EXHIBIT 10.19
ASSET PURCHASE AGREEMENT
BY AND AMONG
NES ACQUISITION CORP.
(THE "PURCHASER"),
SPRINT INDUSTRIAL SERVICES, INC.
(THE "SELLER")
AND
THE STOCKHOLDERS OF THE SELLER
(THE "STOCKHOLDERS")
Dated as of July 1, 1997
TABLE OF CONTENTS
Page
ARTICLE 1
DEFINITIONS............................................................. 1
1.1 Definitions....................................................... 1
1.2 Other Definitional Provisions..................................... 6
1.3 Cross Reference of Other Definitions.............................. 6
ARTICLE 2
PURCHASE AND SALE; ASSUMPTION OF CERTAIN LIABILITIES; CLOSING........... 8
2.1 Purchase and Sale of Sprintank Division Assets.................... 8
2.2 The Closing....................................................... 12
2.3 Post Closing Purchase Price Adjustment............................ 12
2.4 Accounts Receivable Adjustment.................................... 14
2.5 Distribution of Holdbacks......................................... 16
ARTICLE 3
TRANSITIONAL ARRANGEMENTS............................................... 16
3.1 Seller's Use of Names.............................................. 16
ARTICLE 4
CONFIDENTIALITY......................................................... 17
4.1 Confidentiality Obligations of the Seller.......................... 17
4.2 Confidentiality Obligations of the Purchaser....................... 17
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER......................... 18
5.1 Organization of the Purchaser...................................... 18
5.2 Authorization; Binding Effect; No Breach........................... 18
5.3 Brokerage.......................................................... 19
5.4 Disclosure......................................................... 19
5.5 Accuracy on Closing Date........................................... 19
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF THE SELLER AND STOCKHOLDERS........... 19
6.1 Organization and Corporate Power................................... 19
6.2 Capital Stock and Related Matters.................................. 20
6.3 Authorization; Binding Effect; No Breach........................... 20
6.4 Subsidiaries; Investments.......................................... 20
6.5 Financial Statements and Related Matters........................... 21
6.6 Absence of Undisclosed Liabilities................................. 21
6.7 Acquired Assets.................................................... 22
6.8 Absence of Certain Developments.................................... 22
6.9 Tax Matters........................................................ 24
6.10 Contracts and Commitments.......................................... 24
6.11 Proprietary Rights................................................. 27
6.12 Certain Litigation................................................. 28
6.13 Brokerage.......................................................... 28
6.14 Insurance.......................................................... 28
6.15 Employees.......................................................... 28
6.16 ERISA.............................................................. 29
6.17 Real Estate........................................................ 30
6.18 Compliance with Laws............................................... 32
6.19 Disclosure......................................................... 34
6.20 Accuracy on Closing Date........................................... 34
ARTICLE 7
ACCESS TO RECORDS....................................................... 34
7.1 Access to Records.................................................. 34
1
ARTICLE 8
SURVIVAL AND INDEMNIFICATION.......................................................................... 35
8.1 Survival of Representations and Warranties.................................................... 35
8.2 Indemnification Obligations of the Seller and the Stockholders................................ 35
8.3 Indemnification Obligations of the Purchaser.................................................. 36
8.4 Indemnification Procedures.................................................................... 36
8.5 Limitations on Indemnification Obligations.................................................... 37
8.6 Payment....................................................................................... 37
8.7 Exclusive Remedies............................................................................ 38
ARTICLE 9
CONDITIONS TO THE CLOSING............................................................................. 38
9.1 Conditions of the Purchaser's Obligation...................................................... 38
9.2 Conditions of the Seller's Obligation......................................................... 40
ARTICLE 10
OTHER COVENANTS....................................................................................... 42
10.1 Interim Agreements of the Seller and the Stockholders......................................... 42
10.2 Exclusivity................................................................................... 44
10.3 Interim Agreements of the Purchaser........................................................... 45
10.4 Additional Interim Agreements................................................................. 45
10.5 Transaction Expenses.......................................................................... 45
10.6 Special Leasing Arrangements.................................................................. 46
10.7 Employment and Consulting Agreements.......................................................... 46
10.8 Prepayment of Certain Indebtedness............................................................ 46
10.9 Noncompetition and Nonsolicitation............................................................ 47
10.10 Further Assurances............................................................................ 48
10.11 Announcements................................................................................. 48
10.12 Employees..................................................................................... 48
10.13 Employee Benefit Plans........................................................................ 49
10.14 Payment of Account Payable and Accrued Expenses............................................... 49
ARTICLE 11
OTHER AGREEMENTS...................................................................................... 50
11.1 Termination................................................................................... 50
11.2 Remedies...................................................................................... 50
11.3 Consent to Amendments......................................................................... 51
11.4 Successors and Assigns........................................................................ 51
11.5 Governing Law................................................................................. 51
11.6 Notices....................................................................................... 51
11.7 Severability of Provisions.................................................................... 52
11.8 Schedules and Exhibits........................................................................ 53
11.9 Counterparts.................................................................................. 53
11.10 No Third-Party Beneficiaries.................................................................. 53
11.11 Headings...................................................................................... 53
11.12 Merger and Integration........................................................................ 53
11.13 Allocation of Purchase Price.................................................................. 53
11.14 Bulk Sales Law................................................................................ 53
EXHIBITS
Exhibit A-1 - Form of Opinion of Seller's Counsel
Exhibit A-2 - Form of Opinion of Purchaser's Counsel
Exhibit B-1 - Form of Real Estate Lease for Corpus Christi Facility
Exhibit B-2 - Form of Real Estate Lease for Baton Rouge Facility
Exhibit B-3 - Form of Real Estate Lease for 0000 Xxxxxx Xxxxx, Xxxxxxx, Xxxxx
Exhibit C-1 - Form of Employment Agreement with Xxx X'Xxxx
Exhibit C-2 - Form of Employment Agreement with Xxxxx Xxxxxx
Exhibit C-3 - Form of Employment Agreement with X. X. Xxx
Exhibit D - Form of Consulting Agreement with Xxxxxx X. Xxxxxxxx
Exhibit E - Form of Noncompetition Agreement
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PURCHASER'S DISCLOSURE SCHEDULES
Purchaser's Organization Schedule
SELLER'S DISCLOSURE SCHEDULES
Affiliated Transactions Schedule
Assets Schedule
Brokerage Schedule
Capitalization Schedule
Compliance Schedule
Consents Schedule
Developments Schedule
Employee Benefits Schedule
Employees Schedule
Environmental Matters Schedule
Excluded Assets Schedule
Insurance Schedule
Liabilities Schedule
Litigation Schedule
Organization Schedule
Permits Schedule
Permitted Liens Schedule
Proprietary Rights Schedule
Real Estate Schedule
Sprintank Contracts Schedule
Taxes Schedule
3
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is made as of July 1, 1997, by and among NES
ACQUISITION CORP., a Delaware corporation (the "Purchaser"), SPRINT INDUSTRIAL
SERVICES, INC., a Texas corporation (the "Seller") and XXXXXX X. XXXXXXXX and
XXXXXX X. XXXXXX, the sole stockholders of the Seller (the "Stockholders"). The
Purchaser, the Seller and the Stockholders are collectively referred to herein
as the "Parties."
WHEREAS, upon the terms and subject to the conditions set forth in this
Agreement, the Purchaser desires to acquire from the Seller, and the Seller
desires to sell to the Purchaser, substantially all of the Seller's assets which
relate to the Seller's SPRINTANK division (the "Sprintank Division") (subject to
certain of the Sprintank Division's liabilities as specifically provided
herein), which assets include, among other things, substantially all of the
Seller's assets which relate to the Seller's tank and mobile storage business.
NOW, THEREFORE, the Parties agree as follows:
ARTICLE 1
DEFINITIONS
1.1 DEFINITIONS. For purposes hereof, the following terms, when used herein
with initial capital letters, shall have the respective meanings set forth
herein:
"Affiliate" of any Person means any other Person controlling, controlled by or
under common control with such first Person.
"Agreement" means this Asset Purchase Agreement, including all Exhibits and
Schedules hereto, as it may be amended from time to time in accordance with its
terms.
"Books and Records" means all lists, records and other information pertaining
to accounts, personnel and referral sources of the Seller, all lists and records
pertaining to suppliers and customers of the Seller, and all other books,
ledgers, files and business records of every kind relating or pertaining to the
Sprintank Division, in each case whether evidenced in writing, electronically
(including by computer) or otherwise.
"Code" means the United States Internal Revenue Code of 1986, as amended.
"Environmental Affiliates" of any Person means, with respect to any particular
matter, all other Persons whose liabilities or obligations with respect to that
particular matter have been assumed by, or are otherwise deemed by law to be
those of, such first Person.
"Environmental and Safety Requirements" means all federal, state, local and
foreign statutes, regulations, ordinances and similar provisions having the
force or effect of law, all judicial and administrative orders and
determinations, all contractual obligations and all common law concerning public
health and safety, worker health and safety and pollution or protection of the
environment, including all such standards of conduct relating to the presence,
use, production, generation, handling, transport, treatment, storage, disposal,
distribution, labeling, testing, processing, discharge, release, threatened
release, control, or cleanup of any hazardous materials, substances or wastes,
chemical substances or mixtures, pesticides, pollutants, contaminants, toxic
chemicals, petroleum products or by-products, asbestos, polychlorinated
biphenyls (or PCBs), noise or radiation.
"Environmental Lien" means any Lien, whether recorded or unrecorded, in favor
of any Government Entity relating to any liability of the Seller or any
Environmental Affiliate of the Seller arising under any Environmental and Safety
Requirement.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended.
4
"GAAP" means, at a given time, United States generally accepted accounting
principles, consistently applied.
"Government Entity" means the United States of America or any other nation,
any state or other political subdivision thereof, or any entity exercising
executive, legislative, judicial, regulatory or administrative functions of
government.
"Indebtedness" of any Person means, without duplication: (a) indebtedness for
borrowed money or for the deferred purchase price of property or services in
respect of which such Person is liable, contingently or otherwise, as obligor or
otherwise and any commitment by which such Person assures a creditor against
loss, including contingent reimbursement obligations with respect to letters of
credit (other than trade payables and other current liabilities incurred in the
ordinary course of business); (b) indebtedness guaranteed in any manner by such
Person, including a guarantee in the form of an agreement to repurchase or
reimburse; (c) obligations under capitalized leases in respect of which such
Person is liable, contingently or otherwise, as obligor, guarantor or otherwise,
or in respect of which obligations such Person assures a creditor against loss;
and (d) any unsatisfied obligation of such Person for "withdrawal liability" to
a "multiemployer plan," as such terms are defined under ERISA.
"Investment" means, with respect to any Person, any direct or indirect
purchase or other acquisition by such Person of any notes, obligations,
instruments, stock, securities or other ownership or beneficial interest
(including partnership interests and joint venture interests) of any other
Person, and any capital contribution by such Person to any other Person.
"Knowledge" means, with respect to a Person, (a) the actual knowledge of a
director or senior executive officer of such Person and (b) the knowledge which
any such director or senior executive officer of such Person would have obtained
after making reasonable inquiry with respect to the particular matter in
question.
"Legal Requirement" means any requirement arising under any action, law,
treaty, rule or regulation, determination or direction of an arbitrator or
Government Entity, including any Environmental and Safety Requirement.
"Lien" means any mortgage, pledge, security interest, encumbrance, easement,
restriction, charge, or other lien.
"Loss" means, with respect to any Person, any diminution in value,
consequential or other damage, liability, demand, claim, action, cause of
action, cost, damage, deficiency, Tax, penalty, fine or other loss or expense,
whether or not arising out of a third party claim, including all interest,
penalties, reasonable attorneys' fees and expenses and all amounts paid or
incurred in connection with any action, demand, proceeding, investigation or
claim by any third party (including any Government Entity) against or affecting
such Person or which, if determined adversely to such Person, would give rise
to, evidence the existence of, or relate to, any other Loss and the
investigation, defense or settlement of any of the foregoing, together with
interest thereon from the later of (i) the date such Loss is actually paid (it
being understood and agreed that for purposes of this clause (i), any claim not
involving the actual expenditure of funds cannot be "paid"), and (ii) thirty
(30) days after the date on which such Person provides the written notice of the
related claim as described in Section 8.4 through and including the date on
which the total amount of the claim, including such interest, is recovered or
recouped pursuant to Article 8.
"Officer's Certificate" of any Person means a certificate signed by such
Person's president or chief financial officer (or an individual having
comparable responsibilities with respect to such Person) stating that (a) the
individual signing such certificate has made or has caused to be made such
investigations as are necessary and reasonable under the circumstances in order
to permit such individual to verify the accuracy of the information set forth in
such certificate and (b) such certificate does not misstate any material fact
and does not omit to state any fact necessary to make the facts stated therein
not misleading.
"Person" means an individual, a partnership, a corporation, an association, a
limited liability company, a joint stock company, a trust, a joint venture, an
unincorporated organization, a governmental entity or any department, agency or
political subdivision thereof and any other entity.
5
"Permitted Liens" means (a) the leases of Sprintank Division equipment by the
Seller to customers of the Sprintank Division in the ordinary course of the
Sprintank Division's business and (b) the Liens listed on the attached Permitted
Liens Schedule, which will not be released at or prior to Closing.
"Proprietary Rights" means, with respect to the Seller, all of the following
owned by, issued to or licensed to the Seller and which relate to the Sprintank
Division: (a) all inventions (whether patentable or unpatentable and whether or
not reduced to practice), all improvements thereto, and all patents, patent
applications, and patent disclosures, together with all reissuances,
continuations, continuations-in-part, revisions, extensions, and reexaminations
thereof; (b) the names "Sprintank" and "Sprint Mobile Storage" and all
trademarks, service marks, trade dress, logos, trade names, associated with such
names, together with all translations, adaptations, derivations, and
combinations thereof and including all goodwill associated therewith, and all
applications, registrations, and renewals in connection therewith; (c) all
copyrightable works (including, without limitation, all software developed by
the Seller for use in the Business), all copyrights, and all applications,
registrations, and renewals in connection therewith; (d) all mask works and all
applications, registrations, and renewals in connection therewith; (e) all trade
secrets and confidential business information (including ideas, research and
development, know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings, specifications,
customer and supplier lists, pricing and cost information, and business and
marketing plans and proposals); (f) all computer software (including data and
related documentation); (g) all other proprietary rights; and (h) all copies and
tangible embodiments thereof (in whatever form or medium); provided, however,
that Proprietary Rights shall not include the name "Sprint" except when used as
part of "Sprintank" or "Sprint Mobile Storage" or any names confusingly similar
to "Sprintank" or "Sprint Mobile Storage" when such confusingly similar names
are used in connection with businesses the same as or substantially similar to
the Sprintank Business.
"Sprintank Business" means the business of the Sprintank Division as now
conducted.
