EXHIBIT 10.19
-------------
ASSET PURCHASE AGREEMENT
Between
W&B NEWCO, L.P.
Buyer,
And
W&B REFRIGERATION SERVICE COMPANY,
Seller
For the Purchase and Sale
of Certain Assets of W&B Refrigeration Service Company
Dated as of December 26, 2001
-----------------------------
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS.........................................1
1.1. "Assumed Contracts"....................................1
1.2. "Assumed Liabilities"..................................1
1.3. "Assumption Agreement".................................1
1.4. "▇▇▇▇ of Sale".........................................1
1.5. "Business Intellectual Property".......................1
1.6. "Buyer Documents"......................................2
1.7. "Buyer's Services".....................................2
1.8. "Cash Purchase Price"..................................2
1.9. "Closing"..............................................2
1.10. "Closing Date"........................................2
1.11. "Closing Date Balance Sheet"..........................2
1.12. "Closing Date Net Asset Value"........................2
1.13. "Code"................................................2
1.14. "Consulting Services Agreement".......................2
1.15. "Customer List".......................................3
1.16. "Deed"................................................3
1.17. "Effective Time"......................................3
1.18. "Employee Benefits"...................................3
1.19. "Employee Plans"......................................3
1.20. "Employees"...........................................3
1.21. "Equity Purchase Price"...............................3
1.22. "Estimated Net Asset Value"...........................3
1.23. "Estimated Purchase Price"............................3
1.24. "ERISA"...............................................4
1.25. "Excluded Assets".....................................4
1.26. "Excluded Inventory"..................................4
1.27. "Governmental Body"...................................4
1.28. "Intercreditor Agreement".............................4
1.29. "Inventory"...........................................4
1.30. "Knowledge of Buyer," "Buyer's Knowledge".............4
1.31. "Knowledge of Seller," "Seller's Knowledge"...........4
1.32. "Leased Real Property"................................4
1.33. "Leases"..............................................5
1.34. "Loan Agreement"......................................5
1.35. "Liabilities".........................................5
1.36. "Lien"................................................5
1.37. "Losses"..............................................5
1.38. "Machinery and Equipment".............................5
1.39. "Non-Competition Agreements"..........................5
1.40. "November Balance Sheet"..............................5
1.41. "Other Property"......................................5
1.42. "Partnership Agreement"...............................5
1.43. "Parts and Used Unit Inventory".......................6
1.44. "Permitted Liens".....................................6
1.45. "Person"..............................................6
1.46. "Pledge Agreement"....................................6
1.47. "Preliminary Balance Sheet"...........................6
1.48. "Purchased Assets"....................................6
1.49. "Purchase Price"......................................6
1.50. "Purchased Real Property".............................6
1.51. "Real Property".......................................6
1.52. "Refurbishment Allowance".............................6
1.53. "Refurbishment Cost"..................................6
1.54. "Security Agreement"..................................6
1.55. "Seller Documents"....................................6
1.56. "Seller Loan Documents"...............................6
1.57. "Seller Note".........................................7
1.58. "Shareholders' Agreement".............................7
1.59. "Tax" or "Taxes"......................................7
1.60. "UCC-1s"..............................................7
ARTICLE II PURCHASE AND SALE OF PURCHASED ASSETS..............7
ARTICLE III ASSUMPTION OF LIABILITIES.........................8
ARTICLE IV CLOSING............................................9
4.1. Closing Date...........................................9
4.2. Deliveries at the Closing..............................9
ARTICLE V PURCHASE PRICE AND PURCHASE PRICE ADJUSTMENTS......11
5.1. Purchase Price........................................11
5.2. Purchase Price Adjustment.............................11
5.3. Allocation of Purchase Price..........................12
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF SELLER..........12
6.1. Organization..........................................12
6.2. Authority; Consents and Approvals.....................13
6.3. Title to Purchased Assets.............................13
6.4. Assumed Contracts.....................................13
6.5. No Injunctions or Orders..............................13
6.6. Real Property.........................................13
6.7. Employees.............................................14
6.8. Employee Benefits and Employee Plans..................14
6.9. Compliance with Laws..................................14
6.10. Litigation...........................................14
6.11. Brokers..............................................15
ARTICLE VII REPRESENTATIONS AND WARRANTIES OF BUYER..........15
7.1. Organization..........................................15
7.2. Authority, Consents and Approvals.....................15
7.3. No Injunctions or Orders..............................15
7.4. Brokers...............................................15
7.5. Litigation............................................16
7.6. No Knowledge..........................................16
ARTICLE VIII INDEMNIFICATION.................................16
8.1. Survival of Representations and Warranties............16
8.2. Indemnities by Seller.................................16
8.3. Indemnities by Buyer..................................16
8.4. Indemnity Procedures..................................16
8.5. Dollar and Other Limitations..........................17
8.6. Indemnification by FFE................................17
ARTICLE IX FURTHER AGREEMENTS................................18
9.1. Change of Name........................................18
9.2. Confidentiality.......................................18
9.3. Defense of Claims.....................................18
9.4. Additional Actions by Seller and Buyer................18
9.5. Certain Liabilities; Prorations.......................19
9.6. Announcements.........................................19
9.7. Attorneys' Fees and Other Transaction Costs...........19
9.8. Books and Records.....................................20
9.9. Employees.............................................20
9.10. Excluded Inventory as Fee for Services...............22
9.11. Accounts Payable; Accounts Receivable................22
9.12. Refurbishment Cost Adjustment........................22
9.13. Interim Services.....................................23
ARTICLE X MISCELLANEOUS .....................................23
10.1. Entire Understanding, Waiver, Etc.....................23
10.2. Severability..........................................24
10.3. Accounting Terms......................................24
10.4. Notices...............................................24
10.5. Successors and Assigns................................25
10.6. Waivers...............................................25
10.7. Counterparts..........................................25
10.8. Attorneys' Fees and Costs.............................25
10.9. Headings..............................................25
10.10. Governing Law........................................25
SCHEDULES AND EXHIBITS
----------------------
EXHIBIT A ASSIGNMENT AND ASSUMPTION AGREEMENT
EXHIBIT B ▇▇▇▇ OF SALE
EXHIBIT C CONSULTING SERVICES AGREEMENT
EXHIBIT D SPECIAL WARRANTY DEED
EXHIBIT E INTERCREDITOR AGREEMENT
EXHIBIT F-1 LEASE
EXHIBIT F-2 LEASE
EXHIBIT F-3 LEASE
EXHIBIT G LOAN AGREEMENT
EXHIBIT H-1 NON-COMPETITION AGREEMENT
EXHIBIT H-2 ▇▇▇▇▇▇▇ NON-COMPETITION AGREEMENT
EXHIBIT I PARTNERSHIP AGREEMENT
EXHIBIT J-1 PLEDGE AGREEMENT
EXHIBIT J-2 PLEDGE AGREEMENT
EXHIBIT J-3 PLEDGE AGREEMENT
EXHIBIT K SECURITY AGREEMENT
EXHIBIT L SELLER NOTE
EXHIBIT M SHAREHOLDERS' AGREEMENT
EXHIBIT N-1 UCC-1
EXHIBIT N-2 UCC-1
ASSET PURCHASE AGREEMENT
========================
This Asset Purchase Agreement (this "Agreement") is entered into
as of the 21st day of December, 2001, by and between W&B REFRIGERATION
SERVICE COMPANY, a Delaware corporation ("Seller"), which will change
its name to AirPro Holdings, Inc. following Closing (as defined below),
and W&B NEWCO, L.P. a Texas limited partnership ("Buyer"), which will
change its name to W&B Service Company, L.P. following Closing.
WHEREAS, Seller is an indirect wholly-owned subsidiary of Frozen
Food Express Industries, Inc. ("FFE"); and
WHEREAS, Seller operates a business that repairs and maintains
trailers and trailer refrigeration units and sells new and used
trailers and trailer refrigeration units and the parts thereto (the
"Business"); and
WHEREAS, Seller desires to sell to Buyer, on the terms and
subject to the conditions of this Agreement, the Purchased Assets (as
defined below) used by Seller in the Business, and Buyer desires to
acquire the Purchased Assets and to assume certain Assumed Liabilities
(as defined below) of the Business upon the terms set forth in this
Agreement;
NOW, THEREFORE, intending to be legally bound, the parties agree
as follows:
ARTICLE I
=========
DEFINITIONS
-----------
The terms defined in this Article shall have the following meanings:
1.1. "Assumed Contracts" means those certain leases, contracts and
agreements pertaining to the Business to which Seller is a party, including,
but not limited to those listed on Schedule 1.1.
1.2. "Assumed Liabilities" shall have the meaning set forth in
Article III.
