obligated thereunder,
and the Seller shall satisfy all such obligations to such
employees.
(e) The
Seller will retain responsibility for, and continue to pay, all hospital,
medical, life insurance, disability, supplemental unemployment and all other
welfare plan expenses and benefits for each Seller employee hired by the
Purchaser (and covered dependents) with respect to claims incurred by such
employee or their covered dependents prior to the Closing. The Seller
will retain responsibility for, and continue to pay, any life, health or other
welfare benefits payable to each former employee of the Seller who terminated
employment with the Seller (and their dependents) on or prior to the Closing in
respect of claims incurred on their behalf prior to the Closing. For
purposes of this paragraph, a claim is deemed incurred when the event that first
gave rise to the claim occurred, notwithstanding the fact that such benefits may
be paid at a subsequent date.
(f) The
Seller is responsible for any liabilities that may arise with respect to
application of Section 4980B of the Code or Part 6 of Subtitle B of Title I of
ERISA (“COBRA”)
with respect to any of its employees or covered dependents as a result of the
Transactions, as well as for any prior COBRA violations which occurred prior to
Closing. The Purchaser is not a successor employer for COBRA
purposes.
(g) The
Purchaser is not, and shall not be deemed to be, a successor employer to the
Seller with respect to any Plans or Benefit Programs; and no plan or other
program adopted or maintained by the Purchaser after the Closing is or shall be
deemed to be a “successor plan”, as such term is defined in ERISA or the Code,
of any such Plan or Benefit Program.
Section
7.7 Taxes.
(a) Liability for
Taxes. The Seller shall be liable for, and shall indemnify and
hold its Subsidiaries, the Purchaser and its Affiliates harmless from and
against, (i) all Taxes (or the nonpayment thereof) that are imposed on or
incurred by the Seller, (ii) all Taxes (or the nonpayment thereof) that are
imposed on or incurred with respect to the Acquisition Assets or the Business
for any taxable period ending on or before the Closing Date, (iii) a portion,
determined as described below, of any Taxes that are imposed on or incurred with
respect to the Acquisition Assets or the Business for any taxable period
beginning prior to and ending after the Closing Date (“Straddle Period”)
which is allocable to the period ending on or before the Closing Date, (iv) all
Taxes of any member of an affiliated, consolidated, combined or unitary group of
which the Seller or any of its Subsidiaries is or was a member on or prior to
the Closing Date, (v) any Taxes payable as a result of a breach by the Seller of
any of the representations set forth in Section 5.11 hereof,
and (vi) any attorneys’ fees or other costs incurred by the Purchaser or its
Affiliates in connection with any payment from the Seller under this Section
7.8(a). The determination of the portion of any Taxes imposed
on or incurred with respect to the Acquisition Assets or the Business for a
Straddle Period which is allocable to the period ending on or before the Closing
Date shall be made, in the case of ad valorem, property or similar Taxes, if
any, which are not measured by or based upon production, or franchise or capital
Taxes which are not measured by or based upon net income, by allocating such
Taxes on a per diem basis, and, in the case of all other Taxes, by assuming that
the period ending on or before the Closing Date constitutes a separate taxable
period and by taking into account the actual taxable events occurring during
such period.
(b) Responsibility for Filing
Tax Returns for Periods through Closing Date. The Seller shall
include the income of its Subsidiaries (including any deferred items
triggered into income by Treasury Regulation §1.1502-13 and any excess loss
account taken into income under Treasury Regulation §1.1502-19) on the Seller’s
consolidated federal income Tax Returns for all periods through the Closing Date
and pay any federal income Taxes attributable to such income. For all
taxable periods ending on or before the Closing Date, the Seller shall cause its
Subsidiaries to join in the Seller’s consolidated federal income Tax Return and,
in jurisdictions requiring separate reporting from the Seller, to file separate
company state and local income Tax Returns. All such Tax Returns
shall be prepared and filed in a manner consistent with prior practice, except
as required by a change in applicable Legal Requirements. The
Purchaser shall have the right to review and comment on any such Tax Returns
prepared by the Seller. The Purchaser shall cause the Seller's
Subsidiaries to furnish information to the Seller as reasonably requested by the
Seller to allow the Seller to satisfy its obligations under this section in
accordance with past custom and practice. The Seller’s Subsidiaries
and the Purchaser shall consult and cooperate with the Seller as to any
elections to be made on returns of the Seller's Subsidiaries for periods ending
on or before the Closing Date. The Purchaser shall cause the
Seller's Subsidiaries to file income Tax Returns or shall include the
Seller's Subsidiaries in its combined or consolidated income Tax Returns for all
periods other than periods ending on or before the Closing Date.