"Sprintank Fixed Asset Amount" means (a) the book value of the Sprintank
Division's fixed assets determined in accordance with GAAP, applied on a basis
consistent with the Latest Balance Sheet (to the extent the Latest Balance Sheet
was prepared in accordance with GAAP), minus (b) the book value, determined in
accordance with GAAP, applied on a basis consistent with the Latest Balance
Sheet (to the extent the Latest Balance Sheet was prepared in accordance with
GAAP), of the Seller's (i) land and buildings in Corpus Christi, Texas, (ii)
land in Baton Rouge, Louisiana, (iii) furniture, fixtures, shop equipment and
office equipment located at 0000 Xxxxxx Xxxxx, Xxxxxxx, Xxxxx, and (iv) assets
listed on the attached Excluded Assets Schedule; provided that in any event, for
purposes of this definition, no depreciation deductions will be taken against
any of the Sprintank Division's fixed assets for any period after December 31,
1996.
"Sprintank Inventory Amount" means the cost basis of the Sprintank Division's
parts and supply inventory.
"Sprintank Prepaid Expenses Amount" means the book value of the Sprintank
Division's prepaid expenses, determined in accordance with GAAP, applied on a
basis consistent with the Latest Balance Sheet (to the extent the Latest Balance
Sheet was prepared in accordance with GAAP); provided that in any event,
Sprintank Prepaid Expenses Amount shall only include those prepaid expenses the
benefits of which are useable by the Purchaser following the Closing.
"Subsidiary" means, with respect to any Person, any corporation a majority of
the total voting power of shares of stock of which is entitled (without regard
to the occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled, directly or
indirectly, by that Person or one or more of the other Subsidiaries of that
Person or a combination thereof, or any partnership, association or other
business entity a majority of the partnership or other similar ownership
interest of which is at the time owned or controlled, directly or indirectly, by
that Person or one or more Subsidiaries of that Person or a combination thereof.
For purposes of this definition, a Person is deemed to have a majority ownership
interest in a partnership, association or other business entity if such Person
is allocated a majority of the gains or losses of such partnership, association
or other business entity or is or controls the managing director or general
partner of such partnership, association or other business entity.
6
"Taxes" means any federal, state, local, or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including taxes imposed pursuant to Section 59A
of the Code), customs duties, capital stock, franchise, profits, withholding,
social security, unemployment, disability, real property, personal property,
sales, use, transfer, registration, value added, alternative or add-on minimum,
or other tax, fee, assessment or charge of any kind whatsoever, including any
interest, penalty, or addition thereto, whether disputed or not.
"Transaction Documents" means this Agreement, and all other agreements,
instruments, certificates and other documents to be entered into or delivered by
any Party in connection with the transactions contemplated to be consummated
pursuant to any of the foregoing.
"Treasury Regulations" means the United States Treasury Regulations
promulgated pursuant to the Code.
1.2 OTHER DEFINITIONAL PROVISIONS.
(a) Accounting Terms. Accounting terms which are not otherwise defined in
this Agreement have the meanings given to them under GAAP. To the extent that
the definition of accounting term that is defined in this Agreement is
inconsistent with the meaning of such term under GAAP, the definition set forth
in this Agreement will control.
(b) "Hereof," etc. The terms "hereof," "herein" and "hereunder" and terms of
similar import are references to this Agreement as a whole and not to any
particular provision of this Agreement. Section, clause, Schedule and Exhibit
references contained in this Agreement are references to Sections, clauses,
Schedules and Exhibits in or to this Agreement, unless otherwise specified.
(c) Successor Laws. Any reference to any particular Code section or any other
law or regulation will be interpreted to include any revision of or successor to
that section regardless of how it is numbered or classified.
1.3 CROSS REFERENCE OF OTHER DEFINITIONS. Each capitalized term listed below
is defined in the corresponding Section of this Agreement:
7
Term Section
---- -------
Actual Sprintank Fixed Asset Amount...................... 2.3 (a)
Actual Sprintank Inventory Amount........................ 2.3 (a)
Actual Sprintank Prepaid Expenses Amount................. 2.3 (a)
Assumption............................................... 2.2 (c)
Closing.................................................. 2.2
Closing Accounts Receivable.............................. 2.4 (a)
Closing Accounts Receivable Amount....................... 2.4 (a)
Closing Date............................................. 2.2
Closing Review........................................... 2.3 (a)
Confidential Information................................. 4.1 (a)
Consents................................................. 9.1 (e)
Continuing Employees..................................... 10.12 (b)
Contracts................................................ 6.10 (b)
Controlled Group......................................... 6.16 (h)
Division Employees....................................... 10.12 (a)
Draft Computation........................................ 2.3 (a)
Employee Pension Plans................................... 6.16 (b)
Employee Welfare Plans................................... 6.16 (a)
Excess Collections....................................... 2.4 (b)
Financial Statements..................................... 6.5 (a)
Firm..................................................... 2.3 (a)
Holdback................................................. 2.1 (e)
Indemnification Claim Notice............................. 8.4 (a)
Indemnified Party........................................ 8.4 (a)
Indemnifying Party....................................... 8.4 (a)
Latest Balance Sheet..................................... 6.5 (a)
Leased Real Property..................................... 6.17 (b)
Leases................................................... 6.17 (b)
Multiemployer Plan....................................... 6.16 (c)
Noncompetition Period.................................... 10.9 (a)
Objection Notice......................................... 2.3 (a)
Other Plans.............................................. 6.16 (a)
Owned Real Property...................................... 6.17 (a)
Owned Real Property Leases............................... 10.6 (b)
Parties.................................................. Preface
PBGC..................................................... 6.16 (h)
Pending Claim............................................ 2.5
Plans.................................................... 6.16
Proceeding............................................... 8.4 (a)
Purchaser................................................ Preface
Purchaser Indemnitees.................................... 8.2
Remaining Holdback....................................... 2.5
Sale..................................................... 2.2 (a)
Seller................................................... Preface
Seller Confidential Information.......................... 4.2 (a)
Seller Employees......................................... 6.16 (a)
Seller Indemnitees....................................... 8.3
Sprintank Acquired Assets................................ 2.1 (a)
Sprintank Assumed Liabilities............................ 2.1 (c)
Sprintank Cash Purchase Price............................ 2.1 (e)
Sprintank Division....................................... Preface
Sprintank Excluded Assets................................ 2.1 (b)
Sprintank Excluded Liabilities........................... 2.1 (d)
Sprintank Purchase Price................................. 2.1 (e)
Stockholders............................................. Preface
Transition Period........................................ 10.13
Uncollected Receivables Amount........................... 2.4 (b)
8
ARTICLE 2
PURCHASE AND SALE; ASSUMPTION OF CERTAIN LIABILITIES; CLOSING
2.1 PURCHASE AND SALE OF SPRINTANK DIVISION ASSETS.
(a) Sprintank Acquired Assets. Upon the terms and subject to the conditions
set forth in this Agreement, at the Closing the Seller shall sell, assign,
transfer and deliver to the Purchaser free and clear of all Liens, and the
Purchaser shall purchase, all properties, assets, rights and interests of every
kind and nature, whether tangible or intangible, and wherever located and by
whomever possessed, owned by the Seller as of the Closing Date and relating to
the Sprintank Division, except as set forth in Section 2.1(b) below
(collectively, the "Sprintank Acquired Assets"), including, without limitation:
(i) all accounts receivables relating to the Sprintank Division
(whether current or noncurrent);
(ii) all Proprietary Rights, along with all income, royalties, damages
and payments due or payable as of the Closing or thereafter, including,
without limitation, damages and payments for past, present or future
infringements or misappropriations thereof, the right to xxx and recover for
past infringements or misappropriations thereof and any and all corresponding
rights that, now or hereafter, may be secured throughout the world;
(iii) all of the Seller's rights existing under leases, contracts,
licenses, permits, distribution arrangements, sales and purchase agreements,
accounts receivable, other agreements and business arrangements, including,
without limitation, all contracts and agreements described on the Sprintank
Contracts Schedule attached hereto;
(iv) all leasehold interests in real estate, all leasehold improvements
and fixtures located thereon and all machinery, equipment (including all
transportation and office equipment), tools, dyes and furniture wherever
located, including, without limitation, all such items which are located in
any building, warehouse, office or other space leased, owned or occupied by
the Seller or used in connection with the Sprintank Division;
(v) all rental equipment of any kind, wherever located, rented by the
Seller to any Person as part of the Sprintank Business;
(vi) all inventories of work in process, semi-finished and finished
goods, stores, replacement and spare parts, packaging materials, operating
supplies, and fuels, wherever located;
(vii) all office supplies, production supplies, spare parts, other
miscellaneous supplies, and other tangible personal property of any kind
related to the Sprintank Division wherever located, including, without
limitation, all property of any kind located in any building, office or other
space leased, owned or occupied by the Seller or in any warehouse where any of
the Seller's properties and assets may be situated, other than furniture,
fixtures, and shop and office equipment located at 0000 Xxxxxx Xxxxx, Xxxxxxx,
Xxxxx, and such other items as may be a Sprintank Excluded Asset;
(viii) all prepayments and prepaid expenses related to the Sprintank
Division which are included in the Sprintank Prepaid Expenses Amount;
(ix) all of the Seller's claims, causes of action, choses in action,
rights of recovery and rights of set-off of any kind relating to the Sprintank
Division;
(x) the right to receive and retain mail, accounts receivable payments
and other communications relating to the Sprintank Business;
(xi) the right to xxxx and receive payment for equipment leased,
products shipped or delivered and services performed but unbilled or unpaid as
of the Closing;
5
(xii) all lists, records and other information pertaining to accounts,
personnel and referral sources, all lists and records pertaining to suppliers
and customers, and all books, ledgers, files and business records of every
kind, whether evidenced in writing, electronically (including, without
limitation, by computer) or otherwise;
(xiii) all advertising, marketing and promotional materials and all other
printed or written materials;
(xiv) all permits, licenses, certifications and approvals relating to
the Sprintank Business from all permitting, licensing, accrediting and
certifying agencies, and the rights to all data and records relating to the
Sprintank Business held by such permitting, licensing and certifying agencies;
(xv) all goodwill as a going concern and all other intangible
properties;
(xvi) all telephone numbers (e.g. "800" numbers) used by the Seller;
(xvii) the names "Sprintank" and "Sprint Mobile Storage" and any names
confusingly similar to "Sprintank" or "Sprint Mobile Storage" when such
confusingly similar names are used in connection with businesses the same as
or substantially similar to the Sprintank Business;
(xviii) all internet addresses, domain names and web sites, if any;
(xix) all cash received by the Seller as security deposits and as
payments for services or equipment to be provided after the Closing, if any,
in each case to the extent relating to the Sprintank Business; and
(xx) except as specified in Section 2.1(b) below, all other property
owned by the Seller, or in which it has an interest on the Closing Date,
relating to the Sprintank Division including, without limitation, all fixed
assets relating to the Sprintank Division included on the Latest Balance Sheet
and any and all subsequent improvements or additions thereon through the
Closing Date.
(b) Sprintank Excluded Assets. Notwithstanding Section 2.1(a) above, the
following assets relating to the Sprintank Division are expressly excluded from
the purchase and sale contemplated hereby and, as such, are not Sprintank
Acquired Assets (collectively, the "Sprintank Excluded Assets"):
(i) all cash (other than cash received by the Seller as security
deposits or as payments for services or equipment to be provided after the
Closing, if any, in each case to the extent relating to the Sprintank
Business), cash equivalents, bank accounts, investments, securities and
partnership interests, and all monies to be received by the Seller from the
Purchaser;
(ii) all rights of the Seller under this Agreement;
(iii) all qualifications to do business as a foreign corporation;
(iv) all arrangements with registered agents relating to foreign
qualifications;
(v) all taxpayer and other identification numbers;
(vi) all seals, minute books, stock transfer books, blank stock
certificates, and other documents relating to the organization, maintenance,
and existence of the Seller as a corporation;
(vii) the real property owned by the Seller in Corpus Christi, Texas and
Baton Rouge, Louisiana, and all plants, buildings, fixtures and other
improvements located on such property, and all easements, licenses, rights of
way, permits and all appurtenances to such property, including, without
limitation, all appurtenant rights in and to public streets, whether or not
vacated;
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(viii) the real property leased by Seller at 0000 Xxxxxx Xxxxx, Xxxxxxx,
Xxxxx;
(ix) all furniture, fixtures, shop equipment and office equipment
located at 0000 Xxxxxx Xxxxx, Xxxxxxx, Xxxxx;
(x) the name "Sprint" when used in tradenames or trademarks other than
"Sprintank," "Sprint Mobile Storage" or any names confusingly similar to
"Sprintank" or "Sprint Mobile Storage" when such confusingly similar names are
used in connection with businesses the same as or substantially similar to the
Sprintank Business;
(xi) all claims, causes of action, choses in action, rights of recovery
and rights of set-off to the extent any of the foregoing constitute defenses,
counterclaims or cross claims against any third parties with respect to
Sprintank Excluded Liabilities; and
(xii) the assets listed on the attached Excluded Assets Schedule.
(c) Sprintank Assumed Liabilities. Subject to Section 2.1(d) below, as
additional consideration for the Sprintank Acquired Assets, at the Closing the
Purchaser will assume all liabilities and obligations of the Seller pursuant to
executory contracts, orders and commitments covering the purchase of inventory
and/or supplies, the sale of merchandise or services or the lease of equipment
which are described on the attached Sprintank Contracts Schedule (including,
without limitation, the leases of Sprintank Division equipment by the Seller to
customers of the Sprintank Division in the ordinary course of the Sprintank
Division's business) (the "Sprintank Assumed Liabilities").
(d) Sprintank Excluded Liabilities. Except as set forth in Section 2.1(c)
above, the Purchaser shall not assume or become liable for, and shall not be
deemed to have assumed or have become liable for, any of the Seller's
liabilities or obligations not expressly assumed by the Purchaser pursuant to
Section 2.1(c) above, whether accrued, absolute or contingent, whether known or
unknown, whether disclosed or undisclosed, whether due or to become due and
whether related to the Sprintank Acquired Assets or otherwise, and regardless of
when asserted, including, without limitation, all Indebtedness, Taxes, accounts
payable, accrued expenses and loss contingencies (the "Sprintank Excluded
Liabilities"). The Seller hereby acknowledges that it is retaining the
Sprintank Excluded Liabilities and the Seller and the Stockholders jointly and
severally agree to promptly pay and discharge all such liabilities and
obligations when due.
(e) Purchase Price for Sprintank Acquired Assets. The purchase price for the
Sprintank Acquired Assets (the "Sprintank Purchase Price") will consist of the
assumption by the Purchaser of the Sprintank Assumed Liabilities and the payment
of an aggregate of $25,256,431, which shall be paid at the Closing as follows:
(i) the Purchaser shall deliver $24,756,431 in cash (the "Sprintank Cash
Purchase Price") and (ii) the Purchaser shall maintain $500,000 in a book entry
account of the Purchaser (the " Holdback"). The Holdback shall be available to
satisfy any amounts owing to the Purchaser pursuant to Section 2.3 (Post Closing
Purchase Price Adjustment), Section 2.4 (Accounts Receivable) and/or Section 8.2
(Indemnification).
