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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934.
Date of Report (Date of earliest event reported): February 3, 1999
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Commission File Number 000-23353
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Denali Incorporated
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(Exact Name of Registrant in its Charter)
Delaware 76-0454641
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1360 Post Oak Blvd., Suite 2250, Houston, Texas 77056
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(Address of Principal Executive Officers) (Zip Code)
713-627-0933
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(Registrant's Telephone Number, Including Area Code)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On February 3, 1999, pursuant to the terms of the Stock Purchase
Agreement ("the Agreement") by and between Steve Jones and Belco Manufacturing
Company, Inc. ("Belco") and Containment Solutions, Inc. ("CSI"), a wholly-owned
subsidiary of Denali Incorporated, CSI purchased 100% of the outstanding stock
of Belco Manufacturing Company, Inc. for approximately $4.7 million in cash
(net of cash and cash equivalents acquired), a $1.5 million seller note and $.5
million in Denali Incorporated stock (44,417 shares) for a total of
approximately $6.7 million. In addition, CSI acquired certain assets and
assumed certain liabilities of S. Jones Limited Partnership, an affiliate of
Belco for approximately $.4 million in cash (net of cash acquired). The
purchase price for these transactions was determined by arms length
negotiations between Steve Jones and CSI. The funds used to pay the cash
portion of the purchase price in this acquisition were borrowed by Denali
Incorporated under its $35 million acquisition line of credit with Canadian
Imperial Bank of Commerce, ING (U.S.) Capital LLC, CIBC Inc., Key Corporate
Capital Inc. and Bank of Oklahoma, N.A. Belco is a manufacturer of engineered
fiberglass-reinforced plastic tanks, vessels, and piping systems, and their
products are primarily sold into the water/wastewater, oil and gas, food
processing and semi-conductor industries where corrosion-resistant products are
needed.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Business Acquired
As of the date of filing this Current Report on Form 8-K, the
financial statements required by this Item 7(a) are not
available. In accordance with Item 7(a)(4) of the Form 8-K,
such financial statements will be filed no later than April
19, 1999.
(b) Pro Forma Financial Information
As of the date of filing this Current Report on Form 8-K, the
pro forma financial information required by this Item 7(b) is
not available. In accordance with Item 7(b)(2) of Form 8-K,
such financial statements will be filed no later than April
19, 1999.
(c) Exhibits
10.41 Stock Purchase Agreement dated February 3, 1999 by
and between Steve Jones, Belco Manufacturing Company,
Inc. and Containment Solutions, Inc.
10.42 Asset Purchase Agreement dated February 3, 1999 by
and between Tiger Trucking LLC, S. Jones Limited
Partnership and Containment Solutions, Inc.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DENALI INCORPORATED
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(Registrant)
Date: February 18, 1999 /s/ R. KEVIN ANDREWS
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R. Kevin Andrews
Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)
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INDEX TO EXHIBITS
Exhibit
Number Description of Exhibit
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10.41 Stock Purchase Agreement dated February 3, 1999 by and between
Steve Jones, Belco Manufacturing Company, Inc. and Containment
Solutions, Inc.
10.42 Asset Purchase Agreement dated February 3, 1999 by and between
Tiger Trucking LLC, S. Jones Limited Partnership and
Containment Solutions, Inc.
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT, made and entered into on the 3rd day of February,
1999, by and between Steve Jones ("Seller") and Belco Manufacturing Company,
Inc. a Texas corporation, (hereinafter referred to as ("Company"), and
Containment Solutions, Inc., a Delaware corporation, (hereinafter referred to as
"Purchaser");
WITNESSETH
WHEREAS, Seller owns all of the issued and outstanding shares of
capital stock (the "Capital Stock") of the Company;
WHEREAS, Seller desires to sell to Purchaser, and Purchaser desires to
purchase from Seller, all of the shares of Capital Stock issued and outstanding
on the terms and subject to the conditions hereinafter set forth;
NOW, THEREFORE, the parties agree as follows:
Definitions
(a) Intellectual Property. Shall be defined as any and all (i) patents
(including, without limitation, design patents, industrial designs and utility
models, utility patents and plant patents) and patent applications (including
docketed patent disclosures awaiting filing, reissues, results of
reexaminations, divisions, continuations and extensions), patent disclosure
awaiting filing determination, inventions and improvements thereto; (ii)
trademarks, service marks, trade names, trade dress, logos, business and product
names, slogans and registrations and applications for registration thereof;
(iii) copyrights and registrations thereof and rights and unpublished works to
the extent such rights are not subsumed by copyright; (iv) inventions,
processes, designs, formulae, trade secrets, know-how, software, industrial
models, confidential and technical information, manufacturing, engineering and
technical drawings, product specifications and confidential business
information; and (v) intellectual property rights (including rights as a
licensee, if any) similar to any of the foregoing; in each case, that are
specific to the Subject Business.
(b) Liens. Shall be defined as all mortgages, deeds of trust, liens,
security interests, pledges, conditional sales contracts, claims, rights of
first refusal, options, charges, liabilities, obligations, easements,
rights-of-way, limitations, reservations, restrictions and other encumbrances of
any kind.
(c) Company. Shall include all affiliated companies listed at Section
3(i) hereto.
1. Purchase and Sale of Shares.
(a) Purchase and Sale of Shares. Subject to the terms and conditions
set forth herein, at the Closing, Seller will sell, assign and deliver or cause
to be sold, assigned and delivered to Purchaser, and Purchaser will buy and
accept all right, title and interest in and to, the Capital Stock, free and
clear of all preemptive rights, liens, claims and encumbrances (the
"Acquisition").
(b) Purchase Price and Payment. The purchase price for all the shares
of the Capital Stock shall be US$ 7,700,000, to be paid as follows:
1) $5,700,000 in cash at Closing;
2) $500,000 in shares of Denali Incorporated common stock,
priced using a 60-trading-day-average prior to Closing (these
shares will not be registered under the Securities Act of 1933 and
will be restricted pursuant to Rule 144 of the Securities Act of
1933);
3) $1,500,000 promissory note, guaranteed by Company, with a
five year maturity, quarterly 8 1/2% interest-only payments.
Cash amounts shall be paid by wire transfer of immediately available
Federal Reserve funds to accounts maintained by Seller to be designated in
writing by Seller at least five (5) business days prior to the Closing Date. The
number of shares of stock shall be determined at Closing and certificates will
be delivered to Seller within 3 business days of Closing. The purchase price
shall be adjusted in cash in accordance with Section 1 (c) below.
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(c) Cash at Closing and Purchase Price Adjustment. (i) At the Closing
Date, the total of cash, bonds, stocks, trade accounts receivable and inventory
less the trade accounts payable shall be equal to or greater than $3.1 million.
In the event the total varies from this amount, an adjustment up or down to the
cash portion of the purchase price shall be made to reflect the difference, in
accordance with subsection (ii) below . For purposes of this subsection only,
Company shall include S. Jones Limited Partnership.
(ii) Price Adjustment. Within 30 days of Closing, the Company will
present to the Seller a balance sheet prepared in all material respects in
accordance with GAAP and consistent with prior practices and financial
assumptions ("Closing Balance Sheet"). This Closing Balance Sheet will be the
basis for the purchase price adjustment of (i) above. If the amount is greater
than $3.1 million, then the Purchaser shall remit, within 30 days of
presentation of the balance sheet, the difference to the Seller. If the amount
is less than $3.1 million, then the Seller shall remit, within 30 days of
presentation of the balance sheet, the difference to Purchaser.
(d) Steve Jones' Employment Agreement. Purchaser (or one of its
subsidiaries) shall offer employment to Mr. Jones for a term of five years, for
$100,000 per year, participation in the Company benefits under the standard
terms offered to employees, as well as the executive bonus plan. The employment
agreement shall contain a noncompetition clause, and such other terms and
conditions agreed upon by the parties. The amounts paid pursuant to this Section
1(d) are in addition to, and not a part of, the purchase price to be paid as set
forth in Section 1(b).
(e) Lease Agreement. Steve Jones ("Lessor") shall agree to amend the
existing Lease Agreement on the Company facility to provide Purchaser with a
five-year renewal option and a purchase option to purchase the premises, on
terms and conditions agreed to by the Lessors and Purchaser. Otherwise, the
Lease terms shall remain unchanged.
2. The Closing.
(a) The closing of the Acquisition (herein called the "Closing") shall
take place on or before February 3rd, 1999, to be effective at 11:59 p.m.
Central Time on the date on which Seller receives the funds referred to in
Section 2.b.1(iii) below. The date of the Closing is referred to in this
Agreement as the "Closing Date".
(b) Closing Deliveries.
1. At the Closing, Purchaser will deliver to Seller:
(i) one copy of the resolutions adopted by the Board of
Directors of Purchaser authorizing the transactions
contemplated hereby, certified by the Secretary or Assistant
Secretary of Purchaser;
(ii) certificate to the effect of Section 8(a) executed
by appropriate authorized officers of Purchaser;
(iii) payment of the purchase price to Seller's account;
(iv) the opinion of counsel described at Section 8(g);
and
(v) the Promissory Note referenced at Section 1(b)
above.
2. At the Closing, Seller and Company will deliver to
Purchaser:
(i) one copy of the resolutions adopted by the Company,
authorizing the transactions contemplated hereby, certified
by the Company;
(ii) certificates to the effect of Sections 7(a) and 7(j)
hereof executed by Seller;
(iii) the duly executed and sealed stock certificate #9
representing the Capital Stock registered in the name of
Purchaser;
(iv) resignations of all officers and directors of the
Company serving in office immediately prior to the Closing,
except that Steve Jones will not resign as President; and
(v) The opinion of counsel required by Section 7(k).
3. At the Closing, Purchaser and Seller and Company will execute,
deliver and acknowledge, or cause to be executed, delivered and acknowledged, to
the other such certificates and other documents related to the consummation of
the transactions contemplated hereby, as may be reasonably requested by the
other.
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3. Representations and Warranties of the Seller. The Seller represents and
warrants to the Purchaser that:
(a) Organization and Existence. Company is a corporation duly organized
and validly existing and in good standing under the laws of the State of Texas
and has full power and authority to carry on its business as now conducted.
Complete and correct copies of the Certificate of Incorporation and Bylaws of
the Company as in effect on the date hereof have been delivered to the
Purchaser. The Seller owns all of the Capital Stock of the Company. The Company
is qualified in Texas, which state represents every jurisdiction where such
qualification is required except where failure to be so qualified would not have
a material adverse affect on the business, properties or assets of the Company.
(b) Authority Relative to This Agreement. The transactions contemplated
by this Agreement have been duly authorized by the Seller, and no further
corporate action is necessary on the part of the Seller or Company to make this
Agreement valid and binding upon the Seller or Company in accordance with its
terms. The execution, delivery and performance of this Agreement by the Seller
and Company will not result in a violation or breach of any term or provision
of, or constitute a default or accelerate the performance required under the
Certificate and Bylaws of the Company, any indenture, mortgage, deed of trust or
other contract or agreement to which the Seller or Company is a party or by
which it or any of their properties are bound, or violate any order, writ,
injunction, decree of any court, administrative agency or governmental body.
(c) Validity and Enforceability. This Agreement and all related
documents have been duly executed and delivered by Seller and Company and
constitute legal, valid and binding obligations of Seller and Company
enforceable in accordance with their terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, or the laws affecting the
enforcement of creditors' rights generally, and the application of general
principles of equity.
(d) Financial Statements. The Seller has delivered to Purchaser the
adjusted unaudited financial statements of the Company for the period ending
September 30, 1998, attached hereto as Schedule 3(d) (the "Financial
Statements"). The financial statements fairly represent the financial position
of the Company as of the date thereof and the results of operations and changes
in financial position for the periods then ended, provided that such statements
are subject to year-end adjustments in accordance with GAAP, none of which are
material.
(e) Absence of Certain Changes or Events. With respect to the Company,
except as contemplated hereby and as listed on Schedule 3(e) hereto, and other
than in the ordinary course of business, since September 30, 1998 neither the
Seller nor Company have:
(i) Sold, transferred, or otherwise disposed of, or agreed to
sell, transfer or otherwise dispose of any of the assets of the Company except
in the ordinary course of its business;
(ii) Entered or agreed to enter into any agreement or arrangement
granting any preferential rights to purchase any of the assets, or requiring the
consent of any party to the transfer and assignment of any of such assets,
property or rights;
(iii) Waived any rights of value with respect to the Company;
(iv) Made or permitted any amendment or termination of any
contract, agreement or license to which Company is a party or by which Company
is subject;
(v) To its knowledge, incurred or become subject to any material
claim or liability for any damages or alleged damages for any actual or alleged
negligence or other tort or breach of contract which might in any fashion
adversely affect the value of the Company;
(vi) Made any capital expenditure (or commitments therefor),
aggregating in excess of $5000.00 and relating to the Company;
(vii) Entered into any other material transaction of which
Purchaser has not been formally notified in writing; or
(viii) Changed its management practices, operations or policies
with respect to (a) the standard terms and conditions of sale of products or
services; (b) the method of accounting for sale of products or services; (c) the
policy regarding maintenance of inventory levels; or (d) the conduct of accounts
receivable collection and accounts payable payment activities.
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(f) Consents. The consummation of the Acquisition contemplated herein
by the Seller and Company shall not require the consent, approval or
authorization of any third party.