1.3. "Assumption Agreement" means that certain Assignment and
Assumption Agreement, in the form attached as Exhibit A to this Agreement,
to be executed and delivered by Buyer and Seller at the Closing, pursuant to
which Seller will assign the Assumed Contracts to Buyer and Buyer will assume
the Assumed Contracts.
1.4. "▇▇▇▇ of Sale" means that certain ▇▇▇▇ of Sale, in the form
attached as Exhibit B to this Agreement, to be executed and delivered by
Seller to Buyer at the Closing.
1.5. "Business Intellectual Property" means all rights to the trade
name "W&B" and all derivatives thereof, including "W&B Refrigeration Service
Company," "W&B Holdings," "W&B Management," and "W&B Service Company," and all
of Seller's rights to use the trade names "Carrier Southwest," "Carrier
Transicold of Dallas," "Carrier Transicold of Texas," and all derivatives
thereof, and all of Seller's rights to and interest in all trademarks, service
marks, trade names, Internet domain names, and logos together with all
goodwill, registrations and applications related to the foregoing; all
inventions, patents (including any registrations, continuations, renewals and
applications for any of the foregoing); all copyrightable works, all copyrights
(including any registered copyrights and registration applications);
intellectual property license agreements; software (excluding commercially
available mass-market software (e.g. Microsoft Windows, WordPerfect, Excel));
trade secrets, processes, confidential business information, technical formulas,
technology and know-how, data, designs, drawings, specifications, supplier
lists, pricing and cost information, business and marketing plans and
proposals, and all copies and tangible embodiments thereof (in whatever
form or medium) (collectively, "Intellectual Property"); in the case of each
of the foregoing, that are primarily used in the conduct of the Business or
are known by Seller to be necessary for the continued conduct of the Business
by Buyer after the Closing Date, other than Excluded Assets.
1.6. "Buyer Documents" shall have the meaning set forth in Section 7.2.
1.7. "Buyer's Services" means any future services provided to Seller
and its affiliates by Buyer, excluding equipment sales and parts sold across
the counter.
1.8. "Cash Purchase Price" means six million eight hundred thirty-one
thousand one hundred fifteen and No/100 Dollars ($6,831,115.00); provided,
however, that such amount is subject to adjustment by the parties hereto
pursuant to the adjustments to the Purchase Price described in Section 5.2.
1.9. "Closing" shall have the meaning set forth in Section 4.1.
1.10. "Closing Date" means the date on which a Closing actually occurs
pursuant to Section 4.1 hereof.
1.11. "Closing Date Balance Sheet" means a balance sheet of the Business
as of the Closing prepared in accordance with the methodologies used in
calculating the November Balance Sheet.
1.12. "Closing Date Net Asset Value" means the net asset value of the
Business as of the Closing Date, the components of which will consist of
(i) accounts receivable, less allowance for doubtful accounts, (ii) inventories
(less the amount of Excluded Inventory), (iii) all other current assets,
(iv) investments and other assets, (v) property and equipment (including (A)
the Purchased Real Property, but excluding all other land and buildings,
(B) service equipment and (C) computer and related property), less
accumulated depreciation, minus (vi) trade accounts payable, (vii) accrued
payroll, (viii) all other accrued liabilities, and (ix) long term debt, all
determined consistently with the principles used to prepare the Preliminary
Balance Sheet.
1.13. "Code" means the Internal Revenue Code of 1986, as amended, or
any successor statute thereto.
1.14. "Consulting Services Agreement" means that certain Consulting
Services Agreement, in the form attached hereto as Exhibit C to be executed
by Buyer and Seller at Closing.
1.15. "Customer List" means the name of each customer of Seller with
respect to the Business to whom Seller has made sales or has provided services
as of the Closing Date or within one year period prior to Closing, and the
address of each such customer.
1.16. "Deed" means that certain Special Warranty Deed, in substantially
the form attached as Exhibit D to this Agreement, to be executed and delivered
by Seller.
1.17. "Effective Time" means the effective time of Closing specified in
Section 4.1 hereof.
1.18. "Employee Benefits" means all wages, accrued vacation, sick leave
and personal day payments, employment contracts and collective bargaining
agreements, salary continuation (for disability or otherwise), scholarship
programs or other compensatory practices, whether formal or informal, for the
benefit of one or more present or former Employees or their beneficiaries,
medical, dental and hospitalization, Medicare premium reimbursement, sick pay,
sickness and accident benefits, short- and long-term disability benefits,
workers' compensation, life insurance (and any other death benefits) and any
and all other individual and group benefits under all Employee Plans and other
arrangements in effect or covering one or more Employees or retired, disabled
or terminated Employees (including their dependents and beneficiaries).
1.19. "Employee Plans" means any of the following, which is or was
sponsored by Seller or Buyer or any member of any controlled group (within
the meaning of the Code or ERISA) to which Seller or Buyer belongs, or to
which Seller or Buyer or any member of the controlled group of Seller or
Buyer contributes or contributed, with respect to Employees or former
employees of the Business: any plan described in Section 3(3) of ERISA, any
employee welfare benefit plan (within the meaning of Section 3(l) of ERISA)
or any employee pension benefit plan (within the meaning of Section 3(2) of
ERISA), including all collectively bargained plans, and all plans or policies
providing for "fringe benefits" or Employee Benefits, and any trust, escrow or
other agreement related thereto.
1.20. "Employees" means all employees of Seller whose services are or
have been used by or in connection with the Business immediately prior to the
Effective Time, including employees on leave of absence, short-term and
long-term disability, layoff status with recall rights and part-time employees.
1.21. "Equity Purchase Price" means a 19.9% partnership interest in Buyer,
comprised of a 19.9% interest in JM&R, Inc., the sole general partner of Buyer
(the "General Partner"), and a 19.9% limited partner interest in Buyer, the
implied value of which is One Million and No/100 Dollars ($1,000,000.00) at
the Effective Time).
1.22. "Estimated Net Asset Value" means the estimated amount of net asset
value of the Business as calculated pursuant to the Preliminary Balance Sheet."
1.23. "Estimated Purchase Price" means the estimate prepared prior to
Closing of the Purchase Price payable to Seller by Buyer as consideration for
the sale and assignment of the Purchased Assets.
1.24. "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, or any successor statute thereto.
1.25. "Excluded Assets" means those assets to be retained by Seller and
which are not to be included as part of the Purchased Assets, including the
following assets of Seller:
(a) all assets of Seller that are not used in the Business and are
identified on Schedule 1.25, including those assets of Seller that are used
primarily in connection with the operation of Airpro, a division of Seller
("Airpro");
(b) cash, except for ▇▇▇▇▇ cash at each of Seller's branch
locations at which the Business is operated;
(c) the Excluded Inventory;
(d) all real property owned by Seller, except the Purchased Real
Property;
(e) the shares of stock of Compressors Plus, Inc. owned by Seller;
and
(f) all minute books, stock transfer records, tax records and
financial statements of Seller.
1.26. "Excluded Inventory" means the Inventory described on Schedule 1.26
having a value of approximately Two Million Two Hundred Ninety-Three Thousand
Two Hundred Ninety and No/100 Dollars ($2,293,290.00).
1.27. "Governmental Body" means any federal, state, local or other
governmental department, commission, board, bureau, agency, instrumentality
or other authority.
1.28. "Intercreditor Agreement" means the subordination agreement between
Seller and the lender providing financing to Buyer for the purchase of the
Purchased Assets (the "Senior Lender") in the form attached as Exhibit E.
1.29. "Inventory" means all inventories of Seller relating to the Business,
including raw materials and supplies, parts and goods in process.
1.30. "Knowledge of Buyer," "Buyer's Knowledge" or any substantially
similar term means the actual knowledge of Buyer, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, the General Partner or any officers of Buyer.
1.31. "Knowledge of Seller," "Seller's Knowledge" or any substantially
similar term means the actual knowledge of the following individuals, ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇, ▇▇., ▇.▇. ▇▇▇▇▇▇▇▇ III, F. ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇▇ ▇▇▇▇▇▇ and
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇.
1.32. "Leased Real Property" means the parcels of real property owned or
leased by Seller and located in Fort Worth, Houston, and Harlingen, Texas,
which shall be leased or subleased by Seller to Buyer pursuant to the Leases.
The Leased Real Property shall also mean the portion of the premises owned
by Seller and located in Mesquite, Texas which shall be leased to Buyer
pursuant to an oral month to month lease.
1.33. "Leases" means the lease or sublease agreements attached hereto as
Exhibits F-1, F-2, and F-3 with respect to the Leased Real Property, and
containing such options for purchase of the Leased Real Property as may be
specified in such Leases.