2.2 THE CLOSING. The closing of the purchase and sale of the Sprintank
Acquired Asset, the assumption of the Sprintank Assumed Liabilities, and the
transactions relating thereto (the "Closing") will take place at the offices of
Xxxxxxxx & Xxxxx, 000 Xxxx Xxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx, at such other
place as is mutually agreeable to the Parties or at such place as is required by
the Purchaser's senior lenders, commencing at 10:00 a.m. local time on the date
hereof. The date and time of the Closing are herein referred to as the "Closing
Date." At the Closing, subject to the satisfaction or waiver of each of the
conditions specified in Sections 9.1 and 9.2 below:
(a) the Seller will convey to the Purchaser good and marketable title to all
of the Sprintank Acquired Assets free and clear of all Liens (other than
Permitted Liens), and deliver to the Purchaser bills of sale, assignments of
leases and contracts and all other instruments of conveyance which are necessary
or desirable to effect transfer of the Sprintank Acquired Assets (the "Sale");
11
(b) the Purchaser will deliver to the Seller such instruments of assumption as
are required in order for the Purchaser to assume the Sprintank Assumed
Liabilities (the "Assumption");
(c) the Purchaser will deliver to the Seller (or, at the Seller's direction,
to lenders or other third parties) the Sprintank Cash Purchase Price by wire
transfer of immediately available funds; and
(d) there shall be delivered to the Purchaser and the Seller the opinions,
certificates and other documents and instruments provided to be delivered under
Article 9 hereof.
2.3 POST CLOSING PURCHASE PRICE ADJUSTMENT.
(a) Post-Closing Determination. Within 60 days after the Closing Date, the
Purchaser and its auditors will conduct a review (the "Closing Review") of (i)
the Sprintank Inventory Amount, (ii) the Sprintank Prepaid Expenses Amount and
(iii) the Sprintank Fixed Asset Amount, each as of the close of business on the
day before the Closing Date, and will prepare and deliver to the Seller a
computation of such amounts as of the close of business on the day before the
Closing Date (the "Draft Computation"). The Purchaser and its auditors will
give the Seller and its auditors an opportunity to observe the Closing Review
and will make available to such Persons all records and work papers used in
preparing the Draft Computation. If the Seller disagrees with the computation
of the Sprintank Inventory Amount, Sprintank Prepaid Expenses Amount and
Sprintank Fixed Asset Amount reflected on the Draft Computation, the Seller may,
within thirty (30) days after receipt of the Draft Computation, deliver a notice
(an "Objection Notice") to the Purchaser setting forth the Seller's calculation
of the amounts of the Sprintank Inventory Amount, Sprintank Prepaid Expenses
Amount and Sprintank Fixed Asset Amount as of the close of business on the day
before the Closing Date. The Purchaser and the Seller will use reasonable
efforts to resolve any disagreements as to the computation of the Sprintank
Inventory Amount, Sprintank Prepaid Expenses Amount and Sprintank Fixed Asset
Amount, but if they do not obtain a final resolution within 30 days after the
Purchaser has received the Objection Notice, the Purchaser and the Seller will
jointly retain an independent accounting firm of recognized national standing
(the "Firm") to resolve any remaining disagreements. If the Purchaser and the
Seller are unable to agree on the choice of the Firm, the Firm will be a "big-
six" accounting firm selected by lot (after excluding one firm designated by
each of the Purchaser and the Seller). The Purchaser and the Seller will direct
the Firm to render a determination within fifteen (15) days of its retention and
the Purchaser, the Seller and their respective agents will cooperate with the
Firm during its engagement. The Firm will consider only those items and amounts
in the Draft Computation set forth in the Objection Notice which the Purchaser
and the Seller are unable to resolve. The Firm's determination will be based on
the definitions of Sprintank Inventory Amount, Sprintank Prepaid Expenses Amount
and Sprintank Fixed Asset Amount included herein. The determination of the Firm
will be conclusive and binding upon the Purchaser and the Seller. The parties
shall bear the costs and expenses of the Firm based on the percentage which the
portion of the contested amount not awarded to each party bears to the amount
actually contested by such party. The amount of the Sprintank Inventory Amount,
as finally determined pursuant to this Section 2.3(a), is referred to herein as
the "Actual Sprintank Inventory Amount." The amount of the Sprintank Prepaid
Expenses Amount, as finally determined pursuant to this Section 2.3(a), is
referred to herein as the "Actual Sprintank Prepaid Expenses Amount." The
amount of the Sprintank Fixed Asset Amount, as finally determined pursuant to
this Section 2.3(a), is referred to herein as the "Actual Sprintank Fixed Asset
Amount."
(b) Post-Closing Adjustment.
(i) If the Actual Sprintank Fixed Asset Amount is greater than
$12,430,217, the Purchaser shall pay to the Seller, within two (2) business
days after determination thereof, the amount of such excess; provided that if
the Actual Sprintank Fixed Asset Amount is less than $12,430,217, the
Purchaser shall be entitled to receive from the Holdback, within two (2)
business days after the determination thereof, the amount of such shortfall
(provided, however, that if the Holdback is less than the amount of such
shortfall, the Seller shall pay to the Purchaser, within two (2) business days
after the determination of the Actual Sprintank Fixed Asset Amount, the amount
by which the Holdback is less than the amount of such shortfall) by wire
transfer or delivery of other immediately available funds. Such payment shall
be deemed to be an adjustment to the Sprintank Purchase Price.
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(ii) If the Actual Sprintank Prepaid Expenses Amount is greater than
$64,441, the Purchaser shall pay to the Seller, within two (2) business days
after determination thereof, the amount of such excess; provided that if the
Actual Sprintank Prepaid Expenses Amount is less than $64,441, the Purchaser
shall be entitled to receive from the Holdback, within two (2) business days
after the determination thereof, the amount of such shortfall (provided,
however, that if the Holdback is less than the amount of such shortfall, the
Seller shall pay to the Purchaser, within two (2) business days after the
determination of the Actual Sprintank Prepaid Expenses Amount, the amount by
which the Holdback is less than the amount of such shortfall) by wire transfer
or delivery of other immediately available funds. Such payment shall be
deemed to be an adjustment to the Sprintank Purchase Price.
(iii) If the Actual Sprintank Inventory Amount is less than $200,000, the
Purchaser shall be entitled to receive from the Holdback, within two (2)
business days after the determination thereof, the amount of such shortfall
(provided, however, that if the Holdback is less than the amount of such
shortfall, the Seller shall pay to the Purchaser, within two (2) business days
after the determination of the Actual Sprintank Inventory Amount, the amount
by which the Holdback is less than the amount of such shortfall) by wire
transfer or delivery of other immediately available funds. Such payment shall
be deemed to be an adjustment to the Sprintank Purchase Price.
2.4 ACCOUNTS RECEIVABLE ADJUSTMENT.
(a) Within ten (10) days after the Closing, the Seller and the Purchaser shall
jointly prepare a list of (i) the accounts receivable of the Seller relating to
the Sprintank Business in existence as of the Closing and (ii) all other amounts
owing to the Seller with respect to the Sprintank Business for services
previously rendered by the Seller which would have constituted accounts
receivable of the Seller if the Seller had billed such amounts prior to the
Closing (collectively, the "Closing Accounts Receivable"). The amount of such
listed Closing Accounts Receivable is referred to herein as the "Closing
Accounts Receivable Amount." If the Closing Accounts Receivable Amount is
greater than $2,225,773, the Sprintank Purchase Price shall be increased by the
amount of such excess and the Purchaser shall pay such excess to the Seller on
or before the fifteenth (15th) day following the Closing. If the Closing
Accounts Receivable Amount is less than $2,225,773, the Sprintank Purchase Price
shall be decreased by the amount of such shortfall and the Seller shall pay such
shortfall to the Purchaser on or before the fifteenth (15th) day following the
Closing. Such payment shall be made by wire transfer or delivery of other
immediately available funds and shall be deemed to be an adjustment to the
Sprintank Purchase Price.
(b) If collections by the Purchaser with respect to the Closing Accounts
Receivable during the 90-day period between the Closing Date and the 90th day
following the Closing Date are less than the Closing Accounts Receivable Amount
(such deficit is the "Uncollected Receivables Amount"), the Purchaser shall be
entitled to receive from the Holdback, within two (2) business days after the
determination thereof, an amount equal to the Uncollected Receivables Amount;
provided, however, that if the Holdback is less than the Uncollected Receivables
Amount, the Seller shall pay to the Purchaser, within two (2) business days
after the determination of the Uncollected Receivables Amount, the amount by
which the Holdback is less than the Uncollected Receivables Amount by wire
transfer or delivery of other immediately available funds; provided that if
collections by the Purchaser with respect to the Closing Accounts Receivable
during the 90-day period between the Closing Date and the 90th day following the
Closing Date are greater than the Closing Accounts Receivable Amount (such
excess is the "Excess Collections"), the Purchaser shall pay to the Seller,
within two (2) business days after the determination of the Excess Collections,
an amount equal to the Excess Collections by wire transfer or delivery of other
immediately available funds. Such payment shall be deemed to be an adjustment
to the Sprintank Purchase Price.
(c) The Purchaser agrees to use commercially reasonable efforts to collect all
of the Closing Accounts Receivable. The Purchaser shall furnish the Seller with
all such records and other information as the Seller may reasonably require to
verify the amounts collected by the Purchaser with respect to the Closing
Accounts Receivable. For the purpose of determining amounts collected by the
Purchaser with respect to the Closing Accounts Receivable, (i) in the absence of
a bona fide dispute between an account debtor and the Purchaser regarding
receivables of such account debtor accrued prior to the Closing Date, all
payments by an account debtor shall first be applied to the oldest outstanding
invoice due from that account debtor, and (ii) in the case of a dispute
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between the Purchaser and an account debtor with respect to a particular
invoice, all payments shall be first applied to the next oldest invoice due from
that account debtor. The Purchaser shall not be required to retain a collection
agency, bring any suit, or take any other action out of the ordinary course of
business as it was conducted prior to the Closing to collect any of the Closing
Accounts Receivable.
(d) To the extent that the Purchaser has not collected the full amount of the
Closing Accounts Receivable and has been paid by the Sellers in accordance with
Section 2.4(b), the Purchaser shall reassign any such uncollected Closing
Accounts Receivable to the Seller.
(e) In the event that after the Closing Date, the Seller shall receive any
remittance from or on behalf of any account debtor with respect to any accounts
receivable relating to the Sprintank Business (excluding any Closing Accounts
Receivable reassigned to the Seller or any Closing Accounts Receivable that have
already been paid in full), the Seller shall endorse without recourse such
remittance to the order of the Purchaser and forward same to the Purchaser
promptly upon receipt thereof.
(f) In the event that the Purchaser shall receive any remittance from or on
behalf of any account debtor with respect to any Closing Account Receivable
after such Closing Account Receivable has been reassigned to the Seller or with
respect to any Closing Accounts Receivable that have already been paid in full,
the Purchaser shall endorse such remittance to the order of the Seller and
forward the same to the Seller promptly upon receipt thereof.
2.5 DISTRIBUTION OF HOLDBACKS. On the 90th day after the Closing Date, the
Purchaser shall pay to the Seller an amount equal to the amount of the Holdback,
if any, remaining after (i) all amounts owing to the Purchaser pursuant to
Section 2.3 have been satisfied, (ii) all amounts owing to the Purchaser
pursuant to Section 2.4 have been satisfied, and (iii) all claims of the
Purchaser under Section 8.2 which have theretofore been finally resolved have
been satisfied (the "Remaining Holdback") less any amount for which the
Purchaser claims, prior to such 90th day, that it is entitled to receive
indemnification pursuant to Section 8.2 (each, a "Pending Claim"). As soon as
practicable following final resolution of all Pending Claims, the Purchaser
shall pay to the Sellers an aggregate amount equal to the portion, if any, of
the Holdback which remain after payment of the Remaining Holdback and final
resolution of all Pending Claims.
ARTICLE 3
TRANSITIONAL ARRANGEMENTS
3.1 SELLER'S USE OF NAMES. As of the Closing Date, the Seller will, and will
cause its Affiliates to, refrain from using the names "Sprintank" and "Sprint
Mobile Storage" (and any names which are confusingly similar to such names), it
being the intent of the Parties that from and after the Closing the Purchaser
will have the sole right as against the Seller and all other Persons to conduct
business under such names and that the Purchaser will commence doing so at the
time of the Closing.
ARTICLE 4
CONFIDENTIALITY
4.1 CONFIDENTIALITY OBLIGATIONS OF THE SELLER.
(a) Confidential Treatment. The Seller and the Stockholders will (and will
cause each of their Affiliates to) treat and hold as confidential all of the
Confidential Information (as such term is hereinafter defined), refrain from
using any Confidential Information, and, at the Purchaser's request, deliver to
the Purchaser or destroy all tangible embodiments (and all copies) of any
Confidential Information which are in the Seller's, Stockholders' or any of
their Affiliate's possession. As used herein the term "Confidential
Information" shall mean all information concerning the business and affairs of
the Sprintank Business which (i) is confidential and proprietary to the
Sprintank Business, (ii) confers a competitive advantage on the Sprintank
Business, or (iii) would be detrimental or embarrassing to the Sprintank
Business if disclosed; provided, however, that Confidential Information shall
not
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include information that is generally available to the public (other than by
reason of any disclosure by any of the Seller, the Stockholders or any Affiliate
thereof which constitutes or is the result of breach of this Section 4.1(a) or
any disclosure by any such Affiliate which would constitute a breach of this
Section 4.1(a) if such Affiliate were the Seller) immediately prior to the time
of disclosure.
(b) Forced Disclosure. If any of the Seller, the Stockholders or any
Affiliate thereof is requested or required (by oral question or request for
information or documents in any legal proceeding, interrogatory, subpoena, civil
investigative demand, or similar process) to disclose any Confidential
Information, such Person will use its reasonable best efforts to notify the
Purchaser promptly of such request or requirement so that the Purchaser may seek
an appropriate protective order or waive compliance with the provisions of this
Section 4.1. If, in the absence of such a protective order or waiver, such
Seller, Stockholder or Affiliate thereof is compelled to disclose any
Confidential Information, such Person will use his or its reasonable best
efforts to limit such disclosure to Confidential Information which is so
required to be disclosed and to obtain an order or other assurance that
confidential treatment will be accorded to any Confidential Information
disclosed.
4.2 CONFIDENTIALITY OBLIGATIONS OF THE PURCHASER.
(a) Confidential Treatment. From the date of this Agreement until the
Closing, the Purchaser will (and will cause each of its Affiliates to) treat and
hold as confidential all information it receives from the Seller ("Seller
Confidential Information") and refrain from using any Seller Confidential
Information (other than in preparation for the transactions contemplated by this
Agreement), and, at the Seller's request after termination of this Agreement,
deliver to the Seller or destroy all tangible embodiments (and all copies) of
any Seller Confidential Information which are in the Purchaser's or any such
Affiliate's possession. This Section 4.2(a) will not apply to any Seller
Confidential Information which is generally available to the public (other than
by reason of any disclosure by the Purchaser or any Affiliate of the Purchaser
which constitutes or is the result of breach of this Section 4.2(a) or any
disclosure by such an Affiliate which would constitute a breach of this Section
4.2(a) if such Affiliate were the Purchaser) immediately prior to the time of
disclosure.