(g) Organizational Instruments. Seller has made available to Purchaser
complete and accurate copies of the Certificate of Incorporation and Bylaws of
Company, as amended. Company is not in violation of any provision of its
Certificate of Incorporation or Bylaws. Except for this Agreement, there are no
agreements or commitments which obligate or require Seller or Company to amend
or authorize an amendment of the Certificate of Incorporation or Bylaws of the
Company. Seller has made available or caused to be made available to Purchaser
complete and accurate copies of the minute books and stock books of the Company.
Such minute books contain complete and accurate copies of all records of all
meetings and consents in lieu of meetings of the Board of Directors and Seller
of the Company.
(h) Capital Stock. The authorized, issued and outstanding Capital Stock
consists of 15,024 shares of common stock at $1.00 par value, fully paid and
non-assessable. There are no outstanding subscriptions, options, warrants,
rights, convertible or exchangeable securities, agreements or commitments which
obligate or require Seller or Company to issue, sell or transfer any shares of
Capital Stock. Seller owns all issued and outstanding shares of stock in the
Company.
(i) Subsidiaries. Except as set forth on Schedule 3(i), Company does
not directly or indirectly own or have the power to vote shares of the Capital
Stock or other ownership interests of any corporation or entity such that it has
voting power to elect a majority or a specified number of the directors of such
entity. Company is neither a partner of any partnership nor a member of any
joint venture or other business entity.
(j) Title to Owned Properties. Company has good and valid title to all
of the material properties owned by it, free and clear of all liens, claims and
encumbrances other than:
(i) liens, claims and encumbrances reflected in the
Financial Statements;
(ii) liens for taxes, charges and assessments not yet due
and payable or which are being contested in good faith;
(iii) mechanics', suppliers', installment sales and similar
liens for services rendered or materials furnished, the
charges for which are not yet due and payable or which are
being contested in good faith by appropriate proceedings;
and
(iv) easements and restrictions of record and zoning
ordinances.
(k) Prepayments and Deposits. There are no prepayments or deposits
which have been received and are being held by the Company and the Company has
made no prepayment or deposit other than those prepayments and deposits set
forth in Schedule 3(k).
(l) Absence of Undisclosed Liabilities. Except as disclosed to the
Purchaser on Schedule 3(l), none of the assets are subject to any liabilities or
obligations (accrued, absolute, contingent or otherwise), or will be subject to
any such liability or obligation arising from the actions of the Seller or
Company on or before the Closing Date, whether or not such liability would
normally be shown or reflected on a balance sheet prepared in a manner
consistent with generally accepted accounting principles. Except as disclosed to
the Purchaser in a Schedule hereto, there are no facts in existence on the date
hereof which might reasonably serve as the basis for any liabilities or
obligations of the Company and which would adversely affect the value of the
Company.
(m) Tax Matters. All federal, state, county, local and other taxes,
including, without limitation, income taxes, corporate franchise taxes, payroll
taxes, customs fees and duties, sales taxes and ad valorem taxes, due and
payable by the Company on or before the date of this Agreement have been timely
paid, and all tax returns and reports required to be filed by the Company have
been timely filed with all such taxing authorities. No assessments or
deficiencies have been made against the Company, no audits or notices of audit
are pending, and no extensions of time are in effect for the assessment of
deficiencies. Except as set forth on Schedule 3(m), there is no material dispute
or claim concerning any tax liability of the Company as to which the Seller has
knowledge, and the Company will not incur any tax liability in connection with
consummation of the Acquisition (including but not limited to Section 4978 of
the Internal Revenue Code).
(n) Patents, Etc. The Seller has delivered to the Purchaser a true and
complete Schedule (Schedule 3(n)) setting forth all Intellectual Property
patents, inventions, trademarks, tradenames, brand names or copyrights owned or
used by or licensed to or by the Company (if any), and relating to the Company,
together with a summary description and full information in respect of the
filing, registration or issuance and the status thereof, except for rights to
intellectual property arising under common law. Except as disclosed in Schedule
3(n), the operations of the Company do not infringe upon the
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patent, trademark or other similar rights of any other person or entity. Except
as disclosed in Schedule 3(n), the Company has asserted no claim that the
operations of any other entity infringe upon the Intellectual Property of the
Company.
(o) Insurance. Attached hereto as Schedule 3(o) is a Schedule setting
forth a list and brief description of all policies of insurance, held by the
Company or on its behalf. There is no material inaccuracy in any application for
any such policy which would form a basis for termination of any such policy.
(p) Licenses, Permits, Etc. Attached hereto as Schedule 3(p) is a list
and brief description of all licenses and permits held by the Company, copies of
which licenses and permits have been furnished to the Purchaser. Except as noted
on Schedule 3(p), such licenses and permits constitute all licenses and permits
necessary to own the assets or conduct the business of Company, and each is in
full force and effect. Except as set forth on Schedule 3(p), there is no
violation that would adversely affect the value of the Company, and no
proceeding is pending or threatened seeking the revocation or limitation of any
such license or permit.
(q) Litigation. Except as set forth on Schedule 3(q) hereto, there are
no claims, actions, suits, proceedings or investigations pending or threatened
against or affecting the Company or any of its properties, at law or in equity
or before or by any court or federal, state, municipal or other governmental
department, commission, board, agency or instrumentality. Neither Seller nor
Company are subject to any court or administrative order, injunction or similar
decree, the enforcement of which would adversely affect the value of the
Company.
(r) Compliance with Laws. Except as disclosed on Schedule 3(r) hereto,
the operations of the Company, either historically or as now conducted, do not
violate any federal, state or local law, ordinance, rule or regulation,
(including, without limitation, any laws or regulations relating to the
environment or the handling, treatment or disposal of wastes or products of
Company) the violation of which would adversely affect the value of the Company.
(s) No Default. Company is not in default in any respect of any
obligation to be performed by the Company under any material contract, lease,
agreement, commitment or undertaking which default would adversely affect the
value the Company is a party or by which the Company is bound, nor has Company
waived any right under any such contract, lease, agreement, commitment or
undertaking.
(t) Product Liability and Warranty. Except as listed on Schedule 3(t),
the Seller has no knowledge after reasonable inquiry of any state of facts or
the occurrence of any event forming the basis of any present claim against the
Company for product liability or on account of any express or implied warranty.
Warranty work over the last three years has not been material to the Company.
(u) Disclosure. The representations and warranties contained in the
Articles and the Schedules hereto, do not and shall not, when taken as a whole,
contain any untrue statement of a material fact or omit any material fact
necessary to make the statements contained therein or herein not misleading in
view of the circumstances under which they were made. To the extent that
Purchaser (or its officers or agents) has actual knowledge of any discrepancy,
statement or statement of facts, the applicable representation or warranty known
to be untrue or misleading shall be unenforceable to the extent of the knowledge
of such discrepancy, statement or state of facts. In all other respects, the
representations and warranties of Seller shall remain unaffected. Disclosures
made in any of the Schedules or exhibits to this Agreement are hereby deemed to
be made for purposes of all other schedules or exhibits.
(v) Contracts, Leases, Licenses. Schedule 3(v) lists all contracts,
agreements and commitments having values in excess of $20,000 to which Company
is a party. All are legal, valid and binding obligations of Company and are in
full force and effect.
(w) Other Agreements. Schedule 3(w) lists all partnership, joint
venture, confidentiality, noncompete, collective bargaining, and guaranty
agreements. There are no outstanding Powers of Attorney executed on behalf of
Company.
(x) Environmental. Except as disclosed at Schedule 3(x): (i) There are
no hazardous substances on or in the Company's leased or owned real property,
whether contained in barrels, tanks, equipment (movable or fixed) or other
containers; deposited or located in land, waters, sumps or in any other part of
the Company's real property; incorporated into any structure on the Company's
leased real property; or otherwise existing thereon; (ii) The Company's leased
or owned real property (and, to the best of Seller's knowledge, nearby property)
has never been used for industrial or commercial operation involving any
hazardous substance, including but not limited to any sort of manufacturing,
processing or refining; equipment, machinery, part or component, cleaning or
degreasing; the sale, storage or transport of hazardous substances; any aspect
of the provision of services which utilize hazardous substances; drilling,
mining or production of oil, gas, minerals or their naturally occurring
products; or any agricultural activities involving the use or
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storage of fertilizers or pesticides; (iii) No spills, discharges, releases,
deposits or emplacements of any hazardous substances have ever occurred on or
near the Company's leased or owned property or on any customer's real property
where the Company is deemed to be responsible as a result of its field
operations; (iv) No asbestos-containing materials have been installed in or
affixed to the structures on Company's leased real property at any time before
or during Seller's ownership thereof. No such materials have been stored or
disposed of anywhere on the Company's leased real property; (vi) No electrical
transformers, fluorescent light fixtures or other electrical equipment
containing PCBs are or have been installed in, affixed to or located on the
Company's leased or owned real property at any time before or during Seller's
ownership thereof; (vii) No storage tanks for gasoline or any other substance
have been located on the Company's leased or owned real property, whether above
ground, underground or within a structure at any time before or during Seller's
ownership thereof.
(y) Real Property. Company owns no real property.
(z) Owned Personal Property. All of the material tangible personal
property (including, without limitation, furnishings, furniture, office
equipment, vehicles, inventories, tools, machinery, equipment, structures and
movable fixtures) which is reflected in the September 30, 1998 balance sheet
included among the Financial Statements (and that formerly leased property
described on Schedule 1(g) hereto) is owned by Company and in reasonable working
order and repair for use as presently used by Company in connection with
Company's business.
(aa) Human Resources.
(i) Schedule 3(aa) hereto sets forth a complete and accurate list of
(a) all of the collective bargaining agreements and agreements with labor unions
or associations representing employees to which Company is a party and (b) as of
the dates set forth in the Schedule, the total number of employees of Company
and the number of such employees represented by each such agreement. Such
numbers of employees have not changed since such dates except in the ordinary
course of business. Except as set forth on the Schedule, there are no organizing
efforts, strikes, slowdowns, picketing, work stoppages, labor troubles or other
similar events in which employees of Company are participating.
(ii) Except as set forth on Schedule 3(aa) hereto, Company (a) is not a
party to any written consulting or employment contract; and (b) has neither made
any commitment to, nor entered into any written agreement obligating it to,
increase the wages or modify the material conditions or terms of employment of
its employees.
(iii) Schedule 3(aa) sets forth all of the employee benefit plans
maintained by Company, and all of the severance, termination and similar
programs either established by Company with respect to the transactions
contemplated hereby or otherwise applicable to Company's employees ("Benefit
Plans").
(iv) Other than as indicated on Schedule 3(aa):
(a) Neither Seller nor Company maintain, sponsor nor
contribute to any program or arrangement covering employees of
Company that is an "employee pension benefit plan", an
"employee welfare benefit plan", or a "multiemployer plan" as
defined in Sections 3(2), 3(1) and 3(37) of ERISA ("ERISA
Plans"), or any other incentive or benefit arrangement
("Non-ERISA Plans").
(b) The present value of the accrued benefits under
any and all ERISA Plans which are defined benefit plans, as
defined in Section 3(35) of ERISA, and which are maintained by
Seller or Company for employees and former employees of
Company ("Pension Plan") did not, as of the last annual
valuation date for such Pension Plan, exceed the value of
assets of such Pension Plan allocable to such benefits;
(c) No ERISA Plan (or any trust created thereunder)
has engaged in a "prohibited transaction" within the meaning
of Section 406 of ERISA or Section 4975 of the Internal
Revenue Code of 1986, as amended (the "Code"), which could
subject Purchaser or Company to any tax penalty on prohibited
transactions and which has not adequately been corrected;
(d) Each ERISA Plan is in compliance with all
material reporting, disclosure and other requirements of the
Code and ERISA as they relate to any such ERISA plan,
including but not limited to the health care continuation
coverage requirements of ERISA section 601 et. seq.;
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(e) Determination letters have been received from the
Internal Revenue Service with respect to each ERISA Plan which
is intended to comply with Code Section 401(a), stating that
such ERISA Plan is qualified thereunder.
(f) No Pension Plan subject to Title IV of ERISA has
been terminated nor has there been any "reportable event" as
such term is defined in Section 4043 of ERISA with respect to
any such Pension Plan;
(g) No Pension Plan has incurred any "accumulated
funding deficiency" as such term is defined in Section 302 of
ERISA and Section 412 of the Code and Seller or Company has
made all contributions on a timely basis;
(h) No liability to the Pension Benefit Guaranty
Corporation ("PBGC"), other than for premiums, has been
incurred with respect to any Pension Plan;
(i) No proceeding or other action has been initiated
by the PBGC to terminate any Pension Plan, nor has written
notice been given to Seller or Company of an intention to
commence or seek the commencement of any such proceeding or
action;
(j) Seller and Company have not, within the last six
years before the Closing Date, completely or partially
withdrawn from a "multiemployer plan" covering employees; and
(k) Copies of all documents embodying the ERISA Plans
have been delivered or made reasonably available to Purchaser.
(bb) Health and Safety Conditions. Schedule 3(bb):
(i) lists all current material safety data sheets relating to
the products currently sold by Company and the chemical substances or
mixtures currently used by Company in the conduct of its business as
presently conducted by Company;
(ii) lists all written internal safety and health audits
conducted since January 1, 1993 by Company; and
(iii) lists all citations, notices of violations, orders and
consent orders issued and administrative or judicial enforcement
proceedings commenced by governmental or agencies, authorities and
instrumentalities (including OSHA, any state occupational safety and
health administration and EPA) with respect to safety and health
matters relating to Company since January 1, 1993.