(c) Audits. The
Seller shall allow the Purchaser and its counsel to participate at Purchaser's
expense in any audit of the Seller’s consolidated federal income Tax Returns to
the extent that such returns relate to the Seller's Subsidiaries. The
Seller shall not settle any such audit in a manner that would adversely affect
the Seller's Subsidiaries after the Closing Date unless such settlement would be
reasonable in the case of a Person that owned the Seller and its Subsidiaries
both before and after the Closing Date.
(d) Carrybacks. The
Seller shall immediately pay to the Purchaser any Tax refund (or reduction in
Tax liability) resulting from a carryback of a post-acquisition Tax attribute of
any of the Seller's Subsidiaries into the Seller consolidated Tax Return, when
such refund (or reduction) is realized by the Seller’s group. At the
Purchaser’s request, the Seller will cooperate with the Purchaser and the
Seller's Subsidiaries in obtaining such refund (or reduction), including through
the filing of amended Tax Returns or refund claims. The Purchaser
agrees to indemnify the Seller for any Taxes resulting from the disallowance of
such post-acquisition Tax attribute on audit or otherwise.
(e) Retention of
Carryovers. The Seller shall not elect to retain any net
operating loss carryovers or capital loss carryovers of the Seller's
Subsidiaries.
(f) Post-Closing
Elections. At the Seller’s request, the Purchaser will
cause any of the Seller's Subsidiaries to make or join with the Seller in making
any other election if the making of such election does not have an adverse
impact on the Purchaser (or any of the Seller's Subsidiaries) for any
post-acquisition Tax period.
(g) §338(h)(10)
Election. At the Purchaser's option, the Seller
and the Purchaser shall join in making an election under Code §338(h)(10) (and
any corresponding elections under state, local, or non-U.S. tax law)
(collectively a ‘‘§338(h)(10)
Election’’) with respect to the purchase and sale of the stock of the
Seller’s Subsidiaries hereunder. The Seller will pay any Tax
attributable to the making of the §338(h)(10) Election and will indemnify the
Purchaser and the Seller's Subsidiaries against any adverse consequences arising
out of any failure to pay such Tax. The Purchaser will also pay any
state, local, or foreign Tax (and indemnify the Purchaser and the Seller's
Subsidiaries against any adverse consequences arising out of any failure to pay
such Tax) attributable to an election under state, local, or foreign law similar
to the election available under Code §338(g) (or that results from the making of
an election under Code §338(g)) with respect to the purchase and sale of the
stock of the Seller's Subsidiaries hereunder.
(h) Allocation of Purchase
Price. The Parties agree that the Purchase Price and the Liabilities of
the Seller's Subsidiaries (plus other relevant items) will be allocated to the
assets of the Seller and the Seller's Subsidiaries for all purposes (including
Tax and financial accounting purposes) as shown on the allocation schedule
attached as Schedule
2.4 hereto, and the Seller shall file all Tax Returns (including amended
returns and claims for refund) and information reports in a manner consistent
with such allocation.
(i) Other
Taxes. The Seller shall be liable for and pay, and shall
indemnify and hold the Purchaser harmless from all transfer, sales, use, gross
receipts, stamp, value added, excise, or similar Taxes imposed on or relating to
the sale or transfer of the Acquisition Assets or the Business.
Section
7.8 Consents. The
Seller shall use its best efforts to procure all consents, novations, approvals
or waivers in a form reasonably satisfactory to the Purchaser which must be
obtained by the Seller pursuant to this Agreement or which are necessary to
assign the Assigned Leases, Assigned Contracts and Assigned Permits and transfer
any other Acquisition Assets to the Purchaser. To the extent such
consents cannot be obtained, the Seller will use its best efforts to take such
actions as may be possible without violation or breach of any such nonassignable
Assigned Leases, Assigned Contracts or Assigned Permits to effectively provide
the Purchaser with the economic benefits of such nonassignable Assigned Leases,
Assigned Contracts and Assigned Permits. At the Closing, the
Purchaser may, but shall not be obligated to, elect to close the Transactions,
notwithstanding the fact that the Seller may have failed to obtain consents to
the transfer.
Section
7.9 Change of
Name. Within fifteen (15) days after the Closing Date, the
Seller will cause its name to be changed to a name not containing “▇▇▇▇▇▇▇▇” or
any name or ▇▇▇▇ confusingly similar to “▇▇▇▇▇▇▇▇”.