(b) Forced Disclosure. If the Purchaser or any Affiliate of the Purchaser is
requested or required (by oral question or request for information or documents
in any legal proceeding, interrogatory, subpoena, civil investigative demand, or
similar process) to disclose any Seller Confidential Information prior to the
Closing, the Purchaser will use its reasonable best efforts to notify the Seller
promptly of such request or requirement so that the Seller may seek an
appropriate protective order or waive compliance with the provisions of this
Section 4.2. If, in the absence of such a protective order or waiver, the
Purchaser or any Affiliate of the Purchaser is compelled to disclose any Seller
Confidential Information, the Purchaser will use its reasonable best efforts to
limit such disclosure to Seller Confidential Information which is so required to
be disclosed and to obtain an order or other assurance that confidential
treatment will be accorded to any Confidential Information disclosed.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
As a material inducement to the Seller to enter into this Agreement, the
Purchaser hereby represents and warrants that:
5.1 ORGANIZATION OF THE PURCHASER. The Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. The Purchaser has the requisite corporate power and authority and all
licenses, permits and authorizations necessary to enter into, deliver and carry
out its obligations pursuant to the Transaction Documents to which it is a
party. The Purchaser's Organization Schedule attached hereto lists every
jurisdiction where the Purchaser is qualified to do business. The Purchaser has
the requisite corporate power necessary to own and operate its properties and
the Sprintank Acquired Assets, and to carry on its current business and the
Sprintank Business after Closing, and to enter into, deliver and carry out the
transaction contemplated by the Transaction Documents.
15
5.2 AUTHORIZATION; BINDING EFFECT; NO BREACH. The Purchaser's execution,
delivery and performance of each Transaction Document to which the Purchaser is
a party has been duly authorized by the Purchaser. Each Transaction Document to
which the Purchaser is a party constitutes a valid and binding obligation of the
Purchaser which is enforceable in accordance with its terms. The execution,
delivery and performance by the Purchaser of the Transaction Documents to which
the Purchaser is a party do not and will not (i) conflict with or result in a
breach of the terms, conditions or provisions of, (ii) constitute a default
under, (iii) result in a violation of, or (iv) require any authorization,
consent, approval, exemption or other action by or declaration or notice to any
Governmental Entity pursuant to, the charter or bylaws of the Purchaser or any
agreement, instrument, or other document, or any Legal Requirement, to which the
Purchaser or any of its assets is subject.
5.3 BROKERAGE. There is no claim for brokerage commissions, finders' fees or
similar compensation in connection with the transactions contemplated by the
Transaction Documents based on any arrangement or agreement which is binding
upon the Purchaser.
5.4 DISCLOSURE. Neither this Article 5 nor any certificate or other item
delivered to the Seller or the Stockholders by or on behalf of the Purchaser
with respect to the transactions contemplated by the Transaction Documents
contains any untrue statement of a material fact or omits a material fact which
is necessary to make any statement contained herein or therein not misleading.
5.5 ACCURACY ON CLOSING DATE. Each representation and warranty set forth in
this Article 5 and all information contained in any certificate delivered by or
on behalf of the Purchaser pursuant to this Agreement will be true and correct
as of the time of the Closing as though then made, except to the extent that the
Purchaser has advised the Seller otherwise in writing prior to the Closing.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF THE
SELLER AND STOCKHOLDERS
As a material inducement to the Purchaser to enter into this Agreement, purchase
the Sprintank Acquired Assets and assume the Sprintank Assumed Liabilities, the
Seller and the Stockholders hereby jointly and severally represent and warrant
that:
6.1 ORGANIZATION AND CORPORATE POWER. The Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Texas and is duly qualified to do business in each jurisdiction in which its
ownership of property or conduct of business requires it to so qualify. The
Organization Schedule attached hereto lists every jurisdiction where the Seller
is duly qualified to do business. The Seller has the requisite corporate power
necessary to own and operate its properties, carry on the Sprintank Business and
enter into, deliver and carry out the transactions contemplated by the
Transaction Documents. Each Stockholder has the requisite capacity necessary to
enter into, deliver and carry out his obligations pursuant to the Transaction
Documents to which he is a party.
6.2 CAPITAL STOCK AND RELATED MATTERS. Except as set forth on the attached
Capitalization Schedule, no Person holds any rights to vote or control the
voting of any of the issued and outstanding shares of the Seller. Except for
agreements among and between the Stockholders or their Affiliates, no Person has
any rights to acquire any of the capital stock of the Seller.
6.3 AUTHORIZATION; BINDING EFFECT; NO BREACH. The Seller's execution, delivery
and performance of each Transaction Document to which the Seller is a party have
been duly authorized by the Seller. Each Transaction Document to which the
Seller or any of the Stockholders is a party constitutes a valid and binding
obligation of such Person which is enforceable in accordance with its terms.
Except as set forth on the attached Consents Schedule, the execution, delivery
and performance of the Transaction Documents to which such Seller or Stockholder
is a party do not and will not (i) conflict with or result in a breach of the
terms, conditions or provisions of, (ii) constitute a default under, (iii)
result in the creation of any Lien upon any of the Sprintank Acquired Assets
16
under, (iv) give any third party the right to modify, terminate or accelerate
any Sprintank Assumed Liability or other liability or obligation of such Seller
or Stockholder under, (v) result in a violation of, or (vi)require any
authorization, consent, approval, exemption or other action by or declaration or
notice to any Governmental Entity pursuant to, the charter or bylaws of the
Seller or any agreement, instrument or other document, or any Legal Requirement,
to which such Seller, Stockholder or any of the Seller's assets is subject.
Without limiting the generality of the foregoing, except as set forth on the
attached Consents Schedule, neither such Seller, Stockholder nor any Affiliate
of any of them has entered into any agreement, or is bound by any obligation of
any kind whatsoever, directly or indirectly to transfer or dispose of (whether
by sale of stock or assets, assignment, merger, consolidation or otherwise) the
Sprintank Business or the Sprintank Acquired Assets(or any substantial portion
thereof) to any Person other than the Purchaser, and neither such Seller nor
Stockholder has entered into any agreement, nor is it bound by any obligation of
any kind whatsoever, to issue any capital stock of the Seller to any Person.
6.4 SUBSIDIARIES; INVESTMENTS. The Seller does not own or hold any rights to
acquire any capital stock or any other security, interest or Investment in any
other Person other than investments which constitute cash or cash equivalents.
The Seller does not have, and has never had, a Subsidiary.
6.5 FINANCIAL STATEMENTS AND RELATED MATTERS.
(a) Financial Statements. Each of (i) the audited balance sheet of the Seller
as of December 31, 1996 and the audited related statements of operations,
stockholders' equity and cash flows for the 12-month period then ended, (ii) the
unaudited balance sheets of the Seller as of December 31, 1995, December 31,
1994 and December 31, 1993 and the unaudited related income statements for the
respective 12-month periods then ended, and (iii) the unaudited balance sheet of
the Seller as of April 30, 1997 (the "Latest Balance Sheet") and the related
income statement for the four-month period then ended (collectively, the
"Financial Statements") (including in all cases the notes thereto, if any)
fairly presents the financial condition of the Seller and the results of its
operations as of the dates thereof and for the periods covered thereby and has
been prepared in accordance with GAAP.
(b) Receivables. The accounts receivable which are part of the Sprintank
Acquired Assets are valid receivables, current, and are subject to no valid
counterclaims or setoffs, at the aggregate amount recorded on the Seller's books
and records as of the Closing, net of an amount of allowances for doubtful
accounts which relate to those receivables computed in a manner consistent with
GAAP and the accounting practices used in the preparation of the Latest Balance
Sheet.
(c) Inventory. The inventory which is part of the Sprintank Acquired Assets
consists of a quantity and quality which is usable or saleable in the ordinary
course of the Sprintank Business. Except as expressly set forth in this
subsection (c), and except for any warranty of title set forth in this
Agreement, the inventory that is part of the Sprintank Acquired Assets is sold
AS IS, WHERE IS, AND WITH ALL FAULTS, ALL EXPRESS AND IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE BEING HEREBY EXPRESSLY
DISCLAIMED.
6.6 ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth on the attached
Liabilities Schedule, the Seller does not have any liability relating to the
Sprintank Business (whether accrued, absolute, contingent, unliquidated or
otherwise, whether or not known to the Seller or the Stockholders, whether due
or to become due, and regardless of when asserted) other than: (a) the
liabilities set forth on the face of the Latest Balance Sheet, (b) current
liabilities which have arisen after the date of the Latest Balance Sheet, in the
ordinary course of the Sprintank Business and consistent with the Seller's past
practice (none of which is a liability resulting from breach of contract, breach
of warranty, tort, infringement, claim or lawsuit) and (c) other liabilities and
obligations expressly disclosed or quantified in the other Schedules to this
Agreement.
6.7 ACQUIRED ASSETS. Except as set forth on the attached Assets Schedule:
17
(a) the Sprintank Acquired Assets constitute all of the assets and rights
(other than the Sprintank Excluded Assets) which are necessary for the conduct
of the Sprintank Business as currently conducted and presently proposed to be
conducted;
(b) the Seller has good and marketable title to, or a valid leasehold interest
in, all properties and assets used by it, located on its premises, or shown on
the Latest Balance Sheet or acquired by it since the date of the Latest Balance
Sheet, in each case free and clear of all Liens, other than Permitted Liens or
Liens disclosed on the Latest Balance Sheet (including any notes thereto); and
(c) the Seller's equipment and other tangible assets are fit for use in the
ordinary course of the Seller's business consistent with its past practice.
Except as expressly set forth in this subsection (c), and except for any
warranty of title set forth in this Agreement, the tangible personal property
that is part of the Sprintank Acquired Assets is sold AS IS, WHERE IS, AND WITH
ALL FAULTS, ALL EXPRESS AND IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS
FOR A PARTICULAR PURPOSE BEING HEREBY EXPRESSLY DISCLAIMED.
6.8 ABSENCE OF CERTAIN DEVELOPMENTS. Except as set forth on the attached
Developments Schedule, since December 31, 1996, there has been no material
adverse change in the Sprintank Acquired Assets, the Sprintank Assumed
Liabilities, or the financial condition, operating results, assets, customer or
supplier relations, employee relations or business prospects of the Sprintank
Business. Without limiting the generality of the preceding sentence, except as
expressly contemplated by this Agreement or as set forth on the attached
Developments Schedule, since December 31, 1996, the Seller has not:
(a) engaged in any activity which has resulted in any delay in the payment in
its accounts payable, or any delay in its capital expenditures, in each case as
compared with its custom and practice in the conduct of the Sprintank Business
immediately prior to December 31, 1996;
(b) mortgaged or pledged any Sprintank Acquired Asset or subjected any
Sprintank Acquired Asset to any Lien except Liens arising in connection with the
purchase of Sprintank Acquired Assets in the ordinary course of the Sprintank
Business;
(c) sold, assigned, conveyed, transferred, canceled or waived any property,
tangible asset, Proprietary Right of the Seller or other intangible asset or
right which, if it were held by the Seller on the Closing Date, would constitute
a Sprintank Acquired Asset, other than in the ordinary course of the Sprintank
Business consistent with the Seller's past practice;
(d) disclosed any Confidential Information to any Person other than (i) the
Purchaser, (ii) the Purchaser's representatives, agents, attorneys, accountants
and present and proposed financing sources and (iii) the Seller's
representatives, agents, attorneys and accountants;
(e) waived any right other than in the ordinary course of the Sprintank
Business consistent with the Seller's past practice;
(f) made commitments for capital expenditures which, in the aggregate, would
exceed $25,000 other than in the ordinary course of the Sprintank Business
consistent with the Seller's past practice;
(g) made any loan or advance to, or guarantee for the benefit of, or any
Investment (other than Investments which constitute Sprintank Excluded Assets or
guaranties that are included in the Sprintank Excluded Liabilities) in, any
other Person;
(h) granted any bonus or any increase in wages, salary or other compensation
to any employee (other than increases in wages or salaries or employee loans
granted in the ordinary course of the Sprintank Business consistent with the
Seller's past practice granted to any employee who is not affiliated with the
Seller other than by reason of such Person's employment by the Seller);
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(i) suffered damages, destruction or casualty losses which, in the aggregate,
exceed $50,000 (whether or not covered by insurance) to any Sprintank Acquired
Asset or any other property or asset which, if it existed and was held by the
Seller on the Closing Date, would constitute a Sprintank Acquired Asset;
(j) to the Seller's Knowledge, received any indication from any material
supplier of the Seller to the effect that such supplier will stop, or materially
decrease the rate of, supplying materials, products or services to the Seller
(or to the Purchaser, if the Sale is consummated), or, to the Seller's
Knowledge, received any indication from any material customer of the Seller to
the effect that such customer will stop, or materially decrease the rate of,
leasing equipment from the Seller (or from the Purchaser, if the Sale is
consummated);
(k) entered into any transaction other than in the ordinary course of the
Sprintank Business consistent with the Seller's past practice, or entered into
any other material transaction, whether or not in the ordinary course of the
Sprintank Business which reasonably would be expected to adversely affect the
Sprintank Business, the Sprintank Acquired Assets or the Sprintank Assumed
Liabilities; or
(l) agreed to do any act described in any of clauses 6.8(a) through (k) above.
6.9 TAX MATTERS. Except as set forth in the attached Taxes Schedule or
otherwise disclosed in writing to the Purchaser:
(a) the Seller has filed all Tax returns and other reports which it was
required to file and each such return or other report was correct and complete
in all respects, and the Seller has paid all Taxes due and owing by it (whether
or not shown on any Tax return or other report) and has withheld and paid over
all Taxes which it is obligated to withhold from amounts paid or owing to any
employee, independent contractor, stockholder, creditor or other third party;
(b) no Tax audits are pending or being conducted with respect to the Seller;
(c) there are no Liens on any of the assets of the Seller that arose in
connection with any failure (or alleged failure) to pay any Tax;
(d) to the Seller's Knowledge, no information related to Tax matters has been
requested by any Taxing authority and the Seller has not received notice
indicating an intent to open an audit or other review from any Taxing authority;
(e) there are no unresolved disputes or claims concerning the Seller's Tax
liability;
(f) to the Seller's Knowledge no claim has ever been made by any jurisdiction
in which the Seller does not file Tax returns to the effect that the Seller is
or may be subject to any Tax imposed by that jurisdiction;
(g) to the Seller's Knowledge the Seller has not waived any statute of
limitations in respect of Taxes nor has the Seller agreed to an extension of
time with respect to any Tax assessment or deficiency; and
(h) the Seller is not a party to any Tax sharing or allocation agreement, and
the Seller has no liability for the Taxes of any person under Section 1.1502-6
of the Treasury Regulations (or any similar provision of state, local or foreign
law), as a transferee or successor, by contract, or otherwise.