1.34. "Loan Agreement" means the subordinated loan agreement between
Buyer and Seller relating to the Seller Note, in the form attached as Exhibit G.
1.35. "Liabilities" means any indebtedness, liability, loss, damage,
deficiency, or obligation, known or unknown, fixed or unfixed, ▇▇▇▇▇▇ or
inchoate, liquidated or unliquidated, secured or unsecured, accrued, absolute,
contingent or otherwise, whether or not of the kind required by generally
accepted accounting principles to be set forth on a financial statement,
including any liability for Taxes.
1.36. "Lien" means any lien, pledge, mortgage, security interest, claim,
lease, charge, option, right of first refusal, easement, servitude, transfer
restriction, or any other encumbrance, restriction or limitation whatsoever.
1.37. "Losses" means any and all losses, costs, expenses, obligations,
liabilities, or damages, including attorneys' fees and disbursements.
1.38. "Machinery and Equipment" means all of the office equipment,
machinery, vehicles, other equipment and computer hardware and software
primarily utilized by Seller in the Business, including, but not limited to,
those items identified on Schedule 1.38 attached hereto.
1.39. "Non-Competition Agreements" means the non-competition agreement
among Buyer, Seller and FFE in the form attached hereto as Exhibit H-1 (the
"Seller Non-Competition Agreement") and the non-competition agreement between
Buyer and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ in the form attached hereto as Exhibit H-2, (the
"▇▇▇▇▇▇▇ Non-Competition Agreement").
1.40. "November Balance Sheet" means the balance sheet of Seller dated
as of November 30, 2001, attached as Schedule 1.40.
1.41. "Other Property" means all guarantees, warranties, books and records,
files, documents, supplies, and other personal property primarily owned or
used by Seller in conducting the Business as it is presently being conducted
by Seller, other than the Excluded Assets.
1.42. "Partnership Agreement" means the partnership agreement
governing Buyer and, after the Closing, means the partnership agreement as
amended and restated for the payment of the Equity Purchase Price and to
include matters relating to Seller's investment in Buyer, in the form attached
as Exhibit I, also referred to as the "Amended and Restated Partnership
Agreement."
1.43. "Parts and Used Unit Inventory" means the Parts and Used Unit
Inventory retained by Seller as part of the Excluded Inventory.
1.44. "Permitted Liens" means those Liens on the Purchased Assets listed
on Schedule 1.44 hereto.
1.45. "Person" means an individual, partnership, corporation, trust,
unincorporated organization, association or joint venture or Governmental Body.
1.46. "Pledge Agreement" means, collectively, the pledges of (i) the
partnership interests owned by ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and the General Partner in the
Partnership and (ii) the shares of stock owned by ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ in the
General Partner, in each case to secure the Seller Note, in the forms attached
as Exhibits J-1, J-2 and J-3.
1.47. "Preliminary Balance Sheet" means an estimated balance sheet of the
Business as of November 30, 2001, prepared by Seller in accordance with the
methodologies used in calculating the November Balance Sheet and delivered to
Buyer by Seller on or before the Closing Date.
1.48. "Purchased Assets" shall have the meaning set forth in Article II.
1.49. "Purchase Price" shall have the meaning set forth in Section 5.1.
1.50. "Purchased Real Property" means the real property owned by Seller
located at ▇▇▇ ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, together with all
buildings, improvements and fixtures located thereon and any easements, rights
of way or appurtenances thereto.
1.51. "Real Property" means all real property owned or leased by Seller
in connection with the Business, including the Leased Real Property and the
Purchased Real Property, identified on Schedule 1.51 hereto.
1.52. "Refurbishment Allowance" means $125,000.00, which amount is
included in the Estimated Purchase Price as the estimated Refurbishment Cost.
1.53. "Refurbishment Cost" means the actual cost incurred by Buyer to
refurbish the Used Trailer Inventory included in the Excluded Inventory
identified on Schedule 1.25 to standard trade specifications.
1.54. "Security Agreement" means the subordinated security agreement
establishing a second lien on all the Purchased Assets other than the Real
Property to secure the Seller Note in the form attached as Exhibit K.
1.55. "Seller Documents" shall have the meaning set forth in Section 6.2.
1.56. "Seller Loan Documents" means the Seller Note, Loan Agreement,
Pledge Agreement, Security Agreement, UCC-1s, Intercreditor Agreement and such
other documents as may be required pursuant to the terms of the Loan Agreement.
1.57. "Seller Note" means the subordinated term note by Buyer in favor of
Seller in the principal amount of four million one hundred thirty-four thousand
seven hundred eighty-five and No/100 Dollars ($4,134,785.00) attached hereto
as Exhibit L.
1.58. "Shareholders' Agreement" shall mean the agreement among the
General Partner, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and Seller governing the ownership and
disposition of shares in the General Partner and certain other agreements
between the Shareholders of the General Partner in the form attached hereto
as Exhibit M.
1.59. "Tax" or "Taxes" means any federal, state, local or foreign income,
gross receipt, license, payroll, employment, excise, severance, occupation,
capital stock, franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, sales, use,
transfer, registration, estimated, or other tax of any kind whatsoever,
including any interest, penalty, or addition thereto, whether disputed
or not.
1.60. "UCC-1s" shall mean the UCC-1 financial statements filed relating
to the security for the Seller Note in the forms attached as Exhibits N-1 and
N-2.
ARTICLE II
==========
PURCHASE AND SALE OF PURCHASED ASSETS
-------------------------------------
On the terms and subject to the conditions hereof, at Closing, Seller
shall sell, transfer, assign, convey and deliver to Buyer, and Buyer shall
purchase, acquire and accept from Seller all of Seller's right, title and
interest in and to all properties and assets, both tangible and intangible
that are used in, or arise in connection with, the conduct of the Business
(the "Purchased Assets") including without limitation:
(a) all prepaid expenses;
(b) the Customer List;
(c) the Machinery and Equipment;
(d) all accounts, notes and other receivables of Seller;
(e) the Inventory (other than the Excluded Inventory);
(f) all Governmental Body licenses, permits, certificates of
authority, authorizations, approvals, registrations, franchises and similar
consents, to the extent assignable;
(g) the Business Intellectual Property;
(h) the Purchased Real Property and the leasehold interests in the
Leased Real Property, including all improvements and fixtures thereon;
(i) the Other Property;
(j) the rights and interests of Seller under the Assumed Contracts
and
(k) ▇▇▇▇▇ cash located at each of Seller's branch locations at
which time the Business is operated.
All of the personal property is sold to Buyer "AS IS, WHERE IS."
ARTICLE III
===========
ASSUMPTION OF LIABILITIES
-------------------------
On the terms and subject to the conditions hereof, at Closing, Buyer shall
assume, perform and discharge when and as the same become due, each of the
following liabilities relating to the Business (the "Assumed Liabilities"):
(i) all obligations of Seller arising from and after the Closing
Date under the Assumed Contracts and permits, licenses, authorizations and
approvals of Seller related to the Business;
(ii) all trade accounts payable and accrued expenses incurred by
Seller in connection with the Business and reflected on the books and records
of Seller as of the Effective Time;
(iii) all liabilities arising from and after the Closing Date out
of all employment-related matters resulting from decisions of Buyer made on
or after the Effective Time, including but not limited to any and all
liabilities arising under the Worker Adjustment and Retraining Notification
Act, the Family Medical Leave Act, state and federal discrimination statutes
and the Fair Labor Standards Act;
(iv) all those Liabilities of Seller which expressly are set forth
on Schedule 3; and
(v) all liabilities of the Business arising from and after the
Closing Date.
Notwithstanding anything to the contrary set forth herein, the
Assumed Liabilities shall expressly exclude:
(i) any Liabilities of Seller for unpaid Taxes for periods prior to
Closing, including any liability for income Taxes arising in connection with
the consummation of the transactions contemplated hereby;
(ii) any Liabilities of Seller for costs or expenses incurred in
connection with this Agreement, or the transactions contemplated hereby,
expressly assumed by Seller in Section 9.7 hereof that are not identified in
the Financial Statements; and
(iii) any Liabilities of Seller arising out of or in connection
with the operations of Airpro.
ARTICLE IV
==========
CLOSING
-------
4.1. Closing Date.
------------
(a) Closing hereunder (the "Closing") shall take place simultaneously
with the execution and delivery of this Agreement by the parties (the date of
such execution and delivery, the "Closing Date").
(b) The effective time of the Closing hereunder will be deemed to
have occurred at 5:00 p.m. (Central time) on the Closing Date (the "Effective
Time").