(cc) Entire Business. Company owns, leases or has licenses or other
contractual rights to use all of the material tangible and intangible assets
used by it in the conduct of the business as presently conducted by it except
for (i) assets used to provide services or goods to Company pursuant to a
contract, agreement or commitment set forth in a Schedule hereto, and (ii)
pension or other funded employee benefit plan assets. The contracts, agreements
and commitments under which such contractual rights have been granted are listed
on Schedules hereto.
(dd) Leased Property. Schedule 3(dd) lists and describes all real
property leased or subleased to or by Company. Company has delivered to
Purchaser copies of all leases and subleases listed at Schedule 3(dd). Each
lease is legal, valid, binding, enforceable and in full force and effect, and
will continue to be after Closing. All facilities leased or subleased have
received all approvals of governmental authorities (including licenses and
permits) required in connection with the operation thereof and have been
operated and maintained in accordance with all applicable laws, rules, and
regulations.
(ee) Investment Representation. Seller represents that he understands
that: (i) the Capital Stock being acquired by Seller pursuant to this Agreement
has not been registered under the Securities Act of 1933, as amended; (ii) the
Capital Stock must be held indefinitely unless a subsequent disposition thereof
is registered under the Securities Act of 1933, as amended, or is exempt from
such registration; (iii) the Capital Stock will bear a legend to such affect;
and (iv) Denali will make a notation on its transfer books to such effect.
Seller further represents that : (i) the Capital Stock is being acquired for
investment and without any present view toward distribution thereof to any other
persons; (ii) Seller will not sell or otherwise dispose of the Capital Stock,
except in compliance with the registration requirements or exemption provisions
under the Securities Act of 1933, as amended, the rules and regulations
thereunder, and as
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otherwise adopted by the Securities and Exchange Commission; (iii) Seller has
knowledge and experience in financial matters and that they are capable of
evaluating the risks and merits of an investment in common stock; (iv) Seller
has consulted with counsel, to the extent deemed necessary, as to all matters
covered by this Agreement, and has not relied on Purchaser or Denali for any
explanation of the various federal or state securities laws with regard to the
acquisition of the Capital Stock; (v) Seller has investigated and are familiar
with the affairs, financial condition and prospects of Denali, and have been
given sufficient access to and have acquired sufficient information about Denali
to reach an informed, knowledgeable decision to acquire the Capital Stock; and
(vi) Seller is able to bear the economic risks of such an investment.
All Schedules delivered to the Purchaser by the Seller pursuant to this
Section shall be delivered upon the execution of this Agreement and shall be
signed for identification by Seller.
4. Representations and Warranties of the Purchaser. Purchaser
represents and warrants to the Seller that:
(a) Organization and Existence. The Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power to enter into and perform this
Agreement.
(b) Authority Relative to This Agreement. The transactions contemplated
by this Agreement have been duly authorized by the Board by Directors of
Purchaser, and no further corporate action is necessary on the part of the
Purchaser to make this Agreement valid and binding upon the Purchaser in
accordance with its terms. The execution, delivery and performance of this
Agreement by the Purchaser will not result in a violation or breach of any term
or provision of, or constitute a default or accelerate the performance required
under, any indenture, mortgage, deed of trust or other contract or agreement to
which the Purchaser is a party or by which it or any of its properties is bound,
or violate any order, writ, injunction or decree of any court, administrative
agency or governmental body.
(c) Validity and Enforceability. This Agreement and all related
documents have been duly executed and delivered by Purchaser and constitute
legal, valid and binding obligations of Purchaser enforceable in accordance with
their terms, except as the same may be limited by applicable bankruptcy,
insolvency, reorganization, or other laws affecting the enforcement of
creditors' rights generally, and the application of general principles of
equity.
(d) Brokers. The Purchaser is not a party to or in any way obligated
under any contract or other agreement and there are no outstanding claims
against it for the payment of any broker's or finder's fee in connection with
the origin, negotiation, execution or performance of this Agreement.
(e) Consents. The consummation of the transactions contemplated herein
by the Purchaser shall not require the consent, approval or authorization of any
third party.
(f) Compliance with Laws. Except as disclosed in a Schedule hereto,
Purchaser's operations, either historically or as now conducted, do not violate
any federal, state or local law, ordinance, rule or regulation, the violation of
which would adversely affect its ability to perform under this Agreement.
(g) No Default. Purchaser is not in default in any respect of any
obligation to be performed by the Purchaser under any contract, lease,
agreement, commitment or undertaking which default would adversely affect its
ability to perform under this Agreement.
(h) Investment Representation. Purchaser represents that it understands
that: (i) the Capital Stock being acquired by Purchaser pursuant to this
Agreement has not been registered under the Securities Act of 1933, as amended;
(ii) the Capital Stock must be held indefinitely unless a subsequent disposition
thereof is registered under the Securities Act of 1933, as amended, or is exempt
from such registration; (iii) the Capital Stock will bear a legend to such
affect; and (iv) Company will make a notation on its transfer books to such
effect. Purchaser further represents that : (i) the Capital Stock is being
acquired for investment and without any present view toward distribution thereof
to any other persons; (ii) Purchaser will not sell or otherwise dispose of the
Capital Stock, except in compliance with the registration requirements or
exemption provisions under the Securities Act of 1933, as amended, the rules and
regulations thereunder, and as otherwise adopted by the Securities and Exchange
Commission; (iii) Purchaser has knowledge and experience in financial matters
and that it is capable of evaluating the risks and merits of an investment in
common stock; (iv) Purchaser has consulted with counsel, to the extent deemed
necessary, as to all matters covered by this Agreement, and has not relied on
Seller or Company for any explanation of the various federal or state securities
laws with regard to the acquisition of the Capital Stock; (v) Purchaser has
investigated and is familiar with the affairs, financial condition and prospects
of Company, and has been given sufficient access to and has acquired sufficient
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<PAGE> 9
information about Company to reach an informed, knowledgeable decision to
acquire the Capital Stock; and (vi) Purchaser is able to bear the economic risks
of such an investment.
(i) Disclosure. The representations and warranties contained in the
Articles and the Schedules hereto, do not and shall not, when taken as a whole,
contain any untrue statement of a material fact or omit any material fact
necessary to make the statements contained therein or herein not misleading in
view of the circumstances under which they were made. To the extent that Seller
(or their officers or agents) has actual knowledge of any discrepancy, statement
or statement of facts, the applicable representation or warranty known to be
untrue or misleading shall be unenforceable to the extent of the knowledge of
such discrepancy, statement or state of facts. In all other respects, the
representations and warranties of Purchaser shall remain unaffected. Disclosures
made in any of the Schedules or exhibits to this Agreement are hereby deemed to
be made for purposes of all other schedules or exhibits.
5. Covenants of Seller. The Seller and Company covenant with the
Purchaser that:
(a) Conduct of Business. From the date of this Agreement to the Closing
Date, the business of the Company will be operated only in the ordinary course,
and in particular, without the prior written consent of the Purchaser, the
Seller will not and will not allow Company to:
(i) Cancel or permit any insurance to lapse or terminate,
unless renewed or replaced by like coverage;
(ii) Change the Company's Certificate of Incorporation or
Bylaws or the composition of Company;
(iii) Be in default under any material contract, agreement,
commitment or undertaking of any kind or under any local, state or federal
permits;
(iv) Knowingly violate or fail to comply with all laws
applicable to it or its properties or business;
(v) Commit any act or permit the occurrence of any event or
the existence of any condition of the type described in Section 3(e) hereof; or
(vi) Merge, consolidate or agree to merge or consolidate with
or into any other corporation.
(vii) Enter into any new, or amend any existing, Benefit Plans
or any other agreement, program, or arrangement in connection therewith
(including any trust agreement, insurance contract or credit facility) or grant
any increases in compensation.
(viii) Make or revoke any elections with respect to Taxes
other than in the ordinary course of business or as provided in this Agreement.
(ix) Make any changes in Company's practices and financial
assumptions.
(b) Access. From and after the date of this Agreement, Company and
Seller will provide to Purchaser and its respective counsel, accountants,
engineers and other representatives, full and free access to the records of the
Company during normal business hours upon prior reasonable notice. Expenses of
providing such access shall be paid by the party requesting such access.
(c) Preservation of Business Organization. The Seller and Company will
use their best efforts to preserve the business organization of the Company and
to preserve for the Purchaser the Company's good relations with all customers
and others having business relations with the Company.
(d) Trade Secrets. From and after the Closing Date, Seller will not use
or divulge to any competitor or unauthorized person any confidential
information, and he will use all reasonable and proper efforts to insure that
its agents do not use or divulge any confidential information, trade secrets,
processes, formulae or know-how relating to the Company.
(e) Brokers. Seller shall pay all broker's fees or finder's fees in
connection with the origin, negotiation, execution or performance of this
Agreement. Such fees will be paid out of Company assets.
(f) Confidentiality of Information Furnished by Purchaser. Seller and
his representatives will treat all information related to these transactions as
confidential. Seller agrees not to use any of this information except in
connection with this Agreement. Seller will use his best efforts to keep such
information confidential. If the transactions
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contemplated by this Agreement are not consummated, Seller and Company will
return to the Purchaser all information relating to Purchaser (and all copies
thereof) then in their possession.
(g) Notification of Untrue Reps and Warranties. Seller will promptly
give written notice to Purchaser upon becoming aware of the occurrence or
failure to occur, or the impending or threatened occurrence or failure to occur,
of any event that would cause or constitute, or would be likely to cause or
constitute, any of the Seller's or Company's representations or warranties being
or becoming untrue.
(h) Payment of Debts. Not later than Closing Date, Seller will pay,
assume or cause the release of liabilities for monies borrowed by Company from
third parties or the Seller.
(i) Exclusivity. The Seller and Company will not (i) solicit, initiate
or encourage the submission of any proposal or offer from any other entity
relating to the acquisition of capital stock or a substantial portion of the
assets of the Company.
(j) Other Arrangements. Seller and Company shall settle all life
insurance and deferred compensation arrangements prior to Closing.
(k) Employment Agreement. Steve Jones agrees to enter into an
Employment Agreement with Purchaser, on terms and conditions acceptable to both
parties.
(l) Product Warranty and Liability. From and after Closing, if
Purchaser receives notice of a claim for repairs to products under warranty for
which Purchaser is not assuming warranty obligations pursuant to Section 6(a),
Purchaser shall promptly notify Seller. Purchaser shall perform the repairs, and
Seller agrees it will pay Purchaser time and material at Purchaser's cost.
(m) Non-Competition. SELLERS AGREE THAT DURING A FIVE YEAR PERIOD
COMMENCING ON THE CLOSING DATE, THEY WILL NOT, DIRECTLY OR INDIRECTLY, FOR THEIR
OWN ACCOUNT OR FOR THE ACCOUNT OF OTHERS, WHETHER AS PRINCIPAL OR AGENT OR
THROUGH THE AGENCY OF ANY CORPORATION, PARTNERSHIP, ASSOCIATION OR OTHER
BUSINESS ENTITY, ENGAGE IN ANY ACTIVITY SIMILAR TO OR COMPETITIVE WITH THE
ACTIVITIES OF THE COMPANY AS PERFORMED BY THE COMPANY IN THE FIVE YEAR PERIOD
ENDING ON THE CLOSING DATE IN THE ABOVE GROUND FRP TANK BUSINESS IN THE UNITED
STATES. THE FOREGOING AGREEMENT NOT TO COMPETE SHALL NOT BE HELD INVALID OR
UNENFORCEABLE BECAUSE OF THE SCOPE OF THE SAID TERRITORY OR THE ACTIONS
RESTRICTED THEREBY, OR THE PERIOD OF TIME WITHIN WHICH SUCH AGREEMENT IS
OPERATIVE; BUT ANY JUDGMENT OF A COURT OF COMPETENT JURISDICTION MAY DEFINE THE
MAXIMUM TERRITORY AND ACTIONS SUBJECT TO AND RESTRICTED BY THIS PARAGRAPH AND
THE PERIOD OF TIME DURING WHICH SUCH AGREEMENT IS ENFORCEABLE
6. Covenants of the Purchaser. The Purchaser covenants with the Seller
that:
(a) Product Warranty. Purchaser shall assume warranty obligations
associated with receivables on the balance sheet as of and after September 30,
1998 and agrees to perform, in accordance with applicable warranties, all
warranty services to repair or replace all such defective parts or products.
(b) Notification of Untrue Reps and Warranties. Purchaser will
promptly give written notice to Seller upon becoming aware of the occurrence or
failure to occur, or the impending or threatened occurrence or failure to occur,
of any event that would cause or constitute, or would be likely to cause or
constitute, any of the Purchaser's representations or warranties being or
becoming untrue.
7. Conditions to Obligations of the Purchaser. The obligations of the
Purchaser under this Agreement shall be subject to the satisfaction of the
following conditions:
(a) Representations and Warranties of Seller and Company True at
Closing. The Purchaser shall not have discovered any material error,
misstatement or omission in the representations and warranties made by the
Seller or Company in Article 3 hereof; the representations and warranties made
by the Seller and Company shall be deemed to have been made again at and as of
the time of Closing and shall then be true in all material respects, except to
the extent that such representations and warranties shall have been made as of a
specified date;
(b) Seller shall have performed and complied with all agreements and
conditions required by this Agreement to be performed or complied with by it at
or prior to Closing.