ARTICLE
VIII
[Intentionally
Deleted]
ARTICLE
IX
[Intentionally
Deleted]
ARTICLE
X
INDEMNIFICATION
Section
10.1 The Seller’s Indemnity
Obligations. The Seller shall indemnify, hold harmless and
defend the Purchaser, and the Purchaser’s officers, partners, employees, agents,
representatives and Affiliates (each a “Purchaser Indemnified
Party”) from and against, and shall reimburse the Purchase Indemnified
Parties for, any and all claims (including without limitation, Environmental
Claims), actions, causes of action, arbitrations, proceedings, losses, damages,
remediations, liabilities, strict liabilities, judgments, fines, penalties and
expenses (including, without limitation, reasonable attorneys’ fees)
(collectively, the “Indemnified Amounts”)
paid, imposed on or incurred by a Purchaser Indemnified Party or for which a
Purchaser Indemnified Party bears responsibility directly or indirectly,
resulting from, caused by, arising out of, or in any way relating to and with
respect to any of, or any allegation by any third party of, the
following:
(a) any
breach or misrepresentation in any of the representations and warranties made by
or on behalf of the Seller in this Agreement, including without limitation with
respect to environmental matters, or in any certificate, instrument or agreement
delivered in connection with this Agreement;
(b) any
violation or breach by the Seller or any Subsidiary of, or default by the Seller
or any Subsidiary under, the terms of this Agreement or of any certificate,
instrument or agreement delivered in connection with this
Agreement;
(c) any act
or omission by the Seller, its Subsidiaries, or any officer, director, partner, employee, agent
or representative of the Seller or its Subsidiaries occurring or commencing on
or prior to the Closing Date (including any claim by a third party, employee or
customer, arising out of or relating to any act or omission by the Seller, its
Subsidiaries or any officer, director, partner, employee, agent or
representative of the Seller or its Subsidiaries occurring on or prior to the
Closing Date);
(d) any
Environmental Claim and/or any violation of any Requirements of Environmental
Law if such Environmental Claim or violation relates, directly or indirectly, to
events, conditions, operations, facts or circumstances which occurred or
commenced on or prior to the Closing Date;
(e) any Taxes
incurred by the Parties as a result of the consummation of the Transactions;
or
(f) the
Excluded Liabilities.
For
purposes of this Section 10.1,
Indemnified Amounts shall include without limitation those Indemnified Amounts
ARISING OUT OF THE STRICT LIABILITY (INCLUDING BUT NOT LIMITED TO STRICT
LIABILITY ARISING PURSUANT TO ENVIRONMENTAL LAWS) OR NEGLIGENCE OF ANY PARTY,
INCLUDING ANY PURCHASER INDEMNIFIED PARTY, WHETHER SUCH NEGLIGENCE BE SOLE,
JOINT OR CONCURRENT, ACTIVE OR PASSIVE.
Section
10.2 Purchaser’s Indemnity
Obligations. Purchaser shall indemnify, hold harmless and
defend the Seller and the Seller’s agents, representatives and Affiliates (each
a “Seller Indemnified
Party”) from and against, and shall reimburse the Seller Indemnified
Parties for, any and all Indemnified Amounts paid, imposed on or incurred by a
Seller Indemnified Party, or for which a Seller Indemnified Party bears
responsibility directly or indirectly, resulting from, caused by, arising out
of, or in any way relating to and with respect to any of, or any allegation by
any third party of, the following:
(a) any
breach or misrepresentation in any of the representations and warranties made by
or on behalf of Purchaser in this Agreement or in any certificate or instrument
delivered in connection with this Agreement;
(b) any
violation or breach by Purchaser of or default by Purchaser under the terms of
this Agreement or of any certificate or instrument delivered in connection with
this Agreement; or
(c) the
Assumed Liabilities.
Section
10.3 Indemnification
Procedures. All claims for indemnification under this
Agreement shall be asserted and resolved as follows:
(a) (i) Any
Party claiming indemnification under this Agreement (an “Indemnified Party”)
shall promptly give written notice (a “Claim Notice”) to the
Party from whom indemnification is sought (the “Indemnifying Party”)
of any third party claim(s) asserted against the Indemnified Party (a “Third Party Claim”),
which Claim Notice shall include a copy of all papers served with respect to
such Third Party Claim, a description in reasonable detail of the nature of the
Third Party Claim, an estimate of the amount of damages attributable to the
Third Party Claim to the extent feasible (which estimate shall not be conclusive
of the final amount of such claim) and the basis of the Indemnified Party’s
request for indemnification under this Agreement. Failure to deliver
a Claim Notice will not relieve the Indemnifying Party of any Liability that it
may have to the Indemnified Party, except to the extent the defense of such
action is materially and irrevocably prejudiced by the Indemnified Party’s
failure to give such Claim Notice.