4.2. Deliveries at the Closing.
-------------------------
(a) At the Closing, Seller will:
(i) deliver to Buyer a duly executed ▇▇▇▇ of Sale;
(ii) deliver to Buyer a duly executed counterpart of the
Assumption Agreement;
(iii) deliver to Buyer a duly executed counterpart of the
Consulting Services Agreement;
(iv) deliver to Buyer a duly executed Deed with respect to the
Purchased Real Property;
(v) deliver to Buyer a duly executed counterpart of each of
the Leases;
(vi) deliver to Buyer the titles to and applications for
transfer of the vehicles included in the Purchased Assets;
(vii) deliver to Buyer a duly executed counterpart of the
Amended and Restated Partnership Agreement;
(viii) deliver to Buyer a duly executed counterpart of the
Shareholders' Agreement;
(ix) deliver all the Seller Loan Documents to be executed by
Seller;
(x) deliver to Buyer duly executed copies of the consent
and approvals of third parties required in connection with the Assumed Contracts
and Assigned Leases, including the consent of the Carrier Transicold Division
of United Technologies Corporation;
(xi) deliver to Buyer a counterpart of the Seller
Non-Competition Agreement duly executed by Seller and FFE;
(xii) deliver to Buyer a Certificate of the Secretary of Seller,
including resolutions of the Board of Directors of Seller authorizing the
execution, delivery and performance of this Agreement;
(xiii) deliver to Buyer a UCC-3 Financing
Statement Amendment releasing the lien of Seller's lender on the
Purchased Assets; and
(xiv) deliver to Buyer all such other deeds, endorsements,
assignments and other instruments, documents and agreements as Buyer may
reasonably request to carry out the transfers and assignments contemplated by
this Agreement and to comply with the terms hereof.
(b) At the Closing, Buyer will:
(i) deliver to Seller a duly executed counterpart of the
Assumption Agreement duly executed by Buyer;
(ii) deliver to Seller a duly executed counterpart of the
Consulting Services Agreement;
(iii) deliver to Seller a duly executed counterpart of each of
the Leases;
(iv) deliver to Seller the Seller Loan Documents duly executed
by Buyer, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and the General Partner, as appropriate;
(v) deliver to Seller a duly executed counterpart of the
Amended and Restated Partnership Agreement,
(vi) deliver to Seller a duly executed counterpart of the
Shareholders' Agreement;
(vii) deliver to Seller the Cash Purchase Price by wire
transfer of immediately available funds;
(viii) deliver to Seller duly executed counterparts of the
Seller Non-Competition Agreement and the ▇▇▇▇▇▇▇ Non-Competition Agreement;
(ix) deliver to Seller a Certificate of the sole general
partner of Borrower and a Certificate of the Secretary of the General Partner
authorizing the execution, delivery and performance of this Agreement;
(x) deliver to Seller certificates of insurance issued to
Buyer evidencing Buyer's compliance with the insurance provisions of the Seller
Loan Documents and the Leases; and
(xi) deliver to Seller, such other instruments, documents or
agreements as Seller may reasonably request to carry out the transactions
contemplated by this Agreement and to comply with the terms hereof.
ARTICLE V
=========
PURCHASE PRICE AND PURCHASE PRICE ADJUSTMENTS
---------------------------------------------
5.1. Purchase Price. The purchase price payable to Seller by Buyer as
consideration for the sale and assignment of the Purchased Assets (the
"Purchase Price") shall consist of the sum of (i) the Cash Purchase Price,
(ii) the Equity Purchase Price, (iii) the amount of the Seller Note, subject
to adjustment as set forth in Section 5.2.
5.2. Purchase Price Adjustment.
(a) Not later than thirty (30) days after the Closing Date, Seller
will prepare and deliver to Buyer a statement (the "Closing Date Net Asset
Value Statement"), certified by an appropriate senior executive officer of
Seller, setting forth Seller's calculation of the Closing Date Net Asset Value
of the Business as of the Closing Date. Upon delivery of the Closing Date Net
Asset Value Statement, Seller shall provide Buyer and its representatives with
reasonable access during business hours to the books and records of the
Business in order to allow Buyer and its representatives to verify the accuracy
of the calculation of the Closing Date Net Asset Value Statement.
(b) (i) In the event that Buyer does not object to the Closing Date
Net Asset Value Statement delivered by Seller by written notice of objection
(the "Notice of Objection") delivered to Seller within ten (10) business days
after the date on which the Closing Date Net Asset Value Statement was
delivered to Buyer, such Notice of Objection to describe in reasonable detail
Buyer's proposed adjustments to the Closing Date Net Asset Value Statement,
the Closing Date Net Asset Value Statement shall be deemed final and binding.
(ii) If Buyer delivers a timely Notice of Objection to Seller,
then all undisputed amounts shall be released to the appropriate party and any
remaining matters in dispute shall be resolved as follows:
(A) Seller and Buyer shall promptly endeavor to agree upon
the Closing Date Net Asset Value Statement. In the event that a written
agreement as to the Closing Date Net Asset Value Statement has not been reached
within ten (10) business days after the date of delivery by Buyer of the Notice
of Objection, Seller's Closing Date Net Asset Value Statement, together with a
description of any unresolved dispute, shall be submitted to the
Dallas, Texas office of the American Arbitration Association (the "Arbitrator").
(B) Within thirty days of the submission of any dispute
concerning the Closing Date Net Asset Value Statement to the Arbitrator, the
Arbitrator shall render a decision in accordance with this Section 5.2 along
with a statement of reasons therefor. The decision of the Arbitrator shall be
final and binding upon each party hereto and deemed to be an arbitral award
which may be entered in any court having competent jurisdiction. In the event
Seller and Buyer submit any unresolved disputes to the Arbitrator for resolution
pursuant to this Section 5.2(b)(ii), the losing party shall pay the fees and
expenses of the Arbitrator and of counsel for the prevailing party.
(c) If the Closing Date Net Asset Value of the Business as of the
Closing Date as reflected on the final Closing Date Net Asset Value Statement
is less than the Estimated Net Asset Value, then Seller shall be obligated to
pay to Buyer the amount of any such deficiency within five (5) business days
after the determination of the final Closing Date Net Asset Value Statement by
(i) wire transfer of immediately available funds to an account designated in
writing by Buyer, if Buyer and Seller agree that such amount is to be paid in
Cash, (ii) a decrease in the equity interest in the Buyer by an appropriate
adjustment to the Equity Purchase Price, if Buyer and Seller agree that such
amount is to be paid in equity, or (iii) cancellation of the Seller Note in
exchange for a substitute promissory note duly executed by Buyer with the only
change to such Seller Note being the appropriate decrease to the principal
amount of the Seller Note and the corresponding principal payments, if Buyer
and Seller agree that such amount is to be paid by adjusting the Seller Note.
If the Closing Date Net Asset Value of the Business as of the Closing Date
as reflected on the final Closing Date Net Asset Value Statement exceeds the
Estimated Net Asset Value, then Buyer shall be obligated to pay to Seller the
amount of any such excess within five (5) business days after the determination
of the final Closing Date Net Asset Value Statement at Buyer's election by
(i) wire transfer of immediately available funds to an account designated in
writing by Seller, if such amount is to be paid in Cash, (ii) an increase in
the equity interest in the Buyer by an appropriate adjustment to the Equity
Purchase Price, if such amount is to be paid in equity, or (iii) cancellation
of the Seller Note in exchange for a substitute promissory note duly executed
by Buyer with the only change to such Seller Note being the appropriate
increase to the principal amount of the Seller Note and the corresponding
adjustment to the principal payments, if such amount is to be paid by adjusting
the Seller Note. Buyer and Seller shall make appropriate amendments to the
Partnership Agreement, Seller Note or other appropriate documents in such
components of the Purchase Price are adjusted and shall adjust the allocation
of the Purchase Price as provided in Section 5.3 below.
5.3. Allocation of Purchase Price. At Closing, Buyer and Seller shall
allocate the Purchase Price among the Purchased Assets. Buyer and Seller shall
timely complete a Form 8594, Asset Acquisition Statement of Allocation,
consistent with such allocation and shall file a copy of such form with its
federal income tax return for the period that includes the Effective Time.
Each of Buyer and Seller further agrees not to take any position inconsistent
with such mutually agreed allocation for any tax purpose.
ARTICLE VI
==========
REPRESENTATIONS AND WARRANTIES OF SELLER
----------------------------------------
Seller hereby represents and warrants to Buyer as follows:
6.1. Organization. Seller is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware and has
all requisite right, power and authority to own, lease and operate all of its
properties and assets used in the Business and to carry out the Business as it
is presently conducted. To the extent required by applicable law, Seller is
licensed or qualified to do business in Texas, and in each jurisdiction in
which the failure to be so qualified could reasonably be expected to have a
material adverse effect on the Business or the transactions contemplated by
this Agreement.