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(c) Seller shall provide Purchaser with all certificates and other
documents, in form and substance reasonably satisfactory to Purchaser, required
to be delivered to Purchaser at or before the Closing pursuant to this
Agreement, duly executed by all necessary persons.
(d) Company will be relieved of liabilities related to monies borrowed
from third parties or the Seller as set forth in Section 5(h) hereof.
(e) Approval of Counsel. All actions, proceedings, instruments and
documents reasonably required to carry out the transactions contemplated by this
Agreement or incidental thereto and all other related matters shall have been
approved by counsel for the Purchaser, which approval shall not be unreasonably
withheld or delayed, and such counsel shall have been furnished with such
certified copies of actions and proceedings and other such instruments and
documents as such counsel shall have reasonably requested.
(f) Changes in Business. Prior to the Closing, there shall have been no
changes in the business, properties or operations of the Company since the date
of this Agreement which would have a material adverse effect on the value of the
Company.
(g) Absence of Restraint. No order to restrain, enjoin or otherwise
prevent the consummation of this Agreement or transactions in connection
herewith shall have been entered and, on the Closing Date, there shall not be
any pending or threatened litigation in any court, or any proceeding by or
before any governmental commission, board or agency, seeking to restrain or
prohibit consummation of the transactions contemplated hereby or in which
divestiture, rescission or significant damages are sought in connection with the
transactions contemplated hereby, and no investigation by any governmental
agency shall be pending or threatened which might result in any such litigation
or other proceeding.
(h) Approval. The Seller shall have approved the transactions
contemplated by the Agreement and such approval shall not have been rescinded.
(i) Governmental Consents. Any and all necessary consents of and
filings with any governmental authority or agency relating to the consummation
of the transactions contemplated by this Agreement shall have been obtained or
accomplished, and no action, proceeding, inquiry or investigation by any private
or governmental agency shall have been brought or threatened which questions the
validity or legality of the transactions contemplated by this Agreement.
(j) Charter; Good Standing; Incumbency. There shall have been delivered
to Purchaser (i) a certificate dated within ten (10) days of Closing Date from
the Secretary of State of Texas with respect to the incorporation and good
standing of, and the payment of franchise taxes by Company, (ii), copies of
Articles, Bylaws and all amendments and the resolutions of the Board of
Directors of Company approving these transactions, and (iii) a certificate dated
Closing Date with respect to the incumbency and signatures of all officers of
Company signing this Agreement and any certificate, agreement or instrument
delivered on behalf of Seller in connection with this Agreement.
(k) Opinion of Counsel. The Purchaser shall have received an opinion of
counsel for the Seller, dated the Closing Date, to the effect that:
(i) The Company is a corporation duly organized and
validly existing and in good standing under the laws of the
State of Texas and has all requisite power and authority to
carry on its business as now conducted;
(ii) This Agreement has been duly authorized by all
necessary action on the part of the Seller and Company and
has been duly executed and delivered by Seller and Company
and constitutes a valid and binding obligation of Seller
and Company enforceable in accordance with its terms;
(iii) The instruments of assignment, transfer and
conveyance delivered by Seller to Purchaser pursuant to
this Agreement have been duly authorized by all necessary
action of the Seller and Company, executed and delivered by
Seller and Company;
(iv) The consummation of the transactions
contemplated by this Agreement will not result in a breach
of or constitute a default under the Certificate of
Incorporation or Bylaws of the Company; and
(v) Such counsel does not know of any litigation or
other proceeding or governmental investigation pending or
threatened against the Company or affecting the Company or
the transactions contemplated by this Agreement which, if
adversely determined would have a materially adverse effect
on the value of the Company.
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Such opinions may contain such exceptions, qualifications and
explanations as shall be reasonably acceptable to Purchaser
and its counsel.
(l) Other Arrangements. Seller and Company shall have settled all life
insurance and deferred compensation arrangements prior to Closing.
(m) Lease Amendment. The Lease shall have been amended in accordance
with Section 1(e).
8. Conditions to Obligations of the Seller. The obligations of the Seller
under this Agreement shall be subject to the satisfaction of the following
conditions:
(a) Representations and Warranties of Purchaser True at Closing. The
Seller has not discovered any material error, misstatement or omission in the
representations and warranties made by Purchaser in Section 4 hereof; the
representations and warranties made by the Purchaser shall be deemed to have
been made again at and as of the time of Closing and shall then be true in all
material respects, except to the extent that such representations and warranties
shall have been made as of a specified date; and the Purchaser shall have
performed or complied with all agreements and conditions required by this
Agreement to be performed or complied with by it at or prior to Closing; and
Purchaser shall provide Seller with a Certificate from Purchaser's President
dated as of Closing that the above conditions have been fulfilled.
(b) Approval of Counsel. All actions, proceedings, instruments and
documents required to carry out the transactions contemplated by this Agreement
or incidental thereto and all other related legal matters shall have been
approved by counsel for Seller, which approval shall not be unreasonably
withheld or delayed.
(c) Absence of Restraint. No order to restrain, enjoin or otherwise
prevent the consummation of this Agreement or transactions in connection
herewith shall have been entered and, on the Closing Date, there shall not be
any pending or threatened litigation in any court, or any proceeding by or
before any governmental commission, board or agency, with a view to seeking to
restrain or prohibit consummation of the transactions contemplated hereby or in
which divestiture, rescission or significant damages are sought in connection
with the transactions contemplated hereby, and no investigations by any
governmental agency shall be pending or threatened which might result in any
such litigation or other proceeding.
(d) Government Consents. Any and all necessary consents of and filings
with any governmental authority or agency relating to the consummation of the
transactions contemplated by this Agreement shall have been obtained or
accomplished, and no action, proceeding, inquiry or investigation by any private
or governmental agency shall have been brought or threatened which questions the
validity or legality of the transactions contemplated by this Agreement.
(e) Seller will have received all certificates and other documents, in
form and substance reasonably satisfactory to Seller, required to be delivered
to Seller at or before Closing pursuant to this Agreement, duly executed by all
necessary persons.
(f) Seller will have received payment of the Purchase Price in
accordance with this Agreement.
(g) Opinion of Counsel. Seller shall have received an opinion of
counsel from Purchaser, dated the Closing Date, to the effect that:
(i) Purchaser is a corporation duly organized and
validly existing and in good standing under the laws of the
State of Delaware and has all requisite power and authority
to carry on its business as now conducted;
(ii) The Agreement has been duly authorized by all
necessary action on the part of Purchaser and has been
executed and delivered by Purchaser and constitutes a valid
and binding obligation of Purchaser enforceable in
accordance with its terms; and
(iii) The consummation of these transactions will not
result in a breach of or constitute a default under the
Certificate of Incorporation or Bylaws of Purchaser.
9. Tax Matters
9.1.1 Records Retained By Seller. Seller will deliver to Company within
sixty days after the Closing Date, all books, records and files which pertain
(i) to the business conducted by Company; (ii) to the Company; or (iii) to any
of the properties owned, leased or used by Company, to the extent such books and
records relate solely to the Company and
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do not contain any information pertaining to Seller ("Business Records").
Business Records which contain information relating to Seller may be retained by
Seller and copies of such Business Records will be delivered to Company.
9.1.2 Audit Cooperation. Seller will assist Purchaser and Company in
obtaining prior year audits, if necessary, to comply with SEC rules and
regulations, including but not limited to timely access to key personnel and the
appropriate documentation of management representations.
9.2 Tax Representation
a) Purchaser shall file the income tax returns and be responsible for
paying any tax liability for the period beginning October 1, 1998 and
thereafter, subject to prior review by Seller of the period October 1, 1998 to
Closing. Purchaser shall cause Company to take into account all reasonable
comments of Seller.
9.3 Cooperation. After Closing, Seller and Purchaser shall cooperate,
and shall cause their respective subsidiaries to cooperate, with each other in
connection with the filing of any Tax Return which is required to be filed by
Seller, Company, Purchaser or their respective subsidiaries and which covers a
period that ends prior to or on the Closing Date, and all such information shall
be treated as confidential by the parties. Seller and Purchaser shall also
cooperate fully in connection with any audit, litigation or other proceeding
with respect to taxes, however, the primary responsibility and total cost of
defending such actions arising out of periods ending before or up to the Closing
shall be Seller's.
9.4 Tax Sharing Agreements. Any and all tax sharing agreements between
or among Company and Seller shall be terminated as of the Closing and, from and
after the Closing, neither Company nor Seller or its subsidiaries shall have any
further rights or liabilities thereunder.
9.5 Tax Election . If Purchaser desires to have an election made under
Section 338(h)(10) of the Internal Revenue Code ("the Code")with respect to the
purchase of the Company, Seller shall make the joint election on IRS Form 8023A
upon request of Purchaser. Purchaser shall be responsible for the preparation
and filing of such election. The allocation of purchase price among the assets
of Company shall be made in accordance with Sections 338 and 1060 of the Code
and any comparable provisions of state, local or foreign law, as appropriate,
and shall be subject to Seller's approval prior to filing. Purchaser shall be
responsible for, and shall pay any income, franchise or similar taxes arising as
a result of any Section 338(h)(10) election or any comparable or resulting
election under state law filed by Seller or by Purchaser with the consent of
Seller.
9.6 Certain Taxes. All transfer, documentary, sales, use, stamp,
registration, excise and other taxes and fees incurred in connection with this
Agreement shall be paid by Seller when due, and Seller will, at his own expense,
file all necessary returns and other documentation with respect to all such
taxes.
10. Nature and Survival of Representations and Warranties.
(a) Nature of Statements. All statements contained in any Schedule
hereto or in any certificate delivered by or on behalf of the Seller or the
Purchaser pursuant to this Agreement shall be deemed representations and
warranties by the Seller or the Purchaser, as the case may be.
(b) Survival of Representations and Warranties. Except with respect to
matters addressed at Article 11(b), all covenants, agreements, representations
and warranties made hereunder or pursuant hereto or in connection with the
transactions contemplated hereby (even if the damaged party knew or had reason
to know of any misrepresentation or breach of warranty at the time of Closing)
shall survive the Closing and remain effective for a period of three years from
the Closing Date; provided, however, that any bona fide claim for which notice
of claim has been given within such three-year period shall continue in effect
until such time as such claim that has been asserted has been resolved or
settled and the covenants in Sections 11(a) and (c) shall survive in accordance
with their term.
11. Indemnification.
(a) General Indemnity by Seller. Subject to the conditions hereinafter
set forth, for a three year period, the Seller shall indemnify and hold harmless
the Purchaser and Company against any loss, damage or expense (including
reasonable attorneys' fees) incurred by the Purchaser and Company and caused by
or arising out of (i) any breach or default in the performance by Seller of any
covenant or agreement of Seller contained in this Agreement; (ii) any breach of
a warranty or representation made by Seller pursuant to this Agreement, or in
any certificate required to be delivered pursuant to this Agreement, or any
material misstatement or omission in any Schedule attached or to be delivered
pursuant to this Agreement; (iii) any warranty claims for which Seller is
responsible pursuant to Section 5(l) hereof; and
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(iv) all costs and liabilities associated with the cleanup of any contaminated
soil or materials spilled, disposed of or buried by Company or located on the
property operated by Company or on any customer property where Company is deemed
to be responsible as a result of its field operations, prior to Closing Date;
provided however, unless specifically provided otherwise in this Agreement,
Seller will not indemnify Purchaser for any matter of which Purchaser has actual
knowledge prior to Closing. If disclosed on a Schedule attached hereto, the
Purchaser is deemed to have actual knowledge.
(b) Other Indemnities by Seller. 1. Upon the terms and subject to the
conditions set forth in this Section 11(b), Seller shall indemnify and hold
harmless the Purchaser and Company against and will reimburse Purchaser or
Company for:
(i) any and all tax deficiencies in respect of federal, state,
and local and foreign sales, use, income or franchise tax or taxes
based on or measured by income or assets, including any interest or
penalties thereon, and legal fees and expenses incurred by Company or
Purchaser with respect to September 30, 1998 and all prior taxable
years; and
(ii) any and all such taxes, penalties, interest and legal
fees and expenses in respect of the period from September 30, 1998, up
to and including the Closing Date.
This indemnity for taxes, penalty and interest and legal fees and
expenses shall be independent of and in addition to any other indemnity
provision of this Agreement and shall survive until the expiration of the
applicable statute of limitations for assessment for the taxes referred to
herein. The above tax indemnity provisions shall apply regardless of any
investigation at any time made by or on behalf of Purchaser or any information
Purchaser may have in respect thereof.
2. The survival period for Seller's representation made at
Section 3(h) shall be six years.
(c) Procedure for Making Claims. If and when the Purchaser or Company
desires to claim indemnification by the Seller pursuant to the provisions of
this Section, the Purchaser shall deliver to the Seller within 20 days of its
receipt of a claim, a certificate signed by the President or any Vice President
of the Purchaser (the "Notice of Claim") (i) stating that the Purchaser or
Company has properly accrued or anticipates that it may be required to accrue
losses, damages or expenses to which the Purchaser is entitled to
indemnification pursuant to this Section, and (ii) specifying the individual
items of loss, damage or expense included in the amount so stated, the date each
such item was properly accrued, if any, and the nature of the misrepresentation,
breach of warranty or claim to which such item is related. In the event that
Purchaser fails to give notice within the 20 day period and Seller is harmed due
to the delay, Purchaser shall waive its claim to the extent of harm caused
Seller by the delay. If Seller objects to such claim or needs more information,
it may deliver written notice of objection (the "Notice of Objection") to the
Purchaser within ten (10) days after the Purchaser's delivery of the Notice of
Claim to Seller. The Notice of Objection shall set forth the grounds upon which
the objection is based. If no Notice of Objection shall have been so delivered
within such ten (10) day period, the Seller shall be deemed to have acknowledged
the correctness of the claim or claims specified in the Notice of Claim for the
full amount thereof, and shall thereupon pay to the Purchaser, on demand, in
cash, an amount equal to the amount of such claim or claims.