6.10 CONTRACTS AND COMMITMENTS.
(a) Contracts Schedule. Other than this Agreement or as described on the
attached Sprintank Contracts Schedule the Seller is not a party to any written
or oral:
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(i) pension, profit sharing, stock option, employee stock purchase or other
plan or arrangement providing for deferred or other compensation to employees
or any other employee benefit, welfare or stock plan or arrangement which is
not described on the attached Employee Benefits Schedule, or any contract with
any labor union, or any severance agreement;
(ii) contract for the employment or engagement as an independent contractor
of any Person on a full-time, part-time, consulting or other basis, other than
those which are not Sprintank Acquired Assets or Sprintank Assumed
Liabilities;
(iii) contract pursuant to which the Seller has advanced or loaned funds, or
agreed to advance or loan funds, to any other Person, other than those which
are not Sprintank Acquired Assets or Sprintank Assumed Liabilities;
(iv) contract or indenture relating to any Indebtedness or the mortgaging,
pledging or otherwise placing a Lien on any of the Sprintank Acquired Assets;
(v) contract pursuant to which the Seller is the lessee of, or holds or
operates, any real or personal property owned by any other Person;
(vi) contract pursuant to which the Seller is the lessor of, or permits any
third party to hold or operate, any real or personal property owned by the
Seller or of which the Seller is a lessee (other than leases of equipment to
customers in the ordinary course of business copies of which have previously
been made available to the Purchaser);
(vii) assignment, license, indemnification or other contract with respect to
any intangible property (including any Proprietary Right of the Seller) which
is not described on the attached Proprietary Rights Schedule;
(viii) contract or agreement with respect to services rendered or goods sold
or leased to or from others, other than any customer purchase order accepted
in the ordinary course of business and in accordance with the Seller's past
practice which both (1) does not require delivery after the date which is six
months after to Closing Date and (2) does not involve a sale price or rental
amount of more than $25,000;
(ix) contract prohibiting it from freely engaging in any business anywhere
in the world;
(x) independent sales representative or distributorship agreement with
respect to the Sprintank Business; or
(xi) any other contract which is material to the Sprintank Business or
involves consideration in excess of $25,000.
(b) Enforceability. Each item described on the attached Sprintank Contracts
Schedule (together with the leases of Sprintank Division equipment by the Seller
to customers of the Sprintank Division in the ordinary course of the Sprintank
Division's business, the "Contracts") is valid, binding and enforceable in
accordance with its terms, except as such enforceability may be limited by (a)
applicable insolvency, bankruptcy, reorganization, moratorium or other similar
laws affecting creditors' rights generally and (b) applicable equitable
principles (whether considered in a proceeding at law or in equity).
(c) Compliance. The Seller has performed all obligations required to be
performed by it under each Contract, and, to the best of the Seller's Knowledge,
the Seller is not in default under or in breach in any material respect of (nor
is it in receipt of any claim of default or breach under) any such obligation.
To the Seller's Knowledge, no event has occurred which with the passage of time
or the giving of notice (or both) would result in a default, breach or event of
noncompliance in any material respect under any obligation of the Seller
pursuant to any Contract. The Seller has no present expectation or intention of
not fully performing any of its obligations pursuant to any Contract, and the
Seller has no Knowledge of any breach or anticipated breach by any other party
to any Contract.
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(d) Leases. With respect to each Contract shown on the attached Sprintank
Contracts Schedule which is a lease of personal property under which the Seller
is the lessee, the Seller holds a valid and existing leasehold interest under
such lease for the term set forth with respect to such lease on the attached
Sprintank Contracts Schedule.
(e) Affiliated Transactions. Except as set forth on the attached Affiliated
Transactions Schedule, no officer, director, stockholder or Affiliate of the
Seller (and no individual related by blood or marriage to any such Person, and
no entity in which any such Person or individual owns any beneficial interest)
is a party to any material agreement, contract, commitment or transaction with
the Seller (other than this Agreement) or has any material interest in any
material property used by the Seller.
(f) Copies. The Purchaser's special legal counsel has been supplied with a
true and correct copy of each written Contract shown on the attached Sprintank
Contracts Schedule, each as currently in effect.
6.11 PROPRIETARY RIGHTS.
(a) Schedule. The attached Proprietary Rights Schedule contains a complete
and accurate list of the following items, in each case relating to the Sprintank
Business: (a) all patented or registered Proprietary Rights owned by the Seller
or used in connection with the Sprintank Business, (b) all pending patent
applications and applications for registrations of other Proprietary Rights of
the Seller filed by or on behalf of the Seller, (c) all trade names, corporate
names and unregistered trade names and service marks owned by the Seller or used
in connection with the Sprintank Business which are material to such business
and (d) all unregistered copyrights and computer software which are material to
the Sprintank Acquired Assets, the Sprintank Assumed Liabilities, or the
financial condition, operating results, assets, customer or supplier relations,
employee relations or business prospects of the Sprintank Business. The
attached Proprietary Rights Schedule also contains a complete and accurate list
of all licenses and other rights granted by the Seller to any third party, and
all licenses and other rights granted by any third party to the Seller, with
respect to any Proprietary Rights relating to the Sprintank Business other than
Proprietary Rights which individually or in the aggregate are not material to
the Sprintank Business. The Proprietary Rights listed on the Proprietary Rights
Schedule comprise all intellectual property rights which are necessary for the
operation of the Sprintank Business.
(b) Ownership; Claims. Except as set forth on the attached Proprietary Rights
Schedule, the Seller owns and possesses all right, title and interest in and to
(or has the right to use pursuant to a valid and enforceable license) all
Proprietary Rights necessary for the operation of the Sprintank Business as
presently conducted and as presently proposed to be conducted. Except as
indicated on the attached Proprietary Rights Schedule:
(i) the Seller owns all right, title, and interest in and to all of the
Proprietary Rights described on such Schedule and each other Proprietary Right
which is material to the conduct of the Sprintank Business (in each case free
and clear of all Liens),
(ii) there have been no claims made against the Seller asserting the
invalidity, misuse or unenforceability of any of such Proprietary Rights, and
to the Seller's Knowledge there are no grounds for any such claim,
(iii) the Seller has not received any notice of (nor is it aware of any
facts which indicate a likelihood of) any infringement or misappropriation by,
or conflict with, any Person with respect to the Proprietary Rights (including
any demand or request that the Seller license rights from any Person),
(iv) to the Seller's Knowledge, the conduct of the Sprintank Business has
not infringed or misappropriated, and does not infringe or misappropriate, any
proprietary right of any other Person, nor would the Purchaser's conduct of
the Sprintank Business as presently conducted infringe or misappropriate any
proprietary right of any other Person,
(v) to the best of the Seller's Knowledge, the Proprietary Rights used in
connection with the Sprintank Business have not been infringed or
misappropriated by any other Person, and
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(vi) the consummation of the transactions contemplated by this Agreement
will have no material adverse effect on any Proprietary Right of the Seller.
6.12 CERTAIN LITIGATION. Except as set forth on the attached Litigation
Schedule, there is no action, suit, proceeding, order, investigation or claim
pending (or, to the best of the Seller's Knowledge, threatened) against or
affecting the Seller or the Sprintank Business (or to the best of the Seller's
Knowledge, pending or threatened against or affecting any officer, director or
employee of the Seller with respect to the Sprintank Business), at law or in
equity, or before or by any Government Entity (a) with respect to the
transactions contemplated by the Transaction Documents, or (b) concerning the
design, manufacture, rendering or sale by the Seller of any product or service
in the course of the Sprintank Business or otherwise concerning the conduct of
the Sprintank Business, and, except for matters which if resolved unfavorably
would not have a material adverse effect on the Sprintank Business or the
Sprintank Acquired Assets after the Closing, to the best of the Seller's
Knowledge, there is no basis for any of the foregoing.
6.13 BROKERAGE. Except as set forth on the attached Brokerage Schedule, there
is no claim for brokerage commissions, finders' fees or similar compensation in
connection with the transactions contemplated by the Transaction Documents based
on any arrangement or agreement which may be binding upon the Seller or to which
the Seller or any of the Sprintank Acquired Assets may be subject.
6.14 INSURANCE. The attached Insurance Schedule contains a description of
each insurance policy maintained by the Seller with respect to its properties,
assets or business, and each such policy is in full force and effect. To its
Knowledge, the Seller is not in default on any obligation pursuant to any
insurance policy maintained by it.
6.15 EMPLOYEES.
(a) Continued Employment. Except as set forth on the attached Employees
Schedule, to the best of the Seller's Knowledge, no executive or key employee of
the Seller or any group of employees of the Seller has any plans to terminate
employment with the Seller.
(b) Compliance and Restrictions. The Seller has complied in all material
respects with all laws relating to the employment of labor in connection with
the Sprintank Business including provisions of such laws relating to wages,
hours, equal opportunity, collective bargaining and the payment of social
security and other taxes, and the Seller has no material labor relations problem
(including any union organization activities, threatened or actual strikes or
work stoppages or material grievances). Neither the Seller nor (to the Seller's
Knowledge) any of its employees is subject to any noncompete, nondisclosure,
confidentiality, employment, consulting or similar agreement relating to,
affecting, or in conflict with, the Sprintank Business.
6.16 ERISA. Except as set forth on the attached Employee Benefits Schedule:
(a) with respect to all current employees (including those on lay-off,
disability or leave of absence), former employees, and retired employees of the
Seller (the "Seller Employees"), the Seller does not maintain or contribute to
any (a) employee welfare benefit plans (as defined in Section 3(1) of ERISA)
("Employee Welfare Plans"), or (b) any plan, policy or arrangement which
provides nonqualified deferred compensation, bonus or retirement benefits,
severance or "change of control" (as set forth in Code Section 280G) benefits,
or life, disability accident, vacation, tuition reimbursement or other material
fringe benefits ("Other Plans");
(b) the Seller does not maintain, contribute to, or participate in any defined
benefit plan or defined contribution plan which are employee pension benefit
plans (as defined in Section 3(2) of ERISA) ("Employee Pension Plans");
(c) the Seller does not contribute to or participate in any multiemployer plan
(as defined in Section 3(37) of ERISA) (a "Multiemployer Plan");
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(d) the Seller does not maintain or have any obligation to contribute to or
provide any post-retirement health, accident or life insurance benefits to any
Seller Employee, other than limited medical benefits required to be provided
under Code Section 4980B;
(e) all Plans (and all related trusts and insurance contracts) comply in form
and in operation in all respects with the applicable requirements of ERISA and
the Code;
(f) all required reports and descriptions (including all Form 5500 Annual
Reports, Summary Annual Reports, PBGC-1s and Summary Plan Descriptions) with
respect to all Plans have been properly filed with the appropriate government
agency or distributed to participants, and the Seller has complied with the
requirements of Code Section 4980B;
(g) with respect to each Plan, all contributions, premiums or payments which
are due on or before the Closing Date have been paid to such Plan; and
(h) the Seller has not incurred any liability to the Pension Benefit Guaranty
Corporation (the "PBGC"), the United States Internal Revenue Service, any
multiemployer plan or otherwise with respect to any employee pension benefit
plan or with respect to any employee pension benefit plan currently or
previously maintained by members of the controlled group of companies (as
defined in Sections 414(b) and (c) of the Code) that includes the Seller (the
"Controlled Group") that has not been satisfied in full, and no condition exists
that presents a material risk to the Seller or any member of the Controlled
Group of incurring such a liability (other than liability for premiums due the
PBGC) which could reasonably be expected to have any adverse effect on the
Purchaser or any of the Sprintank Acquired Assets after the Closing.
The "Plans" means all Employee Pension Plans, Employee Welfare Plans, Other
Plans and Multiemployer Plans to which the Seller contributes or is a party.
6.17 REAL ESTATE.
(a) Owned Properties. The attached Real Estate Schedule lists and describes
briefly all real property relating to the Sprintank Business that the Seller
owns (the "Owned Real Property"). Except as otherwise described on the Real
Estate Schedule, with respect to each such parcel of Owned Real Property:
(i) there are no leases, subleases, licenses, concessions, or other
agreements, written or oral, granting to any Person the right of use or
occupancy of any portion of the Owned Real Property (other than the right of
the Purchaser pursuant to this Agreement and the rights of the Purchaser under
the Owned Real Property Leases (as such term is hereinafter defined) executed
between the Purchaser and the Seller with respect to such Owned Real
Property);
(ii) there are no outstanding options or rights of first refusal to purchase
any of the Owned Real Property (other than the right of the Purchaser pursuant
to this Agreement), or any portion thereof or interest therein, other than any
options or rights of first refusal which would not adversely affect the rights
of the Purchaser under the Owned Real Property Leases;
(iii) no Person (other than the Seller) is in possession of any of the Owned
Real Property;
(iv) the current use of the Owned Real Property and the operation of the
Sprintank Business thereon, does not violate any instrument of record or
agreement affecting the Owned Real Property or any applicable Legal
Requirements except for such violations which, individually and in the
aggregate, could not reasonably be foreseen to have a material adverse affect
on the Sprintank Business;
(v) all buildings, structures and other improvements located on the Owned
Real Property, including all material components thereof, are in a condition
sufficient to enable the continued operation of the Owned Real Property as it
is now operated in connection with the conduct of the Sprintank Business; and
23
(vi) all certificates of occupancy, permits, licenses, approvals and other
authorizations required in connection with the operation of the Sprintank
Business on the Owned Real Property required to have been issued to enable the
Owned Real Property to be lawfully occupied and used for all of the purposes
for which it is currently occupied and used in connection with the operation
of the Sprintank Business have been lawfully issued and are, as of the date
hereof, in full force and effect.
(b) Leased Property. The attached Real Estate Schedule lists and describes
briefly all real property leased or subleased to the Seller and all other real
property which is used in the Sprintank Business and not owned by the Seller
(the "Leased Real Property"). The Seller has delivered to the Purchaser's
special legal counsel correct and complete copies of the leases and subleases
listed on the Real Estate Schedule (collectively, the "Leases"). Except as
otherwise disclosed on the attached Real Estate Schedule, with respect to the
Leased Real Property and each of the Leases:
(i) such Lease is legal, valid, binding, enforceable, and in full force and
effect;
(ii) such Lease is (either by its terms or as consented to in writing by the
other party thereto) fully assignable to the Purchaser and will continue to be
legal, valid, binding, enforceable, and in full force and effect on identical
terms following the consummation of the Sale and the Assumption and the
commencement of the operation of the Sprintank Business by the Purchaser;
(iii) to the Seller's Knowledge, no party to such Lease is in breach or
default, and no event has occurred which, with notice or lapse of time (or
both), would constitute a breach or default or permit termination,
modification, or acceleration of such lease or sublease;
(iv) no party to such Lease has repudiated in writing any provision thereof;
(v) to the Seller's Knowledge, there are no disputes, oral agreements, or
forbearance programs in effect as to such Lease;
(vi) in the case of each Lease which is a sublease, the representations and
warranties set forth in clauses 6.17(b)(i) through (v) are true and correct
with respect to the underlying lease;
(vii) the Seller has not assigned, transferred, conveyed, mortgaged, deeded
in trust, or encumbered any interest in the leasehold or subleasehold created
pursuant to such Lease;
(viii) none of the Leases has been modified in any respect, except to the
extent that such modifications are in writing and have been delivered or made
available to the Purchaser or except to the extent any such modifications
would not have an adverse effect on the use of the property covered thereby by
the Purchaser after the Closing;
(ix) to the Seller's Knowledge, all buildings, improvements and other
structures located upon the Leased Real Property have received all approvals
of governmental authorities, including licenses and permits, required in
connection with the operation of the Sprintank Business thereon and have been
operated and maintained in accordance with all material Legal Requirements and
all terms and conditions of the Leases; and
(x) all buildings, structures and other improvements located upon the Leased
Real Property, including, without limitation, all components thereof, are in a
condition sufficient to enable the continued operation of the Leased Real
Property in the manner currently being used in connection with the operation
of the Sprintank Business.
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6.18 COMPLIANCE WITH LAWS.
(a) Generally. Except as set forth on the attached Compliance Schedule, the
Seller has not violated any Legal Requirement the violation of which could have
an adverse effect on the Sprintank Acquired Assets, the Sprintank Assumed
Liabilities or the financial condition, operating results, assets, customer or
supplier relations, employee relations or business prospects of the Sprintank
Business, and the Seller has not received notice alleging any such violation.