(ii) The
Indemnifying Party will have the right to defend against a Third Party Claim
with counsel of its choice reasonably satisfactory to the Indemnified Party if
(A) within 15 days following receipt of the Claim Notice the Indemnifying Party
notifies the Indemnified Party in writing that the Indemnifying Party will
indemnify the Indemnified Party from and against the Third Party Claim, (B) the
Indemnifying Party provides the Indemnified Party with evidence reasonably
acceptable to the Indemnified Party that the Indemnifying Party will have the
financial resources to defend against the Third Party Claim and pay, in cash,
all damages the Indemnified Party may suffer resulting from, relating to,
arising out of, or attributable to the Third Party Claim, (C) the Third Party
Claim involves only money damages and does not seek an injunction or other
equitable relief, (D) settlement of, or an adverse judgment with respect to, the
Third Party Claim is not in the good faith judgment of the Indemnified Party
likely to establish a precedential custom or practice materially adverse to the
continuing business interests of the Indemnified Party, and (E) the Indemnifying
Party continuously conducts the defense of the Third Party Claim actively and
diligently.
(iii) So
long as the Indemnifying Party is conducting the defense of the Third Party
Claim in accordance with Section 10.3(a)(ii),
(A) the Indemnified Party may retain separate co-counsel at its sole cost and
expense and participate in the defense of the Third Party Claim, (B) the
Indemnified Party will not consent to the entry of any Order with respect to the
Third Party Claim without the prior written consent of the Indemnifying Party
(not to be unreasonably withheld), and (C) the Indemnifying Party will not
consent to the entry of any Order with respect to the Third Party Claim without
the prior written consent of the Indemnified Party (not to be unreasonably
withheld, provided that it will not be deemed to be unreasonable for an
Indemnified Party to withhold its consent (1) with respect to any finding of or
admission (x) of any violation of any law, order or permit, (y) of any violation
of the rights of any Person, or (z) which Indemnified Party believes could have
a material adverse effect on any other actions to which the Indemnified Party or
its Affiliates are party or to which the Indemnified Party has a good faith
belief they may become party, or (2) if any portion of such order would not
remain sealed).
(iv) If
any condition in Section 10.3(a)(ii)
is or becomes unsatisfied, (A) the Indemnified Party may defend against, and
consent to the entry of any order with respect to, a Third Party Claim in any
manner it may deem appropriate (and the Indemnified Party need not consult with,
or obtain any consent from, the Indemnifying Party in connection therewith), (B)
the Indemnifying Party will be obligated to reimburse the Indemnified Party
promptly and periodically for the costs, expenses and damages relating to
defending against the Third Party Claim, and (C) the Indemnifying Party will
remain liable for any damages the Indemnified Party may suffer relating to the
Indemnification Claim to the fullest extent provided in this Section
10.3(a).
(b) In the
event any Indemnified Party should have a claim against any Indemnifying Party
hereunder that does not involve a Third-Party Claim, the Indemnified Party shall
transmit to the Indemnifying Party a written notice (an “Indemnity Notice”)
describing in reasonable detail the nature of the claim, an estimate of the
amount of damages attributable to such claim to the extent feasible (which
estimate shall not be conclusive of the final amount of such claim) and the
basis of the Indemnified Party’s request for indemnification under this
Agreement.
(c) Notwithstanding
anything to the contrary within this Section or Agreement, both the Indemnifying
Party and the Indemnified Party agree to reasonably cooperate in resolving any
dispute or claim which triggers this Article
X.
ARTICLE
XI
GENERAL
PROVISIONS
Section
11.1 Survival. The
representations and warranties set forth in this Agreement and in any
certificate or instrument delivered in connection herewith shall be continuing
and shall survive the Closing for a period of two (2) years following the
Closing Date; provided,
however, that there
shall be no such termination with respect to any such representation or warranty
as to which a bona fide claim has been asserted by written notice of such
claim delivered to the Party making such representation or warranty prior to the
expiration of the survival period; provided, further, that the
representations and warranties (i) set forth in Sections 5.1, 5.2, 5.3, 5.10, 5.12, 5.13, and 5.21 hereof shall
survive the Closing indefinitely, (ii) Sections 5.14, and
5.15 shall
survive the Closing for the greater of two (2) years or the statutory survival
period of the underlying claim. The covenants and agreements,
including but not limited to indemnification obligations, set forth in this
Agreement and in any certificate or instrument delivered in connection herewith
shall be continuing and shall survive the Closing; provided, however, that the
indemnification obligations of the Seller set forth in Section 10.1(a) shall
survive the Closing until termination of the applicable representations and
warranties. The indemnification obligations of the Seller set forth
in Sections 10.1(b),
(c), (d), (e) and (f) shall survive the Closing without
limitation.
Section
11.2 Notices. All
notices and other communications hereunder shall be in writing and shall be
deemed given if delivered personally, mailed by registered or certified mail
(return receipt requested) or sent via facsimile to the Parties at the following
addresses (or at such other address for a Party as shall be specified by like
notice):
(a) If to
Purchaser, to:
▇▇▇▇▇▇▇▇
Technologies, LLC
▇▇▇▇ ▇.
▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇▇ ▇▇▇▇▇▇
Telecopy:
(▇▇▇) ▇▇▇-▇▇▇▇
with a
copy to:
▇▇▇▇▇
Lord Bissell & Liddell LLP
▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇
Attention:
▇▇▇ ▇▇▇▇▇▇▇
Telephone:
(▇▇▇) ▇▇▇-▇▇▇▇
Telecopy:
(▇▇▇) ▇▇▇-▇▇▇▇
(b) If to
Seller, to:
▇▇▇▇▇▇▇▇
Industries, Inc.
▇▇▇
▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇
with a
copy to:
__________________________________
__________________________________
__________________________________
Section
11.3 Interpretation. The
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the interpretation of this Agreement. In this
Agreement, unless a contrary intention is specifically set forth, (i) the words
“herein”,
“hereof” and
“hereunder” and
other words of similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision, (ii) the words “including”, “including without
limitation”, and “including but not limited
to” and other words of similar import do not imply any limitation on (but
may expand) the antecedent reference and (iii) reference to any Article or
Section means such Article or Section hereof. No provision of this
Agreement shall be interpreted or construed against any Party solely because
such Party or its legal representative drafted such provision. The parties
intend that each representation, warranty, and covenant contained herein shall
have independent significance. If any party has breached any
representation, warranty, or covenant contained herein in any respect, the fact
that there exists another representation, warranty or covenant relating to the
same subject matter (regardless of the relative levels of specificity) which the
party has not breached shall not detract from or mitigate the fact that the
party is in breach of the first representation, warranty or
covenant.
Section
11.4 Miscellaneous. This
Agreement (including the documents and instruments referred to herein and the
Schedules and Exhibits attached hereto) (a) constitutes the entire agreement and
supersedes all other prior agreements and understandings, both written and oral,
among the Parties, or any of them, with respect to the subject matter hereof,
and (b) shall not be assigned by operation of law or otherwise except that
Purchaser may assign this Agreement to one or more of its Affiliates, but no
such assignment shall relieve the Purchaser of its obligations
hereunder. The rights and remedies provided in this Agreement shall
be cumulative and not exclusive of any rights or remedies provided by
law.
Section
11.5 Governing Law;
Venue. THIS
AGREEMENT SHALL BE GOVERNED IN ALL RESPECTS, INCLUDING VALIDITY, INTERPRETATION
AND EFFECT, BY THE LAWS OF THE STATE OF TEXAS APPLICABLE TO CONTRACTS EXECUTED
AND TO BE PERFORMED WHOLLY WITHIN SUCH STATE. Each of the
Parties hereto agrees that any action or proceeding brought to enforce the
rights or obligations of any party hereto under this Agreement shall be
commenced and maintained in any court of competent jurisdiction located in
▇▇▇▇▇▇ County, Texas, and that any Texas state court or federal court sitting in
▇▇▇▇▇▇ County, Texas shall have exclusive jurisdiction over any such action or
proceeding brought by any of the parties hereto. Each of the Parties
hereto further agrees that process may be served upon it by certified mail,
return receipt requested, addressed as more generally provided in Section 11.2 hereof,
and consents to the exercise of jurisdiction over it and its properties with
respect to any action or proceeding arising out of or in connection with this
Agreement or the Transactions or the enforcement of any rights under this
Agreement.
Section
11.6 Amendment. This
Agreement may not be amended except by an instrument in writing signed on behalf
of all of the Parties.
Section
11.7 Counterparts. This
Agreement may be executed in two or more counterparts, each of which shall be
deemed to be an original, but all of which shall constitute one and the same
agreement.
Section
11.8 Parties in
Interest. This Agreement shall be binding upon and inure
solely to the benefit of each Party hereto, and nothing in this Agreement,
express or implied, is intended to confer upon any other person any rights or
remedies of any nature whatsoever under or by reason of this
Agreement.
Section
11.9 Validity. The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provisions of this Agreement,
which shall remain in full force and effect.
[Signature
Page Follows]
IN
WITNESS WHEREOF, the Parties have executed and delivered this Agreement
effective as of the date first written above.
PURCHASER:
|
|
▇▇▇▇▇▇▇▇
TECHNOLOGIES, LLC
|
By: Fabcorp, Inc., Sole
Member
By:
Name:
Title:
SELLER:
▇▇▇▇▇▇▇▇
INDUSTRIES, INC.
By:
Name:
Title:
EXHIBIT
A
Glossary
For
purposes of this Agreement, the following terms shall have the meaning specified
or referred to below when capitalized (or if not capitalized, unless the context
clearly requires otherwise) when used in this Agreement.