If any third party shall assert any claim or bring any action against
the Purchaser or Company which, if successful, might result in a right of
indemnification hereunder, the Seller shall be given written notice thereof in
accordance with the provisions of this Section 11(c), except that the notice
periods for both parties shall be thirty (30) days instead of 20/10 days.
Thereafter, the Seller shall have the right to defend such claim or action at
its own expense, and through counsel of its own choice (which counsel shall be
reasonably satisfactory to Purchaser). If Seller fails or refuses to provide a
defense to any third party claim, the Purchaser shall have the right to
undertake the defense, compromise or settlement of such claims, through counsel
of its own choice, on behalf of and for the account and at the risk of Seller
and Seller shall be obligated to pay the costs, expenses, and attorneys' fees
incurred by Purchaser in connection with such third party claim. Purchaser
agrees that it will not compromise or settle any claim without the consent of
Seller, which consent shall not be unreasonably withheld. In any event,
Purchaser, Company and Seller shall fully cooperate with each other and their
respective counsel in connection with any such litigation, defense, settlement,
or other attempted resolution.
(d) Seller's Indemnification Limits. Seller shall have no obligation to
indemnify Purchaser with respect to any claim described in Section 11(a) or (b)
if (i) Purchaser fails to give the notice of claim for general claims described
in Section 11(a) within three years; or (ii) Purchaser fails to give the notice
of claim for tax related claims described in Section 11(b) within the applicable
statute of limitations for assessment for the taxes described Section 11(b).
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<PAGE> 15
(e) General Indemnification by Purchaser. The Purchaser agrees to
indemnify and hold the Seller harmless against and in respect of (i) any damage,
claim, liability, deficiency, loss, cost or expense (including reasonable
attorney's fees) sustained by the Seller arising out of or resulting from (a)
any misrepresentation by the Purchaser contained in this Agreement (or any
collateral documents), in any schedules attached hereto or thereto or in a
certificate to be delivered at the Closing, or (b) the breach of or default
under any warranty or representation, or the nonfulfillment of or default under
any agreement or covenant, of the Purchaser contained in this Agreement (or
collateral documents), schedules or certificates hereto, (c) the failure, after
the Closing Date, of Purchaser or Company to pay or otherwise discharge when due
any contractual or other obligation relating to the Company, (d) Taxes for which
Purchaser or Company is responsible. The procedures set forth at Section 11(c)
shall apply to claims for indemnification made by Seller.
(f) Offset Against Promissory Note. With respect to all indemnification
obligations of Seller hereunder, any claims to be paid to Purchaser by Seller
shall first be offset against the Promissory Note ("Note") payable to Steve
Jones, up to but not exceeding, in the aggregate, $1,500,000.00. This is not a
limitation on Steve Jones' liability. Purchaser shall notify Steve Jones in
writing that Purchaser desires a set-off reducing the principal amount
outstanding under the Note described at Section 1(b) hereof. The parties shall
follow the procedure for notification, objection and defense of claims as set
forth in Section 11(c) above. If the parties are unable to agree or if Steve
Jones fails to discharge the obligation with respect to which a set-off is
requested, the right to any set-off and the amount shall be mediated by a third
party acceptable to both Seller and Purchaser and if the mediation is
unsuccessful, the parties shall then avail themselves of all legal remedies
allowed under applicable law.
12. Termination.
(a) Best Efforts to Satisfy Conditions. The Seller agrees to use all
reasonable and proper efforts to bring about the satisfaction of the conditions
specified in Article 7 hereof and the Purchaser agrees to use its best efforts
to bring about the satisfaction of the conditions specified in Article 8 hereof.
(b) Termination. This Agreement may be terminated by:
(i) The mutual consent of the Seller and the Purchaser;
(ii) The Purchaser if a material default shall be made by the
Seller in the observance of or in the due and timely performance by the Seller
or Company of any of the covenants of the Seller or Company herein contained, or
if there has been a material breach by Seller of any of the warranties and
representations of the Seller herein contained, or if the conditions of this
Agreement to be complied with or performed by the Seller at or before the
Closing shall not have been complied with or performed at the time required for
such compliance or performance and such noncompliance or nonperformance shall
not have been waived by the Purchaser; or
(iii) The Seller if a material default shall be made by the
Purchaser in the observance of or in the due and timely performance by the
Purchaser of any of the covenants of the Purchaser herein contained, or if there
shall have been a material breach by the Purchaser of any of the warranties and
representations of the Purchaser herein contained, or if the conditions of this
Agreement to be complied with or performed by the Purchaser at or before the
Closing shall not have been complied with or performed at the time required for
such compliance or performance and such noncompliance or nonperformance shall
not have been waived by the Seller.
(iv) Purchaser or Seller if Closing shall not occur on or
February 3, 1999.
In the event of termination of this Agreement as provided above,
written notice thereof shall be given to the party within five (5) business
days. No termination pursuant to paragraphs (ii) and (iii) hereunder shall
relieve any party hereto from any liability in respect of such party's breach or
indemnification obligations hereunder.
13. Schedules. If any Schedule recited to be attached hereto is not so
attached at the time of the execution hereof, if Purchaser agrees, the same may
be prepared after execution of this Agreement and, upon approval by notation of
said Schedule by Seller and a representative of the Purchaser, shall become a
part of this Agreement.
14. Miscellaneous.
(a) Expenses. Whether or not the transactions contemplated hereby shall
be consummated, each of the parties will pay all costs and expenses (including
Closing costs) of its performance of and compliance with this Agreement.
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<PAGE> 16
(b) Notices. All notices, requests and other communications hereunder
shall be in writing and shall be deemed to have been given if personally
delivered or mailed, first class, registered or certified mail, postage prepaid:
If to Seller: Steve Jones
908 Crescent Drive
Belton, TX 76513
With a copy to: Jim Linzy
Linzy & Thigpen
17 North 25th Street
P.O. Box 428
Temple, TX 76503
If to Purchaser: Robert Bennett
Containment Solutions, Inc.
5150 Jefferson Chemical Rd.
Conroe, TX 77301-6834
With a copy to: Cathy L. Smith, Esq.
1360 Post Oak Blvd., Suite 2250
Houston, TX 77056
If to Company: Belco Manufacturing Company, Inc.
P.O. Box 210
Belton, TX 76513
Or at such other address as shall be given in writing by any person
identified above to each of the other such persons.
(c) Assignment. This Agreement may not be assigned by any party hereto
without the prior written consent of the other parties.
(d) Successors Bound. Subject to the provisions of Paragraph 15(c),
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns.
(e) Section and Paragraph Headings. The section and paragraph headings
in this Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement.
(f) Amendment. This Agreement may be amended only by an instrument in
writing executed by the parties hereto.
(g) Entire Agreement. This Agreement, the Schedules hereto, and the
documents specifically referred to herein constitute the entire agreement,
understanding, representations and warranties of the parties hereto.
(h) Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which shall constitute one of
the same instrument.
(i) Governing Law. This Agreement shall be construed in accordance with
and governed by the laws of the State of Texas.
(j) Publicity. No party will or will permit its affiliates or
subsidiaries to issue any publicity, release or announcement concerning the
execution and delivery of this Agreement, the provisions hereof or the
transaction contemplated hereby without the prior written approval of the form,
mode and content of such publicity, release or announcement by the other party.
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<PAGE> 17
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties as of the date first above written.
AGREED TO BY SELLER:
STEVE JONES
/s/ STEVE JONES
-------------------------------------
Sole Shareholder
AGREED TO BY COMPANY:
BELCO MANUFACTURING COMPANY, INC.
/s/ STEVE JONES
-------------------------------------
By: Steve Jones
Title: President
AGREED TO BY PURCHASER:
CONTAINMENT SOLUTIONS, INC.
/s/ ROBERT BENNETT
-------------------------------------
By: Robert Bennett
Title: President
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<PAGE> 1
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT, made and entered into on 3rd day of
February, 1999, by and between Tiger Trucking LLC ("General Partner"), S. Jones
Limited Partnership ("Company"), (hereinafter Partner and Company may be
referred to collectively as "Sellers") and Containment Solutions, Inc., a
Delaware corporation, (hereinafter referred to as "Purchaser");
WITNESSETH
WHEREAS, the parties hereto desire that the Purchaser will acquire all
of the assets of the Company in exchange for the consideration herein described
on the terms and conditions hereinafter set forth;
NOW, THEREFORE, the parties agree as follows:
Definitions
(a) Intellectual Property. Shall be defined as any and all (i) patents
(including, without limitation, design patents, industrial designs and utility
models, utility patents and plant patents) and patent applications (including
docketed patent disclosures awaiting filing, reissues, results of
reexaminations, divisions, continuations and extensions), patent disclosure
awaiting filing determination, inventions and improvements thereto; (ii)
trademarks, service marks, trade names, trade dress, logos, business and product
names, slogans and registrations and applications for registration thereof;
(iii) copyrights and registrations thereof and rights and unpublished works to
the extent such rights are not subsumed by copyright; (iv) inventions,
processes, designs, formulae, trade secrets, know-how, software, industrial
models, confidential and technical information, manufacturing, engineering and
technical drawings, product specifications and confidential business
information; and (v) intellectual property rights (including rights as a
licensee, if any) similar to any of the foregoing; in each case, that are
specific to the Subject Business.
(b) Inventory. Shall be defined as Inventories of raw materials, spare
parts (as detailed on the attached Schedule (c), to be prepared on the Closing
Date) and office and other supplies, and other items reflected as inventory in
the financial statements.
(c) Liens. Shall be defined as all mortgages, deeds of trust, liens,
security interests, pledges, conditional sales contracts, claims, rights of
first refusal, options, charges, liabilities, obligations, easements,
rights-of-way, limitations, reservations, restrictions and other encumbrances of
any kind.
(d) Permitted Encumbrances. Shall mean Liens for current taxes and
assessments not yet due and payable, including, without limitation, liens for
nondelinquent ad valorem taxes, nondelinquent statutory liens, inchoate liens,
deposits for workman's compensation, unemployment and surety bonds arising other
than by reason of any default on the part of the Sellers.
(e) Assets. Shall be defined as all the assets of the Company, as
specifically set forth on Schedule 1 (a) hereto.
1. Transfer of Assets; Purchase Price; and Related Matters
(a) Transfer of Assets. In reliance upon the representations and
warranties of Purchaser contained herein, and on the terms and subject to the
conditions of this Agreement, the Sellers, at the Closing referred to in Section
2 hereof, will sell, transfer, convey and deliver to Purchaser all of the Assets
shown on the balance sheet dated September 30, 1998, and as reflected on
attached Schedule 1(a) (collectively "Subject Business"). The Sellers shall
transfer such Assets free and clear of all Liens, except Permitted Encumbrances,
such Liens, if any, to be released by the Sellers at Closing (as hereinafter
defined).
(b) Purchase Price.
(i) In reliance on the representations and warranties of the
Sellers herein contained, and on the terms and subject to the conditions of this
Agreement, the Purchaser, in consideration for the transfer and delivery to it
of the Assets as herein provided, will pay $1,000,000.00.
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<PAGE> 2
(ii) Allocation of Purchase Price. Purchaser shall prepare in
good faith and deliver to Sellers either at Closing, or if not at Closing,
within 15 days of Closing, an allocation of the consideration paid by Purchaser
for the Assets, which shall be prepared in accordance with the methodology
contained in Section 1060 of the Code. Each party hereto agrees to complete
jointly and to file separately Form 8594 with its Federal Income Tax Return
consistent with such allocation for the tax year in which the Closing Date
occurs, to file, or cause to be filed, all other Tax Returns in a manner
consistent with such allocation, and not take any actions inconsistent
therewith.
(c) Instruments of Conveyance and Transfer. At the Closing, the Sellers
shall deliver to the Purchaser or its designee such bills of sale, warranty
deeds, endorsements, assignments, title certificates to motor vehicles, and
other good and sufficient instruments of transfer, conveyance and assignment, in
form reasonably satisfactory to the Purchaser's and Sellers' counsel, as shall
be effective to vest in the Purchaser good title to the Assets, free and clear
of all Liens, other than Permitted Encumbrances.
(d) Contracts, Records. At the Closing, the Sellers will deliver to the
Purchaser all contracts, commitments, and rights of the Company which are part
of the Assets and listed on Exhibit 1(a), with assignment thereof, to assure the
Purchaser of the full benefit of such contracts, leases, commitments and rights.
All consents, except those from landlords of real property leases, shall be
obtained by Sellers post closing. At the Closing, the Sellers shall deliver to
the Purchaser all records and other data relating to the inventory and fixed
assets acquired. Simultaneously with such delivery, the Sellers shall take all
such steps as may be reasonably required to put the Purchaser in actual
possession and control of the Assets. Sellers shall retain a right of access to
and right to make copies of all such records, during normal business hours, upon
reasonable notice to Purchaser.
(e) Employee Matters. Sellers agree to terminate all employees prior to
Closing. Sellers agree that they shall be solely liable for and shall indemnify
and defend Purchaser from and against any employee obligations arising prior to
or directly related to events occurring prior to the Closing Date. Sellers
further agree to permit Purchaser to access employees prior to Closing, to
negotiate, at Purchaser's sole discretion, rehire.