(b) Required Permits. Except as set forth on the attached Compliance
Schedule, the Seller has complied in all material respects with (and is in
compliance with) all permits, licenses and other authorizations required for the
occupation of the Seller's facilities and the operation of the Sprintank
Business. The items described on the attached Permits Schedule constitute all
of the permits, filings, notices, licenses, consents, authorizations,
accreditation, waivers, approvals and the like of, to or with any Government
Entity which are required for the consummation of the Sale, the Assumption or
any other transaction contemplated by the Transaction Documents or the lack of
which would reasonably be expected to have a material adverse effect on the
ownership of the Sprintank Acquired Assets or the Purchaser's conduct of the
Sprintank Business (as such is presently conducted by the Seller) after the
Closing.
(c) Environmental and Safety Matters. Without limiting the generality of
Section 6.18(a) and (b) above, except as set forth on the attached Environmental
Matters Schedule, the Seller and all of the Seller's Environmental Affiliates
have complied (and are in compliance), in all material respects, with all
applicable Environmental and Safety Requirements, and neither the Seller nor any
of the Seller's Environmental Affiliates has received any written notice or
report regarding any liabilities (whether accrued, absolute, contingent,
unliquidated or otherwise), or any corrective, investigatory or remedial
obligations, arising under any Environmental and Safety Requirement. Without
limiting the generality of the preceding sentence, except as set forth on the
attached Environmental Matters Schedule:
(i) no underground storage tank or landfills exists at any property owned or
occupied by the Seller or any of its Environmental Affiliates;
(ii) no asbestos containing material in any form or condition, or PCB
containing materials or equipment, exist at any property owned or occupied by
the Seller which under current Environmental and Safety Requirements is
required to be remediated;
(iii) the transactions contemplated to be consummated pursuant to the
Transaction Documents will not result in the imposition of any obligations
under Environmental and Safety Requirements for site investigation, cleanup or
notification to or consent of any government agency or third party;
(iv) no equipment, facts, events, conditions, conduct or methods relating to
the past or present facilities, properties or operations of the Seller or any
of its Environmental Affiliates will give rise to or result in any corrective,
investigatory or remedial obligation to the Purchaser on or after the Closing
pursuant to Environmental and Safety Requirements, or give rise to or result
in any other liability (including any liability relating to onsite or offsite
hazardous or non-hazardous substance releases, personal injury, cleanup,
remediation, property damage or natural resources damage) to the Purchaser on
or after the Closing pursuant to any Environmental and Safety Requirement; and
(v) no Environmental Lien has attached to any property of the Seller or any
of its Environmental Affiliates.
6.19 DISCLOSURE. Neither this Article 6 nor any schedule, attachment, written
statement, document, certificate or other item supplied to the Purchaser by or
on behalf of the Seller with respect to the transactions contemplated by the
Transaction Documents contains any untrue statement of a material fact or omits
a material fact necessary to make each statement contained herein or therein not
misleading.
6.20 ACCURACY ON CLOSING DATE. Each representation and warranty set forth in
this Article 6 and all information contained in any exhibit, schedule or
attachment to this Agreement or in any certificate or other writing
25
delivered by, or on behalf of, the Seller to the Purchaser will be true and
correct as of the time of the Closing as though then made, except (i) as
affected by the transactions expressly contemplated by the Transaction
Documents, (ii) to the extent that such representation or warranty relates
solely to an earlier date and (iii) to the extent that the Seller has advised
the Purchaser otherwise in writing prior to the Closing.
ARTICLE 7
ACCESS TO RECORDS
7.1 ACCESS TO RECORDS. To the extent reasonably required for any bona fide
business purpose, each Party will allow, and will use its best efforts to cause
its Affiliates to allow, the other Parties (and the other Parties' agents,
representatives and Affiliates) access to all business records and files
concerning the Sprintank Business, the Sprintank Acquired Assets or the
Sprintank Assumed Liabilities which relate to the period prior to the Closing
Date and will permit such Persons to make copies of the same. Such access will
be granted upon reasonable advance notice, during normal business hours, and in
such a manner so as not to interfere unreasonably with the operations of the
Person affording such access. Without limiting the generality of the foregoing,
if any Party or any of its Affiliates actively is contesting or defending
against any charge, complaint, action, suit, proceeding, hearing, investigation,
claim, or demand in connection with (a) any transaction contemplated by the
Transaction Documents, or (b) any fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident, action,
failure to act, or transaction on or prior to the Closing relating to the
Sprintank Business, then the other Parties will cooperate, and use their best
efforts to cause their Affiliates to cooperate, with the contesting or defending
Person and its counsel in such contest or defense, make available such other
Parties' and their Affiliates' personnel and provide such testimony and access
to books and records as are reasonably requested in connection with such contest
or defense, all at the contesting or defending Person's expense (unless the
contesting or defending Person is entitled to indemnification therefor pursuant
to Section 8.2 or 8.3). No provision of this Article 7 will be construed so as
to limit the Seller's obligation to transfer to the Purchaser all Books and
Records which are part of the Sprintank Acquired Assets.
ARTICLE 8
SURVIVAL AND INDEMNIFICATION
8.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties contained herein or made in writing by any Party in connection
herewith shall survive the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, regardless of any
investigation made by any Party or on its behalf as hereinafter provided. A
Party's participation in the consummation of any transaction pursuant to any
Transaction Document will not constitute a waiver by such participating Party of
any representation or warranty of any Party or otherwise affect the survival of
any such representation or warranty. The representations and warranties made in
Section 6.9 and 6.16 (or Section 6.20 in respect of such matters) shall survive
for 30 days after the expiration of the applicable statute of limitations and
shall at that time terminate and be of no further force or effect. The
representations and warranties made in Sections 5.1, 5.2 and 6.1 through 6.3 (or
Sections 5.5 or 6.20 in respect of such matters) shall not terminate. The
representations and warranties made in Sections 6.5(c) and 6.7(c) (or Section
6.20 in respect of such matters) shall survive for 90 days after the Closing and
shall at that time terminate and be of no further force or effect. All other
representations and warranties not otherwise referred to in this Section 8.1
shall survive for one year after the Closing and shall at that time terminate
and be of no further force or effect.
8.2 INDEMNIFICATION OBLIGATIONS OF THE SELLER AND THE STOCKHOLDERS. The Seller
and the Stockholders will jointly and severally indemnify the Purchaser and its
Affiliates, stockholders, officers, directors, employees, agents,
representatives and permitted successors and assigns (collectively, the
"Purchaser Indemnitees") in respect of, and save and hold each Purchaser
Indemnitee harmless against and pay on behalf of or reimburse each Purchaser
Indemnitee as and when incurred, any Loss which any Purchaser Indemnitee
suffers, sustains or becomes subject to as a result of, in connection with,
relating or incidental to or by virtue of, without duplication:
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(a) any misrepresentation or breach of any representation or warranty by any
of the Seller or the Stockholders set forth in Article 6 of this Agreement;
(b) any misrepresentation, breach or nonfulfillment of any representation,
warranty, covenant or agreement of any of the Seller or the Stockholders set
forth in this Agreement (other than in Article 6 of this Agreement), any
Transaction Document or any Schedule, Exhibit, certificate or other instrument
or document furnished to the Purchaser by any of the Seller or the Stockholders
pursuant to any Transaction Document; or
(c) any Sprintank Excluded Liability.
The Purchaser Indemnitees may proceed against any or all of the Seller and/or
the Stockholders, at the Purchaser Indemnitees' option.
8.3 INDEMNIFICATION OBLIGATIONS OF THE PURCHASER. The Purchaser will
indemnify the Seller and its Affiliates, stockholders, officers, directors,
employees, agents, representatives and permitted successors and assigns
(collectively, the "Seller Indemnitees") and hold each of them harmless against
any Loss which such Seller Indemnitee suffers, sustains or becomes subject to as
a result of, in connection with, relating to or by virtue of, without
duplication:
(a) any misrepresentation or breach of any representation or warranty by the
Purchaser set forth in this Article 5 of this Agreement;
(b) any misrepresentation, breach or nonfulfillment of any representation,
warranty, covenant or agreement of the Purchaser set forth in this Agreement
(other than in Article 5 of this Agreement), any Transaction Document or any
Schedule, Exhibit, certificate or other instrument or document furnished to the
Seller by the Purchaser pursuant to any Transaction Document; or
(c) any Sprintank Assumed Liability.
8.4 INDEMNIFICATION PROCEDURES.
(a) Notice of Claim. Any Person making a claim for indemnification pursuant
to Section 8.2 or 8.3 above (an "Indemnified Party") must give the Party from
whom indemnification is sought (an "Indemnifying Party") written notice of such
claim (an "Indemnification Claim Notice") promptly after the Indemnified Party
receives any written notice of any action, lawsuit, proceeding, investigation or
other claim (a "Proceeding") against or involving the Indemnified Party by a
Government Entity or other third party or otherwise discovers the liability,
obligation or facts giving rise to such claim for indemnification; provided that
the failure to notify or delay in notifying an Indemnifying Party will not
relieve the Indemnifying Party of its obligations pursuant to Section 8.2 or
8.3, as applicable, except to the extent that such failure actually xxxxx the
Indemnifying Party. Such notice must contain a description of the claim and the
nature and amount of such Loss (to the extent that the nature and amount of such
Loss is known at such time).
(b) Control of Defense: Conditions. With respect to the defense of any
Proceeding against or involving an Indemnified Party in which the Government
Entity or other third party in question seeks only the recovery of a sum of
money for which indemnification is provided in Section 8.2 or 8.3, at its option
an Indemnifying Party may appoint as lead counsel of such defense any legal
counsel selected by the Indemnifying Party; provided that before the
Indemnifying Party assumes control of such defense it must first
(i) enter into an agreement with the Indemnified Party (in form and
substance satisfactory to the Indemnified Party) pursuant to which the
Indemnifying Party agrees to be fully responsible (with no reservation of any
rights other than the right to be subrogated to the rights of the Indemnified
Party) for all Losses relating to such Proceeding and unconditionally
guarantees the payment and performance of any liability or obligation which
may arise with respect to such Proceeding or the facts giving rise to such
claim for indemnification, and
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(ii) furnish the Indemnified Party with evidence that the Indemnifying
Party, in the Indemnified Party's sole judgment, is and will be able to
satisfy any such liability.
(c) Control of Defense: Exceptions, etc. Notwithstanding Section 8.4(b), the
Indemnified Party will be entitled to participate in the defense of such claim
and to employ counsel of its choice for such purpose at its own expense;
provided that the Indemnifying Party will bear the reasonable fees and expenses
of such separate counsel incurred prior to the date upon which the Indemnifying
Party effectively assumes control of such defense.
The Indemnifying Party must obtain the prior written consent of the Indemnified
Party (which the Indemnified Party will not unreasonably withhold) prior to
entering into any settlement of such claim or Proceeding or ceasing to defend
such claim or Proceeding.
8.5 LIMITATIONS ON INDEMNIFICATION OBLIGATIONS. Notwithstanding anything in
this Article 8 to the contrary, neither the Purchaser nor the Seller shall be
entitled to assert any claims for indemnification under Sections 8.2(a) or
8.3(a) unless and until such Person has incurred Losses in excess of $50,000,
and then such Person may only assert a claim for indemnification to the extent
of such excess. The foregoing limitation shall not apply to indemnification
regarding any Sprintank Excluded Liability or any Sprintank Assumed Liability.
It is also agreed that no claims for indemnification under Sections 8.2(a) or
8.3(a) may be asserted with respect to the breach of any representation or
warranty after it has terminated as provided in Section 8.1, unless notice of
such claim has been given to the Indemnifying Party prior to the termination of
the relevant representation or warranty.
8.6 PAYMENT. Subject to Section 2.5, the Indemnifying Party shall pay the
Indemnified Party to the extent the Indemnified Party is entitled to payment
hereunder in immediately available funds promptly after the Indemnified Party
provides the Indemnifying Party with notice of a claim hereunder and the parties
reasonably agree that there is a reasonable basis for such claim, or a final
result, determination, finding, judgment and/or award is made with respect to
such claim.
8.7 EXCLUSIVE REMEDIES. Except for the rights and remedies set forth in
Sections 10.9 the rights and remedies set forth in this Article 8 shall be the
only rights and remedies available to the Purchaser or the Seller with regard to
any breach by the other party of any representation, warranty, covenant or
provision contained in this Agreement.
ARTICLE 9
CONDITIONS TO THE CLOSING
9.1 CONDITIONS OF THE PURCHASER'S OBLIGATION. The Purchaser's obligation to
effect the Sale and the Assumption at the Closing is subject to the satisfaction
as of the Closing of the following conditions precedent:
(a) Representations and Warranties. Each representation and warranty set
forth in Article 6 will be true and correct in all material respects at and as
of the Closing as though then made (without giving effect to any disclosure made
by the Sellers pursuant to Section 6.20 above), except to the extent of any
change solely caused by the transactions expressly contemplated by the
Transaction Documents.
(b) Covenants. The Seller and the Stockholders will have performed and
observed each covenant or other obligation required to be performed or observed
by them pursuant to the Transaction Documents prior to the Closing.
(c) Compliance with Applicable Laws. The consummation of the transactions
contemplated by the Transaction Documents will not be prohibited by any Legal
Requirement or subject the Purchaser, the Sprintank Business or the Sprintank
Acquired Assets to any penalty, liability or other onerous condition arising
under any applicable Legal Requirement or imposed by any Government Entity.
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(d) Proceedings. No action, suit or proceeding will be pending or threatened
before any Government Entity the result of which could prevent or prohibit the
consummation of any transaction pursuant to the Transaction Documents, cause any
such transaction to be rescinded following consummation, or adversely affect the
Purchaser's right to acquire or hold the Sprintank Acquired Assets or conduct
the Sprintank Business or the Seller's performance or its obligations pursuant
to the Transaction Documents, and no judgment, order, decree, stipulation,
injunction or charge having any such effect will exist.
(e) Consents. All filings, notices, licenses, consents, authorizations,
accreditation, waivers, approvals and the like of, to or with any Government
Entity or any other Person that are required for the consummation of the Sale,
the Assumption or any other transaction contemplated by the Transaction
Documents or the ownership of the Sprintank Acquired Assets or the conduct of
the Sprintank Business by the Purchaser after Closing (the "Consents") will have
been duly made or obtained.
(f) Opinion of Counsel. The Purchaser will have received from Xxxxxxx Xxxxx &
Xxxxx, legal counsel for the Seller, an opinion with respect to the matters set
forth in Exhibit A-1 attached hereto addressed to the Purchaser and the
Purchaser's lenders. Such opinion will be dated the Closing Date and will be in
form satisfactory to the Purchaser's special legal counsel.
(g) Financing. The Purchaser shall have obtained on terms and conditions
satisfactory to it all of the debt and equity financing it needs in order to
consummate the transactions contemplated hereby and fund the working capital
requirements of the Sprintank Business after the Closing.
(h) Due Diligence. The Purchaser shall be satisfied with the results of its
legal, accounting, business, environmental and other due diligence review of the
Sprintank Business.