“Affiliate(s)” with
respect to any Person, means any Person directly or indirectly controlling,
controlled by or under common control with such Person, and any natural Person
who is an officer, director or partner of such Person and any members of their
immediate families living within the same household. A Person shall be deemed to
control another Person if such Person possesses, directly or indirectly, the
power to direct or cause the direction of the management and policies of such
other Person, whether through the ownership of voting securities, by contract or
otherwise.
“Benefit Program”
means any plan, policy, contract, program, commitment or arrangement providing
for bonuses, deferred compensation, retirement payments, profit sharing,
incentive pay, commissions, hospitalization or medical expenses or insurance or
any other benefits for any officer, consultant, director, annuitant, employee or
independent contractor of the Seller or any Subsidiary as such or members of
their families (other than directors’ and officers’ liability policies), whether
or not insured.
“Books and Records”
means all books, records, papers, documents, instruments, books of account,
files and data, catalogs, brochures, sales literature, promotional material,
personnel files, reports, strategic planning documents, financial forecasts,
certificates and other documents of whatever nature and wherever located that
are in the possession or control of the Seller or its Subsidiaries, that relate
to the Business or the Acquisition Assets or which are required or necessary in
order for the Purchaser to conduct the Business from and after the Closing Date
in the manner in which it is presently being conducted, including, without
limitation, accounting and financial records relating to the Assigned Contracts,
maintenance records, environmental records, analytical data and reports,
correspondence with Governmental Authorities relating to the Business, customer
and supplier lists and other customer and supplier data relating to the purchase
of supplies or sales of goods or services, notices of claims or demands by third
parties, copies of Material Agreements and confidential information relating to
the Business;
“Business” means the
manufacture, engineering, fabrication and distribution of engineered products
and chemicals in the fuel distribution, water treatment and utility vehicle
industries and any other business engaged in by the Seller and the Acquired
Entities.
“Business Facility” or
“Business
Facilities” includes any property (whether real or personal) which the
Seller or its Subsidiaries currently leases, operates, or owns or manages in any
manner or which the Seller, its Subsidiaries or any of their organizational
predecessors formerly leased, operated, owned or managed in any
manner.
“Code” means the
Internal Revenue Code of 1986, as amended, or any amending or superseding tax
laws of the United States of America.
“Encumbrance” means
any lien, pledge, hypothecation, charge, mortgage, deed of trust, security
interest, encumbrance, equity, trust, equitable interest, claim, easement,
right-of-way, servitude, right of possession, lease tenancy, license,
encroachment, burden, intrusion, covenant, infringement, interference, proxy,
option, right of first refusal, community property interest, defect, exception,
condition, restriction, reservation, limitation, impairment, imperfection of
title, restriction on or condition to the voting of any security, restriction on
the transfer of any security or other asset, restriction on the receipt of any
income derived from any security or other asset, and restriction on the
possession, use, exercise or transfer of any other attribute of ownership,
whether based on or arising from common law, constitutional provision, statute
or contract.
“Environmental
Claim(s)” means any claim; litigation; demand; action; cause of action;
suit; loss; cost, including, but not limited to, attorneys’ fees, diminution in
value, and expert’s fees; damage; punitive damage; fine, penalty, expense,
Liability, criminal liability, strict liability, judgment, governmental or
private investigation and testing; notification of status of being potentially
responsible for clean-up of any facility or for being in violation or in
potential violation of any Environmental Law; proceeding; consent or
administrative orders, agreements or decrees; lien; personal injury or death of
any person; or property damage, whether threatened, sought, brought or imposed,
that is related to or that seeks to recover losses, damages, costs, expenses
and/or liabilities related to, or seeks to impose liability for: (i) improper
use or treatment of wetlands, pinelands or other protected land or wildlife;
(ii) noise; (iii) radioactive materials (including naturally occurring
radioactive materials); (iv) explosives; (v) pollution, contamination,
preservation, protection, decontamination, remediation or clean-up of the air,
surface water, groundwater, soil or protected lands; (vi) solid, gaseous or
liquid waste generation, handling, discharge, release, threatened release,
treatment, storage, disposal or transportation; (vii) exposure of persons or
property to Materials or Environmental Concern and the effects thereof; (viii)
the release or threatened release (into the indoor or outdoor environment),
generation, extraction, mining, beneficiating, manufacture, processing,
distribution in commerce, use, transfer, transportation, treatment, storage or
disposal of Remediation of Materials of Environmental Concern; (ix) injury to,
death of or threat to the health or safety of any person or persons caused
directly or indirectly by Materials of Environmental Concern; (x) destruction
caused directly or indirectly by Materials of Environmental Concern or the
release or threatened release of any Materials of Environmental Concern of any
property (whether real or personal); (xi) the implementation of spill prevention
and/or disaster plans relating to Material of Environmental Concern; (xii)
community right-to-know and other disclosure laws; or (xiii) maintaining,
disclosing or reporting information to Governmental Authorities of any other
third person under any Environmental Law. The term, “Environmental
Claim,” also includes, without limitation, any losses, damages, costs, expenses
and/or liabilities incurred in testing, if such testing confirms the presence of
Materials of Environmental Concern.