6.2. Authority; Consents and Approvals. Seller has all requisite corporate
right, power and authority to execute, deliver and perform this Agreement and
each other document referenced herein to be executed and delivered by Seller
pursuant hereto (together, the "Seller Documents"). The execution, delivery,
and performance of the Seller Documents by Seller has been duly and validly
authorized and approved by all necessary corporate action. This Agreement
constitutes a valid and legally binding obligation of Seller, and except as
set forth on Schedule 6.2, the execution, delivery and performance of the
Seller Documents by Seller will not violate Seller's Certificate of
Incorporation or Bylaws, as each is amended to the date hereof, or to the
knowledge of Seller, (a) violate in any material respect any applicable
provision of law or any rule or regulation of any Governmental Body or any
order, writ, injunction, judgment or decree of any court, administrative
agency or Governmental Body, (b) require any consent under or constitute a
default under any material agreement, indenture, mortgage, deed of trust,
lease, or other instrument to which Seller is a party or by which it is bound
(including any of the Assumed Contracts), or any license, permit or certificate
held by it, or (c) result in the creation of any Lien upon any of the Purchased
Assets or under any of the Assumed Contracts.
6.3. Title to Purchased Assets. At Closing, Seller will have the full
right and power to convey and will convey to Buyer, effective as of the
Effective Time, good and indefeasible title to the Purchased Assets, free and
clear of any and all Liens except the Permitted Liens and for the lien of
Seller's lender, which Seller shall cause to be released promptly following
receipt by Seller of the Cash Purchase Price.
6.4. Assumed Contracts. Seller has made available to Buyer true and
correct copies of all Assumed Contracts. To Seller's knowledge, such Assumed
Contracts (a) constitute all of the contracts, leases and agreements material
to the Business, other than (i) employment contracts or service contracts
terminable at will without payment of any penalty, (ii) purchase orders entered
into in the ordinary course of business, and (iii) miscellaneous contracts
involving liabilities of not more than $250,000.00 in the aggregate, and
(b) are in full force and effect and neither Seller nor any other party to
such Assumed Contracts is in default thereunder.
6.5. No Injunctions or Orders. There are no necessary governmental
consents, approvals or filings necessary for the sale by Seller of the
Purchased Assets, and Seller is not subject to and, to Seller's knowledge,
has not been threatened with any injunctions of any court or orders of any
federal, state or municipal court or Governmental Body, which would limit or
otherwise adversely affect Seller's ability to sell the Purchased Assets or
to conduct the Business substantially as it is currently conducted by Seller.
6.6. Real Property.
(a) Schedule 1.51 sets forth a true and complete list of the real
property owned or leased by Seller which is used in the Business.
(b) With respect to the Purchased Real Property:
(i) to the knowledge of Seller, there are no pending or
threatened condemnation proceedings, lawsuits or administrative actions
relating to the Purchased Real Property;
(ii) to the knowledge of Seller, there are no leases, subleases,
licenses or other agreements, written or oral, granting to any party of right
of use of occupancy of any portion of the Purchased Real Property;
(iii) to the knowledge of Seller, there are no outstanding
options or rights of first refusal to purchase the Purchased Real Property,
or any portion thereof or interest therein; and
(iv) to the knowledge of Seller, there are no Liens upon the
Purchased Real Property other than those listed on Owner's Policy of Title
Insurance to be obtained by Buyer with respect to the Purchased Real Property
(the "Owner's Title Policy").
(c) To the knowledge of Seller, there are no Liens upon any of the
leasehold interests of Seller in the Leased Real Property. To the knowledge
of Seller, (i) each lease of each Leased Real Property is valid and binding
and in full force and effect, (ii) Seller is not in default and has not
received notice of alleged default, and (iii) no event has occurred which with
notice or the passage of time would constitute a default under any of such
leases.
6.7. Employees. Schedule 6.7 sets forth a true and complete list of all
Employees of Seller who are engaged in the Business, along with their hourly
rate or annual salary, title and bonus paid last year.
6.8. Employee Benefits and Employee Plans. Schedule 6.8 sets forth a list
of all Employee Benefits and Employee Plans of Seller (each a "Seller Employee
Plan" and collectively, the "Seller Employee Plans") currently provided to the
Employees and relating to the Business. True and correct copies of the Seller
Employee Plans and all amendments thereto have been delivered to Buyer. The
administration of all Seller Employee Plans prior to date hereof will not
result in the creation of any liens against the Purchased Assets or any
liability on the part of Buyer therefor.
6.9. Compliance with Laws. To Seller's knowledge, Seller has complied in
all material respects with the laws and regulations applicable to the Purchased
Assets and the Business.
6.10. Litigation. To Seller's knowledge, there is no pending or threatened
litigation against Seller relating to the Business that would result in a Lien
against the Purchased Assets at Closing or otherwise prohibit Seller's ability
to transfer the Purchased Assets to Buyer or to consummate the transactions
contemplated by this Agreement. Except as set forth on Schedule 6.10 attached
hereto, there is no suit, action, administrative proceeding, arbitration,
grievance or other governmental investigation pending or, to the knowledge of
Seller, threatened against Seller which individually or in the aggregate could
create a Lien on the Purchased Assets or result in any liability on the part
of Buyer therefor.
6.11. Brokers. No agent, broker, investment banker or employee of Seller
or of FFE, or other person acting on behalf of or under the authority of Seller
or FFE is or will be entitled to any broker's or finder's fee or any other
commission or similar fee, directly or indirectly in connection with the
transactions contemplated by this Agreement for which Buyer will be liable and
no valid claim will exist against Buyer or against the Business or Purchased
Assets for any broker's or finder's fee or any other commission or similar fee,
directly or indirectly, in connection with the transactions contemplated by
this Agreement. To Seller's knowledge, only the broker or finder listed on
Schedule 6.11 alleges that a fee is due from Seller with respect to the
transactions contemplated by this Agreement.
ARTICLE VII
===========
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
Buyer hereby represents and warrants to Seller as follows:
7.1. Organization. Buyer is a limited partnership duly organized, validly
existing and in good standing under the laws of the State of Texas and has the
full right, power and authority to own, lease and operate the Purchased Assets
and the Business in the State of Texas.
7.2. Authority, Consents and Approvals. Buyer has all requisite
partnership right, power and authority to execute, deliver and perform this
Agreement and each other document and agreement to be executed and delivered
by Buyer pursuant hereto (together, the "Buyer Documents"). The execution,
delivery and performance of the Buyer Documents by Buyer have been duly and
validly authorized and approved by all necessary partnership action. This
Agreement constitutes a valid and legally binding obligation of Buyer. The
execution, delivery and performance of the Buyer Documents by Buyer will not
violate the Partnership Agreement as amended to the date hereof, and to the
knowledge of Buyer, will not (a) violate any provision of law or any rule or
regulation of any Governmental Body applicable to Buyer, or any order, writ,
injunction, judgment or decree of any court, administrative agency or
Governmental Body applicable to Buyer, (b) require any consent under or
constitute a default under any agreement, indenture, mortgage, deed of trust,
lease, license or other instrument to which Buyer is a party or by which it is
bound, or any license, permit or certificate held by it, or (c) require any
consent of, approval by, notice to or registration with any Governmental Body.
7.3. No Injunctions or Orders. Buyer is not engaged in, nor is there
pending or, to Buyer's knowledge, threatened, any action, dispute, claim,
litigation, arbitration, investigation or other proceeding at law or in equity
or before any Governmental Body or other administrative agency nor are there
any injunctions of any court or orders of any federal, state or municipal
court or Governmental Body which could adversely affect Buyer's ability to
perform any of its obligations hereunder or the transactions contemplated by
this Agreement.
7.4. Brokers. No agent, broker, investment banker or other Person acting
on behalf of Buyer or under its authority is or will be entitled to any broker's
or finder's fee or any other commission or similar fee, directly or indirectly,
in connection with the transactions contemplated by this Agreement for which
Seller will be liable.
7.5. Litigation. There is no pending or, to Buyer's knowledge, threatened
litigation against Buyer that would inhibit Buyer's ability to consummate the
transactions contemplated by this Agreement.
7.6. No Knowledge. To the knowledge of Buyer, there are no (i) matters
which (a) constitute a breach of a representation or warranty of Seller or
(b) are a liability or contingent liability of Seller or (ii) written or oral
agreements with any Person which would result in the deferral of any income
in connection with the Business until after the Closing Date which are not
known by the individuals listed in the definition of "Knowledge of Sellers."