(i) Prepayment of Certain Indebtedness. The Seller will have prepaid, or will
have caused to be prepaid, all third party Indebtedness and all other
liabilities or obligations of the Sprintank Division which are secured by any of
the Sprintank Acquired Assets pursuant to Section 10.8 below, and the Purchaser
shall have received, at the Seller's sole cost and expense, evidence
satisfactory to the Purchaser of the release of all Liens (other than Permitted
Liens) any third parties may have in any of the Sprintank Acquired Assets.
(j) Other Agreements. The agreements referred to in Sections 10.6, 10.7 and
10.9 below shall have been duly executed and delivered to the Purchaser and
shall be in full force and effect.
(k) Seller's Closing Documents. The Seller will have delivered to the
Purchaser the following documents:
(i) an Officer's Certificate of the Seller, dated the Closing Date,
stating that the conditions specified in Sections 9.1(a) through (e) inclusive
and Section 9.1(i) have been fully satisfied;
(ii) a copy of the resolutions duly adopted by the Seller's board of
directors and stockholders authorizing the Seller's execution, delivery and
performance of the Transaction Documents to which the Seller is a party and
the consummation of the Sale and all other transactions contemplated by the
Transaction Documents, as in effect as of the Closing, certified by an officer
of the Seller;
(iii) a certificate (dated not earlier than ten business days prior to the
Closing) of the Secretary of State of Texas as to the good standing of the
Seller in such state;
(iv) a certificate (dated not earlier than ten business days prior to the
Closing) of the Secretary of State of each state wherein the Seller has
qualified to do business as a foreign corporation as to the good standing of
the Seller in such state;
(v) the Books and Records at the Seller's office;
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(vi) a xxxx of sale, warranty deeds, warranty assignments of leases and
all other instruments of conveyance which are necessary or reasonably
desirable to effect the Sale, including documents acceptable for recordation
in the United States Patent and Trademark Office, the United States Copyright
Office and any other similar Government Entity;
(vii) copies of the Consents; and
(viii) such other documents relating to the transactions contemplated by
the Transaction Documents as the Purchaser reasonably requests.
All corporate and other proceedings or actions taken or required to be taken by
the Seller or the Stockholders in connection with the transactions contemplated
by the Transaction Documents, and all documents incident thereto, must be
reasonably satisfactory in form and substance to the Purchaser and its special
legal counsel. Any condition set forth in this Section 9.1 may be waived only
in a writing executed by the Purchaser.
9.2 CONDITIONS OF THE SELLER'S OBLIGATION. The Seller's obligation to effect
the Sale at the Closing is subject to the satisfaction as of the Closing of the
following conditions precedent:
(a) Representations and Warranties. Each representation and warranty set
forth in Article 5 will be true and correct in all material respects at and as
of the Closing as though then made (without giving effect to any disclosure made
by the Purchaser pursuant to Section 5.5 above), except to the extent of any
change solely caused by the transactions expressly contemplated by the
Transaction Documents.
(b) Covenants. The Purchaser will have performed each covenant or other
obligation required to be performed by it pursuant to the Transaction Documents
prior to the Closing.
(c) Compliance with Applicable Laws. The consummation of the transactions
contemplated by the Transaction Documents will not be prohibited by any Legal
Requirement or subject the Seller to any penalty or liability arising under any
Legal Requirement or imposed by any Government Entity.
(d) Proceedings. No action, suit or proceeding will be pending or threatened
before any Government Entity the result of which could prevent or prohibit the
consummation of any transaction pursuant to the Transaction Documents, cause any
such transaction to be rescinded following such consummation or adversely affect
the Purchaser's performance of its obligations pursuant to the Transaction
Documents, and no judgment, order, decree, stipulation, injunction or charge
having any such effect will exist.
(e) Other Agreements. The Stock Purchase Agreement dated as of July 1, 1997
by and among the Stockholders, National Equipment Services, Inc. and others and
the agreements referred to in Sections 10.6, 10.7 and 10.9 below shall have been
duly executed and delivered by the Purchaser or National Equipment Services,
Inc., as applicable, and upon execution by the other parties thereto shall be in
full force and effect.
(f) Consents. All Consents shall have been duly made or obtained.
(g) Opinion of Counsel. The Seller will have received from Xxxxxxxx & Xxxxx,
special legal counsel for the Seller, an opinion with respect to the matters set
forth in Exhibit A-2 attached hereto addressed to the Seller and the
Stockholders. Such opinion will be dated the Closing Date and will be in form
satisfactory to the Seller's legal counsel.
(h) Purchaser Closing Documents. The Purchaser will have delivered to the
Seller the following documents:
(i) an Officer's Certificate of the Purchaser, dated the Closing Date,
stating that the conditions specified in Sections 9.2(a) through (d),
inclusive, have been fully satisfied;
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(ii) a copy of the resolutions duly adopted by the Purchaser's board of
directors authorizing the Purchaser's execution, delivery and performance of
the Transaction Documents to which the Purchaser is a party and the
consummation of the Sale and all other transactions contemplated by the
Transaction Documents, as in effect as of the Closing, certified by an officer
of the Purchaser;
(iii) a certificate (dated not earlier than ten business days prior to
Closing) of the Secretary of State of Delaware as to the good standing of the
Purchaser in that state;
(iv) all instruments which are necessary or desirable to effect the
Assumption; and
(v) such other documents relating to the transactions contemplated by
the Transaction Documents to be consummated at the Closing as the Seller
reasonably requests.
All corporate and other proceedings or actions taken or required to be taken by
the Purchaser in connection with the transactions contemplated by the
Transaction Documents, and all documents incident thereto, must be reasonably
satisfactory in form and substance to the Seller and its legal counsel. Any
condition set forth in this Section 9.2 may be waived only in a writing executed
by the Seller.
ARTICLE 10
OTHER COVENANTS
10.1 INTERIM AGREEMENTS OF THE SELLER AND THE STOCKHOLDERS. The Seller and
each Stockholder covenants and agrees that prior to the Closing, unless the
Purchaser agrees otherwise in writing, or as otherwise expressly contemplated or
permitted by the Transaction Documents, the Seller will conduct the Sprintank
Business in, and the Seller will not take any action with respect to the
Sprintank Business other than in, the ordinary course, on an arm's-length basis
and in accordance in all material respects with all Legal Requirements and the
Seller's past custom and practice. Without limiting the generality of the
preceding sentence, the Seller and each Stockholder covenant that:
(a) the Seller will not, directly or indirectly
(i) sell, pledge, dispose of or encumber any Sprintank Acquired Asset
other than sales of inventory and dispositions of surplus, obsolete or
unusable equipment in the ordinary course of the Sprintank Business,
(ii) engage in any activity which would accelerate the collection of its
accounts or notes receivable, delay the payment of its accounts payable, delay
its capital expenditures or reduce or otherwise restrict the amount of
inventory (including raw material, packaging, work-in- process, or finished
goods) on hand, in each case, other than in the ordinary course of the conduct
of the Sprintank Business,
(iii) acquire (by merger, exchange, consolidation, acquisition of stock
or assets or otherwise) any corporation, partnership, joint venture or other
business organization or division or material assets thereof,
(iv) incur any Indebtedness or issue any debt securities which will not
be fully repaid on or prior to Closing,
(v) take any action with respect to the grant of any bonuses, salary
increases, severance or termination pay,
(vi) take any action which would render, or which could reasonably be
expected to render, any representation or warranty made by the Seller in this
Agreement untrue at (or at any time prior to) the Closing;
(vii) adopt or amend any employee benefit or welfare plan, or
(viii) enter into or modify, or propose to enter into or modify, any
agreement, arrangement or understanding with respect to any of the matters
referred to in clauses (i) through (vii) above;
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(b) the Seller will use its best efforts to cause its current insurance
policies not to be canceled or terminated, and not to permit any of the coverage
pursuant to any such policy to lapse, unless at the time of such termination,
cancellation or lapse there is in full force and effect a replacement policy
which provides coverage in an amount which is not less than the amount of the
coverage pursuant to the canceled, terminated or lapsed policy;
(c) the Seller will
(i) insofar as such matters relate to the Sprintank Acquired Assets,
the Sprintank Assumed Liabilities or the Sprintank Business use its reasonable
best efforts to (1) preserve intact the organization and goodwill of the
Sprintank Business, (2) keep available the services of its officers and
employees as a group, and (3) maintain satisfactory relationships with its
material financing sources, suppliers and customers and other Persons having
business relationships with it,
(ii) upon reasonable request, confer with representatives of the
Purchaser and the Purchaser's present and proposed financing sources regarding
the Sprintank Acquired Assets, the Sprintank Assumed Liabilities and the
Sprintank Business,
(iii) upon reasonable request, arrange meetings with such customers of,
and suppliers to, the Seller as the Purchaser shall reasonably designate in
order that the Seller and the Purchaser may confer with such customers and
suppliers regarding the Sprintank Business and the nature of the transactions
contemplated by this Agreement,
(iv) maintain its facilities and assets in their present condition
consistent with the Seller's past maintenance practices, and
(v) notify the Purchaser of any emergency or other material change in
the normal course of the Sprintank Business or in the condition of the
Sprintank Acquired Assets or the operation of the Sprintank Business and any
governmental or third party complaint, investigation or hearing (or
communication indicating that such a complaint, investigation or hearing is or
may be contemplated) if such emergency, change, complaint, investigation or
hearing could reasonably be expected to be material, individually or in the
aggregate, to the Sprintank Acquired Assets, the Sprintank Assumed Liabilities
or the financial condition, operating results, assets, customer or supplier
relations, employee relations or business prospects of the Sprintank Business;
(d) the Seller promptly will notify the Purchaser if it discovers that any
representation or warranty by the Seller set forth in this Agreement was untrue
when made or subsequently has become untrue; and
(e) the Seller will permit representatives of the Purchaser and the
Purchaser's present and proposed financing sources to have full access (at
reasonable times and in a manner so as not to unreasonably interfere with the
Seller's normal business operations) to all of the Seller's personnel and all
premises, properties, books, records, contracts, Tax records and other documents
of the Seller pertaining to the Sprintank Business and will allow such Persons
to make and retain copies of such documents.
10.2 EXCLUSIVITY. Neither the Seller nor the Stockholders will (i) solicit,
initiate, or encourage the submission of any proposal or offer from any Person
relating to the acquisition of any capital stock or other voting securities, or
any substantial portion of the assets, of the Seller (including any acquisition
structured as a merger, consolidation, or share exchange) or (ii) participate in
any discussions or negotiations regarding, furnish any information with respect
to, assist or participate in, or facilitate in any other manner any effort or
attempt by any Person to do or seek any of the foregoing. The Stockholders will
not vote any shares of the Seller in favor of any such acquisition structured as
a merger, consolidation, or share exchange. The Seller will notify the Purchaser
immediately if any Person makes any proposal, offer, inquiry, or contact with
respect to any of the foregoing.
10.3 INTERIM AGREEMENTS OF THE PURCHASER. From the date of this Agreement
until the Closing, the Purchaser promptly will notify the Seller (i) if any
representation or warranty of the Purchaser set forth in this
32
Agreement was untrue when made or subsequently has become untrue and (ii) of any
emergency or other material change in the normal course of the Purchaser's
business or in the Purchaser's financial condition, and any governmental or
third party complaint, investigation or hearing (or communication indicating
that such a complaint, investigation or hearing is or may be contemplated) if
such emergency, change, complaint, investigation or hearing could reasonably be
expected to be material, individually or in the aggregate, to the Purchaser, its
business or its financial condition.
10.4 ADDITIONAL INTERIM AGREEMENTS. Each Party will use reasonable efforts to:
(a) take or cause to be taken all actions, and do or cause to be done all
things, which are necessary, proper or advisable to cause any other Party's
conditions set forth in Sections 9.1 and 9.2 to be fully satisfied, and
(b) consummate and make effective as promptly as practicable the transactions
contemplated by the Transaction Documents, including using reasonable efforts to
obtain the Consents; provided, however, that reasonable efforts shall not
require or involve the payment of funds (other than valid payments of
indebtedness and related prepayment penalties and premiums) in order to obtain
the Consents.
10.5 TRANSACTION EXPENSES. The Purchaser will bear its own costs and expenses
(including, without limitation, all Taxes and all legal, accounting, consulting
and other fees and expenses) incurred in connection with this Agreement and the
transactions contemplated hereby. The Seller will pay all costs and expenses
incurred by the Seller or the Stockholders in connection with the negotiation,
preparation and entry into the Transaction Documents and the consummation of the
transactions to be consummated pursuant to the Transaction Documents. The
Purchaser shall pay all transfer, sales, use and similar Taxes imposed by reason
of the transactions contemplated by this Agreement. The Purchaser and the
Seller shall each pay one-half of all stamp and recording taxes, fees and
expenses, settlement fees, escrow fees and other miscellaneous closing fees or
costs associated with the transactions contemplated by this Agreement.
10.6 SPECIAL LEASING ARRANGEMENTS.
(a) Corpus Christi Facility. At the Closing, the Seller and the Purchaser
shall enter into a real estate lease for the Corpus Christi, Texas facility,
substantially in the form of Exhibit B-1 attached hereto.
(b) Baton Rouge Facility. At the Closing, the Seller and the Purchaser shall
enter into a real estate lease for the Baton Rouge, Louisiana facility,
substantially in the form of Exhibit B-2 attached hereto. The lease described
in this clause (b) and the lease described in clause (a) above are referred to
herein as the "Owned Real Property Leases."
(c) Xxxxxx Xxxxx, Houston Facility. At the Closing, the Purchaser shall enter
into and the Seller shall cause Xxxxxx Xxxxx, Ltd. to enter into a real estate
lease for the facility located at 0000 Xxxxxx Xxxxx, Xxxxxxx, Xxxxx,
substantially in the form of Exhibit B-3 attached hereto.
10.7 EMPLOYMENT AND CONSULTING AGREEMENTS.
(a) Employment of Xxx X'Xxxx. At the Closing, the Purchaser and Xxx X'Xxxx
shall enter into an employment agreement substantially in the form of Exhibit C-
1 attached hereto.
(b) Employment of Xxxxx Xxxxxx. At the Closing, the Purchaser and Xxxxx
Xxxxxx shall enter into an employment agreement substantially in the form of
Exhibit C-2 attached hereto.
(c) Employment of X. X. Xxx. At the Closing, the Purchaser and X. X. Xxx
shall enter into an employment agreement substantially in the form of Exhibit C-
3 attached hereto.
(d) Consulting Arrangement with Xxxxxx X. Xxxxxxxx. At the Closing, the
Purchaser and Xxxxxx X. Xxxxxxxx shall enter into a consulting agreement
substantially in the form of Exhibit D attached hereto.
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10.8 PREPAYMENT OF CERTAIN INDEBTEDNESS. At the Closing, the Seller will
prepay all third party Indebtedness and all other liabilities or obligations of
the Sprintank Division which are secured by any of the Sprintank Acquired
Assets, other than any liability or obligation which is a Sprintank Assumed
Liability (whether or not secured by any of the Sprintank Acquired Assets), and
shall secure complete releases of any Liens any third parties may have in any of
the Sprintank Acquired Assets.