“Environmental Law(s)”
means any federal, state, local or foreign law, statute, ordinance, rule,
regulation, code, license, permit, authorization, approval, consent, legal
doctrine, guidance document, order, consent agreement, order or consent
judgment, decree, injunction, requirement or agreement with any governmental
entity or any judicial or administrative decision relating to (x) the
protection, preservation or restoration of the environment (including, without
limitation, air, water, vapor, surface water, groundwater, drinking water
supply, surface land, subsurface land, plant and animal life or any other
natural resource) or to human health or safety, (y) the exposure to, or the use,
storage, recycling, treatment, generation, transportation, processing, handling,
labeling, application, production, release or disposal of Materials of
Environmental Concern, in each case as amended from time to time, or (z) health,
worker protection or community’s right to know. The term
“Environmental Law” includes, without limitation, (i) the Federal Comprehensive
Environmental Response Compensation and Liability Act of 1980, the Superfund
Amendments and Reauthorization Act, the Federal Water Pollution Control Act of
1972, the Federal Clean Air Act, the Federal Clean Water Act, the Federal
Resource Conservation and Recovery Act of 1976 (including the hazardous and
Solid Waste Amendments thereto), the Federal Solid Waste Disposal Act and the
Federal Toxic Substances Control Act, the Federal Insecticide, Fungicide and
Rodenticide Act, the Federal Safe Drinking Water Act and the Federal
Occupational Safety and Health Act of 1970, each as amended from time to time,
and (ii) any common law or equitable doctrine (including, without limitation,
injunctive relief and tort doctrines such as negligence, nuisance, trespass and
strict liability) that may impose liability or obligations for injuries or
damages due to, or threatened as a result of, the presence of, effects of or
exposure to any Materials of Environmental Concern.
“Environmental
Permit(s)” means all permits, licenses, certificates, registrations,
identification numbers, applications, consents, approvals, variances, notices of
intent, and exemptions necessary for the ownership, use and/or operation of any
current Business Facility or to conduct the Seller’s or its Subsidiaries’
businesses as currently conducted in compliance with Requirements of
Environmental Laws.
“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 applied on a consistent basis.
“Governmental
Authority” or “Governmental
Authorities” means any nation or government, any state or political
subdivision thereof and any agency or entity exercising executive, legislative,
judicial, regulatory or administrative functions of, or pertaining to,
government.
“Governmental
Authorization” means any permit, license, franchise, approval,
certificate, consent, ratification, permission, confirmation, endorsement,
waiver, certification, registration, qualification or other authorization
issued, granted, given or otherwise made available by or under the authority of
any Governmental Authority or pursuant to any Legal Requirement.
“Indebtedness” means
the aggregate indebtedness and Liabilities of the Seller.
“Intellectual
Property” includes all fictitious business names, trade names, brand
names, registered and unregistered trademarks, service marks and applications,
all patents and patent applications, all copyrights in both published and
unpublished works, software, licenses, all processes, shop rights, formulas,
trade secrets, proprietary information, material and manufacturing
specifications, drawings, designs and any similar items and related rights owned
by or licensed to the applicable party.
“Knowledge” means: (i)
in the case of an individual, the actual knowledge of such individual after
reasonable inquiry, and (ii) in the case of a Person other than an individual,
Knowledge of a particular fact or other matter by such Person’s directors,
officers and management.
“Legal Requirement”
means any law, statute, ordinance, decree, requirement, Order, treaty,
proclamation, convention, rule or regulation (or interpretation of any of the
foregoing) of, and the terms of any Governmental Authorization issued by, any
Governmental Authority.
“Liability” or “Liabilities” means
any debt, obligation, duty or liability of any nature (including any unknown,
undisclosed, unfixed, unliquidated, unsecured, unmatured, unaccrued, unasserted,
contingent, conditional, inchoate, implied, vicarious, joint, several or
secondary liability), regardless of whether such debt, obligation, duty or
liability would be required to be disclosed on a balance sheet prepared in
accordance with GAAP.
“Material Adverse
Effect” means any event, occurrence, fact, condition, change, development
or effect that, individually or in the aggregate, could reasonably be
anticipated to be materially adverse to the business, assets (including
intangible assets), liabilities, financial condition, results of operations,
properties (including intangible properties) or business prospects of the
Seller, its Subsidiaries or the Purchaser and its Subsidiaries (if any), as
applicable, taken as a whole.