To the knowledge of Buyer, since the date of the November Balance Sheet, the
Business has been carried on in the ordinary course and in substantially the
manner as carried on prior thereto and no transaction has been entered into
which is outside of the ordinary course of business or with an affiliated
Person that is on other than arm's length terms that is not known to Seller.
ARTICLE VIII
============
INDEMNIFICATION
---------------
8.1. Survival of Representations and Warranties. The representations
contained in Sections 6.2, 6.3, 6.6(b), 6.8, 6.10, 6.11, 7.3, 7.4 and 7.6 of
this Agreement shall survive the execution and delivery of this Agreement and
continue in full force and effect for a period of one (1) year thereafter.
EXCEPT AS EXPRESSLY PROVIDED HEREIN, THE REPRESENTATIONS AND WARRANTIES MADE
BY ANY PARTY IN THIS AGREEMENT (INCLUDING ALL SCHEDULES HERETO) WILL NOT
SURVIVE THE CLOSING.
8.2. Indemnities by Seller. After the Effective Time, Seller shall
indemnify, defend and hold harmless Buyer from and against and in respect of
any and all Losses that Buyer shall incur, suffer or have asserted against it,
which arise, result from or relate to: (a) any material breach of any
representation or warranty or covenant or agreement of Seller contained in
this Agreement; and (b) all Liabilities of Seller other than the Assumed
Liabilities, including but not limited to all Liabilities relating to the
Purchased Assets or the Business that relate to the period prior to the
Effective Time.
8.3. Indemnities by Buyer. After Closing, Buyer shall indemnify, defend
and hold harmless Seller from and against and in respect of any and all Losses
that Seller shall incur, suffer or have asserted against it, which arise,
result from or relate to: (a) any material breach of any representation or
warranty or covenant or agreement of Buyer contained in this Agreement; (b) any
Assumed Liabilities; (c) any liabilities or contingent liabilities of Seller
relating to the Business and not known to the individuals listed in the
definition of "Seller's Knowledge" but known by the individuals listed in the
definition of "Buyer's Knowledge," and (d) all Liabilities relating to the
operation of the Business or the Purchased Assets arising after the Closing.
8.4. Indemnity Procedures. In case any claim, demand or action shall be
brought against any party entitled to indemnity, such party shall notify the
other party from whom indemnity is sought in writing within ten (10) days of
the date such party receives notice thereof, and the indemnifying party shall
assume the defense thereof, including the employment of counsel; provided,
however, that any failure to notify the indemnifying party of a claim, demand
or action shall not bar a claim of indemnity unless the indemnified party has
been prejudiced or damaged, in which case the right to be indemnified shall be
reduced by the Losses suffered as a result of such failure to give notice. If
any party shall become aware of any facts which might result in any such claim,
demand or action, such party shall promptly notify the other party from whom
indemnity might be sought with respect thereto, which shall have the right to
take such action as it may deem appropriate to resolve such matter. The
indemnified party shall have the right to employ separate counsel in any such
action and to participate in the defense thereof, but the fees and expenses of
such counsel shall be at the expense of such indemnified party unless the
employment of such counsel has been specifically authorized by the indemnifying
party or unless a conflict of interest exists between the interests of the
indemnified and indemnifying parties that requires a separate representation,
in which case the fees and expenses of separate counsel shall be paid by the
indemnifying party. The indemnifying party shall not be liable for any
settlement of any action effected without its consent, which consent will not
be unreasonably withheld.
8.5. Dollar and Other Limitations.
(a) Seller will not be liable to Buyer for indemnification
hereunder until the Losses of Buyer in the aggregate under Section 8.2 exceed
$20,000.00, and then only to the extent that such Losses exceed that amount.
(b) The Buyer will not be liable to Seller for indemnification
hereunder until the Losses of Seller in the aggregate under Section 8.3 exceed
$20,000.00, and then only to the extent that such Losses exceed that amount.
(c) The total amount payable pursuant to this Article VIII by Seller
with respect to all Indemnification Claims brought by Buyer hereunder will not
exceed $500,000.00.
(d) The total amount payable pursuant to this Article VIII by Buyer
with respect to all Indemnification Claims brought by Seller hereunder will not
exceed $500,000.00.
(e) No amount shall be payable to the extent of insurance, except
to the extent there has been a claim of subrogation requiring payment by the
party seeking indemnification hereunder, with respect to any Loss.
8.6. Indemnification by FFE. FFE shall indemnify, defend and hold harmless
Buyer from and against and in respect of any and all Losses that Buyer shall
incur which arise, result from or relate to: (a) any presently disclosed
Liabilities associated with Compressors Plus, Inc., W&B Management, or Airpro,
or (b) any Losses or Liabilities arising with respect to the Business and the
Purchased Assets from any activity of Seller prior to Closing which is not an
Assumed Liability and which is known to Seller at Closing. Such indemnification
shall be provided only to the extent Buyer has made demand upon Seller, Seller
does not contest such demand and Seller fails to so indemnify Buyer within 30
days thereafter. The obligation of FFE to indemnify Buyer hereunder and any
amounts payable by FFE hereunder shall be subject to the same limitations as
those of Seller pursuant to Sections 8.4 and 8.5 above.
ARTICLE IX
==========
FURTHER AGREEMENTS
------------------
9.1. Change of Name. Within five business days after the Closing Date,
Seller shall amend its Certificate of Incorporation to change its name from
W&B Refrigeration Service Company to a name that does not include "W&B
Refrigeration," "W&B Service," or any derivative of any such names and will
cease using the "W&B Refrigeration" name or any component thereof and will not
grant or renew any license to use such name or any component thereof.
Following the Closing Date, Seller agrees to file a written consent and
whatever other documents are required to permit Buyer (or any affiliate of
Buyer) to incorporate, qualify or register using "W&B Refrigeration," "W&B
Service" or any similar name.
9.2. Confidentiality. Whether or not the transactions contemplated by
this Agreement are consummated, each of the parties hereto agrees to use its
best efforts to keep confidential any and all information and data with
respect to the other party which it has received as a result of any
investigation made in connection with this Agreement and which is not
otherwise available to the public; provided, however, that notwithstanding
the foregoing, each of the parties hereto shall be free to disclose any
such information or data (a) to the extent required by applicable law or
(b) during the course of or in connection with any litigation or other
proceeding based upon or in connection with the subject matter of this
Agreement, including, without limitation, the failure of the parties to
consummate the transactions contemplated hereby.
9.3. Defense of Claims. Buyer hereby agrees from and after Closing to
use reasonable efforts to assist Seller and FFE with the defense, at Seller's
or FFE's expense, of any proceeding brought against Seller or FFE, Seller's
expense, arising out of or in connection with the Purchased Assets or this
Agreement.
9.4. Additional Actions by Seller and Buyer. After the Closing, Seller
and Buyer shall execute and deliver such documents and do and perform all such
other acts as may reasonably be required by the other in order to consummate
the transactions described in this Agreement. To the extent that Seller's
rights under any Assumed Contract and Lease may not be assigned without the
consent of another Person, which consent has not been obtained as of the
Closing Date, and to the extent Buyer agrees to waive in writing obtaining
such consent as a condition precedent to the Closing, this Agreement shall
not constitute an agreement to assign the same if an attempted assignment
would constitute a breach thereof or be unlawful. Seller shall use its
commercially reasonable efforts (not including any payments) to obtain any
such required consents as promptly as practicable. If any such consent shall
not be obtained or if any attempted assignment without such consent would be
ineffective or would impair Buyer's rights under the Assumed Contract and
Lease in question, Seller shall act, for a period of one year after the
Effective Time, or for the duration of the Assumed Contract and Lease in
question, whichever is less, as Buyer's agent to obtain for Buyer the benefits
thereunder and shall cooperate with Buyer in any other reasonable arrangement
designed to provide such benefits to Buyer. Buyer shall execute and deliver
all such documents and assumptions and do and perform all such other acts as
may be reasonably requested by Seller to assure the assignment to and the
assumption by Buyer of the Assumed Contracts and the Assumed Liabilities.
9.5. Certain Liabilities; Prorations. All unpaid ad valorem taxes, other
property taxes and highway use taxes incurred prior to the Effective Time
pertaining to the Purchased Assets shall be pro rated as of the Effective
Time between Buyer and Seller, and Buyer shall assume the obligation to pay
such prorated costs and taxes, including but not limited to, all unpaid ad
valorem and other property taxes incurred in connection with the Real Property,
but specifically excluding all unpaid utility costs (including charges for
electricity, water, sewage, fuel oil, gas and telephone usage). Such assumed
prorated costs and taxes that relate to the period prior to the Effective Time
shall be included in the Assumed Liabilities. Although Buyer shall assume the
obligation to pay such costs and taxes, Seller shall reimburse Buyer for all
of such costs and taxes relating to the period prior to the Effective Time.