10.9 NONCOMPETITION AND NONSOLICITATION.
(a) Noncompetition. Each of the Seller and the Stockholders acknowledges that
in the course of his or its affiliation with the Sprintank Business he or it has
become familiar with trade secrets of the Sprintank Business and with other
Confidential Information. Therefore, each of the Seller and the Stockholders
agrees that for the period commencing on the Closing Date and ending on the
fifth anniversary of the Closing Date (the "Noncompetition Period"), the Seller
shall not directly or indirectly own, manage, control, participate in, consult
with, render services for, or in any manner engage in any business competing
with the businesses of the Purchaser or its Affiliates which are substantially
the same as the Sprintank Business as it is conducted by the Seller immediately
prior to the Closing Date within Texas, Louisiana, Mississippi and Alabama,
which are the states in which the Seller currently engages in such business.
Each of the Seller and the Stockholders agrees that the provisions of this
Section 10.9(a) are reasonable with respect to their duration, geographical area
and scope.
(b) Nonsolicitation. During the Noncompetition Period, the Seller shall not
directly or indirectly through another entity (i) induce or attempt to induce
any employee Purchaser or any of its Affiliates to leave the employ of the
Purchaser or such Affiliate, or in any way interfere with the relationship
between the Purchaser or any such Affiliate and any employee thereof, or (ii)
induce or attempt to induce any customer, supplier, licensee or other business
relation of the Purchaser or any of its Affiliates to cease doing business with
the Purchaser or such Affiliate, or in any way interfere with the relationship
between any such customer, supplier, licensee or business relation and the
Purchaser or any of its Affiliates; provided that the provisions of this Section
10.9(b) shall in no apply to any action taken by or on behalf of the Purchaser.
(c) Enforcement. If, at the time of enforcement of Section 10.9, a court
holds that the restrictions stated herein are unreasonable under circumstances
then existing, the Parties agree that the maximum duration, scope or
geographical area reasonable under such circumstances shall be substituted for
the stated period, scope or area and that the court shall be allowed to revise
the restrictions contained herein to cover the maximum duration, scope and area
permitted by law. Because the Seller and the Stockholders have had access to
Confidential Information, the Parties agree that money damages would be an
inadequate remedy for any breach of this Section 10.9. Therefore, in the event
of a breach or threatened breach of this Section 10.9, the Purchaser or its
successors or assigns may, in addition to other rights and remedies existing in
their favor, apply to any court of competent jurisdiction for specific
performance and/or injunctive or other relief in order to enforce, or prevent
any violations of, the provisions of this Section 10.9.
(d) Noncompetition Agreements. Each of the Stockholders shall enter into, and
shall cause each of the Sprintank Division's senior management members to enter
into, a Noncompetition Agreement substantially in the form of Exhibit E attached
hereto.
10.10 FURTHER ASSURANCES. From and after the Closing, the Seller and the
Stockholders will execute all documents and take any other action which they are
reasonably requested to execute or take to further effectuate the transactions
contemplated by the Transaction Documents.
10.11 ANNOUNCEMENTS. Prior to the Closing, the Purchaser will not make any
public announcement of or regarding the transactions contemplated by this
Agreement without the prior approval of the Seller as to the timing and content
of such announcement (which approval the Seller may not unreasonably withhold or
delay). Neither the Seller nor the Stockholders will make any public
announcement of or regarding the transactions contemplated by this Agreement
without the prior approval of the Purchaser as to the timing and content of such
announcement (which approval the Purchaser may not unreasonably withhold or
delay).
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10.12 EMPLOYEES.
(a) The Seller has provided the Purchaser with a true, correct and complete
list of all of the Seller's employees employed in the Sprintank Division (the
"Division Employees") indicating the rate of pay of each such employee during
the twelve months preceding the date hereof and the location of such employee.
The Seller shall pay all amounts of wages, bonuses and other remuneration
(including, without limitation, discretionary benefits and bonuses) payable to
such employees with respect to the period ending on the day prior to the Closing
Date, together with any worker's compensation claims or amounts payable on an
ongoing basis to such employees in connection with events occurring prior to the
Closing Date.
(b) The Purchaser will offer employment to all Division Employees employed as
of the Closing Date (the Division Employees who accept the Purchaser's
employment offer and become actively employed by the Purchaser are referred to
herein as the "Continuing Employees") on terms and conditions which are in the
aggregate substantially equivalent to those applicable to such Division
Employee's employment with the Seller as of the Closing Date. Nothing in this
Section 10.12 shall obligate the Purchaser to continue to employ any Continuing
Employee for any period of time.
(c) The Seller will be responsible for and shall pay (i) to the Division
Employees at Closing an amount equal to all vacation pay, sick leave pay and
floating holiday pay earned or accrued by the Division Employees as of the close
of business on the Closing Date, including any related payroll burden (FICA and
other employment taxes) with respect thereto, whether or not such pay is vested
or has been accrued on the books of the Seller at such close of business, based
upon the remuneration of such Division Employees, normally used in computing
such vacation pay, sick leave pay and floating holiday pay and (ii) to the
appropriate Division Employees, all severance payments (if any) due to Division
Employees as a result of the termination of their employment with the Seller.
(d) The Seller has provided the Purchaser with a true, correct and complete
list of all Division Employees indicating the amount of each such Division
Employee's severance payments (if any) and earned or accrued vacation pay, sick
leave pay and floating holiday pay.
10.13 EMPLOYEE BENEFIT PLANS. The Seller shall be responsible for and shall
pay, all obligations to employees as they come due under any and all employee
welfare benefit plans, employee pension benefit plans or any fringe benefit
arrangements at any time maintained by the Seller; provided, however, that it is
understood and agreed that the Seller intends and has the full right and option
to terminate any such employee welfare benefit plans on or after the Closing (at
its sole cost and expense) to the extent that they can be terminated lawfully in
accordance with the express requirements of ERISA and the terms of any such
plan. The Seller agrees to continue to cover (or cause to continue to be
covered) the Continuing Employees (and their eligible dependents) under the
Employee Welfare Plans continuously after the Closing Date up to and including
July 31, 1997 (the "Transition Period") as if such Continuing Employees had
continued to be actively employed by the Seller throughout the Transition
Period. The Purchaser shall reimburse the Seller for the insurance premium with
respect to each Continuing Employee for such continued coverage under such
Employee Welfare Plans, provided the Seller delivers a written invoice to the
Purchaser accurately setting forth the amount of insurance premium due from the
Purchaser with respect to the Continuing Employees promptly after the end of the
Transition Period. The Seller agrees to make available for the Purchaser's
inspection such data as the Purchaser may reasonably request concerning the
computation of any insurance premium with respect to the Continuing Employees.
The Purchaser shall indemnify and hold harmless the Seller for any Losses (other
than Losses resulting from a breach by the Seller of the provisions of this
Agreement) suffered by the Seller as a result of the Seller's continued coverage
of the Continuing Employees under the Employee Welfare Plans during the
Transition Period pursuant to this Section 10.13.
10.14 PAYMENT OF ACCOUNT PAYABLE AND ACCRUED EXPENSES. The Seller shall pay
all accounts payable and accrued expenses relating to the Sprintank Business in
the Seller's ordinary course of business; provided that all such amounts (other
than in the case of a bona fide dispute between the Seller and an account
creditor with respect to a particular invoice) shall in any event be paid by the
Seller prior to date which is 30 days after the Closing Date. With respect to
any such bona fide dispute, the Seller (a) will use its best efforts to amicably
35
resolve such dispute as expeditiously as possible, and (b) immediately pay the
amount determined to be due upon resolution of such dispute.
ARTICLE 11
OTHER AGREEMENTS
11.1 TERMINATION. This Agreement may be terminated:
(a) at any time prior to the Closing by mutual agreement of the Purchaser and
the Seller,
(b) by the Purchaser, at any time when any Party other than the Purchaser is
in breach of any of its material obligations pursuant to this Agreement or if
any representation or warranty of any Party other than the Purchaser is false or
misleading in any material respect (provided that such condition is not the
result of any breach of any covenant, representation or warranty of the
Purchaser set forth in any Transaction Document),
(c) by the Seller, at any time when the Purchaser is in breach of any of its
material obligations pursuant to this Agreement or if any representation or
warranty of the Purchaser is false or misleading in any material respect
(provided that such condition is not the result of any breach of any covenant,
representation or warranty of a Party other than the Purchaser set forth in any
Transaction Document), or
(d) by the Purchaser or the Seller, at any time after the date hereof, if the
Closing has not then occurred; provided, however, that neither the Purchaser nor
the Seller shall be entitled to terminate this Agreement pursuant to this
Section 11.1(d) if such Party's willful or knowing breach of this Agreement has
prevented the consummation of the transactions contemplated hereby at or prior
to such time.
Any termination of this Agreement pursuant to any of clauses 11.1(b) through (d)
will be effected by written notice from the Seller to the Purchaser (if the
Seller is the terminating Party) or from the Purchaser to the Seller (if the
Purchaser is the terminating Party). Any termination of this Agreement pursuant
to clauses 11.1(b) or (c) will not terminate the liability of any Party for any
breach or default of any representation, warranty, covenant or other agreement
set forth in any Transaction Document which exists at the time of such
termination.
11.2 REMEDIES. No failure to exercise, and no delay in exercising, any right,
remedy, power or privilege under this Agreement by any Party will operate as a
waiver of such right, remedy, power or privilege, nor will any single or partial
exercise of any right, remedy, power or privilege under this Agreement preclude
any other or further exercise of such right, remedy, power or privilege or the
exercise of any other right, remedy, power or privilege provided herein. The
rights, remedies, powers and privileges provided pursuant to this Agreement are
exclusive and exhaustive of any other rights, remedies, powers and privileges
which may be provided by law.
11.3 CONSENT TO AMENDMENTS. No waiver, amendment, modification or supplement
of this Agreement will be binding upon any Party unless such waiver, amendment,
modification or supplement is set forth in writing and is executed by such
Party. No other course of dealing between or among any of the Parties or any
delay in exercising any rights pursuant to this Agreement will operate as a
waiver of any rights of any Party.
11.4 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided in this
Agreement, all covenants and agreements set forth in this Agreement by or on
behalf of the Parties will bind and inure to the benefit of the respective
successors and assigns of the Parties, whether so expressed or not, except that
neither this Agreement nor any of the rights, interests or obligations hereunder
may be assigned by the Seller without the Purchaser's prior written consent. The
Purchaser may (at any time prior to the Closing) at its sole discretion, in
whole or in part assign its rights and delegate its obligations pursuant to this
Agreement, including the right to purchase the Sprintank Acquired Assets and the
obligation to assume the Sprintank Assumed Liabilities to one or more of its
Affiliates, and the Purchaser may, at its sole discretion, direct the Seller to
convey the Sprintank Acquired Assets, in whole or in part, to one or more of the
Purchaser's Affiliates. Furthermore, the Purchaser may assign its rights under
this
36
Agreement for collateral security purposes to any lenders providing financing to
the Purchaser or any of its Affiliates.
11.5 GOVERNING LAW. This Agreement will be governed by and construed in
accordance with the domestic laws of the State of Texas, without giving effect
to any choice of law or conflict provision or rule (whether of the State of
Texas or any other jurisdiction) that would cause the laws of any jurisdiction
other than the State of Texas to be applied. In furtherance of the foregoing,
the internal law of the State of Texas will control the interpretation and
construction of this Agreement, even if under such jurisdiction's choice of law
or conflict of law analysis, the substantive law of some other jurisdiction
would ordinarily apply.
11.6 NOTICES. All demands, notices, communications and reports provided for
in this Agreement will be in writing and will be either personally delivered,
mailed by first class mail (postage prepaid) or sent by reputable overnight
courier service (delivery charges prepaid) to any Party at the address specified
below, or at such address, to the attention of such other Person, and with such
other copy, as the recipient party has specified by prior written notice to the
sending Party pursuant to the provisions of this Section 11.6.
If to the Seller or the Stockholders:
Sprint Industrial Services, Inc.
0000 Xxxxxx Xxxxx
Xxxxxxx, Xxxxx 00000
Attn: Xxxxxx X. Xxxxxxxx
with a copy, which will
not constitute notice to
the Seller or the Stockholders, to:
Xxxxxxx Xxxxx & Xxxxx
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attn: B. Xxxx Xxxxx, III
If to the Purchaser:
NES Acquisition Corp.
0000 Xxxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxx
with a copy, which will
not constitute notice to
the Purchaser, to:
Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Perl
Any such demand, notice, communication or report will be deemed to have been
given pursuant to this Agreement when delivered personally, on the third
business day after deposit in the U.S. mail or on the business day after deposit
with a reputable overnight courier service, as the case may be.
11.7 SEVERABILITY OF PROVISIONS. If any covenant, agreement, provision or
term of this Agreement is held to be invalid for any reason whatsoever, then
such covenant, agreement, provision or term will be deemed
37
severable from the remaining covenants, agreements, provisions and terms of this
Agreement and will in no way affect the validity or enforceability of any other
provision of this Agreement.
11.8 SCHEDULES AND EXHIBITS. The Schedules and Exhibits constitute a part of
this Agreement and are incorporated into this Agreement for all purposes.
11.9 COUNTERPARTS. The Parties may execute this Agreement in two or more
counterparts (no one of which need contain the signatures of all Parties), each
of which will be an original and all of which together will constitute one and
the same instrument.
11.10 NO THIRD-PARTY BENEFICIARIES. Except as otherwise expressly provided in
this Agreement, no Person which is not a Party will have any right or obligation
pursuant to this Agreement.
11.11 HEADINGS. The headings used in this Agreement are for the purpose of
reference only and will not affect the meaning or interpretation of any
provision of this Agreement.
11.12 MERGER AND INTEGRATION. Except as otherwise provided in this Agreement,
this Agreement sets forth the entire understanding of the Parties relating to
the subject matter hereof, and all prior understandings, whether written or oral
are superseded by this Agreement.
11.13 ALLOCATION OF PURCHASE PRICE. The allocation of the Sprintank Purchase
Price among the various Sprintank Acquired Assets shall be made in accordance
with Section 1060 of the Code and applicable Treasury Regulations thereunder.
The fair market value of the Sprintank Acquired Assets shall be determined
jointly by the Purchaser and the Seller reasonably and in good faith, and such
determination shall be used by the parties in allocating the Sprintank Purchase
Price and in preparing (a) Form 8594, Asset Acquisition Statement, for each of
the Purchaser and the Seller, and (b) all Tax returns. Each of the Purchaser
and the Seller shall file Form 8594, prepared in accordance with this Section
11.13, with its federal income Tax return for its Tax period including the
Closing Date.
11.14 BULK SALES LAW. The Seller will bear any loss, liability, obligation or
cost suffered by the Seller or the Purchaser as a result of the Seller's
noncompliance with any provision of any bulk sales law which may be applicable
to the transfer of the Sprintank Acquired Assets pursuant to this Agreement.
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IN WITNESS WHEREOF, the Parties have executed this Asset Purchase Agreement as
of the date first written above.
PURCHASER:
NES ACQUISITION CORP.
By: /s/ Xxxxx Xxxxxxx
------------------------------
Its: CEO
SELLER:
SPRINT INDUSTRIAL SERVICES, INC.
By: /s/ X. X. X'Xxxx
------------------------------
Its: President
STOCKHOLDERS:
/s/ Xxxxxx X. Xxxxxxxx
---------------------------------
XXXXXX X. XXXXXXXX
/s/ Xxxxxx X. Xxxxxx
---------------------------------
XXXXXX X. XXXXXX
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