“Materials of Environmental
Concern” means: (i) those substances included within the
statutory and/or regulatory definitions or listings of “hazardous substance,”
“medical waste,” “special waste,” “hazardous waste,” “sludges,” “sewage sludge,”
“extremely hazardous substance,” “regulated substance,” “solid waste,”
“hazardous materials,” or “toxic substances,” under any Environmental Law; (ii)
any material, waste or substance which is or contains: (A) petroleum,
oil or a fraction thereof, (B) explosives, or (C) radioactive materials
(including naturally occurring radioactive materials); and (iii) such other
substances, materials, or wastes that are or become classified or regulated as
hazardous or toxic under any applicable federal, state or local law or
regulation. To the extent that the laws or regulations of any
applicable state or local jurisdiction establish a meaning for any term defined
herein through reference to federal Environmental Laws which is broader than the
meaning under such federal Environmental Laws, such broader meaning shall
apply.
“Organizational
Documents” means (a) articles or certificate of incorporation and bylaws
of a corporation; (b) the limited partnership agreement and a certificate of
limited partnership of a limited partnership; (c) any charter or similar
document adopted or filed in connection with the creation, formation, or
organization of any Person; and (d) any amendment to any of the
foregoing.
“Order” means any
order, judgment, injunction, edict, decree, ruling, pronouncement,
determination, decision, opinion, sentence, subpoena, writ or award issued,
made, entered or rendered by any court, administrative agency or other
Governmental Authority or by any arbitrator.
“Person” means any
individual, partnership, joint venture, corporation, limited liability company,
association, trust, unincorporated organization, government or agency or
subdivision thereof or any other entity.
“Plan” means an
“employee benefit plan” (as defined in Section 3(3) of ERISA) which is or has
been established or maintained, or to which contributions are or have been made,
by the Seller, its Subsidiaries, or by any trade or business, whether or not
incorporated, which, together with the Seller, is under common control, as
described in Section 414(b) or (c) of the Code.
“Remediation” means
any action necessary to: (i) comply with and ensure compliance with
the Requirements of Environmental Laws and (ii) the taking of all reasonably
necessary precautions to protect against and/or respond to, remove or remediate
or monitor the release or threatened release of Materials of Environmental
Concern at, on, in, about, under, within or near the air, soil, surface water,
groundwater or soil vapor at any Business Facility of the Seller, its
Subsidiaries or of any property affected by the business, operations, acts
omissions, or Materials of Environmental Concern of the Seller or its
Subsidiaries.
“Requirement(s) of
Environmental Law(s)” means all requirements, conditions, restrictions or
stipulations of Environmental Laws imposed upon or related to the Seller, its
Subsidiaries or the assets, Business Facilities and/or the business of the
Seller or its Subsidiaries.
"SEC" means the
Securities and Exchange Commission.
“Securities Act” means
the Securities Act of 1933, as amended.
“Subsidiary” or “Subsidiaries” shall
mean, when used with reference to an entity, any other entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar
functions, or a majority of the outstanding voting securities of which, are
owned directly or indirectly by such entity.
“Taxes” shall mean any
and all taxes, charges, fees, levies or other assessments, including, without
limitation, income, gross receipts, excise, real or personal property, sales,
withholding, social security, occupation, use, severance, environmental,
license, net worth, payroll, employment, franchise, transfer and recording
taxes, fees and charges, imposed by the IRS or any other taxing authority
(whether domestic or foreign including, without limitation, any state, county,
local or foreign government or any subdivision or taxing agency thereof
(including a United States possession)), whether computed on a separate,
consolidated, unitary, combined or any other basis and whether disputed or not
and including any obligations to indemnify or otherwise assume or succeed to the
Tax Liability of any other Person; and such term shall include any interest
whether paid or received, fines, penalties or additional amounts attributable
to, or imposed upon, or with respect to, any such taxes, charges, fees, levies
or other assessments.
“Tax Return(s)” shall
mean any report, return, document, declaration or other information or filing
required to be supplied to any taxing authority or jurisdiction (foreign or
domestic) with respect to Taxes, including, without limitation, information
returns and documents (i) with respect to or accompanying payments of estimated
Taxes or (ii) with respect to or accompanying requests for the extension of time
in which to file any such report, return, document, declaration or other
information, including any schedule or attachment thereto and any amendment
thereof.
“Transactions” means
any of the transactions contemplated by this Agreement, including without
limitation: (i) the sale of the Acquisition Assets by the Seller and the
Purchaser’s delivery of the Purchase Price therefor; (ii) the execution,
delivery and performance of all the documents, instruments and agreements to be
executed, delivered, and performed in connection herewith; and (iii) the
performance by the Parties of their respective covenants and obligations (pre-
and post-closing) under this Agreement.