(f) Further Assurances. The Sellers shall, from time to time after the
Closing at the Purchaser's request and without further consideration, execute
and deliver such instruments of transfer, conveyance and assignment in addition
to those delivered pursuant to Paragraph 1(c), and take such other action as the
Purchaser may reasonably require to more effectively transfer, convey and assign
to and vest in the Purchaser, and to put the Purchaser in actual possession and
control of, any of the Assets. To the extent that the assignment of any license,
contract, commitment, or right subject to the Bill of Sale and Assignment and
Assumption Agreement shall require the consent of the other party thereto, this
Agreement shall not constitute an agreement to assign the same if any attempted
assignment would constitute a breach thereof. If any lease, license, contract,
commitment, right or other assets or property which are part of the Assets
cannot be transferred effectively to the Purchaser without the consent of a
third party, the Sellers shall thereafter be obligated to use its best efforts
to assure the Purchaser of the benefits of such lease, license, contract,
commitment, right or other asset or property.
(g) Liabilities Not Assumed by Purchaser. Except as expressly provided
to the contrary in this Agreement, Purchaser shall not assume any of Company's
litigation, tax, product liability or any other obligations arising from
products or services manufactured, sold or performed prior to Closing or other
products or services invoiced by Company or any of Company's liabilities and
obligations of any and every kind whatsoever, whether disclosed, undisclosed,
direct, indirect, absolute, contingent, secured, unsecured, accrued or
otherwise, whether known or unknown.
(h) Purchase of all Assets. Purchaser and Sellers' intend that this
transaction qualifies as an occasional sale within the meaning of Section
151.304 of the Texas Tax Code, under the tax laws of any other state which is
applicable to this transaction as well as any similar laws.
2. The Closing. The closing of the transactions provided for in
Section 1 of this Agreement (herein called the "Closing") shall take place on
twenty-four hours prior notice on or before February 3, 1999, to be effective
at 11:59 p.m. Central Time. The date of the Closing is referred to in this
Agreement as the "Closing Date".
(a) Closing Deliveries.
1. At the Closing, Purchaser will deliver to Sellers:
(i) one copy of the resolutions adopted by the Board of Directors
of Purchaser authorizing the transactions contemplated hereby,
certified by the Secretary or Assistant Secretary of Purchaser;
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<PAGE> 3
(ii) certificate to the effect of Section 8(a) executed by
appropriate authorized officers of Purchaser;
(iii) payment of the purchase price to Sellers' account; and (iv) the
opinion of counsel described at Section 8(d).
2. At the Closing, Sellers and Company will deliver to Purchaser:
(i) one copy of the resolutions adopted by the Sellers, authorizing
the transactions contemplated hereby, certified by the Sellers;
(ii) certificates to the effect of Sections 7(a) and 7(h) hereof
executed by General Partner and Company; and
(iii) The opinion of counsel required by Section 7(c).
3. At the Closing, Purchaser and Sellers will execute, deliver and
acknowledge, or cause to be executed, delivered and acknowledged, to the other
such certificates and other documents related to the consummation of the
transactions contemplated hereby, as may be reasonably requested by the other.
3. Representations and Warranties of the Sellers. The Sellers represent
and warrant to the Purchaser that:
(a) Organization and Existence. Company is Texas limited partnership
duly organized and validly existing and in good standing under the laws of the
State of Texas and has full power and authority to carry on its business as now
conducted. Complete and correct copies of the partnership agreement and
certificate of limited partnership of the Company as in effect on the date
hereof have been delivered to the Purchaser. The Company is qualified in Texas.
General Partner is a Texas limited liability company, duly organized and validly
existing and in good standing under the laws of the State of Texas and has full
power and authority to carry on its business as now conducted. Complete and
correct copies of the Articles and Regulations of the General Partner as in
effect on the date hereof have been delivered to the Purchaser. The General
Partner is qualified in Texas.
(b) Authority Relative to This Agreement. The transactions
contemplated by this Agreement have been duly authorized by the General Partner
of the Company, and no further action is necessary on the part of the Company to
make this Agreement valid and binding upon the Company in accordance with its
terms. The execution, delivery and performance of this Agreement by its Managing
Member of the Company will not result in a violation or breach of any term or
provision of, or constitute a default or accelerate the performance required
under the partnership agreement of the Company or the Articles and Regulations
of the General Partner, any indenture, mortgage, deed of trust or other contract
or agreement to which the Company or General Partner is a party or by which they
or any of their properties is bound, or violate any order, writ, injunction,
decree of any court, administrative agency or governmental body.
(c) Ownership of Assets. Company owns, has good and marketable title
to, and is in possession of all of the assets set forth on the September 30,
1998 balance sheet, free and clear of all liens, security interests and
encumbrances, except for Permitted Encumbrances.
(d) Validity and Enforceability. This Agreement and all related
documents have been duly executed and delivered by Sellers and constitute legal,
valid and binding obligations of Sellers enforceable in accordance with their
terms, except as the same may be limited by applicable bankruptcy, insolvency,
reorganization, or the laws affecting the enforcement of creditors' rights
generally, and the application of general principles of equity. Specifically,
Steve Jones as Managing Member has authority to execute and deliver these
documents on behalf of Tiger Trucking LLC, which has authority to execute and
deliver these documents on behalf of Company.
(e) Financial Statements. The Company has delivered to Purchaser the
adjusted unaudited financial statements of the Company for the period ending
September 30, 1998, attached hereto as Exhibit 3(e). Except as otherwise
disclosed on Exhibit 3(e), the financial statements fairly represent the
financial position of the Company as of the date thereof and the results of
operations and changes in financial position for the periods then ended,
provided that such statements are subject to year-end adjustments in accordance
with GAAP, none of which are material.
(f) Absence of Certain Changes or Events. With respect to the Subject
Business, except as contemplated hereby and as listed on Exhibit 3(f) hereto,
and other than in the ordinary course of business, since September 30, 1998 the
Sellers have not:
(i) Sold, transferred, or otherwise disposed of, or agreed to
sell, transfer or otherwise dispose of any of the Assets in other than the
ordinary course of the Subject Business;
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<PAGE> 4
(ii) Entered or agreed to enter into any agreement or arrangement
granting any preferential rights to purchase any of the Assets, or requiring the
consent of any party to the transfer and assignment of any of such assets,
property or rights;
(iii) Waived any rights of value with respect to the Assets;
(iv) Made or permitted any amendment or termination of any
contract, agreement or license to which they are a party or by which they or any
of the Assets is subject, other than changes to purchase orders made in the
ordinary course of business;
(v) To its knowledge, incurred or become subject to any material
claim or liability for any damages or alleged damages for any actual or alleged
negligence or other tort or breach of contract which might in any fashion
adversely affect the value of the Assets or the Subject Business;
(vi) Made any capital expenditure (or commitments therefor),
aggregating in excess of $25,000.00 and relating to the Assets or the Subject
Business; or
(vii) Entered into any other material transaction of which
Purchaser has not been formally notified in writing.
(g) Prepayments and Deposits. Except as disclosed on Exhibit 3(g),
there are no prepayments or deposits which have been received and are being held
by the Company and the Company has made no prepayment or deposit.
(h) Absence of Undisclosed Liabilities. None of the Assets are subject
to any liabilities or obligations (accrued, absolute, contingent or otherwise),
or will be subject to any such liability or obligation arising from the actions
of the Sellers on or before the Closing Date, whether or not such liability
would normally be shown or reflected on a balance sheet prepared in a manner
consistent with generally accepted accounting principles. Except as disclosed to
the Purchaser in an exhibit hereto, to Sellers' knowledge, after reasonable
investigation, there are no facts in existence on the date hereof which might
reasonably serve as the basis for any liabilities or obligations of the Company
and which would adversely affect the value of the Assets or the Subject
Business.
(i) Tax Matters. Except as disclosed on Exhibit 3(i), all federal,
state, county, local and other taxes, including, without limitation, income
taxes, franchise taxes, payroll taxes, customs fees and duties, sales taxes and
ad valorem taxes, due and payable by the Company on or before the date of this
Agreement have been timely paid, and all tax returns and reports required to be
filed by the Company have been timely filed with all such taxing authorities. No
assessments or deficiencies have been made against the Company, no disputes or
audits or notices of audits are pending, and no extensions of time are in effect
for the assessment of deficiencies.
(j) Patents, Etc. The Sellers have delivered to the Purchaser a true
and complete Exhibit (Exhibit 3(j)) setting forth all Intellectual Property
patents, inventions, trademarks, tradenames, brand names or copyrights owned or
used by or licensed to or by the Company (if any), and relating to the Assets or
the Subject Business, together with a summary description and full information
in respect of the filing, registration or issuance and the status thereof,
except for rights to intellectual property arising under common law. Except as
disclosed in Exhibit 3(j), to the Sellers' knowledge, after reasonable
investigation, the operations of the Subject Business do not infringe upon the
patent, trademark or other similar rights of any other person or entity. Except
as disclosed in Exhibit 3(j), the Company has asserted no claim that the
operations of any other entity infringe upon the Intellectual Property of the
Company.
(k) Insurance. Attached hereto as Exhibit 3(k) is an Exhibit setting
forth a list and brief description of all policies of insurance, held by the
Company applicable to any Assets or the Subject Business.
(l) Licenses, Permits, Etc. Attached hereto as Exhibit 3(l) is a list
and brief description of all licenses and permits held by the Company, copies of
which licenses and permits have been furnished to the Purchaser. Except as noted
on Exhibit 3(l), to Sellers' knowledge, after reasonable investigation, such
licenses and permits constitute all licenses and permits necessary to own the
Assets or conduct the Subject Business, and each is in full force and effect.
Except as set forth on Exhibit 3(l), there is no violation that would adversely
affect the value of the Assets or the Subject Business; and no proceeding is
pending or threatened seeking the revocation or limitation of any such license
or permit.
(m) Litigation. To Sellers' knowledge, after reasonable investigation,
there are no claims, actions, suits, proceedings or investigations pending, or
threatened against or affecting the Company or any of its properties, at law or
in equity or before or by any court or federal, state, municipal or other
governmental department, commission, board,
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<PAGE> 5
agency or instrumentality. The Sellers are not subject to any court or
administrative order, injunction or similar decree, the enforcement of which
would adversely affect the value of the Assets or the Subject Business.
(n) Compliance with Laws. To Sellers' knowledge, after reasonable
investigation, the operations of the Subject Business, either historically or as
now conducted, and the ownership of the Assets do not violate any federal, state
or local law, ordinance, rule or regulation, (including, without limitation, any
laws or regulations relating to the environment or the handling, treatment or
disposal of wastes or products of the Subject Business) the violation of which
would adversely affect the value of the Assets or the Subject Business.
(o) Brokers. The Sellers are not a party to or in any way obligated
under any contract or other agreement, and there are no outstanding claims
against them, for the payment of any broker's or finder's fee in connection with
the origin, negotiation, execution or performance of this Agreement.
(p) No Default. Except as disclosed on Exhibit 3(p), to Sellers'
knowledge, after reasonable investigation, the Company is not in default in any
respect of any obligation to be performed by the Company under any material
contract, lease, agreement, commitment or undertaking which default would
adversely affect the value of the Assets or the Subject Business to which the
Company is a party or by which the Company or the Assets are bound, nor has
Company waived any material right under any such contract, lease, agreement,
commitment or undertaking.
(q) Product Liability. To Sellers' knowledge, after reasonable
investigation, there is no state of facts or the occurrence of any event forming
the basis of any present claim against the Company for product liability on
account of any express or implied warranty. Warranty work over the last three
years has not been material to the Subject Business.
(r) Disclosure. The representations and warranties contained in the
Articles and the Exhibits hereto, do not and shall not, when taken as a whole,
contain any untrue statement of a material fact or omit any material fact
necessary to make the statements contained therein or herein not misleading in
view of the circumstances under which they were made. To the extent that
Purchaser (or its officers or agents) has actual knowledge of any discrepancy,
statement or statement of facts, the applicable representation or warranty known
to be untrue or misleading shall be unenforceable to the extent of the knowledge
of such discrepancy, statement or state of facts. In all other respects, the
representations and warranties of Sellers shall remain unaffected. Disclosures
made in any of the Exhibits or exhibits to this Agreement are hereby deemed to
be made for purposes of all other schedules or exhibits.
(s) Contracts. Exhibit 3(s) lists all substantial contracts of the
Company.
(t) Environmental. Except as disclosed on Exhibit 3(t), (i) Company's
use and disposal of hazardous substances on or in the Company's real property
(which includes leased real property), has at all times complied with all
applicable laws and regulations; (ii) No spills, discharges, releases, deposits
or emplacements of any hazardous substances have occurred on the Company's real
property during the period of its occupancy, and to Sellers' knowledge, after
reasonable investigation, prior to occupancy; (iii) No electrical transformers,
fluorescent light fixtures or other electrical equipment containing PCBs have
been installed in, affixed to or located on the Company's real property during
Sellers' occupancy thereof; (iv) To Sellers' knowledge, after reasonable
investigation, there are no storage tanks for gasoline or any other hazardous
substance located on the Company's real property, whether above ground,
underground or within a structure.
All exhibits delivered to the Purchaser by the Sellers pursuant to this Section
shall be delivered upon the execution of this Agreement and shall be signed for
identification by Sellers.