9.6. Announcements. The parties will mutually agree as to the time, form
and content before issuing any press releases or otherwise making any public
statements or statements to third parties with respect to transactions
contemplated hereby, except as may be required by law or rule of any applicable
securities exchange.
9.7. Attorneys' Fees and Other Transaction Costs.
(a) Seller shall be responsible for the following:
(i) the payment of (A) legal fees and expenses reasonably
incurred by Buyer in connection with this Agreement and the transactions
contemplated hereby, including the formation of Buyer as a Texas limited
partnership and the formation of the General Partner, and Buyer obtaining loans
from the Senior Lender (the "Senior Indebtedness") and the Seller for the
financing of its purchase of the Purchased Assets, and (B) the health and
dental expenses incurred by or on behalf of ▇▇▇▇▇ ▇▇▇▇▇; provided that the
total amount payable under this subsection (i) shall not exceed $140,000; and
such items shall be payable by Seller when incurred either directly to the
third party charging for such expenses or as a reimbursement of Buyer or
▇▇▇▇▇ ▇▇▇▇▇, as appropriate.
(ii) the payment of Seller's own costs and expenses incurred
in connection with this Agreement and the transactions contemplated thereby;
(iii) the reimbursement of Buyer at Closing for one-half of
the cost of the premium for the Owner's Title Policy up to $5,000.00; and
(iv) the payment of one-half of any Liabilities, up to
$5,000.00, for transfer, sales, use, motor vehicle, or other Taxes, other than
income Taxes of Seller, arising in connection with the sale by Seller to Buyer
of the service vehicles included among the Purchased Assets.
(b) Buyer shall be responsible for the following:
(i) the payment of all costs and expenses relating to loan
closing costs, the Senior Lender's fees and costs of the Senior Lender's legal
counsel incurred in connection with the Senior Indebtedness;
(ii) the payment of the costs of the premium
for the Owner's Title Policy not paid by Seller pursuant to subsection
(a) above; and
(iii) the payment of one-half, plus the amount, if any, that
such one-half exceeds $5,000.00, of any Liabilities for transfer, sales, use,
motor vehicle, or other Taxes, other than income Taxes of Seller, arising in
connection with the consummation of the transactions contemplated hereby.
(c) To the extent Seller has paid any amounts to be paid by Buyer
or such amounts have been taken into account in adjusting the Purchase Price,
the provisions of subsection (a) above shall be inapplicable.
9.8. Books and Records. From and after Closing, Buyer shall own and be
entitled to possession of all books and records of Seller exclusively
pertaining to the Business or the Purchased Assets and operations of the
Business prior to Closing, but, for five years after Closing, Seller shall
have the right from time to time and at any time to examine and copy, at its
own expense and upon request during normal business hours, the books and
records pertaining to the Business and relating to any period prior to Closing.
Seller shall provide access to any records of Seller which relate to the
Business that are not included in the Purchased Assets, and to employees of
Seller having knowledge of the Business to the extent reasonably requested by
Buyer.
9.9. Employees.
(a) As of the Effective Time, Buyer will offer employment to the
Employees engaged in the Business and listed on Schedule 6.7. The terms and
conditions of employment to be offered to such of the Employees will be
determined by Buyer in its sole discretion. Each such employee who accepts
Buyer's offer of employment will hereinafter be referred to as a "Transferred
Employee", and each such employee who is not offered employment with Buyer or
who does not accept Buyer's offer of employment will hereinafter be referred
to as a "Former Employee."
(b) Buyer agrees that it will assume all of the accrued but unused
vacation days and all earned but unused sick days credited to each Transferred
Employee under the applicable vacation and sick leave policies of Seller as of
the Effective Time. After the Effective Time, each Transferred Employee shall
accrue vacation days and earn sick days for service with Buyer only in
accordance with the applicable vacation and sick leave policies of Buyer and
each Transferred Employee will only be allowed to use or be paid for unused
vacation days and sick days assumed by Buyer in accordance with the policies
of Buyer; provided, however, that in no event shall the application of the
policies of Buyer serve to eliminate any benefits accrued by a Transferred
Employee to the use of such vacation days and sick days. Seller will be
responsible for paying Former Employees for unused vacation days and sick days,
and Buyer will reimburse Seller for any such payments within five (5) business
days of receipt of an invoice from Seller for such payments and any appropriate
documentation that Buyer may reasonably request.
(c) Except as specifically provided herein, a Seller Employee Plan,
but only in accordance with its otherwise applicable terms, conditions, and
exclusions, shall be liable for all Seller Employee Plan obligations to Former
Employees and their eligible dependents and beneficiaries, regardless of when
incurred, and to Transferred Employees and their eligible dependents and
beneficiaries incurred before or at the Effective Time. Except as specifically
provided herein, a Employee Plan of Buyer (a "Buyer Employee Plan"), but only
in accordance with its otherwise applicable terms, conditions, and exclusions,
shall be liable for Employee Plan obligations to Transferred Employees and their
eligible dependents and beneficiaries incurred after the Effective Time.
(d) COBRA, Health, LTD, Life and AD&D Benefits. Except as otherwise
required by applicable law, Seller shall be responsible for any group health
plan continuation coverage, notices, and disclosure required under Section
4980B of the Code or Sections 601 through 608 of ERISA ("COBRA") with respect
to any Former Employee or Transferred Employee or any "qualified beneficiary"
(as defined in Section 4980B of the Code) of any Former Employee or Transferred
Employee with respect to any Seller Employee Plan. Buyer agrees to obtain
within one hundred twenty (120) days of Closing, Health, long-term disability
("LTD"), life, and accidental death and dismemberment ("AD&D") Employee Plans
of Buyer with benefits that shall generally be either the same as the benefits
of similarly situated Buyer employees or comparable to the benefits of the
Seller health, LTD, life, and AD&D Employee Plans by which they were covered
immediately before the Effective Time for Transferred Employees and their
eligible dependents.
(e) 401(k) Plan.
(i) FFE shall take whatever action is required under or with
respect to the Frozen Food Express Industries, Inc. 401(k) Savings Plan ("FFE's
401(k) Plan") to cause the trustee of FFE's 401(k) Plan to distribute, or
offer to distribute, the account of each Transferred Employee in accordance
with the terms of FFE's 401(k) Plan, as soon as administratively feasible
after the Effective Time, but only to the extent distribution is determined
by the Plan administrator of FFE's 401(k) Plan to be permissible under the
Code.
(ii) As soon as reasonably practicable after the Effective Time,
Transferred Employees shall become eligible to participate in a 401(k) Plan to
be established by Buyer ("Buyer's 401(k) Plan") in accordance with the terms
of Buyer's 401(k) Plan. For purposes of determining their eligibility to
participate in and vested percentage under Buyer's 401(k) Plan, Transferred
Employees shall receive credit under Buyer's 401(k) Plan for service for which
they received credit under FFE's 401(k) Plan before the Effective Time.
(f) The parties agree to furnish each other with such information,
and to take all such other action, as is necessary and appropriate to effect
the transactions contemplated by this Section 9.9 of this Agreement.
(g) No provision of this Section 9.9 of this Agreement shall create
any third-party beneficiary or other rights in any Transferred Employee or
Former Employee (including any beneficiary or dependent thereof) with respect
to continued employment with Buyer or with respect to any Employee Plan of
Buyer, Seller, or FFE, nor shall any provision of this Agreement modify or
amend, or be deemed to modify or amend, the terms of any Employee Plan of
Buyer, Seller, or FFE. No provision of this Agreement shall constitute a
limitation on Buyer's, Seller's, or FFE's rights to amend, modify, or
terminate after the Effective Time any Employee Plan.
9.10. Excluded Inventory as Fee for Services. After Closing, Seller
shall have the option, exercisable in Seller's sole discretion, to pay for the
Buyer's Services, as follows:
(i) For the first $1,000,000.00 of Buyer's Services billed to
Seller or its affiliates, being Frozen Food Express Industries, Inc., or any
of its subsidiary entities, Seller may pay up to ten percent (10%) of each
invoice for such services by transferring to Buyer certain of the Parts and
Used Unit Inventory having a cost basis equal to ten percent (10%) of each
such invoice; and
(ii) Once the total amount billed to Seller and its affiliates,
being Frozen Food Express Industries, Inc., or any of its subsidiary entities,
for Buyer's Services exceeds $1,000,000.00, Seller may pay up to fifteen
percent (15%) of each subsequent invoice by transferring to Buyer certain of
the Parts and Used Unit Inventory having a cost basis equal to fifteen percent
(15%) of each such invoice.