4. Representations and Warranties of the Purchaser. Purchaser represents
and warrants to the Sellers that:
(a) Organization and Existence. The Purchaser is a corporation duly
organized validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power to enter into and perform this
Agreement.
(b) Authority Relative to This Agreement. The transactions contemplated
by this Agreement have been duly authorized by the Board by Directors of
Purchaser, and no further corporate action is necessary on the part of the
Purchaser to make this Agreement valid and binding upon the Purchaser in
accordance with its terms. The execution, delivery and performance of this
Agreement by the Purchaser will not result in a violation or breach of any term
or provision of, or constitute a default or accelerate the performance required
under, any indenture, mortgage, deed of trust or other contract or agreement to
which the Purchaser is a party or by which it or any of its properties is bound,
or violate any order, writ, injunction or decree of any court, administrative
agency or governmental body.
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<PAGE> 6
(c) Validity and Enforceability. This Agreement and all related
documents have been duly executed and delivered by Purchaser and constitute
legal, valid and binding obligations of Purchaser enforceable in accordance with
their terms, except as the same may be limited by applicable bankruptcy,
insolvency, reorganization, or other laws affecting the enforcement of
creditors' rights generally, and the application of general principles of
equity.
(d) Brokers. The Purchaser is not a party to or in any way obligated
under any contract or other agreement and there are no outstanding claims
against it for the payment of any broker's or finder's fee in connection with
the origin, negotiation, execution or performance of this Agreement.
(e) Consents. The consummation of the transactions contemplated herein
by the Purchaser shall not require the consent, approval or authorization of any
third party.
(f) Compliance with Laws. Except as disclosed in an exhibit hereto,
Purchaser's operations, either historically or as now conducted do not violate
any federal, state or local law, ordinance, rule or regulation, the violation of
which would adversely affect its ability to perform under this Agreement.
(g) No Default. Purchaser is not in default in any respect of any
obligation to be performed by the Purchaser under any contract, lease,
agreement, commitment or undertaking which default would adversely affect its
ability to perform under this Agreement.
(h) Absence of Certain Changes. Since September 30, 1998, there has
been no material change in the business, prospects or condition, financial or
otherwise, of the Purchaser except changes in the ordinary course of business
affecting the entire industry which in the aggregate have not been materially
adverse.
5. Covenants of Sellers. The Sellers covenant with the Purchaser that:
(a) Conduct of Business. From the date of this Agreement to the
Closing Date, the business of the Company will be operated only in the ordinary
course, and in particular, without the prior written consent of the Purchaser,
the Sellers will not:
(i) Cancel or permit any insurance to lapse or terminate,
unless renewed or replaced by like coverage;
(ii) Change the Company's Articles of Incorporation or Bylaws
or the composition of General Partner;
(iii) Be in default under any material contract, agreement,
commitment or undertaking of any kind or under any local, state or federal
permits, except as disclosed on Exhibit 5(a)(iii);
(iv) Knowingly violate or fail to comply with all laws
applicable to it or its properties or business;
(v) Commit any act or permit the occurrence of any event or
the existence of any condition of the type described in Paragraph 3(f) hereof;
or
(vi) Merge, consolidate or agree to merge or consolidate with
or into any other corporation.
(b) Access. From and after the date of this Agreement, Company and
Purchaser will provide to each other and their respective counsel, accountants,
engineers and other representatives, full and free access to the records of the
Subject Business during normal business hours upon prior reasonable notice,
without disruption of the Subject Business. Expenses of providing such access
shall be paid by the party requesting such access.
(c) Preservation of Business Organization. The Sellers will use their
best efforts to preserve the business organization of the Company and to
preserve for the Purchaser the Company's good relations with all customers and
others having business relations with the Company.
(d) Trade Secrets. From and after the Closing Date, Sellers will not
use or divulge to any competitor or unauthorized person any confidential
information, and it will use all reasonable and proper efforts to insure that
its agents do not use or divulge any confidential information, trade secrets,
processes, formulae or know-how relating to the Assets or the Subject Business.
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<PAGE> 7
(e) Consents of Third Parties. The Sellers will use their best efforts
to obtain, on a post-closing basis, where required, the consents of all third
parties to the assignment and transfer of all contracts, licenses, registrations
and commitments affecting the Assets which require such consents.
(f) Non Competition. SELLERS AGREE THAT DURING A THREE YEAR PERIOD
COMMENCING ON THE CLOSING DATE, THEY WILL NOT, DIRECTLY OR INDIRECTLY, FOR THEIR
OWN ACCOUNT OR FOR THE ACCOUNT OF OTHERS, WHETHER AS PRINCIPAL OR AGENT OR
THROUGH THE AGENCY OF ANY CORPORATION, PARTNERSHIP, ASSOCIATION OR OTHER
BUSINESS ENTITY, ENGAGE IN ANY ACTIVITY SIMILAR TO OR COMPETITIVE WITH THE
ACITIVITIES OF THE COMPANY AS PERFORMED BY THE COMPANY IN THE THREE YEAR PERIOD
ENDING ON THE CLOSING DATE IN THE DUCT SALES BUSINESS IN THE UNITED STATES. THE
FOREGOING AGREEMENT NOT TO COMPETE SHALL NOT BE HELD INVALID OR UNENFORCEABLE
BECAUSE OF THE SCOPE OF THE SAID TERRITORY OR THE ACTIONS RESTRICTED THEREBY, OR
THE PERIOD OF TIME WITHIN WHICH SUCH AGREEMENT IS OPERATIVE; BUT ANY JUDGMENT OF
A COURT OF COMPETENT JURISDICTION MAY DEFINE THE MAXIMUM TERRITORY AND ACTIONS
SUBJECT TO AND RESTRICTED BY THIS PARAGRAPH AND THE PERIOD OF TIME DURING WHICH
SUCH AGREEMENT IS ENFORCEABLE.
(g) Bill of Sale and Assignment and Assumption Agreement. At Closing,
a duly authorized member of the General Partner shall have executed and
delivered the Bill of Sale and Assignment and Assumption Agreement to Purchaser.
(h) Product Warranty and Liability. From and after Closing, if
Purchaser receives notice or a claim for repairs to products under warranty that
were manufactured and sold by Company, then Purchaser shall promptly notify
Sellers. Purchaser agrees to make repairs and Sellers will be charged for time
and material at Purchaser's cost.
(i) Confidentiality of Information Furnished by Purchaser. Sellers and
their representatives will treat all information related to these transactions
as confidential. Sellers agree not to use any of this information except in
connection with this Agreement. Sellers will use their best efforts to keep such
information confidential. If the transactions contemplated by this Agreement are
not consummated, Sellers will return to the Purchaser all information relating
to Purchaser (and all copies thereof) then in their possession.
(j) Return of Property. Sellers hereby agree that they will promptly
distribute to Purchaser all funds, mail and other items owned by Purchaser that
come into the possession of Sellers at any time after Closing.
(k) Employees. From the date hereof until the date three years from
the Closing Date, the Sellers and its subsidiaries and affiliates shall not
directly induce or encourage any current employee of the Subject Business to
terminate or otherwise interfere with his or her employment relationship with
Purchaser.
(l) Notification of Untrue Reps and Warranties. Sellers will promptly
give written notice to Purchaser upon becoming aware of the occurrence or
failure to occur, or the impending or threatened occurrence or failure to occur,
of any event that would cause or constitute, or would be likely to cause or
constitute, any of the Sellers' representations or warranties being or becoming
untrue.
6. Covenants of the Purchaser. The Purchaser covenants with the Sellers
that:
(a) Confidentiality of Information Furnished by Sellers. The Purchaser
and its representatives will treat all information furnished pursuant to
Paragraph 5(b) (including financial statements) as confidential; however, it is
understood that such information must be revealed to various employees and
agents of the Purchaser for analysis and evaluation. Purchaser agrees not to use
any of this information except in connection with this Agreement. The Purchaser
will use its best efforts to keep such information confidential. If the
transactions contemplated by this Agreement are not consummated, the Purchaser
will return to the Sellers all such information (and all copies hereof) then in
its possession.
(b) Product Warranty. (i) Purchaser shall assume warranty obligations
for products manufactured after the Closing date; (ii) Purchaser agrees to
perform, in accordance with applicable warranties, all warranty services to
repair or replace defective parts or products sold or manufactured by the
Company prior to the Closing Date, to the account of Sellers. The price to
Sellers shall be the cost of Purchaser's time and materials.
(c) Notification of Creditors. Purchaser will waive compliance with
any applicable bulk sales law.
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<PAGE> 8
(d) Return of Property. Purchaser hereby agrees that it will promptly
distribute to Sellers all funds, mail and other items owned by Purchaser that
come into the possession of Purchaser at any time after Closing.
(e) Books and Records. Purchaser agrees to retain at the current
business premises the contracts and records assigned to Purchaser under this
Agreement for a period of one year.
(f) Notification of Untrue Reps and Warranties. Purchaser will
promptly give written notice to Sellers upon becoming aware of the occurrence or
failure to occur, or the impending or threatened occurrence or failure to occur,
of any event that would cause or constitute, or would be likely to cause or
constitute, any of the Purchaser's representations or warranties being or
becoming untrue.
7. Conditions to Obligations of the Purchaser. The obligations of the
Purchaser under this Agreement shall be subject to the satisfaction of the
following conditions:
(a) Representations and Warranties of Sellers True at Closing. The
Purchaser shall not have discovered any material error, misstatement or omission
in the representations and warranties made by the Sellers in Section 3 hereof;
the representations and warranties made by the Sellers shall be deemed to have
been made again at and as of the time of Closing and shall then be true in all
material respects, except to the extent that such representations and warranties
shall have been made as of a specified date; the Sellers shall have performed
and complied with all agreements and conditions required by this Agreement to be
performed or complied with by them at or prior to Closing; and Sellers shall
provide Purchaser with a certificate from General Partner and Company's
President or Secretary, dated as of Closing that the above conditions have been
fulfilled.
(b) Approval of Counsel. All actions, proceedings, instruments and
documents reasonably required to carry out the transactions contemplated by this
Agreement or incidental thereto and all other related matters shall have been
approved by counsel for the Purchaser, which approval shall not be unreasonably
withheld or delayed, and such counsel shall have been furnished with such
certified copies of actions and proceedings and other such instruments and
documents as such counsel shall have reasonably requested.
(c) Opinion of Counsel for the Sellers. The Purchaser shall have
received an opinion of counsel for the Sellers, dated the Closing Date, to the
effect that:
(i) The Company is a Texas limited partnership duly organized
and validly existing and in good standing under the laws of the State of Texas
and has all requisite power and authority to carry on its business as now
conducted; the General Partner is a Texas limited liability company duly
organized and validly existing and in good standing under the laws of the State
of Texas and has all requisite power and authority to carry on its business as
now conducted;
(ii) This Agreement has been duly authorized by all necessary
action on the part of the Sellers and has been duly executed and delivered by
Sellers and constitutes a valid and binding obligation of Sellers enforceable in
accordance with its terms (with the usual creditors' rights exceptions);
(iii) The instruments of assignment, transfer and conveyance
delivered by Sellers to Purchaser pursuant to this Agreement have been duly
authorized by all necessary action of the Sellers, executed and delivered by
Sellers;
(iv) The consummation of the transactions contemplated by this
Agreement will not result in a breach of or constitute a default under the
Articles of Incorporation of General Partner or the partnership agreement of the
Company; and
(v) Such counsel does not know of any litigation or other
proceeding or governmental investigation pending or threatened against the
Company or affecting the Assets, the Subject Business, the General Partner or
the transactions contemplated by this Agreement which, if adversely determined
would have a materially adverse effect on the value of the Assets or the Subject
Business.
Such opinion may contain such exceptions, qualifications and
explanations as shall be reasonably acceptable to Purchaser and its counsel.
(d) Changes in Business. Prior to the Closing, there shall have been
no changes in the business, properties or operations of the Sellers since the
date of this Agreement which would have a material adverse effect on the value
of the Assets or the Subject Business.
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<PAGE> 9
(e) Absence of Restraint. No order to restrain, enjoin or otherwise
prevent the consummation of this Agreement or transactions in connection
herewith shall have been entered and, on the Closing Date, there shall not be
any pending or threatened litigation in any court, or any proceeding by or
before any governmental commission, board or agency, seeking to restrain or
prohibit consummation of the transactions contemplated hereby or in which
divestiture, rescission or significant damages are sought in connection with the
transactions contemplated hereby, and no investigation by any governmental
agency shall be pending or threatened which might result in any such litigation
or other proceeding.
(f) Approval. The General Partner of the Company shall have approved
the transactions contemplated by the Agreement and such approvals shall not have
been rescinded.
(g) Governmental Consents. Any and all necessary consents of and
filings with any governmental authority or agency relating to the consummation
of the transactions contemplated by this Agreement shall have been obtained or
accomplished, and no action, proceeding, inquiry or investigation by any private
or governmental agency shall have been brought or threatened which questions the
validity or legality of the transactions contemplated by this Agreement.
(h) Charter; Good Standing Incumbency. There shall have been delivered
to Purchaser (i) a certificate dated within thirty (30) days of Closing Date
from the Secretary of State of Texas with respect to the incorporation and good
standing of General Partner and the formation and good standing of Company, (ii)
copies of Articles, Bylaws and all amendments and the resolutions of the Board
of Directors of Company and of General Partner approving these transactions, and
(iii) a certificate dated Closing Date with respect to the incumbency and
signature of the General Partner of Company signing this Agreement and any
certificate, agreement or instrument delivered on behalf of Sellers in
connection with this Agreement.
8. Conditions to Obligations of the Sellers. The obligations of the
Sellers under this Agreement shall be subject to the satisfaction of the
following conditions:
(a) Representations and Warranties of Purchaser True at Closing. The
Sellers have not discovered any material error, misstatement or omission in the
representations and warranties made by Purchaser in Section 4 hereof; the
representations and warranties made by the Purchaser shall be deemed to have
been made again at and as of the time of Closing and shall then be true in all
material respects, except to the extent that such representations and warranties
shall have been made as of a specified date; and the Purchaser shall have
performed or complied with all agreements and conditions required by this
Agreement to be performed or complied with by it at or prior to Closing; and
Purchaser shall provide Sellers with a Certificate from Purchaser's Secretary or
President dated as of Closing that the above conditions have been fulfilled.
(b) Approval of Counsel. All actions, proceedings, instruments and
documents required to carry out the transactions contemplated by this Agreement
or incidental thereto and all other related legal matters shall have been
approved by counsel for the Sellers, and such counsel shall have been furnished
with such certified copies of actions and proceedings and other such instruments
and documents as such counsel shall have reasonably requested.
(c) Absence of Restraint. No order to restrain, enjoin or otherwise
prevent the consummation of this Agreement or transactions in connection
herewith shall have been entered and, on the Closing Date, there shall not be
any pending or threatened litigation in any court, or any proceeding by or
before any governmental commission, board or agency, with a view to seeking to
restrain or prohibit consummation of the transactions contemplated hereby or in
which divestiture, rescission or significant damages are sought in connection
with the transactions contemplated hereby, and no investigations by any
governmental agency shall be pending or threatened which might result in any
such litigation or other proceeding.
(d) Opinion of Purchaser's Counsel. Sellers shall have received an
opinion of counsel for the Purchaser, dated the Closing Date, to the effect
that:
(i) Containment Solutions, Inc. is a corporation duly
organized and validly existing and in good standing under the laws of the State
of Delaware and has all requisite power and authority to carry on its business
as now conducted.
(ii) This Agreement has been duly authorized by all necessary
action on the part of Purchaser and has been executed and delivered by Purchaser
and constitutes a valid and binding obligation of Purchaser enforceable in
accordance with its terms.
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<PAGE> 10
(iii) The consummation of these transactions will not result
in a breach of or constitute a default under the Articles of Incorporation or
Bylaws of Purchaser.
(e) Changes in Business. Prior to Closing, there shall have been no
changes in the business, properties or operation of Purchaser since the date of
this Agreement which would have a material affect on Purchaser's ability to
perform under this Agreement.
(f) Government Consents. Any and all necessary consents of and filings
with any governmental authority or agency relating to the consummation of the
transactions contemplated by this Agreement shall have been obtained or
accomplished, and no action, proceeding, inquiry or investigation by any private
or governmental agency shall have been brought or threatened which questions the
validity or legality of the transactions contemplated by this Agreement.
9. Nature and Survival of Representations and Warranties.
(a) Nature of Statements. All statements contained in any exhibit
hereto or in any certificate delivered by or on behalf of any of the Sellers or
the Purchaser pursuant to this Agreement shall be deemed representations and
warranties by any of the Sellers or the Purchaser, as the case may be.
(b) Survival of Representations and Warranties. Regardless of any
investigation at any time made by or on behalf of any party hereto or of any
information any party may have in respect thereof, but subject to the provisions
of Section 10 hereof, all covenants, agreements, representations and warranties
made hereunder or pursuant hereto or in connection with the transactions
contemplated hereby shall survive the Closing and remain effective for a period
of three years from the Closing Date; provided, however, that any bona fide
claim shall continue in effect until such time as such claim has been resolved
or settled and the covenants in Sections 10(a) and (c) shall survive in
accordance with their term.
10. Indemnification.
(a) General Indemnity by Sellers. Subject to the conditions
hereinafter set forth, for a three year period, the Sellers shall indemnify and
hold harmless the Purchaser against any loss, damage or expense (including
reasonable attorneys' fees) incurred by the Purchaser and caused by or arising
out of (i) any breach or default in the performance by Sellers of any covenant
or agreement of Sellers contained in this Agreement; (ii) any breach of a
warranty or representation made by Sellers pursuant to this Agreement, or in any
certificate required to be delivered pursuant to this Agreement, or any material
misstatement or omission in any Schedule attached or to be delivered pursuant to
this Agreement; (iii) any warranty claims for which Sellers are responsible
pursuant to Section 5(h) hereof; and (iv) all costs and liabilities associated
with the cleanup of any contaminated soil or materials spilled, disposed of or
buried by Company or located on the property operated by Company or on any
customer property where Company is deemed to be responsible as a result of its
operations, prior to Closing Date.
(b) Tax Indemnity by Sellers. Upon the terms and subject to the
conditions set forth in this Section 10(b), Sellers shall indemnify and hold
harmless the Purchaser and Company against and will reimburse Purchaser or
Company for:
(i) any and all tax deficiencies in respect of federal, state,
and local and foreign sales, use, income or franchise tax or taxes
based on or measured by income or assets, including any interest or
penalties thereon, and legal fees and expenses incurred by Company or
Purchaser with respect to December 31, 1998 and all prior taxable
years; and
(ii) any and all such taxes, penalties, interest and legal
fees and expenses in respect of the period from December 31, 1998, up
to and including the Closing Date.
This indemnity for taxes, penalty and interest and legal fees and
expenses shall be independent of and in addition to any other indemnity
provision of this Agreement and shall survive until the expiration of the
applicable statute of limitations for assessment for the taxes referred to
herein. The above tax indemnity provisions shall apply regardless of any
investigation at any time made by or on behalf of Purchaser or any information
Purchaser may have in respect thereof.
(c) Procedure for Making Claims. If and when the Purchaser desires to
claim indemnification by the Sellers pursuant to the provisions of this Section,
the Purchaser shall deliver to the Sellers within 20 days of its receipt of a
claim, a certificate signed by the President or any Vice President of the
Purchaser (the "Notice of Claim") (i) stating that the Purchaser has properly
accrued or anticipated that it may be required to accrue losses, damages or
expenses to which the Purchaser is entitled to indemnification pursuant to this
Section, and (ii) specifying the individual items of loss,
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<PAGE> 11
damage or expense included in the amount so stated, the date each such item was
properly accrued, if any, and the nature of the misrepresentation, breach of
warranty or claim to which such item is related. In the event that Purchaser
fails to give notice within the 20-day period and Sellers are harmed due to the
delay, Purchaser shall waive its claim to the extent of harm caused Sellers by
the delay. If Sellers object to such claim or needs more information, it may
deliver written notice of objection (the "Notice of Objection") to the Purchaser
within ten (10) days after the Purchaser's delivery of the Notice of Claim to
Sellers. The Notice of Objection shall set forth the grounds upon which the
objection is based. If no Notice of Objection shall have been so delivered
within such ten (10) day period, the Sellers shall be deemed to have
acknowledged the correctness of the claim or claims specified in the Notice of
Claim for the full amount thereof, and shall thereupon pay to the Purchaser, on
demand, in cash, an amount equal to the amount of such claim or claims.
If any third party shall assert any claim or bring any action against
the Purchaser which, if successful, might result in a right of indemnification
hereunder, the Sellers shall be given written notice thereof in accordance with
the provisions of this Section 10(c), except that the notice period for both
parties shall be 30 days instead of 20/10 days as above. Thereafter, the Sellers
shall have the right to defend such claim or action at its own expense, and
through counsel of its own choice (which counsel shall be reasonably
satisfactory to Purchaser). If Sellers fail or refuse to provide a defense to
any third party claim, the Purchaser shall have the right to undertake the
defense, compromise or settlement of such claims, through counsel of its own
choice, on behalf of and for the account and at the risk of Sellers and Sellers
shall be obligated to pay the costs, expenses, and attorneys' fees incurred by
Purchaser in connection with such third party claim. Purchaser agrees that it
will not compromise or settle any claim without the consent of Sellers, which
consent shall not be unreasonably withheld. In any event, Purchaser, and Sellers
shall fully cooperate with each other and their respective counsel in connection
with any such litigation, defense, settlement, or other attempted resolution.
(d) Sellers' Indemnification Limits. Sellers shall have no obligation
to indemnify Purchaser with respect to any claim described in Section 10(a) or
(b) if (i) Purchaser fails to give the notice of claim for general claims
described in Section 10(a) within three years; or (ii) Purchaser fails to give
the notice of claim for tax related claims described in Section 10(b) within the
applicable statute of limitations for assessment for the taxes described Section
10(b).
(e) General Indemnification by Purchaser. The Purchaser agrees to
indemnify and hold the Sellers harmless against and in respect of (i) any
damage, claim, liability, deficiency, loss, cost or expense (including
reasonable attorney's fees) sustained by the Sellers arising out of or resulting
from (a) any misrepresentation by the Purchaser contained in this Agreement (or
any collateral documents), in any schedules attached hereto or thereto or in a
certificate to be delivered at the Closing, or (b) the breach of or default
under any warranty or representation, or the nonfulfillment of or default under
any agreement or covenant, of the Purchaser contained in this Agreement (or
collateral documents), schedules or certificates hereto, (c) the failure, after
the Closing Date, of Purchaser to pay or otherwise discharge when due any
contractual or other obligation relating to the Company, (d) Taxes for which
Purchaser is responsible. The procedures set forth at Section 10(c) shall apply
to claims for indemnification made by Sellers.
11. Termination.
(a) Best Efforts to Satisfy Conditions. The Sellers agree to use all
reasonable and proper efforts to bring about the satisfaction of the conditions
specified in Section 7 hereof and the Purchaser agrees to use its best efforts
to bring about the satisfaction of the conditions specified in Section 8 hereof.
(b) Termination. This Agreement may be terminated by:
(i) The mutual consent of the Sellers and the Purchaser;
(ii) The Purchaser if a material default shall be made by the
Sellers in the observance of or in the due and timely performance by the Sellers
of any of the covenants of the Sellers herein contained, or if there has been a
material breach by Seller of any of the warranties and representations of the
Sellers herein contained, or if the conditions of this Agreement to be complied
with or performed by the Sellers at or before the Closing shall not have been
complied with or performed at the time required for such compliance or
performance and such noncompliance or nonperformance shall not have been waived
by the Purchaser; or
(iii) The Sellers if a material default shall be made by the
Purchaser in the observance of or in the due and timely performance by the
Purchaser of any of the covenants of the Purchaser herein contained, or if there
shall have been a material breach by the Purchaser of any of the warranties and
representations of the Purchaser herein contained, or if the conditions of this
Agreement to be complied with or performed by the Purchaser at or before the
Closing shall not have been complied with or performed at the time required for
such compliance or performance and such noncompliance or nonperformance shall
not have been waived by the Sellers.
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<PAGE> 12
In the event of termination of this Agreement as provided above,
written notice thereof shall be given to the party within five (5) business
days. No termination pursuant to paragraphs (ii) and (iii) hereunder shall
relieve any party hereto from any liability in respect of such party's breach or
indemnification obligations hereunder.
12. Exhibits. If any exhibit recited to be attached hereto is not so
attached at the time of the execution hereof, the same may be prepared after
execution of this Agreement and, upon approval by notation of said exhibit by a
representative of the Sellers and a representative of the Purchaser, shall
become a part of this Agreement.
13. Miscellaneous.
(a) Expenses. Whether or not the transactions contemplated hereby
shall be consummated, each of the parties will pay all costs and expenses
(including Closing costs) of its performance of and compliance with this
Agreement.
(b) Notices. All notices, requests and other communications hereunder
shall be in writing and shall be deemed to have been given if personally
delivered or mailed, first class, registered or certified mail, postage prepaid:
If to Sellers: Steve Jones
908 Crescent Drive
Belton, TX 76513
With a copy to: Jim Linzy
17 North 25th Street
P.O. Box 428
Temple, TX 76503
If to Purchaser: Robert Bennett
Containment Solutions, Inc.
5150 Jefferson Chemical Rd.
Conroe, TX 77301
With a copy to: Cathy L. Smith, Esq.
Denali Incorporated
1360 Post Oak Blvd., Suite 2250
Houston, TX 77056
Or at such other address as shall be given in writing by any person
identified above to each of the other such persons.
(c) Assignment. This Agreement may not be assigned by any party hereto
without the prior written consent of the other parties.
(d) Successors Bound. Subject to the provisions of Paragraph 13(c),
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns.
(e) Section and Paragraph Headings. The section and paragraph headings
in this Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement.
(f) Amendment. This Agreement may be amended only by an instrument in
writing executed by the parties hereto.
(g) Entire Agreement. This Agreement, the exhibits hereto, and the
documents specifically referred to herein constitute the entire agreement,
understanding, representations and warranties of the parties hereto.
(h) Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which shall constitute one of
the same instrument.
(i) Governing Law. This Agreement shall be construed in accordance
with and governed by the laws of the State of Texas.
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<PAGE> 13
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties as of the date first above written.
AGREED TO BY SELLERS:
S. Jones Limited Partnership
By: Tiger Trucking LLC
As: General Partner
/s/ STEVE JONES
By: Steve Jones
Its: Managing member
AGREED TO BY PURCHASER:
CONTAINMENT SOLUTIONS, INC.
/s/ ROBERT B. BENNETT
By: Robert B. Bennett
Title: President
34