In the event that Seller elects to exercise its option hereunder with
respect to the payment for Buyer's Services performed within a given
month, Seller shall notify Buyer within fifteen (15) days following the
end of such month of its intention to exercise its option. The Parts
and Used Unit Inventory to be transferred pursuant to this Section
shall be selected by Seller, in its reasonable discretion, and
delivered to Buyer together with a ▇▇▇▇ of sale or other appropriate
title document to transfer such parts and used units inventory free and
clear of any lien or encumbrance within thirty (30) days following the
end of the month during which the Buyer's Services for which payment is
being made were performed.
9.11. Accounts Payable; Accounts Receivable. Seller shall promptly
forward to Buyer any payments Seller receives for any accounts receivable of
the Business that are included in the Purchased Assets. Seller shall promptly
forward to Buyer any bills, accounts payable or notes payable with respect to
the Purchased Assets that are included in the Assumed Liabilities or otherwise
payable by Buyer pursuant to the terms of this Agreement, and Buyer shall pay
such items promptly when due.
9.12. Refurbishment Cost Adjustment. In the event that the Refurbishment
Cost exceeds the Refurbishment Allowance, then Seller shall transfer to Buyer
certain of the Parts and Used Unit Inventory having a cost basis equal to the
amount of such excess. In the event the Refurbishment Cost is less than the
Refurbishment Allowance, Buyer shall transfer to Seller additional used parts
held in Buyer's inventory having a cost basis equal to the amount of such
deficiency. Transfers of Excluded Inventory to be made pursuant to this
Section shall be made within thirty (30) days of the date of determination of
the Refurbishment Cost by the party required to transfer such inventory
executing a ▇▇▇▇ of sale transferring such Excluded Inventory to the other
party.
9.13. Interim Services.
(a) Seller will provide to Buyer common payroll services,
including paying all salaries, wages and commissions, and providing all
related payroll tax deposit and tax reporting services (the "Payroll Services")
for all of the Transferred Employees for a period commencing on the date
hereof and terminating on December 31, 2001. Seller shall also cause IRS
Form W-2 Wage and Tax Statements (the "W-2's") to be prepared and issued to
the Transferred Employees for the 2001 tax year.
(b) Buyer shall reimburse Seller for all amounts paid by Seller
in connection with the Payroll Services and the issuance of the W-2's to the
Transferred Employees, including, but not limited to the wages paid to
Transferred Employees and the fees charged by Seller's payroll service
provider, which amounts shall be payable by Buyer within fifteen (15) days
of its receipt of a ▇▇▇▇ from Seller therefor.
(c) Seller shall use commercially reasonable efforts to limit the
Payroll Services to the payments of payroll and withholding of taxes described
in subsection (a) above. However, in addition to reimbursement for the
foregoing, Buyer shall be required to reimburse Seller for any amounts withheld
or contributions made by Seller to any 401(k) accounts of Transferred Employees
or any amounts contributed to any cafeteria plan of any Transferred Employees
in connection with Seller's provision of the Payroll Services.
(d) The parties acknowledge and agree that Seller and all employees,
personnel, principals, officers, agents and independent contractors of Seller
(the "Seller's Group") shall be independent contractors in relation to Buyer
in connection with their provision of services under this Section 9.13.
(e) Buyer shall protect, indemnify, defend and hold Seller
harmless from and against all liabilities, claims, damages, losses and expenses,
including, but not limited to, court costs and reasonable attorney's fees
(collectively, the "Losses"), caused by or arising in connection with Seller's
provision of services pursuant to this Section 9.13. The indemnification of
Seller by Buyer under this Section 9.13 shall not be subject to the dollar
limitations of Section 8.5 hereof.
ARTICLE X
=========
MISCELLANEOUS
-------------
10.1. Entire Understanding, Waiver, Etc. This Agreement (including all
schedules and exhibits attached hereto) and all other agreements executed and
delivered at the Closing set forth the entire understanding of the parties and
supersede any and all prior or contemporaneous agreements and understandings
relating to the subject matter hereof, and the provisions hereof may not be
changed, modified, waived or altered except by an agreement in writing signed
by the parties hereto. A waiver by any party of any of the terms or conditions
of this Agreement, or of any breach thereof, shall not be deemed a waiver of
such term or condition for the future, or of any other term or condition
hereof, or of any subsequent breach thereof.
10.2. Severability. If any provision of this Agreement or the application
of such provision shall be held by a court of competent jurisdiction to be
invalid or unenforceable, the remaining provisions of this Agreement shall
remain in full force and effect.
10.3. Accounting Terms. All accounting terms not specifically defined in
this Agreement shall have the meanings given to them under accounting principles
generally accepted in the United States.
10.4. Notices. All notices, requests, demands and other communications
that are required or may be given under this Agreement shall be in writing.
All notices shall be deemed to have been duly given or made: if by hand,
immediately upon delivery; if by Federal Express, Express Mail or any other
reputable overnight delivery service, one business day after being placed in
the control of the courier for overnight delivery; and if mailed by certified
mail, return receipt requested, five business days after mailing. All notices
are to be given or made to the parties at the following addresses (or to such
other address as either party may designate by notice in accordance with the
provisions of this Section):
(a) If to Seller:
W&B Refrigeration Service Company, Inc. (and
after Closing to AirPro Holdings, Inc., Seller's new name)
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
With a copy to:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ & Price, L.L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
(b) If to Buyer:
W&B Newco, L.P. (and after Closing to W&B
Service Company LP, Buyer's new name)
▇▇▇ ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
With a copy to:
▇▇▇▇ ▇. ▇▇▇▇▇, P.C.
Key & ▇▇▇▇▇, L.L.P.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
10.5. Successors and Assigns. Neither this Agreement nor any of the
rights or obligations arising hereunder shall be assignable without the prior
written consent of the parties hereto; provided, that without such prior
consent Buyer may assign this Agreement to an affiliate of Buyer or to the
Senior Lender, as collateral for the Senior Indebtedness, and Seller may
assign this Agreement to a successor by merger to Seller. Any such assignment
will not release or discharge the applicable party to this Agreement from
any obligations it may have pursuant to this Agreement. Nothing in this
Agreement, express or implied, shall confer upon any Person, other than the
parties hereto, and their successors and permitted assigns, any rights or
remedies under or by reason of this Agreement.
10.6. Waivers. At any time prior to the Closing, any party hereto may
(i) extend the time for the performance of any of the obligations or other
acts of the other party hereto, (ii) waive any inaccuracies in the
representations and warranties of the other party contained herein or in any
document delivered pursuant hereto, and (iii) waive compliance with any of
the agreements or conditions contained herein subject to any specific
provisions governing the effect of such extensions or waivers. Any agreement
on the part of a party hereto to grant any such extension or waiver will be
valid only if set forth in a written instrument signed on behalf of such party.
10.7. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which,
together, shall constitute one and the same instrument.
10.8. Attorneys' Fees and Costs. Unless otherwise provided herein to the
contrary, in the event any action or proceeding is commenced by any party to
this Agreement to determine rights, duties or obligations under this Agreement,
determine a breach of this Agreement and obtain damages as a result of such
breach or otherwise enforce this Agreement, the prevailing party in such
action or proceeding shall be entitled to recover from the non-prevailing party
all of the prevailing party's out-of-pocket costs and expenses, including all
reasonable attorneys' fees, disbursements and related charges.
10.9. Headings. The headings contained in this Agreement are for the sole
purpose of convenience of reference, and will not in any way limit or affect
the meaning or interpretation of any of the terms or provisions of this
Agreement.
10.10. Governing Law. THIS AGREEMENT SHALL BE CONTROLLED, CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED IN THAT STATE WITHOUT APPLICATION OF
CONFLICTS OF LAW PROVISIONS.
IN WITNESS WHEREOF, this Agreement has been executed by duly authorized
officers of each of the parties all as of the date first above written.
SELLER:
W&B REFRIGERATION SERVICE COMPANY
-----------------------------------
By: /s/ F. ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇.
-------------------------------
Name: F. ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇.
-----------------------------
Title: Senior Vice President
-----------------------------
BUYER:
W&B NEWCO, L.P.
By: JM&R, Inc., its General Partner
-----------------------------------
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------
Title: President
------------------------------
By signing below, Frozen Food Express Industries, Inc., a Texas
corporation, hereby agrees to be bound by the provisions of Sections
8.6 and 9.9 of this Agreement.
Dated: December 26, 2001 FROZEN FOOD EXPRESS INDUSTRIES, INC.
----------------- -------------------------------------
By: /s/ F. ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇.
---------------------------------
Name: F. ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇.
-------------------------------
Title: Senior Vice President
-------------------------------
